Is your tenure valid?

Mining Updates

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The High Court's decision in Forrest & Forrest Pty Ltd v Wilson & Ors [2017] HCA 30 has confirmed the importance of strict compliance with the provisions of the Mining Act 1978 (WA) (Mining Act) when applying for the grant of mineral rights in Western Australia.

The decision may have broader implications for current and future mining tenement applicants and holders in Australia, as well as third parties relying on the validity of granted tenements including royalty holders, native title holders, and service providers.     

Background

In July 2011, Yarri Mining Pty Ltd and Onslow Resources Ltd applied for mining leases over land within the boundaries of the Minderoo pastoral lease held by Forrest & Forrest Pty Ltd (Forrest). Forrest objected to the applications.

The mining lease applications were not accompanied by a mining proposal or, alternatively, a mineralisation report, as required by section 74(1) of the Mining Act. A mineralisation report was subsequently lodged.

The warden nevertheless found that he had jurisdiction to hear the applications and proceeded to recommend to the Minister that the tenements be granted.

Forrest sought judicial review of the warden's decision on the basis that the warden's jurisdiction to hear the applications was only enlivened if the applicant had complied with section 74(1) (i.e. that is had lodged a mineralisation report at the time the application was made). The primary judge disagreed, holding that contemporaneous lodgement of the mineralisation report was not a precondition to the warden's jurisdiction.

Forrest appealed to the Court of Appeal. The Court of Appeal concluded that the Mining Act did require the mineralisation report to be lodged at the same time as a mining lease application, but a failure to do so did not deprive the warden of jurisdiction to hear the application provided a mineralisation report was subsequently filed.

Decision

A majority of the High Court held that compliance with the requirements in section 74(1) was an essential precondition to the exercise of the power to grant a mining lease under the Mining Act.

The High Court applied Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, and considered that the language, subject matter and objects of the Mining Act, and the consequences for the parties of holding void acts done in breach of it, conveyed an intention not to countenance any degree of non-compliance with the requirements in section 74(1).

This was consistent with authority establishing that where a statutory regime confers power on the executive to grant exclusive rights to exploit the resources of the State, compliance with the requirements of the regime will ordinarily be regarded as essential to the making of a valid grant. 

Considerations

The decision of the High Court is not unexpected but should serve as an emphatic reminder to ensure that tenement applications comply with the requirements prescribed for those applications. A tenement applicant should not blindly presume that the relevant decision-maker will treat non-compliance as a discretionary rather than fatal issue.

There are three questions that arise in light of the decision but remain unresolved:

  • whether an extension of time for late lodgement of the supporting documents would cure the non-compliance and allow grant;
  • whether a mining lease application would be valid if accompanied by supporting documents that were plainly deficient but subsequently supplemented; and
  • whether exploration licences which are not accompanied by section 58 statements (and other tenements in Australia analogous to mining leases) suffer the same fate.

Next steps

Mining lease applicants and holders in Western Australia should review their tenure to identify any potential exposure. Applicants with potential compliance issues should look to withdraw and re-lodge a compliant application. Mining lease holders with potential compliance issues might consider applying over the top of the existing mining lease to protect their tenure. If a competing applicant has lodged an application first then the Minister could be asked to refuse that application on public interest grounds under section 111A of the Mining Act.

It may be prudent for holders of other tenements in Western Australia and in other jurisdictions to conduct the same review.

If you have any questions, please contact one of the members of DLA Piper's mining sector team.