On 8 November 2011, Moore AJ handed down his judgment in the Land and Environment Court in Moolarben Coal Mines Pty Ltd v Director-General of the (former) Department of Industry and Investment NSW (Agriculture Division); Moolarben Coal Mines Pty Ltd v Director-General of the Department of Trade and Investment, Regional Infrastructure and Services.1

The Court examined whether a determination of 'agricultural land' under the Mining Act 1992 (NSW) (Mining Act) by the Director-General of the Department of Industry and Investment NSW (Agricultural Division) (Director-General) in relation to the granting of a mining lease, was valid.

The decision makes it clear that where any procedure is set out in legislation, a decision-maker must, before making a determination, apply the principles of procedural fairness, unless expressly or impliedly displaced. Should procedural fairness not be afforded, there is a risk that the determination will be invalidated.

Background

On 20 July 2004, Moolarben Coal Mines Pty Ltd (Moolarben) lodged an exploration licence application and was subsequently granted a licence which operated for five years. On 21 April 2009, Moolarben lodged a mining lease application over part of the land that was subject to the exploration licence.

Part of the land that was the subject of the mining lease application was owned by Ulan Coal Mines Pty Ltd (Ulan). Ulan objected to the grant of a mining lease on the basis that their land was "agricultural land" (Land) for the purpose of the Mining Act.

The Mining Act provides that a mining lease cannot be granted over the surface of land determined to be "agricultural land" without the consent of the landholder.

Based upon a review of relevant background information (including maps and historical use information), landholder interviews and a detailed field inspection, the Director-General determined the Land was "agricultural land" (Determination). Accordingly, a mining lease could not be granted over the Land without Ulan's consent.

Basis of challenge

Moolarben challenged the validity of the Determination on four grounds. Specifically, Moolarben asserted that:

  1. it was denied procedural fairness as the Director-General failed to take a number of requisite steps identified in the Mining Act, including that Moolarben was entitled to know the basis of Ulan's objection, be given an opportunity to inspect the Land and respond to the Director- General's recommendation that the Land was "agricultural land"
  2. the Director-General failed to follow certain procedures, including:
    1. a failure to address the question of whether the Land satisfied the definition of "agricultural land" at the time the mining lease and exploration licence applications were lodged (as well as the 10 preceding years of both dates). In this case, the Director-General had only considered the question at the time that the exploration licence was lodged, and
    2. whether the relevant expression "successful use" question posed by the definition of "agricultural land" was misconstrued
  4. the Determination was uncertain as it did not identify the land to be agricultural land with sufficient precision, and
  5. no reasonable decision-maker would have come to such a conclusion had they considered all relevant material (relying on the principle of 'Wednesbury unreasonableness': Associated Provincial Picture Houses Ltd v Wednesbury Corporation2.

  6. The case was decided on the outcome of the first and second grounds.

Judgment

The Court stated:

"It is well settled that the repository of a statutory power is obliged to afford procedural fairness to a person whose rights or interests may be adversely affected by the exercise of the statutory power and that position is displaced only by "plain words of necessary intendment"" (at 30).

The Court found that despite the absence of detailed processes providing a mining lease applicant with express rights to make submissions, the principles of procedural fairness applied and in this case, the Determination was found invalid on the basis that procedural fairness was not afforded (at 32 and 46). The Court held:

  • despite various provisions within Schedule 1 of the Mining Act that identified procedural steps relating to the grant of a mining lease, there is no express or implied provision within the legislation that displaces the principles of procedural fairness, and
  • in considering whether Moolarben had a right to be afforded procedural fairness, that:
  • "[Moolarben] was entitled to seek to secure, if lawfully possible, a lease unencumbered by any limitation as to specific areas in which it could mine and free of the attendant burden of having to obtain the consent of landholders of the specific areas. In other words, Moolarben was entitled to resist objections asserting any of the land was agricultural land and to be afforded procedural fairness in that process" (at 37).

The Court found that Moolarben therefore "had an interest attracting procedural fairness as an applicant for a mining lease for part of the area to which its licence related" (at 37).

The Court considered what the principles of procedural fairness involved having regard to the statutory context and whether, based on the particular facts, procedural fairness had been provided to Moolarben. Specifically and applying various cases, the Court held (at 39 and 40):

  • procedural fairness includes an opportunity to put information and submissions to the decision-maker in support of an outcome supporting his or her interests, and may also require an opportunity to rebut and comment on adverse material from other sources put before the decision-maker (depending on the content of the material): Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd3, and
  • ircumstances may arise where adverse material not personal to the individual or party should be made available for comment: Re Minister for Immigration and Multicultural Affairs ex parte Miah4.

In reaching its conclusion, the Court held that the Director-General had failed to inform Moolarben of Ulan's objection, the details of the objection and provide relevant documents to allow Moolarben to submit to the Director-General such material in order to persuade the Director-General not to uphold the objection (at 45 and 46).

The Court also found:

  • the evidence indicated that the Director-General had failed to determine whether the Land was "agricultural land" at the times prescribed in the Mining Act (at 51), the failure of which led to the invalidation of the Determination (at 61), and
  • even if there was an error in misconstruing the expression "successful use", this did not provide a basis to invalidate the Determination (at 49).

Despite these findings, the failure to afford procedural fairness was the basis upon which the Determination was invalidated in this case.

The Court ordered that the Determination was invalid and of no effect on the grounds of a denial of procedural fairness and failure to apply procedures pursuant to the Mining Act.

Implications

In these particular circumstances, it is clear that under the Mining Act, the Director-General must comply with all procedural steps set out in the legislative regime and in particular Schedules 1 and 2 of the Mining Act, when making determinations.

The decision highlights the importance courts attribute to procedural fairness when decisions are made by government departments and agencies as well as the interaction between this principle of administrative law and the procedures and considerations outlined in the legislation under which a decision is to be made.

Footnotes

1[2011] NSWLEC 191
2[1948] 1 KB 223
3[1994] 49 FCR 576
4[2001] 206 CLR 57

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