Collector of Customs v Bell Basic Industries Ltd

[1989] HCATrans 20

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Perth No P29 of 1988

B e t w e e n -

COLLECTOR OF CUSTOMS

Applicant

and

BELL BASIC INDUSTRIES LTD

Respondent

Application for special

leave to appeal

BRENNAN J GAUDRON J McHUGH J

Bell

TRANSCRIPT OF PROCEEDINGS

FROM PERTH BY VIDEO LINK TO CANBERRA

ON FRIDAY, 17 FEBRUARY 1989, AT 2.55 PM

Copyright in the High Court of Australia

C2T 37 /1/JM 1 17/2/89

MR D.R. WILLIAMS, QC:  May it please Your Honours, I

appear with my learned friend MR M.D.F. O'SULLIVAN

for the applicant.	( instructed by the Australian
Government Solicitor)

MR M.L. BARKER:  May it please the Court, I appear

for the respondent. (instructed by Keall Brinsden)

BRENNAN J:	Thank you.
MR WILLIAMS:	Your Honours, the bases on which special leave

is sought in this case can be briefly stated. The

case turns on the definition of "mining operations"

in the CUSTOMS ACT. The definition is set out

in the judgment of His Honour Mr Justice Jenkinson

at page 40 of the application book. The

definition is in three parts, paraphrasing,

"mining operations" means: mining for minerals

and includes other operations and, thirdly:

does not include quarrying operations carried

on for the sole purpose of obtaining stone for

building, road making or similar purposes.

provision and a "but does not include" provision. The question is, from the point of view of	So there is a "means" provision, an "includes" it gets a diesel rebate under both the CUSTOMS ACT
and the EXCISE ACT.

It is our submission that both the

Administrative Appeals Tribunal and the Full decisions on the term "mining operations" as used

in the INCOME TAX ASSESSMENT ACT. I refer in

particular to the New South Wales ASSOCIATED

BLUE METAL QUARRIES case and the NORTH AUSTRALIAN

CEMENT CASE. Both the tribunal and the Federal

Court have, in our submission, elevated what

were findings of fact as to the use of the term

"mining", or "mining operations", or related

expressions in the tax cases to a principle of

law that mining and quarrying were, for the purposes

of the CUSTOMS ACT definition, different to the

extent of being mutually exclusive.

In consequence, although the tribunal and

the 'meaning" part of the definition, they did not consider the evidence, of which there was significant
the court both considered whether the evidence
disclosed a u.&age which would describe the

evidence from several witnesses, to the effect that

it was appropriate to describe the operations as

"quarrying" as well.

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MR WILLIAMS (continuing): In consequence, the proper question

was never addressed. From the point of view of

public interest, in our submission, the proper administration of both the CUSTOMS ACT and the

EXCISE ACT require a review of the Federal Court

decision and a correction of the error and in the
administration of justice so far as it affects

this particular case, it is our submission the

respondent has not had its case considered on the

merits either by the tribunal or by the Federal

Court.

HRENNAN J: What do you say is the true position?

MR WILLIAMS:  The true position is that what is mining or what

are mining operations is to be determined by the

manner in which the term is used at the relevant time

in relation to the relevant operations and the same

goes for what is quarrying or what are quarrying

operations. What the Federal Court said was the two
are mutually exclusive therefore finding that the
operations were mining tor minerals, they could not
be quarrying without considering the evidence to

the effect that it could be so described.

The error, I think, can be very briefly

demonstrated by reference to the reasons of the

tribunal and the reasons of the Federal Court. At

page 2~ in the application book the tribunal held,

at about point D,at the end of the middle paragraph:

We therefore accept that the Applicant has established that the operations in which it

is engaged come within the description

"mining for minerals".

They follow -

Because we consider that the Applicant's

activity comes within the description of·

"mining" we do not consider that it can fall

within the exclusion of "quarrying operations	carried on for the sole purpose of obtaining	stone for building, roadmaking or similar
purposes".

It then went on to deal with another point to which

I will return. ln acting as it ctid at page l8, the

tribunal appears to have regarded itself as obliged by a decision of the full Federal Court to approach the definition of mining operations in the CUSTOM~ ACT

with the High Court decisions under the INCOME TAX
ASSESSMENT ACT in mind. This appears at page 13 in

the reasons. At the bottom of the page in the

third-last line, having referred to the decision of

the full Federal Court in NEUMANN, the tribunal said

that it would:

C2T38/l/BR	3	17/2/89
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approach the definition of "mining operations"
with the High Court decisions on those words

in mind.

Ana then on to page 14 -

Relevant High Court decisions are as follows:

In NSW ASSOCIATED BLUE METAL QUARRIES LTD V

FEDt;RAL COMMI~SIONEK OF TAXATiuN,

(1955) 94 CLR 509, Kitto J held that while 'mining"

was not confined in its meaning to the winning

of minerals by means of underground working,
the getting of other substances such as

freestone and granite in blocks for building

purposes would never be spoken of as mining.

And they then say:

the Full Court ..... took a similar view.

That passage cited from Mr Justice Kitto's decision

appears at pages 512 to 513 and it is apparent

from the context that His Honour was not offering

a proposition of law; he was offering a statement

as to what was connnon usage in relation to what he

was talking about.

Now, another case to which reference is made is

at the bottom of page 14 in NORTH AUSTRALIAN CEMENT

case:  Mr Justice Menzies considered

Menzies J considered that whether open cut

extraction is mining or not is to be determined

by an informed general usage which takes into

account the way in which the deposits of the

material occur, the character of the material

to be recovered and the use to which it may

reasonably be put.

That appears at pages 362 to 363 and there follows a

sentence in which His Honour says that the matter

is essentially a question of fact. (Continued on page 5)

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BRENNAN J:  Do you regard that as an inappropriate method

of construction of the statute here?

MR WILLI.Ai~S:  Not at all and the tribunal, to its credit,

with respect, appears to have applied it in relation
to its consideration of the question whether the
operations were mining for minerals. It did not
go on to consider whether mining for minerals could
also be regarded as - this particular operation

could also be regarded as quarrying. It did not

apply Justice Menzies' test to the second step.

Now, there is ample evidence upon which the

tribunal could have acted, that the operations could

appropriately be described as quarrying and we have

forwarded to the Court separately a bundle of

transcript pages in which they appear. I do noc

intend to refer to those because the reasons of the

tribunal itself refer to some of that evidence.

At page 26 in the application book:

Dr Frankel's evidence was that he

considered the applicant's mode of operation

resulted in it being a quarrying operation

using techniques and skills consistent with
the quarrying of dimension stone.

On page 27, in the middle of the page, the last sentence in the middle paragraph:

Dr Hensel said there are many aggregate

quarries in which dolerite was highly

sought after and commanded a reasonable

price, in some instances with comparable

value to black granite dolerite.

Dr Hensel's evidence was that the operations

operations for extraction of the black

granite dolerite were consistent with

the extraction of dimension stone which

he had seen at the Black Hill quarry in

South Australia. In his view a quarry

was restricted to the art of obtaining

stone from the earth's crust whereas a

mine involves the extraction of one or

more minerals from which one or more

elements is eventually derived by the

beneficiation process.

Page 28B, in the middle of the first paragraph:

Mr Cooke and Mr Gordon considered the

techniques used to extract black granite

5   17/2/89

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dolerite were techniques of the quarrying

industry but they considered that did not
mean the act of extraction could not be
vernacularly described as mining once it

is accepted that the product being extracted

is a mineral in the vernacular sense.

Now, it is our submission that, on the evidence, it

was open to the tribunal to find that common usage

would have appropriately described the operations

as both mining and quarrying.

BRENNAN J: That would have been inconsistent with the evidence

of Mr Gordon, would it not, as it appears from page 27C

to D.

MR WILLIAMS:  I do not dispute that there is evidence both ways.

The point we make is that the evidence in support of it also being a quarrying operation was never considered. That question was never asked and so there is no decision by the tribunal on that point.

Now, in our submission, the Federal Court fell

into the same error.

BRENNAN J:  The relevant finding is at pages 28 to 29, is that

correct?

MR WILLIAMS:  Yes.

We therefore accept that the Applicant has established that the operations in

which it is engaged come within the

description "mining for minerals".

Because we consider that the Applicant's activity comes within the description of

"mining" we do not consider that it can

fall within the exclusion of "quarrying

operations carried on for the sole

purpose of obtaining stone for building,

roadmaking or similar purposes".

GAUDRON J:  But that is right, it is not? It is not obtained

solely for the purpose of "building, roadmaking or

similar purposes".

(Continued on page 7)

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MR WILLIAMS:  That is another issue altogether to which I would

wish to turn.

GAUDRON J:  But if you answer that aspect against you, do

you not also answer the quarrying aspect against you?

MR WILLIAMS:  In our submission, no. There is nothing 1n

the evidence to suggest that a mineral can not

be stone and a stone can not be mineral.

BRENNAN J:  But the tribunal goes on after the passage

which you have just cited.

MR WILLIAMS:	Yes.
BRENNAN J:	It says if that is incorrect and if it is right

to regard it as quarrying operations we do not

consider that the exclusionary provision can apply.

MR WILLIAMS:	Yes, but the reason they do that is because of the view they took of the purpose of the quarrying
operations which is another matter altogether. They
have said it is mining for minerals. Because
of that it is not within the exclusion, but even if it is not within the exclusion, then the purpose test
is not satisfied.  Now, I have separate submissions
to address on the purpose provisions, but that is not the point I am addressing at the moment.

The Federal Court, if I might turn to their

reasons: there are two judgments, that of

Mr Justice Jenkinson with whom Mr Justice Spender

agreed, and that of Mr Justice French.
Mr Justice Jenkinson referred to the decision of

the Full Federal Court in NEUMANN DREDGING at page 43

in the application book and then went on to say that

a submission regarding the interpretation of the
phrase "mining for minerals" should be rejected in

the light of High Court authorities referring

particularly to the NSW ASSOCIATED BLUE-METAL QUARRIES

case,where Mr Justice Kitto said extraction of stone

could never be described as mining,and the NORTH

AUSTRALIAN CEMENT case which the tribunal had referred to for its test as to the characterization

question. He then said:

In those authorities mining and quarrying

are conceived as two different activities

for description of each of which usage has

prescribed the word "mining" and the word

"quarrying" respectively.

Now, what has happened there, in our respectful

submission, is that findings of fact on the

expression "mining carried on on a mining property"

in the INCOME TAX ASSESSMENT ACT has been translated
into determining as a matter of law that mining and

quarrying are separate.

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Now, that that is what His Honour had in mind

is vindicated by the fact that he then addressed the

manner in which the tribunal had considered the

evidence and, concluding at page 47, that:

The reasons of the Tribunal for its

decisions demonstrate that it considered

the evidence and the information which
dictionaries afford concerning usage of
the words "mining" and "quarrying" in order
to reach a conclusion, as to whether the
respondent was engaged in "mining for minerals''
in winning black granite, conformably with

the directions propounded by Menzies J in

NORTH AUSTRALIAN CEMENT.

Now, this is supported, I think, at the bottom of

page 48 by Mr Justice Jenkinson's conclusion:

The decision of fact which tl-ie Tribunal made that

the recovery in this country at this time
of black granite was in the parlance of
those who have occasion to speak of it

"mining for minerals" was one which in my

opinion the evidence could support, and one

which the reasoning in the High Court cases

did not as a matter of law contradict.

Now, there is a complete dearth of a consideration

of the question in Justice Jenkinson's decision

as to whether it could also be quarrying operations.

McHUGH J:  Yes. The majority do not seem to have looked at

that question at all. Mr Justice French, however,

seems to have considered that question and held, on

the evidence, that it probably was not, or it was not.

(Continued on page 9)

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MR WILLIAMS:	Could I take Your Honours to Mr Justice French because his judgment is unusual, in that the bulk of
it addresses the principles of interpretation and his consideration of the facts and the procedure adopted
by the tribunal is very short.  At page 67 he said:

The tribunal however did not make a positive

finding thereon but rather:

... inclined to the view that the black granite

dolerite here in issue is established in this

proceeding as being a mineral.

He then said:

The Tribunal then considered the term

"mining" used in the phrase "mining for minerals",
looking first to its dictionary definition and

then to evidence of commercial usage in relation

to the extraction of black granite dolerite. It

was particularly concerned to consider the

possibility that the extraction process might
be a form of quarrying rather than mining. After

considering the evidence it took the view that in

commercial usage or the "vernacular", the

operation in question could be described as mining.

And he cites a passage which appears in the tribunal's

decision, concluding, at page 68:

We therefore accept that the applicant has established that the operations in which it is

engaged come within the description "mining

for minerals".

Then there is one sentence dealing with the quarrving

operations which, with respect, is ambiguous. It does
not identify whether His Honour is adopting the
tribunal's opinion as to the purpose of the quarrying

or is adopting a conclusion that because they had

found it was mining for minerals they could not find

it was quarrying. In our submission, it was the latter,

and that is supported by what His Honour described

as the function of the tribunal. His Honour took a

very narrow view of what the tribunal saw as its task.

This appears at page 56. In the middle of the page having referred to NEUMANN DREDGING, he said:

The Tribunal saw its duty as being to decide

the question of fact whether dolerite is a

mineral.

He refers to the evidence and says:

That was not the end of the road for the question

then arose, whether the extraction process could
be described as "mining", thus attracting the

the application of the phrase "mining for minerals".

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He deals with the evidence and says:

On that basis it was accepted the application's

operations came within the description "mining
for minerals".

He does not identify the tribunal's reasoning as involving a question of whether the exclusionary provision could apply even if there was a finding that

the operations were mining for minerals.

BRENNAN J:  The burden of your argument does not seek to

challenge the findings in favour of the taxpayer, that

there was a mining for minerals within paragraph (a)?

MR WILLIAMS:	NO.
BRENNAN J:	But .it does seek to rely solely on the exception?
MR WILLIAMS:	Yes.
BRENNAN J:	Now, the question, I suppose, which is relevant,

apart from the mutual exclusion of mining and quarrying,
is whethe~ the purpose of the activity in this case

was the sole purpose specified in the exception?

MR WILLIAMS:  Yes, well that is a point in which, in our

submission, the tribunal fell into a different error
and the Full Court fell into an error in that

Mr Justice French, the only member of the court to

refer to it, simply adopted the tribunal's reasoning.

BRENNAN J: What was the error into which the tribunal fell?

MR WILLIAMS:  The exclusionary provision is to the effect, but

does not include quarrying operations carried on for

the sole purpose of obtaining stone for building,

roadmaking or similar purposes. What the tribunal have done is to say, "'lhis does not mean quarrying

operations carried on for the sole purpose of

obtaining stone for one or more of the specified

purposes", they have said, "'Ihis means that the
quarrying operations must be carried on for the purpose

of obtaining stone soley for one of the specified

purposes". There is a radical distinction between

those two. The sole purpose qualifies the obtaining of the stone for one or more of the purposes and not those subsidiary purposes.

(Continued on page 11)

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MR WILLIAMS (continuing):  But that be seen at the bottom of

page 28. The tribunal said:

Even if the Tribunal is in error and the
Applicant's operations are correctly
described as quarrying operations, we

do not consider that the exclusionary provision

can apply. Firstly, the evidence is that the

extraction of black granite dolerite is

:carried ·on to. obtain it for monumental masonry

and for the cladding of buildings. ·

That is, there are two purposes and they say:

That is, there is not a 11 sole 11 purpose.

But the sole purpose is not that; it is the obtaining of the stone for one or more specified purposes.

They then go on:

Secondly, even if the sole purpose of extraction

on particular occasions is to provide it for

monumental masonry, such purpose is not one

which comes within the normal and usual meaning

of "building.

Which we say is another error:

This is so even given the addition of the words

"or similar purposes."

They then refer to a decision of the tribunal which is

cited at page 13 of the appeal book as authority for the

proposition, in this context, the reference is::

To a use in the building or construction

of something.

And say:

In our view, it is not usual to refer to

monumental masonry being constructed; rather

it is manufactured to requirement and then put

into place.

That is playing semantics in order to obtain an answer

but the question is a different one. The question is

whether monumental masonry is a use which fits in with

building or similar purposes. Then, in the last sentence

of relevance to this point the tribunal say:

It is not necessary to decide whether extracting

for cladding is or is not "building: because

the evidence does not establish such a purpose

is ever a sole purpose.

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Now, it is presumably that passage, starting with:

Even if the Tribunal is in error

and going down to the end of that paragraph to which

Mr Justice French has adhered. In our respectful

submission, there are three errors. The error is to

wrongly identify what is the sole purpose; the second one

is in relation to monumental masonry, to exclude that as

being something that is in the nature of building or

something similar to building; and the third error is to

fail to consider whether cladding of buildings comes

within"building or similar purposes" because it is not

a sole purpose.

BRENNAN J:  Now, the first of those questions is probably a question

of law but are the next two questions questions of law?

MR WILLIAMS: It is difficult - in our respectful submission, it

is not really necessary to answer that because, starting

with the wrong question, the tribunal has not got to even

consider what are the true questions. Are the purposes

specified purposes rather than sole purposes? In any

event, we would -

BRENNAN J:  Is that correct? I mean, let it · - be assumed -

well, there is no challenge, is there, that the purposes

for which this substance is used - monumental masonry

and cladding.

MR WILLIAMS: That was the undisputed evidence.

BRENNAN J: Well then, the question is whether winning them from the

earth to be used for that purpose answers the description

of quarrying operations carried on for the sole purpose

of obtaining stone for the stated purposes.

MR WILLIAMS:	Yes.
BRENNAN J:	And so the relevant question then becomes: are each of

the purposes for which this substance is won from the

earth a purpose which falls within the description of

building, road making, or similar purposes?

MR WILLIAMS:	Yes.
BRENNAN J:	And the relevant inquiry then is the one which the

tribunal made, namely, is monumental masonry a purpose

which falls within the description building, road making

or similar purposes?

MR WILLIAMS: Well, that is the question they have posed.

BRENNAN J:  And rightly posed; have they not?

MR WILLIAMS: In that respect, yes.

BRENNAN J: Well then, is the answer a question of fact or a

question of law?

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:t1R WILLIAMS:  It is a mixed question of fact and law in this

particular circumstance. What they have saict is

the question is whether monumental masonry comes
within the normal and usual meaning of "buildin8"·

That is, with respect, a somewhat narrower question than the one that they were obliged to answer.

We are looking at not necessarily the normal and usual meaning; we are looking at the meaning of "building" in the context of a phrase "building,

roadmaking or similar purposes".

BRENNAN J: "Roadmaking"does not add anything to the relevant

considerations, does it?

:t1R WILLIAMS:  We would submit, no.

BRENNAN J: And the tribunal takes into account the additional

words'br similar purpose~~

:t1R WILLIAMS:  Yes, and reaches, in our submission, a wrong

conclusion.

BRENNAN J:  But why is that not a question of fact which is

not appealable from the AAT?

MR WlLLIAMS:  If the tribunal had gone further and considered

whether, on the evictence, the monumental masonry in

question was capable of being seen as a use for

building or similar purposes in the context of that

phrase, we could have no complaint. It simply said

monumental masonry is not within the usual meaning

of "building" and that is open to - - -

BRENNAN J: Is that what it all comes down to, Mr Williams?

MR WILLIAMS:  There are a number of matters on the way of

very considerable significance.

BRENNAN J: Yes, of course.

:t1R WILLIAMS: Taking Your Honour's question to me as a

suggestion that this is simply a question of fact,

we are left with a tiny point of fact - not fact,

in our submission, but mixed law.and fact - as being-

BRENNAN J: There are two problems about it, are there not?

If that is the ultimate question on which you must

succeed, if you are to succeed at all, and if it

is a question of fact then, of course, you cannot

succeed upon it because there is no appeal from

the AAT on questions of fact .

:t1R WILLIAMS:  I accept that.

BRENNAN J: And although on the way there are thei::P. interesting

questions of mining and quarrying that you have directed

our attention to, they simply cannot be effective

in the end result if that is the point.

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MR WILLIAMS:  I accept that as well. My submission simply is

that the way it has been framed raises a

question of law as well a quescion of fact.	They
are the submissions for the applicant.

BRENNAN J:  Have you anything to add, Mr Williams?

MR WILLIAMS:  No, sir.

BRENNAN J: We need not trouble you, Mr Barker. In this case,

the success of the applicant,were it granted special

leave to appeal,must turn ultimately on the

application of the last three lines ot the provision

of section 164(7J of the CUSTOM~ ACT 1901 which

provides that -

quarrying operations carried on for the

sole purpose of obtaining stone for

building, road making or similar purposes -

"mining operations" in paragraph (a) of subsection (1) of that section. Before the Actministracive Appeals	is not included within the meaning of the term in which the taxpayer engaged did not fall within
those words that I have just recited. In coming to
that conclusion the tribunal said this:

even if the sole purpose of extraction

on particular occasions is to provide

it for monumental masonry, such purpose

is not one which comes within the normal

and usual meaning of "building". This

is so even given the addition of the

words "or similar purposes".

That conclusion, if it were a question of fact - and

it seems that it may well have been - was not open

to challenge on appeal to the Full Federal Court. In those circumstances we do not think that the decision of the Full Federal Court was open to sufficient doubt

to justify the grant of special leave. That is not

to say that the reasoning in the judgments in the

Full Federal Court has been considered and approved

by this Court, it is simply to say that in the result

the case is not attended with sufficient doubt to
justify the grant of special leave. In those

circumstances special leave is refused.

MR BARKER:	May it please Your Honours, I wonder if there might be an order for costs in favour of the respondent?
BRENNAN J:	Mr Williams, have you anything to say to that?

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MR WlLLIAMS:  I have nothing to say, Your Honours.

BRENNAN J: Special leave will be refused with costs.

AT 3.Jl PM THE MATTER WAS ADJOURNED SINE DIE

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