Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 16) [2018] QLC 40

LAND COURT OF QUEENSLAND CITATION: Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 16) [2018] QLC 40 PARTIES: Cherwell Creek Coal Pty Ltd (ACN 063 763 002) (applicant) v BHP Queensland Coal Investments Pty Ltd (ACN 063 763 002) QCT Resources Pty Ltd (ACN 010 808 705) BHP Coal Pty Ltd (ACN 010 595 721) Mitsubishi Development Pty Ltd (ACN 009 779 873) QCT Investments Pty Ltd (ACN 010 487 831) Umal Consolidated Pty Ltd (ACN 000 767 386) QCT Mining Pty Ltd (ACN 010 487 840) (respondents) FILE NO: MRA1332-08 DIVISION: General division PROCEEDING: Hearing of an application for disclosure DELIVERED ON: 30 October 2018 DELIVERED AT: Brisbane HEARD ON: 18 October 2018 HEARD AT: Brisbane PRESIDENT: FY Kingham ORDER: The Court will make orders to give effect to these reasons after hearing from the parties. -- 1 of 24 -- 2 CATCHWORDS: PROCEDURE-CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – DISCOVERY OF DOCUMENTS – PRODUCTION AND INSPECTION OF DOCUMENTS – where documents referred to in the summary of evidence of a witness for a party – whether documents are directly relevant to an allegation in issue – whether documents in the possession or control of a party or an associated company – whether a sabre order should be made- where disclosure ordered and, in the alternative a sabre order was made Land Court Act 2000, s 22(3) Land Court Rules 2000, r 4 Uniform Civil Procedure Rules 1999, r 5, r 211, r 367(1) ACCC v Prysmian Cavi E Sistemi Energia Srl (No 8) [2014] FCA 376, cited Ali v Khan [2015] NSWSC 1961, cited Amos v Brisbane City Council [2012] QCA 206, cited Balnaves v Smith [2008] 2 Qd R 413, cited Century Drilling Ltd v Gerling Australia Insurance Co Pty Ltd [2004] 2 Qd R 481, cited Erskine v McDowell [2001] QDC 192, cited Equuscorp Pty Ltd v Rural Finance Pty Ltd [2001] QSC 259, cited Gill v Fairfax Media Ltd (No 1) [2012] FCA 964 Groves v Australian Liquor Hospitality and Miscellaneous Workers Union & Anor [2004] QSC 142, cited Lilypond Constructions Pty Ltd v Homann [2006] 1 Qd R 411, cited MacArthur Central Shopping Centre Pty Ltd v Valuer-General [2016] QLC 10, cited Malec v J.C. Hutton Pty Ltd (1990) 169 CLR 638 Peninsula Shipping Lines Pty Ltd & Anor v Adsteam Agency Pty Ltd & Anor [2008] QSC 317, cited Psalidis v Norwich Union Life Australia Ltd (2009) 29 VR 123, cited Re Tecnion Investments Ltd [1985] BCLC 434, cited Robson v Reb Engineering Pty Ltd [1997] 2 Qd R 102, cited RP Data Ltd v Property Data Solutions Pty Ltd [2006] QSC 214, cited Sabre Corp Pty Ltd v Russ Kalvin's Hair Care Co (1993) 46 FCR 428, cited Southern Equities Corporation Ltd v Arthur Andersen (No 5) [2001] SASC 335, cited Taylor v Santos Ltd (1998) 71 SASR 434, cited -- 2 of 24 -- 3 APPEARANCES: G Gibson QC, with J Chapple and N Loos (instructed by Holding Redlich Lawyers), for the applicant S Doyle QC, with A Stumer and F Lubett (instructed by Allens), for the respondents Background [1] Cherwell Creek claims compensation from BMA for loss of opportunity to commercialise a coal resource on an area of land over which it previously held an exploration permit (EPC545). In compliance with case management directions, it filed a summary of the evidence by one of its directors, Mr Christopher Wallin. BMA seeks orders requiring Cherwell Creek to disclose documents referred to in Mr Wallin’s summary. BMA relies, alternatively, on the Court’s power to order disclosure by a party1 or to make directions.2 [2] Cherwell Creek opposed the application on a number of grounds. [3] Firstly, it argued there is no obligation on Cherwell Creek to disclose the documents because they are not relevant to any issue on the pleadings. BMA said Cherwell Creek identified their relevance by Mr Wallin referring to them in his summary. Further, as a matter of fairness, it should be able to inspect documents that Cherwell Creek will deploy against it at trial. [4] Secondly, Cherwell Creek denied the documents were in its possession or power. The documents relate to other mines operated by companies associated with QCoal Pty Ltd. Although QCoal is a 50% shareholder in Cherwell Creek, the other 50% being held by Mr Wallin personally, Cherwell Creek has no interest in those other companies. It has no presently enforceable legal right to inspect and produce the documents. BMA said the close connection between Mr Wallin and QCoal with both Cherwell Creek and the other associated companies suggests otherwise. It is also reasonable to assume Cherwell Creek will have a copy of the documents Mr Wallin referred to in his summary. [5] In any case, given the close relationship and Mr Wallin referring to the documents in his summary of evidence, BMA said this is an appropriate case in which to make a 1 Uniform Civil Procedure Rules 1999, r 211. 2 Land Court Act 2000, s 22(3); UCPR r 367(1); Land Court Rules 2000, r 4. -- 3 of 24 -- 4 sabre3 order requiring Cherwell Creek to take reasonable steps to obtain them. Cherwell Creek said BMA should rely on the non-party disclosure rules, which it had already invoked by issuing notices to the associated companies. [6] Those arguments raise the following questions, which I will address in broad terms, before considering the particular categories of documents sought by BMA: Are the documents relevant to an issue on the pleadings? As a matter of fairness, should the Court exercise its directions power to require Cherwell Creek to disclose them? Are the documents in the possession or control of Cherwell Creek, and, if not, should the Court require Cherwell Creek to take reasonable steps to obtain them? [7] Cherwell Creek also raised confidentiality as an issue for some of the documents. At the hearing, counsel asked to be heard further about that, if necessary, once a decision is made on the application. That is a sensible course to adopt, given there are some outstanding disputes about other documents subject to a confidentiality regime that I will determine next month. Are the documents directly relevant to an issue on the pleadings? [8] The test for disclosure is whether the document is directly relevant to an issue on the pleadings.4 That requires a party to do two things. Firstly, to identify a particular allegation in issue on the pleadings to which the document relates. Secondly, to show how the document tends to prove or disprove that allegation. What allegations are in issue on the pleadings? [9] The pleadings define the ambit of the disclosure obligation. The applicant must identify an allegation in issue on the pleadings to which the document relates. [10] However, that must be undertaken with a view to implementing the purpose of the UCPR stated in r 5(1), to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense. It does not require a microscopic examination of each factual averral and response.5 3 Sabre Corp Pty Ltd v Russ Kalvin's Hair Care Co (1993) 46 FCR 428. 4 UCPR, r 211(1)(b). 5 Peninsula Shipping Lines Pty Ltd & Anor v Adsteam Agency Pty Ltd & Anor [2008] QSC 317, [43]. -- 4 of 24 -- 5 [11] Cherwell Creek’s submissions on some categories of documents suggest that an allegation in issue is narrowed by the explanation given for its denial.6 A party is required to explain its denial,7 but that does not mean the allegation is only in issue to the extent of the explanation. The function of the explanation is to make explicit whether the defendant will mount a positive case in respect of the allegation denied. Cherwell Creek still bears the onus of proving the allegation. It is still in issue. 8 [12] The following are the allegations BMA says are in issue. I will later consider the relevance of the documents sought by reference to those allegations. Cherwell Creek would have taken various steps to prepare to commercialise the coal resource and apply for a mining lease. Cherwell Creek would have submitted an EMP and draft EA with the Environmental Protection Authority and obtained approval for them. Cherwell Creek would have sold its interest in the coal resource on or about 8 May 2008 or in about July 2012. Cherwell Creek would not have proceeded to develop the coal resource because of constraints on rail and port facilities. Cherwell Creek had the financial capacity to provide a financial assurance in respect of its obligations under the Environmental Protection Act. Cherwell Creek had the financial ability, with the assistance of QCoal, to carry on the proposed mining operation. Cherwell Creek’s past performance was satisfactory, taking into account the paucity of drilling on the area of EPC545 from 1995 to 2008. How are the documents relevant to the allegation in issue? [13] For a document to be directly relevant to an allegation in issue, it must be so related to the allegation that either alone, or in connection with other facts, it tends to prove or disprove or render probable or improbable the truth of the allegation.9 [14] Cherwell Creek argued many of the documents relate only to credit and there is no duty to disclose documents of that nature.10 BMA accepted the documents may affect Mr Wallin’s credit, but says they are also directly relevant to allegations in issue. It can be difficult to draw a line between relevance to credit and relevance to an 6 E.g. Outline of Submissions by Cherwell Creek Coal Pty Ltd in Response to BMA’s Amended General Application for Disclosure filed 30 October 2018, (59), (42), (89). 7 UCPR, r 166(4). 8 Groves v Australian Liquor Hospitality and Miscellaneous Workers Union & Anor [2004] QSC 142, [14]. 9 UCPR, r 211(1)(b); Southern Equities Corporation Ltd v Arthur Andersen (No 5) [2001] SASC 335, [7]–[8]; Robson v Reb Engineering Pty Ltd [1997] 2 Qd R 102, 105. 10 Outline of Submissions by Cherwell Creek Coal Pty Ltd in Response to BMA’s Amended General Application for Disclosure filed 30 October 2018, (8), (42)(a), (49), (65), (86). -- 5 of 24 -- 6 allegation a party must prove. The nature of these proceedings, the issues the Court must determine, and how Cherwell Creek has framed its case are all key considerations in drawing that line. [15] Cherwell Creek has brought a statute-based claim for compensation for loss of opportunity to commercialise the coal resource.11 The Court must take into account a number of factors that will determine whether Cherwell Creek lost an opportunity it would otherwise have realised, but for the Amending Act.12 [16] In this case, the realisation of the opportunity to commercialise the coal resource does not depend solely on a decision by Cherwell Creek. It must establish that it is more likely than not that the Minister would have granted it the necessary mining lease and that it would have gone on to operate the mine or sell it. That, in turn depends on the Court being satisfied that it is more likely than not that Cherwell Creek could have taken certain steps required to secure a mining lease and operate or sell the mine, and that it would have done so. [17] Whether it could have taken the necessary steps is a question of capacity. Whether it would have done so is a question of intention. In either case, capacity or intention, Cherwell Creek relies on Mr Wallin’s evidence about what he (Cherwell Creek) could and would have done. [18] In his summary, Mr Wallin has referenced what he caused other companies associated with QCoal to do at various times for other mining projects. BMA described that as Mr Wallin’s track-record. Cherwell Creek says Mr Wallin’s track-record is not an issue on the pleadings. [19] Mr Wallin’s track-record may not be directly in issue, but Cherwell Creek’s is. The allegations identified for this application are about past hypotheses. This means the Court must form an estimate of the likelihood of those hypotheses having occurred, had the Amending Act not commenced. Proving a past hypothesis is different from proving an historical fact.13 11 Mineral Resources Act 1989, s 334ZJ. 12 Mineral Resources (Peak Downs Mines) Amendment Act 2008. 13 Malec v J.C. Hutton Pty Ltd (1990) 169 CLR 638, 639–40. -- 6 of 24 -- 7 [20] In this case, Cherwell Creek draws on Mr Wallin’s (and the QCoal companies’) track- record to prove past hypotheses about both its capacity and its intention. [21] An example of an allegation about capacity is that Cherwell Creek pleaded it would have had the necessary technical and financial capacity to develop and operate the mine. This, it explained, is because it would have been able to draw upon the resources of QCoal.14 [22] An example of an allegation about intention is that Cherwell Creek pleaded it would have sold the mine in July 2012. It explained this was because other entities associated with the applicant were looking to develop much larger projects (the Jax and Drake mines).15 [23] Whether dealing with allegations of capacity or intention, Mr Wallin relies on historical facts about QCoal and its other mines, and what he personally did or decided, to prove what Cherwell Creek could or would have done. Particularly, he explains how his method of developing coal mines differs from that of publicly listed coal companies. That is Mr Wallin’s (and QCoal’s) track-record. [24] If evidence about those matters went to credit only, Cherwell Creek could not lead it. In general terms, documents evidencing such matters are directly relevant because of the way in which Cherwell Creek has framed its case. As a matter of fairness, should the Court exercise its directions power to require Cherwell Creek to disclose them? [25] BMA argued that, in any case, the Court should exercise its directions power to require Cherwell Creek to produce any documents referred to in Mr Wallin’s summary. If Cherwell Creek wishes to rely on a document, it should disclose it so BMA can ascertain whether Mr Wallin’s evidence about it is accurate and complete. 14 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (5)(h); Applicant’s Answer to the Request (Dated 8 March 2017) for Further and Better Particulars of the Third Amended Annexure A to the Originating Application filed 26 April 2017, (19)(d). 15 Applicant’s Answer to the Request (Dated 8 March 2017) for Further and Better Particulars of the Third Amended Annexure A to the Originating Application filed 26 April 2017, (12)(a)(ii)(E)(I). -- 7 of 24 -- 8 [26] Counsel for Cherwell Creek said that, at trial, it will not rely on any of the categories of documents requested. That does not mean they are not relevant or that, in fairness, they should not be disclosed. [27] BMA drew an analogy with r 222, which allows the Court to order a party to produce a document referred to in their affidavit or pleading.16 BMA accepted the rule does not apply to a summary of evidence. However, the Court has the power to make directions. For example, a Judge of the Federal Court used a directions power to order production of documents referred to in a proof of evidence, even though the equivalent Federal Court rule to r 222 did not apply to proofs of evidence.17 [28] The purpose of r 222 is to give the opposite party the same advantage as if the documents had been fully set out in the affidavit or pleadings.18 The rationale for the rule is that a party can assume the other party relies on the document or at least regards it as material to its case. If a party refers to a document that is not material, it may still be required to produce it for inspection. 19 [29] However, the courts require production only if there is a clear and unambiguous reference to a document in the pleading or affidavit. 20 An implication or inference as to the existence of a document is insufficient.21 [30] I accept it is open to the Court to use its directions power (not r 222) to require production of the documents referred to in Mr Wallin’s summary. Are the documents in the possession or control of Cherwell Creek, and, if not, should the Court require Cherwell Creek to take reasonable steps to obtain them? [31] The other requirement for disclosure is that the documents are in the possession or control of the party.22 Cherwell Creek argued a large number of documents requested by BMA are not within its possession or control, but are instead within the possession or control of other companies associated with QCoal. 16 UCPR, r 222. 17 Gill v Fairfax Media Ltd (No 1) [2012] FCA 964, [25]–[26]. 18 RP Data Ltd v Property Data Solutions Pty Ltd [2006] QSC 214, 6. 19 Century Drilling Ltd v Gerling Australia Insurance Co Pty Ltd [2004] 2 Qd R 481, [12]. 20 Lilypond Constructions Pty Ltd v Homann [2006] 1 Qd R 411. 21 Balnaves v Smith [2008] 2 Qd R 413; Amos v Brisbane City Council [2012] QCA 206, 2. 22 UCPR, r 211. -- 8 of 24 -- 9 [32] BMA denies that argument is a barrier to the orders it seeks, for two reasons. Firstly, having regard to the relationship between Mr Wallin, Cherwell Creek and the companies alleged to possess the documents, I can infer Cherwell Creek has the right or actual immediate ability to obtain the documents.23 Secondly, the Court has power to make a sabre order to require Cherwell Creek to take reasonable steps to obtain the documents from the other entities.24 Are the documents within Cherwell Creek’s control? [33] Cherwell Creek is only one of a number of companies in which QCoal and Mr Wallin hold direct or indirect interests, and of which Mr Wallin is either the sole director or one of only a few directors. [34] The ultimate holding company for the associated companies is Queensland Resources Holdings Pty Ltd. Mr Wallin is one of three directors of that company and holds a 40% interest in it. [35] QRH wholly owns QCoal Pty Ltd and Mr Wallin is QCoal’s sole director. [36] QCoal, directly or indirectly holds all or all but a small percentage of the shares in the companies that control or operate a number of coal mines, including the Jax, Bowen 23 Erskine v McDowell [2001] QDC 192, [11] (Robertson DCJ), applying Lonrho Ltd v Shell Petroleum Co Ltd [1980] 1 WLR 627, 635–636 (Lord Diplock); Taylor v Santos Ltd (1998) 71 SASR 434, 438. 24 Sabre Corp Pty Ltd v Russ Kalvin's Hair Care Co (1993) 46 FCR 428. -- 9 of 24 -- 10 River, Drake, Sonoma and Byerwen mines. Mr Wallin is the sole director of all but a few companies that are, through QCoal, associated with QRH. [37] Annexure A to this judgment is a schedule that identifies Mr Wallin’s shareholdings and directorships in QCoal and its associated companies, derived from the affidavit evidence before the Court. [38] Documents of a subsidiary company are, prima facie, not in the power of the controlling company. Usually, it will not be appropriate for a court, on an application for disclosure, to lift the corporate veil.25 [39] It may be that not all of the companies associated with QCoal are “under the unfettered control” of Mr Wallin, in the sense that he is their alter ego.26 [40] Nevertheless, in his summary, Mr Wallin asserts his control of Cherwell Creek. He refers to the decisions that he made about the tenures at the heart of this dispute at every stage that is relevant to this claim.27 [41] Further, Mr Wallin speaks in the first person about the other mines he refers to, and identifies himself as the person who made the various decisions about those mines. The contents and tenor of the summary demonstrate Mr Wallin’s role goes well beyond setting an overall commercial strategy that is implemented by the associated companies.28 [42] He explains his flat management system, with work undertaken by a very small core group of experienced people who report directly to him. This allows him to be fully- informed about all major issues and to make decisions quickly.29 [43] Given his evidence, and in the absence of evidence to the contrary, I accept Mr Wallin sits at the heart of decision-making and control for all of those mines, and their corporate vehicles. This is an important point of distinction to the cases relied upon by Cherwell Creek. 25 Taylor v Santos Ltd (1998) 71 SASR 434, 438. 26 Re Tecnion Investments Ltd [1985] BCLC 434, 439. 27 Further Amended Summary of Evidence of Christopher Ian Wallin filed 21 September 2018, [1] – [99]. 28 Taylor v Santos Ltd (1998) 71 SASR 434, 438. 29 Further Amended Summary of Evidence of Christopher Ian Wallin filed 21 September 2018, [144A]. -- 10 of 24 -- 11 [44] I infer, for the purpose of this disclosure application, that he, and through him, Cherwell Creek, controls the documents BMA seeks, jointly with the associated companies.30 [45] Further, BMA argues I should infer Cherwell Creek has a copy of the relevant documents because Mr Wallin is sufficiently familiar with them to refer to them in his summary.31 I accept that is a reasonable inference to draw for any document Mr Wallin has referred to, in clear and unambiguous terms, in his summary. Sabre order [46] BMA has asked the Court to make a sabre order32 in the alternative. This type of order requires a party to take reasonable steps to obtain the documents and to file an affidavit detailing its efforts and results. It is an unusual order, and the Court should be cautious about making it.33 [47] Although Cherwell Creek accepts the Court has the power to do so, it urges the Court not to, for two reasons. [48] Firstly, Cherwell Creek submitted BMA should use, and indeed has invoked, non- party disclosure procedures to obtain the documents. Where non-party disclosure is available, courts have declined to make a sabre order.34 [49] It is true that BMA has issued notices for non-party disclosure against a large number of associated companies. At least some of the recipients objected to their notice because BMA had not exhausted its other options. [50] I must note that four groups of companies associated with QCoal applied to join to or intervene in this application for disclosure by Cherwell Creek. At the hearing, counsel for one of the groups agreed that, if joined to the application, they would have to abandon their argument that BMA had not exhausted all other avenues open to it. I refused the application for reasons given at the time. Those applicants conceded Cherwell Creek was best placed to argue relevance of the documents sought by BMA. 30 Equuscorp Pty Ltd v Rural Finance Pty Ltd [2001] QSC 259, 3. 31 Cf RP Data Ltd v Property Data Solutions Pty Ltd [2006] QSC 214. 32 Sabre Corp Pty Ltd v Russ Kalvin's Hair Care Co (1993) 46 FCR 428. 33 Ali v Khan [2015] NSWSC 1961, [4]. 34 Psalidis v Norwich Union Life Australia Ltd (2009) 29 VR 123, [124]; MacArthur Central Shopping Centre Pty Ltd v Valuer-General [2016] QLC 10, [41]. -- 11 of 24 -- 12 Further, I was not persuaded the involvement of four separately represented groups of companies would result in a more just or efficient determination of the application. [51] The second reason Cherwell Creek resists a disclosure order is that BMA has not established there is a real likelihood that the associated companies would give Cherwell Creek access to the documents if it asked for them.35 Although Mr Wallin is a director of the associated companies, that is not sufficient reason to make a sabre order.36 [52] It is, however, a relevant factor. Mr Wallin is the pivotal connection for the companies associated with QCoal. Further, BMA does not rely solely on Mr Wallin’s status as director. More importantly, BMA relies on Mr Wallin’s references to these documents in his summary of evidence, giving rise to a reasonable inference that he (and therefore Cherwell Creek) would be given the documents or at least a copy of them, if they were requested.37 [53] Given Cherwell Creek’s assertion the documents are not in its possession or control, I am satisfied I should make a sabre order, in the alternative, for any documents I order Cherwell Creek to disclose. [54] If the associated companies provide the requested documents, that will avoid the costs of hearing multiple applications that they disclose them. Further, the relevance of the documents has been assessed in this application. Any concerns the associated companies have about confidentiality should be able to be determined by the Court when Cherwell Creek makes submissions on that issue. That would facilitate the just and efficient resolution of the real issues in this proceeding.38 The 32 categories of documents [55] I have grouped the 32 categories requested by BMA by reference to the allegations to which BMA says they relate. Some documents appear to be no longer in dispute. BMA no longer presses its requests for categories 12 and 23. It appears that Cherwell Creek accepts that categories 2, 7, and 32 are relevant and is continuing to search for those documents. I note that for category 32, Cherwell Creek says that it is not in its 35 Sabre Corp Pty Ltd v Russ Kalvin's Hair Care Co (1993) 46 FCR 428, 432. 36 ACCC v Prysmian Cavi E Sistemi Energia Srl (No 8) [2014] FCA 376, [24]. 37 RP Data Ltd v Property Data Solutions Pty Ltd [2006] QSC 214, 6. 38 UCPR, r 5. -- 12 of 24 -- 13 possession or control and is subject to a confidentiality agreement with ANZ Bank. The final orders on this application will include categories 2, 7, and 32. Cherwell Creek would have taken various steps to prepare to commercialise the coal resource and apply for a mining lease [56] Cherwell Creek alleged that: Between May and September 2008, Cherwell Creek would have prepared: (a) a margin rank and obtained preliminary engineering studies and a rail spur design to identify the optimal location of the infrastructure;39 (b) a preliminary mine plan, field environmental studies, an EMP and a draft EA;40 By about September 2008, Cherwell Creek would have marked out and lodged: (a) an MLA for the area of MDL364;41 (b) an infrastructure MLA;42 By about 1 April 2009, Cherwell Creek would have applied for, and been granted, approval for extraction of a bulk sample;43 Cherwell Creek would have commenced the extraction and selling of coal from the coal resource, in respect of the bulk sample, by about April 2009, and, in respect of the mine production, in about July 2010.44 [57] The categories identified for these allegations are categories 1, 3, 6, 11, 13–22, 24, 28 & 31. With the exception of category 1, which relates to EPC545, the exploration permit for the Cherwell Creek project, all the other documents relate to activities, applications and tenures granted for other mines associated with QCoal. I have decided, for reasons given later, that categories 1, 6, 14–20, 24 & 28 should be disclosed and will not consider them specifically under this heading. [58] That leaves categories 3, 11, 13, 21, 22 & 31 to be considered. Those documents are applications for and tenures granted for other mines associated with QCoal. The 39 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (4)(b); Second Amended Defence to the Fourth Amended Annexure A filed 1 May 2018, (3)(b)(i)(A). 40 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (4)(c); Second Amended Defence to the Fourth Amended Annexure A filed 1 May 2018, (4)(b)(i)(A). 41 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (4)(e); Second Amended Defence to the Fourth Amended Annexure A filed 1 May 2018, (6)(b). 42 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (4)(f); Second Amended Defence to the Fourth Amended Annexure A filed 1 May 2018, (7)(b). 43 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (4)(d); Second Amended Defence to the Fourth Amended Annexure A filed 1 May 2018, (5)(b). 44 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (4)(k); Second Amended Defence to the Fourth Amended Annexure A filed 1 May 2018, (12)(a)(ii), (12)(b)(ii). -- 13 of 24 -- 14 mines include Jax, Cows, Coppabella, Monto, Sonoma, Drake and Byerwen. Mr Wallin refers to them in his summary at [100], [114], [115], [186] & [188]. [59] In short, BMA argues each category is directly relevant to whether Cherwell Creek was intending or planning to proceed with development of MDLA364, the coal resource for the Cherwell Creek project. BMA says that in the absence of any disclosed document recording a plan to commercialise that resource, Cherwell Creek must rely on Mr Wallin’s assertions and inferences from his past conduct with respect to other mines. [60] Cherwell Creek says documents relating to Mr Wallin’s or QCoal’s actions on these other projects are not directly relevant to what Cherwell Creek would have done. This is the track-record argument I have decided against Cherwell Creek earlier in these reasons. [61] I accept that, in some references in his summary, Mr Wallin merely refers to the fact of certain permits being granted (e.g. at [100]). However, Mr Wallin marshals all of his experience in developing mines in support of Cherwell Creek’s allegations that it could and would have commercialised the resource. The following passages are examples: [115] “He will say the manner in which he develops a mine would in his experience differ greatly from the way in which a large publicly listed company would develop a mine and he will explain how he and his employees develop mines and say what that difference is. He will give examples by reference to the manner in which he developed Sonoma. He will say that at Sonoma, QCoal entered into agreement with numerous contractors for essential infrastructure before any mining lease applications were lodged or granted.”45 [144A] “He will explain how he analyses the viability of a project to make a decision to proceed with development, how he would have done this analysis for the Cherwell Creek project and how in his view this differs from the way large publicly listed coal companies make decisions and do business and how in his opinion this gives him a competitive advantage. He will say that he analyses the viability of a project by determining where he believes it sits on the cost curve relative to competitors and by looking at what he believes the market trends are having regard to global markets. He will say that he does not believe in undertaking a formal feasibility “process” which takes several years and costs many millions to make a decision whether to progress development of a project. He will describe his underlying philosophy that coal prices and exchange rates show such rapid fluctuations that any feasibility study undertaken over several years will not capture a rising market and that discounted cash flow models based on assumed forecast coal 45 Further Amended Summary of Evidence of Christopher Ian Wallin filed 21 September 2018. -- 14 of 24 -- 15 prices and exchange rate are unreliable, extremely conservative and do not reflect the actual financial performance of a project. He will say that when he makes a decision to invest, he is investing his own money and this allows him greater freedom to make decisions quickly using his own initiative and based on his own determination as to the viability of a project and to make his own decision as to the level of risk he wishes to assume on a project. He will say that this position contrasts greatly with the formal staged process undertaken by large coal mining companies which typically have a large number of employees who report to various levels of seniority and whose decision making is regularised through a formal “stage gate” process. He will say that decision makers in large companies are in his experience much more conservative and take many more steps to attempt to “de-risk” a decision because they are held accountable to senior management and to shareholders. He will say that he ensures that the work is undertaken on projects by a very small core group of experienced people and that those people report to him directly rather than via any formal “tiered” levels of management. He will say that this “flat” management system allows him to be fully informed about all major issues to ensure that he gets the best information without it being filtered through layers of management and to make decisions quickly. He will say that by applying this philosophy, he successfully discovered and then developed the Sonoma mine, the Drake Mine, the Cows Mine, the Jax Mine (now referred to as the Northern Hub) and more recently the Byerwen Mine.”46 [62] Mr Wallin asserts the relevance of his experience in developing other mines through QCoal, not merely to bolster his credit but to prove his assertions about what he (Cherwell Creek) would have done to commercialise that resource. Particularly, he has repeatedly differentiated his method of mine development from that of a publicly listed coal company. This means the Court must look to Mr Wallin’s past conduct, as well as to industry practice, in assessing the likelihood that Cherwell Creek, through Mr Wallin with the assistance of QCoal, could and would have done what it alleges (and Mr Wallin says in his summary) it could and would have done. Cherwell Creek must disclose the documents requested. Cherwell Creek would have submitted an EMP and draft EA with the Environmental Protection Authority and obtained approval for them47 [63] The categories identified for this allegation are categories 6 and 26. Both involve the Jax project. Category 6 is the mineral development licence applications ([123] of the 46 Further Amended Summary of Evidence of Christopher Ian Wallin filed 21 September 2018. 47 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (4)(h); Second Amended Defence to the Fourth Amended Annexure A filed 1 May 2018, (9)(b). -- 15 of 24 -- 16 summary). Category 26 is the application for an EMP and the EA granted for it ([140] of the summary). [64] Cherwell Creek opposes disclosure of these documents because they relate to an entirely different project, physically distant from the Cherwell Creek mine. Although Mr Wallin referred to his experience with the environmental approval for the Jax mine, he did not say that proves what would happen for the Cherwell Creek mine. [65] Cherwell Creek alleged it would have submitted and had approved a draft EA based on an EMP. Mr Wallin referred to the Jax project to explain why he would have taken the risk of not preparing an EIS for the Cherwell Creek application. He has invoked the Jax mine to support what he says he (Cherwell Creek) could and would have done. [66] Documents in categories 6 & 26 should be disclosed. Cherwell Creek would have sold its interest in the coal resource on or about 8 May 2008 or in about July 201248 [67] BMA says the documents in categories 5, 8 & 9 are directly relevant to these allegations. These documents relate to the sale by QCoal and re-purchase by a QCoal associated company of an interest in the Sonoma project. [68] Category 5 is the agreement by which QCoal sold a 45% interest in the Sonoma Project to Cleveland Cliffs and 5% to JFE Shoji and China Steel ([116] of the summary). [69] BMA submitted the sale agreement is directly relevant to whether Cherwell Creek is likely to have sold its interest in MDL364 in May 2008. Cherwell Creek submitted it is only the fact of the transaction at best, not the terms, that are relevant. [70] It is clear from [115] of the summary that Mr Wallin referred to this transaction to explain the manner in which he develops mines and how that differs from the way in which a large publicly listed company would do so. For this reason, I am satisfied that the terms of the agreement, as well as the price obtained on the sale are directly relevant to the allegations. 48 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (4)(l), (15); Second Amended Defence to the Fourth Amended Annexure A filed 1 May 2018, (13)(b). -- 16 of 24 -- 17 [71] I take the same view of the documents relating to a QCoal associated company purchasing Cliffs Australia’s interest in the Sonoma project ([183(a)(b)] of the summary). Mr Wallin identified this transaction, and the financing arrangements for it, as one of the reasons that would have motivated him to sell Cherwell Creek. [72] By category 8, BMA seeks documents evidencing the purchase. By category 9, BMA seeks documents evidencing the funding of that purchase. Those categories are described too broadly. Cherwell Creek must disclose the purchase and finance agreements associated with the transaction. Cherwell Creek would not have proceeded to develop the coal resource because of constraints on rail and port facilities49 [73] Category 27 is the rail agreements for the Sonoma and Drake mines ([142] of the summary). [74] BMA identified them as relevant to a positive case it will put in denying two allegations made by Cherwell Creek. Firstly, that it would have undertaken certain studies, including the rail spur design, between May and September 2008. Secondly, that it would have commenced extracting and selling coal from the coal resource, in bulk sample, in about April 2009, and in respect of mine production, in about July 2010. [75] Mr Wallin said he would have negotiated a clause in the contract for the Cherwell Creek mine to defer the take or pay element of the contract until after the rail loop joined QR infrastructure. He had negotiated similar clauses for the Sonoma and the Drake mine. The direct relevance of a clause of that nature to BMA’s allegation of constraints on rail and port facilities is not immediately obvious. [76] However, Mr Wallin’s evidence explains what he would have done in terms of rail design and the QR contract, in the context of timing for the Cherwell Creek mine. He would have started negotiations early so the project was not delayed over the Christmas break. It seems to me that the contract arrangements are relevant to that, 49 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (4)(b), (4)(k); Second Amended Defence to the Fourth Amended Annexure A filed 1 May 2018, (3)(b)(i)(C), (12)(a)(iv), (12)(b)(iv). -- 17 of 24 -- 18 rather than to any question of rail and port constraints. For that reason, only the clauses relating to the take and pay element of the contracts must be disclosed. Cherwell Creek had the financial capacity to provide a financial assurance in respect of its obligations under the Environmental Protection Act50 [77] BMA says category 25, documents establishing a Bank Guarantee Facility to satisfy the Department’s financial assurance requirements, are directly relevant to this allegation. Cherwell Creek did not dispute their relevance.51 They clearly are relevant. They should be disclosed. Cherwell Creek had the financial ability, with the assistance of QCoal, to carry on the proposed mining operation52 [78] BMA says categories 1, 4, 5, 10, 29, 30, 32. I have decided that categories 1 & 5 should be disclosed because of their relevance to other allegations. Cherwell Creek does not dispute the relevance of category 32, but says that it is not in its possession or control. It is held jointly by QCoal and ANZ. QCoal is subject to a confidentiality order. The confidentiality of that document can be dealt with later, if need be. It should be disclosed. [79] That leaves categories 4, 10, 29 & 30. [80] Category 4 is a farm-in arrangement for Coppabella mine (at [101] of the summary). BMA submitted the manner in which Mr Wallin funded his other operations is relevant to Cherwell Creek’s financial capacity to conduct the mining operations for the Cherwell Creek project. Cherwell Creek argued an agreement some 20 years earlier is not directly relevant to Cherwell Creek’s financial capacity at the relevant time. I accept the arrangement is dated and is not directly relevant. [81] Categories 10, 29 & 30 relate to contractor costs at the Cows, Sonoma and Drake mines and the electricity costs at the Sonoma mine (at [175] & [185] of the summary). 50 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (5)(h); Further and Better Particulars of the Third Amended Annexure A to the Originating Application Dated 24 April 2017 filed 26 April 2017, (19)(d); Second Amended Defence to the Fourth Amended Annexure A filed 1 May 2018, (14)(h)(iii). 51 Outline of Submissions by Cherwell Creek Coal Pty Ltd in Response to BMA’s Amended General Application for Disclosure filed 17 October 2018, [148] to [150]. 52 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (4)(l), (5)(h); Second Amended Defence to the Fourth Amended Annexure A filed 1 May 2018, (13)(d), (14)(h)(iv). -- 18 of 24 -- 19 BMA understood Cherwell Creek did not dispute the relevance of these documents. It did. BMA has not explained how they directly relate to this allegation, and I am not persuaded they do. Cherwell Creek does not need to disclose categories 4, 10, 29 & 30. Cherwell Creek’s past performance was satisfactory, taking into account the paucity of drilling on the area of EPC545 from 1995 to 200853 [82] BMA says categories 1, 15 to 20 and 24 are relevant to this allegation. [83] Category 1 is the farm-in agreement for EPC545 with ISCOR from 1994 ([17] of the summary). Cherwell Creek argued this was background information only. However, Mr Wallin included it in his recitation of how Cherwell Creek came to hold EPC545 and what it did on that tenure before BHP lodged its applications for infrastructure mining leases over some of that area. It is directly relevant to the allegation. It should be disclosed. [84] Categories 15 – 20 & 24 are the exploration programs by QCoal associated companies at Bowen River, the Birralee property, Rugby, Blackwater Bluff, Capella, Minyango, Sonoma, Byerwen and the land underlying the Drake and Jax mines ([102], [103]- [108], [118] of the summary). Although not identified in BMA’s submissions, I consider the same argument arises for category 14, which is the exploration program at Coppabella (at [101] of the summary) and I have included it here. [85] Cherwell Creek submitted BMA had not pleaded any connection between those exploration programs and BMA’s allegation that Cherwell Creek’s past performance on EPC545 was inadequate. [86] However, Cherwell Creek must prove its allegation that its past performance on EPC545 was satisfactory. At [103] of his summary, Mr Wallin said that he diverted his attention to other tenements in the QCoal portfolio after BHP lodged its infrastructure mining lease applications. He said he was concerned any work on EPC545 would be wasted. This evidence demonstrates the direct relevance of the exploration activities of QCoal associated companies on other tenements. The 53 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (5)(i); Second Amended Defence to the Fourth Amended Annexure A filed 1 May 2018, (14)(i). -- 19 of 24 -- 20 exploration programs should be disclosed. I am not satisfied, though, that the results of any drilling are relevant to this allegation and they need not be disclosed. [87] Cherwell Creek must disclose category 1 and the exploration programs but not the drilling results described in categories 14 – 20 and 24. Conclusion [88] The further disclosure by Cherwell Creek will likely be voluminous. That is a consequence of the way in which Cherwell Creek has framed its case, and the evidence it proposes to lead from Mr Wallin to prove it. [89] The orders will require Cherwell Creek to disclose commercially sensitive material. I will hear from Cherwell Creek about a regime to preserve the confidentiality of documents that warrant that protection. Because I am making a sabre order in the alternative, I expect that Cherwell Creek will make submissions that address any concerns about confidentiality held by companies associated with QCoal as well as its own. [90] I will provide draft orders to the parties to give effect to these reasons and hear from them before finalising them. FY KINGHAM PRESIDENT OF THE LAND COURT -- 20 of 24 -- 21 Annexure A Company/Entity Mr Wallin’s interest Affidavit source Cherwell Creek Coal Pty Ltd Mr Wallin is one of two directors (with Ann Wallin) The shareholders are Mr Wallin and QCoal Pty Ltd Third Affidavit of Stephen James Hurford sworn 8 October 2018, exhibit SJH 26 QCoal Pty Ltd Mr Wallin is sole director. All shares are held by Queensland Resources Holdings Pty Ltd First Affidavit of Toby Boys sworn 3 October 2018, paragraph [2] Second Affidavit of Stephen James Hurford sworn 4 October 2018, exhibit SJH 3 Mr Wallin Boys (3/10/18) [2] Mr Whimp Boys (3/10/18) [2] Byerwen Coal Pty Ltd Mr Wallin is one of two directors. The shares are held by QCoal Byerwen Holdings Pty Ltd and JFE Steel Australia (BY) Pty Ltd. Hurford (2) exhibit SJH 4 QCoal Byerwen Holdings Pty Ltd Mr Wallin is sole director; All shares held by QCoal Pty Ltd Hurford (2) exhibit SJH 5 Bowen River Coal Pty Ltd Mr Wallin is sole director; The shares are held by QCoal Bowen River Holdings Pty Ltd. Hurford (2) exhibit SJH 6 QCoal Bowen River Holdings Pty Ltd Mr Wallin is sole director; The shares are held by QCoal Pty Ltd Hurford (2) exhibit SJH 7 Auriga Coal Pty Ltd Mr Wallin is sole director; Hurford (2) exhibit SJH 8 -- 21 of 24 -- 22 Company/Entity Mr Wallin’s interest Affidavit source The shares are held by QCoal Pty Ltd Australian Environmental Coals Pty Ltd Mr Wallin is sole director; The shares are held by QCoal Pty Ltd Hurford (2) exhibit SJH 9 Diamond Creek Coal Pty Ltd Mr Wallin is sole director; The shares are held by QCoal Diamond Creek Holdings Pty Ltd. Hurford (2) exhibit SJH 10 QCoal Diamond Creek Holdings Pty Ltd Mr Wallin is sole director; The shares are held by QCoal Pty Ltd Hurford (2) exhibit SJH 11 Jax Coal Pty Ltd Mr Wallin is sole director; The shares are held by QCoal Jax Holdings Pty Ltd. Hurford (2) exhibit SJH 12 QCoal Jax Holdings Pty Ltd Mr Wallin is sole director; The shares are held by QCoal Pty Ltd Hurford (2) exhibit SJH 13 QCoal Sonoma Pty Ltd Mr Wallin is sole director; The shareholder is QCoal Pty Ltd Hurford (2) exhibit SJH 14 QCoal Sonoma Washplant Operations Pty Ltd Mr Wallin is sole director; The shareholder is QCoal Pty Ltd Hurford (2) exhibit SJH 14 Sonoma Mine Management Pty Ltd Mr Wallin is one of four directors The shares are held by Watami (Qld) Pty Ltd (4.5%), QCoal Sonoma Pty Ltd (81%), JS Sonoma Pty Ltd (9.5%) and CSC Sonoma Pty Ltd (5%). Hurford (4) exhibit SJH 37 Drake Coal Pty Ltd Mr Wallin is one of two directors (with Mr Whimp) Hurford (2) exhibit SJH 19 -- 22 of 24 -- 23 Company/Entity Mr Wallin’s interest Affidavit source The shares are held by Northern Hub (Drake) Pty Ltd (99.99%) and Jaenna Pty Ltd (0.009%)*. Mr Whimp is the director of Jaenna Pty Ltd. The shareholder is PNK Family Holdings Pty Ltd*. Mr Whimp is the director of PNK Family Holdings Pty. The shareholders are Mr Whimp, Alan Whimp and Kerry Whimp. Northern Hub (Drake) Pty Ltd Mr Wallin is sole director; The shareholder is QCoal Drake Holdings Pty Ltd Hurford (2) exhibit SJH 19 QCoal Drake Holdings Pty Ltd Mr Wallin is sole director; The shareholder is QCoal Pty Ltd Hurford (2) exhibit SJH 20 Sanrus Pty Ltd Mr Wallin is sole director and sole shareholder. Hurford (2) exhibit SJH 22 Energy Minerals Pty Ltd Mr Wallin is one of two directors (with AnnWallin) All shares are held by Mr Wallin and by Queensland Resources Holdings Pty Ltd Hurford (2) exhibit SJH 23 Queensland Resources Holdings Pty Ltd Mr Wallin is one of three directors (with Mr Whimp and Mr McWatters) Shares held 40% Wallin, 40% Whimp 20% McWatters Third Hurford Affidavit, exhibit SJH 27 Rosella Creek Coal Pty Ltd Mr Wallin is sole director; The shareholder is QCoal Pty Ltd Hurford (4) exhibit SJH 35 -- 23 of 24 -- 24 Company/Entity Mr Wallin’s interest Affidavit source Pelican Creek Coal Pty Ltd Mr Wallin is sole director; The shareholder is QCoal Pty Ltd Hurford (4) exhibit SJH 34 Cattle Creek Coal Pty Ltd Mr Wallin is sole director; The shares are held by QCoal Cattle Creek Holdings Pty Ltd. Hurford (4) exhibit SJH 32 QCoal Cattle Creek Holdings Pty Ltd Mr Wallin is sole director; The shareholder is QCoal Pty Ltd. Hurford (4) exhibit SJH 33 Bullock Creek Coal Pty Ltd Mr Wallin is sole director; The shareholder is QCoal Pty Ltd Hurford (4) exhibit SJH 30 -- 24 of 24 --