Plaintiffs v Defendant

Supreme Court of Victoria|2018-09-21|Before: MACAULAY J

STATUTORY INTERPRETATION - Construction - Reconciliation of conflicting provisions - Amendments to Petroleum Act 1998 introduced by enactment of Resources Legislation Amendment (Fracking Ban) Act 2017 - Provision creating statutory moratorium to prohibit onshore petroleum activities - Plaintiff resource companies holders of existing authorities to carry out activities prohibited by moratorium - Provision that moratorium does not affect existing requirements or obligations under the conditions of existing authorities - Meaning of 'requirement' and 'obligation' - Whether provision creating moratorium should be read down - Whether resource companies are permitted to conduct any onshore petroleum activities during the moratorium - Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 and Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) ; applied - Declaratory relief refused.

ADMINISTRATIVE LAW - Wednesbury unreasonableness - Whether purported variations to permits by Minister invalid - Minister given broad discretionary power under s 102 of the Petroleum Act 1998 to vary conditions of permits issued - Purported variations required permit holders to carry out work at future, unspecified time at which time the permit would not authorise the work - Purported variation contains obligation to carry out work illegal under the conditions of permit - Minister for Immigration and Citizenship v Li & Anor [2014] FCAFC 1; (2013) 249 CLR 332, considered - Order made quashing variations.

ADMINISTRATIVE LAW - Implementation of executive policy - Non-statutory moratorium prohibiting onshore petroleum activities - Whether alleged decisions made by the Minister in an administrative capacity to implement the moratorium until March 2017 were unlawful ― Discretionary nature of declaratory relief ― Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564 considered ― Declaratory relief refused on the basis relief lacked utility.

1 This case concerns the legal efficacy of various measures taken by the Victorian government between August 2012 and December 2017 to place a moratorium upon onshore petroleum exploration within Victoria. The plaintiffs are resource companies who hold various authorities granted under the Petroleum Act 1998 (Vic) ('Act') to carry out petroleum exploration in defined areas within Victoria. The defendant is the Minister responsible for granting the authorities and making relevant decisions under the Act.

2 The plaintiffs seek relief which, if granted, would:

declare as unlawful alleged decisions made by the Minister in an administrative capacity to implement the moratorium until March 2017;
prevent the Minister from continuing to refuse to allow petroleum exploration under existing authorities in reliance upon an amendment to the Act that commenced on 16 March 2017; and
set aside certain variations to the authorities made in December 2017.

3 Exploration for and production of petroleum (including petroleum gas) within onshore areas in Victoria is controlled under the Act. Control is exercised through the requirement under the Act that petroleum exploration and petroleum production be carried out only pursuant to an authority granted by the Minister - in the case of petroleum exploration, an 'exploration permit' and, in the case of petroleum production, 'a production licence', and to retain rights to a petroleum discovery pending commercial production, 'a retention lease'.

4 In broad terms, and relevantly for present purposes, the scheme of the Act is as follows. A person interested in extracting petroleum onshore in Victoria must first obtain an exploration permit for a given area. Such a permit authorises the holder to conduct surveys, make wells, take samples for analysis and extract petroleum to determine if it will be viable to extract commercially. An exploration permit expires after five years, but it may be renewed for a further five years and, in certain circumstances, extended for up to a year at a time.

5 If the holder of an exploration permit considers that any petroleum discovered within the permit area is not presently viable to extract commercially but may become so in the future, that holder may apply for and be granted a retention lease for up to 15 years. A retention lease enables the holder to retain the rights to the petroleum discovery for the period of the lease.

6 In due course, the holder of an exploration permit or a retention lease may apply for a production licence over the whole or part of the permit area. Such a licence carries the right to extract the petroleum, produce it commercially or store it in reservoirs for later recovery.

7 Under the Act, an exploration permit, retention lease and production licence are each called an 'authority'.

8 Between 2002 and 2013 the first plaintiff, Mirboo Ridge Pty Ltd (Mirboo), and the second plaintiff, Petro Tech Pty Ltd (Petro Tech), both subsidiaries of the third plaintiff, Lakes Oil Ltd (Lakes Oil), had, between them, obtained - either by grant or transfer from an original grantee - four exploration permits and two retention leases under the Act (the six authorities). Each of the six authorities was granted in respect of a defined area within Victoria. None of the six authorities have yet progressed to the stage of entitling the plaintiffs to obtain a production licence for the area in question.

9 Table 1 below sets out some details of the six authorities, namely: the type of authority,[1] the name of the holder, its general location and the date of grant.

10 Focusing on petroleum exploration activities, Ministerial control under the Act is exercised in a variety of ways. In order to carry out any petroleum exploration activities the would-be explorer must:

(a) (as already explained) be granted an authority by the Minister under either an exploration permit[2] or a retention lease;[3]

(b) in applying for the authority, submit a work program for the Minister's consideration that describes the intended work to be carried out over the life of the authority;[4]

(c) submit and obtain Ministerial acceptance of an operation plan for the intended petroleum exploration work;[5] and

(d) apply for and obtain Ministerial consent to carry out the petroleum exploration work.[6]

11 The work programs referred to in (b) above typically specify the work to be carried out on a staged basis. That is, the work program describes different sequential parts of the work, from initial surveys through to drilling wells and taking samples, on a year-by-year basis over the life of the relevant authority.

12 Prior to 2012 Mirboo and Petro Tech carried out various stages of the petroleum exploration works in accordance with work programs approved under their respective authorities. Before commencing those discrete stages of work, each first obtained acceptance of their operation plans (under s 161) and consent to undertake the petroleum exploration (under s 138).

13 Furthermore, in accordance with other provisions of the Act, the Minister had from time to time extended the authorities after Mirboo or Petro Tech sought and obtained the suspension of various conditions under which the work was to be carried out.

14 By August 2012 four of the six authorities were on foot; the other two soon to be. In respect of those on foot, some work had already been carried out in accordance with approved work programs (subject to any variations that had been made) and after the relevant holder had obtained necessary Ministerial acceptance of their operation plans and consent for their petroleum exploration activities to proceed. Also, in respect of each of them, further work was still to be undertaken. Mirboo and Petro Tech had applied for, or were soon to apply for, acceptance of further operation plans and further Ministerial consent for carrying out the next stage of their work programs.

15 Some of the petroleum exploration activities sought to be undertaken by Mirboo and Petro Tech involved hydraulic fracturing or 'fracking'. Hydraulic fracturing is a technique used in the extraction of unconventional gas, being gas that is found in coal seams, shales and tight sandstones.[7] More recently the petroleum exploration activities sought to be undertaken by Mirboo and Petro Tech also involved conventional drilling techniques in exploration for conventional gas, which is gas found in sandstone.

16 Against this backdrop, between August 2012 and December 2017 a number of things occurred which are critical to the issues arising in this case. Although involving six steps, in substance they constitute three phases of activity broadly designed to effect a moratorium on aspects of onshore petroleum operations: first, the implementation of executive policy (that is, a non-statutory moratorium); secondly, legislative amendment; and, thirdly, variations (or purported variations) of the authorities effected under s 102 of the Act. I describe the three phases below.

Implementation of executive policy (or non-statutory moratorium)

17 In August 2012 the Minister for Resources (then Minister O'Brien) announced a moratorium on hydraulic fracturing in Victoria with immediate effect, including a hold on approvals to undertake hydraulic fracturing as part of onshore gas exploration.[8] At the time, Mirboo and Petro Tech were advised in correspondence that exploration that did not involve hydraulic fracturing 'may proceed subject to any required approvals and consents', but that exploration activities which involved hydraulic fracturing 'will not be approved'.[9]

18 In November 2013 the Premier (then Premier Napthine) announced that the moratorium on hydraulic fracturing would remain in place until at least July 2015 while scientific studies and a community consultative process was undertaken.[10]

19 In May 2014 the non-statutory moratorium was effectively extended to all onshore gas exploration activities (that is, both conventional and unconventional). The Minister issued a press release on 28 May 2014 announcing that the government had 'put a hold on work plan approvals for onshore gas exploration until more information is available including evidence from the water study, community views and industry impacts'. The Minister further stated that '[i]n the spirit of the current moratorium, the Coalition Government will put a hold on making any decisions on the approval of current onshore gas exploration work plans'.[11]

20 On 30 August 2016 Premier Andrews announced that there would be a permanent ban on the exploration and development of all unconventional gas in Victoria, including hydraulic fracturing and coal seam gas. In addition, the Premier announced that the government would legislate to 'extend the current moratorium on the exploration and development of conventional gas until 30 June 2020'.[12] In the same announcement the Premier stated that 'exemptions to the ban' would allow certain activities to continue, such as gas storage, carbon storage research and accessing offshore resources. Information published by the government thereafter indicated that as a consequence of those announcements there would be a hold on approvals to conduct exploration activities including drilling, performance of well tests, collecting samples from drill holes and performing analysis.[13] Consistently with the Premier's announcement, the information also provided that applications could still be made by existing tenement holders for the approval of limited identified activities outside of those already mentioned.

21 As a result of the policy first announced in August 2012, and thereafter continued and extended in the subsequent announcements, the Minister did not make any decisions under s 161 to accept the operation plans submitted by Mirboo or Petro Tech or, under s 138, to consent to the petroleum operations embodied in them (as foreshadowed in paragraph [14] above), for any of the further stages of the work programs under the authorities held by those companies. As a consequence, after that date neither Mirboo nor Petro Tech carried out petroleum operations as described in those work plans but, instead, sought and obtained a series of suspensions of the work plans and extensions to the six [14]thorities.14

22 In March 2017, the non-statutory moratorium was overtaken by a statutory moratorium. The Resources Legislation Amendment (Fracking Ban) Act 2017 (Vic) ('Fracking Ban Act') was enacted and came into operation on 16 March 2017. The Fracking Ban Act introduced four sections into the Act, including a new section 17A, which relevantly provides:

17A Moratorium on petroleum exploration and petroleum production

(1) Subject to this section, despite anything to the contrary in this Act or any condition of a relevant authority, the carrying out of any petroleum exploration or petroleum production during the moratorium period is not authorised under that authority.

(2) Subsection (1) does not affect any requirement or obligation imposed on the holder of a relevant authority by or under this Act or under a condition of the authority during the moratorium period.

(3) In addition, subsection (1) does not affect -

(a) the authorisation of petroleum exploration or petroleum production during the moratorium period by the following production licences -

(i) Production Licence 1 registered in the petroleum register on 1 March 1985;

(ii) Production Licence 2 registered in the petroleum register on 31 December 1990;

(iii) Production Licence 3 registered in the petroleum register on 10 May 1993;

(iv) Production Licence 11 registered in the petroleum register on 14 May 2002;

(v) Production Licence 13 registered in the petroleum register on 7 February 2006; or

(b) the authorisation under a production licence of petroleum storage in a reservoir that is carried out in accordance with a storage development plan approved under Division 7 of Part 5 that applies to the production licence.

(4) Despite anything to the contrary in this Act, the Minister must not grant a relevant authority during the moratorium period.

(5) ln this section-

"moratorium period" means the period beginning on the day on which the Resources Legislation Amendment (Fracking Ban) Act 2017 comes into operation and ending on 30 June 2020;

"relevant authority" means an exploration permit, a retention lease or a production licence.

23 Under s 17A(1), the authority to carry out petroleum exploration or production (as defined) under any existing authority is removed during the moratorium period. The critical question, explored below, is the effect of sub-s (2) which states that sub-s (1) 'does not affect any requirement or obligation...under a condition of the authority during the moratorium period'. As will appear, the meaning attributed to the words 'requirement or obligation' in that context lies at the heart of this case.

24 On 21 December 2017 the Minister exercised his power under s 102 of the Act to vary the six authorities. Although I will come to it in more detail below, the power of variation under s 102 could only be exercised after the permit holder having been notified of the proposed variation and the Minister having considered any submissions from the holder in reply. There is no issue that that process took place properly. The essential substance and effect of the variations to the six authorities is sufficiently illustrated by reference to one example, PEP 169, the details of which appear below.[15]

25 Immediately prior to the variation to PEP 169, only Year 4 and Year 5 of the five-year work program described in condition 1 of the exploration permit remained outstanding. The dates for completion of work in those years, prior to the variation, were 24 October 2017 and 24 October 2018 respectively. Mirboo had sought suspension and extension of Year 4 and Year 5 of the work program so that completion would be 24 October 2018 and 24 October 2019 respectively.[16] When first proposing that there be a variation to the exploration permit, on 30 August 2017,[17] the Minister explained that:

The variations are proposed to clarify any conditions in PEP 169 that might otherwise be understood as authorising petroleum exploration or production contrary to the [Fracking Ban Act]. The conditions will be varied to clarify that a permittee is not required, obliged or permitted to carry out petroleum exploration any earlier than 30 June 2020 or for so long as the moratorium referred to in s 17A of the Act continues in effect, and to delete work program conditions involving hydraulic fracturing.

26 After taking into account certain objections raised by Mirboo, and rejecting others, the Minister proposed the final form of variation on 17 November 2017 in the following form (with additions and deletions underlined by me):[18]

The permittee shall, but no earlier than 30 June 2020, carry out minimum petroleum exploration in the permit area in accordance with the work program outlined in the table below. The time for completion for the work scheduled for years 4 and 5 will be advised but will be after 30 June 2020.

Years 2, 3 & 4 of the work program are declared to be the key objects of the work program for the purpose of section 33 of the Act.

For the avoidance of doubt, the conditions do not impose on the permittee any requirement or obligation, by or under the Act or under a condition of this authority, to carry out any petroleum exploration during the moratorium period.

Explanatory note: On 29 August 2017, years 4 and 5 of the work program in condition 1 of PEP 169 were suspended pursuant to s. 105 of the Petroleum Act 1998 (the Act) for 12 months to 12 October 2017 and the term of the permit was extended to 24 October 2018 pursuant to s. 106 of the Act.

27 The variation was ultimately made in the form set out above. In proposing the variation, the Minister asserted that:

The petroleum exploration works comprising condition 1 fall within the scope of s 17A(1) and are not authorised under the authority. The proposed variation is consistent with the moratorium on petroleum exploration and the provisions and purposes of the Act.[19]

28 Arising from those three phases of activity just outlined, the plaintiffs argue that:

(a) the Minister's failure between November 2013 and March 2017 to accept operation plans submitted for the intended petroleum exploration activities in accordance with approved work programs (under s 161) and to grant consent for the carrying out of those petroleum operations (under s 138) amounted to unlawful constructive refusals to exercise the powers which the Minister was required to exercise under the Act;

(b) unless the December 2017 variations are held to have been validly made (see (c) below), on a proper construction of the amendments inserted into the Act in March 2017 the plaintiffs are not prohibited by the Act from carrying out the 'minimum work' required under their current exploration permits; and

(c) the December 2017 variations to the six authorities were all invalid by reason of being unreasonable in the Wednesbury sense in that they were irrational, made for an improper purpose and involved an unlawful fetter on the future exercise of Ministerial discretion.

29 Based upon those arguments, the plaintiffs seek declarations and orders in the nature of mandamus and certiorari. Specifically, they seek:

(a) declarations that the Minister's past refusals, between November 2013 and 16 March 2017, to decide whether to accept operation plans under s 161 or to consent to petroleum operations under s 138 were unlawful;

(b) declarations that the Minister cannot presently refuse, or in the future refuse, to accept operation plans or consent to petroleum operations on the basis that doing so is prohibited by s 17A(1) of the Act, coupled with orders in the nature of mandamus directing the Minister to determine those issues according to law; and

(c) declarations that the December 2017 variations were invalid and orders in the nature of certiorari quashing the decisions that lead to those variations.

30 The Minister opposes this Court granting the relief sought. He denies that the policy of not deciding whether to accept operation plans or to consent to petroleum operations between November 2013 and 16 March 2017 was unlawful. Further, he maintains that on a proper construction of s 17A of the Act the plaintiffs have no current statutory authority to carry out any petroleum operations under the existing authorities so there is no statutory basis to accept operation plans for or to consent to such operations. Further or alternatively, the Minister says that insofar as s 17A(2) might potentially carve out some petroleum explorations from the moratorium imposed by s 17A(1), it does not have that effect on operations that lack existing Ministerial consent under s 138 or the acceptance of operation plans under s 161. Finally, the Minister denies that the December 2017 variations were invalidly made.

31 A point arose at the outset of argument concerning the order in which it was necessary to address the issues. Specifically, the plaintiffs argued it was not possible to consider the appropriate construction of s 17A, and in particular the operation and effect of s 17A(2), unless a determination was first made as to the efficacy of the December 2017 variations. They argued that it was necessary to determine the validity of the December 2017 variations to identify the conditions that presently apply to the plaintiffs' authorities. I reject that argument. The construction of s 17A is properly addressed and determined independently of the conditions applicable to any particular permit, and that construction is then to be applied to each of the six authorities.

32 The six authorities were granted at various times between 2002 and 2013.[20] Although the subject matter of this dispute includes each of the six authorities, it is only necessary to discuss two of them: PEP 169 and PRL 2. Indeed, these reasons will focus predominantly on PEP 169, as did argument. It is agreed between the parties that the issues raised by the remaining authorities will be determined by the decisions on those two authorities.

33 I have already described the key events between 2012 and 2017 concerning the operation of the non-statutory moratorium, effected by executive policy. Schedule A to these reasons contains a more detailed treatment of that period by focusing on how the relevant events played out with respect to PEP 169.

34 After laying out the statutory scheme of the Act, I will address first the proper construction of s 17A. I will then address the implications of the plaintiffs' lack of s 138 consent or s 161 acceptance upon their argument that they are not currently prohibited by s 17A(1) from carrying out the minimum work required under their existing exploration permits. Having done that I will discuss and give my conclusions on the validity of the December 2017 variations. Finally, I will determine what relief, if any, is to be ordered, including any relief in relation to the alleged constructive refusals to make decisions between November 2013 and March 2017.

35 The purpose of the Act is to regulate petroleum exploration and production in Victoria.[21] The objectives of the Act are to encourage the exploration for petroleum in Victoria and to promote petroleum production for the benefit of all Victorians by, inter alia, providing an orderly, fair and competitive system for granting authorities enabling petroleum exploration and production.[22] In pursuing those objectives regard is to be had to economic, social and environmental interests by ensuring a number of things, including efficiency, public safety, impact on the environment and compliance with authorities.[23]

36 One of the critical aspects of the statutory scheme is therefore to ensure the orderly exploitation of petroleum resources, through the regulated conduct of exploration and production activities.

37 The Crown in right of Victoria owns all petroleum, including gaseous hydrocarbons,[24] below the surface of any land in Victoria.[25] A person must not carry out any petroleum exploration or production operation in Victoria except under, and in accordance with, an authority or as otherwise permitted by the Act.[26] 'Petroleum exploration' is the carrying out of one or more of the activities specified in s 7 of the Act for the purpose of finding petroleum or reservoirs. Those activities include conducting geological, geophysical and geochemical surveys, making wells, taking samples for the purposes of analysis and extracting petroleum from land for the purpose of determining whether it will be viable to extract commercially. 'Petroleum production' is the extraction of petroleum from land for the purpose of producing it commercially, the injection and storage of petroleum in reservoirs or later recovery of petroleum from reservoirs, and other activities incidental thereto.[27]

38 An 'authority' under the Act relevantly includes an exploration permit, a retention lease or production licence.[28]

Exploration permit, work program and key objects

39 An exploration permit authorises the holder of the permit, subject to and in accordance with the conditions of the permit, to carry out petroleum exploration in the permit area and to do anything in that area that is necessary for, or incidental to, that purpose.[29] An exploration permit operates for a term of 5 years unless it is cancelled or surrendered earlier, or the Act otherwise provides.[30] An applicant for an exploration permit must submit a proposed work program including details of how much it intends to spend on each part of that program.[31] A 'work program' is a document, in the form required by the regulations, which outlines the work the applicant intends to perform under the authority, how the work is to be structured, the intended extent of the work and the proposed timelines for the various phases of the work.[32]

40 In granting an exploration permit the Minister must declare in writing that certain specified elements of the work program submitted by the applicant are the key objects of that work program.[33] The holder of an exploration permit must ensure that the key objects of the work program are achieved to the maximum extent practicable.[34] An exploration permit may not be renewed by the Minister if the key objects of the work program to have been conducted under the permit have not been achieved to the maximum extent that is practicable.[35] An exploration permit may otherwise be renewed (but only once) for a further 5 years from the date of its expiry.[36] At the time of any such renewal the permit area for the exploration permit must be reduced by at least 50%.[37]

41 A retention lease enables the holder of an exploration permit to retain certain rights to a petroleum discovery which is not commercially viable to develop under a production licence at the time the lease is granted, but which might become viable to develop within 15 years.[38] A retention lease authorises the holder to carry out petroleum exploration in the lease area, to do anything in that area that is necessary for, or incidental to, that purpose and to apply for a production licence in respect of the lease area under Division 2 of Part 5 of the Act without needing to comply with any requirement that there might otherwise be under the Act to carry out a work program in respect of the area.[39]

42 The holder of an exploration permit or retention lease may apply to the Minister for a production licence in respect of any part of the permit or lease area on which the holder has discovered petroleum or a reservoir.[40] A production licence authorises its holder, subject to the conditions of the licence, to carry out petroleum production and petroleum exploration in the licence area.[41]

43 The Minister may impose on an authority such conditions that the Minister considers to be appropriate.[42] Without limiting the conditions the Minister may specify, the Minister may specify conditions relating to the operations that are to be carried out 'under the authority',[43] requiring the expenditure of a minimum amount of money in relation to operations 'under the authority'[44] and requiring the carrying out of approved work programs 'during the term of the authority'.[45] If the holder of an authority is not complying with a condition of the authority, the Minister may issue an improvement notice requiring the holder of the authority to take specified action within a specified period.[46] Failure to comply with such an improvement notice is an offence.[47]

Variation, suspension, extension and cancellation

44 The Minister may unilaterally vary any condition imposed on an authority, subject to a requirement to first consult with the authority holder.[48] Conditions may also be varied by consent.[49]

45 On the application of the holder of an authority, the Minister may suspend any condition imposed on an authority for up to 1 year.[50] In doing so, the Minister may impose conditions in relation to the suspension and the holder of the authority must comply with those conditions.[51] While a condition of an authority is suspended, the holder of the authority need not comply with the condition.[52] If the Minister suspends a condition of an authority, the Minister may also extend the term of that authority by a period not exceeding the period of the suspension.[53]

46 An authority may be cancelled by the Minister only if one or more of the grounds in s 113 applies.

47 The holder of an authority must not carry out any petroleum operation on any land without the written consent of the Minister.[54] Consent must not be unreasonably withheld.[55] The Minister must give or refuse to give consent within 28 days (or any longer period allowed by the Minister) of it being sought.[56] If the Minister does not comply with that time requirement, and the land in question is not native title land, the Minister is deemed to have given the consent sought.[57]

48 Before carrying out a petroleum operation, the holder of an authority must give the Minister an operation plan that addresses the risks that the operation may pose to the environment, property or the public, and which specifies what the holder of the authority will do to eliminate or minimises those risks and what the holder of the authority will do to rehabilitate the land to be affected by the operation.[58] The operation plan must also include the operational details required by reg. 6 of the Petroleum Regulations 2011 (Vic) ('Regulations').[59] The holder of the authority must not carry out the petroleum operation unless the Minister has accepted the operation plan in writing.[60] If the plan is accepted, the authority holder must ensure the operation is carried out in accordance with the plan.[61] The holder of an authority must rehabilitate any land that is used in carrying out an operation under the authority and must, as far as is practicable, complete the rehabilitation before the authority ceases to apply to the land.[62]

49 It is worth observing at this point that s 161 appears in Part 11 of the Act headed 'Other Obligations on the Holders of Authorities', and the obligation under s 161 is itself reinforced by s 147 which appears in Division 5 of Part 9 of the Act under the heading 'Statement of Pre-Operation Requirements'. Section 147 sets out a table containing 'requirements that must be complied with by an authority holder before a petroleum operation', as listed in the table, may be carried out. As well as listing the requirement of obtaining acceptance of an operation plan under s 161, among other things s 147 also lists the requirement that the written consent of the Minister be obtained in accordance with s 138 of the Act.

50 In short, the plaintiffs' argument concerning the construction of s 17A is that the section does not prohibit an authority holder from carrying out petroleum exploration which, at the date of the amending legislation, was already required to be undertaken under the authority. Indeed, on the plaintiffs' argument, s 17A preserves the requirement to carry out such petroleum exploration such that the authority holder would be in breach of the authority if it did not undertake that work.

51 Key to the plaintiffs' argument is, first, that the phrase 'subject to' in sub-s (1) renders that subsection subservient to the text of sub-s (2). Secondly, the plaintiffs' argument depends on construing the words in sub-s (2), 'requirement or obligation ... under a condition of an authority', so as to pick up the elements of a work program submitted with the application for the authority[63] or, more particularly, the 'minimum' elements of that program.

52 Reading the two subsections together and adopting that construction has the effect, so the plaintiffs contend, that the prohibition in sub-s (1) does not apply to petroleum exploration in so far as it constitutes the minimum works required to be undertaken by the authority holder under the authority. That is, the prohibition in sub-s (1) does not remove authorisation to carry out works which the conditions of the authority, and other relevant statutory provisions, oblige the authority holder to carry out. Rather, so goes the argument, the combined effect of s 17A(1) and s 17A(2) is to except those 'minimum works' from the general moratorium introduced by the Fracking Ban Act.

53 The plaintiffs' argument may be illustrated by an example. Immediately before 21 December 2017 the terms of PEP 169 included, as condition 1, these words:

The permittee shall carry out minimum petroleum exploration in the permit area in accordance with the work program outlined in the table below ...

54 In the table immediately below those words, the works described for Year 4 and Year 5 respectively, were:

55 On the plaintiffs' argument, the removal of authority to carry out petroleum exploration in the PEP 169 permit area during the moratorium period (that is, from March 2017 through to 30 June 2020) had no effect on the permit's minimum work requirement that the authority holder should drill the two exploration wells in Year 4 and Year 5.

56 In my view, the construction of s 17A that produces this result must be rejected. I shall explain why.

57 The relevant principles of statutory construction are orthodox principles.[64] They are well established and need not be repeated.

58 I begin with the text of s 17A itself set out in [22] above. The text of s 17A includes [65]s heading.65 The heading, 'Moratorium on petroleum exploration and petroleum production' is in unqualified terms. There is no suggestion from those words that it is only a partial moratorium.

59 Further, s 17A clearly has a more pervasive effect than merely prohibiting the creation of any new authorities to carry out petroleum exploration or petroleum production during the moratorium period. That much is achieved by s 17A(4) alone. The removal of statutory authority to carry out any petroleum exploration or petroleum production is effected by s 17A(1), 'despite ... any condition of a relevant authority'. That is, subject to the remaining provisions of the section the moratorium applies to the carrying out of petroleum exploration or petroleum production which would otherwise be authorised under authorities existing at the time of the enactment of s 17A. So much was agreed between the parties.

60 Next, it is important to notice the structure of s 17A and the different terminology used within its provisions. Subsections (1) and (3) are focused on what is authorised under an authority. As already noted, sub-s (1) removes authorisation to carry out petroleum operations under an authority. Subsection (3) provides that the removal of authorisation effected by sub-s (1) does not 'affect ... the authorisation of petroleum exploration or petroleum production during the moratorium period' by five specified production licenses dating between 1985 and 2006. It may be noticed therefore that sub-s (1) and (3) are, in language and concept, expressly dealing with the same thing - that is, they are directed to the authorisation to carry out petroleum exploration and petroleum production under existing authorities. So, whilst sub-s (1) generally removes all such authorisation during the moratorium period, sub-s (3) expressly carves out from that general removal the authorisation conferred under five specific authorities. In other words, sub-s (3) creates limited exceptions to the very thing that sub-s (1) is designed to achieve.

61 Subsection (2), however, appears from its text to be dealing with something quite different from the authorisation to carry out petroleum exploration and petroleum production because it employs different language. Instead, sub-s (2) concerns 'requirements and obligations' imposed on the holder of an authority either by the Act or a condition of the authority. Had it been intended that sub-s (2) was to create another category of exception to the moratorium implemented under sub-s (1), one might have expected the use of the same language as seen in sub-s (3). For example, sub-s (2) could have provided that sub-s (1) did not affect the authorisation of petroleum exploration or petroleum production during the moratorium period to the extent that any condition of an authority in existence at the date of the Fracking Ban Act required petroleum exploration or petroleum production to be carried out.

62 The very fact that the language of sub-s (2) is expressed in different terms to the moratorium provision in sub-s (1) and the specific exception provision in sub-s (3) invites close attention to the meaning of 'requirement and obligation' as it appears in that subsection. The terms, 'requirement and obligation' are not defined in the Act. But from the text of sub-s (2) it is evident that a requirement or an obligation may be imposed either by or under the Act itself or under a condition of an authority.

63 By reference to an extensive analysis of the provisions of the Act, the plaintiffs argue that the words 'requirement and obligation' are to be construed as embracing those aspects of a work plan under an authority that the holder is required to carry out. They say their construction is supported by reference to the objectives listed in s 3 of the Act, namely the objective to 'encourage the exploration for petroleum in Victoria and to promote petroleum production for the benefit of all Victorians'. It is said that their construction of sub-s (2) is consistent with and promotes those particular objects in conformity with s 35(a) of the Interpretation of Legislation Act 1984 (Vic).

64 Although it is correct to prefer a construction that would promote the purpose or object of an Act over one that would not,[66] it is important to recognise that in pursuing its objectives the Act seeks to have regard to economic, social and environmental interests, some of which are potentially in tension with one another.[67] For example, ensuring efficient exploration and production of petroleum might conflict with ensuring that impacts on individuals, public safety, public amenity and the environment are minimised as far as practicable, each of which the Act seeks to have regard to. The plaintiffs contend that their construction of s 17A is consistent with the objective of encouraging petroleum exploration and production balanced with due regard being paid to societal and environmental impacts.

65 Obviously, it cannot be taken that the encouragement of petroleum exploration or production, paying regard to economic, social and environmental interests in the manner directed by the Act, means that exploration and production is to be permitted or authorised at all times, or for all forms of petroleum, or at all locations. Put another way, the proper pursuit of the Act's objectives may, from time to time, call for the disallowance of exploration or production of a particular kind, or in a particular area. Similarly, those objectives may, in certain circumstances, call for the disallowance of particular exploration and production activities while the scientific and societal impacts of those activities are being studied and assessed. In short, because the Act has as its broad objective the encouragement of petroleum exploration and production is not a particularly powerful reason for preferring the plaintiffs' construction of subs (2) in this case. Indeed there are other more cogent indications of purpose that point in the opposite direction.

66 The stated purpose of the Fracking Ban Act which introduced s 17A was, insofar as it amended the Act, threefold, namely to:

(i) ban hydraulic fracturing;

(ii) impose a moratorium on petroleum exploration and petroleum production in the onshore areas of Victoria until 30 June 2020; and

(iii) enable the Minister to pay for the surrender of certain exploration permits, retention leases and production licenses.[68]

67 Notably, the purpose of introducing the moratorium was stated in simple, stark and unqualified terms. The third enumerated purpose, to make provision for payment of compensation upon the surrender of various authorities, was implemented by the introduction of ss 251A and 251B into the Act, to which I will return in due course. But for now it is sufficient to note that the introduction of those provisions, and the evident purpose of doing so, points strongly to the known and intended effect of the moratorium. That is to say, it was known and intended that due to its comprehensive nature the moratorium would impact valuable existing petroleum exploration rights under existing authorities.

68 Put briefly, the purpose of very Act that introduced s 17A strongly suggests that the purpose behind the section was to introduce a comprehensive moratorium on petroleum exploration and production activities, otherwise allowed under existing authorities, with a recognition that such a moratorium would impact existing rights.

69 Next, and allied to the observations above concerning the different terms used in the subsections of s 17A, there is a fundamental difference in nature between an authority on the one hand and a requirement on the other. I agree with the Minister's argument that it is counterintuitive and inapt to characterise the activity of petroleum exploration and petroleum production in the context of the Act as a requirement or obligation as the plaintiffs' argument would have it.

70 The plaintiffs' characterisation does not sit well with the overall framework of the Act in which s 17A appears. The Act acknowledges that the Crown owns all petroleum on or below the surface of any land in Victoria that came to be there without human assistance.[69] Petroleum is defined to include gaseous hydrocarbons.[70] From the stated purpose and objectives of the Act it is evident that, by means of this legislation, the State confers authority on private interests to exploit a State-owned asset, but subject to statute enforced conditions and close Ministerial control.

71 The conferral of authorities, the imposition of conditions on those authorities and the extent and architecture of the Ministerial controls all occur within a legislative framework requiring regard to be paid to broad economic, social and environmental interests. As the survey of the legislation reveals, there are multiple layers of control that operate before actual work may be undertaken at a particular point in time within a particular permit area. Those controls include:

(a) the need to obtain the grant of a permit, lease or licence;[71]

(b) the specification of conditions of the relevant authority;[72]

(c) the declaration of key objects of the work program;[73]

(d) the need to obtain acceptance of an operation plan;[74] and

(e) the need to obtain Ministerial consent.[75]

72 The existence of this framework of control emphasises that the exploitation of State-owned petroleum assets is to be carefully supervised having regard to the physical, environmental, economic and social interests of the people of the State. In that setting, petroleum exploration, an activity for the purpose of finding petroleum or reservoirs,[76] is most appropriately understood as a right conferred and authorised under a permit, rather than something required by it.[77] The same is true of petroleum production, an activity for the purpose of producing petroleum commercially.[78] The fact that a number of the Act's provisions make the enjoyment or continued enjoyment of those rights contingent upon an authority holder carrying out the authorised petroleum operations in conformity with their authority[79] - a circumstance the plaintiffs are at pains to emphasise - does not detract from that fundamental characterisation.

73 Noticing that the Act regards petroleum exploration and production more in the nature of a right than a requirement contributes to an overall sense of disharmony if s 17A(2) were construed as if it applied to those activities.

74 The plaintiffs seek to support their argument by emphasising the hierarchical structure of s 17A as rendered by the use of the words 'subject to this section' in subs (1). The plaintiffs emphasise the principle that the phrase 'subject to' shows what is to prevail if there is inconsistency between provisions. Where there is inconsistency, the master provision is to prevail over the subject provision.[80] In this case, the plaintiffs submit that the phrase has the effect that sub-s (2) prevails over subs (1). Thus, the general moratorium implemented by sub-s (1) must give way to the controlling effect of sub-s (2).

75 So much may be accepted. But the statement of principle to which the plaintiffs appeal includes this further elucidation:

Where there is no clash the phrase does nothing: if there is a collision, the phrase shows what is to prevail. The phrase provides no warranty of universal collision.[81]

76 It is not correct to approach sub-ss (1) and (2) as if there must be a collision between them.

77 So, in the end, the meaning and effect of the phrase 'subject to' really begs the question whether there is any collision or conflict between the imposition of the moratorium on carrying out petroleum exploration and production (in sub-s (1)) and the explicit preservation of the requirements and obligations imposed by the Act, or under conditions of the authority, (in sub-s (2)). In my view there is little if any collision between those two provisions.

78 What sub-s (2) reiterates is the continuing pre-eminence of the requirements and obligations imposed on the holder of an authority by other provisions of the Act, and under provisions of an authority, notwithstanding the moratorium on petroleum exploration and production as implemented by sub-s (1). 'Requirements' include those listed, conveniently, in s 147 of the Act. Section 147 sets out in tabular form 'requirements that must be complied with by an authority holder before a petroleum operation of a kind described ... may be carried out'. The table lists the different kinds of petroleum operations in one column and, in another, the corresponding requirements stipulated within the Act that must be complied with for that type of operation. For example, the first entry in column 1 is the widest - 'Any petroleum operation on any land'. Listed among the requirements which must be complied with before any operation of that kind is carried out are the obtaining of the written consent of the Minister under s 138 and the acceptance by the Minister of an operation plan in accordance with s 161.

79 If one turns to ss 138 and 161 themselves, it is clear enough that those provisions, of their own force, require that consent be given and acceptance be obtained before a petroleum operation is carried out. Indeed, those provisions make it an offence to carry out a petroleum operation without the relevant consent or acceptance. The same is true of other listed requirements. Viewed in that context, s 147 is a reinforcing provision, conveniently gathering in one place the multifarious requirements and obligations appearing throughout the Act that must be complied with before a petroleum operation is undertaken, over and above simply having an authority to do so.

80 Further reinforcement of the need to observe the individual statutory requirements and obligations stipulated throughout the Act is achieved by the Minister also making it a condition of any authority, imposed under s 100, that the holder must comply with the requirements of s 147 before carrying out petroleum exploration.[82]

81 To better understand a reason for wanting to unambiguously preserve 'requirements and obligations' as provided in s 17A(2), it is useful to note the nature and range of other incidental requirements and obligations that must be complied with before any operation is carried out, in addition to obtaining consent under s 138 and acceptance of an operation plan under s 161. Referred to in s 147 as 'requirements', they include:

taking reasonable steps to ensure an operation will not contravene the Aboriginal Heritage Act 2006 (s 146);
obtaining the consent of the owner, occupier or manager of the land on which an operation is to occur (s 128);
obtaining insurance (s 171); and
entering into a rehabilitation bond (s 173).

82 For a petroleum operation to be carried out on land with particular characteristics (for example, on private or native title land, on land in which there is a public highway, on land used by a water authority, etcetera) there are further specific requirements with which a permit holder must comply.

83 Additional stipulations in the Act are listed in Part 11 under the heading, 'Other Obligations on the Holders of Authorities'. They include, for example, that:

a petroleum operation must be carried out in accordance with the (accepted) operation plan (s 162);
operations must be carried out in a proper and workmanlike manner (s 164);
the flow of waste and other fluids must be controlled (s 165);
property, equipment and structures must be properly maintained (s 166);
if an authority ceases to apply, equipment must be removed (s 168); and
land must be rehabilitated before an authority ceases to apply (s 170).

84 It may therefore be seen that the scope for the application of the statement in s 17A(2) that the moratorium imposed in s 17A(1) does not affect requirements and obligations otherwise imposed under the Act or by a condition is potentially very broad and far-reaching. The extent of that potential reach is magnified when one has regard to the defined meaning of 'petroleum operation', particularly as it appears in many of the provisions with which compliance is required before an operation is carried out. 'Petroleum operation' is defined in s 4 as 'any activity relating to petroleum exploration or petroleum production' (my emphasis).[83] 'Petroleum exploration' and 'petroleum production' are themselves defined terms (see ss 7 and 8 respectively). Although 'petroleum production' is defined to include any activity 'incidental' to other defined activities, 'petroleum exploration' is not given such an expansive meaning.

85 So, there are likely to be activities that relate to petroleum exploration (and are thus 'petroleum operations') that are not, themselves, petroleum exploration. Additionally, there may also be activities that relate to petroleum production (and are thus 'petroleum operations') which are not in themselves any of the listed petroleum production activities or activities 'incidental' thereto.

86 Notwithstanding that the moratorium applies to 'the carrying out of any petroleum exploration or petroleum production', there remains a considerable field of potential requirements and obligations that are unaffected by that moratorium. That field remains because of the lack of complete overlap between definitions of petroleum exploration and petroleum production, on the one hand, and petroleum operation, on the other. It also remains due to the continuing operation of various statutory provisions and conditions under authorities regardless of whether any petroleum operation is being, or is about to be, carried out.

87 The plaintiffs submit that if sub-s (2) was only intended to say that the moratorium implemented by sub-s (1) did not affect the ongoing application of requirements that would continue to apply in any event, there was no need to enact sub-s (2) at all. They submit that the Court should prefer a construction that in substance recognises that sub-s (2) has work to do rather than being otiose.

88 I do not find that argument to be persuasive in favour of the plaintiffs' construction. Given the complex interaction of provisions within the Act, it is unsurprising that Parliament would reiterate, by way of clarification or for the avoidance of doubt, that the regime of requirements and obligations to which I have drawn attention would remain unaffected by the moratorium. Such a role for sub-s (2) is strongly supported by the Explanatory Memorandum laid before Parliament at the time of presenting the Bill for the Fracking Ban Act. The explanation given for the new s 17A was in these terms (underlining added):

[New section 17A] applies to existing petroleum exploration permits, retention leases, and production licenses.

New section 17A(1) prohibits any petroleum exploration or petroleum production under an exploration permit, a retention lease, or a production license from the day this Bill comes into operation until 30 June 2020 (the moratorium period).

New section 17A(2) clarifies that the holder of any such authority must, during the moratorium period, still comply with any requirements or obligations imposed on them by or under the Act and with any conditions of the authority.

New section 17A(3) specifies certain exceptions from section 17A(1).

...

89 Three things may be noted. First, the Explanatory Memorandum supports the uncontentious view that the section applies to existing authorities. Secondly, it describes the prohibition against petroleum exploration and petroleum production in broad and unqualified terms. Thirdly, it describes sub-s (3) as specifying exceptions to sub-s (1), whereas, notably, sub-s (2) serves the different purpose of clarifying that a holder must, during the moratorium period, still comply with the requirements and obligations of the Act and the conditions of existing authorities. In combination, those explanations provide no support for the plaintiffs' view that sub-s (2) should be interpreted to mean that any and all petroleum exploration or petroleum production which is currently the subject of a work plan stipulated under an existing authority may be carried out during the moratorium period.

90 An obvious problem for the plaintiffs' construction, in my view, is the seeming illogicality of Parliament imposing through one subsection a moratorium on petroleum exploration and petroleum production otherwise authorised under existing authorities, and then, through another subsection, wholly exempting from that moratorium any petroleum exploration and petroleum production currently permitted under an existing authority. Such a result would seem at odds with the stated purpose of the Fracking Ban Act and the heading to s 17A itself. It would also appear to be at odds with the contemporaneous introduction of the surrender and compensation regime, and the provisions granting the State immunity from the consequences of the moratorium, to which I will refer shortly.

91 Well established principles of statutory construction provide that where conflict arises 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 the result which will best give effect to the purpose and language of those provisions while maintaining the unity of the statute as a whole.[84] In this case, on one available construction, there is an apparent conflict between one subsection which removes all authorisation for a specified duration of time, and another which seemingly gives it all back again. The appropriate means of alleviating that conflict, in my view, is to construe the second provision as performing a different role: that is, as I have said, to clarify that other requirements and obligations remain in effect notwithstanding the moratorium.

92 The plaintiffs' proposed means of avoiding the apparent incongruity of taking with one subsection and giving back with the other is, in my view, unpersuasive. The plaintiffs argue that adopting their construction of sub-s (2) would only have the effect that a limited subset of the otherwise authorised petroleum exploration activities would be preserved or remain authorised. In other words, according to their construction, whereas sub-s (1) imposes a moratorium on all of the authorised petroleum exploration, sub-s (2) only preserves authorisation for a narrower field of exploration activity.

93 The plaintiffs' argument is centred on the expressions 'minimum petroleum exploration' and 'minimum work requirement' appearing in the conditions of the six authorities.[85] By reference to those authorities, the plaintiffs contend that the combined operation of sub-ss 17A(1) and (2) is to remove authorisation to carry out petroleum exploration that is over and above the 'minimum work' listed in the conditions, while preserving the authority to carry out petroleum exploration prescribed as a 'minimum work requirement' for any currently operative year.

94 There are numerous difficulties with a construction that leads to that result. The first is that there is no basis for assuming there is any authorised petroleum exploration work beyond that which is prescribed in the condition of the permit. Secondly, and because of the first point, such a construction would 'give back' all that the moratorium was designed to 'take away' for the duration of the moratorium period. Thirdly, there is no statutory foundation for the concept of 'minimum petroleum exploration' or 'minimum work' as expressed in the various conditions. It is not appropriate to construe the statutory provision by reference to a distinction only appearing in an administrative instrument which otherwise finds no existence in the text of the statute itself. Fourthly, the plaintiffs' argument inaptly characterises the conditions under which authorised petroleum operations are to be carried out as legal requirements and obligations, rather than as conditions associated with the permit holder's right to conduct those operations.

95 In summary, the practical consequence of the plaintiffs' construction would create a disharmony with the overall purpose of the Act as affected by the amendment to it wrought by the Fracking Ban Act.[86]

96 A further indication that the moratorium introduced by the Fracking Ban Act was intended and envisaged to affect valuable rights under existing authorities is the insertion into the Act of ss 251A and 251B at the same time as the insertion of s 17A.

97 As already noted, one of the three main purposes of the Fracking Ban Act was to enable the Minister to pay for the surrender of certain authorities. A mechanism existed in the Act for the surrender of licenses even before the Fracking Ban Act came into force. The Act permitted a permit holder to surrender an authority with the Minister's consent.[87] To give that consent the Minister first had to be satisfied that the holder of the authority had complied with the relevant requirements of the Act and the conditions of the authorities and had fulfilled the key objects of the work program. The Minister could give consent even if a requirement or condition was not satisfied, so long as that failure was the result of an event beyond the control of the permit holder.

98 But, until the insertion of s 251B, there was no mechanism by which the Minister could pay for the surrender of the authority. The introduction of that power concurrently with the imposition of the moratorium is best explained by the expectation that the holder of an existing authority may well perceive that delay in its ability to undertake petroleum exploration and production will cause such loss of value to its authority that surrender would be more viable. By contrast, the provision for payment for surrender is not readily explicable if the regime that was introduced by the Fracking Ban Act was to permit all presently authorised petroleum exploration and production to take place (with or without a s 138 consent and the acceptance of an operation plan under s 161) regardless of the moratorium.

99 In my view, the Minister's construction of s 17A is more harmonious with the purpose and text of s 251B.

100 In a similar vein, the insertion of s 251A is more consistent and harmonious with the Minister's construction of s 17A than it is with the plaintiffs'. Section 251A inserts a broad immunity against liability for the State for refusing to grant any new authorities and also for a range of categories and decisions that a Minister could make concerning an authority. The timeframe for the immunity granted under s 251A reaches back to 24 August 2012 (the date of the first media announcement of a moratorium) and through to and beyond the commencement of the amendments introduced by the Fracking Ban Act.[88]

101 The kinds of decisions for which immunity is conferred includes the refusal to give consent to the carrying out of a petroleum operation and the refusal to accept an operation plan for such an operation.[89] The grant of immunity for those last-mentioned kinds of refusals highlights the continued relevance and efficacy of those controls for regulating the carrying out of petroleum operations. It lends support to the proposition that s 17A(2) does not preserve an authority holder's ability to carry out petroleum operation without a s 138 consent or the acceptance of an operation plan under s 161 merely because it is authorised to carry out the particular petroleum operation by the authority. It also points to an anticipation that the refusal to give consent to the carrying out of a petroleum operation or to accept an operation plan could cause loss to an authority holder.

102 As the plaintiffs would have it, the effect of s 17A(2) is to exempt all current, authorised exploration and production work from the moratorium on the basis that the work is required to be performed even absent the Minister's consent or acceptance of an operation plan. Introducing an immunity for the State from liability for losses to authority holders caused by the refusal to give such consent or acceptance, simultaneously with introducing the moratorium, is not readily explained if the plaintiffs' construction is adopted.

103 That observation leads to the next point urged by the plaintiffs. In aid of their argument, the plaintiffs invoke the principle of legality. That is, they rely upon the principle that legislation affecting fundamental rights must be clear and unambiguous and that any ambiguity must be resolved in favour of the protection of those rights.[90] Here, the plaintiffs contend that a moratorium on the carrying out of petroleum operations listed as being current under their work plans would abrogate fundamental property rights.

104 In my view, the application of the principle of legality does not assist the plaintiffs in this case. From all the indications in the text and context of the Act, as amended by the Fracking Ban Act, any presumption that s 17A was not intended to interfere with vested proprietary rights is clearly and unambiguously displaced. I adopt the approach of the High Court in ASIC v DB Management Pty Ltd.[91] That is, when endeavouring to work out the meaning of parts of a legislative scheme designed to preclude the carrying out of petroleum exploration and petroleum production for a defined period of time, it is of little assistance to invoke a presumption against the very thing the legislation sets out to achieve.[92]

Other context - the preceding administrative moratorium

105 There is one final point which in my view favours the construction urged by the Minister and, correspondingly, does not support the construction urged by the plaintiffs. In his Second Reading Speech for the introduction of the Fracking Ban Act (to which I may have regard as an aid to interpretation),[93] the then Minister for Resources explained that the Bill gave 'effect to the commitment made by the Andrews Government on 30 August 2016 in response to the Parliamentary inquiry into onshore unconventional gas'.[94]

106 From the evidence in this case, it is plain that the commitment given on 30 August 2016 was to legislate a continuation and extension of the administrative moratorium that was then in operation. That administrative moratorium involved a 'hold on approvals' to conduct exploration activities which were otherwise authorised under existing authorities.[95] To then legislate a moratorium that preserved the right to carry out petroleum exploration and petroleum production notwithstanding those activities lacked approvals (that is, consent under s 138 and accepted operation plans under s 161) would be to legislate a substantially different regime to the one announced by the Andrews Government in August 2016. It would also be to implement a significantly different moratorium to the one that had been in place since 2012. Plainly, that was not what the Minister stated was the intention behind the legislation.

107 Insofar as the Second Reading Speech and the nature of the non-statutory moratorium to which that speech referred constitute relevant context to aid the interpretation of s 17A, they both favour the construction urged by the Minister.

108 There is a host of considerations which, in combination, support the view that s 17A(2) should be construed as a clarifying provision, inserted out of an abundance of caution. More particularly, notwithstanding the moratorium implemented under s 17A(1), sub-s (2) reiterates that the various requirements and obligations imposed by the Act or under the conditions of an authority continue to apply. However, those unaffected requirements and obligations do not encompass conditions in authorities that prescribe the very petroleum exploration activities that are de-authorised by the moratorium. In summary, the considerations that support this construction are the:

purpose of the Fracking Ban Act;
text of the heading to s 17A;
different terms used in sub-ss (1) and (3) compared with sub-s(2);
terms of the Explanatory Memorandum referring to sub-s (2) as a clarifying provision;
conceptual difference between an authority and a requirement;
inapposite characterisation, in the context of the Act as a whole, of a right to carry out a petroleum operation as a requirement or obligation;
introduction, contemporaneously with s 17A, of a regime to pay for the surrender of authorities and the provision of an immunity to the State for making or refusing to make decisions in connection with authorities;
intention of Parliament, as expressed in the Second Reading Speech introducing the Fracking Ban Act, to legislate to continue the administrative moratorium and the historical elements of that moratorium; and
difficulty in giving effect to the plaintiffs' construction of s 17A(2) without substantially, if not wholly, eroding the moratorium which the Fracking Ban Act was plainly purposed to effect.

109 As indicated above at paragraph [30], the Minister had an alternative argument concerning s 17A(2) should his primary argument on the construction of s 17A fail. The Minister's primary argument has succeeded but, for the reasons that follow, I would have upheld his alternative argument in any event. That argument is that, even if it were accepted that sub-s (2) carves out from sub-s (1) any petroleum exploration or petroleum production that was, at the time of the commencement of s 17A, the subject of a requirement or obligation under the Act or an authority that it be carried out, such a carve-out would not extend to any work that lacked s 138 Ministerial consent or an accepted operation plan under s 161.

110 The Minister's fall-back argument focuses on the continuing operation of ss 138 and 161 as statutory controls to be satisfied before any petroleum operation can be lawfully carried out under the Act. As noted earlier, none of the works described as 'minimum work requirements' for currently operative permit years in any of the plaintiffs' permits have the benefit of Ministerial consent or an accepted work plan. According to the Act, therefore, in those circumstances it would be unlawful and a criminal offence to carry those works out.

111 Yet, the plaintiffs' argument is that those works would fall within the expression 'requirement or obligation imposed on the holder of a relevant authority by or under this Act or under a condition of the authority'. As discussed above, however, to prefer such a construction when others are available would be to prefer a construction that brings disharmony and disunity rather than one which preserves the unity of the Act as a whole. For that reason it should be rejected. Under the Minister's fall-back construction, at most, only works which could lawfully be carried out at the time of the commencement of s 17A would be exempted from the moratorium. More particularly, only works which at the time of the commencement of s17A had Ministerial approvals under ss 138 and 161 would be exempted.

112 The rejection of the plaintiffs' argument is supported not only by reference to the Act as a whole, but also by reference, internally, to the conditions of the six authorities themselves. It cannot legitimately be concluded that an authority contains a requirement or obligation to perform work merely by focusing on one condition in the authority in isolation from all the others. The whole of the terms of the authority must be read together. So, for example, whereas condition 1 of PEP 169 states that the permittee 'shall ... carry out the minimum petroleum exploration' and prescribes works in Year 4 and Year 5 as being a 'minimum work requirement', condition 3 of the same permit provides that before carrying out any petroleum exploration the permittee must comply with the requirements of s 147 of the Act (incorporating, by reference, the requirements of ss 138 and 161). At its highest then, read as a whole, the permit only requires the holder to carry out work if the holder has first obtained the necessary approvals to carry out such work.

113 The problematic circularity of the plaintiffs' case is therefore revealed. On the one hand, in this proceeding the plaintiffs seek mandatory orders to compel the Minister to determine according to law (and, presumably, to grant) the plaintiffs' applications for consent under s 138, and to accept their operation plans under s 161 to enable the outstanding works under their authorities to be lawfully carried out. But, on the other hand, a major plank in the plaintiffs' argument as to why s 17A currently makes it unlawful for the Minister to refuse to grant such approvals is that the outstanding works are already required by law to be undertaken.

114 A construction of the words 'requirement or obligation' in s 17A(2) which encompasses the doing of an act which, if done, would be unlawful under the Act should be avoided where a suitable alternative construction which does not have that effect is available.[96]

115 The resolution of the question of whether the Minister's variations to the plaintiffs' authorities in December 2017 were invalid and should be set aside has less practical importance when s 17A is properly construed as set out above. That is because the variations were only made to clarify, if clarification was required, that the effect of s 17A did not perpetuate any 'requirement' on an authority holder during the moratorium period to perform outstanding work described in the work programs incorporated within the authorities. I have concluded that s 17A did not have the effect of perpetuating any such 'requirement'.

116 On my construction of s 17A, the December 2017 variations were unnecessary and whatever lawful effect they have is subsumed within the operation of the statutory moratorium. If they were invalidly made, the Act will continue to operate in the way I have identified and the relevant works will remain prohibited during the period of the moratorium in any event.

117 Despite that being the case, I will state as briefly as possible my reasoning and conclusion on the arguments concerning the December 2017 variations. In summary, I agree with the plaintiffs' submission that the variations were invalid by reason of being unreasonable in the Wednesbury sense.[97] My reasons for that conclusion may be stated briefly.

118 Again, it is convenient and sufficient to focus on permit PEP 169, the relevant chronology for which is set out in Schedule A to these reasons.

119 It is relevant to recall that an exploration permit operates for five years, but that the term of the authority may be extended for up to one year at a time if a condition of the authority is suspended for a corresponding period.[98] Although first granted in 2007, by a process of such suspensions and extensions PEP 169 remained operative at the time of the commencement of s 17A in March 2017. As a result of a further 12 month suspension of the Year 4 and Year 5 work programs, the term of PEP 169 was extended a further 12 months to expire on 24 October 2018.[99]

120 Prior to the variation made on 21 December 2017 the permit stated that Mirboo was to carry out 'minimum petroleum work' by drilling one well in Year 4 (by 24 October 2017) and a further well in Year 5 (by 24 October 2018).[100] As already noted, Mirboo applied for a further 12 month suspension to each of those dates and a corresponding extension of the permit term.[101]

121 The variations to PEP 169 are shown in the set of conditions extracted at [26] above. They produce the following result:

subject to obtaining the Minister's consent and acceptance of an operation plan, Mirboo is required to undertake and complete work in accordance with the work program in the table;
the only extant works are those in Year 4 and Year 5;
the expiry date of the permit is 24 October 2018 (as stated in the 'Explanatory Note');
there is no stipulated obligation to undertake Year 4 and Year 5 activities before 30 June 2020, but an obligation exists (or will exist) to carry out that work after 30 June 2020;
Year 4 work is a key object of the work program; and
by 30 June 2020 the permit will have lapsed and the carrying out of the work on or after that time will be unlawful.

122 On its face, the permit is nonsensical. It is at least nonsensical insofar as it requires work to be done at a future, unspecified time at which time the permit will not authorise such work.

123 The Minister's attempted justification for this appears to be twofold:

(a) the first is to appeal to the broad and unqualified variation power under s 102 of the Act, coupled with the subject matter, scope and purpose of the Act in its amended form; and

(b) the second is to observe that there remains a 'possibility' that the term of the permit will continue to be extended beyond 30 June 2020 to allow the work presently required to be done under condition 1 to be done lawfully.

125 True it is that the broad discretionary power in s 102 of the Act should not be limited except to the extent that the subject matter, scope and purpose of the Act imply some limitation on the factors to which to the Minister may legitimately have regard.[102] But, such a discretion must also be exercised reasonably,[103] according to the 'rules of reason and justice'.[104] Having regard to the scope and purpose of the Act, the breadth of that discretion does not extend to the creation of an artificial contrivance to achieve, by a side-wind, a multi-year suspension of works that could not have been achieved under the Act's suspension power.[105] The removal of dates for the completion of works, with the postponement of any obligation to perform work to a date beyond the term of the permit itself to accord with the period of the moratorium, meets the description of an artificial contrivance.

126 In my view, the objectives of the Act to provide an 'orderly' system for the granting of authorities and 'clear and effective administrative frameworks'[106] imply a limit on the discretionary power to vary conditions under s 102 so as to preclude the making of the variation in question. The variation in question lacks clear administrative sense and order. It is not 'directed toward and related intelligibly to the purpose of the variation power'.[107]

127 As to there being the 'possibility' that the term of the permit might be extended, that possibility is fragile at best and non-existent at worst. The term of the permit may only be extended for up to one year if the Minister first suspends a condition of an authority.[108] But, relevantly, the primary conditions of PEP 169, namely the requirement to carry out the Year 4 and Year 5 work programs, are incapable of being suspended because there is no date fixed by which they are to be performed. To meet that problem, the Minister answers that the 'not before' 30 June 2020 date could perhaps be suspended or deferred in order to open the discretion to grant an extension. That answer only serves to highlight the artificiality of the regime that has been designed.

128 Alternatively, the Minister points out that s 105(8) allows him to suspend all of the conditions of an authority, observing that many of the plaintiffs' authorities contain incidental conditions such as requirements to lodge annual reports. At this point of the argument, the Minister appears to be latching onto the possible exercise of a discretion which may, in given circumstances, be quite inappropriate to exercise, other than for the purpose of creating a pretext by which to grant an extension, in turn, to try and give sense to something that currently lacks sense. Clearly, the executive cannot assume that future decisions made in the exercise of discretion will produce particular outcomes.[109] I do not think I should take into account such a possibility as a basis for assessing the potential validity of the Minister's decision to make these particular variations.

129 In answer to the criticism that the six authorities as currently varied require work to be done illegally, the Minister points out that by the time 30 June 2020 comes around, absent extensions, the permits will have expired so that any 'requirement' to do the work will have fallen away. Thus, he argues, there would no longer be any obligation conflicting with a prohibition. But, the time to assess the validity of the variation is the time of making it. It presently contains an obligation to do further work and such work will be illegal under the permit's present conditions.

130 For these reasons I would hold that the exercise of the variation power in the manner in which it has been exercised was invalid. It is invalid because no reasonable decision maker would have made the decision to vary the six authorities in those terms,[110] or the decision is one that 'lacks an evident and intelligible justification'.[111]

Historical refusal to accept operation plans and give consent.

131 I then turn to the plaintiffs' claim for relief in respect of the Minister's alleged refusals to decide, between November 2013 and 16 March 2017, whether or not to grant consent under s 138 and to accept operation plans under s 161 in relation to the petroleum operations under the plaintiffs' authorities.

132 The plaintiffs seek declarations from the Court that by virtue of such refusals the Minister acted unlawfully.

133 As already noted,[112] the Minister denies he made any refusal decisions (constructively or otherwise) or that by deferring the making of any decisions he acted unlawfully. If it were necessary to decide, for the reasons advanced by the Minister in both written and oral submissions I would accept the Minister's position as being correct.

134 But, fundamentally, I dismiss the plaintiffs' claim for relief on simpler grounds. The Court has broad inherent and statutory power to grant declaratory relief.[113] The remedy of declaratory relief is discretionary. In Ainsworth, Mason CJ, Dawson, Toohey and Gaudron JJ said that the power to grant declaratory relief was confined by the considerations which mark out the boundaries of judicial power. Their Honours said further:

Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. The person seeking relief must have 'a real interest' and relief will not be granted if the question 'is purely hypothetical', if relief is 'claimed in relation to circumstances that (have) not occurred and might never happen' or if 'the Court's declaration will produce no foreseeable consequences for the parties'. (Citations omitted).[114]

135 In CGU Insurance Limited v Blakeley & Ors[115] the Court of Appeal, in considering what was said in Ainsworth, observed:

... whether or not going strictly to the Court's jurisdiction, what is significant for present purposes is that the High Court identified the need for a 'real interest' on the part of the person seeking relief, together with foreseeable consequences for the parties, if a declaration is to be made. (Citations omitted).[116]

136 On the application of these principles I would refuse to grant the relief sought, even if persuaded (which I am not) that the Minister made refusal decisions on an inflexible approach to a policy, or that the inflexibility of the policy was unlawful. I would refuse the relief because, at this point in time, such relief is not directed to the resolution of a current legal controversy and no real consequence would flow from answering the question posed. In short, the relief would lack any utility.

137 Based on the foregoing reasons, the outcome in respect of the relief claimed by the plaintiffs is as follows:

(a) I refuse to make the declarations sought in paragraphs 46(a) and 46(b) of the second further amended statement of claim (as amended at the hearing of the proceeding on 14 March 2018) concerning the Minister's alleged constructive refusal to make decisions between November 2013 and 16 March 2017;

(b) I refuse to make the declarations sought in paragraphs 46(aa), (ab), (ac) and (ad) of the second further amended statement of claim in respect of the Minister's capacity to refuse to give consent under s 138 and to refuse to accept operation plans under s 161, in reliance upon s17A(1), or to make an order in the nature of mandamus as sought in paragraph 46(e) of the pleading that the Minister consider and determine the applications listed therein;

(c) I will make an order in the nature of certiorari, as sought in paragraph 46.1A of the second further amended statement of claim, to quash each of the purported decisions of the Minister's delegate on 21 December 2017 varying the conditions of the Mirboo Permits and the PetroTech Authorities.[117]

138 The parties should formulate proposed orders to give effect to these conclusions.

Events concerning PEP 169 between August 2012 and 16 March 2017

1 PEP 169 was first granted on 25 June 2007 to Sweetpea Petroleum Pty Ltd.[118] At the time of grant, the Minister's delegate imposed conditions on PEP 169, including the following:

1. The permittee shall carry out minimum petroleum exploration in the permit area in accordance with the work program outlined in the table below:

2. The first three years of the work program are declared to be the key objects of the work program for the purpose of section 27 of the Act

2 PEP 169 was transferred to Mirboo on 12 September 2008.[119] In January 2009 Mirboo sought variations to the conditions concerning the work program.[120] The Minister's delegate approved those variations pursuant to s 103 of the Act.[121] Further variations to the work program were made by the Minister's delegate on 4 August 2009.[122]

3 According to the conditions as amended, under the Year 3 work program Mirboo was to have drilled one exploration well before 24 June 2010. On 23 August 2010 Mirboo applied for a 12 month 'suspension' of the Year 3 work program condition, and an extension of the term of PEP 169 for the same period, on the basis that it had not been possible to complete that work prior to 24 June 2010 for a variety of reasons.[123] In keeping with the Department of Resource's (the Department) approved form for seeking such suspensions and extensions, Mirboo put forward revised dates for the balance of the work program.[124] The Minister's delegate granted the application for suspension of the conditions and issued a new table with revised dates for the work program.[125]

4 This process was repeated on a number of subsequent occasions:

(a) In May 2011 Mirboo sought a suspension of the Year 4 work program commitment and an extension of the term of PEP 169.[126] The Minister's delegate granted a 6 month suspension and extension and issued a revised version of the work program reflecting those decisions.[127]

(b) In December 2011 Mirboo requested a further 6 month suspension of the Year 3 and Year 4 work program commitments and an extension of the term of PEP 169.[128] That was granted by the Minister's delegate on 21 December 2011 and a revised work program was issued.[129]

(c) On 17 April 2012 the Minister's delegate suspended the Year 5 work program commitment for 6 months and extended the term of PEP 169 for 6 months.[130] In doing so the Minister's delegate noted that the Years 3, 4 and 5 conditions had all commenced and each required a well commitment which must be completed.[131]

5 The planned activities in relation to PEP 169 (and other authorities) then came to be affected by the government's non-statutory moratorium on unconventional activities in Victoria. On 29 October 2012 Lakes Oil advised that because of the moratorium Mirboo would have difficulty meeting the time requirements on its current permits.[132] In relation to PEP 169 Mirboo sought a 12 month suspension and extension.[133] The Department sought further information in relation to aspects of the PEP 169 work program, in particular the program for Year 4.[134] Mirboo provided further explanation as to why Year 4 work had not been completed by 24 June 2012, as per the extant version of the work program.[135] Mirboo explained that completion of the Year 4 work would involve the drilling of the "Otway-1 well". The Minister's delegate issued an instrument suspending the Year 4 work program for 12 months, varying the work program table accordingly and extending PEP 169 for 12 months to 24 June 2014.[136] In November 2013 Mirboo submitted a revised operation plan for drilling of the Otway-1 well (Otway-1 Operation Plan).[137]

6 On 29 January 2014 the Minister's delegate issued an instrument suspending the Year 4 work program for PEP 169 for 12 months (therefore requiring completion by 24 October 2014) and extending the term of PEP 169 to 24 October 2015.[138] On 12 March 2014 Mirboo sought an update as to approval of its Otway-1 Operation Plan.[139] On 31 March 2014 the Department advised that no decision had been made on the application for acceptance of the operations plan for PEP 169.[140]

7 On 19 February 2015 Mirboo sought a 12 month suspension of the Year 4 work program commitment for PEP 169, and a corresponding 12 month extension of the term of PEP 169, citing the government's moratorium on all onshore gas exploration activities as the reason why a suspension and extension was necessary.[141] The Department delayed in dealing with the application and Mirboo followed up that application (and others) in August 2015,[142] and again in October 2015.[143] On 23 October 2015 the Minister's delegate issued an instrument suspending Year 4 of the PEP 169 work program for 12 months and extending the term of PEP 169 for 12 months.[144] On the same date, the Minister's delegate issued an instrument of variation, specifying that the table in condition 1 is varied so that the Year 4 work program commitment ends on 24 October 2015 and the Year 5 work program commitment ends on 24 October 2016.[145] PEP 169 was described as being varied as per the attached schedule (at CB 534), which shows the revised table reflecting these changed dates.

8 On 29 September 2016 the Minister's delegate issued an instrument suspending Year 4 of the PEP 169 work program for 12 months and extending the term of PEP 169 for 12 months.[146] On the same date, the Minister's delegate issued an instrument of variation, specifying that the table in condition 1 was varied so that the Year 4 work program commitment ended on 24 October 2016 and the Year 5 work program commitment ended on 24 October 2017.[147] PEP 169 was described as being varied as per an attached schedule (at CB 547) which showed a revised table reflecting these changed dates.

9 By letter dated 17 March 2017 the Minister's delegate advised Mirboo that, in his capacity as delegate of the Minister's power under s 161 of the Act, he intended to refuse to accept the Otway-1 Operation Plan.[148] Relevantly, the letter stated:

The Resources Legislation Amendment (Fracking Ban) Act 2017 (Vic) commenced on 16 March 2017 and amended the Act to include section 17A. Section 17A places a moratorium on petroleum exploration and petroleum production until 30 June 2020. Section 7 of the Act defines the making of a well for the purpose of finding petroleum or reservoirs to be a petroleum exploration activity. Therefore, in my view, the operation plan proposes petroleum [sic] activities that fall within and are subject to the moratorium on petroleum exploration under the Act and provides a reason why they should be refused. Before doing so, l wish to give you an opportunity to be heard on the matter.

10 Mirboo provided two responses to that invitation to make submissions. By letter dated 24 May 2017 Mirboo advised that it agreed with the Minister's delegate's interpretation of the 2017 amendments, but indicated that while the validity of the Fracking Ban Act was under challenge (as was then the case) the delegate should not proceed to make any decision.[149] However, Mirboo sent a further letter dated 13 June 2017 setting out a revised approach.[150] In that letter, Mirboo noted that the Otway-1 Operation Plan was for work which was necessary to fulfil the work program mandated by the conditions of PEP 169. As such, the activity was not precluded by s 17A, because it fell clearly within the terms of s 17A(2) (being work that Mirboo was obliged or required to carry out under the conditions of PEP 169).

11 On 29 August 2017 the Minister's delegate issued an instrument suspending Years 4 and 5 of the PEP 169 work program for 12 months and extending the term of PEP 169 for 12 months.[151] This is the most recent instrument of suspension and extension for PEP 169.

12 The net effect of the various suspension and extension decisions is that, as things stood prior to 21 December 2017, PEP 169 relevantly included the following conditions:

1. The permittee shall carry out minimum petroleum exploration in the permit area in accordance with the work program outlined in the table below:

13 On 20 October 2017 Mirboo sought a further 12 month suspension of the Year 4 and Year 5 work commitments for PEP 169 and a 12 month extension of PEP 169, citing the ongoing onshore petroleum activity ban.[152] The application asks that the time for completion of the Year 4 works be suspended to 24 October 2018. That application remains outstanding.

14 By leave of the Court, on 14 June 2017 the plaintiffs filed in these proceedings a further amended statement of claim (FASOC) in which they pleaded that, having regard to s 17A(2) of the Act and the existing conditions of the six authorities (including PEP 169), it was wrongful for the Minister's delegate to deny Mirboo and Petro Tech the consents and approvals that they required to undertake petroleum exploration activities on the basis of a supposed prohibition in s 17A, in circumstances where the Act expressly contemplates that during the moratorium period the holders of authorities can and must continue to comply with the conditions of their existing authorities: see paragraphs 45B-45J of the FASOC.

15 On 30 August 2017 the Minister's delegate advised Mirboo that he proposed to vary the conditions of PEP 169, acting unilaterally pursuant to s 102 of the Act.[153] Mirboo's solicitors responded on 14 September 2017 setting out the reasons why the Minister's delegate could not validly vary the conditions of PEP 169 in the manner proposed.[154]

16 Following that chain of correspondence, on 17 November 2017 the Minister's delegate advised Mirboo of proposed variations to PEP 169. By letter dated 15 December 2017 Mirboo's lawyers set out reasons why the proposed variations should not be made. On 21 December 2017 the Minister's delegate proceeded to make the December 2017 variations. In relation to PEP 169, the purported effect of the December 2017 variations is to vary the conditions by inserting the following underlined words (my underlining), and deleting dates from where the dashes are now shown, as appears below:

The permittee shall, but no earlier than 30 June 2020, carry out minimum petroleum exploration in the permit area in accordance with the work program outlined in the table below. The time for completion for the work scheduled for years 4 and 5 will be advised but will be after 30 June 2020.

Years 2, 3 & 4 of the work program are declared to be the key objects of the work program for the purpose of section 33 of the Act.

For the avoidance of doubt, the conditions do not impose on the permittee any requirement or obligation, by or under the Act or under a condition of this authority, to carry out any petroleum exploration during the moratorium period.

Explanatory note: On 29 August 2017, years 4 and 5 of the work program in condition 1 of PEP 169 were suspended pursuant to s. 105 of the Petroleum Act 1998 (the Act) for 12 months to 12 October 2017 and the term of the permit was extended to 24 October 2018 pursuant to s. 106 of the Act.

[1] In these reasons for judgment 'PEP' stands for petroleum exploration permit and 'PRL' stands for petroleum retention lease.

[7] Affidavit of Anthony Michael Hurst affirmed 21 December 2016, [14], Court Book ('CB') 106.

[8] Affidavit of Anthony Michael Hurst affirmed 21 December 2016, [24] CB 108; See Media Release, CB 289.

[10] Affidavit of Anthony Michael Hurst affirmed 21 December 2016, [44] CB 115; See Media Release, CB 358.

[14] As per the process described below at [45].

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