FEDERAL COURT OF AUSTRALIA

Country Carbon Pty Ltd v Clean Energy Regulator [2018] FCA 1636

File number: VID 1108 of 2017

Judge: MORTIMER J

Date of judgment: 1 November 2018

Catchwords: ADMINISTRATIVE LAW – application for judicial review of decisions made by Clean Energy Regulator under the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth) – Regulator’s decisions imposed conditions on declarations obtained by applicant that its projects were “eligible offsets projects” including a requirement for consent to be obtained from holders of an “eligible interest” – whether on proper construction of Act the conditions applied only to “sequestration projects” – whether conditions imposed were thus beyond power – conditions imposed not beyond power on proper construction of Act – application dismissed

ADMINISTRATIVE LAW – cross-claim by native title holders seeking declarations that applicant had no “legal right to carry out” project – separate question identified regarding whether existence of such a right a jurisdictional fact on proper construction of the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth) – separate question answered in the negative STATUTORY INTERPRETATION – Circumstances in which it is open to a Court to change or insert words into statute as an exercise in statutory construction – not an appropriate circumstance

Legislation: Constitution, s 75(v)Acts Interpretation Act 1901 (Cth), ss 15AB(1)(a), 15AB(1)(b), 34AB(1)(c)Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth), 3, 4, 5, 12, 13, 15, 22, 23, 27, 28A, 31, 43, 44, 45, 45A, 53, 53A, 54, 97, 98, 99Carbon Farming Initiative Amendment Act 2014 (Cth)Evidence Act 1995 (Cth), s 191Judiciary Act 1903 (Cth), s 39BNative Title Act 1993 (Cth), s 57(2)Parliamentary Privileges Act 1987 (Cth), ss 16(3), 16(5)

Carbon Credits (Carbon Farming Initiative) Rule 2015 (Cth), s 50Federal Court Rules 2011 (Cth), rr 22.01, 22.02, 22.04

Civil Liability Act 2002 (NSW), s 12(2)Compensation to Relatives Act 1897 (NSW)Sentencing Act 1991 (Vic), s 37Sentencing Amendment (Community Correction Reform) Act 2011 (Vic), s 21, Sch 3, cl 5

Cases cited: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27BGM16 v Minister for Immigration and Border Protection [2017] FCAC 72; 252 FCR 97Brennan v Comcare [1994] FCA 360; 50 FCR 555BY Winddown Inc v Vautin [2016] FCAFC 168; 249 FCR 262Cabal v Attorney-General of the Commonwealth [2001] FCA 583; 113 FCR 154Carr v Western Australia [2007] HCA 47; 232 CLR 138CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; 187 CLR 384Colonial Bank of Australasia v Willan (1874) 5 PC 417Corporate Affairs Commission of New South Wales v Yuill [1991] HCA 28; 172 CLR 319DPP v Leys [2012] VSCA 304; 44 VR 1Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503Friends of Leadbeater’s Possum Inc v VicForests [2018] FCA 178; 228 LGERA 255Greenwool for and on behalf of the Kowanyama People v State of Queensland [2012] FCA 1377Harrison v Melhem [2008] NSWCA 67; 72 NSWLR 380Lacey v Attorney-General for the State of Queensland [2011] HCA 10; 242 CLR 573Minister for Immigration and Multicultural Affairs v Eshetu [1998] HCA 21; 197 CLR 611One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77; 277 IR 23Plaintiff M70/2011 v Minister for Immigration and Citizenship [2011] HCA 32; 244 CLR 144Plaintiff S157/2002 v Commonwealth [2003] HCA 2; 211

CLR 476Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355R v PLV [2001] NSWCCA 282; 51 NSWLR 736R v Young [1999] NSWCCA 166; 46 NSWLR 681Re Bolton; Ex parte Beane [1987] HCA 12; 162 CLR 514Special Projects (Qld) Pty Ltd v Simmons [2012] QCA 205SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; 347 ALR 405SZVBN v Minister for Immigration and Border Protection [2017] FCAFC 90; 254 FCR 393Taylor v The Owners – Strata Plan No 11564 [2014] HCA 9; 253 CLR 531Thiess v Collector of Customs [2014] HCA 12; 250 CLR 664Timbarra Protection Coalition Inc v Ross Mining NL [1999] NSWCA 8; 46 NSWLR 55Wentworth Securities Ltd v Jones [1980] AC 74Wik Peoples v Queensland [1996] HCA 40; 187 CLR 1Zheng v Cai [2009] HCA 52; 239 CLR 446

Date of hearing: 17 and 18 April 2018

Date of last submissions: 9 May 2018

Registry: Victoria

Division: General Division

National Practice Area: Administrative and Constitutional Law and Human Rights

Category: Catchwords

Number of paragraphs: 182

Counsel for the Applicant and First Cross-respondent:

Mr N Wood

Solicitor for the Applicant and First Cross-respondent:

Norton Rose Fulbright

Counsel for the First Respondent and Second Cross-respondent:

Mr G A Hill

Solicitor for the First Respondent and Second

HWL Ebsworth Lawyers

Cross-respondent:

Counsel for the Second Respondent and Cross-claimant:

Mr D Yarrow

Solicitor for the Second Respondent and Cross-claimant:

Cape York Land Council Aboriginal Corporation

ORDERS

VID 1108 of 2017 BETWEEN: COUNTRY CARBON PTY LTD

Applicant

AND: CLEAN ENERGY REGULATORFirst Respondent

ABM ELGORING AMBUNG ABORIGINAL CORPORATIONSecond Respondent

AND BETWEEN: ABM ELGORING AMBUNG ABORIGINAL CORPORATIONCross-Claimant

AND: COUNTRY CARBON PTY LTDFirst Cross-Respondent

CLEAN ENERGY REGULATORSecond Cross-Respondent

JUDGE: MORTIMER J

DATE OF ORDER: 1 NOVEMBER 2018

THE COURT ORDERS THAT:

1. The application for judicial review filed on 12 October 2017 be dismissed.

2. The applicant pay the respondents’ costs of the application for judicial review, to be

fixed in a lump sum.

3. If the parties agree on a lump sum figure in relation to the respondents’ costs of the

application for judicial review, they are to file a joint minute of proposed orders on or

before 4 pm on 15 November 2018.

4. In the absence of any joint minute of proposed order, pursuant to paragraph 3 of these

orders:

(a) on or before 4 pm on 22 November 2018, the respondents file and serve an

affidavit constituting a Costs Summary in accordance with paragraphs 4.10 to

4.12 of the Court’s Costs Practice Note (GPN-COSTS) dated 25 October

2016.

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(b) on or before 4 pm on 29 November 2018, the applicant file and serve any

Costs Response in accordance with paragraphs 4.13 to 4.14 of the Costs

Practice Note (GPN-COSTS).

5. In the absence of any agreement having been reached on or before 6 December 2018,

the matter of an appropriate lump sum figure for the respondents’ costs be referred to

a Registrar for determination.

6. The separate question, stated in orders dated 19 March 2018, be answered as follows:

Separate question:

On the proper construction of the defined term “project proponent” in s 5 of the

Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth), is the existence of a

“legal right to carry out” an offsets project a jurisdictional fact that is a necessary

precondition to the exercise of the Clean Energy Regulator’s discretion to declare the

offsets project to be an eligible offsets project under s 27 of the Carbon Credits

(Carbon Farming Initiative) Act 2011 (Cth)?”

Answer:

No.

7. No order is made as to costs of the separate question.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MORTIMER J:

1 This is a difficult case. I consider the law requires the conclusions I have reached, but I have

reached them with some reluctance. The lack of clarity in the relevant statute, and the cost

that lack of clarity has occasioned to the applicant, and to the second respondent, is

undesirable.

INTRODUCTION AND SUMMARY

2 The applicant commenced this proceeding on 12 October 2017 seeking judicial review of

four decisions made by officers of the Clean Energy Regulator (the first respondent) under

the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth), relating to the declaration of

two projects undertaken by the applicant as “eligible offsets projects”. The projects involved

controlled savanna burning as one of the methods through which the applicant could obtain

carbon credits, a tradeable commodity under the CFI Act. In these reasons I shall refer to the

first respondent as the Regulator.

3 On 12 January 2018, the second respondent, Abm Elgoring Ambung Aboriginal Corporation,

filed a cross-claim in the proceeding. In these reasons, I shall refer to the second respondent

as AEA. AEA is the prescribed body corporate for the purposes of s 57(2) of the Native Title

Act 1993 (Cth), for an area in respect of which native title has been recognised by a

determination of native title made by this Court on 5 December 2012: see Greenwool for and

on behalf of the Kowanyama People v State of Queensland [2012] FCA 1377. According to

the terms of the determination of native title, AEA acts on behalf of the native title holders in

the relevant area of land on behalf of the Kowanyama People. The Kowanyama People’s land

includes the area covered by the applicant’s two offsets projects. AEA’s consent to the

carrying out of the offsets projects was not obtained by the applicant. The need for the

applicant to do so is the subject of both the judicial review application and the cross-claim.

4 The orders made today and these reasons deal with the applicant’s judicial review

application, and an agreed separate question on the cross-claim.

5 For the reasons set out below the judicial review application will be dismissed. That means it

is not strictly necessary to determine the separate question on the cross-claim, but given the

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identification of a separate question and full submissions on the matter, I have decided it is

appropriate to determine it. The cross-claim should also be dismissed.

Procedural history and the listing of a separate question

6 Proceedings were initially commenced by the applicant against the Regulator and three

individuals who had been involved in the decisions challenged, in their capacity as delegates

of the Regulator. It was agreed between the parties that these individuals should be removed

as parties as a result of the operation of s 34AB(1)(c) of the Acts Interpretation Act 1901

(Cth), and that the appropriate respondent for the judicial review application was the

Regulator alone.

7 At the first case management hearing in this proceeding, the applicant identified AEA as the

registered native title body corporate for areas subject to the litigation and submitted that

AEA should be advised of the proceeding.

8 AEA subsequently filed an interlocutory application seeking to be joined as a party to the

proceeding and was joined pursuant to orders made on 22 December 2017.

9 When AEA’s cross-claim was filed in January 2018, it became clear that AEA intended to

challenge the legal entitlement of the applicant to carry out the projects that it had undertaken

as “eligible offsets projects”. This raised a number of additional legal and factual issues. The

applicant’s entitlement to undertake the savanna burning projects relied on conferral on the

applicant of permission to do so by pastoral lessees under contract. AEA challenged the

existence of a right on the part of the pastoral lessees to permit the applicant to conduct the

savanna burning project given what it contended was the limited scope of the pastoral

lessees’ rights to the land, and that, so it argued, the conferral of such a right would be

inconsistent with the rights of native title holders pursuant to the Greenwool determination.

10 The applicant and first respondent submitted that the issue raised in the applicant’s

originating application should be heard and determined first because it raised a discrete

question of statutory interpretation and was ready for hearing, whereas the questions raised

by the cross-claim were more expansive. The second respondent accepted its cross-claim

contained a threshold question which concerned a matter of statutory construction. The

parties were given an opportunity to confer and agree on the appropriate form of a separate

question with respect to AEA’s cross-claim, to be decided separately from and before any

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other question arising in the cross-claim, and to be listed for hearing concurrently with the

applicant’s judicial review application.

The separate question on the cross-claim

11 By consent orders made on 19 March 2018, the following separate question was identified for

resolution on the cross-claim:

On the proper construction of the defined term “project proponent” in s 5 of the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth), is the existence of a “legal right to carry out” an offsets project a jurisdictional fact that is a necessary precondition to the exercise of the Clean Energy Regulator’s discretion to declare the offsets project to be an eligible offsets project under s 27 of the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth)?

12 The cross-claim seeks declaratory relief in the following terms:

A declaration that, in respect of each offsets project described in the first cross-respondent’s originating application filed in the proceeding on 12 October 2017 as the “Harkness Station Project” and the “Balurga Station Project”, the first cross-respondent does not have “the legal right to carry out the project” within the meaning of the term “project proponent” in section 5 of the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth).

13 Thus, the cross-claim is also in the nature of a judicial review application, focusing on one

precondition to the making of the declarations by the Regulator, which the applicant impugns

for different reasons.

Notice to admit

14 The day prior to the hearing, the parties provided the Court with a copy of a notice to admit

served by the applicant on the respondents, and correspondence between the parties

concerning the notice. By the notice, the applicant sought to admit a number of matters

alleged by the applicant to be facts, concerning consultations conducted by the

Commonwealth Department of the Environment in 2013 and 2014 in relation to amendments

made to the CFI Act in 2014, and an inquiry conducted by the Senate Environment and

Communications Legislation Committee in relation to the 2014 amendments. At trial, the

Court was advised that while agreement had been reached in relation to some of the matters

outlined in the notice, the respondents challenged the admissibility of statements made in two

paragraphs (paragraphs 3 and 6) on the basis that they were not properly characterised as

“facts”. I deal with my determination in relation to this question later in my reasons.

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Factual and legislative background

15 A statement of agreed facts for the purposes of the separate question was tendered pursuant to

s 191 of the Evidence Act 1995 (Cth). Some of those agreed facts are also relevant to the

judicial review application. In the judicial review application there were no controversial

issues of fact.

16 The CFI Act establishes a scheme providing incentives for the conduct of activities that will

have the effect of reducing atmospheric carbon and other greenhouse gases. This is apparent

from the objects of the CFI Act, set out in s 3:

(1) This section sets out the objects of this Act.

Climate Change Convention and Kyoto Protocol etc.

(2) The first object of this Act is to remove greenhouse gases from the atmosphere, and avoid emissions of greenhouse gases, in order to meet Australia’s obligations under any or all of the following:

(a) the Climate Change Convention;

(b) the Kyoto Protocol;

(c) an international agreement (if any) that is the successor (whether immediate or otherwise) to the Kyoto Protocol.

Incentives

(3) The second object of this Act is to create incentives for people to carry on certain offsets projects.

Carbon abatement

(4) The third object of this Act is to increase carbon abatement in a manner that:

(a) is consistent with the protection of Australia’s natural environment; and

(b) improves resilience to the effects of climate change.

Purchase of carbon abatement by the Commonwealth

(5) The fourth object of this Act is to authorise the purchase by the Commonwealth of units that represent carbon abatement.

17 As AEA submitted, the incentive under the CFI Act takes the form of the issuing of

Australian Carbon Credit Units for “eligible offsets projects” and providing for the purchase

of those ACCUs that are “eligible carbon credit units” by the Commonwealth Government

under “carbon abatement contracts”. As the simplified outline in s 4 of the CFI Act states, an

ACCU is personal property and is generally transferable.

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18 Critical to the applicant’s arguments on the judicial review application is the fact that the

scheme recognises two different kinds of offsets projects, referable to the kinds of activities

to be conducted as part of the projects: sequestration offsets projects and emissions avoidance

offsets projects. Div 12 of Pt 3 of the CFI Act deals with these two kinds of eligible offsets

projects. Emissions avoidance offsets projects are assigned several categories. Broadly,

sequestration offsets projects are designed to remove carbon dioxide from the atmosphere,

and emissions avoidance offsets projects are designed to avoid the emission of greenhouse

gases into the atmosphere. It is worthwhile setting out ss 53, 53A and 54:

53 Emissions avoidance offsets projects

(1) For the purposes of this Act, a project is an emissions avoidance offsets project if it is:

(a) an agricultural emissions avoidance project; or

(b) a landfill legacy emissions avoidance project; or

(c) any other project to avoid emissions of greenhouse gases.

(2) Paragraphs (1)(a) and (b) do not limit paragraph (1)(c).

(3) For the purposes of this Act, a project is not an emissions avoidance offsets project if the project is a sequestration offsets project.

53A Area-based emissions avoidance projects

(1) For the purposes of this Act, an emissions avoidance offsets project is an area-based emissions avoidance project if it is a project of a kind specified in the legislative rules.

(2) Subsection (1) does not, by implication, affect the application of subsection 13(3) of the Legislation Act 2003 to another instrument under this Act.

54 Sequestration offsets projects

For the purposes of this Act, a project is a sequestration offsets project if it is a project:

(a) to remove carbon dioxide from the atmosphere by sequestering carbon in one or more of the following:

(i) living biomass;

(ii) dead organic matter;

(iii) soil; or

(b) to remove carbon dioxide from the atmosphere by sequestering carbon in, and to avoid emissions of greenhouses gases from, one or more of the following:

(i) living biomass;

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(ii) dead organic matter;

(iii) soil.

19 Relevantly to the activities proposed by the applicant, by the definition in s 5, one kind of

“agricultural emissions project” is (see (d) of the definition) a project to avoid the emission of

methane or nitrous oxide from the burning of savannas or grasslands. The applicant’s projects

propose to do this by undertaking controlled burning of such savannas or grasslands.

20 Section 53(3) should also be noted: the two kinds of offsets projects are mutually exclusive.

21 It is important also to note another statutory concept in the scheme, descriptive of the nature

of the offsets projects to be undertaken: that is the concept of an “area-based offsets project”.

This concept is defined in s 5 to mean an offsets project that is:

(a) a sequestration offsets project; or

(b) an area-based emissions avoidance project.

22 In other words, all sequestration offsets projects are area-based, in the sense of being

activities conducted on or by reference to a particular area of land (or waters) – that being an

inherent characteristic of this kind of project. Some emissions avoidance projects may also be

area-based. Hence subsection (b) in the definition. The definition of what is, and is not, an

area-based emissions avoidance project is left by the legislative scheme to prescription by the

executive: see s 53A which I have set out above. Relevantly to the proposed activities of the

applicant in issue in this proceeding, s 50 of the Carbon Credits (Carbon Farming Initiative)

Rule 2015 (Cth) specifies one kind of area-based emissions avoidance project as a project to

avoid emissions of greenhouse gases from the burning of savannas.

23 The applicant proposed to carry out two area-based emissions avoidance projects, within the

meaning of the CFI Act, on land situated on the Cape York Peninsula in Queensland. Both

involved savanna burning. Both projects were to be carried out on land which is the subject

of a pastoral lease, and can be referred to as the Harkness Station project and the Balurga

Station project. The two pastoral lessees have entered into a contract with the applicant in

relation to the carrying out of the projects. The evidence is not entirely clear whether the

savanna burning itself has already been undertaken, and the issue is whether the applicant can

claim the commercial benefit for which the CFI Act provides: whether the burning has yet to

be undertaken does not appear to matter for the purposes of the judicial review application.

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There were no submissions on whether the actual conduct of the burning was relevant to the

cross-claim and the separate question. Certainly no interlocutory relief was pressed.

24 Both projects have been separately declared by a delegate of the Regulator, in mid-2015, to

be eligible offsets projects under s 27(2) of the CFI Act.

25 Section 27 of the CFI Act provides:

27 Declaration of eligible offsets project

Scope

(1) This section applies if an application under section 22 has been made for a declaration of an offsets project as an eligible offsets project.

Declaration

(2) After considering the application, the Regulator may, by writing, declare that the offsets project is an eligible offsets project for the purposes of this Act.

(3) A declaration under subsection (2) must:

(a) identify the name of the project; and

(b) if the project is an area-based offsets project—identify, in accordance with the regulations or the legislative rules, the project area or project areas; and

(c) identify the project proponent for the project; and

(ca) identify the applicable methodology determination for the project; and

(cb) identify the crediting period or periods for the project; and

(d) identify such attributes of the project as are specified in the regulations or the legislative rules; and

(e) if:

(i) the project is a sequestration offsets project; and

(ii) the application included a request that the project be treated as a 100-year permanence period project;

declare that the project is a 100-year permanence period project; and

(f) if:

(i) the project is a sequestration offsets project; and

(ii) the application included a request that the project be treated as a 25-year permanence period project;

declare that the project is a 25-year permanence period project.

Criteria for declaration

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(4) The Regulator must not declare that the offsets project is an eligible offsets project unless the Regulator is satisfied that:

(a) the project is, or is to be, carried on in Australia; and

(b) the project is covered by a methodology determination; and

(c) the project meets such requirements as are set out in the methodology determination in accordance with paragraph 106(1)(b); and

(d) the project meets the additionality requirements set out in subsection (4A) of this section; and

(e) the applicant is the project proponent for the project; and

(f) the applicant passes the fit and proper person test; and

(g) if the project is a sequestration offsets project—the project area, or each project area, meets the requirements set out in subsection (5) of this section; and

(l) the project meets the eligibility requirements (if any) specified in the regulations or the legislative rules; and

(m) the project is not an excluded offsets project.

Note 1: Methodology determinations are made under section 106.

Note 2: For the fit and proper person test, see section 60.

Note 3: For excluded offsets project, see section 56.

(4A) The additionality requirements mentioned in paragraph (4)(d) are:

(a) either:

(i) the requirement (the newness requirement) that the project has not begun to be implemented; or

(ii) if the methodology determination that covers the project specifies, for the purposes of this subparagraph, one or more requirements that are expressed to be in lieu of the newness requirement—those requirements; and

(b) either:

(i) the requirement (the regulatory additionality requirement) that the project is not required to be carried out by or under a law of the Commonwealth, a State or a Territory (other than the National Greenhouse and Energy Reporting Act 2007); or

(ii) if the methodology determination that covers the project specifies, for the purposes of this subparagraph, one or more requirements that are expressed to be in lieu of the regulatory additionality requirement—those requirements; and

(c) either:

(i) the requirement (the government program requirement) that

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the project would be unlikely to be carried out under another Commonwealth, State or Territory government program or scheme in the absence of a declaration of the project as an eligible offsets project; or

(ii) if the legislative rules specify, for the purposes of this subparagraph, one or more requirements that are expressed to be in lieu of the government program requirement—those requirements.

(4B) For the purposes of subparagraph (4A)(a)(i), in determining whether the project has begun to be implemented, disregard any of the following activities that have been, or are being, undertaken in relation to the project:

(a) conducting a feasibility study for the project;

(b) planning or designing the project;

(c) obtaining regulatory approvals for the project;

(d) obtaining consents relating to the project;

(e) obtaining advice relating to the project;

(f) conducting negotiations relating to the project;

(g) sampling to establish a baseline for the project;

(h) an activity specified in the legislative rules;

(i) an activity that is ancillary or incidental to any of the above activities.

(4C) For the purposes of subparagraph (4A)(a)(i), the following are examples of when a project has begun to be implemented:

(a) making a final investment decision in relation to the project;

(b) acquiring or leasing a tangible asset (other than land) that is for use wholly or mainly for the purposes of the project;

(c) commencing construction work for the purposes of the project;

(d) in the case of a sequestration offsets project—preparing soil for seeding or planting that is for the purposes of the project;

(e) in the case of a sequestration offsets project—seeding, planting or fertilising plants that are for the purposes of the project;

(f) in the case of a sequestration offsets project—installing an irrigation or drainage system for the purposes of the project.

(4D) For the purposes of paragraph (4C)(a), final investment decision has the meaning generally accepted within the corporate finance community.

(4E) For the purposes of paragraph (4C)(b), disregard an asset that is a minor asset.

(5) The requirements mentioned in paragraph (4)(g) are:

(a) the project area is Torrens system land or Crown land; and

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(b) the project area is not specified in the regulations or the legislative rules.

Note: For specification by class, see subsection 13(3) of the Legislation Act 2003.

(10) The Regulator must not make a declaration under subsection (2) if:

(a) the project is an area-based offsets project; and

(b) the project area is, or any of the project areas are, to any extent subject to a carbon maintenance obligation.

(11) The Regulator must not make a declaration under subsection (2) in relation to a project (the new project) if:

(a) a notice was given under section 88, 89, 90 or 91 in relation to a project (the prior project) that is or was:

(i) an eligible offsets project; and

(ii) a sequestration offsets project; and

(aa) the new project is an area-based offsets project; and

(b) the project area, or any of the project areas, for the new project was or were identified in the relevant section 27 declaration as the project area or project areas for the prior project; and

(c) the notice required a person to relinquish a particular number of Australian carbon credit units; and

(d) the person did not comply with the requirement within 90 days after the notice was given; and

(e) the penalty payable under section 179 in respect of the non-compliance with the requirement (including any late payment penalty payable under section 180 in relation to the section 179 penalty) has not been paid in full.

Timing

(14) The Regulator must take all reasonable steps to ensure that a decision is made on the application:

(a) if the Regulator requires the applicant to give further information under subsection 24(1) in relation to the application—within 90 days after the applicant gave the Regulator the information; or

(c) otherwise—within 90 days after the application was made.

When a declaration takes effect

(15) A declaration under subsection (2) takes effect when it is made.

Notification of declaration

(17) As soon as practicable after making a declaration under subsection (2), the Regulator must give a copy of the declaration to:

(a) the applicant; and

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(b) if the declaration relates to a sequestration offsets project—the relevant land registration official.

Refusal

(18) If the Regulator decides to refuse to declare the offsets project as an eligible offsets project, the Regulator must give written notice of the decision to the applicant.

Declaration is not legislative instrument

(20) A declaration made under subsection (2) is not a legislative instrument.

26 A declaration made under s 27(2) must identify the “project proponent” for the offsets

project: see s 27(3)(c). The Regulator must not make a declaration unless it is satisfied,

amongst other matters, that “the applicant is the project proponent for the project”: see s

27(4)(e). The term “project proponent” is defined in s 5:

project proponent, in relation to an offsets project, means the person who:

(a) is responsible for carrying out the project; and

(b) has the legal right to carry out the project.

Note 1: See also section 46 (registered native title bodies corporate).

Note 2: See also section 135 (multiple project proponents).

27 AEA contends by the separate question that s 27(4)(e), read with the definition in s 5,

involves a jurisdictional fact. If that is the case AEA will contend at trial that the Court

should decide, as a jurisdictional fact, that the applicant had no legal right to carry out either

of the offsets projects. That is because, as I understand AEA’s argument, a project proponent

for a savanna burning project must establish they have the legal right to control the fire

regime of the area concerned, and it is the native title holders, represented by AEA, which

have that right or which have rights that are inconsistent with any rights of the pastoral

lessees or the applicant to control the fire regime of the area, as part of the native title rights

determined on 5 December 2012. This appears from the affidavit of Mr Graham O’Dell, filed

in support of the cross-claim and to which no objection was taken, where Mr O’Dell disposes

on information and belief that:

(a) Kowanyama People are particularly concerned to conduct traditional burning on their country;

(b) traditional burning requires that particular vegetation be burned a specific times of year, so as to encourage vegetation and animals of concern to Kowanyama People to flourish;

(c) traditional law and custom requires that if persons other than Kowanyama People conduct burning, those persons should seek the permission of

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Kowanyama People first.

28 However, the separate question only relates to the proper construction of s 27(4)(e) (and I

infer, the similar requirement in s 15(2)(b) of the CFI Act) and the consequent

characterisation of the Court’s task on judicial review.

29 At the time the declarations were first made by the Regulator in 2015, two conditions were

attached to each declaration. The power to impose conditions is found in s 28A of the CFI

Act which provides:

28A Declaration may be subject to condition about obtaining consents from eligible interest holders

Scope

(1) This section applies if:

(a) an application under section 22 has been made for a declaration of an offsets project as an eligible offsets project; and

(b) the Regulator makes a declaration under section 27 in relation to the project; and

(c) the Regulator is satisfied that there are one or more persons (the relevant interest-holders) who:

(i) hold an eligible interest in the project area, or any of the project areas, for the project; and

(ii) have not consented, in writing, to the making of the application.

Condition

(2) The Regulator must specify in the declaration that the declaration is subject to the condition that the written consent of each relevant interest-holder to the existence of the declaration must be obtained before the end of the first reporting period for the project.

Consents

(3) A consent mentioned in subparagraph (1)(c)(ii) or subsection (2) must be in a form approved, in writing, by the Regulator.

(4) A consent mentioned in subparagraph (1)(c)(ii) or subsection (2) may be set out in a registered indigenous land use agreement.

(5) Subsection (3) does not apply to a consent mentioned in subparagraph (1)(c)(ii) or subsection (2) if the consent is set out in a registered indigenous land use agreement.

Registered indigenous land use agreements

(6) If:

(a) the declaration is in force; and

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(b) a consent mentioned in subparagraph (1)(c)(ii) or subsection (2) of this section was set out in a registered indigenous land use agreement;

details of the agreement must not be removed from the Register of Indigenous Land Use Agreements under subparagraph 199C(1)(c)(ii) of the Native Title Act 1993 without the written consent of the Regulator.

30 One condition, which is uncontentious in this proceeding, concerned the need to obtain

required regulatory approvals (fire permits) and provide them to the regulator. The second

condition, and the proper construction of s 28A(1) and (2), is at the heart of the judicial

review application. The second condition required that the applicant obtain:

…the written consent of each relevant interest-holder to the existence of the declaration must be obtained before the end of the first reporting period for the project.

31 The phrase “eligible interest holders” is not itself a defined statutory term in the CFI Act.

However, s 5 defines the term “eligible interest” in the following way:

eligible interest, in relation to an area of land, has the meaning given by section 43, 44, 45 or 45A.

32 Sections 43, 44 and 45 are lengthy and need not be set out here. They describe a range of

proprietary interests which are eligible interests. Section 43 deals with land on which it is

proposed to carry out a sequestration offsets project, and with who holds an “applicable

carbon sequestration right” in relation to that land (including the circumstances in which a

registered body corporate for native title holders may hold an applicable carbon sequestration

right). Section 44 deals with proprietary interest in Torrens system land and what kinds of

interests will be eligible interests, including when this will be the case for a mortgagee of

Torrens system land, and the Minister of the State or Territory if the land is Crown land.

Section 45 deals in similar terms with Crown land that is not Torrens system land. Section

45A deals with “native title land”, and should be set out, because this is the interest which

AEA is acknowledged to hold:

45A Eligible interest in an area of land—native title land

Scope

(1) This section applies to an area of land if:

(a) the area of land is native title land; and

(b) there is a registered native title body corporate for the area of land.

Eligible interest

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(2) For the purposes of this Act, the registered native title body corporate holds an eligible interest in the area of land.

33 There was no real dispute by the applicant in its submissions that any person or entity who

falls within, relevantly, s 45A is an eligible interest holder for at least some of the purposes of

the CFI Act. Nor does the applicant dispute that AEA falls within s 45A. Rather, as I set out

below, the applicant disputes the Regulator’s power (under s 28A) to impose a condition that

an eligible interest holder such as AEA must consent to an emissions avoidance offsets

project or area-based emissions avoidance project.

34 In early April 2016, the applicant applied to the Regulator to remove the s 28A condition in

respect of each project. That application was granted, and on 6 May 2016 and 17 June 2016

respectively, an officer of the Regulator made amended declarations removing the s 28A

condition in respect of the Harkness and Balurga projects. If that position had remained, the

subsequent legal steps taken by the applicant would not have occurred.

35 The consent condition having been removed, the applicant then applied in July and August

2016 for the actual permission to claim carbon credits for the offsets projects, called in the

legislative scheme a “certificate of entitlement”, and dealt with principally in s 15 of the CFI

Act. Section 15(2) sets out a number of matters about which the Regulator must be satisfied,

before a certificate of entitlement can be issued. These are properly characterised as

preconditions to the power to issue such a certificate. In s 15(2)(ea) there is a requirement

that the Regulator be satisfied that if the relevant s 27 declaration was subject to a condition

mentioned in subsection 28A(2), that condition has been met. At the time the applicant

applied for the certificates of entitlement, the s 28A condition had been removed from each s

27 declaration, so s 15(2)(ea) was not applicable.

36 However, and critically, before those applications were determined, an officer of the

Regulator decided (on 27 October 2016) to “reinstate” the s 28A condition.

37 The Regulator explained the reinstatement in evidence and submissions in the following way

by reference to a late discovery of the fact that AEA had not provided its written consent to

the making of the application under s 22 of the CFI Act, or subsequently, to the existence of

the declaration. The Regulator maintained during the proceeding, as it had in its previous

decisions, that AEA’s consent was required and the imposition of the condition under s 28A

was within power.

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38 Although the originating application seeks relief in relation to the 2015 and 2016 decisions,

the applicant did not appear to dispute the Regulator’s submission that the 27 October 2016

decisions were the operative decisions imposing the s 28A condition. Indeed, on internal

review of the Regulator’s decision under s 15 to refuse to issue a certificate of entitlement, it

was those decisions which formed the basis for the Regulator’s decision.

39 Given the reinstatement of the s 28A condition, unsurprisingly, the Regulator issued a notice

of intention to make a decision refusing the application for certificates of entitlement in

respect of both projects. It issued that notice on 4 January 2017. It was at this point, in its

response to the notice, that the applicant raised its argument that s 28A did not authorise the

Regulator to impose such a condition on anything but a sequestration offsets project. The

Regulator rejected this argument. A final decision refusing the certificates of entitlement was

made on 28 March 2017. An internal review process was undertaken, on the applicant’s

application, which was unsuccessful and on 24 August 2017 the original decision was

affirmed. On 19 September 2017 the applicant then sought review in the Administrative

Appeals Tribunal, as it was entitled to do. That review is continuing. The judicial review

application was issued as, on the applicant’s submission, a more efficient way of having the

real issue between the parties determined.

40 Subject to the observations I make below, I accept that course was not inappropriate in the

circumstances of this case. Unless the applicant’s argument about the scope of s 28A is

correct, it accepts that the Administrative Appeals Tribunal review must fail, and that the

certificates of entitlement were correctly rejected. As I understand the circumstances, at least

at the time of the proceeding, AEA did not intend to consent to either of the projects, as it

contends it is the native title holders who are entitled to conduct burning on the land in

question, or who, at a minimum, have rights to conduct burning that are potentially

inconsistent with the burning that is required for the applicant’s project.

41 The Regulator in its submissions noted that what is impugned in the judicial review

application before this Court are the original decisions to impose the s 28A condition in mid-

2015, and the “reinstatement” of the condition on 27 October 2016. There is no challenge to

the internal review decision refusing to grant the applicant its certificates of entitlement,

despite the fact, the Regulator contends, that the internal review officer gave independent

reasons for that refusal: namely, that the officer was not satisfied that the applicant met the

“fit and proper person” requirement in s 15(2)(a) of the CFI Act. The applicant answers this

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issue by submitting this is why it seeks declaratory relief and relief in relation to the s 27

decisions only, and the Court should not quash the Regulator’s decision to refuse to issue

certificates of entitlement to the applicant under s 15. Those latter decisions are the subject of

applications for review to the Administrative Appeals Tribunal, and in that review the

Tribunal will consider, amongst other matters, whether it is satisfied that all of the relevant

conditions to the issue of certificates of entitlement are met, including whether the applicant

is a “fit and proper person” for the purposes of s 15(2)(a) of the CFI Act.

42 If I had otherwise been persuaded of the correctness of the applicant’s arguments about s

28A, the appropriateness of the relief sought by the applicant would have required further

analysis. Given I am not so persuaded, I do not consider this matter further.

The parties’ contentions in summary

43 The parties made written and oral submissions in support of their respective positions, and I

have considered all the submissions made. I summarise their key positions here, and refer to

specific submissions later in these reasons where appropriate.

44 The applicant’s core contention on the judicial review application is that the condition

imposed by the Regulator under s 28A was beyond power, because, properly construed, s

28A only applied in relation to sequestration offsets projects, and not emissions avoidance

offsets projects or area-based emissions avoidance projects which, it is common ground, is

the appropriate characterisation of the Harkness and Balurga projects.

45 The applicant accepts that its construction requires a word to be read into s 28A, and accepts

that this is a difficult persuasive task. The applicant accepts there is a debate whether there

has been a drafting error, and even then what is the drafting error. It submits that there has

been a drafting error in section 28A(1)(a), and that the nature of that drafting error is the

omission of the word “sequestration” before the words “offsets project”. In other words, the

applicant contends s 28A(1)(a) should be construed as if it read (with the word to be read in

indicated in bold):

an application under section 22 has been made for a declaration of a sequestration offsets project as an eligible offsets project….

46 A key plank of the applicant’s argument is the relevant legislative history. The applicant

submits, and it is not in dispute, that prior to the amendments to the CFI Act in 2014, by the

Carbon Farming Initiative Amendment Act 2014 (Cth), including the insertion of ss 15(2)(ea)

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and 28A, there was in the pre-amendment version of the CFI Act a provision indicating

consent of eligible interest holders was only required for sequestration projects. That

provision was 27(4)(k), relating to the making of a declaration of a project as an eligible

offsets project: one criterion for such a declaration was that “if the project is a sequestration

offsets project—each person (other than the applicant) who holds an eligible interest in the

project area or any of the project areas has consented, in writing to the making of that

application”.

47 The applicant contends that elsewhere in the CFI Act, prior to the 2014 amendments, the

concept of an “eligible interest” in an area of land was referred to only in provisions dealing

with the statutory concept of a “carbon maintenance obligation” (see: ss 97(6)(b), 98(6)(b)

and 99(4)(b)). Without delving into the complexities of how a carbon maintenance obligation

was imposed by the scheme and given effect (see generally Part 8), some matters should be

noted.

48 First, as set out in s 97 of the CFI Act, where a carbon maintenance obligation is imposed, the

effect will be (subject to statutory exceptions) to prohibit conduct on the relevant area of land

which “results, or is likely to result, in a reduction below the benchmark sequestration level

of the sequestration of carbon in the relevant carbon pool on the area”. The “benchmark

sequestration level” is defined in s 97(8) as the number of tonnes of carbon that was

sequestered in the relevant carbon pool on the area or areas when the declaration of a carbon

maintenance obligation was made. In other words, and as I note subject to any statutory

exceptions, the objective is to ensure that whatever level of carbon sequestration was

mandated by the Regulator in the carbon maintenance obligation declaration is maintained

over time in relation to the area or areas.

49 Second, the concept relates, all parties accepted, exclusively to sequestration projects and

can, in certain circumstances, become an obligation that affects and may bind other interest

holders in the land to which the carbon maintenance obligation is subject. In that sense, as the

applicant contends, a carbon maintenance obligation “runs with the land”. That feature, the

applicant contends, is why the consent of such eligible interest holders (including those

covered by s 45A) to a sequestration offsets project was required: they were exposed to a

risk, in the future, of having to make good on the carbon maintenance obligation created by

the scheme for sequestration projects.

50 In part by reference to extrinsic material, the applicant submitted:

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Therefore, to ensure the efficacy and integrity of the Act insofar as it relates to such projects, Parliament allowed for the imposition of a “carbon maintenance obligation” to ensure that such carbon was permanently stored. Because such an obligation may apply to persons with an “eligible interest” in the project area, it is fair to require such persons to consent to the project before it is declared.

(citations omitted)

51 Aside from this aspect of the scheme, the applicant contended there was (prior to 2014) and is

(after the 2014 amendments) no reason to require consent from eligible interest holders when

it was and remains a pre-condition to an offsets project that the project proponent have a legal

right to carry out the project. This requirement, the applicant contends may carry with it the

seeking of permission from at least some of those who fall within the definition of “eligible

interest holder”, such as a lessee.

52 The applicant also relies on the nature of the extrinsic material, and the extensive consultation

prior to the 2014 amendments, none of which refers to or proceeds on the basis that s 28A

now empowers the Regulator to require the consent of eligible interest holders for non-

sequestration projects.

53 The Regulator’s position has, on the evidence, been somewhat equivocal. As I have noted,

the condition was imposed, removed and then re-imposed. Another indication of some

equivocation by the Regulator relates to the forms prescribed for the purposes of s 28A(3). At

the time of trial, the form prescribed for the purposes of s 28A(3), which was in evidence,

specified it was a form for consent of eligible interest holders in sequestration projects. When

this matter was raised at trial, and the form appearing to give some support to the applicant’s

arguments, the Regulator sought leave to file further affidavit evidence to explain the

situation. Leave was granted. An affidavit of Mark Thomas Williamson, sworn on 9 May

2018, was filed and was taken as read in the proceeding. At the time of swearing his affidavit,

Mr Williamson was the Executive General Manager of the Regulator. He relevantly deposed

that, as the evidence had indicated, after the 2014 amendments came into effect (and

therefore after s 28A was in operation), on 22 December 2014, an approved form made under

s 28A(3) of the CFI Act for providing eligible interest holder consent was published on the

Regulator’s website, and that version remained available on that website until, and including,

25 February 2015. It specified that it was required for sequestration offsets projects. The

several subsequent versions of the approved form for the purposes of s 28A(3), Mr

Williamson deposes, also specified they were to be used for sequestration projects. That

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remained the case until the version approved and published on 1 July 2015, which remains

the current approved version.

54 Mr Williamson deposes that, until 16 June 2015, the Regulator had overlooked and failed to

appreciate the impact of the inter-operation, from 17 February 2015, of the definitions in s 5

of the CFI Act of the terms “area-based emissions avoidance project”, “area-based offsets

project” and “project area”, with ss 28A and 53A(1) of that Act and s 50(a) of the CFI Rule.

In particular, Mr Williamson deposes that the Regulator had overlooked and failed to

appreciate that as a consequence of those defined terms and provisions, the requirement to

obtain the consents mentioned in s 28A “had from 17 February 2015 become applicable in

relation to area-based offsets projects”. This, in substance, reflects the arguments put on

behalf of the Regulator in opposition to the applicant’s judicial review application. Mr

Williamson deposes that the Regulator “became aware and began to appreciate” the

consequences of the inter-operation of those provisions during April and May 2015, and by

16 June 2015 had “formed a view to that effect”.

55 He further deposes that the Regulator:

…had also formed the view that a decision by the First Respondent to declare an area-based emissions avoidance project as an eligible offsets project under s 27(2) of the CFI Act without specifying in the declaration the condition specified in s 28A(2) of that Act was not valid and that the applications for such declarations must be set aside and considered afresh in circumstances where a consent specified in s 28A(1)(c)(ii) of that Act had not been obtained prior to the making of the declaration.

56 He deposes to the applicant being notified of the Regulator’s change of view in June 2015.

As I have noted above, the reinstatement of the s 28A condition for the Harkness and Balurga

offsets projects did not occur until October 2016, more than a year later. This delay is not

explained by Mr Williamson, nor by Ms de Wit in her two affidavits filed on behalf of the

applicant.

57 It might be said that the Regulator’s confused position reflects the difficulties of the

construction issue raised by the applicant.

58 Nevertheless, by the time of trial on the judicial review application, the Regulator had a clear

position (aside from the prescribed form issue to which I have just referred). The Regulator’s

argument emphasised the need to look at the text, context and purpose of the legislative

scheme in its current form, although accepting legislative history was an important

consideration. On its face, s 28A applies to the two projects, in the Regulator’s submission.

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Further, the s 28A(1)(c) preconditions were met. Each of the Harkness and Balurga projects

had an identified “project area”; AEA “holds an eligible interest in the project area … for the

project” (s 28A(1)(c)(i)), read with s 45A) and AEA had not consented, in writing, to the

making of the application (s 28A(1)(c)(ii)). In those circumstances, it contended, the

Regulator had an obligation by s 28A(2) to specify that the declaration was subject to the

condition that the written consent of each relevant interest-holder to the existence of the

declaration must be obtained before the end of the first reporting period for the project.

59 The Regulator submits that, applying the principles set out in various authorities in relation to

the circumstances in which a Court can depart from, or adopt a construction which modifies,

the “literal meaning” of a statutory provision, there is no occasion in this case for the Court to

adopt the construction proffered by the applicant, and to insert the word “sequestration”

before the phrase “offsets project” in s 28A(1)(a). One of the Regulator’s key submissions is

that “more recent statements from the High Court have emphasised the primacy of text in

resolving any perceived tension between the text and the legislative purpose of an Act”, and

this tends against the modification proposed by the applicant, especially given what has been

said by the High Court about excessive weight being placed on statements in extrinsic

material.

60 The Regulator submits there is neither ambiguity in s 28A(1), nor any conceptual difficulty,

or irrationality about the existence of a requirement to have the consent of eligible interest

holders for area-based emissions projects. While the rationale for the pre-2014 version may

have been different, the Regulator submits there is nothing irrational about the extension of

the consent requirement. At [58] of its written submissions, the Regulator submitted (omitting

footnotes):

The “eligible interests” affected by s 28A have a strong practical connection in the scheme of the Act to the requirement that the project proponent have the legal right to carry out the project. That is, the project proponent will often require the consent of an eligible interest holder in order to have the legal right to conduct a project.

58.1. For example, the land that is covered by the Harkness and Balurga projects is not owned by the Applicant, but by pastoral lessees (together with, in the case of Balurga, a mortgagee bank). The Applicant does not have the legal right to conduct burning activities on that land without the consent of the land owners.

58.2. Where land is subject to a native title determination, the consent of native title holders can potentially also affect whether the proponent has the legal right to undertake the project. A purported act by the proponent that was inconsistent with native title rights and interests may be an “invalid future

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act”, and of no legal effect.

61 Lastly, and properly, the Regulator drew the Court’s attention to the fact that there was a Bill

before the House of Representatives proposing to amend s 28A so that it would only apply to

sequestration projects: namely, the Carbon Credits (Carbon Farming Initiative) Amendment

Bill 2017 (Cth). By Sch 1 item 1, the phrase “an offsets project” in s 28A(1)(a) would be

replaced with the phrase “a sequestration offsets project”. The Court has not been advised

that the Bill has progressed, and indeed public records indicate that the Bill had been

introduced into the House and read a first time on 23 March 2017 but that the second reading

of the bill has not occurred at the time of these reasons for judgment.

62 The Regulator recognised that the existence of the Bill might support the applicant’s

argument that there has been a drafting mistake, but its existence equally indicates that the

present state of the law is that the text of s 28A(1), as enacted, is that it applies to all area-

based projects.

63 AEA supported the submissions made by the Regulator. To those submissions, it added that

there was nothing anomalous about the fact that s 28A(1) did not expressly refer to an “area

of land” as did most other provisions in the CFI Act dealing with area-based emissions

offsets projects. AEA submitted that, read in context of being concerned with eligible interest

holders, it was clear that no eligible interest can exist unless the eligible interest concerns an

area of land. Thus, s 28A is confined to offsets projects with a project area: but these two

projects are of that nature and so s 28A applies to them.

RESOLUTION: THE APPLICANT’S JUDICIAL REVIEW APPLICATION

General findings

64 At trial the applicant pressed only its claims under s 39B of the Judiciary Act 1903 (Cth).

65 All parties accepted that prior to the 2014 amendments, the legislative scheme confined the

requirement to seek consent from eligible interest holders to sequestration offsets projects.

All parties accepted that this confinement occurred because the CFI Act imposed as a

precondition to the making of a declaration under s 27 a consent requirement in terms only

applicable to sequestration offsets projects. Although the preconditions in the then s 27(4)

were generally expressed as applicable to all offsets projects, in the chapeau to that sub-

section, paragraph (k) was expressly limited to sequestration projects:

(4) The Regulator must not declare that the offsets project is an eligible offsets

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project unless the Regulator is satisfied that:

…

(k) if the project is a sequestration offsets project—each person (other than the applicant) who holds an eligible interest in the project area or any of the project areas has consented, in writing, to the making of the application…

66 All parties accepted that the explanation given in the extrinsic material for this limitation was

expressly linked to the nature of the carbon maintenance obligation, imposed by s 97 of the

CFI Act, and the fact that it ran with the area of land covered by a sequestration project. The

Explanatory Memorandum for the Carbon Credits (Carbon Farming Initiative) Bill 2011

(Cth) stated:

[3.50] Each person with an eligible interest is required to give consent to an application for a declaration of an eligible sequestration offsets project … and a variation of a projection declaration if specified in the regulations …

…

[3.52] The consent of eligible interest holders is a precondition to the declaration of a project as an eligible offsets project because, in some limited circumstances, an area of land involved in a project can become subject to a carbon maintenance obligation (discussed in chapter 6 below).

[3.53] Depending on the circumstances, that obligation may have to be satisfied by a person other than the applicant for the declaration of a project as an ‘eligible offsets project’. Therefore, it is important to ensure that persons who could be subject to, or have their interests in land affected by the carbon maintenance obligation have agreed to the land being brought into the offsets scheme.

67 All parties also accepted that the extrinsic material accompanying the 2014 amendments did

not explain why the introduction of s 28A (read with s 15(2)(ea), being the provision that

required compliance with conditions before a certificate of entitlement could issue) was

intended to extend consent requirements to eligible interest holders in area-based emissions

avoidance projects. Rather the extrinsic material emphasised the “streamlining” purposes of

the 2014 amendments, to make it easier to register projects and receive carbon credits. The

Explanatory Memorandum to the 2014 Bill relevantly stated:

[1.34] The current law requires that anyone with an eligible interest in a sequestration project must give their consent to the project and this will remain a requirement under the Emissions Reduction Fund.

[1.35] To provide further flexibility, sequestration projects can be registered on a conditional basis before having obtained the consent of all eligible interest holders. [Schedule 1, items 83A, 115, 119A and 119B.] This will enable proponents to obtain the necessary consents after going to auction and securing a contract for the project.

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68 Item 83A became s 15(2)(ea), and Item 115 became 28A.

69 It is also common ground that there were extensive consultations prior to the 2014

amendments, especially with stakeholders. The following submission by the applicant was

not disputed by the Regulator or AEA:

In none of those consultations, and in none of those papers reflecting those consultations, is there any suggestion of any proposal to alter (and limit) the scheme such that a person who has the legal right to carry out an “emissions avoidance offsets project” (e.g., a savanna burning project) cannot obtain a “certificate of entitlement” unless an “eligible interest” holder consents to the declaration of the project.

70 The Regulator and the AEA also did not dispute the fact that the Emissions Reduction Fund

White Paper published on 24 April 2014, which was a product of the consultations prior to

the 2014 amendments, stated (at p 74):

To have a project registered, the project proponent must:

become a registered provider of emissions reductions by satisfying basic probity and identity checks

be responsible for carrying out the project, and

have the legal right to carry out the project, including the consent of others with a relevant property right if the project is a carbon sequestration project.

(emphasis added)

Key aspects of the legislative scheme

71 I have dealt with most of the key provisions above. However, it is worthwhile recalling the

essential structure of the scheme, and the relevant aspects of the changes brought about by the

2014 amendments, before embarking on a consideration of the particular factors which

inform the construction of s 28A which I have concluded is the correct one.

72 I have set out the objects of the CFI Act at [16] above. The CFI Act seeks to achieve those

objects by establishing a system for the carrying out of carbon offsets projects, regulated in

some detail by the Clean Energy Regulator, by a staged process.

73 As I have noted above the definition of “offsets project” in s 5 divides such carbon abatement

projects into two categories: sequestration offsets projects and emissions avoidance offsets

projects. The latter category includes “an agricultural emissions avoidance project”: see

s 53(1)(a). This in turn relevantly includes, as I have noted earlier, a project to avoid an

emission of methane or nitrous oxide from the burning of savannas or grasslands: see para (d)

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of the definition in s 5. However an “agricultural emissions avoidance project” does not

include a sequestration offsets project: see s 53(3). As I have also noted, the scheme (in Div

12 of Pt 3) clearly separates sequestration offsets projects from emissions avoidance offsets

projects.

74 Section 53 was one of the provisions amended in 2014, and the new concept of “area-based”

emissions avoidance projects was introduced in 2014 through s 53A. Section 53A(1)

provides:

For the purposes of this Act, an emissions avoidance offsets project is an area-based emissions avoidance project if it is a project of a kind specified in the legislative rules.

75 Section 28A, when introduced in 2014, related (and continues to relate) only to projects with

a “project area”: see s 28A(1)(c). In other words, to a project that affects an identified and

delineated area of land as opposed to, for example, a project dealing with transport or use of

fuel, which may still qualify as an emissions avoidance project.

76 Eligible offsets projects will have ACCUs issued to them: this is the currency, issued by the

Australian Government, which provides the incentive for the conduct of the offsets project.

The number of ACCUs issued is calculated by reference to the relevant abatement amount

calculated under the applicable methodology determination arising from the operation of Pt 9

of the CFI Act.

77 Eligibility to be issued ACCUs depends on the existence of a “certificate of entitlement” for a

particular reporting period: see s 11. The scheme establishes an application process: see s 12.

78 There are prescribed matters which must be contained in the application (see s 13 and the

Carbon Credits (Carbon Farming Initiative) Rule 2015 (Cth)). The major preconditions to

obtaining a certificate of entitlement are set out in s 15 of the CFI Act: this is where the

requirement for an applicant to be a “project proponent” is located, incorporating the

possession of a “legal right” to carry out the project. It is also where the fit and proper person

requirement is located, and (as I have noted above) the need for obtaining any consents from

eligible interest holders (as a result of the operation of s 15(2)(ea)).

79 A certificate of entitlement to ACCUs can only be issued in respect of an eligible offsets

projects, and eligibility for projects is the concern of Pt 3 of the CFI Act. Eligibility is

determined by a declaration of the Regulator: see s 22. The criteria of which the respondent

must be satisfied before making a declaration are set out in s 27. Again, the “project

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proponent” requirement and the fit and proper person requirement and the consent

requirements are matters about which the respondent must be satisfied before making a

declaration.

80 Notably, consent of eligible interest holders is not a matter about which the respondent must

be satisfied before deciding whether a declaration should be made. This requirement has been

moved, along with the requirement for all regulatory approvals to be obtained, to the stage

before the end of the “first reporting period”. That is the effect of s 28 (about regulatory

approvals) and s 28A (about consent of eligible interest holders).

81 This is part of the “streamlining” of which the Explanatory Memorandum to the 2014

amendments spoke.

82 However, by s 15(2)(e) and (ea) respectively, all regulatory approvals and eligible interest

holder consents must have been obtained before a certificate of entitlement can be issued.

83 Contrary to the applicant’s submissions, the statutory concept of an “eligible interest” (and

who holds it) is a free standing concept, in the sense that it is available to be employed in

whichever way Parliament sees fit in the legislative scheme. It is not tied to sequestration

projects. Due to the nature of the concept, it may be seen as inherently tied to area-based

projects, because the premise for each defining provision (ss 43, 44, 45 and 45A) is that there

is a “project area”: that is, an area of land over which the offsets project will be carried out,

and to which the proprietary interests identified in the definition of “eligible interest” attach.

Summary of reasons

84 The reasons for rejecting the applicant’s contentions in the judicial review application can be

summarised in the following way:

(a) The text of s 28A as it is currently expressed, has a clear meaning. It

empowers (and, by s 28A(2) requires, if the terms of s 28A(1) are met) the

Regulator to impose a condition on a declaration in relation to an area-based

emissions offsets project, that all eligible interest holders consent to the

undertaking of the project.

(b) That meaning is not irrational or unreasonable, and does not produce

capricious results. It does produce results that are adverse to a person or entity

in the position of the applicant, where an eligible interest holder such as AEA

refuses consent. But that cannot be said, on the scheme and given the presence

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of s 45A, to be an unexpected or unintended consequence of the scheme which

requires or demands correction by the Court through a process of construction.

(c) The applicant’s contentions about what the Court should do to correct a

“drafting mistake” fall on the wrong side of the line in terms of the Court’s

function, on present authorities.

85 I deal with each of those matters in turn.

Section 28A’s clear meaning

86 It is worthwhile to set out the text of s 28A:

28A Declaration may be subject to condition about obtaining consents from eligible interest holders

Scope

(1) This section applies if:

(a) an application under section 22 has been made for a declaration of an offsets project as an eligible offsets project; and

(b) the Regulator makes a declaration under section 27 in relation to the project; and

(c) the Regulator is satisfied that there are one or more persons (the relevant interest-holders) who:

(i) hold an eligible interest in the project area, or any of the project areas, for the project; and

(ii) have not consented, in writing, to the making of the application.

Condition

(2) The Regulator must specify in the declaration that the declaration is subject to the condition that the written consent of each relevant interest-holder to the existence of the declaration must be obtained before the end of the first reporting period for the project.

Consents

(3) A consent mentioned in subparagraph (1)(c)(ii) or subsection (2) must be in a form approved, in writing, by the Regulator.

(4) A consent mentioned in subparagraph (1)(c)(ii) or subsection (2) may be set out in a registered indigenous land use agreement.

(5) Subsection (3) does not apply to a consent mentioned in subparagraph (1)(c)(ii) or subsection (2) if the consent is set out in a registered indigenous land use agreement.

Registered indigenous land use agreements

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(6) If:

(a) the declaration is in force; and

(b) a consent mentioned in subparagraph (1)(c)(ii) or subsection (2) of this section was set out in a registered indigenous land use agreement;

details of the agreement must not be removed from the Register of Indigenous Land Use Agreements under subparagraph 199C(1)(c)(ii) of the Native Title Act 1993 without the written consent of the Regulator.

87 Section 28A follows a similar format to s 28, which deals with regulatory approvals. Section

28 was not the subject of any amendment in 2014, which may assist the Regulator’s

construction. Section 28A commences with an expression of the circumstances to which it

applies. It does so by reference to a series of terms that are expressly defined in, or referable

to, the CFI Act: “application under s 22”; “offsets project”; “eligible offsets project”;

“declaration under s 27” and “project area” (although used in the plural).

88 The use in s 28A(1)(c) of the statutory term “eligible interest” follows this same pattern. In

other words, the CFI Act expressly picks up a defined term and uses it in s 28A(1) in relation

to an eligible offsets project, another defined term.

89 The connections between the operation of s 28A and s 22, a matter to which the Regulator

referred, is not insignificant in understanding that s 28A has a clear meaning. Section 22 is a

general provision, aimed at applications for declarations of eligibility in relation to all offsets

projects. That s 28A was drafted in a manner so as to refer to that provision, at that level of

generality, assists in confirming that s 28A is aimed more broadly than sequestration offsets

projects.

90 There are specific provisions dealing with native title rights, in ss 28A(4)-(6). In other words,

s 28A expressly contemplates the intersection of native title rights and the carrying out of

offsets projects, including eligible offsets projects (and not just sequestration projects). That

intention can also be seen from the need for an indigenous land use agreement relating to an

offsets project to accompany the s 22 application: see s 23(1)(f).

91 In its form after the 2014 amendments, where the CFI Act intends to refer to sequestration

projects, and in contradistinction to other kinds of offsets projects, it does so specifically: see

for example ss 23(1)(g), 27(4)(g), s 27(17)(b) and s 27(4C)(d).

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92 Contrary to the applicant’s submissions, the cross-reference in s 28A to s 22 does not assist

its argument. Rather, it indicates an intention to pick up both s 22 and s 27, to which it also

refers and apply them to offsets projects as defined in the CFI Act.

93 Section 31 should also be mentioned. It is expressed to apply to ss 28 and 28A. This

provision enables the variation of a conditional declaration of an eligible offsets project.

Section 31(2) authorises the making of regulations or legislative rules empowering the

Regulator to vary a declaration under s 27 by removing a condition, but only (see s 31(3)(b))

if the condition has been met. Section 31(7) requires that any such regulations or legislative

rules made must provide that, if a variation is made by the Regulator, the Regulator must give

a copy of the declaration as varied to “the relevant land registration official”, if the

declaration relates to a sequestration offsets project. In other words, s 31(7) recognises the

applicability of s 28A to all eligible offsets projects and then makes a specific provision

applicable only to sequestration offsets projects.

94 There is no lack of clarity in s 28A. It unambiguously applies to any eligible offsets projects

in which a person or persons hold an eligible interest, as defined in s 5 of the CFI Act, read

with ss 43-45A.

95 That is why the applicant emphasised in its submissions the presence of what it described as a

“drafting mistake”, which it submitted the Court could “correct”. I turn now to explain why I

do not consider it is clear there is a drafting mistake, and even if there was, why it is not a

matter which should be “corrected” by the Court.

There is nothing irrational, capricious or unreasonable about that meaning

96 I do not accept it is plain, or sufficiently plain, that s 28A contains a drafting mistake, because

its operation is otherwise irrational, unreasonable or capricious. These are the kind of indicia

discussed in the authorities, to which I refer below, of a drafting mistake.

97 Contrary to the applicant’s submissions, there is nothing anomalous in the absence from s

28A of an express reference to projects that have a project area. Rather, it is inherent in the

subject matter of s 28A (consent from holders of eligible interests) that there will be an area

of land which is the project area and to which an eligible interest attaches.

98 Nor is there anything irrational or unreasonable in an extension of the consent requirements

to projects other than sequestration projects. While it can be accepted that in the pre-2014

legislation, a rationale could be found by connecting consent to sequestration projects with

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the prospective liability of a carbon maintenance obligation, that fact alone does not render a

different approach irrational or unreasonable. That is especially so when one considers the

focus in s 28A on native title interests, as a recognised category of eligible interest. The kinds

of rights and interests which may be recognised under a determination of native title are the

kinds of rights and interests which are capable of being affected by activities carried out in

any area-based emissions avoidance project. Parliament has expressly recognised this and

provided for a process to give such interest holders a stake in what happens on their country.

It has done so to the extent of allowing for agreements about offsets projects to form part of

an ILUA. All of this sits comfortably with the clear terms of s 28A, and less comfortably with

the applicant’s construction, which would deprive native title holders of any ability to consent

(whether through an ILUA or otherwise) or withhold consent about activities on their country

carried out under non-sequestration offsets projects, irrespective of the effects on that

country.

99 Likewise, there is nothing irrational or unreasonable in Parliament recognising a consent

requirement for an interest-holder such as a mortgagee of land on which an area-based

emissions project (such as savanna burning) is to be carried, where such an activity may be

capable of affecting the value and marketability of the mortgaged land.

100 It is not the case that the statutory concept of “project proponent” and the need for consent of

those with an eligible interest cover precisely the same field. Not all those with an eligible

interest will necessarily be in a position where they can confer (or withhold) a legal right to

carry on the offsets project on or from the proponent. Taking the current facts, clearly the

consent of the pastoral lessee of the Harkness and Balurga project areas will overlap with the

requirement that the applicant has the legal right to carry on the project as it is the pastoral

lessee which must grant the applicant the right to access the land, and the right to carry out

activities on it. However, there is no such necessary overlap with a mortgagee, as the

applicant recognises in its reply submissions. The absence of an overlap does not mean that

an amendment which introduces a consent requirement for a person such as a mortgagee is

inherently irrational or unreasonable, even if it raises the spectre of consent being withheld.

Rather, it may reflect an alteration of the balance of interests in the carrying out of offsets

projects. I accept any such intention needs to be inferred as there are no statements in the

extrinsic material which would support the proposition that Parliament intended to realign the

interests. However, as I emphasise below, ascertaining the intention of parliament is an

exercise which is carried out within the statute, not by reliance on statements in extrinsic

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material. If that approach is taken, it may be said that the introduction of s 28A, s 53A and the

amendments to s 15, all in plain terms and the first two as freestanding provisions grafted on

an existing scheme, do disclose a parliamentary intention to alter the balance of interests in

the carrying out of offsets projects.

101 After all, debates about activities on land, and whether they should or should not occur, are

not magically eliminated simply because there is no prior consent requirement from all those

who hold an interest in the land. Instead, without a consent requirement, those debates may

take the form of challenges occurring after permission has been granted. Any scheme which

involves a consent requirement shifts any debate between potentially competing interests to

the statutory permission process, rather than to challenges to the grant of permission

afterwards.

102 Whether or not there is a total or partial overlap between the definition of project proponent

and the operation of s 28A in relation to native title holders is, at least in part, the subject of

AEA’s cross-claim, and I will return to this below.

103 Finally, s 28A is a freestanding provision, drafted and introduced as such. The same is true of

s 53A, and the introduction of the specific statutory concept of area-based emissions

avoidance projects. As I have noted, and despite the applicant’s submissions, I consider it is

plain that s 28A is wholly concerned with area-based emissions avoidance projects. Both of

these provisions, but particularly s 28A, pick up and rely upon other existing statutory

concepts in the CFI Act, as I have described above. The manner in which they do so is not

inherently irrational or unreasonable, albeit that from the applicant’s perspective it can no

doubt be said that the operation of the amendments has, from its perspective, an unreasonable

and unforeseen effect on the likelihood of it securing a certificate of entitlement, given

AEA’s apparent objection to the Harkness and Balurga projects. However, that effect, on one

project proponent, does not make the provision itself irrational or unreasonable. And further,

the evidence does not disclose whether there is any capacity for negotiation of a suitable

outcome so that AEA’s consent might be forthcoming in any event. After all, that is no doubt

one of the statutory purposes of incorporating ILUAs into the CFI Act.

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The Court’s task does not extend to making the modification to the statute sought by the applicant

104 Even if, contrary to my opinion, the drafting of s 28A mistakenly, or inadvertently, extended

its effects beyond sequestration projects, I do not accept it is the Court’s function to “correct”

that situation, by re-drafting the provision as an exercise in statutory construction.

105 Even accepting the applicant’s description of the departure from the pre-2014 scheme, by the

introduction of s 28A as “radical”, and recognising (as the Court should) that the effects on

the applicant’s commercial plans for the Harkness and Balurga projects may be highly

significant, what the applicant asks the Court to do is to re-write s 28A in a way which in my

opinion is not consistent with the principles in the authorities, nor with the Court’s task on

judicial review.

106 The applicant accepts that its construction involves reading words into the statute, in a way

which narrows or restricts the operation of s 28A. The word which the applicant contends

should be read in is the word “sequestration”, so as to restrict s 28A and its consent

requirements to sequestration projects. It is appropriate therefore to focus on the authorities

dealing with reading words into a statute, although acknowledging this is but one aspect of

the overall process of determining what the correct meaning is for a statutory provision.

107 I consider the most important authorities in the resolution of the current issue about s 28A are

Taylor v The Owners – Strata Plan No 11564 [2014] HCA 9; 253 CLR 531, and DPP v Leys

[2012] VSCA 304; 44 VR 1, read with the cases referred to in each of these decisions.

108 A number of statements of principle might be recalled to place the current task in context. Of

course, as the applicant submitted, the Court’s paramount task in determining what is the

correct construction of s 28A(1), is to give the text the meaning that the Parliament is taken to

have intended it to have: Lacey v Attorney-General for the State of Queensland [2011] HCA

10; 242 CLR 573 at [43]. In the present context, there is some significance in what the Court

in Lacey went on to say at [43]-[44], after the reference to Project Blue Sky Inc v Australian

Broadcasting Authority [1998] HCA 28; 194 CLR 355:

The legislative intention there referred to is not an objective collective mental state. Such a state is a fiction which serves no useful purpose. Ascertainment of legislative intention is asserted as a statement of compliance with the rules of construction, common law and statutory, which have been applied to reach the preferred results and which are known to parliamentary drafters and the courts. As this Court said recently in Zheng v Cai:

“It has been said that to attribute an intention to the legislature is to apply

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something of a fiction. However, what is involved here is not the attribution of a collective mental state to legislators. That would be a misleading use of metaphor. Rather, judicial findings as to legislative intention are an expression of the constitutional relationship between the arms of government with respect to the making, interpretation and application of laws. As explained in NAAV v Minister for Immigration and Multicultural and Indigenous Affairs, the preferred construction by the court of the statute in question is reached by the application of rules of interpretation accepted by all arms of government in the system of representative democracy.”

The application of the rules will properly involve the identification of a statutory purpose, which may appear from an express statement in the relevant statute, by inference from its terms and by appropriate reference to extrinsic materials. The purpose of a statute is not something which exists outside the statute. It resides in its text and structure, albeit it may be identified by reference to common law and statutory rules of construction.

(citations omitted)

109 I consider the passage from Zheng v Cai [2009] HCA 52; 239 CLR 446, quoted in this

extract, to be of particular importance to the current issue. The Court should approach the

construction of s 28A recognising the “constitutional relationship between the arms of

government with respect to the making, interpretation and application of laws”, and on the

basis that the legislative branch understood (in this particular context) that in enacting

amendments to the CFI Act, the text used by the legislative branch and the structure of the

statute would be the primary tools by which the meaning of any particular provision in the

CFI Act would be ascertained.

110 There is no doubt that current authorities binding on this Court emphasise that the context of

a statutory provision, or even a word, is not a secondary consideration or an afterthought, but

integral to determining correct meaning. Context will include legislative history and extrinsic

materials: see Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012]

HCA 55; 250 CLR 503 at 519, endorsed in Thiess v Collector of Customs [2014] HCA 12;

250 CLR 664 at [22]. As the applicant submitted, in SZTAL v Minister for Immigration and

Border Protection [2017] HCA 34; 347 ALR 405 at [14], Kiefel CJ, Nettle and Gordon JJ

again emphasised that consideration of the context of statutory provisions is a primary

consideration (referring to CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2;

187 CLR 384 at 408:

Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense.

111 Insofar as context includes statements in extrinsic materials about the purpose and

interpretation of a statute, the High Court has been clear about the limits to which extrinsic

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materials can be put. In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue

[2009] HCA 41; 239 CLR 27 at [47]:

This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy.

(citations omitted)

112 I made a similar point in Friends of Leadbeater’s Possum Inc v VicForests [2018] FCA 178;

228 LGERA 255 at [53]-[57]. See also BGM16 v Minister for Immigration and Border

Protection [2017] FCAC 72; 252 FCR 97 at [52]-[54], and [93]-[97]. At [96], Wigney J and I

said:

These cautionary statements should be seen as applicable to the use of extrinsic material under either s 15AB(1)(a) or s 15AB(1)(b) of the Acts Interpretation Act 1901 (Cth). Whether or not there is ambiguity, or whether extrinsic material is relied on only to “confirm” the ordinary meaning, there is always a danger of attention being diverted from the statutory text itself.

113 A different way of expressing a conceptually similar kind of limit can be found in statements

to the effect that statements by a Minister about the intended meaning of a provision cannot

control its legal meaning: see Re Bolton; Ex parte Beane [1987] HCA 12; 162 CLR 514 at

518; Harrison v Melhem [2008] NSWCA 67; 72 NSWLR 380 at [183]-[184] (Mason P).

114 At [182], Mason P said:

In my view, the idea that a Minister can stamp his or her interpretation upon an Act of Parliament by no more than (and I emphasise “no more than”) stating a view as to its meaning is constitutionally unacceptable. Nor is it supported by legitimate canons of statutory construction. The Attorney-General was, in my view, mistaken when he implicitly represented that the new provision replicated the old in the presently relevant context. That mistake cannot control the proper interpretation of the enacted provision.

115 I respectfully agree with the approach taken by his Honour. That approach is all the more

appropriate to explanatory memoranda, which are not the product of responsible Ministers

but of officers within government, whether within the executive or within the office of

parliamentary drafting, or a combination of the two.

116 In Harrison v Melhem at [12], Spigelman CJ (agreeing with Mason P) put the limit rather

emphatically:

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Statements of intention as to the meaning of words by ministers in a Second Reading Speech, let alone other statements in parliamentary speeches are virtually never useful. Relevantly, in my opinion, they are rarely, if ever, “capable of assisting in the ascertainment of the meaning of the provisions” within s 34(1) of the Interpretation Act 1987. I only refrain from using the word “never” to allow for a truly exceptional case, which I am not at present able to envisage.

117 At [13], Spigelman CJ recognised that such extrinsic materials may have a legitimate role in

identifying the mischief to be addressed by legislation, and purpose. As to the latter, some

caution needs to be taken because otherwise to use extrinsic materials to ascertain purpose

appears to contradict what has been emphasised by the High Court as the correct source of

purpose – namely, the statutory text. The web that has been woven in the authorities is not

always easy to disentangle.

Purpose

118 Purpose is recognised as perhaps the governing tool in ascertaining the correct meaning of a

provision. There is something in the nature of a contradiction inherent in discussions and

statements about the ascertainment of statutory purpose as a necessary step in determining the

correct construction of a statutory provision. Purpose resides, as the passage from Lacey

above states, in the text and structure of the legislative scheme under consideration. Yet it is

that text (and also structure, but especially text) which must be given meaning before purpose

can be articulated. Purpose is derived from statutory text, but it is statutory text which must

be given meaning by reference to purpose.

119 To my mind, one way to think about how to resolve this contradiction is to recall that the

structure of a legislative scheme, and its context may play a more significant role in

ascertaining purpose than the details of the text. Once one descends into the details of the

text, that is where the contradiction to which I have referred emerges most strongly. If, to

ascertain purpose, one looks at the structure of the legislative scheme (which obviously

involves text in a more general sense), and at its context (which includes legislative history

and extrinsic material, and identification of the “mischief” to which the legislative scheme, or

different aspects of it, was directed), without too intense a focus on the details of the text at

this stage, the purpose should emerge, and can then be applied to resolve any constructional

choice arising from the detail of the text.

120 As I have noted before (see for example Friends of Leadbeater’s Possum at [231]), a

legislative scheme may have many purposes. It may have a series of objectives that are not

entirely in sympathy with each other, but nevertheless must always be reconciled in any

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exercise on construing the scheme’s provisions. The Native Title Act is a good example. A

particular part or division of an Act may be understood, from the text it uses and from its

context, to have a distinct purpose from other aspects of a legislative scheme. That is why

structure and context are so important.

121 In Carr v Western Australia [2007] HCA 47; 232 CLR 138, Gleeson CJ described this feature

in the following way (at [5]) :

Legislation rarely pursues a single purpose at all costs. Where the problem is one of doubt about the extent to which the legislation pursues a purpose, stating the purpose is unlikely to solve the problem. For a court to construe the legislation as though it pursued the purpose to the fullest possible extent may be contrary to the manifest intention of the legislation and a purported exercise of judicial power for a legislative purpose.

122 In the present case, the objects in s 3 of the CFI Act do not distinguish between different

kinds of offsets projects in terms of how different kinds of offsets projects are, through the

operation of the legislative scheme, intended to achieve the objects in s 3. There is nothing in

s 3, or to be discerned from other provisions in the CFI Act, to suggest that a purpose of the

current CFI Act is to restrict the role of eligible interest holders to consent only in relation to

sequestration offsets projects. There were some indications of such a purpose in the pre-2014

CFI Act. If anything, the amendments in their text and structure suggest an opposite purpose.

123 The CFI Act is, in my opinion, a legislative scheme which discloses objects that are in

sympathy with one another, rather than in tension. Its objects all head in a singular direction –

towards encouraging the lowering of carbon emissions and encouraging abatement of carbon

in the atmosphere, by providing economic incentives for projects that have measurable

outcomes of that kind. The context in which the CFI Act seeks to achieve these objects is, in

a significant respect, related to land or area-based activities. That being the case, the

legislative scheme pays particular attention to who might have interests in the land on which

the activities are to be conducted. One purpose of the legislative scheme is to recognise

particular interests in areas of land over which projects might be conducted, and to

accommodate those interests. How the scheme does so — as between the pre-2014 and post-

2014 versions of the legislation — does not reflect a change in the purpose of the legislative

scheme, but may well reflect a change in emphasis.

124 As Spigelman CJ recognised in Harrison v Melhem at [14], another impediment to the use of

extrinsic materials is that the words actually used in legislation as enacted “may represent a

compromise, without consensus, so that, in substance, the decision has been left to the

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courts”. His Honour referred to Brennan v Comcare [1994] FCA 360; 50 FCR 555 at 572-

575 and Wik Peoples v Queensland [1996] HCA 40; 187 CLR 1 at 168-169. His Honour adds

that even more frequently, “the circumstances in which the statute falls to be applied were not

actually contemplated by anybody”. That is why, as the High Court has often said, the surest

guide for the Courts is the text of the statute as enacted, with objects and purpose to be drawn

from that text, and from the structure of the legislation. The responsibility for the words

chosen, their placement, any defined meanings, and the legislative structure lies with the

Parliament. Beyond defined terms without ambiguity (a class whose membership might be

small), the responsibility for ascribing meaning, and applying that meaning, lies with the

Courts.

125 Section 28A was inserted into an existing regime, picking up concepts of the existing regime

and plainly applying them to a new circumstance. That is indicative, in my opinion, of a

different purpose for the role of consent from eligible interest holders to that which existed

prior to the 2014 amendments.

Taylor and Leys

126 Notwithstanding the rather more general principles set out above, there are some occasions in

which courts have been prepared to read words into a statute, based in part at least on the

identified purpose of the legislation and its structure, consideration of extrinsic materials and

legislative history. To do so involves a particular kind of “construction”: in a way, it involves

“constructing” a meaning that is not otherwise apparent. The authorities recognise the

circumstances in which this can, and should, be done, are rare. As I also note below, the

authorities are quite explicit about what is occurring, and how close it can appear to be to the

exercise of legislative power. Courts are, in these circumstances, modifying the statutory text,

usually by adding words whether of qualification or explanation. The reason this remains an

exercise of judicial power is because of the purpose of doing so.

127 The purpose was explained by Spigelman CJ in R v PLV [2001] NSWCCA 282; 51 NSWLR

736 at [81]-[82]:

It is no part of the function of a judge to supply words believed to have been omitted by the legislature per se. What a court does is to construe the words actually used by the legislature, with an effect as if certain words appeared in the statute. The words so “included” reflect in express, and therefore more readily observable, form, the true construction of the words actually used. The task of the courts is to determine what Parliament meant by the words used, not to determine what Parliament intended to say.

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128 His Honour had made similar observations in R v Young [1999] NSWCCA 166; 46 NSWLR

681 at [5]-[6]. It was in this context in PLV that Spigelman CJ found that in no case where

this approach had been adopted, had it been used to expand the meaning of a word or a

provision: rather, only to limit or qualify it. That distinction was not accepted by the Court of

Appeal in Leys, and I do not propose to enter into that debate. The point in my reference to

Spigelman CJ’s articulation of the appropriate limit, with which I respectfully agree, is that

before this approach is taken, a Court must be confident that the additional or modified words

do in reality reflect the meaning of the statutory words, as Parliament intended. The Court is

only in a very limited sense “correcting a mistake”.

129 I take the two cases in chronological order. In Leys, a sentencing appeal, there was ambiguity

about the date of commencement for a series of amendments to the Sentencing Act 1991

(Vic), made by the Sentencing Amendment (Community Correction Reform) Act 2011 (Vic),

relating to the imposition of community corrections orders. The amendments presented, the

Court of Appeal held, some conflict in their terms concerning the date of commencement, as

the amending Act came into force in a “staggered” way. One provision — s 21 of the

amending Act — was the provision which introduced the substantive amendments. Clause 5

of Sch 3 of the amending Act provided that s 37 applied to a sentence imposed “on or after

the commencement of the Act”. It was cl 5 that the Court of Appeal relevantly construed, by

reading words into the provision. The Court held (at [40]):

The express purpose of introducing the CCO regime was to replace the old regime of CCTOs, ICOs and CBOs, for the purpose of providing sentencing judges with a more flexible approach to community sentencing. There is no ascertainable reason why Parliament would not have wanted s 37 to apply to any CCO imposed on or after 16 January 2012.

130 The Court of Appeal declared that cl 5 of Sch 3 to the Act should be construed as if it said

“after the commencement of section 21 of the Act”. All parties before the Court of Appeal

joined in a submission that there had been some drafting inadvertence and a literal

construction of cl 5 was inconsistent with the purpose and the overall statutory scheme of the

amending legislation: see Leys at [43].

131 The Court of Appeal adopted and applied the “three conditions” set out by Lord Diplock in

Wentworth Securities Ltd v Jones [1980] AC 74 at 105-106:

First, it was possible to determine from a consideration of the provisions of the Act read as a whole precisely what the mischief was that it was the purpose of the Act to remedy; secondly, it was apparent that the draftsman and Parliament had by inadvertence overlooked, and so omitted to deal with, an eventuality that required to

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be dealt with if the purpose of the Act was to be achieved; and thirdly, it was possible to state with certainty what were the additional words that would have been inserted by the draftsman and approved by Parliament had their attention been drawn to the omission before the Bill passed into law. Unless this third condition is fulfilled any attempt by a court of justice to repair the omission in the Act cannot be justified as an exercise of its jurisdiction to determine what is the meaning of a written law which Parliament has passed. Such an attempt crosses the boundary between construction and legislation. It becomes a usurpation of a function which under the constitution of this country is vested in the legislature to the exclusion of the courts.

132 As the Court of Appeal’s reasons for judgment in Leys trace, Lord Diplock’s three conditions

have been applied by Australian courts and in particular, by McHugh J in various decisions

while his Honour was a member of the New South Wales Court of Appeal and of the High

Court.

133 The Court of Appeal added (at [109] and [110]) that the application of these three conditions

should result in a construction, with the word or words read in, that was “reasonably open”,

so that reading in a word or words did not give the provision an unnatural, incongruous or

unreasonable construction, but rather one which conforms with the statutory scheme.

134 There appear to be several points of distinction between intermediate appellate courts in

Victoria and New South Wales on the appropriate approach to issues of this kind, one of

which I have adverted to above at [128]. Further, in Leys, the Court of Appeal said (at [86],

footnotes omitted):

The proposition that satisfaction of the three conditions is necessary but not sufficient to justify the reading in of words was echoed by Beazley JA who, in Taylor v Centennial Newstan Pty Ltd, said that “merely passing through the ‘gateway’ of the three conditions identified by Lord Diplock does not necessarily mean that words can be judicially supplied”. As we discussed above, it is not the case that that proposition has been universally accepted in Victoria.

135 It is fair to say that the Court of Appeal in Leys was prepared to take a wider view of the

Court’s function to add or supplement a statutory text in order to achieve what the Court had

determined was the purpose of a provision, than might have been taken in other cases,

especially in New South Wales.

136 The Court of Appeal in Leys noted another relevant discussion of the appropriate approach is

that of Gleeson CJ in Carr at [17]. There, his Honour identified the relevant question as

whether the literal, or ordinary and grammatical meaning, would “defeat the purpose of the

statute, or (to adopt a test formulated in earlier times)… [produce] a result contrary to the

necessary intendment of the language of the statute”.

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137 Another authority to which the Court of Appeal in Leys referred was the decision of the

Queensland Court of Appeal in Special Projects (Qld) Pty Ltd v Simmons [2012] QCA 205. I

refer to it as an example of the consistency with which the authorities describe what must

exist, by way of a consequence of a literal construction, or one adhering to ordinary usage

and grammar (to adopt Gaudron J’s phrase from Corporate Affairs Commission of New South

Wales v Yuill [1991] HCA 28; 172 CLR 319) before a Court will, in effect, alter the statutory

text by way of an exercise in construction. At [25]-[27], Fraser JA stated (amongst other

matters) that a purposive construction may be adopted where there is a departure “from the

statutory purpose in a way which produces a wholly unreasonable result”; that it will not

suffice to read words in where “the generality of the literal meaning of the definition is

merely discordant with statements in the extrinsic material”, and that any words read in must

not be “absolutely incapable”, in their context, of bearing the purposive construction

advanced.

138 The appellant in Taylor was a widow whose husband had been killed when an awning outside

a shop collapsed on him. Her deceased husband (Mr Taylor) had been a land surveyor in

private practice and, it was accepted, had he lived, he would have earned income

substantially in excess of three times the amount of average weekly earnings. Mrs Taylor’s

claim was based on what her husband would have earned, had he lived, not on her own loss

of past or future earnings. She commenced proceedings under the Compensation to Relatives

Act 1897 (NSW). A question of law was stated in advance of the trial and it was on that stated

question that the High Court’s judgment was given, in its appellate jurisdiction. The question

concerned a limit on the recovery of damages imposed by s 12(2) of the Civil Liability Act

2002 (NSW), and whether that limit applied to an award of damages under the Compensation

to Relatives Act. That was because the terms of s 12 were (with my emphasis):

(1) This section applies to an award of damages:

(a) for past economic loss due to loss of earnings or the deprivation or impairment of earning capacity, or

(b) for future economic loss due to the deprivation or impairment of earning capacity, or

(c) for the loss of expectation of financial support.

(2) In the case of any such award, the court is to disregard the amount (if any) by which the claimant’s gross weekly earnings would (but for the injury or death) have exceeded an amount that is 3 times the amount of average weekly earnings at the date of the award.

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139 The issue of construction was whether the reference to the “claimant’s” earnings in s 12(2)

extended to include the deceased’s earnings. What meaning was to be given to the word

“claimant”? As the Court noted at [10], it was accepted that the only personal injury damages

that could be characterised as compensation “for the loss of expectation of financial support”

were damages under the Compensation to Relatives Act. Both the primary judge and the New

South Wales Court of Appeal (McColl JA giving the lead judgment) had held that although

the literal meaning of claimant would not include the deceased in a claim by a relative, such a

literal construction would defeat the purpose of s 12, and so it was appropriate to apply the

approach by Lord Diplock in Wentworth Securities, and construe “claimant” on the basis that

the legislature would have included the words “or deceased person’s” after the word

“claimant’s” in s 12(2): see Taylor at [15]-[24]. McColl JA endorsed the Victorian Court of

Appeal in Leys and this was said in the High Court to be one of the errors in the Court of

Appeal’s approach.

140 A number of matters from the plurality reasons should be noted. First, at [37], the plurality

accepted, as the Court of Appeal in Leys observed, that there may be cases where reading

words into a statute as part of the construction process expands the operation of the provision.

Accordingly the plurality said that “it should not be accepted that purposive construction may

never allow of reading a provision as if it contained additional words (or omitted words) with

the effect of expanding its field of operation”.

141 At [38], the plurality compared the two ends of the spectrum, or the two sides of the line

(whichever metaphor should be used) about the judicial function in reading words into a

statute (footnotes omitted):

The question whether the court is justified in reading a statutory provision as if it contained additional words or omitted words involves a judgment of matters of degree. That judgment is readily answered in favour of addition or omission in the case of simple, grammatical, drafting errors which if uncorrected would defeat the object of the provision. It is answered against a construction that fills “gaps disclosed in legislation” or makes an insertion which is “too big, or too much at variance with the language in fact used by the legislature”.

142 The present issue about s 28A falls into neither straightforward category. That is why this is a

difficult case. However, as will be becoming apparent from these reasons, the applicant’s

suggested correction tends in my opinion towards the impermissible end of the spectrum as

described by the plurality in this passage. The applicant asks for the insertion of a word

which is at variance with the general language used, and the cross references to defined, but

more general, statutory concepts in the CFI Act.

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143 At [39], there are some indications the plurality does not agree with the entire approach of the

Court of Appeal in Leys, and in particular the proposition that if the three conditions are met,

it will be sufficient if the proposed construction is “reasonably open”. That is because:

any modified meaning must be consistent with the language in fact used by the legislature. Lord Diplock never suggested otherwise. Sometimes, as McHugh J observed in Newcastle City Council v GIO General Ltd, the language of a provision will not admit of a remedial construction. Relevant for present purposes was his Honour’s further observation, “[i]f the legislature uses language which covers only one state of affairs, a court cannot legitimately construe the words of the section in a tortured and unrealistic manner to cover another set of circumstances”.

(citations omitted)

144 Noting in [40] Lord Diplock’s emphasis in Wentworth Securities on the avoidance of judicial

legislation, the plurality added (referring in footnotes to Plaintiff S157/2002 v

Commonwealth [2003] HCA 2; 211 CLR 476 at [102] per Gaudron, McHugh, Gummow,

Kirby and Hayne JJ; Zheng v Cai at [28] per French CJ, Gummow, Crennan, Kiefel and Bell

JJ):

In Australian law the inhibition on the adoption of a purposive construction that departs too far from the statutory text has an added dimension because too great a departure may violate the separation of powers in the Constitution.

145 All these passages can take a Court faced with applying them only so far. In the end, the

judicial task falls to be performed by reference to a particular statutory provision, with a

particular legislative history and context, and to be performed bearing in mind the statutory

purposes the Court has determined inform the particular statute in issue.

146 In my opinion the applicant’s submissions about the insertion of words to clarify the meaning

of s 28A falls on the impermissible side of the authorities which I have discussed, and

especially Taylor. There are two principal reasons for that.

147 First, I am not satisfied that a purposive construction of s 28A leads to the outcome for which

the applicant contends. The purpose of the CFI Act, as it is currently expressed, is not clearly

in favour of the restriction of s 28A to sequestration projects. As the Regulator submits, the

amendments instead disclose an intention to extend the consent requirements to all area-based

emissions avoidance projects. Given the nature of eligible interests as proprietary, and given

the potential effects of area-based emissions avoidance projects (savanna burning being one

example) on the land to which the proprietary interests relate, identifying as a purpose of the

legislative scheme the need to have agreement from all such holders of proprietary interests is

an identification which flows from the structure, text and context of the provisions as they

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currently appear. Such a purposive construction cannot be described as unreasonable,

capricious or irrational, even though from the applicant’s perspective it imposes what it

perceives to be an unreasonable limit on its ability to secure a certificate of entitlement. In

contrast, from AEA’s perspective, the scheme operates reasonably in its current provisions.

That is a matter of perspective from those whose interests are affected, not a matter of

statutory purpose.

148 Further, as I have noted now several times in these reasons, the drafting of s 28A deliberately

picks up terms and phrases which are defined in the statute, and which have a wider

application than to just sequestration projects. As I have also noted, the extension of consent

requirements for area-based emissions avoidance projects to native title holders is well

grounded in the text and structure of the Act, and is rational, given the nature of native title

rights and interests.

149 For these reasons, a purposive construction of s 28A(1) does not support the proposition that

the word “sequestration” should be inserted before the word “offsets project” in s 28A(1)(a).

150 Second, even if contrary to my opinion a purposive construction did support that proposition,

I consider that the insertion of the word “sequestration” departs too far from the existing

statutory text. It is a modification not consistent with the language used by the Parliament,

altering the “state of affairs” currently comprehended by the provision (all area-based

emission offsets projects) to a different state of affairs (only sequestration projects). It is, in

reality, an amendment. To adopt the words of Spigelman CJ in Harrison v Melhem, the

applicant’s proposal does not involve the Court construing the words “offsets project” (being

the ones actually used by the legislature), with an effect as if the word “sequestration”

appeared in the statute before them, because offsets project is a defined term, with a clear

meaning, and is wider than sequestration projects. Rather, the applicant’s proposal asks the

Court to supply a word (“sequestration”) which was omitted or not chosen, and indeed where

the previous version of the CFI Act (in s 24(4)(k)) imposed such a restriction by using such a

word, and was repealed.

151 Finally, and perhaps more relevant to the meaning of s 28A(1) on its face rather than to

changing that meaning, the applicant’s proposed construction involves the elevation of

statements in extrinsic material over the meaning of the text of s 28A in accordance with its

ordinary usage and grammar. That is an incorrect approach to ascertaining the correct

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meaning of a statutory provision, yet it is the extrinsic material which is the real source of the

“purpose” for which the applicant contends.

152 As the Regulator submits, the Full Court has emphasised that courts should be “very slow” to

read additional words into a statute: BY Winddown Inc v Vautin [2016] FCAFC 168; 249

FCR 262 at [45]. There are many reasons for that approach, but one which in the context of

the present issue about s 28A is particularly apposite was explained by French CJ in Alcan at

[4]:

The starting point in consideration of the first question is the ordinary and grammatical sense of the statutory words to be interpreted having regard to their context and the legislative purpose. That proposition accords with the approach to construction characterised by Gaudron J in Corporate Affairs Commission (NSW) v Yuill as: “dictated by elementary considerations of fairness, for, after all, those who are subject to the law’s commands are entitled to conduct themselves on the basis that those commands have meaning and effect according to ordinary grammar and usage.” In so saying, it must be accepted that context and legislative purpose will cast light upon the sense in which the words of the statute are to be read. Context is here used in a wide sense referable, inter alia, to the existing state of the law and the mischief which the statute was intended to remedy.

(citations omitted)

153 Section 28A(1) has, as I have explained above, a clear meaning according to ordinary

grammar and usage. The applicant’s contended meaning is not apparent at all from the

ordinary grammar and usage. It is a construct, to achieve a particular outcome. However, it is

not a construct drawn from the structure and text of the legislation, rather from an assumption

or premise that there was no legislative intention by the 2014 amendments to change the

scope of offsets projects to which consent by holders of eligible interests would be required.

Other matters

The use of the “facts” in the notice to admit

154 As I noted above, there was some debate whether some of the matters alleged in the notice to

admit were susceptible to description as facts.

155 The subject matter of the notice to admit were consultations carried out before the 2014

amendments, and then the Senate Environment and Communications Legislation Committee

inquiry into the proposed amendments.

156 The first and second respondents did not serve a notice disputing the facts, pursuant to r 22.02

of the Federal Court Rules 2011 (Cth). The applicant submitted that therefore, in accordance

with r 22.04, the facts were taken to have been admitted. The respondents’ position, advanced

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to the applicant before trial and maintained at trial, was that they did not dispute the matters

in paragraphs 1, 2, 4 and 5 of the notice. They also made it clear that they did not contend

that any of the extrinsic materials for the 2014 amendments refer to the interpretation of s

28A for which they contend in these proceedings. Thus, they also accepted the “gist” of what

is expressed in paragraphs 3 and 6 of the notice. However they submitted that the matters

expressed in paragraphs 3 and 6 of the notice were too indeterminate to be “facts”, the “truth”

of which could be admitted.

157 Paragraphs 3 and 6 of the notice stated:

3. The Department did not, as part of the consultations described above, consult about the possibility of the Act being amended such that the written consent of each “eligible interest” holder (other than the applicant) must be obtained before the Regulator may issue a certificate of entitlement in respect of an “emissions avoidance offsets project” for a reporting period.

…

6. The Senate did not, as part of the inquiry described above, consult or inquire about the possibility of the Act being amended such that the written consent of each “eligible interest” holder (other than the applicant) must be obtained before the Regulator may issue a certificate of entitlement in respect of an “emissions avoidance offsets project” for a reporting period.

158 I accept the respondents’ submission, advanced in chief by the Regulator and supported by

AEA, that these propositions are too indeterminate to properly be described as “facts” for the

purposes of r 22.01. In reality they are inferences which may be drawn from the other

admitted facts in the notice, and from the extrinsic materials. They are not properly the

subject of a notice to admit. Further, any reliance on the matters set out in paragraph 6 may

also be inconsistent with the prohibition in s 16(3) of the Parliamentary Privileges Act 1987

(Cth), although the scope of the exception in s 16(5) would need to be considered.

159 None of these conclusions do any real harm to the applicant’s case because, as the

respondents have made clear, it is common ground that neither in the consultations prior to

the 2014 amendments nor in any other extrinsic material is there any reference to the consent

of eligible interest holders being required prior to the issue of a certificate of entitlement in

relation to area-based emissions avoidance projects. As I have noted above, and as the

respondents conceded, to the contrary some of the extrinsic material suggests the drafters of

that material considered s 28A was limited to sequestration projects. I have explained above

why I do not consider that fact to be determinative.

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The probative value of the approved forms

160 The same conclusion can be drawn about the references in various versions of the approved

forms to the purposes of s 22 of the CFI Act. There can be no debate on the evidence, and the

Regulator has accepted through Mr Williamson’s affidavit, that the Regulator itself initially

took the view that the consent of eligible interest holders was only required for sequestration

projects. As I have described earlier in these reasons, the uncontested evidence is that the

Regulator subsequently changed its mind, and also changed the approved forms.

161 While it would no doubt have been better in terms of good public administration if the

Regulator had a clear and consistent view on the scope and operation of s 28A, neither the

view of the Regulator, nor what it put on the forms it approved, could control the correct

meaning of s 28A. That is a matter for the Court, and the parties correctly did not ask the

Court to place any weight on what was and was not on the approved forms.

The 2017 Bill

162 In its reply submissions, the applicant disavowed any reliance on the existence or terms of the

2017 amending Bill. The Bill is just that, and can have no bearing on the construction of s

28A, even if there is some authority that were it to be passed into law, in some circumstances

it could do so: see SZVBN v Minister for Immigration and Border Protection [2017] FCAFC

90; 254 FCR 393 at [222], and the authorities there referred to.

RESOLUTION: THE SEPARATE QUESTION ON CROSS-CLAIM

163 In my opinion the separate question should be answered “no”. Whether a person has a “legal

right to carry out the project” so as to fall within the statutory definition of “project

proponent” is a matter to be established to the satisfaction of the Regulator, whose

satisfaction must be lawfully formed. It is not a matter for the Court to determine on

admissible evidence.

164 Like the judicial review application, the determination of the separate question involves a

matter of statutory construction. Earlier in these reasons, I have set out the applicable

principles about statutory construction, the relevant legislative provisions and the factual

background and I need not repeat any of those matters.

165 In my respectful opinion, the most helpful explanation of the circumstances where, as a

matter of statutory construction, a Court may conclude that a legislative provision imposes a

jurisdictional fact as a precondition to a statutory power arising for exercise, is found in the

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reasons for judgment of Spigelman CJ (with whom Mason P and Meagher JA agreed) in

Timbarra Protection Coalition Inc v Ross Mining NL [1999] NSWCA 8; 46 NSWLR 55. A

number of core propositions emerge from his Honour’s reasons:

(a) Parliament may make any fact a jurisdictional fact and where it does so, the

consequence is that the fact “must exist” objectively (at [37]);

(b) To find that a fact is a jurisdictional fact, the Court must conclude, as a matter

of statutory construction, that Parliament intended the presence (or absence) of

the fact to invalidate the exercise of power (at [37]);

(c) Both “objectivity” and “essentiality” (Spigelman CJ’s terms) are inter-related

elements in the determination of whether a matter is a jurisdictional fact (at

[38]), albeit that the ordinary principles of statutory construction are to be

applied (at [39]);

(d) A determination that a matter is not a jurisdictional fact involves a conclusion,

after the process of construction is completed, that Parliament intended that

the primary decision-maker could authoritatively determine the existence or

non-existence of the fact, subject to judicial review of that determination (at

[41]);

(e) Where “a factual reference appears in a statutory formulation containing

words involving the mental state of the primary decision-maker — “opinion”,

“belief”, “satisfaction” — the construction is often, although not necessarily,

against a conclusion of jurisdictional fact” (at [42]);

(f) The location in the statutory structure of the alleged jurisdictional fact may be

critical. Where the alleged fact is located in a provision conferring power, or

arises in the course of the consideration by that repository of a power of its

exercise, then this may suggest the fact is not intended to be jurisdictional. In

contrast, if the fact is located as a preliminary or ancillary matter to the

exercise of power, it may indicate Parliament intended the existence of the

fact, objectively, to condition the exercise of power (at [44], [51]);

(g) Another way to put this factor is by asking the question whether the fact is “a

fact to be adjudicated upon in the course of the inquiry” as distinct from an

“essential preliminary to the decision making process” (at [52], referring to

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Colonial Bank of Australasia v Willan (1874) 5 PC 417 at 443). Spigelman CJ

then lists a number of other authorities dealing with this factor (at [53]-[54]);

(h) Other aspects of a given statutory scheme may inform the characterisation the

Court must make: see generally [67]-[81], where Spigelman CJ analyses a

number of features of the Environmental Planning and Assessment Act 1979

(NSW) and the related Threatened Species Conservation Act 1995 (NSW).

166 I respectfully adopt the description by Weinberg J in Cabal v Attorney-General of the

Commonwealth [2001] FCA 583; 113 FCR 154 at [50] of the different function performed by

a Court once a matter is identified as a jurisdictional fact:

The so-called doctrine of “jurisdictional fact” (assuming that it is correct to so describe it) represents an exception to the principles of restraint which normally govern judicial review. “Jurisdictional fact” enables such review whenever the court determines for itself that a statutorily required fact does not exist. Parliament can stipulate that any action which it authorises depends upon the existence of various preconditions. The legislation may require the existence of those preconditions to be established in the mind of the person or body exercising the power, or in the mind of the reviewing court. Where the power depends upon factual requirements being demonstrated to the satisfaction of the person in whom it is reposed, it is that person’s determination of the facts which is decisive. The validity of the exercise of the power is unaffected if the person, acting in good faith and otherwise according to law, considers the facts, and reaches an opinion about them, albeit one which a court would not share. Where the power depends upon the existence of objective facts, the court on judicial review is given the final say as to whether the required facts exist.

167 The passage from Weinberg J’s reasons in Cabal is also relevant to the present debate

because of its emphasis about the consequence of a statutory provision being expressed in

terms of the formation by the repository of the power of a state of satisfaction. Usually, as his

Honour indicates, that will be a clear indication by Parliament that it is the repository’s state

of mind which is to be decisive, rather than the objective existence of the alleged fact.

168 Applying those principles, the statutory language in the CFI Act tends strongly against

AEA’s submissions.

169 The first point is that the phrase “legal right to carry out the project” forms part of a statutory

definition – namely, the definition of when a person is a “project proponent”. The definition

itself is not a provision conferring any statutory power, and in that sense the definition, and

the key “fact” alleged to be jurisdictional, must be considered together with the provisions

that actually confer power on a repository. While the separate question refers expressly to the

power in s 27 (being specifically the power in s 27(4)(e)), the same statutory formulation is

found in s 15 (specifically, s 15(2)(b)).

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170 In both those provisions, the statutory language chosen by Parliament uses the satisfaction of

the repository of the power as the precondition for the exercise of the power. This is a firm

and clear indication, as the authorities suggest, that Parliament intends the opinion of the

repository of the power to be determinative of whether the fact does or does not exist.

171 The location of the alleged fact, as one of a series of matters about which the repository of the

power (the Regulator) must form an opinion, also suggests that whether or not a person has a

legal right to carry out a project was not intended by Parliament to operate as an essential

preliminary to the exercise of power. Rather, it is but one of a number of matters upon which

the Regulator must form a view. As I note below, the formation of that view will itself be

judicially reviewable, but that is a different matter. Some of the other criteria are plainly

evaluative (such as the fit and proper person requirement), and this tends to suggest that

Parliament intended the repository of the power to determine all the criteria.

172 As the Regulator submits, the second component of the definition of “project proponent”

(“responsibility for carrying out” the project) is an evaluative matter. The prescription by

Parliament of matters which tend to be evaluative in nature, rather than objectively

ascertainable as either existing or not existing, is likely to suggest that the decision is

intended to be left to the repository of the power. There is no rational explanation why, in a

statutory definition with two limbs, one of which is plainly evaluative, Parliament should be

found to intend that a Court objectively determine one of those limbs and the repository of

the power determine the other.

173 Finally, but very much as a secondary matter, the conclusion I have reached on the judicial

review application about the operation of s 28A also supports the conclusion that the

existence of a legal right to carry out the project is not a jurisdictional fact for either the

power in s 27(2) or for the power in s 15(2). The purpose of ensuring a person has such a

legal right before declaring a project an eligible offsets project, and then again before

granting a certificate of entitlement, is part of a decision-making process by the Regulator

(and only part), which must have regard to a number of proprietary interests in the land to be

affected by an area-based emissions project. The consent requirement in s 28A means, or at

least may mean, that the possession of a legal right to carry out the project will not

necessarily suffice to be granted a certificate of entitlement. In other words, the role of the

possession of the legal right is not as central as the applicant submits, but is one of several

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factors relevant to the existence of other proprietary interests in the affected land. This tends

to suggest these are matters for the Regulator, and not for the Court.

174 It is true, as AEA submits, that the concept of jurisdictional fact has been applied, in the

constitutional supervisory jurisdiction of the High Court under s 75(v) of the Constitution, to

the formation of a state of satisfaction by the repository of a statutory power: see Minister for

Immigration and Multicultural Affairs v Eshetu [1998] HCA 21; 197 CLR 611 at [127], [129]

and [130], (Gummow J). It was in that context that Gummow J said (at [130]), as AEA

submitted, that the “‘jurisdictional fact’, upon the presence of which jurisdiction is

conditioned, need not be a ‘fact’ in the ordinary meaning of that term”. However, his Honour

was not making any general or wide statement about the concept of jurisdictional fact.

Rather, there was a specific point to be made, about a Court’s function on judicial review,

and in particular the function of the High Court.

175 At [127] and [131], Gummow J relevantly said:

Rather, this is a case where the legislature has made “some fact or event a condition upon which the existence of which the jurisdiction of a tribunal or court shall depend”. The court or tribunal cannot give itself jurisdiction by erroneously deciding that the fact or event exists.

…..

A determination that the decision-maker is not “satisfied” that an applicant answers a statutory criterion which must be met before the decision-maker is empowered or obliged to confer a statutory privilege or immunity goes to the jurisdiction of the decision-maker and is reviewable under s 75(v) of the Constitution. This is established by a long line of authority in this Court which proceeds upon the footing that s 75 is a constitutional grant of jurisdiction to the Court.

(citations omitted)

176 This approach is well entrenched in a large number of cases since Eshetu. The proposition

was, as the reasons of Gummow J in Eshetu explain, found to be necessary to distinguish

review of the formation of a state of satisfaction required by statute from the exercise of a

discretionary power, and what some authorities prior to Eshetu, in the UK, the US and

Australia, had characterised as a more limited role of the Courts on judicial review in relation

to an exercise of discretionary power. Gummow J’s reasons emphasise that, if there are such

limits, they are not applicable to judicial review in circumstances where the empowering

statute makes the formation of a state of satisfaction a precondition to an exercise of power.

177 The relevance of Eshetu, and the cases which have endorsed this approach, to the present

arguments about the CFI Act, is that the Regulator’s formation of a state of satisfaction about

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whether a person is, or is not, a “project proponent” as that term is defined in the CFI Act, is

susceptible to judicial review. The formation of a lawful state of satisfaction about that matter

is a precondition to the exercise of the power to issue a certificate of entitlement under s 15,

and at an earlier stage, to the making of a declaration under s 27. It is, in that sense, a

jurisdictional fact as Gummow J explained in Eshetu: see the explanation by French CJ in

Plaintiff M70/2011 v Minister for Immigration and Citizenship [2011] HCA 32; 244 CLR

144 at [57]:

[w]here a power is expressly conditioned upon the formation of a state of mind by the decision-maker, be it an opinion, belief, state of satisfaction or suspicion, the existence of the state of mind itself will constitute a jurisdictional fact.

178 And for a recent re-affirmation of this distinction, see the Full Court’s reasons in One Key

Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union [2018] FCAFC 77;

277 IR 23 at [99].

179 However, in its cross-claim AEA does not seek judicial review of any decision of the

Regulator under s 27 or s 15 on this basis.

180 In terms of appropriate relief, at the present time I propose only to answer the separate

question. However, I note the Regulator’s submission that the ultimate relief sought by AEA

on the cross-claim is a declaration that the applicant “does not have the legal right to carry

out” the Harkness and Balurga projects. At present, given the conclusions the Court has

reached on s 28A, the applicant cannot obtain a certificate of entitlement without the consent

of AEA to its projects. Therefore, any satisfaction formed by the Regulator about whether the

applicant falls within the definition of “project proponent” because, relevantly, it has a “legal

right” to carry out each of the projects, is not of any present materiality. It would appear the

applicant can go no further to obtain a certificate of entitlement at the moment in any event.

181 The parties may wish to consider whether any further or other orders are appropriate on the

cross-claim. If none are proposed, the cross-claim will be listed for case management hearing

at a date to be fixed.

CONCLUSION

182 There will be orders dismissing the applicant’s judicial review application, and answering the

separate question. Given the conclusions I have reached, it is clear there should be a costs

order in favour of the respondents on the judicial review application. Since the answer to the

separate question does not dispose of the proceeding, and raises a single question of law, I do

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not consider it is appropriate to make any orders for costs in relation to the determination of

that question. If any party wishes to be heard on a different form of costs order, that party can

apply to vacate the costs order on the separate question and the Court will hear submissions

on what other order is contended to be appropriate.

I certify that the preceding one hundred and eighty-two (182) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mortimer.

Associate:

Dated: 1 November 2018