Fortescue Metals Group Limited and Ors v The Commonwealth of Australia

[2013] HCATrans 41

[2013] HCATrans 041

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 WEDNESDAY, 6 MARCH 2013, AT 10.15 AM

Copyright in the High Court of Australia

____________________

MR D.F. JACKSON, QC:   If the Court pleases, I appear with learned friends, MR B. DHARMANANDA, SC and MR W.A.D. EDWARDS, for the plaintiffs.  (instructed by Corrs Chambers Westgarth Lawyers)

MR J.T. GLEESON, SC, Solicitor‑General of the Commonwealth of Australia:   May it please the Court, I appear with MR N.J. WILLIAMS, SC, MR G.J.D. DEL VILLAR and MR D.F.C. THOMAS, for the Commonwealth.  (instructed by Australian Government Solicitor)

MR W. SOFRONOFF, QC, Solicitor‑General for the State of Queensland:   May it please the Court, I appear with my learned friend, MR A.D. SCOTT, for the Attorney‑General of Queensland.  (instructed by Crown Law (Qld))

MR G.R. DONALDSON, SC, Solicitor‑General for the State of Western Australia:   May it please the Court, I appear with my learned friend, MR A.J. SEFTON and MR J.D. BERSON, for the Attorney‑General of Western Australia.  (instructed by State Solicitor (WA))

FRENCH CJ:   Mr Solicitor, you have, I think, a motion?

MR DONALDSON:   Yes, your Honour, it is a motion to include in the materials before the Court the materials referred to as – or in the book of relevant documents for the Attorney‑General of Western Australia.  Your Honours will have seen some short submissions that have been filed in relation to this matter.  All of those materials ‑ and I do not wish to take much more of the Court’s time other than to refer to those submissions ‑ all of the material, your Honours, is referred to in the written submissions that were filed prior to Christmas in this matter other than, your Honours, the material in the parliamentary debates which I would propose to take the Court to in due course.  The other material is there, your Honours, simply largely because it was referred to in the written submissions.

FRENCH CJ:   Now, to what end ‑ to demonstrate that there is a lot of iron ore in Western Australia, that royalties are an important source of income to the State, royalties on mineral resources, that you have entered into agreements with mining companies, which involve the construction of infrastructure ‑ ‑ ‑

MR DONALDSON:   By a mining company?

FRENCH CJ:   Yes, that is right, that royalties can be used as a factor in encouraging the development of infrastructure and to encourage development of mining resources?

MR DONALDSON:   Can and has been used, your Honour.

FRENCH CJ:   We could work that out for ourselves, could we not?

MR DONALDSON:   We did not think that they were particularly central documents, your Honour, but we put them before the Court simply ‑ ‑ ‑

HAYNE J:   Then why put them on, Mr Solicitor?  This is parties’ litigation, not interveners’ litigation.  What is the purpose that you are pursuing?

MR DONALDSON:   The purpose, your Honour, or what motivated us to put it before the Court, is they were referred to in the written submissions, your Honour.  It is for ease of reference more than anything else, your Honour.

FRENCH CJ:   You mean your written submissions?

MR DONALDSON:   Yes.

FRENCH CJ:   The questions reserved were based on the materials in the pleadings?

MR DONALDSON:   Yes, your Honour.  If they are of no assistance to the Court ‑ ‑ ‑

FRENCH CJ:   Thank you, Mr Solicitor.  Mr Jackson.

MR JACKSON:   Your Honour, I do not wish to say anything orally in relation to the application.  We are content for such an order to be made.

FRENCH CJ:   Yes, all right.  Solicitor‑General for Queensland?

MR SOFRONOFF:   .....

FRENCH CJ:   Yes.  Solicitor‑General for the Commonwealth?

MR GLEESON:   Could I ask Mr Williams to deal with this, your Honour?

MR WILLIAMS:   The Commonwealth opposes the order sought for the reasons set out substantially in our short written submission.  There are two additional points we wish to make, both short, in response to Western Australia’s submissions.  The first is the prospect of constitutional facts as such arising was raised before your Honour the Chief Justice on 5 November.  That is evidenced in the transcript, if it be relevant, page 9 of the transcript attached to our submissions, line 282.  We understood your Honour the Chief Justice’s order to referring questions on the pleadings in the documents therein as binding both the parties and the interveners and as applying equally to constitutional facts and other facts.  We have prepared our submissions on that basis.

The second is that there is prejudice.  The Commonwealth may have wanted to introduce further material in response to the matters now relied on.  To give just one example – in relation to the budget papers of 2012 to 2013 and 2011 to 2012 – we might have wanted to contextualise that material showing that those figures are historical outlines, that they are roughly four times what the figures were, the percentage of royalties as a percentage of the whole budget, roughly four times what they were in 1998 to 1999, double what they were in 2007 to 2008.  We have been denied that opportunity by the course that has been taken ‑ the opportunity to consider that material and some of the other material.  To the extent that we fully understand what is said in the debates in any event, if they are put on for an evidentiary purpose we may have wished to consider what the facts were.  For those reasons, we oppose the relief.

FRENCH CJ:   Thank you.  Mr Solicitor, do you wish to reply?  The Attorney‑General for Western Australia has filed a summons seeking an order amending the orders made on 5 November 2012 to include reference to what are called evidential materials in a book of relevant documents prepared by the Attorney‑General.  The documents include reports concerning the incidence of iron ore deposits in Western Australia and the significance of royalty income to State finances and infrastructure constructed under State agreements with mining companies.  They include extracts of a particular State agreement with a mining company and supporting legislation.  They also include extracts from West Australian parliamentary debates in the 1960s which are evidently intended to demonstrate the purposes for which mining royalties may be imposed and their levels varied.

The application was made late in the day and no adequate explanation has been given for that lateness.  The materials already before the Court, and the facts admitted on the pleadings, are sufficient for the Court to hear and determine the issues between the plaintiff and the defendant which define the matter before the Court.  To the extent that the materials now proffered by Western Australia are intended to demonstrate that iron ore mining is important to the West Australian economy, that royalties are imposed by the State to derive benefit from the extraction of mineral resources within the State, and that royalties can be varied to encourage such activities as the construction of infrastructure, including railways, roads and ports, and to encourage downstream processing – those are matters which do not require evidentiary demonstration.  The larger question, whether an intervener may induce evidence, is not reached.  The Court will not be assisted by the proffered material.  The summons is dismissed.  Yes, Mr Jackson.

MR JACKSON:   Your Honours, the Court already has our outline of argument and may I commence by saying two things?  First, as the Court will have seen, the case concerns the validity of the mineral resource rent tax, which is provided for by the Mineral Resource Rent Tax Act 2012 and imposed by one of the three relevant Imposition Acts 2012; I will come to their terms in just a moment, if I may. Secondly, we attack the validity of the tax on four bases; first, it discriminates between the States in terms of section 51(ii) of the Constitution, secondly, it gives rise to a preference to some States in terms of section 99 of the Constitution. Your Honours, those two issues are related, and may I say now that although I will have to go to section 99, if we did not in this case succeed on 51(ii) we would not succeed on 99. Your Honours, the third basis is that it contravenes the Melbourne Corporation principle, and fourthly, insofar as the tax is imposed in respect of iron ore, it is contrary to section 91 of the Constitution. Your Honours, I propose to deal with those submissions in that order.

Your Honours, could I come first to the way in which the legislation operates? We have set this out in our written submissions in paragraphs 8 to 27 but may I take your Honours through the essential parts of its operation in order to understand the way in which the imposition operates? Your Honours, as is the practice, there are separate Imposition Acts and enactments dealing with how the tax is to be calculated, and there are three Imposition Acts, no doubt because of the presence of section 55 of the Constitution, and your Honours will see that they operate in the alternative. That is set out in section 3(2) of each of them. Now, your Honours, that most likely to apply is the Mineral Resource Rent Tax (Imposition – General) Act 2012. 

Your Honours will see that section 3(1) of that Act seeks to impose the tax described as the “Mineral resource rent tax payable under the Minerals Resource Rent Tax Act 2012”. Your Honours, that is the way in which the imposition is framed. Now, your Honours, the assessment of that tax is provided for by section 10‑1 of the Minerals Resource Rent Tax Act 2012. Could I take your Honours to section 10‑1? If your Honours have a pamphlet copy of it, it is page 8. Your Honours will see that in section 10‑1 “A miner is liable to pay MRRT”. Your Honours, MRRT as appears from the definition section is the shorthand expression for the mineral resource rent tax imposed by the provision of the Imposition Act to which I referred a few moments ago.

Your Honours, one sees in section 10‑1 that there are several features which may be noted. The first is that the liability is in respect of a year and that – or as it is put, your Honours – in there for each of its mining projects for an MRRT year, and the term “MRRT year” is defined by the combination of sections 10‑25and 300‑1 to mean each “financial year starting on or after 1 July 2012”. I should say, your Honours, for completeness that “financial year” is itself defined by section 300‑1 in a manner which takes one to terms of the Income Tax Assessment Act, but to put it shortly, it is simply, and hardly surprisingly, a period of 12 months commencing on 1 July in any year. Now, your Honours, the miner’s liability, if one remains with section 10‑1, in any year, is the result of an addition, namely, it is:

the sum of its MRRT liabilities for each of its mining project interests –

Your Honours, that is on the assumption there is more than one mining project interest but it is one or more, they are ‑ the amount payable in respect of each is aggregated.

Your Honours, the term “mining project interest” used in section 10‑1 is defined in section 15‑5 - may I take your Honours to that for a moment? If I could go first all to subsection (1) of that – it seems really self‑explanatory – and then subsection (2), your Honours will see that:

If the mining venture relates to one or more production rights, the entity has a separate mining project interest in relation to each production right.

Your Honours will see that, from subsection (1), it refers to an ability to “share in the output of a mining venture”.  “Mining venture” is itself defined by subsection (3).  Your Honours will see that it is a mining venture if the undertaking is:

to extract some or all of the taxable resources from the area covered by one or more production rights –

Now, your Honours, the definition of “taxable resource” can be seen in section 20‑5(1).  It is essentially iron ore and coal and some related matters produced or extracted in the course of doing so.  Now, the definition of “production right” can be seen in section 15‑15(1) and your Honours will see that it is:

an authority or right (however described) under an Australian law to extract –

iron or coal from a particular area in Australia and in cases like this, under a law of a State granting such a right.  Your Honours will those rights referred to in the questions reserved book at page 16, paragraphs 21 to 26.  I do not think I need to take your Honours to the detail of them.  I am sorry, your Honours, I should also have said, and, again, I shall not take your Honours to them in any detail, but if one looks at Divisions 120, 125 and 145 they also make it apparent that the imposition of the tax is project area based, that is, based in the State granting the right to mine. 

Your Honours, going back, if I may, to section 10‑1, central to the provision is the concept of MRRT liability and that is a term which is defined by section 10‑5. It lies, of course, at the heart of the case because the tax that is imposed is the tax which is the MRRT liability. The MRRT liability is the result of a calculation. The first element in that calculation is described as MRRT rate, and I am looking, your Honours, at section 10‑5.

“MRRT rate” is defined by section 4 of the Imposition Acts and your Honours will see that although the definition is perhaps a little elaborate for its purpose it means 22½ per cent, and just in case there is any difficulty with the mathematics, your Honours, the Commonwealth agrees - you will see that in paragraph 28 of their submissions.

Your Honours, the 22½ per cent is to be applied to a figure which itself depends on the making of a further calculation.  The further calculation is one based on terms, all of which are defined.  I will come to those in just a moment, your Honours.  Our learned friends, if we may note in passing, seek to make much of the fact that the MRRT rate as defined in section 4 is uniform throughout Australia.  You will see that referred to in paragraphs 52 and 60 of their submissions. 

But, your Honours, the tax is a tax which is the MRRT liability and, your Honours, the fact that one of the requirements – one of the required elements in the calculation is uniform throughout Australia does not mean that the calculation of the tax in the – that is, the MRRT liabilities is itself uniform throughout Australia or, as we would put it, it does not mean that when other factors giving rise to the tax are taken into account that the tax does not attract, for example, the qualification in section 51(ii).

CRENNAN J:   Does that mean that the plaintiff’s complaint about discrimination is not a complaint about the subject matter of the tax, but about the method of the calculation of the liability?

MR JACKSON:   The structure.

CRENNAN J:   The structure.

MR JACKSON:   Yes, your Honour, yes.  We accept that the Commonwealth’s powers to tax are wide and as to subject matter, relevantly, not limited, but it is the structure of it.  Now, your Honours, could I come then to the next element that one sees in section 10‑5, or what is described as “Step 1” in the box that follows in the method statement, and that is to work out mining profit – calculate mining profit.  Your Honours, “mining profit” is a term which is defined by section 25‑5 and it means the difference between mining revenue and mining expenditure. 

But, your Honours, if one goes to those two elements and first to “mining revenue”, your Honours will see that is a term defined by section 30‑5 and your Honours will see that from the terms of section 30‑5 it is the sum of all the amounts that the Act requires to be included as revenue in the year or, to put it another way, mining revenue is not simply the amount that by – if I could use the expression “ordinary accounting principles” – would be regarded as such revenue.

There are two groups of provisions which determine when an amount is to be included in mining revenue.  They are - if I could give the numbers first and then come to them - first of all sections 30‑10 to 30‑35 and, secondly, sections 30‑40 to 30‑55.  The first group, sections 30‑10 to 30‑35, contains the principal provisions and it applies in the circumstances referred to in section 30‑10.  Your Honours will see that:

An amount is included in a miner’s mining revenue for a mining project interest for an MRRT year if:

(a)a taxable resource has been extracted from the project area for the mining project interest; and

(b)during the year, a mining revenue event happens in relation to the taxable resource. 

Now, your Honours, the concept of “mining revenue event” is itself defined by section 30‑15 and your Honours will see that the way in which that works is that it provides in 30‑15(1)(a) that it happens if the miner:

makes an initial supply of the taxable resource, but not after its exportation from Australia –

May I pause at that point, your Honours, to say that “initial supply” is defined by section 30‑20 and your Honours will see it is the “first supply”. The term “supply” is also defined. I hope your Honours will forgive me if I say that it is defined in section 300‑1 by reference to the definition of that term in section 195(1) of, to put it shortly, the GST Act, which takes your Honours back to another provision of that Act, but I do not think the case will turn on the precise terms used there.

Could we say also that if one goes back to section 30‑15(1) your Honours will see that there are also paragraphs (b) and (c) and the way in which they work is that paragraph (b) applies if (a) has not applied and (c) applies if neither (a) nor (b) has applied.  The quantification of the amount to be included in mining revenue proceeds in accordance with section 30‑25(1) and your Honours will see that the method statement that is set out there involves two stages.  The first is to identify the revenue amount.  That is done in accordance with section 30‑25(2) and your Honours will see the table there set out.

FRENCH CJ:   That is 30‑25(2), I think.

MR JACKSON:   It is 30‑25(2), your Honour, yes.  I am sorry, your Honour.  Your Honours, could I also say then that step 2 involves identifying the proportion of the “revenue amount” which is “reasonably attributable” to the iron ore or coal at the valuation point?  Now, your Honours, the valuation point is defined by section 40‑5.  Your Honours will see that the valuation point is “just before the resource is removed from the run‑of‑mine stockpile”, or if it is not stockpiled, when it “enters the first beneficiation process”, or when it is “first moved away from the immediate point of extraction”.  The object of the activity in that step 2 in section 30‑25 is to arrive at a figure as at the valuation point.  Now, your Honours, as section 30‑25(3) says:

The method to use in step 2 . . . is the one that produces the most appropriate and reliable measure of how much of the revenue amount is reasonably attributable as mentioned in that step, having regard to –

the various matters set out in subparagraphs (a) and (b).  Your Honours, section 30‑25(4) involves assuming, where relevant, that the downstream operations are conducted by a notional downstream entity and, your Honours, that, of course, involves a conception of upstream and downstream.  Upstream mining operations are – to put it shortly – those before the valuation point.  You will see that in section 35‑15.  Downstream operations are those after the valuation point.  That is referred to in section 255‑15.

Your Honours, it is possible to satisfy section 30‑25(3) by, in effect, looking at it from the point of view of the notional downstream entity that is section 30‑25(5).

HAYNE J:   Is it unduly simple to see the – nothing is unduly simple in this ‑ is it right to see the scheme as attempting to capture an arm’s length valuation at the point of first reduction to possession after extraction?

MR JACKSON:   Your Honour, that is one way of putting it.  I think there are some qualifications and perhaps complications, but the heart of it is trying to say, what is the value at a certain point – value may be the wrong word, but what is the profit at a certain point, and the certain point is one when, as they say, it has come out of the ground and you deal with it by reference to, in the simple case, what you get when you sell it.

HAYNE J:   In effect, arm’s length value and, yes, there will be difficult questions of valuation and debate about that but ‑ ‑ ‑

MR JACKSON:   Quite, your Honour, yes.

FRENCH CJ:   Understanding the need, of course, to go through all this, but ultimately though your argument is about the relationship between the MRRT liability and the royalty regime imposed by the State embodied in the provision for royalty allowances included in the MRRT allowances.

MR JACKSON:   Yes, your Honour, what I was going to do was to say a couple more things, if I may, just to indicate the structure of it and then come more directly to the question of royalties and royalty allowances.  Your Honours, could I just say one thing related to that?  I have referred to the upstream/downstream division, but that does not apply to royalties.  The royalty, whenever the miner becomes liable to pay it, which may be at this stage upstream or downstream depending on whether the State royalty provides for royalty upon extraction or royalty upon sale or royalty upon beneficiation or something of that kind, it is not divided up into two stages when calculating the royalty allowance.

Now, your Honours, I mentioned a second category of mining revenue being in sections 30‑40 to 35.  I mention it really simply for completeness.  It deals with recoupments and offsets to expenditure and amounts received as insurance or compensation and so on.  Your Honours, mining expenditure, if I could go back to section 25‑5, is an element in calculating the mining profit.  The calculation of mining expenditure is set out in section 35‑5 and your Honours will see that 35‑5(1) says it:

is the sum of all the amounts that, under this Act, are included in the miner’s mining expenditure for that interest for that year.

Subsection (2) says that does not include “excluded expenditure”.  Your Honours will see that from section 35‑10 that:

An amount of expenditure is included in a miner’s mining expenditure . . . to the extent that the miner necessarily incurred the amount . . . in the carrying on . . . of upstream mining operations –

and as you will see from subsection (2) of 35‑10, it may be of a “capital or revenue nature”.  Your Honours, if I could come then to what is referred to in section 35‑2, and that is “excluded expenditure” – I am sorry, 35‑5(1) ‑ it says some expenditure is specifically excluded and, your Honours, the expenditures that constitute excluded expenditure are set out in sections 35‑35 through to 35‑75 and they are, to put it shortly, the costs of acquiring rights in projects, that is 35‑35, royalties and royalty credits, 35‑40, financing costs, 35‑50, higher purchase payments, 35‑55, some capital expenditures, 35‑60, hedging or foreign exchange arrangements, 35‑65, rehabilitation bonds and the like, 35‑70, and then tax, 35‑75.

Now, your Honours, that is the structure of it before one gets to MRRT allowances, and your Honours will see that MRRT allowances are referred to in section 10‑5 in the calculation of MRRT liability as a factor to be taken off. What are MRRT allowances is dealt with by section 10‑10, and your Honours will see that it identifies the various items that are MRRT allowances and also indicates the order in which they are to be applied in working out MRRT liabilities and, your Honours, if the MRRT allowances exceed mining profit then there would be no MRRT liability. Your Honours will see from section 10‑10 that royalty allowance is the first MRRT allowance to be taken into account. Section 60‑10 provides that:

A miner has a royalty allowance for a mining project interest for an MRRT year if:

(a)       the miner has a mining profit . . . and

(b)one or more royalty credits (available royalty credits) relate to the interest.

Now, your Honours will see from section 60‑15 that the royalty allowance is not to exceed the mining profit.  Now, your Honours, the application of the definition of “royalty allowance” turns, in the end, on the definition of “royalty credits”, which one sees in section 60‑20.  The starting point is section 60‑20(1)(a), and your Honours will see that:

A liability a miner incurs gives rise to a royalty credit for a mining project interest the miner has to the extent that the liability is to pay, in relation to a taxable resource extracted under the authority of the production right . . . 

(a)       a mining royalty ‑

“Mining royalty”, your Honours, is defined by section 35‑45 and, your Honours, it is a payment which:

(a)is made in relation to a taxable resource extracted under authority of a production right; and

(b)       is made under a Commonwealth law, a State law –

and, your Honours, one which “is a royalty”, a term defined by section 300‑1.  Now, your Honours, if one goes back to section 60‑20, as that provision in subsection (2) makes clear:

The royalty credit arises at the time the miner incurs the liability, and relates to the MRRT year in which it arises.

Your Honours, I will come in a moment, if I may, to the method of quantification of the royalty credit, but may I mention first two provisions which really make apparent the aim of the provisions as to royalty?  They are to be seen in section 60‑1 in the “Guide to Division” where it says that:

Mining royalties . . . reduce a miner’s MRRT liabilities for a mining project interest.

To work out the royalty allowance, the amount of the royalty is grossed‑up using the MRRT rate, in effect reducing the MRRT liability by the amount of the royalty.

One sees then, if one goes to section 60‑5, that it is stated in terms of the objects of the division and they are:

to reduce a miner’s MRRT liability relating to profits relating to taxable resources, to the extent those taxable resources are subject to –

amongst other things, State “royalties”.  Could I just pause to say this, your Honours, that as the first two paragraphs in the box suggest, mining royalties reduce a miner’s MRRT liabilities and that is the tax, the MRRT liability.  Section 60‑(5)(a) says that that is what is being done and the Act is framed so that MRRT liability of a miner is to be reduced by the amount of any State royalty.

When one comes to the method of calculation of the royalty credit one goes to section 60‑25 and your Honours will see that section 60‑25(1) requires two steps.  The first set out in (1)(a) is to apply section 60‑20 in order to arrive at “the amount of the royalty credit” and the second is to divide that figure by 22½ per cent which is the same as the royalty rate.  Of course, that means, as the example given in section 60‑25(1) indicates, that the amount to be deducted is 4.4 recurring – 4.4 recurring times the amount actually paid as royalty.  What it means is that every dollar of State royalties, other things being pari passu, is multiplied 4.4, et cetera, times and the royalty allowance is that amount.

FRENCH CJ:   So the liability under 60‑20 is that which arises, in effect, directly under the State law and the royalty credit is the result of applying to that the formula in 60‑25?

MR JACKSON:   Yes.  Your Honour, one can put it shortly, really, and that is that the application of the formula in 10‑10 has the result that one is liable to pay 22½ per cent of the calculation of the profit done in the way I have referred to before and then you take from that the whole amount of the royalty paid.

CRENNAN J:   An allowable deduction in the context of income tax, which is referable to some State law, will of course reduce the liability for income tax but not necessarily discriminate.  So it seems that 60‑25(1)(b) seems to be the nub of this case.  What is it that allows one to distinguish, as a matter of principle, between the effect of a grossed‑up royalty and the effect of an allowable deduction referable to some State taxes?

MR JACKSON:  The difference is, your Honour, or perhaps I should say one really needs to go to what the starting point is and the starting point is necessarily section 51(ii), because that is the place where the Commonwealth acquires power to make laws with respect to taxation, but so as not to discriminate between the States. Now, here one has a situation where the way in which the tax is imposed is one which necessarily – I say necessarily because at the time the tax came into force there were different regimes, different regimes in different States. It necessarily, as part of the actual calculation of the tax, requires that the amount payable by way of State royalties in any case be a factor which affects the amount of the tax.

Now, certainly there have been decisions the same or perhaps suggesting that if you have a tax which does not discriminate between States in the sense that it is expressed in general terms, although it may have an operation different in different States because of things like different deductions, then that may be valid. But no case, in our submission, goes so far as to say that if the method of calculation of the tax is one which is based on State differences and necessarily involves State differences as part of the calculation of the tax, that that is something which is not discrimination in terms of section 51(ii).

HAYNE J:   Is it a question of the calculation of the tax or a question of the calculation of the taxpayer’s liability?

MR JACKSON:   Your Honour, the two in this case merge and I say that, your Honour, not to take the quick answer to your Honour’s question, not this time, but can I just say this, that the reason, your Honour, why I went at the start of these submissions to the Imposition Acts was that they impose a tax and a liability for tax.  Now, the tax and the liability for tax are relevantly the same thing and that is because your Honours will see – if I could just go back to the Imposition Act for a moment – that what is imposed is the mineral resource rent tax payable under the Mineral Resource Rent Tax Act.  That is the tax that is imposed.

Now, to understand what that means, one goes then to section 10‑1 of the Assessment Act, if I can perhaps call it that. One goes to section 10‑1 and it says:

A miner is liable to pay MRRT . . .  equal to the sum of its MRRT liabilities –

Then the MRRT liability is that which is referred to in section 10‑5.  So there is a method of calculation of the tax that inherently requires there be taken into account MRRT allowances which include specifically royalty and, your Honours, that is the tax that is imposed.  It is also the manner of calculation of the tax.  That is why, your Honour, I submitted earlier that the two were the same thing.

If I could come back to your Honour Justice Crennan’s question to me, in our submission one does have to look at the starting point.  The starting point is 51(ii) which says that the Commonwealth may impose taxation by its laws, “but so as not to discriminate between States”.  Now, your Honours, a law with respect to taxation, if one leaves aside provisions dealing with collection and so on, but at the heartland of laws with respect to taxation are laws which impose tax.  The tax has to be imposed by statute. 

Your Honours, if one has a statute which itself deals differently with the States in terms of the amount of the tax payable, whether the amount of the tax payable varies because of the way it is to be calculated under the statute and the basis for the variation is the fact that one is in a different State doing the same thing, that is ‑ ‑ ‑

CRENNAN J:   Well, if one had an allowable deduction in the context of income tax and it was related to State taxes and, for some reason, the State decided to reduce the impact of the relevant State tax, I can understand then that the liability of the taxpayer will go up in some respect.  But is the point here this “dollar for dollar” effect of the grossing up of the royalties that somehow leads to taking these facts out of the general principle which you have mentioned in relation to 51(ii). 

I am just not quite sure why it is that there is a principle distinction, having regard to the fact as I say you could have a State reduce its State tax and then have a rise in the tax liability of the taxpayer.  I think, on pure arithmetic here, the dollar for dollar in that reduction of the State tax context probably means a taxpayer pays more than if there was a reduction in a tax which was an allowable deduction.  I mean, I understand the arithmetical differences.

MR JACKSON:   Yes.

CRENNAN J:   But what I am trying to get at is the difference in principle.

MR JACKSON:   Well, your Honour, could I say two things about it?  The first is that the – what your Honour referred to and these may not be the exact words – “established position” – that, if I may say so, with respect, does involve rather an assumption as to what the established position is and what we would say – and I do intend to go to the cases on this issue – is that they do seem to suggest that if you have a tax which just applies and has different effects – I will leave aside altogether different things like more apples in Tasmania and more sugar in Queensland, things of that kind - but if you have one that does have different applications in different States because of particular statutes in the States giving rise to things that are treated as allowable deductions, that may be okay.

But they do not really suggest, if I may say so with respect, that if you structure the tax so that you have to take into account in calculating the amount of the tax – or the basis for calculation of the tax – the laws in different States, that that is something that is valid.  Rather, the suggestion is the other way and, your Honour ‑ ‑ ‑

CRENNAN J:   This is the Chief Justice’s point in Barger’s Case.

MR JACKSON:   Yes, I think, and not just the Chief Justice, if I may say so, and not just Barger’s Case.  May I come to those in a moment because there are express qualifications in the cases about the ability to do it, in effect, in the way in which it is done in this case?

FRENCH CJ:   Does it make any difference to your argument or would it make any difference to your argument if there were in fact no differences in royalty regimes between the States?

MR JACKSON:   Well, your Honour, it is a question when one is talking about, in a sense.  If it were that there were in fact no differences or if the royalty rates were uniform amongst the States, if I could put it that way, then the discrimination at the time of the tax coming into effect – the law coming into effect – it would be more difficult to argue that there was discrimination.  That is, of course, not this case because there were differences and significant differences. 

The point we would seek to make is that one is not dealing with those cases, rather rare cases – I will mention them in a moment, if I may – where the validity of the law can go in and out or disappear and come back again chameleon‑like, but cases where one is looking at the situation as at the time when the law came into being.  Now, if you have a law that at that point is one which is invalid, it is invalid, and it does not have a Lazarus‑like resurrection at some stage because the States might make their royalties the same because the law is invalid, it is ultra vires.

FRENCH CJ:   So your argument is not based upon a potentially discriminatory effect on States but an actual discriminatory impact having regard to differences?

MR JACKSON:   Yes, that is 51(ii) of course, I am talking about.

CRENNAN J:   What about if the royalty rates are different but the allowance made for the purposes of the mining tax is an allowable deduction – income tax deduction, would that be constitutional?

MR JACKSON:   Well, it gets closer to being valid I suspect, your Honour, and the reason for saying that is that one would be able to say well, this is a law which is expressed in the same terms throughout Australia.  It is not designed to impose tax on a different basis for each State.  One gets closer, whether it would be valid is another question, your Honour – ultimately valid.

Your Honour, there was one other thing I was going to say in response to your Honour Justice Crennan’s question which really relates to the question of Melbourne Corporation.  The way in which this Act works is, in effect, that the Commonwealth has taken a view reflected in the legislation.  The Commonwealth has taken a view that the amount that should be paid, and I use the term loosely, in respect of iron ore and coal by persons mining them should be at a particular level. 

When I say “the amount that should be paid” I am speaking about royalty for the moment, and the way in which the statue works is to say this is, in effect, the Commonwealth’s view.  If a State chooses to have a royalty at a lower level, then the person otherwise liable to pay the royalty will pay the difference in tax, and that is an aspect of the Melbourne Corporation argument.  The sanction is you do not do it at our level, do not do it at the level we think is the appropriate one, we will take the difference in tax. 

If one could go back to section 60‑25, your Honours will see in the example set out there the way in which the dollar value of the royalty is, for the purposes of the calculation, multiplied up to give the royalty allowance and the purpose of so doing it is, as I submitted earlier, that – or the effect of it is that the miner’s liability to pay the MRRT is reduced by an amount equal to the amount paid by way of State royalties and, your Honours, if State royalties are low more MRRT is payable to the Commonwealth and vice versa.  So that, your Honours, the result is that the Commonwealth tax varies depending on the level of the State royalty.

Now, your Honours, it is possible of course to do the calculation in a different way and what it does demonstrate is if one does it in a different way then one can see that there is a different effective percentage rate applied by it.  Your Honours, I will not attempt to do it myself, but may I give your Honours a document – and I will give my learned friends a copy also – which shows how one arrives at the effective rate in any State.  It is simply a question of reversing the calculation, in effect, and one sees there is a different effective rate for each of the States.

HAYNE J:   Is this a calculation of the kind sometimes seen in company reports where there is reference to an effective rate of income tax being paid of X per cent, this sort of calculation that you are presenting?

MR JACKSON:   Your Honour, I hasten to say it is of the same genre, but I would hope that it is perhaps more accurate than some ‑ ‑ ‑

HAYNE J:   More demonstrative.

MR JACKSON:   Your Honours, I had not proposed to go through it, but may I give it to your Honours?  You will see that one simply arrives at different rates in each of the States.  Your Honours, could we also say that the explanatory memorandum to the MRRT legislation makes it clear that this was the intended result.  Could I take your Honours to volume 5 of the parties’ relevant documents at page 1954?  Your Honours will see in paragraph 2.24 that it said:

Miners will generally pay royalties to State and Territory Governments.  Royalty regimes and rates vary across jurisdictions but are most commonly a charge on the volume or value of the resource –

Your Honours will see the last sentence of 2.24 and then ‑ ‑ ‑

CRENNAN J:   Is the concept of rents explained?

MR JACKSON:   Yes, it is, your Honour.  Could I give your Honour the reference to that in just a moment? 

CRENNAN J:   Thank you.

MR JACKSON:   The term I might say, your Honour, is used in this Act itself in 1‑10 where it treats economic rents as being above normal profits made by miners.  Your Honours will also see paragraph 2.25 through to 2.26 and if one goes back to page 1925 your Honours will see, to much the same effect, paragraphs 2.21 through to 2.23.  Nothing accidental, if I could put it that way, about this course and it differs, if I could just say so in passing, your Honours, from say section 8‑1 of the Income Tax Assessment Act 1997 where there is a permitted deduction of payroll tax – State payroll tax – before the amount which is subject to income tax is calculated at the relevant marginal rate.

Your Honours, if one goes to later years - that is years later than the year in which the royalty credit arose - one goes to section 60‑25(1), and one has to make the calculation in 60‑25(1) and then 60‑25(2).  May I just endeavour to put shortly what these provisions do, your Honours?  Section 60‑25(2) goes in this way:  one takes the preceding year’s royalty credit, one deducts the previous applications for the royalty credit and, thirdly, multiplies the difference by the uplift factor which is the “long term bond rate”, a defined term, plus 1.07 per cent.

The royalty credits that are so much of the amount of available royalty credits do not exceed the mining profit.  Your Honours have seen that in section 60‑15.  Your Honours, there is an order of priority of the way in which royalty credits are worked out.  Your Honours, I do not think I need to go to the detail of that.  What your Honours will see – your Honours, there is the uplift factor in section 60‑25(2) and, your Honours, the fact that unapplied royalties are uplifted in that way does not change the fact that when they come to be applied the whole of the royalty paid by the miner goes to reduce the amount of the MRRT liability. 

Now, your Honours, could I go on then to mention one other matter, and that is what is described in the Act as the low profit offset?  That can be seen in section 45‑5 and section 45‑10.  The Act is concerned with what it calls above normal profits.  It does not contain a definition of that term as such but, again, not very surprisingly, it provides some indication of the point at which it treats profits as being above normal.  It does so first by section 45‑5, giving an offset when affect no tax, if the miner’s group mining profits are under $75 million, and on then to section 45‑10 a graduated offset if the group mining profit for the year is between $75 million and $125 million.

Your Honours, could I come more directly then to section 51(ii) and to the first of the bases on which we rely? Section 51(ii) gives the Parliament power to make laws with respect to taxation. The qualification, the power, your Honours, is qualified in an important way, namely, by the presence of the words:

but so as not to discriminate between States or parts of States ‑

and at the heartland of the concept of laws with respect to taxation are laws which impose taxation and, your Honours, we would also submit that at the heart of the concept of laws with respect to taxation which discriminate between States are laws which impose different tax on similar activities because they are carried out in different States.  Your Honours, this is a case where, if one puts it in its simplest form, if you are a miner in State A which has a royalty rate of say 3 per cent, you pay more Commonwealth tax, more MRRT than if you were in another State where the royalty rate is, say, 5 per cent.

Now, your Honours, here, this is a case where the method of calculation has, as an essential and integral factor, the amount of royalty payable by the miner.  Your Honours, we would submit, that if a law imposing taxation in that manner is not one discriminating between States then, we would submit with respect, it is difficult to see when a law made under that provision would discriminate between States.  Your Honours, may I say two things in that regard?  One is, we would submit that to tax at a different rate in different States has been regarded in the decisions as a paradigm case where there is discrimination between the States in terms of 51(ii).  Your Honours, I will come to the cases in more detail in just a moment, but could I give your Honours just a reference at present to two observations to that effect?  One is in Barger 6 CLR 41 at page 131, about point 1, Justice Higgins, and in Cameron 32 CLR 68 at page 72, about point 4, Chief Justice Knox.

Your Honours, we also say that what one sees is that in considering whether there has been a contravention of the qualification to section 51(ii), one is looking at not just form but also substance, and the fact that the formula for calculation of the tax does not use the actual numerals of what the State royalty figures are but rather picks up figures to be found elsewhere is immaterial.

Your Honours, we would submit that one does need to bear in mind that the reference in 51(ii) to discrimination between States is a reference to discrimination not just between geographical areas, but discrimination between polities.  It may be, I should say, that the reference to between “parts of States” in the same provision has a more geographical aspect but, we would submit, that the term “between States” means between States which are polities and that taxation laws, if they discriminate between States in terms of 51(ii), may do so not merely on geographical grounds but also on the grounds of the laws in those States.

Your Honours, could I come to the decisions on section 51(ii) dealing with this issue, and may I say that we would do so with a view to demonstrating two things? The first is that while there are references in the decisions to the fact that differences brought about by circumstances, including statutory provisions in States, may not amount to discrimination. In our submission, the decisions do not support the view that a taxing law which requires the differences in State laws to be taken into account does not give rise to 51(ii) discrimination.

Could I come first, your Honours, to the decision of the Privy Council in Colonial Sugar Refining Company Limited v Irving [1906] AC 360? Your Honours, that concerned the Excise Tariff 1902 (No 11) which was the first Commonwealth excise duty on sugar, and uniform duties of Customs came into effect on the same day, which was 8 October 1901. In the period until 8 October 1901 from Federation customs and excise duties were payable pursuant to State, formerly colonial, legislation but the collection of those imposts was to be done by the Commonwealth – that is in sections 86 and 89 of the Constitution.

“On the imposition of uniform duties of customs” State laws which imposed duties of customs and excise ceased to have effect, and your Honours will see that in the second paragraph of section 90 of the Constitution. Your Honours, the new excise tariff imposed duty on – and one can see at page 365, about point 6, it is said that the duty in question was also imposed on all sugar produced in Australia after October 8, 1901 and on sugar produced there before that date and then remaining under Customs’ control or excise supervision or in the ownership or possession of the manufacturers and refiners “and on which no duty of customs or excise had been paid”.

That was the description of the goods on which the new tariff was to be imposed and the CSR Company’s sugar fell within the description there referred to, in particular, no duty had been paid on it because no duty was payable under the former Queensland law. The contention that was advanced was that to impose the excise duty in this way was to discriminate between States in contravention of section 51(ii) and that contention was rejected by the Privy Council, perhaps not terribly surprisingly, your Honours. The relevant discussion of it is at page 367, commencing at about point 7 on the page. Your Honours will see the sentence:

Their Lordships cannot accede to this argument.  The substance of the enactment in question is that goods which have already paid customs or excise duties shall not pay over again, and some such provision is obviously necessary in the transition from the old order to the new.

Let me say this, your Honours, that that seems to have been correct, that Parliament had to make some provision for the future to replace different legislation in different States.

FRENCH CJ:   Reasonable, appropriate and adapted to implementing constitutional change.

MR JACKSON:   Yes, your Honour.  Your Honour, may I deal with that aspect of the case a little later?  Perhaps one might say simply that Lord Davey said was necessary and perhaps reasonably necessary.  Your Honours, could I just say that it is in that context though that in choosing to say that excise duty is payable when goods which otherwise satisfy the terms of it are goods on which duty has not been paid and, your Honours, it is in that context that one sees the second aspect where his Lordship said:

The rule laid down by the Act is a general one, applicable to all the States alike, and the fact that it operates unequally in the several States arises not from anything done by the Parliament, but from the inequality of the duties imposed by the States themselves.

That is the context in which one sees the observation that he made.  Could we note in passing, your Honours, that the position with the MRRT is really very different.  It is explicitly based on State laws and the liability is reduced by different amounts depending on the amount of the Commonwealth tax – sorry, about the amount of the royalty.  Your Honours will see at the bottom of page 367, going on to the top of page 368, that the Privy Council went on to make it clear that what was involved was fundamentally a transfer from a State‑based to a Commonwealth system and that the provision was to be considered in that light.

Now, your Honours, that is the first of the cases.  Could I come then to the decision in Barger -R v Barger (1908) 6 CLR 41? Your Honour, I say immediately Barger is pre‑Engineers’ Case but can I also say not relevantly.  It concerned the Excise Tariff Act 1906 which provided for different and lower rates of duty if agricultural implements were manufactured in an industry in accordance with particular conditions. Your Honour, the section 51(ii) issue was a second point which was raised and your Honours will see that referred to by Chief Justice Griffith at page 64, about point 4 on the page where he said:

They also contend that, even if the Act is an exercise of the power of taxation, it is void because it authorizes discrimination between States and parts of States.

At page 69, about point 9 on the page, their Honours went on to deal with:

The fact that taxation may produce indirect consequences –

That was fully recognised by the framers of the Constitution and he recognised, your Honours, if one goes on to page 70, that the consequences might not be uniform across the Commonwealth, that is from the bottom of page 69 to about point 6 on page 70. Your Honours, one sees in a passage which commences about point 7 on page 70 and goes through to the top of page 71, his Honour says:

The inequality of the indirect effect of Customs duties in different parts of the Commonwealth is obvious to all persons acquainted with its conditions, but any attempt to correct this inequality is forbidden.

Your Honours will see the nature of the inequality that he has referred to earlier on the page.  He went on to refer to CSR v Irving and, if one goes to about the sixth line from the bottom of that page it is said:

This contention was rejected by the Judicial Committee, who said that the discrimination, if any, was not effected by the Act imposing the Excise Duty, but by the operation of the State laws previously existing.  E converso, if the Excise duty had been made to vary in inverse proportion to the Customs duties in the several States so as to make the actual incidence of the burden practically equal, that would have been a violation of the rule of uniformity.

Your Honours, that does not seem very different from this case, with respect.  If one goes to Justice Isaacs at page 82, at about point 4 on the page, his Honour referred to the ambit of the power to make laws with respect to taxation.  It is the sentence commencing, “The words of limitation”.  Then if one goes to about point 7 on the page, his Honour referred to the fact that:

Not all taxation can be sustained as valid.  Thus, if imposed upon any State instrumentality or act of Government, or if it discriminates between State and State . . . or offends [various other provisions] the Act would be invalid, at least pro tanto.

If one goes then to page 106 in his Honour’s reasons, you will see about two‑thirds of the way down the page he refers to there being a difference between the section 51(ii) and the American expression of “uniformity” which is referred to at the bottom of page 105. Then one sees, your Honours, at about point 9 on the page, he said that the language of 51(ii):

more naturally lends itself to the assumption that the prohibition to the Federal Parliament was against differentiating in its measure of taxation between States – 

So your Honours will see the differentiation referred to as being differentiation in the measure of taxation.

FRENCH CJ:   Now, the last part of that sentence “because they were particular States or parts of States”, I think that was a matter of some controversy in Clyne’s Case - but nothing turns on that difference for this case.

MR JACKSON:   No, no, your Honour, I should have said that.  It is really a very difficult question what the right answer to the meaning of those words “between parts of States” should be and it is difficult, your Honour, to adopt a view that something that discriminates against, say, capital cities is not discrimination against the States of which they are capitals.  Your Honour, one can engage in a great deal of discussion about the topic but in the end it does not seem to matter in this case. 

Your Honours, perhaps I should just say this; that there is perhaps a difference between “States” on the one hand and between “parts of States” on the other.  “Parts of States” would seem to inevitably have a geographical aspect to it as a starting point.  “States”, of course, necessarily have a geographical aspect, but “States” are, as I was submitting earlier, polities as well as geographical areas. 

Your Honours, could I go then to – I think I was at page 107 where his Honour referred to the words “more naturally lends itself”, et cetera, in the measure of taxation.  If one goes on to page 110, about point 7 on the page, your Honours will see that he refers in the paragraph commencing:

As well might the Act be said to discriminate –

et cetera, at the bottom of that page his Honour says –

So, here, the rule is a general one, applicable to all parts of the Commonwealth alike, and the fact that it operates unequally in different localities arises, not from anything done by the Parliament, but from the inequality of existing industrial circumstances –

and it goes through to the end of the paragraph.  But your Honours will see once again the words “not from anything done by the Parliament”.  So his Honour contemplates that one looks at the terms of the law itself.  Justice Higgins, your Honours, page 130 ‑ ‑ ‑

FRENCH CJ:   It does not matter that the circumstances have been given effect to by an award?

MR JACKSON:   Sorry, your Honour?

FRENCH CJ:   At page 111.  He says the circumstances “given effect to by an award”.  He is referring there to something which is done pursuant to statutory authority.

MR JACKSON:   Yes.  Your Honour, I think he is referring to the Commonwealth award there, but on the view that his Honour took that was something that would ‑ ‑ ‑

FRENCH CJ:   I am sorry, I see.

MR JACKSON:   Your Honours, Justice Higgins at page 130 in a passage which goes from about point 8 to about point 2 on the next page says:

It is to be observed that it is Parliament––that is to say, the Act of Parliament, that must not discriminate . . . Now, there is certainly nothing on the fact of this Act which makes any such –

provision and then, in the words italicised, he says –

There is not one rate of Excise for Queensland and another for West Australia.  Nor is there one set of conditions of exemption for Tasmania and another for Victoria.

If one goes to page 131 about point 7 he says –

But Parliament does not discriminate between States when it applies the same rule to all the States, even if some of the means of exemption are not for the time being in fact applicable in all the States.  Parliament may not discriminate between States; but the facts may, and often must –

Your Honours, at page 133 about point 8 on the page, his Honour said:

As the case of the Colonial Sugar Refining Co. v. Irving shows, it would not be a discrimination . . . if a graduated income tax were passed, and if it happened that the incomes in Western Australia were larger than in the other States.  Finally, inasmuch as the same taxation, and the same rate of taxation, are applied to all those manufacturers who, in whatever State they reside, cannot bring themselves within . . . that this Act creates no discrimination –

Your Honours, there does seem to be in the various observations in that case a reference to the fact that whatever their views on the reserve powers questions all the members of the Court appeared to recognise that when the Commonwealth law itself provides for different rates of taxation based on State legislation using that, in effect, as an integer, the law will contravene 51(ii).

May I come, your Honour, to what we submit is an important case and that is Cameron v Deputy Commissioner of Taxation (1923) 32 CLR 68. Your Honours, it is a relatively early consideration of the limitation in section 51(ii) provided for by the words “discriminate between States”. The issue arose because section 14 of the then Income Tax Assessment Act provided that income included profit of a business, the values of livestock at the beginning and end of every year were to be taken into account for the purpose of calculating such profit.  The amount of such value was to be cost price but as Justice Isaacs said at page 74 about point 7 he thought there could not be a:

“cost price” of natural increase.  And in some other cases -

and for those cases regulation 46 made under the Act had originally provided that cost price was to be the fair average value as determined by the Commissioner but that was altered so that instead of fair average value being that determined by the Commissioner, rather it was to be as set out in table III of the schedule.  That meant, as Justice Isaacs at the bottom of page 75 pointed out:

From being a “fair average value” in fact at the time of liability, and determined by the Commissioner on real commercial considerations including . . . the values of similar stock in a neighbouring State, the expression “fair average value” has become a permanently fixed standard . . . based on one distinguishing consideration, the restriction to purely State circumstances -

which he elaborated upon a little further.  Now, your Honours, as he said, the discrimen for different values - and this is about point 5 on page 76:

The discrimen for different values is the State in each case.  That is irretrievably in conflict with the constitutional provision prohibiting discrimination between States.

Now, you will see, your Honours, in this case, the calculation of the MRRT is by reference to figures which will differ from State to State.  The discrimen for different values, in effect, is to be found in the identification of the State.  Your Honours will see at page 76 ‑ ‑ ‑

MR JACKSON:   Well, your Honour, it is part of it. I mean, there is no doubt, of course, that section 91 does operate as an exception to the – that one of the functions of section 91 is to operate as an exception to the restriction on the powers of States brought about by section 90. But, your Honours, what one does see, of course, is that the powers that are referred to in, for example, section 90 and also the powers, say, relating to taxation, are not just powers – are not powers that are, in effect, conferred by section 90 but conferred by other provisions such as in a case of taxation and various duties by section 51.

HAYNE J:   But why does a State need the consent of both Houses to grant aid to the production or export of goods, leave aside the case of gold, silver or metals?

MR JACKSON:   Yes, I appreciate that, your Honour, because one has a situation where there are laws made, for example, under section 51(i) dealing with the export of goods.  There are laws with respect to taxation.  There are laws made in respect of bounties and there are other laws made by the Parliament that might prevent it.

HAYNE J:   What, this is qualifying the engagement of 109 in some way, is it?  What is it doing?

MR JACKSON:   Well, your Honour, what it is saying is that the State may grant an aid or bounty, notwithstanding that a law might otherwise prevent it.  Now, it is saying in that regard that it is qualification, if one likes, to section 109 and, your Honour, it does start with the words “Nothing in this Constitution” and that is a matter of some significance.

HAYNE J:   I am not saying it is all clear as burning daylight, Mr Jackson, I am just asking you what the problem is.

MR JACKSON:   We have approached the problem from different ways, your Honour.

FRENCH CJ:   If the State wanted to provide some sort of preferential royalty regime, say, in respect of some non‑metallic mineral, would it have to then get the consent of both Houses of Parliament?

MR JACKSON: Well, your Honour, if it were also an aid to or a bounty on the production of goods, I think it would be in such a case, your Honour. It is just the two parts of section 91 strike at different points, although they would overlap in some cases. The first part deals with mining, the second part production or export of goods and in cases of non‑metallic mining one would expect the production from the mine to be something that fell within the second half of 91.

FRENCH CJ:   That might be a convenient time, Mr Jackson.

MR JACKSON:   Yes, your Honour.  I expect to be half an hour.

FRENCH CJ:   Thank you.  We will adjourn then until 10.15 tomorrow morning.

AT 4.17 PM THE MATTER WAS ADJOURNED
UNTIL THURSDAY, 7 MARCH 2013