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Client Update: Implications of High Court ruling for mining lease applications in WA

23 August 2017

In brief: The High Court has found the mining warden did not have jurisdiction to hear applications for mining leases over certain Minderoo pastoral holdings, because they were not accompanied by either a mining proposal or a mineralisation report. Partner Jodi Reinmuth (view CV) and Law Graduate Jonathon Holborn examine the implications.

Background

The Western Australian mining warden recommended the Minister grant mining leases on land within the Minderoo Station to mining companies Yarri Mining and Onslow Resources.1 Yarri and Onslow planned to mine for mineral sands in the Ashburton River bed for supply to concreter Boral (the intended use being the construction of Chevron's Wheatstone LNG project).2

Andrew Forrest challenged3 the warden's recommendation to grant the mining leases, on the basis that Yarri and Onslow had each failed to lodge either a mining proposal under section 74(1)(ca)(i) or a mineralisation report under s74(1)(ca)(ii) at the same time as their applications for mining leases. The mineralisation reports were lodged a few months after the applications.

How does this affect you?

The key issue in dispute was whether such a failure would mean the mining warden had no jurisdiction to hear the applications. The High Court declared that the warden did not have jurisdiction to hear the mining lease applications, and did not make valid reports and recommendations to the Minister regarding them. Accordingly, the court quashed those reports and recommendations.

It also held that concurrent lodgement (in the case of a mineralisation report) was a precondition to the exercise of the mining warden's jurisdiction under the Mining Act 1978 (WA) (the Act).

The decision seems to turn specifically on the relevant provisions of the Act and the facts of the case. The court was influenced by common law authority that regimes allowing the exploitation of a state's natural resources will ordinarily be interpreted as mandating strict compliance. Applicants for mining leases should therefore ensure that any application is accompanied by a compliant mineralisation report or mining proposal (NB: there's an additional 14 days for lodgement of a proposal).

Accordingly, it may be that the authority has limited application to other aspects of the Act, on the basis that, eg, the regimes for the grant of other tenements do not necessarily contain the same preconditions or attract the same interpretation principles. This will need to be assessed on a case-by-case basis. However, there are circumstances in which decision makers need to consider whether provisions of the Act have been complied with. In practice, the relevant decision makers may elevate these requirements to the level of preconditions.

The parties' arguments

The Solicitor-General, appearing as amicus curiae (friend of the court), argued that non-compliance with s74(1)(ca)(ii) did not necessarily lead to invalidity, despite the apparently clear and prescriptive language of that subsection. The Solicitor-General pointed to s75(6) of the Act, which conferred on the Minister a broad discretion to grant or refuse a mining lease notwithstanding non-compliance with the Act.

Forrest contended that the purpose of s74(1)(ca)(ii) was to prevent non-compliant applications burdening the Act's administration, or disadvantaging owners and occupiers of land. Therefore, Forrest argued, compliance with s74(1)(ca)(ii) was a strict prerequisite to the Minister's jurisdiction to grant a mining lease in the exercise of the discretion under s75(6).

The decisions

The WASCA

The Western Australia Court of Appeal (WASCA) rejected Forrest's jurisdictional error argument. President McClure found that s74(1)(ca)(ii) gave rise to a requirement that a mineralisation report be lodged simultaneously with the application, but held that belated compliance with that requirement would not preclude the grant of a mining lease. Only a failure to lodge the report at all would constitute non-satisfaction of a condition precedent.

The High Court majority

The majority in the High Court (Chief Justice Kiefel, and Justices Bell, Gageler and Keane) referred to a line of authority supporting the proposition that:

where a statutory regime confers power on the executive government of a State to grant exclusive rights to exploit the resources of the State [such as sections 74, 74A and 75 of the Mining Act], the regime will, subject to provision to the contrary, be understood as mandating compliance with the requirements of the regime as essential to the making of a valid grant.4

The High Court noted that the WASCA did not refer to this line of authority. The clear, prescriptive words of s74(1)(ca)(ii) supported that interpretation, as did the structure of the relevant provisions as 'sequential steps in an integrated process leading to the possibility of the grant of a mining lease by the Minister'.5

Further, under s75(4a), the warden's power to hear an application is only enlivened '[i]f the application for the mining lease is accompanied by [the mineralisation report]'.6 That phrase is repeated in subsections grounding the decision-making authority of the mining registrar (s75(2a)), the warden (s75(4a)) and the Minister (s75(8)). Therefore, the requirement to submit a mineralisation report contemporaneously with the application was an essential one.

The High Court found that s75(6) (and s116(2), which also preserves the indefeasibility of title to a tenement even if there was some informality or irregularity in the application), did not excuse any and all non-compliance with the provisions of the Act. In fact, their mere existence was an indication that matters of non-compliance with the Act 'outside the scope [of those sections] were fatal to the validity of a grant'.7 Those sections did not allow the Minister to grant a mining lease where the warden had acted outside of his jurisdiction due to inadequacies in the application.

The court asserted that the WA Government was not permitted to allow an application for a mining lease to proceed 'on credit'.8 It underlined its decision by referring to the Explanatory Memorandum and second reading speech for the Mining Amendment Bill 2004 (WA), which introduced s74(1)(ca)(ii) into the Act. The Explanatory Memorandum stated that the changes were to 'ensure a mining lease is only applied for when accompanied by a notice of intent to commence productive mining operations or a statement that significant mineralisation exists' (the court's emphasis). The Minister for State Development in his second reading speech stated that exploration title holders were misusing mining lease applications to seek 'further exploration rights rather than a title for productive mining'.9 The court was careful to construe the provision so as not to facilitate 'land banking'.

Any delay or cost suffered by Yarri and Onslow due to the invalidation of their mining leases was due to them being 'authors of their own misfortune'.10 Failure to comply with the regime governing the grant of resources under the Act could harm the following two interests:

  • the public interest in the efficient administration of applications processed by the Department of Mines; and
  • the private interest of:
    • owners and occupiers of land who might be troubled unnecessarily by proposals that are not fully formed; and
    • those whose right to object to applications might be prejudiced by a lack of relevant information.
The High Court minority

Justice Nettle disagreed, arguing that, despite the clear and prescriptive language of s74(1)(ca)(ii), the Act as a whole did not reveal a statutory purpose that failure to lodge the mineralisation report together with a mining lease application should vitiate the Minister's power. The following points supported that conclusion:

  • it is conceivable that a mineralisation report may be delayed without fault on the part of anyone concerned, and without causing prejudice to any party;11
  • s75(6) (together with other sections of the Act) reflects a flexible approach to non-compliance with the Act. It would run counter to Parliament's purpose if a failure to comply strictly with s74(1)(ca)(ii) were incapable of remedy by s75(6);12 and
  • there is no compelling reason to conclude that s116(2) cannot remedy an irregularity of this kind. Once a mining lease is granted, it will be 'too late to impeach the lease on the basis of failure to comply with [the] requirements [of the Mining Act]'.13

 

Footnotes
  1. Yarri v Forrest & Forrest Pty Ltd [2014] WAMW 6.
  2. Andrea Mayes and Joanna Menagh, 'Andrew Forrest wins High Court bid to keep miners off his family property, Minderoo Station' (ABC News, 17 August 2017).
  3. Forrest & Forrest v Wilson [2017] HCA 30.
  4. At [64].
  5. At [69].
  6. At [72].
  7. At [74].
  8. At [69]-[70].
  9. At [90].
  10. At [77].
  11. At [103].
  12. At [104]-[105].
  13. At [117]-[118].

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