Miners recover costs against landholders who behave unreasonably

• In the last 12 months, there have been multiple occasions where a landholder has been ordered to pay the costs of a miner in Land Court proceedings.  
• Although the general approach is that costs "follow the event", the Land Court has unfettered discretion to make any order as to costs it considers appropriate in the circumstances (see, eg section 34 of the Land Court Act 2000 (Qld)).
• Miners have obtained costs orders against landholders who have behaved unreasonably, in the form of refusing to remove a "hopeless caveat", "vexatiously" maintaining an objection, and unreasonably persisting in a compensation claim and refusing to meaningfully engage in alternative dispute resolution.

Costs ordered against landholder "rubbing salt into wounds"

In Hail Creek Coal Holding Pty Limited & Ors v Michelmore (No 2) [2021] QLC 23, the Land Court considered an application made by the miner for its costs of, and incidental to, the proceedings and submitted that costs should "follow the event".  

In considering the appropriate approach to costs in this instance, the Land Court considered the following three principles derived from Lonergan & Anor v Friese (No 2) [2020] QLAC 4:

• that, in the absence of settlement offers being made, the default position should be that each party bears its own costs;
• that a costs order should not be made unless the party seeking costs can demonstrate that it has been "successful", thereby engaging the rule that costs should "follow the event"; and
• that the reasonableness, or indeed unreasonableness, of the parties in attempting to reach agreement should be taken into account.

In relation to which party should be considered "successful", although the landholder had successfully been awarded compensation from the miner in relation to its mining lease application, the Land Court noted that the award was substantially less than the miner's Calderbank offer of $2.2 million made prior to the conclusion of the proceedings.  The landholder had originally sought compensation in excess of $14 million which they then revised to a slightly more "modest" $8.14 million.  The Land Court ultimately awarded $530,530.  Consequently, the Land Court found that this amount, in comparison to Hail Creek's Calderbank offer, pointed to the miner's "success".

In relation to reasonableness, the Land Court found that the landholder's initial claim of over $14 million was "clearly unreasonable", particularly since not even the landholder's own expert evidence supported such a view.   

In making its costs order, the Land Court ordered that the landholder pay the miner's costs on a standard basis, due to the "punitive" nature of Calderbank offers.  In closing, the Land Court remarked (at [39]) that it:

can understand that [its] decision on costs may be rubbing salt into his wounds.  But this decision is a salutary lesson to all involved.  Landowners should be careful not to be taken in by overenthusiastic advice from which it is difficult to depart with dignity.  Miners should not be stingy in their early negotiations for compensation.  Lawyers for parties should give appropriately considered advice.  A 20-year mining lease is a long time to reflect on missed opportunities.

Costs ordered against landholder who filed "hopeless" caveat 

In New Emerald Coal Pty Ltd v Manlam Pty Ltd [2019] QLC 43, the Land Court considered an application by New Emerald Coal that a landholder's caveat be removed, and that a corresponding costs order be made against the landholder.  As the caveat was withdrawn prior to the commencement of the hearing, the Court was only required to consider the costs application.  

New Emerald Coal submitted that it was appropriate for a costs order to be made in its favour because: 

• the landholder's caveat was hopeless as there was "no caveatable interest to support it";
• the caveat had been maintained until a very late stage – that is, mere moments before the commencement of the hearing – despite there being no ground to support it; and
• as a result, New Emerald Coal had no choice but to bring the proceedings to remove it.

The Land Court agreed with New Emerald Coal and made an order for costs in its favour, to be agreed within 14 days of the publication of reasons or otherwise to be assessed on a standard basis.

Costs ordered against landholder for "vexatiously" maintaining objections to the grant of a mining lease 

In Peter Campbell Earthmoving Pty Ltd v Plentygold Miclere Pty Ltd [2020] QLC 15, the Land Court considered an application for costs against a landholder brought by Peter Campbell Earthmoving Pty Ltd, after having its objections to the grant of its mining lease struck out.  

The landholder, Plentygold Miclere Pty Ltd (Plentygold), had objected to the application for ML 70069 by another company, Lodestar Mine Pty Ltd, which went into receivership and transferred the mining lease application to Peter Campbell Earthmoving.  However, notwithstanding that Plentygold's objections were largely specific to the original applicant, Plentygold maintained the objections which consequently required Peter Campbell Earthmoving to apply to strike out the objections.

The Land Court determined that, although there was insufficient evidence to prove an improper motive for maintaining the objections, the landholder had maintained its objections "vexatiously".  Therefore, the Land Court ordered costs on a standard basis in the applicant miner's favour.

Costs ordered against a landholder for unreasonable persistence in a compensation claim and for a lack of meaningful engagement in ADR 

In Kelly v Chelsea on the Park Pty Ltd (No 2) [2020] QLC 43, the applicant miner, Mr Kelly, sought an order that the respondent landholder, Chelsea on the Park Pty Ltd, pay his costs of the hearing on an indemnity basis. 

The Land Court took the following three factors into consideration:

• whether the landholder's original compensation claim was reasonable;
• whether the landholder had refused to engage "meaningfully" in alternative dispute resolution (ADR); and
• whether Mr Kelly did, in fact, make an offer to settle.

Due to the requirement in section 279(1)(a) of the Mineral Resources Act 1989 (Qld) that the Court only has jurisdiction if the parties cannot agree compensation, meaningful engagement in ADR is a relevant matter to the consideration of costs.  The Land Court concluded that the facts (eg not responding to Mr Kelly's invitation to mediation) indicated that Chelsea was "not interested in a mediated solution unless that solution was wholly or substantially on [Chelsea's] terms".

Although the Land Court acknowledged that Mr Kelly had made an offer to settle, the offer had been made just before the hearing, this offer did not reflect the actual value of the land and was inadequate in other practical respects (eg providing sufficient inspections and surveillance). 

Taking into consideration all three factors, the Land Court concluded that an order for costs was appropriate, particularly in light of Chelsea's unreasonable persistence in the compensation claim and lack of meaningful engagement in ADR.  However, it was not appropriate for Chelsea to pay Mr Kelly's costs on an indemnity basis.  Chelsea was ordered to pay Mr Kelly's costs of the hearing on a standard basis. 

Authors: Libby McKillop, Senior Associate and Leanne Mahly, Lawyer