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Miracle Lane International Holdings Limited v Spinifex Mines Pty Ltd[2022] QLC 2

Miracle Lane International Holdings Limited v Spinifex Mines Pty Ltd[2022] QLC 2

LAND COURT OF QUEENSLAND

CITATION:

Miracle Lane International Holdings Limited v Spinifex Mines Pty Ltd & Ors [2022] QLC 2

PARTIES:

Miracle Lane International Holdings Limited,

Hong Kong Company Registration Number 1338744

(applicant)

v

Spinifex Mines Pty Ltd

ACN 074 166 519

(first respondent)

Omega Gold Limited, Hong Kong Company Registration Number 2874493

(second respondent)

Jin Resources (Aus) Pty Ltd

ACN 641 111 195

(receivers and managers appointed)

(third respondent)

FILE NO:

MER092-21

PROCEEDING:

Originating application for an order under s 27(1)(b)(i) of the Mineral and Energy Resources (Common Provisions) Act 2014 extending a caveat

DELIVERED ON:

2 February 2022

DELIVERED AT:

Brisbane

HEARD ON:

13 September 2021, 16 November 2021

Submissions closed 25 November 2021

HEARD AT:

Brisbane

MEMBER:

WA Isdale

ORDERS:

  1. That pursuant to section 27(1) of the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld), caveat number 347676, lodged by the applicant over resource authorities EPM14475, ML2709, ML2713, ML2718 and ML2719 Mining Claim 71530 shall not lapse until the earlier of:
  1. the final determination of proceeding 8358/21 commenced by Miracle Lane International Holdings Limited, Hong Kong Company Registration Number 1338744, against Spinifex Mines Pty Ltd ACN 074 166 519 (first defendant), Omega Gold Limited, Hong Kong Company Registration Number 2874493 (second defendant), and Jin Resources (Aus) Pty Ltd ACN 641 111 195 (third defendant) in the Supreme Court of Queensland and any appeal therefrom; and
  2. an order of this Court.
  1. No orders as to costs.

CATCHWORDS:

REAL PROPERTY – TORRENS TITLE – CAVEATS AGAINST DEALINGS – EXTENSION – whether the caveat lodged over resource authorities should be permitted to lapse – where the substantive litigation was in the Supreme Court of Queensland – whether there was a serious question to be tried – whether the balance of convenience favoured the caveat remaining while the Supreme Court litigation was resolved – where there was found to be a serious question to be tried – where the balance of convenience was found not to favour the lapsing of the caveat

Acts Interpretation Act 1954 s 4, s 36, sch 1

Mineral and Energy Resources (Common Provisions) Act 2014 s 10, s 25, s 27

Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46, applied

Australis Exploration Pty Ltd v CST Minerals Lady Annie Pty Ltd & Ors (2014) 35 QLCR 298; [2014] QLC 30, applied

Bowen Central Coal Pty Ltd v Aquila Coal Pty Ltd & Anor [2011] QCA 334, cited

Cambridge Credit Corporation Limited (Receiver Appointed) v Surfers’ Paradise Forests Limited [1977] Qd R 261, cited

Chillagoe Gold v Weil & Stein (2008) 29 QLCR 121; [2008] QLC 161, applied

Macarthur Coal Limited v MCG Coal Pty Ltd (2011) 32 QLCR 256; [2011] QLC 55, considered

Mentech Resources Pty Ltd v MCG Resources Pty Ltd (in liq) & Ors (2013) 34 QLCR 84; [2013] QCA 79, considered

APPEARANCES:

LET Henry (solicitor), Macpherson Kelley, for the applicant

AM Alcock (solicitor), HopgoodGanim Lawyers, for the first respondent

LP McMahon (solicitor), Enyo Lawyers, for the second and third respondent

S Nicols (agent), receiver and manager, for the third respondent

Background

  1. [1]
    On 22 July 2021, the applicant filed a general application in the Court. It was brought pursuant to section 27(1)(b)(i) of the Mineral and Energy Resources (Common Provisions) Act 2014 which provides that:
  1. (1)
    A caveat lapses—

(b) for a caveat for which there was no consent—

(i) if an order of the Land Court is in force in relation to the caveat—at the expiration of the order …

  1. [2]
    The caveat was number 347676 which would have automatically expired unless the Court otherwise ordered. This was due to occur on 28 July 2021.
  1. [3]
    On 27 July 2021 the Court ordered, by consent of the parties, that the caveat, lodged by the applicant over resource authorities EPM14475, ML2709, ML2713, ML2718 and ML2719, be extended until further order of the Court.
  1. [4]
    That order was expressed to be made “[u]pon the Applicant giving the usual undertaking as to damages, by its solicitor”.
  1. [5]
    Other orders were made, principally with a view to preparing for the hearing on 13 September 2021.

The hearing

  1. [6]
    All parties were legally represented at the hearing.
  1. [7]
    Although the third respondent was legally represented, Mr Nicols, the receiver and manager, also appeared, in his case by video link. Mr Nicols’s appearance was not objected to and did not unduly prolong the hearing. He was principally interested in being able to proceed with selling assets and to also obtain the costs of his appearance at the hearing. As the third respondent was legally represented already and Mr Nicols was not part of that legal representation, the Court had to disappoint him in relation to costs.
  1. [8]
    No witnesses were called. The parties chose to rely on affidavit evidence and to make oral submissions in support of the written submissions which they had prepared in accordance with the orders made on 27 July 2021.
  1. [9]
    The cases presented by the parties can be well understood from their written submissions.
  1. [10]
    The Court was informed by the solicitor for the applicant, part-way through the hearing, that, apparently due to an oversight, the Registrar of these tenures, who should have been provided with a copy of the order made on 27 July 2021, did not receive a copy. Nothing was made of this by any party and the parties proceeded with the hearing.
  1. [11]
    It is unnecessary for the Court to consider this aspect as the parties, legally represented and informed about it in Court, chose not to agitate it.

The applicant’s submissions

  1. [12]
    The applicant wishes to extend the caveat over the resource authorities in which it claims a proprietary interest. The authorities pertain to a gold mine called “Gilded Rose”.
  1. [13]
    The applicant states that on 21 July 2021, it commenced a proceeding in the Supreme Court of Queensland, number 8358/21. In that Court, it is seeking declaratory and other relief to determine the rights of the parties in relation to the gold mine, including the tenements the subject of the caveat.
  1. [14]
    The application before this Court seeks to preserve the status quo while the litigation is conducted in the Supreme Court. The caveat, if extended, will do that in respect of the mining tenements, preventing the registration of any dealing with them which might deprive the applicant of its rights, or interfere with them.
  1. [15]
    Around October 2019, the first respondent and the second respondent entered into a sale agreement. The second respondent was to purchase the Gilded Rose mine from the first respondent.
  1. [16]
    The agreement was varied several times. At 21 May 2020 it provided for a consideration of $4,000,000. This was made up of $200,000 for an exclusive option to purchase, $500,000 on 21 May 2021, $1,000,000 on the production of 10,000 ounces of gold after completion and $2,300,000 payable on or before 21 May 2020. This was the “completion payment”.
  1. [17]
    In May 2020, the applicant and the second respondent entered into a loan agreement pursuant to which the applicant advanced $2,300,000 to the second respondent for the express purpose of making the completion payment to acquire the Gilded Rose gold mine.
  1. [18]
    At around the time that the second respondent paid the $2,300,000 to the first respondent, the third respondent was incorporated. It was a wholly owned subsidiary of the second respondent.
  1. [19]
    Shortly thereafter, around 24 August 2020, the second respondent entered into an agreement with the third respondent to assign all of its rights to the mine to the third respondent. Additionally, the third respondent granted the first respondent a general security interest over all of its present and future property, including the gold mine.
  1. [20]
    In November of 2020, the applicant notified the first respondent that it had provided the $2,300,000 and claimed that this had been paid to the second respondent by fraud.
  1. [21]
    The second and third respondents have not made the first milestone payment of $500,000.
  1. [22]
    Around 23 July 2021, the first respondent appointed receivers and managers to the third respondent.
  1. [23]
    The mining tenements are still registered to the first respondent and neither the second or third respondents have entered into possession of the Gilded Rose mine.
  1. [24]
    The applicant submits that this Court’s considerations for present purposes are like those relevant on an application for an interlocutory injunction. They were compendiously stated by the Judicial Registrar in Chillagoe Gold v Weil & Stein.[1] The learned Judicial Registrar said:

“With respect to the application for caveats, there is clear authority that the proper way to proceed is analogous to that of an application for an interlocutory injunction. This was the test applied by the President of the Land and Resources Tribunal in Arthur v Department of Natural Resources and Mines. The test there applied was whether there is a serious question to be tried and whether the balance of convenience favours the caveat remaining whilst the question in dispute is determined.” (citations omitted)

  1. [25]
    As the last sentence quoted from the decision of the Judicial Registrar makes clear, there are two questions–
  1. Is there a serious question to be tried?

and, if this is answered in the affirmative–

  1. Does the balance of convenience favour the caveat remaining while that question is resolved?

The Supreme Court action

  1. [26]
    The affidavit of Lachlan Evan Thomas Henry, the solicitor for the applicant, includes a copy of the claim filed in the Supreme Court under Registry number 8358/21. The parties are identical to the parties in this Court.
  1. [27]
    The Plaintiff claims:
  1. a declaration that the first defendant holds the sum of $2,300,000 on trust for the plaintiff.
  1. an order that the first defendant pay to the plaintiff the sum of $2,300,000 pursuant to a constructive trust.
  1. in the alternative to orders 1 and 2, an order that the first defendant pay to the plaintiff restitution in the sum of $2,300,000, or such other sum as the court thinks fit.
  1. in the further alternative to orders 1 to 3, a declaration that the first defendant holds its entire interest in the assets of the mining project known as Gilded Rose on trust for the plaintiff to the extent of $2,300,000.
  1. in the further alternative to orders 1 to 4, a declaration that the plaintiff is subrogated to the rights of the first and second defendants under the agreement for sale and purchase of the mining project known as Gilded Rose.
  1. interest.
  1. costs.[2]
  1. [28]
    Essentially, the plaintiff wants its $2,300,000 back or a declaration that the assets of the mine, which must include the mining tenures, are held on trust for it to the extent of the $2,300,000.
  1. [29]
    The premise upon which the claims are based is that the applicant paid the money to the second respondent because of a fraudulent misrepresentation or a mutual mistake as to the terms of the loan agreement.[3]

Concession by the applicant

  1. [30]
    The applicant concedes that the claim for restitution does not amount to a claim of a proprietary interest in the assets of the Gilded Rose mine, including the mining tenements the subject of the caveat.[4]
  1. [31]
    The applicant does however maintain that it continues to be relevant in relation to the assessment of the balance of convenience.[5]

The proprietary interest claim

  1. [32]
    The applicant submits that the sale agreement will have conferred rights or vested some interest in the second respondent and/or the third respondent. The rights will be proprietary in nature, either a good title or, at least, that of a part-paid purchaser. In this connection, it is claimed that the $2,300,000 was held under a constructive trust for it.
  1. [33]
    If, the applicant submits, the loan agreement is vitiated by fraud, then the sale agreement may still have effectively conveyed a proprietary interest in the Gilded Rose mine to the second and/or third respondent. That interest would, it is submitted, be held upon trust for the applicant and be capable of supporting the present caveat.

Is there a serious question to be tried?

  1. [34]
    This is the first question to be addressed. If the answer is found to be in the affirmative, only then does the second question, the balance of convenience question, arise.
  1. [35]
    The applicant submits that there are four triable issues. They will be considered seriatim as to their particulars but no conclusion will be drawn until all have been examined.

The first claimed triable issue

  1. [36]
    The first matter said by the applicant to be a triable issue is the authenticity of the signature on the loan agreement purporting to be that of Che Wai Chan, director of the second respondent.
  1. [37]
    Chi Tai Wong provided an affidavit dated 26 July 2021.[6] He is the director of the applicant. Exhibited to that affidavit is a letter from the law firm Stephenson Harwood. It is dated 12 March 2020 and addressed to Lau & Ngan, Solicitors. The letter contains an assertion that the signature appearing on what is described as the “Fake Term Sheet” is not that of Mr Chan.[7] It goes on to refer to an Aaron Ravelle, a junior member of the proposed management team of the mine, and states that he was removed when it was discovered that his real name was Aaron Thomas, who was understood to have “… a track record of embezzlement and fraud”.[8]
  1. [38]
    The Stephenson Harwood letter acknowledges that, inter alia, the signature on the “Fake Term Sheet” purporting to be that of Mr Chan is a forgery.[9] On behalf of the second and third respondents, it is however asserted that there has not been any fraud perpetrated on the applicant.[10]
  1. [39]
    It is submitted that the signature said to be a forgery is obviously different to signatures of Che Wai Chan on documents filed in the Supreme Court of Queensland in separate, but related, proceedings.[11]
  1. [40]
    The allegation that the loan agreement was a fraud is central to the claim for restitution or of the existence of a proprietary interest. This is the first triable issue claimed.

The second claimed triable issue

  1. [41]
    Really an extension of the first claim, it is submitted that the signature of Che Wai Chan, where it appears on other documents, including deeds of variation, is also forged.[12]
  1. [42]
    It is submitted that this may influence whether the sale agreement is binding and whether the loan agreement is vitiated by fraud.

The third claimed triable issue

  1. [43]
    It is submitted that there is a triable issue as to whether the purported signature of Richard Trevillion is authentic. Mr Trevillion, the sole director and shareholder of the second respondent, is the witness to the Chan signature on the loan agreement, a signature apparently accepted to be a forgery.[13]

The fourth claimed triable issue

  1. [44]
    It is submitted that there is a triable issue as to whether the sale agreement has been completed or not. While purportedly complete, the tenements are still registered to the first respondent although there was time for them to be transferred before there was any caveat lodged.
  1. [45]
    Additionally, the first respondent alleges that the second and third respondents have failed to make the first milestone payment and have appointed the receiver and manager to the third respondent.
  1. [46]
    The second and third respondents claim that the first respondent has failed to fulfil its obligations and that they have been unable to take possession and ownership of the mining tenements.[14]
  1. [47]
    The applicant submits that the sale agreement has failed or been frustrated.

Other claimed triable issues

  1. [48]
    The applicant submits that it is “likely”[15] that further material issues of fact will emerge and that other, indirectly relevant, issues exist, such as the state and timing of the first respondent’s knowledge of the applicant’s claim[16] and other issues of fact and law.[17]

The balance of convenience: the applicant’s submissions

  1. [49]
    The second question, if reached, is whether the balance of convenience favours the caveat remaining in place while the dispute is determined.
  1. [50]
    The applicant fears the first respondent being at liberty to dispose of the mining tenements. The caveat prevents that, notifying the world by its presence on the Register that the applicant has its claim. This assumes that the applicant has conveyed the Court’s order made on 27 July 2021 to the Registrar so that the extension of caveat 347676 can be noted on the Register.
  1. [51]
    The applicant fears that should such a transfer occur it would lose any proprietary interest it may have in the tenements and accordingly that security for the $2,300,000.
  1. [52]
    The second and third respondents propose that the caveat be amended to allow a transfer to the third respondent. A caveat could then be lodged after that transfer so as to protect the applicant’s interests.[18] The shortcoming with this, as perceived by the applicant, is that it provides no security against what is proposed, namely the sale of the shares of the second and third respondents to a public company.[19]
  1. [53]
    If the applicant loses its claimed proprietary interest, the first respondent may not have the assets to satisfy a damages claim made in respect of the $2,300,000 as it has been spending the money on various projects.[20]
  1. [54]
    The third respondent is in receivership and may not be able to meet any damages award.
  1. [55]
    None of the respondents have provided any security for repayment of the $2,300,000 that could adequately protect the applicant’s position, the applicant submits.
  1. [56]
    On 23 July 2021, the first respondent appointed Mr Nicols as receiver of the third respondent.[21] This appointment is disputed by the second and third respondents but is presently a fact which amounts to a supervening event, the effect of which is that the second and third respondents cannot suffer any damage by the continuance of the caveat.

The undertaking as to damages

  1. [57]
    The applicant has provided the usual undertaking as to damages.[22] It has provided copies of financial statements in support of the value of the undertaking.[23] The reports and financial statements described as the most recent audited financial statements are for the year ended 31 March 2020.[24] They do not disclose a significant surplus of assets.

The hypothetical situation feared by the applicant

  1. [58]
    Without the caveat, the receiver might well sell the Gilded Rose mine and all its assets, including the mining tenures in dispute, to a third party. Indeed, that a receiver would seek to do so is to be expected. If the proceeds are paid to the third respondent and the outcome of the proceedings in the Supreme Court is that the sale agreement was ineffective and the first respondent is liable to the applicant for the $2,300,000, that money may not be able to be recovered since it has already been paid to the third respondent.[25]

The first respondent’s submissions

  1. [59]
    The first respondent submits that the applicant lacks a caveatable interest in the tenements, does not have a claim for restitution of a proprietary claim against it, has not shown that the balance of convenience favours it and its undertaking as to damages is worthless.[26]
  1. [60]
    The first respondent provided valuable consideration for the $2,300,000 and had no notice of any claim by the applicant against the second respondent. Accordingly, the applicant has no claim against the first respondent in respect of the $2,300,000.
  1. [61]
    In any event, the agreement to advance the $2,300,000 was subsequently documented by a convertible note and a general security agreement to the effect that Blueplanet Asia Limited, a company associated with the applicant, agreed to advance the money to the third respondent. There is no fraud suggested in relation to the convertible note or the general security agreement.[27]
  1. [62]
    The note has matured and automatically converted into shares so the applicant does not have a proprietary interest able to support a caveat.[28]

The test to maintain a caveat

  1. [63]
    The test was referred to by the learned President of this Court in Australis Exploration Pty Ltd v CST Minerals Lady Annie Pty Ltd & Ors.[29] Her Honour said:

“[15]  It is accepted by both parties that the test to maintain a caveat is the same as the test for the grant of an interlocutory injunction. That conclusion was reached in cases dealing with caveats lodged under the Land Title Act 1994 but the same principles have been applied by this Court in relation to caveats lodged under the Act in, for example, Nickmere Pty Ltd v Dianne Mining Corporation Pty Ltd.

[16]  In Australian Broadcasting Corporation v O'Neill the High Court identified the principles relating to the grant of an interlocutory injunction:

"The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the Court addresses itself to two main inquiries and continued:

"The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted."

By using the phrase "prima facie case", their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal:

"How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks." (citations omitted)

[17]  In Warner-Lambert Company UC v Apotex Pty Ltd, the Court said:

"Whether an applicant for an interlocutory injunction has made out a prima facie case or whether the balance of convenience favours the grant of such relief are related questions. It will often be necessary to give close attention to the strength of a party’s case when assessing the risk of doing an injustice to either party by the granting or withholding of interlocutory relief especially if the outcome of the interlocutory application is likely to have the practical effect of determining the substance of the matter in issue or if other remedies, including an award of damages, or an award of compensation pursuant to the usual undertaking, are likely to be inadequate. "” (citations omitted)

  1. [64]
    The ability to lodge a caveat flows from section 25(1) of the Mineral and Energy Resources (Common Provisions) Act 2014. Relevantly, it provides:
  1. (1)
    A person claiming an interest in a resource authority may lodge a caveat over the resource authority …
  1. [65]
    That Act does not provide a definition of “interest”. Assistance can be gained from the Acts Interpretation Act 1954, there being no conflict which might prevent recourse to it. This Act, in schedule 1, defines “interest” in the following way:

interest, in relation to land or other property, means—

  1. (a)
    a legal or equitable estate in the land or other property; or
  1. (b)
    a right, power or privilege over, or in relation to, the land or other property.
  1. [66]
    The applicability of this provision, and its broad scope, is supported by the decision of the Court of Appeal in Mentech Resources Pty Ltd v MCG Resources Pty Ltd (in liq) & Ors.[30]
  1. [67]
    In that case, Gotterson JA, with whom McMurdo P and Fryberg J did not disagree on this aspect, said:

“[62]  That line of authority has been accepted by this Court in Re Henderson’s Caveat. In that case, Macrossan CJ and Demack J observed that “[t]here is now weighty opinion in the High Court suggesting that an equitable interest in land can exist when a claimant is entitled to something less than a full decree of specific performance ordering conveyance, that is it can exist provided that a claimant is entitled to equitable relief by way of injunction or other remedy to maintain and protect his interest”.

[63]  A further reason for this approach is that the terms of s 152(1) MRA itself are sufficiently broad to encompass an equitable interest in this sense. Under that section, a person who claims a right or interest in respect of an exploration permit may lodge a caveat. The word “interest” in this section takes the meaning given to it by s 36 of the Acts Interpretation Act 1954 (Qld). With that meaning, an interest in respect of an exploration permit connotes a legal or equitable interest in it or a right, power or privilege over, or in relation to it.”[31] (citations omitted)

  1. [68]
    Although their Honours were considering section 152(1) of the previous Act, the word “interest” as it appears in section 25(1) of the current Act may also be understood in the light of this decision of the Court of Appeal. The “interest” capable of supporting the caveat is broadly defined and the Court must apply that definition in the Acts Interpretation Act 1954 for present purposes. This will be returned to later in these reasons.
  1. [69]
    In order to justify continuing the caveat, the applicant must show:

“… a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial.”[32]

  1. [70]
    The strength of the likelihood, in order to be “sufficient”, will depend on the nature of the rights the applicant asserts and the practical consequences likely to flow from the orders sought.[33]
  1. [71]
    The second inquiry is whether the detriment likely to be suffered by the applicant if the caveat is not extended outweighs or is outweighed by that which would flow to the respondent if the caveat was renewed.[34] This is the balance-of-convenience consideration.
  1. [72]
    It is also relevant to consider whether damages would be an adequate remedy for the caveator and whether the respondent would be properly protected by the undertaking as to damages provided by the caveator. In other words, is the undertaking sufficient?[35]

The claim against the second and third respondents

  1. [73]
    The first respondent submits that the applicant became aware of the alleged fraud on 16 November 2020.[36] Months passed before it took action against the second or third respondents, this opening the possibility that it had elected to continue with the contract. In any event, it submits that the convertible notes agreement and the security agreement are not suggested to have been entered into under any mistake and their operation results in there being no obligation on either the second or third respondents to repay the $2,300,000.

The claim against the first respondent

  1. [74]
    The first respondent submits that the sale agreement is binding. It submits that it has provided valuable consideration and that property has passed. The first respondent had no notice of the applicant’s claim at the time. The first respondent is not a volunteer and is not liable to disgorge the funds as a volunteer might be. The applicant, it is submitted, does not have any proprietary interest to support the caveat.

The balance of convenience: the first respondent’s submissions

  1. [75]
    The lawyers for the second and third respondents have offered to give a consent caveat to secure the $2,300,000 provided that the caveat does not prevent the transfer to the third respondent.[37] The applicant does not accept this since, as has already been mentioned, the share capital of a company can be sold to another company. The first respondent submits that the caveat does not prevent such a transaction.
  1. [76]
    If the caveat is not extended, the third respondent will be able to have the mining tenements transferred to it.
  1. [77]
    The parent company of the first respondent is Tombola Gold Ltd.[38] There is no evidence that the first respondent would be unable to meet a damages award, despite the fact that the first respondent has been spending the $2,300,000.
  1. [78]
    It is also submitted that sale of the share capital of, for instance, the third respondent, would not transfer the mining tenements.
  1. [79]
    The first respondent submits that extending the caveat would cause it to suffer loss as it is unable to transfer the mining tenures as required by the sale agreement and the second and third respondents are accordingly withholding payment that would be due under the agreement.
  1. [80]
    The first respondent has appointed a receiver to the third respondent. The caveat is preventing the receiver from selling those assets.
  1. [81]
    The Court notes in passing that the receiver does not recognise the authority of the solicitors who have informed this Court that they are acting for the third respondent. The Court accepts the information provided by the solicitors, who are officers of the Court, and has no need, for present purposes, to consider this any further.
  1. [82]
    The first respondent has to pay the costs of keeping the tenures in good standing. Since May 2020, around $41,000 has been paid and approximately a further $40,000 is likely to be spent in the next 3 months.[39]
  1. [83]
    It is submitted that the undertaking as to damages by the applicant is worthless. Its paid-up share capital is worth 10,000 Hong Kong dollars,[40] about 1,750 Australian dollars, and does not own any real property in Queensland.[41]
  1. [84]
    Its financial records as provided are over a year old and show that its assets are exceeded by a debt payable on demand to Mr Wong. The applicant requires his support to continue to exist. There is no evidence that this support can be relied on to continue for any particular length of time.

The second and third respondents’ submissions

  1. [85]
    These respondents point out that the applicant has conceded that its claim for restitution does not give it a proprietary interest.[42]
  1. [86]
    The second and third respondents have offered to consent to a caveat once the tenures are transferred to the second or third respondent.[43]
  1. [87]
    They submit that to continue the caveat would amount to creating new law, whereby an owner of land, unknown to a transaction, may suffer a caveat against it through the interest of another.[44]
  1. [88]
    They adopt the submissions of the first respondent in relation to the balance of convenience.
  1. [89]
    They add, in relation to the matter of concern that their shares could be sold to a listed company, five points of rebuttal. They are that:

“a.  first [sic], the applicant is misusing a caveat, and because, for whatever reason it has sought to protect its interests using a caveat, as opposed to, for example, a freezing order is a matter for the applicant and its solicitors. It does not entitle the applicant to create a new branch of law to suits [sic] its needs and dramatically expand the definition of a “caveatable interest”;

b.  secondly, how it is that a caveat is suitable as against the first respondent, but is somehow not effective as against the other respondents is not explained. Surely if the second or third respondents could sell their share capital, so could the first respondent;

c.  thirdly, the caveat only serves to drag in a third party, a stranger to the dispute as between the applicant and the Omega Respondents, until such time as the applicant manages to litigate its case in the Supreme Court. Such actions are extremely inconvenient to the first respondent, with no knowledge of, or argument with the applicant [sic].

d.  fourthly, the second and third respondents, on their case, have a greater interest in the Gilded Rose Project than the first respondent, and so is unreasonably being withheld from its property. It is difficult to see how this is convenient to any party;

e.  fifthly, the Omega Respondents concede they are indebted to the applicant, and the transfer of the Gilded Rose Project to the Omega Respondents would only serve to increase the security of the applicant. The application is, curiously, against the interests of the applicant.”[45]

Some considerations relating to the caveat

  1. [90]
    It is useful to observe that the authorities relating to caveats consider the courts’ approach to them to be guided by their approach to injunctions. Also, the cases which are available to assist in determining the outcome of disputes involving caveats are overwhelmingly cases involving interests in land. This is land which is dealt with in the Titles Office under the Torrens system. This is undoubtedly a useful analogue to what is being considered here, but it is not the same.
  1. [91]
    These mining tenures have a life of their own and, for present purposes, the starting point must be the relevant legislation rather than to proceed directly to act as if authorities concerning caveats relating to interests in Torrens Title land and injunctions must simply be applied.
  1. [92]
    The authority to lodge a caveat is found in the Mineral and Energy Resources (Common Provisions) Act 2014, as has been adverted to already. It is worth looking at more closely. It relevantly provides, in section 25(1) that:
  1. (1)
    A person claiming an interest in a resource authority may lodge a caveat over the resource authority if the caveat—
  1. [93]
    The word “interest” is not defined in the Act. Accordingly, recourse may be had to the Acts Interpretation Act 1954 for assistance in ascertaining its meaning.
  1. [94]
    The application of that Act may be displaced, wholly or partly, by a contrary intention appearing in any Act, so says section 4 of the Acts Interpretation Act 1954. The Court can not locate any contrary intention and there is no submission that there is one.
  1. [95]
    Section 36 of that Act provides that:

36 Meaning of commonly used words and expressions

  1. (1)
    In an Act, a term defined in schedule 1 has the meaning stated in that schedule.
  1. [96]
    In Schedule 1 of the Acts Interpretation Act 1954, the following definition appears:

interest, in relation to land or other property, means—

  1. (a)
    a legal or equitable estate in the land or other property; or
  1. (b)
    a right, power or privilege over, or in relation to, the land or other property.

The result is that, for present purposes, the wording of s 25(1), although more economical than s 152(1) of the previous Act, see [67] supra, will be indistinguishable in substance such that cases where the previous provision was considered will be of assistance presently.

  1. [97]
    What is a “resource authority” is defined in section 10 of the Mineral and Energy Resources (Common Provisions) Act 2014. There is no dispute that the tenures the subject of the caveat in question, caveat 347676, are resource authorities.
  1. [98]
    In sub-paragraph (b) of the definition of “interest”, the words “in relation to”, extend the meaning of that word and “property” is defined widely in Schedule 1 of the Acts Interpretation Act 1954.
  1. [99]
    The interest in a resource authority required by section 25(1) can be anything that fits under (a) or (b) in the definition of “interest”.
  1. [100]
    In considering a caveat under the previous legislation, His Honour Member Smith said in Macarthur Coal Limited v MCG Coal Pty Ltd:

“[25]  Reference was also made to the Court of Appeal case of D'Aguilar Gold Ltd v Gympie Eldorado Mining P/L. Although that case was primarily concerned with issues of priority with respect to EPM’s, it is noteworthy because the Court of Appeal made observations with respect to the effect of caveats under the MRA. In particular, Williams JA observed as follows:

“[30]  Senior counsel for the appellant submitted, by referring to the position under the Torrens system of land title, that a caveat was primarily concerned with the protection of rights pending registration. Whilst that might generally be so under the Torrens system, it does not mean that the caveat regime under this Act is so limited. The wording of the sections dealing with caveats in this Act clearly indicate that wider protection is afforded than mere protection until registration under s 158.””[46] (citations omitted)

  1. [101]
    It is not possible, and not necessary, at present to determine whether the applicant would ultimately be successful in the proceeding in the Supreme Court. It would be sufficient that there is a serious question to be tried.

Finding of a serious question to be tried

  1. [102]
    This Court accepts, for present purposes, that the legislative provisions operating here may well afford wider protection to the applicant than those considered in the context of caveats within the Torrens system. This is a serious question to be tried. A finding in favour of the applicant in regard to this would support its claims of the existence of the other questions it points to.

Finding of where the balance of convenience lies

  1. [103]
    In view of the finding which has been made regarding the presence of a serious question to be tried, attention must be directed to this aspect.
  1. [104]
    It is not persuasive that there are costs continuing to be incurred in keeping the tenures in good standing. Those costs will have to be paid by whoever is ultimately found to be the holder of the tenures in the proceeding in the Supreme Court.
  1. [105]
    The offer of a consent caveat in the terms discussed is of considerable weight. It could be a means of preserving the applicant’s position while allowing the other transactions to proceed. The applicant’s concern focuses on the possibility that the first respondent may not be able to satisfy a potential award against it in view of the expenditures made on various drilling and exploration programs.
  1. [106]
    Mirroring the applicant’s concern about the worth, or otherwise, of a right to damages is the concern by the respondents that the applicant’s undertaking as to damages may be worthless. The accounts provided to the Court[47] show that the company, as at 30 March 2020, has assets but that its continued existence depends on the financial support of Chi Tai Wong who could, at any time, withdraw funds he is able to demand and thereby leave it valueless.
  1. [107]
    Although that may happen, there is no evidence that it has or is about to.
  1. [108]
    While there is this evidence about the financial position of the applicant and the respondents’ concerns about it, there is no evidence about the financial position of the respondents, apart from the third respondent being in the hands of the receiver/manager.
  1. [109]
    As is submitted, there is no evidence that the first respondent will not be able to meet any award of damages.[48] It is submitted that it is a subsidiary of a public company and the evidence is simply that it has been spending the $2,300,000.[49]
  1. [110]
    On the evidence, the applicant’s undertaking as to damages is not fairly able to be said to be worthless. It may fairly be said that it could rapidly and easily be made worthless, but there is no evidence of any present intention or action aimed at doing so.
  1. [111]
    The financial ability of the respondents to satisfy an award of damages is not in evidence in any meaningful way. This weighs against the convenience of an order that the present caveat not be continued.
  1. [112]
    The substantive dispute behind this caveat is presently before the Supreme Court of Queensland. This Court should take care not to act in such a way as might potentially interfere with the ability of that Court to make orders that may be required in that proceeding. Removing the caveat will alter the status quo in the proceeding in the Supreme Court, with unknown possible effects.
  1. [113]
    For the reasons that have been given, this Court finds that the balance of convenience does not favour the removal of the caveat but instead favours it remaining until further order of this Court or of the Supreme Court of Queensland.
  1. [114]
    The application should be allowed and orders made in line with those sought in the originating application.
  1. [115]
    The orders sought were:
  1. An order pursuant to section 27(1) of the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld), that caveat number 347676, lodged by the applicant over resource authorities EPM14475, ML2709, ML2713, MK(sic)2718 and ML2719 Mining Claim 71530 shall not lapse until the earlier of:
  1. the final determination of proceeding XX/XX commenced by the applicant against the respondent in the Supreme Court of Queensland and any appeal therefrom; and
  1. an order of this Court.
  1. No orders as to costs.”
  1. [116]
    The number of the Supreme Court proceeding is stated in paragraph 4 of the applicant’s outline of submissions dated 6 September,2021 to be 8358/21, so that number will be inserted in lieu of the XX/XX in 1(a).

Costs of the hearing on 16 November 2021

  1. [117]
    The applicant seeks orders that the first respondent pay the costs of the brief hearing on 16 November 2021. The hearing took place so that an error could be corrected. At the substantive hearing, the first respondent informed the Court that the Blueplanet Asia Limited convertible note and general security agreement was entered into on 21 May 2020. Subsequently, the applicant’s solicitors found that some emails indicate that the convertible note and the general security agreement were executed on or about 11 February 2021.
  1. [118]
    The first respondent submits that the matter was appropriately relisted for the error to be corrected.
  1. [119]
    The conduct of the parties in identifying and correcting the error which occurred at the substantive hearing was appropriate and in line with what the Court expects from the professionals involved. The Court is not satisfied that an order for costs ought to be made in the present circumstances where there was a simple error which was corrected in a timely way. This error related to a matter considered in the substantive hearing, as distinct from some new matter being raised for the first time after the hearing. The brief appearance for correcting the error is not distinct from the substantive hearing, in principle, though it occurred later.
  1. [120]
    The application for costs of the hearing on 16 November 2021 is refused.

Orders

  1. That pursuant to section 27(1) of the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld), caveat number 347676, lodged by the applicant over resource authorities EPM14475, ML2709, ML2713, ML2718 and ML2719 Mining Claim 71530 shall not lapse until the earlier of:
  1. (a)
    the final determination of proceeding 8358/21 commenced by Miracle Lane International Holdings Limited, Hong Kong Company Registration Number 1338744, against Spinifex Mines Pty Ltd ACN 074 166 519 (first defendant), Omega Gold Limited Hong Kong Company Registration Number 2874493 (second defendant), and Jin Resources (Aus) Pty Ltd ACN 641 111 195 (third defendant) in the Supreme Court of Queensland and any appeal therefrom; and
  1. (b)
    an order of this Court.
  1. No orders as to costs.

Footnotes

[1]  (2008) 29 QLCR 121, 123 [11].

[2]  Ex 2, LETH–1, page 90.

[3]  Applicant’s submissions [21].

[4]  Ibid [24].

[5]  Ibid.

[6]  Ex 1.

[7]  Ex 1, CTW–1, page 169, para 13, page 171, para 22.

[8]  Ex 1, page 171, para 21.

[9]  Ibid para 23.

[10]  Ex 6, page 59, para 8.

[11]  Ex 3, pages 3–6, 18–20, for example. Compare page 17.

[12]  For example in Ex 1, CTW–1, pages 63, 66, 69, 70, 100, 143.

[13]  Applicant’s submissions [31](b).

[14]  Ex 6, UBP–1, page 66.

[15]  Applicant’s submissions [36].

[16]  Ibid [35](a).

[17]  Ibid [35](b)–(d).

[18]  Ex 6, paras 8–9.

[19]  Ex 1, para 7.

[20]  Ex 4, paras 39–40.

[21]  Ex 4, para 47.

[22]  Ex 1, para 32.

[23]  Ex 1, para 33, and CTW-1, pages 174–87.

[24]  Ibid.

[25]  Applicant’s submissions [44].

[26]  Submissions of the first respondent [1.2].

[27]  Ibid [1.9](c).

[28]  Ibid [1.9](d).

[29]  (2014) 35 QLCR 298.

[30]  (2013) 34 QLCR 84.

[31]  Ibid [62]–[63].

[32] Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57, 82 [65]. 

[33]  Ibid.

[34]  Ibid. See also Bowen Central Coal Pty Ltd v Aquila Coal Pty Ltd & Anor [2011] QCA 334, [38].

[35] Bowen Central Coal Pty Ltd v Aquila Coal Pty Ltd & Anor [2011] QCA 334, [39]; Cambridge Credit Corporation Limited (Receiver Appointed) v Surfers’ Paradise Forests Limited [1977] Qd R 261, 266 at C and D.

[36]  Ex 1, paras 16–23.

[37]  Ex 6, page 59, para 13.

[38]  Ex 4, para 1.

[39]  Ex 4, paras 50–2.

[40]  Ex 5, RMC–01, page 5.

[41]  Ibid, page 13.

[42]  Applicant’s submissions [24].

[43]  Ex 6, page 59, para 13.

[44]  Submissions of the second and third respondents [12].

[45]  Ibid [14].

[46]  (2011) 32 QLCR 256.

[47]  Ex 1, CTW–1, page 174 ff., particularly at pages 178, 180.

[48]  Submissions of the first respondent [6.3](2).

[49]  Ibid.

Close

Editorial Notes

  • Published Case Name:

    Miracle Lane International Holdings Limited v Spinifex Mines Pty Ltd & Ors

  • Shortened Case Name:

    Miracle Lane International Holdings Limited v Spinifex Mines Pty Ltd

  • MNC:

    [2022] QLC 2

  • Court:

    QLC

  • Judge(s):

    Member WA Isdale

  • Date:

    02 Feb 2022

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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