CEO Customs v Adelaide Brighton Cement Ltd

[2004] HCATrans 474

[2004] HCATrans 474

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A44 of 2004

B e t w e e n -

CHIEF EXECUTIVE OFFICER OF CUSTOMS

Applicant

and

ADELAIDE BRIGHTON CEMENT LTD

Respondent

Application for special leave to appeal

GUMMOW J
KIRBY J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 19 NOVEMBER 2004, AT 9.27 AM

Copyright in the High Court of Australia

MR A. ROBERTSON, SC:   May it please the Court, I appear with my learned friends, MR N.J. WILIAMS, SC and MR A. GELBART, for the applicant.  (instructed by Australian Government Solicitor)

MR J.W. DE WIJN, QC:   If it please the Court, I appear for the respondent with my learned friend, MS W.A. HARRIS.  (instructed by Johnson Winter & Slattery)

GUMMOW J:   Thank you.

KIRBY J:   I notice the microphone is off at the other end in Adelaide and they should have the pleasure of listening to us whilst this matter is proceeding.  So if we can switch the microphone on we should, even though they are not involved in this case.

GUMMOW J:   It is changed now.  Yes, Mr Robertson.

MR ROBERTSON:   Thank you, your Honours.  Could I begin by asking your Honours to go to page 103 of the application book, which is in the judgment of Justice Selway.  It compendiously describes some of the evidence and some of the background.  It is at about line 45 that I wish to pick it up.  It begins, “It described”.  Do your Honours see that?

KIRBY J:   Yes.

GUMMOW J:   It just screams out as a special leave point there at page 103.

MR ROBERTSON:   What it involves, in our respectful submission, is ‑ ‑ ‑

GUMMOW J:   This matter came from the AAT, did it not?

MR ROBERTSON:   It came from the AAT. It then came before Justice Mansfield under section 44 of the AAT Act.

GUMMOW J:   That is right, but what I was going to invite you to look at was page 47 of Justice Mansfield, who I think was upheld by the majority, was he not?

MR ROBERTSON:   The majority upheld Justice Mansfield’s ‑ ‑ ‑

GUMMOW J:   He fixed upon these words “mining for minerals” which seems to me is probably right, beginning at line 40 or thereabouts, and carrying down the rest of the page and over to the top of page 48.

MR ROBERTSON:   Yes.  What it amounts to – the difference, as it were, between the majority and the minority of the five judges of the Federal Court is that even though one is dealing with what I would like to call an express exception, that is, minerals except limestone, other than agricultural use limestone ‑ ‑ ‑

GUMMOW J:   It is a question of whether there was an error of law, given this particular factual complex and what they were doing.

MR ROBERTSON:   Quite so.  The facts were fully found.  It I could take your Honours to, if I may, briefly, page 22, which is the Administrative Appeals Tribunal’s decision, one can see the reasoning which, in our respectful submission, is wrong.  One can see it there.

KIRBY J:   What is your answer to Justice Gummow’s point inferring it does not scream out for special leave.  I suppose you say, first of all, you do not have to scream in order to get special leave.

GUMMOW J:   It helps.

KIRBY J:   But, secondly, what is your answer to the suggestion, well, this is a matter on which, as in all matters of construction, you can have different viewpoints, as has been indicated, and that matters of this kind should generally finish in the Federal Court?

MR ROBERTSON:   Could I put it this way, in answer to your Honour Justice Kirby, the principles of statutory construction which we say the majority view departs from include a number.  The first is that, as the minority the Chief Justice and Justice Selway point out, the meaning given by the majority departs from the normal meaning of the words.  That is the first point.

GUMMOW J:   Normal meaning of what word?

MR ROBERTSON:   Of the word “limestone”.  If your Honours look at page 101 ‑ ‑ ‑

GUMMOW J:   The crux of it, though, is “mining for minerals”, is it not?

MR ROBERTSON:   Yes.

GUMMOW J:   And “for” indicates some, dare I say it, purposive notion.

MR ROBERTSON:   Yes, there is no difficulty with that.  Just to answer your Honour Justice Kirby, if your Honours look at page 101, line 30, Justice Selway says:

the fact is that the AAT did not read the word ‘limestone’ in its usual and normal meaning.  Instead it read the word ‘limestone’ as meaning ‘limestone other than limestone where the purpose of its extraction is the constituent minerals contained within it’.

So that is the first point, to depart from the ordinary meaning.  Secondly, the majority add words in, a non‑statutory expression, “limestone as such”, which is picked up from some obiter comments of an earlier Full Court. 
Thirdly, words and expressions which are expressly included in the statute have no work to do.  In particular, the words “other than agricultural use limestone” which were expressly added back in by a second amendment have no word whatever to do, which again is a departure from what one would normally think were the ordinary rules of statutory construction.

KIRBY J:   You have me on your side, as far as the construction is concerned.  The problem is, given that there are alternative ways in which one can do it, what would this Court do except have it argued before us and then see how the numbers fell out here?  It is nothing, as it were, tremendously significant, and you have unique capacities to have the law changed, if you do not like the outcome in the Federal Court.

MR ROBERTSON:   Your Honour, in answer to that we put these propositions, that here it is not a mere question of statutory construction on which, we say, with respect, the lines of argument are evenly balanced.  One of the significant features of the majority decision, if I can take your Honours to it, is that none of the matters that I have thus far addressed, that is, the departures, we say, from the principles of statutory construction, none of them are adverted to in the majority judgment.

GUMMOW J:   Of course they are not.  This is the staple business of the Federal Court, construing federal legislation.  It is bizarre that they have to set out the whole of the principles of statutory interpretation when they embark on their daily task.  I certainly never did.

MR ROBERTSON:   Your Honour, what one can find in the majority judgment if one goes to page 87 is paragraphs 114 and 115, which seem to be the ratio of the decision.  Then their Honours say whether or not extracting limestone for cement manufacture is or is not excluded is a matter which depends upon the particular tribunal of fact that it comes before.  What it does is, in our respectful submission ‑ ‑ ‑

KIRBY J:   Is that on the basis that Justice Gummow has been suggesting to you, “for minerals”, that it is looking at what the purpose of extracting the limestone is?  It is not enough that it just be limestone, you have to characterise the purpose of the extraction of the limestone.

MR ROBERTSON:   What it comes down to is this, your Honour, if I could answer it in this way.  It involves, in our respectful submission, the proposition that the Parliament when it said “but not limestone” was somehow ignorant of the fact that using limestone to make cement was a very common, if not the most common, use of limestone.  The Chief Justice makes this point at the top of page 69 in the application book, where his Honour says:

The circumstance that the chemical or mineral composition of limestone is the basis for many of its well‑known applications, and the fact that confining the exception to ‘limestone as such’ would deprive the exception of much, if not all, of its practical effect, points powerfully to the conclusion that the ‘limestone exception’ was intended to extend to operations where the limestone, although mined for its mineral or chemical content, has not had any of its constituent minerals extracted from it.

In our respectful submission, that is a powerful consideration which, again, if I may say so, the majority does not address.  Now, to go back to your Honour Justice Kirby’s question, “Why is this not an ordinary question of statutory construction?”, if I could put it that way, our answer is that it involves important principles of statutory construction such as I have identified.

KIRBY J:   I suppose your answer to Justice Gummow is that if this is the staple business of the Federal Court, it is quite important that they should “staply” get it right.

MR ROBERTSON:   We would respectfully submit so.  It is not a matter that, as it were, comes without my client having sought, to the extent that he can, full consideration by the Full Court.  There was a court of five judges convened for the purpose of resolving the conflict between two earlier Full Federal Court decisions.  The majority again, in our respectful submission, wrongly says at pages 91 to 92, “There is no conflict”, but, if I can put it this way, Goliath – which was the earlier cement case – Goliath had said, “We would like a diesel fuel rebate because we are extracting limestone for use in cement manufacture”, as with Adelaide Brighton.  The only difference in that case was that they asked for the construction of the legislation to extend to a point further than the present respondent.

In other words, that was up to the stockpile, as here, plus a further point, that is, using the limestone in the kiln.  The Full Federal Court in Goliath said, “As a matter of law, no rebate is available.  What you are doing is extracting limestone.  You are not recovering calcite, you are not recovering lime, so your whole application fails”.  What the court has said in Adelaide Brighton is, “But if the applicant, the cement manufacturer, chooses to ask for less – that is, part A of the process, instead of part A plus part B – then rebate is available”.

To put that another way, the majority has said, “There is no conflict between A plus B not being available, but A being available”.  So, in our respectful submission, again, it is not simply a matter of statutory construction; it is a matter where in truth there is a conflict between the Full Court decisions at the level of the Federal Court.

KIRBY J:   What is the economic significance of this?  What is the amount that would be brought to tax if this is reversed?

MR ROBERTSON:   Your Honour, the evidence of Mr O’Halloran is in the application book, and the short answer to your Honour is that up to now the figure is between 24 million and 39 million.

KIRBY J:   It is not peanuts.

MR ROBERTSON:   It is not insubstantial, no.  No doubt that would not of itself be a ground for special leave, but it shows that it is not an insubstantial question.

KIRBY J:   On its own, it would not, but we often look at the fact that there is a lot turning on a case.

MR ROBERTSON:   Yes, quite so.  Your Honours, the way we put the matter is that the Parliament has expressly said, “minerals except limestone”.  One of the clear and common uses of limestone is limestone in cement manufacture.  The question involves, in our respectful submission, departures from important principles of statutory construction.  Your Honour Justice Gummow says, “Well, of course, they do not have to set them out”.  Maybe so, but the result is that words that are there are read out and words that are not there are read in, so that “limestone as such” has become the expression that the Full Court has used.  Your Honours can see that in what I described as probably the “ratio” on page 87, if I could take your Honours back to it, paragraph 115, line 45 to 50:

An operator may, however, excavate limestone with a view to recovering and using the particular mineral compounds found in the limestone.

Now, the word “recovering” is something that the majority addressed, but not in a way which had been put to the Full Court.  The proposition that was put was that if you have an express exception – that is, except limestone – and nothing is ever taken out of it, then how can you say it ceases to be limestone and becomes something else?  So, although there is, we accept, a purposive element in the statutory provisions, the effect of the majority’s conclusion is to say that the activities of the Parliament, the legislative activities of the Parliament on two or three occasions in relation to excluding limestone, have, in effect, misfired or miscarried and the result is the same as if the limestone exception had never been enacted.

Your Honours, the points that we make are those, the statutory construction points, the point that it is not merely a matter of statutory construction on which different mines might legitimately come, applying the same principles, to different conclusions.  Our respectful submission is that the majority has, as we have submitted in the written submissions, read words in, the words “as such” or “not when used for its chemical or mineral composition”.

It has, in a sense, said, well, notwithstanding that Justice Menzies of the High Court looked at the question of limestone mining in the 1960s, notwithstanding that, for example, Justice Spender of the Federal Court looked at mining limestone for cement manufacture and said, “Plainly, it is mining limestone”, that somehow then excluding the mineral limestone leaves one with the same result, that is, the result is the same as if limestone had never been expressly excluded.

GUMMOW J:   Has not this legislation been changed at some stage, Mr Robertson?

MR ROBERTSON:   Now, your Honour, or?

GUMMOW J:   Since these events.

MR ROBERTSON:   What has happened is that there is ‑ ‑ ‑

GUMMOW J:   I just cannot pick it up in the materials.  It was mentioned.

MR ROBERTSON:   Yes, it is mentioned, your Honour.  There is now a piece of legislation which re‑enacts, substantially, the relevant provisions of the Customs Act.  It is called the ‑ ‑ ‑

GUMMOW J:   Yes.  What year was it?

MR ROBERTSON:   It was 2003, I think.  Your Honour is right, there is an Act now called – it is referred to on page 124, your Honour, paragraph 37.

GUMMOW J:   Thank you. 

KIRBY J:   Is that against you?  Does that suggestion a confirmation of the ruling by Justice Mansfield?

MR ROBERTSON:   No, in this sense, that the question was and is being litigated, so I would not expect that somehow retrospectively the Parliament would say, “As for these past events, the answer is a different answer”.  Justice Mansfield’s judgment was August 2003, whereas the Energy Grants (Credits) Scheme Act was a month or so ‑ ‑ ‑

GUMMOW J:   1 July, by the look of it.

MR ROBERTSON:   1 July.

KIRBY J:   Has that been enacted or is it still in the Parliament?

MR ROBERTSON:   No, it has been enacted, your Honour.

KIRBY J:   It has been enacted.

MR ROBERTSON:   But the point that we make at page 124 ‑ ‑ ‑

GUMMOW J:   It commenced then.  It had been passed, presumably, at some earlier stage.

MR ROBERTSON:   It commenced on 1 July, your Honour.

GUMMOW J:   I know, but presumably it had gone through the Parliament at some earlier stage.

MR ROBERTSON:   Yes.

KIRBY J:   On the assumption that they had made everything lucidly clear.

GUMMOW J:   Given this conflicted state of affairs in the Federal Court, allegedly so.

MR ROBERTSON:   On the basis that what the Full Federal Court – when I say “on the basis”, I mean “on the basis I assume”, as one does with those things – on the basis that what the Full Federal Court had said in Goliath, that is, extracting limestone for cement manufacture is caught by the

exclusion of limestone, was the position.  It is not the case – I do not know that your Honour is putting to me that it is, but it is not the case that the express exclusion was changed.  The express exclusion remains.

So, in our respectful submission, it is more than a mere question of statutory construction.  Here the majority have, in effect, said that the attempts by Parliament to limit rebate by expressly excluding limestone, a well‑known use of which is in cement manufacture, has in fact miscarried because it can be re‑characterised as, instead, searching for the minerals of which the limestone is made up.  If your Honours please.

GUMMOW J:   Thank you, Mr Robertson.  Yes, Mr de Wijn.

MR DE WIJN:   If your Honours please, in relation to the last point about the Energy Grants Act, it was in fact enacted after the AAT decision in this case and, more importantly, after the decision of the Full Court in David Mitchell, which we say applied the reasoning of Goliath.  My learned friends say it is inconsistent with Goliath, but our contention and the contention accepted by the majority ‑ ‑ ‑

GUMMOW J:   Yes, David Mitchell was a Full Court decision of 23 March 2001.

MR DE WIJN:   It was, and in fact your Honours will know that there was a special leave application in Goliath in this case, but no special leave application was made in David Mitchell, which was in fact decided before the special leave application in Goliath was heard. 

GUMMOW J:   Goliath was 22 August 2000.

KIRBY J:   What is your answer to Chief Justice Black’s point, though, that you really require a construction of the exclusion which is a very unreal one?

MR DE WIJN:   With respect, no.  With respect, the Tribunal asked itself the question dictated by the statute, namely, what was the respondent mining for?  That was a question of fact.  The Tribunal asked itself the correct question as dictated by the legislation.  That question, what was the respondent mining for, required the Tribunal to look to the purpose of the respondent’s operation.  That was a question of fact, as Justice Spender said in David Mitchell at paragraph 25.

The answer to that question in this case was that Adelaide Brighton sought calcite, silica, alumina and haematite.  It was indifferent to the source of those four minerals, as the evidence again showed, because in respect of one of its other operations it obtained those minerals from marble and in Western Australia in Cockburn Sound it obtained those minerals from shell sands which were not excluded.  So the statutory question was, “What are you mining for?”, not “What are you digging out of the ground?”  but “What are you mining for?”.  If I can take the Court to page 23 of the application book, first of all, line 25 – this is the decision of the Tribunal:

Adelaide Brighton Cement wins the four minerals from the earth and does so purposively because it has a specific use for them.  It no less wins or recovers them by virtue of winning or recovering all four at once.

In the middle of the next paragraph, the Tribunal deals with my learned friend’s separation point and the Tribunal says:

All that needs to be done to separate the four sought minerals from the material adhering to them prior to them being able to be used has been done.

So it is quite clear that the Tribunal looked at the question of purpose, looked at what Adelaide Brighton was seeking to get.  It was not seeking to get limestone, and the evidence of the applicant’s expert was that limestone by itself is not suitable for making cement.  You need to have the four minerals.  It is not the limestone.  The Tribunal looked clearly at what Adelaide Brighton was looking for.

KIRBY J:   I take the force of that point and the two views are expressed in the Federal Court.  We have a case where it is obviously important to both parties, the Federal Court has constituted itself of five judges, which is exceptional, there has been a division of opinion, there are strong arguments against that which you succeeded on and there is an awful lot of tax that is involved.

MR DE WIJN:   With respect, Chief Justice Black – and perhaps Justice Selway or his decision is on a slightly different tangent – but Chief Justice Black is the only judge who has in fact taken a different view.  In Goliath, the view taken was that rebate was not applicable, but that was because of the way the case was argued.  The case was argued on an application for rebate for a whole process and on the basis that the mineral being sought was lime, not calcite, and the lime existed in the kiln for a split second during a different process.  So Goliath was a very different case.  When the Full Court considered Goliath, it considered it on the basis that the mineral being sought by the process A through to B, through the manufacturing process of cement, was to produce lime. 

Now, in our case, it was a very different case.  We sought rebate in respect of simply the extraction process, where the purpose of that process

was to obtain the four minerals, and they were conceded to be four minerals.  What happened in Goliath is that the Full Court then went on to look at the extrinsic material and say, “Having regard to the extrinsic material, if one is mining for calcite or the other minerals that happen to be found in limestone, the limestone exclusion does not exclude it”.  That was, of course, obiter.  When David Mitchell came along, there was an express finding of fact by the Tribunal in David Mitchell – and the case was run quite differently – that David Mitchell was carrying on its extraction operations for the purpose of getting calcite. 

The Full Court in David Mitchell applied the reasoning in Goliath.  It did not say, “We disagree with Goliath”.  It applied the reasoning in Goliath and said that where you have a finding of fact that the purpose of a particular operation, an extraction operation, was to get calcite or one of the other minerals, then the exclusion of limestone does not deny the applicability of the rebate.  So Goliath and David Mitchell were entirely consistent on the reasoning that was applied, and they relied upon the extrinsic material in doing so.

KIRBY J:   I would not exhaust yourself, Mr de Wijn.  I think you have the majority in the Court at the moment, but it is a matter of impression.  Statutory questions are, to some extent, matters of impression and ‑ ‑ ‑

MR DE WIJN:   Can I just add, if one looks at page 61 of the application book, the Chief Justice sets out the extrinsic material relied upon.  Both the Chief Justice and the majority looked at the extrinsic material and came to a conclusion as to what the purpose of the legislation was.  The extrinsic material clearly shows that where one is mining limestone for the purpose of getting its inherent mineral qualities, the rebate still applies.  So it is not something that was just left in the dark.  If the Court pleases.

GUMMOW J:   Thank you.  Yes, Mr Robertson.

MR ROBERTSON:   Your Honours, can I make two brief points in reply.  Could I ask your Honours to turn to page 89 of the application book to show what, in our respectful submission, is the end result and, in view of the express exception, we would say, unfortunate end result.  If your Honours go to page 89, paragraph 120, their Honours of the majority say:

The conclusion that the AAT committed no error of law does not necessarily mean that every operation involving the mining of limestone for use in the production of cement is to be regarded as mining for minerals other than limestone.  Each case must depend on the evidence and its own circumstances.

In our respectful submission, that is a surprising conclusion, given that the Parliament has expressly said, “Except limestone”, other than agricultural use limestone, which is a particular application of limestone.

KIRBY J:   It is a question of what was meant by that exception, by that exclusion, and it is in very large, global terms.

MR ROBERTSON:   That is right.  That is why we respectfully say the majority have in fact reached a result whereby the statutory question has been transmuted into a question of fact in each case.

KIRBY J:   Mr Robertson, you have me eating out of your hands.

MR ROBERTSON:   The last thing I wanted to say, your Honours, was this.  On the topic of conflict, which is an important topic in terms of section 35A of the Judiciary Act, could I ask your Honours to turn briefly to the folder of materials we supplied and to tab 3 of that folder, which is the Full Court decision in Goliath (2000) 101 FCR 11. If your Honours would turn to page 16, at the foot of the page, paragraph 22.

KIRBY J:   This is Justices Lee, Cooper and Kiefel?

MR ROBERTSON:   That is so, and the question of inconsistency and how far the proposition that the mineral constituents, if that is the right expression, or the chemical components of limestone, were raised and dealt with.  Do your Honours see paragraph 22, line 3:

It was submitted –

this is by the then appellant, Goliath –

that the initial object of the operations was the recovery of calcite from limestone; and the overall purpose was to recover lime.

Then, on the next page, their Honours deal with recovery of minerals, which they described as “Central to the phrase”.  Then if I could ask your Honours to turn to page 18, they set out what Justice Spender said in North Australian Cement:

the extraction of limestone for the purpose of the manufacture of cement was properly characterised as mining operations, limestone being a mineral.  That might also be accepted for the purposes of the present case –

say their Honours –

although it does not assist the appellants, because of the exclusion of limestone from the definition of minerals.  They go further, and point to calcite and lime occurring in the processes.

So our submission is that this case, contrary to the majority in Adelaide Brighton, did expressly deal with looking beyond, as it were, the limestone, seeing what its constituents were and saying, “That means I am not mining for limestone within the exception”.  In our respectful submission, there is that conflict, and the resolution of conflict is, of course, one of the matters within section 35A of the Judiciary Act.  If your Honours please.

GUMMOW J:   What I am about to say represents the conclusions of Justice Heydon and myself.

The decision in the Full Court of the Federal Court turned upon whether there had been an error in deciding “a question of law” within the meaning of section 44 of the Administrative Appeals Tribunal Act 1975 in the construction of the provisions of the Customs Act 1901 (Cth), but in the light of the factual findings by the Administrative Appeals Tribunal as to the nature of the activities said to be “mining for minerals”.

There appears to us to be no question of general importance relating to the applicable principles of statutory construction.  With respect to the majority decision reached by the Full Court on the factual basis established by the Administrative Appeals Tribunal there are insufficient prospects of success to warrant a grant of special leave.  Accordingly, we would refuse the grant.

KIRBY J:   I would grant special leave.  In my view, the minority views expressed in the Federal Court are persuasive.  The Federal Court was constituted by five judges for the appeal to it.  It divided, with two judges, including the Chief Justice, dissenting.  There is arguably a difference of view now in the Federal Court on the construction of the relevant legislation.  As was pointed out in argument, a very large amount of tax hangs on the outcome of the case.  In my view, there is sufficient prospect of success to warrant the grant of special leave.  I would favour that grant.

GUMMOW J:   The order of the Court is special leave is refused with costs.

AT 10.01 AM THE MATTER WAS CONCLUDED