Newmont Canada FN Holdings ULC v Commissioner of Taxation

JUDGE: MCKERRACHER J DATE OF ORDER: 6 June 2018

1. The Respondent's application for a stay of the proceedings, filed 19 April 2018, be dismissed.
2. The Applicant's request for further particulars be dismissed.
3. The Applicant file its evidence by 14 December 2018.
4. This proceeding, together with WAD590/2017, be listed for a case management hearing on a date to be advised, but not before 1 February 2019.
5. There be liberty to apply.
6. Costs of and incidental to today be reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BETWEEN: NEWMONT CAPITAL LIMITED Applicant

AND: COMMISSIONER OF TAXATION Respondent

JUDGE: MCKERRACHER J DATE OF ORDER: 6 June 2018

1. The Respondent's application for a stay of the proceedings, filed 19 April 2018, be dismissed.
2. The Applicant's request for further particulars be dismissed.
3. The Applicant file its evidence by 14 December 2018.
4. This proceeding, together with WAD585/2017, be listed for a case management hearing on a date to be advised, but not before 1 February 2019.
5. There be liberty to apply.
6. Costs of and incidental to today be reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

MCKERRACHER J: 1 The Commissioner applies to stay these proceedings pending the outcome of an appeal to a Full Court of this Court from a case raising a similar point, alternatively, pending outcome of a further appeal, if any, to the High Court. The applicants (Newmont Canada FN Holdings ULC (NCFN) and Newmont Capital Limited (NCL), jointly Newmont) oppose a stay and seek particulars of the Commissioner's appeal statement, which is particularly brief. I dismissed each application for the reasons which follow. 2 The appeals are pursuant to Pt IVC of the Taxation Administration Act 1953 (Cth) (TAA) against the decisions made by the Commissioner on Newmont's objections to income tax assessments in respect of the year ended 30 June 2011. There are four assessments in question. The assessments, together with relevant penalties involve a total liability of $120,717,535.34. The primary tax in dispute is in excess of $96 million.

The application for a stay 3 The Commissioner seeks a stay of the proceedings until the outcome of the Commissioner's appeals to the Full Court from the orders of Pagone J in Resource Capital Fund IV LP v Commissioner of Taxation [2018] FCA 41 (NSD276/2014 and NSD277/2014). The issues raised in Newmont's appeal pertain to Div 855 Income Tax Assessment Act 1997 (Cth) (ITAA 1997). I accept for present purposes that the issues in the two appeals are similar. The decision in the Resource Capital Fund appeal is likely to be helpful in guiding the outcome, at least in part, in the current appeals. It is unnecessary for the purposes of these applications to discuss that topic further, despite the very helpful submissions for the Commissioner. Shortly put, there are common issues of principles associated with the proper interpretation and application of the definition of 'mining, quarrying or prospecting rights' in the context of Div 855 in relation to 'taxable Australia real property' (TARP) and, secondly, on the application of the Spencer v The Commonwealth (1907) 5 CLR 418 test in the context of Div 855. 4 The Commissioner particularly emphasises that, unless the application is stayed, the Commissioner may incur expenses of about $600,000 in obtaining the advice of experts as to asset values in circumstances where the value of Australian-based assets owned by Newmont exceeds $5 billion. That expense might be incurred unnecessarily, the Commissioner says, depending on which of multiple possible outcomes of Resource Capital Fund occur.

The principles 5 In Apotex Pty Ltd v Les Laboratoires Servier (No 6) [2012] FCA 745 (at [9]), Bennett J identified the following principles as being generally apposite to assist in identifying how the discretion to award a stay should be exercised: (a) Prima facie a plaintiff is entitled to have his action tried in the ordinary course of the procedure and business of the Court (Rochfort [v John Fairfax & Sons Ltd [1972] 1 NSWLR 16] at 19). (b) It is a grave matter to interfere with this entitlement by a stay of proceedings, which requires justification of proper grounds (Rochfort at 19). (c) The burden is on the defendant in a civil action to show that it is just and convenient that the plaintiff's ordinary rights should be interfered with (Jefferson Ltd v Bhetcha [1979] 2 All ER 1108 at 1113). (d) The Court's task is one of 'the balancing of justice between the parties', taking account of all relevant factors (Jefferson at 1113). (e) Each case must be judged on its own merits, and it would be wrong and undesirable to attempt to define in the abstract what are the relevant factors (Jefferson at [905]). 6 The Commissioner asserts, relying on Apotex (at [16]), that it is not necessary to demonstrate exceptional circumstances in order to succeed on the application. 7 The Commissioner also relies upon the observations of Starke J in Ramsay v Aberfoyle Manufacturing Co (Australia) Pty Ltd (1935) 54 CLR 230 (at 253): 'Courts of law … can only act upon the law as it is, and have no right to, and cannot, speculate upon alterations in the law that that may be made in the future'. While Starke J wrote a dissenting judgment in Ramsay, his Honour did so on a different point and this principle has subsequently been adopted by the courts: see, for example, Thornton v Repatriation Commission (1981) 52 FLR 285 per Fisher J (at 291-292); Sydney City Council v Ke-Su Investments Pty Ltd (1985) 1 NSWLR 246 (at 251); Murrumbidgee Groundwater Preservation Assn Inc v Minister for Natural Resources (2005) 138 LGERA 11 per Spigelman CJ (Beazley JA and Tobias JA agreeing) (at [49]); City of Sydney Council v Satara [2007] NSWCA 148 per McColl J (Beazley and Tobias JJA agreeing) (at [20]); Esso Australia Resources Pty Ltd v Federal Commissioner of Taxation (No 1) (2011) 196 FCR 560 per Edmonds and Perram JJ (at [15]-[16]). Even if in a particular case it is appropriate for a court to take into account a substantive legislative amendment that would accrue for the benefit of one party, it is not appropriate to treat it as a 'controlling factor': Esso per Edmonds and Perram JJ (at [15]). 8 Nevertheless, as Dean J pointed out in R v Whiteway; ex parte Stephenson [1961] VR 168 (at 171) '[s]ometimes adjournments have been made pending the decision of another case and, in general, this is legitimate enough'. Dean J cited Re Yates Settlement Trusts [1954] 1 All ER 619 as authority for that proposition. Re Yates Settlement Trusts was concerned with an appeal to the Court of Appeal from an order of the trial judge granting an adjournment of the proceeding pending the outcome of an appeal in another case (Re Chapman's Settlement Trusts [1953] 1 All ER 103) to the House of Lords. In the appeal from the order granting the adjournment, Evershed MR (with whom Denning LJ and Romer LJ agreed) stated (at 621): It may well be that, if a case, an important case is known to be subject to appeal to the House of Lords, or from a judge of first instance to the Court of Appeal, a judge may reasonably and properly think that it is in the public interest not to decide another case on the same lines until the result of the case under appeal has become known … It depends very much on all the circumstances of the particular case, and, if the judges of the Chancery Division have reached the conclusion that in the public interest it would be better generally to postpone dealing with applications of this kind until the decision in Re Chapman is known, then I should feel that it was, prima facie at any rate, a matter for the Chancery judges to decide. Whether any such decision by the judges has been come to I do not, of course, know. I have said what I have because I desire to confine my judgment to the particular case which we have before us. (Citations omitted, emphasis added.) 9 In Thornton (at 492), Fisher J explained that Starke J's observations in Ramsay were directed to 'amendment of the law and not the clarification or settling of the law' by an appellate court. In Thornton, after reviewing those authorities, Fisher J determined that an order of the Repatriation Board to defer a decision pending the outcome of an appeal in another proceeding to the High Court, which could render any decision of the Repatriation Commission in the Thornton proceeding incorrect, was not unreasonable. 10 The distinction between the approach taken by the courts to an application for a stay or adjournment on the basis of an anticipated amendment to the law on the one hand, and clarification of the law by an appellate court on the other hand, was explained by Mason P (with whom Sheller JA and Beazley JA agreed) in Meggitt Overseas Ltd v Grdovic (1998) 43 NSWLR 527 (at 534) in the context of a prospective legislative amendment: Two situations should be distinguished from the one at hand [i.e. proposed legislative amendment]. First, I would distinguish cases where an adjournment is sought to enable a proposition established in a decided case to be tested in an appeal brought by the parties to that case. Such a situation has been correctly viewed differently from the case at hand … The reason why a pending appeal is different from a proposal for legislative amendment is that there is a level of certainty that the point will be addressed; and knowledge that if and when it is, the decision of the court higher in the appellate chain will declare the law on the relevant topic with retrospective effect. (Citations omitted, emphasis added.) 11 Mason P's analysis was followed in Esso by Edmonds and Perram JJ (at [17]); and also in Satara (at [32]). 12 In Geelong Football Club Ltd v Clifford [2002] VSCA 212, the Supreme Court of Victoria Court of Appeal per Ormiston JA (Callaway JA agreeing) drew a distinction between cases where an appellate decision 'may have a bearing on the outcome of a particular trial' (at [7]) (emphasis added), and the cases generally concerning matters of principle - that is, matters in which the appellate court will declare the law on the relevant topic with retrospective effect: see Meggitt. 13 In Satara, Ms Satara's claim in negligence against the City of Sydney was fixed for hearing to commence on 30 April 2007 with an estimate of 3 weeks. On 27 February 2007, the Court of Appeal published its decision in North Sydney Council v Roman (2007) 69 NSWLR 240, which Ms Satara contended related to matters to be considered in Ms Satara's case, in particular the proper construction of s 45 of the Civil Liability Act 2002 (NSW). On 18 April 2007, Ms Satara made an application to vacate the hearing date on the basis that an application for special leave to appeal to the High Court had been made on 23 March 2007 in respect of the decision in Roman. The trial judge granted the application on 23 April 2007. The defendant sought leave to appeal that order. Leave was granted and the appeal allowed. McColl JA (with whom Beazley JA and Tobias JA agreed) referred to the above authorities, including Geelong (at [29]-[30]), and then observed (at [32]): It is apparent from the authorities that there are circumstances in which it is open to a trial judge to adjourn the hearing of a case pending the outcome of an appeal yet to be heard in another case. In Meggitt, Mason P pointed out that one of the distinguishing features in such cases was the "level of certainty that the point will be addressed" and the "knowledge that if and when it is, the decision of the Court higher in the appellate chain will declare the law on the relevant topic with retrospective effect." 14 McColl JA considered the granting of adjournments in the context of a special leave application having been filed in another matter, and observed (at [33]) that '[t]he situation is different ... when only a special leave application has been filed'. Her Honour (at [34]-[37]) concluded that the trial judge erred by adjourning the matter in circumstances where the case was fixed for trial and had been for so long, the outcome of the special leave application was unknown, and it was debateable that any appeal would affect the case. However, McColl JA also clarified that (at [38]): … I am not intending to indicate that adjournments should be granted whenever a special leave application has been filed if the outcome could affect the outcome of the pending trial. As the authorities indicate each case must turn on its own facts. The position may (but not necessarily) have been different if special leave had been granted and the hearing of the appeal expedited. 15 In Spendido v Assistant Minister for Immigration and Border Protection [2017] FCA 605, the applicant sought the vacation of a hearing date pending the High Court's determination in the matter of Falzon v Minister for Immigration and Border Protection [2018] HCA 2. Both parties accepted that the outcome of Falzon would have a bearing on the Federal Court proceeding (at [4]). Pagone J adjourned the hearing. His Honour declined the Minister's application for the 'non-Falzon' issues to be determined in a separate hearing because (amongst other reasons) there was a possibility that the outcome of the Falzon appeal to the High Court could give rise to 'new or different arguments' being available in the proceedings before his Honour and affect the manner in which arguments in the proceedings developed (at [7]). 16 Accepting, as I do, that Resource Capital Fund raises matters of principle that may influence the outcome of these proceedings because, at least in part, the same points of law arise, the question is what weight to give to these and other factors. I accept that the Commissioner has brought the applications at an early stage, prior to the matters being listed for trial. This is appropriate, but as will be seen, is unlikely to have a significant practical impact.

Consideration 17 A moving party has a prima facie right to have his or her action tried in the ordinary course of the procedure and business of the Court and, consequently, the burden is on the party seeking a stay to show that it is just and convenient that the Court interfere with those rights. Any grant of stay must be in the interests of justice overall, with each application for a stay being determined on its own merits. 18 There is a legislative policy in favour of the protection of the revenue: Deputy Commissioner of Taxation (Cth) v Gergis (1991) 22 ATR 1 per Cummins J (at 3 and the authorities therein cited). That policy is reflected in part by the legislative provisions which require payment of the tax before the appeal is pursued. It also reflects a number of presumptions in favour of the Commissioner and dictates an entitlement on the part of the Commissioner to put the taxpayer to proof on every aspect of its claim or appeal. All these legislative tools, quite properly, work in favour of the revenue and the Commissioner. Nonetheless, once the Court process of an appeal has commenced, the interests of justice require taking into account the position of all parties. 19 An application for a stay by the Commissioner does appear to be unusual. Stay applications are, from time to time, pursued by taxpayers. The prejudice to Newmont, if a stay is granted, is, of course, the delay. In reality, it is quite possible that a Full Court decision will not be known until early next year and then there will be the further distinct possibility of a High Court appeal. With the way I propose dealing with the matters, the Commissioner will incur no expense in this period of time because Newmont will be preparing its appeal case. It is common ground that to do so will be a very extensive task and the Commissioner does not challenge the fact that Newmont will need until the end of the year to put on its evidence. As I say, during that period of time, there is no reason to think that the Commissioner will incur any substantial cost. This is particularly likely the case with the sensible negotiation which I am confident the parties can embrace, such that hopefully certain areas of evidence preparation can be avoided or minimised. Further, the Court can assist, where necessary or sought by the parties, in intervening to confine the categories of dispute. 20 Newmont expresses the following prejudice it would suffer if the appeal is stayed for the period contemplated by the Commissioner: (a) the income tax liabilities assessed by the Commissioner in respect of the 2011 year to which these proceedings relate were due and payable on 1 December 2011 (s 5-5(4) of the ITAA 1997) and were paid by Newmont on 28 February 2012; (b) Newmont will not be fully compensated if they succeed in these proceedings by the payment of the statutory interest. Although it is true that Newmont's payments of income tax will be refunded and they will be paid interest calculated under the Taxation (Interest on Overpayments and Early Payments) Act 1983 (Cth) (IOOP Act), the interest paid under the IOOP Act is not a commercial rate of interest. Rather, under the IOOP Act, interest is calculated on a simple basis without any uplift above the base interest rate. The base rate is currently 1.77% (until 30 June 2018), which on any reasonable view is low and is deposed to being lower than Newmont's internal rate of return on capital invested in their businesses; (c) Newmont are expending significant internal and external resources on these proceedings and the longer the proceedings take to resolve, the more resources Newmont will expend. Additionally, efficiencies will be lost through the need to 'put down' and 'pick up' activities because of an adjournment; (d) further, if Newmont succeeds in these proceedings, it necessarily follows that the further amended assessments of income tax and assessments of shortfall penalty in respect of the year ended 30 June 2011, that were issued by the Commissioner on 23 October 2017, are also excessive and should be reduced to nil. The additional liabilities notified by these assessments were due and payable on: (i) 16 November 2017 in respect of Newmont's increased liability to pay income tax (a further $24,425,809.50 in respect of NCFN and $56,651,363.40 in respect of NCL) and shortfall interest charge ($6,120,197.83 in respect of NCFN and $14,194,721.41 in respect of NCL); and (ii) 13 November 2017 in respect of Newmont's liability to pay a penalty or ($1,221,290.45 in respect of NCFN and $2,832,568.15 in respect of NCL); (e) these liabilities must be disclosed in the consolidated accounts of Newmont's parent company, Newmont Mining Corporation, a company listed on the New York Stock Exchange. This is notwithstanding that the liabilities are disputed; (f) to the extent that any of the tax liabilities of Newmont have remained unpaid after they were due to be paid, General Interest Charge (GIC) has accrued daily by operation of the statute on those unpaid amounts on a compounding basis at a rate that is seven percentage points higher than the base interest rate for the day (s 5-15 of the ITAA 1997, s 298-25 of Sch 1 to the TAA and Pt IIA of the TAA). GIC will continue to accrue for as long as any amounts that are due and payable remain unpaid. For instance, the GIC that accrued in just one month in December 2017 in respect of NCL was $391,886.37 and in respect of NCFN was $165,951.01; (g) to secure the Commissioner's consent to defer the recovery action in respect of the increased tax liabilities notified in the assessments issued on 23 October 2017, Newmont have entered into a '50/50 agreement' with the Commissioner. Although these agreements typically require payment of 50% of the income tax in dispute in exchange for the Commissioner's agreement not to pursue recovery action and to remit 50% of the GIC accruing on the unpaid part of the debt after the date of payment, the Commissioner has in this case also required security in respect of the remaining 50% of the tax in dispute because the Newmont companies are foreign residents; (h) Newmont arranged for Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (ANZ) to provide the financial guarantees required by the Commissioner of $21,580,184.58 in respect of NCFN and $50,962,972.01 in respect of NCL. Newmont have each agreed to pay ANZ a fee of 0.60% per annum on the value of the guarantee in consideration for ANZ providing the required security. Irrespective of the outcome of these proceedings, Newmont will not be able to recover the fee paid to ANZ from the Commissioner; (i) by reason of the payments made in relation to the original assessments, and the further payments made for the purposes of giving effect to the proposed 50/50 agreements, as at 23 November 2017 NCFN has paid $14,238,696.30 to the Commissioner and NCL has paid $33,935,682.45 to the Commissioner in relation to the transactions that are the subject of these proceedings. This is notwithstanding that Newmont maintains that any gain arising out of the transactions ought to have been wholly disregarded for tax purposes; and (j) ironically, the Commissioner has requested as a term of the 50/50 agreements that Newmont 'diligently and expeditiously conduct and prosecute any proceedings filed under Part IVC or the TAA' in relation to either the original assessments or the further assessments issued on 23 October 2017. Newmont have agreed to this condition. 21 Some aspects of the evidence set out above is challenged, but broadly speaking I accept that Newmont has established these factors on its affidavit evidence. Insofar as interest is concerned, one fully accepts that the rate of interest at which the Commissioner would be required to make repayment, should the appeals succeed, is that determined by Parliament. Nonetheless, it is relevant to take into account that shareholders in Newmont would feel disappointed if that was the rate of return the company achieved on their capital. One can accept that a better recovery than this statutory interest rate could be achieved by a public company putting those funds to use. 22 It follows in my view, that the interests of justice favour the hearing resolving of these proceedings, rather than a stay of them. 23 Further, having regard to the fact that the Commissioner should not start incurring substantial cost until about the time the Full Court's decision is known tends against the grant of stay. 24 On those grounds alone I would decline to grant the stay. 25 There is a further and separate consideration as to whether this appeal relies only on the issues raised in the appeals from Resource Capital Fund. In that regard, Newmont says: (1) There is very little overlap between the legal issues arising in these proceedings and in the appeals from Resource Capital Fund. In a broad sense, both cases concern the operation of Div 855 of the ITAA 1997 and whether a Double Tax Agreement prevented the taxation of any gain in Australia. However, this broad description of the similarities between the cases belies the true differences between the cases. The differences between the cases include: (a) the question of whether the corporate limited partnerships to which assessments had been issued were taxable entities (see Resource Capital Fund at [1]-[23]) does not arise in this case because NCL and NCFN are both companies; (b) the question of the source of ordinary income (see Resource Capital Fund at [24]-[53]), which depends on the facts and circumstances of each case, does not arise in this case because the Commissioner has not contended that the gain is ordinary income; (c) the analysis of the United States Convention in Resource Capital Fund (at [54]-[88]) was undertaken from the perspective of a gain on revenue account and in relation to those partners in the partnership that were residents of the United States, meaning that it is of limited relevance to a case dealing with a capital gain, particularly insofar as Newmont are both companies and the United States Convention is only relevant to one of these proceedings as NCFN is domiciled in Canada; and (d) without limiting the foregoing, issues as to whether Taxation Determination TD 2011/25 was binding on the Commissioner (Resource Capital Fund at [71]-[76)) are irrelevant in this case. (2) The issues listed above are irrelevant to these proceedings and any one of them may determine the appeal. (3) The areas of purported commonality identified by the Commissioner relate to the operation of Div 855 of the ITAA 1997. However, the analysis of Div 855 of the ITAA 1997 in Resource Capital Fund (at [89]-[124]) turns on the specific assets of Talison Lithium Limited and the valuation evidence in that case. (4) Broadly speaking, Div 855 of the ITAA 1997 operates to disregard a capital gain made by a foreign resident where the relevant CGT event happens in relation to a CGT asset that is not TARP. Where the CGT asset is shares in a company, as in this case, the shares can only be TARP in circumstances where certain minimum ownership conditions are satisfied and the shares pass the 'principal asset test' in s 855-30 of the ITAA 1997 at the time of the CGT event. The question of whether shares in a company (in this case Newmont Australia Pty Ltd (NAPL)) pass the principal asset test involves a factual enquiry as to whether, at the relevant time, the sum of the market values of that company's assets that are TARP exceeds the sum of the market values of its assets that are not TARP. The term 'taxable Australian real property' (TARP, as previously defined) is defined in s 855-20 of the ITAA 1997 as being real property situated in Australia (including a lease of land situated in Australia) or a 'mining, quarrying or prospecting right', as defined in s 995-1 of the ITAA 1997, if the minerals, petroleum or quarry materials are situated in Australia. (5) Most of the areas of purported commonality identified by the Commissioner between the appeals in Resource Capital Fund and this case are matters of fact and evidence: (a) The question whether general purpose leases or miscellaneous licences are 'mining, quarrying or prospecting rights' as defined in s 995-1 of the ITAA 1997 will depend on the terms of those leases and licences in each case, and whether those leases and licences satisfy the statutory description of 'an authority, licence, permit or right under an Australian law to mine, quarry or prospect for minerals, petroleum or quarry materials'. That enquiry will depend on an examination of the particular lease or licence under consideration, and the statute under which the lease or licence was issued. (b) Even if a particular mining lease, general purpose lease or miscellaneous licence is found to be a 'mining, quarrying or prospecting right', that will not answer the question of whether buildings and improvements on the land subject to that particular lease or licence are also TARP as defined in s 855-20 of the ITAA 1997. The High Court's decision in TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576 per French CJ, Gummow, Heydon, Crennan and Kiefel JJ (at [35]) has the effect that, absent some specific legislative provision, items affixed to personal property such as mining leases and licences do not become 'fixtures' in the technical sense, and therefore cannot be real property belonging to NAPL or its subsidiaries. Under para (d) of the definition of 'mining, quarrying or prospecting rights' in s 995-1 of the ITAA 1997, certain rights to buildings and improvements may be mining, quarrying or prospecting rights. Whether par (d) applies to a particular right will require the clear identification of that right, and of the circumstances and time of its acquisition, and the valuation of that right. Again, this issue involves factual enquiries. (c) The question of whether Talison Lithium Limited carried on two sets of operations, namely mining and mineral processing, is factual and of no relevance to how the operations of NAPL and its subsidiaries should be characterised. (d) There is no warrant for inferring that any conclusion reached about the appropriateness of the 'netback' valuation methodology in relation to the assets and operations of Talison Lithium Limited would have any implications for the appropriateness of that methodology for the assets of NAPL and its subsidiaries. The appropriate valuation methodology to be used in these proceedings will be determined based on the expert and other evidence before the Court. (6) The only issue of construction that arises in the appeals from Resource Capital Fund and in these proceedings concerns the Commissioner's argument that the full value of the relevant company's own plant and equipment located on certain tenements will be included in the value of the assets of that company that are TARP. The Commissioner's argument in Resource Capital Fund was that plant and equipment that can be described as building or improvements will be within para (d) of the definition of 'mining, quarrying or prospecting rights', irrespective of when that plant and equipment was acquired or the circumstances of its acquisition. In Resource Capital Fund, the Commissioner made no attempt to value any rights but simply contended that the value of the rights were equal to value of Talison Lithium Limited's own plant and equipment. On its face, this argument cannot be reconciled with the language of para (d) of the definition of 'mining, quarrying or prospecting right' in s 995-1 of the ITAA 1997, which refers to 'any rights that are in respect of buildings or other improvements' and which requires that those rights 'are acquired with' the relevant mining, quarrying or prospecting right. Paragraph (d) simply requires one to identify the particular right contemplated and value that right. It does not follow that the value of such a right, if any, is equal to the value of the plant and equipment which the company owns and happens to be situated on a particular tenement. (7) Finally, this is not a case in which there are any common facts between Resource Capital Fund and these proceedings which could give rise to a risk of conflicting findings of fact or the need to consider witnesses who would otherwise be required in both proceedings. There is no scope for the factual findings with respect to the assets in operation of lithium production under consideration in Resource Capital Fund in the present cases which concern the goldmining and exploring assets of a different entity and its subsidiaries. 26 This list of differences between these appeals and Resource Capital Fund was at least partly accepted by the Commissioner as I understand it. Clearly there are also similarities. But the extent of the differences and their potential effect on the outcome is relevant to whether a stay should be ordered. For these further reasons, I would decline to grant a stay.

The request for particulars 27 Newmont has sought an order that the Commissioner provide further and better particulars of its appeal statements. It must be said that as presently formulated at this early stage, the appeal statements are not helpful. In substance, each statement simply identifies the statutory conclusion entitling the Commissioner to take the position he has. From a practical perspective, however, I am not persuaded that the provision of further particulars at this point will illuminate the position. The Commissioner says that he is putting Newmont to proof on every issue. I have invited the parties to meet and offered the Court's facilities to assist in further isolation of the issues which would ultimately arise for determination. In any event, however, Newmont accepts that they have and will have to continue for several months to engage experts on a valuing and categorisation process, which in turn will set up the further bases for their claims. Newmont, not unreasonably, points to the fact that the Commissioner has conducted an audit over a period of two years and might be expected to have much of the information upon which it bases its position. 28 Newmont makes the complaints that follow: (1) Paragraph 23 of the Commissioner's appeal statements simply assert a conclusion that the Commissioner contends should be drawn concerning the operation of the principal asset test in s 855-30 of the ITAA 1997 in relation to Newmont's shares in NAPL without stating the facts and matters that would allow that conclusion to be drawn. In particular, Newmont contends that the Commissioner has not in his appeal statement: (a) identified any assets of NAPL, nor even categories of assets owned by NAPL; (b) identified which assets belonging to NAPL, or to a subsidiary of NAPL, are to be taken into account for the purposes of the principal asset test under s 855-30(3) and (4), are 'CGT assets', as defined, that are also TARP within the meaning of s 855-20 of the ITAA 1997; (c) made any contentions with respect to issues of construction that may be relevant to the characterisation of assets as either TARP or non-TARP, notwithstanding that the Commissioner is aware that aspects of his preferred construction of expressions such as 'mining, quarrying or prospecting right' are disputed (see Bartlett v Federal Commissioner of Taxation (2003) 54 ATR 261 per Hill J (at 265), cited in Rio Tinto Ltd v Federal Commissioner of Taxation (2004) 55 ATR 321 (at [25]); (d) stated whether the Commissioner has withdrawn concessions previously made by him which formed the basis of his decision on objection; and (e) referred to any valuation undertaken by or on behalf of the Commissioner for the purposes of the principal asset test. (2) The purpose of the principal asset test is to define when an entity's underlying value is principally derived from Australian real property (s 855-30(1) of the ITAA 1997). Here, the shares held by Newmont in NAPL will have passed the principal asset test on 30 June 2011, if the sum of the market values of NAPL's assets that are TARP exceeds the sum of the market values of its assets that are not TARP (s 855-30(2) of the ITAA 1997). At 30 June 2011, TARP was defined in s 855-20 of the ITAA 1997 in the following way: A *CGT asset is taxable Australian real property if it is: (a) real property situated in Australia (including a lease of land, if the land is situated in Australia); or (b) a *mining, quarrying or prospecting right (to the extent that the right is not real property), if the *minerals, *petroleum or quarry materials are situated in Australia. (3) The expression 'mining, quarrying or prospecting right' was defined in s 995-1 of the ITAA 1997 as follows: mining, quarrying or prospecting right is: (a) an authority, licence, permit or right under an *Australian law to mine, quarry or prospect for *minerals, *petroleum or quarry materials; or (b) a lease of land that allows the lessee to mine, quarry or prospect for minerals, petroleum or quarry materials on the land; or (c) an interest in such an authority, licence, permit, right or lease; or (d) any rights that: (i) are in respect of buildings or other improvements (including anything covered by the definition of housing and welfare) that are on the land concerned or are used in connection with operations on it; and (ii) are acquired with such an authority, licence, permit, right, lease or interest. However, a right in respect of anything covered by the definition of housing and welfare in relation to a quarrying site is not a mining, quarrying or prospecting right. (4) Although the Commissioner acknowledges at para 7 of its appeal statements that NAPL held interests in a number of named mining operations, the Commissioner otherwise does not identify any of NAPL's assets, let alone any CGT assets, that are TARP. The Commissioner also has not made any attempt to identify how different categories of NAPL's assets should be characterised for the purposes of Div 855 of the ITAA 1997. This is notwithstanding that the Commissioner had previously: (a) advised Newmont that the Commissioner would not contend that various items of plant and equipment located at the Boddington mine site would not be treated as fixtures and therefore TARP under s 855-20(a) of the ITAA 1997; and (b) taken the position in its reasons for decision that accompanied the Commissioner's decision on objection dated 29 September 2017 that the following assets were TARP: land and land improvements, buildings, mineral interests, and some plant and equipment to the extent that they are covered by paragraph (d) of the definition of 'mining, quarrying or prospecting right'. (5) Because the Commissioner has not disclosed the basis for the conclusion asserted at para 23 of his appeal statements, Newmont does not know whether they can rely on the concessions previously made by the Commissioner. Nor do they know to what extent the Commissioner will continue to rely on a construction of the expression 'mining, quarrying or prospecting right' to treat items of plant and equipment as TARP under s 855-20(b) of the ITAA 1997; this issue of construction is particularly important in circumstances where the Commissioner's preferred construction is arguably inconsistent with the approach taken in Resource Capital Fund. (6) In taxation appeal proceedings, such as these, where Newmont bears the onus of proof under s 14ZZO of the TAA, the deficiencies in the Commissioner's appeal statements mean that Newmont will be required to speculate about and adduce evidence, including expert evidence, to negate various alternative ways in which the Commissioner might ultimately put its case: see also Bailey v Commissioner of Taxation (Cth) (1977) 136 CLR 214 per Aicken J (at 227), cited by Stone J in BAE Systems Australia (NSW) Pty Ltd v Federal Commissioner of Taxation (2008) 69 ATR 567 (at [14]). In their present form, the Commissioner's appeal statements are embarrassing in that they are likely to both delay and increase the costs associated with the conduct of these proceedings: Rio Tinto (at [58]); see also Spiteri v Nine Network Australia Pty Ltd [2008] FCA 905 per Edmonds J (at [22]-[23]). By way of example, if the Commissioner does not maintain its concession that items of plant and equipment at Boddington are fixtures, it will be necessary for Newmont to: (a) file evidence addressing factual matters such as the purpose and degree of annexation of all the plant and equipment owned by NAPL and its subsidiaries at 30 June 2011; and (b) instruct one or more valuation experts to prepare their valuation reports on the alternative bases that the plant and equipment is either TARP or non-TARP.

Consideration 29 Again, while there is force in some of these points, it is to be remembered that the Commissioner is entitled to put Newmont fully to proof. That said, the better starting point is for the parties to confer on these issues with a view to saving time and costs, at least as a first measure. Again, the Court's registrars would willingly assist in completing and refining the issues, their proof and identifying the issues truly in conflict. If that has not produced a functional or preferable outcome I would certainly entertain a further application for particulars. It is imperative that neither party nor the Court be taken by surprise at the final hearing. 30 Newmont has already embarked upon the apparently inevitable task of valuing and categorising the relevant assets. Although the Commissioner has conducted a two year audit, the Commissioner is entitled to put the taxpayer to proof of its appeal and, in this instance, has done so. The Commissioner's position on particulars, in substance, is that were it required to set out substantive particulars, it would be conducting the same exercise which the taxpayer is required by statute to carry out in this particular case. 31 I also have regard to the observations of the High Court in WR Carpenter Holdings Pty Ltd v Federal Commissioner of Taxation (2008) 237 CLR 198 per Gleeson CJ, Gummow, Kirby, Hayne, Heydon, Crennan and Kiefel JJ (at [30]) in this regard: First, in a number of respects the appellants are engaging here in fishing in the sense identified in the passage from Meth set out earlier in these reasons. The appellants, as suggested by the terms of the Appellants' Statements, are seeking to locate some state of affairs which may provide them with an issue to be pursued in the Pt IVC appeals. Secondly, to a significant degree the appellants appear to be concerned with eliciting the understanding of the Commissioner of factual aspects of the CHIL Transaction and Loan Agreement #13. However, the opinion of the Commissioner respecting these objective matters can be no evidence of the facts, which exist or do not exist irrespective of the attitude of the Commissioner which appears in the Commissioner's statement; factual disputes are for resolution by the Federal Court on the hearing of the appeals and the burden will rest upon the appellants who are, after all, closer to the facts than the Commissioner. (Citations omitted, emphasis added.) 32 What is ultimately critical is that the taxpayer and the Court be given a clear and succinct statement of the Commissioner's position well before the parties proceed to the hearing, without, at the same time, imposing any element of burden of proof on the Commissioner. I accept the Commissioner's contention that the practical approach reflected in the judgment of Stone J in BAE Systems (at [19]) also reflects the fact that tax appeals may cover many situations and what is required to satisfy r 33.03 of the Federal Court Rules 2011 (Cth) in one case may differ from that required in another. What will be required will be informed by a number of factors, including the number and complexity of the factual and legal issues, the form of the appeal statement and the identification of issues by the parties in the appeal statements. There is no doubt that in this case that the TARP issue or the Div 855 issue are what have been consistently identified by the parties as the real issues in dispute. There is no doubt that what is for determination is whether or not Newmont's assets, principally comprising assets associated with identified mining operations, do or do not pass the principle asset test by reference to the sum of the market value of Newmont's TARP assets as compared with the market value of Newmont's non-TARP assets. Newmont has already approached the matter on the basis which the Commissioner, again, identifies as being his position, namely, that Newmont is put to proof on all factual matters in this regard. 33 For those reasons, I declined to order the Commissioner to provide the particulars sought by Newmont.

Conclusion 34 The appropriate disposition in the circumstances is to reserve costs of and incidental to the dismissed applications. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.