Fortescue Metals Group Ltd v The Commonwealth

The High Court of Australia considered a constitutional challenge brought by Fortescue Metals Group Ltd and others (the plaintiffs) against the Commonwealth of Australia concerning the Minerals Resource Rent Tax (MRRT) legislation. The dispute centred on whether the MRRT, as established and imposed by several Commonwealth Acts, discriminated between States or parts of States, or gave preference to one State over another, contrary to sections 51(ii) and 99 of the Constitution, or otherwise exceeded the Commonwealth's legislative power under the *Melbourne Corporation* doctrine. The plaintiffs also argued the Acts contravened section 91 of the Constitution.

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.