Australia: EPOs and "related persons": Bond v Chief Executive of Environment and Heritage Protection [2016] QPEC 40

Last Updated: 19 October 2016
Article by Thomas Buckley

The amendments introduced to the Environmental Protection Act 1994 (EP Act) earlier this year that allow environmental protection orders (EPOs) to be issued to "related persons" of companies carrying out environmentally relevant activities (ERAs) are now in full swing. One of the first reported cases is Peter Bond, the former Chairman and Managing Director of Linc Energy Limited (Linc), who was issued with an EPO in May 2016 to take action to rehabilitate land at the Chinchilla CSG Gasification Plant. The EPO also required Mr Bond to provide a bank guarantee in the sum of $5,500,000. Mr Bond applied for an internal review of the decision to issue the EPO and then commenced an appeal to the Planning and Environment Court (P&E Court). The decision of Bond v Chief Executive of Environment and Heritage Protection [2016] QPEC 40 is a determination by the P&E Court of a preliminary point in the ultimate proceedings against the decision to issue the EPO.

CHAIN OF RESPONSIBILITY LAWS

The chain of responsibility laws took effect earlier this year when the Government passed the Environmental Protection (Chain of Responsibility) Amended Act 2016. One of the most significant components on these new laws was the expanded powers afforded to the Department of Environment and Heritage Protection (DEHP) in respect of EPOs. Now, in some circumstances, EPOs can be issued to persons who are considered to be "related" to a company carrying out an ERA, instead of issuing the EPO to the company who actually conducts the ERA. Related persons includes holding companies of the company, some landowners on which the ERA is being carried out and, significantly, persons considered to have a "relevant connection" to the company.

The "relevant connection" test is broadly drafted and can capture a person that:

  • is capable of significantly benefiting financially, or has significantly benefited financially, from the carrying out of a relevant activity by the company; or
  • is, or has been at any time during the previous 2 years, in a position to influence the company's conduct in relation to the way in which, or the extent to which, the company complies with its obligations under the EP Act.

A person may 'influence a company's conduct' by giving a direction or approval, by making funding available, or in another way.1 That was considered a relevant factor in the decision to issue Mr Bond with an EPO.

LINC & BOND

Linc was the holder of various environmental authorities for the Chinchilla CSG Gasification Plant. The company was placed into voluntary administration and subsequently resolved to be wound up. Mr Bond held different senior positions within Linc throughout the company's history, including Chief Executive Officer, Managing Director, and Chairman of the Board.

In May 2016, an EPO was issued to Mr Bond to:2

  • secure compliance with various conditions of Linc's environmental authorities;
  • secure compliance with the general environmental duty;
  • require Mr Bond to take action to rehabilitate or restore land because of environmental harm from a relevant activity and/or contaminations on land on which Linc carried out its activities; and
  • require Mr Bond to give DEHP a bank guarantee or other security for Mr Bond's compliance with the EPO.

Mr Bond sought internal review of the decision to issue the EPO, and subsequently appealed the internal review decision to the P&E Court. One of the grounds of appeal was that Mr Bond was not a related person to whom the EPO could lawfully be issued.

PRELIMINARY HEARING BEFORE THE P&E COURT

The hearing before the P&E Court in August 2016 was a preliminary point and not a full determination of the appeal. Mr Bond alleged that the EPO was unlawful because it did not comply with section 360 of the EP Act. Mr Bond also alleged that he was denied procedural fairness in relation to the internal review decision. Both of those arguments were unsuccessful.

The first argument focused on whether DEHP was required to determine, in issuing the EPO, that 'special circumstances' were applicable to this case. In cases where there are special circumstances, an applicant is afforded a longer period within which to make its application for internal review.3 The EPO issued to Mr Bond did not state there were special circumstances. However, it was subsequently acknowledged by DEHP that special circumstances may apply in this case. Mr Bond alleged that the failure by DEHP to acknowledge this at the time of issuing the EPO (and state it in the EPO) made the EPO unlawful. The P&E Court was unpersuaded by this argument. The fact that the EPO did not state that special circumstances applied did not of itself make the EPO defective. Rather, it suggests that at the time the EPO was issued DEHP was not of the view that special circumstances were present. The second related argument claimed Mr Bond was denied procedural fairness because he had not been given a longer period to properly formulate his application for internal review. This was argument was also unsuccessful.

LINGERING CONCERNS

Although the full appeal against the decision to issue the EPO to Mr Bond is still yet to be heard, the case is a timely reminder of the new laws which now apply in this jurisdiction. This is off the back of the already deep-felt concerns within the industry about the potential unintended consequences of these laws. While we await judicial guidance on a number of these new provisions, including particularly the extent to which a person will be considered to have a "relevant connection" to company, there are lingering concerns that the provisions simply allow DEHP the ability to pursue any entity financially equipped to rehabilitate or rectify the environmental damage notwithstanding that the entity may not have been extensively involved.

Footnotes

1 EP Act, s. 363AB(3)(b)

2 Environmental Protection Order EM1029

3 EP Act, s. 521(2)(a)(ii)

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