Nardell Colliery Pty Ltd v New South Wales Coal Compensation Review Tribunal & Anor

LOWER COURT New South Wales Coal Compensation Review Tribunal JURISDICTION : LOWER COURT 1999/11 FILE NUMBER(S) : LOWER COURT JUDICIAL OFFICER :

• 44 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION Administrative Law List

30049/02 The Nardell Colliery Pty Ltd v New South Wales Coal Compensation Review Tribunal & Anor

Introductory 1 His Honour: This is an application for judicial review pursuant to s69 of the Supreme Court Act 1970 in relation to a determination of the New South Wales Coal Compensation Review Tribunal (the Tribunal). 2 The Court is informed that, in certain respects, this is a test case which will affect the determination of a large number of claims pending before the New South Wales Coal Compensation Board (the Board) and the Tribunal. 3 On 19 November 1999, the Board determined a claim for compensation by the plaintiff, The Nardell Colliery Pty Limited (Nardell). The company was only partially successful in its claim. Nardell appealed to the Tribunal. On 17 April 2002, the Tribunal decided the appeal. The Tribunal dismissed Nardell's appeal in relation to two heads of claim but remitted the application to the Board for redetermination in a third respect. These proceedings relate to the Tribunal's determination of the appeal. 4 Nardell has joined the Board and the Tribunal as defendants in the present proceedings. The Tribunal has filed a submitting appearance. 5 On the hearing before me, Mr S D Robb of Queen's counsel and Mr N Kidd of counsel appeared for Nardell and Mr S J Gageler of senior counsel and Mr N Perram of counsel appeared for the Board. 6 By its amended summons dated 26 March 2003, Nardell claims the following orders or such other orders as the Court thinks fit. (The technical terms will be explained in this judgment.) An order under section 69 of the Supreme Court Act 1970 that: (a) the direction of the first defendant in respect of variable 'r' in paragraph 3 on page 30 of its Decision dated 17 April 2002 in CCRT No. 1999/11 in the matter of an appeal by the plaintiff against a determination of the second defendant (the CCRT Appeal) and the direction of the first defendant that no orders be made in respect of front-end payments and super royalty in paragraph 4 on page 30 of that Decision be quashed; (b) the first defendant re-determine afresh its determination in respect of variable 'r' in the CCRT Appeal (including super royalty) according to law in conformity with this Court's decision concerning the way in which variable 'r' should be determined in the circumstances of the present case; (c) the first defendant re-determine afresh its determination in respect of front-end payments according to law in conformity with this Court's decision concerning the way in which front-end payments should be dealt with in the circumstances of the present case.

The facts 7 There is an agreed statement of facts. The narrative is some four and a half pages long and incorporates two ring binders of documentary material. I will review the facts of the case in the context of the relevant legislation (which has gone through a number of fundamental changes with changes of government and government policy). In doing so, I will refer to aspects of the agreed facts and incorporated documentation as is necessary. 8 As an aid to assimilating what follows, I provide the following tables: RELEVANT INSTRUMENTS Coal Mining Act 1973 (the CMA 1973)Provisions concerning coal leases and the application of royalty and front-end payments in favour of coal owners Coal Acquisition Act 1981 (the CAA 1981)Acquisition by the Crown of all privately owned coal as at 1 January 1982 Coal Mining (Amendment) Act 1981 (the CMAA 1981)Amendment to the CMA 1973 consequential upon the CAA 1981 Coal Acquisition (Compensation) Arrangements 1985 (the 1985 Arrangements)Compensation for acquisition Coal Ownership (Restitution) Act 1990 (the CORA 1990)Some dispossessed owners could apply for restoration Statute Law (Miscellaneous Provisions) Act 1991Amendment to CMA 1973, reinstating the application of royalties in favour of private coal owners Mining Act 1992 (the MA 1992)Replaced CMA 1973; restored entitlements of private coal owners to a limited extent Coal Acquisition (Amendment) Act 1997 (the CAAA 1997)Power in the Crown to re-acquire restored coal and to refuse applications for restoration Coal Acquisition (Re-acquisition Arrangements) Order 1997 (the 1997 Arrangements)New scheme for compensation

ABRIDGED CHRONOLOGY 1 January 1982Acquisition of Nardell's coal by the Crown 20 October 1989Coal lease to Bloomfield Collieries Pty Limited 24 June 1997Nardell's claim for compensation under the 1985 Arrangements determined at nil 12 December 1997Nardell applied for restoration of its previously owned coal November 1998Nardell's application for restoration refused 26 November 1998Nardell applied for compensation under the 1997 Arrangements 19 November 1999The Board's determination of compensation under those Arrangements 16 December 1999Appeal to the Tribunal by Nardell 17 April 2002 Decision by the Tribunal

Nardell as coal owner under the Coal Mining Act 1973 9 The exploitation of coal deposits in this state has been heavily regulated. As at 1981, the Coal Mining Act 1973 (the CMA 1973) provided that coal could not be extracted, whether by a private coal owner or by a third party, otherwise than under a coal lease granted by the Crown: s130. 10 The CMA 1973 also provided for payment to the Crown of a royalty on extracted coal at the prescribed rate (prescribed royalty): s77(1)(b). A further royalty could be levied on the lessee by agreement as a condition for grant of the lease (super royalty): s41(7) and s77(1)(a). The super royalty was customarily levied on coal more easily won, as by open cut method. Seven-eighths of all royalty received by the Crown - prescribed royalty and super royalty - was paid to the coal owner: s76(2). 11 In the process of letting coal leases, a premium payable to the Crown could also be negotiated with the lessee (a front-end payment). That was then to be paid over in whole to the owner or owners of the coal: s128(3) and (4). (A coal lease commonly covered coal deposits owned by more than one coal owner.) 12 The value of a coal deposit to a private coal owner was, accordingly, so far as is presently material, the coal owner's interest in any royalty and in any front-end payment collected by the Crown in relation to coal extracted prospectively.

Nardell's coal acquired by the Crown under the 1981 legislation 13 The Coal Acquisition Act 1981 (the CAA 1981), s5, provided for the compulsory acquisition by the Crown of all privately owned coal in the state. Section 5 provided as follows: 5 All coal that, but for this Act, would be vested in - (a) an instrumentality or agency of the Crown; or (b) any person other than the Crown, is vested in the Crown freed and discharged from all trusts, leases, licences, obligations, estates, interests and contracts.

The effective date was 1 January 1982. 14 The Coal Mining (Amendment) Act 1981 (the CMAA 1981) amended the CMA 1973, consequential upon the CAA 1981. Otiose provisions were removed. The word "coal" was deleted from s76(2) (which related to the coal owner's share in royalty) and subsections 128(3) and (4) (which related to the coal owner's entitlement to share in front-end payments) were deleted altogether. 15 Nardell was a private coal owner. As at 1 January 1982, its coal became vested in the Crown.

The 1985 Arrangements for compensation of dispossessed coal owners 16 The executive government was authorised by the CAA 1981 to make arrangements for the determination of compensation. In that regard, s6(1) provided as follows: 6(1) The Governor may make arrangements - (a) for the determination of the cases, if any, in which compensation is to be payable as a result of the enactment of this Act; and (b) if there are any such cases - for the determination of the amount and method of payment of any such compensation. 17 The Coal Acquisition (Compensation) Arrangements 1985 (the 1985 Arrangements) were promulgated pursuant to s6(1) of the CAA 1981. The Board and the Tribunal were constituted under the arrangements. The Board's role was to process and pay claims for compensation. An appeal lay to the Tribunal.

The 1989 coal lease granted to Bloomfield Collieries 18 On 20 October 1989, a lease over coal, which included coal expropriated from Nardell in 1982, was granted by the Crown to a third party, Bloomfield Collieries Pty Limited. Under the lease, Bloomfield was obliged to pay to the Crown a front-end payment of $121,788.00 (condition 133), the prescribed royalty on extracted coal and super royalty agreed at $0.50 per tonne for coal won by open cut, subject to variation of that rate in the Minister's discretion (Schedule B). 19 The front-end payment was paid on 29 October 1989. 20 So, as from 20 October 1989, the Crown took the exclusive benefit of the front-end payment and of the prescribed royalty and super royalty levied in relation to the coal expropriated from Nardell in 1982.

The 1990 restoration legislation 21 Next came the Coal Ownership (Restitution) Act 1990 (the CORA 1990) which provided, selectively, for restoration of ownership of coal which had been acquired by the Crown under the CAA 1981. A refund of any compensation received under the 1985 Arrangements had to be made in exchange for any such restoration: s6. 22 Conformably, s76(2) of the CMA 1973 was amended by the Statute Law (Miscellaneous Provisions) Act 1991, re-instating the entitlement of private coal owners to seven-eighths of the royalty paid in relation to privately owned coal, with the same commencement date as the CORA 1990, 22 June 1990. This amendment made no distinction between prescribed royalty and super royalty in that regard. 23 There was no re-instatement of the entitlement of private coal owners to share in the distribution of a front-end payment.

Replacement of the Coal Mining Act 1973 with the Mining Act 1992 24 That was followed by the Mining Act 1992 (the MA 1992) which replaced the CMA 1973. Relevantly, the MA 1992 distinguished between publicly and privately owned minerals, including coal. (Privately owned coal, as at 1992, can only have been coal expropriated under the CAA 1981 and restored under the CORA 1990.) 25 As to publicly owned coal, there was an obligation on the part of the holder of a mining lease to pay a base royalty and any additional royalty that might be prescribed: ss282 and 283. These royalties corresponded respectively with the prescribed royalty and super royalty under the CMA 1973. 26 As to privately owned coal, there was an obligation to pay the prescribed (base) royalty: s285(1), of which seven-eighths was to be paid by the Crown to the coal owner: s284(2). There was now no statutory provision imposing or authorising the imposition of a super royalty in relation to privately owned coal, whether as agreed or as prescribed. 27 The replacement of the CMA 1973 with the MA 1992 made no material difference in relation to the royalty stream from the coal expropriated from Nardell in 1982. The prescribed royalty and a super royalty continued to be payable by the coal miner, the coal now being public rather than private coal, and the Crown continued to take the full benefit of both types of royalty.

Failure of Nardell's application for compensation under the 1985 Arrangements 28 Nardell made a claim for compensation under the 1985 Arrangements. On 24 October 1997, the compensation was assessed at nil because of a capping clause in the arrangements pursuant to s6(3) of the CAA 1981, which limited the compensation payable to companies in the one group. (Another company in the same group had exhausted the compensation available to the group.)

The 1997 re-acquisition legislation 29 The CORA 1990 was amended by the Coal Acquisition (Amendment) Act 1997 (the CAAA 1997). Sections 5A and 7(1A) were introduced. In the case of coal acquired by the Crown in 1982 which had been restored to an owner under the CORA 1990, that coal could now be re-acquired at the Crown's discretion: s5A. In the case of coal acquired by the Crown in 1982 which had not been restored to the owner, restoration could now be refused at the Crown's discretion: s7(1A). 30 In relation to the re-acquisition of restored coal, s5A(3) provided as follows: 5A(3) In deciding whether to make such a recommendation, the Minister may have regard to the revenue that would be likely to accrue to the Crown if the coal were vested in the Crown.

In relation to coal acquisition in 1982 and which had not been restored, s7(1A) provided, so far as is presently material, as follows: 7(1A)(b) [T] he Minister may refuse to grant coal to an eligible claimant if of the opinion that the Crown would lose significant revenue were the coal to cease to be vested in the Crown. 31 The trade-off for this change of policy was a more generous compensation scheme. 32 The 1997 legislation had as its objective the concentration in Crown ownership of the more lucrative coal deposits in the state, leaving only the less lucrative coal deposits in private hands.

Nardell's failure to obtain restoration of its coal 33 On 12 December 1997, Nardell applied for restoration under the CORA 1990. In November 1998, the application was refused on the ground specified in s7(1A).

The 1997 compensation arrangements 34 The amendments made by the CAAA 1997 to the CAA 1981 in relation to compensation were as follows. First, s6(1) was amended by introducing a reference to s5A as well as to s5. The section now read as follows, so far as is relevant: 6(1) The Governor may make arrangements - (a) for the determination of the cases, if any, in which compensation is to be payable as a result of the operation of section 5 or 5A …; and (b) if there are any such cases - for the determination of the amount and method of payment of any such compensation. 35 Further subsections were also added to s6. These were s6(7) and s6(8). (The legislative history relating to the introduction of s6(4), (5) & (6) is not of relevance.) I need to quote only subs (7): 6(7) The amount of compensation payable under arrangements under this section must be just and equitable in so far as the compensation: (a) results from the operation of section 5A, or (b) relates to a refusal by the Minister to grant coal to an eligible applicant, after the commencement of this subsection, under the Coal Ownership (Restitution) Act 1990. For the purpose of giving effect to paragraph (b) any existing determination of the compensation concerned is to be re-determined in accordance with this subsection. 36 There is a distinction to be recognised between s6(1), in its original and amended form, and s6(7). Section 6(1) authorised a scheme which would provide the machinery for determining both entitlement criteria and how the amount of compensation was to be assessed. Section 6(7) does not relate to entitlement criteria. It relates exclusively to how the amount of compensation is to be assessed; the new scheme was to provide for the assessment of compensation in the manner required by the subsection. 37 Pursuant to s6(1) of the CAA 1981, as amended by the CAAA 1997, the 1997 Arrangements were promulgated by executive order. 38 Under the 1997 Arrangements, the Board was retained as the agency charged with the determination of applications for compensation under those Arrangements. The Tribunal was retained as the agency for determination of appeals. The 1985 Arrangements continued to apply in relation to the constitution, function and proceedings of those bodies. 39 The 1997 Arrangements make provisions for both eligibility and for the way compensation is to be determined. 40 Part 2 of the 1997 Arrangements, Compensation in respect of returned coal revested in the Crown, provides, so far as is material, as follows: 6(1 ) Any person, other than the Crown or an instrumentality or agency of the Crown, is eligible to apply for compensation under this Part in respect of saleable coal that: (a) is vested in the Crown under section 5A of the Acquisition (b) was immediately before it so vested in the Crown vested in the person. (2) The compensation payable is to be calculated in accordance with Schedule 1. 41 Part 3 of the 1997 Arrangements, Compensation when restitution application refused, provides, as follows: 10(1) When an eligible claimant under the Restitution Act [the CORA 1990] has the person's application under that Act refused on the ground specified in section 7 (1A) (b) of that Act (namely, that the Minister is of the opinion that the Crown would lose significant revenue were the coal concerned to cease to be vested in the Crown), the original compensation claim (that is, the claim for compensation under the 1985 Arrangements by reason of which the person was such an eligible claimant) is on application to be redetermined under this Order. [Emphasis in the instrument.] (2) For the purposes of the redetermination, the compensation payable is to be calculated in accordance with Schedule l. The amount of compensation as redetermined is not to be less than the amount determined under the 1985 Arrangements in respect of the original compensation claim. 42 The original compensation claim referred to in cl 10(1), now to be redetermined, was, in terms of the 1985 Arrangements, a claim for compensation for the 1982 acquisition. 43 Whilst both classes of claim are to be determined according to Schedule 1, the schedule itself provides (by the definition of "base date" in cl 1) that compensation in the case of s5A claimants is to be determined from the date of re-acquisition whereas in the case of s7(1A) claimants the compensation is to be determined as from 1 January 1982. 44 Schedule 2 of the 1997 Arrangements amends the 1985 Arrangements to provide that a claim cannot be made under the earlier Arrangements if the loss is one in respect of which an application for compensation can be made under the 1997 Arrangements. So, where the 1997 Arrangements apply, the determination of compensation is to be made exclusively under those Arrangements. 45 The assessment of compensation under Schedule 1 is based on a discounted cash flow approach. The method is specified as follows: · Step 1 is to calculate the "total base compensation amount". That is to be done by adding up the compensation calculated for each period of one year before and after the date of determination, as from "the base date". As I have mentioned, the base date, in case of a Pt 3 application (non-restored coal), is 1 January 1982, being the date of acquisition under s5. · A formula is provided for past periods: r x t x a. · r is "$0.90 or such other amount as the Board considers just and equitable in the circumstances of the case". · t is the quantity of coal in tonnes that "in the Board's opinion has been or will be extracted" in each year, past and future. · a is a factor for interest on past losses. · A further formula is provided for future periods: r x t x e/1000. · e/1000 is a factor for discounting future losses for present value and for risk. · The figures so determined for each period of one year are added together, to obtain "a total base compensation amount for the application". · The total base compensation amount is then to be adjusted (as far as is presently relevant) so as to be "just and equitable". · Step 2 is to deduct the value of any interim or preliminary payments. 46 There are several observations to be made initially about this scheme.

(a) The words "just and equitable" confer a broad discretion which is, however, to be exercised judicially, taking into account only relevant matters: Talga Ltd v MBC International Ltd (1976) 133 CLR 622 at 633-4.

(b) The source of the figure of $0.90, provisionally specified for factor r , is clear. The figure of $0.50 in the original 1985 Arrangements was amended to $0.90 in 1990. Arithmetically, that figure was the value of seven-eighths of the prescribed royalty of $1.70 per tonne after tax at the 1990 company tax rate of 39 per cent.

(c) By November 1997, when the 1997 Arrangements were made, the company tax rate was, in fact, 36 per cent and the up-to-date figure would have been $0.95. (d) The formula for computing compensation for loss relating to royalty required the Board to take into account the amount of coal actually extracted to the date of the determination, and to estimate the amount of coal that would be extracted, year by year, thereafter. (e) The Schedule did not include a cap of the kind which defeated Nardell's earlier claim.

The concept of compensation in the 1997 Arrangements 47 What is the concept of compensation in the 1997 Arrangements? The overriding consideration in assessing compensation is that the injured party is to receive - that sum of money which will put the party who has been injured … in the same position as he would have been if he had not sustained the wrong for which he is now getting his compensation or reparation.

That was stated as the general rule, applicable to both tort and contract, by Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 5 App Cas. 25, 39, a statement of principle since frequently re-affirmed. The concept is as applicable to the assessment of compensation under a scheme such as the 1997 Arrangements as to the assessment of compensatory damages at law. 48 Next, the concept of compensation involves a comparison between an actual and a hypothetical state of affairs. The actual state of affairs is the situation as it has been and will be following the loss-causing event. The hypothetical state of affairs is the situation as it would have been if the loss-causing event had not occurred. That is the concept of compensation as understood by the law in relation to the assessment of damages for an actionable wrong or breach of contract. I quote from the judgment of Deane J in The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 (at 116): The general principle governing the assessment of compensatory damages in both contract and tort is that the plaintiff should receive the monetary sum which, so far as money can, represents fair and adequate compensation for the loss or injury sustained by reason of the defendant's wrongful conduct. The application of that general principle ordinarily involves a comparison, sometimes implicit, between a hypothetical and an actual state of affairs: what relevantly represents the position in which the plaintiff would have been if the wrongful act (i.e. the repudiation or breach of contract or the tort) had not occurred and what relevantly represents the position in which the plaintiff is or will be after the occurrence of the wrongful act (See, eg, Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, at p 39; Monarch Steamship Co Ltd v Karlshamns Oljefabriker (A/B) [1949] AC 196, at p 221; Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185, at p 191.)

Again, these considerations are as applicable to the assessment of compensation under a scheme such as the 1997 Arrangements as to the assessment of compensatory damages at law. 49 For the purpose of determining what the situation would have been but for the loss-causing event, there are two possible approaches. One is to have regard to what has in fact occurred. The other is to have regard to what was likely to occur at the time of the loss-causing event. The former approach is usually followed by the courts in assessing damages for commission of a tort. The latter approach is followed in assessing damages for compulsory resumption of real property. It is also the general rule in assessing damages for breach of contractual duty. It is appropriate where the injured party has the opportunity of buying into the same market to replace what has been appropriated or has otherwise been lost. 50 The concept of compensation inherent in the 1997 Arrangements is the former of these two approaches, that is, that events occurring to the date of the determination are to be taken as certain. Apart from anything else, that is apparent from the formula for calculating the "total base compensation amount", which requires the Board to recognise the actual quantity of coal extracted during each year to the date of the determination, rather than the quantities which would have been likely to be extracted as at the time of acquisition. 51 There is a problem when a question arises as to whether the loss for which compensation is sought - or part of it - would have happened anyway, that is, irrespective of the loss-causing event relied upon as the basis for the claim. 52 Such a situation is familiar to the courts in personal injury cases where the plaintiff establishes that a disability has resulted from the defendant's wrong but the defendant says that the disability would, wholly or to some extent, have come about in any event at a later date due to the progress of a pre-existing disease. Whilst the legal burden of proof never shifts from the plaintiff to establish what damage results from the defendant's wrong, once the plaintiff makes out a prima facie case that a disability so results, it is for the defendant to adduce evidence - which, if accepted, would establish with some reasonable measure of precision, what the pre-existing condition was and what its future effects, both as to their nature and their future development and progress, were likely to be

( Purkess v Crittenden (1965) 114 CLR 164, 168). As a practical matter, a tactical burden of proof shifts to the defendant in such a case. 53 This approach is commonsense reasoning and, as such, it also is as apposite to the assessment of compensation under a scheme such as the 1997 Arrangements as it is in relation to the assessment of damages by the courts.

Redetermination by the Board of Nardell's application for compensation 54 On 26 November 1998, Nardell made an application for compensation under the 1997 Arrangements. It was a Part 3 application. 55 The Board made interim payments of compensation in 1999, aggregating $1.9m. 56 On 23 September 1999, the Board issued a final assessment report. It contained the following elements: · Compensation was assessed under the 1997 Arrangements for each year from and including 1998 to and including 2027. 1998 was presumably the first year in which coal was extracted under the lease. 2027 was the Board's finding as to when the Nardell coal deposit would be exhausted. · In the report, a rate of 15.5 per cent was used in relation to future income for factor e. That was a base rate of 9.5 per cent plus a margin of 6 per cent for the business risk associated with extraction of the deposit of which the Nardell coal was part. · Factor r (income per tonne) was determined at $0.90 on the basis that "no private agreement was operating between the claimant and any other party". · Compensation for the period 1988 to 2027 was assessed at a total of $2,484,335.00. · From that, the value of the interim payments was deducted, resulting in an amount of compensation payable of $564,401.00 rounded to $564,500.00. 57 The provenance of the figure $0.90 has been mentioned. It related to the prescribed royalty. However, as at 1999 the company tax rate was 36 per cent, so that, as at 1999, $0.95 per tonne was the true after-tax value of seven-eighths of the prescribed royalty of $1.70 per tonne (without further adjustment for imputation credits, as to which see later). 58 The reason given in the report for the figure of $0.90 was that "no private agreement was operating between the claimant and any other party". The rationale for that statement is not clear. The language is similar to that used in s285(b) of the MA 1992, but that provision does not relate to coal. I take the observation to mean no more than that, at the time of acquisition in 1982, Nardell had no commercial interest in the coal arising from any private arrangement dependant upon continuing ownership of the coal which might affect the value of the coal deposit to Nardell. 59 The final assessment report was adopted by the Board with some adjustments. The Board's notice of determination is dated 19 November 1999. $0.90 for factor r was expressly retained as being "just and equitable in the circumstances of the case", notwithstanding that $0.95 was the correct figure (again, without further adjustment for imputation credits). The yearly compensation figures were re-assessed by the Board, producing a base compensation figure of $2,536,031.00. So too was the value of the interim payments. The result was $608,955.00, rounded to $609,000.00. 60 Nothing was allowed for loss in relation to super-royalty or front-end payment.

Nardell's appeal to the Tribunal 61 On 16 December 1999, Nardell appealed to the Tribunal. 62 Schedule 3 of the 1985 Arrangements, preserved by the 1997 Arrangements, governs the proceedings of the Tribunal. It included the following provisions: 6 An appeal lodged with the Tribunal in respect of a claim shall be dealt with by reconsidering the matters that were considered by the Compensation Board and by considering any evidence or representations in addition to or substitution for any evidence or representations given before or made to the Board in relation to the claim. 7 The onus of sustaining the grounds on which an appeal before the Tribunal is based is on the appellant. 8 The Compensation Review Tribunal: (a) is not bound by the rules of evidence and may obtain such information to assist it as it considers to be appropriate, and (b) shall act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. … … … 10(2) In respect of every appeal lodged with the Tribunal, the Tribunal may announce its decision at a hearing of the Tribunal but it shall in any event cause to be served on the parties to the appeal a notice in writing specifying that decision and the reasons on which it is based. 63 Whether by operation of cl 6 of Schedule 3 or by agreement, Nardell's claim was heard by the Tribunal de novo. 64 It is common ground that cl 7 of the Schedule means no more than that an appellant is required to persuade the Tribunal affirmatively that what it asserts in support of its application for compensation as presented on appeal is correct. 65 By cl 29 of the 1985 Arrangements (which is preserved), the Tribunal, upon allowing an appeal, could dismiss the appeal, vary the determination of the Board or remit the claim to the Board for reassessment as directed. 66 The Tribunal gave its decision on 17 April 2002. As the Board had done, it allowed nothing in relation to super-royalty or front-end payment. However, it held that the claim should be remitted to the Board for redetermination of the r factor having regard to movement in the company tax rate. (By 1999, the rate had been reduced to 30 per cent.) The Tribunal, accordingly, remitted the claim to the Board for redetermination in accordance with directions which it specified.

The present proceedings 67 The challenge in the present proceedings is, first, to the Tribunal's failure to bring to account Nardell's asserted loss in relation to super-royalty and front-end payment. Secondly, there is a challenge to the directions given by the Tribunal to the Board as to how factor r should be recalculated. 68 As to the scope of the appeal, judicial review of administrative decisions is limited to controlling the exercise of power within its true bounds. A decision involving the exercise of a discretion which is so unreasonable that no reasonable person could have come to it is beyond power and amenable to judicial review: Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1 KB 223, 230 (per Lord Greene); Minister for Aboriginal Affairs v Peko Wallsend Ltd (1985-6) 162 CLR 24, 45; ULV Pty Ltd v Scott (1990) 19 NSWLR 190, 207-8. 69 Caution is to be exercised. As was said in Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259, 271-2 (per Brennan, Toohey, McHugh & Gummow JJ), referring to the decision of the Full Court of the Federal Court under appeal, When the Full Court referred to "beneficial construction", it sought to adopt an approach mandated by a long series of cases, the best exemplar of which is Collector of Customs v Pozzolanic (1993) 43 FCR 280. In that case, a Full Court of the Federal Court (Neaves, French and Cooper JJ) collected authorities for various propositions as to the practical restraints on judicial review. It was said that a court should not be "concerned with looseness in the language ... nor with unhappy phrasing" of the reasons of an administrative decision-maker [at 287]. The Court continued [at 287]: "The reasons for the decision under review are not to be construed minutely and finely with an eye keenly attuned to the perception of error". These propositions are well settled. They recognise the reality that the reasons of an administrative decision-maker are meant to inform and not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed [See McAuliffe v Secretary, Department of Social Security (1992) 28 ALD 609 at 616]. In the present context, any court reviewing a decision upon refugee status must beware of turning a review of the reasons of the decision-maker upon proper principles into a reconsideration of the merits of the decision. This has been made clear many times in this Court. For example, it was said by Brennan J in Attorney-General (NSW) v Quin (1990) 170 CLR 1 at 35-36: "The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository's power. If, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone." 70 In Attorney-General (NSW) v Quin (1990) 170 CLR 1, Brennan J said (at 36-37), shortly after the passage quoted in Wu Shan Liang: There is one limitation, " Wednesbury unreasonableness" (the nomenclature comes from Associated Provincial Picture Houses Ld. v. Wednesbury Corporation [1948] 1 KB 223), which may appear to open the gate to judicial review of the merits of a decision or action taken within power. Properly applied, Wednesbury unreasonableness leaves the merits of a decision or action unaffected unless the decision or action is such as to amount to an abuse of power: Nottinghamshire County Council v. Secretary of State for the Environment [1986] AC 240, at p 249. Acting on the implied intention of the legislature that a power be exercised reasonably, the court holds invalid a purported exercise of the power which is so unreasonable that no reasonable repository of the power could have taken the impugned decision or action. The limitation is extremely confined. As Professor Wade explains (Administrative Law, 6th ed (1988), p 407) in a passage cited with approval in Reg. v. Boundary Commission; Ex parte Foot [1983] QB 600, at p 626: "The doctrine that powers must be exercised reasonably has to be reconciled with the no less important doctrine that the court must not usurp the discretion of the public authority which Parliament appointed to take the decision. Within the bounds of legal reasonableness is the area in which the deciding authority has genuinely free discretion. If it passes those bounds, it acts ultra vires. The court must therefore resist the temptation to draw the bounds too tightly, merely according to its own opinion. It must strive to apply an objective standard which leaves to the deciding authority the full range of choices which the legislature is presumed to have intended." 71 That is not to say, however, that a decision reasonably open to the Tribunal should stand if the reasons for the decision are illogical or involve a mistake or are erroneous in point of law. 72 When the proceedings are for judicial review of an administrative decision it is not necessary that an error be error on the face of the record: Craig v South Australia (1995) 184 CLR 163, 179.

Super royalty and front-end payment 73 In reviewing the decision of the Tribunal, I will deal first with the rejection by the Tribunal of Nardell's claim that the Board erred in failing to bring to account Nardell's asserted loss in relation to super-royalty and in relation to front-end payment. 74 In assessing the compensation to which Nardell is entitled, the Board brought to account Nardell's prospective income in relation to the prescribed royalty which became payable under the Bloomfield coal lease, but not prospective income in relation to the super royalty and front-end payment. So far as is presently relevant, the Tribunal dismissed Nardell's appeal in those respects. The Tribunal's reasons for disallowing those parts of Nardell's claim were as follows: The Appellant [Nardell] claims that before 1 January 1982 it had a reasonable expectation that, if a coal lease were granted in the future, it would be entitled to a share of any "front-end payment" made under Sections 32 or 33 of the Coal Mining Act 1973 and payable pursuant to Section 128(4) of that Act. That may have been the case before the commencement of the CAA, but that Act and the introduction of the cognate Coal Mining (Amendment) Act 1981 (the CMAA) swept away that expectation along with Sub-sections (3) and (4) of Section 128 of the Coal Mining Act 1973 when, at the same time, the Crown acquired the subject coal. The decision of the Court of Appeal in Gilder's case (CA 40732/96, 29 July 1997, unreported) relates to a claim for pecuniary loss resulting from a front-end payment that was in progress before the operation of the CAA and the CMAA, which repealed provisions for distribution of front-end payments to persons other than the Crown. Saving provisions of the CMAA reserved to private coal owner's payments made prior to 1.1.1982. In the Appellant's case there was no mining lease until 20 October 1989 (Exhibit 37). The Tribunal cannot accept that the Appellant is entitled to any share of the "front-end payment" referred to in that lease, payment of which to private coal owners was based on legislation repealed in 1982. Nor can it have entertained a claim for pecuniary loss based on Clause 9(2) of the 1985 Arrangements in respect of front-end payments for a lease that did not come into existence until 20 October 1989. The Appellant claims that the amount of super-royalty paid as a result of a condition inserted in a lease pursuant to Section 41(7) of the Coal Mining Act 1973 should be part of the determination of the variable "r" and not excluded as has been done by the Respondent [the Board] in this case. The Appellant argues that the purpose of the variable "r" is to "provide the best estimate" of the actual nominal [notional?] royalty that Nardell would have received (net of all tax effects) if the coal which it owned had not been acquired compulsorily by virtue of the CAA. The Coal Mining Act, 1973 contained provision for the Minister to distribute seven-eighths of any royalty received from private coal to the owner of that coal. However, in 1981 the CMAA repealed that provision of the 1973 Act and there has been no subsequent reinstatement of such a provision. In this regard the Appellant submits that "r" should be calculated on the basis that, had the CAA not operated upon its title, the Appellant would have received a share of any super-royalty paid pursuant to Section 41(7) of the Coal Mining Act, 1973 in addition to the base-royalty [prescribed royalty] payable under Section 77(1) of the same Act. If that were the case, that right would have been eliminated when the Coal Mining Act, 1973 was amended as "a consequence of the enactment of the Coal Acquisition Act 1981" (preamble, CMAA) and the CAA set in place a scheme, under the 1985 Arrangements, to compensate private coal owners for the loss of royalty income. The scheme which emerged from the 1985 Arrangements, was that the value of the coal acquired by the CAA was determined as an amount of money, calculated in accordance with the formulae found in Clause 18 of the 1985 Arrangements, paid to the former owner which is the NPV of the income stream that would have derived from continued ownership of the coal. Prior to the 1997 order, the Appellant had been eligible under Clause 9(2) of the 1985 Arrangements to make a claim for pecuniary loss under Clause 12. It was the practice of the Respondent to determine amounts of compensation that related to coal ownership in accordance with the formulae provided in Clause 18 of the 1985 Arrangements, and the Respondent did so in its 1997 determination. In introducing the Coal Acquisition (Re-acquisition Arrangements) Order 1997 the then Minister said (referring to the discrepancy between the value of the coal to the Crown and the value to the owner); A further component of the discrepancy is that an additional royalty of $0.50 per tonne may be levied on Crown coal mined from open-cut mines. This levy is not applied on coal from private coal titles. Acquisition of private coal will achieve the collateral benefit of removing this anomaly and providing a level playing field for mining companies. The major component of the discrepancy is the fact that compensation is calculated at $0.90 per tonne to reflect the tax-free nature of compensation compared to $1.70 per tonne royalty as taxable income. Estimates show that the State will capture about $100 million in net present value terms which would otherwise be diverted to the taxation office if royalty at $1.70 per tonne was paid to the claimants. (Second Reading Speech. 27 May 1997 @ Hansard - Assembly 9252) The Tribunal is of the view that the Minister's statement clearly indicates that it was never the intention of the Government that owners of private coal should receive any portion of a super-royalty. It is also the view of the Tribunal that there is a clear intention of the Government, in providing in the 1997 Order that "… r is $0.90 or such other amount as the Board considers just and equitable in the circumstances of the case" (Schedule 1 Clause 2), that "r" should related to the base royalty (in nominal terms) of $1.70 per tonne. The Tribunal is not persuaded that the reasoning of the Court of Appeal in NSW Coal Compensation Board v NSW Coal Compensation Review Tribunal (Gilder's case) (Unreported 29 July 1997), which applied to front-end payments, applied equally to a coal owner's loss of the entitlement to share in the super-royalty. Even if such an entitlement existed, Gilder's case is to be distinguished on the basis that it applied to a front-end payment provided for in Section 128 of the Coal Mining Act 1973 which excludes royalties from the provisions of the Section and on the basis that the expectation of the Appellant that it would share in super-royalties is not, for the reasons given above, a reasonable one. The Mining Act 1992, in repealing the Coal Mining Act 1973, included coal in the definition of "mineral" and rendered coal subject to the provision of Part 14 - Royalty - of that Act, and re-introduced the requirement that the Minister pay 7/8th of the amount paid to the owner of a private mineral (Section 284(2)). However, at the same time, the effect of Section 285(a) is to restrict the payment of royalty on privately owned coal to the base royalty only. There is no provision for the payment of any additional royalty on coal above the base rate. 75 I have first to say that the assessment of compensation did not turn on Nardell's expectations as at 1981, reasonable or otherwise. (See my earlier discussion of the concept of compensation adopted by the 1997 Arrangements.) 76 As to Nardell's prospective share in the front-end payment received by the Crown upon the grant of the 1989 lease, that was a loss resulting from the expropriation on 1 January 1982 (no less than the loss of Nardell's prospective share in the prescribed royalty collected by the Crown in relation to coal extracted under that lease, which the Tribunal was bound to allow). That the prospect of receiving a share of the front-end payment was swept away by the CAA 1981 is the foundation of Nardell's claim for that loss, not a reason for rejecting it. So much was established by the decision of the Court of Appeal in New South Wales Coal Compensation Board v New South Wales Coal Compensation Tribunal & Ors (22 April 1997, unreported) (Gilder's case). The distinction sought to be made by the Tribunal between Gilder's case and the present case is one without a different in principle. 77 But for the acquisition of privately owned coal by operation of the CAA 1981, Nardell would have been entitled to a share in the front-end payment received by the Crown in 1989 when the Bloomfield Collieries lease was granted. That was a loss resulting from the acquisition of Nardell's coal on 1 January 1982. It is true that such an entitlement on the part of private coal owners was removed by the CMAA 1981 but that was because there were to be no more private coal owners. Removal of the statutory entitlement to a share of front-end payments would not have occurred but for the acquisition of private coal under the CAA 1981. 78 The Tribunal was bound to find that it was just and equitable that Nardell receive compensation for the loss of its entitlement to a share of the front-end payment received by the Crown in relation to the Bloomfield Collieries lease in 1989. No other view was reasonably open. Allowance for that loss should have been included in the process of assessment at the point where the "total base compensation amount" was to be adjusted so as to be just and equitable. 79 To some extent, the arguments advanced by counsel on behalf of the Board in justification of the Tribunal's decision in relation to super royalty apply to the Board's disallowance of the claim in relation to front-end payment as well. But the position in relation to front-end payment is so clear that I will not take further time over it. 80 As to Nardell's prospective share in the super royalty received by the Crown in relation to coal extracted under the 1989 lease, the Tribunal rejected that claim on three grounds. First, the figure of $0.90 was said to indicate an intention to limit the compensation for royalty to loss of the prescribed royalty. I disagree. That figure was to be substituted, if necessary, with whatever "other amount" would produce a just and equitable assessment of the applicant's loss for the year. 81 If, contrary to that approach, the "other amount" was restricted to prescribed royalty, then there was an obligation to bring any annually recurring loss other than prescribed royalty to account by adjustment to the "total base compensation amount" (the aggregate of year by year assessments) in order to make that figure just and equitable. Adjustment at that stage would require a reworking of the figure for each year in relation to the other loss, either in isolation or in conjunction with the loss relating to prescribed royalty. The result would then be the same as including the other loss in the year to year assessment in the first place. 82 The second reason for rejecting the claim in relation to super royalty appears to be that the entitlement to a share of super royalty received by the Crown was removed by the CMAA 1981 and never reinstated. That is the same reason for disallowing compensation as the Tribunal gave in relation to the loss of Nardell's entitlement to a share of the front-end payment received by the Crown on the grant of the Bloomfield Collieries lease. It involves the same error. And the CMAA 1981 had no more relevance to super royalty than it did to prescribed royalty, which the Tribunal was bound to allow as a comparable loss. 83 The third reason given by the Tribunal for rejecting Nardell's claim in relation to super royalty was an asserted disclosure of parliamentary intention, said to be apparent from the Minister's speech when introducing the 1997 compensation scheme, namely, that the scheme was not intended to give rise to an entitlement to compensation for loss of a share in prescribed royalty. It seems that the Tribunal has misread the speech. First, the quotation is from a speech by the Minister supporting the Coal Acquisition Amendment Bill which became the CAAA 1997, not the 1997 Arrangements as stated by the Tribunal. More importantly, it appears that the Minister's comments were directed to a perceived anomaly under the CORA 1990, namely, that the miners of coal restored to the original coal owners under the CORA 1990 were charged only the prescribed royalty (super-royalty on privately-owned coal having been abolished in 1992), whereas the miners of publicly owned coal could be charged a super-royalty as well. It does not appear that the Minister was adverting either to compensation for the re-acquisition of restored coal under the proposed CAAA 1997 or to compensation for the acquisition of coal under the CAA 1981. 84 But, however that may be, the CAAA 1997 and the 1997 Arrangements were intractable in their requirement that just and equitable compensation be provided. If compensation for a loss in relation to prescribed royalty is mandated by that rubric, the intentions of the government as conveyed by a speech in the Parliament counts for nothing. 85 Nardell's argument in the proceedings before me was that such compensation was mandated if the award was to be just and equitable. But for the acquisition in 1982 and the associated legislation, it was said, Nardell would have had a statutory entitlement to seven-eighths of both the prescribed and super royalty once the extraction of coal commenced under the lease granted to Bloomfield Collieries in 1989. And the entitlement in relation to super royalty was lost no less than that in relation to the prescribed royalty when the coal was acquired by the Crown in 1982. 86 Counsel for the Board sought to justify the Board's decision to disallow the claim in relation to prescribed royalty on two independent bases, fortified by a third. 87 The first basis of justification was that the "triggering event" was the refusal of Nardell's application for restoration in 1997, not the acquisition of its coal in 1982. 88 That is correct in a sense. It was the refusal of Nardell's application for restoration in 1997 which made Nardell eligible for redetermination of its claim for compensation under the 1997 Arrangements. But the argument went on to assert that compensation was to be assessed by reference to the situation in which Nardell would have been if its application for restoration had been successful. 89 It is unnecessary to trace this argument further. It fails at the threshold. Refusal of Nardell's application for restoration made Nardell eligible for compensation under the 1997 Arrangements. That circumstance had no further effect. Once eligible on that ground, Nardell was entitled to a redetermination of its claim for compensation for the acquisition of its coal in 1982. That is clear from the nature of the claim under the 1985 Arrangements which was to be redetermined, from the base date specified for such a claim, and from the contrast between the terminology of paragraphs (a) and (b) of s6(7). 90 The second way in which the counsel for the Board sought to justify the Tribunal's rejection of the claim for compensation in relation to super royalty accepted, for the purpose of the argument, that Nardell was entitled to just and equitable compensation for the loss of its interest in the coal acquired in 1982. There were then two limbs to this argument. First, it was said that receipt of a share of super royalty was a contingency as at 1982, not a certainty, because, as at 1982, the lease was a contingency not a certainty. The question of compensation was to be decided accordingly. Again, it is unnecessary to trace the argument through because it fails at the threshold. The concept of compensation inherent in the 1997 Arrangements requires, as I have said, that known events occurring prior to determination are to be taken as certain. That answers the first limb of the argument. 91 The second limb of the second approach accepted that intervening events are to be taken as certain. Attention was then directed to the repeal of the CMA 1973 in 1992 and the enactment of the MA 1992 in its place. The case has been argued on that basis that this effectively removed the liability of a lessee to pay super royalty under a current lease relating to privately owned coal. (I am not sure that this is so. In relation to such a lease, no statutory obligation to pay a super royalty arose under the MA 1992. A contractual obligation under an existing lease may nonetheless have continued. However, I will decide the case as it has been argued.) Therefore - so the argument runs - if Nardell's coal had not been compulsorily acquired in 1982, it would have ceased to be subject to super royalty in 1992 and Nardell would have lost its share of that royalty at that time. On that account, it is said, loss of a share of super royalty as from 1992 does not result from the 1982 acquisition, because the loss would have happened as from 1992 in any event. 92 The difficulty about this argument is the underlying assumption that, irrespective of the comprehensive acquisition of coal in 1982 and what followed from that, super royalty under existing leases over privately owned coal would have been abolished, as (it is common ground) occurred by the enactment of the MA 1992 in place of the CMA 1973. That assumption I have to say is misplaced for the following reasons. 93 The CAA 1981 operated to confiscate all privately owned coal in the state. The 1985 Arrangements provided for somewhat limited compensation. The CORA 1990 provided for restoration but selectively. Applications for restoration were confined to "eligible claimants". They were prior owners (mostly) who had made a successful claim for compensation under the 1985 Arrangements. (The compensation had to be refunded as a condition for any grant of restoration.) When the definitions are worked through, applications were also confined to coal on which extraction had not commenced as at 1 January 1986. Grant of an application was then in the discretion of the Minister. 94 The context in which the legislation was enacted and the policy considerations which actuated it are apparent from the second reading speech of the Minister introducing the legislation (Hansard, 16 May 1990, the Assembly): When this Government was elected extensive reviews were made of the legal, financial and administrative aspects of the coal compensation scheme. It became clear after seven years of operation that this scheme was in an unmanageable state and the problems associated with it would not be solved by a repealing of the Coal Acquisition Act. … The option of restitution of coal rights will be offered to claimants whose land was outside a colliery holding as of 1st January, 1986, so that, where practicable, coal will be handed back to its former owners. … [T] he Coal Compensation Board will determine the compensation payable and offer a choice to claimants whether to elect to receive compensation or to apply to have their coal rights restored. 95 The context was as follows. By 1992, the CORA 1990 would have produced or was likely, in the near future, to produce a mix of publicly owned and privately owned coal. The abandonment of super royalty in relation to privately owned coal under the MA 1992 involved a concession to miners at the expense of the Crown and private coal owners. But mostly that was at the expense of private coal owners who would otherwise have received seven-eighths of the super royalty. By contrast, in relation to coal not restored to private ownership, which included all coal deposits as to which extraction had commenced by 1 January 1986, the Crown would continue to receive the whole of the prescribed and super royalty levied on that coal, as it had done since 1 January 1982. The commercial considerations were not the same in 1992 as they would have been but for the comprehensive 1982 acquisition of privately owned coal. 96 In the circumstances as they existed, the removal of super royalty on privately owned coal had a limited effect on the Crown's royalty income. That situation is to be contrasted with the situation as it would have been in 1992 if the CAA 1981 had not been enacted. If there had been no wholesale acquisition of coal by the Crown in 1982, the abandonment of super royalty on privately owned coal would have had a very much greater effect on the Crown's income from super royalty than it did as the situation was in 1992. 97 Having regard to that consideration, it is unlikely in the extreme that super royalty on privately owned coal would have been abolished as it was in 1992 but for the CAA 1981 and what followed in its wake. 98 Nardell had a clear case for compensation for loss of a seven-eighths share in the super royalty received by the Crown under the 1989 lease up to the enactment of the MA 1992. As to the period thereafter to the date of determination and continuing into the future, it was for Nardell to establish that the loss resulted from the acquisition of its coal under the CAA 1981. But it had a strong prima facie case that this was so. The Board relied on the enactment of the MA 1992 as an event which would have caused that loss in any event. It was unlikely, however, that that event would have occurred as and when it did but for the 1982 acquisition and what followed from that. The Board's argument fails for that reason. 99 The first main argument advanced by the Board and its second main argument were said to be fortified by considerations of parity with other classes of affected individuals. 100 Counsel specified three other categories of affected persons none of whom, it was said, would recover a share of front-end payment under a lease granted after the CAA 1981 or a share of super royalty after the MA 1992, or compensation for loss of such interests. 101 It was not entirely clear, in all cases, that exclusion from such income or lack of compensation for the loss of it was a secure assumption. But, given the assumption, there are a number of major problems with the approach. 102 First, criteria in the statutes relating to restoration, refusal of restoration and reacquisition, produce results which are by no means even-handed. In some instances, movement from one status to another or refusal of movement are decided in the interests of the Crown rather than in the interests of the individual. Then, movement from one status to another or not doing so will, in some instances, have been a matter of choice on the part of the individual for reasons unrelated to entitlement to share in front-end payments or super royalty. For example, for the coal to be free from super royalty might be a selling point when it comes to interesting a mining company in extracting the coal. 103 So it by no means follows that individuals who may be in a class without the benefit of participation in front-end payment or super royalty are in a worse position on that account when one takes a broader view. 104 Then, as to compensation under the 1997 Arrangements, there is the marked difference between the basis on which s5A applicants and s7(1A) applicants - the latter beings Nardell's category - are dealt with having regard to the date from which compensation is assessed. Whether a s5A applicant for compensation will have done better or worse than a s7(1A) applicant will depend, among other things, on how the s5A applicant has fared during the period of restored ownership which such an applicant will have enjoyed. How that balances out against the assumption that a s5A applicant would not recover compensation relating to loss of a share of a front-end payment or loss of a share of super royalty is likely to vary considerably from case to case. 105 The argument is so fraught with conjecture that it provides no secure basis on which to conclude that the executive government, when promulgating the 1997 Arrangements, did not intend applicants in Nardell's situation to recover compensation of the kind now in question on the ground of parity with other affected individuals. 106 For these reasons, the Tribunal's determination disallowing the claim in relation to front-end payment and super royalty was one which could not reasonably be made. In that respect, the determination of the Tribunal should be quashed, and the proceedings should be remitted to the Tribunal for redetermination. 107 Nardell had a further argument relating to both front-end payment and super royalty, which has particular relevance to its claim in relation to super royalty. It was along the following lines. On 1 January 1982, Nardell's interest in the coal which it owned was transferred compulsorily to the Crown. That interest was, relevantly, the value to it of a proportion of such front-end payment, prescribed royalty and / or super royalty as came to be levied on the coal at such time as a lease was granted and the coal extracted. The transfer of that interest to the Crown was not just the loss of the interest to Nardell but the gain of that interest by the Crown. The lease was granted, the front-end payment was made and prescribed and super royalty were received by the Crown, unaffected by subsequent legislation. The Crown thereupon retained the whole of such payments. 108 The argument was then that, to provide just and equitable compensation for that loss, the Crown should now account to Nardell for what the Crown had taken from Nardell for its own benefit. The argument involves a concept of restitution. 109 The value of the argument is that it potentially avoids any problem arising from the enactment of the MA 1992 because, under this approach, it may not matter that the loss would have occurred anyway if that be the fact. If a thief goes into a house that has been left open and steals a television set which he sells, is it an answer to a claim for damages that, if the thief had not taken the television set, someone else would have? If A defrauds a company of $1,000, is it an answer to a claim for damages by the company against A that the money would have been lost anyway because next day the managing director cleaned the company out and flew to South America? 110 I have to say that this argument impresses me. That may be sufficient, without further analysis, if the question is really one of causality, because causality is (on authority) a matter of commonsense and normative judgment. But, being satisfied that Nardell is entitled to the relief sought on other grounds and in the interests of a prompt judgment, I have not taken further time in refining my thoughts about this approach.

Tax adjustment and the r factor 111 In the course of the hearing of the appeal to the Tribunal, a minute paper of the Board dated 15 August 2001 was tendered. It provided a discount rate re-calculation, in conformity with the Board's current procedures as at the date of the minute. The methodology there recorded was as follows. · The discount rate employed by the Board in its 19 November 1999 determination of Nardell's claim consisted of a base rate plus a margin of 6 per cent for market risk. · The 6 per cent margin was retained. The base rate was recalculated in the minute. · The base rate, as recalculated, was the long term bond rate on the last trading date before the assessment, plus a premium. · The applicable long term bond rate at the time of the Board's November 1999 determination was 6.63 per cent. · The premium was derived by calculating a weighted average cost of capital (WACC) for coal mining companies (a surrogate for coal owners). A formula was used which included a factor y (gamma) for imputation tax adjustment. That factor had a possible range of 0 to 1.0. It was quantified at 0.5 in this case. · With inputs for other factors, the formula yielded 8.25 per cent. · The premium to be added to the long term bond rate was extracted from that figure at 3.23 per cent, and rounded to 3.0 per cent. · The base rate as at November 1999 (that is, as at the determination of the claim by the Board) was now recalculated by adding the premium so calculated to the long term bond rate as at 29 October 1999 (6.63 per cent), yielding a base rate of 9.63 per cent, rounded to 9.5 per cent. · Adding the margin of 6 per cent, a discount rate of 15.5 per cent was obtained, which was the same as that used by the Board when it determined the claim in November 1999. 112 The minute concluded with the observation that the Board's determination of November 1999 would, therefore, have been the same using the revised methodology. 113 Before the Tribunal, Nardell challenged the 15.5 per cent discount rate applied by the Board. Its expert witness, Mr Stirzaker, contended for a much lower rate, 6.6 per cent. The Board's expert witness, Mr Ergas, supported the Board's 15.5 per cent rate, although he favoured a different method for ascertaining the discount rate. The Tribunal rejected Mr Stirzaker's figure. 114 Mr Gageler SC submitted on behalf of the Board that, in so holding, the Board accepted Mr Ergas' preferred approach for ascertaining an appropriate discount rate without the use of a WACC formula. I disagree. The statement by the Tribunal that Mr Ergas' approach was more acceptable was directed to the rejection of Mr Stirzaker's proposed discount rate of 6.6 per cent, not to whether a method for determining the discount rate, which included a WACC formula in the manner set out in the Board's minute, was appropriate. 115 That the Tribunal adopted the Board's method, including the use of a WACC formula in the way set out in the minute, is apparent from the following passages in the Tribunal's reasons for decision, at pages 10 and 31 respectively: The Tribunal has examined the Respondent's [the Board's] current procedure for establishing discount rates for claims (Exhibit 6), which employs the WACC formula to establish a base discount rate, to which adjustments are made to account for mine specific risks. It is aware that the discount rate for Rix's Creek [the area in which the Nardell coal was situated] has been recalculated using the current procedure, as an exercise for comparison with that used in the 1999 determination of this claim and that the result achieved was similar to the rate used in 1999. The Tribunal supports the Respondent's current procedure for establishing a base discount rate and, in doing so, accepts that the base rate reached in the 1999 determination was satisfactory at that time … In respect of "e", the Tribunal accepts that the current method used by the Respondent in determining the base discount rate, which is in accordance with CCB Minute Paper 786C (Exhibit 6) involves a proper and correct procedure. Accordingly, the Tribunal directs that this method be applied in the re-determination of the base discount rate. 116 In its minute of 15 April 2001, the Board recalculated a discount rate for use as factor e in the scheme for assessing compensation under the 1997 Arrangements. As a step in that process, it used a particular WACC formula. It is common ground that the formula was one of three formulae developed by a Professor Officer for use in conjunction with corresponding after-tax treatments of cash flow. Each of the three formulae, when matched with the corresponding after-tax treatment of cash flow, produce the same result. The formula used by the Board in its minute of 15 August 2001 was for use with an after-tax treatment of cash flow which brought imputation credits to account. 117 As I have said, the Tribunal adopted the methodology in the Board's minute, including the use of the formula selected and utilised by the Board. The factor for cash flow in the 1997 Arrangements was factor r. Adoption of the selected WACC formula accordingly required that factor r be quantified on an after-tax basis including an adjustment for imputation credits. 118 The Tribunal remitted the claim to the Board and directed the Board as to how it was now to quantify factor r. The direction was as follows: 3. In respect of "r" the Respondent is to apply a value based on 7/8ths of the $1.70 per tonne royalty rate for coal. This amount is then to be adjusted down according to the corporate tax rate applying at each relevant past period for which compensation is calculated and at the corporate tax rate applying at the time of re-determination for each future period. 119 The direction correctly required factor r to be quantified on an after-tax basis but failed to specify that an adjustment for imputation credits must also be made in quantifying that factor. As the direction stands, there is a mismatch between the formula to be used and the basis on which cash flow is to be treated. 120 The omission from the direction of the need to adjust for imputation credits arose, I am sure, by oversight rather than by misunderstanding. But, irrespective of how it arose, it was a mistake. Does the mistake constitute reviewable error? Plainly so. Insofar as the Tribunal's determination includes the direction which it gave to the Board, it was a determination which could not reasonably be made. 121 Counsel for the Board argued that if the result is not unreasonable there can be no Wednesbury unreasonableness, notwithstanding a mistake in the reasoning which led the Tribunal to the conclusion it reached (the Ergas preferred route). Put another way, if the result could be reached by another route reasonably open to the authority, the decision cannot be impugned as unreasonable. If that is right, the answer in this case is a failure to take into account a relevant consideration, namely, imputation credits, when directing how factor r was to be calculated when used with the formula adopted for factor e. Failure to take into account a relevant consideration puts the decision beyond power. 122 It was further submitted by counsel for the Board that rectification of the mismatching mistake would not make a significant difference to the result, particularly if the inconsistency was resolved by selecting a different formula rather than adjusting the r factor to match the formula used. (The latter approach would allow use of rounding-off margins to reduce any difference arising from the mismatch.) 123 It was then argued that the relief sought should be refused on discretionary grounds because it would be futile, assuming the result would be no different or because the result would not be sufficiently different to warrant relief. 124 In response to those arguments, I would observe that the Tribunal, in remitting the matter to the Board, has directed the Board to use the formula now propounded by the Board as appropriate for use in applications of this kind. It would not be right to invite the Board to select a different formula with the r factor calculated in the same way merely to afford an opportunity to the Board to award a lesser amount of compensation than the methodology it has propounded as appropriate would yield. 125 Secondly, I am not otherwise satisfied by the analysis presented on behalf of the Board that correcting the Tribunal's mistake would be futile or would not lead to a significantly different result. 126 Thirdly, the application is to be remitted to the Board, in any event. The Tribunal has so directed and there is no issue about that. The effect of the Board's argument is that the Board should be required to redetermine the application on a basis which it acknowledges to be incorrect rather than on a basis that is correct. That should not happen. 127 The decision of the Tribunal, insofar as it includes the direction to the Board, should be quashed and the Tribunal should be directed to redetermine that part of its decision in the manner I have indicated.

(1) Orders pursuant to paragraphs (1)(a), (b) and (c) of the amended summons.

(2) Liberty to apply for any other order, my associate to be notified of any such application within fourteen days from today's date. -o0o-

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