Energy Resources of Australia Ltd v Chief Executive Officer of Customs [1998] FCA 109 (27 February 1998)

Last Updated: 2 March 1998

FEDERAL COURT OF AUSTRALIA

CUSTOMS AND EXCISE - Diesel fuel rebate - whether Jabiru a "mining town" - whether Jabiru "administered by" Jabiru Town Council - whether Jabiru Town Council "a council" - whether incorrect findings were errors of law.

Administrative Appeals Tribunal Act 1975 (Cth) s 44

Customs Act 1901 (Cth) s 164(7)

Jabiru Town Development Act 1979 (NT) ss 4(4), 5, 19A, 23, 24, 25D, 29A, 31

Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321, appl

NSW Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation (1955) 94 CLR 509, appl

Re Reference under section 11 of the Ombudsman Act 1976 (1979) 2 ALD 86, appl

Waterford v Commonwealth [1987] HCA 25; (1987) 163 CLR 54, appl

ENERGY RESOURCES OF AUSTRALIA LTD v

CHIEF EXECUTIVE OFFICER OF CUSTOMS

NG 526 of 1997

DAVIES J

27 FEBRUARY 1998

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 526 of 1997

BETWEEN:	ENERGY RESOURCES OF AUSTRALIA LIMITED Applicant
AND:	CHIEF EXECUTIVE OFFICER OF CUSTOMS Respondent
JUDGE:	DAVIES J
DATE OF ORDER:	27 FEBRUARY 1998
WHERE MADE:	SYDNEY

MINUTES OF ORDER

THE COURT ORDERS THAT:

The application be dismissed with costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 526 of 1997

BETWEEN:	ENERGY RESOURCES OF AUSTRALIA LIMITED Applicant
AND:	CHIEF EXECUTIVE OFFICER OF CUSTOMS Respondent

JUDGE:	DAVIES J
DATE:	27 FEBRUARY 1998
PLACE:	SYDNEY

REASONS FOR JUDGMENT

This is an appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) from a decision of the Administrative Appeals Tribunal ("the Tribunal") in which the Tribunal rejected a challenge to a decision refusing to approve the payment of rebate on diesel fuel purchased by the applicant, Energy Resources of Australia Limited ("ERA"), for use in the generation of electricity for the township of Jabiru in the Northern Territory. The appeal raises only questions of law.

The only issue debated before the Tribunal was whether Jabiru was a "mining town" as defined in s 164 of the Customs Act 1901 (Cth). The definition reads:

"'mining town' means a town constructed by or on behalf of a person engaged in mining operations, in an area where immediately prior to its construction there was no town, principally to house employees of the person, but does not include a town administered by:

(a) a council that is constituted under local government legislation of a State or Territory; or

(b) an organisation taken to be a council under such legislation;"

The issues before the Tribunal were whether the Jabiru Town council was "a council", whether it was "constituted under local government legislation" and whether Jabiru was "administered by" the Jabiru Town Council. The Tribunal answered those questions in the affirmative. In the present proceedings, it has been conceded that the Jabiru Town Council, which was formed in accordance with the Jabiru Town Development Act 1979 (NT) ("the JTD Act 1995 "), was "constituted under local government legislation". Counsel for ERA has contended that the Tribunal erred in law in its interpretation and application of the terms "administered by" and "a council".

I do not propose to mention the facts in any great detail; however, an outline is essential. The township of Jabiru was established in 1979 for the purposes of the proposed Ranger Uranium Mine. Both the Township and the mine are situated within the Kakadu National Park. The JTD Act was passed to establish the Jabiru Town Development Authority, which was to control the town. The Authority comprised a Chairman and six other members, all of whom were appointed. In the early days, the Authority had a strong input from the Northern Territory Government. Over the years, the influence of the government representatives probably declined and the influence of ERA's representatives would have grown. The Authority was required by s 4(4) of the JTD Act to comply with any directions given to it by the Minister. Section 5 of the JTD Act conferred upon the Authority the following functions, inter alia:

(a) to develop and maintain the town of Jabiru;

(b) to give leases of land and premises and parts of premises in the town of Jabiru;

(c) to administer, manage and control the town of Jabiru;

(d) to carry out such local government functions as are conferred on it by or under this Act;

..."

Section 23 provided that the Authority may declare a rate or charge on rateable land at Jabiru. Section 31 provided that the Authority may make by-laws to prescribe all things required or permitted to be prescribed or which were necessary or convenient in the performance of its functions. It was under the control of the Authority that the construction of the town proceeded. The Commonwealth was the owner of the relevant land. It granted a lease to the Authority. The Authority subleased land to others for residential and business purposes.

By 1981, consideration had been given to achieving some form of participation by citizens residing in the town in the decision-making processes relating to the town. It was contemplated that there would be a staged development leading ultimately to a fully elected local government representation. The JTD Act was amended in 1982 to provide for a Jabiru Town Advisory Council, of which five members were to be elected and of which five members were to be appointed by the Minister. That Council when established advised the Authority on local government issues affecting Jabiru. The JTD Act was amended again in 1984 to establish the Jabiru Town Council. That Council consists of five members elected by persons residing in the district and three members appointed by the Minister. The functions of the Council are specified in s 25D which provides:

"The function of the Council is to exercise a power or perform a function delegated to it by the Authority in so far as the power or function -

(a) falls within the powers of the Authority under or by virtue of this Act;

(b) is exercised or performed in or in relation to the area administered by the Authority; and

(c) is or is in relation to a function specified in Schedule 2 of the Local Government Act."

(emphasis added)

Section 19A provides for a delegation by the Authority of its powers. The section provides, inter alia:

"(1) Subject to sub-sections (4) and (5), the Authority may, by instrument in writing, delegate to a person any of its powers and functions under this Act, other than this power of delegation.

...

(4) Where the person to whom the Authority has, under sub-section (1), delegated a power or function is the Council, the Council may delegate the power or function to -

(a) one or more of the members of the Council; or

(b) a person who is a member of the staff of the Council."

Under this provision, most of the powers of the Authority have been delegated to the Council, which in turn has delegated some of the powers to its officers including the Town Clerk.

Some written material before the Tribunal indicated that the local government functions of the Authority, although not its functions as a lessor, were delegated to the Council save for the authority's power to set rates under s 23 of the JTD Act and its power to determine the number and classification of staff of the Council and their terms and conditions of employment under s 29A of the JTD Act. Unfortunately, neither party thought it useful to insist that copies of the delegations be put in evidence. Oral evidence given to the Tribunal indicated, however, that some other functions, including the power to make by-laws, were not delegated to the Council. I shall mention this aspect later in more detail.

The Council has a Town Clerk and staff and, under s 24 of the JTD Act, it is entitled to and does collect the rates. Accordingly, the annual accounts show that the Council receives the general rates and the water, garbage and sewerage rates and that it expends its revenue on the usual local government activities. The accounts make reference, inter alia, to environmental protection, water supply, sewerage, roads, lake, parks and reserves, cemetery, children's services, library, community centre, aboriginal services, swimming pool, culture, sport and recreation, tourism, commercial development, waste management, health and safety and public relations. The Council does not itself make town planning decisions, but it has an input into the planning of the area and, by arrangement, plays an advisory or sifting role in relation to town planning decisions.

The case as put for ERA was based on a passage in an explanatory memorandum to the Customs and Excise Legislation Amendment Bill (Cth), which amended the provisions of s 164 of the Customs Act 1976 and, with one minor amendment which has since been made, introduced the definition of "mining town" which now appears in s 164(7). In relation to that definition, the explanatory memorandum said:

"A mining town is essentially a town that had to be built from scratch by a mining company in an isolated location somewhere near the mine site to house its employees, and which has not yet matured sufficiently as a community in its own right so as to be controlled by a town council established pursuant to the local government legislation of the States and Territories."

(emphasis added)

Relying upon the explanatory memorandum, Dr J Griffiths, counsel for ERA, put the case that Jabiru was essentially a town that was constructed from scratch by ERA, a mining company, in an isolated location near the site of the Ranger mine to house the employees of ERA. Dr Griffiths put the submission that Jabiru was still a company-run town and, although the town was in the process of normalisation, it had not yet matured sufficiently as a community in its own right as to be controlled by a Town Council under the Local Government Act (NT).

In support of the submission, Dr Griffiths pointed to the fact that Jabiru was created for the purposes of the Ranger Uranium mine and that, in the early days, it was regarded by the authority as a "closed town", an expression used in several documents. Dr Griffiths put the point that because ERA played such a large part in the formation of the town and in establishing its facilities, both by way of planning the development which occurred and funding the development, and because the Authority, which in effect operated as the instrument of ERA, controlled both the local government activities and, as lessor, all activities involving land use, the town had been controlled effectively throughout the period by the Authority or ERA. Dr Griffiths relied upon a passage in the 1983-4 Report of the Authority which said:

"As the result of legal advice from the Authority's solicitors which was supported by the Department of Law, the Government decided in July 1983 that the Authority would remain in existence as a statutory body with all of its existing powers and functions, and that its ongoing functions be performed as far as possible under agency agreements with Government Departments and Authorities, and by delegation to a municipal body. The primary reason for this decision was to ensure that the Authority continues to have the final responsibility for managing and controlling the Town, thus ensuring that it may take whatever action may be required in the future to protect its Head Lease of the townsite."

Dr Griffiths submitted that Jabiru was undergoing a process of normalisation or development from being a "closed town" to being an independent town but had not yet reached that latter stage. He referred, for example, to the statement in the Authority's 1995-6 Report as follows:

"The Authority's Vision

To develop Jabiru as an economically diversified town administered by an autonomous local government council and providing facilities to support tourism as well as the commercial and administrative needs of the region."

The Report went on to say:

"In pursuit of its vision the Authority aims to achieve the following:

* encouraging the social and economic development of Jabiru;

* promotion of the tourism potential of Jabiru;

* acknowledgment and endorsement within the Kakadu National Park Plan of Management of changes, developments and opportunities proposed for the future of Jabiru;

* adding value to Jabiru's assets and enhancing its investment appeal;

* mutual commitment by the Northern Territory Government and Energy Resources of Australia (ERA) to a negotiated resolution to the Cost Sharing Agreement; and

* negotiation of a mutually acceptable settlement between ERA and the NT Government concerning arrangements with respect to the future provision of power, water and sewerage services to the town."

The last two dot points of that passage are a reference to the fact that it is proposed that there will be a new financial arrangement made between ERA and the Jabiru Town Council in place of the cost sharing agreement which was entered into between ERA and the Authority under which ERA has, it is said, contributed more towards the cost of the construction of public facilities than it was bound to contribute. There will also have to be arrangements made with respect to the future provision of essential services. Those are matters for the future. The 1995-6 Report expressed a future initiative as follows:

"Establish fully democratic local government for Jabiru under the Northern Territory's Local Government Act for the 1997/98 financial year."

Dr Griffiths submitted that, having regard to the fact that the Authority still participated in the control of Jabiru through its power as lessee, its power to set rates, its power to determine the staff of the Council, their number and their terms of employment, the power of the Council to pass by-laws and because it functioned as a representative not of the local community but of the Government and ERA, the latter of which in particular has enormous financial investment in the town, the town was not "controlled" by the Council but by the Authority and perhaps, ultimately, by the Government and ERA.

Another point that Dr Griffiths might have made is that the expression in the explanatory memorandum "a town council established pursuant to the local government legislation of the States and Territories" may refer more readily to those statutes in each State and Territory which are called the "Local Government Act" than does the expression in the relevant definition in s 164(7) which, referring to "local government legislation", omits the definite article.

I would accept that, if the paragraph in the explanatory memorandum to which I have referred expressed the principle to be applied, ERA might have had quite a strong case before the Tribunal.

However, those were not the words which Parliament used. Unlike the explanatory memorandum, the statutory definition does not refer, either expressly or impliedly, to a process of normalisation. The statutory definition does not use the word "controlled" but the words "administered by" and it does not refer to "a town council established pursuant to the local government legislation of the States and Territories" but to a "council that is constituted under local government legislation".

In my opinion, the words of the statute are not ambiguous. They should be read and applied according to the meaning which they convey in ordinary parlance in the context, of course, of local government. Deputy President McMahon, who constituted the Tribunal, was of the view that he should give to the words of the statute their ordinary meaning rather than applying the different words of the explanatory memorandum. His approach was correct.

One issue is whether the Council is a "council" for the purposes of the statutory definition. It having been conceded that the Council has been constituted under "local government legislation", the conclusion which the Tribunal reached that the Council meets the statutory description seems to me to have been both correct and inevitable. The statutory definition does not lay down any prescription for the council. It is not required to be fully elected. It is not required to have a minimum number of members. It is not required to be elected in a particular way. The definition does not specify precisely what powers the council should have or what functions it must fulfil. As the Northern Territory Legislature has established the Council and, by the name given, has recognised it to be a council, it would be surprising if a tribunal or a court would hold that the body was something other than a council. The JTD Act no doubt called the body a "Council" as the body had the constitution and functions of a council. The Macquarie Dictionary gives these definitions of "council":

"3. a body of persons specially designated or selected to act in an advisory, administrative, or legislative capacity.

...

5. the local administrative body of a city, municipality or shire."

I see no error in the Tribunal's conclusion that the Council was a "council" for the purposes of the definition.

The major issue is whether Jabiru was "administered by" the Council. The Tribunal expressed the view that:

"Whilst recognising that there are legal limitations on the extent of the powers of the Jabiru Town Council, it seems to me that there is clear agreement that the every day affairs of the area are administered by the Council and its officers."

The Tribunal concluded:

"Whatever happened prior to 1983, the fact is that in the relevant collection year (1995/6) the affairs of the town of Jabiru were administered by the Jabiru Town Council, a Council that was constituted under local government legislation. In my view, this puts the town squarely within the terms of the exception in the definition and excludes fuel purchased for the generation of electricity for supply to that town from eligibility for rebate."

I see no error in the Tribunal's finding. It is consistent with the evidence of Mr C C Brown who, from December 1991 to August 1994, was ERA's representative on the Council and who, from November 1991 to January 1996, was one of ERA's representatives on the Authority. Mr Brown gave evidence that, in 1994, he was given responsibility for the entire Ranger Uranium Mine and that his tasks included managing ERA's township responsibilities. Mr Brown gave this evidence:

"The JTDA was not heavily involved in the daily running of Jabiru. However, the JTDA had responsibility for:

(a) the JTC's budget;

(b) the manning or staffing levels of the JTC, and the employment conditions of JTC staff;

(c) the approval or setting of rates within the township of Jabiru; and

(d) the amendment, setting or administration of by-laws within Jabiru for the use of the township's assets."

Mr B G Fisk, who was the Chief Executive Officer of ERA from 1979 to 1986, similarly deposed:

"In my opinion in practical terms the Applicant had the ultimate say over the JTDA's activities even though the JTDA's day-to-day actions were left largely in the hands of the JTDA and, subsequently, the Jabiru Town Council".

As this passage shows, although ERA had influence, the day-to-day administration during the relevant period was carried out by the Jabiru Town Council.

The words "administered by" do not require that the town be solely or exclusively administered by the Town Council. Nor is that required by the history of local government in Australia. The part which government, ministers and other bodies play in local government affairs varies from time to time and from place to place. It is not uncommon, for example, for ministers rather than a local municipal authority to have responsibility for town planning or for a body other than the local municipal council to have the ultimate decision with respect to town planning issues.

The question before the Tribunal is whether the town of Jabiru was administered by the Jabiru Town Council. In my opinion, it was open to the Tribunal to conclude on the facts before it that that was the case. For what it is worth, my own view of the matter accords with that of the Tribunal.

The word "administer" is defined in the Macquarie Dictionary as:

"1. to manage (affairs, a government, etc.); have charge of the execution of: to administer laws.".

This is the meaning which the Tribunal applied. It was an appropriate meaning in the circumstances.

Dr Griffiths submitted that in the definition the term "administered" has the meaning of "controlled". But in the context of local government affairs, the verb "administer" is a more appropriate one than the verb "control". A great deal of what is done by a council involves the day to day provision of services and the maintenance of facilities rather than matters coming within the concept of "control". The Jabiru Town Council exercised "control" in the sense of "authority" in carrying out its functions.

When a power is delegated, the delegate acts under the power in its own right. As the then President of the Administrative Appeals Tribunal, Brennan J said in Re Reference under section 11 of the Ombudsman Act (1979) 2 ALD 86 at 94:

"... where the relevant power is delegable and has been delegated, the delegate may - without further authorization - act in effective exercise of the power. His acts are not treated as acts vicariously done by the authority. He is not an agent to exercise the authority's power; he may validly exercise the power vested in him."

The Council had both the authority to perform the local government functions which had been delegated to it and responsibility to perform them.

In a case such as the present where only a question of law is involved, the principle to be applied is that stated by Kitto J in NSW Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation (1955) 94 CLR 509 at 511-2:

"This is a mixed question of law and fact: see the cases cited by Rich J. in Federal Commissioner of Taxation v Broken Hill South Ltd. [1941] HCA 33; (1941) 65 C.L.R. 150, at p.154. First it is necessary to decide as a matter of law whether the Act uses the expression 'mining operations' and 'mining property' in any other sense than that which they have in ordinary speech. As to this, it is enough in the present case to say that the expressions are not defined in the Act, that they have no technical legal signification, and that neither in the provisions of Div. 10, nor in any of the other provisions of the Act in which these or similar expressions occur (ss.23(m), (o), (p) 23A, 44 and 78 (1)(b)), is there to be found any indication that the Parliament intended any other meaning than that which the words ordinarily have in this country and at this time. The common understanding of the words has therefore to be determined, and that is a question of fact: see the cases cited by Starke J. in the Broken Hill South Case (1941) 65 C.L.R., at p.155. The next question must be whether the material before the Court reasonably admits of different conclusions as to whether the appellant's operations fall within the ordinary meaning of the words as so determined; and that is a question of law: ibid; see also per Isaacs and Rich JJ. in Australian Slate Quarries Ltd. v. Federal Commissioner of Taxation [1923] HCA 69; (1923) 33 C.L.R. 416, at p.419. If different conclusions are reasonably possible, it is necessary to decide which is the correct conclusion; and that is a question of fact: see per Williams J. in the Broken Hill South Case (1941) 65 C.L.R., at p.160."

In my opinion, the approach adopted by the Tribunal was correct and its decision was open to it on the facts.

Some particular matters were raised by Mr Griffiths. One was that the Tribunal expressed the meaning of the word "administer" given by the Macquarie Dictionary in these terms:

"to manage the affairs of, or have charge of, or the execution of"

That was an incorrect transcription of the words of the Dictionary. However, I cannot draw the conclusion that there was any misunderstanding of the words in the statutory definition. It is clear that the Tribunal gave to the words their meaning in ordinary parlance and considered that, on the facts of the case, the town of Jabiru was administered by the Jabiru Town Council.

Dr Griffiths submitted that the Tribunal misunderstood the part which the Council played in relation to by-laws and land use and that the Tribunal misstated the matter when it said that the Authority had delegated most of its functions to the Jabiru Town Council but had retained control over the approval of the Council's budget through control over the rates and the setting of terms and conditions of employment of the employees. Dr Griffiths said that the finding overlooked the important task which the Authority played in relation to land use through the steps which it took as landlord and through the power which it retained to pass by-laws. Dr Griffiths referred to a specific findings of the Tribunal that:

"Section 19A gives the Authority power to delegate any of its powers or functions to the Jabiru Town Council or to one or more of the members of the Council or to a member of Council's staff. In fact the evidence was that most of the powers and functions (with two important exceptions) were so delegated prior to the relevant collection year.

The Jabiru Town Council is established by s 25B as a corporation by the name of the Jabiru Town Council. Its functions, as set out in s 25D, are to exercise any power or perform any function delegated to it by the Authority or any of the powers and functions specified in schedule 2 of the Local Government Act 1993 (NT) (to which reference will later be made). The Act provides in s 25E for the election of members of the Council and further provisions are made for its internal management and finances. Although the Authority retains the power to make by-laws, there have been delegations of this power to the Council. Section 31 empowers the Council to administer the by-laws."

(emphasis added).

The evidence of Mr Brown and of the Town Clerk, Mr TF Tapsell, was that the power to make by-laws remained with the Authority. Mr Tapsell gave the following evidence:

"If we wish to change the present by-laws or in fact get a new by-law passed we must convince the Jabiru Town Development Authority that that is the direction - that is the right way to go and, of course, they have got to agree to that."

Mr Tapsell also said in his oral evidence, however, that the administration of the by-laws had been delegated to the Council.

If the oral evidence be accepted, the Tribunal's expressed finding of fact that there had been a delegation of the power to make by-laws was wrong. However, I cannot see any significance in this point. The making of a wrong finding of fact is not of itself an error of law. See Waterford v The Commonwealth [1987] HCA 25; (1987) 163 CLR 54 at 77. I do not think that there was any matter of substance which the Tribunal failed to take into account or which, had the Tribunal been aware of the correct position, would have been likely to have affected its decision. It is clear from the evidence that the Council was given the task of administering the by-laws and, although the decision-making authority rested with others, it played a part if only a consultative part in decisions made both with respect to planning matters and matters involving the by-laws.

Although the Tribunal was incorrect in saying that s 31 of the JTD Act empowered the Council to administer the by-laws, Mr Tapsell's evidence was that the administration of the by-laws has been delegated to it. So there is no significance in that matter.

Dr Griffiths also pointed out that the Tribunal misread s 25D of the JTD Act when it said that that section authorised the Council to exercise any of the powers or functions specified in Schedule 2 of the Local Government Act. The Tribunal also later said that s 121(2) of the Local Government Act described the basic functions of councils by reference to Schedule 2 and that the JTD Act empowered the Jabiru Town Council to concern itself with any of those functions subject to any limitations to be found in the JTD Act. However, s 25D did not have that effect. Paragraph (c) of that section merely imposed a limitation upon the powers and functions which could be delegated.

Again, however, although the position was misstated by the Tribunal, there was no significant error in the Tribunal's approach to the facts of the case. What the Council did is clear enough from its annual reports and accounts which disclosed the nature of its activities. The Council's authority to do this came from delegations from the Authority rather than s 25D. This point of distinction would not have been likely to and ought not to have affected the Tribunal's decision. As was pointed out in Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 359, in administrative law proceedings this Court reviews decisions, not findings.

These particular matters in the Tribunal's reasons for decision raised by Dr Griffiths seem to me to reflect a lack of editing rather than an error of law. I am not satisfied that there was any error of law in the Tribunal's decision. The application will therefore be dismissed with costs.

I certify that this and the preceding thirteen (13) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies

Associate:

Date: 27 February 1998

Counsel for the Applicant:	Dr J.E. Griffiths
Solicitors for the Applicant:	Blake Dawson Waldron
Counsel for the Respondent:	A. Gelbart
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	9 February 1998
Date of Judgment:	27 February 1998