Kralcopic Pty Ltd (admins apptd) v Minister for Resources
[2021] VSC 101
•9 March 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2019 04967
| KRALCOPIC PTY LTD (ACN 007 222 086) (administrators appointed) | Plaintiff |
| v | |
| MINISTER FOR RESOURCES | Defendant |
---
| JUDGE: | GINNANE J |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 4 September 2020 |
| DATE OF JUDGMENT: | 9 March 2021 |
| CASE MAY BE CITED AS: | Kralcopic Pty Ltd (admins apptd) v Minister for Resources |
| MEDIUM NEUTRAL CITATION: | [2021] VSC 101 |
---
JUDICIAL REVIEW – Mining licences – Application for renewals –Whether licensee likely able to finance proposed works and rehabilitation of land – Whether upon application for licence renewals the Minister’s delegate was satisfied that licensee no longer complied with that requirement – Relevant and irrelevant considerations – Whether jurisdictional errors – Whether property left on land to which licence applied had become property of the Crown –Mineral Resources (Sustainable Development) Act 1990, ss 15(2)(d), 31(2)(f), 80, 114.
WORDS AND PHRASES – ‘likely to be able to finance’, ‘may’, ‘no longer’.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Silver | Lewis Holdway Lawyers |
| For the Defendant | Ms L De Ferrari SC with Mr J Bayly | MinterEllison |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 1
Background.................................................................................................................................... 1
The chronology of the licence renewal applications................................................................ 4
The PwC reports............................................................................................................................ 9
PwC’s second Report........................................................................................................ 12
PwC’s third report............................................................................................................. 13
The Delegate’s refusal of licence renewals.............................................................................. 16
Relevant statutory and regulatory provisions............................................................................ 20
Mineral Resources (Sustainable Development) Act 1990...................................................... 20
Kralcopic’s grounds of review....................................................................................................... 24
Grounds A and B – Construction of word ‘likely’ in s 15(6)(d).............................................. 25
Kralcopic’s submissions............................................................................................................. 25
The Minister’s submissions....................................................................................................... 28
Analysis of Grounds A and B.................................................................................................... 29
Ground C – Meaning of ‘no longer complies with section s 15(6)(d)’ in s 31(2)(f)............. 38
Kralcopic’s submissions............................................................................................................. 39
The Minister’s submissions....................................................................................................... 40
Analysis of Ground C(a)............................................................................................................ 41
Ground C(b)................................................................................................................................. 42
Analysis of Ground C(b)............................................................................................................ 42
Ground D – Consideration grounds............................................................................................. 43
Kralcopic’s submissions............................................................................................................. 43
The Minister’s submissions....................................................................................................... 44
Analysis of Ground D................................................................................................................. 44
Forfeiture of plant....................................................................................................................... 46
Conclusion......................................................................................................................................... 47
HIS HONOUR:
Introduction
On 7 April 2016, the Minister for Resources approved the transfer of three mining licences (‘the Licences’) from Unity Mining Ltd to the plaintiff (‘Kralcopic’[1]).[2] In 2019, the Minister, by her delegate, refused to renew the Licences. Kralcopic seeks judicial review of that refusal. The parties accepted that for the purposes of this proceeding, the three Licences should be considered together as the plaintiff’s arguments and the defendant’s response applied to each of them. The Licences applied to land in the Bendigo region, which of course, is an historic gold mining area. They were issued under the Mineral Resources (Sustainable Development) Act 1990 (‘the Act’).
[1]By letter of 9 March 2021, Mr M Kucianski of Worrells Solvency & Forensic Accountants confirmed that he and Mr C Kokkinos were appointed joint and several administrators of the plaintiff effective 2 March 2021.
[2]Court Book, Kralcopic Pty Ltd v Minister for Resources (Supreme Court of Victoria, S ECI 2019 04967, Ginnane J, 4 September 2020) 262-264 (‘CB’).
The decision to refuse to renew the Licences was made by the Minister’s delegate, Mr Anthony Hurst, Executive Director Earth Resources (‘ERR’) Department of Jobs, Precincts and Regions. In these reasons for judgment, I will refer both to the Minister or the delegate as the context requires.
Kralcopic seeks judicial review remedies including declarations that the refusal to renew the Licences was void ab initio and that the Licences have continued in operation. Alternatively, it seeks an order quashing the Minister’s refusal to renew the Licences and an order that she decide its applications for licence renewals according to law. It also seeks a declaration that its property left on one of the mining sites has not vested in the Minister.
The result of my judgment is that Kralcopic has not established any of its grounds.
Background
Kralcopic is a wholly-owned subsidiary of GBM Gold Ltd (‘GBM’), which was established in 1989 under the name Greater Bendigo Gold Mines.[3]
[3]CB 433.
The Licences applied to land in the Bendigo area: MIN4878 (‘Whip and Jersey Licence’), MIN5344 (‘Greater Bendigo Licence’) and MIN5364 (‘Evaporation Pond Licence’) (collectively, ‘Licences’). Mining operations ceased in 2011. The evidence in the proceeding concerned the second and third licences and little was said about the Whip and Jersey Licences. Two of the areas to which the Licences applied were on Crown Land and one on land owned by GBM.[4]
[4]Transcript of Proceedings, Kralcopic Pty Ltd v Minister for Resources (Supreme Court of Victoria, S ECI 2019 04967, Ginnane J, 4 September 2020) 109-110 (‘T’).
The MIN5364, Evaporation Pond Licence, is an infrastructure licence, namely a licence solely for the construction of a facility or other infrastructure to be used for the purpose of mining under another mining licence. The area to which MIN5364 applies is also known as the Woodvale Evaporation Pond Complex and consists of seven ponds, five of which hold groundwater from the mining extraction process previously carried out on the two other mining licences sites, and the rehabilitated ponds. Since the cessation of pumping, the ponds have accumulated rainwater that has fallen on the ponds surface and internal embankments of each pond. Stormwater run-off is diverted around the site by means of a system of diversion drains.[5] Unity Mining had purchased the facility from Western Mining Corporation in 1993, which in turn had obtained approval to operate the facility in 1987.
[5]CB 298.
The Minister’s media release announcing the approval of the licence transfers stated that, as a condition of the transfer of the Evaporation Pond Licence, Kralcopic was required to rehabilitate the two largest ponds within two years and only send treated water to the site for use in dust suppression.[6] Kralcopic contended that this condition was imposed without any prior consultation, and had a negative impact as it could not use MIN5364 to evaporate treated groundwater pumped to the site as had occurred for 30 years.[7] Kralcopic had acquired the Evaporation Pond Licence on the understanding that the pumping of untreated groundwater could continue indefinitely. Kralcopic intended to close and rehabilitate the Woodvale Evaporation Ponds Complex site in a staged manner. It intended to rehabilitate Ponds 6 and 7 and retained Ponds 1 to 3 until they were no longer required as an alternative ground-water disposal site. Between February 2016 and August 2017, Kralcopic held discussions with the Earth Resources Regulation Unit (‘ERR’) of the Department about the closure and rehabilitation of the Woodvale site.[8]
[6]CB 582.
[7]CB 143.
[8]CB 143.
The other licence of significance in the proceeding was the Greater Bendigo Licence, MIN5344, which applied to mining operations, particularly at the Carshalton site at Kangaroo Flat. The activities proposed to be conducted under this licence were underground mining, the processing of gold bearing ore and some surface stockpiling of non-gold bearing rock from the underground mine. That rock was to be either reused or crushed and screened for offsite sale and the recovery and retreatment of material residue from the processing of gold bearing ore as the sand tailings that had been identified as containing some residual gold.[9]
[9]CB 441.
The Minister’s powers to approve the transfer of mining licences are contained within 15(6)(a)-(d) of the Act. Those provisions in turn affect the Minister’s discretion to renew the Licences: see, s 31 of the Act which is discussed below. Section 15(6)(d) requires the Minister to be satisfied that the transferee ‘is likely to be able to finance the proposed work and rehabilitation of the land’. When considering an application for the renewal of a mining licence, the Minister acts under s 31(2)(f) and may refuse a renewal on grounds that include her satisfaction that ‘the applicant as a licensee no longer complies with … section 15(6)(d)’.
Licences are issued for a period not exceeding 20 years unless the Minister otherwise decides.[10]
[10]MRSD Act (n 10) s 14(3)(a).
Kralcopic challenges the Minister’s decision to refuse to renew the Licences on the grounds that the delegate misinterpreted s 15(6)(d), especially the phrase ‘likely to be able to finance’ and, as a result, misinterpreted his task under s 31(2)(f). It also argued that the Minister failed to take into account relevant considerations and took into account irrelevant considerations. Ground E, an unreasonableness ground, was not pursued.[11]
[11]T 21-22.
The chronology of the licence renewal applications
Kralcopic applied to renew the Licences on 28 July 2017, about 15 months after it became the licensee.[12]
[12]CB 144.
On 7 May 2018, an ERR officer wrote to Kralcopic stating that the overall expenditure for the main operating site, MIN5344, the Greater Bendigo Licence, had not been met since 2013. The letter stated that this was a significant matter and could be grounds to recommend refusal of the renewals.[13] ERR sought details of how Kralcopic intended to address the expenditure requirements, an explanation of why they had not been met and updated financial information, as well as a satisfactory 2016/2017 Annual Activity and Expenditure Report.[14] The obligation to have a works program and associated expenditure is imposed by the relevant regulations, which are referred to below.
[13]CB 144, 484.
[14]CB 484.
On 5 June 2018, Kralcopic provided ERR with several documents, and stated that ‘[t]he transfer of the tenement was not completed until 17 May 2016. Any deficiency in expenditure prior to May 2016 is not the responsibility of Kralcopic Pty Ltd’.[15]
[15]CB 499.
On 3 October 2018, ERR informed Kralcopic that its work plan variation for MIN5344, the Greater Bendigo Licence, to carry out reprocessing of coarse tailings was an administrative change to the approved work plan and that no work plan variation approval was required, but that Kralcopic must incorporate the details of the change into its next work plan variation application.[16]
[16]CB 426-7.
On 20 November 2018, Kralcopic’s Chief Executive Officer, Mr John Harrison, together with other company officers attended the Department’s offices and presented a proposal for the use of the Evaporation Pond Licence land, MIN5364, as a major solar power farm.[17]
[17]CB 1407
On 13 December 2018, the Department informed Kralcopic that the Minister intended to refuse to renew the Licences.[18] The notifying email attached two documents titled ‘Mining Licence MIN5334 – Notice of Intention to Refuse to Renew – Section 31, Mineral Resources (Sustainable Development) Act 1990’. The other was a document with a similar title, save that it concerned ‘MIN5364’, the Evaporation Pond Licence.[19] The documents said:
[18]CB 764.
[19]CB 765-8.
Based on the financial information provided by Kralcopic Pty Ltd to Earth Resources Regulation on 5 June 2018, I am of the view that Kralcopic Pty Ltd may no longer comply with section 15(6)(d) of the Act, being the requirement that the applicant is likely to be able to finance the rehabilitation of the land under the renewed licence.
Under section 31(2) of the Act I may refuse to renew [the Licences] unless Kralcopic Pty Ltd can satisfy me that it meets the requirements under section 15(6) of the Act.
As Kralcopic Pty Ltd is the licensee, please confirm whether the licensee is able to fund the rehabilitation of the licence area or whether GBM Gold Ltd will be the entity funding the work and rehabilitation, please provide financial information to demonstrate its ability to meet the expenditure requirements.
Further I have identified shortfalls in the financial information provided that suggest there will not be enough to meet the expenditure requirements for the operation and rehabilitation of the licence area[s].
In forming my intention to refuse to renew [the Licences] I have considered the implications for the purposes, objectives and principles of sustainable development of the Act. I am of the view that Kralcopic Pty Ltd is unlikely to be able to rehabilitate the land under [the Licences] compatible with objective 2(1)(b)(iii) of the Act which aims to ensure land that has been mined is rehabilitated.
Failure to satisfactorily rehabilitate the land under [the Licences] will mean that Kralcopic Pty Ltd is unlikely to eliminate or minimise as far as reasonably practicable ongoing risks posed to the environment, to members of the public, or to land, property or infrastructure as required by section 2(1)(b)(i) of the Act. A failure to rehabilitate the land will also be inconsistent with the sustainable development principles 2(a) and 2(b) set out in section 2A of the Act which require a path of economic development that safeguards the welfare of future generations and provides for equity between generations.
I would appreciate your submissions in relation to the issues raised above, including any further financial information that you can provide evidence that Kralcopic Pty Ltd is able to fulfil the requirements of section 15(6)(d) of the Act.
Any submission you may wish to make giving reasons why the licence[s] should be renewed, will be considered if it is received within 28 days of your receipt of this letter.[20]
[20]CB 767-8.
In response to the Notices, on 10 January 2019, Mr Harrison wrote to the Minister’s delegate addressing concerns about Kralcopic’s financial capacity expressed in the Notices.[21] His letter confirmed that Kralcopic and GBM would jointly fund operations including the rehabilitation of the Woodvale land from a number of sources. First, a fully underwritten rights issue of shares in GBM to raise up to $6,709,971. Second, from profits from a joint venture between GBM and Gold Miners Australia in a gold and sulphides recovery project at Kangaroo Flat. Third, income from ‘revenue generating activities’, including: profits from the Kangaroo Flat Coarse Sand Dam project totalling $2,142,000 over two years; the leasing of a Water Treatment Plant which would generate $500,000 over two years; interest to be received on an environmental bond at $180,000 per year; and GBM’s share of the Harvest Home (MIN5510) mining project, which was predicted to generate $1,184,000. Fourth, from the sale of the Kangaroo Flat Gold Processing Plant which Kralcopic was entitled to deal with as it saw fit following a sale which did not proceed.[22] Fifthly, from a line of credit of approximately $8,000,000, provided by Colbert Finance Limited, a Hong Kong licenced money lender.[23] The letter summarised GBM’s net position as $14,117,450, a figure derived from net assets of $21,817,450 and net liabilities of $7,700,000, all of which were listed as ‘[e]xpenditure required on this application [for the] first two years’.[24]
[21]CB 770.
[22]CB 771.
[23]CB 771, 1014.
[24]CB 772.
In a letter of the same day, Mr Harrison wrote to the Department about the use of the Evaporation Pond Complex, MIN5364, as a solar farm that would ‘[r]emove the $1.8 million rehabilitation liability from Kralcopic’ and ‘[p]rovide a long-term income source for GBM Gold’.[25].
[25]CB 774.
On 3 May 2019, the Department sent a notice to Kralcopic pursuant to s 80(4) of the Act requiring that it provide a further rehabilitation bond $572,665.[26] Rehabilitation bonds are provided for in s 80 of the Act, which is discussed below. Kralcopic challenged the requirement for the additional bond in a separate judicial review proceeding, which while listed for hearing on the same day as this proceeding, was instead dismissed by consent.
[26]CB 783.
On 10 May 2019, Kralcopic’s solicitors wrote to the Department confirming that its holding company, GBM, had announced a proposed rights issue to raise additional capital of $6,670,000. They sought confirmation that upon this occurring, the Greater Bendigo Licence, MIN5344, would be renewed.
On 13 May 2019, the delegate responded to the solicitors’ letter, noting that:
I am providing this response to you to outline the steps that I will take to assess this additional financial information in order to reach a decision ...
…
Firstly, I propose to have all the financial information you have provided to the Department independently assessed by a financial accounting firm. This will include the financial information provided in your original applications on 28/07/2017, as well as the further information provided on 10 January 2019 and the information contained within the ASX announcement enclosed with your solicitors’ letter dated 10 May 2019.
Given you have confirmed that GBM Gold Ltd will be jointly funding your proposed works for [the Licences], as well as the rehabilitation of the relevant land, the independent assessment will also consider publicly available information regarding GBM Gold Ltd, such as annual reports and previous announcements to the ASX.
For the purposes of this independent assessment, I will instruct the external consultant to consider whether Kralcopic Pty Ltd and GBM Gold Ltd are likely to be able to finance the proposed works and rehabilitate the relevant land, in accordance with the requirement under section 15(6)(d) of the Act. In assessing this consideration, I will instruct the independent consultant to have regard to the proposed work set out in your licence conditions for [the Licences], as well as the rehabilitation required for the relevant land.[27]
[27]CB 790.
The delegate’s letter summarised the Department’s calculation of the minimum finance needed to conduct the proposed work and rehabilitation of the land subject to the Licences. The calculations produced a figure of $11,810,000 for the Greater Bendigo Licence, $2,380,000 for the Evaporation Pond Licence and $31,000 for the Whip and Jersey Licence.[28] The letter explained that:
The work program is taken directly from the minimum annual expenditure requirements for each licence, as set out in the relevant licence conditions. For example, MIN5344 has a minimum annual expenditure of $3,850,000 per year, as outlined in the Instrument of Variation dated 7 August 2002. MIN 4878 has a minimum annual expenditure of $15,000 as specified in the Instrument of Variation dated 26 August 2002. MIN 5364 does not have a minimum spend, as it is treated as an infrastructure licence.
The Rehabilitation cost is based on the current rehabilitation bonds held by the Department, which were determined following an independent review conducted in February 2016. The rational for including these values is that the rehabilitation bonds are held by the Department to cover the costs of the relevant rehabilitation in case Kralcopic Pty Ltd does not or is not able to complete it, and is equivalent to the expected cost of rehabilitation. The rehabilitation for Woodvale Ponds include the notice of further bond recently issued to you for a further $572,000.[29]
[28]CB 791.
[29]Ibid.
On 5 June 2019, the Minister’s delegate wrote to Mr Harrison confirming that he was considering refusing Kralcopic’s licence renewal applications. The delegate was ‘presently not satisfied that Kralcopic is likely to be able to finance the proposed work and rehabilitation of the land’. He said that he had reviewed the financial and supplementary information provided by Kralcopic and had obtained an independent financial report prepared by PricewaterhouseCoopers Australia (‘PwC’), which he enclosed. That report concluded ‘we are unable to find that the Licensee is likely to have sufficient capacity to meet the $14.1m obligations defined by DJPR’.[30]
[30]CB 798.
The PwC reports
Kralcopic’s grounds for judicial review do not challenge PwC’s reports, but, I will describe their conclusions as they formed a significant role in the delegate’s refusal to renew the Licences. The delegate considered that the PwC report found that if the Licences were to be renewed, Kralcopic would be unable to finance the proposed works and rehabilitation of the land.[31]
[31]CB 793.
PwC reports were prepared in response to the following engagement:
You have asked PwC to prepare an independent assessment of the financial standing of Kralcopic Pty Ltd (the Licensee), as fully funded by its parent company, GBM Gold Ltd (GBM). The Licensee has applied to renew mining licenses MIN 5344, 5364 and 4878 (the Mining Licenses), which expired on 9 August 2017. The purpose of PwC’s assessment is to assist the Minister for Resources in determining whether the Licensee has the financial capability to meet its obligations relating to the Mining Licenses under Section 15(6)(d) of the Mineral Resources (Sustainable Development) Act (the Act). You have advised us that its financial obligations in relation to the Mining Licenses total $14.1m over the next two years (the License Obligations) as detailed in Appendix B.[32]
[32]CB 796.
PwC concluded that on a ‘better case’ Kralcopic and GBM projects would result in a financial deficiency of $1.88 million. On a ‘lower case’, PwC concluded the projects would result in a deficiency of $13.97 million.[33] The report concluded that:
[T]he information available does not support a finding that the Licensee will be ‘likely to be able to finance the proposed work and rehabilitation of the land’, as required by the [MRSD] Act.
On both ‘better case’ and ‘lower case’ scenarios modelled herein, the funding sources identified by GBM are not sufficient to fund the [Licence] Obligations.
Our views on the $6.7m rights issue and the $8m line of credit are critical in forming our conclusion on the Licensee’s ability to fund the [Licence] Obligations. Our analysis is detailed on pages 12 and 14 respectively.[34]
[33]CB 814.
[34]CB 798.
The report analysed the sources of funds relied on by GBM and Kralcopic. These were GBM’s net equity;[35] the proposed rights issue,[36] the line of credit,[37] the net income from projects,[38] the joint venture,[39] the issue of return of assets[40] and the repayment of the line of credit.[41]
[35]CB 805.
[36]CB 806-7.
[37]CB 808-9.
[38]CB 810.
[39]CB 811.
[40]CB 812.
[41]CB 813.
On the issue of whether Kralcopic had the capacity to fulfil rehabilitation works, PwC concluded:
We understand DJPR requires GBM to have sufficient financial capacity to rehabilitate the Mining Licenses. The rehabilitation amounts required have been provided by DJPR and have not been verified by us. See Appendix B for a breakdown of rehabilitation costs by mining license.
We note that GBM holds a bank guarantee of $5.9m as a non-current asset on the balance sheet which is offset by a rehabilitation liability for the same value. We are directed by DJPR that per Earth Resources Regulation policy, GBM needs to have sufficient financial capacity to fund the remediation works without relying on the bank guarantees held by DJPR.[42]
[42]CB 814.
On 18 June 2019, Mr Harrison accompanied by other company representatives, met with the delegate Mr A Hurst and Ms J Scott, an ERR team leader to discuss ERR’s financial requirements. According to Mr Harrison, they said that the previous method of financial assessment ‘was a mistake’.[43] In a subsequent email to Kralcopic, Mr Hurst reaffirmed that Kralcopic needed to demonstrate that it could finance mining works and site rehabilitation which was calculated to cost $14,100,000.[44]
[43]CB 147.
[44]CB 827.
In his response of 25 June 2019, Mr Harrison explained that the decrease in the net equity of GBM and Kralcopic was due to delays in regulatory approvals which had prevented Kralcopic generating predicted revenues. He said that underwriters had refused to complete the underwriting following the delegate’s notice of intention to refuse to renew the Licences and would not do so until concerns about the renewal of the Greater Bendigo Licence were resolved.[45]
[45]CB 829.
On the issue of the line of credit, Mr Harrison noted that the letter from Colbert Finance provided to PwC did constitute an offer but with the condition that it only be used for rehabilitation purposes.[46] He also confirmed that the condition stating that ‘[n]o provision of this agreement shall be deemed to require the Lender to advance any sum of money at any time’ had been removed and that the repayment period had been extended from 12 to 24 months to alleviate PwC’s concerns.[47]
[46]CB 830.
[47]Ibid.
Mr Harrison wrote that GBM had not generated income from mining in the last three years because the Department required it to submit a Variation of Work Plan for the Greater Bendigo Licence; but that requirement was later withdrawn. He confirmed that GBM had been granted approval for a gold reclamation project at Kangaroo Flat and a mining project at the Harvest Home Open Pit Mine. He said that a further $500,000 in revenue was expected from the lease of the New Moon Water Treatment Plant.
With respect to the joint venture of GBM and Gold Miners Australia, Mr Harrison explained that they had agreed to jointly reprocess tailings sand in the Kangaroo Flat Coarse Sand Dam to recover the contained gold and sulphides. GBM had provided some infrastructure and the parties would jointly operate the project, which was expected to take two to three years to complete. Gold Miners Australia had purchased equipment and GBM had provided some infrastructure. Operating costs and profits would be shared equally, with operating costs budgeted at $3,455,000 over two years. Gold Miners Australia’s commitment over two years of $1,727,000 was expenditure on the tenement additional to Kralcopic’s expenditure.
GBM provided evidence that it contended established that it was entitled to sell the gold processing plant remaining on the Kangaroo Flat land.[48]
[48]CB 771, 831.
GBM confirmed that the line of credit was only for rehabilitation work and that when it was complete, it understood that the Department would release the environmental bonds enabling repayment of the line of credit.
GBM pointed out that it had satisfied the Department when the transfer of licences from Unity Mining occurred that it had the capacity to fund the work program for two years and had lodged a valid bond.[49]
[49]CB 831-2.
In summary, the letter concluded that GBM and Kralcopic’s financial viability in a best case scenario was a net surplus of $6,545,000 and in a worst case scenario a net surplus of $545,000.[50]
[50]CB 834.
PwC’s second Report
On 8 July 2019, Mr Hurst wrote to Mr Harrison stating that PwC’s further report and assessment of Kralcopic’s financial standing had again concluded that it was unlikely to be able to finance the proposed works and rehabilitation of the land.[51] He attached a copy of the report.[52]
[51]CB 843-4.
[52]CB 845-908.
PwC’s opinion was that the additional information provided by GBM did not support a finding that the Licensee will be ‘likely to be able to finance the proposed work and rehabilitation of the land’ as required by the Act, ie of $14,100,000 over two years.[53] GBM had written to the Department outlining updated sources of funds totalling $20,6000,000, which it said would be available to fund the $14,100,000 licence obligations. However, in PwC’s opinion, GBM had provided only minimal documentation to support these funding sources.[54] Although, the ‘better case’ scenario modelled in PwC’s supplementary report demonstrated that GBM would have sufficient capacity to meet the licence obligations, it considered that ‘the assumptions underlining this scenario, specifically those pertaining to the rights issue and the line of credit, did not meet the required threshold of being likely to be achieved’.[55]
[53]CB 848.
[54]MRSD Act (n 10) s 15(6)(d).
[55] CB 848.
On 11 July 2019, Mr Harrison replied to Mr Hurst addressing PwC’s supplementary report.[56] He confirmed that GBM had the financial capability to honour its commitments when the tenements were renewed.[57] He attached a loan commitment letter dated 24 June 2019, describing the loan agreement between GBM and Giant Master Ltd, which allowed GBM to borrow up to $2,000,000.[58]
[56]CB 910.
[57]CB 911.
[58]CB 912-57.
On 12 July 2019, Mr Hurst replied to Mr Harrison requesting further written information and supporting documentary evidence to assess Kralcopic’s financial standing, including:
·A signed version of the memorandum of line of credit agreement between Kralcopic and Colbert Finance (dated 24 June 2019),
·The due diligence conducted on Colbert Finance by Kralcopic,
·Information on the parent company of Colbert finance (referred to as a Hong Kong listed company),
·Confirmation from Nex Kiwi that it agrees to complete the Kralcopic rights issue (as referred to in GBM’s letter dated 11 July 2019),
·The due diligence conducted on Nex Kiwi by Kralcopic,
·An updated position on Nex Kiwi’s intention to complete the underwriting commitment of the rights issue (noting Nex Kiwi previously requested the completion to be extended to 12 July 2019), and
·Confirmation of the financial standing of Giant Master.[59]
[59]CB 960.
PwC’s third report
On 22 July 2019, Mr Hurst wrote to Mr Harrison conveying his concerns that some of the documents provided, including the Colbert line of credit and the Giant Masters Loan, did not give Kralcopic sole discretion to access the funds listed, and thus did not make it able to meet the finance requirements of the licence obligations.[60] He was concerned about other matters that might affect Kralcopic’s ability to fund the proposed works and rehabilitation of the land, including GBM’s suspension from ASX trading since 2018 and the uncertainty of Kralcopic’s proposed gold production at the Kangaroo Flat site, given that production was yet to commence, despite the licensee’s advice that it was imminent.[61] Mr Hurst considered that Kralcopic fell short of meeting the threshold required to renew a licence pursuant to s 15(6)(d) of the Act.
[60]CB 973.
[61]Ibid.
Attached to Mr Hurst’s letter of 22 July 2019 were PwC’s three reports.[62] The third report noted uncertainties and gaps in a range of areas concerning Kralcopic’s finances. The report noted that:
The additional information provided by GBM provides clarity and resolution on some of the issues that we raised in our previous reports. Overall, however, uncertainties and gaps still remain in a number of aspects.
…
In summary, GBM’s additional material does not, in our view, resolve all of the issues and concerns identified in our Previous Reports. In respect of the Colbert Finance line of credit and Giant loan in particular, GBM does not have the sole discretion to exercise the loan facilities.[63]
[62]CB 975-1005.
[63]CB 1209.
On 25 July 2019, Mr Harrison replied to Mr Hurst, drawing his attention to the history of the renewal process and his concerns with the Department’s interpretation of ‘financial standing’. He referred to the test in the guidelines which was ‘net assets minus expenditure required for the first two years’.[64] He said that Kralcopic had provided details of its net financial position in accordance with these guidelines. He attached a document titled ‘Net Financial Position’, which he contended complied with the guidelines test. It showed a net financial position of $3,404,932.[65]Mr Harrison said that Kralcopic based its fundraising on meeting the Department’s financial request guidelines and that the Department’s table of 13 May 2019 bore little resemblance to those guidelines.[66]
[64]CB 1007.
[65]CB 1011.
[66]CB 1008.
Mr Harrison wrote that, in his table, the rehabilitation cost was incorporated into the $7,700,000 expenditure commitment, in accordance with the principle of progressive rehabilitation pursuant to s 81(1) of the Act and sch 19 of the Regulations. He confirmed that Kralcopic had been progressively rehabilitating the land and would continue to do so. He stated that the Department’s requirement that Kralcopic provide rehabilitation funds in addition to the $7,700,000 expenditure commitments and $5,900,000 of bonds was a significant departure from Departmental Guidelines. GBM maintained that the appropriate test, as detailed in the financial request guidelines, was net assets minus expenditure required for the first two years.[67]
[67]Ibid.
On 29 July 2019, Mr Harrison again wrote to Mr Hurst regarding the shortfall in revenue from the rights issue and the ASX listing.[68] He explained that the Department’s correspondence on 5 June 2019 ‘changing the rules to net assets minus expenditure required for the first two years plus the value of the environmental bonds and rejecting the previously accepted Colbert Finance Line of Credit … caused considerable alarm for GBM’s major shareholders and Nex Kiwi, the underwriter’.[69] Nex Kiwi decided that the increased level of risk in investing in mining in Victoria was too high and had cancelled its underwriting commitments. But, GBM managed to replace it with Metropolis Enterprises Group Ltd, which had agreed to fully underwrite the company’s $6,700,000 rights issue.[70]
[68]CB 1012-13.
[69]CB 1012.
[70]CB 1013.
Attached to Mr Harrison’s letter was an updated Colbert Finance line of credit document titled, ‘Memorandum of Line of Credit Agreement Confirmation Letter’.[71] This agreement provided Kralcopic with access to the line of credit of a maximum loan amount of HKD45,000,000. Mr Harrison noted that this has not been required for the past three years, as GBM had funded its progressive rehabilitation of the land.
[71]CB 1014-19.
Mr Harrison sent Mr Hurst, at his requests, a signed and dated copy of the Metropolis underwriting agreement.[72]
[72]CB 1021, 1022-65.
The Delegate’s refusal of licence renewals
On 16 August 2019, Mr Hurst notified Mr Harrison that the licence renewal applications had been refused.[73] Enclosed with this letter were ‘Refusal to Renew (section 31 – MRSDA)’ Notices for each of the Licences.[74] On 24 September 2019, at Kralcopic’s request, Mr Hurst sent a statement of reasons for his decision to refuse to renew the Licences.[75] The statement of reasons included an introduction, a Legislative Framework section and Background. The Background section included the following sentences:
On 13 December 2018, ERR issued Notices of Intention (Notices) to refuse to renew MIN 5344 and MIN5364 on the basis that the licensee had not demonstrated that they were likely to be able to finance the proposed work and rehabilitation of the land under the Licences (Attachment 6). The Notices provided Kralcopic with 28 days to respond to the matters set out in the Notices (Attachment 7).[76]
[73]CB 1126.
[74]CB 1127-9.
[75]CB 1135-9.
[76]CB 1135.
The second last sentence, that ending with ‘(Attachment 6)’, had an attached footnote which stated:
In this context, I understand the term ‘likely’ to mean a probable or real ability to finance the work programs and rehabilitation.
The delegate did not define the term ‘real ability’. The word ‘real’ has often been used in giving meaning to the word ‘likely’. It appears to be used as meaning ‘existing or occurring as a fact; actual rather than imaginary ideal or fictitious)’; ‘actual as opposed to possible or potential’.[77] However, using words such as ‘real’ to define a word such as ‘likely’ can cause a further definitional problem. It is a further step away from the words of the statute.
[77]Macquarie Dictionary (8th ed, 2020) ‘real’ (defs 2, 8b).
Kralcopic challenged this statement of the delegate’s interpretation of the word ‘likely’ in its first ground seeking judicial review.
The statement of reasons continued as follows:
My decision of 16 August 2019
In making my decision, I had regard to the legislative framework, including the purpose, objectives and principles of sustainable development under the MRSDA, the applications for renewal of MIN5344, MIN5364 and MIN4878, all information provided to me by Kralcopic (and GBM), the independent assessment of financial information, ERR's assessment of financial information and recommendations, and the trading halt on GBM shares. The matters to which I had regard included:
1. In applying the MRSDA, ERR's policy requires the licensee to provide evidence that it is likely to be able to finance the first two years of the required minimum expenditure set out in the proposed licence conditions and the assessed rehabilitation liability for the land.
2. Kralcopic was required to demonstrate the likely ability to finance $7,730,000 for two years of the work programs required in the licence conditions and $6,401,000 for the rehabilitation work, being a total of $14,131,000 for MIN5344, MIN5364 and MIN4878.
3. Kralcopic provided information to ERR in relation to the following sources of funding:
a)Net equity based on the company's financial accounts.
b) A rights issue for its parent company GBM prospectus issued on 24 May 2019, that was undersubscribed and eventually withdrawn when the underwriter, Nex Kiwi Group Holdings Limited, exercised its ability to withdraw under the terms of the underwriting agreement. A subsequent rights issue was released on 27 August 2019 with a new underwriter, Metropolis Enterprises Group Limited, but essentially in the same terms as the previous agreement.
c) A line of credit provided by Colbert Finance Limited for GBM to fund its rehabilitation obligations.
d) A loan offer from Giant Master Limited to fund some of the work program.
e) Net income from projects, based on the profit and loss forecast provided.
f) Return of assets, based on an asset sale agreement with Australian Mining Equipment Exporters Pty Ltd.
4. PricewaterhouseCoopers (PWC) was engaged to undertake an independent analysis of these funding sources and to provide an assessment of Kralcopic's likely ability to fund the work program and rehabilitation required under MIN5344, MIN5364 and MIN4878.
5. PWC prepared a sensitised analysis of each funding source on a 'better case' and 'lower case' scenario, based on the financial information provided to ERR by Kralcopic prior to 17 May 2019, and the prospectus issued on 24 May 2019. The PWC Report dated 5 June 2019, concluded that even on the 'better case' scenario modelled, the information available did not support a finding that Kralcopic would be likely to be able to finance the work program and rehabilitation of the land.
6.The PWC Report dated 5 June 2019 was provided to Kralcopic with a Notice of Intent to refuse the renewals, and Kralcopic was provided with an opportunity to respond. Further information was supplied by Kralcopic to support its renewal applications and subsequent analysis was completed by PWC.
7. PWC prepared two supplementary reports (dated 4 July 2019 and 19 July 2019), which took into account further information provided by Kralcopic and publicly available information up to the dates of these reports. The supplementary report dated 19 July 2019 noted that while the further information provided by Kralcopic rectified some concerns, it did not resolve all of the issues and concerns identified in PWC's previous reports. For example, in respect of the Colbert Finance line of credit and Giant Masters loan in particular, GBM does not have the sole discretion to exercise the loan facilities.
8. ERR supplied both of the supplementary reports to Kralcopic separately and provided it with an opportunity to respond and address the concerns raised in these reports.
9. ERR assessed the information and submissions provided by Kralcopic in relation to the six sources of funding Kralcopic had identified and publicly available information in relation to the rights issue, based on the independent assessments undertaken by PWC. The new underwriting agreement with Metropolis Enterprises Group Limited was not included in the analysis by PWC, but a review by ERR concluded that it was very similar to the previous one with Nex Kiwi.
10. ERR's assessment identified concerns regarding the funding sources including: 3 of 5
a) That the net equity has been incorrectly assessed by Kralcopic, leading ERR to conclude that the net equity amount is negative.
b) The uncertainty regarding the likely success of the latest rights issue of August 2019, considering the previous rights issue was undersubscribed, the previous underwriter withdrew by exercising its rights, and the replacement underwriter could exercise its right to withdraw, for example, noting that the timetable for the rights issue had already been breached thereby providing a trigger for withdrawal.
c) That the August 2019 Prospectus indicates that only limited funds would be directed towards funding work on the relevant licences.
d) The lack of certainty regarding the line of credit as the offer by Colbert Finance for GBM is not unconditional.
e) The lack of certainty regarding the loan offer to GBM, as it is conditional on completing final terms, such that it is unclear whether GBM would be able to meet the requirements.
f) The uncertainty regarding the ability of GBM to repay the line of credit or the loan.
g) The fact that Kralcopic has not generated any gold production revenue under the relevant licences, despite repeated assurances to the department about imminent commencement of tailings processing and has not provided reliable information to support its profit and loss projections. Kralcopic has reported zero gold production to ERR for each financial year since 2015.
h) There are significant uncertainties in relation to the realised value of the processing plant and how this may or may not be used to fund proposed work or rehabilitation.
11. That a renewal of MIN5344, MIN5364 and MIN4878, without further evidence of Kralcopic's financial capability, would be inconsistent with the MRSDA's purpose, objectives and principles of sustainable development.
a) The financial information provided by Kralcopic suggested that the licensee is not capable of extracting the value from the resources under MIN5344 in a way that was compatible with the economic, social and environmental objectives of the State.
b) Kralcopic is unlikely to be able to rehabilitate the land under MIN5344, MIN5364 and MIN4878 and is therefore incompatible with objective 2(1 )(b)(iii) of the MRSDA which aims to ensure land that has been mined is rehabilitated.
c) Failure to satisfactorily rehabilitate the land under MIN5344, MIN5364 and MIN4878would mean that Kralcopic is unlikely to eliminate or minimise as far as reasonably practicable ongoing risks posed to the environment, to members of the public, or to land, property or infrastructure as required by section 2(1)(b)(i) of the MRSDA.
d) A failure to rehabilitate the land would also be inconsistent with the sustainable development principles 2(a) and 2(b) set out in section 2A of the MRSDA which require a path of economic development that safeguards the welfare of future generations and provides for equity between generations.
12. Therefore, ERR recommended that the renewals for MIN5344, MIN5364 and MIN4878 be refused.
Relevant statutory and regulatory provisions
I will next set out the relevant statutory provisions for the determination of the issues in this proceeding.
Mineral Resources (Sustainable Development) Act 1990
1 Purpose
The purpose of this Act is to encourage mineral exploration and economically viable mining and extractive industries which make the best use of, and extract the value from, resources in a way that is compatible with the economic, social and environmental objectives of the State.
2 Objectives
(1) The objectives of this Act are—
…
(b) to establish a legal framework aimed at ensuring that—
(i) risks posed to the environment, to members of the public, or to land, property or infrastructure by work being done under a licence or extractive industry work authority are identified and are eliminated or minimised as far as reasonably practicable; and
…
(iii) land which has been mined or from which stone has been extracted or removed is rehabilitated; and
15 Application for a licence
(1) A person may apply to the Minister in accordance with the regulations for an exploration licence, a mining licence, prospecting licence or retention licence.
…
(6) An applicant for a licence must satisfy the Minister that the applicant—
(a) is a fit and proper person to hold the licence; and
(b) intends to comply with this Act; and
(ba) subject to subsection (6A), genuinely intends to do work; and
(c) subject to subsection (6A), has an appropriate program of work; and
(d) is likely to be able to finance the proposed work and rehabilitation of the land.
29 Application for renewal of licence
(1)A licensee (other than a licensee who is a holder of a prospecting licence) may, before a licence expires, apply in accordance with the regulations to the Minister for renewal of the licence.
(2)If an application for renewal of a licence is lodged before the licence expires, the licence continues in operation until the application is granted and registered or refused.
31 Renewals of licences
(1) The Minister must refuse to renew a licence if the applicant does not satisfy the Minister as to the matter specified in section 15(6)(ba) unless the applicant satisfies the Minister that the applicant has identified minerals in the land covered by the licence and that—
(a) additional time is necessary to assess the economic viability of mining those minerals; or
(b) it is not at present economically viable to mine those minerals but it may become so in the future.
(2) The Minister may refuse to renew a licence if the Minister is satisfied as to any one or more of the following matters—
(a) the applicant as a licensee has not substantially complied with—
(i) subject to subsection (3), this Act or the regulations; or
(ii) any condition to which—
(A) the licence that is the subject of the application for renewal is subject; or
(B) a work plan is subject; or
(iii) any condition specified under section 44; or
(iv) any relevant planning scheme or permit; or
(b) the applicant as a licensee has unreasonably delayed in trying to obtain any necessary consent or other authority;
(c) the applicant as a licensee has not commenced work within the time specified in or allowed under section 42(5);
(d) the applicant as a licensee has endangered the public or an employee on or near the land covered by the licence that is the subject of the application for renewal;
(e) the applicant as a licensee has undertaken work on land otherwise than in accordance with a work plan;
(f) the applicant as a licensee no longer complies with section 15(6)(a), (b), (ba), (c) or (d);
(g) in the case of an application for the renewal of a mining licence, the area covered by the licence is depleted of minerals to the extent that it is no longer feasible to mine that area;
(h)in the case of an application for the renewal of a mining licence or retention licence, it is not feasible to mine minerals in the area covered by the licence and will not be feasible to do so in the foreseeable future;
(i) in the case of an application for the renewal of a retention licence, the applicant as a licensee has failed to comply with a requirement under section 112A.
(3) Subsection (2)(a)(i) does not authorise the Minister to refuse to renew a licence if the Minister is satisfied that the non-compliance is not likely to affect adversely any person’s rights under this Act or the regulations or to result in any person being deprived of information necessary for the effectual exercise of those rights.
(4) Otherwise, subject to subsections (5) to (9), the Minister may, by instrument served on the applicant, renew or refuse to renew a licence.
…
(8) In the case of an application for the renewal of a mining licence (including an infrastructure mining licence), the Minister may renew the licence if—
(a) mining is taking place under the licence at the time of the application and the Minister is satisfied that there is a reasonable prospect that mining will continue after that renewal; or
(b) mining had taken place under the licence before the date of the application and the Minister is satisfied that there is a reasonable prospect that mining will recommence within 2 years after renewal of the licence.
(9) The Minister may renew a licence—
(a) subject to any conditions specified in the renewal; or
(b)to cover a smaller area than that covered by the application for renewal.
(10) A renewal or refusal to renew has no effect until the instrument of renewal or refusal to renew is registered.
33 Transfer of licence
(3) Before approving an instrument of transfer, the Minister must be satisfied that—
(a) the proposed transferee complies with section 15(6)(a), (b), (ba), (c) and (d); and
(b) subject to subsection (3B), the existing licensee has paid all outstanding fees, bonds, royalties and rents in respect of the licence; and
(c) subject to subsection (3C), in the case of an existing licensee who has a work plan, the work plan is adequate.
The Mineral Resources (Sustainable Development) (Mineral Industries) Regulations 2013 sets out the required content of a mining licence application in Schedule 3, which in part provides:
Information Required in Application for Mining Licence
…
(11) Evidence of financial capability to fund the estimated expenditure to undertake the proposed program of work (refer item 16).
…
(16)Details of the proposed program of work including:
(a) a map of the location of the proposed mining works in relation to the boundaries of the land included in the application; and
(b) a brief description of the proposed type of works, including—
(i) a description of the mining activities to be undertaken, including the proposed scale of mining;
(ii) where relevant, a statement outlining any studies to be undertaken to further establish the economic viability of mining the mineral resource;
(iii) where relevant, a description of any further geological work to upgrade the mineral resource;
(c) a proposed schedule for—
(i) obtaining any other necessary permits, approvals or authorisations required before mining can commence;
(ii) construction and commissioning for mining;
(iii) commencement of mining.
Kralcopic’s grounds of review
Kralcopic relied on the following grounds to obtain judicial review orders:
A. The accepted legal meaning of ‘likely’ means ‘a real commercial likelihood that is less than probable.’ The meaning of ‘likely’ in sub-s 15(6)(d) of the Act (‘likely to be able to finance the proposed work’) is the accepted legal meaning. In defining ‘likely to be able to finance’ as the plaintiff having to show a ‘probable or real ability to finance’, the defendant applied the incorrect legal test and engaged in a jurisdictional error of law.
B. The defendant otherwise interpreted sub-s 15(6)(d) other than in accordance with its correct legal meaning, and engaged in a jurisdictional error of law.
C. The defendant ‘may’ refuse to renew a licence if the licensee is ‘no longer’ (sub-s 31(2)(f)) ‘likely to be able to finance the proposed work and rehabilitation’ (sub-s 15(6)(d)). On 7 April 2016, the Minister for Energy and Resources was satisfied (sub-s 33(3)(a)) of a likelihood, and vested the Licences in the plaintiff (‘Transfer Approval’). When considering if the licensee was ‘no longer’ ‘likely to be able to finance the proposed work and rehabilitation’, the defendant was required to, but did not, consider the information provided by the plaintiff in its Transfer Application. In failing to consider the circumstances of approval, the defendant:
(a) engaged in a jurisdictional error of law; and/or
(b) failed to take into account relevant considerations.
PARTICULARS
In considering if a licensee is ‘no longer’ ‘likely’, the defendant had to consider any changes since the previous approval, including, inter alia, between the financial information as provided in the 2016 transfer application, and any additional expenditure required by variations to the work plan.
D. In refusing the renewal application for MIN5344, the defendant:
(a) took into account an irrelevant consideration, that the plaintiff's predecessor licensee (Unity Mining) had not met expenditure requirements before the transfer of MIN5344 to the defendant in 2016; and/or
(b) failed to take into account the relevant consideration that the defendant delayed the plaintiff undertaking activities concerning MIN5344 (including fundraising) by requiring work plan variations.
PARTICULARS
The plaintiff refers to the letter under signature of Judy Scott (Team Leader, Licensing, Earth Resources Regulation) of 7 May 2018.
Grounds A and B – Construction of word ‘likely’ in s 15(6)(d)
Kralcopic’s submissions
Kralcopic submitted that in determining the meaning of ‘likely to be able to finance the proposed work and rehabilitation of the land’, the delegate erred by giving it the meaning of ‘a probable or a real ability to finance the work programs and rehabilitation’.[78] This interpretation was contained in the footnote. Kralcopic contended that the word ‘likely’ means ‘a real chance’. Because of his error in interpreting the word ‘likely’, the delegate’s decision should be declared to be void ab initio.
[78]CB 1135.
Kralcopic contended that the meaning of the word ‘likely’ depended on its statutory context.[79] Relying on Deane J’s judgment in Tillmanns Butcheries Pty Ltd v Australasian Meat Industries Employees’ Union,[80] it submitted that the word ‘likely’ in s 15(6)(d) means a real chance or possibility, irrespective of whether the chance was greater than 50 per cent.
[79]Assistant Minister for Immigration and Border Protection v Splendido (2019) 271 FCR 595, 615 [59] (Mortimer J), referring to RJE v Secretary to the Department of Justice (2008) 21 VR 526, 534 [27] (Maxwell P and Weinberg JA); [98] (Nettle JA) (‘RJE’); George v Queensland [2008] FCA 1518, [44] (Logan J); Sabourne v Western Australia [2010] WASCA 242, [59] (Buss JA).
[80]Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees' Union (1979) 27 ALR 367, 382 (‘Tillmanns Butcheries’).
Kralcopic argued that the delegate’s interpretation of the phrase ‘likely to be able to finance’, reflected a simple grammatical analysis, as opposed to a correct statutory construction. It advanced its argument as both a jurisdictional error of interpretation and a failure to take into account relevant considerations.
Kralcopic also submitted that the instructions to PwC stated a higher standard of the word ‘likely’ than the statute intended. Namely, it was asked to determine whether the licensee had the financial capacity to meet the requirements of s 15(6)(d).[81]
[81]CB 817.
The meaning of the word ’likely’ could not be decided without a consideration of the Act’s structure as a whole, including its objectives and purposes. The delegate’s interpretation was not consistent with them. The Minister was given a discretion whether to grant applications for the renewal of licences and to interpret the word ‘likely’ as ‘probable’ placed too great an obligation on the applicant to demonstrate an ability to finance the works and rehabilitation. The adoption of the ‘real chance’ meaning of ‘likely’ was consistent with the Act’s balance of competing considerations.
Kralcopic contended that if the delegate had adopted the ‘real chance’ meaning of ‘likely’, he would have considered other factors that would have led him to conclude that it was likely to be able to finance the works.[82] These included: Kralcopic’s present financial position; any proposal that it had to fund the proposed work and rehabilitation of the land; the assets of its controllers and their willingness to provide funding; the state of the lending market for mining; the likelihood of it striking gold and GBM’s record of being able to fund mining ventures and comply with financial requirements.
[82]T 43-4. See also Kralcopic Pty Ltd, ‘Kralcopic’s Submissions in Reply’, 2 September 2020, 5 [18].
Kralcopic submitted that as used in the Act, the word ‘likely’ contained a flexible standard of possibility and not an actual or certain state of affairs. It required the decision-maker to consider present facts to assess future possibilities. In contrast, s 15(6)(a) required the Minister to be satisfied that an applicant for a mining licence ‘is a fit and proper person’, which is an actual present state of affairs.
Kralcopic also relied on the judgment of Logan J in George v Queensland[83] when considering a provision permitting summary dismissal of an application for native title, if the Court was satisfied an application had not been accepted by the Registrar and ‘is not likely to be amended in a way that would lead to a different outcome once considered by the Registrar’. His Honour explained that:
[D]epending upon the context in which it appears, ‘likely’ can mean ‘more probable than not’ or it can mean ‘some possibility, more than a remote or bare chance’. Tillmanns Butcheries and, in turn, Australian Telecommunications Commission v Kreig Enterprises Pty Ltd, referred to in each of the substantive judgments delivered in Tillmanns Butcheries, demonstrate the importance of context in the determination of the meaning of the word. For example, that there was a reticence on the part of this Court in Tillmanns Butcheries to confine the meaning of the word to ‘more probable than not’ in the context a provision directed in the public interest to the proscription of a form of behaviour in trade or commerce considered by Parliament to be undesirable is, with respect, readily comprehensible.
The occasion for affording the word ‘likely’ the meaning ‘more probable than not’ in a provision directed to the dismissal of a native title application without a hearing on the merits of that application is less compelling.[84]
[83]George v Queensland [2008] FCA 1518, [51], [73].
[84]Ibid [44]-[45].
Kralcopic referred to the principle that a statute is assumed to use words consistently, subject to contrary intention, and pointed out the Act’s use of the work ‘likely’ on 15 occasions. It submitted that either the Act used the word ‘likely’ consistently or the particular context of the use of the word ‘likely’ revealed whether it means either ‘probable’ or a ‘real chance’.
Kralcopic submitted that the Act used the word ‘likely’ in two ways: first, to describe the necessary likelihood of the existence of particular criteria which were a precondition for the Minister to grant, cancel or decline to grant a licence; or, secondly, to describe the risk of mining activities interfering with third-party rights, which would be a matter for the Minister to consider. In the second category, the ‘real chance’ meaning is more appropriate, because it permits the Minister to take a more cautious approach in assessing the risk of interference with third party rights.
Kralcopic contended that giving the word ‘likely’ the meaning of ‘probable’ would severely limit the Minister’s environmental protection powers. For instance the Minister’s powers would be limited under s 110B which states that:
(1) This section applies if the Minister believes on reasonable grounds that—
(a) an act or omission of an owner of registered mine land is likely to result in a risk to public safety, the environment, land, property or infrastructure; or
…
(c) an owner of registered mine land has contravened or is likely to contravene this Act.
(2) The Minister may, by notice served on the owner of registered mine land, require the taking within a specified period of any of the actions set out in subsection (3) in order to—
…
(b) avoid the likely contravention or non-compliance…
Furthermore, the Minister could grant or renew licences on conditions, for example, by requiring the provision of a bond. If a bond had been required, even if Kralcopic proved to be unable to finance the proposed works and rehabilitation, the State would have held a substantial sum of money that can be used for those purposes.
Additionally, the economic, social or environmental interests of Victoria would not be advanced by the Minister limiting applicants to those with ‘cash at bank’, and not taking into account their capacity to obtain finance even if that involved risk or uncertainty.
The Minister’s submissions
The Minister submitted that the word ‘likely’ in s 15(6)(d) meant a ‘probable or real ability’ to be able to obtain the finance to perform the proposed works and rehabilitate the land. The word ‘likely’ is protean in meaning and determined by its legislative context. She relied on the judgment of Marks J in the Full Court in Department of Agriculture and Rural Affairs v Binnie who held that ‘likely’ may well vary in meaning according to its context’.[85] The interpretation of the work ‘likely’ in s 15(6)(d) is to be guided by its inclusion in the phrase ‘likely to be able to finance’. That use of ‘likely’ means that the Minister must be satisfied that it is more probable that not that the applicant will be able to finance the works proposed and the rehabilitation required under the licence.
[85]Citing Department of Agriculture and Rural Affairs v Binnie [1989] VR 836, 841 (Marks J) (‘Binnie’) cited in RJE (n 79) 534-5 [28].
The interpretation of the word ‘likely’ must yield to the overall purpose of the Act. An interpretation of ‘likely’ as ‘probable’ promoted the Act’s objective of ensuring that mining operations are conducted compatibly with Victoria’s economic, social and environmental objectives. Taking those objectives into account, the Minister could not be required to renew a licence when there was a less than 50 per cent chance that the applicant would have the financial capacity to complete mining and rehabilitation works.
Licences could be granted for 20 years and the Minister needed to be satisfied of Kralcopic’s ability to finance the works for the term of the licence.
Analysis of Grounds A and B
The Minister understood the term ‘likely’ to mean ‘a probable or real ability to finance the works program and rehabilitation’.[86]
[86]CB 1135.
The parties referred to a number of authorities on the meaning of the word ‘likely’, while recognising that it was to be read with the words ‘likely to be able to finance’. The likelihood to be assessed is the licensee’s ability to finance the works proposed and the rehabilitation of the land. The delegate made clear the importance of being satisfied of that likelihood. In paragraph 11 of his reasons, the delegate also made clear that he was not considering the requirements of s 15(6)(d) or s 31(2)(f) in isolation from the objectives of the Act read as a whole. He noted that if Kralcopic was unlikely to be able to rehabilitate the land, this would be incompatible with objective s 2(1)(b)(iii) of the Act, which aims to ensure that land that is mined is rehabilitated. It would also mean that Kralcopic was unlikely to eliminate or minimise, as far as reasonably practicable, ongoing risks posed to the environment, to members of the public, or to land, property or infrastructure as required by s 2(1)(b)(i) of the Act. It would also be inconsistent with the sustainable development principles contained in s 2A(2)(a) and (b) of the Act which require a path of economic development that safeguards the welfare of future generations and provides for equity between generations. The delegate’s reasons therefore emphasised the importance of the issue of likelihood of being able to finance the works and rehabilitation in achieving the purposes and objectives of the Act. That made it appropriate to adopt a ‘stronger’ meaning to the word ‘likely’.
Kralcopic’s submission that the Minister could grant approval of a licence on conditions, including the lodging of bonds is not decisive of the meaning of the word ‘likely’. Kralcopic accepted that the Minister could not include the provision of rehabilitation bonds within the assessment of financial capacity required by s 15(6)(d),[87] but submitted that their provision was relevant to the Minister’s exercise of the discretion conferred by s 31(2)(f).
[87]T 73.
A rehabilitation bond, which must be a bank guarantee, is a financial security provided by a licensee to ensure that rehabilitation can be undertaken by the Minister should the licensee be unable to meet its rehabilitation obligations. If the Minister is required to carry out rehabilitation work, following the failure of the licence holder to do so, she may recover as a debt any amount by which rehabilitation costs incurred exceeds the amount of the bond. The rehabilitation is a fall back and is not proof that the applicant satisfies s 15(6)(d) or s 31(2)(f). Rather in requiring the licensee to provide a bond to fund the rehabilitation is carried out, the environmental and economic objectives of the Act are achieved.
The parties adopted the often cited Full Federal Court decision in Tillmanns Butcheries as a primary reference for the meaning of the word ‘likely’. Under consideration in that case were the secondary boycott provisions in s 45D of the Trade Practices Act 1974 which stated:
Where the conduct is engaged in for the purpose, and would have or be likely to have the effect of causing substantial loss or damage to the business of the corporation.[88]
[88]Cited in Tillmanns Butcheries (n 80) 367.
Bowen CJ, with Evatt J agreeing, said:
The word ‘likely’ is one which has various shades of meaning. It may mean ‘probable’ in the sense of ‘more probable than not’ – ‘more than a fifty per cent chance’. It may mean ‘material risk’ as seen by a reasonable man ‘such as might happen’. It may mean ‘some possibility’ more than a remote or bare chance, or, it may mean that the conduct engaged in is inherently of such a character that it would ordinarily cause the effect specified.
The circumstances to which s 45D may apply are so various, that I hesitate to place a gloss on the section by preferring one meaning of at 376 ‘likely’ rather than another for the determination of this particular case. It is unnecessary to do so, because I have formed the view that whichever meaning is adopted the evidence leads me to the conclusion that the likelihood of substantial loss or damage has been established.[89]
[89]Ibid 375-6.
Deane J favoured the ‘real chance or possibility’ meaning and held that ‘the preferable view in that case was that the word ‘likely’ was not synonymous with ‘more likely than not’.[90] He wrote:
The word ‘likely’ can, in some contexts, mean ‘probably’ in the sense in which that word is commonly used by lawyers and laymen, that is to say, more likely than not or more than a 50 per cent chance. It can also, in an appropriate context, refer to a real or not remote chance or possibility, regardless of whether it is less or more than 50 per cent. When used with the latter meaning in a phrase which is descriptive of conduct, the word is equivalent to ‘prone’, ‘with a propensity’ or ‘liable’. When so used, it is sometimes equated with the concept of foreseeability in the law of negligence. Thus, if I fire a rifle through drawn curtains into a quiet lane in a country village, it is not likely, in the sense of more likely than not or an odds-on chance, that I will injure anyone. It would, however, be difficult to deny that there was a real chance or possibility (or likelihood in that sense) that an occasional passer-by would be wounded by the bullet. Plainly, the act of firing a rifle through drawn curtains into a lane used by pedestrians would be an act which was, in the circumstances, prone or liable (likely in that sense) to cause injury to a passing pedestrian.[91]
[90]Ibid 347.
[91]Ibid 380-1 (Deane J) (citations omitted).
Section 45D required an assessment of whether a secondary boycott was likely to have the effect of causing substantial loss or damage to the business of the corporation, which was the subject of the boycott. Establishing that effect was difficult and that made ‘the real chance or possibility’ standard more appropriate.
The word ‘likely’ takes on different meanings depending on the context in which it appears.[92] In Australian Telecommunications Commission v Krieg Enterprises Pty Ltd, Bray CJ suggested that, in some contexts, ’probable’ is regarded as a stronger word than ‘likely’ and, ‘on the other hand, sometimes ‘likely’ is regarded as stronger than ‘probable’.[93]
[92]See Binnie (n 85) 841 cited in RJE (n 79) (Maxwell P and Weinberg JA).
[93](1976) 14 SASR 303, 311.
In Air New Zealand Ltd v Commerce Commission,[94] Davidson CJ, in determining whether a particular proposal was ‘likely’ to be contrary to the public interest, also referred to dictionary definitions of ‘likely’ which he found were synonymous with ‘probably’. In regard to these two words, his Honour said:
It is difficult to differentiate clearly between them in any sensible degree. On a graduated scale one might place expressions of likelihood in the following order of certainty - possible; distinct or significant possibility; reasonably probable; probable; highly probable.[95]
[94][1985] 2 NZLR 338.
[95]Ibid 342.
The Macquarie Dictionary gives a number of definitions of ‘likely’ including:
1. probably or apparently going or destined (to do, be, etc.): likely to happen.
2. seeming like truth, fact, or certainty, or reasonably to be believed or expected; probable: a likely story.[96]
(Emphasis added)
[96]Macquarie Dictionary (8th ed, 2020) ‘likely’ (defs 1, 2).
An example of a legislative context that required the word ‘likely’ to be given the meaning of ‘more likely than not’ was the Court of Appeal’s decision in RJE v Secretary to the Department of Justice.[97] Under consideration was s 11(1) of the Serious Sex Offenders Monitoring Act 2005 (‘Monitoring Act’) which permits an extended supervision order to be made binding an offender if the Court ‘is satisfied to a high degree of probability, that the offender is likely to commit a relevant offence’. Maxwell P and Weinberg JA considered that the statutory context meant that the word ‘likely’ should be read as ‘more likely than not’. Their Honours wrote:
Were it necessary for us to express a concluded view on the ordinary meaning of “likely” — which is, after all, a question of fact rather than of law — we would be respectfully inclined to agree with Bray CJ in Australian Telecommunications Commission v Krieg Enterprises Pty Ltd. In our view, when it is said that a particular team is likely to win a sporting contest, or that a particular person is likely to recover from illness, what is being conveyed is that the event is more likely than not to occur. Conversely, we do not think it would accord with ordinary usage for an occurrence to be described as “likely” if the odds were against it occurring, that is, if there were a greater chance that it would not occur than that it would.[98]
[97](2008) 21 VR 526.
[98]Ibid 536-7.
In a footnote to that passage their Honours wrote:
It should be noted that, if a less than “odds-on” chance were to be treated as synonymous with “likely”, then the prospects of the matter eventuating would be both likely and unlikely at the same time.[99]
[99]Ibid 537, footnote n 46.
Their Honours considered that in the context of the Monitoring Act the word ‘likely’ meant that the probabilities favoured the occurrence of the event in question; the chance of it occurring was greater than 50 per cent.[100]
[100]Ibid 537.
Nettle JA considered that the word ‘likely’ meant at least more likely than not. He wrote:
Uninstructed by authority, I too should have thought that ’likely’ in s 1’(1) means at least ‘more likely than not’. Although the meaning of ‘likely” is especially sensitive to context, in ordinary speech it usually means ‘more likely than not’. …
There are also the statutory constructional considerations adumbrated in the President’s and Weinberg JA’s reasons under the headings of The statutory context and The TSL analysis, of which the most important is doubtless that, because s 11 prescribes a test for imposing orders which trench upon the liberty of the subject, and because the word ‘likely’ is capable of more than one meaning, such if any ambiguity as remains after the application of ordinary principles of construction ought be resolved in favour of the subject.[101]
[101]Ibid 552.
However, Nettle JA referred to previous authority from which he considered that he should not depart, in the absence of a compelling reason, that the word ‘likely’ in s 11 of the Monitoring Act was capable of meaning less likely than not.[102] But his Honour considered that the application of s 32 of the Charter of Human Rights and Responsibilities Act 2006 led to the word ‘likely’ conveying the meaning ‘at least more likely than not’.[103] His Honour stated:
I cannot conceive of the potentially far reaching restrictions on rights provided for in the Act as being capable of demonstrable justification in the relevant sense unless the risk of an offender committing a relevant offence is at least more than even.[104]
[102]Ibid 552.
[103]Ibid 558.
[104]Ibid 554.
The Full Court decision of Department of Agriculture and Rural Affairs v Binnie[105] considered whether the disclosure of a document under freedom of information legislation ‘would be reasonably likely to endanger the lives or physical safety of a person…’. Marks J concluded that, in context, the phrase ‘reasonably likely’ spoke of a chance of an event occurring or not occurring which is real, not fanciful or remote. It did not refer to a chance which was more likely than not to occur, that is, one which was ‘odds-on’.[106]
[105]Binnie (n 85) 840–3 (Marks J, Young CJ substantially agreeing, Teague J agreeing with Young CJ and Marks J).
[106]Ibid 842.
These decisions suggest that in giving meaning to the word ‘likely’, the consequences of the event or conduct whose likelihood is being predicted is significant. Thus, where the event may cause harm to persons, a lower threshold of the likelihood of the event occurring may be appropriate. But where the determination that an event is likely to occur will authorise action which will restrict personal liberty, a higher threshold may be required before the occurrence of the event is said to be likely.
An example of the former situation is the High Court decision in Sheen v Fields Pty Ltd[107] where under consideration was the meaning of the term ‘likelihood of injury’ in the Factories and Shops Act 1960 (Qld). Gibbs CJ stated:
In the Full Court it was held that ‘likelihood’ in cl 21 means ‘something less than probability but more than a remote possibility’. I would accept that view. In other words, a likelihood is ‘a real or not remote change or possibility regardless of whether it is less or more than 50 per cent’: Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees’ Union, per Deane J. However, to define ‘likelihood’ does not decide the present case. The critical question is whether the likelihood is to be judged, as Demack J said in an unreported judgment in Moscrop v Vigilante , which he followed in the present case, ‘not by considering the nature of any one task but by considering the overall activities in the factory’ or whether, as the Full Court thought, regard must be had to the particular task being performed by the employee in question.[108]
[107](1984) 51 ALR 345.
[108]Ibid 348 (Mason, Wilson and Dawson JJ agreeing, Murphy J agreeing in the result) (citations omitted).
In my opinion the meaning of the word ‘likely’ where appearing in s 15(6) is ascertained by reading it in the phrase ‘likely to be able’, which means likely to be able to finance, to have the capability or means to finance. The finance will be required when work is being done and when rehabilitation is needed. But assessment of the likelihood of the finance being available must be performed when the renewal application is decided.
Although there are many uses of the word ‘likely’ in the Act, it is not appropriate to attempt to interpret them all in this judgment. Not least because I did not receive detailed submissions about them. They deal with different situations and have a context from the a licence renewal application. The meaning of the word ‘likely’ is usually dependent on context.
However, some tentative comments can be made about the use of ‘likely’ in other sections of the Act. When the word is used in a provision that is intended to protect the public as in Part 12, including ss 110, 110AB and 110A, a lower threshold of the word ‘likely’ may well have been intended. Other sections, for example s 25(4), the grant or refusal of a licence, s 25A(7), waiver of exploration holder’s consent, and s 38 (1)(b)(vi), cancellation of licence, may have been intended as using the word ‘likely’ with the meaning of ‘probable’.
But the principle of consistent interpretation yields to context.[109] A word within a statute is usually given its ordinary meaning, but the meaning given in a particular context is guided by the purpose of the statute and the consequences of adopting that meaning. The word or phrase must be construed in a way that is consistent with the language, scope and objectives of the statute.[110] As Mason J stated in Registrar of Titles (WA) v Franzon:
It is a sound rule of construction to give the same meaning to the same words appearing in different parts of a statute unless there is reason to do otherwise.[111]
[109]See Murphy v Farmer (1988) 165 CLR 19, 27 and authorities referred to therein.
[110]Interpretation of Legislation Act 1984 s 35; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 381 [69] (McHugh, Gummow, Kirby and Hayne JJ), 370 [26] (Brennan CJ).
[111](1975) 132 CLR 611, 618.
If the context so indicates, there is nothing to prevent an identical word from being used with different meanings in the same Act.
In the present case, the likelihood of the event which is being considered will have at least an indirect effect on the public in that unless the work is carried out and in due course rehabilitation performed, the objectives of the Act will not be achieved.
Nonetheless, it would appear that ‘likely’ is section specific within the MRSD Act, as the appropriate meaning must account for the purposes and context of each section. As Kralcopic submitted, it would be inconsistent with the objects of the Act and the Minister’s environmental protection abilities if ‘likely’ was read as ‘probable’ in for instance, s 110B. However, contrary to Kralcopic’s submissions it does not follow that this favours a ‘real chance’ interpretation. Rather it strengthens the notion that ‘likely’ should be interpreted within the confines of each section. For instance, a purpose of s 15(6)(d) is to ensure that the licensee, and not the State, finances the rehabilitation of land. It would be inconsistent with that purpose for ‘likely,’ when used in s 15(6)(d0, to be read as a ‘ real chance’ and thus requiring the Minister to renew the licence even though she did not believe it probable that the licensee was able to finance required rehabilitation.
Following the purpose of the Act, and the context surrounding many sections such as ss 15(6)(d) and 110B (and others), it is apparent that the legislation seeks to mitigate significant damage to peoples’ lives and businesses, infrastructure, and the environment. Where these concerns are in contention it becomes clear that the term ‘likely’ takes on the meaning that strengthens that protection. That is so notwithstanding that the section is expressed in a positive or negative manner (e.g. Likely that Licensee can do X, or, likelihood that damage could be done). Accordingly, ‘likely’ takes on the meaning most amenable to advancing the purpose sought. As I have previously mentioned, workplace occupational health and safety laws seeking to protect workers from harm may use ‘likely’ with a lower threshold, whereas when a decision that something is ‘likely’ to occur may restrict civil liberties a higher threshold may be intended.
An assessment of financial capacity to carry out an obligation would logically be based on the details of the assets of the person under consideration or ability to access finance in the present and in the near future. Financial details, statements and reports and letters of finance and credit offers would be evidence of financial capacity. They would enable a conclusion to be drawn about whether an applicant was likely to be able to finance the required works, at least to the standard that it was more probable than not that it would be able to do so. The ability to obtain finance is something that can be measures and assessed on information an applicant provides. It may be found in a letter of offer, an agreement or even a history of business dealings. But, it is not a vague or imprecise feature of business life, it should normally be a matter on which a conclusion can be reached about probabilities.
In my opinion, both the ordinary meaning of the word ‘likely’ and the overall purpose of the Act support the Minister’s submission that the word ‘likely’ in s 15(6)(d), means ‘a probable or real ability’ to finance the work programs and rehabilitation. That interpretation promotes the purpose and objectives of the Act, of requiring that mining operations will be conducted in a way compatible with the economic, social and environmental objectives of Victoria and that extraction of minerals will be a source of revenue for the State, by an economically efficient system of royalties, rentals, fees and charges. The Act contemplates that public money will have to be spent if the licensee cannot meet its obligations. The Act’s objectives and purposes are not advanced by interpreting s 15(6)(d) as having a relatively low threshold required by the ‘real chance’ formula that requires a less than probable chance that the applicant has the financial capacity to complete the works that it proposes to carry out or the rehabilitation that will be required.
I do not consider that the PwC reports adopted an incorrect interpretation of s 15(6)(d).
Although there was no detailed submissions about the matter, I should state that I do not consider that the delegate erred in requiring the licensee to provide evidence that it was likely to be able to finance the first two years of the required minimum expenditure set out in the proposed licence conditions and the assessed rehabilitation liability for the land. That is a period consistent with the objectives and purpose of s 15(2)(f) of the Act.
I accept the Minister’s submission that it would be an unlikely interpretation of s 15(6)(d) that she would be required to renew the licence if she considered that it was not probable that the licensee had the capacity to fund the work and rehabilitation.
I consider that the delegate did not err in adopting a ‘more probable than not’ meaning of the word ‘likely’.
Grounds A and B have not been established.
Ground C – Meaning of ‘no longer complies with section s 15(6)(d)’ in s 31(2)(f)
It is appropriate at this point to set out the relevant parts of the media release of the Minister for Energy and Resources, announcing the approval of the licence transfers in 2016:
Minister for Energy and Resources Lily D’Ambrosio has approved the transfer of mining and exploration licences in Bendigo from Unity Mining to Kralcopic Pty Ltd, a subsidiary of Bendigo-based company GBM Gold.
The licence transfer to GBM Gold will create 15 new jobs as the company expands its operations in Bendigo.
As a condition of the transfer, GBM Gold will be required to rehabilitate the two largest ponds at the Woodvale site within two years and can only send treated water to the site and for use in dust suppression.
The new operator has passed the fit-and-proper person test, meets financial stability standards to carry out the currently licensed mining activity and to pay the site’s assessed rehabilitation bond, as required under the Mineral Resources (Sustainable Development) Act 1990.
GBM Gold intends to reprocess the contents of the mine’s sand and tailings waste to extract further gold that would otherwise be lost to mining by-product.
Reprocessing the tailings also helps with the progressive environmental rehabilitation of the mine site.
The rehabilitation works required as part of the licence transfer applies to ponds six and seven at the Woodvale site.
The two ponds cover around 80 hectares, which is about two-thirds of the entire evaporation ponds area.
GBM Gold will engage with the local community as it develops its work plan and Earth Resources Regulation, the mining regulator, will discuss site rehabilitation issues with the local community.
The work of the mining regulator in assessing the licence transfers has been reviewed by independent financial consultants Price Waterhouse Coopers.
The rehabilitation bond was also independently reviewed earlier this year by an EPA accredited auditor from environmental consultants AECOM, and increased to $5.948 million.[112]
[112]CB 582.
Kralcopic’s submissions
Kralcopic submitted that the Minister, when considering whether it was ‘no longer’ ‘likely to be able to finance the proposed work and rehabilitation’, was required to consider the information provided in its transfer application in 2015. In failing to do so, the Minister made a jurisdictional error. A common-sense construction of the term ‘no longer complies with’, required the delegate to consider the fact that the Minister, when approving the transfer of the Licences in 2016, was satisfied that it met the requirement of s 15(2)(d) before deciding that he was not so satisfied when considering the renewal applications. The renewal applications were made little more than a year after the transfer approvals. The delegate should have at least acknowledged the first decision and considered the material that led to it, although he did not have to reach the same conclusion about Kralcopic’s financial ability when deciding the renewal applications.[113] The delegate should also have taken into account that rehabilitation works may not have to be performed for many years.
[113]T 45.
A licensee seeking renewal of the licences occupies a different position than an applicant for a licence or for approval of a transfer. They no longer have to satisfy the financial ability test as a mandatory precondition, but their failure to do so can be taken into account by the Minister in the exercise of the discretion conferred by s 31(2).
The delegate did not identify any change in Kralcopic’s financial ability since the licence transfers were approved. He had to consider the financial information provided in 2016, instead of deciding to refuse to renew them in a legal void. Kralcopic referred to its 2015 annual report and financial statements, which demonstrated that GBM had very low net assets and surplus at the time of the transfer and a ‘low’ surplus of $1,300,000 million.[114] Kralcopic’s counsel described the strategy of GBM as to acquire licences with a low cost start-up company to earn an income to carry out further work.[115]
[114]CB 216-17; T 35.
[115]T 34.
The Minister’s submissions
The Minister submitted that the effect of s 31(2)(f), when read with s 15(6)(d), was that the delegate had to determine whether he was satisfied that the licensee seeking renewal no longer satisfied him that it was likely to be able to finance the proposed works.
A licence renewal application only occurs when a licence has been previously granted. The subjective jurisdictional fact that must exist before s 31(2)(f) permits the licence renewal is that the Minister is satisfied that the applicant has the requisite financial capacity to conduct mining operations and rehabilitation of the land. There was no requirement that the Minister or delegate compare the financial position of the licensee at the time the licence transfers were approved with its financial position when renewal of the licences is sought.
While the Act does not permit the cancellation of a licence because it later turns out that approval of the transfers in the first place, the Minister is not obliged to renew them. The Minister or delegate has to be satisfied of the applicant’s likely financial ability at the time of renewal.
Analysis of Ground C(a)
In my opinion, the delegate was only required to consider the licence renewal applications before him and exercise the discretion conferred by s 31(2)(f) of the Act. He was required to consider at that time whether he was no longer satisfied that Kralcopic was likely to be able to finance the mining and rehabilitation works required by the Licences. He was not required to compare its financial capacity at that point with its financial capacity in 2016.
The words ‘no longer’ are appropriate as recognising that the applicant for licence renewals had previously satisfied the financial ability requirement. Section 31(2)(f) operates on a renewal application of an existing licence once granted after the Minister was satisfied of the requirements of s15(6)(d). The Minister was not obliged to consider why Kralcopic no longer satisfied the financial ability requirement. Section 31(2)(f) gives the Minister a discretion to renew or not renew a licence, unlike s 15(6)(d), which makes a decision that the Minister is satisfied of the applicant’s likely financial ability a precondition to the grant or transfer of a licence.
In fact, in this case, Kralcopic’s financial position had changed since the transfer of the Licences, for example, share issues had not proceeded and underwriters had changed.
If the Minister or delegate so chose, they might re-examine the circumstances that led to the licence transfers being approved, particularly if it gave light to the licensee’s financial position at the time of the renewal application. But, they were not obliged to do so. Equally, they could have taken into account the reasons why Kralcopic or GBM had not earned income from mining since the transfer was approved, but were not obliged to do so.
I am not satisfied that the delegate erred in his interpretation or application of the words ‘no longer complies with section 15(6)(2)(f)’ in s 31(2)(f).
Based on the independent financial assessments undertaken by PwC, and the information supplied by Kralcopic, the delegate was entitled to conclude the was not satisfied that Kralcopic was likely to be able to finance the works and carry out the rehabilitation costing $14,100,000. The three PwC reports did not support Kralcopic having a real chance or possibility of financing that amount. There were doubts about the operation of the joint venture and the line of credit. There can be no challenge in this judicial review proceeding to the delegate’s findings on those questions.
Ground C(a) has not been established.
Ground C(b)
Kralcopic argued in ground C(b) that the Minister failed to take into account the relevant consideration that in considering if a licensee was ‘no longer’ ‘likely’, she had to consider any changes since the previous approval, including, inter alia, between the financial information provided in the 2016 transfer application and additional expenditure required by variations to the work plan.
The Minister disputed the validity of this ground.
Analysis of Ground C(b)
It follows from my determination of ground C(a) and of the effect of s 31(2)(f), that I do not consider that the delegate was under a mandatory obligation to consider any of the changes described in Ground C(b). The words ‘likely to be able to finance’ suggests that the Minister or delegate was required to assess a licensee’s ability to perform works and rehabilitate the land. I consider that if the legislature had intended previous decisions about the grant or transfer of a licence to be a relevant consideration upon their renewal it would have provided for that in clear terms.
Section 31(2)(f) makes no reference to the original decision to grant a licence or approve its transfer. The term ‘no longer satisfied’ acknowledged the Minister had been previously satisfied. It created no obligation on the Minister to compare, contrast or consider previous decisions.
Ground C(b) has not been established.
Ground D – Consideration grounds
Kralcopic’s ground D contends that the delegate took into account an irrelevant consideration, namely that Unity Mining had not met expenditure requirements before the transfer of MIN5344, the Greater Bendigo Licence, to Kralcopic in 2016. It also contends that the delegate failed to take into account the relevant consideration that the Minister delayed Kralcopic undertaking activities concerning MIN5344, including fundraising, by requiring work plan variations.
Kralcopic’s submissions
In oral submissions, counsel for Kralcopic stated that while it was still relying on ground D, he did not propose to develop it in detail by oral submissions.[116]
[116]T 12, 14, 47.
There are a number of separate matters referred to in submissions that I will briefly consider under this ground.
Kralcopic submitted underground D(a) that the Minister took into account an irrelevant consideration, that it had not generated any gold production since 2015. In fact, the delegate’s statement of reasons noted that Kralcopic was only transferred control of the mines at the end of the 2015 to 2016 financial year. Mr Harrison’s affidavit said that no gold production had occurred for reasons of regulatory delay and that the previous Minister failed to give notice, prior to approving the transfer of the licence, that MIN5364, the Evaporation Pond Licence, could no longer be used for mining purposes.[117] As a result, time had been spent on a work plan variation for MIN5344, the Greater Bendigo Licence. The Minister ignored her own Department’s role in Kralcopic’s inability to generate gold production by mistakenly stating that Kralcopic had not use the Licences since the transfer.
[117]CB 143-4.
Kralcopic made similar arguments in support of ground D(b), which contended that the Minister or delegate failed to take into account the relevant consideration that she delayed it undertaking activities under MIN5344, the Greater Bendigo Licence, including fundraising, by requiring work plan variations.
Kralcopic also advanced miscellaneous issues that were not contained in the particulars of ground D(b) being matters that it contended the Minister or delegate should have taken into account. These included that its directors had underwritten the first share rights issue in GBC for $1,800,000, and argued and that the delegate had misunderstood the joint venture operation and how much GBM would contribute towards its expenditure. The delegate had also misunderstood Kralcopic’s right to realise the value of the processing plant. Finally, it contended that the Minister had ignored the existence of the rehabilitation bond.
The Minister’s submissions
The Minister submitted that ss 15(6)(d) and 31(2)(f) did not contain mandatory considerations that must be taken into account when she exercised the discretion to decide a licence renewal application. The considerations that might be taken into account in the exercise of the discretion are unconfined, ‘except in so far as there may be found in the subject-matter, scope and purpose of the statute some implied limitation on the factors to which the decision-maker may legitimately have regard’.[118]
[118]Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, 40 (‘Peko-Wallsend’).
Counsel referred me to the second page of the Minister’s decision which listed the matters that she took into account and argued that none were irrelevant.[119] None of the matters that Kralcopic complained were not taken into account were mandatory.[120] The delegate also listed 26 documents to which he had regard.[121] Kralcopic did not allege that the delegate had misunderstood the financial information provided by Kralcopic or the PwC’s analysis of it.[122] The delegate had ample material to justify his decision to refuse to renew the Licences.
[119]CB 1135-9.
[120]T 117.
[121]CB 1138-9.
[122]Citing Chang v Neill [2019] VSCA 151, [92].
Analysis of Ground D
None of Kralcopic’s submissions in respect of this ground establishes a jurisdictional error by the delegate.
I accept the Minister’s submission that the factors her delegate was permitted to take into account in exercising the discretion to renew Licences were unconfined save to the extent the subject-matter, scope and purpose of the statute imply.[123] Section 31(2) made a number of considerations relevant including the likely financial ability of the licensee. The evidence does not establish that the delegate considered matters not permitted by the Act.
[123]Peko-Wallsend (n 118).
As Mason J stated in Minister for Aboriginal Affairs v Peko-Wallsend Ltd:[124]
In the context of judicial review on the ground of taking into account irrelevant considerations, this Court has held that, where a statute confers a discretion which in its terms is unconfined, the factors that may be taken into account in the exercise of the discretion are similarly unconfined, except in so far as there may be found in the subject-matter, scope and purpose of the statute some implied limitation on the factors to which the decision-maker may legitimately have regard (authorities omitted).
By analogy, where the ground of review is that a relevant consideration has not been taken into account and the discretion is unconfined by the terms of the statute, the court will not find that the decision-maker is bound to take a particular matter into account unless an implication that he is bound to do is to be found in the subject-matter, scope and purpose of the Act.
[124]Ibid.
The delegate was required to focus on the subject-matter, scope and purpose of the discretion conferred by s 31(2). He based his decision on a matter contained in s 31(2)(f) that the licensee no longer complied with s 15(6)(d). As previously stated, s 31(2)(f) did not require the delegate to compare the applicant’s financial ability at the time of the renewal application with its position when the transfers were approved. Nor did it require the delegate to consider matters that are particularly raised in Mr Harrison’s affidavit, being the reason for delays in the commencement of mining activities or the failure to generate revenue. The delegate was not obliged to take into account whether the change to the requirement for approval of a work plan variation had caused delays in commencement of works. No material was placed before him about likely income flows if the work plan variation requirement had been approved more speedily. In fact, the delegate did not base his decision because Kralcopic had not commenced work within any specified time.
There were no mandatory considerations that the delegate failed to take into account and there were no impermissible considerations that he did take into account. His decision concerned the likelihood of being able to finance the works and rehabilitation.
This judicial review proceeding does not permit a review on the merits as to whether the delegate’s decision as to Kralcopic’s likely financial capacity was the correct or preferable decision. The delegate gave Kralcopic ample opportunity to address this issue before making his final decision and Kralcopic’s counsel stated that the works and the costs were not in dispute.[125]
[125]T 56.
The delegate’s decision gave four reasons why he refused to renew the Licences. He considered that to do so would be inconsistent with the Act’s purpose, objectives and principles of sustainable development. He considered that Kralcopic was not capable of extracting value from the resources under MIN5344, the Greater Bendigo Licence. It was unlikely to be able to rehabilitate the land. It would be unable to eliminate or minimise the risks to the environment, public or to the land or infrastructure as required by s 2(1)(b)(i) of the Act. It would be inconsistent with the sustainable development principle.
The delegate was entitled to take each of those matters into account in exercising the discretion conferred by s 31(2)(f). They were each matters relevant to the subject-matter, scope and purpose of the Act.
Ground D has not been established.
Forfeiture of plant
Kralcopic claimed to be entitled to the gold processing plant that had been left on the land at Kangaroo Flat. It had agreed to sell that plant to a third party, but the sale had fallen through after part payment of the purchase price. Kralcopic claimed title to the plant. Section 114 of the Act provides that abandoned plant that is not removed from any land before the expiration of six months after the licence ceased to apply to the land becomes the absolute property of the Crown. Section 29(2) provides that if an application for renewal of the licence is lodged before the licence expires, the licence continues in operation until the application is granted and registered or refused. Kralcopic submitted that the forfeiture of plant provisions did not apply to the processing plant because of the commencement of this judicial review proceeding. The parties discussed whether in the event that Kralcopic was successful in setting aside the refusal to renew the Licences, the decision would be void ab initio with the result that it would not have forfeited the plant. Counsel for the Minister submitted that Kralcopic’s commencement of judicial review proceeding did not stop the operation of the Minister’s decision pending those proceedings. Little discussion occurred about the position should Kralcopic be unsuccessful. I will hear the parties further on this if they wish.
Conclusion
None of Kralcopic’s grounds has succeeded. I will hear the parties about the appropriate orders, if they cannot agree on them.
---
2
12
0