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The Decision

The Land Court decision in Pembroke Olive Downs Pty Ltd v Balanced Property Pty Ltd; Pembroke Olive Downs Pty Ltd v Namrog Investments Pty Ltd (No 2) [2024] QLC 26  was delivered on 10 December 2024 and provides much guidance to parties involved in a compensation dispute.

The Land Court determined compensation resulting from the grant of mining leases pursuant to the Mineral Resources Act 1989 (Qld) (the “MRA”) and awarded compensation to the owners of land for diminution in the value of the land and its improvements, transaction costs to acquire replacement land, and the s.281(4)(e) 10% uplift.   The Court did not award compensation for agistment costs nor for the costs of relocating cattle.

In its consideration of the respondent landowners claims for compensation, the Land Court identified a fundamental problem for landowners claiming compensation relevant to cattle operations on the land which are in fact operated by a different entity to that which owns the land.   

The MRA defines the ‘owner’ of freehold land as the registered owner of the land.  The Land Court found that the owner of the land is entitled to compensation resulting from the grant of the mining lease under the Act; but not the trading entity which owns the cattle and operates the cattle enterprise on the land which is not the owner of the land.

“It is unsurprising that the legislature did not contemplate a split between the ownership of the land and the fruits of a cattle operation on the land. The owners are correct that there are many reasons why complex structures exist: tax minimisation, preservation of family interests for succession planning or in the event of divorce, asset protection in the event of insolvency, or even redressing imbalances in estate distribution. 

None of these things appear to be within the contemplation of the legislature …

People are free to manage their affairs in whatever way they wish and can take the benefit of those decisions. But they must also accept the burdens of those structures if they are not the owner of the land as defined by the MRA.”

This particular aspect of the decision will likely be of great practical interest to both landowners and their professional advisers in the structuring and operation of businesses conducted on that land.

Key Takeaways

Commonly rural enterprises employ a number of structures and strategies to operate a business, which commonly separates land holdings from the business and cattle ownership. There are a myriad of reasons for this in the modern economic and legal landscape within which sits the agricultural industry.

However, the MRA simply does not contemplate this split nor does it recognize it in the entitlements to claim compensation for losses resulting from mining leases.

The decision demonstrates that if you own land and you set up structures which own cattle and run the cattle enterprise in different entity/ies and the Land Court is determining the compensation payable as a result of mining leases on your land,  then you will need to carefully consider what losses are suffered (and by whom) arising from the cattle operations (if any) and the evidence the Land Court will require.

For example, relevant considerations may include:

  • the instructions to the experts concerning the cattle operations;
  • the financial books of account for the owner of the land, the owner of the cattle and the entity conducting the cattle operations;
  • the detail of the cattle operations on the land;
  • any agreement, whether it be in writing or informal, between the owner of the land, the owner of the cattle, and the entity which operates the cattle enterprise.

Conclusion

If your land is subject to a mining lease (or an application for one), we recommend that you obtain appropriate valuation, legal and accounting advice as to any likely losses resulting from the grant of the mining leases, who is suffering those losses, and how the owner of the land may be positioned (or not) to recover them by compensation claimed under the MRA. 

Specific advice should be sought if you have structured your business operations and land holdings in separating the ownership of land from the ownership of cattle and the conduct of the business operations on the land.

We recommend that you seek:

  • legal advice on the terms of any agreements (e.g. lease, agistment agreement, license) or informal arrangements between the owner of the land, the owner of the cattle, and the entity which runs the cattle operations on the land;
  • accounting advice as to how the financial accounts and reporting of the landowner, cattle owner, and cattle operations are undertaken.

In your circumstances, as the owner of land will you suffer any loss resulting from the grant of the mining lease with respect to the uses of the land (e.g. cattle operations)?

If so, how is that loss evidenced?  

Considerations may include for example:

  • the relevant entities financial accounts and reporting?
  • what records of the day to day cattle operations are kept?
  • how are the cattle operations recorded?
  • does any agreement deal specifically with the rights of compensation for resources activities on the land?
  • does any agreement impose any obligations on the landowner with respect to the cattle operations and the entity that conduct them on the land?

Such matters are likely to be pertinent to determining the entitlement, extent and scope of compensation arising in connection with cattle operations which may or may not be claimed by a landowner under the MRA resulting from a mining lease on the land.

Need help with Land, Gas & Mining Law?

The law relating to Gas and Mining is ever-changing and our experienced team is able to advise and negotiate on behalf of both resource companies and private landowners.

If you are unsure as to whether you can make a claim, please contact our Toowoomba, Roma and Warwick office so we may assist with your enquiry.

Please call us today on 07 4637 6300 or contact us.