Posted on May 13, 2021 by Sue Puckeridge and Lachlan Penninkilampi

UPDATE: Court of Appeal overturns LEC decision on dominant use of land ‘mining’ for rating purposes

In June 2020, we blogged about a decision of the Land and Environment Court (LEC) which significantly raised the rating liability for mining companies that ‘hold’ land for mining purposes under the Local Government Act 1993.

Since then, the landowner has appealed to the Court of Appeal (Court) challenging the decision insofar as it related to some of the land. The Court in the decision of Mangoola Coal Operations Pty Limited v Muswellbrook Shire Council [2021] NSWCA 46 has set aside the decision relating to that land and remitted the case to the LEC for determination according to law.

The background and issues of the case can be found in our original post here. In this post, we discuss the five key issues arising from the appeal and note its implications for local councils.

Issues on appeal in determining the dominant use of the land for rating purposes

1. Whether grazing occurred and whether the drought was relevant

Mangoola challenged the primary judge’s finding that there were no ‘grazing activities’ on certain lands, arguing that he had failed to take into account the impacts of drought on those land.

The Court found that determining the rating category of land in a given year required consideration of the use of land ‘in context‘—i.e., what previously occurred on the land and what might be intended to occur afterwards.

As there was no reason other than drought why grazing had not occurred on the land in the relevant years, and there was no evidence that the grazing activity had been abandoned (i.e. permanently ceased) and would not resume once the drought was over, the trial judge should have inferred that grazing was intended to resume on the land and should have taken this into account in determining its dominant use for rating purposes.

Alternatively, the Court held, it was unreasonable and therefore not open for the trial judge to find on the facts that there was no use of the land for farming in the relevant years.

2. The importance placed on the easement for utilities

The primary judge had approached his examination of the easement by emphasising its essentiality to the mine’s operations, as it supplied the mine with water and electricity.

The Court found this approach to be erroneous when determining the dominant use of land. Rather than focusing on how important the use of the easement was to the adjacent mine, the primary judge should have examined the nature and extent of easement and its impact on the land it burdened as a whole.

The use of land burdened by an easement cannot be not determined by the use of the easement by which it is burdened, however important that easement may be to the land that benefits from the easement.

Consequently, because the easement covered only 1% of one section of the land and the landowner’s property rights ‘were only marginally qualified by the easement‘, the use of that part of the land for mining purposes could not be decisive in determining the dominant use of the land for rating purposes (at [55]).

3. Whether there was any mining use of the land

The Court rejected the argument that there was no mining use of the relevant parcels of land.  The presence of the monitoring devices (required by the project approval) and the use of the electricity cables and water pipes were all for mining purposes, even though that use was ‘of limited significance‘ in considering the dominant use of land as a whole.

The Court disagreed with the appellant that the source of the requirement to carry out that use was irrelevant. It found that ‘if a use is essential, not simply for practical reasons, but because there is a legal requirement for that activity to occur, that will be relevant to characterising the activity‘ (at [58]).

4. Whether the offset areas for biodiversity conservation and Aboriginal cultural heritage protection could properly be characterised as being ‘used for a coal mine

The Court was emphatic that biodiversity and heritage offset areas are ‘for purposes that are the antithesis of mining‘ (at [60]).

Although the Court agreed that it was relevant to consider why these areas existed as offsets—i.e., to address the environmental and heritage impacts of the mine—it disagreed that lands are ‘for a mine‘ for rating purposes simply because they were mandatory offsets under a condition of approval. If the land is to be used for another purpose, the mere holding of that land for a mine-related purpose does not mean it is used for a mine.

5. The significance of the environmental monitoring devices and mining exploration activities

While not ignoring the importance of monitoring activity for the mine, the Court found that environmental monitoring devices had ‘very little impact‘, giving rise to ‘little, if any, interference‘ with farming activity on the land (at [62]).  As such they were of limited significance in determining the dominant use of Mangoola’s land.  Their significance was only to the holder of the easement and the easement was only a small part of the subject land.

As a matter of principle, mining exploration activities could be significant in determining the dominant use of land.  However, in these particular circumstances, they were not because their activities were extremely limited.

Implications

In our earlier post on the LEC decision, we suggested that councils may wish to review the rating categorisation of land owned by mining companies in their LGA which is used to service a mine. However, this case has confirmed that the focus is on the use of the particular land being rated, not the benefit that land used for mining might gain from using the particular land.

It is also worth noting the caution given by the Court about dividing one parcel into a number of sections when determining the dominant use of land. While this is permissible as an aid to an en globo assessment, the focus must remain on the dominant use of the land as a whole.

Finally, we remind councils that the state of rating is in flux. New laws for an ‘environmental’ land category and the creation of sub-categories for existing categories, which we blogged about in December, have just passed the lower house of NSW Parliament.

The full text of the judgement is accessible here.

If you wish to discuss this post, please leave a comment below or contact Sue Puckeridge or Lachlan Penninkilampi.