Supreme Court of WA|2001-04-04|Before: Mr J, Smith J

Finesky Holdings Pty Ltd v Minister for Transport for Western Australia [2001] WASC 87 (4 April 2001)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : FINESKY HOLDINGS PTY LTD -v- MINISTER FOR TRANSPORT FOR WESTERN AUSTRALIA [2001] WASC 87

Trespass and conversion - Damages - Exemplary damages - Limestone quarry - Encroachment into mining lease of plaintiff

Mining lease - Whether exclusive right may be claimed against the Crown

Mining lease - Stamp duty - Whether rights under mining lease before stamping - Whether prior consent of Minister a condition precedent

Mining lease - Whether no rights until lease registered - Mining Regulations 1981 (WA), reg 110

Mining lease - Minerals mined by third party - Whether lessee owns minerals so mined

Trespass - Interest - Interest under lease a profit a prendre - Whether an interest in the land - Whether grounding an action for trespass

Conversion - Nature of claim - Quarrying and removal of limestone - Whether rights of ownership in lessee

Representation - Misleading and deceptive conduct in course of trade or commerce - Fair Trading Act 1987 (WA), s 10 and s 77 - Whether authorisation for contractor to enter land misleading and deceptive conduct

Damages - Principles - Measure of - Removal of limestone from plaintiff's lease

Exemplary damages - Principles - Whether award appropriate - Whether disentitling conduct by plaintiff

Mining Regulations 1981 (WA), reg 110

Public Works Act 1902 (WA), s 112A

Amann Aviation Pty Ltd v The Commonwealth of Australia [1990] FCA 55; (1990) 22 FCR 527

Bahr v Nicolay (No 2) [1988] HCA 16; (1988) 164 CLR 604

Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; (1982) 149 CLR 600

Commissioner of Stamp Duties (NSW) v Henry [1964] HCA 4; (1964) 114 CLR 322

Cousins v Wilson [1994] 1 NSWLR 463

DKLR Holding (No 2) v Commissioner of Stamp Duties [1980] 1 NSWLR 510

Duke of Sutherland v Heathcote [1892] 1 Ch 475

Ellison v Vukicevic (1986) 7 NSWLR 104

Ex parte Henry; Re Commissioner of Stamp Duties [1964] HCA 4; [1963] NSWR 1079; (1964) 114 CLR 322

Jacobsen v Rogers [1995] HCA 6; (1995) 182 CLR 572

Mason v Clarke [1955] AC 778

Moreland Timber Co v Reid [1946] VicLawRp 35; [1946] VLR 237

Reid v Moreland Timber Co Pty Ltd [1946] HCA 48; (1946) 73 CLR 1

Wik Peoples v Queensland (1996) 187 CLR 1

1 ROBERTS-SMITH J: In 1996 the Western Australian Department of Transport ("DoT") was constructing a breakwater and boat harbour at Exmouth. The work had been contracted (under contract number E150) to a company by the name of Civcon Pty Ltd ("Civcon") which had been registered in December 1989 and the directors and shareholders of which were Mr Frank Simunovich and Mr William Maloney. The material for the breakwater was limestone which was being obtained from a quarry owned by the Western Australian government ("the quarry"). Not long into the project, Civcon complained it was experiencing difficulty in extracting limestone of sufficient quality and quantity to meet the contractual requirements. The Civcon representatives urged DoT to approve the extension of mining from the existing quarry site out to the north-west.

2 On 26 August 1996 that approval was given but on 13 September 1996 DoT terminated Civcon's appointment under the contract because of continuing dissatisfaction with Civcon's performance (and specifically because a creditor had filed a petition to wind up the company on 23 August) and on 18 October 1996 entered into a new contract (number E 166) with Thiess Contractors Pty Ltd ("Thiess") for completion of the harbour. Thiess in turn subcontracted the operation of the quarry to PMR Quarries Pty Ltd trading as WA Limestone ("WA Limestone").

3 As a result of losing the contract Civcon went into voluntary administration and eventually in October 1996 into liquidation.

4 Finesky Pty Ltd ("Finesky") was a shelf company registered on 31 January 1996. It was purchased by Simunovich and Maloney on 1 April 1996 and its registered office was transferred to 15 Park Lane, Bassendean (which was also Civcon's registered office). From 1 April 1996 the directors of Finesky were Simunovich and Maloney. Dexter John Carr became a director on 31 October 1997.

5 Broadly to the north-west of the quarry was a mining lease M08/6 over some 484 hectares which had been held by Alcoa of Australia ("Alcoa") since 1984.

6 On 9 December 1996 Finesky entered into a mining sublease 2H/967 with Alcoa ("the sublease") for 25 hectares of the area covered by its lease immediately adjacent to the boundary of the quarry. (See exhibit P1 trial document ("TD") 56 cl 3). A price of 30 cents per tonne of limestone was fixed, that being the royalty payable by Alcoa to the Crown.

7 Coincidentally on the same day, WA Limestone began extracting limestone from the south-eastern corner of Alcoa's mining lease M08/6 in the area covered by Finesky's sublease and continued doing so until January 1997.

8 In the meantime the sublease was approved by the Minister for Minerals and Energy on 10 December 1996 but was not stamped and registered until 20 January 1997. Also on 20 January 1997 Simunovich and Maloney advised the defendant that unauthorised quarrying was being done on the sublease. The defendant says mining operations had been completed before that and to the extent any work was then occurring it was in the nature of rehabilitation. The defendant does not dispute that until that time it had caused the extraction and removal of limestone from the Finesky sublease.

9 Finesky issued a writ of summons against the defendant on 20 May 1997 claiming damages (including exemplary damages) and an account for damages for loss caused by the defendant interfering with Finesky's rights under the sublease and removing a quantity of limestone rock from the tenement contrary to those rights.

10 By its re-amended statement of claim, Finesky claims, put shortly, that between 9 December 1996 and 27 January 1997 the defendant, by his agents Thiess and WA Limestone, entered onto the sublease and mined and carried away 13,677 bank cubic metres ("BCM") of limestone rock to which Finesky was entitled. It is further alleged that the defendant's conduct was oppressive and arbitrary in that (through his representatives) he knew he was mining and carrying away limestone to which he was not entitled. Finesky claims damages of $2,029,650, or alternatively, $587,000 depending upon the basis of the valuation of limestone removed. There is also a claim under s 10 of the Fair Trading Act 1987 (WA) by which it is said that in authorising Thiess and WA Limestone to enter upon the sublease and extract limestone from it, the defendant implicitly represented to them that it was authorised to do so, which representation was untrue, misleading and deceptive and as a result of which Finesky suffered loss and damage.

11 The defendant admits the removal of limestone but denies any liability to Finesky on the grounds that:

(a) Finesky had no mining rights in the subleased area prior to 20 January 1997;

(b) even if the sublease did confer mining rights on Finesky prior to 20 January 1997 Finesky has not shown that interference with the type of rights granted to it gives rise to any cause of action for damages at common law; and

12 It is convenient to commence consideration of the evidence by turning first to the Alcoa lease.

13 The Alcoa lease was granted on 20 August 1984 with an annual rental payment then of $2910 which had increased to $4839 in 1996. There were prescribed expenditure conditions which required the lessee to maintain an annual expenditure of $48,400 unless exempted. In fact no expenditure was claimed and an exemption was granted for each year from 1985 to 1996. Other conditions to which the lease was subject included that any work done would have to comply with requirements for the preservation of Aboriginal sites and heritage and that no mining would be undertaken within 800 metres of a water bore. Non-compliance with the conditions would render the lessee liable to forfeiture of the lease or a fine of $1000 at the option of the Minister.

14 It appears the quarry site was selected about 1990. It comprised approximately 5.04 hectares and its north-eastern boundary was adjacent to the south-western boundary of the Alcoa lease. It is approximately 9 kilometres from the marina site and approximately 3.3 kilometres West of Murat Road. The marina site itself is located immediately South of the town of Exmouth and approximately 0.7 kilometres West of Murat Road.

15 Contract E150 ("the Civcon contract") was for the construction of breakwaters and revetments for Exmouth boat harbour, excavation of the harbour basis and entrance channel (including the placement of spoil in reclamation areas) and sundry earthworks and soil stabilisation adjacent to the harbour.

16 Significantly for present purposes, the works also included the establishment, operation and management of the quarry and access roads.

17 Civcon had tendered for the contract by tender dated 17 October 1995 in the sum of $5,113,723. That tender was accepted by letter from the DoT dated 15 January 1996. The contract was for the supply, delivery and placement of limestone armour stone. The specifications provided different rates for different classes of armour stone as well as for core stone and rubble, the highest rate being $14 per tonne of class 1 armour stone and the lowest being $10 per tonne for rubble. A rate of $5.40 per tonne was set for stockpiling 1000 tonnes of armour stone in the quarry and lump sum fees of $50,000 and $33,500 were fixed for the establishment and maintenance of the quarry access road and the establishment and operation of the quarry respectively.

18 In the Civcon tender letter dated 17 October 1995 annexed to the contract (exhibit P1, TD 7), Simunovich wrote:

"In accordance with the geotechnical report on quarrying operations prepared for the Department of Transport by Soil and Rock Engineering, we estimate that a 20% yield of class 1 armour rock should be produced from (the quarry).

However, there would appear to be inconsistencies between fracture intervals evident on the cores and the conclusions reached by Soil and Rock Engineering. Actual quarry yields of class 1 and class 2 armour may be considerably less than has been suggested.

Therefore if after establishing the quarry it is evident that the quarry will not yield the specified quantity of larger armour, we propose to redesign the breakwaters to suit the armour yield ..."

19 That offer was not accepted. In a letter to Civcon dated 5 January 1996 Mr Peter Boreham, the project manager, wrote -

"In your letter of 17 October you have offered to redesign the breakwaters at a cost of $50,000 if sufficient class 1 and class 2 armour cannot be won. The Department of Transport has not accepted this offer.

In the event that you cannot win the specified quantity of large armour from the quarry, you shall advise the superintendent in writing. The superintendent will engage a suitably experienced and qualified consultant to review the quarry operation and submit recommendations on methods of operation which will allow the larger armour to be won. If the consultant is able to recommend an applicable method, the cost of the consultant shall be met by the contractor. If the consultant advises that the required armour cannot be won, the cost of the consultant shall be met by the principal, and the principal shall arrange for a redesign of the breakwater."

20 The contract specified various classes of limestone for which payment was to be made at differential rates. They were -

21 By at least April 1996 Civcon was experiencing difficulty meeting the project timetable. This was said to be due mainly to a lower than expected rate of extraction of quality limestone from the quarry. There was a dispute about this between Civcon and DoT relating to the amount of limestone rock available in the quarry which Civcon had to work in order to obtain the rock necessary to build the breakwater. Civcon maintained there was not sufficient available rock whereas DoT considered there was an adequate quantity of appropriate rock if quarrying was carried out properly.

22 In a letter to Mr Tony Mitchell, the superintendent's representative, dated 30 May 1996, Civcon reported on areas in the contract where slippage had occurred in the programme and advised of the strategies which were intended to enable the original project target dates to be met. The letter noted (inter alia) that Civcon had already requested that enquiries be made as to the possibility of extending the north-west boundary of the quarry given its concerns that at then current yields there would be insufficient rock within the boundary of the quarry and noting there was a dispute about that in relation to the rate at which material was being won from the quarry, Civcon saw it of the utmost importance that a strategy for producing the quantities of class 1 and 2 armour rock required be developed as soon as possible and with that in mind requested assistance from the DoT consultants ABT Engineering in developing blasting and quarrying techniques to achieve that as soon as possible.

23 However, by June 1996 DoT had been persuaded by the Civcon representatives that extension of the quarry out to 100 metres to the west and 20 metres to the north was necessary.

24 Boreham became project manager for the Exmouth boat harbour project in August 1994. He had had little or no involvement with the project before then. From an examination of departmental files he was able to say that Department of Marine and Harbours file 30/8/89 has a reference to mining lease M08/6. However, that file was closed on 3 October 1990 and he did not recall examining it prior to January 1997 and was himself not aware of the existence of the Alcoa lease prior to January 1997.

25 Some time after his appointment as project manager he received a letter from Whitecrest Enterprises Pty Ltd ("Whitecrest") dated 15 August 1995 advising that company had applied for an exploration licence E08/828 over the area in which the quarry was located and that was immediately to the East and adjacent to an existing exploration licence also held by Whitecrest. Boreham checked the Mining Act 1978 (WA) and confirmed that pursuant to s 112 of that Act, exploration licences included a reservation in favour of the Crown to take rock etcetera. He assumed that the Whitecrest exploration licence covered all of the area DoT intended to quarry. He was not aware of the Alcoa lease and did not undertake any searches either then nor at any other time prior to January 1997 to establish whether there were any other mining leases in the area.

26 Boreham's understanding was that as the quarry was located in water supply reserve 34055 which was vested in the Minister for Water Resources and the land was Crown land and the works were public works under s 112A of the Public Works Act 1902 (WA), a quarry or mining lease was not required, the quarry was not covered by the Mining Act 1978 (WA) and approval from the Minister for Mines or the Department of Minerals and Energy was not required, although environmental approval was required under the Environmental Protection Act 1986 (WA). Environmental Protection approval was given in 1992. One of the conditions of approval required the preparation of an environmental management programme for the quarry prior to the commencement of quarry operations. This was the subject of a quarry management plan ("QMP") prepared by consultants Soil and Rock Engineering in May 1995 on behalf of the Minister.

27 In preparing the QMP a nominal boundary was drawn around the area of the quarry. Boreham explained this was not a property or lease boundary in any sense but was drawn solely for the purpose of defining the anticipated maximum extent of the proposed quarry operations for the information of the approving bodies. Approval was issued on 11 March 1996.

28 There were several changes to the quarry boundaries after the QMP was first prepared. One was initiated during the Civcon contract; the remainder were initiated during the Thiess contract.

29 Civcon commenced work in the quarry site in late February 1996. On 13 March that year a meeting was held on site. This was attended by Alan Smith, Brian Harold and Dexter Carr representing Civcon and Boreham, George Anderson and Laurie Brown from DoT on behalf of the Minister. Two consultants engaged by DoT, Christopher Lane and William Delaney, were also present.

30 Boreham testified that at that meeting Alan Smith requested that the quarry boundary be extended to the North. Boreham did not agree with that request. He considered that the quarry had not been developed to a level which justified any claim that there was insufficient rock available within the existing boundaries.

31 The minutes of that meeting (attachment 8 to Boreham's statement, exhibit D1) indicate that Smith advised that Civcon could not get sufficient large armour (that is, classes 1 and 2) from the quarry. There was discussion about the soil and rock report and Smith's request that the quarry boundary be extended to the North to encompass at least the RL 50.00 contour. The minutes reflect that Boreham considered that neither desirable nor necessary given his view that adequate supplies of suitable material were available in the existing quarry area. There was further discussion about the method of quarrying and it is clear that there was some concern that Civcon were not using appropriate techniques. This was particularly reflected in Boreham's suggestion that Civcon consider employing a quarry operator with experience in that type of work to extract the rock and to pass on experience in the quarrying of large rocks to Civcon staff.

32 Over the next few months Civcon continued to seek an extension of the boundaries to the North and West, claiming consistently that there was insufficient rock within the quarry.

33 In a letter dated 5 July 1996 Simunovich suggested that urgent consideration be given to redesign of the North breakwater head and noted that unless the existing quarry area could be extended, it might also be necessary for DoT to enter into an arrangement with Whitecrest to use the Whitecrest quarry.

34 On 5 June 1996 Boreham wrote to the Department of Environmental Protection ("DEP") and the Waters and Rivers Commission and on 19 July to the Shire of Exmouth seeking approval to move the quarry boundaries to the north-west. The proposal was for a block shift of the boundary 100 metres north-west and 20 metres north-east. Boreham's evidence was the request was made only as a contingency and was done as a result of the representations which had been made to him by Civcon. Although he was unaware of it at the time the proposal involved an extension into the south-west corner of the Alcoa lease.

35 There was correspondence and discussions on the matter between the DoT and DEP for some weeks. Amongst other things DoT was required to prepare a revised QMP and on 30 July 1996 Soil and Rock Engineering were engaged by DoT to undertake that exercise.

36 Between the time of the original request for the boundary change and the engagement of Soil and Rock Engineering to undertake the revised QMP, Civcon's perceived need to extend the boundary gradually became more insistent. Some time prior to 6 August 1996 Civcon forwarded to Boreham a marked up contour plan showing where they expected to find armour rock based on surface indications of visible rock. The plan was forwarded with a verbal request that the quarry be extended into that area. The sketch was included in the revised QMP submitted to DEP on 6 August 1996. Thus the new QMP included an additional area beyond the extension proposed in the original request for a change to the pre-existing QMP - it was the latter boundary change which was eventually approved by the Minister for the Environment on 26 August 1996.

37 This was reflected in a letter dated 29 July 1996 from Simunovich to the DoT in which he wrote (inter alia) -

"To ensure that the works can continue without incurring further latent conditions, costs and time delays, Civcon urges you to take immediate action in allowing Civcon to quarry areas of only competent rock, mainly north-west of the existing quarry limits".

38 The total area within the new boundary was slightly reduced from the original area of 5.04 hectares to approximately 4.91 hectares.

39 Nonetheless, dissatisfaction with Civcon's performance continued and on 13 September 1996 the Minister wrote to Simunovich advising that as a consequence of an outstanding petition for winding-up of the company which had been filed on 23 August 1996, Civcon was in default under the contract and that accordingly all further work under the contract was taken out of the hands of Civcon.

40 On 18 October 1996 the Minister entered a new contract for completion of the boat harbour with Thiess who subcontracted the quarry aspect to WA Limestone.

41 On 9 December 1996 Finesky took a sublease of 25 hectares from Alcoa immediately adjacent to the boundary of the quarry.

42 On 10 December 1996 the Minister for Mining consented to the sublease "subject to the agreement being properly executed and assessed by the Department of State Taxation". That did not occur until 20 January 1997, on which date the sublease was also registered.

43 There were several further boundary changes during the course of the Thiess contract. In his approval of 26 August 1996 the Minister had stated that he did not consider the boundary changes to be substantial and so subsequent changes were dealt with at officer level with approvals being forthcoming generally within a few days. The final boundaries increased the intrusion into the sublease area.

44 Simunovich gave evidence that on 16 January 1997 he drove to Exmouth to undertake an aerial survey of the Civcon quarry for purposes relevant to the dispute and subsequent arbitration between Civcon and the Minister. He was accompanied by Maloney and Mr Greg Robinson, a surveyor.

45 They undertook the survey on 17 and 18 January 1997. They located two boundary pegs representing two of the four corners of the Civcon quarry and also located a permanent survey station in the middle of the quarry. From those three points they established the other two corners of the Civcon quarry. Those were then marked with large red plastic markers for aerial observation. Simunovich said that once the plastic markers were in place he could see clearly that the defendants new contractors had extended the Civcon quarry well beyond its original boundary and he suspected then for the first time that the defendant was quarrying limestone in the Finesky sublease area.

46 On 18 January 1997 he and Robinson were flown over the area in a chartered aircraft and took aerial photographs.

47 Simunovich says that on his return to Perth he marked the Civcon quarry on the photograph with a red border by joining the red corner markers and then plotted the relative positions of each quarry using grid references on two plans, one being a schedule to the sublease agreement and the other a document produced by the defendant in its tender documents for the Exmouth boat harbour project. Having completed that, he confirmed that the defendant's new contractor was operating in part of the area covered by the sublease and that limestone appeared to have been extracted from it.

48 According to Simunovich, on 20 January 1997 he telephoned Dr Mike Paul of DoT who had been the superintendent of Civcon's contract and advised him of Finesky's complaint that DoT was operating in the area of Finesky's sublease and appeared to be extracting limestone from that area. He says he demanded on behalf of Finesky that the Department stop quarrying in Finesky's sublease area and that it vacate the area immediately. He says Dr Paul suggests that he confirm his demand in writing, which he did by facsimile the same date.

49 The facsimile was addressed to Department of Transport, Attention Mike Paul - Superintendent, from Frank Simunovich and Bill Maloney and the subject heading was "Exmouth Quarry". The text of the message was as follows -

"With respect to our telephone conversation this morning please be advised:

1. Following an ariel (sic) survey of the Exmouth Quarry undertaken on 18.1.97 it is evident that the Department of Transport has substantially encroached and removed a considerable quantity of limestone rock from our Mining Lease.

2. Could you please ensure that ALL ACTIVITY CEASES IMMEDIATELY and all plant is removed from the north-west area of the quarry until an inspection and a survey is carried out by us."

The message was signed by Frank Simunovich and Bill Maloney and there was a "cc" to the Minister for Transport, the Hon Eric Charleton MLC.

50 Simunovich's testimony was that on 21 January 1997 he spoke to Mr Laurie Brown of DoT who was at the Civcon quarry site and asked him whether the new contractor had vacated the Finesky sublease area. Brown informed him that the contractor was rehabilitating the mined area of the Finesky sublease area by blasting the quarry faces and pushing them down to a 20 degree slope. He says that he understood by this that stockpiled waste material was being pushed back to the quarry faces and they were otherwise being flattened. The effect of this conduct was three-fold. First, it would become difficult to survey the area to ascertain the volume of limestone removed; secondly it would add considerably to Finesky's costs of opening a quarry because a large volume of stockpiled material would have to be removed before a quarry face could be exposed; and thirdly, the freshly blasted material would be significantly less valuable than the same material in situ which could be extracted more carefully as building materials.

51 Simunovich says that accordingly, by facsimile dated 21 January 1997, he wrote to Ian Hutton, the then superintendent of the Exmouth boat harbour contract and demanded that DoT cease the "rehabilitation process".

52 That facsimile message was set out in the same format as the one the previous day and signed in the same way by Simunovich and Maloney. It read -

"With respect to our facsimile yesterday and subsequent telephone conversations with Dr Paul and Mr Boreham, it is our understanding that the Department of Transport is rehabilitating our mining lease with waste material produced from their blasting.

You are hereby advised to cease this and all other operations on our mining lease immediately.

You are also advised that all materials stockpiled and pushed back to the faces will have to be removed by you to our satisfaction so that proper surveys and inspections can be carried out by us."

53 Simunovich testified that he telephoned Brown each day from 21 to 24 January 1997 and on each occasion was informed that the "rehabilitation" process was continuing, notwithstanding the facsimile of 21 January 1997. He says that it is his understanding that the contractor did not leave the area until 24 January 1997 at which stage all quarry faces had been "destroyed" by the rehabilitation process.

54 On Simunovich's instructions Finesky's then solicitors wrote to the Minister on 3 February 1997 demanding compensation for the extraction of limestone rock from the area of Finesky's sublease.

55 Lawrence Brown had been engaged by DoT as site superintendent for the Thiess contract and was on site in Exmouth between 28 November 1996 and 1 March 1997 as the superintendent's representative. He maintained a site diary and by reference to that was able to give evidence about visits made by Simunovich, Maloney and others to the site during that period.

56 According to his evidence Simunovich, Maloney and a man by the name of Ashley Crighton arrived at the Exmouth boat harbour site office on Thursday 19 December 1996 at 9am. Brown was aware that Simunovich and Maloney were directors of Civcon which he knew was the company with which DoT had previously contracted for the Exmouth boat harbour breakwater construction before Civcon went into liquidation and the Department entered into contract E 166 with Thiess. He was also aware there was a dispute between Civcon and DoT, part of which related to whether the quarry was adequate to allow Civcon to extract sufficient rock to provide for the breakwater. He took them to the quarry where they spent some 1-1/2 hours walking around and taking photographs of rehabilitated quarry faces and current working faces. He observed that work was being carried out on face 5, that being one of the faces which encroached into the sublease area. Brown's understanding was that the group were there on behalf of Civcon for purposes related to that company's dispute with DoT. At no stage did anybody mention any sublease to him.

57 At 8am on Friday 17 January 1997 Simunovich, Maloney and Robinson again arrived at the Exmouth boat harbour site office and told him that they intended to survey the original quarry boundaries, place markers at the corners of the quarry and photograph the quarry from the air. Again, at that stage he was not aware of the existence of Finesky, nor that the company had an adjoining sublease next to the quarry. His assumption was that the survey related to the liquidation of Civcon and that company's dispute with DoT.

58 He contacted Boreham, who was then in Exmouth staying at the Potshot Hotel, and notified him of the intended quarry boundary survey. Boreham subsequently advised that the group should be permitted access to the quarry. Brown saw that they conducted a survey between 1 and 3.30pm on 17 January 1997 although they did not put markers out until the following day. Later in the morning of 18 January they gave him a normal size photographic print showing an aerial view of the quarry which included red markers at the corners of the square which Simunovich informed him indicated the corners of the original quarry. They told him that this was a photograph of the quarry taken from the air about 8.30am that morning. He says there was no discussion of any nearby mining lease held by Finesky, nor of any encroachment into that subleased area. He presumed he was being given the photograph in connection with the Civcon dispute.

59 After the group left Brown arranged for the Thiess surveyor to survey the corner pegs placed by them and to provide the coordinates, which he then plotted on a drawing showing the original quarry boundary. He noted that the plotted coordinates closely coincided with the original quarry boundary corners. He then faxed that information, together with a photocopy of the aerial photograph provided by Simunovich to Boreham in Perth.

60 On the morning of Monday 20 January 1997 whilst Brown was talking to Boreham on the telephone, a facsimile message from Simunovich and Maloney arrived at his office. This was the one already referred to. He read the message to Boreham who told him that he had been made aware of the situation some 10 minutes earlier. He says Boreham advised him to continue operations as normal until advised to the contrary from DoT's Fremantle office. He forwarded a copy of the facsimile to Boreham.

61 Some time later the same day he received a telephone call from Simunovich enquiring whether or not he had received the facsimile. He said that he had and that he had discussed the matter with Boreham and was awaiting instructions.

62 Brown went to the quarry and took photographs some time between 1 and 2.30pm on 20 January 1997. His recollection was that drilling and blasting in the disputed area had finished prior to 20 January and on that date WA Limestone was tidying the area by removing suitable rocks to stockpiles and pushing down quarry faces. That this process was still underway on 20 January is confirmed by the photographs taken that date and by further photographs he took the following day. The comparison of the photographs indicate that the quarry faces had been substantially battered down. The term "battering down" describes the process of creating a slope over a sheer quarry face in order to make the face safe. This may be done by a combination of techniques; the bottom part of the slope may be created by pushing waste material back onto the sheer quarry face and the top part of the face may be blasted down.

63 Brown says he received another phone call from Simunovich at 3.30pm on 20 January 1997 who asked whether quarrying had stopped. He told Simunovich he was still awaiting instructions from Boreham. At that time, however, drilling and blasting to extract rock had ceased but rock which had already been quarried was being sorted and stockpiled. It was later established that the stockpiled rock was located outside of the subleased area.

64 About 4.30pm on 20 January Brown spoke to Boreham again by telephone and told him of the calls from Simunovich. Boreham asked him to telephone Simunovich and ascertain more details of the disputed quarry operations. He did that and Simunovich then told him that DoT's operations in the north-west area of the quarry had intruded into the south-east corner of the Alcoa lease, portion of which had been subleased to Finesky, which was a company of which Simunovich was a director. Brown relayed that information to Boreham by facsimile.

65 The following day Brown took the further photographs already mentioned and that afternoon was advised by a WA Limestone representative that rehabilitation of that area of the quarry faces was complete. The photographs taken on the morning of 21 January 1997 show a drill operating in the disputed area but the WA Limestone representative, Renzo Della Bona, confirmed that those holes were not charged nor blasted.

66 Later in the afternoon of 21 January 1997 Boreham rang Brown who advised him that all quarrying operations in the disputed area had ceased. Boreham asked him to convey that to Simunovich. Brown received a call from Simunovich about 2.35pm and during the course of that conversation advised him that DoT had ceased quarrying operations in the area concerned.

67 On Wednesday 22 January 1997 WA Limestone and Thiess hired a light aircraft and a professional photographer to take aerial photographs of the harbour construction site and the quarry site. Brown went with them and took some photographs of his own. These show the quarry faces pushed down and in a safe condition. They also show a line of unblasted charge holes along the top of one of the quarry faces in the disputed area and that the roads into that area were still in position.

68 On Saturday 25 January 1997 Brown, together with the Thiess surveyor and an assistant, pegged out the south-east corner of the sublease and took further photographs. This was the first time he was aware of the precise boundaries of the sublease.

69 According to Brown, WA Limestone withdrew its quarrying equipment from the quarry on 29 January 1997.

70 Brown's evidence on this is generally confirmed by that of Della Bona. He was a director of PMR which was trading as WA Limestone. They began work in Exmouth about October 1996 and completed the subcontract on 31 January 1997. Della Bona was on site at Exmouth supervising the quarrying operations from October 1996 to January 1997.

71 In the first week of December 1996 WA Limestone employed Dexter Carr to act as quarry manager. He was a registered quarry manager under the Mines Safety and Inspection Act 1994 (WA) and remained in that position until the contract finished on 31 January.

72 Della Bona described the work which WA Limestone was subcontracted to do as being first to quarry the limestone then to cart the stone to the breakwater site and finally to build the breakwater by placing the limestone into the ocean. It was Thiess' responsibility to undertake the excavation of the harbour basin and the entrance channel.

73 WA Limestone conducted the mining of the limestone by drilling and blasting. This involved drilling holes behind the quarry face and then charging them up with explosive. The face would then be blasted and the blasted material sorted into the various material classes. That material would then be carted to the harbour and placed in the breakwaters as and when required. Following the completion of mining in any particular part of the quarry WA Limestone was required to rehabilitate that part and make it safe by battering.

74 Della Bona testified that in late January 1997, just before completion of the contract, WA Limestone was working in the quarry close to a boundary pegged out by Thiess. After they had finished blasting and carting rock from this particular area he had a conversation with Brown about a week after WA Limestone had commenced rehabilitation work. Brown told him there was a problem about where they had been operating and asked them not to take any more rock from that area. Della Bona says that at the time of that conversation WA Limestone had already started battering in the area with the bulldozer because the quarrying operation had been completed. He says that after that conversation WA Limestone did no more blasting in that whole general part of the quarry, even for the purposes of battering and nor did it cart any more rock out of that area, although it did proceed to push rubble over the top of the quarry face to complete the battering. Della Bona says that he had a drill rig on site which was about to leave. He asked the driller to drill some extra holes in some of the quarry faces after his discussion with Brown in case he needed them later. He did not want to have to call the drill rig back to the site once it had left. In fact none of those holes were ever blasted.

75 Della Bona says he was not aware of the existence of any nearby mining lease until after his conversation with Brown. During the period of the works he did not observe any marks, posts, trenches or other things which may have been mining lease boundary marks in the vicinity of the area in which he was working, other than those placed by Thiess.

76 He did have a recollection that some time before Christmas 1996 whilst working on a face within the disputed area Simunovich, Maloney and another person who he believed to be a geologist, visited the work. His recollection was that was on a Saturday morning. He also recalled Chris Otto, his leading foreman, had told him that he had spoken to a group of men in the quarry.

77 Otto was a plant operator who drove a Caterpillar loader in the quarry for WA Limestone during late 1996 and early 1997. He was also in charge of drilling and blasting and although Thiess had nominated a quarry manager who would visit the quarry each day, Otto was effectively the person in charge, day to day. The first Thiess quarry manager was Mr William McWurter but he was later replaced by Dexter Carr. Otto gave evidence of an occasion before Christmas 1996 when he came upon a group of three men in a white Toyota landcruiser on the quarry site. He considered it unsafe for them to be there and confronted them. There was some acrimonious conversation during which threats were made. Later that day Otto spoke to Della Bona by telephone who told him that the group was from Civcon and they would be returning. In fact they did return late in the afternoon, accompanied by Brown. Otto did not speak to them on that occasion. He recalled that in January 1997 some considerable time after this incident, he was told by Brown not to do any more work on a particular quarry face because WA Limestone were not supposed to be operating there. He confirms that when he was given that instruction they had already finished quarrying two to three days earlier and had begun rehabilitating the area. According to his recollection the bulldozer spent another day or two rehabilitating in the area after the conversation with Brown.

78 Dexter Carr was called by the plaintiff. He had been employed by Civcon during 1995, prior to its liquidation, as its quarry manager on the Civcon contract. He ceased working as quarry manager for Civcon on 25 August 1996 when all work in relation to that company's quarrying activities were suspended. In early November 1996 he commenced employment as a quarry manager with WA Limestone, which position he held until about February 1997. He had been engaged by Della Bona who came to his house in Exmouth early in November 1996 and asked him whether he would be interested in becoming WA Limestone's quarry manager for completion of the project. According to Carr's evidence, Della Bona explained that WA Limestone needed a contract manager pursuant to the contract but did not have one and that his appointment would be as a "token" or "figurehead" only. Carr states that he explained to Della Bona that even though he was to be a "figurehead" appointment he would still need to visit the quarry site daily, or at least once every two days to inspect quarrying operations. Della Bona agreed to that. Carr went to the quarry site for the first time as WA Limestone's quarry manager the next day and says he visited the quarry almost every day from then until the quarry operation ceased late in January 1997.

79 When he first visited the site he saw that WA Limestone was quarrying two faces, one in the south-east area of the quarry and one towards the north-west. While quarrying in the south-east area WA Limestone encountered a cave and shortly after that, quarrying in that area ceased - this was by late November 1996. From that point WA Limestone completed the contract using rock from the north-west face.

80 The face which WA Limestone was working in the north-west was known as face 5. By December 1996 the face was outside the original quarry boundaries within which Civcon had been required to operate. Carr testified he knew this because Civcon had excavated rock right up to the north-west boundary of the original quarry during his time as its quarry manager and had not been able to excavate beyond that boundary. He stated that when he came on as quarry manager for WA Limestone a large volume of material had been removed in the area outside the original north-west boundary. Faces which had been developed before he had been appointed were exhausted and by December 1996 only face 5 was producing material. He says that some time in late December 1996 or early January 1997 WA Limestone opened a new face known as face 7. From December until the quarrying operation ceased all material placed in the breakwaters came from face 5 or face 7.

81 Greg Robinson is a qualified surveyor with 14 years' experience in mine surveying. He had known Simunovich since about 1982 when they were both working for the Department of Marine and Harbours and Simunovich was his boss. They are friends. On cross-examination (t 298 et seq) Robinson said he came to be at the same quarry at Exmouth on 18 January 1997 because Simunovich (who is himself a qualified surveyor) asked if he could borrow Robinson's surveying equipment to survey a quarry and Robinson had gone with him. He said he was not paid for it. He thought Simunovich wanted to relocate some points of the quarry relating to what Civcon had been doing. He agreed that as a professional surveyor taking probably three days to accompany Simunovich to Exmouth was "quite a decent favour". He could not recall anything being said about Finesky and he did not think there had been any mention of Simunovich and Maloney having a sublease in the area, until after his first visit to Exmouth (t 303). He thought the purpose of the visit was to confirm the original quarry boundary. It was only after the photo was taken that he realised quarrying had been done outside the original area.

82 Robinson prepared a report on material removed from the area of the encroachment. I will return to that below.

83 On 20 January 1997 Boreham became aware that Simunovich and Maloney - whom he knew as directors of Civcon - had claimed that DoT's quarrying operation in Exmouth had encroached into a mining lease held by them. He recalled speaking to Brown and discussing the fax which Brown had received and a copy of which was sent to him by Brown. Boreham noted that no evidence was advanced to support the claim, Finesky was not mentioned in the fax, there was no supporting information regarding the claim and he was not aware of the mining lease referred to in the facsimile message. From his daily conversations with the site superintendent he was aware that operations in the quarry, including in the north-west area, were substantially complete and that WA Limestone was in the process of rehabilitating parts of the quarry. Boreham did not immediately order the work to cease because there was no evidence to support the claim by Simunovich and Maloney that they held a mining lease, nor that Thiess or WA Limestone had encroached upon the area of such a lease and that under the conditions of environmental approval for the project, DoT had an obligation to rehabilitate the quarry including stabilising the quarry faces. In addition, WA Limestone was currently rehabilitating the area of the quarry which was alleged to be in the disputed area and that work consisted primarily of bulldozing material against the quarry faces. If the claim proved to be valid, then in Boreham's view the material would be easy and cheap to remove and DoT had only removed large pieces of rock and much of the replaced material would still be suitable for uses such as production of aggregate or road base which was the most likely use for a quarry at Exmouth. Furthermore, WA Limestone had advised that the works requiring rock were nearing completion and they would be withdrawing plant from the quarry within a few days. If the claims proved to be false then DoT could expect to incur significant additional costs if it was necessary to remobilise plant to complete the rehabilitation. Boreham knew that Civcon was in liquidation and felt there was little chance of recovering these costs should the claim be unfounded. At that time he was not aware of the existence of Finesky and assumed that the claim was associated with Civcon of which Simunovich and Maloney were the directors. He also added that it would have been irresponsible for DoT to leave the quarry in an unsafe condition. Boreham said that for all these reasons he instructed Brown to continue work until he had the opportunity to check the claims by Simunovich and Maloney and direct him otherwise.

84 Boreham contacted DME by telephone and they sent by facsimile a quick appraisal which listed mining tenements in Crown reserve 34055. He received that at 3.35 pm on 20 January 1997. The only tenements shown were for Whitecrest and Alcoa. There was nothing to support the claim by Simunovich and Maloney that they held a mining lease in the area.

85 Boreham telephoned Brown and asked him to contact Simunovich and ascertain further details of the claim. Brown advised him by fax timed at 4.50 pm that day that he had spoken with Simunovich who had told him they held a sublease of the Alcoa lease in the name of Finesky. That was the first time Boreham had heard of Finesky.

86 Boreham again contacted DME and they forwarded a part of a plan showing the Alcoa lease in relation to other geodatic data by fax timed at 5.19 pm. This plan was illegible but by the time he actually received and examined it, it was too late in the afternoon for Boreham to contact DME again. He was able to obtain a second legible fax of the same plan the following day at 10.15 am and he was able to ascertain that the amended quarry boundary intruded into the Alcoa lease area; however he could still not tell from those documents whether the DoT quarrying operation had entered the Finesky sublease area.

87 At 10.56 am on 21 January Boreham received a copy of the fax from Simunovich and Maloney to Hutton, which had been sent to the Exmouth site office. Boreham telephoned Brown early in the afternoon of 21 January who advised him that all quarry operations had ceased in the disputed area. He told Brown to pass that information on to Simunovich.

88 A meeting was held in Civcon's Bassendean office on 21 January between Simunovich, Maloney, Ian Hutton and Boreham to discuss the Finesky claim. At that meeting Simunovich and Maloney were advised that quarrying operations had ceased in the disputed area. They said that they wished to survey their lease in the near future and discuss compensation. They also showed a marked up photograph indicating the DoT quarry and the boundary of the Alcoa lease, a copy of the sublease and a copy of the ministerial consent for the sublease.

89 A letter dated 24 January 1997 was sent by Simunovich and Maloney to the Minister thanking him for his prompt action in stopping the quarry operations and advising that they estimated the loss of profit per tonne at $29.33.

90 The plaintiff's writ was issued on 20 May 1997. By trial, the re-amended statement of claim, after pleading certain introductory matters including the mining sublease approved by the Minister and entered in the Mining Register on 20 January 1997, continued as follows:

"4. Under the Lease, the plaintiff is entitled to:

(a) work and mine the land to which the Lease applies ("Land");

(b) take and remove from the land any minerals and dispose of them;

(c) do all acts and things that are necessary to effectually carry out mining operations in, on or under the Land;

(d) use, occupy and enjoy the Land;

(e) own all minerals lawfully mined from the Land, including limestone rock.

5. Between on or about 9 December 1996 and on or about 27 January 1997 the defendant, by his agents, Thiess Contractors Pty Ltd ("Thiess") and PMR Quarries Pty Ltd trading as WA Limestone ("WAL"), entered on the Land, mined and carried away and disposed of to his own use, 13,677 BCM of limestone rock ("Limestone").

6. The plaintiff was entitled to the Limestone by reason of the facts pleaded in paragraph 4 above.

7. The defendants conduct pleaded in paragraph 5 above was oppressive and arbitrary.

Particulars

At all materials (sic) times, the defendant, by his representatives who supervised and instructed Thiess, knew the defendant was mining and carrying away limestone rock to which he was not entitled.

8. As a result of the defendant's conduct pleaded in paragraph 5 above, the plaintiff has suffered loss and damage of $2,029,650.00, alternatively $587,000.00.

Particulars

(a) The plaintiff's loss of $2,029,650.00 is calculated as follows:

(i) 13677 BCM of Limestone at a dry density of 2.65 tonnes per BCM is 36,244 tonnes;

(ii) quarry yield of 80% for useable material - 28,995 tonnes;

(iii) value per tonne of Limestone as cladding, tiling and other building products - $270.00;

(iv) cost per tonne of severing Limestone from the Land to produce cladding, tiling and other building products - $200.00;

(v) difference - $70.00;

(vi) total loss is 28,995 x $70.00 - $2,029,650.00.

(b) Alternatively, the plaintiff's loss and damage of $587,000.00 is calculated as follows:

Use as armour stone/core

Total removal approximately 20,000 tonne

Of which

$85% armour stone 17,000 tonne

15% core 3,000 tonne

Market price armour $30/tonne $476,000.00

Less extraction costs $2/tonne

= $28/tonne

Market price core $9/tonne

Less extraction costs $2/tonne

= $7/tonne $21,000.00

$497,000.00

Spoil left behind, say 15,000 tonne

Value as core/rubble $9 tonne

Less value as land fill $3/tonne $90,000.00

$587,000.00

9. The plaintiff repeats paragraphs 1 to 8 above.

10. In or about September 1996, the defendant entered into a contract with Thiess and Thiess, in turn, entered into a subcontract with WAL for the quarrying of limestone material in an area including the land.

Particulars

Particulars are entirely within the knowledge of the defendant and the plaintiff will provide full particulars prior to trial.

11. By the contract referred to in paragraph 10 above, the defendant authorised Thiess and WAL to enter the Land and extract the limestone from it.

12. Implicit in the authorisation referred to in paragraph 11 above, was a representation by the defendant to Thiess and WAL that the defendant was entitled to authorise its agents to enter upon the Land and extract limestone from it ("Representation").

13. The Representation was conduct by the defendant in the course of trade or commerce.

14. By reason of the facts, matters and things referred to in paragraph 4 above, the Representation was untrue, misleading and deceptive.

15. As a result of and induced by the Representation, between on or about 9 December 1996 and on or about 27 January 1997, Thiess and WAL entered the Land, extracted the Limestone and disposed of it to the use of the defendant.

16. As a result of the facts and matters referred to in paragraph 15 above, the plaintiff has suffered loss or damage.

Particulars

The plaintiff repeats the particulars to paragraph 8 above.

1. Damages including exemplary damages;

2. An order for compensation under section 77 of the Fair Trading Act 1987;

3. Interest on damages pursuant to the Supreme Court Act 1932 from and including 27 January 1997;

4. Costs;

5. any other order this honourable Court deems appropriate;

6. any goods and services tax payable in accordance with the A New Tax System (Goods and Services Tax) Act 1999 on the items of claim or damages generally."

91 By his amended defence the defendant pleads, in substance, that:

• By the sublease the plaintiff was granted a non-exclusive right to enter part of the land the subject of Mining Lease 08/6 for the purpose of extracting approximately 20,000 to 100,000 tonnes of limestone every year during the term of the sublease;

• Under reg 110(3) of the Mining Regulations 1981 the sublease was not effectual to pass any estate or interest until it was registered on 20 January 1997;

• The plaintiff is not, and at all material times was not, able to lawfully mine any limestone from the subleased land because:

a) Mining Lease 08/6 was subject to a condition prohibiting mining being carried out within 800 metres of any water bore, and the land lay within 800 metres of at least 3 water bores;

b) the plaintiff has not complied with relevant requirements of environmental protection, native title and mining legislation;

• the defendant's contract with Thiess was entered into on 2 October 1996;

• portion of the quarry site from which Thiess was to quarry limestone for the Exmouth Boat Harbour included an area which, without the defendant's knowledge, was part of Mining Lease 08/6 and which later became the subject of the sublease;

• from about 9 December 1996 until a day prior to 20 January 1997 WA Limestone quarried limestone from within the subleased area and carried it away to be used for the construction of the Exmouth Boat Harbour;

• the plaintiff suffered no loss or damage, or alternatively, failed to mitigate any such loss or damage.

No exclusive right to mine may be claimed against the Crown

92 The defendant's first contention is that a mining lease granted under the Mining Act 1978 (WA) does not operate to grant exclusive rights to the lessee as against the Crown and that the Crown was entitled to mine and remove limestone from the subleased area notwithstanding the sublease.

93 The argument begins with the proposition that at common law the Crown in right of the State has radical title to all land. The regime in the Mining Act for granting tenements is a statutory procedure for carving out interests in the Crown's common law rights. In effect, the grant of a tenement is a sale by the Crown of minerals reserved by the Crown to be taken by the lessee over a period of years as royalties. So much may be accepted: see Newcrest Mining (WA) Ltd v The Commonwealth [1997] HCA 38; (1997) 190 CLR 513 per Gummow J (at 634-5) with whom Toohey and Gaudron JJ generally concurred (ibid, 560, 561 - but see McHugh J, contra, at 573); Wade v NSW Rutile Mining Co Pty Ltd [1969] HCA 28; (1969) 121 CLR 177, 192-3. It is necessary to consider the nature of a mining lease under the Mining Act. Gummow J discussed the common law concept in Newcrest (at 616):

"In Gowan v Christie (1873) LR 25c & Div 273 at 284 Lord Cairns described a 'mineral lease' as understood by the common law. His Lordship said it was:

'liberty given to a particular individual, for a specific length of time, to go into and under the land, and to get certain things there if he can find them, and to take them away, just as if he had bought so much of the soil.'

With reference to this passage, Windeyer J, in Wade v New South Wales Rutile Mining Co Pty Ltd [1969] HCA 28; (1969) 121 CLR 177, 192, said of the grant by the Crown of a mining lease of an area of private land that it was 'really a sale by the Crown of minerals reserved to the Crown to be taken by the lessee at a price payable over a period of years as royalties'. Kitto J had earlier stated that the common law recognises that a lease which entitles the lessee to work a mine on the demised premises gives the right not only to use the property, but also as part of the same grant the right to appropriate the minerals when severed from the land: Commissioner of Stamp Duties (NSW) v Henry [1964] HCA 4; (1964) 114 CLR 322 at 330. Windeyer J also referred in Wade to the practice in Australia, when making Crown grants, to reserve minerals to the Crown as being a keeping back of a physical part of that which otherwise was granted: Wade [1969] HCA 28; (1969) 121 CLR 177 at 194."

94 Section 82 of the Mining Act prescribes the covenants and conditions that are to apply to every mining lease. Section 85 sets out the rights of a lessee. Section 85(1) relevantly authorises a lessee to work and mine the land and to take and remove minerals from the land and dispose of them.

95 Section 85(2) provides that subject to the Act, a lessee:

"(a) is entitled to use, occupy and enjoy the land in respect of which the mining lease was granted for mining purposes; and

(b) owns all minerals lawfully mined from the land under the mining lease."

"the rights conferred by this section are exclusive rights for mining purposes in relation to the land in respect of which the mining lease was granted."

97 The defendant argues these provisions do not operate against the Crown in right of the State.

99 There is no express provision in the Mining Act purporting to bind the Crown. The defendant relied on (inter alia) Commonwealth v Western Australia [1999] HCA 5; (1999) 196 CLR 392 for its assertion that the Mining Act had no express nor implied operation which would divest the Crown of its property, rights, interests or prerogatives (see Gleeson CJ and Gaudron J at 410, ibid, where their Honours described this as the presumption that legislation does not affect government property). Although Commonwealth v Western Australia concerned the application of the (State) Mining Act to the Crown in right of the Commonwealth, the presumption(s) apply to the Crown in all its capacities and not simply the Crown in right of the community whose legislation is under consideration. For this reason the presumption with respect to government property is one with respect to all polities in the federation, not simply that of the enacting polity (ibid, at 410-411, referring to Bradken Consolidated Ltd v Broken Hill Pty Co Ltd [1979] HCA 15; (1979) 145 CLR 107, 122-3, 129, 136). This being so Commonwealth v Western Australia is not to be distinguished on the ground that it concerned the application of a State law to the Crown in right of the Commonwealth. However that case is distinguishable in that the question was not whether the Mining Act bound the Commonwealth but rather whether it applied to lands acquired by the Commonwealth for a public purpose (Gleeson CJ and Gaudron J, op cit, at 409).

100 In my view s 112(1) of the Mining Act is also of significance here. That section reads:

"(1) Subject to subsection (2), every prospecting licence and exploration licence is subject to a reservation in favour of the Crown and any person authorized thereby of the right to enter thereon and remove therefrom any rock, stone, clay, sand or gravel for use for any public purpose or for use in any prescribed work or undertaking."

101 The fact that the Act expressly reserves that right to the Crown in respect specifically of prospecting and exploration licences seems to me clearly to indicate first that the legislature apprehended that such reservation was necessary because the Crown would otherwise have retained no right, and secondly, in the absence of such a reservation in respect of mining leases the legislative intention was that there was to be no such reserved right in the Crown. It is also to be noted that the Third Schedule to the Alcoa lease contains a reservation to the Crown of all petroleum on or under the land.

102 The defendant's submissions on this point, founded on Bropho v Western Australia [1990] HCA 24; (1990) 171 CLR 1 and Bridgetown Greenbushes Friends of the Forest Inc v CALM (1997) 18 WAR 126, 183, do not I think go to the precise issue here. Clearly enough the Mining Act does apply to the Crown in right of the State for the very reason that (as the defendant acknowledges) it constitutes a statutory regime for carving out interests in the Crown's common law rights. It could not sensibly be argued, for example, that s 85(2)(b) gives a lessee ownership of all minerals lawfully mined under the lease as against all the world, except the Crown in right of the State. Nor in my view does s 85(3) give a lessee exclusive rights as against everyone except the Crown.

103 The Alcoa lease (TD 3) is in Form No 8 of the Schedule to the Mining Regulations 1981. It is a lease of the subject land for a term of 21 years. The covenants and conditions include payment of rents and royalties, use of the land only for mining purposes, compliance with prescribed expenditure conditions, and a restriction on underletting without the prior written consent of the Minister. Other special conditions notified to Alcoa in a letter from the Principal Registrar of the Department of Mines dated 22 August 1984 (TD 4) included compliance with the provisions of the Aboriginal Heritage Act 1972 (WA) to ensure that no action is taken which is likely to interfere with or damage any Aboriginal site (condition 3) and that no mining was to be carried out within 800 metres of any (water) bore (condition 4). By condition 8 the right of ingress and egress to the lease area is required to be available at all reasonable times to employees of the Public Works Department.

104 The sublease was dated 9 December 1996 and by cl 1(a) and 5(a) was deemed to commence on that date.

105 The term of the sublease was for four years with a right of renewal for a similar term. Some of the presently relevant provisions of the sublease were as follows:

"2. CONDITION PRECEDENT

This is a condition precedent of this Sublease that the Minister of Mines provides his prior written consent to the subleasing of part of the Lease, namely the Land to the Sublessee.

3. QUANTITY, EXTENT & METHOD OF MINING

a) Dependent on the level of building and construction activity in the vicinity of the Land, the Sublessee will extract approximately 20,000 to 100,000 tonnes of limestone every year during the Term.

b) The Sublessee will conduct all quarrying and processing such as rock cutting and crushing within the parameters of the Land.

c) In order to produce high quality building products from the limestone extracted from the Land, the Sublessee will open small faces where higher grade limestone is present. The limestone will be removed by drilling, blasting and cutting blocks in situ where appropriate.

a) Gross tonnage of limestone extracted from the Land will be assessed by quarterly surveys conducted by the Sublessee.

b) The Sublessee will pay Alcoa a royalty of $0.30 per gross tonnage of limestone extracted from the Land...

a) The Sublessee will not use or permit the Premises to be used for any purposes other than mining and processing limestone from the Land and related purposes.

...

The Sublessee covenants that it will:

a) comply with all the terms and conditions of the Lease, as well as all statutes, ordinances and regulations relating to the Premises including without limitation all EPA and other regulatory conditions for the development, operation and rehabilitation of the Land;

b) ...

c) ...

d) conduct their operations on the Premises in accordance with a mine plan approved by Alcoa and the State of Western Australia;

e) prior to commencing any mining submit for Alcoa's approval a conceptual mine site rehabilitation plan;

f) prepare all necessary submissions for environmental assessment and approval by the EPA and will submit all such submissions in draft form to Alcoa prior to submission to the EPA; ...

g) ...

h) ...

i) ...

j) ...

k) ...

l) ...

m) at the end of the Sublease deliver possession of the Premises to Alcoa in a state of repair and rehabilitation as agreed by Alcoa; and

n) upon being given 24 hours notice allow Alcoa to conduct inspections of the Premises.

9. COVENANTS BY ALCOA

Alcoa covenants that it will:

a) ensure that the Sublessee may possess the Premises without interruption or disturbance from Alcoa or its officers; ...."

106 There is nothing in the lease (nor the sublease) which would suggest any different view of the legislative provisions than that the intention was that the rights of the lessee be exclusive as against the whole world, including the Crown.

107 The whole concept of the Mining Act is to enable the State to divest itself of its interests in or rights to minerals in exchange for payment of fees and royalties. Thus, while the Crown has a continuing right to unmined minerals by way of reversion on the expiration of the term of the lease, the Mining Act does not continue a right in the Crown to mine and remove the minerals inconsistently with the rights granted to the lessee under the lease, short of lawful termination of the lease.

108 The defendant argues that the plaintiff gained no right nor interest under the sublease until it was consented to by the Minister in writing, stamped and registered.

109 There are three ways in which the requirement for ministerial consent are put. The first is that pursuant to s 82(1)(d) of the Mining Act the Alcoa lease was subject to a condition that Alcoa would not underlet or part with possession with any part of the leased land without the prior written consent of the Minister. The second was that prior written consent of the Minister was expressed as a condition precedent of the sublease itself. The third was that ministerial consent was given (in fact by a delegate, but nothing turns on that) expressly:

"... subject to the agreement being properly executed and assessed by the Department of State Taxation." (Letter from Department of Minerals and Energy dated 10 December 1996: trial doct No 28).

110 In Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27; (2000) 22 WAR 101 the parties had entered into a form of heads of agreement which provided (inter alia) that the appellant would expend $500,000 over three years on the respondent's exploration and mining tenements "to earn a 100% interest in any base metals discovered." There were various other clauses. The appellant sought a declaration that the heads of agreement was a valid and binding contract. An argument put on behalf of the respondent was that the agreement was illegal and void because it conferred a legal or equitable interest in an exploration licence contrary to s 64 of the Mining Act. That section stipulated that:

"(1) During the first year of the term for which an exploration licence is granted, a legal or equitable interest in or affecting an exploration licence shall not be transferred or otherwise dealt with, whether directly or indirectly, unless -

(a) ...

(b) prior written consent to the dealing is given by the Minister or an officer of the Department acting with the authority of the Minister."

111 Ipp J (with whom Pidgeon J agreed) held first that the right to earn an interest in base metals discovered on the land had no bearing on any interest in the exploration licence itself (ibid, [102]) and that the agreement did not transfer nor otherwise deal with a legal or equitable interest in or affecting an exploration licence (ibid, [104]). Importantly though for present purposes, his Honour held (at [106]) that even if it did the agreement was not thereby rendered either illegal or ineffective. His Honour thought the remarks of Kennedy J in Terrex Resources NL v Magnet Petroleum Pty Ltd (1988) 1 WAR 144 at 162 concerning s 80 of the Petroleum (Submerged Lands) Act 1967 (Cth) pertinent. That section relevantly provided:

"80. A legal or equitable interest in or affecting an existing ... permit ... is not capable of being created, assigned, affected or dealt with, whether directly or indirectly, except by an instrument in writing."

"The appellant's contention was that, in the absence of an instrument in writing, the agreements were ineffective. But that contention appears to me to gloss the statute. The purpose of s 80 is to prevent legal or equitable interests in permits from being created, assigned, affected or dealt with, whether directly or indirectly, except by an instrument in writing. It does not provide that oral agreements shall be of no force: cf s 81(2). Accordingly, although an oral agreement may not, for example, assign an interest in a permit, this is not to say that it does not create a personal right in contract. I consider that it does: cf Adamson v Hayes [1973] HCA 6; (1973) 130 CLR 276 at 297, 304, 306, 319-320, the note by R P Austin, 'The Conveyancer: Moot Point' (1974) 48 ALJ 322 at 324 and N C Seddon, 'Contracts for the Sale of Land: Is a Note or Memorandum Sufficient?' (1987) 61 ALJ 406."

113 Ipp J noted that s 64(1) of the Mining Act was in similar, although not identical, terms to s 80 of the Petroleum (Submerged Lands) Act and did not provide that an agreement purporting to transfer or deal with an exploration licence during the first year of the term of the exploration licence is otherwise invalid or of no effect (Anaconda, [107]).

Finesky Holdings Pty Ltd v Minister for Transport for Western Australia [2001] WASC 87

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (434 paragraphs)

Finesky Holdings Pty Ltd v Minister for Transport for Western Australia [2001] WASC 87 (4 April 2001)

No exclusive right to mine may be claimed against the Crown

Parties

Legislation Cited (10)

Cases Cited (31)