Fordham & Anor v Evans

The applicants, Robert Clive Fordham and the Attorney-General for the State of Victoria, sought the removal of proceedings from the Federal Court to the High Court of Australia. The dispute concerned the valuation of oil at the wellhead for royalty purposes under the *Petroleum (Submerged Lands) Act 1967* (Vic) and the *Petroleum (Submerged Lands) (Royalty) Act 1967* (Vic). The core of the disagreement lay in whether excise duty paid by oil producers to the Commonwealth Government should be deducted from the market value of oil when calculating the wellhead value for state royalty assessments.

The legal issues before the High Court were primarily constitutional. Specifically, the Court was required to determine the validity of the *Excise Tariff Act* (Cth) and its relevant provisions. This constitutional question arose because the State Minister had been advised that the *Excise Act* was *ultra vires* the Commonwealth, leading him to cease deducting excise payments from royalty calculations. The Commonwealth Minister disagreed, directing the State Minister to continue the deduction, which prompted the State Minister to seek judicial review in the Federal Court.

The High Court was asked to consider the constitutional validity of the *Excise Tariff Act* as a preliminary matter, with the intention that the entire cause would be removed to the High Court for a definitive determination. The applicants argued that the process of stabilizing oil, which involved extracting gas, was subject to excise duty. This stabilization process was considered an expense in bringing the oil to market, and for some time, the excise paid had been deducted from the market value to arrive at the wellhead value. The State Minister's challenge to the validity of the *Excise Act* formed the basis for the constitutional question to be resolved by the High Court.