Uncertainty Remains For Western Australian Mining Titles.
Legal News & Analysis - Asia Pacific - Australia - Energy & Project Finance
3 August, 2018
Implications of the decision in Forrest & Forrest v Wilson
The majority of the High Court of Australia in Forrest & Forrest Pty Ltd v Wilson & Ors  HCA 30 (Forrest) held that the failure of an applicant to lodge a mineralisation report (a report prepared by a qualified person substantiating the existence of significant mineralisation existing that justifies the grant of mining tenure) contemporaneously with a Western Australia (WA) mining lease application rendered the mining lease application invalid. The Court also held that the protection afforded by 'the curative provision' (section 116(2) of the Mining Act 1978 (WA) (Act)), did not extend to the title holder to cure the non-compliance.
The decision has had broad implications for current and future mining tenement applicants along with mining tenure holders in WA including:
- granted mining leases being challenged on the basis of invalidity for not submitting a mineralisation report at the time of application;
- other mining tenure being at risk or subject to challenge as they did not strictly comply with the application procedures prescribed by the Act and Mining Regulations 1981 (WA) particularly where there are requirements for the application to be "accompanied" by documents and payments;
- applications for mining leases (and other mining tenure) being invalid an incapable of grant; and
- third parties marking out fresh applications over ground invalidly applied for by the mining tenure holder.
The Department of Mines, Industry Regulation and Safety (DMIRS) has identified at least 55 current mining lease applications where a mineralisation report was not lodged contemporaneously or where the report was not signed off by a qualified person. DMIRS has not publicly released the number of granted mining tenements which are the subject of invalid applications, but the number is thought to be quite large given the non-concurrent lodgement of these documents was quite common in practice.
Leaving to one side the issue of granted tenure the subject of invalid applications, the 55 identified mining lease applications on foot are all invalid as a result of the Forrest decision and cannot be granted. Accordingly, the affected applicants are now required to mark out the land again, make a new application ensuring that all accompanying documents are correctly prepared and lodged, then undertake the objections process under the Act (whereby third parties claiming other interests in the land can object to the grant of the mining lease).
Significantly, the applicants must also go through the Native Title Act 1993 (Cth) (NTA) future act process again. Further, while affected applicants are going through the fresh application process they run the risk that opportunistic third parties may lodge competing tenure applications over the same land, and are forced to rely on the Minister for Mines refusing to grant opportunistic applications for being contrary to the public interest (using the discretionary power afforded pursuant to section 111A of the Act).
The legislative solution
After the Forrest decision was handed down, DMIRS reassured members of the mining industry that it would act swiftly and on 28 November 2017, the Minister for Mines announced Cabinet's approval to draft validating legislation. Sadly, to date, industry is yet to see the draft legislation.
That said, both DMIRS and the Minister for Mines have indicated that the promised legislative remedy would only validate granted mining leases, meaning that non-compliant mining lease applications would remain invalid and would have to undergo the processes outlined above.
As such, many mining lease applicants have received a 21 days' notice from DMIRS that their applications will be declared null and void and struck from the register where DMIRS believes that the Forrest ruling has rendered their applications invalid.
Whilst industry waits for the WA Government to implement their legislative solution, uncertainty remains.
Barriers to the legislative solution
Implications of the Forrest decision on compliance with the NTA have resulted in Commonwealth legislation being required to adequately resolve the current situation, in addition to the WA Government solution.
These implications stem from concerns that, in applying the rationale set down in Forrest, if a mining lease was granted and its application did not accompany a mineralisation report, it would be invalid and hence, cannot have complied with the NTA. Although DMIRS has argued that granted leases would no longer have native title issues as they have been through the future act process of the NTA, a "future act" must be compliant with the Act apart from its effect on native title, otherwise, it would be invalid even if it had previously undergone the future act process under the NTA.
There have also been concerns raised by the Association of Mining and Exploration Companies (AMEC) that the validating State legislation may be regarded as a new "future act" under the NTA, notwithstanding compliance with the NTA future act provisions at the time of the original grant. AMEC wrote to the Commonwealth Attorney General on 8 Dec 2017 to alert him to their concerns and for the matter to be urgently dealt with. To address this issue, AMEC proposes that amendments to the NTA should allow for validating legislation by the State or Territories to address technical compliance with State legislation where there has otherwise been compliance with the NTA.
Currently, a stalemate remains between the WA Government and the Attorney General as the later insists that WA must act first, despite the WA government refusing to proceed with the validating legislation until the Commonwealth Government amends the NTA. Further, given the slim majority held by the Commonwealth Government, they appear to be reluctant to propose anything other than legislation it deems critical or politically important.
In the meantime
In the face of the risk of invalidity, major iron ore players such as Fortescue and Roy Hill have publicly announced that they have applied for new leases over their existing granted leases. Other companies have adopted a similar course of action.
The aftermath of Forrest is that mining lease holders should undertake an audit of mining tenure to ensure the lodgment of their mineralisation report was at the same time as their application. Further, if such audit uncovers non-compliance and the mining lease is of sufficient value to justify the expense, it would be prudent to lodge an application for a new mining lease over the existing tenure and await the State (and Commonwealth's) legislative solution.
Encouragingly, DMIRS has said that it will not act on any application until the validating legislation goes through to ensure lease holders' interests are maintained.
Holders of tenure other than mining leases may also choose to undertake an audit of all their tenure to ensure that procedural requirements were followed during the application process.
As with mining lease holders, if such audit uncovers non-compliance and the tenure is of sufficient value to justify the expense, it would be prudent to lodge an application over the existing tenure prior to the legislative solution.
All applicants with un-granted mining leases in WA should check that their mineralisation report was lodged at the same time as their application. In addition, it would be advisable to ensure that the mineralisation report was prepared by a qualified person and that all other requisite documents, procedural requirements and payments were followed and submitted on time or "accompanying" the application as expressly stated in the Act.