Wright Prospecting Pty Ltd v Mount Bruce Mining Pty Ltd; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37

The High Court has handed down its decision today (14 October 2015) in the case of Wright Prospecting Pty Ltd v Mount Bruce Mining Pty Ltd; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37. The Court ruled that Mount Bruce Mining (MBM) is liable to pay royalties to Wright Prospecting and Hancock Prospecting (Hanwright) with respect of iron ore mined in the Eastern Range and Channar areas of the Pilbara region in Western Australia.

Background

Hanwright and MBM entered into an agreement on the 5 May 1970 concerning payment of royalties by MBM in relation to the extraction of ore from areas of land that were the subject of the agreement. Under the agreement, royalties were payable on all ore won by MBM from the MBM Area as specified in the agreement. The obligation to pay royalties extended to "all persons or corporations deriving title through or under" MBM to the "MBM area".

MBM claimed that the term "MBM area" did not refer to an area of land to which rights of occupancy had been transferred to MBM; rather, it referred to the rights themselves. The point of this argument was that the Eastern Range and Channar area therefore did not fall within the MBM Area. MBM further argued that in respect of certain iron ore extracted from a part of Channar (Channar A) they were also not obligated to pay royalties as it was not extracted by entities deriving title through or under MBM.

The Court of Appeal of the Supreme Court of New South Wales ruled in favour of Hanwright on the first point but ruled in favour of MBM on the second point. Namely, they found that iron ore extracted in respect of Channar A did not fall under the agreement and therefore royalties did not need to be paid.

High Court

The High Court held that the term MBM area referred to the physical area of land that had been transferred to MBM and was not limited to the rights under the tenements that affected that land at the time of the 1970 Agreement. The Court further held that iron ore was being won from Channar A by entities deriving title through or under MBM. Consequently, the Court found that MBM was liable to pay Hanwright royalties in respect of both points. 

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Wright Prospecting Pty Ltd v Mount Bruce Mining Pty Ltd; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37