Mining Lease Applications were Invalid
In 2011 the process for mining lease applications went into disarray when Mr Forrest objected to a couple of sand miner’s mining lease applications over the Ashburton River that runs through Minderoo Station. The grounds for objections was the failure to lodge a Mineralization Report at the same time as the mining lease application. Lodgement of Mineralization Report two weeks after the application was common practice at the time, as it was recommended by the DMIRS guidelines; though contrary to s74(1)(ca)(ii) of the Mining Act, until this point it had not been a cause for invalidating applications.
After the Warden denied the objection, it was taken to the High Court in the case Forrest & Forrest v Wilson. This case determined the Mining Act should be strictly complied with, calling those who failed to meet the requirements “authors of their own misfortune”. The High Court regarded the mining lease applications invalid and the rigid ruling was dubbed “The Forrest Approach”.
As the delayed lodging of mineralization reports was common at the time, companies were scrambling to check their mining lease applications, and if faulty, repeg their mining leases to mitigate the risk of losing ground. FMG was one of the first off the block, rushing to repeg many of their own mining leases 3 days after the decision of the High Court costing in excess of $1M. Our preliminary investigations at the time revealed approximately 55 mining leases were in violation of the High Court’s Forrest Approach.
DMIRS guidelines had been allowing mineralisation reports or mining proposals to be lodged up to 2 weeks after the related mining lease applications. Much to their client’s regret, some tenement consultants followed the DMIRS guidelines. After this case, DMIRS began strictly applying the High Court’s interpretation. They rejected any mining lease application that was not simultaneously accompanied by a mineralisation report or mining proposal.
Amending the Mining Act
The WA government endeavoured to amend the Mining Act, wanting to make the invalid mining leases valid. They were hobbled by the fact that under the Native Title Act it was considered a “future act”. To validate the mining leases, one was required to follow the future act process which is a whole other kettle of fish.
It has been suggested that the Native Title Act was to be amended to bypass this; however, the Native Title Act was amended in 2021 and it contains no such amendment. As the Mining Amendment (Procedures and Validation) Bill 2018 (WA) has stalled, there may be approximately 200 invalid mining leases still in existence to this day.
A following case, Onslow v DMIRS [2021], the Court of Appeal predictably used The Forrest Approach, stating that supplementary information cannot cure a non-compliant mining operations report.
A trend of strict compliance was further augmented by Forrest and O’Sullivan [2020], where the marking out of prospecting licences was non-compliant with s105 of the Mining Act. Because the requirement for one-meter trenches commencing from the corner peg was breached because the where 10 to 20 cm away. This was deemed non-compliant with the Mining Act, thus invalidating the applications.
Leichardt v Santos Et al, a different interpretation
Recently, Warden McPhee in Leichardt v Santos et al [2022] decided to take an alternate path to the rigid Forrest Approach.
Leichardt made applications for Mining Leases 47/1622 and 47/1623 and simultaneously lodged a mining proposal, though the Mining Registrar said the mining proposal had shortcomings and deemed the mining lease applications invalid but later withdrew their decision, as the Registrar decided it was outside his jurisdiction.
The Applicant made an Interlocutory Application seeking a 10 year extension of time to lodge a substitute mining proposal. The Objectors (Santos et al) had no objection, relying on the Forrest Approach. The Warden allowed the application for extension of time under 162B. He deemed it appropriate as the Applicant was prompt in dealing with the issues at hand.
Warden McPhee did not declare the mining leases invalid because of strict compliance pursuant to the Forrest Approach. Warden McPhee distinguished the decision from Forrest & Forrest v Wilson because it was a different section of the Mining Act. This section referred to the lodgement of mining leases with a mining proposal rather than with a mineralization report. The High Court in Forrest v Wilson said lodging a mining lease application with a mineralization report required strict compliance, because it was “not subject to provisions to the contrary”, whereas lodging with a mining proposal is quite the opposite and depends on other provisions eg: guidelines.
As per section 74(1AA) “a mining proposal may be lodged within the prescribed time and in the prescribed manner…”. Subject to the guidelines published by government. This meets the requirements of “provisions to the contrary”. This means that a mining proposal that fails to meet the stipulations in the Mining Act does not make the mining lease application invalid.
The Warden did not go out on a limb in this decision, relying on precedent set by Justice Tottle of the Supreme Court in Wyloo Metals v Quarry Park [2021].
DMIRS Undisclosed Guidelines Invalid
Furthermore, DMIRS possessed a document that was revealed by a Freedom of Information Request, the document titled “DMIRS Resource Tenure Strict Compliance Guidelines consequent to High Court of Australia Forrest & Forrest v Wilson and Others [2017] HCA 30”. The Warden stated that because the document was not publicly available as required under s75P of the Mining Act, DMIRS could not rely on it to invalidate a mining lease.
Granting Mining Tenements was no cure
You may ask why the granted mining leases were not protected by s116(2) of the Mining Act, which states:
“a mining tenement granted … shall not be impeached or defeasible by reason or in account of any informality or irregularity in the application or in the proceedings previous to grant …” except in the case of fraud.
It’s due to a majority decision in the High Court, this stated that the grant of a mining lease to the registered holder is invalid by reason of non-compliance with any of the statutory preconditions of application. It also declared that the failure to simultaneously lodge a mineralization report with the application was an “irregularity in the application”.
However, if a mining lease were to be transferred, the new holder would be afforded protection s116(2) (shown in bold below):
S116 (2) 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 of that tenement and no person dealing with a registered holder of a mining tenement shall be required or in any way concerned to inquire into or ascertain the circumstances under which the registered holder or any previous holder was registered…
There may be opportunity for companies to validate their invalid leases by transferring their mining leases to a related company. That is, of course, if they can get the Government and the Office of State Revenue to waive their transfer taxes.
Though Leichardt v Santos et al furthers confuses the requirements of s74 in the Mining Act, I would be circumspect in relying on the decision for future mining lease applications until the legislation is amended, or the High Court supports Warden McPhee’s decision. Complying with strict adherence, as set out by the High Court, ensures that one isn’t unknowingly becoming author of his own misfortune.
To avoid making similar mistakes so you don’t lose your tenements, LandTrack Systems offers several Training Courses:
Understanding Tenement Expenditure
Navigating Exploration Agreements
