Bedrock Landscape Supplies (QLD) Pty Ltd v Fryer [2020] QLC 17

LAND COURT OF QUEENSLAND CITATION: Bedrock Landscape Supplies (QLD) Pty Ltd v Fryer [2020] QLC 17 PARTIES: Bedrock Landscape Supplies (QLD) Pty Ltd ACN 010 598 268 (applicant) v Peter Fryer (respondent) FILE NO: MRA106-19 DIVISION: General Division PROCEEDING: Determination of compensation payable for grant of mining lease DELIVERED ON: 2 June 2020 DELIVERED AT: Brisbane HEARD ON: Submissions closed 24 April 2020 HEARD AT: Heard on the papers MEMBER: PG Stilgoe OAM ORDER: 1. I determine compensation in respect of ML 100175 in the sum of Forty-Two Thousand, Nine Hundred and Seventy-Eight Dollars ($42,978). CATCHWORDS: ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – COMPENSATION – where an 81 ha mining lease was granted over land used for cattle grazing for the purpose of silica sand mining – whether the miner’s past efforts to rehabilitate mined land had been effective – whether the landowner was entitled to compensation for deprivation of possession of the surface of the lease area and, if so, to what extent considering its irregular shape – whether the cost of fencing the lease area was a “loss or expense” under s 281(3)(a)(vi) of the MRA – whether the landowner was entitled to compensation for inspection of the lease and the progress of rehabilitation – whether “legal and -- 1 of 9 -- 2 professional fees” are considered a “loss or expense” under s 281(3)(a)(vi) MRA Mineral Resources Act 1989 s 281 Sullivan v Oil Co of Aust Ltd & Anor [2003] QCA 570, cited APPEARANCES: Not applicable [1] Peter Fryer owns Fairview, part of a larger cattle grazing aggregation known as Tabletop Station. The aggregation is situated on the Harvey Range Road, approximately 58 km west of Townsville. [2] Bedrock Landscape Supplies (QLD) Pty Ltd has been extracting silica from Fairview since 1994. Other entities were extracting silica from the property for the preceding 20 years. Bedrock has existing mining leases but it has applied for a new lease, ML100175, preconditioned on the surrender of part of the existing leases. [3] The parties are unable to agree what compensation Bedrock should pay Mr Fryer for the new lease. Their respective positions, taking each of the elements of s 281(3) of the Mineral Resources Act 1989 (“MRA”), are summarised as follows: Head of Compensation Fryer Bedrock Deprivation of surface of land 81.51 ha x $750/ha $61,133.00 Loss of buffer: 30 ha x $750/ha x 50% $11,250.00 Diminution of the value of the land or improvements 7 ha x $750/ha x 100% diminution $5,250.00 74.51 ha x $750/ha x 20% diminution $11,177.00 Diminution of the use of the land or improvements Nil Nil Severance Nil Nil Loss or expense Owner’s time $18,000.00 Owner’s time $8,000.00 Fencing $69,400.00 -- 2 of 9 -- 3 Water tank and trough $2,011.00 Other TBA Legal and professional costs TBA Subtotal $161,794.00 $24,427.00 Additional amount to reflect compulsory nature $16,179.40 $2,443.00 Total $177,973.40 $27,000.00 [4] Despite the very different figures in the table above, the parties agree on some things. They agree that the value of the land is $750/ha. They agree that Mr Fryer’s time should be valued at $100/hour. The areas of disagreement are: the efficacy of rehabilitation; the amount of land disturbed and the extent of the disturbance; whether rehabilitation requires fencing of the mining lease; and the amount of time Mr Fryer should spend monitoring the effect of the mining operations. Efficacy of rehabilitation [5] I will deal with this matter first, as my finding on the efficacy of rehabilitation will have an impact on the balance of the issues. [6] Mr Fryer does not think that Bedrock’s previous attempts at rehabilitation have been successful. He has not observed anyone reseeding areas of Fairview.1 He has never observed any vegetation growing on former extraction sites other than natural vegetation.2 By contrast, as you would expect, Bedrock states that it has been conducting regular and appropriate rehabilitation.3 [7] Mr Fryer obtained a report from Bob Shepherd, the principal extension officer, Grazing Land Management at the Department of Agriculture and Fisheries, dated 14 August 2019.4 Mr Shepherd commented on the previously quarried area. He noted that, while there was some attempt to rehabilitate, there was little evidence of a planned approach to rehabilitation. He noted that the main access track was eroding in sections and the crossovers over drainage lines had been poorly designed and built.5 He further noted that the whole site was generating a lot of run-off and transporting 1 Affidavit of Peter Fryer, filed by the respondent on 20 March 2020 [31]. 2 Ibid [32]. 3 Affidavit of Stephen Thomas Edwards, filed by the applicant on 28 February 2020 [56] - [58]. 4 “Land Reclamation Report - ‘Tabletop Stn’ Herveys Range, North Queensland”, PF-1 to the affidavit of Peter Fryer filed by the respondent on 20 March 2020. 5 Ibid 13. -- 3 of 9 -- 4 sediment into adjoining watercourses.6 Mr Shepherd recommended a particular rehabilitation regime. [8] I have the benefit of two valuer’s reports. James Lyons provided a report dated 19 February 2020.7 Roger Hill provided a report dated 7 April 2020.8 [9] Mr Hill inspected the property on 7 April 2019. In his general overview, Mr Hill states that no rehabilitation has taken place, the soil has been left exposed without grown groundcover, and this will contribute to the degradation of the landscape through erosion.9 He included some photos which show areas of open sandy soil. However, the comments in his general overview are somewhat at odds with his comment in the vegetation management status section10 that he has assumed that all land development has complied with the relevant statutory regulations. [10] Mr Lyons’ report includes photographs of rehabilitated areas.11 The photos show open sandy areas which, he says, are the active zones of the mining operation. The photos also show a rehabilitated area, a reseeded area and a previously mined area. Mr Lyons states that the reseeded pastures are generally good for grazing and superior to natural grasses, but he concedes that the rehabilitation process can take a period of years, with good coverage generally achieved within a five-year period depending upon the season. [11] Based on all the evidence, I am satisfied that Bedrock’s efforts at rehabilitation have been, mostly, successful although there is room for improvement. Mr Shepherd’s concerns seem to focus mainly on the access track and drainage lines. As Mr Lyons noted, recently quarried areas will appear as open, sandy tracts, which may explain Mr Hill’s concerns. However, I also accept that full pasture coverage will take some time. 6 Ibid 14. 7 “Mining Compensation Assessment”, JL1 to the affidavit of James Bernard Lyons filed by the applicant on 28 February 2020. 8 “Mining Compensation Assessment”, RCMH-2 to the affidavit of Roger Charles Mitchell Hill filed by the respondent on 20 March 2020. 9 Ibid 5. 10 Ibid 13. 11 “Mining Compensation Assessment”, JL1 to the affidavit of James Bernard Lyons filed by the applicant on 28 February 2020, 9. -- 4 of 9 -- 5 The extent of the disturbance [12] Mr Hill thought that the mining operation would deprive Mr Fryer of 100% use of the mining lease area in perpetuity. He based that view on two factors. Firstly, it was his view that no rehabilitation had taken place. I have found that this is not correct. Further, Mr Hill regards the horseshoe shape of the proposed mining lease to mean that Mr Fryer would never have access to, or use of, the existing areas.12 [13] I do not agree with Mr Hill’s assessment that all the mining lease will be lost to Mr Fryer in perpetuity. The better view is that some of the mining lease will be lost to Mr Fryer but the balance will be available, although not in the same condition. I can see no basis for Mr Hill’s assessment that the horseshoe shape of the proposed mining lease means that Mr Fryer would never have access to, or use of, the existing areas. [14] Mr Lyons accepted that about 7 ha would be lost in perpetuity but the balance of the mining lease would be available to Mr Fryer for grazing purposes. He calculated the area of 7 ha as: 2 ha cleared and 1 ha worked at any one time, plus 5 ha under rehabilitation for a period of 5 years. I accept Mr Lyons’ assessment of a loss of 7 ha in perpetuity. In fact, given the lease is for a period of 15 years, this assessment may be a little generous. [15] Mr Lyons applied a 20% discount for the loss of pasture during the rehabilitation period. [16] I think Mr Lyons has underestimated the effect of mining operations on the long-term quality of the pasture. Although Mr Lyons says that the quality of the post- rehabilitated pasture is better than natural grasses, Mr Fryer asserts that the removal of the silica degrades the pasture quality. He notes13 that the high silicon content in the sand below the topsoil enables the pasture to respond faster after the first rain than pasture on other parts of the aggregation. He says that the first growth in this area is faster and “more luscious” than other parts. Mr Fryer says cattle can graze on Fairview earlier in the season and those cattle put on weight more quickly and, given that the silica has been removed, the pasture will not be of the same quality as it was pre-mining. 12 “Mining Compensation Assessment”, RCMH-2 to the affidavit of Roger Charles Mitchell Hill filed by the respondent on 20 March 2020, 9. 13 Affidavit of Peter Fryer, filed by the respondent on 20 March 2020 [8], [12]. -- 5 of 9 -- 6 [17] I accept Mr Fryer’s statement that the post-mining pasture will not be as good as the pre-mining pasture, due to the loss of the silica sand. A better assessment of the diminution of the value of the land subject to the mining lease, in my view, is 50%. [18] Mr Hill has suggested that a further area of 30 ha will be subject to a loss of about 50% productivity. This includes the area inside the horseshoe. It seems, although it is not explicit, that Mr Hill has assumed a 100% loss of this area for the 15 years of the mining lease. I reject that assumption for two reasons. Firstly, for reasons that follow, I do not accept that the lease requires fencing. Secondly, the “horseshoe” has a very wide mouth. The area is not severed from the balance land in any way and there is nothing to suggest that cattle will not be able to traverse the “horseshoe” freely. Should the mining lease be fenced? [19] At no time during the previous extraction of silica sand from Fairview has any area of the mining lease been fenced. The Environmental Authority14 does not require the mining lease to be fenced except around dams,15 processing plant and open mine excavations,16 and by the provision of silt fences.17 [20] Mr Fryer says that if the area is not fenced, the lease will not be fully rehabilitated. He says that livestock will access the newly rehabilitated areas to feed on new grasses, thereby preventing those grasses from becoming established. He says that if new growth is consumed by livestock, no more plants will grow, leaving the area un- rehabilitated and barren.18 [21] This assessment seems at odds with My Lyons’ report. It is also at odds with a history of quarrying in the area for over 40 years. If Mr Fryer is correct, the land would have significant areas of unremediated pasture. [22] Mr Shepherd provided an addendum to his report by a letter dated 16 March 2020.19 In that letter, Mr Shepherd recommends that “the site” be fenced to improve the rate of rehabilitation. Unfortunately, without knowing the context in which the letter was 14 Department of Environment and Heritage Protection, Eligibility criteria and standard conditions for mining lease activities—Version 2 (ESR/2016/2241). 15 Ibid 10 (condition B7 and note 34). 16 Ibid (note 35). 17 Ibid 5 (condition A7). 18 Affidavit of Peter Fryer, filed by the respondent on 20 March 2020 [35]-[38]. 19 PF-3 to the affidavit of Peter Fryer filed by the respondent on 20 March 2020. -- 6 of 9 -- 7 written, Mr Shepherd’s comments are of limited assistance. What prompted him to write the letter? What information was he given? What was his understanding of “the site”? Is it his view that the rehabilitated areas should be fenced off for the whole of the five-year period? In the absence of that information, and given that previous rehabilitation activities seem to have had some efficacy, it is my view that while fencing the newly sown area may be appropriate, fencing the whole mining lease is not. [23] Further, I do not accept that fencing is an expense to Mr Fryer. Rather, if there is a need to fence, it is a natural consequence of Bedrock’s obligation to undertake rehabilitation. Bedrock should bear the responsibility for fencing the area, particularly as it will have more detailed knowledge of its operations and the progressive rehabilitation. Mr Fryer should only be paid the cost of fencing in the event that Bedrock fails to fence adequately and Mr Fryer does so at his own expense. [24] For a similar reason, I reject Mr Fryer’s claim for the expense of installing a water tank and trough. If the area is not fenced, then there is no possibility that cattle will be trapped without access to water. Supervision [25] Mr Fryer says that he will have to conduct regular inspections to inspect the fence and ensure there is enough water in the tank each month.20 If there is no fence, and no water tank, there is no need for that inspection. Currently, Mr Fryer goes on to Fairview a minimum of every 10 to 14 days to replenish lick, check fences and check stock. When he musters on Tabletop, Mr Fryer is on or near Fairview every day for about 10 days.21 [26] Bedrock extracts the silica sand over a limited period of two weeks each year in the dry season.22 [27] As Mr Fryer is frequently in the area and, except for a two-week period, Bedrock is not, I agree with Mr Lyons that additional supervision of four visits per year to check 20 Affidavit of Peter Fryer, filed by the respondent on 20 March 2020 [40]. 21 Ibid [29]. 22 Affidavit of Stephen Thomas Edwards, filed by the applicant on 28 February 2020 [51]. -- 7 of 9 -- 8 on erosion and rehabilitation progress23 would be sufficient. Indeed, given Mr Fryer’s reasonably frequent visits to the area, even this allowance is generous. Other expenses [28] Mr Fryer makes a claim for “reasonable legal and professional fees”. He asserts that the parties should be able to agree those costs between them.24 I am content to leave that to the parties subject to the observation that s 281(3)(a)(vi) of the MRA provides that Mr Fryer is entitled to compensation for loss and expense that arises and s 34 of the Land Court Act 2000 gives the Court the power to award costs. They are different things and the costs of preparing a claim for compensation, prior to the referral to the Court or the filing of an application, may be neither a loss or expense that arises from the mining lease,25 nor a cost as it is commonly understood. Conclusion [29] Based on Bedrock’s current level and method of operation, and assuming that Bedrock will fence as necessary during the rehabilitation period, I assess Mr Fryer’s entitlement to compensation as follows: Head of compensation Assessment Deprivation of surface of land $5,250 (7 ha x $750/ha) Diminution of the value of the land or improvements $27,941 (74.51 ha x $750/ha x 50% diminution) Diminution of the use of the land or improvements Nil Severance Nil Loss or expense Owner’s time $5,880 ($400 per annum x 15-year term, discounted by 2% for net present value) Fencing Nil Water tank and trough Nil Legal and professional costs Nil Subtotal $39,071 Additional amount to reflect compulsory nature (10%) $3,907 Total $42,978 23 “Mining Compensation Assessment”, JL1 to the affidavit of James Bernard Lyons filed by the applicant on 28 February 2020, 13. 24 Respondent's Compensation Statement, filed by the respondent on 20 March 2020 [26]. 25 Sullivan v Oil Co of Australia Ltd & Anor [2003] QCA 570 [37]. -- 8 of 9 -- 9 Order: I determine compensation in respect of ML 100175 in the sum of Forty-Two Thousand, Nine Hundred and Seventy-Eight Dollars ($42,978). PG STILGOE OAM MEMBER OF THE LAND COURT -- 9 of 9 --