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NQ Marble Pty Ltd v Commonwealth of Australia[2021] QLC 42

NQ Marble Pty Ltd v Commonwealth of Australia[2021] QLC 42

LAND COURT OF QUEENSLAND

CITATION:

NQ Marble Pty Ltd v Commonwealth of Australia [2021] QLC 42

PARTIES:

NQ Marble Pty Ltd

(applicant)

v

Commonwealth of Australia

(respondent)

FILE NO:

MRA095-20

PROCEEDING:

Determination of compensation payable for grant of mining lease

DELIVERED ON:

6 December 2021

DELIVERED AT:

Brisbane

HEARD ON:

Submissions closed 15 November 2021

HEARD AT:

Heard on the papers

MEMBER:

JR McNamara

ORDERS:

  1. I determine that NQ Marble Pty Ltd must pay the Commonwealth of Australia compensation in respect of ML 100209 in the sum of three thousand four hundred and seventy-five dollars and zero cents ($3,475) per annum for the term of the lease.
  2. The applicant must pay the amount set out in Order 1 within 1 month of the grant ML 100209, and then annually on the anniversary of the grant of ML 100209 by the Department of Resources.

CATCHWORDS:

ENERGY AND RESOURCES – MINERALS – COURTS OR TRIBUNALS EXERCISING JURISDICTION IN MINING MATTERS – Queensland – where the respondent is acting through the Department of Defence – where the land is currently subject to an agistment agreement – whether the ‘direct comparison’ approach to valuation to assess land values in conjunction with a combination of the ‘piecemeal approach’ and the ‘before and after’ approach is the most appropriate method of calculation – where the Court accepted the approach adopted by the respondent’s valuer with adjustments – where the Court did not accept apportioning rate by land classification per ha based on a desktop analysis – where the Court preferred averaging 

ENERGY AND RESOURCES – MINERALS – COURTS OR TRIBUNALS EXERCISING JURISDICTION IN MINING MATTERS – Queensland – where a premium was applied to reflect the ‘potentiality’ the land provides to the respondent – where the respondent would be the only likely purchaser of the land – where the buyer would be willing to pay more than the market is willing to pay – where the premium to reflect potentiality is more than token

ENERGY AND RESOURCES – MINERALS – COURTS OR TRIBUNALS EXERCISING JURISDICTION IN MINING MATTERS – Queensland – where the Court considered the asserted need for a buffer area – where there was an absence of evidence sufficient to support the need for a buffer area and the necessity for fencing – where other loss or expense considered – where the loss will result from the time the agistment agreement terminates – where reasonable management expenses to consider applications and requests concerning entry to the respondent’s tenement area are compensable

Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) ch 3, s 11A(2)

Mineral Resources Act 1989 (Qld) (MRA) ch 4, s 129, s 281(3), s 281(4)

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

Fuller v Grabbe & Anor [2021] QLC 35, cited

Kelly v Chelsea on the Park [2020] QLC 36, cited

Krieg v Woolgar Valley Aboriginal Corporation [2021] QLC 28, cited

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

Mitchell v Oakhill and Mitchell (1998) 19 QLCR 66; [1998] QLC 25, cited

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

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

Smith v Cameron (1986) 11 QLCR 64, cited

State of Queensland v Inglis & Ors [2015] QLAC 3, applied

Valentine v Henry [2018] QLC 21, cited

Vyicherla Naryana Gajapatirajup Bahadur Garu v Revenue Divisional Officer, Vizagapatam [1939] AC 302; [1939] 2 All ER 317, applied

Wallace v O'Shea; Wallace v O'Shea [2021] QLC 6, cited

Woels v Hicks [2021] QLC 31, cited

APPEARANCES:

Not applicable

The mine

  1. [1]
    Described as a ‘family concern’ NQ Marble have been ‘operating in the mining industry since 1958’. They mine contrasting marble styles from two quarries on (the former) Shield Creek Station about 50 km south west of Greenvale in north Queensland. NQ Marble now wish to expand their mining operation.[1]
  1. [2]
    NQ Marble have identified two additional commercial styles of marble on their existing mining lease, and to the north and south of the existing mining lease within the surrounding exploration permit area (EPM 14193). They propose to conditionally surrender their current lease over 36.8 ha (ML 10290) and replace it with a new mining lease over 338.82 ha (MLA 100209). The term they seek is 10 years.
  1. [3]
    A compensation agreement for the existing ML 10290 was struck on 26 May 2004 between the then miner (RB Cameron) and the then landowners (DJ and MA Turley).
  1. [4]
    The current owner of the land is the Commonwealth of Australia (the Commonwealth). Compensation has not been agreed between NQ Marble and the Commonwealth regarding the mining lease application. Compensation must be agreed or determined by the Court to enable the mining lease to be granted. The applicant applied to the Court to determine compensation. Orders were made for the filing of material relevant to that determination. The parties agreed that the matter could be determined by the Court in the absence of a hearing.

The land

  1. [5]
    In 2018 the Commonwealth, acting through the Department of Defence, purchased Shield Creek Station from the Turley’s together with five adjoining rural properties for the development of a military training facility.
  1. [6]
    On 11 December 2018 the Commonwealth entered into an agistment agreement with the Turley’s over the whole of Shield Creek Station. The agistment fee is $1 and the agreement will terminate around June 2022 unless extended by the Commonwealth.[2]
  1. [7]
    At the time the mining lease application was made in 2019, Shield Creek Station was the subject of a rolling term lease, ending 31 March 2047. Shield Creek Station is located in a Rural zone under the Charters Towers Regional Town Plan 2019. The purpose of the rural zone is to provide for rural uses and activities, or compatible uses and activities, and maintain the capacity of the land for those uses by protecting and managing significant natural resources and processes.
  1. [8]
    By late 2021, the 58,100 ha rolling term lease for Shield Creek Station was surrendered and had become part of a single lot Perpetual Lease (amalgamation)[3] totalling almost 305,000 ha.

The tenement/s

  1. [9]
    The mining lease application (MLA 100209) area is wholly within the former Shield Creek Station.[4] While it is not entirely clear from the material provided, the proposed mining lease area would appear to sit towards the centre of the amalgamation.
  1. [10]
    In the Executive Summary to the respondent’s Compensation Statement Mr Cavanagh, Valuer, says that during the 2018 acquisition process the Commonwealth was not aware the applicant was intending to expand their existing operations. The relevance of this statement is unclear.
  1. [11]
    The mining lease application was made on 10 May 2019.[5] The Agreement to Offer a Perpetual Lease (dated 8 February 2021) did not identify any mining leases or permits as existing encumbrances.[6] Due diligence would no doubt have identified all existing mining and exploration tenements at the time of purchase.
  1. [12]
    In her affidavit, Ms Felton, Property Management Branch, Department of Defence, says that “Defence has a policy of coexisting to the greatest extent possible, with resource interests in the land subject to the perpetual lease.”[7] A Joint Media Release dated 17 December 2020 was annexed to Ms Felton’s affidavit to demonstrate this commitment.[8] The statement references the signing of a Deed of Access for a major nickel and cobalt mine[9] which will generate 300 full time jobs and deliver significant upgrades to infrastructure in the region.   
  1. [13]
    The NQ Marble project is clearly not of the same scale or regional significance as the Sconi Mining project. NQ Marble has a current workforce of one manager and four workers on a seven day on, seven day off roster. Should the mining lease be granted, the new operation will involve “another grouping of four workers per quarry plus a roving manager when new quarries are opened”.[10] 
  1. [14]
    Ms Felton, says that “it is likely that there will be twenty eight resource companies with an interest in the land subject to the Perpetual Lease”.[11] It is not disclosed in the evidence how many current mining and exploration tenements exist in the area of the Perpetual Lease, their location generally, their location in relation to MLA100209, nor the area/s they cover.
  1. [15]
    The applicant is the holder of EPM 14193 which encompasses ML 10290 and MLA 100209; and EPM 27285.[12] It is assumed that EPM 27285 is in the vicinity of the applicant’s other interests as the four tenements are identified in the same environmental authority (EA) EPSL00886813.[13] EPMs are granted in respect of multiples of sub-blocks (Mineral Resources Act 1989 (Qld) ch 4) and are a pre-requisite interest to the grant of production tenement/s.[14]
  1. [16]
    The material does not disclose anything further regarding the terms of the applicant’s EPMs or their relinquishment status. There is no statement that either or both EPMs are to be relinquished upon the grant of MLA 100209. The applicant might therefore retain the entitlements of the holder over the permit areas for the term of the EPM.[15] The entitlements of the holder of an EPM are set out in the Mineral Resources Act 1989 (Qld) (MRA) s 129 and are exercised in compliance with Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) ch 3 and the environmental authority. 

What is the nature and extent of NQ Marble’s project should the MLA be granted?

  1. [17]
    The Mineralisation Report for the project dated 5 May 2019 was completed by Dr CS Rugless.[16] The report includes a description of the mining method. Approximately 25 ‘blocks’ are extracted each month. A block is in the order of 1.8 m (W) x 2.0 m (D) x 2-2.5 m (L). At that rate of extraction, the floor of the quarry is deepened by a rate of 2 m every two to three months. The depth of the resource based on the existing mine is at least 40 m.
  1. [18]
    It is not clear what total surface area is the subject of mining activity at any one time. However, the environmental authority requires that not more than 1000 m2 can be disturbed at any one location, excluding campsites. There are seven locations identified in the material, Pits 1 and 2, and Pits A to E.
  1. [19]
    The Mineralisation Report says that current infrastructure and buildings on site occupy 1.33 ha which could increase to approximately 3 ha should the mining lease be granted. It is difficult to correlate this with the applicant’s Compensation Statement – see paragraph [26] below.
  1. [20]
    Annexed to the affidavit of GL Rolfe, Exploration and Mining Geologist, engaged by the applicant, is a Compensation Statement where at page 2 it says:

“Development on MLA100209 would commence with the southern extension of Pit 1, followed by development of Pits B, C and D. Pit E would be developed later. … The development of MLA100209 would be over a period of 10 years, with yearly increments. Table 2 indicates areas of pits B, C, D and E with a total disturbance of 8.39 ha. It is therefore projected that the annual rate of development would be 0.85ha.

If the tracks are included as disturbed ground the total disturbed ground on MLA100209 amounts to 10.15ha over the lease life of 10 years.”[17]

  1. [21]
    The plans indicating the location of Pits A – E (figures 5 and 6) suggest that: Pit A is just within ML 10290 in the north of that mining lease; Pit B is in the north west of ML 10290 but mostly in the MLA area (that is, mostly outside the current ML area); Pit C is in the middle west boundary region of ML 10290 but again mostly in the MLA area; Pit D towards the middle of the eastern boundary of ML 10290 and equally spread over the existing ML 10290 and into the MLA area; and Pit E is the only Pit wholly outside the current ML, and close to the southern boundary of the MLA.
  1. [22]
    It appears that NQ Marble currently mine Pit 1 and Pit 2. So, apart from Pit E, the areas of interest to NQ Marble are relatively close to the existing mining lease area. However, the mining lease application area is significantly larger.
  1. [23]
    It does not appear from the figures (site sketches) provided in the applicant’s Compensation Statement that any of the Pits are contiguous, that is, they appear to be discrete quarries.
  1. [24]
    Included in the applicant’s further materials in support of compensation filed 30 June 2020 is an 8 May 2019 letter from the applicant’s tenement manager to the Mineral Assessments Hub with the subject line, “Justification of size, shape & surface area of Mining Lease Application”. No justification is articulated in the text of the letter except to say that “the areal extent of the dimension stone styles has been outlined based on geological fact mapping”.
  1. [25]
    It is not entirely clear if mining will occur sequentially or concurrently. The passage quoted at [20] above suggests that the extension to Pit 1 will be followed by Pits B, C and D, and later E. No mention is made of Pit A. The expected workforce should the MLA be granted is discussed at [13] above and would suggest that only two pits would be worked at any one time.
  1. [26]
    Tables 2 and 3 in the applicant’s Compensation Statement quantifies the land area of all Pits should the MLA be granted, and the access areas (excluding Shield Creek Road). Table 3 indicates the total area of disturbed land (including tracks and waste pits) is 12.4 ha.
  1. [27]
    Table 1 is not referenced in Mr Rolfe’s statement, but is headed “Current Infrastructure of ML10290 and MLA100209”. It includes the camp, waste Pits 1, 2 and 3 and other items which do not seem to appear in Tables 2 and 3. In those circumstances the total area would be in addition to the area of disturbed land in Table 3. Including the camp, the total area is 5.04 ha.
  1. [28]
    The total area expected to be disturbed, should the MLA be granted, is therefore 17.44 ha.

Approaches taken to assess compensation

  1. [29]
    Although the Court is required to consider the matters listed in s 281, the MRA does not prescribe a method of valuation. On this the parties are ad idem.[18] Each cite the same authorities in support of this proposition.[19] The respondent says however that any assessment of compensation cannot be adequately calculated without reference to all of the applicable matters set out in s 281(3)(a) of the MRA.[20]
  1. [30]
    As noted already, the applicant’s Compensation Statement was prepared by Mr Rolfe[21] and the respondent’s Compensation Statement was prepared by Mr Cavanagh.[22]
  1. [31]
    The applicant says Mr Rolfe bases his compensation assessment analysis on the current use and carrying capacity of the land (Shield Creek Station).[23] His calculations are based on stock numbers of 2000 to 3000 over an area of 51,800 ha to determine carrying capacity and a per annum amount determined on a dollar value per head. This is then applied to the gross disturbed area, and on the basis that the undisturbed area remains available for grazing a discounted rate is applied. A statutory premium (MRA s 281(4)(e)) is then added. 
  1. [32]
    The respondent submits that Mr Cavanagh’s method of valuation – being the ‘Direct Comparison’ approach to assess land values in conjunction with a combination of the ‘Piecemeal approach’ and the ‘Before and After’ approach to assess compensation – is the most appropriate method of calculating compensation in the current matter.[24]
  1. [33]
    Further, the respondent says the Cavanagh Compensation Statement includes a secondary assessment of compensation using the ‘Agistment/Land Rental approach’ in order to assist the Court and provide a check calculation to Mr Cavanagh’s assessment.[25]

What the parties say about the approach adopted by the other

  1. [34]
    The respondent says the methodology applied by the applicant where the annual rent is calculated by dividing the retail value of a beast by the stocking rate,[26] is not consistent with standard valuation practice. 
  1. [35]
    The respondent says the applicant has assessed the land as grazing land without considering the ‘potentiality this land provides to the respondent’. They also say the applicant failed to apply the 10% premium under s 281(4)(e) and made no provision for ‘all loss or expense’ incurred by the respondent.
  1. [36]
    The applicant says Mr Cavanagh’s compensation assessment analysis is based on a market value of the Shield Creek Station which is then increased by factoring the potentiality of the land and hypothetical competitive offers by adjoining landholders.[27] The applicant says this is speculation and not supported by any evidence. The applicant notes that the land is zoned ‘rural’ and is subject to an agistment agreement.

Conclusion - methodology

  1. [37]
    In my view the approach of Mr Cavanagh is to be preferred to that of Mr Rolfe in this matter.
  1. [38]
    While the approaches of both Mr Cavanagh and Mr Rolfe include a degree of speculation and estimation, the productive capacity methodology adopted by Mr Rolfe which requires a two-step process of determining market value of the land, and a determination of carrying capacity, introduces a greater degree of risk to accuracy. Its application by Mr Rolfe in my view involved more room for error as the ‘inputs’, and the source/s and veracity of those inputs, were insufficiently precise to give me confidence in the conclusion reached. While the land is currently the subject of an agistment agreement, once that agreement terminates the use of the land for the foreseeable future will not involve a grazing enterprise.

Consideration

  1. [39]
    While I prefer the comparable sales approach in conjunction with the Piecemeal approach adopted by Mr Cavanagh, for the reasons that follow, I do not accept it without some adjustment.
  1. [40]
    Based on comparable sales Mr Cavanagh assessed the market value of Shield Creek Station to be $9,050,000 using an average rate $175 per ha TFW over 51,800 ha.[28] I accept Mr Cavanagh’s consideration and analysis and the conclusion he reaches in this regard. Mr Cavanagh goes on to apportion that value between ironbark and range country. He says these are the two dominant land classifications “within the ML areas and the buffer area”. He applied a ‘blended rate’ to the buffer area and the ‘ironbark’ rate (higher) to the MLA area. I am less comfortable with apportioning the value in this way as it is based on a desktop analysis “without conducting a site visit or physical investigation”.[29] The land classification Mr Cavanagh adopts is taken from the 2018 Lyons Valuation Report which provides a percentage breakdown. However, Mr Cavanagh’s basis for concluding the dominant classification in the area of the MLA area is unstated. In my view, in the circumstances the value should be apportioned evenly across the property.
  1. [41]
    To the assessed ‘per ha’ value Mr Cavanagh then applied a premium to reflect the ‘potentiality’ the land provides to the respondent. To determine the premium, Mr Cavanagh develops a hypothetical market for Shield Creek Station by assuming three adjoining owners were in competition to buy the property.[30] He uses a 2018 assessed market value of $6,500,000 from a valuation prepared for ‘acquisition purposes’ by Taylor Byrne, valuers, on instructions from the Department of Defence.[31] He also applies some percentage increases, which were not fully explained, to represent a market increase in 2018 to derive a market range and market value of $8,000,000 to determine the premium the Commonwealth (in fact) paid in dollar terms and as a percentage (100%). Mr Cavanagh however then reduces the premium by 50% to the market value to take account of the possibility that the Commonwealth would not have to pay a premium equal to or greater than that paid in 2018.

What premium, if any, should reflect the potentiality of the land in this matter?

  1. [42]
    Some issues relevant to this matter are currently live before the Land Appeal Court in Michelmore v Hail Creek Coal Holdings (LAC005-21; LAC006-21). The appeal was heard on 5 November 2021 and the decision reserved.
  1. [43]
    In Vyicherla Naryana Gajapatirajup Bahadur Garu v Revenue Divisional Officer, Vizagapatam (Raja),[32] the Privy Council allowed an increased value in circumstances of a compulsory acquisition where the land was worth considerably less unless used for the purpose for which it was being compulsorily acquired. It was held that the potentiality in the acquired land, which can be taken to fruition only by the acquiring authority, is to be considered in valuing that land for the purposes of assessing compensation. If there is an attribute of the land which would be of value to the acquiring authority only, then the value of that attribute must form part of the market value.[33]
  1. [44]
    Raja has been applied by the Land Appeal Court in Inglis & Ors v State of Queensland (No. 2) (Inglis)[34] where Lyons J, MacDonald P and Smith M held:

“Raja’s case commenced with the proposition that compensation “must be determined… by reference to the price which a willing vendor might reasonably expect to obtain from a willing purchaser”. That proposition may be seen as related to the formulation of Griffith CJ in Spencer v Commonwealth, referring to a person desiring to buy the land on the one hand, and a vendor willing to sell it for a fair price but not desirous to sell, on the other; or as later expressed by his Honour, “a desirous purchaser”, and “a not unwilling vendor”. The propositions subsequently stated in Raja’s case are directed to the determination of market value, although in particular circumstances. The judgment in Raja’s case then records that the fact that some particular purchaser might desire the land more than others is not to be disregarded. Nor is the possibility of the land’s being used for a particular purpose. Nevertheless, where such a potentiality is to be taken into account, any addition to the value may need to be reduced by reference to the possibility that the land might never be required for that purpose, or might not be required for it for a considerable time. Such a potentiality of the land is to be taken into account even if there is only one possible purchaser to whom the potentiality is of value, such as an adjoining land owner. Raja’s case decided that such a potentiality had to be considered, even where the only purchaser to whom it might be of value was the authority compulsorily acquiring the land. There is no reason to doubt the continuing authority of Raja’s case.”[35] (citations omitted)

  1. [45]
    In relation to highest and best use of the land, the respondent says the intended use of Shield Creek Station (Pandanus) “is for military training purposes which is a higher and best use than the current use”[36]. Mr Cavanagh went on to say, “However, it is my understanding this use is subject to further approvals. Therefore, it is not appropriate to assess the land as if it were a training facility, but it is appropriate to consider the potentiality this land has for the intended use”.
  1. [46]
    By the time the respondent filed its submissions dated 15 November 2021, the various lots had been amalgamated and a perpetual lease granted over the amalgamation. It is not clear what, if any, ‘further approvals’ are required to enable the land to be put to its intended use. No reference is made in submissions to the relevance this might have to Mr Cavanagh’s opinion. That is, whether Mr Cavanagh’s conclusion based on direct comparison together with potentiality would be the same as a market value assessment in circumstances where necessary approvals are in place to support the intended use. Theoretically the result should be the same and I proceed on that basis.
  1. [47]
    The fact that the Commonwealth would be the only likely purchaser of the land (for defence purposes) does not mean that the market value should be determined to be only a token amount more than pastoral value.
  1. [48]
    How potentiality is to be assessed quantitatively, and particularly where there is only one likely purchaser, is not addressed in Raja. However, where the purchaser is willing to pay an ‘above market’ sum to secure the land, and the vendor is willing to sell, and there is only one buyer to whom it can realistically sell at a premium might suggest that the purchaser is not likely to pay a significantly higher price and the vendor would not hold out for a greater premium. The fact that the respondent may have in fact paid a 100% premium (noting that Mr Cavanagh himself discounts the premium in his calculations to 50%) for the land does not mean that it is in fact an accurate assessment of potentiality.
  1. [49]
    As noted at [40] above, I am prepared to accept Mr Cavanagh’s assessment of market value of $9,050,000 using an average rate of $175/ha TFW over 51,800 ha.[37] To that, in my view, an additional 20%, sufficient to constitute a ‘more than token’ premium can be applied to represent potentiality. This renders for present purposes $210.00 per ha to be applied to the assessable land area.

What is the assessable land area?  

  1. [50]
    Included in the respondent’s Compensation Statement are calculations based on areas not included in the mining lease application, that is, a buffer area.
  1. [51]
    In her affidavit Ms Felton says at [18]:

“The Safety Template for specific military training activities have not yet been developed, however, I have been informed and verily believe that the presence of NQM on the MLA will require a one kilometre buffer around the area of the MLA. The area within that safety buffer will be unavailable for training activities.”[38]

  1. [52]
    This statement is prefaced by Ms Felton at [15]-[17] saying a qualified officer will develop a range plan according to training objectives of the military activity and then generate a supporting Range Safety Template and Range Detail. The Safety Template assesses the risk associated with certain activities (such as live fire) affecting the safety of people and/or infrastructure and imposes operational constraints on training activities based on the safety profile of the specific activities.
  1. [53]
    While the Safety Template may impose operational constraints on the training activities that can occur in the MLA area, in the absence of the Safety Template there is no evidence on which to conclude that that would be the case. The MLA 100209 area is 338 ha within a 305,000 ha amalgamation. The facilities intended to be located at or near MLA 100209 might be facilities other than field training and live fire, such as vehicle parking, maintenance and wash facilities, field toilets and waste management facilities.
  1. [54]
    Based on the advice that a buffer area was in fact necessary, Mr Cavanagh assesses the area of the buffer area around MLA 100209 to be 1218.61 ha. For reasons I do not understand, he then deducts an area (310 ha) that would comprise a 1 km buffer around the existing ML 10290. ML 10290 will be surrendered if MLA 100209 is granted.
  1. [55]
    Mr Cavanagh concludes that the loss of access to the buffer area is compensable pursuant to s 281(3)(a)(iii), ‘diminution of the use made or which may be made of the land of the owner or any improvements thereon’. This ‘head of compensation’ in Mr Cavanagh’s statement constitutes the biggest line item in terms of quantum. Mr Cavanagh also concludes that the buffer area must be fenced and quantifies the cost of erecting and removing 9.6 km of fencing as ‘loss or expense’ pursuant to s 281(3)(a)(vi). There is no reference to a requirement to fence the buffer area in Ms Felton’s affidavit or in the instructions Mr Cavanagh received.
  1. [56]
    Surprisingly, as the biggest line item, any justification for a buffer area in the material is limited. The respondent in submissions say that Ms Felton’s evidence should be accepted because she is a senior Commonwealth public servant with experience in various roles relating to property acquisition and management. The need for the buffer is linked to the ‘Safety Template for specific training activities’ which has not yet been developed. Despite that, Ms Felton says she has been informed that the presence of NQM on the MLA will require a one kilometre buffer around the area of the MLA. I have no reason to doubt that Ms Felton was so informed. It is not clear if the requirement for a one kilometre buffer would apply to all interests and areas persons other than Defence personnel who might have a right to access to parts of the 305,000 ha amalgamation, including but not limited to all existing MLs, EPMs, roads, stock routes and watercourses. Taken to its illogical conclusion, this could result in a swiss cheese configuration of fencing or some possibly overlapping like Venn diagrams.
  1. [57]
    The asserted need for a buffer area is also said to be due to ‘the presence of NQM on the MLA’. However, NQM already hold rights under their EPMs to be present in areas within and outside the MLA area. Further, those rights will continue while the EPMs continue to exist, along with the rights, if any, of twenty-eight other companies with an interest in the area. To require the fencing of a buffer area around a ML where rights of access exist on a EPM area which may extend beyond the buffer area, and/or where the rights of another tenement holder might exist, makes the requirement seem arbitrary.
  1. [58]
    I accept that there are circumstances where evidence will support a conclusion that an allowance for a buffer area is justified as a consequence of the diminution of the use of land beyond the relevant tenement. I accept that safety and possibly security reasons could justify a buffer area, particularly where explosives, or certain exercises and machinery or equipment might be being used.
  1. [59]
    The inadequacies in the evidence were highlighted by the applicant in submissions however, the respondent’s response submissions do not improve the material and the respondent did not seek leave to introduce any further evidence in that regard. In the absence of evidence to support the asserted need, I am unable to accept the requirement for a buffer zone and consequently the necessity for fencing. The assessable land area in my view is 338 ha (rounded).

Other issues

Development of the training area

  1. [60]
    Ms Felton describes the stages of development of the facility in her affidavit as follows:

“As part of ASMTI, a new training area will be developed at Greenvale (Facility). The planning phase for the construction of the Facility will take place between November 2020 and January 2022, and the delivery phase will take place between February 2022 and November 2027. The construction of the Facility will include, range control and exercise briefing facilities, medical facilities, infrastructure associated with urban operations and field training, live fire facilities, vehicle parking, maintenance and wash facilities, field toilets and waste management facilities.”[39]

  1. [61]
    The applicant in submissions contends that construction of the facility will be completed in November 2027 which, should the MLA be granted soon, would allow mining activities on MLA 100209 to be conducted for five years with “insignificant diminution of the value of the Land, or deprivation of possession of the surface of Land”.[40]
  1. [62]
    The respondent does not engage with this contention in its submissions. Despite that, in my view it is reasonable to conclude that although Defence intend to co-exist with NQ Marble, the whole of the MLA 100209 area will be lost to the respondent for its intended use while activities associated with the mining lease, if granted, continue. The loss will occur from the time the agistment agreement terminates. As noted at [6] the agistment agreement will terminate around June 2022 unless extended by the Commonwealth. Nevertheless, in the calculations of compensation that follows I have accepted a period of 1.25 years at 3% for deprivation of possession as per the formula advanced by the respondent in their compensation statement.

Other loss or expense

  1. [63]
    The respondent says that expenses will be incurred in order to facilitate NQ Mining accessing the facility. The activities described in Ms Felton’s affidavit are as follows:
  1. “(a)
    considering whether approval should be given for NQM to remain on the land if a declaration of a Defence Area under the Defence Act 1903 (Cth) is made;
  2. (b)
    providing a site induction to any personnel, subcontractors or other persons associated with NQM prior to them coming onto the Facility;
  3. (c)
    considering whether approval should be given for any notifiable equipment to be brought onto the land;
  4. (d)
    considering notifications of the use of unmanned aircraft systems;
  5. (e)
    conducting briefings required by Defence of upcoming training activities and Defence requirements;
  6. (f)
    maintaining a register of approved personnel permitted to access the Facility, as well as monitoring access to the Facility.”[41] 
  1. [64]
    The importance of these requirements Ms Felton says was contained in a letter of intent send to the applicant.[42] The letter dated 26 February 2021 from Amelia Charlton, the A/Assistant Secretary, Property Management, Department of Defence, summarises the principles by which Defence intends to co-exist with NQ Marble within the training area. The letter was intended to ‘cover the content’ of a draft Deed of Access for ML 100209 “now referred to as the draft Deed of Compensation and Access (DoCA) and the Deed of Access (exploration) which covers EPM14193”. Neither deed was in evidence.
  1. [65]
    The letter says that the Commonwealth is “seeking a collaborative relationship with NQ Marble that facilitates the co-existence of resource sector interests and Defence training outcomes at Greenvale.” In addressing issues regarding the construction of infrastructure, persons and property, access notification and access approvals, and notifiable equipment, each issue in the letter is prefaced by a statement that the intent of the particular clause is not a presumption that any request from NQ Marble will be rejected.
  1. [66]
    The tone of the letter is conciliatory. No mention is made of a requirement for a buffer area, and no mention is made that in “facilitating… co-existence” in accordance with the various deeds and the letter of intent, that the Commonwealth intended to outsource some of this work and intended to charge NQ Marble for its consideration of the matters (notifications, approvals, requests) that Defence requires in accordance with the letter of intent, and seemingly the deeds.
  1. [67]
    Ms Fenton’s evidence is that Defence intends to outsource items (c), (d) and (f) at paragraph [63] above to private consultancy firm JLL and has estimated an outlay of $12,600 for a five year period as an expense relevant to the applicant’s mining lease. The material suggests that Defence will absorb the costs of items (a), (b) and (e).
  1. [68]
    The JLL Business Case says that (at the time the resourcing analysis was done) it was estimated there would be fourteen Deeds of Access in total.[43] JLL estimates the average number of requests per month per activity, multiplied by the ‘resourcing estimation’ (time per request) at an hourly rate of $74.12 to determine the annual cost.
  1. [69]
    The evidence upon which the estimates are made is not disclosed. Nor is the basis for determining the hourly rate however, it is a rate similar to that adopted in some recent Land Court decisions for ‘management time’.[44]
  1. [70]
    The requirement for the activities described at [63](c), (d) and (f) above are requirements seemingly arising from the Deeds referred to in the JLL Business Case. These are conduct arrangements which may or may not have been agreed between the respondent and applicant, not compensation matters, except to the extent that the presence of the applicant on the respondent’s land will cause the respondent to expend some management time. Any obligation to compensate the applicant in relation to the implementation of the Deed/s should have been addressed in those agreements.
  1. [71]
    There is little, if any, evidence to confirm that the respondent will be burdened to the extent submitted in relation to the activities the respondent proposes to monitor. For example, there is no evidence that the applicant proposes to use unmanned aircraft systems in conducting its mining operation. The applicant will be entering the land and there will be personnel including sub-contractors accessing the area. In my view, it is reasonable to compensate the respondent for management expenses of one hour per month at the rate of $78.12 to assess, in particular, applications and requests concerning entry to the respondent’s tenement area.

Conclusion

  1. [72]
    Adopting the methodology as applied by Mr Cavanagh at page 33 of his Compensation Statement, amounts are adjusted to reflect the temporary nature of the proposed ML (50%), discounted 35% due to the interest the respondent retains in the land as a result of certain conditions, and the deferral of compensation amount for 1.25 years at 3% to allow the existing agistment agreement to end.
  1. [73]
    In respect of ML 100209:

Head of compensation

Calculation

Amount

Deprivation of possession of the surface of land of the owner

s 281(3)(a)(i)

338 ha x 210 = $70,980

discounted 35% = $46,137/2

deferred for 1.25 years at 3%

$22,203.44

Diminution of the value of the land of the owner or any improvements thereon

s 281(3)(a)(i)

 

Nil

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

s 281(3)(a)(iii)

 

Nil

Severance of any part of the land from other parts thereof or from other land of the owner

s 281(3)(a)(iv)

 

Nil

Surface rights of access

s 281(3)(a)(v)

 

Nil

Loss or expense

s 281(3)(a)(vi)

($78.12 x 12) x 10

$9,374.40

Amount to reflect compulsory nature of the action taken

s 281(4)(e)

10% x $31,577.84

$3,157.78

Total

$34,735.62

Annualised compensation (rounded)

$3,475

Orders

  1. I determine that NQ Marble Pty Ltd must pay the Commonwealth of Australia compensation in respect of ML 100209 in the sum of three thousand four hundred and seventy-five dollars and zero cents ($3,475) per annum for the term of the lease.
  2. The applicant must pay the amount set out in Order 1 within 1 month of the grant ML 100209, and then annually on the anniversary of the grant of ML 100209 by the Department of Resources.

Footnotes

[1]  In the respondent’s Compensation Statement (Ex TMPC-3 to affidavit of TMP Cavanagh dated 4 May 2021), Mr Cavanagh, Valuer, the property name “Pandanus Station” is used whereas the applicant refers to the same property as “Shield Creek Station”. The PMAV Queensland Globe image at figure 5 of the Compensation Statement, also identifies the land by the name Shield Creek. I will refer to the former property as Shield Creek Station.

[2]  Respondent’s submissions filed 15 November 2021 [8].

[3]  A copy of the Department of Resources Agreement to Offer a Perpetual Lease (dated 8 February 2021) is Ex MMF-2 to the affidavit of Melissa Marie Felton, Property Management Branch, Department of Defence filed 5 May 2021. The combined area of land the subject of the offer was 304,961.634 ha (Ex MMF-2, page 3). The Agreement to Offer included a clause that the respondent must surrender the existing leases to take effect when surrender notices are issued (cl 11), and to prepare a single lot plan for the amalgamation of the six lots (cl 15). The amalgamation is Lot 54 on SP319944.

[4]  Lot 575 on PH219.

[5]  Respondent’s submissions filed 15 November 2021 [1]; Affidavit of Timothy Martin Patrick Cavanagh filed 5 May 2021, Ex TMPC-3, page 28, para 46.

[6]  Affidavit of Melissa Marie Felton filed 5 May 2021, Ex MMF-2, page 16, cl 13.

[7]  Affidavit of Melissa Marie Felton filed 5 May 2021 [10].

[8]  Affidavit of Melissa Marie Felton filed 5 May 2021, Ex MMF-3: The signatories to the statement were the Minister for Defence, the local Federal Member of Parliament, and the Special Envoy for Northern Australia (Senator McDonald).

[9]  Sconi Mining Operation Pty Ltd.

[10]  C.S. Rugless (2019) NQ Marble (ML 10290) - New ML Application/Conditional Surrender Mineralisation Report NQ Marble - Dimension Stone Project. NQ Marble Pty Ltd.

[11]  Affidavit of Melissa Marie Felton filed 5 May 2021 [11].

[12]  Affidavit of Graham Lindsay Rolfe filed 13 January 2021, Ex B, page 107: EA EPSL00886813.

[13]  On 22 January 2020, the Environmental Permit for the existing ML 10290 and EPM 14193 was amended to include MLA 100209.

[14] Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) s 11A(2); Bounded by 2 parallels of latitude 1 minute apart and 2 meridians of longitude 1 minute of longitude apart. A sub-block is approximately 300 ha.

[15]  Exclusive of the granted ML area.

[16]  Applicant’s further supporting materials in support of compensation filed 30 June 2020.

[17]  Affidavit of Graham Lindsay Rolfe filed 13 January 2021, page 2.

[18]  Applicant’s submissions filed 25 October 2021 [12]-[16]; Respondent’s submissions filed 15 November 2021 [27]-[30].

[19] Smith v Cameron (1986) 11 QLCR 64; Shaw v Heritage Holdings Pty Ltd (1992) 14 QLCR 139; Mitchell v Oakhill and Mitchell (1998) 19 QLCR 66; Valentine v Henry [2018] QLC 21.

[20]  Respondent’s submissions filed 15 November 2021 [31].

[21]  Affidavit of Graham Lindsay Rolfe filed 13 January 2021, Ex B.

[22]  Affidavit of Timothy Martin Patrick Cavanagh filed 5 May 2021, Ex TMPC-3.

[23]  Applicant’s submissions filed 25 October 2021 [19].

[24]  Respondent’s submissions filed 15 November 2021 [64].

[25]  Ibid [67].

[26]  Affidavit of Timothy Martin Patrick Cavanagh filed 5 May 2021, Ex TMPC-3, page 31.

[27]  Applicant’s submissions filed 25 October 2021 [29]-[30].

[28]  Affidavit of Timothy Martin Patrick Cavanagh filed 5 May 2021, Ex TMPC-3 [64]: “The TFW Sale Rate”.

[29]  Affidavit of Timothy Martin Patrick Cavanagh filed 5 May 2021, Ex TMPC-2: KWM Letter of Instructions.

[30]  Affidavit of Timothy Martin Patrick Cavanagh filed 5 May 2021, Ex TMPC-3 [83]-[102].

[31]  Affidavit of Timothy Martin Patrick Cavanagh filed 5 May 2021, Ex TMPC-3, Annex 5: It is noted that at 3.2, in reference to ML 10290, Taylor Byrne says “The lease has some impact on value as there is considerable traffic involved in the operation. The effect on value on an overall basis is generally nominal”.

[32]  [1939] AC 302.

[33]  Ibid 316-317.

[34] State of Queensland v Inglis & Ors [2015] QLAC 3 [36]. 

[35]  Ibid.

[36]  Affidavit of Timothy Martin Patrick Cavanagh filed 5 May 2021, Ex TMPC-3 [80].

[37]  Affidavit of Timothy Martin Patrick Cavanagh filed 5 May 2021, Ex TMPC-3 [96].

[38]  Affidavit of Melissa Marie Felton filed 5 May 2021 [18].

[39]  Affidavit of Melissa Marie Felton filed 5 May 2021 [6].

[40]  Applicant’s submissions filed 25 October 2021 [33].

[41]  Affidavit of Melissa Marie Felton filed 5 May 2021 [19].

[42]  Ibid Ex MMF-5.

[43]  Ibid Ex MMF-6.

[44]  In Land v Grabbe & Anor [2021] QLC 1 the Court adopted a calculation used in Kelly v Chelsea on the Park [2020] QLC 36 to accept a rate of  $78.12, which has been accepted in Wallace v O'Shea; Wallace v O'Shea [2021] QLC 6; Australian Asiatic Gems Pty Ltd v Grabbe & Anor [2021] QLC 25; Sawyer v Grabbe & Anor [2021] QLC 27; Krieg v Woolgar Valley Aboriginal Corporation [2021] QLC 28; Woels v Hicks [2021] QLC 31; Fuller v Grabbe & Anor [2021] QLC 35. This rate does not set a standard for all future matters.

Close

Editorial Notes

  • Published Case Name:

    NQ Marble Pty Ltd v Commonwealth of Australia

  • Shortened Case Name:

    NQ Marble Pty Ltd v Commonwealth of Australia

  • MNC:

    [2021] QLC 42

  • Court:

    QLC

  • Judge(s):

    JR McNamara

  • Date:

    06 Dec 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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