Alinta LGA Limited (Formerly The Australian Gas Light Company) v Mine Subsidence Board

Alinta LGA Limited (Formerly The Australian Gas Light Company) v Mine Subsidence Board - [2008] HCA 17 - HCA 2008 case summary — Zoe

[12]

GUMMOW, HAYNE, HEYDON, CRENNAN AND KIEFEL JJ. The Appin Mine Subsidence District was proclaimed under s 15(1) of the Mine Subsidence Compensation Act 1961 (NSW) ("the Subsidence Act") on 20 March 1968[1]. Located within that district are the Appin and West Cliff Collieries. Between May 1998 and July 2003, coal was extracted by a third party from longwalls in these collieries. AGL Gas Networks Limited owned the Wilton to Horsley Park natural gas pipeline ("the Pipeline") at that time. It had acquired the Pipeline in 1985 from The Australian Gas Light Company. The Pipeline was built in or around 1975 and passes through the Appin Mine Subsidence District.
The Australian Gas Light Company is now styled Alinta LGA Limited (the first appellant) and AGL Gas Networks Limited is now styled Alinta AGN Limited (the second appellant). It is convenient to refer to the appellants collectively as Alinta. Alinta alleges that the extractions between May 1998 and July 2003 caused subsidence to occur in the vicinity of the Pipeline and that it undertook preventative and mitigatory works to prevent damage to the Pipeline as a result of that subsidence. Alinta claims that the works cost $2,392,229.29.
Section 10(1) of the Subsidence Act establishes a Mine Subsidence Compensation Fund ("the Fund"). The Fund is under the direction and control of the respondent, the Mine Subsidence Board ("the Board") (s 10(4)). Sections 12 and 12A establish a scheme for the payment from the Fund of compensation for damage to improvements caused by subsidence, of amounts to meet the expense of preventing or mitigating such damage and of compensation for damage caused by the Board carrying out certain works. "Improvement" is defined by s 4 to include any building or work erected or constructed on land and, relevantly to this appeal, any pipeline.
The litigation which has reached this Court stems from the treatment by the Board of a claim made by Alinta on 28 September 2004. Alinta made a claim for compensation from the Fund in the sum of $2,392,229.29. By letter dated 14 October 2005, the Board informed Alinta that the claim could not be entertained by reason of s 15(5)(b) of the Subsidence Act. This states that "no claim shall be entertained or payment made under [the Subsidence Act]" in the circumstances there described. It will be necessary to set out the text of s 15(5)(b) in full later in these reasons. It is sufficient now to note that the consequence of the Board's refusal to entertain Alinta's claim was that no payment of compensation from the Fund was made.
Alinta filed an application in the Land and Environment Court of New South Wales ("the LEC") on 10 February 2006. The application was identified as an "[a]ppeal under s 12B of [the Subsidence Act] against the decision of [the Board] as to non-payment from the Fund". Section 12B of the Subsidence Act states:

[24]

Of the seven classes of jurisdiction referred to in s 16(2), it is the third class that is relevant to this appeal. Class 3 of the LEC's jurisdiction is titled "land tenure, valuation, rating and compensation matters" (s 19). Pursuant to s 19(fl), the matters within Class 3 of the LEC's jurisdiction include jurisdiction to hear and dispose of "appeals under section 12B of [the Subsidence Act]".
The powers of the LEC when hearing and disposing of appeals in Class 3 of its jurisdiction are described by s 39. They include the following. First, in accordance with s 39(3), the "appeal" is conducted by way of a de novo rehearing; fresh evidence or evidence in addition to, or in substitution for, the evidence given on the making of the decision under appeal may be received. Secondly, for the purposes of hearing and disposing of the "appeal", the LEC has all the functions and discretions which the person or body whose decision is under appeal had in respect of "the matter the subject of the appeal" (s 39(2)). Thirdly, the decision of the LEC on the "appeal" is deemed, where appropriate, to be the final decision of the relevant person or body and shall be given effect accordingly (s 39(5)). Proceedings in Class 3 of the LEC's jurisdiction are conducted with as little formality and technicality as possible (s 38(1)). The LEC is not bound by the rules of evidence (s 38(2)) and may obtain the assistance of other persons (s 38(3)), such as an assessor.
Alinta relies on the breadth of the LEC's powers under s 39 of the LEC Act to hear and dispose of appeals under s 12B of the Subsidence Act by way of a de novo rehearing. It submits that such a proceeding is an appeal in name only, and that the proceeding is in truth an original proceeding for a determination of the claimant's entitlement to payment from the Fund where the LEC is given by s 39(2) of the LEC Act all the functions and discretions of the Board.
While s 39 grants the LEC powers and discretions that provide, in effect, for a full merits review[4], those powers and discretions are only conferred in respect of an "appeal" as defined by the section[5]. Section 39(1) defines "appeal" when used in s 39 to mean:

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Section 5(1) constitutes the Board. It is a body corporate capable of suing and being sued in its corporate name (s 6(1)). Its functions and duties include directing and controlling the Fund (s 10), collecting the contributions of colliery proprietors (s 11), investigating and determining claims for compensation (ss 12 and 12A), purchasing damaged improvements and effecting remedial works (s 13), carrying out preventative or mitigatory works (s 13A) and determining approvals and certifications (ss 15 and 15B).
The Board consists of the Director-General of the Department of Primary Industries or a member of staff of that Department as chairperson (s 5(2)(a)), the Chief Inspector of Coal Mines (s 5(2)(b))[6] and four persons appointed by the Governor (s 5(2)(c)). The persons appointed by the Governor must include a representative of the colliery proprietors (s 5(2)(c)(i)) and a person nominated by the Minister to represent improvement owners within mine subsidence districts (s 5(2)(c)(iii)). The composition of the Board is illustrative of the balance the Subsidence Act seeks to strike between the interests of the colliery proprietors and the owners of improvements within a mine subsidence district.
The Fund consists of the contributions of colliery proprietors (s 10(2)(b)) and certain other sums (s 10(2)(a), (c) and (d)), such as interest accruing from the investment of moneys in the Fund (s 10(2)(c)). Colliery proprietors are obliged to make contributions to the Fund in accordance with s 11(1A), (1B) and (1C) and the amount so calculated is deemed a debt due to the Crown and recoverable by the Board (s 11(8)).
The statutory quid pro quo for the contributions of colliery proprietors to the Fund lies in s 14(1) of the Subsidence Act. Provided the proprietor of a colliery holding is not in arrears with contributions (s 14(1)(a)) and observes operational covenants of the kind described by s 14(1)(b), the proprietor "shall not be liable for any damage to improvements or household or other effects occasioned by subsidence" (s 14(1)). This statutory immunity is stated not to extend to relieve the liability of a proprietor for damage caused by subsidence due to negligence (s 14(2)). Alinta submitted that s 14(1) would displace the liability of a proprietor under the tort of nuisance; it is unnecessary to determine whether that is so.

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The statute also imposes obligations upon the owners of improvements and those effecting improvements. Observance of those obligations assists the interests of the colliery proprietors. That observance is encouraged by provisions denying the competency of claims to compensation from the Fund to which the colliery proprietors are required to contribute.
It is an offence for a person to do or cause to be done any work in connection with the erection or alteration of an improvement within a subsidence district without the Board's approval or in disconformity with such approval as is given (s 15(7)). It is also an offence for a person to subdivide or cause to be subdivided any land within a subsidence district without approval of the Board (s 15(8)). It is the former offence (s 15(7)) that is relevant to this appeal.
Three possible consequences flow from a contravention of s 15(7) of the Subsidence Act. First, there may be a prosecution under s 17, provided proceedings to prosecute are brought within 12 months of commission of the offence (s 15(10)). The maximum penalty is 20 penalty units. Secondly, where any improvement has been erected or altered in contravention of the section, a purchaser may cancel a contract for sale and recover any deposit paid together with reasonable costs and expenses (s 15(5)(a)). The reason why a purchaser might wish to do so becomes apparent when one has regard to the third possible consequence of a contravention. This is provided by s 15(5)(b). Read together with s 15(7), s 15(5)(b) relevantly provides that where an improvement has been altered or erected without the approval of the Board, "no claim shall be entertained or payment made under [the Subsidence Act] in respect of damage caused by subsidence" unless a certificate is issued under s 15B(3A). Such certificates take their place in the scheme of the Subsidence Act as follows.
A contravention of s 15(7) of the Subsidence Act may be avoided by a person applying to the Board for its approval to alter or erect improvements in the form required by s 15(2A). The Board may grant its approval conditionally or unconditionally (s 15(3)) and certificates of compliance in respect of that approval may be obtained under s 15B. A certificate of compliance is deemed to be conclusive evidence that the requirements of the Subsidence Act relating to an improvement have been complied with up to the date of the certificate (s 15B(4)). The rationale of the certification regime was explained by the then Minister for Minerals and Energy in the second reading speech upon the Bill for what became the Mine Subsidence Compensation (Amendment) Act 1989 (NSW) ("the 1989 Act"). The Minister said[9]:

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The language of "entertain" and "payment" is also found in s 12(1A) of the Subsidence Act. Section 12(1A) relevantly provides that the Board "may refuse to entertain a claim, or make a payment" where improvements or household or other effects were used in extractive industries or operations and the Board is satisfied that the relevant subsidence was caused by the carrying on of that industry or operation. Alinta submitted that the use of "may" in s 12(1A) is akin to that discussed in Leach v The Queen[14] and confers no discretion on the Board as to whether it should refuse to entertain a claim or make a payment in such circumstances. It may be assumed, without deciding, that this analysis is correct.
Alinta characterises the Board's refusal to entertain its claim to compensation as a "decision" made under s 12(2)(b) that "no payment be made from the Fund in the absence of a s 15B(3A) certificate". That decision of "no payment" is said to be a decision "as to the amount of the payment from the Fund" for the purposes of s 12B(b) of the Subsidence Act.
However, in this characterisation there is implicit a misunderstanding of the decision-making process mandated by the provisions just described and by s 15(5)(b) in particular. Section 15 manifests a policy that the alteration or erection of improvements within a mine subsidence district should only take place with the Board's approval. One of the means of giving effect to that policy is to place persons who contravene s 15 in a position where they are unable to recover compensation from the Fund in respect of damage caused by subsidence by force of s 15(5)(b), unless a certificate is issued under s 15B(3A).
This object might readily have been achieved by stating "no payment shall be made under this Act", but the disjunctive phrase "no claim shall be entertained or payment made under this Act" is adopted in s 15(5)(b) (emphasis added). This provides a powerful textual indication that s 15(5)(b) curtails not just a claimant's entitlement to payment from the Fund, but also the Board's jurisdiction to investigate, report and make a decision as to the payment, if any, to be allowed under s 12(2)(b). In this regard, both Alinta and the Board accept that the words "under this Act" in s 15(5)(b) should be read as providing "no claim shall be entertained [under this Act] or payment made under this Act".
The Board submits that s 15(5)(b) requires the Board to satisfy itself that the approval regime prescribed by s 15 has been complied with before exercising its extensive powers to investigate, report and determine claims for payment from the Fund under s 12(2)(b). This construction is explained by the statutory context. Expenses incurred by the Board in administering the Subsidence Act, including expenses incurred in investigating notifications of damage and claims for payment, are paid out of the Fund (s 10(3)(b)). Determining the cause and extent of damage in a claim for payment from the Fund may be complex and difficult, especially where (as here) the improvement concerned is a major underground infrastructure. However, where the Board finds that an improvement was altered or erected in a mine subsidence district without the Board's approval and no certificate has issued under s 15B(3A), the words "no claim shall be entertained" take effect. They relieve the Board from incurring unnecessary costs investigating and determining whether damage has been caused by subsidence and the extent and quantum of such damage when, in any event, no payment could be made because there has been a contravention of s 15.
Subject to one additional matter, the Board's construction of s 15(5)(b) should be accepted. So construed, s 15(5)(b) presents jurisdictional facts upon which the exercise of the Board's powers under s 12(2)(b) to investigate and determine claims for compensation are conditioned[15]. In this case, the Board found that requisite facts presented by s 15(5)(b) (approval under s 15 or the issue of a certificate under s 15B(3A)) were not established.
Alinta has never conceded in this litigation that the Pipeline was erected without the Board's approval. Relevantly in this regard, Hodgson JA observed in the Court of Appeal that[16]:

[75]

Three observations may be made about the text of s 12B. First, there must be a decision of the Board on a claim under ss 12 or 12A for the right of appeal provided by s 12B to be enlivened. The Board's decision on an application for approval under s 15 or certification under s 15B will not meet the statutory description called for by the section. It may thus be observed at the outset that not every decision of the Board will be the subject of an appeal to the LEC.
The second observation is that the Board's decision on the claim must be a decision "as to" one of two classes of subject matter (identified in pars (a) and (b) of s 12B) for the right of appeal to be enlivened.
The third observation is that the subject matter prescribed in pars (a) and (b) is identified and delimited by the language of ss 12 and 12A. This proposition is elucidated by a textual comparison. The disjunctive expression "arisen from subsidence or could reasonably have been anticipated" in par (a) corresponds to the language used to prescribe causal elements of claims under ss 12 and 12A respectively. Under s 12(1), compensation may be claimed for damage which "arises from subsidence" (s 12(1)(a) and (d)) (emphasis added). That language is adopted by the first limb of s 12B(a) which refers to a decision "as to whether damage has arisen from subsidence" (emphasis added). By way of example, the Board may decide on a claim under s 12(1)(a) that there is no damage or less damage than is claimed or that the relevant damage pre-existed the alleged subsidence or has some other cause. Those decisions would be decisions as to the subject matter identified by s 12B(a). Similarly, a claim may be brought under s 12A(1)(b) in respect of an amount to meet the expense of preventing or mitigating damage that, in the opinion of the Board, the owner could "reasonably have anticipated would otherwise have arisen, or could reasonably anticipate would otherwise arise" from a subsidence that has taken place (emphasis added). This language is reflected by the second limb of s 12B(a). This provides a right of appeal against a decision "as to whether damage … could reasonably have been anticipated". Pursuant to s 12B(a), an appeal lies to the LEC against the Board's decision as to that subject matter on a claim under s 12A.
As to par (b) of s 12B, claimants under ss 12(1) or 12A(1) must specify the "amount claimed" from the Fund in their application (ss 12(2)(a) and 12A(2)(c)) (emphasis added). Sections 12(1)(b) and 12A(1)(b) confer the right to make a claim for an "amount to meet the proper and necessary expense" of undertaking certain works (s 12(1)(b)) or preventing or mitigating damage (s 12A(1)(b)) and s 12(1)(c) confers the right to make a claim for an "amount equivalent to the rent which would have been payable" (emphasis added). The Board may also reduce "the amount of compensation" where the damage caused by subsidence is greater because of the negligent or improper manner in which an improvement is constructed or maintained (s 12(1), ultimate paragraph) (emphasis added). The Board's decision as to the quantum of payment from the Fund pursuant to these provisions would be a decision "as to the amount of the payment from the Fund" within s 12B(b) of the Subsidence Act.
The Board submits that, if a broader construction of s 12B(b) be accepted, s 12B(a) would be rendered redundant. This would be because any adverse decision by the Board on the question of causation which leads to the refusal of a claim and hence "no payment" or a reduced payment is appealable under s 12B(b). Hodgson JA recognised the force of this submission but observed that[19]:

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