Complex Exploration Pty Ltd v McPhee in His Capacity as Mining Warden
[2023] WASC 357
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: COMPLEX EXPLORATION PTY LTD & ANOR -v- MCPHEE IN HIS CAPACITY AS MINING WARDEN [2023] WASC 357
CORAM: HOWARD J
HEARD: 24 AUGUST 2023
DELIVERED : 21 SEPTEMBER 2023
FILE NO/S: CIV 1348 of 2023
BETWEEN: COMPLEX EXPLORATION PTY LTD
First Applicant
BYRO EXPLORATION PTY LTD
Second Applicant
AND
THE HONOURABLE THOMAS WILLIAM MCPHEE IN HIS CAPACITY AS MINING WARDEN
Respondent
ALEXANDER CREEK PTY LTD
Other Party
Catchwords:
Judicial Review - Application for a writ of certiorari and a declaration - Administrative decision of Mining Warden to recommend denial of an expenditure exemption under s 102 of the Mining Act 1978 (WA) - Time required to raise capital in the Expenditure Year - Consideration of activities post-Expenditure Year - Application dismissed
Legislation:
Mining Act 1978 (WA)
Result:
Application dismissed
Category: B
Representation:
Counsel:
| First Applicant | : | D R Chandler |
| Second Applicant | : | D R Chandler |
| Respondent | : | No appearance |
| Other Party | : | M F Gerus |
Solicitors:
| First Applicant | : | Lawton Macmaster Legal |
| Second Applicant | : | Lawton Macmaster Legal |
| Respondent | : | State Solicitor's Office |
| Other Party | : | Lawton Macmaster Legal |
Case(s) referred to in decision(s):
Byro Exploration Pty Ltd v Alexander Creek Pty Ltd [2022] WAMW 25
Hot Holdings v Creasey (1996) 185 CLR 149
Medical Board of Australia v Arunkalaivanan [2023] WASCA 117
Siberia Mining Corporation Pty Ltd v O’Sullivan [2020] WASC 214
Thompson v Siberia Mining [2021] WASCA 115; (2021) 14 ARLR 293
HOWARD J:
Introduction
The applicants are joint registered holders of mining tenements E09/1507 and E09/1552 (Exploration Licences) and are wholly owned subsidiaries of Athena Resources Limited ACN 113 758 900 (Athena).
During the period 23 October 2019 to 22 October 2020 (Expenditure Year), the applicants were obliged to, but did not meet minimum expenditure requirements on the Exploration Licences.[1]
[1] Pursuant to Mining Act 1978 (WA) s 62(1).
The applicants applied for exemptions pursuant to s 102 of the Mining Act 1978 (WA) (Exemption Applications). (Unless otherwise indicated, from here all statutory references are to the Mining Act).
Alexander Creek Pty Ltd ACN 166 909 182 objected to the Exemption Applications and is Other Party in this Court.
Following a contested hearing on 6 and 7 September 2022, the Mining Warden (the respondent in this Court) (Warden) recommended to the Hon Minister for Mines that the Exemption Applications be refused (Recommendation). The Warden delivered his reasons on 16 December 2022 (Warden's Reasons).[2]
[2] Byro Exploration Pty Ltd v Alexander Creek Pty Ltd [2022] WAMW 25.
The Application
The applicants seek judicial review of the Recommendation pursuant to O 56 r 2 of the Rules.
Conventionally, the Warden as respondent abided the outcome of the Application.[3]
[3] First Respondent’s Notice to Abide by Decision, eLodged 4 May 2023.
It is well established that judicial review is available in relation to the Warden's decision to recommend the refusal of a grant of an exemption: Hot Holdings v Creasey (1996) 185 CLR 149, 174 (Brennan CJ, Gaudron and Gummow JJ); Thompson v Siberia Mining [2021] WASCA 115; (2021) 14 ARLR 293 [54] (Buss P, Beech and Vaughan JJA).
I granted the applicants leave to rely on an Amended Application at the hearing in this Court on 24 August 2023.[4]
[4] This Court's transcript ts 9.
The Application (as amended) advances two Grounds.
Ground 1 is that the Warden committed a jurisdictional error in that he failed to consider the applicants' evidence as to the work done and money spent on Exploration Licences subsequent to the Expenditure Year when that evidence was not challenged.[5]
[5] Amended Application for Judicial Review, eLodged 14 August 2023.
Ground 2 is expressed to be in the alternative: the Warden committed a jurisdictional error in that his consideration of the applicants' evidence as to the work done and money spent on the Exploration Licences subsequent to the Expenditure Year was unreasonable.[6]
[6] Amended Application for Judicial Review, eLodged 14 August 2023.
My understanding from the applicants' submissions at the hearing in this Court is that Ground 1 asserts, essentially, a jurisdictional error by the Warden not considering post-Expenditure Year expenditure under s 102(4) when considering the applicants' reasons for exemptions. This was said to be a failure to consider an 'integer' of the applicants' claim.[7] I understand that to mean that it was a consideration which the Warden was mandated to consider.
[7] Applicants' Outline of Submissions [10]; this Court's transcript ts 26.
Ground 2, rather, asserts an unreasonable reasoning process on the part of the Warden[8] in that the Warden may have changed his conclusion under s 102(3) if he had properly considered the funding received by the applicants subsequent (to the Expenditure Year) when deciding whether the applicants not spending in the Expenditure Year was reasonable while they waited for third party funding.[9]
[8] This Court's transcript ts 21, 34.
[9] This Court's transcript ts 54.
The relevant provisions of the Mining Act
As in this Court,[10] before the Warden the applicants only pressed their Exemption Application under s 102(2)(b) and s 102(3).[11]
[10] This Court's transcript ts 37.
[11] Warden’s Reasons [41].
Those provisions, relevantly are:
(2)A certificate of exemption may be granted for any of the following reasons:
…
(b)that time is required to evaluate work done on the mining tenement, to plan future exploration or mining or raise capital therefor;
…
(3)Notwithstanding that the reasons given for the application for exemption are not amongst those set out in subsection (2), a certificate of exemption may also be granted for any other reason which may be prescribed or which in the opinion of the Minister is sufficient to justify such exemption.
Also relevant to this Application is s 102(4) which provides:
When consideration is given to an application for exemption regard shall be had to the current grounds upon which exemptions have been granted and to the work done and the money spent on the mining tenement by the holder thereof.
Thompson v Siberia Mining
The Application has to be determined against the proper construction of the relevant provisions of the Mining Act. They were recently considered in Thompson v Siberia Mining and I have set out below the relevant principles (all paragraph references in this section refer to Thompson v Siberia Mining unless otherwise indicated).
The relevant statutory framework, including s 102, for applications for exemption was set out: [10] - [18]. It is to be noted that the Court of Appeal expressly approved both the construction adopted by, and the reasoning of, the primary Judge, Tottle J:[12] [8].
[12] See Siberia Mining Corporation Pty Ltd v O’Sullivan [2020] WASC 214.
The reasons specified in s 102(2) do not require a tenement holder to explain its non‑compliance: [57].
Nevertheless, each reason in s 102(2) describes factual circumstances which, in effect, may be seen as both a reason as to why a certificate of exemption may be granted and a reason or explanation as to why the expenditure conditions have not been (or will not be) satisfied: [57].
Each reason in s 102(2) is constituted by a state of (factual) affairs that existed at the time the application is made: [58].
Separate pathways are provided to the grant of an exemption by s 102(2) and s 102(3): [61].
A combination of reasons which, individually, may not satisfy any of the criteria within s 102(2) may nonetheless ground the granting of an exemption pursuant to s 102(3): [62]; but an 'other reason' for the purposes of s 102(3) need not be of a different character to the reasons specified in s 102(2): [59].
A reason will be an 'other reason' that does not satisfy the criteria of one or more of the reasons specified in s 102(2). Nothing more is required in order to be an 'other reason': [127].
Evidence of subsequent events may be relevant to reasons which exist in the Expenditure Year given to justify the grant of an exemption - such evidence may advance the strength or legitimacy of the reasons given: [52], [67].
So long as one or more of such reasons (under s 102(2) or (3)) are demonstrated, in exercising the discretion whether to grant an exemption s 102(4) requires that regard be had to work done and moneys spent on the mining tenement by the holder, including subsequently to the Expenditure Year: [104].
If no such reason is established (under s 102(2)), no exemption may be granted: [104].
Section 102(4) requires regard to be had to two mandatory considerations 'when consideration is given to an application for exemption', namely:
(a) current grounds upon which exemptions have been granted; and
(b) the work done and the moneys spent on the mining tenement by the holder thereof: [73].
Those two considerations are not reasons for granting an exemption but must be considered in determining whether to grant an exemption: [73].
The secondary mandatory consideration in s 102(4) requires consideration of work done and moneys spent up to the date of the consideration of the application - not just up to the date the application was made. The phrase 'work done and moneys spent' includes all work done and moneys spent up to the time when the application is considered: [75].
There is no tension in considering work done and moneys spent after the relevant expenditure year when deciding whether to grant an exemption from expenditure for a reason which arose during the expenditure year: [103].
The reason or reasons for the exemption must be found in matters existing during the Expenditure Year and work and expenditure subsequent to the Expenditure Year cannot be the reason for the exemption: [118].
If, and only if, such reasons are established, in exercising the discretionary power to grant an exemption the Minister must take account of all expenditure and work up to the date of consideration of the application: [118].
Thus: while facts subsequent (to the Expenditure Year) may be probative to the reason/s asserted in the Expenditure Year, subsequent matters could not be a reason/s in the Expenditure Year for the granting of an exemption.
The Warden's decision
The Warden set out what he apprehended were the most relevant matters given how the matter was conducted:
… the onus was on the Applicant in this matter when relying on s 102(2)(b) … to demonstrate the requirement of time to undertake one of the following activities for the tenements in question:
…
(d)Raise Capital to permit evaluation of the work done on the tenement; or
(e)Raise Capital to plan or conduct exploration on the tenement; or,
(f)Raise Capital to plan or conduct mining on the tenements.
…
(I have only cited those which are said to remain relevant to this Application.)
Warden's Reasons [29]: see also [42].
The Warden stated that he was required, under s 102(3) and s 102(2)(b), to consider the whole of the circumstances presented and any other relevant matters. He identified those relevant matters as including:
[32]… facts, matters and things post-dating the expenditure year, in circumstances where that evidence can be said to have related to material facts from the expenditure year.
…
[34]I did not understand there to be any significant dispute between the parties as to the evidence sought to be advanced in support of the exemption application, including by reference to some information post-dating the expenditure year.
[35]That information related to asserted activities upon the tenements after the completion of the expenditure year, and the date of the hearing before me.
Warden's Reasons [32], [34], [35].
The Warden approached the Exemption Applications by asking the following questions:
1.Did the applicants need time during the reporting years to raise capital?
2.What was the purpose of the capital raising?
3.Were there any impediments to the necessary conduct of expenditure from the tenements?
4.Does any previous grant of exemptions for the tenements weigh in favour or against the grant of exemptions?
5.Does the work done and money spent on the tenements weigh in favour or against the grant of exemptions?
Warden's Reasons [49].
In the broad, before both the Warden and this Court, the applicants contended that the factual position was that:
1.the applicants planned to do drilling work on the Exploration Licences in the Expenditure Year;
2.that planned drilling work was not done;
3.that was because the applicants expected to receive moneys in the Expenditure Year from a foreign corporation, Goldway Mega Trade Limited (Goldway), which did not arrive in the Expenditure Year;
4.the applicants ran out of money for their business during the Expenditure Year; and
5.when the funds were received following the Expenditure Year they were used, or expended in part, on the Exploration Licences.
As I understand it, both before the Warden and this Court no different facts were put to support the Exemption Applications under s 102(3) from the facts put to support s 102(2)(b).[13]
[13] This Court's transcript ts 16, 28.
Significantly for the Application the Warden made two broad sets of factual findings.
The first was that the applicants and their parent (Athena) had sufficient funds available to them in the Expenditure Year to have complied with the expenditure obligations if they had chosen to do so.
The second was to the effect that the applicants waiting for, and relying on Goldway, as a third party funder in the Expenditure Year was unreasonable.
These are both considered in more detail below.
Applicants chose not to spend in the Expenditure Year
The Warden made findings of fact, which are not disputed in this Court,[14] to the effect that the applicants had funds available to them in the Expenditure Year but gave precedence to other expenditure (other than that required for the Exploration Licences) in the Expenditure Year: Warden's Reasons [91], [118(d), (e), (f)], [147], [168], [197].
[14] This Court's transcript ts 15, 38, 39.
The Warden found:
[149]Further, the funds which did flow into the coffers of Athena in the relevant period (which were not insignificant), were not used for purposes consistent with the expenditure requirements of the Act in respect of the Tenements of the Applicants.
…
[179]Absent specific evidence as to the inability to conduct any relevant work or expenditure on the tenement for the course of the relevant year, I simply do not accept that there was an inability to meet the expenditure requirements for [sic] that basis …
Warden's Reasons [149], [179]
The Warden found:
[206]Ultimately, I am unable to escape a conclusion that Athena made a conscious determination not to expend available capital on the Tenements in the form of the required expenditure in the Expenditure Year, but rather to ensure the administration and corporate costs of Athena were met.
Warden's Reasons [206]
Applicants' reliance on Goldway
The Warden found that neither the applicants, nor Athena, had any enforceable or binding agreement for future funding with Goldway: Warden's Reasons [69], [70], [72] - [74], [113], [146].
The Warden found the applicants (and Athena) had placed absolute reliance on the funding from Goldway: Warden's Reasons [144].
The Warden found that there was no reasonable basis to expect funds at any time from Goldway: Warden's Reasons [106], [118(h)], [153], [162], [166]; and so by necessary extension, no reasonable basis not to spend on the Exploration Licenses in the Expenditure Year.
Funding and expenditure post-Expenditure Year
It was not suggested in this Court, and I do not consider it could have been, that the fact of Goldway's subsequent funding was not before the Warden.
As to the funding and expenditure post-Expenditure Year, the Warden found:
[165]Indeed, on the evidence available post-dating the expenditure year, a limited amount of activity occurred, notwithstanding the fact that the funds from Goldway were said to eventually arrive.
…
[189]There is no dispute that when assessed over a period of time, and considered in an aggregate manner, the expenditure on the collective group of tenements, exceeds the sums required over the relevant period of time.[15]
…
[198]Very little expenditure has occurred on the tenement, though Athena claims significant expenditure across the entirety of its holdings.
Warden's Reasons [165], [189], [198]
[15] It appeared to be accepted by the applicants that it was open to conclude that this demonstrated the Warden took into account the post-Expenditure Year expenditure: This Court's transcript ts 27.
Consideration of the s 102(2)(b) reason
It appears from the first set of factual findings set out above that the Warden did not consider that the applicants required time in the Expenditure Year to relevantly raise capital for the Exploration Licences. That is, in plain terms, the Warden found that the applicants had sufficient funds available to them in the Expenditure Year to meet their expenditure obligations but chose not to.
The Warden concluded that s 102(2)(b) was not satisfied - that is, the provision was not met and did not provide a reason to recommend an approval of the Exemption Applications.
As noted, there was no challenge to the Warden's findings that, in effect, the applicants (themselves, or by their parent Athena) chose not to meet the expenditure obligations on the Exploration Licences despite having the funds to do so.
Further, there was no challenge to the related finding made by the Warden that time was not required to raise capital for work on the Exploration Licences within the meaning of s 102(2)(b).
On my understanding of Thompson v Siberia Mining, especially [73], [104], [118], the consequence of those findings is that the mandatory considerations in s 102(4) did not arise because there was not a reason in the Expenditure Year to grant an exemption under s 102(2)(b).
If that is correct, then even if the Warden failed to consider the post‑Expenditure Year expenditure as asserted by Ground 1, it would not constitute a material jurisdictional error which would lead to the quashing of the Warden's Recommendation.
In my judgment, then, neither Ground 1, nor Ground 2, could arise in relation to the applicants' reliance on s 102(2)(b) and so those Grounds must fail insofar as they relate to s 102(2)(b).
In any event, I do not accept the proposition underlying Ground 1 - that the Warden failed to consider the subsequent (to the Expenditure Year) expenditure.
Rather, in my view, on a fair reading of the Warden's Reasons, the subsequent expenditure was taken into account by the Warden and was done so pursuant to s 102(4).
As I understand the applicants' contentions in this Court, the Warden needed to take into account:
1.the fact that Goldway did provide moneys to the applicants following the Expenditure Year; and
2.that part of those funds were used by the applicants on the Exploration Licences;
as bearing on whether time was required to raise capital under s 102(2)(b).
Of course, the test is not whether this Court would have dealt with that evidence in the same way as the Warden did (although, with respect, it seems the Warden dealt with it in a sensible way). The question is whether there was any jurisdictional error committed. I find there was not.
It appears that at its highest, the evidence of what occurred post the Expenditure Year may have gone to showing that it was commercially sensible, defensible or reasonable for the applicants to make that choice/s because of the expectation in the Expenditure Year of Goldway's funding and Athena's group ambition to conduct a particular tenement-wide programme, rather than meeting the particular expenditure obligations of the applicants for the Exploration Licences.
Even at that highest point, the evidence post the Expenditure Year did not, and could not, undermine or touch the Warden's finding that the applicants did not require time to raise capital in the Expenditure Year within s 102(2)(b). That later evidence could not advance the strength and legitimacy of the reason given within Thompson v Siberia Mining [52], [67].
Consideration of s 102(3) reason
The applicants also relied on s 102(3) as providing a reason for the Warden to recommend the Exemption Applications be granted. Indeed in this Court the applicants emphasised, and relied more heavily on, the Grounds so far as they relied on s 102(3).[16]
[16] See, eg, this Court's transcript ts 54.
The applicants contended that they did not spend the money in the Expenditure Year because they were waiting for Goldway to fund them in the Expenditure Year which was an 'other reason' under s 102(3).
In my view, the second set of factual findings made by the Warden and set out above is against the applicants' reason advanced under s 102(3).
As I understand the applicants' submissions, they are to the effect that the subsequent (to the Expenditure Year) funding by Goldway was relevant to, and may have changed the Warden's mind about, whether in the Expenditure Year it was reasonable for the applicants to wait on Goldway before meeting their expenditure obligations.[17]
[17] This Court's transcript ts 54.
The Warden, as seen, rejected that reason and found effectively there was an unreasonable corporate stance taken by the applicants (and Athena) because there could be no reasonable expectation that the funding would come from Goldway.[18] The applicants challenged that by saying the fact that funds were subsequently (to the Expenditure Year) received showed, or may have shown, that the reliance or waiting on Goldway was not unreasonable.
[18] Warden’s Reason [118(h)].
Accepting for present purposes that waiting on Goldway was, potentially, an other reason to recommend an exemption under s 102(3) the applicants must confront the Warden's assessment of that reason as not being enough or being unreasonable and so not grounding, in his assessment, an exemption under s 102(3).
In short, it appears to me that it was open to the Warden to reach the assessment he did as to the reasons advanced by the applicants under s 102(3).
The applicants say that conclusion is affected by legal unreasonableness (in the fact finding process) and so a jurisdictional error was committed.
The unreasonableness arose, as I understand it, by the failure of the Warden to properly consider the post-Expenditure Year funding when considering the in Expenditure Year events (said to ground the exemption reason under s 102(3)). If he had properly considered it, it was said, that may have changed his assessment of the 'reason' in the Expenditure Year.
Two things answer the contention that the Warden may have changed his mind if he had taken into account the fact that Goldway did fund subsequently.
Firstly, it appears that the Warden did take into account the subsequent funding by Goldway; and secondly, it is not plain how it is said that it was legally unreasonable for the Warden to conclude that it was not a good, sufficient or reasonable reason for the Warden to recommend that an exemption be granted under s 102(3).
As to the first, I have set out above the Warden's consideration of the subsequent expenditure.
Further to that second matter, it might reasonably be thought that funding arriving later did not obviously or significantly alter the assessment as to the reasonableness of waiting in an earlier period. That is, when the earlier period (the Expenditure Year) finished, the funding might yet, or not, arrive later.
As to the test of legal unreasonableness which the applicants must meet, the Court of Appeal recently stated the relevant principles in Medical Board of Australia v Arunkalaivanan [2023] WASCA 117 (Buss P, Vaughan and Hall JJA) to the effect that:
1.unreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification: [69];
2.there will be no jurisdictional error if the decision maker's reasoning process and relevant conclusion is justifiable: [25];
3.illogicality or irrationality means something more than emphatic disagreement with the decision: [76];
4.a decision that is merely contestable is not illogical or irrational in the required sense. The decision maker's grounds for the impugned finding must reach the level of being 'arbitrary' or 'perverse': [77];
5.a finding that a determination is illogical, irrational and not based on findings or inferences of facts supported by logical grounds is not made lightly: [78]; and
6.in seeking judicial review based on illogicality or irrationality it does not need to be established the decision would have been different, it is sufficient if the decision may have been different: [78].
Simply put, I consider that there was an evident and intelligible justification for the Warden's decision to not recommend an exemption under s 102(3). That is, the Warden found that the applicants did not act reasonably in the Expenditure Year in waiting on Goldway.
I think, with respect, this challenge is no more than a challenge on the merits of the conclusion reached.
Conclusion
The Warden held that the applicants did not require time to raise capital in the Expenditure Year to spend on the Exploration Licences. Therefore, the Warden held that the applicants were not within s 102(2)(b). There was no challenge to those findings.
As I understand Thompson v Siberia Mining, the Warden did not need to then consider the matters under s 102(4) (here, the later funding) because no reason within s 102(2)(b) was found.
In my judgment, then, neither Ground 1, nor Ground 2, could arise in relation to the applicants' reliance on s 102(2)(b) and so those Grounds must fail insofar as they relate to s 102(2)(b).
In any event, I consider that the Warden did consider the applicants' expenditure after the Expenditure Year and so the premise in Ground 1 was not, made out.
In my judgment, the Warden considered whether there was an 'other reason' to recommend the exemptions under s 102(3). That 'other reason' being that the applicants had waited on Goldway to provide funds in the Expenditure Year.
The Warden, in considering that 'other reason' did, as I have set out above, take into account that the funds were subsequently received and spent, at least to some degree, on the Exploration Licences. Accordingly, in my judgment, Ground 1 must fail insofar as it is based on s 102(3).
Further, in my judgment, there was no legal unreasonableness as asserted by the applicants in the way the Warden dealt with the 'other reason' under s 102(3).
Again, in my view, the Warden did consider the funds received and expenditure made post-Expenditure Year by the applicants.
Further, while the applicants clearly did not accept the finding that their reliance, and waiting, on Goldway in the Expenditure Year was unreasonable and not a good reason under s 102(3), I consider that there is an evident and intelligible basis for the Warden's conclusion.
For the above reasons, Ground 1 and Ground 2 must be dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JR
Associate to Hon Justice Howard
21 SEPTEMBER 2023
0
4
0