CSG Wells and Your Mortgage

CSG Wells

There has been a bit of media attention lately regarding a bank turning down a loan application on grounds relating to some Coal Seam Gas operations on a property. An example of such a story can be found here.

https://www.theguardian.com/environment/2016/sep/30/commonwealth-bank-coal-seam-gas-makes-property-unacceptable-as-loan-security

Conduct and Compensation Agreement

It is usually a term of your bank mortgage that you must seek the consent of your bank prior to entering into any agreement for compensation relating to mining and/or gas activities on your property. It is therefore very important to provide a copy of any Compensation Agreement or CCA to your banker prior to signing any such document.

This will save you dealing with an angry mortgagee later and could have saved the landowners mentioned in the story attached from some problems.

If your bank is worried about any changes in the value of your land, then you can use their valuations or letters as a bargaining tool in your negotiations with a gas or mining company.

Sometimes, especially if the Activities to be performed on your land are quite substantial (e.g. a large gas pipeline), it is a good idea to chat with your banker about how your expected income stream on your property may be affected by gas or mining activities.

Your banker may like to hear from you about when any expected compensation money might be due to be paid to you so they can work with you in meeting the terms of your mortgage.

What can I do?

Conduct and Compensation Agreements for Mining and Gas Agreements are very complicated, and for this reason you should always involve your accountant, your lawyer and your banker at least in any negotiations you start. It is for this reason we would never advise a landowner to “Opt Out” of a negotiation.

The law also requires companies to reimburse landowner legal, accounting and valuation fees so it is always good to get advice on these types of negotiations.

Contact Energy, Environment & Agribusiness Partner, Melanie Findlay on (07) 4927 6333 or at enquire@reesjones.com.au.

Buying a Rural Property with a CCA

Energy, Environment & Agribusiness Solicitor, Emma Kime tells us how important it is to ask the right questions when Buying a Rural Property with a CCA.

Emma can be contacted at Rees R & Sydney Jones Solicitors on (07) 4927 6333 or at enquire@reesjones.com.au.

Conduct and Compensation Agreements

Energy, Environment & Agribusiness Solicitor, Amy Gudmann talks about the standard
Conduct and Compensation Agreement.


Amy can be contacted at Rees R & Sydney Jones Solicitors on (07) 4927 6333 or at enquire@reesjones.com.au.

Draft MERCP Regulations

The draft Mineral and Energy Resources (Common Provisions) ("MERCP") Regulations are up for consultation. You can make a submission and review the new Regulations here
https://www.dnrm.qld.gov.au/our-department/corporate-information/policies-initiatives/mining-resources/legislative-reforms/mqra/consultation-draft-regulation

We represent Landholders who are affected by mining and gas activities on their land. When negotiations fail, there is a process where a mining or gas company can effect to take a landholder to a mediation or a conference to negotiate the matter before a third party.

The problem currently is that landowners are entitled to have their reasonable and necessary legal fees reimbursed to them for the negotiation of a CCA or Conduct and Compensation Agreement.

Currently there is a gap in the law which says that a legal advisor for a landholder is only allowed to be present at a conference if the other party agrees AND the officer is happy that there is no undue disadvantage to the other party at the conference.  This wording is not desirable because a mining company MUST therefore agree to allow a landholder lawyer to attend the conference.

Usually gas or mining companies are represented at these conferences by legally trained people and if you have ever attended these conferences, there is usually a cast of thousands attending on behalf of the resource company. The balance of power in a meeting, without a lawyer present on behalf of a landholder is undesirable.  The change of just one word in the new Regulations could correct this.

A party must not be represented by a lawyer at the conference unless—
(a) the other party agrees; OR (rather than AND)
(b) the authorised officer is satisfied there is no undue disadvantage to the other party.

Submissions are due on the draft by 12 August 2016.

Contact our Energy, Environment & Agribusiness team on (07) 4927 6333 or at enquire@reesjones.com.au.

Watch out you do not Opt Out?

 The new Mining and Energy Resources (Common Provisions) Bill 2014 was passed by the LNP Government and comes into force over the next month or so.  Whilst there has been much debate over the issue of removing rights to object to Mining Leases for landowners, some other nasty provisions have been added to the mix which landholders need to be wary of.  Rural Lawyer Melanie Oliver explains the new “Opt Out Agreements” that have just been added into the already confusing world of resource company documents.

An owner or an occupier of Land can now Opt Out of a Conduct and Compensation Agreement with a resource company. Once an Opt Out Agreement is signed, the resource company can enter the land and start its activities.  In our view it would be very rare for it ever to be appropriate for a Landholder to sign an Opt Out Agreement and we would urge Landholders to be very cautious and get full advice before signing anything they are presented.

If you would like further information or have any questions please give Melanie Oliver, Amy Gudmann or Justin Houlihan a call at Rees R & Sydney Jones on (07) 4927 6333.  

Buying Rural Property and checking for Conduct and Compensation Agreements

When purchasing a property these days, it is important for Buyers to know exactly what they are purchasing. 

With the mining industry in Queensland active, it is very rare to find a property for sale that does not have some form of exploration permit for mining or gas on it and without requesting the right information from the Vendor, Buyers may be purchasing a new property and inheriting 10 gas wells along with it. 

At Rees R & Sydney Jones, as a standard part of any rural conveyance we conduct a free Local Area Mining search on behalf of our clients.  This search reveals exactly what type of Permits or Claims are listed over the property being purchased.  However, these searches do not advise if the current Landowner has signed any Agreements to allow the Mining or Gas Company onto the property to conduct works.  These are called Conduct and Compensation Agreements.  That is why we recommend that our clients request copies of any Conduct and Compensation Agreements signed by the Vendor allowing mining or gas companies access to the property to conduct works.

Often a Vendor will sign a Conduct and Compensation Agreement prior to the Contract of Sale being signed.  Sometimes these agreements can last for years or even decades.  Often the Vendors are signing away their rights to certain areas of the property for which they will receive an amount of compensation. 

As Conduct and Compensation Agreements pass from Vendor to Purchaser, they therefore pass to the new owners upon completion of the conveyance.  However, the Vendor is the one who benefits from the Compensation, while the new owner is left with the damage to the property, especially if the works are schedule to start after the settlement date of the contract of sale or are to continue past the settlement date of the contract of sale.

Therefore it is important to request copies of any Conduct and Compensation Agreements that may have been signed by the Vendor prior to the Contract being signed so that Buyers know exactly what they are purchasing and what responsibilities pass to them once settlement is complete.

If you have any questions or concerns in relation to purchasing or selling rural properties or the effects of Conduct and Compensation Agreements, please call Jade Scott at Rees R & Sydney Jones Solicitors on 4927 6333.