Fullerton Cove Residents Action Group Incorporated v Dart Energy Limited

March 2013

EDO NSW acted for Fullerton Cove Residents Action Group (FCRAG) in a challenge to Dart Energy’s proposal for the drilling of coal seam gas exploration wells at Fullerton Cove near Newcastle. The Pilot Appraisal Exploration Program (PAEP) is for two vertical wells drilled into two separate coal seams, with four lateral wells, two in each coal seam. The PAEP includes the continuous pumping of water out from the coal seams (16,000 Litres per day) for 12 months, allowing the gas to flow. It is to be located on a floodplain zone, in a high water table area, near an internationally-listed RAMSAR wetland.

FCRAG argued that the PAEP is high-impact development, and Dart should have prepared a full Environmental Impact Statement (EIS), and be subject to the formal public consultation processes under Part 5 of the Environmental Planning and Assessment Act 1979 (EPA Act). FCRAG also argued that the PAEP was not properly assessed under Part 5 of the Act, particularly in relation to potential impacts on groundwater, threatened species and ecological communities. In particular, the Department of Trade and Investment had not been provided with any groundwater assessment by Dart before approving the project.

On 5 September 2012, FCRAG was successful in obtaining an injunction restraining Dart Energy from drilling the wells until the main case had been decided. The injunction was necessary because Dart refused to agree to stop work while the case was on foot. In delivering judgment, Justice Sheahan found that FCRAG had a reasonably arguable case, and that damages would not be an adequate remedy if the injunction was refused and significant environmental harm was caused beneath the surface. His Honour recognised that this was a public interest case, and as such, FCRAG was not required to provide any undertaking as to damages.

The main proceedings were heard in the Land and Environment Court on 15-19 October 2012 before Justice Pepper. On 28 March 2013, Justice Pepper dismissed FCRAG’s case, delivering a 339 paragraph judgment on the legal and factual issues. The Court found that although there was no consideration of any groundwater assessment, the Department had complied with its requirements to consider environmental impacts “to the fullest extent possible” under s111 of the EPA Act. Her Honour took into account the fact that this was a pilot project, and the Department had general knowledge of the geology of the area, and information collected in reports for nearby exploration wells. Justice Pepper also found that there was no failure to consider biodiversity impacts, as the Department had “general regard” to the seven-part test for threatened species under section 5A of the Act.

The Court agreed with FCRAG’s view that the decision as to whether or not an activity is likely to have a significant impact is one that should be determined objectively by the Court, regardless of any opinion formed by the Department under Part 5 of the Act. However, Justice Pepper found that in this case, the project was not likely to have a significant effect on the environment, and that therefore no EIS was required.

The Department pursued its costs of the case from FCRAG, claiming that the case was not brought in the public interest. Dart Energy did not pursue its costs. FCRAG requested the Court to not make a costs order against them under Rule 4.2 of the Land and Environment Court Rules 2007, on the basis that the case was brought by them in the public interest. The Court refused to award costs to the Department, saying that FCRAG's case ‘epitomises the very concept of litigation properly brought in the public interest'. The Court also ordered the Department to pay FCRAG's legal costs in relation to the Department's cost application.

EDO NSW is grateful to barristers Ian Hemmings and Verity McWilliam for their assistance with this matter.

Judgment  - Application for injunctive relief

Judgment - Regarding costs

Judgment