Caveats under the WA Mining Act… just because you say so doesn't mean it's true

Although caveats are typically thought of in the context of land titles, they are also relevant to mining tenements (being another form of interest in land).

Given their importance, it is useful to understand the different types of caveats under the Mining Act 1978 (WA) and the protections granted to a caveator.

Although it did not consider a WA Mining Act caveat, the recent decision in the NSW Supreme Court of Appeal in Ta Lee Investment Pty Ltd v Antonios [2019] NSWCA 24 (Ta Lee Decision) provides a useful analysis of the circumstances in which caveats are registrable. In the Ta Lee Decision, a loan instrument gave a lender a right to lodge caveats over the borrower's land titles in the event of a default by the borrower. The Court upheld a decision that a contractual right to lodge a caveat did not, of itself, give rise to an equitable interest in the caveated titles.

This decision provides a useful reminder that, as a general principle, the existence of a caveat is not, of itself, evidence that a caveator has a proprietary interest in the relevant land. Under the Mining Act however, a particular class of caveats (consent caveats) will be registered by the Department to support interests other than proprietary interests in a mining tenement.

Purpose and types of caveats under the WA Mining Act

The purpose of lodging a caveat over a mining tenement is to prevent registration of a dealing (being a mortgage or transfer) or surrender of that tenement.

The Mining Act provides for three different types of caveats that may be registered in respect of a mining tenement:

• absolute caveats;
• subject to claim caveats; and
• consent caveats.

Absolute and subject to claim caveats

To lodge an absolute caveat or subject to claim caveat over a mining tenement, a party must have an "interest" in that tenement.

In this context, an "interest" is generally accepted to mean a proprietary or equitable interest in a tenement (Commissioner of State Revenue v Abbotts Exploration Pty Ltd [2014] WASCA 211).

Absolute and subject to claim caveats are lodged over WA mining tenements in numerous circumstances, including:

• where a party is "farming" into a tenement by incurring expenditure so as to earn a legal interest in the tenement;
• where a party is granted an option to purchase a tenement;
• where a party has contracted to purchase a tenement but completion of the sale has not yet occurred; and
• where a party is granted mining rights in respect of a tenement.

Consent caveat

A party may lodge a consent caveat over a mining tenement if:

• that party has entered into an agreement with the holder of the mining tenement for the sale of the tenement or any other matter connected with the holder’s interest in the mining tenement; and
• the agreement provides that the party may lodge a caveat.

The wording "any other matter connected with the holder’s interest in the mining tenement" potentially permits the registration of a caveat in respect of a personal, as opposed to a proprietary, interest in a mining tenement.

In our experience, the WA Department of Mines, Industry Regulation and Safety (DMIRS) will permit the holder of a royalty to lodge a consent caveat over a mining tenement, contrary to the established position that a caveat cannot be lodged to protect a personal right. A royalty is not a proprietary interest in a tenement – it is a contractual right to an income stream in relation to minerals produced from a mining tenement. To support a consent caveat, the relevant instrument creating the royalty must provide that the holder of the tenement consents to the royalty holder lodging a caveat in respect of the royalty.

Accordingly, the circumstances where a person may lodge a consent caveat under the Mining Act are potentially broader than those for the lodgement of an absolute or subject to claim caveat. Consent caveats are unique to the WA Mining Act, as they potentially allow a party to lodge a caveat to support a personal interest.

However, it should be noted that this potential ability to register a consent caveat to support registration of a personal right has not yet been tested.^[1]

Duration of caveats over a mining tenement

Absolute and subject to claim caveat

If a dealing or surrender is lodged over a tenement the subject of an absolute caveat or a subject to claim caveat, then the caveator will receive notice to this effect. The absolute caveat or subject to claim caveat will expire 14 days from the date on which notice is given.

In relation to a subject to claim caveat, the notice period (and subsequent expiry) will not be triggered if the dealing is expressed to be subject to the interest claimed by the caveator.

Accordingly, an absolute caveat or subject to claim caveat essentially gives the caveator 14 days' notice if the tenement holder proposes to deal with the tenement in a way that is inconsistent with the caveator's interest.

This is consistent with the Ta Lee Decision. In that decision, the Court held that a caveat lodged by the lender should be set aside as the lender did not have an equitable interest in the caveated titles. Under the Mining Act, the registration of an absolute caveat or subject to claim caveat will not, of itself, prevent the registration of a dealing over the tenement. Instead, the caveator is effectively given a 14-day window to substantiate its interest in the tenement and establish the right to maintain the caveat on the register.

An absolute caveat and subject to claim caveat may be removed at the direction of the mining warden.

Consent caveat

A consent caveat will be removed upon being withdrawn by the caveator. Unlike an absolute caveat and subject to claim caveat, a consent caveat does not automatically expire following notice that a dealing has been lodged.

To that end, a consent caveat gives the caveator stronger protection than absolute and subject to claim caveats.

A consent caveat may however also be removed at the direction of the mining warden.

Using the right caveat over a mining tenement

If a party has a proprietary interest in a tenement, it may lodge an absolute or subject to claim caveat. However, these types of caveats provide the caveator with notification rights only.

A consent caveat gives stronger protection as it will remain in force until removed by the caveator (or at the direction of the warden).

Generally speaking, a person must have a proprietary or equitable interest in a tenement to support the lodgement of a caveat over that tenement. A consent caveat will however currently be permitted to be lodged over a WA mining tenement in support of a personal right such as a royalty, provided that the relevant instrument provides for the lodgement of the caveat. This position has not however been tested in the courts yet.

^[1] Previous Warden's Court decisions have held that a royalty is not a proprietary interest in a tenement and therefore does not constitute a caveatable interest: Rural and Industries Bank of Western Australia v Hamilton and King (unreported, Leonara's Warden Court, 19 December 1989, noted 9 AMPLA Bull 61). However, these decisions were handed down prior to the current provisions in the Mining Act in relation to consent caveats. ^{Back to article}