Eliza Creek Mines Pty Ltd & Anor v Stanbroke Pastoral Company Pty Ltd [2005] QLRT 111

LAND AND RESOURCES TRIBUNAL QUEENSLAND CITATION: Eliza Creek Mines Pty Ltd & Anor v Stanbroke Pastoral Company Pty Ltd [2005] QLRT 111 PARTIES: In the Matter of Mining Lease 90157 – Referral by Mining Registrar for determination of compensation payable by Eliza Creek Mines Pty Ltd & Exco Resources N.L. to Stanbroke Pastoral Company Pty Ltd. FILE NO/S: MLC36/05 PROCEEDING: Application for determination of compensation DELIVERED ON: 23 August 2005 DELIVERED AT: Brisbane HEARING DATE: Heard on the papers PRESIDING MEMBER: Kingham DP ORDER/S: 1. I determine compensation under s. 281(3) in the sum of $9,176.50 (at [15]). 2. In accordance with s. 281(4)(e), I award an additional amount of $917.65(at [15]). 3. I direct that the miners pay the total compensation of $10,094 to the landowner within 1 month of the grant of the mining lease (at [16]). CATCHWORDS: MINING LEASE – DETERMINATION OF COMPENSATION – AREA – TERM –LAND VALUE - CIRCUMSTANCES OF THE MINING LEASE Mineral Resources Act 1989, ss 276, 281(3)&(4); 283B Environmental Protection Act 2000, s162 Code of Environmental Compliance for Mining Lease Projects Bakhash v Monize [2003] QLRT 133 referred to Brown v Armstrong & Anor [2005] QLRT 18 referred to COUNSEL: N/A SOLICITORS: N/A -- 1 of 5 -- Background Constitution of Tribunal [1] On 17 March 2005, the Mining Registrar for the Mt Isa District referred the question of the compensation payable by Eliza Creek Mines Pty Ltd & Exco Resources N.L. (“the miners”) to the Stanbroke Pastoral Company Pty Ltd (“the landowner”) in relation to mining lease No 90157 to the Tribunal for determination. The lease was recommended for grant by the Tribunal on 10 December 2004. It is over a 181.7ha area of land situated 40km north-east of Cloncurry for the open cut mining of gold, copper ore, silver ore, cobalt ore, fluorite/fluorspar, molybdenum and rare earths. A draft environmental authority has been issued by the Environmental Protection Agency (EPA) (MIM400142203). It requires compliance with the Code of Environmental Compliance for Mining Lease Projects. The lease cannot be granted until compensation has been agreed or determined. [2] The application was heard on the papers pursuant to the Tribunal’s practice direction 1 of 2003. The landowner filed no material other than a submission that it would “accept ten per centum (10%) of any income whatsoever earned or derived from the land”. Although the parties are able to reach such an agreement, in my view the Tribunal cannot make a determination in those terms. The Tribunal is required to determine “the amount of compensation an owner of land is entitled to as compensation for” the matters set out in s.281(3) of the Mineral Resources Act 1999 (the Act). This necessitates a specified amount, not a per centum rate of payment. Accordingly, I have not made a determination in the terms requested by the landowner. [3] The miners filed an affidavit by Alasdair Cooke, a Director of the Eliza Creek Mines Pty Ltd. They also lodged some submissions and a bundle of material that their corporate solicitor asked me to consider. Included in the material were documents that would appear to attract privilege against disclosure because they were “without prejudice” communications apparently made for the purpose of attempting to settle the matter between the parties. The landowner was not asked whether it consented to me taking such material into consideration. I raised this matter with the corporate solicitor at a directions hearing, but she indicated there was nothing she could say in relation to the privilege. In the absence of any evidence that the landowner waived privilege, I did not take into account any material to which the privilege appears to attach. That leaves only Mr Cooke’s affidavit and some parts of the submissions prepared by the corporate solicitor. [4] Neither party submitted any evidence, expert or otherwise, regarding the value of the land or the impact of the proposed mining on that value. Mr Cooke made some speculative statements about value (“Property sales in Mt Isa may value the highest echelon of stocked land…” para (i)) but produced no evidence to support his statements. In 2003, Deputy President Smith of this Tribunal determined compensation payable for a lease in the Mt Isa Mining District.1 On the basis of evidence tendered in that case, the Deputy President accepted the actual value of that land was $150 per hectare. I have taken his conclusion into account in making this determination. I have taken into account all of the material referred to above 1 Bakhash v Monize [2003] QLRT 133. -- 2 of 5 -- and the maps and documents provided to the Tribunal by the Mining Registrar. In considering the likely impact, I have drawn upon my personal observations of open cut mining operations. I have also considered the environmental and mining conditions with which the miner will be required to comply.2 In these reasons I refer to the salient points but not all the evidence that I relied upon in making my findings. Compensation claims [5] The landowners’ proposal for compensation has already been canvassed. The miners proposed compensation of $15,000 plus $100 per ha for areas outside the mining lease affected by the mining activity. The basis for calculating these sums was not evident from the miners’ material. Nor is it possible to identify what, if any, areas outside the mining lease, but within the landowners’ property, may be affected by mining. Mr Cooke made a number of statements about the nature and, therefore, the impact of the mining operation which, presumably, determined the amount proposed. [6] Those statements are: (a) The proposed mining activities will significantly impact on only 10 ha of the project area. (b) The operation may (my emphasis) have minimal impact on the viability of the pastoral operation other than those 10 ha. (c) The term of mining will be between 5 and 10 years from commencement of mining, although the exact time frame is incapable of any certainty. [7] In relation to area, the lease covers an area of 181.7 ha. Neither the mining lease, as recommended by the Tribunal, nor the draft environmental authority confines the miner to an area of only 10ha. The reference to 10ha limit may arise from a criterion used by the EPA in determining the level of assessment for a mining lease project under the Environmental Protection Act 2000. One of the criteria, set out in the Code of Environmental Compliance for mining lease projects, is whether the activity will significantly disturb more than 10ha at any one time. If it will, it may require a higher level of environmental assessment.3 However, there is no condition in the Code that limits the miners to disturbing only 10ha. Rather, the condition requires land disturbance to be minimised. It is worth noting that the application for this mining lease includes a plan showing the area of disturbance proposed is some 28.1ha, not 10ha as stated by Mr Cooke. If there was a change to this application, it has not been provided to the Tribunal. [8] Further, in determining compensation for mining leases, this Tribunal has consistently applied the approach that, unless there is a condition that limits land disturbance,4 a hypothetical prudent purchaser would consider they were effectively deprived of the use of the entire lease area for the term of the lease. The possibility that the landowner may be allowed some access to some of the lease area during the term of the lease, may lesson the impact on value but will not necessarily negate it. 2 Section 276 MRA, draft environmental authority no. MIM400142203 and Code of Environmental Compliance for Mining Lease Projects. 3 Section 162 Environmental Protection Act 2000. 4 As was the case in Brown v Armstrong & Anor [2005] QLRT 18. -- 3 of 5 -- [9] In relation to the term of the lease. The lease is for a 15 year term. Mr Cooke indicated that the duration of active mining may be only 5 to 10 years but this was not certain. Even after active mining has ceased, the miner retains rights over the lease area for its full term and may be engaged in remediation activities that would, nevertheless, prevent the landowner enjoying the full use of the land. Compensation principles [10] Section 281(3) & (4) of the Act define the landowner’s entitlement to compensation and list a number of matters that must be considered by the Tribunal in assessing compensation. I have adopted the approach generally taken by the Tribunal in such matters. That is that the matters set out in the section are concepts to be taken into account in determining compensation, rather than heads of compensation requiring separate and discrete treatment to arrive at an accumulated figure. In determining compensation, the overriding principle is of equivalence, ensuring that, so far as money can do it, the landowner is placed in the same position as if the mining lease was not granted. Discussion of compensation [11] As indicated above, the parties produced no evidence as to the value of the affected property. In the absence of any other evidence I have adopted Deputy President Smith’s determination of the value of the property in Backhash v Monize as a guide, accepting that there is no other evidence that would allow me to assess the relative values of the two properties. On that basis, and applying a discount factor of 30%, given the 15 year term of the lease, I assess the diminution in value of the land covered by the mining lease (including deprivation of possession, diminution of value of land and diminution of the use which may be made of the land) to be $8,176.50 ( 30% (discount factor) x [181.7ha x $150/ha] = 8,176.50). There is no evidence to suggest severance of any part of the land from other parts of the land and, therefore, no compensation for severance is included in the determination. [12] I accept that the impact on the land will extend beyond the lease area. The miners have offered $100 per ha for land outside the lease area affected by mining activities. There is no evidence to indicate with any precision what that area might be or how it might be affected. There is no evidence before me as to the total area of the land owned by the landowner and, therefore, I cannot assess the proportion the mining lease area bears to the property as a whole. Unless it is included in the $100 per ha offer referred to above, the miners have not included any amount for access to the lease through the landowners’ property. In the circumstances, I have determined a figure of $1,000.00 should be paid in order to compensate the landowner for the impact of the mining activities and access across land outside the mining lease area. [13] Neither party has submitted that there is any other loss or expense that should be considered and, therefore, the determination makes no allowance for this. However, Mr Cooke has stated that the following representations or offers have been made to the landowners. Whilst the Tribunal cannot specify these as conditions that bind the miners, I have taken them into account as circumstances that are relevant to the determination of compensation. It is worth noting that, if -- 4 of 5 -- there is a material change in the circumstances for the mining lease, the parties can renegotiate compensation or, failing agreement, the Tribunal can review the compensation determination.5 The circumstances that Mr Cooke has stated and that I have taken into account are: b) The miners will minimise disturbance to pastoral infrastructure off the mining lease. c) The miners will minimise disturbance to the landowner’s normal pastoral activities. d) The miners will provide alternative access by the landowner’s livestock to water troughs where this is required because of the erection of a stock proof fence. e) The miners will provide a replacement water storage facility with a capacity no less than that of Turkey Nest dam (which is now located on the mining lease) if that dam becomes inaccessible to the landowner’s livestock. [14] Neither party made an application for the costs of these proceedings, and no order is made. Determination of compensation [15] Taking into account the matters set out above, I determine compensation under s. 281(3) in the sum of $9,176.50. In accordance with s. 281(4)(e), I award an additional amount of $917.65, which is 10% of the compensation determined above, to reflect the compulsory nature of the grant of the mining claim. The total compensation payable for the full term of the lease is $10,094 (rounded down from $10,094.15). I direct the miners to pay that sum to the landowner within 1 month of the grant of the mining lease. 5 Section 283B. -- 5 of 5 --