Balanced Property Pty Ltd & Anor v Pembroke Olive Downs Pty Ltd; Pembroke... [2025] QLAC 3 | Case summary

s 403Balanced Property Pty Ltd & Anor v Pembroke Olive Downs Pty Ltd; Pembroke... [2025] QLAC 3 | Case summary | Zoe

[25]

[1] In the 25-year period between 1998 and 2023, James Gorman has caused companies that he owns to have purchased 21 cattle properties. Vermont Park and Seloh Nolem are two cattle properties within a complex vertically integrated cattle enterprise, which are specifically utilised as breeding properties.
[2] Mr Gorman is the sole director of Seamark Pty Ltd (Seamark), Namrog Investments Pty Ltd (Namrog), and Balanced Property Pty Ltd (Balanced). Seamark is a wholly owned subsidiary of Namrog but Balanced is not a subsidiary of Namrog.
[3] Namrog purchased Vermont Park, which is near Dysart, on 25 November 2009. The photographs show Vermont Park to be an impressive breeding property. It comprises 16,669.01 hectares of easy sloping topography and importantly, the eastern boundary fronts the Isaac River.
[4] Balanced purchased Seloh Nolem on 31 August 2015. Seloh Nolem adjoins Vermont Park and is on the opposite side of the Isaac River, comprising another 8,614.948 hectares. Since the acquisition of Seloh Nolem in 2015, the two properties have been operated in conjunction as breeding properties. The combined area of Vermont Park and Seloh Nolem is 25,283.958 hectares. In the five years from 2018 to 2022 cattle numbers have varied between 4725 (in 2018) to 5527 (in 2020) with an average holding of 5081 cattle per annum.[1]
[5] The cattle on Vermont Park and Seloh Nolem as well as Mr Gorman's other 19 properties in his vertically integrated cattle enterprise are owned by Seamark.
[6] There are 25 operating coal mines within the region of the Vermont Park and Seloh Nolem aggregation. Pembroke Olive Downs Pty Ltd (Pembroke) has applied for a mining lease over that aggregation, intending to commence the infrastructure build in 2028 for an open cut mine to be in operation for 30 years from 2030. The mine is to be situated on Vermont Park; the associated transport infrastructure will be on Seloh Nolem.
[7] Figure eight of the valuer's joint expert report, as shown below, shows the position of the proposed mining lease MLA 700033, which, if granted, will cut Vermont Park essentially in half and deny the landowner access to large parts of the Isaac River. As is also described in figure eight, the effect of the mining lease is to create three areas of balance land identified as the homestead balance land (the position of the Vermont Park homestead), the eastern balance land (being a small area between the Isaac River and the mining lease as identified), and the very large but very irregularly shaped south-west balance land.

[27]

[8] Section 279 of the Mineral Resources Act 1989 (MRA) provides that a mining lease shall not be granted in a case such as the present one until compensation has been agreed or as determined by the Land Court.
[9] The parties could not agree on an appropriate quantum of compensation payable to Namrog and Balanced in the event the mining lease is granted to Pembroke and so the Land Court was asked to make that determination.[2]
[10] Two experienced rural valuers gave expert evidence: Mr McLay, who was engaged by Namrog and Balanced, and Mr Cavanagh, who was engaged by Pembroke. Mr McLay and Mr Cavanagh submitted a joint valuers' report (JVR), gave evidence, and were cross-examined simultaneously in the Land Court hearing.
[11] Mr McLay reasoned that the compensation to the landowners as a result of the mining lease over Vermont Park was properly assessed at $45,249,579.00. Mr Cavanagh assessed compensation to the owners as a result of the granting of the mining lease over Vermont Park at $22,207,356.00.
[12] The valuers also disagreed as to the proper compensation payable in respect of Seloh Nolem, with McLay opining compensation at $15,690,551.00 and Mr Cavanagh assessing compensation at $6,275,912.00.
[13] In view of the disparity in the expert opinion evidence, the primary judge "wielded a blunt axe where necessary" in making the determination.[3] Compensation was assessed by the Land Court in the sum of $34,835,600.40 with Namrog as owner of Vermont Park, being awarded $26,287,445.40 in compensation. The owner of Seloh Nolem, Balanced was awarded $8,548,154.99 in compensation. [4]
[14] Both the landowners and the miner contend that the judgment contains errors of fact and law and that the compensation assessment made by the Land Court is incorrect: the former argue it should be higher; the latter says it should be lower. The landowners argue that as the primary judge utilised the carrying capacity of each property as a method of settling the compensation sum, which was not foreshadowed, and as both experts had considered carrying capacity to be an unreliable metric, the judgment is flawed.
[15] The landowners Namrog and Balanced appealed to the Land Appeal Court, raising 22 grounds of appeal. The miner Pembroke cross-appealed, raising eight grounds of appeal. The landowners also sought leave to amend a ground of appeal, that there was a denial of procedural fairness in the way the compensation was assessed. Leave to amend was opposed, however, it was granted as it was an argument of law and not dependant on any evidential matters which could prejudice the respondent.
[16] For the reasons that follow, we find that the appeal should be allowed, and the cross-appeal be dismissed.
[17] Section 56(1) of the Land Court Act 2000 (Qld) confirms that "an appeal in the Land Appeal Court must be decided on the evidence on the record of the proceeding in which the decision appealed against was made". The appeal is by way of rehearing.[5]
[18] Although there is a statutory discretion to admit new evidence in section 56(2) of the Land Court Act 2000, section 57 of that Act also confirms there is power to remit the question of compensation for re-determination in the Land Court. We are satisfied there is no need to do the latter and find there is ample evidence available to settle the quantum of compensation payable.[6]

[35]

[29] The respondent cross appealed this conclusion and this submission has merit. The unchallenged evidence does not support the primary judge's conclusion. The unchallenged evidence is that both valuers adopted the direct comparison approach as set out on page 25 of their report. The method utilised by Mr Cavanagh, set out on page 28 of the report, is that he used a five-step process.
[30] In step one, Mr Cavanagh used Queensland Globe and Google Earth, showing the aerial photo with cadastral boundaries and overlaid that on the mining lease application boundaries.
[31] In step two, Mr Cavanagh said he measured the three main land categories and then categorized them as remnant poor forest, remnant better forest and non-remnant cleared grazing.
[32] In step three, Mr Cavanagh calculated the percentage of land with non-remnant cleared grazing comprising brigalow and scrub influenced land to provide a better comparison between Vermont Park and comparable sales evidence.
[33] In step four, Mr Cavanagh analysed the comparable sales evidence by deducting sale inclusions and structural improvements to derive a Treated, Fenced and Watered ('TFW') value.
[34] In step five, Mr Cavanagh applied steps one to three to the sales evidence, apportioned TFW values for each sale between the differing land categories.
[35] Utilising this method, Mr Cavanagh analysed Vermont Park's 16,669.01 hectares as comprising 8,621.53 hectares of remnant poor forest (51.72%), 2,747.37 hectares of remnant better forest (16.48%) and 5,300.11 hectares of non-remnant cleared grazing land (62%).[8]
[36] Mr Cavanagh then assessed a rate of $300.00 per hectare TFW for remnant poor forest, $1,850.00 per hectare TFW for remnant better forest, and then applied a variable rate of between $3,000.00 per hectare TFW and $3,750.00 per hectare TFW for the cleared grazing land.
[37] Mr Cavanagh added the value of the structures assessed at $800,000.00 (3%) but then deducted $100,000.00 to reflect the presence of existing mining leases on the western side of Vermont Park. Thus, Mr Cavanagh did not value each component of the properties in the after case and then add those amounts to arrive at the valuation.
[38] Mr Cavanagh did analyse the purchase price by reference to the type of country comprising Vermont Park and assessed it at a particular value per hectare depending upon his classification. Accordingly, it has been established that the primary judge ought not to have rejected Mr Cavanagh's opinion on the basis that the primary judge did.
[39] The methodology utilised by Mr Cavanagh to value Vermont Park at $26,604,940.00 was an orthodox and logical methodology. It is in the application of the methodology in which error must be found in order to reject Mr Cavanagh's valuation.
[40] Both valuers agreed that approximately 5,300 hectares of Vermont Park comprised the cleared grazing land, which was the most valuable land type. However, the valuers significantly disagreed as to the correct valuation rate of that type of land, with Mr McLay valuing the productive land at $5,500.00 per hectare. As stated above, Mr Cavanagh adopted rates of between $3,000.00 per hectare and $3,750.00 per hectare (with an average of $3,591.00 per hectare).[9]
[41] The second main area of difference between the valuers was the classification of and the value rate of the remnant forest,[10] with Mr Cavanagh adopting $300.00 per hectare and Mr McLay adopting $1,200.00 per hectare. As succinctly put at paragraph 177 of the JVR:

[37]

[42] Mr Cavanagh's before value of Vermont Park, at $27.4 million, was based on his tripartite classification of the country type of Vermont Park and value rates of each type as calculated by him. Mr McLay utilised the same methodology as Mr Cavanagh, but he adopted different land classifications in respect of river/creek frontages and remnant forest and applied significantly higher rates.[11]
[43] Mr McLay's approach was to assess the cleared grazing land of 5,259.4 hectares at $5,500.00 per hectare for a total of $28,926,700.00. River/creek frontages were then valued at $2,500.00 per hectare to total $4,050,000.00 and remnant forest of 9,789.61 hectares was valued at $1,200.00 per hectare, providing a value of $11,747,532.00 for remnant forest. The total value of $44,724,232.00 resulted in a blended rate for the 16,669.01 hectares of Vermont Park of $2,683.00 per hectare. Mr McLay then added $930,000.00 for the structural improvements to quantify the before value at $45,650,000.00.
[44] Although the conclusions of the valuers were vastly different, the methodology adopted by them was similar; the disparity was, as the valuers made plain, that the valuers had different opinions of the proper classifications of land and the value of the land depending upon that classification.
[45] The primary judge was correct in reaching the conclusion that the valuers agreed that the property Jimarndy was the most comparable property to Vermont Park, as it had a similar land area and a comparable mix of scrub, forest and river country.[12] As the primary judge accurately recorded, Mr McLay had conceded that Jimarndy was superior in the sense that it had greater proportions of non-remnant land, meaning that it had a greater proportion of cleared land, but it also had the disadvantage of regular inundation and severances with the Isaac River floodplain.[13] Mr McLay explained that the blended hectare rate of $2,717.00 per hectare for Jimarndy was the most comparable land having been the most recent sale (at September 2022), despite the differences.
[46] Mr McLay explained his reasoning; Jimarndy and Vermont Park had similar land areas, Jimarndy had a slightly superior stocking rate of 9.6%, and the properties had a comparable mix of scrub, forest and river frontage country. Jimarndy had a greater proportion of developed land but had the disadvantage of regular inundation with severances within the Isaac River floodplain.[14]
[47] Mr McLay then reasoned with respect to those five (differential) features that justified the differential blended per hectare rate of $2,717.00 for Jimarndy and $2,683.00 for Vermont Park. Accordingly, Mr McLay's tripartite classification of the land of Vermont Park and his adoption of the value rates per hectare for each different class, resulted in an overall valuation of $45,650,000.00 with a blended rate of $2,683.00 per hectare, most closely aligns with the most comparable sale.
[48] The primary judge was faced with the circumstance that in the abstract, two valuers utilising the same orthodox methodology had arrived at vastly different valuations. However, Mr McLay's valuation did have the advantage of not only being a logical and orthodox application, but as was demonstrated, it was referenced back to the market value of the most comparable property, Jimarndy.
[49] As the primary judge observed "Mr McLay's assessment of $2,683.00 per hectare for Vermont Park as against Jimarndy at $2,687.00 would appear to be the more logical conclusion."[15] Respectfully, the primary judge was correct in that analysis. However, the primary judge then reasoned "however, that analysis ignores the fact that Vermont Park has a significantly lower carrying capacity than Jimarndy and that Mr McLay has overstated the carrying capacity of Vermont Park."
[50] It is in this last observational caveat that the primary judge has fallen into error. As the primary judge had correctly stated, the less comparable property of Berrigurra was assessed by both valuers as a superior property, but counter-intuitively it had a significantly lower carrying capacity than Vermont Park. Therefore, as both valuers said and as the primary judge had accurately observed, there can be no direct correlation between a property's carrying capacity and its value.[16] Carrying capacity is but one of many factors that a valuer may take into account, and the effect of carrying capacity is a matter of evidence in each case.
[51] As stated above in respect of the Spencer test and as observed by Griffiths CJ, the assumption is that both the seller and the buyer must be placed in "the position of persons conversant with the subject". As stated by Isaacs J in Spencer at 441, it is assessed that both parties are "perfectly acquainted with the land and cognisant of all circumstances which might affect its value... including its situation, character, quality."
[52] The Berrigurra sale demonstrates that it is a mistake to intuitively assume that a property's carrying capacity has a direct or mathematical relationship to a property's market value, and as was repeatedly pointed out in the JVR, both valuers opined that it was a mistake to value Vermont Park on the basis of carrying capacity, as such an approach was subjective.[17]
[53] The use made of carrying capacity before the primary judge was limited to its use as a means to test the accuracy of the value rates for each type of land as classified by each valuer. Even in that regard, it had extremely little impact. The valuers were right to reject carrying capacity, however assessed, as a primary, important or direct variable in the valuation of rural land. Indeed, the term 'carrying capacity' was referred to 24 times in the hearing and in submissions - which all served to confirm that it was not used as a valuation method.
[54] The conjecture inherent in any carrying capacity analysis may be observed on the face of the Forage Report: Long-Term Carrying Capacity reports proved in evidence before the primary judge. The forage reports defined the long-term carrying capacity ('LTCC') as an estimate of the number of livestock a property can support over a long period (decades) without causing land degradation.
[55] The LTCC for Vermont Park was noted at 2766 in the forage report of 4 May 2022, whereas less than two years later, on 28 March 2024, it had improved to 3232. That is an increase of 16% of the decade-long average, within two years. More importantly, the disclaimer of the report states: "The purpose of the report is to provide an objectively estimated LTCC for the property which can be used as a starting point for discussion and to add input for further analysis (i.e. use spreadsheet supplied along with this report to improve the LTCC estimates). Values given for the LTCC are an indication only, significant management of property grazing pressure is still required on a season to season basis (i.e. forage budgeting)." Perhaps the accuracy of that comment is demonstrated by the 2018 to 2022 average actual carry capacity of Vermont Park of 5081 head of cattle.
[56] As carrying capacity analysis was demonstrated to be an unreliable metric and positively rejected by both experienced valuers as such, it cannot be used to negatively adjust Mr McLay's valuation as no 'prudent' purchaser or seller would rely on an unreliable metric. Even if, as the primary judge observed, Mr McLay had overestimated Vermont Park's carrying capacity, it is clear that Mr McLay did not rely on carrying capacity to arrive at his conclusion.
[57] The evidence made it plain that carring capacity could not properly be used as a basis for quantifying the value of Vermont Park. The primary judge's conclusion that the before value of Vermont Park ought to be valued at $31,561,465.00 was calculated by the primary judge utilising the ratio between Jimarndy's stocking rate and Vermont Park's stocking rate of 4.01 divided by 5.8, multiplied by Mr McLay's valuation of $45,650,000.00 to arrive at the valuation of $31,561,465.00. Such a quantification was not open upon the evidence; nor as a matter of logic.
[58] Indeed, the carrying capacity and the stocking rate of cattle properties are two quite different things. The carrying capacity of a particular property is an estimated number which varies vastly when a property is being stocked, de-stocked, or over-stocked, which can happen for a variety of reasons, including weather conditions and market forces.
[59] The Land Court is not bound by expert evidence. In Leichhardt Council v Roads and Traffic Authority (NSW) (2006) 149 LGERA 439; [2006] NSWCA 435, Spigelman CJ said (with whom Beasley, Bryson, Basten JJA and Campbell J agreed), at 83:

[39]

[60] The primary judge was not bound to accept Mr McLay's valuation at $45,650,000.00 and was entitled to use the court's experience to identify an "appropriate level of discount" or "appropriate quantum of adjustment to the comparable sales figure". That adjustment must be made by reference to the differential characteristics of the property undertaken in an "appropriate" manner.
[61] As may be observed from Mr McLay's evidence, he had decreased the blended average rate for Jimarndy by about 1% on the agreed basis that Jimarndy was the most comparable sale to Vermont Park.
[62] The approach of the primary judge in using the unreliable metric of carrying capacity resulted in a 40% decrease to the closest comparable sale, which cannot under the Spencer test be accepted as being correct.
[63] Mr McLay's conclusion of the market value of Vermont Park at $45,650,000.00 is a reduction on the comparable sale price of Jimarndy by about 1.3%. Although a discount of 1.3% is relatively small, the important characteristics of Jimarndy relative to Vermont Park show that Jimarndy and Vermont Park are closely comparable.
[64] Firstly, both properties are relatively large properties, with Jimarndy being 17,368.3 hectares and Vermont Park 16,669.01 hectares. That is, as Mr McLay accurately says, a 4.2% variance. Whilst there are some differences, Mr McLay's conclusion that the properties have a comparable mixture of scrub, forest and river frontage country is a fair and open conclusion.
[65] Vermont Park has the advantages that it is sufficiently high to avoid the regular inundation suffered by Jimarndy. It also avoids the severances of the Jimarndy property within the Isaac River floodplain. In this respect, Vermont Park is superior to Jimarndy.
[66] However, on the extremely unreliable metric of carrying capacity and based on the 2022 carrying capacity figures, Jimarndy had a superior 9.6% additional carrying capacity over Vermont Park. When analysed with respect to the 2024 carrying capacity, however, that unreliable metric differential evaporates.
[67] In the circumstances, therefore, even if all expert evidence was rejected and a judicial evaluation was undertaken, the most appropriate method would be to conclude Jimarndy was the most comparable property and then to select an appropriate level of discount. The discount ought, on the facts, to be very small - in the vicinity of 1.3% and not in the vicinity of 40%.
[68] It follows that the primary judge's judicial valuation of the before value of Vermont Park at $31,561,465.00 was incorrect. Furthermore, the appellant's submission that they have been denied natural justice by the primary judge adopting a methodology for the valuation of Vermont Park, which was unknown to the parties and unknowable to the parties, ought to be accepted.[18]
[69] Although it is true that carrying capacity was utilised in cross-examination as a basis to attack the valuers' classification of land and value of land type, it was, as stated above, the firm common view of both expert valuers that the usage of carrying capacity to value the rural property was inappropriate, as the metric was unreliable and subject to too much conjecture.
[70] It follows, therefore, that the appellant could not have reasonably foreseen that any judicial valuation would be undertaken by reference to carrying capacity when that had been emphatically rejected by both experts.
[71] While the appellants have been denied natural justice by the primary judge utilising a valuation methodology which was unforeseen and unforeseeable on the evidence, there is no utility in remitting the matter to the Land Court. There is ample, carefully tested evidence upon which a proper conclusion as to compensation can be deduced.
[72] We would conclude that the primary judge was in error in rejecting Mr McLay's before valuation of Vermont Park at $45,650,000.00 which is a 1.3% reduction in value to the comparable property Jimarndy.
[73] Utilising a "before" valuation of Vermont Park at $45,650,000.00 and adopting the diminution rates utilised by the primary judge results in a loss in value in respect of Vermont Park which ought to be calculated using a similar methodology as adopted in the primary judgment at [76].
[74] The adoption of a before valuation of Vermont Park at $45,650,000.00 results in a before value for the mining lease at $25,472,700.00 (calculated as 55.8%[19] x $45,650,000). This leaves $20,177,300 or 44.2% of total value to be allocated between the Homestead ($149,822), South-western balance land (8,200ha), Eastern balance land (224.79ha) and Improvements at $800,000. Adopting the Homestead value as $149,822 as at [54] of the primary judgment and Improvements at $800,000 as at [69] of the primary judgment, leaves an area of 8424.79ha in South-western balance land (8700ha) and Eastern balance land (224.79ha) which is valued at $19,227,478 ($20,177,300 - $149,822 - $800,000). This results in a before value for the Southwest balance land of $18,714,451 (8,200ha ÷ 8,424.79ha[20] x ($20,177,300 - $149,822 - $800,000)) and a before value for the Eastern balance land of $513,027 (224.79ha ÷ 8,424.79ha x ($20,177,300 - $149,822 - $800,000). Utilising the before valuation of Vermont Park at $45,650,000.00 but otherwise utilising the same methodology adopted by the trial judge results in a loss of value for Vermont Park as set out in the table below:

[43]

[77] As may be observed from Figure Map 8 in paragraph 8, the effect of the proposed mining lease is that it creates a very large but irregularly shaped south-west balance land. The south-west balance land is approximately 8,200 hectares.
[78] The effect of the granting of a mining lease upon agricultural land is that it may create balance lots. The numerous characteristics of a newly created balance lots are to be taken into account, as required in the Spencer test. In the present case, a good example is the eastern balance land, which has an area of 224.79 hectares. Both valuers agree that because of the small size of the eastern balance land and its position in isolation, the eastern balance land has no value as agricultural land. Accordingly, both valuers agree that the diminution rate for the eastern balance land is 100%.
[79] The large south-western balance land does have value. However, its value has been affected by the positioning of the mining lease, and the effect the mining lease would have upon the utility of the balance land is an important matter that any prudent purchaser would take into account in determining the price that purchaser would pay for the land. This principle was discussed by President Trickett in Mitchell v Oakhill and Mitchell (1989) 19 QLCR 66 at pages 73-74. In that case, as there was a lack of valuation evidence as to the proper effect of the diminution, the President was placed in a situation where there was no option other than to allow a nominal figure of $20,000.00 for all loss sustained under section 281(3)(a)(i) to (v) of the Mineral Resources Act 1989, which included in section 281(3)(a)(iii) "compensation for the diminution of the use made or which may be made of land of the owner or any improvements thereon".
[80] In the present case, the primary judge did have valuation evidence as to the proper diminution in the use of the south-west balance land, with Mr Cavanagh opining the diminution rate at 25% and Mr McLay opining the diminution rate at 30%. The primary judge accepted Mr Cavanagh's opinion on this issue. The appellant refers to the well-accepted principle in cases of compulsory acquisition that "in a case of compensation, doubts are resolved in favour of a more liberal estimate...".[24]
[81] The appellant's argument is that the primary judge was in error in accepting Mr Cavanagh's more conservative 25% diminution rate than Mr McLay's 30% diminution rate, simply because of the principle that doubts are resolved in favour of a more liberal estimate.
[82] In terms of the quantification of the diminution effect of a mining lease, both valuers agreed that the sale of the rural property Broadlea was the only evidence available to support a diminution rate for the balance land connected with mining leases granted for surface mining activities. Both valuers agreed that the Broadlea sale showed a diminution rate of 23.5% over the land outside the existing mining leases.
[83] Mr Cavanagh then reasoned that the diminution rate for Vermont Park would be slightly more generous than Broadlea even though he pointed out that it was arguable that the impacts on Broadlea were greater than those envisaged for Vermont Park, as the effect of the four mining leases upon Broadlea was to create four parcels of severed or balance land, and the property was significantly more impacted by infrastructure-related activities, including a train load-out facility and railway line.
[84] Mr Cavanagh pointed out that in respect of the proposed mining lease for Vermont Park, there would be several surface mining pits. However, there were significantly less infrastructure-related activities in that the mining plan for Vermont Park included only an overland conveyor and an access road, in addition to the surface mining activities. In this regard, it is apparent that Mr Cavanagh did apply a generous approach.
[85] Mr McLay's reasoning for providing a higher diminution rate at 30% was essentially because the sale of Broadlea occurred while mining was being conducted upon Broadlea, the purchaser could observe all of the infrastructure and the effect of the mining lease, whereas for Vermont Park, it could not be observed. The primary judge concluded that the diminution rate to be applied ought to be more than the 23.5% made for Broadlea, but reasoned that the level of uncertainty of the greenfield mining site at Vermont Park did not justify an extra 6.5% diminution, particularly, as accurately observed, the actual impact of the mining lease in Vermont Park is likely to be less than that experienced at Broadlea. In those circumstances, it was open to the primary judge to prefer Mr Cavanagh's assessment of a 25% diminution, which was, nonetheless, a generous assessment in keeping with the above authorities.

[59]

[88] Whilst it is true in terms of section 281(4)(a) MRA that the landowners Namrog and Balanced do not own the livestock and it follows that there can be no relocation of the "owner's" livestock, the chapeau to section 281(4) shows that the amount of compensation payable under section 281 is to be assessed under section 281(3) MRA. In this regard, sections 281(4)(a), (b), (c), (d), and (e) add to the proper compensation that may be assessable under section 281(3) but does not limit or otherwise confine the proper compensation assessable under section 281(3) MRA.
[89] In particular, the test under section 281(3)(a)(vi) MRA is that the Land Court is required to assess the amount of compensation an owner of land is entitled to for "all loss or expense that arises as a consequence of the grant or renewal of the mining lease."
[90] The relevant question, therefore, is not which company owns the cattle but rather whether either landowners, Namrog or Balanced, suffer a loss or expense as a consequence of the grant of the mining lease. The uncontested evidence is that as Seamark is a wholly owned subsidiary of Namrog, so that any loss or expense suffered by Seamark as a consequence of the grant of the mining lease is equally suffered by Namrog.
[91] Mr Ashby is a forensic accountant who was retained by the landowners. He explained the loss in an uncontested fashion.[27] On the uncontested facts, there were only two alternatives in respect of the costs to relocate cattle and the costs incurred with respect to the ongoing management of the cattle. Mr Ashby's evidence was that Seamark could fund those losses by two possible means. The first was through additional monies (an inter-company loan) from the holding company Namrog to Seamark to pay for those costs, or in the alternative, where there was no inter-company loan, so that Seamark would bear the costs itself. In this latter scenario when Seamark suffered the loss, that loss caused a diminution in the value of Seamark's net assets, which in turn decreased the value of the shares owned by Namrog in Seamark.
[92] In either scenario, Namrog, as the holding company, suffers a loss. This proposition was theoretically and evidentially sound. And that is perhaps why it was not the subject of any challenge. Despite that, the uncontradicted evidence was rejected by the primary judge.
[93] The primary judge's rejection of the uncontested evidence, which was evidentially and theoretically sound, is not a proper basis to deny the appellant compensation.
[94] As observed by the primary judge, the valuers had agreed the cost to relocate the cattle ought to be allowed. The losses sustained by the relocation of one-half of the breeding herd due to the granting of the mining lease were calculated in Mr Ashby's report of 8 July 2024 and summarised in figure three.[28] Mr Ashby's quantification of the net present value of the additional relocation costs totalled $4,134,233.00. Mr Ashby's model assumes that one-half of the breeding herd would be removed on 1 July 2025 and then agisted for three financial years before a replacement property was found in the 2029 financial year, at which time the cattle would be moved from the agisted property to the newly acquired replacement property. The primary judge rejected the claim for agistment. The appellant asserted that the primary judge erred in this conclusion.

[74]

[100] In Barrett, the lease was a short term, three-year lease granted for the purpose of mining silver, gold, diamond, lead, sapphire, zinc and zircon. The lease was granted on 1 July 2002 with the area of operations defined in the mining lease plan limited to only 1.752 hectares.
[101] Whilst the miners were limited by their current area of operations, they could make further application at any time to amend that area. The original grant of mining lease was over an area of 71.2743 hectares, but only the very small portion of 1.752 hectares, could be disturbed without further application being made.
[102] Accordingly, President MacDonald's conclusions at [26] were based upon a lease that in fact existed and which made reference to a very limited area of disturbance. President MacDonald's decision in Barrett was cited with approval in Pembroke Olive Downs Pty Ltd v Namrog Investments Pty Ltd (Pembroke Olive Downs) [2025] QCA 87 at [27] and footnote 10.
[103] As may be observed by section 235(1)(b) MRA, the holder of a mining lease may do all such things as are permitted or required under the lease or by this Act.
[104] In Barrett's case, under the lease, the holder of the mining lease was permitted only to disturb 1.752 hectares without further application and accordingly under that lease, it was plain that the mining lessee was not given the right to exclusive possession of the whole of the lease area, which comprised 71.2743 hectares.
[105] It is also clear, as pointed out recently by the Court of Appeal in Pembroke Olive Downs, that on application of sections 235 and 403 MRA, it cannot automatically be assumed that a mining lease would grant exclusive possession of the mining lease area to the holder of the mining lease. For example, as provided in section 403(1)(e) MRA an owner may obtain the consent of the holder of the mining lease to enter upon the mining lease area.
[106] It is therefore a matter of negotiation and agreement, which may be evidenced by the mining lease itself, or as set out in Barrett's case in another settled agreement.
[107] As observed by the primary judge in the present case, as the lease has not yet been granted and there had not been any settled agreement reached, that does not mean that an agreement could not be reached.
[108] As acknowledged by the Court of Appeal in Pembroke Olive Downs, the MRA seeks to obtain a balance between the rights of landowners and miners and in part is protective of the rights of landowners. Compensation for the compulsory acquisition of an owner's land ought not be approached in a manner which is dismissive of the rights of the landowners.
[109] In our view, the reasoning of Barrett's case ought to be accepted. That is, generally, unless there is a settled agreement, an arrangement for the use of the land is not relevant. However, if there is a clear and unambiguous offer from a miner which, if accepted, would offset aspects of the compensation claim, then that may be taken into account. A landowner cannot create a compensable loss by rejecting a reasonable offer or refusing to negotiate when a miner makes a reasonable offer. The duty to mitigate loss is not confined to a breach of contract or tort but applies throughout the law of the assessment of damages, loss, or compensation. As Isaacs J said in Ardlethan Options Ltd v Easdown [1915] HCA 53; (1915) 20 CLR 285 at 296 "...every person claiming damages is bound, to do all things reasonable to mitigate his loss."
[110] In the present case, as stated by the primary judge, there was evidence from Pembroke's chief operating officer that Pembroke would not start work on the mining lease until mid-2028 and would allow the owners full access to the land until that time. That may be construed as a clear and unambiguous offer from the miner, which, if accepted, would offset any loss of agistment claim at least until mid-2028. The offer provided Seamark a period of almost three years to remove the cattle it owns. The offer reflects the submission of the appellant, that it will take three years to locate and bring a replacement property up to production. The offer is clear evidence of the owner's authorisation to utilise the leased area in terms of s 403(1) MRA. In the circumstances, the primary judge was right to reject the agistment claim on that basis alone.

[76]

[113] The appellants' claim for additional operating costs ought to have been allowed as compensation to Namrog on the same basis as the costs for relocation of the cattle owned by Seamark.
[114] The basic principle for the assessment of a compensable loss is to quantify the sum of money which will place the injured party in the same position that that party would have been in, had the event causing the loss not occurred. The position before the issue of a mining lease was that the Vermont Park-Seloh Nolem aggregation could be efficiently operated by one management team, on a large rural breeding property.
[115] The loss of essentially half the use of the land in turn causes the owners to relocate half the herd, which will occur within three years. The replacement land, of course, has not been identified. It may be within a 250-kilometre radius of the Vermont Park-Seloh Nolem aggregation, as opined by Mr Cavanagh or within a 500-kilometre radius of the Vermont Park-Seloh Nolem aggregation, as suggested by Mr McLay.
[116] In either case, the consequence is that the management of the cattle enterprise is significantly different. Whilst both valuers recognised that the loss would be sustained, they took a very different view as to how that loss should be quantified. Mr McLay's opinion was that to operate a property which was not aggregated as the Vermont Park-Seloh Nolem properties were, would result in one additional farmhand being employed at the new property at a cost of $84,294.00 per annum, plus an additional cost of a vehicle at $30,000.00 per annum, which if capitalised as an annual expense in perpetuity at 3.25%, quantified the loss at $3,522,561.00.
[117] Mr Ashby undertook a similar analysis but quantified a larger loss, upon the assumption that the incremental wages for a manager would be $131,250.00 per annum.
[118] On the far more conservative side was Mr Cavanagh's opinion, that all that was required was one person to undertake a 500-kilometre round trip once every fortnight for 30 years, discounted at 10%, quantifying additional costs at $135,540.00.
[119] The primary judge rejected the assessment of additional operational costs but stated that if minded to allow compensation for the additional operational costs, would have accepted Mr Cavanagh's opinion that it would be in the order of $135,540.00.
[120] As a replacement property has not been found, it cannot be demonstrated that Mr Cavanagh's assumption that a replacement property 250 kilometres from Vermont Park is incorrect. As the JVR shows[29], Mr Cavanagh's thesis is that what ought to be allowed is only the travel time of five hours, being 250 kilometres each way, together with the vehicle expenses at $0.72 per kilometre. Mr Cavanagh's thesis is that the compensable loss is only the additional costs involved in the travel of one person from the current Vermont Park-Seloh Nolem aggregation to the new property, undertaken once a fortnight.
[121] Mr McLay rejected Mr Cavanagh's quantification, stating "most-larger scale, rural properties have at least one full-time employee. In my view, it is very unlikely that a replacement property can be effectively managed on a one-day per fortnight basis."[30]
[122] The primary judge did not address the critical difference in expert opinion between Mr Cavanagh proposing that a several thousand hectare rural property carrying between 2,000 to 3,000 head of cattle could be managed by working as little as one day a fortnight, and Mr McLay's opinion that that was "very unlikely" and that at least one full-time employee would be required other than by commenting, "I cannot envisage a situation where the additional labour would be required in perpetuity, given the advances in technology that have occurred and are likely to continue."
[123] There is no evidence from the valuers, nor any experienced cattleman, nor any witnesses, as to what advances in technology had occurred or which might occur, such as to render the operational requirements for a large cattle property down to as little as one day's work per fortnight. There is accordingly no sound basis upon which to accept Mr Cavanagh's quantification at $135,540.00.
[124] Mr McLay's model, which is similar to Mr Ashby's model, quantifying the loss at $3,522,561.00 has not been shown to be incorrect and is based upon the most reasonable of assumptions, namely that one additional farm hand would be required to perform the work due to the disaggregation of the properties.
[125] As discussed above, although Seamark as cattle owner suffers the loss, it is also a loss directly suffered by Namrog as the owner of Seamark. Accordingly, Namrog ought to be allowed compensation at $3,522,561.00 in respect of the additional operational costs with respect to the resettlement of one half of the cattle on a replacement property, to be acquired.

[77]

[126] The majority of the primary judgment and the grounds of appeal and cross-appeal relate to the compensation assessed in respect of the mining lease upon Vermont Park or both Vermont Park and Seloh Nolem. Ground 8(b) of the appeal and grounds 5, 6, 7 and 8 of the cross appeal solely concern the primary judge's assessment of compensation in respect of Seloh Nolem.
[127] Paragraph 8(b) of the grounds of appeal raises the argument that the primary judge fell into error in rejecting Mr McLay's evidence that the diminution rate for the eastern balance land, opined by Mr McLay at 17.5%, ought to have been accepted, and that the primary judge fell into error in accepting the evidence of Mr Cavanagh of a 5% diminution rate for the eastern balance land.
[128] The primary judge rejected Mr McClay's much higher estimate of 17.5% for the diminution rate as it was based on the Broadlea argument. As discussed above, at [77] to [85], that argument ought to be rejected as the potential impact is easily discernible by a "prudent" purchaser. Importantly the impact on the Eastern balance land was minimal and so Mr Cavanagh's 5% diminishment rate was reasonable.
[129] As to grounds 5 and 6 of the cross appeal, as is demonstrated in figure eight, all of the mining pits and the vast disturbance to the land will occur upon Vermont Park. The disturbance caused by the mining lease upon Seloh Nolem is limited to an area of 1,185 hectares in the southwest corner of Seloh Nolem. Seloh Nolem is some 8,615 hectares, thus the mining lease is approximately 14% of Seloh Nolem. As the mining lease upon Seloh Nolem is to be used only for infrastructure, namely a conveyor and a haul road, the impact upon Seloh Nolem is significantly less than the impact upon Vermont Park.
[130] The primary judge's approach in respect of Seloh Nolem was to accept there was a total loss of the value of the west balance land (valued at $150,000) and a total loss of the mining lease area of 1,185 hectares and to allow that at a rate of $4,385.70 per hectare. The primary judge quantified the rate of $4,385.70 per hectare by reference to two comparable sales, namely the Maynes sale and the Morpeth sale. No challenge is brought to the primary judge's approach in this regard. Although, as acknowledged at [28] to [39], ground 2 of the cross-appeal has merit, it does not follow that the primary Judge erred in not accepting Mr Cavanagh's opinion as to the value of Seloh Nolem. As discussed at [59], the primary Judge was entitled to reject Mr Cavanagh's opinion and value the property by making "appropriate" adjustments to comparable sales. This is precisely what the primary Judge did, and it has not been demonstrated that there was any error in that approach. It is for that reason that grounds five and six of the cross-appeal ought to be dismissed.
[131] Ground 7 of the cross appeal raises the ground of appeal that Seloh Nolem has not suffered a loss of transaction costs to acquire replacement land as the cattle depastured upon Seloh Nolem are owned by Seamark.
[132] As discussed above, however, the loss is sustained not by Seloh Nolem but by Seamark and therefore Namrog as Seamark as wholly owned subsidiary of Namrog. Grounds 7(a) and 7(b) of the cross appeal ought to be dismissed.
[133] As to ground 7(c) of the cross appeal, the argument brought is that as the severance area is approximately 14% of the total area of Seloh Nolem, the majority of Seloh Nolem is not affected by the granting of the mining lease, so there ought to be no allowance for transaction costs to acquire replacement land. That ground of appeal ought to be rejected as although the mining lease only occupies approximately 14% of Seloh Nolem, it still renders 1,185 hectares to be lost, in respect of which the owner of Seloh Nolem, Balanced, is entitled to proper compensation in order to acquire replacement land. Although 1,185 hectares is a relatively small area compared to the Vermont Park-Seloh Nolem aggregation, it is still a substantial parcel of real property.
[134] As to ground 8 of the cross-appeal, the stamp duty which flows from the quantification assessment flows from the proper assessment of the compensation and has not been demonstrated to be incorrect.
[135] The cross-appeal in respect of Seloh Nolem ought therefore to be dismissed. Similarly, the appeal in respect of Seloh Nolem ought to be dismissed, other than in respect of the replacement property premium as discussed below.

[80]

[137] In the JVR[32], Mr Cavanagh opined that no premium ought to be allowed as "premiums are not consistent with the Spencer test. They only favour one party in the transaction." Mr Cavanagh also made reference to the sale of several rural properties between 2019 and 2022 to opine that "replacement land is available, and the market continues to trade."
[138] Mr Cavanagh further opined in paragraph 217 of the JVR that a premium "is considered double dipping because section 281(4)(e) allows a minimum of 10% of the aggregate to represent the compulsory nature of the process."
[139] The premium issue between the valuers was addressed extensively in cross-examination.[33] As is recorded, Mr McLay had increased the premium from 20% to 35%, upon the basis of the more recent Apis creek sale.
[140] As a matter of construction of section 281(4) MRA, it seems plain that a premium may be allowed, if the evidence supports such a premium under sections 281(4)(a), (c) or (e) MRA. Each of those subsections are broadly drafted provisions, in remedial legislation, intended to provide a generous measure of compensation afforded to landowners who have their land compulsorily acquired under the provisions of the MRA. In the present case, as replacement land has not been purchased, in terms of section 281(4)(a) MRA, a premium may be allowed if it is "likely" that the cost will be incurred.
[141] In the present case, the valuers agree that it is necessary for the owner to obtain replacement land of a similar productivity, nature and area and relocate livestock. In those circumstances, section 281(4)(a) MRA requires the assessment of compensation to the landowner who has not yet purchased the replacement land for compensation for all reasonable costs likely to be incurred by the owner in obtaining the replacement land.
[142] In his evidence, Mr McLay pointed out that there was not any property currently available in the Isaac Shire or Central Highlands Shire that could be considered a larger scale breeding property, such that there was no replacement land available of similar productivity, nature and area to resettle the cattle.[34] Mr McLay's unchallenged demonstration of significant price increases for rural land supports a high premium.[35] The average yearly increase from 2017 to 2022 was 18.42%. Mr McLay points out that the property Langley was sold in July 2020 for $9.3 million and sold again in November 2022 for $17 million - an increase of 82.8% in a period of only 16 months.
[143] In response, Mr Cavanagh pointed out that Mr Perkins and Mr Newman had indicated that replacement properties could be sourced in other areas. Mr McLay conceded that there were two breeding properties in the Theodore area, but they could not be considered replacement land as they were in a different area and were too small. Mr Cavanagh was able to point initially to Mayfield as being a suitable replacement. However, Mr Cavanagh conceded it was no longer on the market as it had gone under contract and, in any event, it was too small. Mr Cavanagh thought there might be one suitable property available in Dingo, but he could not even recall the name of it. Both valuers agreed that cattle could be bred on finishing country, but that did not make sense, because finishing country is more expensive.
[144] The evidence therefore before the primary judge was that, from Mr McLay, there were no suitable properties available at all, and on Mr Cavanagh's evidence that there was perhaps an unknown property at Dingo, about which he could not recall any details. The only evidence before the primary judge, in terms of meeting the objective of section 281(4)(a) MRA in assessing compensation for suitable replacement land, was that there was a chance that an unknown property near Dingo (more than 250km from Vermont Park) may be available, and Mr McLay's evidence that there were no such properties available for rural land, in a steeply rising market. That would not seem to be a confident basis upon which to predict that the landowner will be able to obtain suitable replacement land at historical market value.
[145] In these circumstances, it is the overwhelming inference that the purchase of the replacement land will be required to be undertaken at a premium to historical market value. However, in terms of section 281(4)(a) MRA, there is no reliable evidence as to the likely level of that premium. It could be anywhere from 18% to 92%. In this regard, the premiums paid by mining companies of 9% to 27%,[36] may give a better guide than the premium paid in respect of the Apis Creek transaction of 35%.
[146] The evidence strongly supports the conclusion that a premium will be paid as it is likely there will be few, if any, suitable properties available.[37] The relatively slow nature of the acquisition of large rural properties is demonstrated by Mr Gorman requiring 25 years to acquire his properties.
[147] Given the nature of the task required of a court in assessing compensation as stated in paragraphs [19] to [22] above, it appears that in this case, that it is all but certain that a high premium will be required. The problem is that there is only the broadest evidence as to what that premium is likely to be. The proper solution is to utilise section 281(4)(e) MRA to increase the minimum additional premium of 10% to a higher uplift to recognise the likely premium to be paid for the land. With respect to the land only, a proper premium on the evidence is 17.5%. The awarding of an additional 7.5% to 17.5% % is close to the 2017-2022 average increase of 18.42% and one half of the Apis Creek premium of 35%, and towards the lower end of the premiums paid by mining companies. However, it is the nature of section 281(4)(e) uplift that the percentage uplift chosen applies to the aggregate assessed under section 281(3). The argument and evidence in the trial and appeal relate to the premium to be paid for the loss of rural land. The premium assessed therefore ought to be accepted with respect to the rural land of Vermont Park and Seloh Nolem but not the ancillary losses of relocation fees and additional operation costs. In this case the correct approach is to allow a premium of 15% for all losses at Vermont Park and Seloh Nolem; as to allow 17.5% on the land loss and a further 10% under section 281(4)(e) would, as Mr Cavanagh said, amount to a 'double dip' on the premiums.

Balanced Property Pty Ltd & Anor v Pembroke Olive Downs Pty Ltd; Pembroke Olive Downs Pty Ltd v Balanced Property Pty Ltd & Anor [2025] QLAC 3

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Judgment (93 paragraphs)

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Cases Cited (11)