Campbell v Sanangar Pty Ltd and Pedogenesis Pty Ltd [2009] QLC 42

LAND COURT OF QUEENSLAND CITATION: GB and TM Campbell v Sanangar Pty Ltd and Pedogenesis Pty Ltd [2009] QLC 42 PARTIES: GB and TM Campbell (applicants) v. Sanangar Pty Ltd and Pedogenesis Pty Ltd (respondents) FILE NO: MLC00053/2009 DIVISION: General Division PROCEEDING: Application for an adjournment DELIVERED ON: 17 March 2009 DELIVERED AT: Brisbane HEARD AT: Brisbane MEMBER: Mrs CAC MacDonald, President ORDER: 1. The application by the respondents for adjournment of the hearing of the claim for compensation is granted. 2. The matter is listed for review for 2 hours on Thursday, 9 April 2009 at 10.00 a.m. 3. The claim for compensation is listed for hearing for 4 days commencing on Tuesday, 5 May 2009 at 10.00 a.m. 4. Costs of the application for adjournment are reserved. CATCHWORDS: Application for an adjournment of a hearing – respondent company in administration – consequent uncertainty – adjournment granted. APPEARANCES: Mr A Skoien for the applicants Mr T Quinn for the respondents -- 1 of 7 -- 2 SOLICITORS: MRH Lawyers for the applicants McInnes Wilson Lawyers for the respondents [1] This is an application by GB and TM Campbell (the applicants) for an adjournment of the hearing of a claim for compensation in connection with the grant of a mining lease to Sanangar Pty Ltd and Pedogenesis Pty Ltd (the respondents). The application was supported by an affidavit sworn by Ms AC Grayson, a solicitor in the employ of MRH Lawyers, the solicitors for the applicants. Ms Grayson also gave oral evidence at the hearing of the application for the adjournment. [2] Briefly, the background to the application is that, pursuant to the provisions of the Mineral Resources Act 1989 (the Act), the respondents applied for a lease to mine part of land owned by the applicants on 10 October 2007. The applicants objected to the mining lease application by document dated 27 November 2007 and the application was referred to the Land Court on 10 December 2007. On 16 December 2008 the Land Court (Mr PA Smith) recommended to the Minister for Mines and Energy that, subject to the formal pegging of survey points on the agreed survey plan and subject to the draft conditions as agreed, Mining Lease No. 80143 be granted. [3] Section 279(1)(a) of the Act provides that a mining lease shall not be granted unless compensation has been determined between the applicant [for the mining lease] and each person who is the owner of land the surface of which is the subject of the application and of any surface access to the mining lease level. There has been no agreement between the parties as to the compensation payable and, consequently, the hearing of the claim for compensation was set down for three days commencing 16 March 2009. This application was brought at the commencement of the first day. [4] The applicants seek three orders – 1. An order that the dates for the hearing of the compensation proceeding be vacated; 2. An order that the proceeding be listed for review on a date to be fixed in April 2009; and 3. An order that the costs thrown away by the adjournment be reserved. The grounds for the application are, in broad terms, that - 1. The proceeding should be adjourned as its continued prosecution may be futile; 2. The respondents have failed to disclose all material relevant to the matter, in particular, documents relating to Muan Quarry which are directly relevant to the dispute about potential impacts from the proposed mining activities; and -- 2 of 7 -- 3 3. The respondents seek to rely on expert evidence as provided to the claimants during the week beginning 9 March 2009 which expert evidence does not comply with the Court's Orders of 16 December 2008. The 'futility' ground [5] Ms Grayson's affidavit established that on 24 February 2009 an administrator (Ms JA Williams) was appointed to administer the affairs of Pedogenesis Pty Ltd. The directors of Pedogenesis Pty Ltd are Ms DP Sheehy and Mr H Treers. [6] It appears that the administrator of Pedogenesis Pty Ltd was appointed pursuant to s.436A of the Corporations Act 2001 (Cth) which provides that - "(i) a company may by writing appoint an administrator if the board has resolved to the effect that – (a) in the opinion of the directors the company is insolvent or is likely to become insolvent at some future time; and (b) an administrator should be appointed." Section 435C(2) provides that - "(2) The normal outcome of the administration of a company is that: (a) a deed of company arrangement is executed by both the company and the deed's administrator; or (b) the company's creditors resolve under paragraph 439C(b) that the administration should end; or (c) the company's creditors resolve under paragraph 439C(c) that the company be wound up." Section 437A(1) provides that - "(1) While a company is under administration, the administrator: (a) has control of the company's business, property and affairs; and (b) may carry on that business and manage that property and those affairs; and (c) may terminate or dispose of all or part of that business, and may dispose of any of that property; and (d) may perform any function, and exercise any power, that the company or any of its officers could perform or exercise if the company were not under administration." Section 440D(1) provides – "(1) During the administration of a company, a proceeding in a court against the company or in relation to any of its property cannot be begun or proceeded with, except: (a) with the administrator's written consent; …" [7] The administrator's written consent to the continuation of these proceedings was granted by letter dated 13 March 2009. [8] Mr Skoien, for the applicants, submitted nevertheless, that the hearing of the compensation claim should be postponed pending the outcome of the creditors' meeting -- 3 of 7 -- 4 and their decision under s.435C(2) as to the outcome of the administration. Section 439A(2) of the Corporations Act effectively provides that the creditors' meeting must be held, at the latest, within 5 business days after the expiration of 20 business days after the day the administration begins. [9] Mr Skoien submitted that it would be prudent to postpone the hearing because - (1) Pedogenesis Pty Ltd is insolvent or is likely to be insolvent; (2) the applicants should not be put to the cost of a full hearing until it was clear what the outcome of the administration would be pursuant to s.435C; (3) it was unlikely that the Minister would grant a mining lease to a company in administration or recently out of administration; (4) if Pedogenesis Pty Ltd were wound up it would be unable to take the grant of mining lease. [10] Mr Quinn for the respondents submitted that the hearing should continue because - (1) the applicants' submissions ignored the fact that Sanangar Pty Ltd was also an applicant for the mining lease; (2) the Court may extend the time for meetings of creditors, leading to further delay; (3) the administrator considered that it was worthwhile to proceed with the lease (and compensation) application; (4) the company can continue to trade; (5) the lease or the application for the mining lease could be assigned under s.300(1) of the Mineral Resources Act. Conclusions re futility point [11] I have decided that the hearing of the claim for compensation should be adjourned pending a decision as to the outcome of the administration of Pedogenesis Pty Ltd. [12] As Austin J pointed out in Brian Rochford Ltd v Textile Clothing and Footwear Union of New South Wales1, the period of administration is designed to enable the administrator to fulfil her/his statutory duty to investigate the company's affairs and to form an opinion about the best interests of the company's creditors. Following the administrator's reports the creditors will decide which of the outcomes under s.435C will flow. The uncertainty created by this process is good reason, I consider, to adjourn the hearing of the compensation claim in order to clarify whether Pedogenesis Pty Ltd will remain in existence. Pending that decision I do not consider that it is reasonable that the applicants should bear the costs of an extended hearing. 1 (1998) 30 ACSR 38 at 44. -- 4 of 7 -- 5 [13] The effect of granting the adjournment is to postpone the hearing of the compensation claim, not to terminate it permanently. The period of administration should be relatively brief, given the timeframes set up under the Corporations Act and as Austin J said in Rochford2 the courts are reluctant to grant extensions of time to the statutory periods - "Therefore, it is true as a general proposition that Pt 5.3A imposes a moratorium on the security enforcement, recovery and legal proceedings to which it applies, not extinguishing rights but generally suspending their exercise. That being so, it is essential in the interests of those whose rights are suspended that the period of moratorium be the minimum period necessary for the efficient and effective achievement of the objective of the administration." [14] It is accepted that there are two applicants for the mining lease, Sanangar Pty Ltd and Pedogenesis Pty Ltd. However, Pedogenesis was nominated as the principal tenure holder in the original application for the mining lease and the uncertainty as to its status is a significant factor to be taken into account in deciding whether to postpone the hearing of the compensation claim. [15] I also accept that the mining lease application may be assigned. However it has not yet been assigned so that Pedogenesis remains one of the applicants for the lease and one of the relevant parties against whom the application for compensation is made. The uncertainty created by the administration of Pedogenesis affects both those processes. The Disclosure Ground [16] Given my decision on the futility point, it is not strictly necessary to decide the other grounds on which the adjournment application was brought. However, to assist the future progress of this matter, I can say that I would not have granted an adjournment on this ground. [17] A number of documents relative to other mining activities conducted by the respondents were identified by the applicants as documents in respect of which disclosure was sought. These included records relating to matters such as extraction quantities, sale quantities, weighbridge records, expenditure, assets (including plant and equipment), machinery repairs, maintenance logs, tax returns, statutory returns, compliance certificates, consultant reports, development approvals, compliance with environmental codes etc.3 [18] Mr Skoien submitted that the documents sought were relevant to the matters in issue because the respondents were seeking to rely on a document authored by Ms Sheehy which referred extensively to a mining operation at Muan Quarry where Ms Sheehy oversees the day to day activities and where she is the company geologist/chief executive officer. 2 At 45. 3 By email from MRH lawyers to McInnes Wilson Lawyers dated 10 March 2009 (Exhibit AC6 22 to Ms Grayson's affidavit sworn 16 March 2009). -- 5 of 7 -- 6 [19] Muan Quarry is a basalt rock quarry unlike the proposed limestone operation the subject of these proceedings. Ms Grayson said that she considered that documents relating to the type of operation conducted at Muan Quarry, the amount of dust generated and the plan of operations were important in the current matter. [20] Although not framed as an application for further disclosure, I consider that to succeed on this ground the matters to be established by the applicants are the same as those relevant to an application for further disclosure. Relevantly, Rule 223(4)(b)(i) of the Uniform Civil Procedure Rules 1999 requires the Court to be satisfied that there is an objective likelihood that the duty to disclose has not been complied with. The duty to disclose requires a party to disclose each document directly relevant to a matter in issue in the proceeding (r.211(1)(c)). [21] In my opinion, the applicants have failed to establish that all of the documents sought in relation to the Muan Quarry are directly relevant to the matters in issue in these proceedings and, therefore, I am not satisfied that there is an objective likelihood that the duty to disclose had not been complied with. It may be that a differently framed application could succeed. The Expert Evidence Ground [22] As mentioned above, a statement has been prepared by Ms Sheehy and filed in the Court. The applicants have challenged this statement on the basis that the statement indicated that Ms Sheehy will be giving expert evidence and the obligations concerning expert witnesses imposed by Court orders of 16 December 2008 have not been fulfilled. Included in those orders were orders that the parties provide notification of the names and field of expertise of each expert witness to be called to give evidence by 28 January 2009, that there be joint meetings of those experts by 6 February 2009, that they provide a joint report by 13 February and that there be an exchange of expert reports by 27 February 2009. It appears that there has been no compliance with these orders in respect of Ms Sheehy's evidence. [23] At one point, Mr Quinn said that his clients were prepared to proceed on the basis that Ms Sheehy's (and Mr Treers') statements should be admitted only as evidence of the facts therein. Subsequently he said he was not seeking to rely on any comparison with Muan Quarry in Ms Sheehy's and Mr Treers' statements. [24] This aspect of the matter remained unresolved and, therefore, I make no decision in relation to this ground. -- 6 of 7 -- 7 Orders 1. The application by the respondents for adjournment of the hearing of the claim for compensation is granted. 2. The matter is listed for review for 2 hours on Thursday, 9 April 2009 at 10.00 a.m. 3. The claim for compensation is listed for hearing for 4 days commencing on Tuesday, 5 May 2009 at 10.00 a.m. 4. Costs of the application for adjournment are reserved. CAC MacDonald PRESIDENT OF THE LAND COURT -- 7 of 7 --