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New Clarity on Compensation for Landowner Time

Posted on 30 September 2014

Source:  Corrs Chambers Westgarth, 30 July 2013

In a recent decision, the Land Court found that landowner time, in and of itself, is not recoverable as compensation under the Mineral Resources Act 1989 (Qld) (MRA).

The Court considered whether the scope of the compensation provisions in relation to the grant of a mining lease under the MRA allowed the recovery of landowner time.  These compensation provisions are in all material respects the same as the compensation provisions applicable to exploration permits and mineral development licences under the MRA and to petroleum authorities under the Petroleum and Gas (Production and Safety) Act 2004 (Qld) and the Petroleum Act 1923 (Qld).

The specific issue considered by the Land Court was whether the landowner was entitled to compensation for their time spent finding a replacement property (see related article to the right).

The Land Court analysed the legislation and concluded that landowner time cannot be considered a "cost" or "loss" under the legislation.  Therefore a claim for time spent finding a replacement property is not sustainable unless the landowner could demonstrate that the loss of their time has or would be likely to lead to some expenditure that the landowner would otherwise not have incurred.

The example given by the Land Court for the recovery of amounts for landowner time was the cost of hiring labour to work in the business while the landowner was engaged in finding alternate land.

This reasoning would equally apply to time spent by the landowner in other activities such as negotiating agreements with resource companies.

The Land Court also issued a warning that a claim for landowner time would only be allowed where "such an expenditure has been made and verified appropriately".  This would suggest that, as a minimum, there must have been a genuine need for the labour hire to have occurred, the costs of the labour hire must have been reasonable or appropriate and the person hired must not have been otherwise obligated to undertake the work.

The Land Court's reasoning in this case recognises that not all impacts felt by the landowner arising out of resources activities are recoverable by way of compensation and that time spent by landowners engaged in some activities, such as negotiating compensation, is simply an incident of land ownership.  This is consistent with the legal position that both landowners and resources companies have concurrent rights to be upon and use the land.

The case leaves open the ability for parties to negotiate compensation for landowner time purely on a commercial basis.  However, the parties would need to recognise that if no agreement is reached, no compensation for landowner time would be recoverable in the Land Court unless an actual cost has been incurred (e.g. in hiring labour).

While the position that compensation does not include landowner time (unless an actual cost was incurred) should now be taken as settled law, the Queensland Government is still in the process of implementing the Newman Government's Six Point Action Plan in relation to Queensland's land access laws.

Depending on the outcomes of the implementation process, the position in relation to landowner time could well change if the Government decides to amend the current law.  So while clarity now exists, it may not last.