Expenditure Commitments WA

26 Oct 2017

Spend more on Expenditure Commitment and less on Lawyers

In recent times there has been a trend by solicitors of the defendants of forfeiture applications to seek large securities for costs to scare the ‘plaintiffs’ from litigating.

In a recent Wardens Courts decision, Serena Minerals Pty Ltd v Audalia Resources Ltd, Warden Maughan recommended for refusal the application for security on the grounds that the:

principle [the ability for other people to apply for forfeiture of tenements for a breach of expenditure conditions] relies on “the jealous neighbour principle” and is vital to the self-regulation of the mining industry; and

along with Serena Minerals having enough funds to cover the litigation costs.

It is interesting to note that Audalia’s expenditure on the 3 exploration licences under forfeiture application was less than $9K on each for a commitment of $50K each. Then on each of Audalia’s project groups was deficient compared to the commitment.

$51K expenditure compared to commitment of $233K; and

$259K expenditure compared to $364K.

Audalia are really testing the limits of their jealous neighbours.

A further point to note; in this case Warden Maughan quoted Warden Hall in St Clair v Oz Youamni who said the following should be considered in whether awarding security for costs:

  1. the promptness of the application for secuity;
  2. the merits of the applicant for security;
  3. the available funds in the jurisdiction to cover a cost order and the ability of the courts to enforce a cost order; and
  4. whether a security for cost would be oppressive to deny a impecunious plaintiff the right to litigate.

This last point indicates that seeking security for costs when there is a strong case of forfeiture is a poor defence and more a process for scaring off litigants. I suggest that tenement holders should therefore be more prudent about complying with expenditure commitments.

Audalia ended up surrendering the exploration licences and Serena exercised it 14 day right to apply for the ground.