Jemena Gas Networks (NSW) Limited v Mine Subsidence Board [2011] HCATrans 80
[2011] HCATrans 80
[2011] HCATrans 080
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S312 of 2010
B e t w e e n -
JEMENA GAS NETWORKS (NSW) LIMITED
Appellant
and
MINE SUBSIDENCE BOARD
Respondent
FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J
BELL J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON TUESDAY, 5 APRIL 2011, AT 10.15 AM
Copyright in the High Court of Australia
MR R.J. ELLICOTT, QC: If the Court pleases, I appear with MR J.R. WILLIAMS for the appellant. (instructed by Freehills)
MR S.B. LLOYD, SC: May it please the Court, I appear with MR S.J. FREE for the respondent. (instructed by Crown Solicitor (NSW))
FRENCH CJ: Yes, Mr Ellicott.
MR ELLICOTT: Your Honours, we have handed up an outline of oral submissions. I am not sure whether it is what the Court wants. It is a new practice, but we have been short and my friend has been long, and your Honours can perhaps say what form you want it in. Your Honours, our argument has to be preceded by some factual matters. One matter of fact that is important because it distinguishes this case from certain facts in the case of Alinta, that is that the Mallaty Creek, which is the relevant point of interest in this case, was crossed by the Moomba/Sydney gas pipeline.
That pipeline was built prior to the 30 June 1976. If an improvement is made on an area that is within a mine subsidence district under section 15 then, of course, you have to get consent and that was the Alinta Case. The area south of Mallaty Creek was, in fact, subject to a mine subsidence district declaration before the pipeline was built. The northern area which concerns this case – that former was Alinta – the relevant area in this case is the north of Mallaty Creek and, therefore, section 15 does not apply.
Your Honours, if I could take your Honours to the chronology and briefly take your Honours through it. In 1991 a coal mining lease was granted to a subsidiary of BHP. On 22 November 2002, approval was given under section 138 of the Coal Mines Regulation Act. That section will be found at page 41 of the appellant’s authorities.
No method of mining other than the bord and pillar system shall be used in an underground mine except with the approval of the Minister given on the recommendation of the Chief Inspector and subject to such conditions as the Minister may impose.
This being longwall mining was the subject of approval and that early approval was given for Longwalls 29 to 33. The mining commenced on 14 April 2003 and after that, it was actually the miner, I think, that obtained the report. Consultants were engaged for the purposes of predicting subsidence levels from mining and at appeal book 48, your Honours will find a table. There were two experts engaged. One was MSEC and it was engaged to predict those subsidence levels and they are set out in paragraph 28.
Longwall 30 it starts with and the cumulative subsidence in the first column is the subsidence at the centre of Mallaty Creek. The subsidence that is measured is at the end of the longwall, at the completion of each longwall, so that there is a subsidence of 17 millimetres at 31 and, as your Honours may have gathered from reading, that the relevant longwall where subsidence was likely to take place which would affect the situation was 349. The other expert ‑ ‑ ‑
FRENCH CJ: That is Longwall 32.
MR ELLICOTT: Yes, 32. The other expert was Worley and if your Honours got to paragraph 31 at page 49, which summarises their advice:
the anticipated pipeline stress at Mallaty Creek resulting from the predicted cumulative subsidence from extraction from Longwalls 30 and 31 was within acceptable levels (Peak Tresca stresses below 90%) and no mitigation works would be required . . .
(b)the anticipated pipeline stress at Mallaty Creek resulting from the predicted cumulative subsidence from extraction from Longwalls 30 to 32 was above acceptable levels and mitigation works would be required.
There are tables, which I can take your Honours to quickly, at 52 and 53, particularly the one at 53 which shows in green those longwalls where the stress was not a problem, that it became a stress in the red area at Longwall 32 onwards. Once it reaches 100 per cent it reaches a level where it is thought desirable for the mitigation or the preventive action to be taken. Your Honours will notice Peak von Mises - they are just two different measurements available for stresses on pipelines and Peak Tresca is apparently regarded as the one to rely on. Those were in existence by 11 February 2004.
On 24 December 2004, that initial approval under section 138, to which I have taken your Honours, was revoked and a new approval granted to the miner to mine Longwall panels 29 to 33. If your Honours go to appeal book 46 and 47, your Honours will see, first of all, those facts in paragraphs 19 and 20 and down at the bottom there are dates which were, in effect, the history of the mining operation and it shows the commencement and completion of each longwall. That is a helpful table in seeing the progression which becomes relevant under a final submission we make, the progression of what we say was the extraction of coal.
Now, in order to understand – if your Honours, with respect, do not already understand, but I will take your Honours to it – there are some maps at 60 and 61. The one at 60 shows the longwalls from 30 through to 36, and the relevant crossing is the crossing of Mallaty Creek, which your Honours will see there in the middle of the page going from northeast to southwest. You will see the pipeline crossing it in Longwall 32.
If your Honours go to the map on the other side there are – and whether your Honours are familiar with longwall mining – but just very broadly, a very large machine goes through the stretch of the coal seam and it, in effect, shaves the coal off and it goes onto a conveyor and as that machine goes ahead the ceiling above collapses and the effect of that collapse, of course, is that there is subsidence, but I will come to that a little later. But there are gaps between each of the longwalls because otherwise the whole thing would collapse and it is important to keep some of the possible stress restrained.
Your Honours will see also that on this map that table at AB 47 is, in effect, so far as it shows the start, it shows the start of each of those longwalls and it shows also that on 28 August 2007 – if your Honours see Longwall 32 – as a result of the mining operation there was subsidence at 274.7 – that is millimetres. That is consistent with the projections and in paragraph 31 at page 49 of the appeal book in the statement of agreed facts – again, I apologise, it is page 50 and it is paragraph 39, I am sorry:
Based on the MSEC predicted ground movements . . . and the Worley advice, the applicant reasonably anticipated –
and this is picking up, of course, the words of the section –
(a)further subsidence was likely to occur at Mallaty Creek in the order of 1307mm from the continuation of longwall mining activities in accordance with the Second Revised Longwall Mining Approval and the Proposed Further Longwall Mining Application, in particular extraction from Longwall 32; and
(b)the anticipated cumulative subsidence at Mallaty Creek (that is, the Observed Subsidence and the anticipated further subsidence) was of such a magnitude as was likely to cause significant damage to the Pipeline.
On 4 June 2005 the mining of Longwall 30 was completed, it having begun on 14 April 2003. Then commenced the extraction of coal from Longwall 31 and what happens broadly is that once the machine gets to the end then there is a process of moving the machine or other machinery perhaps into the next longwall and it takes several months before they start again. That appears from that table that I took your Honours to.
An important date on one view is 24 October 2005. Subsidence of 31.8 mm was recorded at the intersection at the pipeline and Mallaty Creek. Again that relates to the last submission that we make. In December 2005 the appellant commenced engineering design works to prevent damage to the pipeline –based on the reports, and it commenced works pursuant to that design in October 2006. On 11 December 2006 the mining of Longwall 31 is completed.
Now, up to that point there is no subsidence that is predicted, and it in fact did not occur, which jeopardised the pipeline, but at that stage those preventative works are taking place and on 20 December 2006 the subsidence was 42.3 millimetres as recorded at that point. An important date, January 2007, the works that were undertaken to prevent it were completed. So it is clear that up to that point of time the subsidence had not been sufficient to jeopardise the pipeline, but when we come to the argument, we are saying it was part of the cause of the subsidence that was prevented in order to preserve the pipeline from damage.
In February 2007, the miner commences 32 and the work continues. In April, the subsidence is 140.4. On 17 July the application is made under the relevant section - 12A(1)(b). On 28 August the subsidence has grown considerably. It is 274.7. As I pointed out, that is only partially through Longwall 32, but from then onwards the whole of the operation is subject to – if the preventative work had not taken place, the whole of the operation was likely to cause damage to the pipeline. On 23 July 2008, that application was refused and your Honours, if you go to 42 of the appeal book, your Honours will find the letter which represents the Board’s opinion, not an opinion within the section but its decision on the application:
On 23 July 2008, the Board decided to refuse Alinta’s claim for compensation under s.12A(1)(b) on the basis that the damage to the pipeline anticipated by Alinta would not “otherwise have arisen…from subsidence that has taken place”, as that provision requires.
That, in effect, although we might say that was ambiguous, it stated the ground upon which they rested their decision and that is the matter we have come to the courts and, finally, to this Court, to have determined. Could I just hand up to your Honours - your Honours have it, it is a ‑ ‑ ‑
FRENCH CJ: I think we have it.
MR ELLICOTT: This is simply an illustration that is not intended to be part of the factual situation, that is to say, it does not represent what happened necessarily at Mallaty Creek. It is simply to indicate the effect of longwall mining. It leaves this caved area above and that sets in motion downward forces on the original surface. Your Honours can see that. The important part of this to have in mind is that it has that cone‑like effect, the cone being upside down but the surface being the base of the cone. It operates not only directly above the mining activity, but it sets in motion forces at a distance.
That is illustrated, of course, in those reports and the evidence that I have taken your Honour to that although they were mining in Longwalls 29, 30 and 31 it was having an effect, during that period, on the surface at Mallaty Creek where the pipeline crossed and that, of course, was some distance away from the vertical projection of where the coal mining activity was going on.
BELL J: Mr Ellicott, just taking you back for a moment to the Board’s letter advising of its determination on 28 July at appeal book 42, I think you said a moment ago that there may be some ambiguity about the basis for the Board’s decision. Can I inquire whether you accept the characterisation that Justice Basten put on it at appeal book 133, paragraph 122? His Honour considered the factual inference to be drawn from the letter was:
that the Board did not form the relevant statutory opinion because, in its view, the (whole of the) subsidence from which damage could reasonably be anticipated, must occur prior to –
the incurring of the expenditure. Is that accepted to be the factual inference?
MR ELLICOTT: That is the ground upon which the refusal took place.
BELL J: Yes. So you accept that is the way to construe the Board’s letter?
MR ELLICOTT: Yes, and when I made that statement, but I – we construe those words in a different way and it is to that proposition I should now come in moving on with the argument. Most of your Honours, I think, did participate in Alinta and you will be familiar with this Act in recent times but I had in mind to take your Honours quickly through the Act and to relevant parts of it and then perhaps helpfully, from your Honours’ point of view, so that we do not spend too much time on this, if I can take your Honours to Alinta which you will find at page 141.
The index is not quite correct. It is under tab 8 and at paragraphs 14 to 25 your Honours do set out the - your Honours’ summary of the provisions of the Act. It really covers much of the field but not all of the field I was going to go to. I will not stop to read it, your Honours, but having that in mind that your Honours have visited this area recently, I will not stay too long on this particular part of it, but there are some important points to make.
The first section is the definition provision - section 4 and your Honours will find the Act in our book at tab 1. The definition really picks up, I guess, the dictionary definition which is to cave in or sink. The word “subside” is the dictionary definition in both the Macquarie and the Oxford. It is subsidence due to the extraction of coal. Now, there is a point that your Honours will come to where, in the judgments, the judges took the view that the extraction of coal was confined to each longwall and therefore if it had to occur due to the extraction of coal, you had to find it was due to the extraction in Longwall 32.
We say that this whole operation was the extraction of coal, certainly relevantly up to Longwall 32 it was subject to a mining approval and there is no suggestion that the ongoing process did not go on. There was no break because of a decision that the company had to go into liquidation or something of that description and therefore our argument, put shortly at the moment, is that the extraction was the ongoing activity and therefore all the subsidence that was occurring right through from Longwall 29 was a likely contributory cause to the damage that was being sought to be prevented by the preventative works.
CRENNAN J: The consequential stresses of the mining could not be confined to individual longwall, could they, whilst the machine was operating?
MR ELLICOTT: Yes, because of that, what I call “a cone‑like effect” ‑ ‑ ‑
CRENNAN J: They are distributed, are they not?
MR ELLICOTT: ‑ ‑ ‑the stresses were occurring over there when the mining was taking place here, and so the ongoing activity gradually increased the pressure – “stress” is a better word – the stress on the pipeline, until it got to this 100 per cent point which was at Longwall 32. By reason of an amendment to this definition, which took place at the same time as the relevant sections that we are going to go to - 12A and 13A came in - there was added words:
and includes all vibrations or other movements of the ground related to any such extraction or prospecting (whether or not the movements result in actual subsidence), but does not include vibrations or other movements of the ground that are due to blasting operations in an open cut mine and that do not result in actual subsidence.
The definition is important because it contains the germ of the idea that subsidence is a process. It is not just something that happens, and that is it. It is ongoing, and not only is it ongoing, but what you might call an initial subsidence without any further work can suddenly collapse again because of the underground forces at work and so without any further extraction that subsidence can be deeper. We submit that the section has that connotation in it.
Sections 5 onwards deal with the appointment of the Board and these provisions are dealt with by your Honours in Alinta. Section 8, the Board has the powers of a royal commission. Section 10 is very important to our argument because in Alinta – and I will give your Honours the particular paragraph. I am getting ahead of myself, but it is an important point to make – your Honours talk about the fund being, in a sense, and these sections that we are going to go to, 12A – it is in paragraph 18 at 145 in the authorities:
The statutory quid pro quo for the contributions of colliery proprietors to the fund lies in s 14(1) of the Subsidence Act. Provided the proprietor of a colliery holding is not in arrears with contributions (s 14(1)(a)) and observes operational covenants of the kind described by s 14(1)(b), the proprietor “shall not be liable for any damage to improvements or household or other effects occasioned by subsidence” (S 14(1)). This statutory immunity is stated not to extend to relieve the liability of a proprietor for damage caused by subsidence due to negligence –
We do not need to debate whether it is a tort of nuisance. The fact is that there is a quid pro quo and there is a debate in the court below as to, in effect, the consequence of this notion in the Act. We say that as a result of it there is to be read into the Act, in interpreting it, the purposive operation that the intention was to provide benefits to the improvement owner which were commensurate with what it might – not exactly, but in a broad sense, commensurate with what the improvement owner had lost by reason of being deprived of common law rights, for instance, to seek damages for the disturbance, or no doubt to seek injunctive relief if there was a threat to damage improvements from underground activity.
There are cases in England - and I will give your Honours the reference to them - no doubt a multitude of cases but we have selected two that cover both types of relief. Section 10, read with section 14, are very significant provisions in the Act. I do not think anything turns on the detail of the provisions as to the fund - the fund is there - except the extent of it and who is contributing to it. It is the miners. They are the people who are causing the problem. They are getting the benefit of the coal and, therefore, the owners need some methods of compensation. The Act started off, broadly speaking, with section 12. Your Honours will notice under that:
Claims may be made under this Act for payment from the Fund of:
(a)compensation for any damage to improvements that arises form subsidence, except where the subsidence is due to operations carried on by the owner –
Now, (b) is important. It says:
an amount to meet the proper and necessary expense incurred or to be incurred as a result of such damage in:
(i)building retaining walls or bolting together or underpinning or otherwise supporting, raising or repairing buildings and walls . . .
(iii)raising, lowering, diverting or making good –
inter alia, pipelines. The importance of it is that we say that there is an argument that 12 and 12A are complementary and that 12 is only dealing with actual damage from subsidence. It is our submission that (b) crosses the line and enables amounts to be paid where preventative work is being undertaken under, for instance, (b)(i) or (b)(iii) or perhaps (b)(ii) as well, before the damage occurs. It is not confined as suggested. We come to 12A and 12A(1)(a) has to be borne in mind. It is:
compensation for damage incurred as a result of the exercise by the Board of its powers under section 13A –
When your Honours come to that, as your Honours have probably come to it already, your Honours will notice that it does, in fact, enable the Board to undertake preventative and mitigatory works. The relevant provision we are concerned with is (b):
an amount to meet the proper and necessary expense incurred or proposed by or on behalf of the owner of improvements or household or other effects in preventing or mitigating damage to those improvements -
I will skip the household -
that, in the opinion of the Board, the owner could reasonably have anticipated would otherwise have arisen, or could reasonably anticipate would otherwise arise, from a subsidence that has taken place, other than –
as in the previous section –
a subsidence due to operations carried on by the owner.
Now, those words which are the subject of our argument here today from a subsidence that has taken place, we say, embrace anticipatory subsidence and do not require the subsidence to have occurred before the expenses incurred which was the view of the Court of Appeal by majority. It is our submission that those words, in effect, have the same hypothetical quality as does the word “damage”.
FRENCH CJ: What we are ultimately concerned about is whether the Board has formed its opinion upon a proper construction of that provision.
MR ELLICOTT: Yes, and we have a preliminary argument which says that is what it means. There is no anterior about it. It is not something that happens. It is purely saying that you can prevent or mitigate damage from a subsidence – it is not any particular subsidence – it is just one that has taken place and that is the subsidence that could occur up to the time of the damage and, therefore, is just as anticipatory as the damage. That is consistent, that broader interpretation, with the view that these sections are a quid pro quo for section 14 and it was not the intention of the legislature to confine, as exposed by the section, the subsidence to an actual subsidence that has occurred before the expenditure.
Of relevance is the fact that a claim has to be made within three months – that is under 2(b) – and it is also significant that because we are concerned with the opinion of the Board as a very relevant matter, that those broad provisions in 12(2)(b) and section 12(5) operate. So it is a very important feature of the section that the Board with these powers of a royal commission and with an instruction to carry out an inquiry, in effect, is a protection to the miners and the fund and, at the same time, no doubt, ensuring that the expenditure is not excessive as well as engaging in the question whether or not the damage could reasonably be anticipated to have arisen from a subsidence that has taken place. Section 12B enables appeals – this is the provision that your Honours considered in Alinta. It is an appeal:
A person claiming compensation –
which is broad; it is all right for 12, but not 12A, but it does not matter –
may appeal to the Land and Environment Court against the decision of the Board:
(a)as to whether damage –
then leaving out “has arisen from subsidence” –
could reasonably have been anticipated.
So that is the question that goes on appeal. Under the view that was expounded by Justice Basten, he said the words that are “from a subsidence that has taken place”, they attach in the context of the Board forming an opinion, and therefore the Board could take into account facts relating to subsidence up to the point where they formed their opinion because they formed an opinion here but unfortunately not what we say was the correct one. The date of the opinion is going to be clear, there is no question of date, they are going to form an opinion at a meeting of the Board, and that opinion will be conveyed, and ‑ ‑ ‑
HAYNE J: But it would be more than “could take to account”. It would be “should take to account”, would it not, if that construction were to be adopted – the Board should take to account all matters up to the point of forming its opinion?
MR ELLICOTT: Yes, that is right, and they, in their investigation, would go right through – the applicant might have missed something, but whatever happens, they will take all those facts into account. They will not be able to cut it off at the point where they say what happened before the expense was incurred or proposed. Now, I did not draw to your Honours’ attention that section 12A(1)(b) does use the words “incurred or proposed by”.
“Proposed by” seems to be to me not something proposed to the Board, but something – there is another meaning in the definition of “proposed”. It means that you make a decision to do something and it is probably, we would say, used in that sense rather than proposed to the Board and the reason for that is that they have to make a claim within three months after the day on which the expense to which the claim relates became known and presumably the proposal could of course be anterior to a definition in their minds of what the expense was going to be.
Section 13 enables steps to be taken to acquire the land and do work. A critical provision in that section is (2)(b), which helps the view that subsidence is something that is ongoing, it is a process:
Where in the opinion of the Board:
(i)damage to improvements . . . has been caused by subsidence, and
(ii)further subsidence is likely to occur,
the Board may effect or have effected temporary repairs and may defer payments in respect of claims for damage to such improvements or household or other effects until it is satisfied that such subsidence has settled or is unlikely to recur within a reasonable period.
We simply refer to it as a section that has within its veins the same idea that subsidence is rather a moving feast. It is not much of a feast, but it is something that is causing harm and because it is like there is a tsunami or something, it is unpredictable, and what might seem to be the point of settlement today changes tomorrow. Section 13A is the other critical provision:
The Board may carry out, or cause to be carried out such works as, in its opinion, would reduce the total prospective liability of the Fund by preventing or mitigating damage that the Board anticipates would, but for those works, be incurred by reason of subsidence, whether or not the damage anticipated is damage to improvements . . . on the land on which the works are to be carried out.
Having just mentioned that those words “on the land on which the works are to be carried out”, it is indicating that something can be done there which the owner of improvements cannot do. He has to do it, no doubt, on his own land, but the Board can move into other land to do these works. But going back to the beginning, it can only do –
such works as, in its opinion, would reduce the total prospective liability of the Fund –
It may be – to take the facts of this case – they are extreme facts that I am about to mention, but we have to take them into account and that is that the Board under this section might come to the view that it would be cheaper to let the damage occur and, because only talking about the liability to the fund – that is, the cost of the preventative or mitigatory works – it would be cheaper to not do the work, but allow the damage to occur, because the estimated cost of these works is going to be $2 million, and if the damage occurs, we think it will be less. That is because they have some different view about the need for preventative steps to be taken.
KIEFEL J: Do you say that the fact that section 13A is not cast in the terms of an obligation to undertake preventative work is important to the construction of section 12A?
MR ELLICOTT: Yes. I do, yes. That is very important. There is an issue about subsidence and damage being contemporaneous and I will come to that later, but it is important in relation to that because it is suggested ‑ ‑ ‑
KIEFEL J: I suppose in the context of if there was a statutory obligation which could be enforced by an improvement owner that would tend against the notion of the improvement owner themselves carrying out the preventative works.
MR ELLICOTT: The owner is faced with work that may be - there is one thing posited in the second reading speech – an emergency situation – cannot wait for the Board, has to do it and moves in under 12A, does the work and then seeks the recompense from the fund. In many ways, the words “as, in its opinion, would reduce the total prospective liability of the Fund” are a restriction on 13A and its operation and the ability of the improvement owner, apart from its discretion as well, of getting the Board to act whereas, under 12A, which can apply to an emergency situation, but it can apply to any situation and the improvement owner, we say, is faced with the same set of facts in this sense, that the Board is asking the question. There is likely to be subsidence causing damage at a particular point and we think we should move ahead. It will not reduce the total prospective liability of the fund and we think we should move ahead and do those preventative works. In that case, both the damage that is sought to be prevented and the subsidence to which it is due, is anticipatory. That is the construction of the section which has been accepted below.
CRENNAN J: I suppose the difference in wording – here it is damage “incurred by reason of subsidence” and, I suppose, it is put that that expression “by reason of subsidence” more easily embraces anticipatory subsidence than the expression with which you are dealing – “a subsidence that has taken place”.
MR ELLICOTT: Your Honour, there is just as much reason, we would submit, with respect, for saying that it means by reason of a subsidence that has taken place.
CRENNAN J: It is the same policy considerations, I suppose.
MR ELLICOTT: It is the same policy, but when you use the word “by reason of subsidence”, you have to add something, what are you talking about, it is a subsidence that has taken place.
GUMMOW J: You may get some support, I think, by looking at section 13A with section 14. It seems that the colliery proprietor in the situation we are looking at is immune from any mandatory injunctive relief to put a stop to something that is continuing and getting worse.
MR ELLICOTT: Yes, and it is in that context where we say what I will call a beneficial construction should be put on 12A, that is to say that it leaves the owner in the position of being able to do that which it might otherwise, but for this Act, have been the subject of relief from a court.
CRENNAN J: That kind of injunctive relief is frequently quoted in the textbooks as a good example of quia timet relief.
MR ELLICOTT: Yes, and we would submit it is a very powerful argument that section 14 and what this Court has said in Alinta quid pro quo raises the status of these provisions greatly because, after all, they are not just for large companies as are here before this Court, but they go to ordinary people in Newcastle and Appin, and all those other places where coal mining has been going on for decades or perhaps centuries. It is something that a householder might want to do because it is like having a car you do not want to lose; you want to move ahead of something that you get an expert to say if that coal mining goes on, and we understand from them that they have a plan to do so, then I tell you, your house is going to collapse.
The theory that my friend is putting forward is that you have to wait until the subsidence occurs and then you have to hope that you will have enough time to do something. It is not enough to say if it collapses you can go under section 12, you have some damage from subsidence. Everybody had a power to go and seek damages from the court, but the equity courts came in and said you can get injunctive relief and that completed the circle of relief.
These provisions, in our submission, do the same thing, but they do enable the Board through 13A to come in and do it provided it does not reduce the total respective liability of the fund. If it gets into a tussle between words and by this - and it is in a sense a tussle; their whole argument is a tussle between words - but if one applies proper principles, no doubt, but a very exacting exercise of logic on these words in this Act, one has to face the problem that in some of the provisions you get all sorts of references to subsidence.
If your Honours go to our submissions, there is a footnote at page 14. It is a footnote referable to 54(b) of our submissions. The submission is that subsidence is described in many different ways in the Act and a consistent theme is impossible to discern. Chief Justice Spigelman referred to them, but he did not embrace my argument. That is the misfortune that beset us.
In section 4, “actual subsidence” is used suggesting that had the intention been to limit section 12A(1)(b) to actual subsidence, the same formulation would have been used. Section 12(1)(a) – “arises from subsidence”; section 12(1)(d) – “arises from subsidence” and “caused by subsidence”. In 12(1A) there is a reference; 12(2)(a) “damaged by subsidence”; 12(5) “damage arising from subsidence”; 12B(a) “has arisen from subsidence or could reasonably have been anticipated”; 13A; 14(1) “occasioned by subsidence” and 16(1) “damage . . . from subsidence could reasonably have been, or be, anticipated”. There are varying statements in the Act. There is no regular adoption of the words such as “actual subsidence”. One might have hoped that they could have put that in, but it seemed to have crept in, in 1969.
HAYNE J: There seems to be, I think, in the argument against you, the treatment of the term “subsidence” as referring to an observed – perhaps observable – but an observed change in level that exists as a discrete phenomenon. At least in your argument, I understand, subsidence is given a meaning which includes that meaning – that is, there is an observed, or observable change in level, but it encompasses also the notion of process – that is, process of change; the notion that an observation once made of change of level does not mean that the subsidence is complete, has ended, or the like, but does that capture some part of the debate between the parties?
MR ELLICOTT: It does. It certainly captures some part of our argument which we put in relation to a later submission about the nature of subsidence. But it may be – I think I follow what your Honour is putting to me – when I say this, that this area of subsidence has been – and assessing subsidence and expressing scientific views about whether certain coal mining activity will cause subsidence, which is based on observed facts, not about that particular subsidence, but it is a science, as your Honours know, all of its own, and the Worleys and the MSECs of this world are able to predict, with some degree of particularity and exactness, the effect of certain coal mining activity.
So although my friend is pressing for a view that it is physically observable, you have got it to a point where it is likely to cause damage, it is, in this case, say 274, and therefore that is the point when you can make the expenditure, and it is observable, but that sort of observable subsidence – that actual subsidence, I suppose you would call it – is not the end of the road for observation because the scientific observation can tell you that that is predictable to such an extent that we would say it is going to happen, and not only that, if you do not do something about it, then it will subside.
HAYNE J: But an element of the construction task we have is to relate the phrase “could reasonably anticipate would otherwise arise” in 12A, with the phrase “from a subsidence that has taken place”. One observes the word “otherwise arise . . . from a subsidence that has taken place”. Now, does that require not only that a snapshot be taken and observed that there is a change in level, but does the word “otherwise” in the phrase “could reasonably anticipate would otherwise arise” encompass within it the notion that from a subsidence that has taken place, yes, encompasses the notion that there is today an observed change in level, but that that process is not yet complete?
MR ELLICOTT: Under our second argument, which is really Justice Basten’s approach because he had to say you cannot say that Wambo was clearly wrong and therefore you cannot accept our primary argument, that is an approach which assists our argument. In relation to our initial argument that the words are in effect hypothetically describing the damage, that is to say, it is damage arising from a subsidence that has taken place, is doing no more than looking into the future and you have to anticipate the damage and you have to say it has arisen, or might otherwise arise, or could arise, from a subsidence that has taken place.
FRENCH CJ: It is an element of the hypothesis as you put it, is it?
MR ELLICOTT: Yes, it is part of the hypothesis.
KIEFEL J: On your primary construction do you focus attention away from the - and I suppose you do - temporal requirement that a subsidence has taken place by this route, that the section is concerned with a claim for moneys paid to prevent damage, thus the focus is upon the damage that would have otherwise arisen, not the subsidence that has taken place. If you focus upon the damage that would otherwise have arisen, whether or not the subsidence has or has not taken place, is really by the by.
MR ELLICOTT: Yes.
KIEFEL J: So it is really where you put the focus.
MR ELLICOTT: It is in the area of damage from subsidence or subsidence, I am not sure what is correct, I looked up the dictionary and I slip into different gears to satisfy everybody.
KIEFEL J: But if the construction focuses upon the damage that would have otherwise have arisen if the preventative measures were not taken, then the notion of whether the subsidence occurred, and to the extent to which it occurred, and whether it is completed, falls beside the way, because it is subsumed under whatever works were taken to prevent the damage.
MR ELLICOTT: Yes, and that is what we mean by saying it is like the damage, it has attributed to it the same category of something that is anticipated which is to be prevented. What you are doing is preventing or mitigating damage from subsidence, and that subsidence is a subsidence that has taken place. The Chief Justice was very strong on his view that the grammatical interpretation of this was in favour of my friend’s argument, but, with great respect, it is difficult to see why, grammatically, you have to attach it to damage in that way, that it is a subsidence that occurred before the incurring or proposing of the expenditure.
CRENNAN J: Some might say the indefinite article points in the opposite direction.
MR ELLICOTT: His Honour said it pointed in the opposite direction. It is not just a matter of either or neither. It is a distinct - our submission is that the indefinite article is really describing something that you do not know anything about precisely, that is, if they were talking about, in effect, actual subsidence they would have said “which had taken place” or they would have used the phrase “actual subsidence”.
KIEFEL J: Or even “the subsidence” to take up the point about the indefinite article. If the indefinite article points to a potentially hypothetical subsidence which the preventative measures have prevented occurring – sorry, that is repetitious. What you have then in the two phrases “would otherwise arise” and “has taken place” ‑ ‑ ‑
MR ELLICOTT: Yes.
KIEFEL J: ‑ ‑ ‑ are inconsistent tenses. One of them has to be read down to make the subsection work. If you read down, as strictly required, “that has taken place” and focus upon “damage which would otherwise have arisen” you make more sense out of the subsection and the warrant in part for that is that a subsidence gives you potentially the hypothetical subsidence which has been overcome.
MR ELLICOTT: Yes. That is right, your Honour. That is our approach and ‑ ‑ ‑
BELL J: Your approach is consistent with reading the subclause as though it read from subsidence.
MR ELLICOTT: Yes.
BELL J: Without the indefinite article or the words “that has taken place”.
MR ELLICOTT: Yes, and that you could say of 13A that the word “subsidence” there simply means, when it says “by reason of subsidence”, a subsidence that has taken place.
BELL J: But I think against you ‑ ‑ ‑
MR ELLICOTT: Because the damage is the point. It is focusing on – it is trying stop damage.
BELL J: I understand that, Mr Ellicott, but I think the point taken against you by the majority in the Court of Appeal was if you are to give some work to the use of the indefinite article and the words “that has taken place” it does not sit readily with acceptance of your primary position which would be fully stated if the clause read “or could reasonably anticipate would arise from subsidence”.
MR ELLICOTT: In the court below they adopted what Justice Tobias said in Wambo and when you look at his judgment you find he says that what it means is, in fact, already taken place. So he adds a word or two in order to get there. What we are really saying is that it is a subsidence that has taken place to cause the damage or it is a subsidence that has taken place in the sense that it took place beforehand but the “beforehand” means any time up to the damage. The very significant point, we say, is that it focuses on damage. That is the whole thrust of the section to stop it and when you add behind that the quid pro quo concept, we submit that that gives strong support to our argument.
GUMMOW J: It may be that this phrase “that has taken place” – and this assists you, I think – is in there as part of this hypothesis, when the Board is forming an opinion about something that could have been anticipated and as part of that there is this idea of a subsidence.
MR ELLICOTT: That is right and the Board in considering it is looking at it as hypothetical and not otherwise. That is under our first proposition.
GUMMOW J: That is why is says “a subsidence”. That is, as it were, put in as an element in this hypothesis.
MR ELLICOTT: Yes, that is our submission, that it is put in ‑ ‑ ‑
FRENCH CJ: And if the subsidence does not occur, the fund still has the liability if the hypothesis is properly answered in the opinion of the Board.
I am just trying to compare that with the quid pro quo of what the area of hazard, if you like, which is being removed - from which the colliery operator is being removed, colliery operator absent this scheme might have exposure as was suggested earlier to some sort of injunctive relief which might well be permanent injunctive relief and yet the event feared may never occur. The colliery operator would have had to rearrange its operations.
MR ELLICOTT: We get an injunction on a hypothetical subsidence.
FRENCH CJ: On different standard, of course. The hypothesis is formulated in different words than might be necessary or sufficient to get you an injunctive remedy.
MR ELLICOTT: It is not possible to say that it is exactly the same but it is a broad attempt to put the improvement owner in a position that the improvement owner would have been in had the sections not been enacted. It is said that because these amendments, that is, 12A and 13A came in later that the quid pro quo argument has had its day because it was in there at the beginning and they got something much less, with very great respect, and that argument was one that was embraced by the majority. With very great respect, I would submit that that is clearly wrong because when the Parliament acts in 1969 to amend the Act to include those provisions, it is surely capable of having an intention to grant the quid pro quo in the sense we have been discussing it. The quid pro quo is not spent because they did not put the provisions in in the first place.
HAYNE J: Can I just go back a moment, Mr Ellicott, to the matters Justice Gummow was exploring with you and relate that to the earlier element in 12A(1)(b) of preventing damage? The notion of preventing damage is necessarily, it seems to me, anticipatory. You are anticipating damage that has not yet occurred. Do I understand a way in which you put the case to be that the damage that is to be prevented is then articulated or stated in the balance of the section as being damage having a number of characteristics: one, reasonable anticipation by the owner. Reasonable anticipation would otherwise have arisen ‑ that is to say, but for the mitigatory works would have arisen and that from a subsidence that has taken place is simply the final element of this description of the kind of damage that is anticipated. Does that capture a way in which you put the argument?
MR ELLICOTT: Yes, it does and it is really saying that a subsidence is – it is merely describing what could cause the damage, that is, any subsidence up to the point of the time of the damage, and it is hypothetical, therefore it includes hypothetical. Some may have arisen already as in this case, but they are expending the money because they know that if they do not it is going to get worse and as a gas company we certainly do not want our pipeline to be down for a fortnight or a few weeks because that will make our consumers and the New South Wales Government very unhappy, and not only that, we have an obligation under the Pipeline Act to keep the pipeline under repair, and it is an obligation that is subject to criminal sanction.
GUMMOW J: Where do we see that provision?
MR ELLICOTT: That is in the Pipeline Act, your Honours will find that under tab 5. There is section 26 at 99. Section 26:
A licensee shall not permit or suffer the waste or escape of any substance from the pipeline or any part thereof.
Maximum penalty: 40 penalty units –
Section 27(b):
shall maintain the pipeline in good condition and repair . . .
Maximum penalty: 40 ‑ ‑ ‑
BELL J: Can I take up with you one aspect of the reasoning underpinning the majority in the Court of Appeal, taking as a starting point paragraph [14] in Alinta with the recognition that the Act is accommodating the interests of colliery proprietors and the owners of damaged improvements? As I understand their Honour’s reasoning, it was to see that a balance had been struck with the introduction of sections 12A and 13A into the Act in this way and it may be illustrated by the circumstances of this case. Some six million plus was expended by the Board under 13A in undertaking works of a preventative character with respect to the eastern pipeline which I think was in the same easement as your client’s pipeline, and as I understand it they were, as it were, bundled together; there were three or four pipelines.
Now, acceptance of your argument would be that if each owner of a pipe proceeded to expend moneys those might, assuming in each case it was reasonably anticipated that damage would occur from subsidence on the hypothesis that you propose, then each might recover sums even though that might not be an economically efficient way to proceed to undertake the work and that the Parliament struck the balance by the provision that it made in 13A for preventative works to be carried out by the Board with a much more limited scope for the owners of improvements under 12A.
MR ELLICOTT: If the word “may” means must and if the condition about the liability of the fund had not been there, then one might have thought well, yes, that is an appropriate way to deal with it but there are limitations in the section which preclude the owner from achieving the result it wants to achieve under 13 but with those particular provisions in it.
The recourse to 12A, on that narrow view of the Court of Appeal, as we would put it, leaves the owner in a very difficult position and an inadequate position because – take this case, of an emergency, and the Parliament apparently thought there could be an emergency and 12A will cover that. It was not limited in words to emergency but if there was, then the emergency might be one where the damage and the subsidence are contemporaneous. The only way of dealing with that is what I will call by the anticipatory route. You can wait until the damage occurs. It would have been an horrific consequence in this case. There would be class actions all over the place, I imagine, because, despite the section, they decided to do it anyhow.
Given the possible contemporaneous nature of the two events, 12A, given that narrow construction, prevents my client or anybody, the owner of the house, anybody, the right to move to protect their house or their pipeline or whatever it is, if there is a real danger that the subsidence and the damage will occur either contemporaneously or so closely as they might that no preventative works or mitigatory works could be undertaken and fall within the section by way of recompense for expenditure undertaken.
FRENCH CJ: In the formation of the Board’s opinion under 12A(b) – this is in a sense peripheral to your argument, I think – but the words “the owner”, is it right to say that they are, in a sense, unnecessary, that it could simply be read as “in the opinion of the Board, it could reasonably have been anticipated”. In other words, it is an objective test.
MR ELLICOTT: Yes, but they have made the opinion of the Board critical, and that opinion is as to the expenditure being proper and necessary, et cetera, so there is a protection to the fund ‑ ‑ ‑
FRENCH CJ: That is a factual condition. That is a necessary condition, but I am just looking at the content of the opinion that has to be formed. The opinion has to be an opinion about whether - or a hypothetical ‑ ‑ ‑
MR ELLICOTT: It is about reasonable anticipation.
FRENCH CJ: I do not query whether it refers to this particular owner in that particular owner’s circumstances, but I might think it is really framed in language that suggests an objective test.
MR ELLICOTT: Yes, it is, and the reasonableness of that anticipation will be based on scientific evidence and your Honour can assume of course that a Mining Subsidence Board has some experts in it on their side who are constantly monitoring subsidence. It is an issue of fact that they can quickly embrace.
FRENCH CJ: The Board is putting itself back in the position of a hypothetical owner at a time when the owner is deciding whether to take preventative work or not, so it has to ‑ ‑ ‑
MR ELLICOTT: Yes, that is it, and it is from that vantage point that the section should be interpreted.
KIEFEL J: The owner is armed with information about a potential subsidence because it is only damage caused by subsidence, which is the concern of the subsection, and the owner has to reasonably anticipate that if the subsidence takes place then damage will occur.
MR ELLICOTT: Yes.
GUMMOW J: Are you going to take us to the critical passage in Wambo, Mr Ellicott, which…..to the opposite effect, I suppose.
MR ELLICOTT: I was, your Honour. I think I have submitted sufficient about our main first contention. Your Honours will have heard enough from me on that.
Your Honour, our next submission is that the Wambo construction is wrong and should not be followed. Now, if your Honours go to Wambo that is under tab 1, I think, your Honours. No, it is not ‑ ‑ ‑
FRENCH CJ: It is the last one in the book, I think.
MR ELLICOTT: ‑ ‑ ‑ it is under tab 9. I think it starts at paragraph 28, your Honours. What Justice Tobias says is that he sets forth a number of reasons and these are accepted without critical appraisal other than the general approval of the Court. In other words, Justice Basten goes through each one and gives reasons which are not really picked up in the majority judgment:
First, there is no doubt that s 12(1)(a) relates to claims for payment from the Fund of compensation in respect of damage to improvements that has arisen from subsidence which has taken place. On the other hand, s 12A(1)(b) relates to claims for payment from the Fund of an amount to meet the proper and necessary expense incurred or proposed to be incurred in preventing or mitigating damage which the owner of the improvements could reasonably have anticipated would otherwise have arisen . . . from "a subsidence that has taken place".
So, there is stress on the words.
GUMMOW J: Well, there is stress on the words, but there is not stress upon the significance of the passage in paragraph (b) of section 12A(1) beginning with:
that, in the opinion of the Board –
MR ELLICOTT: Yes, that is right.
GUMMOW J: That does not seem to be dealt with.
MR ELLICOTT: When you realise those words are there and have significance they – putting our first submission aside for the moment – they colour the whole material that follows because in the opinion of the Board it has to be something that is reasonably anticipated – that is, the damage is reasonably anticipated – from a subsidence that has taken place. That is the issue before the Board, that is the question to be determined.
CRENNAN J: Did Justice Tobias deal anywhere with the quid pro quo point, the section 14 point?
MR ELLICOTT: I do not think so, no. There seems to be an underlying assumption in this judgment that those words are fixed in meaning and you cannot depart from them. They mean something that has already occurred when something happens, that is, when you incur expense, and in doing that they overshoot the runway, as it were, and forget the words “in the opinion of the Board”, and that is the point that Justice Basten fixed on. When you get to second, he says it:
is directed to claims for compensation in respect of damage which has in fact arisen from subsidence . . . is directed to expense incurred in preventing or mitigating damage which is yet to arise but which is reasonably anticipated to arise from a subsidence that has in fact (that is, already) taken place.
FRENCH CJ: Could “reasonably have anticipated” mean that the Board has to be satisfied of no more than it was reasonably open to the owner to form that view, to form that apprehension or anticipation?
MR ELLICOTT: That is right. It is the sort of issue that was before it. Could damage have arisen from the subsidence that has taken place? The answer is, yes or no, as the case may be.
FRENCH CJ: For example, the Board might form the opinion that had it been the owner, it would not have had that anticipation, but that anticipation was reasonably open. In other words, there is a variety of reasonable views open to people put in that situation at that time.
MR ELLICOTT: Yes. Our first argument, of course, does not reject this, it embraces it. It goes beyond and says, well, even if it has not happened up to the time of the opinion, nevertheless the opinion could be based, that is the opinion of reasonable anticipation could be based on anticipatory subsidence based on expert evidence.
FRENCH CJ: The important thing is the Board is not just travelling back in time and putting itself in the seat of the owner’s chief executive and saying, well, he thought this but we now in his position think that. That is not the question, the question is whether having regard to the information available to the chief executive at the time, the anticipation, as it were, or the apprehension, is reasonably based?
MR ELLICOTT: Yes, and the issue is not – is the opinion of the Board, that is the determining matter, that the Board is of the opinion, the issue is not whether the owner reasonably anticipated, although you might assume that the owner, if they thought that the owner ‑ ‑ ‑
FRENCH CJ: It is whether it could reasonably have been anticipated, so it has to be a notional person in the owner’s position, but it is still objective, it does not depend upon the subjective views of the owner.
MR ELLICOTT: Yes, it is all objective based on the facts. These various paragraphs, to some extent, repeat the same argument, and they do not – for instance, if you get to 34, when that passage – well, I will read the passage:
The bill will provide also for the carrying out of works by the board to prevent or mitigate subsidence damage before it [the damage] occurs. Proposed new section 13A will empower the board to carry out such works where the total prospective liability of the fund will thereby be reduced.
When that passage from the Minister’s speech is read with those set out at [20] of these reasons, it becomes apparent that first, the objective of reducing the prospective liability of the Fund . . . is left to the Board. Second, it is only in the context of that power of the Board that the concept of the costs of prevention being often cheaper than of cure was regarded as relevant. Third, it was only in the context of emergencies (where presumably the Board’s power under s 13A could not be exercised in a timely fashion) that it was contemplated that the owner of improvements would carry out preventative or mitigating works arising from a subsidence that had taken place.
So there is another slip there of another word, which might have – it is another case, but it is not this case. It is in that vein that these paragraphs are dealt with.
HAYNE J: One of the points that seems to be made is in paragraph 32 of the reasons in Wambo which is to contrast 13A and the use in 13A of the phrase “incurred by reason of subsidence” with the phrase from a "subsidence that has taken place”. Could 12A(1)(b) have been rendered in the form which you say it bears on its true construction by saying would otherwise arise by reason of subsidence?
MR ELLICOTT: Yes.
HAYNE J: How then do we deal with the fact that different phrases are used in 12A(1)(b) and 13A?
MR ELLICOTT: I referred your Honours to a footnote to our submissions which contained all these references to subsidence. That is one answer. There is no actual footing for particular expressions. They did not start off because it came in later. The words “actual subsidence” might have helped if it had been used. One might as well contrast a subsidence that has taken place with actual subsidence and say, they did not mean actual subsidence. It is a matter of language, obviously, and equally one can say that if you give 12A a narrow construction, why does not one give 13A the same construction from subsidence because it is a subsidence that has taken place?
You cannot take the words, obviously, out of their context in the section, and when you put the words in their context in 12A they mean, in our submission, what I have already submitted, and they certainly do not mean anything other than as suggested by Justice Basten, namely, that those words should, in that context, be limited if some subsidence has to take place, should be limited to any subsidence that has taken place up to the time the Board forms the opinion which it is bound by the section to form. The whole prediction that the Board is called upon to make, whether it is reasonably anticipated, is a hypothetical prediction.
Your Honours, I should give your Honours references to the passages in the Court of Appeal majority judgment of Justice Spigelman. First of all, at 111 to 114 to see how the Court dealt with it. Now, what his Honour did was set out all the reasons, and they are set out on pages 111 through to 113, and his Honour just repeats them. There is one other matter which his Honour did not specify, and that is:
The use of the article, “a subsidence”, where twice appearing in s 12A(1)(b), in contrast with the absence of any article in numerous other references to “subsidence” in the Act, including in the definition, is an indication that what is being referred to is a specific, past subsidence. Significantly, each of s 12(1) and s 13A do not contain an article. These sections, respectively, employ the formulations “from subsidence” and “by reason of subsidence”. The article directs attention to what has occurred up to the relevant point of time.
Now, the relevant point of time is either a future event that might cause damage, anticipated subsidence, or the date of the Board’s expression of its opinion. Then his Honour, having set that out at 118 and 119, at paragraph 62 says:
For the reasons by Tobias JA on appeal . . . together with the tenth proposition I added . . . this option should be rejected –
that is, of overruling the one that I submitted to him –
I would add further that the proposition does too much violence to the structure of the section. The reference to claims appears in the chapeau. The reference to “subsidence that has taken place” appears in the very last two subordinate subclauses . . . It is a considerable syntactical leap to connect those references to the reference to claims.
With great respect to his Honour, we submit that that is not correct, and I cannot add anything to what I have already submitted to try and convince your Honours that that passage is not correct. He goes through to paragraph 64:
The characterisation of the reference to “a subsidence . . . as a “hypothesis” . . . carries with it the implication that no subsidence needs to take place. On this basis the reference remains hypothetical throughout although, of course, in the usual case there will be subsidence, the effects of which have been avoided by the work carried out by the owner.
This proposition is clearly contrary to the reasoning of Tobias JA in Wambo.
He refers to his Honour’s reiteration of the proposition –
“ . . . what is to be reasonably anticipated is damage arising from subsidence that has (already) taken place . . .
It is clear that the purpose of the section under consideration is to prevent or mitigate damage and, in that sense, there is a hypothetical element in s 12A(1)(b). There is no reason, however, to conclude that any other element in the section is similarly hypothetical. Specifically the words . . . are intractable. They refer in their natural and ordinary meaning to an actual, past event.
But what is the actual past event? The actual past event is the hypothetical damage in the hypothesis. It is past; it is anterior to the damage. That is the relevant thing, and we submit his Honour has escaped that notion:
First . . . “from a subsidence that has taken place” cannot be set aside as irrelevant –
and he goes on to deal with the presence of the indefinite. Then at paragraph 71:
In my opinion, the interpretation for which the appellant contends should be rejected. I would do so even if this was a case in which the degree of restraint involved in overruling an earlier judgment . . . was not applicable. The fact that such a restraint is applicable, in my opinion, puts the matter beyond doubt.
HEYDON J: Mixing up two ideas.
MR ELLICOTT: I cannot do anything about that, your Honour, that is his Honour’s view, and it is strongly put. Now, Justice Basten’s critique - I could also give your Honours I think - I will just check. I think it is fair to say that your Honours will not find in the Court of Appeal judgment, a majority judgment, any critical analysis of the Wambo judgment. It is a – I do not say a blind acceptance, and I do not say that their Honours have not given it very great thought; I am sure they did, but the trees seem to have – around this proposition, seems have to have prevented, in our respectful submission, their Honours from seeing the wood, and the wood is the words “in the opinion of the Board” and the hypothetical nature of the issue that would be before it, and therefore a choice between what I will call “the Basten view” or, alternatively, the broader view that we have put earlier. At 125 and 126 there is another portion of the judgment where I ‑ ‑ ‑
GUMMOW J: Just before you leave that, could we just go back to paragraph 66 for a minute - of the Chief Justice in this case:
It s clear that the purpose of the section . . . in that sense, there is a hypothetical element in s 12A(1)(b). There is no reason, however, to conclude that any other element in the section is similarly hypothetical. Specifically the words . . . are, in my opinion, intractable.
That seems to be the ‑ ‑ ‑
MR ELLICOTT: That is where his Honour, in our submission, goes into error, as did Justice Allsop and Justice Giles, and at 125 and 126 ‑ ‑ ‑
HAYNE J: Just on that, does his Honour at any point grapple with the reference in 12A(1)(b) to “expense incurred or proposed by”?
MR ELLICOTT: No. There is no critical analysis of – for instance if you choose the word “incurred”, you choose a multitude of situations, because a legal analysis will show that there are various points at which a legal liability is – to double use the word, it is incurred, or created, and we have some case here to refer to that, but it is a proposition that is well known in tax law that the word “incurred” has variable applications depending on the circumstances of the particular contract and the context.
Similarly, with the word “proposed” if it means what is proposed to the Board, we would say that does not mean that because of that subsection, having to put a claim in within three months of the expense becoming known. It makes it difficult to say that that means proposed to the Board. It means that the person proposes to do something about this. That is another definition given in the dictionaries. That is the one that is used here.
Now, just imagine the variations or the difficult issues of fact as to when a person first proposed. Why would the legislature adopt those as the time by which the subsidence had taken place? One is entitled to ask those questions. There is no analysis in the judgment about that. At 83, I should have taken your Honours - that is at page 123, I am sorry:
Nothing in the scope, purpose and structure of the legislative scheme suggests that the grammatical structure of the paragraph should not be given its natural effect.
The Act replaced the 1928 Act -
The present legislative scheme, like its predecessor, created a statutory scheme for the regulation of the divergent interests involved where conflicting land uses arise. The common law right to the support of land was curtailed by s 6 of the 1928 Act in the context of a scheme of compulsory statutory insurance against subsidence, administered by the Mine Subsidence Board. In this respect the provisions of s 14 of the 1961 Act continue the basic structure of a regime that has been in place for a very long time.
84 In such a context it is not helpful, for the purpose of interpreting amendments introduced in 1969, to have regard, as Mr Ellicott QC did in his submissions, to the abolition of common law rights and the establishment of a scheme of compensation in order to characterise the Mine Subsidence Compensation (Amendment) Act as “beneficial legislation”.
That, his Honour says, I think it is fair to say, notwithstanding this Court’s decision in Alinta:
It introduced additional opportunities for the carrying out of preventative work by the owner of the land and by the Board. The position of an owner adversely affected was improved in the sense that, prior to these amendments, the owner of the land had no right to payment for preventative or mitigatory work. I should note that it does appear, from the second reading speech of the 1969 Amendment Act, that the Board had in fact carried out preventative works without express statutory authority and the 1969 Amendment Act expressly validated its prior conduct in this respect.
86 The introduction of s 12A is beneficial in the sense that it provides an alternative option to act, in emergency situations, without the prior approval of the Board.
It does not restrict itself to emergency. True, it could be so used:
It also provides the option, in non-emergency situations, to make a claim on the Board where the owner would conduct the work, rather than requiring the Board to exercise its powers under s 13A.
His Honour is reading the sections as if they are alternatives. They are not alternatives because they have different provisions and conditions to be met before they come into operation. He goes on. Your Honours have the second reading speech but he refers to relevant parts of it:
88 The minister went on to explain the introduction of s 12A as follows:
“It is recognised also that emergencies may occur where it might be necessary for the owner to carry out works to prevent or mitigate damage arising from a subsidence.
It is interesting that Mr Fife, the Minister, did not put in the words “that has taken place”. When you read the two parts of the second reading speech alongside one another, that relating to section 13A and the other relating to section 12A, you do not get any impression that the Minister is talking about, on the one hand, anticipated subsidence and on the other hand, a subsidence that has taken effect.
Now, Justice Basten’s criticisms of Wambo your Honours will find begin at page 140 of the appeal book, paragraph 145 to 161. I will not read those, your Honour, but we do adopt them as part of our argument and we deal with them with what we see as the major ones in our written submissions which are fairly closely argued on this particular point. One of the things that struck his Honour was this time squeeze between subsidence and damage. You may get situations where you cannot do anything unless you can move ahead of the subsidence and it, therefore, seems to be out of step with what we say is a clear situation where in terms of the quid pro quo, the Act is designed in its amendments to give the owners of improvements, opportunities to recover from a fund in circumstances they may not previously under the Act’s regime have obtained them, but certainly before the 1928 Act they were opportunities which owners would have had under the common law.
There is the point about the Pipelines Act and I have referred your Honours to that. Those sections are not necessarily complementary and I have dealt with that. The existence of section 13A should not be used to batter section 12A into some insignificant situation of emergency which is difficult to see in all situations because the damage in the subsidence in an emergency situation might well be thought to be going to coincide.
Your Honours, the case on “incurred” that I have referred to is Federal Commissioner of Taxation v Malouf [2009] 174 FCR 581 at 43 to 45. Your Honours will be familiar with, no doubt, that case and other cases that deals with the Woolcombers Case and the meaning of “incurred”. The next proposition is that which embraces that those propositions were an attack on Wambo, but to attack Wambo is to conclude, in our submission, that Justice Basten’s view of the section should be adopted if our attack is successful. That is our next submission.
GUMMOW J: Before you leave Justice Basten, at paragraphs 162 and 163 he makes what may be an important point, I think, as to the form of the question in Wambo, that is formulated the section in a way that omitted the phrase “in the opinion of the Board”. His Honour makes the point in paragraph 163 – it “distracted attention from the importance of the phrase”.
MR ELLICOTT: Yes, your Honour, that is right, yes, your Honour, and the passages that we would rely on, if I can give your Honours those, is appeal book 136 and 137, paragraphs 134 to 136; appeal book 138 and 139, paragraphs 140 and 141; appeal book 139 to 140, paragraphs 143 and 144 and appeal book 146 and 147; appeal book 166. There is a point that it is not at all clear that Justice Basten dismissed our view. In other words, if your Honours go to appeal book 130 in 111, his Honour says:
The primary argument for the appellant was that they form part of the hypothetical assessment required to be made by the Board. That is not an assessment of any opinion held by the owner when incurring the expenditure, but an assessment made by the Board in considering the claim. When expense is incurred to prevent damage, the feared damage is not damage which has occurred, but damage which could reasonably have been anticipated. Further, it must be damage that would have arisen “from a subsidence”. The subsidence, the argument proceeded, may also be hypothetical, for the purposes of the formation of an opinion by the Board. That is logical because, where subsidence and damage are likely to be coincident, the relevant steps will need to precede both to be effective.
That is a compelling argument, in our submission. His Honour went on:
This construction does not depend upon a subsidence occurring at any particular time or at all. It is equivalent to reading the provision as requiring an anticipation of damage ‘from subsidence’, or from a subsidence, ‘if that were to take place’.
This approach was inconsistent with the reasoning of this Court in . . . Wambo Coal Pty Ltd [2007] NSWCA 137; 154 LGERA 60. This construction should therefore not be adopted unless the Court were now of the view that the reasoning in Wambo was distinguishable, because it was addressing a different point, or that it was clearly wrong. In a sense discussed below, Wambo was addressing a different point, but not in a way which renders the reasoning distinguishable. Unfortunately, the formulation of the separate question which was in issue in that case inevitably obscured the central element of s 12A(1), noted above. It also appears that the submissions in Wambo did not address a number of critical questions in relation to the language of the Act and its structure.
That is where he deals with it. It does not seem to – for whatever support we get from it, that his Honour did see some merit and logic in the proposition we were putting.
HAYNE J: Can I just take you back to paragraph 111 and seek to identify whether it could or should be supplemented? His Honour says at paragraph 111 of the proposition:
That is logical because, where subsidence and damage are likely to be coincident, the relevant steps will need to precede both to be effective.
Is the more general expression of the thought which underpins that, that the construction urged is one which takes account of two aspects of the notion of subsidence? One, it is not always a once-for-all act, and two, it is not always a sudden and catastrophic act and that those ideas are the ideas that seem to be underpinning the particular example that is given in that sentence, this is logical, et cetera.
MR ELLICOTT: Yes. Your Honour, I think what your Honour is putting to me and I am just putting it back in another way, is that you cannot answer the question that is before the Court without bearing in mind the nature of subsidence, the uncertain nature of it, the moving nature of it, the progressive nature of it. I think that covers all we wanted to say about that proposition, your Honours – that is the proposition that we embrace, Justice Basten. If all is lost, we come to the last wall of ‑ ‑ ‑
FRENCH CJ: Your last longwall ‑ ‑ ‑
MR ELLICOTT: Yes, the last longwall.
GUMMOW J: Before you come to that Mr Ellicott ‑ ‑ ‑
HAYNE J: Surely it has not come to that now.
GUMMOW J: ‑ ‑ ‑ can you just look at paragraph 114 of Justice Basten and paragraph 115?
MR ELLICOTT: Yes, your Honour. He seems to dislike the question here.
GUMMOW J: Yes, and one can see why, but you want us to answer “yes”.
MR ELLICOTT: I want your Honours to answer the question “yes”.
GUMMOW J: Looking at appeal book 161, would it not require some finessing in terms of giving a speaking answer of some sort?
MR ELLICOTT: Well, I do not know whether I am finessing, your Honour, but if I can take your Honours to our submissions, we deal with this in a couple of paragraphs. Your Honour asked me at the special leave application whether we had given this consideration and I said we had – paragraphs 63 to 65 of our submissions. I will read it because it gives the detail of what we say allows the question to be asked. The nature of the response is to say, well, the facts are before the Court which enable you to conclude that because there was some subsidence before the expenditure was incurred, then it was a cause because it was part of the cumulative subsidence. The other facts that are needed are there.
With respect, it is not obvious why the period of the mining lease, the precise terms of mining approval, were necessary for resolution of this issue. They were agreed facts that the miner obtained an approval under section 138 for the longwall mining of the relevant longwall panels. The miner, to the appellant’s knowledge, proposed to seek a further approval for subsequent longwall panels. The miner obtained expert advice from mine subsidence and engineering consultants as to the potential for subsidence and damage to the pipeline from its approved longwall mining, and on the basis of that advice the appellant reasonably anticipated subsidence and damage from mining in accordance with such approvals. In particular, the appellant reasonably anticipated that subsidence would reach the critical level during the mining of Longwall 32.
KIEFEL J: Would you forgive me for interrupting you there? Do we need to go through each of these steps, or is it sufficient to have regard to paragraph 39 of the statement of agreed facts, which appears at page 50 of the appeal book?
MR ELLICOTT: That is the one I read earlier.
KIEFEL J: Yes, and in particular because the question as posed does not say anything about the opinion of the Board, but paragraph 39 might allow a conclusion as to that. Of course, Mr Lloyd would need to address that, but this would appear to be a concession by the Board which accords with your construction, if you are correct.
MR ELLICOTT: Yes, your Honour. I thank your Honour. That is a likely substitute.
GUMMOW J: I am sorry, do we not also have to tend to page 42, which you took us to? That is the Board’s letter:
the Board decided to refuse Alinta’s claim for compensation . . . on the basis that the damage . . . would not “otherwise . . . as that provision requires.
MR ELLICOTT: Yes, as the provision required. They are just saying, well, if we ‑ ‑ ‑
GUMMOW J: You want us to say that is an error, this construction of the Act?
MR ELLICOTT: Yes.
GUMMOW J: So their opinion was not properly formed.
MR ELLICOTT: That opinion was not properly formed, yes.
GUMMOW J: Yes.
FRENCH CJ: But the agreed fact at paragraph 39 to which you took us, does that constitute a concession by the Board that the owner could reasonably have anticipated, et cetera, within the meaning of section 12A(1)(b).
MR ELLICOTT: Yes, so that when you go to the letter which says:
would not “otherwise have arisen…from a subsidence that has taken place” -
we are saying that they ignored the subsidence that did take place. If they took the view that there had to be some subsidence before the expense was incurred, which seemed to be the view they were taking, that was wrong because there had been some subsidence before the works were designed and the works were undertaken and the expenditure was incurred. That was part of the cumulative subsidence that ultimately the expert said would cause damage to the pipeline when it got into Longwall 32. That paragraph 39 does go a long way to obviate some of the inquiry in 63. The agreed facts were sufficient in 65, we say ‑ ‑ ‑
FRENCH CJ: You say having regard to the concession in 39 the Board would have no alternative but to form the requisite opinion upon the proper construction of 12A(1)(b). Is that right? You leave out the question of proper and necessary because it is subject to that ‑ ‑ ‑
MR ELLICOTT: That is right. That is on the basis, of course, that they have obviously neglected to appreciate that some subsidence had, in fact, occurred. They, of course, think that the subsidence that occurs must be the subsidence that is going to ultimately cause the pipeline to be damaged. That is the Board’s approach. Embraced in that is another error and that is that causation, when you are looking at the cause of damage, and you are looking for some subsidence, you do not need the whole subsidence because they also have this view that you can divide up the process of subsidence to longwalls which is artificial. They are wrong, in our submission, in the view that you must have the subsidence that would actually cause the damage occur before you can recover under the section.
If they are right about Wambo being right then they are still open to this submission that some subsidence having occurred in the terms that they say it needs to occur as before, and that subsidence being a cause under the law as expounded by this Court in relation to causation, then that caused the damage. It has taken place and could cause the damage; it could be reasonably anticipated to cause the damage. So it is an argument that we submit, notwithstanding any limitations that Justice Basten may have seen in the section, that is open to be adopted by this Court.
BELL J: The error of law that you identify for the purposes of the appeal to the Court of Appeal under section 57(1) of the Land and Environment Court Act is the error of concluding that the subsidence had to have occurred entirely, as it were, at the point that the claim was made. Is that so?
MR ELLICOTT: This is on the application to the Land and Environment Court?
BELL J: I am concerned with the appeal to this Court which requires us to consider what was the nature of the appeal before the Court of Appeal. That was an appeal under 57(1) of the Land and Environment Court Act, I think, being an appeal on a question of law. The question of law with which the Court was concerned was the construction of the provision. You identify the error of law that the majority made, being the acceptance of the Wambo construction.
MR ELLICOTT: Yes.
BELL J: In some of your submissions you have advanced a view about subsidence necessarily having a degree of continuation as the result of mining activities and so forth. Are there not factual questions that would require determination even if it be accepted that Wambo was incorrectly decided and either your primary construction or Justice Basten’s construction is to be favoured?
MR ELLICOTT: If that question is answered in our favour on either of those bases, then the matter goes back and then a question arises as to whether, as I understand it, the Land and Environment Court will then go into the facts relating to reasonable anticipation on this appeal from the Board under 12B, that is to say, against the decision of the Board as to whether damage could reasonably have been anticipated. Those words are a short form of 12A, I think.
BELL J: I think that matter that I am taking up with you is the orders that you seek – this is at 161 – are answering the question, identified by Justice Sheahan as the separate question, in the affirmative and I am wondering if that follows from success on the question of law. I think it is the matter that troubled Justice Basten.
MR ELLICOTT: I think, with respect, it troubled him in relation to this matter that I am now addressing in relation to there being some subsidence, but his difficulty with the other arguments was that he could not conclude that Wambo should be overruled because he – but if the court had said it would overrule on Wambo for one of the reasons that we submitted, then the question would be answered, yes, but on the ‑ ‑ ‑
BELL J: The question at 131, set out in Justice Basten’s reasons, is:
“Whether the Applicant is entitled to an amount under section 12A(1)(b) . . . in respect of expenses that it incurred in performing work on the Sydney to Moomba Gas Pipeline in circumstances where the subsidence occurred at or near Mallaty Creek near Campbelltown in or about October 2005, on the assumption that the Applicant can establish that, for the purposes of that section, the expenses incurred by it were ‘proper and necessary’.”
The legal error, if it be that, in the approach taken by the Board and adopted by Justice Sheahan, and then the majority in the Court of Appeal, would not lead to answering that question in the affirmative, would it?
MR ELLICOTT: It makes an assumption:
on the assumption that the Applicant can establish that, for the purposes of that section, the expenses incurred by it were ‘proper and necessary’.”
The statement of facts, having said in that paragraph 39 that Justice Kiefel referred to, made an admission about reasonable anticipation. So that the facts were there to answer the question, yes on the basis that either my first proposition that it is hypothetical, that is, has taken place, or that it is answered by Justice Basten’s view that the critical issue is that the Board
and the majority view was overlooking the importance, the centrality of the words “in the opinion of the Board”.
But when you come to this other question – this is when he raises it - that is the one I am now addressing, he says there is a difficulty and he thinks some facts are needed in relation to it. We say that because of the admission in paragraph 39, because of this other material I referred to in paragraph 61, I think it is, of our submissions, that there is sufficient material to conclude that there was subsidence before the expenditure was incurred and that subsidence caused the damage in the relative sense, even though it was not sufficient in itself and that therefore the question can be answered, yes, because it is based on an assumption that the necessary and proper expense will be proven.
HAYNE J: If that submission were not to be accepted, Mr Ellicott – and I do not know whether it should or should not – but if it were thought desirable to give a speaking answer, I, for my part would be assisted by any submission you wish to make about that, and just so that the point might be sharpened a little so that you see what I have in mind, a form of speaking answer might run something along the lines, it being agreed that – and you would then set out what is set out in 39 of the statement of agreed facts - the Board was bound to form the opinion that an amount to meet the proper and necessary expenses incurred or proposed in performing work preventing or mitigating damage to the pipeline on account of the matters agreed to be reasonably anticipated was allowable under - identify the provision of the Act concerned. Now, I am sure that there are other forms of speaking answer that might be given but, for my part, I would be assisted by any submission that later you wanted to make about the form that a speaking answer might take.
MR ELLICOTT: Yes, your Honour. I notice the time. I have concluded my submissions, but we could give that consideration over lunchtime and give your Honours our speaking answer. If the Court pleases.
FRENCH CJ: Thank you, Mr Ellicott. Yes, Mr Lloyd.
MR LLOYD: Your Honours, given the time, and without wanting to appear in any way defensive, it might be useful to go to the last issue first. Some questions from the Court might at least, perhaps wrongly, have led me to believe that the Court was thinking that what was being undertaken was judicial review of the Board’s decision ‑ ‑ ‑
GUMMOW J: It is difficult to hear you because you are not raising the ‑ ‑ ‑
MR LLOYD: Sorry, your Honour. Some of the questions led me to believe the Court had in mind that perhaps the Board’s decision was somehow critical, but what of course happened after the Board’s decision is there was a de novo merits review to the Land and Environment Court. It is Justice Sheahan’s decision as to whether or not something could be reasonably anticipated, which is ultimately the critical question, not the Board’s view. The Board has expressed a view and it is not ‑ ‑ ‑
GUMMOW J: The relief sought in the Environment Court appears at page 2 and it was an order that your client pay Mr Ellicott’s client, from the fund, a particular amount.
MR LLOYD: That is so. That is on the basis that they wanted to advance a case whereby the court would have been satisfied of the relevant matters, formed the relevant opinions and then paid the sum. So all I wanted to say is, for my client’s part, if the Court is against us on the applicant’s first construction, which is to say that “that has taken place” is just a reference to an entirely theoretical subsidence, then we accept that it follows from what is in paragraph 39 that the Land and Environment Court, on the basis of the admission made in the agreed fact in paragraph 39, that the amount subject to the proper and necessary issue would meet the test.
So if the first construction - we do not say that that requires any further factual issue. The second construction which is Justice Basten’s construction adopted by the appellants is that “that has taken place” refers to that has taken place at the time of the Board’s opinion. Now, whether that means, as they put it, at the time of the Board’s opinion or whether that means at the time of the L&E Court’s opinion, we accept that the subsidence did take place at either of those points in time. So again if the Court is on the appellant’s side in relation to that construction we accept that, in effect, an answer yes to the question is not inappropriate, although we do accept that the question was premised with the correctness in Wambo in mind.
Before Justice Sheahan this whole hypothetical matter which is now put was conceded against the appellants and they expressly said they were not arguing that, as I apprehend the matter. So if the Court looks, for example, at the decision of Justice Sheahan on page 72, paragraph 30:
It is common ground –
there, so his Honour thought at least –
that s 12A(1)(b) is engaged only in the event of actual, as compared with anticipated, subsidence
So that is why the question was in the form it was in referable to 2005. Things have moved on since then. But if one reads the question which was being asked, in a sense ignoring the reference to the levels of subsidence having occurred at 2005 but having just asking the question whether the applicant is entitled to an amount subject, of course, to the proper and necessary issue, we accept on the agreed facts before the Land and Environment Court on either of the first two constructions that would follow.
It is slightly tricky. I think the point Justice Bell makes in relation to the third…..which is whether subsidence is seen as a one‑time, all‑embracing thing. I should say that is no part of our case. We simply say, I move my hand from here to here, that could be said to be a movement but the bit from here to here is also a movement. It is bits of movement. They are all movements and the definition of “subsidence” ultimately is a movement of the ground. That is, we say, what a subsidence is.
So the statutory question, we say, is whether a movement of the ground has taken place. It does not matter if it is part of a bigger movement of the ground. The question is whether at the relevant time a movement of the ground has taken place and if it has then the question is can you anticipate from that movement of the ground that damage will follow.
Just to give some indication of what we say, in relation to section 12A it is our case that it is a narrow provision. It was, as the extrinsic materials show, meant to deal with a very specific problem with the Act as it was which was under section 12 the Act did not allow for any payments to be made or for the Board to do anything unless there had been damage. One can see that under 12(1)(a) there can be a claim for:
compensation for any damage to improvements that arises from subsidence –
If I stop there, damage will not have happened unless there has in fact been subsidence. It is talking about subsidence that has taken place, in a sense. It does not usee that language but it is clear that is what is talking about. Then under (b) it says that you can also claim:
an amount to meet the proper and necessary expense incurred or to be incurred as a result of such damage –
that is, damage that arises from subsidence being subsidence that has actually taken place. The concern was that one or more situations had arisen where there had actually been subsidence. There was a reasonable anticipation that the subsidence that had occurred would cause harm to an improvement but that harm had not yet occurred. In the extrinsic material there is a reference expressly to that situation. That was the failing of section 12. The mischief was the Board nor the owner could get in and be paid for something if they wanted to stop the harm happening from the subsidence that had taken place. What we say is 12A is an extension of that to allow for that to happen.
GUMMOW J: Is it assumed, though, at this stage, that section 14 would have protected the colliery proprietor from a quia timet mandatory injunction?
MR LLOYD: Prior to section 12A we say yes and after section 12A.
GUMMOW J: If you are right about that – that that is how it applied at the time – there was a, one might think, a disproportion in the way the Act was working.
MR LLOYD: That may or may not be so. That, as I understand it, is not the way that it is put against us that anything is invalid for disproportionality or anything.
GUMMOW J: I am not saying it is invalid, but we have come to a matter of construction.
MR LLOYD: It is what Parliament had in mind. Your Honours can see from the 1969 amendment it was expressly made to apply retrospectively to validate the incidences where the Board had actually acted beyond power and gone in to fix things and to prevent damage from occurring in those instances where there had been subsidence that had taken place but no damage yet.
FRENCH CJ: We will break there, I think, Mr Lloyd, and adjourn until 2.15.
AT 12.47 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.15 PM:
FRENCH CJ: Yes, Mr Ellicott.
MR ELLICOTT: Your Honours, I did not want to interrupt my friend unduly. In answer to Justice Hayne, we have handed up a piece of paper that has what we thought might be an appropriate answer to the question. It covers each of the possible ways of approaching it. My friend of course has a copy.
FRENCH CJ: Yes, Mr Lloyd.
MR LLOYD: Thank you, your Honour. Before the break, I answered one of Justice Gummow’s questions about section 14, and I thought perhaps I should do a slightly more comprehensive job. I have had handed up to your Honours over the break a copy of the Mining Act 1992 (NSW), not the whole Act, but an excerpt from it, and also a schedule to it.
The point that I seek to make here is that it is not simply a question that the applicants can get money under section 12A, or they get nothing whatsoever. Although it is in another scheme, the scheme works, in a sense, in this way. Under the Mine Subsidence Compensation Act, the fund is paid for through some kind of equalisation process by all coal miners, and if it falls within the compensation you are entitled to under that scheme, then in effect, all coal miners have to pay for a bit of the damage. What the Mining Act provision shows is, for example, under section 265:
On the granting of a mining lease, a landholder of any land . . . becomes entitled to compensation for any compensable loss suffered, or likely to be suffered, by the landholder as a result of the exercise of the rights conferred by the lease.
So that is an amount recoverable against the miner. So in this case there would be a range of compensable damages or compensable loss that the applicant could have against BHP in relation to its pipeline and the ambit of that can be seen by the definition of “compensable loss”. It is defined in fairly broad terms under (a), which sort of includes structures or works – damage to those things. Under (f), it includes “damage consequential on any matter”. It is also broad because it includes – you have an entitlement not once the damage is done, but even when it is likely to be suffered. So, you can go and have your pipeline shifted in advance at the cost of the actual person who is mining the coal, rather than at the cost of all coalminers collectively.
The definition of “landholder” is said to include secondary landholder. The significance of that can be seen in this bundle if your Honours turn towards the back. There is the dictionary section and “landholder” is defined on page 3 of 7 at the top and under (g1) on page 4 of 7, it includes persons identified in the register kept by the Registrar‑General.
So if as one would assume would normally be the case a pipeline owner, or for that matter anyone else with an easement, has a registered easement, they become a secondary landholder; that applies to provisions which refer to secondary landholders, which includes this division. So all of that is to say, while section 14 of the Act does exclude compensation in relation to damage suffered as a result of subsidence, it is not to say that the applicant is bereft of any remedy, it just means that they would need to turn to BHP rather than to the fund to pay for it. Perhaps I should, particularly in referring to the compensable loss definition, note that it is defined in a way so that it excludes compensation under the Mine Subsidence Compensation Act, so that is at the end of the definition.
BELL J: Just when one looks at it in paragraph (a) of the definition, it refers to “damage to the surface of land”. This is concerned with compensating for a variety of losses as the result of mining operations apart from, or perhaps in addition to, mining as the result of underground mining activity that occasions subsidence, is it not?
MR LLOYD: We would say, in addition to, yes.
BELL J: Well, when you say “in addition to”, there is limited room to operate, having regard to the concluding words of the definition.
MR LLOYD: Well, what it means is you cannot double-dip. You cannot go to BHP, in this case, or to whomever the miner is, and gets them to pay you compensable loss in respect of something which is compensable under this scheme. If the mining subsidence scheme is narrow, as we say it is, all that means is if you get any compensation it is from BHP or it is from the primary miner, it is not from all colliery miners cumulatively supplying the fund with moneys.
BELL J: Damage to improvements caused by subsidence would be compensable under the Subsidence Act.
MR LLOYD: That is so. If you have damage you would get compensation under the Mine Subsidence Act, but if you have not had damage yet and you do a range of things to avoid damage, for example, then you would be entitled to it because you are entitled to compensation if the compensable loss is suffered, or likely to be suffered. So you say, it is likely that my pipeline will be damaged, so I am then entitled to compensable loss, and that compensable loss would be in respect of – and that is also caused or likely to be caused, so the compensable loss means loss which is caused or likely to be caused by:
damage to the surface of land, to crops, trees, grasses . . . buildings, structures –
et cetera. I mean, in the end I do not take it much further than to say section 14, when it is the quid pro quo, as this Court put it in Alinta, has to be at least understood in the context that there are other legislative regimes by which someone can get compensation but not for the same thing. They cannot be compensated twice, so if it is compensable under this scheme they would not be entitled to it under the Mining Act.
KIEFEL J: There is the prospect that it may be not compensable under either.
MR LLOYD: It is a possibility, I suppose.
KIEFEL J: Depending upon the construction taken of the Mine Subsidence Compensation Act and the definition of compensable loss.
MR LLOYD: Certainly, if section 12A is construed, as we would have it construed, that would narrow what is compensable under the Mine Subsidence Compensation Act and allow, therefore, greater scope for compensable loss under this Act.
KIEFEL J: Well, not necessarily, there is no statutory intention here that the Mining Act takes up what is not provided for under the Mine Subsidence Compensation Act. It is not a fall‑back position in statutory terms, is it?
MR LLOYD: Well, in my submission, what the intention of – as shown by the definition, is that they are to be complementary and not allow for double‑dipping.
KIEFEL J: In that sense, yes.
MR LLOYD: If it compensable under the Mine Subsidence Act you cannot get it separately under that Act, but if it is not compensable under the Mine Subsidence Act because it is construed as we say, then at least there is no preclusion from getting compensation under this Act if it is otherwise compensable under this Act.
FRENCH CJ: Mr Lloyd, does the grant of the statutory authority to undertake the longwall mining under the land in question of itself have any effect on common law causes of action in relation to subsidence?
MR LLOYD: The grant of the approval itself?
FRENCH CJ: Yes.
GUMMOW J: Under the Mining Act. Is there any equivalent of section 14 in the Subsidence Act in the Mining Act itself.
MR LLOYD: I am not sure that there is. Since the 1906 Act there has been a provision like the section 265 we have taken the Court to. In the 1973 Act I think it was sections 97 and 98. In the earlier 1906 Act there was also provision for compensation. So there may be common law rights as well, I am not sure if they have been excluded, perhaps we will make some inquiries while I otherwise present my submissions. Now, subject to that, what I propose to take the Court to in the start of my submissions is our positive case about the construction, and the convenient place to start is at section 12A, and I propose to make about 10 observations that we make in relation to matters of construction.
The first is that section 12A(1) provides for the making of payments out of the fund. The second is – now I am talking about 12A(1)(b), it deals with two situations; claims for expenditure already incurred, which we say relates to the past because they have been incurred, and then claims for expenditure proposed to be incurred, and we say that is, in effect, a present claim where somebody is saying, perhaps I do not have enough money but something needs to be done, and if it is not done this bad damage will occur, and I want the Board to give me some money and then I will do it.
That is the second limb, so there is a past and present limb. There is a proper and necessary test which allows for some limitation on the kind of expenditure or amounts that can be entitled to, so it does not necessarily mean someone is entitled to do a Rolls Royce response or some kind of wildly disproportionate response to the damage which is being threatened. The claim must be by the owner or on behalf of the owner of the relevant improvement. The fifth point is that the purpose of the expenditure proposed or incurred must be to prevent or mitigate damage to improvements. The sixth point is that the damage must be damage that would, but for the works, arise or have arisen from a subsidence that has taken place. We obviously place emphasis on the idea that the subsidence has taken place. The next point is more of a practical one, which is to say that a claim under section 12(1)(b) only arises in practice where the owner of the improvement in fact anticipates damage or did anticipate damage to the improvement for reasons of the subsidence.
Now, I say that because if they did not anticipate it, they would not be seeking money, they would not have incurred the expense or they would not be seeking moneys in order to incur the expense. Then we say the Board is required to form an opinion about whether the owner could have reasonably anticipated the damage. Now, that is the test where the moneys have been expended, whether he or she could have reasonably anticipated the damage or could reasonably anticipate the damage. That is the test where the moneys have not yet been expended and it is simply a proposal. We then say the objective assessment of anticipation that could have been held directs the Board to the time when the anticipation was or is relevant. We say in relation to moneys that have been expended, it directs attention to the anticipation at that time, so it is a time when the expenditure was incurred. In relation to the second limb, the proposal limb, it relates to future expenditure and it is, in effect, looking at the reasonableness of the anticipation in the present.
We say that is why the provision focuses upon these two tenses in the way that it deals with “could reasonably have anticipated” or “could reasonably anticipate”. The last observation in relation to the text is that the last phrase “other than a subsidence due to operations carried on by the owner”, we say, reinforces the idea that the provision is talking about a subsidence that has, in fact, happened and where one can determine whether it was due to operations carried on – which is to say in the past – by the owner.
Now, Justice Basten’s first issue that his Honour took with this was that his Honour said that the clause should have ended with “from a subsidence that had taken place” on this construction. Our answer to that is that his Honour’s approach does not appreciate that there is a present tense aspect to the test in relation to proposed expenditure which has not yet taken place. The reasonableness of that anticipation is a current reasonableness and that would have to have “that has taken place” and we say that “has taken place” is certainly capable in context of dealing with both the present proposal situation and looking back at the time the expenditure was incurred.
The next point we refer to is a point made by Chief Justice Spigelman at paragraphs 68 to 70 at appeal book page 119, which is the “a subsidence” point. We say the reference to “a subsidence”, especially when one appreciates the definition of “subsidence”, is referring to a movement, so a movement of the ground. Perhaps it is convenient to go that definition now for a couple of reasons that relate to a few of the appellant’s arguments. It is on page 3 of the Act. I am not sure what page of the bundle it is:
Subsidence means subsidence –
So if I stop there the second version of subsidence would mean the ordinary English meaning which is, as I think my friend said, something like a downward movement. But then the next two paragraphs are there to limit the ordinary meaning and the limit is it is not interested in subsidence from earthquakes or from any other kind of operations, other than the specified coal or shale operations. The definition then continues:
and includes all vibrations –
Now, vibrations would not fall within the dictionary definition of “subsidence” so the statutory definition is thus expanded -
or other movements of the ground related to any such extraction or prospecting (whether or not the movements result in actual subsidence) –
My friend relies upon the idea of actual subsidence as being something which the Parliament should have said if it meant subsidence that had taken place. What we say it means is actual subsidence, in that sense, has the same meaning – the ordinary English meaning – of downwards movement, but this definition has been changed to include other movements. It includes vibrations backwards and forwards, but perhaps ending at the same spot.
It also includes other movements and I am not sure if the Court recalls the table my friend took the Court to on pages 52 and 53 of the book, but what I suppose became known or became clearer anyway at some point in time after the Act was originally enacted was that subsidence does not always result in the land – or coal mining, I should say, does not always result in the land going down.
Sometimes it goes up, which is counterintuitive, but in this case it went up. There is something called “upsidence” and your Honours will see in the table my friend took the Court to on page 53, there is a reference to the “upsidence”. The purpose of the definition then is to say that “subsidence”, as defined, includes all vibrations and all movements. It does not matter which direction, so –
whether or not the movements result in actual subsidence) –
Whether or not it goes down, it is still subsidence under the Act, but then that is qualified –
but does not include vibrations or other movements of the ground that are due to blasting operations in an open cut mine and that do not result in actual subsidence.
So there is a policy choice that if your house shakes or moves sideways or upwards as a result of blasting from open cut mining, that is not subsidence and this Act has nothing to say about it. If there is blasting and your house goes down, then that is actual subsidence, and it is covered. We say that, for relevant purposes, “subsidence” just means a movement of the ground, but I do make the point that the reference to actual subsidence is not talking about subsidence that has actually happened. It is talking about a downward movement in the ordinary sense.
So if I then return to what Chief Justice Spigelman is saying at 68 to 70 of the appeal book about a subsidence, we say that where the provision is talking about “a subsidence”, it is talking about a movement of ground due to the extraction of coal. Before there can be a subsidence, there must have been extraction of coal. The subsidence referred to is an actual subsidence from an actual extraction of coal, and we say that the reference to “a subsidence” is rejecting the notion of a hypothetical subsidence.
I made the point that that was a point accepted by the appellants at first instance. My friends say that Justice Basten did not decide this point against them, but at page 145 of the appeal book in paragraph 161, his Honour says:
The Chief Justice adds to these reasons reliance upon the use of the indefinite article “a” before “subsidence” . . . His Honour relies upon this language as support for the requirement of “an actual, not a hypothetical occurrence” . . . That reasoning may also be accepted –
and we say that his Honour should also be accepted as rejecting the hypothetical, and we say that the hypothetical approach has been rejected by all eight Justices in the Court of Appeal that have looked at the matter.
GUMMOW J: So?
MR LLOYD: Well, we say your Honour should give some weight to that, and we say that there is no purpose in the Act which is advanced by reading it as a hypothetical subsidence. It is not the language. If the intention was that it would be a hypothetical subsidence one would have expected that some different formulation would be used. It is hard to think of a worse formulation to refer to a hypothetical subsidence than a subsidence that has taken place, especially bearing in mind that it was introduced at the same time as section 13A was introduced where language much more capable of and accepted by my client as extending to anticipated subsidence was used.
CRENNAN J: Except that expressions like “would otherwise have arisen” or “would otherwise arise”, those sorts of expressions would have, as sometimes intended, to indicate contingency or a hypothetical ‑ ‑ ‑
MR LLOYD: I entirely accept that, your Honour, it is hypothetical, the hypothesis ‑ ‑ ‑
CRENNAN J: I am just observing that in response to your suggestion that there is no use of a word like “hypothetical” in the context of the provision, but there are grammatical indications that it may be that contingency or a hypothetical situation is envisaged.
MR LLOYD: I entirely accept that a hypothetical situation is envisaged because what is at least hypothetical is that the damage will be caused by something. One possibility is that the damage – the hypothesis is that but for the preventative measure the damage would be caused by either a) any subsidence that you could anticipate, that is the appellant’s case, or b) a subsidence that has taken place. We say that if the Parliament had in mind that it was meant to be any subsidence that you reasonably anticipate, they might have said something either like they did in 13A, or something even more clearly, but if what they wanted was that you had to work out whether or not the hypothetical, there would be damage from a subsidence that has taken place, the formula actually used is an ideal, and we say, compelling, formulation for subsidence that has occurred.
HAYNE J: Just in relation to that aspect of your argument, what anticipates what in 12A(1)(b)? Is it not prevention, which is to say work anticipating damage?
MR LLOYD: We say that the anticipation is that a) a subsidence has taken place and the person who is anticipating that from that subsidence that has taken place damage would occur if preventative measures are not taking place.
HAYNE J: I understand the emphasis you place on “from a subsidence”, but throughout your argument you have, on occasions, referred to expenses, the expense anticipating damage, prevention anticipating damage, expense anticipating subsidence. What I want to know is, on your submission, in the text of 12A(1)(b), what anticipates what?
MR LLOYD: Well, I am grateful for your Honour to have pointed out if I have used inappropriate language, and let me be precise. What we say is the relevant anticipation that a person has to have, or at least that the Board has to consider is reasonably open, is that you anticipate that from a subsidence that has taken place – we say that means one that has actually occurred – you anticipate that if preventative and mitigatory works are not undertaken damage will arise and it will arise from the subsidence. So what you are anticipating is, you have seen, for example, the ground fall away, and you think, well, next time there is rain there could be a flood here now when there would not have formerly been a flood, and so I anticipate that from a subsidence that has occurred there could be damage to my works, because if a flood comes it could damage my improvements.
HAYNE J: That understands the word “anticipate” as “expect”. Is that the way in which it is used? I would not have thought so. There is a distinction to be drawn, is there not, between “expect” and “anticipate”? Perhaps the drafter thought the two were identical, perhaps not, but there is, I think, a distinction to be had.
MR LLOYD: In my submission, they probably do mean the same thing in this context, in the sense that the assessment in relation to an expense incurred you need to know or need to form an opinion about whether or not the damage was anticipated from, in the sense of, they expected it to happen as a result of the subsidence that has taken place. The appellant’s hypothetical argument is premised in part on what is said to be an underlying theme of the provisions, but we say that the underlying theme does not come from the language of the provisions. It also, and I will take the Court ultimately to the extrinsic material, it does not come from any of the extrinsic materials.
The extrinsic materials do not show that Parliament was concerned that owners of improvements were not getting a fair deal, and that some new provision needed to be put in to make it better quid pro quo. What the Minister was saying was we can protect the fund if we allow the Board to get in and do preventative works, and that was the concern, was about protecting the fund and allowing preventative works that would save a greater amount of damages.
We say there is no basis for the underlying theme argument, and to say that the legislation is beneficial, I mean, beneficial to improvement holders, is also difficult, and if the Court accepts that prior to this legislation the improvement holders used to have but no longer have certain common law causes of action then all it does is it takes them away and gives them something less in its place so it is difficult, we say, to see it as being beneficial.
FRENCH CJ: I suppose the use of the construction "anticipate as expect" would be understandable if you accept the other element of the construction which you advanced, that you have actually got some subsidence occurring and then, in other words, you have got a concrete rather than a hypothetical situation. You are saying that, really, that that construction to anticipate is consistent with the construction you propose for the role of the words “a subsidence that has taken place”?
MR LLOYD: I certainly would say that, your Honour.
FRENCH CJ: Whereas if anticipate is apprehend, that fits in more with the role of a subsidence that has taken place as a hypothetical element?
MR LLOYD: Then once again one asks, why, if it means apprehend, would one use a subsidence that has taken place rather than from subsidence?
FRENCH CJ: I appreciate that, I am just looking at the way the different approaches to anticipate might fit in to different constructions.
MR LLOYD: Certainly, your Honour. Then we say that section 13A – a lot of what the applicants say is that section 13A is not good enough for them because they do not have a right under section 13A to have these things done. It is true that they do not have the right under section 13A. The evidence shows that my client has, in a comparable situation, in fact, acted under section 13A. It is a power which allows for the efficient achievement of preventative measures. If, for example, there is going to be the relocation of 10 barns which might be affected by mining, it would allow my client to come in and arrange for one contractor to build 10 barns all at once in an efficient manner rather than to allow each of them to build their own barns in their own way.
We also place reliance upon section 15. My friends say it has no application because the northern side of the Mallaty Creek is not mine subsidence district. We say that that is not correct. First of all, it is a mine subsidence district; that is the first point, that since 1976 it has been, and that is an agreed fact in the statement of agreed facts. It is true that it was not a mine subsidence district when the improvement was built; that is paragraph 9 of the statement of agreed facts on page 45, but it has been for a long time. Section 15, once something is made a mine subsidence district, creates a lot of power upon my client to control what alterations and erections are built. Using my barn example, the owners of the barns could not just go out and build another barn without my client’s permission which shows, we say, that at least it is consonant with our construction that section 13A is meant to be the mechanism by which preventative measures in relation to anticipated subsidence, not subsidence that has occurred, is the vehicle.
Section 13A can go further than that, but it is the way that is intended to be done and, in our submission, that is another reason why the hypothetical situation – it is not that the Court needs to construe it beneficially so that there is some way that the appellant can get some form of relief. They could have, like other pipeline holders, come to us and proposed the works and we could have caused it to be carried out. Alternatively, perhaps, they can go to the miner, because we say it does not fall under section 12A under the Mining Act, but we say that sections 12A and 13A make a coherent scheme and add to the difficulty that previously existed under the scheme, which as I said prior to the luncheon adjournment, was that the power under section 12, even to do things like pay for the building of retaining walls or altering approaches or raising and lowering pipelines, bridges, et cetera, only arose after there had been damage caused by subsidence.
What section 12A does is it deals with the situation where there has been subsidence, so we say, but there has not yet been damage, but one can anticipate that damage will happen, and that further support for that division between section 12 embracing situations where there is damage and section 12A where there is not damage can be seen, for example, in the language of section 12(1A) where the first paragraph uses language which engages or draws from section 12, and the second paragraph uses language that does not refer to damage but refers to, as it were, damage or – in the footer of that subsection – damage, or where it is necessitated, the expense.
So for those reasons, we say that the Court should reject the appellant’s first argument that it is hypothetical. That then leaves two constructions currently advanced before the Court. On both of those constructions, it is accepted that the expression “a subsidence that has taken place” is referring to a subsidence that has, in fact, taken place. We are not talking any more about apprehended or anticipated subsidence, but to actual subsidence. Then the question is whether that subsidence has to have taken place, as we say.
Perhaps I could put it this way? The differences are between the majority and the minority view in the court below. The view advocated by the Board is that the relevant time is identified by the nature of the expenditure in issue in this sense, where the claim is for expenditure that is proposed to be undertaken, the Board is to look at the reasonableness of the anticipation of damage from a subsidence that has taken place when the proposal was considered, which is to say, at the time of the Board’s decision. However – and this is where we depart from Justice Basten – we say that where the claim is for expenditure that has been incurred, the Board is to look at the reasonableness of the anticipation of damage from a subsidence that has taken place at the time the expenditure was incurred.
On the construction we advance the reasonableness is to be judged against what the claimant knew, or could have known, at the relevant time. On the appellant’s construction it would be a more difficult assessment because then one has to read it as working out whether it was reasonable to anticipate that damage would arise from a subsidence that will have taken place by the time the Board makes its decision, even though we do not know exactly when that will be, and we say that that would be an unusual way to construe the provision. We adopt what Chief Justice Spigelman says at paragraph 78 on pages 121 and 122 of the appeal book that there is a stronger syntactical link between the subsidence and the anticipation is stronger than the link between the anticipation and the Board’s opinion.
FRENCH CJ: Can I just ask, in relation to the opening words of 12A(1)(b), what gloss does the word “proper” put on “necessary”? Once the expenses are necessary, what is the qualification imported by the word “proper”?
MR LLOYD: Well, in my submission, it would at least cover this sort of situation. If somebody says, “My house, which is worth $100,000 is going to be knocked down, to save this house I would need to do this incredibly elaborate ‑ ‑ ‑
FRENCH CJ: So it is a proportionality?
MR LLOYD: ‑ ‑ ‑piece of engineering that will cost $8 million to save my $100,000 house”, it might be necessary in a sort of a technical sense to have – that is the cheapest possible way of having saved the house, but you could still say it was not a proper expenditure having regard to the likelihood of the damage or the quantum of the damage compared to the size of the expenditure needed to prevent the damage.
FRENCH CJ: It does not feed into risk assessment on the hypothesis of anticipated damage by the owner.
MR LLOYD: I had not taken that view, your Honour, but there is a limit on outrageous claims rather than anything else. Now, I have taken the Court already to some of the provisions. My friend has taken the Court to section 12A(2)(b) which has the three‑month time limit which runs from when the expense to which the claim relates became known. I will turn to that, but we say that that in itself provides an important reason for not accepting the view advanced by the appellant and by Justice Basten because it leads to a situation – perhaps if I just address it now.
It leads to a situation where somebody is encouraged under the scheme to wait to the last moment before doing the works because if you do the works too early, on Justice Basten’s view, then you have to put in the claim within three months of, in effect, the works being over because you would at least by then have become aware of the expenditure. If the test is has the subsidence occurred on the date of the Board’s decision, you would want to leave it to as near as possible to when you think the subsidence is going to occur, otherwise the Board might make a snap decision and say the subsidence has not happened yet so, therefore, you lose.
Now, the answer put against us is that at least even if that is unfortunate, at least they have some capacity to get money under that scheme. Under our scheme they say there is no capacity. We say that is not right, that section 13A is the capacity, they should come to us. As in this case where the works were done over a matter of years , they could have come to us at any time and said this needs to be done – this is what we think needs to be done, can you cause it to be done or something along those lines. That is what others have done and we say that that is the answer, not trying to give a strange and strained reading to section 12A(1)(b) which turns on the time of the Board’s opinion.
BELL J: As a matter of interest, Mr Lloyd, bearing in mind section 15, which you took us to earlier, and the circumstance that the whole of the affected area was within a mine subsidence district, if I understand you, was it necessary to obtain your Board’s approval for whatever remedial works were done in any event, in which case, do I take it that your client was on notice of what was occurring?
MR LLOYD: I think no approval was sought because they take the view that they did not have to seek approval because the pipeline was built before it became a mine subsidence district. Presumably, they take the view that it is not an alteration, perhaps. That may or may not be right. My point of referring to section 15 was not necessarily limited to the facts of this case but to deal with the scheme of the legislation under which, at least generally, my client will have to be notified of things going on because approval will need to be sought.
My friend took the Court to section 13(2)(b), I think, in relation to its reference to the idea of subsidence and then further subsidence. He says, well, that shows that subsidence is one big thing, one continuing thing. That may or may not be so. What it also shows is you can stop part way along the subsidence. Someone can put in a claim part way along subsidence and it is not, in any way, we say, inconsistent with our construction that it refers to further subsidence.
There may well be further subsidence but the point is at the time you have spent the money did you anticipate from the subsidence that had taken place at that point in time that that subsidence, that there would be damage arising from that subsidence. If the answer to that is no, the mere fact that you can anticipate more subsidence is not the statutory test, at least on our view. It does not talk about anticipated subsidence. It talks about damage being anticipated from a subsidence that has taken place.
Section 13A, my friend referred to this as well. We obviously put reliance upon the different language of being incurred by reason of subsidence, the fact that this was introduced at the same time as section 12A and that it has quite different language. We say that on our construction, section 12A has a narrower ambit than section 13A. I will take your Honours, in due course, to the extrinsic material. We say that that gains support in that ordinary meaning is confirmed by the extrinsic material.
I have already mentioned section 14. I have already mentioned section 15. There is also section 16. Section 16 continues on – confers a power on the Board to investigate and it is, and can be read as, referring to after the words “as may be necessary” and the first one is:
to ascertain the nature and extent of any damage occasioned to any property where such damage is alleged to have been caused by subsidence -
That is the first one, so that is the section 12 reference. Then it goes on:
or to assess whether damage to any property from subsidence could reasonably have been, or be, anticipated -
So again there is that past tense or present tense notion of “anticipated”. We say that that is consistent with out view as to the timing issue. In summary then, we say the way the Act works is section 12 provides for compensation and provides for some self‑help under 12(1)(b) where there has been damage from subsidence. Section 12A is for self‑help where there has been no damage but damage can reasonably be anticipated from a subsidence that has taken place. So it supplements the missing aspect of section 12.
Section 13A applies whether or not there has been damage, but where damage is anticipated from subsidence and we say and accept that that means a subsidence whether or not it has yet occurred. Justice Basten rejected the notion that section 12A(1)(b) was supplementary of section 12(1)(b) because his Honour was of the view that section 12(1)(b) allowed for preventative work where there was no damage, but we say that that is wrong, that the chapeau to 12(1)(b) only arises where the expense is incurred, or to be incurred, as a result of such damage. Such damage is the damage that has arisen, and that was the flaw that led to 12A(1)(b) being enacted.
Perhaps it is convenient to go that extrinsic material now. I believe it is in tabs 6 and 7 of the appellant’s bundle. Can I go first to the comments by Mr Fife. For most of the first column it is dealing with an exclusion which has been enacted to stop owners of improvements claiming in respect of their own mining activities because previously apparently you could mine underneath your own property, damage it, and then get all the other coal miners to pay for it. Then from about point 8 on the page, there is a sentence begins, and it probably should be a paragraph:
The Bill will provide also for the carrying out of works by the board to prevent or mitigate subsidence damage before it occurs. Proposed new section 13A will empower the board to carry out such works where the total prospective liability of the fund will thereby be reduced.
Then an example is given of a case where there had been subsidence and that subsidence was in the processes of causing, or at least was likely to cause damage – expected to cause damage, but nothing was done, and in that case, the Board went in and put in pipes to carry the floodwaters or excess waters away and prevent the damage and what the Minister is saying is that that was the mischief which has been addressed:
As the Act stands at present the board can carry out works only after damage to improvements by subsidence has arisen.
That is what we say is the limit on 12(1)(b) -
This power to repair is to be supplemented by power to carry out preventative works, as the costs of prevention are often cheaper than of cure.
It is recognized also that emergencies may occur when it might be necessary for the owner to carry out works to prevent or mitigate damage arising from a subsidence. In such cases –
that is to say, in these emergency situations –
proposed new section 12A (1) (b) will empower a claim to be made for the proper and necessary expense so incurred.
We do not say, of course, that the Court should read in emergencies into the provision, but we say that the Court should look at what the mischief was and whether our construction – which we say is the ordinary meaning – would meet that mischief and we say it does meet that mischief. It does not do everything the appellants would like it to do, but it meets the mischief that was identified and was the reason.
Perhaps I will not take the Court to it, but in the Legislative Council’s second reading speech, the Minister who gave the speech – presumably on behalf of the Minister for Mining – said something much the same on page 2779 in the middle paragraph, and in the middle of that paragraph:
It is also recognized that emergencies can occur when it might be necessary for the owner to carry out works to prevent or mitigate damage arising from a subsidence. In such cases new section 12A(1)(b) will empower a claim to be made –
We say that is because section 12 did not allow for preventive works at all, even where subsidence had happened. In relation to another difficulty that arises from Justice Basten’s approach focusing upon the Board’s opinion is that there is a full de novo merits review from the Board’s decision to the Land and Environment Court, at least, on these issues.
It then leads to a curious result that if, at the time of the Board’s decision, the subsidence has not taken place, does the applicant then get to say “I will appeal that decision to the Land Environment Court” because it stands in the shoes of the decision‑maker and is to make the decision at the time of its own assessment on the basis of all the evidence it has, then through the vehicle of an appeal there is then in effect an extension of time from the date of the Board’s opinion to the date of the Court’s decision.
The response of the appellant to that is that it does not work that way because the Court has to look at the date of the Board’s opinion as well. We apprehended that answer is not consistent with the authorities and if I can give the Court some references as to the nature of the full merits review in the L&E context. This Court in Alinta 82 ALJR 826, paragraphs [11] and [13] noted the nature of a merits review that is done in the immediately present context and perhaps, I should also mention the last sentence of paragraph 63 of Alinta where it is said:
On the other hand, the legislation left for determination by the LEC de novo such questions as the determination of causation and quantum of compensation in claims competently made against the fund.
Then the proposition that in those circumstances what the Land and Environment Court does is look at the timing of its own decision or its own opinion rather than that of the primary decision‑maker for a further court – I think we have provided copies, but I will just give your Honours the references – Shi v Migration Agents Registration Authority (2008) 235 CLR 286 at paragraph 99, as I recall in the joint judgment of your Honours Justices Hayne and Heydon and that is obviously in a different context, but in the context of the Land and Environment Court in a case which is on our list, there is a case called Australian Leisure and Hospitality Group Pty Ltd v Manly Council (2009) 172 LGERA 1 ‑ ‑ ‑
GUMMOW J: What are we getting out of this?
MR LLOYD: That what the court does is decide the question for itself on the material before it at its time. So it does not look back to the time of the Board’s decision but it looks at it on all the evidence up to the time of its decision. We say, that means that if the Court adopts Justice Basten’s construction then the Board could quite legitimately say no subsidence has happened by the time we have made our decision, but then they appeal. It takes a year or so in the Land and Environment Court and then by the time that happens they get, in effect, an extension of time for the subsidence to occur and, we say, that that is so arbitrary the court would not readily accept a construction of the Act whereby, in effect, an extension of time is achieved through an appeal process of that kind.
HAYNE J: Does that difficulty emerge if the first construction urged by the appellant were to be adopted?
MR LLOYD: No, because on the first construction there is no subsidence that has to occur at all. So that problem arises, we say – and the submissions I am making now, perhaps I should make it clearer, is we are advocating as between Justice Basten’s construction adopted by the appellant and the majority’s construction as advanced by us, assuming that the expression “a subsidence that has taken place” is referring to a subsidence that has, in fact, occurred, when that must have occurred what we say is, in relation to past expenditure, it has to have occurred at that time that fits in with the example which Parliament was specifically thinking of and the mischief it was addressing and it fits with the language choices, we contend.
KIEFEL J: Could I just take you back to the primary construction, if I am not taking you out of order now, of section 12A(1)(b)?
MR LLOYD: Yes, your Honour, 12A(1)(b)?
KIEFEL J: 12A(1)(b), yes. The reasonable anticipation that the owner is to have, in the opinion of the Board, is in the first place that the damage “would otherwise have arisen” read with “from a subsidence that has taken place”, that is one view. The other matter that the owner could reasonably anticipate is that the damage would otherwise arise, and it is only when you get to the second question of what the owner might anticipate that the tense of “from a subsidence that has taken place” does not fit. It is almost as if the words “or could reasonably anticipate would otherwise arise” have been inserted afterwards and they do not make sense, that there is a clash between the tenses. I know it is hard to speculate on these things, but it is just that the phrase “from a subsidence that has taken place” makes sense with one, but not the other.
MR LLOYD: I accept that our construction would be even more compelling if it had said, that had or has taken place, but you have a situation where an expense has not been incurred, that is definitely in the past. My friends say a proposal was in the past, but we say that a proposal is, in effect, current because one is looking at whether or not the proposal should be accepted and the expenditure made in the future.
KIEFEL J: I suppose what I am trying to say is that the words “would otherwise arise”, the futuristic nature of them does not fit with the past tense of “that has taken place”.
MR LLOYD: No, what we say, your Honour, is that there are two limbs. One is in respect of the past expenditure the Board has to be of the opinion that “the owner could reasonably have anticipated would otherwise have arisen”, so in the past, but the clause also has to deal with the present situation where there is a proposal on foot; where the proposal is on foot the opinion of the Board has to go to whether the owner “could reasonably anticipate" that it "would otherwise arise”. So on our view, there is a current subsidence ‑ ‑ ‑
KIEFEL J: It still does not make sense, you have still got to read “would otherwise arise” with “from a subsidence that has taken place”, and the proposal does not make much sense.
MR LLOYD: In our submission, your Honour, "that has taken place" would be certainly the correct tense for “or could reasonably anticipate would otherwise arise, from a subsidence that has taken place”. That puts it, as it were, in the context of a current perspective of a current proposal. So you are looking – there is “a subsidence that has taken place”, and you are saying currently it has taken place, and whether you "could reasonably anticipate" that it "would otherwise arise".
KIEFEL J: Yes, I see what you mean; it is the narrower operation of the subsection.
MR LLOYD: Yes. The only difficulty we have is, on our view, it would have been better if it said “from a subsidence that had or has taken place”, but we say that ‑ ‑ ‑
KIEFEL J: Yes, I see what you mean.
MR LLOYD: ‑ ‑ ‑the elaborate tense of “has taken place” is sufficiently flexible to deal with the time at which the previous tense directs one to, which is the past when the expense incurred, or the present when the proposal was being considered.
HAYNE J: Well, are not these difficulties either diminished, not to say removed – one, if the word “anticipate” or its forms is used in the sense of to forestall, or perhaps more likely, in sense 9 in the OED, “To look forward to, look for (an uncertain event) as certain”? You are then faced with a question whether the future event, this future uncertain event that is going to be treated as a certainty, is a compound event, the elements of which are damage from a subsidence that has taken place, a compound future event, or whether, as you would have it, the only future event that anticipate joins with is damage. That is the construction question, is it not? Why would one not treat it as a singular compound event? Damage not yet occurred because we are dealing with preventing or mitigating – at least preventing – so damage is undoubtedly future. Why would you not treat the description of the damage, damage from a subsidence that has taken place, as itself also referring to a future subsidence, and that the anticipation is treating now as certain that which is a future event and uncertain?
MR LLOYD: I think I have already said it, your Honour, but we say that if that was the intention the selection of the words “a subsidence that has taken place” is an incredibly inept selection of language to achieve that result. It could have just said “from subsidence” or “from anticipated subsidence” or “from expected subsidence”. It could have said so many other things if they wanted that outcome, whereas the clause works entirely well, even under the meanings of “anticipate” your Honour has put forward, if you have to anticipate something from the factual base.
GUMMOW J: They had to accommodate the very last exclusion, “other than a subsidence due to”.
MR LLOYD: “Due to operations carried on”, yes, because you are not entitled to it if you, the owner, are the person who is the cause of the subsidence. So if you caused the subsidence which has occurred, has taken place, then you cannot get an entitlement to compensation from the fund.
GUMMOW J: Do the last words mean other than from a subsidence?
MR LLOYD: It is excluding from the reference to a subsidence in the previous phrase a subsidence of that character which is a subsidence which is due to in the sense of was caused by operations that the owner carried on. So if the owner was the cause of ‑ ‑ ‑
GUMMOW J: I know that but you said it would have been enough – in answer to Justice Hayne you said why did they not just say “from subsidence”? The answer is that would not fully have effectuated their purpose, I think, because you have to build into that this exclusion.
MR LLOYD: It could easily have said “from subsidence other than subsidence due to operations carried on by the owner”. They have gone on and made it a subsidence, that that is a movement of the ground that has taken place. We say, we certainly respectfully adopt the view of the Chief Justice, that the language of “that has taken place” is intractably opposed ‑ ‑ ‑
GUMMOW J: It is not intractable. This word “intractable” just begs the question. That is why we are here.
MR LLOYD: We certainly say that it would be a most exceptionally poor choice of language if what was sought to be achieved was anticipated subsidence and there is nothing whatsoever in the extrinsic materials that suggest that that is what the legislature had in mind. In fact, they identified as an example which was a flaw previously, so the mischief they were addressing was that in relation to situations where there had actually been subsidence they could not address it.
GUMMOW J: The Chief Justice draws attention in the Mining Act at 218 as to prohibition of Commonwealth claims. Is there any other section?
MR LLOYD: I can only say not that we are aware of, but if the Court would be assisted we will do a note that addresses whether there are any other provisions of that kind.
FRENCH CJ: It is not clear that that excludes to persons who are the grantees of mining claims. That is the area we are looking at really, is it not?
MR LLOYD: The last issue I wanted to address was the causation question, which is to say the last of the appellant’s grounds which, as we apprehend it, is advanced on the assumption that our construction is correct and they say nonetheless they should succeed because a subsidence at the time of the expenditure had taken place which was the small and, we say, immaterial subsidence. Our answer to that is that on the construction we advanced the existence of an irrelevant subsidence, and by irrelevant I mean a movement from which you cannot anticipate that damage would occur, is not enough to enliven the provision. I note that at paragraph 38 of the statement of agreed facts it is an agreed fact that:
The applicant did not anticipate that subsidence resulting from the extraction from Longwalls 30 and 31 –
which were the ones that had taken place at the time the expenditure was incurred –
was likely, in the absence of further mining of Longwalls 32 and following, to result in damage to the Pipeline.
So our answer is a relatively simple one which is to say one has to look at the movement. It is, we say, a distraction to look at mining plans or what was likely to happen or whatever. It is at the time that you have expended the money from the subsidence that had taken place at that time, could you reasonably anticipate that damage would have occurred, and we say it is an agreed fact that from that subsidence they could not anticipate it, and their answer to that is, well, that was just the beginning of a bigger subsidence and it is enough that it begins.
Now, this whole argument was premised upon paragraph 37 of Justice Tobias’ decision in Wambo which was not embraced by the majority in the court below, and we say rightly so, but our short answer is, it is no part of our argument to say that subsidence is necessarily an event, but we just say it is a matter of looking at the time. If at the time subsidence has taken place from which you can reasonably anticipate damage, then the provision is engaged, otherwise, if you are just in a situation where you reasonably anticipate future subsidence, you should go to the Board and seek to engage them under section 13A, or use such other rights as you have under the Mining Act to deal with the issues.
I will just see if there was anything arising from my friend’s oral submissions. At one point my friend described the current position as being able to fall within the description of emergency. We say that the multi‑year planning that went into the current arrangements is not capable of falling within that notion to the extent that that has any relevance. My friend said that the court below did not undertake a critical analysis of Justice Tobias’ reasoning in Wambo. We say that the Chief Justice set it out and then expressly added an additional point and it is clear in context that his Honour did embrace those reasons and we say, correctly so.
My friend at one point said that this Court in Alinta said that the Mining Subsidence Compensation Act was beneficial legislation. I, at least, have not been able to find that reference. There is a reference to section 14 being a quid pro quo for something, but that does not, we say, constitute anything, and in any event, we would rely upon our written submissions which deal with the fact that beneficial legislation does not provide for, or that that legislation can be so characterised, does not provide for a strange reading per se. Thank you, your Honour, they are the Board’s submissions.
FRENCH CJ: Thank you, Mr Lloyd. Yes, Mr Ellicott.
MR ELLICOTT: Your Honours, the definition of “subsidence”, my friend referred to that to counter our submission in relation to it – that it does assist the notion that subsidence is a process, and not an event. He sought to distinguish, I thought, movements and actual subsidence for that purpose. The movements, plural, are subsidence, and that is what was going on at the intersection of Mallaty Creek, and they continued going on from the extraction of coal, and that is the substance of the argument in relation to that third point that we made.
There is actually nothing my friend says in the second reading speech regarding quid pro quo – well, of course, those words are not used – but if it is read side by side in relation to 13A and 12A(1)(b), that reading would lead, in our submission, to the view that they were clearly in relation to 13A talking about anticipated subsidence, and when you come to what they say about emergencies they do not distinguish in any way by using different language; they say “damage arising from a subsidence”. It is very difficult to squeeze these lemons to get very much out of them. In this case, it is probably so that it is more, in our submission, more to our advantage than my friend’s argument.
Their argument put broadly seems to be locked into the proposition that you can look at the words “from a subsidence that has taken place” as if they were surrounded by all those other words. Without taking into effect the importance of the fact that the Board has to form an opinion about something and when you look at it, we would say that the preferred view about that matter is that it is a composite decision that covers not only anticipated damage but also anticipated subsidence. There was reference to the words at the end of section 12A(1)(b):
other than a subsidence due to operations carried on by the owner.
Those words, in their context and consistent with the submissions that we put, are obviously picking up – they talk about a subsidence – but in terms of the future, the Board will ask, well, are these going to be due to operations carried on by you or were these due to operations carried on by you? So, you really get nothing out of it. It is not referring, essentially, to a past situation. It is capable of fitting in to the context of our other submission to refer to something that the owner is going to do, in which event the owner gets nothing. Nothing fell from my friend, in our submission, which answers the problem of simultaneous damage and subsidence. That still remains something that my friends leave up in the air as to how it is going to be dealt with. That argument, I have to confess, is based on our view which we put that the section was designed to cover, beneficially that is, in covering the quid pro quo, something that would deal with a problem which arises in futurity both as to damage and as to substance which would obviously arise if they were coincidental.
FRENCH CJ: I suppose you would say that that is answered, albeit it maybe imperfectly, by section 12.
MR ELLICOTT: Yes, but that, as I put to your Honours, would rob the owner ‑ ‑ ‑
FRENCH CJ: Well, it is an imperfection on the preventive regime.
MR ELLICOTT: It would not help with all those people making claims from the Sydney gas area in our case, and similarly to the person that loved their home and they did not want it destroyed and they wanted to take steps to keep it. It works at both ends of the scale.
BELL J: Is that latter argument somewhat reduced in force by the Board’s power to compulsorily acquire one’s home?
MR ELLICOTT: No, because the owner wants to keep the improvement, wants to retain it, and the Board does not assist by acquiring it. That, in our submission, is what that submission is referring to, or it does not have to be based on emotion or threats of other proceedings that might be taken. It is simply a situation where the totality of the common law rights is excluded in 13A and 12A, because 13A gives no rights. Section 12A does and it is important, yet it leaves out a substantial part of those rights.
HAYNE J: An element of that seems to be to identify the mischief as including that which the Minister referred to in the second reading speech as the observation that costs of prevention are often cheaper than cure.
MR ELLICOTT: Yes, that is right, which is something that I meant to put at the forefront of my argument, your Honour, but omitted to mention. Your Honours, my friend had an argument as to tense, but it really, again, does not assist the argument. The whole question is going to be answered by the proposition whether or not the matter about which an opinion is to be formed is a composite matter as to futurity. My friend had an argument based on section 39 of the Land and Environment Court Act, shortly, 39(2), and your Honours emphasised this in Alinta:
the Court shall . . . have all the functions and discretions which the person or body whose decision is the subject of the appeal –
which that person –
had in respect of the matter the subject of the appeal.
The matter the subject of the appeal your Honours considered in Alinta as being the relevant question and here the question is against the decision of the Board as to whether damage could reasonably have been anticipated. That is the question. That is the question which is the subject of the appeal as 12B(a) provides. In section 12(1)(a), I did deal with this but perhaps my friend was inclined to push it aside, dismissed it. Section 12(1)(b):
an amount to meet the proper and necessary expense incurred or to be incurred as a result of such damage –
Now, what those actions in (i) and (iii) would do would prevent further damage. The point is made that it is not just about damage from subsidence. It is about, in that provision, in 12(1)(b)(i) and (iii) as applied to this case, it is directly dealing with a case where damage might occur but steps are taken to stop it. You build retaining walls or you divert or raise or lower a pipeline.
My friend referred to the Mining Act 1992. One would have to go back through the Acts and I have not done so, but, of course, there is a basic principle which your Honours will never forget, and that is you cannot construe an Act by a later Act; this is the 1992 Act. My friend referred to some other legislation earlier. I have not looked at it, but at first sight I thought his submission might be answered by that proposition, but if one goes back one might find that these provisions in substance were, in effect, prior to 1969 when 12A(1)(b) came into effect.
The importance that can be attached to the Mining Act, we submit is minimal, because it excludes it. Secondly, although my friend talks about compensable loss likely to be caused the Act does not appear to relate that to – I mean, if it applies to damage that is likely to be caused then it is not going to deal with a situation where an injunction has to be sought, on the one hand, under the common law, or as in this case, where the owner wants to prevent the damage. There is a subsection at section 265:
(4)The holder of a mining lease is not authorised to exercise any rights under the lease on the surface of any part of the mining area unless the amount of any compensation payable to a landholder under subsection (1) in respect of that part of the mining area is the subject of a valid agreement or of an assessment made by –
the Land Environment Court. We would submit that the effect of that submission is minimal in the circumstances, because it just leaves the question begged as it was before as to what is the effect of section 12(1)(a), and whether it be the fact or not – if it is not the fact, it does not matter, but it would be the fact that provisions like this were already in existence. The legislation determined to leave them out of consideration, and one might assume that therefore the Act should speak in accordance with whatever principles of construction should be applied to it. There is section 70 of the
Mining Act which I omitted to mention. It is under tab 4 of the authorities at page 45:
A mining lease is subject to:
(a)a condition that the holder of the lease will not suspend mining operations in the mining area otherwise than in accordance with the written consent of the Minister –
Now, (1A) says –
Subsection (1)(a) does not apply to a mining lease that is granted in relation to a mining purpose or mining purposes only.
There is a regulation under the Mining Act. It is regulation 7, and it defines “mining purpose” and it is our submission that those activities do not affect the width of the condition insofar as it would apply to the longwall mining undertaken by BHP. If your Honours please.
FRENCH CJ: Thank you, Mr Ellicott. The Court will reserve its decision. The Court adjourns until 9.45 tomorrow for pronouncement of orders.
AT 3.51 PM THE MATTER WAS ADJOURNED
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