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CITE

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Century Mining Pty Ltd v Commissioner of State Revenue[2024] QSC 143Treston J
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Century Mining Pty Ltd v Commissioner of State Revenue[2024] QSC 143

SUPREME COURT OF QUEENSLAND

CITATION:	Century Mining Pty Limited v The Commissioner of State Revenue [2024] QSC 143
PARTIES:	CENTURY MINING PTY LIMITED ACN 006 670 300 (appellant) v THE COMMISSIONER OF STATE REVENUE (respondent)
FILE NO/S:	BS No 4844/23
DIVISION:	Trial Division
PROCEEDING:	Amended Notice of Appeal filed 15 March 2024
ORIGINATING COURT:	Supreme Court of Queensland at Brisbane
DELIVERED ON:	4 July 2024
DELIVERED AT:	Brisbane
HEARING DATE:	14 and 15 May 2024
JUDGE:	Treston J
ORDER:	The appeal is dismissed. I will hear the parties as to costs.
CATCHWORDS:	ENERGY AND RESOURCES – MINERALS – MINING FOR MINERALS – ROYALTIES – where the appellant exports zinc concentrate from the Port of Karumba on a vessel called the MV Wunma – where the appellant lodges quarterly royalty returns with the respondent, the Commissioner of State Revenue – where the appellant must pay to the respondent a royalty in respect of ‘prescribed minerals’, including zinc concentrate – where the royalty payable depends on the ‘value of the prescribed mineral’, which does not include ‘marine cost’ – where the respondent conducted a desktop audit of quarterly royalty returns and declared that the deducted expenses associated with the MV Wunma were not deductible ‘marine cost’ within the definition of s 54 of the Mineral Resources Regulation 2013 (Qld) – where the appellant, at the invitation of the respondent, conducted a self-review for the quarterly royalty returns it lodged over several years – where the respondent served reassessment notices following the self-review, the appellant lodged objections to those reassessment notices, and the respondent disallowed the appellant’s objections – where the respondent decided that the transport costs associated with the MV Wunma were not deductible ‘marine cost’ – whether the transport costs were deductible ‘marine cost’ within the definition of s 54 of the Mineral Resources Regulation 2013 (Qld) STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – CONSIDERATION OF EXTRINSIC MATTERS – EXPLANATORY MEMORANDA, PARLIAMENTARY DEBATES AND MATERIALS ETC – where the respondent submitted that the meaning of ‘marine cost’ should be construed with reference to extrinsic material, including the Mineral Resources Regulation 2013 (Qld) and Ministerial Statement 140 – whether such extrinsic material should be used in the construction of ‘marine cost’ Acts Interpretation Act 1954 (Qld), s 14B Mineral Resources Act 1989 (Qld), s 320, s 321, s 417 Mineral Resources Regulation 2013 (Qld), s 35, s 46, s 54, s 56, s 58, s 59, sch 6 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 69(1), s 69(2) Statutory Instruments Act 1992 (Qld), s 15 Taxation Administration Act 2001 (Qld), s 69, s 70, s 70A, s 70B, s 70C Transport Operation (Marine Safety) Act 1994 (Qld), pt 7 Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297, cited Full Joy Foods Pty Ltd v Australian Dairy Park Pty Ltd [2020] VSC 672, cited Glencore Coal Assets Australia Pty Ltd (ACN 163 821 298) v Australian Competition Tribunal & Ors (2020) 280 FCR 194, cited New Zealand Pelt Export Co Ltd v Trade Indemnity New Zealand Ltd [2004] VSCA 163, cited Oceanic Life Limited & Anor v Chief Respondent of Stamp Duties (1999) 168 ALR 211, cited Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355, cited Raptis v City of Melbourne [2017] VSC 247, cited Taylor v Public Service Board (NSW) (1976) 137 CLR 208, cited Travelex Limited v Federal Commissioner of Taxation (2010) 241 CLR 510, cited Wakefield v Commissioner of State Revenue [2019] 3 Qd R 414, cited
COUNSEL:	A C Stumer KC, for the applicant M Brennan KC with S A Amos, for the respondent
SOLICITORS:	Herbert Smith Freehills for the appellant Minter Ellison for the respondent

[1]
The appellant, Century Mining Pty Limited, is the holder of mining leases ML90045 and ML90058 over its operation of the Century Mine at Lawn Hill in Queensland which is located approximately 250 kms north-northwest of Mount Isa. Century Mining exports zinc concentrate from the Port of Karumba, located at the mouth of the Norman River in the Gulf of Carpentaria by water to a port outside Queensland.
[2]
Port Karumba is situated in the south-east corner of the Gulf of Carpentaria, 530 kms west of Cairns at the mouth of the Norman River. It is a shallow-water port with depths which range from 3.4 metres at the entrance of the channel to 6.3 metres at the Mobil/Trinity Wharf.
[3]
The respondent is the Commissioner of State Revenue within the meaning of s 7 of the Taxation Administration Act 2001 (Qld) (Taxation Administration Act 2001) and the respondent under the Mineral Resources Act 1989 (Qld) (Mineral Resources Act 1989).
[4]
The proceedings concern an appeal brought pursuant to ss 69 and 70 of the Taxation Administration Act 2001. The issue that must be determined is whether the costs as claimed (referred to below as ‘the Wunma costs’) can properly be deducted from the value of mineral for the purpose of calculating royalties. In doing so, the court must determine whether the Wunma costs fall within the meaning of the phrase ‘marine cost’ as defined in s 54(4) of the Mineral Resources Regulation 2013 (Qld) (Mineral Resources Regulation 2013).

Relevant facts

[5]
The following facts are summarised from the agreed statement of facts between the parties.
[6]
For the purpose of exporting zinc concentrate from the Port of Karumba, Century Mining hydraulically mined and subsequently processed tailings that contained zinc at a facility in Lawn Hill to produce a zinc concentrate slurry. That slurry was pumped via a 304 kilometre pipeline to Century Mining’s facility in Port Karumba to prepare for export.
[7]
At Port Karumba, Century Mining further processed the slurry to remove water and then stored the dried concentrate at its facility at the port. Century Mining then exported the dried concentrate from Port Karumba by loading it from a wharf within Port Karumba into a trans-shipment vessel, the MV Wunma.
[8]
The MV Wunma then transported the zinc concentrate to larger bulk carrier vessels, also known as ocean-going vessels, anchored outside Port Karumba. Those vessels were anchored in an area of deeper water outside Port Karumba known as the Roadstead Anchorage because they were too big, in length, depth, or both, to enter the Port.^[1]
[9]
The Roadstead Anchorage was situated approximately 22.5 kms to the north-west of the entrance to Port Karumba in depths of 9 to 12 metres. Once the MV Wunma had delivered its loads of zinc concentrate to the ocean-going vessels, those vessels transported the zinc concentrate by water to a port outside Queensland.
[10]
Century Mining shipped the zinc concentrate under Incoterms ‘cost, insurance and freight’ (CIF), such that Century Mining, as seller, was responsible for bearing the costs of freight and insurance of transporting the zinc concentrate by water to the port of disport (i.e. to ports outside Queensland).
[11]
Century Mining seeks to claim the costs incurred in conducting the MV Wunma’s trans-shipment operations as a ‘marine cost’ within s 54(4) of the Mineral Resources Regulation 2013. Specifically, Century Mining contends that the costs fall into the following categories:
1. diesel;
2. vessel operations and maintenance;
3. consumables;
4. vessel management expenses;
5. hull and machinery insurance;
6. expenses for MV Wunma personnel to travel to the Port of Karumba;
7. port fees and charges;
8. dredging costs; and
9. vessel re-fit and dry-docking costs

(together, Century Mining refers to these as ‘the Wunma costs’).

[12]
Century Mining identifies the sum of the Wunma costs in the following periods as:
1. for the period 1 January 2019 to 31 March 2019, the sum of $806,652.00;
2. for the period 1 April 2019 to 30 June 2019, the sum of $183,342.45;
3. for the period 1 July 2019 to 30 September 2019, the sum of $1,098,198.34;
4. for the period 1 October 2019 to 31 December 2019, the sum of $787,955.87;
5. for the period 1 January 2020 to 31 March 2020, the sum of $3,148,171.15;
6. for the period 1 April 2020 to 30 June 2020, the sum of $4,154,237.06;
7. for the period 1 July 2020 to 30 September 2020, the sum of $3,832,864.41;
8. for the period 1 October 2020 to 31 December 2020, the sum of $4,880,571.00;
9. for the period 1 January 2021 to 31 March 2021, the sum of $1,522,565.93;
10. for the period 1 April 2021 to 30 June 2021, the sum of $6,314,117.74; and
11. for the period 1 July 2021 to 30 September 2021, the sum of $2,584,838.40.
[13]
The MV Wunma is not owned by Century Mining, but is owned by a related entity, Investment Co Pty Ltd. Investment Co Pty Ltd does not have independent operations of its own. As a consequence, all accounting entries relating to the MV Wunma were, and continue to be, booked through the accounts of Century Mining. Century Mining therefore was, at all times, and remains, liable for the Wunma costs.
[14]
The procedural background does not need to be set out in any detail. Suffice to say that Century Mining lodged quarterly royalty returns for the Century Mine pursuant to s 35(1)(a) of the Mineral Resources Regulation 2013 claiming the Wunma costs above as a ‘marine cost’. The Commissioner disallowed those costs, both initially (the Objection Decision) and upon further reconsideration (the Further Objection Decision).

The appeal

[15]
This proceeding is an appeal by Century Mining against the Objection Decision and the Further Objection Decision pursuant to ss 69 and 70 of the Taxation Administration Act 2001.
[16]
Pursuant to s 69 of the Taxation Administration Act 2001, a taxpayer who is dissatisfied with the Commissioner’s decision on the taxpayer’s objection, and who has paid the whole amount of tax and interest payable under the assessment, may:
1. appeal to the Supreme Court; or
2. apply, as provided under the Queensland Civil and Administrative Tribunal Act 2009 (Qld), to QCAT for a judicial review of the Commissioner’s decision (ss 69(1) and 69(2)).^[2]
[17]
Sections 70 to 70C of the Taxation Administration Act 2001 provide for appeals to the Supreme Court as follows:

“70 How to start appeal to the Supreme Court

An appeal to the Supreme Court is started by giving written notice of the appeal to the commissioner within 7 days after the notice of appeal is filed.

The notice of appeal must be filed within 60 days after notice is given to the taxpayer of the commissioner’s decision on the objection.

The Supreme Court must not extend the time for filing the notice.

The notice of appeal must state fully the grounds of the appeal and the facts relied on.

The grounds of an appeal to the Supreme Court are limited to the grounds of objection unless the court otherwise orders.

70A Onus on appeal

On the appeal, the appellant has the onus of proving the appellant’s case.

70B Admissibility of new evidence

(1) Subsection (2) applies if─

The Supreme Court is satisfied evidence material to the objection was not before the commissioner when the objection was decided; and
Subject to section 70(5), the court admits the evidence.

(2) The court must─

adjourn the hearing of the appeal; and

direct the commissioner to reconsider the objection having regard to the evidence and any other evidence obtained by the commissioner.

However, subsection (2) does not apply if the commissioner asks the court to continue the hearing without the commissioner reconsidering the objection.

For reconsidering the objection, the commissioner has all the powers conferred under this Act.

70C Deciding appeal

The Supreme Court must allow the appeal completely or partly or disallow it.”

[18]
In Wakefield v Commissioner of State Revenue,^[3] Bowskill J, as her Honour then was, considered the nature of an appeal to the Supreme Court under s 69 of the Taxation Administration Act 2001, and found:

“[30] The nature of an appeal to the Supreme Court under s 69 Taxation Administration Act 2001 is a rehearing (more aptly, a fresh hearing, as no hearing has previously taken place), conducted by the Supreme Court in its original jurisdiction, on the materials that were before the Commissioner, subject to the power of the Court to admit new evidence under s 70B(1).

[31] Where the Court is prepared to admit new evidence, it must first give the Commissioner the opportunity to reconsider the objection having regard to all of the evidence, including the new evidence (s 70B(2)). But the Court can proceed to hear the appeal, if the Commissioner declines that opportunity (s 70B(3)).

[32] The Supreme Court does not stand in the shoes of the Commissioner but exercises it original jurisdiction to make such judgment as it considers ought to have been given, on the facts and the law, at the time of the hearing of the appeal. The appeal is in that sense a hearing de novo.”

[19]
As such, this is a fresh hearing conducted by the Supreme Court in its original jurisdiction on the materials that were before the Commissioner, subject to the power of the court to admit new evidence under s 70B(1) of the Taxation Administration Act 2001.
[20]
Orders were made on 5 March 2024 pursuant to s 70B(1)(b) of the Taxation Administration Act 2001 that certain further evidence be admitted at the hearing of the appeal. The hearing proceeded on the basis therefore that the court conduct the hearing taking into account all the evidence, including the new evidence, without the Commissioner further reconsidering the objection within s 70B(3) ) of the Taxation Administration Act 2001.
[21]
In the circumstances, the court should give such judgment on the appeal as it considers ought to have been given, on the law and facts as they are at the time of the hearing of the appeal. It follows that the exercise of the court’s powers is not dependent upon the demonstration of some legal, factual or discretionary error by the decision-maker.^[4]

The rival contentions – a broad summary

[22]
Section 54(4) of the Mineral Resources Regulation 2013 provides the formula for the calculation of the value of the mineral for royalty purposes:

“54 Value of minerals

Subject to subsection (3), the value of a mineral must be worked out by—

working out the gross value of the mineral under part 5; and

subtracting the following amounts from the gross value—

any marine cost for the mineral;

…

In this section—

marine cost means—

for coal—

a cost relating to a late despatch of the coal from a port; or

a freight or an insurance cost relating to the transport of the coal by water to a port outside the State; or

for another mineral—a freight or an insurance cost relating to the transport by water, to a port outside the State, of—

the mineral; or

if the mineral is oil shale that has been processed—the oil processed from the oil shale.” (emphasis added)

[23]
Century Mining contends for a broad construction of ‘marine cost’ that comprehends the costs associated with the use of the MV Wunma to transport the zinc from the Port to the Roadstead Anchorage. It describes those costs^[5] as part of the ‘first stage’ of moving the zinc to an ocean-going vessel to transport the zinc by water to a port outside the State. That is because the large ocean-going vessels cannot enter or berth at the Port of Karumba because it is too shallow and too narrow.^[6] The MV Wunma therefore brings the mineral from the Port of Karumba to the ocean-going vessel, and from there it is transported by water to a port outside of the State. As will be seen in more detail below, the construction that Century Mining contends for includes not just, for example, the diesel to power the MV Wunma as it moves the mineral, but broader costs such as those of dredging the Port and the Norman River so that the MV Wunma can operate more regularly. Each of the costs sought are analysed below.
[24]
The Commissioner submits that Century Mining’s construction strains the natural reading of the provision, and advocates for a more limited construction such that there is a more direct connection between the freight and insurance costs and the transport by water to a port outside the State.
[25]
The Commissioner submits that the regulations provide for a formula that reflects well-known commercial practice and the terms of contracts for carriage of goods by sea. In particular, the Commissioner submits the court ought to have regard to contracts on FOB terms (free on board), which confirms that the royalty is imposed on the gross value, that is the price payable when title in the mineral passes to the buyer, and that is when the mineral passes over the ship’s rail.^[7] As such, input costs prior to that time do not fall within the s 54(1)(b)(i) of the Mineral Resources Regulation 2013 deduction.
[26]
The Commissioner further submits that where the sale price was paid on CIF terms (cost, insurance, freight), then the price was reduced by the deduction made for insurance and freight components paid by the seller for and on behalf of the buyer in whom title to the mineral had passed.
[27]
I deal with the submissions of each party in more detail below.

Construction and context

[28]
The guiding principles of statutory construction are well known. One starts by reading the section to discern the ordinary and natural meaning of the language.^[8] The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute.^[9] This means that the provision must be determined ‘by reference to the language of the instrument viewed as a whole’.^[10] It is the case, therefore, that the process of construction must always begin by examining the context of the provision that is being construed.
[29]
Section 54 of the Mineral Resources Regulation 2013 forms part of the legislation which creates a system for the imposition and calculation of royalties.^[11] A royalty is payable to the Crown where the Crown has property in a mineral.^[12]
[30]
Chapter 11 of the Mineral Resources Act 1989 relates to royalties. Section 319 expressly provides for the relationship with the Taxation Administration Act 2001 in relation to certain provisions dealing with royalties, relevantly legal proceedings, evidentiary matters and objections to decisions relating to royalties.
[31]
The obligation to pay a royalty arises under s 320(1) of the Mineral Resources Act 1989, which provides:

“320 Royalty return and payment

The holder of a mining claim, mining lease or other authority under this Act or any other Act relating to mining who mines or allows to be mined mineral, whether or not the Crown has the property in the mineral, from the area of that mining claim, mining lease or other authority shall pay royalty as prescribed at the rate for the time being prescribed in respect of that mineral.

…”

[32]
The prescription of the royalty is contained in s 321 of the Mineral Resources Act 1989, which provides that regulations made pursuant to s 417 may prescribe the royalties payable in respect of the mineral mined from the land to the Crown or other person who had the property and the mineral.
[33]
Section 321(2) of the Mineral Resources Act 1989 then provides that the royalties shall be calculated at such rate or rates, in such manner and on such basis or bases as are prescribed by regulation. The relevant regulation is the Mineral Resources Regulation 2013.^[13]
[34]
Under s 321(3), the way in which the rate of royalty can be calculated, and the basis of its calculation, are regulated as follows:

“Prescription of royalty

…

Without limiting the authority of the Governor in Council to regulate with respect to royalty, a rate of royalty and the manner and basis of its calculation—

may be prescribed by reference to the quantity of mineral-bearing ore removed or by reference to the quantity of mineral mined;
may be prescribed by reference to a proportion of the profits made from specified operations or from a particular operation or of the gross proceeds of the sale or disposal of the product of specified operations or of a particular operation;

may vary as between royalties payable in respect of different minerals;

may vary as between royalties payable by the same person or by different persons whether—

in respect of the same mineral or different minerals;

in respect of mineral mined at the same place or at different places;

in respect of mineral mined at the same point in time or at different points in time;

in respect of mineral mined by the same method of mining or by different methods of mining;

may be prescribed to apply generally throughout the State or in any prescribed locality of the State;

may be prescribed in respect of all mining operations in the State or in respect of a particular mining operation or in respect of the mining operations of a particular person.”

[35]
The applicant was required to lodge royalty returns on a quarterly basis in respect of its mining leases^[14] and it did so.
[36]
It is not in dispute that zinc is a prescribed mineral within the meaning of that term as it is contained in Schedule 6 of the Mineral Resources Regulation 2013. For a prescribed mineral,^[15] the royalty payable for a prescribed mineral sold, disposed of, or used in a return period, is payable at the royalty rate stated in Schedule 3 Part 1 s 2 of the Mineral Resources Regulation 2013.^[16] Further, under Schedule 3, Part 1, s 2, the royalty rate for the prescribed mineral involves the application of a percentage to the ‘value of the prescribed mineral’.
[37]
Section 54 of the Mineral Resources Regulation 2013 as set out at [22] above then provides the formula for the calculation of the value of the mineral. The first step is to ascertain what is the gross value of the zinc concentrate.^[17] Gross value for a market value mineral is by means of s 58, and for a mineral that is not a market value mineral, by reason of s 59. This appeal proceeds on the basis that zinc concentrate is a market value mineral; therefore, s 58 applies. The parties agree, therefore, that the royalty is imposed on the value of the mineral, being its gross value minus the ‘marine cost’. It is on the net value, after this deduction, that the royalties are calculated.
[38]
The context and purpose, therefore, is that the legislation provides the mechanisms by which minerals are valued, so that after allowable deductions, royalties are returned to the State of Queensland on the value of the minerals which have been taken from the ground.
[39]
However, not every royalty on every mineral is imposed or calculated in the same way. Prescription of royalties may vary between different persons, minerals, locations, times and mining methods.^[18] That means that careful attention needs to be paid to the sums that are able to be subtracted from the value of the mineral in question because the context of the legislation is that different deductions are made in different circumstances. It also means that clarity must be read into the application of the provisions so as to provide some certainty as to the calculation of royalties.
[40]
The Commissioner relies upon the explanatory memorandum to the Mineral Resources Regulation 2003 (Qld) to explain the purpose of the inclusion of the definition of ‘marine cost’ as a deduction to the gross value of the mineral from the time the term was included in the 2003 Regulations onwards. In particular, the Commissioner relies upon the following in the explanatory memorandum:

“…Updating the royalty provisions in the regulation (Part 9 and Schedule 4) to reflect current drafting practice and incorporating greater detail regarding the determination of value for royalty purposes and the application of existing royalty concessions. As these matters are currently detailed in Departmental policy statements and administrative guidelines, the proposed changes are consistent with existing Government policy and practice.” (emphasis added)

[41]
Whilst regard can be had to the explanatory memorandum as ‘extrinsic material’ relevant to the construction of the Mineral Resources Regulation 2003,^[19] and by extension the same Regulation in 2013, there are limits to the application of s 14B of the Acts Interpretation Act 1954 (Qld) (Acts Interpretation Act 1954). Extrinsic material is only capable of assisting in the interpretation of an Act in certain circumstances. Section 14B provides:

“14B Use of extrinsic material in interpretation

Subject to subsection (2), in the interpretation of a provision of an Act, consideration may be given to extrinsic material capable of assisting in the interpretation—

if the provision is ambiguous or obscure—to provide an interpretation of it; or

if the ordinary meaning of the provision leads to a result that is manifestly absurd or is unreasonable—to provide an interpretation that avoids such a result; or

in any other case—to confirm the interpretation conveyed by the ordinary meaning of the provision.

In determining whether consideration should be given to extrinsic material, and in determining the weight to be given to extrinsic material, regard is to be had to—

the desirability of a provision being interpreted as having its ordinary meaning; and

the undesirability of prolonging proceedings without compensating advantage; and

other relevant matters…”

[42]
Assuming either ss 14B(1)(a), (b) or (c) is satisfied, the explanatory memorandum may be of some assistance in the interpretation of the ordinary meaning of ‘marine cost’. It might assist in explaining why the marine cost deduction is allowed, for royalty purposes, but does little to identify what those costs are. Whilst regard might therefore be had to the explanatory memorandum for statutory context and purpose, it does little to assist in the proper construction of the term ‘marine cost’. I would therefore have regard to the explanatory memorandum for statutory context and purpose only.
[43]
Even if the explanatory memorandum was of broader assistance, the content of it would likely only assist if matters detailed in the Departmental Policy Statements and Administrative Guidelines were also explanatory memoranda in accordance with the meaning of that term in the Acts Interpretation Act 1954.^[20]
[44]
The Commissioner sought to rely upon the relevant Departmental Statement prior to the explanatory memorandum, being the Ministerial Statement MIN 140 (MIN 140).
[45]
MIN 140 was not placed into evidence, but the Commissioner produced, without objection, a copy of it in a supplementary bundle of documents.
[46]
I accept the submission made by Century Mining that MIN 140 does not fall within the definition of ‘extrinsic material’ pursuant to s 14B of the Acts Interpretation Act 1954. That is because ‘extrinsic material’ is defined in s 15 of the Statutory Instruments Act 1992 (Qld)^[21] relevantly as follows:

“extrinsic material means relevant material not forming part of the statutory instrument or the Act under which the statutory instrument was made, including, for example—

…

if the statutory instrument is subordinate legislation—an explanatory note or memorandum relating to the statutory instrument, or any other relevant document, that was laid before, or given to the members of, the Legislative Assembly—

before the end of 14 sitting days after the statutory instrument was laid before the Legislative Assembly; and

by the clerk of the Parliament or the member who laid the statutory instrument before the Legislative Assembly…”

[47]
Century Mining contends that MIN 140 does not fall within the definition of ‘extrinsic material’ as there is no evidence that MIN 140 was laid before, or given to the members of, the Legislative Assembly before the end of 14 days after the statutory instrument was laid before the Legislative Assembly (in accordance with s 15(f)(i) of the Statutory Instruments Act 1992) nor by the Clerk of Parliament or the member who laid the statutory instrument before the Legislative Assembly (in accordance with s 15(f)(ii)).
[48]
The Commissioner did not attempt to establish that MIN 140 satisfied the definition of ‘extrinsic material’ within the meaning of s 15 of the Statutory Instruments Act 1992, but rather contended in oral submissions that the MIN 140 was to be considered to ascertain what was the content of government policy and practice. Even assuming that to be correct, it does not assist in the interpretation of the regulation. Further, in oral submissions, the Commissioner did not cavil with the proposition that MIN 140 was concerned exclusively with coal royalties.
[49]
In the circumstances, I am satisfied that MIN 140 is not extrinsic material to which I ought to have regard in the consideration of the explanatory memorandum to the extent that it might inform the proper meaning of the words ‘marine cost’.
[50]
Even if I am wrong, and MIN 140 is extrinsic material to which I can have regard, on its face, it is a policy relating to the ‘valuation of coal for royalty purposes’. Nothing on the face of MIN 140 suggests it can be used for royalty purposes for zinc concentrate, or otherwise that it is relevant to zinc concentrate at all.
[51]
To the extent that it might be thought to be relevant, the terminology referable to the valuation of coal for royalty purposes of ‘allowable deductions’ is not terminology that is readily adaptable to the phrase in question here, being ‘marine cost’. In the circumstances, I find that MIN 140 is of no assistance in the construction of the words ‘marine cost’.
[52]
The Commissioner also submitted that MIN 140 could be relied upon for context for the construction of the section. I have already found that that document is not extrinsic material to which the court ought to have regard. However, it was submitted that the Ministerial Statement reflected what was said to be well-known commercial practice in terms of contracts in relation to the carriage of goods by sea, and the importance in the contract as to whether the contract was FOB (free on board) or CIF (cost, insurance and freight).
[53]
The role of these contractual terms to the construction of the regulation can however be considered for context without needing to consider MIN 140. That is because the words ‘freight’ and ‘insurance’ have a particular and well understood meaning in commercial sea transportation.
[54]
In Glencore Coal Assets Australia Pty Ltd v Australian Competition Tribunal & Ors,^[22] Allsop CJ, Beach and Colvin JJ considered the different types of international sale contracts as follows:

“[129] Those engaging in the international sale of goods employ different types of contracts in order to adjust the risks and rewards of the different markets involved in the transaction, including the relevant goods or commodities markets, carriage or freight markets, and insurance markets. Two well-known, indeed notorious, types of sales contracts or arrangements are CIF and FOB, being Cost, Insurance and Freight and Free on Board.

[130] It is unnecessary to focus on the differences and similarities of these types of contract except in one respect. If one is selling CIF the seller will arrange both insurance and the shipping (freight) and the buyer pays a price accordingly. Thus it will be for the seller to arrange the carriage by some form of charter arrangement, such as a voyage charter. This responsibility of the seller to arrange carriage and insurance requires the seller to enter both the insurance and the freight markets. The arrangement may be C&F (Cost and Freight) where it will be for the seller to arrange carriage, but not insurance.

[131] If one is selling FOB, the price represents only the goods which the seller has the responsibility to place on board the ship, with title passing as the goods pass the ship’s rail at loading. The seller often will not be responsible for the arranging of the carriage. In circumstances where the seller does arrange the carriage under an FOB contract (FOB terms with additional carriage services) it is arranged for and on behalf of the buyer. See the classic judgment of Devlin J in Pyrene Company Ltd v Scindia Steam Navigation Company Ltd [1954] 2 QB 402 at 424; [1954] 2 All ER 158, where the relationship between law and practical day-to-day working of commerce in this respect is explained.

[132] The important commercial considerations distinguishing the CIF and FOB sales are that in the former, the seller undertakes the risks and seeks the rewards in entering three fluctuating markets: commodity, insurance and freight; whereas in the latter, the seller only undertakes the risks and seeks the rewards in the relevant commodity market.

[133] The terms of the International Chamber of Commerce Incoterms 2010 define and describe FOB and CIF contracts as follows:

FOB — Free on Board

“Free On Board” means that the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.

…

CIF — Cost, Insurance and Freight

“Cost, Insurance and Freight” means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination. The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage. The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.”

(footnotes omitted) (underlining added)

[55]
In my view, that passage relied upon by the Commissioner serves to demonstrate the well understood principle which centres around the point at which responsibility or risk for the goods being transported passes.^[23] If the producer, here Century Mining, assumes a contractual responsibility as to freight or insurance relating to the transport of the mineral by water to a port outside of the State, then the producer is entitled to subtract that expense from the gross value of the mineral so as to ensure that royalties are only paid on the net value of the mineral after those deductions are made. Were the gross value of the mineral already clear of the freight and insurance costs, because of the contractual terms of the transport, no such deductions would apply.^[24]
[56]
Next, the Commissioner submits that the position of the commas in s 54(4)(b) of the Mineral Resources Regulation 2013 was purposeful to ensure that the breadth of the phrase ‘relating to’ was to connect the prescribed costs to the required mode of water transport of the mineral. Against that argument, however, the same phrase is used immediately above in s 54(4)(a)(ii) in relation to coal; viz ‘…freight or an insurance cost relating to the transport of the coal by water to a port outside the State’ without the commas after ‘water’ and ‘State’ as appears in s 54(4)(b). Where the same phrase is used in the same section, but with different punctuation, it is difficult to conclude that the punctuation serves any meaningful purpose. Rather, the placement of the commas seems only to be a grammatical reflection of the fact that s 54(4)(a)(ii) speaks only of one mineral, coal, whereas s 54(4)(b) pertains to different types of minerals or shale oil. I therefore do not consider that the placement of the commas assists in the interpretation of the section.
[57]
This does not mean, however, that I reject the Commissioner’s construction of the term ‘marine cost’; rather, only that I reject the basis for the submission that some assistance can be obtained by reference to the MIN 140 or from the punctuation within the relevant sections of the Mineral Resources Regulation 2013. I do however consider the contracts for transport by sea offers some context in the construction of the section. Century Mining contends that while the word ‘freight’ may be used to denote the charge that is made for transporting goods, that is not the sense in which the word is used in s 54(4)(b)(i). If it were used in that sense, then there would be no need to include the word ‘cost’ in connection with ‘freight’. Rather, Century Mining says the word ‘freight’ is used in the sense of transporting the goods, therefore it will be a ‘freight cost’ if it is incurred for the purpose of transporting the goods.
[58]
The Commissioner submits that in the context of international sale of minerals, ‘freight’ encompasses the transportation of goods by the use of a particular mode of transport - in this case, water - under a commercial arrangement, and a fee payable for that transport. The transport must be to a port outside Queensland.
[59]
Being an addition to the price paid by the international buyer for the mineral as if sold on FOB terms, the Commissioner submits that it necessarily follows that the freight costs are costs of transport from the time title passes to the buyer, and they do not include transport and associated costs for the mineral prior to that time. Rather, it is the value of the mineral at the point of sale which is the value upon which the royalty is imposed. Thus, the Commissioner submits, all the costs in mining, processing and transport of the mineral up until the time the mineral passes the ship’s rail are input costs, and are not deductible from the price paid by the buyer in the calculation of value for royalty purposes.
[60]
Century Mining submits that because it operates the MV Wunma for the purpose of transporting zinc from the Port of Karumba to the Roadstead Anchorage, all of the costs associated with the MV Wunma are freight costs because they have no purpose other than freight.
[61]
Century Mining contends that it is artificial to draw a distinction between the freight and insurance costs of the MV Wunma and those of the ocean-going vessels. It argues that all the costs are freight (or insurance) costs relating to the transport of the mineral by water to a port outside of the State because when the focus is on the transport of the mineral, the transport on the MV Wunma is just the first stage of the transport by water to a port outside the State. The MV Wunma is not the ocean-going vessel because that vessel cannot access the Port because of its length and draw. The MV Wunma is then integral to taking the zinc, by water, to the Roadstead Anchorage, and from there, by water, to a port outside the State. Accordingly, Century Mining submits a ‘broad ambit’ ought to be given to the freight or insurance cost ‘relating to’ the transport by water.
[62]
Century Mining also submits that the Wunma costs are ‘marine cost’ because “…they are freight costs for (and therefore “relating to”) the transport of a mineral to a port outside the State”.
[63]
I accept that words such as ‘relating to’, have a wide import. They must nevertheless be construed in the context of the statutory context and purpose. In Oceanic Life Limited & Anor v Chief Commissioner of Stamp Duties, Fitzgerald JA said:^[25]

“The width of the phrase “relating to” is undoubted. Lord Macnaghten stated that ‘[t]here is no expression more general or far reaching” … The difficulties of construction presented by such language have also been noted. Taylor J observed that “… the expression ‘relating to’ … is … vague and indefinite …” and “… leaves unspecified the plane upon which the relationship is [to be] sought and identified” … One area of debate has been whether, in particular legislation, a relationship need or need not be “direct” or “direct and immediate” … Overall, the position judicially adopted has been that the operation of the phrase “relating to” is determined by the statutory context and purpose…” (citations omitted)

[64]
Similar expressions, such as ‘in respect of’, ‘related to’ and ‘with respect to’ are correspondingly wide but again take colour from their context. The construction of these phrases is subject to the overriding principle that ‘context will always determine the scope of any expression’.^[26]
[65]
Thus, in Travelex Limited v Federal Commissioner of Taxation, French CJ and Hayne J said:^[27]

“It may readily be accepted that ‘in relation to’ is a phrase that can be used in a variety of contexts, in which the degree of connection that must be shown between the two subject matters joined by the expression may differ. It may also be accepted that “the subject matter of the inquiry, the legislative history, and the facts of the case” are all matters that will bear upon the judgment of what relationship must be shown…” (citations omitted) (emphasis added)

[66]
Here, the words ‘relating to’ transport by water reflect the statutory context of making specified deductions from the gross value of the mineral relating to the transport of the mineral out of State whilst still returning to the citizens of the State royalties to reflect the value of the mineral sold.

Meaning of ‘marine cost’

[67]
What, then, is the proper construction of the term ‘marine cost’ within s 54(4)(b) of the Mineral Resources Regulation 2013?
[68]
One starts with the words of the regulation. First, ‘marine cost’ is a composite expression, and must be construed as such.^[28] There are three aspects to the definition of ‘marine cost’ that must be considered for the purpose of s 54(4). For a mineral such as zinc concentrate:
1. it must be a freight cost or an insurance cost;
2. that cost must be relating to the transport of the zinc concentrate by water; and
3. that cost must be relating to the transport by water to a port outside of the State.

‘Freight or insurance’

[69]
As a matter of construction, not all costs are covered by the definition of ‘marine cost’. Only two categories of costs are covered – freight and insurance. If the cost sought to be deducted does not fall into either category, the cost will not be a marine cost. In respect of each cost claimed it is therefore necessary that the cost be either ‘freight’ or ‘insurance’.
[70]
The parties turn to the Macquarie dictionary definition of ‘freight’, as a noun, as follows, with particular reliance on the third and fourth aspect of the definition:

“1. cargo or lading carried for pay either by land, water, or air;

2. (a) the cargo or lading, or any part of the cargo or lading, of a ship;

(b) merchandise transported by water or air;

the transporting of goods by water;

the charge made for transporting goods…”

[71]
The Oxford English dictionary contains a similar definition of ‘freight’, as a noun, being:

“transport of goods in bulk, especially by truck, train or ship; goods transported by freight; a charge for such transport.”

[72]
Dictionaries are generally unhelpful in mature and developed jurisprudence,^[29] and are not a substitute for judicial determination of the interpretation and then construction of statutes and other documents.^[30]
[73]
I accept that as the Mineral Resources Regulation 2013 requires the gross value of the mineral to be determined by the price by which it is sold,^[31] it follows that the meaning of freight, and insurance, ought to be construed consistently with the well understood use of those terms in international shipping arrangements.
[74]
I reject the submission that because the MV Wunma operates for the purpose of transporting zinc from the Port of Karumba to the Roadstead Anchorage, all of the costs associated with the MV Wunma are freight costs because they have no purpose other than freight, as Century Mining submits. That misconstrues the meaning of ‘freight’ as if it read ‘relating to freight’. That is not the wording of the regulation.
[75]
In the context of this regulation, for the mineral (zinc):

‘freight … cost’ means the carriage or shipping cost of the mineral;^[32]

‘insurance cost’ means the cost of insuring the mineral against loss or harm;

relating to the transport of the mineral by water to a port outside the State.

‘Relating to transport by water’

[76]
The second aspect ‘relating to transport by water’ is important for five reasons.
[77]
First, the word ‘marine’ in the composite phrase ‘marine cost’ is one which gives context to the costs which are able to be subtracted. The Macquarie dictionary definition of ‘marine’ as an adjective is ‘of or relating to the sea’. The importance of ‘relating to the transport by water’ is therefore seen in the identification of the terminology chosen. It is not just a ‘freight cost’ or ‘insurance cost’ that is to be subtracted at s 54(1)(b)(i) of the Mineral Resources Regulation 2013, but a ‘marine cost’.
[78]
Second, it is not all freight costs or insurance costs that are subtracted, but only ones which are ‘relating to the transport by water…’. Freight or insurance costs might properly be disallowed if they were not ‘relating to the transport by water’.
[79]
Here, the zinc concentrate is the mineral being transported; it is the freight. But although the term ‘freight’ alone would otherwise have been wide enough to relate to transport by land, rail or air, here those costs would be likely excluded from the definition of ‘freight… cost’ in s 54(4)(b) of the Mineral Resources Regulation 2013 because they are not, at least on their face, costs ‘relating to the transport by water’.
[80]
Third, it is not a cost relating to freight (or insurance) which is to be subtracted, but a defined class of costs, freight or insurance, relating to transport by water. That means that costs which might be construed as ones incidental, ancillary or relating to freight (or insurance) will unlikely fall within the definition because they would not, of themselves be ‘freight (or insurance) costs’ if they are merely ‘relating to’ freight (or insurance).
[81]
Fourth, the end location of the transport by water, that is to ‘a port’ outside of the State, reinforces the importance of the transport by water to the definition of ‘marine cost’. This is because freight transported by other means – for example, road, rail or air – would unlikely be transported to a ‘port’ which the Oxford English dictionary defines as ‘a place where ships load and unload goods or shelter from storms’.
[82]
Fifth, and related to the fourth point above, it is not all freight and insurance costs relating to the transport by water that are ‘marine costs’, but only those ‘relating to’ transport by water ‘to a port outside the State’. Again, the costs incurred are ones directed to a location outside Queensland, which costs would not be a subtractable costs were they by road, rail or air, but could only be reached by sea.

‘…to a port outside the State’

[83]
The port must be one outside the State of Queensland, but as a matter of construction, I cannot consider these words alone. I must also consider the breadth of the words that precede it, being ‘relating to the transport by water, to a port outside the State’.
[84]
Century Mining submits the Wunma costs are all ‘integral’ aspects of the transport by water of the zinc concentrate. The MV Wunma, it is said, is merely the ‘first stage’ of transit to a port outside the State. I accept that the ocean-going vessels cannot enter the port, and the MV Wunma is therefore, as a question of fact, a necessary part of the loading of the ocean-going vessel. That does not mean the Wunma costs incurred are marine costs. Merely because the costs are necessary ones, does not mean that all preparatory or ancillary costs are marine costs. To describe them as ‘necessary’ or ‘integral’ masks the proper enquiry.
[85]
Central Mining’s contended construction creates substantial uncertainty as to what activities and associated costs are covered by this interpretation. Where does that ‘first stage’ begin? Does it begin whilst the MV Wunma is being refitted in Papua New Guinea, months before the loading begins?^[33] Does it begin once the MV Wunma is fully loaded and ready to depart, or is the loading itself integral to the first stage? If the loading of the MV Wunma is integral, surely the costs of workers and machinery on the dock to carry out the loading are also ‘marine cost’. The workers must be paid superannuation, and the machinery must be fuelled and serviced – are those costs also ‘marine cost’? Does it include dredging the port so that the MV Wunma can operate more frequently?^[34] That, of course, is not an exhaustive list of the questions which might be raised on the issue, but they demonstrate that the point at which reasonable minds might contend the ‘first stage’ commences is highly uncertain on this approach.
[86]
Whilst the words ‘relating to’ are of broad meaning, as a matter of construction I take into account the subject matter of the inquiry, the legislative history, and the facts of the case as ones which bear upon my judgement of what relationship must be shown.
[87]
I find that the term ‘relating to the transport by water, to a port outside the State…’ does not cover costs preparatory to or ancillary to the transport of the mineral to a port outside the State. To adopt that approach, as Century Mining contends for the Wunma costs, leads to significant uncertainty as to what is deductible as a marine cost and what is not. I reject such an uncertain construction.
[88]
Finally, in relation to this issue, Century Mining submitted that where freight costs are being paid to an unrelated third party, those costs would be calculated by reference to ‘all the costs of operating the vessel, plus a profit component’. Therefore, it was submitted, that there ought to be equal treatment of freight costs paid to a third party and freight costs incurred by the exporter where they directly incur the cost. Century Mining put the submission as follows:

“However, each of the Wunma Costs is a freight cost because it is integral to the operation of the MV Wunma. If Century Mining were paying “freight” costs to an unrelated third party for the charter of a vessel, those costs would be calculated having regard to all of the costs of operating the vessel (plus a profit component for the charterer). Costs of operating a vessel that are paid by Century Mining should not be excluded merely because Century Mining is using a vessel owned by a related entity, rather than chartering a vessel from an unrelated third party. All of the Wunma Costs ought properly to be included within “freight” costs because it is not possible for Century Mining to transport the goods by water to a port outside the State without incurring those costs.”

[89]
I have no evidence before me as to what constitutes ‘freight costs’ or ‘insurance costs’ in the industry generally, paid to third parties, specifically for the transportation of zinc concentrate or other minerals. I have no evidence as to how, or as a matter of practice, those costs are calculated, charged or apportioned. I have no expert evidence (assuming such evidence might exist and be admissible) of what costs in the industry are generally charged or passed on as ‘freight costs’ that might assist me to determine if costs being claimed here are freight or insurance costs. Specifically, I have no evidence to support the submission set out at [88] above. During submissions, and after the case had closed, Century Mining tendered, with the Commissioner’s consent, three lever arch files of material that comprised the bundle of documents that had been before the Commissioner for the purpose of the Objection Decision and the Further Objection Decision. In submissions, I was taken only to a bundle of 500 out of almost 2000 documents in that exhibit. It was submitted to me that I needed only to refer to the first and last page of those 500 pages for the submission which referred to those documents. As a consequence, no party made any submissions as to those documents regarding the constructions question before me.
[90]
As I have said, I reject the ‘integral to the operations’ approach to the construction of ‘marine cost’. I find this is not the proper construction of the section. It is correct that the ‘freight cost’ must be one relating to the transport by water to a port outside the State, but the freight cost must still be proven to be a freight cost, and not some other cost. A cost is not proven to be a ‘freight cost’ merely because it is, or is submitted to be, integral to the operation of the MV Wunma. That is because the test is not that the cost be one ‘relating to freight’. The test is that the cost first be a freight cost, and then be such a cost ‘relating to transport by water to a port outside the State’.
[91]
This problem is not cured by the reliance on the entries in the accounting records as business records. I accept the documents are admissible as business records. But that does not prove the character of the cost incurred as freight or insurance costs, a factor which is critical to the determination of each claim as a ‘marine cost’.

Conclusion

[92]
For the reasons set out at in paras [68]-[91] I find that for the definition of ‘marine cost’:
1. the freight and insurance costs relating to the transport by water to a port outside the State does not:
  1. (i)
    include those costs to transport the mineral to the point of loading on the ocean-going vessel; or
  1. (ii)
    apply to activities occurring at or prior to the point of loading on the ocean-going vessel;
2. freight and insurance costs must be just that, costs of freight and insurance.^[35] I find that costs ‘relating to’ freight and insurance are not covered by the definition;
3. the marine costs covered by the section are:
  1. (i)
    those proved to be freight or insurance costs; and
  1. (ii)
    those costs which are activities occurring, or risks arising, after the mineral is loaded onto the ocean-going vessel.
[93]
That construction accords with the statutory purpose and context, while giving effect to the words with a clearly understood meaning in the context of commercial sea transportation. Such a construction places a proper emphasis on the limited costs intended to be covered by the section (freight and insurance), not a broader category of ‘relating to …’ freight and insurance. Finally, that construction offers certainty as to what costs are and are not deductible, rather than relying on an imprecise approach as to what constitutes ‘the first stage’ in the movement of the mineral.
[94]
With that construction in mind, I turn to consider each of the categories of costs claimed.

The categories of costs claimed

Dredging

[95]
Mr O'Shea, the Port Operations Manager for Century Mining described in his affidavit, that the depth of the channel at the Port of Karumba decreases over time because of flooding of the Norman River which creates siltation in the channel at the Port of Karumba. Dredging is also required because annual monsoon activity creates the migration of sand from the sandbar into the channel. The recurring siltation and migration of sands from monsoons into the Karumba channel makes the channel inaccessible to larger vessels. The decreases in depth also creates a challenge for the operation of the MV Wunma meaning that, in the absence of dredging, the MV Wunma could only operate at high tide. That in turn would limit the number of journeys that the MV Wunma could do to the ocean-going vessel to load zinc. Consequently, unless dredging is conducted in the port, the MV Wunma’s capacity to be loaded would decrease.
[96]
For these reasons, Century Mining identifies that it needs to carry out dredging operations at the channel at the Port of Karumba annually to a depth of 2.5 metres and 2.6 metres. This allows the MV Wunma to travel every day of the year.
[97]
Mr O'Shea also gave evidence, which was not challenged on this issue, that in 2023, by way of example, due to the unavailability of suitable dredging vessels, the channel was only dredged to 2.3 metres. This meant that the MV Wunma was not able to travel on all days. Consequently, it is now the case that Century Mining contracts with Ports North (Queensland) to undertake regular dredging at the Port of Karumba.
[98]
The submission on behalf of Century Mining therefore was that the dredging needs to be conducted for Century Mining to conduct its operations safely, efficiently and regularly. If dredging is necessary for the safe and efficient operations of the MV Wunma, then it is an integral and necessary cost of the MV Wunma, meaning it is a ‘freight’ cost that is captured within the definition of ‘marine cost’.
[99]
I reject that construction of ‘marine cost’ because:
1. based on Mr O'Shea’s evidence, I find that the cost of dredging is a maintenance cost of the river and the Port. While those costs may be a legitimate business expense they are not a freight cost;
2. for dredging costs to be construed as a ‘marine cost’, the court must conclude that a very broad construction ought to be given to the phrase ‘relating to transport by water…’ so that costs ancillary to the transport of the mineral by water, to a port outside the State, are captured. I reject that construction.
3. even if I was wrong to reject that construction, I would find that the connection between the maintenance works of dredging are too remote to be ‘relating to’ transport of the mineral by water to a port outside the State having regard to the context and purpose of the legislation;
4. even if dredging could be construed as ‘relating to’ the transport of the mineral by water out of the State, the cost still has to be a ‘freight or insurance cost’. Dredging costs cannot naturally be seen as a ‘freight cost’ and no evidence was called upon which I could conclude it was a ‘freight cost’. I find that dredging costs are not a ‘freight cost’. Dredging costs are certainly not an ‘insurance cost’ and it was not submitted that they were;
5. even if dredging costs could be seen as ‘relating to’ freight, that is not how the section is to be construed; and
6. the construction strains the ordinary and proper meaning of the term ‘marine cost’ in its statutory context. Having regard to the purpose and context of the legislation, dredging is not an insurance or freight cost that was intended to be captured as a deduction for the purpose of calculating the value of the mineral being transported and therefore the royalty to be paid.

Vessel drydock and class survey

[100]
The Group Financial Controller of Century Mining’ parent company, New Century Resources Limited, Mr Worcester gave evidence that the vessel drydock and class survey costs are expenses incurred by Century Mining in relation to the refit of MV Wunma. Century Mining is required by regulators to undertake a refit of the vessel every five years. It is a more significant refit than the general repairs and maintenance done throughout the year. That refit would be required no matter what task, if any, the MV Wunma was undertaking.
[101]
There was little evidence of what that refit entailed. The relevant exhibit to Mr Worcester’s affidavit is said to contain all relevant entries to this claim. It includes a wide range of costs such as dry dock expenses, supply of life-rafts and tugboat assistance, as well as flights, fuel and ship management fees. Mr Worcester accepted that the dry docking and survey of the vessel was done prior to the vessel being put into operation at Century Mine. The work was done in Papua New Guinea and the vessel then imported in order for operation to being thereafter in October 2018. Examples of claims such a flights and expenses in June 2018 were to cover trips to either Papua New Guinea or Singapore preliminary to the MV Wunma going into service at Century Mine.
[102]
In other examples, dry docking fees were attributed to the MV Wunma in May 2019 when Mr Worcester accepted that the MV Wunma was on a charter in the Northern Territory at the time.
[103]
I find that this category of expenses are not a ‘marine cost’ within the meaning of s 54(4) of the Marine Resources Regulation 2013 because:
1. based on Mr Worcester’s evidence, I find that the cost of vessel drydock and class survey is a cost associated with the servicing and maintenance of the MV Wunma. While those costs may be a legitimate business expense for the maintenance of the MV Wunma and to satisfy regulatory requirements, they are not a freight cost;
2. I find that the costs were incurred before the MV Wunma was even placed into service at Century Mine, so it was a cost preparatory to the movement of any freight;
3. I find that these costs are a regulatory requirement. They would be incurred whether the MV Wunma was moving zinc to the ocean-going vessels or not;
4. each of the reasons in (a), (b) and (c) above demonstrate that the cost claimed is not a freight cost;
5. for these costs to be construed as a ‘marine cost’, the Court must conclude that a very broad construction ought to be given to the phrase ‘relating to transport by water…’ so that costs ancillary or preparatory to the transport of the mineral by water, to a port outside the State, are captured. I reject that construction.
6. at best, those costs are only incidentally ‘relating to’ the transport of the mineral by water, to a port outside the State. I find that the costs are too remote to be ‘relating to’ transport of the mineral by water to a port outside the State;
7. even if these costs could be construed as ‘relating to’ the transport of the mineral by water out of the State, the cost still has to be a ‘freight or insurance cost’ to be a ‘marine cost’. There is no evidence to satisfy me that the costs are ‘freight costs’. I find that they are not. They are certainly not an ‘insurance cost’, and it was not submitted that they were;
8. even if vessel drydock and class survey costs could be seen as ‘relating to’ freight, that is not how the section is to be construed; and
9. the construction strains the ordinary and proper meaning of the term ‘marine cost’ in its statutory context. Having regard to the purpose and context of the legislation, they are not a cost that was intended to be captured as a deduction for the purpose of calculating the value of the mineral being transported and therefore the royalty to be paid.

Port fees and charges

[104]
These are claims for expenses incurred by Century Mining in relation to port fees that Century Mining is required to pay to Ports North Corporation each year, in order to operate the MV Wunma in the Port of Karumba. It is unclear on the evidence whether these fees and charges are required to be paid every year, regardless of the tasks being carried out by the MV Wunma. There was no evidence offered as to whether the charges related to the number of journeys carried out by the MV Wunma, or indeed what the basis of the calculation for the charges was. The exhibit to Mr Worcester’s affidavit does not assist as other than a record of the fact that the charges were made, in certain amounts on identified dates, for given periods.
[105]
I find that this is not a ‘marine cost’ within the meaning of s 54(4) of the Marine Resources Regulation 2013 because:
1. based on Mr Worcester’s evidence, I find that the cost of port fees and charges are a cost associated with operating out of the Port of Karumba. It is not proven to be related to the journeys which the MV Wunma took to the ocean-going vessels. The evidence suggests it is akin to a fee for license to operate out of the Port. While those costs may be a legitimate business expense as a requirement to operate at the Port, I find they are not a ‘freight cost’;
2. I find that the costs are too remote to be ‘relating to’ transport of the mineral by water to a port outside the State. They appear, on the limited evidence produced, to be related to a license or permit to operate the MV Wunma generally;
3. even if these costs could be construed as ‘relating to’ the transport of the mineral by water out of the State, the cost still has to be a ‘freight or insurance cost’ to be a marine cost. They are certainly not an ‘insurance cost’ and it was not submitted that they were. I find they are not a freight cost;
4. even if port fees and charges could be seen as ‘relating to’ freight, that is not how the section is to be construed;
5. for these costs to be construed as a ‘marine cost’, the Court must conclude that a very broad construction ought to be given to the phrase ‘relating to transport by water…’ so that costs ancillary to the transport of the mineral by water, to a port outside the State, are captured. I reject that construction; and
6. the construction strains the ordinary and proper meaning of the term ‘marine cost’ in its statutory context. Having regard to the purpose and context of the legislation, they are not a cost that was intended to be captured as a deduction for the purpose of calculating the value of the mineral being transported and therefore the royalty to be paid.

Vessel management fees

[106]
Mr Worcester gave evidence that these are expenses incurred by Century Mining in relation to management fees charged by P&O in relation to managing the operation of the MV Wunma, together with incidentals. The management fees were charged by P&O to Investment Co Pty Ltd under the Ship Management Agreement exhibited to Mr Worcester’s affidavit. Although Century Mining does not own the MV Wunma, Mr Worcester gave evidence that Century Mining remained liable for the costs associated with the MV Wunma because of the group structure which treated the group as a consolidated group for taxation purposes.
[107]
The cross examination demonstrated that, in certain periods:
1. a claim was made for P&O management services in June 2018 when the P&O agreement for those services did not commence until October 2018. Mr Worcester did not explain how such a claim could be made, or how such a claim could be a ‘freight cost’;
2. a claim was made for P&O management services in May 2018 when the mine was in care and maintenance phase. It was put to him that there could be no possible basis for such a claim in those circumstances, with which he disagreed, although he did not identify any basis for that disagreement.
[108]
I find that this claim is not a ‘marine cost’ within the meaning of s 54(4) because:
1. there was insufficient evidence to satisfy me that these costs could properly be attributed to either ‘freight’ or ‘insurance’ costs;
2. there was no proper explanation as to how a cost being incurred before a management agreement was even entered into could be treated as a ‘freight’ cost. While those costs may be a legitimate business expense, they are not a freight cost;
3. I find that vessel management fees are not a ‘freight’ or ‘insurance’ cost within the meaning of s 54(4)(b);
4. even if such a cost was a ‘freight’ or ‘insurance’ cost, it does not relate to the transport of the mineral by water, to a port outside of the State, other than as an incidence of moving the zinc concentrate from the port to the ocean-going vessel. It is the payment of a management fee to a third party, pertaining to the use of the MV Wunma, which itself was a vessel merely being used a means of loading the ocean-going vessel, but was not a ‘marine cost’ within the meaning of s 54(4)(b). On the proper construction of the section, in its context, as I have found it, the cost it is too remote;
5. even if vessel management fees could be seen as ‘relating to’ freight, that is not how the section is to be construed;
6. for these costs to be construed as a ‘marine cost’, the Court must conclude that a very broad construction ought to be given to the phrase ‘relating to transport by water…’ so that costs ancillary to the transport of the mineral by water, to a port outside the State, are captured. I reject that construction;
7. even if I was wrong to reject that construction, I would find that the connection between the services is too remote to be ‘relating to’ transport of the mineral by water to a port outside the State having regard to the context and purpose of the legislation; and
8. the construction strains the ordinary and proper meaning of the term ‘marine cost’ in its statutory context. Having regard to the purpose and context of the legislation, vessel management fees are not an insurance or freight cost that was intended to be captured as a deduction for the purpose of calculating the value of the mineral being transported and therefore the royalty to be paid.

Vessel operations and maintenance

[109]
Mr Worcester’s evidence was that these are expenses incurred by Century Mining in relation to the vessel operation and maintenance costs for the MV Wunma. His evidence was that the majority of these expenses are in fact incurred by P&O under the ship management agreement in operating the MV Wunma and, effectively, passed on to Century Mining.
[110]
Mr Worcester did not give any evidence as to why he classified these expenses as a ‘freight cost’. The exhibit to his first affidavit demonstrates the costs are coded as a wide variety of expenses such as, among other things, diesel, charter flights, opex costs, taxis, consumables, and employment costs. In respect of those entries in the schedule of exhibits, there was no attempt to identify, by industry-specific practice, expert evidence or otherwise, why any category of them would be a ‘freight cost’. Nothing in his supplementary affidavit cures that deficiency of evidence.
[111]
Objections were taken to paragraph 14 of exhibit 1 and to the exhibit MJW1 at pages 15 to 23 on the basis that the paragraph and the exhibits pages relate to the costs of Century Mining to deliver the mineral to the ocean-going vessel prior to the point of sale, and are not freight or insurance costs relating to transport of the mineral by water to a port outside of the State. Century Mining responded to the objection on the basis that the question of whether the Wunma Costs are freight or insurance costs relating to transport of the mineral by water to a port outside of Queensland is the principal issue in the case, and therefore the evidence is relevant to the determination of that issue.
[112]
At the commencement of the trial, I was advised that the objection was a technical one, because it was agreed that all of the costs incurred (the Wunma costs) were incurred before the mineral was loaded, therefore I could not determine the objection without determining the application.
[113]
I find that that these are not a ‘marine cost’ within the meaning of s 54(4) because:
1. I find that the vessel operations and maintenance costs does not fall within the definition of ‘freight’ or ‘insurance’ within the meaning of ‘marine cost’;
2. the costs are no doubt a business expense, but they are not freight cost. It was not contended I could find they are an insurance cost, and they plainly are not;
3. for these costs to be construed as a ‘marine cost’, the Court must conclude that a very broad construction ought to be given to the phrase ‘relating to transport by water…’ so that costs ancillary to the transport of the mineral by water, to a port outside the State, are captured. I reject that construction;
4. even if I was wrong to reject that construction, I would find that the costs are too remote to be ‘relating to’ transport of the mineral by water to a port outside the State having regard to the context and purpose of the legislation;
5. the costs as described in evidence do not relate to the transport by water, to a port outside of the State, other than as an incidence of moving the zinc concentrate from the port to the ocean-going vessel. The use of the MV Wunma was merely a means of loading the ocean-going vessel, but was not a ‘marine cost’ within the meaning of s 54(4)(b) because, on the proper construction of the section, in its context, as I have found it, the cost it is too remote; and
6. even if vessel operations and maintenance could be seen as ‘relating to’ freight, that is not how the section is to be construed.

Consumables

[114]
This is a claim for expenses incurred by Century Mining in relation to consumables required in operating the MV Wunma. In his affidavit, Mr Worcester said this was a claim for things such as lubricants and cleaning equipment. The schedule produced particularises some items which might fall within the description of lubricants and cleaning equipment; however, it also contains items such a rain coats, respirators, stair tread nosing, safety goggles etc.
[115]
I find that this claim is not a ‘marine cost’ within the meaning of s 54(4) because:
1. while those costs may be a legitimate business expense they are not a freight cost;
2. for these costs to be construed as a ‘marine cost’, the Court must conclude that a very broad construction ought to be given to the phrase ‘relating to transport by water…’ so that costs ancillary to the transport of the mineral by water, to a port outside the State, are captured. I reject that construction;
3. I find these are not a ‘freight’ or ‘insurance’ cost within the meaning of s 54(4)(b). Just because they are consumables being used on the boat which assists in the transport of the zinc, that does not make them a freight cost. I find that they are not;
4. the evidence before me could only be classed as the highest level describing them as ‘consumables required in operating the MV Wunma’. That is not enough to satisfy me, on the balance of probabilities, that I ought to conclude they are a ‘freight cost’;
5. even if consumables could be seen as ‘relating to’ freight, that is not how the section is to be construed; and
6. the costs as described in evidence do not relate to the transport by water, to a port outside of the State, other than as an incidence of moving the zinc concentrate from the port to the ocean-going vessel. The use of the MV Wunma (and therefore the ‘consumables’ to operate it) was merely a means of loading the ocean-going vessel, but was not a ‘marine cost’ within the meaning of s 54(4)(b) because, on the proper construction of the section, in its context, as I have found it, the cost it is too remote.

Travel expenses

[116]
This is a claim for expenses incurred by Century Mining in relation to the P&O staff that manage the MV Wunma travelling to and from the Port of Karumba. Mr Worcester gave evidence that this claim records expenses incurred by Century Mining in relation to the P&O staff that manage the MV Wunma travelling to and from the Port of Karumba.
[117]
Mr Worcester did not give any evidence as to why he classified these expenses as ‘freight costs’. The exhibit to his first affidavit demonstrates the costs are coded as accommodation, flights, taxi fares and the like. I accept that the costs claimed are properly described as travel expenses. But I remain unconvinced on the balance of probabilities that those costs can be properly described as freight costs. In respect of those entries in the schedule of exhibits, there was no attempt to identify, by industry specific practice, expert evidence or otherwise, why any of them would be a ‘freight cost’. Nothing in his supplementary affidavit cures that deficiency of evidence.
[118]
Whilst they might be costs that are ‘relating to’ freight movement generally (i.e., freight cannot be moved if there are no people there to carry out the tasks required), the test is not that the claim be related to freight. The claim must be a freight cost itself, and there is no evidence to satisfy me that it is any such cost.
[119]
I find that these are not a ‘marine cost’ within the meaning of s 54(4) for the same reasons as set out at [115] above.

Insurance

[120]
Mr Worcester gave evidence in his first affidavit that the parent company, New Century Resources Limited insures its risks in a pooled manner and takes out a single policy in relation to each of its risks. It then re-charges Century Mining for insurance costs that relate to Century Mining’s business and operations.
[121]
The insurance renewal summary taken by New Century sets out the premium related to the MV Wunma. Mr Worcester’s evidence is therefore that the portion of the annual insurance premium relating to the MV Wunma had been calculated by reference to each of the applicable insurance renewal summaries and invoices. Brokerage fees have not been included in the calculation. Exhibit MJW1 at page 61 was said to demonstrate all relevant insurance renewal summaries between the period 1 January 2019 and 30 September 2021.
[122]
The document produced at page 61 was for hull and machinery insurance where the total value was $432,948. Mr Worcester was cross-examined about that claim, and it was put to him that the insurance covering hull and machinery is not insurance covering the status of cargo that had been transported from the roadstead to the port of discharge. He agreed that was correct.
[123]
The evidence therefore demonstrates that the hull and machinery insurance in respect of the MV Wunma in the period 1 January 2019 to 30 September 2021 was the whole of the insurance for that vessel for that period. There is no evidence that there was any deduction, for example, for any period that the MV Wunma was on charter elsewhere.
[124]
Whilst I find the cost claimed would be an ‘insurance cost’ within the meaning of s 54(4) of the Mineral Resource Regulation 2013, I cannot conclude that it is a cost ‘relating to the transport by water to a port outside the State of the mineral’. The evidence demonstrates, and I find, that it is a cost for insuring the vessel itself to cover events such as fire or theft. It is not an insurance cost relating to the transport of the mineral. The extent to which it relates to transport by water is obvious, being that it is a marine vessel, but the insurance sought to be claimed is of the vessel itself and not an insurance cost relating to the transport of the mineral. I therefore conclude that that cost is not a ‘marine cost’.

Diesel

[125]
This claim is in relation to diesel fuel that is used by the MV Wunma and the MV Aburri, as well as the applicable fuel tax credits. Mr Worcester’s evidence in relation to this claim developed between his first and second affidavit. He gave evidence that he was satisfied that no diesel included in the amount claimed was used for another vessel, vehicle, plant, or equipment. He was cross-examined about the reliability of that assessment. While his cross examination demonstrated some doubt about the quantum of the claim, it did not affect the assessment of whether it was within a category of deductions which ought to be allowed.
[126]
I accept the evidence that the diesel was diesel used in MV Wunma and MV Aburri.
[127]
However, I find that the cost for diesel fuel for the MV Wunma (and the MV Aburri) does not fall within the definition of ‘marine cost’ because:
1. the use of the MV Wunma (and MV Aburri) was merely a means of loading the ocean-going vessel, and not the shipping or carriage itself to transport the mineral to a port outside the State;
2. as such whilst the cost might be a freight cost generally, it is not the relevant freight cost for the purpose of this section because those costs are only incidentally ‘relating to’ the transport of the mineral by water, to a port outside the State; and
3. it is not a freight cost which relates to activities occurring after the mineral is loaded onto the ocean-going vessel as I have found the definition requires.
[128]
Whilst I do not doubt that there are circumstances where diesel fuel will properly be considered a ‘freight cost’, I am not satisfied that the diesel cost claimed for the MV Wunma it is a ‘marine cost’ for the purpose of s 54(4).
[129]
If I am wrong about any of the costs claimed as the Wunma costs, I would not have accepted the quantum of the costs claimed in each category but would have referred them back to the Commissioner for reassessment.

Conclusion

[130]
The appeal is dismissed.

Footnotes

[1] For example, s 4.4 of the Port Procedures and Information - Shipping of Port Karumba, which limits ship size to no more than 100 metres in overall length. See Division 2 of Part 7 of the Transport Operation (Marine Safety) Act 1994 (Qld).

[2] See also Wakefield v Commissioner of State Revenue (Qld) (2019) 3 Qd R 414 at [11].

[3] [2019] 3 Qd R 414 at [30]–[32] (“Wakefield’s Case”).

[4] Ibid 414, 425–426 [34]; Allesch v Maunz (2000) 203 CLR 172, 180–181 [23].

[5] Being the Wunma costs as defined at [11] and quantified at [12] above.

[6] There is also an issue with respect to legality arising out of certain Harbour Master’s directions; however, the importance of that is diminished when the fact remains that it is not physically possible for the ocean-going vessels to access the wharf.

[7] New Zealand Pelt Export Co Ltd v Trade Indemnity New Zealand Ltd [2004] VSCA 163, [55] per Nettle JA (Ormiston JA and Hansen AJA agreeing).

[8] Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320 per Mason and Wilson JJ (‘Cooper Brookes’).

[9] Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355, 381–382 [69]–[71], citing Taylor v Public Service Board (NSW) (1976) 137 CLR 208, 213 per Barwick CJ.

[10] Ibid; Cooper Brookes at 320 per Mason and Wilson JJ.

[11] Mineral Resources Act 1989 (Qld) and Mineral Resources Regulation 2013 (Qld).

[12] Mineral Resources Act 1989 (Qld) s 320(3)(a).

[13] Both the reprint as at 25 October 2018 and 1 October 2020 are relevant for the purposes of this proceeding. The relevant parts, Chapter 3, Schedule 3 Part 1 and Schedule 6 are indistinguishable between those two reprints.

[14] Mineral Resources Act 1989 (Qld) ss 320(4) and (5); Mineral Resources Regulation 2013 (Qld) s 35(1)(a).

[15] Other than coal seam gas.

[16] Section 46(a).

[17] Section 56.

[18] Mineral Resources Act 1989 s 321(3).

[19] There being no change between the 2003 Regulations and the 2013 Regulations.

[20] Section 14B(3).

[21] Which modifies the application of s 14B of the Acts Interpretation Act 1954 (Qld) for statutory instruments.

[22] (2020) 280 FCR 194 (Glencore’s case).

[23] Full Joy Foods Pty Ltd v Australian Dairy Park Pty Ltd [2020] VSC 672 at [90].

[24] Subject to the Commissioner’s power, on reasonable grounds, to allow other such deductions, see s 54(1)(b)(iii) of the Mineral Resources Regulation 2013.

[25] (1999) 168 ALR 211, 224–5 [56].

[26] Raptis v City of Melbourne [2017] VSC 247.

[27] (2010) 241 CLR 510 at 519–20 [25].

[28] Built Qld Pty Ltd v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd (2022) 13 QR 148 at [30].

[29] SDA v Corporation of the Synod of the Diocese at Rockhampton (2021) 8 QR 440, 449 at [10] and [11].

[30] Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 at 78 per Isaacs J.

[31] Sections 54 and 58 Mineral Resources Regulation 2013.

[32] As it was described in Glencore’s case at [129]-[133].

[33] See [101] below.

[34] See [95]–[99] below.

[35] See [74] above.

Editorial Notes

Published Case Name:
Century Mining Pty Limited v The Commissioner of State Revenue
Shortened Case Name:
Century Mining Pty Ltd v Commissioner of State Revenue
MNC:
[2024] QSC 143
Court:
QSC
Judge(s):
Treston J
Date:
04 Jul 2024
Selected for Reporting:
Editor's Note

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Cases Cited List of Cases Cited by this judgment

Case Name	Full Citation	Frequency
Allesch v Maunz	View on:JADE(2000) 203 CLR 172	1 citation Jump To Cite 1 - (2000) 203 CLR 172
Australia Limited v Phillips	View on:JADE(1925) 36 C.L.R., 60	1 citation Jump To Cite 1 - (1925) 36 C.L.R., 60
Built Qld Pty Ltd v Pro-Invest Australian Hospitality Opportunity (ST) Pty Ltd	(2022) 13 QR 148; [2022] QCA 266	1 citation Jump To Cite 1 - (2022) 13 QR 148
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation	View on:JADE(1981) 147 CLR 297	2 citations Jump To Cite 1 - (1981) 147 CLR 297 Cite 2 - (1981) 147 CLR 297
Oceanic Life Ltd v Chief Commissioner of Stamp Duties	(1999) 168 ALR 211	2 citations Jump To Cite 1 - (1999) 168 ALR 211 Cite 2 - (1999) 168 ALR 211
Project Blue Sky v Australian Broadcasting Authority	View on:JADE(1998) 194 C.L.R 355	2 citations Jump To Cite 1 - (1998) 194 C.L.R 355 Cite 2 - (1998) 194 C.L.R 355
Pyrene Co. Ltd v Scindia Navigation Co. Ltd	View on:ICLRUK[1954] 2 QB 402	1 citation Jump To Cite 1 - [1954] 2 QB 402
SDA v Corporation of the Synod of the Diocese of Rockhampton	(2021) 8 QR 440; [2021] QCA 172	1 citation Jump To Cite 1 - (2021) 8 QR 440
Taylor v Public Service Board (N.S.W.)	View on:JADE(1976) 137 C.L.R 208	2 citations Jump To Cite 1 - (1976) 137 C.L.R 208 Cite 2 - (1976) 137 C.L.R 208
Travelex Ltd v Commissioner of Taxation	View on:JADE(2010) 241 CLR 510	2 citations Jump To Cite 1 - (2010) 241 CLR 510 Cite 2 - (2010) 241 CLR 510
Wakefield v Commissioner of State Revenue	[2019] 3 Qd R 414; [2019] QSC 85	3 citations Jump To Cite 1 - [2019] 3 Qd R 414 Cite 2 - [2019] 3 Qd R 414 Cite 3 - [2019] 3 Qd R 414

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Century Mining Pty Ltd v Commissioner of State Revenue[2024] QSC 143