The appeal-Macquarie Generation[1]

MG appealed against Pain J’s interlocutory finding. In respect to the determination the existence of any implied conditions, Handley AJA (with whom Whealy JA and Meagher JA agreed) rejected with the notion that limits on statutory immunity from liability in tort can apply to proceedings under a statute which does not invoke common law rights.[2] It was argued that an implied condition could only exist if it was necessary, obvious, clear and consistent with the express terms of the licence.[3] While private rights generally focus on common law protection, the tort of public nuisance protects public right and can be brought in respect of public environmental harm.[4] By applying the test, the court found it unnecessary to imply the condition sought to make the licence effective and noted that the condition relied upon by the climate change action group would in fact tend to contradict the licence.[5] Instead, the Court found it necessary to imply a term that permitted MG to emit CO2 for the reason that “a licence to burn coal would otherwise be ineffective”.[6]

Arguments relied in Court

The court held a five-fold test to determine whether a term of a contract should be implied. In determining the existence of any implied conditions, the Court held that the relevant test for the implication of conditions under contract law is to be reasonable and equitable, be necessary and obvious that it goes without saying, and be clear and not to contradict any express term of the contract. The Court of Appeal held that in this case, the implied condition does not apply, as it would actually contradict the licence issued to MG since the licence was one entitling it to burn coal. The Court of Appeal also rejected the applicants’ argument that the POEO Act automatically incorporated an Environmental Impact Statement (‘EIS’) for a project into the licence. It was held that the extent of the Environmental Protection Authority (‘EPA’) duty was to take the EIS into account and it is for the EPA to incorporate the EIS into the licence, not the court.

Further, Pain J refrained from the argument that CO2 emitted by MG was a “waste” under section 115(1) of the POEO Act.[7] From 1 January 2002 to 26 July 2009, the emission of CO2 from the Bayswater Power Station have dispersed and accumulated in the atmosphere. This has resulted the increased of the atmospheric concentration of anthropogenic CO2 atmosphere and altered the environment.

In Massachusetts v Environmental Protection Agency,[8] it was held by the United States Supreme Court that the US Environmental Protection Agency had authority to regulate CO2 and other greenhouse gases under the Clear Air Act because they fell within the definition of an ‘air pollutant’ under that legislation. While the Land and Environment Court[9] itself recognised the importance of the case as building on the principles of the case of Massachusetts,[10] Pain J did not however finalise his decision in Gray No 3[11] of whether or not CO2 was a ‘waste’ for the purpose of the POEO Act.[12] One of the arguments was that MG did not have lawful authority under s115 of the POEO Act[13] concerning the disposal of ‘waste’ for emissions in an excessive level imposed by the implied EPL condition. However the Court’s rejection of the implied condition in the EPL that limits the overall consumption of CO2 by MG rendered it unnecessary to determine whether or not CO2 was a ‘waste’ under the Act.

Ms. Hodgson’s argument

While Hodgson put forward a logical argument, it was not as well formulated as it could have been. The applicants’ argument was based on analogy with the common law principle that while statutory authorisation will provide immunity from an action in nuisance, it will not do so if the authorised act is carried out negligently.[14] The applicants chose to argue that by virtue of the construction of s115 of POEO Act[15] MG was required to take care of its CO2 emissions, either as an implied limitation under s115[16] or as an implied condition under its licence. Relying on this argument is problematic as proof of the offence under s115(1)[17] by applicant would require proof of the negligent disposal of waste and also proof by the respondent under s115(2) that the activity carried out by the respondent was not negligent. Furthermore, such interpretation by Hodgson J need not be done this way when the applicant implied that one of the condition of the environment protection licence was to take reasonable care to reduce emission.[18] For instance, s115(1)[19] should have been presented as establishing the primary duty not to dispose of waste negligently and s115(2)[20] should be interpreted to require the defendant to establish lawful authority to the extent of whether there was negligent to cause environment harm. Because of this, the court overlooked the analogy that could have been drawn between s115(1) and public nuisance environmental harm with the possibility of restraint the use of s115(2) defence. It is argued that the court was too quick to dismiss the applicants’ case for which s115 could have been reasonably argued by establishing an ongoing duty for corporations holding such licence to take reasonable care to reduce emissions harmful to the environment and to see whether MG has done everything reasonably possible to reduce its CO2 emissions and whether such character of environmental harm would be attributed to its emissions.[21]

 

[1] Macquarie Generation v Hodgson [2011] NSWCA 424; BC20110361 (Macquarie v Hodgson).

[2] Ibid, 44.

[3] Macquarie Generation v Hodgson [2011] NSWCA 424; BC20110361 (Macquarie v Hodgson), 63.

[4] Kent v Jackson (1973) 2 ACTR 1.

[5] Macquarie Generation v Hodgson [2011] NSWCA 424; BC20110361, 65.

[6] Macquarie Generation v Hodgson [2011] NSWCA 424; BC20110361, 66.

[7] Protection of the Environment Operations Act 1997 (NSW), 115(1).

[8] Massachusetts v Environmental Protection Agency (2007) 549 United 497.

[9] Massachusetts v Environmental Protection Agency (2007) 549 United 497, [62]-[67].

[10] Massachusetts v Environmental Protection Agency (2007) 549 United 497.

[11] Gray v Macquarie Generation (No 3) [2011] NSWLEC 3; BC201101002 (Gray No 3).

[12] Protection of the Environment Operations Act 1997 (NSW).

[13] Protection of the Environment Operations Act 1997 (NSW), 115.

[14] Van Son v Forestry Commission of New South Wales (1995) 86 LGERA 108.

[15] Protection of the Environment Operations Act 1997 (NSW), 115.

[16] Protection of the Environment Operations Act 1997 (NSW), 115.

[17] Protection of the Environment Operations Act 1997 (NSW), 115(1).

[18] Alex Gardner and Jessica Lee, ‘Case note: Macquarie Generation v Hodgson [2011] NSWCA 424’ (2012) Australian Environment Review, 322.

[19] Protection of the Environment Operations Act 1997 (NSW), 115(1).

[20] Protection of the Environment Operations Act 1997 (NSW), 115(2).

[21] Alex Gardner and Jessica Lee, ‘Case note: Macquarie Generation v Hodgson [2011] NSWCA 424’ (2012) Australian Environment Review, 322.

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