LAND APPEAL COURT OF QUEENSLAND

CITATION:	Lonergan & Anor v Friese (No 2) [2020] QLAC 4	
	Patrick Joseph Lonergan & Prue Madeline Lonergan
(appellants)

v

Murray John Friese
(respondent) 	
FILE NOs:	LAC007-19
Land Court No MRA219-18	
DIVISION:	Land Appeal Court of Queensland	
PROCEEDING:	Application for costs 	
ORIGINATING COURT:	Land Court of Queensland	
DELIVERED ON:	10 June 2020	
DELIVERED AT:	Brisbane	
HEARING DATE:	Submissions closed 28 May 2020	
THE COURT:	Crow J
FY Kingham, President of the Land Court 
WA Isdale, Member of the Land Court	
ORDERS:	1.	The appellants must pay the respondent’s costs of and incidental to the appeal assessed on an indemnity basis.
 
2.	The parties are to bear their own costs of the hearing at first instance.	
CATCHWORDS:	APPEAL AND NEW TRIAL – PROCEDURE – QUEENSLAND – POWERS OF COURT – COSTS – where the appeal was dismissed by the Land Appeal Court – where the respondent sought indemnity costs for the appeal on the basis that the appellant’s grounds of appeal were unreasonable –– where the appellant submitted that at least half of the appeal was taken up with the respondent’s application – where the Court found that the appellant acted unreasonably by advancing an exaggerated claim for compensation both at first instance and on appeal – where the Court ordered that the appellant pay the respondent’s costs on the indemnity basis 

APPEAL AND NEW TRIAL – PROCEDURE – QUEENSLAND – POWERS OF COURT – COSTS – where the appellant sought standard costs of the hearing at first instance  – where the respondent also sought costs of the hearing at first instance on standard basis on the grounds that the respondent was successful, given the disparity between the appellants claim and the compensation awarded – where the Court found that neither party were successful – where the Court held that each party should bear their own cost of the hearing at first instance  

Land Court Act 2000 s 34, s 36, s 37, s 57A, 
Land Court Rules 2000 r 4
Mineral Resources Act 1989 (as at 21 August 2017) s 279, s 279A, s 281
Mineral Resources Act 1989 s 282(5), s 282A(6)

AAI Limited v Caffrey [2020] QCA 116, applied
Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586, cited
ERO Georgetown Gold Operations Pty Ltd v Henry (No 2) (2016) 37 QLCR 186; [2016] QLAC 3, considered
Friese v Lonergan & Anor [2019] QLC 27, considered
Kendell v Kendell & Ors [2005] QCA 390, applied
Lonergan & Anor v Friese [2020] QLAC 3, considered
Mentech Resources Pty Ltd v MCG Resources Pty Ltd (In Liq) (No. 2) (2012) 33 QLCR 43; [2012] QLAC 2, considered 
Mio Art Pty Ltd v Brisbane City Council (No 3); Greener Investments Pty Ltd (In Liquidation) v Brisbane City Council (No 3) (2013) 34 QLCR 222; [2013] QLAC 3, considered 
Mio Art Pty Ltd & Ors v Brisbane City Council [2010] QLC 86, considered	
APPEARANCES:	SW Trewavas (instructed by Marland Law) for the appellant 
R Cunningham (solicitor), Taylors Solicitors, for the respondent	

[1]	THE COURT: On 4 June 2019 Member Stilgoe made a determination, under the Mineral Resources Act 1989 (MRA), for compensation payable for the renewal of a mining lease. The respondents in the Land Court matter, Patrick and Prue Lonergan, appealed Member Stilgoe’s determination to the Land Appeal Court. The appeal was unsuccessful. 
[2]	The parties, having been unable able to reach agreement as to costs, have filed submissions with regard to costs in both the appeal and, as no cost order was made, the hearing at first instance. 
[3]	Section 57A of the Land Court Act 2000 (LCA) provides: 
57A	Costs 
(1)	The Land Appeal Court may order costs for an appeal to the court as it considers appropriate. 
(2)	Without limiting subsection (1), the Land Appeal Court may order costs for the proceeding in which the decision appealed against was made, whether or not the court or tribunal that made the decision made, or had power to make, an order for costs for the proceeding. 
(3)	If the Land Appeal Court does not make an order under subsection (1), each party to the appeal must bear the party’s own costs for the appeal. 
(4)	This section is subject to the provision of this Act or another Act to the contrary.
[4]	Furthermore, s 282(5) of the MRA confers a near analogous power on the Court to “make such orders as to costs of the appeal as it thinks fit”. As such s 57A(4) of the LCA is not enlivened. 
Appeal Costs 
[5]	The respondent seeks an order that the appellant pay the respondents costs of the appeal on an indemnity basis, or, in the alternative, a standard basis.  
[6]	Generally speaking, “costs follow the event in the usual way”, as the Land Appeal Court said in Mentech Resources Pty Ltd v MCG Resources Pty Ltd (In Liq) (No. 2):
Hence the Land Appeal Court may order costs ‘as it considers appropriate’. The discretion to award costs is unfettered. However the rule often followed, and the rule incorporated in r 689 of the Uniform Civil Procedure Rules 1999, is that costs follow the event. That rule, while it does not govern the exercise of the discretion here, nonetheless informs it, as there is justice in that approach. It protects those put to unnecessary and substantial expense at the behest of others. There is no reason here why costs should not follow the event in the usual way.
[7]	Mentech has been applied by the Land Appeal Court in several cases including Mio Art v Brisbane City Council and ERO Georgetown Gold Operations Pty Ltd v Henry (No 2). In ERO Georgetown¸ the Land Appeal Court said: 
While s 34 does not accord pre-eminence to the rule that the costs follow the event, in contrast to r 681 of the UCPR, equally, it does not create a general rule that parties bear their own costs. When an application is made for costs under it, the Court is required to determine what order (if any) is appropriate. In carrying out that task, the Court is to have regard to established principles relating to the exercise of such a discretion, to the extent they are relevant to the facts of the case before the Court. One such principle is the “rule often followed” that costs follow the event. The passage quoted from the judgment of McHugh J in Latoudis is also relevant. It follows that a party’s success will often be a significant, though not necessarily decisive, factor in its application for an order for costs. 
[8]	The appellant submits that, “at the highest”, the respondent’s claim for costs would be half the costs of the appeal and assessed on a standard basis only. The appellant submits this on the basis that the Land Appeal Court considered an application on behalf of the respondent (the preliminary issue) which had taken up “nearly 50% of the hearing and “almost half the appeal judgment”, and that while unsuccessful, the grounds of appeal do not rise to a level of unreasonableness. 
[9]	In Mio Art, the Land Appeal Court said: 
	In reaching a decision in this matter, the court is mindful of the fact that the specific provisions of s.34(1) of the Act apply rather than the UCPR. It is clearly open to this court to reach a decision on costs on the principles as outlined by Toohey J in Hughes. However, this court is aware of the words of caution expressed by Toohey J: 
“There is no difficulty in stating the principles; their application to the facts of a particular case is not always easy. Also it is necessary to keep in mind the caveat by Jacobs J. in Cretazzo v. Lombardi at 16. His Honour sounded what he described as ‘a note of cautious disapproval’ of applications to apportion costs according to the success or failure of one party or the other on the various issues of fact or law which arise in the course of a trial. His Honour commented:
“But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.”” (footnotes omitted) 
[10]	The Court does not accept the appellant’s submission that the hearing and judgment were equally occupied by the Appeal itself and the application to dismiss. The hearing predominantly dealt with the nine grounds of appeal, as did both parties oral and written submissions. As a result of that, in fact, concomitant of it, the appeal judgment also predominately dealt with the grounds of appeal. The respondent raised only one issue in the argument concerning the preliminary issue and made numerous concessions. The operation of s 282A(6) of the MRA had not been considered judicially before and the parties submissions regarding the issue were not comprehensive. Accordingly, this is not a case where it is appropriate to apportion costs. 
[11]	 With regard to awarding costs on an indemnity basis, the Court of Appeal said in Kendell v Kendell & Ors: 
This Court has the power to make an order it considers appropriate concerning the costs of an appeal. Despite the existence this wide power, the Court will usually only award costs on the standard basis unless it is of the view that the conduct of the appeal by a party has been ‘plainly unreasonable’ or there are other ‘special or unusual features justifying a departure from the usual course.
 	In my respectful opinion, an order of costs on the indemnity basis is appropriate in this case. The principal contention advanced by the appellant before this Court, and which was the focus of attention at the hearing of the appeal, related to an issue which had not been litigated below and which was not available to be raised for the first time on appeal. The assurance of freedom from personal liability that the appellant claimed to seek by way of an order from this Court had never been sought in clear terms by him and, most importantly, was not sought by him between the decision at first instance and the hearing of the appeal. The appellant's conduct was, in my view, so unreasonable as to require him to be ordered to pay costs on the indemnity basis.
[12]	In the present case the respondent argues that as the appellants were unsuccessful on all grounds, they have acted unreasonably as it “should have been clear that their appeal had no prospects of success”. Relevantly, the respondent points out that the appellant did not adduce any additional evidence for the appeal, despite a lack of evidence being referred to multiple times in the decision of Member Stilgoe.
[13]	As set out above, in Kendell v Kendell, unreasonableness was established against the appellant by advancing a principal contention upon appeal which was not raised before the primary judge. That example of unreasonableness does not arise in the present case. Before the Land Court, the respondent argued for compensation in the sum of $64,696.80. Despite a three-day hearing, including a visit to the mine site, the learned member quantified compensation at $3,726.38 together with an obligation to pay 10% of any annual invoice for track grading. 
[14]	As set out in this court’s decision, the learned member undertook her role in assessing compensation carefully, rationally and in accordance with the legislation. Despite this, the appeal was lodged on 26 October 2019 seeking the same amount of compensation as originally sought: $64,696.80, quantified in precisely the same manner as sought before the learned member. That is, the appellant argued that the learned member had assessed compensation incorrectly by a factor of 17. The appellant, in essence, argued that the learned member was wrong in every respect, but as has been shown in the Appeal judgment, the learned member was right in all respects, bar a mathematical error which was in the appellant’s favour. As this Court reflected, the mathematical error pointed out by the appellant could only lead to the conclusion that the learned member’s compensation valuation was “too generous”. 
[15]	In AAI Limited v Caffrey,  the Court of Appeal reinforced the notion that a successful party, particularly an “impecunious litigant”, should not be left “out of pocket” by the impact of a standard costs order. It must be reiterated that the mining lease was for a small, family-operated gold surface mine in the rough terrain.
[16]	As demonstrated by the learned member’s judgment in the first instance and, in particular, on appeal, the claim advanced by the appellant was for an exaggerated sum.  One example of this is the appellant’s claim for management time, particularised both in the hearing at first instance and on appeal, as “negotiations with the applicants regarding compensation - ten hours at $150 per hour”. The learned member dealt with this in her judgment:
Mr Lonergan was vague in identifying the time spent with Mr Friese trying to negotiate compensation. At best, it seems there is only one meeting. I do not accept that this meeting justifies a claim for 10 hours spent in negotiations. The bulk of the time claim appears to be the time Lonergan spent preparing for the hearing. The time spent preparing for the hearing cannot be the subject of compensation.
As the primary judgment and appeal judgment shows, each of the claimed heads of compensation was demonstrably inflated. The conduct of the appellant in advancing, at first instance and on appeal, a claim for compensation which was exaggerated or demonstrably inflated, constitutes conduct which is plainly unreasonable, thus warranting an indemnity order as to costs.
[17]	Accordingly, the appellant ought to pay the respondent’s costs of and incidental to the appeal assessed on an indemnity basis.
Hearing at first instance 
[18]	Section 34 of the LCA provides:
34	Costs 
(1) 	Subject to the provisions of this or another Act to the contrary, the Land Court may order costs for a proceeding in the court as it considers appropriate. 
(2) 	If the court does not make an order under subsection (1), each party to the proceeding must bear the party’s own costs for the proceeding.
The Land Court did not make an order for costs. Section 34(2) of the LCA is engaged and the position is that each party to the proceeding must bear their own costs for the proceeding.
[19]	It is submitted by the respondents (applicants at first instance) that given the disparity between the amount claimed by the appellants (respondent at first instance) and what was awarded by the Land Court, some $60,000, that the respondent was “successful” and as such “costs should follow the event”. 
[20]	Alternatively, the appellant submits that the amount awarded by the Land Court was “three times” the amount proposed by the respondent, plus the 10% allowance for track maintenance. However, with the total compensation awarded being $3,726.38, an increase of 300% is relatively insignificant; an increase from $100 to $200 would be a 200% increase but is hardly substantial. 
[21]	Furthermore, the appellant points out that prior to the respondent filing with the Land Court the parties only conducted one meeting to negotiate compensation. The respondent argues that as the appellant was claiming such a large amount further negotiation would have been fruitless.  By its conduct of the appeal in claiming exaggerated amounts for each and every head of damage sought, it may be demonstrated, in retrospect, that the respondent was correct that further negotiation would have been fruitless. The difficulty with such an affirmative conclusion is that there is a dearth of evidence as to what in fact occurred regarding any attempt to reach an agreement as to compensation. 
[22]	As the learned member reflected, it appeared there was only one meeting concerning an attempt to negotiate compensation. Despite both parties having the opportunity to provide evidence upon the issue of costs, no party provided any evidence as to what occurred during that one meeting, nor any other evidence concerning negotiations or offers to properly settle the amount of compensation. The success or otherwise of the parties’ positions must be judged according to the only available evidence. 
[23]	The only available evidence is that the respondent’s position at the conclusion of the primary trial was for a rate of $150 per annum for the ten years. That is, a submission that appropriate compensation is approximately $1,500 (on a non-discounted basis), whereas the respondent’s position at trial was that it sought compensation of $64,696.80. In the absence of evidence as to what offers were made at any time prior to the learned member’s determination of compensation, it must be concluded that no party succeeded, in the sense that neither party beat its own offer. 
[24]	The determination made by the Land Court under s 281(1) of the MRA enlivens in the Land Court a general discretion as to costs at the conclusion of a proceeding pursuant to s 34 of the LCA. The MRA supports a cooperative approach between the parties to agree the amount of compensation. Importantly, s 36 of the LCA allows for the arrangement of a preliminary conference to “discuss the issues in dispute and attempt to negotiate a settlement” and s 37 of the LCA applies the alternate dispute resolutions (“ADR”) provisions of the Civil Proceedings Act 2011 to the Land Court. Furthermore, by r 4 of the Land Court Rules 2000 (LCR), the rules in the Uniform Civil Procedure Rules 1999 (UCPR) apply. This, in turn, engages Chapter 9 Part 5 of the UCPR allowing formal offers to settle.
[25]	In summary therefore, the MRA encourages negotiation by the parties to reach an agreement with respect to compensation, failing which either party can apply to the Land Court for a determination under s 281. Or, if compensation was not agreed between them within 3 months after the current term of the lease ended, the chief executive was required to refer the issue of compensation to the Land Court for its determination. 
[26]	 Under the LCA there is opportunity for a preliminary conference chaired by a Land Court member or judicial registrar to attempt to reach an agreement as to compensation and an ADR process such as mediation or case appraisal. The LCR further engage the UCPR which allow formal offers to settle to be made. The parties may also make offers to settle at common law pursuant to the principles in Calderbank v Calderbank and successful parties may receive an order for indemnity costs on this basis.
[27]	In this case, neither party applied for a determination. The chief executive referred the question of the amount of compensation to be paid by the miner to the Land Court for determination. Neither party occupies the position of plaintiff or defendant as they would in ordinary civil litigation. Accordingly, in the absence of evidence of offers to settle it cannot be concluded whether either party was “successful”. Furthermore, s 34 of the LCA, in recognition of this, invests the Land Court with a broad discretion as to the appropriate costs order and provides the default position in an absence of an order, each party to the proceedings bear its own costs. 
[28]	In Mio Art Pty Ltd & Ors v Brisbane City Council, President MacDonald said: 
	The effect of s.34(1) of the Land Court Act and s.27(1) of the Acquisition of Land Act is that the Land Court has a complete discretion as to the award of costs, subject only to s.27(2) of the Act. The discretion is to be exercised judicially, that is, for reasons that 5 can be considered and justified. There are a number of factors that are relevant to the exercise of that discretion.
 	One factor is that 
‘Compulsory acquisition cases differ from ordinary claims in the significant respect that the claimant, unlike the ordinary plaintiff, has no choice whether to make a claim or not. The mere acquisition by compulsory process gave the claimant a claim to compensation which he or she could hardly be expected to renounce.’
	And in Banno v The Commonwealth Wilcox J said – 
‘… The acquisition left the applicants in the position of either accepting the Commonwealth’s assessment of the proper compensation or of having the Court rule on its adequacy. Perhaps people in that position should be allowed access to the Court, to present an arguable and well organised case, without being deterred by the prospect of being ordered to pay the Commonwealth’s costs if their case proves unpersuasive. I distinguish the situation of resumees who pursue a vexatious, dishonest or grossly exaggerated claim or present their case in such a way as to impose unnecessary burdens on the Commonwealth or the Court.’
	Similarly, in Pastrello v Roads and Traffic Authority (NSW) Talbot J said – 
	‘There needs to be a strong justification for awarding costs against an applicant where the effect of making that order is to erode the benefit of the just compensation recovered as a consequence of the Court's determination. It is only in special cases that the Court will deprive the owner of the full benefit of the compensation which is determined as fair and just in the circumstances of the case.’ 
	Another factor to be considered is the quantum of the claims as compared with the amount of the Court's determination. The Council has submitted that the claims were exorbitant and that the effect of the exorbitant claims was that the Council was forced erroneously and unnecessarily into a lengthy and complex two week trial. (footnotes omitted) 
[29]	As already observed, neither party occupies the position of plaintiff or defendant as they would in ordinary civil litigation. Accordingly, the principles in Mio Art are not completely pertinent but one factor that may be taken into account is the reasonableness or, lack thereof, in attempting to reach an agreement as to the amount of compensation. The discretion to award costs under s 34 of the LCA is broad and does not create a “general rule that parties bear their own costs”. However, in accordance with orthodox principle, costs orders ought not be made unless the party seeking the costs order demonstrates it has been “successful” so as to engage the ordinary rule that costs follow the event. 
[30]	While the amount of compensation awarded by the Land Court was much closer to the amount proposed by the respondent, the Court was not convinced that they were “successful” and that “cost should follow the event”. 
[31]	The learned member at first instance would have no doubt been aware of the operation of s 34(2) of the LCA, that is, where no order as to costs is made, parties are to bear their own costs. Confirming the learned members approach, with regard to the hearing at first instance, the parties are to bear their own costs.
Orders: 
1.	The appellants must pay the respondent’s costs of and incidental to the appeal assessed on an indemnity basis
2.	The parties are to bear their own costs of the hearing at first instance.
CROW J

FY KINGHAM
PRESIDENT OF THE LAND COURT

WA ISDALE
MEMBER OF THE LAND COURT