An excellent summary.
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“Government of Laws, not Men”
admin Mining and Resources Sector Law
The decision in
Metgasco v Minister for Resources and Energy [2015] NSWSC 453 demonstrates that governments, and Ministers of the Crown, are as much subject to the law as ordinary citizens – and reminds us that the courts are our protection against capricious, oppressive, or simply incompetent government.
In brief, Metgasco holds a licence to explore for coal seam gas in the Northern Rivers area of NSW. One of the conditions attaching to its licence is that Metgasco “must engage with the community in relation to the planning for and conduct of prospecting operations” in accordance with the NSW Government’s “Guidelines for community consultation requirements for the exploration of coal and petroleum, including coal seam gas”.
Metgasco carried out the community consultation program, as outlined in its licence application (upon which the licence had been granted) in the face of a vigorous campaign opposing CSG not merely in the in the local Northern Rivers community but statewide.
In May 2014, under the pressure of that opposition campaign, and without prior warning, NSW’s Liberal Minister for Resources Anthony Roberts (through his “Delegate”, the Director of the Office of Coal Seam Gas), issued a letter suspending Metgasco’s licence, on grounds that Metgasco had not complied with its licence conditions. As evidence, the Minister pointed to reasons including “fundamental concerns expressed by members of the impacted community”. That suspension was confirmed by a further letter in June, asserting that Metgasco had not engaged in “effective consultation” as required by the Guidelines.
Justice Button, in the Supreme Court of NSW, found that the initial suspension was unlawful and therefore invalid, because the Minister did not first give Metgasco the opportunity to make submissions, as required by section 22 of the Petroleum (Onshore) Act 1991. The confirmation, in June 2014, was equally invalid, because “it purports to confirm a decision where there is no power in the statute to do so”.
The Minister’s lawyers tried to persuade the Judge that whatever defects there may have been in the procedure, they were all fixed by the time of the confirming letter, and that the Court should not engage in “excessive formalism”. The Judge’s response was comprehensive and compelling:
“The Act … sets out a detailed regime with a comprehensive structure. … I respectfully consider that to call upon the Delegate to comply with the statutory regime does not bespeak excessive formalism.”
The Judge also considered whether Metgasco’s community consultation complied with the Guidelines. Crucially, he found that “effective consultation” as required by the Guidelines
“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.”
Therefore, by relying on the failure of the consultation process to persuade some members of the community as a justification for suspending Metgasco’s licence, the NSW government had taken account of irrelevant considerations.
Under the previous Labor government, Resources Minister Ian Macdonald allegedly succumbed to pressure and inducements by political colleagues in the improper awarding of mining tenements. Those matters have played out before ICAC, and continue to play out today before the courts. Minister Roberts broke the law under pressure from anti-CSG activists, with the inducement of saving Coalition seats at the next State election.
Metgasco suffered enormous financial losses as a consequence of the Minister’s illegality. Fortunately for Metgasco, Justice Button provided redress, and it appears likely that the State will compensate the company for its loss, estimated at $80million.
Unfortunately for the citizens of NSW, we will pay the price in increased State taxes and reduced services. Minister Roberts continues to draw his salary.
(20min delay)