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Summerville v Skelton[2022] QLC 7

LAND COURT OF QUEENSLAND

CITATION:

Summerville v Skelton [2022] QLC 7

PARTIES:

Alison Summerville

(applicant)

v

Christopher Skelton

(respondent)

FILE NO:

MRA020-22

PROCEEDING:

Determination of compensation for grant of mining claim

DELIVERED ON:

13 July 2022

DELIVERED AT:

Brisbane

HEARD ON:

Submissions closed 30 June 2022

HEARD AT:

Heard on the papers

MEMBER:

JR McNamara

ORDERS:

I determine:

  1. 1.Four Hundred and Sixty-Two Dollars ($462.00) paid as a lump sum representing the diminution of the use made or which may be made of the land including 10% reflecting the compulsory nature of the mining claim; and
  2. 2.The cost of one inspection per year as a one hour trip by one person annually in the sum of Fifty-Five Dollars ($55) including 10%, indexed annually to CPI.

CATCHWORDS:

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

Land Court Act 2000 s 7

Mineral Resources Act 1989 s 85

Bucholz & Ors v Great Mines Ltd & Charters Towers Mines NL (1987) 11 QLCR 269, 277-278, cited

GOTAP Pty Ltd v Skelton [2021] QLC 20, cited

Kelly v Chelsea on the Park Pty Ltd (No 2) [2020] QLC 43, cited

Lonergan & Anor v Friese [2020] QLAC 3, cited

Valentine v Henry [2018] QLC 21, cited

Washington v Skelton [2021] QLC 11, followed

APPEARANCES:

Not applicable

Background

  1. [1]
    Alison Summerville is an opal miner. She holds a small mining claim (MC 3590) on a property owned by Chris Skelton. She has now applied for a mining claim (MC 300355) over a larger area which would subsume MC 3590. Before that new mining claim can be granted, compensation with Chris Skelton must be agreed or determined by the Land Court.[1]
  1. [2]
    The area of the new mining claim is 14.79 ha.[2] It is approximately 146km south of Winton. The term applied for is 10 years.
  1. [3]
    The land is identified as Lot 2 on RK5. It is, or is part of, a property called Mayneside Station. It would appear from other matters before the Court[3] that Chris Skelton owned six adjoining properties in the region, an area of approximately 700,000 acres. There is a restricted area declaration (RA257) over the part of Mayneside which includes the area the subject of the mining claim application. RA257 is also seen in the maps attached to Ms Summerville’s compensation statement. The declaration confirms this an opal rich region and explains the number of mining lease, mining claim and exploration permits in the area.
  1. [4]
    Attached to Ms Summerville’s originating application were a number of documents including the Resource Authority Public Report, the Application for Mining Claim, the Mining Claim Work Program, and a number of maps.
  1. [5]
    In the Application for Mining Claim, Ms Summerville says:

“Surrender of MC 3590

The original claim is .9 ha in size, which limits the amount of digging in this area. After exploration, we know the opal nearing level is at approx.. 48 foot. Therefore, we require a much larger area to complete the work.

This is on the known Opal Creek fault, which produced large quantities of resource.”

  1. [6]
    In the ‘Description of mining operations’ it says that the area of disturbance will be ‘0.1 to 0.5 hectares’; the method will be ‘open cut (surface)’ with the maximum size of the open cut being 50M (long) x 50M (wide) x 10M (deep); that the claim area does not contain previous underground/open cut workings; that 10-20% of the mining claim has been previously worked (by all holders over time); that mining will occur for approximately 20 hours per week from May to and including September. While none of the structures that are on or are to be erected on the area are permanent, there will be 2 dongas, a caravan, 2 sheds, an ablutions structure, and 3 tanks (water and fuel).
  1. [7]
    Maps included in the Application for Mining Claim indicate other tenements in the general area including exploration permits, mining leases and mining claims. Maps attached to Ms Summerville’s compensation statement, which include historic data, show an overlapping patchwork of tenements.
  1. [8]
    A marked access road appears to run from the south of the mining claim area in a NNW direction through the length of the proposed mining claim and through another mining claim and mining lease area, and connect with a road. I do not know if those other tenements are current.
  1. [9]
    Ms Summerville and Mr Skelton corresponded and exchanged draft compensation agreements. Agreement was not reached.
  1. [10]
    Following the application to the Court, orders were made in the usual form for Ms Summerville to file and serve a compensation statement (including all evidence relied on to support the compensation statement), for Mr Skelton to file and serve a response (including all evidence relied on to support the response), and for Ms Summerville to file and serve a reply, if any.
  1. [11]
    Mr Skelton is represented by an agent, Leonard Coyte. The relationship between Ms Summerville and Mr Coyte appears fractious.

Compensation statement and evidence

  1. [12]
    While not directly addressing the criteria relevant to determining compensation in s 85 of the Mineral Resources Act 1989 (‘MRA’), Ms Summerville sets out asserted facts supported by maps and photographs and summarises her statement by saying: that the claim area has been heavily disturbed over many years; vegetation is limited to spinifex, small shrubs and lancewood, although there is some herbage during wet conditions; and no livestock frequent the area as it is not near a waterway.  She claims that an offer of $5 per hectare per year compensation “has not been an area of dispute” between the parties.
  1. [13]
    Mr Skelton’s response is quite literal, that is, it responds directly to each matter raised in Ms Summerville’s compensation statement, before proposing orders which align with the statutory criteria.[4] 
  1. [14]
    Ms Summerville provided a timeline of events and attached the draft ‘compensation agreements’ which were exchanged. One format was prepared by Ms Summerville which initiated the exchange, and the other format was prepared for Mr Skelton by Mr Coyte.

The draft agreements - quantum

  1. [15]
    The various agreements saw an offer from Ms Summerville of $5 per hectare per year (this would total $740 for the 10 year term, assuming the offer related to the total area of the mining claim), followed by an offer of $10 per hectare per year (this would total $1480 for the 10 year term). The second offer also included commitments by Ms Summerville to use all efforts to cooperate and be respectful of each other’s rights, maintaining good relations, to notify Mr Skelton immediately in writing of any transfer or sale of the mining claim, to maintain the access road, and an open invitation to Mr Skelton to visit the tenement to discuss issues and inspect the camp. She says however, “There will be no compensation for bio security inspections.” This became a sticking point.
  1. [16]
    The first version of Mr Skelton’s agreement proposed compensation at a flat rate of $100 per year, and $150 per year for biosecurity inspections (this would total $2500 for the 10 year term). Version two proposed compensation of $500 for 10 years, and $132 per year for biosecurity inspections (this would total $1820 for the 10 year term). The Skelton agreements contain extensive relationship and conduct terms discussed further below.
  1. [17]
    There is not a lot of detail in the material filed concerning the appropriate compensation methodology. The ‘per hectare’ rates proposed are based on known and agreed compensation for other tenures in the region located on land of a similar condition. Mr Skelton says those rates were “based on a historic figure as the Unimproved Capital Value of the land for local government rating purposes which bears no comparison to the value of the loss of use for income earning purposes.”
  1. [18]
    Mr Skelton refers in reply to Washington v Skelton and says:

“In Washington v Skelton, the compensation for loss of use of the land was based on a per annum land earning value of $27.95 per hectare for what in that case was alleged “poor country” similarly vegetated to the land in this case with spinifex, shrubs and, after rain, weeds. Since the Washington case the respondent has arranged for the land value to be assessed and he has been advised that the Respondent’s holdings has increased, as an averaged, in the order of some 30% since the increased rainfall over the past two years.”

  1. [19]
    Following this Mr Skelton says in his response he now seeks the following orders:
  1. 1.Compensation for deprivation of the use of the land [Section 85(5)(a)] for 14.8 hectares at the rate of $28.00 per hectare per annum ($414.40 per annum) for the term of the tenement (Total of $4144.00).
  2. 2.Loss or expense that arises [Section 85(5)(f)]
  1. a.
    Biosecurity inspection costs for one (1) inspection per year at the rate of 5 hours (2 people) at $50.00 per hour plus 10% (Total of $400.00 annually indexed to CPI)
  2. b.
    Respondent’s legal advice and representation costs
  3. c.
    Respondent’s administration time in obtaining legal advice and in administration in attempting to obtain agreement from the applicant when six other miners on the same property had already executed the standard document.

Note: Items b and c above have occurred given that:

  • This is a new application, and,
  • The Applicant has refused to sign the same agreement that six other miners have already signed with the same Landholder.
  1. 3.Additional amount to reflect the compulsory nature of the payment 10%
  2. 4.Maintenance of the access track is to be undertaken by the Miner.
  1. [20]
    There is no evidence in Mr Skelton’s response to quantify his claims for loss of use of the land, biosecurity inspections and legal advice and representation costs. The Court is not bound by the rules of evidence,[5] 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.”[6] That does not mean that a statement made without sourcing the information supporting it can be taken on its face. A lack of evidence does not assist the Court in assessing the substantial merits of the case.

The draft agreements - content

  1. [21]
    Mr Skelton says in his reply that when Ms Summerville, in her second proposed compensation agreement “offered a more acceptable doubling of compensation, it denied compensation for any necessary biosecurity inspections” and “… the amended document offered by the Applicant did not offer any compensation for any necessary biosecurity inspections.”
  1. [22]
    Mr Skelton does not however clearly relate the need for biosecurity inspections to anything, other than a general reference to the Meat and Livestock Corporation Pastoral Assurance Program, which is discussed further below.  He does not provide detail of when, how and by whom biosecurity inspections would be conducted; and if or how biosecurity inspection of this mining claim might fit within a larger scheme of biosecurity inspections for the other resource authorities in the area.
  1. [23]
    The Summerville agreements could be described as a minimalist form of compensation agreement, while the Skelton format was more expansive and amongst other things included special conditions and conduct rules, confidentiality provisions, and a process for dispute resolution. The Skelton format appears to be a modification of a template document which appears on the Department of Resources website. Some of those modifications, for example investing the Land Court with jurisdiction to resolve a dispute arising under the agreement concerning something other than compensation, apart from potentially being invalid, might be misleading. In a typed undated letter from Mr Skelton to Ms Summerville, which is attached to her compensation statement, Mr Skelton refers to the clauses Ms Summerville had deleted from the Skelton draft as those detailing various aspects of the relationship, access, protection of infrastructure, biosecurity, and issue resolution.
  1. [24]
    It is clear to me what the parties hoped to achieve in the form of agreement they each presented. I am conscious of the importance of good relations between landholders and the holders of resource authorities. As the parties are aware, a Compensation Agreement and a Conduct and Compensation Agreement[7] are not the same thing. Parties are at liberty to negotiate conduct arrangements, but they are not a necessary part of a compensation agreement in the circumstances. My task it to determine compensation informed by the submissions and evidence of the parties.  The criteria for determining compensation are those contained in s 85 of the MRA.
  1. [25]
    The fact that others have signed compensation agreements using the Skelton format is not particularly relevant to my task. Nor is the effort and engagement with other landholders or miners, or discussions with industry bodies or government agencies determinative.
  1. [26]
    The material indicates that the mining claim is subject to the Small Scale Mining Code.[8]  Mr Skelton, in his response says:

“The Special Conditions which the applicant describes as ‘extensive’ are in fact simplified summarizations of the requirements for small mining claims contained in the Mineral Resources Act, the Mineral Resources Regulations, the Environmental Protection Act, and the Small Mining Code’.” 

  1. [27]
    Other comments in his reply about committing parties to comply with ‘various Acts, regulations and other subordinate legislation’ are not particularly relevant to my consideration. In Washington v Skelton Member Stilgoe said:

“Mr Skelton is concerned with possibilities if Mr Washington does not comply with his obligations and Mr Skelton suffers loss. As it has been noted, this Court does not calculate compensation on a possibility. It does calculate compensation on the assumption that miners will comply with their obligations …”[9] (footnotes omitted)

  1. [28]
    Mr Skelton in reply has referred to a recent occasion in 2021 where “obvious non-compliant and potentially illegal diggings and apparently poor attempts at rehabilitation” were observed. It is unclear if these incidents were reported to the Department of Resources, and if so, what action was taken. The instrument which commits a mining claim applicant to compliance with the law is the granted mining claim.
  1. [29]
    Possibly in relation to biosecurity, Mr Skelton says in his reply:

“When the Respondent visited the area of this claim application in 2020, he noticed several areas of non-compliance in relating to the legislation that indicated some of the previous mining activities in the area had been conducted in a manner which might increase his risk of liability or impact on his ability to comply with the Meat and Livestock Corporation Pastoral Assurance Program his business model operates under.

Further investigations indicated that, if he could secure compliance with the legislation governing small mining as detailed above, his risk of failing to comply with his obligations would be reduced.”

  1. [30]
    I was not presented with detailed evidence concerning the business model which Mr Skelton observes on Mayneside, in the area of the mining claim, and how it might be relevant to my consideration of compensation. There is some evidence concerning the movement of cattle between Mr Skelton’s various land holdings to ensure they enjoy optimal conditions for quality and growth. I have not been presented with evidence concerning if or how compensation might address potential non-compliance with the Meat and Livestock Corporation Pastoral Assurance Program.
  1. [31]
    A reading of the other recent ‘Skelton’ cases’[10] provides some guidance to the matters that are relevant to the decision the Court is being asked to make.

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

  1. [32]
    Mr Skelton seeks compensation for deprivation of possession over the total area of the mining claim. There is no evidence to support a claim for the deprivation of possession of the surface of the land. There is no evidence that Mr Skelton will be physically deprived of the surface of the land, nor is there evidence that Mr Skelton will be permanently deprived of the surface of the land. There is no evidence that the boundary of the mining claim will be fenced.
  1. [33]
    In my view, the claim is more appropriately made as one for diminution of the use made or which may be made pursuant to s 85(5)(c) of the MRA, which will be considered below.

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

  1. [34]
    As noted, maps included with the Application for Mining Claim show other tenements in the general area including exploration permits, mining leases and mining claims. Maps attached to Ms Summerville’s compensation statement, include historic data and show an overlapping patchwork of tenements. Photographs attached to Ms Summerville’s compensation statement also show the general condition of the land. Mr Skelton makes no claim, and in my view, compensation is not warranted, for diminution of the value of the land.

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

  1. [35]
    Ms Summerville says that the area of disturbance will be 0.5 ha. The Resource Authority Public Report says the maximum size of the open cut will be 50M (long) x 50M (wide) x 10M (deep). This is an approximate area of 0.25ha. The report also identifies a number of structures which are or will be located on the tenement. In Washington v Skelton, Member Stilgoe, presented with similar evidence, concluded that the use of 1.5 ha/pa would be diminished by the mining claim.[11]  In my view it is also reasonable in this matter to conclude that an area of approximately 1.5 ha/pa would be diminished.
  1. [36]
    Although Mr Skelton says he has advice that since Washington v Skelton his “holdings [have] increased, as an averaged (sic), in the order of some 30% since the increased rainfall over the past 2 years” he nevertheless says that compensation should be assessed on the basis of $28.00 per hectare per annum.  In Washington v Skelton, the miner asserted that the methodology for assessing compensation for deprivation of the surface of the land should be the unimproved land value, per hectare per annum.  Mr Skelton asserted that a stocking rate methodology be used, which determined a land value of $27.95 per hectare per annum.   Member Stilgoe, while accepting the rate asserted by Mr Skelton, assessed compensation only in relation to the area diminished, not the total area of the mining claim.[12]
  1. [37]
    Therefore, accepting Mr Skelton’s methodology (and rounding the figure up to $28 per ha) and applying it to the area diminished in this case, compensation for diminution of the use of the land would be $28.00 per hectare per annum, capitalised as a lump sum of $420.00 for the duration of the mining lease.

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

  1. [38]
    Under this head, Mr Skelton seeks compensation for biosecurity inspections.
  1. [39]
    As noted already, I was not presented with detailed evidence concerning the business model which Mr Skelton observes on Mayneside, in the area of the mining claim, and how it might be relevant to my consideration of compensation.  Nor have I been presented with evidence concerning if or how compensation might address potential non-compliance with the Meat and Livestock Corporation Pastoral Assurance Program.  If this is a reason the biosecurity inspections are required, it is not clear in the evidence.
  1. [40]
    Where ‘Weeds and Biosecurity’ are addressed in the Skelton agreements, they only require the miner to take all reasonable precautions against the transportation of restricted or prohibited matter, and to adhere to the ‘Landholder’s Biosecurity Management Plan’. The Landholder’s Biosecurity Management Plan was not provided by either party. The Skelton draft agreement does not refer to a requirement for biosecurity inspections. Ms Summerville says that she is aware that there are biosecurity risks and, if necessary, she would introduce her own plan.
  1. [41]
    There is an offer from Ms Summerville for Mr Skelton to visit the tenement to discuss issues and inspect the camp, however there was no offer for biosecurity inspections.
  1. [42]
    In the absence of evidence explaining the need and the basis for the need for biosecurity inspections I am unable to determine compensation. The general reference to the need for biosecurity inspection and a vague reference to the Meat and Livestock Corporation Assurance Program is an insufficient basis for me to assess and award compensation. The Landholder’s Biosecurity Management Plan was not in evidence.
  1. [43]
    It has been accepted however that the very existence of a mining interest and mining activities warrant observation and checking from the landowner from time to time.[13] On that basis some allowance for managerial time is warranted. In the absence of specific evidence of the actual time and taking account of the small-scale operation, and on the basis that inspections would be undertaken in relation to a number of other tenements in an area, I would allow compensation for a one hour inspection by one person annually at the rate of $50 per hour, which was the hourly rate identified in Mr Skelton’s reply.
  1. [44]
    Mr Skelton also seeks recovery for the “Respondent’s legal advice and representation costs.” There were no invoices or statements of account for these claimed costs. I note that there is no solicitor on the record. There is an agent, Mr Coyte. In mining compensation matters, professional expenses incurred in the carriage of a matter are generally not recoverable, unless there are exceptional circumstances such as the conduct of the claim being grossly vexatious, excessive or frivolous.[14] On the material before me, there is no basis to allow compensation for the costs of Mr Coyte’s work on behalf of Mr Skelton.
  1. [45]
    Mr Skelton further claims as a ‘loss or expense’ the Respondent’s administration time in obtaining legal advice and in attempting to obtain agreement. It is well-settled that the time spent by a landowner negotiating with a miner about compensation is not a loss or expense that arises as a consequence of the grant of the mining tenement.[15]
  1. [46]
    Mr Skelton does not pursue compensation for maintenance of the access road, fencing or any other basis for loss or expense.

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

  1. [47]
    Mr Skelton claims an additional amount to reflect the compulsory nature of the payment. The usual uplift of 10% is awarded.

Conclusion

  1. [48]
    Ms Summerville must pay Mr Skelton compensation as follows:

Head of compensation

Amount ($)

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

$0

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

$0

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

$420

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

 

Monitoring costs (per annum)

$50

Legal/agent expenses

$0

Additional amount to reflect the compulsory nature of the payment:

s 85(6)(e)

10%

Orders:

I determine:

  1. 1.Four Hundred and Sixty-Two Dollars ($462.00) paid as a lump sum representing the diminution of the use made or which may be made of the land including 10% reflecting the compulsory nature of the mining claim; and
  2. 2.The cost of one inspection per year as a one hour trip by one person annually in the sum of Fifty-Five Dollars ($55) including 10%, indexed annually to CPI.

Footnotes

[1] Mineral Resources Act 1989 s 85.

[2] Originating Application Form 01A, Attachment 1 – MC 300355 Resource Authority Public Report.

[3] GOTAP v Skelton [2021] QLC 20; Washington v Skelton [2021] QLC 11.

[4] Mineral Resources Act 1989 s 85.

[5] Land Court Act 2000 s 7(a).

[6] Ibid s 7(b).

[7] Mineral and Energy Resources (Common Provisions) Act 2014 Div 2.

[8] The guidelines are aimed at providing small scale miners with general principles and directions as to how to best undertake their activities while limiting impact to a reasonable level.

[9] [2021] QLC 11 [18].

[10] GOTAP v Skelton [2021] QLC 20; Washington v Skelton [2021] QLC 11.

[11] Washington v Skelton [2021] QLC 11 [11].

[12] Ibid.

[13] See e.g. Valentine v Henry [2018] QLC 21 [69].

[14] Bucholz & Ors v Great Mines Ltd & Charters Towers Mines NL (1987) 11 QLCR 269, 277-278; see also Kelly v Chelsea on the Park Pty Ltd (No 2) [2020] QLC 43.

[15] Lonergan & Anor v Friese [2020] QLAC 3 [56].

Close

Editorial Notes

  • Published Case Name:

    Summerville v Skelton

  • Shortened Case Name:

    Summerville v Skelton

  • MNC:

    [2022] QLC 7

  • Court:

    QLC

  • Judge(s):

    McNamara

  • Date:

    13 Jul 2022

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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