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Washington v Skelton[2021] QLC 11

LAND COURT OF QUEENSLAND

CITATION:

Washington v Skelton [2021] QLC 11

PARTIES:

Michael Wade Washington

(applicant)

v

Christopher Skelton

(respondent)

FILE NO:

MRA120-20

DIVISION:

General Division

PROCEEDING:

Determination of compensation payable for grant of mining lease

DELIVERED ON:

17 March 2021

DELIVERED AT:

Brisbane

HEARD ON:

Submissions closed 29 January 2021

HEARD AT:

Heard on the papers

MEMBER:

PG Stilgoe OAM

ORDERS:

I determine:

  1. Five Hundred and Fifty Dollars ($550) paid as a lump sum representing the diminution of the use made or which may be made of the land including 10% reflecting the compulsory nature of the mining claim;
  2. the cost of one inspection per year as a 5-hour round trip in the sum of Four Hundred and Forty Dollars ($440) including 10%, indexed annually to CPI; and
  3. if Mr Washington does not maintain the access track and Mr Skelton incurs that expense, one third of the cost of any reasonably necessary track maintenance within 28 days of presentation of an invoice.

CATCHWORDS:

ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – COMPENSATION – where the applicant owned a mining lease situated on the land of the respondent – whether and, if so, what compensation was payable under s 85 of the Mineral Resources Act 1989

Mineral Resources Act 1989 s 85

Agnew v DWAJ Pty Ltd [2020] QLC 14, cited

Valantine v Henry [2018] QLC 21, cited

APPEARANCES:

Not applicable

  1. [1]
    Michael Wade Washington has in principle approval for a 10-year mining claim (MC 300270) (“MC”) on Elvo Station, located 150 km south west of Winton. He wants to mine for opal. The MC covers an area of 5.19 ha wholly within Lot 2148 on SP262009. Access to the MC is via a 25 km track from the Winton Jundah Road.
  1. [2]
    Christopher Skelton owns Lot 2148.[1] He also owns five adjoining properties. These six properties have an area of approximately 700,000 acres. That is about 283,280 ha. Mr Skelton runs cattle across his properties. He uses Mt Elvo to grow weaners before transferring them to better country to fatten.
  1. [3]
    Mr Washington must pay Mr Skelton compensation for the MC but the parties cannot agree on the amount. I must determine compensation pursuant to s 85 of the Mineral Resources Act 1989.

Deprivation of possession of the surface of the land: s 85(5)(a)

  1. [4]
    The term of the MC is 10 years. Mr Washington does not propose to fence the MC,[2] and he does not intend to limit Mr Skelton’s access to the MC. This means that much of the claim will still be available to cattle. Correctly, Mr Skelton does not claim that he will be deprived of possession of the land. I determine no compensation is payable under this head.

Diminution of the value of the land: s 85(5)(b)

  1. [5]
    Mr Washington’s application for the MC shows that it encompasses two previous diggings. The photos show bare earth and mullock heaps. Sensibly, Mr Skelton makes no claim for diminution in the value of the land.

Diminution of the use made or which may be made of the land: s 85(5)(c)

  1. [6]
    I accept that Mr Washington’s mining operation will limit access to some of the MC at various times of the year. Mr Washington says that mining will happen infrequently and for short periods of time when his earthmoving business is slow.[3] He estimates that, at any one time, about 0.5 ha will be disturbed.[4]
  1. [7]
    Mr Washington says that the area surrounding the MC is poor quality. He says the country is top rock with ironstone ridges covered by spinifex on which cattle do not graze. He says the country cannot support any reasonable pasture and the only vegetation is weeds after rain. He says that cattle do not frequent this area. Mr Washington has provided photos to support his description of the land.[5]
  1. [8]
    In calculating the compensation payable to Mr Skelton, Mr Washington used the unimproved value of $9.61/ha, rounding it up to $50 p.a.[6]
  1. [9]
    Mr Skelton engaged Andrew Fisher, an agronomist, to estimate Mr Skelton’s loss caused by the MC. To assess the diminution of the use Mr Skelton made of the land, Mr Fisher assumed that Mr Skelton must exclude cattle from the MC.[7] For reasons which I discuss later, I do not accept that Mr Fisher’s assumptions are correct.
  1. [10]
    Mr Fisher accessed Mr Skelton’s grazing management system records which, unfortunately, are not in evidence before me. Based on those records, Mr Fisher assessed the stocking rate of Elvo Station as 1AE/25 ha. Mr Fisher states that the value of a beast is $748.25 p.a. He notes that the freight costs are $50 per head per annum and deducts this from the value of the beast, giving a total of $698.25. Mr Fisher divides this figure by 25 to give a per hectare per annum value to the land of $27.95.[8] He multiplies this figure by the area of the MC – 5.19 ha – and rounds it up to $145 p.a.[9]
  1. [11]
    I have noted that Mr Fisher’s calculation assumes that cattle would be excluded from the MC. It is more likely that cattle will have unrestricted access for much of the year. If, as Mr Washington submits,[10] only half a hectare is disturbed at any one time, and allowing time for some rehabilitation, I assess that the use of 1.5 ha/p.a. will be diminished by the MC. Using Mr Fisher’s assessment of the value per hectare, that amounts to an annual figure of $41.92.
  1. [12]
    While I do not accept Mr Washington’s use of the unimproved value of the land as the appropriate basis to assess compensation, I note that he used that figure to calculate an annual compensation of $50 p.a. I accept that slightly more generous sum as the appropriate figure for compensation. As the compensation is only a small amount, it should be capitalised and paid as one lump sum of $500.

All loss or expense that arises: s 85(5)(f)

Fencing

  1. [13]
    Mr Skelton says that his obligations under the Livestock Production Assurance accreditation are significant, and any breach of those could result in him losing accreditation.[11] He is concerned about the risk of cattle falling into an open cut excavation.[12] He is concerned about the machinery Mr Washington will bring onto the claim.[13] He is concerned that cattle may access fuels or chemicals stored incorrectly.[14] He is concerned about the introduction of invasive weeds.[15]
  1. [14]
    Element 1 of the Livestock Production Assurance audit checklist requires all potentially contaminated sites to be identified and all identified sites to be managed to restrict livestock access to prevent exposure and contamination.[16]
  1. [15]
    Mr Washington proposes to have two caravans onsite: one for use as a residence and one for storage. The Small Scale Mining Code provides that Mr Washington must ensure all fuel is stored as required under the Australian Standard 1940 “The storage and handling of flammable and combustible liquids”. He is not permitted to use, nor is there any need for, chemicals in the separation or processing of the opal. He is not permitted to dispose of regulated waste on the claim. The risk of Mr Washington creating a contaminated site is low; the risk of cattle accessing that contamination is also low.
  1. [16]
    Element 6 of the Livestock Production Assurance audit checklist requires a farm biosecurity plan to minimise the risk of introducing and spreading infectious diseases. Element 6 refers to disease in cattle, not the spread of invasive weeds. Mr Skelton does not explain how fencing the MC will address the obligation to minimise the risk of introducing infectious diseases.
  1. [17]
    Mr Washington has pointed out that weeds are the only vegetation that grows on the MC. If Mr Skelton wants to fence the MC to prevent the introduction of invasive weeds species, he is too late.
  1. [18]
    Mr Skelton is concerned with possibilities if Mr Washington does not comply with his obligations and Mr Skelton suffers a loss. As it has been noted,[17] this Court does not calculate compensation on a possibility. It does calculate compensation on the assumption that miners will comply with their obligations.[18] I am not persuaded that it is necessary to fence the MC to protect against possibilities. If a fence is necessary, then it is Mr Washington’s obligation to erect it.

Maintenance costs for fencing

  1. [19]
    I have decided not to award any amount for fencing. The obligation to maintain fencing, if any, lies with Mr Washington. Therefore, no compensation is payable to Mr Skelton for the cost of maintaining fencing.

Maintenance costs for access road

  1. [20]
    There are two tracks into the MC. One, passing the Elvo Station house is about 6 km long. This is not the track Mr Washington has nominated as the access to the claim. I must assess compensation on the track he has nominated, which is 25 km long.
  1. [21]
    Mr Washington submits that he should pay 10% of the cost of maintaining this track.[19] He says that Mr Skelton uses the track for property maintenance – checking water, cattle yards, and general movement around the property.[20] He says that four other miners also use the track.[21] He says that he will use the track about 15 times per year, usually by four-wheel drive or a small service truck.[22] He has offered to use his mining machinery to grade the track and to repair creek crossings after rain.[23]
  1. [22]
    Mr Skelton says that the other miners have agreed to grade tracks as part of their access conditions.[24] In his affidavit, Mr Skeleton did not agree with Mr Washington’s assertion that other miners use this track.[25] He asserted that Mr Washington will be the only person using this access track.[26] Mr Skelton says that, although Mr Washington says he will only use the track about 15 times per year, he has the right to use it as often as he wants.[27]
  1. [23]
    Mr Skelton says the track should be graded twice per year; before and after the wet season.[28] He has a quote of $3,690.50 for that work.[29] That is an annual cost of $7,381. However, Mr Skelton submits that Mr Washington should pay $8,982 p.a.[30]  I cannot find any explanation for the additional $1,601 Mr Skelton claims.
  1. [24]
    As Mr Skelton has freely admitted that he has arrangements with other miners in which they conduct the road maintenance, and Mr Washington has made the same offer, I do not consider it appropriate to award Mr Skelton compensation for costs that he may never incur. If Mr Washington does not maintain the track, and the task falls to Mr Skelton, then he should be paid compensation.
  1. [25]
    I do not accept, however, that Mr Washington should bear the full cost of maintaining the track. Mr Skelton has now accepted that other miners use parts of the track,[31] albeit in a limited way.
  1. [26]
    Mr Skelton does not agree Mr Washington’s access track is identical to other miners’ access because when he plots the GPS tracking points onto QGlobe, there are significant differences.
  1. [27]
    The parties made submissions about the location of the access track based on a QGlobe map provided by the Court.[32] Mr Washington says that QGlobe is not completely accurate.[33] He says there is only one track. He notes that his track (the purple track) follows a defined track on the map, whereas the yellow track (which Mr Skelton says show the true track) is a point-to-point representation, and, in fact, there is no actual path along that line. He notes that even the defined roads, such as the Winton Jundah Road, do not fall exactly in line with the marking on the map and, in some cases, the marked track goes through untouched bushland.[34]
  1. [28]
    QGlobe does have limitations and it is not unusual to find that spatial markings do not line up with reality. Therefore, I prefer Mr Washington’s evidence that there is only one track which is used by Mr Washington and other miners.
  1. [29]
    If Mr Skelton must engage contractors to grade the track, because Mr Washington has failed to do so, then Mr Washington should pay one third of the cost of any reasonably necessary track maintenance within 28 days of presentation of an invoice. As Mr Washington does not intend to work on the MC twelve months a year, his liability to contribute to track maintenance should be limited to one invoice per year.

Monitoring costs

  1. [30]
    Mr Washington accepts that Mr Skelton should be compensated for additional administration time and the parties agree that a rate of $50/hour is appropriate. They also agree that quarterly inspections are appropriate.
  1. [31]
    Mr Washington submits that four hours p.a. is sufficient.[35] He points out that his claim is a very small part of a large area, it is about 75 m from an established property road and, therefore, will not require extra travelling time for inspections.[36]
  1. [32]
    Mr Skelton says that each inspection will require five hours, including travel time from Eildon Park.[37]
  1. [33]
    Mr Skelton has given me no information on the distance between Eildon Park and the MC, nor has he given me any detail about the frequency of visits or operations in this area under the current management plan. Given the number of other mining claims in the area, and the presence of cattle yards, I think it unlikely that Mr Skelton would make a special trip four times a year just to inspect Mr Washington’s MC. I do accept, however, that Mr Skelton may not be able to accommodate a regular inspection into his work program every time. Despite the absence of proper information, I am prepared to allow one inspection per year at Mr Skelton’s claimed 5-hour round trip. Mr Washington should pay Mr Skelton $400 p.a. indexed annually to CPI.

Additional amount to reflect the compulsory nature of the payment: s 85(6)(e)

  1. [34]
    Mr Skelton claims an uplift of 15% to allow for the increased costs over the life of the claim.[38] I have dealt with that differently. I have capitalised the loss of use and Mr Washington must pay that at the commencement of the grant. The expenses that Mr Skelton will incur will increase by reference to CPI or will be payable at the rate applicable at the time they are incurred.
  1. [35]
    Of course, Mr Skelton is entitled to the usual uplift of 10% in accordance with s 85(6)(e).

Conclusion

  1. [36]
    Mr Washington must pay Mr Skelton compensation as follows:

Head of compensation

Amount ($)

Deprivation of possession of the surface of the land: s 85(5)(a)

$0

Diminution of the value of the land: s 85(5)(b)

$0

Diminution of the use made or which may be made of the land: s 85(5)(c)

$500

All loss or expense that arises: s 85(5)(f)

 

Fencing

$0

Maintenance costs for fencing

$0

Maintenance costs for access road

One third of the cost of any reasonably necessary track maintenance within 28 days of presentation of an invoice

Monitoring costs

$400 p.a. indexed annually to CPI

Additional amount to reflect the compulsory nature of the payment: s 85(6)(e)

10%

Orders:

I determine:

  1. Five Hundred and Fifty Dollars ($550) paid as a lump sum representing the diminution of the use made or which may be made of the land including 10% reflecting the compulsory nature of the mining claim;
  2. the cost of one inspection per year as a 5-hour round trip in the sum of Four Hundred and Forty Dollars ($440) including 10%, indexed annually to CPI; and
  3. if Mr Washington does not maintain the access track and Mr Skelton incurs that expense, one third of the cost of any reasonably necessary track maintenance within 28 days of presentation of an invoice.

Annexure A

Judgment-Image

Judgment-Image

Footnotes

[1]Mr Skelton is the lessee of a registered rolling term pastoral lease.

[2]Compensation Statement of Michael Wade Washington (Applicant), 29 October 2020, 1.

[3]Mining Plan of Operation for MC300270, 29 October 2020, [(a)]. This plan is appended to Compensation Statement of Michael Wade Washington (Applicant), above n 1.

[4]Ibid [(b)].

[5]Ibid 1; Statement Template, 2. This statement is appended to Compensation Statement of Michael Wade Washington (Applicant), above n 1.

[6]Compensation Statement of Michael Wade Washington (Applicant), above n 1, 2.

[7]Letter from Fisher Financial Solutions to Josh Davenport, 12 November 2020, [2]. This letter is appended to Statement of C J Skelton (Respondent), 17 November 2020.

[8]Ibid [3].

[9]Statement of C J Skelton (Respondent), above n 7, 3.

[10]Mining Plan of Operation for MC300270, 29 October 2020, [(b)]. This plan is appended to Compensation Statement of Michael Wade Washington (Applicant), above n 1.

[11]Statement of C J Skelton (Respondent), above n 7, [16].

[12]Ibid [18(a)].

[13]Ibid [18(b)].

[14]Ibid [18(d)].

[15]Ibid [18(e)].

[16]Livestock Production Assurance Audit Checklist, October 2017, 2. This checklist is appended to Statement of C J Skelton (Respondent), above n 7.

[17]See, eg, Valantine v Henry [2018] QLC 21 [69]; Agnew v DWAJ Pty Ltd [2020] QLC 14.

[18]Ibid.

[19]Compensation Statement of Michael Wade Washington (Applicant), above n 1, 1.

[20]Ibid 3.

[21]Ibid 4.

[22]Ibid.

[23]Ibid 3–4.

[24]Ibid 4.

[25]Statement of C J Skelton (Respondent), above n 7, [34].

[26]Ibid [35].

[27]Ibid [33].

[28]Ibid [36].

[29]Galilee Basin Haulage & Plant Hire Quote dated 16 October 2020. This quote is appended to Statement of C J Skelton (Respondent), above n 7.

[30]Statement of C J Skelton (Respondent), above n 7, [38].

[31]Email from Josh Davenport to Land Court of Queensland, 12 February 2021.

[32]Annexure A; Queensland Government, Queensland Globe (Web Page) <https://qldglobe.information.qld.gov.au/qldglobe/public/mra120-20-washington-v-skelton-mc300270-1>.

[33]Email from Mick and Ally Washington to Associate Member Stilgoe, 12 February 2021.

[34]Ibid.

[35]Compensation Statement of Michael Wade Washington (Applicant), above n 1, 3.

[36]Ibid.

[37]Letter from Fisher Financial Solutions, above n 7, [6]. This letter is appended to Statement of C J Skelton (Respondent), above n 7.

[38]Statement of C J Skelton (Respondent), above n 7, [38].

Close

Editorial Notes

  • Published Case Name:

    Washington v Skelton

  • Shortened Case Name:

    Washington v Skelton

  • MNC:

    [2021] QLC 11

  • Court:

    QLC

  • Judge(s):

    PG Stilgoe OAM

  • Date:

    17 Mar 2021

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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