Bengal Coal Pty Ltd v Cradcorp Pty Ltd (No 2)
[2017] QLC 47
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- Unreported Judgment
- Bengal Coal Pty Ltd v Cradcorp Pty Ltd (No 2)[2017] QLC 47
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Bengal Coal Pty Ltd v Cradcorp Pty Ltd (No 2)[2017] QLC 47
Bengal Coal Pty Ltd v Cradcorp Pty Ltd (No 2)[2017] QLC 47
LAND COURT OF QUEENSLAND
CITATION: | Bengal Coal Pty Ltd v Cradcorp Pty Ltd as TTE (No 2) [2017] QLC 47 |
PARTIES: | Bengal Coal Pty Ltd (applicant) |
v | |
Cradcorp Pty Ltd as TTE (respondent) | |
FILE NO/s: | MRA1148-16 |
DIVISION: | General division |
PROCEEDING: | Determination of compensation payable for grant of mining lease application 70507 |
DELIVERED ON: | 30 August 2017 |
DELIVERED AT: | Brisbane |
HEARD ON: | 26 July 2017 Final submissions filed 17 August 2017 |
HEARD AT: | Brisbane |
PRESIDENT: | FY Kingham |
ORDERS: |
|
CATCHWORDS: | ENERGY AND RESOURCES – MINING FOR MINERALS – COMPENSATION – COAL MINE – proceeding to determine compensation on grant of mining lease – where the proceedings commenced by referral – where both valuers undertook a piecemeal assessment – where both valuers considered a loss of possession of overlapped land; diminution in value of the balance land; and loss of infrastructure – where the applicant’s valuer relied on a comparable sales analysis – where the respondent’s valuer relied on two previous transactions involving the applicant and relating to land within the area of the proposed mining lease – where the respondent’s method does not comply with the Spencer test – where the applicant’s valuation method was accepted – where the applicant’s valuation evidence was accepted PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – where the applicant submitted the respondent pay its costs of the proceedings, including of the stay application – where the respondent’s conduct in the case was found to not be reasonable and responsible from the date it failed to comply with a direction of the Court – where costs are intended to indemnify the successful party against litigation expenses – where costs were awarded in favour of the applicant assessed on the standard basis Land Court Act 2000 s 34(1) Mineral Resources Act 1989 s 279, s 281, s 281(7) Anson Holdings Pty Ltd v Wallace & Anor (2010) 31 QLCR 74, considered Bengal Coal Pty Ltd v Cradcorp Pty Ltd as TTE [2017] QLC 16, considered Commissioner for ACT Revenue v Rosnet Pty Ltd (1994) 94 ATC 4424, considered Glencore Coal Queensland Pty Ltd & Ors v Keys & Ors [2014] QLAC 2, applied Mayne Property Development Pty Ltd v Chief Executive, Department of Natural Resources (1996-1997) 16 QLCR 709, considered Mentech Resources Pty Ltd v MCG Resources Pty Ltd (in liq) (No 2) (2012) 33 QLCR 43, applied Moreton Bay Regional Council v Mekpine (2014) 35 QLCR 273, applied PT Limited and Westfield Management Limited v Department of Natural Resources and Mines [2007] QLAC 121, considered Redeam Pty Ltd v South Australian Land Commission (1977) 40 LGRA 151, followed Wills v Minerva Coal Pty Ltd [1998] QLC 149, followed Spencer v The Commonwealth (1907) 5 CLR 418, followed |
APPEARANCES: | MG Lyons of Counsel, instructed by McCullough Robertson Lawyers, for the applicant G Houen, Landholder Services Pty Ltd as agent, for the respondent |
Background
- [1]Bengal Coal Pty Ltd has applied for a mining lease[1] which includes a 299ha parcel of land owned by Cradcorp Pty Ltd (“the overlapped land”) within an 18,000ha cattle breeding property known as “Dysart Station”. Dysart Station is already subject to another mining lease[2] which caused severance issues and reduced the value of Dysart Station.
- [2]The overlapped land is a triangular shaped area in the northeast of Dysart Station adjoining a road reserve. If granted, the ML will form part of the Dysart East Coal Project. Before the ML can be granted, the Court must determine compensation payable by Bengal Coal to Cradcorp.[3]
- [3]The parties each called evidence from a valuer. Their assessments of compensation are poles apart. Mr Patrick Lyons, engaged by Bengal Coal, assessed the market value of the land subject to the ML at $442,500. Mr Peter Jinks, engaged by Cradcorp, assessed it at $1,345,000. The gulf between their assessments arises from their conflicting views about what sales and other evidence is relevant in determining the market value of Dysart Station as a whole, and the overlapped land in particular.
- [4]The valuers did agree on some matters which confined the scope of the hearing. It is common ground a before and after assessment of Dysart Station as a whole was not appropriate, because of the small area subject to the MLA. Further, in undertaking a piecemeal assessment, both valuers addressed three aspects of compensation: loss of possession of the overlapped land; diminution in value of the balance land; and loss of infrastructure.
- [5]For the loss of possession of the overlapped land, they agreed compensation should be assessed as a total loss of value of the land within the ML area.[4]
- [6]Mr Lyons allowed $442,500 and Mr Jinks allowed $1,345,000. Mr Lyons started with a rate of $1,850/ha derived from analysis of certain sales, which he discounted by 20% to reflect the impact of severance and other aspects of the existing ML. That resulted in a rate of $1,480/ha.[5] Mr Jinks applied a rate of $4,500 which was derived from two transactions, without any discount.
- [7]For diminution in value of the balance land, they agreed a 726ha area of land to the east of the ML area would suffer a diminution in value of 10% as a result of the grant of the ML.
- [8]Mr Lyons allowed $98,736 and Mr Jinks allowed $290,400. Mr Lyons started with a rate of $1,700/ha which he discounted by 20% the impact of severance and other aspects of the existing ML. That resulted in a rate of $1,360/ha. Mr Jinks applied a per/ha rate of $4,000. It is not clear how he arrived at that rate.
- [9]There are two further matters that do not appear to be in dispute, although they were not agreed between the valuers.
- [10]Firstly, Mr Lyons allowed a further $121,500 for diminution in value of the balance land for the blot on title. He started with his valuation for Dysart Station (without the ML area) at $12,150,000. He allowed 1% diminution in value, taking into account the small size and remoteness of the overlapped land in relation to Dysart Station. Mr Jinks made no separate allowance for this.
- [11]Secondly, at the hearing counsel for Bengal Coal said he was instructed not to dispute Mr Jinks’ assessment of $93,520 for the value of infrastructure lost to mining and Cradcorp’s claim for the valuation fee of $3,938.
- [12]Although Mr Lyons was cross-examined about a number of aspects of his valuation, the primary issue related to the evidence used to derive market value. Mr Jinks’ assessment depends entirely on two transactions relating to land within the area of Bengal Coal’s proposed ML. One was a sale of a parcel of land by a group of companies known collectively as BMA[6] to Bengal Coal (the BMA contract). The other was a compensation agreement entered into between Bengal Coal and another owner of land (the Murphy agreement).
- [13]Initially, Mr Lyons did not consider those transactions. Because of the circumstances in which the transactions occurred, he did not accept they were relevant evidence of market value. Nevertheless, at the Court’s request, he identified how he would analyse the transactions if the Court did take them into account.
- [14]Mr Jinks, on the other hand, could not assist the Court to assess market value if those transactions were not taken into account. He considered the sales evidence referred to by Mr Lyons had “no bearing or similarity to the subject land”.[7] If the Court does not accept Mr Jinks’ view about those two transactions, then, his evidence is of no assistance.
- [15]The issues that arise are:
- Are the BMA contract and the Murphy agreement relevant in assessing market value?
- Should Mr Lyons’ assessment of compensation be accepted?
Are the BMA contract and the Murphy agreement relevant in assessing market value?
- [16]In determining compensation, the Court must assess the impact of the grant of the ML on the value of the land of the owner.[8] That has been interpreted to mean the value of the land to the owner, ascertained in accordance with the Spencer test: the price a willing purchaser would have paid to a vendor who was not unwilling, but not anxious to sell.[9]
- [17]
- [18]Mr Jinks considered the BMA contract and the Murphy agreement are the only relevant transactions, because they relate to land within the ML area. He said there is no other sales evidence from which he could derive market value.[12] Bengal Coal’s objection to both these transactions is that they do not pass the Spencer test.
- [19]A sale to a resource agreement need not be disregarded simply because of the identity of the purchaser. It does not automatically follow that the price paid by a resource company exceeds market value. However, such a sale should be treated with some care.[13]
- [20]The same caution is taken to sales by liquidators or mortgagees in possession.[14] They are sometimes referred to as forced sales. The concern is the purchaser will have secured the property for less than its market value because the liquidator or mortgagee has an interest in securing a quick and certain sale, rather than ensuring the property is adequately marketed and sold at its full value.
- [21]The concern with sales to resource companies is that the price paid may be above the market value. There are many reasons a resource company may be willing to pay a premium. Owning the land may eliminate an objection to grant of the ML and, therefore the costs, delays, and uncertainties of dealing with that objection during the approval process. It may avoid the same issues relating to compensating the affected landowner, as this must be resolved before the ML can be granted. The land may have some other value associated with the mining project, such as access, a location for associated off-lease activities, or to provide a buffer to neighbouring land users.
- [22]In this case, there is evidence about the circumstances in which the transactions occurred.[15] Bengal Coal called evidence from Mr Lumb, a manager and director of Dysart Coal Mine Management Pty Ltd, which is the project manager for Dysart East Coal Project. Mr Lumb said the amounts paid under both the BMA contract and the Murphy agreement were determined by factors other than the market value of the land.
- [23]In the case of the BMA contract, Mr Lumb said Bengal Coal considered the benefits of avoiding an objection to the grant of the ML and associated court proceedings. It was evident to him that BMA was not using a market value assessment of the land as the basis for negotiations. He considered Bengal Coal paid what it needed to in order to secure the land, taking into account that this would avoid the costs and delay associated with either objections or compensation proceedings involving BMA. The price included BMA’s transaction costs and advisors’ costs and was set by BMA.[16] Although they hoped to achieve the same result with all objectors, in dealing with each objector they took into account these factors in their negotiations with individual landowners.[17]
- [24]As for the Murphy agreement, Mr Lumb said Bengal Coal paid the Murphys more than the market value as assessed by Mr Lyons.[18] Mr Lyons had prepared a report to assist the company in its negotiations with the Murphys.[19] The amount paid under the agreement exceeded that assessment. As well as avoiding the costs and delays associated with its application, the compensation agreement dealt with compensation for any renewals or other approvals. Further the delay in payment of compensation, the bulk being paid 6 months after grant, was a significant benefit.[20]
- [25]The agent for Cradcorp, Mr Houen, cross-examined Mr Lumb about this. He questioned whether Bengal Coal had received the benefits it said it paid a premium for. Mr Lumb confirmed not all landowner issues were resolved by agreement. That was hardly in issue, as these proceedings demonstrate.
- [26]Mr Houen implied there was no value in reaching agreement with one potential landowner unless the issues with all landowners were resolved. Mr Lumb said:[21]
“…we were aiming to negotiate with every party and to avoid this – going through this process with everybody. Unfortunately, that didn’t happen…”
- [27]Bengal Coal failed to reach agreement with all potential objectors or affected landowners and took some time to reach those agreements they secured. That does not mean the transactions are evidence of market value. To the contrary, Mr Lumb’s evidence establishes Bengal Coal was willing to pay a premium in relation to each individual landowner. It seems there was a particular concern about BMA objecting to the ML.[22] Whether or not they could secure agreement of all landowners, there is a clear benefit to Bengal Coal in settling with each.
- [28]I accept Bengal Coal was motivated in its decisions in both transactions by factors that could have inflated the price above the market value. Cradcorp led no evidence to indicate that the price paid, in fact, reflected market value. Because Mr Jinks placed sole reliance on these transactions he could give no assistance in that regard.[23]
- [29]In his written submissions Mr Houen raised for the first time an argument that these transactions are relevant because the highest and best use of the land was for mining.[24] There is no basis in the evidence for that submission. Mr Jinks expressed no opinion about the highest and best use of the land. Mr Lyons did. He said the current use[25] is the highest and best use.[26]
- [30]In summary, there is no evidence the amounts paid under the transactions represent the market value for those areas of land. The rates derived by Mr Jinks from them are $3,340/ha for the BMA contract and $4,173/ha for the Murphy agreement. Those rates are significantly above the rates Mr Lyons derived from the sales he analysed.[27] Mr Jinks did not assist by reference to any other sales. When the Murphy agreement was entered into, Bengal Coal had Mr Lyons’ assessment of value at significantly below the amount paid to the Murphys. Mr Lumb’s evidence about the factors that influenced Bengal Coal in agreeing to the amounts paid under each transaction was not effectively challenged.
- [31]I consider these transactions should be disregarded in determining the value of the land to Cradcorp.
- [32]If I am wrong in that conclusion, Mr Lyons has been helpful in explaining how he would analyse the transactions by reference to the sales which he considered were comparable. Taking into account the circumstances in which the transactions occurred, Mr Lyons analysed the BMA contract at $1,924/ha and the Murphy agreement at $2,090/ha. He considered the land involved in both transactions was superior. Mr Lyons’ evidence about the comparable sales is unchallenged. I have no reason to reject his analysis of the BMA contract and the Murphy agreement. If I had taken those transactions into account, I would have accepted Mr Lyons’ evidence that his assessment of market value did not need to be adjusted because of them.
Should Mr Lyons’ assessment of compensation be accepted?
- [33]The effect of my finding about the disputed transactions is that Cradcorp has no evidence supporting a different assessment to the one made by Mr Lyons. Assuming I did not consider the disputed transactions, Mr Jinks said that he “would not have a basis of value” and couldn’t provide an opinion on market value.[28]
- [34]There is, therefore, no contrary expert evidence to that given by Mr Lyons about comparable sales. That does not mean his evidence was not challenged. Mr Houen questioned Mr Lyons about a number of matters either in cross examination or through his submissions:
- (a)cropping land suitability;
- (b)subsidence;
- (c)discount for existing ML; and
- (d)basis of valuation.
Cropping land suitability
- [35]Mr Houen made a number of submissions about the cropping suitability of the overlapped land and the balance area to the east.[29] He said that Mr Jinks described the whole of the subject land as suitable for cropping. That is not accurate. In his report, Mr Jinks said the land is considered to be strategic cropping land.[30] That is not in dispute.
- [36]In answer to my question about the proportion of land within the overlapped land that was suitable for commercial cropping, Mr Lyons said it was about 50/50. The other 50% was more suitable for fodder crops, consistent with what he had seen on the balance of the property. Either way, to develop the land for cropping would require significant expenditure to develop it because of the large timber.[31] Later, he clarified that he had done a more precise allocation between the two areas (120ha was above average quality and the other area was 179ha).[32]
- [37]It is not clear what Mr Houen says the Court should make of his submissions about this evidence. Mr Lyons recognised the cropping suitability in his assessment of compensation for both the overlapped land and the balance land to the east.[33] I see no conflict between his oral evidence and his report or, for that matter, between that evidence and what Mr Jinks said in his report.
Subsidence
- [38]Mr Houen asked Mr Lyons a number of questions about subsidence. This has no relevance to Mr Lyons’ assessment for the overlapped land as he assumed a total loss. Even if the risk of subsidence was fully realised it could have no impact on his assessment as he assumed the overlapped land will have no residual value.[34]
- [39]It could have some relevance for assessing diminution in value of the balance lands. However, there was no dispute about the approach the Court should adopt to that assessment. Both Mr Lyons and Mr Jinks reduced their market value assessment by 10%. No other basis for dealing with the issue of subsidence was raised during the hearing.
Discount for existing ML
- [40]Mr Lyons was questioned about his analysis of the sale of “Broadlea”, but Mr Houen made no submissions about this evidence.
- [41]Mr Lyons undertook a detailed analysis of that sale. When it was sold, it was subject to two mining leases and two major haul roads crossed the property. By reference to unencumbered land, Mr Lyons assessed the reduction in value of the usable area of the property at 23.2%.[35] He used that analysis to support his application of a 20% discount to the rates used for the overlapped land, the land to the east and Dysart Station as a whole.[36]
- [42]I accept Mr Lyons had a sound basis for doing so.
Basis of valuation
- [43]Mr Houen’s submissions about Mr Lyons’ valuation are somewhat difficult to follow.[37] He made a number of arguments about the size of the properties considered by Mr Lyons and the size of the parcels involved in the disputed transactions. He also raised questions about whether a smaller parcel had to be a separate title before sales of a similar size were relevant.
- [44]Doing the best I can to understand his point, it seems that Mr Houen argued the disputed transactions used by Mr Jinks should be preferred because they were of a similar size. I have already addressed the disputed transactions and will not address that issue further.
- [45]Mr Houen suggested reliance on sales of larger properties is risky when the subject area is so small in comparison. Mr Lyons recognised the difficulty in assessing compensation for the overlapped land because of its size. That is one of the reasons he chose to assess compensation on a piecemeal basis rather than by using the before and after method.[38]
- [46]Mr Lyons examined nine sales in detail. One of them was “Broadlea” which he did not rely on for evidence of market value. The purpose of that analysis has already been discussed in these reasons. The other 8 sales are the basis for the rates he applied to the overlapped land, the area to the east, and Dysart Station as a whole. All those sales occurred within 12 months of his valuation. He placed more weight on the more recent of those sales because there was then a rising market for rural property.
- [47]Mr Lyons derived different rates by reference to the type of country and its quality compared to the sales evidence. Before discounting for severance and injurious affection from the existing ML, he arrived at the following rates: $1,850/ha for the overlapped land; $1,700/ha for the balance land to the east; and for Dysart Station as a whole, $2,500/ha for good scrub cultivation land and $850/ha for fair to good grazing land.[39]
- [48]His analysis of the sales and the way in which he derived the rates was clearly explained. He was not effectively challenged. There is no basis for the Court to reject Mr Lyons’ assessment.
Other issues
- [49]Mr Houen raised two other issues which should be addressed in brief.
- [50]Firstly, in his submissions, he raised the prospect that the ML might be granted and compensation paid to Cradcorp before Bengal Coal had a decision on its application for a Regional Interests Development Approval.[40] He did not make it clear how this was relevant to the Court’s task of determining what compensation should be paid for the grant of the ML. I refused an application to stay this matter pending the RIDA process, for reasons already given. It is not necessary to say anything further about this issue.
- [51]Secondly, again in his submissions, Mr Houen referred to an offer made by Bengal Coal to Cradcorp during their negotiations.[41] He sought to use the offer to support his argument that mining is the highest and best use of the overlapped land.[42] The offer was admitted into evidence for an expressly limited purpose – to demonstrate the fact of the communication, the state of negotiations between the parties.[43] It was not admitted as evidence of value. I confirmed the basis it was tendered with Mr Houen before the offer was admitted. I will not consider it for any other purpose, including the one Mr Houen proposed in his submissions.
Assessment of compensation
- [52]The consequence of my findings is that compensation is assessed as follows:
Loss of possession of the overlapped land: $442,500
Diminution in value of land to the east of the overlapped land: $98,736
Diminution in value of the balance land: $121,500
Loss of infrastructure: $93,520
Valuation fee: $3,938
$760,194
10% s 281(4)(e) $76,019.40
Total compensation $836,213.40
Costs of the proceedings and of the stay application
- [53]Bengal Coal has applied for an order that Cradcorp pay its costs of the proceedings, including of the stay application, assessed on the standard basis.
- [54]The Land Court Act 2000 confers power on the Court to order costs for a proceeding as it considers appropriate.[44] The MRA confers a specific power to award costs on a determination of compensation under that Act.[45] Both provisions are to the same effect. That is, costs are at the unfettered discretion of the Court. That discretion must be exercised judicially.[46]
- [55]The general rule that applies in courts of civil jurisdiction is that costs follow the event. Although the rule does not bind the Court, the Land Appeal Court has recognised it may inform the exercise of the Court’s discretion, “as there is justice in that approach. It protects those put to unnecessary and substantial expense at the behest of others”.[47]
- [56]Bengal Coal is in a strong position on costs of both the stay application and the proceeding as a whole.
- [57]Dealing firstly with the stay application, it had no real prospects of success. I decided to reserve the costs, although I observed, for reasons explained, that Bengal Coal has good cause to ask for its costs.[48] At that stage, Cradcorp had not filed its compensation material and there was a prospect, albeit it seemed faint, that the issues raised by the stay application may have had some relevance to the compensation determination. As matters transpired, they did not and there seems no reason Bengal Coal should not have the costs of that application.
- [58]As for the proceedings as a whole, if the rule that costs follow the event was applied in this case, Bengal Coal would be entitled to the order it seeks. The compensation awarded to Cradcorp reflects what it proposed. The Court has accepted without qualification Mr Lyons’ expert evidence on the loss of land value attributable to the grant of the ML.
- [59]In proceedings of this nature, the Court takes into account that the parties are engaged in a statutory process which was instigated because one of them (in this case Bengal Coal) wants to mine land owned by the other (Cradcorp).[49] In that sense, the proceedings are not voluntary on Cradcorp’s part.
- [60]However, that is not the only consideration. Whether a party’s conduct in the matter was “reasonable and responsible” is also relevant in deciding how to exercise the Court’s discretion.[50]
- [61]In my decision on the stay application, I expressed my concern about Cradcorp’s position in the proceedings, given Bengal Coal’s approach to formulating compensation was to award full value to the land subject to the ML. I observed:[51]
“The next step in this case is for Cradcorp to formulate its Compensation Statement and to provide the evidence upon which it will rely, including valuation evidence. Given Bengal Coal’s approach to determining compensation, no doubt Cradcorp will give careful consideration to Bengal Coal’s valuation and determine where, if at all, there is a material dispute about what compensation should be awarded.”
- [62]In its conduct of this case, Cradcorp adopted an unusual and risky approach to assessing the market value of its land. Cradcorp proposed compensation be determined by reference to only two transactions, a sale and a compensation agreement, both of which involved resource companies. In his report, Mr Jinks, asserted the two transactions were “the most logical evidence of value to assess the compensation”.[52] He did not say they represented market value. He did not appear to undertake a comparable sales analysis, the method long recognised as the best evidence of market value.[53]
- [63]Cradcorp, and presumably Mr Jinks, knew there would be a dispute about the two transactions before he prepared his report. He already had a report prepared by the expert engaged by Bengal Coal, Mr Lyons, in which he identified the Land Appeal Court decision in Glencore Coal Queensland Pty Ltd & Ors v Keys & Ors as one of the precedents he had regard to in assessing compensation.[54] Mr Lyons explained that he had not had regard to sales which involved purchases by mining companies which were well above the prevailing non mining market.[55]
- [64]In Glencore, the appeal related to the Member’s acceptance of evidence from Mr Jinks about a sale to a resource company. The Land Appeal Court said:[56]
“In dealing with this sale, the starting position adopted in the Land Court was that a sale should not be disregarded simply because it was a sale to a resource company; and accordingly it did not automatically follow that the sale price exceeded the market value of the property. However it was recognised that the sale might not reflect market value, and accordingly should be treated with some care. There is no error in this approach.”
(emphasis added)
- [65]As Mr Jinks was an expert who gave evidence in Glencore, the Court would expect him to have been aware of this decision. The Court has the same expectation of Mr Houen, who regularly appears as a paid representative of parties in matters brought in this Court. Unfortunately, Mr Jinks did not treat those transactions with the care required.
As already noted, he said these transactions were the most logical evidence of value. He said:[57]
“To my mind the sale and the compensation agreement because of location, area, country type, no structural improvements or stock or plant represent the most logical evidence of value to assess the compensation for the subject land.”
- [66]Accepting, for argument’s sake, that the features he referred to mean that the land is comparable, Mr Jinks did not consider whether the transactions were comparable.
- [67]Mr Lyons filed a response to Mr Jinks’ report on 21 April 2017 in which he explained his concerns about the transactions:[58]
“I consider that the transactions as relied upon by Mr. Jinks in his assessment of compensation should not be preferred to an assessment based on the comparable sales relied upon by me for the above reasons.
At best, these transactions could be used as a ‘check’ on the valuation determined, however this would need to be undertaken with significant caution due to the circumstances of each transaction which are different to those in a normal market transaction within the definition of market value.
In this respect, I consider that the values derived from the two transactions (which I consider Mr. Jinks has incorrectly assessed for the above reasons) ought to be disregarded.
As a result, in my opinion, Mr. Jinks’ approach must be in error.”
- [68]Because of the polarity in the reports filed by the experts, on 3 May 2017 I ordered each valuer address the other’s contention:
“3. Each party must, by 24 May 2017, file a further report by their valuation expert addressing:
- (a)as to the Applicant’s expert, whether and how the expert’s opinion would change if an assumption was made that the two transactions identified in the P.J. Jinks & Associates Valuation Report dated 4 April 2017 are relevant to determination of compensation; and
- (b)as to the Respondent’s expert, whether and how the expert’s opinion would change if an assumption was made that the two transactions identified in the P.J. Jinks & Associates Valuation Report dated 4 April 2017 are not relevant to determination of compensation.”
- [69]Mr Lyons complied with the order. He maintained his view the sales were not relevant but explained how he would assess the premium involved in the transactions if I did decide to have regard to them.
- [70]Even on a generous view of Mr Jinks’ statement, he did not comply with the order. Unlike the scenario in Glencore, in this case Mr Jinks did have information about the circumstances of the transactions. That came from a party to both transactions, the applicant in this case.
- [71]In his further statement Mr Jinks referred to what Mr Lumb had to say about the circumstances of each of the transactions. Mr Jinks responded as if he were the advocate, not an expert witness providing an independent opinion to the Court:[59]
“I’ve read the reasons advanced by Bengal Coal’s valuer Mr Lyons and the reasons of Mr Lamb on behalf of Bengal, as to why Bengal purchased that lot too. In my opinion these reasons are unconvincing, for example…”
- [72]Mr Jinks maintained an adversarial stance when giving oral evidence. He was argumentative about the circumstances of the transactions. He said he would not necessarily believe what Mr Lumb said.[60] He did not appear to understand it was not his role to determine the circumstances of the transactions. Eventually, he conceded that, if the Court accepted Mr Lumb’s evidence, he could not provide an opinion about market value based on the transactions.[61]
- [73]The decision in Glencore provided useful guidance about the proper approach to such transactions. In that case, neither valuer had any evidence about the disputed sale to the resource company. That was found to be an insufficient basis for rejecting Mr Jinks’ evidence in relation to that sale. However, that was not the only sale Mr Jinks had regard to. The Land Appeal Court noted that Mr Jinks had considered other sales and had not been questioned about whether the sale to the resource company was inconsistent with them.[62]
- [74]Because of Mr Jinks’ involvement in Glencore the Court would expect him to have had a keen appreciation of the risks in relying on transactions involving a resource company without knowing the circumstances of those transactions and without some other evidence of market value. In the face of both Mr Lumb’s affidavit and the Court’s order, Mr Jinks’ insistence on the two transactions, to the exclusion of any other evidence of market value, was foolhardy.
- [75]Mr Houen submitted Cradcorp did not have control over Mr Jinks’ opinion. That is so. However, Cradcorp, through its agent, is in control of the conduct of its case. Mr Houen is not a lawyer but has been appearing in this Court and its predecessor for many years and should be familiar with matters of procedure. He could have instructed Mr Jinks to comply with the Court’s order. If Mr Jinks did not, Mr Houen could have sought leave to lead evidence from another expert.
- [76]Costs are not awarded to punish the unsuccessful party, but are intended to indemnify the successful party against the expense to which he or she has been put in the litigation.[63] I consider Cradcorp’s conduct in this case has not been reasonable and responsible, at least since 22 May 2017, when Cradcorp filed a statement by Mr Jinks which did not respond to the Court’s order. In the particular circumstances of this case, I consider discretion should be exercised in favour of Bengal Coal for its legal costs incurred after 22 May 2017.
Orders
- [77]I make the following orders:
- Bengal Coal Pty Ltd must pay Cradcorp Pty Ltd as TTE the sum of $836,213.40 by way of compensation within 14 days of the grant of ML 70507.
- Cradcorp Pty Ltd as TTE must pay Bengal Coal its costs (assessed on the standard basis, if not agreed):
- (a)of the application to stay the proceedings; and
- (b)of the proceedings, from 22 May 2017.
FY KINGHAM
PRESIDENT OF THE LAND COURT
Footnotes
[1]MLA 70507.
[2]ML1782.
[3]Mineral Resources Act 1989 ss 279 and 281.
[4]Although the ML term was 21 years, Bengal Coal had negotiated with Crapcorp on the assumption of a 25 year term, with Cradcorp excluded for the whole period. Bengal Coal accepts this represents a total loss of value of the land the subject of the ML.
[5]Ex 7, pp 27 and 28.
[6]BHP Coal Pty Ltd, Umal Consolidated Ptd Ltd, BHP Queensland Coal Investments Pty Ltd, Mitsubishi Development Pty Ltd, QCT Investment Pty Ltd, QCT Mining Pty Ltd & QCT Resources Pty Ltd.
[7]Ex 13, p 5.
[8]Mineral Resources Act 1989 s 281.
[9]Wills v Minerva Coal Pty Ltd [1998] QLC 149 at 25; Spencer v The Commonwealth (1907) 5 CLR 418 at 441.
[10]Redeam Pty Ltd v South Australian Land Commission (1977) 40 LGRA 151 at 156.
[11]Commissioner for ACT Revenue v Rosnet Pty Ltd (1994) 94 ATC 4424 at 4430; cited in Jacobs Law of Compulsory Land Acquisition (Law Book Co. 2010) at para 19.450.
[12]T 1-83, lines 1 to 30.
[13]Glencore Coal Queensland Pty Ltd & Ors v Keys & Ors [2014] QLAC 2 at [16].
[14] Mayne Property Development Pty Ltd v Chief Executive, Department of Natural Resources (1996-1997) 16 QLCR 709.
[15]That is a point of distinction to Glencore Coal Queensland Pty Ltd & Ors v Keys & Ors [2014] QLAC 2 in which case neither enquired of the purchaser.
[16]Ex 6, paras 16 to 22.
[17]T 1-41, lines 30 to 35.
[18]T 1-53, lines 15 to 20.
[19]Ex 6, para 29.
[20]Ex 6, paras 28 to 32.
[21]T 1-41, lines 43 to 35.
[22]T 1-41, lines 18 to 23.
[23]This is different to the approach adopted by Mr Jinks in the case of Glencore Coal Queensland Pty Ltd & Ors v Keys & Ors [2014] QLAC 2 at 21, where he had regard to other sales and there was no evidence that the disputed sale to the miner was inconsistent with other sales that were not disputed.
[24]Respondent’s submissions filed 14 August 2017, para 21.
[25]Breeding and backgrounding of beef cattle with significant areas of commercial cultivation.
[26]Ex 7, p 27.
[27]Before discounting for severance and injurious affection from the existing ML: $1,850/ha for the overlapped land; $1,700 for the balance land to the east; $2,500/ha for good scrub cultivation land and $850/ha for fair to good grazing land; Ex 7, pp 27 to 29.
[28]T 1-83, lines 19 to 21 and lines 26 to 30.
[29]Respondent’s submissions filed 14 August 2017, paras 4 to 7.
[30]Ex 12, para 1.
[31]T 1-57, lines 8 to 42.
[32]T 1-69, lines 26 to 46.
[33]Ex 7, pp 27 to 29; T 1-69, lines 45 to 46.
[34]T 1-67, lines 33 to 47; T 1-68, lines 1 to 44; T 1-69, lines 6 to 19.
[35]Ex 7, pp 43 to 44.
[36]Ex 7, pp 27 to 31.
[37]Respondent’s submissions filed 14 August 2017, paras 12 to 19.
[38]Ex 7, p 27.
[39]Ex 7, pp 27 to 29.
[40]Respondent’s submissions filed 14 August 2017, paras 1 to 3.
[41]Ex 4.
[42]Respondent’s submissions filed 14 August 2017, para 25.
[43]T 1-32, lines 12 to 18; T 1-35, line l3 to T 1-36, line 15.
[44]Land Court Act 2000 s 34(1); although this matter commenced by referral, the Court’s function is determinative and, therefore, is a proceeding.
[45]Mineral Resources Act 1989 s 281(7).
[46]Moreton Bay Regional Council v Mekpine (2014) 35 QLCR 273 at [12].
[47]Mentech Resources Pty Ltd v MCG Resources Pty Ltd (in liq) (No 2) (2012) 33 QLCR 43 at [4]; Moreton Bay Regional Council v Mekpine (2014) 35 QLCR 273 at [12].
[48]Bengal Coal Pty Ltd v Cradcorp Pty Ltd as TTE [2017] QLC 16 at [30] to [41].
[49]Anson Holdings Pty Ltd v Wallace & Anor (2010) 31 QLCR 74 at [29].
[50]Ibid at [34].
[51]Bengal Coal Pty Ltd v Cradcorp Pty Ltd as TTE [2017] QLC 16 at [42].
[52]Ex 12, p 7.
[53]Ex 12, p 5.
[54]Ex 7, p 26.
[55]Ex 7, p 33. That report was filed on 20 February 2017 (almost two months before the report of Mr Jinks).
[56]Glencore Coal Queensland Pty Ltd & Ors v Keys & Ors [2014] QLAC 2 at [16].
[57]Ex 12, p 7.
[58]Ex 8, p 1.
[59]Ex 13, p 2
[60]T 1-82, lines 13 to 15.
[61]T 1-83, lines 26 to 30.
[62]This case is different to the facts considered. See Glencore Coal Queensland Pty Ltd & Ors v Keys & Ors [2014] QLAC 2 at [19] to [21].
[63]PT Limited and Westfield Management Limited v Department of Natural Resources and Mines [2007] QLAC 121 at [25].