Recent legislative changes in Queensland have changed the way landholders and resources companies will now negotiate a Conduct and Compensation Agreement (CCA). These important agreements allow a resource authority holder to conduct exploration activities on private land, and have implications for current and future owners of the land, mortgagees, lessees and agistees.
The amendments to the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) recognise the fact that negotiations leading to such agreements are costly and time-consuming for landholders, involving valuations, legal and accounting fees, and agronomy studies. Prior to the amendments, landholders could be left out of pocket in situations where negotiations were abandoned by the resource authority holder.
What do the changes mean?
Under the changes to the Act which came into effect from April 19, 2019, landholders can now seek reimbursement for reasonable and necessary expenses they incur in negotiating and preparing a CCA with a resource authority holder.
Significantly, these costs can be claimed irrespective of whether or not a CCA is ultimately reached between the parties.
Previously, landholders were only entitled to such a claim when an agreement was reached with the resource authority holder, with the payment of costs commonly made on or after the date the agreement was signed.
In addition to legal, accounting and valuation costs, a resource authority holder is also liable to pay the costs of an agronomist if those costs are incurred by the landholder after April 19, 2019.
The amendments mean that a resource authority holder seeking to negotiate with landholders in relation to exploration activity will need to pay the costs of negotiating a CCA regardless of whether agreement is eventually reached with the landholder. This also applies to resource authority holder’s currently negotiating CCAs with landholders.
The legislative process has also changed
As a result of the amendments to the Act, after April 19, 2019, if the parties are unable to agree to a CCA within the minimum negotiation period, they can progress to an alternative dispute resolution (ADR) process (e.g. case appraisal, mediation, conciliation or negotiation) by issuing an ADR election notice, or directly to arbitration by issuing an arbitration election notice.
It should be noted that a resource authority holder will also now be liable for the costs of an ADR facilitator if an ADR election notice is issued by either party.
If the parties elect to progress to an ADR process and no agreement has been reached at the end of that process, then either party may issue an arbitration election notice.
Changes also means parties will still be able to elect to attend a conference with an authorised officer until the issue of an ADR election notice or an arbitration election notice, but it will no longer be a prerequisite for an application to the Land Court. If an ADR election notice or arbitration election notice is issued, then any conference must cease and no new conferences can be called.
This is the case unless prior to 19 April 2019, a party had given the other party an election notice calling upon the other party to agree to a conference or an ADR to negotiate a CCA; and the conference or ADR has not finished and the CCA has not been agreed. In this situation, the old legislative process will continue to apply and the conference or ADR will be able to be used as a prerequisite to make an application to the Land Court for a determination.
It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.