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Krieg v Woolgar Valley Aboriginal Corporation[2021] QLC 28

Krieg v Woolgar Valley Aboriginal Corporation[2021] QLC 28

LAND COURT OF QUEENSLAND

CITATION:

Krieg v Woolgar Valley Aboriginal Corporation [2021] QLC 28

PARTIES:

Kenneth John Krieg

(applicant)

v

Woolgar Valley Aboriginal Corporation

(respondent)

FILE NO:

MRA499-20 (ML 2720)

PROCEEDING:

Determination of compensation payable for renewal of a mining lease

DELIVERED ON:

23 August 2021

DELIVERED AT:

Brisbane

HEARD ON:

Submissions closed 6 August 2021

Matter allocated on 20 August 2021

HEARD AT:

Heard on the papers

MEMBER:

JR McNamara

ORDER/S:

  1. I determine that Kenneth John Krieg must pay Woolgar Valley Aboriginal Corporation compensation in respect of ML 2720 as follows:
    1. Six hundred and thirty-six dollars and zero cents ($636); plus
    2. Three hundred and sixty dollars and zero cents ($360) per year for the term of the renewal, indexed to CPI.
  2. The applicant must pay the amount set out in order 1(a) within 1 month of the grant of the renewal of ML 2720 by the Department of Resources.
  3. The applicant must pay the amount set out in order 1(b) annually on the anniversary of the grant of the renewal of ML 2720 by the Department of Resources.
  4. The application by the respondent for costs is partially allowed.
  5. The applicant is ordered to pay the respondent the sum of One Thousand Three Hundred and Seventy-Five Dollars ($1,375) to the respondent within thirty (30) days of the handing down of this decision.

CATCHWORDS:

ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – COMPENSATION – where the applicant requires compensation to be decided – where the respondent at different stages of negotiations referred to conduct and compensation – where the respondents offer was contingent on agreement to pay legal and valuation costs ­– where the respondent is an Aboriginal Corporation  – where the applicant is subject to the laws of general application including the Aboriginal Cultural Heritage Act 2004 (Qld) – where valuer’s report was provided – where compensation was determined

ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – OTHER MATTERS – where costs were considered –– where the Court considered the discretion to award costs for ‘legal costs’ ought not be exercised  – where the Court was assisted by the valuer’s report – where each party should bear half the cost of the valuation report

Mineral Resources Act 1989 (Qld) s 281(3)

Land Court Act 2000 (Qld) s 7, s 34

Australian Asiatic Gems Pty Ltd v Grabbe & Anor [2021] QLC 25, cited

Deimel v Phelps & Anor (No 2) [2019] QLC 21, cited

ERO Georgetown Gold Operations Pty Ltd v Henry (No 2) (2016) 37 QLCR 186; [2016] QLAC 3, considered

Mio Art Pty Ltd v Brisbane City Council (No 3); Greener Investments Pty Ltd (In Liquidation) v Brisbane City Council (No 3) (2013) 34 QLCR 222; [2013] QLAC 3, cited

Guernier & Anor v Chelsea on the Park Pty Ltd [2021] QLC 13, considered

Hughes v Western Australian Cricket Association (Inc) & Ors (1986) ATPR 40-748, considered

Land & Anor v Grabbe & Anor [2021] QLC 1, cited

Lonergan & Anor v Friese (No 2) [2020] QLAC 4, cited

Mentech Resources Pty Ltd v MCG Resources Pty Ltd (in liq) (2012) 33 QLCR 43; [2012] QLAC 2, cited

Mio Art Pty Ltd v Brisbane City Council (No 3) [2010] QLC 86, considered

Queensland Industrial Minerals Pty Ltd v Younger & Ors; Queensland Industrial Minerals Pty Ltd v Ryan (No. 2) (2017) 38 QLCR 210; [2017] QLC 54, followed

Sawyer v Grabbe & Anor [2021] QLC 27, cited

APPEARANCES:

Not applicable

Introduction

  1. [1]
    Kenneth John Krieg and his late father pegged the 85 ha mining lease ML 2720 on Middle Park Station, 140 km north of Richmond, around 1980. Work was put into the mining operation with a view to what was ultimately an unviable ‘wet mining operation’. The lease changed hands around 1999, was renewed in 2000, and Mr Krieg purchased it back in 2016. Since then he has done testing and built machinery to support a dry sluicing operation.
  1. [2]
    The Woolgar Valley Aboriginal Corporation (WVAC) is the lessee of the 130000 ha Middle Park Station. The property was purchased by the Indigenous Land Corporation “to provide opportunities for the traditional owners of that area, the Woolgar people, who mostly live in Yarrabah, Hopevale and Townsville.”[1]
  1. [3]
    When the mining lease was coming up for renewal, Mr Krieg approached the WVAC’s solicitors to discuss a compensation agreement, but things got off to a rocky start. Needless to say, compensation has not been agreed.
  1. [4]
    On 30 November 2020 the Chief Executive, Department of Natural Resources, Mines and Energy referred the matter to the Land Court to determine compensation. On 29 March 2021 and 23 July 2021, I made orders for the filing and exchange of evidence and submissions between the parties. It was agreed that the matter could be determined on the filed material.

Referral documents

  1. [5]
    The referral documents (although not provided strictly in accordance with Practice Direction 1 of 2017) accompanied by a statement by Mr Krieg inform me that:
  • the end date of the renewal is 30 September 2035;
  • it is a two person operation;
  • it uses a dry sluicing plant;
  • rehabilitation is progressive, trenches are backfilled prior to moving to the next trench;
  • the mining season is limited to around 6 months of the year because it is a dry operation;
  • the capacity of (the) plant and equipment means only 100 m3 a day can be processed;
  • it would take more than 10 years or more to process the approximate 300000 m3 of gravel available;
  • the gravel might yield 0.4 grams/m3 (gold); and
  • that the equipment on site is limited to a grader, a dry sluicing plant and two 4WD vehicles. 

Applicable legislation

  1. [6]
    The things I must take into account in determining compensation are set out in s 281(3) of the Mineral Resources Act 1989 (Qld) (MRA) and are focussed on the impact caused or inconvenience suffered by a landholder as a result of a mining lease on their land. The evidence is therefore focussed on the lost opportunity of the landholder to use the area and any loss in value as a consequence of the mining lease. Access is not an issue in this matter because the mining lease area is adjacent to a gazetted road. 
  1. [7]
    Importantly, this is a mining compensation matter. It is not, as the correspondence from Mr Ellis (solicitor) at different stages suggested, a Conduct and Compensation matter.[2] The difference is important. My decision is limited to determining compensation. I cannot make orders concerning the conduct of the parties, that is, the sorts of things that might relate to the relationship between miner and landholder during the term of the lease. 

The applicants evidence

  1. [8]
    Mr Krieg filed four witness affidavits and his own affidavit. These include the witness affidavits of Mr Wharton, Mr Flute, Mr Tritton and Mr Purse.
  1. [9]
    Mr Wharton, a Stock and Station Agent from the region, acknowledges that he is not a valuer.[3] In his affidavit he:
  • says that he is familiar with the locality having managed an adjoining lease;
  • described the mining lease area as “an extremely steep sided gorge… with a fair body of grass on the hillsides, but limited access due to steep nature… on the flatter areas… there is little to no soil of any quality”; and
  • expressed his opinion that the lease area would barely sustain one head of cattle over a 12 month period. 
  1. [10]
    Mr Flute, grazier and owner of Fog Creek Station north-west of Middle Park, indicates that he is familiar with “jump up country” also found on Middle Park, noting that the creeks and gullies that come off the range are very steep sided and do not grow much useful grass.[4] He expresses the view that the mining lease area “is unfit for bovine habitation. It is very poor cattle country.”
  1. [11]
    Mr Tritton, grazier, owns Peterfield Station Holding which neighbours Middle Park. He says the mining lease area, by reference to similar terrain on the northern side of his property, largely goes unused as it is very poor grazing country. In his view the lease area “would probably sustain a few head of cattle for a couple of months a year.”[5]
  1. [12]
    Mr Purse of Borree Station in Richmond says he “has been associated with this type of country for 50 odd years having managed Middle Park in the 60’s and owning Bellfield further around the escarpment for 40 odd years.” He expressed the view that “the open forest country south of the lease will run a beast to 40 acres however in the rough areas would run 80% less in my opinion.”[6] 
  1. [13]
    In his affidavit filed 7 April 2021, Mr Krieg describes the engagement with the WVAC’s solicitor in late 2020 concerning compensation. He invited an offer of compensation. A proposal was presented to Mr Krieg for an annualised payment together with “legal fees that had accrued” which he rejected.
  1. [14]
    Mr Krieg says “the matter was then referred to the Land Court”,[7] and WVAC engaged a valuer to conduct a desktop assessment. He says that based on the valuer’s report WVAC made a further offer of $8,900 as a one-off payment for a 10 year term, together with legal and valuers fees totalling $12,000, which Mr Krieg says he also rejected.
  1. [15]
    Mr Krieg’s affidavit includes a number of photos of the ML area. He also explains that at the time the lease was pegged, the Mines Department required leases to be square or rectangular, rather than follow the alluvial watercourse. This, he says, resulted in areas “of useless terrain” being incorporated into lease areas. Exhibited to his affidavit is an email to the WVAC solicitor dated 22 March 2021, which addresses the issues raised in the valuer’s report and notes the disparity between the per hectare value of the property calculated by the valuer and the per hectare value based on the unimproved valuation. He made the following offer: “$542.00 payable 30/6 each year with all costs to date payable by Woolgar Aboriginal Corporation.”

The respondent’s material

  1. [16]
    Mr Ellis, solicitor, filed two affidavits on 23 April 2021.[8] Mr Ellis describes how Mr Krieg came to contact him regarding a compensation agreement with the WVAC and that on 13 November 2019, Mr Krieg forwarded Mr Ellis a compensation agreement which he then passed on to the WVAC Chairperson. Mr Ellis says that he received instructions to propose to Mr Krieg that the respondent was willing to negotiate and prepare a conduct and compensation agreement in relation to the renewal of ML 2720 “on the basis the Applicant met the respondent’s legal fees in the estimated amount of $3622.50.”[9]
  1. [17]
    Correspondence from Mr Ellis to Mr Krieg dated 8 April 2020 has the subject heading “CONDUCT AND COMPENSATION AGREEMENT WITH WOOLGAR VALLEY ABORIGINAL CORPORATION FOR MINING LEASE 2720.”[10] The letter goes on to refer to the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) and to an obligation on a proponent to meet the reasonable legal costs of the landowner, whether or not an agreement is ultimately reached.
  1. [18]
    Whether it was apparent to Mr Krieg that Mr Ellis was mistaken as to the nature of the tenement and the basis upon which a compensation agreement was being sought is not clear. However, a response on Mr Krieg’s behalf came to Mr Ellis from Ms Eden Hodson of UTM Global (tenement services provider) on 14 April 2020,[11] correcting Mr Ellis as to the basis upon which a compensation agreement was being sought. Ms Hodson also informed Mr Ellis that her client was not required to meet the reasonable legal costs as claimed.
  1. [19]
    The response email from Mr Ellis to Ms Hodson some 3 weeks later on 5 May 2020 appears defensive. It says, “We note your confirmation that the proposed Compensation Agreement is pursuant to s 279 of the Mineral Resources Act 1989, rather than s 81 of the Mineral and Energy Resources (Common Provisions) Act 2014.” The language suggests that it was either Ms Hodson or Mr Krieg who had been mistaken. However, I note that the compensation agreement which Mr Krieg had forwarded to Mr Ellis clearly refers to s 279 of the Mineral Resources Act 1989 (Qld), and that it was Ms Hodson who informed Mr Ellis of the correct legislation and provision. 
  1. [20]
    Mr Ellis’s 5 May 2020 email to Ms Hodson goes on to say, “However, we note that it has long been accepted that the owner of land can be compensated for costs associated with obtaining professional legal and valuation advice to prepare a compensation claim under the MRA.”
  1. [21]
    After the 5 May 2020 email, Mr Ellis says he did not hear further from the applicant until he received a telephone call on 13 October 2020 where he says a “fair settlement” proposal (from Mr Ellis) was discussed involving an annual payment which would be provided by email on a “without prejudice except as to costs” basis.
  1. [22]
    The 13 October 2020 email from Mr Ellis is surprising. While referring to the correspondence with Ms Hodson, which corrected the nature of the compensation agreement being sought, Mr Ellis says he confirms his instructions that WVAC is amenable to “entering into a Conduct and Compensation Agreement… providing you meet our client’s reasonable costs of negotiating and drafting the agreement as set out in the attached letter…” (emphasis added). The proposed compensation was $3,000 per annum “provided you meet our client’s reasonable legal costs of negotiating and drafting the agreement” which were estimated at that time as $3,984.75.   
  1. [23]
    Mr Ellis in his affidavit notes that Mr Krieg did not respond. I am not surprised. Mr Krieg may well have been perplexed. The reference by Mr Ellis to a Conduct and Compensation Agreement was apt to have that effect. Expressed this way, the offer to settle was both contingent upon entering into an agreement regarding conduct (not just compensation as required by the MRA), and upon Mr Krieg meeting the respondent’s “legal costs of negotiating and drafting the agreement.”
  1. [24]
    In the respondents submissions (amended) at [10] they say, “As an outcome of the First Review, the respondent engaged Caleo & Co Valuers to prepare a Desktop Assessment of Compensation for the renewal of ML 2720 with a view to it forming the basis of further negotiations between the parties, for which the Court allowed the parties until 26 March 2021.”[12] 
  1. [25]
    The valuer’s desktop report dated 17 March 2021, undertaken without the benefit of a physical inspection, was completed by Mr Geoff Eales of Caleo & Co.
  1. [26]
    Mr Eales estimated a carrying capacity of 1300 EA over the area of 61534 ha leased by S Purse, being the southern part of the aggregation. He assumes that the whole area of the ML will be used for mining. Mr Eales notes that the area of the “proposed mine” sits into the rough ridges and associated tributary of the Woolgar River in Middle Park. He notes that the main cattle yards are away from the ML; that there is no apparent grazing infrastructure on the ML area; that the homestead is well away from the ML area; that there is no impact on structures or amenity to the homestead; that “there will be a small increase in heavy vehicle use on internal roads system which is currently gravel”; that there is a small mining camp located within the ML; and that the mine is expected to be in production for 6 months/year.
  1. [27]
    Based on an 85 ha total area of disturbance in poor breeding country, Mr Eales estimated an average carrying capacity of 1:20 ha and on that basis estimated 4 head would be lost within the surface area. He says: “The renewal of mining lease factor a 70% of the lands value has been adopted as a loss.”
  1. [28]
    In relation to the diminution in value, Mr Eales said that in view of the relatively small area of impact in relation to the overall area of the property, diminution has been assessed on a ‘Piecemeal Basis’. Mr Eales looked at four sales which he described as a ‘broad range’ and a ‘broad range of value’ of $2,500 to $3,850 per beast area, and adopted a value for the subject land of $3,000 per beast area.
  1. [29]
    Accordingly, for deprivation of possession of the surface of the land,[13] Mr Eales estimates $3,600 representing a loss of 4 head ($12,000) discounted 70% for renewal.
  1. [30]
    For other criteria in s 281(3) of the MRA, Mr Eales did not consider there is any diminution in value, blot on title, diminution in use, or severance.
  1. [31]
    As to s 281(3)(a)(vi) of the MRA concerning “all loss or expense that arises”, Mr Eales considered that allowance should be made for management time to monitor stock “and the Applicants impacts to the property during the term.” He calculated this to be 1 hour/mth for 6 mths/year over 10 years at $75/hr which totals $4,500. Fair compensation under s 281(3) he says would be $8,100, together with a 10% uplift for the compulsory nature of matter bringing the total to $8,900.
  1. [32]
    Mr Eales in his Compensation Liability Assessment at page 20 of his report also includes amounts for “Legal & Valuation Fees” without explaining the basis for their assessment or their inclusion.
  1. [33]
    In correspondence to Mr Krieg dated 18 March 2021, Mr Ellis provides particulars of WVAC’s claim for compensation pursuant to s 281 of the MRA. The compensation amount is per the Caleo & Co report ($8,900) together with legal fees ($3,333) and valuation fees ($2,750). However, Mr Ellis says that WVAC is willing to settle on the basis of a $12,500 one-off up-front payment.
  1. [34]
    The conduct conditions referred to in the correspondence are those Mr Ellis says “we understand applied to your agreement with the previous landholder.” I observe that the “additional conduct conditions” are to “maintain tracks” in circumstances where the applicant has access from a gazetted road which is also a stock route; to “not disturb or interfere with Aboriginal Cultural Heritage” where the applicant is subject to the laws of general application including the Aboriginal Cultural Heritage Act 2004 (Qld) pursuant to which he is subject to a duty of care; and to attend to “reasonable rehabilitation” which is, in any event, a condition of a lease under the MRA.
  1. [35]
    Mr Krieg responded on 22 March 2021 addressing the Caleo & Co report noting that he agreed with many of the observations of Mr Eales, but expressed the view that he doubted the mining lease area would sustain (even) one head of cattle for a 12 month period. He noted that the comparable properties in the Caleo & Co report are not as isolated and have far more improvements than Middle Park. Mr Krieg offered an annual payment of $542 and to prepare an agreement that would include all the conditions outlined in Mr Ellis’ offer.

Submissions

  1. [36]
    In the respondent’s Submissions (amended) filed 24 May 2021 it says that Middle Park Station is of strong spiritual and cultural meaning and significance to the members and beneficiaries of the respondent. I accept that.
  1. [37]
    The submissions go on to suggest that Mr Krieg did not engage constructively in negotiations. They say he did not negotiate after 13 October 2020 nor make a counter offer before “commencing proceedings” on 30 November 2020.
  1. [38]
    As noted already, in my view the 13 October 2020 correspondence was apt to confuse and on its face revert to the mistaken basis upon which the parties were meant to negotiate and to reveal a misunderstanding of the meaning of “loss or expense”.
  1. [39]
    It is a matter for the parties as to the evidence they wish to present to the Court. The outcome of the Review referred to in the respondent’s submissions at [10] and referenced at [24] above, was that orders were made for the parties to file and serve “any expert reports” and any lay witness statements by certain dates. The outcome of the Review was not to direct that any party obtain or engage experts, or experts in any particular discipline. The inference in the submission is that the Court endorsed what the respondent chose to do in terms of briefing experts, and that the applicant provided actual or tacit consent. If that is what is intended in the submission, then I reject the suggestion. As to the position the applicant took at the Review, the respondent asserts in its “compensation submissions” at [29] that the obtaining of the Caleo & Co report was an “agreed outcome of the First Review.” I also reject that characterisation.
  1. [40]
    The respondent goes on to challenge the lay witness evidence filed by the applicant – on grounds including the fact that, although witnessed and filed, two of them were undated. I find this somewhat spurious and if there was any doubt, I note that s 7 of the Land Court Act 2000 (Qld) provides a basis for accepting them. Section 7 provides that the court is not bound by the rules of evidence and may inform itself in the way it considers appropriate; and must act according to equity, good conscience and the substantial merits of the case without regard to legal technicalities and forms or the practice of other courts.
  1. [41]
    In relation to the other grounds of objection, in my view the affidavits speak for themselves. They are quite self-contained. I accept that in making the affidavits, the authors are known to the applicant. Each of them however is evidently familiar with the area the subject of the mining lease and the type of enterprise undertaken on the land in that region.
  1. [42]
    The respondent submits that, as the only expert evidence before the Court, the Caleo & Co report should be accepted however, they “do not press for the inclusion of legal and valuation costs as disturbance costs, per se.” The respondent makes separate submissions on costs.

Compensation

Deprivation of possession – s 281(3)(a)(i)

  1. [43]
    For deprivation of possession of the surface of the land,[14] the difficulty I have with the respondent’s material is that the compensation sought is based on the impact to pastoral operations on the subject area. Those pastoral operations are conducted under licence by Mr S Purse. 
  1. [44]
    The rights and obligations of Mr Purse and the WVAC are set out in an Occupancy Licence Agreement (the licence agreement). The licence agreement was annexure REE-1 to the affidavit of Mr Ellis filed 27 July 2021. The commencement date of the licence agreement was 3 September 2020 for a term of 1 year. The licence agreement provides for fixed payments by Mr Purse to the respondent and is not based on production.
  1. [45]
    The licence provides that nothing in the Occupancy Licence Agreement impedes the legitimate exercise of rights under mining leases by those holding such rights within the licence area.[15] The licence agreement is also clear that the agreement does not grant the licensee exclusive rights. In terms of general conduct, the licence agreement provides that the licensee must ensure that numbers of livestock within the licence area are consistent with the reasonable carrying capacity of the Licence Area and that there is no overgrazing. The licence area is 61,543 ha. At the expiration of the term of the licence, or if the licence is terminated, the licensee must vacate the licence area and remove all livestock, plant and equipment within 3 months. There is no renewal clause.
  1. [46]
    The term of the mining lease renewal application is 15 years. The start date identified in the Application for Renewal is 1 October 2020 and the end date is 30 September 2035.
  1. [47]
    In my view there is no deprivation compensable to WVAC under s 281(3)(a)(i) of the MRA on the basis of (lost) carrying capacity while the relevant area is subject to the occupancy licence. There is no evidence to suggest that licence fee payments are discounted as a result of the operation of the mine. It is however evident that the WVAC intend to occupy and make productive use of the land in the future. The applicant’s material and the valuers report indicate that the mine life is approximately 10 years, operated for 6 months per year. Although somewhat arbitrary, it would seem unlikely that WVAC would be in possession and be operating the area to capacity within 2 years of the start date of the mining lease renewal. Accordingly, an award under this head of compensation ought to be discounted 20%.
  1. [48]
    There is no evidence regarding the actual stocking rate of the licence area. The Caleo & Co report estimate a carrying capacity of the (Purse) licence area as 1300 Adult Equivalent (AE), or 1000 breeders. Mr Eales acknowledges the mining lease area as poor breeding country nevertheless estimates an average carrying capacity at 1:20 ha, and on that basis assesses that 4 head will be lost within the surface area.
  1. [49]
    As noted at [9] to [12] above the lay witnesses who provided affidavits which were filed by Mr Krieg, expressed the view that the 85 ha area the subject of the mining lease, as opposed to the whole property: was unfit for bovine habitation;[16] would barely sustain 1 head of cattle over a 12 month period;[17] would probably sustain a few head of cattle for a couple of months a year;[18] and would run to 80% less than 1 beast to 40 acres.[19] Mr Krieg says that not all of the mining lease area is used for mining purposes due to the way leases areas were drawn. I prefer the view of the lay witnesses who provide evidence based on their experience in the pastoral industry in and around the subject land. I prefer an estimate for the carrying capacity of the area of the mining lease, noting also that all the lease area will not be the subject of mining activities, of 1 AE/year.
  1. [50]
    Mr Eales uses sales evidence to establish a range and adopt a value for the subject land per beast area. There were four sales analysed. I do not have sufficient information to determine comparability however in terms of analysed carrying capacity, three were reasonably close in terms of range, and one was an outlier. In my view, in those circumstances the outlier should have been discarded. Removing the outlier from the calculation, and in the absence of other evidence, I accept a value for the subject land of $2,650/beast area. Mr Eales allowed 30% on the basis that it is a lease renewal, which I accept. Accordingly, compensation under this head is $795, discounted a further 20% as discussed at [47] above. This amounts to $636.

Loss or expense – s 281(3)(a)(vi)

  1. [51]
    The only other head of compensation claimed is for “management time to monitor stock and the Applicant’s impacts to the property during the term” under s 281(3)(a)(vi). Mr Eales assessed compensation at 1 hour per month at $75 per hour for 6 months per year over 10 years, totalling $4,500.
  1. [52]
    The licence agreement suggests that WVAC intends to take a keen interest in the operation of licence with an inspection, access and reporting regime.[20] The agreement provides for six monthly meetings between the licensee and WVAC to review operations and discuss matters in connection with the agreement. While the licence agreement is in place, I expect that any discussion regarding stock and impacts will form part of the six monthly meetings. Once WVAC is undertaking its own operation on the area it is reasonable to expect that management time will be spent as claimed. The rate suggested, by reference to other recent Land Court decisions,[21] is reasonable. In my view reasonable compensation in this regard would be 1 hour per month, for 6 months per year, for 80% of the period of the operation of the mine. This would equate to $3,600, or $360 per year payable for the term of the renewal on the anniversary date of the mining lease, indexed to CPI.

Conclusion

  1. [53]
    In respect of ML 2720:

Head of compensation

Calculation

Amount

Deprivation of possession

s 281(3)(a)(i)

(30% x $2,650)

- 20%

$636

Diminution of value

s 281(3)(a)(ii)

 

nil

Amount to reflect compulsory acquisition

s 281(3)(a)(v) – on s 281(3)(a)(i) only

 

nil

Compensation

$636

Loss or expense

s 281(3)(a)(vi)

(6 x $75)

x 80%

$360

Annualised compensation

$360

Costs

  1. [54]
    The respondent made submissions on costs, citing the decision of Guernier & Anor v Chelsea on the Park Pty Ltd,[22] where Member Stilgoe notes:

“The Land Appeal Court has determined that:

“the time spent by a landowner negotiating with a mining lessee as to appropriate compensation cannot be properly characterised as “loss or expense that arises as a consequence of the grant of renewal of the mining lease” pursuant to s 281(3)(a) because the grant or renewal of the mining lease cannot occur until, pursuant to s 291, compensation has been determined by agreement or by determination of the Land Court.”

Accordingly, Chelsea’s claim for compensation for Mr Pearson’s time cannot be the subject of compensation.

I take the same approach for the legal and valuation costs. They are costs incurred in negotiating compensation, they are not costs that arise as a consequence of the grant of the mining lease. The situation under the MRA is very different from the regime for conduct and compensation agreements under the Mineral and Energy Resources (Common Provisions) Act 2014 which expressly gives a right to claim the reasonable costs of negotiating an agreement. In the absence of an express provision, and in light of the Land Appeal Court’s decision, I can find no justification for an order that Mr Guernier pay Chelsea’s costs.”[23] (citations omitted) (emphasis added)

  1. [55]
    The respondent states that despite the allowance in the Caleo & Co Report for legal and valuation costs, they do not seek inclusion by the Court in its assessment of compensation of an allowance for legal and valuation costs.[24] I understand this to mean that the respondent does not press a claim for “legal and valuation costs” under s 281(3)(a)(vi) of the MRA. Rather, they ask the Court to exercise its discretion to award costs. The respondent submits that the Court has a general power to make a costs order between the parties as the Court thinks fit and/or appropriate.[25]
  1. [56]
    In Queensland Industrial Minerals Pty Ltd v Younger & Ors; Queensland Industrial Minerals Pty Ltd v Ryan (No. 2)[26] President Kingham noted the general power of the Court under s 34 of the Land Court Act 2000 (Qld) (LCA) to order costs as considered appropriate, subject to s 281(7) of the MRA which provides that the Court may order costs as it thinks fit for proceedings such as these.[27] The discretion to award costs is unfettered,[28] and is to be exercised based on the facts and circumstances of each case without caprice. 
  1. [57]
    First, I must consider whether to exercise my discretion and order costs in favour of the respondent. If so, I have a further discretion to order costs on an indemnity basis.

Costs in the proceedings

  1. [58]
    While the rule that costs follow the event does not govern the exercise of discretion here, it nonetheless informs it.[29] In ERO Georgetown Gold Operations Pty Ltd v Henry (No 2)[30]  cited in Lonergan & Anor v Friese (No 2),[31] the Land Appeal Court said:

“…When an application is made for costs… the Court is required to determine what order (if any) is appropriate. In carrying out that task, the Court is to have regard to established principles relating to the exercise of such a discretion, to the extent they are relevant to the facts of the case before the Court. One such principle is the “rule often followed” that costs follow the event… It follows that a party’s success will often be a significant, though not necessarily decisive, factor in its application for an order for costs.” [32]

  1. [59]
    Also cited in Lonergan & Anor v Friese (No 2)[33] at [9] is a passage from Mio Art Pty Ltd v Brisbane City Council (No 3)[34] where the Land Appeal Court referred to the “note of cautious disapproval” expressed by Toohey J in Hughes v Western Australian Cricket Association (Inc) & Ors[35] to apportion costs according to the success or failure of one party or the other. The context of those comments is the fact that trial courts often see one party wholly or substantially successful, but fail on particular issues of fact or law. They ought not be dissuaded by the risk of costs from canvassing issues, however doubtful, which might be material to the decision of the case.
  1. [60]
    In this matter the respondent argues that:[36] the evidence establishes “the differing approaches” of the parties with the result that the respondent has incurred significant costs in bringing relevant evidence before the Court; that the applicant has been a passive participant in a proceeding despite initiating proceedings; that unless the Court assesses compensation as nil the respondent ought to be viewed as the successful party; that the applicant adduced no valuation evidence or expert evidence (and the respondent has); that the Court should not accept the applicant’s assertion that the respondents engagement of Caleo & Co was not agreed to by him; and at no time prior to the provision of the Caleo & Co report did the applicant offer to pay any monetary compensation.
  1. [61]
    Other factors referred to by the respondent in submissions are what might be described as an uneven negotiating position include the fact that the respondent found the process intimidating, the applicant possessed a degree of sophistication, and the applicant elected not to incur “the cost of legal or other representation” in the proceedings.
  1. [62]
    Finally, the respondent contends it acted reasonably in making a without prejudice offer to settle on 18 March 2021 in the sum of $12,500 (inclusive of legal and valuation costs) when the Caleo & Co report was provided. They submit that the applicant acted unreasonably in rejecting the respondents settlement offer and offering “merely $542 per annum” for the duration of the lease with no allowance for CPI indexation, on the basis that the respondent pay its own costs.
  1. [63]
    The costs order sought is that the applicant pay the respondent costs on an indemnity basis from 22 March 2021, or in the alternative pay 50% of the respondent’s solicitor-client costs (including valuation costs) from the date of filing its application, being 30 November 2020.
  1. [64]
    I note in these reasons that in the early stages of engagement between the parties things got off to a rocky start. I don’t consider the applicant was passive. I do consider that confusion was introduced into the process as a result of the mischaracterisation of the agreement required. That seemingly caused the applicant to engage an advisor who provided correction. Despite that, it appears that confusion continued as a result of characterising the nature of negotiations using the language of MERCPA (being Conduct and Compensation) and by couching offers based on contingencies. That is, that compensation be linked to conduct arrangements (even though those terms were largely agreed) and in relation to legal and valuation costs.
  1. [65]
    I do not consider the approaches of the parties that different. Both sought and obtained evidence relevant to the assessment of compensation. The applicant provided a number of sworn statements of lay witness which I found useful. I was also assisted by the valuer’s report, in the absence of better evidence, concerning a value to be attributed to beast/area for the subject site. The parties agreed that this matter be determined on the papers. Either or both could have proposed that a hearing be held, and that witnesses be available for cross-examination. That did not occur.
  1. [66]
    I have not assessed compensation as nil. I have assessed compensation (overall) in an amount less than the lowest offer of either party. The MRA does not define compensation but references to it are framed in terms of the “amount of compensation” or “compensation payable”.[37] I do not accept the proposition that unless it is determined that compensation is not payable, that the respondent ought to be viewed as the successful party. Nor do I consider a decision to award compensation of any amount to mean the applicant is the successful party. As noted earlier, this is not necessarily decisive.
  1. [67]
    Earlier in these reasons at [60] I expressed the view that I do not accept the assertion that “the Court should not accept the applicant’s assertion … that the respondent’s engagement of Caleo & Co was “not agreed to by him””.
  1. [68]
    In relation to the suggested uneven negotiating position of the parties, the applicant, seemingly at the suggestion of the licensee Mr Purse, contacted the legal advisors for WVAC. When the mischaracterisation as to the nature of the engagement arose, it appears that the applicant sought and obtained advice from Ms Hodson. Although the applicant had experience with the processes relevant to mining lease applications, it is likely that WVAC had not. The respondent’s legal advisor however, launched offers that were contingent on the payment of legal expenses, firstly as an obligation, and then as a condition of settlement. The advice communicated by Ms Hodson (on behalf of the applicant) to the respondent’s legal advisor was to the effect that the two elements were not co-dependent in relation to the type of compensation agreement being sought.
  1. [69]
    The respondent says they acted reasonably in making the without prejudice offer to settle on 18 March 2021 in the sum of $12,500 (inclusive of legal and valuation costs) and that the applicant acted unreasonably in rejecting the respondents settlement offer and offering “merely $542 per annum” for the duration of the lease with no allowance for CPI indexation and on the basis that the respondent pay its own costs.
  1. [70]
    The approach taken by the respondent to formulating an offer is not on its face unreasonable. Whether it is proportional to a compensation agreement for the renewal of what would be described as a “small mining” operation is less clear. I accept that the respondent might not be aware of what might be considered reasonable compensation in the circumstances of this matter. However, their legal advisor is much better placed.
  1. [71]
    The approach taken by the applicant was not unreasonable in my view. While he indicated early that he was willing to pay compensation, an offer was not initially forthcoming due to the confusion created regarding the nature of the agreement. That confusion persisted beyond the respondent’s 13 October 2020 offer. Even the 18 March 2021 “one-off all-up” offer was presented in a way that legal fees and valuation fees were not severable from the offer to settle compensation. The applicant responded to that offer on 22 March 2021, challenging a key aspect of the valuer’s report being the carrying capacity of the relevant area. The offer made by the applicant was an annual payment of $542 for the term of the lease, and agreement to the conduct conditions proposed. The method of calculating the annual payment is not clear to me, however, the value would in total be perhaps a little more than I have assessed in this decision. I am not satisfied that the applicant’s offer was unreasonable.
  1. [72]
    Overall, I am not satisfied that my discretion to award the respondent costs for legal expenses in this matter ought to be exercised. Accordingly, it is unnecessary for me to consider an award of costs on an indemnity basis.
  1. [73]
    As noted in other decisions the Court recognises the great benefit that it often receives by having placed before it independent expert evidence in general and, as regards compensation matters, expert valuation evidence in particular.[38] As stated at [65], although I favoured the lay witness evidence over that of the valuer concerning some aspects in this matter, I was assisted by the valuer’s report. Taking into account my determination of compensation, in my view it is appropriate that each party should bear half the cost of the expert valuation report. The respondent submitted the cost of the report to be $2750.
  1. [74]
    I allow the application for costs by the respondent regarding valuation expenses, and fix costs in the total sum of $1,375. The applicant is to pay the total sum of $1,375 to the respondent within 30 days of the handing down of this decision.

Orders

  1. I determine that Kenneth John Krieg must pay Woolgar Valley Aboriginal Corporation compensation in respect of ML 2720 as follows:
  1. (a)
    Six hundred and thirty-six dollars and zero cents ($636); plus
  1. (b)
    Three hundred and sixty dollars and zero cents ($360) per year for the term of the renewal, indexed to CPI.
  1. The applicant must pay the amount set out in order 1(a) within 1 month of the grant of the renewal of ML 2720 by the Department of Resources.
  1. The applicant must pay the amount set out in order 1(b) annually on the anniversary of the grant of the renewal of ML 2720 by the Department of Resources.
  1. The application by the respondent for costs is partially allowed.
  1. The applicant is ordered to pay the respondent the sum of One Thousand Three Hundred and Seventy-Five Dollars ($1,375) to the respondent within thirty (30) days of the handing down of this decision.

Footnotes

[1]Affidavit of Lavin James Keyes filed 23 April 2021 [3].

[2]The Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) provides for conduct and compensation arrangements.

[3]Affidavit of John Wharton filed 7 April 2021.

[4]Affidavit of Terrance Flute filed 7 April 2021.

[5]Affidavit of Corbett Tritton filed 7 April 2021.

[6]Affidavit of Ronald Purse filed 7 April 2021.

[7]Affidavit of Kenneth Krieg filed 7 April 2021 [6]; I note that while Mr Krieg says he instigated the referral, it was the Chief Department of Natural Resources, Mines and Energy who in fact referred the matter.

[8]Both sworn on 22 April 2021.

[9]Affidavit of Ryan Ellis filed 23 April 2021 [9].

[10]Affidavit of Ryan Ellis filed 23 April 2021, Ex REE-5.

[11]Affidavit of Ryan Ellis filed 23 April 2021, Ex REE-6.

[12]Respondent’s Submissions (Amended) filed 24 May 2021 [10].

[13]Mineral Resources Act 1989 (Qld) s 281(3)(a)(i).

[14]Mineral Resources Act 1989 (Qld) s 281(3)(a)(i).

[15]Affidavit of Ryan Ellis filed 27 July 2021, Ex REE-1, cl 5.6.

[16]Affidavit of Terrance Flute filed 7 April 2021 [3].

[17]Affidavit of John Wharton filed 7 April 2021 [4].

[18]Affidavit of Corbett Tritton filed 7 April 2021 [3].

[19]Affidavit of Ronald Purse filed 7 April 2021 [4].

[20]Affidavit of Ryan Ellis filed 27 July 2021, Ex REE-1, cl 10.

[21]Land & Anor v Grabbe & Anor [2021] QLC 1; Sawyer v Grabbe & Anor [2021] QLC 27; Australian Asiatic Gems Pty Ltd v Grabbe & Anor [2021] QLC 25.

[22][2021] QLC 13.

[23]Guernier & Anor v Chelsea on the Park Pty Ltd [2021] QLC 13 [39]-[42].

[24]Respondent’s Submissions (Amended) filed 24 May 2021 [24].

[25]Respondent’s Submissions (Amended) filed 24 May 2021 [24]-[25].

[26]  (2017) 38 QLCR 210.

[27]Queensland Industrial Minerals Pty Ltd v Younger & Ors; Queensland Industrial Minerals Pty Ltd v Ryan (No. 2) (2017) 38 QLCR 210 [3].

[28]Ibid [4].

[29]Mentech Resources Pty Ltd v MCG Resources Pty Ltd (in liq) (2012) 33 QLCR 43 [4].

[30][2016] QLAC 3.

[31][2020] QLAC 4 [7].

[32]ERO Georgetown Gold Operations Pty Ltd v Henry (No 2) (2016) 37 QLCR 186 [24].

[33][2020] QLAC 4 [7].

[34][2010] QLC 86; Mio Art Pty Ltd v Brisbane City Council (No 3); Greener Investments Pty Ltd (In Liquidation) v Brisbane City Council (No 3) (2013) 34 QLCR 222 [23].

[35](1986) ATPR 40-748.

[36]Respondent’s Submissions (Amended) filed 24 May 2021 [29].

[37]Mineral Resources Act 1989 (Qld) s 281.

[38]Deimel v Phelps & Anor (No 2) [2019] QLC 21 [29].

Close

Editorial Notes

  • Published Case Name:

    Krieg v Woolgar Valley Aboriginal Corporation

  • Shortened Case Name:

    Krieg v Woolgar Valley Aboriginal Corporation

  • MNC:

    [2021] QLC 28

  • Court:

    QLC

  • Judge(s):

    JR McNamara

  • Date:

    23 Aug 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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