If you own an improvement to land in NSW, you now have a greater
incentive to undertake preventative or mitigatory works if there is
a threat of subsidence from mining operations, following the High
Court's decision on the State's scheme to compensate owners
for mining subsidence (Jemena Gas Networks (NSW) Limited v Mine
Subsidence Board  HCA 19).
The landowner acts to protect its works from subsidence
Jemena Gas Networks owns and operates the Moomba to Sydney
pipeline. Along the way it traverses land on which coal mining is
conducted. Expert consultants predicted that once mining began at a
particular spot on that land, there would be subsidence, so Jemena
undertook preventative and mitigatory works to protect the
It then claimed its costs from the Mine Subsidence Board, which
said that Jemena couldn't make a claim unless the
whole of the subsidence occurred before Jemena had
incurred the expense of preventative works.
The confusing section in the Mine Subsidence Compensation
At the heart of the case was section 12A(1)(b) of the Mine
Subsidence Compensation Act 1961 (NSW), which says
"(1) Subject to this section, claims may be made under this
Act for payment from the Fund of:
(b) an amount to meet the proper and necessary expense incurred
or proposed by or on behalf of the owner of improvements or
household or other effects in preventing or mitigating damage to
those improvements or household or other effects that, in the
opinion of the Board, the owner could reasonably have anticipated
would otherwise have arisen, or could reasonably anticipate would
otherwise arise, from a subsidence that has taken place, other than
a subsidence due to operations carried on by the owner."
Jemena argued that the phrase "from a subsidence that has
taken place" doesn't refer to a specific subsidence that
has occurred, but a subsidence which may not have happened but
which is anticipated to take place in the future, causing
The High Court explains how this works
The problem with the section, said the High Court, is that it is
not very easy to understand, which is why judges have interpreted
it in different ways, and there are linguistic problems with any
construction of the section. The interpretation in Wambo that the
Board used would, however, have two serious practical effects for
owners of improvements:
first, these owners, who may not have unlimited liquidity,
would not be able to obtain from the Fund an amount to meet
expenses to prevent or mitigate damage, leaving them much worse off
under the Act than they would have been under the general law;
secondly, they would be inhibited from taking steps to protect
their interests (including the strong pressures of the criminal law
and of commercial and political considerations) by dealing with
threats to the safety of the improvements, rather than waiting on a
decision by the Board under s 13A.
The correct way to interpret the section is Jemena's. As the
High Court pointed out, "The Act operates ... to prevent or
reduce damage before it is caused. Prevention may be cheaper than
cure, and more efficient than cure". Owners of improvements
don't have to wait for the subsidence to occur before
A claim can be made for payment from the Fund of an amount to
meet expense incurred by the owner of improvements in preventing or
mitigating damage that, in the opinion of the Board, the owner:
could reasonably have anticipated would otherwise have
or could reasonably anticipate would otherwise arise;
from a subsidence that has taken place before that damage arose,
even though at the time when the expense is incurred or proposed
there has not yet been either subsidence or damage.
So what does this mean for owners of improvements?
The High Court's decision means that owners of improvements
to land will be able to get compensation for the proper and
necessary expenses they incur in preventing or mitigating
anticipated damage from mine subsidence, instead of waiting for the
subsidence to happen and then dealing with the damage. As a result
they'll be able to make sensible decisions in the light of
their legal duties and commercial imperatives.
This legal update is an overview of existing eligible project activities and new project types proposed to be developed.
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