Wood v Everingham

[2007] QLC 126

LAND COURT OF QUEENSLAND

CITATION:  Wood v Everingham & Anor [2007] QLC 0126

PARTIES:Joseph Herbert Wood

(applicant)

v.

Lorraine Edith Everingham and William Winston Everingham
(respondents)

FILE NO:MLC00131/2007

PROCEEDING:  Application to determine compensation

DELIVERED ON:                  7 December 2007

DELIVERED AT:                   Brisbane

MEMBER:Mr FW Windridge, Judicial Registrar

ORDERS:1.  Compensation determined at $600 per year for a period of 10 years.

2.  The first payment of $600 compensation to be paid by the miner to the landowner within 60 days of notification of the renewal of the mining lease, and thereafter on or before 1 June each year for a period of 9 years unless the lease is sooner cancelled, partially abandoned or fully  abandoned.  

CATCHWORDS:                  Compensation – mining lease – grazing property

Mineral Resources Act 1989, s 281

Smith v Cameron [1986-1987] 11 QLCR 64

Shaw v Heritage Holdings Pty Ltd (1992-93) 14 QLCR 139

Mitchell v Oakhill and Mitchell (10 March 1998) unreported

APPEARANCES:                  Not applicable - Heard on the Papers

1. This is an application under section 281 of the Mineral Resources Act 1989 (MRA) for the determination of compensation for the effect upon the respondent landowners (LE Everingham and WW Everingham) of the proposed renewal of the applicant’s mining lease number 5194 (Mareeba District) which was due to expire on 31 May 2007.  The renewal application was lodged on 20 November 2006, such renewal if granted to be effective from 1 June 2007.  The lease is located on Lot 4 on BW802411, being part of Blackdown Pastoral Holding.  The actual area of the lease is 43.52 hectares.  For convenience and ease of calculation, I round off the area to 43.50 hectares.

1. I note that a certain party (Queensland Minerals Australia Pty Ltd) has an option over the lease, and this party has been negotiating with the landowners. Ultimately, the agreement or determination binds the applicant miner and the landowners, not the option holder. However, I accept that the option holders have such an interest as to warrant their active participation in the negotiations/agreement as it is assumed they ultimately will be liable for the payment of compensation as part of the option or change of ownership if it occurs. The parties ( the miner, represented by the option holders, and the landowners) have been unable to resolve the issue of compensation, and the matter has been referred to the Tribunal (as it then was) for determination. Whilst it is within the power of the parties to come to agreement on any issues, the power of the Court (as it now is), is limited to section 281 of the MRA. While off-sets can be made for improvements left for the landowner, these must be demonstrated or already in existence. That is not the case here, as I understand the situation. The landowner seeks (or has sought) that the term of the renewal be limited to five years. A limited term of renewal is possible by agreement between the parties, but in a determination by the Court, only a monetary award can be made. The landowner has no right of veto over any term of renewal unless ratified by way of agreement between the parties, with the application ( for renewal) being amended accordingly.

1. The Land and Resources Tribunal has given directions in relation to submissions, and this matter has been dealt with on the papers.  The landowner has lodged a submission through their legal advisors.  The applicant miner has lodged a brief written submission through the option holders.  I have referred to that material in making this determination.  I have also referred to some documents supplied by the Registrar namely a copy of the application for renewal of the mining lease and the mining lease Public Report for the purpose of accuracy where necessary.  No site visit has been conducted for this determination although a general tour of inspection is scheduled for next year when climatic and road conditions are favourable.  The miner seeks a renewed term of 21 years.  Given the area involved, the minerals sought and the usual industry method of operations, this appears to be an appropriate term, although the miner has the option of surrender if the area is mined and rehabilitated before expiry of the term.   

Compensation

1. Relevantly, section 281(3)(a) requires the Tribunal to settle the amount of compensation an owner of land is entitled to as compensation for:

“(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”.

1. Section 281(4) enables various additional factors to be included in the compensation determination. In the present case, only paragraph (e) is relevant. It provides as follows:

   “(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 … shall be not less than 10% of the aggregate amount determined under subsection (3).”

2. The matters which must be considered by the Court are set forth in section 281(3) of the Act. Although section 281 sets out the matters to be considered, it does not define any method of assessment. Whilst the Court is only bound by the relevant legislation (i.e. section 281), the following past appeal cases offer some guidance as to methodology to be used in arriving at a determination. In Smith v Cameron [1986-1987] 11 QLCR 64, the Land Court held at p. 74…

   “The section in my option 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.”

1. In Shaw v Heritage Holdings Pty Ltd (1992-93) 14 QLCR 139, the Court at p. 146 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.”

2. In considering Mitchell v Oakhill and Mitchell (10 March 1998) unreported, The President of the Land Court, referring to section 281(3) of the Mineral Resources Act, 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.”

1. In this instance, I have no evidence of value or if any of the lease area is within the banks of any stream.  The geology report seems to indicate that alluvial material exists on the lease area. It is the responsibility of the miner to submit such information for consideration.  On my understanding of material supplied in support of the renewal application, it appears that both alluvial deposits and hard rock deposits may exist over the area of the lease, and therefore hard rock mining and alluvial mining may occur.  Some of the mining may only be an alluvial operation in the bed of creeks or gullies if that is where the target minerals are located.  Normally the bed of a stream would be valued less than adjoining banks.  In the absence of detailed information on this aspect, I will treat all the surface area as being of equal value for the purpose of this determination, but allow a discounting factor because mining will only disturb a smaller area under the usual environmental conditions attaching to such leases.  

1. There is no evidence of the dimensions of access, or the effect it will have on the operation of the property.

1. Deprivation of possession:  Technically, grant or renewal of a lease does in law deprive the owner of the use of that surface area that is within the lease boundary.  However, I take into account that such leases are normally never fenced off and the surface area not under active mining is usually available for grazing stock. Therefore a further discounting factor on the overall award comes into play.

1. Diminution of value:  There is no valuation evidence to consider and no basis on which to assess diminution of value.  

1. Diminution of use:  There is no evidence of diminution of use of the property or the lease area although it is obvious the area under an actual mining operation is not available.   The compensation determination allows for this diminution of use.

1. Severance:  There is no evidence that the grant of this lease will cause severance of one part of the property from any other part of the property.  I make the assumption that the plan of operations restricts the mining operation to a percentage of surface area only.  There is no evidence that one part of the property is divided from any other part of the property to the extent that any division causes operational problems for the landowner.  

1. Surface rights of access:  There is no evidence of any loss of land in the surface right of way.  I assess loss of access to be of nominal effect, and award the sum of $100 under this head of claim, based on the fact that the renewal is for a period of 21 years.  

1. Loss or expense:  There is no evidence of any other loss or expense that will occur because of the grant of the lease.

1. Additional 10%:  In respect of s. 238(4) (e), no submissions were made.  There does not appear to be any reason or special circumstance why the premium should be increased, and therefore no more than the statutory 10% should be added to the general award.

Determination

1. The submission of the landowners (through their legal representative) is to the effect that the loss of land in the mining lease area equates to the loss of a beast area of 7.25 beasts.  The landowner calculates that the loss equates to 7 weaners per year, culminating is a total loss of about $3500 per year.  I am not convinced that that such a loss can be quantified in the manner as calculated by the landowner except on a very broad overview, not taking into account various factors in their favour i.e. access to most of the surface area of the lease not under any mining program, or that a beast area basis is necessarily the best methodology for assessment.  The applicant miner (through the party that holds the option over the lease) offers the sum of $500 per annum.  This appears to be an “off the cuff” offer not based on any formal or informal assessment on their part.  A QVAS (Property Details Report) is included in the documents supplied by the Registrar, as is current practice. This document indicates (apart from other factual matters) that as of an effective date namely 30 June 2006, the unimproved valuation of the property is assessed at $1,700,000 the last recorded (improved) sale being for the sum of $3,900,000 on 23 May 2003.  Taking the unimproved value as disclosed on the QVAS Report, the property has a value of $15.88 per hectare.  I take into account this valuation is about 13 months prior to the stated date of renewal, and I also take into account that the value of properties of this nature on the open market has, in all probability, increased and for some inexplicable reason continues to increase.  I am prepared to accept that currently and during the anticipated first half of the renewed term, at least, the value could rise to the vicinity of $20 per hectare unimproved, if it has not done so already.  I therefore determine compensation as follows, allowing a discounting factor of 50% (under items 9 & 11):

   (a)   Deprivation of possession (s. 281(3)(a)(i))
         43.50 ha @ $20.00 per ha
         discounted by 50%   $435.00
   (b)   Access (s.281(3)(a)(v)   $100.00
     Sub-total     $535.00

   c)    Additional 10% (s.281(4)(e))   $ 53.50

   Total     $588.50

2. I round off this determination to the sum of $600 per annum. This determination effectively means that the applicant miner is paying 50% of the unimproved value of the property ( per hectare, based on the latest information available in the QVAS Report), for the total lease area. This fact, in my opinion, adequately compensates for other issues that may exist but were not raised under section 281 of the Act ( see Mitchell v Oakhill & Mitchell supra).  I therefore limit the payments as follows, taking into account that mining may or may not proceed after the investigative drilling and sampling is completed by the option holders (as appears to be indicated by them in documents lodged with the Registrar in support of the application for renewal).  The applicant miner is ordered to pay the sum of $600 to the respondent landowners in respect of the renewed term commencing on 01.06.2007 within 60 days of notification of the grant of the renewal by the Registrar, and thereafter the sum of $600 on or before 1 June each consecutive year after 01.06.2007 for the following nine (9) years unless the lease is cancelled or surrendered or partially abandoned.  

1. Should the applicant miner surrender or abandon part of the surface area, the sum of compensation due and payable each year shall be reduced accordingly in proportion to the percentage of the lease that is surrendered or abandoned, and in the event of any dispute as to the quantum of reduced compensation, each party is given leave to apply to the Court for a resolution of the issue on the giving of 21 days notice to the other party, or apply for a review at any time under the material change provisions (s.283B(2)) of the Act.  

JUDICIAL REGISTRAR