Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 12) [2018] QLC 15

LAND COURT OF QUEENSLAND CITATION: Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 12) [2018] QLC 15 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) (respondents) FILE NO: MRA1332-08 DIVISION: General division PROCEEDING: Hearing of application DELIVERED ON: 13 June 2018 DELIVERED AT: Brisbane HEARD ON: Submissions closed 18 May 2018 HEARD AT: Brisbane PRESIDENT: FY Kingham ORDERS: 1. Order 6 made on 14 December 2017 is vacated. 2. Cherwell Creek Coal Pty Ltd must pay the respondent’s costs of the application, as assessed if not agreed. -- 1 of 11 -- 2 CATCHWORDS: CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PROCEDURE – where the court directed parties and experts to engage in court managed expert evidence (CMEE) pursuant to a draft Guideline – where the applicant submitted the process was contrary to the Land Court Act 2000 and the Land Court Rules 2000 – where the applicant argued the process was not necessary in this case – where a Practice Direction was issued after the application was filed and before it was determined – where the Practice Direction restricted the CMEE convenor’s power to make directions – whether order 6 should be set aside – whether the case should be directed to CMEE pursuant to the Practice Direction Land Court Act 2000, s 14, s 22, s 24, s 36 Land Court Rules 2000, r 19(b), r 22(a), r 22(b), r 24 Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 11) [2017] QLC 59, applied Chief Executive, Department of Transport and Main Roads v Cideno Pty Ltd [2015] LGERA 448, applied Citigold Corporation Limited v Chief Executive Department of Environment & Heritage Protection (No 4) [2016] QLC 57, applied Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51, applied Owen v Menzies [2012] QCA 170, applied APPEARANCES: G Gibson QC, with N Loos and J Chapple of Counsel (instructed by Holding Redlich Lawyers) for the applicant S Doyle QC, with Y Lubett of Counsel (instructed by Allens) for the respondents [1] This is an application by the respondents (BMA) about orders relating to expert evidence in the pre-hearing preparation of the case. [2] BMA’s application raised three issues: 1. Whether Cherwell Creek should file reports responding to BMA’s expert reports on certain issues prior to the experts meeting to prepare their joint expert reports; 2. Whether the Court should vacate orders made on 27 February 2018; and 3. Whether the Court should vacate an order directing the case to Court Managed Expert Evidence (CMEE) pursuant to draft Guidelines for Expert Evidence in the Land Court, made on 14 December 2017. -- 2 of 11 -- 3 [3] On 19 April 2018, I made orders and gave oral reasons on the first two issues, and made directions about written submissions and, if required, further hearing on the third.1 [4] Having considered the further written submissions filed by both parties, I did not wish to hear further from counsel and neither party sought an oral hearing. This judgment deals with the third issue and with the costs of BMA’s application. [5] Although the third issue is framed as a request to vacate order 6, as the matter was argued a concomitant issue arose - whether the case should be directed to CMEE pursuant to Practice Direction 3 of 2018. Should the Court vacate order 6? [6] The disputed order is order six made on 14 December 2017: “ 6. Pursuant to section 5 of the draft Guidelines for Expert Evidence in the Land Court: (a) the parties and the parties’ experts will engage in a Court Managed Expert Evidence (CMEE) process with a court appointed CMEE Convenor; (b) the parties and/or the parties’ experts will attend conferences as directed by the CMEE Convenor, such conferences to commence at 10am Wednesday 28 February 2018 in Court 43, level 8, Brisbane Magistrates Court; and (c) the parties’ experts will deliver joint reports detailing the matter on which the experts agree and the matters upon which they do not agree and the reasons why on a date to be directed by the CMEE Convenor.” [7] The order references draft Guidelines prepared and circulated for consultation with the legal profession, expert witnesses, and other persons or organisations with an interest in the procedures of this Court. The date for submissions in response to the draft was set at 5 February 2018. I intended to revise the Guidelines and issue a Practice Direction after considering any responses, prior to the first CMEE conference for this case, which was listed for 28 February 2018. It would always have been necessary to revisit the disputed order when that happened. [8] For reasons that do not need to be traversed in this judgment, the Court extended the date for one group to provide feedback about the draft Guidelines. As a result, I did not issue the Practice Direction before the first conference in the CMEE for this case. 1 To date, Auscript has provided a transcript of only part of the oral reasons. The Court will publish the reasons on the first two issues in full once Auscript provides a complete transcript. -- 3 of 11 -- 4 [9] When I adjourned the balance of the application on 19 April 2018 to allow Cherwell Creek time to prepare submissions, I advised the parties I would proceed, as planned, to revise the Guidelines and issue a Practice Direction about the CMEE process. I made orders that suspended the CMEE in this case pending determination of BMA’s application. [10] On 30 April 2018, I revised and published the Guidelines for Expert Evidence in the Land Court and issued Practice Direction 3 of 2018 – Procedure for Court Managed Expert Evidence. The parties’ made their further written submissions after that date. [11] In its first submissions, BMA raised a number of arguments that challenged both the legality and the necessity of the disputed order. BMA maintains its position that it is not necessary to use a CMEE process in this case.2 I will return to that issue later in the reasons. [12] As for legality, in its first submissions BMA argued the CMEE process described in the draft Guidelines was contrary to the Land Court Act 2000 and the Land Court Rules 2000 and was incompatible with the institutional integrity of the Court. [13] There was some exchange between the parties about whether BMA was raising a Kable3 argument. In its reply submissions, BMA clarified it did not challenge the status of the Court, rather relied on it to support its argument. BMA contended the CMEE process as described in the draft Guidelines “embraced features which represented significant departures from the processes which characterise the exercise of judicial power and thereby impair the institutional integrity of the Court”.4 [14] This argument centred on the CMEE Convenor’s power in a “without prejudice” process,5 to “make such directions as are reasonably required for the efficient management of the CMEE process”.6 It argued the draft Guidelines allowed the CMEE Convenor to make directions without necessarily hearing from the parties and without maintaining a record on the Court’s file. 2 BMA outline of submissions in reply filed 21 May 2018, [28]. 3 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51. 4 BMA outline of submissions in reply filed 21 May 2018, [20]. 5 Draft Guidelines for Expert Evidence in the Land Court, p 4. 6 Draft Guidelines for Expert Evidence in the Land Court, p 5. -- 4 of 11 -- 5 [15] It submitted this was inconsistent with a party’s right of appearance,7 would not afford them procedural fairness, and was inconsistent with the Court’s power to make directions.8 It also raised concerns about the process for reports by the CMEE Convenor to the President.9 [16] Cherwell Creek’s reply submissions addressed those arguments by reference to the new Practice Direction. Although BMA criticised that approach to its arguments, in its reply submissions it acknowledged the Practice Direction dealt with a number of matters it had raised in its original submissions:10 (a) the CMEE Convenor’s reports; (b) the nature of the confidentiality of the CMEE process; (c) the scope of the CMEE Convenor’s directions power; and (d) the record of the CMEE. [17] BMA has not challenged the legality of the CMEE process as now defined by the Practice Direction. Given that, the utility of Cherwell Creek responding to BMA’s arguments about a process in an earlier iteration is questionable. Nevertheless, I will make some observations about the differences between the process described in the draft Guideline and as provided for in the Practice Direction because that has some bearing on the question of costs. [18] The Practice Direction provides a more detailed description of the CMEE process. It clarifies some misapprehensions by readers of the draft Guideline, including counsel for BMA, and elucidates the process. It is also more prescriptive about the powers of the CMEE Convenor. [19] Some changes to the CMEE process are significant for this application. They relate to the CMEE Convenor’s power to make directions. [20] Firstly, the draft Guideline left open the possibility that the CMEE Convenor could make directions at the case management conference, which the parties attend, or a meeting of experts, which they do not. 7 Land Court Act 2000 s 24. 8 Land Court Act 2000 s 22; Land Court Rules 2000 r 19(b). 9 BMA outline of submissions filed 12 April 2018, [32]. 10 BMA outline of submissions in reply filed 21 May 2018, [16]. -- 5 of 11 -- 6 [21] In referencing the draft Guidelines in order 6, it was not my intention to confer power on the CMEE Convenor to make directions during a meeting of experts without reference to the parties. However, I accept that, as drafted, the draft Guideline left open that possibility and it was realised in this case. The Practice Direction clarifies the administrative and facilitative power of the Convenor in chairing the meetings of experts by providing that the convenor may make the necessary administrative arrangements for the meetings.11 [22] Secondly, the draft Guideline conferred the power to make directions reasonably required for the efficient management of the CMEE process. That was not limited to those directions that the parties agreed were reasonably required for that purpose. The Practice Direction provides that directions by the CMEE Convenor must be made by consent.12 [23] Turning to the arguments about the directions power, Cherwell Creek argued the role of the CMEE Convenor is procedural and described the power as instructive of the experts, not decisive of the dispute before the Court.13 [24] The role as described in both the draft Guideline14 and the Practice Direction15 relates only to the preparation of expert evidence for the hearing. In making directions about that, the CMEE Convenor is not determining a substantive issue arising from the claim or appeal before the Court. They are engaged in a non-adjudicative process. Both the draft Guideline16 and the Practice Direction17 preclude the CMEE Convenor deciding the case, without the consent of all parties. [25] However, a direction is a procedural order, enforceable by the Court. One of the directions made during the CMEE confined the further evidence the parties could lead from the expert witnesses. Although the order allowed for the Court to grant leave for further evidence, as it stood it had consequences for the way in which the parties could 11 Land Court of Queensland, Practice Direction No 3 of 2018 – Procedure for Court Managed Expert Evidence, 30 April 2018, [38(b)]. 12 Land Court of Queensland, Practice Direction No 3 of 2018 – Procedure for Court Managed Expert Evidence, 30 April 2018, [19(b)]. 13 Cherwell Creek’s reply submissions filed 4 May 2018, [4]-[7]. 14 Draft Guidelines for Expert Evidence in the Land Court, p 4-7. 15 Land Court of Queensland, Practice Direction No 3 of 2018 – Procedure for Court Managed Expert Evidence, 30 April 2018, [19]. 16 Draft Guidelines for Expert Evidence in the Land Court, p 5. 17 Land Court of Queensland, Practice Direction No 3 of 2018 – Procedure for Court Managed Expert Evidence, 30 April 2018, [17]. -- 6 of 11 -- 7 conduct their case at the hearing. That is a significant matter given expert evidence is crucial to both parties. [26] A member has the power to issue directions about a case before the Court when constituted by the member.18 A single member constitutes the Court, except in circumstances not relevant to this case.19 To constitute is to “be the components or essence of, makeup, form”.20 Although it might be argued that the Convenor does not constitute the Court in a non-adjudicative process, I consider the better view is that when making directions about procedural matters in preparation for or relating to the hearing, the convenor constitutes the Court for the purpose of making those directions. Further, they are doing so in a process that is Court ordered, Court defined, and Court supervised. [27] There is no express power in the Act for a judicial officer to exercise the power to make directions without hearing from the parties and there are indications to the contrary, such as the right of appearance.21 This is a Court of statutory jurisdiction and a clear foundation for power is desirable. For example, the powers of a member or judicial registrar in a preliminary conference are clearly articulated in the Act.22 The Practice Direction now makes it clear that directions cannot be made without reference to the parties. [28] Indeed the Practice Direction goes further, and confines directions to those consented to by the parties. I do not accept that it is inimical to the judicial function that a member could make directions arising out of a confidential process. An example of the power to do so is found in the Queensland Civil and Administrative Tribunal Act 2009 s 71. Although styled a Tribunal, it, too, is a court of record23 and subject to the same arguments raised by BMA. [29] However, there is no express power to that effect in the Act. In those circumstances, a cautious approach was taken to this issue when the Practice Direction was issued. 18 Land Court Act 2000 s 22. 19 Land Court Act 2000 s 14. 20 Australian Oxford Dictionary (Oxford University Press, 2nd ed, 2004). 21 Land Court Act 2000 s 24. 22 Land Court Act 2000 s 36. 23 Owen v Menzies [2012] QCA 170. -- 7 of 11 -- 8 [30] As already observed, the Court must vacate the disputed order because it imposes a process defined in the draft Guideline since overtaken by the Practice Direction. However, assuming that had not occurred, I would have been persuaded by BMA’s submissions to vacate order 6, if only to confine the CMEE Convenor’s directions power in the way now provided in the Practice Direction. [31] That begs the next question, whether the Court should direct the case to CMEE pursuant to the Practice Direction. Should the Court direct the case to CMEE pursuant to the Practice Direction? [32] The Land Court Rules 2000, like the rules of many courts of civil jurisdiction in Australia, provide for meetings of experts to take place without the involvement or influence of the lawyers who have engaged them. That is, as BMA observed in its submissions, orthodox.24 [33] BMA argues a CMEE process is not necessary in this case for two reasons. Firstly, two joint expert reports have been prepared without the intervention of a third party or the Court. Secondly, the experts have already provided extensive reports and all that remains is the meetings of experts and joint expert reports. [34] That is true, but context is important. There are some 20 experts yet to produce nine or 10 further joint expert reports, depending on how the issues and experts are grouped. This claim has proceeded at snail’s pace over more than a decade. It has reached the penultimate stage in preparation for hearing. The logistics involved in so many expert meetings, given the history of this case, alone suggests a CMEE Convenor would make for a more efficient process. [35] Further, the purpose of a joint expert report is to prepare a joint opinion for the Court. That is a collaborative exercise, by which the experts identify what matters they agree and disagree about and the reasons for any disagreement.25 A joint expert report should assist the Court to both understand and resolve issues involving matters of specialist knowledge. In a previous judgment dealing with procedural issues, I have observed the crucial role individual expert reports will play in defining the issues for 24 BMA outline of submissions filed 12 April 2018, [34]. 25 Land Court Rules 2000 r 22(a) and r 22(b). -- 8 of 11 -- 9 the hearing in this case.26 That applies equally, if not more so, to the joint expert reports. [36] Well-prepared and comprehensive joint expert reports may resolve some issues and will clarify others. However, they will facilitate an efficient and focused hearing only if they reveal the real issues between the experts. Experience shows that experts can fail to properly address all relevant issues in their joint expert reports.27 [37] The CMEE process promotes that objective because the CMEE Convenor can assist the experts to: (a) check they have addressed all issues identified in their brief or have explained why they cannot do so; (b) confirm they have not expressed an opinion outside their area of expertise; (c) check they have addressed all scenarios arising from the issues and from the evidence from other expert witnesses, to the extent that evidence is relevant to the issue they must address; (d) check they have considered the underlying facts, assumptions, methodologies, and conclusions of any other expert witness included in the report; (e) check that, to the extent they disagree on the matters in (d) above, they each explain- I. why they disagree; II. what their evidence would be if the Court accepted the evidence of the expert on any of those matters; and (f) identify aspects of their evidence that may need to be clarified so the Member who will conduct the hearing can understand it.28 [38] I have already observed there are 20 experts who will engage in nine or 10 meetings of experts, depending on how the experts and the issues are grouped. Some experts will need to participate in more than one meeting of experts. Determining which experts address which issues may be in issue. That is not clear. [39] The overlap of issues and experts presents a real risk to the integrity of the process. In order to prepare their report, one group of experts may want to clarify an issue addressed (or not addressed) in the joint expert report of another group of experts. 26 Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 11) [2017] QLC 59. 27 Chief Executive, Department of Transport and Main Roads v Cideno Pty Ltd [2015] LGERA 448 at [61] to [64]; Citigold Corporation Limited v Chief Executive, Department of Environment & Heritage Protection (No 4) [2016] QLC 57 at [8]. 28 Land Court of Queensland, Practice Direction No 3 of 2018 – Procedure for Court Managed Expert Evidence, 30 April 2018, [44]. -- 9 of 11 -- 10 There is a risk that an expert common to both groups could influence how the second group interprets the first group’s report, without all experts from the first group knowing what the expert common to both has conveyed. [40] As well as driving an efficient process and promoting comprehensive and well prepared reports, the CMEE Convenor can promote the integrity of the expert meeting process and ameliorate risks such as the one identified. Under the Practice Direction, the CMEE Convenor manages and facilitates communications between experts in different disciplines29 and keeps the parties informed.30 [41] Given those factors, I will set aside the disputed order but will direct the case to CMEE under the Practice Direction. I intend to make further directions about matters that may be controversial between the parties and fix some dates for reports and reviews. I will make orders about such matters after hearing from the parties. Costs [42] In determining costs I applied principles that are frequently relied upon in this jurisdiction and have, in the past, been applied to a previous interlocutory decision in this matter.31 My findings as to costs take into account the outcome of the application and the characteristics of the parties who are both commercial entities, well represented in the proceedings. [43] BMA seeks its costs of the application arguing that it was successful on issue one and two and should have its costs if order 6 is also set aside. Cherwell Creek argues that to award costs against it would be to punish it for fully engaging in the CMEE process. [44] I have decided Cherwell Creek should bear the costs of the application for the following reasons. 29 Land Court of Queensland, Practice Direction No 3 of 2018 – Procedure for Court Managed Expert Evidence, 30 April 2018, [39]. 30 Land Court of Queensland, Practice Direction No 3 of 2018 – Procedure for Court Managed Expert Evidence, 30 April 2018, [40]. 31 Cherwell Creek Coal Pty Ltd v BHP Queensland Coal Investments Pty Ltd & Ors (No 9) [2017] QLC 1, [2]-[6]. -- 10 of 11 -- 11 [45] Firstly, I do not accept that awarding costs against Cherwell Creek punishes it for engaging in the CMEE process. That does not deal with the merits of the arguments on the application. [46] Secondly, BMA was successful in securing an order that Cherwell Creek deliver expert reports in response to BMA’s expert reports before the meetings of experts commence. My oral reasons deal with that in some detail. Relevant to costs, the expert reports are important in providing particulars of Cherwell Creek’s reply and Cherwell Creek changed its position about the reports after the case was directed to CMEE. [47] Thirdly, BMA obtained the other relief it sought in the application: to set aside the disputed order as well as the orders made on 27 February 2018. [48] Fourthly, the application, as it related to order 6, was adjourned at Cherwell Creek’s request. [49] Finally, BMA succeeded in its argument that order 6 should be vacated, not just because it had been overtaken by the Practice Direction, but also for the reasons set out at [11] to [15]. [50] BMA did not succeed in its argument the case should not be referred to CMEE pursuant to the Practice Direction. However, this was not vigorously argued and was an ancillary issue. Orders: 1. Order 6 made on 14 December 2017 is vacated. 2. Cherwell Creek Coal Pty Ltd must pay the respondent’s costs of the application, as assessed if not agreed. FY KINGHAM PRESIDENT OF THE LAND COURT -- 11 of 11 --