Cape Flattery Silica Mines Pty Ltd v Hope Vale Aboriginal Shire Council & Anor [2012] QSC 381

SUPREME COURT OF QUEENSLAND CITATION: Cape Flattery Silica Mines Pty Ltd v Hope Vale Aboriginal Shire Council & Anor [2012] QSC 381 PARTIES: CAPE FLATTERY SILICA MINES PTY LTD ACN 000 586 096 (Applicant) v HOPE VALE ABORIGINAL SHIRE COUNCIL (First Respondent) HOPE VALE CONGRESS ABORIGINAL CORPORATION RNTBC (ICN 3135) (Second Respondent) FILE NO/S: BS No. 10138 of 2012 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 29 November 2012 DELIVERED AT: Brisbane HEARING DATE: 6 November 2012 JUDGE: Ann Lyons J ORDER: 1. It is declared that upon the proper construction of two Compensation Deeds entered into between the applicant and the first respondent dated 30 April 1992 being Deed of Compensation ‘A’ and Deed of Compensation ‘B’ and to the extent that the obligations thereunder remain unperformed as at the date hereof: a. the payments referred to, subject to the provisions relating to those payments, in clauses 5.7.5 in Compensation Agreement ‘A’ and clauses 7.8 in Compensation Agreement ‘B’ as and from 15 December 2011 are payable to the second respondent; b. the second respondent is entitled to the benefit of the applicants obligations with respect to maintenance of a road contained in clause 5.7.2 of Compensation Agreement ‘A’; c. (in all other respects) to the extent that the -- 1 of 11 -- 2 applicant is required to perform the obligations contained in clauses 7.1, 7.2, 7.3, 7.4, 7.5 and 7.6 of Compensation Agreement ‘B’ those obligations are of the benefit of the first respondent being Hope Vale Aboriginal Shire Council also known as Hope Vale Shire Council formerly Hope Vale Aboriginal Council as the representatives of the Members of the Hope Valley Community as that term is defined by Compensation Deed ‘B’. 2. The costs of the applicant and the second respondent of and incidental to this application, assessed on the standard basis, be paid by the first respondent. CATCHWORDS: ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – DEALINGS IN TITLES – SALE, TRANSFER AND ASSIGNMENT – Where Applicant is lessee of four mining leases issued under Mineral Resources Act 1989 (Qld) and operates a mine – Where land holder recently changed to a new trustee Native Title Body Corporate under Aboriginal Land Act 1991 (Qld) – Where Compensation Deeds originally entered into to the benefit of the land holder – Whether compensation payments relate to land – Whether compensation payments run with land pursuant to s 53 of Property Law Act 1974 (Qld) Aboriginal Land Act 1991 (Qld), s 3 Land Act 1962 (Qld) Land Act 1994 (Qld) Mineral Resources Act 1989 (Qld), s 281(6), s 358 Mineral Resources Amendment Act (Qld), s 78 Native Title Act 1993 (Cth) Property Law Act 1974 (Qld), s 49, s 53 P & A Swift Investments (a firm) v Combined English Stores Group PLC [1989] 2 All ER 885 Simmons v Lee [1998] 2 Qd R 671 COUNSEL: R Lilley S.C. for the Applicant A Scott for the First Respondent D Rangiah S.C. with A Nicholas for the Second Respondent SOLICITORS: Norton Rose Australia for the Applicant Bottoms English Lawyers for the First Respondent P&E Law for the Second Respondent ANN LYONS J: Background -- 2 of 11 -- 3 [1] Pursuant to a Deed of Grant in Trust (―DOGIT‖) granted on 18 July 1986 the Hope Vale Council was the holder of land in trust for the ―benefit of Aboriginal inhabitants‖ under the now repealed provisions of the Land Act 1962 (Qld) and the Land Act 1994 (Qld). The Hope Vale Aboriginal Shire Council, (―the Council‖) is the successor in title to the original council and is the First Respondent in these proceedings. [2] The Applicant, Cape Flattery Silica Mines Pty Ltd (―the Mining Company‖) is the lessee named in four mining leases issued to it under the Mineral Resources Act 1989 (Qld) and conducts the Cape Flattery Silica Mine (―the Mine‖). The four mining leases are relevantly: (a) ML2806 (which expired on 31 August 2012); (b) ML7069 (which expires on 30 June 2014); (c) ML2965 (which expires on 29 April 2013); and (d) ML40048 (which expires on 30 June 2014). [3] The Mine and the road to the Mine were, until recently, located on the land held by the Hope Vale Council. Two agreements were entered into between the Applicant Mining Company and the relevant Council on 30 April 1992 in compliance with, what was then, s 7.36 of the Mineral Resources Act.1 The Compensation Deeds required the Applicant Mining Company to make quarterly compensation payments to the Council based on a gross percentage of sales of product from the mine, to maintain the road, as well as requiring that it provide certain employment and training benefits to the local indigenous community. The compensation agreements are due to expire in April 2013. [4] Pursuant to s 358 of the Land Act 1994, the original Deed of Grant in Trust (―Original DOGIT‖) was surrendered on 11 October 2011. [5] On 15 December 2011 there was a change in the trustees of a significant part of the Original DOGIT which had been granted on 18 July 1986 and a New Deed of Grant in Trust (―New DOGIT‖) issued under the Aboriginal Land Act 1991 (Qld). The new trustee is a Native Title Body Corporate, namely the Hope Vale Congress Aboriginal Corporation (―the Corporation‖) and is the Second Respondent in these proceedings. It is a prescribed registered Native Title Body Corporate (―RNTBC‖) under the Native Title Act 1993 (Cth) and administers native title land on behalf of 11 of the 13 Hope Vale clans in the Hope Vale area. [6] It is clear that the Mine and road are entirely located within the New DOGIT under the Aboriginal Land Act. That area comprises some 110,000 hectares. The Original DOGIT has been reissued but is very reduced in area and basically now encompasses the township of Hope Vale which is an area of some 63.2 hectares. This application 1 See now s 279 of the Mineral Resources Act. -- 3 of 11 -- 4 [7] Pursuant to an application filed on 30 October 2012 the Mining Company seeks a declaration as to the construction of those two Compensation Deeds which were entered into between the Council and the Mining Company in 1992. The essential question is which body is entitled to the benefits to be conferred under the compensation deeds: the Council or the Corporation? [8] There is no dispute that the compensation that was originally paid under the Deeds was paid to the Council and its successor which runs the local government for the Hope Vale area. However, the Mine is no longer on the Council‘s land, but is on land held by the Corporation. As the Corporation has now succeeded to the title of the land on which the Mine is conducted, it claims the compensation payable. [9] The Council, however, claims that despite the cancellation of the Original DOGIT and despite the grant of the land to the Corporation under the New DOGIT it remains entitled to receive compensation pursuant to the Compensation Deeds. [10] The Mining Company, however, submits that on a proper construction of the compensation deeds the Corporation is entitled to the compensation payments and the Council is entitled to the employment benefits. The arguments on behalf of the Hope Vale Aboriginal Shire Council [11] Counsel for the Council argues that the New DOGIT did not cause the Corporation to be the successor of the Council and the Corporation has not succeeded to the rights and liabilities of the Council. Accordingly, counsel argues that the Council is still entitled to the benefit of the agreements because there was only a partial cancellation of the Old DOGIT on 15 December 2011. [12] Counsel accepts that the partial cancellation was effected automatically upon the grant of the New DOGIT to the Corporation under the Aboriginal Land Act and that the partial cancellation removed from the Old DOGIT the area of land where the Mine is situated so that the Mine is now situated exclusively within the area of the New DOGIT. [13] Counsel argues that the Old DOGIT remains in force and that the Council remains the trustee for the benefit of the Aboriginal inhabitants of Hope Vale although the property of the trust has been reduced by the removal of the land within the area of the New DOGIT from that body of property. Essentially it is argued that rights to compensation are personal to the Council and do not run with the land. [14] Counsel for the Council accepts that the New DOGIT is an interest in land which was formerly the subject of the Old DOGIT but that it is an entirely new and separate interest to the Old DOGIT. By this New DOGIT, counsel for the Council argues that the Corporation obtained an interest in fee simple in the land which requires the Corporation to hold the land on trust ―for the benefit of the Aboriginal people particularly concerned with the land‖.2 It is argued that the objects of the trust are wider than the objects of the Old DOGIT, as the term ―Aboriginal people particularly concerned with the land‖ is defined in s 3 of the Aboriginal Land Act to include both those who are living on the land as well as those who have a particular connection with the land under Aboriginal tradition. 2 Exhibit CSS-3 to the Affidavit of C S Small sworn 30 October 2012. -- 4 of 11 -- 5 [15] Whilst it is accepted that the fee simple interest in the land provided for by the New DOGIT was created by the Governor in Council upon the making of the New DOGIT, counsel argues that the partial cancellation of the Old DOGIT had no effect on the constitution of the Council or its functions and that it remains the local government for the Hope Vale area. [16] Counsel relies on s 7.38 of the Mineral Resources Act which was in force at the time the agreements were entered into which provided: ―The Wardens Court‘s determination of any matter under this section shall be deemed to be an agreement between the parties and shall be given effect accordingly.‖ [17] Accordingly, counsel argues that as s 281(6) was introduced by the Mineral Resources Amendment Act 1995 (Qld) and as it did not provide that it was to apply retrospectively to agreements entered into prior to its commencement, it is of no relevance. [18] Counsel for the Council therefore argues that the Applicant Mining Company‘s contention that the intent of the Mineral Resources Act and the Deeds, that the compensation agreements are binding on successive land owners, is wrong because of cl 2.1 of the agreements. That clause provided that the Deed was binding not only on the parties but their ―respective heirs, assigns and successors.‖ [19] It is also argued that this phrase ‗heirs, assigns and successors‘ does not have the meaning the Applicant contends for and that the Corporation is not the heir, assign or successor of the Council and, further, that the Council did not assign the benefit of the agreements to the Corporation. It is also argued that the divesting to the Corporation of a legal interest in the land formerly the subject of an interest held by the Council does not make the Corporation the successor of the Council. [20] The Council argues that it is in fact the successor of the original Hope Vale Aboriginal Council and it has succeeded to the rights and liabilities of the Hope Vale Aboriginal Council. Counsel argues that the Applicant erroneously relies on the general law principles relating to covenants that touch and concern land. [21] In order to determine this application it is necessary to consider the Compensation Deeds and the relevant legislation in some detail. The Compensation Deeds [22] On 30 April 1992 the Council and the Mining Company entered into the Compensation Deeds, known respectively as Compensation Deed A and Compensation Deed B. [23] Those Compensation Deeds provided for the Mining Company to compensate the Council in respect of activities to be carried out on Mining Leases 7069, 2806 and 2965. In 2006, those Deeds were amended so that the compensation was also compensation for a further Mining Lease, 40048. [24] Compensation Deed A provides:3 3 Exhibit CSS-5 to the Affidavit of C S Small sworn 30 October 2012. -- 5 of 11 -- 6 ―2.1 This Deed is binding on the parties, their respective heirs, assigns and successors. 2.2 ...In the event CFSM is legally obliged to pay compensation to another owner not being Hope Vale in respect of the DOGIT or part thereof then an equivalent amount shall be deducted from the compensation payable to Hope Vale hereunder. 2.3 This Deed shall continue to be effective for so long as Hope Vale remains the owner of the DOGIT for the purposes of the [Mineral Resources Act]. This sub-clause shall cease to apply upon grant of CFSM of ML7069. … 4.1.7 The compensation payable by the CFSM to Hope Vale which Hope Vale acknowledges is full and complete compensation to Hope Vale in respect of mining operations on the DOGIT. … 5.2 Hope Vale will agree to accept compensation in relation to mining operations on the DOGIT as provided in this Deed and the Collateral Deed in lieu of determination of the amount of compensation by the Mining Warden in relation to ML2086, ML2965, ML7069 and the Mining Lease referred to in Clause 5.5 hereof and renewal of any such leases during the term of this Deed, provided that any renewed term does not exceed the term hereof unless otherwise mutually agreed by the parties. 5.7.5 (a) CFSM will pay to Hope Vale an amount of 2.5 per centum of the gross sales proceeds of the silica sand and other products won by CFSM from ML2806, ML2965 and ML7069.‖ [25] Compensation Deed B contains essentially the same clauses and the equivalent compensation clause can be found in Compensation Deed B at:4 ―7. 8 COMPENSATION (a) CFSM will pay to Hope Vale an amount of 0.5 per centum of the gross sales proceeds of the silica sand and other products won by CFSM from ML2806, ML2965 and ML7069..‖ 4 Exhibit CSS-6 to the Affidavit of C S Small sworn 30 October 2012. -- 6 of 11 -- 7 [26] Compensation Deed B also imposes a number of obligations relating to employment and training on the Mining Company, namely 7.1.2, which required essentially that: (a) the Council will publish and submit to the mining company list of members of the Hope Vale community as available for employment and the Mining Company agrees to employ certain persons from that list; (b) the Mining Company will employ a member of the Hope Vale community, selected by the Council, as a community liaison officer; (c) subject to certain requirements, the Mining Company agreed to provide employment for, or fund, two new Hope Vale apprenticeships, starting in 1992 until eight apprenticeships are attained and thereafter maintained; and (d) the Mining Company agreed to establish training programmes which are designed to ensure the Hope Vale employees have the opportunity to attain and occupy all positions within the company including those of Senior Management . [27] Compensation Deed B also stipulates several other non-cash benefits to be provided to the Council including: (a) at 7.2, the provision of self-contained housing for certain employees; (b) at 7.3 at least one $7,000 bursary to any University, College of Advanced Education or TAFE College for a member of the Hope Vale Community; and (c) at 7.4, a system whereby all employees receive a health examination after five consecutive years of employment. [28] Accordingly, it is clear that the primary purpose of the Deeds was to provide consent to and to settle the compensation for the grant and renewal of Mining Leases for the purposes of the Mineral Resources Act. [29] The relevant legislation is as follows. The legislation [30] At the relevant time, s 7.6 of the Mineral Resources Act provided: ―7.6 Mining lease over surface that is reserve or near dwelling house etc. Only with consent -- 7 of 11 -- 8 A mining lease shall not be granted over the surface of land that is a reserve except with - (a) the consent of the owner of that land lodged in writing with the mining registrar...‖ [31] Section 7.36 of the Mineral Resources Act then provided: ―7.36 Compensation to be settled before grant or renewal of mining claim (1) A mining claim shall not be granted or renewed unless— (a) compensation has been determined (whether by agreement or by determination of the Land Court) between the applicant and each person who is the owner of land the subject of the application and of any surface access to that land…‖ [32] Section 1.8(1) defined ‗owner‘ to include the trustee of a reserve and the registered proprietor of land held in fee simple. [33] Section 78 of the Mineral Resources Amendment Act 1995 (Qld) introduced a provision expressly stating that an award of compensation was to be binding on the parties‘ successors and assigns. Section 281(6) of the current version of the Mineral Resources Act provides: ―An amount of compensation decided by agreement between the parties, or by the Land Court, is binding on the parties and the parties' personal representatives, successors and assigns.‖ [34] Section 53 of the Property Law Act 1974 (Qld) is also relevant to a determination of this application. The section provides: ―53 Benefit and burden of covenants relating to land (1) A covenant relating to any land of the covenantee shall be deemed to be made with the covenantee and the covenantee‘s successors in title and the persons deriving title under the covenantee or the covenantee‘s successors in title, and shall have effect as if such successors and other persons were expressed.‖ [35] Section 49 of the Property Law Act is also relevant and provides: ―49 Implied covenants may be negatived (1) Subject to this Act, a covenant, power or other provision implied under this or any other Act shall have the same force and effect, and may be enforced in the same manner, as if it had been set out at length in the instrument in which it is implied. -- 8 of 11 -- 9 (2) Any such covenant or power may, unless otherwise provided in this or such other Act, be negatived, varied, or extended by— (a) an express declaration in the instrument in which it is implied; or (b) another instrument. (3) Any such covenant or power so varied or extended shall, so far as may be, operate in the like manner and with all the like incidents, effects and consequences as if such variations or extensions were implied under the Act.‖ Does this covenant run with the land? [36] It is significant that s 49 of the Property Law Act provides that a covenant implied under the Property Law Act is to have the same force and effect as if it had been set out at length in the instrument in which it is implied. The section then provides that any such covenant may be negatived, varied or extended but it requires an express declaration in the instrument in which it is implied or another instrument. [37] I am satisfied that there is no express declaration as required by s 49, in the Compensation Deeds to the effect that s 53 of the Property Law Act is not to apply. Accordingly I am satisfied that s 53 applies. [38] There is no doubt that the Corporation is indeed the successor in title to the land on which the mining lease is located. It is clear therefore that pursuant to s 53 a covenant relating to the land of the covenantee shall be deemed to be made with the covanantee and the covenantee‘s successors in title. [39] It is significant also that cl 2.1 of the Compensation Deeds provides that the deeds are binding on the parties, their respective heirs, assigns and successors. [40] The term ‗relating to land‘ in s 53 of the Property Law Act means the covenant must touch and concern the land, and was discussed extensively by McPherson JA in Simmons v Lee:5 ―In the end, the defendants‘ submission on this aspect is reduced to saying that the guarantee is intended to be personal to the original lessor Hewchester Pty Ltd simply because it makes no express mention of assignees of the lessor. However, while that omission is something that weighs in favour of the defendants, it is precisely because of the absence of any reference to assignees that s. 53(1) of the Property Law Act is called into play. On any view of s. 53(1), it functions at the very least as a ‗‗wordsaving‘‘ provision by ‗‗deeming‘‘ a covenant relating to land of the covenantee to be made with the covenantee and his successors in title, and so, in that way, it supplies the expression ‗‗assignee‘‘ or successors in title after the description of Hewchester Pty Ltd in the guarantee. It is from this point that the defendants‘ submission assumes an appearance of circularity. Section 53(1), 5 [1998] 2 Qd R 671 at 677-678. -- 9 of 11 -- 10 it is said, applies only if the covenant is one that relates to or touches and concerns land of the covenantee; and that, it is claimed, it cannot be seen to do unless the covenant itself is expressed to be made with the covenantee and assigns. But to countenance such an argument is to deprive s. 53(1) of all effect. Nor can it gain added force by referring to what was said by Lord Oliver in Swift Investments v. Combined English Stores Group Plc [1989] A.C. 632, 642, where his Lordship enumerated as the third of four requirements for holding that a covenant touches and concerns land that: ‗‗(3) the covenant is not expressed to be personal (that is to say neither being given only to a specific reversioner nor in respect of the obligations of a specific tenant)‘‘… In the present case, the defendants‘ guarantee of the rent is something that touches and concerns the leased land and s. 53(1) therefore deems it to have been made with the Lessor and its successors in title, which include the plaintiffs as assignees of the reversion.‖ [41] In P & A Swift Investments (a firm) v Combined English Stores Group PLC,6 Lord Oliver held: ―Formulations of definitive tests are always dangerous, but it seems to me that, without claiming to expound an exhaustive guide, the following provides a satisfactory working test for whether, in any given case, a covenant touches and concerns the land. (1) The covenant benefits only reversioner for time being, and if separated from the reversion ceases to be of benefit to the covenantee. (2) The covenant affects the nature, quality, mode of user or value of the land of the reversioner. (3) The covenant is not expressed to be personal (that is to say neither being given only to a specific reversioner nor in respect of the obligations only of a specific tenant). (4) The fact that a covenant is to pay a sum of money will not prevent it from touching and concerning the land so long as the three foregoing conditions are satisfied and the covenant is connected with something to be done on, to or in relation to the land. For my part, I am entirely satisfied that the decision of the Court of Appeal in Kumar v Dunning was correct and was reached for the correct reasons. The instant case is indistinguishable in any material respect. Nothing I think turns upon the precise terms of the covenant in either case. It follows that I would dismiss this appeal.‖ [42] In my view, covenants for the payment of compensation for the use, destruction or removal of land through mining are obviously covenants which ‗touch and concern‘ the land. It is also clear that s 53(1) of the Property Law Act applies and the consequence is that covenant by the Mining Company to pay compensation to the Council is thereby deemed to have been made between the Mining Company and the Corporation. 6 [1988] 2 All ER 885 at 890-891. -- 10 of 11 -- 11 [43] Whilst I note the arguments by counsel for the Council in relation to the Original DOGIT, having considered the relevant searches exhibited to the Affidavit of Christine Small7 I am not satisfied that it was simply a partial cancellation as counsel submits. Even if it was a partial cancellation as counsel contends I do not consider it alters the conclusion that it was a covenant which touched and concerned the land. [44] I consider that the Corporation takes the benefit of the compensation monies. Similarly, the covenants in relation to the road touch and concern the land and the Corporation obtains the benefit of that provision and can enforce it as against the Mining Company. [45] However, the employment benefits and the non-cash benefits do not touch and concern the land in any way and the aboriginal inhabitants of the Hope Vale community should continue to receive those benefits. [46] There will be orders in the following terms: 1. It is declared that upon the proper construction of two Compensation Deeds entered into between the applicant and the first respondent dated 30 April 1992 being Deed of Compensation ‗A‘ and Deed of Compensation ‗B‘ and to the extent that the obligations thereunder remain unperformed as at the date hereof: (a) the payments referred to, subject to the provisions relating to those payments, in clauses 5.7.5 in Compensation Agreement ‗A‘ and clauses 7.8 in Compensation Agreement ‗B‘ as and from 15 December 2011 are payable to the second respondent; (b) the second respondent is entitled to the benefit of the applicants obligations with respect to maintenance of a road contained in clause 5.7.2 of Compensation Agreement ‗A‘; (c) (in all other respects) to the extent that the applicant is required to perform the obligations contained in clauses 7.1, 7.2, 7.3, 7.4, 7.5 and 7.6 of Compensation Agreement ‗B‘ those obligations are of the benefit of the first respondent being Hope Vale Aboriginal Shire Council also known as Hope Vale Shire Council formerly Hope Vale Aboriginal Council as the representatives of the Members of the Hope Valley Community as that term is defined by Compensation Deed ‗B‘. 2. The costs of the applicant and the second respondent of and incidental to this application, assessed on the standard basis, be paid by the first respondent. 7 Exhibit CSS-3 (Historical Title Search of Title Reference 40063264) to the Affidavit of C S Small sworn 30 October 2012 -- 11 of 11 --