Zimmerebner v Hawkins

[1999] QLC 19

[1999] QLC 19

 

LAND COURT,

BRISBANE

30 March 1999

Re:     Appeal against the determination of the Mining Wardens

Court of compensation payable in terms of section 282 of

the Mineral Resources Act 1989 in respect of Mining Lease

Applications Nos 2051, 2052, 2058, 2059 and 2060 in the

Emerald Mining District.  (A97-76).

Adi George Zimmerebner

(Appellant)

v.

Charles Joseph Hawkins, Jacqueline Hawkins and Gloria Walter

(Respondents)

(Hearing at Emerald)

J U D G M E N T

Introduction:

In November 1991, the appellant (Mr Zimmerebner) was granted five mining leases over land owned by the then owners, including respondents (Mr and Mrs Hawkins and Mrs Walter).  The leases were granted for periods of five years from 1 November 1991.  On 24 June 1996, the appellant lodged applications for renewal of the five mining leases for a further period of five years from 1 November 1996. 
The applications were considered by the Acting Mining Warden who recommended to the relevant Minister that they approved subject to compensation being settled by the parties or determined by the Wardens Court under section 279 of the Mineral Resources Act 1989 (the MRA). The parties did not agree to the amount of compensation so the matter was referred to the Wardens Court for determination of the amount of compensation and the terms, conditions and times of payment (section 281 of the MRA). Although they are not yet granted, for convenience I will refer to the five applications for renewal as “the subject leases”.
           On 28 October 1997, the Acting Mining Warden determined compensation in the sum of $20,000, with $8,000 to be paid within sixty (60) days of the renewal of the leases, and the balance $12,000 to be paid in annual instalments of $4,000 on the anniversary of the renewal.  The appellant appealed to the Land Court against the determination of the Warden. 
           The application for the determination of compensation by the Mining Warden was in the name of Charles Joseph Hawkins, but the evidence on appeal disclosed that in addition to Mr Hawkins, Mrs Hawkins and Mrs Walter also have interests in that property.  Counsel for the appellant, Mr Philip Morrison QC, pointed out that they should have been made parties to the proceedings to bind them to the result.  In his written submission, counsel for the respondents, Mr Grant Allan, sought leave to add Mrs Hawkins and Mrs Walter as respondents to the appeal.

Nothing seems to turn on the point that Mrs Hawkins and Mrs Walter were not initially included as parties and there have been no such submissions by counsel.  Therefore, I grant leave to add Jacqueline Jeanette Hawkins and Gloria Walter as respondents to the appeal.

Background:
           The respondents’ property is known as “Keilambete” and is situated approximately 70 kms west of Emerald, in the Gemfields area near the townships of Rubyvale and Sapphire.  When the respondents purchased “Keilambete” in 1984, there were no mining leases on the property, but there were many mining tenements and claims, as well as illegal squatters.  In October 1985, the respondents agreed to transfer to the State Government part of “Keilambete”, an area which became known as the Reward Designated Area which the Government required in order to regulate fossicking and hand mining.
           “Keilambete” contains an area of about 20,000 hectares, consisting of a variety of tenures including freehold, GHFL and GHPL, as well as permits to occupy and a special lease over designated mining and forestry areas.  The subject leases are in respect of leasehold land described as Grazing Homestead Perpetual Lease 202173, comprising Lot 23 on CML 655, Parish of Keilambete (southern severance on which the subject leases are situated) with an area of 3,040 hectares, and Lot 7 on CP858528, Parish of Gardner (northern severance) with an area of 5,786 hectares.  The total area of GHPL 202173 is 8,826 hectares.
           The subject leases are situated near the eastern boundary of “Keilambete”, close to the Reward Designated Area, but separated from it by Sheep Station Creek.
           The appellant initially applied for the five leases in either 1986 or 1987.  There followed a protracted period of negotiation with the owners about compensation.  At that time the appellant was seeking the leases for a period of 21 years, but as the respondents were seeking some $220,000 in compensation, he finally settled on a five year period.  For the initial five year period, the appellant and the respondents reached agreement concerning  compensation at $20,000.  The leases were subsequently granted from 1 November 1991.
           However, no mining took place in that five year term.  The appellant explained that  no mining was possible for the whole of the period, because the area was suffering from drought and there was no water available for processing the sapphire-bearing gravel.  However, some 18 test holes were dug, all but two of which were back-filled.  It is the intention of the appellant to work the two unfilled test pits, one of which is more than 10 metres deep.
           Historically and presently, “Keilambete” has been and still is, subject to a great deal of mining for gemstones.  In addition to numerous mining tenements and mining activity being carried on in the 940 hectare Reward Designated Area which has been set aside for hand-mining and over which the respondents have a Permit to Occupy, with the granting of the subject leases “Keilambete” will be subject to 13 mining leases, either granted or pending.  Mr Hawkins explained that apart from the subject leases,  Mozley has two (for renewal), Vella has three, Salmon has one (granted pending determination of compensation), Graham has one and Elliott has one (application).   According to Mr Hawkins, in 1986 there was what he described as “a pegging spree” with 167 applications lodged.  However, he objected to each one and most of the applications were withdrawn.

The Acting Mining Warden’s Determination of Compensation:
           The Acting Mining Warden held a compensation hearing in respect of the subject leases at Emerald on 7 October 1997.  Neither party was legally represented and no valuation evidence was presented.  However, Mr Hawkins, who appeared for the respondents, tendered a copy of a contract of sale of part of “Keilambete”, to neighbouring property owners.  That property, of GHPL tenure, with an area of about 5,867 hectares, sold in 1993 for $485,000, or $82.66 per hectare.  Mr Hawkins contended that because the land comprised in the subject leases is superior to the land that was sold, the 76.2 hectares in the five leases had a value of $98.80 per hectare.  He further contended that the balance of GHPL 202173  would be diminished in value by 2 percent. In his opinion, the remaining area of 8,749.8 hectares would be valued at $86.45 per hectare, or $756,420.21, two percent of which is $15,128.40.  When added to the loss of the area of the mining leases themselves (76.2 ha x $98.80 per ha = $7,928.56), compensation should be $22,656.96.  However, as the previous compensation agreement was for $20,000, Mr Hawkins was prepared to accept a similar amount as compensation for the renewed leases. 
A copy of the compensation agreement for the previous five year term dated 15 July 1991, was tendered. That agreement stated that the parties had agreed to the amount of compensation of $20,000 in respect of the five mining lease applications totalling 76.2 hectares over Lot 23, for a term of five years. Clause 4 stated that compensation included compensation under headings (a) to (g), which were expressed in terms similar to the entitlements to compensation in section 281(3)(a)(i) to (vi) of the MRA. However, the agreement contained no apportionment of the amount to any of those headings. Nor did the agreement contain any reference to compensation extending to any renewal of the five mining leases. There was no reference in the oral evidence before the Acting Warden or in any of the exhibits, to compensation extending beyond the period of five years.
           However, in oral evidence before the Acting Warden, the appellant referred to an alleged verbal variation of the written agreement, whereby he and Mr Hawkins came to a “handshake agreement” that compensation would not be paid until mining commenced.  Mr Hawkins disputed that any such agreement was made.  This matter was pursued in much greater detail on appeal.
           The Acting Warden delivered his determination on 28 October 1997.  In his reasons for the determination he pointed out that while the area of the five mining leases is 75.292 hectares (not 76.2 hectares as recorded in the compensation agreement), 12.562 hectares consisted of road reserves, leaving an area of about 63 hectares.  In the absence of any other evidence or significant challenge from Mr Zimmerebner, the Acting Warden accepted Mr Hawkin’s evidence relating to the value of the land and the diminution in value of the balance of GHPL 202173.  The Acting Warden’s calculations were as follows:
           Total area of leases 63ha x $98.80/ha  =         $    6,224.40

Diminution in value of balance of GHPL 202173,
           8763ha x $86.45/ha  =         $257,561.35 x 2%

=         $  15,151.22

TOTAL COMPENSATION  $  21,375.62

The Acting Warden referred to the fact that Mr Hawkins had sought compensation of $20,000, because the compensation agreement entered into between the parties in 1991 was for five years for a total amount of $20,000 and that Mr Hawkins believed that nothing had changed since the agreement was entered into.  He also mentioned the dispute in relation to the “handshake agreement” regarding payment of compensation at the commencement of mining, without making any specific finding or further comment in that regard.
           The Acting Warden determined compensation at $20,000, ordering an initial payment of $8,000 and the balance $12,000 to be paid in yearly instalments of $4,000 (1 year of the term of the renewed leases having already expired).
           Clearly the Warden accepted that notwithstanding that the leases were to be renewed for a period of only five years, the full value of the land, $98.80 per hectare, should be paid as compensation.  Indeed, that was the only evidence (such as it was) before him and there was little challenge to that reasoning.

The Appeal to the Land Court:
Mr Zimmerebner appealed to the Land Court under the provisions of section 282 of the MRA against the decision of the Acting Mining Warden. His grounds of appeal included:

·    there was no acceptable valuation evidence upon which the compensation figure could be determined;

·    the Acting Mining Warden failed to take into account that since the mining leases had issued, no mining work had taken place;

·    the Acting Mining Warden had given inappropriate weight to the agreement between the parties;

·    the Acting Mining Warden had erred in rejecting the evidence that there had been an agreement between the parties whereby compensation would only be required to be paid at the commencement of mining;

·    the Acting Mining Warden had erred in accepting a figure of 2% diminution of the balance of GHPL 202173.

On appeal, the parties agreed to call fresh evidence under the provisions of section 282(7)(b) of the MRA. They also elected to rely on the evidence and proceedings taken in the Warden’s Court, which had been transmitted to the Land Court under section 282(3) of the MRA. Although the appeal proceeded as a hearing de novo, I agree with Mr Morrison that it could perhaps more accurately be described as a “hybrid”, falling somewhere between a hearing de novo and a re-hearing in the strict sense. This is analogous to the procedure adopted by the Land Appeal Court when it allows the introduction of further evidence. (See the decision in Bignell v. Chief Executive, Department of Lands (1994-95) 15 QLCR 528.)

Before proceeding to the issues of this case, I will briefly discuss the structure of the MRA so far as it concerns the Land Court as the appellate court in compensation matters.

The Statutory Provisions:

Part 7 of the MRA deals with mining leases and sets out the procedure to be followed prior to the granting of a mining lease.  However, a mining lease shall not be granted or renewed unless compensation has been determined by agreement or by the Wardens Court, between the applicant and the owner of the land which is the subject of the application, and the conditions of the agreement or determination have been, or are being, complied with by the applicant (section 279(1)).  An agreement as to compensation is not effective unless it is in writing, signed by the parties and it is filed in the office of the Mining Registrar (section 279(3)) and, if required, stamped (section 279(4)).         

When compensation has not been agreed upon, the matter may be referred to the Wardens Court by the Mining Registrar (279(5)), or by application by one of the parties (section 281). Section 281(3) provides that

“ … a Wardens Court shall settle the amount of compensation an owner of land is   entitled to as compensation for

(a)in a case of compensation referred to in section 279 –

(i)deprivation of possession of the surface of the 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)…

(4)In assessing the amount of compensation payable under sub-section (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
lodgment 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).     

(5)     In any case the Wardens Court may determine the amounts and the terms, conditions, conditions and times when payments aggregating the total compensation payable shall be payable.

(6)     An amount of compensation decided by agreement between the parties, or by the Wardens Court or the Land Court on appeal, is binding on the parties and the parties’ personal representatives, successors and assigns.

(7)     The Wardens Court shall give written notice of its determination to all parties and may make such order as to costs between the parties to the determination as it thinks fit. ”

A party aggrieved by a determination of a Wardens Court may appeal to the Land Court (section 282(1)).  The mining registrar is required to transmit to the Land Court the evidence, notes, reasons and proceedings taken in the Wardens Court (section 282(3)).  In deciding the appeal, the Land Court is required to consider the things relevant to the appeal that the Wardens Court was required to consider when making the decision appealed against (section 282(5)).

Upon hearing the appeal the Land Court may either (a) vary the determination of the Wardens Court in such way as it thinks just; or (b) disallow the appeal; and may make such order as to costs of the appeal as it thinks fit (section 282(6)).

The determination of the Land Court is final and conclusive (section 282(8)).

In Mitchell v. Oakhill (10 March 1988, not reported), this Court considered the question of compensation under the provisions of section 281 of the MRA. There it was pointed out that in an earlier case, Smith v. Cameron (1986) 11 QLCR 64, the Land Court considered provisions similar to those of section 281(3)(a), which were contained in the Mining Act 1968. In that case, the Court had likened the use of land for mining purposes to the compulsory acquisition of land for a limited period and applied the various principles and practices of valuation which were applied in determining compensation for the taking of limited rights over land for public purposes.

In Mitchell the Court concluded that the same reasoning can be applied to section 281(3) of the MRA, but it does not prescribe a method of valuation. As long as the amount of compensation finally determined accounts for each of the entitlements referred to in the sub-section, it is not necessary to quantify an amount in respect of each of the matters.

More recently, in Wills v. Minerva Coal Pty Ltd (27 November 1998, not reported), the Land Court undertook an exhaustive comparison of the provisions of the MRA with those of the Acquisition of Land Act 1967. In addition, the Court considered the concept of “compensation” as it applies to the compulsory acquisition of land. There the Court came to a similar conclusion, that with regard to the provisions of section 281(3)(a)(i) to (v), it is the compensation concepts referred to in those provisions overall that are to be taken into account in determining compensation, not a figure accumulated by amounts arrived at following the separate and discreet treatment of each of them as if they were separate heads of compensation.

The EMOS (Environmental Management Overview Strategy).
           Section 245(1) of the MRA requires that an application for a mining lease must be accompanied by an environmental management overview strategy for protecting the environment and managing environmental impacts on, and in the vicinity of, the land covered by the proposed lease, and for progressive and final rehabilitation of the land.
           Under the provisions of section 276(1) of the MRA, each mining lease shall be subject to a number of conditions including:
“          (b)       a condition that the holder submit a plan of operations that is consistent with the accepted environmental management overview strategy; and

(c)       a condition that the holder conduct mining activities under the mining lease in accordance with the accepted environmental management overview strategy and current plan of operations; …”

Section 291(7) provides that the holder of a mining lease “must perform operations under the lease in accordance with the current plan of operations for the lease”; and under section 291(8), the current plan forms part of the conditions of the lease.  The plan referred to in those sub-sections is the plan of operations which relates to the EMOS.

Furthermore, each lease is subject to a condition that the holder of the lease will comply with the provisions of the Mineral Resources Act (section 276(1)(n)). Under section 318(1), a mining lease holder is obliged to give rehabilitation reports and an audit statement confirming that the EMOS and plan of operations have been met. The Minister can give directions about rehabilitation if he is not satisfied that the EMOS and plan of operations have been met (section 318(2)). Failure to comply with those directions is an offence (section 318(3)).

Mr Allan pointed out that in this case, notwithstanding the provisions of section 246(1)(p) of the Act, which require that an application for the grant of a mining lease shall be accompanied by an EMOS, there is no evidence that there was an EMOS for the first five year period of these leases.  However, it must be assumed that there was one, or s.286(2)(b) would not have been complied with.  Mr Allan also pointed out that the starting date for the EMOS is 4 July 1997 and the expiry date 4 July 2002, while the renewal date for the subject leases is 1 November 1996 and the expiry date 30 October 2001.  However, both valuers have proceeded on the assumption that the EMOS would have applied as at 1 November 1996. 

The relevant commitments of the appellant’s EMOS are as follows:

·    the maximum area of all disturbed land (mining, camp, roads, plant, dams, etc.) will be 3 hectares at any one time;

·    the maximum area of all mining disturbance (pre-clearing, mining area, mining area not yet rehabilitated) will be 2 hectares at any one time;

·    all re-shaped disturbed land will be similar to surrounding undisturbed land;

·    the mining disturbance area will be stripped of topsoil ahead of mining and topsoil will be reused or stored;

·    topsoil will be spread over all disturbed ground as a rooting medium for the revegetation process;

·    all revegetation processes will be maintained until vegetation cover is re-established to a similar extent as in undisturbed land and the area is to be fenced if necessary;

·    disturbed areas are to be revegetated as soon as possible.

Notwithstanding the irregularities regarding the dates of the EMOS, the MRA requires the commitments of the EMOS to be regarded as conditions of the lease.  Therefore, I agree with Mr Morrison that it must be assumed as a matter of law, that the miner will abide by his EMOS commitments.  This is the starting point upon which both valuers proceeded, except that Mr Compton raised doubts as to whether the EMOS could be amended, or that even the best efforts of the miner would result in successful rehabilitation.

The Issues:
           Many of the issues in this appeal relate to the valuation methods which should be adopted in determining compensation.  However, before proceeding to examine the valuation issues, I will deal with two other issues between the parties, both of which relate to the 1991 compensation agreement.

The Alleged Oral Variation of the Compensation Agreement:
           Mr Zimmerebner gave evidence that prior to the granting of the subject leases in 1991, Mr Hawkins came to his house at Sapphire to finalise the compensation agreement.  After the document was signed, he gave Mr Hawkins sapphires to the value of $20,000.   Mr Zimmerebner alleged that he said, “This agreement should start from the time we start physically mining the ground.”  He alleged that Mr Hawkins agreed.  The only witness present, Mrs Zimmerebner, is alleged to have written that agreement on a separate piece of paper, which  Mr Hawkins signed and which was then given to Mr Hawkins.  No copy was kept by the Zimmerebners.  Unfortunately, Mrs Zimmerebner died  shortly before the hearing of the appeal. 
           Mr Hawkins emphatically denied that any such agreement took place.  He said that in all his dealings with miners he has never agreed to such a variation and there was no reason why he should start in the present case.
           I have carefully considered the written and oral evidence in relation to this alleged variation of the agreement, including the unsigned affidavit of Mrs Zimmerebner.  I have come to the conclusion that, for the following reasons, it is most unlikely that such an agreement was made.
First, there are the provisions of the MRA. Section 279(3) provides that an agreement as to compensation is not effective unless it is in writing, signed by the parties. It is also to be filed in the office of the mining registrar and, if required, stamped. The original agreement was signed by all the then owners of the property and by Mr Zimmerebner.
           Mr Morrison argued that there were two other oral variations of the agreement which were not reduced to writing.  The first variation was that payment be in sapphires rather than money; and the second variation was an agreement not to publicise the method of payment.  If two such oral variations were made, why not one in respect of the commencement of compensation?

In my view, these variations of the written agreement are not of the significance of the alleged oral agreement.  Such an important variation of the written agreement would have to be reduced to writing and signed by all the parties and filed in the office of the mining registrar.

Second, there is the agreement itself.  Clause 3 of the agreement states:

“It is expressly agreed by and between the parties that this indenture is and remains subject to the payment of the compensation by the miner forthwith upon the signing of this indenture to the owners provided that if the Minister for Mines refuses to grant the mining lease the compensation will be refunded to the miner.  ”  (Emphasis added).

That clause provides for payment (or at least initial payment) forthwith, i.e. immediately, upon the signing of the indenture of agreement.  It contemplates payment even before the Minister grants the mining lease, subject only to compensation being refunded if the lease is not granted.  There is nothing in that clause or any of the other clauses which contemplate that there would be any delay in the payment of compensation.  In fact, there was no delay.  Mr Hawkins was paid in sapphires as soon as the agreement was finalised.  If such a major variation of that agreement had been made, then it requires better proof than was produced on appeal.

The Continuing Effect of the 1991 Compensation Agreement:

Mr Morrison submitted that since no mining occurred on the subject leases during the initial five year term of the lease, then none of the events contemplated by Clause 4(a) to (g) for which compensation was agreed, had occurred.  Therefore, he contended that the compensation thereby agreed, continued into the second five year term of the leases.  If this was not so, he argued, then the owners had been compensated for things which have not happened.  Therefore, no further compensation should be awarded in respect of any of those items.

On the other hand, Mr Allan submitted that no weight should be given to the 1991 compensation agreement in this determination of compensation, as it is irrelevant to this case.  He contended that any agreement as to compensation for the granting of the subject leases for the initial term of the leases related solely to that term and cannot be extended to cover renewal of the leases.  Any agreement as to compensation upon the initial grant could not include agreement about any future term beyond the initial period of the leases.  Each assessment of compensation after the initial term is to be undertaken having due regard to the terms and conditions of the proposed lease at the relevant date of assessment. 

After considering those submissions, I have come to the conclusion that the 1991 compensation agreement does not extend beyond the initial five year term.  The provisions of Part 7 of the MRA require that compensation be determined, either by agreement or by the relevant Court, in respect of each application for the grant, or for the renewal, of a mining lease.  In other words, compensation is determined in respect of that period only.  They do not require that, as Mr Morrison put it, “the value of compensation is preserved in the hands of the landowner”.

In my view, the MRA does not contemplate that compensation agreed or determined in respect of the granting of a mining lease for a period of years would continue into any renewal of that lease. Section 286 provides for the renewal of a mining lease, but the provisions clearly contemplate that such an application may be refused. Section 279 of the Act makes it clear that a mining lease cannot be granted until compensation has been determined (whether by agreement or by determination of the relevant Court) and this in my opinion can only be for the term of that lease. This is consistent with section 286(3) which provides that the Governor in Council, upon the recommendation of the Minister, may grant a renewal of that mining lease for such further term as the Governor in Council specifies, but that further term “shall not include a period that is not covered by an agreement as to or a determination of compensation pursuant to sections 279, 281 or 282”. In my opinion, that clearly indicates that the Act intends that the agreement or determination of compensation be for that term only and, to use a similar double negative to that in the legislation, does not include a period that is not included in that term.
           The 1991 compensation agreement is binding on the parties (section 281(6)), but only for the term of that agreement.  The Act does not contemplate any automatic renewal.  Indeed, section 286 provides for a similar process upon renewal to that undertaken in respect of the original application.  The only exception is sub-section (7), which makes provision for the continuation of the previous lease beyond the expiry date if an application for renewal has been made but has not been dealt with at that time.  However, that does not mean that compensation which had been agreed upon for the initial lease continues into any period of renewal. 

Furthermore, there is no suggestion in the compensation agreement that it extended to any period of renewal.  If that had been the intention of the parties, it would have been a simple matter to include such a provision.  Mr Brown, the valuer for the appellant, has seen compensation agreements which included such a provision.

I must agree with Mr Allan that the 1991 compensation agreement is confined to the initial term of five years and is irrelevant to the determination of compensation in this case.  Therefore, even if the oral variation of the agreement between Mr Zimmerebner and Mr Hawkins had been made, it also ceased upon the expiry of the initial five year term.  The parties no doubt had their own reasons for entering into the compensation agreement in 1991, and there is evidence that Mr Zimmerebner agreed to it reluctantly, but whatever those reasons were, its effect cannot extend beyond the expiry date of that initial five year term.  The agreement itself does not suggest it and the MRA does not provide for it.

The Valuation Evidence:
           Unlike the proceedings in the Wardens Court, two registered valuers gave evidence at the hearing of the appeal.  Mr Russell Brown gave evidence for the appellant, while Mr John Compton gave evidence for the respondents.  However, they approached the assessment of compensation in quite different ways.
           Mr Brown described the land comprised in the five leases as gently undulating creek flats of gumtop box, ironbark, silverleaf and broadleaf, interspersed with areas of blackbutt and on occasions small areas of brigalow, with sandalwood and current bush throughout, fairly well grassed, but the box country has light, powdery soil; the creek flats contain better grasses of green panic and buffel, some kangaroo and spear; while he would not call them alluvial flats, he agreed that they were superior to the average of Bush Paddock.
           Mr Brown’s approach to the assessment of compensation is set out in his report (Exhibit 21).  He pointed out that the mining leases lie within a designated mining area close to the Reward Designated Area, a public fossicking area controlled by the Department of Minerals and Energy.  He referred to the general location as being criss-crossed by a myriad of tracks accessing fossicking sites and more permanent mining lease sites, which contain a number of shacks, shanties and small cabins, with a large area of the land having been turned over and mined for gems in the past.
           He went on to say that the mining leases are located within  Bush Paddock, which is used for breeding purposes.  He noted that none of the mining leases in the area had been fenced out and stock grazed freely over all operating leases.  Both valuers agree that Bush Paddock runs approximately 450 cows with progeny, or approximately 1 breeder to 11.5 hectares.
           Mr Brown pointed out that the EMOS commitment limits the maximum area of all disturbed land to 3 hectares at any one time, and the maximum area of all mining disturbance to 2 hectares at any one time.  He concluded that  a maximum of 3 hectares will be lost from the area occupied by the five leases during the term of the lease, including areas which are in the process of rehabilitation.  Because of the small size of that intrusion onto the property, he did not envisage any need to fence the boundaries of the mining leases.  He thought that the disruption to the parent parcel will be minimal. He noted that mining was not conducted on the parcels during the original five year grant, with the exception of a trial pit.
           Mr Brown reasoned that as the term of the leases is for five years only, it was appropriate to utilise a lost grazing basis of assessment.  In addition, the property would be encumbered by mining leases from 1 November 1996, which caused a “blot on title” for a period of five years.  He acknowledged that if the owners were to sell the parent parcel during that period, they would receive less because of that encumbrance.  However, he concluded that such notional loss is not in perpetuity, but is cancelled upon the expiry of the leases, with the land returning to its full value.  He likened the effect to that of an easement for a limited term. 
           Since the mining leases have not been utilised during the first five year term, nor for the first year of the proposed renewals, Mr Brown reasoned the land has been available for use by the dispossessed owners.  He believed that an annual payment, based on the lost agistment value should be paid only at the commencement of mining and on an annual basis thereafter. 
           Mr Brown could see no evidence of disruption to stock grazing because of the existing mining operations on land close to the subject leases.  He reasoned that because of the extent of mining activity in the locality, any additional injurious affection from these leases would be so small as to be immeasurable.  He could envisage no disturbance to the stock crossing at the junction of Retreat and Sheep Station Creeks or any disruption to watering.
           Finally, he ventured the opinion that it was reasonable that both legal and valuation expenses incurred by the landowners in assessing the extent of their claims for compensation under the MRA should be paid as part of the compensation.

Mr Brown’s assessment of compensation was as follows:
“          a)        Blot on Title

Whilst this encumbrance will be retired in five years following the expiry of the leases, we have assessed this item as if the encumbrance was for all time.

62.73 ha encumbered @ $100/ha  =         $6,273
Blot  say 20%  $1,255

b)         Mining Disturbance

i)Say 3 ha maximum disturbed at any one time (as per EMOS) inclusive of rehabilitated areas.

Say 1 beast @ $2.00/head/week         =         $  104 p.a.

ii)Assume an area of 10 ha disturbed for grazing purposes surrounding the mine operations and road access.

Say 2 beasts @ $2.00/head/week        =         $  208 p.a.  

Therefore our assessment is as follows:

i)Payment upon Renewal of Lease

assessed at  $1,255

Plus Additional Amount under the Act –

assessed at minimum – 10%  $   125

$1,380

Plus interest from 1.11.96 to anticipated payment date,

Say 1.11.98 – 2 years @ 7%  $   194

Total Initial Payment  $1,574

ii)Annual Payment

At commencement of mining, and thereafter to expiry of leases
  assessed @  $   312p.a.
Plus Additional Amount under the Act – minimum – 10%  $     31p.a.
  Total Annual Payment  $   343p.a.

iii)Disturbance Items

Reasonable Professional Fees   ”

On the other hand, Mr Compton adopted an entirely different approach.  He described the land affected by the subject leases somewhat differently to Mr Brown, as good quality grazing land with box and gum flats, containing areas of Moreton Bay ash, silverleaf ironbark, bauhinia, brigalow, blackbutt, with sandalwood influence.  He went on to say that these alluvial flats, at the junction of the major Retreat and Sheep Station Creeks, lie between gullies and swampy areas below undulating low forest ridges and the high creek bank.  He

16

described the land as naturally timbered and grassed including forest mitchell and blue grasses, with green panic and buffel along the creek frontages, spreading onto the flats.  He regarded it as some of the best grazing country on the GHPL.

Mr Compton pointed out that the land affected is part of the large Bush Paddock, which had an area of 5,227 hectares, consisting of Lot 23 (part of the GHPL), Lot 22 (freehold) and the Permit to Occupy over the Reward Designated Area.  While he agreed that Bush Paddock normally ran about 450 cows with progeny, or 1 breeder to 11.5 hectares, in his opinion the best creek frontage country containing the subject leases carried 1 beast to 6 hectares.
           Mr Compton’s assessment of compensation was as follows:
“Claims under Section 281(3)

(a)•     Loss of Leasehold Grazing Land due to loss of possession, use
           and value until rehabilitated to restore present productivity at
           some future time.
           Loss 62.73ha good quality forest flats @ $125/ha x 90%  $  7,057
   •       Diminution in Value of Balance Lands of  Bush Paddock due to:-
           Rights of access over adjoining land, severance and injurious
           affection including dust and noise, disturbance to cattle and blot
           on title caused by the 5 leases,
           GHPL  About 300 ha area east of Sheep Station Creek to
           Bousgas Bore and south to the lower Retreat Creek crossing
           300ha @ $100/ha x 20%  $6,000
           (3.1% of GHPL value excluding the 5 mining leases –
           6.6% all inclusive)
           Freehold  About 300 ha extending between the Retreat Creek
           stock and vehicle crossings back to ML2132 excluding approx.
           44ha within the 3 existing leases
           Land value of $125/ha reduced by 20% to $100/ha due to the
           existing leases
           Further diminution due to the 5 subject leases
           300ha @ $100/ha x 10%  $3,000
           (2.4% of freehold value  excluding the 3 existing Mining Leases)
           Total diminution in value of balance lands in Bush Paddock  $  9,000
  $16,057
•          Consequential losses and expenses:
           Owners costs of follow-up rehabilitation works completed by
           the miner over about 63ha to prevent erosion, limit danger to
           stock and vehicles due to subsidence and prevent infestation by
           weeds and parthenium in sparsely grassed disturbed areas.

Assessed as follows:-

(a)10hrs @ $100/hr for owners plant to rip, level top soils and

reseed selected areas  $1,000

(b)Temporary fencing of selected areas to ensure re-

vegetation – 2kms @ $1000/km  $2,000   $3,000
  $19,057
Owners loss of time and out of pocket expenses   $1,000
  $20,057

Claim under Section 281(4)

(f)An additional amount to reflect the compulsory nature

of the action    $2,006
Assessed at 10% of total assessed under section 281(3)

$22,063 ”

Mr Compton discussed the effects of the granting of the subject leases in terms of the matters in section 281(3)(a)(I) to (vi) of the MRA. In respect of “deprivation of possession of the surface land” he reasoned that the owners will lose grazing use from the commencement of mining until the expiry of the leases and successful rehabilitation of the land. He saw this as total loss of the whole area and considered there would be a reduction in carrying capacity of the paddock of 12 head, on the basis of 1 beast to 6 hectares on the best flats. Although mining had not commenced at the date of hearing which was some two years after the date from which the leases will be granted, Mr Compton did not consider it necessary to adjust his assessment accordingly.

Mr Compton went on to say that fencing would be required to prevent stock losses in deep excavations and silt dams and to ensure rehabilitation.  However, he did not advocate fencing the entire perimeter of the subject leases.  Here his opinion differed from that of Mr Hawkins who expressed the view that the perimeter of the leases should be fenced at a cost of $6,750.  While this would perhaps be ideal from the landowners’ perspective, it is not the practice on the Gemfields and is not necessary, as the evidence from other witnesses is that cattle soon become accustomed to mining activity and graze across the unworked areas of mining leases.  As long as the worked areas and the rehabilitation areas are fenced as required by the EMOS, in my view, it would not be necessary to fence the lease boundaries.

Rather than assessing the loss of carrying capacity of 12 head, Mr Compton calculated the loss of grazing land at 62.73 hectares of good quality forest flats at $125 per hectare.  However, in recognition of the fact that it was not lost for all time, he applied 90% of that loss, or $7,057.
           This seems to be an extraordinarily high percentage of loss for leases which were for only 5 years, but Mr Compton felt that in addition to the threat of the continued use of the land for the 5 year period, the leases were likely to be renewed and therefore could not be regarded as simply leases for five years.  In addition, although he conceded that the appellant’s EMOS  formed part of the conditions of the leases, he appeared to have difficulty in accepting that they would be adhered to.  First, he made the point that the EMOS could be amended and was not, as he put it, “written in stone”.  Second, referring to failed rehabilitation efforts by others in the area, Mr Compton was of the opinion that all rehabilitation efforts by any miner were doomed to failure.
           Although the EMOS limited the area of disturbance to a mere 3 hectares, Mr Compton’s assessment seemed to proceed on the assumption that most of the surface area would be effectively lost to the respondents because of failed rehabilitation attempts.  However, he was prepared to concede that if the terms of the EMOS were adhered to strictly and that the rehabilitation efforts by the appellant were successful in establishing reasonable pastures, the effect under this heading would be greatly minimised.  He also conceded that it was unlikely the whole area could be mined during the remaining three years of the term of the subject leases.
           Under the heading “Diminution in Value of the Land of the Owner or any Improvements thereon”, Mr Compton assumed that the value of the total area of the five leases will be lost for the period of mining and the value of that land significantly diminished,  until rehabilitated by the miner and pastures re-established.  However, it had been his experience that rehabilitation could take two or three years after completion of mining, even if rehabilitation was commenced immediately.  He insisted that fencing of rehabilitation areas would be required to protect new pastures. 
           Mr Compton was also of the opinion that there would be diminution in value of part of the balance lands of  Bush Paddock.  He felt that about 300 hectares of the GHPL and a similar area of the freehold land would be affected due to “rights of access” over adjoining lands.  He also envisaged that there would be severance and injurious affection, including dust and noise disturbance to cattle.  In addition, there was the “blot on title” created by the granting of the leases, “thereby compounding losses sustained by the earlier granting of other leases within the grazing homestead perpetual lease and freehold”.
           He then went on to say:

“This mining sprawl into grazing lands would be recognised by the market as a significant encumbrance on title and disturbance to grazing use, sufficient to reduce demand and value.”  (Exhibit 22, page 4).

In my view, this reasoning provides an insight into the manner in which Mr Compton has approached the assessment of compensation.  He seems to recognise that it is the totality of the mining operations conducted on “Keilambete” that has such an impact on its value, rather than the impact of the granting of five additional leases.  I will return to this aspect of his assessment later.

Under the heading “Diminution in Value of Balance Lands of Bush Paddock”, Mr Compton identified the 300 hectares affected on the GHPL as being east of Sheep Station Creek to Bougas Bore and south to the lower Retreat Creek crossing.  He valued that 300 hectares at $100 per hectare, and considered it to be affected to the extent of 20%, or $6,000.
           He identified the 300 hectares affected on the freehold land as being between the Retreat Creek stock and vehicle crossings south to ML2132 (one of three other mining leases in that area).  He went on to state that the land value of $125 per hectare had already been reduced  by 20% to $100 per hectare due to the other existing leases, and would be further diminished by the granting of the five subject leases by a further 10%, i.e. (300 hectares x $100 x 10%), or $3,000.  The granting of the subject leases would compound the losses to that extent.
           Therefore, Mr Compton assessed the diminution in value of the balance lands of the respondents resulting from the renewal of the five subject leases at $9,000.  It seems that that figure includes compensation for both blot on title and injurious affection to other lands of the owners from mining activities.
           Under the heading “Diminution of the use made or which may be made of the land of the owner or any improvements thereon”, Mr Compton reported as follows:

“The granting of the mining lease applications and mining operations will cause:-

(a)        Loss of grazing within the mining lease area;
(b)        Disturbance to stock watering at Hunts Bore on Sheep Station Creek adjacent  to ML2052, Bougas Bore in the GHPL and the bore on the freehold; [Blacksoil Bore]
(c)        Disturbance to stock crossing Retreat Creek at the junction opposite ML2059 and at Hunts Bore on Sheep Station Creek, steep banks limit direct access for mustering to these points or at alternative crossings about 2.4 kms upstream and downstream on Retreat Creek.  ”  (Exhibit 22, pages 6 and 7).

This further explains why Mr Compton felt that the granting of the subject leases would have such a major impact.  In his oral evidence he said that the location of the five subject leases could not  be worse, as the area was “at the heart of the business end of Bush Paddock”, between three very important bores (Hunts Bore, Bougas Bore and Blacksoil Bore) and some of the best country across mustering routes.  He felt that the mining operations would disturb stock from watering at those bores, not so much in driving them from the area, but by interfering with the free access of cattle to those bores.  The leases were in the hub of the paddock and “the pick of the country”.

Mr Compton felt that the granting of the leases would have a major impact on the important stock crossing of Retreat Creek, near the junction with Sheep Station Creek.  That crossing was on a strategic mustering route and any mining activity on ML2059, particularly in the south-western corner, would he thought, so inhibit cattle using that crossing that alternative crossings would have to be used.  Because of the high steep banks on Retreat Creek, the only alternative crossings were more than 2 kms upstream or downstream.  However, Mr Compton agreed that the impact on the crossing would be lessened if the mining activity was taking place occurring on any of the other four mining leases, or if by some arrangement mining activity would cease during the mustering of Bush Paddock.  

However, mining on ML2059 will not be the only impact on that crossing.  The crossing will also be affected by mining on Vella’s mining lease ML2063 to the south of Retreat Creek.  Therefore, it is the additional impact of ML2059 that must be assessed.

Mr Compton further explained the difficulty in working the property under the  heading, “Severance of any part of the land from other parts thereof and from other land of the owner”.  He felt that the granting of the leases at that particular location would cause difficulty to the mustering of stock in Bush Paddock.  The usual direction of mustering is down Retreat Creek, crossing at the junction, then up Sheep Station Creek to Hunts Bore, then to a holding paddock at Bougas Bore to the north-east.  He was of the opinion that mining activity would disperse stock from the flats and hinder mustering.  There would also be severance of the existing property access track between Blacksoil Bore, south of Retreat Creek and Bougas Bore, north of the creek, which provided access to the Rubyvale Road. 

That track, running north from Blacksoil Bore across Retreat Creek, cuts through ML2060 and ML2052.  However, if the mining leases are not totally fenced, Mr Compton agreed that the tracks would only be affected if mining activity or rehabilitation work occurred on the tracks themselves.  Even then, it appears that the users of the tracks would simply find another way around any obstacles.  The evidence indicates that the numerous tracks in the area are used not only by station vehicles, but also by miners, fossickers and tourists.  It seems to me that the impact of additional vehicles working on the five leases would be minimal.

This was explained further by Mr Compton under the next heading, “Any surface rights of access”, where he stated that practical access available to the operators of the mining leases is through the paddock, along the route of the existing Reward access track.  Mr Compton felt that the increased use by plant, trucks and vehicles would cause pasture damage and loss by proliferation of tracks made when required, as existing tracks become boggy and are cut by erosion.  However, the evidence of the appellant is that there will be minimal use of the tracks by machinery, as a mobile processing plant and other necessary machinery would be moved onto the leases and remain there for the duration.  Trucks will not be required.  The only use of the tracks would be by the appellant and perhaps two to three workers driving to and from Sapphire each day.  In any case, it seems that the tracks through the whole area are so frequently used by others that the additional few vehicles would have no measurable impact.
           Under the next heading, “All loss or expense that arises as a consequence of the grant or renewal of the mining lease”, Mr Compton took into account the following matters:

·cost to fence the perimeter of the mining lease area after mining to restore pasture.

·cost to restore productivity by ripping, levelling and seeding selected areas to complete rehabilitation.

·the owner’s loss of time and expense in attempting to negotiate settlement with the claimants, briefing professional advisers, including on-site inspection with the valuer, and attending the Mining Wardens Court objection hearing.

Mr Compton assessed what he thought would be the respondent’s costs of follow-up rehabilitation work after the miner had attempted to rehabilitate about 63 hectares.  He felt that such work would be necessary to prevent erosion, limit danger to stock and vehicles due to subsidence, and to prevent infestation by weeds and parthenium in sparsely grassed disturbed areas.  He assessed the cost of the follow-up works at $3,000.  In addition, he assessed the owners’ loss of time and out of pocket expenses at $1,000.

Mr Compton’s assessment of follow-up works stems from his concern that the EMOS conditions will be complied with effectively.  Even though he accepted that the miner will attempt rehabilitation, Mr Compton considered that there will be a need for the owners to carry out additional works to ensure the area is completely rehabilitated.  Even though there was evidence of less than satisfactory rehabilitation by other miners, those areas were not fenced and in my view, it is not appropriate to allow for further rehabilitation by the owners.
           Similarly, the allowance for temporary fencing would seem to be unnecessary, because the EMOS conditions require the miner to effectively fence all rehabilitation areas. 
           I will deal with the claim for owners’ loss of time and out of pocket expenses later.
Mr Compton’s assessment of compensation under the provisions of section 281(3) of the Act totalled $20,057. As required by section 281(4)(e) of the Act, he allowed an additional amount to reflect the compulsory nature of the action at the statutory minimum of 10% of the aggregate amount determined under sub-section (3). Accordingly, he added a further amount of $2,006, bringing his total assessment of compensation to $22,063.
Mr Compton made no claim under the provisions of section 281(4)(a) to (d), although he commented that a claim for loss of profits would depend upon the speed and success of rehabilitation of pastures in the mined area. Inadequate rehabilitation of other mined lands on the GHPL indicated to him that a reduction in carrying capacity causing loss of profits is probable for a considerable period after the expiry of the leases. He thought this could result in a reduction of carrying capacity from 1 beast to 6 hectares to 1 beast to 9 hectares, or a loss of grazing of about 4 head on the area for an indefinite period. Although he made no separate assessment of loss of profits, that reasoning no doubt influenced his assessment under the various headings.
           Mr Compton’s reasoning was further explained under the heading of “Valuation Considerations” in his report.  There he commented that the depth of the excavations and tailing dams, would create hazards for stock.  Fencing would be required to protect the stock and to successfully rehabilitate the land.  He went on to say that the number of leases within close proximity, together with associated plant, dam and road areas, “not necessarily limited to a maximum disturbance area of 3 hectares at any one time”, would create “a maze of mining disturbance” during the lease period.
           Once again, this illustrates to me that Mr Compton was influenced more by the impact of mining generally on “Keilambete”, rather than the additional impact of the granting of the five subject leases.
           In his oral evidence Mr Compton said that after assessing compensation by this piecemeal method, he then stood back and looked at his assessment from the eyes of a hypothetical prudent purchaser, asking how much less would such a purchaser pay for the “marketable parcel” of “Keilambete” because of the granting of the five subject leases.  The “marketable parcel” consisted of Bush Paddock plus the balance of GHPL 202173, Lot 7 consisting of 5786 hectares, a total of 11,013 hectares.  He reasoned that such a purchaser would pay something less and came to the conclusion that it could not be less than $20,000.  His reasoning seemed to be somewhat affected by the fact that if the property went to auction, a minimum bid would be $50,000.  That raises the question as to how much less a hypothetical prudent purchaser would pay because of the granting of the five subject leases in bidding for a property already substantially affected by mining. 
           In making their assessments, both valuers agreed that as the EMOS requirements become conditions of the leases, it must be assumed that the miner will comply with his EMOS.  While Mr Brown accepted that the EMOS requirements would be fulfilled entirely and that the mined land would be fully rehabilitated, Mr Compton had  difficulty in accepting that any rehabilitation efforts of the miner would be more than only partially successful and that follow-up work would be required.

Considerations and Conclusions:
           As this Court pointed out in Mitchell, the piecemeal assessment of compensation by separately quantifying an amount for each of the matters for which section 281(3) provides, is not validly based. In most cases, the accepted method of valuation would be the “before” and “after” method. However, I agree with Mr Morrison that in the present circumstances such an assessment would not provide the necessary sensitivity to accurately assess compensation. It is therefore necessary to resort to a summation, or piecemeal method, taking appropriate care that there is no overlapping, or doubling-up, in the assessment of compensation. However, it seems to me that the piecemeal method is closely related to the “before” and “after” method, because it involves assessing under each of the piecemeal headings the allowance that a hypothetical prudent purchaser would make for each of them.

In this case, I have the benefit of the evidence of two experienced valuers and although, as I will explain, I do not fully agree with either of them, I found aspects of the evidence of each of them to be helpful. 

I think that Mr Brown took an overly optimistic approach to how the mining and the grazing activities could coexist with one another.  He simply took the view that the owner would be deprived of the area being mined or disturbed (a maximum of 3 hectares at a time) and an area which would be undergoing rehabilitation.  In his view the balance of the area of the leases would be available for grazing with little or no disturbance to the cattle.
           He did recognise that there was an encumbrance or blot on the title but, having regard to the other mining tenements on “Keilambete”, the additional blot or encumbrance imposed by the five subject leases would be relatively minor.  He reasoned that the leases were only for five years and at the end of that period, or perhaps a couple of years longer for rehabilitation, the land would revert to the respondents in a totally rehabilitated condition.  Based upon such reasoning Mr Brown’s assessment of compensation was relatively small.
           On the other hand, Mr Compton thought that mining and grazing were totally incompatible activities.  As stated previously, I feel that Mr Compton’s assessment was influenced by the impact of mining generally, rather than the additional impact that the granting of these five leases would have on a property which was already significantly affected by mining.  His assessment was also influenced by his assumption that the EMOS obligations could be varied, or could not be fully complied with.  When he was asked to assume that those obligations would be satisfactorily undertaken, he conceded that the impact of the granting of the leases would be minimised.
           The test to be applied in cases such as the present one was set out by the Land Court in Smith v. Cameron (1986) 11 QLCR 64. There the Court considered provisions similar to those of section 281(3)(a) of the present Act, which were contained in its predecessor, the Mining Act 1968. In that case, the Court likened the use of land for mining purposes to compulsory acquisition of land for a limited period and applied the various principles and practices of valuation which are applied in determining compensation for the taking of limited rights over land for public purposes.
           In this regard the Court said at pp.73/74:

“ These similarities are evident in the principles laid down by the Land Appeal Court for consideration in the latter and no better set out than in the case of  P Joyce v. The Northern Electric Authority of Queensland (1974) 1 QLCR 171 where in dealing with the taking of an easement for electric line purposes the Court at page 177 said:

‘The test is the attitude of the hypothetical prudent purchaser and the extent to which in the opinion of such a person the claimant has suffered diminution in the value of his property resulting from the erection of the transmission line over his land and the creation of the easement including where appropriate severance and injurious affection damage.’

And at page 178 –

‘Each case must be considered according to the terms and conditions of the easement created and the frequency and magnitude of the disturbance likely to result in consequence to the claimant’s proprietary rights.’ ”

Applying the tests enunciated by the Land Appeal Court in Joyce’s case to the present case, the question arises as to the attitude of a hypothetical prudent purchaser and whether such a person would consider that the property (i.e. the marketable parcel) would suffer diminution in value because of the granting of the mining leases. In this case I have to assume that such a hypothetical prudent purchaser would have regard to each of the matters provided for in section 281(3)(a), but not attribute a separate value to each of them, in determining how much less to pay for the land because of the granting of the five mining leases.
           Before proceeding to consider the approach that such a purchaser would take, there are some fundamental facts which such a purchaser would be aware of and there are some assumptions which  must be made. 
           Any potential purchaser of “Keilambete” as a whole, or the 11,013 hectare marketable parcel, would be well aware that there is already significant mining activity in the area.  The five subject leases are on the boundary of the Reward Designated Area which has been made available for hand miners and fossickers and upon which there is considerable activity.  The environment of the Reward Area is therefore criss-crossed by tracks, many of which may be illegal, but all of which have been tolerated by the respondents.  In addition to the activity in the Reward Area, the locality is affected by a number of mining leases, with even more likely to be granted.  There is no doubt that a hypothetical prudent purchaser would regard the existing mining activity as diminishing the value of the property and  would certainly pay more for it if the mining tenements and activity did not exist.
           The real question is the extent to which that diminution in value is increased when the subject five mining leases are granted.
           On the other hand, the evidence indicates that as incompatible as grazing and mining are said to be, the owners of “Keilambete” have successfully run cattle in Bush Paddock and they have grazed, apparently relatively undisturbed, throughout the areas of mining activity.  There was evidence of some stock losses from cattle falling into pits or becoming bogged in tailings dams, but no evidence of cattle being killed by vehicles or mining machinery.    There was, however, some evidence of disturbance of young cattle which were introduced into Bush Paddock without having experienced mining activity.  There is also evidence that mining activity would disrupt mustering patterns, particularly the use of the stock crossing to the south of ML2050.
           As a matter of law, a hypothetical prudent purchaser must assume that the miner will act lawfully, will comply with the provisions of the MRA and will conform to the commitments in his EMOS. 
           However, I think it is fair to say that any hypothetical prudent purchaser wishing to use the property for grazing purposes would much prefer to have, and would pay something more for, a property which did not have the additional five mining leases.  The difficult question is just how much less such a purchaser would pay for the property if the leases were granted?
           As explained in Mitchell, the Land Court in Smith v. Cameron recognised that compensation can be assessed by either the “before” and “after” valuation method, or the piecemeal or  summation method.  In this case, I have found that the “before” and “after” method is not appropriate and must resort to a piecemeal assessment, as did the valuers.  However, the fundamental test of the attitude of a hypothetical prudent purchaser remains.
           After considering the evidence, I do not think that a fully informed hypothetical prudent purchaser would be justified in adopting the optimistic approach taken by Mr Brown.  Nor do I think that such a purchaser would reason that the mining activity on the land would simply diminish the carrying capacity of the property by the equivalent of 3 head for the period of mining. 
           As for the blot on title, Mr Brown was of the opinion that the encumbrance would disappear in five years following the expiry of the leases.  He considered it adequately compensated for by allowing 20% of the value of the area of 62.73 hectares occupied by the five leases.  I do not think that such an approach adequately compensates an owner for the encumbrance.  In my view the encumbrance cannot be confined to the area of the mining leases, but extends beyond that to affect the title of that part of the owners’ land.
           On the other hand, I do not agree with Mr Compton that the diminution in value of the land occupied by the mining leases should be almost total loss.  It must be assumed that under the EMOS no more than 3 hectares of land will be disturbed at any one time.  That will include the areas undergoing rehabilitation.  Since under the EMOS only the rehabilitation areas will be fenced, cattle will be free to graze over most of the mining lease area.  The difficulty for the owners of the property as I see it, is that the miner has the right to work any part of the 62.73 hectares.  This may be haphazard, depending on where the best wash is situated.  From the granting of the leases, the owners will lose control of what happens on that land.  The miner will have the right to mine it or not as circumstances dictate.  An example of the lack of owners’ control of the miner’s activities on the leases was the digging of 18 test pits and two of them left unfilled.

However, this is not a case where the landowner will lose the use of the land for a lengthy period.  Because of the total area of the subject leases and the small area that can be mined at any one time, a hypothetical prudent purchaser may well assume that the leases will be further renewed.  However, there is no certainty that all or any of them will be renewed.  Indeed, there is evidence from another miner, Mr Salmon, that the area occupied by his three leases was worked out within a five year period and he did not seek renewal.  I would think that it is the uncertainty of the extent of the use and of the period of the occupation and of the length of time necessary for effective rehabilitation,  which would occupy the mind of a prudent purchaser.  In my view, a prudent purchaser would tend to regard the subject leases as effectively depriving the owners of possession of the surface of the land, even though their stock may from time to time graze on that area.  However, having regard to the fact that the land will be returned to the owners at the end of the five year term and rehabilitation will be complete in a year or so after that, I think that it would be reasonable for such a purchaser to discount the purchase price for that aspect alone, by 25%.

Accordingly, Mr Compton’s calculation becomes 62.73ha good quality forest flats @ $125 per hectare = $7,840 discounted by 25% = $1,960, say $2,000.
           Of course, if the leases were to be renewed at the end of the five years, the compensation process would begin again.
           As for the diminution in value of the other lands of the owner, and of the use which may be made of those lands (s.281(a)(ii) and (iii), they are analogous to injurious affection.  Severance (s.281(3)(a)(iv) can be dismissed from consideration, as only the rehabilitation areas will be fenced.  The evidence is quite clear that cattle will have free access to the unworked areas and that if mining operations or rehabilitation affect the property tracks then it is relatively simple to create new tracks around the worked areas.
           Before turning to the effect of mining on the other lands of the owners from the grant of the five mining leases, there is the “blot” or encumbrance on title of GHPL 202173, particularly Lot 23.  However, this must be kept in perspective, as it is merely an additional  encumbrance on the title of a property which is already significantly encumbered, and it is only for a limited period.
           However, in my view Mr Brown’s assessment of $1,255 is not sufficient.  Although the property was encumbered by eight mining leases, either granted or pending, the granting of the subject five leases will increase the number to thirteen.  These leases in total must create a significant encumbrance on the title of Lot 23.  While the proportion to be attributed to the subject leases is debateable, I feel that a hypothetical prudent purchaser would consider it to be greater than assessed by Mr Brown.
           On the other hand, Mr Compton’s assessment of $9,000 would seem to include compensation for “blot” on title as well as “injurious affection” and he did not express an opinion of the effect on value for “blot” on title.  In the circumstances, I can do no more than recognise that there is an additional encumbrance on title which a prudent purchaser would certainly prefer not to have.  If the granting of each additional lease diminished the value of the land by $1,000, then in my opinion it would not be unreasonable to allow a total of $5,000 for the additional encumbrance that the granting of the five subject leases will impose.
           I turn now to the effect on the surrounding lands when mining activity commences.  I accept Mr Compton’s evidence that there will be a certain amount of disruption of the cattle using the three bores and, from time to time, in mustering.  Notwithstanding that there is other mining activity in the area and that the disruption will be relatively localised to the proximity of the leases, the fact that additional mining activity is to take place on the land close to three bores and to a strategic creek crossing, must be of concern to any landowner and would certainly affect the price that a hypothetical prudent purchaser would pay for the property.
           Mr Compton was of the opinion that an area of 600 hectares would be affected from the time of granting of the mining leases, with a loss of value in perpetuity of 20 percent (20%) on 300 hectares on Lot 23 and of ten percent (10%) on 300 hectares of Lot 22  respectively for the GHPL and the freehold.  He recognised that the value of each of those lands was already diminished by the existence of other mining leases.
           However, in my view, an assessment of loss in perpetuity is not appropriate in this situation where mining activity will occur for a limited period only, even if the subject leases are further renewed.  It is more appropriate to determine that element of compensation by assessing the diminution in value which will result from mining activity on the five subject leases each year.
           On the other hand, I accept Mr Compton’s opinion that the area between the three bores will be disrupted by mining activity on the subject leases, but not to the extent that he has assessed.  Based on the evidence, I would think that when mining commences, the balance lands of the owners will be affected and that such “injurious affection” would amount to $2,000 each year that mining continues.  Over the five year period this would amount to $10,000.

In my opinion, that compensation would adequately cover the diminution in value of the balance land of the owners because of the disturbance of stock, the disruption to mustering, and the potential for the occasional loss of use of the stock crossing over Retreat Creek.

Consequential losses and disturbance:

As for the consequential losses and expenses assessed by Mr Compton, in my opinion the $1,000 for additional costs of follow-up rehabilitation works by the owners, including the prevention of infestation of weeds and parthenium, cannot be allowed.  It must be assumed that the EMOS commitments will be adhered to completely.  If that is the case, then there will be no need for such follow-up works.  Similarly, with the claim for temporary fencing, as that also is an EMOS commitment by the miner.

Both valuers have suggested that disturbance items, namely legal and valuation fees, should be allowed. These claims are said to arise under the provisions of section 281(3)(a)(vi) – all loss or expense that arises.

In my opinion, the claim for such disturbance items is not well founded.  In Smith v. Cameron, the Land Court pointed out that in cases involving the compulsory acquisition of land, legal and valuation fees incurred in the preparation and lodgment of a claim for compensation are allowed as items of disturbance. The Court saw no reason why the principle should not be applied to an application for compensation under the Mining Act. That reasoning was followed by this Court in Mitchell. However, in this case there is, of course, no claim for compensation in the same manner as there would be under the Acquisition of Land Act. In the circumstances, it would seem appropriate to allow reasonable legal and valuation costs in preparing a claim for compensation before the Mining Warden.

However, in this case the respondents did not seek legal or valuation advice prior to the hearing in the Wardens Court.  They were represented by Mr Hawkins.  They did not seek legal or valuation advice until after the Acting Mining Warden had delivered his determination.  In my opinion, such items are not compensable, but are simply costs of the action.

With regard to the claim for loss of time and expenses incurred by Mr Hawkins, it is well established in cases of compulsory acquisition that such items are not compensable.  (See Thirty-fourth Philgram Pty Ltd v. The Crown (1993) 14 QLCR 13 at pp.45-52 and the cases referred to therein.) In my view, similar reasoning should apply in this case.

The entitlement to compensation:

Counsel for the appellant submitted that section 281(3)(a) provides for compensation, not indemnity, and there is no entitlement to compensation until loss or damage arises when the mining has commenced. In my view, that cannot be correct.

By way of analogy, section 20 of the Acquisition of Land Act 1967 provides for the assessment of compensation for the loss of land taken and also the damage caused by severance and injurious affection. That compensation must be assessed from the date of the taking of the land.

It is well settled that compensation under those provisions must be assessed prospectively, taking into account circumstances occurring or likely to occur after the date of resumption (see Gilmour  v. The Crown (1980-81) 7 QLCR 160 at 165.) In my view, the assessment of compensation under section 281(3)(a) of the MRA must be assessed in a similar manner. Section 281(5) merely gives the Court discretion to determine the amounts and the terms, conditions and times when payment aggregating the total compensation payable shall be payable.  (Emphasis added).

It seems to me that the Court must, as best it can, assess total compensation as at the relevant date, i.e. the date of the grant of the mining leases.  Then, having regard to the circumstances of the particular case, it can impose terms, conditions and times when payments shall be made.  There seems to be no limits on that discretion, provided that the Court determines the amount of that compensation.  Therefore, there would not seem to be any prohibition on awarding part of the compensation upon the happening of an event, such as the commencement of mining.

Counsel for the appellant also submitted that the appellant would be prepared to give certain undertakings with regard to his mining and the rehabilitation of mined areas, which should be taken into account.  I have no doubt that such undertakings would be welcomed by the owners,  but I cannot take them into account in assessing compensation in this case.  Were I to do so, I would foresee difficulties in enforcing such undertakings.  The duty of this Court, as I see it, is solely to determine compensation.  Some discretion is given to the Court in determining the terms, conditions and times when compensation shall be payable.  However, I do not see this as empowering the Court to impose conditions in terms of complying with undertakings given by the miner.

Therefore, while I would encourage the appellant to give such undertakings, I cannot take them into account when assessing compensation.

Determination:

Therefore, compensation payable under the provisions of section 281(3)(a) amounts to Seventeen thousand dollars ($17,000).However, under the provisions of section 281(4)(e), an additional amount must be determined to reflect the compulsory nature of the action taken, which must not be less than 10% of the aggregate amount determined under sub-section (3). In this case, I can see no reason for departing from the statutory minimum of 10%. Therefore, in normal circumstances, I would assess compensation at Eighteen thousand, seven hundred dollars ($18,700).

The appellant argued that compensation should be payable only from the commencement of mining. I have rejected that argument in respect of the immediate effects of the granting of the five subject leases. However, I see merit in the argument so far as the effects of mining on the balance lands of the owners are concerned. More than two years have elapsed since the nominal commencement date of the renewed leases. However, the appellant gave evidence that he would commence mining soon after the hearing. It therefore seems inequitable that the appellant should pay “injurious affection” for damage which has not occurred. If the matter involved was the assessment of compensation under the Acquisition of Land Act, the Court would have to assess that damage as best it can at the date of resumption. But here the Court has some discretion.

In my opinion, compensation for diminution in value of the balance land of the owners should be paid only from the commencement of mining.

Orders:

Accordingly, the appeal is allowed, and the determination of the Wardens Court is varied and compensation is determined in the sum of Fourteen thousand, seven hundred dollars ($14,700).

It is ordered that compensation be paid in the following manner:

The sum of $8,700 shall be paid within 60 days of the grant of the mining leases and the balance $6,000 shall be paid in equal annual instalments of $2,000 from the commencement of mining.  (As there has been no mining on the land for the first two years of the renewal period, no award has been made for those two years.)  Subsequent instalments will be payable for each year on the anniversary of the renewal date of the leases. 

Interest:

Mr Allan submitted that interest should be payable on the amount of compensation awarded from the date of renewal until the date of payment of compensation.  However, as the owners have remained in possession of the land and no mining activity had taken place up to the date of hearing, in my opinion it is not appropriate to award interest in this case.

(JJ Trickett)

President of the Land Court