I know what you did last summer: Supreme Court confirms conduct prior to grant can be considered in exemption applications

In Regis Resources Limited v Cleary in her capacity as Mining Warden [2024] WASC 427, the Supreme Court (Court) upheld the Warden’s finding that the conduct of a tenement-holder prior to the grant of a tenement can be considered when determining applications for exemption.

The Court, however, overturned the Warden’s finding that the Minister must be positively satisfied that an applicant is not circumventing the Mining Act 1978 (WA) (Act) before granting an exemption. The Court thus remitted the matter to the Warden for rehearing and determination.

This case involved 10 applications for exemption over various exploration and prospecting licences within a combined reporting group. It was agreed that the total expenditure over the combined reporting group, if apportioned, was sufficient to meet the total expenditure requirements for the group. This is a ground upon which an exemption to expenditure requirements may be granted under s 102(2)(h) of the Act.

Nonetheless, objections to the exemption applications were lodged, on the basis that the holder had engaged in “warehousing”, whereby the provisions of the Act were manipulated to retain control of the tenements without conducting exploration. The alleged warehousing involved the surrender of tenements shortly before their expiry, after which a friendly third party would apply for tenements over the same ground before the statutory prohibition against Regis Resources Limited (Regis) doing so expired. Regis would then apply and regain control of the tenements.

The Warden accepted the allegations of warehousing and recommended refusal of the exemptions.

Regis applied to the Supreme Court to review the Warden’s decision, arguing, among other things, that the Warden and Minister could not have regard to the allegations of warehousing, which relate to conduct prior to the grant of the relevant tenements. Regis sought a declaration to that effect.

The Court determined that the Warden and Minister should consider conduct relevant to an applicant’s “capacity or willingness to undertake expenditure and work on the tenement”. Nothing in the Act or its objects limited that assessment to post-grant conduct, and therefore pre-grant non-compliance or collusion to circumvent the Act was properly considered by the Warden.

The Court therefore refused the declaration sought.

The Court did, however, quash the Warden’s decision and remit the matter because the Warden had, incorrectly, found that “there must be a positive finding of the Minister that the applicant for an exemption is not circumventing the principles of the Act before the exemption can be granted.” There is no such requirement in the Act, and the Warden’s decision was therefore set aside.

HFW comment

This case closes a potential loophole that could have facilitated warehousing of tenements contrary to the objects of the Act. Significantly, the Warden can reject an exemption application on the basis of warehousing (or other conduct contrary to the Act), notwithstanding that the grounds for a combined expenditure exemption were otherwise met. This highlights the risks of under-expenditure and reliance on obtaining an exemption, even when grounds for an exemption are available.