Australia: Report On Investigation Of Varanus Island Gas Explosion Clears Another Legal Hurdle

Public law report


On 3 June 2008, there was an explosion at the Varanus Island gas processing facilities in Western Australia (WA) which caused the facilities to close down and caused significant disruption to the state's power supply. The Apache companies were involved as operator of the gas processing facilities and as one of the licensees of the pipeline from those facilities.

On 8 May 2009, the WA Minister for Mines and Petroleum (the Minister) announced that the Department of Mines and Petroleum (the Department) would carry out the final stage of investigations into the Varanus Island incident and that David Agostini and Kym Bills, as inspectors appointed under the Petroleum Pipelines Act 1969 (WA) (the Act), would coordinate this investigation.

On 18 June 2009, Agostini and Bills delivered their completed report (the Report) to the Department. The Department expressed an intention to deliver the Report to the Minister as soon as possible.

Trial proceedings – Apache Northwest Pty Ltd v Agostini [2009] WASC 225

The Apache companies commenced proceedings in the Supreme Court of Western Australia to restrain Agostini and Bills and the Department from providing the Report to the Minister. The Apache companies claimed that they had not been afforded procedural fairness in the preparation and finalisation of the Report. Alternatively, the Apache companies sought an injunction restraining the Minister from publishing the Report or its contents.

It was admitted by the parties that the Report contained findings and material that adversely affected, or were capable of adversely affecting, the interests of the Apache companies (these were referred to as the "Adverse Contents"). Nonetheless, Beech J held that no duty of procedural fairness arose in relation to the preparation and provision to the Minister of the Report because no right or interest of the Apache companies was sufficiently directly affected. In particular, the provision of the Report, without publication, did not sufficiently affect the reputation of the Apache companies (although any proposed general publication of the Report by the Minister would attract an obligation of procedural fairness). Nor would the provision of the Report, of itself, sufficiently affect the Apache companies' oil and gas interests because, before the Minister took any action in relation to those interests (for example, by refusing to grant or renew licences) on the basis of the Adverse Contents, he would be obliged to afford the Apache companies procedural fairness.

Appeal proceedings – Apache Northwest Pty Ltd v Agostini [No 2] [2009] WASCA 231

The appeal by the Apache companies was heard on an urgent basis on 10 September 2009.

Buss JA disagreed with the primary judge's conclusion on the existence of a duty to accord procedural fairness. His Honour considered that Agostini and Bills were obliged, in carrying out their investigation and preparing the Report, to accord procedural fairness to the Apache companies before delivering the Report to the Minister. However, in his Honour's view, the Apache companies were given a reasonable opportunity to put relevant information or material and to make submissions on issues that were likely to affect their rights or interests but had failed to avail themselves of that opportunity. The content of any procedural fairness obligations did not require that the Apache companies be provided with a draft of the Report prior to its delivery to the Minister. Accordingly, the argument by the Apache companies that Agostini and Bills had breached their procedural fairness obligations had not been made out.

In contrast, Wheeler and Newnes JJA agreed with the primary judge that Agostini and Bills did not owe the Apache companies a duty of procedural fairness. Neither the existence of a variety of offences under the Act in relation to the management of pipelines, nor the Minister's powers to take action in relation to licences, were capable of attracting a duty to afford procedural fairness.

In relation to the issue of reputation, no risk to the Apache companies' reputation arose at the time of provision of the Report to the Minister so as to attract a duty of procedural fairness. Cases that had recognised an interest in "reputation" as attracting procedural fairness referred to the interest in "general reputation". This was to be distinguished from the view which a particular individual (in this case, the Minister) may take of a person.

Further, a communication to a Minister concerning matters for which he was responsible could not affect reputation so as to attract a duty of procedural fairness. Responsible government depended upon the assumption that Ministers have access to information which is held by departmental officers. Agostini and Bills had been engaged merely for the purpose of informing the Minister and their position was analogous to that of departmental officers. If the purpose of the Report was in order to inform not just the Minister, but the public at large (for example, by being tabled in parliament or publicly released by the Minister), their Honours found that a duty of procedural fairness would have been owed. On the evidence, there was no express indication by the Minister of an intention to publish the Report. In their Honours' view, the issue of the Apache companies' reputation was properly left for the Minister to weigh up with other public interests relevant to the release of the Report, or portions of it.


While the Apache companies were unsuccessful in preventing the delivery of the Report to the Minister, the majority judgment of the Court of Appeal highlights potential difficulties for the Minister should he ultimately decide to publicly release the Report. The judgment specifically states that the Apache companies' reputational interests would not be adequately protected by an opportunity, following the completion of the Report, to make submissions to the Minister.

Immediately following the judgment, the Minister issued a Media Statement indicating that he would "review the Report closely before deciding what further action to take" (Norman Moore MLC, Minister for Mines and Petroleum, "Minister welcomes release of long awaited report into Varanus gas explosion", Media S tatement, 22 December 2009). More recently, the Minister has indicated in Parliament his desire to make the Report public but has stated that this has not yet occurred as it may jeopardise prosecutions against some of the Apache companies (Legislative Council, Hansard, 23 March 2010, p 928).

In separate proceedings in the Federal Court, the Apache companies successfully challenged the release of documents to a joint Commonwealth-State inquiry into the Varanus Island incident (Apache Northwest Pty Ltd (ABN 58 009 140 854) v Agostini [2009] FCA 534).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Ashley Tsacalos
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