Pangolin Resources Pty Ltd v The Hon Norman Moore MLC, Minister for Mines and Petroleum

[2012] WASC 343

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   PANGOLIN RESOURCES PTY LTD -v- THE HON NORMAN MOORE MLC, MINISTER FOR MINES AND PETROLEUM [2012] WASC 343

CORAM:   EM HEENAN J

HEARD:   27 AUGUST 2011

DELIVERED          :   27 AUGUST 2012

PUBLISHED           :  17 SEPTEMBER 2012

FILE NO/S:   CIV 3440 of 2011

MATTER                :An application for writs of certiorari and mandamus against the Hon Norman Moore MLC, Minister for Mines and Petroleum

BETWEEN:   PANGOLIN RESOURCES PTY LTD

Applicant

AND

THE HON NORMAN MOORE MLC, MINISTER FOR MINES AND PETROLEUM
First Respondent

SARUMAN HOLDINGS PTY LTD
Second Respondent

Catchwords:

Mining law - Exploration licence - Application for exemption from expenditure conditions - Application heard and recommended to Minister by Warden - Minister dismissing application - Alleged jurisdictional error - Application of wrong statutory test - Certiorari granted - Mandamus unnecessary

Legislation:

Mining Act 1978 (WA)

Result:

Order absolute for certiorari in first instance

Category:    B

Representation:

Counsel:

Applicant:     Mr C Zelestis QC and Mr D R Chandler

First Respondent           :     No appearance

Second Respondent       :     No appearance

Solicitors:

Applicant:     Gilbert & Tobin

First Respondent           :     State Solicitor for Western Australia

Second Respondent       :     Lawton Lawyers

Case(s) referred to in judgment(s):

Cockburn Cement Ltd v Minister for Environment (WA) [2011] WASC 260

Craig v The State of South Australia (1995) 184 CLR 163

FAI Insurance Ltd v Winneke (1982) 151 CLR 342; [1982] HCA 26

Hot Holdings Pty Ltd v Creasy [2002] HCA 51; (2002) 210 CLR 438

Hunter v The Minister for Planning [2012] WASC 247

Mawson West Ltd & Pangolin Resources Pty Ltd v Saruman Holdings Pty Ltd [2010] WAMW 10; (2010) 3 ARLR 346

O'Sullivan v Farrer (1989) 168 CLR 210; [1989] HCA 61

Re Her Honour Judge Schoombee; Ex parte Attorney General for Western Australia [2011] WASC 23

Re Minister for Resources; Ex parte Cazaly Iron Pty Ltd (2007) 34 WAR 403; [2007] WASCA 175

Re Plutonic Operations Ltd, SIPA Resources Ltd and the Minister for Mines; Ex parte Roberts [1999] WASCA 133

Re Warden Calder; Ex parte Lee (2007) 34 WAR 289

Re Warden S Richardson; Ex parte Binthalya Holdings [2011] WASC 56

Seddon v Medical Assessment Panel [2011] WASC 237

1. EM HEENAN J: At the conclusion of the hearing of this originating motion on 27 August 2012 I concluded that the applicant was entitled to a writ of certiorari to be issued immediately to quash the decision of the first respondent, the Minister for Mines and Petroleum, made 2 August 2011 to refuse application for exemption number 299783, made by the applicant under s 102 of the Mining Act 1978 (WA). I thereupon made an order absolute for certiorari in the first instance to remove the decision of the Honourable Minister into this court and to quash it. In the circumstances, the applicant did not press for an order for a writ of mandamus or in the nature of mandamus and it was unnecessary to consider that part of its application. At the time I gave brief oral reasons for the substance of my decision indicating that more detailed reasons would follow, as they now do.

2. The applicant applied by notice of originating motion dated 23 December 2011, later amended by leave at the hearing, for the following relief:

   1.The first respondent, the Hon Norman Moore MLC, Minister for Mines and Petroleum ('Minister') show cause why a writ of certiorari should not be issued against him to remove into this Honourable Court for the purpose of being quashed his decision on 2 August 2011 to refuse Application for Exemption No 299783 ('Exemption Application') made by the applicant, Pangolin Resources Pty Ltd ('Pangolin') under s 102 of the Mining Act 1978 (WA) on grounds that the Minister erred in law:

   (a)by considering and determining the Exemption Application as if Pangolin sought the grant of a certificate of exemption under s 102(2)(h) of the Mining Act and, in any event, as if the Exemption Application turned upon the question whether Pangolin had satisfied the elements of that section, when that was not the case; and

   (b)by failing to consider and determine the Exemption Application under s 102(3) of the Mining Act when:

   (i)on the proper construction of that provision, a certificate of exemption was capable of being granted to Pangolin under s 102(3) of the Mining Act; and

   (ii)the Exemption Application had been made, and the grant of a certificate of exemption had been recommended by the Hon Warden Calder, under s 102(3) of the Mining Act.

   2.The Minister show cause why a writ of mandamus should not be issued against him to deal with the Exemption Application according to law.

   3.In the alternative to 1 above and on the grounds above:

   (a)a writ of certiorari issue in the first instance against the Minister to remove into this Honourable Court for the purposes of quashing his decision on 2 August 2011 to refuse the exemption application made by Pangolin, under s 102 of the Mining Act ('Exemption Application Decision'); and

   (b)the Exemption Application Decision be quashed on the return of the order nisi without further order.

   4.In the alternative to 2 above and on the grounds above:

   (a)a writ of mandamus issue on the first instance against the Minister; and

   (b)the Minister deal with the Exemption Application according to law.

   5.There be no order as to costs.

   6.Any other order that this Honourable Court deems fit.

3. The notice of originating motion also contained 12 separate grounds for the application as follows:

   1.On 16 September 2008 Pangolin caused the Exemption Application to be lodged with the Norseman Mining Registrar, by which the grant of a certificate of exemption was sought on the 'further time', 'project' and 'any other reason' grounds in s 102(2)(b), 102(2)(h) and 102(3) of the Mining Act for the expenditure year of 1 August 2007 to 31 July 2008 for Exploration Licence 63/1042 ('E63/1042).

   2.On 16 September 2008 Mawson West was the registered holder of E63/1042 and the Exemption Application was lodged in its name.

   3.At all times Pangolin had the conduct of the Exemption Application.

   4.On 6 October 2008 the second respondent, Saruman Holdings Pty Ltd ('Saruman'), lodged with the Norseman Mining Registrar objection number 301023 ('Objection') to the Exemption Application.

   5.On 15 May 2009 Pangolin abandoned its reliance on the 'project' ground of exemption in s 102(2)(h) of the Mining Act, as stated in the further and better particulars of the Exemption Application.

   6.On 7 July 2009 Pangolin was registered as the holder of E63/1042.

   7.On 6 August 2009 Pangolin was joined as the second applicant to the Exemption Application by order of the Hon Warden Calder.

   8.On 18 December 2009 Pangolin confirmed in its written submissions in support of the Exemption Application that it no longer relied on the 'project' ground of exemption in s 102(2)(h) of the Mining Act.

   9.On 31 March 2010 and 1 April 2010 the hearing of the Exemption Application and the objection was held before the Hon Warden Calder.

   10.On 28 June 2010 the Hon Warden Calder published his report to the Minister and reasons for recommending that the Minister grant to Pangolin a certificate of exemption under s 102(3) of the Mining Act.

   11.By letter dated 19 January 2010, but received on 20 January 2011, the Minister invited Pangolin and Saruman to make submissions on how he should determine the Exemption Application.

   12.By letters dated 4 February 2011 and 18 March 2011 Pangolin made submissions to the Minister concerning the Exemption Application.

   13.By letters dated 16 July 2010, 18 February 2011 and 18 March 2011 Saruman made submissions to the Minister concerning the Exemption Application.

   14.On 2 August 2011 the Minister determined to not follow the recommendation of the Hon Warden Calder and refused the exemption application based on his reading and understanding of the Policy Guidelines of the Department of Mines and Petroleum relating to the 'project' ground of exemption in s 102(2)(h) of the Mining Act.

4. The affidavit evidence filed in support of the application establishes that the chronology and events set out in the grounds for the relief claimed in the originating motion are correct and that no other facts or circumstances are material.

5. The first respondent by the State Solicitor of Western Australia has filed a notice dated 30 January 2010 informing the court that he does not intend to appear by way of counsel in this matter and will abide by the decision of this Honourable Court save as to costs.  The second respondent, the objector in the proceedings before the warden and in the correspondence with the Minister, has entered a memorandum of appearance dated 8 February 2010, but by notice of 16 July 2012 has informed the court that it does not intend to appear by counsel and will abide by the decision of this Honourable Court save as to costs.  There was, accordingly, no appearance by either respondent at the hearing of the originating motion although both had notice of the proceedings.

6. The history of Exploration Licence 63/1042 ('EL63/1042') and the events leading to the exemption application at its hearing before Warden Calder are fully set out in the reasons for decision of his Honour, Calder M of 28 June 2010 in Mawson West Ltd & Pangolin Resources Pty Ltd v Saruman Holdings Pty Ltd [2010] WAMW 10; (2010) 3 ARLR 346. From these it is apparent that the learned Warden correctly identified the crucial issue for the determination of his enquiry and recommendation was whether or not, for the purposes of s 102(3) of the Mining Act, there is any reason other than those prescribed in s 102(2) which, in the opinion of the Minister, is sufficient to justify the grant of a certificate of exemption. In [7] of the learned Warden's reasons this issue is plainly identified notwithstanding that in the first line there is an obvious typographical error where s 102(2) is mentioned instead of s 102(3). That this is only a typescript error is apparent from reading the paragraph as a whole and is rendered certain by the second sentence which refers to the application being made under s 102(3). Further confirmation is apparent from the reasons for the ultimate recommendation of the Warden which are set out below.

7. While the precise details are a little involved, it is sufficient to state simply that the applicant had taken steps to acquire EL63/1042 from Mawson West Ltd but there had been a number of delays, the responsibility for which was in no way attributable to either Mawson West Ltd or to Pangolin, before the exploration licence was transferred into the name of Pangolin. During this time the expenditure requirements for the exploration licence had not been met because it was anticipated, on good grounds, that upon the exploration licence being transferred to Pangolin, Pangolin would be eligible to apply for combined reporting status for that exploration licence and other contiguous tenements which it owned or controlled for the purposes of applying for exemptions from expenditure conditions under s 102. In due course, Pangolin ultimately became the registered proprietor of EL63/1042 and eligible for combined reporting status for that and other tenements, which led to an entitlement to exemption from the expenditure requirements for EL63/1042 from then on. However, for the expenditure requirements for the year ending 31 July 2008 for EL63/1042 were not met and it was in respect of that period that the exemption application was made. Saruman objected to the exemption application and itself brought a forfeiture application for non‑compliance with the expenditure requirements. The forfeiture application was deferred pending the outcome of the application for exemption from the expenditure requirements.

8. This history and the reasons for the recommendation of the learned Warden to grant the application for exemption from expenditure requirements can be found in [86] ‑ [95] of the learned Warden's reasons, which are as follows:

   86.As previously mentioned, application for inclusion of EL 63/1042 in the existing combined reporting group was made on 20 May 2008, being the day following the transfer of control of the Pangolin tenements to Central Norseman.  The application did not receive approval until the end of the 2008 expenditure year for 63/1042.  There is nothing in the evidence before me to explain why it took so long for the approval to be given.  In particular, there is nothing to indicate that when the Director of the Geological Survey, on behalf of the Minister, was giving consideration to approval, the previous history of combined reporting on tenements controlled by Norseman Gold or Central Norseman affected the time taken.

   87.There is no evidence before me which suggests that the Director had any concerns about any of the other factors that are required to be taken into account under any guideline in determining the application for approval.  In the absence of any such evidence it is open to me to infer, and I do, that the time taken was due to nothing more than the staff resources capacity of the Department to process the application.  I infer that had the application for approval been dealt with before the end of the subject expenditure year for EL 63/1042, it would have been granted.  I infer that as at the date when the application was made, namely, 20 May 2008, the exploration licence was a tenement that was then eligible for approval of combined reporting status and that between then and the end of the 2008 expenditure year, it remained eligible and had the Director dealt with the matter during that time, approval would have been granted.

   88.I infer that it was not anything done by or any failure to do anything by, or for any other reason attributable to, any of Mawson, Pangolin, Norseman Gold or Central Norseman that had the effect that combined reporting status was not granted until the end of the 2008 expenditure year or that combined reporting status would not have been granted before the end of that expenditure year had the Director of the Geological Survey finished giving consideration to it during that period.  In my opinion, it is important to note that the combined reporting guidelines do not expressly specify as a criteria to be taken into account by the Director of the Geological Survey that, under the 'common exploration program’, work has been done on every tenement within the group or has been specifically planned and provided for.  In my opinion, such criteria are not implied.

   89.The giving of combined reporting approval has the immediate effect of giving to the holder of any tenement within the combined reporting group a potential reason for the granting of a certificate of exemption which would not be available if the combined reporting approval were not extended to that tenement ‑ par 102(2)(h). In my opinion, for purposes of subs 102(3) of the Mining Act, the Minister is entitled to take into account the following factors in the present case:

   -The combined reporting approval application was lodged during the expenditure year the subject of the exemption application and the subject of the forfeiture application approximately two and a half months before the end of that year.

   -The application for approval was lodged on behalf of Central Norseman within one day of Central Norseman gaining control of the tenement.

   -Had the Director of geological survey considered the application immediately upon lodgement or, in any event, before the end of the subject expenditure year, combined reporting approval would have been given.

   -The delay in approval being given was not due to anything done or not done on the part of the holder of the tenement or any other person not connected with the Mines Department.

   -Norseman Gold and Central Norseman have control EL 63/1042.

   -The tenement is part of a large project involving 120 other tenements.

   -Until the ability to legally control EL 63/1042 was obtained by Central Norseman, Central Norseman would not have been able to have the exploration licence included in a combined reporting approval with its other project tenements.  Further, there was, until then, no 'common exploration program' and no 'common operator'.

   -By 20 May 2008 all of the elements in guideline 22 that the Director of geological survey must take into account were present.

   90That is not intended to be an exhaustive list of matters that the Minister may, for purposes of subs 102(3), take into account arising out of the giving of approval of combined reporting arrangements in respect of EL 63/1042 pursuant to s 115A.

   91It is important to note that combined reporting approval given under s 115A does not necessarily entitle the tenement holder to the grant of an exemption under par 102(2)(h). Paragraph 102(2)(h) is only one of the several reasons specified in subs 102(2) for which the Minister may, as a matter of the exercise of a discretionary power, grant a certificate of exemption. Even though approval has been given under s 115A for combined reporting, the Minister, in exercising the discretion under s 102, must take into account all other matters which would usually be taken into account in determining whether it is appropriate to grant an exemption. Such matters include current grounds upon which exemptions have been granted and to work done and money spent on the tenement (subs 102(4)), and the particular circumstances in which the application for exemption is made.

   92There is no qualification within par 102(2)(h) and none within the published exemption guidelines to the effect that no exemption should be granted under par 102(2)(h) where the expenditure year the subject of the exemption application is the first year of life of the tenement.  There is no such qualification in s 115A or in any regulation or in the s 115A guidelines that has such an effect.

   The Circumstances of Acquisition of EL 63/1042 by the Norseman Group

   93I am satisfied that all of Norseman Gold, Central Norseman, Pangolin and Mawson during all negotiations related to the execution and implementation fo the Pangolin share sale agreement were aware, or should have been aware, that EL 63/1042 was not in good standing from the point of view of the expenditure condition not having been fulfilled and unlikely to be fulfilled during the 2008 expenditure year.  Proper due diligence on the part of the Norseman Group would, by 19 May 2008, have revealed that.  The inference that I draw is that whether or not there had been expenditure compliance in respect of EL 63/1042 was a matter of either no concern at all to any of those involved in the share sale agreement or, if it was of any concern, was not of sufficient concern to prevent the tenement being included in the shares sale agreement.

   94The holding of El 63/1042 is not, and has never been, a matter that is relevant  to the present or continuing view of the Norseman Group as to the viability of the project as a whole.  Whether the Group has control of the tenement or not is not a critical factor.  Having said that, however, I am of the opinion that it is commercially reasonable for Norseman Gold and Central Norseman to want to include it in the project given its size and location and its geographical and geological connection to other project tenements.  It is also relevant, in my opinion, that the essential objective of the vendor and the purchaser in the Pangolin share sale agreement was that control of all of the Pangolin tenements, or those believed to be held by Pangolin ‑ that is, including El 63/1042 ‑ would pass to the purchaser of Pangolin.  Mawson did not want to be left as the holder of EL 63/1042 when it was issued.

   95There is merit in the submission by the Objector that it was not reasonable for Central Norseman to decide that it would not try and fulfil the minimum expenditure condition by the end of the 2008 expenditure year simply because it expected to be given combined reporting status and, thereby, a reason for exemption.  It was, however, not unreasonable for Central  Norseman to expect that combined reporting approval would be given for EL 63/1042.

1. As is apparent at [89], the learned Warden draws a distinction between the potential reasons for the grant of a certificate of exemption under s 102(2)(h) of the Mining Act on the one hand and s 102(3) of the Act on the other, and in [90] confirms the distinction by referring to a preceding list of factors which the Warden has identified as being some of those which the Minister may, for the purposes of s 102(3), take into account. Read in context, it is apparent that the learned Warden has treated the case leading to his recommendation as falling within s 102(3) and not s 102(2)(h) of the Act. Furthermore, the written submissions from the applicant to the Minister, consequent upon the Warden's recommendation, also make it clear that Pangolin was relying on the power of exemption under s 102(3) exclusively and not upon any power under s 102(2)(h).

2. The decision whether or not to grant the exemption application, however, lay with the Minister and not with the Warden. All that the Warden was required and entitled to do was to conduct a hearing and to make a report and recommendation to the Minister, and the Minister was not bound to follow or accept the Warden's recommendation ‑ s 102(5) ‑ (7). Accordingly, the Minister is the decision‑maker on the issue of whether or not to grant or refuse the application for exemption of the particular expenditure condition As such, the Minister's decision is susceptible to judicial review: Re Plutonic Operations Ltd, SIPA Resources Ltd and the Minister for Mines; Ex parte Roberts [1999] WASCA 133. While he is not bound by the decision of the Warden, he is nevertheless required to make his decision and to exercise any accompanying discretions consistently with the scope and objects of the Mining Act:  O'Sullivan v Farrer (1989) 168 CLR 210; [1989] HCA 61 216 ‑ 217 and the object of the Mining Act is to encourage and to promote prospecting and exploration for, the mining of, mineral deposits in the State:  Re Minister for Resources; Ex parte Cazaly Iron Pty Ltd (2007) 34 WAR 403; [2007] WASCA 175 [70] and Re Warden Calder; Ex parte Lee (2007) 34 WAR 289 [39]. In exercising that power of decision and associated discretionary powers, the Minister is susceptible to judicial review in the case of jurisdictional error or breach of the requirements of procedural fairness: FAI Insurance Ltd v Winneke (1982) 151 CLR 342; [1982] HCA 26; Craig v The State of South Australia (1995) 184 CLR 163 and Hot Holdings Pty Ltd v Creasy [2002] HCA 51; (2002) 210 CLR 438.

3. As set out in the grounds of the application for prerogative relief, the applicant made written submissions to the Minister as to whether or not Pangolin should be granted a certificate of exemption after the Warden had made his recommendation and in doing so relied squarely on the 'any other reason' ground for seeking the exemption pursuant to s 102(3) of the Act. The second respondent, Saruman, also made written submissions to the Minister and in these contended that Pangolin ought not be granted the certificate of exemption under any ground.

4. By letter dated August 2011, notice was given to the parties that on 2 August 2011 the Minister had refused the exemption application.  Pangolin then requested that the Minister provide written reasons for his decision but the Minister has declined to do so.  Pangolin then obtained copies of documents relating to the Minister's decision from the Minister and from the Department by applications made under the Freedom of Information Act 1992 (WA). From these it is apparent that the Minister's decision is recorded in a handwritten note which the Minister apparently made on the minute dated 13 July 2011 which had been prepared for him by the department. That minute set out two options for the Minister. The first option was the follow the Warden's recommendation and grant the exemption sought. The second option was to decline to follow the Warden's recommendation and to refuse the exemption sought, and the Minister chose the second. Significantly, the minute did not draw to the attention of the Minister that the applicant was relying only on s 102(3) as the source of power for the grant of the exemption. A handwritten note recording the Minister's decision reads as follows:

   Based on my reading and understanding of the DMP Policy Guidelines relating to expenditure conditions (102(2)(h)).

5. The documents released on FOI relating to the Minister's decision include a document with a handwritten heading 'Extract From DMP's Policy Guidelines Entitled "Exemption From Expenditure Condition"'. That particular document reproduces yellow highlighting and red annotations apparently made on the original. It is a one-page extract of the department's exemption guidelines relating to the 'project ground' exemption in s 102(2)(h) of the Mining Act.  It contains two handwritten notations (emphasis in original document):

   DMP/Minister has requested that this page be left with these papers - and ultimately filed with them.

   *  The above paragraph was noted by Minister Moore during his consideration of this case [redaction] 2.8.11.

6. From this it is apparent that the Minister must have considered that the entitlement to he expenditure requirement exemption turned on whether or not the criteria for s 102(2)(h) were satisfied and that, in the circumstances of this case, the factual history did not fall within the guidelines published by the department. In the applicant's written submissions it is contended that the highlighted paragraph from the guidelines mentioned in the FOI documents emphasised that the requirement for a tenement to be granted an exemption under s 102(2)(h) of the Act was that the tenement must have been the subject of a combined reporting status under s 115A(4) of the Act before the end of the period for which the exemption was sought. Whatever may be the status of those guidelines and whether or not such a requirement is or may validly be imposed on an application for exemption under s 102(2)(h), that question is not determinative of whether or not an exemption from expenditure conditions should be granted for some other reason under s 102(3) which was the basis for the Warden's recommendation and the contention of the applicant before the Minister.

7. It follows that it has been sufficiently demonstrated that the Minister's decision to refuse the exemption application was determined by the Minister's view on whether or not Pangolin had satisfied the requirements of s 102(2)(h) of the Act. However, that was not the question which the Minister was required to consider and determine. Both as a result of the recommendation of the Warden and because of the written submissions of the applicant, the case for the applicant before the Minister was whether or not exemption from the expenditure condition should be granted for some other reason under s 102(3). The only evidence available strongly suggests that that question was not addressed by the Minister and that, rather, the decision was made by reference to different considerations. Determining an application which requires to be considered according to law by reference to some ground not relied upon by the applicant is to determine the issue on the wrong basis or, as is sometimes said, by asking the wrong question and that will constitute a jurisdictional error: Craig v The State of South Australia (1995) 184 CLR 163, 179. What this means is that not only is there no evidence to suggest that the Minister considered the right question but that the available information leads inevitably to the conclusion that the decision was determined on the wrong basis. This involves a further consideration that the Minister did not consider the different and central question of whether, notwithstanding that the elements of s 102(2)(h) may not have been satisfied, there had, nevertheless, been sufficient compliance with the underlying policy of the Act and s 115A(4) to warrant an exemption under s 102(3). This is sufficient reason to conclude that a jurisdictional error has occurred and that the decision should be removed into this court and quashed in order that the matter can be considered afresh and on the correct basis.

8. Submissions were advanced as to whether or not the test for determining whether or not an order nisi for certiorari should be granted had been satisfied ‑ compare Hunter v The Minister for Planning [2012] WASC 247 [19] and Re Her Honour Judge Schoombee; Ex parte Attorney General for Western Australia [2011] WASC 23 [11] ‑ [18] and Seddon v Medical Assessment Panel [2011] WASC 237 [29] ‑ [32]. On either approach it is clear that there is the basis for granting an order to review in the present case. However, in view of the full argument which has been addressed to the court, the absence of any opposition by either respondent and the demonstrated error which has occurred, this is an occasion for the court to exercise its power to make an order absolute in the first instance ‑ RSC O 56 r 1(6). This can be done if a grant of certiorari at first instance would avoid delay and cost and promote the public interest and the efficient allocation of limited public and private resources: Re Warden S Richardson; Ex parte Binthalya Holdings [2011] WASC 56 [38] and Cockburn Cement Ltd v Minister for Environment (WA) [2011] WASC 260 [33] ‑ [36]. In this case, it is sufficiently clear that there was a jurisdictional error in refusing this exemption application by addressing the wrong question and by failing to consider the statutory basis upon which the exemption had been recommended and was pursued by the applicant. Further hearing or argument of the matter would do no more than rehearse the examination which has already been fully conducted.

9. For these reasons an order for certiorari in the first instance was made.  As it was accepted that, in these circumstances, the Minister would in due course reconsider the application, there was no need for any remedy in the nature of mandamus and the claim for that was not pursued.