MINING PROJECTS MANAGEMENT GROUP PTY LTD -v- AU KT PTY LTD [2026] WASC 288

[2026] WASC 288 Page 1 JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA IN CIVIL CITATION : MINING PROJECTS MANAGEMENT GROUP PTY LTD -v- AU KT PTY LTD [2026] WASC 288 CORAM : COBBY J HEARD : 3 JULY 2026 DELIVERED : 20 JULY 2026 FILE NO/S : CIV 1787 of 2025 BETWEEN : MINING PROJECTS MANAGEMENT GROUP PTY LTD Plaintiff AND AU KT PTY LTD Defendant Catchwords: Contract - Interpretation - Farm-in and Joint Venture Agreement - Obligation to comply with statutory expenditure conditions in respect of mining tenements - Failure to pay prescribed expenditure during prescribed period - Effect of failure to comply with default notice Legislation: Mining Act 1978 (WA) s 8, s 62, s 63A, s 71, s 80, s 82, s 96, s 96A, s 97, s 98, s 99, s 102, s 102B, s 103, s 162B Mining Regulations 1981 (WA) reg 15, reg 21, reg 31, reg 54 -- 1 of 19 -- [2026] WASC 288 Page 2 Result: Declaration made Order for transfer of interests in mining tenements made Category: B Representation: Counsel: Plaintiff : B J Tomasi Defendant : D R Chandler Solicitors: Plaintiff : Pragma Lawyers Defendant : Lawton Macmaster Legal Case(s) referred to in decision(s): Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 Cougar Metals NL v Richore Pty Ltd [2024] WASCA 36 Electricity Generation and Retail Corporation (t/a Synergy) v Eit Kwinana Partner Pty Ltd [2022] WASCA 3 Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 JPA Finance Pty Ltd v Gordon Nominees Pty Ltd [2019] VSCA 159; (2019) 58 VR 393 Maggbury Pty Ltd v Hafele Aust Pty Ltd [2001] HCA 70; (2001) 210 CLR 181 Rose v Goldtime Australia Pty Ltd [2004] WAMW 8 Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80; (2019) 55 WAR 89 Turnbull v Australian Metallic Resources NL [2000] WAMW 2; (2000) 30 SR (WA) 1 -- 2 of 19 -- [2026] WASC 288 COBBY J Page 3 COBBY J: 1 The plaintiff and defendant are parties to a farm-in and joint venture agreement made 23 April 2019, by which the plaintiff granted the defendant the right to earn an interest in a number of mining tenements held by the plaintiff upon the terms and conditions contained therein. 2 The mining tenements the subject of the agreement comprised a combination of 42 prospecting licences, 17 exploration licences and three mining leases (the Tenements)1 issued under the Mining Act 1978 (WA) (the Act). 3 It was common ground at trial that the defendant now held a 75% interest in the Tenements, having acquired a 49% interest in consideration of having incurred $1.75 million in costs and expenses in connection with the exploration, development and mining of the Tenements. The defendant acquired the further 26% interest by exercising an option to purchase that interest for an additional $1 million. 4 It was further agreed that the parties are associated in an unincorporated joint venture to explore, develop and mine for minerals on the Tenements, and that the defendant was and is relevantly obliged to fund all joint venture expenditure until one of certain specified milestones is achieved, defined in the agreement as the Sole Funding Period. 5 Clause 1.1 of the agreement relevantly provides: Expenditure means all costs and expenses incurred in connection with the Exploration, development and mining of the Tenements for minerals accounted for in accordance with accounting principles generally accepted in the Australian mining industry including Outgoings. … Exploration means searching for, discovery and delineation of commercial deposits of minerals on the Tenements and the evaluation of such deposits, including prospecting, surface mapping, sampling, aerial mapping and reconnaissance, drilling, trenching and related field 1 An application for a prospecting licence and an application for an exploration licence were also identified in the agreement, but are not relevant for present purposes. -- 3 of 19 -- [2026] WASC 288 COBBY J Page 4 work, geophysical and geochemical testing, core sampling, assaying, exploration declines, test mining, analysis and evaluation of activities undertaken and results obtained, conducting preliminary feasibility studies, preparing feasibility study reports, and planning, supervising and administrating all activities undertaken. … Joint Venture means the unincorporated joint venture established by this agreement for the purpose of exploring, and if warranted, developing and mining the Tenements. Joint Venture Property means all rights, titles, interest, claims, benefits and all other property of whatever kind, real or personal, from time to time owned by the Joint Venture for the purposes of the Joint Venture, and includes the Tenements and the Mining Information. Mining Act means the Mining Act 1978 (WA). 6 The parties entered into the Joint Venture pursuant to cl 6.1 upon the defendant giving notice to the plaintiff that the defendant had elected to continue to sole fund Expenditure. Clause 6.2(a) provides, consistently with the definition of 'Joint Venture', that the parties are associated in an unincorporated joint venture 'to explore for minerals in respect of the Tenements'. 7 Clause 6.5(a) provides that the parties are to form a management committee to approve all programs and budgets for the Joint Venture, comprising two nominees from each party. One of the defendant's nominees is to be the chair of the committee, with a casting vote in the event of a deadlock. 8 Clause 7.1 provides that the defendant is to fund all expenditure by the Joint Venture during the Sole Funding Period. 9 Clause 7.3 provides: Activity during the Sole Funding Period (a) During the Sole Funding Period, [the defendant]: (i) must comply with the terms of the Mining Act, each condition on which each Tenement is granted, and with all other laws and guidelines affecting the Tenements; -- 4 of 19 -- [2026] WASC 288 COBBY J Page 5 (ii) must meet all statutory expenditure conditions on each Tenement; (iii) may only seek application for exemption from statutory expenditure conditions with the consent of [the plaintiff], not to be unreasonably withheld or delayed; and (iv) must not do or omit to do anything which may put any Tenement at the risk of forfeiture or loss. (b) If [the defendant] is in default of any obligation under clause 7.3(a), and the default remains unrectified 60 days after [the plaintiff] gives notice to [the defendant] demanding rectification of such default, [the defendant] will be deemed to have withdrawn from this agreement in accordance with the terms of clause 10 (Withdrawal). 10 It is common ground that the Sole Funding Period has not come to an end. 11 Clause 10.2(a) provides that upon a withdrawal or deemed withdrawal from the agreement, the withdrawing joint venturer 'absolutely forfeits and must assign to' the other joint venturer all of its interest in the Joint Venture Property. 12 It is agreed that the defendant did not comply with the prescribed expenditure conditions in respect of six exploration licences during 2024 and that the plaintiff issued a default notice in respect of the defendant's failure to do so on 24 February 2025. 13 The default notice required the defendant to lodge applications for exemption for expenditure in respect of four of the six exploration licences within 21 days, applications for exemption having already been lodged by the defendant in respect of the other two licences. 14 The defendant subsequently applied for extensions of time in which to apply for exemptions from the minimum expenditure conditions in respect of the four licences, but each of those applications was dismissed by a mining warden prior to the trial of these proceedings. 15 All six exploration licences are the subject of applications for forfeiture filed by a third party, which are yet to be determined. -- 5 of 19 -- [2026] WASC 288 COBBY J Page 6 16 The same third party has lodged objections to the remaining two applications for exemption from the minimum expenditure conditions. Each of those applications is also yet to be determined. 17 In those circumstances, the plaintiff contends that the defendant has not rectified the defaults identified in the default notice, and that the defendant is therefore deemed to have withdrawn from the Joint Venture and is obliged to transfer its 75% interest in the Joint Venture Property, including the Tenements, to the plaintiff in accordance with cl 10 of the agreement. 18 The defendant submits that, on the proper construction of the agreement, there has not yet been a default and that the issue of the default notice by the plaintiff was therefore premature. It contends that the defendant will not have breached its obligations under each of cll 7.3(a)(i), (ii) or (iv) unless and until a mining warden recommends to the Minister that a Tenement should be forfeited. 19 That submission is founded upon two propositions, the first being that it is open to a mining warden hearing any application for forfeiture of an exploration licence to conclude that the failure to comply with the expenditure condition is not of sufficient gravity as to justify forfeiture. 20 The second is that, as it is open to a mining warden to impose a fine rather than order the forfeiture of an exploration licence, where a fine is imposed the defendant will have complied with the statutory expenditure conditions upon payment of that fine. That is so, the defendant submits, notwithstanding that in those circumstances the defendant will only have paid the fine imposed and not have spent the prescribed amount 'in mining on or in connection with mining on the licence' during the prescribed period as required by reg 21(1) of the Mining Regulations 1981 (WA) (the Regulations), because the phrase 'statutory expenditure conditions' used in cl 7.3(a)(ii) does not bear the same meaning as the term 'expenditure conditions' defined by s 8 of the Act. 21 The defendant further submits that the plaintiff's proposed construction of the agreement is 'unreasonable and uncommercial', because a relatively minor failure on the part of the defendant to expend the prescribed amount in respect of a single Tenement would, if that failure could not be remedied within 60 days of the receipt of a notice of default, result in the defendant being obliged to transfer its interest in all of the Tenements to the plaintiff. The defendant points to the fact -- 6 of 19 -- [2026] WASC 288 COBBY J Page 7 that it has paid at least $2.75 million to acquire its 75% interest in the Tenements in this regard. 22 It can be accepted that is a harsh result. Nonetheless, in broad terms I accept the plaintiff's construction of the agreement for the reasons which follow. 23 The principles applicable to the construction of written contracts were summarised by the Court of Appeal in Sino Iron Pty Ltd v Mineralogy Pty Ltd2 and Electricity Generation and Retail Corporation (t/a Synergy) v EIT Kwinana Partner Pty Ltd.3 24 In short, the construction of a written contract involves the determination of the objective meaning of the words of the contract by reference to its text, context and purpose, with consideration being given to the language used in the contract, the circumstances addressed by the contract, and the commercial purpose or objects to be secured by the contract. 25 Further, unless a contrary intention is indicated in the contract, a court is entitled to approach the task of construction on the assumption that the parties intended to produce a commercial result, in the sense that a commercial contract should be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience'.4 26 However, if the court comes to the conclusion, after considering the terms of the contract in the circumstances known to the parties, that the language of the contract is unambiguous, the court must give effect to the terms used unless the contract would have an absurd operation, as opposed to an operation which might be thought commercially unwise when considered from the viewpoint of one contracting party. 27 In the present case, it is clear from the definition of the term 'Mining Act' in cl 1.1 and the use of that term, together with the reference to 'all other laws and guidelines affecting the Tenements', in cl 7.3(a)(i) that the context in which the agreement was made included the provisions of the Act and the Regulations. 2 Sino Iron Pty Ltd v Mineralogy Pty Ltd [2019] WASCA 80; (2019) 55 WAR 89 [295] - [298]. 3 Electricity Generation and Retail Corporation (t/a Synergy) v Eit Kwinana Partner Pty Ltd [2022] WASCA 3 [230]. 4 Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 [35]. -- 7 of 19 -- [2026] WASC 288 COBBY J Page 8 28 The parties are therefore to be taken to have known the provisions of the Act and the Regulations as at the time the agreement was made, notwithstanding they were matters of law.5 29 Section 8 of the Act defines the term 'expenditure conditions' as follows: [I]n relation to a mining tenement means the prescribed conditions applicable to a mining tenement that require the expenditure of money on or in connection with the mining tenement or the mining operations carried out thereon or proposed to be so carried out. 30 The Act imposes an obligation to comply with the prescribed expenditure conditions in respect of each prospecting licence,6 exploration licence7 and mining lease.8 31 The Regulations specify the minimum amount to be expended or cause to be expended by the tenement holder on mining or in connection with mining during each year of a licence or lease.9 The Regulations further provide that expenditure incurred during the month in which the anniversary of the commencement of the term of the licence or lease occurs may be treated by the tenement holder as having been incurred in the year preceding that date, or the year thereafter.10 32 A failure to comply with the prescribed expenditure conditions may lead to the forfeiture of a mining tenement.11 Section 96(2)(b) of the Act provides, in effect, that a mining warden may order the forfeiture of any prospecting licence upon the application of the Minister, any mining registrar, any authorised person or any other person where there has been a failure to comply with the prescribed expenditure conditions and the warden is satisfied both that there has been a failure to comply with those conditions in a material respect and the matter is of sufficient gravity to justify forfeiture of the tenement. 33 Where the tenement holder fails to comply with the prescribed expenditure conditions in relation to an exploration licence, s 96A(1) empowers the Minister to cause the licence to be forfeited by declaring 5 Maggbury Pty Ltd v Hafele Aust Pty Ltd [2001] HCA 70; (2001) 210 CLR 181 [11]. 6 s 50(1). 7 s 62(1). 8 s 82(1)(c). 9 See reg 15 (prospecting licences), reg 21 (exploration licences), reg 31 (mining leases). 10 See reg 15(1a), reg 21(1aa) and reg 31(1a) respectively. 11 See s 96(2)(b) (prospecting licences), s 63A(b)(i) (exploration licences) and s 97(1) (mining leases). -- 8 of 19 -- [2026] WASC 288 COBBY J Page 9 that to be the case by notice published in the Government Gazette. Section 97(1) confers a similar power in relation to mining leases. 34 In relation to exploration licences and mining leases, s 98 of the Act further provides: 98. Application for forfeiture on other grounds (1) Where the requirements of this Act are not being complied with in respect of the expenditure conditions applicable to an exploration licence or a mining lease, any person may apply for the forfeiture of such licence or lease as provided in this section. (2) An application for forfeiture under this section shall be made, during the expenditure year in relation to which the requirement is not complied with or within 8 months thereafter, in such form and manner as may be prescribed and shall be accompanied by the prescribed fee. (3) The application for forfeiture shall be heard by the warden. (4A) When the warden finds that the holder of an exploration licence or lessee of the mining lease has failed to comply with such requirements as are mentioned in subsection (1), the warden may recommend the forfeiture of such licence or lease, or impose a penalty not exceeding $10 000 as an alternative to the forfeiture or dismiss the application. (4B) Where a penalty is imposed under this section the warden may award the whole amount of the penalty or any part thereof to the applicant. (5) A recommendation shall not be made under subsection (4A) unless the warden is satisfied that the non-compliance with such requirements is, in the circumstances of the case, of sufficient gravity to justify the forfeiture. (6) As soon as practicable after the hearing of the application the warden shall forward to the Minister the notes of evidence, with a report and the warden's recommendation, if any, on the application and the Minister may, before acting on the recommendation, require the warden to take such further evidence or rehear the application as the Minister directs. -- 9 of 19 -- [2026] WASC 288 COBBY J Page 10 (7) No exploration licence or mining lease shall be forfeited for non-compliance by the holder or lessee thereof with the expenditure conditions, if the holder or lessee satisfies the Minister that the non-compliance therewith has been occasioned by a strike. (8) If the applicant fails to proceed with his forfeiture application, the warden may award the holder or lessee such sum for costs and expenses as he thinks fit. (9) Where any penalty imposed by a warden as an alternative to forfeiture under subsection (4A) is not paid within the time specified by the warden, or within 30 days after the penalty is imposed where no other time is specified, the warden shall make a recommendation to the Minister as to whether or not the licence or lease should be forfeited. 35 Accordingly, while it is the mining warden who determines whether a prospecting licence is to be forfeited for failure to comply with the prescribed expenditure conditions where an application has been made pursuant to s 96(1), where an application has been made pursuant to s 98(1) in relation to exploration licences and mining leases the warden makes a recommendation to the Minister. Section 99 provides that, after receiving the warden's recommendation, the Minister may declare the exploration licence or mining lease forfeit, impose a penalty not exceeding $10,000 or determine not to forfeit the licence or lease. 36 Section 102 of the Act provides that a tenement holder may obtain a total or partial exemption from the obligation to comply with the prescribed expenditure conditions in respect of that tenement. An application for exemption may be made during the year in which the prescribed expenditure is to be incurred,12 or within 60 days after the expiration of that year.13 37 Clause 7.3 of the agreement is to be construed in that statutory context. In doing so, it is readily apparent the obligations imposed on the defendant by cll 7.3(a)(i), (ii) and (iv) involve a degree of overlap. 38 As the Act imposes an obligation upon the tenement holder to expend a prescribed minimum amount in respect of each mining tenement held by that person, it might be said that cl 7.3(a)(i) imposes 12 s 102(1). 13 s 102(1), read with reg 54(1a). -- 10 of 19 -- [2026] WASC 288 COBBY J Page 11 the same obligation to spend or incur the prescribed minimum expenditure in respect of each Tenement as cl 7.3(a)(ii). 39 Similarly, the obligation to not omit to do anything which might put a Tenement at the risk of forfeiture or loss in cl 7.3(a)(iv) could also be said to require the defendant to comply with the prescribed expenditure conditions in respect of each Tenement, since a tenement will be exposed to a risk of forfeiture if those conditions are not met. 40 There is, however, a distinction to be drawn between the obligations to comply with the provisions of the Act imposed by cl 7.3(a)(i) and cl 7.3(a)(iv) and that imposed by cl 7.3(a)(ii). 41 Were it not for cll 7.3(a)(ii) and (iii), it might be argued that the defendant will have met its obligations under the Act and Regulations in respect of any particular Tenement where it has obtained an exemption from the statutory expenditure condition in relation to that Tenement. 42 Clauses 7.3(a)(ii) and (iii), considered in the context of clauses 1.1, 6.1 and 6.2, operate to make clear that the defendant's obligation, independent of the general obligation to comply with the Act imposed by cl 7.3(a)(i), is to expend at least the prescribed minimum amount on exploration, mining and development of each of the Tenements in each year, except where the plaintiff agrees that an exemption can be sought. 43 That construction is supported by the context in which the agreement was made. At that time, the plaintiff held the entire interest in all but two of the Tenements.14 Although the agreement contemplated that the defendant would acquire an interest in the Tenements in return for solely funding the costs of exploring for minerals upon them and that the parties might enter into a joint venture agreement to continue to do so at the defendant's election, it also provided that the plaintiff would retain at least a 25% interest in the Tenements during the Sole Funding Period. 44 The plaintiff therefore had a clear commercial interest in ensuring that the defendant carry out exploration works on the Tenements, so that the potential value of the plaintiff's interest in them might be ascertained. 14 It did not hold the entire interest in two of the mining leases. -- 11 of 19 -- [2026] WASC 288 COBBY J Page 12 45 That interest was further advanced by cl 7.3(a)(iii), which restricted the defendant's ability to obtain exemptions from incurring the expenditure necessary to do so. 46 The effect of cl 6.5(a) of the agreement was that, once the parties entered into the Joint Venture, the defendant would have effective control of the management committee of the Joint Venture and thereby control the extent and cost of the exploration works to be carried out in respect of any particular Tenement. 47 Considered in that context, cll 7.3(a)(ii) and (iii) operated to compel the defendant to expend at least the prescribed minimum on the exploration works contemplated by the agreement in respect of each Tenement, unless the plaintiff agreed otherwise. 48 The construction of the phrase 'statutory expenditure conditions' in cl 7.3(a)(ii) advanced by the defendant, to the effect that the phrase extends to include a penalty imposed by a mining warden on the hearing of an application for forfeiture, must therefore be rejected as being inconsistent with the text of cl 7.3(a)(ii), considered in context. 49 Further, although that phrase is not defined in the agreement, the references to the Act and 'other written laws' in cl 7.3(a)(i) demonstrate that the parties intended that the defendant would comply with the expenditure conditions set out in the Act and Regulations. 50 A reasonable business person would not understand those conditions to include a penalty for failure to comply with the expenditure conditions in respect of a particular Tenement, because that construction is not reasonably open. A clear distinction is drawn in s 98 between 'the expenditure conditions applicable to an exploration licence or a mining lease' identified in s 98(1), which are to be understood by reference to the definition of 'expenditure conditions' in s 8 of the Act, and any penalty which a mining warden may impose pursuant to s 98(4A) in the exercise of discretion. 51 The mining warden may only impose a penalty under s 98(4A) once a finding has been made that the tenement holder has failed to comply with the prescribed expenditure conditions. 52 Any penalty the mining warden might impose is therefore both logically distinct from the prescribed expenditure conditions identified in s 98(1) and in any event outside the scope of the statutory definition of those conditions, the payment of a penalty pursuant to s 98(4A) not -- 12 of 19 -- [2026] WASC 288 COBBY J Page 13 involving 'the expenditure of money on or in connection with the mining tenement or the mining operations carried out thereon'. 53 A further difficulty with the construction advanced by the defendant is that it does not address the risk of forfeiture which arises upon a failure to comply with the prescribed expenditure conditions in respect of prospecting licences, where it is the mining warden who determines whether the tenement is to be forfeited, nor the risks that the Minister may declare exploration licences and mining leases forfeit pursuant to s 96A(1) and s 97(1) without a hearing before the warden. 54 I accordingly find that the defendant breached the obligation imposed by cl 7.3(a)(ii) when it failed to expend the prescribed minimum expenditure in respect of each of the six exploration licences identified by the plaintiff by the end of the month in which the anniversary of the grant of that licence occurred. 55 As each of those dates occurred before the issue of the default notice, I reject the defendant's submission that the issue of the default notice was premature. 56 Turning to the question whether the defaults specified in the notice have been rectified, in its written submissions the plaintiff adopted the position that a breach of cl 7.3(a)(ii) was not capable of rectification, because (in effect) the prescribed amount was required to have been expended prior to the expiration of the prescribed period. 57 In oral argument, however, counsel for the plaintiff appeared to accept that it might be possible to rectify a breach of cl 7.3(a)(ii) by obtaining an exemption from the prescribed expenditure obligation within 60 days of the issue of the default notice. 58 The text of cl 7.3(b) contemplates that the clause is to operate where the defendant is in default of 'any' obligation under cl 7.3(a), which includes the obligation imposed by cl 7.3(a)(ii). 59 There are two components of that obligation. The first is that the defendant expend the prescribed amount in respect of any particular Tenement. The second is that the defendant do so within the prescribed period. 60 As the plaintiff has an interest in the defendant carrying out the exploration works contemplated by the agreement, a failure by the defendant to comply with the prescribed minimum expenditure -- 13 of 19 -- [2026] WASC 288 COBBY J Page 14 conditions might be said to have been rectified if the defendant expended that amount within the 60 days contemplated by cl 7.3(b). Rectification of the default within that period would advance the plaintiff's underlying commercial interest in performance of the obligation, particularly where no application for forfeiture of the relevant Tenement was made. 61 Although incurring the expenditure necessary to comply with the expenditure conditions applicable to a Tenement within 60 days of the issue of a default notice would not rectify a breach of cl 7.3(a)(iv) arising from the failure to do so within the prescribed time, it addresses one of the commercial objectives underlying cl 7.3(a)(ii), namely that the defendant carry out exploration works on the Tenement. 62 Further, events occurring after the end of the prescribed period but prior to the determination of an application for forfeiture are relevant to the exercise of the warden's discretion to recommend forfeiture: see Turnbull v Australian Metallic Resources NL15 and Rose v Goldtime Australia Pty Ltd.16 Although incurring the expenditure after the prescribed date would not prevent the making of an application for forfeiture of the Tenement by a third party, the fact that had been done might, consistent with the obligation imposed by cl 7.3(a)(iv), influence the exercise of the warden's discretion whether to recommend forfeiture of the licence. 63 Rectification of a failure to expend the prescribed minimum before the required date can therefore not be said to lack utility. 64 As for the requirement that the expenditure occur within the prescribed period, s 162B(1) provides that the Minister or a warden may extend the period or the time for doing a thing where the Act provides for something to be done within a prescribed period or a prescribed time. That power may be exercised after that period has ended or the time passed.17 65 An application could possibly be made to extend the prescribed period in which the expenditure conditions in relation to a particular Tenement were to be satisfied, unusual as that course might be, following the issue of a default notice in respect of a breach of the obligation in cl 7.3(a)(ii). 15 Turnbull v Australian Metallic Resources NL [2000] WAMW 2; (2000) 30 SR (WA) 1 [26]. 16 Rose v Goldtime Australia Pty Ltd [2004] WAMW 8 [43]. 17 s 162B(2). -- 14 of 19 -- [2026] WASC 288 COBBY J Page 15 66 It is unnecessary to consider the point further, as it was not suggested that such an application has been made, and the time for doing so specified in cl 7.3(b) has now passed. 67 In any event, a breach of the obligation imposed by cl 7.3(a)(ii) might be 'rectified' by the obtaining of an exemption from the prescribed expenditure conditions in respect of a Tenement after the expiration of the prescribed period. 68 The Macquarie Dictionary defines the ordinary meaning of 'rectify' to be 'to make, put, or set right; remedy; correct'. 69 Section 102 provides, in effect, that a tenement holder may obtain a total or partial exemption from the prescribed expenditure conditions in respect of a particular tenement. An application for exemption may be filed within the prescribed period, or within 60 days thereafter.18 70 Section 103 provides: Effect of exemption Upon the granting of a certificate of exemption pursuant to section 102 or section 102A the holder of a mining tenement to whom it is granted shall be deemed to be relieved, to the extent, and subject to the conditions specified in the certificate, from his obligations under the prescribed expenditure conditions relating to the mining tenement. 71 In Cougar Metals NL v Richore Pty Ltd19 the Court of Appeal explained the operation of s 103 in the context of an option agreement concerning a mining lease as follows: In this regard, the inclusion of the qualification (the words after 'unless') in s 82(1)(c) itself is best understood as contemplating the grant of a prospective exemption. The qualification is on the verb 'shall comply' (ie future tense) such that, in a case of an exemption granted prior to or during the relevant year, the holder is relieved of the obligation 'to comply' to the extent of the exemption. Conversely, absent a prospective exemption, the obligation 'to comply' continues unaffected during the year, and consequently, a failure 'to comply' by the end of that year (including the period allowed by reg 31(1a)) will be a breach of the condition. In the case of an exemption granted after the relevant expenditure year, it strains the language of s 82(1)(c) to speak of an exemption affecting an obligation that the lessee 'shall comply … with' in circumstances in 18 reg 54(1a). 19 Cougar Metals NL v Richore Pty Ltd [2024] WASCA 36 (Cougar). -- 15 of 19 -- [2026] WASC 288 COBBY J Page 16 which the time for performance of that obligation has already passed. At that point there is nothing left 'to comply with' in relation to the year that has passed. In the case of a retrospective exemption, one would expect clear statutory language attaching new legal consequences in relation to the facts or events that have already occurred. Of course, that is precisely what one finds in s 103 of the Mining Act, which provides that the tenement holder who is granted an exemption 'shall be deemed' to be relieved from the obligations under the prescribed expenditure conditions. Again, pursuant to s 103 it is not the 'prescribed expenditure conditions' that are affected by the exemption but the tenement holder's 'obligations' under them. More importantly the use of the word 'deemed' makes clear that the section is attaching new and different legal consequences to events that have already occurred. 'Deeming' provisions are often described, in this way, as creating a 'statutory fiction'. In other words, the effect of s 103 is to provide that, whereas prior to the grant of an exemption a tenement holder may have been subject to, and indeed in breach of, their obligations with respect to prescribed expenditure conditions, the tenement holder is now (upon the grant of the exemption) 'deemed to be relieved' of them. Nevertheless, in such a case, prior to the grant of such an exemption, the tenement holder who has not complied with the prescribed expenditure conditions will, as a matter of law, have been in breach of their obligation under s 82(1)(c). … In a case in which the tenement holder is granted a prospective exemption, such that the tenement holder is relieved of the obligation to comply with the 'prescribed expenditure conditions', there would, in our view, relevantly be no 'commitment' within the meaning of cl 6(a)(ii) of the Option Agreement. In the same way a partial exemption granted prospectively of, for example 50% of the 'prescribed expenditure conditions' would correspondingly reduce the size of the 'commitment' for the given year. In such a case, namely where the tenement holder is relieved of the commitment (or the commitment is otherwise reduced), Cougar would not be in breach of cl 6(a)(ii) for not expending what would have been the prescribed expenditure in the absence of an exemption. This construction is, again, confirmed by the fact that the payment obligation in cl 6(a)(ii) is a subset of the obligation to maintain the Tenement 'in good standing'. In such a case, there would be no point in time at which the Tenement would be liable to forfeiture under s 98 of the Mining Act, for failure to comply with expenditure conditions. There would never be a point in time at which the Tenement was not 'in good standing'. We therefore reject the respondents' contention that, even where an exemption is obtained prior to the end of the relevant year, such that -- 16 of 19 -- [2026] WASC 288 COBBY J Page 17 there is no breach of the condition in s 82(1)(c) of the Mining Act, Cougar would still be obliged, under the Option Agreement to expend the prescribed amount. A reasonable businessperson, aware of the legislative context, would understand Cougar's contractual obligations in respect of the 'statutory minimum annual commitments' to reflect Pyke Hill's actual obligations 'during' the relevant year. The position is, however, different in the case of a retrospective exemption, namely an exemption granted after the relevant year (as occurred in this case). In such a case, as a matter of the proper construction of the Option Agreement, at all times during the relevant year, there was a 'commitment' to expend the prescribed amount, which, if not expended during the tenement year (including the period allowed by reg 31(1a)), rendered the tenement holder, at the end of that period, in breach of the condition imposed by s 82(1)(c) of the Mining Act.20 72 Consistent with the Court of Appeal's reasoning, in the present case the defendant would still have failed to fulfil the obligation to meet the prescribed expenditure conditions in breach of cl 7.3(a)(ii) in respect of a Tenement if it obtained a retrospective exemption from those conditions. 73 However, in the present case the parties, recognising in cl 7.3(a)(iii) the possibility that an exemption from the prescribed expenditure conditions might be obtained, contemplated in cl 7.3(b) that a 'default in any obligation under' cl 7.3(a) might be rectified. In that context, the parties are to be understood as having agreed that the obtaining of an exemption from the prescribed expenditure conditions in respect of a particular Tenement would constitute 'rectification' of a breach of the obligation imposed by cl 7.3(a)(ii), provided that the exemption was obtained within 60 days of the giving of the required default notice. 74 The tenement register searches in respect of the six Tenements identified by the plaintiff show the defendant to have claimed to have incurred expenditure in excess of the total required for the 2024 and 2025 years in respect of two Tenements, but not the balance. 75 It is also common ground that the defendant has not obtained exemptions from the prescribed expenditure conditions in respect of all six Tenements, and its applications for an extension of time in which to apply for an exemption have been dismissed in relation to four of them. 20 Cougar [100] - [102], [104] - [107]. -- 17 of 19 -- [2026] WASC 288 COBBY J Page 18 76 I therefore find that the defendant has not rectified the breaches of the obligation imposed by cl 7.3(a)(ii) within 60 days of the issue of the default notice by the plaintiff pursuant to cl 7.3(b) in respect of, at the least, the four exploration licences in respect of which no exemption application exists. 77 Pursuant to cl 7.3(b), the agreed consequence of the defendant's failure to do so is that the defendant is deemed to have withdrawn from the agreement. 78 The defendant is accordingly obliged to transfer its interest in Joint Venture Property, including its interest in the Tenements, to the plaintiff in accordance with cl 10.2(a). 79 As noted above, that is a harsh outcome. The consequence of the defendant's failure to rectify its defaults within the time specified in cl 7.3(b) is that it has lost its entire interest in 62 mining tenements, and the whole of its investment. 80 However, that is what the parties agreed would occur. If the words used in their agreement are unambiguous, as in this case, it is beside the point that the outcome is harsh.21 81 In view of the conclusion I have reached in relation to the operation of cl 7.3(a)(ii) and cl 7.3(b), it is unnecessary to determine whether the defendant was also in default of its obligations under either cl 7.3(a)(i) or cl 7.3(a)(iv). 82 For the sake of completeness, the defendant did not seek to argue that cl 7.3(b) constituted a penalty or that equitable relief against forfeiture was available.22 It is accordingly unnecessary to consider either doctrine. 83 I therefore propose to make declarations to substantially the effect proposed by the plaintiff, and order that the defendant transfer its interests in the Joint Venture Property to the plaintiff. 84 I will hear counsel as to the precise terms of the orders to be made. My preliminary view is that the plaintiff, having been successful, 21 Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99, 109. 22 As to which see JPA Finance Pty Ltd v Gordon Nominees Pty Ltd [2019] VSCA 159; (2019) 58 VR 393 [76] - [113]. -- 18 of 19 -- [2026] WASC 288 COBBY J Page 19 should have the costs of the action, including any reserved costs, but I will hear from counsel as to costs. I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia. RH Associate to the Hon Justice Cobby 20 JULY 2026 -- 19 of 19 --