Sloan & Anor v Weir & Gregcarbil Pty Ltd
[2009] QLC 183
•24 December 2009
LAND COURT OF QUEENSLAND
CITATION: Sloan & Anor v Weir & Gregcarbil Pty Ltd [2009] QLC 0183 PARTIES: Barry W and Emma L Sloan
(applicants)v. Kelven John Weir and Gregcarbil Pty Ltd
(respondents)FILE NO: MRA1320-08 (formerly MLC0113-08) DIVISION: General Division PROCEEDING: Application for compensation for renewal of mining lease DELIVERED ON: 24 December 2009 DELIVERED AT: Brisbane HEARD AT: Written submissions PRESIDENT: Mrs CAC MacDonald ORDERS: 1. Compensation is determined in the sum of Five Thousand , Five Hundred Dollars ($5,500).
2. The respondents are ordered to pay Two Thousand, Two Hundred Dollars ($2,200) to the applicant within one month of the date of this decision.
3. The respondents are ordered to pay the balance compensation of Three Thousand, Three Hundred Dollars ($3,300) to the applicants by three instalments of One Thousand, One Hundred Dollars ($1,100) each, on or before 1 July 2010, 1 July 2011 and 1 July 2012.
CATCHWORDS: Mining lease renewal – compensation – claim for loss of value of land by landowners – claim allowed in part – effect of surrender of lease.
This is an application by Barry William and Emma Louise Sloan for a determination of compensation under the provisions of the Mineral Resources Act 1989 (the Act) in respect of the renewal of Mining Lease 70211. The respondents to this application are Kelven John Weir and Gregcarbil Pty Ltd who are the holders of Mining Lease 70211. The mining lease was previously held by Mr Weir and Mr MW Bayly. Mr Bayly's share in the lease was transferred to Gregcarbil Pty Ltd on 8 August 2008 and, consequently, the claim for compensation has proceeded against Gregcarbil in lieu of Mr Bayly.
With the consent of the parties, this matter has been dealt with on the papers.
Mining Lease 70211 expired on 30 June 2008. The respondents have applied for a renewal of that lease for a period of five years. The lease partially covers Lot 63 on PT 358 in the County of Plantagenet, Parish of Anakie, which is owned by the applicants. Part of Lot 63 is also subject to access to the lease. The balance of Mining Lease 70211 partially covers Lot 5 on CLM 597 GHPL 37/3210A County of Clermont, Parish of Keilambete and is the subject of a separate application for compensation by the owner of that property, Rodney Keith Barrett. The Court's determination of the compensation payable to Mr Barrett is dealt with in a separate decision.
The lease has an area of 71.2743 ha and was granted for the purpose of mining silver ore, gold, diamond, lead ore, sapphire and zircon and to establish a tailings/settling dam and treatment plant/mill site. The applicants' land is used for the purpose of grazing.
Section 279(1)(a) of the Act provides that a mining lease shall not be renewed unless compensation has been determined (whether by agreement or determination of the Land Court). As the parties have not reached agreement as to the amount of compensation payable in respect of the renewal of this lease, the question of compensation has been referred to the Land Court for determination pursuant to s.279(5) of the Act.
Section 281 of the Act provides -
"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
…
(4) In assessing the amount of compensation payable under subsection (3) -
…
(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 no less than 10% of the aggregate amount determined under subsection (3).
(5)In any case the Land Court may determine the amounts and the terms, conditions and times when payments aggregating the total compensation payable shall be payable."
In assessing compensation under s.281, regard must be had primarily to the words of the section.[1] 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).[2] The assessment of compensation may be made by the before and after method or the summation or piecemeal approach.[3]
[1] Wills v Minerva Coal Pty Ltd [2] (1998) 19 QLCR 297 at 313.
[2] Wills v Minerva Coal Pty Ltd [2] (1998) 19 QLCR 297 at 313.
[3] Smith v Cameron (1986) 11 QLCR 64 at 74.
In this matter the only evidence led by the parties adopts the piecemeal approach. In the absence of any other evidence, I consider it to be an appropriate method of valuation in the circumstances and, accordingly, that methodology will be adopted.
The applicants have claimed compensation as follows -
Impact of mining lease on the land pursuant to s.281(3)(a)(ii)
Land value: 35 ha at $570/ha $19,950
QVASNRW (sales data)
Depreciation of 33.3% $6,650 per year
Pasture reestablishment two years after rehabilitated (Richardson v Barrett 2001 QLRT 89).
Year 1 50% carrying capacity 35/ha is 7 head = 7 x $4 x 52 weeks $1,456
Year 2 75% carrying capacity 35/ha us 4 head = 4 x $4 x52 weeks $832
$2,288As per section 281(4) 10% to reflect the compulsory
nature of the action $500 per yearTotal compensation market value – total 35 ha lease 5 year lease $38,038 + GST for the 5 years to be paid in total up front.
The respondents have assessed compensation as follows:
Temporary loss of grazing for 1 beast at $280 per annum for
5 years at $208 x 5 $1,050
(rounded up)10% solatium – s.281(4)(e) $105
Total $1,155The history of the compensation payable in respect of the original mining lease and the first renewal over the applicants' property is relevant. As explained above, Mining Lease 70211 straddles two properties, that owned by the applicants and the property adjoining owned by Rodney Keith Barrett. There was no direct evidence before me as to the precise area of the lease on each of these properties. I have, therefore, accepted the area of the lease affecting the Sloans' land as calculated in the previous determination of compensation namely 35 hectares.[4] It appears that the lessees have, on two separate occasions, lodged surrenders of two different areas of the lease. The effect of these proposed surrenders is considered later in this decision.
[4] Sloan v Weir [2006] QLRT 50 at [3].
Mining Lease 70211 was originally granted on 1 July 2002 for a period of 3 years expiring on 30 June 2005. The compensation payable in respect of the original grant of the lease by the then owners of the lease to the applicants was agreed at $7,880.40. It appears that that agreement was reached following the determination of the Land and Resources Tribunal (Smith DP) of the compensation payable in respect of the grant of the portion of mining lease 70211 over Mr Barrett's land at $10,890.00.[5]
[5] Weir v Barrett [2001] QLRT 95.
Mining Lease 70211 was renewed on 1 July 2005 for a further period of 3 years expiring on 30 June 2008. The compensation payable in respect of the renewal over the Sloans' land was determined by the Land and Resources Tribunal (Windridge MR) on 2 June 2006 at a total of $697.40.[6] An appeal from the decision was disallowed by decision dated 7 September 2006 and the determination was confirmed.[7]
[6] Sloan v Weir [2006] QLRT 50.
[7] Sloan v Weir [2006] QLRT 100.
The Land and Resources Tribunal also determined that the compensation payable to RK Barrett in respect of the renewal of Mining Lease 70211 over Mr Barrett's land was $686.40.[8] An appeal against that decision was dismissed.[9]
[8] Re Barrett v Weir [2006] QLRT 51.
[9] Barrett v Weir [2006] QLRT 96.
Leaving aside for the moment the difference between the impact of the mining lease on Mr Barrett's land as compared with the applicants' land, the applicants in this matter have drawn attention to the discrepancy between the two determinations made in respect of the Barrett land and, consequently, the difference between the agreed determination payable in respect of the original grant of the lease over the applicants' land as compared with the determination made in 2006 in respect of the renewal.
Perusal of the decisions of the Land and Resources Tribunal referred to above indicates that the differing amounts of compensation determined in respect of the Barrett lease are attributable primarily to the different evidence before and methodology adopted by Smith DP, the decision-maker in 2001 as compared with the decision made in 2006 by Windridge MR.
In 2001, compensation was determined on an all up basis at $9,900 to which was added 10% (pursuant to s.281(4)(e) of the Act) making a total award of compensation of $10,890.[10] In coming to that conclusion, Smith DP took into account the following items -
Impact of the mining lease on the land the subject of the mining lease $3,000
Impact on the balance area of the land - $1,750 p/a for 3 years $5,250Severance - $225/pa for 3 years $675[10] [2001] QLRT 95.
In the 2006 decision concerning the applicants' land, compensation was assessed on the basis of stocking rates or agistment rates.[11] Windridge MR noted that this was a brownfield not a greenfield site and that the lessees sought a short term of renewal. He said that the only viable use of the land was low intensity grazing under favourable pasture and weather conditions. He considered that mining operations confined to 4 ha or less would have no measurable effect on the operations conducted on the property [1,450 ha]. Mr Windridge went on to say that it would be inequitable to require the miner to pay the full (or a discounted) freehold value for every renewal of a short term lease and he considered that the only equitable method of assessing compensation was on an agistment basis. Accordingly, it was not necessary to consider the value of the subject land on a comparative sales per hectare basis. Compensation was determined at $624 (one beast at $4 per week for 156 weeks, the term of the lease). The sum of $10 was awarded for access and a further 10%, that is $63.40, was awarded under s.281(4)(e) to reflect the compulsory nature of the renewal of the lease.
[11] Sloan v Weir [2006] QLRT 50.
An appeal against that decision was disallowed.[12] The appeal panel accepted that the value of the land was probably lessened by the existence of the mining lease but said that the question of quantification must take into account the factors which the Mining Referee had identified and considered. The appeal panel noted that the appellant had not submitted any valuation evidence to the Mining Referee and concluded that there had been no error in the approach of the Mining Referee.[13]
[12] Sloan v Weir [2006] QLRT 100.
[13] At [17] and [18].
The applicants have submitted that the compensation in this matter should be determined on the market land value of the total lease not simply in relation to the disturbed land. It was submitted that because there was no legal requirement for the miners to confine their disturbance to one section of the lease at a time, they could disturb portions here and there and thus affect the total area of the lease. Determining compensation for the mining lease only was short-sighted because it did not reflect losses that might be incurred by the landowner as a result of the existence of mining on that lease.
The applicants submitted that pursuant to s.281(3)(a)(ii) the impact of the mining lease on the land subject to mining within ML 70211 should be assessed at $6,650 per annum that is, $19,950 for three years.[14] This figure was calculated by multiplying the area affected by the lease (35 ha) by $570 per ha. That amount was then depreciated by 33.3% to reach a figure of $6,650 per annum.
[14]Although the application for renewal was for five years, the applicants did not change their calculations when they became aware that the renewal period sought was five years, not three years.
The applicants relied on QVAS NRW sales data to support that valuation. The applicants said they had not engaged a land valuer due to the high cost but had benefited from the knowledge of the valuer's report filed by both the Grahams and the Barretts.
The QVAS NRW sales data referred to by the applicants provides details of the sale of a property on 1 December 2004 from GJ Hoare and RE Richardson to BW and EL Sloan (the applicants it seems). The sale property has an area of 1,911.431 ha and sold for $1,090,000 or $570/ha. No details of the sale property were available other than the property is used for cattle grazing and breeding and is situated at Withersfield Road Western (R) Queensland. There are no details as to any improvements on the property nor as to whether the sale included any stock etc. Most particularly, there is no information to enable me to draw a comparison between the sale property and the subject property. This sale does not of itself establish the value of the subject land.
The other valuation information referred to by the applicants was contained in the valuers' reports concerning Mr Barrett's adjoining land. Mr Barrett's valuer's report was filed in connection with his compensation application in respect of his property. That information is not part of the evidence in this case and I have not taken it into account in my assessment.
However, the report of the respondents' valuer, Mr PJ Lyons, a registered valuer of Taylor Byrne, was annexed to an affidavit of Miss CG Graham filed in this matter on 5 January 2009. That report also concerns Mr Barrett's property which Mr Lyons valued at $1,000/ha. Mr Lyons' valuation of Mr Barrett's land at $1,000/ha is supported by sales evidence and I have accepted it as an accurate assessment of the value of that land.
The only evidence as to a comparison between Mr Barrett's land and the applicants' land was that of Ms Graham who said in her affidavit that Mr Barrett's land was vastly superior to the state of the land on the Sloan section. On that basis I am prepared to accept the applicants' estimate of the value of their land at $570/ha although I consider their sales evidence to be inconclusive.
The area of the mining lease is 35ha. Although only a small portion (.60575 ha) of the mining lease will be disturbed from time to time by the mining operations, I have accepted that the loss of value of the land is greater than is reflected by the loss of grazing capacity of that small area. 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 move from time to time to various parts of the leased area without the consent of the landowner. The applicants sought to quantify this loss by a depreciation of 33.3% applied per annum.
There was no evidence given by the applicants to support a depreciation of 33.3% and on the face of it I consider that rate to be excessive given that the term of the renewal is for a comparatively short period of five years. Doing the best I can, I consider that a rate of 25% more accurately reflects the applicants' loss.[15] Moreover, I consider that an allowance of 25% is sufficient to allow for the total impact of the five year term and that it would not be appropriate to allow 25% per annum for the term of the lease. Compensation under this head is assessed as follows -
35ha at $570/ha = $19,950
Loss of value 25% = $4,987.50Rounded to $5,000[15] See Zimmerebner v Hawkins (1999) 20 QLCR 71 at 89.
The applicants adopted an alternative method of assessment in their initial submissions filed on 11 December 2008. This methodology relied on an agreement made in a matter of Richardson v Salmon in 2008 where compensation was agreed at $2,000 per year for 2.5 ha of disturbed land. On the basis that there would be 2 ha of disturbed land on their property pursuant to ML 70211, the applicants assessed the compensation as follows:
$1,600 for 2 ha per year $4,800.
Again, there is no relevant evidence which supports this valuation of $1,600 for 2 ha per year. I therefore have not accepted that the assessment of loss using this methodology has been proved.The applicants also sought, in their submissions of 11 December 2008, a sum of $1,500 for the impact of the existence of the lease on the balance of the land pursuant to s.281(3). This head of claim appears to be based on the decision of Smith DP in Weir v Barrett[16] where a sum of $1,750 per year was allowed for the impact of the mining lease on the balance area of land. The evidence given by the applicants in respect of this head of claim was that the respondents were to mine on the applicants' land and then haul the materials to Mr Barrett's land for processing. This meant, said the applicants, that a permanent haul road would be established across their land. Grazing would be adversely impacted by the haul road, dust and noise, not only on the road itself, but also in a zone surrounding the road.
[16] [2001] QLRT 95.
The respondents' response to this aspect of the claim was that the area where the mining lease was situated had been mined previously and was left "in the mess it is in today". The respondents said that this damage was done many years before the Sloans purchased their property and that it was known that the property had been mined and that the area was inside the Miner's Common. The respondents' opinion was that the plan of operations would not impact on the lease area to any greater extent than the previous operations. In further submissions filed on the 28 April 2009, the respondents said that the haul road referred to by the applicants is a 300 metre haul road which is factored into the plan of operations area to be disturbed.
The evidence as to the precise location of the haul road is sparse. It appears that the road is on the mining lease area. That being the case, I consider that my determination of $5,000 compensation for the diminution in value of the land is sufficient to cover any loss incurred as a result of the use of the road.
The applicants also claimed the sum of $2,288 as compensation for pasture reestablishment for two years after rehabilitation, relying on the authority of Richardson v Barrett[17]. The amount of $2,288 is calculated as follows –
Year 1: 50% carrying capacity 35 ha is 7 head = 7 x $4 x 52 weeks = $1,456
Year 2: 75% carrying capacity 35 ha is 4 head = 4 x $4 x 52 weeks = $832[17] [2001] QLRT 89.
This claim appears to be based on a misunderstanding of the decision in Richardson v Barrett. In that case it was found that there would be a reduction in carrying capacity of the area of the mining lease outside the disturbance area of approximately 50% throughout the 5 year term of the lease. In addition, it was found that there would be an impact on the land surrounding the mining lease during the term of the lease such as to reduce the carrying capacity of that land by approximately one third for the term of the lease. There was no allowance in Richardson v Barrett for pasture reestablishment for 2 years after rehabilitation. As there was no evidence in this case establishing the need for pasture reestablishment, nor any evidence to support the calculations represented under this head of claim, I am not prepared to allow this part of the claim.
The applicants also sought an additional amount of 10% to be added to the award of compensation to reflect the compulsory nature of the grant of the lease over their land pursuant to s.281(4)(e) of the Act. The applicants quantified this amount at $500 per annum for each year of the lease. While it is accepted that the applicants are entitled to an award of an additional 10% under s.281(4)(e), that amount is not to be awarded per annum but on the total amount of the compensation otherwise awarded.
For the reasons set out above, I consider that compensation for the renewal of the lease for 5 years should be determined in the sum of $5,000. In addition, the applicants are entitled to 10% additional compensation to reflect the compulsory nature of the action, under s.281(4)(e) which amounts to $500. I therefore assess the total compensation payable for the five year term at $5,500.
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.
As indicated above, copies of two surrender documents relating to this lease have been forwarded to the Court by Ms Graham on behalf of the respondents. It appears that a partial surrender of Mining Lease 70211 was lodged in the office of the mining registrar at Emerald on 8 May 2009. Although a detailed plan showing the partial surrender was included in the documents sent to the Court, the Court has no information as to the size of the area to be surrendered nor the date of effect of the surrender. It appears that the second surrender document was lodged in the office of the mining registrar at Emerald on 5 November 2009 and that, when that document comes into effect, the balance of the lease will be surrendered.
The Court has received no advice from the mining registrar that either of these surrenders has been registered and therefore, the surrenders have not been taken into account in this determination.
The compensation is to be paid on an annual basis by instalments of $1,100. As the date for renewal of the lease was 1 July 2008, the first two instalments ($2,200) are to be paid within one month of the date of this decision. The remaining compensation is to be paid by annual instalments of $1,100 each on or before 1 July 2010, 1 July 2011 and 1 July 2012.
ORDERS
1.Compensation is determined in the sum of Five Thousand, Five Hundred Dollars ($5,500).
2.The respondents are ordered to pay Two Thousand, Two Hundred Dollars ($2,200) to the applicant within one month of the date of this decision.
3.The respondents are ordered to pay the balance compensation of Three Thousand, Three Hundred Dollars ($3,300) to the applicants by three instalments of One Thousand, One Hundred Dollars ($1,100) each, on or before 1 July 2010, 1 July 2011 and 1 July 2012.
CAC MacDONALD
PRESIDENT OF THE LAND COURT
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