Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 15) [2018] QLC 39

LAND COURT OF QUEENSLAND CITATION: Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 15) [2018] QLC 39 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) and QCoal Pty Ltd (ABN 99 010 911 234) Christopher Ian Wallin Paul Alan Whimp (non-party respondents to the application) FILE NO: MRA1332-08 DIVISION: General division PROCEEDING: Hearing of application DELIVERED ON: 24 October 2018 DELIVERED AT: Brisbane HEARD ON: 22 October 2018 HEARD AT: Brisbane -- 1 of 6 -- PRESIDENT: FY Kingham ORDERS: 1. The application is dismissed. 2. BMA must pay the costs of the respondents to the application. CATCHWORDS: PROCEDURE -STATE AND PROCEEDINGS IN STATE AND TERRITORY COURTS – DISCOVERY OF DOCUMENTS – NON-PARTY DISCLOSURE - where non-parties closely related to the applicant – where non- parties disputed the relevance of the required documents – whether documents sought were directly relevant to an issue on the pleadings – where application was dismissed Uniform Civil Procedure Rules ch 7 pt 2, r 242, r 248 Creswick & Ors v Creswick [2009] QSC 219, cited APPEARANCES: G Gibson QC, with J Chapple and N Loos of Counsel (instructed by Holding Redlich Lawyers) for the applicant A Stumer of Counsel (instructed by Allens) for the respondents [1] Cherwell Creek Coal Pty Ltd claims compensation from BHP Queensland Coal Investments Pty Ltd and the other respondent companies (BMA) for loss of the opportunity to commercialise the coal resource on an area of land over which Cherwell Creek formerly held an exploration permit. [2] BMA seeks disclosure of documents by QCoal Pty Ltd, Mr Christopher Wallin, and Mr Paul Whimp. None of them is a party to Cherwell Creek’s claim and the rules relating to non-party disclosure apply.1 [3] Each of the respondents to this application is closely associated with Cherwell Creek, Mr Wallin particularly so, as the following chart demonstrates: 1 Uniform Civil Procedure Rules 1999 ch 7, pt 2. 2 -- 2 of 6 -- [4] The shareholding in Cherwell Creek is held 50% by QCoal and 50% by Mr Wallin, who is also a director of Cherwell Creek and the sole director of QCoal. QCoal is the wholly owned subsidiary of Queensland Resources Holdings Pty Ltd. Both Mr Wallin and Mr Whimp are directors of QRH and each holds 40% of the shares in that company. [5] The legal principles are not in dispute. Because the respondents did not formally object to notices of non-party disclosure, the application is for production of documents rather than to life a stay of the notices.2 The Court may direct the respondents to comply with the notice and make another order it considers appropriate.3 [6] However, a notice may only require production of a document that is directly relevant to an allegation in issue in the pleadings.4 I would not order production of documents that did not meet that requirement.5 Albeit by correspondence, the respondents have always disputed the relevance of the broadly described categories of documents requested by BMA. That is the real issue in this application. [7] The pleadings define relevance for the purpose of non-party disclosure.6 BMA identifies the issue is the ability of Cherwell Creek (or QCoal, as a financial 2 UCPR r 248. 3 UCPR r 248(2). 4 UCPR r 242(1)(a). 5 Creswick & Ors v Creswick [2009] QSC 219 at [14]. Daubney J applied that reasoning on an application to lift a stay of a notice of non-disclosure. 6 UCPR r 242(1)(a). 3 -- 3 of 6 -- supporter of Cherwell Creek) to fund the process of obtaining the necessary approvals for the proposed mining operations and eventually carry on the proposed mining operations. [8] Specifically, the issue arises in the following way. [9] Cherwell Creek makes its claim under a special-purpose compensation regime introduced to the Mineral Resources Act 1989, referred to in the pleadings as the Amending Act.7 Cherwell Creek pleaded that, but for the passage of the Amending Act it: 1. would have undertaken certain studies to prepare to develop the coal resource between May 2008 and September 2008.8 2. would have marked out and lodged a mining lease application by about September 2008;9 3. would have continued the extraction and selling of coal from the coal resource until, at the latest date, the end of the 2017 calendar year;10 4. had the necessary financial and technical capabilities to carry on the proposed mining operation.11 [10] BMA denied each of those allegations because, it says, Cherwell Creek did not have the financial ability to do what it alleged.12 [11] Further, in answer to a request for particulars of its financial capacity, Cherwell Creek said it was supported, financially, by the QCoal group of companies and by Mr Wallin.13 Cherwell Creek relied on these particulars in denying BMA’s allegation it did not have the financial ability to carry on the proposed mining operation.14 7 Mineral Resources (Peak Downs Mines) Amendment Act 2008. 8 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (4)(b). 9 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (4)(e). 10 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (4)(l). 11 Fourth Amended Annexure A to Originating Application filed 6 April 2018, (5)(h). 12 Second Amended Defence to the Fourth Amended Annexure A filed 1 May 2018, (3)(b)(iii), 6(a), 13(d), 14(h)(iv). 13 Applicant’s Answer to the Request for Further and Better Particulars of the Third Amended Annexure A to the Originating Application filed 26 April 2017, (19). 14 Second Further Amended Reply filed 17 October 2018, (18)(f). 4 -- 4 of 6 -- [12] The effect of those pleadings, BMA submitted, is that the financial ability of Cherwell Creek is squarely in issue from 2008 to 2017. Because of the particulars, QCoal’s ability to support Cherwell Creek during that period is also in issue. [13] The respondents did not contest that interpretation of the pleadings and have disclosed financial reports, special-purpose financial reports, profit and loss statements, and balance sheets for QCoal and Cherwell Creek from 2007 to 2017. [14] BMA has refined its requests from the very broad categories described in its notices to the following categories of documents: 1. As against all three respondents: (a) Bank statements for QCoal from 2007 to 2017; (b) Documents relating to the “related party receivables” and “related party payables” recorded in the annual financial statements for QCoal for that period; 2. As against Mr Whimp only: (a) Annual financial statements and bank statements for QRH for the same period; (b) Documents obtained by Mr Whimp prior to his appointment as a director of QRH concerning the availability to QCoal and QRH of funds and/or assets. [15] Because the non-party disclosure notices referred to a period from May 2008 until 1 December 2017, BMA conceded the orders, if made, should be confined to that period. [16] The respondents argued BMA was trying to go behind the audited financial reports for QCoal and had not demonstrated why the financial position of QRH is relevant. [17] BMA said the bank statements would enable it to make a point-in-time assessment of QCoal’s cash and loan positions. However, it did not identify any particular points in time that arise from an issue on the pleadings. [18] As to the “related party receivables” and “related party payables”, BMA argued this would help it understand the entries in the financial reports and could explain how QCoal could support Cherwell Creek. The fact of QCoal’s capacity to fund Cherwell Creek is relevant on the pleadings. That information appears from the financial reports. I am not persuaded that how or why QCoal has that capacity is directly relevant to the issue. 5 -- 5 of 6 -- [19] QRH is the holding company for QCoal. QCoal’s financial reports demonstrate QCoal was debt free until November 2012. It is not clear how QRH’s financial position prior to that date could be relevant. After that date, BMA did not point to anything that demonstrated the relevance of QRH’s financial position. [20] Finally, BMA seeks any documents Mr Whimp obtained prior to his appointment as a director of QRH concerning the availability to QCoal and QRH of funds and/or assets. In correspondence, Mr Whimp’s lawyers asserted he had none of the documents requested in his capacity as a director. BMA invited me to assume from that qualification that Mr Whimp likely received some documents about the financial position of QRH before he accepted appointment as a director. That may be a reasonable inference, but the category of documents is so broad as to be objectionable. It is not confined to any period. BMA has not established the relevance of the documents that might be caught by the description. [21] I make the following orders: 1. The application is dismissed. 2. BMA must pay the costs of the respondents to the application. FY KINGHAM PRESIDENT OF THE LAND COURT 6 -- 6 of 6 --