21 September, 2017
Nothdurft and Anor v QGC Pty Limited and Ors [2017] QLC 41
What you need to know
This was the first time that the Land Court has considered a review in compensation payable to landholders for activities authorised under a Petroleum Lease.
While the landholders requested the Land Court to consider the appropriateness of the original compensation under a compensation agreement, the Court found that its scope of review was confined by the compensatable effects of the alleged material change in circumstances.
The Court discounted six of the eight grounds of review raised by the landholders. The Court found there was only one circumstance, being noise exceedances, which required the original compensation to be reviewed. Even then, the Court noted compensation was not found "to the full extent alleged."
What you need to know
The decision provides guidance for proponents on how the Land Court will consider any "material change of use" applications in the future.
This decision highlights the importance of reliable evidence, witnesses and representatives.
Background
Mr and Mrs Nothdurft own a property, Bellara, south of Chinchilla where they live and use the property for cropping, running beef cattle and conducting a manure spreading business.
QGC and the Nothdurfts entered into conduct and compensation agreements (CCA) relating to the compensatable effects of QGC's activities including wells and gathering lines.
The landholders applied to the Land Court seeking to have the entire compensation under the CCA assessed afresh in light of several alleged material changes in circumstances. The landholders raised eight issues which they claimed amounted to material changes in circumstances since the CCA was concluded between the parties.
The landholders' application was brought in accordance with the now repealed section 537C of the Petroleum and Gas (Production and Safety) Act 2004 (Qld). An equivalent provision now exists as section 101 of the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld).
Scope of review
The Land Court has jurisdiction to review compensation where there has been a material change in circumstances after an agreement has been concluded between the parties. This review is qualified under the relevant legislation so that the review of the original compensation is only to the extent it is affected by the change in circumstances.
In this case, the landholders' representative argued that the original compensation should be reviewed afresh. They argued that the Court should ascertain the "global" compensation payable as if no agreement had been entered into and deduct the original compensation to determine the value attributed to the change.
This argument was not accepted by the Land Court. President Kingham found that the review is not an opportunity to consider compensation afresh and the review should be confined by the compensatable effects of the material change.
Land Court's finding on circumstances raised by landholder
The landholders raised eight circumstances which they claimed had materially changed since the CCA was reached, being (broadly): non-compliance with noise limits, discontinuance of untreated CSG water supply, gas emissions, incorrect well locations, owners' time and resources, dust contaminating rainwater tanks, perceived health risks in living in or around gasfield, and the need to relocate place of residence.
President Kingham found that only two of these circumstances raised by the landholder actually amounted to a material change in circumstances.
Further, her Honour found there was only one circumstance, being the noise exceedances, which was both material, and required the original compensation to be reviewed.
While the landholders alleged frequent exceedances of noise limits based on their own measurements of noise, their evidence was contradicted by the expert witness who concluded that it was not reliable evidence of the issues and of nil assistance in confirming QGC's plant noise impacts. Her Honour did not accept the landholders' contentions that the noise exceedances were frequent or substantially over the relevant EA conditions. However, her Honour did recognise that there had been some exceedances which represent a material change in circumstances.
As her Honour found that the exceedances were in the past with no current or enduring impacts, the assessment of compensation was difficult for the Court to determine. QGC's proposed methodology was accepted which was to consider a "reasonable amount to fairly compensate Mr and Mrs Nothdurft in light of the character, duration and frequency" of the noise exceedances. QGC's submissions that there was no evidence to justify an award of more than $55,000 was accepted. President Kingham also included an allowance for the landholders' time in raising and responding to the noise complaints in connection with the material change, bringing the award to $60,500.
The Court ordered QGC to make this award for periodically exceeding agreed noise conditions between 2015 and 2016.
Criticism of non-legal representation and reliable evidence
President Kingham was critical of the landholders' non-legal representative and some of the evidence that was adduced by the landholders.
Her Honour noted that the landholders' representative, as a lay advocate, is not subject to the ethical standards which apply to legal professionals, and was critical of the representative for maintaining allegations about an expert witness' professionalism without a basis for doing so. The representative was also criticised for his inaccurate analysis of noise monitoring reports, stating it was "an example of, at best, poor analysis of the evidence and, at worst, an attempt to misrepresent it to the Court."
Her Honour was also critical of the landholders' valuation expert and reiterated that a Court will always prefer the evidence of a witness who is independent and demonstrates they understand and are willing to fulfil their function of assisting the Court on matters within their expertise.
This decision comes only a few months after the Land Court released a Practice Direction regarding "Representation by Agents". The Practice Direction highlights the risks of non-legal representation, potential difficulty in being compensated if an agent makes any serious errors and cautions that the agent's fees are unlikely to be recovered if you are successful in the proceeding.
For further information, please contact:
Gavin Scott, Partner, Ashurst
gavin.scott@ashurst.com
