Deimel v Cochrane & Anor

[2014] QLC 8

LAND COURT OF QUEENSLAND

CITATION:

Deimel v Cochrane & Anor  [2014] QLC 8

PARTIES:

Wolfgang Deimel
(applicant)

v

Howard Christopher Cochrane and Loretta Valerie Cochrane
(respondents)

FILE NO:

MRA462-13

DIVISION:

General Division

PROCEEDING:

Application for determination of compensation

DELIVERED ON:

12 March 2014

DELIVERED AT:

Brisbane

HEARD ON:

Heard on the Papers
Decision reserved on 19 February 2014

HEARD AT:

Brisbane

MEMBER:

WA Isdale

ORDERS:

1. Compensation is determined in the amount of $2,000 per annum under s 281(3) of the Mineral Resources Act 1989.

2. Under s 281(4)(e) an additional amount of compensation is determined in the amount of 20% of the aggregate amount determined under s 281(3) of the Mineral Resources Act 1989.

3.    The applicant shall pay the respondents the total compensation of $2,400 per annum in advance of the year to which it relates with the first payment being made within 30 days of the renewal of the mining lease.

4.    The parties are to bear their own costs of the present proceedings.

CATCHWORDS:

Mineral Resources Act 1989, s 279, s 281

Mining Lease – renewal – determination of compensation

Mitchell v Oakhill and Mitchell (unreported, Land Court of Queensland, 10 March 1998)
Shaw v Heritage Holdings Pty Ltd (1992-1993) 14 QLCR 139
Smith v Cameron (1986-1987) 11 QLCR 64

APPEARANCES:

The parties made written submissions and requested that the Court determine the matter on those papers.

Background

1. On 13 September 2013 the Mining Registrar for the Brisbane District, Southern Region referred to the Court the matter of compensation for the renewal of Mining Lease (ML) 5933. This action was in accordance with s 279 of the Mineral Resources Act 1989 (the Act). The Mining Registrar has taken this step because compensation must be determined before a mining lease is granted or renewed and the holder of the mining tenement, the applicant, and the landowners, the respondents, have been unable to reach agreement on the compensation which the applicant should pay to the landowners in accordance with the Act.

2. This matter came before the Court on 19 February 2014 when the applicant appeared in person and Mr Cochrane attended by means of a telephone link. The Court asked the parties whether they would be able to reach an agreement between themselves in regard to the compensation and they advised that this was not possible. They both requested that the Court determine the matter of compensation on the basis of the written material that they had provided to the Court. While the parties, if making their own agreement, are free to compromise with each other in a way mutually acceptable to them, the Court is more limited in what it may do and must decide the case in accordance with the Act and on the material which the parties have chosen to provide it with. The Court’s scope for action is more limited than that which the parties would enjoy when negotiating privately but is that which the law gives to it and its determination must be made on the material to hand.

3. Mining Lease 5933 is for the purpose of gold mining and is over land located about 45 km west of Warwick. It is proposed to be for a five year period and is a renewal of the previously existing tenure. It is over freehold pastoral land owned by the respondents. The previous written compensation agreement reached between the parties was made on 4 May 2008. The terms of that agreement included compensation of $2,000 per annum plus GST and indexed to the Consumer Price Index. Payment was to be made by 1 January of every year, late payment attracted 10% per annum additional payment, two bores drilled on the lease were to be left there at the end of the tenure and stock were to be allowed to graze and access water on land not being used for mining.

4. The compensation was expressed by the agreement to be with respect to:

   “(a)deprivation of possession of the surface of the land of the owner;

   (b)diminution of the value of the land of the owner or any improvements thereon;

   (c)diminution of the use made or which may be made of the land of the owner or any improvements thereon;

   (d)severance of any part of the land from other parts thereof or from other land of the owner;

   (e)any surface rights of access;

   (f)all loss or expense that arises

   as a consequence of the grant of the mining lease.”

5. At the time of the agreement, ML 5933 had an area of about 59 ha. It now is proposed to have an area of 5.6042 ha, the remainder of the lease area having been surrendered. In the application for renewal, the reduced area is described as critical to future mining operations as it holds “vital infrastructure” which includes:

   ·Fresh water dam

   ·Sediment settlement dam

   ·Suspended clay settlement dam

   ·Operational fully equipped bore

   ·Suitable area for processing plant

   ·Area for storage and camp

Compensation sought by the respondents

1. The respondents, in their written submissions, filed in response to the submissions made by the applicant, make the following points:

   (a)    The previous compensation agreement is not directly relevant to the present situation as now the property market treats properties with mining leases over them differently to previously, decreasing the marketability of the land;

   (b)    The respondents do not wish there to be any mining leases on the land which is their primary asset and source of future retirement funding;

   (c)    Bores and storage dams were due to be ceded to the respondents at the end of the lease term on 31 December 2013;

   (d)    The property which the applicant uses for comparison purposes in his submissions is inferior and without sealed road access;

   (e)    The compensation sought is linked to the overall effect on the value of the respondents’ holding, not just the land actually being mined;

   (f)     The applicant is in arrears with local authority rates;

   (g)    The respondents seek compensation of $40,000 plus GST per annum.

2. In support of their submissions, the respondents included two letters from local real estate agents. An undated letter apparently addressed to Mr Cochrane from Mr Rob Finlay, the licensee of LJ Hooker, Warwick, gives it as his opinion that mining leases have some effect, either on the sale price of land or in a worse case of not being able to sell the land to some buyers.

3. A letter which is dated 21 November 2013, has been provided by Mr Andrew Williams, the licensee of Elders Real Estate, Warwick. Like Mr Finlay, he observes that more potential buyers are researching the question of the presence of or potential for mining leases, with buyers a lot more cautious about this aspect. He states that it would be preferable not to have to try to market an affected property. He gives an example of a block, affected by a lease for mining sandstone, being under contract for less than one-third of what the next-door and nearby blocks have sold for. Buyers, he states, are looking for reasons to pay less and matters that could affect a sale should be resolved before any marketing campaign.

The applicant’s submissions

1. In his written submissions the applicant refers to the compensation agreement that was in place for the last five years. He states that during this time stock was given access for grazing and watering and station workers were not refused access to the leased area, which was then much larger, about 53 ha now having been returned after rehabilitation. The applicant intends to apply to convert an exploration licence surrounding ML 5933 to a mining lease to adjoin ML 5933 with a total area of about 20 ha. The proposed addition would be accessible to stock and access to water would be available from a large open dam with secure footing. Access to ML 5933 is by farm tracks and no fence lines need to be crossed or gates used. The station homestead is several miles away, according to these submissions, which are not contradicted in this aspect. The applicant expresses the opinion that the mine has increased the value of this portion of the property. The large dam will remain as will an equipped bore with a value of about $30,000. The applicant expresses the view that the land as farmland has a value of $381 per ha and submits that compensation should be based on farm land values only or for loss of use of land. He states that rental of the lease area of 5.6042 ha is $6,300.

2. In support of his submissions, the applicant has provided a copy of a real estate advertisement listing for sale a property at 1247 Columba Road, Gore, which is a 13,000 acre property in the traprock country. It shows a list price of $2,000,000. The respondents’ view of the non-comparability of this property has already been referred to. The applicant has also provided a copy of the previous compensation agreement, the relevant parts of which have been set out above, and some other documentation.

3. The other material provided is a copy of Exploration Permit for Minerals (EPM) 25185 in his favour, a letter from the Mining Registrar dated 11 January 2013 confirming the partial surrender of ML 5933 and its retained area of 5.6042 ha. Also included is a copy of the Goondiwindi Regional Council rate notice addressed to the applicant and for the period 1 July 2013 to 31 December 2013. It shows arrears of rates, a matter not relevant to this Court’s present considerations. A copy of a water licence, reference 80424T, in favour of the applicant is provided along with a copy of Rent and Statistics information in two sheets from the Department of Natural Resources and Mines.

The relevant considerations

1. The Court must consider the matters set out in s 281 of the Act. It is not necessary to set them out in detail once it is observed that the previous compensation agreement specifically referred to these things. The Court must also allow an additional amount for the compulsory nature of the action taken under the Act. An amount so allowed shall not be less than 10% of the aggregate amount determined under the other categories. Section 281(4)(e) of the Act makes that requirement.

2. The parties are far apart on the aspect of diminution in value of the owner’s land. The applicant says the value will be enhanced due to the works done on the land and the owners submit that the presence of the tenure will reduce the land’s value so that the compensation will need to be increased to allow for this, seeking compensation of $40,000 per annum plus GST.

3. An examination of the evidence, in particular the letters from Mr Finlay and Mr Williams do not establish a reduction in the value of this land which the Court must now consider. The letters do not amount to valuations of the subject land with an assertion of a certain reduction on account of this mining tenure. The example given by Mr Williams, of the sale of Lot 9 Gilchrist Road, on the outskirts of Warwick, does not explain the extent of the sandstone extraction on it so that the reduction in value there could be compared with the circumstances affecting the subject land. It is therefore not possible to conclude that the reduction in value which may be due to the mining tenure there would demonstrate the reduction in value contended for due to the tenure in question in the present case. Additionally, no explanation is provided as to how the $40,000 contended for by the respondents could be arrived at on the evidence which they or the applicant provided and upon which the Court must act.

The legal framework within which the Court must act

1. Section 279 of the Act provides that a mining lease shall not be renewed unless an agreement in relation to compensation has been filed at the office of the Mining Registrar, or in the absence of such an agreement, a determination of compensation has been made by the Court. The matters which must be considered by the Court are set forth in s 281(3) of the Act. While s 281 sets out the matters to be considered, it does not define any precise method of assessment. In Smith v Cameron (1986) 11 QLCR 64, the Land Court said at p 74:

   “The section in my opinion merely identifies matters which shall be taken into consideration in making the assessment. It does not prescribe a method of valuation. No doubt each case will depend on its own facts and circumstances. …”

1. In Shaw v Heritage Holdings Pty Ltd (1992-93) 14 QLCR 139, the Court at p 146 said:

   “The method of assessment remains a matter which will be governed by the facts and circumstances of each case. …”

1. In Mitchell v Oakhill and Mitchell (unreported, Land Court of Queensland, 10 March 1998), the President of the Land Court, referring to s 281(3) of the Act, said:

   “… the latter section does not prescribe a method of valuation. In my view, as long as the amount of compensation finally determined sufficiently accounts for each of the matters referred to in the sub-section, it is not necessary to quantify an amount in respect of each of the matters referred to.”

The evidence

1. There is no useful valuation evidence. The vague and general statements of the real estate agents do not assist in valuing the aspects to which the Act requires the Court to have regard. The sole example of a sale which was referred to has the deficiencies to which reference has already been made. The real estate agents have not claimed to be offering opinions as valuers and have not provided any analysis of the relevant valuation impact of the subject tenure on the subject land or sought to estimate a value in dollars, which the Court must do. Their statements are not of assistance in answering the question now before the Court.

Resolution

1. From the evidence which the parties have chosen to provide to the Court, the Court must do its best to settle the amount of compensation to which the owners are entitled. It is noted that there was a previous agreement and that the respondents have formed the view that circumstances have now changed so that the value of the land will be diminished to a greater extent by the tenure. I have referred to the lack of useful evidence which might support that conclusion and quantify the extent of the effect. I also note that the area of the tenure is to be greatly reduced from that which existed when the previous agreement was negotiated by the parties. Then, grazing access and access to water for stock was available. When the previous agreement was negotiated, it covered compensation for about 59 ha and the area now being considered is 5.6042 ha, less than 10% of the previous area. This weighs against the asserted quantified effect of the existence of the lease on the value of the land, particularly where the evidence on this aspect is very unhelpful.

Conclusion

1. While the parties have been free to negotiate as they wish and to take into account what they feel is relevant, this Court must act on the evidence that they have chosen to put before it. Once the matter is referred, the Court is required by the Act to consider the matters set out in s 281 and to come to a conclusion on the basis of the evidence provided and in accordance with legal precedent such as the legal authorities to which reference has been made.

2. On the evidence provided, it could not be safely concluded that compensation in respect of the greatly reduced area of ML 5933 should be greater than what was previously agreed by the parties in respect of the originally much larger area. The Court is required to determine the amount of compensation and, in absence of any agreement between the parties for a formula for taking into account such things as possible yearly increases, will set an unambiguous amount of compensation so as to provide the parties with certainty.

3. Taking into account all aspects of compensation in s 281(3) of the Act, compensation is determined at $2,000 per annum. In relation to the requirement in s 281(4)(e) of the Act, an amount of not less than 10% is to be added to this. The amount of $2,000 is arrived at by the Court considering the previous agreement, the asserted change in the market which cannot be quantified on the evidence and the reduced area of the tenure for present purposes when compared to that dealt with in the previous agreement. The allowance for the compulsory nature of the mining lease process is an amount that shall not be less than 10%. It is noted that the respondents have concerns for the future potential marketability of this land in view of the presence of the mining lease. The Court is satisfied on the evidence in this case that the allowance to be made under s 281(4)(e) of the Act should exceed the mandatory minimum and doing the best that it can, determines this amount at 20%. There has been no allowance separately quantified for such things as GST or Consumer Price Index changes; the Court has acted in accordance with the words of s 281 of the Act, as it must.

Orders

1. Compensation is determined in the amount of $2,000 per annum under s 281(3) of the Mineral Resources Act 1989.

2. An additional amount of compensation is determined in the amount of 20% of the aggregate amount determined under s 281(4)(e).

3.     The applicant shall pay the respondents the total compensation of $2,400 per annum in advance of the year to which it relates with the first payment being made within 30 days of the renewal of the mining lease.

4.     The parties are to bear their own costs of the present proceedings.

WA ISDALE

MEMBER OF THE LAND COURT