Gregcarbil Pty Ltd v Backus (No. 4)
[2013] QLC 68
•20 December 2013
LAND COURT OF QUEENSLAND
CITATION: Gregcarbil Pty Ltd v Backus & Ors (No. 4) [2013] QLC 68 PARTIES: Gregcarbil Pty Ltd
(Applicant)v.
Cameron Backus and Louisa Backus
(Landholders)
(MRA464-13 and MRA465-13)and
Gregcarbil Pty Ltd
(Applicant)v.
William James Crowther
(Landholder)
(MRA229-11 and MRA894-11)FILE NOs: MRA229-11, MRA894-11, MRA464-13 and
MRA465-13DIVISION: General Division PROCEEDING: Determination of compensation payable for Mining Leases DELIVERED ON: 20 December 2013 DELIVERED AT: Brisbane HEARD ON:
21 October 2013
(1, 2, 3 August 2011
19 October 2011
28, 29, 30 November 2011
19 April 2012)HEARD AT: Emerald (Clermont and Brisbane) MEMBER: PA Smith ORDERS: 1. As regards MLA 70419 (file MRA 229-11) compensation is determined in the total sum of $96,133.06
2. Further as regards MLA 70419 (file MRA 229-11) Gregcarbil is ordered to pay the compensation to Mr Crowther by way of instalments, with the sum of $16,133.06 payable within one month of the grant of MLA 70419, followed by payments of $20,000 on the first, second, third and fourth anniversary of the grant of MLA 70419.
3. As regards MLA 70447 (file MRA 894-11) compensation is determined in the total sum of $102,930.45.
4. Further as regards MLA 70447 (file MRA 894-11) Gregcarbil is ordered to pay the compensation to Mr Crowther by way of instalments, with the sum of $22,930.45 payable within one month of the grant of MLA 70447, followed by payments of $20,000 on the first, second, third and fourth anniversary of the grant of MLA 70447.
5. As regards MLA 70419 (file MRA 464-13) compensation for access is determined in the total sum of $2,127.39.
6. Further as regards MLA 70419 (file MRA 464-13) Gregcarbil is ordered to pay the total compensation of $2,127.39 to Mr and Mrs Backus within one month of the grant of MLA 70419.
7. As regards MLA 70447 (file MRA 465-13) compensation for access is determined in the total sum of $2,127.39.
8. Further as regards MLA 70447 (file MRA 465-13) Gregcarbil is ordered to pay the total compensation of $2,127.39 to Mr and Mrs Backus within one month of the grant of MLA 70447.
CATCHWORDS: Mineral Resources Act 1989
MINING – compensation for mining lease – statutory lands, Mineral Resources Act [MRA] s 281 – method of valuation – conflicting authorities – no separate assessment for each head – principle of equivalence – no “doubling-up” – consider circumstances of each case
MINING – compensation for mining lease – deprivation of use of surface area – relevant factors: term of lease, area impacted, ease of continued grazing – percentage allowance, not a mathematical exercise
MINING – compensation for mining lease – effect on balance land – additional allowance – (0.5%)
MINING – compensation for mining lease – where lease over small area of large holding – method of assessment – valid for total compensation to exceed pro rata value of lease area
MINING – compensation for mining lease – miscellaneous claims – loss of owner’s time allowed – need to inspect mining activity – capital gains tax not allowed
MINING – damage from illegal activities of miner – separate claim under MRA s 363 – need to prove – no allowance for possibility of damage under s 281 – assume mining activity conducted lawfully
MINING – compensation for mining lease – claim for access to lease over adjoining property – claim allowed for owner’s time – no separate allowance for gates and grids
Re Australian Diatomaceous Earth Pty Ltd & Marsterson [2004] QLRT 76
Re Barrett v Weir & Anor [2006] QLRT 51
Barrett v Weir & Anor [2006] QLRT 96
Brown v Armstrong & Anor [2005] QLRT 18
Collins v Coates [2012] 33 QLCR 45
Endeavour Mining Pty Ltd v Mintram & Anor (2009) 30 QLCR 272
Re Fitzgerald & Anor [2009] QLC 15
Re Fitzgerald & Anor v SR Struber & Anor [2009] QLC 0076
Fitzgerald v Struber [2013] QLC 43
Barrett v Weir and Gregcarbil Pty Ltd [2009] QLC 182
Gregcarbil Pty Ltd v Backus & Ors (No. 2) [2013] QLC 46
MJ Griffin & Ors v Bill Scott Rural Pty Ltd as Trustee and Ors [2011] QLC 41
Junior Mining (Operations) Pty Ltd (now called Australis Mining Operations Qld Pty Ltd) v Schmidt [2004] QLRT 131
Land and Resources Tribunal v Schmidt & Ors [2005] QCA 195
Mintram & Anor v Endeavour Mining Pty Ltd [2010] QLC 133
Mitchell v Oakhill and Mitchell (10 March 1998) (unreported)
Queensland Zeolite Pty Ltd v Spencer & Ors (2010) 31 QLCR 60
Richardson v Barrett [2001] QLRT 89
Sloan & Anor v Weir & Gregcarbil Pty Ltd [2009] QLC 183
Smith v Cameron (1986) 11 QLCR 64
Shaw v Heritage Holdings Pty Ltd (1992-93) 14 QLCR 139
Weiben & Ors v Great Southern Cattle Holdings Pty Ltd [2008] QLC 141
Weiben v Camm [2012] QLC 40
Weir v Barrett [2001] QLRT 95
Wills v Minerva Coal (unreported Land Court, 9 February 1999)
Wills v Minerva Coal Pty Ltd[No. 2] (1998) 19 QLCR 297Zimmerebner v Hawkins & Anor (1999) 20 QLCR 71
APPEARANCES: Mr AC Barlow of Counsel instructed by Paul Watts & Co, Solicitors, for Gregcarbil Pty Ltd
Mr C Backus representing himself and Mrs L Backus
Mr R Peters of Anne Murray and Co, Solicitors, for Mr W Crowther
Background
The Court has before it four applications requiring the determination of compensation with respect to two mining lease applications (“MLAs”) pursuant to the provisions of the Mineral Resources Act 1989 (“the MRA”).
By agreement between the parties, and as a matter of convenience, it is appropriate to deal with the four applications together, although separate determinations of compensation and orders will be made with respect to each MLA.
The two MLAs are both made by Gregcarbil Pty Ltd (“Gregcarbil”). The first is MLA 70419 and the second is MLA 70447. MLA 70447 has also been referred to throughout the proceedings as “the old Australia lease”.[1] Both MLA 70419 and MLA 70447 are located on a property known as Nardoo North, owned by William James Crowther (“Mr Crowther”). Access to the MLAs is obtained partly through Nardoo, owned by Cameron Backus (“Mr Backus”) and Louisa Backus (“Mrs Backus”).
[1] Gregcarbil Pty Ltd v Backus & Ors (No. 2) [2013] QLC 46.
The four files currently before the Court are described below:
As regards MLA 70419
· MRA464-13
Determination of MRA compensation for access payable by Gregcarbil to Mr and Mrs Backus
· MRA229-11
Determination of MRA compensation payable by Gregcarbil to Mr Crowther
As regards MLA 70447
· MRA465-13
Determination of MRA compensation for access payable by Gregcarbil to Mr and Mrs Backus
· MRA894-11
Determination of MRA compensation payable by Gregcarbil to Mr Crowther
The facts and circumstances relating to the MLAs have been fully set out in my decision in Gregcarbil Pty Ltd v Backus & Ors (No. 2) (“Gregcarbil No. 2”).[2] There is no need to repeat those facts and circumstances here.
[2] [2013] QLC 46.
The Hearing
The hearing of the four compensation matters specifically was conducted in Emerald on 21 October 2013. However, as the decision in Gregcarbil No. 2 made clear, issues of compensation, particularly with respect to Mr Crowther as at the date of the decision, and subsequently with respect to Mr and Mrs Backus, were heard in conjunction with all of the other matters heard in Gregcarbil No. 2. Evidence heard in all matters in Gregcarbil No. 2 was received as evidence in the four compensation matters.
Findings as to credit from Gregcarbil No. 2, insofar as they are applicable to the issues which relate to the determinations of compensation, carry over into this decision.
The Court undertook an inspection of both MLA areas and the access thereto on 1 August 2011.
Throughout the hearing, Gregcarbil was represented by Mr Barlow of Counsel, instructed by Paul Watts and Co, Solicitors; Mr Crowther was represented by Mr Peters, a solicitor with Anne Murray and Co and Mr Backus represented both himself and Mrs Backus.
Oral evidence was given during the hearing on 21 October 2013 by the following people:
· Cameron Peter Backus
· Patrick John Lyons, an expert registered valuer, called by Gregcarbil
· Murray John Davis, an expert registered valuer and agricultural economist, called by Mr Crowther
Principles of compensation under the MRA
Section 279 of the MRA provides that a mining lease shall not be granted or 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. In these matters, no agreements have been lodged with the Mining Registrar and the matters have been referred to the Court for determination.
The issues which must be considered by the Court are set forth in s 281(3) and (4) of the MRA which provides as follows:
“281 Determination of compensation by Land Court
…
(3)Upon an application made under subsection (1), the Land Court shall settle the amount of compensation an owner of land is entitled to as compensation for—
(a) in the case of compensation referred to in section 279—
(i)deprivation of possession of the surface of land of the owner;
(ii)diminution of the value of the land of the owner or any improvements thereon;
(iii)diminution of the use made or which may be made of the land of the owner or any improvements thereon;
(iv)severance of any part of the land from other parts thereof or from other land of the owner;
(v)any surface rights of access;
(vi)all loss or expense that arises;
as a consequence of the grant or renewal of the mining lease; and
(b) in the case of compensation referred to in section 280—
(i)diminution of the value of the land of the owner or any improvements thereon;
(ii)diminution of the use made or which may be made of the land of the owner or any improvements thereon;
(iii)all loss or expense that arises;
as a consequence of the grant or renewal of the mining lease.
(4)In assessing the amount of compensation payable under subsection (3)—
(a) where it is necessary for the owner of land to obtain replacement land of a similar productivity, nature and area or resettle himself or herself or relocate his or her livestock and other chattels on other parts of his or her land or on the replacement land, all reasonable costs incurred or likely to be incurred by the owner in obtaining replacement land, the owner’s resettlement and the relocation of the owner’s livestock or other chattels as at the date of the assessment shall be considered;
(b) no allowance shall be made for any minerals that are or may be on or under the surface of the land concerned;
(c) if the owner of land proves that the status and use currently being made (prior to the application for the grant of the mining lease) of certain land is such that a premium should be applied—an appropriate amount of compensation may be determined;
(d) loss that arises may include loss of profits to the owner calculated by comparison of the usage being made of land prior to the lodgement of the relevant application for the grant of a mining lease and the usage that could be made of that land after the grant;
(e) an additional amount shall be determined to reflect the compulsory nature of action taken under this part which amount, together with any amount determined pursuant to paragraph (c), shall be not less than 10% of the aggregate amount determined under subsection (3).”
Although s 281 sets out the matters to be considered, it does not define any method of assessment. In Smith v Cameron,[3] the Land Court held:
“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 but it seems to me that either method is open to the valuer.”
[3] (1986) 11 QLCR 64 at p 74 and 75.
In Shaw v Heritage Holdings Pty Ltd,[4] the Land Court said:
‘The method of assessment remains a matter which will be governed by the facts and circumstances of each case in which event emphasis may shift from one method to another.”
[4] (1992-93) 14 QLCR 139 at p 146.
In considering the Mitchell v Oakhill and Mitchell,[5] the then President of the Land Court, referring to s 281(3) of the MRA, found:
“the latter section does not prescribe a method of assessment. 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.”
[5] (10 March 1998) unreported.
In determining compensation under s 281 of the MRA, I have adopted the same approach I took in Richardson v Barrett.[6] 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.
[6] [2001] QLRT 89 at paragraphs 9, 10 and 14.
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 leases were not granted.[7] Of course, great care must also be taken to ensure that there is no “doubling up” of compensation.
[7] Horn v Sunderland Corporation [1941] 2 KB 26 at 43 per Jacobs J.
Assessment of witnesses
As previously indicated, findings as to the credit of witnesses from Gregcarbil No. 2 carry over, so far as they are relevant, to these reasons. Accordingly, it is only necessary to deal with issues as to credit with respect to the two expert valuers, Mr Davis and Mr Lyons, and Mr Backus, who all gave evidence on 21 October 2013.
Cameron Peter Backus
In Gregcarbil No. 2, I found Mr Backus[8] “to be an open, honest reliable witness, who although shown to be in error on occasion, freely admitted his errors when same were pointed out to him under cross-examination.”
[8] Gregcarbil No. 2 at para 63.
Having heard further evidence from Mr Backus on 21 October 2013, I have no reason at all to change my view as to the reliability of Mr Backus’ evidence. I accept the truthfulness of all of Mr Backus’ evidence given on 21 October 2013. However, it does not necessarily follow that I accept the conclusions as to valuation that Mr Backus arrived at in light of his factual evidence.
Put simply, I accept the factual accounts of his evidence. A key area of evidence in this regard relates to his concerns regarding access and his view that the installation of grids and gates to a certain specification are required on the MLA’s access. Mr Backus’ views in this regard are honestly held. I accept the quotations he has obtained for the purchase and installation of certain grids and gates as factually correct. However, that does not mean that I accept Mr Backus’ opinion that such items are compensable under s 281 of the MRA.
Patrick John Lyons
Mr Lyons was called by Gregcarbil as an expert valuer to assist the Court. Mr Lyons has a tertiary certificate in real estate valuation and is a registered rural and urban valuer in Queensland. He is an Associate Member of the Australian Property Institute.[9]
[9] See Exhibit 42 Annexure 2.
Mr Lyons has an extensive history as a valuer dating back to 1976. He is currently a director of Taylor Byrne and is the branch manager of that firm’s Central Queensland office.
Mr Lyons gave evidence on 1 December 2011 and 21 October 2013. His tendered material is contained in Exhibits 42, 43 and 48.
Mr Lyons was an impressive expert witness in clear command of his topics. Although his expert opinion in a number of respects differed to that of the other expert valuer, Mr Davis, he maintained clear, coherent reasoning in support of his conclusions. His reasoning stood up well to cross-examination.
One area in which Mr Lyons’ evidence was lacking, related to the additional amount payable under s 281(4)(3) of the MRA and the fact that there have been some Land Court decisions in recent years that have allowed an additional amount in excess of 10%.[10]
[10] See, for instance, Endeavour Mining Pty Ltd v Mintram & Anor (2009) 30 QLCR 272 at paras [17] and [18] and Queensland Zeolite Pty Ltd v Spencer & Ors (2010) 31 QLCR 60 @ paras [28] and [39].
Murray John Davis
Mr Davis was called by Mr Crowther as an expert valuer. Mr Davis was a director of the firm NPR Valuers at the time that he first gave evidence and tendered his report in 2011. However, when he was called to give further evidence on 21 October 2013, Mr Davis was a valuer for Opteon Property Group.
Mr Davis holds a valuation degree and is an Associate Member of the Australian Property Institute. He is a registered Queensland valuer. In addition, Mr Davis is also qualified as a Agricultural Economist.[11]
[11] T 1 December 2011 p 16 Lines 14 - 24.
Mr Davis gave evidence on 1 December 2011 and 21 October 2013. His tendered material is contained within exhibits 44, 45, 46, 49 and 50.
Mr Davis was a very good expert witness who clearly understood the valuation exercise that he was called upon to perform. As previously indicated, his valuation evidence differed in a number of respects to that of Mr Lyons. However, like Mr Lyons, he also maintained clear, coherent reasoning in support of his conclusions. His evidence generally stood up well to cross-examination, save for his assessment of the Land and Resources Tribunal decision of Junior Mining (Operations) Pty Ltd (now called Australis Mining Operations Qld Pty Ltd) v Schmidt.[12]
[12] [2004] QLRT 131.
Mr Davis initially did not rely on the Junior Mining decision as he could not locate it. After gaining access to the decision, Mr Davis had the following to say in Exhibit 49:[13]
“Following a more detailed review of this case, I am glad I did not rely on this decision in my initial report for compensation. The Junior Mining (Operations) Pty Ltd compensation decision appears to have resulted in a judgement that was not a fair or equitable outcome as further legal avenues were not pursued and the fact that the mine went into administration resulting in a non-rehabilitated site. This put the land owner in an unfortunate position.”
[13] On page 3.
Mr Davis fell from his comments regarding the decision in Junior Mining somewhat during cross-examination by Mr Barlow.[14] He clearly did not have an appreciation of either the appeal provisions generally which applied to the Junior Mining decision, or of the actual events which occurred with respect to the appeal in that case. His evidence suffers as a result.
[14] T 21 October 2013 pp 23-28.
Analysing the expert evidence
At first glance, it may appear that I have found in favour of conflicting evidence provided by both valuers. It is true that I have found Mr Lyons an “impressive expert witness” and Mr Davis “a very good expert witness”, and that both demonstrate clear, coherent reasoning in support of their conclusions.
As Mr Peters points out in his submissions,[15] both valuers are “roughly in agreement on the value of the land” on which the MLAs are located, despite using different methods to arrive at such value. This is consistent with the evidence of Mr Lyons as set out in Exhibit 43:[16]
“However, it appears to be generally agreed that the best evidence of value is the sale of the subject, however the respective analyses of the sale are somewhat different between the valuers.
Based on his analysis, Mr. Davis places a value before of $383,425. Although not directly calculated in my valuation I have allowed a value of $385,450 or:-
280 hectares @ $1,300 = $364,000
39 hectares @ $550 = $ 21,450$385,450”[15] 18 October 2013 para 7.1.
[16] Page 2, para 2.
One aspect where the valuers differ is in their understanding and application of various Land Court and Land and Resources Tribunal decisions regarding the determination of compensation under s 281 of the MRA.
Mr Lyons considers that the appropriate compensation payable to Mr Crowther with respect to MLA 70491 is $64,500, assessed as follows:[17]
[17] Ex 48 page 2.
“• Loss in Asset Value
280 hectares @ $1,300/hectare Depreciate 12 ½ % $45,500
38.87 hectares @ $550/hectare Depreciate 12 ½ % $ 2,672Total Loss in Asset Value $48,172
• Owners Time $10,249
$58,421
Plus Statutory Additional Sum under Section 281(4) (e) 10% $ 5,842
$64,263Adopt $64,500”
Likewise, Mr Lyons assesses the compensation payable to Mr Crowther for MLA 70447 in the sum of $67,500 as follows:[18]
“• Loss in Asset Value
175.0037 hectares @ $1,300/ha Depreciate 22 ½ % $51,188• Owners Time $10,249
$61,437Plus Statutory Additional Sum under Section 281 (4) (e) 10% $ 6,144
$67,581Adopt $67,500”
[18] Ex 48 pages 2 - 3.
For his part, Mr Davis has calculated the compensation payable to Mr Crowther for both MLAs in the total sum of $606,647 (leaving aside Capital Gains Tax issues) as follows:[19]
[19] Ex 50 page 2.
“Our updated assessment results in the following calculations for compensation assessment:
s.281(3)(a)(ii) Diminution in the value of land within ML
ML 70419
Brigalow Scrub 110ha @ $1,550/ha = $170,500
Quality Creek Flats 170ha @ $1,170/ha = $198,900
Iron Back Ridge 39ha @ $355/ha = $ 13,845
$ 383,245ML 70447
Brigalow Scrub 175ha @ $1,550/ha = $271,250
TOTAL LAND $271,250TOTAL LAND VALUE $654,495
At 33% diminution of value equals $ 215,983
s.281(3)(a)(ii) Diminution in the value of balance lands on Lot 98
Brigalow Scrub 1,020ha @ $1,550/ha = $1,581,000
Quality Creek Flats 1,490ha @ $1,170/ha = $1,743,300
Iron Back Ridge 191ha @ $345/ha = $ 65,895
Open Iron Back Forest 715ha @ $500/ha = $ 357,500
TOTAL LAND $3,747,695At 5% diminution of value equals $ 187,385
Additional management costs (at present value) $ 76,195
(3 visits/month x 5 hours/visit x $100/hr)Total Loss $ 479,563
Plus 10% Statutory Sum $ 47,956
Total $ 527,519Premium under s.281(4)(c) assessed at 15% $ 79,128
TOTAL $ 606,647”
Following the evidence on 21 October 2013, Mr Peters reduced the claim made by Mr Crowther, in light of concessions, down to $522,942. The calculations are best set out by specific reference to the transcript:[20]
“… So with ML 70419, which is 318.8 hectares, the calculation that’s before me is that that represents 8.16 per cent of the total area of Nardoo North and ML 70447, which has an area of 175 hectares, represents 4.48 per cent of the total area. So in summary, your Honour, if you were to – it would be open, your Honour, in summary, for you to take this position, in my submissions, that you take the figure which Mr Davis has allowed for ML 70447, at 33 per cent. So that will give a sum of $89,512. If you were to take a revised diminution of value for the other lease, 70419, based on his concession today, of 20 per cent, that would give a figure of 76,649.
…
The residual land value as put forward by Mr Davis was $3,749,695. So again, using that mathematical formula based on Armstrong’s case, if you took the diminution in value of the balance of the land at, say, 4.1 per cent, as opposed to the five which he’s allowed, that comes at 153,655. And to that, your Honour, I would be suggesting, for the reasons that I’ve outlined, that you would prefer the management costs which Mr Davis say should apply, which is 76,195. Throw in the legals and valuations fees at 10,000. Now, on my calculations, that comes to a figure of $406,011. Those amounts that I’ve gone through, if you then make some allowance for the special status under that 2814; Mr Davis suggested 15 per cent.
It’s of course a matter for your Honour But if that was adopted, that would amount to $60,901 in round figures. That would bring the compensation to 466,912 and then if your Honour were to allow, say, 12 per cent instead of the ordinary 10 per cent for the statutory allowance, that would probably give Mr Crowther an extra $10,000 to deal with the capital gains tax issue or the business inconvenience, as it’s been described in the Minerva case. So that would come to $56,029; the total compensation there being a figure of $522,942, your Honour.”
[20] T 21 October 2013 page 84 line 16 - page 85 line 2.
So far as it is necessary, my findings in the pages that follow in these reasons, under the various heads in s 281 of the MRA, will make such conclusions as I consider appropriate, in light of the evidence, and in light of the relevant legislation and legal authorities.
An examination of the authorities
As indicated, both valuers referred to a number of authorities which they used in arriving at their final calculations. The valuers should be both commended and criticised for this approach.
They should be commended because they have taken the time to analyse previous authorities which have dealt with determinations of compensation pursuant to s 281 of the MRA relating to similar land to that currently under consideration, in the same locality as the subject land.
They should be criticised because they have not considered the totality of the authorities that are applicable to s 281 of the MRA. There are of course many determinations of compensation made by the Land Court relating to land at various locations across the State, but all bearing consideration of s 281 at the fore.
I appreciate the difficult position the valuers found themselves in. Quite clearly, their analysis requires a mix of both classic valuation principles (as in valuing Mr Crowther’s land) and a legal understanding of s 281 of the MRA and the myriad of authorities that have dealt with the appropriate interpretation of that section. It is not an easy task.
Given the approach taken by the valuers, it is appropriate that I give consideration to the authorities that the valuers considered.
Mr Lyons relied on three authorities: Junior Mining; Barrett v Weir and Gregcarbil Pty Ltd;[21] and Smith v Cameron.[22]
[21] [2009] QLC 182.
[22] (1986) 11 QLCR 64.
Junior Mining
Mr Lyons described the Junior Mining decision in the following way:[23]
“This decision which was not upset on appeal, involves areas located on the subject property. I am unable to determine if part of the area involved is now included in MLA 70419.
The MLA’s under renewal in this matter were for a period of 10 years. It would appear that any one time dependent on seasonal conditions that it was envisaged that between 41 hectares and 60 hectares may be unavailable for grazing or between 6.7% and 10% of the MLA area. The cumulative area to be mined over the term of the lease was not known however it would appear that it was a significant percentage of the MLA area. The decision of the Tribunal in this matter was to allow a diminution in value of 25% over the area encumbered by the MLA plus an allowance for increased management time of 2 hours per month at $100/hour for the duration of the lease.”
[23] Ex 42 pages 21 - 2.
At first glance, it would appear that the decision, as described by Mr Lyons, should be a clear precedent to apply in matters currently under consideration. However, life, and the law, is rarely that simple.
Then President Koppenol of the Land and Resources Tribunal handed down the decision in Re Australian Diatomaceous Earth Pty Ltd & Marsterson[24] five months before his decision in Junior Mining. It is particularly relevant that President Koppenol specifically chose not to follow certain Land Court decisions in that Tribunal. In Australian Diatomaceous Earth, President Koppenol had this to say:[25]
“[5] Section 281(3)(a)(i)-(vi) identify ‘heads of compensation’. As such, factors including transparency and clarity necessitate separate monetary attribution to each head. Naturally, care must be taken to avoid compensating more than once for a particular component. As statutory criteria are the source of the compensation entitlement, primary regard must be had to the term of the statute and not to decisional law or general principles.
…
[7] To the extent that Land Court of Queensland decisions advocate a different approach from that set out above, they should not be followed in this Tribunal
[footnotes omitted] ”
[24] [2004] QLRT 76.
[25] At paragraphs 5 and 7.
The cases which President Koppenol expressly stated should not be followed in the Tribunal were described as follows:
“Eg, Smith v Cameron(1986) 11 QLCR 64; Zimmerebner v Hawkins (1999) 20 QLCR 11.”
It should be immediately observed that, at [13] of these reasons, I made specific reference to Smith v Cameron. In following paragraphs, I made reference to additional Land Court authorities. This practice is of course entirely consistent with that currently adopted in the Land Court; see, for instance, specific reference to Smith v Cameron in the following Land Court decisions: Re Fitzgerald & Anor;[26] Weiben & Ors v Great Southern Cattle Holdings Pty Ltd,[27] MJ Griffin & Ors v Bill Scott Rural Pty Ltd as Trustee and Ors;[28] Weiben v Camm;[29] Collins v Coates;[30] and Sloan & Anor v Weir & Gregcarbil Pty Ltd.[31]
[26] [2009] QLC 15 at [4].
[27] [2008] QLC 141 at [7].
[28] [2011] QLC 41 at [5].
[29] [2012] QLC 40 at [28].
[30] [2012] 33 QLCR at 45 at [193].
[31] [2009] QLC 183 at [7].
Why is this issue important? The reason is that it goes to the heart of the assessment of compensation under s 281 of the MRA. President Koppenol in Australian Diatomaceous Earth was essentially advocating an approach where the total compensation was assessed by determining compensation under each separate heading of s 281 of the MRA and then cumulatively adding all such sums together to arrive at a final determination of compensation.
In this regard, it is worth repeating the observations of his Honour Member Cochrane in Collins v Coates:[32]
[32] [2012] 33 QLCR 45 at [188] - [195].
“[188]Section 281(3) of the Mineral Resources Act sets out the matters which are to be considered by the Court in that determination of compensation.
[189]Although s.281 sets out, in a somewhat compendious fashion, the matters to be considered it does not specify any particular method or mode of assessment.
[190]The Land Court in Smith v Cameron [(1986) 11 QLCR 64] (a case which is often cited by this Court, held, that:
‘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 but it seems to me that either method is open to the valuer.’[P. 74]
[191]In Cameron v Smith the following observation was made [P. 73]:
‘In the end result Mr Todd's valuation of the property at $266,750 was accepted by the Warden and depreciated by him by one-sixth after finding that he had cause to consider matters listed in paragraphs (a) to (f) of Section 431A(5) and that there was no evidence to enable him to make any specific finding in relation to paragraphs (g) and (h) of the subsection. In doing so he likened, rightly in my opinion, the use of the land for mining purposes to a compulsory acquisition of land for a limited period which in my view opens the door for the application of the various principles and practices of valuation applied in determining compensation for the taking of limited rights over land for public purposes. In particular I see an affinity and similarity between the imposition of an encumbrance on the appellants' land by means of the grant of a mining lease and that of the compulsory taking of an easement over land for public purposes.’
[192]It is appropriate to identify, at this point, the provisions of s.281(3). That section provides:
(3) Upon an application made under subsection (1), the Land Court shall settle the amount of compensation an owner of land is entitled to as compensation for—
(a) in the case of compensation referred to in section 279—
(i) deprivation of possession of the surface of land of the owner;
(ii) diminution of the value of the land of the owner or any improvements thereon;
(iii) diminution of the use made or which may be made of the land of the owner or any improvements thereon;
(iv) severance of any part of the land from other parts thereof or from other land of the owner;
(v) any surface rights of access;
(vi) all loss or expense that arises;
as a consequence of the grant or renewal of the mining lease; and
(b) in the case of compensation referred to in section 280—
(i) diminution of the value of the land of the owner or any improvements thereon;
(ii) diminution of the use made or which may be made of the land of the owner or any improvements thereon;
(iii) all loss or expense that arises; as a consequence of the grant or renewal of the mining lease.”
[193]I have had regard to the observations in Smith v Cameron and the decision of Member Scott in Wills v Minerva Coal [(unreported Land Court, 9 February 1999)] and also the observations of the then President of the Land Court in Mitchell v Oakhill and Mitchell [10 March 1998 unreported] where His Honour observed, in respect of s.281(3) that:
‘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.’
[194]In the present case it would be impossible to ‘quantify an amount in respect of each of the matters referred to’ because in respect of some of them there was simply no evidence sought to be adduced by either party e.g. s.281(3)(vi).
[195]His Honour Member Smith in Fitzgerald & Anor v SR Struber & Anor [ [(2009) QLC 0076] observed, having regard to the judgment of Member Scott in the Wills v Minerva Coal, as follows [Re: Fitzgerald & Anor v SR Struber & Anor para 11]:
‘I tend to agree with the observations of Member Scott of the Land Court in Wills v. Minerva Coal when dealing with a compensation matter under the MRA. He stated that the matters set out in the MRA were compensation concepts to be taken into account in determining compensation, not a figure accumulated by amounts arrived at following a separate and discrete treatment of them as if they were separate heads of compensation. In determining compensation, 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 lease was not granted.’”
The position of the Land Court was perhaps best put by President MacDonald in Sloan & Anor v Weir & Gregcarbil Pty Ltd[33] as follows:
“In assessing compensation under s.281, regard must be had primarily to the words of the section [Wills v Minerva Coal Pty Ltd [2] (1998) 19 QLCR 297 at 313]. Section 281 of the Act neither prescribes nor suggests a method of assessment or valuation and the selection of an appropriate method is a matter for the relevant expert who should be careful not to duplicate items by simply accumulating figures assessed independently under each of the items listed in s.281(3)(a)(i) to (vi) [Wills v Minerva Coal Pty Ltd [2] (1998) 19 QLCR 297 at 313]. The assessment of compensation may be made by the before and after method or the summation or piecemeal approach [Smith v Cameron (1986) 11 QLCR 64 at 74].
[33] [2009] QLC 183 at [7].
Before leaving Junior Mining, a point of difference in the evidence was whether or not the case was subject to appeal. For instance, as already indicated, Mr Lyons states that the decision was not “upset on appeal”,[34] while Mr Davis considers the case “not a fair or equitable outcome as further legal avenues were not pursued”.[35]
[34] Ex 41 page 21.
[35] Ex 49 page 3.
After reviewing the evidence and a relevant Court of Appeal authority, what occurred regarding the appeal becomes clear.
The landholder did institute an appeal against then President Koppenol’s decision in the Land and Resources Tribunal. However, the appeal process stalled in light of a stance taken by President Koppenol that the appeal could not be heard by the Tribunal (Appeal). This necessitated proceedings in the Court of Appeal which, on 10 June 2005, in Land and Resources Tribunal v Schmidt & Ors, dismissed the Land and Resources Tribunal’s application, thus holding that the appeal was properly to the Tribunal (Appeal). [36]
[36] [2005] QCA 195.
The submissions made by both Mr Backus[37] and Mr Barlow[38] are clear enough about what happened to the substantive appeal in Junior Mining. Firstly, the appeal was delayed for up to a year while the Court of Appeal considered President Koppenol’s appeal point. For an unknown reason, the appeal apparently then remained in the Land and Resources Tribunal without being heard for an extended period. Australis (the successor of Junior Mining and the respondent in the appeal) then went into liquidation in about 2006/7 and, the landholder, being concerned that there was no longer a viable company to respond to the appeal and actually make any payment of determined compensation, and in an endeavour to save further expenditure on the appeal, withdrew the appeal.
[37] T 21 October 2013 page 87.
[38] T 21 October 2013 page 88.
Accordingly, in technical terms, the appeal against the decision of President Koppenol in Junior Mining was simply withdrawn. However, it is clear that the withdrawal of the appeal occurred for commercial reasons linked to both the delay in hearing the appeal and the liquidation of Australis. I accept without hesitation that the landholder in Junior Mining was not satisfied with the determination of compensation by President Koppenol and would, had the circumstances unfolded in the usual way, prosecuted the appeal.
In light of both the manner in which President Koppenol determined Junior Mining by refusing to follow Land Court precedents such as Smith v Cameron, and due to the highly unusual circumstances concerning the prosecution of the appeal in Junior Mining, it is my view that the Junior Mining decision at first instance is sufficiently suspect so as not to be a reliable basis for a valuation to follow.
As Mr Lyons relied heavily on the Junior Mining decision, my conclusions in the preceding paragraph must have an adverse impact on Mr Lyons’ evidence.
Barrett v Weir and Gregcarbil Pty Ltd
In relying on this case, Mr Lyons had this to say:[39]
“This decision relates to a small MLA on the Emerald Gemfields. Approximately 11.7% of the MLA area would be disturbed at any one time. The decision was to allow 25% diminution in the value of the MLA area of 15 hectares.”
[39] Ex 42 page 22.
An examination of Barrett is appropriate. That cause related to the determination of compensation for the renewal of ML 70211 in the Central Queensland gemfields at a location certainly not adjacent to, but not greatly distant from, Nardoo North.
Compensation with respect to ML 70211 was actually determined on three occasions: Weir v Barrett in 2001;[40] Re Barrett and Weir in 2006;[41] and the Land Court decision of Barrett in 2009.
[40] [2001] QLRT 95.
[41] [2006] QLRT 51, upheld on appeal in [2006] QLRT 96.
As then Member MacDonald noted:
“[41] It is acknowledged that the amount of this award differs from both the previous awards concerning this property. The differing awards flow from the fact that different evidence has been adduced in each case. I am bound to take into account all the relevant evidence put before me and I cannot take into consideration the evidence that may have been adduced in the earlier cases. My determination is made on that basis.”
I agree with the comments from Barrett in the preceding paragraph. This highlights a further difficulty for the valuers in relying on previous decisions – each case must be determined in accordance with the evidence adduced in that case.
Further comments from Barrett are relevant to the determination of compensation in the case at hand. I note in particular the following regarding blot on title and the question of deprivation of use of the owner.[42]
“[25] In my opinion, the landowner is entitled to be compensated for the loss of control over the mining lease area as evidenced, for example, by the fact that the mining area may shift from time to time to various parts of the lease without the consent of the landowner. Further, the lease may be regarded as an encumbrance or blot on title so that the applicant's land with the lease in place is worth less than it would be if unencumbered by the lease.[See Zimmerebner v Hawkins (1999) 20 QLCR 71 at 89]
[26] However, I do not accept that the impact of the lease is to deprive the owner of the use of the whole of the lease area for the term of the lease. The effect of s.235 of the Mineral Resources Act is that the lessee is entitled to go on to and remain on the mining lease area for purposes connected with mining only. The mining lessee is not given a right to exclusive possession of the lease area. Section 403 of the Act creates certain statutory offences in relation to unauthorised entry onto the lease area. Neither section grants exclusive possession rights to the lessee nor enables the lessee to prevent unauthorised entry onto the lease area. It is clear from the respondents' submissions that they do not object to the applicant's cattle continuing to graze on those parts of the mining lease area that are not from time to time disturbed by the mining operations. Thus in assessing loss suffered from the deprivation of possession of the surface land as a result of the lease under s.281(3)(a)(i) the fact that the landowner may continue to graze his cattle on the undisturbed area of the mining lease should be taken into account. … ”
[42] Barrett at [25] and [26].
Of particular significance to the case at hand, given the special status which the landholder holds which require the cattle to be produced which have not been exposed to chemicals, is Member MacDonald’s further findings:[43]
“[27] Further, I do not accept that the applicant has proved that he has suffered or is likely to suffer any loss caused to the cattle by exposure to the mining activity or chemicals, as it is to be assumed that the respondents will conduct their mining operations lawfully. Therefore I have not made any allowance for this aspect of the claim.”
[43] Barrett at [27].
I agree.
I would add to the above the observation that, should it ever in fact transpire that the miner does cause the landholder’s cattle to be exposed to chemicals, the landholder has a separate cause of action which he can take against the miner to recover losses caused by any contamination. In this regard, I note in particular the decision of Mintram & Anor v Endeavour Mining[44] where a landholder successfully sued a miner for the recovery of damages suffered as a result of contamination and death of cattle caused by the miner.
[44] [2010] QLC 133.
Smith v Cameron
With respect to Smith v Cameron, Mr Lyons had this to say:[45]
“This is a decision on appeal handed down by Mr. White, Member of the Land Court in 1986. It involved a number of gold mining leases at Miclere, near Clermont. The member effectively outlined the principles of assessing compensation for Mining Leases and the method of payment.”
[45] Ex 42 page 22.
Given the lengthy reference I have already made to this case, it is unnecessary to comment further.
Mr Davis’s authorities
For his part, Mr Davis relied upon the decisions of Brown v Armstrong & Anor[46] and, like Mr Lyons, the decision in Barrett.
[46] [2005] QLRT 18.
The decision in Barrett has already been discussed. For completeness, this is what Mr Davis had to say regarding Barrett:[47]
“This decision involved a determination of compensation for the renewal of a mining lease on a grazing property located at the Emerald Gemfields. In this case the area of the lease was only small and a diminution of the Mining Lease land value was assessed at 25% for the total mining lease area.”
[47] Ex 44 page 24.
Brown v Armstrong
As regards the decision in Brown v Armstrong, Mr Davis stated as follows:[48]
“This decision involved a determination of compensation for the granting of a mining lease on a grazing property that adjoins the subject property. In this case the total area of the Mining Lease was applied with a 33% diminution in land value plus a further 0.5% (1.5% of 33%) of the remaining rural land as a diminution of the balance land. Additional management costs and an amount reflecting the compulsory nature of the grant was applied.”
[48] Ex 44 page 24.
A number of observations need to be made regarding Brown v Armstrong. Firstly, it must be noted that it was a decision of the Land and Resources Tribunal delivered subsequent to President Koppenol’s pronouncements in Re Australian Diatomaceous Earth, and as such must be subject to query.
Unfortunately, the decision in Brown v Armstrong did not address President Koppenol’s contentions regarding Land Court decisions. It is also noteworthy that Kingham DP, as her Honour then was, did make reference to the Zimmerebner decision, although not in relation to the issue of contention raised by Koppenol P.
These factors alone are sufficient to cause the decision in Brown v Armstrong to be viewed with caution. However, there is a more fundamental reason why this authority should not be followed.
It is certainly true, as Mr Davis states, that Kingham DP allowed compensation taking into account loss of the landholder of the total area of the mining lease, for the term of the mining lease.
Specifically, Kingham DP had this to say:[49]
“[23] In Mr Compton’s experience, graziers are suspicious about their ability to use land subject to a mining lease. I accept it is reasonable for Mr Compton to draw on his experience and to take into account the genuine concerns he has encountered about the impact of mining on a property. It should be noted that mining and grazing do already co-exist on other properties in the area and that a properly informed prudent purchaser would draw conclusions from his or her observations of other operations. Further, the Tribunal’s recommendation is to impose a significant restraint on mining under this lease. That recommendation is directly relevant to the fear a potential purchaser might have about their ability to use any of the land subject to the lease. I do not accept Mr Compton’s assumption that a prudent purchaser would pay no regard to the recommendation. Rather, reasonable enquiries by a responsible prudent purchaser would allay that fear so as to reduce its consequence for the value of the property.
[24] Mr Barlow, Counsel for the miner, argued that a prudent purchaser would consider this lease to be only a 10ha mining lease because of the disturbance area limitation. I do not accept that either. In his statement, the miner stated he expected to disturb 100 ha over the 10 year period of the lease and that, as sapphire mining is patchy, he anticipates only disturbing areas where the wash is reasonably close to the surface. A prudent purchaser would draw a distinction between a mine that was confined to a discrete and well defined area and one which was limited in the area that could be disturbed but where the particular areas of disturbance are not predetermined.”
[49] Brown v Armstrong at [23] - [24].
Her Honour then when on to draw the following conclusions:[50]
“[26] In determining compensation, I have taken into account the term of the lease; that there is some risk of increased public access to the property; that there is a significant restriction on the area that can be disturbed; that the property is within RA1 and that this is not the first mining lease on the property. In the absence of other evidence upon which to base my assessment, I have adopted the discount factor of 33.33% that Mr Compton applied in his first bank valuation, as producing a more reasonable assessment of the diminution in value of the area the subject of the lease. That equates to the sum of $54,294.57 (150 ha @ $1086ha x 33.33% = $54,294.57).”
[50] Brown v Armstrong at [26].
Of course, every case must be determined on its own facts. However, it is notable that the lease area in Brown v Armstrong was 150 ha and that the Environmental Authority (“EA”) only allowed disturbance of 10 ha at any one time, thus leaving a relatively large area of the mining lease area available for the grazing of cattle.
I prefer the approach to compensation taken by the then Member MacDonald in Barrett to that of Kingham DP in Brown v Armstrong. To remove any doubt, I repeat and rely upon Member MacDonald’s observations already quoted in paragraph 66 of these reasons. Particularly with respect to large MLs on which mining is significantly restricted by the EA, and where the evidence makes it clear that the landholder’s cattle may continue to graze on those parts of the ML not subject to significant mining disturbance, in my view it is not appropriate to treat the landholder as having been deprived of access to the total area of the ML for the term of the ML.
Specifically with respect to the matters at hand, not only does the evidence make it clear that the landholder’s cattle can continue to graze on those parts of each ML not subject to significant disturbance and fencing, but also a number of specific conditions of the EA for each ML also make that position abundantly clear.
In addition, of course, no mining can occur on the Endangered Regional Ecosystem (ERE), which, with respect to MLA 70419, comprises a significant area of the MLA, and over which the landholder’s cattle can graze unimpeded.
In my view, Mr Davis’s evidence suffers due to his reliance on Brown v Armstrong.
Some observations regarding determining compensation under s 281 MRA
I have reviewed a number of authorities in some detail so as to provide, hopefully, a greater understanding of the difficult task of determining compensation for MLAs under s 281 MRA.
It must always be remembered that s 281 MRA is a “one size fits all” provision. That is, the provision applies as equally to a tiny ML on a huge outback property as it does to an enormous open cut operation over the totality of a rural property.
Indeed, determining compensation for matters which fall at each end of the spectrum is relatively easy. For instance, there have been, I expect, hundreds of determinations made of compensation for small MLs over very large properties where the classic determination has been an assessment of a rate per hectare for the total area of the ML per year. See for instance the recent Land Court decision Fitzgerald v Struber[51] where Judicial Registrar O’Connor awarded what he referred to as the “minimal”[52] sum of $10 per hectare per year, making in that case a total payment of compensation of $130 per year for the 10 year term of the ML.
[51] [2013] QLC 43.
[52] At [6].
Based on my experience, it may well be the case that, based purely on a per ha value of the land being used, a determination such as Fitzgerald v Struber (the like of which I have also determined a large number of times over my judicial career) essentially requires the payment by the miner of the total value of the mined land each year for the term of the lease. At first glance, this would appear to be against general compensation principles that compensation should not exceed the value of that taken (leaving aside of course any additional payments such as the minimum extra amount of 10% under s 281(4)(e)).
However, what must be remembered is that the assessment of compensation for mining is pursuant to the statutory scheme of the MRA and in particular s 281(3). Clearly, the existence of small MLs on a large property do have some impact on that property and, in my view, particularly given the small amount concerned and the absence (for practical, economic reasons) of valuation and other evidence, assessments such as those undertaken by Judicial Registrar O’Connor are entirely appropriate and consistent with the MRA. In these small cases, any reference to percentage diminution in the land would be futile.
At the other end of the spectrum are the large open cut mining operations which effectively take all of the landholder’s land. Determination of compensation in those cases is also relatively straightforward. Although there will be a return of the land, unencumbered by mining, to the landholder after the end of the ML, that will normally not be for a period of 20 years or perhaps substantially longer. In such cases, the starting point is the landholder’s loss as 100% of the value of the land, and to then add other costs, such as the cost of relocation etc. Again, no reduction for diminution.
The two MLAs currently under consideration fall within the more difficult part of the spectrum. That is, they are each over a relatively large area of land (318.8771 ha for MLA 70419 and 175.0037 ha for MLA 70447) but are subject to significant restrictions as to the amount of land that can be significantly disturbed at any one time. Further, provided rehabilitation is undertaken correctly in accordance with the EA, the land will be available for grazing once the rehabilitation is completed. There is clear evidence of those parts of the Old Australis lease, which were properly rehabilitated, being suitable for grazing post mining.
Taking into account the authorities I have referred to, a determination of compensation for “middle spectrum” MLAs such as these require consideration of a number of variables, such as the term of the lease, the amount of the lease likely to be actually impacted by the mining operations and the EA, and the relative ease, or otherwise, for cattle to graze on the balance land of the MLA. These are the variables which can significantly alter the diminution percentage based on the evidence of each particular case. It is not merely a mathematical exercise or an exact science.
Determination of compensation payable to Mr Crowther
I turn first to consider compensation with respect to the actual area of the mining lease, and in particular the appropriate $ rate of diminution.
I prefer the approach taken in this regard of Mr Lyons to that of Mr Davis. Mr Lyons’ approach is more consistent with the relevant authorities.
The approach adopted by Mr Lyons is best summarised in his assessment of compensation for MLA 70447 where he said:[53]
“The judgement allows for a maximum area of disturbance of 9.75 hectares at any one time. We have assumed that this also includes the processing plant for both MLA’s 70491 and 70447.
MLA 70447 contains an area of 175.0037 hectares and is sought for a period of 5 years. With rehabilitation processes occurring simultaneously it is possible that up to 15 hectares, dependent on seasonal circumstances, could be unavailable for grazing at any one time or 8.5% of the lease area.
Due to the length of the proposed lease which is 5 years the diminution in value of the lease area must be less than the 25% allowed in the Junior Mining decision. However it must be more than the amount assessed in relation to MLA 70419.
As a result I propose to adopt a diminution in value of 22 ½ %. This reflects the higher ratio to be mined on this MLA than on MLA 70419 after taking into account the significant part of MLA 70419 which cannot be mined.”
[53] Ex 48 page 2.
Mr Lyons used similar reasoning in arriving at a 12.5% diminution rate for the area of MLA 70419.[54] The percentage is significantly lower than that for MLA 70447 due to the large area (120 ha) subject to ERE on which mining cannot occur.
[54] Ex 48 page 1.
Although I prefer Mr Lyons’ approach over that of Mr Davis, in my view he does not completely give full regard to the loss that the landholder suffers in each MLA area.
In Ex 48, Mr Lyons refers to my previous decision as making reference to the “maximum area of disturbance” at any one time.[55] This is not entirely accurate. The reference is actually to the area that can be significantly disturbed at any one time. Save for the area of the ERE, the miner is free to conduct low or minimal intensity work throughout the area of each MLA. This may involve anything from walking over the MLA area, to driving machinery from one part of the MLA area to another, or to making advanced preparations for the opening up of a new area of either MLA to significant disturbance.
[55] Ex 48 page 2 at .5
Taking into account the low impact activities which Gregcarbil can undertake throughout the area of the MLAs, in my view the percentage determination for MLA 70447 should be increased by 10%. This rises the diminution for MLA 70447 from 22.5% to 24.75%.
As regards MLA 70419, I consider it appropriate to start with a like increase of 10%, but to reduce such increase in light of the existence of the significant area of the ERE. Using rounding, such an increase should be reduced by 40% to take into account the 120 ha of ERE. This results in an increase to 12.5% of 0.75% which equates to 13.25%.
Although there was some disagreement between the valuers as to the way in which the value of Nardoo North was assessed, particularly regarding fattening land, as previously indicated the overall assessment of value is consistent between each valuer. Accordingly, and taking particular account of the stocking rates relied on by Mr Davis, I am prepared to adopt the rounded overall figures of Mr Lyons which are $300/ha for superior country and $550/ha for inferior country.
Applying the above rate per ha to the percentage for diminution for each MLA, the calculation for the ML area of each MLA is as follows:
MLA 70419
MLA area 318.8771 ha
280 ha @ $1,300/ha depreciated at 13.25%
280 x 1300 = 364,000 x 13.25% = 48,230.00
38.8771ha @ $550/ha depreciated at 13.25%
38.8771 x 550 = 21,382.40 x 13.25% = 2,833.17
TOTAL $51,063.17
MLA 70447
MLA area 175.0037 ha
175.0037 ha @ $1,300/ha depreciated at 24.75%
175.0037 x 1300 = 227,504.81 x 24.75% = 56,307.44
TOTAL $56,307.44
Balance landI now turn to consider compensation payable with respect to the impact of the MLAs on the balance land of Mr Crowther.
Mr Lyons does not consider that any amount is properly payable to Mr Crowther in this regard, while Mr Davis has done a relatively detailed assessment applying a depreciation rate of 5% to arrive at an overall figure for both MLAs of $187,385.
I agree with Mr Davis that some allowance must be made for the impact that the existence of each ML will have on the balance land. However, I find the assessment made by Mr Davis to be overstated. In this regard, I am in a like position to that of the then Land Court President Trickett in Zimmerebner v Hawkins & Anor.[56] In Zimmerebner, the miner’s valuers considered that no allowance need be made for balance land over and above that already allowed for the ML land, while the landholder’s valuer, in President Trickett’s opinion, overstated the impact on balance lands.[57]
[56] (1999) 20 QLCR 71.
[57] See at pages 89-91.
President Trickett determined a dollar value for this head, doing the best he could with the evidence before him. He did not consider a percentage diminution.
In the present case, all that I have to go on is the evidence of Mr Davis which is to a diminution of 5%, which I consider overstated for much the same reasons as those taken into account in Zimmerebner. For completeness, I should add that the mining activity in that case was in the same gemfields west of Emerald as the present MLAs under consideration.
Kingham DP in Brown v Armstrong considered a claim with respect to balance lands based on a diminution percentage. Brown v Armstrong also concerned the same gemfields west of Emerald. After considering the evidence in that case, Kingham DP determined a diminution of 1.5% x 33%.[58] Expressed in a different way, this equates to a diminution of 0.5%.
[58] (2005) QLRT 18 at [31].
Applying the reasoning of Zimmerebner to the diminution percentage in Brown v Armstrong, and given the fact that the subject lands are all on the same gemfields, I consider it appropriate to allow a diminution in the value of the balance lands of 0.5% for both MLAs. This results in the following calculations for the respective MLAs. (It should be noted that Mr Davis’s figures related to a claim for balance lands on Lot 98 only of an area of 3,591 ha.[59] I assume that this is the net figure after deducting the area of both MLAs.) The calculations are therefore as follows:
[59] See Ex 44 page 26.
MLA 70419
Area from Mr Davis’s report - 3,591 ha
Plus area of MLA 70447 175.0037 ha
Total Area 3,766.0037 ha
2,860.0037 ha at $1,300/ha 3,718,004.81
906 ha at $550/ha 498,300.00
$4,216,304.81
$4,216,304.80 at a diminution of 0.5% = $21,081.52
MLA 70447
Area from Mr Davis’s report - 3,591 ha
Plus area of MLA 70419 318.8771 ha
Total Area 3,909.8771 ha
3,003.8771 ha at $1,300/ha 3,905,040.20
906 ha at $550/ha 498,300.00
$4,403,340.20
$4,403,340.20 at a diminution of 0.5% = $22,016.70Owners time
I now turn to consider Mr Crowther’s claim for owner’s time. Mr Davis considers an amount of $76,195 payable in this regard. He arrives at this figure by applying present value costs to three visits/month at five hours per visit at $100 per hour. This amount relates to both MLAs combined.
Mr Lyons agrees with the figure of $100 per hour, but considers that only two hours per month are required for each MLA. His assessment for each MLA is $10,249 for owner’s time, made up as follows:
24 hours @ $100/hour = $2,400 pa
Capitalised @ 5.5% for 5 years
Adopt $10,249I completely understand the reasons why Mr Davis has applied 15 hours per month as an appropriate amount of time to monitor the mining operations. It is clear from his evidence that he believes such a large amount of time is required in light of the negative experiences of the then landholder with the Old Australia lease. However, what this misses is the fact that this is a new mining operation by different miners who, as I have already indicated, must be presumed to be carrying out their mining activities in a lawful manner. Further, the evidence in this case clearly shows that Mr Crowther attends to the Kubota bore, located in the vicinity of the MLAs, quite regularly. It would seem reasonable for Mr Crowther to combine any trip to Kubota bore with a view of the MLAs. This of itself drastically reduces the amount of owner’s time required due to the existence of each MLA.
In the circumstances, I am prepared to accept the allowance made by Mr Lyons of $10,249 for owner’s time for each MLA.
Valuation and legal fees
Agreement has been reached between the parties for the cost to Mr Crowther of valuation and legal fees in preparing his claim in the sum of $10,000 in total,[60] which, the lawyers for both parties assure me, can be equally divided between the two MLAs in the sum of $5,000 for each.
[60] T 21 October 2013 page 3 line 45 - page 4 line 4.
Additional amount
I now turn to the additional amount that is applied pursuant to s 281(4)(e) of the MRA at the rate of at least 10%. I have already discussed previous cases where an amount greater than 10% has been granted. Such cases are rare.
Mr Lyons contends for the standard 10% while Mr Davis considers an amount of 15% appropriate. Mr Davis relies on the special contamination free status enjoyed by Mr Crowther, no doubt obtained after considerable trouble and effort on his behalf, to support the claim of 15%.
Although I am sympathetic to Mr Crowther’s position, and commend him for the certification he has for his beef, in my view there is nothing in the evidence of this matter to warrant a departure from the standard 10%. The evidence shows that toxic chemicals such as cyanide are not going to be used on these mine sites. The areas of significant mining activities are all to be fenced off from the cattle. Accordingly, I consider that an allowance of the usual 10% under s 281(4)(e) is appropriate. Of course, should the mining activities not be conducted properly on either MLA and Mr Crowther’s cattle are contaminated as a result, then, as already indicated, Mr Crowther could bring an action under s 363 of the MRA against Gregcarbil.
Capital Gains Tax
Before concluding the assessment of compensation payable to Mr Crowther with respect to each MLA, it is appropriate to consider the claim made for Capital Gains Tax. Although such claim has still technically been made, it was apparent by the manner in which Mr Peters concluded Mr Crowther’s cases that such claim had, in effect, been abandoned.
In Wills v Minerva Coal Pty Ltd [No. 2],[61] Member Scott considered whether or not Capital Gains Tax was properly claimable under s 281 of the MRA.[62] He concluded that Capital Gains Tax is not a loss or expense which arises as a consequence of the grant of a MLA. I see no reason to depart from Member Scott’s conclusions.
[61] (1998) 19 QLCR 297.
[62] At pages 349 - 361.
Determination – Mr Crowther
In light of the totality of my findings, I consider it appropriate to make the following determination of compensation with respect to those actions involving Mr Crowther for MLA 70419 and MLA 70447.
MLA 70419 (file MRA 229-11)
Compensation for area of MLA 70419 $51,063.17
Compensation for balance land of Lot 98 $21,081.52
Owner’s time $10,249.00
Legal and valuation costs $5,000.00
Sub total $87,393.69
Plus additional 10% (s 281(4)(e)) 8,739.37
Total $96,133.06
MLA 70447 (file MRA 894-11)
Compensation for area of MLA 70447 $56,307.44
Compensation for balance land of Lot 98 $22,016.70
Owner’s time $10,249.00
Legal and valuation costs $5,000.00
Sub total $93,573.14
Plus additional 10% (s 281(4)(e)) $9,357.31
Total $102,930.45Terms of payment
Mr Crowther is seeking the payment of the compensation upfront, while Gregcarbil is seeking payment of the compensation by way of instalments.
In my view, neither side has mounted compelling arguments in support of their respective contentions.
In light of the quantum of compensation for each MLA and the term of five years for both leases, in my view an amount should be paid for each MLA within one month of the grant of the respective MLA, followed by four equal payments on the first, second, third and fourth anniversary of the grant of each MLA.
As regards MLA 70419, the amount of $16,133.06 should be paid by Gregcarbil to Mr Crowther within one month of the grant of the MLA, followed by payments of $20,000 on the first, second, third and fourth anniversary of the grant of the MLA.
As regards MLA 70447, the amount of $22,930.45 should be paid by Gregcarbil to Mr Crowther within one month of the grant of the MLA, followed by payments of $20,000 on the first, second, third and fourth anniversary of the grant of the MLA.
Assessment of compensation for access payable to Mr and Mrs Backus for each MLA
The determination of compensation for access to both MLAs is relatively straightforward compared to the assessments that I have already undertaken. There is only valuation evidence from one valuer, Mr Lyons, who considers that compensation for access under all heads, including s 281(4)(e) of the MRA, should be assessed in the sum of $1,000. It is clear that this sum is to apply to each MLA.[63]
[63] T 21 October 2013 page 67 lines 7-11.
It is clear from the evidence that Mr Backus is content enough with the valuation sum of $1,000, but believes that there should be added to such sum the cost of public liability insurance, as well as the cost of establishing two grids and gates on the access where such access crosses property boundaries. He also believes that the $1,000 should be doubled to take into account night time as well as daytime use.
As regards public liability insurance, I accept the submissions that Gregcarbil is required to take out its own public liability insurance and therefore should not be required to effectively pay public liability insurance twice.
I now turn to the question of Mr Backus’ claim for the cost of two grids and gates.
Firstly, I have already indicated, both in this decision and in Gregcarbil No. 2, my general acceptance of the evidence of Mr Backus, and specifically the acceptance of his evidence over that of Mr and Mrs Graham.
I accept the evidence of Mr Backus as to why he considers the grids and gates necessary, and also I accept the quotations he has received for the supply and installation of appropriate grids and gates. In this regard, I refer specifically to Exhibits 51 - 55. However, my acceptance of the evidence does not mean that the amount he claims is recoverable under s 281 of the MRA.
As I have already stated on a number of occasions, I am duty bound to proceed on the assumption that Gregcarbil will conform with all its legal requirements in carrying out its mining operations. This includes the maintenance of boundary fencing impacted by its access, whether that be by Gregcarbil ensuring that all existing boundary gates on the access are closed and locked whenever access entry is conducted, or whether Gregcarbil chooses, or is required by Occupational Health and Safety Laws, to itself install grids and gates.
Mr Backus explained his position quite clearly during cross-examination by Mr Barlow. Mr Backus had this to say:
“… There needs to be grids and gateways that are appropriate for people who are not familiar with wire gates in their operation, so that I don’t have to spend my time going out there and making sure gates that miners who may not be familiar with their operation are using and not closing properly. The amount of $1000 that Mr Lyons has come up with, I’m not going to argue with how he came to that amount, he’s said that it’s simply for the loss of land for grazing. If I was going to argue that case, it would be that time has not been allocated to going out and checking that the gateways have been closed properly. I’m happy to accept that $1000 per lease for daytime use and an additional $1000 per lease for the night time use of that roadway for the disturbance of my livestock. As they have indicated, they are wanting to put a camp out there which would result in the destruction of their nocturnal activities.
If I was to apply time spent checking those grids and gateways that they have been shut properly, and I don’t have livestock on the other side, and I’m not having to contact the neighbours to request permission to retrieve livestock and then trucking their livestock back and vice versa, I would seek a lot more than $1000 over a five year period. $200 per year would cover one day per year of checking that. But I’m willing to accept that $1000 per lease per 12 hour period, so a total amount of $4000 for the two leases, so long as the amount for the grids is paid upfront so that I don’t have to worry about going out there to the furthest point on our property to check that the right thing has been done, when in the past, the right thing has never been done.
It’s fine to say on paper that this is a new entity and that it will be assumed that they will do the right thing, but we have previous experience with the Graham’s on our place, we have previous experience with other gem miners on our place and it’s not been the case. I know their not Australis but we have had the Graham’s on our place before who are the principals of Gregcarbil. And so what I’m asking is to be compensated for the installation of proper gateways and grids that anyone can open and close and can be secured at night or at times of inactivity to prevent people coming onto our property that shouldn’t be there. And so that we don’t have to worry that people are coming onto our place and spreading weeds. People are coming onto our place, shooting pigs. People are coming onto our place stealing stuff.
If these proper gateways are put in, then that will alleviate the need to go out there every second day, checking that there’s not a beast perishing, checking that someone isn’t out there doing the wrong thing. …”
I do not accept Mr Backus’ contention that Mr Lyon’s assessment of compensation should be doubled to take account of daylight and night use. I also do not accept, as a proposition of law, that (Mr and Mrs Backus) should be compensated for the cost of the installation of grids and gates on the access boundaries. However, that is not the end of the matter. I do accept that Mr Backus has experienced difficulties with Mr and Mrs Graham and that, absent being assured that grids and gates will be installed, it is reasonable for him to mount what I accept as his claim in the alternative that he and his wife receive compensation by way of payment for owner’s time for checking the access in general and, more particularly given the special circumstances and evidence of this case, the boundary fencing, particularly where the access crosses the boundaries, but also where the access runs beside the boundary fencing.
Doing the best that I can with the evidence before me, and remembering of course that evidence in one matter is accepted as evidence in the other matters given the circumstances which caused these matters to be heard together with Mr Crowther’s, I consider it appropriate to allow Mr and Mrs Backus 10% of the amount that I have allowed Mr Crowther for owner’s time with respect to each MLA. This amounts to the sum of $1,024.90 for each access.
There should of course be added to this sum 10% pursuant to s 281(4)(e), which amounts to $102.49, making a total for owner’s time of $1,127.39.
I have arrived at the figure of 10% of Mr Crowther’s owner time due to the fact that the impact of access only for mining operations is far less invasive, and thus requiring of far less scrutiny, than the mining operations on the MLAs.
Determinations – Mr and Mrs Backus
In light of the foregoing, I make the following determinations of compensation for access payable to Mr Backus:
MLA 70419 (file MRA 464-13)
Compensation for loss of use of the land (includes s 281(4)(e) allowance) $1,000.00
Owner’s time (including s 281(4)(e) allowance) $1,127.39
Total $2,127.39
MLA 70447 (file MRA 465-13)
Compensation for loss of use of the land (including s 281(4)(e) allowance) $1,000.00
Owner’s time (including s 281(4)(e) allowance) $1,127.39
$2,127.39In light of the relatively small amount of compensation for access, the compensation for access for each MLA is to be paid by Gregcarbil to Mr and Mr Backus in full within one month of the grant of each MLA.
Orders
1. As regards MLA 70419 (file MRA 229-11) compensation is determined in the total sum of $96,133.06
2. Further as regards MLA 70419 (file MRA 229-11) Gregcarbil is ordered to pay the compensation to Mr Crowther by way of instalments, with the sum of $16,133.06 payable within one month of the grant of MLA 70419, followed by payments of $20,000 on the first, second, third and fourth anniversary of the grant of MLA 70419.
3. As regards MLA 70447 (file MRA 894-11) compensation is determined in the total sum of $102,930.45.
4. Further as regards MLA 70447 (file MRA 894-11) Gregcarbil is ordered to pay the compensation to Mr Crowther by way of instalments, with the sum of $22,930.45 payable within one month of the grant of MLA 70447, followed by payments of $20,000 on the first, second, third and fourth anniversary of the grant of MLA 70447.
5. As regards MLA 70419 (file MRA 464-13) compensation for access is determined in the total sum of $2,127.39.
6. Further as regards MLA 70419 (file MRA 464-13) Gregcarbil is ordered to pay the total compensation of $2,127.39 to Mr and Mrs Backus within one month of the grant of MLA 70419.
7. As regards MLA 70447 (file MRA 465-13) compensation for access is determined in the total sum of $2,127.39.
8. Further as regards MLA 70447 (file MRA 465-13) Gregcarbil is ordered to pay the total compensation of $2,127.39 to Mr and Mrs Backus within one month of the grant of MLA 70447.
P A SMITH
MEMBER OF THE LAND COURT
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