Hot Potash-o: Federal Court revests mining tenements in liquidator to enable sale
In Kalium Lakes Potash Pty Ltd (in liq) v Minister for Mines and Petroleum [2026] FCA 355, the Federal Court of Australia has revested tenements in a company in liquidation to facilitate their sale by the company’s liquidators, reversing the liquidator’s earlier disclaimer of the tenements as onerous property.
Background
Kalium Lakes Potash Pty Ltd (KLP) and Kalium Lakes Infrastructure Pty Ltd (KLI) (together, the Companies) conducted a potash mining project known as Beyondie SOP.
On 3 August 2023, administrators were appointed to KLP and KLI; receivers were appointed to the Companies’ assets and operations immediately after.
On 18 March 2024, the administrators were appointed as liquidators of the Companies.
Upon the retirement of the receivers in early October 2024, certain mining tenements came under the liquidators’ control.
Those tenements were the subject of mortgages to Westpac and caveats to various entities.
The liquidators disclaimed those tenements as onerous property later that month, pursuant to s 568 of the Corporations Act 2001 (Cth). The grounds for disclaimer were that ‘the tenements were unsaleable or not readily saleable, that they may give rise to a liability to pay money or some other onerous obligation, or that it was reasonable to expect that the costs in realising them would exceed any proceeds’.1
As luck would have it, approximately two weeks later, a prospective purchaser contacted the liquidators to enquire about purchasing some of the tenements.
Those negotiations eventually resulted in a conditional sale and purchase agreements to acquire the Companies’ tenements.
The liquidators applied to the Court for orders pursuant to s 568F of the Corporations Act to revest the tenements in the Companies, so they could be sold to the prospective purchaser.
In the meantime, proceedings to forfeit the tenements had been commenced before the Mining Warden. The liquidators sought the revesting of the tenements, so the sale to the potential purchaser could complete prior to the determination of any forfeiture proceedings. The sale agreements required the purchaser to make certain payments with the aim of reducing the risk the tenements would be forfeited.
Findings
The Court identified the following pre-requisites to a vesting order under s 568F:2
- there must be property that has been disclaimed;
- there must be an application by a person claiming an interest in the disclaimed property or who is under a liability in respect of the disclaimed property that has not been discharged by the Corporations Act;
- the Court must be satisfied it has heard from those persons it considers appropriate on the application.
The first element was clearly satisfied.
The Court was satisfied that the Companies had a sufficient interest in the disclaimed tenements by virtue of their interest in any sale proceeds if the sale agreements completed, and a sufficient liability by virtue of the forfeiture proceedings and arrears owed in respect of the tenements.
While finding it unnecessary to decide the point, the Court favoured the view that the liquidators separately had a sufficient interest in the tenements to bring the application, citing the liquidators’ control of any sale proceeds received and their equitable lien over the assets in respect of their fees.
The Court was also satisfied of the third element. The Minister for Mines was represented and all the caveators were served with the application (one of whom filed evidence, submissions and was represented at the hearing).
The Court accepted the Companies’ and Liquidators’ submissions that it was appropriate for the Court to revest the tenements and the Court should exercise its discretion to do so. The Court emphasised the potential prejudice to the Companies’ creditors, Westpac and the caveators if the tenements were not revested, rather than the prejudice to the purchaser by way of costs thrown away.
The Court’s orders expressly preserved the pre-disclaimer mortgages and caveats upon revesting the tenements.
Implications
This case illustrates the tools available to liquidators under the Corporations Act when prospective purchasers belatedly appear after the disclaiming of assets, including mining tenements.
It also highlights some of the risks faced by insolvency practitioners appointed over mining companies. Here, the liquidators’ ability to revest the tenements for sale was possible because the mortgagee had not enforced its security and the forfeiture proceedings were, it appears, instigated by the Department, not a third party. Had a third party applied to forfeit the tenements, the risk of forfeiture would have been significantly more difficult to mitigate by post-sale payments.
Those possibilities are an important reminder that insolvency practitioners appointed to mining companies should take legal advice early on the obligations imposed by the Mining Act 1978 (WA). Delayed action can risk the forfeiture of tenements and destruction of value otherwise available to creditors, which could result in proceedings against the liquidators.
Footnotes
- Kalium Lakes Potash Pty Ltd (in liq) v Minister for Mines and Petroleum [2026] FCA 355 at [8].
- Kalium Lakes Potash Pty Ltd (in liq) v Minister for Mines and Petroleum [2026] FCA 355 at [25] citing Moya Pty Ltd v State of New South Wales, in the matter of Vapula Pty Limited (in liq) [2022] FCA 1217 at [11].
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