Hardie Holdings Pty Ltd v Director-General of the Department of Natural Resources

Case •

[2007] NSWLEC 39

•

7 February 2007

No judgment structure available for this case.
Reported Decision: 151 LGERA 373

Land and Environment Court


of New South Wales


CITATION: Hardie Holdings Pty Limited et al v Director-General of the Department of Natural Resources [2007] NSWLEC 39
PARTIES:

APPLICANTS:

No. 40508 of 2006
Hardie Holdings Pty Limited
ACN 070 004 590

No. 40509 of 2006
Hardie Somers O'Sullivan Pty Limited
ACN 096 315 561

No. 40511 of 2006
Hardie Garnet Pty Limited
ACN 070 075 740

No. 40559 of 2006
Hardie Ayrefield Pty Limited
ACN 108 833 790

No. 40560 of 2006
Arlam Pty Limited
ACN 096 315 561

RESPONDENT:
Director-General of the Department of Natural Resources
FILE NUMBER(S): 40508 of 2006; 40509 of 2006; 40511 of 2006; 40559 of 2006; 40560 of 2006
CORAM: Lloyd J
KEY ISSUES:

Administrative Law :- validity of statutory notices – power to “serve” a notice extends to antecedent functions of originating and issuing a notice – “relevant information” – “possible contravention of this Act” – an objective test – an investigative power – not limited to production of documents which already exist – documents required for an extraneous, improper or collateral purpose – the improper purpose must be the substantial purpose to be invalid – whether notices too wide, oppressive and ultra vires – principles governing the content of statutory notices.
LEGISLATION CITED: Interpretation Act 1987 s 48
Native Vegetation Act 2003 ss 33, 36, 37, 38, 48 and 49
Native Vegetation Conservation Act 1997 s 46(1)
CASES CITED: Currency Brokers (Aust) Pty Ltd v Corporate Affairs Commission (NSW) (1986) 5 NSWLR 483;
Federal Commissioner of Taxation v Australia & New Zealand Banking Group Ltd (Smorgon Case) (1979) 143 CLR 499;
Hakim v Waterways Authority [2006] NSWCCA 376;
Integrated Financial Group Pty Ltd v Australian Securities & Investments Commission (2004) 183 FLR 8;
Pyneboard Pty Ltd v Trade Practices Commission and Bannerman (1982) 39 ALR 565;
Samrein Pty Ltd v Metropolitan Water, Sewerage and Drainage Board (1982) 56 ALJR 678
DATES OF HEARING: 12/12/2006 and 13/12/2006
 
DATE OF JUDGMENT: 
7 February 2007
LEGAL REPRESENTATIVES:

APPLICANT:
J M Ireland QC and J B Maston (barrister)
SOLICITORS:
Sparke Helmore

RESPONDENT:
S A Duggan (barrister) and M D Seymour (barrister)
SOLICITORS:
Legal Office
Department of Natural Resources


JUDGMENT:

- 1 -

      IN THE LAND AND
      ENVIRONMENT COURT
      OF NEW SOUTH WALES

      Lloyd J

      Wednesday, 7 February 2007

      LEC Nos. 40508 of 2006; 40509 of 2006; 40511 of 2006; 40559 of 2006 and 40560 of 2006

      HARDIE HOLDINGS PTY LIMITED et al v DIRECTOR-GENERAL OF THE DEPARTMENT OF NATURAL RESOURCES [2007] NSWLEC 38

      JUDGMENT

1 HIS HONOUR: On 30 May 2006 Mr Scott Priestley, the Acting Resource Compliance Manager, Hunter Region, Department of Natural Resources issued a notice against each of the five applicants in these proceedings. The notices were issued under s 36 of the Native Vegetation Act 2003 (the NV Act”) and required each of the recipients to give the information and produce the documents described in Sch 1 to the notice. Four of the notices are in substantially the same terms.

2 Each of the five applicants seeks a declaration that the notice is not authorised by s 38 of the NV Act and is invalid and of no effect.

3 At the commencement of the hearing I made an order by consent that the five proceedings be heard together, since the issues in each case are common.

4 The applicants claim, in effect that the notices are invalid for the following reasons:


      (1) The person issuing the notices, Mr Priestley, was not authorised to do so.

      (2) The notices were issued for an improper purpose and thus extraneous to the power because:

          (a) the Director-General had already determined that a contravention of the NV Act had occurred;

          (b) the notices required the production of documents which did not then exist;

          (c) a purpose of the notices was to reduce the cost of investigation by the Director-General.


      (3) The notices are too wide and are oppressive and thus ultra vires .

Section 36

5 Section 36 of the NV Act, which is said to be the source of the power to issue the notices, is relevantly as follows:

          36 Power to obtain information
          (1) In this section:
              relevant information means information about a possible contravention of this Act.
          (2) The Director-General may, by notice in writing served on a person, require the person:
              (a) to give to an authorised officer, orally or in writing signed by the person (or, if the person is a corporation, by a competent officer) and within the time and in the manner specified in the notice, any relevant information of which the person has knowledge, or
              (b) to produce to an authorised officer, in accordance with the notice, any document containing relevant information.
          (3) An authorised officer may inspect a document produced in response to such a notice and may make copies of, or take extracts or notes from, the document.
          (4) A person must not, without reasonable excuse:
              (a) fail to comply with such a notice to the extent that the person is capable of complying with it, or
              (b) in purported compliance with such a notice, give information or an answer to a question, or produce a document, knowing that it is false or misleading in a material particular.
              Maximum penalty: 100 penalty units.
          (5) A person is not excused from giving information, answering questions or producing documents under this section on the ground that the information, answers or documents may tend to incriminate the person.
          (6) Any information or document obtained from a natural person under this section is not admissible against the person in criminal proceedings other than proceedings for an offence under this section.

Mr Priestley’s authority

6 It can be seen from s 36(2) that only the Director-General has the power to serve a notice under that section. Under s 48 of the NV Act, the Director-General may delegate any of the Director-General’s functions under the Act, other than the power of delegation.

7 By an instrument of delegation dated 30 November 2005, the Director-General delegated a number of his powers and functions, including the power to “serve notice on a person requiring information or production of documents, under section 36 of the NV Act”, to the Resource Compliance Manager. Mr Priestley was the Acting Resource Compliance Manager at the time that the notices were issued. However, s 48 of the Interpretation Act 1987 (NSW) states that if an act or instrument confers or imposes a function on a particular officer or the holder of a particular office, the function may be exercised by the person for the time being occupying or acting in the office concerned.

8 The applicants accept that Mr Priestley was duly authorised to “serve” the notices. Mr J M Ireland QC (with him Mr J B Maston), appearing for the applicants, submits however, that that is all that Mr Priestley was authorised to do. That is, he did not have authority to do more than “serve” the notices, namely, to deliver or present the notices. Mr Ireland submits that Mr Priestley’s authority did not extend to the function of originating and issuing the notices.

9 In my opinion, however, the power to “serve” a notice must include the power to do all those things involving and preparatory to physical service, including drafting and issuing the notices. To limit the power to physical delivery of the notice would be an absurdity. Moreover, there is no need to delegate the function of physical delivery, since service in that limited sense is already authorised by s 49 of the NV Act, so that a delegation of the power to “serve notice” in the limited sense of delivery would be otiose.

10 I conclude, therefore, that Mr Priestley was duly authorised to perform the antecedent function of originating and issuing the notice which functions are a necessary component of the power to “serve notice”.

An improper purpose?

11 The applicants’ argument turns upon the definition of “relevant information” in s 36(1). A notice under the section can only require the giving of “relevant information”, or the production of any document containing “relevant information”, being information about a “possible contravention” of the NV Act.

12 Mr Ireland submits that the matters to which the notices in the present cases relate had gone beyond the stage of a “possible contavention”. For example, “stop-work” orders had been issued to two of the applicants, Hardie Ayrefield Pty Limited and Hardie Holdings Pty Limited, on 19 October 2005 under s 46(1) of the Native Vegetation Conservation Act 1997 (see the equivalent of that section in the present NV Act, s 37(1)). The stop-work orders state that the Director-General is of the opinion that the recipient is “about to contravene” that Act and order each recipient not to carry out any clearing of native vegetation on “lot 1, deposited plan 707207, Parish of Rothbury, County of Northumberland”. Lot 1 described in the stop-work orders is part of the land to which the notices in the present case relate.

13 There are other internal memoranda within the Director-General’s department which show that departmental staff, including Mr Priestley, were confident that a breach of the NV Act had already occurred.

14 As I understand the applicants’ submission, it is that by the date of the issuing of the notices the respondent had formed the view that a contravention of the NV Act had occurred, so that the power to issue the notices under s 36 was spent and there was no jurisdiction to issue or to serve the notices.

15 It seems to me, however, that the submission fails for the following reasons:


      (a) The test of what is or is not “ relevant information ” is an objective one. This is to be contrasted with s 37, which authorises the Director-General to give a “ stop-work ” order, and s 38, which authorises the Director-General to direct the carrying out of specified work. In the case of both s 37 and s 38, the Director-General can only give a “ stop-work ” order, or direct the carrying out of specified work, if he “ is of the opinion that a person is contravening, or is about to contravene ” the NV Act (s 37), or if he “ is satisfied ” that any native vegetation has been cleared in contravention of the NV Act , or he “ is satisfied ” of the existence of certain other matters (s 38).

      (b) The fact that the officers of the Director-General’s department, or the Director-General himself, may have formed a view that a breach of the NV Act had occurred is irrelevant for the purpose of s 36. The question of whether there is or has been a possible contravention of the NV Act remains a possibility until at least either the commencement of prosecution proceedings or, alternatively, until a court makes a finding that there has been a contravention of the NV Act . There may well be a watertight defence to any prosecution.

      (c) Moreover, the power under s 36 is an information gathering exercise, which continues to be available so long as a contravention of the NV Act remains possible. That is, the power is investigative, which is to be contrasted with orders under s 37 or directions under s 38. Finally, the definition of “ relevant information ” does not preclude a request for information or documents if the prospect of a contravention of the NV Act is more than a possibility. That is, once the threshold of a possibility is reached then a notice may be given, but the power to serve a notice does not cease once that threshold has been reached.

16 The applicants next submit that the notices require the production of documents which do not necessarily exist. Specifically, the notice served on Arlam Pty Limited requires the production, inter alia, of:

          ( 4) A map showing where and when anyone was authorised or directed by Hardie Holdings Pty Limited, Hardie Ayrefiled Pty Limited or Hardie Garnet Pty Limited to clear native vegetation on the land. (If no such map exists, prepare and submit a map.)

17 The answer to this submission is found in the text of s 36(2)(a). The Director-General may, by the notice, require a person to give “orally or in writing, signed by the person” any relevant information of which the person has knowledge. Obviously, if the information is oral then it does not exist in written form, and if it to be “in writing, signed by the person” then this clearly is yet to be prepared. This is to be contrasted with s 36(2)(b), which refers to the production of “any document containing relevant information”. In other words, a request for information to which s 36(2)(a) applies is not limited to the production of documents which may already exist.

18 The applicants further submit that the notices require information for an extraneous, improper or collateral purpose, namely, to obtain ecological reports with the intent that such reports be obtained through the process of s 36 so as to avoid the Director-General incurring additional costs in investigating the contravention.

19 Support for the submission is contained in an internal memorandum dated 16 February 2006 from Mr Priestley to Mr Craig Abbs, Regional Director – Hunter. The report canvasses the prospect of exercising the power under s 36 of the NV Act in relation to the present applicants and lists the advantages and disadvantages of adopting such a course. One of the stated advantages in the memorandum is that it “negates the requirement for further expenditure by DNR to obtain expert reports, and allows for the available information to be incorporated into a proposed s 38 notice”.

20 Further support for the submission is found in the notice which was served on one of the applicants, Harper Somers O’Sullivan Pty Limited, which I understand is a firm of consultants. That notice specifically requires production of the following document: “Harper Somers O’Sullivan (2005) Ecological Consultants Masterplan (ECMP) for Streetwater. Prepared for Hardie Holdings”.

21 I accept the proposition that a power may not be exercised for an improper purpose. As submitted by Ms S A Duggan (who, with Mr M Seymour appears for the respondent), for it to amount to an improper purpose, the motivation for the exercise of the power must be the substantial purpose. I accept the test of substantial purpose stated in Samrein Pty Ltd v Metropolitan Water, Sewerage and Drainage Board (1982) 56 ALJR 678 at 679:

          …; it will be an abuse of the Board's powers if the ulterior purpose is a substantial purpose in the sense that no attempt would have been made to [exercise the power] if it had not been desired to achieve the unauthorized purpose: ….

22 The onus is thus on the applicants to show that the requirements to give the information and to produce the documents must have been for a purpose other than the legitimate purpose of investigating a possible contravention of the Act; that is, that it was a desire to obtain ecological reports and thereby save costs in investigating the possible contravention and if not, then no attempt would have been made to obtain the information or the documents required by the notices.

23 In the present case it is not contended that the ecological report is not a “document containing relevant information”. To the extent that its production may save costs, this fact does not affect the validity of the notice if it is a document containing relevant information as authorised by s 36(2)(b). In another way, on the assumption that the document contains relevant information, the additional fact that the information is included in an ecological report which will negate the need for further expenditure to obtain such a report does not fail on the principle explained in Samrien. That is, the evidence does not satisfy me that no attempt would have been made to serve the notices if it had not been desired to achieve the unauthorised purpose.

24 I find, therefore, that the applicants’ submission that the notices were issued for an improper purpose fails.

The form of the notices

25 The applicants submit that the form of the notices themselves are too wide and not sufficiently particularised to enable the recipients to determine the material to be produced and the notices, therefore, are oppressive and ultra vires.

26 The notices state that they require documents and information which relate to land known as “Sweetwater” as identified in Attachment 1.

27 The attachment is a map having a shaded area showing the area of interest. The applicants do not own all of the land shown in the shaded area. One of the applicants owns one parcel of land, but has no interest in other land within the shaded area. Other applicants have options to purchase some land within the shaded area, or have caveats over the land. Some applicants have no legal or equitable interest in any land within the shaded area. For example, two of the applicants are, I understand, consultants, but who may nevertheless have some knowledge of the activities on the land.

28 Although the schedule attached to each notice is not identical, an example of what is required is the notice to Arlam Pty Limited. It requires the following:

          (1) All documents to or from Hardie Holdings Pty Ltd, Hardie Ayrefiled Pty Ltd, or Hardie Garnet Pty Ltd relating to the Land including but not limited to correspondence, emails, quotations, contracts, tax invoices, receipts, maps pr areas of works, work instructions, and diary notes or verbal conversations

          (2) All documents relating to vegetation management works on the Land including clearing, slashing and mulching of vegetation. Without limitation, documents may include any of the types of documents listed in Clause 1 above and may also include:

              a. Records of vehicle and machinery operating on the Land.

              b. Any instructions provided to employees of Arlam Pty Ltd and timesheets of employees of Arlam Pty Ltd pertaining to activities on the Land.

              c. any plans or maps related to management of native vegetation on the Land.

              d. any photographs of the Land or of vegetation management operations on the Land.
          (3) The following information in writing:

              a. Who authorised or directed the management or clearing native vegetation on the Land?

              b. Which Directors of Hardie Holdings Pty Ltd, Hardie Ayrefield Pty Ltd, or Hardie Garnet Pty Ltd, if any, authorised or directed anyone to manage or clear native vegetation on the Land?

              c. Which Arlam Pty Ltd employees, contractors or subcontractors, if any, were directed or authorised to conduct any clearing of native vegetation on the Land?

              d. What were the date of dates anyone was authorised or directed to manage or clear native vegetation on the Land?

              f. What instructions, if any, were given to anyone in relation to managing or clearing of native vegetation on the Land?

              g. What method or methods were used to manage or clear native vegetation on the Land?

              h. What machinery was used on the Land?

          (4) A map showing where and when anyone was authorised or directed by Hardie Holdings Pty Ltd, Hardie Ayrefield Pty Ltd, or Hardie Garnet Pty Ltd to clear native vegetation on the Land (if no such map exists, prepare and submit a map.)

29 It can be seen that the documents and the information sought is not limited to any particular period of time. The notice does not specify the contravention of the NV Act. Although it is not clear whether the whole or some part of the land depicted on the attached map is the subject of the requirement to provide information, I am prepared to assume that it refers to all or any of the land thus depicted. The notice is obviously wide, requiring the production of “all documents”, “relating to the Land”, “relating to vegetation management works” and “without limitation”. The applicants submit that this has the effect of compelling the production of documents which do not fall within the definition of “relevant information” in s 36 and thus oppressive and it is in excess of the power under s 36 to serve a notice in such terms.

30 The respondent relies on the following submissions.


      (a) There is no statutory requirement which dictates the form of the notice and hence no requirement that the particular contravention of the NV Act be nominated. It may be that the information is required to determine which particular contravention (defined in s 33) may have occurred.

      (b) Any ambiguity in a statutory notice is not itself a ground of review unless it cannot be given any meaning: Pyneboard Pty Ltd v Trade Practices Commission and Bannerman (1982) 39 ALR 565. Having regard to the extent of the recipients’ knowledge of the circumstances the meaning would be reasonably clear to them: Integrated Financial Group Pty Ltd v Australian Securities & Investments Commission (2004) 183 FLR 8.

      (c) As to the absence of any specified period of time, the notice must be understood as having effect subject to the NV Act , and s 36(2)(a) can only require information of which the recipient has knowledge: Hakim v Waterways Authority [2006] NSWCCA 376 at [117], [122].

31 Mr Ireland in reply submits that it is critical for the notice to define the particular contravention of the Act of which the recipient is said to have knowledge. He further submits that the notice itself must be self-contained in the sense that recourse to surrounding circumstances should not be necessary. No authority, however, is cited in support of the submission, which appears to be contrary to the authorities to which I refer below.

32 I now turn to the authorities on the principles governing the content of statutory notices. In Federal Commissioner of Taxation v Australia and New Zealand Banking Group Ltd(Smorgan case) (1979) 143 CLR 499 (“ANZ Banking”) the High Court considered, inter alia, the form of notices given under s 264(1) of the Income Tax Assessment Act 1936 (Cth), which provided:

          264(1) The Commissioner may by notice in writing require any person, whether a taxpayer or not, including any officer employed in or in connexion with any department of a Government or by any public authority—
              (a) to furnish him with such information as he may require; and
              (b) to attend and give evidence before him or before any officer authorized by him in that behalf concerning his or any other person's income or assessment, and may require him to produce all books, documents and other papers whatever in his custody or under his control relating thereto.

33 As to this power, Gibbs ACJ said (at 525):

          To be valid a notice to produce documents under s 264(1)(b) must of necessity identify with sufficient clarity the documents which are required to be produced.

34 Mason J, however, held that the Commissioner was entitled to make what was in effect a “roving enquiry” into the income of a taxpayer; or as Murphy J said (at 545), “[s]ection 263 enables the commissioner to “fish” for information.

35 According to Mason J (at 537):

          What para (1)(b) has in mind is that a notice may be given requiring the recipient to produce “all books, documents and other papers” in his custody or control “relating thereto”, that is, to the income or assessment of the person whose name is stated in the notice. It is then for the recipient to decide for himself, difficult though the task may be, which of the documents answer the description. If his decision is wrong he exposes himself to prosecution and penalty.

          The existence of this hazard is not a sufficient basis for the conclusion that the section requires the Commissioner to give a notice in such terms as would enable the recipient on reading it and on examining the documents in his custody or control to determine whether they fall within the ambit of the Commissioner's powers. To so hold would be to impose an impossible burden on the Commissioner. In many, if not most, cases he will be unaware of the contents of the documents of which he seeks production. …

36 The case was applied by the Full Court of the Federal Court in the Pyneboard case. The validity of notices issued by the respondent Chairman of the Trade Practices Commission pursuant to s 155 of the Trade Practices Act 1974 (Cth) was challenged. That section empowered the Chairman to serve notice on a person requiring the person to furnish information, produce documents, or give evidence “relating to a matter that constitutes, or may constitute, a contravention” of the Act. The Full Court (Northrop, Deane and Fisher JJ) held (at 570-571):

          The requirement that a notice under s 155(1) convey, with reasonable clarity, to the recipient what information he is required to furnish or what documents he is required to produce is not to be applied in a precious or hypercritical fashion (see, Melbourne Home of Ford Pty Ltd v Trade Practices Commission (No 3) (1980) 31 ALR 519 at 531). Artificial dissection, in the cause of determined obfuscation, can introduce an argumentative element of uncertainty into words which, when read reasonably in context, are adequate to convey a plain and clear meaning. Provided a notice makes it reasonably clear, in the circumstances in which it is given and on a fair reading of its terms, what information or documents are required, the requirements of s 155(1) as to clarity will be satisfied. In this regard, the mere fact that parsing and analysis in the artificial atmosphere of the courtroom can lead to the identification of a number of latent ambiguities will not invalidate what, as a matter of common sense, is reasonably clear.

37 Both the ANZ Banking case and the Pyneboard case were followed in Integrated Financial Group Pty Ltd v Australian Securities and Investments Commission (2004) 183 FLR 8, which was about a notice issued under s 33 of the Australian Securities and Investments Commission Act 2001 (Cth). That section enables the Australian Securities and Investments Commission to “give to a person a written notice requiring the production to a specified member or staff member, at a specified place and time, of specified books that are in the first-mentioned person’s possession and relate to: (a) affairs of a body corporate; or (ab) affairs of a registered scheme; or (b) a matter referred to in any of paragraphs 31(1)(g) to (m), inclusive; or (c) a matter referred to in paragraph 32A(c) or (d)”.

38 In Integrated Financial Group, Roberts-Smith J in the Supreme Court of Western Australia also referred (at 16 [63]) to the judgment of Bryson J in Currency Brokers (Australia) Pty Ltd v Corporate Affairs Commission (NSW) (1986) 5 NSWLR 483:

          In Currency Brokers , Bryson J thought there to be no reason to apply a strict or punctilious standard to a specification of documents to be produced. He considered it necessary to ask whether the specification is comprehensible or clear in that it can reasonably be understood so as to comply with it.

39 Roberts-Smith J adopted (at 17) the following approach as stated by Bryson J in Currency Brokers (at 489):

          Another important matter is the evident purpose of the provision to place effective investigative tools in the hands of the Commission. In the nature of investigation the person giving the notice and making the specification would often not be well informed, yet the process would be futile if this disabled him from giving a valid notice.

40 Roberts-Smith J also held (at 21) that such a notice is to be construed in the light of the circumstances in which it was given; and those circumstances may include the common knowledge and understanding of the person serving the notice and the recipient of the notice.

41 In applying these authorities to the present case, I am not persuaded that the notices are oppressive or that it is in excess of power under s 36 to give such notices. As stated in Pyneboard, the words of the notices must be read reasonably in their context, and the context includes the circumstances in which it is given. Moreover, to require the notice to specify with particularity the documents or the information required would, as stated by Mason J in the ANZ Banking case, impose an impossible burden on the person serving the notice, since he will be unaware of the particular documents or the relevant information until they and it are produced. To hold otherwise would, as Mason J also observed, frustrate the object of the section. Moreover, as Bryson J observed in Currency Brokers, in the nature of investigation the person giving the notice would often not be well informed, yet the process would be futile if this disabled her or him from giving a valid notice.

42 It is to be noted that the Director-General is entitled to make a roving enquiry as described by Mason J in the ANZ Banking case, or, as was said by Murphy J in the ANZ Banking case, to fish for information. This is to be contrasted with notices to produce and subpoenas, under which such inquiries are not permitted.

43 No evidence was led to show that the notices in the hands of the recipients were not comprehensible or could not reasonably be understood, as to not enable them to be complied with.

44 It follows that the applicants’ claims for declaratory and consequential relief must be refused.

Orders

45 The order of the Court in each case are:

          (1) The application is dismissed.

          (2) The question of costs is reserved.

          (3) The exhibits may be returned.

              I hereby certify that the preceding 45 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

              Associate

              Dated: 7 February 2007
      *************
Most Recent Citation