Agribusiness properties are increasingly complex businesses, which are using a range of different cropping and stock management practices over portions of property of varying quality.
Unfortunately, mining and petroleum companies often fail to recognise these complexities, resulting in inadequate conduct and compensation agreements (CCAs) being offered by resource companies.
Under section 81 of the Mineral and Energy Resources (Common Provisions) Act 2014, landowners and occupiers are entitled to be compensated for adverse impacts suffered due to petroleum or mining activities.
It's common for resource companies to offer compensation based solely on the physical disturbance, that is, compensation for land taken for the footprint of gas wells or mining activities and any associated infrastructure, with little regard to the practicalities of how agribusinesses operate in real life.
Resource companies are failing to adequately compensate for the disruption to the business activities of the landowner.
If the location of gas infrastructure impedes crop ploughing and harvesting, or adversely impacts on stock breeding and mustering activities, this can lead to reduced economic and business returns for landowners. In many cases, the landowner is entitled to be compensated for these losses.
When assessing whether compensation is adequate, it is critical to understand how the resource company's activities affect the farmer's land and agribusiness activities. The agreements are intended to regulate conduct on the land. Template agreements by resource companies generally don't properly address conduct in a way which adequately permit the mining and agricultural activities to coexist in a fair and reasonable manner.
Landowners should not be coerced into waiving their right to seeking expert professional advice merely because a resource company advises that it will only pay a limited and fixed amount for professional costs. Under the Act, resource companies must pay the professional costs reasonably and necessarily incurred by the landowner when negotiating a CCA.
It's important that landowners obtain expert legal, valuation and accounting advice to ensure they receive compensation that is fair and equitable. Compensation under a CCA needs to reflect and address the long term effects the resource company's activities will have on their business.
Cooper Grace Ward is a leading Australian law firm based in Brisbane.
This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.