BW Offshore Singapore Pte v Environmental Protection Authority

[2020] NZHC 1117

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-153

[2020] NZHC 1117

UNDER

the Exclusive Economic Zone and

Continental Shelf (Environmental Effects) Act 2012 (EEZ Act)

IN THE MATTER

of an application for leave to appeal from a decision of the High Court pursuant to section 56 of the Senior Courts Act 2016

BETWEEN

BW OFFSHORE SINGAPORE PTE LTD AND VIJAYENDRAN MAHINDRAN

Applicants

AND

ENVIRONMENTAL PROTECTION AUTHORITY

Respondent

Hearing:	On the papers
Appearances:	M G Conway and H P Harwood for the Applicants I Carter and M Sampson for the Respondent
Judgment:	26 May 2020

JUDGMENT OF COOKE J

(Leave to appeal)

[1]    By application dated 28 April 2020 the applicants apply for leave to appeal to the Court of Appeal from my decision dated 7 April 2020.1 In that decision I granted an application by the Environmental Protection Authority (EPA) for a stay of a decision by the Environment Court pending its appeal to this Court. In the decision under appeal the Environment Court had itself granted BW Offshore Singapore Pte

1      Environmental Protection Authority v BW Offshore Singapore Pte Ltd [2020] NZHC 704.

BW OFFSHORE SINGAPORE PTE LTD v ENVIRONMENTAL PROTECTION AUTHORITY [2020] NZHC 1117 [26 May 2020]

Ltd (BWO) a stay of an abatement notice issued by the EPA.2 In other words my decision stayed the stay.

Jurisdiction

[2]    The applicant has sought leave to appeal under s 56(3) of the Senior Courts Act 2016. The EPA oppose leave, and in its submissions addressed the jurisdictional pathway to the suggested application of s 56(3).

[3]    Under s 131 of the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012 (the Act) and s 299 of the Resource Management Act 1991 (the RMA) there is a right to appeal to this Court on questions of law. Under s 308(1) of the RMA there is then a further appeal to the Court of Appeal in accordance with the procedures in sub-part 8 of Part 6 of the Criminal Procedure Act 2011 (the CPA). Under s 303 of the CPA leave to appeal is required. It is accordingly this section, rather than s 56 that regulates the substantive appeal rights. Moreover such leave can only be granted by the second appeal court, in this case the Court of Appeal (s 303(1)).

[4]    There is no apparent right to appeal interlocutory decisions made in the course of the determination of the appeal under s 303(1) of the CPA. In Friends of Pakiri Beach v McCallum Bros the Court of Appeal interpreted that right to encompass an interlocutory decision striking out such an appeal.3 But I do not think that reasoning can apply to a stay decision which does not substantively determine the appeal.

[5]    BWO contends that s 56 of the Senior Courts Act 2016 applies rather than     s 303(1) of the CPA precisely because the relevant decision here is not the substantive decision on the appeal controlled by ss 299 and 303, but an independent interlocutory decision controlled by s 56(3). In Friends of Pariki Beach the Court of Appeal concluded that there was a right to appeal costs awards made in the course of such appeal under the predecessor of s 56, s 66 of the Judicature Act 1908, with the Court not being attracted to the proposition that even an outrageous order could not be

2      BW Offshore Singapore Pte Ltd v The Environment Protection Authority [2020] NZEnvC 033.

3      Friends of Pakiri Beach v McCallum Bros [2008] NZCA 87, 18 PRNZ 932.

appealed at all.4 By analogy BWO can contend that there should be some right to apply for leave to appeal the stay decision.

[6]    I see force in BWO’s argument. I will accordingly proceed to consider the application for leave on its merits. But clearly the position is not free from doubt. Given my conclusion on the merits of the application, the Court of Appeal may itself be asked to confirm the jurisdictional question.

Merits of application

[7]    There are decisions of the Court of Appeal applying s 56(3), but no specific test has been specified.5 In considering the grant of leave I have broadly applied the approach outlined by Palmer J in Li v Chief Executive, Ministry of Business,

Innovation and Employment:6

[22] … an application to appeal an interlocutory decision under s 56(3) is likely to be granted where: (a) there is good reason to consider it before, or separately to, the substantive appeal; and (b) it is sufficiently meritorious in substance and relates to a sufficiently important issue as to outweigh the cost and delay of appeal.

[8]    But as Fitzgerald J said in Finewood Upholstery Ltd v Vaughan the ultimate question is “whether the interests of justice are served by granting leave to appeal”.7 That approach was also applied by the Court of Appeal in Fairway Holdings Ltd v McCullagh.8

Factual and procedural background

[9]    BWO’s vessel has been chartered and used for some years as the floating oil production installation for an undersea oil mining project undertaken by Tamarind Taranaki Ltd (TTL). Activities in the exclusive economic zone (EEZ) are regulated under the Act. Under s 162(2) of the Act the EPA may determine that any new proposed activity in the EEZ does not require a marine consent if it is satisfied that “the adverse effects are likely to be minor or less than minor”. In 2017 TTL

4 At [51].

5      See Fairway Holdings Ltd v McCullagh [2018] NZCA 605 at [11]–[14].

6      Li v Chief Executive, Ministry of Business, Innovation and Employment [2018] NZHC 1171, [2018] NZAR 1134.

7      Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [14].

8      Above n 5, at [14].

successfully applied for such a ruling to allow the vessel to disconnect from the overall oil production facilities, for the disconnected pipes to be laid on the seabed, and for the vessel to leave New Zealand in anticipation that a new vessel would subsequently reconnect to resume oil production the following summer.

[10]   That decision was not acted upon at that time. In late 2019 there were then two significant developments. First TTL went into receivership, and then liquidation. Secondly one of the undersea pipes ruptured, apparently causing the contents of the pipe to spill into the marine environment. An inspection of the undersea equipment then undertaken suggested there were more widespread structural integrity issues. Notwithstanding these developments, BWO then sought to act upon the 2017 ruling. The EPA formed the view that it should not do so given the developments, and it issued abatement notices preventing that step.

[11]   BWO then appealed the issuing of the abatement notices to the Environment Court, and at the same time applied for a stay of the notices. The Environment Court granted that stay. The EPA then appealed that decision to this Court, and itself applied for a stay of the Environment Court’s judgment. This was the stay that was granted in the decision which BWO now seeks leave to appeal to the Court of Appeal.

The significance of the underlying issues

[12]   I accept BWO’s point that there are important issues of law, capable of bona fide argument, concerning the correct approach to the relevant provisions of the Act. The underlying questions have not been previously addressed by any earlier authority, they are not straightforward, and there is room for different views.9 It is also apparent that these underlying issues affect more than BWO such that there is a wider public interest in the correct interpretation and application of the Act which could be assisted by a decision by the Court of Appeal.

[13]   But I am far from convinced that an appeal from the present decision is the appropriate proceeding for such issues to be addressed. This is for three related reasons:

9      The Court of Appeal has, of course, recently addressed other provisions of the Act in a comprehensive way in Trans-Tasman Resources Ltd v Taranaki-Whanganui Conservation Board [2020] NZCA 86, although that judgment is subject to a potential appeal to the Supreme Court.

(a)First this Court’s decision was limited to whether a stay should be granted. Moreover even the appeal to this Court involved an appeal against a stay granted by the Environment Court. This means that the underlying questions of law of substance will not necessarily arise in any appeal to the Court of Appeal. That would depend on its view of the stay issues. For example it would be open for it to conclude that the stay granted by the Environment Court was inappropriate simply on the basis that it rendered both the appeal to that Court and the abatement notices nugatory.

(b)Secondly the underlying questions of law have not been addressed in a full way. There is no decision of the High Court, Environment Court, or even the EPA dealing fully, or substantively with these issues. It would be far better for the Court of Appeal to have such substantive decisions before it is called upon to address the issues itself.

(c)Thirdly, the present decisions were reached not only under circumstances of significant urgency, but they occurred in the context of level 4 of the COVID-19 measures. The hearing in this Court occurred by way of telephone over four hours on 6 April 2020 following the filing of written submissions. The Court delivered a judgment the following day. That was also true of the Environment Court which held the telephone hearing on 24 March, and delivered its decision the following day. The parties benefited from reasonably fully reasoned decisions in both courts, but it can be expected that with less pressure the Court, and the parties presenting argument to the Court, would be expected to address the issues in a more complete way.

Prejudice to BWO

[14]   The above factors by themselves may not be decisive if there was significant prejudice caused to BWO resulting in a need to have its position considered urgently by the Court of Appeal.

[15]   There is, however, no immediate issue. The evidence presented to the Environment Court and this Court justifying the urgent hearings was that BWO had a very limited window of opportunity for its vessel to leave New Zealand prior to the worsening weather in the winter months, and that if it was not able to leave before that time it would be required to remain in New Zealand until the following summer. The window of opportunity described in that evidence has now passed. No new evidence has been filed in support of the application to suggest that BWO’s vessel can leave before next summer. In my view that allows time for the substantive issues to be addressed in a fuller way, at least by the EPA and this Court, and potentially also the Court of Appeal. I explain my view on the overall procedural course in a little more detail below.

[16]   BWO contends, however, that this Court’s judgment puts it in an impossible position because this Court’s reasoning will likely be applied by the EPA and Environment Court, and that requires BWO to have responsibility not only for its own activities and assets but also TTL’s subsea assets, which it simply cannot do.

[17]   I do not accept that submission which involves a misinterpretation of this Court’s judgment.

[18]   The Court has concluded that the EPA will now need to reconsider the disconnection application in the context of the new circumstances, including those relating to the issues concerning the whole Tui field system, and irrespective of who owns particular assets.10 But that does not mean that BWO has responsibility for assets that it does not own. What is in issue is the particular disconnection activities subject to the application under s 162(2) of the Act. The Court has been advised that the Crown now has legal responsibility for TTL’s undersea assets as a consequences of TTL’s insolvency, although no evidence has actually been provided on that issue. If the Crown were to confirm that it is responsible, and will address all the environmental issues that now arise, and that the disconnection of BWO’s vessel can occur without adverse environmental impact, then a basis for the EPA to conclude that the adverse effects of the proposed disconnection “are likely to be minor or less than minor” under s 162(2) exists. The two issues of fact addressed in the judgment, which were based

10     Environmental Protection Authority v BW Offshore Singapore Pty Ltd, above n 1, at [37].

on the evidence then before the Court, illustrate this — if there was no issue with the pipes attached to the vessel being laid on the seafloor, or arising from any need to “flush” the pipes as part of that disconnection notwithstanding their damaged state, then disconnection may be able to proceed. That was what this Court indicated.11 The critical point was that this factual analysis was now needed.

[19]   Indeed it may not be necessary for the Crown to accept responsibility in the way I have just described. The EPA could conduct its own investigations and determine that the Crown is responsible and any adverse impacts of the activities that are the subject of the application will be minor or less than minor. Whilst there do not appear to be detailed provisions regulating the procedure to be followed by the EPA for decisions under s 162(2), it must at least be permitted to make its own inquiries of the Crown (see, for example, s 15), and it might be thought that it would do so in the present circumstances.

[20]   No information has been put before the Court of any engagement with the Crown by BWO or the EPA. The only reference has been the submissions of counsel for BWO seeking leave, and that was to a media report by Stuff that the Crown has taken ownership of the subsea assets. I would have thought that BWO would now be engaging with the Crown about the current circumstances, but the Court has no evidence about that. I do not accept that BWO is placed in an impossible position in the absence of such evidence. The apparent solution for BWO lies outside the courtroom, and involves it dealing with the issues of substance concerning the current position of the Tui oil field, and the appropriateness of the disconnection of its vessel from the undersea pipes notwithstanding the new circumstances.

Other considerations

[21]   There is a final relevant consideration in my view. The procedural course of these proceedings has become complicated. In part that is because of tactical stances adopted by both the parties. Most recently that involved the EPA applying for a stay of the Environment Court’s judgment rather than pursuing the appeal to this Court. But BWO also engaged in a degree of litigation strategy by applying to the Environment Court for an urgent stay of the decision to issue abatement notices, rather

11     At [42]–[47].

than an urgent appeal from the decision to issue those notices. BWO cannot expect the Court of Appeal to untangle this procedural knot in order to get to the substance of the matter when it has some responsibility for initiating that position.

Case management

[22]   When giving the parties directions in relation to the filing of submissions for the application for leave to appeal, I also asked them to address the question of appropriate case management. How the proceedings are to be managed in an overall way is also relevant to the merits of the application for leave.

[23]   I question the utility of the appeal before this Court from the Environment Court decision now being heard and determined. That appeal relates solely to the Environment Court’s decision to grant a stay. I also question whether pursuit of BWO’s appeal to the Environment Court makes sense given this Court’s judgment, and given the EPA either has, or will be addressing the substantive application. What now appears appropriate is for substantive decisions on the underlying issues to be focused on.

[24] In order for that to occur, the EPA first needs to have made a decision on the substantive issues. When this matter was argued all that the EPA had done was issue abatement notices. A substantive decision to be made under s 162(2) in light of the current circumstances had not been made. It is possible that this has now been done as BWO applied for such a decision prior to this Court’s judgment, and I am advised that the EPA has now issued a decision. But I am unsure whether that decision has been made in the context of the kind of information I refer to at [18] above. Neither party provided the Court with a copy of that decision.

[25]   There is no right of appeal against the EPA’s decisions under s 162(2). A challenge to such a decision would need to be by way of judicial review. That would be the appropriate avenue for the underlying issues of law to be addressed by this Court, and then potentially the Court of Appeal. I can indicate that the High Court at Wellington would be likely have capacity to hear and determine such an application for judicial review on an urgent basis over the next few months, at least as matters presently stand.

[26]   The above analysis proceeds on the basis that the 2017 ruling does not already give BWO the right to disconnect and leave the jurisdiction. That is because I have formed the view that it does not give that right because of a material change in circumstances. But BWO retains the ability to challenge that view in any judicial review proceedings against further EPA decision, and any possible appeal of the decision of this Court to the Court of Appeal.

[27]   In any event it is for the parties themselves to determine what steps they wish to take. It is for BWO to decide what applications it makes to the EPA, and on what basis, whether it wants to judicially review any decision made, or whether it wants to pursue its current appeal to the Environment Court. It is for the EPA to decide whether it wishes to pursue its appeal of the Environment Court decision presently before this Court.

[28]   I invite either of the parties to seek a telephone conference to determine the next steps. It may be that this should await any application that BWO might make to seek leave to appeal from the Court of Appeal.

Conclusion

[29]For the above reasons I dismiss BWO’s application for leave.

[30]   Either party may seek a telephone conference on the next steps for the proceeding remaining in the High Court, but I ask that that not be done until any issue concerning any application by BWO for leave to the Court of Appeal is resolved.

Cooke J

Solicitors:

Simpson Grierson, Wellington for the Applicants

Ian Carter, Lambton Chambers, Wellington for the Respondent