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[1997] NSWCA 206
Court of Appeal (NSW)
1997-08-29
Young J, Mason P, Stein JA
Original judgment source is linked above.
MINISTER FOR MINERAL RESOURCES v BRANTAG PTY LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL
MASON P, STEIN JA AND SHEPPARD AJA 29 August 1997, 20 November 1997
Mines and minerals - reservation of "all minerals" to Crown - whether included mineral sands of rutile, zircon, and ilmenite - meaning of "minerals". Crown grants - discussion of principles of construction - history of reservation of minerals in NSW.
Since 1989 the respondent was the registered proprietor of two parcels of land at Port Stephens. The respondent commenced proceedings in the Equity Division seeking a declaration that it was the owner of any rutile, ilmenite and zircon present within the land; and seeking an order that the appellant account to it for royalties in respect of those minerals. Young J concluded that the three minerals were not reserved to the Crown in an "all minerals" reservation in Crown Grants issued in 1877 and 1879 and accordingly found that the respondent was entitled to recover (without deduction) the royalties that the Crown had received pursuant to the Mining Act 1992.
On appeal, the principal issue was whether a reservation of "all minerals" in Crown Grants issued in 1877 and 1879 extended to the mineral sands of rutile, zircon and ilmenite that were later discovered and extracted from the sandy hills that were the lands included in the two grants.
(1) Although the commercial purposes of the three minerals may or may not have been unknown in the mid-nineteenth century, there was ample evidence that their existence as minerals was as real to the scientific community of the day as was their physical presence in the respondent's land at the time of the relevant Crown Grants.
(2) The three minerals were within the reservation, notwithstanding the fact that the possibility of extracting them from the black sands of the east coast of Australia may not have been considered until the 20th century.
(3) The "all minerals reservation" was not confined to the royal minerals of gold and silver, but related to a wider but necessarily undefined class of "all minerals".
(4) The general rule of construction of grants is that ambiguity is to be resolved in favour of the grantee, but the opposite principle applies in favour of the Crown. A reservation of minerals in a Crown Grant is to be determined having regard to the facts and circumstances existing at the time at which the instrument was executed. Principles relating to the construction of Crown Grants discussed in general.
(5) It is settled law that in construing an expression such as "mines" or "minerals" in a conveyance or statutory reservation of minerals, the ultimate search is for the expressed intention of the parties. Courts have applied a vernacular test, ie, what those words meant in the vernacular of the mining world. Principles relating to the meaning of "minerals" in reservations in Crown Grants discussed.
(6) There is no general principle of interpretation that a reservation or exception of "minerals" excludes the contents of the ordinary rock, stone or soil of the district. Relevance of context and evidence of value of particular minerals forming part of or found within that "ordinary" rock, stone or soil discussed.
Mason P The principal issue in this case is whether a reservation of "all minerals" in Crown Grants issued in 1877 and 1879 extended to the mineral sands of rutile, zircon and ilmenite that were much later discovered and extracted by processing from the predominantly sandy hills that were the lands included in the two grants.
The respondent has, since 1989, been the registered proprietor of two parcels of land registered under the Real Property Act. Each parcel had a number of prior certificates of title, stemming back to Crown Grants made on 10 October 1877 and 3 February 1879 respectively. The Court was informed that the 1877 Crown Grant was made pursuant to s21 of the Crown Lands Alienation Act 1861, and that the 1879 Crown Grant was made pursuant to s13 of the same Act. Each Crown Grant was made:
"SUBJECT NEVERTHELESS to the reservations, provisoes and conditions hereinafter contained, that is to say: PROVIDED NEVERTHELESS And We Do Hereby Reserve unto Us, Our Heirs and Successors all Minerals which the said Land contains, with full power and authority for Us, Our Heirs and Successors and such person or persons as shall from time to time be authorised by Us, Our Heirs and Successors, or by the Governor for the time-being of Our said Colony, to enter upon the said Land and to search for, mine, dig and remove the said Minerals, with full right of ingress, egress and regress for the purposes aforesaid: PROVIDED ALSO AND WE DO HEREBY FURTHER EXCEPT AND RESERVE unto Us, Our Heirs and Successors, all such parts and so much of the said Land as may hereafter be required for a Public Way, or Public Ways, Canals, or Railroads, in, over, and through the same, to be set out by Our Governor for the time-being of Our said Colony or some person by him authorised in that respect: AND ALSO all Sand, Clay, Stone, Gravel, and Indigenous Timber, and all other Materials, the natural produce of the said Land, which may be required at any time or times hereafter by the Government of Our said Colony, for the construction and repair of any Public Ways, Bridges, or Canals, or for Naval purposes, or railroads... ".
The reservation of "all Minerals which the said Land contains" shall be referred to as the "all minerals reservation". The exception and reservation of "all Sand, Clay, Stone, Gravel, [etc] for the construction and repair of any Public Ways [etc]" shall be referred to as the "construction materials reservation". Reference to the reservations appears in the current certificates of title.
Both before and after the acquisition of the two parcels by the respondent, mineral deposits of rutile, ilmenite and zircon have been mined from the land pursuant to Mining Leases granted to Mineral Deposits Ltd by the appellant or his predecessor. The lessee has paid royalties to the Crown pursuant to those Mining Leases.
The respondent commenced proceedings in the Equity Division seeking a declaration that it was the owner of any rutile, ilmenite and zircon present within the
land; and an order that the appellant account to the respondent for all royalties received by the appellant in respect of those minerals mined from the land. Expressed in its simplest terms, the respondent's case was that the three identified minerals had not been reserved to the Crown under the Crown Grants.
The matter came before Young J, who initially ordered a separate question to be decided which was expressed in the following terms:
URJ MINISTER FOR MINERAL RESOURCES v BRANTAG PTY LTD (Mason P) 3
"Assuming for the purpose only of this application (and noting that the assumptions are made without admissions) that the plaintiff will prove at the trial each and every fact deposed to by Michael Kevin Johns in paral to para10 of his affidavit sworn 25 January 1994 and filed in these proceedings, do the provisions of the Crown Lands Consolidation Act 1913 apply so as to deem zircon, ilmenite and rutile to be excluded from the definition of the words 'all minerals' contained in the Grants of Land Purchased by Conditional Sale without Competition that are annexures 'A' to 'E' to the said affidavit, dated 1877 and 1879 respectively? Note that no issue estoppel will arise from the determination of the preliminary issue other than the question the subject of the preliminary issue. "
The affidavit referred to in the question set out title details and proved the mining activities summarised above. Mr Johns also deposed that the respondent's land is "substantially, if not predominantly, composed of sand hills". The appellant (the defendant below) also read an affidavit providing detailed information relating to the land and mining titles.
In a judgment delivered on 31 October 1994 ("'the first judgment"), Young J addressed the separate question. However his Honour's reasons went well beyond. It appears that the parties and the judge came to recognise that the separate question
missed the real point of the dispute. I will return to such of his Honour's reasoning as is relevant to the issues raised in the appeal.
The matter next came before Young J on 10 November 1994. Counsel asked the judge to determine the whole of the proceedings on the evidence that had been before him on the separate question. The transcript records counsel for the appellant indicating that he was happy to have the matter determined on the basis of the Crown grants. His Honour was informed that, although both sides had obtained "expensive reports" as to the meaning of the word "minerals" according to the "vernacular test" at the time of the Crown Grants, none of this evidence was to be placed before the Court. In a judgment delivered on 18 November 1994 ("the second judgment"), Young J passed to "the final determination of the proceedings ". He indicated his reasons leading to a declaration (which he apparently made) that the respondent was the owner of any rutile, ilmenite and zircon present within the two parcels of land. He also made an order referring to the Master an account of what, if any, royalties were owing to the respondent because of the Crown's grant of mineral leases over the land and the Crown retaining the proceeds. However, he reserved further consideration in case the parties desired him to make a final judgment of a money sum rather than proceed to an enquiry before the Master.
The parties returned before Young J on 1 March 1995 to debate two further questions. One related to whether the minerals were reserved to the Crown in respect of land lying under certain roads in one of the parcels. This issue was disposed of and is not of present concern. The second question debated on that day
was whether the Crown was enticed to deduct one-eighth of the royalties otherwise due to the respondent pursuant to s284(2) of the Mining Act 19921. This issue, which will be explained later, was answered adversely to the appellant in a reserved "third judgment" dated 29 March 1995.
There was a fourth judgment delivered ex tempore on 29 March dealing with the calculation of interest and culminating in a final order (in lieu of the earlier orders in the proceedings) that the appellant pay to the respondent the sum of $229,980.40. This sum represented agreed calculations as to royalties collected under the Mining Leases and withheld by the Crown from the respondent.
The reasons in each judgment are clearly intended to be read as supplementing the earlier judgment or judgments.
The appellant seeks to have the verdict and judgment set aside. On one way in which the case is put, dismissal of the proceedings would follow. An alternative approach would see the proceedings remitted for further hearing.
As already indicated, Young J addressed a number of issues in a series of four judgments. His reasons touching the matters agitated on appeal are to be found in the first three judgments. The second judgment retraced some of the reasoning of the first, and modified it in one respect.
It is possible to summarise the learned judge's reasons as follows:
Young J rejected the argument that s235 of the Crown Lands Consolidation Act 1913 and the definition of "minerals" in that Act (later amended) had any bearing upon the construction of the Grants in this case which were made in 1877 and 18792. These arguments were not pressed on appeal. With respect, Young J was quite correct in ignoring this later statutory material.
In the absence of a relevant statutory provision, Young J described his primary task as being that of construing the Grants themselves, according to their tenor3
Although expressed as reservations, the all minerals and the construction minerals reservations were, in law, exceptions+. Young J also noted case law supporting the proposition that all grants of the Crown are to be construed strictly against the grantee, contrary to the usual policy of the law in the consideration of grants5.
Ultimately, Young J held the question to be one of fact as to what was meant in the community by the word "minerals" at the time the Crown Grants were issued®. In support of this "vernacular test" he cited Jesasu Pty Ltd v Minister for Mineral Resources (No 2)7 and English cases to which reference will be made later in this judgment.
Noting that the three minerals are obtained from the sand by processing the sand8, Young J found that the respondent's land was substantially, if not predominantly composed of sand hills®. In a critical part of his reasoning in the second judgment,!° he said:
He cited R v Redhead Coal Mining Co (1886) LR 7 NSW LR(L) 270.
(1865) 6 B & S257, 284; 122 ER 1191, 1201; Viscountess Rhondda's Claim [1922] 2 AC 339,
353; Hume Steel v Attorney General (re) (1927) 39 CLR 455, 463. For a recent statement, see
Earl of Lonsdale v Attorney General [1982] 3 All ER 579 at 590-1.
URJ MINISTER FOR MINERAL RESOURCES v BRANTAG PTY LTD (Mason P) 5
"... sand includes all its constituent parts. It seems to me that metals do not appear in nature in their pure form. If there is a reservation of gold, that must carry with it a reservation of all the auriferous ore which it is necessary to extract from the soil in order to refine the gold from it. Likewise, it is impossible just to reserve the rutile, ilmenite and zircon, one must extract the sand, refine it, extract the precious substances and then dispose of the residue. The mere fact that in practice the residue has customarily been restored to the beach etc from which it is taken does not take the matter very far. The point is that in order to extract the mineral one must actually extract the substance which bears the mineral. Accordingly the sand must be itself reserved in order to obtain the rutile, zircon and ilmenite."
"The rutile, ilmenite and zircon are contained within that sand. That sand is the ordinary soil of the district. It must follow from the reasoning I gave on 31 October that the rutile, ilmenite and zircon were not reserved to the Crown by the Grants referred to in my earlier reasons for judgment."
In this reference to sand as the "ordinary soil of the district", Young J incorporated his reasoning in the first judgment!2 where he had mentioned
cases which showed that (in specific contexts) sand,13 gravel!4 and stone!5 had been held to be minerals, adding the observation that the three cases cited "had made it clear that ordinarily what is part of the sand would not be considered "minerals'." Later in that judgment!¢ his Honour referred with apparent approval to a submission by counsel for the respondent (the plaintiff below) that the word "minerals " does not mean the ordinary sand of the district!7.
As I read the judgments below, the reasoning summarised in s5 and s6 (which I shall designate as the "sand as the ordinary soil of the district" point) is one of the two specific bases upon which the decision turns.
The other basis for the judgment was what I will term the "expressio unius point'. Young J regarded the distinction in the grants between the "all minerals reservation" and the "construction materials reservation" as having significance to the matter at hand. This was because the grants themselves distinguished between minerals on the one hand and sand, clay, stone, gravel and timber on the other; and restricted the Crown's right to remove the latter to removal for limited and specified purposes. !8
Having determined that the three metals were not reserved to the Crown, Young J concluded that the respondent was entitled to recover from the Crown the royalties it had received from Mineral Deposits Ltd as on an
account of profits. In the third judgment he rejected the Minister's submission that the Crown was entitled to deduct one-eighth of the royalties pursuant to s284(2) of the Mining Act 1992 (or its predecessor, s96 of the Mining Act 1973).
This was because that right was construed as being in the nature of a service charge to be deducted for administration expenses. The right of deduction was held not to represent a commission recoverable simply by virtue of the royalty having passed through the Minister's hands. Since the Minister had collected royalties on his (ie the Crown's) own behalf in the present case, the service charge was held not to be payable. Accordingly, the amount recoverable as an account of profits was not thereby reduced.
The term "mineral sands" is used to describe a group of minerals mined from beaches and near-coastal areas because of their value to industries ranging from aircraft engines and paints to steel making and ceramic glazing. These minerals are principally rutile, zircon and ilmenite ("the three minerals"). Both rutile and ilmenite are converted from their oxide state to form the metal titanium, while zircon is a silicate of the metal zirconium. Rutile is a reddish coloured detrital mineral which is mainly used as a paint pigment, as a welding flux and for the production of titanium metal. Titanium is used in aircraft engines, as a pigment for paints and for other purposes. Zircon is zirconium silicate (ZrSiO4), which is used for ceramics, refractories and zirconium metal smelting. Ilmenite is iron titanate (FeTiO3), the principal ore of titanium. It was agreed between the parties at trial that
the judge would not be required to determine whether or not ilmenite is an ore of iron!9. The three minerals are frequently referred to as heavy minerals or beach minerals and they form the black sand, also known as mineral sand, found particularly in the east coast of Australia. Australia is by far the world's leading miner of mineral sands. I have drawn this summary from Alexander and Hattersley, Australian Mining, Minerals and Oil?° and from the first judgment of Young J2!.
It is common ground that rutile, zircon and ilmenite are minerals according to modern usage and the provisions of the Mining Act 1992 and its predecessor dealing with royalties.
In his work Black Sands: A History of the Mineral Sand Mining Industry in Eastern Australia22, I W Morley traces the history of Australian mineral sands industry. Recognising the need for care in reliance upon historical works, I do not think that the respondent would cavil at the following citation, which I shall assume to be correct for the purposes of this appeal:
"Tt was not until the late 1920s that separation of the rutile and zircon from the black sands was considered. Prior to that time the black sands were mined for their small gold, tin and platinum content only?3.
To point this out does not mean that the three minerals were not recognised as such by the mid-nineteenth century. Their commercial purposes may or may not have
Morley, op cit, pl. Reference to this source is justified pursuant to s144 of the Evidence Act 1995.
URJ MINISTER FOR MINERAL RESOURCES v BRANTAG PTY LTD (Mason P) 7
then been unknown, but there is ample evidence that their existence was as real to the scientific community of the day as was their physical presence in the respondent's land at the time of the relevant Crown Grants. I shall refer later to dictionaries of the day.
RESERVATION OF MINERALS IN NEW SOUTH WALES CROWN GRANTS
As early as 28 September 1788, Governor Phillip reported that it was supposed that the country contained iron, tin and silver. However he gave no encouragement to search after "what, if found in our present situation, would be the greatest evil that could befal the settlement'24. Presumably he feared that mineral exploration would divert the colonists from the more pressing concerns of feeding the early European settlers.
A Government Order or Regulation promulgated by the Colonial Secretary's Office on 21 August 1828 announced the intention of the government to reserve gold and silver from future Crown Grants. The fact that it was seen necessary to make such announcement may indicate doubts at the time surrounding the prerogative. Whatever the basis of such doubts, it is now clearly recognised that, in Windeyer J's words?5:
"Gold in the Australian colonies belonged always to the Crown, whether it was in Crown land or in lands alienated by the Crown. No express reservation was necessary to preserve the Crown's rights. They depended
upon prerogative rights recognised by the common law. Thus gold did not pass by a Crown Grant of the land in which it lies."
Windeyer J indicated that a similar position probably applies with respect to silver26. This is enough to reject the respondent's argument that the "all minerals reservation" was confined to the royal minerals. Indeed this suggests very strongly that the all minerals reservation must relate of necessity to a wider but necessarily undefined class of "all minerals".
The learned trial judge noted that he had been informed by counsel that up until 1828 there was no reservation of minerals in Crown Grants in New South Wales. From 1828 to 1844 there were varied reservations of gold, silver and coal. From 1844 until 1850 only coal was reserved in Crown Grants, and certain Grants only reserved coal up until the year 1862. On 29 January 1850 all former reservations of coal were abrogated by the Crown except in land within any city, township or village. From 1850 until 1861 there were no reservations of minerals though there were some exceptional cases. From 1850 until the Crown Lands Act 1884 which commenced on | January 1885, there was no definition of minerals in the Act, but the grants did refer to the reservation of minerals27.
Case law from the period when the Grants in this case were made also confirms the widespread practice of Crown Grants reserving to the Crown the right to take timber, sand, clay, gravel and other natural produce required for public purposes28.
Historical Records of Australia, Series 1, vol 1, 1788-1796, "Governor Phillip to Lord Sydney".
Wade v New South Wales Rutile Mining Co Pty Ltd (1969) 121 CLR 177 at 186.
Ibid. See also Woolley v Attorney General (Vic) (1877) 2 App Cas 163; Attorney General v Great Cobar Copper Mining Co (1900) 21 LR (NSW) 351.
First judgment, p6. See also Veatch, Mining Laws of Australia and New Zealand, 1911, chapter 6.
See Campbell v Dent (1864) 3 SCR (NSW)(L) 58; Bayview Properties Pty Ltd v Attorney General for Victoria and Board of Lands and Works [1960] VR 214.
It is well established that an interest in Crown lands may not be disposed of except in pursuance of and in accordance with the Crown Lands legislation in force at the relevant time29. The principle is robustly affirmed in s3 of the 1861 Act itself, which provides that "any Crown Lands may lawfully be granted in fee simple or dedicated to any public purpose under and subject to the provisions of this Act but not otherwise" (emphasis added). This principle affects the construction of Crown Grants in the case of ambiguity because of the general approach to interpretation requiring construction ut res magis valeat quam pereat. In the words adopted from Sheppard's Touchstone by Martin B in Fussell v Daniel:
"if words have a double intendment, and the one standeth with law, and the other is against law, they are to be taken in the sense which is agreeable to law."
The Crown Lands Alienation Act of 1861 did not prescribe any form for a Crown Grant. However s18 required that a grant of conditionally purchased Crown land was to be made "with reservation of any minerals which the land may contain." The 1879 Grant was of this nature. S21 of the 1861 Act (pursuant
to which the 1877 Grant was made) dealt with additional selection of lands adjoining conditionally prescribed land. That section required the additional selection to be "subject to all the conditions applicable to the original purchase except residence" and this would appear to have incorporated s18's requirement that the grant of fee simple should be made with reservation of any minerals. It was common ground in the appeal that s18's requirement applied to each Grant.
The general rule of construction of grants is that ambiguity is to be resolved in favour of the grantee3!, but there is considerable authority indicating that the opposite principle applies in favour of the Crown?2. The rationale is to be found in the earliest of these, The "Rebeckah"33:
"All grants of the Crown are to be strictly construed against the grantee, contrary to the usual policy of the law in the consideration of grants; and upon this just ground, that the prerogatives and rights and emoluments of the Crown being conferred upon it for great purposes, and for the public use, it shall not be intended that such prerogatives, rights, and emoluments are diminished by any grant, beyond what such grant by necessary, and unavoidable construction shall take away."
The Hazeldell litigation34 relates to a Crown Grant issued in 1886 containing an all minerals reservation. However, the decision primarily addressed the impact of the Crown Lands Act of 1884 upon a Crown Grant issued after its commencement. Specific provisions and definitions found in the 1884 Act and the Mining Act 1906 render the decisions largely unhelpful in the present case. Hazeldell was a compensation case in which the resuming authority (the
O'Keefe v Williams (1907) 5 CLR 217 at 225; Cudgen Rutile (No 2) Ltd v Chalk [1975] AC 520 at 533; Mabo v Queensland (1988) 166 CLR 186 at 215.
URJ MINISTER FOR MINERAL RESOURCES v BRANTAG PTY LTD (Mason P) 9
Commonwealth) argued unsuccessfully that the large quantities of limestone on the land were to be ignored in the valuation because the limestone was a mineral reserved to the Crown in right of New South Wales by the all minerals reservation in an 1886 Crown Grant. In the High Court, Griffith CJ and Rich J said3s:
".. the meaning of the language of a grant, which is a record of a present transaction, must be determined as at the date of the grant, and... a subsequent change, however arising - by lapse of time, changed circumstances, gradual modifications of usage, or otherwise - cannot affect the meaning of the grant itself... "
Later36 their Honours recognised that the meaning of a reservation of "minerals" in a Crown Grant unaffected by the 1884 Act had to be determined having regard to the tune at which the instrument was executed, and the facts and circumstances then existing. The Privy Council37 also emphasised the need to have regard to the facts and circumstances existing at the date of the relevant grant.
It is now settled law that, in construing an expression such as "mines" or "minerals " in a conveyance or statutory reservation of minerals, the ultimate search is for the expressed intention of the parties38. In this quest, the courts came to recognise that (subject to specific context) what has to be determined is a question of fact, namely what those words meant in the vernacular of the mining world, the
commercial world, and land owners at the time,when the instrument was made39. I shall refer to this as the "vernacular test". This position was only reached after a period of prolonged uncertainty stemming from conflicting views expressed by Mellish LJ and James LJ in Hext v Gill4°. The conflict is generally regarded as having been settled in North British Railway v Budhill Coal and Sandstone Company?! favour of the views of James LJ. The history, described as "long and curious and full of uncertainty and conflict" is traced by Egbert J in Western Minerals Ltd vy Gaumont.42
I do not understand the vernacular test to be inconsistent with the ultimate rule of construction suggested by Lord Macnaghten in Lord Provost and Magistrates of Glasgow v Farie43:
"Now the word 'minerals' undoubtedly may have a wider meaning than the word 'mines'. In its widest signification it probably means every inorganic substance forming part of the crust of the earth other than the layer of soil which
sustains vegetable life. In some of the reported cases it seems to be laid down, or assumed, that to be a mineral a thing must be of commercial value, or workable at a profit. But it is difficult to see why commercial value should be a test, or why that which is a mineral when commercially valuable should cease to be a mineral when it cannot be worked at a profit. Be that as it may, it has been laid down that the word 'minerals' when used in a legal document, or in an Act of Parliament, must be understood in its widest signification, unless there be something in the context or in the nature of the case to control its meaning."
This "widest signification" test has been cited with approval in various Canadian courts and applied to "mines and minerals" reservations cast in general language. The cases were recently reviewed and applied by the British Columbia Court of Appeal in Western Industrial Clay Products Ltd v Keeping"4.
Of course, context may require a narrower meaning to be given. One way this may occur is where there is a listing of minerals45. The corollary is that where, as in the present case, one encounters expressions of emphasised generality such as "all minerals", these are to be seen as indicators of the propriety of applying the "widest significant" test. (The impact of the construction materials reservation is addressed below in relation to the expressio unius reasoning of Young J.)
RUTILE, ZIRCON AND ILMENITE WERE "MINERALS" IN THE VERNACULAR OF THE MID-NINETEENTH CENTURY
As Young J held, the "all minerals reservation" is, in truth, an exception in the sense of a description of that which is kept back from what was otherwise granted46. It must also be recognised that, when a mineral is reserved, it is reserved to the Crown whether extracted or not and whether or not it is to be found secreted in a substance
which is not a (reserved) mineral47. The very terms of the all minerals reservation make this clear.
It was common ground at the appeal that rutile, zircon and ilmenite were "minerals" as that term is understood today. This creates a presumption that a similar situation prevailed in earlier times48. This presumption was not displaced, indeed its correctness was affirmed.
The parties provided the court with extracts from various dictionaries. For example the Imperial Dictionary published in 1881 contains the following entries
"RUTIL, RUTILE, n. Titanic acid, of a dark red colour, or of a light or brownish red. It occurs massive, disseminated, membranous, and in crystals.
ZIRCON, n. Called also jargon of Ceylon, a mineral originally found in Ceylon, in the sands of rivers, along with spinel, sapphire, tourmalin, and iron sand. Zircon, hyacinth, and zirconite, are regarded as varieties of the same species. They are essentially composed of zirconia, with silex, and a minute portion of iron. The primitive form of the crystals is an octahedron, composed of two four-sided prisms. The common form is a rectangular four-sided prism."
URJ MINISTER FOR MINERAL RESOURCES v BRANTAG PTY LTD (Mason P) 11
Webster's Dictionary of the English Language of 185449 contains the following definitions
"TLMENITE, n. A black metallic mineral, consisting of titanic acid and oxyd of iron.
RUTIL, RUTILE n. An ore of titanium, of a reddish-brown colour sometimes passing into red.
ZIRCON, n. A mineral containing the earth zirconia and silica, occurring in square prisms, with pyramidal terminations of a brown or grey color (occasionally red, and then called hyacinth) and often nearly transparent."
The Oxford English Dictionary also defines the three minerals, accompanied by references in each case tracing back to the early nineteenth century.
Before leaving dictionaries roughly contemporaneous with the Crown Grants in question, it may be noted that the Imperial Dictionary and Webster's Dictionary in the editions already cited contain the following definitions of "mineral" when used as a noun:
"MINERAL n. [Fr and Sp mineral: Low L minera, a matrix or vein of metals, whence mineralia; all from mine.] A body destitute of organization, and which naturally exists within the earth or at its surface. Minerals were formerly divided into salts, earths, inflammable and ores; a division which serves for a general distribution: but a more scientific arrangement into class, orders, genera, species, subspecies, and varieties, has been adopted to meet the more precise views of modern mineralogists. The description of minerals and their arrangement in systematic order must result from an investigation of their properties. These properties consist in certain relations which minerals bear to our senses or to other objects. Some of them are discoverable by mere inspection, or at most require some simple experiment to be made upon the mineral to ascertain its hardness, structure, colour, gravity, & c, while others cannot be observed without a decomposition of the mineral. All these properties are usually called characters. We hence have a twofold division of the properties or characters of minerals, into chemical and physical. Some minerals are simple or homogeneous, and others compound or heterogeneous." (Imperial Dictionary)
"MINERAL. N (Fr, Sp Mineral] Any natural production formed by the action of chemical affinities, and organized, when becoming solid, by the powers of crystallization. Rocks are aggregates of minerals. - Dana" (Webster's Dictionary)
This material amply demonstrates that the three minerals were regarded as such according to the vernacular test at the date of the relevant Crown Grants.
"In certain circumstances, general language, originally designed to apply to any earlier technology, may apply to supervening technology."
His Honour cites both constitutional5! and statutory52 examples. The distinction between a fixed connotation and an expanding denotation has been used in both constitutional53 and non-constitutional54 contexts. One of the cases
Telstra Corporation Ltd v Australasian Performing Rights Association Ltd (1997) 146 ALR 648 at 687.
Rv Brislan; Ex parte Williams (1935) 54 CLR 262; Jones v The Commonwealth (No 2) (1965) 112 CLR 206.
Late Macquarie Shire Council v Aberdare County Council (1970) 123 CLR 327 at 331; Federal Commissioner of Taxation v ICI Australia Ltd (1972) 127 CLR 529 at 548; Wilson v Commissioner of Stamp Duties (1988) 13 NSWLR 77 at 78.
See, eg Attorney General (Vic), Ex re Black v The Commonwealth (1981) 146 CLR 559 at 578.
cited by Kirby J is Lake Macquarie Shire Council v Aberdare County Council55 where the question arose whether a reference to the powers of a Council to supply "gas'56 included the supply of liquefied petroleum gas. It was clear from an examination of the relevant Act that the legislature had in contemplation only coal gas when the Act was passed - simply because it was the only type of gas then available. Notwithstanding, the majority of the High Court considered that the word "gas" was used in its generic sense, and was thus not limited to coal gas. Barwick CJ said:57
"T can see no reason why, whilst the connotation of the word 'gas' will be fixed, its denotation cannot change with changing technologies."
If it were necessary to resort to this principle, it would further assist the appellant. However, the dictionary evidence satisfies me comfortably that the three minerals were within the reservation, notwithstanding the fact that the possibility of extracting them from the black sands of the east coast of Australia may not have been considered until the twentieth century. That evidence also avoids the need to rely upon the principle about construing ambiguity in favour of the Crown in this type of instrument.
It is now convenient to address the arguments which found favour with Young J and led him to the opposite conclusion.
Ihave already recorded that this was, in effect, one of the grounds upon which the judgment below turned.
The stream of English cases cited by the learned judge culminated in Waring v Foden,°8 a decision of the English Court of Appeal which held that a reservation in a 1925 conveyance of "all mines, minerals, and mineral substances" did not include sand or gravel. The judgments in Waring reviewed the earlier cases, citing in particular passages from North British Railway Co v Budhill Coal and Sandstone CoS? where a distinction is drawn between minerals on the one hand and clay, sand, gravel and ordinary rock or stone on the other. However, most of the cases which are reviewed in Waring relate to the meaning of "minerals" in statutes providing for public works where land is authorised to be taken for a railway or waterworks, leaving the minerals to the owner. In my view, this context is important, not so much in suggesting any difference in the meaning of "minerals" in a conveyance, grant or statute,©° but to emphasise the need for caution before applying the "ordinary soil of the district" gloss found in some of those cases.
In the first place, in the many cases involving railway companies, the purpose of the acquisition (ie to lay a track) suggested a clear reason why unexceptional parts of the surface or immediate substratum with no intrinsic value, such as soil, gravel, clay or sandstone, would not be seen as (exceptional) minerals for which the railway company would be intended to pay.¢! It was otherwise if the clay, etc
Lake Macquarie Shire Council v Aberdare County Council (1970) 123 CLR 327 at 331.
URJ MINISTER FOR MINERAL RESOURCES v BRANTAG PTY LTD (Mason P) 13
had special value, such as the seams of fireclay that were held to be "minerals" in Caledonian Railway Co v Glenboig Union Fireclay Co.®2
Secondly, the provision being addressed by the House of Lords in the Budhill and Glenboig Union Fireclay cases? precluded the railway company from taking "mines of coal, ironstone, slate or other minerals under any land purchased". In
this context the words "or other minerals" was seen as designating "exceptional substances".64 Noscitur a sociis.
The distinction in both language and context between these cases and s18 of the Crown Lands Application Act 1861 will be apparent. Canadian case law has correctly emphasised the context which led to a narrow or "exceptional" interpretation for "minerals" in the class of English and Scottish cases to which I have referred.65
A case which supports the respondent at first blush, but on closer analysis undermines its case, is the decision of the Privy Council in Barnard-Argue-Roth-Stearns Oil and Gas Co Ltd v Farquharson.°¢ It involved a reservation in a private deed of conveyance of "all mines and quarries of metals and minerals and all springs of oil in or under the said lands whether already discovered or not". The question at issue was whether natural gas was included in this reservation. The trial judge held that, because in 1867 (the date of the grant) the presence of natural gas was unknown to the parties, and natural gas had no commercial value, but was regarded as a dangerous and destructive element, its preservation could not have been contemplated by the parties. Accordingly it was not included in the reservation. This judgment was affirmed by the Judicial Committee. However a close reading of the speech of Lord Atkinson shows that the specificity of the detailed reservation led to its narrow construction; and that the Privy Council was
not suggesting a universal principle relating to minerals whose commercial value was unknown at the time of the deed. Since a deed inter partes was involved, and since natural gas was seen as a "dangerous and destructive element" at the time of the grant, the inference was drawn that the idea of preserving the ownership of the gas never occurred to the parties in 1867. In different contexts, "minerals" in nineteenth century deeds and statutes have included natural gas.67
In my view, there is no principle of interpretation which supports a general proposition that a reservation or exception of "minerals" excludes the contents of the ordinary rock or stone of the district. The vernacular test remains the surer guide. In Shire of Wannon v Riordan,°8 Dean J suggested that Waring v Foden establishes that the word "minerals" refers to something of an exceptional character as distinct from "the ordinary rock of the district". In my respectful view, the passages cited by Dean J from Waring®? do not support such an absolute
proposition. I think that a more accurate summary of Waring was given by Egbert J in Western Minerals Ltd v Gaumont,7° where he said that:
"The judgments [in Waring] stated that the main principles to be gathered from the authorities are: (1) That the word 'minerals' when found in a reservation out of a grant of land means substances, exceptional in use, in value, and in character, and does not mean the ordinary soil of the district which if removed would practically swallow up the grant; and (2) That in deciding whether or not in a particular case exceptional substances are 'minerals' the true test is what the word meant in the vernacular of the
mining world, the commercial world and landowners at the time of the grant, and whether the particular substance came within that grant."
Even if (as I accept) this is an accurate summary of the reasoning in Waring, there remain difficulties with it. In the first place Waring applied principles derived from the special statutory context of the line of decisions in the House of Lords dealing with the Railways Clauses Acts of 1845. I have already indicated the problem of applying those cases out of their context. Secondly, the House of Lords cases themselves appear to me to be authority for a narrower proposition than that summarised in para(1) of the passage just quoted from Western Minerals. In Caledonian Railway Co v Glenboig Union Fireclay Co7! the House of Lords held that fireclay, distinguished from ordinary clay by containing a large proportion of refractory substances, which made it valuable for the manufacture of bricks capable of resisting high temperatures, was a "mineral" within the exception found in the Railways Clauses Act. Lord Loreburn LC said72 that:
"Tf anything exceptional in use, character, or value was [under the land], that was reserved, provided it could be included under the word 'minerals' as understood in the vernacular of the mining world, and the commercial world, and the landowner."
This decision, as well as the decision in the Carpalla Case,73 which dealt with clay that had special value because it was china clay, suggests that a valuable substance will be a mineral, so long as it is recognised as such in the vernacular at the time of the grant, even though it is a common part of the soil or rock of a particular district. In Heinatz v Allen74 the Supreme Court of Texas held that:
"substances such as sand, gravel and limestone are not minerals within the ordinary and natural meaning of the word unless they are rare and exceptional in character or possess a peculiar property giving them special value, as for example sand that is valuable for making glass and limestone of such quality that it may profitably be manufactured into cement. Such substances, when they are useful only for building and road-making purposes, are not regarded as minerals in the ordinary and generally accepted meaning of the word."
See also Holland v Dolese Co75 In other words, great care needs to be taken before the idea that "the ordinary soil of the district" can, standing alone, be used as the basis of negating the conclusion that a recognised mineral is outside a
URJ MINISTER FOR MINERAL RESOURCES v BRANTAG PTY LTD (Mason P) 15
general reservation of "all minerals' especially one that has statutory mandate. Waring was not a case involving a Crown Grant with a reservation of nail minerals" stipulated by statute.
Thirdly, the cases discussing the concept of "the ordinary soil of the district" are all distinguishable on their facts from the situation presented in the present case where the "mineral" is itself extracted from the "ordinary soil" and does not represent the whole or a substantial part of it. In the present case there was no direct evidence to assist the Court in determining whether the three minerals are components of the actual granules of sand or separate particles mixed with the "sand", which need to be separated out from it. The parties were unable to agree on this point. But, regardless of how separation of the three minerals from "sand" takes place, it is clear that it occurs. Equally clear is it that the residue is replaced and that it represents the greater part in volume of what was originally mined. I note that the mining leases that were in evidence required the lessee to recontour and regenerate all mined
areas. Indeed there were special conditions relating to "Rutile, Zircon etc Operations" (cl64ff) which required the leaseholder to return all tailings continuously to excavated areas.
In my view, this distinction between the three minerals (however extracted) and the "sand" from which they are mined is critically important. A gold nugget lying in a river bed does not cease to be a royal mineral because it is found in part of the "ordinary soil" of the district. The gold would be "rare and exceptional",76 because of its intrinsic value and the fact that it would be recognised as distinctive from the sand in which it is found.
With respect to Young J,77 I cannot accept that the mere fact that the three minerals are contained within the sand is enough to preclude the reservation of them, even if it were permissible to start with the legal proposition that the ordinary soil of the district (in this case sand) is not, or prune facie is not, a mineral within the reservation. The distinction between the "ordinary soil" and the minerals it contains is given particular force in the present case where it is recognised, as Young J did, that "in practice the residue has customarily been restored to the beach etc from which it is taken".78
As indicated above, the second basis upon which Young J rested his decision was the need to construe the "all minerals reservation n in the light of the "construction materials" reservation. His Honour noted that the grants themselves distinguished between minerals on the one hand and sand, clay, stone, gravel and timber on the other, and restricted the Crown's right to remove the latter to removal for limited and specified purposes. From this he drew support for the conclusion that the word "minerals" in the earlier reservation did not include sand.
There is an initial difficulty with this approach to construction of the grants. It ignores the force of the statutory requirement that the relevant grants had to be made "with reservation of any [ie all] minerals."79 This precluded the reading down of the "all minerals reservation" by reference to the "construction materials
reservation" lest the validity of the grant be brought into question. An expressio unius inference may not be drawn that is inconsistent with a statutory requirement.8° This very approach to the construction of a grant made under the 1861 Act is adverted to by the Privy Council in Hazeldell.8!
I would reach the same view in any event. Construction of documents according to the expressio unius maxim is always something that requires considerable caution.8? In the present case the construction materials reservation has as its focus and purpose the reservation in favour of the Crown of a profit a prendre for specified
public purposes. Its subject matter was quite alien to that addressed in the all minerals reservation. This approach is reinforced by the principle, which I accept, that ambiguity is to be resolved (fairly) in favour of the Crown. The cases are referred to above.
A further reason for not accepting this approach has already been adverted to in an earlier context. The three minerals are not in any relevant sense the sand. They are separated from it before the "sand" tailings are returned.
I would therefore uphold the appeal. It is not necessary to consider the issue about the Crown's right to deduct royalties in relation to a trespassory taking of private minerals.
Stein JA I have had the benefit of reading the draft judgment of Mason P with which I agree in all respects. The 1877 and 1879 Crown Grants reserve 'all Minerals' to the Crown. Does this exception include rutile, ilmenite and zircon? Young J held that it did not.
There is no doubt that rutile, ilmenite and zircon are minerals and, by the middle of the nineteenth century, were understood as such. True it is that their commercial value may not have been recognised until this century, when separation of the minerals from the sands was undertaken. Nonetheless, it is quite apparent that their existence was well known at the time of the Grants.
Applying the vernacular test of what the words in question meant to the mining world and to land owners in the 1870's (with the aid of dictionaries of the day) it is apparent that the three minerals were considered minerals, and are included within the reservation. The fact that extraction of them from the sands was not considered until later does not, in my opinion, detract from this conclusion. The same answer is arrived at by applying the 'widest significance' test expounded by Lord Macnaghten in Lord Provost and Magistrates of Glasgow v Farie (1888) 13 App Cas 657 at 689. I accept that this rule of construction is not inconsistent with the vernacular test.
I agree with Mason P that the fact that the minerals are contained within the sand does not preclude the reservation of them. I also agree with what the President says about the expressio unius point, especially bearing in mind the caution required in applying the maxim.
URJMINISTER FOR MINERAL RESOURCES v BRANTAG PTY LTD (Sheppard AJA) 17
Sheppard AJA In this matter I have had the advantage of reading the judgment to be delivered by Mason P. I am in agreement with his Honour's reasons and conclusions and with the orders which he proposes.
The dictionaries and other material to which Mason P has referred plainly establish that ilmenite, rutile and zircon were known to be minerals in the middle of the last century and before. It is unlikely that, when the Crown Grants in question issued, anyone in New South Wales was aware that the sands comprising most of the upper surface of the land contained these substances. Furthermore, if this had been known or suspected, it is unlikely that there would then have existed the technology to extract them. Nor, if it had existed, would there have been any demand for the minerals at least in commercial quantities. The fact remains, however, that the language of the reservations is very wide. There is no warrant for giving the words "all minerals" the narrow construction contended for by the respondent.
Counsel for the respondent did not concede that any definitions found in dictionaries published in the United Kingdom or the United States were available to citizens or the Government of New South Wales between 1861 and 1879. But the dictionaries referred to reflect an aspect of the world's technological knowledge at, or really before, the time they were compiled. And the grants were grants made by the Crown of lands within the Colony of New South Wales which was then a British possession. It is therefore immaterial whether anyone in New South Wales was aware of ilmenite, rutile or zircon, or of the contents of the dictionaries.
In any event, the words in question, having the wide meaning indicated by Mason P, are plainly wide enough to embrace any mineral subsequently discovered on the land whether that mineral was known at the time the grants were made or was discovered by later scientific investigation.
As Young J said, the respondent's land is substantially, if not predominantly, comprised of sand hills. The ilmenite, rutile and zircon are contained within that sand which, in his Honour's words, was the "ordinary soil of the district". His Honour's eventual conclusion was that the grants of land comprised wholly sand "and a complete reservation of the sand as being a mineral". But it is not suggested that it is the sand which is the mineral. The minerals were the ilmenite, rutile and zircon contained within it. They comprised only a fraction of it. The fact that, in order to extract them, the whole of the sand had to be removed or at least disturbed, is not to the point. The only purpose of the removal was to recover the minerals. The situation appears to be no different from many others in which mining involved extraction of minerals from ore-bearing deposits from land. Iron ore and
bauxite come to mind. In some places, it is not uncommon for them to be as much the ordinary soil of the land as was the sand in the present case.
In the result I agree that the appeal should be allowed.
Respondent to pay appellant's costs of appeal and to have a certificate under Suitors Fund Act if qualified.
Counsel for the appellant: P Hall QC with M Willmot
Solicitors for the appellant: F Kristic - Dept of Mineral Resources Legal Services
5 Solicitors for the respondent: Bowen-Thomas & Hewitt
MINISTER FOR MINERAL RESOURCES
BRANTAG PTY LTD
(1927) 39 CLR 455
(1988) 13 NSWLR 495
(1969) 121 CLR 177
(1907) 5 CLR 217
(1988) 166 CLR 186
(1918) 25 CLR 552
(1921) 29 CLR 448
(1921) 29 CLR 448
(1996) 71 ALJR 173
(1997) 146 ALR 648
(1935) 54 CLR 262
(1965) 112 CLR 206
(1970) 123 CLR 327
(1972) 127 CLR 529
(1988) 13 NSWLR 77
(1981) 146 CLR 559
(1992) 176 CLR 239