What you need to know about conduct and compensation agreements in Queensland

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

Key takeaways

  • Natural resources on or under privately-owned land are generally the property of the Crown, which has the right to control and profit from their extraction.
  • While the Government has the power to give third parties the right to explore for, and extract, certain natural resources on privately-owned land,  the owners of such land have the right to receive compensation for any loss and damage suffered as a consequence of activities carried out on their land.
  • Landowners also have a say in some aspects of the practical aspects of what will happen on their land.

In Queensland, the general rule is that all minerals, oil and gas (resources) are the property of the Crown. 

It follows that the Crown, and not the owner of the land on or under which the resources are located, has the right to control (and profit from) their extraction. This is achieved through the Government granting resource authorities that allow for the exploration and extraction of resources.

The resource authority system is separate from, but related to, the land title (ownership) system. Resource authorities are granted over parcels of land and are perhaps best thought of as existing as a “layer” on top of parcels of land. Resource authorities are not themselves parcels of land.

Ultimately this means the Government has the right to grant resource authorities over privately-owned land without the consent of the owner of the land. However, the owners of such land are not without any rights, although the scope of those rights depends on the type of resource authority.

As a general rule, owners have the right to be compensated by the holder of the resource authority (holder) for any loss and damage suffered as a consequence of the carrying out of activities under the resource authority. 

In respect of most types of resource authorities, before “advanced activities” are carried out on the land, owners also have the right to require the holder agree on how it will conduct certain aspects of its operations on the land. 

The existence of those two rights ordinarily leads to the owner and the holder entering into a Conduct and Compensation Agreement. As the name suggests, this covers both “conduct” and “compensation”.

As to the conduct component, the Agreement can cover:

  • How and when the holder may enter the owner’s land; and
  • How authorised activities, to the extent they relate to the owner’s land, must be carried out.

As to the compensation component, the owner is entitled to receive compensation in respect of the following:

  • Any of the following caused by the holder, or a person authorised by the holder, carrying out authorised activities on the owner’s land:
    • Deprivation of possession of the land’s surface.
    • Diminution of the land’s value.
    • Diminution of the use made, or that may be made, of the land or any improvement on it.
    • Severance of any part of the land from other parts of the land or from other land that the owner owns.
    • Any cost, damage or loss arising from the carrying out of activities under the resource authority on the land; and
  • Consequential loss incurred by the eligible claimant arising out of a matter mentioned above.

There are myriad of things to consider when an owner negotiates these components with a holder and I will explore these in future articles.

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.