Munns v Wharley[2016] QLC 35

LAND COURT OF QUEENSLAND

1. [1]
   This matter involves a referral to the Land Court pursuant to s 85(12) of the Mineral Resources Act 1989 (MRA) for the determination of compensation in respect of the grant of a mining claim.

Background

2. [2]
   The applicant Dale Frank Munns (the applicant) applied for the grant of mining claim 72387 on 19 August 2014. The land upon which the proposed mining claim is located is approximately 80 km north-west of Emerald, within the Emerald Mining District. The land is within the Central Highlands Regional Council local government area. The purpose of the proposed grant is for the mining of Sapphire and Zircon.
3. [3]
   The land upon which the mining claim and access track is situated is owned by Peter Andrew Wharley, Allison Denise Wharley and Fay Rose Walker (the respondents). The land is known as “Reklaw Park” and is more particularly described as Lot 10 on CLM673 GHPL 12/2424. It is approximately 12,300 hectares in area and is used for grazing purposes.
4. [4]
   The specific Land Court reference and tenure details are set out as follows: 

Relevant Legislation

5. [5]
   Section 85 of the MRA provides that a mining claim shall not be granted or renewed unless compensation has been determined (whether by agreement or by determination of the Land Court) between the applicant and each person who is the owner of land the subject of the application and of any surface access to that land. In respect of this matter, no agreement has been lodged with the Department of Natural Resources and Mines (DNRM) and accordingly the matter has been referred to the Land Court for determination.
6. [6]
   The matters that must be considered by the Court are set out in s 85(7) of the MRA which provides that an owner of land is entitled to 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.

7. [7]
   Section 85(8) of the MRA enables various additional factors to be included in the compensation assessment. In the present case, only paragraph (e) is relevant. It provides as follows:

1. “(8)
   In assessing the amount of compensation payable under subsection (7) -

…

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

8. [8]
   In Wills v Minerva Coal Pty Ltd [No. 2]^[1], when considering a provision effectively identical to s 85 of the MRA this Court observed as follows -

“It is beyond question as I have written above that the primary source of law is the statute under consideration and it seems to me that the learned Member acknowledged this when he said:

‘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.’

Section 281 MRA neither prescribes nor suggests a method of assessment or valuation either. The selection of an appropriate method is a matter for the relevant expert, however, there is one warning that I should post. If the expert was to approach the assessment of compensation by simply accumulating figures assessed independently under each of the items listed in s.281(3)(a)(i) to (vi) and without regard to the prospect of a matter being dealt with under more than one item, the chance that there will be a duplication of items assessed will be high.”

9. [9]
   Similarly in Mitchell v Oakhill and Mitchell^[2], the then President of the Land Court observed in relation to s 281 of the MRA:

“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.”

The Conduct of Proceedings

10. [10]
    On 9 April 2015, the Land Court registry forwarded correspondence to the parties setting out a timetable for the delivery of materials and submissions in accordance with Land Court Practice Direction No 5 of 2013.
11. [11]
    The parties have provided written submissions in support of their respective positions. On 25 January 2016, the Acting Mining Registrar requested that the determination be placed on hold to enable further consideration to be undertaken as part of MC 72387 may have been situated within an “Environmentally Sensitive Area”.
12. [12]
    On 7 April 2016, correspondence from the Acting Mining Registrar advised that MC 72387 was situated within an Environmentally Sensitive Area with the implication that “no mining activity will be able to take place in the area covered in blue/purple”. Mapping that was provided depicted the Environmentally Sensitive Area overlapping along the northern and western boundaries of MC 72387. The area was said to comprise approximately 50% of the claim. This information was provided to the parties by email on 13 May 2016.
13. [13]
    On 13 May 2016, Deputy Registrar De Marco wrote to the parties and the Principal Mining Registrar at Emerald seeking advice regarding the required environmental authority for MC 72387 in view of the Environmentally Sensitive Area.
14. [14]
    On 19 May 2016, correspondence was received from Mr Jason Turner, Principal Mining Registrar, DNRM advising that:

1. The applicant, Mr Munns had not made an application to the Department of Environment and Heritage Protection for an environmental authority for MC 72387. (the forms had since been emailed to Mr Munns).
2. As the mining claim application falls within an Environmentally Sensitive Area and the 500m buffer of the Environmentally Sensitive Area it is no longer eligible to be a small scale mining activity. For any mining activity to occur an environmental authority will be required.

15. [15]
    On 20 May 2016, further email correspondence was received from Mr Jason Turner advising inter alia that following an inspection with an officer from the Department of Environment and Heritage Protection it was ascertained that there “is no Environmentally Sensitive Area in the Tomahawk Creek area that effects MC 72387” and   “this would mean that the whole area of MC 72387 could be mined”. This determination will therefore be undertaken on the basis of this advice from the Principal Mining Registrar.

The Applicant’s Submissions

16. [16]
    The applicant provided a brief submission requesting the Court note that MC 72387 will be situated within Restricted Area 1 and that the environmental authority states that only 2 hectares of the claim may be disturbed at any time. The submission also requests the Court to “ refer to the Richardson, Richardson and Hanley cases already before the Land Court and to determine compensation as this mining claim abuts these mining claims”.

The Respondents’ Submission

17. [17]
    The respondents have provided a compensation statement in support of their position. Exhibit 1 to that statement is a valuation report by the Opteon Property Group dated 25 July 2014. This report was prepared in respect of earlier Land Court proceedings namely, Richardson & Ors v Wharley & Ors^[3] (Richardson). The mining claims in those proceedings were in the immediate vicinity of MC 72387. Exhibit 2 to the compensation statement is a copy of the decision in Richardson.  As this decision is the most recent determination within the Emerald District, was contested, and largely based on expert valuation evidence, I am prepared to follow that Court judgment as a guide in the present determination.
18. [18]
    Although the valuation report by Opteon Property Group does not purport to address the factors identified in s 85 of the MRA in relation to the present claim, MC 72387, it does address adjoining claims MC 72357 and MC 72362. In the circumstances, and in the absence of any other evidence or formal objection, I am prepared to receive the valuation report for the purpose of considering the landowners submissions.
19. [19]
    An invoice from the Opteon Property Group in respect of the valuation report was provided by the landowners together with the following Court decisions:

1. Sloan & Anor v Weir & Gregcarbil Pty Ltd [2009] QLC 0183
2. Woels v Hicks [2010] QLC 0137
3. Salmon v Richardson & Anor [2014] QLC 9
4. Gregcarbil Pty Ltd v Backus and Ors [2013] QLC 68

20. [20]
    Given the similarity and proximity of the claims in Richardson it is not surprising that the contentions on behalf of the respondent are mostly premised on that decision. The contentions will be considered below using the same subheadings as the compensation statement.

Direct impact on land

21. [21]
    It is clear from the Richardson decision that this aspect of compensation was assessed on the basis of only 2 Ha of the tenure being disturbed by mining at any one time. The Court, however, concluded that as a consequence of this disturbance, the respondents were effectively deprived of the entire surface area of the tenure. In the absence of any submission to the contrary I accept the landowners’ contention and adopt the amount assessed in Richardson in respect of this item at $174/annum.

Diminution of value of balance land

22. [22]
    I have again examined the landowners’ submissions in light of the Richardson decision. On the evidence before me, and given the comparatively small area of disturbance within MC 72387 and the much larger balance area within Reklaw Park, I am unable to accept the contention some additional impact would apply over the balance land. I agree with the decision in the Richardson case that compensation should not be granted in respect of this item.

Owner’s Time

23. [23]
    I have considered the landowners’ contentions in support of a claim for $1200 per annum. This total annual amount is said to be calculated on the basis of $100 per hour for weekly inspections of 15 minutes. In Richardson an amount of $800 dollars was awarded in respect of owner’s time on the basis of four visits of one hour per month shared equally across each of the six tenures, i.e. 48 hours in total for the year, with eight hours apportioned in respect of each claim. 

The expert evidence relied upon by the landowners in Richardson was premised on four monthly inspections of the six claim areas with the Court adopting a similar frequency of inspections in its reasoning. On this basis and given the proximity of MC 72387 to the mining claims assessed in Richardson, I am unable to accept the landowners’ contention for weekly inspections of 15 minutes duration. Accordingly, I consider that an annual amount of $800 for owner’s time is fair and reasonable in the current circumstances.

Initial Costs: Administrative time and valuation reports

24. [24]
    In this regard the landowners have sought “4 hours of landowner time to respond to this particular claim” together with “5% of the cost to be attributed to this applicant” (the valuation report cost of $3,000).

Whether these items are claimable at all arises as a threshold issue as a result of the Court of Appeal decision in Sullivan v Oil Company of Australia Ltd (No.2.)^[4] (Sullivan).

In Sullivan it was held that legal fees paid for the preparation of a compensation claim pursuant to the Petroleum Act 1923 were not claimable as the fees could not be considered “…as consequential upon the occupation of land under an authority to prospect or lease…”^[5].

25. [25]
    Sullivan was considered by Member Jones (as he then was) in Matrix Metals Limited v The North Australian Pastoral Company Pty Ltd^[6]. In that case, the relevant claim concerned “other costs” including “two hours of owners time and a contribution towards the owners legal and professional costs”. Member Jones observed:

25. “[13]
    In Sullivan v Oil Company of Australia Ltd (No. 2) the Court of Appeal held that legal fees paid by the owner in preparation of a claim for compensation were not compensable under the Petroleum Act 1923 because such fees could not be properly characterised as damages consequential upon the occupation of land under the relevant mining authorities issued under that Act. In this matter I feel bound by the reasoning of the Court of Appeal in Sullivan to reject the "Other Costs" claim.
26. [14]
    In my opinion the claim could only succeed if its elements reasonably fell within the description "loss or expense that arises as a consequence of the … renewal of the mining lease". In Sullivan the Court of Appeal considered that valuation and legal fees incurred in the preparation of a claim for compensation should not be treated any differently from costs in any other form of litigation. The wording of s.281(3)(a)(vi) does not, in my opinion, allow me to reasonably distinguish and depart from the reasoning of the Court in Sullivan.”

26. [26]
    In the respect of the “Initial Costs” claimed by the landowners in respect of administrative time and valuation report costs, I am unable to conclude on balance that these costs arise as a consequence of the grant of MC 72387 and as a result these items cannot be included in this assessment of compensation.

Compensation

27. [27]
    After consideration of the materials and evidence before me and taking into account the findings of the recent Court judgment in Richardson, I consider the following determination in respect of MC 72387 to be fair and reasonable:

MC 72387

28. [28]
    Given the length of the term (10 years) I also consider that Consumer Price Index increases should be applied to the compensation amount in the second and subsequent years of the claim period. I also concur with the reasoning in Richardson that the compensation amounts should be paid in advance and order accordingly.

ORDERS

1. Compensation payable by the applicant to the respondents for the grant of MC 72387 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.

2. That the compensation pursuant to Order 1 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.

GJ SMITH

JUDICIAL REGISTRAR