Drake Coal Pty Ltd v Gordon Wallace MacNicol

[2011] QLC 9

LAND COURT OF QUEENSLAND

CITATION:	Drake Coal Pty Ltd & Anor v Gordon Wallace MacNicol [2011] QLC 0009
PARTIES:	Drake Coal Pty Ltd and Jax Coal Pty Ltd (Applicants)
v.
Gordon Wallace MacNicol (Respondent)
FILE NO:	MRA865-10 MRA866-10 MRA24-11 MRA25-11
DIVISION:	Land Court of Queensland
PROCEEDINGS:	Review; question posed by Court
DELIVERED ON:	16 March 2011
DELIVERED AT:	Brisbane
HEARD AT:	Brisbane
MEMBER:	His Honour, Mr WL Cochrane, Member
ORDERS:	The Court is empowered to consider the question of compensation in the absence of any details about the conditions which may attach to or the terms of any recommendation for the grant of a mining lease.
CATCHWORDS:	Power to assess compensation - Mineral Resources Act 1989 ss 268, 279, 281
APPEARANCES:	Mr DB Fooks, Solicitor, Clayton Utz Lawyers appeared for the Applicants Ms F Pinfold, Trainee Solicitor, by leave, Emanate Legal appeared for the Respondent Mr SR Grant of Counsel, Legal Services, Department of Employment and Economic Development and Innovation appeared on behalf of the State of Queensland by way of assistance and at the request of the Court

Background

1. Each of these matters requires determination of the compensation payable in respect of mining leases sought by each of the applicants, Drake Coal Pty Ltd and Jax Coal Pty Ltd.

2. The ambition of the miners (Drake Coal Pty Ltd and Jax Coal Pty Ltd) is to operate separate open-cut coal mines in an area located near to Collinsville. The landowner in respect of each of the applications is Gordon Wallace MacNicol. Details of the proposed leases and the real property description is Lot 618 on Crown Plan PH2106 Title Reference 17664023 (the Land).

3. Consequent upon reading the application material in each of the files it became apparent that these are cases in which no recommendation for a mining lease had been made and, in fact, the mining lease applications are still in every sense of the word being progressed through all of their various stages.

4. At my direction, the Registrar wrote to the parties and to the Department of Employment, Economic Development and Innovation observing as follows:

   “His Honour had an opportunity to review the files in each of the above matters and is concerned as to the capacity of the Court to deal with determination of the question of compensation. In circumstances where the terms of the possible mining lease remain unclear, in the absence of any recommendation regarding the lease applied for including, in particular, the area and duration of the recommended lease any determination may be purely hypothetical.

   Accordingly, His Honour has instructed me to write to you as the appropriate departmental officer, apprised of the Court’s concerns as a consequence of earlier dialogue between yourself and the Registrar of the Land Court, to invite the department by its legal representatives to participate in the hearing set down on Thursday morning.

   The Member is concerned to avoid unnecessary litigation being visited upon applicants for mining lease, in circumstances where the Court may come to the view that it is unable, in the absence of any recommendation which would enable the Court to more fully understand the likely terms of any mining lease to embark upon the determination of the appropriate compensation. The department’s views with respect to these matters would be valued by His Honour.”

1. The matter came on for hearing and review on 10 February 2011. Because of an administrative oversight it became apparent that the solicitors for the landowner, Mr MacNicol, had not been provided with a copy of the letter sent out at my direction and accordingly they were given some time to lodge submissions with respect to the issue of whether or not the Court was either entitled or required to proceed to a determination of the compensation issue prior to being informed as to what the likely nature of the mining lease recommendation would be when the application had finished wending its way through the various administrative and assessment processes.

2. In an affidavit filed by the mining companies, sworn by Christopher Ian Wallin, Mr Wallin quite fairly sets out the basis upon which the miners have sought to have the matter of compensation determined prior to the actual hearing of each of the mining lease applications.

3. In his affidavit sworn on 10 February 2011, Mr Wallin says:

   “The Applicants have requested that the Mining Registrar refer the Jax MLA and the Drake MLAs to the Land Court for the determination of compensation prior to the actual hearing of each of the mining lease applications. The significance of the Projects to Queensland and Australia requires that the Applicants have the Projects operational as soon as possible. In order to commence construction works as son as possible (which can only occur after the grant of the proposed mining leases) the Applicants believe that it is prudent to resolve all issues associated with the grant of the proposed mining leases as soon as possible. The Applicants therefore seek for the Land court to determine compensation payable to the Respondent as doing so will resolve issues with the Respondent.”

4. At the hearing on 10 February 2011 Mr SR Grant of Counsel from the Department of Employment and Economic Development and Innovation appeared on behalf of the State of Queensland in order to assist the Court. His appearance was appreciated.

5. My concerns arose from a consideration of ss 271 and 279 of the Mineral Resources Act 1989 (the MRA).

6. Section 271 of the MRA requires the Minister to consider every application for the grant of a mining lease and sub-section 6 effectively removes from the Minister any entitlement to delegate that consideration of a mining lease application to other officers. The Minister is entitled to refer an application to the Land Court for further investigation to hold a hearing and to provide its findings to the Minister.

7. Section 279 of the MRA provides that compensation has to be settled before the grant or renewal of a mining lease.

8. It is clear that the terms of the mining lease ultimately recommended by the Minister and granted by the Governor-in-Council may not be in precise accordance with what is applied for. Such things as areas, timing, the nature of the activities, conditions about rehabilitation and the life of the lease all fall for consideration.

9. Accordingly, determination of the compensation without the benefit of knowing how precisely the lease will be formulated becomes something of a hypothetical exercise. As I observed to the parties (T1-5 point 48) “a Court will not normally embark upon something as a hypothetical because the outcome really lacks utility to anybody”.

10. Both the Department and the solicitors for the miners were unanimous in their view that it was not only desirable but necessary that, in the present circumstances, the determination of compensation occur prior to the Court being informed or becoming aware from its own involvement as to what the recommended terms of the lease would be.

11. Mr Grant of Counsel identified what he described as three scenarios in relation to when the Court may be determining compensation.[1]

    [1]     T1-9 point 50.

12. The first scenario is where there has not been an objections period and accordingly the Court would be considering what Mr Grant described as “all manner of submissions as to what would be an appropriate amount of compensation”.

13. He informed the Court that the State’s position is that the determination of compensation is a separate issue from whether or not a lease should be granted.

14. Mr Grant observed “if, in this first scenario, it is expected that there will be objections to the granting of the lease, then they can factor into the formulation of the compensation to be payable, by way of variations as to the terms of what may be payable, and when”.[2]

    [2]     T1-10 point 10.

15. In response to a question from me in the following terms: “am I supposed to determine the compensation in all of those scenarios, carry out a hypothetical exercise as to what the Minister might ultimately recommend is the term of the lease?”, Mr Grant submitted “I think the State’s position is that you are able to consider such factors if you consider it appropriate and formulate a decision - a determination in such a way that you can, that can be applied and it is really factually distinct, or if the strength of the objections to be made are such that the Court is unable to, in its good conscience and equity, make such a determination at that time, it may - it runs its own proceedings”.

16. I suggested to Mr Grant the following[3] “… the State’s position in respect of the first scenario is that I’m expected to carry out a hypothetical exercise which includes hypothetically determining any conditions that are attached to the lease, the likelihood of any objections from the parties about whom I can only speculate and the area of the lease and the life of the lease?”

    [3]     T1-13 point 35.

17. Mr Grant confirmed[4] in the first scenario, that is correct; if those are the issues that are brought up.

    [4]     T1-13 point 42.

18. Later in the proceeding I made the following observation to Mr Grant and sought his views:

    “… but it does rather seem to me that so far as you've outlined anything to this point in time, you're really saying to the Court and to the prospective miners, "Well, the Minister's not going to make a consideration, he's not going to consider the application and make a recommendation.  We're going to wait and see what the Land Court says about what might be the lease - and by the way, we'd like the Land Court to produce a compensation determination which includes a number of scenarios which cover all possibilities".  Isn't that what you've just told me?”

19. Mr Grant’s response was “That is correct, your Honour.”

20. Mr Grant identified a second scenario[5] which is one where the objections period has commenced and objections have been made and accordingly the matter is referred to the Land Court for consideration and for recommendation to the Minister as to whether or not the mining lease should be granted and on what conditions. That is the process pursuant to ss 265 and 269 of the MRA.

    [5]     T1-14 point 42.

21. In that second scenario Mr Grant’s proposition was: “that the Court is in the position where it can determine either both of the applications together, that is the referral in relation to the objections as well, and at the same time consider the compensation. Or the Court in its discretion may choose to deal with the objections and make a recommendation and then consider what compensation would be appropriate on the basis of that recommendation”.

22. Mr Grant’s third scenario is where there was an objections period and no objections were received so that there was a relatively narrow opportunity for arguments to be placed before the Land Court in relation to what is appropriate in the terms and conditions of the lease. In that circumstance it seemed likely that the application as made would be accepted and the conditions that would apply would be those conditions that are outlined within the MRA.

23. Mr Grant’s submissions seem to take substantial comfort from the notion that, if in the light of later events, the compensation appeared inappropriate, the issue could be revisited by this Court.

24. In its written submissions the State of Queensland summarised its position in paragraph 2 in the following terms:

    “General Submission

    2.The State repeats and relies upon the general submissions made orally on behalf of the State on 10 February 2011 that —

    a.the MRA provides a clear framework for determination of compensation by this Honourable Court at any time prior to grant of a mining lease by the Governor in Council;

    b.the MRA includes appropriate and adequate processes for dealing with changes to the terms of conditions of any lease granted from that applied for and upon which compensation might be based;

    c.any recommendation a Minister might make in relation to a mining lease application is irrelevant for the purposes of the Court’s considerations under the MRA;

    d.the MRA requires the Land Court to make a decision upon referral of a matter.”

25. Mr Fooks solicitor for the miners adopted essentially the same position as was advanced by Mr Grant. I think it would be an arid exercise to reiterate all of the propositions advanced by Mr Fooks as none of them departed in any significant way from those made by Mr Grant.

26. Mr Fooks was able to point to a number of decisions of the Land and Resources Tribunal which was the predecessor in this jurisdiction to the Land Court where the Land and Resources Tribunal had determined compensation in anticipation of the grant of a mining lease. Those cases were Re Australian Diatomaceous Earth Pty Ltd & Marsterson [2004] QLRT 49 and Re QCoal Pty Ltd & Ors v Watts [2006] QLRT 115.

27. In the QCoal decision, Smith DP (as he then was) observed, at paragraph 4:

    The determination of compensation in these matters proceeds on the assumption that the MLAs are granted for the purposes set out in each MLA, and over the areas and for the terms also set out in each application.  Should any of the material features with respect to each MLA significantly change, the determination of compensation can be amended by agreement or reviewed by the Tribunal.

28. It is notable that that determination was also one made pursuant to the Mineral Resources Act 1989.

29. On 22 February 2011 in conformity with the order made on 10 February 2011 the respondent, Gordon Wallace MacNicol, by his solicitors delivered submissions to the Court. Those submissions were accompanied by an affidavit of Fiona Anne Pinfold sworn 21 February 2011. No leave was sought to file that affidavit.

30. For reasons that are not immediately clear to me, that affidavit really only exhibits correspondence passing between the parties, some of which is, in my opinion, arguably “without prejudice”.

31. That point was initially taken by the solicitors for the applicant miners, but on 28 February 2011 they withdrew an earlier objection to my seeing the material. I should say that I have paid very little attention to the material because it does not seem to be, in any way, directly relevant to the issues raised by me. At best it is obliquely relevant because it seems to go to demonstrate that there have been some negotiations between the miner and landholder.

32. In any event the respondent’s outline of submissions seeks, in its effect, to make a further application to strike out the applicant’s claims. In my view the arguments and contentions contained in the respondent’s outline of submissions are premature. They complain about technical issues relating to the question of compliance with Practice Direction no. 9 of 2009 which in its turn requires the provision of a compensation statement and complains of a failure by the respondent miners to provide adequate information pertaining to the terms of the mining leases together with any offer for the quantum of compensation, to enable meaningful negotiations to occur between the parties and alleging that that has had the consequence of unnecessary litigation.

33. Compliance with such technical requirements are matters that can be dealt with in the directions hearing and in my view do not warrant the severe consequences for which the respondent contends namely striking out of the claims.

34. It also appears clear in the light of the view which I reach later in this decision that it cannot be contended that the applicant has prematurely commenced these proceedings.

35. Of more relevance are its submissions with respect to compensation particularly where the respondent submits (at paragraphs 24, 25, 26 and 27) as follows:

    “24.Notwithstanding that an Applicant may apply to the Mining Registrar to have the question of compensation referred to the Land court, at any time after the Mining Registrar issues to Certificate of Application, the legislature could not have intended that the Court determine the question of compensation hypothetically and, in particular, without adequate information pertaining to the terms of the Mining Lease. Those terms need to be settled upon within reasonably bounds of certainty, subject to the discretion reserved to the Minister, in order for compensation to be properly assessed by the Land Court.

    25.Such terms, in reality, can only be settled upon after the determination of the objection process (with or without the recommendation about such objections by the Land Court) and after any other conditions intended to be imposed are notified. The bounds of a mining lease, including conditions upon which the Minister intends to approve the Mining Lease, are able to be notified prior to the grant of the Mining Lease, such that compensation will be determined before that grant in accordance with section 279(1) of the Act.

    26.Prima facie, the presumption of the legislature must be that the Land Court is not intended to embark upon a hypothetical and futile determination of compensation. The intention must be that the Land Court determine compensation on a basis which reasonably reflects the likely terms of the Lease proposed to be granted by the Minister.

    27.The Court should prefer a construction of the Act which avoids its time and resources being wasted upon hypothetical determination of compensation. In circumstances where the only prescriptive requirement imposed by the legislature is that compensation be determined before the grant of the Mining Lease, the Land Court should prefer construction of the Act which, subject only to that prescription, involves it in the determination of compensation on reasonably likely, and therefore real, terms of the Mining Lease.

36. I agree with many of the sentiments expressed by the respondent in their submission.

37. Embarking upon what might ultimately be a hypothetical exercise, particularly in circumstances where, as the State contends, the Court is required to speculate about the nature of submissions or objections which might be made by interested parties has the hallmarks of a waste of time.

38. It is true however that if the hypothetical including assumptions about objections does not come to reflect reality then there is a statutory opportunity for the Court to revisit the question of the determination of compensation.

39. That results, of course, in something of a duplication of effort in those cases where it occurs.

40. Ultimately, the determination as to whether the Court has the power and/or obligation to hear and determine an application for compensation prior to becoming properly appraised of the terms of any recommended mining lease is easily resolved.

41. No party referred the Court to the provisions of s.268 of the MRA save for an oblique reference at paragraph 16 of the submissions of the State of Queensland to s. 268 in its entirety.

42. Section 268 of the MRA deals with the hearing of an application for the grant of a mining lease and relevantly provides at sub-section (6) “Nothing in subsection (1) shall prevent the question of compensation being determined by the Land Court pursuant to section 279”. Sub-section (1) deals with the requirement for the Land Court to hear any application for and objections to the grant of a lease.

43. In my view s.268(6) is a clear statutory indication that the legislature contemplated that the determination of the question of compensation may, in appropriate circumstances, be determined prior to a determination by the Court of a hearing of an application for the grant of a mining lease.

44. While there does not appear to be a similar statutory provision in respect of the determination of compensation prior to the Minister discharging his responsibilities pursuant to the MRA parity of reasoning would suggest that a similar conclusion can be reached in the case of a determination by the Minister.

45. It is regrettable that my attention was not drawn to that sub-section because it fairly clearly, in my opinion, resolves the issue in favour of the view advanced by the State of Queensland and the miners’ representatives.

1. Accordingly I am satisfied that the Court has the power to determine the appropriate amount of compensation prior either to becoming aware of the precise terms of any recommendation by the Minister for the grant of a mining lease or deciding the terms of a recommendation pursuant to s.268(1)(2)and s.269.

2. Accordingly I propose to make directions for the future conduct of this matter so as to facilitate the determination of the appropriate compensation.

HIS HONOUR, WL COCHRANE

MEMBER OF THE LAND COURT