13 May 2021

Land Court rejects MERCPA landowner compensation claim without evidence to support factual assumptions of expert

By Mark Geritz, Jasmin Singh and Matthew Hales

There can be significant benefits to making an application to the Land Court to determine compensation amounts where there are substantial differences between the experts engaged by the parties.

A recent Land Court of Queensland compensation decision confirms the importance of landowners disclosing information that may materially affect the quantum of compensation claimed in compensation proceedings under the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) (MERCPA).

Delivered on 28 April 2021 by Member Isdale, Horizon Minerals Ltd & Anor v Stacey [2021] QLC 17 was a determination of compensation for mineral exploration activities that turned on evidence of stocking records which the landowner did not disclose to the expert agronomist witnesses or the Court. The stocking records were required to support the landowner's compensation claim for destocking, which was based on an assumption by the landowner's agronomist expert as to the number of stock on the land. The withholding of this evidence led to the Court being unable to give any weight to the opinion of the landowner's expert as it was determined to be based on facts not proven.

Ultimately, the landowner's submission that overall compensation be assessed at $723,699.50 was rejected by the Court in favour of the resource authority holder's determination of $56,825.50.

How was compensation assessed?

Horizon Minerals Limited and Richard Vanadium Technology Pty Ltd (the applicant) brought an application to determine the amount of compensation due to a pastoralist landowner in the business of breeding, backgrounding and fattening cattle (the respondent) under section 81 of MERCPA. The Court also determined the amount that was payable by the applicant for negotiation and preparation costs under sections 91 and 96B of MERCPA, although the parties had agreed this amount by consent.

Financial positions were agreed between the parties on most matters related to compensation, but the Court relied on the expert opinion evidence of two agronomists to determine whether the rehabilitation of the land would require the destocking of the property for a period of two years, or whether a considerably less exacting method of land rehabilitation was sufficient. This issue in dispute constituted the vast majority of the respective compensation assessments arrived at by the parties.

The key aspect of the landowner's compensation claim was based on its expert agronomist evidence that the land would need to be completely destocked for two years to allow the necessary rehabilitation. In making that determination the landowner's expert had:

  1. determined the land to be of a particular category under the relevant Queensland Government technical guide, which necessitated all stock to be removed in order to properly rehabilitate it; and
  2. assumed the number of stock on the land was approximately 600 head.

As to a), the Court did not accept this conclusion and instead preferred the evidence of the applicant's expert that the land was of a category that could be rehabilitated without removing all stock.

As to b), the Court held that, for the evidence from the landowner on this issue to have any weight, the factual basis of the opinion evidence had to be proved, citing Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705. Despite the Court accepting that the landowner kept detailed stocking records and paddock rotations, this data was not provided to the experts or the applicant, and therefore there was no evidence before the court of the actual stocking of the land. This occurred in circumstances where only the landowner had knowledge of the relevant data, had exclusive power to produce it for the Court, and where there was evidence that the applicant had requested the information for the formulation of compensation calculations.

As a result of this absence of evidence, the Court determined that the calculations of the landowner's expert agronomist on the destocking requirements would not be of sufficient weight to be useful to the Court.

The Court ultimately accepted the applicant's expert calculation for annual loss due to stock reduction, determined to be $1,478 per annum (over a six year rehabilitation period), a fraction of the $327,317 per annum (over a two year rehabilitation period) submitted by the landowner.

Ultimately, the Court determined to award the amount of $56,825.50 to the landowner, including:

  • $38,648 compensation pursuant to section 81 of MERCPA; and
  • $18,177.50 costs pursuant to sections 91 and 96B of MERCPA, being:
    • $15,400 for legal costs up to the proceedings; and
    • $2,777.50 for agronomy costs up to the proceedings.

Although the landowner had not formally made a claim under sections 91 and 96B of MERCPA, the Court noted that there had been no submission by the applicant that there was a barrier to the Court making orders for such compensation and such amounts had already been agreed by the parties.

What do parties need to know?

This case demonstrates that there can be significant benefits to making an application to the Land Court to determine compensation amounts where there are substantial differences between the experts engaged by the parties. It also indicates that, to extent the valuations of the experts (such as agronomists and valuers) are underpinned by factual assumptions, those facts need to be proven.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.