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- Unreported Judgment
Linc Energy Limited v Chief Executive, Department of Environment and Heritage Protection QLC 12
LAND COURT OF QUEENSLAND
Linc Energy Limited v Chief Executive, Department of Environment and Heritage Protection  QLC 12
Linc Energy Limited
Chief Executive, Department of Environment and Heritage Protection
1 April 2015 [Ex tempore]
1 April 2015
1. The supplementary affidavit of Claire Gitsham sworn on 1 April 2015 (Confidential Affidavit) will not be used for any purpose other than the conduct of the originating application filed 26 March 2015.
2. Subject to the leave of the Court first had and obtained, the Confidential Affidavit will not be:
(a) disclosed to the respondent or the respondent’s delegates;
(b) disclosed to any other person except as provided for in order 3; and
(c) copied or otherwise reproduced in whole or in part.
3. The information contained in the Confidential Affidavit will not be divulged to any person, firm or company other than:
(a) the solicitors or Counsel for the parties; and
(b) representatives or officers of the applicant.
4. The Confidential Affidavit will be kept in a sealed envelope on the Court file and not be removed from that envelope without leave of the Court or otherwise with the consent of the applicant.
5. No information, not already public, about commercial or financial matters of the applicant be made available to the public.
6. The operation of the original decisions of the delegate of the respondent dated 4 March 2015 be stayed pending the latest of the outcome of the internal review application lodged by the applicant on 18 March 2015 or any subsequent appeal from the review decision of those applications to this Court or hearing and determination of any further appeal to the Land Appeal Court. This Order is to apply until 4.00pm on Thursday 7 May 2015 or until any further Order of the Court made before then.
7. The parties have liberty to apply on the giving of two (2) business days’ notice in writing to the Court and the other party.
8. Costs be reserved.
Stay of decision pending appeal ― grounds for stay of decision ― securing the effectiveness of the appeal
Environmental Protection Act 1994, s 522
RJ Bain QC and ND Loos instructed by Thomson Geer lawyers for the applicant
JM Horton QC and R Laidley instructed by A Craddick, Director of legal Services for the respondent
- This is the decision in relation to the originating application filed on 26 March 2015 for Linc Energy Limited. The application is made pursuant to s 522 of the Environmental Protection Act 1994 (EPA) for a stay of the operation of original decisions made pursuant to ss 305 and 306 of the EPA in Queensland.
- The original decisions which form the basis for the application are notice pursuant to s 305 of the EPA in respect of [indistinct] called MIN or operative document MIN100657607 dated 4 March 2015. Notice pursuant to s 305 of the EPA in respect of PEN100232408 dated 4 March 2014. Notice pursuant to s 306 of the EPA in respect of MIN100657607 dated 4 March 2015. Notice pursuant to s 306 of the EPA in respect of PEN100232408 dated 4 March 2015. And statement of reasons for s 306 notice and ss 302, 305 amendment applications which are referred to as the original decisions.
- The applicant seeks an order. And the order was originally sought in the form:
“The applicant seeks orders that the original decisions be stayed pending the outcome of the applicant’s review of each of the original decisions –”
- I take it that means the respondent’s review of each of the original decisions:
“…and any appeal the applicant may make against the review decisions.”
- The applicant seeks orders for the following grounds. The original decisions purport to increase the amount of financial assurance owed by the company which is the applicant referred to as Linc, from 1,831,319 for the MDL, to 1,825,844 for the PFL, to $24,435,272 and $4,644,786 respectively. Payment for the financial assurance appear to be paid on 2 April 2015, which is tomorrow.
- Linc has applied for internal review of the original decisions. Link says that the original decisions were unreasonable and inappropriate because they were each fundamentally undermined by errors made by the delegate as identified in the supporting submissions. They failed to give proper regard to the submissions of the applicant made in writing on 17 November 2014, 4 February 2015 and 2 March 2015.
- They failed fundamentally and repeatedly to rely on expert evidence or verified scientific data. And they failed fundamentally to have regard to proportionality, particularly with respect to financial assurance obligations imposed on other resource activities within the state. And in the case of the original decisions made under s 305 of the EPA, failed fundamentally to express adequate reasons for refusal other than some brief insufficient and unsatisfactory remarks at paragraph 90 of the statement of reasons. The material before the Court is exhibit 1, the application; exhibit 2, the affidavit of Claire Gitsham sworn on 26 March 2015; exhibit 3, the supplementary affidavit of Claire Gitsham sworn on 1 April 2015, today; and exhibit 4, is a bundle of letters. Firstly, a letter dated 26 March this year from the applicant to the respondent. Secondly, a letter dated 26 March this year from the applicant’s lawyers to the respondent’s lawyers. And, thirdly, the letter dated 27 March this year from the applicant’s lawyers to the respondent’s lawyers, along with a draft consent order that was enclosed with it.
- After hearing from Mr Bain for the applicant and Mr Horton of Queen’s Counsel for the respondent, the Court has today made the following five orders already:
- (1)It is ordered that the supplementary affidavit of Claire Gitsham sworn 1st of April 2015, referred to as confidential affidavit, will not be used for any purpose other than the conduct of the originating application filed 26 March 2015.
- (2)Subject to leave of the court first had and obtained, the confidential affidavit will not be (a) disclosed to the respondent or the respondent’s delegates, (b) disclosed to any other person except as provided for in order 3, and (c) copied or otherwise reproduced in whole or in part.
- (3)The information contained in the confidential affidavit will not be divulged to any person, firm or company other than (a) the solicitors or counsel for the parties, and (b) the representatives or officers of the applicant.
- (4)The confidential affidavit will be kept in a sealed envelope on the court file and not be removed from that envelope without the leave of the court or otherwise with the consent of the applicant.
- (5)That no information not already public about commercial or financial matters of the applicant be made available to the public.
- The respondent opposes the making of that order. Without a stay, two decisions of the delegate of the Chief Executive – that’s the respondent – will take effect on 2April 2015, which is less than eight hours from the present moment. The two decisions would require the applicant to provide a further $25,422,895.05 in financial assurance to the Chief Executive beyond that which has already been provided. The applicant has sought an internal review of the decisions. The respondent proposes to allow the time within which that is to occur under the legislation to expire. So that there will be a deemed affirming of the decision which the applicant indicates will be appealed for this Court.
- The internal review itself does not stay the decisions. Section 522 of the EPA is relevant for consideration at this point. It provides that a stay of operation of particular original decisions, sub (1), is:
“(1) If an application is made for review of an original decision mentioned in schedule 2, part 1 or 2, the applicant may immediately apply for a stay of the decision to—
- (a)for an original decision mentioned in schedule 2, part 1—the Land Court; or
- (b)for an original decision mentioned in schedule 2, part 2—the Court.
- Sub (2) provides that:
“(2) The Land Court or the Court may stay the decision to secure the effectiveness of the review and any later appeal to the Land Court or the Court.
- (3)A stay may be given on conditions the Land Court or the Court considers appropriate and has effect for the period stated by the Land Court or the Court.
- (4)The period of a stay must not extend past the time when the administering authority reviews the decision and any later period the Land Court or the Court allows the applicant to enable the applicant to appeal against the review decision.”
- And I keep those provisions steadily in mind in making the decision that’s now before the Court.
- The applicant company is now decommissioning its demonstration underground coal gasifaction facility at number 357 Kummerows Road, Chinchilla. That’s the plant to which the present application essentially relates. The respondent Chief Executive currently holds financial assurances in the amounts of $1,451,878.21 and $1,825,844. The first of those amounts is proposed to be increased to $14,002,987. And the second of those amounts is proposed to be increased to $10,547,003.
- The Court must exercise a discretion in deciding whether to make the order sought. In Paringa Mining and Exploration Company Proprietary Limited against North Flinders Mines Limited (1998) 165 CLR 452, Chief Justice Mason said that:
“Where there is a serious issue to be tried –”
and that is not in dispute here:
“…the court must find where the balance of convenience lies.”
- In Jesaru Proprietary Limited and the Minister for Natural Resources (1987) 11 NSWLR 110, then President Kirby considered that:
“Where there is an appeal as a right and an arguable case, and no more is sought but to preserve the status quo, and where there may be serious and irreversible consequences to the appellant, the balance of convenience favours in that case an injunction.”
- And I’m aware here and bear steadily in mind as it was submitted by Mr Horton of Queen’s Counsel that the particular wording of s 522 is what constrains the discretion of exercise by the Court. And I consider these cases in the light of that statutory provision.
- In the case of Network 10 Proprietary Limited and Rowe, which was reported in  NSWCA 4, Justice of Appeal Santow referred to there being – who, as I recollect, was sitting alone in that decision – referred to there being no more than necessary to preserve the status quo pending the outcome of an appeal, that there was an apparently arguable point. And where there was a – if a failure to grant relief, it might involve serious damage to the applicant as being relevant considerations in relation to the exercise of the discretion that was then before him.
- Here, it’s submitted, that if the applicant must comply with the decisions, it would not be able to be compensated for the loss or damage that may accrue to it for having to do so. The respondent Chief Executive already holds $3,277,722.21 in financial assurances from the applicant. He does not challenge the affidavit evidence put before the Court by the applicant and has not introduced any evidence.
- The evidence is that the only option the applicant has to obtain the financial assurance requires – that is required of it – would require it to provide security by way of cash. This would necessitate a global restructure of its financial arrangements which, on the evidence of Ms Gitsham, is estimated would take between three and four months. The cost of external advisors to be involved in this endeavour is alone estimated to be between US $5 million and US $8 million. This is in addition to the applicant’s own staffing costs for applying its resources to this particular activity. But these resources would need to be applied to the work of capital raising and debt restructuring.
- In Cougar Energy Limited and Debbie Best, Chief Executive Under the EPA, a case which the parties haven’t referred the Court to but which appears to me to be relevant, his Honour Judge Jones, District Court judge, made some comments that are apparently relevant to the current circumstances. That’s reported in (2011) QPEC 150. Now, his Honour said at paragraph 20 of his decision which related to its application for a stay pursuant to s 535 of the EPA. The application was dismissed. Now, his Honour said at paragraph 20:
“Notwithstanding that these proceedings involve an appeal against what is effectively an administrative decision, it is generally agreed that the general principles associated with the granting of a stay in usual civil litigation are applicable, subject to some variation or adjustment where necessary. By reference to cases such as Cook Construction Proprietary Limited and Stork Food Systems Australasia Proprietary Limited (2008) Qd R 453; Alexander and Cambridge Credit Corporation Limited (1985) 2 NSWLR 685; and Attorney General for the State of Queensland against Farden (2011) QCA 111.”
- The following principles seem to be established:
- (1)It is not necessary for the applicant for a stay to show special or exceptional circumstances which warrant the grant of the State.
- (2)The fundamental justification for granting a stay, pending an appeal, is to ensure that the audits which might ultimately be made by the court are fully effective.
- (3)While the prospects [indistinct] success in the appeal are a relevant consideration unless it can be said that the appeal is frivolous or not arguable the Court will generally not descend into a detailed assessment of the prospects of the appeal.
- (4)Finally, will the applicant for the stay be irreparably prejudiced if the stay is not granted?
- And at paragraph 22 his Honour adopted the words of Justice Chesterman [indistinct] at paragraph 18. The determination in the application must balance the competing considerations.
- Now, this was applied by his Honour Member Smith of this Court in an ex tempore decision his Honour gave on Friday 13 March this year in a case called City Gold Corporation Limited and the Chief Executive, Department of Environment and Heritage Protection. His Honour granted a stay until midnight on 31 December this year, subject to a further order of the Court. And he required in that case that the bank guarantee be increased to a million dollars, effectively doubling it, by 18 March 2015. This wasn’t objected to by the parties.
- It’s conceded by Mr Horton of Queen’s Counsel for the respondent that the applicant has shown a prima facie case to argue on its foreshadowed appeals. It’s not suggested that the proposed appeals could be said to be frivolous or vexatious. On behalf of the respondent it is argued that the financial assurance scheme is an important part of the legislative scheme overall, and that there’s no suggestion that the decisions are affected by a jurisdictional error which might – may be such as to vitiate them. The appeals that are foreshadowed are, of course, fresh hearings, not affected by any prior decision.
- It’s submitted that the applicant’s claim of financial strain is a vague one, and it ought to have more – or it will have, as it were, made provision by now to meet the obligations which were foreshadowed late in 2014. There’s no suggestion that the existing obligations are inadequate to meet any existing cost, but they are an insurance to protect the State from possible costs which are not presently in prospect, but which could arise. It’s submitted that the power to grant the order sought must be exercised within the boundary set by s 522, as I mentioned earlier in these reasons, which is to secure the effectiveness of any later appeal to this Court.
- The respondent submits that it’s not suggested that if the increases were – were paid – the increased amounts were paid – and, ultimately, those decisions – imposing them were – were overturned on appeal – the applicant would be unable to recover the cash it had put aside for the assurances. This needs to be considered in light of the evidence, which is that – and which is uncontradicted – that costs of at least five to eight million dollars US would be necessarily paid just to advisors. And there’s no indication that that would be recoverable. That’s referred to specifically in the supplementary affidavit – that external adviser costs are estimated to be between US five million dollars to US eight million dollars. And there are additional costs that are referred to, which include staffing [indistinct] cost.
- It’s admitted that if the stay is granted the order be on conditions such as for a limited time, that an undertaking be given as to damages, and that a portion of the assistance be required to be paid. And I’ve referred to a case that, in fact, did proceed upon the basis of requiring an increased assurance to be provided. There is no evidence to support any amount as being suitable for some increase in the size of the insurance – of the assurance. The Court cannot set an arbitrary figure. The case before his Honour Smith was one where the parties agreed to a certain increase. There is no evidence for any foreseeable damages to which an undertaking could be required in the context of a stay order. The submission that the order be for a limited time is persuasive.
- Now, exercising the discretion, the Court takes into account all the material before the Court, and the wording of s 522 of the EPA. The balance of convenience is considered within the scope of what is necessary to secure the effectiveness of the foreshadowed appeals. The affidavit evidence of Claire Gitsham is uncontradicted by any other evidence. It’s that there would necessarily be between five and eight million dollars US in external advisors fees to be paid if the present decisions are not stayed. And if the obligation needs to be complied with these fees would be necessary in order to raise the necessary funds. The Court is not satisfied that those costs could be recovered from the respondent chief executive if the decisions are overturned on appeal. The applicant would have to bear the expense if the decisions are not stayed.
- For these reasons, the Court will grant the order sought. The draft order is to be, however, amended by including in it at the end the following. Now, I propose this wording, and I will hear you both on it in more detail so as to finalise it, but this is what is foreshadowed. That this order is to apply until 4 pm, on Tuesday 5 May 2015, or until any further order of the Court made before then. It hasn’t been raised yet, I will just mention the matter of costs, whether the costs of this originating application ought to be reserved, or made costs of the appeal, or considered at a time after the expiry of this last order that I’ve read, or of its variation.
- Now, these reasons are given ex tempore, and I reserve the right to tidy them up for publication, if that becomes necessary.
- The supplementary affidavit of Claire Gitsham sworn on 1 April 2015 (Confidential Affidavit) will not be used for any purpose other than the conduct of the originating application filed 26 March 2015.
- Subject to the leave of the Court first had and obtained, the Confidential Affidavit will not be:
- (a)disclosed to the respondent or the respondent’s delegates;
- (b)disclosed to any other person except as provided for in order 3; and
- (c)copied or otherwise reproduced in whole or in part.
- The information contained in the Confidential Affidavit will not be divulged to any person, firm or company other than:
- (a)the solicitors or Counsel for the parties; and
- (b)representatives or officers of the applicant.
- The Confidential Affidavit will be kept in a sealed envelope on the Court file and not be removed from that envelope without leave of the Court or otherwise with the consent of the applicant.
- No information, not already public, about commercial or financial matters of the applicant be made available to the public.
- The operation of the original decisions of the delegate of the respondent dated 4 March 2015 be stayed pending the latest of the outcome of the internal review application lodged by the applicant on 18 March 2015 or any subsequent appeal from the review decision of those applications to this Court or hearing and determination of any further appeal to the Land Appeal Court. This Order is to apply until 4.00pm on Thursday 7 May 2015 or until any further Order of the Court made before then.
- The parties have liberty to apply on the giving of two (2) business days’ notice in writing to the Court and the other party.
- Costs be reserved.
MEMBER OF THE LAND COURT
- Published Case Name:
Linc Energy Limited v Chief Executive, Department of Environment and Heritage Protection
- Shortened Case Name:
Linc Energy Limited v Chief Executive, Department of Environment and Heritage Protection
 QLC 12
Member WA Isdale
01 Apr 2015