Today the High Court allowed an appeal from the NSW Court of Appeal holding (by majority) that Jemena Gas Networks (NSW) Ltd was entitled to be paid an amount from the Mine Subsidence Compensation Fund to meet the proper and necessary expense of preventing or mitigating cumulative subsidence from longwall mining that Jemena anticipated was likely to cause damage to its pipeline.
Jemena owns and operates a gas pipeline that runs from Moomba to Sydney. The pipeline runs underground at the point where it crosses Mallaty Creek and traverses an area of land which is subject to a mining lease held by a subsidiary of BHP Billiton Limited relating to the West Cliff Colliery. The pipeline runs above a series of “panels” used for underground longwall mining. Expert consultants predicted that there would be subsidence where the pipeline crosses Mallaty Creek when a certain panel was mined and that the subsidence would increase as subsequent longwall panels were mined. Other experts advised that mitigating works would be needed as a result of future mining from subsequent longwall panels. Jemena undertook excavation work to prevent the pipeline being damaged by the predicted subsidence. Subsidence, broadly corresponding with that predicted by Jemena’s experts, subsequently occurred.
The Fund, to which colliery proprietors make compulsory contributions pursuant to the Act, is administered by the Mine Subsidence Board. Under s12A(1)(b) of the Mine Subsidence Compensation Act 1961 (NSW), owners of improvements on land may make claims for payment from the Fund for expenditure incurred in preventing or mitigating damage to those improvements 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”. Jemena made a claim against the Fund for the costs of preventative and mitigatory works performed by it on the pipeline.
Relying on existing authority, the Board and subsequently the NSW Land and Environment Court and the NSW Court of Appeal considered that Jemena could only make a claim if the whole of the subsidence had occurred before the expense of preventative works was incurred.
By majority, the High Court held that claims under s12A(1)(b) are not confined to expenditure incurred only once a subsidence has in fact occurred. Rather, claims under s12A(1)(b) extend to expenditure 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 been neither subsidence or damage.
Jemena Gas Networks (NSW) Limited v Mine Subsidence Board [2011] HCA 19
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