Legal News & Analysis – Asia Pacific – Australia – Energy & Project Finance

What Has Happened?

The NSW Court of Appeal has recently delivered a judgment upholding a decision by the NSW Land and Environment Court (LEC) to overturn the Part 3A approval granted for the Warkworth Extension Project. 
 
The judgment contains important lessons about objector merits appeals against mining projects and other major projects. It raises the question: ‘What should you be doing to protect your projects?’

Who Is Affected?

Anyone proposing to conduct a major mining or resources project or other major project in NSW.

What Are The Lessons?

Success in an objector merits appeal will depend on defensible, independent identification and assessment of impacts. Even if the consent authority has agreed with the impacts that have been identified and with their assessment, on appeal the Court may not, and it is central to the Court’s function on the appeal to conduct an independent review. 

If there is an appeal, it presents an opportunity to review and if necessary recast the identification and assessment of impacts which has taken place to date and to present further or fresh evidence. 

Background

We recently reported on Bulga Milbrodale Progress Association Inc v Minister for Planning and Infrastructure and Warkworth Mining Limited [2013] NSWLEC 48 (Bulga 1)¹. This case was a merits appeal in which the LEC overturned a decision by the Planning Assessment Commission (PAC) to grant an approval under Part 3A of the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act) for the Warkworth Extension Project.

In Bulga 1, the LEC said that a merits appeal involves the following steps:

1. ‘first, identification of the relevant matters needing to be considered …’
2. ‘secondly, fact finding for each relevant matter …’
3. ‘thirdly, determining how much weight each relevant matter is to receive, and …’
4. ‘fourthly, balancing the weighted matters to arrive at a…decision’. 

The LEC undertook a highly structured and detailed discussion of each of those four elements. The NSW Court of Appeal has now confirmed this approach in Warkworth Mining Limited v Bulga Milbrodale Progress Association Inc [2014] NSWCA 105 (Bulga 2).

It can now be expected that the LEC will undertake a similarly structured and detailed discussion of the four elements in future ‘merits review’ appeals, and that the chances of success in mounting or defending any such appeal will depend on the solidity and independence of the evidence presented to the LEC on those elements.

Issues In Court Of Appeal

Warkworth Mining Limited (Warkworth) appealed to the Court of Appeal under s 57 of the Land and Environment Court Act 1979 (NSW) which provides for an appeal on a question of law. To succeed on the appeal, Warkworth needed to show that there had been a legal error in the manner in which the LEC had determined a relevant issue in Bulga 1.

Warkworth sought to establish legal error on several grounds. Principally, Warkworth argued that there was error in (at [19]):

1. the LEC’s approach to establishing ‘background noise levels’,
2. in the basis for the LEC’s conclusion as to effects of the Extension Project on endangered ecological communities,
3. in the consideration and weight given by the LEC to the report of the Director-General of Planning on the Extension Project (DG’s Report), and
4. in the LEC’s concept of ‘polycentricity’. 

None of these arguments succeeded.

Consideration Of The DG’s Report

Particularly significant are the findings of the Court of Appeal concerning the DG’s Report. 

The DG’s Report recommended approval to the Extension Project. Warkworth argued that, because (the now repealed) s 75J(2)(a) of the EPA Act prescribed mandatory consideration for the DG’s Report, the DG’s Report was therefore ‘a more significant factor than other merely relevant factors’ (at [227]). 

The Court of Appeal rejected this argument on several grounds, the chief among them being that ‘to say that the Department’s view must be given prima facie weight…would serve to place a constraint on the [statutory] decision-making task beyond what is required by the legislation and [would] constitute an unauthorised interference with [the statutory] responsibility’ (at [230]).

The Court held that the DG’s Report was only one of the matters which must be considered.

‘Polycentric’ Decision Making

The Court of Appeal’s findings concerning the LEC’s concept of ‘polycentricity’ are also significant. 

In Bulga 1, the LEC said that the decision-making process under (the now repealed) s 75J of the EPA Act involved the resolution of a ‘polycentric problem’, namely: ‘a complex network of relationships, with interacting points of influence [in which each] decision made communicates itself to other centres of decision, changing the conditions, so that a new basis must be found for the next decision’.

The LEC said that the resolution of a ‘polycentric problem’ involved the following steps:

1. ‘first, identification of the relevant matters needing to be considered …’,
2. ‘secondly, fact finding for each relevant matter …’, and
3. ‘thirdly, determining how much weight each relevant matter is to receive, and fourthly, balancing the weighted matters to arrive at a…decision’. 

Warkworth argued that it had been denied procedural fairness because the LEC had adopted a ‘polycentric approach’ without raising its intention to do so at any stage in the hearing of Bulga 1. Warkworth also argued that a ‘polycentric approach’ was legally impermissible and constituted a failure by the LEC to exercise jurisdiction.

The Court of Appeal rejected these arguments. It held that the LEC had understood that its ultimate task was ‘to balance all the relevant matters in determining whether the preferable decision was to approve or disapprove’ the Extension Project, and that there was no suggestion that ‘this was an incorrect description of [the LEC’s task]’ (at [172]). As a result, the Court of Appeal has left undisturbed the description, and the essential components, of the ‘polycentric approach’ which the LEC outlined at length in Bulga 1.

End Notes:

1.  Warkworth Extension Project – LEC overturns Part 3A approval

For further information, please contact:

Peter Briggs, Partner, Herbert Smith Freehills

[email protected]

Herbert Smith Freehills Energy & Project Finance Practice Profile in Australia

Homegrown Energy & Project Finance Law Firms in Australia