Maximus Resources Ltd v Jon Bennett Alton, Arthur James Fowler & Richard Gordon Teusner (NO.4) - [2010] SAWC 2

Wardens Court of South Australia
(District Court Administrative and Disciplinary Division)
MAXIMUS RESOURCES LTD v JON BENNETT ALTON, ARTHUR JAMES FOWLER & RICHARD GORDON TEUSNER (NO.4)
[2010] SAWC 2
Judgment of Senior Warden Dr Cannon
13 April 2010
ENERGY AND RESOURCES - MINERALS - MINING FOR MINERALS
Exempt land, notice of entry, conditions of compensation, lessee as owner

MAXIMUS RESOURCES LTD v JON BENNETT ALTON, ARTHUR JAMES FOWLER & RICHARD GORDON TEUSNER (NO.4)
[2010] SAWC 2

I am dealing with an application under s.9(3)(b) of the Mining Act 1971 (SA) to remove exemptions over portions of Mr Richard Teusner’s land comprised in CTRB Volume 4161 Folio 949. Under s.9(3b) the owner of the exempt land has the benefit of the exemption as does the owner of any adjoining land from where source of the exemption arises. The exemptions are set out in annexure B, and explained in paras.3 and 4 of Mr Scott Duncombe’s affidavit of 2 June 2008.
The mining operation is a proposed drilling program of 17 drill holes and their proposed location is also set out in annexure B. I accept that description of the exempt areas and the location of the drill holes as sufficiently accurate for my purposes. All the proposed drill holes will be in exempt land from one or more causes and the benefit of the exemptions all fall to Mr Richard Teusner as the owner of the freehold title of the land, subject to exemptions. He has the benefit of an exemption around a spring. Mr James Fowler has the benefit of exemptions, in respect of his house, over all of the land where drilling is proposed and for lesser areas for his dam and shed. Mr Jon Bennett Alton has the benefit of an exemption over land affected by at least 12 of the proposed drill holes, one is on the boundary of the exemption and four are outside the exemption. He also has the benefit of an exemption arising from a dam affected by five drill holes. Mr Richard Teusner has the benefit of the rights as a landowner objecting to entry by a miner and to the use of declared equipment.
Mr John S. and Mrs Marina A. Teusner hold a lease for two years over Mr Richard Teusner’s land. I so found at para.2 of my judgment of 25 March 2010, and at para.6 I noted, that they should be parties. They have the same rights as Mr Richard Teusner in relation to the exemption application that is before me. They also have rights in relation to the objection to entry for mining and to the use of declared equipment (eg a drilling rig or an excavator) which Maximus Resources Ltd has not applied for me to address.
I note the supplementary submission of 7 April 2010 signed by Mr Justin Sharman. It asserts that I cannot refer to the unstamped lease by virtue of s.22 of the Stamp Duties Act 1923 (SA). The Statutes Amendment (Budget) 2004) Act 2004 removed the obligation to stamp leases and this was confirmed by the Stamp Duties (Tax Reform) Amendment Act 2009. I refer to the lease and to the oral evidence which would be admissible for this purpose of proving the status of Mr John and Mrs Marina Teusner even if the lease were not. I confirm the findings in my March judgment. I note that by a written submission of 22 February, Mr John and Mrs Marina Teusner disclosed their interest and seek compensation. It is clear that they must be joined as parties to benefit from any compensation and to be bound by any orders permitting access on conditions. They are ‘owners’ of the subject land in the terms of the Act and they are clearly objecting to entry and drilling on the exempt land. My order will not be effective until they are parties to this action and until I am asked to deal with the objection to entry issues as well the exempt land issues. I still await an application to join them and an application to amend this application to confirm that I am asked to deal with the objection to entry issues.
These matters are essential but are procedural. The hearing proceeded on the basis that I was considering the rights of Mr John and Mrs Marina Teusner as well as those of Mr Richard Teusner, Mr Arthur James Fowler and Mr Jon Bennett Alton and in the context of my July judgment, that I was also considering the objection to entry issues. Maximus Resources Ltd assert urgency, so rather than allowing the failure of their advisors to address these procedural issues to cause further delay, I have decided to proceed to consider the substantive issues, with the proviso that until these procedural issues are addressed, my judgment will have no effect for or against Mr John and Mrs Marina Teusner. I make it clear that I reserve all parties’ rights to argue any issues arising from any application to amend this application or to join parties and the publishing of these reasons do not assume any decision on those matters.
In my judgment of 4 July 2008 I decided not to deal with the separate rights of each party but took one approach to conditions and individual awards of compensation to each party. I take the same approach here.
Mr John Teusner grazes and breeds sheep on this land, as did his father. In relation to the disruption to stock it has been suggested that I should allow the program to proceed and assess actual damage after the event by a comparison of returns from the grazing of sheep in the most recent season compared to the actual returns whilst the exploration returns. This could be a contested and lengthy process more expensive in legal fees than the amount in contention. I am not inclined to allow that. In my previous judgment I expressed a preference to assess damages for disruption to stock on the basis of the cost of agistment of the affected stock elsewhere, but neither party has provided me with figures to do this. In future cases of this type I will encourage an assessment on an agistment basis as it minimises the room for expensive debate.
I have an application to require a bond because the nature of mining exploration is speculative. If I agreed with the miner that I should await the outcome of the activity to assess the actual loss I might sensibly require a bond to be lodged. If I assess damages in anticipation, the calculation is less certain, but it can be paid in advance and so the confidence that a bond would provide is not necessary.
I intend to follow the orders in my July judgment, with modifications. I first explain the reasons for substantive changes.
I am asked to permit one year from the start to the completion of any drilling program. It is urged that the availability of drilling rigs makes twelve months realistic. Against this, the owners want any disruption I permit to the enjoyment of their freehold to be for as short a time as possible. I shall permit one year to complete the program, but from the date of this order, not from the date of commencement. That will require the work to be completed well before the lambing season in 2011 which starts in June and so will minimise disruption to the Teusners.
I accept the evidence of Mr John Teusner that electric fencing is not sufficient to prevent the access of sheep and that the pads should be kept isolated until the end of summer to allow re-sown pasture to run to seed. I have excluded the use of electric fencing and extended the obligation to fence the areas to be rehabilitated until the end of April 2011. I have left open how this is best achieved.
I have modified the obligation to restore land to its prior contour to permit some flexibility if Mr Teusner agrees in writing. I have noted the undertaking by Maximus Resources Ltd not to dig the sumps for each pad until the drilling is ready to proceed. I have extended the required minimum notice of commencement of the works to seven days.
I have clarified the obligation in relation to groundwater. I reiterate the finding in my July judgment that the risk to the aquifers is uncertain (paras.32-34). The owners of bores and springs are entitled to certainty that their access to water is not diminished by mining activity. That is the purpose of the exemption. When an exemption around a spring or bore is removed, any conditions should protect the access to quality and quantity of water. I accept the central importance of water to the value of rural land and the obligation I impose below is intended to reflect that.
In relation to losses to Mr Richard Teusner in his written submission forming part of R1 he asserts that after my July judgment, in anticipation of mining commencing, he de-stocked 35 ewes which had not yet lambed. He seeks the compensation previously ordered by me. There was not discussion about whether he had the opportunity to mitigate this loss by placing the ewes elsewhere, or returning them when it became clear that the mining activity was not going to proceed. There is no other evidence on this point. I shall allow Mr Richard Teusner the loss of profit I previously calculated at $1,620 (para.48). This is for historic losses so no adjustment for inflation is required and I am not inclined to calculate any allowance for interest. Loss of amenity does not apply to Richard Teusner as no mining proceeded and he has now granted the right to possession of the land by lease to John and Marina Teusner. Once I made it clear that no program would proceed without a fresh application then there was nothing to stop Mr Richard, or John and Marina Teusner undertaking pasture improvement. I allow nothing for loss of productivity due delays in pasture improvement.
In relation to Mr John and Mrs Marina Teusner, I have their submission about anticipated stock losses and the current improving price of lambs. There is no contrary evidence. I am sceptical of his confidence in bringing more than one lamb per ewe to market. I note, I allowed Mr Richard Teusner one lamb per ewe. Although a generous line widely drawn around all the drill holes may equal 20% of the land, the drilling will not be on all holes at once and the loss of available land for grazing over the season will be likely to be less than the 10% I previously estimated. I remain content with my previous basis of calculation of a 10% loss. That is one successful lamb on average per ewe which is 180 lambs. I shall allow a loss of 10% but at the now much better price of $140 after allowing a 5% deduction for levies and yardage. I shall allow for disruption of stock 10% of 180 x $140 = $2,520. I am not convinced any fleece will be lost nor do I have sufficient information on shearing costs, dipping etc to go down the path of calculating that loss. I shall allow loss of amenity.
In relation to general awards, such as loss of amenity, I should adjust these for inflation that has occurred since July 2008. I have of my own volition informed myself from the Australian Bureau of Statistics website[1]. I appreciate that this is a departure from the usual adversary process where the parties bring the evidence to court, but it has long been recognised that the mining warden can inform him or herself from particular knowledge of the jurisdiction and the personalities involved in the mining industry[2] and accessing this uncontroversial guide to price movements is consistent with that approach. The Consumer Price Index, Australia, June 2009, the All groups June quarter 2008 to June 2009 showed an increase of 1.5%. The same index for the September quarter 2009 showed an increase for that quarter of 1% and for the December quarter 2009 an increase of 0.5%. That is a total change to between July 2008 and December 2009 of 3%. The permission sought here covers activity for up to a year hence so an adjustment of 5% to the figures in my July 2008 judgment is a realistic allowance for general price movements since then. The loss of amenity will be increased from $220 to a figure in this judgment of $231. I shall apply the same adjustment to the other general awards which are drawn from my July 2008 reasons.
[1]
[2] Eg Pacminex.
I note the relevant Exploration Licence is due for renewal and the orders below are made on the basis that the renewal is in place.
Accordingly, I make the following orders:
I permit Maximus Resources Ltd and its contractors access over Mr Richard Teusner’s land with the required declared equipment to undertake the drilling program of 17 RC and diamond drill holes described in the particulars (Exhibit P1) of the evidence of Mr Maddocks and clarified by the evidence of Mr Duncombe, including the rehabilitation work (all of which I shall call ‘the exploratory drilling work’). I note that the actual location of the drill holes may vary but any proposal to increase the number of drill holes or to substantially change their location will require the leave of the court. The land where the exploratory drilling work is to occur and the access track is to cease to be exempt land in respect of all exemptions, but only for the purpose of the exploratory drilling work. The permission to enter and to use declared equipment and the removal of exemptions is subject to the limitations in this order and the strict compliance by Maximus Resources Ltd with the terms of this order. I give liberty to apply if it is alleged that there is a breach of this order. Nothing in this order or these findings implies any future permission to enter or removal of exemptions for other mining operations.
CONDITIONS
Maximus Resources Ltd will designate a person or persons who have authority to deal with the landowners and that person(s) will have authority to bind Maximus Resources Ltd. Mr Richard Teusner and Mr John and Mrs Marina Teusner will designate which of them has authority to liaise with Maximus Resources Ltd and that person(s) will have authority to bind all of them. A reference to Mr Teusner in these conditions refers to all of Mr Richard Teusner and Mr John and Mrs Marina Teusner. A reference to the landowners means each of Mr Richard Teusner, Mr John and Mrs Marina Teusner, Mr Arthur James Fowler and Mr Jon Bennett Alton.
Maximus Resources Ltd:
1.      Will complete the exploratory drilling work within one year of this order.
2. Will liaise with Mr Teusner to use the most suitable access route and minimise inconvenience to Mr Teusner in farming operations on his property, while ensuring that the work is conducted while Maximus Resources Ltd has access to equipment and contractors.
3. a.      Will give the landowners no less than seven days’ notice before it        commences the exploratory drilling work on Mr         Teusner’s land.
b. Will delay the digging of any sump required for a drill hole until the     drilling is shortly to commence.
4.      Will only conduct exploratory drilling work on Monday to Saturday     inclusive, between the hours of 7 a.m. and 5 p.m.
5.      Will leave gates in the same position as they find them.
6.      Within limits imposed by operational practicality and safety, will facilitate access by Mr Teusner and his stock, to the area affected by exploratory    drilling work.
7.      Will comply with the requirements of the Mining Act 1971 (SA), the Mines and Works Inspections Act 1920 (SA), the conditions of the Exploration        Licence, any approval to carry out mining operations, and any other        legislation, regulations, licences or government codes of conduct affecting    its activities on the landowners’ land;
8.      Will ensure continuity of Mr Fowler’s power supply and Mr Bourne’s water         supply and in the event of any interruption to them caused by Maximus     Resources Ltd, immediately arrange for alternative services sufficient for        their needs, whilst Maximus Resources Ltd promptly reinstates the usual    supplies.
9.      Will provide sufficient sheep proof fencing to sufficiently isolate the    exploratory drilling work to allow the grazing of stock to successfully       continue without undue risk to stock and people and to ensure that all areas        that are re-sown are protected from grazing until at least 30 April 2011 and          then to remove all such fencing.
10.    Will reinstate any damaged fencing and gates as quickly as possible after      any damage occurs.
11.    Will rehabilitate any land compacted or disturbed by exploratory drilling      work to at least its productivity prior to the mining operation and where possible improve it by appropriate measures such as:
a.      Removing and replacing the topsoil and subsoil in such manner as to    ensure minimal loss of the topsoil, maintenance of soil structure and organic carbon and to ensure there is no bad clay closer to the surface than prior to the mining operation;
b.      Taking all necessary steps to prevent loss of rehabilitated soil,      including, where necessary, planting and watering a cover crop as agreed by Mr Teusner;
c.      Remedying any compaction of the soil.
12.    Will take sufficient profiles to establish the contoured form of Mr Teusner’s         land before the exploratory drilling work and return the Teusner’s land to    substantially the same as the original contoured form after the soil has         settled, or to such other contour as may be agreed with Mr Teusner in         writing.
13.    Will use its best endeavours to protect all aquifers and in any event ensure    there is no lesser quality nor quantity of water available to the landowners      during and after the mining operations, save lesser quality or quantity which Maximus Resources Ltd can establish is due to normal seasonal variations or other causes that were not related to the exploratory drilling work, and:
a.      Take two samples from one of any existing springs or bores on    Teusner’s land, Fowler’s land and Alton’s land that each of them      nominates and give one sample to the landowner and test the quality of water in the other sample and make the results available to the          landowners.
b.      Upon there being a lesser quality or quantity of water available from    any nominated spring or bore, which Maximus Resources Ltd cannot establish is due to normal seasonal variations or other causes that are       not related to the exploratory drilling work, to immediately make        available an alternative supply of similar quality and not less       quantity until it          succeeds in reinstating the original quantity and quality of water.
c.       If there is an ongoing obligation to supply alternative water in     accordance with clause 13.b the landowners may apply for an         appropriate bond to be ordered to secure the expense of any ongoing obligation.
14.    Will keep current with a reputable insurer, at its sole cost, a public risk         insurance policy in respect of the exploratory drilling work to cover the     liability of Maximus Resources Ltd and Mr Teusner in which the limit of      public risk (being the amount which may be paid arising out of any          single claim) shall be not less than $50 million and which shall include        all provisions as are          normally contained in insurance policies for public      risk.
15.    Will indemnify, and keep indemnified, the landowners from and against      any liability, expenses and costs arising out of any claim made against the        landowners by any third party for loss or damage suffered by that party arising out of the conduct by Maximus Resources Ltd of the exploratory       drilling work.
16.    Will ensure no weeds or diseases are introduced to Mr Teusner’s land,         survey the area covered by the exploratory drilling work and access tracks for weeds and diseases before and after the exploratory drilling work and      co-operate with Mr Teusner to control weeds.
17.    Will:
a.      Ensure dust and noise generation are minimised and buffered to the      extent reasonably possible, including the erection of hay bale sound        barriers;
b.      Take reasonable precautions to minimise the risk of starting fire, including only bringing diesel powered vehicles onto the land and have the ability to extinguish fire;
c.      Not permit dogs or firearms on the landowners’ land;
d.      Not permit groundwater, oil, fuel, chemicals or other pollution to         escape onto the land;
e.      Pay any sum due directly or consequentially under these conditions      when they fall due.
18.    Will not conduct exploratory drilling work Christmas Day.
19.    Will, if Maximus Resources Ltd deals with its interest in the exploration      licence or is taken over or amalgamates with any other party, advise the party with whom it is dealing of these orders and upon such dealing, take      over or amalgamation being agreed, forthwith advise the landowners of          the identity of the party and its interest.
The landowners:
20.    Will permit Maximus Resources Ltd free and undisturbed access to the area         subject to the exploratory drilling program to exercise its rights under the Exploration Licence, and the Mining Act 1971(SA) in accordance with      and to the extent permitted by this order.
21.    Permit Maximus Resources Ltd at its sole cost and expense, to erect or         construct such fences around the work areas as Maximus Resources Ltd     may reasonably require.
All parties:
22.    Will conduct their relationships in the utmost good faith to work co-    operatively to achieve the best progress for the exploratory drilling work,    the least possible disruption of the farming business and the best possible rehabilitation of the land.
23.    If all agree in writing, may vary these terms in which event, the varied         terms shall be promptly filed by Maximus Resources Ltd at the Wardens Court. The variation is subject to acceptance by the court.
Compensation:

The drilling will be a substantial visual imposition for each day that the exploratory drilling work continues, and a substantial noise and privacy intrusion for each day whilst work is being done with the possibility of dust and exhaust smells as well. This will be most serious for Mr and Mrs Fowler and a particular intrusion for Mrs Fowler. Due to the greater distance the intrusions will be less but still significant for Mr Alton and his family. Mr Teusner has different inconvenience as a landowner rather than being able to claim on account of a residential exemption.
In accordance with my judgment of July 2008 and adjusted by 5% for the reasons given above for each day that declared equipment is in on site within 400 metres of Mr Fowler’s dwelling house and operating for any part of that day I order that he is entitled to $300 and if declared equipment is on site within 400 metres of his dwelling and not operating $105 per day (including Sundays).
For Mr Alton, for each day that declared equipment is on site within 400 metres of Alton’s dwelling house and operating for any part of that day, I order that he is entitled to $105 and if it is on site within 400 metres and not operating $31.50 per day (including Sundays).
The amounts for Mr Fowler and Mr Alton include loss of amenity and disturbance to stock.
Maximus Resources Ltd must send each Wednesday by post to each of Mr Fowler and Mr Alton, a statement of the amount owing, in accordance with this judgment for the previous Monday to Sunday inclusive and payment of that amount.
In relation to Mr Richard Teusner, he now suffers no loss as the land is leased and there is no suggestion to me that the rental will be reduced during the drilling program. For reasons given above I allow him $1,620 for losses previously incurred. Mr John and Mrs Marina Teusner will suffer loss of use of the property during the drilling program. For reasons given above I allow them $2,520 for loss of profit caused by disruption to stock and $231 for loss of amenity.
These sums payable to Mr Richard Teusner and Mr John and Mrs Marina Teusner are to be paid within one month of the commencement of the exploratory drilling program. This covers all losses unless Mr John and Mrs Marina Teusner suffer actual loss of stock. If that occurs, there will need to be separate compensation assessed for it. It is my intention that such payments be net of GST and if that aspect needs clarification I give liberty to apply.
I confirm that these orders cannot bind Mr John and Mrs Marina Teusner until someone joins them as parties and at that time I shall confirm that objection to entry and use of declared equipment are dealt with in this application.