Decision
"Attributable"
57I start with the adjective "attributable". As a matter of etymology, it conveys the sense of "capable of being attributed". The Oxford English Dictionary (OED) online gives the meaning:
"Capable of being attributed or ascribed, ESP. As owing to, produced by."
58The Macquarie Dictionary (MD) online gives no separate definition of "attributable". It refers one, as in any event the plain meaning of the word requires, to its cognate forms "attribute" and "attribution".
59As to "attribute":
(1) when used as a noun, the OED online gives, as relevant meanings: "a quality or character ascribed to any person or thing, one which is in common estimation or usage assigned to him"; a quality or character considered to belong or to be inherent in a person or thing; a characteristic quality";
(2) when used as a verb, the OED online gives, as relevant meanings: "to assign, bestow, give, concealed, yield to anyone, as his right"; "to ascribe to as belonging or proper; to consider or view as belonging or appropriate to"; "to ascribe as a quality or "attribute" belonging, proper, or inherent"; "to ascribe, impute, or refer, as an effect to the cause; to reckon as a consequence of".
(3) when used as a noun, the MD online gives, as relevant meanings: "something attributed as belonging; a quality, character, characteristic, or property"; and
(4) when used as a verb, the MD online gives, as relevant meanings: "to consider as belonging to, authored by etc"; to consider as caused by".
60As to "attribution":
(1) the OED online gives, as relevant meanings: "the action of attributing; the result in which this action is embodied"; "ascription in word or statement"; "the (internal) act of ascribing or imputing"; "the assigning or ascribing of a character or quality as belonging as proper to anything"; the ascribing of an effect to a cause..."; and
(2) the MD online gives, as relevant meanings: "the act of attributing; ascription" and "that which is ascribed; an attribute".
61It seems to me to be clear, both from the various dictionary definitions to which I have referred and from the authorities relied upon by counsel, that the relationship between two things, that one be "attributable" to the other, requires some form of connection between them. However, an understanding of the nature of the connection requires attention to the context in which the process of attribution occurs and, specifically, to why it is that one thing is required to be attributable to another.
62In Central Asbestos, the House of Lords was considering whether a limitation period could be extended. That required consideration of the plaintiff's knowledge of material facts relating to his cause of action. The concept of materiality had a number of characteristics, one of which concerned the extent to which the personal injuries complained of were attributable to the alleged negligence, nuisance or breach of duty.
63Lord Reid dealt at 533 with what was meant by "attributable" in that context. His Lordship said:
So probably the key lies in the use of the word "attributable." That means capable of being attributed. "Attribute" has a number of cognate meanings; you can attribute a quality to a person or thing, you can attribute a product to a source or author, or you can attribute an effect to a cause. The essential element is connection of some kind. ... strictly one cannot say that injuries are caused by the legal concept of negligence. But it would be quite proper to attribute injuries to negligence. The connection here is that the injuries were caused by certain acts and that those acts involved or amounted to negligence.
64Lord Morris of Borth-y-Gest identified the importance of the context in which the word appeared. His Lordship noted at 538 that it was used in a section which also included the words "resulted" and "resulting", and hence that "it must have its own meaning". That meaning, his Lordship said, was "that something was capable of being attributed to or of being owing to or produced by negligence".
65Accordingly, I do not accept the primary submission put by Mr Archibald - at least in what might be called its "pure" form. I do not accept that, in the context of cl 12.3(c), the word "attributable" does nothing more than signify a process of allocation (or the ability to allocate). In my view, what the clause requires is that there be some connection between the two things, so that one can be said to be attributable to the other. Put in the language of subpara (3), there must be some connection between the "charge" and the "coal sold... and purchased" that makes it possible to say that the former is "attributable" to the latter.
66I think that Mr Archibald accepted this point in his oral submissions in reply. Mr Hutley had given, as an example of a government charge, stamp duty levied on the purchase by Centennial of a house for its mine manager to live in. Mr Archibald accepted that such a charge could not be prorated between Centennial and Delta, because "there is no relationship at all that makes it appropriate to bring that tax into account" (T42.2-.3). Mr Archibald accepted also (as Mr Hutley had earlier accepted) that subpara (3) was to be read as though the words "that such charges, taxes, royalties and other levies are" were inserted between the words "extent" and "attributable" (see T42.16-.19; and, for Mr Hutley's acceptance, see at T31.36-32.6, noting that Mr Hutley said that those words would be "supererogatory").
67It is convenient at this point to return to the submissions based on the parenthesised exclusions. Ordinarily, one should seek to interpret the words of a contract in a way that gives all of them meaning, not in a way that involves regarding some of them as redundant. See, for example, Dovuro Pty Ltd v Wilkins (2000) 105 FCR 476 at [152], [230]. However, as Ball J recognised in AFC Holdings Pty Ltd v Shiprock Holdings Pty Ltd (2010) 15 BPR 28, 199 at [13], that principle does not operate invariably, or without exception. In some cases, an interpretation which entails a degree of redundancy may be favoured where that interpretation is consistent with the commercial purpose of the contract, particularly if it appears that the words have been included by way of boilerplate drafting, or out of more abundant caution.
68In the present case, I think, it is possible to regard the parenthesised exceptions of income tax and payroll tax as words included out of more abundant caution, or, more bluntly, as superfluous. The initial task is the ascertainment (objectively) of the commercial purpose of the language used; and if the parenthesised words seem to be inconsistent with that purpose, so ascertained, then their significance must diminish.
69I return to the question of attribution. Just as the answer to a question of causation must depend, among other things, on the reason why the question is asked, so, too, it seems to me, the answer to the question of whether one thing is attributable to another must depend on the reason why the question is asked.
70Centennial and Delta sought to achieve a number of things by their agreement. Centennial wanted a guaranteed buyer for 1 million tonnes of coal per annum, with the right to put another 300,000 tonnes per annum to that buyer. Delta wanted a guaranteed supply of at least 1 million tonnes per annum, and was prepared to accept another 300,000 tonnes per annum at Centennial's option.
71Both parties wanted an agreement as to price that would endure, with as little complication as possible, for the life of the agreement. That they achieved by starting with a base price and providing for adjustment for two factors. One was a CPI adjustment. The other was an adjustment for increases in government charges.
72Presumably, the parties intended the CPI adjustment either to compensate, or to act as a surrogate, for increased costs of production (labour, consumables, and all the other things that are involved in getting coal out of the ground). But they recognised also that government charges (including, as one obvious example on which they fixed, royalties) might increase.
73On that analysis, Centennial agreed to accept the risk that its costs of production might increase in a way for which CPI increases did not fully or properly compensate (and Delta accepted the risk that such increases might overcompensate Centennial). Centennial was not prepared to accept all the risk of additional government charges, and Delta agreed to bear at least some of that risk.
74Although I do not think it is correct to say, as Mr Archibald submitted, that Delta was or is in a position to increase the charges for electricity that it sold into the national electricity market, nonetheless, I think, the parties must have recognised that there were some factors, including government charges, that would be likely to bring about an increase in the price of bulk electricity. For example, government charges that affected either all electricity producers, or all of a certain kind, or all in a certain state or locality, would be likely to flow through to price. Even though one producer (such as Delta) might not produce enough electricity to be able to affect the price itself in any significant way, the situation would be different if a number of producers were subjected to the same charge, and sought (acting individually and not in concert) to reflect this in the prices at which they offered to supply into the national electricity market.
75That is a rather roundabout way of saying that Centennial had no way, apart from the contract, of passing on increases in government charges, whereas (as I think the parties should be taken to have understood), there was at least some prospect that the prices that Delta achieved for its electricity would reflect, among other things, the burden of government charges that affected the whole, or a substantial part, of the electricity generators who sold their output into the national electricity market.
76I referred earlier to the importance of understanding the purpose or which it is asked that A is attributable to B. If that question were being asked (for example) for the purpose of imposing criminal liability on B, there would be good reason for construing the words so as to require some direct, immediate and obvious connection between the two. Again, if the question were being asked for the purpose of considering whether statutory or delictual civil liability should be imposed on B, ordinarily the search would be for a clear and obvious connection. But in the present case, the question is asked for the purpose of considering whether a government charge should be passed on, in whole or in part.
77The reason why the question is being asked in the present case is because, by hypothesis, the government charge affects, or has an adverse impact on, Centennial's cost of production: the cost to Centennial of producing the coal that is to be sold, over the life of the contract, to Delta. The clause is intended to pick up government charges that:
(1) are not expressly excluded;
(2) cannot be avoided;
(3) are related in a rational way to the production of coal; and
(4) are related, again in a rational way, to the cost of production of coal.
78That may be regarded as requiring demonstration of some form of causation. But putting the matter in terms of causation does no more than return to the proposition that the answer to the question of causation will depend, among other things, on the reason why question is asked.
Causation
79As I have noted, Mr Archibald relied on the decision of the High Court in Roncevich. That involved the construction of s 70 of the Veterans' Entitlements Act 1986 (Cth). Members of the armed forces were entitled to compensation for incapacity from "defence-caused" injury. By s 70(5)(a), an injury was taken to be a defence-caused injury if it arose out of, or was attributable to, any defence service. It will be seen straight away that para (a) associated "arose out of" disjunctively with "was attributable to". The former might well be thought to indicate direct causal relationship.
80The plurality (McHugh, Gummow, Callinan and Heydon JJ) commented at [27] on the disjunctive use of "arose out of" and "attributable". Their Honours said that this usage:
... manifest [sic] a legislative intention to give "defence-caused" a broad meaning, and certainly one not necessarily to be circumscribed by considerations such as whether the relevant act of the appellant was one that he was obliged to do as a solider. A causal link alone or a causal connection is capable of satisfying a test of attributability without any qualifications conveyed by such terms as sole, dominant, direct or proximate....
81The Full Court of the Federal Court of Australia expressed a similar view in Repatriation Commission v Law (1980) 31 ALR 140 at 151. That case concerned a statutory ancestor of the provision considered in Roncevich: s 101 of the Repatriation Act 1920 (Cth). The relevant test combined, disjunctively, "has arisen out of" and "is attributable to".
82The court (Bowen CJ, Brennan and Lockhart JJ) considered the expression at 151. Their Honours referred to authorities considering the phrase in different legislative contexts and concluded:
It seems clear that the expression "attributable to" in each case involved an element of causation. The cause need not be the sole or dominant cause: it is sufficient to show "attributability" if the cause is one of a number of causes provided it is a contributing cause.
83In my view, their Honours' insistence on some concept of causation is a function, or incident, of the statutory test. It is clear, from what Lord Reid in Central Asbestos, that causation and attribution, whilst sharing a core meaning, may have different denotations in different contexts. As his Lordship said, injuries may be caused by acts; and if the acts involved negligence, then, as a matter of language, the injuries may be said to be attributable to that negligence.
Attributability exists in this case
84In this case, the question is what is required to attribute charges under or referable to the Clean Energy Act - carbon charges and unit shortfall charges - to coal sold by Centennial to Delta under the contract. The context in which that question is to be asked includes, as I have said, the way in which the parties sought to ensure certainty of pricing, whilst at the same time recognising that there would be some external factors - specifically, government charges - that might have a direct impact on the mining of coal for sale to Delta.
85One matter relevant to this issue is that, as the coal supply agreement itself makes clear, the contract was an integral part of the decision to develop the mine. At the time the agreement was made, it was apparently contemplated that the owner of Powercoal (in effect, the State government) might sell it. Special condition 1, set out in Sch 4, dealt with what would happen thereafter:
Schedule 4 - Special Conditions
Special Condition 1
(a) On or before the date which is nine months after the earlier of the change of ownership of the Supplier or the sale of the Mine ('Completion Date'), the Supplier may notify the Purchaser in writing whether the Supplier intends to proceed with the development of the Coal Mine for the supply to the Purchaser of the Fixed Annual Contract Tonnage.
(b) If the notice specifies that the Supplier intends to proceed with the development, that notice once given binds the Supplier to supply the Purchaser with coal in accordance with this agreement (subject to the receipt of all necessary approvals and consents and force majeure).
(c) If the notice specifies that the Supplier does not intend to proceed with the development, or if the Supplier fails to issue a notice, this agreement will terminate without penalty to either party on the earlier of the date on which this notice is given, or the expiry of the nine month period (as the case may be).
(d) From the Completion Date until the earlier of the date on which the notice is given or the expiry of nine months from the Completion Date, the Supplier must pay to the Purchaser an option fee of $200,000 per month.
86Further, as appears from cl 4.5 of the contract itself, Centennial is obliged to source from the Mandalong mine at least 85% of the coal contracted to be sold to be Delta over the life of the agreement.
87It may be stating a truism, but coal cannot be sold and delivered until it is mined. There is nothing in the evidence to suggest that there was some vast stockpile of coal at or near the Mandalong mine, from which (regardless of cl 4.5), Centennial might supply Delta.
88Further, in my view, carbon charges and unit shortfall charges are at present a necessary, or integral, part of the cost of production of coal. That is because they are imposed on (in this case) the emission of methane. As the evidence of Mr Myors shows, the mining of coal inevitably releases seam gases into the atmosphere, and methane is a seam gas, formed (and trapped) as part of the process of "coalification".
89If there were no mining, there would be no carbon charges or unit shortfall charges (at least, in respect of the Mandalong mine). But neither would there be any supply of coal. Once the Clean Energy Act and its cognate legislation came into effect, the charges authorised and levied by that constellation of legislation became an inevitable and unavoidable incident of coal production.
90On the facts of this case, there is an obvious link between coal production and the sale of coal (at least where there is, as in this case, a present sale of "physical" coal). Coal must be produced (by mining) before it can be sold. That being so, a charge which arises inevitably upon production can properly be said to be attributable to the sale of that which is produced, in circumstances where the producer - Centennial - has no right under the contract to cease production until the contract comes to an end.
91Accordingly, I conclude, there is a sufficient connection between the "charge" under consideration and the sale and delivery of coal under the agreement to render the former attributable to the latter.
How to allocate?
92That leads to the question of how the attribution should be quantified. In principle, it seems to me, the appropriate method of quantification is to take the totality of the emissions that are caused by the process of mining in any given period and to prorate those emissions between the total quantity of coal produced in that period and the quantity sold to Delta. That raises at least two subsidiary questions. The first is: what are the emissions to take into account? The second is: how is the process of prorating to be effected?
93As to the former question: I think that the emissions to be considered are those that arise from the mining process itself. That would include the pre-draining of areas that are mined, the construction of roads and process of longwall mining. I accept, as Mr Hutley submitted, that some of those costs could be said to relate not just to the actual quantities mined in any given period but also to quantities mined in subsequent periods. Clearly, pre-draining may range beyond the particular area being mined for particular shipments of coal. And as the evidence showed, the construction of roads advances beyond what is necessary for the immediate production of coal.
94However, activities carried out before mining commences in a particular period will have had the effect of reducing the amount of methane emitted during that period (the same examples, of pre-drilling and road construction, come to mind). Thus, at least where the rate of production is not increasing (and the evidence suggests that this is not happening, because only one longwall mining machine is used at any given time), there is, although at a level of generality, some balance.
95I am not so certain that the emissions to be taken into account should include emissions from stockpiles. There may also be a question as to emissions from goafs, although those emissions would be captured to the extent that they are exhausted through the vertical shaft. However, if that is the extent of the remaining problems, it could be dealt with by reference to an expert as a Technical Dispute.
96The second question requires some comparison of the volume of coal sold and delivered to Delta in any given period with the total amount of coal mined over that period. The prorating exercise would be done using a fraction, the numerator of which is the former value and the denominator of which is the latter.
97Again, I accept, as Mr Hutley submitted, that there will be individual complications within this process. Mr Hutley took as an example Consignment Coal. That is coal, in excess of the quota required, that, subject to some conditions, Centennial may deliver to Delta and Delta must accept. However, although title to that coal passes on delivery and acceptance, Delta is not obliged to pay for it until the coal is "allocated" towards satisfaction of Centennial's obligations of sale and delivery. There may be a question as to whether, in those circumstances, that coal can be described as "sold... and purchased". I think that it can: there is a contract for sale, there is delivery, title has passed; all that is deferred is the obligation to pay.
98Another example relates to "Reject Coal", which is the subject of cl 9.3 of the contract. As its name indicates, that is coal that does not meet the stipulated quality standard. On the face of things, it should be excluded from the calculations.
99Mr Hutley focused on what he said was the prospective as well as the retrospective nature of the charges imposed under the Act. The issuing or sale of units occurs before the liability is assessed; and any shortfall occurs when the liability is assessed. Regardless of the precise structure of the legislation, and mindful that I should not move beyond what has been agreed on the pleadings, I think that, at least for the purpose of attribution (or allocation), the question is to be considered at a point in time when the actual liability for emissions in any given period can be stated. That will be at a time when the actual number of emissions for that period has been ascertained, and when the number of units required to be surrounded in satisfaction of that liability likewise can be ascertained.
100I accept that it may be difficult (at least) to arrive at a result that has absolute precision, or that is precise to the last cent. But, it seems to me, the language of cl 12.3(c)(3) does contemplate less than absolute precision, by the use of the words "as far as is practicable". That may be why CPI adjustments are to be "calculated", but Government charges are to be "adjusted" (see cl 12.3(a)).
101Accordingly, whilst I do not pretend that the process of allocating the charge is as simple as Mr Archibald suggested, nonetheless I think in principle the pro-rating mechanism that I have discussed provides a way of achieving this.