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New judicial guidance on landowner compensation under the Mining Act

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On 12 November 2021, the Land and Environment Court of NSW handed down judgment in David Anthony Lord v Broken Hill Cobalt Project Pty Limited [2021] NSWLEC 126 providing key guidance on the determination of compensation for landowners affected by mining rights.

The Applicants in the proceedings were the owners of Thackaringa, a 64,610 ha sheep farming property which had been occupied and farmed by the family for 150 years.  Over the past 50 years mining and exploration licences were granted over the Land and access arrangements were entered into with the holders of those licences.  A new access licence was required to enable prospecting operations and the parties were unable to agree on its terms.  The dispute was initially determined by an arbitrator under Part 8 of the Mining Act.  The owners were dissatisfied with the outcome of the arbitration and the matter proceeded for determination by a judge of the Land and Environment Court.
 
In the final determination, the arbitrator determined that the only compensable loss that could arise under the provisions of Part 13 of the Mining Act was financial loss. Consequently, the arbitrator only took into account those loses identified by the parties that would produce a direct and measurable financial loss to the Applicants.
 
Duggan J disagreed with this approach, instead directing the focus of the enquiry to the matters in section 262 of the Mining Act which she said makes it clear that compensable loss is to be assessed by reference to the heads of compensation in that section.  Rather than asking whether the owner will incur a financial or non-financial loss the correct approach is to ask whether the loss is within one of the categories in s262. If it does not fall under one of these categories, even if that loss if real and quantifiable, it will not be subject to the requirement to pay compensation under the Mining Act.
 
Duggan J held that:
  • the words in s 262 of the Mining Act do not limit, either in language or by context, losses to financial losses;
  • s 262 captures both actual and prospective losses;
  • compensable loss defined in s 262 is not limited to financial losses, provided that such losses “likely” or “are probably or reasonably expected rather than remote or fanciful” .
There were some claims which Her Honour held had no reasonable relationship to the terms of s262 even on the “most generous construction of s 262”.  These were:
  • Mining works and equipment acting as an attraction for unauthorised and criminal persons to enter the Land, and
  • The adequacy of the quantum of security deposits paid pursuant to the terms of the ELs.
Claims which were upheld were those which related to the physical damage to the surface of the Land or arose as a “consequence of the intensity of the uses of the Land” for mining exploration. The Court rejected the “intensity” of use was limited to the financial loss from an inability to graze the Land.  Rather, it included impacts on the owners’ ability to muster their flock, the movement of stock through paddocks, the impact of the constant presence of mining vehicles travelling along the access tracks within the Land and the capacity for the owners to make other management decision relating to the use of the Land as a whole. The interference to management and influence upon management decisions were found to be losses compensable under s 262(g) and the compensation could not be measured simply by, for example, assessing additional time spend in the handling of stock.
 
In assessing compensation for non-financial loss, Duggan J referred to Cl 91(2) of the Mining Regulation which outlines a number of factors relevant to the assessment of compensation.  This led Her Honour to take into account the fact that the Respondents will be entitled to access of the land for 365 days each year and the time the landholders would need to take into account the Respondent’s presence, additional staff wages, the extent of damage to the land caused by the creation of tracks, the continuation of use of existing tracks and the drilling locations identified by the Respondents.  
 
In reaching her conclusion, Duggan J rejected the miner’s reliance on comparative amounts paid to both the owners and other landholders in other market arrangements which had been put forward in a bid to establish a “market price”. She found no “meaningful comparison” between those access arrangements and the present case, distinguishing them based upon the fact that they had been determined by agreement. However, the judgement does leave room for instances where the Court may be able to be satisfied that other access agreements which are truly comparable could be used in the determination of appropriate compensation. 
 
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