Arthur v Department of Natural Resources and Mines [2003] QLRT 94

LAND AND RESOURCES TRIBUNAL QUEENSLAND CITATION: Arthur v Department of Natural Resources and Mines [2003] QLRT 94 PARTIES: Edward William Arthur (Applicant) -and- Department of Natural Resources and Mines (Respondent) FILE NO/S: CAV00099/2003 PROCEEDING: Application to lodge second caveats DELIVERED ON: 24 September 2003 DELIVERED AT: Brisbane HEARING DATE: 22 and 24 September 2003 PRESIDING MEMBER: Smith DP ORDER/S: 1. Leave granted to the Applicant to lodge caveats in respect of the following tenements: mining leases ML5441, ML5442, ML5443, ML5457 and ML5459 in an interim capacity only expiring at 6:00pm on 29 September 2002. (at [14]) 2. The Applicant to serve a copy of these orders on the holder of mining leases ML5441, ML5442, ML5443, ML5457 and ML5459 by 4:00pm Thursday 25 September 2003. (at [14]) 3. Liberty granted to apply to each of the parties and to the tenement holder on the giving of three hours’ notice to each other and to the tribunal. (at [14]) 4. This matter set down for hearing at Brisbane at 10:00am on 29 September 2003 for further order regarding the time to the duration of the caveats. (at [14]) 5. The question of costs is reserved. (at [14]) CATCHWORDS: SECOND CAVEAT – MINING LEASE – TEST TO BE APPLIED – SERIOUS QUESTION TO BE TRIED – BALANCE OF CONVENIENCE – NOTIFICATION TO TENEMENT HOLDER – URGENCY – NATURAL JUSTICE -- 1 of 6 -- Mineral Resources Act 1989, s. 304, 305 Land and Resources Tribunal Act 1999, s. 49 Re Arkaroola Resources Pty Ltd v Niugini Mining (Australia) Pty Ltd (2001) QLRT 12, applied Re Burman’s Caveat (1994) 1 QdR 123, applied COUNSEL: N/A SOLICITOR/S: N/A AGENT/S: S. Baghdadi for the Applicant W. Frampton for the Respondent [1] SMITH DP (Ex Tempore): I have before me an application by Edward William Arthur (“the Applicant”) for orders seeking permission to lodge second caveats relating to unpaid royalties in respect to mining leases ML5441, ML5442, ML5443, ML5457 and ML5459. [2] The Applicant has been represented by an agent in this matter, Mr Baghdadi. The Respondent is the Department of Natural Resources and Mines, Queensland. Mr Frampton has appeared on behalf of the Respondent. [3] The facts of this matter are set out in supporting material filed by the Applicant and in a document titled “Background and Facts” provided by Mr Baghdadi as follows: “A. BACKGROUND AND FACTS The facts of this matter are as follows: 1. In 1967 Melvin and Lenore Morrison and Edward and Shirley Arthur (“Vendors”) discovered the Esperanza Leases (tenements) which form part of the Mt Gordon mineral deposits at the Mt Gordon mine in the Mt Isa district in Queensland. The Mt Gordon copper mine itself is made up of several groups of ore-bodies/tenements, namely the Esperanza, Esperanza South, the Mammoth, Mt Oxido, Moose Hill and Pluto. The Esperanza leases were pegged in 1968. 2. In December 1968 the Vendors sold the leases to VAM Limited (“the Purchaser”) pursuant to an agreement (“Royalty Agreement”) which granted an option to VAM Limited (or its nominee) to acquire the tenements. 3. VAM Limited has established copper producing facilities located at the Mammoth leases that now also form part of the Mt Gordon mine. 4. VAM Limited’s nominee, Surveys and Mining Limited, subsequently exercised the option, the subject of the Royalty Agreement and in consideration thereof granted the royalties to the Vendors. 5. In 1971, VAM Limited was placed in liquidation and Survey and Mining Limited assigned the tenements to Consolidated Gold Fields Australia Limited, Mitsubishi Metal Mining (Australia) Pty Ltd, Mitsubishi Development Pty Limited and Kinsho-Matachi (Australia) Pty Limited. Those companies agreed with the Vendors by a deed (“Joint Venture Deed”) dated 22 November 1971 to pay the royalties as per clauses 3 and 4 of the Joint Venture Deed. The royalty holders are only entitled to receive royalties from copper produced using the Esperanza and Esperanza South ore. -- 2 of 6 -- 6. The assignee companies referred to in paragraph 4 then assigned the tenements to Gunpowder Copper Limited. 7. In 1993 Ted Arthur entered into an agreement with Manumea Pty Ltd (a PNG company) associated with Stephen Baghdadi. Ted Arthur breached the agreement and was subsequently sued. Judgement was obtained against him (“the judgment”). 8. By way of settlement of the judgment the Arthurs offered Manumea or its nominee, Shirley Arthur’s holding in the Esperanza royalty which equated to 24% of the total outstanding royalty. This offer was accepted and documented in May 1996. The interest in the Esperanza royalty was assigned to Sageinvest. 9. In May 1996, Gunpowder Copper Limited assigned the tenements to Aberfoyle Limited, now known as Western Metals Copper Limited (“Western Metals”) and Western Metals undertook by an Undertaking dated 3 May 1996 to pay the royalties to the Vendors. 10. Western Metals successfully explored the Esperanza leases and confirmed the existence of a high grade commercial copper deposit. Western Metals has failed to pay any royalties to the Vendors. 11. In January 1998 Dennis and Co, acting for the Arthurs alleged that Manumea and its associate Sageinvest procured the assignment of Shirley Arthur’s royalty by duress and commenced litigation to recover royalty. 12. In February 2001 an out of court settlement was made between Sageinvest, the Arthurs and others in respect of the recovery action instigated by the Arthurs against Manumea and Sageinvest. The settlement terms consisted of: 12.1 Sageinvest agreed to retain only 14% of the royalty. 13. Sageinvest has entered into agreements with the Vendors that it conduct litigation against Western Metals on behalf of the Vendors. The current litigation relates to the non-payment of royalties by Western Metals and the interpretation of Clause 4 of the Joint Venture Deed. 14. The current royalty holding is as follows:- Name Original Holding Amount Transferred to Sageinvest Amount Transferred to Exoblend Current Holding Melvin Morrison 26.00% 6.50% 19.50% Lenore Morrison 25.00% 6.25% 18.75% Edward Arthur 25.00% 16.25% 8.75% Shirley Arthur 24.00% 14.00% 7.50% 2.50% Exoblend Pty Ltd 36.50% Sageinvest AG 14.00% Totals 100.00% 14.00% 36.50% 100.00% [4] The facts above are supported by the affidavits of the Applicant of 23 September 2003 and Katie McConville of 23 September 2003, and the statutory declaration of Ian Burnham Mitchell of 23 September 2002. [5] Mr Baghdadi has also provided a useful summary of his version of the dispute in this matter as follows: -- 3 of 6 -- “C. THE DISPUTE 16. A dispute has arisen between the royalty holders and Western Metals on the interpretation of clause 4 of the Joint Venture Deed and its effect on the calculation of royalty payments. Clauses 3 and 4 read as follows:- 16.1 “3 For further and better assurance it is hereby declared and confirmed that, pursuant to the said agreement, upon completion of the purchase of the tenements by the joint venturers, the vendor shall be entitled to receive from the joint venturers and the joint venturers shall be obliged to pay to the vendor from time to time royalty payments equivalent in value to five (5%) per centum of the net profits (as hereinafter defined)”. 16.2 “4. Net profits as used in this deed shall mean that amount in dollars as represents the taxable income of the joint venturers (prior to the deduction of income tax) attributable to the exploration, development, production, treatment, manufacture, fabrication, marketing and sale by the joint venturers of any minerals, metals or other materials from the tenements as the same may be calculated in accordance with the Income Tax Assessment Act, 1936 (as amended).” 17. There are two conflicting methods used to interpret clauses 3 and 4 of the Joint Venture Deed which are:- 17.1 All expenditure incurred by the company and attributable to the Esperanza leases, during the time of conducting the above stated heads of activity, whether listed in the deed (heads of activity) or not should be taken into consideration when calculating the attributable costs determine the royalty payable; and 17.2 Only expenditure incurred by the company and attributable to the Esperanza leases, that would be described in the company’s accounts for the calculation of taxable income as, any of the heads of activity listed in the deed, should be taken into consideration when calculating the attributable costs to determine the royalty payable. 18. The royalty holders believe that until such time as an arbitrator, court or mediator has determined the quantum of royalties due to the royalty holders and that until such time as those royalties are paid, the royalty holders have an in interest in respect of the said Mining Leases pursuant to section 301 of the Act. The interest is derived from Clauses 3 and 4 of the 1971 deed. 19. The royalty holders submit that subject to clause 7 of the 1971 deed the title holders cannot without the prior written consent of the royalty holders transfer title in the tenements.” [6] With respect to applications for caveats there is clear authority that the proper way to proceed is analogous to that of an application for an interlocutory injunction. This is the test that was applied by Deputy President Kingham of this Tribunal in Re Arkaroola Resources Pty Ltd v Niugini Mining (Australia) Pty Ltd.1 I also note and follow the decision of the Court of Appeal in Queensland in Re Burman’s Caveat.2 [7] This application is brought under s. 304 of the Mineral Resources Act 1989 (“the MRA”). The application has been necessitated due to the fact that the Applicant has previously had a caveat with respect to this matter accepted by the Mining Registrar and the tenement holder has not consented to a further caveat. 1 (2001) QLRT 12 at paragraph 4. 2 (1994) 1 QdR 123. -- 4 of 6 -- [8] I also note that although there is some doubt regarding the circumstances surrounding the first caveat, the Applicant has confirmed his signature on the application for the first caveat which appears to have been properly duly registered by the Mining Registrar. [9] The tests that I must apply are whether there is a serious question to be tried and whether the balance of convenience favours the caveat remaining whilst that question is determined. As the summary of facts above indicate, and as confirmed by a close reading of all of the material contained in the affidavit evidence before me, there is certainly evidence before me which demonstrates a serious question to be tried. [10] However, there is one important factor in this matter which is also relevant. Whenever matters for injunctive relief are sought, an important element of injunctive relief is notification to the party against whom that injunctive relief is sought. In this matter, although I note the existence of correspondence passing between those who claim royalties and representatives of the tenement holders, there is no specific advice provided to the tenement holders as to these current proceedings before me. That, of course, is not fatal, just as is the case in injunctive matters where urgent interim orders may be made for a short duration ex parte. [11] Unfortunately, the MRA is not clear where it comes to the rights of the tenement holder pursuant to an application under s. 304 of the MLA. Section 304 provides as follows: “304 Second caveat not available to same person When a caveat has lapsed or has been removed or withdrawn as prescribed, it shall not be competent to the caveator to lodge in respect of the same mining lease or application for the grant of the mining lease another caveat whereby the caveator claims the same or substantially the same right or interest unless— (a) the consent of each holder of the mining lease or, as the case may be, each applicant has been lodged with the last mentioned caveat; or (b) the tribunal so orders.” [12] Clearly, the tenement holder would have to know of the proposal for a second caveat in order to consent under s. 304(a) of the MRA. The MRA is silent as to what rights the tenement holder has with respect to s. 304(b). Although I note the provision of s. 305 of the MRA relating to removal or withdrawal of a caveat, such a provision does not necessarily mean that it is not appropriate for the tenement holder to be heard with respect to an application under s. 304(b). The provisions of s. 49(1) and (2) of the Land and Resources Tribunal Act 1999 are particularly relevant: “Conduct of proceeding 49.(1) When conducting a proceeding, the tribunal must— (a) observe natural justice; and (b) act as quickly, and with as little formality and technicality, as is consistent with a fair and proper consideration of the issues before it. (2) For the proceeding, the tribunal— (a) is not bound by the rules of evidence; and (b) may inform itself of anything in the way it considers appropriate; and (c) may decide the procedures to be followed for the proceeding.” The principles of natural justice dictate that the tenement holder should have an opportunity to be heard on this matter. -- 5 of 6 -- [13] On balance, and given the basis of urgency outlined by Mr Baghdadi both in his submissions today and more extensively in his submissions before me on Monday evening last, I consider it appropriate to make an order granting leave for the filing of a caveat, but only for a very limited time to enable the tenement holders an opportunity to place whatever material they may consider relevant before me in this matter before I consider allowing caveats to be lodged for the lengthy period requested by the Applicant. [14] Given the nature of the material that I have read to date which is, despite the naming of the Department of Natural Resources and Mines as Respondent, in effect, ex parte insofar as the mining tenement holders are concerned, I am satisfied that the balance of convenience does dictate that interim orders should be made. In the circumstances, then, I make the following orders: 1. Leave granted to the Applicant to lodge caveats in respect of the following tenements: mining leases ML5441, ML5442, ML5443, ML5457 and ML5459 in an interim capacity only expiring at 6:00pm on 29 September 2003. 2. The Applicant to serve a copy of these orders on the holder of mining leases ML5441, ML5442, ML5443, ML5457 and ML5459 by 4:00pm Thursday 25 September 2003. 3. Liberty granted to apply to each of the parties and to the tenement holder on the giving of three hours’ notice to each other and to the tribunal. 4. This matter set down for hearing at Brisbane at 10:00am on 29 September 2003 for further order regarding the time to the duration of the caveats. 5. The question of costs is reserved. -- 6 of 6 --