I last wrote about how seventeenth Century English history remains important in Australia. Then I wrote about the results of the English Civil War and how it led to a stronger division between the judicial and the executive branches of government. This time I look at a more commercial example and periods both before and after the Civil War.

The opening paragraph of the High Court judgement in Cadia Holdings v The State of New South Wales is

In 1568, an English court held that the Crown had the prerogative right to mines of gold and silver and other metals, such as copper, with which gold or silver in those mines was mixed.1 In a context of constitutional upheaval, that right was modified, in favour of the owners of base-metal mines, by an Act of the English Parliament in 1688.2 It was modified again in 1693.3 Those events, which occurred more than three centuries ago, determine today the amount of royalties payable to the New South Wales Minister for Mineral Resources in respect of copper mined by Cadia Holdings Pty Ltd from land near Orange.

Today the best known part of the royal prerogative is the governor’s reserve powers because –at least here- most of the prerogative is exercised by the executive government- Cabinet and public servants acting –directly or indirectly- on instructions from the Cabinet. And that was true even in 1568, the reigning monarch Queen Elizabeth I didn’t herself mine gold. She had the right to, she charged a price – which even today we call a royalty- to allow others to do so.

Many reasons were given for the King retaining ownership of gold and silvers- the most important being that in those days currency was either issued in gold and silver. Even after paper money was issued the paper notes were able to be converted to gold until 1930 in Australia and later is some other countries. Up to 1966 when decimal currency was introduced the ‘silver’ coins – the threepence, sixpence, shilling and florin were made from silver alloy. And even the first 50c coin was silver alloy (it had so much silver that melted down and sold for its silver content it was actually worth more than 50c for a while)

In England only gold and silver, and metals with which the gold and silver were mixed in the mines were the subject of the prerogative. All other minerals- and metals like copper mined where no gold was mined- belonged to the owner of the land in which the mineral was found. And so the owner could charge the ‘royalty’ not the king. This is unlike the situation in most of Europe- where all minerals belonged to the King. Some economic historians see this difference as being one of the main reasons the Industrial Revolution started in England.

In the early days of the colony the same rules applied- at least to the most common mineral mined in those days- coal and even today some landowners in the Valley also own the coal rights and can charge a royalty.

But to return to the constitutional upheavals and Cadia Holdings. In 1688 the Roman Catholic and absolutist King James II was overthrown and his Protestant son in law became King William III. One of the reasons for this was again an interference with the courts. James II used (his opponents said he abused) his prerogative power of granting pardons to people who broke the law. Even today it is the Governor who pardons people wrongly convicted of a crime or who give the police help in investigating crimes when they themselves have been accomplices.

James II gave wholesale pardons to people for all sorts of acts and ‘dispensed’ with some of the laws which imposed qualifications on people to hold public office or be elected to local government. People were concerned that he was ‘stacking’ local government bodies, juries and so on with his own supporters and that in time would lead to parliament itself being stacked.

He was removed by the “Glorious Revolution” and as part of the constitutional changes public servants were forbidden to stand for parliament- which today remains in section 44 of the Commonwealth Constitution

Another change to the law at time meant that Cadia Holdings did not have to pay eight million in royalties to the State Government.

James II had tried to become financially independent of Parliament so that- to take another complaint against him- he was able to afford a large standing army which people felt he would use to oppress them. The prerogative incomes- such as royalties were not (at least then) controlled by parliament, so that an act which exempted “mines of copper” from the prerogative reduced the income the King could get without parliamentary help. And that is what the 1688 Act did.

But the mine at Orange was one containing both gold and copper. The State government said (and the NSW Court of Appeal agreed with it) that , that the ore fthe Cadia mines contained gold, the copper could not be recovered from the mines separately from the gold; and the Crown’s ownership of the gold was not affected by the 17th-century statute so that the copper was part of a ‘gold mine’ and so liable to the higher rate of royalties.

Or to put it another way the mine was a gold-copper mine, not a copper mine with a small amount of gold in it (and a copper mine with traces of gold would be exempt under the 1688 statute

Cadia’s argument was that the Act exempted copper (or any other mineral) when it was mixed with gold or silver. And so the High Court found: that the 1688 Act allowed a dual categorisation of mines as both gold mines and copper mines. And a mine containing a substantial amount of copper and a substantial amount of gold is both a copper mine and a gold mine. So that the royalties for the copper were assessed on the lower rate of a privately owned mineral.