David Anthony Lord v Broken Hill Cobalt Project Pty Limited

Land and Environment Court (NSW)|2021-10-22|Before: Duggan J

Nature of proceedings

By summons filed on 8 September 2021, the Applicants seek the following relief: 1. Pursuant to s 155 of the Mining Act 1992 (NSW) (Mining Act), a review of the final determination of Robert Angyal SC made 29 August 2021 in respect of a land access arrangement arbitration concerning Exploration Licences 6622, 8143 and 8891; and 2. An order that the Respondents pay the Applicants' reasonable costs of the review.
By order made on 30 September 2021, the hearing of this matter was expedited.

Facts

Thackaringa is a sheep farming property located about 25km west of Broken Hill. The Barrier Highway and the Sydney to Adelaide railway line pass through it. Thackaringa comprises a landholding of approximately 64,610 hectares and is comprised of the following titles: Lot number Deposited Plan Tenure 1 757278 Freehold owned by David Anthony Lord 197 760818 Crown lease to David Anthony Lord 126 760504 Crown lease to David Anthony Lord 5526 768433 Crown lease to David Anthony Lord 196 760817 Crown lease to John Montgomery Lord 4599 767763 Crown lease to John Montgomery Lord

(the Land).

The Applicants, David Anthony Lord and John Montgomery Lord, conduct a grazing enterprise, primarily of sheep, on the Land. The Applicants' family has occupied and farmed the Land for approximately 150 years.
Where the Land is held pursuant to a Crown lease the Applicants are permitted to use the Land for grazing under the Crown Land Management Act 2016 (NSW).
In the past, and continuing to the present, Mining Licences and Exploration Licences have been granted over the Land. The Applicants have entered into access arrangements with miners and explorers on many occasions in the past 50 years. The Applicants have current access arrangements by agreement with two mining entities: Australian Mines Ltd and Panda Mining Pty Ltd.
The Respondents, Broken Hill Cobalt Project Pty Limited (BHCP) and Cobalt Blue Holdings Limited (COB) (together, Cobalt), have the benefit of three Exploration Licences issued under Part 3 of the Mining Act: Title Grant Date Holder Current Expiry Date Act EL6622 30/08/2006 BHCP 30/08/2026 1992 EL8143 26/07/2013 BHCP 26/07/2026 1992 EL8891 03/09/2019 COB 03/09/2022 1992

(the ELs).

The ELs have a total area of approximately 7,000 hectares and relate to land forming part of the Land. For the purposes of the Mining Act the ELs are Prospecting Titles under which Prospecting Operations may be undertaken. Prospecting Operations may only be carried out on land in accordance with an access arrangement with the landowner of the land. Access arrangements may be made by agreement or as determined by an arbitrator in accordance with s 140 of the Mining Act.
For the purposes of the Mining Act, the Applicants are "landholders" of the land over which the ELs relate. Cobalt has sought an access arrangement to enable Prospecting Operations. The parties were unable to agree as to the terms of such access arrangement. The access arrangement, therefore, was required to be determined by an arbitrator in accordance with Part 8 Division 2 of the Mining Act.

Arbitration

In accordance with the requirements of the Mining Act an arbitrator, Mr Robert Angyal SC (the Arbitrator), was appointed. The Arbitrator carried out the following functions as required by the Mining Act: 1. Conducted a mediation as required by s 145 of the Mining Act. The mediation was unsuccessful in resolving the matter and was terminated on 21 December 2020; 2. The Arbitrator then convened an Arbitration which commenced with an inspection of the Land on 2 June 2021 and, thereafter, with a hearing on 2, 3 and 16 June 2021; 3. The Arbitrator delivered an interim determination on 30 June 2021; 4. A further hearing was conducted on 4 August 2021; and 5. The final determination of the Arbitrator was delivered on 29 August 2021 (Final Determination). The Final Determination made determinations as to: the terms of the access arrangement; the compensations payable for compensable loss; and costs.
It is the terms of the Final Determination that the Applicants now review.

Legislative provisions for review of Arbitrator's Determination

Part 8 Division 2 of the Mining Act makes provision for a person to seek to review the determination of an Arbitrator. The relevant statutory provisions relating to such review provide: 155 Review of determination (1) A party to a hearing who is aggrieved by an arbitrator's final determination may apply to the Land and Environment Court for a review of the determination. … (5) Subject to any order of the Land and Environment Court to the contrary, an application for review of a determination operates to stay the effect of any related access arrangement in relation to a party to the arrangement from the time when a copy of the arrangement has been served on the party until the decision of the Land and Environment Court on the review. (6) In reviewing a determination under this section, the Land and Environment Court has the functions of an arbitrator under this Division in addition to its other functions. (6A) A review of a determination is to be by way of rehearing, and fresh material or material in addition to, or in substitution for, the material considered on the making of the determination by the arbitrator may be given on the review and taken into consideration by the Land and Environment Court. (7) The decision of the Land and Environment Court on a review of a determination is final and is to be given effect to as if it were the determination of an arbitrator. (8) The holder of the prospecting title must pay the reasonable costs of the landholder of the land concerned in a review of a determination under this section. (9) The Land and Environment Court, in determining those reasonable costs, must consider whether or not the landholder has acted unreasonably in the negotiation, mediation, arbitration or review proceedings.
Accordingly, in any such review the Land and Environment Court of NSW has the same functions as the arbitrator and to that extent the same obligations. Relevant to the subject matter of these proceedings such relevant functions include: 1. A requirement to specify the compensation for any compensable loss as assessed in accordance with Part 13 Division 1: s 141(2); and 2. A requirement to make a determination as to costs: s 151A.

Issues for determination

The parties were generally in agreement that Cobalt should be entitled to an access arrangement being granted in connection with the Land.
In these proceedings there is a dispute between the parties as to the compensation payable for any compensable loss and the terms of any access arrangement.
As part of each party's case they provided to the Court the form of access arrangement that they contended would be appropriate in the circumstances of this case. Those proposed access arrangements were updated during the course of the hearing in response to evidence that was given. To the extent that a proposed access arrangement is referred to herein I refer to the latest version of such document that was provided to the Court namely: 1. The Applicants' draft proposed access arrangement filed on 28 October 2021 (Applicants' Access Arrangement); and 2. Cobalt's draft proposed access arrangement filed on 26 October 2021 (Cobalt's Access Arrangement).
Accordingly, it will be necessary for me to determine: 1. What losses are properly a compensable loss within the meaning of that term in the Mining Act; 2. The amount of compensation for any such compensable loss; and 3. The terms and provisions of an access arrangement (the Access Arrangement).

Identification of items of compensable loss

The Arbitrator determined at [34] of the Final Determination that the only compensable loss that could arise under the provisions of Part 13 of the Mining Act was financial loss. As a consequence, the determination of the Arbitrator only took into account those losses identified by the parties that would produce a direct and measurable financial loss to the Applicants. This determination was consistent with the submissions made by Cobalt in the hearing before the Arbitrator.
Cobalt maintained the position that the only compensable loss under the provisions of the Mining Act were actual financial losses at the hearing of the matter up until its final submissions. In the final submissions Cobalt conceded that compensable losses could include non-financial loss. However, it contended that such non-financial losses were limited on the facts of this case and would not permit compensation for at least some of the items claimed by the Applicants or if it did not in the quantum contended for by them.
As Cobalt abandoned the construction adopted by the Arbitrator there is no dispute between the parties that requires a determination as to the construction of the legislative provisions as undertaken by the Arbitrator. However, as I am undertaking a review of the Arbitrator's Final Determination I consider it appropriate to record that if I was required to determine this issue I would not have taken the same approach as the Arbitrator to the legislative language of the Mining Act for the reasons, briefly stated, that: 1. The clear words in s 262 do not limit losses to financial losses. It is neither in the language or the context. If it was intended that the loss be only a financial loss, the words of limitation could have been used. Further, the types of losses identified in (a)-(f) are not exclusively losses that result in a financial loss, for example, damage to vegetation and disturbance and interference with stock. 2. The definition of compensable loss in s 262 is seeking to determine actual losses and prospective losses, that is, losses into the future. The use of the phrase "or likely to be caused" is directed to identifying this prospective loss and not identifying an actual existing loss at the date of determination. The reference, in this context, to losses likely to be caused is a delimitation of losses to those that are likely in the sense of the ordinary meaning of that adjective as identified in the Macquarie Online Dictionary as: 1. probably or apparently going or destined (to do, be, etc.): likely to happen. 2. seeming like truth, fact, or certainty, or reasonably to be believed or expected; probable: a likely story. This concept incorporates a limitation of the types of losses that are to be considered to be compensable to those that are probable or reasonably expected rather than remote or fanciful. 1. The reference in the section to the Coal Mine Subsidence Compensation Act 2017 (NSW) does not alter the meaning of the defined term. The exclusion of such claims merely recognises that such types of losses are to be dealt with under a separate regime. The fact that there exists another legislative regime for subsidence does not operate to limit the meaning of the words used in the definition in s 262. 2. When the defined term is read as outlined above there is no inconsistency or tension with the requirement in cl 91(2) of the Mining Regulation 2016 (NSW) (Mining Regulation) which prescribes the manner of assessing compensation. That manner requires an assessment of factors that clearly have a broader consideration than financial loss as it includes, for example: (a) the nature, quality, area and particular characteristics of the land concerned, (b) the proximity of the land to any building, structure, road, track or other facility… These types of considerations bring to mind factors that can generally fall within the broad term "loss of amenity" as well as identifying any financial cost.
For those reasons, I consider that the compensable loss defined in s 262 is not limited to financial losses and can include other non-financial losses, provided such losses are likely. The nature and extent of such loss will depend upon the facts of each case.

Quantification of compensation for items of compensable loss

In this case, the Applicants claim financial and non-financial losses.
In the joint report of the parties experts (Mr Hopcraft, for the Applicants and Mr Ivey, for the Respondents), Mr Hopcraft agreed that the financial losses which related to what were termed "the agro-economic" financial losses were those identified by Cobalt in the evidence adduced by Mr Ivey. Accordingly, there is agreement as to the items of and the quantification of financial losses. Such agreed losses and compensation are dealt with in clauses 10.1, 10.2 and Annexure F clauses 1-8 of Cobalt's Access Arrangement. I consider that the terms of those provisions, with one exception, are appropriate to be incorporated into the Access Arrangement. The exception is clause 4(b) of Annexure F which is proposed by Cobalt to read: Use of existing tracks for vehicles which do not require construction but have been rehabilitated (whether or not by BHCP or COB). A similar expression is also used in clause 10.2(a). I understand the intention of this clause to relate to the use of tracks that have been created by other miners and were required to be rehabilitated at the completion of the Prospecting or Mining Operations. It is proposed that such tracks will be used by Cobalt and the rehabilitation will not be undertaken until completion of its Prospecting Operations. The words that appear in the proposed clause that reference rehabilitation operate in conflict with the first part of the clause, in that if the track has been rehabilitated it will need to be reconstructed as the track no longer exists as a track. Such construction would fall within clause 4(a). For those reasons, it is appropriate that clause only be included up to and including the word "construction" in clause 4(b) and the word "tracks" in clause 10.2(a) and such amendment will be incorporated into the Access Arrangement in clause 10.2(a) and clause 4(b) of Annexure F.
As a consequence of the evidence Cobalt prepared further provisions enabling the limitation of areas of disturbance and a means of quantifying the actual areas disturbed. These measures were contained in clause 10.3 of Cobalt's Access Arrangement and it is appropriate that such provision be included in the Access Arrangement as it provides certainty as to the calculation of financial losses and the ability of the Applicants to adequately identify the amounts of compensation to be paid to them.
However, in addition to those financial losses the Applicants identified, through the expert report of Mr Hopcraft, that there were non-financial losses that would comprise compensable loss as defined in the Mining Act as: 14.0 Exploration Works The proposed exploration indicative works program, as outlined above, is considered to have the following impact on Thackaringa and its management:- 1. Intrusion of vehicles both light and heavy on to the property for extended periods of time. 2. A large number of mining personnel associated with the exploration will be working on Thackaringa for an extended period of time. 3. The security deposits provided by the licence holder are summarised as follows: EL6622 $24,721 EL8143 $10,000 EL5805 $10,000 This total sum of $44,741 is the security deposit which the licence holder must provide for funding of the fulfilment of obligations under the three exploration licences. In the event of default of the licence holder and forfeiture of the security deposits to the New South Wales Department of Planning Industry and Environment there may be insufficient funds on hand to rectify/rehabilitate exploration works over affected areas. 4. The presence of heavy exploration equipment, fuel, spare parts, and associated stores gives rise to intrusion by unauthorised persons, particularly in remote areas looking to illegally obtain fuel, material, spare parts and or vandalise equipment on site. The intrusion of these criminals/unauthorised persons was not generally a management problem prior to the establishment of the exploration base. 5. Management of livestock within the exploration areas will need to be handled carefully to ensure that adequate water is provided and that activities do not disrupt sound agro economic production. This will result in additional work and supervision by management.
In addition, in the Applicants' submissions, the inherent damage to the surface of the Land and the vegetation on it were identified as heads of compensable loss for which a non-financial loss should be determined.

Evidence

The Applicants' expert valuer, Mr Hopcraft, considered the non-financial losses that were caused or likely to be caused by the Access Arrangement as identified above. He determined that the intensity of the Prospecting Operations to be carried out pursuant to the Access Arrangement were essential to an assessment of compensable loss. He relied upon an extract from Cobalt's indicative works program issued in March 2021.
Mr Hopcraft observed at Part 12 of his expert report that, considering the indicative works program: The salient point from the extracts provided are as follows:- 1. Hours of operation are daylight hours 7 days per week. 2. Major resource definition drilling, geo technical and ancillary drilling and bulk sampling will take place over 4-10 months. 3. Indicative equipment numbers are quite large with 2-3 diamond drill rigs, 2-3 crawler units, 4-6 service trucks, 12-20 light vehicles, bulldozer, bobcat and associated storage facilities. 4. Indicative personnel on site are in the order of up to 46 persons for resource and definition drilling, 44 persons for geo technical and ancillary drilling, 86 persons for bulk sampling over 8-10 months and numerous other persons in smaller groups for the less intensive activities of monitoring water impact assessment, biodiversity impact assessment and so forth.
In undertaking an assessment of compensation for the compensable loss identified by him, Mr Hopcraft relied upon what he described as an assessment of the "market value" for such losses determined having regard to the quantum of compensation payable in other access arrangements including but not limited to access arrangements that historically had related to the Applicants' Land. In taking those factors into account Mr Hopcraft assessed the compensable loss payable as:
Cobalt relied upon the expert evidence of Mr Ivey as to the identification of and quantification of compensable loss. Mr Ivey is an agricultural consultant and forensic accountant. He utilised the trading figures for the Applicants' grazing enterprise to determine the gross margin which he then applied on a per hectare rate. Thereafter, by calculating the land that would be occupied by the Prospecting Operations he determined the amount of land that would not be available for grazing during the relevant periods and applied the per hectare rate as a financial loss for being deprived of the use of the Land. On this basis Mr Ivey calculated the compensable loss as:
During his oral evidence when questioned as to any non-financial losses Mr Ivey stated that: … And it perhaps could be some of figure, or an inconvenience, or perhaps a loss of amenity, or something, indeed, which is not really an economic costs, but perhaps is a - is a non-monetary amount…. Tcpt, 21 October 2021, p 79(13)-(15) And further: … and the Court asked what sort of figure would I put on it, I'd have to sort of say it would be a nominal figure. Perhaps over the three expiration licences of [$5,000] - $10,000 in total: Tcpt, 21 October 2021, p 79(16)-(19).
In later evidence the reference to this sum was rounded to the figure of $3,000 for each EL (see for example: Tcpt, 21 October 2021, p 119(11)-(14)). In light of this evidence Cobalt have formulated payment of the lump sum amount of $3,000 per EL to be paid upon commencement of the Access Arrangement as set out in clause 10.8 of Cobalt's Access Arrangement.

Finding on quantification of compensable loss

The financial losses take account only of the fact that a portion of the Applicants' Land will be physically occupied by Cobalt and, thereby, unavailable for economic exploitation by the Applicants.
However, it is necessary to determine whether there will also be non-financial losses that are capable of comprising a compensable loss within the meaning of the Mining Act. Compensable loss is defined in s 262 of the Mining Act as: 262 Definitions In this Division - compensable loss means loss caused, or likely to be caused, by - (a) damage to the surface of land, to crops, trees, grasses or other vegetation (including fruit and vegetables) or to buildings, structures or works, being damage which has been caused by or which may arise from prospecting or mining operations, or (b) deprivation of the possession or of the use of the surface of land or any part of the surface, or (c) severance of land from other land of the landholder, or (d) surface rights of way and easements, or (e) destruction or loss of, or injury to, disturbance of or interference with, stock, or (f) damage consequential on any matter referred to in paragraph (a)-(e), but does not include loss that is compensable under the Coal Mine Subsidence Compensation Act 2017.
The right to compensation is provided for in s 263(1) which states: 263 Compensation arising under exploration licence (1) On the granting of an exploration licence, a landholder of any land (whether or not subject to the licence) becomes entitled to compensation for any compensable loss suffered, or likely to be suffered, by the landholder as a result of the exercise of the rights conferred by the licence or by an access arrangement in respect of the licence.
Section 271 provides that in assessing compensation under Division 3 compensable loss has the same meaning as that contained in s 262.
From these legislative provisions it is clear that compensable loss is limited to the classes or heads of loss that are identified in the relevant definition, in this case that in s 262. Whether the loss is financial or non-financial it must fall within one of the nominated categories. If an identified loss is not referred to in s 262, even if that loss is real and quantifiable, it will not be the subject of a requirement to pay compensation as part of any determination under the Mining Act provisions as they relate to the determination of an access arrangement.
The Applicants, through Mr Hopcraft, have not identified the relevant head of compensable loss in s 262 to which the factors he identifies (as identified in [25] and [28] above) relate. However, even on the most generous construction of s 262 there are some factors he identifies that find no reasonable relationship to the terms of that section. Such factors are: 1. the mining works and equipment acting as an attraction for unauthorised and criminal persons to enter the Land: see [25] at point 4 above; 2. the adequacy of the quantum of security deposits paid pursuant to the terms of the ELs: see [25] at point 3 above.
As these matters fall outside the ambit of the definition of compensable loss I do not consider that the Applicants are entitled to compensation for such losses. Even if they were, I do not have any evidence to permit me to find that the prospect of such losses was "likely" and for that reason would also fall outside the ambit of s 262.
The remaining matters related to the loss are those that would arise as a consequence of the intensity of the user of the Land by Cobalt and the physical damage to the surface of the Land and the vegetation on such Land as a consequence of the occupation and use by Cobalt.
It was contended that the intensity of Cobalt's use had the consequence that farming decisions would always have to be made in the context of the presence of Cobalt. This intensity was reflected by: the number of days; the number of people; the number of movements of machinery and vehicles; and the number of locations upon which Prospecting Operations would occur.
Whilst each of these factors do have the financial effect of preventing the Applicants from occupying the Land for sheep grazing and that such impact has been provided for in the financial loss compensation, the loss is more than the mere inability to graze the Land.
The mere fact of the presence of people and vehicles on the Land for 7 days per week for a number of years provides an intrusion that would not be experienced but for the Prospecting Operations. This intrusion will require the Applicants to consider the presence of these persons and the activities in all aspects of their use of the balance of the Land. The mustering of their flock, the movement of stock through paddocks, the travelling along the access tracks within the Land and the capacity to make other management decisions relating to the use of the Land as a whole will be impacted during the term of the Access Arrangement. This is a loss that cannot be measured by time spent in the handling of stock as it goes well beyond that action. The interference to management and influence upon management decisions is, in the circumstances of this case, a loss capable of comprising compensable loss within the heads of loss in s 262 as it is consequential upon the deprivation of the possession or of the use of the surface of land or any part of the surface, together with the loss being consequential on the disturbance of or interference with, stock. These management considerations are likely losses within the meaning of the definition in s 262 and, therefore, comprise a compensable loss for which compensation must be determined.
Further, I accept the Applicants' submissions based upon the evidence, that it is inherent in the carrying out of the Prospecting Operations that there will be damage to the surface of the Land. Such damage arises from the disturbance to the surface of the Land and the vegetation upon it. Such disturbances include, but are not limited to, the drilling platforms and the existing and proposed use of access tracks.
It is accepted that these disturbed areas of land will ultimately be rehabilitated to the satisfaction of the relevant regulatory authority, however, from the period of the commencement of access until completion of the rehabilitation there will be a lengthy period where the damage will be present. The rehabilitation of such areas after the Prospecting Operations have been completed does provide an end date to the damage but does not preclude a finding that such damage has occurred and that such damage may comprise a non-financial loss for which the Applicants are entitled to compensation. Such compensation relates to the actual period of occupation by Cobalt on the Applicants' Land.
In the circumstances of this case the evidence is that the Land is fragile. It is subject to erosion and its vegetation is sparse. That is the context within which the Prospecting Operations will occur and exemplifies the fact that the damage sustained to the Land during the period of access is not compensated for in the determination of financial losses which relate solely to the inability for the sheep to graze those areas during access. Accordingly, I find that there is the additional head of compensable loss for such damage relating to disturbed areas and consequential disturbance caused by the clearing and use of such areas.
The exercise of determining the appropriate compensation for such non-financial loss is difficult as the compensable losses that I accept are caused by Prospecting Operations are not easily measured by some accepted calculation. Notwithstanding that difficulty, the Mining Act requires a determination of compensation. Inherent in those provisions of the Mining Act is the anticipation that there will be a "payment" of compensation. The reference to a payment of compensation contemplates a determination of a monetary sum, or some other measurable benefit, that will compensate the Applicants for their loss. In this exercise as the Mining Act requires a determination of the compensation amount (ss 141(2), 272 and 275), I must do the best I can on the evidence available to me to determine the appropriate amount.
Mr Hopcraft's approach of quantifying an appropriate amount considered both the non-financial and financial losses as a single sum. Whilst his concession that the financial losses were in the sums identified by Mr Ivey and that allows me to make a rough calculation of what part of the total sum he has attributed to non-financial losses I do not consider that approach to be an appropriate determination of compensation in this case.
The premise underlying Mr Hopcraft's determination of the quantum of compensation was a comparison of amounts paid to both the Applicants and other landholders in other access arrangements. In this comparison he sought to determine what he called a "market price". In order for such a comparison to be made I must be satisfied that the other access agreements are true comparisons, and if not, how they differ such that an allowance can be made for any difference. The evidence as to those access arrangements does not permit me to make any meaningful comparison such that I could be satisfied that there was a "market" sum for such losses.
Further, each of the access arrangements relied upon had been determined by agreement which distinguishes them from the current situation. I accept the submission of Cobalt that an agreed access arrangement may make provision for more that the determination of compensable loss and without evidence as to the factors that influenced each party reaching such an agreement I cannot utilise it for the determination of the quantum of compensation as required by the Mining Act in these proceedings. For those reasons, I do not accept the assessment of the quantum of compensation determined by Mr Hopcraft.
Mr Ivey's written evidence only considered the financial losses and, therefore, was of little assistance to me in the determination of compensation for the non-financial losses. In his oral evidence he determined what he identified as a lump sum payment for inconvenience or loss of amenity. I do not consider that such sum encompasses the totality of the losses that have been identified at above as compensable losses. For those reasons, I do not accept that a single lump sum payment of $3,000 per EL is an adequate sum for compensation for the non-financial losses.
In assessing compensation, I am required to undertake such assessment in the manner provided for in the Mining Regulation. Clause 91 of the Mining Regulation provides: 91 Compensation (1) For the purposes of section 265 (3) of the Act, the prescribed period is the period of 28 days beginning on the date on which the mining lease takes effect. (2) For the purposes of section 272 (1) (a) of the Act, the prescribed manner of assessing compensation is by making an assessment that has regard to the following factors - (a) the nature, quality, area and particular characteristics of the land concerned, (b) the proximity of the land to any building, structure, road, track or other facility, (c) the purpose for which the land is normally used, (d) the use of the land that is approved under any development consent that is in force in respect of the land.
Doing the best I can with the evidence that is before me I consider that it is appropriate, having regard to the nature, quality, area and particular characteristics of the Land, together with the use of the Land for grazing purposes, the Prospecting Operations, and the periods on which Cobalt will have the right under the Access Arrangement to enter upon the Land, that a lump sum per annum should be payable. Such an annual payment will compensate the Applicants for the losses in connection with both the damage to the surface of the Land until such time as it is rehabilitated and the impacts upon the management of the grazing enterprise.
In determining the quantum of such compensation I have had regard to the fact that Cobalt will be entitled to access the Land for 365 days each year and the time that the landholders will need to expend time each day in their farming activities to account for the presence of Cobalt on the Land. I have had regard to the award wage for a farm manager of $50/hour together with potential additional costs for vehicle and equipment, together with other wage costs for farm hands. I have had regard to the extent of damage to the Land caused by the creation of tracks, the continuation of use of existing tracks and the drilling locations in the context of the totality of the Prospecting Operations that Cobalt has identified in its works program. Doing the best I can to synthesise these losses into a lump sum, I determine that a sum is $20,000 per annum per Exploration Licence is appropriate.
To facilitate the payment of the sum for non-financial losses the Access Arrangement will include: 1. A new clause relating to the payment of compensation which adopts the same payment method and dates as for financial losses will comprise a new Clause 10.8 which will be added in the following terms: 10.8 BHCP and COB will pay the Grantor compensation as set out in Annexure F in relation to the non-financial issues caused or likely to be caused as a consequence of the works, or consequential upon the carrying out of the works. The payment will be made by BHCP and COB on the 28th day of the month following every 6-month period of access at the pro rata rate of 1/12th the amount specified in Annexure F payable until the Resources Regulator has expressed satisfaction of the rehabilitation condition 6 in each of the Exploration Licenses 1. a distinction made in Annexure F as between financial and non-financial losses; 2. A new provision will be inserted in Annexure F as clause 9 in the following terms: For each Exploration Licence pay a lump sum of $20,000 per annum. Lump sum is payable in accordance with the provisions of cl 10.8 of the Arrangement. which clause will adopt the same payment methodology as for the financial loss compensation, inserted as clause 10.8 of the Access Arrangement.

Period each year for access - Lambing

The Applicants contend that the Access Arrangement at clause 8 of Annexure C should include a term that precludes access in the period July to September each year. I understand that this period is intended to be inclusive of the months of June to August as these months coincide with the lambing season of the Applicants' sheep. Cobalt opposes this requirement.
Mr Lord gave evidence in his affidavit sworn 14 October 2021 at [29-30]: 29. I would also like to see a term incorporated into the Access Arrangement to provide that the respondents not have access to Thackaringa Station between June and August. I have been a sheep grazier for over 50 years. Sheep lamb during June, July and August. In my experience, miners undertaking exploration activities on Thackaringa Station have always respected the fact. that lambing ewes cannot be disturbed and have worked with us to ensure the welfare of our livestock. During the lambing season we move about Thackaringa Station with great caution. In particular, we leave vehicles some distance from watering points and walk in to check and clean tanks and troughs. I am aware of a recent airborne mining survey having been undertaking during the lambing season on "Grassmere" which is a sheep station owned by Mr Graham Turner near White cliffs about 200km from us. In a recent Zoom meeting Mr Turner told me that the aerial survey resulted in a 40% loss of lambs in the area of the survey compared with lambs on that part of Grassmere not affected by the survey. The activities proposed by the respondents are likely to cause enough disturbance to our sheep to cause them to abandon their lambs at foot and/or to abort. I am aware that the respondents say a like provision is not contained in our agreements with the Australian Mines and Panda Mining. The agreement with Australian Mines does not contain such a provision because it was entered into during a period of drought when there was no prospect of lambing season and was left out of the agreement with Panda Mining through an oversite after I "cut and pasted" the Australian Mines Agreement into the Panda Mining Agreement. However, I picked up the mistake after entering into the Panda Mining agreement and raised the issue with them. Panda Mining did not attempt to access Thackaringa Station during the lambing months. 30. A REF prepared on behalf of the second respondent dated August 2018 is at pages 233 to 380 of the Bundle (Earlier REF) and is in substantially similar (but not identical) terms to the Current REF. Paragraph 33 of the Earlier REF (pages 278 to 288 of the Bundle) noted that there had been communications with me focussed on "agreeing access following the cessation of lambing season (nominal 1 September 2018)". A similar statement is not contained in paragraph 3.3 of the Current REF. I do not know why.
Dr Russell Bush, a specialist in the field of agriculture and livestock production also gave evidence relating to lambing in the following terms: 7.12 Although sheep and cattle will graze 100% of an area (paddock), they exhibit specific behaviours around when grazing occurs. The most frequent hours of movement are three hours before sunrise and three hours after sunset (diurnal grazing behaviours) (Lynch, 1974; Squires, 1976). These behaviours establish a grazing pattern that provides some predictability around where the livestock are likely to be located within a 24-hour period. In an environment such as Broken Hill, with warm to hot days and cool nights, it is likely livestock will graze in the cooler parts of the day (early morning and late evening) and camp (sleep/rest) closer to water during the hottest part of the day (Lynch, 1974; Squires, 1976). In my opinion, this pattern of grazing suggests there would be minimal disturbance or impact on livestock from the proposed activities as these activities will mainly occur outside the periods when grazing occurs. 7.13 In addition, livestock prefer to graze close to watering points in rangeland environments such as the Broken Hill region (Western Local Land Service, 2015). Livestock grazing on dry pasture require increased water consumption to utilise the less digestible fodder (NSW Department of Primary Industries, 2014). In rangeland areas, sheep normally graze within a 2.5 km radius of a watering point, and cattle within a 5 km radius (NSW Department of Primary Industries, 2014). If the water requirements for livestock increase due to lactation or dry feed, they may need to drink more than once a day, reducing their foraging radius and the area of the paddock being used (NSW Department of Primary Industries, 2014). … 7.19 Careful consideration of watering point location is required in relation to the Exploration Licences. Livestock movements at watering points located near the southern boundary of EL 6622 and northern boundary of EL 8143 may be influenced by activities associated with The Exploration Licences, potentially impacting sheep wishing to drink. However, the watering points located near EL 8891 should not interfere with livestock movements due to their location. Any disturbance to livestock movements (noting my opinion at paragraph 7.20 below) from Exploration Licence activities at the southern end of EL 6622 and the northern boundary of EL 8143, could be minimised by scheduling activities in the early morning or late evening periods of the day to coincide with times sheep are likely to be grazing, so that it will not interfere with their desire to drink. Alternatively, relocating or installing new watering points away from the southern end of EL 6622 and the northern boundary of EL 8143 would avoid any disturbance to livestock movements. 7.20 Regardless, sheep are unlikely to change their behaviour to the extent that they will perish from dehydration while avoiding noise and activity. In my experience, once a watering point is known to sheep, they will consistently return in order to consume water. 7.21 It is generally accepted that all activity during lambing be avoided due to possible mismothering and starvation as a result of disturbance (Stanley, 1964). However, the large paddock size encompassing each Exploration Licence and the location of the majority of watering points in each paddock, should, in my opinion, facilitate ample room for lambing without disturbance.
Considering the evidence, it is apparent that lambing is a time when the sheep are vulnerable to disturbance. Management of disturbance is required to ensure that both the sheep and lamb are not stressed and that if not managed appropriately disturbance may lead to the loss of livestock. What underlies this issue is the avoidance of livestock loss rather than compensation in the event of loss. Therefore, it is appropriate that some management systems be put in place to minimise disturbance during this period. I do not consider that no Prospecting Operations should occur during lambing season. As Mr Lord recognises, with appropriate cautions, the sheep are able to be disturbed during lambing and that disturbances such as clearing out the water troughs and checking on sheep health is part of the husbandry activities undertaken during this period. Accordingly, I do not consider, on the evidence available, that all Prospecting Operations should cease during this period.
The evidence suggests that during pregnancy and lactation sheep will have a higher demand for water and will, therefore, reduce their foraging radius and the area of any paddock being used. Usually, on land such as Thackaringa, sheep will graze within a radius of 2.5km of the water source.
It is, therefore, appropriate that some conditions be imposed upon the location of Cobalt's activities during the lambing season.
Cobalt has proposed a regime to accommodate the lambing season that: 1. Limits access to time periods during the whole of the year that is approximately one half-hour after sunrise and one half-hour before sunset; and 2. Limites on drilling within 500m of any watering location where such locations have been identified on a plan. I note that the locations on Cobalt's plan generally coincide with the locations that had been provided by the Applicants in their evidence to the Court comprising the plan that had been provided to and marked by the Arbitrator.
Having regard to the totality of the evidence I consider that the potential disturbance upon sheep during the lambing season is not limited merely to drilling. As observed by Dr Bush the generally accepted position is that all activity should be avoided during lambing. His opinion was, however, that due to the size of the paddocks and the location of watering points in each paddock ample room would be provided for lambing. Bearing in mind that evidence and the evidence of the husbandry practices of the Applicants I consider that such a proposal would only adequately ameliorate disturbances to the sheep during lambing if it included all activities, particularly vehicle movements. Accordingly, I propose to include in the Access Arrangement the conditions proposed by Cobalt at draft clauses 7 and 8 of Annexure C with condition 8 amended to read: 8. Days on which access is NOT permitted: None but no activities, including but not limited to drilling and the movement of motor vehicles, is to occur within 500m of any watering points shown in the map below during June, July or August.
With the amended condition imposed I am satisfied that the potential risk to lambing on the Land will be appropriately managed. If, notwithstanding these management provisions, stock loss occurs as a consequence of the Prospecting Operations the loss will be accommodated by the payment of a fixed sum for the stock as determined below.

Period each year for access - Barrier Range Dragon

The Land contains individuals and habitat of the endangered species of lizard known as the Barrier Range Dragon.
The Applicants propose that Prospecting Operations not be undertaken during the months of September to March. This period is the active period of the endangered Barrier Range Dragon. Cobalt opposes this requirement.
The Applicants submitted that they consider themselves the custodian of the habitat for this endangered species and they consider that they have a responsibility to ensure that it, and its habitat, are not put at risk by Cobalt's activities. They noted that in an earlier iteration of the REF for the Land Cobalt's predecessor Broken Hill Prospecting Ltd had made a commitment to this effect and that Cobalt did not. As it had been recognised in earlier commitments that such a time period was critical to ensure the adequate protection of the Barrier Range Dragon a similar provision should be made in the Access Arrangement.
Cobalt submitted that the provisions for the protection of the Barrier Range Dragon had been prepared by an appropriately qualified expert and assessed in the context of the approval process. By accepting the commitments in the current form the Department was clearly satisfied that the Barrier Range Dragon would be adequately protected by the measures proposed and it would be inappropriate to make further more onerous requirements without evidence to support the Applicants' opinions.
For the same reasons outlined at [86] and [87] below, the appropriate vehicle for the protection of the endangered Barrier Range Dragon is the environmental assessment and approval process that has been undertaken. That process has imposed conditions upon the approval that relate to the protection of the Barrier Range Dragon. The Access Arrangement is not the appropriate vehicle to impose conditions relating to matters that go beyond access.
Further, whilst Mr Lord gave evidence as to his experience with the Barrier Range Dragon and his desire as custodian to ensure its protection, I cannot accept his evidence as anything other than expressions of concern raised by a lay person who, whilst familiar with the species and its habitat from observation, is not capable of giving evidence (nor did he seek to) discerning the potential of certain activities to impact on the species or whether the protective measures that had been imposed would be an adequate protection given the needs of the Barrier Range Dragon. Absent evidence to indicate that the protective measures assessed and proposed in the Activity Approval are inadequate, even if the Access Arrangement terms were the appropriate vehicle to consider such matters, I am unable to form any adequate conclusion on the evidence that exploration activities should not occur during the active months of the Barrier Range Dragon.

Compensation for loss of stock

The Applicants claimed that for any loss of stock caused or likely to be caused by the Prospecting Operations that the sum of $2,500 per head should be paid. Cobalt agreed that a sum should be allowed but contended that such sum should be $475, being the value at market for a sheep.
During the course of cross examination of Mr Hopcraft he accepted that the sum of $475 was representative of the value at market of a sheep and that his sum was "punitive" in the sense that it was high to ensure that the users of the Land under the Access Arrangement acted with care around the stock. During submissions it was observed by counsel for the Applicants that there is no provision in the Mining Act to provide for punitive payments, notwithstanding this acknowledgment I note that the Applicants still press the higher sum in their draft form of Access Arrangement.
The power conferred upon the Arbitrator and thereafter this Court on review is to determine compensable loss in accordance with Part 13 of the Mining Act. The definition of compensable loss in s 262 and the assessment provisions contained in cl 91 of the Mining Regulation do not either in terms or by their context permit punitive payment. The task is to determine actual or likely losses and fix the amount of any compensation relating to that loss and not as a punishment for causing the loss. Accordingly, I reject the quantum of the claim by the Applicants for loss of stock and will adopt the accepted value at market for a sheep at $475/head. The Access Arrangement Annexure D clause 15 will reflect this sum.

The term of the Access Arrangement

Cobalt has three Exploration Licences that relate to various parts of the Land the details of which are identified at [7] above.
EL 8891 currently expires in 2022. The other two licences expire in 2026. Cobalt proposes that the term of the Access Arrangement be defined as follows: Term means the period from the Court's determination of the Arrangement until 26 August 2026, unless otherwise agreed in writing between the parties. If any Exploration Licence lapses, and is not renewed, within the Term, the Access Arrangement shall have no effect to the extent that it applies to the lapsed Exploration Licence.
The Applicants oppose the definition in the manner proposed by Cobalt and maintain that the term of the Access Arrangement be: Term means the period from the date of execution of the Arrangement until: 3 September 2022 in respect of EL 8891; 26 July 2026 in respect of EL 8143; and 30 August 2026 in respect of EL 6622.
The Applicants submitted that there was no power in the Mining Act to provide a term that exceeded the term of the prospecting licence. I do not accept this submission. For the same reasons as expressed by the Arbitrator at [77]-[80] of his Final Determination (which reasons I respectfully adopt) the Mining Act does not preclude an access arrangement from having a term that includes any renewal of the prospecting licence the subject of the arrangement.
Accordingly, I accept that the definition of and the terms of the Access Arrangement will be that as defined in Cobalt's Access Arrangement.

Provision of information to landowner

At the commencement of the hearing the Applicants sought conditions upon the Access Arrangement that required Cobalt to provide information to them with respect to any proposed application for approval together with any approval granted. At the conclusion of the hearing the Applicants only sought a term that required the provision of any approval granted. Whilst Cobalt did not concede that it was necessary that such information be provided it did not oppose the giving of such information to the Applicants. Accordingly, a term in the same form as that proposed by Cobalt's Access Arrangement at clause 19 of Annexure D will be included in the Access Arrangement.

Provisions relating to commitments and other factors dealt with in Activity Approvals

At the Applicants' proposed clauses 16-30 they proposed that conditions be imposed that required, as part of the Access Arrangement, that Cobalt, in effect, comply with commitments it had given in connection with its Activity Approval. These conditions were opposed by Cobalt.
The Applicants submitted that such conditions should be included in the Access Arrangement as the Access Arrangement was the legislative gateway through which Cobalt obtains access to the land on which the mining activity will occur as is identified by s 140(1) of the Mining Act. The Access Arrangement is part of the statutory scheme of regulating the activities of a miner and as such the landowner should have the capacity to enforce the provisions of any commitment given in the context of an Activity Approval through the operation of the Access Arrangement, including by excluding the miner access to the Land where the landowner is of the opinion that the terms of those commitments are not met.
Whilst the Applicants accepted that there were provisions in Part 15 of the Mining Act that would permit them to seek to enforce any breach of any Activity Approval, they submitted that the self-help remedy, by exercising their rights to exclude Cobalt under the Access Arrangement, was the most immediate and more available remedy in the event of a breach.
The Applicants were concerned that the terms of the Activity Approval would not be sufficiently monitored and that it was their responsibility to ensure compliance as the gatekeeper.
Cobalt submitted that the Access Arrangement was not a regulatory arrangement but a provision that permitted access to the surface of the Land to access the minerals beneath that surface, such minerals being excluded from the landholder's interest in the Land. The Access Arrangement was facultative to enable the balancing of the competing claims of the miner and the landholder, not to provide the landholder with pseudo-regulatory or assessment rights relating to the carrying out of an otherwise authorised activity. Conferring such capacity upon a landholder could produce conflicts in the requirements that a miner had to observe. The appropriate authority for determining the requirements of any Activity Approval and its regulation is the department which assessed the proposal and which after such assessment formulated the terms of the Activity Approval. In the event that the landholder is dissatisfied with the manner in which the miner is carrying out the works subject to the Activity Approval the Mining Act makes the necessary provision for enforcement which is pursuant to the open provisions in Part 15 of the Mining Act.
The provisions of the Applicants' Access Arrangement proposed clauses 16-30 of Annexure D to the Access Arrangement will not be included.
An access arrangement is a precondition to entry upon land for the purposes of carrying out exploration. A precondition to the entry upon land for the purposes of the carrying out authorised work does not render that arrangement part of the statutory regulatory system. The Mining Act and the Environmental Planning and Assessment Act 1979 (NSW) make provision for the assessment and determination of applications made for mineral exploration. The requirements of that process are determined by the consent authority nominated by the relevant legislation. The assessment process determines whether a proposal is appropriate and, if so, upon what terms. This process involves a consideration of all of the factors that the Applicants have identified in clauses 16-30.
Once an Activity Approval is granted the miner must abide by the terms of any Approval including the commitments made to the relevant approving authority. Failure to so abide by the requirements can lead to the cancellation of the mining authority: s 125 of the Mining Act. The statutory regulation and enforcement provisions are included in the relevant legislation. In that regard open standing has been provided to enable parties that are not the regulatory authorities to bring proceedings in the event of a relevant breach. The provision of an access arrangement under the Mining Act is to regulate access not to regulate the compliance with the terms of the Activity Approval. Accordingly, I consider that the regulation of the mining activities is sufficiently provided for in the legislative provisions and should not be included as a term of the Access Arrangement.

Definitions of: AIS, EL and REF

As the Applicants no longer press their request for application documents these defined terms become otiose and will not be included in the Access Arrangement.

Clause 2.3

This clause does not impose any obligation upon the Applicants but, if requested by the Applicants, they impose obligations upon Cobalt. Cobalt agrees to these clauses, the Applicants oppose them. As there is no obligation on the Applicants and it remains within the Applicants' power to decide whether to exercise these clauses, I consider that they should be included in the Access Arrangement. The clauses each provide a sensible exchange of information, if requested. Clause 2.3 will be inserted in the Access Arrangement and clause 11.1 will be in the form proposed by the Applicants' Access Arrangement.

Clause 2.4

Clause 2.4 imposes an obligation upon Cobalt to use Agreed Paths of Entry and to that extent, it is appropriate that it form part of the Access Arrangement.
The clause then provides that Cobalt shall maintain and keep in repair the Agreed Paths of Entry. Again, this is an appropriate obligation to impose in the Access Arrangement.
Cobalt proposes that the standard of repair and maintenance be determined having regard "to their condition agreed under clause 2.3". There is no provision or requirement for an agreement to be reached in clause 2.3 and, therefore, this suggestion is meaningless. However, I do consider that the standard of maintenance and repair should be to the standard as at the date of the commencement of the Access Arrangement. Each party can thereafter make their own decisions on how to demonstrate such standards in the event of a dispute. Additionally, I observe that there is a defined term Paths of Entry in the Access Arrangement and that defined term is to be preferred than a reference to "agreed" paths of entry.
Accordingly, clause 2.4 will be amended to read: BHCP and COB will utilize the Paths of Entry and will maintain and keep in repair the Paths of Entry having regard to their condition on the date of the determination of this Access Arrangement.

Clause 18 - Covid Pandemic

The dispute between the parties, in essence, relates to the vaccination status of persons accessing the Land. The limitations on movement and employment as it relates to vaccination are determined either by requirement for vaccination as dictated by the provisions of any relevant public health order or the terms of employment imposed by an employer. In the circumstances of an access arrangement such as this it is inappropriate to dictate the vaccination status of all persons as the interactions between such persons will be limited to the employees and contractors of Cobalt. It is a matter for them to determine whether it will be a term of employment that double vaccination be required. The large area of the Land the subject of the ELs and the distance from those areas to areas the Applicants are likely to be present (such as the Homestead) is such that it is unlikely that there will be anything other than sporadic contact. During such contact the Access Arrangement will require the wearing of a face mask. I consider the terms proposed in clause 18 of the Applicants' Arrangement to be sufficient subject to the deletion of 18.1(a).

Annexure D - clause 15 of Applicants' Access Arrangement

The Applicants propose that there be a clause that provides that the terms of Annexure D prevail over any other provision of the Access Arrangement to the extent of any inconsistency. I do not propose to include this provision. At least in part the Access Arrangement requires that the Prospecting Operations be conducted in accordance with approvals granted by regulatory authorities. There is a potential to create tension between the provisions of the special conditions and the approval conditions should a clause as proposed by the Applicants be included.

Costs

The Mining Act makes provision for the payment of the Applicants' costs. There are disputes between the parties as the costs that should be awarded to the Applicants both in reviewing the earlier cost decision of the Arbitrator and the costs in these proceedings.
Appropriately, as these proceedings were conducted with expedition, the parties have focussed on the substantive aspects of their dispute and not on the question of costs. It is necessary, therefore, that directions be made for the filing and service of any evidence on costs and, thereafter, a hearing date for the determination of costs of the review before the Arbitrator and this review be fixed.

Conclusion and orders

The Court orders that: 1. The Final Determination of the Arbitrator is set aside; 2. Pursuant to s 151(2) and s 155(7) of the Mining Act 1992 (NSW) the Court determines that the Respondents should have a right of access to the areas of the Applicants' landholding comprised in Exploration Licences 6622, 8143 and 8891 on the terms as set out in the Access Arrangement annexed to these orders as annexure A; 3. The exhibits are returned. The parties are to make arrangements to collect the exhibits from my associate within 7 days from the date of these Orders; and 4. That part of the proceedings relating to the review of the Arbitrator's decision as to costs and the costs of these proceedings (costs) are reserved.
The Court directs: 1. The Applicants are to file and serve any evidence relating to costs by 26 November 2021; 2. The Respondents are to file and serve any evidence relating to costs by 10 December 2021; 3. The Applicants are to file and serve written submissions by 17 December 2021; 4. The Respondents are to file and serve written submissions by 4 February 2022; and 5. The parties are granted leave to approach the Registrar within the next 7 days to obtain a date for a hearing before Duggan J on the question of costs. Annexure A (488433, pdf)

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 November 2021

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