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Focus: Resources – October 2008

NSW Government responds to court decision on Mining Act landowner consent requirement for improvements

In brief: In response to a recent New South Wales Court of Appeal decision, the NSW Government has moved quickly to introduce legislation that provides certainty for the mining industry in circumstances in which landowner consent is required over land on which there exists a significant improvement. Partner Tony Wassaf (view CV) and Law Graduate Victoria Ho report on this development.

How does it affect you?

  • Owners of land on which a significant improvement is situated, and over which there is a mining lease application, must make a claim of a significant improvement within 28 days after receiving a notice of the application in order for their consent to the granting of the lease to be required.
  • Applicants for mining leases still need to identify whether there are significant improvements within the mining lease application area and need to lodge an objection within 14 days of receiving notice of a claim from the landholder if they take the view that the claimed item is not a significant improvement. If a mining lease applicant does not lodge an objection within the 14-day period, the item will be taken to be a significant improvement and the consent of the owner will be required before a mining lease can be granted.

Landowner consent requirements

Section 62 of the NSW Mining Act 1992 (the Mining Act) provided that a mining lease may not be granted over the surface of any land on which is situated any improvement (including substantial buildings, dams, reservoirs, or other valuable structures) except with the consent of the owner of the improvement. Where this consent is not provided, a mining lease cannot be granted by the Minister. The applicant for a mining lease is required to notify the relevant landholder about the application for the lease. Schedule 1 of the Mining Act also sets out the process that the landowner must follow in order to make a claim objecting to such an application on the ground that a valuable work or structure exists on the land, including the limitation that any such claim must be made within 28 days of the date on which the notice was served.

There is no provision in the Mining Act that allows any withheld consent to be overridden in order to grant a mining lease.

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Facts of the Ulan case

Moolarban Coal Mines Pty Ltd (Moolarban) applied for a mining lease over part of the land owned by Ulan Coal Mines Limited (Ulan). Moolarban did not seek Ulan's consent for the grant of the mining lease, believing that the land did not contain any substantial and valuable improvements. Ulan also did not make a claim under Schedule 1 of the Mining Act within the specified 28-day time limit. Moolarban applied for and obtained project approval under Part 3A of the Environmental Planning and Assessment Act 1979 (the EP&A Act) to construct and operate a mine on this land.

Ulan applied to the Supreme Court for a declaration that the Minister for Mineral Resources was not entitled to grant the mining lease to Moolarban over the land as there are substantial and valuable improvements (even though no claim had been made under Schedule 1) and Ulan had not consented to the grant of the mining lease.

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Supreme Court decision

The Supreme Court found that the Minister must grant the mining lease even if landowner consent under s62 had not been obtained. The court relied on s75V of the EP&A Act, which provides that a mining lease cannot be refused if it is necessary for the carrying out of the project approval granted under Part 3 of the EP&A Act.

The court also decided that the s62 consent requirement does not apply to the owner of an improvement who does not follow the Schedule 1 claim process.

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Court of Appeal decision

Ulan appealed the decision to the NSW Court of Appeal1.

The Court of Appeal ruled that:

  • an improvement on the land remains an improvement for the purposes of s62 of the Mining Act and the owner's consent is still required even if a Schedule 1 claim process has not been followed; and
  • Section 75V of the EP&A Act does not override the s62 of the Mining Act landowner consent requirement.

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The legislative changes

The NSW Minister for Mineral Resources' response to the Court of Appeal decision has been to introduce legislation making the Schedule 1 claim process compulsory for any landowner owning a significant improvement on the land and wanting to stop the granting of a mining lease, stating that this was what was always intended. The Mining Amendment (Improvements on Land) Act 2008 (NSW) (the Amendment Act) became effective on 25 September 2008.

The main change made by the Amendment Act is that landholder consent to the granting of a mining lease is only required if the landholder has identified the significant improvements in a claim made according to Schedule 1 clause 23A of the Mining Act and no objection has been made to the claim by the mining lease applicant or, if an objection has been made, the warden has declared that it is a significant improvement.

A significant improvement is defined using similar words to those in the Mining Act – the definition is any substantial building, dam, reservoir, contour bank, graded bank, levee, water disposal area, soil conservation work or other valuable work or structure.

The Amendment Act also includes a number of transitional provisions:

  • where an application for a mining lease was lodged before 25 September 2008, regardless of whether the lease was granted before that date, and proper notification of the application was given to the landholder, the 28-day period ended on or before 7 August 2008 (the day before the Ulan case) and no claim was made by the landholder within that 28-day period, then the landholder is taken to have given that consent;
  • any mining lease granted before 25 September 2008 that would be validly granted if the amendments made by the Amendment Act were in force is validated, including any mining lease that may otherwise be invalid because of the Ulan case; and
  • the provisions of the Amendment Act apply to applications for mining leases lodged but not determined before 25 September 2008. This applies even where the landowner was notified of a mining lease application but the 28-day period did not end before 8 August 2008 (the date of the Ulan case). In this situation, the 28-day period is taken to have started on 25 September 2008.

The Minister granted Moolarban a mining lease following the Supreme Court decision. The Court of Appeal decision may have invalidated the mining lease. These transitional provisions validate the mining lease if it was invalid.

Footnotes
  1. Ulan Coal Mines v Minister for Mineral Resources and Anor [2008] NSWCA 174.

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