Shared Knowledge

Recent Decision: Review of Compensation for Material Change

In the recent case of Henry v Georgetown Gold Operations Pty Ltd [2015] QLC 13, a landowner (Henry) applied to the Land Court to review compensation being paid under a compensation agreement on the   basis that there had been a material change in circumstances since entering into an agreement with miner ERO. The decision provides a useful guide about what may constitute a material change in circumstances and how the Court approaches a review in compensation. It is relevant to landowners who have entered into conduct and compensation agreements (CCAs) or other land access agreements with coal seam gas companies and mining companies across Queensland.

The Issue

ERO held various mining leases under the Mineral Resources Act 1989 (Qld) (MRA) over Henry’s property known as Flat Creek Station near Georgetown. ERO proposed to fence off and undertake mining activities over an access road within its mining lease area. ERO’s proposed mining activities on the access road would have the effect of obstructing Henry’s access on the land.

Henry submitted that the failure to grant an alternative right of access amounted to a material change in circumstances and an application was made to the court to review the original compensation in the     compensation agreement pursuant to s 283B of the MRA.  An equivalent provision exists in the Petroleum and Gas (Production and Safety) Act 2004 (Qld).

Material Change in Circumstances

In determining whether there had been a material change in circumstances, the Land Court applied a two stage approach previously set out by the Land and Resources Tribunal in Hicks v Graham & Anor [2004] QLRT 47. Firstly, was there an existing compensation agreement and secondly, was the change pertinent to the amount of compensation that should be awarded and if so, is the change of such significance that an amendment to the original compensation is justified.

The Court found that failure of ERO to provide an alternate right of access to Henry during the mining operations represented a material change in circumstances which warranted a review of the original compensation.

Review of Compensation

Both Henry and ERO presented valuation evidence from registered valuers. Amongst other things, the Court awarded compensation to Henry for:

  • “owner’s time” on the basis that Henry would be required to perform additional work and travel as a result of the road closure. The Court adopted a rate of $100 per hour which is consistent with recent Land Court decisions;
  • “loss of income at stock sales” where there was “actual, ascertainable loss” based on an affidavit from Henry;
  • “loss of income from camping operation” based on advice from Henry’s valuer on the bookings that were lost from a camping operation on the property;
  • “additional mustering and droving” that would be required as a result of the road closure.

Conclusion

The decision provides a useful guide for landholders affected by a change in mining operations on their land.  We encourage landowners to be familiar with the terms of CCAs they have entered into, particularly the nature, extent and location of the activities being undertaken. If you consider that a coal seam gas or mining company has undertaken a new or different activity with new or different impacts on your land, it may be that a material change in circumstances has occurred in which case you have the right to seek to review the original compensation in the agreement. For instance, if a coal seam gas company begins to undertake hydraulic fracturing on your land in circumstances where hydraulic fracturing is not permitted in the CCA, a material change of circumstances may have occurred entitling you to a review of compensation.

One observation arising from the Court’s determination of compensation in this case is that landowners should do all things possible to document any losses that are suffered as a result of a material change. This might mean recording additional hours of work or additional hours spent travelling in a diary. The Court will only award compensation where there has been “actual, ascertainable loss” so it is important that any business losses can be proved.

 

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