UHSIA v MACH (No 2): What are the considerations for developers?

In the recent NSW Land and Environment Court (LEC) decision of Upper Hunter Sustainable Industries Association Inc v MACH Energy Australia Pty Ltd (No 2) [2017] NSWLEC 87 (UHSIA v MACH (No 2)), Justice Pain revisited the question of physical commencement of a development consent for an open cut coal mine at Mount Pleasant in the upper Hunter Valley.

Below, we summarise the case and look at the key considerations for developers as a result of the decision.

THE FACTS OF THE CASE

In late December 1999, the then Minister for Urban Affairs and Planning granted a development consent to Coal & Allied Operations Pty Ltd for the construction and operation of an open cut coal mine, coal preparation plant, and transport and associated facilities.

In 2016, MACH Energy (MACH) bought the mine.

In 2017, the Upper Hunter Sustainable Industries Association (UHSIA) commenced proceedings against MACH, alleging that the mine’s development consent had lapsed because (among other things):

• allegedly, the conditions of the consent before construction were not complied with, including a failure to prepare and submit various environmental management plans in respect of the ‘Development Application Area’ on issues such as waste, flora and fauna, and noise management;

• a dam was not constructed in line with the requirements of the Environmental Impact Statement (EIS) as a clean water dam, and the sole purpose of geotechnical investigation work undertaken was the construction of a sediment dam and therefore unlawful; and

• survey work undertaken was ‘merely notional or equivocal’ and ‘did not relate to the development the subject of the consent’.

THE LEGAL CONTEXT

Section 95(1) of the Environmental Planning and Assessment Act 1979 (EPA Act) provides that a consent lapses five years after the date from which it operates (lapsing date).[1]

To prevent a consent from lapsing, building, engineering or construction work relating to a building, subdivision or work must be ‘physically commenced’ before the lapsing date (section 95(4)).

Identical provisions from an historical version of the EPA Act applied to the circumstances in UHSIA v MACH (No 2). It was agreed between UHSIA and MACH that the relevant ‘lapsing date’ for the consent, if not otherwise lawfully commenced, was 15 February 2005.

THE LEC’S DECISION

The LEC held that the consent had not lapsed, as engineering and construction work relating to the development had taken place before 15 February 2005.

The Court of Appeal decision in the matter of Hunter Development Brokerage Pty Ltd v Cessnock City Council; Tovedale Pty Ltd v Shoalhaven City Council (2005) 63 NSWLR 124 (Hunter Brokerage) was cited, where Justice Tobias had proposed a three-limbed test:

1. Was the work relied on building, engineering or construction work?

2. Did it relate to the approved development?

3. Was it physically commenced on the land to which the consent applied?

MACH submitted that survey and geotechnical work carried out in 2003 and 2004 was evidence of physical commencement. The LEC agreed. Applying the Hunter Brokerage test, the LEC determined that:

• the survey and geotechnical work performed constituted ‘engineering work’, consistent with previous authorities;

• there was no legal or factual basis for finding that the engineering work was not related to the development, as the relevant conditions of consent had been complied with before construction and Stage 1 of the development had been accepted by the Director-General’s delegate; and

• the engineering work was not a ‘sham’ nor ‘merely notional or equivocal’, and had been commenced before 15 February 2005.

MACH also submitted that the issues raised by UHSIA about the ‘unlawfulness’ of the sediment dam did not detract from the construction of that dam. The LEC, again referring to Hunter Brokerage, determined that:

• the partial construction of the dam was ‘construction work’;

• the EIS was not to be construed strictly regarding the construction of the dam, but, rather, a practical approach was to be adopted (the terms of the EIS supported the use of the dam as a sediment dam in the initial stages of the mine, and work which satisfies more than one purpose can satisfy the Hunter Brokerage test); and, in any case

• a construction certificate had been issued in respect of the dam, ‘effectively harmonis[ing] the consent and the work that was done’.

WHAT ARE THE IMPLICATIONS OF THE DECISION?

The LEC’s decision in UHSIA v MACH (No 2) does not change the legal position.

However, it does highlight for developers the importance of:

• complying with conditions of consent required to be satisfied before construction work can be undertaken;

• documenting compliance with each relevant consent condition;

• liaising closely with relevant consent authorities throughout the development process; and

• physically commencing work before the relevant lapsing date.