Got Gas? You might find yourself paying significantly higher Council rates

By Michael Morris, Associate at Hillhouse Legal Partners
| 3 min. read

Key takeaways

  • A recent Land Appeal Court decision has determined that the owner of a rural property used for primary production is liable to pay significantly higher Council rates than normal because the land has coal seam gas infrastructure on it
  • Other land owners could find themselves in a similar position following the decision
  • Affected land owners should consider whether they are entitled to be compensated by the coal seam gas company for the additional rates

The facts

In 2017 Mr Geldard purchased an 839 ha property near Miles, which was within the Western Downs Regional Council (Council) area.

The property was purchased from Australian Pacific LNG (APLNG). APLNG had installed a number of coal seam gas (CSG) wells and associated infrastructure on the property.

After Mr Geldard purchased the property, APLNG continued to use the wells and infrastructure to extract CSG. Mr Geldard, through a related company, used it for grazing and cropping.

At the time of purchase, the category of the property for Council rates purposes was “3/31 Petroleum Other (>400 ha)” (Petroleum Other). That category is defined as follows:

“Land, other than a Petroleum Lease, with an area 400 ha or greater, which is used or intended to be used, in whole or in part, and whether predominantly or not, for:

(a)        gas and/or oil extraction; and/or

(b)        processing of gas and/or oil; and/or

(c)        transportation of gas and/or oil by pipeline; or

(d)        for any purpose ancillary to or associated with (a) to (c), including water storage, compressor stations or block valves.

This category does not include land in Category 4/38.”

 Mr Geldard contended that the appropriate category, based on his use of the land, was “3/16 Rural” (Rural). That category is defined as follows:

 “Land used principally for rural purposes, which is not otherwise categorised, and has an area not less than 100 ha

A consequence of the land being categorised as Petroleum Other was that the Council rates for a half-year were approximately $32,000 – about 20 times what they would be if the land was categorised as Rural.

Mr Geldard formally objected to Council regarding the categorisation.

The outcome

Mr Geldard’s objection was unsuccessful. He then appealed to the Land Court where he was successful - the Land Court held that correct category was Rural.

Council then appealed to the Land Appeal Court, where it was successful – the Court holding that the correct category was Petroleum Other. In reaching that conclusion, the Court looked to the plain words and meaning of the two rating categories.

With regard to the Petroleum Other category, the Court found that the land fell within the definition because it:

  • was not a Petroleum Lease - it was freehold land;
  • had an area greater than 400 ha;
  • was used in part for gas extraction;
  • was not within Category 4/38.

With regard to the Rural category, whilst the land may have been used principally for rural purposes, the land could not fit within this category if it was “otherwise categorised”. That is, if the land fell within any other category, it could not fall within in the Rural category. Accordingly, as the land fell within the Petroleum Other category, it could not fall within the Rural category.

We await to see whether Mr Geldard will appeal the decision to the Court of Appeal.

Related issues

One issue that arises following the decision is whether Council will seek to re-categorise other properties that are used for primary production merely because of the presence of CSG infrastructure on them.

Another issue is whether an affected landholder will be able to recover any increase in rates by way compensation from the CSG company. It may depend on the terms of the conduct and compensation agreement between the landholder and the CSG company, and in particular, the scope of compensation that has been agreed to. Another potential avenue may be to apply to the Land Court to have the compensation increased on the basis there has been a material change in circumstances.

“Link to case: Western Downs Regional Council v Geldard [2020] QLAC 1

Conclusion

If you have CSG infrastructure on your property and are concerned about the potential for your rates to increase, please contact Michael Morris on 3220 1144 or email [email protected].

The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.