The application to the Land Court was brought by a prospective coal explorer (Peabody) to determine compensation liability to a landholder under a Conduct and Compensation Agreement (CCA). Peabody proposed to drill four coal exploration holes and construct six kilometres of access tracks on the Mason family’s property of “Lenton Downs”, a 15,000 hectare cattle breeding property north of Moranbah. Both parties were unable to agree on the quantum of compensation payable for the disturbance caused by the proposed activities and engaged independent valuers to undertake an assessment as per the relevant provisions of the MRA.
One of the main arguments advanced by the landholder was a claim for “diminution” or loss of value of their land as a result of the exploration activities. In this case, it was claimed by the landholder that the exploration activities would result in a decrease in the market value of their property. This was claimed to be caused by the risk and uncertainty caused by the coal exploration and the possibility that a prospective purchaser may be deterred due to potential future coal development.
The Mining company’s valuer argued that there was ‘no evidence in the market place for rural properties in Central Queensland that would give any indication that there is a discount for exploration activities’. The landholder’s valuer was unfortunately unable to refute this claim by providing any market evidence that such a diminution existed. Ultimately, due to the lack of market evidence, the Court held that there was no loss of value of land as a result of the exploration activities.
The Court did however provide an example where diminution of value may exist in terms of drilling causing irreparable damage to an underground aquifer and causing a reduction in the properties value.