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Key issues
As a result of a recent New South Wales Supreme Court decision, holders of mining and petroleum exploration licences should check that they have given proper notice to mortgagees concerning access arrangements for mining and petroleum exploration. Brown & Anor v Coal Mines Australia; Alcorn & Anor v Coal Mines Australia Pty Ltd [2010] NSWSC 143 (5 March 2010) held that an access arrangement or agreement which had been entered into between the holders of mining and petroleum exploration licences and the registered proprietors of land was invalid because the licence holder had not given notice to the mortgagees of the land concerning the proposed access arrangements.
The implications of this decision are potentially very significant for the holders of mining and petroleum exploration licences as access agreements and arrangements are customarily made only with the registered proprietors of land and no notice is given to mortgagees of the land. |
Background
The Brown and Alcorn Decision arose in the following context:
- Coal Mines Australia Pty Ltd (Company) is the holder of an exploration licence under the Mining Act 1992 (NSW) (Mining Act).
- The exploration licence covered land including some farming land owned by the Browns and Alcorn.
- Section 142 of the Mining Act contains provisions which enable the holders of exploration titles, ‘by written notice served on each landholder of the land concerned’, to give notice of the holder’s intention to obtain an access arrangement in respect of the land. ‘Landholder’ is defined by the Mining Act to include not only the registered proprietor of the land but also to include ‘a person identified in any register or record kept by the Registrar-General as a person having an interest in the land’.
- Once a notice is given to ‘each landholder’ under section 142 it activates the access provisions in the Mining Act and enables the holder of an exploration licence to negotiate with the landholders to agree access and, if access cannot be agreed, ‘by further notice in writing served on each landholder’ under section 143, to request the landholders to agree to the appointment of an arbitrator under the Mining Act to determine the issue as to access. Further provision is made in the Mining Act for the appointment of an arbitrator in default of agreement.
- The Company served Brown and Alcorn, as the registered proprietors of the relevant land, with notice of its intention to obtain an access arrangement in respect of the land. However the land owned by Brown and Alcom was subject to a registered mortgage, giving the mortgagee an interest in the land, and the Company did not serve a notice on the mortgagees.
- As the Company failed to reach agreement with Brown and Alcorn as to access, the Company served notice on Brown and Alcorn seeking their agreement to the appointment of an arbitrator. Again, it was inferred that no notice was served on the mortgagees.
- The arbitrator granted the Company access to the land and Brown and Alcorn appealed to the Mining Warden who upheld the grant of access subject to conditions.
- Brown and Alcorn appealed to the Supreme Court against the decision of the Mining Warden arguing that the Mining Warden did not have jurisdiction to determine the appeal from the arbitrator’s decision as the requisite notices in relation to access had not been served on the mortgagees.
The decision
Justice Schmidt held that the Mining Warden did not have jurisdiction to determine the appeal on the following basis:
- The Mining Act contemplates that there may only be one access arrangement entered into between the holder of an exploration licence and all of the ‘landholders’ of the relevant land.
- This means that once an access arrangement is made it will bind all of the ‘landholders’ of the land.
- ‘As a matter of elementary fairness’ it is necessary that ‘each landholder’ including any mortgagees be served with notices under section 142 and 143 so that they are given the opportunity to participate in the negotiation or determination of the access arrangement.
- As the mortgagees were not given notice of the proposed access arrangement or arbitration, the arbitrator did not have jurisdiction to determine the access arrangements.
- As the jurisdiction of the Mining Warden in reviewing the arbitrator’s decision gave the Mining Warden ‘the functions of an arbitrator’, the arbitrator’s lack of jurisdiction meant that the Mining Warden also lacked jurisdiction to determine the access issue.
Implications
By extension, the reasoning adopted by Justice Schmidt has the result that any access arrangement or agreement entered into between the holder of an exploration licence under the Mining Act and the land owner could be invalid if all mortgagees are not provided with proper notice of the proposed access and any arbitration in relation to it.
Further, as the Petroleum (Onshore) Act 1991 (NSW) (Petroleum Act) contains substantially the same provisions as those contained in the Mining Act regarding access and the giving of notice, the reasoning adopted by Justice Schmidt in the Brown and Alcorn Decision will also apply to access agreements and arrangements under the Petroleum Act.
Possible legislative amendments
The New South Wales Minister for Mineral Resources, Ian Macdonald, has said the government is considering the impact of the Brown and Alcorn decision. In the event that the Brown and Alcorn decision is not overturned on appeal it may be that the Mining Act and the Petroleum Act will be amended to remove any requirement to give notice to mortgagees.
Recommended actions
In the meantime, we recommend that holders of mining and petroleum exploration licences ensure that notice of proposed access arrangements are given to all ‘landholders’ including mortgagees.
This article was written by Peter Briggs, Partner and John Taberner, Consultant, Sydney.
More information
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