Adamson v Hayes

Adamson v Hayes - [1973] HCA 6 - HCA 1973 case summary — Zoe

[4]

(a) that as between themselves certain mineral claims should be held by them in the following shares, namely, as to forty-four per centum for the first and second respondents and as to fifty-six per centum for the appellants; (b) that subject to sub-par. (c) the appellants out of their interest in the said mineral claims should offer to Western Titanium N.L. an option to acquire a fifty per centum interest in the said claims upon the following terms: (i) the option period to extend from 1st January 1971 until 30th April 1971; (ii) the consideration for the option to be the sum of $60,000; (iii) all information gained by Western Titanium N.L. in relation to the said claims during the option period to be made available to the first and second respondents monthly; (iv) the purchase price to be $500,000 payable upon the exercise of the option together with one half of one per centum of the f.o.b. value of all ore produced from the said claims (by which all parties meant, and all parties understood to mean one half of one per centum of the f.o.b. value of all minerals produced from the claims). (c) that the terms of the said option save and except those referred to in sub-par. (b) (i) to (iv) should be subject to the prior approval thereof by the first and second respondents and further subject to prior agreement being reached between Western Titanium N.L. and the first and second respondents for the exploration and, if warranted, development of the said claims, such agreement to be upon such terms as the first and second respondents might require; (d) that if no agreement as referred to in sub-par. (c) was concluded between Western Titanium N.L. and the first and second respondents then the appellants would grant to the first and second respondents or to their nominees an option to acquire the said fifty per centum interest in the claims on the same terms as the offer to Western Titanium N.L. set out in sub-par. (b) (i) to (iv) hereof provided however that if within fourteen days from 3rd December 1970 the first and second respondents or the persons nominated by them did not enter into an option on the foregoing terms then the first and second respondents would be required to reach an agreement with Western Titanium N.L. for the exploration and development of the claims and to consent to an option being granted to that company by the appellants upon the terms of the offer set out in sub-par. (b) (i) to (iv); (e) that the first and second respondents should have an option exercisable within fourteen days of the exercise of the option by Western Titanium N.L. (or by such other party as the option might be granted to) of acquiring from the appellants for the purchase price of $70,000 their remaining six per centum interest in the said claims thereby increasing the first and second respondents' interests in the said claims to fifty per centum; (f) that in the event of the respondents' nominee not exercising the option lastly mentioned, the appellants were to have an unrestricted right to sell their interest to whomsoever they pleased.

[40]

In my opinion, the Supreme Court was right in its conclusion. In my opinion, the arrangement between the parties did not involve any immediate creation or transfer of any interest in a mining claim from one of the parties to any other of them or indeed any present change at all in the interest of any person in any one or more of the mining claims. As I have indicated, the parties were not minded to work the claims together. They intended to find an associate with whom the respondents could work the claims when amalgamated into one area or made the subject of a mineral lease. The interests of the newcomer and the respondents in the venture were to be equal. To achieve this purpose the appellants were to have the first opportunity to find a purchaser of part of the interest they were regarded as between the parties and for the purpose of their arrangement as having in the claims as a whole. Failing the finding by the appellants of such a purchaser the respondents were to be at liberty to do so. On a partner being found with whom the respondents could work, the appellants were to sell the balance of that interest to the respondents so that the respondents' interest in the claims as a whole would be equal to that of the newcomer. There was, in my opinion, no intention to change the ownership in the individual claims, legal or beneficial, until it was necessary to implement the arrangements made with the partner with whom the respondents were to work in the development of the claims. For example, the appellants, in my opinion, could not have called upon the respondents to transfer to them or any of them any claims or any interest in any of the claims except as part of the performance of the arrangements for the creation of a mining partnership in which the respondents would be equal partners, see s. 282 (2) of the Act. Thus, the parties' arrangement did not involve, in my opinion, the transfer of any interest in any specific claim nor, in my opinion, the creation of any interest in any specific claim. What it did involve was mutual promises to join in any necessary instruments or procedures required to implement a transfer of the appellants' interest as a percentage of all the claims regarded as a unit to the partnership of the respondents when formed. The claims, of course, could become such a unit by consolidation or by the grant of a mineral lease under the Act; as to consolidation, see ss. 18, 19 and 20. Thus, in my opinion, the mutual promises included promises, if required, to join in all necessary steps under the Act to consolidate the claims or to make application for mineral leases to be issued to one or more of the partners in the enterprise of exploiting the claims. Each claim depended on the continued existence of a miner's right in the person who had pegged the land, see s. 41. A miner's right itself is not transferable, but a claim as a mining tenement is transferable to a person who holds a miner's right. However, the Act recognized the possibility of the existence of a trust with respect to a claim, see s. 40. Though seemingly some claims were held on trust, I do not think the parties' arrangement called for any variation of such trusts until the partner had been found and a mining partnership was to be formed.

[78]

It was not in contest that no agreement as to the terms of the option and the exploration or development of the claims had been reached between Western Titanium N.L. and the first and second respondents. However, it was submitted on behalf of the appellants that it had not been proved that the third respondent was a person willing to take an option from the appellants upon the specified terms. This contention found little support in the pleadings. The third respondent, as a plaintiff, sought specific performance of the agreement to grant the option on the specified terms. The defence contained the assertion that the appellants were under no agreement or obligation to grant any option to the third respondent but it was not expressly alleged that the third respondent was not willing to take an option. Moreover, par. 10 of the statement of claim (whose allegations were deemed to be admitted) read as follows: "The plaintiffs have at all material times been and are now ready and willing to perform their obligations under the said agreement." The appellants contended that the third respondent had no obligations under the agreement sued on and that par. 10 of the statement of claim had nothing to say as to the willingness of that respondent to take an option. However, before the defence was delivered particulars of par. 10 had been sought and obtained. The request for particulars made by the appellants was in the following terms: "Under paragraph 10: Detail the obligations which the plaintiffs allege they are ready and willing to perform." In response to this request the following particulars were given: "The obligations which the plaintiffs say they are willing to perform are to accept the granting of an option as aforesaid" (which by reference to the preceding paragraph of the particulars can be seen to be an option on the specified terms) "by the defendants to the third plaintiff as nominee of the first and second plaintiffs and the payment by the third plaintiff to the defendants of the sum of $60,000 being the consideration for the said option and the making available by the third plaintiff to the first and second plaintiffs monthly of all information gained by it in relation to the said claims during the option period". It was par. 10 as thus particularized which must be taken to have been admitted. I therefore agree with the learned trial judge that on the pleadings this point was not open to the appellants.

[80]

Every mining tenement, and every share and interest therein, shall be deemed and taken in law to be a chattel interest, and, subject to this Act and the Regulations, the holder may transfer and encumber the same. By s. 2 "mining tenement" is defined to mean (inter alia): "A land applied for, held, occupied, used, or enjoyed under a lease or application therefor, or as a claim " On behalf of the appellants it was submitted that the intention of s. 273 was that an interest in a mining tenement should be a chattel interest in land (a chattel real) and that s. 4 of the Statute of Frauds would therefore apply to it. There are in my opinion good reasons for rejecting this contention. An interest in a mining tenement would, apart from statute, in any case be an interest in land within the Statute of Frauds: Boyce v. Greene [1] ; Smart v. Jones [2] . This consideration led the Full Court of New South Wales in Williams v. Robinson [3] , to hold that s. 18 of the Mining Act of 1814 N.S.W., which provided that every interest created under the provisions of that Act should be "deemed and taken in law to be a chattel interest", had the effect that the interests referred to were interests in the nature of chattels personal. Darley C.J. said, at p. 40: "It was unnecessary for the section to declare that a lease" i.e. a gold mining lease "was a chattel real. It always was so." A different view was taken in New Zealand in Mason v. McConnochie [4] , where Williams J. held that a share in a mining claim was an interest in land within the Statute of Frauds, notwithstanding a statutory provision similar to that considered in Williams v. Robinson [3] . He found it difficult to accept that the legislature would enact that a thing was to be deemed to be what it was not, and said [5] : The argument on the other side is that if the term "chattel interest" means a chattel interest in real estate, the Legislature has said what there was no need for it to say. But the Legislature frequently says what there is no need for it to say; and if the alternative is either that the Legislature has said what there is no reason for it to say, or that the Legislature has said that a thing shall be something different from what it really is, I have no hesitation in accepting the former conclusion. With all respect, I find this reasoning (which met with some criticism in Miller v. Minister of Mines and Attorney-General [6] ) unconvincing. The word "deemed" is sometimes used "to impose for the purposes of a statute an artificial construction of a word or phrase that would not otherwise prevail": St. Aubyn v. Attorney-General, per Lord Radcliffe [1] . The purpose of s. 273 was clearly to alter what would otherwise have been the position. Any doubt as to the effect of s. 273 is in my opinion removed by the provisions of s. 287 of the Mining Act, which reads as follows: No contract relating to any mining lease or application therefor, or any share or interest therein respectively, shall be enforceable by any action or other legal proceeding unless some note or memorandum in writing of the contract is made and signed by the party to be charged, or his agent authorised in writing in that behalf. If s. 273 had the effect that all mining tenements, including mining leases, were chattels real there would be no need for the provisions of s. 287, whose work would be done by s. 4 of the Statute of Frauds. In my judgment it is clear that the intention of the legislature was that all mining tenements should be deemed to be chattels personal, but that nevertheless contracts relating to some of those mining tenements should not be enforceable unless evidenced by a note or memorandum in writing. Claims are mining tenements within s. 273 but they are not within the provisions of s. 287. They are deemed to be chattels personal and s. 4 of the Statute of Frauds does not apply to them. 1. (1826) Batt. 608. 2. (1864) 15 C.B. (N.S.) 717, at p. 724; 143 E.R. 966, at p. 969. 3. (1891) 12 N.S.W.L.R. (Eq.) 34. 4. (1901) 19 N.Z.L.R. 638. 5. (1891) 12 N.S.W.L.R. (Eq.) 34. 6. (1901) 19 N.Z.L.R., at p. 642. 7. [1961] N.Z.L.R. 820, at p. 837. 8. [1952] A.C. 15, at p. 53.

[89]

The result of giving an option for value is that the person to whom the option is given acquires an equitable interest. But this equitable interest has not, in my opinion, been sold to him. The equitable interest is measured by what a court of equity would decree in an action for specific performance. The right of the person who may be called the owner of the option is a right to prevent the owner of the property in question from disposing of it inconsistently with the option, together with a right; if he exercises the option, to compel the owner of the property to carry out the contract which has been made by the exercise of the option. The right of the optionee is a right which has been created by the option, but it is not a right which the owner of the property ever possessed. He has created a new right in the optionee which is a right of property, but he has not transferred to the optionee any right which previously belonged to him as the owner of the property in relation to which the option was given. It follows clearly from this statement that the interests created by the agreement to give the options in the present case were not interests subsisting at the time of the agreement: they were new interests, thereby created. They do not come within s. 34 (1) (c). Nor, in my opinion, is it possible to describe the parts of the agreement by which options are granted as declarations of trust: they are not within s. 34 (1) (b). On the other hand, the agreement to grant the options, if valid, did create interests in the claims. If those interests were interests in land the agreement would in my opinion fall within s. 34 (1) (a). That paragraph in my opinion refers to equitable as well as to legal interests in land; s. 33 (s. 52 of the United Kingdom Act) provides that conveyances of land are void for the purpose of conveying or creating a legal interest unless made by deed and the comparison of that section with s. 34 (1) (a) supports the view that the omission to qualify interest in s. 34 (1) (a) by the word "legal" was deliberate. This construction may lead to some overlapping between par. (a) and the other paragraphs of s. 34 (1), but in any case the provisions of that sub-section seem to overlap. It is true that it would appear that if s. 34 (1) (a) is applied to equitable interests, it will embrace within its terms many contractual provisions that would also fall within s. 4 of the Statute of Frauds. It has been said that the latter section "refers to agreements not operating as an immediate transfer or conveyance of an estate or interest in land, but as contracts to make or execute a grant or transfer, or conveyance, at some subsequent period": Agnew, Treatise on the Statute of Frauds (1876), at p. 138 . Section 34 (1) (a) may now refer both to agreements that operate as immediate transfers and to contracts to transfer in future and may thus cover much of the field already covered by the relevant part of s. 4. However, s. 34 cannot be regarded as merely reproducing the effect of those provisions of the Statute of Frauds which it replaces (see Grey v. Inland Revenue Commissioners [1] ) and in my opinion the provisions of s. 34 (1) (a) must be given their natural meaning, without any inhibition that may be caused by a consideration of their history. It therefore follows that the provisions of the agreement providing for the grant of the options will fall within s. 34 (1) (a) and, being by parol, will be ineffective to create or dispose of any interest in the claims, if interests in claims are interests in land. 1. (1937) 57 C.L.R. 127. 2. (1937) 57 C.L.R., at pp. 133-134. 3. [1960] A.C. 1.

[91]

Although the application of s. 34 of the Property Law Act to interests to which s. 4 of the Statute of Frauds does not extend may bring about an anomalous result, it does not seem to me to lead to such absurdity as to justify a conclusion that the legislature could not have intended it. Nor in my opinion is it appropriate to apply the rule of construction expressed in the maxim generalia specialibus non derogant with the result that the general provisions of the later statute, the Property Law Act, must be regarded as not intended to derogate from the particular provisions of the earlier Mining Act. The effect of s. 273 of the Mining Act was as I have pointed out, that interests in mining claims under that Act are not interests in lands within the Statute of Frauds, although that was not its only effect, and s. 273 will not be devoid of all significance if mining tenements are held to be land within s. 34. The fact that the provisions of s. 34 did not merely repeat those of the sections of the Statute of Frauds which they replaced, but were different and somewhat wider in their scope, affords some ground for thinking that the legislature intended those new provisions to apply to all cases which came within their terms, literally construed, and I can find nothing in the Act itself which would indicate that the definition of "mines and minerals" was intended to be given a restricted application. Moreover, it seems likely that there would be little practical operation left for that part of the definition of "land" that includes "mines and minerals" if it were construed so as to exclude mining tenements under the Mining Act. The latter statute deals with mining on Crown land and with mining on private land in those cases where the minerals on or under the land belong to the Crown, viz. in the case of all lands alienated in fee on or after 1st January 1899 (s. 138), and it is probable that mining tenements under the Mining Act form a large proportion of the mines in Western Australia. This question of construction is not without difficulty, but I cannot see sufficient justification for departing from the ordinary and natural meaning of the definitions in s. 7 of the Property Law Act, and I have therefore reached the conclusion that interests in claims under the Mining Act are interests in land within s. 34 of the Property Law Act.

[125]

The definition of "land" as including the right to work and get the minerals and substances in any strata or seam in or under any land appears to me aptly enough to describe the right conferred upon a miner by his holding of a mineral claim over Crown land. The words "whether or not they are held apart from the surface of the land", subject to which the expanded meaning of "mines and minerals", when introduced into the definition of "land", must be read, do not, I think, operate so as to confine the operation of the definition to land other than Crown land; the right to work and get minerals is, in the case of Crown land, held of the Crown in the sense that it is a right granted by the Crown and if "land" is to be extended by definition so as to include a right to work and extract minerals it will follow that if that right is held by a person who has no title to the surface of the land it answers the description of a right "held apart from the surface of the land". Nor do I see any other ground for excluding Crown lands from the definition of "land". The reference in the definition of "land" to "land of any tenure" does not appear to me to provide such a ground; no doubt Crown land over which no rights have been granted by the Crown cannot aptly be described as land of a particular tenure but once the Crown grants rights over Crown land the grantee may be said to hold land of a particular tenure granted by the Crown, as in the case of a Crown lessee, and a Crown leasehold would appear to fall directly within the definition of "land" so that the creation or disposal of interests in such a leasehold by the lessee would, subject to any provisions to the contrary in relevant Lands Act legislation, attract the provisions of s. 34 (1) of the Property Law Act, 1969. Similarly, since "land" is defined to include a right to work and get minerals, the holding of that right from the Crown is not inconsistent with the reference to "land of any tenure". Nor is it, I think, material that it is the working of the minerals and substances in any strata or seam which is referred to. In the case of Crown land occupied as a claim the strata or seams of minerals in situ remain the property of the Crown but I do not read the definitions as requiring that both the right to work and get minerals and also the strata or seams to be worked must all be held in tenure; it suffices if only the former be so held. Likewise the definitions are consistent with the inclusion in the definition of "land" of a mere right to work and get minerals, without having any title to the strata or seam in which they are contained.

[129]

Counsel for the respondents put this point slightly differently when he contended that what he described as the pooling arrangement, provided for in the first agreement and set out in par. 5 (a) of the statement of claim, dealt only with one of two elements which, taken together, constituted a right to work and get minerals. These two elements were the possession of a miner's right and the holding of a claim and it was only the latter that the agreements affected; with the former the agreements had nothing to do, indeed there was never any question of a dealing in any miner's right, each holder of a claim or any interest in a claim having, by the Mining Act, to be possessed of his own miner's right, granted to him by the Crown, before he could acquire a claim or an interest in a claim. It followed, it was said, that if the dealing in a right to work and get minerals from a strata or seam of minerals was the touchstone of the applicability of s. 34 (1) it could not apply here since no such right was dealt in but only one element of that right which, without the other element, possession of a miner's right, did not of itself confer any right to work and get minerals. This argument mistakes, I think, the effect of the possession of a miner's right; it is true that it is a necessary first step, a necessary qualification, before the right to mine may be acquired but it is no more than that. It places a person in a position lawfully to take possession of Crown land but not until possession of an area, the claim, is taken does any land become subject to the right to mine which right, until that time, is inchoate and lacking in subject matter. The situation upon a transfer of a claim illustrates this; the transferee must be the holder of a miner's right but until the claim or a share in it is transferred to him that miner's right gives him no rights whatever to minerals in the land comprised in the claim. The definition of "mines and minerals" in the Property Law Act, 1969 is, I think, speaking of a right to work and get specific minerals, those which lie in a strata or seam in particular land, and to describe the amorphous rights conferred by a miner's right as of themselves in any meaningful sense one of two elements making up that right to mine is erroneous; it is the acquisition of a claim that, for the first time, confers upon the holder of that claim a right to mine specific minerals. Accordingly, a dealing in a claim, although absent any associated dealing in a miner's right, is none the less a dealing in a right to work and get the minerals in any strata or seam of minerals in or under any land and is therefore an interest in land affected by s. 34 (1).

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Court

Decision date

Before

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Judgment (148 paragraphs)

Parties

Cited By (4)