Peabody Pastoral Holdings Pty Limited v Mid-Western Regional Council [2013] NSWLEC 86 | Case summary

Peabody's submissions in favour of a costs order 12Peabody submitted that the Council acted unreasonably in the circumstances leading up to the appeals, in making the original declarations in May 2012 to re-categorise Peabody's properties as mining and the declarations in December 2012 declining Peabody's applications for review of the original declarations and affirming the categorisation as mining. Peabody relied on the statement in the report to the Council meeting on 16 May 2012, concerning categorisation of land owned or leased by mining companies, that "the trigger for a consideration of re-categorisation will be the settlement date of purchase or lease of land by a coal mining company". 13Peabody submitted that the change of ownership of land, by itself, is an irrelevant criterion for categorisation of rateable land under Pt 3 of Ch 15 of the LG Act. The criteria for categorisation of land as one of the four available categories (farmland, residential, mining or business) are specified in ss 515-518 of the LG Act. For mining, the only criteria specified in s 517(1) are that the land "is a parcel of rateable land valued as one assessment and its dominant use is for a coal mine or metalliferous mine". Ownership of land by a mining company is not a criterion for categorisation as mining. 14Peabody submitted that the Council's process for re-categorisation, involving eight self-devised factors that had nothing to do with use or the statute, necessarily lead to legal error in categorising Peabody's properties. Peabody noted that the Council's categorisation of the two smaller properties in Wollar (previously categorised as residential) was based only on the factor of "arguably the absence of a land use of farming". Peabody submitted this was an irrelevant criterion for categorisation of these properties as mining under s 517 of the LG Act. Peabody submitted that none of the eight factors, or the only factor applied by the Council to the Wollar properties, directed the Council to look for any residential use. 15Peabody noted that the Council's categorisation of the larger Barigan property (previously categorised as farmland) was based solely on the potential application of conditions of the project approval for the Wilpinjong Coal Project to one of the lots comprising the Barigan property, and not any absence of a land use for farming. Peabody submitted that mere application of conditions of a project approval for a coal mine carried out on other land to the property was insufficient to make the dominant use of the property for a coal mine. 16Peabody submitted that the Council's decisions to decline Peabody's applications to change the categories of the properties also were affected by legal and factual error. This time, the Council relied on the noise impact of the Wilpinjong coal mine on all three of the properties owned by Peabody and on the application of conditions of the project approval, which require acquisition of the three properties on request by the landowners, as providing the justification for categorisation of the properties as mining. Peabody submitted that this reasoning was legally and factually erroneous. First, the Council confused environmental impact with land use. Secondly, the three properties were not acquired by Peabody pursuant to the project approval or a request and there was no material before the Council suggesting they were. Thirdly, an actual use for residential or farming purposes prevails over more remote purposes and passive 'non-use' purposes such as buffering. 17Peabody submitted that the Council had no evidence contradicting Peabody's claims that the properties were used for residential or farming, as the case may be. 18Peabody submitted that the Council treated like parcels of rateable land differently, evidencing error in decision-making. Neighbouring properties in each case, privately owned by someone else and receiving the same or greater noise as Peabody's properties, were not categorised as mining. Furthermore, the Council decided to change the categorisation for some of the parcels of rateable land owned by Peabody subject to the lease to Minnamurra Pastoral Company Pty Ltd from mining to farmland, but declined to do so for other parcels, including property no 20945, also subject to the lease. The details of the use of the land provided by Peabody for all of the parcels the subject of the lease were the same. 19Peabody also submitted that the Council acted unreasonably in the conduct of the appeals. First, in its Statement of Facts and Contentions, the Council maintained its contention that the parcels of rateable land should be categorised as mining and defended Peabody's applications for change of category from mining to the nominated categories of residential and farmland. Peabody submitted that the Council did not have reasonable grounds for its contentions. 20Secondly, Peabody submitted that the Council acted unreasonably in maintaining up to, but then abandoning, its position a few days before hearing when the relevant particulars had been with the Council for many months beforehand. The Council already had the particulars provided with Peabody's applications for change of category concerning residential or farming use of the properties. Further particulars were provided in Peabody's Statement of Facts and Contentions in Reply. The Council had no evidence to contradict Peabody's claimed residential or farming uses of the properties. Peabody submitted that its affidavit evidence did not change any material matter. The only things that changed were that the tenants of the properties were identified and the involvement of an external real estate agent was made known. However, these were not facts essential to the categorisation decision but rather were peripheral. Hence, Peabody submitted, there were no reasonable grounds for the Council delaying its concession of Peabody's applications until a few days before the hearing. 21Thirdly, Peabody submitted that the late change in position forestalled Peabody commencing other appeals in respect of other parcels of rateable land owned by Peabody. Peabody submitted that it, with the agreement of the Council, had selected these three appeals as test cases for the remainder (there were a total of 114 adverse rating categorisation decisions after the Council had re-categorised 6 properties), with the understanding that the judicial determination of the three appeals would be of value in the resolution of the other matters. Peabody submitted that, in reliance on this understanding, it commenced only the three appeals, and not appeals against all adverse rating categorisation decisions, in circumstances where the appeal rights against the s 525 review applications would lapse or expire on or about 2 January 2013. Peabody submitted that any value a judicial determination of the three appeals would have as test cases would be rendered nugatory without a judgment in these appeals and compromised unless that judgment was the product of a contested hearing. Peabody submitted that this is now the consequence of the Council abandoning its defence a few days before the hearing. 22Fourthly, Peabody submitted that the Council acted unreasonably in attempting to insert facts into a proposed statement of agreed facts that had been directed to be prepared by the Court. 23Peabody submitted that the unreasonableness of the Council's conduct in the proceedings was of such a degree that costs should be awarded on an indemnity basis.

Costs order should be made 35I consider that a costs order is fair and reasonable in the circumstances. I find that the Council's conduct in the circumstances leading up to and in defending the proceedings was sufficiently unreasonable as to justify an order for costs against it in the circumstances. 36At the core of Peabody's submissions on costs is its argument that the Council's original decision to re-categorise, its decision to decline Peabody's applications for change of category and its decision to defend the appeals up until shortly before the hearing, were affected by legal error. I agree. In my view, the Council adopted a construction of s 517 of the LG Act which was in error and applied this erroneous construction to make its decisions to re-categorise, decline to change category, and defend the appeals. To explain this conclusion, I will first need to summarise the reasons given for the view the Council took in the reports to the Council in May 2012 and December 2012, the letters from the Council advising of its decision in December 2012, and the Council's statements of facts and contentions. These reveal that the Council's approach to categorisation was based on five factors. I will then explain why those factors do not support categorisation of Peabody's properties as mining. The Council's reasons for categorisation as mining 37The report to the Council's meeting of 16 May 2012 recommended to the Council that it "endorse the principle and analysis processes, as outlined in this report, to re-categorise property assessments owned or leased by a coal mining company, into the rating category of Mining, sub-category of Mining Coal from the 2012/2013 financial year". 38The "principle and analysis process" outlined in the report was that there had been a review of property assessments owned or leased by the coal mining companies that had been categorised as either farmland or residential to assess whether they could be re-categorised as mining. The report stated: A recent review of these property assessments suggested that they were owned or leased for a range of purposes related to mining that may fit the definition set out in Section 517 LG Act. In principle, every assessment held under the ownership of a coal mining company or its subsidiary company, was assessed for re-categorisation to establish whether it was properly to be included in the category of Mining, sub-category of Mining Coal for rating purposes. This reasoning was based upon the premise that it is reasonable to infer that the company has purchased the land to be used or held for a mining purpose. As a result of the review, a comprehensive and critical analysis was applied to each property assessment to establish for the purpose of the LG Act what was the dominant use of the land. Consideration was given to the identification of the purpose of the use to which the land was being put. The analysis was based upon the existence of a hierarchy of factors as follows: (a)mining lease, (b)development consent, (c)exploration licence, (d)development or project application for a mine, (e)land which is identified as buffer land for a mine, (f)environment offset for a mine, (g)land purchased by a mining company as required by an affected landholder due to conditions of development consent, and (h)arguably the absence of a land use of farming. The same principle and analysis process can be applied to mines other than coal mines eg property assessments categorised as Farmland and purchased for silver or gold mining operations (being metalliferous mines) would be re-categorised to Mining. The Analysis (appended in the confidential section of this business paper) shows for each coal mine: property assessments where land parcels possess one or more of factors (a) to (g) and the corresponding additional rate income based upon the mining coal ad valorem rate (Draft 2012/2013 Operational Plan) as opposed to the amount levied for the 2011/2012 financial year and; property assessments possessing factor (h) and the corresponding additional rate income as opposed to the amount levied for the 2011/2012 financial year. The re-categorisation of such properties for rating purposes is a dynamic process and reviews will be continuous and will be initiated by, but not limited to: purchase of land by a coal mining company, expansion and staged development, new information coming to hand, new valuations of Crown land leased by a coal mining company and amalgamation of properties by the Valuer General that are owned or leased by coal mining companies. It is proposed that the trigger for a consideration of re-categorisation will be the settlement date of purchase or lease of land by a coal mining company. 39The attached analysis listed every parcel of rateable land owned or leased by a mining company, including the three parcels the subject of these appeals owned by Peabody. Property no 7594 (112 Araluen Road, Wollar) was assessed to be mining "with Factor (h) only". Property no 21154 (3 Barnett Street, Wollar) was assessed to be mining "with Factor (h) only". Property no 20945 (1066 Barigan Road, Barigan) was assessed to be mining "with at least 1 Factor (a) to (g)" but for "1 lot only" (out of the 160 lots that comprised property no 20945). The more detailed analysis of property no 20945 showed that one lot to be Lot 1 in DP 755455 and the one factor was said to be "(b) &/or (d) Development Consent/Mine Project [Application]" and the particular given was "05-0021 MOD 3". This was a reference to the Project Approval No 05-0021 Modification 3 (August 2012) for the Wilpinjong Coal Project. This fell within Council's factor (b) "development consent". That particular lot has an occupied residence on it. 40The consequence was that for the two smaller parcels in Wollar (which were previously categorised as residential), the Council's decision to re-categorise those parcels as mining was based only on factor (h) which "was arguably the absence of a land use of farming" and not on any of the factors (a) to (g) which did concern mining. The only factor the Council relied on to re-categorise the larger Barigan parcel as mining was the fact that with respect to one only of the 160 lots that made up that parcel, and on which lot there was a residence, a development consent for a mine applied to the lot. 41The Council adopted the recommended principle and analysis process and re-categorised land owned by Peabody, including the three parcels of rateable land the subject of these appeals. 42On 22 October 2012, Peabody applied for change in category of each of the three parcels of land. Peabody attached individual applications with respect to each parcel of rateable land together with a spreadsheet which gave details in respect of each parcel of the nominated category, the description of present and recent uses, the description of buildings or structures eg. fences, roads, etc, the status of dwellings, the current occupation status, the proposed land use, livestock-type, and whether there was cropping. 43For property no 7594 (112 Araluen Road, Wollar), in the application form, Peabody nominated the category of "residential", described the present and recent use of the land as "land is used for residential purposes/accommodation" and stated, in answer to the question of whether the land was vacant or there were any buildings or structures erected on the land, that there was a "domestic residence". In the spreadsheet, Peabody proposed the category of "Residential Rural", described the present and recent uses as "zoned residential", and noted that the dwelling on the land was "occupied". 44For property no 21154 (3 Barnett Street, Wollar), in the application form, Peabody nominated the category of "residential", described the present and recent use of the land as "land is used for residential purposes/accommodation", and stated, in answer to the question of whether the land was vacant or there were any buildings or structures erected on the land, that there was a "domestic residence". In the spreadsheet, Peabody proposed the category of "Residential Rural", described the present and recent uses as "village", and noted that the dwelling on the land was "occupied". 45For property no 20945 (1066 Barigan Road, Barigan), in the application form, Peabody nominated the category of "farmland", described the present and recent use of the land as "farming and grazing, occupied under access licence", and stated, in answer to the question of whether the land was vacant or there were any buildings or structures erected on the land, that there were "structures on sites likely to include fences, yards, sheds, dams, residence, roads". In the spreadsheet, Peabody proposed the category of "farmland", described the present and recent uses as "farming and grazing", described the buildings and structures present as "fences, yards, sheds, dams, residence, roads", described the current occupation status as "occupied under access licence", described the livestock as "cattle", and stated that there was "no cropping". On three lots within property no 20945, Peabody noted that the existing dwelling houses were proposed to be demolished but on another two lots the status of the dwellings was noted to be "occupied". 46The reports to the General Manager of the Council dated 3 December 2012, on Peabody's applications for change of category for the two smaller properties in Wollar used for residential accommodation, relied on the proximity of the properties to the mine site and on the conditions of project approval for the mine requiring the mine operator, first, to ensure that the noise generated by the project does not exceed specified noise impact assessment criteria and, secondly, if the noise generated by the project does exceed specified criteria, upon receiving a written request for acquisition from the noise affected landowners, to acquire the land. The reports were similar in content and stated: The proximity to the mine site and the requirement on Peabody to acquire the subject property at the request of the landowner due to the noise impact means that there is substantial impact upon the land recognized by the Project Approval. That the land has been acquired either in response to the assessment or upon request as conditioned by the Project Approval identifies the assessed unsuitability for land use as a residence. Ownership under these circumstances absorbs the land use within the mining use and even though some residential component (unidentified by the applicant) may remain, the dominant use is for mining. Accordingly, the land would not be re-categorised as has been applied for by Peabody as residential. The noise impact assessed means that but for the use of the subject property to accommodate the exceedance mining in the form of the operation for which approval has been given would have to be affected in some way to be acceptable. Hence the subject property is a necessary component in the mining operation. To the extent necessary to undertake the approved condition the mining use dominates the residential use as is represented by the acquisition upon request condition. It is notable that the Wollar Land Purchases Project admitted by the Applicant identifies that it is an aim of the Wollar Land Acquisition Strategy (inter alia) to purchase properties to avoid having to noise attenuate plant and equipment at Wilpinjong. ... It is apparent therefore that the whole of the property is proposed for use to accommodate the assessed noise exceedance for coal mining. The land use is one which needs to be considered against the definition of "mine" which is as follows:- 'Mine means land, on or below the surface or partly on or partly below the surface, used or held for any mining purpose.' The dominant use of the subject property is mining. 47The reference to Peabody's Wollar Land Acquisition Strategy was derived from the reference in the "Wilpinjong Contract Exchange Document Execution Form" for certain lands acquired by Peabody to such a strategy. A form of this kind was only available for the property at 112 Araluen Road, Wollar. The form stated in the background section: The Wollar land acquisition strategy aims to:

Purchase properties to avoid having to noise attenuate plant and equipment at Wilpinjong;
Obtain an ML for Slate Gully; and
Obtain an EL for the Wollar area. 48The report to the General Manager on the larger Barigan property made a number of mistakes in discussing Peabody's application, which indicates that an application for change of category in respect of a different property may have been considered by the author of the report. The report stated that Peabody's application had described the present and recent use of the land as "awaiting formalisation of licence agreement for grazing"; in fact Peabody's application had stated "farming and grazing, occupied under access licence". The words quoted in the report were used in a different application for change of category for a different property no 7651. Although the report stated that the application had identified improvements on the property as "structures on sites likely to include fences, yards, sheds, dams, residence, roads", later the report stated that Peabody had said the land was "vacant". For example, the report stated that: Wilpinjong claims that the category is farmland due to the land being vacant and unable to be categorised as either farmland (s515), residential (s516) or mining (s517). Essentially, it is claimed by Wilpinjong that the land, though not used for farmland as defined is farmland by default. Peabody made no such claim in its application for change of category for property no 20945. 49The report stated that the reasons given by Peabody in its application why the proposed category was more appropriate was that "vacant land, zoned primary production and surrounding land use is for farmland"; in fact the application stated that the reasons were "proposed category is dominant use under the Local Government Act 1993". The words quoted in the report were in fact used in the different application for change in category of the different property no 7651. 50The report stated that Peabody had responded to the Council's request for particulars "by letter dated 9 November 2012 but this response did not provide particulars as requested or at all"; in fact Peabody not only responded on 9 November 2012 but also responded to the Council with respect to property no 20945 by letter dated 29 November 2012, attached to which were extracts from a lease from Peabody to Minnamurra Pastoral Company Pty Ltd with respect to properties including the Barigan property no 20945. 51The report noted that Peabody had advised that there was farming and grazing of cattle on the subject property however there was no cropping. The report asserted that Peabody had "not provided evidence that the subject property could be classified as farmland within the category of farmland found in the legislation (s515)". 52The report referred to the Wilpinjong Coal Project Approval and the conditions in Schedule 3 that required the mine operator, first, to ensure that noise generated by the project did not exceed specified noise impact assessment criteria and, secondly, to acquire noise affected properties upon request in the event of noise exceeding specified criteria. The report continued: The proximity to the mine site and the requirement on Wilpinjong to acquire the subject property at the request of the landowner based upon request due to an identified environmental impact (noise impact) means that there is potential for a substantial impact upon the land recognized by the Project Approval. Ownership under these circumstances brings the land use within the mining use and even though some farmland component (unidentified by the applicant) may remain, the dominant use is for mining. Accordingly, the land would not be re-categorised as has been applied for by Wilpinjong as farmland. The noise impact of the mining operation assessed on the land means that but for the use of the subject property to accommodate this use mining in the form of the operation for which the Project Approval has been given would have to be affected in some way to be acceptable. Hence the subject property is a necessary component in the mining operation. ... It is apparent therefore that the whole of the property is proposed for use to attenuate the noise impact of the mining operation and to accommodate this mining use. The land use is one which needs to be considered against the definition of "mine" which is as follows:- "Mine means land, on or below the surface or partly on or partly below the surface, used or held for any mining purpose." It is considered that the Noise Impact Assessment Criteria - Condition 2 - Property ID 60 identified in the Project Approval is required to permit the operation to extract coal occurring in areas where such a location will be impacted by mining to a level where the owner of private land would not tolerate the impact. 53The reports made recommendations and the Council adopted the same recommendations (with some variations) that the Council declare the categorisation for rating purposes of each of the three properties as "mining-mining coal". With respect to the smaller parcels at Wollar (properties nos 7594 and 21154), the Council: 2. Declares the categorisation for rating purposes of the subject property (property number 7594) as "mining - mining coal" by reason of the following: (a)The land comprises a parcel of rateable land valued as one assessment with its dominant use for a coal mine as the term "mine" is defined in the Local Government Act 1993 as follows:- "Mine means land, on or below the surface or partly on or partly below the surface, used or held for any mining purpose." (b)The mining purpose for which the land is used is as to accommodate the assessed noise exceedance of coal mining. (c)The land has been identified for and purchased in anticipation of and for the purpose of securing a property with an assessed noise exceedance from the Wilpinjong Coal Project. (d)The extent of residential use remains unspecified by Peabody. Any such use is not the dominant use. The dominant use is the use for mining to attenuate noise from the mining operation. 54With respect to the Barigan property (property no 20945), the Council: 2. Declares the categorisation for rating purposes of "the subject property" (property number 20945) as "mining-mining coal" by reason of the following:- (a)The land comprises a parcel of rateable land valued as one assessment with its dominant use for a coal mine as the term "mine" is defined in the Local Government Act 1993 as follows:- "Mine means land, on or below the surface or partly on or partly below the surface, used or held for any mining purpose." (b)The mining purpose for which the land is used is to attenuate the noise impact of the mining operation for coal mining by providing buffer land for that purpose. (c)The Project Approval assesses the impact noise on the land such that for the proponent, Wilpinjong, is to acquire the land to accommodate an assessed level of noise such that the mining impact is capable of attenuation. The dominant use of this land is for the accommodation of the noise impact of the mining operation of the mining use. 55On 3 and 10 December 2012, the Council notified Peabody of the declarations for each of the properties giving the same reasons. 56In the Council's statements of facts and contentions for the appeals concerning the two smaller properties in Wollar, the Council contended that: 2 The land is used or held for a mining purpose and falls within the definition of "mine" under the LG Act. 3 The land is a sensitive noise receiver situated to the east of the Wilpinjong Coal Project. 4 The land is affected by and subject to noise from the Wilpinjong Coal Project. 5 The land is used by [sic] to dissipate, attenuate and otherwise to reduce the impact of noise from the Wilpinjong Coal Project. 57In response to Peabody's factual assertion that the parcels of land were used as residences, the Council contended: 7 Any such residential use will necessarily have to accommodate the noise from the Wilpinjong Coal Project and thus be subject to and subordinate to the dominant use for mining. 8 The use as a residence is significantly less in scale, duration, intensity and size than the dominant or primary use of the land for mining. 58In the statement of facts and contentions for the Barigan property, the Council contended: 2. The land is owned and occupied by Peabody Pastoral Holdings, the operator of the Wilpinjong Coal Project. 3. The land is used or held for a mining purpose and falls within the definition of "mine" under the LG Act. 4. The land is a sensitive noise receiver situated to the south east of the Peabody Coal Project [sic]. 5. The land is affected by and subject to noise from the Wilpinjong Coal Project. 6. The land is used by Peabody Pastoral Holdings to dissipate, attenuate and otherwise reduce the impact of noise from the Wilpinjong Coal Project. 7. Peabody Holdings asserts that the land is subject to a lease. Particulars Peabody Pastoral Holdings Pty Limited as lessor lease to Minnamurra Pastoral Company Pty Ltd commencing 14 September 2011 and terminating 13 September 2018. 8. The land is also used for the grazing of cattle. 9. Such use will necessarily have to accommodate the noise from the Wilpinjong Coal Project and thus be subject to and subordinate to the dominant use for mining. 10. The grazing use is significantly less in scale, duration, intensity and size than the dominant or primary use of the land for mining. 59This material reveals that the Council's reasons for categorising Peabody's parcels of land as mining are fivefold: (a)the land is affected by noise from the Wilpinjong Coal Project mine; (b)the noise affected land is owned by Peabody which is a mining company or a subsidiary of a mining company; (c)the purpose for which Peabody acquired the land concerned the noise affectation by the mine; (d)conditions of the project approval for the mine required Peabody to acquire land affected by noise exceeding specified criteria if requested by the noise affected landowner; (e)even if the land was not used for a mining purpose, it was held for a mining purpose. 60In my view, none of the reasons supported categorisation of Peabody's three properties as mining under s 517 of the LG Act. Mere noise affectation by mine insufficient to constitute use for mine 61The three properties the subject of the appeals were not physically used by Peabody for a coal mine. The only potential use of the land for a coal mine contended for by the Council was as a sensitive noise receiver located in proximity to a coal mine. The Council contended that noise affectation by a proximate coal mine was a relevant factor in categorising use of the land for a coal mine because it may trigger acquisition of the land under a condition of project approval or because noise attenuation over the land amounted to its use as a buffer from the mine. 62I do not agree that affectation of land by adverse impacts such as noise from land on which a coal mine is operated causes the affected land to be used for the purpose of a coal mine. 63Virtually all uses of land have external impacts to varying degrees. Use of land for farmland, residential, mining or business can each cause pollution (air, water, land, noise, light or visual), traffic and parking problems, or biodiversity impacts external to the site of the farmland, residential, mining or business use. Such externalities do not result in the land subject to the externalities being used for the purpose of the activity that causes the externalities. The residence affected by air pollution from an adjoining factory is not thereby used for the purpose of factory. A wetland affected by water pollution from an upstream farm is not thereby used for the purpose of a farm. So too land that is affected adversely, such as from noise impacts, by an open cut coal mine is not thereby used for the purpose of a coal mine. Affectation of land is to be distinguished from use of land. Change in ownership of noise affected land does not change use of land 64In submissions, the Council accepted the above proposition that mere affectation of land by a coal mine does not cause the affected land to be used for a coal mine. The Council contended, however, that affectation of land by a coal mine can result in the use of the land for coal mine if the affected land is in the same ownership as the affecting land. Hence, the statement in the report to the Council's meeting on 16 May 2012 that the settlement date of purchase or lease of land by a coal mining company is the trigger for a consideration of re-categorisation. 65For example, the Council accepted that when the land at 3 Barnett Street, Wollar, which was used for residential accommodation, was owned by someone other than Peabody, the land should not be categorised as any category other than residential, notwithstanding that it was noise affected by the nearby coal mine. However, upon transfer of ownership to Peabody, the Council contended that the use transmogrified to be for a coal mine, notwithstanding that there was no change in actual use of the land for residential accommodation. 66The Council's contention is unsupportable. A change in ownership by itself cannot cause a change in the purpose for which land is used for categorisation under s 517 of the LG Act. Purpose of acquisition does not cause a change in use 67The Council also contended that the purpose for which the land was acquired was a relevant factor in determining the use to which the land is put. The Council contended that acquisition by Peabody of the parcels of rateable land because they were affected by noise from the coal mine causes those lands to be used for the coal mine. In submissions, the Council relied on the statement in Council of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493 at 515 that use of land (for the purpose of determining whether the land was exempt from rates under the then s 132(1)(d) of the Local Government Act 1919) "will vary with the purpose for which it has been acquired and to which it has been devoted". 68The Council submitted that the purpose for which land was acquired might be evidenced by the acquisition under a condition of project approval for the mine. In its decisions to re-categorise the properties as mining and to decline to change the category from mining, the Council relied on the existence of conditions of the project approval for the Wilpinjong Coal Project mine that entitled an owner of land affected by noise exceeding certain criteria to request acquisition of the noise affected land by the mine operator. The Council contended that the existence or activation of such conditions caused the noise affected land to be used for the coal mine. 69As Peabody submitted, however, there was no evidence that any of the three properties the subject of these appeals were acquired by Peabody under the conditions of the project approval on the request of the landowner. 70In oral submissions, the Council put its argument a different way. The Council submitted that the conditions of the project approval for the Wilpinjong Coal Project dealing with noise apply only to "privately-owned land". "Privately-owned land" is defined to not include land owned by a mining company or its subsidiary. Hence, upon Peabody acquiring land affected by noise from the coal mine, the condition of the project approval requiring the mine operator to ensure that the noise generated by the mine not exceed specified criteria would cease to apply. By this mechanism, the mine operator could be relieved from having to take action at the noise source (the coal mine) to reduce the noise that would be received on other land to a level that complied with the criteria in the condition. 71The Council submitted that acquisition of noise affected land by Peabody for this purpose caused the acquired land to be used for the coal mine. 72I do not consider that the purpose for which land has been acquired, by itself, is imprinted on the use of the land upon acquisition. First, a mere intention to use land that is to be acquired for a purpose that is different to the purpose for which the land is currently being used is not sufficient to effect a change of use of the land for that purpose upon acquisition. Only when the acquired land is devoted to use for the different purpose for which it was acquired can there be a change in the purpose of the use. The intended purpose of the use of the land must be manifested by the commencement of some activity on the land: Meriton Apartments Pty Ltd v Parramatta City Council [2003] NSWLEC 309 at [22] and Leda Manorstead Pty Ltd v Chief Commissioner of State Revenue [2010] NSWSC 867; (2010) 79 NSWLR 724 at [59]-[60]. 73Secondly, the grant of approval for a mine with a condition entitling noise affected landowners to require acquisition of their land if the noise exceeds certain criteria does not effect any change in the purpose of the use of the land subject to the condition. The affected land is not part of the development site the subject of the project approval. The owners of the affected land may be given entitlements under, but they and their land are not bound by, the project approval. 74Thirdly, any subsequent acquisition of noise affected land pursuant to such a condition also would not, by itself, cause a change in the purpose of the use of the land acquired - it simply causes a change in ownership. The reason why the land is so acquired does not affect the use of the land. The mine operator is required to acquire the land in these circumstances, because that is what the condition of approval for the mine requires the mine operator to do. The mine operator is required by law to carry out the activity of the coal mine in accordance with the conditions of the project approval. One of these conditions is to acquire land affected by noise exceeding specified criteria on request by the owner of the noise affected land. If the mine operator is so required to acquire, and does acquire, noise affected land, the mine operator complies with the law. But such compliance with the law is with respect to carrying out of the activity on the mine site that is the subject of the approval. It does not result in a use of the acquired noise affected land for the coal mine. Acquisition of noise affected land does not expand the boundaries of the mine site on which the coal mine is approved to be carried out. 75Fourthly, any acquisition of noise affected land in order to secure the benefit of not having to comply with conditions of a project approval requiring that the noise generated by the mine not exceed certain criteria for that land also does not thereby affect the use of the acquired land. As was said by Fullager J in Council of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493 at 506, "[t]he root of the fallacy lies in the assumption that deriving an advantage from the ownership of land is the same thing as using the land." This observation was approved by the High Court in Minister Administering the Crown Lands Act v NSW Aboriginal Land Council [2008] HCA 48; (2008) 237 CLR 285 at [75] to which they added: That is, while it is probably true to say that a person who uses land derives an advantage from it, the converse proposition, that deriving an advantage from ownership of the land is using the land, is false. 76In this case, the mine operator may derive an advantage from owning, or having a subsidiary own, land that is noise affected by the mine because such ownership causes the land to no longer be privately-owned land to which the noise conditions of the project approval apply. But the deriving of that advantage from ownership of the land is not using that land. Indeed, on the Council's argument, the only land on which there is a change in the activities by reason of the acquisition of the noise affected land is the mine site. If the noise conditions no longer apply, the mine operator would not have to curtail the nature, extent or other features of the coal mine to reduce the noise generated from the mine to comply with the criteria in the noise conditions and indeed might even be able to increase the noise without breaching the noise conditions. Hence, it is the use of the mine site, not of the acquired land, that could be altered by the change in ownership of the noise affected land. Mere holding of land for mining purposes not a use for a mine 77The Council contended that the definition of "mine" in the Dictionary of the LG Act extends the concept of the use of land to include the holding of land for a mining purpose. My view is that this is incorrect. 78I do not consider that the word "mine" where twice occurring in s 517(1) of the LG Act is used with the meaning defined in the Dictionary to the LG Act. There are at least four indicators. 79First, the word "mine" in the Dictionary and in s 517(1) are directed to different concepts. The defined word "mine" concerns land: it defines what particular types of land will be a mine. Land will be a mine if it is "land, on or below the surface or partly on or partly below the surface, used or held for any mining purpose." The definition incorporates the purpose for which land is used or held. 80Section 517(1) does not use the word "mine" to refer to a particular type of land. Rather the word "mine" is concerned with the purpose of the use of the land. The purpose is the end to which the use of the land is seen to serve. It describes the character which is imparted to the land at which the use is pursued: Shire of Perth v O'Keefe (1964) 110 CLR 529 at 534; Chamwell Pty Ltd v Strathfield Council [2007] NSWLEC 114; (2007) 151 LGERA 400 at [27]. 81Hence, it is not possible to substitute the definition of "mine" from the Dictionary, which is concerned with a particular type of land, for the word "mine" in s 517(1) which is concerned with a particular purpose for which land is used. 82Secondly, the word "mine" in s 517(1) is qualified by the adjectives "coal" or "metalliferous". The Dictionary definition of "mine" has no such qualification. 83As a consequence of these two differences, substitution of the defined term for "mine" for the word "mine" where twice occurring in s 517(1) would lead to a nonsensical statutory provision, as the following shows: Land is to be categorised as "mining" if ... its dominant use is for a coal 'land, on or below the surface or partly on or partly below the surface, used or held for any mining purpose' or metalliferous 'land, on or below the surface or partly on or partly below the surface, used or held for any mining purpose'". This cannot have been the legislative intention. 84Thirdly, s 517(1) is only concerned with whether the dominant "use" is for a coal mine, while the defined word "mine" in the Dictionary is concerned with the use of land for mining purposes as well as the holding of land for mining purposes. The concepts of the use of land and the holding of land are different. The legislature defined "mine" in the Dictionary using both the concepts of use and holding of land but, by contrast, only identified in s 517(1) the criterion of use, not holding, of land for a coal mine or metalliferous mine. This must been seen to be deliberate. This deliberate decision to limit categorisation of land as mining only on the basis of use of land and not holding for a mine would be undermined if the word "mine" in s 517(1) had the meaning defined in the Dictionary of including not only use but also holding for any mining purpose. 85Fourthly, the adjective "dominant" that qualifies "use" in s 517(1) cannot sensibly be applied to a holding of land. The adjective "dominant" that qualifies "use" in s 517(1) makes sense where land is used for a coal mine or metalliferous mine but not where land is merely held and not used for a coal mine or metalliferous mine. Land cannot have "its dominant use" for a coal mine or metalliferous mine if it is not used, but is only held, for a coal mine or metalliferous mine. This is a further indicator that land held for a coal mine is not within the ambit of the concept of dominant use of land for a coal mine in s 517(1). 86Hence, in my view, the Council was in error in this case in considering that the mere holding by Peabody of the properties in question was sufficient to enable categorisation of the properties as mining under s 517 of the LG Act. 87The Council also submitted that mere holding of land for a mining purpose could amount to a use for a mining purpose. It relied on the dicta of Bignold J in Ulan Coal Mines Ltd v Mudgee Shire Council (unreported, 11 January 1988) at p 17, relying on the Newcastle Hospital case (concerning exemption of land from rates), that "the non-use of land to provide an environmental buffer for mining operations may constitute a use of that land for mining purposes". 88My view is that this statement is too dogmatic. The question of whether land is used for a particular purpose is a question of fact and degree in each case. The approach to categorisation of use also depends on the statutory provision under which categorisation is required. The statutory provisions governing categorisation for the purposes of planning law or for determining whether land is exempt from rates are different to those governing the categorisation of rateable land for rating purposes. Hence, care needs to be taken in applying dicta in cases dealing with what constitutes a use of land under other statutory provisions in determining the use of land for rating categorisation purposes. 89In any event, however, the dicta in Ulan Coal Mines Limited v Mudgee Shire Council relied on by the Council was followed by the statement that where "there is an actual use of those lands for grazing purposes, it cannot be concluded that there is a concurrent 'mining purpose' use of the buffer lands based upon their non-use. The fact of actual use necessarily excludes the fact of non-use" (at p 17). 90Applying this statement to the facts of the present appeals would mean that the actual use of Peabody's lands for residential or farming purposes would exclude any "non-use" of the lands as a buffer to attenuate noise from the coal mine. Hence, even if Peabody could be said to hold the lands for a mining purpose (being for attenuation of noise from the coal mine), the actual use of the lands for residential or farming has the consequence of precluding a use of the lands for a coal mine. 91In summary, I am of the view that the Council was incorrect in its construction of s 517, read with the definition of "mine" in the Dictionary, and in its application of those statutory provisions to the facts of these three properties owned by Peabody. 92Once each of these reasons for categorisation as mining under s 517 is shown to be incorrect, then it follows that there was not a foundation for the Council to decide to re-categorise Peabody's lands as mining in May 2012, decline Peabody's applications to change the category from mining in December 2012, or defend its decisions in the appeals. The Council did not have a legal or factual basis for those decisions for, or that defence of, the categorisations of the properties as mining under s 517 of the LG Act. Argument that sufficient factual information was not available is incorrect 93The Council's submission that it did not have all of the facts concerning the use of the properties for residential or farming purposes does not rebut this conclusion. Mining is not a default category like business; that is to say, the Council could not categorise the lands as mining under s 517 if it was not satisfied on the material before it that the land was not used for residential accommodation or farming. Rather, land can only be categorised as mining if the facts fall within the criteria in s 517 properly construed. 94The facts the Council relied on to re-categorise and maintain the categorisation of Peabody's lands as mining were legally insufficient to satisfy the criteria in s 517. These facts have not changed. The evidence of Peabody does not provide any facts as to a use for a coal mine on the lands that were not already known to the Council when it made its decisions and defence to the appeals. 95Once it is appreciated that, on a proper construction of s 517 of the LG Act, the Council could not reasonably have categorised Peabody's lands the subject of the appeals as mining, the Council's submission that it was not until Peabody filed and served its affidavit evidence that the Council was in a position to accede to Peabody's nominated categories loses force. It is true that Peabody's affidavit evidence established more conclusively that the use of the properties was for residential accommodation (for the two Wollar properties) and farming (for the Barigan property). However, the lack of conclusive proof of use for these purposes was not the basis for the Council's original decision to re-categorise the lands as mining, or to decline Peabody's applications for change of category from mining, or to defend its decisions on the appeal. Each of those decisions were based on the Council's view, which I have found to be incorrect, that there was a dominant use of the lands for mining under s 517, not that the use for residential accommodation or farming had not been conclusively proven. This is evidenced by the reasons in the Council's reports, notices and statements of facts and contentions to which I have earlier referred. 96It is to be remembered that Peabody's lands had been categorised by the Council previously as residential or farming. The Council's review of lands owned or leased by mining companies was undertaken with a view to re-categorising the lands as mining if they satisfied the criteria in s 517. It was not done because it was no longer proper to categorise the lands as residential or farming. Hence, if the Council had not misdirected itself as to s 517 and the definition of mine under the LG Act, it can be reasonably inferred that the Council would not have changed the categorisation of the properties from residential or farmland to mining. 97I also accept Peabody's submission that the Council had sufficient information on the use of the properties for residential or farming at the time it made its decisions to re-categorise, decline to change category and defend the appeals. The affidavit evidence did not materially add to the knowledge of the Council on the use for residential accommodation or farming of the properties the subject of the appeals. 98For these reasons, I find that the unavailability of all of the evidence that Peabody later filed and served at the time the Council made its decisions and defence to the appeals was not causative of the Council making the decisions and defence that it did. Council's conduct sufficiently unreasonable as to found a costs order 99In this context, I find that the Council's decisions to re-categorise Peabody's lands as mining, decline to change the category of the lands from mining and defend on the appeals the categorisation of the lands as mining were incorrect on the law and the facts and were sufficiently unreasonable to provide a foundation for making a costs order against the Council under r 3.7(2). Peabody has been put to the expense of bringing appeals against the Council's declarations when it ought not to have had to do so and in prosecuting the appeals until just before the hearing because of the Council's conduct in unreasonably continuing to defend the appeals. 100For completeness, I should note that I am not satisfied that the other conduct relied upon by Peabody would have made it fair and reasonable to order costs against the Council. I do not consider that the Council acted to thwart or render nugatory the value of the appeals as test cases. The Council acted as it did for the reasons I have given earlier which are unrelated to the utility of the proceedings as test cases. I am also not satisfied that the Council's conduct in negotiating the facts to be included in the proposed statement of agreed facts provided a basis in the circumstances for an award of costs against the Council.

Peabody Pastoral Holdings Pty Limited v Mid-Western Regional Council

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