Ann: Metgasco vindicated by Supreme Court decision, page-2

Watchtheeyes, you are to take the credit for putting the link to the court's judgement.

Suggest everybody, especially the all anticsg'ers read this judgement.  It all goes to the heart of procedural fairness - something all of us Aussies hold so dearly.  We can't be hypocrites on this matter specially when we are using the same legal processes to tell our Indonesian neighbours to act fairly in respect to the treatment of our citizens.

It is my understanding that the government will now be required to go back and re-evaluate its decision based upon the direction provided by the court.  It still doesn't mean that Metgasco will be given carte-blanch access to drill rosella.  But I think it would now be a brave NSW government to maintain "this"suspension for the reasons it has already stated.  NSW government tocome up with a(nother) reason that will stand up in court.  But should this occur, they have to inform Metgasco first of their intent to cancel and then provide Metgasco  the right to respond to such a proposed cancelation.

I cant see the NSW Government appealing this decision.  It is quite clear cut.

The NSW government cannot be in the business of issuing exploration licences without the intent of issuing production licences.  The NSW government cannot be in the business of permitting businesses to operate lawful businesses and take significant fees from them for doing same and to then unreasonably delay those business' activities or to randomly shut them down any or everytime someone who has a gripes gets in their ear because they don't like what is going on.

NSW either has a gas industry or it doesn't.  If it means that much to the greenies and the NSW government , shut it all down.  But compensate these effected businesses for their losses.

Clearly some of Metgaso's arguments were found lacking.

I think each party has a lot to be grateful for in Justice Button.  I'm sure he could have stopped after providing his decision on the "First" and "second" Decision, but he chose to also deal with the "irrelevant" consideration put forward by both parties.  That too will provide valuable guidance to both parties going forward in respect to how these types of matters are to be dealt with.
Supreme Court
New South Wales

Medium Neutral Citation:
Metgasco Limited v Minister for Resources and Energy [2015] NSWSC 453
Hearing dates:
20-21 October 2014
Decision date:
24 April 2015
Jurisdiction:
Common Law
Before:
Button J
Decision:
(1) It is declared that the decision of the Minister, by his delegate, on 14 May 2014 (the First Decision) to suspend specified operations under Petroleum Exploration Licence No 16 (PEL 16), being the construction of the Rosella E01 conventional gas exploration well approved by the Minister’s delegate on 6 February 2014 (the Approved Activity), was not made according to law.
(2) It is declared that the decision of the Minister, by his delegate, on 26 June 2014 (the Second Decision) to confirm the First Decision was not made according to law.
(3) The First Decision is quashed.
(4) The Second Decision is quashed.
(5) The first defendant must pay the costs of the plaintiff of the proceedings before me.
Catchwords:
JUDICIAL REVIEW – error of law – decisions of the Minister for Resources and Energy by his delegate to suspend mining operations pursuant to s 22(3A) of the Petroleum (Onshore) Act 1991 (NSW) – whether decisions to suspend operations were made according to law – whether certiorari should be granted
Legislation Cited:
Petroleum (Onshore) Act 1991 (NSW), ss 3, 22, 22(3A), 22(3A)(b), 22(3B)(b), 22(6), 22(6)(a), 22(6)(b), 22(6)(c), 22(7), 136A
Cases Cited:
Minister for Aboriginal Affairs v Peko Wallsend Ltd [1986] HCA 40; 162 CLR 24
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355
Category:
Principal judgment
Parties:
Metgasco Limited (Plaintiff)
Minister for Resources and Energy (First Defendant)
NSW Department of Trade and Investment, Office of Coal Seam Gas (Second Defendant)
Representation:
Counsel:
Mr B Walker SC (Plaintiff)
Ms A Mitchelmore (Plaintiff)
Mr J R Kirk SC (First Defendant)
Mr P D Herzfeld (First Defendant)

Solicitors:
Gilbert & Tobin (Plaintiff)
Norton Rose Fulbright (First Defendant)
File Number(s):
2014/165970
Judgment

Introduction

1. This is an application for judicial review by the plaintiff, Metgasco Limited (Metgasco), of the decision of the Minister for Resources and Energy for the State of New South Wales (the Minister) by his delegate (the Delegate) to suspend specified operations approved under Petroleum Exploration License No 16 (PEL 16) at the Rosella E01 conventional gas exploration well (the Rosella well), assertedly pursuant to s 22(3A) of the Petroleum (Onshore) Act 1991 (NSW) (the Act).
2. By way of an amended summons filed 7 July 2014, the plaintiff seeks a declaration that the decision of the Minister (by the Delegate) on 14 May 2014 (the first decision) to suspend specified operations under PEL 16, being the construction of the Rosella well as approved by the Delegate on 6 February 2014, was not made according to law.
3. Additionally, the plaintiff seeks a declaration that the decision of the Minister (by the Delegate) on 26 June 2014 (the second decision) to “confirm” the first decision was not made according to law.
4. The precise relief that the plaintiff seeks is an order in the nature of certiorari quashing both the first decision and the second decision. The Minister resisted the making of such an order. The Delegate entered a submitting appearance.
5. The dispute raises difficult questions of construction of the Act, and of interpretation of instruments said to have been created pursuant to the Act.
6. As well as that, the evidence shows that the events leading up to the two decisions were not free of controversy, especially in the Northern Rivers of New South Wales. In those circumstances, I consider it appropriate to emphasise that it is no part of my function to assess the desirability of any of the activities of Metgasco, or the desirability of the suspension of any of those activities. All that I am being asked to do, and all that I am empowered to do, is to determine the lawfulness or unlawfulness of the decisions made by the Delegate.

Chronological background

1. On 13 November 1996, the Minister granted PEL 16 to a predecessor in title to Metgasco.
2. On 28 February 2013, PEL 16 was renewed for a further term until 12 November 2017: see pages 1-20 of Exhibit PJH-1 to the affidavit of Peter John Henderson of 3 June 2014. The opening paragraph of the renewal is as follows:

I, CHRIS HARTCHER, MP, Minister for Resources and Energy for the State of New South Wales HEREBY RENEW THE LICENCE subject to the terms and conditions set out below:-
1. The licence is renewed for a further term until 12 November 2017.
2. The licence is renewed over the land described in the First Schedule attached hereto.
3. The conditions of the licence are amended by deleting all the conditions contained in the licence prior to this renewal and by including the attached Second Schedule – Conditions of Petroleum Exploration Licence 2012 numbered: 1 – 3 (inclusive) and 5 – 57 (inclusive) as amended.
4. The Licence is renewed on the basis of a fixed term program as set out in the Third Schedule attached hereto.

1. Turning then to Schedule 2 of PEL 16, its opening words are as follows:

Conditions 1-3, 6-7, 9-23, 25-27, 29-37, 47-54 and 56 of this exploration licence are identified as conditions relating to environmental management.

1. As will be seen later, that distinction between conditions that are and are not related to environmental management is not without significance. To avoid cumbersome repetition, I shall refer to conditions that relate to environmental management as “EM conditions”.
2. Thereafter 57 conditions appear. A number of them are noteworthy. Conditions 1-3 are as follows:

Prospecting operations permitted under this exploration licence
1. The licence holder may conduct Category 1 prospecting operations on the exploration licence area subject to the conditions of this licence.
Note: The licence holder must comply with the requirements of the Act and other relevant legislation. Category 1 prospecting operations:
(a) must be of minimal environmental impact;
(b) cannot be carried out in critical habitat of an endangered species, population or ecological community (identified under the Threatened Species Conservation Act 1995 or the Fisheries Management Act 1994); and
(c) cannot be carried out in a wilderness area (identified under the Wilderness Act 1987).
Prospecting operations requiring further approval
2. The licence holder must obtain approval from the Minister prior to carrying out any of the following prospecting operations on the exploration licence area:
a) Category 2 prospecting operations; and
b) Category 3 prospecting operations.
3. The licence holder must comply with the conditions of an approval under condition 2 when carrying out those prospecting operations.
Note: In the case of prospecting operations identified in condition 2 as requiring approval by the Minister, the application for approval must be accompanied by a Surface Disturbance Notice (SDN). A Review of Environmental Factors and Agricultural Impact Statement may be required for Category 2 prospecting operations if the Minister is of the opinion that the prospecting operations may result in more than minimal environmental impact.
A Surface Disturbance Notice, Review of Environmental Factors and Agricultural Impact Statement are required for all Category 3 prospecting operations.
If the impact of prospecting operations on the environment is determined as likely to be significant in terms of Part 5 of the environmental Planning and Assessment Act 1979, then the Minister will require the licence holder to submit an Environmental Impact Statement (EIS).
Applications may also require a Groundwater Monitoring and Modelling Plan (see condition 13) and/or a Produced Water Management Plan (see condition 14).
[emphasis added to condition 3]

1. Condition 8, which can readily be seen from the opening words of the Schedule as not having been classified as an EM condition, is as follows:

Community consultation
8. The licence holder must engage with the community in relation to the planning for and conduct of prospecting operations authorised under this exploration licence.
The consultation must be undertaken in accordance with the Guideline for community consultation requirements for the exploration of coal and petroleum, including coal seam gas (NSW Trade & Investment, 2012) as amended or replaced from time to time.
An annual report on Community Consultation must be submitted to the Department within 28 days of the anniversary of this licence being granted, together with evidence that community consultation has been undertaken in accordance with the Guideline.

1. The document of which the second paragraph of condition 8 speaks is the New South Wales Strategic Regional Land Use Policy Delivery guideline entitled “Guidelines for community consultation requirements for the extraction of coal and petroleum, including coal seam gas” (the guidelines). They were placed in evidence before me. They are too long to appear in their entirety in this judgment. At page 1 they speak of the need for “genuine and effective consultation” on the part of a license holder. At page 2 they speak of the need for a Community Consultation Plan as follows:

Explorers must consider community consultation to be an integral component of the exploration program. It should have a clear objective, be timely and be allocated to an appropriate member of staff as a key responsibility. Ideally, the community liaison officer should be a well-known local person who can help establish successful long-term operations.
Consultation should also begin as early as possible. Seeking views from the local community at an early stage will assist explorers to identify the best way of interacting and engaging with the community as the process moves forward.

1. On or about March 2013, Metgasco presented a “Category 3” exploration program to the Minister for approval. The exploration program contained detailed plans for the construction of the Rosella well, which is located on freehold private land within a former gravel quarry site in Bentley on the North Coast of New South Wales. The Rosella well is the only immediate project of Metgasco.
2. On 6 February 2014, the Managing Director and CEO of Metgasco, Mr Peter Henderson, received a letter from Ms Rachel Connell, Director of the Office of Coal Seam Gas (OCSG). Ms Connell is the Delegate to whom I have referred. The letter gave approval to the construction of the Rosella well, subject to certain conditions (the Activity Approval): see pages 21-22 of Exhibit PJH-1. The first three paragraphs of that letter are as follows:

Pursuant to Condition 2 of Petroleum Exploration Licence (PEL) 16, granted under the Petroleum (Onshore) Act 1991, the licence holder presented for the Minister’s approval a “Category 3” exploration program comprising the construction of Rosella E01 conventional gas exploration well.
I, Rachel Connell, Director, Office of Coal Seam Gas, under delegation from the Minister for Resources and Energy, dated 16 May 2013, and delegation from the Director General for Resources and Energy, dated 8 May 2013, in accordance with Condition 2 of PEL 16 approve the construction of the Rosella E01 conventional gas exploration well subject to the conditions imposed under the Petroleum (Onshore) Act 1991, including the conditions in Schedule 2 of PEL 16 and to the additional conditions set out below.
A breach of these conditions is an offence under the Petroleum (Onshore) Act 1991 which is subject to a maximum penalty of $1,100,000 for a corporation.

1. The first two conditions that appear thereafter in the letter are as follows:

General conditions
1. The works must be carried out generally in accordance with the location(s) and methods contained in the Review of Environmental Factors, “Rosella E01 Conventional Gas Exploration Well, Bentley Road, Bentley, NSW” Rev C, (the REF) submitted by Metgasco Pty Ltd on 11 March 2013.
2. All works must be completed and the site fully rehabilitated by the end of the current term of PEL 16, being 2 August 2016, unless an extension to this period is approved by the Minister before this time.

1. The Review of Environmental Factors (REF) of Metgasco of 11 March 2013 referred to in the first condition above is relevantly as follows:

In line with Metgasco’s community relations policy, Metgasco’s consultation with stakeholders includes one-on-one meetings with landholders, letter box information drops, signed land access agreements, addressing community concerns via telephone and open community sessions in Casino, NSW.
Consultation will be undertaken in accordance with the NSW Strategic Regional Land Use Policy Delivery guideline titled “Guidelines for community consultation requirements for the extraction of coal and petroleum, including coal seam gas (NSW Government, March 2012).
On approval of this REF and at least two (2) weeks prior to the commencement of operations Metgasco will notify local residents within a 2 km radius of the site of the activity through a letter box drop highlighting Metgasco’s intended operational activities and the relevant contact details where enquiries can be made.

1. Shortly thereafter, several arrangements were made to prepare the site: see the affidavit of Mr Henderson of 3 June 2014. Each task required Metgasco to expend considerable time and effort. For instance, a drill rig had to be contracted through a tender process, which took approximately two months to complete.
2. Thereafter, many residents of the Northern Rivers became concerned about the activities of Metgasco. A camp was established with the aim of protesting against those activities. A large number of letters were written to the Minister opposing the activities of Metgasco, and setting out reasons for that opposition.
3. On 17 January 2014, Metgasco created a report entitled “Metgasco Community Consultation Program”. That report provided an overview of Metgasco’s general community consultation efforts, and attached various materials provided to local landholders, interested members of the public and those in attendance at council briefings.
4. On 14 May 2014 at 6:47 pm, Mr Henderson received a letter via email from Ms Connell notifying Metgasco of her decision to suspend the Activity Approval: see page 24-25 of Exhibit PJH-1. As I have said, that was the first decision; the letter set out the reasons for it.
5. The straightforward reason given for the decision was that:

It has become evident to the Office of Coal Seam Gas that Metgasco is not complying with condition 8, by way of example I note:
● fundamental concerns expressed by members of the impacted community about the way in which Metgasco has characterised its exploration activities; and
● a meeting with landholders impacted by the proposed activity convened by the Land and Water Commissioner and held in Lismore on 13 May 2014.

1. The letter stated that “no works are to be undertaken under the approval dated 6 February 2014 until Metgasco can demonstrate to our satisfaction that you have complied with condition 8 of PEL 16.” In addition, it was noted that “under section 22 of the Petroleum (Onshore) Act 1991, failure to comply with the conditions of PEL 16, including condition 8, constitutes grounds for the cancellation of the title”.
2. On 15 May 2014, Metgasco requested an Australian Stock Exchange (ASX) trading halt. The halt was removed on 16 May 2014. Immediately thereafter, Metgasco’s share price dropped by roughly 40%.
3. On 21 May 2014, Metgasco wrote to the OCSG requesting a “review” of the first decision.
4. On 27 May 2014, Metgasco received a letter from the Delegate inviting submissions in response to the first decision.
5. On 2 June 2014, Metgasco wrote to the OCSG requesting an extension with regard to the provision of written submissions. On the same date, the OCSG agreed to the requested extension.
6. On 3 June 2014, Metgasco commenced judicial review proceedings against the Minister with regard to the first decision.
7. On 6 June 2014, the plaintiff provided written submissions to the Delegate in response to her letter of 27 May: see pages 3-15 of Exhibit PJH-2.
8. On 26 June 2014, the plaintiff received a covering letter from the Delegate recording her decision “to confirm the suspension of Metgasco’s activities”, along with 13 pages of reasons for doing so: see pages 97-110 of Exhibit PJH-2. As I have said, that was the second decision and the reasons given for it. It is not practical to include the entirety of the reasons for the second decision in this judgment. They may be summarised as being that Metgasco had not engaged in effective consultation or developed a community consultation plan that contained a detailed description or analysis of stakeholders.
9. In particular, the Delegate stated that Metgasco’s community consultation program did not set out a detailed proposal or scheme of action in relation to the particular challenges of PEL 16; that the program failed to identify or include groups that should have been the focus of community consultation given the area covered by PEL 16 (such as Lismore City Council and local environmental groups); that the program failed adequately to address the existence of a protest camp on the property adjoining the Rosella well; that Metgasco had developed a “defeatist attitude” in relation to community consultation, and had failed to develop and deliver presentations with the assistance of scientific experts to address heightened confusion and misinformation within the community; and that Metgasco’s primary spokespeople lacked the necessary skills to engage with an “often hostile” audience.
10. In the second paragraph of the letter of 26 June 2014, the Delegate said “I have decided to confirm the suspension of Metgasco’s activities on the same terms as previously stated in my letter of 14 May 2014”.

Extracts from relevant legislation

1. Section 22 appears in Part 3 of the Act, which is entitled “Petroleum titles”. The section in its entirety is as follows:

22 Cancellation and suspension of title
(1) A petroleum title may be cancelled by the Minister if the Minister is satisfied that its holder has, at any time during the term of the title:
(a) contravened or failed to fulfil any of the conditions of the title, or
(b) failed to use the land comprised in the title in good faith for the purposes for which it has been granted, or
(c) used the land for a purpose other than that for which the title has been granted, or
(d) contravened a provision of this Act or the regulations (whether or not the holder has been prosecuted or convicted of an offence arising from the contravention).
(2) A petroleum title may be cancelled either wholly or in part by the Minister on the written request of the holder of the title.
(2AA) A request for cancellation of a petroleum title may be withdrawn by means of a written notice of withdrawal signed by the holder of the title and lodged with the Secretary. The request ceases to have effect when the notice of withdrawal is lodged.
(2A) The Minister may refuse to cancel a title in whole or in part unless:
(a) all data and reports due under the regulations have been submitted, and
(b) all data gathered, and operations carried on, during any period not covered in any such report are made the subject of a full report submitted to the Minister.
(3) If during the term of any petroleum title any part of the land comprised in the title is required for any public purpose, the Minister may, on one month’s notice given by the Minister to the holder of the title, cancel the title so far as it relates to the relevant part of the land, either with or without restrictions as to depth.
(3A) The Minister may suspend all or any specified operations under a petroleum title until further notice if the Minister is satisfied that the holder of the title has contravened:
(a) a requirement under this Act to pay royalty, or to give or maintain security for the performance of the holder’s obligations under the title, or
(b) any condition of the title that is identified as a condition related to environmental management.
(3B) A condition of a title is identified as a condition related to environmental management if the condition is identified as a condition related to environmental management:
(a) in the title, or
(b) in any notice of the imposition or variation of the condition given to the title holder.
(4) Cancellation of, or suspension of operations under, a petroleum title takes effect on the date on which written notice of the cancellation or suspension concerned is served on the holder of the title, or on such later date as is specified in the notice.
(4A) Notice of a cancellation of a petroleum title is to be published in the Gazette as soon as practicable after the cancellation takes effect.
(5) No compensation is payable by the Crown for or in respect of the cancellation of, or a suspension of operations under, a petroleum title.
(6) Before cancelling a title on a ground referred to in subsection (1), or suspending operations under a title, the Minister:
(a) must cause written notice of the proposed cancellation or suspension, and of the grounds of the proposed cancellation or suspension, to be served on the holder of the title, and
(b) must give the holder of the title a reasonable opportunity to make representations with respect to the proposed cancellation or suspension, and
(c) must take any such representations into consideration.
(7) A suspension under this section is revoked on the date on which written notice from the Minister is served on the holder of the affected petroleum title or on such later date as is specified in the notice.
(8) While any operations under a petroleum title are suspended, the title confers no right on its holder to carry out the operations concerned.
[emphasis added]

1. There was no dispute before me that, pursuant to the definition contained in s 3 of the Act, PEL 16 is a petroleum title for the purposes of s 22. Nor did I understand it to be disputed that the operation of the Rosella well was “operations under a… title” for the purposes of s 22(3A) and of s 22(6) of the Act.
2. There are offence-creating provisions contained in the Act. For example, s 136A is as follows:

136A   Contravention of conditions of title
(1)  The holder of any petroleum title must not, without reasonable excuse, contravene or fail to comply with any conditions of the title.
Maximum penalty:
(a) if the condition of the title is identified as a condition related to environmental management:
(i)  in the case of a corporation—10,000 penalty units, or
(ii)  in the case of an individual—2,000 penalty units, or
(b) in any other case—2,000 penalty units.
(1A)  A condition of a title is identified as a condition related to environmental management if the condition is identified as a condition related to environmental management:
(a)  in the title, or
(b)  in any notice of the imposition or variation of the condition given to the title holder.
(2)  If the conditions of a petroleum title held by more than one person are contravened, each holder who knowingly authorised or permitted the contravention is guilty of an offence under this section.
(3)  In imposing a penalty for a contravention of or failure to comply with a condition identified as a condition related to environmental management, the court is to take into consideration the following (so far as they are relevant):
(a)  the extent of the harm caused or likely to be caused to the environment by the commission of the offence,
(b)  the practical measures that may be taken to prevent, control, abate or mitigate that harm,
(c)  the extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence,
(d)  the extent to which the person who committed the offence had control over the causes that gave rise to the offence,
(e)  any other matters the court considers relevant.
[emphasis added]
The first decision impugned

1. The grounds of the summons of Metgasco with respect to the first decision show that there are a number of bases upon which Metgasco attacks the validity of the first decision. In contrast to the attack on the second decision, I shall deal only with the primary ground of attack with regard to the first decision. That is so for two reasons.
2. First, the primary basis was not in real dispute; rather, the Minister submitted that I should decline to exercise my discretion to grant judicial review because the first decision has been superseded by the second decision and accordingly it would be otiose to do so.
3. Secondly, all of the attacks on the first decision are repeated by Metgasco with regard to the second decision. I shall analyse all of the grounds of attack upon the second decision, and that analysis should be understood as extending to the first decision by analogy.
4. In a nutshell, Metgasco submitted that the Delegate did not comply with an essential precondition to the exercise of the power to suspend pursuant to s 22(3A) of the Act. More specifically, it was submitted that the Delegate did not comply with ss 22(6)(a) and 22(6)(b) of the Act, which require that written notice of the proposed suspension and of the grounds of the proposed suspension be served on the holder of the title so that the holder has a reasonable opportunity to make representations with respect to the proposed suspension. And it was emphasised that, pursuant to s 22(6)(c) of the Act, it was mandatory for the Delegate to take such representations into consideration before making a decision to suspend.
5. As I have said, the Minister did not dispute that, as a matter of objective fact, those two sections had not been the subject of compliance before the first decision was made.

Determination with regard to the first decision

1. I respectfully consider that this question can be resolved concisely. Senior counsel for the Minister did not seek to persuade me that the statute had been complied with before the first decision was made. Clearly enough, the letter of 14 May 2014 came as a bolt from the blue to Metgasco. That occurred in the context of Parliament having explicitly commanded that, before a suspension was to occur, a statutory regime of procedural fairness needed to be implemented. It was not.
2. Instead, as I have said, the focus of senior counsel was on whether there was any utility in me quashing the first decision, in light of his proposition that it has been superseded by the second decision, and in light of the well-known discretion to refuse to make orders in the nature of prerogative writs if it would be fruitless to do so. But in light of the clarity of the failing, and the relationship between the first decision and the second decision discussed by me in more detail below, I reject those submissions. The first decision was invalid because it did not comply with a provision of the Act. It should be quashed. Whether anything effectual flows from that, in light of the making of the second decision, is another matter.

The second decision impugned

1. As I have said, I propose to deal with all of the bases upon which Metgasco submitted that the second decision should also be quashed. It is convenient to set out first the submissions of Metgasco, followed by the response of the Minister, and thereafter my determination with regard to each basis.

Confirmation of an invalid suspension?

1. Metgasco submitted that the second decision is invalid because it purports to “confirm” the first decision (a decision that was itself contrary to law). The simple submission was put that the Act contains no mechanism for confirmation of suspensions. Rather, it speaks only of cancellations or suspensions of title, and (at s 22(7) of the Act) of revocations of such suspensions. Metgasco respectfully submitted that it was not inappropriate to ask that a Delegate of a Minister of the Crown comply precisely with the governing statute promulgated by Parliament.
2. I understood the response of the Minister to be as follows. It may be accepted that there are defects in the terminology used to characterise the second decision. And it may be accepted that structurally the confirmation of a suspension (itself determined by me to be unlawful) is not consonant with the Act. But those things are of no great moment. That is because, before making the second decision, the Delegate provided ample opportunity to Metgasco to be heard against it. Indeed, the procedure adopted went well beyond what the Act mandated. The fact is, the submission ran, the second decision was preceded by compliance with s 22(6) of the Act, and to focus on the characterisation of the second decision and its relationship to the first decision could be for me to engage in excessive formalism inapposite to judicial review.
3. I respectfully reject those submissions. The fact is that the second decision is extant and operative, in that its force prevents the Rosella well from operating. And yet it purports to confirm an earlier suspension when such a mechanism is foreign to the Act. The position is exacerbated by the fact that the purportedly confirmed first decision was itself invalid because of its failure to comply with the Act.
4. The Act considered as a whole sets out a detailed regime, within a coherent structure, for the regulation of the search for, and mining of, petroleum in New South Wales: see the approach to statutory interpretation mandated in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355. The first and second decisions have undoubtedly damaged Metgasco substantially, as well as exposing it to criminal sanction. I respectfully consider that to call upon the Delegate to comply with the statutory regime does not bespeak excessive formalism.
5. In short, because the second decision purports to confirm a decision when there is no power in the statute to do so, and because the decision that it purports to confirm is itself invalid, I consider that the second decision is invalid as well.

Asserted breach of a condition that could not form the basis of suspension?

1. As I have said, despite my satisfaction that the second decision is unlawful and amenable to judicial review, as against the possibility that I am wrong in that determination, I shall proceed to consider the alternative grounds of the plaintiff.
2. Metgasco submitted that the second decision is invalid for another reason: the condition, the breach of which was said to found the second decision, was not a condition that could found a suspension in those circumstances. It was said that that is because it was not identified as an EM condition in PEL 16. For convenience I shall refer to a condition, the breach of which can found a suspension, as a “suspendable condition”.
3. To expand upon that submission to a degree, Metgasco submitted that it is clear that the focus of the reasons for the second decision is an asserted breach of condition 8 of PEL 16, in that it is asserted that Metgasco had not engaged in effective consultation or developed a community consultation plan that contained a detailed description or analysis of stakeholders. And yet the purported suspension must have been founded upon s 22(3A) of the Act, in that the suspension of the Activity Approval must be seen as having been a suspension of “specified operations under a petroleum title” for the purposes of s 22(3A) (there is no evidence, it was said, that there had ever been a notice of imposition or variation of a condition, thereby enlivening s 22(3B)(b)). And it can be seen that, pursuant to s 22(3A)(b), only conditions that have been identified as EM conditions can form the basis of a suspension. Because condition 8 was never so identified in the title (that is, in the PEL), the suspension said to be founded upon it must be invalid, as a simple matter of following through the structure in the statute.
4. The response of the Minister disputed the foundations of that approach. It was as follows. The Delegate was not suspending for breach of a condition in the PEL, those conditions being conditions in the title. Rather, the Delegate was suspending for breach of a condition in the Activity Approval. That is because the second of the paragraphs of the Activity Approval that I have extracted at [15] of this judgment was no empty preamble to the Activity Approval. Rather, so the submission goes, the use of the words “including the conditions in Schedule 2 of PEL 16” made all of the conditions contained in Schedule 2 of the PEL conditions of the Activity Approval. The Act speaks of the kinds of conditions in the title that can found a suspension; it says nothing of the conditions in the Activity Approval that can found suspension of activity.
5. As well as that, the Minister submitted that condition 3 of PEL 16 is a provision that empowers the broad imposition of conditions in an Activity Approval without limitation, and without importing the bifurcation in the Act (and indeed reflected in the PEL) between suspendable and non-suspendable conditions. Furthermore, it was said that it would be highly anomalous if the Minister could cancel for breach of any condition, but could only suspend with regard to some of them.
6. Finally, the Minister submitted that the approach contended for made sound sense (to the extent that such matters may inform statutory interpretation): it is not difficult to see that Parliament could well have intended that suspensions of petroleum titles should be limited by way of the dichotomy between suspendable and non-suspendable conditions, but at the same time intended that more flexibility be allowed with regard to activity approvals, which attach to more specific and localised activities.
7. I respectfully reject the submissions of the Minister. I do so for the following reasons.
8. First, I consider that the Act does indeed apply the bifurcation between suspendable and non-suspendable conditions to activity approvals. It does so by way of s 22(3A) of the Act. In other words, I regard the reference to “specified operations under a petroleum title” as extending to the activities to do with the Rosella well that were authorised by the Activity Approval. That seems to me to be the clear meaning of that part of the section under consideration.
9. Secondly, whilst I respectfully reject the submission of senior counsel for Metgasco that the second paragraph of the Activity Approval under consideration was nothing more than an extraneous preamble, I do not consider that the Delegate was empowered to “opt out” of the effect of s 22(3A) by creating a new regime of conditions attaching to the Activity Approval, all of which were suspendable. That is because I do not consider that Parliament intended that such a mechanism could be used to destroy the distinction between suspendable and non-suspendable conditions when the identical conditions attached to a PEL.
10. Thirdly, it would be extraordinary for Parliament to have gone to the trouble of creating the explicit bifurcation with regard to conditions attaching to a petroleum title but to have intended that an activity approval pursuant to such a petroleum title would not be similarly constrained.
11. Fourthly, if Parliament had intended that counter-intuitive result it could have explicitly said so; it did not.
12. Fifthly, considering the Act as a whole, it sets out a detailed regime for the regulation of activities of companies such as Metgasco. I do not accept that, within the context of that regime, an implied lacuna was left that permitted activity approvals to be suspended far more readily than petroleum titles.
13. Sixthly and finally, to the extent that the submission of the Minister is that the PEL (which was subject to the statutory bifurcation), was able, by way of condition 3 of the PEL operating in combination with the reference in the Activity Approval to all of the conditions in Schedule 2 of the PEL, to create a regime of conditions attaching to the Activity Approval that were not subject to that bifurcation, I respectfully consider that it smacks of a process of “bootstrapping” that is conceptually unattractive.
14. In short, to my mind whatever was intended by the second paragraph of the Activity Approval is not to the point. My simple determination is that the Act did not empower the Delegate to suspend the Activity Approval for breach of a condition that was not identified as an EM condition in PEL 16. And yet that is what the Delegate purported to do. It follows that the second decision is invalid on a second, ancillary basis as well.

Irrelevant considerations taken into account?

1. As I have said, I shall now turn to determine further ancillary submissions of Metgasco. However, because I have already determined on two separate bases that the second decision was invalid, I shall engage in that exercise more concisely than if my response to those submissions were dispositive.
2. Metgasco submitted that the reasons for the second decision show that a number of irrelevant considerations were taken into account by the Delegate in the sense discussed in the well-known decision of Minister for Aboriginal Affairs v Peko Wallsend Ltd [1986] HCA 40; 162 CLR 24.
3. First, Metgasco submitted that, taken as a whole, with regard to the requirements that it engage in “effective consultation” (whether those requirements were founded upon a condition that led to the guidelines, or a condition that led to the REF of Metgasco that had the same ultimate destination), that phrase must be understood as follows. It must focus upon the inherent nature of the consultation, and not focus upon its persuasive effect upon those who are being consulted. To use an analogue that is familiar, Metgasco submitted that counsel could display extremely “effective” advocacy, even though he or she ultimately loses the case at hand.
4. The Minister submitted that it can hardly be the case that, in determining whether consultation was “effective”, the Delegate was mandated by the Act and the guidelines to exclude the outcome of the consultation from her consideration.
5. So much may be accepted. But my reading of the reasons for the second decision is that they place substantial weight not only upon asserted inherent shortcomings in the consultation undertaken by Metgasco, but also upon the fact that many persons remained firmly opposed to the activities of Metgasco even after the consultation was well advanced.
6. I turn then to seek to understand the meaning of the phrase “effective consultation” when it is used in the guidelines.
7. A reading of the guidelines as a whole shows that they are speaking of what is required in terms of the activities of the person or body engaging in consultation, rather than focusing on the results of the consultation upon the minds of the persons being consulted. As one would expect from their nature, the guidelines are not prescriptive and admit of a degree of flexibility depending upon the circumstances. They have the tone of constructive suggestions rather than firm commands. And construing them as a whole, their reference to “effective consultation” to my mind focuses on the quality of the process of consultation, rather than on any outcome whereby the persons who are the focus of the consultation are persuaded by it.
8. To the extent that the Delegate purported to confirm the suspension in the second decision on the basis of an asserted breach of the guidelines, and the reasons for the second decision placed substantial weight on the failure of the consultation process to persuade, I consider that the Delegate has taken into account an irrelevant consideration. Were it necessary, I would consider that Metgasco should succeed on this ground as well.
9. Secondly, Metgasco submitted that the Delegate had fallen into the same legal error to the extent that the reasons for the second decision assert that Metgasco had failed to assuage concerns about production of natural gas, when in truth all that Metgasco was engaged in was exploration. But I respectfully consider that such an approach draws too bright a line between those two activities of Metgasco. Concerns about exploration will very often shade into concerns about the possibility of subsequent production if the exploration were to be successful. Were this submission dispositive of the matter, I would not grant the orders sought.
10. In similar vein, Metgasco thirdly submitted that many of the letters from concerned citizens received by the Minister were to do with worries about, and deep opposition to, extraction of coal seam gas. It was said that those letters were irrelevant, in that Metgasco is not involved in that mode of production.
11. I have already found that the Delegate focused unlawfully on the results of the consultation, rather than its inherent characteristics. But if I were wrong in that determination, I would not uphold this ground of Metgasco. If in truth the second decision was able to be based upon the unallayed concerns of many citizens, I do not think that the law is so prescriptive that expressions of concern that may not be completely precise, or that take a more general view, or that fear that one mode of extraction could lead to another mode in the future, must be put to one side as irrelevant.

Second decision so unreasonable as to attract judicial review?

1. Fourthly, to the extent that Metgasco submitted that it was unreasonable for the Delegate to find that the consultation undertaken was inherently ineffective, in the sense of lacking attributes and qualities that would make it efficacious, I respectfully reject that submission. The Delegate was entitled, by way of more than one pathway leading to the guidelines, to consider whether Metgasco had engaged in consultation that could be characterised as being effective in its attributes but not its results. That includes whether the community consultation plan was sufficient. I do not propose to engage in an impermissible review of the merits of that decision; to my mind it was not so unreasonable to be amenable to judicial review. It follows that, if this were the only ground upon which Metgasco relied, I would not intervene on the basis of it.

Conclusion

1. I proceed to summarise my determinations as follows.
2. The first decision was invalid because it was not preceded by compliance with the regime of procedural fairness for which the Act provides.
3. The second decision was invalid because, without authorisation within the Act, it purported to confirm a decision that was itself invalid.
4. The second decision was separately invalid because the Activity Approval had been suspended for alleged breach of a condition, when that breach could not found that suspension.
5. The second decision was separately invalid because, in asserting that a condition requiring “effective consultation” had been breached, it took into account an irrelevant consideration, that being the results of the consultation, rather than focusing upon the attributes of the consultation itself.
6. The second decision was not separately invalid to the extent that it was founded on the concerns of many about extraction of coal seam gas when there was no evidence that Metgasco was engaging or would engage in such a process.
7. The second decision was not separately invalid to the extent that it asserted that the consultation engaged in by Metgasco had to be effective not only with regard to exploration but also with regard to any production that could ensue from that exploration.
8. The second decision was not separately invalid on the basis that it was so unreasonable as to be amenable to judicial review.

Costs

1. Neither party submitted that costs should not follow the event. Nor do I consider that there is any reason to depart from the usual approach.

Orders
(1) It is declared that the decision of the Minister, by his delegate, on 14 May 2014 (the First Decision) to suspend specified operations under Petroleum Exploration Licence No 16 (PEL 16), being the construction of the Rosella E01 conventional gas exploration well approved by the Minister’s delegate on 6 February 2014 (the Approved Activity), was not made according to law.
(2) It is declared that the decision of the Minister, by his delegate, on 26 June 2014 (the Second Decision) to confirm the First Decision was not made according to law.
(3) The First Decision is quashed.
(4) The Second Decision is quashed.
(5) The first defendant must pay the costs of the plaintiff of the proceedings before me.
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Amendments

24 April 2015 - [65] typographical error
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Decision last updated: 24 April 2015