Land Court of Queensland orders the applicant for a mining lease to pay compensation for the supervision and management obligations of the landowner

In brief

The case of Wallace v O’Shea & Ors; Wallace v O’Shea & Anor [2021] QLC 6 concerned a determination by the Land Court of Queensland (Land Court) in respect of compensation payable by an applicant for a mining lease to the landowners of Spring Valley Station in far north Queensland. 

The Court held that there was an absence of evidence in relation to the compensation that ought to be paid, but determined that given the facts and circumstances of this case, an amount of $1,500 was payable for the supervision and maintenance obligations that would arise for the landowners with respect to the mining lease, in addition to an uplift fee of $150 pursuant to section 281(4)(e) of the Mineral Resources Act 1989 (MRA).

Brief background

The applicant for a mining lease on land near Almaden in far north Queensland received an in-principle approval for a five year lease. The proposed mine and part of the access track is to be located on Lot 418 of OL47 (Lot 418) and the balance of the access track is to be located on Lot 355 of OL428 (Lot 355). Lot 418 and Lot 355 are collectively known as Spring Valley Station. 

The landowners and the applicant were unable to agree on the quantum of compensation payable by the applicant to the landowners, and the matter was ultimately referred to the Land Court for determination. The landowners did not participate in the Land Court proceedings and the Land Court’s determination therefore relied on information provided by the applicant. 

Relevant sections of the MRA

Section 281(1) of the MRA relevantly provides as follows:

"(1) At any time before an agreement is made under section 279 or 280, a person who could be a party to the agreement may apply in writing to the Land Court to have the Land Court determine the amount of compensation."

Section 281(3)(a) of the MRA relevantly provides as follows:

"(3) Upon an application made under subsection (1), the Land Court shall settle the amount of compensation an owner of land is entitled to as compensation for—

(a) in the case of compensation referred to in section 279—

(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;

…

(vi) all loss or expense that arises;"

Section 281(4)(e) of the MRA relevantly provides as follows:

"In assessing the amount of compensation payable under subsection (3)—

(e) 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)."

Land Court's determination regarding the compensation payable by the applicant

In considering the compensation payable by the applicant to the landowners, the Land Court had regard to section 281(3)(a) of the MRA. The Land Court's conclusions are stated below. 

Firstly, in relation to the deprivation of possession of the surface of the land (section 281(3)(a)(i) of the MRA), the Land Court accepted that no compensation was payable with respect to the access track, because it already serviced another lease held by the applicant. 

In respect of the mine itself, the applicant submitted that the mining lease would consist mainly of recycled tailings from previous mining operations, and would involve minimal onsite infrastructure. The applicant submitted that the mining program was seasonal, and would only operate during the drier months of the year.

he Land Court concluded that although it was satisfied the landowners would suffer intermittent deprivation, there was no basis for quantifying the impact of the proposed mining lease on the value of Spring Valley Station. As such, no compensation was awarded. 

Secondly, in relation to the diminution of the value of the land (section 281(3)(a)(ii) of the MRA), the Land Court concluded that it could not award any compensation without any evidence. 

Thirdly, in relation to all loss or expense that arises (section 282(3)(a)(vi) of the MRA), the Land Court noted that generally the Court accepts that the presence of a mining lease adds to the supervision and management obligations of the landowner, and that this should be the subject of compensation. In this regard the Court stated as follows:

"There has been a trend in recent cases for the parties to accept an hourly rate of $100 as the cost of that supervision. As always, the Court prefers that parties provide evidence of the cost, rather than accept a rate adopted in one case. The risk of the latter courses … is that parties adopt a 'going rate' which may have no relationship with the true cost of the item being claimed". 

Despite these comments, the Land Court determined that it had no choice but to adopt a figure of $100 per hour for an additional half hour of supervision per month during the mining season (six months per year) over the course of five years. This equated to an amount of $1,500. 

Conclusion

The Land Court ordered that no compensation was payable for Lot 355 and that a sum of $1,500 was payable for Lot 418 in addition to a $150 uplift fee pursuant to section 281(4)(e) of the MRA.