The High Court of Australia has dismissed an appeal by two mining companies whose exploration licences (ELs) were revoked by the NSW Government without compensation on the recommendation of the Independent Commission Against Corruption (ICAC).

Background

In 2013, ICAC found that a number of people involved in the decisions to grant ELs to two exploration companies, including Cascade Coal had engaged in corrupt conduct.  In light of this finding, ICAC recommended that the ELs should be cancelled.

Both Houses of the NSW Parliament reviewed the ICAC reports and agreed that the process leading to the grant the ELs was tainted by serious corruption and as such determined that the ELs should be cancelled.

The existing Mining Act 1992 (NSW) (Mining Act) sets out a formal process that must be followed before an EL can be cancelled.  This process typically involves the EL holder being given notice of the proposed cancellation and an opportunity to make representations about why the EL should continue.

However, the NSW Parliament elected not to rely on these existing provisions of the Mining Act and instead passed specific legislation in January 2014 to cancel the two ELs in question, without compensation, through the Mining Amendment (ICAC Operations Jasper and Acacia) Act 2014 (NSW) (Mining Amendment Act).

High Court challenge to Mining Amendment Act

The mining companies commenced proceedings in the High Court challenging the Mining Amendment Act on a number of grounds. The appeal was heard by a full bench of the High Court in February 2015.

The mining companies argued that the Mining Amendment Act was invalid because it breached the separation of powers doctrine in the Australian Constitution.  In brief the companies’ argument was that:

  • the NSW Parliament had essentially made a ‘finding of fact’ and then imposed a penalty on the basis of that finding
  • making findings of fact and imposing penalties is a judicial function, and
  • judicial functions can only be carried out by courts of competent jurisdiction, not by state parliaments.

The applicant’s contended that the process for cancelling ELs set out in the Mining Act should have been followed. Their argument was based on the premise that direct legislative intervention was outside of the NSW Parliament’s powers and essentially amounted to punishment of the respective companies and their shareholders for corrupt activities undertaken by Government Ministers.

The High Court rejected this argument.  It found that the NSW Parliament had not exercised a judicial function and that the Mining Amendment Act had been validly enacted.