HIGH COURT OF AUSTRALIA
FRENCH CJ,
HAYNE, CRENNAN, KIEFEL, BELL AND KEANE JJFORTESCUE METALS GROUP LIMITED & ORS PLAINTIFFS
AND
THE COMMONWEALTH OF AUSTRALIA DEFENDANT
Fortescue Metals Group Limited v The Commonwealth
[2013] HCA 34
7 August 2013
S163/2012
ORDER
The questions reserved for the consideration of the Full Court on 5 November 2012 be answered as follows:
Question 1
Are any or all of s 3 of the Minerals Resource Rent Tax (Imposition—Customs) Act 2012 (Cth), s 3 of the Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth) and s 3 of the Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth) invalid in their application to the plaintiffs on one or more of the following grounds:
A.they discriminate between the States of the Commonwealth of Australia contrary to s 51(ii) of the Constitution;
B.they give preference to one State of the Commonwealth of Australia over another State contrary to s 99 of the Constitution;
C.they so discriminate against the States of the Commonwealth or so place a particular disability or burden upon the operations or activities of the States, as to be beyond the legislative power of the Commonwealth?
Answer
No.
Question 2
Are any or all of the Minerals Resource Rent Tax (Imposition—Customs) Act 2012 (Cth), the Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth), the Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth) and the Minerals Resource Rent Tax Act 2012 (Cth) invalid in their application to the plaintiffs on the ground that they are contrary to s 91 of the Constitution?
Answer
No.
Question 3
Who should pay the costs of the reserved questions?
Answer
The plaintiffs.
Representation
D F Jackson QC with B Dharmananda SC and W A D Edwards for the plaintiffs (instructed by Corrs Chambers Westgarth Lawyers)
J T Gleeson SC, Solicitor-General of the Commonwealth and N J Williams SC with G J D del Villar and D F C Thomas for the defendant (instructed by Australian Government Solicitor)
Interveners
W Sofronoff QC, Solicitor-General of the State of Queensland with A D Scott for the Attorney-General of the State of Queensland, intervening (instructed by Crown Law (Qld))
G R Donaldson SC, Solicitor-General for the State of Western Australia with A J Sefton and J D Berson for the Attorney-General for the State of Western Australia, intervening (instructed by State Solicitor (WA))
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
FRENCH CJ.
Introduction
Fortescue Metals Group Ltd and four subsidiaries of that company commenced proceedings against the Commonwealth by way of writ issued out of this Court on 22 June 2012. They assert that provisions of the Minerals Resource Rent Tax Act 2012 (Cth) ("the MRRT Act") and three related Acts imposing Minerals Resource Rent Tax ("MRRT") in relation to iron ore are not valid laws of the Commonwealth. The three related Acts are the Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth), the Minerals…
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- Case
- [2013] HCA 34
- Decision Date
CaseChat Overview and Summary
The Court was required to determine whether the MRRT legislation was invalid on several grounds. Specifically, it had to consider whether the Acts discriminated between States contrary to section 51(ii) of the Constitution, gave preference to one State over another contrary to section 99, or placed a particular disability or burden upon the operations or activities of the States beyond the Commonwealth's legislative power. Additionally, the Court had to assess whether the Acts were invalid by reason of contravening section 91 of the Constitution.
The Court reasoned that the MRRT legislation did not discriminate between States or give preference to one State over another. It applied the principle that differential treatment or unequal outcomes are permissible if they are the product of distinctions that are appropriate and adapted to the attainment of a proper objective. The Court found that the differences in the operation of the MRRT, arising from its interaction with varying State royalty regimes, were a reasonable consequence of the dissimilar circumstances between the States and served the proper objectives of the legislation, which were to tax "above normal profits" from certain mining operations. This approach was consistent with historical interpretations of section 51(ii) and the decision in *Permanent Trustee Australia Ltd v Commissioner of State Revenue (Vict)*. The Court also found no contravention of section 91.
The High Court answered the reserved questions in favour of the Commonwealth. It held that none of the impugned provisions of the MRRT legislation were invalid on the grounds of discrimination between States, preference to one State over another, or placing an undue burden on the States. The Court also determined that the legislation was not invalid by reason of contravening section 91 of the Constitution. Consequently, the Court ordered that the plaintiffs pay the costs of the reserved questions.
Orders
Orders of the court
The questions reserved for the consideration of the Full Court on 5 November 2012 be answered as follows:
Question 1
Are any or all of s 3 of the Minerals Resource Rent Tax (Imposition—Customs) Act 2012 (Cth), s 3 of the Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth) and s 3 of the Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth) invalid in their application to the plaintiffs on one or more of the following grounds:
A. they discriminate between the States of the Commonwealth of Australia contrary to s 51(ii) of the Constitution;
B. they give preference to one State of the Commonwealth of Australia over another State contrary to s 99 of the Constitution;
C. they so discriminate against the States of the Commonwealth or so place a particular disability or burden upon the operations or activities of the States, as to be beyond the legislative power of the Commonwealth?
Answer
No.
Question 2
Are any or all of the Minerals Resource Rent Tax (Imposition—Customs) Act 2012 (Cth), the Minerals Resource Rent Tax (Imposition—Excise) Act 2012 (Cth), the Minerals Resource Rent Tax (Imposition—General) Act 2012 (Cth) and the Minerals Resource Rent Tax Act 2012 (Cth) invalid in their application to the plaintiffs on the ground that they are contrary to s 91 of the Constitution?
Answer
No.
Question 3
Who should pay the costs of the reserved questions?
Answer
The plaintiffs.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Established by: FRENCH CJ, HAYNE, BELL AND KEANE JJ
The difficulty of identifying a prohibited preference given to one State over another where there were dissimilar circumstances was recognised by Quick and Garran. They foreshadowed the application of a criterion of reasonableness to the characterisation of preferences[86]: "If a difference of treatment is arbitrary, or if its purpose is to advantage or prejudice a locality, it is undue and unreasonable, and is accordingly a preference. If on the other hand the difference of treatment is the reasonable result of the dissimilarity of circumstances—or if it is based on recognized and reasonable principles of administration—it is no preference."That approach to characterisation was reflected in the general observation about the concept of discrimination made by Gaudron, Gummow and Hayne JJ in Austin v The Commonwealth[87], and quoted by the majority in Permanent Trustee Australia Ltd v Commissioner of State Revenue (Vict) in its discussion of the application of s 99[88]:"The essence of the notion of discrimination is said to lie in the unequal treatment of equals or the equal treatment of those who are not equals, where the differential treatment and unequal outcome is not the product of a distinction which is appropriate and adapted to the attainment of a proper objective." (footnotes omitted)Their Honours' observation did not amount to a qualification justifying a law which would otherwise exceed the constitutional limitations. It set out a criterion for characterisation of a law as discriminatory for the purposes of s 51(ii). It was invoked by the Commonwealth in its submissions. The plaintiffs submitted that the reasoning of the majority in Permanent Trustee in this respect should not be followed. That submission should not be accepted. Before considering it further, however, it is desirable to consider the concepts of discrimination and preference in ss 51(ii) and 99 as they have emerged from the decisions of this Court.[86]Quick and Garran, The Annotated Constitution of the Australian Commonwealth, (1901) at 878.[87](2003) 215 CLR 185 at 247 [118].[88](2004) 220 CLR 388 at 424 [89].Sections 51(ii) and 99 — discrimination, preference and differential operation The uniformity requirement in the draft Constitution, as it stood after the Convention session held in Adelaide in 1897, attracted a "friendly suggestion"[89] from the Colonial Office in the form of a question: "does 'uniform' mean uniform in law, or uniform in effect?"[90] When Edmund Barton moved his amendment to replace uniformity with non-discrimination he made clear that the answer was "uniform in law". Laws with respect to taxation were to be "one in form" throughout the Commonwealth[91]. That approach was reflected in the first reported judicial consideration of s 51(ii), which was undertaken by the Full Court of the Supreme Court of Queensland, in The Colonial Sugar Refining Co Ltd v Irving[92]. Sir Samuel Griffith, then Chief Justice of Queensland and one month short of his appointment as the first Chief Justice of this Court, observed, consistently with the drafting history of s 51(ii), that[93]: "the discrimination must depend upon the geographical position, and not upon the accident of whether things happen to be found in one State or in another."The Full Court held that a Commonwealth law, imposing liability to excise duty on goods and providing an exemption for goods which had been subject to excise duties under State laws, did not discriminate within the meaning of s 51(ii). The Privy Council agreed[94]: "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."[89]So described by Colonial Secretary Joseph Chamberlain in a covering letter to George Reid in July 1897, reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 714.[90]Memorandum C, "Australian Federal Constitution. Criticisms on the Bill", reproduced in Williams, The Australian Constitution: A Documentary History, (2005) at 728.[91]Official Record of the Debates of the Australasian Federal Convention, (Melbourne), 11 March 1898 at 2397.[92][1903] St R Qd 261.[93][1903] St R Qd 261 at 276–277, Cooper J agreeing at 277, Real J agreeing at 281.[94]Colonial Sugar Refining Co Ltd v Irving [1906] AC 360 at 367.