Key Points:

This decision may affect the way access arrangements are interpreted, especially whether they cover all relevant "significant improvements".

A recent decision by the Chief Judge of the NSW Land and Environment Court has expanded what many people previously thought was the scope for land owner resistance to mining exploration and operations.

In its decision in Martin v Hume Coal Pty Ltd [2016] NSWLEC 51, the Court provided a broad definition of "significant improvements" on land, which trigger land owner consent rights for mining and coal seam gas exploration and operations.

The decision could have serious consequences for existing and proposed mining and CSG activities.

Exploration rights and land owner consent

The Mining Act 1992 (NSW) does not allow the holder of an exploration licence to exercise any of the rights conferred by the licence over the surface of that part of the land covered by the licence which lies within a prescribed distance of a dwelling-house (that is a principal place of residence) or garden on that land, or on which there is a "significant improvement", unless the licence holder obtains the written consent of the land owner (or, in the case of a dwelling house, that of the occupant). There is a similar requirement for CSG exploration licence holders in the Petroleum (Onshore) Act 1991 (NSW).

Usually, the licence holder and land owner work out whether there is anything on the land which gives the land owner a consent right and, if so, what may be done on the land which is subject to that right, when they negotiate the land access arrangement which a land owner needs under the Mining Act or the Petroleum (Onshore) Actin order to access the surface of the land. If they cannot reach agreement, they can have the matter determined by an arbitrator or the Court.

The term "significant improvement" is defined under the Mining Act as "any substantial building, dam, reservoir, contour bank, graded bank, levee, water disposal area, soil conservation work or other valuable work or structure".

The potential breadth of the catch-all category "other valuable work or structure" has given rise to some difficult negotiations and a number of disputes between land owners and exploration licence holders. A review by Bret Walker SC in 2014 recommended changes to the definition to clarify the position, and some changes were made by an amending Act in 2015, but they have not yet come into force.

A dispute about "significant improvements"

In this case, Hume Coal and several land owners could not resolve their differences about which parts of the land were subject to the need for land owner consent, owing to a disagreement on what were "significant improvements". The land owners applied to the Court for a ruling on specific works and structures on their land.

A Commissioner of the Court decided that either the works and structures could not be "significant improvements" under the Mining Act definition, or the rights which Hume Coal proposed to exercise over the land on which those works and structures were located were not rights under the exploration licence but instead were access rights under the proposed access arrangement - and so she was not required to determine whether or not the works and structures were "significant improvements".

The Chief Judge of the Court, however, overturned that decision.

A broader view of "significant improvements"

Justice Preston applied previous case law to conclude that each of the works and structures in disputecould be "significant improvements".

His key findings, which will re-shape thinking on land owner consent rights, are that:

  • the specific types of improvement in this case could be "significant improvements", when many stakeholders have concluded previously that they could not;
  • the land owner consent requirement for land on which there is a "significant improvement" applies not only to prospecting activities on the land owner's land, but also applies to access rights on that land; and
  • a "significant improvement" can trigger a land owner consent requirement if it is in place any time before the exploration licence holder proposes to use the land on which it has been placed (even if that time is after access arrangements have been agreed).

Justice Preston did not decide that any particular works or structures in this case were in fact "significant improvements" ‒ he ordered that the case be remitted to the Commissioner to make that determination, noting that it is a "question of fact and degree" in each case. We have outlined below the types of works and structures which he considered, and the key reasons he gave for saying that they could be "significant improvements":

  • Paddocks with improved pastures (including lucerne): paddocks which are the product of sufficient labour done to or on the land so as to make them a "work" or a "structure" that is both "substantial" and "valuable" can be "significant improvements".
  • Equestrian cross-country event course: the course is the physical result of labour done on land, and is therefore a "valuable work" (rather than a "use of land"). It could be a "significant improvement" if the labour gave rise to works or structures which were "substantial" and "valuable" enough. The use of the works and structures can indicate that they are valuable.
  • Irrigation pipes: these should be considered as part of a reticulation system, not as separate components. While a "significant improvement" must be "on the land", this does not necessarily require it all to be on the surface of the land.
  • Cattle laneways: the laneways in this case could be "significant improvements". The need for land owner consent could be triggered even if the exploration licence holder only proposes to travel (and not "prospect") along those laneways.
  • Formed roads and driveways: similar reasoning as applied to the cattle laneways applies here.
  • Fences: not all fences will be substantial and/or valuable so as to make them "significant improvements". It will depend on factors such as the nature, extent and other features of each fence, as well as the property on which the fence is erected and the purpose of the fence on the property.

What does this mean for mining and CSG operators?

The Court's decision will not affect the validity and enforceability of existing access arrangements under the Mining and or the Petroleum Onshore Act. However, it may affect the way in which those arrangements are interpreted, especially whether they cover all relevant "significant improvements".

Exploration licence holders should revisit their proposed access arrangements (and consider revisiting their existing access arrangements), to check whether those arrangements capture all works and structures on the land which might be "significant improvements".

Mining and petroleum lease applicants also should revisit their proposals, because the Mining Act and the Petroleum Onshore Act impose land owner consent requirements for leases over "significant improvements".

All mining and CSG explorers and operators should review the legislative changes which were made in late 2015, and look out for a future commencement date.