Fazzari v Colonial Agricultural Company Limited [2003] QLRT 38

LAND AND RESOURCES TRIBUNAL QUEENSLAND CITATION: Fazzari v Colonial Agricultural Company Limited [2003] QLRT 38 PARTIES: In the matter of Mining Claim 60021 – Application by Frank Fazzari for determination of compensation payable to Colonial Agricultural Company Limited FILE NO/S: MCC00108/2002 PROCEEDING: Application for determination of compensation DELIVERED ON: 9 April 2003 DELIVERED AT: Brisbane HEARING DATE: Heard on the papers PRESIDING MEMBER: Smith DP ORDER/S: 1. I determine compensation under s. 85(7) of the Act in the sum of $50.00. In accordance with s. 85(8)(e) of the Act, I award an additional amount of $5.00, which is 10% of the compensation determined above, to reflect the compulsory nature of the grant of the mining claim. The total compensation payable is accordingly $55.00. 2. I further order the Applicant to pay the sum of $55.00 in compensation to the Respondent within 1 month of the date of this judgment. CATCHWORDS: MINING CLAIM – DETERMINATION OF COMPENSATION – STOCKING RATES – REHABILITATION – ADMINISTRATION FEE – MANAGEMENT TIME Mineral Resources Act 1989 ss. 85, 93 Richardon v Barrett [2001] QLRT 89, followed Horn v Sunderland Court [1941] 2 KB 26, followed Wills v Minerva Coal Pty Ltd [No. 2] (1998) 19 QLCR 297, followed Sullivan v Oil Company of Australia Limited and Santos Petroleum Operations Pty Ltd [2003] QLRT 2, followed -- 1 of 6 -- COUNSEL: N/A SOLICITOR/S: N/A AGENT/S: N/A [1] SMITH DP: On 18 November 2002 the Applicant, Frank Fazzari (“the Applicant”) wrote to the Mining Registrar, Quilpie Mining District, requesting the Tribunal determine compensation with respect to Mining Claim no. 60021. The Applicant had previously made an application on 19 August 2002 for Mining Claim 60021, which expired on 30 September 2002, to be renewed for a period of 5 years. Mining Claim 60021 is in the Quilpie Mining District and covers an area of 1 ha of leasehold land on a property known as Keeroongooloo Station owned by Colonial Agricultural Company Limited (hereinafter “the Respondent”). Mining Claim 60021 originally commenced on 1 October 1992 for a period of 5 years. It was renewed for a further term of 5 years from 1 October 1997. The Applicant purchased the mining claim on 2 July 2001. 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 claim.1 [2] The Applicant represented himself in this matter, whilst the Respondent was represented by certain of its officers acting on the company’s behalf. Following a directions hearing at which both the Applicant and the Respondent appeared before President Koppenol, written submissions and evidence were provided by the parties to the Tribunal. The application was then heard on the papers by myself. Neither party relied upon expert evidence regarding the impact of the proposed mining on the value of the land. In determining compensation I have taken into account all the material filed by the parties, together with material forwarded by the Mining Registrar, Quilpie, at the time that the matter was referred to the Tribunal. These reasons refer to the salient points but not all the evidence that I have relied upon in making my decision. Due to the lack of evidence produced to me, I have also relied on my own observations and experience in the opal fields specifically and mining areas of Queensland generally. [3] The Respondent’s entitlement to compensation is detailed in s. 85(7) and (8) of the Act. In determining compensation, I have adopted the same approach I took in Richardon v. Barrett.2 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 mining claim was not granted.3 [4] The Applicant’s position is that compensation should be based on the unimproved value of the land. Using material supplied by the Department of Natural Resources and Mines, he set that value at the sum of $1.15 per hectare, making a total amount for compensation for the period of 5 years of $5.75. However, the Applicant then 1 See s. 93 of the Act. 2 [2001] QLRT 89 at paragraphs 9, 10 and 14. 3 Horn v Sunderland Court [1941] 2 KB 26 at 43 per Jacobs J. -- 2 of 6 -- goes on to say that the mining activity on the mining claim leads to improvements by way of revegetation worth many times more than what the value of compensation would be. The Applicant accordingly argues that there should be no monetary compensation awarded to the Respondent. [5] The Respondent contends that compensation should be fixed in the sum of $15.00 per hectare per annum plus an “administration fee” of $50.00. The Respondent relies upon the value of the land when purchased by it in 1997 for $7m for 581,000ha. This price equates to $12.00 per hectare. The Respondent asserts that the value of Keeroongooloo Station has increased significantly in the last 5 years. It supports this contention by reference to a 50% increase in the unimproved value of the property as determined by the Department of Natural Resources and Mines in 2002. The Respondent had also referred to an independent valuation that it commissions from Herron Todd White each year which it says is consistent with the stated increase in value. Unfortunately, the Herron Todd White valuation has not been provided to the Tribunal. [6] In accordance with the principles set by the authorities and as previously discussed by myself in Richardson v Barrett4 and other cases, in my view it is appropriate to rely upon the actual value of the land and not the unimproved value. I am prepared to allow a modest increase in value over the sum of $12.00 per hectare that applied in 1997. I therefore, doing the best I can absent specific valuation evidence, assess the value of the land at $15.00 per hectare. It is, of course, appropriate that that amount per hectare be depreciated, given the nature of the land and the 5 year term of the lease. Consistent with the approach that I took in Richardson v Barrett, I considered the appropriate depreciation to be 33⅓%. Applying such depreciation, the sum for the lease area is $5.00. [7] The Respondent has provided evidence that the carrying capacity of Keeroongooloo Station is approximately 16,500 head, which equates to a stocking rate of 1 head to 35 hectares. The Respondent claims that the property is used principally for fattening of young bullocks for a period of 2 years, during which time the value is expected to increase by $700.00 per head. Using their figures, each hectare is therefore expected to produce 1/35th of $350.00 per annum, which equates to $10.00. The Applicant does not agree with the stocking ratios as put by the Respondent. The Applicant says that part of the property, where opal mining is not conducted, “could possibly have an average stocking rate of 1 head of cattle per 50-60 hectares”5 and further that at that part of the property where opal mining is conducted the land has “severely less nutritional value and watering points”. The Applicant says that an appropriate stocking ratio would be one head per 70-80 hectares at best”.6 The Applicant says that the paddock in which he has been operating over the last 3 years has had very little if any stock present during that time. In its reply, the Respondent refutes the Applicant’s assertion of stocking rates. The Respondent relies upon audited stock returns (not produced to the Tribunal) which apparently show that the property as a whole has carried 18,500 head per year over the last 3 years. I note that this figure is greater than the figure claimed by the Respondent. The Respondent stated such figure to be “conservative”.7 The Respondent also asserts that its records 4 [2001] QLRT 89. 5 Applicant’s statement and submission 11 March 2003 p. 4. 6 Applicant’s statement and submission 11 March 2003 p. 5. 7 Respondent’s reply 18 March 2003 p. 3. -- 3 of 6 -- show that at least 1,600 head “have been in the paddock in question throughout the last 2 years. In fact, with the severe drought experienced in the last year, the mulga scrub found in this paddock has been an extremely valuable source of feed”.8 [8] Given the evidence and submissions by the Respondent, I am inclined to accept its assessment of stocking rates. I therefore accept the stocking ratio of 1 head per 35 hectares. However, I do not accept the sum of $700.00 over a 2 year period for fattening. Whilst this may be the gross sum that the Respondent hopes to recover over the 2 year period, from the material before me it does not take into account any of the costs involved in raising the cattle. In making determinations of compensation in previous cases, both this Tribunal and the Land Court has considered, instead of the growth figures provided by the Respondent regarding the value of each head of cattle, assessing the cost to the landholder were it to agist the cattle on another property for the term of the mining lease.9 Unfortunately, in this case I have no evidence of the going rate of agistment in this district. If I act on the assumption that this mining claim has an impact on the carrying capacity of 1/35th of a head for the 1ha of the mining claim, and adopting an approach consistent with that adopted by Kingham DP in a similar mining claim compensation case in this Tribunal,10 then say 5ha of the property are impacted by the existence of the mining claim by way of impact on balance lands and access. In arriving at such a figure, I take into account the evidence regarding access tracks of both the Applicant and the Respondent. I assess that stocking rates will be impacted by say 50% for those 5ha. The total amount of land impacted on from a cattle fattening perspective is accordingly 3.5ha, which equates to 1/10th of a beast a year. Applying an agistment rates of say $2.50 per beast per week, the agistment amount would equate to approximately 25 cents per week. Over the course of 5 years, this equates to $65.00. As I do not have any direct evidence of the appropriate agistment rate, I take this figure as a guide only in assessing the compensation. I note that, if the agistment rate for this area at this time is actually $1.50 per beast per week, the total sum would be $39.00, whilst if the actual sum is $3.00 per beast per week, the sum would be $78.00. [9] Compensation relating to severance does not appear to be relevant to this matter. There is however the issue of compensation for impact on the value of the balance lands of the Respondent, and blot on title. With respect to both these amounts there is scant, if any, evidence by either the Applicant or the Respondent as to the quantum of such compensation. Certainly, any purchaser of a property does take into account the fact that the property is subject to mining tenements when determining the amount that such prudent purchaser is prepared to pay for the property. In this case, the mining tenement is 1ha out of 581,000ha. Accordingly, I allow a minimal amount for blot on title. Likewise, in the absence of evidence, I allow a minimal amount for the impact of the mining claim on the balance lands. It must of course be remembered that a doubling up is to be avoided in compensation and this is particularly the case when one considers the stocking rates as the head of compensation as well as impact to balance lands. 8 Respondent’s reply 18 March 2003 p. 3. 9 See, for example, Richardson v Barrett [2001] QLRT 89 at paragraph 29 where an agistment cost of $2.50 per beast per week was applied. 10 Atkinson v Warner [2002] QLRT 18. -- 4 of 6 -- [10] The Respondent claims the amount of $50.00 as a management fee. This amount is not claimable as an item of disturbance. As Member Scott said in Wills v Minerva Coal Pty Ltd [No. 2]:11 “It is unquestionably the case that an owner of land in a matter involving a consideration of s281 MRA needs to be compensated for costs associated with obtaining professional advice sufficient to allow him to prepare a claim for compensation. Such expenses arise “as a consequence of the grant” of the mining lease, however, any decision by such a landholder to employ one or more of a range of para professionals does not arise as a consequence of a grant of the mining lease, but arises by virtue of the independent decision of that landholder to conduct his affairs in a particular way. … There is nothing in the language of this statutory provision which extends the notion of what is compensable for professional fees beyond that which has been acknowledged by this Court on numerous occasions. … I was referred by the appellant to Smith v Cameron where it was suggested that Mr White implied that owner’s time could be the subject of compensation if evidence was available. There is then a claim which appears to cover losses by the owner in meeting with mining personnel and n engaging a value, and members of the legal profession. On the basis of what follows in respect of the claim for valuation fees incurred in the preparation of the application for compensation I would allow legal fees so incurred but I have no proof of the expenditure. Other losses or expenditure would appear to be compensated for in the service obtained. However without attempting to suggest whether they are or are not compensable I reject the claim through lack of proof.” I do not read this heavily qualified language of extending to an interference that owner’s time, or that of an agent such as Mr Houen, is compensable. Indeed, what Mr White said may be taken to be a reference to legal fees, only.” [11] Consistent with the authorities, I do not allow any sum for an administration fee. However, that is not necessarily the end of the matter. [12] While it is clear that an owner’s time is not compensated for preparation of the matter for hearing, arranging valuation evidence, etc as a disturbance cost, the authorities do 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 my vary from time to time. I’ve tried to take an average on an average working week or month or year at that amount at $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”.12 [13] 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.13 On the basis of the material before me, the amount of management time for the owner of the land in this case is miniscule compared to that of Sullivan. I have no evidence of the appropriate hourly rate of pay of an employee of the Respondent involved in such management, nor do I have any evidence which properly sets out 11 (1998) 19 QLCR 297 at 362-3. 12 Sullivan [2003] QLRT 2 at para 88. 13 See Sullivan [2003] QLRT 2 at para 92. -- 5 of 6 -- management time as a head of compensation in contrast to the claim for an administration fee. I have accordingly taken into account a minimal amount of compensation for management time. [14] The Respondent chose not to provide the Tribunal with a copy of the recent valuation report. It did not engage a valuer for the purposes of this matter, nor did it, from the material before me, incur any legal fees. As can be seen from the authorities that I have already referred to, in relevant compensation matters, legal and valuation fees are compensable as disturbance items. As none are claimed in this matter, I make no allowance for valuation or legal costs in my determination. [15] I also note the evidence of the Applicant and the Respondent relating to improvements that are alleged to have occurred to the foliage on land disturbed by mining activities. Of course, the Applicant is under a statutory obligation to rehabilitate the land. Whilst it may be a relevant factor for negotiating a compensation arrangement with a landholder that the miner will make improvements to the land, such as leaving a dam or whatever on the property following mining, any benefits that flow to the landholder from rehabilitation by the miner flows specifically from the miner’s obligations to rehabilitate. Whilst it is a factor to take into account in the terms in which the Applicant has put it in this case, in like manner as my assessing some of the losses incurred by the Respondent as minimal, I also assess, in the overall scheme of things, any additional foliage growth post mining as minimal. Indeed, that impact, though real, may be said to be set off by changes in waterflow over the subject property post mining, which impact I also assess as minimal. [16] Doing the best that I can with the material before me, and taking all the foregoing into account, I determine compensation under s. 85(7) of the Act in the sum of $50.00. In accordance with s. 85(8)(e) of the Act, I award an additional amount of $5.00, which is 10% of a compensation determined above, to reflect the compulsory nature of the grant of the mining claim. The total compensation payable is accordingly $55.00. [17] I further order the Applicant to pay the sum of $55.00 in compensation to the Respondent within 1 month of the date of this judgment. -- 6 of 6 --