Matu Mining Pty Ltd v Embel [1995] PGSC 4; SC483 (28 July 1995)

Unreported Supreme Court Decisions

SC483

PAPUA NEW GUINEA

[SUPREME COURT OF JUSTICE]

S.C.M. N0 4 OF 1994
BETWEEN: MATU MINING PTY LIMITED
APPELLANT
AND: PHILEMON EMBEL (ATTORNEY GENERAL)
FIRST RESPONDENT
AND: KARE PUGA DEVELOPMENT CORPORATION PTY LIMITED
SECOND RESPONDENT

Waigani

Amet CJ Kapi DCJ Salika J
20 October 1994
21 October 1994
28 July 1995

STATUTES - Interpretation and Construction - Meaning of “difficulties” with transitional provisions - s 183, Mining Act 1992 -

STATUTES - Interpretation and construction - Whether Mining (Transitional Provisions) Regulations is inconsistent with the provisions of Mining Act 1992.

Counsel

I. Molloy for the Appellant

H. Kiele for the First Respondent

C. Wall Q.C. for the Second Respondent

28 July 1995

AMET CJ KAPI DCJ SALIKA J: On 27 September 1990 a special mining lease (hereinafter referred to as "SML1") was granted to Mt. Kare Holdings Pty Ltd over all deposits of alluvial gold and all sand, gravel and coarse aggregate on or under the land described in the lease. This lease was granted under the provisions of the Mining Act (Ch 195) (hereinafter referred to as "the Old Act").

On the same date, SML1 was transferred to Mt. Kare Alluvial Mining Pty Ltd. There is also an (Alluvial Mining) Contract made between the State of Papua New Guinea and Mt. Kare Alluvial Mining Pty Ltd bearing the same date in respect of SML1.

On 28 August 1992 the Mining Act 1992 (hereinafter referred to as "the New Act") came into operation and repealed the old Act.

On 10 August 1993 SML1 was transferred to Kare Puga Development Corporation Pty Limited (hereinafter referred to as "the Second Respondent").

The SML1 held by the second respondent is saved by the new Act. The relevant provision is section 173 which is in the following terms:

"173. SAVINGS.

(1) Nothing in this Act shall affect the provisions of the Acts and the agreements specified in Schedule 2.

(2) Notwithstanding anything in this Act, a special mining lease issued under the provisions of the repealed Acts and the provisions referred to in Subsection (1) shall continue in full force and effect as though the repealed Acts had not been repealed.

(3) Subject to the relevant agreement referred to in Subsection (1), a person may in accordance with this Act apply for a tenement in respect of part or all of the land the subject of a prospecting authority or lease granted under the repealed Acts or in accordance with that agreement.

(4) Any preservation of land made under the repealed Acts and in force immediately before the coming into operation of this Act shall, on that coming into operation, continue in full force and effect as if the repealed Acts had not been repealed.

(5) The provisions of the repealed Acts relating to royalties shall continue in force as if the repealed Acts had not been repealed until the coming into operation of the Mining (Royalties) Act 1992 excepting that the amount equal to 5% of the amount of royalties payable under Section 107 (2) of the Mining Act (Chapter 195) (repealed), shall -

(a) be read as an amount equal to 20% of the amount of royalties; and

(b) be paid in respect of a special mining lease and mining lease under this Act."

Section 173 (2) of the new Act saves the right acquired by the second respondent granted under the old Act. Precisely, this protects the lease over "all deposits of Alluvial Gold as are contained in, on, or under that piece of land" described in the lease and "all sand, gravel and coarse aggregate in, on or under such land for use in the development of facilities and infrastructure" on the same land described in the lease. The second respondent's right under the old Act is saved. This is a normal transitional provision which protects rights acquired under a repealed legislation (see also s173 (4) and (5)).

Section 173 (3) gives a right to any person to apply "for a tenement in respect of part or all of the land the subject of a prospecting authority or lease granted under the repealed Acts or in accordance with that agreement". A tenement includes an exploration license (see definition of "tenement" in s 2 of the new Act).

Matu Mining Pty Limited (hereinafter referred to as "the Appellant") applied for an exploration license in accordance with s 173 (3) and other provisions of the new Act which regulate application for an exploration license. The land over which the exploration license was applied for is designated as EL1093. This is a larger area of land which includes all of the land the subject of SML1. There were two other applicants, Amadio Pty Ltd and Mt Kare Joint Venture Pty Ltd. Pursuant to s 100 (2) of the new Act, priority of the said applications were determined by a ballot conducted by the Registrar of Tenements. Priority was granted to the appellant in accordance with the ballot. On 8 December 1993, the Mining Warden commenced hearing in respect of the appellant's application for the said exploration license pursuant to s 108 of the new Act.

In the mean time, on 10 December 1993, the Mining (Transitional Provisions) Regulation 1993 (hereinafter referred to as "the Regulation") was made by the Head of State and came into force in accordance with the provisions of s 183 of the new Act. It is in the following terms:

"Mining (Transitional Provisions) Regulations.

Being a Regulation,

MADE by the Head of State, acting with, and in accordance with, the advice of the National Executive Council under Section 183 of the Mining Act 1992 to be deemed to have come into operation on 27 August 1992.

EXPLORATION AND MINING RIGHTS IN RELATION TO A SPECIAL MINING LEASE.

(1) Subject to this section, a special mining lease issued under the provisions of the repealed Acts and continuing in force under Section 173 (2) of the Act is deemed to include the exclusive right to explore for and mine minerals in and under the land the subject of the special mining lease notwithstanding that -

(a) any condition in the special mining lease or in the mining development contract or other agreement relating to that special mining lease; or

(b) the grant of any exploration licence under this Act or prospecting authority under the repealed Acts, as, or would appear to have or to have had the effect of precluding or limiting that exclusive right.

(2) The exclusive right referred to in Subsection (1) to explore for minerals and mine minerals, to the extent that it includes rights not granted by a special mining lease prior to the coming into operation of this Regulation, may be exercised only where -

(a) in respect of any exploration licence under this Act or prospecting authority under the repealed Acts referred to in Subsection (1) (b) applies, that exploration licence under this Act or prospecting authority under the repealed Acts has expired or otherwise has terminated according to law; and

(b) the conditions of the special mining lease and relevant mining development contract or other agreement have been varied where necessary to provide for the exclusive right, and it is thereby provided that such variation may be made notwithstanding any provision to the contrary in the special mining lease and relevant mining development contract or other agreement."

This Regulation effectively changed the nature of the second respondent's right in the following manner; that in addition to the rights saved by s 173 (2) of the new Act, the Regulation granted "exclusive right to explore for and mine minerals in and under the land the subject of " SML1. This included all minerals. The second respondent had no such rights before and in a flash under the Regulation, it had the exclusive right to explore and mine other minerals on land the subject of SML1.

This effectively made the application for an exploration license under the new Act by the appellant pointless because any such license which might be granted under the new Act in respect of the land the subject of SML1 is made subject to the Regulation (see s 1 (b)).

This prompted an application for judicial review of the making of the Regulation. Leave was granted and the matter came before Brown J. for substantive hearing. Essentially, the relief sought was a declaration that the Regulation is null and void. Several grounds were relied upon. We will return to the question of the proper grounds that should be raised before us.

Brown J. concluded that the Regulation was made within the powers given under s 183 of the new Act and dismissed the originating summons.

The appellant has appealed against the whole of the decision. The grounds of appeal are as follows:

"3. Grounds

(1) His Honour erred in failing to find that the Mining (Transitional Provisions) Regulation 1993 was ultra vires Section 183 of the Mining Act 1992 (as amended).

(2) His Honour erred in so far as he found that the regulation was made in respect of a "difficulty" in respect of the Transitional Provisions in Part X of the Act.

(3) So far as his Honour considered the matter, he erred in failing to find that the regulation was unreasonable and/or far exceeded what was reasonably necessary to overcome any perceived difficulty in the Transitional Provisions.

(4) His Honour erred in failing to find that the regulation was inconsistent and/or repugnant to the Act.

(5) So far as his Honour considered the matter, he erred in failing to find that the regulation was made in bad faith.

(6) His Honour erred in his interpretation of Section 183 of the Mining Act 1992 (as amended).

(7) His Honour erred in interpreting the regulation-making power so as to permit the making of a regulation with retrospective effect.

(8) His Honour erred in failing to read-down Section 183 of the Mining Act 1992 (as amended) and/or the regulation so as to comply with the National Constitution.

(9) His Honour erred in failing or refusing to consider the Appellant's arguments, and expressing a preference to make a finding on "narrower interpretation" that the regulation is intra vires.

(10) His Honour erred in finding that there was any relevant difficulty or anomaly in the Transitional Provisions of the Act.

(11) His Honour erred in upholding the validity of a Regulation which contravened qualified rights or freedoms under the National Constitution and was not "passed" in accordance with Section 38 of the Constitution."

PRELIMINARY ISSUE

At the outset of the hearing, counsel for the second respondent objected to the competency of grounds 5, 7, 8 and 11. We upheld the objections and struck out these grounds with the exception of ground 7 with reasons to be provided at a later date. This we now do.

The objection was based on an earlier ruling by Brown J. on 27 January 1994. This ruling was given over objections taken by the respondents as to the jurisdiction of the Court to enquire into the inconsistency or otherwise of the Regulations. In addressing the issue, Brown J had to consider the proper issues raised in the application to review the Regulation in question. The statement provided pursuant to O 16 r 3 (2) (a) of the National Court Rules (hereinafter referred to as "the Rules") set out four grounds for review:

(1) The Regulation is ultra vires the provisions of the new Act including Section 183 of the Act.

(2) The said Regulation is inconsistent with the new Act

(3) The said Regulation was made for an improper purpose.

(4) The said Regulation is unreasonable.

In dealing with the issues, Brown J. limited the issues to two questions; whether the Regulation is ultra vires the power given under s 183 and whether the Regulation is inconsistent with other provisions of the new Act? This effectively narrowed down the issues. The appellant did not appeal against this decision and at the substantive hearing, the trial judge did not address the issues relating to questions of bad faith and unreasonableness of the Regulation. In our view it is not competent of the appellant to raise these issues now on appeal. For these reasons, grounds 5 and 8 of the appeal were struck out.

Ground 11 raises Constitutional arguments. This was never a ground for which the judicial review was sought. It is a matter which was not argued fully at the trial and not fully dealt with by the trial judge in his judgment. It is therefore not competent of the appellant to raise it on appeal. For this reason this ground was struck out.

Ground 7 of the appeal raised the issue of retrospective effect of the Regulation. This issue was not raised in the particulars provided in statement pursuant to O16 r 3 (2) (a) of the Rules. However, the point was argued fully by all parties at the trial and the trial judge has dealt with it in his judgment. The parties can be taken to have agreed to have broadened the issues to include the question of the retrospectivity of the Regulation (see Motor Vehicles Insurance (PNG) Trust -v- James Pupune, [1993] PNGLR 370. On this basis the appellant is entitled to raise the issue on appeal.

VALIDITY OF THE REGULATION

We now consider the question of whether the Regulation is ultra vires Section 183 of the new Act. The terms of this provision are as follows:

"183. DIFFICULTIES WITH TRANSITIONAL PROVISIONS.

Where a difficulty arises in respect of the transitional provisions in this Part, the Head of State, acting on advice, may, by regulation -

(a) make such modifications to those provisions as may appear necessary for preventing anomalies during the transition to the provisions of this Act from the provisions of the repealed Acts; and

(b) make such incidental, consequential and supplementary provisions as may be necessary or expedient for the purpose of giving full effect to those transitional provisions,

and any such modifications or provisions made by the Head of State, acting on advice, have, and shall be deemed always to have had, the same force and effect as if they had been enacted by way of an amendment to this Part, and on publication of the Regulation in the National Gazette, this Part shall be amended accordingly."

The power of making regulations under the new Act is set out in s 170. This power is given to the Head of State, acting on advice of the National Executive Council. The section sets out the matters in which the Head of State may make regulations.

The matter raised in section 183 is not included in the matters set out under s 170 of the new Act. It deals with a particular matter, namely, transitional provisions under the new Act. Where a regulation is passed under s 183 to deal with matters set out thereunder, the regulation has the effect of amending the transitional provisions under Part X of the new Act. Apart from this, there is no difference in status between a regulation made under ss 170 or 183 of the new Act. In other words, they are both delegated legislation and subject to other provisions of the Act.

The law relating to construction of all written laws including the Regulation in question is set out in s 10 of the Constitution. In the present case, the Regulation is a "subordinate legislative enactment" and shall be read and construed subject to the law under which it was made (see s 10 (c) of the Constitution). This is applicable to a regulation made under s 170 and under s 183 of the new Act.

The Regulation in question therefore must not exceed the authority given by s 183 of the new Act. In this context what Sir Buri Kidu CJ said in NTN Pty Limited and NBN Limited -v- The State [1986] PNGLR 167 at 178 is applicable:

"where an Act of Parliament authorises an authority to make regulations or rules or by-laws, then the authority must act within the powers given to it. If it goes beyond those powers then it exercises powers that are not given to it by the relevant Act of Parliament."

What then is the power of law making granted by s 183 of the new Act? The power under this provision may only be exercised if a condition precedent is satisfied, namely, "a difficulty arises in respect of the transitional provisions" under Part X of the new Act.

Counsel for the appellant has submitted that there is no difficulty in respect of any transitional provision and therefore no regulation can be made. On the other hand, counsel for the second respondent submitted that there is a difficulty in respect of the transitional provisions.

It is therefore important to examine this provision and determine what is a "difficulty in respect of a transitional provision". The key to understanding these words are to be found in reading the section as a whole. Under s 183 (a), a difficulty is expressed as an anomaly created by a transitional provision "during the transition to the provisions of this Act from the provisions of the repealed Acts". The provision then authorises modifications to those anomalies. This provision deals with situations where a matter under the provisions of the old Act is allowed to continue by the transitional provisions under the new Act (Part X) and in this process the transitional provisions may create an anomaly. The anomaly relates to the manner in which the transitional provision may affect the matter carried over from the old Act. The modifications that may be made affects the transitional provisions and not other provisions of the Act.

Section 183 (b) speaks of "incidental, consequential and supplementary provisions as may be necessary or expedient for the purpose of giving full effect to transitional provisions". This envisages a transitional provision which may lack machinery or enabling provisions without which full effect cannot be given. This provision enables an incidental, consequential or supplementary regulation for the purpose of giving full effect to those transitional provisions.

The relevant transitional provision under consideration is s 173. We have already set out the text of this provision. Section 173 (2) is the saving provision. Under this provision SML1 transferred to the second respondent is saved. The right protected is no less and no more than existed under the old Act. We can see no difficulty with this within the meaning of s 183 (a) and (b).

Section 173 (3) requires close examination. Let us paraphrase the effect of this provision. Where there is a prospecting authority or a special mining lease granted under the old Act over a piece of land, this section authorises any person to apply for any tenement in respect of the part or all of the same piece of land. This transitional provision gives a very wide right to apply for a tenement. In respect of a special mining lease such as SML1 granted under the old Act, s 173 (3) authorises any person to apply for a tenement in respect of any mineral (including alluvial gold) in the piece of land the subject of SML1. The second respondent could apply for a tenement and may well be successful. In which case there would be no difficulty. But the worst scenario is that another person may apply for a tenement and get it. The effect of this would be this that on the one hand, the second respondent would have the right to explore and mine alluvial gold on land the subject of SML1 and on the other hand, a new tenement holder under the new Act would also have the same claim to the alluvial gold. This is an anomaly created by s 173 (3) in giving such a wide right to apply.

The anomaly we have described above can only exist in respect of alluvial gold already granted to the second respondent in SML1. There can be no anomaly in relation to any tenement which may be granted in respect of any other mineral to any other person. The second respondent had no right to explore and mine any other minerals. It had no such right under the old Act and no such right at the time the new Act came into force. The second respondent simply has an equal right to apply for a tenement in respect of other minerals as any other person under s 173 (3).

Applying this to the present case, the anomaly created by s 173 (3) of the new Act is that two persons could be entitled to the same mineral (alluvial gold). This provision can be modified by a regulation under s 183 (a) so that the alluvial gold granted to the second respondent in SML1 cannot be the subject of another tenement. Such a regulation could provide that the SML1 granted to the second respondent in respect of alluvial gold should not be affected by any application under s 173 (3).

An examination of the Regulation in question shows that it does not seek to protect the alluvial gold the subject of SML1. It simply recites the saving provision and goes on and deals with exploration and mining of all other minerals for which the second respondents had no right whatsoever. That in our view is not a modification of s 173 (3) within the meaning of s 183 (a) of the Act. The Regulation in effect grants new rights to the second respondent that it did not have before.

The Regulation deals with minerals other than alluvial gold which are not the subject of any tenement under the old Act. One may ask; what is carried over from the old Act by transitional provisions under the new Act which results in an anomaly? There is none. No one had rights to other minerals including the second respondent. If they had no right to these minerals under the old Act, we cannot see how any anomaly may arise when s 173 (3) gives a right to apply for a tenement in respect of all these minerals.

The wording of s 183 (a) is clear that a modification is to be made to the transitional provisions and not to other provisions of the new Act. If the Regulation moves outside the transitional provisions then it goes outside it's powers. What the Regulation purported to deal with was the difference in effect of a special mining lease under the old and the new Act. What the second respondent argued in effect was that it had a lease which is inferior to a lease granted under the new Act and the purpose of the Regulation was to put the second respondent on an equal footing with other leases granted under the new Act. This in our view illustrates the weakness in the argument of the second respondent. The power granted under s 183 is not concerned with the effect of an old and a new Act. The nature of an interest under the old Act shall remain as it was. This is confirmed and saved under s 173 (2). As we have stated before, the difficulty posed by s 173 (3) relate to a very wide right to apply for a tenement which may affect the right of the second respondent who has the right to mine alluvial gold in SML1. We have already dealt with the manner in which a regulation may be passed to deal with the difficulty in accordance with s 183.

Counsel for the second respondent further argued that the difficulty created by s 173 (3) is that it allows applications to be made for a tenement for other minerals over the same land the subject of SML1. The difficulty he submits relate to the occupation, possession and use of the land. That if another person is granted a tenement over other minerals over the same piece of land (SML1), the difficulty arises as to the occupation and possession of land by the second respondent and the new tenement holder.

Counsel for the appellant submitted that this is not a difficulty within the meaning of s 183. He submitted that use of the same piece of land for different tenements in respect of different minerals was allowed and recognised by the old Act. He further submitted that similar provisions can be found in the new Act.

With respect we cannot accept the submissions of counsel for the second respondent. What counsel for the second respondent refers to is the practical difficulty of occupation, possession and the use of the same land. However, this is not a difficulty within the meaning of s 183. The old Act created such a situation. For example, the land the subject of SML1 was also the subject of prospecting authority granted under the old Act which expired at the end of 1993.

The new Act allows different tenements to be granted over the same piece of land. Under Part V Div 4 Subdiv. B of the new Act, applications can be made in respect of land where there is an existing tenement. Section 60 (3) provides for consultation between respective tenement holders so as to use the same land without interrupting the other.

Section 173 (3) may be said to lack the enabling provisions such as s 60 (3) which provide for consultation between the parties for the use of the same land in such a way as not to interfere with their respective rights. This is a difficulty within the meanings of 183 (b). This provision allows for making of incidental, consequential and supplementary provisions as may be necessary or expedient for the purposes of giving full effect to the transitional provisions. A provision may be made under s 183 (b) to provide for the manner in which the same land may be used without interfering with each other's rights. The Regulation in question does not do that and therefore cannot come within s 183 (b) of the new Act.

We have reached the conclusion that the Regulation does not come within the powers given under S 183 of the new Act. Therefore it is void and of no effect.

INCONSISTENCY.

The Regulation does two things. The first is that it grants the right to explore all minerals on land the subject of SML1. The second is that it grants the right to mine all minerals on land the subject of SML1. We have already pointed out that the second respondent had no such rights under the old Act. Under the new Act, all persons have the right to apply for all these minerals on an equal footing and these applications have to be determined in accordance with Part VI of the new Act.

As to the application, the procedure under the new Act may be summarised as follows. An application for a grant of a tenement may be lodged with the Registrar in the National Capital District (s 98). Where there are two or more applications, the priority of the applications shall be determined on a ballot conducted by the Registrar (s 100). Where all applications comply with all requirements, the Registrar shall give a copy of the application to the Director or officers designated by him for a technical assessment and he may give a report himself in writing to the Board (s 103). Objections to any application may be made within a given period (s 105) and those objections may be heard (s 106). The Warden should then conduct hearings and make recommendations to the Mining Advisory Board. The Minister may before granting a special mining lease consult views of the provincial government which may be affected and the land-owners (s 3).

It is clear from a brief survey of the procedure for application for a tenement that it is elaborate and ensures that all considerations and views are taken into account before Minister responsible grants a tenement.

The Regulation cuts right across the procedure for an application and the power given to the Minister to grant a tenement. On the one hand, the provisions of the new Act provides for an elaborate and a fair system of dealing with an application and on the other hand, the Regulation arbitrarily granted the right to explore and mine minerals to the second respondent. The Regulation is clearly inconsistent with provisions of the Act. The Regulation is therefore void and of no effect.

In view of the conclusion we have reached on the validity of the Regulation, it is not necessary to consider the ground relating to retrospectivity.

We would allow the appeal, quash the decision of the trial judge and declare the Regulation invalid and of no effect. We further order that the respondents pay the appellant's costs of the appeal.

Lawyers for the Appellant: Pato Lawyers

Lawyer for the First Respondent: Solicitor-General

Lawyers for the Second Respondent: Warner Shand Lawyers