Dungog Shire Council v Hunter Industrial Rental Equipment Pty Limited

The Hearing

1. The parties relied on affidavit and oral evidence and a large volume of documentary material. I will refer to the substance of that evidence where it relates to the reasons for my judgment below. In addition, I was assisted by the parties providing comprehensive written and oral submissions.

The Principles

1. The discretion conferred by the EP & A Act, that I am asked to exercise in this Notice of Motion, is wide and unfettered. The exercise of that wide discretion is not constrained by, but can be guided by, the principles outlined in cases such as Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335.
2. Noting that guidance is available I also observe that each case must be decided by reference to its own circumstances and should not be constrained by the manner in which other cases have, on their own facts, been determined.

The Relevant Agreed Facts

1. It was agreed between counsel for the parties that the chronology of events that formed an annexure to the Respondents' written submissions (with agreed amendments to that chronology that have been incorporated) is a broadly accurate summary of the events relevant to the determination of this matter. I attach that amended chronology to these reasons. I rely upon them as an accurate indication of events relevant to this Notice of Motion and do not repeat its contents (Annexure B - Chronology).

Basis Upon Which the Stay is Sought

1. The Respondents identified the basis upon which they sought the stay at [12] of their written submissions as follows: 12. The first and second respondents submit that it is appropriate for a further stay to be granted for the following reasons: (a) the second respondent has been seeking to regularise the unlawful use since 2016, but the process has been delayed largely for reasons beyond its control; (b) that the process should be allowed to continue, and the Quarry continue operating under the tightly constrained requirements of the 2019 IEMP; (c) the evidence suggests that there are minimal environmental detriments as a result of the quarry continuing its operations under that regime; and (d) by contrast, there are severe detriments that are liable to be suffered by the first and second respondents, their employees and third parties as a result of the almost certain closure of the quarry.
2. The Council opposes the further stay of the orders in essence contending that in the exercise of my discretion I would determine that the circumstances would not warrant a further postponement of the operation of Order 6. Council withdrew its contention that the Notice of Motion amounted to an abuse of process.

The Nature of the Discretion to be Exercised

1. Division 9.5 of the Environmental Planning and Assessment Act, 1979 (EP & A Act) provides the regime for civil enforcement where there is asserted an actual or threatened contravention of that Act. In this case an actual contravention of the Act was found and the limits and scope of what uses were capable of being carried out on the land without being in such contravention were identified.
2. In these proceedings the Court (at first instance and on appeal) was vested with a discretion as to what orders, if any, should be made consequent on the finding of the contravention. The Court at first instance was invited to decline to make any orders restraining the contravention the Court refused that invitation: Dungog Shire Council v Hunter Industrial Rental Equipment Pty Ltd (No. 2) [2018] NSWLEC 153. There was no appeal from that part of the first instance Court's decision: Hunter Industrial Rental Equipment Pty Ltd v Dungog Shire Council [2019] NSWCA 147.
3. Both the Court at first instance and the Court on appeal, however, did exercise a discretion (either by agreement between the parties or by order) to delay the operation of Order 6 for various periods of time. These stays were for various periods: firstly, to permit the appeal process to complete; and secondly, to afford the Respondents a period of time after the decision of the Court of Appeal to progress the SSDA and/or for arrangements to be made to "soften" the impacts on third parties of the consequences of bring the operation into conformity with the use anticipated by the injunction contained in Order 6: Hunter Industrial Rental Equipment Pty Ltd v Dungog Shire Council [2019] NSWCA 147.
4. In making the final stay the Court of Appeal ordered that: If and to the extent any steps are required to be taken for the enforcement, variation or termination of the stay, otherwise that by agreement between the parties to these proceedings, application may be made for that purpose to the Land and Environment Court, to which these proceedings shall be deemed to be remitted for that purpose. The present Notice of Motion has been heard by this Court pursuant to that remitter in that it seeks a "…variation…of the stay…".
5. The only question, therefore, before me is whether, in the exercise of my discretion, I would be minded to vary the duration of the stay on the terms proposed by the Respondents for a period of 12 months and/or on such other terms or for such other period as I may determine. It is not open to me as any part of that question to revisit, reconsider or express opinions on the appropriateness or otherwise of the exercise of the discretions in previous decisions in this matter. However, it appeared common ground between the parties that I am entitled to take the fact of those decisions into account as part of the context of the exercise of the discretion sought in the Notice of Motion.

The Evidence

1. The evidence adduced was largely uncontested. However, the parties diverged with respect to what findings I should make based upon the evidence. With respect to the matters put to me by the Respondents, I set out my findings on the evidence with respect to the factors I was invited to take into account in the exercise of my discretion.

Delay

1. The Second Respondent contends that it has been seeking to regularise the unlawful use since 2016, but the process has been delayed largely for reasons beyond its control. Of particular relevance to this matter the Respondents rely upon the need to have determined the scope and extent of the lawful use in order that the appropriate baseline could be fixed for the purpose of defining the nature of the uses proposed in the SSDA and the determination of the relevant impacts of the uses as compared to the established baseline. It was contended that such an approach was one largely endorsed by both the Council evidenced by the approach it took to in its opposition to the Notice of Motion in 2016 (Dungog Shire Council v Hunter Industrial Rental Equipment Pty Ltd [2016] NSWLEC 164), to vacate the proceedings and the Department of Environment and Planning (DEP) in meetings (Affidavit of Adam John Kelly 27 August, 2019 at [31]-[35] and Barbara Crossley 26 August, 2019 at [23]-[25]) it had as part of the continuing SSDA process. In addition, it was said that the establishment of the baseline would have the desirable consequence that it would render more comprehensible the SSDA to members of the public when undertaking the necessary community consultation - rather than presenting multiple contingent assessments which would be relevant or not depending on the ultimate determination of the baseline. The community groups who have been participating in the continuing consultation indicated a preference for this course (Exhibit 8). This baseline was not determined until the decision of the Court of Appeal delivered on 20 June, 2019.
2. The Council contended that whilst it accepted that the baseline could not be determined until after the determination of the Court of Appeal proceedings, the Respondents could have progressed the SSDA by making multiple assumptions that would take into account the range of possible outcomes of the Court of Appeal. Further, the delays are largely of the Respondents making as it deferred the preparation of technical reports until after the finalisation of court proceedings when some substantive work could have been undertaken to progress these reports whilst the proceedings were being determined.
3. Whilst I accept that the SSDA application does appear to have been pending for a considerable period of time, for the purposes of determining this application I am prepared to accept the Respondents' submissions on the effect of this evidence. I find that in large part the delay in the progress of the SSDA since its lodgement in 2016 has been due to the inability of the Respondents to quantify the baseline against which the SSDA was to be assessed and determined. I further find that it was not unreasonable to take such an approach, particularly in circumstances where it was encouraged to do so by both the DEP and community groups (letter from Martins Creek Quarry Action Group dated 30 July, 2019 contained in Exhibit JT1 to the Affidavit of Jacqueline Tupper 4 September, 2019). I accept that the technical reports required this baseline to be determined before reports could be completed and in some cases before reports could be commissioned. I further accept that since the baseline has been established the Respondents have been working towards the finalisation of the amendment to the SSDA application and response to submissions as required by the DEP with an anticipated lodgement date before the end of 2019.

Severe detriments to be suffered by the respondents, their employees and third parties as a result of the coming into force of the injunction in Order 6

1. The evidence with respect to the consequences of the coming into force of the injunction related to: 1. The likely closure of the Quarry if it was required to operate in a "lawful" manner as determined by the Court of Appeal; 2. The consequence of closure on the employees 13 persons employed at the Quarry in the event that the Quarry closed; 3. The consequence of the closure on third parties that relied on the Quarry for the supply of materials and the consequence on the Respondent in the event that it was unable to fulfil existing contracts for the supply of Quarry material; 4. The consequence upon contractors and other businesses that rely on providing services to the Quarry with the consequential impacts on their employees and other financial impacts.

Likely closure of Quarry if stay not extended

1. The Respondents adduced evidence from Mr Kelly that in the event the variation to the stay was not granted the Quarry would not be viable to operate in accordance with the current consent as determined by the Court of Appeal and that it would close (Affidavit of Adam John Kelly 27 August, 2019 at [115] -[122]).
2. The Council cross examined Mr Kelly in connection with the suggestion that the Quarry would be unviable and would be closed. Relevant to this issue he stated in cross examination that: 1. The second Respondent had been operating the Quarry "unlawfully" since 2012 (T 17-18) in respect to: the area to be quarried and therefore the unlawfulness of the consequential quarrying activities relating to that area (eg. Blasting and extraction, processing and transportation of material quarried outside the approved location); the proportion of quarried material transported by road; and the proportion of quarried material derived for purposes other than rail ballast; 2. The second Respondent had been deriving income from the "unlawful" use of the Quarry in the order of in excess of 100 Million dollars since 2012 and that a significant amount of that income has been unlawfully obtained (T 20 lines 1-9); 3. That since the Respondent had undertaken to implement the IEMP (of any date) the income has reduced and the Quarry is now operating at a likely loss (T 23 lines 20-35); 4. If the Quarry output was limited only to that permitted by the current consent as found by the Court of Appeal the Quarry would be unviable and the Second Respondent would likely close the Quarry (T 54-55; T 67 line 45; T 68 line 6); 5. The decision as to whether to continue with the SSDA is not related to whether the stay is extended or not (T 60 lines 36-41); 6. In connection with the SSDA (to date) the Respondent had spent (roughly) 3 million dollars (T 68 lines 11-16); 7. That the Respondents had taken steps to vary the contract with one customer (Metromix) to make provision for the possible closure of the Quarry, which variation had not been disclosed to the Court (Exhibit E).
3. I expressed concern during the course of submissions with both parties with respect to the fact that Mr Kelly had not disclosed what I considered to be an important relevant matter. Mr Howard, senior counsel for the Council, indicated that the Council did not wish to make any submission on Mr Kelly's credit and that Council accepted that Mr Kelly was genuine in his attempt to assist me by answering questions (T 156 lines 9-19). On that basis I do not make any adverse comment with respect to Mr Kelly's evidence, not do I treat his evidence as anything other than a genuine attempt to assist the Court with all relevant material.
4. I accept the evidence of Mr Kelly that if the Quarry was required to comply with the injunction contained in Order 6 the likely consequence would be the closure of the Quarry. Whether this closure is permanent or for the limited time that would be required for the SSDA to be determined (assuming an approval) is not clear from the evidence. However, for either the short term (being the period for a favourable determination of the SSDA) or longer term (if the SSDA is not pursued or is refused or for some other reason not taken up by the Respondents) I accept that the Quarry will close. This is a commercial decision to be made by the Respondents. They are entitled to make such a decision based upon their own commercial considerations. I accept that at law a quarrying use could continue but I also accept that there is no obligation on the Respondents to do so and that it is the present intention of the Respondents based upon financial forecasts not to continue to Quarry the land pursuant to the extent of the existing consent as determined by the Court of Appeal. For the purposes of the determination of this application I accept that the Quarry will close indefinitely and likely permanently.

Employees

1. The Respondents' evidence indicated that the consequence of closure was that all 13 of its current employees at the Quarry would have their employment at risk (Affidavit of Adam John Kelly 27 August, 2019 at [120] and T 32 lines 5-45). It was contended that the number of employees that would be able to be absorbed into other aspects of the Respondents' group of businesses is unknown and depends on demand. Further such employees may elect not to take up such alternative employment if it required relocation from Martin's Creek and its environs (Exhibit 2 Tab 40).
2. The Council contended that the evidence disclosed that of the 13 employees the risk of unemployment was low due to the range of businesses run by the Respondents' group of companies and the potential to absorb these employees by redeployment. It was also said that no evidence to quantify the risk of unemployment had been adduced, nor had the specific discussions with relevant employees as to their attitude to redeployment been adduced at the hearing. Further, the Respondents could continue to operate the Quarry in accordance with the findings of the Court of Appeal and that in that event a number of employees at the Quarry could be retained.
3. I accept the criticism of the quality of the evidence as submitted by the Council. However, if the Quarry was to close I find that notwithstanding any redeployment (if available) it would still be the case that the 13 employees would no longer be employed at the Martin's Creek Quarry and their employment would be terminated. Whatever other opportunities could be made available to them they would still be required to cease their employment at the Quarry. Therefore, I find on the evidence adduced that in the event the Quarry closed 13 employees would lose their positions.

Third-party customers of Quarry products

1. The Respondents' suggest that the evidence discloses that it has existing contracts for the supply of Quarry materials to existing customers and that if the stay is not extended that such contracts may be put at risk. The risk arises from the limited supply of quarry products in the market generally and it is said that if the Martin's Creek Quarry closes there is a genuine risk that the products required will not be able to be sourced at all, or if they are available will come at an extra costs (tangible and intangible costs), for example the supply will likely require further transportation from source to end user. In addition, the Respondents will suffer reputational damage and potential loss of market share if it defaults on contracts or customers are forced to source quarry products from elsewhere. The evidence adduced also indicates that the customers of the Quarry are opposed to the closure of the Quarry (Exhibit 3).
2. The Council does not in a material way challenge this evidence. Rather, its submissions relate to the use to which I should put this evidence and the weight to be attributed to it.
3. Accordingly, for the purposes of this determination I find that there is a real likelihood in the event that the Quarry closes that both customers of the Quarry and the Respondents are likely to suffer losses and there will be increased costs (tangible and intangible) as a consequence of having to source quarry products from other locations if they are available. I further find that the risk of defaulting on contracts has the potential to give rise to reputational losses to the Respondents that may continue into the future.

Consequences on other third-party contractors

1. In addition to its own employees and users of the quarry products there are a number of businesses that supply services to the Quarry that will be impacted in the event of the Quarry closure which may result in direct and indirect financial losses with consequential reduction in staff and the like. A large number of submissions from such persons have been tendered to me outlining the likely impacts on their livelihood and income together with explanations as to why they oppose the closure of the Quarry (Exhibit 2).
2. Again, the Council does not in a material way challenge this evidence, its submissions relate more to the use to which I should put this evidence and the weight to be attributed to it.
3. Accordingly, I find that on the evidence there are a large number of third-party suppliers of services to the Quarry that are likely to be adversely impacted by the closure of the Quarry.

There are minimal environmental detriments as a result of the Quarry continuing its operation under the IEMP 2019

1. The Respondents submitted that the Court could be satisfied of minimal environmental detriments if it continued to operate for a further period subject to the IEMP 2019. The focus of these submissions related to the matters of: traffic; noise and air quality; and blasting. It was suggested that this focus was to address what were considered by the residents who made submissions to Molesworth JA in the proceedings before him or that he had identified in his reasons as matters of concern including but not limited to: Dungog Shire Council v Hunter Industrial Rental Equipment Pty Ltd [2018] NSWLEC 153 at [285] and [286], [337]-[345] and [396].
2. Evidence was adduced that a further 12 month operation in accordance with the IEMP 2019 would meet external independence standards for traffic noise (Exhibit 4 Tabs 4 and 9); blasting (Exhibit 4 Tab 11); and Intersection Level of Service (Exhibit 4 Tab 6).
3. The Council's submissions focussed on the areas where an assessment had not been made. It did not seek to challenge the essence of the evidence but it did suggest that the manner in which it was adduced - through Ms Crossley, the Respondent's SSDA lead consultant rather than by the individual experts rendered it an opinion to which I should give little, if any, weight.
4. I find that the carrying out of the use pursuant to the terms of the IEMP 2019 (and its previous iterations) has improved the impacts from traffic volume and noise and has managed blasting and air quality external impacts on the community to a significant degree. In some cases some of the complainants are now satisfied that the intensity of the use as it affects them is acceptable (Exhibit 9).
5. I am also prepared to accept that the use pursuant to IEMP 2019 can be managed within independently mandated limits with respect to traffic generation; truck noise; air quality and blasting.
6. However, I do also accept the submission of the Council that such evidence is limited only to the areas of impact that primarily manifest externally to land on which the Quarry operates. No substantive evidence has been adduced before me that consider the impacts that may be experienced internally to the site. I accept the Council's submission that no findings could be made on the evidence with respect to the factors beyond those focussed on by the Respondents.
7. Notwithstanding the Respondents' focus on the particular factors presented in the evidence I do not consider myself, in the exercise of the broad discretion, limited in my consideration to those factors identified by the Respondents' submissions in previous cases or the concerns of Molesworth JA in the substantive proceedings.

Consideration

1. On the basis of the findings on the evidence I have made it was submitted that the Court should exercise its discretion in favour of the extension of the stay for the reasons recited at paragraph 12 above. For the reasons stated below I find that the stay should not be extended notwithstanding my general acceptance of the Respondents' evidence and submissions as to the significant consequences likely to occur in the event the stay is not extended.
2. I accept the submissions made by the Council that these proceedings related to a public duty to carry out development in accordance with the laws as set by Parliament and that the Council, as a public authority, was not seeking to obtain some private or pecuniary benefit from the action, but rather took the proceedings in its protective and beneficial capacity: see Guideline 4 and 6 of Sedevcic at 339-340.
3. The nature and scope of the use that is lawful on the land has been determined by the Court of Appeal. What the Respondents propose as an interim use during the period of any stay is beyond the scope of that lawful use. The use as circumscribed by the IEMP 2019 or as proposed in the SSDA are uses that are permissible with consent pursuant to the EP & A Act. That Act sets out an appropriate mechanism for the proper consideration of such uses. Neither the IEMP 2019 use or the SSDA use have yet been the subject of that assessment regime.
4. It is submitted by the Respondents that I should accept that the continued operation of the Quarry for a period of 12 months subject to the terms of the IEMP 2019 is a use that would have an appropriate environmental impact. The principle foundation for this submission was that the uncontested evidence disclosed that the Respondent was operating under the IEMP 2019 in a manner that was within recognised limits placed on activities such as blasting and traffic generation and traffic noise. Whilst it does appear that issues such as: air quality; traffic generation; traffic noise; and blasting impacts were factors that were of particular concern to local residents and were matters of concern to Molesworth AJ in the determination of the matter before him I am not satisfied that I could form the necessary opinion on the evidence before me that the continued use under IEMP 2019 would have an acceptable environmental impact. It is clear that the Respondents propose to continue to extract and process resource from the Quarry, albeit within the lateral surface extent of the current Quarry (i.e. they will increase the size of the Quarry in its vertical plane but not its horizontal plane). There is no sufficient evidence before me to permit an assessment of the environmental consequences of that continued operation. Accordingly, even if I accept that the external manifestations of the Quarry activity can be managed I have no sufficient evidence to permit a finding as to the effects of the internal manifestation of that continued use. I further note that issues such as ecological impacts, visual impacts and cultural and indigenous heritage impacts have not been assessed with respect to the continued operation for the 12 month period (T 100 lines 10-45, T 72 lines 1-5 and T 103 line 37, lines 41-105).
5. Further, the quarrying process by its inherent nature is destructive. To permit it to continue largely uncontrolled (except for the limited matters addressed in the IEMP 2019) is to allow the destructive process to continue without a consideration as to (inter alia): the appropriateness of the depth of extraction; the conditions upon which such extraction should take place; or the effects of that extraction on all of the relevant matters that are required by s 4.15 of the EP & A Act to be examined. These are precisely the factors that the determination of an application as anticipated by the EP & A Act would allow.
6. I accept that I am not bound by the terms of the IEMP 2019 and would be entitled to impose further constraints if I considered them appropriate. I do not have sufficient evidence to enable such an assessment to be made. Further, I do not consider that even if that evidence was available that proceedings such as these should undertake a de facto assessment of that mandated by the EP & A Act.
7. I also take into account in my consideration the fact that the type of development that would be carried out if the stay were granted subject to the IEMP 2019 is designated development. As was submitted by the Council this form of development confers on a proponent obligations with respect to the standard of information to be produced for consideration and the nature of community consultation required. It also confers upon third-parties rights of appeal from or in connection with any determination of such an application. The process of permitting the use to continue without adhering to what would be the usual course of assessment and appeal (if appropriate) circumvents the process mandated by the Act and prevent the exercise of the rights accruing to third parties in accordance with that process, at least in respect of the use during the period of any stay.
8. Weighing these factors against the disadvantages identified by the Respondent I find that it is not appropriate in the circumstances of this case for the stay to be further varied. In particular, I have taken into account the impacts on the identified classes of third-parties but I must also weigh: the public interest in the proper administration of justice; the interests of the public in having developments properly assessed in accordance with the processes mandated by the legislation; and the potential consequences of permitting the use in accordance with IEMP 2019 to continue for a further period of 12 months or such lesser time. In considering all of those factors, on balance, I find that it is appropriate that the stay of Order 6 not be varied.
9. I have sympathy of the third parties that will suffer the consequences of the closure of the Quarry. However, I have determined that notwithstanding these significant impacts that the interests of the community in the enforcement of its environmental and planning laws and the adherence to the process of assessment to take place before the use is expanded (vertically or horizontally or at all) in the circumstances of this case are of greater weight. The Respondents are able to ameliorate at least to a limited extent the long term effects of their intended closure of the Quarry (should they elect to do so) by continuing to advance the SSDA in a timely manner.

Costs

1. It was accepted by the Respondents' counsel that due to the nature of this application the Council's costs should be paid Respondent whatever the outcome. The Respondents having been unsuccessful in this application is a circumstance where costs should follow the event.

Orders

1. Therefore the orders of the Court are: 1. The Notice of Motion filed 21 August, 2019 is dismissed; 2. The Respondents are to pay the Council's costs of the Notice of Motion. 3. The exhibits are returned. Annexure A (196 KB, pdf) Annexure B (255 KB, pdf)

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 September 2019