Queensland Judgments
Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment

Ausmex Resources Pty Ltd v Daniels[2021] QLC 18

Ausmex Resources Pty Ltd v Daniels[2021] QLC 18

LAND COURT OF QUEENSLAND

CITATION:

Ausmex Resources Pty Ltd v Daniels & Ors [2021] QLC 18

PARTIES:

Ausmex Resources Pty Ltd

(applicant)

v

Andrew William Jesse Daniels, Samuel Donald James Daniels, Gabrielle Kennedy, Jeffrey Robert James Daniels, Luke William Jesse Daniels

(respondents)

FILE NO:

MRA149-20

PROCEEDING:

Determination of compensation payable for grant of mining lease

DELIVERED ON:

13 May 2021

DELIVERED AT:

Brisbane

HEARD ON:

Submissions closed 1 April 2021

HEARD AT:

On the papers

MEMBER:

PG Stilgoe OAM

ORDERS:

I determine:

  1. compensation for diminution in the value of the land in the sum of Eleven Thousand, Five Hundred and Ninety-Eight Dollars and Fifty-Eight Cents ($11,598.58);
  2. compensation for diminution of the use of the land in the sum of Eleven Thousand, Five Hundred and Ninety-Nine Dollars ($11,599); and
  3. compensation of an additional 10% to reflect the compulsory nature of the Golden Mile MLA,

within 14 days of the grant of the MLA.

I order:

  1. Any submissions seeking a costs order in this proceeding must be filed and served within 14 days of the publication of these reasons.

CATCHWORDS:

ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – COMPENSATION – where the applicant owned a mining lease situated on the land of the respondents – whether and, if so, what compensation was payable under s 281 of the Mineral Resources Act 1989

Mineral Resources Act 1989 s 281

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

Washington v Skelton [2021] QLC 11, cited

APPEARANCES:

Not applicable

  1. [1]
    Since May 2017, Ausmex Resources Pty Ltd has been exploring for gold in an area about 40 km south east of Cloncurry. This area has historic mining operations and has been subject to mining exploration for at least 50 years.[1]
  1. [2]
    Ausmex has now applied for a mining lease, ML100201 (the Golden Mile MLA), for a term of 10 years. It proposes to extract gold/copper concentrates through underground cut and fill, with a simple gravity separator onsite and offsite processing at Cloncurry. The area of the Golden Mile MLA and the access to it is 130 ha. Ausmex says there will be minimal surface disturbance as most of the mining will be underground.[2]
  1. [3]
    The Golden Mile MLA sits on land held by the respondents under rolling term leases.
  1. [4]
    The parties cannot agree what compensation is payable for the Golden Mile MLA, so the task falls to me pursuant to s 281(3) of the Mineral Resources Act 1989 (MRA).
  1. [5]
    The respondents want $250,127 compensation made up as follows:

Deprivation of possession of the surface of the land

$58,913

Diminution of the value of the land

$69,592

Diminution of the use made, or which may be made, of the land

$98,883

 

$227,388

Statutory 10%

$22,739

Total

$250,127

Deprivation of possession of the surface of the land – s 281(3)(a)(i)

  1. [6]
    The respondents engaged David Matson to prepare a valuation report. He assumed that the Golden Mile MLA would deprive the respondents of the whole surface area of the lease for the whole of the term.[3] He assessed compensation under this head at 100% loss as he thought that rehabilitation is unlikely to return the land to its pre-mining productivity. Using comparable sales, he valued the land at $200/ha.
  1. [7]
    Ausmex engaged Murray Davis to prepare a valuation report. He agreed with Mr Matson that there was 100% loss of the surface of the land but disagreed with Mr Matson that the underlying value of the land was $200/ha. He arbitrarily adopted $60/ha.
  1. [8]
    The draft Environmental Authority (EA) states the mining activity will not, at any one time, cause more than 10 ha of land to be significantly disturbed,[4] and the mining activity will not significantly disturb more than 5 ha of mine workings at any one time.[5]
  1. [9]
    Ausmex points out that the area has been the subject of historical mining and that the landforms and soils readily regenerate.[6] It must complete rehabilitation processes within 6 months of completion of work in an area,[7] and it must progressively rehabilitate where practical.[8] It must rehabilitate to a stable landform similar to that of the surrounding undisturbed area.[9] It must promote vegetation of a similar species and density of cover.[10]
  1. [10]
    The Golden Mile MLA is for a term of 10 years only.
  1. [11]
    There is no justification for the valuers’ assumption of a 100% loss of the surface of the land. Ausmex has indicated that most of the area will be available for grazing during the term of the lease.[11]
  1. [12]
    The respondents will not be deprived of the surface of the land. No compensation is payable under this head.

Diminution of the value of the land of the owner – s 281(3)(a)(ii)

  1. [13]
    Mr Matson assesses the loss of the value of the land by reference to the reduced carrying capacity of the land.[12] He assessed that the carrying capacity would be reduced by 30 breeders.[13] He assigned an agistment rate at $5.50 per breeder per week. He calculated the diminution of the value of the land as $5.50/breeder/week, equalling $165/week, or $8,580 pa, which is a present value of $69,592 over the term of the lease, using an interest rate of 4%.
  1. [14]
    Mr Davis took the view that the respondents were not entitled to compensation for diminution of the value of the land because he had accounted for that loss in assessing the deprivation of the surface of the land. He agreed with Mr Matson’s agistment rate of $5.50/week, and his calculation of the present value, but did not agree with Mr Matson’s assessment of carrying capacity.
  1. [15]
    The respondents state that the average carrying capacity of their leases is 1,500 breeding cows,[14] over 48,300 ha.[15] I accept that figure even though Mr Matson refers to the land carrying 800 breeders.[16] A stocking rate of 1,500 breeders means that the property can support one breeder for every 32.2 ha. Therefore, even if the whole of the mining lease area is unavailable for cattle, the carrying capacity is only reduced by 4.037 breeders. If I round that up to 5 breeders and apply Mr Matson’s variables, the diminution of the value of the land can be no more than $27.50/week, equalling $1,430 pa. Using the agreed interest rate of 4%, that is a net present value of $11,598.58.

Diminution of the use made, or which may be made, of the land – s 281(3)(a)(iii)

  1. [16]
    Mr Matson calculated compensation under this head by adding together the additional mustering costs, the impact on the watering point near the mine and compensation for the repair of the private roadway at the termination of the lease. In my view, these items are more properly matters that fall under s 281(3)(a)(vi) – any loss or expense that arises, and I propose to deal with them under that head of compensation.
  1. [17]
    Mr Davis took the view that Ausmex’s use of the haul road would create dust which would diminish the respondents’ use of the land. He assessed the affected area as 250 ha (100 m x 25 km) but he assigned only a 50% reduction in capacity for this land. He adopted a carrying capacity of 30 breeders/ha, which is slightly less than I have allowed above. He calculated the net present value as $10,959,[17] but rounded it up to $11,599.[18]
  1. [18]
    Mr Davis also added $10,000 for “injurious affection and blot on the title”.[19] Injurious affection is a concept commonly used in resumption cases but has no equivalent under s 281 of the MRA. I can only award compensation if it falls within one of the heads of compensation under s 281. As there is no head of compensation for injurious affection, Mr Davis’ concession is misconceived.
  1. [19]
    Any blot on the title should be accounted for when considering if there is a loss of the value of the land. If there is no evidence that the grant of a mining lease diminishes the value of the land, there is no justification for adding compensation for a blot on the title.
  1. [20]
    I think Mr Davis’ calculation of a 50% diminution of the use of land near the haul road is overly generous however he has considered a number of factors in arriving at that figure,[20] Ausmex is content to pay that amount,[21] and I am inclined to award compensation on that basis.

All loss or expense that arises – s 281(3)(a)(vi)

Additional mustering expenses

  1. [21]
    The haul road is used for mustering, which occurs twice a year.[22] Helicopters muster cattle to the roadway and then the respondents use motorbikes to walk the cattle down the roadway to holding yards. Mr Matson states that Ausmex’s use of the haul road is incompatible with mustering because numerous heavy trucks using the road will create a safety hazard for cattle and motorbikes, and trucks driving through the mob will cause cattle to scatter.[23]
  1. [22]
    Mr Matson does not disclose how many helicopters are presently used for mustering, but he states that this interference with mustering will require two additional helicopters for 1.5 hours twice a year. He costed the helicopter at $415/hour,[24] which is $2,490 pa.
  1. [23]
    Mr Matson does not state how many ringers are presently used in mustering, but he estimates that the additional mustering time will involve an extra half day for five ringers at $250/day, twice a year. Inexplicably, Mr Matson then calculates 5 x $250 x 2, giving a figure of $2,500 pa. If the ringers are only required for a half day and the daily rate is $250, the correct figure should be $1,250.
  1. [24]
    Mr Matson’s net present value of the additional mustering costs is $40,473. At most, it should be $30,334.75 (the net present value of $3,740 pa).
  1. [25]
    Ausmex has undertaken to suspend haulage operations during mustering.[25] The respondents submit that there is no guarantee that Ausmex will stop its mining activities during mustering and that the condition is not enforceable.[26]
  1. [26]
    It is true that the “condition” is not enforceable, because this is a compensation dispute. Had the parties been able to negotiate an agreement, then there may have been an enforceable condition. But I do not think that the offer from Ausmex is just lip service without an intention to honour the undertaking. It knows that the simple expedient of suspending operations will save it $3,740 pa. It has a positive obligation to minimise the duration of disturbance to land,[27] which can be achieved by scheduling activities for times when they will have the least impact.[28] If it does not honour its undertaking, Ausmex knows that the respondents can seek an amendment to the compensation payable under this decision.[29]
  1. [27]
    Taking all these matters into account, I consider that no compensation is payable for additional mustering costs unless Ausmex reneges on its undertaking to suspend operations on the haul road during mustering.

Impact on the watering point near the mine

  1. [28]
    There is a dam approximately 1.2 km from the mine site.[30] Mr Matson says that the noise and activity from the mine site will impact on timid cattle who will not water at the dam. Mr Matson proposes the construction of an alternative watering point at a cost of $45,000. In the claim for compensation, he has discounted this figure by $17,500 to account for the benefit of the watering point remaining after the expiration of the lease.
  1. [29]
    Mr Davis agrees that cattle may not water near an active mine. He notes, however, that the country between the mine and the dam is undulating and, although the distance between the Golden Mile MLA boundary and the dam is 1.3 km, the distance between the mine workings and the dam is closer to 2 km. He notes that the dam is close to a previous mine that is currently being “maintained and improved”.[31] By that phrase, I assume Mr Davis means that there is human activity close to the dam that is not related to the Golden Mile MLA.
  1. [30]
    I am not satisfied that the evidence before me justifies Ausmex paying for the cost of an additional watering point. I have no information on the location of other watering points in the area, even though Mr Davis has provided an aerial photo which shows creeks and, perhaps, other dams.[32] Mr Matson has not attempted to quantify the likely noise impact of the mine operation at the dam. He refers to the possibility of the mine operating at night,[33] but Ausmex has stated that it will only work during daylight hours.[34] The predominant wind is from the south east,[35] which means that any noise from the mining operation will be pushed in the opposite direction from the dam.
  1. [31]
    No compensation is payable for the construction of an additional watering point.

Fencing

  1. [32]
    Mr Matson has allowed for the cost of installing and maintaining fencing “on the basis that the miner will not be fencing the boundary of the lease”.[36] He has calculated the cost of fencing at 4.25 km x $4,000/km. He added the cost of a heavy vehicle grid at $10,000. He estimated the maintenance cost at 2 station hands x 2 days per year x $200/day = $1,200 pa. The net present value of maintenance is $9,733.
  1. [33]
    Ausmex has stated it will fence the mining area and maintain that fencing. It will install a grid. It will remove the fencing when rehabilitation is complete.[37] It has a positive obligation to install and maintain devices to exclude people and livestock from open mine excavations or underground workings.[38]
  1. [34]
    The respondents submit that there is no agreement to fence which they can enforce and, in the absence of an enforceable agreement, they should be paid the cost of fencing the Golden Mile MLA.[39]
  1. [35]
    As I have already noted, because the parties could not agree, there is nothing in writing between them that compels Ausmex to fence the Golden Mile MLA. It is true that this Court cannot direct the parties to enter into an enforceable agreement.[40] It is also true that there will always be the possibility that Ausmex will fail or be unable to comply with its obligation to fence.[41] That possibility would exist even if the parties had entered into an agreement.
  1. [36]
    I have consistently stated that I will not award compensation based on possibilities.[42] Nothing before me in this case causes me to change that view. There is no justification for fencing the whole of the Golden Mile MLA, particularly when the area not used for the mining operations will be available for grazing. If Ausmex does not fence its mining operations, and that causes a hazard to the respondents’ operations, then they will be entitled to fence the mining operations and recover that cost from Ausmex. A payment in anticipation of a breach that may never occur will result in a windfall to the respondents.

Road repairs

  1. [37]
    Mr Matson states that the mine access route is a private road constructed by another miner whose lease expires in 2028. At that time, the road will revert to the respondents. He has assumed that Ausmex will not maintain the road and that it will require repair at the conclusion of the Golden Mile MLA term. He has assessed this cost at nine days rectification involving a grader, roller and water truck at $4,150 per day, being $37,350. The net present value is $25,232.[43]
  1. [38]
    Mr Davis states that Ausmex will repair the road at the end of the lease and he expects the EA would require Ausmex to maintain the route during the term of the lease.[44]
  1. [39]
    Mr Davis is correct; the EA does require Ausmex to repair all damage to existing private roads and tracks resulting from the mining activity so that they are as trafficable as they were prior to any damage.[45]
  1. [40]
    The respondents once again submit that there is no enforceable agreement between the parties as to the road repairs and that the EA conditions fall well short of their entitlement to compensation under the MRA.[46] Mr Matson’s assessment is purely speculative. Once again, I decline to award compensation on a possibility; there is no entitlement to be paid for something that might happen if Ausmex breaches its obligation to maintain the road. Once again, a payment under these circumstances would be a windfall to the respondents. It would also present a powerful disincentive to Ausmex to comply with its obligations to maintain the road during the term of the lease.

Conclusion

  1. [41]
    The respondents are entitled to a payment of $23,197 represented by $11,598.58 for diminution in the value of the land and $11,599 for diminution of the use of the land.
  1. [42]
    They are also entitled to an additional 10% to reflect the compulsory nature of the Golden Mile MLA.[47]

Orders

I determine:

  1. compensation for diminution in the value of the land in the sum of Eleven Thousand, Five Hundred and Ninety-Eight Dollars and Fifty-Eight Cents ($11,598.58);
  2. compensation for diminution of the use of the land in the sum of Eleven Thousand, Five Hundred and Ninety-Nine Dollars ($11,599); and
  3. compensation of an additional 10% to reflect the compulsory nature of the Golden Mile MLA,

within 14 days of the grant of the MLA.

I order:

  1. Any submissions seeking a costs order in this proceeding must be filed and served within 14 days of the publication of these reasons.

Footnotes

[1]  Additional Information Document to Support Variation Application for a New Environmental Authority for a Resource Activity for the Golden Mile Mining Lease Application, 7 November 2018, 5. This document is contained in the Applicant’s Further Supporting Material, 27 July 2020. 

[2]  Ibid 3.

[3]  Compensation Assessment Report by Matson Valuations, 3 February 2021, 42. This document is annexed to the Respondent’s Compensation Statement in Response, 12 February 2021.

[4]  Environmental authority number EA0002309, 26 June 2020, 60 [(a)]. This document is appended to Affidavit of Aaron Day, 29 January 2021.

[5]  Ibid 60 [(e)].

[6]  Additional Information Document to Support Variation Application for a New Environmental Authority for a Resource Activity for the Golden Mile Mining Lease Application, above n 1, 5.

[7]  Environmental authority number EA0002309, above n 4, 69 [B14].

[8]  Ibid 69 [Note 44].

[9]  Ibid 69 [B18].

[10]  Ibid 69 [B19].

[11]  The Affidavit of Aaron Day filed 29 January 2021 refers to carrying capacity, which I take to mean stocking rate.

[12]  Compensation Assessment Report by Matson Valuations, above n 3, 42.

[13]  Ibid 38.

[14]  Respondent’s Compensation Statement in Response, 12 February 2021, [26].

[15]  Ibid [2(a)].

[16]  Compensation Assessment Report by Matson Valuations, above n 3, 36.

[17]  Opteon Review of Valuation Completed by Matson Valuations, 26 February 2021, 20. This document is annexed to the Applicant’s Reply to Respondent’s Compensation Statement Response, 26 February 2021.

[18]  Ibid 21.

[19]  Ibid 20.

[20]  Ibid.

[21]  Opteon Review of Valuation Completed by Matson Valuations, 26 February 2021, 4. This document is annexed to the Amended Applicant’s Reply to Amended Respondent’s Compensation Statement Response, 4 March 2021.

[22]  Compensation Assessment Report by Matson Valuations, above n 3, 36.

[23]  Ibid 38.

[24]  Ibid.

[25]  Applicant’s Reply to Respondent’s Compensation Statement Response, 26 February 2021, [30(a)].

[26]  Outline of Argument of the Respondent, 23 March 2021, [24(a)].

[27]  Environmental authority number EA0002309, above n 4, 61 [A2].

[28]  Ibid 61 [Note 3].

[29]  MRA s 283A.

[30]  Compensation Assessment Report by Matson Valuations, above n 3, 39.

[31]  Opteon Review of Valuation Completed by Matson Valuations, above n 17, 19.

[32]  Ibid.

[33]  Compensation Assessment Report by Matson Valuations, above n 3, 39.

[34]  Additional Information Document to Support Variation Application for a New Environmental Authority for a Resource Activity for the Golden Mile Mining Lease Application, above n 1, 4.

[35]  Ibid.

[36]  Compensation Assessment Report by Matson Valuations, above n 3, 38.

[37]  Applicant’s Reply to Respondent’s Compensation Statement Response, above n 25, [15], [30(a)].

[38]  Environmental authority number EA0002309, above n 4, 67 [Note 35].

[39]  Outline of Argument of the Respondent, above n 26, [24(b)].

[40]  Ibid [26].

[41]  Ibid [27].

[42]Agnew & Ors v DWAJ Pty Ltd [2020] QLC 14 [4], Washington v Skelton [2021] QLC 11 [18].

[43]  Compensation Assessment Report by Matson Valuations, above n 3, 40.

[44]  Opteon Review of Valuation Completed by Matson Valuations, above n 17, 19.

[45]  Environmental authority number EA0002309, above n 4, 65 [Note 23].

[46]  Outline of Argument of the Respondent, above n 26, [24(d)].

[47]  MRA s 281(4)(e).

Close

Editorial Notes

  • Published Case Name:

    Ausmex Resources Pty Ltd v Daniels & Ors

  • Shortened Case Name:

    Ausmex Resources Pty Ltd v Daniels

  • MNC:

    [2021] QLC 18

  • Court:

    QLC

  • Judge(s):

    Member PG Stilgoe OAM

  • Date:

    13 May 2021

Appeal Status

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

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.