Gray and Anor v Macquarie Generation

A-G v Great Eastern Railway Co (1880) 5 App Cas 473 Agar v Hyde (2000) 201 CLR 552 Briginshaw v Briginshaw (1938) 60 CLR 336 Egan v Willis (1998) 195 CLR 424 Electricity Commission of New South Wales v Environment Protection Authority (1992) 28 NSWLR 494 Environment Protection Authority v Australian Iron & Steel Pty Ltd (1992) 28 NSWLR 502 Environment Protection Authority v Cleary Bros (Bombo) Pty Ltd (1996) 92 LGERA 101 Environment Protection Authority v Hardt (2006) 148 LGERA 61 Ex parte Johnson; re MacMillan (1946) 47 SR (NSW) 16 CASES CITED: Fenton v Hampton (1858) 11 Moore 347 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Genkem Pty Ltd v Environmental Protection Authority (1994) 35 NSWLR 33 Gilmour v Director of Public Prosecutions (Cth) (1995) 43 NSWLR 243 Johns v ASC (1993) 178 CLR 408 Leerdam v Noori (2009) 255 ALR 553 Metro Transport Sydney Pty Ltd v City of Sydney Council [2009] NSWLEC 37 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 Protean (Holdings) Ltd v Environment Protection Authority [1977] VR 51 Salter v Director of Public Prosecutions [2008] NSWSC 1325 Van Son v Forestry Commission of New South Wales (1995) 86 LGERA 108

TEXTS CITED: Bennion on Statutory Interpretation, 5th ed, Butterworths 2008 Thomson Reuters, Laws of Australia, vol 14 (current at 31 August 1997) 14 Environment and Natural Resources, '14.6 Environmental Harm: Pollution Control and Hazardous Substances' [7]: Laws of Australia, (On-line) Legal Online (accessed 25 March 2010)

APPLICANTS Mr I Lloyd QC SOLICITOR LEGAL REPRESENTATIVES: Environmental Defenders Office RESPONDENT Mr B Walker SC with Mr R Lancaster SC and Mr L Livingston SOLICITOR Clayton Utz

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

JUDGMENT 1 Her Honour: In these Class 4 proceedings the Applicants seek a declaration, that between 1 January 2002 and 26 July 2009, the Respondent wilfully or negligently disposed of waste by the emission of carbon dioxide (CO2) into the atmosphere in a manner that harmed or was likely to harm the environment, in contravention of s 115(1) of the Protection of the Environment Operations Act 1997 (the POEO Act). An order is sought that the Respondent forthwith cease disposing of waste through the emission of CO2 into the atmosphere in contravention of s 115(1) of the Act. 2 Section 115 of the POEO Act states: 115 Disposal of waste - harm to environment (1) Offence If a person wilfully or negligently disposes of waste in a manner that harms or is likely to harm the environment: (a) the person, and (b) if the person is not the owner of the waste, the owner, are each guilty of an offence. (2) Defence - lawful authority It is a defence in any proceedings against a person for an offence under this section if the person establishes that the waste was disposed of with lawful authority. (3) Definitions In this section: dispose of waste includes to dump, abandon, deposit, discard, reject, discharge or emit anything that constitutes waste, and also includes to cause or permit the disposal of waste. owner of waste includes, in relation to waste that has been disposed of, the person who was the owner of the waste immediately before it was disposed of. 3 The proceedings are enabled by s 252 of the POEO Act which provides that any person may bring proceedings in this Court to remedy or restrain a breach of the Act.

4 The Respondent has filed a Notice of Motion seeking dismissal of the proceedings pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (the UCPR), which states: (1) If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings: (a) the proceedings are frivolous or vexatious, or (b) no reasonable cause of action is disclosed, or (c) the proceedings are an abuse of the process of the court, the court may order that the proceedings be dismissed generally or in relation to that claim. (2) The court may receive evidence on the hearing of an application for an order under subrule (1). 5 Paragraphs 54A and 54B are new paragraphs the Applicants wish to add to amend the Points of Claim (hereafter APOC). The parties agreed these would be considered as part of the consideration of the Respondent's Notice of Motion. 6 The parties have filed a Statement of Agreed Facts (SOAF) for the purposes of the hearing of the Notice of Motion only as follows: For the purposes of the hearing and determination of the respondent's Notice of Motion filed in Court on 11 September 2009, the parties agree in these proceedings that: 1. Macquarie Generation is, and was at all material times (that is, on and from 1 January 2002): a corporation constituted by the Energy Services Corporations Act 1995 and an electricity generator within the meaning of Part 2 of that Act; and a statutory SOC within the meaning of Part 3 of the State Owned Corporations Act 1989. 2. At all material times, Macquarie Generation carried on the business of the wholesale generation of electricity, in particular, the generation of electricity from a coal-fired power station known as the Bayswater Power Station situated at New England Highway, Muswellbrook, NSW comprising part Lot 15 DP 848095 and Lot 6 DP 247943 ( Bayswater Power Station ). 3. Macquarie Generation is, and was at all material times, the owner, occupier and operator of Bayswater Power Station. 4. Macquarie Generation has, and had at all material times, the management and control of Bayswater Power Station. 5. Macquarie Generation is, and was at all material times, the holder of a valid and subsisting premises-based environment protection licence No 779 (the Environment Protection Licence ) issued under the Protection of the Environment Operations Act 1997 (NSW) (the POEO Act ) in respect of its electricity generation activities at Bayswater Power Station. 6. The Environment Protection Licence applies to the premises of Bayswater Power Station and its operation by Macquarie Generation for the generation of electricity. 7. By letter dated 18 September 1980 to the Electricity Commission of NSW, Muswellbrook Shire Council granted approval for the development of Bayswater Power Station as described in the environmental impact statement and supplementary information volume dated June 1979, subject to a number of conditions ( Development Consent ). 8. NOT USED. 9. Macquarie Generation has generated electricity at Bayswater Power Station through the burning of coal since on or about 1 March 1996 and proposes to continue to do so by operating Bayswater Power Station. 10. Carbon dioxide ( CO 2 ) is produced when coal is burnt in oxygen. 11. Between 1 January 2002 and 26 July 2009, in the course of its operation for the generation of electricity, Macquarie Generation burnt coal in oxygen and emitted CO 2 at Bayswater Power Station in the following approximate annual amounts: a) 2002 - 15.6 Mt [million tonnes] of CO 2 ; b) 2003 - 14.5 Mt of CO 2 ; c) 2004 - 15.1 Mt of CO 2 ; d) 2005 - 15.3 Mt of CO 2 ; e) 2006 - 14.8 Mt of CO 2 ; f) 2007 - 13.3 Mt of CO 2 ; and g) 2008 - 14.1 Mt of CO 2 . 7 The APOC refer to the effects of global warming from greenhouse gases at par 12-21, increased ocean acidification at par 22-23, the volume of emissions of CO2 from burning coal in coal fired power stations, and Bayswater in particular at par 24-35. The APOC also state in part: Waste 36 From at least 1 January 2002 to 26 July 2009 ( Relevant Period ) the emissions of CO 2 described in paragraph 30 above from Bayswater Power Station have: (a) dispersed throughout the atmosphere; (b) accumulated in the atmosphere; (c) increased the atmospheric concentration of anthropogenic CO 2 in the atmosphere; and (d) altered the environment.

37 If continued as proposed or threatened by Macquarie Generation, CO 2 emissions from Bayswater Power Station will continue to: (a) be dispersed throughout the atmosphere; (b) accumulate in the atmosphere; (c) increase the atmospheric concentration of anthropogenic CO 2 in the atmosphere; and (d) alter the environment. 38 In the premises:

(a) the CO 2 that has been emitted into the air or atmosphere at Bayswater Power Station by Macquarie Generation in the Relevant Period; and (b) the CO2 that Macquarie Generation proposes or threatens to continue to emit into the air or atmosphere at Bayswater Power Station, is or will be "waste" within the meaning of paragraph (a) of the definition of that term contained in the Act because it has caused or will cause an alteration in the environment.

(a) the CO 2 that has been emitted at Bayswater Power Station by Macquarie Generation in the Relevant Period; and (b) the CO2 that Macquarie Generation proposes or threatens to continue to emit into the air or atmosphere at Bayswater Power Station, is or will be "waste" within the meaning of paragraph (b) of the definition of that term contained in the Act because it is or will be a discarded, rejected, unwanted, surplus or abandoned substance. Particulars (a) CO 2 is produced when coal is burned in the presence of oxygen. It is a by-product of electricity generation in coal-fired power stations. (b) At Bayswater Power Station, CO 2 is emitted or discharged through four emission stacks. Disposed 40 The CO2 emissions referred to in paragraphs 30 to 33 above were or will be emitted into the air or atmosphere at Bayswater Power Station by Macquarie Generation. 41 Further or alternatively, the CO2 emissions referred to in paragraphs 30 to 33 above were or will be discharged into the air or atmosphere at Bayswater Power Station by Macquarie Generation. 42 In the premises, the CO2 emissions referred to in paragraphs 30 to 33 above were or will be "disposed" of for the purposes of s 115 of the Act, in the sense that they were or will be emitted or discharged. Harm to the environment 43 The CO2 that has been emitted into the atmosphere at Bayswater Power Station by Macquarie Generation in the Relevant Period has indirectly altered the environment with the effect of degrading the environment, by increasing the atmospheric concentration of anthropogenic CO2 which, in turn, has contributed to: (a) global warming and the matters described in paragraph 20 above; and (b) increased ocean acidification and the matters described in paragraph 23 above.

44 Further or alternatively, it is likely that the CO 2 that has been emitted into the atmosphere at Bayswater Power Station by Macquarie Generation during the Relevant Period has indirectly altered the environment with the effect of degrading the environment by increasing the atmospheric concentration of anthropogenic CO 2 which, in turn, has contributed to: (a) global warming and the matters described in paragraph 20 above; and (b) increased ocean acidification and the matters described in paragraph 23 above.

45 Further or alternatively, the emission of CO 2 from Bayswater Power Station by Macquarie Generation during the Relevant Period resulted in or was likely to result in "pollution" within the meaning of the Act. 46 In the premises, Macquarie Generation has emitted CO2 into the atmosphere at Bayswater Power Station in the Relevant Period in a manner that harms or is likely to harm the environment within the meaning of s 115 of the Act. 47 If Macquarie Generation continues to emit CO2 into the air or atmosphere at Bayswater Power Station as proposed or threatened, those emissions will continue to harm or be likely to harm the environment in the manner described in paragraphs 43 to 46 above.

Paragraphs 48-53 allege that the Respondent in emitting CO 2 was aware that it would cause or was likely to cause environmental harm and was recklessly indifferent to that harm or likely harm to the environment. Lawful authority 54 At all material times, Macquarie Generation has not had lawful authority to emit CO2 at Bayswater Power Station. Particulars (a) CO 2 is not included in the types of waste the disposal of which are authorised by the Environmental Protection Licence. (b) Macquarie Generation does not otherwise have any lawful authority to emit CO 2 at Bayswater Power Station. …

8 Additional paragraphs the Applicants seek to rely on: 54A Further or in the alternative, even if Macquarie Generation has lawful authority to emit CO 2 at Bayswater Power Station, it is only authorised to emit CO 2 in a manner that has reasonable regard and care for:

(a) the interests of other persons; and/or (b) the environment. Particulars If Macquarie Generation has lawful authority to emit CO 2 , which is denied, the limits on that authority are to be implied from the Environmental Protection Licence.

54B At all material times, Macquarie Generation has emitted CO 2 at Bayswater Power Station in a manner that fails to have reasonable regard and care for:

(a) the interests of other persons; and/or (b) the environment,

and as such the emissions of CO 2 at Bayswater Power Station by Macquarie Generation have been without lawful authority. Particulars The Applicants refer to and repeat paragraphs 43 to 46 of the Points of Claim.

POEO Act provisions concerning licences 9 Chapter 3 of the POEO Act concerns licensing. Section 43(b) provides: Environment protection licences may be issued for the following purposes: … (b) to authorise the carrying out of scheduled activities at any premises, as required under section 48,

10 Power generating activities of a certain size are referred to in Sch 1 cl 17 and require a licence. A licence can be issued subject to conditions, s 63. Section 63(2) provides a condition cannot be attached to a licence if compliance with the condition would result in a breach of a requirement made by or under this Act. Other relevant section of the POEO Act are: 66 Conditions requiring monitoring, certification or provision of information, and related offences (1) Monitoring The conditions of a licence may require: (a) monitoring by the holder of the licence of the activity or work authorised, required or controlled by the licence, including with respect to: (i) the operation or maintenance of premises or plant, and (ii) discharges from premises, and (iii) relevant ambient conditions prevailing on or outside premises, and (iv) anything required by the conditions of the licence, and (b) the provision and maintenance of appropriate measuring and recording devices for the purposes of that monitoring, and (c) the analysis, reporting and retention of monitoring data. … 75 Conditions relating to waste (4) Waste received at premises The conditions of a licence may include the following: (a) conditions relating to the storage, handling or disposal of waste received at the premises to which the licence applies, (b) conditions requiring the holder of the licence to take only certain classes and quantities of waste at those premises, or requiring the holder to refuse to accept certain classes and quantities of waste at those premises, (c) conditions requiring the holder of the licence to provide incentives to encourage separation of waste delivered to those premises. Terms of Environment Protection Licence No 779 11 In the section "Information about this licence" the responsibilities of the licensee are set out as follows: Responsibilities of licensee Separate to the requirements of this licence, general obligations of licensees are set out in the Protection of the Environment Operations Act 1997 ("the Act") and the Regulations made under the Act. These include obligations to: ensure persons associated with you comply with this licence, as set out in section 64 of the Act; control the pollution of waters and the pollution of air (see for example sections 120 - 132 of the Act); and report incidents causing or threatening material environmental harm to the environment, as set out in part 5.7 of the Act. 12 Section 1 of the licence is headed "Administrative conditions" and identifies what the licence authorises and regulates. At condition A1 - What the licence authorises and regulates, condition A1.2 states: This licence authorises the carrying out of the scheduled activities listed below at the premises specified in A2. The activities are listed according to their scheduled activity classification, fee-based activity classification and the scale of the operation. Fee based activity Scale Hazardous, Industrial or Group A Waste Generation or Storage (73) 10 - 100 T Generation of electrical power from coal 4000 - Gwh generated Coal Washery Reject or Slag Landfilling (78) 0 - All

13 Section 2 is headed "Discharges to air and water and applications to land". At condition P1 - Location of monitoring/discharge points and areas, condition P1.1 states: The following points referred to in the table below (table not included) are identified in this licence for the purposes of monitoring and/or the setting of limits for the emission of pollutants to the air from the point. 14 Section 3 is headed "Limit conditions". At condition L3 - Concentration limits, condition L3.1 states: For each monitoring/discharge point or utilisation area specified in the table's below (by a point number), the concentration of a pollutant discharged at that point, or applied to that area, must not exceed the concentration limits specified for that pollutant in the table.

Condition L3.4 states: The reference basis for the air pollutants specified in condition L3.3 for points 10, 11, 12 and 13 are as follows:

For solid particles, dry 273K. 101.3 kPa, corrected to 12%CO 2 or equivalent O 2 percentage. For Sulphuric acid mist (H 2 SO 4 ) and/or Sulphur Trioxide (SO 3 ), Chlorine (Cl 2 ), Hydrogen chloride (HCl). Total Fluoride, hazardous substances, Cadmium (Cd) and Mercury (Hg): dry, 273 K, 101.3 kPa.

15 In condition L5 - Waste, condition L5.1 states: The licensee must not cause, permit or allow any waste generated outside the premises to be received at the premises for storage, treatment, processing, reprocessing or disposal or any waste generated at the premises to be disposed of at the premises, except as expressly permitted by the licence.

Condition L5.2 states: This condition only applies to the storage, treatment, processing, reprocessing or disposal of waste at the premises if those activities require an environment protection licence.

Condition L5.3 states: Except as provided by any other condition of this licence, only the waste listed below may be treated, processed, reprocessed or disposed of at the premises: a) Acid solutions or acids in solid form; b) Asbestos; c) Fly ash and bottom ash; d) Waste mineral oils unfit for their original use e) Waste oil/water hydrocarbon/water mixtures or emulsions; f) Boiler cleaning residues; g) Filter bags and h) Water treatment residues.

16 Section 5 is headed "Monitoring and recording conditions". At condition M1 - Monitoring records, condition M1.1 states: The results of any monitoring required to be conducted by this licence or a load calculation protocol must be recorded and retained as set out in this condition. Condition M2 specifies the requirement to monitor concentrations of specified pollutants discharged at specified points. CO 2 is referred to in the table as requiring yearly monitoring using a specified sampling method at Points 10, 11, 12, 13. Respondent's submissions 17 The Respondent accepts that it must meet a high threshold in obtaining an order for dismissal of the proceedings on the basis that no reasonable cause of action is disclosed (r 13.4(1)(b) UCPR), as identified in Agar v Hyde (2000) 201 CLR 552. Summary dismissal can be granted even if extensive argument is necessary to demonstrate the futility of a claim: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129. Lawful authority 18 The nature of electricity generation by coal fired power stations results in the release of CO2 when coal is burnt in oxygen. Given the inevitability of the emission of CO2 it must have been considered by the Environment Protection Authority (the EPA) at the time of the grant of the consent that the activities permitted included the emission of CO2. The construction of the consent as not permitting the emission of CO2 as a necessary incident of the electricity generation at a coal-fired power station would deprive the licence of sensible operation. The permitted activity under the licence and development consent from Muswellbrook Shire Council (the Council) allows the release of CO2 through stacks. There is no means of capturing the CO2 from those stacks in place at the premises. It is unknown if such means are available. The development consent issued by the Council does not permit capture and sequestration of CO2.

19 At all relevant times the Respondent had lawful authority to emit CO2 at the power station under an environment protection licence granted by the EPA. It also has the necessary development consent from the Council. The claim in par 54 of the APOC that the Respondent had no lawful authority to emit CO2 cannot be established and without it being established there is no reasonable cause of action disclosed. The scheme for licensing under the POEO Act and the environment protection licence issued to the Respondent provides for the monitoring of CO2 from several stacks at the premises.

20 Environment protection licences may be issued under Ch 3 of the POEO Act for certain identified purposes. They authorise the carrying out of scheduled activities at any premises, as required under s 48 of the Act (s 43(b)). An occupier of any premises at which any such scheduled activity is carried on is guilty of an offence, unless the person is, at the time that activity is carried on, the holder of a licence which authorises that activity to be carried on at those premises (s 48(2)). In this way, the objects of the POEO Act (set out in s 3) are advanced by a regime for the grant of licences, upon detailed conditions, which authorise activity that otherwise would be unlawful.

21 A statutory instrument such as the licence is to be construed by reference to the language of the instrument viewed as a whole, on the prima facie basis that its provisions are intended to give effect to harmonious goals, and in such a way as to give meaning to every word or provision in the instrument as a whole (see Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] - [71]).

22 On its proper construction, the licence has at all material times authorised, and continues to authorise, the combustion of carbon based fuels (including coal) at the Bayswater Power Station. The Respondent submits at par 23 of its written submissions dated 13 November 2009: (a) By condition A1.2, the licence authorises the carrying out of: (i) the scheduled activity of "Electricity generation", meaning "the generation of electricity by means of electricity plant that, wherever situated, is based on, or uses, any energy source other than wind power or solar power"; and (ii) certain "Fee Based Activities", including (subject to a restriction as to maximum scale) the "[g]eneration of electrical power from coal". (b) The licence expressly provides for the discharge to air of emissions from four boiler stacks.

(c) In its terms, the licence contemplates that CO 2 will be released into the environment as a result of the operation of the Bayswater Power Station and, subject to the conditions of the licence, permits this to occur.

(d) The licence imposes an obligation on the respondent to monitor the volume of various substances, including CO 2 , being released from the Bayswater Power Station in section 2 (pp 8-11) and section 5 (pp 18-19) and to provide annual reports to the Environment Protection Authority including a Monitoring and Complaints Summary (section 6 at p 23).

(e) Although the licence imposes limits upon the discharge of certain other specified substances (section 3), the licence does not impose any limit upon the volume of CO 2 that is authorised to be released into the environment from the Bayswater Power Station. That is, the "Limit Conditions" in section 3 of the licence (pp 11-15) and the "Operating Conditions" in section 4 of the licence (pp 15-16) do not impose any limit upon the volume of CO 2 emissions.

23 In any event, the licence should be interpreted as permitting or authorising conduct (namely, the emission of CO2) which, as a matter of undisputed fact, is a necessary or inherent incident or consequence of the principal activity expressly authorised by the licence and the purpose for its grant (namely, the generation of electricity through the burning of coal).

24 In Environment Protection Authority v Australian Iron & Steel Pty Ltd (1992) 28 NSWLR 502 at 505 Gleeson CJ said a licence permits something to be done. In this case that is the generation of electricity. Further the licence must be considered in substance and as a matter of statutory context, for example Genkem Pty Ltd v Environmental Protection Authority (1994) 35 NSWLR 33 at 41.

25 The Respondent also relies upon a settled principle of statutory construction, relevant to the authority conferred by the licence, variously expressed as follows: (a) " Whenever anything is authorised, and especially if, as a matter of duty, required to be done by law, and it is found impossible to do that thing unless something else not authorised in express terms be also done, then that something else will be supplied by necessary intendment. " ( Egan v Willis (1998) 195 CLR 424 at 468 [83] (McHugh J), citing Fenton v Hampton (1858) 11 Moore 347 at 360; 14 ER 727 at 732) (b) "[T] hose things which are incident to, and may reasonably and properly be done under the main purpose, though they may not be literally within it, would not be prohibited. " (Metro Transport Sydney Pty Ltd v City of Sydney Council [2009] NSWLEC 37 at [29] (Biscoe J), citing A-G v Great Eastern Railway Co (1880) 5 App Cas 473 at 481 (Lord Blackburn)) (c) "[W] hatever may fairly be regarded as incidental to, or consequential upon, those things which the Legislature has authorised, ought not (unless expressly prohibited) to be held, by judicial construction, to be ultra vires. " ( Metro Transport Sydney Pty Ltd v City of Sydney Council [2009] NSWLEC 37 at [29] (Biscoe J), citing A-G v Great Eastern Railway Co (1880) 5 App Cas 473 at 481 (Lord Blackburn))

(d) "An authority conferred by statute is construed as authorizing everything which can fairly be regarded as incidental to or consequential upon the authority itself." ( Johns v ASC (1993) 178 CLR 408 at 428-429 (Brennan J))

26 Electricity Commission of New South Wales v Environment Protection Authority (1992) 28 NSWLR 494 (Elcom) relied on by the Applicants is not comparable on its facts and does not contain a principle of law relevant to this case. The discharge of oil into Lake Liddell was not a necessary, anticipated and inevitable consequence of the operation of the gas turbine station there in issue. The court was not considering an argument about the necessary implication of authority from the terms of a licence. The emission of CO2 is a necessary and anticipated consequence of the generation of electricity from a coal-fired power station. Unlike the licence in Elcom, the licence in this case has no prohibition on the emission of CO2 into the atmosphere, either conditionally or unconditionally. Whether CO 2 a waste under the licence 27 Firstly, condition L5 "only applies to the storage, treatment, processing, reprocessing or disposal of waste at the premises if those activities require an environment protection licence" (emphasis added) (condition L5.2). The emission of CO2 to the atmosphere is not among the "scheduled activities" identified in Pt 1 of Sch 1 to the POEO Act, in respect of which a licence is required under s 48(1) of the POEO Act. See, in particular, the scheduled activities identified in cl 39 to 42 of Pt 1 Sch 1 to the POEO Act. It follows that condition L5 does not apply to the emission of CO2 and, therefore, condition L5 is irrelevant to the circumstances of this case. 28 Secondly, even if CO2 is properly identified as "waste generated at the premises" the emission of CO2 from the premises is not the disposal of CO2 at the premises as: (a) where the licence regulates the emission of substances into the air or water, it uses the language of substances being "discharged from" the premises (condition L2.1) or "emitted to the air" (conditions P1.1, M3.1, M6.1(c) or "discharged to waters" (conditions P1.2, M3.2, M6.1(a)); (b) the structure of the licence strongly reinforces this construction. The licence deals separately with, on the one hand, the storage, treatment, processing and disposal of waste at the premises (condition L5) and, on the other, the monitoring and control of substances discharged from the premises into the air or water (conditions L2 to L4, M2, M3); and (c) having regard to the statutory context of the condition, in particular to the type of processes involving waste referred to in cl 39 to cl 42 of Pt 1 of Sch 1 to the POEO Act, the condition is limited to processes involving waste in or on the ground. 29 Thirdly, "waste" as defined in condition L5 does not include CO2. Waste is defined in the dictionary to the licence which states that unless the contrary is indicated that term has the same meaning as in the POEO Act. Just because CO2 is waste within the meaning of the POEO Act does not mean that it is waste under the licence. Given the conditions of the licence which expressly or necessarily envisage the discharge of CO2 the Court would conclude that the contrary is indicated and that the reference of waste in the licence does not include CO2. Condition M2 of the licence obliging the Respondent to monitor emissions of CO2 from the power station are conditions provided for by the opening words of condition L5.3. It would be directly inconsistent with that monitoring obligation to hold that CO2 was waste under condition L5. It is a fundamental requirement that licence provisions be construed harmoniously. 30 Fourthly, the exception in condition L5.3 (except as provided by any other condition of this licence) applies. There are other conditions of the licence which permit the emission of CO2. Additional grounds in APOC (par 54A, 54B) 31 The proposed paragraphs 54A and 54B disclose no proper basis of claim. The limitations are not reflected in the POEO Act particularly s 55 under which an instrument comes into legal force. Nor are they reflected in the terms of the licence. The circumstances in which a court can construe a statutory provision by reading in words of limitation are very limited. This is all the more so where the words of the instrument are clear. The amendments attempt to graft private law concepts of nuisance as found in Van Son v Forestry Commission of New South Wales (1995) 86 LGERA 108 onto a statutory scheme. There is no basis for doing so. 32 Further the limitations are contrary to the licence terms and the licensing regime in Ch 3 of the POEO Act. The licence authorises the carrying out of the scheduled activities identified in condition A1 which is the activity of electricity generation. Condition A4.1 requires the Respondent to carry out the proposal in the licence application except as provided by the condition of the licence. The licence provides for the monitoring of, and limits on, the discharge of specified substances. In framing the terms of the licence the EPA has chosen to regulate the emission of substances by specific and detailed express terms. 33 Further the introduction of the implied limitation is inconsistent with the terms, scope and purpose of Ch 3 (Environment Protection licenses) in the POEO Act. The relevant processes for determining a licence application by the regulatory authority are identified at par 38 and 39 in the Respondent's submissions (dated 1 December 2009). The licence can be issued subject to a variety of conditions as provided by s 65 to s 76 of the POEO Act. The EPA can vary the licence at any stage and each licence must be reviewed at least every five years. The imposition by the Court of unexpressed and implied limitations on a licence validly granted under s 55 of the POEO Act would be inconsistent with that regulatory regime. 34 Further, the implied limitations are vague and uncertain. There is no practical criterion or guidance for the Court in evaluating the circumstances of any particular act or omission. A heavy burden such as a possible conviction should not be imposed by implication, see Bennion on Statutory Interpretation, 5th ed, Butterworths 2008 at 495 and for example, Genkem at 49F.

Applicants' submissions 35 Applying the test in General Steel as identified in Leerdam v Noori (2009) 255 ALR 553 at [75] by Macfarlan JA (Spigelman CJ and Allsop P concurring), the Respondent has not met the high threshold required in order to succeed on its Notice of Motion. At the final hearing the Applicants have the onus of proving, accepting the Briginshaw test that a criminal act has occurred (Briginshaw v Briginshaw (1938) 60 CLR 336), and the onus then falls on the Respondent to establish on the balance of probabilities that it has lawful authority. For the purposes of this argument the Applicants' case must be taken at its highest. Lawful authority 36 The relevant lawful authority relied on by the Respondent is the environment protection licence. The licence in section 4 contains a general obligation that Macquarie Generation not pollute the atmosphere. 37 Paragraph 54 of the APOC states that the Respondent wilfully or negligently disposed of waste in breach of s 115(1) of the POEO Act. The defence under s 115(2) is not made out merely by demonstrating that the Respondent possessed some form of general authority to do certain acts related to the relevant disposal of waste. Rather, attention is required as to whether the Respondent had the particular requisite authority for what it actually did: Gilmour v Director of Public Prosecutions (Cth) (1995) 43 NSWLR 243 at 246, Dunford J at 248 (with whom Hunt CJ and Allen J concurred); Salter v Director of Public Prosecutions [2008] NSWSC 1325 at [13] - [16]; and see also Environment Protection Authority v Hardt (2006) 148 LGERA 61 at [71] and [97]. 38 None of the conditions in the licence confer on the Respondent the right to do the specific act of disposal of waste by the emission of CO2. This case is similar to Elcom and the findings of Gleeson CJ at 500 apply to the facts of this matter. A licence must give express power to pollute. This cannot be implied. A licence must in its terms permit the particular disposal of waste in issue. None of the provisions relied on by the Respondent confers express permission to discharge CO2. Whether CO 2 a waste under the licence 39 Alternatively, waste is defined in the dictionary to the POEO Act at (a) as: (a) any substance (whether solid, liquid or gaseous) that is discharged, emitted or deposited in the environment in such volume, constituency or manner as to cause an alteration in the environment. The licence prohibits the disposal of waste by way of the emission of CO 2 . Condition L5 sets out the conditions of the licence in relation to the disposal of waste and permits the disposal of certain types of waste. The CO 2 that has been emitted is "waste" within the meaning of the definition in the POEO Act. It therefore requires a licence for the purposes of condition L5.2 (cl 17 Sch 1 to the Act). Condition L5.1 applies to the disposal of CO 2 and prohibits the Respondent from disposing of any waste except as expressly permitted by the licence. The list of wastes that can be disposed of under the licence in condition L5.3 does not include CO 2 . The licence does not authorise and prohibits the disposal of CO 2 from the power station and is not a source of lawful authority for the purpose of s 115(2) of the Act. 40 This ground is not answered by the conditions of a licence based on s 66(1)(a)(ii) of the POEO Act requiring monitoring of discharges from premises. The discharge from the premises is the disposal of waste and condition L5.1.2 applies. Additional grounds in APOC (par 54A, par 54B) 41 The additional paragraphs 54A and 54B found an alternative argument that if there is a finding that the Respondent does have lawful authority to dispose of waste by way of emission of CO2 under the licence that authority does not extend to the emission of CO2 in a manner that does not have reasonable regard and care for the interests of other persons and the environment. It cannot be authority to emit unlimited amounts of CO2. The exercise of statutory power under an instrument must be undertaken without negligence (having a particular meaning), so as to require the person undertaking the activity to act a certain way in order to obtain the immunity from prosecution conferred by a licence; see Van Son at 129-130.

42 Questions of fact arise in relation to paragraphs 54A and 54B and it is difficult to predict precisely how these will unfold. There is a real question of law to be determined as to whether the licence authorises or prohibits the disposal of waste by way of the emission of CO2 into the atmosphere from the power station. To construe the licence as authorising the Respondent to emit an unlimited amount of CO2 into the atmosphere would result in serious environmental harm and would be at odds with the general duty under the licence to abide by the provisions of the POEO Act, including s 115. This would also be at odds with the objects of that Act. 43 Paragraphs 54A and 54B raise real questions of law (whether the environment protection licence, properly construed, does limit the emissions of CO2) and fact (whether any limitations arising on the emission of CO2 imposed by the environment licence have in fact been breached). Finding 44 The Applicants are applying under r 13.4 of the UCPR for an order that the proceedings be dismissed as no reasonable cause of action is disclosed. The relevant test to apply in the consideration of dismissal applications is that in General Steel by Barwick CJ at 129. As held in Leerdam at [75]: Such a course [dismissal of proceedings] should only be taken in a clear case. Descriptions of the test to be applied have included such phrases as "so obviously untenable that it cannot possibly succeed" and "manifestly groundless": General Steel Industries Inc v Cmr for Railways (NSW) (1964) 112 CLR 125 at 129; [1965] ALR 636 at 638 ( General Steel ). Particular caution is required where factual questions are involved as it is difficult to predict in advance of a final hearing the precise manner in which the evidence will unfold. While caution is also required where, as here, the application turns on questions of law and there is no reasonable prospect that deficiencies in what is pleaded will be able to be cured by amendment, opportunities to summarily dismiss or strike out claims will arise more frequently.

45 In Agar v Hyde (2000) 201 CLR 552 at 575-576, the High Court (Gaudron, McHugh, Gummow and Hayne JJ) held that the test for summary dismissal while expressed in many ways required a high degree of certainty about the outcome. Gleeson CJ at 560 and Callinan J at 593 similarly agreed. 46 A matter can be summarily dismissed even where lengthy argument is necessary, see General Steel at 129. The parties agree that the Applicants' claim must be taken at its highest when considering the arguments on the Respondent's Notice of Motion. The parties agreed a statement of agreed facts for the purposes of the hearing on the motion set out above at par 6. The Respondent's counsel advised that these facts would not be agreed if there was a substantive hearing and that all facts would be in issue. The Respondent addressed the statutory framework in the POEO Act for environmental protection licences and the relevant conditions of the Respondent's licence at length. The Respondent has identified its arguments in detail, essentially as it would present at a final hearing of the issues raised by the APOC. The Applicants have stated their case relatively simply. They have not addressed all of the matters raised by the Respondent's submissions in chief and in reply. Assessing the merits of the Applicants' argument taking the case at its highest in the face of the comprehensive submissions of the Respondent has been difficult. 47 The breach of a licence is a criminal offence under the POEO Act. The declaration sought that the Respondent is disposing of waste without lawful authority, a criminal offence under s 115, is being civilly enforced. According to the Applicants' counsel, the Applicants seek a declaration that a crime is being committed and the Applicants have the onus of proving the crime is taking place, accepting the Briginshaw test. The onus would then fall on the Respondent to establish there is lawful authority. As submitted by the Respondent the meaning of the statute will not alter according to whether there is a civil or criminal context. Lawful authority 48 The Applicants argue that the Respondent does not have lawful authority to emit unlimited amounts of CO2 from Bayswater Power Station under its licence. Its submissions emphasise that the authority conferred concerns the right to do an act, see Jordan CJ in Ex parte Johnson; re MacMillan (1946) 47 SR (NSW) 16 referred to in Hardt at [70]. Section 43 of the POEO Act states that an environment protection licence can be issued for scheduled premises. Such a licence has been issued in relation to the operation of the Bayswater Power Station. The occupier of premises is guilty of an offence under s 48 if a scheduled activity is carried out unless that person has a licence. The imposition of licence conditions is provided for in s 63(1). Section 63(2) states that a condition cannot be attached to a licence if compliance would result in a breach of a requirement made by or under the Act. It is an offence not to comply with a licence condition, s 64. The types of conditions which may be imposed are identified in s 66(1)(ii) in relation to monitoring of discharge from premises and the retention of recording data. 49 Condition A1.2 of the licence specifies the activities authorised by the licence according to their scheduled activity classification, and include the generation of electrical power from coal on a scale of generation greater than 4000Gwh. Particular points of discharge to air, inter alia, are specified in condition P1.1 for monitoring and/or the setting of limits for the emission of pollutants. Condition L3.4 specifies limits on identified air pollutants discharging from specific points. CO2 is not referred to in that condition. Several different emissions, including CO2, are required to be monitored under conditions M1.1 and M2 using specified methods from several specified points. 50 A licence is a statutory regulatory instrument, a breach of which can give rise to a criminal offence. It must be construed strictly, in accordance with the usual rules of statutory construction in light of the objects and purposes of the Act it is made under, see Gillard J in Protean (Holdings) Ltd v Environment Protection Authority [1977] VR 51 at 55; see also Bignold J in Environment Protection Authority v Cleary Bros (Bombo) Pty Ltd (1996) 92 LGERA 101 at 111 considering the Pollution Control Act 1970 (repealed), a predecessor to the POEO Act. 51 Project Blue Sky, relied on by the Respondent, states at 381: The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute [45]. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos [47], Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed [48]. A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals [49]. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions [50]. Reconciling conflicting provisions will often require the court "to determine which is the leading provision and which the subordinate provision, and which must give way to the other" [51]. Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme. Furthermore, a court construing a statutory provision must strive to give meaning to every word of the provision [52]. In The Commonwealth v Baume [53] Griffith CJ cited R v Berchet [54] to support the proposition that it was "a known rule in the interpretation of Statutes that such a sense is to be made upon the whole as that no clause, sentence, or word shall prove superfluous, void, or insignificant, if by any other construction they may all be made useful and pertinent". 52 These principles should be applied to the construction of the Respondent's licence. I accept the submission of the Respondent that the correct understanding of the effect of the licence depends upon the proper construction of the terms of the licence as a whole. This must be determined as a matter of substance and in context, that is, having regard to the statutory context (the power pursuant to which it was granted and conditions imposed) and the context of all the terms and conditions of the licence itself; see for example Genkem at 41. The authority conferred by a licence is that expressly conferred and that which is necessarily implied upon the proper construction of the licence. 53 As submitted by the Respondent, the licence expressly authorises the carrying out of electrical power generation from coal in condition A1.2. The licence provides authority to undertake the scheduled activity of electricity generation, on the conditions specified. The Applicants are correct in stating that the licence does not in explicit terms state that CO2 can be emitted as it is not one of the pollutants referred to in limit condition L3.1. CO2 is referred to in condition M1.1 as a substance which the licence requires to be monitored at specified points (stacks). Monitoring of CO2 can only occur if CO2 is being emitted from those stacks. 54 The Respondent argues persuasively that where there is a necessary process for the principal activity the subject of the licence, the licence should be interpreted as permitting that activity. Several references to decisions where that principle has been stated to apply in other contexts are referred to in par 25, including Egan v Willis, Fenton, and Metro Transport. Such a principle must also logically apply in this case. The scheduled activity licensed by the EPA is the generation of electricity by burning coal. That activity has occurred since the establishment of the power station in 1996 according to par 9 in the SOAF. The SOAF also states that CO2 is produced when coal is burned. There is no doubt that the emission of CO2 is essential to the generation of electricity by this coal fired power station. 55 I agree with the Respondent's submission that the licence would have no sensible operation if the licence is construed as not allowing the emission of CO2. Paragraphs 22 and 23 above identify the Respondent's submissions as to why the licence should be so interpreted given the specific references to CO2. The Respondent's construction of the licence gives effect to its purpose and, to the extent that is necessary, "harmonises" the terms of the licence, as referred to in Project Blue Sky. These arguments are compelling and are not addressed by the Applicants' case. 56 The Applicants argue that no provision of the licence specifies that CO2 may be emitted so that the emission of CO2 is unauthorised. General authority to carry out an activity is not sufficient to authorise specific acts which result in the emission of waste not specifically authorised by the licence. Elcom was relied on to support this argument. In Elcom the statutory authority was prosecuted for an alleged offence of polluting waters contrary to s 16(1) of the Clean Waters Act 1970 (repealed). The pollution occurred from an oil spillage into Lake Liddell from the Hunter Valley gas turbine station owned by Elcom. The gas turbine station was part of a large electricity producing complex which included the Liddell Power Station and the Bayswater Power Station. One of the defences raised by Elcom was that its licences under the relevant pollution control legislation then in force permitted the conduct which had given rise to the offence. At the time of the offence Elcom held three potentially relevant licences: one for Liddell Power station issued under the State Pollution Control Commission Act (1970) (repealed), one for the Bayswater Power Station and one for the gas turbine station. The latter contained no condition permitting the pollution of any waters. Pollution of waters is not an offence if a person or entity pollutes waters in compliance with a pollution control licence. Gleeson CJ (Carruthers and Smart JJ concurring) held that none of the licences permitted pollution by the spillage of oil. The passage relied on by the Applicants at 500 is that: None of the three potentially relevant licences in terms permitted what occurred in the present case. The licence in respect of the gas turbine station simply prohibited pollution of any waters. The licences in respect of both the Bayswater and Liddell Power Stations prohibited pollution of waters except as may be provided in some other condition of the relevant licence. Only the Bayswater Power Station licence contained a condition on the subject matter of oil pollution, and it did not relate to discharges of oil in the circumstances of this case. 57 The licences considered in Elcom did not make any specific provision for the release or spillage of oil into Lake Liddell and it was not an essential part of the operation of the gas turbine station that oil be released or spilled. I cannot agree with the Applicants' submissions that the principles in Elcom apply to the licence held by the Respondent because of the important components of that licence referred to in the Respondent's submissions. Contrary to the Applicants' submission that a similar submission to that put by the Respondent in this case was rejected by Gleeson CJ at 500, Elcom does not address the quite different provisions of the licence held by the Respondent or the arguments of the Respondent based on those licence provisions. The EPA as the issuing authority for the Respondent's licence must have been and must be aware that CO2 is emitted by the Bayswater Power Station because the power station could not otherwise operate. That knowledge is reflected, inter alia, in licence provisions which require the monitoring of CO2 emissions. The EPA's decision to allow the discharge of CO2 by the Respondent from the Bayswater Power Station under the licence is not the focus of this litigation and it is not a party in these proceedings. It is not correct to say that the licence does not deal with CO2 in such a way that there is no lawful authority to emit CO2 provided under it. 58 The issues arising in relation to the construction of the Respondent's licence were not addressed by Elcom. In the absence of any further response from the Applicants to the Respondent's submissions, the Respondent has provided several compelling reasons to refute this part of the Applicants' APOC. I consider at a final hearing on this issue the Applicants are unlikely to succeed. Whether CO 2 is waste under the licence 59 The other contention of the Applicants addressed by the Respondent's motion for summary dismissal is the argument that CO2 is waste under condition L.5 of the licence and its discharge is not authorised on this basis. That contention is set out above in par 39-40. Condition L5 states that the licence holder must not dispose of waste generated outside the premises to be received at the premises for storage or treatment or any waste generated at the premises to be disposed of at the premises unless the licence permits it. Waste conditions L5.1, L5.2 and L5.3 are set out above in par 15. 60 The Applicants argue that because CO2 is not contained in the substances identified as waste in condition L5.3, it is waste. That CO2 is referred to as a substance to be monitored under the monitoring conditions in section 5 of the licence does not mean it is not a waste under condition L5. The Respondent has provided cogent reasons for why the licence should not be interpreted in the way contended by the Applicants. These arguments are identified at par 27-30 and it is unnecessary to set them out again here. They provide a complete answer to this aspect of the Applicants' case. Taking the Applicants' case at its highest I consider it is very unlikely to succeed on this argument also. 61 At a final hearing the Respondent bears the onus of proof of demonstrating that it has lawful authority to do what it seeks to do by virtue of s 256 of the POEO Act. It is very likely that it would be able to do so. Additional grounds in APOC (par 54A, 54B) 62 As identified in the additional par 54A and par 54B, the Applicants seek to argue in the alternative that if the Respondent has lawful authority to emit CO2 it is only authorised to emit CO2 in a way that has reasonable regard and care for people and the environment and that such a limitation is to be implied in the licence. It argues that as a matter of fact the Respondent has failed to undertake its activities in accordance with this requirement. According to the Applicants, a general limitation must be complied with under the general terms of the licence. The implied limitation is said to arise from principles articulated in Van Son. 63 Van Son was an action for damages commenced in the Equity Division of the Supreme Court of NSW due to an interference by the defendant with the plaintiff's riparian rights to use the water of a specified creek in an unpolluted condition. The damage to the creek was found to result from the defendant's forestry operations. The defendant held a pollution licence issued under the Pollution Control Act (1970)(repealed). As part of the reasoning of Cohen J at 129-130, his Honour held that the licence did not authorise work to be done in a manner which was unreasonable and caused damage to neighbours.

64 Circumstances where common law principles have been applied to remedy pollution emitted under authority of licences are found in negligence and/or tort actions seeking damages. Van Son is one case which fits within this broad category. Such actions can be available despite the existence of approval for the polluting activity which gives rise to the pollution in some jurisdictions, see for example cases referred to in electronic commentary Thomson Reuters, Laws of Australia, vol 14 (current at 31 August 1997) 14 Environment and Natural Resources, "14.6 Environmental Harm: Pollution Control and Hazardous Substances" [7]: Laws of Australia, (On-line) Legal Online (accessed 25 March 2010). The Applicants in this case are not presently seeking damages for environmental harm but the nature of the arguments they are seeking to raise overlap with actions of this type. There have been few actions of this type in NSW or in other Australian jurisdictions so far as I am aware. 65 The Respondent put comprehensive submissions about why this part of the Applicants' case was untenable as a matter of statutory construction and general principle, as outlined above in par 31-34 which in turn is a summary of matters set out comprehensively at par 30-53 of the Respondent's written submissions in reply. The correctness of these submissions is not so self-evident however that summary dismissal is warranted. 66 The Respondent's submissions (par 33 above) are predicated on the assumption that the statutory scheme for licensing under the POEO Act must "cover the field" for the authorisation of activities enabled under the licence. That is not automatically the case, as the Applicants seek to argue. While accepting the Respondent's submissions that limitations on statutory authority should not be readily implied in the absence of specific limitations in the relevant instrument or the enabling statute, that does not rule out completely a cause of action such as that contended by the Applicants. For example, a section of the POEO Act that may arise for consideration is s 332 which provides that any right or remedy or proceedings under any other Act or law is not limited by the POEO Act. Section 322(3) states that a right includes a right to restrict or prevent or obtain damages for pollution. This part of the Applicants' case taken at its highest is arguable in my view, and is not met entirely by the Respondent's arguments in support of the motion for summary dismissal. The Applicants' arguments are novel and the principle of limitation of statutory authority referred to in Van Son has not been applied in relation to the POEO Act so far as I am aware. 67 The Respondent submits (par 34 above) that the implied limitations are vague and uncertain and could give rise to a possible conviction so that the litigation is a heavy burden on the Respondent. I have upheld the Respondent's summary dismissal claim in relation to the lawful authority issue raised by the Applicants. Paragraphs 54A and 54B will be considered in the context that there is lawful authority to emit CO2 under the licence. That is the basis on which the Applicants put forward par 54A and 54B. I do not therefore understand that a finding of conduct potentially giving rise to a criminal offence under s 115 can arise in relation to these paragraphs if the Applicants' argument is upheld. The focus of the case will be on whether there are implied limitations as contended by the Applicants on the emission of CO2 separately from the licence as a matter of law and, if these limitations exist, as a matter of fact. I do not consider that par 54A and 54B should be summarily dismissed as the Respondent has not met the high threshold necessary of demonstrating that no reasonable cause of action exists. Conclusion 68 Given my finding that the Applicants' case in relation to the absence of lawful authority under the licence, including that CO2 is not a waste for the purposes of the licence, should be summarily dismissed, the Applicants will need to recast their summons and APOC. For example, the declaration sought in the Class 4 summons is that the Respondent is wilfully or negligently disposing of waste in breach of s 115 of the POEO Act. That declaration is directed as I understand it to a case based on an absence of lawful authority. Further, I have not discussed par 48-53 of the APOC headed "wilful and negligent" as I did not understand that these paragraphs were raised in argument before me. The Applicants will need to clarify whether these grounds are to continue in whole or part in light of my findings that part of the Applicants' case is summarily dismissed. Additionally the Applicants may need to consider the consequential order(s) they seek if the case is recast. 69 I should make an order upholding in part the Respondent's application for summary dismissal in this Notice of Motion. An order in general terms can be made. Alternatively, the Applicants' advice as to what paragraphs of the APOC will remain or are summarily dismissed can be provided. I can then identify in an order those parts of the APOC which are summarily dismissed. It will also be necessary to make a timetable for the filing of amended pleadings by the Applicants. The parties advice on these matters is sought.

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