The New Redhead Estate & Coal Company Ltd v NSW Coal Compensation Board &... [1999] NSWCA 464 | Case summary

1 PRIESTLEY JA: When the Coal Acquisition Act 1981, with related legislation, came into operation in 1982, it vested all privately owned coal in the Crown. It also gave authority to the Governor to make arrangements for the determination of compensation for rights taken or terminated by the legislation. Pursuant to this authority, the Coal Acquisition (Compensation) Arrangements 1985 (the Arrangements) were published in the Government Gazette of 21 June 1985. The Arrangements (subsequently amended from time to time) regulated the way in which compensation was to be claimed and calculated. Clause 18 of the Arrangements set out a formula for the calculation of compensation. Clause 18 also contained definitions of the various factors in the formula. 2 One claimant for compensation was the New Redhead Estate & Coal Company Limited (Redhead). Redhead had leased to the Broken Hill Pty Company Limited (BHP) various minerals, including coal, in land near Port Macquarie, in which a mine known as the John Darling Colliery was situated, for a term of fifty years from 16 December 1974. The lease required BHP to pay rent and royalties to Redhead calculated by reference (in part) to quantities of coal BHP got from the demised minerals. The vesting of all coal in the Crown put an end to Redhead's rights to the rent and royalty payments. 3 Pursuant to the Arrangements, Redhead's claim, which was under cl 11 of the Arrangements, was considered by the New South Wales Coal Compensation Board (the Board). The Board applied the formula set out in cl 18 of the Arrangements for the calculation of compensation. Two factors in the formula represented a royalty figure and a tonnage figure. The way in which the definitions of these factors should be applied to the facts of the case became the subject of dispute. There was no argument in this court about the other factors in the calculation formula, so it is unnecessary to mention them further. The definitions of the royalty figure (called r) and the tonnage figure (called t), so far as relevant for purposes of this appeal were as follows: " r is: (a) ... ; or (b) in the case of a claim under clause 11: (i) $0.90, except as provided in subparagraph (ii); or (ii) if, but for clause 4 of Schedule 2 to the Coal Mining (Amendment) Act 1981, a rent or royalty in respect of the coal that is the subject of the claim would have been payable to the claimant under a lease, agreement or other instrument which was terminated by that clause and that rent or royalty would have been less than $0.90 for each tonne of coal extracted under that lease, agreement or instrument - that lesser amount; " 4 The definition of t was " t in respect of a particular relevant period is the number of tonnes of saleable coal which has been or, in the Board's opinion, will be extracted from that part of the colliery holding which contains the coal that is the subject of the claim during that relevant period. " 5 Before describing how the Board dealt with r and t some background facts need to be given of the way Redhead and BHP implemented the terms of the lease. 6 The royalty payments by BHP to Redhead were based on run-of-mine tonnage, that is, the tonnage brought to the surface at the mine. 7 From the mine the coal was taken to the BHP Steelworks at Newcastle where it underwent a coal preparation process before being used in the Steelworks coke ovens. The coal that emerged from this process was called "washed" coal. The tonnage figure for washed coal was less than the tonnage figure for the run-of-mine coal from which it was produced. 8 The Board in deciding what figure should be used for r looked to the Redhead BHP lease, saw the amounts payable under it in respect of run-of-mine coal, saw that those amounts were less than 90 cents per tonne of coal extracted and based the r figure in the calculation formula on the figures disclosed by the lease which were less than 90 cents per tonne. 9 Then, in arriving at the figure to be used for t the Board used the washed coal tonnages rather than the run-of-mine tonnages. 10 Under the Arrangements an appeal lay from the Board to a Compensation Review Tribunal (the Tribunal). The Tribunal upheld the appeal. (I should record that it is from the Tribunal's reasons that I have taken my summary of background facts and the Board's reasoning set out in paragraphs (6-9) above.) 11 The Tribunal took the view "that the ultimate disposal of the coal occurred at the Steelworks after it had been converted into washed, saleable coal". They therefore agreed with the Board that the figure that should be taken as t was the tonnage of washed coal. 12 However, they did not agree with the Board's view about r. The Tribunal was of opinion that the coal "that is the subject of the claim" in sub-par (b)(ii) of the definition of r was the saleable coal after beneficiation at the Steelworks and that this was not the coal for which royalty of less than 90 cents was paid under the lease. That being so, in the Tribunal's opinion, r should have been 90 cents under sub-par (b)(i) of the definition of r. 13 The Board then challenged the Tribunal's orders in the Supreme Court. The matter came before Callaway AJ. He noted that there was no specific provision for appeal from the Tribunal, but that, on the basis of Wambo Mining Corporation v Lange, an unreported decision of Hunt CJ at CL (29 January 1993) and NSW Coal Compensation Board v Gilder, an unreported decision of Hamilton AJ (15 November 1996) affirmed in the Court of Appeal on 29 July 1997, errors of law could be dealt with in the Supreme Court by the granting of relief in the nature of prerogative relief, or by declaration. That view of the jurisdiction was not challenged in this court, but it will be necessary for me to mention it again later. 14 Callaway AJ dismissed the Board's summons on the basis that he agreed with the Tribunal's conclusion concerning r. He did not think that the "coal the subject of the claim" in relation to "r" should be significantly different from "saleable coal" in relation to t. He had earlier noted that counsel for Redhead had made an alternative submission (which had been the subject of a cross-claim by Redhead) that upon the proper construction of t the figure for it should be the tonnage of the run-of-mine coal. He was of the view that since the Tribunal had not erred in regard to r he did not need to deal with Redhead's alternative submission about t. However, Redhead subsequently made it known to the judge that it wished to have a decision on the point. Callaway AJ then ordered that the cross-claim be dismissed. 15 The Board appealed against the dismissal of its summons. Redhead appealed against the dismissal of its cross-claim. 16 The Board's submission was that r should be the less than 90 cents royalty paid by BHP for run-of-mine coal, and that the Tribunal's contrary opinion was wrong. The Board also submitted that t should be the tonnage of washed coal. The submissions depended, first, upon a distinction which, with some justification, was said to be apparent from the terms of the Arrangements, between "coal" and "saleable coal" and, second, upon the proposition that, on the facts of the case, the only saleable coal for which compensation was payable was the washed coal. 17 In regard to the second step of the submission, I think the Board's argument breaks down. I do not think there is any doubt that run-of-mine coal became the property of BHP as soon as it was, in the words of cl 3 of the lease, "gotten from or out of the demised mines". It was then the royalty was payable. (This is also the way Redhead and BHP treated it - see BHP's letter of 15 March 1993, Blue AB 85.) In my opinion the run-of-mine coal when brought to the surface was coal extracted for sale or disposal within the meaning of "saleable coal" as defined in cl 3 of the Arrangements, and the sale or disposal for which it was destined took place for the agreed consideration at the pithead when it was run-of-mine coal. 18 What seems to be a conclusion very similar to what I have said in the preceding paragraph was reached by the Tribunal in their reasons: " Coal was mined by the lessee (BHP) at John Darling Colliery and, under the terms of the commercial arrangements applying by virtue of the private lease conditions, it appears that the coal passed from the lessor as the original owner of the coal, to the ownership of the lessee at the mine subject to the payment of an agreed rate of royalty. " 19 However, towards the end of their reasons, the Tribunal said: " The Tribunal is of the view that the ultimate disposal of the coal occurred at the Steelworks after it had been converted into washed, saleable coal. We therefore agree with the Board's selection of washed tonnage as being acceptable in terms of the tonnage ' t ' in Clause 18. " 20 With respect, I do not think the second passage is consistent with the first. The coal belonged to BHP at the pithead. It could not dispose of the washed part of it to itself later, in the sense, which is the only relevant one here, of a transfer of property. 21 The understanding of t that I have reached has the result that, in the circumstances of the present case, "the number of tonnes of saleable coal" referred to in the definition of t is the same as that of "the coal that is the subject of the claim" in sub-par (ii) of the definition of r. This result will not necessarily be the same in other cases. The fact that, in my opinion, it is so in the present case, makes it unnecessary to consider the quite complex textual analysis of a number of provisions in the Arrangements which was advanced by the Board in support of its submitted distinction between "coal" and "saleable coal" as those terms are used in different places in the Arrangements. 22 In my view, it follows from my understanding of t, in the circumstances of the present case, that the figure for r in the present case must be the royalty figures, less than 90 cents payable by BHP to Redhead in respect of run-of-mine coal. 23 In my opinion it follows again that the determination of the Tribunal should be quashed, following which it will become the task of the Tribunal to decide afresh the orders it should make in respect of Redhead's appeal to it, such orders to be arrived at in conformity with this court's decision concerning the proper application of r and t in the circumstances of the present case. 24 Having reached the conclusion that the relief stated in the preceding paragraph should be granted, it is necessary to return to the subject mentioned in passing earlier, that is the jurisdictional basis of relief. Of the cases Callaway AJ referred to, the first was decided before Craig v The State of South Australia (1995) 184 CLR 163, and the decisions in Gilder by Hamilton AJ and in this court were decisions refusing to grant relief. Craig reversed a line of authority which had grown up in this court, so that cases decided before it may not be of much assistance now. After the decision in Craig, s 69 of the Supreme Court was amended to make clear something which Craig had rendered doubtful at least in some cases. The relevant amendments were in subss (3) and (4) which provided that this court's jurisdiction includes jurisdiction to quash a determination made on the basis of an error of law appearing on the face of the record of the proceedings below and that the face of the record includes the reasons expressed by a tribunal for its ultimate determination. 25 What the effect of Craig and the present form of s 69 may be, was not the subject of conclusive consideration in Gilder either by Hamilton AJ or this court. 26 In the present appeal therefore, the court raised with counsel the question whether any party was questioning the jurisdiction of the court to entertain the two appeals and to grant relief of a prerogative kind if the court concluded a party was otherwise entitled to it. Neither party wished to argue against the court's jurisdiction. Counsel for the Board submitted that there was no provision in relation to the Tribunal for the making of orders of a formal nature so that it would appear that the whole of the proceedings before the Tribunal constituted the formal record. That proposition was not disputed by counsel for Redhead. 27 In the circumstances it seems appropriate to me that this court should accept the position as agreed by counsel and exercise jurisdiction in the way I have indicated above. 28 The way the two appeals have turned out, it seems fair to make no order for costs in either appeal, nor in the proceedings before Callaway AJ. 29 I therefore propose the following formal orders: 1. Each appeal upheld. 2. Orders of the court below set aside. 3. On the summons filed in this court: (a) determination of Tribunal quashed, (b) Tribunal to decide afresh the orders to be made on Redhead's appeal to it, in conformity with this court's decision concerning the way in which r and t should be applied in the circumstances of the present case, (c) no order for the costs of the summons. 4. No orders for the costs of the appeals. 30 STEIN JA: I agree with Priestley. 31 BELL AJA: I agree with Priestley JA. **********

The New Redhead Estate & Coal Company Ltd v NSW Coal Compensation Board & Anor: The New South Wales Coal Compensation Board v New South Wales Coal Compensation Review Tribunal & Anor.

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