4nature Incorporated v Centennial Springvale Pty Ltd

1. [1]

   BEAZLEY P: I have had the advantage of reading in draft the reasons of and the orders proposed by Basten JA, with which I agree. I also agree with the additional observations of Leeming JA.

2. [2]

   BASTEN JA: The issue in the present appeal is whether the Land and Environment Court correctly rejected a challenge to the validity of a development consent granted on 21 September 2015 to the Springvale Mine Extension Project. For the reasons given below, that Court should have upheld the challenge and granted consequential relief. This Court should allow the appeal and set aside the judgment below. A further hearing will be required to consider the orders appropriate to resolve the proceedings.

Background

1. [3]

   Pursuant to a development consent granted in July 1992, the corporate respondents, Centennial Springvale Pty Ltd and Springvale SK Kores Pty Ltd, have carried out underground coal mining operations at the Springvale Mine located 15 kilometres north-west of Lithgow and 120 kilometres west of Sydney. Mining continued pursuant to that development consent (as modified) until 30 September 2015.

2. [4]

   In April 2014 the respondents sought approval for an extension of the existing underground mine to the east and south-east of the existing workings. Pursuant to the proposal, the respondents sought to extract a further 4.5 million tonnes of coal per year for a period of 13 years and 3 months, up to 31 December 2028.

3. [5]

   The project was classified as State significant development under s 89C of the Environmental Planning and Assessment Act 1979 (NSW) (“the Planning Act”). [1] Being State significant development, the designated consent authority was the Minister for Planning. [2] The Minister was the third respondent to the proceedings, but will be referred to as required as “the Minister”.

4. [6]

   The proposal was contentious (being the subject of more than 25 public objections) with the result that the Minister’s powers were delegated, in accordance with the terms of a standing delegation, to the Planning Assessment Commission (“PAC” or “Commission”). [3]

5. [7]

   On 27 April 2015 the Minister requested the Commission to undertake a review of the proposal and conduct a public hearing, pursuant to s 23D of the Planning Act and the Environmental Planning and Assessment Regulation 2000 (NSW) (“the Planning Regulation”), cll 268R and 268V. On 13 August 2015 the Minister requested the Commission to conduct a further review and public hearing.

6. [8]

   On 18 September 2015 the proposal was referred to the Commission for determination. On 21 September 2015 the Commission granted development consent to the development application, subject to conditions.

7. [9]

   On 18 December 2015 the applicant, 4nature Incorporated, commenced proceedings in the class 4 jurisdiction of the Land and Environment Court challenging the validity of the consent. The principal ground of challenge was that in granting consent the Commission had not been satisfied of an essential precondition to the grant, namely that “the carrying out of the proposed development would have a neutral or beneficial effect on water quality”, the proposal involving the discharge of water within the Sydney drinking water catchment. The requirement to be so satisfied was imposed by cl 10(1) of the State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011 (NSW) (“the Catchment SEPP”).

8. [10]

   The application was listed for hearing on 9 May 2016 before the primary judge, Pepper J. With the assistance of succinct but pertinent written submissions from the parties, the hearing was completed on that day. On 13 September 2016 the primary judge delivered a judgment dismissing the summons. [4]

Grounds of challenge

1. [11]

   Three grounds of challenge were identified in the Land and Environment Court which were, in substance, as follows:

   1. (1)

      The [Commission] did not reach a state of satisfaction that the carrying out of the proposed development would have a neutral or beneficial effect on water quality as required by cl 10(1) [of the Catchment SEPP], prior to purportedly deciding to grant the consent. [5]

   2. (2)

      [The Commission] misdirected itself as to the law to be applied to the consideration and determination of the development application, in that it considered the Catchment SEPP (including cl 10) merely as an environmental planning instrument that it was required to take into account under s 79C(1)(a)(i) of the [Planning Act], rather than directing itself to cl 10 of the Catchment SEPP to ask whether it was satisfied that the carrying out of the proposed development would have a neutral or beneficial effect on water quality. [6]

   3. (3)

      [The Commission] failed to take into account a mandatory relevant consideration, namely whether it was satisfied that the carrying out of the proposed development would have a neutral or beneficial effect on water quality. [7]

2. [12]

   These grounds were reformulated for the purposes of the appeal. The notice of appeal filed on 11 October 2016 identified the following three grounds (with references to the judgment below):

3. [13]

   A feature of the proceedings was that the Commission gave no reasons for its decision to grant the consent. Nor did any party seek reasons. As a result, the appellant was required to establish the factual premise of its case, namely that the Commission did not form the necessary state of satisfaction, in accordance with cl 10(1) of the Catchment SEPP, by reference to the voluminous documentary material which was before the Commission and before the Court. However, the primary focus of the parties was on a document prepared for the consideration of the Commission in August 2015 by the Department of Planning and Environment and known as the Addendum Report.

4. [14]

   Before this Court, there was a change in emphasis in the formulation of the grounds of challenge. Although the primary position remained a complaint that the Commission had not formed the necessary state of satisfaction, the appellant submitted that the error in the judgment below lay in an incorrect understanding of the legal requirements of cl 10(1) of the Catchment SEPP. As the respondents noted, the appellant did not seek to prove that the Commission could not reasonably have formed the required state of satisfaction on the materials before it.

5. [15]

   There was no dispute between the parties on the appeal that the Catchment SEPP required that the Commission be satisfied as to the neutral or beneficial effect of the proposed development on water quality. That in turn required the identification of a “base case” and an assessment of water quality “with and without” the proposed development. The finding of the primary judge that the Commission adopted the “existing discharge limits for salinity under EPL 3607” [8] as a baseline led the respondents to defend that standard as a legally available approach. The critical issue on appeal was whether that approach satisfied the requirement of cl 10(1).

Statutory structure for grant of consent

1. [16]

   The State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (NSW) (“Mining SEPP”) provides that certain development can be carried out only with development consent. [9] Relevantly for present purposes, that includes “underground mining carried out on any land”. [10]

2. [17]

   Special provision is made with respect to development in the Sydney drinking water catchment area, pursuant to s 34B of the Planning Act, which relevantly provides:

3. [18]

   The Catchment SEPP identified an area of land for the purposes of s 34B(1) of the Planning Act to include certain sub-catchments, one of which was the Upper Coxs River, [11] being the sub-catchment in which the proposed mine would discharge water. Part 2 of the Catchment SEPP dealt with assessment and approval of development and activities. Clause 10 reads as follows:

4. [19]

   The “NorBE Tool” is a defined term and means “the tool titled Neutral or Beneficial Effect on Water Quality Assessment Tool 2015 set out in Appendix 1 to the NorBE Guideline.” [12] The “NorBE Guideline” is also a defined term and means “the document titled Neutral or Beneficial Effect on Water Quality Assessment Guideline 2015 prepared by the former Sydney Catchment Authority as published in the Gazette on the same day as State Environmental Planning Policy (Sydney Drinking Water Catchment) Amendment 2015 was published on the NSW legislation website.”

5. [20]

   It was common ground that the “NorBE Tool” was not required to be applied with respect to State significant development, which included the present proposal. However, reference was made to it in the course of submissions as an indication of how cl 10 was intended to operate with respect to the assessment of water quality. It will be necessary to identify how the respondents sought to deploy the tool in due course.

6. [21]

   It remains to consider the statutory instruments relevant to the procedural steps taken for the purposes of assessing the proposal.

7. [22]

   Part 4, Div 4.1 of the Planning Act deals with “State significant development”, being development declared under s 89C. Pursuant to the State Environmental Planning Policy (State and Regional Development) 2011 (NSW), cl 8(1), and Sch 1, cl 5(1)(a), coal mining is declared to be State significant development. As noted above, the consent authority for State significant development is the Minister for Planning. [13] The Minister is required to determine a development application by granting consent, subject to modifications and on such conditions as the Minister may determine, or by refusing consent. [14] Consent may not be granted if the development is wholly prohibited by an environmental planning instrument. [15] The evaluation required under s 79C of the Planning Act applies to the determination of a development application with respect to State significant development. [16] Further, the provisions of Div 4.1, and any other provisions of the Planning Act with respect to State significant development “prevail to the extent of any inconsistency with any other provisions of or made under this Act relating to development to which this Part applies.” [17]

8. [23]

   The Planning Assessment Commission is created as a body corporate pursuant to s 23B(1) of the Planning Act. Its functions include the review of any development, activity or project to which the Act applies and the holding of public hearings in relation to any matter which the Minister requests the Commission to review; [18] they also include any function delegated to the Commission under the Planning Act or any other Act. [19] No “appeal” can be brought under the Planning Act in respect of a decision of the Commission if made after a public hearing. [20]

Reasoning of primary judge

1. [24]

   More than half the judgment under appeal involved a summary of the process of assessment and the extraction of key passages from the documentation produced during that process. It is not necessary to review that material. However, one factual finding should be noted. The dispute about water quality turned (at least for present purposes) on the salinity of water discharged from the mine. The underground mining left cavities which tended to fill with ground water if not pumped out through bores. It was this water which was discharged into the environment. The respondents had conducted monitoring of the salinity at the key discharge point and reported to the Department that “the updated median salinity at LDP009 (reflecting monitoring up to 29 May 2014) was 1060 μS/cm”. [21] That was a measurement of electrical conductivity which was used as a proxy for concentrations of salts in the water.

2. [25]

   The first substantive question addressed by the primary judge was whether the Commission in fact published a statement of reasons for its decision. [22] Although the issue is peripheral to the appeal, it is helpful to explain how the question arose. On 21 September 2015 the Chair of the three member Commission nominated to determine the development application, Mr Brian Gilligan, sent a letter to the Secretary, Department of Planning and Environment, with a copy to the Minister for Planning, attaching the signed development consent and the file. The letter, which did not exceed two pages, noted briefly the nature of the proposal, the reports prepared in the course of “a rigorous assessment process involving multiple opportunities for public consultation” and addressed a number of recommendations it had made in its own earlier reports. It concluded with the following general paragraph:

3. [26]

   The following day, the Commission released publicly a statement in two paragraphs recording its determination of the development application. The second paragraph read as follows:

4. [27]

   Understandably, the primary judge concluded that these documents were not (and did not purport to be) “an exhaustive statement of all of the reasons why the project was approved.” [23] Further, she declined to draw any inference from the omission from the documents of any explicit statement of satisfaction of the neutral or beneficial effect on water quality, in terms reflecting the requirement of cl 10(1) of the Catchment SEPP. [24] The judge therefore concluded that the applicant needed to demonstrate the absence of the necessary state of satisfaction under cl 10(1) by reference to the documentary material before the Commission at the time it made its decision. [25]

5. [28]

   Next, the primary judge set out the “applicable legal principles” governing judicial review proceedings. She repeated the view, not challenged on the appeal, that the applicant bore the onus of establishing the absence of the relevant state of satisfaction, it being the party alleging invalidity.

6. [29]

   There followed three sections in which the judge addressed the specified grounds of challenge. The first of these dealt with the question whether the Commission did in fact attain a state of satisfaction in compliance with cl 10(1). [26] In that context, the primary judge also addressed the second ground of challenge identified by her as “whether the PAC misdirected itself as to the law to be applied in the consideration and determination of the consent”. [27] The judge found, understandably, that it was convenient to deal with those two matters together because, in considering whether the Commission reached a particular state of satisfaction, it was necessary to identify the factors as to which satisfaction was required.

7. [30]

   With respect to the effects on water quality, the judge noted that there was a threshold question “as to what was the appropriate comparator for the purposes of cl 10(1) of the Catchment SEPP.” [28] The applicant had contended that “the relevant comparison was between the water quality if the project were carried out and the water quality if it were not”. [29] The competing contention of the respondents was that “the appropriate comparator (in other words, the ‘base case’) to be applied for any given development application was a factual question for the decision-maker as at the date of the determination of the application.” [30] The judge accepted the respondents’ contention. [31] As will be seen below, while that position was not abandoned by the respondents, in fact the arguments on both sides were refined on the appeal.

8. [31]

   The primary judge also noted the applicant’s submission that part of the Department’s material presented to the Commission, [32]

9. [32]

   That approach, it had been submitted, was contrary to the text of cl 10(1). The primary judge also rejected that approach. [33] She stated that she did so “[f]or the reasons largely put by the respondents”, presumably referring to the earlier submission that the method of measurement was a matter for the decision-maker.

10. [33]

    That conclusion was based on the proposition that cl 10(1) was “silent as to the relevant comparator” and that it “does not specify a base case against which to assess the neutral or beneficial effect on water quality by the carrying out of development.” [34] Although the judge was not prepared “to read into that clause” the approach proposed by the applicant, she held that “the selection of the appropriate base case involves matters of judgment, and retaining a degree of flexibility is both necessary and desirable”. [35] The primary judge took a similar stance in relation to the selection of where the measurement was to take place. [36]

11. [34]

    The judge’s conclusions were expressed in the following terms:

12. [35]

    Those findings were determinative of the third ground, namely that the Commission did not take into account the test contained in cl 10(1). [37]

(a) submissions on appeal

1. [36]

   Subject to noting a further narrowing of the dispute, it is convenient to address the parties’ submissions in the course of resolving the critical issues.

2. [37]

   On the appeal the respondents submitted that the appellant had abandoned its initial allegation that the Commission had failed to form any opinion for the purposes of cl 10(1) of the Catchment SEPP and had focused on the nature of the comparison required by cl 10(1). Thus, the respondents submitted: [38]

3. [38]

   The appellant, in its submissions in reply, adopted that statement of the issues between the parties but maintained, first, that it was not open to the Commission to adopt a calculation of the “base case” which did not rely upon a measurement of current water quality and, secondly, that the Commission in fact used as a comparator “not existing or current water quality at the date of determination (or at any other time) in the absence of the proposed development, but rather the hypothetical maximum discharges permitted under the Environment Protection Licence (EPL) that applied to the site”. [39] The appellant’s reply continued:

4. [39]

   In the course of oral submissions, the respondents sought to defuse the dispute as to whether the relevant comparison was between the maximum allowable concentration of salt in the discharged water under the licence (being 1200 µS/cm), or whether it was the actual level of discharge, which was said to be 1060 µS/cm, in accordance with the finding of the primary judge noted at [24] above. On either view, the respondents submitted, there would be a neutral or beneficial effect as a result of the proposed development, because the maximum permissible salinity would be below either of those figures, in accordance with the conditions imposed on the consent. [40]

5. [40]

   It is convenient now to turn to what are, in substance, the two outstanding issues, dealing first with the question of construction of cl 10(1) and, secondly, the findings of the primary judge as to how the Commission determined the matter before it.

(b) construction of cl 10(1) of Catchment SEPP

1. [41]

   Section 34B of the Planning Act (set out at [17] above) is to be found in Div 1 of Pt 3 of the Planning Act, dealing with environmental planning instruments, the Division being headed “General”. While s 34B(2) does not itself impose an essential precondition to the grant of consent to a development application, it requires that such a provision be included in a SEPP. The terms of the requirement are, however, prescribed by s 34B. Thus, although the essential precondition is to be found in the Catchment SEPP, cl 10(1), its terms are dictated by the statute.

2. [42]

   As the primary judge correctly held, the requirement in cl 10(1) was not to be treated as a question of fact to be assessed by the Court, but was a question of fact to be determined by the Commission. In other words, it is the state of satisfaction of the decision-maker which, in the language adopted by Gummow J in Minister for Immigration and Multicultural Affairs v Eshetu, [41] is a “jurisdictional fact”. [42] A state of satisfaction is not unreviewable; [43] as the primary judge correctly noted, the state of mind of the Commission “had to be reasonably open to it and formed on a correct understanding of the law”. [44]

3. [43]

   However, the primary judge went somewhat further, finding that the nature of the exercise to be undertaken by the Commission was itself a matter for it to determine. That the exercise involved a comparison of two states of affairs was not in question; nor was it in question that the Commission might have a degree of flexibility in the manner in which the comparative exercise was undertaken, depending no doubt on the material before it. What was in dispute was the extent to which the statute and the Catchment SEPP dictated an objectively determinable comparison, to be undertaken as a precondition to the grant of consent to the development application. In approaching that question, the judge adopted what she described as “[t]he applicable legal principles of construction relating to subordinate legislation”. [45] Noting that general principles of statutory construction apply, the judge continued: [46]

4. [44]

   The passage referred to by the primary judge in the judgment of Leeming JA in Tovir Investments included the following statement which encapsulated the principle relied upon:

5. [45]

   In Tovir the Court was required to construe the definition of “backpackers’ accommodation”, which required one to “navigate a sea of verbiage.” [48] It does not follow that there is some general principle requiring laxity or flexibility in construing delegated legislation, or statutory instruments generally. What is more, the language required to be construed in the present case was taken directly from the Planning Act, s 34B(2); it could not be said that it was “drafted less carefully than primary legislation”.

6. [46]

   The application of this supposed principle, requiring that regard be had to “more practical considerations, rather than … a strict adherence to its language”, affected the approach adopted by the primary judge, as appears from the following steps in her reasons:

7. [47]

   In this passage, the first paragraph focuses on the object of the Catchment SEPP, not the language of cl 10(1). The second paragraph appears to focus on a temporal element, although the point made is unclear. Whatever the point, to say in the next paragraph that it was “therefore open” to the decision-maker to identify the appropriate baseline did not follow from any discussion of the language of the clause.

8. [48]

   Taken together, the third paragraph acknowledges that an “appropriate baseline” is “the existing water quality as at the date of its determination to grant consent.” As the purpose is to “ensure that drinking water quality is maintained irrespective of the proposed development”, it is not clear why the baseline should not take into account the fact that an existing source of pollution will shortly cease if the development is not permitted. The third paragraph also acknowledges that in assessing the impact of a proposal the Commission may have “regard to the term of the project as a whole”; what is not explained is how the language of the clause would permit any other assessment in relation to a fixed term development.

9. [49]

   In the fourth paragraph, the statement that cl 10(1) is “deliberately silent on how to best promote” the objective set out in cl 3 is again made without reference to the language of cl 10(1). Nor is it clear why a “fluid construction” is required. Clause 10 fixes a standard; it does not address the mechanisms for measuring water quality. Flexibility in relation to mechanisms may be accepted; the standard is a separate issue.

10. [50]

    There followed a slide from a consideration of the broad objective of the Catchment SEPP, and the need for a flexible approach, to a conclusion that “[i]t was therefore reasonably open to the Department to select the existing discharge limits for salinity under EPL 3607 as the base case for the pre-development baseline.” [49] The judge then stated: [50]

11. [51]

    Determining the scope and operation of cl 10(1) requires a recognition that the language of the provision in the Catchment SEPP is precisely that of its statutory source, namely s 34B(2) of the Planning Act. Basic principles of statutory construction require that the language be read in context and having regard to the objective which it was designed to promote. However, the primary focus must remain upon the text.

12. [52]

    To say that the measurement of water quality may be imprecise or difficult to achieve is to acknowledge that what is to be measured is “the quality of water.” Further, the outcome of the assessment will no doubt involve a significant element of imprecision because that which is to be assessed involves the effects of carrying out of a proposed development, which are self-evidently not known. However, none of this affects the nature of the comparison required. What the language of the provision requires is an assessment of the effect of carrying out the proposed development on the quality of water, relevantly for present purposes in a defined sub-catchment.

13. [53]

    It was in this context that the respondents relied upon the structure and content of the NorBE Tool. Although the NorBE Tool was not applicable to this development, it was submitted that the purpose of deploying the tool, pursuant to cl 10(2), was to carry out the same assessment which was required by cl 10(1). Accordingly, the submission proceeded, the NorBE Tool provided “context” within which to understand cl 10(1).

14. [54]

    The submissions relied on two characteristics. [51] The first was that the tool (in Modules 1 and 2) asked a series of questions which required an assessment by reference to a comparison between the proposed development and “the current (legal) use and condition of the site”. [52] Secondly, those modules required answers in binary form: in other words, there was a series of questions to be answered sequentially, each sequential step depending on whether the preceding question had been answered “yes” or “no”. That, it was submitted, revealed the nature of the assessment to be undertaken pursuant to cl 10(1). Curiously, the argument was developed by reference to the 2011 Guideline. The current 2015 Guideline expanded Modules 3 and 4 so that they mirror the form of Modules 1 and 2. [53]

15. [55]

    Finally, the respondents relied upon a statement in the Guideline requiring an assessor using the NorBE Tool to consider a general assumption, namely: [54]

16. [56]

    There are four broad reasons why those submissions should not be accepted. Further, those reasons demonstrate a critical element in the resolution of the question of construction.

17. [57]

    First, and importantly, the logic of the submissions is inverted. Although it is true that the provision to be applied in this case was cl 10(1) of the Catchment SEPP, the language of that provision was relevantly identical with the terms of s 34B(2) of the Planning Act. Although it is also true that “context” may be an important factor in construing legislation, it would be a most unusual case where the context of the statutory language was affected by (i) a State Environmental Planning Policy promulgated two years later, (ii) a further instrument (the NorBE Tool), to which reference is made in the SEPP, or (iii) Guidelines published at the same time as the NorBE Tool was gazetted, which are referred to in a note in the SEPP. Reliance on this material as “context” for construing the statutory provision adopts an unconventional meaning of “context” and, if accepted, would displace the established principle that delegated legislation must be consistent with the empowering statute and does not change the meaning of the statutory language.

18. [58]

    The second reason for not accepting the proposed approach to the construction of cl 10 is precisely that cl 10, while it may involve a single conceptual exercise, deliberately distinguishes between those situations in which the NorBE Tool must be deployed and those in which it is not deployed. The distinction between those situations suggests that there is an important difference between them, with the result that the exercise reflected in the NorBE Tool may not be appropriate in other cases.

19. [59]

    Thirdly, and consistently with the last point, it was noted in argument that modules 1 and 2, upon which reliance was placed, were in quite different form from modules 3, 4 and 5, which also constituted part of the NorBE Tool. Modules 3, 4 and 5 did not propose a sequential, binary exercise. Precisely how modules 3, 4 and 5 operated did not appear from that material. However, they were described as applicable in relation to “development types where there is more risk to water quality than for developments under Modules 1 and 2.” [55] Whatever was required by module 5, the circumstances in which it applied included “miscellaneous higher risk developments that do not involve residential development”, which were undoubtedly closer to the circumstances of the present case than modules 1 and 2. (That remains true of Modules in the 2015 Guideline.) It follows that the manner in which the assessment is to be undertaken in the present case gains little if anything by way of clarification from an understanding of modules 1 and 2 of the NorBE Tool.

20. [60]

    Fourthly, it is significant that the NorBE Tool does not apply to State significant development, such as the present proposal. Why that is so was not explored in argument, but there are two aspects of the present proposal which are atypical of a vast range of developments. The first aspect is that, without the proposed development taking place, the current legal use of the land will not continue indefinitely, but will terminate. Secondly, the proposed development will also not continue indefinitely, but will terminate within a fixed period. Each of those factors suggests that the exercise required by cl 10(1) in the present case may differ from the exercise required in other circumstances.

21. [61]

    Accordingly, rather than construing the passage from the Guideline set out above as a direction that the assessment must always be undertaken by reference to current legal usage, the preferable understanding is that the comment in the Guideline will apply where current legal usage is relevant to the exercise required by the Catchment SEPP and the statute.

22. [62]

    On the other hand, as the respondents recognised, it does not follow that the exercise required by cl 10(1) is undefined or idiosyncratic; if the comparison undertaken does not comply with the requirements of the clause, it will be invalid. Although it may involve substitution of the statutory language with other words, it is common ground that what is required is an assessment of water quality both “with and without” the proposed development. There was no dispute as to what was in issue with respect to “water quality”, it being the salinity of the water discharged from the mine site. [56] As the respondents accepted, “a reasonable evaluation of whether the carrying out of the proposed development would have a [neutral or beneficial effect] on water quality, necessarily [involves] a comparison between water quality at two points, as reflected in the very concept of a ‘base case’. The same principle would preclude a consent authority from adopting an ‘arbitrary’ base case or one that could be altered in a capricious or ‘whimsical’ manner (either of which would be unlawful on the basis of irrationality or unreasonableness)”. [57]

(c) conclusion as to construction of cl 10(1)

1. [63]

   The meaning of s 34B(2), and therefore the operation of cl 10(1), is that proposed by the appellant. Clause 10(1) requires the comparison of “water quality” on two hypotheses; namely, where the development is carried out and where it is not. Where the proposed development covers a fixed period, that period will provide the temporal parameter of the comparison. As it will commence in the future, the base case may, but will not necessarily be, an extrapolation of current water quality at the time of the assessment. If current water quality is affected by a use which will terminate (as here) before the development commences, current quality will need to be adjusted to take account of that change. (Other circumstances may arise in other cases which need not be addressed.) Against that base case, the comparison must then address the anticipated effects of carrying out the proposed development.

(d) assessment adopted by Commission

1. [64]

   The case ultimately turns, therefore, on the modelling in fact adopted by the Commission in assessing the effect on water quality of the discharges of water from the proposed mine development. As the respondents noted, there was no challenge to the findings of fact made by the primary judge. The findings may be summarised for present purposes by extraction of the following propositions:

   1. (1)

      “[i]t was therefore reasonably open to the Department to select the existing discharge limits for salinity under EPL 3607 as the base case for the pre-development baseline”; [58]

   2. (2)

      “the Department and the EPA were satisfied that there would be a neutral or beneficial effect on water quality … even though the project might cause an arithmetic increase in the overall salinity levels relative to current levels”; [59]

   3. (3)

      “[a]s the respondents have correctly asserted, there was no submission or advice before the PAC suggesting that the Department’s Addendum Report was incorrect insofar as it had selected an inappropriate base case. That a different baseline measurement could have been adopted by the Department does not mean that the PAC has erred in accepting the Department’s approach.” [60]

2. [65]

   These findings are consistent with the proposition that the Commission reached a state of satisfaction for the purposes of cl 10(1) based on its acceptance of the matters set out in the “Addendum Report” provided by the Department of Planning and Environment. That conclusion is also supported by the Second Review Report published by the Commission on 15 September 2015, which identified opinions formed by the Commission in reviewing the Addendum Report. Three days after the release of the Second Review Report the Commission was notified that the Minister had, on 14 September 2015, delegated to the Commission the power to determine the development application. On the same day, Friday 18 September, the Department provided to the Commission its Final Assessment Report, adopting the Commission’s remaining recommendations in its Second Review Report; attaching draft conditions for approval of the development application and recommending that the Commission grant consent subject to those conditions. That the Commission duly did on Monday, 21 September 2015. It is therefore appropriate to turn to the content of the Department’s Addendum Report.

3. [66]

   The document, dated August 2015, stated that it had been prepared for the purposes of s 89E of the Planning Act. It also stated that it had been prepared “for consideration by [the Commission]”. [61] In dealing with the discharge of water for the purposes of the Catchment SEPP, it referred to the Neutral or Beneficial Effect on Water Quality Assessment Guideline (2011). The report continued: [62]

4. [67]

   The report then noted that between 2006 and 2014 water from the operating Springvale mine was transferred by pipeline to the Wallerawang Power Station for use as cooling water; the power station closed in 2014 and thereafter the water was discharged to Coxs River at the discharge point identified as LDP 9. It referred to the “current licensed water discharge limits” from LDP 9. The report continued: [63]

5. [68]

   It will be necessary to return to these passages in order to consider the figures which have been omitted from the extract set out above in order to allow the underlying argument to be identified more readily. Before addressing the figures, it is convenient to note the changes at Lake Burragorang, which were also considered in this section of the Addendum Report: [64]

6. [69]

   To return to the figures upon which the changed approved limits were based, it is to be recalled that the EPL was not before the Commission or the Court below (nor before this Court). However, based on the Department’s Addendum Report, it is understood to have two parameters. One is a level of electrical conductivity (EC), [66] which is treated as a proxy for the concentration of salinity; the second is a volumetric control measured in megalitres of water per day. Further, the controls on concentration of salinity assume a degree of variation. As described in the Addendum Report, the “current licensed water discharge limits from LDP 9 are a 100th percentile limit of 1200 µS/cm EC and 30ML/day volumetric.” [67] As noted above, monitoring of “median salinity” at LDP 9 up to 29 May 2014 provided a reading of 1060 µS/cm, which the judge said equated to 710mg/L of salts. [68] The proposed new limits would require the respondents “to meet a 50th percentile of 700, a 90th percentile of 900 and a 100th percentile of 1000 µS/cm EC limits for salinity by 30 June 2017”. [69] That is, after two years it was required that at no point in time could the EC exceed 1000, and that for at least half the time it could not exceed 700.

7. [70]

   Three elements of this analysis may be noted. First, although the licence permitted the daily discharge of 30ML, the actual average daily discharge was 12ML, but was expected to increase to 18-19ML under the proposal. Thus the actual volume of water to be discharged was expected to increase by 50% should the new proposal go ahead, but would still be less than two-thirds of the volumetric limit under the current licence.

8. [71]

   Secondly, while the outer limit of electrical conductivity was to reduce from 1200-1000 µS/cm after two years, there was no indication in this passage as to the effect that either the reduced maximum or the percentile controls would have on current discharge levels. (The current discharge, expressed as a “median”, indicated that half the readings were above 1060, and perhaps between 1060 and 1200, and half were below.) On the other hand, it was open to the Commission to infer that the new proposed limits would, over time, reduce current levels of salt concentration at the point of discharge.

9. [72]

   Thirdly, there was no information as to the likely changes which might occur (either with respect to the licence conditions or the actual discharges) if the Commission were to refuse consent to the proposal. In order to assess that matter, it would have been necessary for the Commission to have regard to the future of operations at the mine site. There were two factors said by the respondents to be addressed in that respect.

10. [73]

    One was that, although the period of the development consent had expired on 30 September 2015, there were six longwalls for which extraction had been approved, but which had not taken place. The second was that the development consent was required only for the underground mining and not with respect to the discharge of water from the mine. However, the water was discharged to prevent the mine flooding. There was therefore a question as to whether the respondents would continue to pump water from the mine in the event that consent to the further proposed mining operations was refused. In respect of this material, the primary judge reached the following findings: [70]

11. [74]

    There are several problems with this finding. First, it is not expressed in terms of a finding reasonably open to the Commission, nor as a finding which was in fact made by the Commission. The appropriate test would have been whether there was material before the Commission from which it could or could not draw appropriate inferences. However, for reasons set out below, that is not a critical difficulty.

12. [75]

    Secondly, the finding is directed to a single point in time, namely whether mining would continue for a period after 30 September 2015 and whether the discharge of water would continue after that date. There was no consideration in any material before the Commission of the period over which either mining or water discharge would continue. For example, there was no consideration as to whether the companies would continue to pump water from the mine for a period of 13 years during much of which mining would not be permitted. Consideration of those matters would have been essential if the Commission were to have assessed the actual discharge of water under the “base case” scenario, as opposed to merely placing reliance on the current existence of a licence.

13. [76]

    The critical problem with the analysis was that, in the absence of reasons, the approach adopted by the Commission must be inferred from the material before it (as the primary judge otherwise accepted). It may be recalled that the Commission undertook two “reviews” before determining that consent should be given to the development application. In its first review, dated June 2015, the Commission included a lengthy discussion of the proposed variations to the terms of the licence with respect to reductions in salinity concentrations. [71] It did not have, nor seek, information as to what might happen were consent to be refused.

14. [77]

    In September 2015 the Commission produced a second report, noting that there were “several key issues that required further consideration and clarification during this review, particularly including … minewater discharge impacts and subsidence-related impacts on swamps.” [72] In section 4.2, “Minewater discharge”, the Commission noted:

15. [78]

    Although the first and second respondents noted three matters which suggested that, in practice, discharge of all water might not have ceased if the consent were not granted, they did not suggest that there was any material before the Commission which would have allowed the assessment of these considerations. Thus they submitted, first, that the companies had a legal right under EPL 3607 to continue to discharge water from the mine. Secondly, the companies said they had an entitlement to seek a modification of the 1992 development consent pursuant to s 75W of the Planning Act, to extend the deadline for carrying out the mining operations which had been approved. Thirdly, the companies submitted that they had legal rights under applicable mining leases, in accordance with s 73 of the Mining Act 1992 (NSW), to carry out exploration, without obtaining a development consent. [73] All of that may be so, but there was no material to suggest that the Commission had identified or considered these possibilities. The absence of material was not entirely surprising, as the position of the Department, which provided most of the relevant material to the Commission, was, as noted above, that the “base case” was the limits on water discharge imposed by EPL 3607. On that basis, what happened on the ground, either currently or in the future, was irrelevant.

16. [79]

    There was, however, material before the Commission which appeared not to support the respondents’ assertions with respect to the possible continuing discharge of water. The Department’s preliminary assessment report, which was before the Commission, had included as an appendix an hydrological report prepared by Dr Justin Bell of Jacobs Group (Australia) Pty Ltd entitled “Additional Simulations of the Regional Water Quality Impact Assessment Model” and dated 26 March 2015. The appellant sought to obtain assistance from the Jacobs report on the basis that it provided information as to the NUL (or null) case, involving no extension to the current mining consent. [74] The report stated that “comparison of the prediction simulation and the NUL case presents the impact due to the Proposal.” [75] Dr Bell’s analysis was based at least in part on information supplied by his clients, the respondents. [76] No significant discharge from the Springvale mine at LDP 9 was identified in calculating the NUL case. (A figure of 0.5ML/day is insignificant in relation to the issues in this case but appears in any event to relate to Angus Place Colliery.) [77]

(e) conclusions as to validity of determination

1. [80]

   It is clear from the findings of the primary judge that the Commission adopted the Department’s position. Although the respondents, in the course of submissions on the appeal, went close to accepting that what needed to be assessed as the base case for the comparison was the current level of actual discharge, absent the effects of carrying out the proposal, it was clear that that was not the approach adopted by the Commission, nor did the primary judge so find.

2. [81]

   The Department’s position was that the current permissible level of discharge from the Springvale mine provided the baseline against which the proposed development was to be assessed. However, the consent pursuant to which the mining operation was undertaken (which gave rise to the need to discharge ground water) was due to terminate on 30 September 2015. That fact was not addressed in the Department’s calculations.

3. [82]

   Reliance by the Commission on the Department’s approach was erroneous for two reasons. First, the baseline calculation of water quality pursuant to cl 10(1) must be undertaken by reference to actual, and not hypothetical, water quality. The salinity of water in the Upper Coxs River depended upon (relevantly) the actual volume and salinity of the water discharged from the Springvale mine at LDP 9. Secondly, it was no doubt because the Department treated the relevant level as the maximum permitted under the EPL (which was not time limited) that the Department did not consider what might happen on the ground when the mining operation terminated. Apart from the material in Dr Bell’s report which suggested discharges thereafter would be minimal, the Commission had no material to support a finding that even current discharges would continue absent mining, nor was it invited to so find. Further, it was not invited to consider whether mining would continue, nor for how long and on what conditions. The judge’s findings were inconsistent with any suggestion that it had in fact assayed that task.

4. [83]

   Finally, the respondents’ reliance upon the actual (median) level of salinity recorded up to 29 May 2014 (being in the same order as the maximum level permitted under the licence) did not assist because it was not the figure upon which the Department had relied; if it had been, it would have been necessary to consider the effect of the termination of the mining consent, being the step which was not taken.

5. [84]

   Speculation as to what might have happened after 30 September 2015, absent consent to the new proposal, is beside the point because, on the findings made by the primary judge, it was not an exercise undertaken by the Commission. Because the Department’s approach, particularly as set out in the Addendum Report, did not reflect the exercise required by cl 10(1) with respect to the development proposal, the decision of the Commission, based on that report, was infected by the same error. Accordingly, the appeal must be upheld and the judgment below set aside.

Orders

1. [85]

   The following orders, sought by the appellant in that event, should be made:

   1. (1)

      Allow the appeal and set aside the order of the Land and Environment Court made on 13 September 2016 dismissing the amended summons dated 24 February 2016.

   2. (2)

      Order that the respondents to the appeal pay the costs of the appellant in this Court.

2. [86]

   The appellant sought further orders. The first was a declaration that the consent given by the Planning Assessment Commission, as delegate of the Minister of Planning, on 21 September 2015 with respect to State significant development application number SSD 5594 was invalid. The second was an order setting aside the consent granted on 21 September 2015. Ordinarily orders in this form would be made. However, the parties agreed that given the consequences for the current operations of the respondents and the users of the coal supplied by the mine, the Court should hear further submissions before making such orders. That should be accepted. Whether this Court should ultimately make the proposed further orders, and if so when, or should remit the matter to the Land and Environment Court for it to determine whether, and if so when, to make the further proposed orders is also a matter yet to be determined.

3. [87]

   In addition the appellant sought an injunction restraining the respondents from undertaking any development in reliance on the development consent. However, there is no evidence before the Court to suggest that the first and second respondents would attempt to carry out the proposal the subject of the development application in the absence of a lawful consent. That order would not be made.

4. [88]

   Finally, the appellant sought an order for the costs of the proceedings brought by it in the Land and Environment Court, in which it is now successful. If there were any reason to think that an order for costs could appropriately be resisted, that is a matter which should be dealt with in the Land and Environment Court. If there is no proper basis for resisting such an order, it is likely that the respondents (including the Minister if the Minister was an active party in the Court below) will consent to such an order. No submissions having been made by any party with respect to that question, it is not appropriate for this Court to deal with the costs in the Land and Environment Court. In particular, it is to be noted that, although a different order may have been envisaged at the time, that Court expressly reserved the question of costs before it.

5. [89]

   LEEMING JA: I agree with Basten JA, for the reasons his Honour gives, that this appeal should be allowed and the orders of the primary judge set aside. Without detracting from his Honour’s reasons, I wish to add the following observations.

6. [90]

   It is as well to explain the issues on which this appeal turns. This appeal is not about the merits of burning coal to produce electricity. Nor is it about the merits of mining coal from the existing mine at Springvale and burning it at the adjacent power station. Those issues are questions of policy as to which it is no part of this Court’s function to rule.

7. [91]

   This Court has instead been asked to determine a legal question. The question is whether the decision to approve development extending the mining operation at Springvale was within power. The answer is either yes or no, and this appeal having been regularly brought, the Court has no choice but to answer it. As Spigelman CJ said in Woolworths Ltd v Pallas Newco Pty Ltd (2004) 61 NSWLR 707; [2004] NSWCA 422 at [9]:

8. [92]

   The essence of the legal question can be stated quite simply (although what follows assumes knowledge of the background which is contained in Basten JA’s judgment, and passes over some details). The Legislature of New South Wales has insisted that consent be granted to development relating to any part of the Sydney drinking water catchment only if “the consent authority is satisfied that the carrying out of the proposed development would have a neutral or beneficial effect on the quality of water”. This has occurred in two stages. First, s 34B(2) of the Environmental Planning and Assessment Act 1979 (NSW) required that:

9. [93]

   Secondly, in accordance with that obligation, cl 10(1) of the State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011 provides:

10. [94]

    Both the Minister and the Planning Assessment Commission (to which the Minister delegated the decision) are bound to observe that limitation on their power.

11. [95]

    The decision to extend mining at Springvale until 2029 was made 9 days before approval for the existing operation expired. No reasons were given by the Planning Assessment Commission for its decision (nor was there an obligation to do so). That raises a difficulty, because the issue posed by the appeal requires an examination of whether or not the Planning Assessment Commission was satisfied as required by cl 10(1). But that difficulty is not insuperable. The parties are agreed, in accordance with long-standing authority, that the decision must be set aside if the Planning Assessment Commission misconstrued the test of being satisfied of there being a neutral or beneficial effect on water quality, and that in the absence of reasons, inferences may be drawn as to its reasoning process.

12. [96]

    Basten JA has shown how it should be inferred that the Planning Assessment Commission accepted the submissions advanced by the Department and by Centennial, in writing, on the operation of cl 10. The inference is powerful, and indeed, the main focus on the appeal was not so much whether that inference should be drawn, but whether legal error was disclosed.

13. [97]

    The mining approved by the Planning Assessment Commission will involve the discharge of large quantities of water with elevated concentrations of salts into the Sydney drinking water catchment. To ask whether a proposed development has a neutral or beneficial effect on water quality requires a comparison to be made. Not least because it is necessary to look into the future to predict the likely effect of the proposed development – in the present case over a 13 year period – the assessment may be technical and contestable and require considerable expertise. Where precisely is the effect on water quality to be measured – at a single place or places? Over what time frame is the effect on water quality to be considered? If at different places or at different time periods (or both) the effect is uneven – perhaps negative on some occasions or places and positive on other occasions or places – then how is a view formed as to whether there is “a neutral or beneficial effect on water quality”? Clause 10(1) leaves those questions open. But none of those considerations detracts from the requirement in cl 10(1) that in each case there must be a comparison so as to enable an answer to the question whether the effect of the proposed development would be neutral or beneficial.

14. [98]

    The “Addendum Report” to which Basten JA has referred reflected a detailed recommendation by Departmental officers supplied to the Planning Assessment Commission shortly before the decision was made. It addressed the impact of water discharges in two ways. The difference is telling.

15. [99]

    One approach was based on modelling to the effect that total salinity in Lake Burragorang would increase by 5-6% (from 98 mg/L to 103 or 104 mg/L) under median rainfall conditions compared to what would occur if both Springvale and Angus Place mines were closed. The Departmental officers were of the view that that increase was environmentally neutral, because it was relatively small, and because the result was substantially less than the 600 mg/L recommended by the Australian Drinking Water Guidelines 2015. No complaint was made in this Court about this aspect of the evaluation of the environmental impacts of the proposed development.

16. [100]

    The report proceeded on the basis that it was not sufficient to confine the assessment to the increase in total salinity in Lake Burragorang. The water discharge from mining operations would have environmental effects on the water quality at least in the upper catchment by reason of the increased salt concentration. But a different approach was taken in the application of cl 10(1) to that impact.

17. [101]

    The respondents contended that the test of neutral or beneficial effect could be satisfied by comparing the likely discharge from the proposed mine extension with the existing levels of permissible discharge from Springvale Mine in the period up to September 2015. Departmental officers made the same submission to the Commission. That is quite different from the approach taken in relation to total salinity in Lake Burragorang. And it is not a correct approach to measuring the effect on water quality of the carrying out of development for the purpose of cl 10(1). It is not a correct approach because it is a comparison which puts to one side the vitally significant fact that the present adverse environmental effect is limited in time – in the present case, to a mere nine days. Indeed, it is the expiration of the existing approval which has driven the need for the development application for the period from October 2015 until December 2028.

18. [102]

    Another way of making this point is to consider a different example. Suppose Springvale Mine had development approval to extract 3 million tonnes per annum of coal for the next 13 years, and had applied for approval to increase the rate of extraction to 4.5 million tonnes per annum for the same period, on the basis that it would also put in place measures to ensure that the environmental effect of additional discharges improved or at worst remained the same. It would be open to the consent authority in that case to approach its task by comparing present discharges with what was proposed. In that case, a comparison with existing operations would make sense because, if consent is refused, there is no reason to think that the existing mining operations would not continue.

19. [103]

    But, to return to the facts in this appeal, one does not assess the effect on water quality of mining over the next 13 years by assuming that historical mining, which was to cease 9 days after the decision was made, would continue.

20. [104]

    There may be a sound basis to conclude that the steps proposed to be taken by Centennial, which appear to have been the result of a process of interaction with the Environmental Protection Agency and Water NSW, would result in less environmental harm compared to the mining for which approval was given many years ago. That may be regarded as a good policy outcome. But whether or not that is so does not answer the legal question of power posed in this appeal. The legal question of power is not whether the consent authority is satisfied that the proposed development is less harmful to water quality than something which had been approved many years ago for a limited period of time which will have expired before the proposed development commences. The question is whether the consent authority is satisfied that the proposed development would itself have a neutral or beneficial effect on water quality.

21. [105]

    The legal question requires consideration of what would happen if the proposed development were refused. There are a variety of possibilities. One is that mining would move to the rehabilitation phase. Another is that the mine might temporarily cease. There may be other possibilities. But there is nothing to suggest that the Planning Assessment Commission gave any consideration as to what would happen at Springvale Mine in the future in the event that the application were refused. That shows that the Commission has misapplied the legal test.

22. [106]

    Ground 2 of the appeal concerned whether there was a different approach to construing delegated legislation, as opposed to primary legislation. There is no general proposition that the task of ascertaining the legal meaning of delegated legislation differs from the construction of primary legislation. One reason for that is that there is a wide range of delegated legislation. Some is drafted by the Parliamentary Counsel’s Office, which also drafts primary legislation, but some is not (an example of the latter was a Local Rule of Harness Racing New South Wales considered in Day v Harness Racing New South Wales (2014) 88 NSWLR 594; [2014] NSWCA 423, which was drafted by the Chief Operating Officer and approved by the five members of Harness Racing New South Wales, none of whom had expertise in drafting). Some delegated legislation is disallowable; but some is not (indeed, environmental planning instruments such as the State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011 cannot be disallowed; the Interpretation Act 1987 (NSW) distinguishes between “statutory rules” and “environmental planning instruments”).

23. [107]

    It is a general proposition that if legal language has been used less than carefully, it may be appropriate to give rather less weight to precise textual considerations. That was the point intended to be conveyed by what I said in Tovir Investments Pty Ltd v Waverley Council [2014] NSWCA 379 at [54]-[55], which commenced with an observation that “the drafter has been less than fastidiously precise in his or her choice of language” and concluded with reference to the “somewhat casually drafted internal definition”. There are reasons to think that delegated legislation, or, at least, some classes of delegated legislation, may be less carefully drafted than primary legislation.

24. [108]

    However, contrary to the view expressed by the primary judge, none of this is presently to the point. There is no basis for applying a different approach to the construction of cl 10(1) whose function is plainly to satisfy the obligation imposed by s 34B(2) and whose language is materially identical to that provision.