BUMA Australia Pty Ltd v Queensland Power Company Pty Ltd [2026] QSC 55

SUPREME COURT OF QUEENSLAND CITATION: BUMA Australia Pty Ltd v Queensland Power Company Pty Ltd [2026] QSC 55 PARTIES: BUMA AUSTRALIA PTY LTD (Applicant) v QUEENSLAND POWER COMPANY PTY LTD (First Respondent) AND QUEENSLAND POWER (AUSTRALIA) PTY LTD (Second Respondent) AND MILLMERRAN INVESTMENT COMPANY I PTY LTD (Third Respondent) AND MILLMERRAN INVESTMENT COMPANY II PTY LTD (Fourth Respondent) AND MILLMERRAN INVESTMENT COMPANY III PTY LTD (Fifth Respondent) AND MILLMERRAN INVESTMENT COMPANY IV PTY LTD (Sixth Respondent) AND MILLMERRAN INVESTMENT COMPANY V, PTE. LTD. (Seventh Respondent) AND MILLMERRAN INVESTMENT COMPANY VI, PTE. LTD. (Eighth Respondent) FILE NO/S: BS 13604/24 DIVISION: Trial PROCEEDING: Originating Application ORIGINATING COURT: Supreme Court DELIVERED ON: 28 April 2026 DELIVERED AT: Brisbane HEARING DATE: On the papers (written submissions received on 30 January, 6 February and 13 February 2026) -- 1 of 9 -- 2 JUDGE: Freeburn J ORDERS: The respondents pay the applicant’s costs of the proceeding: (a) on the standard basis up to and including 14 May 2025; and (b) on the indemnity basis on and from 15 May 2025. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND SETTLEMENTS – INFORMAL OFFERS AND CALDERBANK LETTERS – GENERALLY – where the applicant made a valid Calderbank offer – where the applicant’s offer was made prior to the close of a second round of pleadings, before the completion of disclosure, and before the parties had exchanged any lay or expert evidence – where the respondents did not accept the applicant’s offer – where the applicant was successful at trial – where the court awarded the applicant an amount slightly better than the applicant’s offer – where the usual rule provides that costs should follow the event – whether the applicant should be awarded costs on the indemnity basis from the date after the offer Alves v Patel [2005] NSWSC 841 BUMA Australia Pty Ltd v Queensland Power Company Pty Ltd [2025] QSC 338 Calderbank v Calderbank [1975] 3 All ER 333 S.H.A. Premier Constructions Pty Ltd v Niclin Constructions Pty Ltd (No 2) [2020] QSC 323 COUNSEL: D Clothier KC, M Doyle and J Hohl for the applicant P O’Shea KC, D Turner and T Smith for the respondents SOLICITORS: Corrs Chambers Westgarth for the applicant Herbert Smith Freehills Kramer for the respondents [1] This proceeding was tried over the best part of two weeks in November 2025. On 10 December 2025 I delivered reasons on the 26 issues that separated the parties. Those reasons are published as BUMA Australia Pty Ltd v Queensland Power Company Pty Ltd (2025) QSC 338 (the Reasons). [2] Subsequently, on 12 January 2026, orders were made based on the resolution of the 26 issues and awarding BUMA $27,760,994 plus GST and interest under the Contract Mining Agreement, a total of (as at 12 January 2026) $32,052,279. [3] The remaining issue is costs. BUMA, the applicant, was largely successful. And so, pursuant to the general principle of ‘costs follow the event’ in rule 681(1) of the -- 2 of 9 -- 3 Uniform Civil Procedure Rules 1999 (Qld), BUMA would be entitled to an award of costs. [4] However, BUMA seeks its costs on the indemnity basis because, in May 2024, BUMA made an offer to resolve the proceeding on the basis that the respondents, MPP, pay BUMA $27 million plus GST and interest. That offer was not accepted. BUMA argues that the court’s ultimate orders awarding BUMA $27,760,994 plus interest and costs means that BUMA has obtained orders substantially more favourable than its offer. BUMA seeks costs on an indemnity basis from 15 May 2025 – the day after its offer. [5] MPP argues that the appropriate order is that MPP pay BUMA’s costs of the proceeding to be assessed on the standard basis. The principles [6] There is no dispute that the offer made by BUMA in May 2025 was a valid offer made pursuant to the principles stated in Calderbank v Calderbank.1 That being the case, the approach of the court that guides the exercise of the discretion was summarised by Bond J in S.H.A. Premier Constructions Pty Ltd v Niclin Constructions Pty Ltd (No 2):2 [10] First, the usual rule is that where the Court orders the costs of one party to litigation to be paid by another party, the order is for assessment of those costs on the standard basis. [11] Second, the Court will depart from the usual rule where the circumstances of the case warrant that course. [12] Third, one feature which may justify a departure from the usual rule is the rejection of a Calderbank offer to compromise. However, it is wrong to think that an offeree’s rejection of a Calderbank offer gives rise to a presumption that the offeree should pay the offeror’s costs on an indemnity basis if the offeree obtains a less favourable result than contained in the offer. Rather, the correct approach is to consider whether the rejection of the Calderbank offer, in all the circumstances, justifies a departure from the usual rule. [13] Fourth, the balance between the competing policy considerations of, on the one hand, appropriately encouraging settlement and, on the other, not discouraging potential litigants from bringing their disputes to the courts, is found by applying a test of “reasonableness”. The policy rationale for requiring the offeree to indemnify the offeror for costs incurred after the offeree’s unreasonable rejection of an offer is that, from the time of the unreasonable rejection, notionally the real cause and occasion of the litigation is the unreasonable attitude adopted by the offeree. [14] Fifth, deciding the critical question of whether the offeree’s rejection of the offer is unreasonable in all the circumstances will always involve matters of judgment and impression. However, the discretion as to costs must be exercised 1 [1975] 3 All ER 333. 2 [2020] QSC 323 at [10]-[14]. Footnotes omitted. -- 3 of 9 -- 4 judicially and is subject to review in accordance with the principles set out in House v The King (1936) 55 CLR 499 at 505. Without being exhaustive concerning the considerations which should be taken into account, a court should ordinarily have regard to at least the following matters: (a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree’s prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; and (f) whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it. [emphasis original] [7] The parties’ written submissions3 considered each of those factors in turn. I will do the same (but in a slightly different order). The clarity of the offer and foreshadowed consequences [8] The May 2025 offer was expressed in clear terms. The offer expressly referred to Calderbank v Calderbank and (twice) stated that, in the event it was not accepted, and the judgment of the court was more favourable than the offer, BUMA would rely on the offer in support of an application for indemnity costs. The stage of the proceeding [9] The proceedings were commenced in October 2024. BUMA filed and served its first statement of claim the following month. The parties engaged in a second round of pleadings. At the time of a case management review before Hindman J on 14 May 2025 – the same day as the offer – the only outstanding pleading was a rejoinder which MPP was directed to provide by 27 May 2025. Her Honour also made directions for lay and expert evidence. [10] MPP makes a number of related submissions. First, MPP makes the point that the pleadings had not closed. That is something of a simplification and perhaps a technical rather than a substantive point. Only MPP’s rejoinder was outstanding from the second round of pleadings. These were sophisticated mining entities with access to experienced commercial legal advice. Their commercial relationship ceased in September 2024 and from that point on they put their views on their respective rights under their contract through their legal teams. [11] It is unrealistic to act on the basis that these parties left it until after the formal close of pleadings to properly investigate the respective claims and counterclaims and to avail themselves of proper legal advice. If they did leave it until then, that was a 3 Applicant’s Submissions as to Costs dated 30 January 2026 (CFI#94); Respondents’ Submissions as to Costs dated 6 February 2026 (CFI#96); Applicant’s Reply Submissions as to Costs dated 13 February 2026 (CFI#98). -- 4 of 9 -- 5 commercial risk. And it is significant to note that no evidence suggests that there were any late-breaking issues. [12] Second, MPP submits that, at the time of the offer, disclosure was not complete and remained ongoing until shortly before trial. Again, there is some simplification involved here. As an affidavit of BUMA’s solicitor, Mr Muir, explains: It is not the case that there was a continuous process of disclosure in this proceeding from before BUMA's offer to shortly before trial. It is more accurate to say that: (a) between February and April 2025, disclosure took place pursuant to orders of the Court; and (b) between April 2025 and the trial in November 2025, there were some instances of supplementary disclosure by both parties. The instances of supplementary disclosure were, cumulatively, much more limited in scope than the disclosure process that took place pursuant to the orders of the Court.4 [13] No evidence has been adduced to the effect that the supplementary disclosure by BUMA contained new or decisive material. [14] Third, MPP points out that, at the time of the offer, no lay evidence or expert evidence had been exchanged.5 [15] Fourth, there is an unsettling undercurrent in those three submissions by MPP. The idea seems to be that a party is not obliged to properly consider a Calderbank or similar offer until the pleadings are closed, and disclosure is substantially complete, and the evidence is in. Such an approach would defeat the objective of Calderbank offers of encouraging offers of settlement and a reasonable approach to settlement. [16] In Alves v Patel,6 Adams J said: When dealing with the issue of costs in the context of settlement negotiations it is important to recognize, as it seems to me, that such negotiations often take place before the trial commences, well before the evidence is concluded and often before its detail is clear. Moreover, as the matter proceeds, the absence of settlement in the period — sometimes lengthy — before trial will often lead to further investigation and the collection of further evidence. The notion that Calderbank offers can safely be ignored without costs consequences just because the offeror’s case is not ready for trial or all pre-trial requirements as to service of reports or supply of particulars have not been complied with cannot be right: much will depend on a commonsense approach to the case and the particular circumstances at the time of the offer… 4 The affidavit of Mr Matthew Graeme Muir affidavit affirmed and filed on 13 February 2026 (CFI#97) at [7] and [8]. 5 There is one exception – an affidavit of Mr Hunter filed in support of the originating application. Note that there was a similar argument about the offer pre-dating the filing and service of evidence in McGlashan v QBE Insurance (Australia) Ltd (No 4) [2014] NSWSC 882 although in that case the discretion being considered was the discretion by reason of an offer under the rules. 6 [2005] NSWSC 841. -- 5 of 9 -- 6 …The mere fact that a defendant does not know precisely what the value of the plaintiff’s claim or the scope of the evidence proposed to be led in support of it when a Calderbank offer is made does not mean that it is not unreasonable for such an offer to be ignored. After all, the defendant is not without the means of independently estimating the value of the case. Offers are very often made and accepted because the value of the claim is difficult to estimate. Much also depends also on the extent to which the offer is exceeded by the judgment. In this case, moreover, the defendant’s consideration of the offers was simplified by the plaintiff’s very strong case on liability, which was admitted (in careful language) well before the trial.7 [emphasis added] [17] In my view, there are sound reasons why settlement negotiations often take place before the trial, and before the evidence is in, and often quite early in the litigation process. Parties to litigation have often articulated their position on the controversy before the proceeding has commenced. They frequently act sensibly by obtaining legal advice before the litigation commences or at least at the outset of the litigation. And the risks, costs, uncertainties and reputational dangers associated with litigation mean that no reasonable sophisticated commercial party would be likely to embark on litigation (whether as a plaintiff or as a defendant) without promptly obtaining legal advice on the prospects of that litigation. [18] MPP’s submission that the offer came too early in the proceedings treats the litigation as if it were an investigation procedure, with MPP entitled to await the conclusion of that investigative process before considering offers. Such an approach would leave a very small window of opportunity for a sensible offer of settlement to be made and rationally considered. In fact, the law, it has been remarked, should not encourage the use of a Calderbank offer delivered shortly before trial — when the offeree might be expected to have its focus on a number of matters and will already have incurred considerable costs.8 Courts have discouraged the use of Calderbank offers ‘as an indiscriminately wielded tactical weapon’.9 [19] A better approach is to regard litigation as a process for dispute resolution rather than an investigative procedure. In the ordinary course of events, especially for sophisticated commercial parties, the investigation will have been undertaken before or at the commencement of that dispute resolution process and the parties will have corresponded setting out their arguments, often in great detail. In that context, early offers of settlement are a reasonable step designed to avoid the significant and often disproportionate costs as well as the risks of the litigation. [20] Of course, each case will depend on its own facts. But, in the absence of evidence, the court should be reluctant to assume that a party in receipt of an offer early in the litigation is somehow disabled from properly and fairly considering that offer. 7 Ibid at [14] and [15]. This passage was quoted with evident approval by Williams J in Built Qld Pty Ltd v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd (No 3) [2022] QSC 62 at [14] and [15]. 8 See Dal Pont, Law of Costs, 5 th ed (2021) at [13.91] citing Colgate Palmolive Ltd v Markwell Finance Ltd [1990] RPC 197 at 200–201; University of Western Australia v Gray (No 21) (2008) 249 ALR 360; [2008] FCA 1056; Al Amanah College Inc v Minister for Education and Training (No 4) [2012] NSWLEC 26. 9 Dal Pont (supra) citing Maclean v Rottnest Island Authority [2001] WASCA 323 at [36]. See also De Groot v The Nominal Defendant [2005] NSWCA 61 at [261]. -- 6 of 9 -- 7 [21] In this case, the parties were sophisticated mining entities arguing about significant sums of money. The controversy matured as BUMA reached the end of its tenth operating year. For example, in October and November 2024 the parties openly disagreed on the OBIA reconciliation amount.10 The proceedings were commenced at this time and lawyers were engaged. It is likely that from this point on the parties and their lawyers were actively considering the merits or each other’s claims and counterclaims. And the likelihood is that each side had, to use the language of Adams J in Alves v Patel, the capacity to independently estimate the value of each other’s claims and counterclaims. [22] For those reasons I do not accept MPP’s submission that the stage of the proceeding at which the offer was made is a consideration weighing against the court departing from the usual rule to award costs on the standard basis. Time allowed to consider the offer [23] MPP does not dispute the reasonableness of the period of 14 days allowed to consider the offer. The extent of the compromise [24] MPP submits that the material terms of the offer were that MPP was to pay $27 million representing approximately 97% of BUMA’s claimed amount, exclusive of GST and interest). The order made was that MPP pay BUMA $27,760,994 (plus GST and interest) which is only a modest 2.8% improvement on the offer (again, excluding GST and interest). In other words, the offer and the court’s judgment are a close run thing. [25] MPP points out that, in return for the offer of $27 million – a figure quite close to its ultimate liability – MPP was invited to abandon the entirety of its counterclaim. However, that is too one-dimensional. The claims and the counterclaims overlapped in significant ways. [26] On the other hand, it is going too far for BUMA to submit that the sum by which the court’s award exceeded the offer, that is roughly $761,000, “represented a substantial discount to the overall sum that BUMA claimed”. [27] It was a meaningful offer of compromise that proved to be close to the mark. That was not the case for MPP’s counteroffer. By a letter in October 2025, MPP rejected BUMA’s May offer and made a counteroffer under the rules or alternatively pursuant to Calderbank principles. That counteroffer was for BUMA to pay MPP approximately $11.8 million. As can be seen, the parties were quite some distance apart. The prospects of success assessed at the date of the offer [28] The reasonableness of the offer, or the unreasonableness of its rejection, is clearly influenced by the strength of the offeror’s case or defence, as the case may be.11 Here 10 See the Reasons at [65]-[68]. 11 Dal Pont (supra) at [13.88]. -- 7 of 9 -- 8 the resolution of the 26 issues depended on issues of contract interpretation as well as some lay and expert evidence. [29] As to the Hired Fleet Variation issues, BUMA contends, somewhat colourfully, that “MPP invited the Court to disregard the language of the Variation in favour of its dubious assertions about commerciality”. It is true that the interpretation that succeeded was that aligned with the clear words. But that does not mean the interpretation task was an easy one. For example, the interpretation task involved understanding the commercial context in which the parties came to negotiate the variations. Surprisingly frequently parties are at loggerheads as to the proper interpretation of their commercial agreements. [30] The controversy was similar for the OBIA Reconciliation issue. The interpretation that was favoured was the interpretation that aligned with the clear words. Where there is a contested interpretation, there will often be a preference for what is perceived to be the clear words. [31] The Reject Coal issues had some complexity with 32 disputed deliveries and several sub-issues affecting many of those deliveries. BUMA emphasises the total failure of consideration of the sub-issue on which MPP failed. But there was also the sub-issue as to whether the clauses by which MPP imposed the Reject Price amounted to an unenforceable penalty. On that issue BUMA failed, and the Reasons record that I took the view that it was hard to imagine a less appealing case for an unenforceable penalty.12 [32] MPP argues that its arguments were open and reasonable and not very likely to fail and certainly were not, as appears implicit in the offer, likely to fail at an assumed probability of 97% against MPP. However, the court’s approach to offers and prospects is not a mathematical exercise. [33] Overall, some care is needed to ensure that genuinely contested issues are not viewed with the piercing clarity of hindsight.13 There was a contest. The prospects of the various issues covered a spectrum. Departure from the usual rule? [34] As explained above, the correct approach is to consider whether the rejection of the Calderbank offer, in all the circumstances, justifies a departure from the usual rule that costs are awarded on the standard basis. Here, there was a clear Calderbank offer made by one sophisticated mining entity to another which specified the potential cost consequences if the offer were rejected. The offer was made at about the midpoint in the litigation when both litigants had the capacity to independently assess the value of each other’s claims and counterclaims. The offer gave the offeree a reasonable time to consider the offer. [35] BUMA’s offer did not include much of a discount on the claim. However, MPP took some five months to respond, and its response rejected the BUMA’s offer outright and criticised BUMA’s offer as proposing “a near total capitulation on the part of MPP”. MPP stated that such an outcome was not an accurate reflection of the merits 12 Reasons at [231]. 13 Hindsight and the authorities are discussed by Dal Pont (supra) at [13.87]. -- 8 of 9 -- 9 of the issues to be determined. In fact, as events turned out, BUMA’s offer was close to the mark and MPP’s counteroffer was some distance from an accurate reflection of the merits. [36] All of that illustrates that BUMA made an assessment of the prospects that proved to be significantly more accurate that MPP’s assessment. In commercial cases there are sound reasons for giving a full indemnity to those who properly and accurately assess the prospects of a case, especially when the prospects of the case do not centre on contested factual issues or questions of credit or other matters of considerable difficulty and uncertainty.14 Giving a full indemnity in those situations encourages the making or reasonable offers and the serious consideration of reasonable offers. [37] There are also two idiosyncratic reasons for giving effect to the Calderbank offer in this case. [38] First, in the course of the Reasons, I referred to the evidence that MPP had looked for ‘possible cost reduction initiatives’ and a ‘cost neutral outcome’ with the exit of BUMA as the mining contractor from September 2024.15 The evidence was that MPP wanted to ‘optimise’ its commercial position for completion. I rejected the idea that the court should view the evidence with a jaundiced or sceptical eye because MPP may have had the (hardly surprising) objective of optimising its commercial position. [39] However, on the issue of costs, this evidence rather demonstrates that MPP’s approach to the claims and counterclaims was to optimise its own commercial position. That makes it entirely appropriate for the court to give effect to a Calderbank offer which has proved to be a reasonable offer. No doubt MPP rejected BUMA’s offer because it took a different view of the case and wished to optimise its commercial position. [40] Second, MPP’s counteroffer expressly gave notice that it would be unreasonable for BUMA not to accept MPP’s counteroffer and that, if MPP obtained a judgment more favourable than its counteroffer, MPP would seek an order for indemnity costs against BUMA. [41] In those circumstances both parties adopted what was quintessentially a commercial approach and envisaged that, if either offer or counteroffer was bettered, the opposite party would pay the offeror’s costs on an indemnity basis from the time of the offer. [42] In the circumstances, MPP’s rejection of BUMA’s Calderbank offer justifies a departure from the usual rule that costs are awarded on the standard basis. For the reasons explained, MPP should pay BUMA’s costs of the proceeding on the standard basis up to and including 14 May 2025 and thereafter on the indemnity basis. 14 See Dal Pont (supra) at [13.88]. 15 Reasons at [70]. -- 9 of 9 --