Mirboo Ridge Pty Ltd (ACN 060 663 934) and Ors (according to the attached Schedule) v Minister for Resources
[2019] VSCA 304
•17 December 2019
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2018 0138
| MIRBOO RIDGE PTY LTD (ACN 060 663 934) & ORS (according to the attached Schedule) | Applicants |
| V | |
| MINISTER FOR RESOURCES | Respondent |
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| JUDGES: | MAXWELL P, McLEISH and T FORREST JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 6 August 2019 |
| DATE OF JUDGMENT: | 17 December 2019 |
| MEDIUM NEUTRAL CITATION: | [2019] VSCA 304 |
| JUDGMENT APPEALED FROM: | [2018] VSC 557 (Macaulay J) |
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MINING AND MINERALS – Petroleum exploration – Hydraulic fracturing – Exploration permit – Permit subject to minimum work condition – Statutory moratorium on exploration – Right to explore suspended – Moratorium expressed not to affect any ‘requirement or obligation’ imposed on permit holder – Whether exclusion applied to minimum work condition – Whether permit holder authorised to explore up to minimum work level – Consideration of statutory context and purpose – No legislative intention to authorise continuation of exploration – Appeal dismissed – CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 applied – Petroleum Act 1998 ss 3, 17A, 96, 97, 100, Interpretation of Legislation Act 1984 s 35(a).
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicants | Mr C M Caleo QC with Ms E Bennett | Piper Alderman |
| For the Respondent | Mr J D Pizer QC with Ms C van Proctor and Ms E Smith | Victorian Government Solicitor |
MAXWELL P
McLEISH JA
T FORREST JA:
Summary
In August 2012, the Victorian Government announced a moratorium on exploration for gas by means of hydraulic fracturing, usually referred to as ‘fracking’. Hydraulic fracturing is a technique used in the extraction of unconventional gas, being gas that is found in coal seams, shales and tight sandstones. The moratorium was implemented administratively, through the withholding of Ministerial approval for exploration works of that kind.
In 2017, legislation was enacted to place the moratorium on a statutory footing. Amendments were made to the Petroleum Act 1998 (the ‘Act’), the stated purposes of which were (relevantly):
(i) to ban hydraulic fracturing; and
(ii)to impose a moratorium on petroleum exploration and petroleum production in the onshore areas of Victoria until 30 June 2020.[1]
[1]Resources Legislation Amendment (Fracking Ban) Act 2017 s 1(b). Amendments were also made to the Mineral Resources (Sustainable Development) Act 1990.
Section 15 of the Act prohibits the carrying out of any petroleum exploration in Victoria except:
(a) under, and in accordance with, an authority; or
(b) as otherwise permitted by this Act.
The mechanism adopted to effect the moratorium was to suspend, or nullify, the operative effect of any existing authority during the moratorium period. Thus, s 17A(1) declares that exploration activity to which an authority applies ‘is not authorised under that authority’. (We will refer to s 17A(1) as ‘the moratorium provision’.)
The critical question before the Court concerns the construction of s 17A(2), which provides that the moratorium provision:
does not affect any requirement or obligation imposed on the holder of a relevant authority by or under this Act or under a condition of the authority during the moratorium period.
Each of the applicants held a relevant authority when the moratorium provision came into force. It is common ground that each of those authorities has been ‘de-authorised’ by the moratorium provision. That is, for the duration of the moratorium period, the holder of the authority is not authorised to carry out the exploration work which is the subject of the authority. It is also common ground that there are conditions of the relevant authorities under which the holder has to satisfy what is referred to as a ‘minimum work condition’, being a minimum amount of petroleum exploration activity to be carried out during the period of the authority.
The contention for the applicants, both before the judge and in this Court, was that the intent of s 17A(2) was to preserve the ‘requirement or obligation’ imposed by a condition of that kind, such that what was formerly an obligation to do a certain amount of exploration would become in effect a continuing authority to carry out petroleum exploration up to that minimum level.
The trial judge rejected that contention. His Honour held that, on the proper construction of the provisions, the legislature did not intend such a result. The applicants now seek leave to appeal from that decision. For reasons which follow, we would grant leave to appeal but dismiss the appeal. We respectfully agree with his Honour’s conclusion, although we do so for reasons somewhat different from those which his Honour gave.
Provisions in the clearest terms would have been required before the Court could have concluded that, despite withdrawing the authority to do any exploration work at all, the legislature nevertheless intended to permit the authority holder to continue to do exploration work up to the level required by the minimum work condition. Not only is there no such clear provision but when s 17A is construed — as it must be — by reference to the text, the context and the statutory purpose, it is clear that the legislature had no such intention.[2]
Background[3]
[2]See CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384, 408 (Brennan CJ, Dawson, Toohey and Gummow JJ).
[3]Paragraphs 9–25 are based on the reasons for judgment at first instance: Mirboo Ridge Pty Ltd v Minister for Resources [2018] VSC 557.
Exploration for and production of petroleum (including petroleum gas) within onshore areas in Victoria is controlled under the Act. As already noted, control is exercised through the requirement under the Act that petroleum exploration and petroleum production may be carried out only pursuant to an authority granted by the Minister — in the case of petroleum exploration, an ‘exploration permit’;[4] in the case of petroleum production, ‘a production licence’;[5] and in order to retain rights to a petroleum discovery pending commercial production, ‘a retention lease’.[6]
[4]The Act pt 3.
[5]Ibid pt 5.
[6]Ibit pt 4.
In broad terms, the scheme of the Act is as follows. A person interested in extracting petroleum onshore in Victoria must first obtain an exploration permit for a given area.[7] Such a permit authorises the holder to conduct surveys, make wells, take samples for analysis and extract petroleum to determine if it will be viable to extract commercially.[8] An exploration permit expires after five years, but it may be renewed for a further five years and, in certain circumstances, extended for up to a year at a time.[9]
[7]Ibid s 15.
[8]Ibid ss 7, 18.
[9]Ibid ss 26, 28.
If the holder of an exploration permit considers that any petroleum discovered within the permit area is not presently viable to extract commercially but may become so in the future, that holder may apply for and be granted a retention lease for up to 15 years. A retention lease enables the holder to retain the rights to the petroleum discovery for the period of the lease.[10]
[10]Ibid ss 36, 38.
In due course, the holder of an exploration permit or a retention lease may apply for a production licence over the whole or part of the permit area.[11] Such a licence carries the right to extract the petroleum, produce it commercially or store it in reservoirs for later recovery.[12] Under the Act, an exploration permit, retention lease and production licence are each called an ‘authority’.[13]
[11]Ibid s 47.
[12]Ibid ss 8, 46.
[13]Ibid s 4.
Between 2002 and 2013 the first applicant, Mirboo Ridge Pty Ltd (‘Mirboo’), and the second applicant, Petro Tech Pty Ltd (‘Petro Tech’), both subsidiaries of the third applicant, Lakes Oil Ltd (‘Lakes Oil’), had between them obtained — either by grant or by transfer from an original grantee — four exploration permits and two retention leases under the Act (‘the six authorities’). Each of the six authorities was granted in respect of a defined area within Victoria. None of the six authorities has yet progressed to the stage of entitling the holder to obtain a production licence for the area in question.
The table below sets out some details of the six authorities, namely: the type of authority,[14] the name of the holder, its general location and the date of grant.
[14]In these reasons for judgment, ‘PEP’ stands for petroleum exploration permit and ‘PRL’ stands for petroleum retention lease.
Authority Holder Location Date PEP 163 Mirboo Geelong/Bellarine 19 July 2002 PEP 166 Petro Tech Near Wilsons Promontory 31 January 2013 PEP 169 Mirboo Near Camperdown 25 June 2007 PEP 175 Mirboo Near Port Fairy 18 April 2013 PRL 2 Petro Tech Near Sale 27 February 2007 PRL 3 Petro Tech Near Bairnsdale 27 February 2007
Focusing on petroleum exploration activities, Ministerial control under the Act is exercised in a variety of ways. In order to carry out any petroleum exploration activities, the would-be explorer must:
(a) (as already explained) be granted an authority by the Minister, in the form of either an exploration permit[15] or a retention lease;[16]
[15]The Act ss 18, 20A.
[16]Ibid ss 37–38.
(b) in applying for the authority, submit a work program for the Minister’s consideration that describes the intended work to be carried out over the life of the authority;[17]
(c) submit and obtain Ministerial acceptance of an operation plan for the intended petroleum exploration work;[18] and
(d) apply for and obtain Ministerial consent to carry out the petroleum exploration work.[19]
[17]Ibid ss 96–97.
[18]Ibid ss 147, 161.
[19]Ibid ss 138, 147.
The work programs referred to in (b) above typically specify the work to be carried out on a staged basis. That is, the work program describes different sequential parts of the work, from initial surveys through to drilling wells and taking samples, on a year-by-year basis over the life of the relevant authority. Once a work program is approved by the Minister, compliance with it becomes a condition of the authority.[20]
[20]Ibid s 113(a).
For example, PEP 169 was granted on 25 June 2007 for a period of five years, and included the following condition:
1.The permittee shall carry out minimum petroleum exploration in the permit area in accordance with the work program outlined in the table below:
Year of permit Permit Year Starts Permit Year Ends Minimum Work Requirement Estimated Expenditure
$A1 25 June 2007 24 June 2008 Geological and geophysical studies. 100,000 2 25 June 2008 24 June 2009 Drill two exploration wells. 4,000,000 3 25 June 2009 24 June 2010 Fracture stimulation on candidate wells. 1,000,000 4 25 June 2010 24 June 2011 Drill one exploration well. 2,000,000 5 25 June 2011 24 June 2012 Geological and geophysical studies. 100,000 Total 7,200,000
Prior to 2012, Mirboo and Petro Tech carried out various stages of the petroleum exploration works in accordance with work programs approved under their respective authorities. Before commencing those discrete stages of work, each first obtained acceptance of their operation plans (under s 161) and consent to undertake the petroleum exploration (under s 138).
By August 2012 four of the six authorities were on foot; the other two were soon to be. In respect of those on foot, some work had already been carried out in accordance with approved work programs (subject to any variations that had been made), after the relevant holder had obtained necessary Ministerial acceptance of its operation plans and consent to its petroleum exploration activities. Also, in respect of each of them, further work was still to be undertaken. Mirboo and Petro Tech had applied for, or were soon to apply for, acceptance of further operation plans and further Ministerial consent for carrying out the next stage of their work programs.
Some of the petroleum exploration activities sought to be undertaken by Mirboo and Petro Tech involved hydraulic fracturing or ‘fracking’. More recently, the petroleum exploration activities sought to be undertaken by Mirboo and Petro Tech also involved conventional drilling techniques in exploration for conventional gas, which is gas found in sandstone.
Non-statutory moratorium
In August 2012 the then Minister for Resources announced a moratorium on fracking in Victoria with immediate effect, including a hold on approvals to undertake hydraulic fracturing as part of onshore gas exploration. At the time, Mirboo and Petro Tech were advised in correspondence that exploration that did not involve hydraulic fracturing ‘may proceed subject to any required approvals and consents’, but that exploration activities which involved hydraulic fracturing ‘will not be approved’.
In November 2013, then Premier Napthine announced that the moratorium on hydraulic fracturing would remain in place until at least July 2015 while scientific studies and a community consultative process was undertaken. In May 2014, the non-statutory moratorium was effectively extended to all onshore gas exploration activities (that is, both conventional and unconventional). The Minister issued a press release on 28 May 2014 announcing that the government had ‘put a hold on work plan approvals for onshore gas exploration until more information is available including evidence from the water study, community views and industry impacts’. The Minister further stated that ‘[i]n the spirit of the current moratorium, the Coalition Government will put a hold on making any decisions on the approval of current onshore gas exploration work plans’.
On 30 August 2016, Premier Andrews announced that there would be a permanent ban on the exploration and development of all unconventional gas in Victoria, including hydraulic fracturing and coal seam gas. In addition, the Premier announced that the government would legislate to ‘extend the current moratorium on the exploration and development of conventional gas until 30 June 2020’. In the same announcement the Premier stated that ‘exemptions to the ban’ would allow certain activities to continue, such as gas storage, carbon storage research and accessing offshore resources.
Information published by the Government thereafter indicated that, as a consequence of those announcements, there would be a hold on approvals to conduct exploration activities including drilling, performance of well tests, collecting samples from drill holes and performing analysis. Consistently with the Premier’s announcement, the information also provided that applications could still be made by existing tenement holders for the approval of limited identified activities outside of those already mentioned.
As a result of the policy first announced in August 2012, and thereafter continued and extended in the subsequent announcements, the Minister did not make any decisions under s 161 to accept the operation plans submitted by Mirboo or Petro Tech or, under s 138, to consent to the petroleum operations embodied in them, for any of the further stages of the work programs under the authorities held by those companies. As a consequence, after that date neither Mirboo nor Petro Tech carried out petroleum operations as described in those work plans but, instead, sought and obtained a series of suspensions of the work plans and extensions to the six authorities.
Statutory moratorium
In March 2017, the non-statutory moratorium was overtaken by a statutory moratorium. The Resources Legislation Amendment (Fracking Ban) Act 2017 came into operation on 16 March 2017. That Act introduced four sections into the Act, including a new s 17A which provides as follows:
17A Moratorium on petroleum exploration and petroleum production
(1) Subject to this section, despite anything to the contrary in this Act or any condition of a relevant authority, the carrying out of any petroleum exploration or petroleum production during the moratorium period is not authorised under that authority.
(2)Subsection (1) does not affect any requirement or obligation imposed on the holder of a relevant authority by or under this Act or under a condition of the authority during the moratorium period.
(3) In addition, subsection (1) does not affect—
(a)the authorisation of petroleum exploration or petroleum production during the moratorium period by the following production licences—
(i)Production Licence 1 registered in the petroleum register on 1 March 1985;
(ii)Production Licence 2 registered in the petroleum register on 31 December 1990;
(iii)Production Licence 3 registered in the petroleum register on 10 May 1993;
(iv)Production Licence 11 registered in the petroleum register on 14 May 2002;
(v)Production Licence 13 registered in the petroleum register on 7 February 2006; or
(b)the authorisation under a production licence of petroleum storage in a reservoir that is carried out in accordance with a storage development plan approved under Division 7 of Part 5 that applies to the production licence.
(4)Despite anything to the contrary in this Act, the Minister must not grant a relevant authority during the moratorium period.
(5) ln this section—
‘moratorium period’ means the period beginning on the day on which the Resources Legislation Amendment (Fracking Ban) Act 2017 comes into operation and ending on 30 June 2020;
‘relevant authority’ means an exploration permit, a retention lease or a production licence.
It is necessary to refer also to s 100 of the Act, which provides for the attachment of conditions to the grant of an authority. That section provides as follows:
100 Conditions that may apply to authorities
(1)The Minister may specify that an authority to be granted is to be subject to any conditions that she or he considers to be appropriate.
(2)The Minister may also specify that a person must comply with any conditions that the Minister considers to be appropriate before the Minister will issue an authority to the person.
(3)Without limiting the conditions the Minister may specify under this section, the Minister may specify conditions—
(a)relating to the operations that are to be carried out under the authority;
(b)requiring the expenditure of a minimum amount of money in relation to operations under the authority;
(c)requiring the carrying out of approved work programs during the term of the authority;
(d) concerning the protection of the environment;
(e)concerning the rehabilitation of any land affected by operations under the authority;
(f)requiring compliance with any written directions of the Minister in relation to any matters covered by the authority that are not otherwise the subject of a condition;
(g)requiring the holder of the authority to obtain specified approvals or submit specified information to the Minister before beginning a specified operation or using specified equipment;
(h)requiring the holder of the authority to provide other specified information to the Minister.[21]
[21]Emphasis added.
As can be seen, s 100(3)(c) expressly authorises the Minister to specify conditions ‘requiring the carrying out of approved work programs during the term of the authority’. The ‘minimum work conditions’ under consideration here were imposed under that statutory power.
It is necessary also to set out the provisions governing the submission of proposed work programs. Sections 96 and 97 provide as follows:
96 Application for authorities
(1) An applicant for an authority—
(a)must apply for the authority in the manner required by the Minister; and
(b)must submit a proposed work program and details of how much it intends to spend on each part of that program; and
(c)must submit details of any matter required by the Minister to enable the Minister to assess the application; and
(d)must submit evidence of its ability to comply with this Act; and
(e)may set out other matters that it wishes the Minister to consider.
(2)In the case of an applicant for a retention lease who does not intend to carry out any petroleum operations under the lease, it is sufficient compliance with subsection (1)(b) if the applicant submits a document declaring that intention.
97 Work programs
A work program in relation to an authority is a document—
(a)that outlines the work that it is intended to do under the authority; and
(b)that outlines how the work is to be structured and the intended extent of the work; and
(c)that sets out proposed timelines for the various phases of the work; and
(d)that is in the form required by the regulations; and
(e)that contains any other details required by the regulations.
Applicants’ contention
The argument for the applicants has an attractive simplicity. It involves the following steps:
1.The statutory moratorium in s 17A is not unqualified. So much appears from the introductory words to sub-s (1) — ‘Subject to this section’ — and from the use of the words ‘subsection (1) does not affect’ in both sub-s (2) and sub-s (3).
2.Each of sub-ss (2) and (3) is a ‘carve out’ provision, that is, it is a provision which excludes from the operation of the moratorium the matters identified in the subsection.
3.The plain intent of sub-s (2) is to exclude from the operation of the moratorium ‘any requirement or obligation imposed on the holder of a relevant authority’, whether it is imposed ‘by or under this Act’ or ‘under a condition of the authority’.
4.The ‘minimum work condition’ is a condition of a relevant authority under which a ‘requirement or obligation’ is imposed on the holder of the authority.
5.Accordingly, the requirement to carry out the exploration work specified in the minimum work condition is excluded from the operation of the moratorium.
The sole ground of appeal contends that his Honour erred in failing to construe the provisions in this manner. The essential complaint is that his Honour impermissibly read down the phrase ‘requirement or obligation’ in s 17A(2) so as not to apply to the exploration requirement imposed by the minimum work condition. Rather than dealing with the individual aspects of that complaint, it is convenient to turn directly to the construction contended for by the applicants.
Consideration
The task of the Court in construing a statutory provision is to discern the intention of the legislature in enacting the provision. That intention is ordinarily expressed through the statutory language employed in the provision, considered in its context. As the High Court said in CIC Insurance Ltd v Bankstown Football Club Ltd,[22] the statutory context includes the existing state of the law and the ‘mischief’ which the statute was intended to remedy:
Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd, if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent.[23]
[22](1997) 187 CLR 384.
[23]Ibid 408 (Brennan CJ, Dawson, Toohey and Gummow JJ) (citations omitted). See also BMW Australia Ltd v Brewster [2019] HCA 45, [43] (Kiefel CJ, Bell and Keane JJ), [125] (Nettle J); The Queen v A2 (2019) 93 ALJR 1106, 1117 [32]–[33] (Kiefel CJ and Keane J), 1138–9 [163]–[165] (Edelman J); [2019] HCA 35.
In the present case, the applicants submit that the phrase ‘requirement or obligation’ is to be given its ordinary meaning and that the minimum work condition is, plainly enough, a ‘requirement’ for this purpose. When the relevant contextual considerations are brought to bear, however, the ‘apparently plain words’ of s 17A(2) ‘wear a very different appearance’.
There are several relevant features of the context in which s 17A falls to be construed. First, the enactment of s 17A was accompanied by an express statement of legislative purpose. As noted earlier, the Parliament’s stated purpose was:
to impose a moratorium on petroleum exploration and petroleum production in the onshore areas of Victoria until 30 June 2020.[24]
[24]Resources Legislation Amendment (Fracking Ban) Act 2017 s 1(b)(ii).
On ordinary principles, if a choice of interpretations were available, s 35(a) of the Interpretation of Legislation Act 1984 would be engaged. That provision relevantly provides as follows:
35 Principles of and aids to interpretation
In the interpretation of a provision of an Act …
(a)a construction that would promote the purpose or object underlying the Act … shall be preferred to a construction that would not promote that purpose or object.
Secondly, it is necessary to examine the function of conditions imposed on a relevant authority under the Act. Self-evidently, the imposition of a condition on the grant of an authority means that the authority is qualified rather than unqualified. Ordinarily, that qualification means that the continued enjoyment of the right conferred by the authority is subject to compliance with the condition. Non-compliance may result in the loss of the right.
So it is with a work program condition. Under s 113 of the Act, the Minister may cancel an authority if:
(a)the holder of the authority has not complied with the work program that was to have been carried out under the authority.
In other words, the right which is conferred on the authority holder — to explore for petroleum — is subject to a requirement that at least the work specified in the work program be carried out during the period of the authority. The policy underlying the imposition of conditions of this kind is, presumably, to ensure that during the subsistence of the valuable — and exclusive — right to explore, the authorised party takes active steps to explore, an objective of the Act being ‘to encourage the exploration for petroleum in Victoria’.[25]
[25]The Act s 3(1).
This analysis exposes the conceptual flaw which lies at the heart of the applicants’ argument. They accept that the right to explore, previously conferred by each relevant authority, has been withdrawn. Notwithstanding what the relevant authority purports to authorise, there is no authority under it to explore for petroleum. They further concede — correctly, in our opinion — that the minimum work requirement is not an authority to explore. Plainly enough, it is not. Rather, it is an obligation the discharge of which was, during the currency of the authority, necessary in order to preserve and maintain the right to explore.
As senior counsel for the applicants accepted, the construction of s 17A(2) for which they contend would have the effect of converting what was a condition of the authority to explore into an implied authority to continue to explore — up to the amount of the minimum — notwithstanding the legislative suspension of the authority itself. Put another way, their interpretation means that an obligation to do a certain amount of exploration work (as a condition of an authority for which the Act provides) is converted into a permission to do that amount of exploration work.
In our view, the very nature of a minimum work condition of this kind suggests that, once the authority to do any exploration work is withdrawn, the minimum condition is — of necessity — inoperative. Once the authority holder ceases to be authorised to explore for petroleum, meaningful content cannot readily be given to the notion that the holder must — and therefore may — continue to do a minimum amount of exploration work. On this approach, a minimum work condition is only intelligible if it relates to work which can lawfully be undertaken.
When asked what legislative rationale might explain the result contended for, senior counsel for the applicants drew attention to the objectives of the Act which — as already mentioned — include the encouragement of exploration for petroleum. Counsel noted that the moratorium is, at present, scheduled to end on 1 July 2020 and that it is unknown whether or not there will be any further moratorium and, if so, whether its scope will be the same as the present. In that context, counsel submitted, it was rational for the legislature to have made provision to enable holders of authorities to continue particular exploration work ‘pursuant to requirements in conditions of their authority’. This would mean that, in the event that the moratorium was either discontinued or narrowed, those authority holders would be ‘better placed to pursue the objectives of the Act’.
In our view, there is nothing in the provisions of s 17A to suggest any such legislative purpose. On the contrary, the structure and language of the provision point to the opposite conclusion. Plainly enough, it would have been a significant qualification on the moratorium if an authority holder whose authority carried a minimum work condition were to be authorised, notwithstanding the suspension of the authority itself, to continue to explore up to the minimum work level. Had that been the legislature’s intention, specific provision to that effect would have been expected.
Instead, the provision on which the applicants rely (s 17A(2)) is expressed in entirely general terms, encompassing as it does:
any requirement or obligation imposed on the holder of a relevant authority by or under this Act or under a condition of the authority during the moratorium period.
As discussed in argument, the Act itself imposes a variety of requirements and obligations on the holder of a relevant authority. There is, moreover, a variety of conditions attached to individual authorities, some of which may be characterised as imposing a ‘requirement or obligation’ and some of which would not be so characterised.
In this statutory context, we would not interpret a provision of such broad scope and undifferentiated application as conveying — implicitly — a legislative intention to confer on the holders of authorities subject to a minimum work condition a continuing authority to explore for petroleum. As we have said, the result for which the applicants contend would be a significant qualification on the moratorium. In the absence of express language, we are not persuaded that the legislature intended such a qualification, less still when the extent of the qualification would depend on the variable content of particular work conditions attached to particular authorities.
Thirdly, the extent of the qualification effected by s 17A(2) on the applicants’ construction is especially striking when account is taken of s 17A(4), which provides that the Minister must not grant a relevant authority during the moratorium period. In light of that provision, the real work done by s 17A(1) is to deprive the holders of existing authorities of the right to carry out petroleum exploration, despite their authorities, during the moratorium period. That being so, if the holders of such authorities were nonetheless entitled to undertake petroleum exploration in compliance with their authorities, the potential effect would not be to qualify the scope of sub-s (1) but to substantially reverse its operation, defeating its evident purpose.
Fourthly, as senior counsel for the respondents pointed out, there is a significant difference in the statutory language used in sub-s (2) as compared to the language of sub-ss (1) and (3). Both of the latter subsections use the language of authorisation. Thus, the moratorium provision declares that the carrying out of petroleum exploration ‘is not authorised’.[26] Subsection (3) also uses the language of authorisation, providing as it does that sub-s (1) ‘does not affect … the authorisation of petroleum exploration or … production’ under certain specified production licences.
[26]Ibid s 17A(1).
The language of sub-s (2) is strikingly different. There is no suggestion in the subsection that Parliament intended to preserve any authority to carry out petroleum production. Instead, the section focuses on requirements and obligations. It would be a most surprising result if a provision expressly directed at preserving obligations to do things during the period of the relevant authority was intended to confer on the holder authority to continue to do — up to the minimum level of exploration — the very thing which it was no longer authorised to do.
Fifthly, sub-s (3) is precisely the kind of express provision which would be expected if the legislature intended to exempt particular exploration activities from the scope of the moratorium. Subsection (3) is to be read, in our view, as dealing exhaustively with the subject of exempted activities. There is no reason for thinking that Parliament intended to exempt other activities — without saying so expressly — through the use of entirely general language in sub-s (2). That conclusion is reinforced by the use of the words ‘In addition’ at the beginning of sub-s (3), indicating that Parliament was addressing in sub-s (3) a different subject-matter from that dealt with in sub-s (2).
Finally as to context, some assistance can be derived from the explanatory memorandum for the amending legislation. As the judge noted, the memorandum relevantly states as follows:
Clause 10inserts a new section 17A into the 1998 Act, which applies to existing petroleum exploration permits, retention leases, and production licences.
New section 17A(1) prohibits any petroleum exploration or petroleum production under an exploration permit, a retention lease, or a production licence from the day this Bill comes into operation until 30 June 2020 (the moratorium period).
New section 17A(2) clarifies that the holder of any such authority must, during the moratorium period, still comply with any requirements or obligations imposed on them by or under the Act and with any conditions of the authority.
New section 17A(3) specifies certain exceptions from section 17A(1).[27]
[27]Explanatory Memorandum, Resources Legislation Amendment (Fracking Ban) Bill 2016 (Vic) 4.
As senior counsel for the applicants correctly pointed out, the statement that the holder of authority would still have to comply with ‘any conditions of the authority’ was not correct. The reference should have been to compliance with ‘any requirement or obligation imposed on them by any conditions of the authority’. That error does not, however, affect the relevance of what is there stated. So far from giving any indication that sub-s (2) was intended to qualify the moratorium, by authorising the carrying out of exploration work formerly required to be done under a minimum work condition, the memorandum described the subsection as a clarificatory provision.
That characterisation is, in our view, reinforced by the fact that it was strictly unnecessary to refer in sub-s (2) to requirements or obligations imposed ‘by or under this Act’. As both counsel accepted in this Court, such requirements or obligations would continue to apply to the authority holder by force of law, that is, by operation of the statutory provisions themselves. No additional provision was necessary to secure that continued application. That being so, sub-s (2) is properly to be viewed as a provision included ‘for the avoidance of doubt’.
In our opinion, the clear intent of sub-s (2) was to convey to an authority holder that the withdrawal of authority to explore did not relieve the holder of obligations to which it was subject with respect to the area covered by the authority. Examples given in the course of argument included the obligations to maintain all structures and equipment in good condition and repair;[28] to rehabilitate the land;[29] to obtain and maintain insurance;[30] and to pay rent.[31] In other words, read in the context of the section and the Act as a whole, sub-s (2) was never intended to apply to a requirement to do exploration work, being work which was only necessary — and possible — while there was a subsisting authority to explore.
[28]The Act s 166(1).
[29]Ibid s 170.
[30]Ibid s 171.
[31]Condition attached to PRL 2.
For these reasons, we consider that the construction of s 17A(2) for which the applicants contend is not supported by the language of the section read as a whole and in context. To the extent that there is a choice of interpretations, we prefer the construction we have identified. It is a construction which promotes the express purpose of s 17A — relevantly, to impose a moratorium on petroleum exploration —whereas the construction advanced by the applicants would not promote that purpose.[32]
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[32]Interpretation of Legislation Act1984 s 35(a).
SCHEDULE OF PARTIES
| MIRBOO RIDGE PTY LTD (ACN 060 663 934) | First Applicant |
| PETRO TECH PTY LTD (ACN 009 116 429) | Second Applicant |
| LAKES OIL N.L. (ACN 004 247 214) | Third Applicant |
| v | |
| MINISTER FOR RESOURCES | Respondent |
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