Key trends in Land Court compensation determinations
20 December 2022
20 December 2022
Summerville v Skelton  QLC 7 concerned the compensation payable by Ms Summerville, an opal miner, to the landowner Mr Skelton.
The parties exchanged several proposed compensation agreements. Prior to the matter being heard by the Land Court, their proposals were as follows:
In reply submissions, Mr Skelton referred to Washington v Skelton  QLC 11 (a previous case he was involved in), in which Member Stilgoe OAM based compensation for loss of use of the land on a land earning value of $27.95 per hectare per annum.
He then sought orders for:
The Land Court assessed compensation with reference to the specific heads of claim under the Mineral Resources Act 1989 (Qld).
Member McNamara noted that there was no evidence to quantify Mr Skelton's claims for loss of use of the land, biosecurity inspections and legal advice and representation costs. He stated that while the Court is not bound by the rules of evidence, "that does not mean that a statement made without sourcing the information supporting it can be taken on its face. A lack of evidence does not assist the Court in assessing the substantial merits of a case".
While Mr Skelton's claim for biosecurity inspections was rejected in the absence of evidence explaining the need for them, Member Stilgoe OAM noted that it has been accepted that the existence of a mining interest and activities warrants observation and checking from time to time. On that basis, he allowed $50 of compensation for an annual one-hour inspection.
The Court also re-iterated the established principles that, in mining compensation matters:
The Court ordered the following compensation:
Both sums included the usual uplift of 10%.
The Land Court decision in NQ Marble Pty Ltd v Commonwealth of Australia  QLC 42 is yet another recent compensation case in which the Court adopted a low-risk valuation approach to calculating compensation for landholders. The applicant, NQ Marble Pty Ltd (NQ Marble) held an existing mining lease over land approximately 50 km south west of Greenvale in north Queensland. NQ Marble had identified two additional commercial styles of marble on and around its existing mining lease and sought to replace it with a new mining lease for a term of 10 years.
This matter related to compensation payable to the landholder, the Commonwealth of Australia, before the new mining lease could be granted. The land was purchased by the Commonwealth through the Department of Defence and is subject to an agistment agreement until June 2022.
NQ Marble's valuer adopted a two-step approach to valuation. Assessing the land as grazing land, he determined the carrying capacity (by calculating stock numbers of 2000-3000 over 51,800 ha) and then determined a per annum amount based on dollar value per head for the disturbed area under the lease. A statutory premium, under section 281(4)(e) of the Mineral Resources Act 1989, was then added. The Commonwealth's valuer adopted the "Direct Comparison" approach in conjunction with a combined "Piecemeal" approach and "Before and After" approach to assess compensation under the lease.
The Court preferred the valuation methodology adopted by the Commonwealth. While acknowledging that the approaches of both valuers included "a degree of speculation and estimation", the two-step approach used by NQ Marble's valuer posed a greater risk to the accuracy of the land's valuation, with more room for error resulting from the calculation's 'inputs' and their reliability. The Court also considered that, while the land was subject to the agistment agreement at the time of determining compensation, once the agistment agreement terminates then the land would be used for grazing purposes.
The Court then applied a premium of 20%. This represented a "more than token" premium for the potentiality of the land, while acknowledging that:
The Court further adjusted the amount, as follows:
Based on the above, the Court determined that the compensation payable to the Commonwealth totalled $34,735.62. This included a final amount of $22,203.44 per ha, $9,374.40 in loss or expenses and an additional 10% to reflect the compulsory nature of the action taken at $3,157.78.
Another important decision was recently handed down in Australian Asiatic Gems Pty Ltd v Grabbe & Anor  QLC 25. This matter concerned an issue where the originating application referenced the renewal of only one mining lease, rather than the intended two mining leases. However, the parties agreed that the two matters could be joined without need for filing of further material.
The Court noted that Member Stilgoe of the Land Court had previously considered a similar application in Land & Anor v Grabbe & Anor  QLC 1, with the same respondent and a different applicant over nearby tenements, in January of 2021. The Court considered that the underlying facts and circumstances were very similar and thus generally agreed with Member Stilgoe's findings in the earlier decision that $100/ha in circumstances of total loss should be compensation for the deprivation of possession of the surface of the land. Further, the Court found that no compensation could be given for any alleged diminution in the value of the land due to the renewal of the mining lease.
The Court accepted the decision of Member Stilgoe that the appropriate liability for the applicant is one third of the value of the land. As both mining leases in question are accessed by the same track, the Court found that compensation in this regard is to be apportioned evenly between the two tenements. Further, the Court agreed with the Land Court's finding that one additional hour of inspection time, at a rate of $78.12 per hour, should be paid as compensation. However, no compensation would be given for an increase in management or inspection time as a result of the second tenement.
Consequently, compensation payable to the respondent was calculated to be $1,031.18. This consisted of $78.12 (the hourly rate) x 12 months + 10% uplift, which should be paid annually and indexed to CPI. These amounts were held to be payable until the mining leases expire which, under the resource authority's public reports, will be in 2025 and 2035 for the two tenements, respectively. The Court also stated that if one mining lease ended prior to the other and was not renewed, the holder of the mining tenement is to be responsible for the full amount under s 281(3)(a)(vi).
Costs associated with the valuation report in the Land Court were claimed, but were dismissed. Member Stilgoe had held these costs were part of litigation and not incurred due to the application for renewal.
The Court agreed. The Court noted the decision of the Land Appeals Court in Lonergan v Friese  QLAC 3, in which it was held that the costs of negotiation cannot properly be characterised as "loss or expense that arises as a consequence of the grant or renewal of the mining lease". This is because the grant or renewal cannot occur until an agreement on compensation is reached or a determination is made by the Land Court under s 281. In other words, because the grant or renewal must occur after compensation is determined, it cannot be said that the legal expenses in negotiation occurred as a consequence of the grant or renewal.
The Court also noted that the claim for legal expenses was not itemised in any way to enable the Court to consider it further, and so it was dismissed.
Lastly, Sawyer v Grabbe & Anor  QLC 27 concerned a decision regarding the compensation for the renewal of an existing mining claim and the fresh grant of a mining claim. It dealt with similar subject matter to the Australian Asiatic Gems decision summarised above, as well as the Land decision referenced in that case, and thus the Land Court saw little reason to depart from many of the findings in those decisions. Material which was filed and relied upon in Australian Asiatic Gems was also "recycled" by the respondents for the purposes of this case.
The Court once again applied the findings of Member Stilgoe in the Land decision in determining that $100/ha was appropriate in circumstances of total loss for deprivation of possession. The total amount of compensation was reduced to one third for the renewal, as the productive potential of the land had already been lost due to previous activities on that claim.
The applicant contended, relying on the decision in Kelly v Chelsea on the Park Pty Ltd  QLC 36 (summarised on page 21 of our Queensland Land Access and Resource Approvals Year in Review for 2020–2021) that only the area of disturbance should be subject to consideration, rather than the whole surface. The applicant also noted that the claims would be worked for only six to seven months of the year.
The Court rejected this submission. The Court considered that, based on the work program for the claims, the production potential for the whole area of the claims would be significantly impacted once that program was completed. Accordingly, the Court did not apply any discount for deprivation of the surface of the land. However, the Court also noted that this conclusion meant that any future renewal over the same area would not raise a liability for compensation.
As in Australian Asiatic Gems, because the access track is common to both claims, the Court held that the compensation payable be split evenly under the two claims. However, should either claim cease to exist, then the holder of the remaining claim would be liable for the combined annual access track compensation payment under both claims.
With regard to compensation for loss or expenses arising out of additional inspection time, the Court (consistent with Australian Asiatic Gems) allowed compensation for one hour per month at $78.12 with a 10% uplift. This was again to be split between the two claims, as the claims were adjoining, and so the Court considered the management time required would not be duplicated – but again, should one claim terminate before the other, then the holder of the remaining claim would be liable for the total amount.
The applicant again made the submission that because the claims would be worked only six to seven months a year, the management costs should be reduced to that timeframe. The Court was not satisfied that these increased management obligations would be limited to the time the tenements remained 'live', and so declined to reduce this amount.