Deane v Burnett & Ors [2016] QLC 45

LAND COURT OF QUEENSLAND CITATION: Deane v Burnett & Ors [2016] QLC 45 PARTIES: John Smith Deane (applicant) v John Stephen Burnett, Hazel Jean Mayes and Grant Andrew Wallace (respondents) FILE NO: MRA547-15 DIVISION: General Division PROCEEDING: Determination of compensation payable for grant of mining lease. DELIVERED ON: 9 August 2016 DELIVERED AT: Brisbane HEARD ON: Submissions closed 6 May 2016 HEARD AT: Heard on the papers JUDICIAL REGISTRAR: GJ Smith ORDERS: 1. In the case of ML 70522 compensation is determined in the total sum of $2,420 per annum. 2. The applicant pay compensation to the respondent in the amount set out in order 1 within three months from notification of the issue of the mining lease by the Department of Natural Resources and Mines and thereafter on the anniversary of the issue of the mining lease. CATCHWORDS: MINING LEASE – grant – determination of compensation – period of grant – level of activity – access – assumption of legal and reasonable conduct – use of valuation report – mustering costs – owners time – use of Court judgments for determination purposes –compulsory nature of action – additional amount percentage. Mineral Resources Act 1989, ss 279, 281 -- 1 of 10 -- 2 Barrett v Weir and Gregcarbil Pty Ltd [2009] QLC 182 Deane v Burnett & Ors [2015] QLC 24 Gregcarbil Pty Ltd v Backus & Ors (No. 4) [2013] QLC 68 Matrix Metals Limited v The North Australian Pastoral Company Pty Ltd [2007] QLC 75 Mitchell v Oakhill and Mitchell (Unreported, Land Court of Queensland, JJ Trickett, President, 10 March 1998) Wills v Minerva Coal Pty Ltd [No.2] (1988) 19 QLCR 297 SG & PM Smith v RA Cameron [1986] 11 QLCR 64 Sullivan v Oil Company of Australia Ltd (No.2) Xstrata Coal Queensland Pty Ltd & Ors v Keys & Anor [2013] QLC 34 APPEARANCES: Not applicable [1] This proceeding concerns a referral to the Land Court by the Chief Executive, Department of Natural Resources and Mines (DNRM) pursuant to s 279(5) of the Mineral Resources Act 1989 (MRA) for the determination of compensation in respect of the grant of proposed mining lease ML 70522. Background [2] The applicant, John Smith Deane (the applicant) seeks the grant of ML 70522 over land located approximately 35 km north-west of Clermont in the Emerald District and within the Isaac Regional Council local government area. The land upon which ML 70522 and the access track are situated is owned by John Stephen Burnett, Hazel Jean Mayes and Grant Andrew Wallace (the landowners). The holding is known as Blair Athol Station and is more particularly described as Lot 22 on DC 162 GHPL 12/2525A and Lot 18 on CLM628 GHPL 12/2525A. Blair Athol Station is approximately 2819 hectares in area and is used for grazing and agricultural purposes. [3] The specific Land Court reference and individual lease and tenure details are set out as follows: Court Reference Tenure ID Lease Area Term Lease Purpose Access MRA547-15 ML 70522 5.6041 ha 5 years Gold 5.64 km Relevant Legislation [4] Section 279 of the MRA provides that a mining lease shall not be granted or renewed unless an agreement in relation to compensation has been filed or, in the absence of such an agreement, a determination of compensation has been made by the Land Court. In this matter, no agreement has been lodged with DNRM and the matter has been referred to the Land Court for determination. -- 2 of 10 -- 3 [5] Section 281 of the MRA identifies the matters which must be considered by the Court in determining the compensation. In particular, s 281(3)(a) provides that an owner of land is entitled to compensation for: (i) deprivation of possession of the surface of land of the owner; (ii) diminution of the value of the land of the owner or any improvements thereon; (iii) diminution of the use made or which may be made of the land of the owner or any improvements thereon; (iv) severance of any part of the land from other parts thereof or from other land of the owner; (v) any surface rights of access; (vi) all loss or expense that arises; as a consequence of the grant or renewal of the mining lease. [6] Section 281(4) enables various additional factors to be included in the compensation determination. In the present case, only paragraph (e) is relevant. It provides as follows: “(4) In assessing the amount of compensation payable under subsection (3) — … (e) an additional amount shall be determined to reflect the compulsory nature of action taken under this part which amount … shall be not less than 10% of the aggregate amount determined under subsection (3).” [7] The assessment process to be undertaken in accordance with s 281 has been addressed in the judgment of Wills v Minerva Coal Pty Ltd [No. 2]1 as follows: “It is beyond question as I have written above that the primary source of law is the statute under consideration and it seems to me that the learned Member acknowledged this when he said: ‘The section in my opinion merely identifies matters which shall be taken into consideration in making the assessment. It does not prescribe a method of valuation.’ Section 281 MRA neither prescribes nor suggests a method of assessment or valuation either. The selection of an appropriate method is a matter for the relevant expert, however, there is one warning that I should post. If the expert was to approach the assessment of compensation by simply accumulating figures assessed independently under each of the items listed in s.281(3)(a)(i) to (vi) and without regard to the prospect of a matter being dealt with under more than one item, the chance that there will be a duplication of items assessed will be high.” [8] Furthermore, in Mitchell v Oakhill and Mitchell2, the then President of the Land Court observed in relation to s 281 of the MRA: “…..the latter section does not prescribe a method of assessment. In my view, as long as the amount of compensation finally determined sufficiently accounts for each of the matters referred to in the sub-section, it is not necessary to quantify an amount in respect of each of the matters referred to.” 1 (1988) 19 QCLR 297 at 315. 2 Unreported, Land Court of Queensland, JJ Trickett, President, 10 March 1998. -- 3 of 10 -- 4 [9] The principles from these judgments have been applied in determining compensation under s 281 of the MRA. The Conduct of the Proceedings and Evidence [10] On 25 November 2015, the Land Court registry forwarded correspondence to the parties setting out a timetable for the delivery of materials and submissions in accordance with Land Court Practice Direction No 6 of 2015. [11] On 28 November 2015, email correspondence was received from the applicant with an attached letter addressed to the Court and also copies of correspondence from Mr Deane dated 27 October 2015 and a reply by Mr John Burnett dated 21 November 2015. On 11 December 2015 additional correspondence was received from the applicant enclosing correspondence to Mr John Burnett dated 21 September 2015, 27 October 2015 and 28 November 2015, a draft compensation agreement and earlier correspondence from Mr Burnett dated 9 and 21 October 2015 and 21 November 2015. [12] On 3 January 2016 correspondence was received from Mr Burnett requesting a three month extension to the dates set out in the correspondence from the Court dated 25 November 2015. The correspondence detailed medical grounds as the basis for the requested extension. [13] On 6 January 2016 the Court extended the date for the provision of material by the respondents until 29 April 2016 and the date for the applicant’s reply until 6 May 2016. [14] On 29 April 2016 a compensation statement, hearing statement and supporting documentation was received by the Court on behalf of the respondents. No addition material has been filed by the applicant in reply to the landowners’ material. The Applicant’s Contentions [15] The following points have been extracted from the material filed by the applicant: i. The quantum of compensation should be $360 per annum plus an additional 5% of the gold recovered. ii. Not more than half a hectare of land shall be worked at any time with such works being undertaken by a D3 Caterpillar bulldozer excavating the area by taking off topsoil then excavating approximately 300 mm of subsoil gravels. If any gold is recovered the gravel and then the top soil will be replaced. iii. When a hectare of land has been worked it will be harrowed and seeded with selected grass seed. Care will be taken to preserve healthy trees and any dead timber will be placed in piles ready for burning if the owner requires. -- 4 of 10 -- 5 iv. A 20” x 12” shed to house bulldozer, equipment and accommodation will be erected by the applicant. v. Care shall be taken to ensure cattle and horses are not disturbed. The applicant and his son being the only people working the lease. vi. Any other terms will have to be agreed by the parties. vii. $55/ha is the average rate within a few kilometres from ML 70522. The Landowners’ Contentions [16] The contentions on behalf of the landowners are partly based on a valuation report dated 24 July 2014 from Taylor Byrne, Emerald. The valuation document is said to be prepared on behalf of Suncorp Metway Limited for mortgage security purposes. Paragraph 2.6 (ii) of the report provides: “We state that this report is for the use only of Suncorp Metway Limited. The report is to be used for no other purpose, and no responsibility is accepted to any third party for the whole or part of its contents and annexures. No responsibility will be accepted for photocopied signatures”. [17] In light of paragraph 2.6 (ii) and in circumstances where the report has clearly not been prepared for the purpose of these proceedings I am unable to treat the report as uncontradicted expert evidence in respect of the determination of compensation pursuant to s 281 of the MRA. The following sub-headings have been used by the landowners to detail the items claimed as compensation. Deprivation of possession of the surface of land of the owner [18] An amount of $4,089 is sought as compensation for “deprivation of possession of the surface of land of the owner”. This amount is said to arise from losses associated with chickpea production on an area identified for “development as cropping land” and the impact upon existing grazing activities on the proposed ML 70522. The production losses been apportioned pro rata on the basis of 5.54 acres of cropping and 8.30 acres of grazing within ML 70522 with contended annual losses from the cropping of $3,601 and grazing of $488. [19] It appears likely on the material before me that the contended losses from chickpea production are in reality potential losses at this point in time i.e. there is no evidence of actual cropping having occurred to date and the relevant areas are referred to as proposed cropping land in the materials filed. Accordingly it would seem premature, at least at this stage to conclude that the contended losses from chickpea production are likely as a consequence of the grant of ML 70522. [20] As part of the landowners’ submission a loss of $800 per annum was also contended on the basis of the entire area of ML 70522 being utilised solely for grazing purposes. In the -- 5 of 10 -- 6 circumstances I am prepared to accept the amount of $800 per annum in respect of this item of compensation. Diminution of the value of the land [21] The landowners claim a one off amount of $7280 in respect of this item of compensation based on the mining lease area of 5.6 ha x $1,300/ha. The rate of $1,300/ha would appear to have been adopted from the Taylor Byrne valuation and correspond with an analysis of Blair Athol Station on a fully improved basis. [22] The landowners rationale for the amount sought is based on the presumed permanent loss of the area of ML 70522 as a consequence of that land becoming totally unproductive and dangerous for cattle. The landowners contend that there is no evidence of successful rehabilitation of gold mining operations on similar land in the district. Conversely the material from the applicant indicates that he plans to undertake ongoing rehabilitation within days of any disturbance throughout the term of ML 70522. [23] Whilst appreciating the landowners’ contention in this regard I am mindful that this determination of compensation must be undertaken “on the assumption that the applicant for the leases will act reasonably and at all times according to law and in accordance with the terms and conditions of the proposed leases.”3 In the circumstances I am unable to accept the contended amount of $1,300/ha as compensation on the basis sought. The failure to rehabilitate ML 70522 as foreshadowed may afford the landowners a basis for the review of compensation if this were to eventuate. [24] I am also of the view that, on the material before the Court, it is likely, given the potential for overlap between the heads of compensation envisaged by s 281 (3)(a)(i) and (ii) that the compensation amount of $800 per annum discussed at [20] sufficiently accounts for both heads of compensation anticipated by (i) and (ii). Severance of any part of the land from other parts thereof or from other land of the owner [25] In respect of this item no specific dollar amount is contended on behalf of the landowners. The submission notes that BA Station is already heavily impacted by mining infrastructure and that while the applicant proposes to place a lock on the gate to the lease area “this is not workable as BA Farming Co have numerous staff accessing the land from different locations in order to check stock, water, fences etc”4. This contention does not in my view establish a basis for the award of any additional compensation in respect of severance. 3 SG & PM Smith v RA Cameron [1986] 11 QLCR 64 4 Landowners compensation statement para (iv) -- 6 of 10 -- 7 Any surface rights of access [26] The landowners seek an amount of $887 per annum in respect of access to ML 70522. The amount is calculated on the basis of an equal or half share of an estimated total maintenance cost of $1774 per annum. On the material before the Court it appears that the access to ML 70522 is likely to be utilised by the applicant for three to four months per year5 and that there are a number of others who utilise this access including “tourists, prospectors, pig hunters”6 and “unauthorised visitors”7. In light of these factors I am unable to conclude that the contended apportionment to the applicant of 50% of the estimated maintenance costs is likely to accurately reflect reasonable compensation pursuant to s 281 of the MRA. In the circumstances and given the dimensions of the access route I intend to allow $100 per annum in respect of this item of compensation. All loss or expense that arises as a consequence of the grant [27] Costs of relocation of water facility – The landowners claim an amount of $33,850 plus GST for costs associated with relocating a water facility which they say is necessary as a consequence of the mining activity on ML 70522. The submission also notes that this Court has already generally accepted the landowners’ evidence regarding this matter in an earlier objection hearing relating to ML70522. Further details regarding the costs and steps associated with the relocation have been set out on behalf of the landowners but need not be repeated in detail here. It should be noted however that the relocation process itself would not be insubstantial and of itself likely to involve some added disruption to the activities on Blair Athol Station. [28] Additional mustering costs – an alternative submission on behalf of the landowners involves additional mustering being undertaken in lieu of relocating the water facility. Additional mustering costs are contended at $1,800 per annum and said to entail 3 persons mustering for an additional 2 hours when undertaking 3 musters per year. Although not initially stated the hourly rate applied is clearly $100 per hour. A further 4.5 hours of mustering time is also claimed irrespective of the water facility being re-located. This amount of $450 per annum is said to relate to the additional distances that the cattle would be required to be mustered. [29] I have considered the rationale for these additional amounts in light of mapping, diagrammatic and other materials before me. While I am prepared to accept that an additional 22.5 hours of mustering time per annum is required I am unable to accept the 5 Deane v Burnett & Ors [2015] QLC 24 at [16] 6 Ibid at [7] 7 Ibid at [11] -- 7 of 10 -- 8 contended hourly rate of $100. While a rate of $100 per hour has been accepted by this Court in respect of “owner’s time”8 I do not consider this rate to be reasonable in relation to additional mustering costs. On the basis of relevant Court judgments9 I consider an amount of $40 per hour to be fair and reasonable in the circumstances. [30] In my view the alternative mustering option appears to be a more reasonable, workable and cost effective than relocating the water facility. Accordingly, in lieu of the option I propose to include an additional amount of $900 per annum in respect of additional mustering costs. [31] Costs of inspection and administration – in respect of this item an annual amount of $400 is sought for owner’s time undertaking weed, pest and bio-security monitoring of the mining lease areas and access areas (4 hours at $100 per hour). Given the nature of the cropping and grazing operations on BA Station and the serious consequences of any bio-security breaches I consider the amount sought is reasonable and accordingly the claim for this amount is accepted. [32] Costs for valuation and professional fees – the compensation sought under this heading relates to assistance provided by DGL Project Services Pty Ltd in relation to the preparation of this claim of compensation on behalf of the landowners. The amount sought is a one off payment of $3,000. [33] Claims of this nature in my view must be considered in light of the Court of Appeal decision in Sullivan v Oil Company of Australia Ltd (No.2)10. (Sullivan). In Sullivan it was held that legal fees paid for the preparation of a compensation claim pursuant to the Petroleum Act 1923 were not claimable as the fees could not be considered “…as consequential upon the occupation of land under an authority to prospect or lease…” [34] Similar circumstances were considered by Member Jones (as he then was) in Matrix Metals Limited v The North Australian Pastoral Company Pty Ltd11 (Matrix Metals). This decision concerned “other costs” including “two hours of owner’s time and a contribution towards the owner’s legal and professional costs”. Member Jones observed: [14] In my opinion the claim could only succeed if its elements reasonably fell within the description "loss or expense that arises as a consequence of the … renewal of the mining lease”. In Sullivan the Court of Appeal considered that valuation and legal fees incurred in the preparation of a claim for compensation should not be treated any differently from costs in any other form of litigation. The wording of s.281 (3)(a)(vi) does not, in my opinion, allow me to reasonably distinguish and depart from the reasoning of the Court in Sullivan.”12 8 Gregcarbil Pty Ltd v Backus & Ors (No. 4) [2013] QLC 68 9 Xstrata Coal Queensland Pty Ltd & Ors v Keys & Anor [2013] QLC 34 10 Sullivan v Oil Company of Australia Ltd (No.2.) (2004) 2 Qd R 105 11 Matrix Metals Limited v The North Australian Pastoral Company Pty Ltd [2007] QLC 075 12 Ibid at[14] -- 8 of 10 -- 9 [35] The decisions of Sullivan and Matrix Metals in my view preclude the inclusion of professional fees in respect of the services provided by DGL Project Services Pty Ltd as compensation pursuant to s 281 of the MRA. [36] Other costs – these costs are perhaps better described as potential costs that may arise at some future date subsequent to the commencement of mining on ML70522. The costs foreshadowed include declarations regarding non-contamination and additional sale and compliance costs that the landowners may incur as a consequence of the operations. These costs would appear to be incapable of being quantified at this point in time and accordingly are not able to be included in this determination. Additional amount pursuant s 281 (4)(e) of the MRA [37] On behalf of the landowners it has been contended that this additional amount should be 20% so as to reflect “the combined impacts of mine related approvals” on BA Station. Whilst appreciating the point made in this regard I do not consider that an amount greater than 10% is warranted given the duration, area and mining activities proposed for ML 70522. Compensation [38] After considering all of the materials provided by and on behalf of the parties and the referral documents provided by DNRM including application documents, mapping and plans and having noted the location, area, programs, purpose and the period for which the grant is sought, I make the following determination in respect of ML 70522: ML70522 Direct impact on land $ 800 per annum Access $ 100 per annum Additional mustering costs $ 900 per annum Owners time $ 400 per annum Subtotal $2,200 per annum add 10% s 281(4)(e) $ 220 per annum TOTAL $2,420 per annum [39] Given the term of the lease (5 years) I do not consider that Consumer Price Index increases are warranted for the second and subsequent years. The compensation amounts should be paid in advance and I order accordingly. -- 9 of 10 -- 10 ORDERS 1. In the case of ML 70522 compensation is determined in the total sum of $2,420 per annum. 2. The applicant pay compensation to the respondent in the amount set out in order 1 within three months from notification of the issue of the mining lease by the Department of Natural Resources and Mines and thereafter on the anniversary of the issue of the mining lease. G J SMITH JUDICIAL REGISTRAR -- 10 of 10 --