Australia: Mining, Land Access And Compensation Pitfalls: Who Is An "Occupier"?

In Queensland, mining and petroleum companies are required to negotiate compensation and access with each "owner" and "occupier" of private land. Unfortunately, the ambiguous definition of "occupier" in the legislation has caused confusion and uncertainty for resources companies in complying with this requirement. Proposed amendments seek to improve the situation – but they don't go far enough.

The Mining and Other Legislation Amendment Bill 2012 was introduced into Queensland's Parliament last November. It proposes to amend the definition of "occupier" in various resources sector Acts, including the Petroleum and Gas (Production and Safety) Act 2004 (PGA) and the Mineral Resources Act 1989 (MRA). The Bill has been referred to a Parliamentary Committee, to be reported on by 12 March 2013.

The definition of "occupier" is important because Queensland's statutory land access regime for mining and petroleum activities includes a staged process by which resource authority-holders and "owners" and "occupiers" of land can negotiate compensation and access.

Under this regime, an authority-holder cannot undertake preliminary activities, like pegging, unless it has served an "entry notice" on every owner and occupier of the land. Similarly, an authority-holder cannot undertake advanced activities, like vegetation clearing, unless the authority-holder and every owner and occupier is party to a conduct and compensation agreement or, failing agreement, to Land Court compensation proceedings.

So, it is critical that, before undertaking activities, an authority-holder identifies all owners and occupiers. Identifying owners is generally straightforward, because the definition is clear, and the owner is usually apparent from a title search.

However, the PGA and MRA define "occupier" in very broad and ambiguous terms. This is an understandable consequence of Parliament trying to ensure that nobody is unfairly denied compensation, but it creates significant uncertainty for authority-holders.

Failing to identify all owners and occupiers at the start of the negotiation process can have dire consequences for an authority-holder. For example:

• activities conducted by the authority-holder may be unlawful, and potential grounds for noncompliance action by the Minister; and
• the authority-holder could be required to restart the negotiation process with the overlooked owner or occupier, delaying access to the land.

THE CURRENT DEFINITION

As the PGA and MRA currently stand, a person will be an "occupier" if they fall under either of the following two limbs:

If this definition is given its ordinary and grammatical meaning, a person can only be an "occupier" of freehold land if they derive occupation rights under a registered lease, or if they fall under the Second Limb.

This gives rise to anomalous outcomes. For example, a person who holds a right to occupy freehold land, other than under a registered lease, will not be an "occupier" if their right was granted by the land's freehold owner. This is because the right, being granted by an owner rather than a registered lessee of freehold land, is not derived from a First Limb occupier. Oddly, however, if a registered lessee of freehold land had granted that same right to occupy, the holder of that right would clearly fall within the Second Limb.

THE PROPOSED REFORM

If the Bill is passed, the First Limb will be amended to remove the phrase "for freehold land".

The apparent purpose of this amendment is to clarify that a person will be an occupier of freehold land if they derive occupation rights either "under an Act" or a registered lease – in contrast to the current definition, under which it appears that only a registered lease will suffice.

In turn, this expands the class of persons who can confer Second Limb occupation rights. Under the new definition, registered lessees and persons with occupation rights "under an Act" will be able to confer Second Limb occupation rights.

EFFECTIVENESS OF PROPOSED REFORM

Regrettably, the Bill fails to achieve its stated goal of "[removing] the potential ambiguity in relation to the definition of occupier."

The Bill's Explanatory Notes state that the Bill proposes to amend the definition of "occupier" to:

• provide that an "owner" (freehold title or leaseholder), or person with a right to occupy under an Act or registered lease, is able to confer a right to occupy to another person or entity (e.g. children, other family members, family trust);
• ensure that the definition would enable the recognition of legitimate business arrangements such as family trusts, partnerships and companies associated with managing rural businesses on both leasehold and freehold land.

It is questionable whether the new definition will effectively achieve these objectives.

For a family member, family trust, partnership or company to be an "occupier", they will need to establish that they have a "right to occupy" under either the First Limb or the Second Limb.

First Limb occupation rights will be established if the owner has granted a registered lease in favour of the family member, family trust, partnership or company. However, this scenario would seem relatively uncommon. Many rural arrangements are undocumented. Even those arrangements that are documented in some form are unlikely to have been registered (or even be in registrable form).

First Limb occupation rights will also be established if the family member, family trust, partnership or company has a "right to occupy" under an Act. Again, this scenario is difficult to imagine. Simply pointing to the Trusts Act, Partnership Act or Corporations Act is unlikely to be sufficient to establish a "right to occupy".

Thus, in most cases, such entities will need to rely upon the Second Limb. However, to satisfy the Second Limb, they will need to show:

1. that they have a "right to occupy"; and
2. that the person they received the "right to occupy" from – namely, the owner, is a First Limb occupier.

The application of these two requirements is not clear at all.

With respect to the first requirement, does a station-hand who is required by their employment agreement to reside on a property have a "right to occupy", or are they merely present as an agent or representative of their employer? Plainly, they are in a position to be affected by an authority-holder's activities, but they have no formal proprietary occupation right.

With respect to the second requirement, can an "owner" also be a First Limb occupier? A freehold owner's title is a consequence of registration under the Land Title Act. Crown lessees are granted leasehold interests under the Land Act. Therefore, there is a basis to say that an "owner" derives occupation rights "under an Act". However, it could be inferred from the extract of the Explanatory Notes referred to above that Parliament considers "owners" and "occupiers" to be different classes of people. As stated above, one of the purposes of the Bill is to enable occupation rights to be conferred by owners or persons with a right to occupy under an Act or registered lease (i.e. First Limb occupiers).

If the correct interpretation is that an owner cannot be a First Limb occupier, then owners will not be able to create Second Limb occupation rights. This means that they will be incapable of giving a family member, family trust, partnership or company a recognised "right to occupy", unless they are formal First Limb rights.

The new definition also presents other issues.

By defining a First Limb occupier as someone who derives a right to occupy "under an Act, or a registered lease", it could be inferred that Parliament does not believe that a registered lease confers occupation rights "under an Act" and, instead, that Parliament believes that the rights stem from the lease instrument itself. Otherwise, the reference to registered lease would serve no useful purpose.

If this is correct, then easements might also be excluded from the First Limb, since easements are also created by instruments registered under the Land Title Act. While, on balance, easements would likely fall within the First Limb, since they must be registered "under" the Land Title Act; ¹ the answer is far from clear.

Further, the potential for anomalous outcomes remains.

Suppose a registered owner of freehold land agrees to rent a small workers cottage on the property to a friend for 12 months. There is no formal lease, merely a "handshake arrangement".

The friend will not be an "occupier" because:

• they do not derive occupation rights under an Act or registered lease; and
• they have not been given a right to occupy the place by a person deriving occupation rights under an Act (assuming a freehold owner has no such rights) or a registered lease.

However, if the freehold owner had granted a registered lease to their son, and the son had informally rented the cottage to the friend on the same terms as the handshake arrangement, then the friend would be a Second Limb occupier. This is because the friend would have received occupation rights from a registered lessee.

It is bizarre that Second Limb occupiers are identified not by reference to the nature of their right, but by reference to the class of person conferring the right. It is also difficult to reconcile this with Parliament's apparent policy goal of ensuring that all individuals who are not owners, but whose interests are adversely affected by an authority-holder's activities, are entitled to compensation.

CONCLUSION & PRACTICAL RECOMMENDATIONS

The Bill fails to resolve the ambiguity surrounding the "occupier" definition. The proposed new definition requires significant upheaval before being in a form that will provide certainty for landholders and resource companies.

Until the meaning of "occupier" is clarified, resource authority-holders should err on the side of caution. This means negotiating with, and joining to any Land Court proceedings, all possible occupiers, even if they will likely not suffer adverse consequences from the authority-holder's activities. This approach does not prevent an authority-holder from asking the Court to determine whether in fact a particular person is an "occupier" and whether that person is entitled to any compensation.

Further, because owners will often be best-placed to identify occupiers, authority-holders should endeavour to engage in good faith negotiations with owners to ensure that all "occupiers" are identified at the earliest possible stage.

By adopting these approaches, authority-holders can reduce the pitfalls that come from the PGA and MRA's vague definitions of "occupier".

Footnotes

¹See s.82 of the Land Title Act.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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