The Land Appeal Court’s recent decision in Balanced Property Pty Ltd & Anor v Pembroke Olive Downs Pty Ltd; Pembroke Olive Downs Pty Ltd v Balanced Property Pty Ltd & Anor involved a proposed open-cut coal mine development by Pembroke Olive Downs Pty Ltd (Pembroke) that would bisect two adjoining grazing properties, “Vermont Park” and “Seloh Nolem”, which were operated as part of a vertically integrated grazing enterprise near the Isaac River.
At first instance, the Land Court awarded the landowners a combined $34.8 million in compensation. On appeal, the landowners successfully argued for greater compensation, with the Land Appeal Court increasing the total to $52.86 million, including a 15% statutory uplift.
The key factors influencing the Land Appeal Court’s assessment of compensation were:
- rejection of the primary judge’s “carrying capacity” approach to valuation and adoption instead of “before and after” value analysis—the mining lease area represented 55.8% of Vermont Park’s value, despite being only 49% of its area;
- recognition of diminution in value for parts of “Vermont Park” and “Seloh Nolem” not covered by the mining lease, including 5% diminution in the value of the balance of “Seloh Nolem”, 25% diminution in the value of 8,200ha of “Vermont Park” and 100% diminution in the value of 224.79ha of Vermont Park severed the balance by the mining lease;
- recognition of additional operating and relocation costs, including losses borne by related operating companies that were causally connected to the mining lease; and
- an increase in the statutory uplift from the minimum 10% to 15%, reflecting the premium required to secure replacement land for both “Vermont Park” and “Seloh Nolem”.
Importantly, the Land Appeal Court’s decision provides relief to farmers and graziers who conduct their business operations through an entity different from that which owns the underlying land. Business losses suffered as a result of a mining lease, even if borne by a related company, are compensable, provided they are directly linked to the mining lease.
This decision could also have implications where there are mining and renewable energy projects competing for the same land. For example, if a wind or solar farm is being developed or operated on land over which a mining lease is later sought, the Pembroke decision suggests that compensation might be payable for losses associated with the wind or solar farm. Landowners should ensure they are not exposed to liability if caught between a renewable project developer and a miner.
The Court’s findings also remind landowners that well-prepared, evidence-based claims for compensation for mining leases will achieve a better result.
Thynne + Macartney’s agriculture lawyers have decades of experience assisting landowners through the compensation process for resource activities.
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