What’s happened?

The High Court has delivered an important decision1 making it clear that statutory compensation is payable in NSW for works undertaken to prevent or mitigate damage by mining to existing surface and subsurface improvements.

Who needs to know?

Miners, and owners of surface and subsurface improvements and infrastructure on mining land.

Details

Jemena Gas Networks (NSW) Limited (Jemena) owns and operates the gas pipeline which is the main source of natural gas for the Sydney and Newcastle metropolitan areas. The pipeline traverses an area of land which is subject to a mining lease relating to the West Cliff Colliery.

The focus of the High Court’s decision is section 12A(1)(b) of the Mine Subsidence Compensation Act 1961 (NSW) (Compensation Act). In July 2007, Jemena lodged a claim under that section for the costs of preventive and mitigatory works performed on the north side of Mallaty Creek. Later in that month, the Mine Subsidence Board (MSB) rejected the claim.

The MSB agreed with Jemena that expert advice indicated that the approved longwall mining would result in cumulative subsidence which was likely to cause damage to the pipeline. However, the MSB relied on the NSW Court of Appeal in Mine Subsidence Board v Wambo Coal Pty Ltd (2007) 154 LGERA 60, and took the view that no claim could be made under section 12A(1)(b) of the Compensation Act unless the whole of the subsidence occurred before the expense of preventative works was incurred.

The High Court has rejected this approach. The court has held that, because the MSB had agreed that Jemena reasonably anticipated damage to its pipeline from cumulative subsidence, Jemena is entitled to an amount from the statutory compensation fund to meet its proper and necessary expenses of preventing and mitigating that damage This is so even though, at the time when Jemena’s expenses were incurred or proposed, neither subsidence nor damage had occurred.

Summary

Claims under section 12A(1)(b) of the Compensation Act are not confined to expenditure incurred once a subsidence has in fact occurred. Rather, the claims which can be made under the section include claims for expenditure that, in the opinion of the Board, the owner reasonably anticipates.