Maddingley Brown Coal Pty Ltd v Environment Protection Authority

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION
VALUATION, COMPENSATION AND PLANNING LIST

S CI 2011 2872
S CI 2011 3244
S CI 2011 3343

MADDINGLEY BROWN COAL PTY LTD (ACN 007 397 686)	Plaintiff
v
ENVIRONMENT PROTECTION AUTHORITY	Defendant

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JUDGE:	KYROU J
WHERE HELD:	Melbourne
DATES OF HEARING:	7, 8, 9, 12, 13, 16, 20, 21, 22 August 2013
DATE OF JUDGMENT:	29 October 2013
CASE MAY BE CITED AS:	Maddingley Brown Coal Pty Ltd v Environment Protection Authority
MEDIUM NEUTRAL CITATION:	[2013] VSC 582

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ENVIRONMENT PROTECTION — Category C contaminated soil — Such soil used to construct a firewall separating brown coal seam in mining operation from landfill operation on same site — Exemption from landfill levy — Whether amendment to exemption to insert an expiry date valid — Issue of classification restricting the off-site uses of Category C contaminated soil — Whether classification valid — Whether use of Category C contaminated soil in firewall constituted a ‘direct beneficial reuse’ and, if so, whether the soil ‘has been consigned for [that] use’ — Environment Protection Act 1970 ss 1A, 1I, 4(1), 13, 20B, 50S, 67A, sch E — Environment Protection (Prescribed Waste) Regulations 1998 regs 5, 16, 20 — Environment Protection (Industrial Waste Resource) Regulations 2009 regs 1, 5, 6–11, 33, 43–6, 48, schs 2–3.

TAX — Claims for repayment of landfill levy paid to Environment Protection Authority and into a designated bank account — Whether claims statute barred — Whether plaintiff would make a windfall gain — Limitation of Actions Act 1958 s 20B.

REMEDIES — Declaration — Whether declaration sought is a remedy ‘in the nature of certiorari’ — Whether discretionary grounds for refusing relief — Supreme Court (General Civil Procedure) Rules 2005 O 56.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Morris QC with Mr A J Finanzio SC and Mr A Walker	Merrylees Legal
For the Defendant	Mr S Molesworth QC with Mr T Boston and Mr D Deller	Solicitor, Environment Protection Authority

TABLE OF CONTENTS

Introduction and summary.............................................................................................................. 1

Overview of applicable statutory scheme..................................................................................... 4

Overview of the facts......................................................................................................................... 9

Validity of Amendment to the 2008 Exemption......................................................................... 13

Relevant provisions of the 1998 and 2009 Regulations......................................................... 13
The terms of the 2008 Exemption and the Amendment to the 2008 Exemption............... 18
Factual issue: Procedure used by EPA for Amendment to the 2008 Exemption............... 20
Relevant legal principles............................................................................................................ 29
Parties’ submissions.................................................................................................................... 33
Decision on the validity of the Amendment to the 2008 Exemption................................... 36

Amendment to the 2008 Exemption was an unauthorised amendment...................... 36
Non-compliance with procedures in reg 46 of the 2009 Regulations............................ 40
Invalidity of Confirmation of Amendment to the 2008 Exemption not in issue......... 42
Irrelevant considerations, improper purpose and unreasonableness........................... 43
Conclusion: The Amendment to the 2008 Exemption is invalid.................................... 44

Validity of the 2011 Classification................................................................................................ 44

Relevant provisions of the 2009 Regulations.......................................................................... 46
Parties’ submissions.................................................................................................................... 48
Decision on the validity of the 2011 Classification................................................................. 51

Whether the 2011 Classification was authorised by pt 2 of the 2009 Regulations...... 51
Inconsistency with the wastes hierarchy and the 2009 Regulations.............................. 53
Irrelevant considerations and improper purpose............................................................ 54
Conclusion: The 2011 Classification is invalid.................................................................. 55

Are the requirements of ‘direct beneficial reuse’ satisfied?.................................................... 55

Relevant statutory provisions and EPA forms....................................................................... 56
Elements of definition of ‘direct beneficial reuse’ and principles of interpretation.......... 58
Factual issue: How Cat C soil is brought to the Site and used in the Firewall.................. 62
Was the Cat C soil reused?........................................................................................................ 65
Was the Cat C soil consigned for use as a direct beneficial reuse?...................................... 70

Meaning of ‘has been consigned for use’.......................................................................... 70
Decision on whether the Cat C soil has been consigned for use as a DBR................... 75

Is concurrent operation of a DBR and a Deemed SBR authorisation possible?.................. 79

Section 50S of the EP Act: ‘scheduled premises’ and ‘deposited on land’........................... 82

Is s 20B of the Limitation of Actions Act 1958 a bar to relief?................................................. 83

Requirements of s 20B of the Limitation of Actions Act........................................................... 84
Factual issue: The process by which the plaintiff sets its gate rate...................................... 86
Restitution claim for the amount of $3,198,821 paid to the EPA for the Levy................... 89

Issue of voluntariness........................................................................................................... 89
Issue of windfall.................................................................................................................... 92

Claim for the amount of $13,892,319 paid into the Designated Account........................... 98

Emerton J’s order dated 28 November 2011 and correspondence preceding it.......... 98
Does s 20B apply to the claim for the money in the Designated Account?................ 102
Would recovery of the money in the Designated Account result in a windfall gain? 105

Is Order 56 of Chapter 1 of the Rules a barrier to relief?....................................................... 105

Should declaratory relief be refused on discretionary grounds?......................................... 107

Overpayment for period commencing 1 July 2011.................................................................. 108

Use of immobilised and treated Cat C soil in the Firewall.................................................... 108

Proposed order................................................................................................................................ 109

HIS HONOUR:

Introduction and summary

This consolidated proceeding concerns whether the plaintiff, Maddingley Brown Coal Pty Ltd, is liable to pay to the defendant, the Environment Protection Authority (‘EPA’), a landfill levy on contaminated soil that the plaintiff uses in the construction of a firewall (‘Firewall’) at its premises at East Maddingley Road Bacchus Marsh (‘Site’).

The plaintiff conducts a brown coal mining business and a solid waste landfill business at the Site. The EPA has required the plaintiff to construct the Firewall between the face of the coal seam and the landfill in order to reduce the risk of a fire in the landfill spreading to the coal seam. The EPA has permitted the plaintiff to use contaminated soil — which is usually sourced from excavation sites in and around Melbourne — in the construction of the Firewall. The soil is now known as ‘Category C soil’ (‘Cat C soil’). Prior to 1 July 2007, it was known as ‘contaminated soil (low level)‘ (‘LLC soil’). For simplicity, I will use the phrase ‘Cat C soil’ to also encompass LLC soil.

Section 50S of the Environment Protection Act 1970 (‘EP Act’) requires the payment of a landfill levy for ‘prescribed industrial waste’ deposited on land (‘Levy’). However, that liability does not apply in certain circumstances, including where the waste is ‘exempt material’ or has a ‘direct beneficial reuse and has been consigned for [that] use’.[1]
[1]See [25], [28] below.

The plaintiff contends that it is not liable to pay the Levy, or, alternatively, that it is liable to pay a discounted Levy, on two bases. The first basis, upon which the plaintiff principally relied, is that its use of the Cat C soil in the Firewall constitutes a ‘direct beneficial reuse’ (‘DBR’) as defined in reg 5(1) of the Environment Protection (Industrial Waste Resource) Regulations 2009 (‘2009 Regulations’)[2] and that it was consigned for that use. If this contention is correct, the plaintiff has not been liable to pay any part of the Levy since the commencement of the 2009 Regulations on 1 July 2009.
[2]See [180] below.

The plaintiff’s second, alternative, basis has two limbs. The first limb is that the exemption that the plaintiff was granted by the EPA on 19 March 2008 (‘2008 Exemption’) under the Environment Protection (Prescribed Waste) Regulations 1998 (‘1998 Regulations’) continued in force under reg 48(c) of the 2009 Regulations as a secondary beneficial reuse (‘SBR’). The second limb is that the EPA’s amendment to the 2008 Exemption on 11 March 2011 to insert an expiry date of 30 June 2011 (‘Amendment to the 2008 Exemption’) was invalid. As the 2008 Exemption permitted the plaintiff to pay the Levy on five out of eight tonnes of Cat C soil used in the Firewall (‘Discounted Levy’) instead of paying the Levy on all tonnes of Cat C soil (‘Full Levy’), if the plaintiff’s alternative argument is correct, it continues to be liable to pay only the Discounted Levy.

The plaintiff also contends that Classification No 2011/018 titled ‘Classification with Management Options’ that the EPA issued with effect from 1 July 2011 (‘2011 Classification’) — which in essence restricted the off-site use of Cat C soil to treatment or disposal — is invalid.

In the period that is relevant to this proceeding, namely from 9 June 2010 until 30 June 2013,[3] the plaintiff made the following payments in respect of the Levy for Cat C soil used in the Firewall:
[3]The plaintiff does not claim repayment of any amounts it paid to the EPA prior to 9 June 2010 as it accepts that such a claim would be statute barred under s 20A of the Limitation of Actions Act 1958.

(a) For the period from 9 June 2010 until 31 March 2011, the plaintiff paid to the EPA Discounted Levy amounts totalling $3,198,821 in accordance with the 2008 Exemption.

(b) For the period from 1 April 2011 until 30 June 2011, the plaintiff paid the amount of $2,379,299 into an account with National Australia Bank (‘Designated Account’) which was established pursuant to a consent order made by Emerton J on 28 November 2011 (‘Emerton J’s order’).[4] This amount equates to the value of the Discounted Levy payable in accordance with the 2008 Exemption for this period. The parties agreed to the use of the Designated Account pending the resolution of this proceeding.

(c) For the period from 1 July 2011 until 30 June 2013, the plaintiff paid into the Designated Account the amount of $11,513,020 in respect of the Full Levy.

As at 30 June 2013, the balance in the Designated Account was $13,892,319.

[4]Emerton J’s order is set out at [336] below.

The plaintiff seeks repayment of the amount of $3,198,821 on the basis that it was paid under a mistake of law. The plaintiff also asserts an entitlement to the amount of $13,892,319 in the Designated Account.

The EPA has denied the existence of any mistake of law and has submitted that, even if there were such a mistake, the plaintiff’s claims cannot be maintained due to s 20B of the Limitation of Actions Act 1958 (‘LA Act’). If that provision applies to all the plaintiff’s claims in the proceeding, the plaintiff cannot recover any amount unless it satisfies the Court that such recovery ‘would not result in a windfall gain to the [plaintiff].’ By counterclaim, the EPA has sought an order that it be paid the amount of $13,892,319 in the Designated Account.

For the reasons that follow, I have concluded that:

(a) The Amendment to the 2008 Exemption is invalid because it did not satisfy the requirements of regs 44 and 46 of the 2009 Regulations and therefore the 2008 Exemption continues in force.

(b) The 2011 Classification was not authorised by reg 11 of the 2009 Regulations and is invalid.

(c) The use of Cat C soil in the Firewall constitutes a DBR but the soil was not consigned for use as a DBR.

(d) Subject to a possible exception, s 20B of the LA Act precludes the plaintiff from recovering any amount it paid to the EPA or into the Designated Account. The possible exception relates to the difference between the Full Levy and the Discounted Levy for the period commencing on 1 July 2011.

Overview of applicable statutory scheme

The EP Act, the 1998 Regulations and the 2009 Regulations provide the statutory scheme for the resolution of the issues in this proceeding. Set out below is an overview of the scheme. Specific provisions of the scheme will be described in more detail in those parts of this judgment to which they are relevant.

The purpose of the EP Act is ‘to create a legislative framework for the protection of the environment in Victoria having regard to the principles of environment protection.’[5] Those principles are set out in ss 1B to 1L and it is the intention of Parliament that in the administration of the EP Act, regard should be given to those principles.[6]
[5]EP Act s 1A(1).
[6]EP Act s 1A(2)–(3).

The key principle for the purposes of this proceeding is the principle of wastes hierarchy in s 1I of the EP Act. That section provides as follows:

1I        Principle of wastes hierarchy
Wastes should be managed in accordance with the following order of preference—
(a)       avoidance;
(b)       re-use;
(c)       re-cycling;
(d)      recovery of energy;
(e)       treatment;
(f)       containment;
(g)       disposal.

The purpose of the EP Act and the principle of wastes hierarchy are expressly recognised in reg 1 of the 2009 Regulations, which provides as follows:

1 Objectives
The objectives of these Regulations are to—
(a)assist industry to implement the principle of wastes hierarchy as set out in section 1I of the Environment Protection Act 1970;
(b)prescribe requirements for assessing, categorising and classifying industrial waste and prescribed industrial waste for the purposes of the Environment Protection Act 1970;
(c)encourage industry to utilise industrial waste as a resource through exempting material from categorisation as prescribed industrial waste where a secondary beneficial reuse is established;
(d)prescribe requirements for the transport and management of prescribed industrial waste including requirements for the tracking of prescribed industrial waste.
Note

The purposes of the Act include the creation of a legislative framework for the protection of the environment in Victoria having regard to the principles of environment protection. One of the principles of environment protection is the principle of wastes hierarchy set out in section 1I of the Act, which provides that the most preferable management option is avoiding waste production, and the least preferable management option is disposal.

The EP Act regulates the production, transportation, use and disposal of different forms of waste. The present proceeding concerns only solid industrial wastes. Those wastes have been classified into various categories from time to time. Different restrictions apply to waste depending on the applicable category.

Schedule 2 of the 2009 Regulations sets out three ‘hazard categories’ for industrial waste, namely, Categories A, B and C. In essence, Category A waste comprises dangerous goods such as explosives which generally cannot be disposed of in landfill; Category B waste comprises wastes with high levels of contamination; and Category C waste comprises wastes with low levels of contamination.

It was common ground that the soil that the plaintiff has used in the Firewall was Cat C industrial waste.

The EPA, which is established by the EP Act, is responsible for administering the EP Act and giving effect to its provisions. Under the EP Act, the EPA can exercise a variety of powers to give effect to the principles of environment protection, including the granting of licences, the issuing of exemptions, the charging of levies and the taking of enforcement action in respect of contraventions of the EP Act.

A licence granted under the EP Act may authorise an activity which would otherwise constitute a contravention of the EP Act. Thus, pursuant to s 20 of the EP Act, the EPA may grant a licence for the disposal of waste. A licence issued under the EP Act can contain conditions which regulate the manner in which the licensed activity is conducted.

The EPA may grant exemptions which provide dispensation from particular provisions of the EP Act that would otherwise apply.

The purpose of levies imposed under the EP Act is not only to raise revenue to fund the EPA’s activities but also to discourage activities that are harmful to the environment.

The regulations made under the EP Act from time to time set out detailed provisions to give practical effect to the provisions of the EP Act. For example, the regulations prescribe the procedures that must be followed and the forms that must be used for the purposes of particular provisions of the EP Act.

Section 20B of the EP Act sets out a procedure for consultation with ‘interested parties’ — called a ‘s 20B conference’ — to which the EPA may resort if it is of the opinion that this procedure may assist the EPA to resolve any matter under its consideration. Section 20B provides as follows:

20B Conferences
(1)The [EPA] may if it is of the opinion that a conference of persons concerned in any matter under consideration by the [EPA] may assist in a just resolution of the matter, invite all or any of the interested parties to a conference.
(2)All persons invited to attend a conference under this section shall be advised in writing of the time and place at which the conference is to be held.
(3)A conference held under this section shall be presided over by the Chairman or a person nominated by the Chairman for the purpose.
(4)The [EPA] shall take into consideration the discussions and resolutions of any conference under this section and the recommendations of any person presiding at that conference.

Part III, div 1 of the EP Act (ss 16 to 19) empowers the Governor in Council, on the recommendation of the EPA, to publish environment protection policies, including State environment protection policies (‘SEPP’) and waste management policies. Such policies may incorporate a national environment protection measure (‘NEPM’).

As discussed at [3] above, the Levy is imposed by s 50S of the EP Act. That section is in pt IX div 3 of the EP Act and provides as follows:

50S Landfill levy — amount payable
…
(2)The holder of a licence in respect of a scheduled premises which is—

(a)prescribed as a scheduled premises required to pay the landfill levy; and
(b)licensed for the discharge or deposit to land of wastes that are prescribed industrial waste—

must pay to the [EPA] a landfill levy for each tonne of waste that is deposited on to land at the premises.

…
(2AA)The amount of the levy payable under subsection (2) is the amount specified in Schedule E for the relevant category of prescribed industrial waste.

The expressions ‘scheduled premises’, ‘waste’ and ‘industrial waste’ in s 50S of the EP Act are defined in s 4(1). As it was common ground that the soil used in the Firewall constituted ‘waste’ and ‘industrial waste’, I will not set out the definitions of these terms. It was also common ground that the soil used in the Firewall constituted ‘Category C waste not being packaged waste asbestos’. Pursuant to sch E of the EP Act, a landfill levy of $70 per tonne is payable in respect of such waste.

The plaintiff pleaded that, while the landfill on the Site constituted ‘scheduled premises’, the Firewall did not. The plaintiff also contended that the manner in which it used Cat C soil in the Firewall constituted a reuse rather than a ‘depositing’ of the waste on land at the Site. These issues are discussed at [287] to [291] below.

The phrase ‘prescribed industrial waste’ in s 50S of the EP Act is central to the resolution of the issues in this proceeding. It is defined in reg 5(1) of the 2009 Regulations as follows:

prescribed industrial waste means any industrial waste … other than industrial waste … that—
…
(b) has a direct beneficial reuse and has been consigned for use; or
(c) is exempt material; …

It was common ground that, subject to the issues discussed at [287] to [291] below, the plaintiff is required to pay the Levy for the Cat C soil it uses in the Firewall unless the soil falls within paras (b) or (c) of the above definition.

In relation to para (b), the issue of whether the use of the Cat C soil in the Firewall ‘has a direct beneficial reuse and has been consigned for [that] use’ is discussed at [178] to [277] below. In relation to para (c), the question of whether the Cat C soil used in the Firewall is ‘exempt material’ depends on whether the first limb of the definition of that term in reg 5(1) of the 2009 Regulations is satisfied. As that limb applies to industrial waste ‘for which a secondary beneficial reuse is established in accordance with Part 5 [of the 2009 Regulations]’, the issue is whether the Amendment to the 2008 Exemption was valid and whether the 2008 Exemption continues in force.[7] That issue is discussed at [52] to [138] below.
[7]See [5] above.

Overview of the facts

Set out below is an overview of the facts which were largely not in dispute. As such, I will not refer to the affidavit or oral evidence upon which the following factual findings are based. Disputed factual matters are discussed in those parts of this judgment to which they are relevant. As will become apparent, I have not been assisted by the disputed expert evidence upon which the parties relied.[8]
[8]At [332] below, I explain why I was not assisted by the disputed evidence of two of the experts. Although I have considered the evidence of the other experts, I have not found it necessary to expressly identify any part of it. I note, however, that my conclusions have not been influenced by the evidence of the environmental consultant, Mr David Maltby, upon which the plaintiff relied.

The plaintiff acquired the Site in 1990 and, on 6 December 1990, it took a transfer of an EPA waste discharge licence (‘EPA Licence’) to enable it to conduct a landfilling operation at the Site using solid industrial waste. The EPA Licence has been amended from time to time, and the plaintiff continues to hold it.

On 8 September 1993, the plaintiff was granted a mining licence for the Site (‘Mining Licence’). The Mining Licence required the plaintiff to submit a work plan for approval. In 1995, the plaintiff received approval for its work plan and this approval enabled the plaintiff to conduct an open cut brown coal mining business on the Site. The mining activity has the effect of creating voids within the land at the Site. The voids created by past mining activities are used as the tipping areas for the landfilling. In those voids, the coal seam is exposed.

The EPA Licence, as amended on 8 June 1994, and the approved work plan require the plaintiff to construct and maintain the Firewall.[9] The Firewall is a non-combustible barrier of compacted earth between the exposed coal seam and the solid industrial wastes, whose purpose is to prevent any fire spreading from the landfill to the coal seam. The Firewall is progressively built up to match the level of adjacent waste deposition in the landfill. Apart from providing thermal insulation between the landfill and the coal seam, the Firewall provides structural support for a faulted coal face at the south eastern corner of the open cut mine. From 31 August 1998, the EPA Licence permitted the deposit of LLC soil at the landfill on the Site.
[9]An amendment to the approved work plan on 19 November 1999 maintained the requirement for the Firewall.

The Firewall forms a continuous section of the landfill area approximately 700 metres in length, which has been progressively constructed in four areas. The Firewall is constructed in three metre high increments and can only be filled to match the height of the landfill. The EPA Licence initially required the Firewall to be 20 metres in width. On 4 June 2007, the EPA Licence was amended to reduce the required width to 13.5 metres.[10] The Firewall has basal and side compacted clay liners, a leachate collection system, surface water management, and is subject to groundwater monitoring and reporting requirements. The basal liner has a reinforcing geotextile layer and a HDPE membrane.
[10]On 16 December 2010, conditions were added to the Mining Licence, one of which specified a Firewall that was 13.5 metres wide.

In the period that is relevant to this proceeding, the Firewall has been constructed as an engineered structure, using clean fill, clay and Cat C soil. The process is subject to environmental controls relevant to landfill cells.

The process of using Cat C soil in the construction of the Firewall involves spreading, placing and compacting the soil. Apart from the displacing of air, this process does not involve any physical alteration to the Cat C soil, and involves no chemical alteration to that soil. Cat C soil is used as a substitute for clean fill or clay that would otherwise be used in the construction of the Firewall. Clean fill is a valuable resource with competing uses. It would not have been economical to obtain sufficient clean fill or clay to construct the Firewall at a rate that would have permitted the sustainable operation of the landfill.

Between 8 June 2010 and the time of the hearing of the proceeding, the only practicable options for the management of Cat C soil were disposal to landfill or use by the plaintiff in the construction of the Firewall. The concentrations and value of the contaminants in the Cat C soil are such that it was not practicable to remove them from the soil. As at the time of the hearing, there were no available facilities at which the Cat C soil could have been treated to remove the contaminants.

On 18 April 2000, the EPA granted the plaintiff an exemption under reg 16(1)(a) of the 1998 Regulations (‘2000 Exemption’) which permitted it to use Cat C soil in the construction of the Firewall. The 2000 Exemption described the plaintiff as ‘the waste reuser’.[11] By letter dated 18 April 2000, the EPA advised the plaintiff that Cat C soil that was used in the Firewall in accordance with the 2000 Exemption would not be subject to the Levy. The 2000 Exemption was extended a number of times and expired on 14 March 2005. Between 15 March 2005 and 18 March 2008, the plaintiff was not authorised to deposit Cat C soil into the Firewall.
[11]See the definition of ‘waste reuser’ at [53] below.

As stated at [5] above, on 19 March 2008 the EPA granted the plaintiff the 2008 Exemption which permitted the plaintiff to use Cat C soil in the Firewall and to pay the Discounted Levy.[12] The plaintiff continued to pay the Full Levy for Cat C soil disposed of at the landfill on the Site. Clause 1.2 of the 2008 Exemption required that the 2008 Exemption be reviewed three years after the date of its issue, on 19 March 2011. The relevant terms of the 2008 Exemption are set out at [62] below.
[12]The plaintiff was the only landfill operator in Victoria authorised to pay less than the Full Levy.

As stated at [4] above, the 2009 Regulations came into effect on 1 July 2009. They introduced the concepts of DBR and SBR which are discussed in more detail later in this judgment. For present purposes, I note that a key difference between them is that an SBR involves prior treatment of contaminated soil whereas a DBR does not.

When the 2009 Regulations commenced, the 2008 Exemption was still in operation. Pursuant to reg 48(c), the 2008 Exemption was deemed to continue in effect as a ‘secondary beneficial reuse authorisation’ (‘Deemed SBR authorisation’).

In December 2010, the EPA commenced the process of reviewing the 2008 Exemption pursuant to cl 1.2 (‘2008 Exemption Review’). The 2008 Exemption Review process is described at [69] to [84] below.

On 7 January 2011, the plaintiff delivered to the EPA an ‘Application for Exemption for SBR’ (‘Application for SBR’). This was effectively an application for a new SBR authorisation, which if granted, would completely exempt the plaintiff from the liability to pay the Levy in respect of Cat C soil used in the Firewall. The EPA considered the Application for SBR simultaneously with the 2008 Exemption Review. The process by which it did so is described at [72] to [84] below.

As discussed at [5] above, on 11 March 2011 the EPA issued the Amendment to the 2008 Exemption which inserted an expiry date of 30 June 2011. The Amendment to the 2008 Exemption is set out at [68] below. The plaintiff’s challenge to the validity of the Amendment to the 2008 Exemption is discussed at [52] to [138] below.

On 8 April 2011, the EPA made the following four decisions:

(a) a decision to refuse the Application for SBR;

(b) a decision to amend the EPA Licence with effect from 1 July 2011 to make the Firewall a ‘landfill cell’ — with the consequence that the Full Levy was payable;

(c) a decision to allow the Amendment to the 2008 Exemption to operate according to its terms, that is, to allow it to expire on 30 June 2011 (‘Confirmation of Amendment to the 2008 Exemption’); and

(d) a decision to publish a draft classification in relation to management options for the use of contaminated soil pursuant to reg 11 of the 2009 Regulations.

Initially, the plaintiff sought to impugn the EPA’s decision to refuse the Application for SBR. However, during the hearing the plaintiff amended its statement of claim to abandon this part of its claim.

On 21 April 2011, the plaintiff made an application for review to the Victorian Civil and Administrative Tribunal (‘VCAT’) in respect of the amendment to the EPA Licence. As a result of the application, the amendment has not yet commenced operation. Neither the amendment nor the pending review by VCAT is material to this proceeding.

The plaintiff’s challenge to the Confirmation of Amendment to the 2008 Exemption is discussed at [130] to [132] below.

On 21 June 2011 the EPA issued the 2011 Classification whose terms are set out at [143] below. The plaintiff’s challenge to the validity of the 2011 Classification is discussed at [139] to [177] below.

Prior to 2006, the Levy rate in the EP Act was $10 per tonne of prescribed industrial waste deposited on land. In 2006, the EP Act was amended to increase the Levy rate to $50 per tonne. In 2007, the EP Act was further amended to increase the Levy to $70 per tonne. The Levy is payable to the EPA quarterly in arrears.[13]
[13]EP Act s 50SB(3).

Validity of Amendment to the 2008 Exemption

It will be recalled from [30] above that if the Amendment to the 2008 Exemption is invalid and the 2008 Exemption remains in force, the Cat C soil used in the Firewall will constitute ‘exempt material’ for the purposes of the definition of ‘prescribed industrial waste’ in reg 5(1) of the 2009 Regulations. Subject to the issue discussed at [278] to [286] below, and noting the discussion at [63] to [64] below, the effect of this would be that the plaintiff is liable to pay the Discounted Levy in accordance with the terms of the 2008 Exemption.

Relevant provisions of the 1998 and 2009 Regulations

Regulation 5 of the 1998 Regulations defined ‘prescribed industrial waste’ by reference to reg 7. As it was common ground that the Cat C soil used in the Firewall constituted ‘prescribed industrial waste’ for the purposes of the 1998 Regulations, I will not set out the definition of that term. Regulation 5 defined ‘waste reuser’ as follows:

waste reuser means an occupier of premises where the use of prescribed industrial waste as a direct input occurs, without prior treatment or reprocessing, into the manufacture of a product.

The 1998 Regulations contained the following provisions relating to the granting of exemptions and the conditions that could be imposed on exemptions:

16 Exemption to certain persons
(1) The [EPA] may—
(a)exempt a person or class of persons from complying with section 19A(3A)[14] or 20(3A)[15] of the Act; …
[14]Section 19A(3A) of the EP Act relevantly dealt with works approvals.
[15]Section 20(3A) of the EP Act relevantly dealt with licences.

…
20 Conditions for exemptions
(1)If the [EPA] exempts a person under this Part the [EPA] must specify the period for which the exemption applies and may impose conditions relating to any or all of the following—
(a)characteristics of the prescribed industrial waste for which the exemption has effect …;
(b)the person, premises or industries from which the prescribed industrial waste may originate;
(c)the person, premises or industries permitted to receive the prescribed industrial waste;
(d)any sampling, analysis, monitoring and reporting requirements to be undertaken by the prescribed industrial waste producer, waste receiver, waste reuser, waste recycler or recoverer of energy;
(e)any measures that are required of the prescribed industrial waste producer, waste transporter, waste receiver, waste reuser, waste recycler or recoverer of energy to ensure that the management of the prescribed industrial waste is not likely to result in an unacceptable risk of damage to the environment;
(f)any other matters required of the prescribed industrial waste producer, waste transporter, waste receiver, waste reuser, waste recycler or recoverer of energy to ensure that the exemption is not likely to result in an unacceptable risk of damage to the environment;
(g)a requirement to notify the [EPA] of any changes relating to the matters and information relating to the exemption.

Although the 2009 Regulations repealed the 1998 Regulations with effect from 1 July 2009, the 2008 Exemption continued in force after that date by virtue of reg 48(c) of the 2009 Regulations. Regulation 48(c) provides as follows:

48 Savings for certain existing permit conditions and accreditations
Despite the revocation of the Environment Protection (Prescribed Waste) Regulations 1998—
…
(c)an exemption granted under Part 5 of those Regulations continues to have effect as a secondary beneficial reuse authorisation for the purposes of Part 5 of these Regulations.

In the absence of reg 48(c) of the 2009 Regulations, which deemed the 2008 Exemption to have effect as an SBR authorisation, the use of the Cat C soil in the Firewall would not have been an SBR authorisation. That is because the definition of ‘secondary beneficial reuse’ in reg 5(1) of the 2009 Regulations — which is set out at [181] below — required the soil to undergo treatment or processing prior to use.

Regulations 43 to 46 of the 2009 Regulations deal with imposing conditions on, and amendment and revocation of, ‘notifications’ which, for present purposes, include SBR authorisations. It was common ground between the parties that the 2009 Regulations applied to the 2008 Exemption while it continued to have effect under reg 48(c) as a Deemed SBR authorisation.

Regulation 43 of the 2009 Regulations provides as follows:

43 Conditions for secondary beneficial reuse
(1)If the [EPA] authorises a secondary beneficial reuse notification under this Part, the [EPA] must specify the period for which the notification applies.
(2)The [EPA] may impose conditions relating to one or more of the following matters on a notification authorised under regulation 41—
(a)characteristics of the material for which the notification has effect …;
(b)the prescribed industrial waste producer, premises or industries from which the material may originate;
(c)the person, premises or industries permitted to receive the material;
(d)any sampling, analysis, monitoring and reporting requirements to be undertaken by the prescribed industrial waste producer, waste receiver, reuser, or recycler of the material;
(e)any measures that are required of the prescribed industrial waste producer, transporter, waste receiver, reuser, or recycler of the material to ensure that the management of the material is not likely to result in an unacceptable risk of damage to the environment;
(f)any other condition that the [EPA] considers appropriate. …

Regulation 44 of the 2009 Regulations provides as follows:

44 Amendment of notification
(1)The [EPA] may amend any notification authorised under this Part if the [EPA] is satisfied that amending the notification—
(a)is necessary or desirable in the light of changes to the circumstances that existed at the time the [EPA] authorised the notification; and
(b)will not result in an unacceptable risk of harm to the environment.

(2) If the [EPA] decides to amend a notification it must—
(a)notify in writing the prescribed industrial waste producer or waste receiver whose notification will be amended within 7 days after deciding to amend; and
(b)specify in the written notice to the prescribed industrial waste producer or waste receiver the date and time from which the amendment takes effect.

Regulation 45 of the 2009 Regulations provides as follows:

45 Revocation of notification
(1)The [EPA] may revoke any notification authorised under this Part if it is satisfied that—
(a)any information supplied by the prescribed waste producer or waste receiver was false or misleading; or
(b)any other information taken into consideration by the [EPA] has changed and as a consequence the notification is likely to result in an unacceptable risk of harm to the environment; or
(c)any condition in relation to that notification under regulation 43 has been contravened; or
(d)the prescribed industrial waste producer or waste receiver has been found guilty of one or more relevant offences …; or
(e)the activities in respect of which the notification related have ceased.

(2)If the [EPA] decides to revoke a notification, the [EPA] must—
(a)notify in writing the prescribed industrial waste producer or waste receiver whose notification will be revoked within 7 days after deciding to revoke; and
(b)specify in the written notice to the prescribed industrial waste producer or waste receiver the date and time from which the revocation takes effect.

Regulation 46 of the 2009 Regulations provides as follows:

46Procedure to be followed before amendment or revocation under this Part
(1)Before amending or revoking a notification authorised under this Part, the [EPA]—
(a)must give a written notice to the prescribed industrial waste producer or waste receiver whose notification the [EPA] intends to amend or revoke that—
(i)gives details of the action the [EPA] intends to take; and
(ii)gives the reasons why the [EPA] intends to take that action; and
(iii)invites the prescribed industrial waste producer or waste receiver whose notification the [EPA] intends to amend or revoke to comment on the [EPA’s] proposed course of action within the time specified in the notice; and

(b)must consider any comments that are made by the prescribed industrial waste producer or waste receiver whose notification the [EPA] intends to amend or revoke within the time specified.

(2)The [EPA] must not specify a period of less than 7 days under subregulation (1)(a)(iii).

The terms of the 2008 Exemption and the Amendment to the 2008 Exemption

The 2008 Exemption that was issued on 19 March 2008 relevantly provided:

NOTICE OF EXEMPTION

…
WHEREAS
(1)The [EPA] has received an application from Maddingley Brown Coal Pty Ltd (‘the waste reuser’) for exemption from complying with sections 19A[16] and 20[17] of the [EP] Act and regulation 16(1)(a)[18] of the [1998] Regulations (‘the application’); and
(2)The application relates to the reuse of Category C contaminated soil at a landfill at premises situated at East Maddingley Road, Bacchus Marsh (‘the premises’); and
(3)The [EPA] has determined the application in accordance with the [1998] Regulations;
[16]Section 19A of the EP Act relevantly deals with works approvals.
[17]Section 20 of the EP Act relevantly deals with licences.
[18]Regulation 16 of the 1998 Regulations is set out at [54] above.

NOW TAKE NOTICE that the [EPA] pursuant to regulations 16(1)(a) and 20[19] of the [1998] Regulations HEREBY EXEMPTS Maddingley Brown Coal Pty Ltd from complying with sections 19A and 20 of the [EP] Act and regulation 16(1)(a) of the [1998] Regulations subject to the conditions [below].
…
[19]Regulation 20 of the 1998 Regulations is set out at [54] above.
1GENERAL CONDITION[S]
…
1.2This exemption will be reviewed in 3 years from the date of issue.
1.3Category C soils … may be accepted for reuse in the construction of the firewall in the areas 1, 2, 3 and 4 as delineated in the attached ‘Plan of Premises’ being part of Maddingley Brown Coal Pty Ltd, Bacchus Marsh.
…
1.6Prescribed industrial waste accepted at the premises must be transported in accordance with the [1998 Regulations] or as amended.
1.7Maddingley Brown Coal Pty Ltd must apply the prescribed industrial waste landfill levy in accordance to the requirements of the [EP] Act for 5 of every 8 tonnes of Category C soils reused in areas 1, 2, 3 and 4.
2OPERATING CONDITIONS
…
2.4Maddingley Brown Coal must sample the incoming waste at a rate of at least one sample per 500m³, or one sample per batch where total volume is less than 500m³. The samples must then be analysed for total and leachable concentrations to ensure compliance with the Category C classification.

The parties conducted this proceeding on the basis that the 2008 Exemption was valid under reg 16 of the 1998 Regulations when it was made on 19 March 2008 and that, after 1 July 2009, it continued to have effect as a Deemed SBR authorisation under reg 48(c) of the 2009 Regulations. It was not part of the plaintiff’s case that the status of the 2008 Exemption as a Deemed SBR authorisation meant that all Cat C soil used in the Firewall after 1 July 2009 was ‘exempt material’ and therefore not ‘prescribed industrial waste’, with the consequence that no part of the Levy was payable. Both parties proceeded on the basis that, after the 2008 Exemption became a Deemed SBR authorisation, all its clauses had continuing effect according to their terms, including the obligation in cl 1.7 requiring payment of the Discounted Levy.

The approach that the parties adopted meant that they did not address the relationship between cl 1.7 of the 2008 Exemption and s 50S of the EP Act. That section provides that the levy specified in sch E must be paid for each tonne of prescribed industrial waste that is deposited on to land at a scheduled premises. On the other hand, cl 1.7 of the 2008 Exemption provides that the plaintiff must ‘apply the prescribed industrial waste landfill levy in accordance to the requirements of the [EP] Act for 5 of every 8 tonnes of Category C soils reused in [the Firewall].’ One possible way in which cl 1.7 could be reconciled with s 50S is to construe cl 1.7 as treating only five of every eight tonnes of Cat C soil used in the Firewall as prescribed industrial waste. However, I do not need to form a final view on this matter. This is because, given the manner in which the parties conducted the proceeding, the validity of cl 1.7 or any other term of the 2008 Exemption is not an issue for determination in this proceeding.

It is apparent from the terms of the 2008 Exemption that it did not comply with the requirement in reg 20(1) of the 1998 Regulations that it ‘specify the period for which the exemption applies’. Consistent with what I have already said at [63] to [64] above, the parties have conducted this proceeding on the basis that this non-compliance did not invalidate the 2008 Exemption.

On 30 July 2008, in response to an enquiry from the plaintiff, the EPA informed the plaintiff in writing that the review required by cl 1.2 of the 2008 Exemption ‘does not limit the life of [the 2008] Exemption to 3 years but will ensure amongst other things that the exemption’s conditions are being complied with.’

On 25 August 2009 the EPA wrote to the plaintiff to confirm that the 2008 Exemption continued to have effect under the 2009 Regulations as an SBR authorisation for the purposes of pt 5 of those regulations. It is common ground between the parties that this outcome resulted from reg 48(c) of the 2009 Regulations.

The Amendment to the 2008 Exemption that was made on 11 March 2011 relevantly provided:

NOTICE OF AMENDMENT OF [SBR] NOTIFICATION
…
NOW TAKE NOTICE that the [EPA] pursuant to regulation 44[20] of the [2009] Regulations HEREBY AMENDS the exemption issued on 19 March 2008 … as shown [below].
…
ADDITIONAL CONDITION
1.8 This exemption will expire on the 30^th June 2011.
[20]Regulation 44 of the 2009 Regulations is set out at [59] above.

Factual issue: Procedure used by EPA for Amendment to the 2008 Exemption

On 3 December 2010, the EPA wrote to the plaintiff to advise that it would conduct the 2008 Exemption Review as required by cl 1.2 of the 2008 Exemption. The EPA’s letter stated that, although there was no legislative requirement to advertise the review, it would do so ‘due to interest from third parties.’ The letter invited the plaintiff to submit its comments by 21 January 2011 and stated that the plaintiff could also meet with the EPA to discuss the review. On the same day, the EPA wrote in similar terms to a number of organisations with an interest in the waste industry.

Between 24 December 2010 and 21 January 2011, the EPA received written submissions from a number of third parties and from the plaintiff. According to a summary of the submissions that the EPA published on its website on 25 February 2011, the EPA received 12 submissions, five of which supported the continuation of the 2008 Exemption in some form and seven of which opposed it. A copy of the summary was provided to the plaintiff on 25 February 2011 and to the submitters on 28 February 2011.

The plaintiff made a seven page submission dated 21 January 2011 (‘Plaintiff’s Review Submission’) in which it:

(a) stated that it ‘appreciates the requirement for a public review and consultation regarding the renewal’ of the 2008 Exemption;

(b) submitted that the EPA should renew the 2008 Exemption for a further period of three years;

(c) stated that its use of Cat C soil in the Firewall was ‘the highest possible resource recovery option under the waste[s] hierarchy (other than avoidance, which [was] out of [its] control)’ and enabled the Government ‘to achieve its policy objective of diverting Prescribed Industrial Waste from Landfill’;

(d) set out the environmental benefits of using Cat C soil in the Firewall, including: providing a thermal barrier between the coal face and the landfill; providing a more desirable use than landfill disposal; and reducing the use of clean virgin clay and thus preserving the clay for higher value uses;

(e) submitted that no Levy should be payable because the continuing operation of the 2008 Exemption as an SBR rendered the Cat C soil used in the Firewall exempt material;[21] and

(f) reserved the right to treat its use of Cat C soil in the Firewall as a DBR.

[21]See [30] above.

The Application for SBR that the plaintiff delivered to the EPA on 7 January 2011[22] was seven pages in length and was very similar to the Plaintiff’s Review Submission. It was accompanied by detailed technical supporting documents. For the purposes of the 2009 Regulations, the Application for SBR was a notification of SBR seeking the EPA’s approval under reg 41. Regulation 41(2) required the EPA to decide whether to grant the Application for SBR within 28 days of the EPA’s confirmation that it had received the application. On 8 February 2011, the plaintiff agreed in writing to extend the deadline to 1 March 2011. That agreement was made under s 67A of the EP Act which effectively defers the statutory consequences of the expiration of a time limit to the expiration of the extended time limit.
[22]See [44] above.

On 15 January 2011, the EPA wrote to the plaintiff stating that, as

(a) the EPA’s decision could conceivably involve an amendment to the 2008 Exemption; and

(b) if so, the seven day period for notice and invitation to comment in reg 46 of the 2009 Regulations would bring the deadline for the EPA to make a decision to 21 February 2011,

the plaintiff should provide any further information and submissions on or before 18 February 2011.

On 18 February 2011, the plaintiff provided two letters to the EPA. The first letter was a six page response to issues that the EPA had raised about the Application for SBR. The second letter was a five page response to the summary of submissions to which reference was made at [70] above. On the same day, the plaintiff emailed to the EPA a letter dated 17 February 2011 prepared by Environmental Resources Management Australia Pty Ltd. That letter stated that, at that time, the only available options for the Cat C soil used in the Firewall were disposal or reuse.

The EPA decided to consider the Application for SBR as part of the 2008 Exemption Review. It also decided to conduct a s 20B conference[23] to assist it in the decision-making process regarding the 2008 Exemption Review and the Application for SBR. The EPA advised the plaintiff of these decisions on 25 February 2011.
[23]See [23] above.

On 25 February 2011, the plaintiff and the EPA entered into a further agreement under s 67A of the EP Act to extend the deadline for the making of a decision on the Application for SBR until 15 April 2011. Paragraph 6 of the agreement stated that ‘EPA has agreed that the [2008 Exemption] will continue pending its decision on whether to [grant the Application for SBR].’ The agreement dated 8 February 2011 did not contain a similar statement. Neither agreement gave any indication that an expiry date would be inserted in the 2008 Exemption prior to the EPA’s decision on whether to grant the Application for SBR.

In a letter to the plaintiff dated 25 February 2011, the EPA stated that the 2008 Exemption ‘continues to operate — meaning that the extension [of time to 15 April 2011] does not involve any prejudice to [the plaintiff].’ The letter also stated that ‘[a]t the completion of the process, EPA will determine … whether to continue, amend or revoke the [2008 Exemption] or authorise a new [SBR] …’

On 28 February 2011, the EPA sent a letter to each of the persons that had made submissions for the 2008 Exemption Review and advised them that it would ‘be convening a s 20B conference of all submitters within the next few weeks.’ The letter stated: that the submissions that the EPA had received had raised ‘a number of complex issues from various perspectives in relation to the use of Category C soil in [the plaintiff’s] firewall’; that the EPA wished ‘to hear further from all submitters’; that the local council and the Department of Primary Industries would also be invited to attend the s 20B conference; and that the s 20B conference would be conducted by an independent chairman. The s 20B conference was scheduled for 16 March 2011.

Without giving notice to the plaintiff that it proposed to amend the 2008 Exemption prior to the s 20B conference, on 11 March 2011, the EPA decided to make the Amendment to the 2008 Exemption. The EPA’s decision was based on recommendations in an internal briefing note dated 10 March 2011 (’10 March 2011 Briefing Note’) which relevantly stated:

Executive Summary:

…

[Condition 1.2] indicated that the exemption would operate until 19 March 2011, but provided no certainty that it would continue after that date.

…

A decision following the review called for by condition 1.2 will not be made until 15 April 2011, i.e., after 19 March 2011, so a short extension of the period of operation is required.

…

Reason for Urgency:

As the review process has been extended, involving a s 20B conference, a decision following the review will not be made by 19 March 2011. Hence a short extension of [the] operation period is required and must be granted before 19 March 2011.

Recommendation:

That the [EPA] … amend the secondary beneficial reuse authorisation held by [the plaintiff] to clarify that its period of operation extends until 30 June 2011 …

Additional Background:

…

Conceptually, three levy exemption rate options are available for EPA’s SBR decision:

(1) revoke (and not replace) the existing SBR, thus ending the exemption entirely;

(2) authorise an SBR with no levy exemption; or

(3) authorise an SBR that continues the three-eighths exemption.

Given those options, the expiry date recommended is 30 June 2011, for the following reasons.

· If EPA’s decision is option (1) or (2), the further 3.5 months’ duration provides natural justice to [the plaintiff], allowing it (and relevant potential customers) to adjust to the total loss of exemption on 30 June.

· If the decision is option (3), the extension would provide the necessary bridging period between the existing SBR and the commencement date of the new SBR.

…

Relationship to Legislation and EPA policy

Environment Protection (Industrial Waste Resource) Regulations 2009. Regulation 43(1) states that the [EPA] must specify the period for which the secondary beneficial reuse notification applies.

A copy of the Amendment to the 2008 Exemption was sent to the plaintiff’s solicitor on 11 March 2011 under cover of an email stating: ‘Attached as foreshadowed is an amendment to your client’s current SBR.’

The s 20B conference took place as scheduled on 16 March 2011 and was chaired by Mr Timothy Offor. Nineteen people attended, including the plaintiff’s managing director, general manager and solicitor. The EPA provided to the attendees a set of materials about the 2008 Exemption and relevant environmental and regulatory issues. Mr Offor prepared a report dated 6 April 2011 (‘Report on the s 20B conference’) in which he stated that the plaintiff responded to questions and issues raised in submissions and also to additional questions, concerns and issues raised. The Report on the s 20B conference summarised the issues raised in the submissions and at the conference and set out the following relevant conclusions:

The key points of difference hinged around interpretation of some key issues relating to [the] SBR, in particular:

§ Whether the [plaintiff’s] use of the Category C [soil] involves ‘treatment’ or ‘processing’ as defined under the regulations;

§ Whether the [plaintiff’s] use of Category C [soil] does in fact constitute a SBR; and

§ Whether EPA Victoria has the ability to apply a fractional landfill levy.

…

There appear to be strong economic arguments both for the continuing SBR (in particular for [the plaintiff] and its customers) and against continuing the SBR (for the wider land fill and waste treatment industry). Whatever EPA’s decision, there will be unhappy parties. However, if the full exemption from the landfill levy as sought by [the plaintiff] is issued, the negative factors currently claimed by other operators and described as ‘market distortions’ could be further exacerbated. Consequently, consideration of these market issues is recommended prior to making a decision, if EPA Victoria is of a mind to continue the SBR.

As stated at [46] above, on 8 April 2011, the EPA made four separate decisions, namely, a decision to refuse the Application for SBR, which is not the subject of this proceeding; a decision to amend the EPA Licence, which is also not the subject of this proceeding; the Confirmation of Amendment to the 2008 Exemption, which is discussed at [130] to [132] below; and a decision to publish a draft classification, which is discussed at [139] to [177] below.

The decisions referred to at [82] above were based on recommendations in an internal briefing note dated 7 April 2011 (‘7 April 2011 Briefing Note’). That briefing note set out reasons for its recommendations. The reasons for the recommendations to amend the EPA Licence and to publish a draft classification were set out in separate parts of the 7 April 2011 Briefing Note. Detailed reasons were also provided for the recommendation to refuse the Application for SBR. However, separate reasons were not provided for the recommendation to allow the Amendment to the 2008 Exemption to operate according to its terms and it is not clear which, if any, of the reasons for the recommendation to refuse the Application for SBR were intended to apply also to the recommendation to allow the Amendment to the 2008 Exemption to operate according to its terms. For present purposes, it is worth noting the following statements in the 7 April 2011 Briefing Note:

Executive Summary:
…
7)It has become apparent in recent years that the standards and approaches for the treatment and reuse of waste have changed, thus providing useful guidance to EPA to determine evolving standards and what constitutes best practice.
8)The assessment and review process concluded that:
(a)[the plaintiff’s] use of Cat C soil in the construction of the firewall:
i)is not now an SBR as defined by the [2009] Regulations, essentially because the use is not a beneficial reuse in accordance with current standards; but
ii)is a disposal operation, equivalent to a landfilling operation; …

Recommendation:
…
10)That the [EPA] allow the existing SBR to continue in effect until (but not beyond) its expiry date of 30 June 2011, so as to allow [the plaintiff] a reasonable time to update its business practices before the transition of the firewall operation from the SBR to the licensing regime.
…
Rationale for Recommendations
…
30)That in the context of current standards and best practice, authorising or continuing an SBR for the use of Cat C soil in the [plaintiff’s] firewall would be contrary to:
a)the [2009 Regulations], especially:
i)the definition of SBR;
ii)the objectives of the [2009] Regulations; …

b)the National Environment Protection (Assessment Of Site Contamination) Measure 1999 (‘the NEPM’) and State Environment Protection Policy (Prevention and Management of Contamination of Land), made on 4 June 2002 (‘the Contaminated Land SEPP’); and
c)Principles 1F and 1I of the EP Act.

…
Reuse or disposal
…
45)In the current context, the [plaintiff’s] firewall, because of its design, construction and operation as a landfill cell, is more accurately described as containment or disposal. Relevant characteristics are as follows:
a)the firewall was designed as a best practice landfill cell to meet BPEM[24] requirements at that time;
[24]Best Practice Environment Management.
b)Cat C soil delivered to the landfill is received as a waste through the landfill gate, including disposal fee (payment of gate fee and (partial) levy); and
c)the soil received by [the plaintiff] contains particular contaminants above specified thresholds used for determining Cat C soil, and those contaminants are unaltered by the process of constructing the firewall — they are not ‘reused’, removed or destroyed; they are only contained.

…
52)On balance, in the current day context, the firewall operation should be considered a disposal not a reuse activity for the purposes of the wastes hierarchy. Accordingly, the activity cannot be a beneficial reuse as the EPA currently understands that term.
The [NEPM] and SEPP — preferred management options for contaminated soil
...
56)The NEPM describes a clear preference for the treatment of soil to remove or destroy contaminants to enable reuse. Both the NEPM and the Contaminated Land SEPP list off-site containment as the least preferable option for the management of contaminated soil. The Contaminated Land SEPP and NEPM are important policies for guiding EPA’s decisions.
57)[The plaintiff’s] SBR does not achieve the higher order reuse preferences described by the Contaminated Land SEPP and NEPM. The treatment of soil by [the plaintiff] does not remove or destroy contaminants; the contaminants are only contained. Therefore, the firewall is better described as a disposal operation, not a reuse.

The EPA informed the plaintiff of the Confirmation of Amendment to the 2008 Exemption by letter dated 8 April 2011. That letter relevantly stated:

As you are aware,
…
· the decision-making context has substantially changed since the decision to issue what is now the existing SBR was made 3 years ago (and changed even more so by comparison with the context in the years before that) — for example, the [2009] Regulations have come into effect, landfill levy rates have been significantly increased, new waste treatment technologies have been developed, and best practice has continued to evolve.
A. Decisions in relation to the SBR review and notification
The [EPA] has decided as follows:
…
3)[The plaintiff’s] existing SBR is to continue in effect until (but not beyond) its expiry date of 30 June 2011, so as to allow [the plaintiff] a reasonable time to update its business practices before the transition of the firewall operation from the SBR to the licensing regime.
…
B. Rationale for the decisions
...
3)[The plaintiff’s] existing SBR is to continue in effect until (but not beyond) its expiry date of 30 June 2011, so as to allow [the plaintiff] a reasonable time to update its business practices before the transition of the firewall operation from the SBR to the licensing regime.
This decision is expressed in terms that make it self-explanatory.

Relevant legal principles

The plaintiff relied on two cases in support of its argument that the 2008 Exemption was not amended, but revoked.[25] The first case was Pearce v City of Coburg,[26] in which the Court was required to decide whether the City of Coburg was empowered to terminate a permit it had granted by rescinding the original motion to grant the permit instead of revoking the permit pursuant to s 24 of the Town and Country Planning Act 1961. Under that section, in limited circumstances, a council could revoke a permit after making a recommendation to the relevant Minister and receiving the Minister’s approval. Starke J held that there were clear indications in s 24 that the legislature intended to lay down an ‘exclusive code for the revocation of permits by a council.’[27] One of these indications was the inclusion of a right to compensation in s 24, which could otherwise be bypassed by a council. A second indication was that if a council terminated a permit by any other means, it would be giving itself a power which s 24 only provided if authorised by the Minister.[28] His Honour held that the rescission resolution was void.
[25]See [92] below.
[26][1973] VR 583 (‘Pearce’).
[27]Pearce [1973] VR 583, 587.
[28]Pearce [1973] VR 583, 588.

The second case was McEachern v Minister for Energy and Resources, and Ports,[29] in which the plaintiff challenged the validity of four orders made by the Minister for Energy and Resources, and Ports under the Fisheries Act 1995. That Act permitted the Minister to make, revoke and amend orders in respect of fisheries. The power of revocation was unrestricted, but the power of amendment was subject to additional restrictions in some circumstances. One of the bases for challenge was that the orders were invalid on their terms, as they purported to be fresh orders but effectively involved an amendment to a set of corresponding orders made in respect of the same fisheries. The first set of orders was revoked on the same day as the impugned orders were made. The Minister had not complied with the procedure for amending an existing order. It was argued that there was no power in the Act to revoke an order and then make a new order in respect of the same fishery, and that the amendment procedure ought to have been followed.
[29][2001] VSC 506 (20 December 2001) (‘McEachern’).

Pagone J found that the statutory scheme allowed the Minister to make orders which were designed to have a substantial measure of permanency and not be capable of easy amendment because they dealt with valuable property rights.[30] The Minister was not entitled to use the revocation power together with the power to make an order, to bring about an amendment.[31] Pagone J considered the substance of the two sets of orders, finding that they bore substantial resemblance to each other and their variations could easily be detected. The timing of the revocation and issue of new orders, and the correspondence leading up to those events, were consistent with a finding that the Minister’s actions amounted to an amendment.[32] The impugned orders were held to be invalid.
[30]McEachern [2001] VSC 506 (20 December 2001) [17], [20].
[31]McEachern [2001] VSC 506 (20 December 2001) [19].
[32]McEachern [2001] VSC 506 (20 December 2001) [21].

Project Blue Sky Inc v Australian Broadcasting Authority[33] is relevant to the plaintiff’s submission that the Amendment to the 2008 Exemption was invalid because the EPA failed to comply with the mandatory procedures in reg 46 of the 2009 Regulations.[34] In that case, the High Court held that an act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect.[35] Non-compliance will not invalidate an exercise of power unless a legislative purpose can be discerned to invalidate any act that fails to comply with the condition. The existence of such a purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition.[36] This approach was said to be preferable to the traditional approach of the courts, which was to draw a distinction between acts done in breach of an essential preliminary to the exercise of a statutory power or authority (a mandatory requirement) and acts done in breach of a procedural condition for the exercise of a statutory power or authority (a directory requirement).[37] The better test for determining the issue of validity is to ask ‘whether it was a purpose of the legislation that an act done in breach of the provision should be invalid.’[38]
[33](1998) 194 CLR 355 (‘Project Blue Sky’).
[34]See [94] below.
[35]Project Blue Sky (1998) 194 CLR 355, 388–9 [91].
[36]Project Blue Sky (1998) 194 CLR 355, 388–9 [91].
[37]Project Blue Sky (1998) 194 CLR 355, 389–90 [92]–[93].
[38]Project Blue Sky (1998) 194 CLR 355, 390 [93].

Minister for Aboriginal Affairs v Peko-Wallsend Ltd[39] is relevant to the plaintiff’s submission that the Amendment to the 2008 Exemption was vitiated by the taking into account of irrelevant considerations.[40] In that case, the High Court set out the principles for establishing whether a decision-maker has taken into account irrelevant considerations. The factors which a decision-maker is bound to consider in making a decision are determined by construction of the statute conferring power to make that decision. If those factors are not expressly stated, they must be determined by implication from the subject-matter, scope and purpose of the statute. If the statute confers a discretion which is in its terms unconfined, the factors that may be taken into account in the exercise of that discretion are also unconfined, except to the extent that they are impliedly limited by the subject-matter, scope or purpose of the statute.[41]
[39](1986) 162 CLR 24 (‘Peko-Wallsend’).
[40]See [95] below.
[41]Peko-Wallsend (1986) 162 CLR 24, 39–43.

To successfully impugn the EPA’s decision on the ground that it took into account one or more irrelevant considerations, the plaintiff must demonstrate three things. First, that the allegedly irrelevant considerations were actually taken into account. Secondly, that the taking into account of the considerations was prohibited by the relevant statutory provisions. Thirdly, that the relevant statutory provisions must have the effect that taking the considerations into account will invalidate the decision.[42] An irrelevant consideration may be so insignificant that taking it into account will not invalidate a decision.[43]
[42]Love v Victoria [2009] VSC 215 (23 June 2009) [191] (‘Love’).
[43]Love [2009] VSC 215 (23 June 2009) [191]; Peko-Wallsend (1986) 162 CLR 24, 40.

The plaintiff also submitted that the Amendment to the 2008 Exemption was vitiated by an improper purpose.[44] Acting with an improper purpose involves exercising a power for a purpose which is foreign to the purpose for which that power was conferred.[45] In order to make out an allegation of improper purpose, evidence that the decision-maker actually had that improper purpose for making the impugned decision is required.[46] However, the decision-maker need not intend to act with an improper purpose.[47] An improper purpose will not be lightly inferred, and only where the evidence cannot be reconciled with the proper exercise of the power.[48] As with irrelevant considerations, it is not necessary that an improper purpose be the sole purpose. However, if an impugned decision is made for multiple purposes, the presence of an improper purpose will not invalidate the decision unless the decision would not have been made but for the improper purpose, in other words that the improper purpose was a ‘substantial’ purpose.[49]
[44]See [97] below.
[45]See, eg, R v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170, 233 (‘Toohey’).
[46]See National Tertiary Education Industry Union v Commonwealth (2002) 117 FCR 114, 145 [120].
[47]Toohey (1981) 151 CLR 170, 233.
[48]Love [2009] VSC 215 (23 June 2009) [182].
[49]Thompson v Council of the Municipality of Randwick (1950) 81 CLR 87, 106; Samrein Pty Ltd v Metropolitan Water Sewerage and Drainage Board (1982) 41 ALR 467, 468–9; Warringah Shire Council v Pittwater Provisional Council (1992) 26 NSWLR 491, 507–11; East Melbourne Group Inc v Minister for Planning (2008) 23 VR 605, 683 [337]; Hunter v Minister for Planning [2012] WASC 247 (5 July 2012) [24]–[27].

Parties’ submissions

The plaintiff submitted that although the Amendment to the 2008 Exemption purported to be an amendment, in substance it was a revocation. As a precondition to the exercise of the power to revoke the 2008 Exemption, the EPA was required to be satisfied of one of the matters listed in regs 45(1)(a)–(e) of the 2009 Regulations. In the plaintiff’s submission, the evidence supports a finding that the EPA was not satisfied — and could not be satisfied — of any of those matters and therefore no power to revoke the 2008 Exemption was enlivened.

The plaintiff submitted that even if the Amendment to the 2008 Exemption was not a revocation but an amendment, the only source of power of amendment that was available was reg 44 of the 2009 Regulations. According to the plaintiff, reg 20 of the 1998 Regulations was no longer in force and reg 43 only applied to an actual SBR authorisation and did not extend to a Deemed SBR authorisation. The plaintiff contended that the EPA was not entitled to exercise the amendment power in reg 44, since it was a precondition to the exercise of that power that the amendment was necessary or desirable in the light of changes to the circumstances that existed at the time it authorised an SBR (that is, at the time the 2008 Exemption was granted). The EPA’s opinion as to whether such a change in circumstances had occurred was said to be irrelevant. According to the plaintiff, there had been no relevant change to those circumstances, and in particular, no change to the manner in which the plaintiff used Cat C soil in the Firewall.

The plaintiff also submitted that irrespective of whether the Amendment to the 2008 Exemption constituted a revocation or an amendment, the EPA did not comply with the procedures contained in reg 46 of the 2009 Regulations for amendment or revocation. This is because reg 46 contains preliminary steps to the exercise of the power to revoke or amend a Deemed SBR authorisation such that non-compliance rendered any exercise of power invalid. Accordingly, so it was said, the 2008 Exemption continues to apply — in accordance with its terms as at 11 March 2011, including the entitlement to pay the Discounted Levy — as a Deemed SBR authorisation. The plaintiff contended that the 2008 Exemption is unaffected by the 2011 Classification.

The plaintiff also contended that the EPA had regard to the following irrelevant considerations in making the Amendment to the 2008 Exemption:

(a) the Victorian Government’s decision to increase landfill levies;

(b) the effect that the Amendment to the 2008 Exemption might have on landfill levy revenue generally;

(c) the way in which the EPA could apply any additional funds collected as a consequence of the amendment;

(d) whether the contaminants in the Cat C soil must be valuable or beneficial to enable a reuse. This consideration was said to lead the EPA to misdirect itself as to the proper application of the 2009 Regulations because the regulations deal with waste (such as contaminated soil) rather than the contaminants in the waste;

(e) the ‘flow of money’ — from a waste producer to the plaintiff for receipt of Cat C soil — as a factor supporting the conclusion that the use of contaminated soil in the Firewall is ‘disposal’ rather than ‘re-use’; and

(f) the fact that the Firewall required engineering controls to ensure environmental protection.

The plaintiff further submitted that the EPA misdirected itself as to the proper application or interpretation of the legislative framework, particularly by ‘elevating’ the ‘disposal’ of waste and the ‘treatment’ of waste above the ‘re-use’ of waste. The EPA’s application of the National Environment Protection (Assessment of Site Contamination) Measure 1999 (‘1999 NEPM’) was said to lead it to the incorrect conclusion that ‘on-site’ treatment of contaminated soil is to be preferred to ‘off-site’ treatment when neither the 2009 Regulations nor the wastes hierarchy distinguish between on-site and off-site treatment.

The plaintiff also submitted that the Amendment to the 2008 Exemption was made for an improper purpose,[50] namely to seek to ensure that the plaintiff paid the Full Levy rather than the Discounted Levy, thereby increasing the EPA’s landfill levy revenue. The plaintiff also contended that the Amendment to the 2008 Exemption was unreasonable in the Wednesbury sense.[51]
[50]The plaintiff preferred the phrase ‘extraneous purpose’ to the traditional phrase ‘improper purpose’. For convenience, I will use the traditional formulation.
[51]Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 (‘Wednesbury’).

The EPA submitted that the Amendment to the 2008 Exemption constituted an amendment rather than a revocation, and that it was authorised by reg 44 of the 2009 Regulations read together with reg 43(2)(f).

According to the EPA, the prevailing circumstances rebut the plaintiff’s assertion that the 2008 Exemption was intended to be revoked, including that the EPA had not yet made a decision in respect of the Application for SBR and whether the 2008 Exemption would continue beyond 30 June 2011.

The EPA contended that the procedure in reg 46 of the 2009 Regulations was followed in substance through the s 20B conference mechanism that the EPA adopted for the 2008 Exemption Review, and that this mechanism provided the plaintiff an equivalent process and the same protections as reg 46.

The EPA denied that the Amendment to the 2008 Exemption involved the taking into account of irrelevant considerations, as it was issued for the following reasons:

(a) to allow sufficient time to convene the s 20B conference, and for the EPA to consider the discussions and findings of that conference;

(b) to remove any uncertainty about whether the 2008 Exemption remained in force after 19 March 2011;

(c) to allow for the 2008 Exemption to continue to operate while the EPA completed the 2008 Exemption Review; and

(d) to coincide with the end of a quarterly levy calculation period specified under the EP Act.

The EPA also emphasised that the plaintiff’s allegation that the Amendment to the 2008 Exemption was made for the improper purpose of increasing EPA revenue ought to have been put to the EPA’s witnesses and was not. Moneys raised by the EPA from the Levy are paid into a fund entitled ‘Environment Protection Fund’, and must be used for the purposes of environment protection.

The EPA submitted that it did not misdirect itself with regard to the application of the wastes hierarchy in s 1I of the EP Act, and maintained that the use of Cat C soil in the Firewall is not a ‘re-use’ but rather a ‘disposal’.

Decision on the validity of the Amendment to the 2008 Exemption
Amendment to the 2008 Exemption was an unauthorised amendment

In my opinion, viewed objectively, the Amendment to the 2008 Exemption constitutes an amendment.

The title of the Amendment to the 2008 Exemption states that it is an amendment under reg 44 of the 2009 Regulations. In form, and in substance, it is an amendment because it comprises the insertion of an additional cl 1.8 in the 2008 Exemption rather than the abrogation of the instrument as a whole.

It is true that the effect of the Amendment to the 2008 Exemption was to cause the 2008 Exemption to expire on 30 June 2011. However, if the Amendment to the 2008 Exemption was intended to be a revocation, there would have been no need to make the expiration of the exemption prospective. The revocation could have been expressed to operate immediately. The fact that the expiration date that was inserted in the 2008 Exemption was nearly four months after the date that the Amendment to the 2008 Exemption was made and the fact that the word ‘expire’ was used rather than the word ‘revoke’ support the conclusion that the Amendment to the 2008 Exemption constitutes an amendment.

[T]he question is to be approached with reference to the actual conduct of the seller in setting prices based upon its actual knowledge at the relevant time. That knowledge includes the belief that the component of sales tax which later proves to have been an overpayment is a real cost of doing business. Accordingly, it is unsurprising that a seller’s intention, whether subjective or objectively ascertained, will generally be to pass the burden of the impost on to the purchaser. Since the onus of proof lies upon the taxpayer, it will be for it to establish that a price which is set so as to ensure that it recovers its costs does not include the economic burden of the sales tax.[91]

[90]Avon Products (2006) 230 CLR 356, 362–3 [9].

[91]Avon Products (2006) 230 CLR 356, 363 [11] (emphasis in original).

The Court rejected the appellant’s contention that a tax has only been passed on if the price at which the goods are sold is increased by the amount of the tax. The Court also rejected the contention that, since the appellant’s regular prices remained constant and were fixed by reference to market benchmarks without reference to cost, it did not pass on the sales tax. The Court did not accept this approach because it assumes that if a cost is being passed on, removing it from the entire system will have an immediate correlative effect on price and profit.[92] The Court concluded that, as the appellant had set its regular and discount prices at a level to ensure that they exceeded costs, including sales tax, it had failed to discharge its onus of establishing that it had borne the burden of the overpaid tax itself and had not passed it on to its customers.[93]
[92]Avon Products (2006) 230 CLR 356, 366 [23]–[24], [26].
[93]Avon Products (2006) 230 CLR 356, 365–6 [21]–[22].

Avon Products is to be contrasted with the earlier decision of the Victorian Court of Appeal in Drake Personnel Ltd v Commissioner of State Revenue (Vic).[94] In that case, the Court was required to consider whether the Drake group of companies (‘Drake’) was entitled to refunds of payroll tax. Drake maintained a register of temporary workers, and supplied its clients with the services of those workers. Drake charged its clients a fee for the workers’ services and paid the workers a portion of that fee. The Commissioner of State Revenue had levied payroll tax on Drake in respect of payments it made to the temporary workers, on the basis that those payments were ‘wages’ within the meaning of the Pay-roll Tax Act 1971.
[94](2000) 2 VR 635 (‘Drake’).

Drake contended that the payments were not properly characterised as ‘wages’. Section 22 of the Taxation Administration Act 1997 was in similar terms to s 20B of the LA Act, and prohibited the refund of payroll tax unless the Commissioner of State Revenue was satisfied that the employer had not charged to or recovered, and would not charge or recover, the tax from another person. The word ‘charge’ was defined in that Act to include ‘pass on’.

There was evidence at trial to the effect that Drake included in its fees to clients a ‘generalised margin to cover all on-costs’ and when there were occasional increases in the imposts payable by Drake, those increases were absorbed in what otherwise would have been the profit margin. This generalised margin included payment of payroll tax, together with profit, a WorkCover levy, a superannuation benefit and other costs. As such, payroll tax was but one consideration in calculating the margin.[95]
[95]Drake (2000) 2 VR 635, 662–3 [70]–[71].

The Court of Appeal found that the payments made by Drake were taxable wages on which payroll tax was due. Phillips JA, with whom Buchanan JA agreed, stated that Drake would presumably not have known until the end of each year whether its generalised mark-up had proved sufficient to yield a profit that made the carrying on of business worthwhile. His Honour said:

The impact of payroll tax on what otherwise would have been profit would then be one consideration; but that does not seem to me to mean, even if Drake’s only source of income were the amounts paid by the clients, that the clients were ‘charged’ the payroll tax within the meaning of … s 22, or that the amount of payroll tax was ‘recovered’ from them or ‘passed on’ to them.[96]

[96]Drake (2000) 2 VR 635, 663 [71].

Phillips JA commented that it was difficult to see why Drake should be caught by s 22 of the Taxation Administration Act 1997 only because it had regard to imposts when calculating its mark-up, unless the calculation of the charge to the client was more specific than the evidence suggested.[97] Ormiston JA agreed with Phillips JA’s conclusion on this point, but wished to strike a note of caution in relation to the connotation, in other circumstances, of the expression ‘pass on’ contained in s 22 of the Taxation Administration Act 1997.[98]
[97]Drake (2000) 2 VR 635, 663 [72].
[98]Drake (2000) 2 VR 635, 639 [6].

In the present case, the plaintiff relied on the comments of Phillips JA referred to at [327] above and contended that what is required in order to satisfy s 20B of the LA Act is that the calculation of a particular charge be ‘more specifically related’ to the impost in question than was evident in Drake.

In my opinion, the plaintiff’s reliance on Drake is misplaced. The evidence in Drake was insufficient to establish a nexus between the tax and the price charged to customers. The case, however, does not stand for the proposition that there must be an exact correlation between the tax and the cost passed on to customers. In any event, such a proposition was rejected by the High Court in Avon Products.

There are good reasons why an exact correlation is not necessary. If it were necessary, an unscrupulous taxpayer who sought to profiteer from a tax by passing on to customers an amount that exceeded the tax could not be held to have made a windfall gain if the taxpayer were to recover the amount of the tax. That result would clearly be absurd and could not have been intended by the Court of Appeal in Drake.

In Avon Products, the High Court adopted a more generalised approach to the relationship between the relevant tax and price than was adopted by the Victorian Court of Appeal in Drake. The facts in the present case more closely resemble those in Avon Products than Drake. In my opinion, the principles in Avon Products inexorably mean that the plaintiff has failed to discharge its onus of satisfying me that it has not charged to, or recovered from, its customers the amount of the Discounted Levy. The undisputed evidence was that the plaintiff’s gate rate indirectly incorporated the Full Levy, which, as I have explained, must mean that the gate rate involved recovery from the plaintiff’s customers of the Discounted Levy. Implicit in Mr Calleja’s evidence is that the plaintiff set its gate rate to cover its costs and make a profit. In any event, it is clear that the plaintiff did not bear the economic burden of the Discounted Levy. Rather, it passed that burden on to its customers by recovering from them the Full Levy.

I have been able to arrive at the above conclusions based on the plaintiff’s direct evidence about how it fixed its gate rate and have not been assisted by the opinions of the parties’ experts, Dr Pickin and Mr Houston. Those opinions were no more than the experts’ articulation in economists’ language of their understanding of the underlying facts.

In any event, both experts agreed that the plaintiff’s gate rate indirectly passed on to customers the Full Levy. As I have explained above, because the greater must include the lesser, the gate rate necessarily involved recovering the Discounted Levy from customers.

In the light of the express terms of s 20B(2)(a) of the LA Act, the fact the plaintiff’s invoices do not mention the Levy is not material.

It follows that the plaintiff has failed to discharge the onus of satisfying me that it has not charged to, or recovered from, any person an amount in respect of the money paid to the EPA for the Discounted Levy. Accordingly, I am not satisfied that the recovery of the amount of $3,198,821 would not result in a windfall gain to the plaintiff. This means that the plaintiff’s claim for that amount is barred by s 20B(1) of the LA Act.

Claim for the amount of $13,892,319 paid into the Designated Account
Emerton J’s order dated 28 November 2011 and correspondence preceding it

Emerton J’s order dated 28 November 2011 was made by consent ‘on the papers’. The order relevantly provides:

OTHER MATTERS:
(a)During the period 1 January to 30 June 2011 (‘the First Period’), the Plaintiff deposited Category C soil into the area known as ‘the firewall’ at the Plaintiff’s landfill at Bacchus Marsh (‘the firewall’).
(b)From 1 July 2011 (‘the Second Period’), the Plaintiff has continued and will continue to deposit Category C soil into the firewall.
(c)In respect of the First Period, the Defendant alleges that the Plaintiff must pay [the] landfill levy in respect of 5 out of 8 tonnes of Category C soil deposited into the firewall, at the prescribed industrial waste levy rate.
(d)In respect of the Second Period, the Defendant alleges that the Plaintiff must pay the landfill levy in respect of every tonne of Category C soil deposited into the firewall, at the prescribed industrial waste levy rate.
…

THE COURT ORDERS BY CONSENT THAT:
1.Within seven (7) days of the date of this Order, the Plaintiff will establish and maintain, until further order, an account with a Bank or financial institution (‘the Bank’) in the name of ‘MBC-EPA[99] Levy Account’ (‘the Designated Account’) for the express purpose of the Plaintiff depositing from time to time sums of money equivalent to the amounts of levy alleged by the Defendant to be payable in accordance with paragraphs A, B, C and D above and Part IX Division 3 of the [EP Act].
[99]‘MBC’ is an abbreviation for Maddingley Brown Coal.
2.The Plaintiff shall provide to the Defendant the monthly Bank statements in respect of the Designated Account within seven (7) days of receipt of such statements.
3.Until further order or without the prior written approval of the Defendant, the Plaintiff will not withdraw or otherwise conduct transactions on the Designated Account that reduce the balance of the Designated Account.
4.Except as provided for in Order 3 herein, the Plaintiff will have all powers necessary to establish and maintain the Designated Account.
5.This Order does not prevent the Bank at which the Designated Account is held from:
(a)exercising any right of set off or other rights that it may have in respect of the Designated Account prior to or after the date of this Order;
(b)enforcing or exercising any right or interest existing now or in the future in relation to the Designated Account;
(c)debiting the Designated Account with any interest, fees, costs and charges in accordance with the Bank’s terms and conditions.

…
8.For the avoidance of doubt, all of the Bank’s rights are preserved and remain at the Bank’s absolute discretion, subject to the terms and conditions set out in the Bank’s terms and conditions.
9.The Plaintiff will provide to the Defendant, within seven (7) days of the end of each month (or within such time as agreed in writing between the parties), commencing with the month of December 2011, details of the amount of Category C soil deposited into the firewall during the preceding month.
10.By 30 November 2011, the Plaintiff will provide to the Defendant, in relation to Category C soil deposited into the firewall, the Quarterly Calculation Data for:
(a)     the quarter 1 January to 31 March 2011;
(b)     the quarter 1 April to 30 June 2011;
(c)     the quarter 1 July to 30 September 2011.
11.Within seven (7) days of the end of each quarter commencing with the quarter beginning on 1 October 2011, the Plaintiff will provide the Quarterly Calculation Data to the Defendant in relation to Category C soil deposited into the firewall.
12.For the purpose of these Orders, ‘Quarterly Calculation Data’ means a written statement setting out the following information:
(a)details of the amount of Category C soil (in tonnes) that was deposited or estimated to be deposited into the firewall in that quarter;
…
(c)any other information the Defendant might reasonably require to enable it to determine the amount of landfill levy it is alleged the Plaintiff is liable for …

Emerton J’s order was preceded by correspondence between the parties which is summarised below.

On 23 August 2011, the EPA wrote to the plaintiff stating its position that there was a Levy amount of $760,068.95 outstanding for the period from 1 January 2011 until 31 March 2011, and that as a result, it was satisfied that it was entitled to suspend the EPA Licence pursuant to s 50XB(1) of the EP Act. On 31 August 2011 the EPA wrote to the plaintiff agreeing to a proposal that the plaintiff had made that the plaintiff commence a declaration proceeding. The EPA’s letter set out the two issues to be dealt with in the declaration proceeding, namely, whether the amount of $760,068.95 was payable in respect of the Levy, and whether the deposit of Cat C soil in the Firewall was a DBR or an SBR, and if so, whether it was subject to the Levy. The EPA’s letter also stated that the EPA retained a discretion to take ‘other action as appropriate’.

On 12 September 2011, the plaintiff agreed to initiate a declaration proceeding and proposed to amend its existing statement of claim to encompass the declarations sought by the EPA. On 15 September 2011, the EPA wrote to the plaintiff accepting the plaintiff’s proposal to initiate the declaration proceeding. The EPA’s letter stated that the plaintiff was ‘in non-compliance’ with the EP Act as a result of its continuing use of Cat C soil in the Firewall and non-payment of the outstanding Levy amount. However, the EPA stated that it would not take any licence suspension or injunction action while the proposed proceeding was on foot.

On 25 October 2011, the EPA stated that, given its position that the plaintiff was required to pay the Levy, it required a ‘formal financial arrangement’ in the context of the proceeding. This was intended to ensure that, should the Court find the plaintiff liable to pay the Levy, the amount payable would be ‘available’. It was proposed that the plaintiff establish a separate bank account into which all Levy amounts collected since 1 January 2011 would be paid, and provide monthly reports to the EPA on matters including the quantity of Cat C soil deposited in the Firewall, the amount of Levy collected and the amounts paid into the bank account. The EPA sought the plaintiff’s agreement to have these arrangements formalised in a consent order.

The plaintiff responded on 27 October 2011, stating that it agreed with the EPA’s proposal, but did not consider a consent order to be necessary. Eventually, however, the plaintiff agreed to the making of Emerton J’s order by consent on the papers.

In his affidavit in support of the consent order, the EPA’s solicitor, Mr Mark Payton, stated that the parties were seeking the order ‘for the purpose of ensuring that the money in dispute is kept secure in a designated account.’

Does s 20B apply to the claim for the money in the Designated Account?

The question of whether s 20B of the LA Act applies to the plaintiff’s claim for the money in the Designated Account depends on whether this proceeding, insofar as it concerns that claim, is a proceeding that falls within s 20B(3)(a). The components of that provision need to be considered in turn.

The plaintiff contended that the money was not ‘paid’ because the EPA did not receive it. However, as s 20B(3)(a) of the LA Act does not specify any particular recipient of the money that is ‘paid’, payment into the Designated Account means that the money was ‘paid’.

Similarly, the plaintiff contended that this is not a proceeding for the ‘recovery of money’ because the money has not been paid to the EPA and therefore an order is not required compelling the EPA to repay the money. I reject this contention. The plaintiff paid the money into the Designated Account in accordance with Emerton J’s order, which provides that the plaintiff is not entitled to the money unless the EPA agrees or the Court so orders. As the EPA will not agree, the only way in which the plaintiff can withdraw the money from the Designated Account and deal with it as its own, is by virtue of a Court order. As the plaintiff is seeking in this proceeding an order that it is entitled to withdraw the money in the Designated Account, it is seeking recovery of that money.

It was common ground that the payments that the plaintiff made into the Designated Account were not made under either a mistake of law or of fact. The payments were made pursuant to the terms of Emerton J’s order. Although the plaintiff did not concede that the payments it made into the Designated Account were made under the colour of authority, it is clear that it would not have made those payments had it not been for the EPA’s insistence that it do so in respect of Levy payments that the EPA maintained that the plaintiff was liable to make. Accordingly, in my view, the payments were made under colour of authority.[100]
[100]Bryan A Garner (ed), Black’s Law Dictionary (Thomson Reuters, 9^th ed, 2009) defines ‘colour of authority’ as: ‘The appearance or presumption of authority sanctioning a public officer’s actions. The authority derives from the officer’s apparent title to the office or from a writ or other apparently valid process the officer bears’: at 302.

The plaintiff has not suggested that either the Discounted Levy set out in the 2008 Exemption or the Levy set out in s 50S of the EP Act, is unlawful. Accordingly, each is a tax rather than a purported tax.

The key remaining issue is whether, insofar as it concerns the plaintiff’s claim to the money in the Designated Account, this proceeding is for the recovery of money ‘paid by way of … tax … or … an amount that is attributable to tax’.

In my opinion, insofar as it relates to the money in the Designated Account, this proceeding does not concern the recovery of money paid by way of tax. That is because the plaintiff has disputed its liability to pay the Levy and has refused to pay the Levy to the EPA. Accordingly, in order for s 20B of the LA Act to apply to the plaintiff’s claim to the money in the Designated Account, that claim must be for the recovery of money paid by way of an amount that is attributable to tax.

I am satisfied that the plaintiff’s claim to the money in the Designated Account, insofar as it corresponds to payments due for the Discounted Levy, is for the recovery of money paid by way of an amount that is attributable to tax. As I have concluded that the 2008 Exemption continues in force, the plaintiff has continued to be liable to pay the Discounted Levy rather than the Full Levy. However, the EPA has insisted that the plaintiff pay the Full Levy for Cat C soil used in the Firewall since 1 July 2011. The position regarding the difference between the Full Levy paid by the plaintiff for Cat C soil used in the Firewall since 1 July 2011 and the Discounted Levy that was lawfully payable (‘Overpayment’) is discussed at [369] to [370] below. What follows is subject to that discussion.

According to the Shorter Oxford English Dictionary, ‘attributable’ means ‘able to be attributed to, owing to’ and one of the meanings of ‘attribute’ as a verb is ‘ascribe to’.

The authorities establish that, while the phrase ‘attributable to’ requires a causal connection between two subjects, it need not be a sole, dominant, direct or proximate causal connection.[101]
[101]Roncevich v Repatriation Commission (2005) 222 CLR 115, 126 [27], 133 [56]; Gilkinson v Repatriation Commission (2011) 284 ALR 226, 228–9 [6]; NSW Coal Compensation Board v NSW Coal Compensation Tribunal [1997] NSWCA 231 (29 July 1997) 7.

According to Emerton J’s order, the amounts paid by the plaintiff into the Designated Account are ‘equivalent to the amounts of levy alleged by the [EPA] to be payable’ by the plaintiff. Pursuant to that order, the plaintiff is obliged to calculate and account for those amounts as if they were payments of the Levy. The substitution of the Designated Account for the EPA as the recipient of the payments pursuant to Emerton J’s order has not altered the plaintiff’s obligations in respect of the Levy. It can thus be said that those amounts are equivalent to — and therefore represent or are able to be attributed to — the Levy.

Had it not been for the EPA’s demands that the plaintiff pay the precise amounts deposited into the Designated Account, which represent the amounts of Levy claimed by the EPA as payable, the plaintiff would not have paid those amounts into the Designated Account. Accordingly, it can be said that the plaintiff paid those amounts into a Designated Account owing to the EPA’s demands for the payments of those amounts as Levy.

The fact that the purpose of the payments into the Designated Account is to provide a fund as security for any liability this Court may find the plaintiff owed to the EPA in respect of the Levy is not inconsistent with the above conclusion. The plaintiff has parted with the precise amounts that the EPA has demanded as payment of the Levy and therefore those amounts were paid into the Designated Account as amounts attributable to the Levy.

It follows from the above that this proceeding is a proceeding to which s 20B of the LA Act applies.

Would recovery of the money in the Designated Account result in a windfall gain?

The amount of $2,379,299 that was paid into the Designated Account for the period from 1 April 2011 until 30 June 2011 was based on the Discounted Levy. Accordingly, that amount raises the same issues as those discussed at [308] to [335] above in respect of the amount of $3,198,821 paid to the EPA. For the reasons set out in those paragraphs, I am not satisfied that recovery of the amount of $2,379,299 would not result in a windfall gain to the plaintiff.

The amount of $11,513,020 that was paid into the Designated Account for the period from 1 July 2011 until 30 June 2013 was based on the Full Levy. The plaintiff did not make submissions on the issue of whether recovery of this amount would result in a windfall gain. In this regard, I note that the evidence discussed at [302] to [307] above indicates that the plaintiff set its gate rate by reference to the market rate, which indirectly incorporated the Full Levy.

Subject to the discussion about the Overpayment at [369] to [370] below:

(a) the plaintiff has failed to discharge the onus of satisfying me that it has not charged to, or recovered from, any person an amount in respect of the money in the Designated Account;

(b) accordingly, I am not satisfied that recovery of that money would not result in a windfall gain to the plaintiff; and

(c) the plaintiff’s claim for that money is barred by s 20B(1) of the LA Act.

Is Order 56 of Chapter 1 of the Rules a barrier to relief?

The EPA submitted that the plaintiff’s applications for declarations of invalidity in respect of the Amendment to the 2008 Exemption, the Confirmation of Amendment to the 2008 Exemption and the 2011 Classification were, in substance, applications for orders in the nature of certiorari and that those applications were barred by O 56 of the Supreme Court (General Civil Procedure) Rules 2005 (‘Rules’) because they were not filed within the 60 day time limit set out in r 56.02(1).

Order 56 of the Rules is titled ‘Judicial Review’. Rule 56.01 stipulates that subject to any Act, the jurisdiction of the Court to grant ‘any relief or remedy in the nature of certiorari, mandamus, prohibition or quo warranto shall be exercised only by way of judgment or order’. Pursuant to rr 56.01–2, such a proceeding must be commenced by originating motion, ‘within 60 days after the date when grounds for the grant of the relief or remedy claimed first arose.’

The EPA submitted that the plaintiff commenced this proceeding by writ and statement of claim filed on 7 June 2011 because the plaintiff had failed to commence O 56 judicial review proceedings within 60 days of the making of the impugned decisions. Given that the plaintiff is seeking declarations that these decisions were ‘of no effect’, the EPA sought to characterise the relief sought as being ‘in the nature of certiorari’.

The EPA submitted that the present case can be distinguished from Minister for Youth and Community Services v Kew Cottages & St Nicholas Parents’ Association Ltd.[102] In that case, Phillips JA stated that a particular remedy does not become ‘relief in the nature of’ another remedy for the purposes of O 56 of the Rules only because the effect of the remedies ‘may be like’, and that declarations and injunctions are not directly affected by the constraints found in O 56.[103] His Honour added, however, that this did not go so far as to preclude a reference being made to the time limits for claiming certiorari and mandamus, and the general purport of O 56, in the context of an argument against the exercise of discretion to grant an injunction or a declaration.[104] Both Callaway and Hedigan JJA agreed that declarations and mandatory injunctions are not within the purview of O 56 because they are not remedies ‘in the nature of’ certiorari, mandamus, prohibition or quo warranto.[105]
[102](1996) 10 VAR 293 (‘Kew Cottages’).
[103]Kew Cottages (1996) 10 VAR 293, 297.
[104]Kew Cottages (1996) 10 VAR 293, 297–8.
[105]Kew Cottages (1996) 10 VAR 293, 299, 302.

In my opinion, Kew Cottages cannot be distinguished. The plaintiff has sought relief by way of declaration rather than an order in the nature of certiorari. Accordingly, if the plaintiff otherwise establishes an entitlement to a declaration, the fact that the relief was not sought within the time specified by r 56.02(1) of the Rules for prerogative relief cannot be an automatic bar to the making of the declaration. In the present case, the delay between the making of the impugned decisions and the commencement of this proceeding seeking declaratory relief does not enliven any discretionary grounds for refusing to grant that relief.

Should declaratory relief be refused on discretionary grounds?

The EPA submitted that, even if the plaintiff established a proper legal basis for the granting of declaratory relief, such relief should be refused on discretionary grounds. The grounds upon which the EPA relied included inconsistency with various policies and interstate approaches to waste management, and diminution of revenue from the Levy.

I agree with the plaintiff that the EPA’s submission misunderstands the nature of the judicial discretion to refuse declaratory relief.

In Ainsworth v Criminal Justice Commission,[106] the High Court reiterated the established principle that superior courts have inherent power to grant declaratory relief. In a joint judgment, Mason CJ, Dawson, Toohey and Gaudron JJ stated the following about such relief:

It is a discretionary power which ‘[i]t is neither possible nor desirable to fetter ... by laying down rules as to the manner of its exercise.’ However, it is confined by the considerations which mark out the boundaries of judicial power. Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. The person seeking relief must have ‘a real interest’ and relief will not be granted if the question ‘is purely hypothetical’, if relief is ‘claimed in relation to circumstances that [have] not occurred and might never happen’ or if ‘the Court's declaration will produce no foreseeable consequences for the parties’.[107]

[106](1992) 175 CLR 564 (‘Ainsworth’).

[107]Ainsworth (1992) 175 CLR 564, 581–2 (citations omitted).

The grounds upon which the EPA relied do not provide any foundation for refusing declaratory relief to the plaintiff where it has established a legal basis for such relief.

Overpayment for period commencing 1 July 2011

As discussed at [350] above, at the EPA’s insistence, the plaintiff has paid into the Designated Account amounts equivalent to the Full Levy for use of Cat C soil in the Firewall since 1 July 2011 when it was only obliged to pay amounts equivalent to the Discounted Levy. The Overpayment has arisen because of my finding that the 2008 Exemption continues in force.

As the parties did not anticipate the precise findings that I have made, they did not make detailed submissions about the applicability and effect of s 20B of the LA Act in relation to the Overpayment. Accordingly, before making final orders, I will give the parties an opportunity to make submissions on this issue.

Use of immobilised and treated Cat C soil in the Firewall

In the period that is relevant to this proceeding, namely from 9 June 2010 until 30 June 2013, the plaintiff’s authority to use Cat C soil in the Firewall was predominantly limited to solid inert Cat C soil. However, in the period from 25 August 2009 until 11 March 2011, the plaintiff was authorised by the EPA to also use immobilised Cat C soil by an amendment to the 2008 Exemption. Immobilised Cat C soil is soil that has attained Cat C status by a form of treatment that has immobilised the contaminants in the soil. In the period from 1 July 2010 until 1 August 2012, the plaintiff also used in the Firewall other treated Cat C soil.

While the pleadings specifically mention the immobilised Cat C soil and the other treated Cat C soil referred to at [371] above, the parties’ submissions have not identified how, if at all, the use of that soil affects the issues requiring resolution in this proceeding. The only exceptions appear to be, first, that the immobilised Cat C soil and the other treated soil cannot satisfy the ‘without prior treatment or reprocessing’ requirement in the definition of ‘direct beneficial reuse’; and, secondly, the use of the other treated soil in the Firewall may have been unauthorised. In case I have misunderstood the position, I will give the parties an opportunity to make submissions on the immobilised Cat C soil and the other treated soil before I make final orders.

Proposed order

For the above reasons, I propose to make declarations to the following effect:

(a) The Amendment to the 2008 Exemption is invalid.

(b) The 2008 Exemption continues to have effect as an SBR authorisation.

(c) The 2011 Classification is invalid.

In the light of the outstanding matters referred to at [369] to [372] above, I will adjourn the further hearing of the proceeding to enable the parties to consider this judgment and make further submissions on those matters, on the precise form of the orders to be made by this Court to reflect my conclusions, and on the question of costs.

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[2013] VSC 582

29 October 2013