Centennial Mandalong v Delta Electricity [2013] NSWSC 1505

Centennial Mandalong v Delta Electricity [2013] NSWSC 1505

In the context of cl 12.3(c) and the definition of "Government Charges Per Tonne", the carbon charges and unit shortfall charges had a sufficient connection with coal sold and delivered to Delta because mining coal inevitably emitted methane, the charges were an unavoidable incident of coal production, coal had to be mined before it could be sold, and Centennial was contractually obliged to supply coal from the Mandalong mine. The charges incurred under the Clean Energy legislation in respect of the Mandalong mine were therefore charges, taxes, royalties or other levies imposed on or payable by Centennial within the meaning of the contract.

Jurisdiction
Australia
Judgment Date
17 October 2013
Procedural Posture
Contract Interpretation Proceedings Seeking Declarations / Principal Judgment After Hearing in the Equity Division Commercial List
Outcome
Plaintiff entitled to the first declaration sought; second declaration stood over for further consideration; costs reserved.
Legal Topics
['contract Interpretation' 'coal Supply Agreement' 'government Charges Component' 'carbon Charges' 'attributable to Coal Sold' 'clean Energy Act 2011 (cth)']
['contracts' 'equity' 'energy and Resources'] ['contract Interpretation' 'coal Supply Agreement' 'government Charges Component' 'carbon Charges' 'attributable to Coal Sold' 'clean Energy Act 2011 (cth)']

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Procedural Posture

Contract Interpretation Proceedings Seeking Declarations / Principal Judgment After Hearing in the Equity Division Commercial List

Legal Issues

  1. 1 ['Whether charges incurred by Centennial under the Clean Energy Act 2011 (Cth) or the Clean Energy (Unit Shortfall Charge - General) Act 2011 (Cth) in respect of the operation of the Mandalong mine were within the meaning of "Government Charges Per Tonne" in the coal supply agreement.' 'Whether those carbon charges were "attributable to coal sold by the Supplier and purchased by the Purchaser" under the coal supply agreement.' 'How any attributable charges should in principle be quantified or allocated between coal produced and coal sold to Delta.']

Ratio Decidendi

In the context of cl 12.3(c) and the definition of "Government Charges Per Tonne", the carbon charges and unit shortfall charges had a sufficient connection with coal sold and delivered to Delta because mining coal inevitably emitted methane, the charges were an unavoidable incident of coal production, coal had to be mined before it could be sold, and Centennial was contractually obliged to supply coal from the Mandalong mine. The charges incurred under the Clean Energy legislation in respect of the Mandalong mine were therefore charges, taxes, royalties or other levies imposed on or payable by Centennial within the meaning of the contract.

Court Disposition

Plaintiff entitled to the first declaration sought; second declaration stood over for further consideration; costs reserved.

Orders

  • ['Declare that the charges incurred by the plaintiff under the Clean Energy Act 2011 (Cth) or the Clean Energy (Unit Shortfall Charge - General) Act 2011 (Cth) in respect of the operation of the Mandalong mine are charges, taxes, royalties or other levies imposed on or payable by the plaintiff within the meaning of...