Kelvin Park Pty Ltd v Fairstar Resources Ltd
[2018] WASC 97
•5 APRIL 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: KELVIN PARK PTY LTD -v- FAIRSTAR RESOURCES LTD [2018] WASC 97
CORAM: MASTER SANDERSON
HEARD: 15 MARCH 2018
DELIVERED: 15 MARCH 2018
PUBLISHED: 5 APRIL 2018
FILE NO/S: CIV 2761 of 2017
BETWEEN: KELVIN PARK PTY LTD
Plaintiff
AND
FAIRSTAR RESOURCES LTD
First Defendant
SHELDON PHILIP COATES and HARVEY LARRY CHARLES COATES in their personal capacity and as trustees for The Sheldon Coates Superannuation Fund
Second Defendants
Catchwords:
Practice and procedure - Order for sale of mining tenement pursuant to mortgage over tenement - Form of order
Legislation:
Mining Act 1978 (WA)
Mining Regulations 1981 (WA)
Transfer of Land Act 1893 (WA)
Result:
Orders made.
Category: A
Representation:
Counsel:
| Plaintiff | : | Mr A J Papamatheos |
| First Defendant | : | No appearance |
| Second Defendants | : | Mr J A Robertson |
Solicitors:
| Plaintiff | : | Lawton Lawyers |
| First Defendant | : | No appearance |
| Second Defendants | : | Williams & Hughes |
Case(s) referred to in decision(s):
Nil
MASTER SANDERSON:
On 3 January 2018 the following order was made by consent:
1.Judgment is entered against the defendant in favour of the plaintiff in the sum of $5,845,093.00 and for interest on that sum or any partial sum outstanding at the prescribed rate under section 8 of the Civil Judgments Enforcement Act 2004 (WA) from the date of this judgment until payment in full by the defendant.
2.The plaintiff have possession of Mining Lease 28/373 and Exploration Licence 28/1997 in accordance with regulation 799(2)(b)(i) of the Mining Regulations 1981 (WA).
3.It is declared that the plaintiff as mortgagee is entitled to auction or otherwise sell each of the Mining Lease 28/373 and Exploration Licence 28/1997, including in accordance with regulation 79(2)(b)(i) of the Mining Regulations 1981 (WA).
4.Within 21 days, this action is to be listed before the Master in Chambers for orders and other directions that may be considered necessary, ancillary or incidental, in relation to the conduct, or completion, of the auction or sale in paragraph 3 above.
5.The plaintiff has liberty to apply as to paragraphs 3 and 4 above, on 72 hours written notice.
6.The defendant pays the plaintiff's costs of the action, such costs to be taxed if not agreed.
The statement of claim pleaded that the plaintiff had lent the defendant funds which had been secured by mortgages taken over the mining lease and exploration licence referred to in pars 2 and 3 of the order. There had been default under the mortgages and the purpose of the order was to allow the plaintiff to take possession of both tenements and arrange for their sale so as to recover moneys lent to the defendant.
Exploration licences and mining leases are creatures of statute. Exploration licences are dealt with in pt IV div 2 of the Mining Act 1978 (WA) and mining leases are dealt with in div 3 of that same part. Pursuant to s 119A a mining tenement may be mortgaged. That section is in the following terms:
(1)A mining tenement or share in a mining tenement may be mortgaged as security for the repayment of money advanced or agreed to be advanced or for the discharge of any liability.
(2)If there are 2 or more mortgages affecting the same legal interest in a mining tenement, the mortgages take priority according to the time and date of their registration.
(3)A mortgage -
(a)has effect only as security for the repayment of the money intended to be secured by the mortgage and not as an assignment of the mining tenement; and
(b)may cover all buildings, improvements, machinery and appliances in or upon the land comprised in the mining tenement.
That provision was inserted into the Act in 1996. It has echoes of the Transfer of Land Act 1893 (WA) inasmuch as the mortgage acts as a security and not as an assignment. It is, however, a mechanism by which money can be raised either for the purposes of developing the tenements or otherwise. How commonly it is used I am not in a position to say. But it does represent an important available option for those looking to develop mining tenements.
Turning then to the Mining Regulations 1981 (WA), Div 4 pt V of the regulations deals with 'transfers, caveats, mortgages'. Regulations 79 through to 81 deal with mortgages. They are in the following terms:
79. Covenants included in mortgage
(1)A mortgage may contain such covenants, provisions, stipulations and powers as may be agreed between the parties.
(2)Except as is otherwise provided by a mortgage there shall be deemed to be included in every mortgage -
(a)stipulations to the following effect:
That during the continuance of the security the mortgagee may (at the expense of the mortgagor) when the mortgagor neglects or refuses so to do, do all such acts and things as may be necessary for the preservation or protection of the property comprised in the mortgage and of the title thereto and in particular may fulfil the conditions applicable to that property, and obtain exemptions from those conditions.
(b)powers to the following effect:
That if default is made by the mortgagor in repayment or discharge of the moneys secured by the mortgage for a period of one month after demand, or if the mortgagor fails to perform or observe any of the covenants contained in the mortgage and on the part of the mortgagor to be observed and performed the mortgagee may -
(i)enter upon and take possession of the property comprised in the mortgage, or any part thereof, and work or let the same, subject to the provisions of the Act, but in that case the mortgagee shall be liable to account to the mortgagor for the rents and profits of such property until the mortgagor’s right to redeem the same has been determined by sale or otherwise; or
(ii)cause the property comprised in the mortgage, or any part thereof, together with any right, title or interest the mortgagor may have in any mining product from the property, to be sold by auction after having not less than 30 days clear before the date of sale ‑
(I)advertised his intention so to do by such means as the Minister approves; but ‑
(II)the mortgagee shall, at any such auction be at liberty to bid for and purchase the property or any part thereof;
(III)if the mortgagee is unable to obtain at any public auction a sum sufficient to discharge the debt or liability due to him from the mortgagor he may sell the property, or any part thereof, by private contract;
(IV)if, after sale, there remains a balance over and above the amount due to the mortgagee, he shall lodge a statement of account together with such balance for payment to any other mortgagees according to their respective priorities, and to the mortgagor.
[Regulation 79 amended in Gazette 18 Mar 2011 p. 925.]
80. Mortgagee’s expenses may be added to security
All expenses properly incurred by the mortgagee under the covenants, stipulations, agreements, or powers contained or implied in the mortgage together with interest thereon from the date of disbursement, at the rate named in the mortgage with respect to the principal moneys thereby secured, may be added to the security.
81. Transfer under powers contained in mortgage
When a mining tenement secured by a mortgage is sold under the powers contained or implied therein, the mortgagee shall as if he were the holder execute a transfer of the tenement in the form of Form 23 and the transfer requirements of this Division shall be complied with.
[Regulation 81 amended in Gazette 15 Jan 2010 p. 110.]
Two points can be made about these regulations. First, they do not contain any form which sets out the mechanism for enforcement of the mortgage. Regulation 79(2)(b) requires that the mortgage contain a provision empowering a mortgagee to take possession of the property and to sell it but it does not say how any caveator is to be dealt with, whether any unpaid rents are to be deducted from the proceeds of sale, what is to become of any plaints against the tenements and so on. It does also not specify who is to conduct the sale. The second point to note is that under reg 79(2)(b)(ii)(I) any advertisement must be approved by the Minister. There is no form which gives any guidance as to what matters the Minister might regard as relevant.
It would appear this case represents the first occasion upon which a mortgagee has moved to sell mining tenements. The plaintiff's solicitor, a very experienced practitioner in the field of mining law, and counsel took considerable time and effort to craft a form of orders which in the end they were satisfied would allow for orderly realisation of the tenements. There were a number of attendances in chambers and on each occasion the plaintiff's solicitors and counsel had more closely refined the orders. Ultimately, on 15 March I was able to enter an order which, in my view, can serve as a model for orders of this type in the future. Really, the purpose of these reasons is to publish the form of orders which I would call a 'Lawton order' in deference to the plaintiff's solicitor. (I appreciate the order was crafted by Mr Lawton and Mr Papamatheos of counsel. To refer to the order as a 'Lawton/Papamatheos' order would be too clunky. With due respect to Mr Papamatheos, it has to be a 'Lawton order'.) A copy of the eventual order made is attached to these reasons.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
ASSOCIATE TO MASTER SANDERSON7 MAY 2018
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