LAND COURT OF QUEENSLAND CITATION: Hudson & Ors v Pedracini [2014] QLC 10 PARTIES: Douglas Thomas Hudson, Marie-Anne Heather Stout and Michael James Stout (applicants) v Reginald Joseph Pedracini and Beverley Isabell Jane Pedracini (respondents) FILE NO: MRA338-11 DIVISION: Land Court of Queensland PROCEEDING: Application for Determination of Compensation ML 30031 - Determination of Compensation payable by Douglas Thomas Hudson, Marie-Anne Heather Stout and Michael James Stout to Reginald Joseph Pedracini and Beverley Isabell Jane Pedracini. DELIVERED ON: 19 March 2014 DELIVERED AT: Brisbane HEARD AT: Cairns MEMBER: WL Cochrane ORDER: 1. 2. CATCHWORDS: Compensation in respect of ML 30031 is determined at $110 per annum. The miner is to pay the said compensation to the landowner in advance with the first payment to be made within two months from notification of renewal of the mining lease by the mining registrar and payable thereafter on the anniversary of the granting of the renewal of the mining lease. Mining Lease – Determination of Compensation – Compulsory Nature of Action – Compensation Mineral Resources Act 1989 ss 279A, 281, 363 Mitchell v Oakhill and Mitchell 10 March 1998 unreported Shaw v Heritage Holdings Pty Ltd (1992-93) 14 QLCR 139 SG & PM Smith v RA Cameron [1986] 11 QLCR 64 Snowmist Pty Ltd v Cantoni [2011] QLC 0052 Wallace & Ors & Evans [2006] QLRT 93 Wellington v Pedracini [2011] QLC 0021 Re: Wilkins & Mudge [2009] QLC 0075. APPEARANCES: The matter is determined on the papers. Background [1] The Court has before it a referral for determination of compensation in respect of renewal of ML 30031. [2] Compensation in respect of a renewal of a mining lease must be settled before that renewal can be granted. So much is provided by s 279 of the Mineral Resources Act 1989. [3] The mining lease is located on a property described as lease number PH 728 County of Gilbert Parish of Mistletoe, which is generally referred to as Mistletoe Station. [4] An aerial photograph of ML 30031 provided to the Court by Mr Hudson who acts for all three of the proposed miners shows a treatment plant, workshop, kitchen, facilities block, storage area, two caravans, a Telstra installation and a truck shed. [5] The lease is generally a regular rectangular area which is said to be one hectare in size. [6] The original mining lease dates from 1 February 1982 and has been renewed regularly in 1998 and 2005. In each case the term was 6 or 6.6 years. In the current application the Applicants seek a term of 6 years. [7] The application for renewal of the mining lease appears to have been lodged with the Mining Registrar at Georgetown in about November 2010. [8] The application makes no reference to the area of any access road but it is clear from the Queensland Government map attached to the Department of Employment, Economic Development and Innovation mining lease report that access is proposed over an area about 2 km long and 10 m wide. In their material filed with the Court on 18 October 2011 the Applicants say, with respect to the matter of access that “we consider the diminution of use of the land to be minimal as the access has been established in excess of 25 years and is used by the miners, prospectors and the landholders." [9] I further acknowledge that maintenance work is apparently carried out on the access road whenever required and submit that the access has recently been upgraded to facilitate drilling exploration by other operators adjacent to the subject mining lease ML 30031. In 2 my view it is beside the point that other persons including the landowners make use of the mining access. [10] The Applicant proposed to make use of the access and that use will necessarily contribute to any impacts on that access way, by virtue of vehicular traffic. Accordingly, it is a compensable use of the landowners’ land. [11] In an attempt to resolve the compensation issue with the property lessees a compensation agreement was sent by the Applicants to the landowners in August 2011 evincing a willingness to pay $100 per annum as compensation for the mining lease subject to the general conditions of course which flow from the Mineral Resources Act. 1 [12] That offer was rejected. [13] Mr and Mrs Pedracini through their then solicitor responded with a compensation agreement which contemplated an annual compensation sum of $3,000 per annum paid annually on 1 June to provide for a total compensation sum of $18,000. In addition to those sums the Pedracinis contended for a condition requiring as follows: "The Miner further agrees to erect at the Miner's sole expense and maintain of a four (4) barbwire fence around the dam on the Mining Lease during the term of the Renewal of the Mining Lease for the period 1 June 2011 to 31 May 2017." [14] The justification for the requirement for a fence around a dam has never been explained to the Court. Normally such a condition would be made a condition of the mining lease rather than a condition of compensation. [15] In the present instance the Mining Registrar's referral has occurred because no agreement has been reached between the parties in respect of the compensation which is payable. [16] I have commented on a number of occasions, as have other Members of the Court, that s 281(3) of the MRA identifies the matters which must be considered in determining the compensation. Section 281(3) provides that an owner of land is entitled to compensation for: (i) (ii) (iii) (iv) (v) (vi) deprivation of possession of the surface of land of the owner; diminution of the value of the land of the owner or any improvements thereon; diminution of the use made or which may be made of the land of the owner or any improvements thereon; severance of any part of the land from other parts thereof or from other land of the owner; any surface rights of access; all loss or expense that arises; as a consequence of the grant or renewal of the mining lease; and (b) in the case of compensation referred to in section 280— 1 See s 276 Mineral Resources Act 1989. 3 (i) (ii) (iii) diminution of the value of the land of the owner or any improvements thereon; diminution of the use made or which may be made of the land of the owner or any improvements thereon; all loss or expense that arises; as a consequence of the grant or renewal of the mining lease. [17] That section however, does not in a statutory sense, define any particular method of assessment. 2 [18] This Court has, on previous occasions, taken comfort from the observations of an earlier President of the Land Court (Mr White) in Smith v Cameron 3 . [19] In the Smith case Mr White observed: 4 "The section in my opinion merely identifies matters which shall be taken into consideration in making the assessment. It does not prescribe a method of valuation. No doubt each case will depend on its own facts and circumstances but it seems to me that either method is open to the valuer." [20] Similar observations to those of the President have also been made in Shaw v Heritage Holdings Pty Ltd 5 and in Mitchell v Oakhill and Mitchell6 . [21] In Smith v Cameron the President was considering competing contentions supporting either a "before and after" method of valuation or a "piecemeal assessment" approach to the valuation exercise. [22] In Wilkins v Mudge, which was referred to above, the Judicial Registrar of this Court Mr O'Connor observed: 7 "While the Miners claim nil compensation should be awarded at this stage, some allowance must be made for the blot on the landowner’s titles resulting from the existence of the mining lease." [23] It should be observed that in that case the Judicial Registrar was acting in somewhat of a vacuum, neither party having filed any material to assist him in his task of assessing compensation. [24] In the present case the parties have filed material but, as observed below, that material is of little assistance to the Court. [25] The mining lease was due to expire on 31 May 2011 and the application for renewal was lodged with the Mining Registrar at Georgetown on 3 November 2010. 2 3 4 5 6 7 See Snowmist Pty Ltd v Cantoni [2011] QLC 0052, Wallace & Ors & Evans [2006] QLRT 93 and Re: Wilkins & Mudge [2009] QLC 0075. SG & PM Smith v RA Cameron [1986] 11 QLCR 64. [1986] 11 QLCR 64 at page 74. (1992-93) 14 QLCR 139. 10 March 1998 unreported. [2009] QLC 0075 at 4. 4 [26] The additional information which accompanied the application identified the mining lease area as one on which no mining operations were carried out but which was used for workshop and plant and storage and as an operational base for both existing and proposed leases. It was proposed that all structures of the miners' would be located on this site. [27] The fact that no mining will be carried out on the subject lease site is, in my view, irrelevant to determination of the appropriate amount of compensation. [28] In September 2011 orders were made for the filing of material to be relied upon by the parties. [29] On 18 October 2011 Mr Hudson on behalf of the Applicants, filed a document with the Court which set out their contention that compensation of $100 per annum for the lease and access should be paid, such payment to be made within 30 days after each anniversary of the renewal date. [30] By way of justification of the miners' proposal Mr Hudson set out the following: "Justification of the Proposal [31] 1. The applicants' compensation proposal (A2) is comparable to other agreements in the district and assessed using land valuations ($34.43/ha) QVAS refer: A3 and acceptable DPI stocking rates for 'dry land savannah'. 2. We consider the diminution of use of the land to be minimal as the access has been established in excess of 25 years and is used by the miners, prospectors and the landholders. 3. The operations on the lease are dependent on water supply availability. Generally less than 6 months per year is operational. 4. The access is not fenced and does not affect or restrict the movement of cattle. 5. No operations or access is made during the wet season. (Thus minimising maintenance). 6. The miners carry out maintenance to the access whenever required from which all users benefit. 7. The access has been recently upgraded to facilitate drilling exploration by other operators, adjacent to ML 30031." With reference to point 1 the reader is directed to the document entitled A3 which is a QVAS property details report in respect of the Mistletoe Station. That QVAS report shows the property to have an area of 40,922 ha with a valuation of $1,450,000. [32] From using those figures Mr Hudson extracted a value of $34.43 per ha. I think the correct figure is $35.43 but nothing much turns upon that. [33] Mr and Mrs Pedracini had also had prepared for the Court by their then solicitor, a document entitled "Response" to the Hudson material. [34] In it they set out in some detail the background to the mining lease. 5 [35] The landowners, the Pedracinis, identify the lease that is the subject of these proceedings as dating back to at least 1990. [36] The material submitted includes what must be regarded as an objection to the grant of the renewal and requests this Court not to renew ML 30031. [37] In my view, as this matter was referred to the Court only for the purpose of determining the question of compensation, there is no basis upon which I am required to consider the issue of the mining lease per se. [38] In any event, on my reading of the statutory provisions no entitlement vests in a landowner to object to the renewal of a lease which has already been granted. [39] Putting that aside, the landowners seek compensation for the following: "1. Deprivation of possession of the surface area contained in the Mining Lease and the non-gazetted access road: (a) deprivation of possession of surface area contained in ML30031 @ $305.77 per hectare based on market value of land = $305.77 (excluding GST). (b) (2.5km x 10m non-gazetted access road = 2.5ha) @ $305.77 per hectare equating to $764.43 (excluding GST). [40] 2. Compensation in the amount of $18,000.00 (excluding GST) over a 6 year renewal period being payable in 6 equal instalments of $3,000.00 (excluding GST) being payable annually on the anniversary of the renewal of ML30031 being the Landholders' costs consequential to the Miner's activities on ML30031 specifically in relation to the contamination and silting of the tailing dam constructed on ML30031 and the Landholder's costs in relation to retrieval of cattle fouling in the dam constructed by the Miner on ML 30031. 3. The construction of a 4 wire barb fence at the Miner's sole cost to the Landholders' specifications around the boundary of ML30031 during the proposed term of renewal of ML30031. 4. Payment of the Landholders' legal costs involved in the preparation, negotiation, construction, execution and stamping of any compensation agreement in the amount of $1,000.00 (excluding GST)." They go on to assert that the compensation offered by the miner does not adequately compensate the landholders for loss arising from the following matters: "Deprivation of possession of the surface area of the Land; Diminution of the value of the Land of the Landholder or any improvements thereon; Diminution of the use made or which may be made of the Land of the Landholder or any improvements thereon; Severance of any part of the Land from other parts of the Landholders' land or from other Land of the Landholder; Any surface rights of access; Loss of cattle killed or injured as a result of the Miner's activities on the Land and proposed access road; Disturbance; Vehicular traffic on non-gazetted access road; Environmental damage and nuisance; Dust and Erosion; Introduction of noxious weeds." 6 [41] It is the landowners' submission that true and appropriate compensation should occur in the form of: "1. Deprivation of possession of 1 hectare at $305.77 (excluding GST). [42] 2. Deprivation of possession of non-gazetted access road at $764.43 (excluding GST). 3. Compensation for the Landholders' loss and expenses arising from the contamination and silting of the tailing dam on ML30031 at $18,000.00 (excluding GST). 4. Construction of a 4 barb wire stock proof fence around the boundary of ML30031 at the Miner's sole cost and expense to the Landholders' specifications. 5. The Landholders' legal costs involved in the preparation, negotiation, construction, execution and stamping of a Compensation Agreement capped at $1,000.00 (excluding GST)." The submission of the landowners goes on to reject the miners' offer of $100 per annum and also the contention that the market value of the land was $35.43. [43] [44] The landowners make a number of assertions in their submissions. Those assertions are: (a) "… the market value of the Landholders' land comprising ML30031 and associated non-gazetted access roads is $1,070.20 (excluding GST)." (b) "… that the surface area of ML30031 is quality grazing country in comparison to other parts of the Etheridge Shire Council and maintains a high (sic) carrying capacity than other areas in the Etheridge Shire." (c) "… that the Miner has constructed infrastructure on the Landholders' land outside the boundary of ML30031 without the Landholders' consent." (d) "… that an area much larger than the mining lease area will be affected by the Miner's renewal and any mining operations." (e) "… that the dam constructed by the Miner and associated infrastructure is not confined to the area of ML30031 (1 Ha)." (f) "… that the dam constructed by the Miner has become toxic and contaminated and is being used by the Miner as a tailings dam and as it remains unfenced by the Miner and affects cattle who water at the dam." (g) "… that the monetary compensation offered by the Miner in the amount of $100 per annum is inadequate in respect of the deprivation of possession of the surface of the land, diminution of the value of the Land of the Landholders' Land (sic) or any improvements thereon, diminution of the use made or which may be made of the Land of the Landholder and any improvements thereon, severance of any part of the Land from other parts of the Landholder (sic), any surface rights of access, loss of cattle killed or injured as a result of the Miner's activity on the Land and proposed access road, disturbance, environmental nuisance principally in the form of dust, erosion and the introduction of noxious weeds." Unfortunately the landholders do not provide any details in support of their assertions nor any evidence of the conduct complained of. [45] There is no proper evidence of the value of the land and nor is there any evidence that the particular location of the mining lease is on quality grazing land either in general or on land of a better quality than that generally found throughout the Etheridge Shire. 7 [46] There is nothing which the Court could rely upon which evidences carrying capacity of the subject property or of other comparable properties. [47] To the extent that there is an allegation that infrastructure has been constructed on land outside the boundary of ML30031 without the landholders' consent, that is a matter which could be the subject of complaint but it is not a matter which sounds in compensation. [48] To the extent that it is contended that the impact of the mining lease will go beyond the boundaries of the mining lease area there is no evidence on that matter. [49] There is issue taken with a dam which allegedly goes beyond the area of the mining lease and there are allegations that the dam has become toxic and contaminated. [50] There is no suggestion that the dam fencing has been erected by the landowners and accordingly there is no element of compensation which might reflect a restitution amount for monies expended by the Pedracinis. [51] Those are matters which relate to the terms of the lease itself and, could be substantiated by the making of a complaint made to the relevant authorities, either to the Department of Mines or the Department of Environment and Heritage Protection. They are not matters in respect of which this Court has any power in the context of a determination of compensation. [52] Alternatively, because it is beyond my jurisdiction in a case such as this to make orders or to determine compensation in such a way as to repair damage done in the past, the landowners are entitled to contemplate bringing their own action pursuant to the provisions of the Mineral Resources Act 1989 s 363 which deals with the substantive jurisdiction of this Court to hear and determine actions, suits and proceedings arising in relation to prospecting, exploration or mining or to any permit claim licence or lease granted or issued under this Act or any other Act relating to mining. [53] Section 363(2)(h) gives this Court jurisdiction to hear and determine actions with respect to any assessment of damage, injury or loss arising from activities purported to have been carried on under the authority of this Act or any other Act relating to mining. [54] Similarly a requirement to construct or to maintain fences is not a matter of compensation but rather a matter which can be explored in the conditions which attach to the mining lease. [55] There is no evidence before this Court of any cost or loss incurred by the Pedracinis as a consequence of the dam, (wherever it is located), remaining unfenced. [56] Nor is there any evidence with respect to the loss of livestock from any factor relevant to the grant or utilisation of the mining lease. 8 [57] The fact that a miner may not currently be making use of a mining lease area does not excuse it from a requirement to pay compensation for the existence of the lease which, on a number of occasions, this Court has observed 8 is akin to a resumption because the landowner is excluded, generally, from the mining lease area. The mining lease area is said in the Mining Lease Report to have an area of 1 ha. That matter was not sought to be contradicted by the landowners, indeed, their submission includes a calculation for deprivation of possession of the surface area of 1 ha. [58] In the Mitchell decision the President had to consider compensation for a property where the mining lease took up an area of 49 ha together with a 2.2 ha access road area. [59] In that case the landholder had sought to have the compensation calculated by the addition on a piecemeal basis of a number of values which were said to reflect various consequences of the presence of the mining lease on the property. [60] The landowners raised issues and compensation amounts with respect to: (i) deprivation of possession of the surface of land of the owner; (ii) diminution of the value of the land of the owner or any improvements thereon; (iii) diminution of the use made or which may be made of the land of the owner or any improvements thereon; (iv) severance of any part of the land from other parts thereof or from other land of the owner; (v) all loss or expense that arose. (vi) an additional amount determined to reflect the compulsory nature of the action taken. [61] In his decision the President said: 9 "In my opinion, that piecemeal assessment of compensation by separately addressing each of the matters for which Section 281(3) provides that an owner of land is entitled, is not validly based. The assessment of the individual matters is inconsistent and, in part, represents a doubling-up of some claims. For example, paragraphs (i) and (ii) are calculated on the basis of productivity on one hand and percentage loss on the other. Such a piecemeal assessment demonstrates to me the difficulty of attempting to address each of the matters separately, rather than by an accepted method of valuation, preferably the 'before' and 'after' method. If circumstances force a valuer to adopt a summation approach, then care must be taken to ensure that there is no over-lapping or doubling-up in the assessment of compensation." [62] Many of the matters asserted by the landholders could have been contained in sworn affidavits which would carry some probative weight and may have required the miners to respond to the assertions. That did not happen. 8 9 See Smith v Cameron [1986] 11 QLCR 64 and Mitchell v Oakhill & Anor (unreported) Land Court Brisbane, 10 March 1998. 10 March 1988 unreported, at page 8. 9 [63] It is not open to the Pedracinis to submit that they were not given any opportunity to make submissions, nor could it be said that they lacked any opportunity to put evidence in the form of sworn affidavits before the Court. [64] They are aware from previous matters that this Court can only act upon evidence and that there is an obligation on a party contending for a particular level of compensation to support that contention with proper evidence. [65] It is noteworthy also, that with respect to activities which have occurred in the past and which may have relevance to the determination of compensation in respect of this application for renewal of the mining lease, that the Pedracinis are in the best position to identify any of those matters and to support them with evidence. [66] As I indicate above, that has not happened. [67] The Pedracinis were appellants in another matter before this Court in 2011 arising out of a decision of the Judicial Registrar made in 2009. In those circumstances, the Pedracinis did not bother to provide any information to the Court to assist it in the determination of compensation so that the Judicial Registrar was compelled to apply the compensation principles and methodology applied by Mining Referee Windridge in Re: Wallace & Others v Evans [2006] QLRT 93. [68] The issues raised in that appeal 10 reflect the submissions made on their behalf in the present case. [69] In each case the Pedracinis have retained the same legal representation. [70] The material submitted by the Pedracinis contains a number of assertions and contentions without any supporting evidence or other material such as photographs or reports or the like. [71] In an earlier paragraph I drew attention to the decision of this Court in Smith v Cameron and the observation that the granting of a mining lease might be seen as akin to a resumption given that the landowner is dispossessed of the use of the land given over to mining for the duration of the lease. [72] In the present case the submissions of the landowners (unsupported by any evidence) suggest that the value of the land is $307.77 per ha. There has, as pointed out above, been no attempt to displace the assertion by the miners that the area of the lease is 1 ha. The renewal application seems not to identify with any particularity the area of any road used for access on the subject property although a copy of a map showing ML 30031 and ML 3551 shows a straight line access into the mine. The submissions of the landowners are 10 Wellington v Pedracini [2011] QLC 0021. 10 that they seek compensation in respect of access road with a length of 2.5 km and a width of 10 m. [73] Scaling of the map which was produced by the Department of Employment, Economic Development and Infrastructure suggests that the access road is something less than 2 km. I am inclined to allow the Respondents’ contention that the access road may be 2.5 km in length with a width of 10 m producing a total area of 2.5 ha (i.e. 2,500 m x 10 = 25,000 m²). [74] With respect to the road, the landowners of course is not excluded from use of that area and it may be that others, including the landowners, make use of that access road. Something, however, must be allowed for the use of that access road by the miners. [75] Having regard to the notion of treating the lease area as a defacto resumption and allowing something for the use of the access way, acceding to the miners' suggestion that they pay $100 per annum as compensation, would produce a total sum of $600 over the six year life which is sought for the renewal of the lease. [76] That figure equals just less than the value of 2 ha of land adopting the figure contended for by the landowners of $305.77 per ha. ($305.77 x 2 = $611.54). [77] Looked at another way $600 payable over six years equates to $305.77 for the 1 ha of land taken for the mining lease and $294.23 as compensation for the utilisation of the access road. [78] In the absence of any other evidence I am prepared to find that that figure is a reasonable figure. [79] The landowners are of course not entitled in each year to recover a sum which represents the per hectare value of the resumed land. That value must be spread across the life of the lease. [80] The landowners' costs are consequential upon what the landowner says is contamination and silting of the tailing dam, and the costs in relation to retrieval of cattle falling in the dam. These are matters which, as outlined above, should be the subject of a claim pursuant to s 363. [81] The construction of the barb wire fence is a matter which should have been dealt with at the stage of the granting of the mining lease and is not, in my view, a matter which falls within the ambit of a determination of compensation. In the absence of any evidence that the mining lease and the activities carried thereon would result in depreciation of damage to existing wire fences, I am not inclined to allow anything for the cost of the preparation, negotiation, construction, execution of stamping of a compensation 11 agreement (utilising the language adopted by the landowner's in their submission) as that requirement is usually complied with by the miner. [82] This Court has recently been advised by the Office of State Revenue that a compensation agreement in respect of a mining lease does not need to be assessed for stamp duty nor to be stamped. Sections 85(4) and 279(4) of the MRA refer to the circumstance that “if an agreement referred to in subsection (3) is required by any law of Queensland to be stamped, it shall not be filed until it is stamped according to law”. [83] Under the Duties Act 2001 only a dutiable transaction for dutiable property requires stamping. Paying compensation pursuant to a compensation agreement is not a dutiable transaction, and dutiable property is not money paid by way of compensation. This removes the obligation on either party to the compensation agreement to have the document stamped or assessed for stamp duty. [84] Section 281(3)(ii) of the MRA refers to compensation for diminution of the value of the land of the owner or any improvements thereon. [85] There was no submission made by the landowners in support of a contention that there is any diminution in the value of its land or any improvements thereon. [86] Section 281(4)(e) requires that in determining compensation an additional amount shall be determined to reflect the compulsory nature of action taken under this part which amount, together with any amount determined pursuant to paragraph (c) shall be not less than 10% of the aggregate amount determined under subsection (3). [87] Having determined that a sum of $600 payable over a period of six years is a reasonable figure for compensation, pursuant to s 281(4)(e) I add to that figure a sum of $60 so the total compensation is determined in the sum of $660 payable over six years. [88] I am of the view that the compensation should be paid in advance on a simple annual basis on the anniversary of the granting of the renewal of the mining lease. [89] Accordingly I order that:(1) Compensation in respect of ML 30031 is determined at $110 per annum; (2) The miners are to pay the said compensation to the landowners in advance with the first payment to be made within two months from notification of renewal of the mining lease by the Mining Registrar and payable thereafter on the anniversary of the granting of the renewal of the mining lease. WL COCHRANE MEMBER OF THE LAND COURT 12