Richardson v Wharley[2015] QLC 6

LAND COURT OF QUEENSLAND

Background

1. [1]
   These matters arise from six applications for the grant of mining claims, referred to hereafter as tenures. As the parties have not been able to agree on the amount of compensation payable by the applicant miners, the Department of Natural Resources and Mines has referred this to the Land Court to be determined. This procedure is required by the Mineral Resources Act 1989 (MRA). The tenures are proposed to be on land known as “Reklaw Park”, a 12,300 ha grazing property at Reklaw Road, Argyll, 4721. “Reklaw Park” is a Grazing Homestead Perpetual Lease not far from Emerald which is run in conjunction with three adjoining special leases with a further combined area of 2,980 ha. The property is used primarily for cattle breeding and consists of a mixture of semi-open Ironbark forest with areas of developed brigalow and blackbutt country. The property has been developed with 12 main paddocks, seven equipped bores and over 20 dams as well as two dwellings, two sets of cattle yards and multiple sheds. The key details of the tenures are as follows:

2. [2]
   In all of these cases, the parties have provided written submissions to the Court and requested that the compensation be decided on the basis of the written material without them making any further submissions. It is convenient to deal with the matters in one written decision, although reference will be made and individual consideration given to each case.

The applicable law

3. [3]
   Section 85(1) of the MRA provides that a mining claim shall not be granted or renewed unless compensation has been agreed or a determination of compensation has been made by the Court.
4. [4]
   The issues which must be considered by the Court are set forth in s 85(7) and (8) of the MRA, which provides as follows:

“(7) Upon an application made under subsection (5), or the referral of a matter under section 85A(2), the Land Court shall settle the amount of compensation an owner of land is entitled to as compensation for—

1. (a)
   deprivation of possession of the surface of land of the owner;
2. (b)
   diminution of the value of the land of the owner or any improvements thereon;
3. (c)
   diminution of the use made or which may be made of the land of the owner or any improvements thereon;
4. (d)
   severance of any part of the land from other parts thereof or from other land of the owner;
5. (e)
   any surface rights of access;
6. (f)
   all loss or expense that arises;

as a consequence of the grant or renewal of the mining claim.

3. (8)
   In assessing the amount of compensation payable under subsection (7)—

1. (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;

2. (b)
   no allowance shall be made for any minerals that are or may be on or under the surface of the land concerned;

3. (c)
   if the owner of land proves that the status and use currently being made (prior to the application for the grant or renewal of the mining claim) of certain land is such that a premium should be applied, an appropriate amount of compensation may be determined;

4. (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 lodgement of the relevant application for the grant or renewal of a mining claim and the usage that could be made of that land after the grant or renewal;

5. (e)
   an additional amount shall be determined to reflect the compulsory nature of action taken under this chapter which amount, together with any amount determined pursuant to paragraph (c), shall be not less than 10% of the aggregate amount determined under subsection (7).”

5. [5]
   Although s 85 sets out the matters to be considered, it does not define any method of assessment. In Smith v Cameron,^[1] the Land Court, considering a similar provision, held:

“The section in my opinion 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.”

6. [6]
   In Shaw v Heritage Holdings Pty Ltd,^[2] the Land Court said, again considering a similar provision:

“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.”

7. [7]
   In Mitchell v Oakhill and Mitchell,^[3] the then President of the Land Court, referring to s 281(3) of the MRA, which is in similar terms to s 85(7), 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.”

8. [8]
   In determining compensation under s 85 of the MRA, the Court has adopted the same approach that Deputy President Smith (as he then was) of the Land and Resources Tribunal took when considering a similar provision in Richardson v Barrett.^[4] The matters set out in the section are matters to be taken into account in determining compensation, rather than being separate heads of compensation requiring separate treatment to arrive at an accumulated figure.
9. [9]
   The overriding principle is of equivalence, ensuring that, so far as money can provide this, the landholders are placed in the same position as if the mining claim were not granted.^[5] Care must also be taken to ensure that there is no “doubling up” of compensation. This Court is a specialised Court and will apply its own expertise to assist it to perform its function.

The evidence

Court file MRA413-14

10. [10]
    Court file MRA413-14 relates to Mining Claim (MC) 72358. This relates to 19.9685 ha in the Tomahawk Creek locality in the Central Highlands local authority area. The minerals sought are sapphire and zircon. Compensation for grant of the mining claim and for access to it is in issue.

The applicants’ submissions

11. [11]
    The applicant miners and the respondents, who are the landowners, have prepared documentary material to deal with all six claims, which makes it convenient to deal with all of them in this one written decision. In all cases, submissions have been provided on behalf of the applicant miner. In submissions received on 27 October 2014, it is pointed out that the claims are in mining area “RA1” and that the Environmental Authority states that only 2 ha can be disturbed at a time. In all six tenures departmental officer’s notes in the Office Use Only part of the Applications for Mining Claim indicate that the applications refer to land in restricted area “RA1”. The material refers the Court to two previous decisions, Graham v Hicks & Anor^[6] and Sloan & Anor v Weir & Anor.^[7] It is submitted that as the property here almost adjoins that considered in the first case referred to, compensation should be comparable. In that case there was a renewal of a mining lease with an area of about 15 ha and a term of three years commencing on 1 January 2004. The Land and Resources Tribunal determined total compensation in the sum of $858. In the Sloan case there was a three year term of renewal of a mining lease over about 71 ha commencing on 1 July 2005. The area of the mining lease actually on the Sloan land was found to be 35 ha. In that case total compensation was determined in the sum of $697.40.

The respondents’ submissions

12. [12]
    The respondents/landowners have submitted that the cases referred to are for renewals whereas the present matters are original applications, that they relate to three year leases, while in the present case the periods are for ten years and that they are not recent enough to reflect current values. It is submitted that in both cases more recent renewals have seen higher figures of compensation for those leases. Reference is made to Sloan & Anor v Weir & Gregcarbil Pty Ltd^[8] where a five year lease period was considered and compensation was determined in the sum of $5,500, payable in instalments.
13. [13]
    In Woels v Hicks^[9] a renewal of a mining lease for a five year term resulted in compensation being determined in the sum of $1,700. The lease was over a surface area of 14.5427 ha. Only the landowner provided details of the compensation sought and the learned Judicial Registrar noted^[10] that there was no formal valuation evidence to assist the Court in that case. In the present case the area of 19.9685 ha is larger than that considered in the case before the learned Judicial Registrar.
14. [14]
    It is submitted that references to land said to almost adjoin the subject land and to determinations some years ago relating to that other land would be of less use to the Court than valuation evidence in the present proceedings.
15. [15]
    The respondents have provided the Court with a valuation report by Opteon Property Group. The inspecting valuer is Mr Murray Davis, AAPI Certified Practicing Valuer 3466. The date of valuation is 25 July 2014. It is convenient to set out a brief table of the compensation amounts assessed by Mr Davis in the case of each of the matters presently before the Court. Each are for compensation, excluding legal and valuation expenses.

 MC 72358 MRA413-14 $44,326

 MC 72359 MRA414-14 $25,528

 MC 72360 MRA418-14 $44,307

 MC 72361 MRA419-14 $25,901

 MC 72362 MRA415-14 $25,806

 MC 72363 MRA416-14 $25,854

16. [16]
    In addition to the information in the valuation, the respondents submit that the claims dealt with in MC 72358 and MC 72360 will interfere with a stock watering point since the access will cross the laneway which leads to it. Planned access here will, it is submitted, cause cattle to avoid the water point and the nearby grass, putting grazing pressure elsewhere. The landowners believe that it would be necessary to install another water point so that cattle can travel the same distance to access water. In this respect a map and quotes for the necessary fittings have been provided. The quote dated 17 November 2014 from CQ Pump and Irrigation Services Pty Ltd at Emerald is for $5,365.97 for the water point materials and the quote from another supplier dated 20 November 2014 for a trough is $698.50. There is no claim for the supply and ongoing costs of a pump, which it is submitted would also be needed.
17. [17]
    The respondents also submit that, although disturbance of an area of land is one thing, cattle are inhibited from accessing the grass over a considerable area around this. It is pointed out that widespread small test holes are contemplated. In MC 72362 it is submitted that a wash plant is suggested by water storage for that purpose and in the matter considered in MC 72363 a shed suggests activity around it. In the case of MC 72358 and MC 72360 widespread small test holes are indicated, it is submitted, and MC 72359 shows widespread intended excavations on the mapping. In the case of MC 72361 it is submitted that there is evidence of the intention to excavate 30 holes, each about 8 m², spread over the tenure.
18. [18]
    The respondents state that the applicant has made an offer of $500 per claim per annum for compensation. They submit that this would be insufficient to properly compensate them and see it as a minimum.
19. [19]
    The respondents refer to the case of Salmon v Richardson & Anor.^[11] It involved a five year renewal of a mining lease for 53.4 ha over land owned by Raymond Richardson and Glenda Hoare. The respondents point out that this is the same Mr Richardson who has been representing the applicants in dealings with them in the negotiations in the present matters. This is pointed to as an example of higher compensation being paid in respect of grazing land. It must be noted that the applicant in that case was willing to pay the $2,000 per annum ordered, although the evidence supported a much lesser sum.^[12]
20. [20]
    It is suggested that this decision may have set a precedent for higher compensation values. The Court is not able to accept this submission as the sum awarded was the amount which the miner had expressed willingness to pay.

The respondents’ valuation report

21. [21]
    The valuation discloses that the property is leasehold 12,300 ha in size and is run in conjunction with three adjoining areas comprising a further 2,980 ha. It is used primarily for cattle breeding and is a mixture of semi-open Ironbark forest country with some good areas of developed brigalow and blackbutt country. The valuation report considers the effect of the six mining claims in the present cases and arrives at the compensation amounts which have been set out above. There is no other expert valuation evidence before the Court in these matters. The valuer was instructed to assess the compensation payable to the landowners taking into account the MRA, particularly s 85(7) and (8), the provisions which are presently relevant and which the Court must consider.
22. [22]
    The valuation report considers four sales of properties which are used for comparison purposes. They are:

Sale 1 “Clontarf” of 10,516.16 ha leasehold pastoral land in June 2014 for $5,100,000. This sale was analysed to show a value of $470 per ha treated, fenced and watered, or about $2,125 per beast.

Sale 2 “Tango” of 15,417 ha in four freehold parcels in September 2013 for $13,000,000. This was analysed to show a value of $828 per ha, excluding structures, or about $3,190 a beast.

Sale 3 “Lamorby” of 5,281.15 ha leasehold in August 2013 for $4,000,000. This sale was analysed to show a value of $743 per hectare excluding structures, or $2,804 per beast.

Sale 4 “Glen Avon” of 15,807 ha of which 14,036 ha was freehold in May 2013 for $10,250,000. This sale was analysed to show a value of $545 per ha excluding structures, or $2,154 a beast.

23. [23]
    The valuation report, in part 14, sets out s 85(7) and (8) of the MRA, the relevant provisions of the Act for present purposes, so it is apparent that the valuer has had regard to the correct legislative provisions. It is not necessary to repeat them here.
24. [24]
    In the same part of the report, the valuer has listed the decisions of the Land and Resources Tribunal and of this Court to which regard has been had. There is no submission that there has been any error made in this.
25. [25]
    The valuer has proceeded to consider each of the relevant categories of compensation set out in the MRA in detail. It is not necessary to repeat them in the detail provided as there is no contrary evidence. This expert evidence is mostly uncontradicted by any other material and as such is appropriately accepted where uncontradicted and is relied upon by the Court. The valuer has applied 10% to reflect the compulsory nature of the loss of the land in the present tenure process. This is the minimum amount and, in the absence of reasons to depart from it, it is applied in the present cases for this particular category of compensation. The valuation is prepared on the basis that payment will take place at the granting of the tenures. The valuer has allowed for costs of the time of the landowner to manage the proposed mining claim under paragraph (f) of s 85(7) of the MRA “all loss or expense that arises”. The number of hours and an hourly rate of $100 per hour have been used along with a discount rate of 5.5% to find the net present values. This has not been challenged by the applicant but the Court has made its own calculations based on the wording of the report and arrived at its own number of hours, as will be seen.
26. [26]
    The valuer states, at page 19 of the report, that if compensation is to be paid over the ten year period of the mining claim, the amount assessed for the owner’s time should not be discounted to a net present value. Four hours per month has been allowed for visits to the land and additional mustering time of four hours per muster with six musters per year. Again, this has not been challenged by the applicant and these times and the hourly rate are applied. The Court reaches its own conclusions on the number of hours rather than simply applying the numbers aggregated by the valuer which it does not find to be mathematically justified.

The applicants’ response to the respondents’ material

27. [27]
    By a one-page letter dated 24 November 2014, Mr Rowan Richardson has replied on behalf of the applicants to the material provided by the respondents. Referring to the freehold property owned by Mr Raymond Richardson referred to in Salmon v Richardson & Anor^[13] he states that it is some 45 kms from the respondents’ property and is blade ploughed, cultivated land which he submits would be worth at least three times that of the land in question. He states that Mr Wharley had indicated that mining could have the benefit of providing some land clearing. Mr Richardson submits that the economic situation and dry conditions have caused marked decreases in local land prices. He submits that in his observation, cattle don’t worry about the machinery on mining claims and will still be able to access their usual watering points and be able to graze on the mining claims as only 2 ha can be disturbed at any time. The property, he submits, is within 10 km of the similar property considered in Woels v Hicks.^[14] The applicants offer compensation of $500 per year, “plus CPI or 3 percent, per annum”.

Discussion

Claim for additional stock watering point

28. [28]
    The submissions for the respondents explain why a water point would need to be installed as a result of MC 72358 and MC 72360, essentially as access to these claims crosses a laneway which leads to an existing water point and since, it is submitted, cattle will avoid the laneway if there is activity in it. The activity is said to be likely to occur at peak frequency in mornings and afternoons when cattle are likely to move to and from water. The respondents are conscious of their welfare obligations to their stock and seek to maintain existing levels of access to water. On behalf of the applicants it is submitted that in the experience of Mr Rowan Richardson stock “don’t worry about the machinery”. There is no evidence of what amount of use is likely to be made of the access in connection with mining. There is simply a difference in the opposing submissions. There will however be potential for the access for mining to be used as required at any time.
29. [29]
    The respondents’ valuer has allowed for the cost of the proposed new water point. In fact he has allowed for it twice, as it affects MC 72358 and MC 72360, the northern claims. The valuation report states that the stock watering point will be “significantly impacted by the two northern claims”^[15] so it would appear suitable for this cost to be shared equally in respect of both if it is applicable. There is no submission that it is not allowable in principle, simply that the cattle are not expected by the miners to be worried about the machinery so they can use the existing water point. There is no suggestion that the existing water point will be closed and relocated but rather that an additional water point be installed. The submissions for the respondents are on the basis that “It seems likely” that traffic relating to the claim would peak when cattle are moving to and from water. This is a supposition which stands against the opposing submission that the applicants “don’t foresee” the cattle being disturbed. Weighing this material, the Court is not satisfied that compensation ought to include the cost, or in the case of this tenure, half the cost, of a water point.

The area of the tenure

30. [30]
    The valuer has allowed for compensation as being equivalent to a 25% diminution of the value of the entire area of the tenure. In this case, 19.9 ha has been used for his calculations. This results in a figure of $1,741.25 for compensation. He has proceeded on the basis that all of the tenure area is impacted all of the time. The submissions dated 24 November 2014 and made on behalf of the applicants state that:

“The cattle will be able to graze on the mining claims at all times as an area of only 2 hectares can be disturbed at any one time.”

The area of the tenure is 19.9685 ha. On the basis of what amounts to the assurance of access from the applicants which has been quoted above it seems clear that only 2 ha can be disturbed at any one time. The submissions on behalf of the respondents state that cattle “are inhibited from accessing the grass over a considerable area around the defined disturbance”. The valuer has made a 25% allowance over the whole area of the tenure for the whole ten year tenure period. On the basis of the material to hand, the Court is satisfied that disturbance to be expected would be such that the deprivation of possession of all of the surface area of the land ought to be allowed for as the valuer has done since there is, submitted by the respondents, to be an effect well beyond an area of 2 ha of workings at any time. This takes into account the intention to allow grazing on the mining claim.

Impact on the balance land

31. [31]
    In this case, and in all the cases being considered, the valuer has calculated the impact on the balance land. In this case an area of 12,280.1 ha. Very slightly different areas are used in the other cases so as to reflect small differences in the areas of the tenures. Valuing the land at $350 per ha and allowing for improvements, he has applied a 0.25% allowance for diminution of value across all of the remaining land. In this case, the figure is $11,558. It is the same in all of the other cases except for MC 72359, where it is $11,561. The allowance is 1% of the size of the allowance applied over the area of the tenure. The size of the balance area gives some indication of the distances likely to be involved. The valuer reports that there are twelve main paddocks, 7 equipped bores and over twenty dams. On the evidence, the Court is not able to be satisfied that the tenure would result in diminution of value across the entire balance area, particularly in view of the 2 ha limitation which has been referred to. The Court does not propose to allow this item of compensation sought.^[16]

Owner’s time

32. [32]
    The valuer reports that time to manage the claims will be four hours per month plus, in the cases of MC 72358 and MC 72360, additional mustering at four hours per muster and six musters per year, a total of 24 hours. The number of hours allowed by the valuer is as set out in the calculations on page 19 of the report, in section 14.3, 48 hours per year for MC 72358 and the same for MC 72360, with 24 hours per year in the case of the other tenures. As has already been indicated, the text of the valuer’s report inclines the Court to the view that the time for managing all of the tenures has been estimated but added in whole to each one except for the two northern tenures, where it was also doubled.

Conclusion – Court file MRA 413-14

33. [33]
    As has been discussed, compensation for the ten year period of the tenure will include a total of $1,741.25 for the deprivation of the area of the tenure. The Court has apportioned this cost equally to each year of the tenure. In the case of MC 72358 compensation for the first year should be calculated as follows:

$  174 direct impact on the land

$1,200 owners’ time for additional mustering time at four hours per muster and six musters per year at $100 per hour. This cost shared over two tenures. The need for this was not disputed.

$  800 Owner’s time for four visits each of one hour per month to manage all of the tenures. Forty-eight hours shared equally across six tenures is eight hours per year per tenure. The need for this cost was not disputed.

$2,174

Add 10% $   217 reflecting the compulsory nature of the process

 $2,391 compensation per annum

34. [34]
    As there is a ten year term, it would seem suitable for the amount to be paid in advance on a per year basis. The submissions for the applicant, offering $500 per year, also offer Consumer Price Index (CPI) increases, or 3 per cent. In order to protect the value of the compensation and, in view of the applicants’ offer of this in the present cases as an option, it will be ordered that the $2,391 payable in the first year be increased by the CPI in each subsequent year so as to preserve its value.

Court file MRA414-14

35. [35]
    MC 72359 is dealt with on Court file MRA414-14. It has an area of 15.9812 ha and a requested term of ten years. The same submissions and valuation have been provided in respect of this matter. The Court’s considerations and conclusions are relevantly identical to the first matter and need not be repeated. In this case there is no claim for extra mustering. Allowing for the smaller area than the first matter the compensation for MC 72359 for the first year will be calculated as follows:

$  140 direct impact on the land

$  800 being 8 hours of owners’ time to manage the tenure

$  940

Add 10% $    94 reflecting the compulsory nature of the process

 $1,034 compensation per annum

This will be adjusted in the following years as was done in the first matter.

Court file MRA415-14

36. [36]
    MC 72362 is dealt with on Court file MRA415-14. It has an area of 18.8581 ha and the term sought is ten years. The same material is provided. Allowing for the area as the variable here, compensation for MC 72362 for the first year will be:

$  165 direct impact on the land

$  800 being 8 hours of owners’ time to manage the tenure

$  965

Add 10% $    96 reflecting the compulsory nature of the process

 $1,061 compensation per annum

This will be adjusted in the following years as has been explained above.

Court file MRA416-14

37. [37]
    MC 72363 is dealt with in Court file MRA416-14. The area is 19.4084 ha and the term sought is ten years. The same material is provided for consideration. Compensation for MC 72363 for the first year will be:

$  170 direct impact on the land

$  800 being 8 hours of owners’ time to manage the tenure

$  970

Add 10% $    97 reflecting the compulsory nature of the process

 $1,067 compensation per annum

This will also be adjusted in the same way as the others in the following years.

Court file MRA418-14

38. [38]
    MC 72360 is dealt with in Court file MRA418-14. The area is 19.9688 ha and the term sought is ten years. The material provided is the same. Additional mustering costs are also required in this case as they were in MC 72358. Compensation for MC 72360 for the first year will be: :

$  172 direct impact on the land

$1,200 owners’ time for additional mustering time as in MC 72358

$  800 being 8 hours of owners’ time to manage the tenure

$2,172

Add 10% $   217 reflecting the compulsory nature of the process

 $2,389 compensation per annum

This will be adjusted in the same way as the others in the following years.

Court file MRA419-14

39. [39]
    MC 72361 is dealt with in Court file MRA419-14. The area is 19.9181 ha and the term sought is ten years. The material provided is the same. Compensation for MC 72361 for the first year will be: :

$  174 direct impact on the land

$  800 being 8 hours of owners’ time to manage the tenure

$  974

Add 10% $    97 reflecting the compulsory nature of the process

 $1,071 compensation per annum

This will be adjusted in the same way as the others in the following years.

Orders

1. Compensation payable by the applicant to the respondents for the grant of MC 72358 is determined in the sum of $2,391 per annum for the first year and that sum as adjusted in accordance with the Consumer Price Index in each subsequent year of the tenure.

2. Compensation payable by the applicant to the respondents for the grant of MC 72359 is determined in the sum of $1,034 per annum for the first year and that sum as adjusted in accordance with the Consumer Price Index in each subsequent year of the tenure.

3. Compensation payable by the applicant to the respondents for the grant of MC 72362 is determined in the sum of $1,061 per annum for the first year and that sum as adjusted in accordance with the Consumer Price Index in each subsequent year of the tenure.

4. Compensation payable by the applicant to the respondents for the grant of MC 72363 is determined in the sum of $1,067 per annum for the first year and that sum as adjusted in accordance with the Consumer Price Index in each subsequent year of the tenure.

5. Compensation payable by the applicant to the respondents for the grant of MC 72360 is determined in the sum of $2,389 per annum for the first year and that sum as adjusted in accordance with the Consumer Price Index in each subsequent year of the tenure.

6. Compensation payable by the applicant to the respondents for the grant of MC 72361 is determined in the sum of $1,071 per annum for the first year and that sum as adjusted in accordance with the Consumer Price Index in each subsequent year of the tenure.

7. In all cases the compensation shall be paid per annum in advance. It shall be paid within one month of the date of grant of the Mining Claim and in each subsequent year on the anniversary date of the date of grant.

WA ISDALE

MEMBER OF THE LAND COURT