Pass the [penalty] parcel: Current tenement holders held liable for past holders’ non-compliance

In a number of recent cases, the Perth Mining Wardens have found current tenement holders liable for the non-compliance of their unrelated predecessors, while foreshadowing increased penalties in forfeiture cases.

In Department of Energy, Mines, Industry Regulation and Safety v Phillip Andrew Dignam [2024] WAMW 43, Warden Maughan considered an application for forfeiture where the Form 5 was filed four days late. Approximately one month after that late filing, the tenement was sold. His Honour found that the current tenement holder was liable for the previous holder’s non-compliance with the tenement conditions. Here, the purchaser could have identified the non-compliance by searching the register and not proceeding with the purchase or sought an extension of time for the late filing, but did neither. Noting the short delay, expenditure well in excess of the minimum amount and the tenement holder’s ignorance of the non-compliance (even though he should have known), his Honour imposed a fine of $300 in lieu of forfeiture. Importantly, his Honour stressed that this amount was less than would normally be imposed, and other industry participants should not assume a similar result in similar circumstances (where a large fine could be ordered or forfeiture recommended).

In Department of Energy, Mines, Industry Regulation and Safety v Bruce Jeffrey Bates [2024] WAMW 44 (Bates), Warden McPhee agreed that the current tenement-holder is liable for the previous holder’s non-compliance and must pay any fine imposed in relation to that non-compliance which, in this case, was the non-compliance in filing a Form 5 five days late. His Honour stated his view that, until recently, forfeiture applications brought by the Department have not been taken seriously, with insufficient fines sought and imposed, tenement-holders skipping the hearings, and the Department not engaging counsel.

His Honour expressed the view that tenement holders must satisfy the Warden not to forfeit a tenement, where there has been non-compliance, relying on Commercial Properties v Italo Nominees Pty Ltd (Unreported, WASCA, Library No 7427, 16 December 1988).

Warden McPhee reiterated that tenement purchasers must take steps, such as checking the register, enquiring with the Department or seeking warranties from the seller to protect themselves when purchasing tenements. In this case, Mr Bates had not done so. As a result, it was not possible for Mr Bates to avoid a fine. However, in light of Mr Bates’ otherwise impeccable conduct, a fine of $300 in lieu of forfeiture was imposed, which his Honour described as “significantly lighter than normal”.

In Department of Energy, Mines, Industry Regulation and Safety v Cue Consolidated Mining Pty Ltd [2024] WAMW 45 (Cue Consolidated), Warden Maughan ordered forfeiture instead be after rent for two prospecting licences was paid 48 and 49 days late.

Throughout proceedings, Cue Consolidated Mining (Respondent) offered various explanations for the late payment . The first explanation was that the tenement manager was interstate. A delay in project funding from overseas, combined with Form 5s lost beneath office filing and having an incorrect address registered with the Department, were then offered as reasons. By the time affidavit evidence was due, the Respondent’s director was solely blaming late payment on the incorrect address being registered with the Department. Counsel for the Respondent could provide no reasonable explanation for the earlier attribution of the blame to the non-receipt of international funding.

Warden Maughan took a similar view to Warden McPhee in Bates, suggesting s 96(3) contemplated an order for forfeiture unless the circumstances of the case dictated otherwise.

The registration of an incorrect address with the Department was found not to be a sufficient circumstance. The Warden also found that a party cannot rely on the Department to notify them of their obligations. Similarly, neither the intention to conduct future work, nor inclusion in a combined reporting group, were sufficient reasons to avoid forfeiture.

Warden Maughan recommended forfeiting the tenements, relying on what he considered to be unexplained and dishonest contradictions in explanations on the part of the Respondent, together with a history of non-compliance.

HFW comment

The Perth Mining Wardens have placed the industry on notice that Departmental forfeiture applications must be taken seriously, and that forfeiture will be considered. Gone are the days where such applications can be ignored on the assumption that only a fine will be imposed.

We do note that, despite the determinations in Bates and Cue Consolidated, the circumstances in which an onus falls on the tenement-holder to justify not forfeiting a tenement are limited to cases where there is no evidence of expenditure (i.e. complete non-compliance), as in Commercial Properties: Richore Pty Ltd v Cougar Metals NL (Subject to DOCA) [2023] WASC 2 [63]-[73]. In those circumstances, an evidentiary onus falls on the tenement-holder to support a finding that the non-compliance is of sufficient gravity to justify forfeiture. In cases where some expenditure has been proved, it falls on the party seeking forfeiture to prove the non-compliance was of sufficient gravity to justify forfeiture: Re Roberts SM; Ex parte Burge [2003] WASCA 2 at [28].

Following a consistent theme throughout recent decisions, at all levels, about the WA Mining Act, compliance (and therefore prevention) is key.