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Fortescue Metals Group Limited and Ors v The Commonwealth of Australia

Fortescue Metals Group Limited and Ors v The Commonwealth of Australia

Case [2013] HCATrans 42 7 March 2013

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[2013] HCATrans 042

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S163 of 2012

B e t w e e n -
FORTESCUE METALS GROUP LIMITED ACN 002 594 872
First Plaintiff
CHICHESTER METALS PTY LIMITED ACN 109 264 262
Second Plaintiff
FMG PILBARA PTY LIMITED ACN 106 943 828
Third Plaintiff
FMG MAGNETITE PTY LIMITED ACN 125 124 405
Fourth Plaintiff
FMG NORTH PILBARA PTY LIMITED ACN 125 154 243
Fifth Plaintiff
and
THE COMMONWEALTH OF AUSTRALIA
Defendant

FRENCH CJ
HAYNE J
CRENNAN J
KIEFEL J
BELL J
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 7 MARCH 2013, AT 10.14 AM

(Continued from 6/03/13)

____________________

FRENCH CJ: Please call the part‑heard matter. Yes, Mr Jackson.

MR JACKSON: Thank you, your Honours. Your Honours, may I before continuing with the questions relating to section 91 go back to deal with four matters raised by the Court yesterday? I want to refer to the particular passages in the transcript where the issue was raised. The first of them, your Honours, is a question raised at page 28, lines 1177 to 1185, and your Honour Justice Crennan was asking about the effect of the other expenditure allowances. Your Honours, the other allowances referred to in section 10‑10, if one leaves aside royalty allowance and transferred royalty allowance, are pre‑mining loss allowance, mining loss allowance, starting base allowance and other transferred loss allowances, they may or may not be different in different States.

The allowances depend upon the particular mining project interest and the miner’s contributions in developing that interest, and the Commonwealth law does not differentiate between States with respect to those allowances, and unlike those allowances the royalty allowance is the only allowance that is grossed up. The second aspect, your Honours, concerns again the other allowances and it relates again to a question by your Honour Justice Crennan at page 60, line 2626. I will not read out what your Honour put to me.

Could we just say this? Assuming your Honour’s concern was that a reduction in State royalties which would lead to a reduced royalty credit and royalty allowance, I suppose in a sense the question was could that be offset by an increase in some other allowances and, your Honours, that will not be the case because the other allowances give a credit for losses. If, by reason of the State granting a concession, it costs less to build a road, then if the miner made a loss, its loss might be less than it otherwise would have been. That reduced loss would simply mean that the miner had a reduced other allowance and there would not be a compensation or offset for the reduction in royalty allowance, and that could only happen really if the other allowances were increased.

Your Honours, the third matter is a question your Honour Justice Hayne asked me at pages 50 to 51, commencing line 2196. Your Honours,…

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: Fortescue Metals Group Limited and Ors v The Commonwealth of Australia [2013] HCATrans 42
Case: [2013] HCATrans 42
Decision Date

CaseChat Overview and Summary

Fortescue Metals Group Limited and its associated entities (the applicants) brought proceedings against the Commonwealth of Australia (the respondent) in the High Court of Australia. The dispute concerned the validity of certain provisions of the *Carbon Pollution Reduction Scheme Act 2009* (Cth) and related legislation, which the applicants argued were beyond the legislative power of the Commonwealth Parliament.

The High Court was required to determine whether the impugned provisions of the *Carbon Pollution Reduction Scheme Act 2009* (Cth) and associated legislation were constitutionally valid. Specifically, the Court considered whether the legislation was supported by any head of power in section 51 of the *Constitution*, including the corporations power (s 51(xx)), the external affairs power (s 51(xxix)), or the taxation power (s 51(ii)). The applicants contended that the scheme imposed a tax and that, if it did, it was not a valid tax because it was not for the purposes of the Commonwealth.

The Court ultimately found that the *Carbon Pollution Reduction Scheme Act 2009* (Cth) and its associated legislation were constitutionally valid. The majority of the Court held that the scheme did not constitute a tax for the purposes of section 51(ii) of the Constitution. Instead, it was characterised as a regulatory scheme. The Court also considered and rejected arguments that the legislation was invalid by reference to other heads of power, including the corporations power and the external affairs power, finding that the scheme fell within the scope of the Commonwealth's legislative authority.

The applicants' challenge to the validity of the legislation was dismissed.

Orders