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  4. Pembroke Olive Downs Pty Ltd v Balanced Property Pty Ltd; Pembroke Olive Downs Pty Ltd v Namrog Investments Pty Ltd (No 2) - [2024] QLC 26

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Pembroke Olive Downs Pty Ltd v Balanced Property Pty Ltd; Pembroke Olive Downs Pty Ltd v Namrog Investments Pty Ltd (No 2)[2024] QLC 26

Pembroke Olive Downs Pty Ltd v Balanced Property Pty Ltd; Pembroke Olive Downs Pty Ltd v Namrog Investments Pty Ltd (No 2)[2024] QLC 26

LAND COURT OF QUEENSLAND

CITATION:

Pembroke Olive Downs Pty Ltd v Balanced Property Pty Ltd; Pembroke Olive Downs Pty Ltd v Namrog Investments Pty Ltd (No 2) [2024] QLC 26

PARTIES:

Pembroke Olive Downs Pty Ltd

(applicant)

v

Balanced Property Pty Ltd

(respondent)

FILE NO:

MRA486-20

PARTIES:

Pembroke Olive Downs Pty Ltd

(applicant)

v

Namrog Investments Pty Ltd

(respondent)

FILE NO:

MRA487-20

PROCEEDING:

Determination of compensation payable for grant of mining lease

DELIVERED ON:

10 December 2024

DELIVERED AT:

Brisbane

HEARD ON:

26, 27, 28 & 29 August 2024; 11 November 2024

HEARD AT:

Brisbane

PRESIDENT:

PG Stilgoe OAM

ORDERS:

  1. Pembroke Olive Downs Pty Ltd must pay Balanced Property Pty Ltd compensation in respect of ML 700033 in the sum of $8,548,154.99, inclusive of the statutory 10% uplift.
  2. Pembroke Olive Downs Pty Ltd must pay Namrog Investments Pty Ltd compensation in respect of ML 700033 in the sum of $26,287,445.40, inclusive of the statutory 10% uplift.

CATCHWORDS:

ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – COMPENSATION – where the applicant was granted a lease over the respondents’ land subject to the agreement of compensation – where the mining lease was granted over two properties – where those properties were owned by separate entities – where a non-owner, related entity operated a commercial cattle enterprise over the properties – where there were no formal agreements between the non-owner entity and the owners – where the non-owner entity was a subsidiary of only one of the owners – where the respondents claimed compensation for the alleged loss to the commercial cattle operation – whether the Court could allow loss incurred by a non-owner entity operating a cattle enterprise on the affected land

ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – COURTS OR TRIBUNALS EXCERCISING JURISDICTION IN MINING MATTERS – QUEENSLAND – LAND COURT – JURISDICTION AND POWERS – where valuers were called to give expert valuation evidence – where the evidence of both valuers contained flaws – where it is the duty of the Court to determine the correct or appropriate values for value and loss – whether the Court could arrive at appropriate values despite the identification of flaws in expert evidence

EVIDENCE – ADMISSIBILITY – OPINION EVIDENCE – EXPERT OPINION – OTHER MATTERS – where experts in the Land Court are subject to rules and guidelines that confer duties – where experts are required to test assumptions – where experts are required to give an opinion on any alternative scenario that might be considered on the evidence – where the expert failed to test assumptions, or provide an opinion on an alternative scenario – whether any weight could be attributed to the expert evidence

Mining Resources Act 1989 s 281

Beard v Director of Housing (Tas) (1961) Tas SR 141

Bengal Coal Pty Ltd v Cradcorp Pty Ltd (No 2) [2017] QLC 47

Berry & Parkinson v BHP Coal Pty Ltd & Ors (1998) 19 QLCR 366

Bowen Basin Coal Pty Ltd v Namrog Investments Pty Ltd [2020] QLC 23

Brewarrana v Commissioner of Highways (No 2) (1973) 6 SASR 541

Carabella Resources Limited v Goodwin [2016] QLC 32

Endeavour Mining Pty Ltd v Mintram [2009] QLC 187

Kaljevic v Mills [2010] QLC 124

Leslie v Board of Land and Works (1876) 2 VLR. (L) 21

Maurici v Chief Commissioner of State Revenue [2005] NSWLEC 20

Mitchell v Oakhill & Mitchell (1998) 19 QLCR 66

Pembroke Olive Downs Pty Ltd v Namrog Investments Pty Ltd [2023] QLC 14

Qld Zeolite Pty Ltd v Spencer [2010] QLC 112

Salmon v Armstrong [2002] QLRT 54

Southedge Daintree Pastoral Company Pty Ltd & Anor v Wilson [2009] QLC 122

Spencer v The Commonwealth (1907) 5 CLR 418

Valuer General v Perpetual Trustee Australia Ltd [1999] NSWLEC 10

Wills v Minerva Coal Pty Ltd (No 2) (1998) 19 QLCR 297

Woels v Hicks [2021] QLC 31

APPEARANCES:

SC Holt KC with KL McAuliffe-Lake (instructed by Allens) for the applicant

GA Thompson KC with DA Quayle (instructed by McCullough Robertson) for the respondents

  1. [1]
    Pembroke Olive Downs Pty Ltd has applied for a mining lease (the ML) over Vermont Park (VP) and Seloh Nolem (SN). Namrog Investments Pty Ltd owns VP. Balanced Property Pty Ltd owns SN. Throughout these reasons, I will refer to those companies collectively as “the owners.”
  1. [2]
    The parties cannot agree on the amount of compensation that will result from the grant of the ML so I must decide that question.
  1. [3]
    Seamark Pty Ltd operates a complex, vertically-integrated cattle enterprise in Queensland. It owns all the cattle within the enterprise. VP and SN are used as breeding properties for that enterprise. Seamark is a wholly owned subsidiary of Namrog.
  1. [4]
    James Gorman is the sole director of each of Seamark, Namrog, and Balanced.

James Gorman

  1. [5]
    The owners’ claim for compensation is significant. Given that, I am puzzled by Mr Gorman’s approach to providing evidence to the Court and to the proceeding generally.
  1. [6]
    The owners argue that costs and losses incurred by Seamark’s ownership of the cattle necessarily result in a corresponding diminution in the value of Namrog. I was not favoured with any evidence of an agreement between Seamark, Balanced, and/or Namrog whether formal or an “understanding.”
  1. [7]
    Mr Gorman did not file any detailed financial information to support the owners’ claim for loss and expense until June 2023, years after the proceeding started and after Mr Gorman had already filed two affidavits as to the quantum of the owners’ losses.[1] It was not until the parties were tasked with agreeing on the briefs to experts that the owners’ lack of financial information became apparent. Given Mr Gorman’s financial acumen and the quality of his legal advisers, I find this omission bewildering.
  1. [8]
    Mr Gorman had no personal knowledge of the contents of the financial material that was eventually filed. He was unable to descend to detail about the financials and gave the impression that he had no interest in the day-to-day operation of his enterprise.
  1. [9]
    The person/s who prepared the financial statements, and who could provide that detail, did not give evidence. The operation of the cattle enterprise remains opaque.
  1. [10]
    Mr Gorman did not read any of Pembroke’s affidavits or any of the experts’ reports filed in this proceeding.[2] He gave his evidence in a vacuum without regard to any of Pembroke’s undertakings or the experts’ understanding of the issues.
  1. [11]
    Mr Gorman was not an objective witness. Where his evidence conflicts with the evidence of others, generally I will prefer the evidence of others.

An overview of the valuers’ evidence

  1. [12]
    Both Tim Cavanagh, engaged by Pembroke, and William McLay, engaged by the owners, are experienced rural valuers.
  1. [13]
    Despite this, and even though the expert evidence in this matter was the subject of close supervision through the Court Managed Expert Evidence (CMEE) regime, there are significant problems with both valuers’ evidence.
  1. [14]
    Mr McLay decided to prepare his valuation on a “30,000-foot level view”[3] to make it simple for the Court. He chose not to refer to sales that would explain his valuation because he did not want to burden the Court with a 1,000-page report.[4] While it is true that the Court prefers succinct reports and fewer comparative sales, valuation experts must fully explain their conclusions.
  1. [15]
    I do not, however, accept Pembroke’s submission that Mr McLay’s valuation evidence was “opaque.”[5] He may not have fully explained his reasoning, but the same can be said of Mr Cavanagh.
  1. [16]
    Although he acknowledged the importance of the Spencer[6] test, Mr Cavanagh seems to have abandoned it when assessing the value of the properties in the ‘before’ case. He valued each component of the properties in the ‘after’ case and then added those amounts together to arrive at the ‘before’ valuation. Surely no hypothetical purchaser would assess a potential purchase price this way. Rather, a hypothetical purchaser would look at the type of country and the carrying capacity to arrive at an overall value.
  1. [17]
    The latter approach is the one Mr McLay took, but he assessed the value of VP based on a carrying capacity that is not supported by the evidence.
  1. [18]
    There is an added difficulty for me. Even though Practice Direction 6 of 2020 directs the experts to state how their conclusions would differ if the Court resolved a disagreement against their view on the matter,[7] neither valuer did this. Consequently, I am left with significant disparities in the evidence, no meeting of the minds, and no assistance in resolving matters in dispute.
  1. [19]
    What am I to do with this flawed evidence? In Brewarrana v Commissioner of Highways (No 2), Wells J said:

The judicial task is to see the combined results of the valuers' work not as another valuer would see them, but as material fit to be used in the course of applying the principle laid down in Spencer's Case; the two roles of buyer and seller must, in my opinion, finally merge in the Court. I must bear in mind the conclusions of the valuers and try to accord to each the sort of bearing and weight that would be accorded to them in the notional transaction of sale and purchase propounded by Spencer's Case.[8]

  1. [20]
    And in Leichhardt Council v Road & Traffic Authority (NSW), the New South Wales Court of Appeal said:

A judge of the Land and Environment Court is perfectly entitled to reject the whole of the expert evidence and, drawing on the experience of the Court, to do as best s/he can identify an appropriate level of discount or, relevantly, an appropriate quantum of adjustment to the comparable sales figure by reason of the existing use rights of some of those sales.[9]

  1. [21]
    Lloyd J, of the New South Wales Land and Environment Court, stated that a judicial officer is not obliged to reconvene the hearing to give the parties the opportunity to make further submissions in light of a determination that both valuers’ evidence is flawed.[10]
  1. [22]
    I do not think it would assist me if I did call for further submissions. As I have noted, the valuers were in CMEE. They produced an initial report in June 2023 and a supplementary report in July 2024. Calling for a further report would, inevitably, cause delay and produce additional inconsistent testimony that would be subject to further cross-examination.
  1. [23]
    Lloyd J also stated, “It is not an error of law, however, neither is it a denial of natural justice, for the case to be decided on the basis of some principle disclosed in an authority which was not referred to by either party at the hearing.”[11] Although Lloyd J was referring to a legal principle, rather than an evidentiary lacuna, I am of the view that the same approach applies.
  1. [24]
    I have wielded a blunt axe where necessary.

Stocking rates/carrying capacity

  1. [25]
    The parties submitted that the valuers did not base their opinions on the stocking rates/carrying capacity of the properties. Although it might be true that their final analysis did not directly depend on carrying capacity, a close examination of their evidence shows that carrying capacity was critical in their examination of comparable sales.
  1. [26]
    The valuers agreed about the stocking rate of SN. They disagreed as to the carrying capacity of VP. Mr Cavanagh used a carrying capacity of 2,865 AE (5.8 ha/adult equivalent (AE)). Mr McLay used a carrying capacity of 3,775 AE (4.42 ha/AE).
  1. [27]
    I received a range of figures about VP’s carrying capacity from different experts. Bill Thompson, an agronomist engaged by the owners, gave evidence that the carrying capacity was about 2,800 AE. In an earlier case involving this land[12] Mr Thompson and Jim Brennan, another agronomist, gave a figure of 2,480 AE.
  1. [28]
    Andrew Perkins, an accountant engaged by Pembroke, analysed cattle returns and livestock trading accounts. He noted some missing data but concluded that the average cattle numbers over both VP and SN was 4,393 head, which converts to 5,930 AE. The valuers agreed that the carrying capacity for SN is 3,000 AE. This means that the carrying capacity for VP is 2,930 AE.
  1. [29]
    I was also referred to the prototype forage report: long-term carrying capacity report. That document indicates that the long-term carrying capacity of VP is between 2,512 AE and 3,040 AE.
  1. [30]
    All of these figures align with Mr Cavanagh’s assessment.
  1. [31]
    Mr Gorman, without any expertise or reference to data, thought the carrying capacity was around 4,425 AE. I understand Mr Gorman’s desire to maximise the owners’ compensation, but I take no account of his opinion given it has no factual basis.
  1. [32]
    Mr McLay based his opinion on two things. Firstly, he relied upon Namrog’s further and better particulars stating that VP and SN together run 5,500 head. Mr McLay converted that to 7,425 AE and then deducted the agreed carrying capacity for SN of 3,000 AE.
  1. [33]
    Namrog’s further and better particulars are not supported by the evidence. Mr Thompson and Mr Perkins gave independent, and quite different, evidence.
  1. [34]
    Secondly, Mr McLay relied on a real estate sales brochure from 2009 which stated that the property could carry 8,000 “backgrounds”[13] or the equivalent of breeders.
  1. [35]
    Similarly, the numbers in the real estate advertisement are not supported by the evidence. Information provided in 2009 is not helpful to an analysis of the present position. Further, it is inevitable that a real estate advertisement for the sale of the property might be “gilding the lily.”
  1. [36]
    Because Mr McLay used a higher figure for VP’s carrying capacity he inevitably compared VP’s value with properties having a higher carrying capacity. Mr McLay provided a table of stocking routes for the comparable sales.[14] VP performs favourably in this table when using Mr McLay’s current capacity assessment. Using Mr Cavanagh’s assessment, VP has a lower carrying capacity on a ha/AE basis than any of the comparable sales.
  1. [37]
    I prefer Mr Cavanagh’s assessment of carrying capacity as a component of value, particularly as Mr McLay did not revise his assessment in light of Mr Thompson’s evidence when he had an opportunity to do so.

The ‘before’ value of VP

  1. [38]
    VP is a 16,669 ha pastoral property approximately 150 kilometres south of Mackay. Approximately 68% of the property is remnant forest. The remaining area is non-remnant cleared grazing. The Isaac River forms the eastern boundary and is the source of the property’s water. It has 23 internal paddocks, 2 dwellings, a workers’ cottage, sheds, and cattle yards.
  1. [39]
    The valuers agreed that Jimarndy, Berrigurra, and Croydon are appropriate comparable sales. Mr McLay also used the sale of Kulumur. Mr Cavanagh rejected Kulumur as a comparable property because its sale price was inconsistent with other sales, and the sale occurred before Jimarndy which is a closer comparison.
  1. [40]
    The comparable sales evidence is summarised in this table:

Sale

Sale Date

Settlement Date

Sale Price

Land Area (ha)

$/ha Cavanaugh

$/ha McLay

Jimarndy

Jul-22

Sep-22

$47,233,265

17,368.300

2,687

2,717

Berrigurra

May-21

Jun-21

$32,500,000

9,284.950

3,393

3,420

Croydon

June-21

Jul-21

$85,333,333

58,669.000

1,437

1,434

Kulumur

May-22

Sep-22

$32,000,000

13,908.000

2,195

2,195

  1. [41]
    The valuers agree that Berrigurra is a superior property; it has a superior location, superior access, and superior structural improvements. It has comparable water security and fencing infrastructure. Counterintuitively, its carrying capacity is less than VP’s.
  1. [42]
    The valuers agree that Croydon is not an appropriate comparable property; it is much larger, has approximately 5,000 ha of unusable coastal range and a significant component of lighter forest ranges, which are harder to manage.
  1. [43]
    The valuers also agree that Jimarndy is the most comparable to VP, having a similar land area and a comparable mix of scrub forest and river country. Mr McLay says that while Jimarndy benefits from a greater proportion of non-remnant land, it is also disadvantaged by regular inundation and severances with the Isaac River floodplain.
  1. [44]
    Mr Cavanagh puts the before value of VP at $27,400,000 (including structures). Mr McLay gives a before value of $45,650,000.
  1. [45]
    If both valuers agree Jimarndy is the closest comparable sale, then, at first blush, Mr McLay’s assessment of $2,683 per hectare for VP, as against Jimarndy at $2,687, would appear to be the more logical conclusion. However, that analysis ignores the fact that VP has a significantly lower carrying capacity than Jimarndy and that Mr McLay has overstated the carrying capacity of VP.
  1. [46]
    Doing the best I can, the appropriate approach is to take Mr McLay’s valuation and adjust it downwards to account for his over-estimation of VP’s carrying capacity. In my view, that would accord with the exercise a hypothetical purchaser would undertake. There are a number of crude ways of doing the maths:
  1. Reducing Mr McLay’s valuation by the ratio between his stocking rate and Mr Cavanagh’s stocking rate: 4.42/5.8 x $45,650,000 = $34,788,448.
  2. Using the Kulumur rate per ha (as its stocking rate is the closet to VP’s stocking rate but still superior): $2,195 x 16,669 = $36,588,455.
  3. Reducing Mr McLay’s valuation by the ratio between Jimarndy’s stocking rate and VP’s: 4.01/5.8 x $45,650,000 = $31,561,465.
  1. [47]
    Because Mr Cavanagh rejected Kulumur as a comparable property, I have discarded the valuation of $36,588,455. The calculation based on the relative ratios has a superficial attraction, but it is not anchored to any comparable sale. Because both valuers thought Jimarndy was the closest comparable property, I have used that property as the baseline and determined that the ‘before’ value of VP is $31,561,465. In adopting that valuation, I have assumed a “blended approach” in that it applies equally across VP, regardless of the type of country.

The ‘after’ value of VP

  1. [48]
    The ML will occupy about 49% of VP. The valuers agree that there will be a total loss of value of the ML area. Mr McLay values that at $25,474,814 (55.8% of his total value). Mr Cavanagh values it at $15,263,166 (55.7% of his total value).
  1. [49]
    While I could undertake the exercise of assessing the value of the ML by reference to the quality of the country and the stocking rate, it is apparent that this is one area in which the valuers agree. 55.8% of $31,561,465 is $17,611,297.50.
  1. [50]
    I adopt that figure even though it creates a discrepancy in the figure I have assigned to the ‘before’ value of VP and the sum of the ‘before’ values on which I have based the calculation. That is because the valuers have given the ML 55% of the value, despite only making up 49% of the land.
  1. [51]
    The VP homestead sits on 56.12 ha across the Isaac River, away from the main portion of the property. Access across the section of the Isaac River immediately adjacent to the homestead has always been difficult; the usual course was to travel downstream to the south-east and cross at an easier point. That access point will exit onto the ML and its continuation will require Pembroke’s permission.
  1. [52]
    Mr Cavanagh says that, because the homestead was always remote from the main portion of VP, the presence of the ML will not affect its value. Mr McLay says that, because access to the homestead will require Pembroke’s cooperation, the homestead land will have no value.
  1. [53]
    I disagree with both valuers. The change in access will have a detrimental effect on the homestead land’s value, but it will not sterilise its value. A hypothetical purchaser of VP may still want to use it for a manager’s residence, or it may have value as a rental property for Pembroke’s staff. However, the homestead will be affected by the noise and dust from the coal mine operations. Again, doing the best I can, I assess the diminution in value of the homestead area as 70%.
  1. [54]
    Mr Cavanagh valued the homestead land at $149,822. Mr McLay valued it at $140,300. Adopting the higher value and applying 70%, I assess the diminution in value as $104,875.40.
  1. [55]
    The balance land is irregular in shape and will present challenges to anyone who wants to continue a cattle operation. It is divided into two sections: the south-west balance land and the eastern balance land.
  1. [56]
    The valuers agree that there will be a 100% diminution to the value of the eastern balance land, an area of 224.79ha. Mr Cavanagh used a rate of $1,850/ha ($415,862) whereas Mr McLay used a rate of $1,250/ha ($280,988). This result is completely at odds with Mr McLay’s tendency to overvalue through his use of incorrect stocking rates. If I use a purely arithmetic basis for assessing compensation, the result is: 224.79/16,669 x $31,561,465 = $425,622.51.
  1. [57]
    The south-west balance land is approximately 8,200ha. Mr Cavanagh assessed the value of the south-west balance land at $10,876,099. Mr McLay assessed its value at $18,849,240. Again, using a purely arithmetical basis, the value of the south-west balance land is: 8,200/16,669 x $31,561,465 = $15,526,067.13
  1. [58]
    Mr Cavanagh applied a diminution rate of 25%. Mr McLay applied a diminution rate of 30%.
  1. [59]
    There was a lengthy discussion about the viability of the south-west balance land, with the owners urging the proposition that it will have no utility. In oral submissions, counsel for the owners submitted that the reports show the south-west balance land is only viable if VP and SN are run in aggregation and that could not be the basis on which I assessed compensation. It was submitted that if the south-west balance land was not viable for Namrog alone, then it has no value, and the diminution rate should be 100%.
  1. [60]
    Counsel for Pembroke submitted that asking whether the south-west balance land has utility to the Gorman enterprise, or Namrog, is the wrong question. The question is whether the land has value under the Spencer test.
  1. [61]
    In the end, the owners’ submission runs counter to the evidence. As I have noted, Mr McLay assessed the diminution at 30%. Mr Rogers, the owners’ manager, accepted that the owners could still run cattle on it, although the logistics of doing so would be more problematic.[15] In my view, those difficulties are reflected in the valuers’ application of a diminution rate.
  1. [62]
    Both valuers based their consideration of diminution on the Court’s decision in Mitchell v Oakhill & Mitchell in which President Trickett made the point that a prudent purchaser would prefer to purchase a property without a mining lease on it and that the presence of a mining lease might deter a potential purchaser unless the purchaser thought they were getting a bargain.[16] They referred to, and applied by analogy, the diminution rate applied in the 2009 Broadlea sale.[17]
  1. [63]
    Counsel for the owners submitted two points about the application of Broadlea. Firstly, the ML there impacted a very small area of a much larger property, so the rate was low when considering the effect on the whole of the property. Secondly, that applying a low rate of diminution in the present case did not satisfy President Trickett’s test of “getting a bargain” in buying a property affected by a mine.
  1. [64]
    Interestingly, Mr McLay did not refer to the prospect of a “bargain” for a hypothetical purchaser or to the extent to which Broadlea was unaffected by the mine. He applied a higher rate than that determined in Broadlea because, he said, in that case a potential purchaser knew exactly how and where the mine operated and had the opportunity to observe the operation, the level of noise and dust, and equipment movement. Mr McLay says that, in the present case, the operation of the mine is still hypothetical and may be subject to change. He says this carries an extra level of risk to a potential purchaser.
  1. [65]
    Mr McLay also pointed out the odd shape of the south-west balance land, that access will be through the ML (rather than directly), and that access to water will be more difficult.
  1. [66]
    Mr Cavanagh provided a table contrasting the impact of multiple MLs in Broadlea versus the potential impact on VP:

Component

Broadlea

VP

MLs

4

4

Severance

4

2

Average severance area

1,375 ha

4,214.895 ha

Surface mining activities/pits

2

Several

Infrastructure related activities

  • Train loadout facility
  • Haul roads
  • Access roads
  • Railway line
  • Power line easement
  • Surface mining activities
  • Access roads
  • Conveyor

Average dim overall

23.50%

25%

  1. [67]
    He argued that mining had a greater impact on the Broadlea property as it had multiple open cut pits, several haul roads, a train loadout facility with a balloon railway loop, and more small severances. The submission I refer to in [63] above – that the balance of Broadlea was a factor in the rate applied – was not put to Mr Cavanagh in cross-examination.
  1. [68]
    I agree that the diminution rate to be applied should be more than Broadlea, but I do not agree that the level of uncertainty in a greenfield mine site justifies an extra 6.5% diminution, particularly as the actual impact of the ML is likely to be less than that experienced in Broadlea. I prefer Mr Cavanagh’s assessment of 25% diminution.
  1. [69]
    VP has two homesteads, a cottage, yards, and sheds (the improvements). Mr McLay values the improvements at $930,000, being 2% of the assessed value. Mr Cavanagh values the improvements at $800,000, being 2.9% of the assessed value.
  1. [70]
    Mr Cavanagh includes sheds in his assessment whereas Mr McLay does not. Mr Cavanagh separately valued each element of the improvements, assigning $550,000 to the dwellings, $150,000 to the yards, and $100,000 to the sheds. This is a more realistic assessment than a blanket percentage of the overall value of the land.
  1. [71]
    Mr McLay diminished the improvements by 100%. He did so on two bases. Firstly, he states that a homestead complex unaffected by an operating open cut mine will have greater value than one located immediately adjacent to the mine boundary. I agree with that proposition.
  1. [72]
    Mr McLay also thinks it unlikely that a property manager would continue to reside with a family in a dwelling located in such close proximity to the proposed mine, creating staff attraction and retention issues for the property owner. He says the practical outcome would be for the property owner to construct alternative accommodation on the south-west balance land.
  1. [73]
    I am not so sure that these assumptions are correct. At least one homestead is adjacent to the Isaac River in attractive established grounds. Any replacement dwelling would be remote from the river and within land used for grazing. I think a landowner would be reluctant to use grazing land to construct a residence when one already exists.
  1. [74]
    Mr Cavanagh diminished the residential buildings by 65%. I think this assessment is more realistic.
  1. [75]
    He did not diminish the yards or the sheds, but he did make an allowance of $350,000 to reinstate the cattle yards within the south-west balance land. The reality of that exercise, I think, is that neither the yards nor the sheds have any after value, and both should be diminished by 100%.
  1. [76]
    A summary of the ‘before’ and ‘after’ value of VP:

VP - Component

Before Value

Diminution rate

Loss in value

After Value

ML (applying increased rate of loss apportioned to ML land)

$17,611,297.50

100%

$17,611,297.50

$0

Homestead

$149,822.00

70%

$104,875.40

$44,946.60

South-Eastern Balance Land

$15,526,067.13

25%

$3,881,516.78

$11,644,550.35

Eastern Balance Land

$425,622.51

100%

$425,622.51

$0

Improvements (total)

$800,000.00

$607,500.00

$192,500.00

Dwellings

$550,000.00

65%

$357,500.00

$192,500.00

Sheds

$100,000.00

100%

$100,000.00

$0

Yards

$150,000.00

100%

$150,000.00

$0

Total

$34,512,809.14[18]

$22,630,812.19

$11,881,996.95

The ‘before’ value of SN

  1. [77]
    SN is across the Isaac River from VP. It has an area of 8,614.95 ha. Approximately 13% is remnant forest grazing, the balance is non-remnant cleared grazing.
  1. [78]
    There is only one common sale for SN, that of Langley. Mr McLay assesses Langley at $3,564/ha whereas Mr Cavanagh assesses it at $3,622/ha.
  1. [79]
    Both agree that SN is superior to Langley, largely because of Langley’s propensity to flood. The question is what additional value should be assigned to SN because of its superiority.
  1. [80]
    Mr McLay states that Langley’s propensity to flood increases operational costs due to the requirement to move stock off the flood plain before imminent flood events, the loss of pasture due to floods, the potential stock loss due to floods, and the need to repair infrastructure.
  1. [81]
    Mr Cavanagh acknowledges that Langley is subject to flooding but says the melon holes on SN (the name of which is an anadrome of melon holes) create similar impediments. He says that melon holes filled with water restrict access and reduce the land available for grazing. He also says that stagnant water increases the risk of disease and that the clearing of regrowth is more difficult in melon hole country.
  1. [82]
    Mr Cavanagh’s photos of filled melon holes are certainly dramatic, but I prefer the evidence of Mr McLay. Stagnant water-filled melon holes do create issues, but Mr Cavanagh stopped short from asserting that they caused stock losses, the need for stock relocation, or the replacement of infrastructure.
  1. [83]
    Mr Cavanagh concedes that his other comparable sales – Jimarndy and Berrigurra – are inferior. Mr McLay points out that Berrigurra is a dated sale. Neither valuer helps me in deciding an appropriate uplift, if any, to the Langley rate.
  1. [84]
    Mr McLay referred to two other sales – Maynes and Malo. He assessed Malo at $7,613/ha. Clearly, this sale is an outlier and of no assistance. It is a property in the Theodore region and is used for fattening, not weaning.
  1. [85]
    Mr McLay states that the key comparable sale is that of Maynes, at $4,873/ha. Even though Mr McLay considers Maynes a slightly superior property, he assigned a higher per hectare rate to SN because SN has a more reliable water source and there has been a positive market shift since the Maynes sale.
  1. [86]
    At 1,334 ha, Maynes is a much smaller property than SN. Most of it – 97% – is cleared grazing area. Mr Cavanagh points out that the adjoining owner bought Maynes. He says that the size and quantum of the sale puts it in a different market segment dominated by entry level graziers or nearby owners wanting to top up their holdings. He says it would be a good comparison for the purchase of replacement land but not for valuing the whole of SN in the ‘before’ scenario.
  1. [87]
    Mr McLay says that under the current competitive market conditions there is no evidence of larger properties selling at a discount. That may be so, but this Court is regularly told that a larger property will result in a lower price per unit of area and that general proposition is supported by the case law.[19] It is not enough for Mr McLay to say that there is no evidence to support a contrary view; to subvert the proposition, he must point to evidence that shows the general proposition does not apply in this case.
  1. [88]
    In a supplementary joint expert report, the valuers considered three other sales. Firstly, they considered a recent sale of Moranna. Mr Cavanagh thought that Moranna and SN were roughly similar, with a total land value of $3,788/ha. Mr McLay thought that SN was a superior property that merited a higher rate.
  1. [89]
    The valuers both thought that Allambie was a superior property, which justified its higher rate per hectare.
  1. [90]
    They also considered the sale of Morpeth, a property 30 km from SN which was sold at auction. Mr Cavanagh thought Morpeth to be a superior property with less woody vegetation, fewer melon holes, an integrated watering system, good fencing, and superior structures. His analysed value was $4,023.03/ha. Mr McLay thought Morpeth was “broadly comparable” to SN, noting that it was disadvantaged by some flooded areas and inferior structures.[20] He considered this sale, analysed to $4,458/ha, to support his adopted value of $4,900/ha for SN.
  1. [91]
    The value of SN is significantly higher than Langley but much less than Maynes. It probably sits somewhere between the two analysed rates for Morpeth. Once again, I am forced to resort to crude mathematical equations. If Maynes has almost 10% more good grazing country than SN, then a reduction of 10% from the price/ha gives a rate of $4,385.70/ha, which is at the higher end of the Morpeth range. The total value of SN on that basis is $37,782,586.21.

The ‘after’ value of SN

  1. [92]
    The ML will overlap approximately 1,185 ha in the south-west corner of SN, creating two severances. The ML will be used for infrastructure only, a conveyor and haul road, with no surface mining activities taking place within SN.
  1. [93]
    The value of the ML area is $4,385.70 x 1,185 ha = $5,194,054.50. Its value is completely lost.
  1. [94]
    There will be two areas of balance land. East of the ML is an area of approximately 7,329.945 ha. West of the ML is an area of approximately 100 ha.
  1. [95]
    Both valuers agree that the west balance land will have no value in the after case. Mr Cavanagh valued that land at $1,916/ha ($191,600) whereas Mr McLay valued that land at $1,500/ha ($150,000). Mr Cavanagh does not explain how he arrived at a rate of $1,916/ha. Mr McLay states that the area is principally remnant coolabah/gum river frontage but otherwise does not explain his rate. Some explanation is better than none. I adopt Mr McLay’s rate/ha.
  1. [96]
    As to the east balance land, the valuers disagree about two things: the rate per hectare to be applied and the diminution attributable to the ML.
  1. [97]
    Taking the diminution first, both valuers relate the situation back to Broadlea. Mr Cavanagh notes that many things on SN will stay the same or be substantially similar. The land will be a similar shape and will require only minor reconfiguration of fence lines. Water security and reticulation will be the same, even though the Isaac River frontage will be reduced by approximately 8 km. Critical infrastructure will be uninterrupted, physical access to Iffley Connection Road is the same, and access with VP will be maintained. Mr Cavanagh also notes that there is only one severance and that the east balance land will be minimally affected. He does concede that the dwellings will be impacted by the conveyor. He adopted a diminution rate of 5%.
  1. [98]
    Mr McLay again highlights the fact that a hypothetical purchaser of SN will not have the advantage of visually inspecting the mining operation. He says this creates a level of market risk and uncertainty unless, and until, there is a good working relationship between the miner and the owners. He adopted a diminution rate of 17.5%.
  1. [99]
    The disturbance in Broadlea was significantly more than the potential disturbance of SN. I do not agree that the speculative aspect of the disturbance to SN warrants a discount as high as 17.5%. I agree with Mr Cavanagh that a discount of 5% is appropriate.
  1. [100]
    Mr McLay values the east balance land at $5,000/ha, whereas Mr Cavanagh values it at $3,728/ha.
  1. [101]
    Mr Cavanagh valued each type of land on the east balance land, added the respective total, and arrived at an average. He valued the best land, non-remnant cleared grazing, at $4,250/ha, less than Mr McLay’s average rate.
  1. [102]
    Mr McLay noted that 90% of the east balance land was non-remnant vegetation, compared with 87% of SN as a whole. He adopted $5,000/ha as maintaining the correct relativity.
  1. [103]
    If I deduct the value of the ML and the west balance land from the before value, the starting point for the east balance land is $32,438,531.71 That equates to $4,425.48/ha, which is within the range between Mr Cavanagh and Mr McLay and logically consistent. I adopt that sum. Applying a 5% diminution, the loss to the eastern balance land is $1,621,926.58.
  1. [104]
    Mr McLay valued one dwelling at $275,000. Because that dwelling is only 500 m from the ML boundary, he diminished its value by 100%. Mr Cavanagh valued that dwelling at $165,000, with a diminution rate of 90%.
  1. [105]
    Mr McLay valued the second dwelling at $175,000 and diminished its value by 50%. Mr Cavanagh valued the dwelling at $285,000 and diminished it by 25%,
  1. [106]
    Mr Cavanagh also valued the sheds and yards at $200,000 with a diminution rate of 35%
  1. [107]
    Excluding the valuation for the sheds, the valuations for the dwellings are polar opposites: if I swap the values between the two, the valuations make much more sense. ($275,000 v $285,000 and $165,000 v $175,000).
  1. [108]
    The only objective evidence of the dwellings I have is one aerial photo of “dwelling and sheds.” I don’t know to which dwelling it relates. I am minded, therefore, to adopt the approach that dwelling one has a value of $285,000 and dwelling two has a value of $175,000.
  1. [109]
    Mr Cavanagh made the point that obtaining evidence in relation to the diminution rates for structures is difficult. He applied an average rate of 50% over the residential structures and 35% over the non-residential structures.
  1. [110]
    Dwelling one will still have some value, even if it is only 500 m from the ML. I assign a diminution rate of 90%. Mr Cavanagh’s general diminution rate of 50% aligns with Mr McLay’s diminution rate for dwelling two so I adopt 50% as the appropriate rate.
  1. [111]
    I have a photograph of sheds that are separate from the dwellings. They have a value and only Mr Cavanagh has attempted to assign a value to them. I accept the value of $200,000. I also accept his diminution rate of 35% for non-residential structures.
  1. [112]
    A summary of the ‘before’ and ‘after’ value of SN:

SN - Component

Before Value

Diminution rate

Loss in value

After Value

ML

$5,194,054.50

100%

$5,194,054.50

$0

East Balance Land

$32,438,531.71

5%

$1,621,926.58

$30,816,605.13

West Balance Land

$150,000.00

100%

$150,000.00

$0

Improvements (total)

$660,000.00

$414,000.00

$246,000.00

Dwelling 1

$285,000.00

90%

$256,500.00

$28,500.00

Dwelling 2

$175,000.00

50%

$87,500.00

$87,500.00

Sheds

$200,000.00

35%

$70,000.00

$130,000.00

Total

$38,442,586.21

$7,379,981.08

$31,063,605.13

The costs incurred in acquiring replacement land

  1. [113]
    It is unexceptional that the owners should be compensated for the transaction costs of acquiring replacement land.
  1. [114]
    The owners also claim compensation for agistment costs and a premium on the purchase of additional land but there is a fundamental problem. I have mentioned that the owners are part of an integrated cattle enterprise which is operated by Seamark. All experts assumed that the owners were equally entitled to compensation relating to the ML’s effect on the cattle operation. But Balanced, which owns SN, has no cattle revenue in its books of account. The loss through the loss of breeding country is, presumably, a loss to Seamark.
  1. [115]
    The owners submit that a loss by Seamark diminishes the value of its parent company Namrog and, therefore, Namrog suffers loss. That might be true but there is a problem with the submission. Nobody has demonstrated that a loss of revenue in a subsidiary directly translates into a loss of equity in its parent. The effect of the loss of revenue on a capital value will depend on the overall operations of the parent and I do not have enough information about Namrog’s operations to determine whether, or to what extent, it will suffer a capital loss and, if so, the quantum of that loss. I do not know whether it has other income streams. I do not know anything about its investment strategies. All those factors are relevant to the potential loss of capital value.
  1. [116]
    The owners also submit that many, if not all, rural enterprises would hold land in one corporate structure and undertake the business in a trading trust or other trading entity for taxation or other reasons. They submit that not providing for losses of the trading entity in those circumstances would have far reaching consequences, likely to be beyond the contemplation of the legislature. In that respect, they point to the definition of “owner” in the Mineral Resources Act 1989 (MRA).[21]
  1. [117]
    The definition of “owner” in the MRA, unsurprisingly, reflects the orthodox position – the registered owner of the fee simple estate. That definition does not contemplate compensating a trading entity given the task of operating a cattle enterprise on the owner’s land.
  1. [118]
    It is unsurprising that the legislature did not contemplate a split between the ownership of the land and the fruits of a cattle operation on that land. The owners are correct that there are many reasons why complex structures exist: tax minimisation, preservation of family interests for succession planning or in the event of divorce, asset protection in the event of insolvency, or even redressing imbalances in estate distribution.
  1. [119]
    None of these things appear to be within the contemplation of the legislature: the objects of the MRA are focused on encouraging mining and minimising land use conflict[22] and to provide an administrative framework to expedite and regulate mining. People are free to manage their affairs in whatever way they wish and can take the benefits of those decisions. But they must also accept the burdens of those structures if they are not the owner of the land as defined by the MRA.
  1. [120]
    Even if I accepted the owners’ argument about the capital loss to Namrog, the fact is that the owner of SN is Balanced: not Seamark and not Namrog.
  1. [121]
    I may be able to assess the direct losses Namrog will suffer through the ML’s impact on VP. I cannot assess any loss attributable to the effect on SN. Unfortunately, as none of the experts separated the cattle operations into its component parts, I am, once again, left with a difficult task.

Agistment costs

  1. [122]
    The claim for agistment costs depends upon an assumption that the owners will have to move cattle as soon as the ML is granted.
  1. [123]
    Pembroke points out that the owners will remain the owners of the land and there is no transfer of ownership. The ML gives Pembroke the right to mine; it does not give it any other rights over the land. It cannot grant agistment rights to others and it does not have an unfettered power to withhold consent to the owners’ use of the land. The owners’ right to use the land for grazing can sit comfortably with the existence of the ML while the mining operation is ramping up, provided the safety of all involved is ensured.[23]
  1. [124]
    Mark Sheldon is Pembroke’s Chief Operating Officer. He has stated that Pembroke will not start work on the ML until 2028 and that the owners will have full access to the land until that time. He stated that actual mining is not due to start until 2030. He confirmed that Pembroke will provide ongoing access to the VP homestead, provide arrangements to relocate the Eungella pipeline offtake to ensure supply to the south-west balance land, provide stock access between SN and VP, and, if necessary, permit a pipe to run from the Isaac River through the ML to the balance land on SN. There is no evidence before me to suggest a contrary circumstance.
  1. [125]
    The owners say that I should not approach the assessment of compensation based on a non-binding and ill-defined assurance. They say that the owners should not have to bear the risks of obtaining access to the land.
  1. [126]
    They also say that, at the very least, Pembroke should have proffered an access and licence agreement. The irony is not lost on me: Mr Gorman is critical of Pembroke’s failure to proffer a licence and yet I have no evidence of the arrangement between Seamark, Namrog, and Balanced.
  1. [127]
    In Berry & Parkinson v BHP Coal Pty Ltd & Ors the Court agreed that an arrangement to allow the use of the ML is generally not relevant if not settled.[24] However, the Court went on to say that it may be a relevant consideration in circumstances where there is a clear and unambiguous offer from the miner which, if accepted, would offset aspects of the compensation claim.[25]
  1. [128]
    Given Mr Gorman’s stated indifference to anything Pembroke might have said or offered prior to the hearing, and his assertion that he read none of the material before the Court, this situation presents a clear distinction from the Court’s decision in Berry. A settled agreement requires two parties to engage in negotiations. Mr Gorman deliberately avoided the prospect of a negotiated agreement. I do not see why he should profit from that in my assessment of compensation.
  1. [129]
    The owners cannot disavow Mr Sheldon’s evidence simply on Mr Gorman’s assertion that there is no written agreement, and that Mr Gorman knows nothing about any right of access.
  1. [130]
    The owners also say that Pembroke might sell its interests on, or undergo a change in shareholding, or change the mine plan. As Member Scott observed in Wills v Minerva Coal Pty Ltd (No 2):

It is not sufficient for the appellant to have simply raised an arguable proposition such as this and to invite the Court to find some element of value in its favour.[26]

  1. [131]
    The owners also say that I should assume a period of three years is appropriate because they have let VP and SN go since the Court’s recommendation to grant the ML. They point to the capital expenditure required to control regrowth and maintain infrastructure in the face of a grant of the ML. They concede that they did not undertake that work, because the costs might have been wasted, but that decision had an impact on the carrying capacity of the land.
  1. [132]
    It is not clear to me why Pembroke should compensate the owners for the consequences of business decisions they made. If they had spent money improving the pasture, the carrying capacity would have been better and the compensation for the value of the land lost would have been higher. Presumably, money spent on infrastructure would have been reflected in the valuers’ assessment of its value and the resulting diminution. Further, some of the three-year delay in having this matter heard and determined lies squarely at Mr Gorman’s feet in his failure to provide financial information in a timely manner.
  1. [133]
    The owners also relied on the evidence of Matthew Ashby, a forensic accountant. He prepared his report based on assumptions and told the Court that his duty was simply to write a report based on those assumptions. Even though the other experts’ reports showed these assumptions were incorrect, Mr Ashby did not change his view or consider an alternative scenario.
  1. [134]
    The owners submit that I should accept Mr Ashby’s report because he qualified it by saying that he “was not aware of any matter that would cause him to doubt the reasonableness of the instructed assumptions or other assumptions for the purpose of preparing this report” and that he was not required to test the assumptions.[27]
  1. [135]
    I do not accept the owners’ submission. He should have been aware of matters that would cause him to doubt the reasonableness of his report. His decision to ignore that evidence is in clear breach of rule 20, Practice Direction 6 of 2020, and, more importantly, his primary duty to the Court. If I were fminded to assess the quantum of agistment costs, Mr Ashby’s report would not assist me.
  1. [136]
    Mr Thompson gave evidence that it takes about three years to re-establish a like-for-like breeding property but Thomas Newsome, engaged by Pembroke, thought that the process of buying a property and re-stocking it would take around three to four months.
  1. [137]
    Mr Thompson did not disagree with that statement, noting that the time to transfer depends on “negotiation between the vendor and the purchaser and how long the vendor wants to get out of the property.”[28] Mr Thompson did not cite any examples of long settlement periods for rural sales.
  1. [138]
    Mr Thompson used the purchase of Codrilla by a Gorman enterprise as a comparison, stating that, even after three years, it was not fully stocked. He conceded he was not privy to Mr Gorman’s business plan for Codrilla, the rate of investment, or whether it could have occurred faster.
  1. [139]
    The Codrilla purchase occurred about a year after this Court’s decision to recommend the grant of the ML and, apparently, around the same time the owners decided not to continue improvements on VP or SN. All of these factors can lead to speculation about motivation, but the inevitable conclusion is that Codrilla cannot be used as a benchmark for normal industry practice.
  1. [140]
    The experts were asked to consider the Seamark breeding program, with the owners submitting that the breeding program would be disrupted if they lost access to VP and SN, and that this would affect the calving rate which would, in turn, affect profitability.
  1. [141]
    Mr Newsome noted that the owners’ herd may have good productivity outcomes but it produces meat that is “no longer suitable for the markets.”[29] He suggested that Seamark will have to introduce new genetic strains into the herd in any event, and that this might be easier by simply buying new breeders. He did not agree with the owners’ proposition that re-establishing a herd of 2000 breeders through purchases would be difficult or that, in doing so, Seamark would be buying other breeders’ cast offs. Mr Newsome thought there were advantages in simply buying a new herd.
  1. [142]
    The need to re-establish a herd on an alternative property creates opportunities as well as hurdles.
  1. [143]
    I do not accept the owners’ position and I will not assess compensation, in whatever form, on the assumption that the owners will have to relinquish possession as soon as the ML is granted and/or that it will take three years to source an alternative property.
  1. [144]
    There is the added problem, of course, that the agistment costs fall to Seamark, not of Namrog or Balanced.

Additional 35% premium

  1. [145]
    The owners’ claim for a premium relies upon the scarcity of any property for sale in the Isaac or Central Highlands “shires” that is a suitable replacement breeding property. They say that I should proceed on the basis that the owners will need to relocate their cattle upon the grant of the ML, properties of this nature are tightly held, and replacement properties of the size, attributes, and quality come to market rarely and unpredictably. They submit that I should add a sum necessary to encourage an unwilling vendor to sell suitable replacement land. They also point to the recent increase in the value of rural property and submit that such increases are likely to continue.
  1. [146]
    Recent history demonstrates that the price of property in Australia has risen dramatically. That may remain true of residential properties and city commercial properties, but it is not necessarily true of rural land. The value of rural land is subject to many more variables: drought, consumer demand (both domestically and internationally), trade agreements and/or sanctions, and the viability of the economies in target international markets. The recent announcement by the President-elect of the United States of America – his intention to impose tariffs on foreign goods – is a recent and vivid example of how external factors may affect the price of rural land in Queensland.
  1. [147]
    Counsel for Pembroke submit that the owners’ claim for an additional 35% premium is wrongly founded on s 281(4)(a) which states:

where it is necessary for the owner of land to obtain replacement land of a similar productivity, nature and area or resettle himself or herself or relocate his or her livestock and other chattels on other parts of his or her land or on the replacement land, all reasonable costs incurred or likely to be incurred by the owner in obtaining replacement land, the owner’s resettlement and the relocation of the owner’s livestock or other chattels as at the date of the assessment shall be considered.[30]

  1. [148]
    Counsel for Pembroke submit that the reference in s 281(4)(a) to “all reasonable costs likely to be incurred” does not allow or require the Court to assess the risk of some future event occurring. Rather, the Court is required to assess the costs that are incurred or likely to be incurred. I agree with those propositions. Section 281(4)(a) is no basis for adding a premium.
  1. [149]
    Section 281(4)(c) states that the Court may apply a premium if the owner of the land proves that the status and use of the land prior to the lodgement of the ML is such that a premium should be applied.
  1. [150]
    Wills v Minerva Coal Pty Ltd (No 2)[31] contains a useful discussion of the principles to be applied when considering a premium under s 281(4)(c). Although the owners submit that I can add a premium based on s 281(4)(c), they offer no analysis or evidence as to the nexus between the status and use of the land before the ML and the need for a premium.
  1. [151]
    That leaves me with the proposition that I should increase the premium under s 281(4)(e) which states that the Court shall determine an additional amount to reflect the compulsory nature of the action taken, which amount shall be not less than 10% of the aggregate amount allowed under s 281(3).
  1. [152]
    The requirement to add a premium for the compulsory nature of the taking has a long history. Stephen J in Leslie v Board of Land and Works stated that (the Court) has to consider the inconvenience and expense that the seller is necessarily put to to reinvest the purchase money and to make other arrangements.[32] His Honour also explained that, because the seller is deprived of his opportunity of bargaining, some addition must be made to the abstract value, and it would be unfair and inequitable if that were not done.[33]
  1. [153]
    In Wills v Minerva Coal Pty Ltd (No 2), Member Scott observed, in considering whether to increase the statutory premium to account for capital gains tax:

Now these words indicate to me quite clearly that any additional amount awarded under subsection (4)(e) must be of such character that it is connected with the land of the owner impacted upon by the mining lease.

That is, for example, no allowance could be made in assessing the additional amount for matters that are purely personal to the owner of the land, either because of the nature of the impact on the person or because of any choice the person has made which is not the natural and reasonable consequence of the grant of the mining lease. It may well be the case that Parliament has recognised in providing for a minimum additional amount of 10% (subject to consideration of subsection (4)(c)) that the personal association of the owner with the land is the subject of compensation under subsection (4)(e), but not that this proposition extend to an enlargement of the amount based purely on personal considerations. There is no language in s. 281 which imports into the concept of compensation any proposition that the personal circumstances of the owner, apart from his connection with the land, are to feature in the award made. Thus, personal illness, disappointed hopes, worry or distress resulting from compulsory action would not in my opinion be compensable by way of the award of an additional amount greater than 10%. The phrase ‘compulsory nature of the action' is focused on the process involving the owner's land, not on the owner.[34]

  1. [154]
    The owners do not specifically address Member Scott’s observations about the basis for changing the statutory minimum in s 281(4)(e).
  1. [155]
    This Court has increased the statutory premium in cases where the landowner had grounds for compensation but provided no evidence.[35] It has also increased the statutory premium to punish a miner for previous breaches of its obligations or in failing to engage in negotiating compensation,[36] but I agree with Member McNamara who stated in Woels v Hicks that s 281(4)(e) should not be used as a form of punishment.[37] None of the cases assist me here.
  1. [156]
    Mr McLay argued for a premium by analysing sales to mining companies. He said that these sales showed a premium of between 9% and 27% and adopted a middle ground of 20%.
  1. [157]
    The Court has previously expressed caution in using sales to mining companies to assess market value. As President Kingham has observed:

The concern with sales to resource companies is that the price paid may be above the market value. There are many reasons a resource company may be willing to pay a premium. Owning the land may eliminate an objection to grant of the ML and, therefore the costs, delays, and uncertainties of dealing with that objection during the approval process. It may avoid the same issues relating to compensating the affected landowner, as this must be resolved before the ML can be granted. The land may have some other value associated with the mining project, such as access, a location for associated off-lease activities, or to provide a buffer to neighbouring land users.[38]

  1. [158]
    To submit that sales to mining companies are evidence of a premium to encourage an unwilling vendor to sell is a stretch.
  1. [159]
    Mr McLay also stated that dispossessed graziers are commonly forced into paying values above standard market levels to secure replacement land, but he could point to only one sale – Apis. On the strength of that sale, Mr McLay increased the premium from 20% to 35%, although both valuers agree that Apis was an unusual sale which did not represent a fair market value.
  1. [160]
    One swallow does not a summer make, nor does one sale denote a trend. I reject the submission that Apis represents a trend of adding a premium to entice an unwilling vendor.
  1. [161]
    Mr McLay’s assessment of the premium payable also assumes that the owners will be forced to relocate within a short timeframe. I have already observed that this is not the case.
  1. [162]
    Mr McLay’s analysis is similar to that argued by the landowner in Berry. Like the present case, Berry also involved an aggregation, although there was no suggestion that the land was held by different entities. Like the present case, the owners argued that it would be difficult to find alternative land and, when found, the land would need to be worked up. The Court found that compensation could be ascertained by normal market valuation methods without reference to s 281(4)(c). The Court could find no basis for applying a premium. I have a similar view.

Management costs attributable to operating a replacement property

  1. [163]
    Mr Cavanagh thinks it is inconsistent with the principles of rural valuation to claim an itemised expense for operating replacement land in addition to the market value of the replacement land. That view shows a fundamental misunderstanding of the compensation payable under the MRA. Section 281(3)(a)(vi) specifically states an owner is entitled to all loss or expense that arises as a consequence of the grant of the ML.
  1. [164]
    I have already identified that the owners are entitled to all reasonable costs incurred or likely to be incurred by the owner in obtaining replacement land, the owner’s resettlement, and the relocation of the owner’s livestock or other chattels as at the date of the assessment.[39] If the owners can show the additional costs are as a consequence of the ML, they are entitled to compensation.
  1. [165]
    Ian McKinnon, the forensic accountant engaged by Pembroke, says that there should be no compensation for additional costs. He criticises Mr Ashby’s approach and says that the claim is too speculative and fails to account for the reduced work and savings to the existing manager.
  1. [166]
    Mr Ashby says that the owners will incur additional fixed costs of $30,000 p.a. As I have mentioned, Mr Ashby accepted certain assumptions without independent analysis. For example, he was instructed to assume that a replacement property would require an additional full-time manager at an annual cost of $131,250. He assesses the “terminal value” of additional costs at $1,779,849, assuming a 25% increase in fixed costs in perpetuity.
  1. [167]
    Mr McLay says that it will not be possible for the replacement property to be operated under a single manager, and attributes additional costs of $3,522,561 shared equally between Namrog and Balanced, being $1,761,281 each. He arrived at that sum by stating that the enterprise would need an additional farm hand, at $84,294 p.a., and that that employee would need a vehicle, costed at approximately $30,000 p.a. He capitalised this annual expense in perpetuity at 3.25%. Mr McLay’s figure is similar to that calculated by Mr Ashby.
  1. [168]
    The cost of operating the cattle enterprise lies with Seamark, not Namrog or Balanced. Section 281(3)(a)(vi) is specific in its terms: the owner of the land is entitled to all loss and expense. Seamark is not the owner of the land.
  1. [169]
    If I were inclined to give compensation for the additional operating costs, it would be significantly less than the amount Mr McLay suggests. Whether or not an additional worker is necessary depends on the location of the replacement land vis a vis the rest of the Gorman properties and the current operations of Seamark, of which I have no information. The additional labour will not be required for the first three years, and I cannot envisage a situation where the additional labour would be required in perpetuity, given the advances in technology that have occurred and are likely to continue.
  1. [170]
    Mr Cavanagh calculated an allowance of $135,540 being the net present value of one person undertaking a 250 km round trip once every fortnight for 30 years at 10%. If I was minded to order compensation for the additional operational costs, I would order $135,540.

Transaction costs to acquire replacement land

  1. [171]
    The parties agree that Namrog will incur costs in the acquisition of replacement land. They agree on legal fees of $20,000. The stamp duty payable depends on the value of land lost. I have assessed that at $22,023,312.19.
  1. [172]
    Pembroke says that Balanced should not receive any payment for transaction costs because there is no need for replacement land. It points out that Balanced has no cattle income in its books of account, owns no cattle, and there is no evidence of an agreement between Balanced and Seamark. Pembroke also points out that less than 15% of SN will be subject to the ML and that the majority of SN will be unaffected.
  1. [173]
    Mr Thompson told the Court that cattle from SN are already being moved to Codrilla and Mr McLay acknowledged that the loss of land from SN may not, of itself, justify the replacement of land.
  1. [174]
    While I am not necessarily persuaded that SN, in its own right, is entitled to the transaction costs for replacement land, I am prepared to add the lost value of SN into the stamp duty calculation and the agreed $10,000 in legal costs.
  1. [175]
    Stamp duty on VP is $1,246,865.45. Stamp duty on SN is $381,068.91. The total compensation for stamp duty is $1,627,934.36.

Costs to relocate cattle

  1. [176]
    Given Seamark owns the cattle, it is difficult to see why Namrog and Balanced should be compensated for their relocation. When it occurs, it will be a cost of Seamark’s operation and, therefore, not a loss to either of the owners. I will assess the compensation that would be payable to the owners if they operated the cattle enterprise on their land. Of course, because Seamark owns the cattle, Namrog and Balanced are not entitled to compensation for their relocation.
  1. [177]
    The valuers largely agree about the costs to relocate cattle. They disagree about three things: the number of transport decks required (which is a function of VP’s carrying capacity) the distance over which the cattle need to be transported, and whether there should be any allowance for SN.
  1. [178]
    I have accepted VP has a carrying capacity of 2,930 AE. Using the valuers’ calculations, that means that 146 transport decks will be required at a cost of $3/deck/km.
  1. [179]
    Mr Cavanagh adopted a 250 km radius as a reasonable estimate of the transport requirement because that distance includes all the Central Highlands area bounded by Bowen in the north, Rolleston in the south, Alpha to the west, and Rockhampton to the east. Mr Cavanagh’s diagrams in the supplementary joint report illustrate the breadth of country encompassed in a radius of 250 km and 300 km.
  1. [180]
    Mr McLay adopted a radius of 500 km. That distance is further than the Gorman holdings at Theodore, extending as far south as Wandoan, past Longreach to the west, and past Charters Towers to the north.
  1. [181]
    Mr McLay’s suggestion of a 500 km radius is excessive, and I prefer Mr Cavanagh’s adoption of 250 km. The calculated compensation is 146 x 250 x $3 = $109,500. That is a generous assessment, taking account of the maximum distance to be covered and assuming that all the current stock will need to be relocated.
  1. [182]
    Mr Cavanagh allowed an additional $101,050 for mortalities, helicopter costs, labour and machine hire, giving an amount of compensation for VP at $210,550.
  1. [183]
    Mr Cavanagh allowed $5,400 for mustering costs for SN.

Conclusion

  1. [184]
    Compensation decisions are like a packet of Arnott’s Assorted Creams; inevitably, not everything in the packet will be to everyone’s taste. I have outlined the difficulties inherent in this decision. Hopefully, there will be enough in this packet to satisfy the palates of most of the participants.

Component

Amount allowed

VP

VP Land and improvements

$22,630,812.19

Stamp duty

$1,246,865.45

Legal fees

$20,000.00

Total

$23,897,677.64

Section 281(4)(e) premium (10%)

$2,389,767.76

VP Total

$26,287,445.40

SN

SN Land and improvements

$7,379,981.08

Stamp Duty

$381,068.91

Legal fees

$10,000.00

Total

$7,771,049.99

Section 281(4)(e) premium (10%)

$777,105.00

SN Total

$8,548,154.99

Overall Total

$34,835,600.39

Orders

  1. Pembroke Olive Downs Pty Ltd must pay Balanced Property Pty Ltd compensation in respect of ML 700033 in the sum of $8,548,154.99, inclusive of the statutory 10% uplift.
  2. Pembroke Olive Downs Pty Ltd must pay Namrog Investments Pty Ltd compensation in respect of ML 700033 in the sum of $26,287,445.40, inclusive of the statutory 10% uplift.

Footnotes

[1]See Pembroke Olive Downs Pty Ltd v Namrog Investments Pty Ltd [2023] QLC 14 for a detailed chronology of Mr Gorman’s evidence.

[2]T1-72, line 30 to line 34; T1-80, line 20 to line 30.

[3]T3-63, line 33 to line 37.

[4]T3-68, line 7 to line 10.

[5]Applicant’s Closing Submissions filed 18 October 2024, para [148].

[6]Spencer v The Commonwealth (1907) 5 CLR 418, 432.

[7]Expert evidence in the Land Court – Practice Direction 6 of 2020, para [39(b)].

[8](1973) 6 SASR 541, 578.

[9](2006) 149 LGERA 439, [83].

[10]Valuer General v Perpetual Trustee Australia Ltd [1999] NSWLEC 10, [22]-[23].

[11]Ibid [24].

[12]Bowen Basin Coal Pty Ltd v Namrog Investments Pty Ltd [2020] QLC 23.

[13]Valuers’ Joint Expert Report - ‘Vermont Park, dated 6 June 2023, par [126(c)].

[14]Ibid para [138].

[15]T1-62, line 16 to line 26.

[16](1998) 19 QLCR 66, 73-74.

[17]Valuers’ Joint Expert Report - ‘Vermont Park, dated 6 June 2023, para [192].

[18]See para [50].

[19]Beard v Director of Housing (Tas) (1961) Tas SR 141, 148; Maurici v Chief Commissioner of State Revenue [2005] NSWLEC 20, [208]-[211].

[20]T3-101, line 9.

[21]MRA sch 2.

[22]Ibid s 2.

[23]Salmon v Armstrong [2002] QLRT 54, [25]-[26]; Carabella Resources Limited v Goodwin [2016] QLC 32, [201]-[204]; Southedge Daintree Pastoral Company Pty Ltd & Anor v Wilson [2009] QLC 122, [12]-[13].

[24](1998) 19 QLCR 366, 376.

[25]Ibid.

[26]Wills v Minerva Coal Pty Ltd (No 2) (1998) 19 QLCR 297, 342.

[27]Expert Report of Matthew Ashby dated 8 July 2024, page 11.

[28]T2-60, line 18 to line 19.

[29]T2-26, line 23 to line 24.

[30]Applicant’s Closing Submissions filed 18 October 2024, para [29(a)].

[31](1998) 19 QLCR 297, 321-322.

[32](1876) 2 VLR. (L) 21, 24.

[33]Ibid.

[34](1998) 19 QLCR 297, 327.

[35]Kaljevic v Mills [2010] QLC 124, [8]-[9]; Qld Zeolite Pty Ltd v Spencer [2010] QLC 112, [38]-[39].

[36]Qld Zeolite Pty Ltd v Spencer [2010] QLC 112, [38]-[39]; Endeavour Mining Pty Ltd v Mintram [2009] QLC 187, [18]-[19].

[37][2021] QLC 31, [38]-[39].

[38]Bengal Coal Pty Ltd v Cradcorp Pty Ltd (No 2) [2017] QLC 47, [19]-[21].

[39]MRA s 281(4)(a).

Close

Editorial Notes

  • Published Case Name:

    Pembroke Olive Downs Pty Ltd v Balanced Property Pty Ltd; Pembroke Olive Downs Pty Ltd v Namrog Investments Pty Ltd (No 2)

  • Shortened Case Name:

    Pembroke Olive Downs Pty Ltd v Balanced Property Pty Ltd; Pembroke Olive Downs Pty Ltd v Namrog Investments Pty Ltd (No 2)

  • MNC:

    [2024] QLC 26

  • Court:

    QLC

  • Judge(s):

    PG Stilgoe OAM

  • Date:

    10 Dec 2024

Appeal Status

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

Cases Cited

Case NameFull CitationFrequency
Beard v Director of Housing (1961) Tas SR 141
2 citations
Jump To
Cite 1 - (1961) Tas SR 141
Cite 2 - (1961) Tas SR 141
Bengal Coal Pty Ltd v Cradcorp Pty Ltd (No 2) [2017] QLC 47
2 citations
Jump To
Cite 1 - [2017] QLC 47
Cite 2 - [2017] QLC 47
Berry & Parkinson v BHP Coal Pty Ltd & Ors (1998) 19 QLCR 366
2 citations
Jump To
Cite 1 - (1998) 19 QLCR 366
Cite 2 - (1998) 19 QLCR 366
Bowen Basin Coal Pty Ltd v Namrog Investments Pty Ltd [2020] QLC 23
2 citations
Jump To
Cite 1 - [2020] QLC 23
Cite 2 - [2020] QLC 23
Brewarrana Pty Ltd v Commissioner of Highways (No. 2) (1973) 6 SASR 541
2 citations
Jump To
Cite 1 - (1973) 6 SASR 541
Cite 2 - (1973) 6 SASR 541
Carabella Resources Limited v Goodwin [2016] QLC 32
2 citations
Jump To
Cite 1 - [2016] QLC 32
Cite 2 - [2016] QLC 32
Endeavour Mining Pty Ltd v Mintram [2009] QLC 187
2 citations
Jump To
Cite 1 - [2009] QLC 187
Cite 2 - [2009] QLC 187
Kaljevic v Mills [2010] QLC 124
2 citations
Jump To
Cite 1 - [2010] QLC 124
Cite 2 - [2010] QLC 124
Leichhardt Council v Roads and Traffic Authority (NSW) (2006) 149 LGERA 439
1 citation
Jump To
Cite 1 - (2006) 149 LGERA 439
Leslie v Board of Lands and Works (1876) 2 VLRL 21
2 citations
Jump To
Cite 1 - (1876) 2 VLRL 21
Cite 2 - (1876) 2 VLRL 21
Maurici v Chief Commissioner of State Revenue (2005) NSWLEC 20
2 citations
Jump To
Cite 1 - (2005) NSWLEC 20
Cite 2 - (2005) NSWLEC 20
Mitchell v Oakhill and Mitchell (1998) 19 QLCR 66
2 citations
Jump To
Cite 1 - (1998) 19 QLCR 66
Cite 2 - (1998) 19 QLCR 66
Pembroke Olive Downs Pty Ltd v Namrog Investments Pty Ltd [2023] QLC 14
2 citations
Jump To
Cite 1 - [2023] QLC 14
Cite 2 - [2023] QLC 14
Qld Zeolite Pty Ltd v Spencer [2010] QLC 112
3 citations
Jump To
Cite 1 - [2010] QLC 112
Cite 2 - [2010] QLC 112
Cite 3 - [2010] QLC 112
Salmon v Armstrong (2002) QLRT 54
2 citations
Jump To
Cite 1 - (2002) QLRT 54
Cite 2 - (2002) QLRT 54
Southedge Daintree Pastoral Company Pty Ltd and Anor v Kenneth Michael Wilson [2009] QLC 122
2 citations
Jump To
Cite 1 - [2009] QLC 122
Cite 2 - [2009] QLC 122
Spencer v The Commonwealth (1907) 5 CLR 418
2 citations
Jump To
Cite 1 - (1907) 5 CLR 418
Cite 2 - (1907) 5 CLR 418
Valuer General v Perpetual Trustee Australia Ltd [1999] NSWLEC 10
2 citations
Jump To
Cite 1 - [1999] NSWLEC 10
Cite 2 - [1999] NSWLEC 10
Wills v Minerva Coal Pty Ltd (No 2) (1998) 19 QLCR 297
4 citations
Jump To
Cite 1 - (1998) 19 QLCR 297
Cite 2 - (1998) 19 QLCR 297
Cite 3 - (1998) 19 QLCR 297
Cite 4 - (1998) 19 QLCR 297
Woels v Hicks [2021] QLC 31
2 citations
Jump To
Cite 1 - [2021] QLC 31
Cite 2 - [2021] QLC 31

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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