Chief Executive, Department of Environment and Resource Management v Australis Mining Operations Qld Pty Ltd & Ors [2016] QPEC 36 (2016) QPELR 675

PLANNING & ENVIRONMENT COURT OF QUEENSLAND CITATION: Chief Executive, Department Of Environment and Resource Management -v- Australis Mining Operations Qld Pty Ltd & Others [2016] QPEC 36 PARTIES: CHIEF EXECUTIVE, DEPARTMENT OF ENVIRONMENT AND RESOURCE MANAGEMENT (Applicant) v AUSTRALIS MINING OPERATIONS QLD PTY LTD (Respondent) & ANTHONY DAMIANOS (Third Respondent) FILE NO/S: 3765 of 2009 DIVISION: Planning & Environment PROCEEDING: Application ORIGINATING COURT: Brisbane DELIVERED ON: 29 July 2016 DELIVERED AT: Brisbane HEARING DATE: 21 March 2016 JUDGE: Rackemann DCJ ORDER: The application for costs is dismissed CATCHWORDS: PLANNING AND ENVIRONMENT – COSTS – proceeding for orders to require rehabilitation of a disused mine – proceeding ultimately discontinued after a third party obtained rights to reopen the mine, subject to obligations to rehabilitation – where third party had been discouraged from applying for approvals earlier by an officer of the application and the applicant had refused to consent to an adjournment – whether applicant continued to the proceeding primarily to delay or obstruct – whether the proceeding or part thereof was vexatious – whether applicant had not properly discharged its responsibilities COUNSEL: A Morris QC and A C Barlow for the applicants / first and third respondent -- 1 of 15 -- 2 M D Hinson QC for the DERM SOLICITORS: Paul Watts & Co Solicitors for the first and second applicants Chief Executive for the respondent [1] This matter has an unusually long history. It was commenced by an originating application filed on 23 December 2009 seeking orders, pursuant to s 505 of the Environment Protection Act (EPA), to require rehabilitation works at the site of a discontinued sapphire mine. On 20 May 2015 orders were made dismissing the application as against the fourth respondent and giving leave for the proceeding to be discontinued as against the then remaining respondents. Two of those, namely the first (Australis) and the third (Damianos) respondents seek their costs of the proceeding on an indemnity, or alternatively on a standard, basis. [2] Because the proceeding was commenced in December 2009, it is the now former s 457 of the Sustainable Planning Act (SPA) which applies in relation to the application for costs.1 That relevantly provides as follows 457 Costs (1) Each party to a proceeding in the court must bear the party’s own costs for the proceeding. (2) However, the court may order costs for the proceeding, including allowances to witnesses attending for giving evidence at the proceeding, as it considers appropriate in the following circumstances- (a) the court considers the proceeding was instituted, or continued by the party bringing the proceeding, primarily to delay or obstruct; (b) the court considers the proceeding, or part of the proceeding, to have been frivolous or vexatious; … (i) an applicant, submitter, assessment manager, referral agency, coordinating agency for a master plan application, compliance assessor, a person requesting 1 See s 945 of SPA. -- 2 of 15 -- 3 compliance assessment or a local government does not properly discharge its responsibilities in the proceeding. [3] It was submitted on behalf of Australis and Damianos that the jurisdiction to make a costs order arises under each of s 457(2)(a),(b) and (i) and that the discretion ought be exercised in favour of making an order. The essential underlying complaint is of DERM’s decision to continue to prosecute the proceeding instead of earlier adopting the alternative, and ultimately successful, avenue towards a resolution based on a third party taking responsibility for the mining and rehabilitation of the site. [4] The first return date of the originating application was 26 February 2010. The substantive proceeding was ultimately set down for hearing commencing on 22 November 2010. On the second day of the hearing, Ms Mackaway, a principal environmental officer with DERM, conceded that one way to achieve rehabilitation would be if another miner was prepared to undertake the required rehabilitation as part of a mining project pursuant to a new mining lease and environmental authority2 and that there had been some communication on behalf of an interested miner, namely Gregcarbil. A letter of 19 December 2010 on behalf of Gregcarbil to DERM was tendered. The letter advised that Gregcarbil was an experienced mining company which was in the process of applying for a mining lease for adjoining land and had an interest in using Australis’ plant site and in progressively rehabilitating the Australis site over the period of the lease. The letter sought advice as to who Gregcarbil could approach with a view to discussing “possibilities and opportunities”. [5] An affidavit of Mrs Graham (a director of Gregcarbit) filed on 18 January 2011 reveals that on 17 November 2010, she had written to Ms Mackaway (with copies to 2 23 November 2010 T 2-45, 46. -- 3 of 15 -- 4 the mining registrar and to counsel for Australis and Damianos) in terms which included the following: (i) it would be best if Gregcarbil acquired the area of the Australis plant (ii) Gregcarbil was “prepared to come to the table with all concerned, with a sensible and visible approach to try to solve the rehabilitation problems” (iii) the problem will not be solved “unless someone capable is allowed an Environmental licence over this area with an ongoing plan for rehabilitation” (iv) Gregcarbil is prepared to “talk to try to achieve a suitable resolution of this problem”. [6] Mrs Graham also deposed, in the same affidavit, to a telephone conversation between Mrs Graham and Ms Mackaway in which the later said that DERM would not give an environmental authority over the Australis site because there was no application for a mining lease. As Senior Counsel for DERM pointed out,3 that advice was not unaccurate, but as is referred to later, another officer of DERM had earlier advised to the effect that no environmental authority would be granted, in any event, whilst the subject proceeding was pending. [7] At the conclusion of evidence on 23 November 2010, the further hearing was adjourned to 26 November 2010 for submissions. On 24 November 2010, counsel for Australis and Damianos sent an e-mail to Senior Counsel for DERM in the following terms: As you know I am instructed by Paul Watts & Co and I act on behalf of the above named. 3 21 March 2016 T1-21. -- 4 of 15 -- 5 I have spent considerable time with Mr Damianos. The following alternative proposals are offered in settlement of the proceedings presently before the Planning and Environment Court Brisbane. Mr Damianos has, overnight, put together a real plan for the rehabilitation of the Australis site, presently the subject of these proceedings. At present, it is envisaged rehabilitation will involve the following: (a) A plan from Gregcarbil Pty Ltd to rehabilitation the site, with some immediate rehabilitation to take place, if approval granted, and progressive rehabilitation thereafter, in accordance with a set and defined plan – to be provided; (b) Financial assurance in a reasonable sum (a financial backer has indicated interest in providing assurance, possibly up to $750,000.00) to be provided; and (c) A firm plan outlining the above in greater detail to be provided by 4pm Friday 3 December 2010. Mr Damianos, in conjunction with a financial backer who is prepared to support Gregcarbil’s rehabilitation will put together a firm proposal outlining the above in greater detail. It would be necessary to adjourn the present proceedings for say 14 days, to allow the plan to be put forward and your client to have some time to consider it. That may be of interest to your clients – it involves a result which would no doubt be of benefit to your client and the landholder as it would see real rehabilitation work performed, immediately, as part of a plan to rehabilitate the site fully over a period of time. It (sic) that is not acceptable to your client, Mr Damianos, and Australis (jointly) offer the following: (a) They will forgo their present costs order granted in their favour earlier this year; (b) Mr Damianos will sell his private motor vehicle expected to return $10,000.00 (he will guarantee that sum); and -- 5 of 15 -- 6 (c) The $50,000.00 Financial Assurance held in respect of the company and Subera be released to your clients absolutely. As you know I have pointed out to you neither the company, nor Mr Damianos have any funds whatsoever. [8] It was obviously in the interests of Australis and Damianos to have someone else assume responsibility for the part of the site said to be in need of rehabilitation. The written outline of submissions for Australis and Damianos suggested the letter of 24 November 2010 was, or was akin to, a calderbank offer which ought not have been rejected. As Senior Counsel for Australis and Damianos accepted, in the course of oral argument on the costs application, things had not then matured to a point where the e-mail of 24 November could constitute an offer to settle the proceeding. In that regard, the e-mail spoke of rehabilitation which was ‘envisaged’ to be done by the third party (Gregcarbil), subject to approvals which had not then been applied for, pursuant to a plan which had yet to be prepared. Things were, in essence, at the level of an expression of interest. [9] When the hearing resumed on 26 November 2010, I questioned whether the court was, or should be, fully informed of the circumstances of Gregcarbil’s intentions. Senior counsel for DERM contended that the case should proceed to judgment, with orders being made which could then become the subject of an application to vary in the event that there were subsequent relevant events concerning Gregcarbil’s intentions. The hearing was adjourned to 2 December 2010 to permit the parties to formulate reply submissions. [10] On 2 December 2010 counsel for Australis and Damianos sought to tender a letter in relation to Gregcarbi’s position with respect to the Australis site and its dealings with DERM and the Mining Regulator. Objection was taken to the tender and senior -- 6 of 15 -- 7 counsel for DERM repeated the earlier submission that any future developments could be the subject of an application to vary orders. Counsel for Australis and Damianos nevertheless made an application to reopen the case to prove the facts in a proper way. That application was granted. Oral submissions on contentious matters otherwise were heard on the day, but the matter was then adjourned and a timetable set for the filing of further affidavits and for the resumption of the hearing in order for the deponents to be cross-examined and further submissions to be made. [11] The matter next came before the court on 27 January 2011. Further affidavit material was tendered, but the parties were not then in a position to proceed. Accordingly, the matter was further adjourned to 11 February 2011 with directions as to filing further evidence [12] One of the deponents of the new affidavit material was Mrs Graham. Both Mr and Mrs Graham gave testimony on 11 February 2011. Their evidence included as to the following effect: (i) Gregcarbil, and the Graham family are experienced miners; (ii) Gregcarbil was then the applicant for a mining lease over an area adjoining the subject site; (iii) Gregcarbil’s application for a lease on the adjoining site had attracted objections and the application was then subject of a pending proceeding in the Land Court; (iv) the Australis site would be of considerable value and benefit to Gregcarbil (assuming it obtained the right to mine the adjacent land). It would allow Gregcarbil to use the plant site on the Australis site, thereby minimising both -- 7 of 15 -- 8 the extent of disturbance on its site and establishment costs. There are also remaining sapphire deposits on the Australis site which could be mined. Further, the Australis site may facilitate better access; (v) Gregcarbil wished to apply for a mining lease over the Australis site, including presently disturbed areas; (vi) Subject to obtaining a mining lease on terms acceptable to it, Gregcarbil’s intention was to utilise the Australis site and to carry out rehabilitation over the course of the lease, however Gregcarbil could not then commit; unconditionally, to rehabilitation the Australis site “because we have not considered whatever requirements the Mining Registrar or DERM might have, if indeed, Gregcarbil is offered a chance to utilise the site”; 4 (vii) Gregcarbil had been discouraged, by certain advice, from making an application over the Australis site. [13] Gregcarbil’s interest in the Australis site dates back to prior to lodging its application over the adjoining land on 30 November 2009. Mrs Graham deposed that, shortly before that time, the prospect of ‘pegging’ the Australis site was discussed with Mr Pokarier (Mining Registrar – not with DERM). She says that he informed her that “there was no way we would be allowed to go near that area” and that Gregcarbil should lodge its application and see if DERM issued a draft environmental authority. She deposed that “It appeared to be the mining Registrar’s position that we might be lucky to get the lease, as applied for, without the Australis site”. Gregcarbil did not however, make an application with respect to the Australis site at that time. 4 Affidavit of the CJ Graham para 25(g). -- 8 of 15 -- 9 [14] Mrs Graham also deposed to a face-to-face meeting with a Mr Southwell (a senior environmental officer with DERM) on 9 February 2010. On the same day Mr Southwell sent an e-mail which said, amongst other things: “In regards to attaining a mining lease or purchasing land and pegging a mining lease, the department is in legal proceedings with the Australis company to get rehabilitation done on these areas and from our perspective we would not issue another environmental authority over these areas until the legal proceedings have been finalised. So if you were to buy the land off Mr Schmidt you would not be able to conduct mining activities (even rehabilitation) on these areas at this stage.” [15] In the course of the hearing on 11 February 2011, I questioned the advice given to Gregcarbil. Senior Counsel for DERM acknowledged that, in point of law, the present proceeding did not create any impediment to Gregcarbil making an application (which would then be required to be considered on its merits) over the Australis site. I suggested that some way be found to communicate that to the relevant officers, so that Gregcarbil could, if it wished, pursue its intended application. [16] In the circumstances, this court was called upon to consider whether any rehabilitation orders should then be considered in respect of the Australis land, when there was the possibility that the land, or part thereof, might become the subject of a further mining lease and environmental authority. In short, there was at least some prospect that the land said to be in need of rehabilitation might be mined again and become subject to new rehabilitation responsibilities, thereby affecting the utility of ordering rehabilitation in the meantime. -- 9 of 15 -- 10 [17] There were at least 2 ways of dealing with that prospect. The first, which was urged by DERM, would be to determine, by judgment, the substantive issues as to whether a rehabilitation order would otherwise be appropriate (and in what terms) and then, if such an order were otherwise appropriate, to make such an order but to consider suspending its operation. The second was to adjourn the further hearing of the proceeding to permit time for the Gregcarbil’s foreshadowed application to progress, on the basis that such a course might potentially render consideration and determination of the contested substantive issues unnecessary. Each of those courses was reasonably open. Ultimately, in circumstances where there appeared to be no urgency about the rehabilitation, the court decided to follow the latter course, whilst reviewing the matter, from time to time, to check on the progress of the Gregcarbil application. [18] Subsequently, Gregcarbil made an application on 7 March 2011, which attracted objections. The issue of a lease over the Australis site became the subject of Land Court proceedings. That process took longer than anticipated, but as it transpired, the ultimate outcome led DERM to conclude that the relief previously sought no longer had utility, given the extent of the mining permitted and the rehabilitation obligations. None of the above suggests that there was any lack of merit in DERM’s case at the time the proceeding was instituted or at the time of the hearing. [19] It was submitted, for Australis and Damianos, that “as at 11 February 2011, the substance of the application changed entirely, because Gregcarbil offered to rehabilitate the whole of the site in exchange for a reasonably conditioned lease” such that “any decision to progress the case beyond this point, flies in the face of known facts”, but: -- 10 of 15 -- 11 (i) Securing a mining lease (and environmental authority) is not a matter of bargaining. It involves a statutory application, assessment and decision making process, which, as at 11 February 2011, had not been embarked upon far less concluded; (ii) The remedy initially sought by DERM only came to lack utility at a later point, when mining rights and rehabilitation obligations crystallised; (iii)The case was not, in any event, substantively progressed after 11 February 2011, save for periodic reviews to check on the progress of the Gregcarbil application. [20] The submission, on behalf of Australis and Damianos, was that resolution of the matter was delayed by DERM not earlier responding positively to the suggestion of pursuing the prospect of resolution on the basis of responsibility being taken over by Gregcarbil. It was submitted that, by instead pursuing the relief claimed, DERM was guilty of: (i) continuing the proceeding primarily to delay the resolution of the matter5 (s457(2)(a)); (ii) vexatiousness6; and (iii) not properly discharging its responsibilities in the proceeding7 (s457(2)(i)). [21] This is not a case where DERM attempted to elongate the subject proceeding. Indeed, it urged the court to proceed to judgment, on the basis that any change of circumstances, or potential change of circumstances as a result of the Gregcarbil 5 21/3/16 T1-6. 6 21/3/16 T1-6. 7 21/3/16 T1-7. -- 11 of 15 -- 12 interest could be dealt with by a subsequent application to vary any orders made, or by staying the operation of orders. [22] Reliance was placed on the discouragement of Gregcarbil to make an earlier application for a lease over the Australis site, with a consequent delay in obtaining rights and obligations which overtook any need for rehabilitation by Australis or Damianos. It was submitted that, until the error of the advice was pointed out on 11 February 2011, “the impediment to a sensible resolution of this litigation had been a not only erroneous but perverse attitude taken by the department”.8 [23] As to s 457(2)(a), the argument was not ultimately put of the basis of the institution of proceedings,9 but it was contended, for Australis and Damianos, that DERM continued the proceeding in order to delay Gregcarbil’s foreshadowed application for a mining lease.10 It was initially submitted, for DERM, that such a purpose (if established) would not be caught by s 457(a), because it is directed to delay or obstruction of a party in relation to something which is the subject matter of the proceeding. The words ‘delay’ or ‘obstruct’ however, are not expressly linked to a party or to a particular subject matter. On their face, the words are broad enough to extend to the institution or continuation of a proceeding to delay or obstruct a non- party in some way. It is however, unnecessary to reach a concluded view on the scope of s 457(2)(a) since, even on the construction contended for on behalf of Australis and Damianos, the contention that s 457(2)(a) is triggered fails for want of proof. 8 21 March 2016 T1-11. 9 21 March 2016 T1-12. 10 The written outline also took issue with delay in commencing proceedings and in not exploring alternatives prior to instituting proceedings. The section is concerned with the institution or continuance of proceedings in order to delay or obstruct, rather than delay in the institution of proceedings. Further I am not satisfied that any failure to more diligently examine alternatives to litigation in this case justifies a conclusion that the proceeding was instituted or continued primarily to delay or obstruct. -- 12 of 15 -- 13 [24] That a third party was given incorrect advice (including by an officer within the employ of DERM) and was thereby discouraged,11 for a time, from making its own application for a mining lease and environmental authority does not lead to the conclusion that DERM’s decision to institute or pursue the subject proceeding was primarily in order to delay or obstruct the third party. It was submitted,12 for Australis and Damianos, that I should conclude (in the circumstances and on the balance of probabilities) that this was not a case of an officer giving honest but mistaken advice to Gregcarbil, but was instead a case of DERM intentionally continuing the subject proceeding so as to prevent a third party (Gregcarbil) from getting to a position whereby it assumed responsibility of the site rehabilitation13. I am not prepared to infer that intent on the material. [25] Some issue was sought to be taken with the attitude of DERM in a meeting in March 2011 concerning the Gregcarbil application. In particular, it was indicated that Gregcarbil would only be required to rehabilitate whatever part of the Australis site it used, but that Gregcarbil could tender for remaining rehabilitation work. That was said to be extraordinary, given Gregcarbil’s preparedness to do all the rehabilitation. Senior Counsel for DERM submitted that Gregcarbil could not, as a condition of its approval, lawfully be required to do more than rehabilitate the area of its operations. In any event the subject proceeding did not proceed in a substantive way thereafter. Ultimately, the arrangements were such as to render the continuation of this proceeding unnecessary. I do not consider that the above reflects on the attitude of 11 It was submitted, on behalf of DERM, that Mrs Graham, in her testimony, had explained Gregcarbil’s discouragement more by reference to what Mr Pokarier (not an officer of DERM) had said, but it is difficult to discount the likely effect of Mr Southwell’s advice and, for the reasons stated, the basis for a costs order is not made out even on the assumption that it was Mr Southwell’s advice that was the operative cause of delay in Gregcarbil making its application. 12 21 March 2016 T1-13, T1-15. 13 which would obviate the utility of the subject proceeding. -- 13 of 15 -- 14 DERM more generally in a way which would justify a conclusion that s 457(2)(a) is engaged. [26] As to s 457(2)(b), it was contended that part of the proceeding was vexatious for the following reasons:14 “it is hard to think of something more vexatious than running an eight day trial15 that was totally unnecessary simply because the department had, to borrow your Honour’s felicitous turn of phrase, a muddle-headed view. That, on any view, gets up to the level of being vexatious, eight days in court because someone in the department isn’t prepared to seek or act on proper advice as to what the legal position is.” [27] The submission focuses on the decision to proceed with a hearing. It has already been observed that, at the time the hearing proceeded there was no offer then capable of acceptance, to bring an immediate end to the proceeding. DERM could have agreed to adjourn the further hearing to enable the Gregcarbil interest to mature, but it is difficult to see why its failure to do so should be considered vexatious. It is unfortunate that Gregcarbil was discouraged from making its application for some time, but that does not constitute that subject proceeding, or part of it, as vexatious. [28] The submission on behalf of Australis and Damianos appears to proceed on the assumption that the hearing only occurred because of an unwillingness, on DERM’s part, to seek or act on proper advice. However, even if it is assumed that those within DERM who were responsible for the carriage of this proceeding were conscious of the advice given to Gregcarbil, knew or ought to have known that the advice was 14 21 March 2016 T1-14. 15 the reference to an 8 day trial is influenced by the fact that the transcript for 11 February 2011 described it as day 8, but the course of the hearing is as described earlier. -- 14 of 15 -- 15 mistaken and ought to have earlier done something to correct it, it does not follow that DERM would have been obliged to put the current proceeding on hold whilst Gregcarbil made and progressed its application. It has already been observed that, even when the mistaken advice became evident, DERM continued to contend for the issues between the parties to be resolved by judgment, with consideration being given to the operation of any orders being suspended, as thought appropriate, in light of Gregcarbil’s intentions. That was an available course of action. There was nothing vexatious about DERM contending for the matter to proceed to judgment. That the Court took another course does not alter that conclusion. As has already been observed, the utility of the present proceeding was not extinguished until a later point in time. [29] As to s 457(2)(i) the matters relied upon by Australis and Damianos were, in essence, the same as those already dealt with.16 [30] For the above reasons I do not consider that s 457(2)(a),(b) or (i) is engaged. The application by Australis and Damianos for costs is dismissed. 16 21 March 2016 T 1-7. -- 15 of 15 --