Qld Zeolite Pty Ltd v Spencer - [2010] QLC 112

LAND COURT OF QUEENSLAND

CITATION: Qld Zeolite Pty Ltd v Spencer & Ors [2010] QLC 0112

PARTIES:In the matter of Mining Lease No 70253 – Determination of compensation payable by Qld Zeolite Pty Ltd to Gregory Spencer, Sonya Maree Spencer, Neal William King and Sharon Maree King
FILE NO’s:MRA1332-08
PROCEEDING:                   Application for determination of compensation
DELIVERED ON:  19 March 2010 (ex tempore)
DELIVERED AT:                Brisbane
MEMBER:Mr PA Smith
ORDERS:1.     The applicant pay part compensation to Gregory and Sonya Spencer in the amount of Twenty-six Thousand Dollars ($26,000) together with the additional amount of 20% which equals Five Thousand Two Hundred Dollars ($5,200), making the sum payable of Thirty One Thousand Two Hundred Dollars ($31,200) within 28 days of the grant of the mining lease.

2. The applicant pay to Gregory and Sonya Spencer the additional sum of Two Hundred and Forty Six Thousand Four Hundred and Ninety Seven Dollars and Eighty-Eight Cents ($246,497.88) including interest by way of further compensation, together with an additional amount of 20% which equals Forty Nine Thousand Two Hundred and Ninety-Nine Dollars and Fifty-Eight Cents ($49,299.58) making the sum payable of Two Hundred and Ninety Five Thousand Seven Hundred and Ninety-Seven Dollars and Forty-Six Cents ($295,797.46) within 5 years of the grant of the mining lease.

3. The applicant pay the costs of Gregory and Sonya Spencer fixed in the sum of One Thousand Five Hundred Dollars ($1,500) within 28 days of the date of this decision.

4. The applicant pay part compensation to Neil and Sharon King in the amount of One Thousand Nine Hundred and Fifty Dollars ($1,950) compensation, together with the additional amount of 20% which equals Three Hundred and Ninety Dollars ($390), making the sum payable of Two Thousand Three Hundred and Forty Dollars ($2,340) within 28 days of the grant of the mining lease.

5. The applicant pay to Neil and Sharon King the further amount of Seven Thousand Eight Hundred and Forty One Dollars and Seventy-Six Cents ($7,841.76) including interest for additional compensation 5 years after the grant of the mining lease.

6. The applicant pay the costs of Neil and Sharon King fixed in the sum of Five Hundred Dollars ($500) within 28 days of the date of this decision.

7. The Court further directed that a copy of the reasons for judgment and Order be provided to The Honourable The Minister for Mines and Energy and Minister for Trade.

CATCHWORDS: MINING LEASE – DETERMINATION OF COMPENSATION – NO APPEARANCE BY MINING LEASE APPLICANT – LONG DELAY IN PROGRESSING MATTER – HAZARDOUS MATERIAL – BEAST AREA – ACCESS PRINCIPLES - COMPULSORY NATURE OF ACTION – ADDITIONAL AMOUNT - COSTS
Mineral Resources Act 1989, s 281

APPEARANCES: Mr and Mrs Spencer in person.

Mr and Mrs King in person

No appearance by Qld Zeolite Pty Ltd

Background

These matters relate to determination by the Land Court, pursuant to section 281 of the Mineral Resources Act 1989 (“MRA”) of compensation with respect to mining lease application 70253. The application for mining lease 70253 was originally made on 23 November 2000 by Supersorb Minerals NL.
The Land and Resources Tribunal of Queensland made a recommendation that the mining lease application be granted on 20 July 2001[1]. On the 1 October 2007 the ownership of the mining lease application was transferred from Supersorb Minerals NL to Queensland Zeolite Pty Ltd.
[1] see Supersorb Minerals NL 2001 QLRT 50
On the 29 November 2008, as compensation had not agreed between the parties, the Mining Registrar, Emerald District, forwarded the matter to the Land Court for determination of compensation pursuant to the MRA. Subsequently on the 31 October 2008 the Land Court wrote to the applicant and the landholders, Mr and Mrs Spencer, who own the property over which the mining lease is proposed as well as a small amount of access, and Mr and Mrs King who own a property over which access is required, seeking their submissions as to the amount that should be determined in compensation.
Following requests of 19 November 2008 by the Spencers and 26th of November 2008 by D J Delroy on behalf of the applicant Queensland Zeolite, a new timetable was established by the Court for submissions on 26 November 2008, and this timetable was provided to the parties.
Unfortunately, no submissions were received by the mining lease applicant in accordance with that timetable, and also neither of the property holders provided any submissions to the Court. It would seem that the property holders were waiting for the mining lease applicant to set out the fundamentals of compensation before responding, but the property owners should themselves have also provided material to the Court at that time.
The Land Court subsequently, due to the very large size of the mining lease application and the potential dollar value of compensation that may be awarded, listed the matter for a directions hearing on the 2nd of September 2009. This, however, was cancelled due to the unavailability of the parties and the matter was relisted for 15 September 2009.
Mr Delroy and the landholders attended this directions hearing and the matter was then listed for mediation. That mediation was scheduled to take place in Emerald on 8 and/or 9 October 2009[2]. Ultimately, Mr Delroy advised that he could not attend for mediation on 8 or 9 October and the matter was therefore adjourned to further mediation on 13 November 2009. There were formal notifications sent by the Land Court to all the parties, as there have been at each step of this matter.
[2] there being some movement between those dates to meet the requests of the parties
When the matter came on for mediation in Emerald on 13 November 2009 there was no attendance at that mediation by the applicant miner and accordingly the mediation was not conducted.
I should point out that that mediation was scheduled to be conducted by myself which would in normal circumstances have conflicted me out of the hearing of this matter, but as the mediation was not conducted there is nothing precluding me from proceeding with the hearing of this matter.
The Court attempted to phone the applicant on 13 November 2009 and ultimately received a telephone call from a D Delroy advising that she knew nothing about the mediation on the 13th of November. I do not accept that there was no notice given to the applicant miner of the mediation.
The matter was subsequently listed for a directions hearing on 28 January 2010. At that directions hearing there was an appearance by the applicant miner as well as by both landholders. At the directions hearing the Court made important orders, and they are as follows:
"The applicant is to file with the Court and serve on the respondents its written statements of evidence by 4 p.m. on Friday 19 February 2010;

Each respondent is to file with the Court and serve on the applicant and the other respondent its written statement of evidence by 4 p.m. Monday 1st of March 2010;

The applicant is to file with the Court and serve on the respondents its reply, if any, to a respondent's written statement of evidence by 4 p.m. on Thursday 4th of March 2010."

The matter was listed to be conducted by hearing in Brisbane with video conference facilities from Emerald courthouse on 10 March 2010.

It is a matter of note to the Court that the applicant has not complied with any of the orders made on 28 January 2010, nor has the applicant made any attempt to correspond with the Land Court, or the parties, seeking an amendment to the orders that were made.
I also note that the landholder, Spencers, did provide material, albeit only on 18 March 2010, to the Land Court, but the Kings have only relied upon oral evidence at the Land Court today.
Due to matters beyond the control of any of the parties, the hearing of 10 March had to be vacated and changed to Friday 19 March 2010. The circumstances surrounding this vacation of the hearing on 10 March 2010 should be explained. Unfortunately the Land Court has had two Members retire in recent times and neither Member has at this stage been replaced by a new appointment by the Governor in Counsel and further very recently, another Member of the Land Court was appointed from the Land Court to the District Court, thus causing a further vacant seat on the Land Court and there are now only two Members sitting on the Land Court. On the 10 March 2010 I was involved in a matter in Townsville which could not be altered and Mr Jones, who was appointed to the District Court, was the Member who was going to hear this matter on 10 March 2010, but his appointment to the District Court preceded that date and therefore there was simply no-one available to hear the matter on 10 March as listed.
Accordingly, the matter was adjourned until Friday 19 March 2010. Notice of that adjournment was provided to the parties on 5 March 2010. Unfortunately there has been no appearance by the mining lease applicant at the hearing today. I accept the evidence of Mr Spencer that he received a telephone call from a representative of the applicant earlier today advising that Neil Delroy would be unable to attend today as he was in Brisbane and seeking to have further discussions held in the coming week regarding the question of compensation.
I also note the contents of Exhibit 2, which is a file note of the Land Court of 17 March 2010 relating to a telephone call from Neil Delroy to the Land Court. The contents of that file note are relevant to these proceedings and are in the following terms:
"Received phone call from Neil Delroy from Queensland Zeolite wanting to find out whether or not the hearing listed for 19/3/10 was still going ahead. I advised him that it was and that the parties were required to attend the Emerald courthouse and appear by video link. He advised that he was not available as he had to take his daughter to the hospital. I asked him whether or not his father Mick Delroy was available and he advised that he would be. I also advised that it would be in their best interest for someone to appear on behalf of Queensland Zeolite because given the history of this matter, the Member would probably decide compensation even if no-one from Queensland Zeolite appeared. He understood the situation."

Conduct of Matter

Before proceeding to the formal determination of compensation, I should make some general comments regarding the conduct of this matter. I find it almost beyond belief that this matter which was subject to a recommendation by the then Land and Resources Tribunal on 20 July 2001 has not been finalised, in circumstances where there were, as I read the decision of then Deputy President Kingham, no native title issues precluding the grant of the mining lease application. The delay in this matter is without any excuse that has been made known to the Court.
It could, of course, be argued by the applicant that for the first six years after the recommendation, that the mining lease was the responsibility of another party, being Supersorb Minerals NL. That is certainly correct; however, Queensland Zeolite has been the holder of this application since 1 October 2007, and I note that the Mining Registrar waited some 12 months after the acquisition by Queensland Zeolite of the application before formally referring the matter to the Court. That was indeed ample time for any person or entity that is serious about conducting mining operations in this State to at least attempt to resolve the issue of compensation.
I further note the detailed history of the attempts by the Court to have a determination made of compensation in this matter, either by way of formal submissions on the papers to the Court; through mediation, or, indeed, today, through the hearing of this matter. Although there had been spasmodic attendances by representatives of the applicant at some of the Court proceedings, there has been a complete absence of any following of any orders made by the Court in so far as those orders relate to a formal statement of evidence, or submissions as to compensation that should be payable by the mining lease applicant.
I also accept the evidence of Mr Spencer in particular, that he has been unable to get the mining lease applicant to speak in any meaningful way with respect to the actual quantum of compensation that should be paid in this matter.
In my view, the application for the mining lease has hung over heads of the property owners in this matter for an intolerable period of time. Under the MRA, the only power I have is to make an award of compensation in this matter. Once that award of compensation is made, it is then a matter for the Minister to take a recommendation to the Governor in Council that the mining lease either be accepted, rejected or referred back to the Land Court.
In my view, this is a matter where the Minister should give some consideration to the genuineness of the applicant in wishing to progress mining operations on the subject land, and may indeed be a matter where it would be appropriate for the Minister to reject the application.
I also note material provided on file in Exhibit 1, being the evidence provided by Mr Spencer, regarding the existence within the mining lease area of a substance known as mordenite. I note an email from Peter Flood, Dean of the University of New England and geologist for Zeolite Australia, contained within Exhibit 1 where Mr Flood expresses the opinion that, "The crystal habit of some of the mordenite in localities like "China Wall" is fibrous". I further note that the fibrous nature of mordenite is potentially very harmful to health, giving asbestos-type possibilities of disease.
I accept the evidence of Mr Spencer that in discussions with the mining lease applicant, the mining lease applicant had agreed to remove the area known as "China Wall" from the mining lease application. Again, nothing has happened in either the Land Court or in the office of the Mining Registrar Emerald to have that occur so the Court has no option but to accept the mining lease as containing China Wall, and to take into account compensation with the potential that an extremely hazardous substance is to be mined in that area.

Compensation – Spencer Land

I now turn to the formal determination of compensation in this matter. I'll deal first with the compensation that should be awarded to Mr and Mrs Spencer. To begin with, I note that in determining compensation in this matter I am not dealing with a small mining lease or a small mining operation. This is nothing like a one to a five-hectare gold, sapphire or opal mining venture undertaken by a small miner. This is a mining lease application with a surface area of 403.3 hectares, and a total area of 414.8 hectares. The significance of this is that the size of the mining lease encompasses some 20 per cent of the Spencers' property. It accordingly has, just in terms of blot on title, a significant impact on the Spencers' property and potentially, if mined to the fullest extent possible, a very large impact on the grazing operations conducted by the Spencers.
The Land Court is in a difficult position in this matter in that the only evidence that has been provided to it is the evidence of the landholders. I have determined to proceed to the decision today in the absence of any evidence from the applicant miner for all the reasons I have indicated and, in particular, because the miners have not only failed to attend Court today for the hearing, they have failed on at least two occasions to abide by direct orders of the Court regarding the filing of their evidence and submissions as to a proper determination of compensation.
This attitude by the miners leaves the Court in no position but to proceed with the determination and to accept the evidence of Mr Spencer and Mrs King. It does not follow, though, that it is appropriate under the MRA, given the previous determinations of compensation by the Court under that Act, to make awards in the full quantum as sought by the landholders.
In my view, Mr Spencer has well made out his argument that the disturbance of the mining lease area at a rate of five hectares disturbance at any one time and a significant mining operation moving from site to site in any one year, could lead to a disturbance of, say, 20 hectares. Of course, 20 hectares disturbance in a year also fits with a position of having the total area of the mining lease mined over a 20 year period, so it is consistent with the size of the mining lease sought by the applicant.
I am prepared to allow the Spencers the loss of grazing on the area of 20 hectares per year for the life of the lease, based on an agistment rate of $5 per beast, based on a stocking rate of one beast per four hectares. This works out to a loss over 52 weeks for 20 years of $26,000.
Mr Spencer has also sought an amount for diminution in value, which he calculates at $400,000. This is based on a sale of a neighbouring property from which he has arrived at a dollar amount of $936 a hectare, which he considers appropriate to also apply to his property. In the absence of any evidence to the contrary, I am prepared to accept that the value of Mr Spencer's property is $936 a hectare.
The difficulty that I have in determining diminution is that, given the nature of the application and the nature of the statements made by the miner at directions hearings conducted by the Court, it would appear highly unlikely that the miner will either, in the short or long term, ever proceed to a substantial mining operation on this area of land. However, in determining compensation, in the absence of any formal evidence from the miner, I have no option but to assume that the mining operations will be to the total extent possible.
Balancing the various rights in this matter and noting that there has been a lengthy period of uncertainty hanging over heads of the landholders while the mining lease application has remained in existence, I have determined that the appropriate way of dealing with this matter is as follows: I note that the mining lease application area relates to 20 per cent diminution of the property as a whole. This must, of course, have a significant impact on the grazing operations on the property should the disturbance ever reach the point where it was for the entire mining lease area that was being disturbed and that amount of land being, in effect, locked out.
Taking into account issues of doubling up, but noting the extreme nature of the diminution in value that is possible in this matter, I have decided to calculate diminution of 20 per cent of a value of the property as a whole for the amount of 403 hectares, (rounded to the size of the mining lease, the two figures happen to correspond in this matter, or near enough to), that the amount of $936 a hectare, which equates to $377,208 discounted by 50 per cent to take into account issues of doubling up with respect to activities on the mining land as already covered by compensation for agistment rates, the discounted amount accordingly is $188,604.
Due to my doubts regarding the mining activities proposed by the miners in this matter, I have determined that such amount shall be payable by the miners to the landholder, Mr and Mrs Spencer, five years after the granting of the mining lease application. Taking into account interest at the rate of 5.5 per cent per annum, to convert the amount of $188,604 to 2015 dollars, interest amounts to $57,893.88, making a total sum of $246,497.88 by way of diminution payable by the miner to the landholder five years after the grant of the mining lease application.
In deferring the payment of this amount for a period of five years, I have done so taking into account the specific provisions of the MRA and, in particular, section 283B of the MRA. That provision of the MRA allows for the matter to either be renegotiated or brought back to the Land Court if there is a material change in circumstances for the mining lease. Accordingly, should the mining lease operation conducted by the miner in this matter not be for the full area of the mining lease application and not to the total extent of diminution, a total extent of 403 hectares, as provided for in this award, then the miner will have a period of five years in which to either amend his mining program and the size and area of his mining lease application, or alternatively, if the mining lease is of the full area and full mining operations are undertaken, then the total amount of $246,497.88, as determined, will be payable.

The Spencers have also sought the amount of $3,000, by way of lost time in dealing with this matter up until now. There is always some difficulty, since the handing down by the Queensland Court of Appeal of a decision in Sullivan v Oil Company of Australia (No 2)[3] relating to the award of these form of costs as a head of compensation.
[3] Sullivan v Oil Company of Australia (No. 2) [2004] 2QdR 105
In the circumstances of this matter, and given the nature of the claim made by Mr Spencer, I do not think it appropriate to include the claim for $3,000 as a cost arising pursuant to section 281 of the MRA, but I am satisfied that the Spencers have been put to a large amount of cost and delay in the attending at mediation which did not proceed, other attendances in this matter, and at the hearing today, and taking into account all these circumstances of the matter I have determined to fix an award of costs payable by the miner to Mr and Mrs Spencer for these proceedings in the amount of $1,500.
In accordance with the provisions of the MRA, it is also necessary for me to determine an additional amount that should be made payable to the landholders pursuant to section 281(4). This amount is traditionally an amount in the sum of 10 per cent, although in special circumstances in some matters that amount can indeed be a greater amount.
In the circumstances of this case, I have not made a specific allowance in the figures mentioned for the hazardous nature of the operations that are likely to occur under this mining lease application, and, in particular, the dangers associated with mordenite. Given the compulsory nature of the action in having a mining lease placed over their property and given the nature of the mining operations to be conducted and the failure of the mining lease applicant to provide any evidence to this Court to counter any of the evidence given as to the dangers inherently associated with this mining lease proposal, I consider it appropriate in all of the circumstances to award an amount of 20 per cent by way of additional compensation. This amount will be applied to the sum of $26,000 and to the sum of $246,497.88 but not to the payment of costs.
Accordingly, with respect to Mr and Mrs Spencer, I make the following determination:
(1) I order the applicant to pay to Mr and Mrs Spencer the amount of $26,000 compensation within 28 days of the grant of the mining lease, together with an additional amount of 20 per cent, which equals $5,200, making a total sum payable by the applicant to the landholder within 28 days of grant of $31,200;
(2) I order the mining lease applicant to pay to the landholders Mr and Mrs Spencer the sum of $246,497.88 for diminution in value for the property by way of compensation within five years of the grant of the mining lease application, plus an additional amount of 20 per cent, which equals $49,299.58, which equals the total amount of $295,797.46;
(3) I order the mining lease applicant to pay the costs of Mr and Mrs Spencer fixed in the sum of $1,500 within 28 days of the date of this decision.

Compensation – King Land

I now turn to the compensation payable to Mr and Mrs King. The King’s have sought compensation in the amount of $500 per year for access to their property. I note that the length of access is short, being only some 700 metres, and that an award of that nature would be completely out of line with all previous decisions made by the Land Court relating to compensation for access.
What I am prepared to award Mr and Mrs King by way of compensation is an amount worked out on a loss of the area of the access based on agistment rates using the same form of calculation and dollars as applied to Mr and Mrs Spencer. With respect to that amount, I consider that as the cattle will still be able to graze across the area of the track during times when vehicles are present, that that amount should be discounted by a further amount of 25 per cent. The calculation I have is as follows: approximately half a beast lost by the access, which amounts to $2.50 for agistment costs for 52 weeks per year, which is the sum of $130 per year, discounted by 25 per cent, equals $97.50 for 20 years, making a total of $1,950.
I consider that that amount ($1,950) plus the additional amount of 20 per cent applied for the same reasons as adopted for the Spencer land above, which equals $390, making a total of $2,340, should be paid by the mining lease applicant to Mr and Mrs King within 28 days of the grant of the mining lease.
Mrs King also gave significant evidence regarding the need to establish a grid and gate on the property. In my view, if the mining operations are in the nature of extremely small scale as may be possible, it would not be necessary for a grid and gate to be incorporated. However, if the mining operations are to the full extent to which they could be, then such a grid and gate would be necessary.
For like reasons to that as I applied relating to the Spencers' compensation, in my view it is appropriate to allow a sum of $5,000 costs of installing a grid and gate, payable five years after the grant of the mining lease application. Again allowing interest at the rate of 5.5 per cent, that leads to a total interest payment of $1,534.80 for a total amount of $6,534.80, plus the rate of 20 per cent which amounts to $1,306.96 for a total of $7,841.76.
I note the Kings’ concerns in this matter regarding the issue of dust. I consider that the allowance for dust, et cetera, is properly accounted for in the amount that I have already determined for compensation for access in this matter.
Mr and Mrs King seek an award of costs in this matter. As I've indicated, their involvement is significantly less than Mr and Mrs Spencer as their issue relates to access only and not the actual mining operations. I do note, however, that they have been required to be out of pocket because of the hearing of this matter and the lengthy time that this application has been in existence.
Taking all factors into account I have determined to award costs to Mr and Mrs King in the sum of $500 payable within 28 days of the date of this decision.

ORDERS

The applicant pay part compensation to Gregory and Sonya Spencer in the amount of Twenty-six Thousand Dollars ($26,000) together with the additional amount of 20% which equals Five Thousand Two Hundred Dollars ($5,200), making the sum payable of Thirty One Thousand Two Hundred Dollars ($31,200) within 28 days of the grant of the mining lease.

The applicant pay to Gregory and Sonya Spencer the additional sum of Two Hundred and Forty Six Thousand Four Hundred and Ninety Seven Dollars and Eighty-Eight Cents ($246,497.88) including interest by way of further compensation, together with an additional amount of 20% which equals Forty Nine Thousand Two Hundred and Ninety-Nine Dollars and Fifty-Eight Cents ($49,299.58) making the sum payable of Two Hundred and Ninety Five Thousand Seven Hundred and Ninety-Seven Dollars and Forty-Six Cents ($295,797.46) within 5 years of the grant of the mining lease.

The applicant pay the costs of Gregory and Sonya Spencer fixed in the sum of One Thousand Five Hundred Dollars ($1,500) within 28 days of the date of this decision.

The applicant pay part compensation to Neil and Sharon King in the amount of One Thousand Nine Hundred and Fifty Dollars ($1,950) compensation, together with the additional amount of 20% which equals Three Hundred and Ninety Dollars ($390), making the sum payable of Two Thousand Three Hundred and Forty Dollars ($2,340) within 28 days of the grant of the mining lease.

The applicant pay to Neil and Sharon King the further amount of Seven Thousand Eight Hundred and Forty One Dollars and Seventy-Six Cents ($7,841.76) including interest for additional compensation 5 years after the grant of the mining lease.

The applicant pay the costs of Neil and Sharon King fixed in the sum of Five Hundred Dollars ($500) within 28 days of the date of this decision.

The Court further directed that a copy of the reasons for judgment and Order be provided to The Honourable The Minister for Mines and Energy and Minister for Trade.

PA SMITH
MEMBER OF THE LAND COURT