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- Unreported Judgment
Palmer River Pty Ltd v Callaghan QLC 38
LAND COURT OF QUEENSLAND
Palmer River Pty Ltd v Callaghan & Anor  QLC 38
Palmer River Pty Ltd
Bertie Lyndon Callaghan
Craig Anthony Callaghan
Determination of compensation for renewal of mining lease
22 October 2018
Submissions closed 8 June 2018
Allocated on 2 August 2018
Heard on the papers
ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – COMPENSATION – where land is used for carbon farming – where no material provided by either party
Mineral Resources Act 1989 s 85(12), s 279A, s 281
Alphadale Pty Ltd v Dore & Ors  QLC 15, considered
Hoolihan v Prichard  QLC 172, considered
Keyse v Phillipson & Ors  QLC 40, considered
Wills v Minerva Coal Pty Ltd (No. 2) (1998) 19 QLCR 297, considered
Thomsen v Struber  QLC 33, considered
Pavey & Anor v Struber & Anor  QLC 63, considered
Skrzypczynski & Ors v Hutchinson  QLC 4, considered
- This matter is a decision on a referral by the Chief Executive of the Department of Natural Resources and Mines (DNRM) to the Land Court pursuant to s 279A of the Mineral Resources Act 1989 (MRA) for the determination of compensation in respect of the renewal of mining lease 20366.
- On 30 April 2015, the applicant miner, Palmer River Pty Ltd, applied to renew ML 20366.
- The application sought a renewal of ML 20366 for a term of 5 years set to expire on 31 October 2020.
- The subject mining lease is located on several properties including Lot 233 on PH 1796, the Palmer River; on a property owned by Beverley Anne Kingsley, Howard Albert Kingsley and Mt Mulgrave Holdings Pty Ltd; and on a property owned by the respondents, Bertie Lyndon Callaghan and Craig Anthony Callaghan, whose property is described as Lot 5218 on PH 1103 and is known as Fairlight Station.
- The total area of the mining lease is 43.4534 hectares, of which, 7.1 hectares is located on the respondents property.
- As detailed in correspondence from the respondents’ representative, Lot 5218 on PH 1103 operates as a grazing property and trades in carbon farming.
- The Court notes that the signature of Mr Steine reflects “JDM Aust Pty Ltd”. However, Mr Steine has come to accept and respond to correspondence directed towards Palmer River Pty Ltd. Accordingly, he appears to be acting, or at least, accepting correspondence on their behalf. Therefore, there can be no suggestion that the entity, Palmer River Pty Ltd, is unaware of the progress of this matter.
- This decision is made to satisfy the requirements of s 279 of the MRA which provides that a mining lease shall not be granted or renewed unless an agreement in relation to compensation has been filed or, in the absence of such an agreement, a determination of compensation has been made by the Land Court.
- In the present case, no agreement has been lodged with the relevant Department and consequently, the matter has been referred to the Land Court for determination.
- Section 281 of the MRA sets out those matters which must be considered by this Court when determining the compensation.
- Section 281(3)(a) provides that an owner of land is entitled to compensation for:
- (i)deprivation of possession of the surface of land of the owner;
- (ii)diminution of the value of the land of the owner or any improvements thereon;
- (iii)diminution of the use made or which may be made of the land of the owner or any improvements thereon;
- (iv)severance of any part of the land from other parts thereof or from other land of the owner;
- (v)any surface rights of access;
- (vi)all loss or expense that arises;
as a consequence of the grant or renewal of the mining lease…
- Further s 281(4)(e) provides that in assessing the amount of compensation payable under s 281(3):
- (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).
- How the assessment of compensation is to be determined is not fully explained in the MRA itself. Rather, the MRA identifies matters to be taken into account without prescribing any particular method of valuation.
- The usual process reflected in a number of decisions of this Court is that the parties to a determination for compensation provide evidence, often expert evidence, which seeks to demonstrate what the appropriate amount of compensation should be. This is often done by reflecting the productivity of the land lost to the mining lease, the likely revenue to be gleaned from uninhibited use of that land, stocking rates for livestock or yield rates for cultivation and various items of disamenity caused by the inevitable intrusion into a landholders property by machinery and vehicles. In some cases, valuers and agronomists are engaged.
- It must be recognised, however, that the cost of such an exercise often results in a cost which far exceeds the revenue to which the dispossessed landowner may be entitled.
The conduct of these proceedings
- This Court gave notice to the parties that a preliminary conference was proposed to be heard by Member PG Stilgoe.
- On 6 November 2017, a preliminary conference was conducted at the Cairns Courthouse by Member Stilgoe. At the conclusion of the preliminary conference, the parties reached a tentative agreement as to the compensation amount pending the resolution of some of the issues mentioned in the preliminary conference.
- On 6 December 2017, a representative of the applicant confirmed that all that was needed was a signature from the director. The correspondence on file demonstrates a lack of response to repeated requests by the applicant seeking material relating to carbon farming costs from the respondents.
- As no agreement was lodged, the matter proceeded to a directions hearing. This occurred on 8 December 2017, where the parties informed the Court that they had a draft compensation agreement to be signed.
- On the same day as the directions hearing, the respondents were emailed by the director of the applicant, Mr Steine, asking if they agreed to the proposed compensation agreement or not. Mr Steine sent a further email to the respondents on 23 January 2018 asking whether there was agreement to $10 per hectare for the mining lease area and $5 per hectare for the access area.
- I will note at this juncture that ML 20366 does not affect the respondents land for access purposes and therefore access compensation is not considered in this decision.
- On 23 February 2018 Ms Cheree Callaghan, on behalf of respondents, agreed to the compensation proposed by Mr Steine with the reservation that compensation be included in the agreement for any fire affecting the respondents’ carbon farming.
- Ms Callaghan states that she and her husband use their property for the purpose of carbon credit compensation and is concerned that if a fire should occur on the mining lease area that fire could destroy trees which generate carbon credits and thus income for she and her husband.
- Accordingly, Ms Callaghan submits that any compensation determination should include an allowance for the potential destruction of trees by fire and the consequential loss of carbon credits.
- Upon request by the applicant’s representative, Ms Cheree Callaghan said she would provide information to the applicant regarding the “carbon credit compensation”. In response to queries by the applicant’s representative, Ms Callaghan also advised that she had already had communications with “Country Carbon” and that satellite based fire maps may be used to determine where a fire starts on the property.
- On file is correspondence dated 26 February 2018 from “Country Carbon: Carbon Stock Agents” to Ms Callaghan detailing how compensation is to be worked out. The formula proposed by Country Carbon is as follows:
“If you divide the area of your property by the average amount of C02-e in your baseline period it will calculate how much area is assigned to each ACCU. So, with your project area being 105,142.09ha and your baseline period being 17,348.43 tonnes of CO2-e, each ACCU would be 6.061ha (105,142.09/17,348.43=6.061). As we already know, each ACCU is worth $11.00. So for every 6.061ha burnt as a result of the mining lease, you could be entitled to $11.00.”
- To ensure the formula is clear, ACCU is an acronym adopted for “Australian Carbon Credit Units”.
- As pointed out above in paragraph 11, s 281(3) sets out the matters in respect of which compensation is to be determined.
- In my view, the potential loss of carbon credits consequent upon an outbreak of fire is too speculative to be able to be included in a determination of compensation. That does not mean that the Callaghan’s are not entitled to some compensation if a fire were to occur which resulted in the loss of trees.
- Section 283B provides for a review of compensation by this Court if there is a material change of circumstances for the mining lease. In my view, the outbreak of fire on the mining lease tenure area would constitute a change of circumstances such as would entitle the Callaghans to return to this Court.
The history of the matter
- The matter came before Member Stilgoe again on 29 March 2018 where her Honour ordered the filing of both parties’ statements of facts, matters and contentions and any supporting affidavits.
- To date, no material has been filed by either party. Rather, on 27 April 2018, an email was provided by the respondents to the effect that previous emails stipulate the facts, matters and contentions for the respondents and that there is agreement with compensation but that it needs to include compensation for any fires which is assessed the following year.
- The Court is left in the position of having to provide a decision about compensation based upon no evidence whatsoever from either party apart from limited correspondence agreeing to a compensatory figure without any formal agreement being lodged and an email containing carbon farming cost analyses.
- The mining lease area on Lot 5218 on PH 1103, as indicated above, is 7.1 hectares.
- As unsatisfactory as it may be, and in lieu of simply declining to determine any compensation whatsoever, the Court, on previous occasions, has resorted to other decisions from throughout Queensland as offering guidance as to the figure that should be settled upon.
- In this case, the mining district is in Mareeba, that is to say, it is in far north Queensland.
- In the present case, I am inclined to determine compensation at the rate of $10 per ha per annum in respect of the mining lease area.
- This accords with the figure of $10 per hectare offered by Mr Steine in his email correspondence of 23 January 2018.
- That figure of $10 per hectare seems to have been accepted by the respondents in their email correspondence of 23 February in which they say:
“Compensation is non-arguable as it has never changed in value in the Land Court’s eyes so that it is agreeable by the Callaghans in moving forward for the standard rate of dollars per hectare/acre.”
- Accordingly, in this case, the determination in respect of ML 20366 is as follows:
- Area covered by the mining lease – 7.1 ha at $10 per ha = $71 per annum;
- Section 281(4)(e) of the MRA component of $7.10 per annum making a total of $78.10 per annum or $390.50 for the life of the lease.
- As indicated above, any claim for carbon farming costs will depend on whether the fire starts on the mining lease area and possibly, other causation factors in the event a fire starts due to mining activity as opposed to on the mining lease area located on the respondents’ land.
- The total area of the respondents land used for carbon farming, as provided in the Country Carbon correspondence detailed above, is 105,142.09 hectares. With such a large area, any fire on the land could cause a large loss to the respondents farming abilities. Accordingly, the impact of any fire which might, speculatively, occur in the future for presently unidentified causes, in unidentifiable areas, with equally unidentifiable consequences, remain un-ascertainable and can sensibly only be dealt with by way of an application back to this Court pursuant to s 280B.
- Therefore, the orders of the Court are:
- In respect of the application for renewal of ML 20366 compensation is determined in the amount of Seventy Eight Dollars and Ten Cents ($78.10) per annum, which is Three-Hundred and Ninety Dollars and Fifty Cents ($390.50) for the life of the lease.
- Palmer River Pty Ltd is to pay to Bertie Lyndon Callaghan and Craig Anthony Callaghan compensation in the amount set out in Order 1, namely, Seventy Eight Dollars and Ten Cents ($78.10) within thirty (30) days from the notification of the renewal of the mining lease by the Department of Natural Resources, Mines and Energy and thereafter annually in advance.
MEMBER OF THE LAND COURT
 See Wills v Minerva Coal Pty Ltd (No.2) (1998) 19 QLCR 297, 305-16 (particularly at 315).
 See Alphadale Pty Ltd v Dore & Ors  QLC 15; Keyse v Phillipson & Ors  QLC 40.
 See Thomsen v Struber  QLC 33; Pavey & Anor v Struber & Anor  QLC 63; Skrzypczynski & Ors v Hutchinson  QLC 4.
- Published Case Name:
Palmer River Pty Ltd v Bertie Lyndon Callaghan and Craig Anthony Callaghan
- Shortened Case Name:
Palmer River Pty Ltd v Callaghan
 QLC 38
22 Oct 2018