Shared Knowledge

Nothdurft v QGC – Review of Compensation

Background

On 18 August 2017 judgment has handed down by the Land Court in the matter of Nothdurft & Anor v QGC Pty Limited & Ors [2017] QLC 41.

Mr and Mrs Nothdurft brought an application in the Land Court seeking a review of compensation under their 2006 Compensation Agreement with QGC in relation to their property “Bellara” near Chinchilla, arguing a material change in circumstances due to:

·             Noncompliance with noise limits

·             Discontinuance of the supply of untreated CSG water

·             Emission of gases

·             Incorrect well locations

·             Owners time and resources

·           Dust causing contamination of rainwater tanks

·           Perceived health risks in living in or around the gasfield

·           The need to relocate their place of residence and business

due to noise impacts

Mr and Mrs Nothdurft submitted that the Court must assess compensation ‘afresh’ on the changed circumstances. QGC disagreed and argued that the correct approach required the Court to review the original compensation to the extent it is affected by the change (i.e. whether additional compensation should be paid for that particular change).

The Decision

The Court found that to trigger a review of compensation, the court must be satisfied of two things: firstly, that the circumstances have changed; and secondly, that the change is material to the agreement about compensation.  When considering whether a change is a material change, the focus is on the effect rather than the activity, and the change must be of significance or importance.

Of the changes in circumstance raised by Mr and Mrs Nothdurft (listed above), only two were accepted as material changes by the court: the cessation of access to untreated CSG water and past exceedances of noise conditions. The Nothdurfts contended that noise impacts rendered “Bellara” uninhabitable. The Court rejected that contention and found that, based on expert evidence, noise exceedances had occurred on an irregular basis from 2015, but that QGC were now operating in compliance with the noise conditions contained in its environmental authority. This finding had a significant bearing on the determination of additional compensation.

The final question for the court to consider was whether the material change in circumstances justified an award of additional compensation due to “compensatable effects”. The Court accepted QGC’s submission that it could only review compensation to the extent it was affected by the change.  The Court could not assess the entire compensation ‘afresh’.

Despite there being a material change in relation to the loss of supply of untreated CSG water, the Court found that there was no associated compensatable effect that justified an award of additional compensation. This is because alternative treated water sources were now available to Mr and Mrs Nothdurft through a separate agreement with SunWater as part of the Chinchilla Beneficial Use Scheme.  The Court accepted the scheme would not exist without QGC’s activities on “Bellara” and other properties. The Court awarded no additional compensation.

Based on the Court’s findings in relation to the historical noise exceedances, and having accepted the evidence that QGC were now complying with its noise limits, President Kingham awarded Mr and Mrs Nothdurft $60,500 for the past exceedances, calculated at $55,000 for noise attenuation costs plus 10% for Mr Nothdurft’s time in raising and responding to noise impacts.

Implications of Decision

Importantly, Nothdurft confirms the court’s power to review compensation where there has been a material change in circumstances, limited to the compensatable effects caused by the material change.

The case highlights a number of critical issues for landholders involved in Land Court proceedings, including:

  1. the court’s reluctance to accept opinion evidence from a lay witness, particularly in relation to breaches of conditions, including in relation to noise, dust and health impacts;
  2. the reliance of the court on expert evidence;
  3. the role of experts to act independently when assisting the court and to not stray into the realm of advocacy;
  4. the importance of analysing evidence correctly; and
  5. the expectations of the court in relation to honesty and candour from representatives.

“Material change of circumstances” arising from CSG activities may give rise to an additional compensation liability for CSG companies.  The Nothdurft decision provides further guidance to landholders about how a claim for material change should be assessed.

 

This information provides advice of a general nature only and should not be relied upon as legal advice.