In a short but interesting judgment, the High Court
ruled in favour of the appellant in Jemena Gas Networks (NSW)
Ltd v Mine Subsidence Board  HCA19.
Jemena Gas Networks (Jemena) was the owner of a gas pipeline
that ran above a series of "panels" that were proposed
for longwall mining. Expert consultants advised Jemena that there
would be subsidence at a certain point following mining of the
panels under their pipe. Jemena expended a considerable sum to
prevent the pipeline from being damaged by the predicted
subsidence. The subsidence occurred as predicted by the
Jemena had made a claim for compensation under the Mine
Subsidence Compensation Act 1961 (NSW) (the Act) to recover the
costs of the preventative and mitigatory works from the Mine
Subsidence Compensation Fund (Fund).
The Fund turned down its claim, as did the Land and Environment
Court (LEC), and the NSW Court of Appeal.
The issue turned on the construction of s12A(1)(b) of the Act,
which provides that the Fund may pay to the owner of an improvement
"an amount to meet the proper and necessary expense incurred
... in preventing or mitigating damage to those improvements ...
from a subsidence that has taken place".
The Fund, the LEC, and the Court of Appeal followed a previous
decision of the Court of Appeal (Mine Subsidence Board v Wambo
Coal Pty Ltd (2007) 154 LGERA 60) which had said that the
words "from a subsidence that has taken place" mean that
the Fund may only pay a person the proper and necessary expense
incurred in preventing or mitigating damage after a subsidence has
actually taken place. In this case, the plaintiff's expenses
had been anticipatory.
There were two alternative approaches to the section of the Act
that the High Court considered:
that the subsidence could occur after the expenditure, but had
to take place before the Fund formed its opinion as to whether
compensation was required, or
that the subsidence only needs to be reasonably anticipated at
the time that the owner of the improvements incurs the expense to
prevent or mitigate it.
The majority (Bell J dissenting) preferred the second option.
They concluded that (at ):
"Section 12A(1)(b) thus permits a claim to 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 arisen, or could reasonably anticipate would
otherwise arise, from a subsidence that has taken place prior to
that damage arising, even though at the time when the expense is
incurred or proposed there has not yet been either subsidence or
The High Court noted that the section was a difficult one to
interpret, and in the end concluded that their task was to look for
the "least irrational" construction (at ). The Court
considered questions of policy, including the argument that
prevention is better than cure, and that the section ought to be
read as allowing owners of property to prevent damage and be
compensated, not just to fix damage that has occurred.
The High Court's conclusion means that owners of
improvements on land can recover the proper and recurring expenses
they incur in preventing or mitigating damage that they could
reasonably have anticipated would otherwise occur. An expert report
would seem to be a sound basis on which to form a reasonable
opinion that subsidence will occur and cause damage.
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