Devil’s in the detail for better outcome

Last week, the NSW government said it would implement the 32 land access reform recommendations of the Walker Review into the arbitration process.

Among the wins for landholders was a recommendation that mining explorers cover legal costs presently borne by landholders.

This cost is only paid for on behalf of landholders during initial negotiations, not arbitration.

Yet, despite the admission by NSW Resources Minister Anthony Roberts the system was “broken”, the government will wait until 2015 before attempting to introduce change.

Meanwhile, there are some significant concerns that potentially would do little to advance landholders’ cause, or worse still, lose ground in the battle to balance the broken system (“Land access laws terrifying”, The Land, June 26, p3).

Private legal practitioner Mary Lou Potts and retired Family Court judge Ian Coleman specialise in land access.

They said benefits would flow to landholders from recommended changes to the processes around arbitration, particularly changes to the arbitration process and payments for time, legal costs and expert advice,” Ms Potts said.

“On the cost basis it is fantastic that landholder time is considered.

“Also legal costs are all payable.”

Mr Coleman said the reforms were very fair and sensible.

“The important thing is how the recommendations end up in legislation,” he said.

However, legal fees for landholders look set to be a sore point.

Another proposed reform would see all landholders’ legal costs covered by the explorer, but the review said reasonable limits should be set to cap costs.

Ms Potts and Mr Coleman welcomed the move but said a low cap limit would tip the scales toward the explorer during negotiations.

Both lawyers expressed concern about Walker’s recommendation that landholders shouldn’t be able to bar explorers from disturbing significant improvements, such as residences and essential farm infrastructure.

Currently, what qualifies as a significant improvement is loosely defined.

The reforms may open the door for arbitrators to determine what is and isn’t significant, Mr Coleman said.

He argued there was sufficient legal precedent in NSW for the courts to decide.

“Anything prescriptive over what is and isn’t a significant improvement could potentially have very big implications for landholders,” he said.

Mr Coleman said new laws should ensure the definition of significant improvements covered on-farm investments such as improved pastures.

“I know from decades on the land it takes a long time to build a healthy improved pasture,” he said.

“But think of the amount of land it covers in NSW.”

The report argued for change to existing laws, where landholders can deny access to significant improvements to avoid “perverse outcomes” where the landholder is left worse off by the exploration activity.

The report cited an example of an explorer seeking an access road that cut across a fence.

It said greater disturbance could be caused if access was denied because the explorer would have to build access roads through a more circuitous route around the fence and across the property.

Ms Potts said without the right to deny access to significant improvements, “landholders’ interests could be overridden by the economic considerations of the explorer”.

The liability for the cost of impacts to landholders’ property from exploration, and associated insurance risks, remains unclear.

LAND access arrangements are a high-stakes game for explorers and landholders, and when all options are exhausted, arbitration is the only option.

Unfortunately, to date, it has been a disappointing process for the people and companies involved.

NSW Farmers conservation and resource management committee chairman Mitchell Clapham said arbitration was often unnecessary.

“Most farmers are reasonable people,” he said.

“We know mining will provide jobs and benefit the local community. We just want a fair go.”

However, Mr Clapham said situations would always crop up where landholders couldn’t agree to the terms on offer and, in that scenario, the system worked in favour of the explorer.

Mr Clapham assisted Greg Reeves, “Kooringle”, Running Stream, in his negotiations with miner Centennial Coal.

Mr Reeves lives on his 200 hectare property, which has volcanic soil, near Lithgow and manages a large property about 20 kilometres away.

A 500-metre long access road built by Centennial to carry its drilling equipment was a major sticking point in negotiations.

Mr Reeves had concerns about its size and potential land damage from poor construction.

Negotiation and arbitration took 18 months and Centennial has now drilled and left the property.

Mr Reeves said the experience was stressful, protracted and required time and effort.

Centennial said it usually managed to negotiate access without arbitration.

“Arbitration is always a last resort and only taken after negotiations have been fully exhausted,” a spokeswoman said.

“In the past four years Centennial has only used the arbitration process on two occasions,” a spokeswoman said.

Negotiations over exploration between Bylong Valley landholder Craig Shaw and coal company Kepco have been protracted – attracting media attention along the way and again, causing stress.

Negotiations went for nine months before arbitration kicked in, and are ongoing.

Mr Shaw said his negotiations did not seek to delay the process “for delay’s sake”.

“I wanted the mining company to provide certain information and getting it was like pulling teeth.”

Mr Shaw said he was exercising his rights by demanding details relating to exploration activity because it was “a matter of equity”.

Kepco Australia chief operating officer Bill Vatovec said the Bylong Project had strong relationships with the community and exploration was negotiated “without using the arbitration process in all but two cases”.

Arbitration with Mr Shaw was a last resort for Kepco, and an unfortunate example of what happens when a process that was “designed to be conciliatory” is taken over by lawyers, Mr Vavotec said.

Mr Shaw said the reforms would make up for some significant deficiencies of the current system.

“Anybody reading through them would think it all sounds very sensible, but it’s astonishing such basic, commonsense reforms are needed.”