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When is a Mining Compensation Agreement not a Compensation Agreement?

August 15, 2018

 

Under the Mineral Resources Act, the holder of a Mining Lease can ask for a review of the agreed upon Compensation Agreement if there has been a change in circumstances since the agreement was made.

 

In Exco Resources v Daniels 2018 The Land Court was asked by mining company, Exco Resources (Exco) to conduct such a review of an agreement. The Compensation Agreement allowed Exco to conduct exploration activities only, but the parties had not agreed on compensation for the Mining Lease.

 

The Compensation Agreement stated that any mining activity would be the subject of a fresh agreement before Exco could access the land to carry out any mining activity.

 

The Landholder submitted that the Land Court did not have jurisdiction to review the compensation as there was no agreement for compensation for the Mining Lease in place. The Land Court needed to look at the agreement as a whole and decide if there was in fact a s279 Compensation Agreement in place that they then could review. Despite the fact that the Compensation Agreement referred to s283A and s279 of the Mineral Resources Act there was no actual compensation amount for the Mining Lease in the document.

 

They had only agreed on compensation for the exploration activity. The Land Court decided that even though Exco might have wanted the agreement to be a s279 Compensation Agreement the parties had not in fact agreed on compensation for a Mining Lease.

 

Member Stilgoe stating:

 

"A rose by any other name may smell as sweet, but a cabbage will smell like a cabbage even if you call it a rose."

 

The Land Court also had to look at whether or not there had been a material change in circumstances for the mining lease.

 

Exco submitted that the time for determining whether a material change has occurred is the time of the agreement, not the time when the lease was granted. The Land Court agreed, but did not agree with Exco's submission that the material change in circumstance as "its intention to carry out mining activities".

 

Exco submitted that at the time of the Compensation Agreement they were not clear on the nature of the activities that might be the subject of compensation and that now they were clear. The Land Court did not agree.

 

The Land Court were not provided a copy of the original Mining Lease Application and did not demonstrate a change sufficient to enliven the Land Court's jurisdiction.

 

Member Stilgoe stated:

 

"While I understand Exco's frustration in being unable to proceed with its mining activities, that is not a reason to exercise jurisdiction where none exists."

 

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