Friday’s decision by Justice Button in the Supreme Court of New South Wales in Metgasco Limited v Minister for Resources and Energy¹ has affirmed the importance of government officials complying with statutory decision-making processes. The Metgasco decision reflects fundamental rule of law principles and highlights the importance of excluding political considerations from official decision-making.

Button J, in his judicial review of two decisions of the Minister for Energy and Resources to suspend Metgasco’s petroleum exploration activities, quashed both decisions for invalidity.

Background

Metgasco, for whom Gilbert + Tobin acts, holds a licence for petroleum exploration under the Petroleum (Onshore) Act 1991 (the Act), valid until November 2017. In March 2013 it presented a detailed exploration plan to the Minister for approval.  The exploration program was to commence in Bentley on the NSW North Coast and was Metgasco’s only immediate project. 

A Delegate of the Minister approved the program in February 2014. In reliance upon this approval, Metgasco expended considerable funds, time and resources to prepare the site, including tendering and contracting for a drill rig, and engaging in extensive community consultation as required by its licence.

Despite Metgasco’s consultation efforts, there remained considerable opposition from local residents. Demonstrations took place, including highly publicised protests at the Bentley drill site, in the year leading up to a State election. 

In May 2014, the Minister’s Delegate notified Metgasco of her decision to suspend the exploration program under s 22 of the Act (the first decision). This decision was made without first giving Metgasco notice or an opportunity to make representations.²  In June 2014, the Delegate confirmed her decision to suspend the activities (the second decision).³  The Delegate’s reasons were, in summary, that Metgasco had allegedly breached condition 8 of its licence by failing to engage in “effective consultation” with “often hostile” community stakeholders.⁴ 

Judgment

The judgment reinforces the importance for government officials to comply with statutory regimes for official decision-making.  Button J quashed the first decision because the Delegate had failed to comply with the statutory suspension process set out in the Act.  He said that the Delegate had breached the statutory procedural fairness requirements and the decision had come as a “bolt from the blue” to Metgasco.⁵

The second decision was also held to be invalid.⁶  Button J held that near enough to the regime required by the Act was not good enough.  He appeared critical of this approach,⁷ saying that that calling upon the Minister to comply precisely with the statutory regime was not unreasonable and “does not bespeak excessive formalism.”⁸ In addition the Minister could not, by a process of “bootstrapping”, create a power in a new instrument that he did not have under the Act or the petroleum exploration licence.⁹

Button J ruled that the second decision was also invalid on other grounds.¹⁰ He held that phrase “effective consultation” focuses on the quality of the process of community consultation, rather than the substantive outcome of this consultation.¹¹ The fact that protesters remained at Bentley could not, he said, be evidence of a poor process of consultation, and he ruled that it had been wrong for the Minister to take this fact into account in deciding to suspend the approval. 

This is an important articulation of the need for official decision-makers to resist the temptation to allow political concerns, such as public protests, to interfere with their decision-making duties.

Footnote

1  [2015] NSWSC 453

2  [2015] NSWSC 453 at [40]-[41].

3  [2015] NSWSC 453 at [23]. 

4  [2015] NSWSC 453 at [31].

5  [2015] NSWSC 453 at [42].

6  [2015] NSWSC 453 at [46].

7  Button J acknowledged that the first and second decisions combined  “undoubtedly damaged Metgasco substantially, as well as exposing it to criminal sanction.” [2015] NSWSC 453 at [47].

8  [2015] NSWSC 453 at [47].

9  [2015] NSWSC 453 at [61].

10  [2015] NSWSC 453 at [49]-[70].

11  [2015] NSWSC 453 at [68]-[69].