Queensland landholders to be reimbursed during conduct and compensation negotiations

On 19 April 2019, the remaining sections of the Mineral, Water and Other Legislation Amendment Act 2018 (Qld) commenced resulting in changes to the existing legislative conduct and compensation agreement (CCA) negotiation process and reimbursement model.  Significantly, resource companies are now required to reimburse landholders for costs incurred regardless of whether a CCA is actually entered into by the parties.  Partner Damian Roe, Senior Associate Katrina Matthews and Law Graduate, Kate Thorogood discuss.

CCA negotiation reimbursement during negotiations

As of 19 April 2019, landholders will be entitled to reimbursement for costs necessarily and reasonably incurred when negotiating CCAs with resource companies regardless of whether an agreement is reached. 

Previously, landholders were only entitled to such reimbursement when an agreement was reached with the resource company, with the payment of costs commonly made by the resource company on the date the agreement was signed.

Specifically, the amendments to the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) mean that:

1. resource companies negotiating CCAs with Queensland landholders are now liable to pay the negotiation and preparation costs necessarily and reasonably incurred by a landholder in entering or seeking to enter into a CCA; and
2. in addition to legal, accounting and valuation costs, a resource company is also liable to pay the costs of an agronomist if those costs are incurred by the landholder after 19 April 2019.

A resource company will also be liable for the costs of an alternative dispute resolution (ADR) facilitator if an ADR election notice is issued by either party (see below).

Resource companies that are currently negotiating CCAs with landholders will now need to ensure that they have adequately budgeted to reimburse landholders even if no agreement is reached. 

Resource companies should also ensure that before they embark on negotiations with landholders in relation to an exploration program that they are willing to incur the CCA negotiation costs for all of the landholders that they engage with regardless of whether agreement is reached with the landholder.

Changes to the CCA legislative process

The CCA legislative process has also changed.  As of 19 April 2019:

1. if the parties are unable to agree to a CCA within the minimum negotiation period, parties may progress to an ADR process (e.g. case appraisal, mediation, conciliation or negotiation) by issuing an ADR election notice or directly to arbitration by issuing an arbitration election notice;
2. if the parties elect to progress to an ADR process and no agreement has been reached at the end of the ADR process, then either party may issue an arbitration election notice;
3. parties will still be able to elect to attend a conference with an authorised officer until the issue of an ADR election notice or an arbitration election notice but it will no longer be a pre-requisite for an application to the Land Court; and
4. if an ADR election notice or arbitration election notice is issued then any conference must cease and no new conferences can be called.

However, if prior to 19 April 2019:

1. a party had given the other party an election notice calling upon the other party to agree to a conference or an ADR to negotiate a CCA; and
2. the conference or ADR has not finished and the CCA has not been agreed,

the old legislative process will continue to apply and the conference or ADR will be able to be used as a pre-requisite to make an application to the Land Court for a determination.

For further information regarding landholder reimbursement for CCA negotiations or the CCA process, please contact the HopgoodGanim Lawyers Resources and Energy team.