That sinking feeling: compensation for mine subsidence in NSW

By Nick Thomas.

Key Points:
Some subsidence must have taken place before your preventing or mitigating works are performed if you want compensation for your works under the Mine Subsidence Compensation Act 1961 (NSW).

In the late 1990s Wambo Coal Pty Ltd built a conveyor on land which was within a mine subsidence district as proclaimed under the Mine Subsidence Compensation Act 1961 (NSW). A few years later it discovered United Collieries Pty Limited wanted to mine under the conveyor, which would cause subsidence and inevitably damage the conveyor. Wambo therefore decided to move the conveyor. The relocation cost nearly $600,000. The subsidence then occurred, in areas which were reasonably similar to those which Wambo predicted.

Wambo then went to the Mine Subsidence Board for compensation under the Act, but the Board rejected the claim.

The central issue was one of timing. The Act provides for compensation for expense incurred in preventing or mitigating reasonably anticipated damage to improvements when a subsidence has occurred. But is it necessary to have some subsidence before the expense was incurred? Or can a claimant still be compensated for expense incurred before any subsidence has happened?

Unfortunately for Wambo, the NSW Court of Appeal said that the subsidence has to happen first.

Basically, said the Court in Mine Subsidence Board v Wambo Coal Pty Ltd [2007] NSWCA 137, some subsidence must have taken place before you carry out preventing or mitigating works if you want compensation for those works. According to the Court, the Act's compensation scheme is essentially this:

• payment from the Fund of compensation for damage to improvements that arises from subsidence that has taken place (further subsidence may be anticipated which, without the taking of preventative or mitigating measures, is likely to cause damage or greater damage to those improvements);
• compensation for damage incurred as a result of the exercise by the Board of its power to carry out works to reduce the prospective liability of the Fund, by preventing or mitigating damage that the Board anticipates would, but for those works, be incurred by reason of subsidence (including anticipated subsidence); and
• payment of compensation from the Fund in an amount to meet the proper and necessary expense incurred (or proposed to be incurred) in preventing or mitigating damage to improvements, which their owner could reasonably have anticipated would otherwise have arisen (or could reasonably anticipate would otherwise arise) from a subsidence that has in fact taken place but is yet to cause damage or significant or more extensive damage.

It seems the Court is saying that, if you anticipate damage as a result of subsidence which has not yet started, then you should either ask the Board to carry out preventative or mitigating works or wait until the subsidence has started.

The Court placed some weight on the idea that subsidence and substantial damage don't necessary occur at the same time, so there may be time to avoid substantial damage by carrying out preventative or mitigating works after subsidence has begun. It will be interesting to see whether experience bears this out.

For further information, please contact Nick Thomas.