Warkworth Mining Limited v Bulga Milbrodale Progress Association Inc

[2014] NSWCA 105

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Warkworth Mining Limited v Bulga Milbrodale Progress Association Inc [2014] NSWCA 105

Hearing dates:

14, 15 and 16 August; 5 September 2013

Date of orders:

07 April 2014

Decision date:

07 April 2014

Before:

Bathurst CJ;
Beazley P;
Tobias AJA

Decision:

1. Appeal dismissed with costs;
2. Cross-appeal dismissed with costs;
3. Summons dismissed with costs.

Catchwords:

ENVIRONMENT AND PLANNING – major infrastructure development – Environmental Planning and Assessment Act 1979, Pt 3A

ENVIRONMENT AND PLANNING – major infrastructure development – public interest – Ecologically Sustainable Development

ADMINISTRATIVE LAW – appeal on a question of law – error of law – procedural fairness

ADMINISTRATIVE LAW – appeal on a question of law – mandatory considerations – ‘focal point’ or ‘fundamental element’

ADMINISTRATIVE LAW – appeal on a question of law – irrelevant considerations

ADMINISTRATIVE LAW – orders in the nature of prerogative relief – Supreme Court Act 1970, s 69

Legislation Cited:

Environmental Planning and Assessment Act 1979
Environmental Planning and Assessment Amendment (Part 3A Repeal) Act 2011
Environmental Planning and Assessment Regulation 2000
Land and Environment Court Act 1979
Mining Act 1992
National Parks and Wildlife Act 1974
Supreme Court Act 1970
Threatened Species Conservation Act 1995

Cases Cited:

A v Pelekanakis (1999) 91 FCR 70
Alinta LGA Limited v Mine Subsidence Board [2008] HCA 17
Anderson v Director General of the Department of Environmental and Climate Change [2008] NSWCA 337; 163 LGERA 400
Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223
Barrick Australia Ltd v Williams [2009] NSWCA 275; 74 NSWLR 733
Blacktown City Council v Hocking [2008] NSWCA 144
Castle Constructions Pty Ltd v North Sydney Council [2007] NSWCA 164
Ceva Logistics (Australia) Pty Ltd v Redbro Investments Pty Ltd [2013] NSWCA 46
Clements v Independent Indigenous Advisory Committee [2003] FCAFC 143; 131 FCR 28
Damjanovic & Sons Pty Ltd v Commonwealth [1968] HCA 42; 117 CLR 390
Dasreef Pty Ltd v Hawchar [2011] HCA 21; 243 CLR 588
Director-General, Dept of Ageing, Disability and Home Care v Lambert [2009] NSWCA 102; 74 NSWLR 523
Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 77 ALJR 1088
Evans v Marmont (1997) 42 NSWLR 70
Farah Constructions Pty Ltd v Say Dee Pty Ltd [2007] HCA 22; 330 CLR 89
Goodwin v Commissioner of Police [2012] NSWCA 379
Hunter Development Brokerage Pty Ltd v Cessnock City Council (No 2) [2006] NSWCA 292
James Hardie & Coy Pty Limited v Roberts [1999] NSWCA 314; 47 NSWLR 425
Kioa v West [1985] HCA 81; 159 CLR 550
Kirk v Industrial Relations Commission; Kirk Group Holdings Pty Ltd v WorkCover Authority of New South Wales (Inspector Childs) [2010] HCA 1; 239 CLR 531
Kostas v HIA Insurance Services Pty Limited [2010] HCA 32; 241 CLR 390
Lowy v The Land and Environment Court of NSW & Ors [2002] NSWCA 353; 123 LGERA 179
Macedon Ranges Shire Council v Romsey Hotel [2008] VSCA 45; 19 VR 422
McKinnon v Secretary, Department of Treasury [2006] HCA 45; 228 CLR 423
Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24
Minister for Immigration and Ethnic Affairs (1987) 14 ALD 291
Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; 206 CLR 323
Minister for Immigration v Li [2013] HCA 13
Minister for Planning v Walker [2008] NSWCA 224; 161 LGERA 423
Mitchell v Cullingral Pty Ltd [2012] NSWCA 389
Muin v Refugee Review Tribunal [2002] HCA 30; 190 ALR 601
O’Sullivan v Farrer [1989] HCA 61; 168 CLR 210
Osland v Secretary to Department of Justice [2008] HCA 37; 234 CLR 275
Osland v Secretary to Department of Justice [No 2] [2010] HCA 24; 241 CLR 320
Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110
R v Hunt; Ex Parte Sean Investments Pty Ltd [1979] HCA 32; 180 CLR 322
R v Toohey; Ex parte Meneling Station P/L [1982] HCA 69; 158 CLR 327
Rana v Military Rehabilitation and Compensation Commission [2011] FCAFC 80
RCB v The Honourable Justice Forrest [2012] HCA 47; 247 CLR 304
Re Minister for Immigration and Multicultural Affairs; ex parte Applicant S154/2002 (2003) 77 ALJR 1909
Re Minister for Immigration and Multicultural Affairs; Ex parte Lam [2003] HCA 6; 214 CLR 1
Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22; 206 CLR 57
Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33
Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66
RTA v Damjanovic [2006] NSWCA 166
RTA v Peak [2007] NSWCA 66
Segal v Waverley Council [2005] NSWCA 310; 64 NSWLR 177
Singh v the Minister for Immigration [2001] FCA 389
Stead v State Government Insurance Commission [1986] HCA 54; 161 CLR 141
SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63; 228 CLR 152
The Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal [2012] HCA 36; 246 CLR 379
Tickner v Chapman (1995) 57 FCR 451
Turner v Minister for Immigration and Ethnic Affairs (1981) 35 ALR 388
Ucar v Nylex Industrial Products Ltd [2007] VSCA 181
Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWCA 178
Walkerville v Adelaide Clinic Holdings (1985) 38 SASR 161
Water Conservation and Irrigation Commission (NSW) v Browning [1947] HCA 21; 74 CLR 492
Wen v Minister for Immigration and Multicultural Affairs [2000] FCA 320
Zhang v Canterbury City Council [2001] NSWCA 167; 51 NSWLR 589

Texts Cited:

M Aronson, M Groves, Judicial Review of Administrative Action, 5th ed (2013, Thomson Reuters)
M J Beazley, The Scope of Judicial Review (The Joint Seminar on Legality of Administrative Behaviours and Types of Adjudication, Xian, People’s Republic of China, 11-13 April 2006)
E Campbell and M Groves, ‘Polycentricity in Administrative Decision-Making’ in Matthew Groves (ed), Law and Government in Australia (2005, Federation Press)

Category:

Principal judgment

Parties:

Warkworth Mining Limited (Appellant/Second Cross-Respondent)
Bulga Milbrodale Progress Association Inc (First Respondent/First Cross-Appellant)
Minister for Planning and Infrastructure (Second Respondent/Cross-Appellant)

Representation:

Counsel:
N J Williams SC; R C Scruby; T Z Phillips (Warkworth Mining Limited)
J Robson SC; R White (Bulga Milbrodale Progress Association Inc)
R Lancaster SC; N Kelly (Minister for Planning and Infrastructure)
Solicitors:
Minter Ellison (Appellant)
Environmental Defender’s Office (First Respondent)
Department of Planning and Infrastructure (Second Respondent)

File Number(s):

CA 2013/124340; 2013/136441

 Decision under appeal 

Court or tribunal:

Land and Environment Court

Citation:

Bulga Milbrodale Progress Association Inc v Minister for Planning and Infrastructure and Warkworth Mining Limited [2013] NSWLEC 48

Date of Decision:

15 April 2013

Before:

Preston CJ of LEC

File Number(s):

10224 of 2012

HEADNOTE

[This headnote is not to be read as part of the judgment]

On 3 February 2012, the Planning Assessment Commission, as delegate to the Minister for Planning and Infrastructure, granted approval to an application for a major infrastructure project by Warkworth Mining Limited (Warkworth) under Pt 3A of the Environmental Planning and Assessment Act 1979 (the EPA Act).

Bulga Milbrodale Progress Association Inc (the Association) brought an appeal from the Commission’s decision in the Land and Environment Court’s Class 1 jurisdiction, pursuant to the EPA Act, s 75L(3). Preston CJ of LEC re-exercised the statutory power of the Minister and disapproved the project application.

Warkworth brought an appeal from the decision of Preston CJ of LEC to this Court. The Minister also appealed the decision (by way of cross-appeal). Additionally, Warkworth brought proceedings in the alternative for orders in the nature of prerogative relief under s 69 of the Supreme Court Act 1970.

In this Court, Warkworth pressed 13 grounds, including contentions, inter alia:

(1) That Warkworth had been denied procedural fairness in respect of a number of factual matters relating to their application;

(2) That Preston CJ of LEC had erred in law by failing to give weight to the Director-General’s report, and the recommendations contained therein, as a ‘focal point’ or ‘fundamental element’ in his determination as to whether to grant approval to the application;

(3) That Preston CJ of LEC had erred in law by failing to have regard to the Mining Act 1992, which was relevant legislation under the Court Act, s 39(4).

The Court dismissed the appeal.

Held by the Court (Bathurst CJ, Beazley P and Tobias AJA):

(i)   A failure to afford a party procedural fairness will constitute an error of law, and is also a basis upon which an order in the nature of certiorari may be made under the Supreme Court Act 1970, s 69: [5], [39], [45].

Considered: Goodwin v Commissioner of Police [2012] NSWCA 379; Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66 at [141]-[151]; Clements v Independent Indigenous Advisory Committee [2003] FCAFC 143; 131 FCR 28 at [8]; Rana v Military Rehabilitation and Compensation Commission [2011] FCAFC 80 at [24].

(ii)   The requirement under the Land and Environment Court Act 1979, s 38(1), that proceedings brought in the Court’s Class 1 jurisdiction are to be brought with as little formality as possible, does not abrogate the fundamental requirements of procedural fairness in those proceedings: [38].

Considered: RTA v Peak [2007] NSWCA 66 at [15] and [150].

(iii) If evidence is required to meet an issue, the party asserting the factual basis for the issue bears the responsibility for adducing the necessary evidence. The failure to adduce relevant evidence does not give rise to a failure to afford procedural fairness. Where evidence is by way of expert opinion, it is not sufficient to expect that the underlying basis of that opinion not otherwise adduced in the evidence would be revealed in cross-examination: [112].

(iv) When engaged in an exercise of balancing a number of relevant matters in the exercise of a statutory discretion, and in the absence of a statutory indication of the weight to be given to various considerations, a decision-maker is entitled to designate the weight given to a particular matter prior to undertaking the overall balancing exercise: [178].

Considered: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24.

(v) The description of a mandatory consideration as a ‘focal point’ or ‘fundamental element’ is used to emphasise that the relevant matter is a factor that must be placed at the forefront of the decision-maker’s consideration. The language may be appropriate where limited factors or discrete requirements are specified in the legislation. While Section 75J(2) of the EPA Act made consideration of the Director-General’s Environmental Assessment Report mandatory, it did not operate to require the report to be a ‘fundamental element’ or ‘focal point’ in the decision-maker’s consideration. There was no requirement for prima facie effect to be given to the recommendations in the report, or for the decision-maker to articulate why those recommendations should not be followed: [217], [231].

Considered: R v Hunt; Ex Parte Sean Investments Pty Ltd [1979] HCA 32; 180 CLR 322; Zhang v Canterbury City Council [2001] NSWCA 167; 51 NSWLR 589; James Hardie & Coy Pty Limited v Roberts [1999] NSWCA 314; 47 NSWLR 425; Evans v Marmont (1997) 42 NSWLR 70; Singh v the Minister for Immigration [2001] FCA 389; Walkerville v Adelaide Clinic Holdings (1985) 38 SASR 161.

(vi) The circumstances of an administrative review from a primary decision maker to a tribunal is of a different nature to the statutory right of appeal for which s 75L(3) provides.

Distinguished: Macedon Ranges Shire Council v Romsey Hotel [2008] VSCA 45; 19 VR 422, distinguished.

(vii) A statutory requirement that regard be had to the public interest operates at a high level of generality. It is capable of embracing principles of Ecologically Sustainable Development notwithstanding that there is also a legislative provision that makes consideration of those principles necessary: [296], [299].

Considered: Minister for Planning v Walker [2008] NSWCA 224; 161 LGERA 423; Telstra Corporation Limited v Hornsby Shire Council [2006] NSWLEC 133; 67 NSWLR 256; O’Sullivan v Farrer [1989] HCA 61; 168 CLR 210.

(viii)   The Mining Act 1992 was not relevant legislation to which the Minister or the Land and Environment Court was required to have regard in determining whether to grant approval. The operative provisions of the Mining Act 1992 do not deal with the grant of development consent for mining activities. The requirement under s 65 that development consent be obtained prior to the grant of an authority is a legislative indication that questions of development consent and the grant of an authority are separate and distinct processes involving different mandatory and discretionary considerations: [321]-[322].

Legislation considered: Mining Act 1992, s 65

Judgment

INTRODUCTION
INDEX	(Para)
The proceedings	2
Warkworth’s application for a major infrastructure project approval	7
Issues on the appeal	19
(1) Denial of procedural fairness	19(1)
(2) Error of law	19(2)
(3) Failure to exercise jurisdiction	19(3)
The legislation	22
The Environmental Planning and Assessment Act	22
The Land and Environment Court Act	33
Legal Principles relating to procedural fairness	34
GROUND 1: The background noise issue	46
The noise conditions in the approval	54
The pleaded case	60
The evidence	62
The parties’ submissions before the trial judge	71
The primary judge’s reasons on the noise issue	93
The alleged errors	100
Consideration	106
GROUND 2: Impacts on threatened fauna	120
GROUNDS 2A and 6: Polycentricity	147
The Minister’s position on polycentricity	151
Ground 2A	153
The economic evidence	159
Consideration	165
Ground 6	175
GROUND 2B; cross-appeal grounds 1 and 2: The Director-General’s Environmental Assessment Report	181
Fundamental or focal consideration	191
Trial judge’s consideration of the Director-General’s report	236
GROUND 2C: Public interest considerations	270
GROUND 3: Failure to determine the public interest	278
GROUND 5: Failure to consider relevant legislation: The Mining Act	304
GROUND 7: Measures of avoidance: an irrelevant consideration	326
GROUND 8: Erroneous view of EEC offset measures	337
GROUND 9: Failure to consider natural regeneration	342
GROUND 10: Condition 41A	358
ORDERS	378

1. THE COURT:

INTRODUCTION

The proceedings

2. This is an appeal from an order made by Preston CJ of LEC on 15 April 2013, in which his Honour disapproved an application made by Warkworth Mining Limited (Warkworth) for a major infrastructure project approval under the Environmental Planning and Assessment Act 1979 (the EPA Act), Pt 3A to extend the existing Warkworth mine located in the Hunter Valley, a coal-rich region in the State.

3. The proceedings before his Honour were an appeal from the decision of the Minister’s delegate, the Planning Assessment Commission (the Commission) brought in the Court’s Class 1 jurisdiction: Land and Environment Court Act 1979 (the Court Act) Pt 3 Div 1, s 17; and the EPA Act, s 75L(3) (the LEC appeal). The LEC appeal was by way of rehearing and fresh or additional evidence could be tendered and was tendered in this case. In determining the LEC appeal, the Court was required to re-exercise the statutory power conferred upon the Minister in determining the application. In that regard, the Court had all the functions and discretions that the Minister had in respect of the application: the Court Act, s 39(2), s 39(3). However, one further matter should be noted for the record. Warkworth submitted that the jurisdiction conferred by the Court Act, s 39 was that it provided for a rehearing, but not by way of a de novo redetermination. Warkworth acknowledged that this argument was not available to it in this Court: Alinta LGA Limited v Mine Subsidence Board [2008] HCA 17.

4. The appeal to this Court is brought pursuant to the Court Act, s 57, which provides for an appeal on a question of law. To succeed on the appeal it is necessary for there to have been legal error in the manner in which a question was determined in the court below: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWCA 178 at [19]-[24]; Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66 at [136]. It is not necessary, however, for the question of law to be explicitly stated and decided; it is sufficient if a decision is such that resolution of a question of law is manifested by it: Kostas v HIA Insurance Services Pty Limited [2010] HCA 32; 241 CLR 390 at [23], [69], [78] and [91]. Errors with respect to relevant and irrelevant considerations constitute an error or a question of law for the purposes of s 57: Director-General, Dept of Ageing, Disability and Home Care v Lambert [2009] NSWCA 102; 74 NSWLR 523.

5. Failure to afford procedural fairness also constitutes an error of law: Clements v Independent Indigenous Advisory Committee [2003] FCAFC 143; 131 FCR 28 at [8]; Rana v Military Rehabilitation and Compensation Commission [2011] FCAFC 80 at [24]; Goodwin v Commissioner of Police [2012] NSWCA 379 at [19].

6. Warkworth has also brought proceedings pursuant to the Supreme Court Act 1970, s 69 for orders in the nature of prerogative relief, in the event that any of its grounds of appeal do not involve a question of law: Director-General, Dept of Ageing, Disability and Home Care v Lambert at [77], [96]. Warkworth submitted that relief was available pursuant to s 69 on the basis that the Court exceeded its jurisdiction in making the order disapproving Warkworth’s application for major infrastructure project approval. Warkworth also submitted that a failure to afford procedural fairness is a ground to make an order in the nature of certiorari. It was accepted that it was appropriate for Warkworth to bring this application additional to its appeal: Lowy v The Land and Environment Court of NSW & Ors [2002] NSWCA 353; 123 LGERA 179; Kirk v Industrial Relations Commission; Kirk Group Holdings Pty Ltd v WorkCover Authority of New South Wales (Inspector Childs) [2010] HCA 1; 239 CLR 531 at [55].

Warkworth’s application for a major infrastructure project approval

7. Warkworth operates an open cut coalmine mine (the Warkworth mine) approximately 4 km northeast of the village of Bulga in the Hunter Valley. It is one of several coalmines in the area.

8. The Warkworth mine commenced operation in 1981. Its current operations are conducted pursuant to a development consent (the 2003 Development Consent) granted by the Minister for Planning in May 2003 under the EPA Act, Pt 4, s 80 (now repealed). That consent was subject to conditions, including conditions requiring the conservation of areas of native vegetation and landforms to the north, west and southwest of the mine, which were designated as non-disturbance areas and habitat management areas. There were also conditions relating to noise. In that regard, the background noise level for Bulga, including residences to the north of the Village, was assessed to be 33 dB(A). This assessment was based upon a 2002 Environmental Impact Statement, the findings in which were said to have been validated in another study conducted in 2008. The 2008 findings were contained in what became identified in the proceedings as the Global Acoustics Reports.

9. In 2010, Warkworth lodged the application for major infrastructure project approval to extend the mine spatially to the west and southwest (the Project). The application also sought an extension of the existing development consent to mine the underlying coal reserves until 2031. A reason for the application was to take advantage of improved coal prices which made it economic to mine areas which had previously been considered uneconomic, including parts of those areas that had been designated as non-disturbance areas and habitat management areas under the 2003 development consent.

7. Warkworth’s existing mining lease extended over the disturbance area of the Project, but did not include the 20 m immediately below the surface. If approval were given to extend the mine over the proposed extension area, but to restrict Warkworth to underground mining only, 20.1 Mt of product coal would be yielded. By contrast, an open cut mine, as proposed by the Project, would produce a total of 105 Mt of product coal. Therefore, underground mining within the proposed extension area would only produce a yield of 19 per cent of the potential coal product available through open cut mining (being 20.1 Mt divided by 105 Mt).

8. If approved, the extension of the mine would necessitate significant physical disturbance of the surrounding area including:

1. The closure and excavation of Wallaby Scrub Road, a major local road, and the northern extension of the Great North Road, an historic road in the area;

2. Clearing of approximately 766 ha of four types of endangered ecological communities (some of this clearing would have occurred under the existing 2003 consent);

3. Removal of Saddleback Ridge, which separates the Warkworth mine from the village of Bulga;

4. Emplacement of overburden from the Warkworth mine at the Mount Thorley mine which adjoined the Warkworth mine immediately to the south. (The Mount Thorley mine was in separate ownership, but both mines were managed as a single operation under a joint venture agreement between Warkworth and the owners of the Mount Thorley mine).

12. One of the significant vegetation communities most at risk, should the Project proceed, is the Warkworth Sands Woodland, a unique ecological community not found in any other region in the world, including in any other part of the Hunter Valley. The uniqueness of the Warkworth Sands Woodland derives from its propagation in Aeolian sand deposits which only occur in this area. To offset the significant biodiversity impacts, Warkworth nominated two biodiversity areas proximate to the site as offset areas, identified as the Southern and Northern Biodiversity Areas respectively. Other areas (the remote biodiversity offset areas) were nominated as strategic offsets, including for two essential Ironbark communities, principally comprised of the Central Hunter Grey Box. The offset areas were also intended to serve as off sets for disrupted fauna habitat.

13. On 3 February 2012, the Commission, as delegate of the Minister, approved the Project (the Project Approval). The Project Approval permitted an extension of the northern and western pits of the existing mine in a westerly direction over 1271 ha and allowed mining for an additional 10 years to 2031. The approval was subject to conditions, including that Warkworth establish the nominated biodiversity offsets to compensate for the Project’s impacts on biological diversity, including on endangered ecological communities. There were also conditions relating to noise.

14. If the Project is approved, Warkworth’s mining operations would encroach more closely on Bulga from the present 4 km to approximately 2.8 km from the village. The Bulga Milbrodale Progress Association Inc (the Association) was the applicant in the LEC appeal before Preston CJ of LEC. The Association contended before his Honour that Warkworth’s application for the Project should be refused because of its significant and unacceptable impacts on biological diversity, including on endangered ecological communities (EECs), that were not avoided, mitigated or otherwise compensated for by the terms imposed by the Minister’s consent.

15. The Association also contended that there were unacceptable noise and dust emissions impacting upon the residents of Bulga and upon the surrounding countryside; adverse social impacts on the community of Bulga; and economic issues, including that the full environmental costs were not internalised by the Project. The Association contended that overall it was contrary to the public interest to grant approval to the Project.

16. Warkworth and the Minister accepted that there should be some variation to the conditions initially imposed so as to better address the potential impacts of the Project that had been raised during the course of the proceedings before his Honour. They contended that the Project as modified would have acceptable impacts in terms of biological diversity, noise and dust, and in respect of social and economic factors. Overall, they submitted that in balancing the economic, social and environmental factors, the Project was acceptable.

17. Preston CJ of LEC determined that the application for the Project should be disapproved. His Honour’s reasons, at [498], were as follows:

“I have found, amongst other things, that the Project would have significant and unacceptable impacts on biological diversity, including on endangered ecological communities, noise impacts and social impacts; that the proposed conditions of approval are inadequate in terms of the performance criteria set and the mitigation strategies required to enable the Project to achieve satisfactory levels of impact on the environment, including the residents and community of Bulga; and that the proposed conditions of approval, including by combining the Warkworth mine with the Mount Thorley mine, are likely to make monitoring and enforcing of compliance difficult, thereby raising the possibility that the Project's impacts may be greater and more adverse than allowed by the conditions of approval.”

18. His Honour accepted, at [499], that the economic impact and positive social impacts were substantial, but in balancing all relevant matters nonetheless determined that the preferable decision was that the Project be disapproved.

Issues on the appeal

19. The issues raised by the appeal to this Court and on the s 69 summons were as follows:

(1) Warkworth was denied procedural fairness:

1. in respect of his Honour’s finding, at [330]-[333], that background noise levels were set at levels that were too high: ground 1.

2. In respect of his Honour’s finding, at [206]-[207], that there was insufficient evidence to establish that the impacts on the relevant threatened fauna caused by the Project would be offset by the remote biodiversity areas: ground 2.

3. In using a polycentric approach to reject or discount the weight of expert evidence, without raising his intention to do so with the parties or with the witnesses whose evidence was rejected: ground 2A.

4. In applying the wrong test when deciding whether approval should be granted, in that by application of a polycentric approach, he departed from the balancing exercise required by the Act: ground 6. (This issue may be seen as allied to the argument raised by ground 2A.)

5. In failing to deal with the question raised by Warkworth that the natural regeneration of the Warkworth Sands Woodland supported an inference that assisted regeneration would be successful and that the grasslands in the Northern and Southern Biodiversity Areas provided an offset for the loss of the Warkworth Sands Woodland that was to be cleared under the Project proposal: ground 9. It was also said that this constituted a constructive failure to exercise jurisdiction.

(2) His Honour erred in law:

6. In failing to give weight to the Director-General’s report and the reports, advices and recommendations contained therein as fundamental elements in his determination as to whether to grant approval to the application: ground 2B.

7. In failing to consider or give weight to the public interest including in the Director-General’s Report and in the Commission’s conclusions: ground 2C.

8. In failing to address the central aspect of Warkworth’s case, namely, the significant economic benefits and positive impacts of the Project such that there was a failure to exercise jurisdiction and an erroneous application of the applicable legal standard. His Honour also failed to give adequate reasons for his conclusion that the Project should not be approved: ground 3.

9. In failing to have regard to relevant legislation (as required by the Court Act, s 39(4)), namely, the Mining Act 1992 and the terms of the leases held by Warkworth over the disturbance area: ground 5.

10. In deciding the proceedings (a) on the basis that s 75J of the EPA Act or the principles of Ecologically Sustainable Development required or permitted weight to be given to the fact that the Project did not avoid or mitigate impacts on Warkworth Sands Woodland or (b) on the basis that there were available measures to avoid or mitigate those impacts in the absence of evidence to establish that was so: ground 7.

11. In holding, at [205], that only an offset of precisely the same ecological community that would be impacted by the Project could be considered in addressing the impacts of the Project: ground 8.

(3) His Honour failed to exercise jurisdiction:

12. In failing to address Warkworth’s submission that the evidence established that the Warkworth Sands Woodland would regenerate in the Southern and Northern Biodiversity Offset Areas: ground 9.

13. In failing to consider whether the risks of the Warkworth Sands Woodland not regenerating would be mitigated by new condition 41A proposed by Warkworth during the hearing: ground 10. This ground was also advanced as a failure to take into account a relevant consideration, being the condition proposed and as a constructive failure to exercise jurisdiction.

20. All other grounds of appeal were abandoned.

21. By his cross-appeal, the Minister contended that his Honour erred in law by failing to give weight to the Director-General’s report as a fundamental element in his determination, particularly with regard to the aspects of that report addressing the suitability of the biodiversity offsets package, the socio-economic benefits of the project, and the public interest (cross-appeal grounds 1 and 2). The Minister’s cross-appeal raises the same issues as Warkworth’s appeal ground 2B, and are considered together.

The legislation

The Environmental Planning and Assessment Act

22. Warkworth’s application for the extension of the mine was made pursuant to the EPA Act, s 75J. Section 75J was contained in Pt 3A: “Major infrastructure and other projects”. Section 75B(1) provided that Pt 3A applied to the carrying out of a development that is declared under the section to be a project to which the Part applies. Section 75B(2) provided that a major infrastructure or other development that, in the opinion of the Minister, is of State or regional environmental planning significance, may be declared to be a project to which Pt 3A applied.

23. Section 75E provided for the making of an application for approval of a project under the Part.

24. Section 75F provided for the creation of environmental assessment requirements for an approval. When an application was made for approval of a project under Pt 3A, the Director-General was required by s 75(2) to prepare environmental assessment requirements for the project. These requirements were to be prepared having regard to any guidelines published on environmental assessment requirements published by the Minister: see s 75F(1). The Director-General was required to notify the applicant of the environmental assessment requirements that had been prepared. The requirements could be modified by notice to the applicant: s 75F(3).

25. Section 75F(4) required the Director-General, in preparing the environmental assessment requirements, to consult relevant public authorities and have regard to the need for the requirements to assess any key issues raised by those public authorities.

26. An applicant may be required to prepare an environmental assessment: s 75F(5); and may also be required to include in an environmental assessment a statement of the commitments the applicant is prepared to make for environmental management and mitigation measures on the site: s 75F(6). A statement of commitments was required in this case.

27. Section 75H provided that the applicant was to submit to the Director-General the environmental assessment required under s 75F(5). If the environmental assessment was accepted by the Director-General, the Director-General was required to make the environmental assessment publicly available for at least 30 days: s 75H(3). Any person may make a written submission to the Director-General in respect of the environmental assessment: s 75H(4). Copies of the submissions were to be provided, relevantly, to the applicant and any other public authority that the Director-General considers appropriate: s 75H(5).

28. The Director-General could require the applicant to submit a response to the issues raised in the submissions and a preferred project report that outlined any proposed changes to the project to minimise its environmental impact, together with any revised statement of commitments: s 75H(6).

29. Section 75I provided for the Director-General to give a report on a project to the Minister. As this provision is important in Warkworth’s case, it is appropriate to set out its terms in full:

“75I   Director-General’s environmental assessment report

(1)   The Director-General is to give a report on a project to the Minister for the purposes of the Minister’s consideration of the application for approval to carry out the project.

(2)   The Director-General’s report is to include:

(a)   a copy of the proponent’s environmental assessment and any preferred project report, and

(b)   any advice provided by public authorities on the project, and

(c)   a copy of any report of the Planning Assessment Commission in respect of the project, and

(d)   a copy of or reference to the provisions of any State Environmental Planning Policy that substantially govern the carrying out of the project, and

(e)   except in the case of a critical infrastructure project – a copy of or reference to the provisions of any environmental planning instrument that would (but for this Part) substantially govern the carrying out of the project and that have been taken into consideration in the environmental assessment of the project under this Division, and

(f)   any environmental assessment undertaken by the Director-General or other matter the Director-General considers appropriate, and

(g)   a statement relating to compliance with the environmental assessment requirements under this Division with respect to the project.”

30. The Environmental Planning and Assessment Regulation 2000, cl 8B is also relevant and is conveniently referred to at this point. It provided:

“8B   Matters for environmental assessment and Ministerial consideration

The Director-General’s report under section 75I of the Act in relation to a project is to include the following matters (to the extent that those matters are not otherwise included in that report in accordance with the requirements of that section):

(a)   an assessment of the environmental impact of the project,

(b)   any aspect of the public interest that the Director-General considers relevant to the project,

(c)   the suitability of the site for the project,

(d)   copies of submissions received by the Director-General in connection with public consultation under section 75H or a summary of the issues raised in those submissions.”

31. The giving of Approval for a project was governed by s 75J. That section provided, relevantly:

“75J   Giving of approval by Minister to carry out project

(1)   If:

(a)   the proponent makes an application for the approval of the Minister under this Part to carry out a project, and

(b)   the Director-General has given his or her report on the project to the Minister,

the Minister may approve or disapprove of the carrying out of the project.

(2) The Minister, when deciding whether or not to approve the carrying out of a project, is to consider:

(a)   the Director-General’s report on the project and the reports, advice and recommendations (and the statement relating to compliance with environmental assessment requirements) contained in the report …

(3)   In deciding whether or not to approve the carrying out of a project, the Minister may (but is not required to) take into account the provisions of any environmental planning instrument that would not (because of section 75R) apply to the project if approved. However, the regulations may preclude approval for the carrying out of a class of project (other than a critical infrastructure project) that such an instrument would otherwise prohibit.

(4)   A project may be approved under this Part with such modifications of the project or on such conditions as the Minister may determine.

(5)   The conditions of approval for the carrying out of a project may require the proponent to comply with any obligations in a statement of commitments made by the proponent (including by entering into a planning agreement referred to in section 93F).”

32. Notwithstanding that Pt 3A has been repealed, s 75J continues to apply to applications for approval to carry out a project that was made, but not finally determined, before the repeal of the Environmental Planning and Assessment Act, Pt 3A: see Sch 6A(2) and (3) the Environmental Planning and Assessment Amendment (Part 3A Repeal) Act 2011, Sch 1, 1.7[2].

The Land and Environment Court Act

33. The Court Act, Pt 4, Div 4 makes provision, inter alia, for the conduct of Class 1 proceedings in the Court. Relevant to this matter are the provisions of s 38 and s 39. Those sections provide as follows:

“38   Procedure

(1)   Proceedings in Class 1 … of the Court’s jurisdiction shall be conducted with as little formality and technicality, and with as much expedition, as the requirements of this Act and of every other relevant enactment and as the proper consideration of the matters before the Court permit.

(2)   In proceedings in Class 1 … of the Court’s jurisdiction, the Court is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks appropriate and as the proper consideration of the matters before the Court permits.

(3)   Subject to the rules, and without limiting the generality of subsection (2), the Court may, in relation to proceedings in Class 1 … of the Court’s jurisdiction, obtain the assistance of any person having professional or other qualifications relevant to any issue arising for determination in the proceedings and may receive in evidence the certificate of any such person …

39   Powers of Court on appeals

…

(2)   In addition to any other functions and discretions that the Court has apart from this subsection, the Court shall, for the purposes of hearing and disposing of an appeal, have all the functions and discretions which the person or body whose decision is the subject of the appeal had in respect of the matter the subject of the appeal.

(3)   An appeal in respect of such a decision shall be by way of rehearing, and fresh evidence or evidence in addition to, or in substitution for, the evidence given on the making of the decision may be given on the appeal.

(4)   In making its decision in respect of an appeal, the Court shall have regard to this or any other relevant Act, any instrument made under any such Act, the circumstances of the case and the public interest.

(5)   The decision of the Court upon an appeal shall, for the purposes of this or any other Act or instrument, be deemed, where appropriate, to be the final decision of the person or body whose decision is the subject of the appeal and shall be given effect to accordingly.

…

(7)   The functions of the Court under this section are in addition to and not in derogation from any other functions of the Court …”

Legal principles relating to procedural fairness

34. Warkworth contended that it was denied procedural fairness in a number of respects. Each of the matters raised will be dealt with in relation to the particular ground of appeal under which the contention is made. It is useful, however, to first state the principles relating to procedural fairness, a concept which has application in a wide range of circumstances. As the authorities indicate, it is sometimes not difficult to determine that a particular circumstance requires procedural fairness to be accorded. The difficult question, more often, is in determining what is required in the particular circumstance to satisfy the obligation and whether those requirements have been satisfied in the given case. It is in this sense that Gleeson CJ in Re Minister for Immigration and Multicultural Affairs; Ex parte Lam [2003] HCA 6; 214 CLR 1 commented, at [37], in respect of procedural fairness that:

“Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice.”

35. Insofar as procedural fairness relates to the issues raised in the grounds of appeal, the statement of Mason J in Kioa v West [1985] HCA 81; 159 CLR 550 at 587 is of particular relevance. As his Honour stated:

“… recent decisions illustrate the importance which the law attaches to the need to bring to a person’s attention the critical issue or factor on which the administrative decision is likely to turn so that he may have an opportunity of dealing with it.” (citations omitted)

36. This passage was endorsed by McHugh and Gummow JJ in Ex Parte Lam, at [81]. See also SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63; 228 CLR 152 at [32].

37. On the same question, Mark Aronson and Matthew Groves, Judicial Review of Administrative Action, 5th ed (2013) (Thomson Reuters) at 527 have said:

“A fair hearing presumes that the parties to it are fully informed of, and able to respond to, the relevant issues. That is not possible if disclosure is inadequate. Inadequate disclosure can also reduce the accountability, acceptability and quality of decision-making.”

38. Whilst the preceding comments were made in reference to administrative decision-making, procedural fairness is also “an essential characteristic of judicial proceedings”: RCB v The Honourable Justice Forrest [2012] HCA 47; 247 CLR 304 at [42]. However, as the High Court there observed, “its content is dependent upon the nature of the proceedings and the persons claiming its benefit”. In this regard, the requirement under the Court Act, s 38(1), that proceedings in the Court’s Class 1 jurisdiction are to be brought with as little formality as possible, does not abrogate the fundamental requirements of procedural fairness in those proceedings: see RTA v Peak [2007] NSWCA 66 at [15] and [150].

39. A failure to afford a party procedural fairness will constitute an error of law: see Clements v Independent Indigenous Advisory Committee at [8] per Gray ACJ and North J. Where the relevant failure to afford procedural fairness is a failure to consider a substantial claim that has been advanced by a party, there will also be a constructive failure to exercise jurisdiction: Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 77 ALJR 1088, per Gleeson CJ at [24], Gummow and Callinan JJ at [27], Kirby J at [87] and Callinan J at [95]. Construing the legal limits of a court’s powers to determine whether it has exceeded its jurisdiction in a particular case will involve, at least implicitly, a question of law within the meaning of the Court Act, s 57(1): see RTA v Peak at [15] and [141]-[151]; Kostas v HIA Insurance Services at [23]-[25] per French CJ, [69] per Hayne, Heydon, Crennan and Kiefel JJ.

40. There will be procedural unfairness where information is used by a decision maker in a way that could not reasonably be expected by one party and that party is not given an opportunity to respond to that use: see Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22; 206 CLR 57 at [142] per McHugh J and Muin v Refugee Review Tribunal [2002] HCA 30; 190 ALR 601 at [128]-[134] per McHugh J.

41. Another aspect of procedural fairness was argued in the present case, namely, that where a court determines a matter on a basis that was not in issue or argued in the proceedings, there will have been a denial of procedural fairness: see Stead v State Government Insurance Commission [1986] HCA 54; 161 CLR 141. This is a basic requirement of a fair trial. See also Re Minister for Immigration and Multicultural Affairs; Ex parte Miah in the context of administrative decision-making.

42. That general principle is, however, subject to an important qualification, stated at the practical level, by asking, “Would further information possibly have made any difference [to the decision]?”: Stead v State Government Insurance Commission at 145; Re Minister for Immigration and Multicultural Affairs; ex parte Applicant S154/2002 (2003) 77 ALJR 1909 at [28]. An appellate court will not order a new trial where the inevitable result would be that the same order would be made on a retrial. Or, as McHugh J observed in Muin v Refugee Review Tribunal, stating the obverse of this principle, an appellate court should not refuse relief unless it is confident that the breach could not have affected the outcome of the case.

43. In Ucar v Nylex Industrial Products Ltd [2007] VSCA 181, Redlich JA, at [75], identified a further circumstance where relief would be refused, namely, where there is an incontrovertible fact or point of law which provides a discrete basis for the decision which cannot be affected by the procedural unfairness.

44. The Stead v State Government Insurance Commission line of authority deals with the circumstances in which a new trial will be ordered. The same principles apply in respect of this Court’s power to remit matters where an error of law has been identified on an appeal under s 57 (or, for that matter, under s 56): RTA v Damjanovic [2006] NSWCA 166 at [112]; Castle Constructions Pty Ltd v North Sydney Council [2007] NSWCA 164 at [123]. We would comment in passing that it is not necessary for the purposes of this matter to decide whether the less stringent test stated in Damjanovic & Sons Pty Ltd v Commonwealth [1968] HCA 42; 117 CLR 390 should be applied.

45. A failure to afford procedural fairness is also a basis upon which an order in the nature of certiorari may be made under the Supreme Court Act, s 69: see Clements v Independent Indigenous Advisory Committee at [8]; Roads & Traffic Authority of New South Wales v Peak at [141]-[151]; Rana v Military Rehabilitation and Compensation Commission at [24]; Goodwin v Commissioner of Police at [19].

GROUND 1: The background noise issue

46. One of the issues in contention in the proceedings was the nature and acceptability of the noise impacts of the Project. For the purposes of determining the appropriate noise level for the Project, the New South Wales Industrial Noise Policy (the INP) was used. The INP outlines processes:

“… to help strike a feasible and reasonable balance between the establishment and operation of industrial activities and the protection of the community from noise levels that are intrusive or unpleasant.”

47. Intrusive noise criteria were specified in the Project Approval. Dr Parnell, the Minister’s noise expert, explained in his affidavit that intrusive noise criteria are in the INP:

“… to ensure that one single industry does not use all of the noise headroom available for that land use which would have the effect of restricting any other industry being able to be established in the noise catchment.”

48. The intrusive noise criteria is set relative to the background noise level. However, Mr Parnell stated that a protocol existed whereby the intrusive noise criteria is set by reference to the predicted noise levels at the receiver. The receiver is the property at which noise is “received”.

49. There is an accepted method for assessing the long term background noise level so as to ascertain a “rating background level”. In brief, this involves first, a calculation of the background level for each day, evening and night over all days for a specified period and, secondly, determining the rating background level, which is the median assessment background level over all days for the period. The base measure is a 15 minute period. His Honour explained, at [299], that this method:

“… is designed to ensure that the criterion for intrusive noise will be achieved for at least 90% of the time periods over which annoyance reactions may occur (taken to be periods of 15 minutes) (INP, 3.1.1, p 22).”

50. The background noise level for the Project had been assessed at 33dB(A). This was applied to the whole Bulga area. A conventional noise augmentation of 5 dB(A) was applied so as to give a Project Specific Noise Level (PSNL) of 38 dB(A). This calculation was made in accordance with the methodology contained in the INP. There was no issue with the adoption of a 5 dB(A) load or augmentation for determining the PSNL. Rather the issue related to the adoption of a background noise level of 33 dB(A) for the whole of Bulga.

51. His Honour expressed concern about the adoption of this level for the whole of Bulga because the evidence established that some properties in Bulga had a lower background noise level than 33 dB(A). His Honour held, at [330]-[331], that, on the measurement evidence, there were differences in the noise levels experienced by some residences to the north of Bulga village, which only experienced a background noise level of 30 dB(A). His Honour further considered, at [332], that the variation in the noise levels in one part of the Bulga area raised doubts as to the reliability of the adopted background noise levels for the other parts of the area.

52. His Honour concluded, therefore, at [327], that the PSNL was set too high for parts of Bulga. This became important during the hearing because the availability of remedial measures by way of acquisition of affected properties or mitigation of noise impacts were dependent upon the extent to which the intrusive noise criteria set for the properties in Bulga exceeded the PSNL. Properties with background noise levels below 33 dB(A) could therefore experience significant increases in noise levels without gaining entitlement to any remedial measures.

53. A second issue was that the intrusive noise criteria was set by reference to the predicted level, even when that level exceeded the PSNL. This approach meant that the criteria was based on what the mine was capable of achieving, rather than an assessment of what noise levels were acceptable. His Honour regarded this approach to be inconsistent with the approach required by the INP.

The noise conditions in the approval

54. The conditions imposed in respect of noise in the Project Approval are relevant to the determination of this ground. The Committee accepted that there would be substantial noise impacts if the Project was approved. It was considered, therefore, that it would be appropriate to require improved control over noise generating activity by the imposition of controls, including the acquisition of properties and retro-fitting and maintenance of noise attenuation equipment. To this end, three conditions were imposed.

55. Condition 1 required Warkworth to acquire specified properties upon receipt of a written request from an owner, in accordance with procedures prescribed in the Project Approval. Nineteen properties were identified as being affected by noise impacts to which Condition 1 applied. (The first five properties were also entitled to acquisition because of air quality impacts.) The properties, being those numbered 77, 102, D, E, F, 81, 87, 97, 144, 146, 147, 148, 149, 150, 153, 189, 190, 192 and J, were generally located to the north west and west of the mine. These properties were set out in Table 1, which did not require proof that there had been any breach or exceedence of the conditions.

56. Condition 2 required Warkworth, upon written request from the owners of the properties specified in Table 1 and Table 2 to implement additional noise mitigation measures such as double-glazing and insulation. Thirty eight properties were specified in Table 2 and were located further to the north than the properties identified in Table 1 and also to the west and north-east of the mine. The properties specified in Table 2 were 117, 118, 126, 25, 27, 29, 34, 42, 50, 53, 55, 56, 67, 58, 59, 60, 62, 63, 64, 65, 66, 68, 69, 71, 72, 73, 82, 125, 128, 152, 181, 183, 184, 185, 186, 187, 188, 191. The first three properties were also entitled to mitigation measures for air quality impacts.

57. Condition 3 required Warkworth to ensure that the noise generated at the Mount Thorley-Warkworth mine complex did not exceed the criteria in Table 3 at any residence on privately-owned land or on more than 25 per cent of any privately-owned land. (There was excepted from this requirement the noise at affected land specified in Table 1.)

58. Table 3 specified the location, land and the day, evening and night noise criteria. There are six locations specified including Bulga, Warkworth and Mount Thorley. So as to understand how Condition 3 operates, it is convenient to set out that part of the Table that applies to Bulga, which is located west of the mine. It is to be noted that different noise criteria apply for different properties within Bulga. This is also the case for the other locations.

Location	Land	Day (Laeq(15min))	Evening (Laeq(15min))	Night (Laeq(15min))	Night (Laeq(15min))
Bulga	65, 68	42	42	42	48
25, 27, 29, 34, 42, 50, 53, 55, 56, 57, 58, 59, 60, 62, 63, 64, 66, 69, 71, 72, 73, 82	41	41	41	48
17, 19, 24, 30, 31, 35, 36, 39, 40, 43, 44, 46, 47, 48, 49, 52, 74	40	40	40	48
13, 16, 18, 20, 21, 22, 23, 26, 32, 33, 27, 41, 45, 54, 61, 89	39	39	39	48
67, 70	37	37	37	48
8, 10	36	36	36	48
1, 2, 3, 4, 5, 6, 7, 9	35	35	35	48
All other privately owed land	38	38	38	48

59. There was an additional provision for acquisition of houses if Warkworth exceeded the noise criteria in Table 4, which was 43 dB(A) for most properties around the mine, for sustained periods as specified. This was in addition to the rights specified in Condition 1.

The pleaded case

60. The Association pleaded, at para (75) of its statement of facts and contentions, that the Project will have a significant social impact on the health and well-being of the residents of Bulga, contrary to the public interest. Paragraph (a) of the particular contended that current noise impacts as a result of existing mining activities carried out under the 2003 development consent were currently having a substantial negative impact on the health and well-being of the residents. Further particulars were pleaded in support of this allegation. However, none dealt with background noise levels.

61. At para (76) of its statement of facts and contentions, the Association pleaded, relevantly, that noise conditions and mitigation strategies could not adequately mitigate the harm that will be caused by the Project and were contrary to the public interest. Again, the particulars pleaded in support of this contention did not raise background noise levels.

The evidence

62. Two noise experts were called. Warkworth called Mr Ishac and, as already stated, the Minister called Mr Parnell. The Association did not call a noise expert. However, a number of residents gave evidence of the impact of the noise from the existing mine. In brief, the residents’ evidence was that there were differences in noise levels and noise characteristics at different receivers from those at or near the monitoring stations.

63. Mr Ishac had prepared the noise section of Warkworth’s Environmental Assessment (Annexure G to the Environmental Assessment). In his expert report prepared for the proceedings, Mr Ishac stated that the application of the INP policy would set noise intrusiveness for Bulga residences, as determined through monitoring, at 38 dB(A), comprising the background level of 33 dB(A), plus 5 dB(A).

64. In Annexure G to the Environmental Assessment, Mr Ishac had stated that the noise limits for the 2003 Consent under which Warkworth was currently operating were determined by a comprehensive background noise survey undertaken at six representative monitoring locations around the mine, as part of an Environmental Impact Statement carried out in 2002. He stated that background noise levels recorded continuously throughout most of 2008 suggested that the data obtained in 2002 remained representative of the current environment. He said that those levels were observed not to have changed during field survey work undertaken in October 2009.

65. Mr Ishac was cross-examined but was not asked about his assessment of background noise levels or why he had chosen a background level of 33 dB(A) as being appropriate for the whole of Bulga.

66. Mr Parnell was the noise specialist in the Major Projects Assessment division at the Department of Planning and Infrastructure. He was involved in the preparation of the conditions for the Project together with other officers in the Department. In his affidavit dated 7 September 2012, Mr Parnell explained in para (20) of his affidavit that he considered that the background level of 33 dB(a) for Bulga calculated in the 2002 Environmental Impact Statement remained valid. He explained that the PSNL for this project was thus assessed at 38 dB(A), being the background noise level of 33 dB(A) plus the conventional 5 dB(A).

67. Mr Parnell stated that in his experience with the Environmental Protection Authority and in assessing projects for the Department, there was an established practice to follow certain protocols in setting the intrusive noise criteria for a project depending upon the relationship between predicted noise levels and the PSNL. Thus:

“21   …

(a)   If the predicted noise levels at a receiver are less than the PSNL: Set criteria for the receiver at predicted level with a minimum level of 35 dB(A).

(b)   If the predicted noise levels at a receiver are the same as the PSNL: Set criteria at the PSNL. For Bulga, this would be 38 dB(A) at night.

(c)   If the predicted noise levels at a receiver are 1-2 dB above the PSNL: Set criteria at the predicted level, provided reasonable and feasible mitigation measures have been implemented. For Bulga this would be 39-40 dB(A) at night.

(d)   If the predicted noise levels at a receiver are 3-5 dB above the PSNL: Set criteria at predicted level but assign treatment rights (the right to obtain mitigation measures on request) to the property. For Bulga this would be 41-43 dB(A) at night.

(e)   If the predicted noise levels at a receiver are greater than 5 dB above the PSNL: Assign acquisition rights to the property. For Bulga this would be greater than 43 dB(A) at night.”

68. Mr Parnell said that this approach was reflected in Conditions 1-3 of Sch 3 of the Project Approval: the criteria were set in Condition 3 and the acquisition and mitigation rights were provided for in Conditions 1 and 2 respectively.

69. A single example will suffice to explain the interrelationship between Tables 2 and 3 in Conditions 2 and 3 respectively: see [56] and [57] above. In Table 3, the 22 houses in the second segment (being the houses commencing with No 25) had a predicted noise level of 41 dB(A), being 3 dB(A) above the PSNL. The approach taken by the Department as noted by Mr Parnell in para (21)(d) meant that those houses were entitled to additional noise amelioration measures on request, and so were listed in Table 2: see [56] above. By contrast, the 16 houses in the third segment of Table 3 (being the houses commencing with No 13) had a predicted noise level of 39 dB(A), that is, 1 dB(A) above the PSNL. These houses had no entitlement to additional mitigation measures because of the approach specified by Mr Parnell at para (21)(c). Accordingly, they were not listed in Table 2 of the conditions.

70. There was provision for the acquisition of houses if Warkworth exceeded the predicted level for sustained periods as specified. This was in addition to the rights specified in Condition 1 which did not require proof that there had been any breach or exceeding of the conditions. Mr Parnell was not cross-examined on these matters, nor did his Honour suggest to Mr Parnell that the background noise assessment of 33 dB(A) was incorrect or that it was inappropriate to adopt that level for residences in Bulga, including those residences to the north.

The parties’ submissions before the trial judge

71. Warkworth contended that it was no part of the Association’s case, including up to the point of final oral submissions, that there was any issue about background noise. It contended that the focus of the Association's submissions was that the noise assessments for the Project had taken no account of low frequency noise and, on the lay evidence, that the noise impacts actually experienced were unacceptable. The Association does not dispute this.

71. However, his Honour raised a question during the course of the Minister’s oral submissions which, Warkworth contends, eventually resulted in it being denied procedural fairness. The relevant exchange commenced when counsel for the Minister directed his Honour’s attention to the 2003 Environmental Impact Statement prepared for the purposes of the 2003 consent, in which the background noise level was determined to be 33 dB(A).

72. In the 2003 Environmental Impact Statement, a background ambient noise survey was carried out by reference to six representative sites identified as N1-N6. Bulga village was designated as N6 and had a background noise level of 33 dB(A). His Honour observed that the site designated as N5 had a background noise level of 30 dB(A). N5 was a site to the north of the village.

73. It was at that point that his Honour asked:

“So why do we adopt a one-size-fits-all approach to seeing noise conditions? Why wouldn’t one say, ‘Well, if the background for those people in the N5 location is 30, we start from saying the criteria should be 30 plus,’ and then do the 5 dB(A) and do all the things that are done?”

75. His Honour continued:

“See, if we set it too high and we then start putting 5 dBa on and then you start putting further on to get your – you know, for acquisition and severe exceedence, et cetera, it’s all so high that the people will be experiencing noise which may be intrusive yet it never triggers any of the conditions. Yes, that’s the problem. So it’s important, if we’re going to be genuine about fixing the criteria, we fit it at the appropriate level to start with. You see, what I’m concerned about is that there seems to be, from the oral evidence of the locals – and I know it’s subjective and it hasn’t had any readings – but there does seem to be variability between – some people experience it at some locations at certain times and others don’t.”

76. His Honour acknowledged, as had been stated in the evidence, that some individuals are more sensitive to sound than others. However, his Honour’s concern was that there were in reality different background noise levels in the wider area, causing him to remark:

“If that be right, I’m just trying to work out why one wouldn’t start from trying to fix, as your base level, the background for different areas, then do all the adjustments that conditions suggest as appropriate.”

77. The Association took this up in its oral reply, in particular refuting a submission by Warkworth that noise impacts were capable of mitigation by the imposition of appropriate conditions. Counsel for the Association contended that this had “been exposed as incorrect” in his Honour’s questioning of Mr Parnell, such that the noise impact justified a refusal of the Project. The focus of the Association was upon the variability in background noise levels in different parts of Bulga, some of which were lower than 33 dB(A) but some of which were higher as the evidence revealed. The import of the submission was that there were houses in Bulga, in the area identified in the evidence as N5, where the noise level would double the existing background noise level, and that many residences would be subjected to 10 or 11 dB(A) above their site specific background noise levels before any mitigation or acquisition condition was triggered.

78. Warkworth, in responding to this submission, did not assert that it was “not a submission that is available on the evidence”. Rather, its complaint was that the appropriate background noise level that ought to be adopted had not been raised as a live issue in the case. It submitted that if it was to be an issue, Warkworth would need to investigate what the proper background levels were and what the basis was for the February and October 2009 figures, and adduce evidence to establish why 33 dB(A) was appropriate.

79. His Honour questioned why evidence was necessary when there was evidence before the Court of variable background noise levels in different parts of Bulga. His Honour also pointed out that he was not bound by the 33 dB(A) chosen by the Department as the appropriate background noise level.

80. Nonetheless, his Honour considered that it was appropriate to allow the tender of data to support Mr Ishac’s evidence that the 2002 survey figures remained representative of the position in 2009. At that point, Senior Counsel for Warkworth commented, “that is what we are seeking”. In the course of that exchange, Senior Counsel for Warkworth had indicated that Warkworth wanted to investigate the 2009 Global Acoustics Report. That Report related to the continuous monitoring that was carried out in compliance with the 2003 consent conditions. Reference was also made to fieldwork conducted in 2009.

81. The Association then made what became the essential contention on this issue, namely, that it was not a question of the accuracy of the readings at different points in time. Rather, their argument was that the background level had been set too high.

82. After the exchange about the tender of further evidence, counsel for the Association again adverted to Mr Parnell’s evidence, submitting that he “simply made a mistake, that he didn’t recognise that there was a difference between the varying levels within Bulga”. The submission continued:

“So Mr Parnell did his own investigation, as I understand from his evidence, and he found that the 2002 background levels remained the same.

So [Warkworth’s] point doesn’t actually fix up the essential problem which is it’s the department who are setting the level too high and they’ve done it through Mr Parnell, who did his own assessment and found on his own evidence that the 2002 assessment was correct, remained valid in 2012.”

83. Counsel for the Association objected to the further evidence. He pointed out that there was no point in his cross-examining Mr Parnell on his first affidavit, as his evidence went to the methodology applied in recommending the background noise level and the conditions that ought to be imposed. The Association had not challenged that methodology.

84. His Honour permitted the tender of the Global Acoustics Reports for the first, second, third and fourth quarters of 2008 and the annual summary for 2008 and submissions were made by the parties in respect of those reports. Following the tender of the reports, there was discussion between his Honour and the parties as to the information contained in them, including discussion about the inconclusive nature of the background noise levels recorded in 2008 in the area north of Bulga village. Warkworth did not seek to recall its expert, Mr Ishac, notwithstanding that he had referred to the Global Acoustics Reports in his evidence and, it must be inferred, had the expertise to give evidence as to their interpretation.

85. On the next sitting day, the Minister sought to read a further affidavit of Mr Parnell. His Honour refused to admit the new affidavit evidence. The reason why the new affidavit was prepared, the content of the affidavit and his Honour’s reasons for rejecting it are relevant to the question whether Warkworth was denied procedural fairness.

86. The Minister, in seeking to read the further evidence, submitted that the affidavit was necessary to meet the Association’s submission that, contrary to Mr Parnell’s statement in para (20) of his original affidavit, a background noise level of 33 dB(A) for the entire area was not appropriate, because of the lower background noise level for residences in the area identified as N5. Counsel for the Minister pointed out that Mr Parnell had not been cross-examined on whether his assessment of the background noise level was therefore wrong. Counsel for the Minister explained that the intent of Mr Parnell’s affidavit was to give the evidence he would have given had he been cross-examined on that issue.

87. The contents of the proposed affidavit may be summarised as follows. Mr Parnell said that for the purposes of assessing the Project, he had been concerned about whether the background level for the whole village area, including the sites represented by N5 and N6, was representative of background noise levels in the area affected by the mine. He recalled raising that concern with Mr Ishac and being shown documentation, including some Global Acoustics Reports. He also said that he would have been most interested in the data relating to, inter alia, the property at 367 Wambo Road, which was a little to the north of the houses within N5 and of Bulga village.

88. Mr Parnell further stated in his affidavit that on the basis of what he was shown, he was satisfied that 33 dB(A) was a representative background noise level for the Bulga village area. Mr Parnell also stated that for the purposes of making his assessment, he visited the area to satisfy himself that the chosen background noise level of 33 dB(A) was representative of the background noise area in Bulga, including at N5. His visit included 367 Wambo Road and a number of other sites that he was advised by compliance officers would assist him to get a general sense of noise conditions in the Bulga village area. In his oral evidence, Mr Parnell said that whilst he had visited these sites, he had not taken any formal measurements.

89. A review of the oral submissions of counsel for the Association indicates that there was one possible reference to which the Minister’s submission may have been directed, making it necessary on the Minister’s case to adduce further evidence from Mr Parnell. Warkworth had submitted that if the Project was not approved, the noise from the mine would continue under conditions less favourable to local residents than would be the case if the Proposal was approved, and that the noise impacts of the Proposal were capable of mitigation by the imposition of appropriate conditions. Counsel for the Association in turn submitted that Warkworth’s assertions had “been exposed as being incorrect in this case”. The balance of the submissions, however, focused, as already indicated, upon the variability throughout Bulga of different background noise levels.

90. As his Honour did not give formal reasons (and was not required to do so) for rejecting Mr Parnell’s proposed second affidavit, the terms of the exchange between his Honour and counsel are, therefore, important, given the procedural fairness challenge which is now made. It is apparent from the exchanges with counsel that his Honour was not concerned with Mr Parnell’s opinion as to why 33 dB(A) was an appropriate representative background noise level to adopt. His Honour was required to make his own determination on that question and accordingly, his Honour was concerned with the raw data contained in the Global Acoustics Report. There was no challenge to that data.

91. His Honour questioned the relevance of the further affidavit, noting that in his previous affidavit variable noise levels of 30 and 33 dB(A) were referred to and that those readings were also contained in the Global Acoustics Reports that had just been tendered. His Honour then pointed out that Mr Parnell's second affidavit only contained a statement of his opinion, although he noted that Mr Parnell set up the methodology for that opinion in para (21) of his first affidavit, which his Honour said was helpful. The exchange continued:

“HIS HONOUR: But why do I need to get what Mr Parnell thought it should be, 33 or 30 or anything else?

MITCHELMORE: Yes. Your Honour, it was simply a concern by reason of the submission that was made on the last occasion that Mr Parnell had made a mistake.

HIS HONOUR: Just test the hypothesis. Let’s assume that be right. So what, to me? At the end of the day I’ve got to come back and say what level would I put in as the appropriate condition.

MITCHELMORE: Yes.

HIS HONOUR: I’ve obviously got that Mr Parnell thought it was 33.

MITCHELMORE: Yes.

HIS HONOUR: There is data which suggests that north of the village it had a lower background. Should I therefore adjust it? Mr Williams, I would imagine, based upon that other material, would say no, you don’t because it was up and down a bit, so 33 is as good a figure as anything.

MITCHELMORE: Yes.

HIS HONOUR: I’m just not sure that it’s really needed in the circumstances and just because there’s a submission made that it changes it.

MITCHELMORE: Yes.”

92. The affidavit evidence, as already indicated, was not permitted to be adduced.

The primary judge’s reasons on the noise issue

93. At [327] ff, his Honour stated that the noise criteria and mitigation strategies adopted for the purposes of the Project Approval differed from the approach required by the Industrial Noise Policy. He identified five points of distinction. The first two are presently relevant. First, his Honour noted that for many residences, a higher background noise level had been used than was supported by the measurement evidence: see [51] above. Secondly, the project specific noise levels were not the lower of the intrusive criterion and the amenity criterion as required by the Industrial Noise Policy but had been increased to equate with the predicted noise levels for the Project on the basis that this was the best that could be achieved: see [53] above.

94. At [331], his Honour observed that the data in the 2002 Noise and Vibration Study report prepared for Warkworth as part of its application for the 2003 approval showed that the area to the north of Bulga (N5) had a background noise level of 30 dB(A), not 33 dB(A). His Honour considered, based on the data in that report, that a number of residences to the north of the village, namely, numbers 25, 27, 29, 34 and 42, would have a background level of 30 or 31 dB(A) and an intrusive level of 35 or 36 dB(A). His Honour found therefore that “the evidence establishes that the background noise level for some residences to the north of Bulga village is 30 dB(A) rather than 33 dB(A)”.

95. His Honour considered, at [332], that this variation in one part of Bulga “raises doubts as to the reliability of the adopted background noise levels for other parts of that area”. He stated that the six monitoring stations used for the purposes of the 2002 Environmental Impact Statement were not distributed evenly over the area likely to be affected by the Project. His Honour also noted the residents’ evidence that there were differences in noise levels and characteristics of the noise at different receivers to those at or near the monitoring stations.

96. His Honour remarked, at [333], that the adoption of “too high background noise levels” would have an effect of increasing the project specific noise levels but would also result in the application of less noise mitigation strategies. His Honour examined this further at [334] ff. In particular, he noted that the criteria for setting noise mitigation and acquisition criteria by reference to the predicted noise level above the PSNL was based upon an approach adopted by the 2004 Commission of Enquiry under the then s 119(1) of the EPA Act.

97. His Honour continued, at [335]:

“The justification provided in these proceedings for regarding predicted exceedences of 1-2 dB(A) as minor, and setting the noise limits to permit higher levels of noise, was that measurement, and perception, of noise, are difficult, and that there should be latitude given that these are conditions that need to be enforced (Williams subs T 8/11/12, p 227.20). Indeed, the reality is that the Project cannot achieve, by controlling noise at the source or the transmission of noise, the project-specific noise levels that would be derived by application of the INP. The noise limits proposed in the conditions have therefore been increased beyond what would be the project-specific noise levels to match the predicted noise levels of the Project.”

98. His Honour, having dealt with the two considerations, namely, that the background levels were set too high and the noise criteria was based on what was achievable rather than what was acceptable, concluded, at [347]:

“In my view, the case has not been made for setting the noise limits for the Project at the levels proposed in the approval conditions above the project-specific noise levels recommended by the INP. Furthermore, even if the project-specific noise levels recommended in the INP were to be applied in the approval conditions, the Project would be unable to comply with these limits, triggering far more extensive noise mitigation at receivers and acquisition of receivers’ properties, which would itself lead to unacceptable impacts.”

99. His Honour’s final conclusion on noise impact was at [385], where he stated:

“At the noise levels proposed in the approval conditions, the noise impacts of the Project on the residents of Bulga, including the impact of the noise source on receivers, taking account of annoying noise characteristics and the effect of meteorological conditions, are likely to be significant, intrusive and reduce amenity. The noise mitigation strategies proposed in the approval conditions are not likely to reduce noise levels to the project-specific noise levels recommended by the INP or to levels that have acceptable impacts on the residents. The significant residual impacts are unacceptable, taking into account social and economic factors. Further, the extensive noise control at receivers, being mitigation treatment and acquisition of properties in Bulga, is likely to cause social impacts. The combining of noise criteria for the Warkworth and Mount Thorley mines in the proposed approval conditions is of doubtful legal validity but in any event is likely to be difficult to monitor or enforce compliance. Hence, no confident conclusion can be drawn that the noise impacts of the Project will be acceptable.”

The alleged errors

100. Warkworth contended that his Honour erred in three respects in reaching this conclusion. First, it contended that it was denied procedural fairness by his Honour allowing the Association to argue that account should be taken of the differential background noise levels in Bulga and in his Honour deciding that point. It contended that not only was it taken by surprise, but that, in adopting that approach, his Honour had effectively rejected the unchallenged assessments of the only experts called on the basis that the experts had mistakenly overlooked or had discounted data in the 2002 Environmental Impact Statement.

101. Secondly, it was contended that procedural fairness was denied in the rejection of Mr Parnell’s further affidavit as, contrary to his Honour’s view, it was not only the content of the raw data that was important. The interpretation of that data was also important. The question of how to extrapolate the data to particular residences was said to be a matter of expert opinion. Warkworth contended, therefore, that the tender of further data was not sufficient to overcome this denial of procedural fairness. Warkworth submitted that had Mr Parnell’s affidavit been admitted, his Honour would have reached a different conclusion on this issue.

102. Thirdly, Warkworth submitted that his Honour failed to give reasons for rejecting the information to be derived from the data in the Global Acoustics Report, which indicated that the background noise levels in Bulga mostly exceeded 33 dB(A). By way of example, it was contended that:

“For one month (August) the monthly level was 32. For two months (May and July) it was 33. For the remaining 6 months it was above 33: 40 in January, 37 in September, 36 in February and October, 35 in April and 34 in September.”

103. In its oral submissions on the appeal, Warkworth referred in some detail to the background noise level readings recorded in the Global Acoustic Reports. Emphasis was placed upon the readings taken in the first quarter of 2008 in respect of 367 Wambo Road. That property was to the north of the area N5. The average readings in that period were 31 dB(A) for day and 33 dB(A) for night. However, the readings for the third quarter were 37 dB(A) for day and 31 dB(A) for night. The readings for the fourth quarter were 28 dB(A) for day and 42 dB(A) for night.

311. Warkworth contended that the Mining Act was relevant legislation for the purposes of s 39(4), being the primary legislative instrument together with the Mining Regulations, that regulates the exploitation of such resources and determines the benefit by way of royalties that accrues to the State as a result of such exploitation. Warkworth pointed out that it was a condition of its existing mining lease that Warkworth extract as large a percentage of coal in the subject area as was practicable. If the Project was approved, there would be a substantial uplift in coal production including from its existing mine: see [10].

312. The effect of Warkworth’s submission, therefore, was that in combination, the Mining Act and the existing lease were relevant considerations because it was necessary for the Minister and the Court to be aware, not only of the manner in which mining in the State was promoted, facilitated and controlled, but also of the impact that approval would have on Warkworth’s obligations under its existing leases. In other words, approval of the Project would better facilitate Warkworth’s lease obligation, imposed pursuant to the statutory permission in s 70(2), to extract as large a percentage of coal in the subject area as is practicable.

313. The Association submitted that the Mining Act was not relevant legislation to which his Honour was required to have regard. On the Association’s submission, the Mining Act is not concerned with the prospective grant of leases during the development application stage. Rather, the Act regulates the grant of mining leases which, by operation of s 65, cannot be made unless and until development consent has been granted.

314. The Act’s operative provisions, stated in general terms, are directed to applications and grants of authorities, that is, exploration licences, assessment leases and mining leases. They also address the conditions, both mandatory and discretionary, which may be imposed, and the various exigencies that arise once authorities are in place. The operative provisions of the Act do not deal with the grant of development consent for mining activities.

315. The requirement that development consent be obtained prior to the grant of an authority is a clear legislative indication that questions of development consent and the grant of an authority are separate and distinct processes involving different mandatory and discretionary considerations. There is of course an overlap in the considerations that relate to grant of development consent and to the grant of a lease. Environmental considerations are one particular area of overlap. However, as stated, the processes are distinct. One significant difference in the processes is that, under the EPA Act, Pt 3A, there is public participation, whereas consultation under the Mining Act in respect of the grant of a mining lease is limited to relevant government agencies, the Director of Planning and the local councils for the land the subject of the proposed lease: the Mining Act, Sch 1.

316. In our opinion, the objects of the Mining Act support the statutory structure of the operative part of the Act, that is, as legislation directed to the means by which mining may be facilitated and undertaken. This is so notwithstanding that those objects make reference to matters that are also relevant objects under the EPA Act. The overlap in the objects of the two Acts led the Association to submit that his Honour had, in effect, had regard to the objects of the Mining Act. The Association submitted that that phrase “economic use and development” in EPA Act included mining operations and that each Act required the relevant decision-maker to balance environmental concerns with the promotion and facilitation of the economic use of land: see EPA Act, s 5(a)(ii); Mining Act, s 3A.

317. Before concluding on this ground, it must be observed that before his Honour, Warkworth’s submission as to the relevance of the Mining Act was confined to the objects of the Act. Thus, even if the Mining Act was relevant legislation for the purposes of s 39(4), there is, as the Association submitted, sufficient overlap in the objects of the Mining Act and of the EPA Act that a failure to have regard to the Mining Act would not have vitiated the decision.

318. Ground 5 of the appeal is rejected.

GROUND 7: Measures of avoidance: an irrelevant consideration

326. Ground 7 was directed to the consequences of his Honour’s finding that Warkworth had not proposed any strategies to avoid the significant ecological impacts, particularly on the EEC, that the Project would be likely to have. His Honour’s particular concern, at [146], was in respect of the Warkworth Sands Woodland and Central Hunter-Grey Box-Ironbark Woodland and key habitats of fauna species. His Honour considered that the impact was of such magnitude as to require consideration of the measures proposed to avoid, mitigate and offset the impacts to determine the acceptability of the Project.

327. His Honour stated, at [147], that, in order of priority of action, the strategies for managing the adverse impacts of a project on biological diversity were avoidance, mitigation and offsets. His Honour noted that avoidance and mitigation measures should be the primary strategies for managing potential adverse impacts, because such measures directly reduce the scale and intensity of those impacts by a given project. These views were based upon the Principles for the Use of Biodiversity Offsets in New South Wales. No challenge was made to the appropriateness of applying those principles.

328. His Honour noted, at [150], that if all reasonable avoidance and mitigation measures have been implemented and there were still residual impacts, offsets could be considered. He observed that offsets do not reduce the likely impact of a project but rather compensate for the residual impacts. However, as the Project was for open cut mining, no avoidance measures had been proposed within the “envelope of the disturbance area” and the Project, if approved, would have the effect of reversing some of the avoidance measures that had been put in place by the 2003 Development Consent: see judgment at [162].

329. His Honour noted, at [165], that Warkworth had rejected the recommended avoidance measures relating to Warkworth Sands Woodland in favour of the provision of regeneration elsewhere and had also argued that the avoidance measure of not clearing west of Wallaby Scrub Road could not be justified from an economic efficiency perspective. The recommended avoidance measure, as suggested by Mr Peake, was to excise from the mining areas proposed under the Project all Warkworth Sands Woodland occurrences beyond the mining area approved under the 2003 development consent.

330. His Honour observed, at [168], that the exploitation of the mineral resources had no inherent priority over other land uses, including nature conservation. He stated that there had to be an assessment of the different and often competing environmental, social and economic factors to determine what was the preferable decision as to the use of the land. His Honour accepted that the economic analysis advanced by Warkworth was able to assist in the decision-making process, but was neither a substitute for it, nor determinative of it. His Honour continued:

“The question of whether there can be avoidance of impacts on components on biological diversity, including on the WSW EEC, is part of a fact finding and consideration of the relevant matters regarding environmental impacts of the Project, which occur earlier in the process of decision-making, and should not be answered by the later tasks of weighing and balancing all of the relevant matters (environmental, social and economic) to be considered by the Court as decision-maker in arriving at the preferable decision.”

331. His Honour concluded, therefore, at [169], that:

“Accordingly, available measures to avoid significant impacts of the Project on EECs and habitats of fauna are not proposed to be undertaken by Warkworth. The consequence is that there would be no reduction in the scale and intensity of these impacts.”

332. Warkworth submitted that the logical result of his Honour’s approach was that the Project, which was for open cut mining, could not proceed. Warkworth also articulated this argument in the following way, namely:

“… his Honour could not have approved the Project imposing a condition preventing the clearance of [Warkworth Sands Woodland] because that would have been approve a significantly different project”

333. Discussed in terms of relevant error, Warkworth submitted that his Honour took into account an irrelevant consideration and adopted an erroneous view of what was required in assessing the public interest. In this regard, Warkworth submitted that his Honour should have begun from the position that the Director-General and the Commission had regarded it as in the public interest that the Project proceed.

334. The question whether his Honour should have taken, as his starting point, the view of the Director-General and the PAC that the Project was in the public interest, has been considered above in relation to ground 2B. We do not agree, however, that His Honour, by having regard to avoidance measures, took into account an irrelevant consideration. It was a relevant consideration to ascertain the measures, if any, that Warkworth proposed to avoid an undeniable impact.

335. Warkworth further submitted that his Honour erred by confining his consideration to avoidance measures and by doing so, in effect pre-empted the ultimate outcome. We do not agree that his Honour did so. When it is understood that avoidance measures were available but rejected by Warkworth, it was factually correct to state that “the consequence is that there would be no reduction in the scale and intensity of these impacts”. His Honour later considered the offsets proposed by Warkworth to determine whether they adequately addressed the adverse impacts on biological diversity if the Project was approved.

336. Ground 7 of the appeal is rejected.

GROUND 8: Erroneous view of EEC offset measures

337. As noted above, Warkworth proposed an offsets package rather than, as has been noted, any avoidance or mitigation measures. Its offsets package included five remote biodiversity areas. None of those areas included the affected EECs and accordingly, on his Honour's view, at [205], these proposed areas did not offset, that is, compensate for, the impact of the loss of the affected EECs.

338. As the ecological communities in the proposed remote biodiversity offsets areas were different from those in the disturbance area, there was no like-for-like offsetting in accordance with principle 10 of the Principles for the Use of Biodiversity Offsets in New South Wales. Accordingly, the majority of the remote areas proposed by Warkworth as offsets for the endangered EECs did not achieve the fundamental objective of improving or maintaining the viability of those EECs. In his Honour’s view, “[i]t is not appropriate to trade offsets across different ecological communities”. Rather, “[w]here a project impacts on a specific ecological community, any offset must relate to that same ecological community which is impacted”.

339. Warkworth acknowledged that there were two possible constructions of his Honour’s reasoning in these paragraphs, but contended that either construction contained errors. The first possible construction was that an offset could not be taken into account unless it contained the same EEC communities as the Project would impact. Warkworth submitted that if that was his Honour’s reasoning, it was erroneous as a matter of law, as it involved an unduly confined concept of the public interest. Alternatively, Warkworth submitted that his Honour may have meant that the remote offsets could not be considered as offsets for Central Hunter-Grey Box-Ironbark Woodland or Central Hunter Ironbark-Spotted Gum-Grey Box Forest. Warkworth submitted that if that was his Honour’s meaning, that would be contrary to the agreed position of Mr Bell and Dr Robinson, but acknowledged it was in conformity with Mr Peake’s opinion. It submitted, nonetheless, that his Honour ignored its submission that the remote offsets had ecological benefits because of their strategic values.

340. Neither of these matters constitutes an error of law. On the first approach, the question of what is in the public interest requires an evaluation of relevant matters in the context of the various subject matters under consideration. As already noted, Warkworth did not suggest that his Honour erred in having regard to the use of the Principles for the Use of Biodiversity Offsets in New South Wales. It was for his Honour to determine their appropriateness and importance in the decision making process. On the second approach, his Honour made a finding of fact that was available on the evidence. In short, he rejected Warkworth’s submission as to the ecological benefits of the remote offsets.

341. Ground 8 of the appeal is rejected.

GROUND 9: Failure to consider natural regeneration

342. The evidence before his Honour was that that there was no pristine pre-European Warkworth Sands Woodland in existence and that all existing Warkworth Sands Woodland in the Disturbance Area had resulted from regeneration after clearance. Approval of the Project would result in the clearance of 103 ha of Warkworth Sands Woodland. Condition 33 of the Minister’s approval required Warkworth to restore at least 38.6 ha of Warkworth Sands Woodland in the Southern Biodiversity Offset Area and 195.8 ha in the Northern Biodiversity Offset Area.

343. Ground 9 related to the question of the potential for regeneration of Warkworth Sands Woodland in the Northern and Southern Biodiversity Areas. These areas comprised in part Warkworth Sands grassland, that is, areas where Warkworth Sands Woodland had previously been cleared. Warkworth contended before his Honour that on the evidence, the Court could be confident that there would be regeneration. However, his Honour concluded, at [251], that the areas of Warkworth Sands grassland and derived grassland in these two biodiversity areas did not provide long-term offsets that improved or maintained the viability of the EECs impacted by the Project.

344. Warkworth submitted that in coming to this conclusion, his Honour failed to deal with its submission that the evidence of demonstrated natural regeneration of Warkworth Sands Woodlands in the area gave confidence that assisted regeneration in the two biodiversity areas would be successful. Warkworth accepted in oral submissions that his Honour dealt generally with the issue of regeneration, but nonetheless maintained that he failed to accord it the merited importance, given that a central plank in its case was that Warkworth Sands Woodlands had a high capacity for regeneration. Warkworth also complained that his Honour did not refer to the fact that there had been natural regeneration in areas where Warkworth Sands Woodland had been cleared, for example for grazing, once the grazing had ceased.

345. The evidence relating to the capacity of Warkworth Sands Woodland to regenerate was as follows. First, the experts, Dr Clements and Dr Robertson, gave evidence that Warkworth Sands Woodland had a high capacity to regenerate. They had not been cross-examined on that evidence. However, it should be noted that Dr Bell’s view was that the areas nominated by Dr Clements and Dr Robertson were dominated by other species, particularly Eucalyptus creba.

346. Secondly, in his report, Mr Peake had stated that aerial photographs dating back to the 1950s demonstrate that Warkworth Sands Woodland had been cleared and “regenerated in a patchwork across the site”. However, he had also observed that the “floristic and structural composition of the community in response to these changes [was] not well-known”.

347. Thirdly, aerial photographs of the Northern Biodiversity Offset Area, taken in 1963, 1994, 2000 and 2012, were in evidence. The aerial photographs demonstrated that over the period from 1963 to 2012 there had been an increase in the density of Warkworth Sands Woodland in the Northern Biodiversity Offset Area. There also appeared to be an increase in density from 1994 to 2012, but the extent of the increased density could not be gauged with any degree of accuracy from the photographic evidence. From our assessment of the photographic evidence, keeping in mind the limitations of such evidence, there would not appear to have been a substantial increase in density: see Blacktown City Council v Hocking [2008] NSWCA 144.

348. Fourthly, Warkworth informed this Court that his Honour and the parties and witnesses had also had a view of an area of high quality Warkworth Sands Woodland, which, Warkworth contended of itself demonstrated that the Woodland was capable of regeneration. Although a court is entitled pursuant to the Evidence Act, s 54 to draw any reasonable inference from what is seen on a view, his Honour did not do so. It is not possible, therefore, for this Court to speculate what his Honour may have seen or what inferences might have reasonably been drawn from what was observed.

349. Also relevant to this issue was Warkworth’s proposal to contribute $500,000 to a five year research project by the University of New England relating to the regeneration of Warkworth Sands Woodland. Condition 38 of the Project Approval required Warkworth to continue that funding. Dr Robertson and Dr Clements considered that the research project was “highly likely to be successful”. Mr Peake described the research as comprehensive and highly valuable to the understanding of the restoration ecology of Warkworth Sands Woodland. Mr Peake noted that the data was preliminary, being based on only three years of monitoring and approximately two years of revegetation trials, but considered that early indications suggested that there was a high likelihood that Warkworth Sands Woodland could be re-established so long as adequate resources and an adequate monitoring program was provided. He stated:

“In short, the [University of New England] work does much to instill a reasonable degree of confidence in the recoverability of [Warkworth Sands Woodland] over the long term.”

350. His Honour did not accept Dr Clements’ and Dr Robertson’s opinion that the Warkworth Sands Woodland had a high capacity to regenerate as he considered, at [244], that:

“Their opinions are also affected by the belief … that any vegetation community that regenerates on aeolian sands must be [Warkworth Sands Woodland] EEC.”

351. In this regard, his Honour had earlier found, at [224], that:

“Occurrence of aeolian sands substrate is a necessary condition but it is not sufficient for a vegetation community to be classified as [Warkworth Sands Woodland] EEC; the vegetation community must also satisfy the floristic and other criteria in the Scientific Committee's Final Determination listing [Warkworth Sands Woodland] as an EEC.”

As Mr Peake had observed, this had not been established: see above at [346].

352. Nor did his Honour accept the optimistic views of Dr Clements and Dr Robertson and of Mr Peake in relation to the research program. In his Honour's view, the research program had not progressed sufficiently to demonstrate that restoration could be completely successful. In his Honour’s view, the most that could be derived from the research evidence was that 62 per cent of planting in 2009 and 2010 had survived. His Honour did not accept that this meant that a fully functioning ecological community of Warkworth Sands Woodland had been established.

353. His Honour considered, at [240], that:

“… there is a real risk and uncertainty that the derived grassland communities in the Northern and Southern Biodiversity Areas which Warkworth proposes to rehabilitate will become mature EECs.”

354. His Honour’s reasons, from [241]-[249], which included reference to the evidence of Dr Clements and Dr Robertson, explained why he had come to this conclusion.

354. In coming to his conclusion, which was replicated in his finding at [251], his Honour was dealing with Warkworth’s submission that there should be a high degree of confidence that the Woodland would be re-established. His Honour clearly did not have that confidence, for the reasons he gave. As the reasons for judgment demonstrate, there was evidence to support his Honour’s views. In particular, his Honour did not accept that there was a demonstrated natural regeneration of Warkworth Sands Woodland, not least because he was not satisfied that the floristic and other criteria necessary to identify Warkworth Sands Woodland had been identified in the regenerated areas. Indeed, as his Honour found, at [241]:

“There is no current example of a recognised area of [Warkworth Sands Woodland] EEC which has been created by rehabilitation from derived grassland.”

356. There was some debate in the argument before this Court as to whether his Honour had dealt with the submission that Warkworth Sands Woodland had a high capacity to regenerate, or if he had only looked at questions of rehabilitation and restoration. However, it is apparent, both from Warkworth’s submissions to his Honour and from the judgment, that these terms, and in particular the terms rehabilitation and regeneration, had been used interchangeably in the proceedings. This is particularly apparent from Warkworth’s submission to his Honour to which we have referred at [343] above. Warkworth accepted that on this reading of his Honour’s judgment, it could be said that he sufficiently dealt with its submission.

357. Ground 9 of the appeal is rejected.

GROUND 10: Condition 41A

358. During the course of the hearing before his Honour, Warkworth proposed an additional condition of approval, Condition 41A, which would prohibit clearing an area of approximately 67 ha west of Wallaby Scrub Road of Warkworth Sands Woodland until Warkworth demonstrated to the satisfaction of the Director-General that Warkworth Sands Woodland can be regenerated in these two biodiversity areas.

359. Warkworth, in ground 10 of the appeal, contended that his Honour failed to consider the effect of Condition  41A. The condition was proposed to address a concern that the Warkworth Sands Woodland would not regenerate in the grasslands in the biodiversity offset areas. The intention was to retain a 67 ha area of Warkworth Sands Woodland west of Wallaby Scrub Road, over half of which Warkworth was permitted to clear under the 2003 Development Consent, until it had demonstrated to the satisfaction of the Director-General that the Woodland could be re-established in the Northern and Southern Biodiversity Areas. Warkworth’s complaint was that there was a constructive failure to exercise jurisdiction: see Dranichnikov v Minister for Immigration and Multicultural and Indigenous Affairs.

360. Condition 41A was proposed by Warkworth to complement the suite of conditions that had been imposed in respect of the Warkworth Sands Woodland. It is relevant to this ground of appeal to understand those conditions and how Condition 41A was intended to operate in conjunction with them. (Warkworth proposed other changes to the conditions that are not presently relevant. The numbering used in the following discussion reflects the numbering of the conditions as were proposed to Preston CJ of LEC.)

361. Condition 36 required Warkworth to have in place conservation agreements in respect of the Northern and Southern Biodiversity Areas or to have sufficient control of the land to enable conservation agreements to be entered into. Condition 37 required Warkworth to have a recovery plan, or to provide sufficient funding for the preparation of a recovery plan, for the Warkworth Sands Woodland by a specified date. Condition 38 required Warkworth to provide at least $500,000 of funding to support the ongoing implementation of the University of New England’s Warkworth Sands Woodland research program, as previously mentioned. Condition 40 specified that Warkworth was to ensure that the project did not cause any more than negligible environmental consequences to the Warkworth Sands Woodland adjacent to the approved mining pit.

362. Condition 39 required Warkworth to contribute funding to a University of New England research project. Its terms were as follows:

“39.   The Proponent shall:

(a)   provide at least $500,000 of funding to support the ongoing implementation of the existing Warkworth Sands Woodland Research Program being undertaken by the University of New England; and

(b)   ensure that the findings of this research program are published in a suitable scientific publication.”

363. The proposed Condition 41A provided:

“41A.   Prior to clearing any Warkworth Sands Woodland west of Wallaby Scrub Road, the Proponent will demonstrate to the satisfaction of the Director-General that Warkworth Sands Woodland can be re-established on Warkworth Sands Derived Grassland areas or augmented within the Southern Biodiversity Area and/or the Northern Biodiversity Area using the following process and criteria:

(a)   the proponent will establish relevant reference sites to compare and track the progress and inherent ecosystem function of re-establishment areas described below in (b). These reference sites will:

i.   take into account historical disturbance, topography, substrate and biodiversity targets ie species richness and complexity and will be representative of the [Warkworth Sands Woodland] that is to be disturbed.

ii.   be chosen by a suitably qualified ecologist and in consultation with the Director-General

(b)   Undertake augmentation or re-establishment of Warkworth Sands Woodland within six 1 ha plots for a period of at least 4 years:

i.   Augmentation – 3 plots demonstrating an increase in remnant community quality through the re-establishment of woodland adjoining an established remnant plot, and

ii.   Re-establishment – 3 plots demonstrating an expansion of a Warkworth Sands Woodland vegetation within the derived grassland community.

(c)   The plots referred to in (b) are to involve the implementation of restorative strategies that may be replicated on a large scale to ensure that the offsetting commitments of the Proponent in respect of Warkworth Sands Woodland can be met.

(d)   In determining whether or not the Director-General is satisfied that the plots referred to in (b) are on a successful trajectory towards a functional and self-sustainable ecosystem, the criteria described in table 15A are to be considered and applied in accordance with pages 70 to 76 of Appendix B in the Proposed Warkworth Extension Preferred Project Report September 2011 and the Director-General is to take into account the reference sites in (a).

Table 15A. Description of the performance criteria

Performance indicators are quantified by the range of values obtained from replicated reference sites

Hierarchy of ecosystem succession	Aspect or ecosystem component	Ecological performance targets
Landform establishment and stability	Landform function	Landform is functional and performing as it was designed to do
	Active erosion	Areas of active erosion are limited
Growth medium development	Soil chemical, physical properties and amelioration	Soil properties are suitable for the establishment and maintenance of selected vegetation species
Ecosystem establishment	Vegetation diversity	Vegetation contains a density of species comparable/on a trajectory to that of the Warkworth Sands Woodland remnant vegetation
Ecosystem composition	The vegetation is comprised by a range of growth forms comparable/on a trajectory to that of the Warkworth Sands Woodland remnant vegetation

…”

364. The importance of proposed Condition 41A was that Warkworth had approval to clear 38 ha out of a total area of 68 ha in this locality under the 2003 Development Consent, but was agreeing to forego its rights under that approval until it had satisfied Condition 41A. Warkworth submitted that Condition 41A was consistent with Dr Bell’s evidence that approval for clearing of 105 ha of Warkworth Sands Woodland should be reviewed “until such time that it can be satisfactorily demonstrated that re-establishment of this community can be achieved”.

365. Warkworth submitted that his Honour failed to refer to proposed Condition 41A as part of his consideration of the prospects of the grassland becoming Warkworth Sands Woodland. In particular, Warkworth submitted that his Honour failed to appreciate that Condition 41A was intended to meet the problem of a time-lag between the clearance of the Woodland and it being demonstrated that rehabilitation would be successful. It contended that this particular problem was met by the requirement in Condition 41A that the Warkworth Sands Woodland in the area west of Wallaby Scrub Road not be cleared until the Director-General was satisfied of the prospects of successfully restoring the Warkworth Sands Woodland EEC.

366. It is important to keep in mind that Warkworth’s contention was that his Honour did not deal with its argument. His Honour referred to proposed Condition 41A at [195] in that part of his judgment dealing with Warkworth’s proposed offsets package and in the context of the requirements of Condition 39. His Honour noted that there was an element of overlap between Condition 39 and Condition 41A (although the judgment refers to Condition 38, it would appear to be a typographical error). His Honour continued (assuming his reference was to Condition 39):

“… The process and criteria required by Condition 41A would entail preparing and implementing a research program such as would be required under Condition 38. Put another way, if Warkworth demonstrates to the satisfaction of the Director-General of Planning that WSW EEC can be re-established on Warkworth Sands grassland under Condition 41A, the objective of Condition 38 would have been satisfied.”

367. In the section of the judgment under the subheading, “Risk and uncertainty that derived grasslands would not become EECs”, his Honour found, at [241], that there was a real risk and uncertainty that the proposed Northern and Southern Biodiversity Areas would be rehabilitated to create the intended EECs. He said there was no current example of a recognised area of Warkworth Sands Woodland EEC that had been created by rehabilitation from derived grassland. In this regard, the research program of the University of New England in the Northern Biodiversity Area was not sufficiently advanced to demonstrate that restoration would be completely successful.

368. His Honour noted, at [243], that Mr Bell had found no example in the scientific literature of successfully restored EECs in New South Wales and, as previously noted, his Honour did not accept Dr Robertson’s and Dr Clement’s opinion that the University of New England’s research project was “highly likely to be successful”.

369. His Honour referred to Mr Bell’s evidence that the biodiversity areas should not be accepted as offsets until a successful restoration project had been achieved and independently assessed to confirm that a mature example of Warkworth Sands Woodland EEC had been created. In particular, his Honour noted the scientific view (referred to by Mr Bell) that accrued biodiversity values should be demonstrated before they are used to offset biodiversity losses. His Honour also referred to principle 8 of the Principles for the Use of Biodiversity Offsets, noting, at [248], that:

“Offsets should minimise ecological risks from timelags and that the feasibility of the offset action should be demonstrated prior to the approval of the impact”.

370. His Honour therefore concluded that the areas of Warkworth Sands grassland and derived grassland in the Northern and Southern Biodiversity Areas did not provide long-term offsets that improved or maintained the viability of the EECs that would be impacted by the Project.

371. That led to his Honour’s consideration as to whether the other compensatory measures offered sufficient conservation benefits. His Honour found that they did not and again observed that the process and criteria required by proposed Condition 41A would entail preparing and implementing a research program such as Warkworth was required to fund under proposed Condition 39.

372. Warkworth contended that, notwithstanding these references to Condition 41A, his Honour appears not to have appreciated that it was a condition that prevented Warkworth from clearing Warkworth Sands Woodland west of Wallaby Scrub Road unless re-establishment was demonstrated. His Honour thereby failed, on Warkworth's submission, to address a key component of a central issue in the case. Warkworth contended that this constituted a constructive failure to exercise jurisdiction and a denial of procedural fairness. Warkworth submitted that its case based on Condition 41A ought logically to have been dealt with by his Honour as part of his consideration, at [240]-[251], of the “risk and uncertainty that derived grasslands would not become EECs”. Warkworth also contended that his Honour failed to give proper, genuine and realistic consideration to Condition 41A and its submissions about it: see Kahn v Minister for Immigration and Ethnic Affairs (1987) 14 ALD 291 (per Gummow J), referred to in Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [9].

373. His Honour did not in express terms refer to Warkworth’s contention that Condition 41A was intended to ameliorate the time-lag inherent in the establishment of the Warkworth Sands Woodland in the Biodiversity Offset Areas. Nor did he directly state that under Condition 41A there was to be no clearing of the area west of Wallaby Scrub Road until it could be established that Warkworth Sands Woodland could be re-established on derived grassland areas. However, the absence of express references must be considered having regard to the requirements of Condition 41A and his Honour’s consideration of those requirements.

374. Condition 41A did not have the effect of impeding or delaying the implementation of the Project. Rather it meant that a section of other Woodland in the area west of Wallaby Scrub Road could not be removed until the Director General was satisfied that the Woodland “can” be restored. However, it would appear from para (d) of Condition 41A, which refers to the Director-General’s satisfaction that the plots to be planted were “on a successful trajectory”, that it was sufficient for the Director-General to be satisfied at an early stage of the process that the Woodland “can be re-established or augmented” in the biodiversity offset areas.

375. In essence, Condition 41A involved a four year process, whereby Warkworth was to undertake a project directed to the augmentation or re-establishment of Warkworth Sands Woodland on six 1 ha plots. The short term nature of the process was, in effect, the nub of his Honour’s concern, as is apparent from his remarks, at [246], that:

“The timeframe required for certainty of success of rehabilitation is not short (likely to be several decades) and will be much longer than the timeframe over which the [Warkworth Sands Woodland] EEC would be impacted by the Project.”

376. It cannot be assumed that in coming to this conclusion, his Honour did not have regard to the terms of Condition 41A. What is clear is that his Honour did not consider that Condition 41A provided an adequate compensatory or ameliorative solution to the impact of the Project on the Warkworth Sands Woodland. Indeed, in his Honour’s view, Condition 41A effectively replicated condition 39 and therefore did not add any additional protection to what was already contemplated in the approval conditions.

377. Warkworth’s contention, that consideration of its submission, had there been any, would have been expected in the section entitled “Risk and uncertainty that derived grasslands would not become EECs” at [240]-[251], is also rejected. That was a possible place in the judgment for discussion of Warkworth’s submission, but certainly not the only one. Indeed, for the reasons given in the preceding paragraph, Condition 41A was appropriately considered by his Honour in the sections to which we have referred, including in the section dealing with whether satisfactory ameliorative measures were proposed.

378. The Court makes the following orders:

1. Appeal dismissed with costs;

2. Cross-appeal dismissed with costs;

3. Summons dismissed with costs.

**********

Amendments

23 February 2015 - Minor typos corrected in paras 33, 39, 44, 182, 209, 248, 294

Decision last updated: 23 February 2015