First group of issues: the requirements of s 8(2)
The Commission's findings
50It is convenient to introduce this topic by setting out the way in which the Commission expressed its conclusions on s 8(2) in the first report. It is sufficient to set out the relevant findings in respect of Mr Duncan:
The Commission is satisfied that Mr Duncan knew that, if the NSW Government found out that the Obeids had been involved in the creation of the Mount Penny tenement or in the allocation of the Mount Penny exploration licence or had a beneficial interest in the Mount Penny tenement, the NSW Government might take action to set aside the Mount Penny exploration licence or not grant a mining lease in which case the assets of Cascade, of which Mr Duncan was an investor, would be jeopardised. He therefore intended to hide from the NSW Government and relevant public officials the Obeid family involvement. The Commission is satisfied that the steps he took to do this included:
(a) deliberately misleading Mr Cubbin as to the Obeid family involvement in the Mount Penny tenement by failing to disclose the involvement to Mr Cubbin when Mr Cubbin raised the issue with him
(b) deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement
(c) telling Mr Levi that John McGuigan would directly contact Mr Cubbin and thereby relieving Mr Levi from having to answer Mr Cubbin's request for information about the Obeid family involvement
(d) authorising Mr Poole to arrange for the Obeids to be extracted from the Mount Penny joint venture through arrangements involving Coal & Minerals Group and Southeast Investments.
The Commission is satisfied that a substantial purpose in taking these steps was to prevent public officials and public authorities from learning of the Obeid family involvement in the Mount Penny tenement and that Mr Duncan thereby intended to deceive relevant public officials or public authorities of the NSW Government as to the involvement of the Obeids in that tenement.
Mr Duncan's conduct as set out in a) to d) above with the intention, in each case, of deceiving relevant public officials or public authorities of the NSW Government as to the involvement of the Obeids in the Mount Penny tenement, is corrupt conduct for the purpose of s 8(2) of the ICAC Act. This is because his conduct could have adversely affected, either directly or indirectly, the exercise of official functions by any public official or public authority reviewing the creation of the Mount Penny tenement or the grant of exploration licences over the Mount Penny tenement (including the circumstances surrounding the granting of such licences) or the official functions of any public official or public authority considering whether to grant a mining lease over the Mount Penny tenement and could also involve fraud or company violations and therefore comes within s 8(2)(e) and s 8(2)(s) of the ICAC Act.
51The report then turned to consider why it was that the conduct the subject of those conclusions could constitute or involve a criminal offence. Having done that, it set out the findings of corrupt conduct in the form that I have stated already in these reasons.
52The same process was followed for each other individual plaintiff, although of course the "steps" were different in each case, as were the consideration of the criminality of the conduct and the actual findings of corrupt conduct. Since the individual findings of corrupt conduct have been set out already, it is not necessary to do more than set out the "steps" that each other individual plaintiff is said to have taken.
53As to Mr McGuigan, those steps were:
...
a) deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement
b) telling Mr Levi that he (John McGuigan) would directly contact Mr Cubbin and thereby relieving Mr Levi from having to answer Mr Cubbin's request for information about the Obeid family involvement
c) authorising Mr Poole to arrange for the Obeids to be extracted from the Mount Penny joint venture through arrangements involving Coal & Minerals Group and Southeast Investments.
...
54As to Mr Poole, those steps were:
...
a) deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement,
b) telling the IBC that he was not aware of any payments having been made to Edward Obeid Sr or any entities associated with him, and
c) arranging for the Obeids to be extracted from the Mount Penny joint venture through arrangements involving Coal & Minerals Group and Southeast Investments,
...
55As to Mr Atkinson, those steps were:
...
a) deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement
b) authorising Mr Poole to arrange for the Obeids to be extracted from the Mount Penny joint venture through Coal & Minerals Group and Southeast Investments.
...
56As to Mr Kinghorn, those steps were:
... deliberately failing to disclose to the IBC the fact of the Obeid family involvement despite knowing that the IBC was concerned with any such involvement.
57As one would expect, there was individual treatment of the significance of the "steps" in each case, and as to the criminality said to be involved in the conduct that had been found.
Public officials and official functions: the first two suggested categories
The parties' submissions
58The submissions for the individual plaintiffs emphasised, one way or another, that the conduct found (the "steps") fell into two groups. The first group related to misleading Mr Cubbin or the IBC, or withholding, or causing to be withheld, information from Mr Cubbin or the IBC. The second group related to the "extraction" of the Obeids from the Mount Penny joint venture.
59As to the first group of steps, the plaintiffs submitted that neither Mr Cubbin nor the IBC was a "public official" or that he or it exercised "official functions". Those propositions are correct.
60The next step in the submissions was to identify the three categories of public officials, or the three categories of official functions, nominated in the report (I paraphrase):
(1) a public official reviewing the creation of the Mount Penny tenement;
(2) a public official reviewing the grant of exploration licences over the Mount Penny tenement; and
(3) a public official considering whether to grant a mining lease of the Mount Penny tenement.
61Next, it was submitted, there was no "official function" to be found in the Mining Act or the Regulations made under it that created any official function of reviewing the creation of the Mount Penny tenement or the grant of exploration licences over it.
62Mr Hutley (who took the lead on this issue) accepted, I think, that consideration of an application for the grant of a mining lease was an official function, and to that extent was identified in the report. Further, although the officials who might perform that function were not specifically identified, Mr Hutley appeared to accept that identification of the function itself, being undoubtedly one to be performed by public officials, was sufficient. However, he submitted, the conduct found to have occurred was incapable of affecting, let alone of affecting adversely, the exercise of that function. He submitted that this was so because, in effect, the identified conduct was irrelevant to the elements of the statutory discretion.
63Mr Watson of Senior Counsel, who appeared with Mr Free and Ms Heger of Counsel for the Commission, submitted that the plaintiffs' approach to construction of s 8(2) was unduly restrictive. He emphasised the objects of the ICAC Act, both as set out in s 2A and as discernable from its provisions, the obvious public importance attending the achievement of those objects and, more generally, the public beneficial nature of the legislation.
64Mr Watson submitted that it was not necessary to identify specific functions described in the Mining Act or the Regulations. He submitted that official functions would include the day to day business of government, and extended beyond the exercise of particular described powers. I set out, so far as it is relevant, para 33 of the written submissions for the Commission:
33. First, the phrase "official functions", in its ordinary meaning, is not limited to the exercise of particular powers (statutory or otherwise). Official functions include the day-to-day business of government. They include the process of investigating a policy issue, consulting with relevant stakeholders, assessing merits, formulating potential options, briefing the relevant decision-makers and then implementing the preferred option. The option may involve the exercise of a particular power. But it may involve a range of other conduct including developing guidelines, policies or the drafting of legislation.
65Mr Watson relied on the fact that s 8(2) catches both "conduct... that adversely affects" and "conduct... that could adversely affect" the exercise of official functions. He submitted that the word "could" meant no more than "has the capacity to". It followed, as I understood the submission, that it was not necessary that the Commission should find a definite and precise link between specified conduct and specified functions. It would be sufficient, for the purposes of s 8(2), that conduct might affect adversely the exercise of functions that could be described as official.
66Mr Hutley submitted, in response, that the word "could" should be taken to indicate something more than mere possibility. There must be more then a "bare theoretical possibility of an adverse effect", he submitted, it must be said "that the finding of an adverse effect is reasonably open".
Decision
67The starting point seems to me to be that although the expression "official functions" is not defined, those functions, in context, must be functions lawfully exercisable by public officials, or public authorities, acting in their official capacity. That is plain enough, in the case of public officials, from the definition of "public official" in s 3(1). There is no reason to think that any different approach should be taken to the functions of public authorities. That view of s 8(1), (2) is supported by reference to the principal objects of the ICAC Act set in s 2A, which focus on "public administration", "public authorities" and "public officials".
68The next point to note is that for either of sub-ss (1) or (2) of s 8 to be satisfied, it must be possible to say that the conduct suggested to be corrupt adversely affects, or could adversely affect, the exercise of official functions so understood. For that to be said, there must be identified both conduct and official functions, and a rational basis on which it can be said that the former does or could adversely affect the latter.
69Of course, the conduct itself must be identified. But identification of the conduct is the first step, not the conclusion. Before the conduct, clearly identified, can be characterised as corrupt, its effect on the exercise of official functions must be analysed.
70Analysis of the effect of possibly corrupt conduct is not undertaken in a vacuum. The conduct cannot be corrupt, for the purposes of the ICAC Act, unless (among other things) it has, or could have, the adverse effect, on the exercise of official functions, stated in s 8(1) or (2).
71In my view, as a matter of language, conduct could not be characterised as conduct that has, or could have, an adverse effect on the exercise of official functions unless those functions themselves are identified with some degree of precision. That is clear enough in the case of conduct that is said to have had an actual, rather than a possible, effect. Why should the analysis be any different in the case of conduct, of which it is said that it might have that effect?
72Mr Watson appeared to suggest that the formulation "could adversely affect" introduced a degree of, for want of a better word, imprecision into the required analysis. That is correct, at a level of some generality. But, at that level of generality, the proposition is not particularly illuminating (and that is not a criticism of the submission, which was more sophisticated than my summary of it).
73The statutory juxtaposition of "conduct that [does] adversely affect" with "conduct that could adversely affect" indicates that something less than the degree of certainty required to conclude that conduct falls into the former category is required to justify a conclusion that it falls into the latter category. That, I think, is the function of the modal verb "could" in this context. But putting the matter in those terms does not answer the question. It leaves for consideration the degree of probability, or certainty, that is required, before it can be said that conduct falls into the latter category.
74Mr Hutley relied on the analyses undertaken by Gleeson CJ and Priestley JA in Greiner, at 136 and 187 respectively. Their Honours were dealing with s 9(1)(a). Priestley JA said at 187 that, in the context of that provision, the word "could" meant "would, if proved".
75I do not think that the same meaning can be given to "could" in s 8(1),(2). As I have said, those provisions appear to contrast, on the one hand, conduct that does adversely affect the exercise of official functions and, on the other, conduct that could have that effect. That contrast to my mind suggests that the modal verb is intended to refer to possibility rather than (as at one point Mr Watson appeared to submit) futurity. But again, saying this does no more than leave open the question: what is the necessary degree of possibility?
76The inquiry required by s 8(1), (2), is fact-driven. It requires (as Gleeson CJ said in Greiner at 136, of the inquiry under s 9(1)(a)) that the facts be found. But the ascription of the statutory character or consequences to those facts (that they do, or could, adversely affect the exercise of official functions) requires more than the establishment of the facts. It requires, also, some understanding of the functions, the exercise of which might be adversely affected. If it were otherwise, it would not be possible to say that some link existed between the conduct and those functions. And if that link could not be described, there would be no rational basis for characterising it in the terms that the subsections require.
77The first two categories of functions suggested - reviewing the creation of the tenement and reviewing the grant of the exploration licenses - do not seem to have any statutory foundation. That is to say, there does not appear to be any statutory power to undertake those functions, at least in a way that might lead to some consequence adverse to the holder of the licences (in this case, the corporate plaintiffs).
78I do not think that the s 8(1) or (2) inquiry requires the identification, by reference to specific legislative or regulatory provisions, of the official functions, the exercise of which might be adversely affected. Nor do I think that the inquiry requires the precise identification, by position or otherwise, of the very officials, or authorities, who exercise those functions. The plaintiffs did not put the matter so high. As I have noted, Mr Hutley appeared to accept that the third category of adverse effect identified by the Commission - the official functions involved in the grant of a mining lease - did sufficiently describe the functions and, by implication, the officials who exercised them.
79The next step in the statutory analysis requires consideration of the way in which conduct that is found to have occurred has or could have an adverse effect on the officials and functions that are identified. That requires, as I have said, that there be some rational link between the two.
80In many cases, it will not be difficult to see the rational link; and in such cases, it might not be necessary to do a great deal by way of identification of the functions. An obvious example is the payment of bribes, or the provision of other favours, in return for the proverbial blind eye. But, in respect of the first two categories suggested by the Commission, this is not such a case.
81Mr Watson sought to deal with this by identifying particular kinds of official function that might fall within the first two categories. There are difficulties with this approach. The first is that the analysis was not one undertaken by the Commission. Thus, it cannot be said to be an analysis that underpins the Commission's reasons on this point. (In this context, the general proposition that where a decision-maker is required to state reasons, the reasons given record the steps that were taken, is apposite: see Beazley P in D'Amore at [101] to [104].)
82Mr Watson referred to s 114 of the Mining Act. That section deals with renewal applications. It reads as follows:
114 Power of decision-maker in relation to renewal applications
(1) After considering an application for the renewal of an authority, the decision-maker:
(a) may renew the authority, or
(b) may refuse the application.
(2) Without limiting the generality of subsection (1) or any other provision of this Act, an application may be refused on any one or more of the following grounds:
(a) that the decision-maker is satisfied that the applicant (or, in the case of an applicant that is a corporation, a director of the corporation) has contravened this Act or the regulations or a condition of the authority (whether or not the person has been prosecuted or convicted of any offence arising from the contravention) or has been convicted of any other offence relating to mining or minerals,
(b) that the decision-maker is satisfied that a person has contravened a condition of the authority (whether or not the person has been prosecuted or convicted of any offence arising from the contravention),
(c) that the decision-maker is satisfied that the holder of the authority provided false or misleading information in or in connection with the application or any report provided under this Act for or with respect to the authority.
(3) The period for which an authority is renewed may not on any one occasion exceed:
(a) 5 years in the case of an exploration licence or assessment lease, or
(b) 21 years (or such longer period as the decision-maker may, with the concurrence of the Premier, determine) in the case of a mining lease.
(4) On renewing an authority, the decision-maker may amend any of the conditions of the authority and may include further conditions in the authority.
(5) The area of land over which an authority is renewed may differ from the area of land over which the renewal of the authority is sought, but not so as to include any land that was not subject to the authority immediately before the renewal.
(6) The area of land over which an exploration licence may be renewed is not to exceed half the area over which the licence was in force when the application for renewal was made unless the decision-maker is satisfied that special circumstances exist that justify renewal of the licence over a larger area.
(7) The decision-maker may defer dealing with an application for the renewal of a mining lease over any land if the mining lease is the subject of action being taken under Part 6 in connection with the granting of a consolidated mining lease over that land.
83There does not seem to be anything in s 114 which would enable the decision-maker to take into account, in dealing with a hypothetical application for renewal of the exploration licences, the conduct found by the Commission. Thus, it is not possible to say that any rational link might exist between that conduct and the exercise of official functions in respect of any renewal application.
84Another problem with this aspect of Mr Watson's submissions is that, because the suggested functions and particular legislative provision were not referred to in the course of the public hearing or in closing submissions, the individual plaintiffs were not given any opportunity to adduce evidence or to put submissions in respect of those matters. Thus, now to accept Mr Watson's submissions would entail a real denial of natural justice.
85In respect of the first and second categories of official functions identified in the Commission's findings (and in respect of the first and second categories of public officials or authorities by whom those functions might be exercisable), I conclude that the first report does not comply with the requirements of the ICAC Act, because it does not identify, in the way that s 8(2) on its proper construction requires, either the official functions that could have been affected adversely or the public officials or authorities by whom those functions were exercisable.
Third category of functions: the grant of a mining lease
86I turn to the third category: official functions relating to the grant of a mining lease, and start by giving a little more detail of the parties' positions.
The parties' submissions
87It appeared to be common ground that a mining lease could not be granted over the Mount Penny tenement unless there were in place "an appropriate development consent" (see s 65(2) of the Mining Act). It appeared also to be common ground that by virtue of Schedule 1 to State Environmental Planning Policy (Major Development) 2005, development consent would be necessary under what was Part 3A of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act). In very broad terms, the relevant effect of Part 3A (since repealed) was that if the responsible minister (the Planning Minister) had given approval under Part 3A, a mining lease could not be refused. In deciding whether or not to grant approval under Part 3A, the Planning Minister was required to consider a report that the Director-General of the Department of Planning and Infrastructure was required to prepare.
88The Director-General was required, by cl 8B of the Environmental Planning and Assessment Regulation 2000 (the EPA Regulation) to consider, among other things, "any aspect of the public interest that the Director-General considers relevant to the project".
89As I have said, the Planning Minister was required to consider the Director-General's report. It seems to have been common ground that it would have been open to the Planning Minister to take (and act on) a different view to that taken by the Director-General of public interest considerations. In any event, that must be so. Performance of the requirement to "consider" a report involves the application of rational analysis to it. Such analysis may raise at least the possibility of disagreement with some or all of the report. The Minister must be able to give effect to any such disagreement. Any other approach would make the Director-General the real decision-maker, and the Minister a mere cipher.
90The essential controversy between the parties was whether "the public interest", for the purposes of cl 8B of the EPA Regulation, extended beyond what might be called environmental concerns to more general concerns, such as (on the Commission's findings) the corrupt process by which the Mount Penny tenement had been created and the circumstances of corruption leading to the grant of the exploration licence.
91The plaintiffs submitted that planning law was concerned with the use of land, not with the identity of those who use it. Thus, they submitted, the identity or character of the applicant was not a relevant factor to which it was permissible to have regard in deciding whether to consent to a development application.
92Mr Watson submitted that it was open to the Director-General and the Planning Minster to consider, as a relevant aspect of "public interest", the corrupt circumstances surrounding the creation of the tenement and the corrupt processes leading to the grant of the exploration licence. Mr Watson referred to what he called "the exceptional nature of the power to determine a Part 3A project approval". He pointed to the consequence that an approval, once given under Part 3A, had automatic effect for the administration of other Acts. In this case, as s 75V(1)(c) of the EPA Act made clear at the relevant time, once approval had been given under Part 3A, an authorisation for a mining lease could not be refused.
The legislative scheme
93Section 63 of the Mining Act sets out, without limitation, some bases on which an application for a mining lease may be refused:
(1) After considering an application for a mining lease, the decision-maker:
(a) may grant to the applicant a mining lease over all or part of the land over which a lease was sought, or
(b) may refuse the application.
(2) Without limiting the generality of subsection (1) or any other provision of this Act, an application may be refused on any one or more of the following grounds:
(a) that the decision-maker is satisfied that the applicant (or, in the case of an applicant that is a corporation, a director of the corporation) has contravened this Act or the regulations (whether or not the person has been prosecuted or convicted of any offence arising from the contravention) or has been convicted of any other offence relating to mining or minerals,
(b) that the decision-maker is satisfied that the applicant provided false or misleading information in or in connection with the application or any report provided under this Act for or with respect to the lease.
(3) The decision-maker may grant a single mining lease in respect of more than one application.
(3A) A mining lease may not be granted until the mining lease fee prescribed by the regulations has been paid for the grant of the lease.
(4) A mining lease may not be granted under this section otherwise than in accordance with Part 2 of Schedule 1.
(5) A mining lease may not be granted, in respect of a mining purpose or mining purposes only, unless the decision-maker is satisfied that the mining purpose or mining purposes is or are to be carried out in connection with and in the immediate vicinity of:
(a) a mining lease in respect of a mineral or minerals, or
(b) a mineral claim,
being a mining lease or mineral claim that has been or is proposed to be granted.
(6) A mining lease may not be granted over land in respect of a mining purpose or mining purposes relating only to mining under a mining (mineral owner) lease if the land is not owned by the holder of the mining (mineral owner) lease.
94I have referred already to s 65. That section reads:
Development consents under Environmental Planning and Assessment Act 1979
(1) The Minister must not grant a mining lease over land if development consent is required for activities to be carried out under the lease unless an appropriate development consent is in force in respect of the carrying out of those activities on the land.
Note. Section 380AA prevents an application for development consent to mine coal from being made or granted unless the applicant is the holder of an authority that is in force in respect of coal and the land concerned.
(2) Nothing in this Act permits an activity, for which development consent is required, to be carried out without the consent being obtained in accordance with the Environmental Planning and Assessment Act 1979.
(3) If a mining lease is granted over land for which an appropriate development consent has been given (being a mining lease granted and a development consent given before the commencement of Schedule 7.11 to the Environmental Planning and Assessment Amendment (Infrastructure and Other Planning Reform) Act 2005):
(a) any condition (being a special purpose condition within the meaning of Division 2 of Part 2 of Schedule 1, as in force immediately before that commencement) imposed on the development consent by a consent authority, or by a body hearing an appeal from a consent authority, is void, and
(b) the development consent (to the extent only to which it relates to the use of the land concerned for the purpose of obtaining minerals) is taken to have been given free of the condition.
95Section 75D of the EPA Act (as it stood at the time) provided for ministerial approval of projects (such as that presently under consideration) to which the Part applied:
75D Minister's approval required for projects
(1) A person is not to carry out development that is a project to which this Part applies unless the Minister has approved of the carrying out of the project under this Part.
(2) The person is to comply with any conditions to which such an approval is subject.
96Sections 75H, 75I and 75J provided for assessment and public consultation, a report and the ministerial decision:
75H Environmental assessment and public consultation
(1) The proponent is to submit to the Director-General the environmental assessment required under this Division for approval to carry out the project.
(2) If the Director-General considers that the environmental assessment does not adequately address the environmental assessment requirements, the Director-General may require the proponent to submit a revised environmental assessment to address the matters notified to the proponent.
(3) After the environmental assessment has been accepted by the Director-General, the Director-General must, in accordance with any guidelines published by the Minister in the Gazette, make the environmental assessment publicly available for at least 30 days.
(4) During that period, any person (including a public authority) may make a written submission to the Director-General concerning the matter.
(5) The Director-General is to provide copies of submissions received by the Director-General or a report of the issues raised in those submissions to:
(a) the proponent, and
(b) if the project will require an environment protection licence under Chapter 3 of the Protection of the Environment Operations Act 1997-the Department of Environment, Climate Change and Water, and
(c) any other public authority the Director-General considers appropriate.
(6) The Director-General may require the proponent to submit to the Director-General:
(a) a response to the issues raised in those submissions, and
(b) a preferred project report that outlines any proposed changes to the project to minimise its environmental impact, and
(c) any revised statement of commitments.
(7) If the Director-General considers that significant changes are proposed to the nature of the project, the Director-General may require the proponent to make the preferred project report available to the public.
75I Director-General's environmental assessment report
(1) The Director-General is to give a report on a project to the Minister for the purposes of the Minister's consideration of the application for approval to carry out the project.
(2) The Director-General's report is to include:
(a) a copy of the proponent's environmental assessment and any preferred project report, and
(b) any advice provided by public authorities on the project, and
(c) a copy of any report of the Planning Assessment Commission in respect of the project, and
(d) a copy of or reference to the provisions of any State Environmental Planning Policy that substantially govern the carrying out of the project, and
(e) except in the case of a critical infrastructure project-a copy of or reference to the provisions of any environmental planning instrument that would (but for this Part) substantially govern the carrying out of the project and that have been taken into consideration in the environmental assessment of the project under this Division, and
(f) any environmental assessment undertaken by the Director-General or other matter the Director-General considers appropriate, and
(g) a statement relating to compliance with the environmental assessment requirements under this Division with respect to the project.
75J Giving of approval by Minister to carry out project
(1) If:
(a) the proponent makes an application for the approval of the Minister under this Part to carry out a project, and
(b) the Director-General has given his or her report on the project to the Minister,
the Minister may approve or disapprove of the carrying out of the project.
(2) The Minister, when deciding whether or not to approve the carrying out of a project, is to consider:
(a) the Director-General's report on the project and the reports, advice and recommendations (and the statement relating to compliance with environmental assessment requirements) contained in the report, and
(b) if the proponent is a public authority-any advice provided by the Minister having portfolio responsibility for the proponent, and
(c) any findings or recommendations of the Planning Assessment Commission following a review in respect of the project.
(3) In deciding whether or not to approve the carrying out of a project, the Minister may (but is not required to) take into account the provisions of any environmental planning instrument that would not (because of section 75R) apply to the project if approved. However, the regulations may preclude approval for the carrying out of a class of project (other than a critical infrastructure project) that such an instrument would otherwise prohibit.
(4) A project may be approved under this Part with such modifications of the project or on such conditions as the Minister may determine.
(5) The conditions of approval for the carrying out of a project may require the proponent to comply with any obligations in a statement of commitments made by the proponent (including by entering into a planning agreement referred to in section 93F).
97Section 75V(1) provided:
75V Approvals etc legislation that must be applied consistently
(1) An authorisation of the following kind cannot be refused if it is necessary for carrying out an approved project and is to be substantially consistent with the approval under this Part:
(a) an aquaculture permit under section 144 of the Fisheries Management Act 1994,
(b) an approval under section 15 of the Mine Subsidence Compensation Act 1961,
(c) a mining lease under the Mining Act 1992,
(d) a production lease under the Petroleum (Onshore) Act 1991,
(e) an environment protection licence under Chapter 3 of the Protection of the Environment Operations Act 1997 (for any of the purposes referred to in section 43 of that Act),
(f) a consent under section 138 of the Roads Act 1993,
(g) a licence under the Pipelines Act 1967.
98The requirement to consult the public interest came from cl 8B of the EPA Regulation:
8B Matters for environmental assessment and Ministerial consideration
The Director-General's report under section 75I of the Act in relation to a project is to include the following matters (to the extent that those matters are not otherwise included in that report in accordance with the requirements of that section):
(a) an assessment of the environmental impact of the project,
(b) any aspect of the public interest that the Director-General considers relevant to the project,
(c) the suitability of the site for the project,
(d) copies of submissions received by the Director-General in connection with public consultation under section 75H or a summary of the issues raised in those submissions.
Note. Section 75J (2) of the Act requires the Minister to consider the Director-General's report (and the reports, advice and recommendations contained in it) when deciding whether or not to approve the carrying out of a project.
Decision
99At the level of basic principle, it is correct to say, as the plaintiffs submitted, that the focus of planning approval is on the proposed use to be made of the land rather than on the identity or character of the applicant for approval. Stephen J said in Eaton and Sons Pty Limited v The Council of the Shire of Warringah (1972) 129 CLR 270 at 293:
... a consent... is essentially impersonal in the sense that it does not concern itself with and is not limited to the applicant but is a consent to the world at large in relation to the land which is its subject. Once granted it makes lawful, in a town planning context, what would otherwise be unlawful but does so by reference to the acts done and not to the identity of the actor...
100His Honour's observation was picked up and applied by Mason P in House of Peace Pty Ltd v Bankstown City Council (2000) 48 NSWLR 498 at [23]. At [24], Mason P said that the proposition:
... that planning law is concerned with the use of land, not with the identity of the user also focuses attention upon the functions of environmental planning instruments and consents. They are concerned with physical use, environmental impact and amenity.
101Important as those reminders are, the present issue is concerned not with planning consents in general, but with the process of assessment and (where appropriate) approval under Part 3A of the EPA Act: specifically, by reference to the procedures that were laid down in Division 2 (being the division in which the sections that I have set out above are to be found).
102Section 75H required that the necessary environmental assessment (see s 75F) be submitted to the Director-General. Once the Director-General accepted the environmental assessment (that is to say, taking into account subss (1) and (2)), the Director-General was required to make it publicly available for at least 30 days. There was a process for interested parties to make submissions, for the proponent to be given those submissions, and for the proponent to respond.
103Once that process was complete, the Director-General was required to report to the Minister. That report was to deal with at least the matters set out in s 75I(2).
104In general terms, the matters to which s 75I(2) directed attention could be said to relate to the environmental aspects of the proposal and the Director-General's assessment of it. Paragraph (f) refers to any environmental assessment undertaken by the Director-General or other matter that the Director-General considers appropriate.
105It might be thought that, in the context of s 75I, the words "other matter" ought be read as limited to the environmental aspects of the proposal and its assessment. However, cl 8B of the EPA Regulation specifically required the Director-General to address the four topics stated in it unless those matters have been included in the report in any event.
106That regulation seems to have been made pursuant to s 75Z of the EPA Act, which read as follows:
75Z Regulations for purposes of Part
The regulations may make provision for or with respect to the approval of projects (and concept plans for projects) under this Part and to approved projects (and concept plans), including:
(a) prescribing time limits for dealing with applications or other matters under this Part and deeming acceptance or rejection of applications or other matters if those time limits are not complied with, and
(b) requiring owners of land on which projects are proposed to be carried out to consent to applications for approvals under this Part, and
(c) providing for public exhibition, notification and public registers of applications for approvals under this Part (or for the modification of approvals) and of the determination of those applications, and
(d) the fees for applications and the exercise of functions under this Part, and
(e) requiring the New South Wales Aboriginal Land Council to consent to applications for approvals under this Part on land owned by Local Aboriginal Land Councils, if the consent of the Local Aboriginal Land Council concerned is required as owner of the land.
107In the ordinary way, one would think that public interest considerations related to what might be called the environmental aspects, or environmental assessment, of the proposal would have been raised in the environmental assessment required by s 75F and during the public consultation process for which s 75H provided. One would also think that public authorities might have been expected to comment on the public interest aspects of a proposal (at least from their perspective), and to have included that in any advice that they might provide (s 75H(4), s 75I(2)(b)).
108In short, if the concept of "public interest" were limited to "public interest to or arising out of environmental concerns", one would expect it to have been canvassed in the process leading up to the preparation of the Director-General's report. One would also expect it to have been discussed in the Director-General's report.
109Those considerations suggest that, when cl 8B of the Regulation referred to "the public interest", it was not referring only to public interest issues relating to the environmental aspects of the proposal. That approach is supported by the fact that it is not just "the public interest" that the Director-General may consider but, rather, "any aspect of the public interest that the Director-General considers relevant to the project".
110The processes governing the submission, consideration, reporting on and decision upon proposals to which Part 3A applied, set out in Division 2 of that Part, are detailed and prescriptive in nature. Presumably, the exercise of the power to make regulations given by s 75Z, leading to the making of cl 8B of the EPA Regulation, was thought to add something to those detailed and prescriptive processes. Those considerations, too, suggest that for the purposes of cl 8B, the concept of public interest is not to be limited in the way for which the plaintiffs contended.
111In essence, the plaintiffs' submissions on this point must embrace the proposition that even if clear and cogent evidence of corruption in the process of creation of the tenement or grant of an earlier exploration licence were put before the Director-General, the Director-General could not consider that, or take it into account, in preparing his or her report. They must embrace too the proposition that in the same circumstances the Minister, in considering whether or not to grant approval, could not take into account such evidence.
112The idea that a senior public servant and a Minister of the Crown must shut their eyes even to clear evidence of corruption, and must (in the case of the former) recommend and (in the case of the latter) decide, only on the basis of environmental considerations, would come as a surprise to many citizens of this State.
113Further, and as Mr Watson submitted, the effect of 75V of the EPA Act was that, for the various kinds of projects referred to in paras (a) to (g) of subs (1), the grant of ministerial approval under s 75J essentially required that whatever approvals might be required otherwise under the legislation referred to in those paragraphs could not be withheld.
114Thus, an approval under s 75J did not decide only, by way of approval, environmental and related considerations. It also decided, by way of approval, any other questions that otherwise might have arisen under other legislation.
115In those circumstances, it is difficult to see how public interest concerns that could be relevant to approval (or refusal) under that other legislation could not be taken into account under the Part 3A process. Approval under that Part operated, after all, as a statutorily delegated or deemed approval under that other legislation. Relevant public interest concerns should extend, one might think, to those otherwise relevant to the project for which Part 3A approval was sought.
116In this context, it is instructive to return to the language of s 63 of the Mining Act. For convenience, I repeat subs (2):
63 Power of decision-maker in relation to applications
...
(2) Without limiting the generality of subsection (1) or any other provision of this Act, an application may be refused on any one or more of the following grounds:
(a) that the decision-maker is satisfied that the applicant (or, in the case of an applicant that is a corporation, a director of the corporation) has contravened this Act or the regulations (whether or not the person has been prosecuted or convicted of any offence arising from the contravention) or has been convicted of any other offence relating to mining or minerals,
(b) that the decision-maker is satisfied that the applicant provided false or misleading information in or in connection with the application or any report provided under this Act for or with respect to the lease.
117The subsection does not limit the matters that the decision-maker may take into account in deciding whether to grant or refuse an application for a mining lease. But it does draw particular attention to what might be called circumstances of dishonesty attending, preceding or surrounding the application. Again, many citizens of this State would find it strange that the specific kinds of dishonesty referred to in subs (2) could be taken into account, but clear evidence of another form of dishonesty - corruption in relation to the creation of the tenement or the grant of an antecedent exploration licence - must be ignored.
118One of the effects of the grant of a mining lease is to give the lessee the right to extract and deal with, on its own account, mineral wealth that, otherwise, would have been the property of, and exploitable by, the State. There is a clear public interest in ensuring, so far as possible, that rights to exploit what otherwise was public property are given in accordance with the law, and by open and transparent processes; and that they are not given as a result of or consequential upon, corrupt dealings.
119In my view, had it come to the attention of the Director-General, in connection with an application for a mining lease, that the corrupt dealings that the Commission found to have occurred in this case had been associated with the creation of the tenement and the grant of the exploration licence, it would have been open to the Director-General to take those matters into account, as an aspect of the public interest. In the language of cl 8B(b), it would have been open to the Director-General to consider those matters as aspects of the public interest that were relevant to the project.
120Equally, assuming that the Director-General had considered those matters and dealt with them in the report furnished to the Minister, it would have been open to the Minister to take those matters into account in deciding whether or not to grant approval to the application for a mining lease.
121Thus, I conclude, the Commission did not err, at the level of principle at least, in taking into account, as relevant, the official functions of any public official or public authority considering whether to grant a mining lease over the Mount Penny tenement.
122That leads to the next head of challenge to this aspect of the first report. The plaintiffs submitted, one way or another, that it was not open to the Commission to conclude that the conduct that it had found could have affected, either directly or indirectly, the exercise of those official functions.
Adverse effect on the exercise of official functions?
The parties' submissions
123The plaintiffs referred to the fact that the matter of the Obeid family's involvement in the creation of the Mount Penny tenement was in the public domain by May 2010. They referred to an article in the Australian Financial Review published on 19 December 2009 and to a question asked in the Legislative Council of this State on 19 May 2010.
124The AFR article (as for convenience I shall call it) suggested in no uncertain terms that there were, to put it neutrally, suspicious circumstances, indicative of collusion between Mr Macdonald and Mr Obeid, relating to the Obeid family's interests in the Cherrydale and other nearby properties.
125The question in the Legislative Council raised the issue of dealings between Mr Macdonald and Mr Obeid in relation to the licence or the preferred tenderer and other matters. Mr Macdonald's reply denied that there were any such discussions, and asserted that his first knowledge of the various matters came from reading the AFR article.
126More generally, the submissions for the plaintiffs challenged the proposition that disclosure to Mr Cubbin or the IBC would have resulted in greater publicity for, or knowledge of, the dealings in question. The plaintiffs submitted (and it is enough to take Mr Hutley's written submissions at para 87) that:
ICAC failed to consider how the facts allegedly concealed by [Mr Duncan] could have assisted any further than the known circumstances of the Obeid's property holdings in exposing the corrupt conduct of Mr Macdonald, operating in connection with the Obeids.
127Mr Watson submitted, in substance, that revelation of the facts to Mr Cubbin or the IBC would have been likely to lead White Energy to withdraw immediately from the proposal. That was Mr Cubbin's evidence, which was accepted. Mr Watson submitted that this would have increased the risk of the information being "disclosed to the world at large including the NSW Government".
128Further, Mr Watson submitted, it was quite obvious that the individual plaintiffs themselves had feared that disclosure to Mr Cubbin or the IBC was likely to have had an adverse impact on their prospects of obtaining a mining lease.
The AFR article and the question
129I set out (without Mr McDonald's photograph) the AFR article:
There are years when working out who gets the Christmas goodies, and how Santa's little helpers keep track of who's been naughty and nice, seems an overwhelming task.
With some folk it's easy. Travis Davis has just picked up some $500 million from Yanzhoiu Coal's $3.5 billion takeover of Felix Resources and its coal deposits. Then for a stocking stuffer his new venture, Cascade Coal, picked up a highly prospective exploration licence near Bylong in the NSW Hunter Valley.
That might be good news as well for the family of Labor powerbroker Eddie Obeid, if Cascade ends up having to buy out Cherrydale Park, the $3.65 million holiday home the Obeids bought two years ago.
Other winners are harder to track down - like the $1 company that picked up approval for three NSW coal exploration licences at the same time as Cascade. A nice surprise, but where does Santa go on Christmas Eve to drop off the little prezzies?
Back in August last year, Minister Ian Macdonald's Department of Mineral and Forest Resources invited some small to medium mining companies to tender for 11 "smaller remnant coal areas" in NSW. After several extensions - Xstrata, Rio Tinto and Centennial Coal all wanted to tender for areas close to their existing operations - the offer closed last February.
A Request for Papers by the Liberal opposition shows that after applying set criteria, the government's Industry and Investment NSW decided to award six of the 11 exploration licence applications (ELAs) to Monaro Mining and its financial partner Voope Ltd.
Almost all the winners were substantial listed companies except Voope, which has one $1 share owned non-beneficially by a Sydney lawyer, Greg Skehan, who helps run the Dubai arm of Colin Biggers & Paisley.
However, after a board dispute Monaro decided to pull out of the ELAs. On June 1 it changed the name of its bidding vehicle, Monaro Coal, to Loyal Coal, and on June 4 it sold its shares in Loyal to Voope. Sydney finance consultant Andrew Caidbay became Loyal's sole director.
Loyal and Voope then wrote to Macdonald's department to say it was relinquishing three of the tenements but would keep the three smaller ones at Yarrawa, Long Mountain and Ben Bullen. The letter from Voope and Loyal was signed by former Lehman Brothers investment banker Gardner Brook, who says after originally trying to get Lehman to fund Monaro he found a new investor whom he could not name.
An internal email by a department executive states that "we have been told to fast track the ELAs". Davis's Cascade Coal picked up two of the areas Voope didn't want, including Bylong. An independent auditor signed off on a probity review.
Which is how a $1 company ended up with approval to pick up three of the 11 ELAs.
It was a busy time for Brook and Caidbay. On June 3, the day before the change of control at Loyal, they set up three new companies: Buffalo energy, Buffalo Resources and Buffalo Coal. Brook owned 12 per cent of each of them, with the other 88 per cent owned by Equitexx, a nominee company owned by accountant Sid Sassine, but Brook says they were unconnected with Loyal's coal applications.
Sassine's best known client is the Obeid family - he hails from Eddie Obeid's home village in Lebanon, Metrit, and his website includes a glowing testimonial for Eddie's sons Paul and Moses.
But they're just one of many clients. There are no clues to who was Brook's partner in the Buffalo companies, or who is behind Voope. And while the department says "Monaro Mining" is one of those holding ELAs, Brooks says it's news to him.
130I set out also the question and answer, in the Legislative Council:
Ms LEE RHIANNON: I direct my question to the Minister for Mineral and Forest Resources. Following the call for tenders for the exploration licence at Mount Penny near Bylong, did the Minister have any conversations with Mr Eddie Obeid in relation to the Mount Penny licence or the preferred tenderer, a company called Monaro Mining? Is the Minister aware that Locaway, a company owned by members of Mr Obeid's family, had bought property in the Bylong area immediately prior to the tender process for Mount Penny and that a childhood friend of Mr Obeid's son Moses, Mr Justin Lewis, has bought property adjacent to the Locaway property at Bylong?
The Hon. IAN MACDONALD: These questions are clearly the questions for which the Sydney Morning Herald has been seeking some answers. Let us make it clear: I had no discussions about who owned land in the Mount Penny area. The first I learnt of it was when I read an article in the Australian Financial Review late last year in terms of the other issues, if anyone believes there is anything untoward, they can take it to the appropriate forum.
Decision
131In principle, I think, Mr Watson's submissions are correct. I do accept, as was submitted for the plaintiffs, that there had been references in public to a relationship between Mr Macdonald and Mr Obeid that was suggestive of corrupt dealings in relation to what became the Mount Penny tenement. Likewise, what was in the public domain suggested that the Obeid family's purchase of land in the Bylong Valley was referable to those dealings and not to the innocent reason that the Obeid family gave. It is, however, necessary to look at the detail of what was then public.
132As Mr Watson submitted, the thrust of the AFR article and the question related to the property investments so fortunately made by the Obeid family. Mr Cubbin knew of that. He was concerned to find out the details of the joint venture agreement that Cascade Coal had made (with the Obeid family, through Buffalo Resources Pty Ltd, a corporate vehicle controlled by them), and about the details of the first instalment of payments made to another corporate vehicle. We now know that the payee was controlled by the Obeid family, and that the payments were made to "extract" the Obeids from the joint venture.
133If the detail of those further matters had come into the public domain, both the store of public knowledge and its explosive quality would have increased very substantially indeed. The information that would have been revealed was qualitatively different, and (it might be thought) far more damning in terms of pointing towards corruption, than that which was suggested by the AFR article and Ms Rhiannon's question.
134In my view, it was open to the Commission to conclude, as in essence it did, that the disclosure, to Mr Cubbin or the IBC, of information as to the Obeid family involvement and the extraction of the Obeids could have affected adversely the exercise of official functions: being the official functions relating to the grant of a mining lease. That is because it was likely (in reality, I would have thought, inevitable) that if the facts now known had come out at the relevant time, no mining lease would have been granted.
135Mr Cubbin, whose evidence the Commission "generally" accepted, and who was regarded as "a careful and reliable witness", gave evidence of what he would have done had he been told "of an involvement by the Obeid family in the mining venture". He said he would have "become very worried" and "that probably would have been the end of the transaction". He said that he "would be required to inform Deloittes who [were] doing the independent assessment of the deal and it would have to go into the notice of meeting to the shareholders... there would have been a lot of adverse publicity and I think that would have meant the end of the transaction". The Commission specifically referred to this evidence in chapter 31 of its report. That evidence provides strong support for the proposition that revelation of the full truth to the IBC would have put what was revealed into the public domain.
136The findings of fact made by the Commission established that Mr Duncan, Mr McGuigan, Mr Poole, and Mr Atkinson knew of the Obeid family's interest in the joint venture at the relevant time. It was that knowledge which, on the Commission's findings, they sought to ensure would not go to Mr Cubbin or the IBC.
137As Mr Watson submitted, those men feared that, if the information as to the Obeid family's involvement became public (in the sense that the IBC got hold of it), there was an increased risk that their venture would fall apart. That was why they took the steps they did. And their action in taking those steps poses an obstacle to acceptance of this aspect of the submissions put on their behalf.
138The position as to Mr Kinghorn is somewhat different. The Commission directed a section of its first report to the question "What did Mr Kinghorn know?". As the report stated, Mr Kinghorn's position was that "he did not know until November 2010 that the payments being made [to buy out the Obeid interests]... had anything to do with the Obeid family".
139The Commission rejected Mr Kinghorn's evidence on this point, finding that in some respects he "was plainly dissembling".
140However, the only relevant express conclusion stated was:
The Commission finds that Mr Kinghorn was giving false evidence about his lack of knowledge concerning Buffalo Resources.
141In contrast to the position of the other four individual plaintiffs, the Commission did not make a positive finding that Mr Kinghorn knew of the joint venture with the Obeids, through Buffalo Resources.
142There are circumstances in which a finding that someone has lied on a particular issue does not establish the contrary position. See, for example, Steinberg v The Commissioner of Taxation of the Commonwealth of Australia (1975) 134 CLR 640 at 694. However, as Gibbs J recognised at 694, "if the truth must lie between two alternative states of fact, disbelief in evidence that one of the state of facts exists may support the existence of the alternative state of facts".
143In the present case, the "fact" in issue is the state or extent of Mr Kinghorn's knowledge of the Obeid family's involvement. There were, no doubt, many reasons to think that he did have such knowledge. For example, he was one of five investors; the Commission found that the other four did; it is unlikely that Mr Kinghorn alone was innocent of knowledge. Again, the evidence recounted by the Commission in this part of its report could support the conclusion that Mr Kinghorn had the relevant knowledge at the relevant time.
144It is necessary to be careful. This is not an appeal from the Commission's report. The Court is not able to make findings of fact based on the evidence that was before the Commission. The question is: what is conveyed by the Commission's conclusion that Mr Kinghorn gave false evidence about his lack of knowledge concerning Buffalo Resources, when that conclusion is read in context with other relevant findings made by the Commission?
145Mr Kinghorn did not suggest in his evidence to the Commission (so far as it has been put before the Court) that there were more than two alternatives, as to his state of knowledge (for example, that he might once have known, but had forgotten). His position was, categorically, that he did not know of the Obeid family's involvement in the joint venture until an irrelevantly late date. When this section of the Commission's report is read with that in mind, and in context, it seems to me to be appropriate to treat the finding, that Mr Kinghorn's evidence of non-knowledge at any relevant time was false, as amounting to a finding that the did have that knowledge.
146Thus, what I have said in relation to the other four plaintiffs should be taken to apply to Mr Kinghorn also.
147The Commission concluded that the steps taken by the individual plaintiffs (to the extent to which those steps were proved against them individually) were taken in an attempt to prevent knowledge of the Obeid family's involvement from becoming public, or more public; and that they were taken because the individual plaintiffs feared, otherwise, that the mining lease might not be granted. In my view, those conclusions were available, as rational inferences from the evidence before the Commission.
148Further, in my view, it was open to the Commission to conclude, as in substance it did, that the public (or more public) revelation and detailing of those facts could well have affected the exercise of official functions in relation to the grant of a mining lease.
149Accordingly, in relation to this aspect of "official functions", I conclude that the challenge to the first report fails.
Severable findings?
150The plaintiffs submitted that the findings of corruption were based on all the matters set out in the first report, and that it was not possible to deal with them distributively, or to separate them. Mr Watson submitted that the relevant official functions were described distributively ("reviewing the creation of the Mount Penny tenement or the grant of exploration licences over the Mount Penny tenement... or ... considering whether to grant a mining lease over the Mount Penny tenement").
151To my mind, the Commission's disjunctive statement of its conclusions is deliberate, and should be read as written. For example, in relation to the findings as to hiding the Obeid family's involvement, the Commission referred to three matters. The first is that "the Obeids had been involved in the creation of the Mount Penny tenement". The second is that they had been involved "in the allocation of the Mount Penny exploration licence". The third is that they "had a beneficial interest in the Mount Penny tenement".
152As was submitted for the plaintiffs, those matters were referred to collectively as "the Obeid family involvement", and that phrase is then used repeatedly in describing (for example) the steps taken by each of the individual plaintiffs "to hide... the Obeid family involvement". But when it is said, of any particular plaintiff, that, for example, he "deliberately [failed] to disclose to the IBC the fact of the Obeid family involvement", that should be read as a finding that the particular plaintiff took that step to the extent that he had knowledge of one or more of the three separate elements that are comprised within the concept of "Obeid family involvement".
153In my view, it is not correct to read such findings as saying that the individual concerned knew of, and deliberately failed to disclose to the IBC, each of those three elements comprised within "the Obeid family involvement".
154Likewise, in relation to the finding of adverse effect, the Commission posited three categories of official functions. The first was reviewing the creation of the tenement. The second was reviewing the grant of exploration licences. The third was consideration of the grant of a mining lease. Again, it is not necessary to find that each of those official functions existed, and could have been affected adversely by the conduct attributed to the individual plaintiffs. It is sufficient, to support the finding of corruption (I do not intend to overlook the need to find criminality as well), that at least one of the three suggested categories of official functions existed, and was sufficiently identified (as were the public officials by whom those functions could be exercised), and could have been adversely affected by that conduct.
Conclusion on first group of issues
155Thus, as to the group of issues with which I am at present concerned, the conclusions to which I have come mean that:
(1) there are identifiable official functions, and by implication at least identifiable public officials or public authorities; and
(2) the Commission's finding, that the exercise of those official functions could have been affected adversely by the conduct attributed to the individual plaintiffs, must stand.
156It follows that the limited nature of the plaintiffs' success on the first group of issues is not sufficient, of itself, to support their claims to declaratory relief.
157In other words, in my view, it was necessary for the plaintiffs to sustain their challenges in respect of all three classes of official functions if they were to succeed on the first group of issues, to the extent that the declarations sought should be made.