ICI Australia Ltd v Commissioner of Taxation

The first of the questions raised by the appeal relates to a deduction claimed under div. 10 of Pt III of the Income Tax Assessment Act 1936-1966 Cth (the Act). (The changes made in this division by the amending Act of 1968 are not applicable.) The claim was that ICI had incurred expenditure of a capital nature on necessary plant and on development in connexion with the carrying on of mining operations upon a mining property for the purpose of gaining or producing assessable income. It claimed that its residual capital expenditure, ascertained in accordance with s. 122 of the Act, as at 30th September 1967, was $1,874,767 and that it was entitled to a deduction of one-thirteenth of that sum, that is, $144,213. The number chosen for the purposes of the provisions of sub-s. (2) of s. 122 as "the number of whole years in the estimated life of the mine", as at the end of the year of income, was based upon an estimated total life of fourteen years. The primary dispute between the parties as to the application of s. 122 is that ICI claim and the respondent denies that the operations of the taxpayer in connexion with which the expenditure was incurred were "mining operations upon a mining property".

A great deal of evidence was called concerning the project established near Port Alma in Queensland for the obtaining of salt; concerning the geological formation and history of the underground source from which brine containing salt is there procured; concerning the methods used in various parts of the world and at various times for the recovery of salt and of other substances from places on or beneath the surface of the earth; and concerning the terminology used to describe the processes by which they are obtained. At the end of the hearing there was not much in contest between the parties as to what ICI did and does at its works near Port Alma or as to the geological and hydrological questions discussed in the evidence. What remained in contest was whether the operations could and should be described as "mining" and, if so, what was the divisor that should be used in applying sub-s. (2) of s. 122. Since many of the principal matters of fact and of expert opinion stated in the evidence called on behalf of ICI are not now challenged, I am relieved of the need to make such a detailed examination of the evidence as might otherwise have been needed. But it is necessary to give an account of the aquifer, as it is called by the expert witnesses, from which ICI obtains brine and of the lay-out of the works (to use a neutral term) which it has constructed.

Leases are held by ICI in respect of an area of some ten square miles to the south of the Fitzroy River near Rockhampton. These are part of a much larger area of land beneath which lies a deposit of sand and gravel, described by Mr. Hancock in his report as "an alluvial sand and gravel sequence", which partially fills the ancestral valley of the Fitzroy River. This contains within it water in which there is a concentration of salt (sodium chloride) much greater than the normal concentration of salt in sea water. Beneath the leases the salt content is about nine per cent whereas in sea water it is about three per cent. But the brine in the sand and gravel sequence is not all of the same concentration. At some distance to the west or north-west of the leases it has been found to be about six per cent.

Below the sand and gravel sequence is a weathered shale bedrock. Above the sequence is a marine clay layer which is impermeable to normal water flow. It is because of that quality in the clay that the water, which originally came from the sea, was trapped in the sand and gravel sequence. For reasons which are explained in the report, the presence of the clay layer resulted in the concentration of the salt content of the sea water beneath it.

Salt is obtained in Australia and elsewhere by exposing sea water to a process of evaporation. But there is an obvious advantage if at the beginning of the process of evaporation there is a brine which has a salt content much greater than that of sea water. From a natural deposit of brine, which can be brought by pumping to the surface and then put through a controlled series of evaporation processes, there may be obtained a deposit of salt in crystallized form which may then be "harvested". That is in essence the nature of the operation at Port Alma.

The description which I have given of the occurrence of the brine-bearing sand and gravel sequence between a clay layer above and bedrock beneath is over-simplified and may suggest a continuous uniform sequence. The arrangement and the composition of the sediments laid down below the upper layer of clay are much more complicated. There are clays including sandy clays below the upper layer of clay which, although saturated with brine, do not permit the flow of liquid. The conclusions made by Mr. Hancock about the manner in which these are disposed in relation to each other and to the marine clay above them have been depicted in perspex sections and in cross-section drawings prepared by him. But those details do not affect, in my opinion, the primary question which I have to decide. It should be mentioned however, that the depth of the available aquifer is not uniform and that that means that exploratory work was required, including the making of test holes in order to determine how far down the production bores would need to go.

According to the American expert witness, Mr. Richner, the brine deposit described in this case is similar to natural underground brine deposits which occur commonly in many parts of the world, although it is unusual to find them so close to the ground surface as is the deposit at Port Alma. The process of obtaining natural brines from below the surface of the earth by pumping has been used for a long time in England and elsewhere.

At Port Alma, ICI caused bores to be made to extract the brine. In order to make a bore a steel casing is driven into the ground. The material within it is removed. When the casing has gone down to the required depth and all the material within it has been removed a plastic casing is put down inside the first casing and at the end of the plastic casing there is a screen or sieve which will serve when pumping begins to separate sand from the brine. Within that casing a pump casing is lowered, to the bottom of which is attached the impeller of the pump which will be driven by an electric motor on the surface. To aid the subsequent flow of brine the material in the vicinity of the screen is subjected to scouring by hydraulic pressure. When the inner casings are in position the outer steel casing is lifted up so as to be clear of the screen attached to the plastic casing.

A number of production bores were constructed. After pumping began the brine was pumped into a pond, identified in the evidence and on a flow chart as J.1. This and other ponds used in the process are large areas of fairly flat land upon which the brine is concentrated by evaporation. The ponds are enclosed by walls constructed of earth and of rock. Each of the two ponds designated J.1 and J.2 has an area of about 1,300 acres. The ponds F.1. and F.2, to which the brine is removed later in the process of concentration, are much smaller. The pond F.1 has an area of about 390 acres. The ponds are not provided with an artificial "floor".

The brine has a gravity flow from J.1 to the adjoining pond J.2. In both ponds the density of the brine is checked. When it is necessary to do so because there has been a high evaporation rate, sea water is added to the brine. The evidence of Mr. Melvin is that this sea water is used to dilute the brines, not because of its own salt content but because it is readily available. It is pumped from Inkerman Creek which runs through the area occupied by the saltfields. I accept the view that the primary purpose of pumping sea water is to dilute the brine to control its density. The ultimate object is to get the brine to its crystallization point after it reaches the crystallizers and to avoid premature crystallization. But it is true nevertheless that a significant part of the salt produced is derived from the sea water which is added during the concentration process. From the pond J.2 the brine goes to a pond F.1 which is at the opposite side of Inkerman Creek. There is a bridge across the creek. On the bridge is a drain made of timber. The brine is pumped up to the drain and flows along it into the pond F.1. When the brine is in J.2 its desired density is twelve per cent of salt and when it is in F.1 it is seventeen per cent. The "salting point" at which the salt begins to crystallize is about twenty per cent.

From F.1 the brine goes by gravity flow to F.2 through a gate in the wall which separates those two ponds. The operators endeavour to keep the brine in F.2 a little below salting point and to rid it of calcium sulphate, which crystallizes at this stage of the evaporation process and is deposited. From F.2 the brine is pumped into a long drain called a launder along which it goes to the crystallizing area. That drain runs alongside a roadway. It is fifteen to twenty feet wide and has raised walls of earth and stone. It runs for about three-quarters of a mile. It is connected then with pipes running under a road and a railway line and through the pipes the brine flows into the crystallizers, of which there are sixteen, each having an area of twenty-eight acres.

At the wall of F.2 there is a bore (shown in Exhibit C) by which brine is pumped from the aquifer, when required as a dilutant to control the density of the concentrated brine. At this stage of the process the control of density is very important, since the brine must be prevented from crystallizing before it is transferred to the crystallizers.

By crystallization a layer of salt with a hard surface is gradually built up in the crystallizers. The fields which are given that name have earthen banks. By means of drains cut through the salt-covered area, liquid is carried away and some unwanted substances, such as magnesium salts, are removed.

When "harvesting" of the salt takes place the top of the salt layer is removed, leaving a hard salt surface remaining above the clay floor of the field. The harvester breaks up the salt crust. It picks up the salt and carries it to a conveyor at the top of the harvester and it is then transferred to a mobile conveyor system. At this point the salt is a loose mass of crystals. It is then conveyed to a wash plant. Brine is pumped into a container in the wash plant in which the salt is deposited. Then it is agitated. It is carried upwards and as it goes up it is washed further with brine. It drops into a centrifuge, to reduce the remaining moisture. It is taken by an elevator to a hopper placed above a loading point. From the hopper it goes into a truck. If no truck is available the salt is diverted to a stack from which trucks are afterwards loaded. At this time the salt has a remaining moisture content of about five per cent, which is regarded as a satisfactory percentage. What takes place in the washing plant is designed to remove other salts so as to increase the purity of the sodium chloride and to remove so far as is possible what remains of the mother liquor from which the salt was crystallized. After being loaded onto a truck, the salt is carried about three and one-half miles to a stockpile at the Port. Thence it is shipped away for industrial uses.

The process of crystallization and the harvesting operations go on throughout the year. The harvesting takes place at different times in the different crystallizers.

There is no place in Australia where rock salt is or has been extracted from the earth, either in its solid form, or after being dissolved in water introduced in order to dissolve it and to enable the solution to be brought to the surface. In Australia, some rock salt has been discovered but so far as the evidence discloses, none has been recovered from the earth. In various places in Australia, salt is recovered from salt lakes. Except for the operations of ICI and of a company called Central Queensland Salt Industries Ltd ("Central Salt") carried on close to those of ICI, this being the area in which for a short period during the year 1908 salt works were in operation, natural brine containing salt has not been recovered from underground brine deposits in Australia. There are solar saltfields in South Australia, operated by ICI. The salt is obtained there from sea water which is pumped into a concentration system and goes then to a crystallizing system. As at the Port Alma works, water is evaporated by natural processes. The principles upon which the ponds are constructed and the fluid is caused to flow through the system are the same as at Port Alma and a similar type of harvester is used. But there are some differences between the two fields. The ponds in South Australia occupy a very much larger area. The salt is not washed. After it is harvested it is carried in solution by pipe lines to the company's alkalite factory at Osborne. The final salt crystallization process and the harvesting operation are not continuous, but are confined to a period of about six months in each year and the harvesting is done over a period of ten to twelve weeks.

The production of salt from sea water by solar evaporation has occurred at other places in Australia as has the harvesting of lake salt.

A brochure issued by ICI relating to its works at Port Alma refers to a "saltfield". It uses the same word for its operations near Osborne in South Australia. The word "mine" is not used. The annual report for 1967 of ICI refers to the "new saltfield" at Port Alma. The term "saltfields" and the term "salt works" are used in a booklet issued by the Bureau of Mineral Resources in the year 1962 on the subject of salt. The booklet deals with the production of salt in Australia. It does not refer to any of that production as "mining". It was published before the Port Alma Works of ICI were established, but it refers to the production of salt from solar evaporation of underground brine in the Port Alma area by Central Salt, beginning in 1958.

It appears that little material has been published in Australia relating to the production of salt, so that not much guidance is available from publications in this country as to the usage adopted in describing the operations by which salt is produced. Some overseas publications have been put into evidence. A book well known to students of minerals and of methods of recovering them is a Handbook of Mineral Dressing, by A. F. Taggart, an American professor. It has a section dealing with salt, in which rock salt and underground brines are mentioned as sources of supply. The word "mined" is used in relation to rock salt and the term "well mining" is used in relation both to rock salt and to the recovery of brines, in a passage which goes on to discuss methods of evaporation, separation from other substances and crystallization. There is evidence that rock salt is often recovered by dissolving it and bringing it to the surface in solution. I shall refer again to this and to the question whether the terms used to describe that process are necessarily appropriate to describe the operation with which I am now concerned. The expression "well mining" is used in Taggart's handbook.

A professor of mining engineering named Peele was the editor of a handbook published in America, part of which has been put into evidence. The table of contents contains the expression "Mining through Boreholes". Under a heading which includes the words "underground mining" there is a description of the extracting of soluble minerals, including salt, through boreholes, in the form of artificially produced brines, where this method is for some reason preferable to mining the deposit of salt by "room-and-pillar methods".

A paper published early in 1971 in England deals with the procedures and the problems associated with the obtaining of planning permission for the development of new mines in Britain and with public inquiries relating to applications for permission for the working of potash deposits in Yorkshire. These applications were all concerned with the winning of potash from solid seams. In choosing the method by which it was to be extracted, two companies adopted what the paper calls "conventional mining" and a third company adopted what it calls "solution mining". This is a recent example of the use in England of the expression "solution mining", which has become common in the United States. The paper uses the word "mine" as a noun to describe both a "conventional mine" and a "solution mine".

In The Picture Book of Salt, published in England in 1965, the expression "salt mine" is used many times in referring to underground workings where rock salt is obtained by conventional methods. References are made to salt farms, salt fields, salt beds, and saltworks. In relation to the obtaining of rock salt by pumping water down to it and pumping a salt solution back to the surface, the term "salt wells" is used. This process is described as "hydraulic mining".

In various articles in the Encyclopaedia Britannica and in a junior encyclopaedia the usage generally adopted is to employ the words "mining" and "mine" when referring to the recovery of rock salt and not to employ them when referring to recovery of salt from sea water or other natural liquid sources or even when referring to what was called "solution mining" in the paper published in 1971 to which I referred above. For example, in an article on salt manufacture the author refers to the ordinary mining methods followed when "rock-salt is mined" and then states "if mining is impossible, there are two ways of pumping brine". On the other hand, in another article dealing with metal mining there is a statement in these terms, "Mining, broadly, is the industrial process of removing a mineral-bearing substance from the place of its natural occurrence in the earth's crust". This accords with the following statement made in evidence in this case by Mr. Hancock: "I believe that the term "mining" as has been taught to me through my training, is the winning of a mineral from a more or less concentrated body of limited extent by whatever means". He added that the means "are irrelevant for the purpose of determining whether you would classify it in your mind as mining". That is a view which I have no doubt is shared by other experts in sciences relevant to mining. But it gives to the term "mining" a more extensive meaning than that which I am able, consistently with the authorities, to find that it has in s. 122 of the Act. But I think that the evidence of the experts called in this case may nevertheless be of assistance in arriving at its meaning as there used. To the question of the use that may be made of it, I shall return after a statement of what the witnesses have said as to their understanding of what is meant by mining.

Mr. Hancock would not agree that his concept already mentioned did not accord with the common usage in speech in the circles in which he moved. He could not refer to any work which he had read in which the term "brine mining" had been used, but he thought he had used it and heard it used in discussions with officers of the Lands Department in Queensland. He referred to a report relating to the Port Alma aquifer, in which the phrase "the brine reserves will be mined" was used.

Dr. Budavari, an expert in mining engineering, who has only recently come to Australia, has a great deal of knowledge about the recovery of salt and of potash in England. He heard the terms "wet mining" and "dry mining" used at the public inquiry concerning applications for permission to recover potash, which has already been mentioned. He uses the former of those expressions in the same sense as that in which the term "solution mining" is frequently used in America. He agreed that such expressions would be likely to be found in technical writings rather than in general works. He did not know when they were first used. He knew that in England the expression "brine pumping" was commonly used. He gave the opinion that the extraction of brine at Port Alma "is basically a mining operation". He said that from a mining engineer's point of view the operations involved in it are of the same pattern as in other methods of obtaining minerals from the earth. The first stage is that there must be prospecting and exploration of the location of the mineral in the strata and a calculation of the reserves available. Next there is development to get access to the deposit. Then there is the exploitation of it, which in this case means the pumping of the brine from its position underground to the surface. Finally there are the operations of concentrating the mineral and separating it from waste material.

Mr. Richner, an American geologist, has a very extensive knowledge of rock salt deposits and of natural and artificial brines in many countries. To him the expression "solution mining" is now a common expression. He knows he has used and heard it as far back as 1953. He cannot say whether it was used earlier than that The process which it describes is a very old one. Mr. Richner described earlier techniques of obtaining underground natural brines by digging a pit in the ground. These pits or wells became deeper as time went on. Sometimes natural brines are obtained by bores made horizontally into the side of a hill. Mr. Richner gave an explanation also of placer mining, including hydraulic mining. Two main points emerge from his evidence. One is that in his own terminology he would classify what takes place at Port Alma as a mining operation. He said that it is "very similar to mining operations around the world". The second is, that so far as general usage is concerned, he is familiar with the expression "brine pumping" but asserts that the term "wet mining" has long been used as a synonym for it, as has the term "brining". The term "solution mining" has come later and is now used to describe an operation which includes the injection of water into salt, as distinct from "brining" in the sense of obtaining natural brine. He says that is a distinction which was not made in the past but is made now. He said that he believed the term "wet mining" was in use before the beginning of this century, but he could not refer to an book or article in support of that statement. He agreed that it was probably correct that prior to and even into this century one would have difficulty in finding the word "mining" applied to a process in which bores were put into the earth but in which no persons went underground. He agreed that most of the available literature in the English language is American.

Counsel for the respondent relied on the failure of ICI to produce any additional evidence of the use of the term "mine" (and associated terms) to refer to an operation of the kind which it conducts at Port Alma and on its failure to produce any examples of that use in correspondence relating to that project. In this connexion the evidence of Mr. Palm should also be noticed. He could not recall that the project was ever described as a mine. He said that he would himself refer to it as a salt field.

Under the legislation of the State of Queensland to which ICI was and is bound to conform in establishing and conducting the works at Port Alma, the recovery of the brine is treated as a mining operation. In The Mining Acts 1898 to 1967, of that State (The Mining Acts), the expression "To Mine" is defined thus:

"To Mine" - To disturb, remove, cart, carry, wash, sift, smelt, refine, crush, or otherwise deal with any earth by any mode or method whatsoever for the purpose of obtaining gold or any other mineral therefrom. The term "mineral" is not defined but it is not suggested in this appeal that salt is not a mineral. Section 30 of The Mining Acts gives power to grant a mineral lease and, in certain circumstances, to grant a special mineral lease. In this case special mineral leases covering the area in question were granted to Central Salt and were transferred to ICI. Each of them specifies salt as the mineral for the working of which it is granted. Each lease contains a covenant relating to the working of the land "by carrying on mining operations for the purpose of producing salt from under-ground brines obtained from such land" (see s. 34).

In an agreement dated 2nd August 1966, between ICI and Central Salt, there is a recital of an authority to prospect held by Central Salt covering an area of about thirty-five square miles and by the agreement Central Salt agreed to apply for certain mineral leases or special mineral leases and to transfer them, subject to the approval of the Minister for Lands, to ICI. The agreement uses the expression "salt works". The authority to prospect to which it refers gives to the holder, by cl. 5, "the sole and exclusive right to conduct a special field investigation of the said lands for the purpose of determining the existence or otherwise of salt from brine and its extent and nature in the said lands". Clause 19 provides that, subject to certain conditions, the holder shall be entitled to apply for and to have granted to it in priority to any person or company "mining leases for the mineral specified in condition 5 hereof". Such an authority to prospect is granted under The Mining Acts: see s. 23A.

As to the sense in which the terms "mine" and "mining" are used in State legislation, by which mining is controlled and regulated, I add some further references. In The Mining Act of 1968 Q. the definitions in s. 7 of mineral, mining purpose and mining lease, together with ss. 21 and 28, show that the provisions of that Act (which repealed and replaced The Mining Acts) are applicable to the obtaining by ICI of salt from its works at Port Alma. The Mines Regulation Act of 1964 Q., in s. 5, has this definition:

"Mining" and "To mine" - To disturb, remove, cart, carry, wash, sift, crush, concentrate, smelt, refine or otherwise deal with any mineral, rock, stone, quartz, clay, sand or soil by any mode or method whatever for the purpose of obtaining metal or mineral therefrom.

For other provisions including within the scope of mining the extraction of material "by any mode or method whatever" for the purpose of obtaining metal or mineral from it, reference may be made to the Mines Act 1958 Vict., s. 3, definitions of Mine, Mining purposes and To mine and to the Mining Act 1906 N.S.W., as amended, s. 3, definition of To mine. (But in the latter Act the term "minerals" is defined by specifying substances and it does not refer to salt.)

The circumstance that according to State legislation an operation is a mining operation is not conclusive that it is such an operation within the meaning of s. 122 of the Act. In Australian Slate Quarries Ltd. v. Federal Commissioner of Taxation [1] , Higgins J. said that it was dangerous to rely much on the language used in Acts of the States. But it has been regarded as a factor that can be taken into account: see [2] ; Federal Commissioner of Taxation v. Henderson [3] and North Australian Cement Ltd. v. Federal Commissioner of Taxation [4] . I am of opinion that where a question arises whether or not a given type of operation falls within the ordinary meaning of the words used in the Act, according to the "common understanding" of the sense in which they are currently used (see N.S.W. Associated Blue-Metal Quarries Ltd. v. Federal Commissioner of Taxation [1] it cannot be irrelevant that the parliaments of the States have treated that type of operation as being within those words. It is true, of course, that a parliament may use an expression in a defined sense that does not correspond with its ordinary meaning. But when in many different enactments an operation is treated as being a mining operation, this must itself have an influence upon the "common understanding" of that term, at any rate upon the understanding of it by those whose business it is to be acquainted with legislative provisions applicable to the operation in question.

1. (1923) 33 C.L.R. 416, at p. 423. 2. (1923) 33 C.L.R., at p. 420. 3. (1943) 68 C.L.R. 29, at p. 44. 4. (1969) 119 C.L.R. 353, at p. 359. 5. (1956) 94 C.L.R. 509, at pp. 512, 514.

In relation to some of the State Acts, to which I have referred, a question may be raised whether some of the definition provisions apply to the extraction from the earth of a substance which in its natural state in the earth is in liquid form. Thus in The Mining Acts, s. 3, "Earth" is defined as "Any rock, stone, quartz, clay, sand, soil, or mineral" and the definition of "To mine" includes the word "earth". But I think it is clear that to carry on the operations of ICI which I have described is to "deal with any earth". The aquifer is a sand and gravel deposit, not a body of liquid unassociated with solids and, in any event, since the term "earth" includes any mineral, it includes the salt contained within the brine.

The cases in this Court in which the meaning of mining operations and mining property in s. 122 of the Act has been considered do not include any case in which there was an operation of the type with which I am now concerned, that is to say, the extraction by pumping through bores of a mineral deposit located underground. In the Blue-Metal Quarries Case [2] , Kitto J. said that neither in the provisions of div. 10, nor in any of the other provisions of the Act, was there to be found any indication that the Parliament intended "any other meaning than that which the words ordinarily have in this country and at this time". His Honour had no need in that case to consider the special provisions relating to expenditure on prospecting or mining for petroleum which were then part of div. 10 but are now contained in div. 10AA. What he said ought not perhaps to be taken as an expression of a definite opinion that to speak of mining for petroleum (including naturally occurring liquid hydrocarbons in a free state) was to use the term "mining" in its ordinary meaning. But whether or not his Honour adverted to that question, it is to my mind of considerable significance that the Act has long contained and still contains provisions which refer to the recovery of petroleum as "mining".

In this case no question arises as to the propriety of referring to open-cut operations as mining. But a question does arise whether the nature of the deposit which is to be worked and the method used to recover it are the decisive considerations by which it must be determined whether the operations are mining operations. I think that it could not be disputed that if in Australia an underground deposit of rock salt were discovered and underground workings for its recovery by conventionally mining methods were established these would be mining operations. According to common usage, there would be a salt mine. But when no workers go underground and when by drilling of bore holes and the use of pumps a liquid mineral or a liquid containing a mineral in solution is brought to the surface is that a mining operation? In considering whether that description of it "would sound odd and incongrous" [1] and would be "an unnatural and inapt use of language" [2] , I cannot escape the conclusion that it is important to consider the language used in the Act itself in relation to the recovery of petroleum and in the making of provisions for the deduction of expenditure connected with the mining of petroleum, which are of a similar kind to provisions made for the deduction of expenditure connected with mining generally.

1. (1956) 94 C.L.R., at p. 524. 2. (1956) 94 C.L.R., at p. 514.

Division 10AA was inserted in Pt III of the Act in 1963 with the heading "Prospecting and Mining for Petroleum". In nearly every section in that Division the term "mining operations" or the term "prescribed petroleum operations", which by definition (in s. 124DB) means prospecting or mining operations, is used. Several sections contain the words "mining right" or "mining information". The term "mining operations" is used also with reference to petroleum in s. 6 (definition of "assessable income from petroleum") and with reference to "oil" in s. 78 (1) (b).

Prior to the enactment of the amending Act No. 44 of 1951, a deduction for capital expenditure incurred in prospecting or mining for petroleum by a taxpayer who derived income from carrying on mining operations for the purpose of obtaining petroleum was allowed under s. 123A. At that time ss. 122 and 123 were applicable also (subject to s. 123A (3)) to mining for petroleum but s. 123AA was not, because petroleum was expressly excluded. As a result of the 1951 Act, the provisions relating to the development of mining properties and to exploration and prospecting for petroleum and for other minerals respectively were still all contained in div. 10 under the heading "Mining", but they were made mutually exclusive. Section 123A related to petroleum and it excluded petroleum from the operation of ss. 122, 122A, 122B and 123AA. Section 123A which, until its repeal in 1963, when a new division relating to petroleum was enacted, had been a provision relating solely to the deduction of capital expenditure incurred in prospecting or mining for petroleum, had been inserted in the Act in 1939.

I have mentioned these facts as to the history of that portion of the Act with which I am now concerned in order to show that the inclusion in the concept of mining of the recovery of petroleum is not a consequence of a recent change in usage. It goes back even further than the 1939 Act, to an Act passed in 1923. That is of some significance, having regard to the endeavour made by counsel for the respondent to establish that the use of the term "mining" to refer to the recovery in liquid form of minerals, in such expressions as "solution mining" and "wet mining", is both a recent development and one confined mainly to the United States or to scientists and technologists in England who had been influenced by literature of American origin.

From the evidence given by witnesses with special knowledge in mining geology and mining engineering, it appears that amongst such people it would not be thought strange to refer to the salt extraction as a mining operation. For them that would be a natural use of language. Counsel for the respondent has suggested that this evidence, particularly that of Mr. Hancock, does not establish that even by technical men the process is commonly described in ordinary speech as mining, but means only that as a matter of reasoning that is considered a legitimate classification of it. But whilst the evidence did include a justification of a conceptual assimilation of the process to mining processes, it went further than that. Even when considered in the light of the lack of similar evidence from other technical men, particularly those closely associated with ICI, it went to show that at least for some technical men the term "mining" is as a matter of usage applied to a process of this kind. It is true that other terms are also used to describe it but, in my opinion, that is of no consequence.

There has been some debate as to the proper use to be made of the evidence of experts and of conclusions based upon it as to their usage of the words whose meaning I have to determine. I have no doubt that such evidence and conclusions may be taken into account. I think that they may be of much importance, especially in a situation where there has not been in fact any occasion for a widespread adoption or development by the general public of a terminology to describe the particular processes under review. At the same time I think that use may be properly made of such knowledge as isavailable to the Court concerning more general usage. In Federal Commissioner of Taxation v. Broken Hill South Ltd. [1] , Williams J. referred to "the vernacular of mining men". In North Australian Cement Ltd. v. Federal Commissioner of Taxation [2] , Menzies J. referred to "an informed general usage". But those statements do not suggest to me that the Court is restricted to a consideration of the usage adopted by "mining men". Indeed, it seems plain from his judgment that Menzies J. did not think it was so restricted. In Waratah Gypsum Pty. Ltd. v. Federal Commissioner of Taxation [3] McTiernan J. referred to literature which showed how the mining profession described the winning of gypsum and then he referred also to "common parlance". With respect, I am of opinion that his Honour was right in taking both into account.

1. (1941) 65 C.L.R., at p. 160. 2. (1969) 119 C.L.R., at p. 362. 3. (1965) 112 C.L.R. 152, at p. 160.

In Australia, as has been stated, there has been no transition from underground mining of rock salt to the extraction of brine by a different process. There has been experience of the obtaining of salt from sea water or lake water by evaporation. It seems to me that this latter process should not be regarded as a "mining operation", within the ordinary meaning of those words. If salt water were scooped up from the sea or from a salt lake or creek and the water evaporated by artificial or natural heat salt would be obtained. But it would not be natural to call this mining. Likewise, in my opinion, if salt water from the sea or a lake is pumped in large quantities to fields in which it is concentrated by solar evaporation, that would fall outside the ordinary understanding of the meaning of the term "mining". It is the resemblance which in some respects that process bears to the operations of Port Alma that constitutes, in my opinion, the strongest consideration in favour of the respondent's contention in this appeal. Yet I think it can be said that the resemblance lies mainly in those parts of the total activity of obtaining salt, which follow the recovery of the brine. When the brine has reached the concentration ponds, the subsequent processes are in both cases similar and so too is the appearance of the areas upon which they take place. That appearance is a factor which tends to lead one away from a description of the area as a "mine" and towards the use of some such expression as "salt fields". A very large area is covered by a shallow liquid or by deposits of crystallized salt and this, rather than the relatively small area where the pumping operations take place, is likely to be the dominant feature in what is observed. Yet it is the pumping operations to which I think attention must be primarily directed in determining whether ICI is engaged in mining operations. It if is not so engaged when extracting the brine it is clear, in my opinion, that the later operations are not mining operations. But if the recovery of the brine is found to be a mining operation, there will be a further question to be considered whether the subsequent processes or some of them should also be so described.

In my opinion there is an essential difference, for the purpose under discussion, between the collection of salt water which is naturally on the surface of the earth and the pumping of underground brine, which has first to be discovered and surveyed and then exploited by bores going down to the deposit, which is (in Mr. Hancock's words) "a more or less concentrated body of limited extent". Therefore I am of opinion that if it be right, as I think it is, to deny the application of the term "mining" to the pumping and concentration of surface water or surface brine, it does not follow that its application must be denied likewise to the recovery of brine from a natural underground deposit.

I am of opinion, also, that an acceptance of the use of the term "mining" in a description of the process which witnesses called "solution mining" does not conclude the question under discussion. The recovery of a solid underground mineral deposit by dissolving it and bringing it to the surface in a liquid form, as an alternative to hewing it out and carrying it up in solid form, might come to be called "mining", without the same usage being necessarily adopted for the recovery of natural brines. Nevertheless the use of such expressions as "solution mining" or "wet mining" does show an extension of what has been said to be the primary meaning of the term "mine", which is not identical with the extension of it by which it has come to include the extraction of some substances by surface excavations, but which is I think somewhat similar to the latter extension. In both extensions the meaning is no longer confined to underground workings, that is to "diving under the earth, and then working horizontally or laterally": see Bell v. Wilson [1] , quoted in the Blue-Metal Quarries Case [2] . In one extension it applies to the recovery of some minerals located near the surface, by surface workings. In the other extension it applies to the recovery at least of some minerals, which are far below the surface, by operations which are carried out on the surface.

1. (1865) 2 Dr. & Sm. 395, at p. 399 [62 E.R. 671, at p. 673]. 2. (1956) 94 C.L.R., at p. 523.

It was submitted for the respondent that it would be a fundamental misunderstanding of the earlier decisions of this Court if they were taken to establish that if it is found that a substance has been traditionally mined by the traditional method of underground workings and then it is found that the same substance is obtained by another method, a trial judge will conclude that this is a mining operation. It was submitted that if the judge finds that in the actual use of language, the other process has come to be called a mining operation, he will conclude that in the sense in which words are currently used it is a mining operation. But this will not be simply because it is seen that a reason for calling it "mining" may be found in the circumstance that it is another way of bringing about the same result as that achieved by a traditional mining operation. It will be because of the fact that it has come to be called mining, not because of historical reasons that have caused it to be so called. When it has come to be called mining, the cause may be the kind of association of ideas described in the Blue-Metal Quarries Case [1] . But the cause of this happening is not important. It was submitted that in this instance that association of ideas has not occurred in fact. It has not happened that to the alternative process the description "mining" has been given. It was submitted that the association of ideas has had centuries in which to take place and to find expression in language, but this has not occurred. The process has not been called "mining", but has continued to be called "brining" or "brine pumping".

I think that to some extent those submissions are persuasive, but they go too far. After an examination of the cases in this Court in which the question has been considered, I have no doubt that the conclusions of the judge as to actual usage and as to the actual common understanding of the expression "mining operations" have been regarded as being of the highest importance. Yet I cannot agree that the fact that the substance under consideration has been mined by traditional underground methods has been regarded as being of no significance in itself, but as merely providing an explanation of the usage that has been adopted. In this connexion I refer to the mention by Kitto J. in the Blue-Metal Quarries Case [2] , of the lack of evidence that blue metal is ever obtained by underground workings, and to the mention of evidence of underground workings in other parts of the world by McTiernan J. in the Gypsum Case [3] , and by Menzies J. in North Australian Cement Ltd. v. Federal Commissioner of Taxation [4] .

1. (1956) 94 C.L.R., at p. 513. 2. (1965) 112 C.L.R., at p. 156. 3. (1969) 119 C.L.R., at pp. 359, 363.

There is another reason for thinking that the submissions for the respondent on this question cannot be accepted in full. They assume that it must be shown by the appellant that the use of theterms "mine" and "mining" to describe its operations is widespread and consistent and, perhaps, that they are used more frequently than other terms. But, in my opinion, such an assumption is not warranted. If the evidence shows that such operations have been and are described as mining operations, not in some isolated instance but with some frequency, it matters not, in my opinion, that they have been and are described in other ways or even that other descriptions are more common.

Some of the evidence of the usage of the term "mining" refers only to recent times, that is, to the last twenty years or so. The respondent sought to attach some weight to that fact. But, in my opinion, I may properly take into account that evidence along with other evidence not confined to that period, including the legislative usage of the term. I think it would be a mistake to say that the question is as to the meaning which the relevant provisions of the Act had at the time when they were enacted and that therefore no regard can be had to anything that occurred afterwards. When the Act was passed there were no works in Australia of the kind which ICI subsequently established. It was not until such works were established that any question could arise whether they were or were not works to which the general expression "mining operations" used in the Act applied. When it was raised in this case, the question was whether the expenditure then recently incurred by ICI was incurred in connexion with the carrying on of mining operations. In my opinion it must be legitimate to ask whether in the sense in which the words were then used or understood, they applied to the operations of ICI.

I have given an account of the evidence and of the considerations upon which a decision must be made as to the answer to be given to that question. After weighing up all the material before me and the submissions made to me, I find that ICI did incur expenditure of a capital nature in necessary plant and in development, in connexion with the carrying on by it of "mining operations upon a mining property" in Australia. Accordingly I hold that a deduction should have been allowed under s. 122 of the Act.

As to the amount which should have been allowed as a deduction two questions arise. The first is the extent of the operations which should be described as mining operations. The residual capital expenditure claimed in the tax year under review was based upon expenditure incurred in exploration and prospecting and in the establishment of the salt fields, including the provision of plant and equipment up to and including the crystallizers. It did not include expenditure upon the harvesting equipment or the washing plant. The question whether the harvesting of the salt and its treatment in the washing plant are part of the mining operations has arisen, I was informed, in a later tax year, but it is not a question which is now before me. Although it was suggested that if my reasons for judgment indicated how that question should be answered this might save further litigation, I do not think I should deal now with any matter with which this appeal is not concerned.

I have described the different stages in the treatment of the brine from the time of its extraction from below the surface onwards. Having decided that ICI is carrying on mining operations, the further question whether all the processes up to the crystallization of the salt fall within that description depends in my opinion upon a decision whether the object of the mining activities should be regarded as the obtaining of brine or as the obtaining of salt in crystallized form. ICI contends that the object was the obtaining of salt harvested and "washed" and ready to be transported to those who would use it as a commercial commodity, but for present purposes the question may be put in the form in which I have expressed it. In my opinion, in the sense which is here relevant, the "end product" of the operations should be considered to be salt in crystallized form, freed from the water in which it was in solution. Applying to the facts of this case the principle stated in Federal Commissioner of Taxation v. Broken Hill Proprietary Co. Ltd. [1] , I am of opinion that the relevant expenditure was all incurred in connexion with the carrying on of mining operations.

1. (1969) 120 C.L.R. 240, particularly at pp. 272-274.

Counsel for the respondent submitted that the situation at Port Alma is wholly different from that which exists at a place where all that you see when you look at the area at the top of the mine will naturally be called a "mine", without distinction between what is occurring in the extraction of the precious metal or the mineral and what is afterwards occurring in plants within that area. I appreciate that there is a difference of that kind between these operations and many mining operations and, as I indicated earlier in these reasons, I thought that the physical features of the salt fields tended away from a decision that the operations at ICI should be described as mining. But having decided that they should be so described, I do not accept the submission that what is being sought in that operation (in the sense which is here relevant) is the brine and not the salt. It was suggested that the respondent's argument gains support from the reference in the B.H.P. Case [2] , to the operation of mining for petroleum. It was there said that this would finish with the obtaining of petroleum as defined, that is, naturally occurring hydrocarbons in a free state and that treatment in a refinery of the hydrocarbons would not be part of the operation of mining. But in my opinion that illustration does not assist the respondent. I do not think that it should be said that to refine petroleum in order to obtain oil of a particular type is to separate that oil from "unwanted" materials or substances mined with it. But, in my opinion, it can be said that the concentration and crystallization processes are operations to separate the end product from other substances (water and some salts other then sodium chloride which are precipitated before the brine reaches the crystallizers) obtained from the earth with it and I think that these are operations of the kind which the leading judgment in the B.H.P. Case [1] describes as "mining operations". Accordingly on this point my decision is in favour of ICI.

1. (1969) 120 C.L.R., at p. 273. 2. (1969) 120 C.L.R. 240, at p. 272.

One further question has to be considered in relation to the claim under s. 122. The respondent contends that the figure taken by ICI as "the number of whole years in the estimated life of the mine as at the end of the year of income" (see s. 122 (2)) was wrong, or, at least, has not been shown to be right. The figure taken in the year of income now under consideration was thirteen. Some evidence suggests that this figure was too high. But the question to be decided is whether it was too low. If it was not too low then the deduction claimed was not excessive. The respondent contends that it is not shown that the estimated life was less than twenty-five years and that, therefore, in accordance with sub-s. (2), the number twenty-five should be used in calculating the amount of the allowable deduction.

I think it is clear that no one can give a precise answer to the question what was in September 1947 the estimated life of the mine. But there were, in my opinion, two limiting factors. One was that the leases were for twenty-one years. At the relevant date they had approximately twenty years to run. They were expressed to be renewable for further periods of twenty-one years "on the same terms as may be in force with regard to mineral leases at the time of such renewals". But under the legislation (The Mining Acts, ss. 30 and 33), any renewal would be at the discretion of the Minister. In these circumstances I am of opinion that the leases could be regarded as justifying an assertion that the "estimated life" should not be taken at more than twenty years. Another limiting factor was that the leases provided that ICI could not produce more than 4,000,000 tons of salt from underground brines under the leases, except with the permission of the Governorin-Council. That meant that if the company maintained an annual production of 200,000 tons, the limit would be reached in twenty years. If the average production exceeded that figure then the limit would be reached earlier. Figures were produced at the hearing which showed that the yearly production did exceed 200,000 tons in the two years to which the figures referred. But any calculations based on those figures are made difficult of application to the question to be resolved, because in those years there were abnormal weather conditions affecting production and because the salt produced was derived in part from sea water and not from the underground brine.

I am satisfied that the opinions given by Mr. Hancock and Mr. O'Shea would justify a conclusion that, as at the commencement of the operations, fourteen years was not too low an estimate, provided that I am satisfied, in relation to one essential point of difference between the approach to the problem made by them on the one hand and by Dr. Jones on the other, that the approach of Hancock and O'Shea is acceptable. I proceed to explain how the method adopted by them in reaching an estimate differed from that of Jones. The leases relate to a known area of land. Calculations were made, based upon estimates of the total quantity of the brine-bearing deposits lying beneath the land to which the leases referred and of the amount of brine contained within those deposits. Thus was obtained a figure for the volume of brine lying below the leased land before any pumping operatio began. The total volume of the brine-bearing deposit beneath the leased land was estimated to be 193,000 acre feet. The volume of brine was estimated by Hancock to be 54,000 acre feet. There were some differences of opinion as to the correctness of the specific yield figure of twenty-eight per cent taken by Hancock in arriving at the estimate of 54,000 acre feet, but on the evidence I think it may be accepted as a reasonable figure. Then an estimate was made as to the proportion of the brine that would be in a practical sense recoverable by pumping. Hancock put this at eighty per cent in one part of his evidence, but elsewhere he said that he considered that of the 54,000 acre feet, 45,440 acre feet could be extracted. That would be more than eighty per cent. O'Shea thought that the brine extracted might be any percentage between a lower limit of 30 and an upper limit of 100 and expressed the opinion that "one should work on something around about sixty per cent extractable". On some further assumptions, which have yet to be mentioned, that opinion of O'Shea would lead to an estimate of about ten years for the life of the mine. Hancock's more optimistic figure as to the extractability of the brine gives, of course, a higher figure for the life of the mine and, on the same further assumptions as those made by O'Shea he put the life at approximately thirteen years. These further assumptions were (1) that there would be an annual production of 200,000 tons of salt; and (2) that to produce 200,000 tons about 3,200 acre feet of brine would be required. Hancock had made earlier calculations based upon a lower figure, but after further study of available production data, he said that this factor should be taken at about 3,200 acre feet.

I think it is clear that both Hancock and O'Shea assumed for the purposes of their calculations that the maximum volume of the brine resources was the calculated volume of the brine which was beneath the leased land at the time when the operations began. The essential point upon which Jones differed from them was that he assumed that the pumping operations could extract ultimately a substantially greater amount of brine than that which was located at the commencement of the operations within the leased area. He pointed to the facts that the aquifer is not limited to that location but extends far beyond it and that, as pumping goes on, brine from outside that area must move into it and replace partially the brine that has been pumped out. He recognized difficulties in estimating how much would come in but expressed the opinion that over a ten-year period thirty per cent or more of the brine pumped would be brine which had come from outside the area. He said that assuming that there was no change from present activity over the whole of the area of the aquifer, the life of the deposit would be very much longer than the ten to thirteen years that had been suggested and would probably be twice as long as that. It would be twenty-five years or thereabouts.

I think it is plain that the other experts did not think that no brine would come from the rest of the confined aquifer into the area in which the pumps were operating, although if I have understood his evidence correctly, on Hancock's view this process would be slow and would not have such substantial effects as are postulated by Jones. But whether it would be slow or fast, several reasons were put forward by counsel for ICI as justifying the making of an estimate of the life of the mine based upon the estimated volume of brine which was within the leased area of the commencement of operations and not taking into account the volume of brine which might move afterwards into that area. One reason was that as a matter of the construction of the leases no authority was given to the lessee to extract brine in excess of the volume which was originally located within the leased area. I do not accept that submission. The leases impose an express limit upon extraction, expressed in terms of the total production of salt. There is no other express limit. The volume of brine beneath the surface of the leased area was not a definite figure known to the parties to the leases at the time when they were granted. It could be no more than an estimated figure upon which opinions would differ. I do not think it was intended that the lessee might afterwards be in breach of the terms of the lease because of having pumped more brine than was originally beneath the surface of the leased area. It would really be impossible for anyone to know at what point of time, as pumping proceeded, that limit would be reached.

But other reasons advanced in support of the method adopted by Hancock in making his estimate are in my opinion valid. When the problem was considered earlier by other persons, including O'Shea, it is clear that much attention was given to the effect upon the operations of ICI which any other pumping operations outside its area would have. The dramatic effect that this had on O'Shea's mind is shown by his opinion, expressed in March 1969, that after the use of 13,000 acre feet for the establishment of the ponds, there was "a nil life". He said that at that time there were real possibilities that happenings outside the area would reduce the movement of brine into the area and that caused him to take a pessimistic view of the continued feasibility of the pumping operations in that area. In stating in his evidence the limits of thirty per cent and a hundred per cent for the extractability of brine, O'Shea said that if there were no developments outside the leased area and the pressure was allowed to stay there to help extract the brine, a hundred per cent could be achieved but if, on the other hand, the leased area were to be surrounded by other bores extracting brine, then the extraction of brine in that area could come down to the lower limit. Dr. Jones acknowledged that he had disregarded the effects of pumping in adjoining areas. He said that the assumption of no change was the simplest one to make and if you supposed that changes were going to occur but you did not know what they would be, you could not make any estimate "because there is this complete inter-reaction between what goes on inside the lease and what goes on outside the lease".

There is another complicating factor in addition to those to which I have referred. Some of the salt produced comes from sea water which is pumped into the ponds. The evidence suggests that there will be significant variations, resulting from differences in weather conditions, in the amount of sea water used. If a given annual target of production of salt is set, there will be variations in the amount of brine used to produce it, corresponding to variations in the amount of sea water that is used. It is not practicable to make accurate calculations as to the effect of this factor.

Having regard to the complexities of the question and bearing in mind that all that can be done is to make an estimate which may turn out to be wide of the mark because the nature of the problem is such that accuracy cannot be achieved, I accept the evidence of Hancock and O'Shea as arriving at reasonable conclusions upon the assumptions which they made and I accept that their estimates were made by methods that might reasonably be adopted.

Their estimates were based on a production rate of 200,000 tons per year. In fact that has been exceeded. It may be exceeded in the future or, on the other hand, production may fall below it. Counsel for the respondent has contended that ICI must fail upon the question of the estimated life of the deposit, because it has brought no evidence at all to show what it intends to do. It is said that there is no evidence of the rate of production at which it will aim and there is nothing to establish the relevance of the assumed production of 200,000 tons upon which the calculations of the experts were based. I agree that evidentiary material has not been provided upon which a definite finding could be made as to the rate of production which will probably be maintained. But, in my opinion, that does not mean that the estimate of Hancock is of no value. He was asked to advise about the conduct of the operations as well as to qualify himself to give expert evidence. He was asked to make an estimate upon the basis of a production of 200,000 tons per year. I think I am entitled to draw the inference, and I do draw it, that in the early stages of the operations ICI expected and intended to maintain at least in the immediate future a production rate of the order of 200,000 tons. I think I am entitled also to conclude, in the light of what has actually happened, that in the immediate future that rate is likely to be exceeded. Of course, the intentions of ICI may change in the future for any one of a number of reasons. But it would be only if the rate fell significantly below the target of 200,000 tons that there would have to be a revision upwards of the estimated life in the mine. The possibility that such revision may be necessary in the future does not destroy, in my opinion, the validity of an estimate made as at September 1967.

For the reasons I have stated I find in favour of ICI upon all the disputed questions relating to its claim based upon s. 122 of the Act.

There was a claim for a deduction, under s. 54, for depreciation of certain plant and equipment used in the operations at Port Alma. It is acknowledge by ICI that this claim is strictly alternative to its claim based on s. 122 and if the latter claim is upheld the claim under s. 54 cannot be allowed. The respondent disallowed both claims. No reason has been given for disallowing the whole of the claim for depreciation as well as the claim under s. 122. At the hearing counsel for the respondent did not submit that no allowance for such depreciation should be made, although he raised a question concerning the inclusion in the amount upon which the claim was based of costs incurred in making the boreholds. Since I hold that the claim under s. 122 should be allowed, I need not deal further with this claim under s. 54.

The next matter to be considered is a claim based on s. 62AA of the Act. The claim is to deduct one-fifth of certain expenditure of a capital nature on new "manufacturing plant" for use in the operations at Port Alma. This claim, if within the terms of that section it is shown to be valid, is not excluded by the allowance of the claim under s. 122: see sub-ss. (10) and (11) of s. 62AA. But if the operations for which the plant was to be used are "mining operations" (as I have found) the application of s. 62AA is excluded by sub-s. (3) (a) thereof, unless the operations are of the kind described in par. (a) of sub-s. (4) thereof.

The first point to be considered is whether the "plant or articles" to which the claim relates were to be put to the use described in par. (a) of sub-s. (4). The paragraph reads:

(4) Subject to the last preceding sub-section and without either extending or restricting, by implication, the operation of sub-section (2) of this section, this section applies in relation to any property being plant or articles owned by the taxpayer that is for use by the taxpayer primarily and principally, and directly, in -

(a) the concentration of a metal or the treatment or processing of a metal after its concentration, or, in the case of a metal not requiring concentration, the application to the metal of a treatment or process which, if the metal had required concentration, would not have been applied until after the concentration.

In sub-s. (1) it is provided that "metal" includes a compound of a metal and that "concentration", in relation to a metal, means "the separation of the metal from its ore by any process". It was argued that the separation of the salt from the liquid in which it was dissolved was the separation of a "metal" from its "ore". In my opinion this submission should be rejected.

Submissions were made on behalf of ICI that the plant and articles in relation to which the claim under s. 62AA was made came within the provisions of par. (a) of sub-s. (2) and reference was made also to par. (c) and par. (e) of that subsection. I am disposed to think that it could properly be held that the salt produced by ICI answers the description of "manufactured goods" and that it was "derived from other goods" within the meaning of par. (a) of sub-s. (2). But since I hold that the operations in which the plant and articles to which the claim relates are used are mining operations (not being operations of the kind described in sub-s. (4) (a)), s. 62AA does not apply. The provisions of sub-s. (2) are expressed to be subject to sub-s. (3) and having regard to what I have held concerning the operations at Port Alma, the operation of the provisions of sub-s. (2) is excluded.

One other question remains, which is entirely separate from those which relate to the salt fields. This is a claim for a depreciation deduction with respect to acoustic ceilings and certain electrical wiring and equipment in the office buildings of ICI in Sydney and Melbourne. An appeal against the disallowance of a claim for depreciation of the same items in the tax year which ended on 30th September 1961 was dismissed in March 1970 by Kitto J.: see Imperial Chemical Industries of Australia and New Zealand Ltd. v. Federal Commissioner of Taxation [1] . Counsel for the respondent disclaimed any reliance upon any issue estoppel arising from that decision: cf. Caffoor v. Commissioner of Income Tax [2] . As the principal facts upon which this dispute depends are set out in the judgment of Kitto J., I need not restate them here. Some criticism was made of his Honour's statement of the facts, but in my opinion his description of the items in question did not contain any errors which could affect the conclusion which he reached. It may be that in some respects the evidence now before me differs from that which his Honour considered. I have not before me all the evidence which was placed before him. However, Mr. Palm, who gave evidence before me, had given evidence also in the earlier case. After considering his evidence, I do not think it appears that there were important differences between the evidence given before Kitto J. and the evidence given before me. It was submitted that his Honour's conclusion that the items under consideration were part of the "general setting" in which work was done should not be followed. I was referred to several authorities. Having considered the evidence and the submissions made to me, I am not satisfied that Kitto J. erred either in law or in fact in reaching his decision, or that I should reach now a different conclusion. I am not satisfied that the items in question were "property, being plant, or articles owned by a taxpayer and used by him for the purpose of producing assessable income" within the meaning of s. 54 of the Act. On this part of its objection to the assessment, I am of opinion that ICI fails.

(1) The deduction claimed by ICI pursuant to div. 10 of Pt. III of the Act should be allowed in full.

(2) Its claim for a deduction pursuant to s. 62AA of the Act should not be allowed.

(3) Its claim for a deduction pursuant to s. 54 of the Act with respect to plant and articles used in its operations at Port Alma, which was a claim alternative to the claim under div. 10 of Pt. III, should be disallowed.

(4) The claim for a deduction, pursuant to s. 54, with respect to acoustic ceilings and electrical equipment in the city buildings, should be disallowed.

The appeal has not been wholly successful. But the claim upon which ICI has succeeded was a major claim which I have allowed in full. A large part of the time occupied by the hearing was devoted to that claim. It is plain also that the objections to which the appeal related, which included the alternative claims made on the footing that the operations were not mining operations, should not have been wholly disallowed. In the circumstances, I think that the respondent should pay four-fifths of the costs of ICI of the appeal.

I order that the appeal be allowed; that the assessment be set aside and that the matter be remitted to the respondent Commissioner to make an assessment in conformity with this judgment. I order that the respondent pay four-fifths of the costs of the appellant of the appeal. I make the usual order as to the exhibits.

The respondent taxpayer, ICI Australia Ltd., in its tax year ending on 30th September 1967, conducted at Port Alma in northern Queensland an enterprise of producing salt (sodium chloride) for industrial purposes from brines raised from underground. The respondent is the holder of leases granted under The Mining Acts 1898 to 1967 of the State of Queensland (The Mining Acts), in respect of an area of some ten square miles which was part of a much larger area of land in the region of the Fitzroy River which contained sand and gravel bearing brine at up to three times the normal salt concentration of sea water. The brine had been trapped in the sand and gravel in an earlier geological age and held by a weathered shale bedrock below and a layer of impervious marine clay above. The aquifer, as the brine bearing area was referred to in the evidence, was at an unusually shallow depth. Its existence had been discovered by search and prospecting. The leases were for a term of twenty-one years, although they could be renewed at the discretion of the Minister (ss. 30 and 33 of The Mining Acts). They entitled the respondent to investigate the land to determine whether brines existed and to carry on "mining operations for the purpose of producing salt from underground brines obtained from such land". The land and its subjacent mineral bearing sands thus formed, in the circumstances of the case, a mining property for relevant purposes.

A full description of the respondent's operations is to be found in the judgment from which this appeal is brought. I have no need to describe them in any detail. Briefly, the respondent has sunk bores into the sand and gravel carrying the brine. The brine is mechanically pumped to the surface where it is led into a series of pools or ponds. These large areas of fairly flat land enclosed by earthern and rock walls are designed to hold the brine while it concentrates by natural evaporation but under fairly rigid control. As the brine becomes more concentrated it is passed from pond to pond, sometimes by means of gravity and sometimes by pumping, until eventually it flows into ponds where the salt is allowed to crystallize. At times, as a measure of control, either sea water or more brine from underground is added to the pond if evaporation is occurring too quickly. The evaporation is thus a controlled operation with a view to remove unwanted substances such as calcium sulphates and magnesium salts, as well as to concentrate the sodium chloride. After crystallization the salt is "harvested" and taken to a plant where it is washed with brine to remove other extraneous elements. Finally, the salt is carried to the port to be shipped away.

The Justice who heard the appeal held that the raising of the brine from underground by pumping, and the crystallization of the sodium chloride by the described evaporative process, were "mining operations" on a mining property within the meaning of s. 122 of the Income Tax Assessment Act 1936-1966 Cth (the Act). He also held that the aquifer to which the appellant had access, that is to say, the sand and gravel bearing brine, had for the purpose of s. 122 (2) an estimated life of fourteen years. He refused to hold that the evaporative processes to which I have referred constitute a concentration of the metal (sodium chloride) within the meaning and operation of s. 62AA of the Act.

The appellant Commissioner assessed the respondent to tax on the footing that it was not entitled to any deduction under s. 122 for capital expenditure in connexion with the raising of the brine or the crystallization of the salt or under s. 62AA as for concentration of the salt. The appellant also refused a deduction for depreciation under s. 54 in respect of certain electrical fittings and acoustic ceilings to which I later refer.

The respondent's objections to the assessment were (i) that it was entitled to a deduction under s. 122 in respect of capital expenditure on mining operations on a mining property, that is to say, the mining of the brine and the crystallization of the salt; (ii) that the deduction under that section should be calculated on an estimated life of the mine of thirteen years; (iii) that it was entitled to a further deduction under s. 62AA because the evaporative process to which I have referred constituted the concentration of a metal, namely sodium chloride, within the meaning and operation of 62AA; and (iv) that it was entitled to an allowance for depreciation of certain electrical fittings and acoustic ceiling panels installed in buildings used by the respondent in its business. These were claimed to be "plant or articles" owned and used by the respondent for the purpose of producing assessable income. This objection was made with a view to challenging the decision of Kitto J. in Imperial Chemical Industries of Australia and New Zealand Ltd. v. Federal Commissioner of Taxation [1] . His Honour decided in that case, in respect of the same items, that they were neither plant nor articles within s. 54. The Justice hearing this matter at first instance was of opinion that Kitto J.'s decision was correct.

Accordingly, in the result, the assessment of tax which did not reflect deductions conformable to his Honour's findings was set aside and the matter remitted to the appellant for reassessment. The appellant on this appeal challenges the finding that the respondent is entitled to a deduction under s. 122, and that, if entitled to such a deduction, it should be calculated on an estimated life of the mine of fourteen years. The respondent, by cross-appeal, challenges the refusal to allow a deduction under s. 62AA and under s. 54 with respect to the electrical fittings and acoustic ceiling panels.

The first matter to be dealt with is the appellant's challenge to the finding that the respondent, in raising the brine to the surface of the land, was carrying on mining operations on a mining property within the meaning and operation of s. 122 of the Act. I would be satisfied to adopt my brother's conclusion in this respect and to do so for the reasons which he gives. However, as the appellant strongly pressed its submission that the activity of the respondent was not a mining operation, I would express myself briefly with respect to that matter.

The principal ground of the appellant's attack on this finding was that on the material led in the case it ought to have been found that, in common parlance, the described activity of the respondent would not be known as mining, but more properly described as brine pumping. It was then said that in this field of inquiry "common parlance" was definitive and that therefore the respondent was not carrying on a mining operation. This submission was largely derived from expressions used in decisions of this Court, in particular in N.S.W. Associated Blue-Metal Quarries Ltd. v. Federal Commissioner of Taxation [1] . There the question was whether extracting basalt in an open quarry was mining. It was held not to be so, chiefly because it would seem to be a misuse of language to speak of blue-metal mining. But I obtain no assistance from that case in deciding whether the recovery from below ground of a mineral, albeit not by a traditional form of underground operation, is mining within the meaning of a taxation statute evincing a clear policy of encouraging the recovery of minerals by mining.

As a result of decisions of the Court, it seems that "mining" for the purposes of the Act prima facie is the recovery from below the surface of the earth of a mineral or a mineral bearing substance by underground workings of some kind. But this prima facie meaning has been extended to include the recovery of minerals or mineral bearing substances which traditionally have been or are mined by underground working by any method including open cut methods or even recovery where no overburden at all has to be removed. On the other hand, the working in an open pit or quarry of substances such as blue stone and limestone is quarrying. The decision that the recovery of limestone was not mining was taken in the face of evidence that amongst those engaged in mining, that is to say, in the common parlance of the mining industry, the operations described in the case were mining operations, it being concluded that there would be incongruity in speaking in Australia of "limestone workings as a mining property". See North Australian Cement Ltd. v. Federal Commissioner of Taxation [1] .

On the other hand, the recovery of gypsum by open cut working was held to be a mining operation for the purposes of the Act, there being evidence that gypsum extraction by underground techniques was a common and established practice abroad though not in Australia, and evidence that the mining profession habitually referred to the winning of gypsum as mining. Also, it was held that "in common parlance it is usual to speak of "gypsum mines" ": see Waratah Gypsum Pty. Ltd. v. Federal Commissioner of Taxation [2] .

In this case, however, there has been no suggestion that the proper description of the respondent's activities is that of quarrying. It has not been contested in the case that sodium chloride for the purposes of the Act is a metal and the brine, though liquid, is a mineral or at least a mineral bearing substance. It is recovered from beneath the earth's surface by elevating it by means of a mechanical pump. Quite apart from the persuasive fact that the recovery of petroleum is treated by the Act as a form of mining I cannot think that there is any valid essential distinction for present purposes between the recovery of minerals or mineral bearing substances by mechanical means which involve the presence of men below ground and the recovery of the brine from below ground by pumping: each requires the sinking of shafts following upon prospecting. Although attention must be paid to common usage in the nomenclature of an operation in deciding whether an activity is a mining operation for the purposes of the Act, I do not think that the decisions of this Court deny that there is a concept of mining to be considered for that purpose. I think it may be taken that the concept is that of recovery from below the surface of the earth by effort, human or mechanical, separately or in combination, of a mineral or mineral bearing substance. Whilst the unqualified generality of the view of Isaacs and Rich JJ. in Australian State Quarries Ltd. v. Federal Commissioner of Taxation [1] , has not been accepted to the point where the extraction of blue metal or limestone in an open quarry would be designated a mining operation, the views of Knox C.J., Starke and Higgins JJ. in that case are worthy of note. They must now, of course, be read as qualified by the statement that the description by common parlance of an activity as quarrying and not as mining may be definitive.

In his Honour's reasons for judgment in this case he refers to the evidence of usage, principally abroad, in the description of activities such as those carried on by the respondent. I have no need to refer to this evidence beyond saying that his Honour did not find any usage of descriptive terms to cause him to depart from what it seems to me is the concept of mining. I agree with his Honour's views in this connexion. My own conclusion is that the activity of the respondent fits the concept of mining and should be described as a mining operation. That description is not denied by any usage of nomenclature. To speak of brine pumping is, in my opinion, but to describe the particular method of recovery employed, that is to say, conducting the mining operation. The other circumstances to which reference is made in the reasons for judgment of my brother Walsh fortify this conclusion.

The next question arising in the appeal is whether the process of evaporating the brine in the controlled fashion described forms part of the mining operation. Of course, if the evaporation was of sea water or of salt water obtained otherwise than from below the surface of the earth, the evaporative process would not itself be a mining operation any more than the pumping of the water from the sea or from a lake would be a mining operation. But though the evaporative process is similar in each case the facts that the brine is the immediate product, as I think, of a mining operation and that the recovery of the mineral raised by the mining operation is not complete until the evaporative process has taken place lead me to conclude that that evaporative process is itself so associated with the raising of the brine and the recovery of the metal, sodium chloride, as to be part of the mining operation. Accordingly, I agree with the finding of the primary judge in this respect. The respondent should have the appropriate deduction under s. 122.

What, then, is the appropriate deduction? This question involves a consideration of what is meant by s. 122 (2), when it speaks of the "estimated life of the mine as at the end of the year of income". Here the area of the aquifer from which the mining lease entitled the respondent to raise the brines "for the purpose of producing salt" is in my opinion the "mine". The respondent claimed a deduction which was calculated on fourteen years as the estimated total life of the mine or a remaining estimated life of thirteen years. That view of the life of the mine was supported by the respondent, and contested by the appellant, by evidence given at first instance. This was on the footing that the estimated life of the mine whether in total or as at the end of the year of income was a fact to be objectively decided by the Commissioner when making his assessment and on appeal by the Court. But it seems to me, having regard to the terms of s. 122 (2), that the estimated life of the mine as at the end of the year of income is that figure which the taxpayer estimates to be that life. It does not seem to me reasonable to suppose that the legislature intended that the Commissioner should make the estimate. His duty is to assess on the return and such other information as he may have; he is unlikely to have information of the kind necessary to be had in order to determine objectively what is the life of the mine as at the end of the year of income. It seems to me that the true meaning of the provision is that it is for the taxpayer each year to put forward his estimate of the remaining life of the mine. That figure, in my opinion, will not necessarily be the same figure in each successive tax return nor will it necessarily reflect a constant estimate of the total life of the mine. The estimate of one year may be proved by the experience of the succeeding year to have been wrong, or it may be that the taxpayer's programme of extraction may vary upwards or downwards. It does not seem to me to be a practical course or one warranted by the Act to endeavour to determine objectively what the taxpayer's average recovery rate will be: or, for that matter, what is his intended recovery rate or average recovery rate as applicable to any particular span of time. In my opinion, the intention of the Act is that the taxpayer shall make an estimate each year of the remaining life of the mine, having regard to what has already occurred and to the programme he then intends. It seems to me that so long as it is an estimate of the life of the mine by the taxpayer, the Commissioner is bound by it.

His Honour accepted a view put forward by one of the expert witnesses called on behalf of the respondent and found that the mine had an estimated life in all of fourteen years. Whilst I would not disagree with this finding as reflecting his Honour's view of the evidence given before him, I would myself reach the same conclusion by a construction of the sub-section which would render an examination of evidence unnecessary in the circumstances. I would feel bound to accept the respondent's estimate as expressed in its return of income.

I turn then to the respondent's submission that the decision of his Honour refusing a deduction under s. 62AA was erroneous. The respondent's claim is in respect of expenditure of a capital nature on new manufacturing plant for use in the crystallizing operations at Port Alma. To use the jargon current in this field it is a claim for an investment allowance in respect of that plant. Its validity turns on the question whether the process of evaporation to which I have already referred is the concentration of a metal within the meaning of s. 62AA. As I have said, it is not contested that sodium chloride is, for the purposes of the section, a metal. Concentration in relation to a metal means "the separation of the metal from its ore by any process", but does not include a number of operations not presently applicable, s. 62AA (1).

The evaporative process which I have described does in fact effect a concentration of the sodium chloride by separation of it from the other constituents of the brine which was, as I think, mined. In the mining to recover many metals what is brought out of or up from the earth is a substance in which the metal is embedded or intermixed. The recovery of the metal is a process of freeing it from that total substance, in general referred to as the ore or ore body. A mineral is defined in the Shorter Oxford Dictionary as "any substance which is obtained by mining. In early and modern technical use the ore (of a metal)". It does not seem to matter whether the process of freeing the mineral is mainly physical or chemical. In general, the process of freeing the metal leaves on the one hand the metal and on the other a residue. I much doubt whether that residue, for example, the sand resulting from the flotation process used in the barrier mines, or the quartz after the removal of the gold in the case of gold recovered from reef gold or the dross after a cyanide process is properly called the ore or the metal's ore. That term, it seems to me, is properly used to describe the substance in which the metal has been found whilst still embedded in or intermixed with it. But the section treats that from which the metal is separated as the ore of the metal. But be that as it may, in general, the "separation" of the metal leaves two physically identifiable substances, usually solids.

In the present case the evaporative process does free the sodium chloride from the water, magnesium or other salts with which it was associated in the brine. As the result of the process the water changes its form, it vaporises and thus joins the elements of the atmosphere. The magnesium and other salts remain as separate identifiable substances. To speak of the brine as the ore of the sodium chloride, or the water and magnesium and other salts as the ore of the sodium chloride is undoubtedly to suggest a strange concept. It is not one commonly encountered. But it satisfies the dictionary meaning to which I have referred. Also it seems to be contemplated by the Act that a metal which is the subject of mining operations will have been raised in an ore or ore body from which it must be freed or separated. This is so whether the brine itself or its elements other than the sodium chloride is regarded as that from which the salt is separated. Though there may be instances of minerals which are mined in a free state (petroleum may be an instance) i.e. without being embedded or intermixed with any substance, in general what is mined will be an ore or ore body. Usually that ore or ore body is solid and not fluid.

However s. 62AA by concession embraces sodium chloride as a metal. It intends to encompass "any process" of separation of the metal from its ore. To decide that the raising of brine by pumping from below ground is a mining operation to recover sodium chloride must, in my opinion, involve the conclusion that the brine, or at any rate the water and salts other than sodium chloride it contains, is the ore of the sodium chloride. It cannot be said that the sodium chloride is mined in a free state, that is to say, without associated elements from which it must be freed. Therefore, unless it is uniquely regarded as a metal not mined in a free state yet without an ore or ore body the brine or its constituents other than the sodium chloride, in my opinion, should be regarded for the purposes of the Act as the ore of the sodium chloride. Given that the Act includes the making of salt from brines raised from underground by pumping within the policy of encouragement of mining which the Act otherwise exemplifies, I can see no ground in point of policy for excluding the evaporative process by which the sodium chloride is separated out of the brine from the advantages of s. 62AA. It is quite true that part of the mining process is the passage of the brine through the ponds. But this does not preclude the conclusion that that passage is a process of concentration of the mineral within the meaning of the section. In gold mining, or silver lead mining, the cyaniding or the flotation are part of the mining operations, yet would properly be described as concentration processes within the section. For these reasons I would allow a deduction under s. 62AA for capital expenditure otherwise qualifying under the section.

The remaining question relates to certain acoustic ceiling penals and certain electrical equipment installed in buildings owned or used by the respondent in its business. The panels and electrical apparatus are fully described in the judgment in Imperial Chemical Industries of Australia and New Zealand Ltd. v. Federal Commissioner of Taxation [1] and in my brother Walsh's judgment in this case. I am content to uphold Kitto J.'s decision that these items do not qualify for a depreciation allowance under s. 54 for the reasons which are expressed by his Honour in the report of that case. This case is quite different from that of Wangaratta Woollen Mills Ltd. v. Federal Commissioner of Taxation [2] where the items in question had a close connexion, indeed a function, in the process of manufacture being employed by the taxpayer.

1. (1970) 120 C.L.R. 396. 2. (1969) 119 C.L.R. 1.

I would dismiss the appeal and allow the cross-appeal so far as concerns the claim for a deduction under s. 62AA.

I agree in the conclusions of the Chief Justice for the reasons stated in his judgment.

The Federal Commissioner of Taxation - the Commissioner - disallowed an objection by ICI Australia Ltd. - ICI - to the assessment of its income tax for the year ended 30th September 1967. ICI appealed and the appeal was heard by Walsh J. who allowed the appeal, set aside the assessment and directed re-assessment in conformity with his judgment. The Commissioner has appealed. ICI has cross-appealed against the disallowance of claims to deduct (1) the sum of $44,460 under s. 62AA of the Act, and (2) the sum of $16,281 under s. 54 of the Act. ICI also appeals against the limited order for costs made in its favour. Furthermore, ICI claims that, if the appeal be allowed, then, it is entitled to several deductions beyond those allowed.

Apart from the deduction of $16,281 under s. 54, all the deductions claimed related to one activity of ICI, that is, its operation of a "saltfield" or "salt works" at Port Alma in the estuary of Fitzroy River in central Queensland. It contends that this activity is "the carrying on of mining operations upon a mining property" entitling it to the deductions provided by s. 122 of the Act. This, the Commissioner contests and, as the issue is the central matter in the appeal, some account of the activity is necessary.

There is, near Port Alma, an underground source of brine. It covers a very large area partially filling the ancestral valley of the Fitzroy River. Below the surface of this area, there is a deposit of sand and gravel - the alluvium - now containing water with salt in solution to a concentration of up to nine per cent. At its maximum this concentration is about three times as great as that to be found in sea water. The alluvium lies between shale beneath it and an impermeable clay layer above it. The water, it is thought, came from the sea into the alluvium forming a saline aquifer over which marine clay was later deposited. What happened is thus described in a report by Mr. Hancock, dated 4th October 1971:

Erosion of the bedrock to form the Ancestral Fitzroy River valley

Accumulation of sand, gravel, clay and silt beds as channel sands and alluvial plain deposits into the alluvial sequence

Rejuvenation of the erosion cycle in the river with consequent erosion of the upper layers of the deposited alluvium

Inundation of the Fitzroy River valley by the sea, and deposition of the marine/parallic clay sequence as a blanket cover over the alluvium

Emergence of the coast line with exposure of the marine clay layer and establishment of the present stream system

The theory is that, as time went on, the salinity of the sea water trapped in the alluvium increased as some of the water was driven off under pressure. ICI holds a lease of but a part of this area - about ten square miles - and, at a point upon this lease, it pumps brine from the aquifer to the surface, thus draining the aquifer. As brine is pumped out more brine collects by gravity from the whole area and not merely from the area leased by ICI. At the surface the brine is evaporated by the sun in large evaporation ponds to yield crystalline salt which is then harvested, washed, dried, stored and taken on board ships for transport to Botany for the manufacture of chlorine. Brine is, however, not the only source of salt recovered at the works. Sea water is pumped into the evaporation ponds and it serves two purposes: (1) to dilute the brine and control its density as it evaporates to avoid premature crystallization; and (2) to provide a significant part of the salt recovered.

This summary of the activity of ICI at Port Alma seems to me to pose the question whether it constitutes, wholly or in part "mining operations upon a mining property" to use the language of s. 122 which, it is to be observed, requires not only that there should be "mining operations" but that those operations should be upon a "mining property". Indeed, the first critical problem, as it seems to me, is to determine whether ICI has a "mine" at Port Alma for the language of s. 122 (2) demonstrates that the tax payer entitled to deductions under s. 122 must have a mine, the life of which can be estimated. If there be no such "mine", s. 122 can have no application. Mining operations by themselves are not enough, nor do I think are mining operations upon an area which has, under State law, been granted as a "mining lease". This is but a factor in deciding whether there is a "mine" for the purposes of the Income Tax Assessment Act.

There can be no doubt that the end product of the whole activity is crystalline salt. All the crystalline salt recovered by the activity cannot, however, be said to come from a "mine" in any sense. That part which comes from the evaporation of sea water pumped into the evaporation tanks certainly does not come from a mine. If there be a "mine", it seems to me that it cannot be other than ICI's leased area holding underground brine, and, if this be so, then any mining operation of ICI would, prima facie, be the bringing of that brine to the surface at the point where it collects at the pump. The rate of pumping would then determine the estimated "life of the mine" (s. 122 (2)).

As a matter of language, I find it difficult to bring within the description of a "mine" liquid or gas resources collected underground by the forces of nature. It is easy enough to regard a deposit of rock salt as a mine and as to the word "mine" I accept the usage referred to the evidence which Walsh J. describes as [1] :

to employ the words "mining" and "mine" when referring to the recovery of rock salt and not to employ them when referring to recovery of salt from sea water or other natural liquid sources or even when referring to what was called "solution mining" I find the opposite conclusion especially difficult in a case where the so-called "mine" is no more than part of the resources which nature has collected so that what is taken by one "miner" from his "mine" is replaced, wholly or in part, by inflow from the resources outside that "mine". Here, according to the evidence, "there is this complete inter-reaction between what goes on inside the lease and what goes on outside the lease". In s. 122, it seems to me clear that a "mining property" is one which is, or has upon it, a mine and the mine is the mass being mined. It is also the place in which miners work. The "mine" must be of such a character that it has a life capable of estimation presumably by calculating how long it would take to remove what is there available for mining. When a mineral deposit is being removed by open cut methods there is a good instance of what is meant by a "mine". It is a fixed deposit in a place. On the other hand, a person who, upon his own land, taps and pumps to the surface an underground replaceable source of water, whether flowing or not, does not, I think, have a "mine", no matter how highly mineralized the water might be and what minerals might be recovered from it. To put down a bore and pump subterranean water is not to have a mine upon a mining property. 1. Ante, at p. 538.

It is a matter of some significance that State laws have made provision outside their mining legislation relating to the boring for water - even mineralized water - and the pumping of water from underground to the surface. The most illuminating law is perhaps the Groundwater Act 1969 Vict.. There are, however, provisions of similar character in the statute law of the other States. In an article by Clark and Myers in the Melbourne University Law Review, vol. 7, at p. 237 entitled "Vesting and Divesting; The Victorian Groundwater Act 1969 ", there is to be found at p. 238 a reference to this legislation. It is apparent that one problem to which these laws are directed is that water flows underground from one property to another, so that it is inappropriate to refer to one property by itself as a mining property and to the bores thereon as mines.

The foregoing considerations are, I think, reinforced when it is found that, in the special provisions of the Act relating to "Prospecting and Mining for Petroleum" - div. 10AA, there is no reference to a "mine". There is, therefore, a significant difference between the provisions of sections of div. 10 and those of div. 10AA, and although obtaining petroleum is referred to as "mining", there is not the requirement that such mining must be upon a mining property which is or includes a "mine" with an estimated life. Such a provision would, as I think, be entirely inappropriate. A "gusher" is not in ordinary parlance a mine notwithstanding that it may be the result of a mining operation. Division 10AA unquestionably assists in reaching the conclusion that, for the purposes of the Act, ICI is carrying on mining operations at Port Alma. It militates, however, against the argument that ICI has there a mining property which is, or upon which there is, a mine.

It is, I consider, entirely in keeping with the reality of what is being done that ICI in its literature and in its annual report for 1967 refers to its undertaking at Port Alma as a new salt field, rather than a salt-mine. The word "new" is used because ICI has at Osborne in South Australia solar saltfields where sea water is pumped into a circulation system and thence into a crystallizing system.

My conclusion that there is no mine at Port Alma is, of itself, enough to enable me to dispose of the appeal so far as it concerns s. 122 and the deductions there authorized. It should, in my opinion, be allowed. I should, however, add that if I were wrong in this and that ICI is at Port Alma carrying on mining operations upon a mining property, I would consider that the pumping of brine from the aquifer to the surface is the only mining operation there carried on. ICI is, within the relevant provisions of the Act, mining brine; the evaporation of sufficient water from the brine to enable salt crystals to form is not, in my opinion, part of its mining operation. At Osborne the evaporation of sea water is not a mining operation; at Port Alma the evaporation of sea water is not a mining operation; nor, I think, is the evaporation of water from the brine which has been obtained by a mining operation. Once the brine is pumped from the aquifer into the evaporation tanks, the mining operation comes to an end. From that point the operation is exactly the same as if the brine had been run into the ponds by gravity from a source upon the surface. Evaporation and crystallization go on throughout the year; mining goes on only when brine is being pumped. I would not, therefore, regard the use of the evaporation ponds, or, the circulation system whereby salt water moves on into the crystallization system, or, the crystallization system itself, as the continuation of a mining operation. In other words, although I consider that the bringing of the brine to the surface is, having regard to the Act as a whole, a mining operation to obtain brine, the treatment of that brine and sea water to obtain salt is not. In Federal Commissioner of Taxation v. Broken Hill Proprietary Co. Ltd. [1] , it was pointed out that what was being mined at Middleback Range was iron ore, not iron, and the treatment of that iron ore was not a part of the taxpayer's mining operation. So here the treatment of the brine mined is, as I see it, no part of the operation to mine brine.

For the foregoing reasons, I respectfully differ from the learned trial judge in his conclusions that ICI's activities at Port Alma amount to mining operations upon a mining property and that those operations extend beyond bringing the brine to the surface to include the evaporation and crystallizing processes. I would, therefore, allow the appeal.

The cross-appeal refers in the first place to ICI's claim for a deduction pursuant to s. 62AA in respect of expenditure upon plant or articles used in its operations at Port Alma on the footing that they were plant and articles used primarily, principally and directly in the concentration of a metal, that is salt. It was submitted that such concentration takes place because, by the operations of evaporation and crystallization, the compound of a metal, that is salt, is separated from its ore, that is the water in which it was dissolved. Walsh J. rejected this submission and I agree with his Honour. In my opinion, water is not an "ore". The operation under consideration is no more than the conversion of water into vapour. Separation of a metal from its ore leaves, so it seems to me, two solids separate from one another, one the ore, and the other the metal. It would, I think, be contrary to common usage to regard the water in which the salt is dissolved as an ore. To drink a glass of mineral water drawn from underground sources would not normally be regarded as the commencement of a process whereby a metal is separated from its ore.

Differing as I do from his Honour in not regarding the evaporation of the water and the crystallization of the salt as part of mining operations, it is necessary for me to decide a question which his Honour referred to but did not have to decide by reason of his application of s. 62AA (3) (a). That question is whether the evaporation of the water and the crystallization of the salt are operations by means of which manufactured goods are derived from other goods so that the deduction claimed is allowable under s. 62AA (2) (a) (i). His Honour did express the view that the process answers the description and with this I agree. I regard salt as manufactured goods in the sense that it is a product of an industrial undertaking requiring both plant and labour. The brine does, I think, answer the description of "other goods". That a process makes use of the forces of nature does not, of itself, exclude that process from being regarded as manufacturing even though the derivation of goods simply by letting nature take its course - if this were possible - would, I think, fall outside the description of deriving manufactured goods. In any event, what happens at Port Alma in moving the brine from the evaporation tanks and in the formation, washing and drying of crystals, seems to me to go a long way beyond simply letting nature take its course. I would therefore allow the deductions claimed under s. 62AA in respect of the plant and articles used in the evaporation and crystallization processes.

The next deduction which the cross-appeal asserts is a claim for depreciation in respect of acoustic tiles and electrical equipment installed in ICI's office buildings in Sydney and in Melbourne. The claim is on the footing that these are plant or articles owned by ICI and used by it for the purpose of producing assessable income. It is contended that the deduction is authorized by s. 54 of the Act. Walsh J. followed an earlier decision of Kitto J. in disallowing the deduction claimed. In this I think he was right. I agree with the judgment of Kitto J. in Imperial Chemicals Industries of Australia and New Zealand Ltd. v. Federal Commissioner of Taxation [1] .

It is now necessary for me to refer to the following further grounds of cross-appeal:

12. That if the said appeal by the Commissioner of Taxation is allowed in whole or in part the taxpayer claims to be entitled to an allowable deduction under s. 54 of the said Act in respect of certain property being plant or articles used in its said operations at Port Alma which His Honour found and held to be mining operations within the meaning and for the purposes of div. 10 of Pt III of the said Act.

13. That if the said appeal by the Commissioner of Taxation is allowed in whole or in part the taxpayer claims to be entitled to a further or additional allowable deduction under s. 62 AA of the said Act in respect of its expenditure upon certain property being plant or articles used in its said operations (other than the plant or articles referred to in par. 3 hereof).

As to these matters a re-examination of the argument does not permit me to be precise about what is involved. I notice that in the course of argument, Mr. Aickin in referring seemingly to ground 12 said:

The point arises under s. 54. What the taxpayer claimed was a deduction under s. 54 in respect of two items which were claimed to be plant or articles used in the course of the taxpayer's operations.

Yes, it is ordinary depreciation. Perhaps I should just say that my learned friend, as I understand it, now concedes, subject to one point that we do not wish to trouble the Court with, that if we are wrong about the "mining point" we ought to have ordinary depreciation under s. 54 for the pumps and so on which he did not allow us and about which he said nothing at all until my learned friend told the judge below.

However, to deal with them as well as to give effect to my conclusions already expressed, I would frame an order disposing of this appeal along the following lines, namely, that the appeal and the cross-appeal, as to the deduction of $44,460 under s. 62AA, should be allowed, that the assessments should be remitted to the Commissioner for re-assessment on the footing that although ICI carried on mining operations in pumping brine to the surface, those operations were not being carried on upon a mining property, and that the other operations of ICI at Port Alma were not mining operations but were operations by means of which manufactured goods were derived from other goods. Gibbs J.

By his assessment to tax on income derived by the respondent, ICI Australia Ltd. ("ICI"), during the year ended 30th September 1967 the Commissioner of Taxation disallowed claims made by ICI for the following deductions:

(1) $144,213 under s. 122 of the Income Tax Assessment Act 1936-1966 ("the Act");

An appeal brought by ICI against this assessment was allowed in part by my brother Walsh, who upheld the claim to a deduction under s. 122, but held that the other claims were rightly disallowed. From this judgment the Commissioner has appealed and ICI has cross-appealed.

It is unnecessary for present purposes to repeat the full statement of the facts that is contained in the judgment of my brother Walsh. On 6th April 1967 ICI became the holder of mineral leases granted for the term of twenty-one years from 1st May 1966 (and renewable for further periods of twenty-one years) of lands of a total area of about ten square miles near Port Alma in the delta of the Fitzroy River in central Queensland. The leases, which were granted under the mining legislation of the State of Queensland, were expressed to be "for the purpose of mining for salt". Under the conditions contained in the leases ICI was obliged (inter alia) to employ continuously a specified number of persons on working the land comprised in the leases "by carrying on mining operations for the purpose of producing salt from underground brines obtained from such land". It was also obliged to construct works of not less than a specified cost and designed to be capable of producing an average of 150,000 tons of salt per year from the underground brines, and to make a specified annual expenditure on production of salt from underground brines; such expenditure was to be in respect of work "connected with and necessary for the effectual proving, development and working of the mines in the land". The lands the subject of the leases form part of a larger area about thirty-five miles wide under which are deposits of sand and gravel which contain brine, that is a solution of sodium chloride (salt) and other salts (particularly of calcium and magnesium) in water. The concentration of the salt in the brine is considerably larger than in normal sea water. The sequences of sand and gravel containing the brine are found at various depths (all of them comparatively shallow) in a surrounding layer of clay and clayey sand, which itself extends from the bedrock below to an impermeable layer of marine clay above. The aquifer from which the brine is obtained is confined; there is no source from which it may be recharged with brine once that which is there has been removed. During the tax year in question, ICI incurred expenditure of a capital nature on the land the subject of the leases in exploring and prospecting for brine and in constructing what it called a "salt field", that is works and plant necessary to enable brine to be recovered from the aquifer, and salt to be obtained from the brine, by a method which, briefly described, is as follows. The brine is pumped up from the aquifer and then flows into a series of ponds where the salt is increasingly concentrated by evaporation. At this stage of the process calcium sulphate is deposited and removed. When necessary, sea water is added to the brine; this is done with the main object of diluting it and controlling the process of crystallization but, as a side result, quite a substantial part of the salt ultimately produced comes from the sea. Finally the brine is pumped into a long drain called a launder, from which it flows into a number of crystallizers - fields with earthen banks - where crystallization of the sodium chloride finally takes place, the liquid and some unwanted substances, such as magnesium salts, are removed and the salt is harvested by a machine and then transferred by a conveyor system to a wash plant where it is washed to increase its purity. It is then available for transportation elsewhere.

My brother Walsh held that the expenditure incurred by ICI in respect of exploration and prospecting for brine and in the establishment of the salt fields, including the provision of plant and equipment up to and including the crystallizers, was incurred in connexion with the carrying on by ICI of "mining operations upon a mining property" within s. 122 of the Act. No claim was made in respect of expenditure upon the harvesting of the salt and its subsequent treatment in the washing plant. Section 122 (1) and (2) of the Act read as follows:

(1) Where a person, in connexion with the carrying on by him of mining operations upon a mining property in Australia or the Territory of Papua and New Guinea for the purpose of gaining or producing assessable income, has incurred expenditure of a capital nature on necessary plant, development of the mining property or housing and welfare, an amount ascertained in accordance with this section shall be an allowable deduction in respect of that expenditure.

(2) Subject to the next succeeding sub-section, the deduction allowable is the amount ascertained by dividing the residual capital expenditure, as at the end of the year of income, ascertained in accordance with the succeeding provisions of this section, by -

(a) a number equal to the number of whole years in the estimated life of the mine as at the end of the year of income; or

The submission of the Commissioner was that ICI did not carry on "mining operations upon a mining property" on the leases near Port Alma. The main contention was that the operations were not "mining operations" and it was hardly disputed that if they were "mining operations" the leases could be described as a "mining property". Alternatively it was submitted that if the raising of the brine to the surface by pumping was a mining operation, the subsequent operations whereby the brine was converted into crystals of salt did not answer that description. It was not in contest that if all the operations in question in the present case were "mining operations upon a mining property" the expenditure claimed met the other requirements of the section, although a further question arose as to the amount of the deduction allowable under s. 122 (2).

The word "mining" is, as Dixon J. said in Deputy Federal Commissioner of Taxation (Q.) v. Stronach [1] , "a familiar source of difficulty". The meaning of the expression mining operations in s. 122 of the Act, and in a similar section of an earlier Act, has been considered in a number of cases in this Court. In N.S.W. Associated Blue-Metal Quarries Ltd. v. Federal Commissioner of Taxation [2] , the Court said:

In Lord Provost and Magistrates of Glasgow v. Farie [3] , Lord Macnaghten said: "The meaning of the word "mines" is not, I think, open to doubt. In its primary signification it means underground excavations or underground workings". But there are certain metals, minerals and substances which have been traditionally recovered by underground workings. They have thus become associated in idea with the concept of a mine and the association of ideas has made it inevitable that whatever the form of the excavation that is made for the purpose of winning them, whether underground or open-cast, it will be called a mine and the operations will be called mining. This may be an extension of the primary meaning of mining, but it must we think be recognized that, where the context or subject matter does not otherwise require, it forms today one of the natural applications of the words "mine" and "mining". In this sense it is part of the prima facie meaning. In other statements of a similar view it has been said that the term "mining" has been applied to the winning of minerals "usually won by subterranean working" (Deputy Federal Commissioner of Taxation (Q.) v. Stronach [1] ) or "generally obtained by underground working" (N.S.W. Associated Blue-Metal Quarries Ltd. v. Federal Commissioner of Taxation per Kitto J. [2] ). Counsel for the Commissioner relied on these passages and submitted that ICI does not obtain the salt from its leases near Port Alma by underground workings, and that salt is not a substance which is ordinarily and normally recovered by underground working, at least in Australia, and that therefore the operations carried on by ICI were not "mining operations" within the meaning recognized by the Court. Moreover, he submitted that the operations could not be described as "mining operations" within the ordinary meaning which that expression has in common usage. He relied on the fact that ICI itself did not refer to its activities as "mining operations" but called the leases near Port Alma a "salt field". 1. (1936) 55 C.L.R. 305, at p. 313. 2. (1956) 94 C.L.R. 509, at pp. 523-524. 3. (1888) 13 App. Cas. 657, at p. 687. 4. (1936) 55 C.L.R., at p. 313. 5. (1956) 94 C.L.R., at p. 513.

It is true that the expression "mining operations" is a popular, rather than a technical, expression (Federal Commissioner of Taxation v. Broken Hill South Ltd. [3] ) and should, in accordance with established principles of construction, be understood in its ordinary and natural meaning unless the provisions of the Act indicate that some departure from that meaning is intended. However, the expression is one whose ordinary and natural meaning is flexible rather than fixed. In N.S.W. Associated Blue-Metal Quarries Ltd. v. Federal Commissioner of Taxation [4] , the Court said: "The meaning of the words "mine" and "mining" like the word "minerals" is by no means fixed and is readily controlled by context and subject matter". Later in the judgment in that case reference was made [5] to the statement of Lord Watson in Lord Provost and Magistrates of Glasgow v. Farie [6] , that the words "mines" and "minerals" "are not definite terms: they are susceptible of limitation or expansion, according to the intention with which they are used". I do not understand that the Court in Deputy Federal Commissioner of Taxation (Q.) v. Stronach [7] or N.S.W. Associated Blue-Metal Quarries Ltd. v. Federal Commissioner of Taxation [8] intended to lay down a rigid and exhaustive definition of the flexible words "mining operations". The statements in those cases must, of course, be understood in the light of the questions there under discussion, which were whether the obtaining by open-cut workings of granite and freestone (in the former case) and blue metal (in the latter) amounted to mining operations. Moreover, the operations in the present case are of a different kind from those considered in the earlier decisions and the Court has not previously had occasion to advert to the question that now arises. Here the salt is not recovered by underground workings, in the sense that men do not go beneath the surface of the earth to dig it out, but it is obtained by pumping out, from the place in the earth's crust where it is found, the solution in which it naturally occurs. Moreover, salt is a substance which has a traditional association with mining. For many centuries rock salt has been extracted from underground mines, as it still is today in many parts of the world, though not in Australia. There is thus no incongruity in speaking of salt being mined and indeed the Shorter Oxford English Dictionary, in defining "mine", gives salt as one example of the substances that may be mined. Although clearly enough some of the methods of obtaining salt cannot be referred to as mining (for example, its production by the evaporation of water obtained from the sea or from a lake on the earth's surface could not be so described), it seems to me that the expression "mining operations" is capable of including the recovery of salt by the pumping of brine from a natural deposit in the crust of the earth.

1. (1941) 65 C.L.R. 150, at p. 155. 2. (1956) 94 C.L.R., at p. 522. 3. (1956) 94 C.L.R., at p. 524. 4. (1888) 13 App. Cas., at p. 675. 5. (1936) 55 C.L.R. 305. 6. (1956) 94 C.L.R. 509.

Evidence was called by ICI to show that among men connected with mining the operations on the salt field near Port Alma would be described as "mining operations". Also, references were made to technical and other literature, American and English in origin, in which expressions such as "solution mining", "hydraulic mining" and "mining through bore holes" are applied to a procedure whereby water is pumped down to the mineral sought to be recovered which is then pumped back to the surface in solution. In England the recovery of salt in this way is commonly called "brine pumping" but it is not unnatural to refer to it as mining. An example of the use of the word "mining" to include brine pumping is to be found in the law reports. In Salt Union Ltd. v. Brunner, Mond & Co. [1] , Lord Alverstone C.J., speaking of the methods used in Cheshire to obtain salt, said [2] :

During the latter half of the last century a third method of mining had become common in the district, namely, pumping brine from mines which had become inundated by the collapse of the roof and subsidences of the ground, and the access to the unworked salt rock therein of surface water. If the recovery of artificial brines by pumping can appropriately be called mining, that word would seem to me no less apt to refer to the recovery of natural brines by pumping. Indeed, in one of the technical works referred to in evidence the words "well mining" were used to refer to the recovery by pumping of both natural and artificial brines. However, the most striking and apposite example of the use of the expressions "mining", "mining operations" and "mine" to refer to the activities in question is to be found in the mineral leases themselves. Those leases were granted under the powers conferred by, inter alia, s. 30 of The Mining Acts, 1898 to 1967 Q.. The expression "mining operations" was used in that section and in s. 34, which dealt with the covenants and conditions to be contained in mineral leases, and although that expression was not defined it appears clearly enough from the definitions of To Mine, Mining Purposes and Earth in s. 3 that it included the obtaining of salt by pumping brine from an underground deposit of sand and gravel. The Mining Acts, 1898 to 1967 Q. have since been repealed, but the provisions of the legislation now in force would also treat the obtaining of salt in that way as mining: see The Mining Act, 1968 Q., ss. 7 (earth's crust, mine, mineral, mining purpose), 21, 28. State legislation cannot control the interpretation of a Commonwealth statute, but the fact that the obtaining of salt in this way is treated as a mining operation by the State legislation that applies to the case is relevant in considering whether it is also a mining operation within the meaning of the Act (see Australian Slate Quarries Ltd. v. Federal Commissioner of Taxation [1] : Federal Commissioner of Taxation v. Henderson [2] ; North Australian Cement Ltd. v. Federal Commissioner of Taxation [3] ). It may be added that the fact that ICI described its leases as a salt field obviously does not preclude the Court from holding that the operations were mining operations - see Australian Slate Quarries Ltd. v. Federal Commissioner of Taxation [4] . 1. [1906] 2 K.B. 822. 2. [1906] 2 K.B., at p. 823. 3. (1923) 33 C.L.R. 416, at pp. 418, 424; cf. p. 423. 4. (1943) 68 C.L.R. 29, at p. 44. 5. (1969) 119 C.L.R. 353, at p. 359. 6. (1923) 33 C.L.R., at p. 419.

In my opinion, the subject matter of s. 122 and the context in which it is found provide indications that it should be liberally construed. The section is one of the provisions of the Act whose evident purpose is to encourage the production of minerals in Australia and in the Territory of Papua and New Guinea; it gives effect to a legislative policy which, as was said in N.S.W. Associated Blue-Metal Quarries Ltd. v. Federal Commissioner of Taxation [5] , was "to make special concessions to mining as a means of winning precious metals and valuable minerals from the soil". Salt is a valuable mineral, important to industry as well as essential to life, and there is no reason why the legislature should not have wished to encourage its production as well as that of other minerals. A further indication of the scope of s. 122 is given by the fact that under div. 10AA of Pt III of the Act (headed "Prospecting and Mining for Petroleum") a deduction is allowable in respect of the unrecouped capital expenditure of a taxpayer who has incurred capital expenditure in carrying on "prescribed petroleum operations", which are defined by s. 124DB (1) to mean "prospecting or mining operations in Australia or in the Territory of Papua and New Guinea for the purpose of discovering or obtaining petroleum". It is true that div. 10AA does not speak of "a mining property" but clearly in that division the expression "mining operations" is understood to be wide enough to include operations for the purpose of obtaining petroleum, and this shows that the legislature regarded a process whereby a mineral in liquid form is pumped up through bores from under the earth as a mining operation. To my mind it is apparent from these indications that the words "mining operations" in s. 122 are intended to have a meaning wide enough to include the obtaining of salt by pumping brine from beneath the earth's surface.

For the reasons I have given I have reached the conclusion that the activities of ICI on its mineral leases near Port Alma may without incongruity be described as "mining operations", and that that expression in s. 122 of the Act is wide enough to cover those activities. It seems to me to follow that the land subject to the mineral leases, on which the activities were conducted, could appropriately be described as "a mining property". The facts that some of the salt produced came from the sea, and that as brine was pumped up from the leased area further brine would be likely to flow into the sand and gravel under the leased land from parts of the aquifer that lay outside it, do not in my opinion affect these conclusions.

The next question to be considered is whether all the operations up to and including the crystallization of the salt were "mining operations" within s. 122 or whether the mining operations ceased when the brine had reached the surface. The question when mining operations begin and end was discussed in Federal Commissioner of Taxation v. Broken Hill Pty. Ltd. [1] , and in the course of that discussion the Court said [2] :

We do not doubt that to separate what it is sought to obtain by mining from that which is mined with it, e.g., the separation of gold from quartz by crushing etc., or the separation of tin from dirt by sluicing, is part of a "mining operation" but we would not extend the conception to what is merely the treatment of the mineral recovered for the purpose of the better utilization of that mineral. In my opinion, the treatment of the brine after it had been pumped to the surface and before it was harvested in the crystallizers was for the purpose of separating that which it was sought to obtain by mining, namely, salt, from that which was mined with it, namely water and the calcium and magnesium salts. The object of ICI's operation was, I consider, to obtain salt, not to obtain brine. I agree, therefore, with the view taken by my brother Walsh that all the operations up to crystallization formed part of the mining operations. 1. (1969) 120 C.L.R. 240, at pp. 272-274. 2. (1969) 120 C.L.R., at p. 273.

The final question that arises under s. 122 is what divisor was to be taken for the purpose of applying sub-s. (2) of that section. ICI estimated the life of the mine as at 30th September 1967 as thirteen years but the Commissioner submitted that ICI had failed to make good this estimate and that twenty-five years should therefore be taken as the divisor in accordance with s. 122 (2) (b). Upon a consideration of the evidence my brother Walsh accepted ICI's estimate but in my opinion it is unnecessary to consider whether that estimate was correct. I hold that upon the proper construction of the section it is left to the taxpayer to make his own estimate of the life of the mine and (unless, perhaps, that estimate is not a genuine one) the Commissioner and the Court are bound to accept it. The scheme of div. 10 of Pt III of the Act, as in force at the relevant time, stated very broadly, was to permit a taxpayer to recoup all his capital expenditure of the kind referred to in s. 122 before paying tax on the profits from his mining operations. Under that division the taxpayer was given a variety of choices which, without going into full detail, may be summarized as follows. First, he could deduct a proportion of his residual capital expenditure in accordance with s. 122 (2). Since the residual capital expenditure was reduced by the amount of any deduction allowed under the section (s. 122 (5) (a)), if the estimate of the life of the mine made in one year was low, so that the amount of the deduction was proportionately high, the amount of deduction available in the following year would have been correspondingly reduced. Unless the taxpayer made an election to the contrary, the maximum amount of the deduction available under s. 122 was "an amount equal to so much of the assessable income of the year of income as remains after deducting all allowable deductions, other than deductions allowable under this section or under section one hundred and twenty-three aa " (sub-s. (3)). The purpose of this provision was apparently to ensure that a taxpayer who did not derive enough profit in the year of income and in the seven succeeding years to recoup the expenditure, would not be prevented by s. 80 from getting the full benefit of s. 122. However, under s. 122 (4) the taxpayer had the right to elect that sub-s. (3) should not apply; then if the deduction exceeded the income in a particular year the excess would be a loss carried forward in accordance with s. 80. Secondly, the taxpayer could elect that expenditure on plant or development should be a deduction from the assessable income of the year of income in which the expenditure was incurred: s. 122A. In the case of housing and welfare expenditure, the taxpayer could elect to deduct the expenditure over five years: s. 122AB. The deductions under ss. 122A and 122AB were alternative to those allowed under s. 122. Thirdly, the taxpayer could elect to have a deduction where he had appropriated income for expenditure of a capital nature on plant or development although the amount of income so appropriated had not been actually expended in the year of income: s. 122B. Finally, the taxpayer could elect to have no deduction under the Division in respect of plant: s. 123; he could then claim ordinary depreciation under s. 54. If a taxpayer adopted the primary method of claiming a deduction under s. 122 it became necessary that an estimate should be made of the life of the mine. The section does not say by whom the estimate is to be made. There is, however, no reason to assume that it was intended that it should be made by the Commissioner. The facts necessary to enable such an estimate to be made, such as the extent of the mineral deposit, and the intentions and ability of the taxpayer to work it, would not be known to the Commissioner and would go beyond what would ordinarily appear in a return of income. No doubt the Commissioner could obtain information under s. 264 but he would not have it in the first place, and to make an estimate he would in many cases require an amount of geological and financial detail disproportionate to the collateral question to be decided. Having regard to the facts that div. 10 left a number of wide choices to the taxpayer, and that a taxpayer was not required to supply with his assessment the mass of material necessary to enable an estimate of the life of the mine to be made, in my opinion it should be concluded that it was intended that the estimate should be made by the taxpayer. I need express no opinion as to what the position would be if it were shown that the estimate were not a genuine one, for example, if the number of years estimated appeared so unreasonable, having regard to the material available, that no one could honestly have reached such a result. The Commissioner argued in the present case that on the evidence the estimate of thirteen years was wrong, or alternatively that there was no evidence on which it should have been found to be correct. However, the evidence fell far short of establishing that the estimate made was not a genuine one. Whether, on the evidence, the estimate was right or wrong ICI was, in my opinion, entitled to take thirteen as a divisor for the purposes of s. 122 (2), since thirteen was the number of years in fact estimated as the life of the mine, and was of course a period less than twenty-five years.

The first question arising on the cross-appeal is whether ICI was entitled to a deduction under s. 62AA (5) of an amount equal to one-fifth of its expenditure on certain property used in the crystallizing operations. If this deduction is available it is additional to that allowable under s. 122 - s. 62AA (11). However, it is common ground that the deduction is only available if the property in question came within the description of "plant or articles owned by the taxpayer that is for use by the taxpayer primarily and principally, and directly, in the concentration of a metal " within s. 62AA (4). By s. 62AA (1) "concentration", in relation to a metal, "means the separation of the metal from its ore by any process, but does not include crushing, grinding, breaking, screening or sizing in order to enable or facilitate the carrying out of any such process". "Metal" includes a compound of a metal - s. 62AA (1). It was submitted that salt is a "metal" within the definition contained in s. 62AA because it is a compound of sodium which is chemically a metal. I shall assume, without deciding, that that submission is correct. The question then is whether the process whereby the sodium chloride was separated from the water and the other salts in the brine can be described as "the separation of the metal from its ore". It might have been a more correct use of language if s. 62AA had used the word "extraction" instead of the word "separation", but nothing turns on that distinction. The crucial question is whether the brine, or alternatively the water and other salts, excluding sodium chloride, can be described as the "ore" of the sodium chloride. In my opinion the word "ore" does not bear such a meaning. "Ore" is defined in the Shorter Oxford English Dictionary to mean "a native mineral containing a precious or useful metal in such quantity, etc., as to make its extraction profitable". In short, ore is a metalliferous mineral. Water, even water having minerals in solution, is not ordinarily described as an "ore". Moreover, although one may naturally speak of "iron ore" or "nickel ore", it is not usual to speak of "salt ore". There is no evidence of any usage by which the word "ore" is applied to brine or any of its components, and nothing in the statute that would warrant giving the word where it appears in s. 62AA (1) an extended meaning which it cannot naturally bear. In my opinion the deduction claimed under s. 62AA was rightly disallowed.

The other question involved in the cross-appeal is whether ICI is entitled to a deduction for the depreciation of certain of the installations in its office buildings in Sydney and Melbourne, namely certain electrical wiring and acoustic ceiling panels. The submission on behalf of ICI was that the wiring and ceiling panels were "plant, or articles owned by a taxpayer and used by him for the purpose of producing assessable income" within s. 54 of the Act. The installations are described in the judgment of Kitto J. in Imperial Chemical Industries of Australia and New Zealand Ltd. v. Federal Commissioner of Taxation [1] , where the present question was decided adversely to the taxpayer. The electrical wiring in question forms part of the reticulation system for conveying electric current throughout the buildings. The wires are carried loose in trays fitted below the ceilings. ICI relies on the fact that the wiring was designed in elaborate detail so as to provide the necessary amount of power for the equipment intended to be used on each floor: the nature of the office machines intended to be used controlled the nature and the extent of the wiring. Counsel for ICI challenged the statement made by Kitto J. [2] , that the wiring and associated electrical installations had "no relevance to the activities of the appellant beyond the relevance they would have to any occupier's activities". It was submitted that they had a special relevance, being designed and installed in such a way as to meet ICI's particular requirements, having regard to the income-earning activities proposed to be carried on within the various parts of the buildings. The acoustic ceiling panels were metal panels which fitted into a framework fixed below the structural ceiling. The main purpose of the panels was to absorb sound and reduce the level of noise in the offices, although no doubt they served an aesthetic purpose as well.

1. (1970) 120 C.L.R. 396. 2. (1970) 120 C.L.R., at pp. 398-399.

The decisions on the meaning of plant or articles within s. 54 have been reviewed in the judgment of McTiernan J. in Wangaratta Woollen Mills Ltd. v. Federal Commissioner of Taxation [3] . Although fixtures may be "plant or articles", in my opinion they will not fall within that expression if their only function is to form part of the general setting in which the taxpayer produces assessable income. In the present case the installations in question were no more than parts of the buildings where ICI carried on some of its activities. The buildings of which they formed a part were office buildings which could not in themselves be regarded as "in the nature of a tool of the taxpayer company's trade" and were in no way comparable to the dyehouse the subject of the decision in Wangaratta Woollen Mills Ltd. v. Federal Commissioner of Taxation [1] or the dry dock considered in Inland Revenue Commissioners v. Barclay, Curle & Co. Ltd. [2] . In my opinion, the decision of Kitto J. in Imperial Chemical Industries of Australia and New Zealand Ltd. v. Federal Commissioner of Taxation [3] was correct and my brother Walsh was right in holding, in conformity with that decision, that the installations were not "plant or articles" used by ICI for the purpose of producing assessable income. The cross-appeal should accordingly fail.

1. (1969) 119 C.L.R. 1, at pp. 7-11. 2. (1969) 119 C.L.R. 1. 3. [1969] 1 W.L.R. 675. 4. (1970) 120 C.L.R. 396.

Finally, a minor question arises as to the form of the order. My brother Walsh, in allowing the appeal by ICI ordered that the assessment be set aside and that the matter be remitted to the Commissioner to make an assessment in conformity with his judgment. Before us counsel for the Commissioner submitted that it would be more convenient if the assessment were not set aside and that it would be sufficient to direct that it be amended to give effect to the opinion of the Court. He referred to Driclad Pty. Ltd. v. Federal Commissioner of Taxation [4] . In my opinion the order should be amended in the manner suggested by the Commissioner. I would dismiss the appeal and cross-appeal but would vary the form of the order in the manner suggested.