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Deimel v Phelps & Anor[2019] QLC 4

LAND COURT OF QUEENSLAND

CITATION:

Deimel v Phelps & Anor [2019] QLC 4

PARTIES:

Wolfgang Deimel

(applicant)

v

Mark Harry Phelps and Christine Phelps

(respondents)

FILE NOs:

MRA369-17

MRA150-18

DIVISION:

General Division

PROCEEDING:

Determination of compensation payable for the grant of mining lease and  advanced activities on exploration permit

DELIVERED ON:

6 February 2019

DELIVERED AT:

Brisbane

HEARD ON:

16 May 2018

Submissions closed 9 July 2018

HEARD AT:

Brisbane

MEMBER:

PA Smith

ORDERS:

As regards MLA 100140 (MRA369-17):

  1. Compensation is determined for the grant of MLA 100140 in the total sum of Seventeen Thousand Five Hundred Dollars ($17,500).
  1. The applicant is ordered to pay the respondents the sum of Seventeen Thousand Five Hundred Dollars ($17,500) by way of yearly instalments of One Thousand, Seven Hundred and Fifty Dollars ($1,750). The first instalment is to be paid within one (1) month of the grant of MLA 100140 and the further instalments yearly thereafter for the ten (10) year term of the lease.
  1. Any party seeking costs is to file and serve their submissions as to costs by 4:00pm, 22 February 2019. Any submissions in response are to be filed and served by 4:00pm on 1 March 2019 and any submissions in reply are to be filed and served by 4:00pm on 8 March 2019.

As regards EPM 25185 (MRA150-18):

  1. Compensation for the advanced activity of cutting the first costean is assessed in the sum of One Hundred and Fifty Eight Dollars ($158).
  2. Compensation for the second and all following costeans is assessed in the sum of One Hundred Dollars ($100) for each costean.
  3. Where possible, the applicant is to give the respondents up to seven (7) days’ notice in advance of the creation of each costean. If advance notice of the applicant’s intention to cut a costean cannot reasonably be given, at the absolute minimum, the applicant must give the respondents notice of the existence of each new costean not later than seven (7) days after each costean is cut.
  4. Compensation with respect to each new costean is to be paid by the applicant to the respondents within one (1) month of each new costean being cut.
  5. Any party seeking costs is to file and serve their submissions as to costs by 4:00pm, 22 February 2019. Any submissions in response are to be filed and served by 4:00pm on 1 March 2019 and any submissions in reply are to be filed and served by 4:00pm on 8 March 2019.

CATCHWORDS:

ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – COMPENSATION – compensation determination for mining lease application – compensation determination for advanced activities on exploration permit for minerals – valuation of land – where no particular method of valuation must be adopted – where only one independent valuation expert gave evidence – where not all expert conclusions are supported by the facts – where the principle of equivalence applies – where diminution in value to landowner is considered – where landowner only deprived of use of part of mining lease area at any one time – where access is included in compensation – whether loss of stock dam is a relevant consideration – whether professional fees or expert report fees can be included in compensation

ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – COMPENSATION – Mineral Resources Act 1989 – whether the grazing of livestock is a consideration for compensation – where mining lease area will not be fenced – where no chemical leaching is used in gold extraction process – where only ten hectares may be significantly disturbed at any one time – where landholders agist their property the subject of the mining lease application – whether owner’s time is a relevant consideration in determining compensation – what is reasonable owner’s time

ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – LAND AVAILABLE FOR EXPLORATION OR MINING PURPOSES – MINING OPERATIONS ON THE SAME LAND – Mineral and Energy Resources (Common Provisions) Act 2014 – where advanced activities are prohibited until compensation is agreed or determined – compensation that should be awarded for advanced activities on the exploration permit for minerals

Land Court Act 2000 s 34

Mineral and Energy Resources (Common Provisions) Act 2014 s 43, s 81, s 96, s 97

Mineral Resources Act 1989 s 281, s 279(5), s 363

Barrett v Weir & Gregcarbil Pty Ltd [2009] QLC 182, applied

Carabella Resources Limited v Goodwin [2016] QLC 32, applied

Deimel v Cochrane & Anor [2014] QLC 8, cited

Fitzgerald & Ors v Struber [2009] QLC 76, applied

Horn v Sunderland Corporation [1941] 1 All ER 480, followed

Matrix Metals Limited v The North Australian Pastoral Company Pty Ltd [2007] QLC 75, applied

Mitchell v Oakhill & Mitchell (1998) 19 QLCR 66; [1998] QLC 25, applied

Munns v Wardley [2016] QLC 35, applied

Richardson v Barrett [2001] QLRT 89, applied

Salmon v Armstrong [2002] QLRT 54, applied

Shaw v Heritage Holdings Pty Ltd (1992-93) 14 QLCR 139; [1992] QLC 27, applied

Smith v Cameron (1986) 11 QLCR 64, applied

Sullivan v Oil Company of Australia Ltd (No.2) (2004) 2 Qd R 105; [2003] QCA 570, followed

Valantine v Henry [2018] QLC 21, applied

APPEARANCES:

W Deimel, the applicant (self-represented)

M Phelps, a respondent (self-represented), for the respondents

Background

  1. [1]
    There are two closely related matters before the Court involving the same parties. Mr Deimel (the applicant in each matter), who conducts mining operations, is seeking determinations for compensation payable to Mr and Mrs Phelps (the respondents in each matter) with respect to two mining tenures. The first file before the Court (MRA369-17) relates to Mining Lease Application 100140 (MLA 100140). MLA 100140 is located on “Dungorm”, a grazing property located about 60 kilometres west of Warwick with a total area of 3,189.18 ha made up of Lots 14 and Lot 15 on plan B 34379. MLA 100140 covers 54.85 ha of that land. In addition, 0.32 ha are required for the purposes of access. The applicant is seeking a determination of compensation payable to the respondents in order to allow MLA 100140 to be granted.
  1. [2]
    The second file before the Court, MRA150-18, relates to an already granted exploration permit for minerals (EPM 25185) which covers 1,105 ha of Dungorm. The applicant is seeking a determination of compensation payable to the respondents in order to allow advanced activities under EPM 25185 to occur.

The hearing

  1. [3]
    The hearing of these matters took place over one sitting day, with both matters heard, and evidence given, together. Although each matter requires separate determination, given the close relationship of both matters the hearing process was facilitated efficiently by an order that the evidence in one matter is taken to be evidence in both matters, as relevant.
  1. [4]
    The applicant self-represented, as did the respondents (via Mr Phelps).
  1. [5]
    Oral evidence was provided by the applicant, Mr Deimel, and by Mr Phelps for the respondents. Each was cross-examined.
  1. [6]
    Expert valuation evidence was provided by Mr Stephen Cameron, called by the respondents. The evidence was conducted via video link. The video link process went very well and I observed no difficulties with either Mr Deimel or Mr Phelps during their questioning of Mr Cameron.
  1. [7]
    Written submissions and a reply were received. The matter was reserved for decision when the submissions closed on 9 July 2018.
  1. [8]
    For the purposes of my decision, I have referred to the salient points that arise from the evidence in the hearing. In reaching my conclusions, I have taken account of, and carefully considered, all of the evidence placed before me.

The relevant legislation

  1. [9]
    It is important to understand the legislative basis for each determination of compensation. Compensation with respect to MLA 100140 is determined pursuant to the Mineral Resources Act 1989 (the MRA).  Compensation with respect to advanced activities on EPM 25185 is determined under the Mineral and Energy Resources (Common Provisions) Act 2014 (the MERCP). I will deal with the relevant compensation provisions of each act in turn.

MRA

  1. [10]
    The question of compensation for MLA 100140 came before the Court by way of referral from the Department of Natural Resources and Mines, as it then was, under s 281(1) of the MRA at the request of the applicant. A mining lease is not able to be granted until compensation is agreed between the parties or determined by this Court.
  1. [11]
    The issues as to compensation which must be considered by the Court are set forth in s 281(3) and (4) of the MRA:

281 Determination of compensation by Land Court

  1. (3)
    Upon an application made under subsection (1), the Land Court shall settle the amount of compensation an owner of land is entitled to as compensation for—
  1. (a)
    in the case of compensation referred to in section 279—
  1. (i)
    deprivation of possession of the surface of land of the owner;
  1. (ii)
    diminution of the value of the land of the owner or any improvements thereon;
  1. (iii)
    diminution of the use made or which may be made of the land of the owner or any improvements thereon;
  1. (iv)
    severance of any part of the land from other parts thereof or from other land of the owner;
  1. (v)
    any surface rights of access;
  1. (vi)
    all loss or expense that arises;

as a consequence of the grant or renewal of the mining lease; and

  1. (b)
    in the case of compensation referred to in section 280—
  1. (i)
    diminution of the value of the land of the owner or any improvements thereon;
  1. (ii)
    diminution of the use made or which may be made of the land of the owner or any improvements thereon;
  1. (iii)
    all loss or expense that arises; 

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

  1. (4)
    In assessing the amount of compensation payable under subsection (3)—
  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;
  1. (b)
    no allowance shall be made for any minerals that are or may be on or under the surface of the land concerned;
  1. (c)
    if the owner of land proves that the status and use currently being made (prior to the application for the grant of the mining lease) of certain land is such that a premium should be applied—an appropriate amount of compensation may be determined;
  1. (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 of a mining lease and the usage that could be made of that land after the grant;
  1. (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).
  1. [12]
    Although s 281 sets out the matters to be considered, it does not define any method of assessment. In Smith v Cameron, the Land Court held:

“It is well recognised that where damage by way of severance or injurious affection is involved the assessment of compensation may be made on a “before” and “after” method of valuation of the property in which the cumulative effect is reflected in the “after” valuation or alternatively by the summation or piecemeal assessment of all relevant effects… 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.”[1]

  1. [13]
    In Shaw v Heritage Holdings Pty Ltd, the Land Court said:

“…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.”[2]

  1. [14]
    In considering Mitchell v Oakhill & Mitchell, the then President of the Land Court, referring to s 281(3) of the MRA, found:

“The latter section does not prescribe a method of valuation. 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.”[3]

  1. [15]
    In determining compensation under s 281 of the MRA, I have adopted the same approach I took in Richardson v Barrett.[4] This means the matters set out in the section are concepts to be taken into account in determining compensation, not a notion of separate heads of compensation requiring separate and discreet treatment to arrive at an accumulated figure.
  1. [16]
    The overriding principle is of equivalence, ensuring that, so far as money can do it, the landholders are placed in the same position as if the mining lease was not granted.[5] Of course, great care must also be taken to ensure that there is no “doubling up” of compensation.[6]

MERCP

  1. [17]
    The issue of the determination of compensation for advanced activities on EPM 25185 came before the Court in an entirely different way. On 29 March 2018 the applicant filed an originating application in the Court pursuant to s 363(2)(e) of the MRA. Pursuant to that section, the Land Court is given jurisdiction with respect to any matter arising between miners and landholders relating to prospecting, exploring or mining. That is of course a general section conferring jurisdiction. It would have made matters clearer had the originating application referenced the MERCP.
  1. [18]
    Under s 43 of MECRP, the applicant is prohibited from entering the respondents’ land to carry out advanced activities unless there is a form of agreement in place or there is an application to this Court under s 96.
  1. [19]
    The entitlement to bring the originating application with respect to EPM 25185 is pursuant to s 96(1)(d) on the basis of a mediation conference having been held on 19 March 2018 which resulted in no agreement between the parties. The order sought in the originating application is put forward in the most general terms of “make an order for compensation for EPM 25185”. Throughout the hearing, both parties acted on the presumption that the orders sought were those set out in ss 96(2)(a) and (b). That is, the miner’s compensation liability to the respondents and the miner’s future compensation liability to the respondents for authorised activities. I proceed with the decision in this matter on that basis.
  1. [20]
    The applicant’s liability to compensate the respondents is set out in s 81 of the MERCP. Of particular note is s 81(4) which provides as follows:

In this section—

compensatable effect means all or any of the following—

  1. (a)
    all or any of the following relating to the eligible claimant’s land—
  1. (i)
    deprivation of possession of its surface;
  1. (ii)
    diminution of its value;
  1. (iii)
    diminution of the use made or that may be made of the land or any improvement on it;
  1. (iv)
    severance of any part of the land from other parts of the land or from other land that the eligible claimant owns;
  1. (v)
    any cost, damage or loss arising from the carrying out of activities under the resource authority on the land;
  1. (b)
    accounting, legal or valuation costs the claimant necessarily and reasonably incurs to negotiate or prepare a conduct and compensation agreement, other than the costs of a person facilitating an ADR;

Examples of negotiation—

an ADR or conference

  1. (c)
    consequential damages the eligible claimant incurs because of a matter mentioned in paragraph (a) or (b).
  1. [21]
    The orders that the Court can make in relation to an application are to be found in s 97. As well as a general power to make any order the Court considers appropriate to enable or enforce its decision, s 97 also allows the Land Court, inter alia, to order non-monetary compensation as well as monetary compensation, or to order that a party not engage in particular conduct. This is to be contrasted to the MRA provisions with respect to compensation for the grant or renewal of mining leases which do not allow for non-monetary compensation.

Relevant mining tenures on Dungorm

  1. [22]
    As the evidence shows, mining has taken place on and around Dungorm since the 1860’s.[7] The key mineral mine has been, and continues to be, gold. While there is no need to look any further into the history of mining on Dungorm generally in any greater depth, in order to properly understand the evidence in this matter it is necessary to detail recent mining activity on the property.
  1. [23]
    As Exhibit 2 shows, ML 5933 was granted in the 1980’s. This mining lease originally had an area of 59.93 ha and a term of 21 years. The applicant became the holder of ML 5933 on 8 July 2005. On 4 May 2008 the applicant entered into a compensation agreement with the then owners of Dungorm, Mr and Mrs Cochrane. The agreement was for the payment of compensation in the amount of $2000 per annum plus GST.
  1. [24]
    On 12 March 2014, this Court handed down a decision determining the compensation payable for the renewal of ML 5933 for a period of five years.[8] Importantly, as part of the renewal process, the area of ML 5933 was reduced to 5.6042 ha. In that case, his Honour Member Isdale determined compensation in the total sum of $2,400 per annum.
  1. [25]
    The material shows that a compensation agreement was entered into between the applicant and the respondents on 9 December 2014 with respect to ML 50288. Mining Lease 50288 was made up of what had been the remaining 5.6042 ha of ML 5933 together with additional area resulting in a total area of 20 ha. Compensation was agreed covering a period of five years in the amount of $2400 per annum, consistent with the decision of Member Isdale.
  1. [26]
    What is currently ML 50288 is contained wholly within MLA 100140, with the applicant having already conditionally surrendered ML 50288. The conditional surrender is to take effect upon the grant of MLA 100140.
  1. [27]
    The above tenure history reveals that part of the area of the applicant’s current mining activities has remained constant since the applicant commenced mining on Dungorm in 2005. The evidence shows that the reason for this is that the applicant’s key mining infrastructure is located on ML 50288 and will continue to be located in the same place when MLA 100140 is granted. Of course, MLA 100140, as well as containing all of the area of ML 50288, also comprises significantly more new land on Dungorm.
  1. [28]
    Importantly, it is a condition of the applicant’s environmental authority for MLA 100140, and has been a condition of his mining activities for a considerable period of time, that only 10 ha of the area of MLA 100140 is able to be significantly disturbed at any one time.[9]

The compensation positions of the parties

  1. [29]
    The applicant has conveniently summarised his view as to the compensation payable with respect to MLA 100140 this way:

“On evidence presented and past precedents set, compensation should only be set at production loss over 10 hectares.

10 hectares divided by 0.8 sheep = 12.5 sheep

13 sheep x $13.00 per annum = $169.00 per annum

Total compensation for ML100140 = $169.00 perannum.

No allowance has been made for drought conditions over the past 10 years”[10]

  1. [30]
    With respect to compensation for advanced activities to be undertaken on EPM 25185, the applicant has this to say:

“On evidence presented and past precedents set, compensation should be:

4 sub blocks = 4.47 hectares disturbance

5.6 sheep to be compensated for therefore 6 sheep @ $13.00 per year = $78.00 per annum.

Deimel v Phelps & Anor [2019] QLC 4

Total compensation for EPM 25185 = $78.00 per annum.

No allowance has been made for drought conditions experienced over the past 10 years.”[11]

  1. [31]
    During his oral evidence, Mr Phelps on behalf of both respondents, confirmed that the respondents’ position with respect to compensation for both the MLA and the advanced activities proposed under the EPM were those as set out in Mr Cameron’s expert valuation report, Exhibit 14. Mr Cameron provides a summary of his calculations with respect to compensation at page 23 of his report as follows:

Key evidentiary points from lay evidence

  1. [32]
    While there is certainly dispute between the parties as to the amount of compensation payable with respect to both tenures, there is not a great deal of dispute as to the relevant facts in this matter. The oral evidence of Mr Deimel and Mr Phelps mostly comprised of formal tendering of their documents into evidence and some cross-examination. I found both Mr Deimel and Mr Phelps to be open and honest in the presentation of their evidence.
  1. [33]
    It is appropriate to point out some key aspects of the facts. Mining Lease 50288 is not currently fenced and MLA 100140 will not be fenced. Stock are free to graze at will throughout the ML area. The mining operation is for alluvial gold and only water is used in the separation process. That is, there is no chemical leaching of the gold such as is often the case for hard rock gold extraction.
  1. [34]
    On the evidence, the only people involved in the applicant’s mining activity is the applicant and his wife. It is small-scale mining. Depending on drought conditions, mining takes place on about three or four days per week, with Mr Deimel usually working alone. On a normal mining day, access to the ML is by a single light truck. As already indicated, only 10 ha on the ML may be significantly disturbed at any one time, and there will be progressive rehabilitation. As much of the significant disturbance in the 10 ha limit is taken up by key mining infrastructure, the actual area where digging and progressive rehabilitation occurs is comparatively small.
  1. [35]
    Dungorm has a very long primary production history. The respondents have owned Dungorm since 2014. Currently, the property is predominantly used for running sheep. Although the respondents do not live on Dungorm, it is their long-term plan to reside on Dungorm and conduct their own rural activities. The respondents currently agist Dungorm but they still visit the property every three weeks or so.
  1. [36]
    There was conflict in the evidence between Mr Deimel and Mr Phelps regarding the claim for owner’s time to undertake inspections. Mr Deimel’s evidence was that he was not aware of Mr Phelps attending the mine site to carry out inspections of current mining activities, save for those occasions when they have met to discuss compensation related matters. It was clear to me from Mr Deimel’s evidence that he understood the claim for owner’s time to relate to Mr Phelps undertaking an inspection of the mining operations. On the other hand, Mr Phelps’ evidence was more to the point that he wished to check on the impact that the mining operations were having on his property. This is a subtle but important distinction to Mr Deimel’s understanding.
  1. [37]
    Mr Deimel was dismissive of the suggestion that it was sufficient for Mr Phelps to view the mining operations from off the mining lease area. Certainly, if Mr Phelps was undertaking a mining inspection under the MRA, such an inspection would be inappropriate. However, I agree with Mr Phelps that the core reason for his inspections are property related; that is, to check on the impacts that the mining operations are having on Dungorm. This can be as simple as looking to see if gates that are meant to be closed are left closed; whether weeds are spreading from any particular mining area; whether vehicles are properly using access tracks or creating new access routes into the ML; the impact that mining activities are having on sheep at pasture; and the like.
  1. [38]
    In short, the inspections are property related activities that the landholder would not have to undertake but for the existence of the ML. Of course, the extent and frequency of any such inspections must be reasonable. What is reasonable for one mining lease may not be reasonable for a different mining lease. Each case will depend on its own circumstances, with the scale of mining undertaken and the number of miners actively working on the ML being important contributing factors.

The valuation evidence

  1. [39]
    The Court is greatly assisted in determining this matter by having independent expert valuation evidence provided by a registered valuer, Mr Cameron. It is of assistance to consider Mr Cameron’s valuation report in some detail.
  1. [40]
    The applicant was critical of Mr Cameron for producing a report that he considered more appropriate for the purchase or sale of a property rather than the assessment of compensation under the MRA and the MERCP. I disagree. Mr Cameron has quite properly looked at sales evidence in order to ascertain the value of Dungorm. As the mining activities do not impact on any of the key infrastructure on Dungorm, he has valued and discounted the improvements to arrive at an overall dollar value per hectare for pasture land. He has then set out the relevant provisions of the MRA and the MERCP; considered a number of previous authorities; taken into account his understanding of the facts of the matter; then reached his conclusions as to the respective amounts of compensation that in his opinion are properly payable by the applicant. This approach is sound. However, such a finding does not necessarily indicate that Mr Cameron’s conclusions must be followed by this Court. As the only expert evidence provided to the Court, Mr Cameron’s conclusions are important. His conclusions must be tested against the found facts and concessions that he made during cross-examination. Where his conclusions are as a result of his understanding of legal precedents, those conclusions must also be carefully considered.
  1. [41]
    After specifically analysing four sales, Mr Cameron provides a summary of his opinion as a consequence of those sales at page 20 of Exhibit 14 as follows:

Deimel v Phelps & Anor [2019] QLC 4

  1. [42]
    I agree with Mr Cameron’s opinion that the sales evidence he has considered supports a rate of $500 per hectare for the value of the land impacted by ML 100140. That of course does not mean that that amount represents the sum that should be payable with respect to each hectare of the MLA. Mr Cameron has allowed the full rate of $500 per hectare for not only all of the area of MLA 100140, but also for an additional area of 7.18 ha that he refers to as being severed from the rest of the property by the access road. That is, he has allowed a diminution of 100%. For the reasons that follow, I do not agree with Mr Cameron’s opinion in this regard given the clear facts in evidence.
  1. [43]
    So how is the percentage of diminution properly arrived at? I considered a very similar question, with quite similar facts, in the case of Valantine v Henry.[12]  That case involved the consideration of ss 235 and 403 of the MRA. Those sections have also been the subject of a number of judicial decisions. Those sections are relevant as the way that they have been interpreted has a direct bearing on the relationship between a miner and a landholder, including the access and primary production activities that a landholder is able to continue to carry on on the area of a mining lease.
  1. [44]
    Section 235 of the MRA provides as follows:

235 General entitlements of holder of mining lease

  1. (1)
    Subject to section 236 and chapter 8, part 8, division 1, during the currency of a mining lease, the holder of the mining lease and any person who acts as agent or employee of the holder (or who delivers goods or substances or provides services to the holder) for a purpose or right for which the mining lease is granted—
  1. (a)
    may enter and be—
  1. (i)
    within the area of the mining lease; and
  1. (ii)
    upon the surface area comprised in the mining lease;

for any purpose for which the mining lease is granted or for any purpose permitted or required under the lease or by this Act;

  1. (b)
    may do all such things as are permitted or required under the lease or by this Act, including plugging and abandoning, or otherwise remediating, a legacy borehole and rehabilitating the surrounding area in compliance with the requirements prescribed under a regulation.
  1. (2)
    During the currency of the mining lease, the rights of the holder relate, and are taken to have always related, to the whole of the land and surface area mentioned in subsection (1).
  1. [45]
    The MRA then goes on at s 403(1) to provide:

403 Offences regarding land subject to mining claim or mining lease

  1. (1)
    A person shall not—
  1. (a)
    enter or be upon land; or
  1. (b)
    use or occupy land; or
  1. (c)
    erect any building or structure on or make any other improvement to land;

that is the subject of a mining claim or the surface area of a mining lease unless—

  1. (d)
    the person is authorised by or under this Act, any other Act relating to mining, the GHG storage Act or the Geothermal Act in that regard; or
  1. (e)
    the person is the owner of the land or is authorised in that behalf by the owner and, in either case, the person has the consent of the holder of the mining claim or, as the case may be, mining lease.

Note

This provision is an executive liability provision—see section 412A.

  1. [46]
    These sections were considered by then President of the Land Court, her Honour President MacDonald, in the case of Barrett v Weir & Gregcarbil Pty Ltd.[13] Relevantly, President MacDonald had this to say:

“[25] In my opinion, the landowner is entitled to be compensated for the loss of control over the mining lease area as evidenced, for example, by the fact that the mining area may shift from time to time to various parts of the lease without the consent of the landowner. Further, the lease may be regarded as an encumbrance or blot on title so that the applicant's land with the lease in place is worth less than it would be if unencumbered by the lease.

[26] However, I do not accept that the impact of the lease is to deprive the owner of the use of the whole of the lease area for the term of the lease. The effect of s.235 of the Mineral Resources Act is that the lessee is entitled to go on to and remain on the mining lease area for purposes connected with mining only. The mining lessee is not given a right to exclusive possession of the lease area. Section 403 of the Act creates certain statutory offences in relation to unauthorised entry onto the lease area. Neither section grants exclusive possession rights to the lessee nor enables the lessee to prevent unauthorised entry onto the lease area. It is clear from the respondents' submissions that they do not object to the applicant's cattle continuing to graze on those parts of the mining lease area that are not from time to time disturbed by the mining operations. Thus in assessing loss suffered from the deprivation of possession of the surface land as a result of the lease under s.281(3)(a)(i) the fact that the landowner may continue to graze his cattle on the undisturbed area of the mining lease should be taken into account. I do not accept therefore that the applicant is entitled to compensation for loss of carrying capacity or agistment for the whole area of the mining lease.” (citations omitted)

  1. [47]
    President MacDonald’s observations are consistent with those of Deputy President Kingham of the Land and Resources Tribunal (as her Honour then was) in Salmon v Armstrong[14] where her Honour had this to say:

“[25] …It could also be inferred from s. 403(1) that the holder has the right to exclude the landowner from the lease area. Relevantly, that section provides that it is an offence to enter, use or occupy the surface area of a mining lease. It is a defence if the person is the owner or is authorised by the owner and the person has the consent of the holder of the mining lease.

[26] Whilst it is unnecessary for me to determine this issue in order to determine compensation, it is my view that this section does not confer exclusive rights to possession upon the holder of the mining lease. Section 403(1) has to be interpreted in the light of the purpose of the Act and of other relevant provisions, including s. 235. I do not accept that s. 403 confers on the holder of the mining lease unfettered power to withhold consent.

[27] Nevertheless, I consider a hypothetical prudent purchaser would regard the lease as effectively depriving the landowners of possession of the surface of the land, even though their stock may from time to time graze on that area.” (citations omitted)

  1. [48]
    In the case of Carabella Resources Limited v Goodwin[15] I made the following observations:

“[33] By s 235, the lessee is entitled to go on the mining lease for purposes connected with mining. The holder of the mining lease does not have a right of exclusive possession. The impact of the mining lease does not necessarily deprive the owner of the use of the whole of the lease area for the term of the lease.” (citations omitted)

  1. [49]
    The law as regards ss 235 and 403 of the MRA is clear. A mining lease does not grant a miner a right of exclusive possession. The landholder has a continuing right to access the land covered by the ML, provided they have the consent of the miner. The miner is not able to unreasonably withhold consent.
  1. [50]
    Of course, the outcome in each case will depend on its own facts. Some mining activities will encompass the entirety of a mining lease, and in those circumstances the mining leases are often fenced at the boundary. In such cases, stock obviously could not wander over part of the mining lease and it may well be appropriate (for workplace health and safety reasons if none other) for the miner to refuse a landholder request for entry. That, however, is far from the case here.
  1. [51]
    MLA 100140 will, on the evidence, not be fenced at the boundary. A total maximum area of 10 ha will be significantly disturbed at any one time. Put another way, 44.85 ha will not be significantly disturbed. Sheep will be able to graze on that area of land, and the applicant will not be able to reasonably refuse giving consent to the respondents to go on that undisturbed area. I am strongly of that opinion given the evidence at the hearing of this matter.
  1. [52]
    Applying the law to the present facts, the respondents will not have 100% disruption to their activities on the land as claimed. They will not suffer anywhere near a total loss of grazing to the area of MLA 100140.
  1. [53]
    In addition, the facts show that for the great majority of the time there are only eight movements on the access road each week (on the basis of entry/exit each day for four days per week). Although it is clear that the access track has been upgraded from what was a property track to one capable of carrying heavy mining machinery, the evidence shows the movement of heavy mining machinery along the access track is relatively rare. Accordingly, the facts do not support the level of diminution for the access track as opined by Mr Cameron. In turn, this means that the facts also do not support the diminution for the severance area as, quite clearly, sheep will be able to graze on that area unimpeded and the respondents can carry out their usual primary production activities on that area unimpeded by the ML.

Conclusions on diminution for MLA 100140

  1. [54]
    The 100% diminution for the entirety of the ML, access and severance area as proposed by Mr Cameron does not align with the facts. It is a fundamental feature that an expert’s opinion must be subject to the facts as found to exist in any particular case. The more that the found facts differ from the facts that an expert based their opinion on, the less that the Court can be confident of the expert’s conclusions.
  1. [55]
    Mr Cameron’s conclusions would be accurate if the mining activities being undertaken were something akin to a significant open cut operation over much of the ML area for an entirely fenced ML, with heavily used access. That situation is far removed from the actual facts of this case. Given the facts and Mr Cameron’s reasoning, I am prepared to accept 100% diminution with respect to the 10 ha of MLA 100140 significantly disturbed at any one time. As regards the balance area of 44.85 ha, in my view, the diminution is significantly less than 100%. As regards day-to-day pastoral activities, the area of the MLA not significantly disturbed will be able to be used as usual by the respondents, almost as if the ML was not in existence. There is of course still the fact that that there is a blot on title/blight on the property and other impacts which cause a diminution of value as a result of the simple existence of the totality of the MLA area.[16] On the basis of all of the facts, I am unable to make an award for diminution on the balance area of 44.85 ha of any more than 30%.
  1. [56]
    As regards diminution on the area of access, bearing in mind that the access is on an existing track which can still be used by the respondents, but that it has been substantially upgraded to allow large-scale mining machinery to use it, thereby removing all pasture from it, I am prepared to allow 90% diminution. I have not allowed 100% diminution as proposed by Mr Cameron because the fact that the respondents can still use the track for pastoral activities logically precludes diminution of 100%.
  1. [57]
    I make no allowance for the area referred to by Mr Cameron as the severed area.

Respondents time as regards MLA 100140

  1. [58]
    Mr Cameron considered it appropriate to make an allowance for owner’s time in assessing the compensation for MLA 100140. I agree. However, Mr Cameron only devoted three lines of Exhibit 14 to his reasoning in support of a payment for owner’s time. As Mr Cameron put it, an “allowance for owners time has been considered at 1 inspection per month at 1 hour each (including travel to and from the site) reflecting a total of 12 hours per year or 120 hours for term of the lease. At $100/hour reflecting a total of $12,000”.[17]
  1. [59]
    Mr Cameron expanded on his opinion as to owner’s time when cross-examined by the applicant:

“…I would think it is, you know, any landowner’s responsibility that they would want to see what impact potentially to the mine site and outside that area may create on their business operation so to just answer your question, Mr Deimel, looking at previous case law where the landowners have had the same issues where they would want to inspect various mining sites, depending on the size of the impact, will vary, and I guess we’ve taken an approach that Mr Phelps would take a monthly inspection once a month, and, as you stated, what we’ve included is that travel time.  From basically as you enter the property to get up to the mining site, we’ve only allowed an hour.  I think it took us roughly about 20 minutes just to go direct from the house site by the road to the mining lease, so I think the hour is fair and reasonable.”[18]

  1. [60]
    As I have indicated, the facts in this case are quite similar to that of Valantine v Henry. In that case I allowed only a nominal amount of two hours owner’s time for inspections per year at the rate of $100 per hour.[19]  I allowed only a nominal amount of inspection time due to the lack of particularisation of reasonable, justifiable, and actual inspections that the respondent in that matter proposed to undertake each year. I am concerned that in the present case there is again a lack of particularisation of reasonable, justifiable and actual inspections that the respondents intend to make. In short, there is precious little factual evidence to support Mr Cameron’s opinion as to the number of inspections required.
  1. [61]
    Mr Cameron has, in my view, properly applied a rate of $100 per hour for owner’s time. Further, on the limited facts available, but given his evidence that it is approximately 20 minutes from the homesite to the MLA area, I consider his assessment of 1 hour per inspection more than reasonable. Given that Mr Cameron, in effect, allows 20 minutes each way for travel,[20] that means that he has only allowed for 20 minutes of actual inspection time in the vicinity of the MLA. That is indicative of the small-scale mining activities of this mining operation. I agree. However, I do not agree that such small-scale mining activities warrant an inspection every month for a period of 10 years. Given that there is some evidence presented in this matter, I am prepared to increase the number of inspections over that which I allowed in Valantine v Henry to once every 3 months. This equates to 4 per year, which is 40 over the 10 year term of the ML.

Loss of stock dam

  1. [62]
    Mr Cameron has not allowed any amount for the loss of a stock dam due to MLA 100140. His reasoning for not including anything for this aspect is that the parties have negotiated an agreement for the construction of a new dam. I agree with Mr Cameron’s reasoning. To be clear, this compensation determination is made on the basis of the applicant honouring his agreements with respect to stock dams.

Professional fees for MLA 100140

  1. [63]
    The respondents have also claimed professional fees. These are fees relating to solicitors costs and valuation fees. The applicant in his submissions has pointed out the decision of Judicial Registrar Smith in Munns v Wardley[21] where a similar claim was disallowed. As Judicial Registrar Smith observed in that case, the Court of Appeal in Sullivan v Oil Company of Australia Ltd (No.2)[22] held that legal costs do not fall within a claimable head of compensation under the Petroleum Act 1923.[23] The Court of Appeal’s finding in Sullivan was confirmed in the Land Court by Member Jones in Matrix Metals Limited v The North Australian Pastoral Company Pty Ltd where his Honour expressed himself bound by the decision.[24]
  1. [64]
    This situation is to be contrasted to that which existed in the significant compensation matter under the MRA of Carabella Resources Limited v Goodwin.[25] In that matter it was not disputed between the parties that legal and valuation costs incurred up until the time that the matter was referred to the Land Court were properly recoverable under s 281 of the MRA. The facts of this matter show that the legal and valuation costs were incurred by the respondents after this matter had been referred to the Land Court. Given such facts, the legal and valuation fees are not recoverable as a head of compensation.
  1. [65]
    It must be borne in mind that legal and professional fees incurred once a compensation matter is before the Land Court under the MRA may indeed be recoverable by the party incurring such costs, but only if such party is successful in a costs application brought under s 34 of the Land Court Act 2000 (LCA).

Determination of compensation  for MLA 100140

  1. [66]
    Taking into account my reasoning above, the compensation for MLA 100140 is assessed as follows:

10 ha of significant disturbance @ $500 per ha @ 100% diminution  $5,000

44.85 ha of balance area @ $500 per ha @ 30% diminution$6,728 (rounded)

0.32 ha of balance area @ $500 per ha @ 90% diminution $144

Landholders time 40 hrs @ $100 per hr $4,000

TOTAL$15,872

  1. [67]
    To that figure is added an additional amount of 10% pursuant to s 281(4)(e) of the MRA, making the calculation of $15,872 + $1,587.20 = $17,459.20 which I round to $17,500.
  1. [68]
    Given the 10 year term of the MLA, and in light of earlier compensation amounts being paid on an annual basis, it is appropriate to order the payment of an annual sum of $1,750 by the applicant to the respondents, with the first yearly sum payable within one month of the grant of MLA 100140.

Compensation for advanced activities on EPM 25185

  1. [69]
    It is important to bear in mind that compensation with respect to EPM 25185 is for advanced activities proposed to be undertaken on the EPM. In this regard, based on his instructions, Mr Cameron has assumed that each costean will impact a maximum of 20 m². Likewise, he has assumed that the applicant will create 40 costeans on the EPM. The applicant’s evidence is consistent with the size of each costean being a maximum of 20 m², but there is considerable doubt as to the total number of costeans. To begin with, the clear evidence of the applicant is that the area of his EPM as at the date of the hearing was in the process of being reduced, as per the standard legislative requirements, by 50%. Further, the applicant gave clear evidence that all of his mining activities on Dungorm were dependent on the availability of water, and that he had suffered from drought conditions for a number of years.
  1. [70]
    Given the applicant’s evidence, which I accept, there is considerable doubt as to the number of costeans that the applicant will in fact have on EPM 25185. Accordingly, rather than undertaking an educated guess as to the number of future costeans, what I propose to do is to determine compensation per costean.
  1. [71]
    Mr Cameron has assessed the impact of costeans on the basis of a productivity loss in line with the current agistment rate of $0.25 per dry sheep per week at a rehabilitation timeframe of three years for the disturbed land. The applicant agrees with this agistment rate but not with the rehabilitation timeframe. Although Mr Cameron has based his productivity loss on the creation of 40 costeans and a very generous 5.76 ha of roadways at a productivity loss of 25%, the total amount that he has assessed for productivity loss is the minimal amount of $58. Given the very minor amount, I will not quibble with Mr Cameron’s assessment.

Respondents time as regards each costean

  1. [72]
    Consistent with his approach to owner’s time for MLA 100140, Mr Cameron has allowed the rate of $100 per hour for owner’s time. As regards each costean, he considers 30 minutes to inspect each costean during the activity and a follow-up 30 minute inspection to observe the rehabilitation of costeans, access roads, any crossing required over the Macintyre Brook or creeks to be appropriate. I am concerned that Mr Cameron’s figures do not appear to properly take into account travel time from the Homestead to each costean. However, on the evidence, I consider it far from certain that the respondents will actually undertake 2 inspections per costean, given their absent landholder status. Taking an overall approach, I am prepared to agree with Mr Cameron’s overall assessment of $100 for owner’s time per costean.

Professional fees for advanced activities on EPM 25185 

  1. [73]
    The respondents have also claimed professional fees for the EPM. I have already discussed this topic under the compensation heading for MLA 100140. It must be noted however that this claim is made under the MERCP and not the MRA.
  1. [74]
    Had the legal and valuation costs been incurred in the lead up to the mediation conference conducted in March 2018, and for the purposes of that mediation conference, then in my view such costs would be recoverable as a head of compensation under the MERCP. As they were not so incurred, they are not recoverable.
  1. [75]
    It must again be borne in mind that legal and professional fees incurred once a compensation matter is before the Land Court under the MERCP may indeed be recoverable by the party incurring such costs, but only if such party is successful in a costs application brought under s 34 of the LCA.

Determination per costean

  1. [76]
    In order to simplify matters for the parties, I am prepared to order that the first costean to be cut by the applicant should incur compensation payable to the respondents in the amount of $158, made up of $100 for owner’s time and the total productivity loss for all costeans of $58. Thereafter, the compensation for each costean is to be the total sum of $100.
  1. [77]
    To ensure that the respondents are aware of the creation of each new costean, compensation is assessed on the basis of the applicant advising the respondents of each new costean. Given the evidence of the manner in which the applicant undertakes his exploration activities and the difficulties in dealing with the respondents as absent landholders living many hours from Dungorm, but acknowledging the desire of the respondents to be aware of each costean, I consider that, where possible, the applicant should give the respondents up to 7 days’ notice in advance of the creation of each costean. If advance notice of the applicant’s intention to cut a costean cannot reasonably be given, at the absolute minimum, the applicant must give the respondent notice of the existence of each new costean not later than 7 days after each costean is cut.
  1. [78]
    Compensation with respect to each new costean is to be paid by the applicant to the respondents within 1 month of each new costean being cut.

Orders

As regards MLA 100140 (MRA 369-17):

  1. Compensation is determined for the grant of MLA 100140 in the total sum of Seventeen Thousand Five Hundred Dollars ($17,500).
  1. The applicant is ordered to pay the respondents the sum of Seventeen Thousand Five Hundred Dollars ($17,500) by way of yearly instalments of One Thousand, Seven Hundred and Fifty Dollars ($1,750). The first instalment is to be paid within one (1) month of the grant of MLA 100140 and the further instalments yearly thereafter for the ten (10) year term of the lease.
  1. Any party seeking costs is to file and serve their submissions as to costs by 4:00pm, 22 February 2019. Any submissions in response are to be filed and served by 4:00pm on 1 March 2019 and any submissions in reply are to be filed and served by 4:00pm on 8 March 2019.

As regards EPM 25185 (MRA 150-18):

  1. Compensation for the advanced activity of cutting the first costean is assessed in the sum of One Hundred and Fifty Eight Dollars ($158).
  2. Compensation for the second and all following costeans is assessed in the sum of One Hundred Dollars ($100) for each costean.
  3. Where possible, the applicant is to give the respondents up to seven (7) days’ notice in advance of the creation of each costean. If advance notice of the applicant’s intention to cut a costean cannot reasonably be given, at the absolute minimum, the applicant must give the respondents notice of the existence of each new costean not later than seven (7) days after each costean is cut.
  4. Compensation with respect to each new costean is to be paid by the applicant to the respondents within one (1) month of each new costean being cut.
  5. Any party seeking costs is to file and serve their submissions as to costs by 4:00pm, 22 February 2019. Any submissions in response are to be filed and served by 4:00pm on 1 March 2019 and any submissions in reply are to be filed and served by 4:00pm on 8 March 2019.

PA SMITH

MEMBER OF THE LAND COURT

Footnotes

[1]  (1986) 11 QLCR 64, 74–75. 

[2]  (1992-93) 14 QLCR 139, 146; [1992] QLC 27. 

[3]   (1998) 19 QLCR 66, 71; [1998] QLC 25.

[4]   [2001] QLRT 89 [9]–[10]; [14].

[5]Horn v Sunderland Corporation [1941] 1 All ER 480, 496; [1941] 2 KB 26, 49 (Scott LJ).

[6]  See Fitzgerald & Ors v Struber [2009] QLC 76 [11].

[7]  Exhibit 5 [8].

[8]  See Deimel v Cochrane & Anor [2014] QLC 8.

[9]  Exhibit 8, page 3.

[10]  Applicant’s submissions for MRA 369-17.

[11]  Applicant’s submissions for MRA 150-18.

[12]  [2018] QLC 21.

[13]  [2009] QLC 182.

[14]  [2002] QLRT 54.

[15]  [2016] QLC 32.

[16]  See T 1-50 lines 30 to 43 where Mr Cameron spoke about such impacts.

[17]  Page 21.

[18]  T 1-46 lines 37 to 47.

[19]  At [72].

[20]  The travel distance from the Homestead to the ML in Valantine v Henry was significantly greater thus resulting in two hours per inspection being allowed in that case.

[21]  [2016] QLC 35.

[22]  (2004) 2 Qd R 105 [37]; [2003] QCA 570.

[23]Munns v Wardley [2016] QLC 35 [24].

[24]  [2007] QLC 75 [13].

[25]  [2016] QLC 32.

Close

Editorial Notes

  • Published Case Name:

    Deimel v Phelps & Anor

  • Shortened Case Name:

    Deimel v Phelps & Anor

  • MNC:

    [2019] QLC 4

  • Court:

    QLC

  • Judge(s):

    Member Smith

  • Date:

    06 Feb 2019

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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