While I am mostly hoping you read that title by singing along to Salt-n-Pepa’s one-hit wonder melody, another objective is to impress upon you the importance of pushing for a caveat, which is one way you can protect a claim relating to a mining tenement granted under the Mining Act 1978 (WA). The consequences of not doing so can be serious – for instance, the tenement might be sold in direct breach of an agreement with you not to do so without first satisfying certain requirements.

Under the Act, there are 3 types of caveats: subject to claim, absolute and consent.

As caveator, the type of caveat that can – or should – be used depends on the nature of the claim and the degree of protection desired.  It is also important to be aware of the way in which the different caveat types protect a caveator’s claim, as it may in some circumstances influence the structure or terms of a transaction.

Subject to claim caveats

Of the 3 caveat types, subject to claim caveats provide the least protection to caveators.

Section 122A(1)(b) of the Act provides: ‘A person claiming an interest in a mining tenement may lodge… a caveat against the mining tenement forbidding the registration of – (i) a dealing affecting the mining tenement or interest unless the dealing expressly states that it is to be subject to the interest claimed by the caveator; or (ii) a surrender affecting the mining tenement or interest.’

In other words, a person with an interest in a tenement is entitled to lodge a subject to claim caveat. The term ‘interest’ is often the subject of debate and legal advice should be sought as to whether the claim is an ‘interest’ for the purposes of the Act. This said, it is generally understood that a claim such as a legal right to be assigned and transferred a tenement will constitute an ‘interest’ in a tenement. However, other rights, such as contractual rights to receive a royalty calculated by reference to production from a tenement, will not ordinarily give rise to an ‘interest’ in a tenement.

Although the Act uses the term ‘forbidding’, a subject to claim caveat does not operate to prohibit dealings on the tenement indefinitely (and indeed, it only prohibits certain types of dealings). Unless the Warden gives consent or the dealing is expressed to be subject to the interest claimed by the caveator, a transfer or mortgage of a legal interest in the tenement or a surrender (except compulsory surrenders) affecting the subject matter of the caveat must not be registered while the subject to claim caveat remains in force. However, because a subject to claim caveat lapses 14 days after notice is given to the caveator that an application has been made for the registration of such a dealing (unless the Warden otherwise directs), this prohibition is of very limited use.

Absolute caveats

An absolute caveat provides a little more protection than a subject to claim caveat, but only in the sense that it prohibits all transfers and mortgages of legal interests in a tenement.

Section 122A(1)(a) of the Act provides: ‘A person claiming an interest in a mining tenement may lodge… a caveat against the mining tenement forbidding the registration of a dealing or surrender affecting the mining tenement or interest.

Again, this means that an absolute caveator must demonstrate an ‘interest’ in a tenement. The advantage of an absolute caveat is that no dealing can be registered while the caveat remains in force (unless the Warden’s consent is obtained). However, again this prohibition is of limited benefit, because an absolute caveat lapses 14 days after notice is given to the caveator that an application has been made for the registration of a dealing or surrender affecting the subject matter of the caveat, unless the Warden otherwise directs.

Consent caveats

Consent caveats are the most powerful form of caveat protection afforded by the Act.

Section 122A(2) of the Act provides: ‘If – (a) the holder of a mining tenement has entered into an agreement with another person relating to – (i) the sale of the holder’s interest in the mining tenement; or (ii) any other matter connected with the holder’s interest in the mining tenement; and (b) the agreement so provides, either party to the agreement may lodge a caveat against the mining tenement forbidding the registration of a dealing or surrender affecting the mining tenement or interest…

This means that a consent caveator does not need to prove an ‘interest’ in the tenement; rather, it is sufficient that:

  • there is an agreement relating to the sale of the holder’s interest in the tenement or any other matter connected with the holder’s interest in the tenement; and
  • that agreement provides that either party may lodge a caveat against the tenement forbidding the registration of a dealing or surrender affecting the tenement or interest.   

Although the phrase ‘any other matter connected with the holder’s interest in the mining tenement’ does clearly impose some limitations, it provides a significantly broader basis for lodging a caveat – for example, it is generally understood that the contractual royalty right described above would be caveatable if the requirements of section 122A(2) are satisfied.

The real power of the consent caveat is the moratorium it places on the registration of dealings while it is in force combined with its essentially indefinite duration. A dealing or surrender is not to be registered while the consent caveat remains in force (unless the consent of the Warden is given), and the consent caveat does not automatically lapse like subject to claim and absolute caveats do. A consent caveat only ceases to have effect upon the direction of a Warden for the removal of the caveat, the withdrawal by the caveator or the expiry of the period of time (if any) specified in the agreement. In practical terms, this means that generally no dealing can be registered until the caveator is consulted and advises the Warden that it has no objection to the dealing.