BRENNAN CJ, TOOHEY, GAUDRON, McHUGH, GUMMOW AND KIRBY JJ
COMMONWEALTH OF AUSTRALIA APPELLANT
AND
WMC RESOURCES LTD (formerly WESTERN MINING CORPORATION LTD) RESPONDENT
Commonwealth of Australia v WMC Resources Ltd [1998] HCA 8 2 February 1998 M58/1996
ORDER
Appeal allowed with costs.
Set aside the orders of the Full Court of the Federal Court and in lieu thereof, order that:
(a)the appeal to that Court be allowed with costs;
(b)paragraphs 1 and 2 of the orders of Ryan J be set aside and in lieu thereof, order that the application be dismissed with costs.
On appeal from the Federal Court of Australia
Representation:
J J Spigelman QC with H C Burmester and S J Gageler for the appellant (instructed by Australian Government Solicitor)
G A A Nettle QC with P J Hanks for the respondent (instructed by Arthur Robinson & Hedderwicks)
Notice: This copy of the Court’s Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Commonwealth of Australia v WMC Resources Ltd (formerly
Western Mining Corporation Ltd)
Constitutional law – Acquisition of property – Application of s 51 (xxxi) to areas geographically external to Australia – Statutory permit to explore for petroleum granted in area of disputed sovereignty – Law reducing area covered by permit – Whether permit property capable of acquisition – Whether rights under permit could be extinguished without just terms compensation – Constitutional guarantee of just terms.
The context in which the question for determination arises
On 25 June 1977, an exploration permit No WA‑74‑P was issued to a permittee pursuant to the provisions of Div 2 of Pt III of the Petroleum (Submerged Lands) Act 1967 (Cth) ("the PSL Act"). Section 28 of that Act provides:
" A permit, while it remains in force, authorizes the permittee, subject to this Act and the regulations and in accordance with the conditions to which the permit is subject, to explore for petroleum, and to carry on such operations and execute such works as are necessary for that purpose, in the permit area."
The permit area covered by permit No WA‑74‑P consisted of 253 "blocks" which lay within an "adjacent area", those terms being defined in and for the purposes of the PSL Act. To explore for petroleum in an "adjacent area" without a permit is prohibited: s 19. "Blocks" are portions of the surface of the earth bounded by meridians which are separated from each other by 5 minutes of longitude and parallels of latitude that are separated from each other by 5 minutes of latitude and which lie wholly or partly within an adjacent area[1]. An adjacent area means an adjacent area in respect of a State or Territory ascertained in…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Commonwealth v WMC Resources Ltd [1998] HCA 8
Case
[1998] HCA 8
Decision Date
CaseChat Overview and Summary
The Commonwealth of Australia appealed to the High Court against a decision of the Full Court of the Federal Court concerning the extinguishment of petroleum exploration rights. The dispute arose when the Parliament enacted legislation that reduced the area covered by a permit held by WMC Resources Ltd ("WMC") to explore for petroleum in the Timor Gap, an area of disputed sovereignty between Australia and Indonesia. WMC contended that this legislative action constituted an acquisition of property by the Commonwealth without just terms compensation, contrary to section 51(xxxi) of the Constitution.
The High Court was required to determine whether the rights granted under the petroleum exploration permit constituted "property" for the purposes of section 51(xxxi) of the Constitution, and if so, whether the legislative reduction of the permit area amounted to an acquisition of that property by the Commonwealth. A further issue was whether, if an acquisition had occurred, it was on "just terms" as mandated by the constitutional provision. The court also considered the geographical scope of section 51(xxxi), specifically whether it applied to areas outside Australia's territorial limits where Australia asserted sovereign rights.
The High Court allowed the appeal, holding that the rights conferred by the petroleum exploration permit were not "property" within the meaning of section 51(xxxi) of the Constitution. The majority reasoned that the permit created a statutory licence to explore for petroleum, which did not confer exclusive proprietary rights over the permit area itself, but rather a right to engage in specific activities and to claim any petroleum recovered. The legislative reduction of the permit area was therefore not an acquisition of property, but rather a modification of the statutory licence. Consequently, the constitutional guarantee of just terms compensation was not enlivened. The court set aside the orders of the Federal Court and dismissed WMC's application.
Orders
Orders of the court
1.
Appeal allowed with costs.
2.
Set aside the orders of the Full Court of the Federal Court and in lieu thereof, order that:
(a) the appeal to that Court be allowed with costs;
(b) paragraphs 1 and 2 of the orders of Ryan J be set aside and in lieu thereof, order that the application be dismissed with costs.
Background
Background to the litigation
The central question is whether the partial extinguishment of mining rights by the Parliament, in an area of disputed national rights, amounted to an acquisition of property within s 51(xxxi) of the Constitution.The facts The island of Timor lies 300 miles north‑west of Australia. The western part of the island became part of the Indonesian Republic after World War 2. The eastern part of the island was incorporated into the Indonesian Republic in 1975, notwithstanding a claim by Portugal to sovereignty over East Timor. The Timor Trough is a geomorphological feature which lies in the Timor Sea between 40 and 70 miles from Timor and over 200 miles from the Australian coastline. Australia asserts that its sovereign rights extend up to the Timor Trough. Indonesia asserts sovereign rights at least to the median line between Timor and Australia. As a result there is an "area of overlapping claims, which is wholly outside Australian and Indonesian territorial waters"[50]. Lumb[51] describes the process by which the Timor Gap arose:" An Agreement ... was entered into in 1972 between Australia and Indonesia in relation to seabed boundaries to the north and south of the area adjacent to East Timor ... [Between the boundaries drawn] there is a gap (the 'Timor Gap') in the area of the seabed opposite East Timor ... which extends across the north‑eastern portion of the Trough."[50] Horta v The Commonwealth (1994) 181 CLR 183 at 190.[51] "The Delimitation of Maritime Boundaries in the Timor Sea", (1981) 7 Australian Year Book of International Law 72 at 73. The respondent WMC Resources Ltd ("WMC")[52] held a permit ("the Permit") authorising exploration for petroleum by it in an area which lay within the Timor Gap. The Permit was issued on 25 June 1977 under the Petroleum (Submerged Lands) Act 1967 (Cth) ("the P(SL) Act")[53]. At the time it was publicly known that the Timor Gap was an area of disputed sovereign rights between Australia and the Republic of Indonesia.[52] Formerly Western Mining Corporation Ltd.[53] The permit was originally granted to Pelsart Oil NL. On 4 October 1983 WMC acquired the interest of Mesa Petroleum Co which had earlier acquired 16.25% of Pelsart's interest in the permit. Pursuant to s 28 of the P(SL) Act, a permit authorises the permittee to "explore for petroleum, and to carry on such operations and execute such works as are necessary for that purpose, in the permit area"[54]. A permit remains in force for an initial period of 6 years but may be renewed for further periods of 5 years[55]. Any petroleum recovered in the permit area by a permittee becomes the property of the permittee[56]. Exploration is prohibited except under and in accordance with a permit. A breach is an offence[57]. As Cooper J noted in the Full Court of the Federal Court, the "regime established ... is to provide for a general prohibition of specified conduct in defined areas ... without a relevant authorisation and to enforce the prohibition with a criminal sanction"[58].[54] References to the P(SL) Act are to the Act as it appears in Reprint No 2, reprinted as at 31 August 1986. The Reprint was accepted by the parties as the state of the legislation for the purposes of the appeal.[55] s 29.[56] s 127.[57] s 19, unless otherwise permitted by Pt III of the Act.[58] Commonwealth v Western Mining Corp (1996) 67 FCR 153 at 200; 136 ALR 353 at 395.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
BRENNAN CJ
(dissent)
TOOHEY J
(dissent)
GAUDRON J
(dissent)