Fullerton Cove Residents Action Group Incorporated v Dart Energy Ltd [2012] NSWLEC 207 | Case summary

Land and Environment Court (NSW)|2012-09-05|Before: Sheahan J

Introduction 1The applicant organisation is said to have been in existence for around 20 years, as a non profit community group that has been active on a number of different environmental issues (sandmining, sewage treatment) in the Fullerton Cove area, approximately 11 km north of Newcastle. 2It incorporated only on 17 August, and commenced these proceedings on 24 August, challenging a series of approvals given to a petroleum project, largely by the State Government, in that area (specifically about 2 km east of Fullerton Cove, according to Hunter Water). 3The applicants group's major concerns are possible impact on water supply, local aquifers, water quality, a nearby internationally listed Ramsar wetland and the wildlife that occupies it, and the risk of other irreversible environmental harm flowing from the challenged project. 4The first respondent (Dart) has the benefit of those government approvals and the second respondent represents the approving government. The applicant seeks interlocutory relief pending the delivery of judgment in the substantive proceedings. Dart seeks expedition of those substantive proceedings, and the applicant consents to that course. It concedes, in particular, that, if interlocutory relief is granted, an order for expedition is appropriate. 5Dart relies on the same evidence both in support of expedition, and in opposition to interlocutory relief. 6The government's representative, Mr Anderson, is negotiating with the other parties about possibly substituting a different entity as second respondent to the substantive proceedings, but is "neutral" on both questions now before the court, i.e. interlocutory relief, and expedition. It is the presently named second respondent which announced the key approvals, but the political statements have come from the New South Wales Minister for Resources and Energy. For the purposes of this judgment I will refer to, simply, "the second respondent". 7At least two members of the applicant were observed at a protest rally, which commenced a blockade of the access to Dart's presently relevant site, on 20 August. Both (Lindsay Clout and Justin Hamilton) have also been local community members of the independently-chaired Community Reference Group (CRG), established for the subject exploration programme. That CRG appears to have held 5 meetings between 29 February and 2 August 2012, and Dart relies on the notice given to its members of Dart's intentions and progress. 8Dart raises an "unclean hands" defence to the interlocutory motion, on the basis of the members' protest. News reports are among the evidence, indicating protests by between 20 and 400 citizens over 9 days till 28 August when they were dispersed by riot police. There were several arrests and a number of fine notices issued, but the public indicated they would maintain a "vigil" on land across the road. According to press coverage of the blockade, Clout acted as a spokesman for the protestors. Dart says the blockade cost it $17,000. 9The subject project/proposal presently being pursued is defined in acceptable terms in the applicant's submissions (at 6): "The Proposal (as amended) is for the construction of two vertical coal seam gas wells that are drilled to at least the depth of two separate coal seams. Wells are then drilled laterally into each coal seam, with two lateral wells per coal seam. At the surface, there will be a drill platform, which includes installation of a pump and wellhead facilities. The Proposal includes the pumping of water out from the coal seams, allowing the gas to flow. There will also be construction of a drilling sump (pond) for each vertical well. The total drilling activities will be over a seven week period." (The two wells are referred to in the material as the "production well" and the "surface in seam" (or "SIS") well). 10The applicant's position on both substantive and interlocutory proceedings is summarised, helpfully, in its written submissions. At par 11, it says: "... the final relief to which the injunction relates is: a.To preserve the status quo on site by preventing the construction of the exploration well and associated infrastructure until determination of the matter. If the Applicant is ultimately successful, before such construction can proceed, and Environmental Impact Statement will be necessary, either under Part 4 or in the alternative, under Part 5 of the EPA Act. b.To preserve the subject matter of the litigation - if interlocutory relief is not granted and construction proceeds, including drilling into the coal seams, the proceedings are essentially rendered nugatory." 11In par 9, it says that the interlocutory motion is "necessary because the First Respondent refuses to undertake to refrain from taking steps in furtherance of the Proposal pending the resolution of the substantive proceedings". 12On behalf of the applicant EDO, solicitor Elizabeth Johnson affirmed on 29 August that the case involves "important questions of law in relation to which there is a strong public interest". When serving the summons by letter dated 24 August she repeated an earlier request (of 16 August), directed to the CEO of Dart in Queensland, for an undertaking that Dart would refrain from taking "any steps towards construction" while the matter is before the court. The Queensland office of Corrs Chambers Westgarth ("Corrs") responded to the EDO's arguments on 20 August, and refused "to refrain from proceeding with the authorized and approved project". 13On 27 August, Dart's Corrs Sydney solicitor, Louise Camenzuli, again declined to give the undertaking, and requested the applicant to provide the usual undertaking as to damages in the event of its deciding to pursue an interlocutory injunction. Camenzuli also requested financial information regarding the applicant, and, on 3 September, Johnson confirmed that the proceedings are brought "in the public interest", such that an undertaking as to damages is not required (citing Court Rule 4.2). The applicant's incorporation documents indicate no assets or funds held or predicted on its part. 14As I approach the question of interlocutory relief at a time of such public disquiet about the subject matter, I am mindful of the opening paragraph of Pepper J's recent judgment in Barrington - Gloucester - Stroud Preservation Alliance Inc V Minister for Planning and Infrastructure [2012] NSWLEC 197: "It is a matter of common knowledge that the exploration for, and use of, coal seam gas is contentious. This judgment will, however, do little to quell the current anxiety surrounding the coal seam gas mining debate. In this regard it must be understood that the merits, or otherwise, of the use of this resource are irrelevant to the issues raised for determination by these judicial review proceedings, concerning, as they do, only the lawfulness of the approval under challenge."

Relief sought by Applicant 15In its summons filed 24 August, the applicant seeks the following relief:

In relation to the Pilot Appraisal Exploration Program (PAEP) proposed by the First Respondent under Petroleum Exploration Licence 458 and purportedly approved by the Second Respondent on 1 June 2012 (Part 5 Approval): a. a declaration that the PAEP is "designated development" within the meaning of section 77A of the Environmental Planning and Assessment Act 1979 (the Act); b. a declaration that the First Respondent is required to obtain consent under Part 4 of the Act for designated development before any development for the PAEP can be carried out. c. an injunction restraining the First Respondent from carrying out any development for the PAEP without consent for designated development granted under Part 4 of the Act.
In the alternative to 1 above, in relation to the Part 5 Approval: a. a declaration that the Part 5 Approval is invalid and of no effect; b. an order quashing the Part 5 Approval; and c. an injunction restraining the First Respondent from undertaking any work for the PAEP in reliance on the Part 5 Approval.
Such further or other orders as the Court sees fit. 16In the summons it also nominated interlocutory orders in terms of pars 1c and/or 2c. 17In its Notice of Motion (NOM) filed 29 August, the applicant sought:
An order restraining the First Respondent from carrying out any development for the Pilot Appraisal Exploration Program (PAEP) proposed under Petroleum Exploration Licence 458 and purportedly approved by the Second Respondent on 1 June 2012 (Part 5 Approval) without consent for designated development granted under Part 4 of the Act until judgment is delivered in the proceedings.
An order restraining the First Respondent from undertaking any work for the PAEP in reliance on the Part 5 approval until judgment is delivered in these proceedings.
An order that the First Respondent pay the Applicant's costs of this motion.
Such further or other orders as the Court sees fit.

Evidence 18Both the applicant and first respondent filed, served and relied upon extensive affidavit and documentary evidence and, at least at this interlocutory stage, all of it was read without objection. None of the deponents on either side was required for cross-examination, and I have closely considered all the material (some of which is repeated in several places). 19The applicant relies upon affidavits from its public officer, Hamilton, and its EDO solicitor, Elaine Johnson. Hamilton asserts that neither he personally, nor the applicant, has any financial interest in the outcome of these proceedings. He annexed to his affidavit a paper he prepared on environmental concerns but it is not clear to whom it may have been provided. 20Dart relies upon two affidavits from Steve McCall, its environmental planning expert consultant, who produced a bundle (Exhibit D1); one affidavit from its Development Manager, Denzil Cross (plus a bundle - Exhibit D2); one affidavit from its CEO Australia, Robbert de Weijer (plus a bundle - Exhibit D3); a photograph of site works in progress (Exhibit D4); and an affidavit from its Sydney solicitor, Louise Camenzuli. 21The first respondent relies upon the following to defend the legality of its development: (1)the provisions of the Environmental Planning and Assessment Act 1979 (the EPA Act), the Environmental Planning and Assessment Regulation 2000 (the EPA Reg), the Petroleum (Onshore) Act 1991 (the POA), and State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (the SEPP) (2)the terms and conditions of the conditioned Petroleum Exploration Licence 458 (the PEL), dated 6 June 2008 and issued under the POA to Macquarie Energy Pty Ltd ('Macquarie', a wholly owned subsidiary of Apollo Gas Ltd, which is a wholly owned subsidiary of Dart) (3)the contents of the Review of Environmental Factors (the REF), prepared for it by McCall (Hunter area principal of Environmental Property Services (Aust) Pty Ltd), in September 2011, as required by PEL conditions, and of his further submission to the second respondent dated 22 December 2011 (4)the second respondent's conditioned approval granted under the POA, and dated 1 June 2012, for drilling of appraisal wells and testing of production flows (the PAEP referred to in the pleadings) (5)its application to the second respondent for modifications of the 1 June approval - modifications which Dart contends reduced the footprint of the PAEP and some of its potential environmental impacts - and the second respondent's conditioned approval of it, dated 17 July 2012 (6)(a) its referral of the PAEP to the Commonwealth authorities on 13 October 2011 for consideration under the Environmental Protection and Biodiversity Conservation Act 1999 (the EPBC Act), (b) its provision of additional information to the Commonwealth on 28 November 2011, (c) the "Advice" provided to the "decision maker", in response, by the Interim Independent Expert Scientific Committee on Coal Seam Gas and Coalmining (IIESC) dated 11 April 2012, and (d) the "Decision" of 15 May 2012 by the relevant delegate of the Commonwealth Minister that the PAEP is "not a controlled action", provided it is undertaken in the manner stipulated in that decision (i.e. some further conditions were imposed) (7)a "risk assessment" advice, dated 17 May 2012, from the Chief Operating Officer of Hunter Water Corporation, that the Corporation considers that the PAEP "poses no risk to the quality of water taken by Hunter Water from the Tomago Sandbeds". (This advice is to be found at fol 16 of Camenzuli's affidavit). In some of the material there is a suggestion that some 20% of the Lower Hunter's drinking water comes from those sand beds (8)New South Wales Department of Planning Circular PS07-004 regarding gazettal of the SEPP (Camenzuli, fols 18 and 19) 22The respondent doubted the relevance of the New South Wales Resources and Energy document "ESG2: Environmental Impact Assessment Guidelines", stated to be "For exploration, mining and petroleum activities" subject to Part 5 of the EPA Act, "including content requirements for a" REF, and dated March 2012. Its counsel (Mr Leggat SC) initially submitted to me that it issued only in July 2012, but he ultimately conceded that it was extant as the time of the second respondent's consideration of the matter. (The guidelines are Annexure 'K' to Johnson's affidavit). 23The applicant relies upon that guidelines document, as well as some of the contents of the 8 items above, and also: (1)a map (Johnson p46) taken from the Port Stephens LEP 2000, indicating the flood prone status of the subject site; (2)a map of vegetation communities (Johnson p17), drawn from a report prepared by PEA Consulting for the first respondent, indicating that the site is in an area of "Relic Saltmarsh Flat; and (3) a National Water Commission documents, including its Position Statement on "Coal Seam Gas and Water", dated December 2010 (Johnson pp 49-53), highlighting risks regarding water impacts and management.

Consideration 24The principles to be applied in considering injunctive relief are well established. They are set out and discussed in detail in Preston CJ's judgment in Tegra (NSW) Pty Ltd v Gundagai Shire Council [2007] NSWLEC 806; (2007) 160 LGERA 1 (at [6]-[58]). They were usefully summarized by Biscoe J in Shoalhaven City Council v Bridgewater Investments Pty Ltd [2010] NSWLEC 103 (at [4]-[5]). They need not be restated, as I adopt both statements of the principles, in full. 25There is generally accepted to be an urgent need for gas exploration in NSW, leading, hopefully, to gas production. Gas is a small component of energy used in this State, and what little we use is largely imported, when we are believed to have substantial resources yet to be exploited. 26The processes are, very much in the public interest, necessarily staged. What is involved in these proceedings is pilot works of exploration, described by Mr Leggat as relatively modest capital works to create only temporary infrastructure. There are stringent conditions in place and serious duties to rehabilitate. No hydraulic fracturing (or "fraccing") is involved in these works, and it is in the public interest that the State-owned resource be evaluated as proposed. 27McCall's affidavit of 3 September (pars 27-32) is relied upon by Dart to establish that, because of the conditions imposed at the various stages of the approval process, no irreparable or irreversible harm will be caused, nor will harm result from any action to remediate. At pars 31-32, he deposes to the use of the "plug and abandonment" scenario, as specifically contemplated in the REF and the amended application. This project is "only a pilot project and the works undertaking and taken in carrying out the project would need to be reversed in any event if the project data indicates that gas production is not commercially viable". 28Pars 33-35 of his affidavit are relied upon for Dart's submission that no EIS is required, given the adequacy of the REF, and other environmental assessments carried out. 29I acknowledge his credentials but the applicant has not yet received and put on its own expert advice on the technical matters, and McCall is (1) not qualified to express a legal opinion, and (2) hardly an independent witness. 30The chain of documentation before me leads me to note that since 2008 Dart has had exploration rights over an area of 2000km², and has now focused its attention on an area of 2ha, within an area covered by private flood plain pastureland of 140ha. 31At each step of that evolutionary process, environmental assessment, either directly under, or at least within the parameters set by, the EPA Act, has occurred before granting of approval, and appropriate conditions, including as to monitoring, have been imposed on each approval. 32What is envisaged at this PAEP stage is exploration, and not petroleum production, and different regimes apply, according to the hierarchy of "titles" established by the POA and the SEPP. The works presently approved are "Category 3" in the PEL (Exhibit D3, fol 18), and involve three phases (Exhibit D1, fol 24): (1)site preparation and drilling compound construction (2)pilot well drilling and establishment (3)pilot well completion and testing. 33Work on Phase (1), all on or above the surface of the land, commenced on 10 August, and is expected to take until 28 September (subject perhaps to any delays caused by the blockade). So far some $521,000 has reportedly been expended (see work shown in Exhibit D4). Phases (2) and (3) are said to involve two years work. 34The applicant has not demonstrated any likely breach of conditions, or any damage to environmental aspects, which would call for the court to intervene in the progressive completion of Phase (1), despite Ms McWilliam's submission (based on Exhibit D3, fol 96) that Dart has understated the magnitude of material involved. 35The applicant's real concerns come with the drilling, and the damage which it may cause beneath the surface, damage which will not be remediated effectively by measures such as "capping and closing". 36Much is already known about possible, even likely, results (see, example p66 of the REF), but it is open to interpretation whether or not groundwater assessment required by conditions should be materially advanced, if not completed before drilling reaches the aquifer(s). 37The IIESC noted in its "Advice" of 19 April 2012 (Exhibit D3, at fols 131-2):

The Interim Committee notes that: a. given the extent and duration of the proposed action and the implementation of the proposed suite of mitigation measures, there are unlikely to be substantial or measurable changes in the hydrological regime or physio-chemical characteristics of the Ramsar site, nor is it expected or likely that the habitat or life cycle of a species dependent upon the Ramsar site will be substantially impacted. b. as the exposure and activation of acid sulphate soils could cause acidic run-off into the wetlands site, the full implementation of the Acid Sulphate Soils Management Plan should be a specific requirement of any decision to approve the proposed activity.
The Interim Committee suggests that in light of the lack of data about potential impacts of coal seam gas operations on the Ramsar site, the proponent should be required to gather and make available to commonwealth and state regulators data on water quality, quantity and geochemistry characteristics, as well as flow rates in the area of their proposed action. This will provide important baseline information that could be used to measure any resulting changes and also assist with assessing the potential impacts of any proposed expansion of coal seam gas exploration or production in the area.
The Interim Committee would require further careful consideration of potential water related impacts should the proponent wish to seek additional approval for activities associated with coal seam gas production. and, in its "Decision" of 15 May 2012 (at fol 136), it stipulated, inter alia:
As advised by the Interim Independent Expert Scientific Committee all data collected regarding the water quality, quantity and geochemistry and flow rates in the area of the proposed action will be made available, within 2 months of collection, to Commonwealth and New South Wales regulators. 38Counsel for Dart is rather dogmatic about, eg, the effect of the SEPP, and dismissive of the applicant's arguments on the effect and interaction of all the relevant provisions. I cannot agree that the applicant's case is "hopeless", or that it involves only sterile or academic legal questions. I think there are among all the nuances put to the court some serious issues to be tried, beyond what does resemble some trawling of Dart's long and technical assessment documentation for possible shortcomings (e.g. the ecological survey was done at a bad time of year for certain species of frog). I am satisfied that the applicant has a reasonably arguable case to put on several aspects of the approval processes. 39Dart asks the court to rely on the satisfaction apparent on the State government's side that the likely environmental impact is acceptable. However, if significant environmental harm is, in the end, caused beneath the surface, damages will not be an adequate remedy. A case can be made that these are, indeed, public interest proceedings, such that there is a case for not requiring the usual undertaking to be given. No real argument was made by Dart against pars 35 and 36 of the applicant's submissions in this regard. 40The balance of convenience favours the applicant in respect of works scheduled to follow the site/set-up phase, and I will grant relief in respect of them. I also propose to grant the first respondent's application for expedition, acknowledging that the injunction will bring with it some costs for Dart (perhaps up to $22,000 per day if mitigation is not achieved). 41Turning to equitable considerations regarding granting the interlocutory injunction: (a)I reject the "unclean hands" submission; (b)I accept that the alleged "delay" has been suitably explained (by Mr Clout's public statements about needing proper research and advice, before embarking on such litigation); and (c)I consider the alleged adverse effects on innocent third parties to be relatively insignificant in the overall scheme of things.

Conclusion 42I, therefore, make the following orders and directions: (1)Until further order, the first respondent is restrained from carrying out any development for its Pilot Appraisal Exploration Program beyond completion of the on-ground or above ground component in Phase (1), involving site preparation and drilling compound construction. (2)The hearing of the substantive proceedings is expedited, and the parties are to approach the Registrar forthwith for the allocation of the first available 3 days, commencing on or after 28 September. (3)The applicant is directed to file and serve its Points of Claim by 10 September, its lay affidavits by 13 September, and its expert evidence, and outline of submissions by Monday 17 September. (4)The respondent is directed to file and serve its Points of Defence, any evidence in reply, including its expert evidence, and an outline of submissions, by Friday 21 September. (5)The costs of this interlocutory hearing are reserved. (6)The usual directions required in accordance with the court's Practice Notes for class 4 litigation, except as otherwise covered in these orders, are to apply. (7)The parties are granted liberty to restore on three working days notice. (8)The exhibits are returned.

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: 05 September 2012

Environmental Protection and Biodiversity Conservation Act 1999(Cth)

Fullerton Cove Residents Action Group Incorporated v Dart Energy Ltd

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