Compensation payable - Guidance from the Land Court

Key issues:

• On 14 December 2018 the Land Court handed down its decision in Byerwen Coal Pty Ltd v Colinta Holdings Pty Ltd (No. 2) [2018] QLC 49.
• The proceeding was a compensation determination for the grant of three coal mining leases located west of Glenden. 
• The decision:
  • broadens the interpretation of ‘land’ by providing that in certain circumstances contiguous lots should all be treated as ‘land of the owner’ for the purposes of section 281(3)(a) of the Mineral Resources Act 1989 (Qld) (MRA); 
  • includes a contiguous lot in the determination of compensation payable by the mining lease applicant to the landowner;
  • provides a diminution value for ‘balance land’ which is adjacent to mining leases; and
  • emphasises the importance of an expert witness’ duty to the Court. 

Colinta Holdings Pty Ltd (Colinta), a wholly owned subsidiary of Glencore Coal Queensland Pty Ltd (Glencore), manages and operates a single cattle business over three contiguous lots (property). Byerwen Coal Pty Ltd (Byerwen) is the applicant for three coal mining leases which fall within part of the property, specifically within two out of three of the lots. The property is next to Glencore’s Newlands and Eastern Creek mines which are to the south-east of the property.  The property has also been affected by a resumption of parts of two of the lots by the Government for the purposes of the Adani rail line. 

The compensation payable by Byerwen was determined to be $3,543,650.00 and was calculated as follows: 

• a valuation amount of $2,893,750.00 for the land, including an adjustment for the Adani rail line;
• an amount of $327,750.00 for the diminution of the “homestead balance area” comprising an area outside the mining leases; and 
• a 10% uplift of $322,150.00 because of the compulsory nature of the acquisition.

We have extracted the key points and considerations of this decision below. 

Key points:

• The reference to ‘land’ in section 281(3)(a) of the MRA has been interpreted generously, to include a lot that does not form part of the underlying land, the surface of which, is subject to a mining lease application or land of any surface access to the mining lease. The Court stated this interpretation was dependent upon the facts of the case, and that not all contiguous lots will be treated as ‘land of the owner’. In this instance, the following facts supported the wider reading:
  • the business performance of Colinta’s property was assessed cumulatively;
  • the lots were considered an aggregation as they were operated as one business venture, with one manager, one homestead and cattle transferring across all three lots, with some paddocks spanning over more than one lot; and
  • the three lots shared a Property Identification Code (PIC) which is required for the purchase of national livestock identification in system devices or access to national vendor declarations or waybills.
• The reduction of the value of the homestead balance area took into account both Glencore’s adjacent mining operations and Byerwen’s mining lease applications. The homestead infrastructure had been discounted by 50% and a future discount for the homestead balance area of 23% was applied. 
• The importance of an expert witness complying with their duty to the Court was strongly emphasised. This duty overrides any obligation the expert may have to any party to the proceeding. Considering this duty, Member Stilgoe outlined a number of reasons as to why the approach taken by one of the experts did not leave her satisfied that he understood his duty to the Court, or otherwise failed to comply with this duty.
• Reaffirmed the importance of the Spencer test, with the valuer required to consider the interests of both parties, and if a valuation does not consider the interests of both parties it is “of no utility”. 

While these factors will be considered by the Land Court in future determinations, Member Stilgoe emphasised that this matter was determined on the facts, and each compensation determination will be considered on a case-by-case basis.

For more information or discussion, please contact HopgoodGanim Lawyers’ Resources and Energy team.