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Western Australian Student Law Review |
Jonathan Dewing[*]
Indefeasibility—Mining Act 1978 (WA)—Section 116(2)—Mining Title Invalidity—Reform
In Forrest & Forrest Pty Ltd v Wilson [2017] HCA 30, the High Court rejected conventional wisdom and adopted a strict approach to compliance in relation to the procedures to be followed in the application and granting of mining leases. In doing so, fresh insight was provided into the operation and scope of s 116(2) of the Mining Act 1978 (WA): the ‘indefeasibility provision’. This article considers the Court’s observations with respect to s 116(2) and the issue of indefeasibility more broadly. It goes on to discuss the ramifications of the majority judgment’s narrow interpretation of the provision. It is argued that s 116(2) should be amended, with retrospective effect, to offer full protection of title, regardless of any substantial non-compliance with the Act’s provisions. Finally, the article makes proposals in relation to the form such legislative amendment should take.
In July 2011, junior mining companies Yarri Mining and Onslow Resources applied for mining leases over land located within Mindaroo Station.[1] The miners held the common intention to extract mineral sands from the Ashburton River bed to be utilised in the construction of Chevron’s nearby Wheatstone LNG project.[2] Crucially, the mineralisation reports accompanying the applications, required by s 74(1)(ca)(ii) of the Mining Act 1978 (WA) (‘the Act’), were submitted several months after the initial submission.[3] In September 2011, Andrew Forrest, owner of Mindaroo Station, lodged objections to the applications, as per s 75 of the Act.[4] In January 2014, the Western Australian Mining Warden claimed jurisdiction to resolve the contested matter and recommended that the Minister grant the leases. In response, Mr Forrest applied for judicial review of the decision.[5]
The case was brought on the grounds that s 74(1)(ca)(ii) of the Act necessitated that the mineralisation reports be submitted at the same time as the initial applications. Failing this, it was argued the Warden lacked jurisdiction to make recommendations to the Minister (and in turn, the Minister lacked jurisdiction to make the grant).[6] Accordingly, the case predominantly turned on the specific phraseology of s 74 of the Act. However, in the course of the High Court’s decision, it became necessary to examine the operation and scope of the Act’s ‘indefeasibility provision’, s 116(2).[7] The section reads:
Except in the case of fraud, a mining tenement granted or renewed under this Act shall not be impeached or defeasible by reason or on account of any informality or irregularity in the application or in the proceedings previous to the grant or renewal.[8]
The Court was tasked with determining whether the provision could cure substantive non-compliance with the application requirements of the Act.[9] This article considers High Court’s determination of the issue and its implications. It then considers the issue of reform of the Act, and ultimately makes recommendations on point.
Both the Supreme Court and the Court of Appeal found that despite the failure of strict compliance in respect to s 74(1)(ca)(ii), the Minister nonetheless had jurisdiction to grant the lease.[10] For this reason, discussion regarding the scope of indefeasibility within the Act was limited. While it was suggested by Allanson J of the Supreme Court that s 116(2) could cure substantive non-compliance, this assertion was made only in obiter and without detailed justification.[11]
The High Court rejected the Court of Appeal’s decision and Supreme Court in relation to non-compliance with s 74(1)(ca)(ii).[12] Thus, the relevant question became whether s 116(2) was sufficiently broad in scope to cure the application’s substantive administrative defect and protect the grant from invalidation.[13] To this question, the majority concluded in the negative.[14]
The majority judgment asserted that s 116(2) was not expressed in terms which conferred full indefeasibility in respect to any non-compliance with the Act.[15] In support of this position, the majority drew comparisons between ss 116(2) and 76(6)(b). Whereas s 76(6)(b) referred to want of ‘compliance’ with the provisions of the Act, s 116(2) spoke merely of ‘informality or irregularity’ in relation to the application proceedings.[16] The Court opined that the term ‘irregularity’ encompassed only a failure of legal form as opposed to a failure of legal substance.[17] Similarly, citing Davis's Tutor v Glasgow Victoria Hospitals,[18] the Court held that ‘irregularity’ referred to a lapse in regularity in the ‘method or manner in which the power was exercised’.[19] Crucially, the Court contended that the term had been inserted to definitively exclude the provision from application to acts of substantial non-compliance.[20] Accordingly, the majority in Forrest Pty Ltd v Wilson[21] (‘Forrest & Forrest’) held that s 116(2) was not capable of curing the Warden and Minister’s lack of jurisdiction.[22] Thus, the appeal succeeded and the grant was held to be invalid.
Although not central to the matter at hand, the majority also supported, in obiter, the existing interpretation of the second limb of s 116(2).[23] Specifically, it was asserted that if the title to the mining lease had been transferred, the transferee would have received a greater level of indefeasibility by virtue of s 116, and thus have been protected from the claim.[24] In support, the Court cited Toohey J in Hunter Resources v Melville,[25] in which it was concluded that ‘a person dealing with the registered holder will, in the absence of fraud, obtain protection of s 116’.[26]
The ramifications of the Forrest & Forrest decision extend to parties far beyond those immediately involved. Following the 2004 amendment to the Act, which introduced the mineralisation report requirement,[27] it has been standard practice of the Department of Mines to permit the filing of supporting documents after the initial submission of an application.[28] For this reason, the remark made in the majority judgment that the respondents were ‘the authors of their own misfortune’ is arguably unjustified.[29] Regardless of where the blame lies, the fact remains that a material number of mining leases granted after the 2004 amendment are likely to be invalid following the High Court’s verdict. Indeed, there may be numerous other purported grants made before and after the decision in Forrest & Forrest which are invalid owing to non-compliance with other substantive requirements of the Act or the Mining Regulations 1981 (WA). While the Minister, by virtue of s 111A, can mitigate the impact of such invalidity by refusing to grant opportunistic third-party tenement applications (allowing holders of an invalid title sufficient time to reapply), there is no guarantee this will occur.[30] Indeed, the Department of Mines itself has expressed uncertainty regarding the scope of the impact on existing grants.[31]
Given this current state of uncertainty, many have called for legislative reform to protect past and future grants from similar rulings of invalidity.[32] The following part of this article will examine the merits of pursuing such reform by means of broadening the operation of indefeasibility within the Act to cure substantive non-compliance. The discussion is framed around the key practical ramifications of Forrest & Forrest.
The dissent of Nettle J is of particular utility with respect to examining the potential negative ramifications of the decision. His Honour cited the patently absurd situation in which an apparent lessee, who has prima facie received approval from the Minister, could face prosecution under s 155 of the Act for carrying out unauthorised mining operations owing to a failure to strictly comply with s 74(1)(ca)(ii).[33] Further, his Honour noted that in such a situation the apparent lessee could also be liable for trespass to privately held land.[34] Unlike a breach of s 155, such liability could not be avoided through claiming the defence of honest claim of right as enumerated in s 22 of the Criminal Code Act 1902 (WA).[35]
Moreover, the judgment could also severely impact upon the interests of third party stakeholders. A finding of invalidity in relation to a mining lease would undoubtedly impair, or in some instances render impossible, a titleholder’s ability to perform its obligations under related third-party agreements. For example, performance under heritage and native title agreements, royalty agreements, access agreements, and employment agreements would all likely be impaired depending on the operation’s stage of development.[36] Even if such agreements have not yet been finalised, invalidity would invariably frustrate any existing negotiations. This is particularly problematic in relation to native title and heritage negotiations, which are typically time intensive exercises for both parties. Given these wide-reaching and significant ramifications, it is doubtful whether risking such hardships is a justified and proportionate response to what may be described as an immaterial administrative error.
The current uncertainty surrounding past and future apparent grants, in conjunction with the potential implications of invalidity as identified above, also increases the risk tolerance required of prospective investors. Consequently, the difficulty and cost of securing equity and debt funding will likely increase, needlessly impairing economic development.
In addition to protecting against the abovementioned implications, broadening the scope of indefeasibility within Act to cover all non-compliance would also restore the valuable, broad discretionary powers previously thought to be held by the Minister by virtue of s 75(6).[37] In this way, the Minister would be better empowered to make determinations with a focus on public interest factors. This discretion is of particular value in instances where non-compliance by an applicant, or indeed an administrator, does not disproportionately damage the interests of another party (as perhaps could be argued in relation to the late submission of the mineralisation report).
It could be argued that by legislating for a fuller indefeasibility provision, applicants may be disincentivised from ensuring strict compliance with the Act. As articulated in the majority judgment in Forrest & Forrest, this would increase the number of defective applications and thus hamper the administrative efficiency of the application process, whilst also burdening the Department of Mines with additional uncertainty and expense.[38]
Furthermore, amendment of the Act to include a full indefeasibility provision curing all non-compliance would arguably harm stakeholders for whom relevant substantive requirements were drafted to protect. To use the example of s 74(1)(ca)(ii), the requirement that a mineralisation report accompany an application exists at least in part to protect land owners and occupiers from premature, poorly considered mining proposals. This section additionally benefits competing miners by preventing ‘land-backing’.[39]If such proposals were nonetheless granted and immediately cured of any non-compliance by a strengthened indefeasibility provision, the protection received by affected parties from the section would be severely diminished. Moreover, the affected parties would have little recourse to have their interests heard once the grant is made.[40]
A related argument against increasing the scope of indefeasibility is that it may decrease the quality of decision making. If the Minister is knowingly empowered to make a valid grant without heeding all the substantive requirements of the Act, the affected parties those requirements were drafted to protect will again be disadvantaged. While it would generally be expected that the Minister would use his or her best efforts to adhere to the Act, if the scope of indefeasibility was widened to excuse all non-compliance, this could not be guaranteed.
While the arguments against broadening the scope of indefeasibility hold significant merit, note should be taken of Nettle J’s helpful dissenting remarks.[41] His Honour reasoned that a broad approach to indefeasibility under s 116(2) would not be a license for applicants, nor administrators, to ignore the provisions of the Act.[42] Rather, his Honour made clear that failure to comply with the requirements of the Act would still provide ground for ‘objection, judicial review and appropriate remedies to ensure compliance’.[43] It was added that such an approach is consistent with the ‘order and certainty of title’ that s 116(2) was originally designed to achieve.[44] This is to say, broadening the scope of s 116(2) would not by default unacceptably limit the rights of interested parties to have their objections heard. It would simply place additional limits on the period in which those objections may be raised, in order to give rise to the benefits of full indefeasibility upon a grant being made.
In any case, on balance, the inherent uncertainty created by Forrest & Forrest in relation to validity of title is, for the reasons outlined above, wholly unacceptable. It is thus recommended that s 116(2) should be amended, with retrospective effect, to offer full protection of title, regardless of any substantial non-compliance with the Act’s provisions. Indeed, legislative intervention of some form seems probable given the State Government’s announcement that an active inquiry is being undertaken to resolve the matter.[45]
If one accepts the need for reform, the question then becomes what form this should take. In answering this question, it is necessary to closely consider the majority judgment to ensure any proposed amendments to the indefeasibility provision within the Act will withstand claims similar to that in Forrest & Forrest. While it would be possible to resolve the specific matter subject to the Court’s judgment in Forrest & Forrest through amendment of s 74 and its related provisions, the purpose of this article is to consider the merits of broader reform in respect to indefeasibility.
As addressed above, the words ‘informality’ and ‘irregularity’ played a decisive role in the Court’s determination regarding the scope of s 116(2). The terms were assessed to have been deliberatively and consciously inserted to exclude the provision’s application to instances of substantive non-compliance with the Act.[46] Thus, perhaps the simplest approach to reform would be to substitute the phrase ‘any informality or irregularity’ with ‘any non-compliance’.
It should be noted that the context in which ‘non-compliance’ is used immediately above is distinct from the context in which it is used in s 75(6). Relevantly, s 75(6) states that, ‘the Minister may ... grant or refuse the mining lease as the Minister thinks fit, and irrespective of whether ... the applicant has complied in all respects with the provisions of this Act’.[47] Crucially, the provision only refers to non-compliance with the Act by the applicant. It does not excuse non-compliance by those administering the Act.[48] Thus, should a jurisdictional error occur, as in Forrest & Forrest, the provision will not be applicable. Section 116(2), taking into account the aforementioned modification, would read:
... a mining tenement granted or renewed under this Act shall not be impeached or defeasible by reason or on account of any non-compliance in the application or in the proceedings previous to the grant or renewal of that tenement ...[49]
The phrase ‘proceedings previous’ is not limited to only relating to the applicant, contrary to s 75(6), and can readily be interpreted to extend to acts of an administrator, whether it be the Warden or Minister.
In order to ensure full indefeasibility, it may also be prudent to amend the phrase ‘proceedings previous to the grant or renewal of that tenement’ to ‘proceedings previous to and including a purported grant or renewal of that tenement’. In this way, should there exist a defect with the grant itself, as opposed to the proceedings leading up to the grant, the title would still be protected.
As addressed above, Nettle J reasoned that a broad approach to indefeasibility under s 116(2) would not be a license for applicants, nor administrators, to ignore the provisions of the Act.[50] Rather, his Honour made clear that failure to comply with requirements of the Act would still provide ground for ‘objection, judicial review and appropriate remedies to ensure compliance’ prior to the grant.[51] The merits of the full indefeasibility provision drafted above receives support from this line of reasoning. However, it could be argued that the consequential requirement that objections be submitted prior to approval places an overly strenuous, if not impossible, onus on interested parties. For example, if the defect a party wishes to object to relates wholly to the manner in which the grant was made, the interested party would be effectively excluded from having their objection heard, as any defect would be cured instantaneously with the making of the grant. Such an outcome may severely undermine the operation of the Act.
It is therefore proposed that a ‘cooling-off’ period be
implemented into s 116. The provision would operate by permitting
objections to
be raised in relation to a grant, and to previous proceedings, for a discrete
period subsequent to the grant being
made, after which period the title would be
fully indefeasible as per the aforementioned proposal. The provision would serve
to mitigate
valid concerns regarding limiting meritorious objections while also
securing the benefits of full indefeasibility.
Should the aforementioned proposed amendments be deemed inadequate to sufficiently protect the rights and interests of titleholders, a slightly more dramatic approach might be considered: the incorporation of Torrens indefeasibility within the Act. Despite superficial similarities between the phraseology of s 116(2) and the conclusive evidence provision in s 63(1) of the Transfer of Land Act 1893 (WA), the effect of title registration under Torrens and the Act are markedly distinct. Namely, as identified in Yarri Mining v Eaglefield Holdings Pty Ltd,[52] the dominant opinion is that the Act establishes a system of registration of title, whereas the Torrens system is underpinned by the notion of title by registration.[53] The crucial distinction is that while valid title under the Act is conditional on a valid grant, under Torrens, indefeasible title passes on registration irrespective of a grant’s validity.[54] Accordingly, unlike under Torrens, a titleholder under the Act cannot rely on the title’s registration to prove their interest.[55] Calls to incorporate a registration mechanism with a Torrens degree of indefeasibility within the Act have been sporadically voiced since the passing of the original version of the Act in 1978.[56] Were it deemed necessary to implement, the system would offer the most conclusive protection of a titleholder’s interest.
The inherent uncertainty in relation to validity of title created by Forrest & Forrest, in part caused by narrow interpretation of s 116(2), is wholly unacceptable and materially risks undermining the efficiency of mining operations and investment within Western Australia. It is thus recommended that as a matter of urgency, s 116(2) be amended, with retrospective effect, to offer full protection of title, regardless of any substantial non-compliance with the Act’s provision.
[*] LLB, BComm (Accounting), Curtin University.
[1] Forrest Pty Ltd v Wilson [2017] HCA 30, 10 [34] (Kiefel CJ, Bell, Gageler and Keane JJ).
[2] Bill McCredie, Implications of High Court Ruling for Mining Lease Applications in WA (23 August 2017) Allens <https://www.allens.com.au/pubs/mine/cumine23aug17.htm>.
[3] Forrest Pty Ltd v Wilson [2017] HCA 30, 10 [36] (Kiefel CJ, Bell, Gageler and Keane JJ).
[4] Ibid 11 [40] (Kiefel CJ, Bell, Gageler and Keane JJ).
[5] Ibid 12 [43] (Kiefel CJ, Bell, Gageler and Keane JJ).
[6] Ibid.
[7] Ibid 16 [55] (Kiefel CJ, Bell, Gageler and Keane JJ).
[8] Mining Act 1978 (WA) s 116(2).
[9] Forrest Pty Ltd v Wilson [2017] HCA 30, 21–2 [74]–[77] (Kiefel CJ, Bell, Gageler and Keane JJ).
[10] Forrest & Forrest Pty Ltd v Wilson [2015] WASC 181, 17 [49]; Forrest Pty Ltd v Wilson (2016) 10 ARLR 81, 88–9 [33].
[11] Forrest & Forrest Pty Ltd v Wilson [2015] WASC 181, 5 [11], 18 [52].
[12] Forrest Pty Ltd v Wilson [2017] HCA 30, 19–21 [67]–[73] (Kiefel CJ, Bell, Gageler and Keane JJ).
[13] Ibid 21–2 [74]–[77].
[14] Ibid.
[15] Ibid 22 [76].
[16] Ibid.
[17] Ibid.
[19] Davis’s Tutor v Glasgow Victoria Hospitals (1950) SC 382, 385 cited in Forrest Pty Ltd v Wilson [2017] HCA 22 [76] (Kiefel CJ, Bell, Gageler and Keane JJ).
[20] Ibid. See also M'Ginty v Glasgow Victoria Hospitals (1951) SC 200, 211.
[22] Ibid 22 [77] (Kiefel CJ, Bell, Gageler and Keane JJ).
[23] Ibid.
[24] Ibid.
[25] [1988] HCA 5; (1988) 164 CLR 234.
[26] Hunter Resources Ltd v Melville [1988] HCA 5; (1988) 164 CLR 234, 259, quoted in Forrest Pty Ltd v Wilson [2017] HCA 22 [77] (Kiefel CJ, Bell, Gageler and Keane JJ).
[27] Mining Amendment Act 2004 (WA) s 29 amending Mining Act 1978 (WA) s 74.
[28] Michael Hunt and James Hunt, Validity of mining tenements conditioned by strict compliance with Mining Act, High Court says (18 August 2017), Hopgood Ganim <http://www.hopgoodganim.com.au/ page/Publications/Validity_of_mining_tenements_conditioned_by_strict_compliance_with_Mining_Act_High_Court_says_-_18_August_2017/> .
[29] Forrest Pty Ltd v Wilson [2017] HCA 30, 22 [77] (Kiefel CJ, Bell, Gageler and Keane JJ).
[30] Geoff Gishubl, Hight Court decision creates uncertainty for WA mining leases (24 August 2017), Ashurst, <https://www.ashurst.com/en/news-and-insights/legal-updates/energy-resources-alert-high-court-decision-creates-uncertainty-for-wa-mining-leases/>.
[31] Department of Mines, Industry Regulation and Safety (WA), ‘McGowan Government examining solutions for miners’ (Media Release, 5 September 2017) <http://www.dmp.wa.gov.au/News/ McGowan-Government-examining-22744.aspx> .
[32] Hunt and Hunt, above n 28.
[33] Forrest Pty Ltd v Wilson [2017] HCA 30, 36 [115] (Nettle J).
[34] Ibid 37 [116] (Nettle J).
[35] Ibid 36 [115].
[36] Hunt and Hunt, above n 28.
[37] Mining Act 1978 (WA) s 75(6).
[38] Forrest Pty Ltd v Wilson [2017] HCA 30, 24 [84] (Kiefel CJ, Bell, Gageler and Keane JJ).
[39] Ibid 26 [89] (Kiefel CJ, Bell, Gageler and Keane JJ).
[40] Ibid 25 [86] (Kiefel CJ, Bell, Gageler and Keane JJ).
[41] Ibid 38 [118] (Nettle J).
[42] Ibid.
[43] Ibid.
[44] Ibid. See also Hot Holdings Pty Ltd v Creasy [1996] HCA 44; (1996) 185 CLR 149, 174–5 (Brennan CJ, Gaudron and Gummow JJ).
[45] Department of Mines, Industry Regulation and Safety (WA), ‘McGowan Government examining solutions for miners’ (Media Release, 5 September 2017) <http://www.dmp.wa.gov.au/News/ McGowan-Government-examining-22744.aspx> .
[46] Forrest Pty Ltd v Wilson [2017] HCA 30, 22 [76] (Kiefel CJ, Bell, Gageler and Keane JJ).
[47] Mining Act 1978 (WA) s 75(6).
[48] Forrest Pty Ltd v Wilson [2017] HCA 30, 24 [84] (Kiefel CJ, Bell, Gageler and Keane JJ).
[49] Mining Act 1978 (WA) s 116(2).
[50] Forrest Pty Ltd v Wilson [2017] HCA 38 [118] (Nettle J).
[51] Ibid.
[53] Yarri Mining v Eaglefield Holdings Pty Ltd [2010] WASCA 132, 8 [20] (McLure P).
[54] Natalie Skead, ‘The Registration and Caveat Systems under the Mining Act 1978 (WA): A Torrens clone?’ (2007) 26(2) Australian Resources and Energy Law Journal 185, 189.
[55] Ibid.
[56] John Garvey, ‘Inquiry into Aspects of the Mining Act 1983 Report of Hunt’ (1984) 3(2) AMPLA Bulletin 15, 15.
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URL: http://www.austlii.edu.au/au/journals/WAStuLawRw/2018/2.html