Moreton Resources Ltd and Industry Innovation and Science Australia (Taxation) - [2022] AATA 3804

Moreton Resources Ltd and Industry Innovation and Science Australia (Taxation) [2022] AATA 3804 (21 September 2022)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2016/0604
Re:Moreton Resources Ltd
APPLICANT

AndIndustry Innovation and Science Australia
RESPONDENT

Decision
Tribunal:Deputy President F D O'Loughlin KC
Date:21 September 2022
Place:Melbourne

The decision of the Respondent dated 21 December 2015 is set aside and substituted with the following:
The activities referred to as Remaining Core Activities 1 to 7 and the activities registered as Supporting R&D Activities for the 2012, 2013, 2014 Years are Supporting R&D Activities in relation to Core R&D Activities of and for the 2010 Year.

..........................[sgd]..............................................
Deputy President F D O'Loughlin KC
Catchwords
TAXATION – Research and Development – Supporting R&D Activities, whether activities registered as Supporting R&D Activities are directly related to registered Core R&D Activities of previous Income Years.
REVIEW BY AAT – Power and Procedure on remittal from Federal Court
Legislation
Acts Interpretation Act 1901 (Cth)
Administrative Appeals Tribunal Act 1975 (Cth)
Income Tax Assessment Act 1936 (Cth)
Income Tax Assessment Amendment (Research and Development) Act 1986 (Cth)
Income Tax Assessment Act 1997 (Cth)
Industry Research and Development Act 1986 (Cth)
cases
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27
Catlow v Accident Compensation Commission (1989) 67 CLR 543
Commissioner of Taxation (Cth) v Murry (1998) 193 CLR 605
Cooper Brooks (Wollongong) v Commissioner of Taxation (1981) 147 CLR 297
HFM043 v The Republic of Nauru (2018) 92 ALJR 817
Industry Research & Development Board v Coal & Allied Operations Pty Ltd (2000) 101 FCR 405
Kaluza v Repatriation Commission [2011] FCAFC 97
Lim v Comcare [2019] FCAFC 104
Moreton Resources Ltd v Innovation and Science Australia [2019] FCAFC 120
Moreton Resources Ltd and Innovation and Science Australia [2018] AATA 3378
Mt Owen Pty Ltd v Innovation Australia (2013) 137 ALD 88
Northern Territory v Collins (2008) 235 CLR 619
O’Grady v North Queensland Coal Limited (1990) 169 CLR 356
Peacock v Repatriation Commission [2007] FCAFC 156
Minister for Immigration and Multicultural Affairs v Wang (2003) 215 CLR 518
RACV Sales and Marketing Ltd v Innovation Australia (2012) 129 ALD 32
Saeed v Minister for Immigration & Citizenship (2010) 241 CLR 252
Wik Peoples v Queensland (1996) 187 CLR 1
Secondary Materials
Replacement Explanatory Memorandum, Tax Laws Amendment (Research and Development) Bill 2010 (Cth)
Explanatory Memorandum, Income Tax Assessment Amendment (Research and Development) Bill 1986 (Cth)
REASONS FOR DECISION
Deputy President F D O'Loughlin KC

Following the Full Court[1] upholding the Applicant’s appeal to it from the First Tribunal’s Decision,[2] the Full Court’s Order 2 setting aside the Frist Tribunal’s decision, and the Full Court’s Order 3, remitting the application to the present Tribunal in the following terms:
‘3The proceedings be remitted to the Administrative Appeals Tribunal for determination of whether the Applicant’s activities in the 2012, 2013, and 2014 income years were eligible supporting R&D activities in accordance with the law.’
(a)the Respondents decision of 21 December 2015 that none of the Applicant’s activities registered as Core R&D Activities[3] or Supporting R&D Activities[4] in the 2012, 2013 and 2014 Years[5] in connection with its Kingaroy UCG[6] Pilot Project constitute R&D Activities[7] remains effective; and
(b)one remaining question concerning whether the activities referred to in paragraph (a) above constitute R&D Activities remains to be determined.
[1]Moreton Resources Ltd v Innovation and Science Australia [2019] FCAFC 120.
[2]Moreton Resources Ltd and Innovation and Science Australia [2018] AATA 3378.
[3]‘core R&D activities’ within the meaning of the 1997 Assessment Act, s 355-25.
[4]‘supporting R&D activities’ within the meaning of the 1997 Assessment Act, s 355-30.
[5]A Year being a 12 month period from 1 July to 30 June of the calendar year stipulated.
[6]Underground coal gasification: an in situ coal gasification process that obviates the need to mine the coal and transport it to a purpose-built gasifier: a description taken from the Applicant’s opening submissions: remittal hearing transcript, 17 l 23-25, in turn a description taken from the FEED Document referred to below.
[7]‘R&D activities’ within the meaning of the 1997 Assessment Act, s 355-20.
The Substantive issue for determination
The parties agree that the ultimate issue for the Tribunal is which, if any, activities registered and conducted by the Applicant in the 2012, 2013 and 2014 Years were Supporting R&D Activities in relation to Core R&D Activities registered and conducted in the 2010 Year. That ultimate issue for determination requires:
(a)identification of activities registered and undertaken in the 2012, 2013 and 2014 Years; and
(b)analysis of their relationship with activities both registered and accepted as, or determined to be Core R&D Activities that were conducted in the 2010 Year,
to determine whether that relationship is sufficient for the activities identified in paragraph (a) above to constitute Supporting R&D Activities.
To determine the ultimate issue, and largely adopting the Respondent’s formulation, the following questions need to be answered:
Question 1:What Core R&D Activities were registered and conducted by the Applicant in the 2010 Year?
Question 2:For which of the activities registered in the 2012, 2013 and 2014 Years as Core R&D Activities is it now open to the Applicant to submit were Supporting R&D Activities conducted in those Years? In this respect the Respondent contends that some activities registered as Core R&D Activities in the 2012, 2013 and 2014 Years can no longer be contended to be Supporting R&D Activities because they were abandoned by the Applicant during the Full Court Appeal and/or that the scope of the remittal does not extend to these activities.
Question 3:Which, if any, of the activities identified in answer to question 2, were ‘directly related to’[8] and, if necessary, undertaken for the ‘dominant purpose’[9] of supporting, the Core R&D Activities registered and conducted by the Applicant in the 2010 Year?
Question 4:Which, if any, of the activities registered in the 2012, 2013 and 2014 Years as Supporting R&D Activities were conducted by the Applicant in the 2012, 2013 and 2014 Years?
Question 5:Which, if any, of the activities identified in answer to question 4 were Supporting R&D Activities registered and conducted in the 2012, 2013 and 2014 Years in relation to the Core R&D Activities registered and conducted by the Applicant in the 2010 Year?
[8]‘directly related to’ as used in 1997 Assessment Act, s 355-30(1).
[9]‘dominant purpose’ as used in 1997 Assessment Act, s 355-30(2).
One aspect of question 1[10] above, and all aspects of questions 2 to 5 above are disputed.
[10]See [15] - [17] below.
Procedural and evidentiary matters for determination
As forecast in relation to question 2 above, but not limited to that question, a number of procedural and evidentiary matters concerning;
(a)the scope of the remittal;
(b)activities open to be contested;
(c)the extent to which the present Tribunal is limited in its consideration to facts found by the First Tribunal;
(d)whether evidence in addition to that before the First Tribunal, namely the Second Melik Statement can be led;[11]
(e)if evidence in addition to that before the First Tribunal can be led, whether parts of it ought be refused on account of the Respondent’s objections;
(f)whether other evidence ought be refused on account of the Respondent’s objections;
(g)whether the additional evidence led, if permitted, is sufficiently reliable to found the conclusions urged by the Applicant; and
(h)whether Mr Melik is a person of sufficient standing or office to give evidence of the Applicant company’s intentions and purposes and objectives
are also disputed.
[11]Statement of Mr Valeri Melik dated 15 November 2019.
Adding to these differences in view for resolution, the extent to which regard can be had to the Full Court’s reasons in resolving the foregoing procedural and evidentiary matters is disputed.
A further dispute of a procedural nature concerning the appropriateness of resort to the EM[12] in construing provisions of the 1997 Assessment Act[13] also arises in the context of the substantive issue for determination.
[12]Replacement Explanatory Memorandum, Tax Laws Amendment (Research and Development) Bill 2010 (Cth)
[13]The Income Tax Assessment Act 1997 (Cth).
The procedural and evidentiary matters need to be addressed before the substantive disputed matters can be addressed. And because the parties do not agree as to the extent to which it is permissible to have regard to the Full Court’s reasons in determining those procedural and evidentiary matters, that topic must be addressed first.
Reference to and reliance on the Full Court’s Reasons
The Applicant contends the terms of the Full Court’s Order 3 are unrestricted and it is appropriate for the present Tribunal to start afresh and make its own findings, whereas the Respondent contends that the scope of the present Tribunal’s task is limited by reference to the Full Court’s reasons and/or the conduct of the Appeal.
As to inferring limitations in the scope of and procedure for the remittal from the remitting court’s reasons, there is a tension between:
(a)what the Full Court said in Kaluza,[14] affirming a principle expressed in Peacock[15] that limitations in a remittal will rarely be inferred from the remitting court’s reasons where the terms of the remittal are relevantly unqualified, and
(b)the more recent Full Court decision in Lim[16] which set a very low bar, if any bar at all, to allowing a court’s reasons to influence its order and the scope of remittal.
[14]Kaluza v Repatriation Commission [2011] FCAFC 97.
[15]Peacock v Repatriation Commission (2007) 161 FCR 256, 206 [18].
[16]Lim v Comcare [2019] FCAFC 104, [40]-[41] and the authorities there cited.
The Kaluza Full Court observed:
‘37Ordinarily orders made by a court will be taken at their face value rather than being construed in context having regard to their purpose and object. It would be, as the Full Court noted in Peacock, a rare case where it was otherwise. There is nothing ‘rare’ about this remittal. It is and was open to the Court partially to remit a matter but in this case that was not done. Her Honour was not asked partially to remit the case. Cases on judicial review frequently refer to two or more claims. It is common for a large number of issues to be agitated on judicial review but it may only be one of those in which there is success and remittal. It cannot be said that a decision-maker exercising executive power is confined to considering only those issues in respect of which a point of law was made out. This is particularly so in the context of s 44 of the AAT Act which is restricted to appeal on an error of law.’[17]
[17]Kaluza v Repatriation Commission [2011] FCAFC 97, [37].
The Lim Full Court observed:
‘40There is no doubt that a court charged with construing orders may, to the extent of any ambiguity that attends them, have regard to the reasons to which the orders are intended to give effect: Repatriation Commission v Nation. It is likely the case that it may do so whether the orders are ambiguous or not. In Athens v Randwick City Council, Santow JA (with whom Hodgson JA and Tobias JJA agreed) observed:
To pose the question as simply, can ambiguity in court orders be resolved by reference to their external context, obscures the point of what an order sets out to do. The purpose of a court order is, ordinarily, to give effect to a judgment. The judgment is not some kind of penumbral context surrounding the order. Rather the judgment is the source of the order. A court order derives from its originating judgment, as a transfer of land derives from the underlying contract. The order must therefore conform to the judgment, with only such latitude as the judgment allows. Likewise the transfer must conform to the contract. To speak therefore of the originating judgment as providing context for resolving ambiguity understates the primacy of that judgment as a source of the interpretation of the order.

41This court found to similar effect in Yates Property Corporation Pty Ltd v Boland . There, Drummond J (with whom Sundberg and Finkelstein JJ agreed), said:
It is impermissible, in my view, as well as being quite unrealistic, to attempt to read, that is, to understand an order in isolation from the context of the reasons for it being made. The Full Court of the Supreme Court of Queensland, in Australian Energy Ltd v Lennard Oil NL (No 2) held that, in interpreting an order framed in unambiguous language, regard should still be had to the reasons given by the Court for making the order because they form part of a context in which the order was made.
Other judges of this court have expressed similar views’
(Citations omitted)
Notwithstanding the Applicant’s urgings to adopt the Kaluza approach, post the Lim decision there is a very low bar, if a bar at all, to having recourse to the Full Court’s reasons which underlie its Order 3. Order 3 does not specify which ‘activities in the 2012, 2013, and 2014 income years’ are to be considered. That is enough to warrant resort to the Full Court’s reasons.
The remaining procedural and evidentiary matters for determination arise in the context of the activities that were registered for the 2010, 2012, 2013 and 2014 Years at the centre of the present dispute.
Registered activities
2010 Year
The activities registered as Core R&D Activities for the 2010 Year were:
(a)‘Design of a gas processing plant including the piping connecting the wells, the gas processing facility and storage of liquid wastes’;
(b)‘Construction and commissioning of a gas processing pilot plant’;
(c)‘UCG gas pilot burn/ignition’; and
(d)‘Testing and evaluation of gas production and plant performance to test the viability of the coal seam used and to ensure that environmental standards are met’.
The parties now agree that the first three of the 2010 Year activities and part of the fourth activity, namely ‘testing and evaluation of gas production and plant performance to test the viability of the coal seam used’, were conducted in the 2010 Year and were Core R&D Activities.
The Respondent continues to dispute that part of the fourth activity, namely ‘testing and evaluation of gas production and plant performance … to ensure environmental standards are met’, can be a Core R&D Activity because, it contends, it is ‘plainly excluded from the definition of “core R&D activities” by s 355-25(2)(f)’.
2012 Year
The activities registered as Core R&D Activities for the 2012 Year were:
(a)‘design and develop a UCG generated syngas cleaning and power generation plant by integrating known technologies for the first time’. The Respondent contends that this is an abandoned activity and describes this as 2012 Abandoned Activity;
(b)‘environmental monitoring including the installation and monitoring of pressure sensors installed underground to ensure underground cavity remains at a lower pressure than surrounding coal to mitigate possibility of water contamination’. The Respondent accepts that the Tribunal needs to address this activity and describes this as Remaining Core Activity 1;
(c)‘design and verify a procedure for rehabilitation of the underground cavity consistent with environmental guidelines of MNA’.[18] The Respondent accepts that the Tribunal needs to address this activity and describes this as Remaining Core Activity 2; and
(d)‘investigation of ground water movement and extent of plume in upper and lower aquifers’. The Respondent accepts that the Tribunal needs to address this activity and describes this as Remaining Core Activity 3.
[18]Monitored Natural Attenuation.
The activities registered as Supporting R&D Activities for the 2012 Year were:
(a)‘undertake ongoing water monitoring activities in water bearing layers above the coal seam which recorded transitory levels of benzene up to 2 parts per billion. This included the drilling and monitoring of boreholes at various locations around the UCG production site. This monitoring arose out of the failure of the P1/P4 well casings and required research into the hydrogeological mechanisms which potentially allow the movement of contaminants towards the monitoring bores’;
(b)‘undertake ongoing water monitoring activities in the coal seam immediately surrounding, and also remote from, the UCG production site. Levels of benzene and toluene were recorded in four monitoring bores up to 25m from the gasification zone, while a further four bores from 95m to 120m from the gasification zones recorded no benzene or toluene. Understanding the mechanisms for the magnitude and distribution of these chemicals is crucial to the definition of a practical “working gasification cavity”. Whether the results from ground water monitoring and underground pressure senor locations meet the requirements of the relevant environmental authorities’;
(c)‘Conduct Environmental Impact Assessment for DERM’;[19] and
(d)‘Undertake preliminary economic analysis of power plants of various sizes to determine power pricing requirements to enable a commercially viable project to be developed. Data collection for pre-feasibility study: commercial scale power plant. Prefeasibility study: commercial scale power plant’.
[19]DERM is the acronym for then named Queensland Department of Environment and Resource Management. Its successor organisation was the Department of Environment and Heritage Protection (DEHP).
2013 Year
The activities registered as Core R&D Activities for the 2013 Year were:
(a)‘design and develop a UCG generated syngas cleaning and power generation pilot plant’. The Respondent contends that this is an abandoned activity and describes this as 2013 Abandoned Activity;
(b)‘environmental monitoring including the installation and monitoring of pressure sensors installed underground and above ground. This also includes monitoring of other environmental factors including ground water movement and extent of plume in relevant upper and lower aquifers’. The Respondent accepts that the Tribunal needs to address this activity and describes this as Remaining Core Activity 4;
(c)‘design and verify a procedure for rehabilitation of the underground cavity including investigations that help to understand the chemical attenuation around the pilot plant as a result of the pilot plant trials’. The Respondent accepts that the Tribunal needs to address this activity and describes this as Remaining Core Activity 5; and
(d)‘investigations and development of processes to decommission the pilot plant ensuring that the environment is returned to its original condition, including building a conceptual model of the natural attenuation of benzene, and modelling/testing the actual results against this model’. The Respondent accepts that the Tribunal needs to address this activity and describes this as Remaining Core Activity 6.
The activity registered as a Supporting R&D Activity for the 2013 Year was ‘project management and administration’.
2014 Year
The activities registered as Core R&D Activities for the 2014 Year were:
(a)‘development of a conceptual model of the natural attenuation of benzene, and modelling/testing the actual results against this model’. The Respondent contends that this is an abandoned activity and describes this as 2014 Abandoned Activity; and
(b)‘develop a procedure for rehabilitation of the underground cavity including investigations that help to understand the chemical attenuation around the pilot plant as a result of the pilot plant [trials]’. The Respondent accepts that the Tribunal needs to address this activity and describes this as Remaining Core Activity 7.

The activities registered as Supporting R&D Activities for the 2014 Year were:
(a)‘project management and administration’; and
(b)‘environmental rehabilitation and planning’.
The scope of the remittal, facts, fact finding and evidence
The present matter has been remitted by Order 3 of the Full Court’s orders made pursuant to s 44(5) of the Tribunal Act,[20] after:
(a)the Applicant had urged the court to exercise s 44(7) powers and make the necessary findings itself; and
(b)the Respondent resisted the proposition that the Court exercise s 44(7) powers with submissions that:
‘There would also need to be factual findings about whether the activities conducted in 2012 to 2014 were directly related to some specific activities in the earlier years. Thirdly, there would need to be findings of dominant purpose in relation to those activities found to be covered by the exclusion in 25(2)(f) or directly related to producing goods or services, and that, in our submission, would be a factually intensive exercise[21] …
As we’ve submitted, the clear preference of the Respondent, having regard to section 44 of the AAT Act, the rules of the court, the dense factual findings that are outstanding – the clearly preferable course would be for the matter to be remitted to the tribunal’.[22] (Emphasis added)
[20]Administrative Appeals Tribunal Act 1975 (Cth).
[21]Full Court transcript, 113 l 40-46.
[22]Full Court transcript, 115 l 16-20.
The rationale for the Full Court not finding necessary facts itself was explained by the Full Court as follows:
‘161In support of this submission Moreton submits, in summary, that: had the Tribunal not made the findings that it did in relation to the pilot project as a whole, it would have been required to examine more closely the activities registered for the 2010 year; those activities included “UCG gas pilot burn/ignition” and “ongoing testing and evaluation of gas production and plant performance to test the viability of the coal seam used and to ensure environmental standards are met”; to the extent that any of the registered “core R&D activities” for the 2012 to 2014 years were not “core R&D activities”, they were directly related to, and undertaken for the dominant purpose of supporting, the activities registered for the 2010 year. Moreton submits that the connection between the activities arises from, among other things, the terms of the EA that applied to the pilot project, pursuant to which Moreton was required to carry out the remediation activities in the years in question and the fact the activities constituting the pilot project were interrelated. During the hearing of the appeal, we were taken to a substantial number of documents in the Appeal Book in support of these submissions.
…
163In our view, having regard to the matters referred to in s 44(7) of the AAT Act, it is not appropriate for this Court to determine whether the registered “core R&D activities” for the 2012 to 2014 years were Supporting R&D Activities on the basis of Moreton’s alternative submission before the Tribunal. Determining this issue would be a factually intensive exercise. Among other things, it would require consideration of whether the some or all of the registered activities for the 2010 year were “core R&D activities”. If that issue were determined favourably to Moreton, it would be necessary to determine whether the registered “core R&D activities” for the 2012 to 2014 years were directly related to, and undertaken for the dominant purpose of supporting, the core R&D activities for the 2010 year. (Moreton accepts that it needs to satisfy subsection (2) in addition to subsection (1) of s 355-30.) It would also be necessary to determine whether the relevant activities were conducted during the registration year, to the extent that this has not already been determined (see s 27J of the [Industry Research and Development Act 1986 (Cth)]). In the circumstances, it is preferable for the matter to be remitted to the Tribunal.
Conclusion
164For the reasons set out above, the decision of the Tribunal is to be set aside and the matter remitted to the Tribunal for determination according to law.’
The Respondent contends, and the Applicant disputes, that this explanation, in part at least, informs the scope of the remittal to the present Tribunal which in turn informs how the Tribunal is to proceed. More particularly, coupled with the conduct of the appeal to the Full Court, these explanations are also said to inform the activities that it is now open to the Applicant to contend were supporting activities, and throw light on the extent to which the present Tribunal is limited to factual matters and findings contained in the First Tribunal’s reasons and the evidence before the First Tribunal.
Together with the terms of its order, the Full Court’s explanatory remarks need to be considered in the context of the terms of s 44 of the Tribunal Act. The powers of the Court are set out in s 44(4) to (10) in the following terms:
‘(4)The Federal Court of Australia shall hear and determine the appeal and may make such order as it thinks appropriate by reason of its decision.
(5)Without limiting by implication the generality of subsection (4), the orders that may be made by the Federal Court of Australia on an appeal include an order affirming or setting aside the decision of the Tribunal and an order remitting the case to be heard and decided again, either with or without the hearing of further evidence, by the Tribunal in accordance with the directions of the Court.
Constitution of Tribunal if Federal Court remits case etc.
(6)If the Federal Court of Australia makes an order remitting a case to be heard and decided again by the Tribunal:
(a)the Tribunal need not be constituted for the hearing by the person or persons who made the decision to which the appeal relates; and
(b)whether or not the Tribunal is reconstituted for the hearing--the Tribunal may, for the purposes of the proceeding, have regard to any record of the proceeding before the Tribunal prior to the appeal (including a record of any evidence taken in the proceeding), so long as doing so is not inconsistent with the directions of the Court.
Federal Court may make findings of fact
(7)If a party to a proceeding before the Tribunal appeals to the Federal Court of Australia under subsection (1), the Court may make findings of fact if:
(a)the findings of fact are not inconsistent with findings of fact made by the Tribunal (other than findings made by the Tribunal as the result of an error of law); and
(b)it appears to the Court that it is convenient for the Court to make the findings of fact, having regard to:
(i)the extent (if any) to which it is necessary for facts to be found; and
(ii)the means by which those facts might be established; and
….
(8)For the purposes of making findings of fact under subsection (7), the Federal Court of Australia may:
(a)have regard to the evidence given in the proceeding before the Tribunal; and
(b)receive further evidence.
(9)Subsection (7) does not limit the Federal Court of Australia's power under subsection (5) to make an order remitting the case to be heard and decided again by the Tribunal.
(10)The jurisdiction of the Federal Court of Australia under subsection (3) includes jurisdiction to make findings of fact under subsection (7).’
Notwithstanding the earlier submission to the Full Court noted at [‎24(b)] above, the Respondent contends in the present Tribunal review that:
(a)the First Tribunal made ‘detailed findings related to the background facts and … it is apparent from paragraph 163 of the Full Court’s decision … as well as from various other paragraphs … that it is not within the scope of the remittal for the Applicant now to challenge the primary factual findings made by the tribunal below. That is, in relation to the activities conducted in the 2012, 2013 and 2014 Years’;[23]
(b)‘It is not permissible for the Applicant to seek to adduce additional evidence in relation to matters already the subject of factual findings where factual findings have been made in the hope of obtaining different factual findings. The remittal to the tribunal is limited to specific issues and it’s not a rehearing of all the issues’;[24] and
(c)the concession noted by the Full Court in [163], namely that
‘it would be necessary to determine whether the registered “core R&D activities” for the 2012 to 2014 years were directly related to, and undertaken for the dominant purpose of supporting, the Core R&D Activities for the 2010 year. (Moreton accepts that it needs to satisfy subsection (2) in addition to subsection (1) of s 355-30.)’
‘is only consistent with the Applicant not seeking to agitate the 2013 and 2014 Abandoned Activities because those activities were not subject to the exclusion in 355-25(2)(f), and so were not covered by s355-30(2) …’.[25]
[23]Respondent’s opening submissions: remittal hearing transcript, 30, l 2-7.
[24]Respondent’s opening submissions: remittal hearing transcript, 30, l 10-14.
[25]Respondent’s opening submissions: remittal hearing transcript, 33 l 1-5.
The propositions in [‎28(a)] and [‎28(b)] are not accepted and the proposition in ‎[28(c)] is accepted in the present circumstances.
The reasoning in the High Court’s decision in Wang,[26] acknowledged by the Full Court in Kaluza,[27] noted the following relevant guiding principles for fact finding in a remittal.
(a)Orders setting aside a decision and remitting the matter to be determined according to law mean that all questions of fact and law relevant to the claim are to be determined again ‘in the light of the circumstances existing at the date of such new determination, and of the information before the Tribunal at that time.^’[28]
(b)A decision on review is to be made based on the facts ‘as they appear in the … remittal review’.[29]
(c)The earlier findings have ‘no legal status’.[30]
(d)The remittal review Tribunal will not be bound by prior findings.[31]
(e)The remittal review Tribunal might see matters differently, even if based on substantially the same information.[32]
(f)The remittal review Tribunal is not bound to make the same findings as those made by an original Tribunal.[33]
(g)Care is needed in adopting findings of material facts in circumstances where an ultimate conclusion, as here, has been overturned on appeal. Assuming problems associated with disentangling findings of fact from the overturned ultimate conclusion can be resolved, there remains the possibility that the findings of fact are affected by, or reflect at least in part, the erroneous conclusion that has been overturned on appeal and adopting them without great care may skew the required factual enquiry of the remittal review Tribunal.[34]
[26]Minister for Immigration and Multicultural Affairs v Wang (2003) 215 CLR 518.
[27][2011] FCAFC 97, [34].
[28]Wang (2003) 215 CLR 518, 522 [7], 525 [16] (Gleeson CJ).
[29]Wang (2003) 215 CLR 518, 525 [16] (Gleeson CJ).
[30]Wang (2003) 215 CLR 518, 525 [16] (Gleeson CJ).
[31]Wang (2003) 215 CLR 518, 525 [16] (Gleeson CJ).
[32]Wang (2003) 215 CLR 518, 525 [16] (Gleeson CJ).
[33]Wang (2003) 215 CLR 518, 533 [45] (McHugh J).
[34]Wang (2003) 215 CLR 518, 541-2 [74] (Gummow and Hayne JJ).
If it thought it appropriate in the present matter, the Full Court could have made orders affecting matters such as prior findings of fact,[35] but didn’t. To the contrary, the Full Court remitted the matter against an invitation to make findings of fact itself under s 44(7), at least in part because findings of fact are required, and imposed no limitation in that regard. If it thought appropriate, the Full Court could also have made orders concerning whether further evidence could be led,[36] but didn’t. Equally, the parties could have urged the Full Court to express its view on matters appropriate for the remittal and, it appears, neither of them did so. On remittal the present Tribunal can have regard to the evidence led in the earlier Tribunal process.[37]
[35]Tribunal Act, s 44(4).
[36]Tribunal Act, s 44(5).
[37]Tribunal Act, s 44(6).
In one respect, the present matter is similar to Kaluza. While a discrete question has been remitted, the approach to be taken in determining that question has not been constrained or made subject to qualification or directions as to the evidence able to be received or considered by the present Tribunal. The orders give no hint of such a limitation or constraint. The Full Court’s reasons explain that fact-finding is required of the present Tribunal. Without more, there could be no argument that the present Tribunal is required to look at things afresh, including all of the evidence before it, and make requisite findings of fact in an unconstrained way. The only suggestion that findings that have already been made are to be carried forward without review is the sentence: ‘It would also be necessary to determine whether the relevant activities were conducted during the registration year, to the extent that this has not already been determined …’[38] in the Full Court’s explanation for not determining factual questions itself. Having regard to the terms of s 44, and the principles from the authorities concerning the powers of the Tribunal on a remittal as noted above, if this sentence was intended to be a constraint or limitation for the purposes of the remittal, that limitation could be expected to have been factored more clearly into the remittal order. As noted, in relevant respects, the question for consideration has been remitted in unqualified terms. To proceed on a basis that this Tribunal were constrained would be contrary to authority, would preclude the possibility of giving effect to contrary conclusions that might be reached, and would risk the possibility that conclusions formed in a setting of an overturned outcome might be inappropriately entrenched.
[38]Full Court reasons, [163].
In circumstances where the First Tribunal’s findings, particularly the critical conclusion as to whether the relevant activities could constitute Core R&D Activities, were overturned by the Full Court, any conclusions as to facts by the First Tribunal need to be treated with great caution and careful scrutiny because those conclusions could well have been affected by the misconceived and erroneous understanding of the operation of critical aspects of the legislation in the present setting.
Similarly, any inferences that might be drawn from the absence of finding some facts that the Applicant now contends should be found, need to be approached with the same care and caution because the failure to find those facts could equally have been affected by the misconceived and erroneous basis upon which the First Tribunal decision was reached. Further, the First Tribunal did not turn its mind to connections and relationships between activities as is required to reach conclusions concerning Supporting R&D Activities.
Accordingly, the present matter is to proceed on the basis that the present Tribunal is not bound by or limited to the findings of fact by the First Tribunal and is to make the relevant findings of fact as they pertain to the remaining issues in dispute afresh.
Further, those findings of fact are to be made on the basis of the material that is currently before the Tribunal which includes the Second Melik Statement in addition to the evidence that was before the First Tribunal. The evidence as a whole needs to be examined again, and, if to be found again, the facts previously found need reconsideration to determine whether the requisite relationships are established. There is no unfairness to the Respondent in receiving the Second Melik Statement at a time and in a manner which did not compromise the Respondent’s ability to test that evidence and/or challenge its efficacy. The Respondent had that evidence and was aware of its contents for approximately three months before preparing its written submissions which were accompanied by the Respondent’s objections. In that interval the Respondent did not take any step to respond to that evidence or seek time in which to do so. Had there been such a need an application would have been expected. The Respondent sought to challenge Mr Melik in its cross-examination of him at the remittal hearing.
Having regard to the unqualified terms of the remittal and the foregoing principles, all relevant questions of fact and law are to be determined again by the present Tribunal. The tendered evidence from the First Tribunal hearing, and Second Melik Statement can all be considered.
The objections to evidence
A range of objections to evidence were provided to the Tribunal with the Respondent’s submissions. These objections can be broadly categorised as follows:
(a)some of the original evidence and the proposed new evidence of Mr Melik ought not be admitted at all on the remittal given the nature of the remittal and/or is irrelevant to the issues to be dealt with on the remittal; and
(b)some of the proposed new evidence of Mr Melik is opinion, vague, speculative and hearsay, either in isolation or in combination, and/or goes to the ultimate issue to be decided, and/or is evidence of belief.
These objections are noted but rejected.
(a)The terms of the remittal and the responsibilities of the Tribunal on remittal as noted above require consideration of the evidence as a whole to make findings of fact again.
(b)The witnesses who have given evidence both to the First Tribunal and the present Tribunal were in positions such that they were entitled to give the evidence that has been given including evidence of beliefs, intentions and objectives.
(c)As to the contention to the effect that evidence went to the ultimate issue, the Tribunal is not bound by the rules of evidence. The present case calls for identification of activities, the purposes for which those activities were pursued, and connections or relationships between them. Those are questions of fact. Questions of fact of this nature lend themselves to be informed by personal perspectives of the responsible company executives.
The weight to be given to the matters objected to is a matter for the present Tribunal.
2012, 2013 and 2014 Year Abandoned Activities
The Respondent points to both the reasons underlying the remittal order, and what happened in the Full Court to support its assertion that the Applicant had abandoned its contention that some activities had been undertaken in the 2012, 2013, and 2014 Years such that it is no longer able to advance the contention that these activities were Supporting R&D Activities in relation to registered Core R&D Activities undertaken in the 2010 Year. The Applicant disputes both bases for the limitation.
At paragraph 1(b) of its reply submissions to the Full Court, the Applicant said:
‘In respect of those activities carried out during the year ended 30 June 2012 that were not found to be excluded by reason of section 355-25(2)(f) [being the activities referred to at Tribunal Reasons [263]-[267] and [321]] the Applicant contends that the Tribunal erred in finding that they were not core R&D Activities. Although of a limited nature when looked at in isolation, those activities were a continuation of the “core R&D activities” comprising the UCG pilot project.’
At footnote 8 of those submissions the Applicant said:
‘The applicant does not challenge the Tribunal’s findings in respect of the activities falling outside of s355-25(2)(f) for the years ended 30 June 2013 and 30 June 2014: Reasons [323], [325]. This includes the activities in the year ended 30 June 2013 described as “design and develop UCG generated syngas cleaning and power generation pilot plant” and the activities in the year ended 30 June 2014 described as “development of a conceptual water model of natural attenuation of benzene and modellings/testing the actual results of this model” in respect of which the Tribunal made no findings whether they were in fact carried out.’

At this point, namely when submissions were filed in the Full Court, the 2012 Abandoned Activity remained in contention. In the Full Court proceedings, the Respondent filed a notice of contention in the following terms:
‘The Respondent contends that the [First Tribunal] decision … should be affirmed on grounds other than those relied on … below …
Grounds relied on
1.In relation to the activity registered in the 2012 year described as “testing and evaluation of gas production and plant performance … to ensure environmental standards can be met”:
(a)the Tribunal ought to have found that, on the basis of the facts fully found, this activity was not conducted in the 2012 year;
(b)further or in the alternative the Tribunal ought to have held that this activity as excluded from the definition of core R&D activity by s355-25(2)(f): see Tribunal [321].’
In the conduct of the appeal hearing, steps were taken by the Applicant that led the Respondent to withdrawing or not pressing the notice of contention.
Applying the principles in Lim in preference to those in Kaluza concerning the scope of the remittal and the appropriateness of having regard to reasons underlying the remittal order and having regard to the matters the Respondent points to concerning activities it says have been abandoned, the proper conclusion to reach is that the contended for Abandoned Activities are not activities for consideration by the present Tribunal. Both the statements made on behalf of the Applicant in the Full Court and the reasons of the Full Court support that proposition. The Applicant cannot now advance that the 2012, 2013 and 2014 Year Abandoned Activities were Supporting R&D Activities.
The Substantive Issues
Largely, but not wholly, adopting the Respondent’s submission, for the Applicant to succeed:
(a)in relation to the activities registered as Core R&D Activities in the 2012, 2013 and 2014 Years, the Applicant must establish for each activity still contestable, that the activity was:
(i)undertaken in those Years;
(ii)‘directly related’ to a Core R&D Activity conducted and registered in the 2010 Year;
(iii)undertaken for the ‘dominant purpose’ of supporting that Core R&D Activity; and
(b)in relation to the activities registered as Supporting R&D Activities in the 2012, 2013 and 2014 Years:
(i)the activity so registered in the Year in question must have been:
(A)conducted as described in the Year; and
(B)‘directly related’ to a Core R&D Activity conducted and registered in the 2010 Year; and
(ii)where the activity so registered in the Relevant Year is included in s 355-30(2), the activity so registered in the Relevant Year must have been undertaken for the ’dominant purpose’ of supporting that Core R&D Activity.
Being cumulative, failing to satisfy any one of these requirements is fatal to the Applicant’s case for that activity.
The evidence before the Tribunal
The evidence and material before the Tribunal on the remittal included the material listed in the Annexure, which includes the Second Melik Statement, Mr Elks’ evidence, the FEED Document,[39] the PEP[40] and the PCA.[41]
[39]The 27 May 2008 document titled ‘Kingaroy Pilot UCG Project Front End Engineering Definition’. T-Documents T-12.
[40]The 25 September 2008 Kingaroy Pilot Gasification Plant, Project Execution Plan.
[41]The 8 December 2006 Sinclair Knight Merz ‘Kingaroy Underground Coal Gasification and Power Generation Project, Preliminary Concept Assessment.
On the assumption that the Second Melik Statement could be led in the remittal proceeding, Mr Melik’s evidence was challenged on two broad bases; that his evidence could not be accepted as believable or reliable, and that he had no authority to give evidence of the Applicant company’s purposes.
The Second Melik Statement detailed the:
(a)activities undertaken during the 2012, 2013, and 2014 Years, and the reasons for undertaking those activities. His evidence was to the effect that despite the setbacks encountered with the Pilot Project, particularly the P1 and P4 wells, the activities undertaken that could be described as undertaking tests and monitoring may well have been activities embraced by relevant approvals and licenses but went beyond the level of activities required by those approvals and licenses. They were undertaken with the intent to prove that the UCG Pilot Project was capable of operating in a safe, and environmentally friendly manner and to establish best practices relevant to the operation of UCG projects over their lifecycle, namely pre-ignition, operational phase and for several years after plant shut down. Those activities were seen as essential to the development of commercially acceptable UCG based power generation in future. Mr Melik’s evidence was that there was a confidence that the Applicant could demonstrate that the UCG plant had not caused lasting contamination and it would be able to resume its operations.[42] Further, the environmental monitoring activities continued on the basis of the anticipated resumption of operations, and not the obligation and scope of the environmental protection order.[43] This view and confidence in the end outcome informed legal proceedings taken by the Applicant against DERM;[44]
(b)MNA process, which was a novel, and not widely accepted, method of environmental monitoring and rehabilitation at the time. This process, unlike its name, was more than sitting back watching and monitoring and allowing natural processes take their course. It entailed testing and monitoring and adding chemicals to the affected areas to assist and/or accelerate the process of attenuation of the contamination; and
(c)decision to shut down and discontinue attempts to re-start the Pilot Project.
[42]Second Melik Statement, [34].
[43]Second Melik Statement, [36].
[44]Second Melik Statement, [35].
Mr Melik’s additional evidence was subject to cross examination challenge of two broad types:
(a)first of a general nature seeking to impugn reliability of his evidence on topics concerning:
(i)the number of directors Moreton resources has had;
(ii)the number of chairs of directors Moreton resources has had;
(iii)some inaccuracies in his CV concerning the description of his terms as chairman of the Applicant to which he agreed could be misleading but were not intended to be;
(iv)the content of his earlier statement and the range of documents exhibited to it and the absence of any reason to omit material;
(v)contemporaneous documents being the best evidence;
(vi)his earlier evidence being closer in time to the events in question being more likely to be reliable;
(vii)the asserted activities in 2012 not being supported by references to contemporaneous documents;
(viii)his memory of events that happened in 2012;
(ix)that he could have taken more care in making his second statement; and
(x)his specific knowledge of the detail; and
(b)second of specific nature concerning a very small number of paragraphs of his evidence relating to the activities that were undertaken and the reasons for undertaking them. The result of this challenge was that Mr Melik accepted that:
(i)he was mistaken as to the Years in which he had said three activities were undertaken; and
(ii)at least in some respects his statement was incorrect.
The insignificance of the proportion of Mr Melik’s evidence relating to the activities that were undertaken and the reasons for undertaking them that was subjected to direct challenge is noteworthy given the breadth and detail of his evidence as a whole. The Respondent’s urgings that Mr Melik’s evidence should be considered wholly unreliable by the present Tribunal is also noteworthy given the absence of direct challenge to it.
Relevant aspects of the Second Melik Statement, with footnoted references to the parts of it that were subjected to direct challenge, are as follows:
‘20In addition to abovementioned monitoring systems that were implemented for the purpose of understanding and assessing the geostatic and hydrostatic requirements for a feasible gas production as a reliable feedstock for operation of a gas turbine …, the Applicant established and undertook environmental monitoring activities with the intention of proving that the UCG Pilot Project was safe to operate in environmentally friendly manner. These environmental monitoring activities also included air, rainfall, wind direction, soil, surface and groundwater monitoring with samples being taken prior to ignition, during burn and for several years after the plant shutdown.
21The abovementioned monitoring systems were implemented with the intention of understanding and establishing best-practices for UCG ignition, burn and clean-up activities and formed an important aspect of the design operation and expansion of a gas processing plant.
…
28On 24 June 2010, the Applicant commenced drilling two new production wells namely being the P5 and P6, implementing new design structures and alternative casing material with a view to reigniting the UCG Pilot Plant with improvements and learnings derived from the unforeseen and unfortunate failure of production wells P1 and P4.
…
32… Whilst it is unfortunate that the P1 borehole became blocked and P4 ruptured, which caused an uncontrolled shutdown after five (5) days’ operation, the ongoing monitoring that occurred above and beyond any regulation, statutory obligation or guideline (noting that the purpose of the UCG Pilot Plant was to create learning outcomes to produce relevant industry guidelines) was necessary and directly relevant to the design of this experimental pilot plant and for development of future commercially acceptable UCG based power generation industry.
…
Activities During the Financial Years Ending 30 June 2012 and 30 June 2013
34.… I believe that the Applicant remained confident that it would be able to demonstrate that the UCG Pilot Plant had not caused a lasting contamination and that the Applicant would be permitted to resume operations of the UCG Pilot Plant.
35… the Applicant challenged the DERM and State of Queensland in Court with respect to a number of decisions made in relation to the UCG Pilot Plant and that there was confidence by me and others to whom I spoke who also worked for the Applicant namely … that the Applicant would be successfully able to establish that the UCG Pilot Plant would be permitted to continue operation.
36… the Applicant continued to monitor and report on rainfall and hydrostatic pressure variations within the surrounding geological formations and aquafers for the benefit of resuming the pilot plant operations, which were completely unrelated to any regulatory obligations and scope of the environmental protection order.
37Site activities had to be carried out to continue to understand the UCG process to be ready for restart of the underground gasification.
38Specifically, in relation to the financial year ending 30 June 2012, the following activities were undertaken:
•Management and coordination activities of the pilot site personnel, their employment contracts, rostering, overtime and payrolls.
•Management of external contractors and consulting service providers.
•Management of equipment maintenance tasks, repair and modifications.
•Management of inventory, materials, ordering and purchasing.
•Coordinating design and carryout installation of new UCG production wells P5 and P6.[45]
[45]The activities set out in this and the following dot point item were the subject of cross examination challenge and Mr Melik accepted that these activities occurred in the 2010 Year: remittal hearing transcript, 54 l 15 – 55 l 3.
•Coordinating design changes to link the newly installed production wells P5 and P6 with the gas processing and clean-up plant.
•Coordinate development of reignition procedure to recommence the gasification.[46]
[46]The activities set out in this dot point item were the subject of cross examination clarification, that Mr Valeri accepted, that these activities were somewhat limited and were the same as the activities referred to in paragraphs [117] and [118] of his first statement: remittal hearing transcript, 55 l 4 – 57 l 21.
•Undertaking ongoing water sampling activities, testing, analyses and modelling of the specific chemical elements in in a format predefined by the external consulting company. The activities were carried out in the water bearing layers above the coal seam which recorded transitory levels of benzene of up to 2 parts per billion. This included the drilling and installation of additional boreholes at various locations around the UCG test site. This monitoring was ongoing to understand the failure of P1 and P4 well casings which required extensive research into the mechanisms which promoted mobilisation of the contaminants through the geophysical strata towards the pair monitoring bores T5037 and T5038.
•Designing an appropriate water sampling program to undertake an extensive and frequent groundwater sampling activities from the coal seam within the 25m radius of UCG reactor, and also from the coal seam open piezometers located within 95 to120m radius from, the UCG reactor.
•Recording levels of benzene and toluene in four monitoring bores located within the UCG reactor (P2, P3, T5058 and T5061), while a further four bores from 95m to 120m from the gasification zones recorded no benzene or toluene (BTEX) above the detection levels.
•Collecting all that data to understanding the mechanisms, magnitude and distribution of these chemicals was crucial to the definition of practical ‘working gasification cavity’.
•Organising and carry out activities to unblock and repair the damaged production wells P1 and P4.[47]
[47]The activities set out in this dot point item were the subject of cross examination challenge and Mr Melik accepted that these activities occurred in the 2011 Year: remittal hearing transcript, 57 l 24-47.
•Examining thermal effect on the coal and rock cuttings extracted from the investigation boreholes drilled into the UCG gasifier.
•Management of the site environmental and relevant safety documentation.
•Conducting Environmental Impact Assessment.
•Coordinating design and distribution of new network of groundwater monitoring bores above the UCG generator.
•Management of a drilling contractor during installation of 12 new groundwater monitoring bores within the area of gasification.
•Management of development 12 groundwater monitoring bores and development of a new sampling program.
•Collection, interpretation and correlation of VWP data with the groundwater standing levels of surrounding aquifers.
•Undertaking preliminary studies and analyses into design and construction of power lines linking the UCG site with the National Power Grid.
•Data collection for pre-feasibility study into a commercial scale of UCG power plant. [48]
[48]The activities set out in this and the following dot point item were the subject of cross examination challenge but following re-examination this challenge did not succeed: remittal hearing transcript, 58 l 26- 59 l 19, 63 l 23 –64 l 2.
•Pre-feasibility study and identify all design options for a commercial scale power station fuelled by UCG syngas.
39In support of the R&D work undertaken by Cougar Energy, the Applicant prepared and submitted over 600 pages of reports to Queensland Government containing both technical data, investigations and conclusions relevant to the UCG project at Kingaroy
40Specifically, in relation to the financial year ending 30 June 2013, the following activities were undertaken:
•Management and coordination activities of the pilot site personnel, their     employment contracts, rostering, overtime and payrolls.
•Management of external contractors and consulting service providers.
•Management of the pilot site equipment maintenance including repair and modifications to keep the site ready for reignition.
•Management of inventory, materials, ordering and purchasing.
•Management of the groundwater sampling programmes and their design changes.
•Management of equipment inspections by the internal and external contractors.
•Coordination of investigations into existence of biological life within the cavity created by the UCG burn.
•Coordination of activities into research on the appropriate methods of testing for a type of bacteria likely to exist within the UCG reactor.
•Coordination of consultation sessions with the groundwater remediation industry experts from GHD.
•Coordination of meetings and information exchange with DERM’s consultant G+S.
•Coordinating groundwater aeration tests and interpretation of the results.
•Coordinating design activities into discovery of the anaerobic bacteria within the UCG cavity.
•Coordinating design and development of a chemical dosing programme to bio stimulate and enhance activity of the anaerobic bacteria within the UCG reactor cavity.
•Coordinating design, development and construction of a dosing rig to adjust the pH levels of water within the UCG reactor cavity so that to create favourable conditions for the anaerobic bacteria.
•Coordinating design of chemical dosing programme to deliver magnesium sulphate dissolved in rainwater solution to the depth of 2010 metres into the UCG reactor cavity to enhance the count of anaerobic bacteria found.
•Coordinating review and analyses into results of the biodegradation of BTEX components.
•Coordinating measurements and modelling of the BTEX plume and predict the rates attenuation.
•Coordinating ground water sampling, analyses and interpretation of results through a systematic trending of data over the entire period.
•Coordinating collection of hydrostatic pressures and temperatures within the surrounding geological strata and correlation of VWP data with standing water   levels in groundwater monitoring bores along with the rates of rainfalls.
•Coordinating investigations and modelling of the groundwater flow direction.
41A particular development that occurred as a result of the ongoing monitoring was the identification of a correlation between changes in the natural underground hydrostatic pressure in shallow aquafers and bore-water standing levels influenced by the rainfall.
The new findings have also indicated that the lower aquafer in the UCG working zone was not influenced by the rainfall and the natural variations in the hydrostatic pressures and standing water levels were trended in the opposite direction when compared with the trends of shallow aquafers. Natural attenuation of benzene within the UCG cavity was also trended to inform the Applicant on the best methods for cavity rehabilitation at the end of the UCG gasifier working life. This is provided at VM-A VM-131 and the findings regarding the impact of rainfall on shallow aquifers and lack of impact on deep aquifers which is located at VM-A VM-162, 163, 164.
42In my opinion this ongoing reporting directly assists the body of knowledge required for designing gas production plants as these findings allow for more accurate pressure regulation and gauging which is necessary for the quantity of gas flow and consistent production quality. In my opinion, the ongoing project management, monitoring, reporting   and the findings as a result during the financial years ending 30 June 2012 and 30 June 2013 supported the Core R&D Activities in those years. Absent this ongoing work, there would have been a lack of knowledge regarding natural fluctuations of the underground hydrostatic environment. This information was also necessary as new baseline data for the highly anticipated reignition of the UCG reactor.
43As a further activity undertaken, the Applicant engaged GHD Pty Ltd (“GHD”) for the purpose of preparing a Report for Kingaroy Underground Coal Gasification Pilot Plant Groundwater Management Plan which was finalised on 5 August 2011 (“the GHD Report”). In the Report, it was recommended that MNA is to be applied as the means to decontaminating the UCG underground cavity.
44As I explained at Paragraphs 123 and 124 of my First Report, the recommendation that MNA could be a viable, albeit novel, means to decontaminating the cavity created within the coal seam was only possible as a result of the ongoing monitoring, study and evaluation of the site-specific hydrogeological variations.
45The acceptance of the MNA application was originally resisted by DERM who preferred application of a “proven practice” such as flushing the cavity; however, the Applicant pressed on developing new and more effective method of decontamination and was eventually successful demonstrating, which followed by approval to test MNA as a viable alternative to cavity flushing for the following reasons:
•MNA had never been tested at depths greater than 60 metres underground;
•MNA would enable the Applicant to rapidly restart the UCG Pilot Plant in the event that the Queensland Government approved re-ignition; and
•MNA was theoretically a faster and more cost and environmentally efficient decontamination process than any other traditional processes, such as cavity flushing.
•MNA was found to be the most effective method for decontamination of an extinguished UCG reactor while a new reactor initiated as part of the ongoing gasification process.
•This new learning has a direct relevance with the core activities in a sense of controlled shutdown of the exhausted gasification reactor and initiation of new reactor as part of continued running the UCG process in “a safe and environmentally responsible manner” as stated in FEED document.
•MNA trial fits into definitions of accepted Core R&D Activities that were registered UCG: “gas pilot burn / ignition; and testing and evaluation of gas production and plant performance to test the viability of the coal seam.
46As stated in paragraphs 136 to 150, the Applicant engaged GHD and Droycon Bioconcepts for the purpose of determining whether it was possible to use enhanced in-situ biodegradation at the UCG trial site to increase the efficacy of MNA and expedite the process of decontamination. This was an unknown never used before application which involved laboratory bench testing that was discovered and assisted by the Applicant’s consistent and regular monitoring of the UCG Pilot Plant and surrounds.
47Although decontamination was required under the Environmental Authority and Environmental Protection Order, the Applicant went beyond the prescribed requirements and, by monitoring, testing, modelling and reporting the findings which in combination with all other core and supporting activities worked well to improve the MNA process with help of a series of biological activity reaction tests (“BARTs”) during the financial year ending 30 June 2013.
48In addition to the monitoring and reporting, the Applicant continued to employ full time staff; namely Messrs Wayne Livingstone, Peter Ranasinghe and Andrew Brown (who resigned at the end of 2011 calendar year) (“the Staff”) during the financial years ending 30 June 2012 and 30 June 2013. The Staff continued to assist with the site operations under my supervision including performing the following non-exhaustive tasks during the financial years ending 30 June 2012 and 30 June 2013 which, in my opinion, were directly connected to the UCG Pilot Plant:
•Daily check that all equipment, grounds, and buildings are secure. Unlock site each morning on arrival. Lock up site at the end of each day.
•Daily check of fence lines to ensure they are all intact.
•Admit only authorised visitors - turn away any unauthorised visitors.
•Get authorised visitors to "sign in" at Site Office on arrival.
•Get authorised visitors to "sign out" at Site Office on departure.
•Provide either a site induction or escort to all authorised site visitors whilst they are on-site.
•Carry out the sampling of the various water bores as required by the sampling programme-Monthly BTEX, Monthly reduced suite, 3 monthly reduced suite, 6 monthly reduced suite-and landholders water sampling if required.
•Carry out the monthly calibration of the YSI Instrument used to record the water parameters through the flow cell whilst water sampling is carried out.
•Provide timely dispatch of the collected water samples to ALS in Brisbane on the same day of collection for delivery next day via a local freight company.
•Provide the COC (Chain of Custody) paper-work that goes with the collected water samples.
•Suitably pack the collected water samples in ice for the transport to Brisbane and seal up the contents of the transport esky.
•Fill out the freight consignment note to dispatch the water samples.
•Provide maintenance as required on any Solinst water sampling pumps.
•Provide maintenance on the Solinst air pressure sampling control unit.
•Provide expertise and procedure to pull out Solinst pumps and water sampling drop   tubes when required for repair or positioning adjustment.
•Chemical dosing of the water monitoring bores in the production well area as directed.
•Ensure any required site maintenance is carried out in a timely manner.
•Fire extinguisher servicing.
•Company vehicle is serviced as and when required.
•Electrical Test & Tag.
•Maintain the site lifting equipment test certificates.
•Maintain the site computer systems and printers as required.
•Purchase gas bottles for the 2 tonne fork-lift on site.
•Provide repair and maintenance of all equipment as required for safety and compliance with relevant standards and regulation.
•Accelerated rehabilitation of MNA program. Two personnel are required to carry out the following tasks:
•     lifting Solinst bladder pump from the depth of 220m,
•     lowering a chemical delivery tube to the depth of 220m,
•     transferral of rain water from a rain water collection tank into 1.5t container,
•     Preparation of acid solution using H2SO4 to control pH in the production wells,
•     Moving 1.5t container to the well area using forklift,
•     Delivery of solution into the base of the production well,
•     Preparation of diluted solution of MgSO4 to feed the anaerobic bacteria,
•     Delivery of that solution into the base of production wells,
•     Reinstalling Solinst bladder pump,
•     Testing the pump for normal operation,
•     Taking pH sample readings,
•     Deconstruction and removal of the entire UCG gas processing plant followed by the site clean-up. This major undertaking was planned to involve external contractors,
•Sampling water from all three (3) ponds as required and/or directed,
•Daily inspection and removal of any trapped wild-life from the ponds,
•Checking levels of ponds after any heavy rain,
•Chemically treat pond water that starts to appear cloudy or murky,
•Pump out water from the ponds through the irrigation system to reduce the water levels after heavy rainfall,
•Ordering compressed air for groundwater sampling pumps,
•Fill out monthly Permits to Work for the required work to be carried out on and off site,
•Sign off on the just finished Permits to Work for the work on site,
•Review any of the Workplace Health & Safety documentation as required,
•Procure supplies for the site as required,
•Carry out monthly Audit of the compressed air cylinder requirements for the water sampling,
•Carry out monthly audit of the glass water sample bottles required from ALS for the water sampling,
•Stay current with First Aid & CPR training and certification at all times – usually annually,
•Keep MSDS Register up to date,
•Maintain Safety Alerts,
•Maintain Fire Extinguisher Service Records,
•Carry out First Aid Kit inspections when required,
•Carry out the Site Safety Plan Review when required,
•Maintain site Safety Statistics Record,
•Ensure that there are always two (2) personnel on site as a safety requirement when outside physical work is being carried out,
•Carry out slashing of the whole site area, as part of the fire safety around the outside of the perimeter fence,
•Carry out poisoning of various areas on site around equipment, roads, fence-lines and other work areas,
•Carry out brush cutting of the areas that can't be handled by the tractor and slasher.
•Mechanical and servicing maintenance on tractor, slasher, brush-cutter, fork-lift, and 200 litres spray unit,
•Liaison with Petroleum & Gas Inspectorate,
•Safety & Health Section as required,
•Stanwell personnel as required-land owner of site,
•Qld Govt Dept of Environment and Resource Management when required – water sampling programme,
•Engaging and liaising with Golder Associates for evaporation pond inspection and certification-annual requirement,
•Liaising with local suppliers in Kingaroy and surrounding district,
•Liaising with Ergon Energy for any inspections or maintenance work they on HV power line,
•Manage storage of drill core samples taken from the various exploration drilling    programmes,
•Ensure all required safety gear is worn by all visitors while on site.
Copies of administrative correspondence is located at VM -167 to VM -185.
49The above activities had to occur to keep the site in a re-ignition ready state and the ongoing maintenance of the site and monitoring would have allowed the site to be rapidly re-ignited.
50Furthermore, as a consequence of the ongoing activities conducted at Kingaroy, we are able to determine more effective means for environmental management and the location of further coal seams whereat UCG would be a viable means to generating energy on site.
51In or about June 2013, the Applicant resolved that it would cease actively pursuing approval from the Queensland Government to re-ignite the UCG Pilot Plant.
Activities During the Financial Year Ending 30 June 2014
52On 24 July 2013, the Applicant advised the market that it had abandoned its attempts to secure approval to re-ignite the UCG Pilot Plant and, at or around late-July 2013, discontinued proceedings against the Queensland Government.
53As a consequence of the decision to abandon the prospect of re-ignition of the UCG Pilot Plant, the Applicant included, inter alia, “development of a conceptual water model for developing a procedure for rehabilitation of the underground cavity including investigations that help to understand the chemical attenuation around the pilot plant as a result of the pilot plant as a Core R&D Activity in the financial year ending 30 June 2014 as well as “environmental rehabilitation and planning” as a Supporting R&D Activity.
54During the financial year ending 30 June 2014, the Applicant continued to monitor and report on the natural hydrogeological fluctuations by taking regular VWP readings as well as recording and correlating rainfall and aquifer water levels in addition to meeting environmental rehabilitation targets.
55Specifically, in relation to the financial year ending 30 June 2014, the following activities    were undertaken:
•Environmental rehabilitation with associated planning and well-designed site management activities have confirmed that the UCG test site caused no environmental harm.
•As a consequence of the uncontrolled failure of the pilot burn, the Applicant was able to establish a world-first environmental rehabilitation plan that enabled:[49]
[49]The activities set out in this and the following 6 sub dot points were the subjected to cross-examination challenge to the effect that Mr Melik had no independent recollection of these events, a challenge that did not succeed: remittal hearing transcript, 60 l 14 – 62 l 7.
•     Final landform returned to a habitable state for humans and wildlife.
•     Site non-polluting.
•     Final landform stable.
•     Site able to sustain productive land use.
•     Adequate vegetation cover and established to minimise erosion.
•     Established specified self-sustaining natural vegetation or habitat.
•The supporting activities that directly related were as follows:[50]
[50]The activities set out in this dot point were challenged unsuccessfully as well: remittal hearing transcript, 63 l 12-15.
·        Site-security management such as:
•Daily check that all equipment, grounds, and buildings are secure. Unlock site each morning on arrival. Lock up site at the end of each day.
•Daily check of fence lines to ensure they are all intact.
•Admit only authorised visitors - turn away any unauthorised visitors.
•Get authorised visitors to "sign in" at Site Office on arrival.
•Get authorised visitors to "sign out" at Site Office on departure.
•Provide either a site induction or escort to all authorised site   visitors whilst they are on-site.
·        Water Sampling
•Carrying out the sampling of the various water bores as required by the sampling programme-Monthly BTEX, Monthly reduced suite, 3 monthly reduced suite, 6 monthly reduced suite-and landholders water sampling if required.
•Carrying out the monthly calibration of the YSI Instrument used to record the water parameters through the flow cell whilst water sampling is carried out.
•Providing timely dispatch of the collected water samples to ALS in Brisbane on the same day of collection for delivery next day via a local freight company.
•Provide the COC (Chain of Custody) paper-work that goes with the collected water samples.
•Suitably packing the collected water samples in ice for the transport to Brisbane and seal up the contents of the transport esky.
•Filling out the freight consignment note to dispatch the water samples.
•Providing maintenance as required on any Solinst water sampling pumps.
•Providing maintenance on the Solinst air pressure sampling control unit.
•Providing expertise and procedure to pull out Solinst pumps and water sampling drop tubes when required for repair or positioning adjustment.
•Chemical dosing of the water monitoring bores in the production well area as directed.
·        Site Maintenance
•Ensuring any required site maintenance is carried out in a timely manner.
•Fire extinguisher servicing.
•Company vehicle servicing as and when required.
•Electrical Test & Tag.
•Maintaining the site lifting equipment test certificates.
•Maintaining the site computer systems and printers as required.
•Purchasing gas bottles for the 2 tonne fork-lift on site.
•Providing repair and maintenance of all equipment as required for safety and compliance with relevant standards and regulation.
·        Management of rehabilitation work.
•Lifting Solinst bladder pump from the depth of 220m.
•Lowering a chemical delivery tube to the depth of 220m.
•Transferral of rain water from a rain water collection tank into 1.5t container.
•Preparation of acid solution using H2SO4 to control pH in the production wells.
•Moving 1.5t container to the well area using forklift.
•Delivery of solution into the base of the production well.
•Preparation of diluted solution of MgSO4 to feed the anaerobic bacteria.
•Delivery of that solution into the base of production wells.
•Reinstalling Solinst bladder pump.
•Testing the pump for normal operation.
•Taking pH sample readings.
•Deconstruction and removal of the entire UCG gas processing plant followed by the site cleanup. This major undertaking was planned to involve external contractors.
·        Management of the evaporation dam.
•Sampling water from all three (3) ponds as required and/or directed.
•Daily inspection and removal of any trapped wild-life from the ponds.
•Checking levels of ponds after any heavy rain.
•Chemically treat pond water that starts to appear cloudy or murky.
•Pump out water from the ponds through the irrigation system to reduce the water levels after heavy rainfall.
·        Administration
•Fill out monthly Permits to Work for the required work to be carried out on and off site.
•Signing off on the just finished Permits to Work for the work on site.
•Review any of the Workplace Health & Safety documentation as required.
•Procuring any supplies for the site as required.
•Carrying out monthly Audit of the compressed air cylinder requirements for the water sampling.
•Carrying out monthly audit of the glass water sample bottles required from ALS for the water sampling.
•Keeping MSDS Register up to date.
•Maintaining Safety Alerts.
•Maintaining Fire Extinguisher Service Records.
•Carrying out First Aid Kit inspections when required.
•Carrying out the Site Safety Plan Review when required.
•Maintaining site Safety Statistics Record.
•Ensuring that there are always two (2) personnel on site as a safety requirement when outside physical work is being carried out.
·        Land Management
•Carrying out slashing of the whole site area, as part of the fire      safety around the outside of the perimeter fence.
•Carrying out poisoning of various areas on site around equipment, roads, fence-lines and other work areas.
•Carrying out brush cutting of the areas that can't be handled by the tractor and slasher.
•Mechanical and servicing maintenance on tractor, slasher, brush-cutter, fork-lift, and 200 litres spray unit.
·        Liaison duties with all site visitors, external contractors and inspectors such as:
•Petroleum & Gas Inspectorate.
•Safety & Health Section as required.
•Stanwell personnel as required-land owner of site.
•Qld Govt Dept of Environment and Resource Management when required - water sampling programme.
•Golder Associates for evaporation pond inspection and certification-annual requirement.
•Local suppliers in Kingaroy and surrounding district.
•Any companies that interested in purchasing any equipment or plant.
•Ergon Energy for any inspections or maintenance work they on HV power line.
56The Applicant also continued to develop and monitor its MNA strategy including beginning dosing the boreholes with magnesium sulphate dissolved in solution to a depth of 2010 metres into the coal seam enhance count of anaerobic bacteria found within the UCG gasifier cavity and sulphuric acid for pH correction in or about April 2013 based on the knowledge developed from the BARTs.
57As a consequence of the BARTs and application of MNA assisted by biodegradation of BTEX through chemical dosing, the Applicant was able to rapidly decommission and decontaminate the UCG Pilot Plant and recovered a significant amount of its financial assurance as a consequence of the near complete rehabilitation of the site (other than 2 groundwater wells, office and a shed, which remained on site for future use by the Applicant).’

The cross-examination process revealed inaccuracies in Mr Melik’s specific evidence for only an insignificant proportion of that evidence as identified above, and he made the concessions noted. However, and very substantially, his evidence was not subjected to critical challenges to the specifics of the activities he described as having been undertaken.
The challenges and concessions do not detract from the substantial body of his evidence which is consistent with demonstrated goals of re-starting and continuing the Pilot Project until at least June-July 2013, is consistent with Mr Elks’ evidence referred to below, and is evidence of activities that could be expected to be pursued by a company pursuing these ambitions. Apart from the concessions, his evidence is to be accepted. It is noteworthy that the First Tribunal made no criticism of his evidence or reliability or honesty.[51]
[51]First Tribunal reasons, [244].
The other challenge to Mr Melik’s evidence concerned establishing the Applicant’s purpose. According to the Respondent, because Mr Melik was not a director of the Applicant throughout the relevant periods, his evidence ought not be accepted in assessing the Applicant’s purposes for which it did things. The submission was made in the following terms:
‘In relation to purpose, which is a question in relation to issue 3, it’s to be recalled that Mr Melik was not a director of the Applicant until 2016 which was well after the issue – the years in issue in the proceeding. Even if he was a reliable witness he could not give probative evidence of the company’s purpose when he was not a director a relevant time.’[52]
…
‘In relation to the purpose… one would expect evidence of a director of the company’[53]
…
‘In relation to purpose – the company’s purpose, one would expect evidence from a director. In relation to the detailed minutia of a project, it would be entirely orthodox for someone with Mr Melik’s qualifications and positions within the company at the relevant times to give evidence.’[54]
[52]Remittal hearing transcript, 158 l 15-19.
[53]Remittal hearing transcript, 158 l 26-27.
[54]Remittal hearing transcript, 158 l 31-35.
The Applicant resists the Respondent’s submission. That resistance is to be accepted. It is difficult to understand how the Respondent’s submission could be made in circumstances where Mr Melik was a person with a very senior role in the Pilot Project, was a very senior contributor to the Pilot Project, and was instrumentally involved in its establishment, conduct and subsequent events.
Recognising that there are others like it, an example of establishing corporate purpose is found in Middleton J’s decision in Visy Packaging[55] and the references there to the decisions of:
(a)Chief Justice Gibbs in Whitford’s Beach[56] where his Honour indicated that a company’s purpose is found in the purposes of those who are the controlling minds of the company and it is not necessary for those controlling minds to be the minds of the directors in all cases;
(b)Justice Gordon in GE Capital[57] where her Honour found that a senior executive had implied authority by reason of office;
(c)Lord Reid and Viscount Dilhorne in Tesco Supermarkets[58] where the role of a director can be accepted as controlling in some circumstances but not necessarily all; and
(d)Justice Stephen in Smorgon[59] where his honour referred to consistent English authority that the state of mind of a company can be found in its managers.
[55]Visy Packaging Holdings Pty Ltd v Commissioner of Taxation [2012] FCA 1195, [200]-[209].
[56]Whitford’s Beach Pty Ltd v Federal Commissioner of Taxation Whitfords Beach (1982) 150 CLR 355, 370.
[57]GE Capital Finance Australasia Pty Ltd v Commissioner of Taxation [2011] FCA 849, [63]-[65].
[58]Tesco Supermarkets Ltd v Nattrass [1972] AC 153, 170-171 (Lord Reid), 187 (Viscount Dilhorne).
[59]Smorgon v Australia and New Zealand Banking Group Ltd (1976) 134 CLR 475, 482-3.
Contrary to the submission advanced, Mr Melik’s evidence can be accepted as evidence of both the Applicant’s purposes at a corporate level and, in the terms put by the Respondent, at the level of ‘detailed minutia of [the] project’, particularly in relation to the activities undertaken.
The FEED Document detailed what was to be involved in the Pilot Project activities and disclosed the context and objectives of the Pilot Project. Importantly, that context and those objectives included that the Pilot Project was not part of any other commercial activity that may have been undertaken in any event, and that environmental safety was a key consideration. Relevant extracts follow.
‘Introduction
Project Context
Cougar Energy Ltd is a new formed publicly listed Australian Company. Its main interest is in developing Underground Coal Gasification (UCG) projects. The project that is most progressed is at a site just south of Kingaroy, 160km northwest of Brisbane, Queensland.
Drilling results indicate a coal resource that could support a 400MW combined cycle gas turbine power generation plant in excess of 20 years.
To date there are no UCG facilities of this scale in the world, and none utilising a gas turbine to make electricity from the UCG syngas. Once the pilot facility has achieved its aims, the process will be scaled up. Experience with the pilot scale plant and other factors will determine the size and configuration of the first commercial scale gas turbine installed. Options include a nominal 39MW open cycle turbine, a nominal 11SMW open cycle turbine or a nominal 176MW combined cycle turbine. Further turbines would be subsequently added as confidence grows in the process.
This FEED document is for the Pilot Facility only.
Purpose of the Pilot Facility
The purpose of the pilot facility is to demonstrate:
•that the coal deposit selected produces a UCG gas that can be used to power a commercially available gas turbine
•that the UCG gas can be cleaned up to the requirements of the gas turbine
•that the process con be operated in a safe and environmentally responsible manner
As part of the operation of the pilot facility a series of trials with extensive monitoring will be carried out on all aspects of the technology associated with the process, particularly the environmental aspects.
Once the pilot facility objectives have been achieved and confidence in the UCG process has been gained, a larger scale plant can be built.
Purpose of Front End Engineering Definition (FEED)
The primary purpose of this document is to define Cougar Energy's requirements of the Pilot Facility with the main focus on hardware. This document will be used…’ [60]
[60]FEED Document, 3.
…
‘Underground coal gasification (UCG) is a process whereby coal is gasified in situ, without the need to first mine the coal, and then transport it to a purpose built gasifier. Apart from the benefits of not having to mine and transport the coal, UCG requires much less capital since no surface gasification reactor is needed for the process.’[61]
[61]FEED Document. 5.
…
‘Pilot Facility Considerations
Pilot Facility Operating Mode
A range of options have been considered. The UCG gas produced at the pilot scale could be flared or used to produce electricity in gas engines. Producing electricity using gas engines fed by UCG gas from the pilot scale facility has been ruled out. Investigations highlighted capital cost, delivery time and technical problems as issues. On this basis, the gas produced at the pilot scale will be flared.
…
It is proposed to operate the pilot facility for twelve months collecting the operating data and carrying out the technical trials necessary to be confident that a power plant could be successfully operated using UCG syngas as a feed. Following the twelve month period, a shutdown process (nominally six months) will be undertaken to halt the process and restore the site.
Preliminary Trial Program
There is a range of activities, trials and process monitoring required to achieve the pilot facility's objectives. They include:
• operating and monitoring UCG process in standard production mode over a range of injection flows and system backpressures
• linking in new wells
• determining optimum well spacing
• measure the composition of syngas produced for a range of gasifier operating regimes
• measure the composition of the syngas after gas cleanup [sic] (to ensure it is suitable for a commercially available gas turbine). Potentially trialling different packing types, depths, tower diameters and liquor rates. Potentially trial different Venturi Scrubber designs and liquor rates.
• establish vapour liquid equilibrium data for contaminants to be scrubbed from the syngas
• establish height of a cooling transfer unit for the scrubber packing
•trial different scrubber cooling rates to establish the optimum condensable vapour removal rate
•measure the composition of the co-product taroil produced and monitor how its composition changes with production rate
•measure the composition of the water produced and monitor how its composition changes with production rate
•trial alternate water treatment technologies
•monitor the impact on air quality of the flared gases
•monitor the impact on groundwater quality
•monitor the impact on groundwater level
•monitor for ground subsidence
•assess process controllability of the UCG wells and. gas separation operation
•assess materials of construction for larger plant design
•monitor pipework and equipment fouling
•assess instrumentation in the respective services
Environmental Considerations Groundwater
Due to the nature of the gases produced in UCG, there is the potential for groundwater contamination to occur. An extensive groundwater monitoring program is being put in place. It includes sampling of bores surrounding the gasifiers. Coal aquifer pressure is monitored during the process at a number of points surrounding the gasifiers to ensure that the injection pressure is maintained below the aquifer pressure.
Aqueous Emissions
Water from the process is sent to an evaporation pond. It will contain phenolic acids, ammonia and. other compounds. Whilst this is considered acceptable at a pilot scale, the water will need to be treated at the larger scale.
Hydrocarbons
The hydrocarbons produced will contain polyaromatic hydrocarbons, phenolic acids, BTEX, heterocyclics and other aromatics. A tank will be provided on site for a number of months storage however they will need to be sold or disposed of off site. This is the subject of further investigation by Cougar Energy.’[62]
…
[62]FEED Document, 11-12.
The FEED Document also revealed that the Applicant was aware of a range of relevant standards and regulatory matters which either affected or had the potential to affect the Pilot Project. Relevant extracts follow.
‘Standards
Design standards:
•AS1210
•AS1940
•Pressure Piping
•API 5CT
•Hazardous Area Classification
•Confined spaces
Relevant Safety, Health and Environmental Legislation:
•Petroleum and Gas (Production and Safety) Act & Regulation 2004 - this regulates operation of the facility above and below ground level
•Dangerous Good Safety Management Act 2001
•Dangerous Good Safety Management Regulation 2001
•Environmental Protection Act 1994
•Environmental Protection Regulation 1998
•Environmental Protection (Air) Policy 1997
•Environmental Protection (Noise) Policy 1997
•Environmental Protection (Water) Policy 1997
•Code of Environmental Compliance for Exploration and Mineral Development Projects
Licenses
•EPA license conditions for the Project
Plans
•Environmental Management Plan created for the project MDL Application
Helpful Documents:
•SafeOP for petroleum and gas (A guide to legislative requirements for operating plant)’.[63]
[63]FEED Document, 30.
The PEP also disclosed context and objectives of the Pilot Project, importantly that it was not part of any other commercial activity that may have been undertaken in any event and that environmental safety was a key consideration. The PEP disclosed:
‘Before investment in electrical generating export capability is made, a pilot facility is recommended. Operation of the facility would demonstrate:
•that the coal deposit selected produces a UCG gas that can be used to power a commercially available gas turbine
•that the UCG gas can be cleaned up to the requirements of the gas turbine
•that the process can be operated in a safe and environmentally responsible manner
This UCG gas produced at the pilot scale could be flared or used to produce electricity in gas engines. Producing electricity using gas engines fed by UCG gas from the pilot scale facility has been ruled out. Investigations highlighted capital cost and delivery time as issues. On this basis, the gas produced at the pilot scale will be flared.
This PEP details only the activities involved with this pilot plant project. The full scale commercial plant project will be detailed in a separate PEP at the time of full project commencement.[64]
[64]PEP, 1.
…
4OBJECTIVES, EXPECTATIONS AND CRITICAL SUCCESS FACTORS
4.1 Project Objectives
Cougar Energy Business Objectives
To support the future development and execution of a commercial size UCG facility, delivering either electrical generating export capability or gas feedstock for use in further chemical processes, a pilot plant will be installed to obtain detailed process characteristics of a UCG facility in the Kingaroy region. Operation of the facility would demonstrate:
•that the coal deposit selected produces a UCG gas that can be used to power a commercially available gas turbine
•that the UCG gas can be cleaned up to the requirements of the gas turbine
•that the process con be operated in a safe and environmentally responsible manner
4.2Project Key Performance Indicators (KPls)
Key Performance Indicators (KPls) for this pilot plant will be:

Category

Kev Performance Indicator (KPI)

Target Level

Safety

LTIR

0 (per 200,000 man-hours)

Capital Cost

Project Forecast

Within +/-10% of budget following full concept design of the plant

Schedule

Handover commissioned pilot plant

July 2009

Quality

Construction Rework

< 2% of Installed Cost

Environment & Community

Environmental Incidents

Community Impacts/Protests

Nil

Nil

Performance Data

Document technical data after start up

Monthly reporting following start up

’[65]
[65]PEP, 11.

The PCA identified potential environmental safety issues associated with the Pilot Project:
‘7.Environmental Issues and Permitting
As with any project, there is a range of environmental issues relating to approvals processes that must be considered in project development. These include:
•Minimal disturbance of land
•Compliance with statutory requirements
•Rehabilitation to an acceptable post-disturbance land use capability
•Rehabilitation to a stable post-disturbance land form
•Preservation of downstream water quality
•Minimal impact on air quality
•Control and management of storm water run off
•Minimal impact to groundwater
•Protection of flora and fauna
•Noxious plant and weed control
•Site contamination
•Waste management
•Erosion and sediment control
•Subsidence
•Groundwater
•Air Quality
•Odour
•Noise
•Social impact
•Cultural archaeology and heritage
•Monitoring, reporting and auditing
Individual issues will need to be assessed in detail in a site-specific manner.’[66]
[66]PCA, 23.
The Applicant’s intentions to continue its Pilot Project, if it could, were revealed by its unsuccessful 2011 application heard in the Queensland Planning and Environment Court, by its public statements about what it was doing in the 2012 to 2014 Years, and by its subsequent formal abandonment of attempts to revive the project in July 2013. These objectives are revealed clearly in Mr Elks’ evidence and the statements to which he refers in his evidence:
‘22.On 7 July 2011, DERM issued an amended environmental authority, a copy of which is at enclosed at T72-963 (the “Amended Authority”). Broadly, the Amended Authority limited the scope of approved activities that the Company was permitted to undertake at the Kingaroy site to decommissioning, rehabilitation, care and maintenance of the site. As set out in the ASX Announcement dated 8 July 2011 (Annexure JE-7, Folder 1), once the Amended Authority had been issued, the Company sought legal advice in relation to the shutdown of the pilot plant and the Amended Authority issued by DERM.
23.Following DERM issuing the Amended Authority, the Company worked toward identifying legal avenues that were available to it in relation to the Amended Authority and the actions of DERM. In late 2011, the Company initiated the following legal proceedings:
23.1.an appeal to the Planning and Environment Court in Queensland seeking orders to overturn the amendments to the Amended Authority; and
23.2.an action in the Supreme Court of Queensland against the State of Queensland and a number of government department officials seeking damages for the loss caused by the closedown of the Kingaroy site.
The Company initiated these legal proceedings to have the Amended Authority overturned so that it could continue with the operation of the UCG pilot plant. A high level summary of the legal proceedings that the Company initiated are set out in the presentation given by the Company to the 2011 Annual General Meeting of Shareholders on 28 October 2011 at Annexure JE-8, Folder 1 and the Cougar Energy Limited Annual Report 2012 which is at Annexure JE-9, Folder 1.
24.Because of the Company’s belief that it would ultimately be permitted to continue its experimental trial of its UCG pilot plant at Kingaroy, the Company prepared a commissioning and operating budget for the restart at some time in around 2011. A company of that budget is at Annexure JE-10, Folder 1.
25.On 21 December 2011, Queensland’s Planning and Environment Court handed down its decision in Cougar Energy Limited v Debbie Best, Chief Executive Under the Environmental Protection Act 1994 [2011] QPEC refusing the Company’s application for a stay pending an appeal against the decision made by the Chief Executive to issue the Amended Authority on 7 July 2011. A copy of that decision is at Annexure JE-11, Folder 1. Relevantly, at paragraph [8] of the judgment, the Court noted of the Company’s UCG pilot plant project as part of the Queensland Government’s policy on UCG: “The technology and methodology involved is largely unproven, thus the limitation on the process to pilot projects”.
26.An update on the status of the Company’s appeal against the Amended Authority, and the legal action commenced by the Company against the State of Queensland and DERM officials seeking damages, is provided in the running notes for the Company’s extraordinary general meeting of its shareholders held on 3 April 2012 (at Annexure JE-12, Folder 1).
27.On 16 July 2012, the Company also received a letter of comfort from Ergo Exergy deferring the date for payment of its invoices (at Annexure JE-13, Folder 1). The terms of the letter reflected the fact that the Company was continuing to seek approval to re-ignite its UCG pilot plant trial, as it stated: “In the event that Cougar achieves funding for a new pilot burn prior to 30 September 2013, the parties will negotiate in good faith for payment of the invoices prior to commencement of that pilot burn”.
28.In response to the Amended Authority, the Company also prepared a request for internal review of the decision to amend Environmental Authority MIN100656507. A copy of the request dated 2 August 2012, and its covering letter, is enclosed at Annexure JE-14, Folder 1 (the “Internal Review Request”). The Internal Review Request was prepared by the Company with the assistance of its solicitors for the purpose of obtaining specific details of what DERM required from the Company in order to allow the project to proceed at an acceptable risk. As set out in the Internal Review Request, the Company had made appropriate responses to the casing breakage and implemented “new procedures on the ground, by installing two new wells with a modified installation procedure with a view towards a proposed recommencement of gasification”. The Company was also willing to consider any operational improvements requested by DERM to allow its operations to continue. The Company had requested this information as part of its efforts to continue operating the UCG pilot plant at Kingaroy.
29.As part of the Internal Review Request submitted by the Company, the Company also provided a “Report to Department of Environment and Resource Management” dated 16 August 2011, a copy of which is enclosed at JE-15, Folder 1. This document was prepared following the issuance of the Amended Authority by DERM and was submitted to DERM as an annexure to the Internal Review Request. The document outlined a number of the issues considered by GHD as part of their development of a groundwater management plan (attached at Appendix A of the Report).
30.In September 2012, the Company prepared an Operational Action Plan, a copy of which is at Annexure JE-16, Folder 1, which set out the activities that the Company was undertaking in relation to the Kingaroy pilot plant as well as its other projects. The activities set out in the Operational Action Plan were being undertaken by the Company in preparation of re-ignition, although the Company contemplated that shutdown might potentially be an option.
31.Although the Company continued to work toward being granted permission to recommence its UCG pilot plant trial into 2013, the Board of the Company ultimately decided in June 2013 that it would cease its efforts to re-ignite the project and on this basis would abandon the project. I was intimately involved with the Company’s decision to abandon the trial as I was a major shareholder of the Company at the time and I was approached to undertake a removal of the board in March 2013, to effectively close down the UCG attempts and actions, thereby allowing the company to focus upon coal. This strategy under section 249D of the Corporations Act 2001 (Cth) was successful and a new board was instated with my backing as a major shareholder to close down the UCG actions, hence the formal decision was made in June 2013 whilst negotiations were undertaken with Government to settle the matters. It is certain in my mind, if this action had not been taken by the major shareholders, the Company would have continued its efforts to re-ignite and restart the project through it protracted legal rights, actions and continued on site evaluations and efforts.
32.Shortly after making that decision, the Company began to explore settlement options with DERM and the State of Queensland. The presentation notes prepared for a meeting with Andrew Chesterman and Dan Hunt on 15 July 2013 records one such settlement proposal (at Annexure JE-17, Folder 1).
33.On 26 July 2013, the Company released an ASX announcement, a copy of which is at Annexure JE-18, Folder 1. The ASX announcement confirmed that the Company had “reached agreement with the Defendants in the two civil actions it issued” and that the Company would now “continue to work with the Queensland Department of Environment and Heritage Protection to agree a plan of rehabilitation for the Kingaroy site”. It was at this point that the Company began to undertake activities in relation to the rehabilitation of the Kingaroy site. This included continuing to develop a monitored natural attenuation rehabilitation plan in conjunction with GHD which had been ongoing since late 2011, for the sole purpose of the re-ignition and trial, however now focused upon the closure of the site.’[67]
[67]Statement of Alexander Jason Elks dated 15 June 2016.

Whether the activities claimed to be supporting activities are to be accepted as such turns upon whether they are directly related to the core activities as contended for by the Applicant. The concept of what is and what isn’t directly related goes to the heart of one of the issues in dispute.
The Respondent contends:
‘63The requirement of a direct relationship is clearly a limiting one. What is required is a “direct and close” relationship, in the sense of an “immediate” relationship. The ordinary meaning is confirmed by the relevant Explanatory Memorandum:
Activities that are directly related to core R&D activities, in that they have a direct, close and relatively immediate relationship with the experimental activities (but without being part of the experiments themselves), can be supporting R&D activities.
64The use of the adverb “directly” requires more than a mere “but for” or causal connection. It is insufficient that the activity in some way facilitated one or more core R&D activities or that it is a part of the same commercial project. Thus, there must be a direct, close and immediate relationship between the specific “supporting R&D activity” and one or more specific “core R&D activities”. The longer the period of time that elapses between a “core R&D activity” and an activity said to be supporting it, the less likely it is that the latter can be said to be “directly related” to the former.
65Moreover, the requirement of a direct, close and immediate relationship is concerned with more than a mere temporal connection. Where there are intervening events which alter or change the nature of the activities being conducted (e.g. an environmental incident), the less likely that later activities will be sufficiently direct or close to a former “core R&D activity”. This is because the later activities are qualitatively of a different character: they are conducted not to support the experimental activities, but in response to the intervening event.’ (Citations omitted)[69]
[69]Respondent’s Outline of Submissions dated 4 February 2020.
The Respondent also refers to the Mt Owen[70] and RACV[71] decisions.
[70]Mt Owen Pty Ltd v Innovation Australia (2013) 137 ALD 88, 108[153], (Deputy President Tamberlin).
[71]RACV Sales and Marketing Ltd v Innovation Australia (2012) 129 ALD 32,112 [232].
Possibly in recognition of the strength and conventional soundness of the Respondent’s submission, and notwithstanding the acknowledgement that the term ‘directly’ may well have different connotations in different contexts (for all practical purposes an acknowledgement that the term is ambiguous such that the Interpretation Act,[72] s 15AB(1)(b)(i) threshold condition allowing resort to extrinsic materials is satisfied), the Applicant contends that the statutory text and context govern the interpretation of the term ‘directly related’, that there is no need to resort to the EM, and that the decision of Deputy President Tamberlin in Mt Owen insofar as it is to the effect that the term “directly related” requires a direct close and relatively immediate relationship with the experimental activities is not based on any authority. The Applicant refers to the High Court decision in Saeed[73] and the references there to the decisions in Catlow[74] and Wik.[75] The Applicant also refers to the joint decision in Alcan Alumina,[76] and the decisions in Cooper Brooks,[77] HFM043,[78] Collins,[79] and Murry.[80]
[72]Acts Interpretation Act 1901 (Cth).
[73]    Saeed v Minister for Immigration & Citizenship (2010) 241 CLR 252, 264-265.
[74]    Catlow v Accident Compensation Commission I 989) I 67 CLR 543, 550.
[75]    Wik Peoples v Queensland (1996) 187 CLR 1, 168-169.
[76]    Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27, 46-47 [47].
[77]Cooper Brooks Wollongong (1981) 147 CLR 297, 304.
[78]    HFM043 v The Republic of Nauru (2018) 92 ALJR 817, 820 [24].
[79]    Northern Territory v Collins (2008) 235 CLR 619, 642 [99] (Gummow ACJ and Crennan J); at 623 [16] (Kirby J).
[80]    Commissioner of Taxation (Cth) v. Murry (1998) 193 CLR 605, 632.
Further the Applicant refers to O’Grady[81] to the effect that the words ‘related to’ are generally words of broad import and as a consequence the Applicant contends that the relationship must be direct in order to meet the requirements of s 355-30 and there is no further requirement that the relationship be close or immediate. The Applicant contends that the Respondent’s submissions place an unnecessary and an unwarranted gloss on statutory language and that there is no statutory warrant for the submissions that there must be a ‘direct close and immediate relationship between the specific supporting R&D activity and one or more specific core R&D activities’. Further the Applicant contends that a time gap between the occurrence of the Core R&D Activity and an activity said to be supporting it is also not an exclusionary factor. The Applicant refers to Coal & Allied Operations[82] where Lindgren J said:
‘One activity can be carried on “for a purpose directly related to” the carrying on of another activity even though that other activity is completed by the time the activity in question begins.’
[81]O’Grady v North Queensland Coal Limited (1990) 169 CLR 356, 374, 376.
[82]Industry Research & Development Board v Coal & Allied Operations Pty Ltd (2000) 101 FCR 405, 431 [106].
Quite clearly his Honour acknowledged that there can be a time gap between an activity said to be a supporting activity because it is directly related to a core activity and the carrying on of the core activity.
The current research and development tax concession rules are a modification and transition of the former similarly styled rules in s 73B[83] and following of the 1936 Assessment Act.[84] The predecessor regime was also a system that embraced both direct research and development activities and activities related thereto. A deduction was allowed for expenditure that satisfied a number of conditions. What are now defined as Core R&D Activities for the R&D concession purposes have their origins in paragraph (a) of the s 73B definition of research and development activities. What are now defined to be Supporting R&D Activities have their origins in paragraph (b) of that s 73B definition. And what appears now as the s 355-25(2)(f) exclusion has its origins in s 73B(2C)(l).
[83]Inserted by Income Tax Assessment Amendment (Research and Development Act) 1986 (Cth).
[84]The Income Tax Assessment Act 1936 (Cth).
Relevant aspects of the rules applicable immediately before modification and transition to the 1997 Assessment Act were in the following terms:
‘S 73B(1)
…
research and development activities means:
(a)systematic, investigative and experimental activities that involve innovation or high levels of technical risk and are carried on for the purpose of:
(i)acquiring new knowledge (whether or not that knowledge will have a specific practical application); or
(ii)creating new or improved materials, products, devices, processes or services; or
(b)other activities that are carried on for a purpose directly related to the carrying on of activities of the kind referred to in paragraph (a).
research and development expenditure, in relation to an eligible company in relation to a year of income, means expenditure (other than …) incurred by the company during the year of income, being:
(a)contracted expenditure of the company;
(b)salary expenditure of the company, being expenditure incurred on or after 1 July 1985; or
(c)other expenditure incurred on or after 1 July 1985 directly in respect of research and development activities carried on by or on behalf of the company on or after 1 July 1985;
and includes any eligible feedstock expenditure that the company has in respect of the year of income in respect of related research and development activities.
…
S 73B(2C)
For the purposes of this section, the following activities are taken not to be systematic, investigative and experimental activities:
…
(l) activities associated with complying with statutory requirements or standards, such as the maintenance of national standards, the calibration of secondary standards and routine testing and analysis of materials, components, products, processes, soils, atmospheres and other things;
…’
When enacted the concepts of an activity being directly related to another activity and of an excluded activity were explained in the following way:
‘"research and development activities" is a term that is fundamental to the operation of new section 73B. It is only these activities expenditure in relation to which can qualify for the concession provided by the section. …
Other activities carried on for a purpose directly related to the carrying on of activities of the above-mentioned kind are also research and development activities, provided those directly related activities are carried on in Australia or an external Australian Territory (paragraph (b) of the definition).
….
The reference to other directly-related activities makes provision for activities which are integral to, and are undertaken in direct support of, a research and development activity.
Without limiting the range of other activities that may be included, but subject to the requirement that there must be direct links to research and development activities, the activities referred to are:
· Industrial design - that is, a creative activity the aim of which is to determine the formal qualities of objects to be ultimately produced by industrial processes. These formal qualities are not only the external features but principally those
…
Certain activities that might otherwise fall within the meaning of "research and development activities" are specifically excluded from the meaning of that term by sub-section 73B(2) - see notes on that sub-section.
Without limiting the specific activities which may fall within or outside the definition of research and development activities on the basis of the primary criteria, certain activities which may be seen as being close to research and development but nevertheless fall outside of the definition are –
·pre-production activities such as planning or demonstration of commercial viability, tooling-up, trial and production runs;
·routine data collection, except where such activities are part of the research and development process;
·preparing for teaching;
·commercial, legal and administrative aspects of patenting, copyrighting or licensing activities;
·costs associated with standards compliance - that is, the maintenance of national standards, the calibration of secondary standards and routine testing and analysis of materials, components, products, processes, soils, atmospheres, etc;
·specialised routine medical care;
·any duplication of commercial products or processes – “duplication” means any activity related to reproduction of a commercial product or process arising from physical examination of an existing system or from plans, blueprints, detailed specifications or publicly available information.’[85]
[85]Income Tax Assessment Amendment (Research and Development) Bill 1986 (Cth), Explanatory Memorandum, p 13 et seq.
As noted, the Respondent relies on the EM, and particularly the terms extracted above, to give meaning and life to what might otherwise be described as a general and vague composite term ‘directly related’.
The content of the EM extracted at [63] of the Respondent’s submissions noted above is not the full explanation of what was intended by the concept ‘directly related’. The relevant content of the EM is as follows:
‘Supporting R&D
1.18Supporting R&D activities are activities directly related to core R&D activities or, in the case of production activities (or any activities excluded from being core R&D activities), undertaken for the dominant purpose of supporting core R&D activities.
1.19Under the R&D Tax Concession, supporting R&D activities were undertaken for a purpose directly related to conducting core R&D activities.
1.20 The new definition of ‘supporting R&D activities’ imposes a stricter test on activities that an entity is more likely to be undertaking for normal operational reasons. However, such activities remain eligible where the dominant purpose for conducting them is to support core R&D activities.
1.21Chapter 2 provides further information about the definition of supporting R&D activities.
…
Supporting R&D activities
2.21Activities that are directly related to core R&D activities, in that they have a direct, close and relatively immediate relationship with the experimental activities (but without being part of the experiments themselves), can be supporting R&D activities. Supporting R&D activities can occur before, at the same time as, or after the experimental activities and at either a proximate or remote location. [Schedule 1, item 1, subsection 355‑30(1)]
2.22As a general rule, activities directly related to core R&D activities can be eligible for the R&D tax incentive along with their associated core R&D activities. This reflects the fact that supporting activities will usually be required in order for the targeted core R&D activities to take place. However, where supporting activities would have been undertaken anyway for normal operational reasons, they do not impose an additional cost on the company that arises from its R&D activities and so the R&D tax incentive is not intended for them. In particular, it is not intended that the R&D tax incentive cross‑subsidise normal production activities. Accordingly, production activities will only be eligible where the dominant (or sole) purpose for conducting them is to support core R&D. Production activities are those that produce goods and services, along with their directly related activities. Production activities can range from a once-off activity to mass production. [Schedule 1, item 1, paragraphs 355‑30(2)(b) and (c)]
2.23This dominant purpose test also applies to activities that are on the exclusions list (see below). [Schedule 1, item 1, paragraph 355‑30(2)(a)]
2.24Dominant purpose means the prevailing or most influential purpose. Implicit in the dominant purpose test is the acknowledgment that activities can serve, or be conducted for, more than one purpose. Accordingly, the fact that an activity serves a commercial objective as well as being directly related to R&D does not preclude it from qualifying as supporting R&D.
2.25Conversely, the fact that certain activities are necessary in order for core R&D to occur is not sufficient to show that those activities are undertaken for the dominant purpose of supporting core R&D. Nor will the test be satisfied merely because the activities occur in close proximity (either time or location) to the experimental activities. These qualifications can be particularly significant where core R&D is conducted in the context of normal production.
2.26In discerning the purpose for undertaking an activity, regard must be had to the overall circumstances within which the activity is conducted. Being a purpose test, it is possible that activities that are similar in appearance might qualify as supporting activities in one context, but not in another. A critical consideration will be the extent to which the activities in question also achieve outcomes (particularly production or other commercial goals) over and above assisting the conduct of the core activities, and the importance of those outcomes.
2.26Activities required to support an experiment that are in addition to routine activities — such as additional monitoring or output inspections — would normally be considered to be undertaken for the dominant purpose of supporting the experiment. Factors such as the extent to which normal production practices are disrupted or the risk that production outcomes will be significantly compromised will be relevant in determining whether the experimental activities are taking advantage of an essentially normal production run, or whether the production run is being conducted for the dominant purpose of facilitating the experiment. The examples appended to this chapter illustrate the considerations that can be relevant in various contexts.’ (Emphasis added)
It is apparent that the current legislation is a continuation of the former in many respects and calls for identification of linkages between experimental activities and non-experimental activities.
The reference to the EM as an assistance technique as asserted by the Respondent in the present circumstances is wholly warranted. The terms ‘directly’ and ‘related to’ are ambiguous terms capable of varying meanings. In those circumstances it is appropriate to look to the EM to see which among multiple options is the preferred construction. Further it is not apparent that Deputy President Tamberlin was wrong in Mt Owen. To the contrary, his Honour’s approach to the construction of the term ’directly related’ requiring a direct and close relationship between the related activity and the carrying on of the Core R&D Activity is to be preferred. Whether that test is satisfied in the circumstances of a particular case calls for a wholistic analysis of all of the circumstances.
The contended for connection between all of the Remaining Core Activities and the registered Supporting Activities in the 2012, 2013 and 2014 Years is appropriately concluded on any of three bases:-
(a)first, and without resort to the EM, in the circumstances of the present application where the Pilot Project was undertaken for the purposes of working out whether a UCG process was viable in a technical sense and in an environmental sense, and where remediation of the site to be effected after operational Pilot Project activities had concluded was an incidental part of the project from the outset, and where remediation calls for environmental testing so as to ascertain and/or determine any environmental remediation required, the steps taken in the 2012, 2013 and 2014 Years can be seen to be directly connected to, and an incident of, the Pilot Project activities that were actively commenced and undertaken in the 2010 Year such that the necessary direct relationship exists;
(b)second, and again without resort to the EM, in circumstances where the Pilot Project had no parallel commercial activities both the project failure and the activities undertaken in the 2012, 2013 and 2014 Years are not properly to be seen:
(i)in isolation as other than being directly related to the Pilot Project; or
(ii)as being related to anything other than the Pilot Project,
such that the same conclusion is reached; and
(c)thirdly, having regard to the EM it is quite apparent that the directness needs to be relative. Either the object, or a significant object, of the direct relationship test is to separate out activities and expenditure on activities that would have occurred in any event irrespective of the undertaking of research and development activities from those activities which are only or predominantly connected with undertaking research and development activities, so as not to afford a concession in relation to expenditure which would have been incurred in any event. Here there were no other activities apart from the Pilot Project such that the necessary direct relationship exists.
It will be noted that the proposition advanced by the Respondent is that there must be a direct close and immediate relationship. The EM qualified any immediacy aspect or requirement by using the word ‘relatively’. That qualifier allows a range of possibilities depending on the circumstances. The circumstances in the present case include an unplanned for event that caused an environmental problem with the project that ultimately led to its discontinuance. The Respondent contends that the requirement for a direct close and immediate relationship would not be satisfied where there are intervening events which alter or change the nature of the activities being conducted and make it less likely that the latter activities will be sufficiently direct or close to a former Core R&D Activity. The Respondent contends that this is because the latter activities are qualitatively of a different character: they are conducted not to support the experimental activities but in response to the intervening event.

Whether the intervening event submission can be accepted in all cases is open to question.
In the present circumstances there was the environmental incident which might be seen as one that the Applicant and its employees and executives neither expected nor wanted. However, one of the fundamental goals of the project was to obtain knowledge as to whether the UCG process could be used to extract usable gas at the particular site, and importantly, in an environmentally safe way. In such a setting, steps taken to deal with environmental matters can be seen to be part of the Pilot Project and the goals that the project sought to achieve, and part of the set of responsibilities those conducting it were to assume and observe. In that setting the environmental incident ought not be seen as an intervening step that changed the character of relevant activities or broke the necessary nexus of the asserted activities from the Core R&D Activities. It is better viewed as an event which added to the Pilot Project activities that needed to be performed within the set of Pilot Project possibilities from the outset without any change in character at all.
Having regard to the EM, it is apparent that the predominant, if not sole, rationale for the direct relationship requirement for activities to qualify as supporting activities is to differentiate between activities that would have been undertaken in any event from activities undertaken in pursuit of research and development activities. This separation is one way of ensuring that a concession is not allowed for expenditure that would have been incurred in any event. Close proximity in time and or location are not the determinative criteria. They can be seen as indicators which assist in the separation required. Where there is no other activity of a commercial or routine nature carried on to which the activities in question could be related, and the only activities to which they could be related are research and development activities, then the proximity in time and/or location are not so pivotal, if pivotal at all. In the present circumstances the entire project was an experimental Pilot Project entailing flaring the syngas produced, and a projected dismantling project infrastructure and remediation of the site at its conclusion. There was no element of parallel commercial operations. Everything that was done was related to that project and nothing else. It follows that the direct relationship criterion was satisfied.
Accordingly, the classification of disputed 2012, 2013 and 2014 Year activities can be determined before the disputed activity in the 2010 Year is addressed. The relevant activities in the 2012, 2013 and 2014 Years were directly related to those 2010 Year Core R&D Activities that are no longer contested.
Dominant purpose
It is clear that from before the initial construction of the Pilot Project facilities and ignition of the coal seam, the Applicant knew it was bound by and required to observe environmental conditions. In this regard the terms of the FEED Document and the PEP extracted above acknowledge as much. Those conditions were altered over time but were never released.
The environmental testing and monitoring and remediation activities were both directly related to the Pilot Project and had a connection with, and were potentially informed by, relevant statutory and other obligations with which the Applicant was obliged to comply. In that sense these activities were associated with those statutory or other obligations.
Adopting an assumption that the threshold for an activity to be excluded by s 355-25(2)(f) is any association, the lowest threshold available and one urged by the Respondent, and an assumption that might cause a greater exclusion than the statute requires, for the environmental testing and monitoring and remediation activities to be Supporting R&D Activities they need to have been undertaken for the dominant purpose of their direct relationship with the Pilot Project.
The Respondent contends that the environmental testing and monitoring and remediation activities were undertaken so as to comply with statutory or other obligations with which the Applicant was required to comply, and that was the relevant dominant purpose.
It can be accepted that the Applicant had statutory or other obligations that developed over time. However, as noted above, it is also necessary to realise that environmental monitoring was an incidental part of the Pilot Project from the outset as a principal objective was to establish whether the process could be undertaken in a manner that was viable and environmentally safe. From the outset there was also an incidental aspect of the project to rehabilitate the relevant land after the conclusion of the Pilot Project, and an obligation to do so. Those rehabilitation activities would necessarily require environmental monitoring and steps taken to both monitor and assist in remediation.
Establishing MNA as an acceptable rehabilitation strategy is to be regarded as part of those Pilot Project activities.
The fact that it is necessary to look for the dominant amongst multiple purposes for which activities associated with complying with statutory obligations and the like are undertaken means that just because the activities happen to be activities associated with complying with statutory obligations does not disqualify them from being Supporting R&D Activities.
Given that the disputed activities all had a direct relationship with the Pilot Project and the activities connected with Pilot Project that were undertaken in the 2010 Year, were an incidental aspect of what was always a Pilot Project, and have no connection with any other activities that can be pointed to, the correct conclusion to reach is that the dominant purpose of those activities was the relationship to and with the Pilot Project and the discharge of planned activities associated with that project. For the 2012 and 2013 Years where the objectives were to demonstrate that the Pilot Project could be undertaken in an environmentally safe way so as to restart it, the connection is stronger and the purpose more dominant. It is difficult to conceive that the environmental activities could only be related to the relevant statutory obligations.
In the present circumstances the statutory obligation informed the manner in which the environmental testing, monitoring and rehabilitation activities, which were always planned to be part of the project, would be carried out but that does not alter the relevant connection with the project in a way that disqualifies those activities from being Supporting R&D Activities. Just as the manner in which a dangerous activity may be undertaken so as to protect employees from risk, and so comply with occupational workplace safety and health obligations, the relevant obligations here can be seen as framing the manner in which the activities associated with the project were to be undertaken rather than going further and being such as to disqualify those activities.
Disputed 2010 Registered Activities
The disputed 2010 Year registered activity, namely ‘testing and evaluation of gas production and plant performance … to ensure environmental standards are met’, went to the heart of the experimental activities, because the experimental activities were activities conducted to establish whether the UCG process could be conducted at the Kingaroy site in an environmentally safe manner. Without testing it would be impossible to know the answer to that question. In that sense the disputed 2010 Year activity goes to the core or the heart of the experimental activities and ought not be excluded under s 355-25(2)(f).
However, the relevant exclusion is one that requires an examination to see whether the activity was associated with compliance with any relevant statutory requirements or standards. If the threshold for an activity to be excluded by s 355-25(2)(f) is any association, an assumption that might inappropriately exclude some activities as noted above, then the testing and related activities required to ensure that environmental standards were met would be excluded from being a Core R&D Activity.
However, all testing to determine whether environmental standards were met, and all other activities conducted in the 2012, 2013 and 2014 Years, whether required by conditions imposed on the Applicant by the terms of its permits, authorities and licences throughout the Pilot Project, were directly linked to the activities which were both conducted and accepted as Core R&D Activities in the 2010 Year. As a consequence, whether the disputed element of the 2010 Year registered activities was a Core R&D Activity or a Supporting R&D Activity does not impact the substantive dispute between the parties.
Decision
The decision of the Respondent dated 21 December 2015 is set aside and substituted with the following:
The activities referred to as Remaining Core Activities 1 to 7, and the activities registered as Supporting R&D Activities for the 2012, 2013, 2014 Years are Supporting R&D Activities in relation to Core R&D Activities of and for the 2010 Year.

I certify that the preceding 108 (one hundred and eight) paragraphs are a true copy of the reasons for the decision herein of Deputy President F D O'Loughlin KC

............................[sgd]............................................
Associate
Dated: 21 September 2022

Date(s) of hearing: 10, 11, 12 February 2020, 2 September 2022

Counsel for the Applicant: Mr P Bickford

Solicitors for the Applicant: Irish Bentley Solicitors

Counsel for the Respondent:
Dr S Pritchard SC
Mr T Prince

Solicitors for the Respondent: King & Wood Mallesons
Appendix 1 – Agreed Materials relied upon by Parties in the Remittal
Documents Relevant to the Full Court Appeal

Amended notice of Appeal dated 15 February 2019
Applicant’s Outline of Submissions dated 5 April 2019
Respondent’s Outline of Submissions dated 12 April 2019
Applicant’s Reply dated 23 April 2019
Notice of Contention (by Respondent) dated 3 May 2019
Table tendered by the Respondent titled ‘Summary of registered activities, registered as core activities, in the relevant income years with reference to the parties’ submissions’ dated 7 May 2019
Transcript of Proceedings 6-7 May 2019
Witness statements & Reports
Materials Filed at first instance
Environmental Protection Order (marked Exhibit 1 by Deputy President Forgie) dated 17 July 2010
Witness Statement of Valerie Melik dated 16 June 2016
Witness Statement of Jason Elks dated 15 June 2016
Witness Statement of Jason Elks dated 19 January 2017
Joint report of Dr Steve Pearce and Mr Rick Dobbs dated 13 October 2016
Report of Dr Robert McLaughlan dated 13 October 2016
Report of Dr Lloyd Townley dated 1 December 2016
Supplementary report of Dr Robert McLaughlan dated 19 January 2017
Material filed on remittal
Witness statement of Valeri Melik dates 15 November 2019
T- documents relied upon
T-1 Application for Review dated 18 February 2016
T-2 Section 37 Statement dated 22 March 2016
T-3 Statement of Issues for First Conference dates 22 March 2016
T-4 Document titled "Underground Coal Gasification: A Clean Coal Technology Ready for Development" authored by Len Walker October 1999
T-5 Paper to 2001 Gasification Technologies Conference, San Francisco, titled "An GCC Project at Chinchilla, Australia Based on Underground Coal Gasification (UCG)" October 2001
T-12 Cougar Energy document titled "Kingaroy Pilot UCG Project - Front End Engineering Definition" dated 27 May 2008
T-15 Access Permit Number: MINl 00656507 dated 24 October 2008
T-17 Cougar Energy document titled "Cougar on Target for Pilot Bum Start-Up at Queensland Underground Coal Gasification Power Project" dated 16 January 2009
T-18 Mineral Development Licence No.385 dated 22 February 2009
T-26 Cougar Energy Limited Annual Report 2009 dated 30 September 2009
T-27 Access Permit Number: MINl 00656507 dated 15 October 2009
T-29 Cougar Energy document titled "Kingaroy Pilot Plant Update" dated 27 April 2010
T-30 Document titled "2008-09 Application Form for Registration of R&D Activities" dated 30 April 2010
T-31 Letter from S Brown, Auslndustry, to R Watson, Cougar Energy "Notice of Registration for R&D Tax Concession" dated 15 May 2010
T-32 Printout of Queensland Government webpage titled "Cougar Energy ordered to keep its UCG Kingaroy plant closed" dated 15 June 2010
T-37 Kingaroy Power Project Pre-Feasibility Study dated 16 August 2010
T-45 R&D Tax Incentive Application for income period 2009-10 dated 3 December 2010
T-46 Letter from S Brown, Auslndustry, to R Chandra, Cougar Energy "Notice for Registration for R&D Tax Concession" dated 7 December 2010
T-47 Cougar Energy document titled "Update - Kingaroy Environmental Assessment Reports Lodged and Results from Latest Water Sample Tests” dated 13 December 2010
T-48 Cougar Energy document titled "Kingaroy Water Tests Continue to be Within Australian Drinking Water Guidelines" dated 14 December 2010
T-49 Cougar Energy document titled 'Kingaroy Test Results Below Detectable Levels" dated 20 December 2010
T-50 Cougar Energy Annual Safety Report 2011 for the Kingaroy Pilot Plant
T-51 Document titled "Kingaroy Water Test Results Update" dated 7 January 2011
T-53 Document titled "Summary of considerations and recommendations on the Environmental Evaluations of Cougar Energy" dated 24 January 2011
T-54 Document titled "Report of Independent Scientific Panel (ISP) on Cougar Energy's Underground Coal Gasification Trial Project at Kingaroy, Queensland- Response by Cougar Energy Ltd" dated 28 January 2011
T-56 Email from Moore Stephens to Auslndustry titled "Cougar Energy Limited: R&D - Auslndustry" attaching letter from Moore Stephens to Auslndustry dated 14 March 2011
T-59 Email chain between Auslndustry and Moore Stephens titled "Cougar Energy Limited: R&D - Auslndustry" attaching letter from Cougar Energy to Auslndustry titled "Notification of Withdrawal" dated 17 March 2011
T-60 Document titled "Desk Review & Activity Review" dated 17 March 2011
T-62 Letter from B Landsberg, Auslndustry to K Patel, Moore Stephens dated 23 March 2011
T-66 File note titled "Cougar Energy Ltd - R&D Tax Concession - Phone Call" dated 8 April 2011
T-67 Letter from B Landsberg, Auslndustry to K Patel, Moore Stephens dated 8 April 2011
T-68 Document titled "R&D Tax Concession Compliance Review" dated 8 April 2011
T-69 Email chain between Auslndustry and Moore Stephens attaching revised document titled "2009-10 Application Form for Registration of R&D Activities" dated between 29 – April-6 May 2011
T-71 Document titled "Health Safety and Environment Management Plan" dated 6 July 2011
T-72 Permit number: MIN100656507 - Level 1 Mining Project dated 7 July 2011
T-73 Email between Cougar Energy titled "Pond 3 Spillway Earthworks" dated 27 July 2011
T-79 2010-11 Application form for registration of activities for R&D tax concession dated 20 April 2012
T-80 Letter from S Brown, Auslndustry to H Badger, Moore Stephens "Notice for registration for R&D tax concession" dated 24 April 2012
T-81 Golder Associates Evaporation Ponds Inspection report for Kingaroy dated 10 May 2012
T-82 Cougar Energy Limited, Annual Report 2012 dated 30 June 2012
T-83 Report titled "Underground Coal Gasification Project Development Roadmap" dated October 2012
T-84 Document titled "Water Sample - Kingaroy" dated 11 October 2012
T-85 Email from S Goela, Moore Stephens to Auslndustry enclosing revised and superseded "Application: Registration of R&D Activities" for income year 2011/12 dated 27 November 2012
T-86 Letter from S Brown, Auslndustry to H Badger, Moore Stephens "Notice for registration for R&D tax incentive" dated 29 November 2012
T-91 Cougar Energy Limited Annual Report 2013 dated 20 June 2013
T-93 Report titled "Decommissioning Plan Kingaroy UCG Pilot Plant" dated July 2013
T-96 Application: Registration of R&D Activities" for income year 2012/13 dated 1 October 2013
T-97 Letter from S Brown, Auslndustry to H Badger, Moore Stephens "Notice for registration for R&D tax incentive" for 2012/13 dated 3 October 2013
T-106 Document titled "Application: Registration of R&D Activities" for income year 2012/13 dated April 2014
T-108 Email chain between Moreton Resources, Auslndustry and ATO titled "Moreton Resources - R&D Support materials" dated 8 April 2014
T-109 Email chain between Moreton Resources and ATO titled "Thursday's meeting" dated 24-29 April 2014
T-111 Email from PwC to Auslndustry titled "Moreton Resources Limited - Amended R&D Claim for Year Ended 30 June 2013" attaching T-106 dated 30 April 2014
T-117 Document titled "Minute - Variation to Registration under s27M" dated 3 June 2014
T-118 Letter from Auslndustry to PwC titled "Variation to R&D Tax Incentive Registration" dated 11 June 2014
T-119 Document titled "Linc Energy -Annual Report 2014"
T-123 ASX Announcement titled "Market Update on Research and Development Incentive Claim" dated 15 December 2014
T-124 Letter from Golder Associates to Cougar Energy titled "Annual Inspection Report of Kingaroy UCG Pilot Project Evaporation Pond" undated
T-128 Application: Registration for R&D Activities for income year 2013/14 dated 14 April 2015
T-137 Letter from J Schoen, Auslndustry to T Fielding, Deloitte "Notice of Registration for R&D Tax Incentive" dated 8 May 2015
T-138 Email from I Maxwell, Auslndustry to T Fielding, Deloitte, enclosing Notification of Examination of Registration under s27F of the IR&D Act dated 15 May 2015
T-152 Findings of the Delegate under section 27J of the IR&D Act dated 21 August 2015
T-154 Email and letter from I Maxwell, Auslndustry to T Fielding, Deloitte enclosing "Certificate for finding under section 27J of the IR&D Act" dated 24 August 2015
T-155 Email chain between T Fielding, Deloitte and A Lewis, Ausindustry titled "Moreton Internal Review Request", enclosing request for internal review dated 17 September 2015
T-157 Report by GHD titled "Moreton Resources Pty Ltd, Kingaroy UCG Pilot Trial, Application of Monitored Natural Attenuation to Benzene in Groundwater" dated October 2015
T-158 Report by GHD titled "Moreton Resources Pty Ltd, Kingaroy UCG Pilot Trial, Application of Enhanced In Situ Biodegradation to Reduce Benzene in Groundwater" dated October 2015
T-159 File note by C Clark, Auslndustry titled "Moreton Resources" re call with S Mundy, ATO dated 19 October 2015
T-170 Letter from D Evans, Auslndustry to R Naidoo, KPMG titled "Internal Review of Finding under Section 30D of the IR&D Act" and enclosing Certificate of Finding dated 12 December 2015
T-174 Letter from F Walduck Queensland Department of Mines and Energy to Dr Walker, Cougar Energy dated 31 May 2010
T-211 Graphs titled "All Coal Seam + Rain Fall" undated
T-213 Table titled "Gas Parameter's" undated

Category	Kev Performance Indicator (KPI)	Target Level
Safety	LTIR	0 (per 200,000 man-hours)
Capital Cost	Project Forecast	Within +/-10% of budget following full concept design of the plant
Schedule	Handover commissioned pilot plant	July 2009
Quality	Construction Rework	< 2% of Installed Cost
Environment & Community	Environmental Incidents Community Impacts/Protests	Nil Nil
Performance Data	Document technical data after start up	Monthly reporting following start up

Date(s) of hearing:	10, 11, 12 February 2020, 2 September 2022
Counsel for the Applicant:	Mr P Bickford
Solicitors for the Applicant:	Irish Bentley Solicitors
Counsel for the Respondent:	Dr S Pritchard SC Mr T Prince
Solicitors for the Respondent:	King & Wood Mallesons