Benney & Vella, Re [2003] QLRT 182

LAND AND RESOURCES TRIBUNAL QUEENSLAND CITATION: L.R. and E.A. Benney v E.J. Vella [2003] QLRT 182 PARTIES: In the matter of the renewal of Mining Lease 70129 – Application by Lewis R. Benney and Elizabeth A. Benney for determination of compensation payable by Edwin John Vella FILE NO/S: MLC00033/2003 PROCEEDING: Application for determination of compensation DELIVERED ON: 23 December 2003 DELIVERED AT: Brisbane HEARING DATE: Heard on the papers MEMBER: Smith DP ORDER/S: 1. I determine compensation under s. 281(3) of the Act in the sum of $18,500.00. In accordance with s. 281(4)(e) of the Act, I award an additional amount of $1,850.00, which is 10% of the compensation determined above, to reflect the compulsory nature of the renewal of the mining lease. The total compensation payable is accordingly $20,350.00. (at [21]) 2. I further order the Miner to pay the initial sum of $8,350.00 in compensation to the Landholders within 1 month of the renewal of mining lease 70129, and the further sum of $4,000 on 1 June 2004, 1 June 2005 and 1 June 2006 respectively. (at [22]) CATCHWORDS: MINING LEASE – RENEWAL – PRINCIPLES OF COMPENSATION — DETERMINATION OF COMPENSATION Mineral Resources Act 1989 ss. 281, 286 Richardson v Barrett [2001] QLRT 89, followed Horn v Sunderland Court [1941] 2 KB 26, followed Sawicki v Warner [2003] QLRT 153, referred to Sullivan v Oil Company of Australia Limited and Santos Petroleum Operations Pty Ltd [2003] QLRT 2, considered -- 1 of 7 -- COUNSEL: N/A SOLICITOR/S: N/A AGENT/S: Mr Vella represented himself Mr and Mrs Benney represented themselves Background [1] SMITH DP: By letter dated 28 March 2003 Mr and Mrs Benney (“the Landholders”) wrote to the Mining Registrar, Emerald Mining District, requesting the Tribunal determine compensation with respect to Mining Lease no. 70129. Mr Vella (“the Miner”) had previously lodged an application on 24 May 2002 for Mining Lease 70129, which expired on 31 May 2002, to be renewed for a period of 5 years. Mining Lease 70129 is in the Emerald Mining District and covers an area of 31.85 hectares of leasehold land on a property known as “Subera” owned by the Landholders. Mining Lease 70129, applied for in 1995, originally commenced on 1 June 1996. It was renewed for a term of 5.66 years from 1 October 1996. It is a requirement of the Mineral Resources Act 1989 (hereafter “the Act”) that compensation be agreed between the parties or determined by the Tribunal prior to renewal of the mining lease.1 [2] The Miner and Landholders2 both self-represented in this matter. Written submissions and evidence were provided by the parties to the Tribunal. The application was heard on the papers by myself. Neither party relied upon expert evidence from a valuer. In determining compensation I have taken into account all the material filed by the parties, together with material forwarded by the Mining Registrar, Emerald, at the time that the matter was referred to the Tribunal. Due to difficulties in the material provided to the Tribunal by the parties, I also rely on my own experience in viewing properties in the Emerald gem fields area generally and to Subera in particular. These reasons refer to the salient points but not all the evidence that I have relied upon in making my decision. The Principles of Compensation [3] The Landowners’ entitlement to compensation is detailed in s. 281(3) and (4) of the Act. In determining compensation, I have adopted the same approach I took in Richardson v. Barrett.3 This means that the matters set out in the section are concepts to be taken into account in determining compensation, not a notion of separate heads of compensation requiring separate and discreet treatment to arrive at an accumulated figure. The overriding principle is of equivalence, ensuring that, so far as money can do it, the landholders are placed in the same position as if the 1 See s. 286 of the Act. 2 Mrs Benney played the major role in providing evidence and submissions to the Tribunal. However, Mr Benney informed the Tribunal on 16 December 2003 that his wife had passed away and that no further submissions will be made over those dated August 2003 and received by the Tribunal on 9 October 2003. I will continue to refer to Mr and Mrs Benney as the Landholders for the purposes of this decision. 3 Richardson v Barrett [2001] QLRT 89 at paragraphs 9, 10 and 14. -- 2 of 7 -- mining lease was not renewed.4 Of course, great care must also be taken to ensure that there is no “doubling up” of compensation.5 The Claims for Compensation [4] The Miner submits that compensation should be assessed at $842.50 per annum (plus an unspecified amount for timber) calculated as follows: “Compensation (net) offered Loss of net value of production of 10 hectares upon the commencement of the lease and each anniversary thereafter for the term of the lease. 3.3 beasts @ $400 per annum value increase less 40% costs 10 HA of ML 70129 $792.00 2.5 HA Access 49.50 $842.50 Timber The offer is a choice of two ways and either can be used. 1. Pay compensation at the rate of $45 per meter3 for compulsory grade, $20 meter3 for optional grade and $5 meter3 for salvage grade prior to the timbers removal not at the commencement of the lease. An independent assessor will grade the timber and upon payment of compensation the timber will become the property of the payee. 2. The timber needing to be removed will be cut, barked and stacked on the lease and will remain the property of the landholder and no compensation shall be paid.” [5] Although both the Miner and the Landholders were advised at a Directions Hearing held on 14 August 2003 that their written submissions to that date were inadequate, the Miner, despite being in receipt of substantial additional written submissions and evidence from the Landholders in October 2003, informed the Tribunal by letter dated 20 November 2003 that he did not intend providing any additional material or submissions over those made on 7 July 2003. [6] The Landholders claim $127,209.90 as follows: “ $ ¢ (b) Loss in value of the land affected by mining lease 5,903.62 (c) “Blot on title” outside ML area 10,589.00 (d) Allowance for impact on grazing outside of lease area 2,500.00 (g) Loss or expenses that arise (g1) Loss of grazing value 281 26,373.16 (g2) Loss of commercial timber 17,478.40 (g3) Costs to landholder 121.10 (g4) Loss of production after termination 11,734.32 (g5) Running costs involved in the checking of pits and fences 5,610.00 (g6) Labour costs involved in (g5) running 28,050.00 4 Horn v Sunderland Court [1941] 2 KB 26 at 43 per Jacobs J. 5 See, for instance, Richardson v Barrett [2001] QLRT 89 at 30. -- 3 of 7 -- Access road to mining lease 7,285.77 ___________ 115,645.37 Plus Section 281(4)(e) 10% 11,564.53 ___________ Grand Total $127,209.90 Assessing Compensation [7] In accordance with the principles set by the authorities and as previously discussed by myself in Richardson v Barrett6 and other cases, in my view it is appropriate to rely upon the actual value of the land as one basis for assessing compensation. Unfortunately, the Miner has not provided any material as to his view of the per hectare value of the land. On the other hand, the Landholders have relied upon a very convoluted formula in assessing the per hectare value of the land at $422.92. [8] I note that the Landholders purchased the property, which totals 3041 hectares, in 1999 for the sum of $715,000, which equals $235.12 per hectare. The landholders say that this sum should be increased by 80% as the unimproved value of the land has increased by that amount. Although I accept that land values have increased since 1999, in the absence of expert valuation evidence I am not prepared to allow an increase of the magnitude as sought by the Landholders. [9] I have no direct evidence from either of the parties as to whether the subject land is within the best, average or poor land on Subera. Given the relevant submissions of stocking rates for the subject land (1 beast per 2 or 3 hectares) I take it that the subject land is within the better land on Subera. Doing the best I can with the material before me, I assess the value of the land at $275.00 per hectare. As the mining lease renewal is for a term of 5 years, applying standard valuation methodology, I apply a 33⅓% discount to the amount. Accordingly, the sum for the loss of the lease area of 31.85 hectares is $2,926.25. [10] The Landholders have made very significant claims for loss of cattle as a consequence of the existence of the mining lease. Unfortunately, the Landholders have used “grossed up” figures, with only limited evidence of costs incurred. The Landholders did not provide any evidence of agistment costs. To make allowance for costs, the Landholders generally have reduced the value of the cattle by 20%. [11] As I said recently in Sawicki v Warner7: “Further, and indeed much more importantly, the Respondents acknowledge criticism from previous cases of their use of gross figures to determine their loss under this head, yet they persist, rationalising that their actual losses are $326.00 per hectare per year, and that as they are only claiming $41.25 per hectare per year “an 87.4% discount on the cost will more than take account of this difference”.8 I do not accept this submission by the Respondents. The evidence they have provided as to the costs are scant at best. Why isn’t a discount of 95% for costs reasonable, or 50%? More to the point, there is not even any evidence to show that the Respondents are managing the property profitably at all. Perhaps the true situation is that the actual costs exceed the claimed losses. I simply do not know. That is why it is totally 6 [2001] QLRT 89. 7 [2003] QLRT 153 at para 11. 8 See Statutory Declaration, Shane Warner 7 October 2003, under heading “Cost of Loss of Grazing”. -- 4 of 7 -- inappropriate to speak purely in gross figures and provide a “discount” to take account of costs.” [12] I have no option other than to reject the evidence and submissions of the Landholders. The Landholders have simply failed to adequately provide any sound basis that I can rely upon to determine the actual loss of value of cattle. The reason that agistment costs are often used as a measure in assessing compensation are sound, and again highlighted in this matter. It is accepted that mining activity will reduce the carrying capacity of a property. The cattle that would, but for the mining, be on the property, could be agisted, at a cost, on another property. Thus the agistment costs are a useful guide to placing the Landholders in a position of “equivalence” as earlier referred to. [13] As a guide to assist in assessing compensation in this matter, and applying an agistment cost of $2.50 per beast per week, I consider, based on the material of each party, that the subject land has a carrying capacity of 1 beast per 2.5 hectares. This equates to 4 beasts for the 10 hectares of actual disturbance, and applying a like methodology to that used in Richardson v Barrett9 for balance mining lease land and surrounding land, I consider that the balance mining lease land of 21.85 hectares will have a reduced carrying capacity of approximately 4½ head, and surrounding land of say 2½ head. The total loss of carrying capacity is therefore approximately 11 head. Applying the agistment rate of 2.50 per head per week for 5 years, this equates to $7,150.00. Of course, issues of “doubling up” relate to this sum. [14] Consistent with the approach I took in Richardson v Barrett10, I consider it appropriate to take into account an amount of say $1,200 per year for impact on the balance area of the land, given that the mining lease is 31.85 hectares out of a total of 3041 hectares. [15] As regards access, the Landholders assess the access required as 2.53 ha (2530m x 10m). The Landholders then apply a ratio of 1/12th to their figures for the mining lease to arrive at a total figure of $7,604.37. [16] The Miner agrees that the access area is 2.5 hectares, but says that this access is used by a number of miners. He accordingly says that he should only pay 25% of the loss occasioned because of the access. The miner refers to Great Northern Mining but to no others. There is no evidence given as to the relevant use of the access by the miner compared to other miners. The Landholders have acknowledged that other miners use this access. I therefore allow a reduction of 50%, and apply like reasoning to losses incurred by the Landholders for the 2.5 hectares of access to that already calculated for the mining lease. For instance, given the value of the land of $275 per hectare, the loss in value of the access land is $343.75. [17] The Landholders seek $17,478.40 for loss of commercial timber. As previously set out, the miner does not quantify the landholders loss of timber, but does say that commercial rates should not be applied. I note that the Landholders will retain access to the 21.85 hectares of the mining lease not being disturbed at any one time, and in fact the Landholders currently have access to a larger area than this under the existing mining lease. Nevertheless, the miner acknowledges that the mining lease 9 [2001] QLRT 89 at 29. 10 [2001] QLRT 89 at paras 25-27. -- 5 of 7 -- will cause a loss of timber available to the Landholders. Doing the best I can with the material before me, I take into account the sum of $10,000 for loss of timber. Again, this figure involves a doubling up particularly with respect to the value of the land. [18] Compensation relating to severance does not appear to be relevant to this matter. [19] The Landholders claim includes the sum of $121.10 for out of pocket expenses of phone calls and postage etc. In my view these costs should be allowed, applying the principle of equivalence from Horn as discussed in paragraph [3] hereof. I consider the sum of $121.10 claimed reasonable. The Landholders claim the sum of $33,660.00 for management time and associated costs. The authorities make it clear that an owner may recover an amount for management time incurred as a consequence of the grant. I should make it clear what is meant by management time. This management time relates to the time taken by the owner of the property in managing his property as a consequence of the mining tenements’ existence. For instance, in Sullivan v Oil Company of Australia Limited and Santos Petroleum Operations Pty Ltd, an expert, Mr Brown, gave the following evidence as to how management time is assessed. “Well, I assess the extra management time as being the ongoing regular management of a property over a period of time, in other words on a regular basis… . So I’m looking at an average working day as it were and I don’t think there’s a great deal of management time needed by the landowner in this instance… it’s a difficult calculation because it may vary from time to time. I’ve tried to take an average on an average working week or month or year at that amount of $12 per annum and I think that had capped – capitalised at five percent for nine years working on about $100.00 an hour roughly equates to be $16,000.00 as claim as a diminution between my before and after valuation”.11 [20] In Sullivan, I expressed the view that I found great difficulty in properly assessing the value for management time. Such a claim is fraught with danger of a doubling up.12 On its face, I consider the amount claimed by the Landholders for management time to be excessive. Much of the stated management time of the Landholders relates to checking on the Miner properly undertaking his responsibilities under the mining lease. However, the Landholders have also provided evidence, which I find reliable, of problems already encountered by the Landholders with the Miner on this very mining lease, including in the time which will be covered by the renewal which will take effect from 1 June 2002. Furthermore, the Miner has made no submissions to counter any of the evidence or submissions made by the Landholders. In the face of the evidence by the Landholders and no evidence by the Miner, and given the sound evidence of ongoing difficulties that the Landholders have had with the Miner, I consider it appropriate to allow the significant sum of $5,000 for management costs. Conclusion on Compensation [21] Taking full account of the foregoing, and, as previously indicated, assessing compensation in a total sum, and taking proper account of doubling-up, I determine compensation under s. 281(3) of the Act in the sum of $18,500.00. In accordance 11 Sullivan [2003] QLRT 2 pt para 88. 12 See Sullivan [2003] QLRT 2 at para 92. -- 6 of 7 -- with s. 281(4)(e) of the Act, I award an additional amount of $1,850 which is 10% of the compensation determined above, to reflect the compulsory nature of the renewal of the mining lease. Accordingly, I assess the total compensation in this matter at $20,350. [22] The Miner wishes to pay the compensation annually. Due to existing difficulties in receiving payment of compensation due by the Miner to the Landholders under this mining lease, the Landholders seek immediately payment of compensation. In light of the submissions and evidence, as the renewal will be backdated to take effect from 1 June 2002, I further order the Miner to pay the initial sum of $8,350.00 in compensation to the Landholders within 1 month of the renewal of mining lease 70129, and the further sum of $4,000 on 1 June 2004, 1 June 2005 and 1 June 2006 respectively. -- 7 of 7 --