On 17 July 2020, the Land Court handed down its decision in Conway & Ors v Australia Pacific LNG CSG Transmissions Pty Ltd & Anor [2020] QLC 26 (Conway Decision).
In this article, Senior Associate, Emily Collins and Solicitor, Hannah Watson discuss how the Land Court found that the reduction in land value caused by the identification of endangered or threatened species by a resource authority holder is not a compensable effect under section 81 of the Mineral and Energy Resources (Common Provisions) Act 2014 (MERCP Act) (section 81).
Key points:
- The Conway Decision confirmed that a resource authority holder is not liable for the loss a landholder may incur due to the identification of a pre-existing ecological condition on the subject property.
- The Conway Decision also confirms the need for specific and thorough evidence where there is a claim for diminution in value of the property. The Land Court will not accept vague hearsay evidence from real estate agents in that regard.
Background
In this case, the Land Court addressed the effect of Australia Pacific LNG CSG Transmissions Pty Ltd and Australia Pacific LNG Pty Ltd (APLNG) identifying the protected and vulnerable ooline tree present on property owned by Conway on APLNG’s liability to compensate the owner of that land.
An Option for Easement and Conduct and Compensation Agreement (OECCA) was signed by the Conways and APLNG on 6 January 2014. After issuing a notice under the OECCA, APLNG were conducting preliminary activities, which included environmental studies in 2017. During these environmental studies, the ooline tree was found to be present on the property, and APLNG sent a sample to the Queensland Herbarium for confirmation.
At the next review of the Flora Survey Trigger Maps for Clearing Protected Plants in Queensland (FSTM), under the Nature Conservation (Wildlife Management) Regulation 2006, the FSTM for the property identified that the area within a 2km radius of the ooline was high-risk vegetation.
It is because of this high-risk vegetation mapping that Conway has sought compensation for the reduction in value of the property totaling almost $700,000.
There were two questions that were addressed by the Land Court:
- Whether the loss suffered by Conway as a result of the APLNG notifying the Queensland Herbarium of the presence of the ooline tree is a compensable effect
Ultimately, the Land Court identified that the connection between the taking of the sample by the ecologists, and the alleged loss was too remote to satisfy the test of causation. Therefore, a resource authority holder is not liable to compensate a landholder for loss (valuation reduction) suffered as a result of identifying endangered or vulnerable species that result in changes to trigger mapping.
In coming to this conclusion, the following issues were discussed:
- Whether Conway sought to keep the ooline a secret. While there was no evidence to suggest this was the Conway’s intention, the Land Court addressed evidence supplied by the Conway’s ecologist who identified that “there was a low likelihood of finding an ooline because no one would be looking for it” [19]. This approach has been discouraged by the Land Court.
- In determining causation, the Land Court focused on the meaning of “caused by”. Here, the Land Court considered the purpose of the relevant Acts, which identified that the activities of both the Conway’s and APLNG “exist within a network of legislation aimed at protecting the environment”. According to the Land Court, it is therefore unlikely that the purpose of these Acts would be served by construing section 81 “in a way that discourages preservation of the environment”. [35]
- Therefore, “it cannot be the case that a resource authority holder can be responsible for loss occasioned by the revelation of an ecological condition that existed on the land regardless of the resource company’s activities”. [37]
- Quantum of loss suffered
Despite the fact the Court determined APLNG had not caused the loss, the Court still gave consideration to the quantum of loss that was asserted by Conway:
- The valuers agreed that the size of the land affected was 2ha, valued at $6,600/ha, and that the value of this area would be diminished by 50%.
- Conway’s valuer proposed that an additional diminution of $400,000 plus GST would result, while APLNG’s valuer suggested that Conway would incur an additional $20,000 plus GST in expert fees.
- It was agreed that if the purchase price was to be reduced as a result of FSTM, it would appear in comparable sales. The comparable sales did not show an impact on land prices as a result of land being covered by a FSTM, and the other evidence supplied by the Conway’s valuer was not found to be compelling by the Land Court.
- The evidence given by the real estate agents in respect of the diminution in value of the land was found to be not compelling. The Land Court stated at paragraph 46 “…while it is true that this Court often allows valuers to act on hearsay evidence when analyzing comparable sales, it is quite another thing to ask the Court to accept vague hearsay evidence from real estate agents as the basis for justifying a discount to the value of the subject land.”
- Ultimately, the Land Court agreed with APLNG, and identified that if there was a loss due to the activities of APLNG, then it would be limited to $20,000.
Conclusion
This decision has implications for resource authority holders who are engaged with compensation discussions with landholders. It is clear that a resource authority holder is not liable to compensate a landholder for loss suffered as a result of identifying endangered or vulnerable species that result in changes to trigger mapping.
For further information and discussion, please contact our Resources and Energy team.