Queensland Nickel Pty Limited v Commonwealth of Australia
[2016] FCA 290
•23 March 2016
FEDERAL COURT OF AUSTRALIA
Queensland Nickel Pty Limited v Commonwealth of Australia [2016] FCA 290
File number: QUD 255 of 2014 Judge: DOWSETT J Date of judgment: 23 March 2016 Catchwords: PRACTICE AND PROCEDURE – amendment of pleadings – where amendment raises a separate cause of action – meaning of ‘action on the case’ – express or implied threat by Government Authority – causation of damage Legislation: Federal Court Rules 2011 (Cth) r 16.43
Great Barrier Reef Marine Park Act 1975 (Cth) s 6, s7, s 30, s31, s 35C, s 35E,s 35F, s 38DC, s 38DD, s 61A
Great Barrier Reef Marine Park Regulations 1983 (Cth) reg 94
Queensland Nickel Agreement Act 1970 (Qld) s 3
Cases cited: Beaudesert Shire Council v Smith (1969) 120 CLR 145
Bienke v Minister for Primary Industries (1996) 63 FCR 567
Jamesv The Commonwealth (1939) 62 CLR 339
Northern Territory of Australia v Mengel (1994‑1995) 185 CLR 307
Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204
Sutherland Shire Council v Heyman (1985) 157 CLR 424
Date of hearing: 30 March 2015 Registry: Queensland Division: General Division National Practice Area: Administrative and Constitutional Law and Human Rights Category: Catchwords Number of paragraphs: 55 Counsel for the Applicant: Mr J Kirk SC with Mr L Livingston Solicitor for the Applicant: Kilmurray Legal Counsel for the Respondents: Mr Stephen Lloyd SC with Mr G del Villar Solicitor for the Respondents: Australian Government Solicitor ORDERS
QUD 255 of 2014 BETWEEN: QUEENSLAND NICKEL PTY LIMITED (ACN 009 842 068)
Applicant
AND: COMMONWEALTH OF AUSTRALIA
First Respondent
GREAT BARRIER REEF MARINE PARK AUTHORITY
Second Respondent
JUDGE:
DOWSETT J
DATE OF ORDER:
23 MARCH 2016
THE COURT ORDERS THAT:
1.the applicant have leave to file and serve the proposed amended statement of claim not including paras 30 to 37 and para 39 of exhibit 1.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
INTRODUCTION:
The applicant (“QN”) commenced these proceedings on 4 June 2014. A statement of claim was filed with the originating application. On 9 July 2014 the first and second respondents (the “Commonwealth” and the “Authority” respectively) delivered their joint defence. QN now seeks to amend its application and statement of claim.
The second respondent was established by s 6 of the Great Barrier Reef Marine Park Act 1975 (Cth) (the “Reef Act”) and has the functions conferred upon it by s 7 of that Act. Section 30 of the Reef Act provides that:
There shall be a marine park, to be known as the Great Barrier Reef Marine Park, consisting of such areas in the Great Barrier Reef Region as are, for the time being, declared under section 31 to be parts of that Marine Park.
In effect, the Authority is responsible for the management of the marine park so established (the “marine park”) and for a wide range of planning and advisory functions.
QN operates a nickel refinery at Yabalu, near Townsville. The refinery has previously disposed of waste water, using a pipeline which empties into Halifax Bay. Prior to 2001, that part of Halifax Bay in which the pipeline is located (the “pipeline area”) was not within the marine park, nor did the Authority assert, or purport to exercise any authority over it. However the boundaries of the marine park may be fixed from time to time by proclamation pursuant to s 31 of the Reef Act. Any such proclamation may be revoked or amended pursuant to s 31(3).
QN claims:
·to have constructed and to operate the nickel refinery and related infrastructure pursuant to, and in consequence of an agreement (the “Agreement”) between the State of Queensland and Metals Exploration Queensland Pty Ltd and Freeport Queensland Nickel Incorporated (the “companies”), which Agreement is contained in a schedule to the Queensland Nickel Agreement Act 1970 (Qld) (the “QN Act”);
·that the Agreement has the force of law pursuant to s 3 of the QN Act;
·that the pipeline is part of the nickel refinery and related infrastructure, which QN claims to own and control;
·that the pipeline was installed in 1974 for the purpose of discharging rainwater and processing waste water from the refinery;
·that the pipeline is 9,940 feet in length; and
·that its discharge point in Halifax Bay is not more than 1.635 nautical miles or 1.882 miles from the low water mark of the Queensland mainland.
QN has not explained the connection between it and the two companies named in the Agreement. However I assume that QN is one of those companies and that, in some way, the other company is no longer interested in the refinery.
As might be expected, the Agreement is a substantial document. As far as I can see it does not specifically deal with the pipeline, or with the discharge of water into Halifax Bay. In cl 6 of Pt VI, headed “Water for and in Connection with Mining and Treatment Operations”, cl 8 provides that the companies have the right to discharge water into rivers and streams but says nothing about discharge into Halifax Bay.
PROCLAMATIONS AND PERMITS
By proclamation dated 30 May 2001 and gazetted on 4 July 2000, purportedly made under s 31(1) of the Reef Act (the “2001 proclamation”), Halifax Bay was, for the first time, included in the marine park. By proclamation dated 8 April 2004 and effective from 1 July 2004, purportedly made under s 31(1) of the Reef Act (the “2004 proclamation”), the 2001 proclamation was repealed and new boundaries were declared, again including Halifax Bay. Since the gazettal of the 2001 proclamation, the Authority has asserted, and purported to exercise authority over Halifax Bay, including the pipeline area, on the basis that such area is within the marine park.
In May 2004 the Authority purported to issue a permit, to be in force from 10 May 2004 to 10 May 2010, authorizing the operation and maintenance of the pipeline, but making no mention of the discharge of waste water. The Authority also prepared and submitted to the relevant Minister, a zoning plan pursuant to Pt V Div 2 of the Reef Act (the “zoning plan”). The Minister presumably accepted the zoning plan pursuant to s 35C of the Reef Act. I also assume that it was laid before Parliament as contemplated by s 35E of the Reef Act. It took effect on or about 1 July 2004. On 9 March 2009 the Authority purportedly refused an application by QN for permission to discharge waste water into the relevant zone (the “General Use Zone”). On 17 July 2009 the Authority purported to issue a permit, said to be in force from 17 July 2009 to 10 May 2010, again authorizing the operation and maintenance of the pipeline. On 8 June 2011 the Authority purported to issue a permit, said to be in force from 22 June 2011 to 30 June 2013, authorizing the maintenance, decommissioning and removal of the pipeline, and prohibiting discharge from it. It seems that QN did not agree to the changes in permitted use. On 19 December 2011 the Authority purported to reissue the permit of 8 June 2011 with effect from 17 January 2012. On 3 June 2014 the Authority notified QN that it had refused its application for continued permission to operate the pipeline within the General Use Zone, asserting that, “the pipeline is now an unpermitted structure in the Marine Park and may be subject to removal orders”.
THE CURRENT PLEADINGS
The originating application seeks the following orders:
1.A declaration that section 4(2)(g) and Part 7 of Schedule 1 to the Great Barrier Reef Marine Park (Declared Areas) Proclamation 2001 (Cth) dated 30 May 2001 and gazetted on 4 July 2001 (“2001 Proclamation”) are invalid, with the consequence that the area of Halifax Bay in which the Applicant’s pipeline is located does not fall within the boundaries of the Great Barrier Reef Marine Park (“Marine Park”) established by section 30 of the Great Barrier Reef Marine Park Act 1975 (Cth) (“Reef Act”).
2.In the alternative to order 1 above, a declaration that section 4(2)(g) and Part 7 of Schedule 1 to the 2001 proclamation, upon their proper construction, do not apply to the area of Halifax Bay in which the Applicant’s pipeline is located, with the consequence that the said area does not fall within the Marine Park.
3. An order permanently restraining the Respondents from:
a.interfering with the Applicant’s maintenance, operation or use of, including discharge from, the pipeline located in Halifax Bay; or
b.seeking to impose upon or enforce against the Applicant any alleged requirements, prohibitions or restrictions, including any alleged requirement for removal of the pipeline;
upon the footing that the said area of Halifax Bay falls within the Marine Park.
4.An order quashing or setting aside, or declaring as invalid, the reissued permit number G11/33310.1, expressed to be in force from 17 January 2012, insofar as that permit was issued by the Second Respondent in purported reliance upon Part VAA of the Reef Act or Part 2A of the Great Barrier Reef Marine Park Regulations 1983 (Cth).
5.An order that the Respondents pay the Applicant’s costs of and incidental to these proceedings.
6. Such other or further orders as the Court considers appropriate.
In the existing statement of claim, QN makes no reference to the 2004 proclamation. It pleads that, pursuant to s 30 of the Reef Act, the marine park is to consist of areas in the Great Barrier Reef Region, a term which is defined in that Act. QN alleges that the pipeline area is not within the Great Barrier Reef Region as defined, and so cannot be part of the marine park. Concerning the 2001 proclamation, QN pleads that either parts of it were invalid or that, on its proper construction, it did not apply to the pipeline area. On that basis, QN claims that the permit dated 19 December 2011 is invalid, and that the respondents are not entitled to interfere in QN’s maintenance, operation and use of the pipeline, including its use for discharge of waste water into Halifax Bay, or to seek to impose or enforce any alleged requirements, prohibitions or restrictions, including the alleged requirement to remove the pipeline.
THE PROPOSED AMENDMENTS
QN now seeks to amend the originating application and the statement of claim. Broadly speaking, the proposed amendments to the statement of claim plead:
·that QN controls and has the use of the pipeline;
·the making of the 2004 proclamation; and
·that both the 2001 proclamation and the 2004 proclamation exceeded or exceed the power conferred by s 31(1) of the Reef Act;
In addition, QN proposes to plead that it has a proprietary interest as owner in the chattel or fixture constituted by the pipeline and choses in action constituted by its statutory rights under the QN Act including the right to construct and operate the nickel refinery and related infrastructure which encompasses the right to construct and use the pipeline for the purpose of discharging wastewater into Halifax Bay.
QN also proposes to plead that:
·to the extent that relevant provisions of the Reef Act and the Great Barrier Reef Marine Park Regulations 1983 (Cth) (the “Regulations”) made thereunder purport to authorize the respondents, or either of them, or any officer of the Commonwealth to direct QN to remove the pipeline, or to cause such removal without QN’s consent, those provisions effected or authorized an acquisition of QN’s property within the meaning of s 51(xxxi) of the Constitution;
·to the extent that the proclamations purported or purport to include the pipeline area in the marine park, and thereby prevent QN from using the pipeline, including for the purpose of discharging waste water into Halifax Bay, without complying with the provisions of the Reef Act and the Regulations, each proclamation effected or effects, or authorized or authorizes an acquisition of QN’s property within the meaning of s 51(xxxi); and
·neither the Reef Act nor the Regulations provided or provides for compensation on just terms.
Hence QN pleads that parts of both proclamations, to the extent that they purport to apply to the pipeline area, and certain sections of the Reef Act and one of the Regulations, are invalid. Alternatively, it pleads that those provisions, upon their proper construction, do not apply to the pipeline area, and do not authorize the respondents to direct removal of the pipeline, or to cause its removal, without QN’s consent.
THE COMPENSATION CLAIM
To this point, the respondents make no objection to the proposed amendments. However proposed paras 30‑37 of the statement of claim are as follows:
Compensation
30.The applicant repeats paragraphs 23 to 29 above.
31.The conduct of the first respondent as pleaded in paragraph 8 above, and the conduct of the second respondent as pleaded in paragraph 9 above, was wrongful or invalid conduct which has caused permanent damage or destruction to the pipeline, or to the applicant's proprietary rights to use the pipeline, as pleaded in paragraphs 23 and 24 above.
32.The conduct identified in the preceding paragraph has caused the applicant to incur substantial costs as a consequence of the necessity to make alternative arrangements for the management of its wastewater by reason of the prohibition upon the applicant using the pipeline to discharge wastewater into Halifax Bay.
…
33.Any conduct of the respondents, or of any other officer of the Commonwealth, of the kind threatened by the second respondent as pleaded in paragraph 22(b) above, namely causing or requiring the removal of the pipeline without the applicant's consent, would be wrongful or invalid conduct which would cause permanent damage or destruction to the pipeline, or to the applicant's proprietary rights to use the pipeline as pleaded in paragraphs 23 and 24 above.
34.At all material times, the respondents knew, or ought reasonably to have known, that:
a.section 4(2)(g) and Part 7 of Schedule 1 to the 2001 Proclamation and section 4 and Schedule 1 to the 2004 Proclamation (to the extent those provisions purport to apply to the area of Halifax Bay in which the applicant's pipeline is located);
and
b.sections 38DC and 61A(2) of the Reef Act and regulation 94 of the Reef Regulations;
were or are invalid on the ground that they contravened or contravene the limitation upon the legislative power of the Commonwealth specified in section 51(xxxi) of the Constitution.
35.By reason of the conduct of the first respondent as pleaded in paragraph 8 above, and the conduct of the second respondent as pleaded in paragraph 9 above, the applicant has been wrongfully deprived of its use of the pipeline and has suffered financial loss.
…
36.The respondents are liable to the applicant at general law by way of an action on the case or in tort by analogy with, or in the nature of, an action on the case.
37.By reason of the matters pleaded in paragraphs 30 to 36 above, the applicant is entitled to damages in the amount necessary to compensate the applicant for the loss pleaded in paragraph 35 above.
Relief
...
39. By reason of the matters pleaded in paragraphs 30 to 37 above, the applicant claims from the respondents damages in the amount necessary to compensate the applicant for the loss pleaded in paragraph 34 above.
It is important to note that the claim under the heading “Compensation” is not merely a further prayer for relief. It raises a separate cause of action which is based substantially, but not entirely upon the earlier parts of the pleading (in its amended form). The additional matters pleaded are:
·that the respondents knew or ought to have known that parts of proclamations, sections of the Reef Act and reg 94 were invalid;
·that the respondents knew or ought to have known that as a result of its being prevented from discharging waste water through the pipeline, QN would suffer loss;
·that there has been permanent damage or destruction to the pipeline or to the applicant’s “proprietary rights to use the pipeline”; and
·that threatened future conduct will cause permanent damage or destruction to the pipeline or to QN’s proprietary rights to use the pipeline.
The respondents oppose the application for leave to amend the statement of claim to add the claim for “compensation”. They submit that the claim is legally baseless and is likely to raise many factual issues pertaining to liability and quantum, lengthening the trial and adding substantially to the cost.
QN admits that there is “some novelty” about the proposed claim. Nonetheless it submits that the respondents are arguing for summary dismissal of the claim, and that the “persuasive onus” is on them. Such an approach misconceives the nature of this application. It is for QN to satisfy me that it should have leave to amend. QN cannot justify its application for leave simply by asserting that it wishes to raise a claim which cannot be justified by reference to any current authoritative statement of the law. A pleaded cause of action which is unknown to the law, or which cannot be supported by the pleaded facts is liable to be struck out. An application for leave to amend to raise such a claim would generally fail. It is not for me, sitting at first instance, to decide whether the law should move in a particular direction, and then put the other parties to the trouble and expense of engaging in such a speculative exercise. The amendment may only be allowed if there is some reasoned basis upon which the proposed claim might succeed.
AN ACTION ON THE CASE
In para 36 QN pleads that the respondents are liable, “by way of an action on the case or in tort by analogy with, or in the nature of, an action on the case”. Stroud’s, Judicial Dictionary of Words and Phrases (6th ed) says:
“Actions upon the case” ... , may, probably, be defined as those in which a plaintiff sues for damages for any wrong or cause of complaint to which the old action of covenant or trespass would not apply … .
QN seems to rely upon the following passage in Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 at 230 where Dixon J (as his Honour then was) said:
There remains the remedy for special damage sustained by the owner of a chattel who is out of possession. This was a special action on the case and does not depend on the plaintiff's having the immediate right to possession. More usually the action was brought by an owner whose right to possession was suspended. If the chattel was held upon a bailment for a term or until the fulfilment of a condition, it was the only action available to the bailor, if the chattel was damaged. The foundation of the action is the damage and "permanent" damage to the chattel must have occurred, that is damage which would enure to the" reversioner."
That cause of action is discussed in Barker, Cane, Lunney and Trindade: The Law of Torts in Australia (5th ed) at 3.5 where the authors say:
The torts of trespass, conversion and detinue protect interests in possession but there is also a remedy for interferences with goods that affect the owner who is out of possession and not entitled to immediate possession. The action will be available where the trespass, conversion or detinue results in ‘permanent’ damage to the goods, so that when the owner gets them back they will be worth less. The most common example is destruction of the goods, or damage done to them, while out of the owner’s possession, of a kind that will remain when possession returns to the owner. It appears that the mere presence of a contractual right for a bailee of goods to repair or make good the damage does not prevent the action from being brought by a bailor against a third party who is responsible for the damage. But if the bailee has in fact repaired or replaced the goods there can be no claim: historically, the claim was an action on the case, where damage was required to establish a cause of action, and if the bailee repairs or replaces the goods the bailor suffers no loss.
(Footnotes omitted.)
In Balkin, Davis: Law of Torts (5th ed) there is a similar passage at 4.65. The distinction between causes of action available to those in possession of land or chattels, and those available to persons not in possession is of some importance. It has been closely associated with much of the development of the common law. QN presently pleads that it owns, controls and has the use of the pipeline. It proposes to plead that:
·it has a proprietary interest as owner in the chattel or fixture constituted by the pipeline; and
·it possesses choses in action constituted by statutory rights under the QN Act, including the right to control and use the pipeline.
It is unclear whether QN claims to be in possession of either the pipeline or the pipeline area. If it so claims, then the admittedly novel cause of action which it seeks to plead would cut across the historical distinction between actions in trespass and actions on the case.
In Beaudesert Shire Council v Smith (1969) 120 CLR 145 at 156, the High Court (Taylor, Menzies and Owen JJ) held that:
[I]t appears that the authorities cited do justify a proposition that, independently of trespass, negligence or nuisance but by an action for damages upon the case, a person who suffers harm or loss as the inevitable consequence of the unlawful, intentional and positive acts of another is entitled to recover damages from that other.
However that proposition was subject to at least two qualifications, First, it seems that by the word “unlawful”, their Honours meant “forbidden by law”. Second, the proposition was subject to the general rule that breach of statutory duty will not justify a claim for damages by an affected person, unless the relevant statutory provision was intended to confer a private remedy at the suit of such a person.
Although the decision in Beaudesert stood for almost 30 years, it was widely criticized and eventually overruled by the High Court in Northern Territory of Australia v Mengel (1994‑1995) 185 CLR 307. Concerning the correctness of the decision, the majority said at 341‑342:
It is the intentional element of the cause of action described in Beaudesert that has given rise to most concern. More precisely, it is that the principle as formulated permits of liability notwithstanding that there is neither negligence nor an intention to inflict harm. So far as intention is concerned, the cause of action does not depend on an intention to harm the plaintiff, but on the doing of an act which is intentional and the inevitable consequence of which is to cause loss to the plaintiff.
It will later be necessary to say something of the action for breach of statutory duty. But putting that action aside, the recent trend of legal development, here and in other common law countries, has been to the effect that liability in tort depends on either the intentional or the negligent infliction of harm. That is not a statement of law but a description of the general trend ... .
(Footnotes omitted.)
In Mengel, the High Court, at 349, considered the proposition advanced by Priestley J that:
[A] plaintiff has an action on the case for damage suffered because in face of an express or implied threat by governmental authority of unlawful interference with the plaintiff’s property or of unlawful prosecution of the plaintiff, the plaintiff has felt compelled to refrain, and has refrained, to the plaintiff’s loss, from dealing with the plaintiff’s goods.
The relevant party submitted that this proposition was supported by the observations of Dixon J in Jamesv The Commonwealth (1939) 62 CLR 339. The majority of the High Court concluded that the decision in James offered no support for the proposition. At 350 to 351, their Honours said:
The cause of action identified by Priestley J involves no intentional element and, to that extent, is clearly contrary to the principle adopted by Dixon J in James v The Commonwealth. There are also difficulties associated with the notion of liability for an "unlawful prosecution" if that extends beyond malicious prosecution or abuse of process.
Moreover, there is implicit in the principle espoused by Priestley J an assumption that the assertion that certain legal consequences will attend a course of action amounts to a threat for the purposes of the principle stated in Salmond's Law of Torts. That assumption cannot be maintained in the face of what was said by Dixon J in relation to the first aspect of the claim considered in James v The Commonwealth.
In discussing the claim that Commonwealth officers had induced breaches of the obligations of common carriers, Dixon J noted that "inducement [was] to be distinguished from advice or persuasion". In that context, his Honour observed that what had occurred in that case was "an appeal to the law as it was conceived to exist" with "[t]he threat or inducement consist[ing] in a tacit or implied intimation that the claims of the Government might be enforced by resort to legal process". His Honour went on to state that, in his opinion:
"it would be an extension of the principle upon which the procurement of breach of duty is made a tort to hold that it covers a mistaken assertion on the part of the Executive Government or its officers that under the law, as they understood it, it is the third party's duty to refrain from compliance with the obligation upon which the plaintiff insists."
The considerations that led Dixon J to conclude in James v The Commonwealth that the "intimation that the claims of the Government might be enforced by resort to legal process" did not amount to procurement or inducement also lead to the conclusion that the mistaken assertion by government officers that, as a matter of law, certain consequences will or might attend a particular course of action does not constitute a threat for the purposes of the principle stated in Salmond's Law of Torts and adopted by Dixon J. At least that is so if the assertion is made bona fide.
(Footnotes omitted.)
IMPUGNED CONDUCT, RIGHTS AND DAMAGE
In order to understand the compensation claim, one should identify the impugned conduct, and the alleged effect of it upon QN. That exercise necessarily involves identification of the “property” belonging to QN which, it is said, has been, or may be adversely affected by the relevant conduct. Taking into account the proposed amendments, QN’s “property” is described in the proposed amended statement of claim as follows:
·its rights as owner, controller and user of the pipeline (paras 4 and 34A);
·a proprietary interest as owner in the chattel or fixture constituted by the pipeline (para 23);
·choses in action constituted by its statutory rights under the QN Act, including the right to construct and operate a nickel refinery and related infrastructure including, as an essential and/or incidental aspect of the operation of the refinery and related infrastructure, the right to construct and use the pipeline for the purpose of discharging waste water into Halifax Bay (para 24); and
·the right to give or withhold consent to the implementation of any decision by either respondent or any officer of the Commonwealth to cause or require removal of the pipeline (ss 29 and 33).
The conduct of which QN complains (as identified in the proposed amended statement of claim) is that identified in paras 8 and 9 of the existing statement of claim. Such conduct is:
·pursuant to the 2001 and 2004 proclamations, the inclusion of the pipeline area within the marine park;
·the subsequent assertion and exercise of authority by the Authority over the pipeline area, such assertion and exercise being:
·the issue of permits;
·preparation of a zoning plan pursuant to which the pipeline area was placed within the General Use Zone;
·refusal of QN’s application for permission to discharge waste water within the General Use Zone; and
·refusal of QN’s application to operate the pipeline within that zone and the statement that the pipeline was an unpermitted structure which may be subject to a removal order.
The 2001 proclamation has no ongoing relevance, save to the extent that any of the impugned conduct occurred before the 2004 proclamation came into effect.
All of these actions are said to have been unlawful or invalid by virtue of the facts pleaded in paras 25, 26 and 27 of the proposed amended statement of claim. Paragraph 25 asserts that ss 38DC and 61A(2) of the Reef Act and reg 94 of the Regulations authorize the acquisition of QN’s property. Section 38DC makes it an offence for a person to contravene an order or direction given under a regulation, provided that the Regulations provide that the relevant kind of order or direction is one to which s 38DC applies. Section 61A(2) provides that when the Minister suspects that an act or omission constitutes an offence against the Reef Act, or attracts a pecuniary penalty, he or she may take steps to repair or remedy the relevant situation, including the removal of any structure. Regulation 94 permits the Authority to direct the removal of property from the marine park. If appropriate action is not taken, the Minister may deal with the matter under s 61A. Section 38DC applies to any orders made under reg 94.
Paragraph 26 of the proposed amended statement of claim asserts that to the extent that the inclusion of the pipeline area in the marine park prevents QN from using the pipeline, (including use for the purpose of discharging waste water into Halifax Bay), it effects or authorizes an acquisition of QN’s property. In para 27 QN alleges that neither the Reef Act nor the Regulations identifies just terms upon which any such acquisition is to be made.
At para 28, QN pleads that s 4(2)(g) and Pt 7 of Sch 1 to the 2004 proclamation, to the extent that they purport to apply to the pipeline area, are invalid. Those provisions simply identify the relevant area of Halifax Bay. Sections 38DC and 61A(2) of the Reef Act are also said to be invalid. Alternatively, these various provisions should be construed as not applying to the pipeline area.
Damage is an essential element of an action on the case. At para 31 QN pleads that the identified conduct of the Commonwealth (para 8) and that of the Authority (para 9) was wrongful or invalid and has caused permanent damage and destruction to the pipeline, and to QN’s proprietary right to use it. QN further pleads that it has incurred expense in making alternative arrangements for the disposal of waste water. QN then pleads that:
·any conduct of the respondents causing or requiring the removal of the pipeline without QN’s consent would be wrongful or invalid and would cause permanent damage and destruction to the pipeline or to QN’s proprietary right to use it;
·the respondents knew or ought reasonably to have known that to the extent that the proclamations purported to apply to the pipeline area, the identified provisions were invalid on the ground that they contravened s 51 (xxxi) of the Constitution;
·the respondents knew, or ought reasonably to have known, that by refusing to allow QN to discharge waste water from the pipeline, or prohibiting such discharge and/or notifying QN that the pipeline was not a permitted structure and might be subject to a removal order, they were limiting the use which the applicant could make of it, rendering it necessary that QN make other arrangements, thus incurring substantial costs;
·QN has been wrongfully deprived of use of the pipeline and has suffered financial loss.
THE PROPOSED CAUSE OF ACTION
At the heart of the pleading is QN’s assertion that it owns or otherwise has rights with respect to the pipeline. However the nature and source of such rights are unclear. It is not even clear whether the pipeline is said to be a chattel or a fixture. Further, although QN claims to “control” the pipeline, it does not claim to possess it. As I have said, possession may possibly have justified an action in trespass, rather than an action on the case. The existence of a cause of action in trespass may have made it more difficult to establish an admittedly novel cause of action. It may be that an action in trespass would face other problems with which QN does not wish to deal, or cannot deal. The pleading does not identify the location of the pipeline. It seems that it is both on land and on the seabed. There is no plea that it is on QN’s land, although at least some of it probably is so located. Nothing is said about the circumstances in which it came to be constructed on the seabed, within Queensland’s territorial waters. Even the boundaries of the pipeline area are not identified. It is not clear whether the “part of Halifax Bay in which the pipeline is located” (see para 8 of the statement of claim) is precisely the area occupied by the pipeline or some larger area which includes an area surrounding it.
It may be implicit in the pleading that the pipeline was constructed under the general obligations imposed upon QN by the QN Act, and pursuant to the authority of that Act, but there is no mention in the QN Act of a pipeline discharging waste water into Halifax Bay. It is not pleaded that such a pipeline was approved by the Queensland Government, or that the question of discharge of waste water into Halifax Bay was discussed. It is said that such discharge was necessary or incidental to the project at the time, and was an intended and essential aspect of QN’s plans, but those propositions must be doubted in view of the fact that QN has now made other arrangements, although at some cost. Further, those pleadings say nothing about how the pipeline came to be built, or any circumstances which might demonstrate the basis for QN’s claim to ownership of, control of, or right to use it. In some cases, it may not be necessary to particularize such matters. However, in this case it is said that the pipeline may be either a chattel or a fixture. It is located on the seabed which is certainly not QN’s property, and it is not alleged that, to the extent that it is on land, QN owns that land.
CAUSATION OF DAMAGE
Although QN pleads that the pipeline has been damaged, there are no particulars of any conduct by the respondents which could have caused such damage. Nor is the damage particularized. The only damage suffered appears to have been as a result of QN’s loss of use of the pipeline. There is an allegation that future action may destroy the pipeline, but a mere threat cannot sound in damages, save to the extent that it might reduce its value as an asset. However, if QN establishes its claims of invalidity, any loss of that kind will not be incurred.
The matter is further complicated by the pleading at para 24 that QN possesses choses in action, being statutory rights under the QN Act, including the right to construct and operate the refinery and associated infrastructure, of which the pipeline is said to be an essential or incidental aspect. One might have thought that any right to construct is a matter of history, and that operation of the refinery without the pipeline is apparently possible. The only clear feature about all of this is that QN claims the (apparently unqualified) right to discharge waste water into Halifax Bay, using the pipeline, without explaining the basis upon which it makes such claim.
It is difficult to identify how the impugned conduct could have caused harm to QN. Complaint is made concerning:
·the validity of sections 38DC and 61A(2) of the Reef Act;
·section 4(2)(g) and Pt 7 of Sch 1 to the 2001 proclamation;
·section 4 and Sch 1 to the 2004 proclamation; and
·regulation 94 of the Regulations.
For present purposes, I proceed on the basis that either:
·the inclusion of the pipeline area in the marine park was invalid by reason of s 51(xxxi) of the Constitution, however that situation may have arisen; or
·those provisions and/or the proclamations should be construed as not applying to the pipeline area.
QN claims that the Commonwealth wrongfully made the proclamations and the Authority wrongfully asserted, and has purported to exercise authority over the pipeline area as part of the marine park, as alleged in para 9 of the pleading. It is difficult to see how the issue of permit number G04/10823.1 could have caused any damage, given that it authorized the operation and maintenance of the pipeline, albeit without reference to the discharge of waste water. Similarly, the issue of permit number G04/10823.2 could not be said to have caused any damage to QN’s property. Permit number G11/33310.1 (which was both issued and re‑issued) authorized maintenance, decommissioning and removal of the pipeline and prohibited discharge. Given that the permit merely authorized conduct, it is not immediately clear that it could have caused harm, save possibly for any adverse effect on the value of the refinery, including the pipeline. QN may assert that the permit tacitly forbade other conduct, such as use of the pipeline for discharging waste water into Halifax Bay. However that proposition has not been pleaded.
The Authority’s preparation and submission of a zoning plan appears to have been in discharge of its duty pursuant to ss 32A and 35C of the Reef Act. However the plan only came into effect after it had been laid before Parliament in accordance with s 35F. QN pleads that the zoning plan commenced operation on 1 July 2004. However it pleads only that the Authority prepared and submitted it. Those steps cannot have caused harm to QN’s claimed rights. Any such damage was as the result of subsequent action by the Minister and the Houses of Parliament.
The other actions complained of are:
·the refusal of QN’s application for permission to discharge waste water into the General Use Zone; and
·notification of the refusal of a second application to operate the pipeline, and the indication that “the pipeline is now an unpermitted structure in the Marine Park and may be subject to removal orders”.
The applications for permits were presumably based on QN’s understanding that the Authority was asserting that its permission was necessary. That assertion was either correct or it was not. The refusals could only be wrongful if such assertion was correct. If it was incorrect, then the refusal to issue an invalid permit could not be wrongful. It is not possible for QN to submit that the whole regime, as it applies to the pipeline area is invalid, or that the various provisions should be construed as not applying to that area, and at the same time, assert that the Authority ought to have granted a permit to discharge waste water. I should also point out that neither the Commonwealth nor the Authority has required QN to do anything. Although the permits and the zoning plan are not in evidence, it seems likely that the permits were issued pursuant to s 38DD(1) and Div 2 of the Regulations. The term “waste” is defined in s 3, but there is no evidence as to the contents of QN’s waste water. Curiously, QN does not refer to s 38DD. Its reliance on s 38DC seems to relate to a possible future direction that the pipeline be removed.
QN’s real case seems to be that it has been wrongfully deprived of its use (para 35). In para 32, QN pleads that it has incurred outgoings totalling $132,266,044 in the years since 2001, some of which is capital expenditure and some, operating costs. I assume that such outgoings were for the purpose of providing alternative means of waste water disposal. The causal relationship between the respondents’ conduct in incurring, in 2001, 2002 and 2005, over $22 million in capital expenditure for a water treatment plant is not disclosed. Pursuant to March 2009, the Authority seems not to have said anything about the discharge of waste water.
Paragraph 33 of the proposed amended statement of claim anticipates possible future conduct by the respondents. However it is difficult to see any relationship between future conduct and the compensation claim. If, in these proceedings, the proposed conduct is shown to be invalid or unlawful, it will not occur. The possibility of future unlawful conduct cannot presently sound in damages, save to the extent that it may affect the value of the refinery.
KNOWLEDGE OR IMPUTED KNOWLEDGE
In para 34 QN alleges that the respondents knew, or ought to have known that the various provisions were invalid by virtue of s 51 (xxxi) of the Constitution. In para 34A QN pleads that the respondents knew, or ought to have known that if it could not use the pipeline to discharge waste water, it would have to make other arrangements, thus incurring substantial cost. I make two points concerning para 34 and 34A. First, QN has not provided particulars of the facts upon which it relies in asserting knowledge. Rule 16.43 of the Federal Court Rules 2011 (Cth) requires such particulars. Second, the significance of the alleged knowledge is unclear. It may go to the question of unlawfulness of the respondents’ conduct, or it may go to the foreseeability of damage.
THE SUBJECT MATTER OF THE PROPOSED CLAIM
As I have previously said QN pleads that it has a right to discharge waste water through the pipeline and into Halifax Bay, but it is little more than a claim. QN’s failure to identify any cogent basis for this claimed right makes it difficult to identify how its rights have been, or may be breached. It seems likely that any consideration of a novel cause of action on the case will necessarily involve an examination of the relationship between QN and the pipeline or pipeline area, and of the effect of the respondents’ impugned conduct upon that relationship. For so long as QN does little more than assert those rights, it will be difficult to perform that exercise
THE AUTHORITIES
A further problem is that QN asserts a cause of action which reflects the approach adopted in Beaudesert, which approach was disapproved in Mengel. QN claims that it has suffered harm as the inevitable consequence of the unlawful, intentional and positive acts of the respondents. QN’s case also seems to reflect the proposition advanced by Priestley J in Mengel that a plaintiff has a cause of action on the case if, in the face of express or implied threats by governmental authority of unlawful interference with the plaintiff’s property, the plaintiff has felt compelled to refrain, and has refrained from dealing with his or her goods and has suffered loss as a result. Indeed, QN’s case does not rise so high. I cannot see that I can, in the face of the decision in Mengel, allow the pleading of the case for “compensation” to be raised, at least in its present form.
However QN has another problem. In James at 372, Dixon J said:
I am quite unable to believe that an attempted enactment of the legislative organ of government can form any part of a wrongful act for which the Executive Government is liable under Part IX. of the Judiciary Act. The existence of the invalid statute may be regarded as a fact preliminary to and explanatory of the commission by the Executive of a tort, but it cannot, in my opinion, enter into the actual grounds of legal responsibility in tort.
In Bienke v Minister for Primary Industries (1996) 63 FCR 567 at 595 the Full Court (Black CJ, Davies and Sackville JJ) said, concerning a claim in negligence:
The existence of a claim of damages for negligence must depend upon the existence of a relevant duty of care and a breach of that duty. As Deane J said in Hawkins v Clayton (1988) 164 CLR 539 at 576, a "duty of care will arise under the common law of negligence only in a case where the requirement of a relationship of proximity between the plaintiff and the defendant is satisfied". A public authority may be held to have breached a relevant duty of care where direct physical injury or damage was caused by a negligent act: Wyong Shire Council v Shirt (1980) 146 CLR 40. The duty of care may be held to arise if damages have flowed from a negligent misstatement by a public authority: San Sebastian Pty Ltd v Minister Administering Environmental Planning and Assessment Act 1979 (NSW) (1986) 162 CLR 340. And a public authority may be held liable for the negligent performance of an operational act provided that a duty of care subsisted: Sutherland Shire Council v Heyman. But in no case in Australia has a Minister of State or a public authority been held liable for the negligent proclamation of a policy or the making of an invalid rule or regulation or the issue of a plan for which statute makes provision. Of course, there may be liability if the wrongful exercise of authority was carried out in the knowledge that it was beyond power: Bourgoin SA; Farrington v Thomson [1959] VR 286.
I should make three points concerning this passage. First, the decision cannot be discounted simply on the basis that it involved a claim in negligence. Such a claim is, as a matter of history, an action on the case. Second, lest it be suggested that the reference to the decision in Bourgoin offers support for QN’s assertion that the Authority acted beyond its power, I should say something about that decision. It was a case in which a police officer had done an act which, to his knowledge amounted to an abuse of his office. In other words it was a case of misfeasance in a public office. That is not the present case. Third, in Bienke, the Full Court, referring to the decision in Sutherland Shire Council v Heyman (1985) 157 CLR 424, distinguished between areas of policy and operational areas. Whilst a public authority might be liable for a breach of duty in carrying out a particular operational function, the case is otherwise in areas of policy or in the exercise of a discretion. Clearly, the proclamations and other actions of the Authority were matters of policy and/or involved the exercise of a discretion.
A further problem may arise out of the historical distinction between actions in trespass and actions on the case, particularly given the equivocal way in which QN describes the relationship between it and the pipeline.
CONCLUSION
These considerations would, of themselves lead me to refuse to allow QN to plead the claim for compensation. My view is re‑inforced by the deficiencies in the pleading to which I have referred. QN has simply failed to explain the basis of its claimed right to use the pipeline, or the extent of the claimed right. That failure is fatal to the claim for compensation and, perhaps, to other aspects of the case. As far as I can see, it is not possible to identify either the extent of any alleged duty or the damage allegedly done, unless one knows the subject matter in question. There is also no clear assertion of the causal relationship between the impugned conduct and the only alleged damage, the cost of providing an alternative system of waste water disposal. Although QN pleads that it has suffered loss by reference to the value of the pipeline, it does not plead any diminution in value. Further, one would expect that the relevant enquiry would be as to the value of the refinery, with and without the pipeline. It seems unlikely that the pipeline, itself would have any value in the event that it could not be used.
ORDERS
I grant QN leave to file and serve an amended statement of claim, not including paras 30 to 37 and para 39 of exhibit 1. I shall hear submissions as to costs.
I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. Associate:
Dated: 23 March 2016
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