Exco Resources (Qld) Pty Ltd v Daniels [2018] QLC 1

* Pursuant to the Land Court Rules 2000, rule 21 (Power to correct mistakes), this is a corrected decision, issued on 29 January 2018, and replaces the original decision issued on 18 January 2018. LAND COURT OF QUEENSLAND CITATION: Exco Resources (Qld) Pty Ltd v Daniels & Ors [2018] QLC 1* PARTIES: Exco Resources (Qld) Pty Ltd (applicant) v Andrew William Jesse Daniels Samuel Dona James Daniels Gabrielle Kennedy Jeffrey Robert James Daniels and Luke William Jesse Daniels (respondents) FILE NO: MRA697-17 DIVISION: General Division PROCEEDING: General application DELIVERED ON: 18 January 2018 DELIVERED AT: Brisbane HEARD ON: Submissions closed 22 December 2017 HEARD AT: Heard on the papers MEMBER: PG Stilgoe ORDERS: 1. The originating application filed 8 November 2017 is dismissed. 2. The parties may file and serve any submissions as to the costs of the application by 29 January 2018. CATCHWORDS: ENERGY AND RESOURCES – MINERALS – COURTS OR TRIBUNALS EXERCISING JURISDICTION IN MINING MATTERS – QUEENSLAND – OTHER COURTS AND TRIBUNALS – where compensation agreement signed before issue of mining lease – where compensation -- 1 of 7 -- 2 agreement related to exploration only – where compensation limited to $1 – where compensation agreement provided for further negotiation if mining commenced – where parties could not agree further compensation – where miner filed application to amend compensation agreement – whether Court has jurisdiction to amend compensation agreement ERO Georgetown Gold Operations Pty Ltd v Henry [2015] QLAC 4 Hicks & Anor v Graham & Anor [2004] QLRT 47 Nothdurft & Anor v QGC Pty Limited & Ors [2017] QLC 41 Project Blue Sky In v Australian Broadcasting Authority (1998) 194 CLR 355 Acts Interpretation Act 1954 (Qld) s 14A Mineral Resources Act s 2(a), s 2(c), s 2(f), s 279(1) APPEARANCES: Ashurst Australia for the applicant Thynne + Macartney for the respondents [1] The respondents conduct grazing activities on land known as Toole Creek, in the Cloncurry region. On 8 February 2017, they entered into a compensation agreement with Exco Resources (Qld) Pty Ltd. The agreement allowed Exco to conduct exploration activities, including geophysics or geological mapping, and environmental surveys as required. [2] On 16 October 2017, Exco was granted mining lease ML100077 for a term of ten years. It intends to mine on the respondents’ land. [3] The parties have not been able to agree on the compensation payable for mining activities, so Exco filed an application for the Land Court to review the original compensation agreement through its power under s 283B of the Mineral Resources Act 1989 (Qld). [4] Under s 283B, a mining lease holder can apply to the Land Court for a review of original compensation if: (1) Compensation has been agreed under s 279 or 280 for a mining lease; and (2) Since that agreement, there has been a material change in circumstances for the mining lease. [5] The respondents submit that the Court has no jurisdiction to review the compensation. They submit that the parties did not agree compensation for a mining lease within the meaning of the Act. They submit that, if there was such an agreement, there has been no material change of circumstances. -- 2 of 7 -- 3 Did the parties agree compensation for a mining lease? [6] Because the respondents’ land is directly affected by the mining lease, compensation must be agreed under s 279 of the Act. Exco submits that there is such an agreement. It points out that s 279(1) provides that compensation can be agreed between the applicant for a mining lease and the land owner before the lease is granted, and that is what the parties did. It points out that the agreement is in writing and was filed, as required by s 279(3). It points out that General Conditions clauses 6.1 and 6.2 of the compensation agreement records that it is an agreement under s 279. [7] The respondents submit that the effect of General Conditions clause 6.5 is that the agreement was only ever intended to be a preliminary agreement, authorising Exco to carry out less invasive activities than the mining activities now proposed. They also submit it is clear that compensation for mining activities had not been agreed, and that this was to be the subject of further negotiation. They say that if a further agreement was contemplated, then the subject agreement could not have been an agreement for the purposes of s 279. [8] I need to look at the agreement as a whole to decide whether it is an agreement under s 279. General Conditions clause 6.1 is subject to clause 6.5. That clause states that, if Exco wishes to carry out any mining activity, it must: (a) Enter into a further compensation agreement with the respondents; (b) File a copy of the further compensation agreement with the Mining Registrar in accordance with s 283A of the Mineral Resources Act; and (c) Provide a copy of the filed agreement to the respondents. [9] Section 283A applies if compensation has been agreed. It provides that the parties may agree to amend the original compensation. The amended agreement does not take effect until it is filed. At that point, the amended compensation agreement is taken to be the original compensation. By including reference to s 283A, the drafter has emphasised the existence of a s 279 compensation agreement. [10] General Conditions clause 6.3 states that the respondents provide an irrevocable consent to the grant of ML100077. That clause also seems to suggest that the compensation agreement was deliberately drawn to be an agreement under s 279. [11] In fact, however, the parties had not determined compensation for the mining activities contemplated under ML100077; they had only agreed compensation for exploration activities. The compensation agreement only allowed Exco to carry out exploration. It was not permitted to remove any soil, sand, rock, gravel or other quarry material from -- 3 of 7 -- 4 the land.1 The parties expressly agreed that any mining activity would be the subject of a fresh agreement before Exco could access the land to carry out mining activity. [12] A rose by any other name may smell as sweet, but a cabbage will smell like a cabbage even if you call it a rose. The compensation agreement may have incorporated the language of an agreement under s 279, Exco may have wanted it to be a s 279 agreement, but it was not an agreement that provided compensation for the mining activities under ML100077. The parties did not agree compensation for a mining lease. Has there been a material change in circumstances for the mining lease? [13] If I am wrong about whether the agreement is an agreement under s 279, I should also consider whether there has been a material change in circumstances for the mining lease. [14] Exco submits that the ‘temporal reference point’ for determining whether a material change has occurred is the time of the agreement, not the time when the lease was granted.2 I agree. [15] Exco also submits that, adopting the temporal reference point as the time of agreement, the material change in circumstances is its intention to carry out mining activities. It submits that, at the time of the compensation agreement, the nature of the activities which might be the subject of compensation were not clear, and now they are. [16] I do not accept that proposition. As was explained in ERO Georgetown Gold Operations Pty Ltd v Henry:3 … the condition is satisfied when there is a material difference between the circumstances for the mining lease when the compensation was originally agreed or determined, and the circumstances for the mining lease at the date when the change is said to have occurred, the change relating to circumstances relevant to the agreement about or determination of compensation. [17] Henry makes it clear that the material change of circumstances must relate to the circumstances of the mining lease. [18] The compensation agreement referred to ML100077, which did not then exist but the application for the mining lease was lodged on 24 February 2016. The extent of the mining lease, the term and the resource to be mined, must have been within the 1 Special Condition clause 4.5. 2 ERO Georgetown Gold Operations Pty Ltd v Henry [2015] QLAC 4 at [44]. 3 Ibid. -- 4 of 7 -- 5 parties’ contemplation when they entered into the compensation agreement. Exco, in its submissions, concedes as much.4 [19] I have not been provided with a copy of the application for the mining lease, nor has Exco attempted to explain how the application for the mining lease differed from the lease that was granted. Exco simply submits that the compensation agreement was premised on ‘if’ it wanted to carry out mining activity and now it does. The change, it submits, is from inchoate to actual, from a wish to a reality. [20] That is not, in my view, a material change in circumstances for the mining lease. Something more is needed. As the Land and Resources Tribunal noted in Hicks & Anor v Graham & Anor,5 “the material change required to found jurisdiction is a change that is pertinent to what compensation should be awarded …” A change to the area of land that could be mined was pertinent to the compensation.6 A change to the conditions imposed on the mining activity, because it was not pertinent to the question of compensation, was not a material change.7 [21] An increase in the scale or intensity of authorised activities can, or course, amount to a material change in circumstances8 but, as I have already noted, Exco has not demonstrated any such change. [22] The Land Court’s jurisdiction under s 283B is not enlivened. What are the consequences of the Land Court not having jurisdiction? [23] Exco submits that if the Land Court does not have jurisdiction under s 283B, it will be in a worse position than if it had never entered into a compensation agreement, and will be left without a means of amending the original compensation. It submits that this would be an absurd result, clearly inconsistent with the objectives of the Mineral Resources Act. It submits that the Land Court must interpret s 283B to best achieve the purpose of the Mineral Resources Act, as is required,9 by finding that it does have jurisdiction. [24] Of the objectives of the Act set out in s 2, Exco pointed to the objective to encourage and facilitate prospecting and exploring for and mining of minerals10 and to provide an administrative framework to expedite and regulate prospecting and exploring for and 4 Submissions filed 15 December 2017 at [20]. 5 [2004] QLRT 47 at [36]. 6 Ibid at [38]. 7 Ibid at [39]. 8 Nothdurft & Anor v QGC Pty Limited & Ors [2017] QLC 41 at [27]. 9 Acts Interpretation Act 1954 (Qld) s 14A. 10 Mineral Resources Act s 2(a). -- 5 of 7 -- 6 mining of minerals.11 There are, of course, other objectives. One of those is to minimise land use conflict.12 [25] As the High Court noted in Project Blue Sky In v Australian Broadcasting Authority,13 the purpose of legislation is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties. Therefore, the purpose of the Mineral Resources Act cannot be determined by referring only to the objectives. Instead, I must look to the legislative regime as a whole. [26] Compensation to the landowner is a necessary pre-condition for the grant of a mining lease.14 The Act sets out the heads of compensation if the Land Court is required to make a decision about compensation. While parties are free to negotiate, it is implicit that the compensation should be fair. Fair compensation will go some way to minimising land use conflict while encouraging and facilitating prospecting and exploring for and mining of minerals. [27] The parties expressly agreed that the consideration for this compensation agreement ($1) was not compensation for the mining activities.15 Even though compensation for the mining activities has not been agreed, the mining lease has been granted, on the basis of a compensation agreement giving the respondent landowners only $1. [28] It is clear that the addition of s 283B was directed to operational changes during the life of a mining lease, not the artifice of an agreement to agree. Section 283B should not be used to legitimise an artificial situation. [29] Exco submits that the respondents are trying to exercise a veto over the mining operations because they have demonstrated that they are unwilling to engage meaningfully in determining the ‘amended’ compensation. Exco has filed copies of the email correspondence between the parties. I cannot see that this correspondence demonstrates an unwillingness to engage meaningfully; it does demonstrate a polarity of views. Nowhere do the respondents assert that they do not want mining operations on their land. [30] While I understand Exco’s frustration in being unable to proceed with its mining activities, that is not a reason to exercise jurisdiction where none exists. 11 Ibid s 2(f). 12 Ibid s 2(c). 13 (1998) 194 CLR 355 at [91]. 14 Mineral Resources Act s 279(1). 15 General Conditions clause 6.5. -- 6 of 7 -- 7 Orders 1. The originating application filed 8 November 2017 is dismissed. 2. The parties may file and serve any submissions as to the costs of the application by 29 January 2018. MEMBER PG STILGOE MEMBER OF THE LAND COURT -- 7 of 7 --