Reed v QCoal Sonoma Pty Ltd & Ors [2014] QLAC 8

3. In the absence of agreement within one month, the costs and the appropriate scale to be used are to be decided by the appropriate assessing officer of the Supreme Court".

[2] The order concerns an appeal by the appellant against a review decision dated 25 February 2013 under the Water Act 2000 ("the Act") substantially upholding a decision to permit the diversion of Coral Creek near Collinsville to allow coal mining by the second respondents where the creek was naturally located[1]. The proceeding in the Land Court involved some interlocutory hearings[2] preceding the appeal which was heard over three days in January 2014. The learned member reserved his decision and on 11 February 2014 he made orders dismissing the appeal, confirming the review decision and made directions for the filing of an application with respect to costs[3]. It is from the orders concerning costs made after the dismissal of the appeal and the confirmation of the review decision that the appellant appeals to this court[4].

[3] On 27 May 2014 the appellant filed a notice of appeal to this court[5] which contained a number of grounds of appeal. Ultimately at the hearing of the appeal some of the grounds were abandoned and the grounds advanced at the hearing of the appeal were[6]:

The learned trial judge erred in concluding that the appellant's holding the opinion in his letter of 13 December 2013, that it was more likely than not that the review decision maker's decision would be upheld with amended conditions (The appellant's opinion), required the Court to characterise that part of the appellant's appeal related to setting aside the review decision maker's decision as frivolous from that date (at [39]).

The learned trial judge erred by inferring from the appellant's 13 December 2013 letter that from that date the appellant's appeal, to the extent it concerned the setting aside the review decision maker's decision, was characterised by a lack of seriousness and sense (at [39]).

The learned trial judge erred in concluding that no dispute existed between the parties as to the setting aside of the review decision maker's decision after the appellant's letter of 13 December 2013 (at [41]).

The learned trial judge erred by failing to consider the entirety of the appellant's letter of 13 December 2013, including the impossibility of the conditions said to be more likely than not to be imposed, as stated in the response of the respondent on 23 December 2013".

[4] The first respondent[7] to the proceedings in the Land Court was not a party to the appeal to this court[8]. The second respondents filed a notice of contention on 11 June 2014[9] in which they sought that the order made for costs below be affirmed on grounds other than the ground held below in the event that this court found that any of the appellant's grounds of appeal were established. We will return to the notice of contention after first considering the appellant's appeal.

[5] The material or evidence available to the learned member relevant to the consideration of the application for costs included, in addition to the evidence tendered before him at trial[10], two affidavits filed by the solicitors for the appellant and the second respondents respectively. The first was the sixth affidavit of the solicitor for the second respondents[11] and the fourth affidavit of the solicitor for the appellant[12]. Those affidavits exhibit correspondence that had passed between the solicitors for the parties at different times. Exhibited to the affidavit of Mr Stokes were three letters, one dated 3 July 2013 from the solicitors for the second respondents to the solicitors for the appellant[13], the second dated 13 December 2013 by the solicitors for the appellant to the second respondent[14] and one dated 23 December 2013 by the solicitors for the second respondents to the solicitors for the appellant.[15] The affidavit of Ms Spiller exhibited a letter dated 8 January 2014 by the solicitors for the second respondents to the solicitors for the appellant[16] which was presumably sent after the conclusion of the first day's hearing of the appeal. These four letters were specifically referred to by the learned member in his reasons for judgment.[17]

[6] The letters of 13 December 2013 and 23 December 2013 are of greatest significance. The first[18] was written by the solicitors for the appellant and marked "without prejudice save as to costs". Relevantly it provided:

"We write to request your response to the settlement proposal below.

In our view, given the state of expert evidence filed in the present proceeding, it is more likely than not that the Land Court will uphold the review decision maker's decision to grant the water licence to QCoal but with amended conditions which address our client's grounds of appeal concerning:

(a) the adequacy of the hydraulic modelling conducted for QCoal; and

(b) the certainty attaching to the conditions of the water licence as presently formulated.

We wish to explore settlement by the formulation of agreed conditions to address each of these matters.

We suggest that an appropriately crafted condition is capable of addressing the inadequacies in modelling conducted for QCoal identified by our expert, Dr Scott Rayburg. In particular, a condition could provide for:

(a) proper model verification (consisting of sensitivity analysis, calibration, validation and error assessment) to be undertaken by QCoal.

(b) The results of modelling (as verified) to be assessed by an appropriate expert, who then certifies whether or not design changes are required for the proposed diversion, and if so the nature of those changes.

We expect that the amendment of the conditions 1-3 in our client's Further Amended Notice of Appeal will be a matter for collaborative drafting between the parties. We seek your co-operation in this regard.

If appropriate conditions are agreed between the parties, we would anticipate that all parties would bear their own costs of appeal (including any reserved costs). The appeal could be resolved by the parties filing appropriate consent orders which orders would incorporate the agreed conditions in the subject licence.

As the time for trial is fast approaching, your urgent response to the matters outlined above would be appreciated by 4pm on Tuesday, 17 December 2013.

We are presently instructed to continue in our preparation for trial, presently listed for 8-10 January 2014. In the event that settlement is not achieved, and the outcome of the hearing is that the Land Court makes a determination of the appeal consistent with the position outlined above we are instructed to seek an order for costs incurred after 4pm on 17 December 2013."

[7] The solicitors for the second respondents replied by the letter of 23 December 2013[19] also marked "without prejudice save as to costs". Relevantly it provided:

"We refer to your client's 'without prejudice' proposal in the letter from Robyn Spiller dated 13 December 2013, in relation to which we have now received instructions from our clients.

1. We note at the outset that your client's 'offer' is not, in fact, an offer capable of acceptance. Rather, your letter merely invites our client to consider a proposal by which the proceeding may be settled on the basis of conditions which fall within certain parameters. However, your client does not, in fact, propose the specific terms of conditions for the purposes of seeking our clients' instructions.

2. We also note that, although their solicitors are copied to the correspondence, your offer does not appear to be directed to the First Respondent to the proceeding, the Department. Any settlement of the proceeding would necessarily require the agreement of all parties, including the Department.

3. Our clients agree that it is likely that the Land Court will uphold the review decision maker's decision to grant the water licence. However, our clients do not accept that the state of the expert evidence filed to date by our clients and your client would necessarily warrant the Land Court imposing amended conditions of the type suggested by you (sic) client.

4. We are instructed that our clients are not prepared to agree to settle the proceeding based on amended conditions of the type proposed by your client.

5. With respect to the two proposed types of conditions described in your letter, we note that:

(a) the condition concerning modelling is not an appropriate condition for a water licence (which is an authority to interfere with a water course), but rather amounts to a condition precedent to the grant of the water licence, and does not provide our clients with any certainty with respect to the operation of the water licence, if such a condition were included; and

(b) our clients are satisfied that the current conditions applicable to the water license are sufficiently certain, given they are referrable to the Design of Coral Creek Diversion Report and Design of Coral Creek Diversion Addendum Report, which each contain substantial information, including construction drawings, which articulate the extent of the interference authorised by the water licence.

6. We also note that the water licence as amended following the internal review initiated by your client relevantly includes a condition which requires our clients to monitor the performance of the diversion by way of a performance report prepared by a registered professional engineer in regard to geomorphic and hydrogeological conditions. While in our clients' view such a condition is not necessary, the condition ought to be sufficient to allay your client's concerns regarding the proposed interference authorised by the water licence.

7. We refer you to section 882(4) Water Act 2000 (Qld) which sets out the circumstances in which the Court may make a costs order in an appeal. Respectfully, we do not consider that any of those circumstances apply to the benefit of your client and, accordingly, our clients will resist any application by your client to recover his costs form 17 December 2013, as foreshadowed in your correspondence.

8. Further, that the Land Court will likely uphold the decision to grant a water licence ought to have been evident to your client prior to commencing this appeal. In this respect, we note that your client:

(a) has had copies of our clients' application material for a significant period of time prior to commencement of the appeal; and

(b) First obtained a report from Dr Rayburg relating to modelling matters in June 2013.

9. Our clients also requested form your client, shortly after the commencement of your client's appeal, his proposed amendments to the conditions to the water licence.

10. In the circumstances, we consider that our clients have grounds to seek their costs of the appeal from your client.

11. We reserve our clients' rights to refer to this and other correspondence on the question of costs".

[8] The letter of 13 December 2013 by the appellant's solicitors referred to the expert evidence filed in the proceedings. Those expert reports were respectively, on behalf of the appellant, by Dr Scott Rayburg and, on behalf of the second respondents, Dr Thomas Connor and Mr Stephen Clark. The first report was Dr Rayburg's report dated 7 August 2013[20] in response to which the second respondents filed reports by Dr Connor and Mr Clark respectively. The final expert report was a reply report dated 14 November 2013 by Dr Rayburg[21] which had been provided to the solicitors for the second respondents.

[9] By the time of the letter of 13 December the parties' preparation for the hearing of the appeal was presumably well advanced, directions having been given some time before. The appeal was listed to commence in Brisbane on 8 January 2014.

Statutory power to make a costs order - Water Act

[10] Earlier[22] we noted that the proceeding heard and determined by the learned member below was an appeal brought pursuant to ss 877 and 878 of the Act against the review decision granting a licence to the second respondents. The power of the Land Court to order costs in proceedings brought under the Act is governed by s 882 which relevantly provides:

(3) Each party to the appeal must bear the party's own costs for

(4) However, the court may order costs for the appeal, including

allowances to witnesses attending for giving evidence at the

appeal, as it considers appropriate in the following circumstances -

(a) the court considers the appeal was started merely to

(b) the court considers the appeal, or part of the appeal, to have been frivolous or vexatious;

(c) a party has not been given reasonable notice of intention to apply for an adjournment of the appeal;

(d) a party has incurred costs because the party is required to apply for an adjournment because of the conduct of another party;

(e) a party has incurred costs because another party has

(f) without limiting paragraph (d), a party has incurred

costs because another party has introduced, or sought to introduce, new material;

(g) a party to the appeal does not properly discharge its responsibilities in the appeal.".[23]

[11] At the costs hearing before the learned member and on appeal to this Court the only ground upon which the second respondents contended an order could be made in its favour was that the appeal (or part) was frivolous or vexatious under s 882(4)(b).

[12] It is worthy of note that neither below nor in the appeal before us was it submitted that the appellant was activated by any ill will or improper motive. Counsel for the second respondents fairly and quite properly made it clear that it was not a part of his client's case that the appellant was subjectively vexatious.

[13] The learned member correctly noted that s 882(3) provides that the parties must bear their own costs and that the court is given a discretionary power to make an appropriate order only in the circumstances provided in s 882(4)[24]. The learned member referred to and analysed a number of authoritative decisions of the Court of Appeal and this court concerning provisions materially identical to s 882(3) and (4) in other legislation and also the sections in question. The member said[25]:

"[8] The second respondents direct particular attention to s 882(4)(b) and the meaning of the words "frivolous or vexatious" which was looked at by the Court of Appeal in Mudie v Gainriver Pty Ltd (No. 2). In that case the Court considered the expression as it then appeared in s 7.6(1A)(a) in the now repealed Local Government (Planning and Environment) Act 1990. McMurdo P and Atkinson J said that the words should be given their ordinary meaning. In that case Williams JA gave the example of a party relying on groundless assertions as something that could be described as frivolous or vexatious. His Honour referred to the meaning attributed to vexatious by Deane J in Oceanic Sun Line Special Shipping Company Inc v Fay of being productive of serious and unjustifiable trouble and harassment.

[9] The Macquarie Dictionary, revised third edition, defines frivolous as:

1. of little or no weight, worth or importance, not worthy of serious notice;
2. characterised by lack of seriousness or sense;
3. given to trifling or levity.

1. causing vexation, vexing or annoying;
2. law (of legal actions) instituted without sufficient grounds, and serving only to cause annoyance.

The definitions in the Shorter Oxford English Dictionary are effectively the same.

[10] The Land Appeal Court in Chismel Pty Ltd v Department of Natural Resources and Mines recognised that it was appropriate to have regard to decisions considering the relevant expression in planning legislation, taking into account any differences in the drafting. The learned President also considered in Reed v Department of Natural Resources and Mines & Ors that assistance could be gained from a decision of the Planning and Environment Court on the question of whether ss 882(3) and (4) of the Act applied to interlocutory costs. In that case the President decided that the appellant had failed to comply with the Court's procedural requirements under s 882(4)(e) and had not properly discharged his responsibilities within the meaning of s 882(4)(g). The learned President also noted that the Land Appeal Court in Chrismel Pty Ltd v Department of Natural Resources and Mines was of the view that s 882(4)(g) was directed to unmeritorious conduct. I note the breadth of that concept. At [18] of the President's decision, paragraph [50] of the Land Appeal Court's decision is set out in full. The Land Appeal Court indicated that s 882(4)(g) could extend to a wide variety of unmeritorious conduct. In the present case, reliance is placed on another provision.

[11] The second respondents refer to the judgment of Williams JA to which reference has already been made in support of the proposition that an appeal based on wholly unmeritorious grounds would "in ordinary parlance, be described as 'frivolous and vexatious'."

[12] In Ebis Enterprises Pty Ltd v Sunshine Coast Regional Council Chesterman JA, with whom McMurdo P and Philippides J agreed, said:

"... a proceeding will be frivolous if it lacked substance, so there was no reasonable basis for starting it so that its prosecution produced unjustified trouble for the other party."

[14] In argument at the hearing of the appeal before us, counsel drew our attention to other observations of law made by the learned member, namely that lack of success by an appellant does not establish that an appeal was not worth prosecuting and that whether a case is frivolous or vexatious is "primarily a factual issue".[26] Further he said[27]:

"[32] The Court must consider the totality of the ordinary meanings of the words "frivolous or vexatious" and do so in the context of the facts of the present case. It must be borne steadily in mind that there is no punitive element in an award of costs but they are to indemnify a successful party for the expense to which they have been put. It is important that the starting point is that set out in s 882(3) of the Act, that each party must bear their own costs. The discretion in s 882(4) is enlivened once it is shown that the appeal, or part of it, was frivolous or vexatious".

[15] At the hearing of the appeal neither counsel submitted that the learned member below misstated the principles established by the cases to which he referred. With respect to the learned member we can find no fault with his analysis of nor summary of the principles of law established by the cases to which he referred.

[16] The reasoning of a learned member that was the subject of a criticism by the appellant before us concerned the learned member's analysis of the letter of 13 December 2013 and his consideration of whether that letter, when viewed in the context of the proceeding before him established that part of the proceeding before him had been "frivolous or vexatious". In his reasons the learned member said[28]

"[37] The letter of 13 December 2013 discloses the view then held by the solicitors for the appellant that:

"In our view, given the state of expert evidence filed in the present proceeding, it is more likely than not that the Land Court will uphold the review decision maker's decision to grant the water licence to QCoal but with amended conditions which address our client's grounds of appeal ...".

[38] From 13 December 2013, the appellant did not, on the evidence, hold any contrary view. The Court does not find that such a view ought to have been held from a certain time, such as when Dr Connor's first report, dated 16 September 2013, came to attention. This is because the appeal did not become frivolous, of little weight or acquire a lack of seriousness upon that event. Neither did it then become a case carried on without sufficient grounds, serving only to cause annoyance. There were opposing expert views.

[39] From and after the letter of 13 December 2013, the appellant's considered view, expressed in writing by his solicitor, was that it was more likely than not that it would not be successful in what was its primary thrust in the appeal, having the decision to grant the licence set aside. It was submitted that this was not a concession that the case was unmeritorious. To proceed with this aspect of the appeal while holding this opinion does however as a fact require the Court to characterise the part of the appeal so directed as frivolous in that it became of little weight, worth or importance and not worthy of serious notice since the appellant did not believe it was likely to be successful. It was also then and thereafter characterised by a lack of seriousness and sense for the same reason.

[40] The Court is not satisfied on the evidence presented that the appeal could properly thereafter be characterised as vexatious as although carried on without sufficient grounds in relation to the attempt to set aside the decision, there is no evidence that it was carried on only to cause annoyance and such would not be the only inference able to be drawn. Accordingly, it ought not to be.

[41] The position set out in s 882(3) of the Act, that each party should bear their own costs is not displaced prior to the letter of 13 December 2013 as prior to that the parties had a dispute, each side with their own view, in relation to everything in issue in the appeal. From and after that letter, the appellant's pursuit of having the licence set aside became frivolous. Section 882(4) then provides that the Court may order costs of the appeal, including allowances to witnesses attending for giving evidence at the appeal, as it considers appropriate where the Court considers the appeal or part of it to be frivolous.

[42] From 13 December 2013 the appeal was frivolous to the extent only that it related to the setting aside of the decision. On the evidence, there was still an area of dispute in relation to licence conditions which was unaffected by the part of the appeal which concerned granting the licence. In view of the nature of costs as an indemnity to the party put to expense, the Court considers that it ought to exercise its discretion in favour of ordering costs in favour of the second respondents from 13 December 2013. This will apply to those costs which are of and incidental to the appeal so far as it relates to the decision to issue the licence and not the matter of licence conditions. Allowances to witnesses attending to give evidence for the second respondents should be included".

[17] In the hearing of the appeal the case for the appellant devolved into two parts.

[18] The first part was the submissions in support of each of the 4 grounds argued.[29] Concerning the first ground (whether the letter of 13 December 2013 constituted a concession that the case advanced by the appellant in the hearing below was unmeritorious and in some way doomed to failure so that to continue to prosecute the appeal after sending the letter constituted frivolous conduct) the appellant submitted that finding, as a matter of fact, frivolous conduct, was wrong and was a finding which, on the evidence, was not open to the member. Consequently, counsel submitted the finding was an error in the sense of House v The King.

[19] Counsel for the appellant, with respect to the second ground[30] of the grounds pressed, acknowledged that a faulty inference of fact does not necessarily represent an error of law unless it demonstrates the application of an erroneous standard or statutory construction[31]. He submitted however that in the context of the present appeal the inference drawn by the learned member that "the decision to proceed with ground 1 of the appeal" was also then and thereafter characterised by a lack of seriousness and hence for the same reason " represented an erroneous construction of s 882(4)(b) of the Act".

[20] Concerning the third[32] of the grounds pressed in argument at the appeal, in the written outline the appellant submitted that the member below had misconstrued his power under s 882(4)(b) by concluding by implication that no dispute existed between the parties as to ground 1 of the appeal in the Land Court after the receipt of the 13 December 2013 letter. In making that submission counsel for the appellant highlighted that merits review (as was being conducted in the present case) is the exercise of an administrative rather than a judicial power and accordingly, asserted counsel for the appellant "there cannot be said to be a dispute between the parties that is capable of forensic identification - there are no pleadings and the court stands in the shoes of the original decision maker".[33]

[21] The fourth ground[34] relied upon was a contention by the appellant that the condition lacked sufficient certainty to be regarded as a valid condition. The appellant contended the condition in the terms in which it had been notified would result in a decision maker other than a delegate under the Water Act deciding whether the diversion proposed by the respondents would proceed. The appellant's counsel contended that that issue was one worthy of consideration and continuing to propound for an alternative condition required the court to consider the nature of it and whether the allegations raised against it, i.e. lack of finality were properly founded.

[22] The second part (which was a necessary response to the notice of contention delivered by the respondent) was the general submission that the conduct of the appellant in the hearing below was not either frivolous or vexatious and that the evidence given by Dr Rayburg was both proper and relevant and not to be construed as vexatious even though Dr Rayburg failed to provide any positive evidence as to what the modelling which had been carried out demonstrated.

[23] Counsel for the appellant characterised the evidence of Dr Rayburg in this way:[35]

"Your Honours will recall that I characterised the evidence of Dr Rayburg as modelling practice evidence. This is a negative case. A modelling case conducted by the appellant, a negative case that the respondents' modelling was not adequate. That the appellant's expert didn't conduct that modelling himself doesn't detract from the quality of his evidence as to what prevailing modelling practice was; albeit that that evidence was not accepted by the learned trial member".

[24] Further in his written outline of submissions counsel for the appellant reminded us that in De Tornouer v Department of Natural Resources and Water[36] that:

"The appeal to this court is by way of rehearing to be decided on the evidence on the record of the proceeding below".

[25] Counsel for the second respondents contended for a construction of the opening paragraph of 13 December 2013 letter that the appellant was acknowledging that its appeal against the review decision was bound to fail.

[26] He contended[37] that the factual finding by the learned member below corresponded with the ordinary and natural meaning of the word "frivolous" which was considered in the Mudie case[38].

[27] In his oral submissions to the court which were succinct and forceful, counsel for the second respondents urged upon the court that the cost decision should not be read in isolation from the substantive judgment on the appeal below. He emphasised the often referred to advantage a judge has in having an opportunity to observe, hear and assess the performance of a witness in the witness box, so that[39] when the two decisions below were read in concert the proper characterisation of the learned member's decisions is that he was extremely damning of Mr Reed's case to an extent that established sufficiently that the case of the appellant should be characterised as frivolous or vexatious. Counsel drew attention to the evidence of Dr Rayburg and the maintenance of a negative case rather than a positive case and in particular the failure by Dr Rayburg to contend for a particular value of Manning's n integer. Counsel for the second respondents contended that the failure by Dr Rayburg to offer any evidence about what Manning's n should have been was a critical failure in his case.

[28] To the same effect counsel emphasised Dr Rayburg's attack upon the Australian Coal Association Research Project July 2002 report ("ACARP July 2002 report") for the Bowen Basin and Dr Rayburg's disinclination to accept that the Manning's n contended for by Dr Collins was entirely consistent with the ACARP July 2002 report which had investigated 34 different streams in the Bowen Basin.

[29] He also drew attention to Dr Rayburg's failure to carry out flow analysis which procedure Dr Rayburg had given evidence was a simple procedure requiring the efforts of no more than two people for half a day's work on two separate occasions about two to four weeks apart.[40]

Costs orders under the Water Act - a review

[30] Our reference to the learned members' reasons and his summary of the relevant case law[41] permits us to be more concise than might otherwise have been necessary in our reference to the leading cases and established principles.

[31] It should not be overlooked that before s 882(4)(b) is considered it is s 882(3) which sets out the general rule to which the circumstances referred to in s 822(4) are exceptions. Speaking of the statutory equivalent of s 882(3)[42] McMurdo P and Atkinson J said in Mudie v Gainriver Pty Ltd (No 2)[43]:

"[34] It seems likely that one purpose of [s 882(3)], which sets out the general rule that each of the parties bear their own costs, consistent with the objectives of the Act, is to ensure that citizens are not discouraged from appealing or applying to the ... Court because of fear that a crippling costs order might be made against them. The provision no doubt also recognises the public interest character of some applications to the ... Court. For that reason, there is often an understandable judicial reluctance ... in finding proceedings brought by citizens to be frivolous or vexatious"[44].

[32] Further in Mudie v Gainriver Pty Ltd (No 2) McMurdo P and Atkinson J said[45]:

"[35] The words "frivolous or vexatious" are not defined in the Act and should be given their ordinary meaning, unfettered by their meaning in the very different context of striking out or staying proceedings for an abuse of process. By the time an application for costs is made, the court knows the issues which have been litigated whilst a interlocutory applications, the court must to some extent speculate and must necessarily be cautious to ensure a deserving claimant is not unjustly deprived of the opportunity of a trial of the action. The Macquarie Dictionary defines "frivolous" as "of little or no weight, worth or importance; not worthy of serious notice: a frivolous objection. 2. characterised by lack of seriousness or sense: frivolous conduct ..." and "vexatious" as "1. causing vexation; vexing; annoying ...".

[36] Unquestionably, something much more than lack of success needs to be shown before a party's proceedings are frivolous or vexatious. Although in a different context, some assistance can be gained from the discussion of the meaning of these words in Oceanic Sun Line Special Shipping Company Inc v Fay where Deane J states that "oppressive" means seriously and unfairly burdensome, prejudicial or damaging and "vexatious" means productive of serious and unjustified trouble and harassment, meanings apparently approved by Mason CJ. Deane, Dawson and Gaudron JJ in Voth v Manildra Flour Mills Pty Ltd. Those meanings are apposite here.

[37] Whether proceedings are vexatious or oppressive will turn on the circumstances of the case and will include public policy considerations and the interests of justice".

[33] In that case Williams JA in a separate concurring judgment said of the term "frivolous or vexatious"[46]:

"[59] For the appellant to succeed the court must be satisfied that the appeal to the ... Court was "frivolous or vexatious" within the meaning of those words in the section of the legislation empowering the court to make an order for costs. Each word is used in everyday language and there is little doubt as to the ordinary meaning of each. The Shorter Oxford English Dictionary defines "frivolous" as follows:

'1. Of little or no value or importance, paltry; (of a claim, charge, etc) having no reasonable grounds. 2. Lacking seriousness or sense; silly.'

'1. Causing or tending to cause vexation, annoyance, or distress; annoying, troublesome. 2. In law. Of an action; instituted without sufficient grounds for winning purely to cause trouble or annoyance to the defendant.'"

[34] In Ebis Enterprises Pty Ltd v Sunshine Coast Regional Council[47] the Court of Appeal quoted with approval the reasons of the members of the court in Mudie (quoted above) and after doing so Chesterman JA[48] said[49]:

"[7] The notion underlying this elucidation of the section is that a proceeding with be frivolous if it lacked substance, so there was no reasonable basis for starting it so that its prosecution produced unjustified trouble for the party".

[35] In Stevenson Group Investments Pty Ltd v Nunn & Ors[50] the Court of Appeal had to consider a provision of the Integrated Planning Act 1997 with materially indistinguishable provisions with respect to costs. The reasons of the court were given by Margaret McMurdo P (Fraser JA and Mullins J agreeing). In her reasons Margaret McMurdo P said[51]:

"[84] Ordinarily, orders for court costs follow the event (that is, they are paid by the losing party) but costs are a statutory entitlement. The ordinary rule does not apply in the Planning & Environment Court where, under s 4.1.23(1), the ordinary rule is that each party must bear its own costs. It seems likely that the legislature intended in enacting s 4.1.23(1) to ensure that those acting in the public interest were not discouraged from seeking relief in the Planning & Environment Court by the fear of a crippling costs order against them: Mudie v Gainriver Pty Ltd (No 2). This Court in Mudie discussed the meaning of the term "frivolous or vexatious" in s 7.6(1A) Local Government (Planning & Environment) Act 1990 (Qld) (repealed), a provision in broadly comparable terms to s 4.1.23 IPA which replaced it. The plurality noted:

"The words 'frivolous or vexatious' are not defined in the Act and should be given their ordinary meaning, unfettered by their meaning in the very different context of striking out or staying proceedings for an abuse of process. ... The Macquarie Dictionary defines 'frivolous' as 'of little or no weight, worth or importance; not worthy of serious notice: a frivolous objection. 2. characterised by lack of seriousness or sense: frivolous conduct ...' and 'vexatious' as '1. causing vexation; vexing; annoying ...'.

Unquestionably, something much more than lack of success needs to be shown before a party's proceedings are frivolous or vexatious. Although in a different context, some assistance can be gained from the discussion of the meaning of these words in Oceanic Sun Line Special Shipping Company Inc. v. Fay where Deane J. states that 'oppressive' means seriously and unfairly burdensome, prejudicial or damaging and 'vexatious' means productive of serious and unjustified trouble and harassment, meanings apparently approved by Mason C.J. Deane, Dawson and Gaudron JJ. in Voth v. Manildra Flour Mills Pty Ltd. Those meanings are apposite here.

Whether proceedings are vexatious or oppressive will turn on the circumstances of the case and will include public policy considerations and the interests of justice." (citations omitted)

[85] The applicant raised novel arguments of law which had not previously been definitively determined. The judge was entitled to summarily reject those arguments, but that does not make the proceedings which raised them frivolous or vexatious. It would be unfortunate if litigants were discouraged from applying to courts to incrementally develop the law because of a fear that their proceedings may be labelled frivolous or vexatious, with all that flows from that label.

[87] Whether a case is frivolous or vexatious under s 4.1.23(b) is primarily a factual issue. In a borderline case such as this, different courts might reasonably reach different conclusions in determining that question. Only if the conclusion is one that could not be made on the evidence or there was error in the House v The King sense, does it amount to an error of law invoking this Court's discretion under s 4.1.56 to give leave to appeal".

[36] From the foregoing the following may be drawn. For public policy reasons the relatively unfettered discretionary power to award costs found under provisions such as s 34 of the Land Court Act 2000 or the rules of the Supreme Court is absent in proceedings in the Land Court under the Act. Rather it is controlled by s 882(3), ordinarily each party must bear its own costs. However s 882(4) does give the Land Court a discretionary power, "the court may order costs", in the circumstances provided by s 882(4)(a) to (g) inclusive. As the judgments in Mudie and Stevenson recognise that discretionary power is not necessarily liberally or energetically exercised even though the circumstances may suggest that an appeal or part thereof may have been "frivolous or vexatious". The consideration of whether a proceeding is "frivolous or vexatious" is primarily one of fact, upon which minds might reasonably differ. Moreover the certain "judicial reluctance" to find proceedings "frivolous or vexatious" reflects the concern that the threat of crippling costs may deter persons from applying to the court and also the public interest character of some proceedings in courts such as the Land Court or the Planning and Environment Court.

[37] In the context of an appeal against an order of costs consequent upon the finding under s 882(4)(b) the enquiry will be substantially factual. In many cases the first enquiry will be whether the condition for the exercise of the discretion existed, was the proceeding frivolous or vexatious? Depending upon that enquiry the focus may turn to whether the exercise of the discretion miscarried in some way. It is in the context of these enquiries that the reference in Stevenson to House v R[52] and to the familiar statement and principle concerning appeals against an exercise of discretion.[53] Consequently attention is given to the reasons given for the orders made.

[38] Consistently with the foregoing in argument before us the focus of much attention was upon the letter of 13 December 2013[54] and the way in which the learned member interpreted the letter and relied upon that interpretation in making the order appealed from.[55]

[39] It is apparent from the terms of the orders made on 16 April 2014[56] that the costs ordered were limited to those incurred from 13 December 2013 relating to ground 1 of the appeal. The learned member's reasons explain why he limited the cost to ground 1 to those related to the issues joined in ground 1 and why he concluded that the prosecution of ground 1 in the appeal after 13 December 2013 was frivolous in the circumstances. Central to the reasons is his holding that "as a fact" the "concession that the case was unmeritorious" so that the prosecution of the appeal was frivolous because that part of the appeal was "of little weight, worth or importance and not worthy of serious notice since the appellant did not believe it was likely to be successful".[57]

[40] With the greatest of respect to the learned member we are unable to agree. The letter of 13 December 2013 was, on the face of it, a genuine attempt to promote a compromise by way of a settlement of the appeal. In the context of a letter marked "without prejudice save as to costs" the use of the words such as "given the state of expert evidence" and "it is more likely than not" is not apt to indicate that the authors of the letter hold an opinion that their client's case is "of little weight, worth or importance and not worthy of serious notice". Rather it is a statement of a professional opinion that in the circumstances of the evidence it is more probable that there would be a certain outcome in this context: one that involved the upholding of the review maker's decision below to grant the licence but with the imposition of conditions.

[41] In argument before us counsel for the second respondents pressed the submission that as a matter of law the outcome proposed by the letter was not only so unlikely as a matter of fact so as to be frivolous but also that it proposed a resolution inconsistent with the case proposed in the further amended notice of appeal to the Land Court.[58] While it may be accepted that ground 1 of the notice of appeal sought an order setting aside of the review decision to grant the licence because of asserted deficiencies in the hydraulic modelling it should be noted that ground 2 has an alternative assuming the continuity of the licence albeit with conditions imposed.

[42] Be that as it may we are of the view that the conclusion drawn by the learned member below in paragraph 39 of his reasons is erroneous. It cannot be said that the letter of 13 December 2013 as a fact required the court to categorise the further prosecution of the appeal as frivolous. A concession as to the probability of an outcome is not per se a concession of frivolity in the maintenance of litigation. As the authorities clearly establish "something much more than a lack of success needs to be shown before a party's proceedings are frivolous or vexatious".[59] In our view the mischaracterisation of the letter of 13 December 2013 evident from paragraph [39] of the reasons below, is an error within the category of those discussed in House v R[60]. Moreover it is apparent from the reasons below that this error went not only to jurisdiction[61] but also to the exercise of the discretion made to award costs.

[43] Therefore subject to the second respondent's notice of contention the appeal should be allowed.

[44] The second respondents contend that the learned member should have found that the appellant's prosecution of Ground 1 of the appeal below was both frivolous and vexatious within the meaning of s 882(4) of the Act. Five reasons were advanced in support of this contention:[62]

(a) The appellant did not lead any evidence whatsoever as to what he asserted was the correct Manning's n value, and the reasons why that was the correct value, which was critical and necessary to make out his 'Ground 1' of appeal;

(b) The appellant did not seek to lead any evidence whatsoever as to flow data actually collected from Coral Creek, and the implications of such data for the hydraulic modelling, which was critical and necessary to make out his 'Ground 1' of appeal;

(c) The subject hydraulic modelling, which was the subject of the appellant's challenge, was on any reasonable view (and which his expert readily acknowledged) entirely consistent with:

• (i) the modelling for the 34 streams in the Bowen Basin conducted by the Australian Coal Association research Program, as expressly referred to and relied upon in the First Respondent's guidelines titled 'Watercourse Diversions - Central Queensland Mining Industry';

• (ii) various other engineering diversion projects in the Bowen Basin;

(d) The appellant did not lead evidence on one example of hydraulic modelling of a creek in the Bowen Basin for the purposes of a watercourse diversion that was consistent with his assertions in the appeal;

(e) The appellant persisted with allegations as to a lack of sensitivity analysis notwithstanding the second respondent's evidence (in the affidavit of Mr Steve Clark dated 16 September 2013, exhibit 4, paragraph 62) which noted, as a matter of fact uncontested by the appellant, that sensitivity analysis was undertaken.

[45] Further, the second respondents drew attention to paragraph [40] of the learned members reasons below[63] and submitted that carrying on the appeal 'without sufficient grounds in relation to the attempt to set aside the decision'[64] is in itself frivolous or vexatious.

[46] In his written submission,[65] counsel for the second respondents contended that ground 1 of the appellants substantive appeal was wholly unmeritorious, lacked substance, was of little weight, worth or importance, was not worthy of serious notice, and lacked substance. Further, he submitted that the prosecution of ground 1 was productive of serious and unjustified trouble and harassment[66].

[47] In an appeal of the nature heard and determined below an appellant might legitimately proceed in one of two ways. One is to lead a body of evidence (expert or lay) designed to prove that the decision appealed from is based on wrong premises and to demonstrate what is the likely true position. Another is in a sense negative, one designed to cast the premises or basis of the decision into so much doubt that the court is required to set the decision aside without being persuaded nor informed what is the likely true position. Often in litigation of this kind the relevant party's case may involve a combination of both of these aspects. Because the second way of proceeding is not designed to demonstrate or prove what is in fact the true circumstance does not make it an illegitimate tactic. It is not an approach that is, by its very nature, frivolous or vexatious though it may be the approach that is more vulnerable to such criticism than the first.

[48] As previously mentioned, in the appeal below the appellant called and relied upon an expert witness, Dr Rayburg. He was qualified to give expert evidence upon the matters the subject of the appeal. His evidence suggested that the methodology or the data relied upon in support of the decision appealed from was flawed for the reasons he gave. From what will appear hereafter on a number of grounds, Dr Rayburg's evidence was, after consideration in light of the other expert evidence and the cross-examination of the witnesses rejected by the learned member below. In some respects the learned member was critical of Dr Rayburg's evidence. In the hearing before us it was not suggested that the learned member was not entitled to reach the conclusions he did in respect of the expert evidence. But the circumstance that that expert evidence was, after consideration in light of the other evidence rejected does not, without more, demonstrate that the appellant was being frivolous or acting vexatiously in prosecuting his appeal relying, as he did upon the expert evidence called in his case.

[49] In submissions counsel was critical of the appellant for not leading evidence at the hearing as to what he says that the appropriate Manning n value should be. He submitted that it was necessary for the appellant to lead such evidence if it was to have any hope of establishing its case.

[50] Counsel for the appellant acknowledged that no evidence was led as to what the appropriate value for Mannings n should be. However, as counsel for the appellant pointed out during this appeal, the appellant at first instance ran a negative case as regards Mannings n. An examination of the record shows that the appellant through Dr Rayburg, sought to dispute the adequacy of the modelling undertaken for the respondents. The appellant also sought to further his case through the cross-examination of Dr Connor on this point.

[51] A similar argument was made by the second respondent concerning the failure of the appellant at the substantive hearing to lead evidence of flow data from Coral Creek.

[52] Again, the appellant conducted a negative case in this regard. At the hearing of the appeal the appellant relied upon the evidence of Dr Rayburg. It is plain from the reasons below that the learned member was unimpressed with Dr Rayburg's evidence preferring the evidence of Dr Connor upon this issue. However, it does not necessarily follow from that in a finding that the actions of the appellant were necessarily frivolous or vexatious. In our view the appellant was legitimately entitled to rely upon the expert evidence of Dr Rayburg which supported the appellant's substantive appeal.

[53] The next issue raised by the second respondents concerns the issue whether the hydraulic modelling undertaken for Coral Creek was consistent with the ACARP July 2002 report.

[54] Counsel for the second respondents correctly pointed out that, under cross-examination, Dr Rayburg conceded that the hydraulic modelling for Coral Creek was entirely consistent with the way hydraulic modelling was dealt with by ACARP July 2002 as regards 34 streams in the Bowen Basin with respect to the collection and use of flow data;[67] Dr Connor's opinion was entirely consistent in this regard with ACARP July 2002;[68] the hydraulic modelling for Coral Creek was consistent with the way hydraulic modelling was performed by GHD, SKM and Alluvium concerning creek diversions in the Bowen Basin;[69] and Dr Connor's opinion was also consistent with the hydraulic modelling performed by GHD, SKM and Alluvium.[70]

[55] Despite those concessions, Dr Rayburg maintained his assertion that the ACARP July 2002 report did not use a reliable methodology. This is made clear by the following extract from the transcript when Dr Rayburg was being cross-examined by Mr Johnston:[71]

"Now, may I suggest that this is a highly relevant guide, if you like, to what is an appropriate value for Manning's n to be adopted for Coral Creek, noting that Coral Creek is firstly, in the Bowen Basin; secondly, is an ephemeral creek; and thirdly enjoys at least some of the characteristics similar to these 34 creeks which have been streamed. What do you say to that?---I'd say, as I have mentioned before, and according to Land and Water Australia's report, these estimates are using the least reliable method of determining Manning's n. But they haven't been calibrated or tested to see that they're correct. They've just used the exact same methodology.

But Doctor ----?--- So I would be suspect that every one of these values is incorrect, to some degree".

[56] Again, the appellant was entitled to rely upon the evidence of this expert to support his case upon ground 1 of the substantive appeal.

[57] The same comments can be made for the second respondents contention concerning the failure of the appellant to lead evidence as to any example of hydraulic modelling of a creek in the Bowen Basin as regards water diversions. As counsel for the appellant puts it in his submissions in reply,[72] the appellant's expert evidence preceded on the basis of generally accepted hydraulic modelling practice, and that there was no evidence before his Honour that hydraulic modelling in the Bowen Basin was a separate and recognised area of scientific expertise. We agree.

[58] The second respondents also contend that the appellant unjustifiably persisted with allegations as to a lack of sensitivity analysis notwithstanding the affidavit of Mr Stephen Clark, where he said that:[73]

"61 Throughout the development of the existing case and design case models and adoption of the Mannings n, Ms Hube, Mr Canning and I undertook sensitivity testing of the model to ensure that it was producing reasonable and appropriate results.

62 This sensitivity testing involves altering various inputs to the model (such as the topography and roughness) and running these scenarios to assess the outcomes of these changes. For example, at several stages during the design process, the existing case model was run using Mannings n value of 0.030 and 0.080, to assess the sensitivity of the model."

[59] Although Dr Rayburg did agree with the reasoning behind the first respondent seeking modelling at 0.035 Manning's n,[74] the key point remains that Dr Rayburg gave evidence that what was undertaken was "not called sensitivity testing".[75]

[60] We now turn to the second respondents second ground of contention:[76]

"2 Further, the learned Member correctly found at paragraph [40] of the reasons that the appeal was 'carried on without sufficient grounds in relation to the attempt to set aside the decision', but his Honour erred in law in finding that the appeal could not be properly characterised as 'vexatious' on the basis that there was 'no evidence that [the appeal] was carried on only to cause annoyance' because such evidence on the Appellant's objective with his appeal, and such a finding, is not necessary in concluding that the appeal was 'vexatious'".

[61] Counsel for the second respondent correctly submitted that it is not necessary to have evidence on the subjective motivation of a party to a proceeding to conclude that the proceeding was vexatious for the purposes of s 882(4)(b) of the Act[77].

[62] Counsel for the second respondents developed this argument further in his submission:[78]

"26 Here, the learned member correctly found that the appeal was "carried on without sufficient grounds" (underlining added). That conclusion was, of itself, sufficient to find that the appeal was unmeritorious, lacked substance, was of little weight, worth or importance, was not worthy of serious notice, and lacked substance; and / or was productive of serious and unjustified trouble and harassment. That was the consequence of a proceeding being "carried on without sufficient grounds" (to satisfy the test of being "frivolous or vexatious") whatever the subjective intentions of Mr Reed. In other words, a party may not set out to cause any annoyance, and may have a genuine and proper objective or motivation with an appeal, and yet the proceeding may still be properly characterised as being "frivolous or vexatious" because of the reasons identified in Mudie".

[63] In response, the appellant submitted that what his Honour did in paragraph 40 was effectively to make a finding of fact that the conduct of the appellant was not sufficiently serious so as to amount to conduct that is vexatious within the dictionary meaning of that word. The appellant further submitted that the second respondents did not identify an error of principle sufficient to disturb the finding of fact.

[64] What is required to be assessed is not the subjective intention of a party as to the manner in which they conducted the proceedings, but an objective view. However, in reaching an objective view as to the manner in which proceedings are to be viewed, the actual conduct of the party is a material fact that can, and should, be taken into account in reaching an overall objective view[79].

[65] Even if the way in which the learned member expressed himself in paragraph [40] suggests error as submitted, we do not accept the submissions made on behalf of the second respondents in the notice of contention that the circumstances warranted a conclusion that the appellant was vexatious in prosecuting the appeal on ground 1 after the letter of 13 December. It will be recalled that the second respondents' contention is that because the appellant's conduct was frivolous in the relevant sense it was also vexatious because the bringing and prosecuting of, as it was submitted, an appeal of so little merit that it caused a serious and unfair burden to the second respondents that was productive of unjustified trouble and harassment[80]. Objectively speaking, by 13 December 2013 the potential deficiencies in the appellant's case were apparent. A negative case, even one relying upon expert evidence, carries with it obvious risks of failure so that an assessment similar to that expressed by the appellant's solicitors in the letter of 13 December 2013 that it was more likely than not the appeal based upon ground 1 would fail was correct. Nevertheless in our view it cannot be said that the appellant's case was of "little or no weight, worth or importance" or "not worthy of serious notice" or so characterised by a "lack of seriousness" nor so hopeless so as to be capable of being characterised as frivolous. Nor for these reasons could it be characterised as vexatious.

[66] The second respondents' grounds of contention should be rejected.

[67] For the reasons we have given the appellant should succeed in the appeal to this court. In an appeal to this court, which is made under s 64 of the Land Court Act 2000, the court has full discretionary powers to order costs of proceedings in the Land Appeal Court[81]. The appellant has been successful and in the premises costs of the appeal to this court should follow the event. In interlocutory proceedings in this court the second respondents pressed that the appellant provide security for costs. Ultimately this was resolved by way of undertakings given by the appellant on 23 July 2014. The appellant should be released from those undertakings.

[68] In the premises the orders of this court should be:

b. The orders of the Land Court in proceeding WAA114-13 made on 16 April 2014 be set aside;

c. The appellant be released from further compliance with his undertaking given on 23 July 2014;

d. The second respondents pay to the appellant his costs of and incidental to the appeal to this court (including reserved costs if any) to be assessed on the standard basis.

[1] The appeal to the Land Court was pursuant to s 877 and s 878 of the Act.

[2] See for example Reed v Department of Natural Resources and Mines & Ors [2014] QLC 1.

[3] Reed v Department of Natural Resources and Mines & Ors (No 2) [2014] QLC 6.

[4] Reed v Department of Natural Resources and Mines & Ors (No 3) [2014] QLC 13.

[7] Chief Executive, Department of Natural Resources and Mines.

[8] See order of this Court 13 June 2014.

[10] No doubt the particular relevance or weight to be given to the evidence was viewed in light of the reasons given for the dismissal of the appeal.

[11] Affidavit Peter William Stokes filed 4 March 2014; AR 1128.

[12] Affidavit Robyn Jane Spiller filed 24 March 2014; AR1155.

[17] See for example Reed v Department of Natural Resources and Mines & Ors (No 3) [2014] QLC 13 at [7], [20] and [34] ff.

[18] Letter 13 December 2013 p&e Law to McCullough Robertson, AR 1135.

[19] Letter McCullough Robertson to P&E Law, 23 December 2013, AR 1138.

[23] As an aside it might be observed that the power of the Land Court hearing proceedings under the Land Court Act 2002 is not as restricted. See further s 34 Land Court Act 2000.

[24] Reed v Department of Natural Resources and Mines & Ors (No 3) (2014) QLC 13 at [6].

[25] Reed v Department of Natural Resources and Mines & Ors (No 3) (2014) QLC 13 at [8] - [12].

[26] Reed v Department of Natural Resources and Mines & Ors (No 3) (2014) QLC 13 at [21] - [22].

[27] Reed v Department of Natural Resources and Mines & Ors (No 3) (2014) QLC 13 at [32].

[28] Reed v Department of Natural Resources and Mines & Ors (No 3) (2014) QLC 13 at [37] - [42].

[31] In making that concession counsel for the appellant referred to R v District Court: ex parte White (1966) 116 CLR 664 at 654 per Menzies J where his Honour stated "to establish some fault (e.g. illogical inference of fact would not disclose an error of law".

[33] Submissions of the appellant, page 12, para 40.

[36] De Tornouer v Department of Natural Resources and Water (2009) QLAC 6 at [16] per White J, McDonald P and Smith M.

[37] Respondent's written submissions page 5, para 19.

[42] Section 7.6(1) of the then Local Government (Planning and Environment) Act 1990.

[43] [2003] Qd R 271 at 283, [34].

[44] See further Chrismel Pty Ltd v Department of Natural Resources and Mines [2005] QLAC 0031 at [46].

[45] [2002] QCA 546; [2003] 2 Qd R 271 at 283-4, [35]- [37].

[46] Mudie v Gainriver Pty Ltd (No 2)[2003] 2Qd R 271 at 290-291, [59].

[47] [2001] QCA 15.

[48] With whom McMurdo P and Philippides J agreed

[49] Ebis Enterprises Pty Ltd v Sunshine Coast Regional Council [2011] QCA 15 at [7].

[50] [2012] QCA 351.

[51] Stevenson Group Investments Pty Ltd v Nunn & Ors [2012] QCA 351 at [84] ff.

[52] See para [37]; Stevenson Group Investments Pty Ltd v Nunn & Ors [2012] QCA 351 at [87].

[53] House v R [1936] HCA 40; (1936) 55 CLR 499 at 404-405.

[57] See para [39] of the reasons below quoted at para [15??] above.

[58] Exhibit 1 in the Appeal before us.

[59] See Mudie v Gainriver Pty Ltd (No 2) [2003] Qd R 271 at [36].

[60] [1936] HCA 40; (1936) 55 CLR 499 at 505.

[61] That is whether the conduct was "frivolous or vexatious" within s 882(4)(b).

[66] Thus it was submitted the prosecution of the appeal after 13 Dec 2013 was frivolous within the meaning of that term and because it was frivolous, it was also vexatious; see Stevenson Group Investments Pty Ltd v Nunn & Ors [2012] QCA 351 at [85]

[69] AB 76, TI-76 L 9-20; AB 77, TI-77 L 15-19; and AB 71 TI-71, L6.

[70] AB 76, TI-76 L15-20 and AB 77, TI-77 L 15-19.

[77] Recall that improper motive was not suggested in this case, see para [11A].

[79] This is not to say that the subjective intention is always irrelevant. If a subjective intention to vex the opposed party can be demonstrated it would no doubt go a long way to establish vexatious conduct.

[80] Recall Stevenson Group Investments Pty Ltd v Nunn & Ors [2012] QCA 351 at [89].

[81] See s 72 and s 34 Land Court Act 2000.