Carabella Resources Limited v Goodwin

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LAND COURT OF QUEENSLAND

CITATION: Carabella Resources Limited v Goodwin [2016] QLC 32
PARTIES: Carabella Resources Limited
(applicant)
v
Patricia June Goodwin
(respondent)
FILE NO: MRA123-14
DIVISION: General Division
PROCEEDING: Determination of compensation payable for mining lease
DELIVERED ON: 27 May 2016
DELIVERED AT: Brisbane
HEARD ON: 15, 16, 17, 18, 19 September 2014
19, 20, 21, 22 January 2015
12 March 2015
21 August 2015
Submissions closed 25 August 2015
HEARD AT: Rockhampton, Yeppoon and Brisbane
MEMBER: PA Smith
ORDERS:

1. Compensation payable by the applicant to the respondent for the grant of MLA 80194 is determined in the total sum of $1,394,819 which sum includes the items agreed between the parties and the additional amount pursuant to s 281(4)(e) of the Mineral Resources Act 1989

2.     The compensation in order 1 of $1,394,819 is payable within 14 days of the grant of MLA 80194 save for the determined compensation for the relocated house related items which is payable within 14 days of the applicant being provided with a copy of a binding contract for the construction of a house on the land and not before 14 days after the grant of MLA 80194.
CATCHWORDS:

MINING – compensation for mining lease – s 281 Mineral Resources Act 1989 – method of valuation – no separate assessment for each head – no “doubling-up” – consider circumstances of each case

MINING – compensation for mining lease – consideration of legal principles - highest and best use of land – similar legal principles to compensation available under the Acquisition of Land Act 1967

MINING – compensation for mining lease – consideration of comparison sales – conclusions of both sides valuers unreliable – court to do the best it can with what evidence it has before it – benefit given to landowner - check value against sale of neighbouring property to the miner

MINING – compensation for mining lease – consideration of loss of resources (timber and non-mineral) in the proposed mining lease – loss of possible business activity – discounts applied

MINING – compensation for mining lease – consideration of claim for depreciation/diminution to balance land – severance, noise and dust impacts discussed

MINING – compensation for mining lease – loss of adjoining rental property – outside mining lease area – provides no basis for a claim of compensation

MINING – compensation for mining lease – rental income – maintenance costs deduction – rental market evidence – no reasonable evidence of loss – quantum nil

MINING – compensation for mining lease – forced sale of cattle – loss – doubling-up – timing of grant – lack of business and stock records – evidence vague – conjecture – quantum nil

MINING – compensation for mining lease – claim items contended by applicant – not specifically claimed by respondent – stamp duty – livestock transport– settling costs – claims allowed

MINING – compensation for mining lease – 10% value of land – s 281(a)(e) Mineral Resources Act 1989 – greater percentage not contended –…

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Details
Case
[2016] QLC 32
Decision Date

CaseChat Overview and Summary

Carabella Resources Limited, the applicant, sought compensation from Goodwin, the respondent, for the grant of a mining lease over land owned by Goodwin. The dispute was heard and determined by the Queensland Civil and Administrative Tribunal (QCAT). The central issue for the court was to determine the appropriate compensation payable to Goodwin for the mining lease granted over his land, in accordance with section 281 of the Mineral Resources Act 1989. This involved considering various factors such as the highest and best use of the land, comparison sales, loss of resources, depreciation/diminution to balance land, loss of adjoining rental property, rental income, maintenance costs, forced sale of cattle, and additional claim items such as stamp duty, livestock transport, and settling costs.

The court meticulously assessed the evidence presented by both parties' valuers, Mr McLay and Mr Cowie. The court found that the conclusions reached by both valuers were unreliable. However, it was also noted that the Colorado sale, which was relied upon by Mr Cowie, was entered into by parties in litigation and did not meet the Spencer test. In the absence of reliable evidence, the court determined the best approach was to make an assessment based on the available evidence. The court considered the sale of a neighbouring property to the miner as a benchmark for the value of the land. The court also considered the loss of resources, such as timber and non-mineral resources, within the proposed mining lease area, applying appropriate discounts where necessary. The court further examined the depreciation/diminution to balance land, severance, noise, and dust impacts. The loss of an adjoining rental property outside the mining lease area was not considered a basis for compensation. The court found no reasonable evidence of loss of rental income and maintenance costs, and thus, the quantum of compensation for these items was nil. Similarly, the forced sale of cattle was deemed a loss, but the quantum was nil due to the lack of business and stock records, and the evidence was considered vague and conjectural. The court allowed claims for stamp duty, livestock transport, and settling costs as they were not specifically contested by the respondent. Finally, the court determined the compensation payable to Goodwin at 10% of the value of the land, in accordance with section 281(a)(e) of the Mineral Resources Act 1989.

The court ordered that the total compensation payable by the applicant to the respondent for the grant of MLA 80194 was $1,394,819. This sum included the items agreed upon by both parties and the additional amount pursuant to section 281(4)(e) of the Mineral Resources Act 1989. The compensation was to be paid within 14 days of the grant of MLA 80194, except for the compensation related to the relocated house, which was to be paid within 14 days of the applicant providing a copy of a binding contract for the construction of a house on the land, but not before 14 days after the grant of MLA 80194.

Orders

Orders of the court

1. Compensation payable by the applicant to the respondent for the grant of MLA 80194 is determined in the total sum of $1,394,819 which sum includes the items agreed between the parties and the additional amount pursuant to s 281(4)(e) of the Mineral Resources Act 1989

2. The compensation in order 1 of $1,394,819 is payable within 14 days of the grant of MLA 80194 save for the determined compensation for the relocated house related items which is payable within 14 days of the applicant being provided with a copy of a binding contract for the construction of a house on the land and not before 14 days after the grant of MLA 80194.

Background

Background to the litigation

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Evidence

Evidence Before The Court

The legal point has also been made by Ms Brien that the Colorado sale was entered into by parties in litigation and that such sale did not meet the Spencer test.Submissions relating to the evidence of Mr McLay Mr Hammond of Counsel very strongly asserts that the valuation evidence of Mr McLay should be rejected. Importantly, though, Mr Hammond does not assert in any way that Mr McLay’s evidence was deliberately in error or deceptive.[55][55]Respondent’s submissions para 68(m). Mr Hammond’s submissions in support of his contention that I should have no regard to Mr McLay’s evidence are lengthy. Thankfully, he summarised his key elements of criticism of Mr McLay as follows:[56][56]Respondent’s submissions para 63.“a.He did not inspect any of his comparable sales prior to the preparation of his reports and cannot therefore furnish sufficient evidence about these sales to allow any meaningful evaluation of the validity of the conclusions he has reached (Perpetual Trustee Company Limited);b.He swore that he had inspected each property both in his evidence and in his reports even though he agreed under cross-examination that he had not inspected any of his comparable sales at the time of preparing his report (2-59 @ 25);c.His evidence is that he either flew over or ‘drove by’ some of the properties (although he could provide no details) but that he did not physically inspect any of the properties for the purpose of preparing his report;d.Where he did fly over or ‘drive by’ a property, he is unable to provide any dates or other details;e.His failure to inspect any of his comparable sales should result in the Court rejecting his opinion as to value insofar as he relies on those comparable sales (Glencore Coal)f.He has relied on the opinions of other valuers and the input from other valuers but has failed to disclose this in his report or to include a statement as to ‘the degree of reliance (if any) on his professional opinion from outside experts’ as is required by rule 6.4(f) API;g.He has relied on the reports of other professionals without those persons being called to give evidence as to their opinion and accordingly ‘without evidence from the experts who made those valuations and cost assessment reports, they are of no weight’ (ING Management Ltd);h.By failing to inspect the sales evidence and by relying on other experts’ opinions, McLay’s evidence fails to satisfy the requirements of Perpetual Trustee Company Limited that ‘Expert evidence presented to the Court should be, and should be seen to be, the independent product of the expert…’;i.By failing to inspect the sales evidence and by relying on other experts’ opinions, the court is unable to examine the substance of the opinions expressed by McLay as is required in Perpetual Trustee Company Limited and his opinions should accordingly be disregarded;j.He has failed to disclose, as is required by rule 6.4(e) API, that he had not verified all of the facts and information contained within his reports nor the extent to which that failure might affect his valuation;k.He did not make enquiries of any of the owners of any of the sales evidence properties as to the state of those properties at the times of their respective sales for the purpose of preparing his reports, nor was he able to give any reliable evidence as to the state of those properties at the times of their respective sales; andl.He has been unable to rely on any notes or records made or used by him in the preparation of his reports and is accordingly unable to provide the Court with ‘... sufficient information to enable it to evaluate the validity of the experts conclusions…’ (Perpetual Trustee Company Limited).m.Whilst the Court should note that McLay was factually in error in suggesting that he had personally inspected each of his comparable sales and that he had omitted important disclosures from his reports, he openly conceded the errors when they were put to him and there is no suggestion that his conduct was in any way deliberate or deceptive.”

Decision

Reasons for decision

Mr McLay relies on five sales in support of his valuation of Kalari. He has summarised those sales as follows:[24]“6.1 Sales Commentary and ConclusionsWe have summarised the sales utilised in the valuation in the following table.[24]Ex 3 p 11. For his part, Mr Cowie says the following about Kalari:[25] [25]Ex 8 pp 6 – 8.“10.Kalari is adjacent to and immediately south from the Town of Bluff. The property adjoins the Capricorn Highway in the north-eastern corner with the Central Western rail line along the northern boundary of the property. The property is situated about 175km westerly from the City of RockhamptonAccess11.The property has frontage to the Capricorn Highway which is bitumen surfaced.Services12.Rural power and telephone services are connected to the property.Zoning13.The land is zoned ‘rural’ under the Central Highlands Regional Council town planning scheme.Land Use14.Kalari is used for grazing beef cattle. Historically, gravel and white clay have been extracted and sold from the reserves on the property. Rosewood timber fence posts have also historically been harvested from land within the mining lease area.Highest and Best Use15.The highest and best use of Kalari assuming that the mining lease had not been applied for is the existing use. After the grant of the proposed mining lease the harvesting of rosewood posts and rails will be lost to the mining operation as will the quarrying of white clay and gravel and the grazing operation will be adversely affected because the carrying capacity will be reduced significantly by the mining operations.Water Facilities16.Natural: Water lasts in gullies for short periods after rain. There is a small spring in the south-eastern part of the property which lasts throughout the year. Suitable underground water for stock is not available on the property.17.Artificial: Artificially watered by four (4) dams plus a shared dam on the western boundary.Description of Country18.The property comprises a mix of country from developed scrub to open undulating forest, areas of poor forest of lancewood-rosewood gravelly ridges with the southern boundary running into a steep escarpment range with vertical cliffs along the southern boundary.19.There is an area of about 300 hectares of developed scrub in the south-western corner, with a brigalow regrowth on the area recently re-pulled. The area is well grassed with buffel.20.The northern part of the property comprises a mix of forest of Box and Narrow-leaf Ironbark country interspersed with lancewood and Rosewood ridges with areas of lighter country timbered with Cyprus pine and Bull oak.21.The southern part of the property south from the high tension power line comprises mainly open frost country of narrow-leaf ironbark, Moreton Bay Ash with some box and wattle in areas.Description of Country within Mining Lease Area22.The country covered by the mining lease some 588.3 hectares contains a mix of country. This area originally comprised open forest of Box, Sandalwood and Bloodwood on gently undulating duplex soils extending along the eastern and southern areas of the proposed mining lease area.23.The country rises from this forest area to low ridges of broken country comprising a mix of Box and of Bull Oak, Bloodwood, Wattle, Lancewood, Turkey bush and Rosewood interspersed with areas of Bloodwood forest.24.The soils in this area comprise a mix of red, red gravelly to stony areas on jump ups. About 100 hectares (15%) of forest has been developed along the eastern and southern areas. The higher country provides a good mix of country within the subject property and provides shelter and protection for stock during the winter period and rain events.25.For these reasons, the loss of this area by the proposed mining lease will have a detrimental effect on the overall management of the balance area of the property.26.photographs of the country types on Kalari are included in Appendices as summarised in the following table:

Ratio Decidendi

Legal Principle Established

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