SCL AUS Limited v Kirkalocka Gold SPV Pty Ltd

SCL AUS Limited v Kirkalocka Gold SPV Pty Ltd [2025] FCA 1678 is a Federal Court decision on an urgent stay application pending appeal. The Court was not deciding the final appeal. It was deciding whether one part of the primary orders should be paused so the appeal could be heard before the commercial position changed.

The order in question required SCL to consent to withdrawal of its caveat over a mining lease and to do what was reasonably necessary to help remove it. SCL said that if the caveat were removed first, the lease might then be dealt with or transferred in a way that could not be undone later, even if SCL succeeded on appeal. The Court granted the stay until 20 May 2026, subject to SCL's undertaking as to damages and an undertaking to pursue the appeal with due expedition. The $100,000 already paid into court was left in place as security for that undertaking.

Kirkalocka Gold SPV Pty Ltd was incorporated in 2018 to undertake gold exploration and mining. One of its assets was the Kirkalocka Gold Project in Western Australia, situated within mining lease M59/234. On 21 December 2018, SCL AUS Limited and Tor Asia Credit Opportunity Master Fund LP entered into a royalty deed with Kirkalocka. Under that deed, Kirkalocka was required to pay SCL a royalty of $35 per ounce of doré produced from gold-bearing material mined from the project.

The royalty deed did more than create a payment obligation. It also provided for a caveat to be lodged under the Mining Act 1978 (WA) against the mining lease in favour of SCL. The purpose of that caveat was to forbid registration of a dealing or surrender affecting the mining lease, or Kirkalocka's interest in it. SCL eventually lodged a caveat in late 2022, after the project had been placed into care and maintenance.

The commercial relationship then became entangled with insolvency and restructuring events. In November 2023, receivers and managers were appointed to Kirkalocka, and administrators were also appointed under Part 5.3A of the Corporations Act 2001 (Cth). On 22 December 2023, Kirkalocka's creditors entered into a deed of company arrangement. After that, a dispute emerged about whether the DOCA extinguished and barred certain rights and claims SCL said it had under the royalty deed. The disputed rights included future royalty payments and rights to have caveats over relevant mining tenements lodged and maintained.

Kirkalocka then commenced proceedings in the Federal Court against SCL. The primary judge made declarations about the nature of SCL's rights under the royalty deed and about the extent to which the DOCA was binding on SCL in respect of monetary claims under the deed. The primary judge also made the order that became the focus of this stay application: SCL had to provide its consent to withdrawal of the caveat over the mining lease and otherwise do all things reasonably necessary to effect the withdrawal of that caveat.

After final orders were made, SCL sought temporary relief. The primary judge granted a short interim stay on conditions, including that SCL file and serve an undertaking as to damages, file and serve a notice of appeal, and pay $100,000 into court as interim security for that undertaking. SCL complied with those conditions and then brought the urgent stay application in the appeal proceedings themselves.

The evidence on the stay application showed that Kirkalocka had by then exited external administration and that the former receivers had retired. A current director said a strategy was being pursued to restart operations, which would require significant expenditure, funding, possible toll treatment arrangements and a transfer of the mining lease to a special purpose vehicle. But the evidence also showed there were parallel issues affecting the lease, including Wardens Court forfeiture proceedings and separate Supreme Court proceedings concerning another caveat lodged by St Barbara Limited.

The legal question in this judgment was narrow but commercially significant. Under the Federal Court Rules, an appeal does not automatically stay the operation of the judgment being appealed. So SCL had to persuade the Court that the withdrawal of caveat order should be stayed pending the appeal.

The Court identified the usual considerations for a stay application. First, does the appeal raise serious issues for determination, in the sense of arguable grounds? Second, where does the balance of convenience lie? In this case, the respondents accepted for the purposes of the stay application that SCL had raised arguable grounds of appeal. Those grounds included arguments that the primary judge erred in finding that Kirkalocka's royalty payment obligation was compromised by the DOCA, and that obligations relating to the caveat and conditions on transfer of the mining lease did not survive the DOCA.

That meant the real contest was about practical prejudice and the terms of any stay. SCL argued that without a stay its appeal could be rendered nugatory. If the caveat were removed and Kirkalocka were then able to deal with the mining lease, including by transfer, SCL said it could not be restored to the same position later even if it won the appeal. SCL also argued there was no evidence that Kirkalocka, having recently been in administration and receivership, would be able to meet any damages claim SCL might later have.

The respondents argued that the real source of SCL's concern was not withdrawal of the caveat itself but any later transfer of the mining lease. They also relied on the existence of the St Barbara caveat, saying the lease could not be transferred even if SCL's caveat were withdrawn. At the same time, they said Kirkalocka would suffer prejudice if a stay were granted because the continued existence of SCL's caveat would inhibit funding, toll treatment arrangements and a proposed transfer of the lease to a special purpose vehicle.

A further issue arose about money paid into court. The respondents wanted SCL to provide much more than the $100,000 already paid in. They argued that a larger amount should be required because Kirkalocka would incur appeal costs and the former receivers would incur remuneration and costs in defending the appeal. The Court therefore also had to decide what kind of loss an undertaking as to damages is meant to cover, and whether the respondents' claimed amounts were properly secured in that way.

The Court granted the stay. It ordered that, upon SCL's undertaking as to damages and its further undertaking to pursue the proceedings with all due expedition, the primary order requiring SCL to consent to withdrawal of the caveat and otherwise cooperate in its withdrawal be stayed until 4.00 pm AWST on 20 May 2026. The Court also ordered that the $100,000 already paid into court stand as security for SCL's undertaking as to damages. Costs of the interlocutory process were reserved.

The Court accepted that SCL's appeal raised arguable grounds. Because that point was effectively accepted by the respondents for the purposes of the application, the decision turned on the balance of convenience. The Court considered there was a real risk that SCL's appeal could be rendered nugatory if the caveat were removed before the appeal was heard. SCL's concern was that once the caveat was gone, the mining lease might be dealt with or transferred in a way that could not later be reversed if the appeal succeeded.

The respondents' prejudice case was weakened by their own evidence about the St Barbara caveat. The Court noted that much of the prejudice said to be suffered by Kirkalocka would only materialise if the St Barbara caveat were also withdrawn. In other words, the commercial steps Kirkalocka wanted to take were not being held up only by SCL's caveat. That reduced the force of the argument that refusing a stay would cause immediate and distinct prejudice to Kirkalocka.

The Court also rejected the respondents' attempt to use the stay application as a vehicle for broader protection against appeal costs and former receivers' remuneration. The judge said there had been confusion about the scope of the usual undertaking as to damages. Damages under such an undertaking are concerned with loss caused by the interlocutory order itself, not loss flowing from the litigation generally. The respondents' proposed figure of $400,000 was based on estimated legal costs and remuneration said to be incurred in defending the appeal. The Court held that those amounts did not have the necessary connection to loss flowing directly from the stay. If the respondents wanted security for appeal costs, they could seek that separately under the rules.

This case is a practical example of how commercial disputes often turn on interim control rather than final rights alone. SCL's underlying dispute with Kirkalocka involved the meaning and effect of a royalty deed and the impact of a DOCA on future rights. But the urgent application was about something more immediate: whether SCL had to give up the caveat that helped preserve its position before the appeal was heard. For many businesses, that is the real commercial battleground. If a caveat, registration, consent right or transfer restriction disappears too early, a later court win may not fully repair the damage.

The judgment is also useful for businesses dealing with distressed counterparties. Once administrators, receivers or a DOCA are involved, parties often start arguing about which rights survive, which claims are compromised and whether future obligations still bind the company. If your contract depends on future production payments, royalties, earn-outs or asset-linked revenue streams, you should not assume those rights will operate smoothly through an insolvency process. The drafting matters, but so does the practical structure supporting the right.

Another important lesson is to separate different forms of protection. The Court drew a clear distinction between security for an undertaking as to damages and security for costs. Businesses sometimes treat money paid into court as a general buffer against all litigation risk. This judgment shows that the purpose of the payment matters. If the issue is loss caused by the stay itself, that is one question. If the issue is legal costs of the appeal, that is another. Mixing the two can weaken an argument or lead to the wrong application being made.

The case also shows the importance of the surrounding factual landscape. Kirkalocka said the caveat was inhibiting funding and restructuring steps, but there was also another caveat and other proceedings affecting the same lease. That mattered to the balance of convenience. In practice, if your business is asking a court to remove or preserve a protection over an asset, you need to explain the whole picture, including any parallel proceedings, competing claims or other barriers that may already prevent the transaction you say is being blocked.

Several documents and events shaped the Court's reasoning. First was the royalty deed itself, because it created both the royalty payment obligation and the contractual framework for a caveat over the mining lease. Second was the caveat lodged by SCL in late 2022, which became the practical protection SCL was trying to preserve pending appeal. Third was the DOCA entered into on 22 December 2023, because the underlying dispute concerned whether that arrangement extinguished or barred some of SCL's rights under the royalty deed.

The primary judge's orders were also critical. The stay application focused on one specific order requiring SCL to consent to withdrawal of the caveat and otherwise cooperate in effecting that withdrawal. The notice of appeal mattered because it identified the arguable grounds accepted for the purposes of the stay application. The undertakings given by SCL also mattered. The Court required both the usual undertaking as to damages and a further undertaking to pursue the proceedings with due expedition.

On the evidence side, the affidavit from Kirkalocka's director was important because it set out the claimed prejudice from keeping the caveat in place, including funding and transfer issues. But that same evidence also acknowledged the existence of the St Barbara caveat and other proceedings, which reduced the force of the respondents' prejudice argument. The Court's treatment of that evidence is a reminder that in urgent interlocutory disputes, the detail of what is actually preventing a transaction or funding step can be decisive.

The judgment was delivered on 24 December 2025 by Vandongen J in the Federal Court of Australia. It arose from an appeal against the primary decision in Kirkalocka Gold SPV Pty Ltd (Subject to Deed of Company Arrangement) (Receivers and Managers Appointed) v SCL AUS Limited [2025] FCA 1490. The stay granted in this judgment operated until 4.00 pm AWST on 20 May 2026, subject to SCL's undertakings. A correction was later recorded on 29 January 2026 to delete the word 'not' at [46] so the sentence correctly referred to the risk that the appeal would be rendered nugatory.

This means the case should be read as an interlocutory procedural ruling made in the course of ongoing appellate proceedings. It is authoritative on the stay application and the reasoning supporting that stay, but it is not the final word on the underlying royalty deed dispute or on the ultimate appeal outcome.