LAND COURT OF QUEENSLAND

CITATION: 	Hoffman v Blue Bay Tas Pty Ltd [2022] QLC 10	
		
PARTIES:	Stanley William Hoffman
(applicant) 	

v

Blue Bay Tas Pty Ltd ACN 627 625 209 
(respondent)
	
FILE NO:	MRA028-22	
		
PROCEEDING:	Determination of compensation payable for renewal of mining lease	
		
DELIVERED ON:	22 August 2022	
		
DELIVERED AT:	Brisbane	
		
HEARD ON:	Submissions closed 19 August 2022	
		
HEARD AT:	Heard on the Papers 	
		
MEMBER:	JR McNamara	
		
ORDERS:	I determine for ML 20324:
1.	Three Hundred and Forty-Two Dollars and Ten Cents ($342.10) per annum payable on the anniversary of the date of grant of the renewal representing the diminution of the use made or which may be made of the land ($311 plus 10%); and
2.	Two Hundred and Twenty-One Dollars ($221) pa in administration costs, indexed annually to CPI ($210 plus 10%).
I determine for ML 20325:
1.	One Hundred and Fourteen Dollars and Forty Cents ($114.40) per annum payable on the anniversary of the date of grant of the renewal representing the diminution of the use made or which may be made of the land ($104 plus 10%); and
2.	Two Hundred and Twenty-One Dollars ($221) pa in administration costs, indexed annually to CPI ($210 plus 10%).	
		
CATCHWORDS:	ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – COMPENSATION – where the applicant had applied for the renewal of mining leases situated on the land of the respondents – whether and, if so, what compensation was payable under s 281 of the Mineral Resources Act 1989 
Mineral Resources Act 1989 s 281
Guernier and Anor v Chelsea on the Park [2021] QLC 13, distinguished
Hoffman v Hatfield [2019] QLC 48, cited
Kelly v Chelsea on the Park [2020] QLC 36, distinguished
Mitchell v Oakhill and Mitchell [1998] QLC 25; (1998) QLCR 66, applied
Summerville v Skelton [2022] QLC 7, cited	
		
APPEARANCES:	Not applicable	
Background
[1]	Stanley Hoffman is an alluvial gold and tin miner. He holds three mining leases on Spring Hill Station, a pastoral station which is owned by Blue Bay Tas Pty Ltd. ML 20624 was granted in 2019, after a recommendation from this Court to approve the mining lease application. Mr Hoffman now seeks to renew the other two leases, ML 20324 and ML 20325 (‘the Leases’). Before the renewals can be granted, compensation with the landowner of Spring Hill Station must be agreed or determined by the Land Court.
[2]	Court orders invited Mr Hoffman to file and serve a compensation statement and for the then landowners, Travis and Amber Hatfield, to file a response, including all evidence relied on to support the statement or response. Mr Hoffman also had the right of reply.  On 8 August 2022, after all material was filed in accordance with the orders, Spring Hill Station was sold to Blue Bay Tas Pty Ltd.
[3]	In response to correspondence from the Court, the solicitor for Blue Bay Tas Pty Ltd, the new landowner, filed an affidavit stating that during their client’s legal due diligence of the property, Blue Bay Tas Pty Ltd was aware of the Compensation Agreements in place, and that Blue Bay Tas Pty Ltd agreed with and accepted the submissions and evidence presented by the former owners, Travis and Amber Hatfield, in this matter and wished the matter to proceed to determination on that basis. For ease of reference, I will refer to Mr and Mrs Hatfield as the ‘previous landowners’.
[4]	The solicitor assisting the applicant Mr Hoffman also corresponded with the Court saying: “Mr Hoffman does not know whether the new owner was made aware of the position taken by the former owner in the compensation hearing and Mr Hoffman does not wish to re-open negotiations.”
[5]	An order was made substituting Blue Bay Tas Pty Ltd in place of Travis and Amber Hatfield as respondent in this matter. 
[6]	The area of ML 20324 is 8.8 ha. The area of ML 20325 is 2.97 ha. Both are described in Mr Hoffman’s originating application as being approximately 47km east of Mount Carbine. The term applied for is 10 years.
[7]	The Leases are located towards the western boundary of Spring Hill Station. While there are a handful of other mining leases on the Station, none are close to the Leases, save for Mr Hoffman’s other lease ML 20624.
[8]	The Resource Authority Public Reports attached to Mr Hoffman’s originating application identify gold and tin ore as relevant minerals to be mined and “living quarters/camp” is listed as a purpose for ML 20325. 
[9]	Included in Mr Hoffman’s material is an undated Mining Lease Work Program for ML 20324 which states that ML 20324 “is yet to be worked” and that “[w]e anticipate that ML 20324 will commence extraction of gold and tin around 2025 after testing of the plant with tin jigs.” Mining will occur on ML 20324 by way of excavator, which will extract wash that will be fed directly into a mobile plant. Tin concentrates will be retained following gold processing and separated using jigs. Processing will be dependent on water availability, likely in the periods of March-April and then October-December.
[10]	Mr Hoffman’s draft agreements at clause 10.1 allow for the landowner of Spring Hill Station to continue cattle grazing on those parts of the Mining Lease areas not required for authorised activities.  I discuss later in these reasons what that area might be.  
[11]	Unsurprisingly, both leases appear to run along creek beds. There is an access track connecting the Leases, which also connects to ML 20624. The access track runs north towards other mining tenements, which are held by other owners. The track eventually connects to the Mulligan Highway.  
[12]	Mr Hoffman apparently does not have a device on which he can send and receive emails. He did however engage a lawyer to assist him in preparing his compensation statement and statement in reply.  
[13]	As I have said in other matters, I am conscious of the importance of good relations between landholders and the holders of resource authorities, but my task is to determine compensation informed by the submissions and evidence of the parties.  The criteria for determining compensation are those found in s 281 of the MRA.
Compensation statement and evidence
[14]	Court orders invited Mr Hoffman to file and serve a compensation statement and a response by the previous landowners, including all evidence relied on to support the statement or response, and Mr Hoffman the opportunity to reply. 
Mr Hoffman’s material
[15]	Mr Hoffman filed two draft Mining Compensation Agreements, one for ML 20324 and one for ML 20325.  No evidence or document providing a context nor narrative around negotiations, if any, between Mr Hoffman and the landowner was filed.
[16]	The agreements are identical but for the reference to the tenements, the quantum of compensation offered, and proposed “access to water” arrangements pursuant to clause 11.3(1) of each agreement. The agreements include certain relationship and conduct clauses regarding: access, infrastructure and machinery, camp and facilities, operations, weeds and biosecurity, property management, indemnity, dispute resolution and confidentiality.   
ML 20324
[17]	The quantum offered by Mr Hoffman for ML 20324 is $500 per annum payable on the anniversary of the grant during the term of the lease. Clause 11.3(1) provides that in respect of ML 20324 the miner and landowner have agreed that the miner may draw water from any of the constructed or natural watering points on ML 20324 and access associated with ML 20324.
[18]	In his statement in reply, Mr Hoffman increased his offer in respect of ML 20324 to $1000 pa and amended clause 11.3(1) to say the miner must not draw water from any of the constructed or natural watering points without the landowner’s prior written consent.
ML 20325
[19]	The quantum offered by Mr Hoffman for ML 20325 is $250 pa payable on the anniversary of the grant during the term of the lease.  Clause 11.3(1) provides that the miner must not draw water from any of the constructed or natural watering points on the land without the landowner’s prior written consent.
[20]	In his statement in reply, Mr Hoffman increased his offer in respect of ML 20325 to $500 pa.    
The previous landowners’ material
[21]	The previous landowners filed a ‘marked up’ copy of both of Mr Hoffman’s compensation agreements and attached a number of documents.  
[22]	The documents included:
•	a copy of the decision of the Land Court in Hoffman v Hatfield with comments added regarding the financial capability of Mr Hoffman and a request for information concerning compliance with the Land Access Code; 
•	a copy of the decision of the Land Court in Guernier and Anor v Chelsea on the Park highlighting orders where compensation was awarded in relation to inspections, administrative costs, and a contribution to access track maintenance; 
•	an ‘ABN current details’ document concerning Mr Hoffman’s business partner and comments regarding his business partner’s brother; 
•	a table described as a ‘Pay Rates Summary’ from the Fair Work Ombudsman highlighting rates for ‘Farm and livestock hand level 1’ showing an hourly rate of $25.41; 
•	tax invoices for “dozer hire pushing fence lines and cattle yard sites”; 
•	a screen shot showing the cost of a Swann 1080p Outback battery operated observation system; 
•	a sale invoice for $5,500 for a second-hand excavator (the property of the Hatfields which was used or located on ML20325); 
•	an aerial photograph indicating “plant at ML20324 off lease”; 
•	a photograph showing a boundary overlay of ML 20325 suggesting some infrastructure close to or on the boundary; and 
•	photographs of a caravan adjacent to a track or access road and some debris and rubbish on the ground near it.   
[23]	The structure and content of the ‘marked up’ clauses concerning compensation list a number of discrete items for which they seek compensation and/or reimbursement.  These are discussed at [41] – [53] below. 
[24]	Other ‘marked up’ additions to the Hoffman agreements include a requirement: to have the leases “correctly surveyed”; to have the names, addresses and contact details of all associates and workers on the leases provided to the landowner; to provide Landowner Insurance Policies Certificates of currency or registrations for all machinery and vehicles; to require maintenance of the access road in accordance with the code of practice for Native Forest Timber Production on Queensland’s State Forest Estate 2020; for all personnel to have suitable personal protective equipment and induction and to sign a Farm visitor logbook.
[25]	These proposals of the previous landowners are not outcomes that I can order, and they are not compensable items. Proposals which require a party to comply with the law or the terms of any grant, for example the registration of vehicles or to rehabilitate mined areas or to hold a permit to take water if required, do not require an order of this Court to give them effect. If, however, a particular standard or approach to compliance is expected, that could be a matter for negotiation between the parties.  Proposals which require a party to comply with various codes of conduct or a code of practice do not require an order for the code to apply, if the code automatically applies due to the nature of or the consequence of the activity.  If a party wishes to voluntarily agree to comply with a code that might not otherwise apply, then that is a matter that could be negotiated. 
[26]	Without listing them all, other proposals in the previous landowners’ ‘marked up’ agreements are additions to, or embellishments on, conditions in the Hoffman agreements.  For example, where Mr Hoffman includes a condition concerning the safe storage and security of equipment and machinery, the previous landowners added detail about the purpose of the condition, that is, to prevent stock from harm.  Additions or embellishments such as these are not compensable items – but they are matters that the parties can negotiate and agree upon if they so choose.  
Statutory criteria for mining compensation
[27]	As noted, Mr Hoffman proposed a ‘flat fee’ for compensation in relation to each mining lease.  He provides no formula or criteria against which the amounts were set. 
[28]	The previous landowners based their compensation offer on a per hectare statutory land valuation of $35.25 per ha for the total area of the Leases, although noting that they consider “a truer valuation” based on “sales in past years” to be $98 per ha. 
[29]	Neither party identify the statutory basis for compensation. That is, they do not say that compensation is payable for all or any of: deprivation of the surface of the land, diminution of the value of the land, diminution of the use of the land, severance, or the impacts of access, and/or more broadly, all loss or expense that arises.
[30]	While s 281 of the Mineral Resources Act 1989 (‘MRA’) directs me to take into consideration the criteria, I do not need to quantify the amount under each head if my final determination sufficiently compensates the landowner.
[31]	Where the parties propose compensation based on an annual payment per hectare, it suggests to me that the compensation is proposed for either the “deprivation of possession of the surface of the land” or the “diminution of the use made or which may be made of the land.”
[32]	In my view, whether considered to be one or the other, or both, the total quantum will be the same.  Because it does not appear to me that the current landowner will be physically deprived of the surface of the land, nor is there evidence that any deprivation would be permanent, and the evidence does not suggest that the mining lease area will be fenced, it is more relevant to consider ‘diminution of the use’ of the land as the basis for claimed compensation.
[33]	A number of the previous landowners’ other claimed compensable items might fall under the broad umbrella of “all loss or expense that arises”: for example the items in the ‘marked up’ document clause 8(2) – (7). 
[34]	Some items however might not be claimable as ‘loss or expense’ because they do not actually represent ‘loss or expense’. They are, for example, phrased as a requirement to fence (clause 11.3.4) rather than compensation for fencing; and a requirement for garbage disposal (clause 11.3.5) rather than compensation for garbage disposal.
Diminution of the use made or which may be made of the land: s 281(3)(a)(iii) 
[35]	As noted earlier Mr Hoffman’s draft agreement at clause 10.1 would allow for the landowner of Spring Hill Station to continue cattle grazing on those parts of the mining lease areas not required for authorised activities.  The only evidence concerning the area required for authorised activities is found in Mr Hoffman’s reply where clause 11.2(1) is addressed.  He says: “… I only work in ½ hectares at a time …”  I understand this to mean that progressive mining might occur on the leases of an area of 0.5 hectares before moving on to the next 0.5 hectare section.  While new mining is happening presumably rehabilitation activities occur on the previously mined areas.  Rehabilitation might prevent grazing activities for extended periods.  In relation to ML 20325, camp facilities and the storage of equipment would occupy a reasonably large area of the tenement on a longer-term basis, and the parts of the lease which follow the creek bed would seem ripe for mining at some point.  
[36]	Although grazing activities are not necessarily incompatible with mining per se, the nature of gold and tin mining in terms of noise and dust is such that cattle would avoid such areas.  Taking these factors into account, including the reasonably small area of both mining leases, I take the view that the whole of the mining lease areas will be unavailable for grazing purposes during the term of the leases and is therefore diminished by them. 
[37]	As to the measure of loss, the previous landowners adopt the Valuer-General’s unimproved land value of $1,451,200.00 to determine a per hectare rate of $35.25.  Applied to the total area of each mining lease, they propose $310.27 pa in respect of ML 20324, and $103.76 pa in respect of ML 20325. 
[38]	This Court has tended to find actual sale evidence to a better reflection of value. however, the previous landowners’ statement concerning a valuation based on sales is lacking evidential support. Sales evidence also needs to be adjusted to take account of the value of improvements, equipment, and stock to determine an applicable rate per hectare.  I can’t simply adopt a figure to reflect sales without evidence concerning comparability.  I am therefore left with the only evidence being the unimproved land valuation. There is no evidence to suggest that the value of the land the subject of the mining leases would be of a higher or lower value than any other area of the Station.
[39]	Mr Hoffman’s offer of $1000 pa compensation for ML 20324 represents $113.64 per ha pa.  His offer of $500 pa compensation for ML 20325 represents $169.50 per ha pa.  Despite being a more generous offer, the only evidence of the value of loss is that presented by the previous landowners, and I will award the amounts they propose, rounded to $311 pa and $104 pa for ML 20324 and ML 20325 respectively.

All loss or expense that arises: s 281(3)(a)(vi)
[40]	The items for consideration under this criterion are those in the previous landowners’ response to the compensation statement at clauses 8.1(2) to 8.1(7).
Clause 8.1(2) – percentage of proceeds
[41]	The previous landowners sought 1% of the “proceeds” of the mining leases, documented annually.  
[42]	Mr Hoffman refers to the Land Court Practice Direction 3 of 2019 that states that a landholder is not entitled to compensation for the value of the resource.  Appendix A to the Practice Direction is a ‘Guide to Proposal and Response’ which draws on factors contained in the MRA when calculating compensation.  In this case s 281(4)(b) of the MRA says that in assessing compensation “no allowance shall be made for any minerals that are or may be on or under the surface of the land concerned.”
[43]	Accordingly, a claim for a percentage of the proceeds cannot succeed.
Clause 8.1(3)-(5) – reimbursement of the cost of security cameras for surveillance of access; and for the cost of installation; camera maintenance, and administration time
[44]	This claim relates to landholder security.  Mr Hoffman says the installation and use of the cameras does not relate to the mining activities, but rather it concerns use of the access track.
[45]	Apart from the statement that the installation of cameras is a matter of landholder security, the previous landowners have not sufficiently explained the basis for this clause as justifiable compensation.  
[46]	In Kelly v Chelsea on the Park, Chelsea on the Park had managed biosecurity risks posed by entry of persons onto the property by installing a series of satellite points which allowed the installation of surveillance cameras to monitor, amongst other things, access.  The need for surveillance cameras was tied to their biosecurity plan and the risk posed by the entry of any person/s onto the property.  The Court found that the surveillance system would not be necessary but for the access track to Kelly’s mine. Kelly was the only user of the track and the Court found that Kelly should pay the installation cost once installed only if the property holder fenced the boundary to the adjacent national park. There are no similar facts in this matter.
[47]	In this case, the need for the installation of a security system has not been adequately explained.  I therefore do not allow reimbursement of the claimed costs.  
Clause 8.1(6) – biosecurity checks – twice yearly helicopter inspection of 1 hour per mine and administration costs.
[48]	The previous landowners relied on the Land Court decision in Guernier & Anor v Chelsea on the Park in support of this particular claim.  In that matter the Court was presented with a joint report of agronomists who agreed that there were declared weeds on the mining lease that required control and management strategies by both the miner and the landholder.  That control program included twice yearly inspections.  There is no evidence presented in this matter for me to determine the necessity or reasonableness of similar inspections.  In Guernier there was also evidence that Chelsea on the Park had biosecurity obligations which required biosecurity monitoring – including the matching of actual farm visits to Farm Visitor Registration forms.  Due to the minimal biosecurity monitoring which the Court considered would be necessary, the Court factored it into the claim for general administration expenses.
[49]	In this case, there is no evidence of a biosecurity plan for the Station which would require the actions proposed and the claimed costs. I therefore do not allow compensation for biosecurity checks. 
Clause 8.1(7) – administrative costs
[50]	The previous landowners claimed administration costs for 40 hours per year, per mining lease “to ring and check on ML activities.”  The rate clamed is $34.14 per hour (at a total of 40 hours pa) together with $23 for “work cover” per 40 hours and $59.96 superannuation per 40 hours.  The total claimed is therefore $1,448.96 per mine per year.
[51]	I assume that the claimed hourly rate is extrapolated from the Fair Work Ombudsman pay rates summary table attached to the previous landowners’ ‘marked up’ compensation agreement referred to at [22] above. 
[52]	The need for administrative costs appears to be based on the time spent by the previous landowners dealing with matters to do with Mr Hoffman’s mining interests.
[53]	I recently observed in Summerville v Skelton that it has been accepted that the very existence of a mining interest and mining activities warrant observation and checking from the landowner from time to time. In that matter I was not presented with specific evidence of actual time necessary to observe and check and therefore allowed compensation only for a one hour inspection by one person annually at the rate of $50 per hour, a rate identified in the material.  In this case I have only the assertion that 40 hours has been spent this year on matters to do with Mr Hoffman’s mines.  Once compensation is settled it might be expected that time spent in administration will be lessened.  I would therefore allow compensation for administrative costs of one hour per month at a rate of $34.14 per hour together with an additional amount representing work cover and superannuation.  That is $420.00 pa (total). Divided equally between the two leases, that is $210 pa per lease, for administration costs.  
Additional amount to reflect compulsory nature of action taken: s 281(4)(e)
[54]	Pursuant to s 281(4)(e) of the MRA, landowners are entitled to an additional amount to reflect the compulsory nature of action taken, which shall not be less than 10% of the aggregate amount determined under s281(3) of the MRA. 
Conclusion
[55]	Mr Hoffman must pay the landowners of Spring Hill Station compensation as follows:
ML 20324
Head of compensation	Amount ($)	
Diminution of the use made or which may be made of the land (per annum): s 281(3)(a)(iii)	$ 311	
All loss or expense that arises: s 281(3)(a)(vi)		
Clause 8.1(2) – percentage of proceeds	$0	
Clause 8.1(3)-(5) – reimbursement of the cost of security cameras for surveillance of access; and for the cost of installation; camera maintenance, and administration time	$0	
Clause 8.1(6) – biosecurity checks – twice yearly helicopter inspection of 1 hour per mine and administration costs.	$0	
Clause 8.1(7) – administrative costs	$210 pa	
Additional amount to reflect the compulsory nature of the payment: s 281(4)(e)	10%	
ML 20325
Head of compensation	Amount ($)	
Diminution of the use made or which may be made of the land (per annum): s 281(3)(a)(iii)	$104	
All loss or expense that arises: s 281(3)(a)(vi)		
Clause 8.1(2) – percentage of proceeds	$0	
Clause 8.1(3)-(5) – reimbursement of the cost of security cameras for surveillance of access; and for the cost of installation; camera maintenance, and administration time	$0	
Clause 8.1(6) – biosecurity checks – twice yearly helicopter inspection of 1 hour per mine and administration costs.	$0	
Clause 8.1(7) – administrative costs	$210 pa	
Additional amount to reflect the compulsory nature of the payment: s 281(4)(e)	10%	
Orders
I determine for ML 20324:
1.	Three Hundred and Forty-Two Dollars and Ten Cents ($342.10) per annum payable on the anniversary of the date of grant of the renewal representing the diminution of the use made or which may be made of the land ($311 plus 10%); and
2.	Two Hundred and Twenty-One Dollars ($221) pa in administration costs, indexed annually to CPI ($210 plus 10%).
I determine for ML 20325:
1.	One Hundred and Fourteen Dollars and Forty Cents ($114.40) per annum payable on the anniversary of the date of grant of the renewal representing the diminution of the use made or which may be made of the land ($104 plus 10%); and
2.	Two Hundred and Twenty-One Dollars ($221) pa in administration costs, indexed annually to CPI ($210 plus 10%).