05 Apr Ngadju determination appeal
Ngadju determination appeal
29 March 2016
Full Court overturns judgment at first instance, mineral leases granted under Mining Act 1904 and not State agreement, mineral leases granted subject to survey not granted subject to a condition precedent, mineral leases under Mining Act 1904 are deemed to be mining leases under the Mining Act 1978, such mining leases are valid future acts on renewal or re-grant
On 29 March 2016 the Full Federal Court handed down its decision in State of Western Australia v Graham on behalf of the Ngadju People  FCAFC 47 on appeal from three decisions of Mansfield J: Graham on behalf of the Ngadju People v State of Western Australia  FCA 516, Graham on behalf of the Ngadju People v State of Western Australia  FCA 700 and Graham on behalf of the Ngadju People v State of Western Australia  FCA 1247.
The decision concerns the Ngadju native title claim that lies to the North and East of Esperance in the Eastern Goldfields region of Western Australia. Although the case primarily deals with native title issues, the Full Court also dealt with issues arising under the Mining Act 1904, the Mining Act 1978 and the Government Agreements Act 1979 which are relevant to any companies which have mining leases under the Mining Act 1978.
The grant of mineral leases
At first instance Marshall J determined that various mineral leases were granted pursuant to a State agreement and the Government Agreements Act 1979. On appeal the Full Court followed a long line of authority and confirmed that mineral leases are granted under and continue as rights under and in accordance with the Mining Act 1904 and, after the commencement of the Mining Act 1978, as mining leases under the Mining Act 1978. A State Agreement merely creates a contractual regime around those leases.
The grant of mineral leases being “subject to survey”
At first instance Marshall J held that some historical mining tenements which were granted “subject to survey” were invalid because a grant made subject to survey was a grant made subject to a condition precedent. His Honour found that as there was no evidence of the undertaking of a survey the condition precedent had not been satisfied and the tenements were invalid.
The Full Court noted that there are several references to surveys throughout the Mining Act 1904 but none amount to a condition precedent to grant. The Court held that a survey is not a pre-condition to a grant and accordingly the mineral leases were validly granted.
The renewal of the mining leases was a valid future act
Under the Mining Act 1904 a mineral lease was granted for the “working of some mineral or combination of minerals to be specified therein.” Other minerals could be added on application. A mining lease granted under the Mining Act 1978 empowers the lessee to mine “for any minerals”.
The transitional provisions in the Mining Act 1978 provide that every lease under the Mining Act 1904 in force immediately before the commencement of the Mining Act 1978 shall be deemed to be a mining lease granted under the Mining Act 1978 subject to the terms and conditions on which it is granted (other than a term or condition restricting the scope of the lease concerned to certain minerals) and shall remain in force for the unexpired term and shall then expire. Thus on 1 January 1982 a mineral lease granted under the Mining Act 1904 for a limited number of minerals transitioned to a mining lease under the Mining Act 1978 that permitted the lessee to mine for any minerals. However, as the Full Court held, the terms and conditions under which the mineral leases were granted under the Mining Act 1904 remain in force other than any term or condition restricting the lease to certain minerals. Therefore, the Mining Act 1978 “altered those leases so that any restriction of the minerals that could be mined was not continued.”
The Full Court determined that the fact that the State agreement had been terminated was irrelevant. The mining leases simply continued although the contractual rights and obligations between the State and the lessees fell away. The leases were not renewed or re-granted by the termination of the State agreement. In fact, most of the leases in question had been re-granted in 2004 and 2006. It was common ground that the re-grants amount to future acts under the Native Title Act 1993 (Cth) (NTA). The question was whether they were valid future acts.
Marshall J held at first instance that the renewal or re-grant created new rights to mine because as a result of the termination of the State agreement the holder was entitled to mine more than just nickel and associated mineral products.
A future act will be valid if it comes within the criteria in various sections in Part 2 Division 3 of the NTA. Two of those sections are ss 24IB and 24IC.
The lessees argued on appeal that the re-grants were a future act that took place in exercise of a legally enforceable right created by an act done before 23 December 1996 or in good faith in giving effect to, or otherwise because of, an offer, commitment, arrangement or undertaking and thus came with s 24IB. This was said to arise because the leases were granted pursuant to the priority right to mark out and/or apply for a mining tenement contained in clause 2(1) of the Mining Act 1978. The Full Court was not persuaded that s 24IB was satisfied, holding, that the re-grant did not take place in exercise of a legally enforceable right but in exercise of a statutory discretion exercised by the Minister under the Mining Act 1978. Furthermore, the Full Court held that the priority right in clause 2(1) of the Mining Act 1978 concerned only the making of the application and because the Minister had a discretion whether to grant, the grant did not take place in giving effect to or because of an offer, commitment, arrangement or undertaking.
However, the Full Court was satisfied that the re-grant of the mining leases was a permissible lease renew within the meaning of s 24IC and accordingly the re-grants were a valid future act. There was no doubt that the re-grants fell within s 24IC(1)(a) and that the original leases were granted on or before 23 December 1996. The real question was whether the re-grants created a larger or new proprietary interest. If the re-grants did, s 24IC would not apply. Relying on the settled law that the grants of mining tenements under the Mining Act 1904 and Mining Act 1978 are in the nature of personalty and not realty, the Court held that the mining leases do not create a proprietary interest in land. Accordingly, no larger or new proprietary interest had been created by the re-grants. The Court went on to say that even if mining tenements did create a proprietary interest in land, the re-grant did not create a larger interest because the original lease only authorised the mining of nickel and associated mineral products and the re-grant authorised the mining of any minerals. This was because the Mining Act 1978 had effected this change and not the re-grant. The rights under the leases immediately before the re-grant and the rights under the re-granted leases were the same; both authorised the mining of any minerals.
Accordingly, the Full Court allowed the appeal. The most important principle for mining companies in Western Australia is that when mineral leases granted under the Mining Act 1904 are re-granted they are valid future acts under the NTA.