Cadia Holdings Pty Ltd v State of New South Wales

• Jurisdiction: Australia Federal only
• Court: High Court
• Judge: French CJ,Gummow,Hayne,Heydon,Crennan JJ.
• Judgment Date: 25 August 2010
• Neutral Citation: 2010-0825 HCA A,[2010] HCA 27
• Docket Number: S367/2009
• Date: 25 August 2010

[2010] HCA 27

HIGH COURT OF AUSTRALIA

French CJ, Gummow, Hayne, Heydon and Crennan JJ

S367/2009

Cadia Holdings Pty Ltd & Anor

Appellant

and

State of New South Wales & Anor

Respondents

Representation

A J L Bannon SC with R C Scruby for the appellants (instructed by Marque Lawyers)

M G Sexton SC, Solicitor-General for the State of New South Wales with H R Sorensen for the respondents (instructed by Crown Solicitor (NSW))

Royal Mines Act 1688 (1 Wm & Mar c 30), s 3.

Statute 5 Wm & Mar c 6 (1693).

Mining Act 1992 (NSW), ss 282, 284, 379.

Cadia Holdings Pty Ltd v State of New South Wales

Mining — Ownership of minerals — Crown prerogative — Section 379 of the Mining Act 1992 (NSW) (‘the Act’) preserved any Crown prerogative in respect of mines of gold and silver — Ore mined on appellants' lands contained intermingled gold and copper, incapable of being separately mined — Royalty payable under the Act on gold and copper — Section 284 of the Act required Minister to pay seven-eighths of royalty paid on minerals not owned by or reserved to Crown to mineral owner — Whether intermingled copper owned by or reserved to Crown — Whether common law prerogative rights, as received in colony of New South Wales, included Crown ownership of intermingled copper — Whether Royal Mines Act 1688 (1 Wm & Mar c 30) excluded ‘mines of copper’ from scope of prerogative recognised in Case of Mines (1568) 1 Plowden 310 [ 75 ER 472] — Whether mines on appellants' lands were ‘mines of copper’.

Words and phrases — ‘mine of copper’, ‘mine of gold’, ‘prerogative’, ‘privately owned mineral’, ‘publicly owned mineral’, ‘royal mines’.

1. Appeal allowed with costs.

2. Set aside the orders of the Court of Appeal of the Supreme Court of New South Wales made on 1 July 2009 and in lieu thereof order that the appeal to that Court be dismissed with costs.

French CJ

Introduction

1 In 1568, an English court held that the Crown had the prerogative right to mines of gold and silver and other metals, such as copper, with which gold or silver in those mines was mixed 1. In a context of constitutional upheaval, that right was modified, in favour of the owners of base-metal mines, by an Act of the English Parliament in 1688 2. It was modified again in 1693 3. Those events, which occurred more than three centuries ago, determine today the amount of royalties payable to the New South Wales Minister for Mineral Resources (‘the Minister’) in respect of copper mined by Cadia Holdings Pty Ltd (‘Cadia’) from land near Orange which is owned by it and Newcrest Operations Ltd (‘NOL’).

2 The entitlement of the Minister, debated in this appeal, to more than $8 million of royalties on copper mined from the land at Orange depends upon the interaction between the rules of law laid down in the 16th and 17th centuries and the Mining Act 1992 (NSW).

3 When the Crown's prerogative right to mines of gold and silver was judicially recognised in 1568 it was as an aspect of the Crown's fiscal prerogatives. It was justified by the Crown's need to obtain precious metal for the making of coins, a monopoly which was another aspect of the royal prerogative, and by the need to pay military defence forces. It was also justified by the need to avoid undue concentrations of private power within the realm. The 1688 Act protected private interests in copper mines which contained gold. It allowed their owners to retain the copper.

4 The prerogative right to gold and the 1688 and 1693 Acts formed part of the law of the colony of New South Wales, probably from the time of its establishment and at least from 1828, and affected the scope of Crown grants of land, including the land on which the copper and gold mining operations the subject of this appeal are conducted. The Minister says that he is entitled to retain royalties payable in respect of copper recovered from Cadia's mines on the basis that the quantity and value of gold in the ore body means that the mines cannot be regarded as mines of copper protected by the 1688 Act. The copper is said therefore to be a ‘publicly owned mineral’ within the meaning of the Mining Act 1992.

5 In my opinion, the 1688 Act had the effect that the right to copper in the land at Orange was conveyed by the Crown grants of that land in the mid-19th century. The liability to pay royalties for the copper mined from the land is therefore to be assessed on the basis that it was a ‘privately owned mineral’ within the meaning of the Mining Act 1992. The appeal against the decision of the Court of Appeal of the Supreme Court of New South Wales 4, which held the copper to be a ‘publicly owned mineral’ and effectively subject to higher royalties, should be allowed.

Factual and procedural history

6 Cadia and NOL are both wholly owned subsidiaries of Newcrest Mining Ltd. Between them they hold 10 certificates of title to pieces of land near Orange, each subject to ‘reservations and conditions in the Crown grant(s)’ 5. Cadia holds four mining leases over the land pursuant to the Mining Act 1992 6. Under the authority of those leases, it operates two mines from which it recovers ore in which copper and gold are so intermingled that they cannot be mined separately. The weight of copper extracted from the mines vastly exceeded the weight of gold extracted 7. The value of gold recovered, however, substantially exceeded the value of copper recovered 8. The land upon which Cadia operates the mines was originally the subject of nine Crown grants made between 12 April 1852 and 28 November 1881, only one of which expressly reserved minerals, in that case, ‘all gold and mines of gold’ 9.

7 The Mining Act 1992 renders the holder of a mining lease liable to pay royalty to the Minister on minerals recovered under the lease which are ‘publicly owned minerals’ 10. The term ‘minerals’ includes copper and gold 11. A ‘publicly owned mineral’ is defined as ‘a mineral that is owned by, or reserved to, the Crown’ 12. If the minerals recovered are privately owned the lessee is nevertheless liable to pay royalty as if they were publicly owned 13. In that case, however, the Minister must pay seven-eighths of the royalty to the owner of the minerals 14. The Act does not, except as expressly provided, affect any prerogative of the Crown in respect of gold mines and silver mines 15. The noun ‘mine’ is broadly defined. It includes any ‘excavation’ and also any ‘vein, lode, [or] reef … in, on or by means of which, any mining operation is carried on’ 16.

8 Cadia paid royalties to the Minister for the period from 1 July 1998 to 31 March 2008. Cadia and NOL sought repayment of seven-eighths of the royalties paid on the copper mined during that time, claiming that it was a privately owned mineral. The State of New South Wales (‘the State’) and the Minister resisted the claim on the basis that the copper, although not reserved by the original Crown grants, was vested in the Crown pursuant to its prerogative right to mines of gold and was therefore a publicly owned mineral. That contention depended upon the proposition that, although the mines contained copper, they were properly characterised as mines of gold.

9 Cadia and NOL sued the State and the Minister in the Supreme Court of New South Wales for the amount of the repayment claimed 17. For reasons

published on 30 May 2008 and by orders made on 16 June 2008, the primary judge (Hamilton J) declared that the copper in the Cadia mines 18 was a privately owned mineral. He ordered that the Minister pay to Cadia and NOL the sum of $8,030,949, being seven-eighths of the royalty payments made during the period 1 July 1998 to 31 March 2008 in respect of the copper extracted from the mines. He also awarded Cadia and NOL $2,859,725 by way of pre-judgment interest. The State and the Minister were ordered to pay the costs of Cadia and NOL.

10 The State and the Minister appealed, and on 1 July 2009 the Court of Appeal, by a majority decision (Basten JA and Handley AJA, Spigelman CJ dissenting), allowed the appeal and set aside the orders made by the primary judge. It declared that the copper was a publicly owned mineral for the purposes of the Mining Act 1992. The Court ordered Cadia and NOL to repay to the Minister all of the moneys paid to them in execution of the judgment of the primary judge together with interest.

11 Special leave to appeal to this Court from the judgment of the Court of Appeal was granted on 11 December 2009.

12 Cadia and NOL submitted in the Court of Appeal, and on appeal to this Court, that the copper in the Cadia mines was a ‘privately owned mineral’. They put two alternative arguments in support of that submission:

1. The copper had been granted away at the time of the original Crown grants of the land.

2. Even if the copper were not granted away, the Crown's title to it was abrogated by the Mining Act 1992.

Before turning to those submissions and to the decisions of the courts below, it is necessary briefly to review the content and nature of the prerogative right to mines of gold and silver and its application in Australia and in New South Wales.

The prerogative right to mines of gold

13 The existence of the right in the Crown to mines of gold and silver was judicially recognised by all the justices of England and Barons of the Exchequer

in the Case of Mines in 1568 19. The judges also held, by majority, that ‘all ores or mines of copper … containing or bearing gold or silver belong to the King’ 20. No rationale was set out in Plowden's report of the reasons for judgment 21. However, his lengthy report of the argument disclosed that the Crown supported its assertion of the prerogative by reference to the excellence of the monarch's person, which ‘draws to it things of an excellent nature’ 22, the need to finance defence forces 23 and the royal right to control coinage 24. A...