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 [2011] 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 experts.
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 [17]):
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 [30]). 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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