Tuesday, February 10, 2015

Hearings this week in the High Court of Australia

The High Court will today commence hearings in three related cases arising out of the NSW Government’s response to findings made by the Independent Commission Against Corruption following investigations into the grant of various exploration licences.

The first two cases involve Mr Travers Duncan and Cascade Coal Pty Ltd. In June 2009, following a process of expressions of interest to the NSW Department of Primary Industries, Cascade was chosen as the successful applicant for proposed coal exploration licences for areas known as Mount Penny and Glendon Brook.  In October 2009 licences issued under the Mining Act 1992 (NSW) to each of two newly incorporated subsidiaries of Cascade, Mt Penny Coal Pty Limited and Glendon Brook Coal Pty Limited. Mt Penny Coal subsequently carried out extensive exploration and development work, and in December 2010 lodged an application for environmental approval of a proposed open-cut coal mine at Mount Penny.

The third case involves an exploration licence issued under the Mining Act 1992 (NSW) to Doyles Creek Mining Pty Limited.  In early 2010 the shares in DCM were purchased by NuCoal Resources Ltd.  In November 2012 DCM applied for a renewal of its exploration licence.

In July 2013 the ICAC published a report entitled “Investigation into the Conduct of Ian Macdonald, Edward Obeid Senior, Moses Obeid and Others”.  Findings made by ICAC in its report included that Mr Duncan and the other directors of Cascade had engaged in corrupt conduct by taking steps to deceive public authorities as to the involvement of the Obeid family in the Mount Penny tenement.  In August 2013 the ICAC published a report entitled “Investigation into the Conduct of Ian Macdonald, John Maitland and others (Operation Acacia)”.  In that report ICAC made findings of corrupt conduct against several of NuCoal’s shareholders who had in the past been directors of NuCoal and DCM.  A further ICAC report, “Operations Jasper and Acacia – addressing outstanding questions”, was published in December 2013.  That report contained findings by ICAC that the Mount Penny tenement was created as a result of corrupt conduct and that Cascade had acquired the benefit of the Glendon Brook tenement as the result of a corrupt agreement it had made in relation to Mount Penny.  It also found that the grant of the exploration licence to DCM was tainted by corruption and that NuCoal’s purchase of DCM had not been at arm’s length. ICAC recommended that the NSW Government cancel the licences issued to Mt Penny Coal and Glendon Brook.  It also recommended that the NSW Government cancel DCM’s exploration licence and refuse applications associated with it.

On 31 January 2014 the Mining Amendment (ICAC Operations Jasper and Acacia) Act 2014 (NSW) added Schedule 6A to the Mining Act. Schedule 6A declares the application for environmental approval void, cancels the various exploration licences issued to Mt Penny Coal, Glendon Brook and DCM, and obliges the various companies to continue to provide reports and other information obtained from their mining exploration activities to the Government.  Schedule 6A also provides that the Government is not liable to pay compensation for any consequence of the operation of the Schedule.

Mr Duncan and the Cascade parties submit that Schedule 6A determines rights and imposes punishment, thereby amounting to an exercise of judicial power.  They contend that the exercise of such power is beyond the law-making power given to the New South Wales Parliament by s 5 of the Constitution Act 1902 (NSW), with the result that Schedule 6A is not a valid law.  All plaintiffs also contend that, being an exercise of judicial power, Schedule 6A is invalid because it falls outside the integrated system prescribed by Chapter III of the Commonwealth Constitution.  This is because that system involves the supervision by the relevant Supreme Court, and ultimately by this Court, of any exercise of judicial power in a State.

NuCoal submits that in passing the Amendment Act, the New South Wales Parliament purported to assign guilt and impose punishment.  NuCoal contends that the Parliament has never possessed such power.  That lack of power, NuCoal submits, is borne out by relevant colonial-era statutes in relation to the establishment and powers of both the Parliament and the Supreme Court of New South Wales, and the Constitution Act 1902 (NSW) as impacted by the Commonwealth Constitution.  NuCoal submits in the alternative that even if the Parliament has such power, the power must be exercised judicially.  Such exercise would involve hearing from affected parties, considering only relevant information and avoiding arbitrariness.  NuCoal submits that Schedule 6A operates arbitrarily in that it punishes shareholders of the company who had no involvement in any corruption.

The Cascade parties and NuCoal additionally contend that clause 11 of Schedule 6A, which authorises certain officials to use information obtained under the Mining Act is, pursuant to section 109 of the Commonwealth Constitution, invalid to the extent of its inconsistency with the Copyright Act 1968 (Cth).

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