Five important cases for mining executives June 2023 quarter

12 minute read 14.08.2023 David Suttner, Edward Fearis, Angus Paterson

We explore five case studies that demonstrate current trends in the mining sector. This article includes: Bare Form 5s doesn’t prove expenditure compliance; guidance on related party applicants in a ballot for priority; Judicial review of Warden's decision to dismiss forfeiture application; Supreme Court of NSW refuses application to remove mine accident report from the regulator's website.

1. Bare Form 5s not enough to prove compliance with expenditure requirements

In Aria Projects Pty Ltd v Australia Stone Group Pty Ltd [2023] WAMW 7, Warden McPhee recommended forfeiture of a Pilbara exploration licence after finding the Form 5 relied on by the tenement-holder provided insufficient detail of the expenditure and therefore, in the absence of other evidence from the tenement-holder and competing evidence from the applicant for forfeiture, a case for non-compliance, and therefore forfeiture, was made out. Miners are required to provide more than a bare Form 5 to resist a forfeiture application where there is evidence of no work on the ground.

Category	Amount claimed
A. Mineral – Exploration Activities
Other: Consultant	$1,785.00
Other: Exploration Expenses & Management	$594.00
Other: Travel, Accommodation & Phone	$114.00
Other: Fuel & Oil	$54.00
Other: Postage	$23.00
Other: Printing & Stationary	$56.00
Other: Repairs & Maintenance	$78.00
Other: Staff Training & Welfare	$16.00
Other: Storage Costs	$108.00
Other: Subscriptions	$108.00
Other: Telephone & Internet	$38.00
Other: Wages / Salaries / Superannuation	$11,455.00
E Administration / Overheads
Other: Administration & Overheads	$4,000.00
Total	$18,429.00

The tenement holder elected to not put on any further evidence at the hearing of the forfeiture application, relying solely on the Form 5.

However, witnesses for the applicant gave evidence that they regularly attended a neighbouring tenement and that the tenement in dispute was unworkable from December to March due to the heat and conditions. Their evidence was also that anyone working the tenement would have had to pass their camp, and that they had not seen anyone access the tenement. The Warden accepted this evidence, finding that it established that there was no physical attendance upon the tenement by the tenement holder. There was further evidence on behalf of the applicant that no ground disturbance was reported by the tenement holder.

Although accepting that claimable expenditure need not occur on the tenement, and that each part of the applicant's evidence in isolation was insufficient to establish non-compliance, the Warden nevertheless found that the content of the Form 5 was insufficient to allow the Warden to come to a view as to what the claimed expenditure related to. The Warden rejected the tenement holder's argument that the fact the expenditure was claimed in a Form 5 meant that it must relate to mining.

As a result, the Warden placed no weight on the Form 5 when determining if the claimed expenditure was in connection with mining. When considered in the context of the applicant's evidence that there was no attendance on the tenement and no ground disturbance, the Warden found that a case for non-compliance, and therefore forfeiture, was made out.

The Warden observed that if the tenement holder's position was approved, no applicant for forfeiture could lead evidence sufficient to displace a bare Form 5, lacking any particulars or details of the expenditure, when coupled with a suggestion that the expenditure occurred off-tenement. The Warden also drew an inference from the tenement holder's decision to not lead any evidence that any evidence available to the tenement holder would not have assisted its case.

In MCA Nominees Pty Ltd v Nex Metals Exploration Limited & Ors [2023] WAMW 13, Warden Cleary considered Form 5s with even less descriptive detail, and also placed no weight on them. Warden Cleary said that a Form 5 does not itself prove that minimum expenditure obligations have been met and that, while a tenement holder is not compelled to lead evidence itself, it would have to do so if the applicant for forfeiture led persuasive evidence of a lack of on-tenement activity, or the expenditure claimed is off-tenement and not obvious from the on-tenement activity. Warden Cleary also emphasised the need for the Form 5 to provide sufficient particulars of the activity undertaken to enable a determination whether the amount expended was in mining or in connection with mining operations on the tenement.

2. Warden's Court provides guidance on the treatment of related party applicants in a ballot for priority

In In the Matter of Competing Applications for Exploration Licences by Pilbara Gold Exploration Pty Ltd & Ors [2023] WAMW 8 applications for exploration licences were made by related parties regarding relatively identical ground. The Warden excluded one of the applications for purposes of a ballot for priority under section 105A of the Mining Act 1978 (WA). and made it clear that applications filed by related parties will not confer any advantage on the parties or their ultimate parent company.

Five applicants lodged applications for an exploration licence within a mineral field. There was overlap between the ground covered by each of the applications. All the applications were compliant with the requirements of section 58(1)(b) of the Mining Act. Accordingly, a ballot was required to determine the priority of the applications.

The evidence before the Warden showed that:

the First and Third Applicants were both wholly owned subsidiaries of the same ASX listed company;
the applications by each of the First and Third Applicants relied entirely on the provision of financial assistance from their parent company;
both applications related to the same piece of ground; and
both applications had the same tenement manager.

The Warden formed the view that the parent company was aware that two of its wholly owned (and therefore related) subsidiaries were applying for identical ground and, as no explanation was given by the parties, the Warden considered that there were only two inferences open:

one of the applications was filed in error, in which case not intervening and excluding one of the applications would be unfair to the other Applicants; or
the applications were filed with the direct intention of affecting the ballot.

The Warden determined that the applications were "filed for the purposes of affecting the result of a ballot to be conducted". Accordingly, the Warden formed the preliminary view that the Third Applicant (simply because it was listed after the First Applicant) ought be excluded from the ballot pursuant to section 105A(5) of the Mining Act, which .section gives the Warden the power to exclude applications if the Warden is satisfied that the application was filed for the purposes of affecting a ballot notwithstanding the fact it was otherwise a valid application. As a result, the Third Applicant's application can only be considered (if necessary) after the determination of the ballot and the formal assessment of the remaining four applications.

The Third Applicant has been given the opportunity to be heard on the Warden's preliminary view if it chooses to do so.

3. Judicial review of Warden's decision to dismiss forfeiture application dismissed

In Owen v Warden Stephen Wilson [2023] WASC 178, the Supreme Court dismissed a judicial review of the Warden's decision dismissing an application for forfeiture of exploration licences. Mr Owen applied for forfeiture of three exploration licences held by Mr Sandhu on the ground that Mr Sandhu had not met the minimum expenditure conditions. After a lengthy trial, the Warden dismissed Mr Owen's application. In dismissing Mr Owen's application for judicial review of the Warden's decision, the Supreme Court held that Mr Owen had sought to engage in an impermissible "merits review" of the Warden's decision and had established no legal error (which is necessary to succeed in a judicial review application).

Mr Sandhu's exploration licences were held as part of a project in the Goldfields. Mr Sandhu alleged, and proved to the satisfaction of the Warden, that the expenditure conditions had been met through activities including a drilling program and the creation of costeans, a camp and a wet gravity circuit.

Mr Owen then applied for judicial review of the Warden's decision. His grounds of review fell into three categories:

The Warden committed legal error by taking into account expenditure on unauthorised activities.
The Warden denied Mr Owen procedural fairness by relying on evidence from one of Mr Sandhu's witnesses who gave evidence via telephone-link from the USA and had terminated the link before his cross-examination was completed.
The Warden's decision was "legally unreasonable" in accepting evidence from Mr Sandhu’s witnesses rather than Mr Owen,, and that the Warden did not give adequate reasons for these findings.

The Supreme Court found that each of the three categories of alleged error were unfounded.

In relation to the first and third categories, the tenor of the Court's reasons were that Mr Owen was attempting to engage in impermissible "merits review" of the Warden's decision and that Mr Owen had not identified any legal error. The Court found that it was open to the Warden to prefer and rely on Mr Sandhu's witnesses and documentary evidence in the form of invoices, video-recordings of work done etc.

In relation to the alleged failure to provide adequate reasons, the Court found that, while in determining the application for forfeiture the Warden was acting in his "administrative" (not "judicial") capacity, his obligation to give reasons were essentially the same, being to refer to the relevant evidence, set out any material findings of fact and conclusions, and provide reasons for making these findings or conclusions. The Court found that the Warden had satisfied these obligations.

Lastly, the Court found it was open to the Warden to accept the evidence provided by video-link despite cross-examination not completing and that did not amount to a denial of procedural fairness. In any case, the Court found that the witness's evidence was not material to the Warden's decision.

4. Warden determines there is no power to allow a person to be substituted or joined as an objector

In Whitelaw v eMetals Limited [2023] WAMW 12, Warden Cleary dismissed Scorpion Minerals Limited's interlocutory application seeking orders to be either:

substituted as the objector to an application for a special prospecting licence; alternatively
joined as a party to the proceedings; alternatively
granted an extension of time to lodge a fresh objection.

The Warden held that because Scorpion Minerals was not a party to the proceedings, it had no statutory basis to bring an interlocutory application. Further, the Warden was not persuaded that she had "inherent" or "residual" powers to make an order of her own motion for Scorpion Minerals to be substituted or joined. The Warden determined that the correct procedure for becoming an objector was for Scorpion Minerals to lodge a fresh objection to the licence application, which would provide the Warden a discretion to grant an extension of time.

Ms Whitelaw applied for a special prospecting licence. At the time of the application, Scorpion Minerals was the primary holder of the underlying tenement - although there was a commercial relationship between Scorpion Metals and eMetals (the details of which were not disclosed in the Warden's reasons). Pursuant to section 70 of the Mining Act 1978 (WA), only the registered primary tenement holder can object to a special prospecting licence application. However, eMetals did not withdraw its objection, nor was there an application to dismiss eMetals' objection, so the proceedings remained on foot.

By interlocutory application, Scorpion Minerals sought to be substituted as the objector or joined as a party to the proceedings. Scorpion Minerals subsequently sought an extension of time to lodge a new objection in the event that the other orders were not granted.

The Warden held that since Scorpion Minerals was not a party to the proceedings, there was no statutory mechanism giving Scorpion Minerals "standing" to bring an interlocutory application. Further, the Mining Act and the Mining Regulations 1981 (WA) do not include a power to join or substitute parties in objection proceedings, leading the Warden to conclude that she did not have "inherent" or "residual" power to make an order of her own motion.

Warden Cleary also declined to make a determination concerning Scorpion Minerals' application for an extension of time to object to Ms Whitelaw's application because:

an interlocutory application was not the prescribed mechanism by which a party obtains an extension; and
this would be unfair to Ms Whitelaw given this order was not part of Scorpion Minerals' original interlocutory application and so Ms Whitelaw would be denied the opportunity to prepare a response.

Instead, the Warden directed Scorpion Minerals to complete the prescribed Form 16 application for an extension on the basis that the Warden can exercise her discretion to extend the time for a party to object.

5. Supreme Court of New South Wales refuses application to remove a report into a mine accident from the regulator's website

In Young Mining Company Pty Ltd v State of New South Wales [2023] NSWSC 582, Young Mining sought interlocutory relief for the removal of a report from the New South Wales Resources Regulator's website regarding a mine accident, which report contained adverse findings regarding Young Mining. The New South Wales Supreme Court balanced the potential risk of reputational harm to Young Mining against the public interest in the report remaining accessible. The Supreme Court found that the public interest in the accident and the Regulator's findings outweighed the potential risk of reputational harm to Young Mining.

In August 2021, a mine worker engaged at a mine operated by Young Mining was seriously injured when he fell into the entry chute of a conveyor and became buried. The Regulator investigated the incident and published an initial statement in September 2021, a month after the accident. The initial statement contained information about the accident and safety observations. Young Mining did not challenge the initial statement.

In November 2022, the Regulator provided a draft report to Young Mining and asked for comments. Young Mining initially requested further information from the Regulator and then sent correspondence to the Regulator requesting the Regulator refrain from publishing the draft report. Young Mining stated it had not had an appropriate opportunity to respond to the draft report.

The Regulator did not agree with either of the requests and published the report on 10 May 2023. Following publication of the report, there was media coverage in which Young Mining had refuted the report. On 15 May 2023, approximately 6 months after the Regulator had provided Young Mining the draft report, Young Mining commenced proceedings seeking removal of the report from the Regulator's website and an order that the Regulator be prohibited from further publishing the report until a final hearing. The grounds for the application were alleged errors in the report and a denial of procedural fairness to Young Mining.

The Supreme Court rejected the application, commenting that:

the report was published to provide information to the mining industry about safety issues and the causes of risks in the industry;
Young Mining had not complained about the accuracy or content of the initial statement, which contained "significant similarities" to the conclusions in the report;
an accompanying animation to the report had already been viewed by between 2,500 to 3,100 individuals;
there was a significant public interest in understanding the incident and how it may impact other operators in the industry;
the report had been published for three weeks; and
there was already existing media coverage of the accident, which referenced the report.

If you would like further information or detail on any of the cases listed above, please contact us.

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