Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Environment Protection Authority v Schon G Condon as liquidator for Orchard Holdings (NSW) Pty Ltd (in liq) [2014] NSWCA 149 Hearing dates: 28 April 2014 Decision date: 16 May 2014 Before: Bathurst CJ at [1]; McColl JA at [2]; Leeming JA at [3] Decision: Appeal dismissed with costs. Catchwords: APPEALS - whether necessary to deal with notice of contention - not fully argued, not free from difficulty, not determined by primary judge - Kuru v New South Wales [2008] HCA 26; 236 CLR 1 applied CORPORATIONS LAW - liquidator's rejection of proof of debt - proof based on erroneous construction of regulation - appeal dismissed ENVIRONMENT AND PLANNING - contributions in respect of waste received at waste facility - occupier operated quarry and received waste from off-site - inadequate records of waste received kept - EPA based contribution on estimate of waste at the waste facility and determined contribution accordingly STATUTORY CONSTRUCTION - construction of regulation - construction as a whole and in context - weight to be given to minor textual differences - anomalies arising on one construction - scope of regulation-making power - whether construction beyond scope of or inconsistent with Act - preference to be given to construction which is within power Legislation Cited: Corporations Act 2001 (Cth), s 1321 Interpretation Act 1987 (NSW), s 41 Legislation Review Act 1987 (NSW), ss 8A, 9 Protection of the Environment Operations Act 1997 (NSW), ss 3, 88, 91, 104, 107, 323 Protection of the Environment Operations (Waste) Regulation 2005 (NSW), cl 5, 6, 12, 13 State Revenue and Other Legislation Amendment (Budget Measures) Act 2008 (NSW), Schedule 15 Cases Cited: Airservices Australia v Canadian Airlines International Ltd [1999] HCA 62; 202 CLR 133 Aroona Developments Pty Ltd (in liq) v Killen [2004] NSWCA 363; 50 ACSR 668 Attorney-General (Cth) v Oates [1999] HCA 35; 198 CLR 162 Attorney-General (SA) v Corporation of the City of Adelaide [2013] HCA 3; 87 ALJR 289 Boorer v HLB Mann Judd (NSW) Pty Ltd [2014] NSWCA 100 Doyalson Wyee RSL Club Ltd v Liquor Administration Board of NSW [2007] NSWSC 910 Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 Kuru v New South Wales [2008] HCA 26; 236 CLR 1 Liversidge v Anderson [1942] AC 206 Master Education Services Pty Ltd v Ketchell [2008] HCA 38; 236 CLR 101 Mine Subsidence Board v Jemena Ltd and Jemena Gas Networks (NSW) Ltd [2013] NSWCA 465 Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24 Minister for Urban Affairs and Planning v Rosemount Estates Pty Ltd [1996] NSWSC 348; 91 LGERA 31 Morton v Union Steamship Co of New Zealand Ltd (1951) 83 CLR 402 Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 Shanahan v Scott (1957) 96 CLR 245 at 250 Smalley v Motor Accident Authority of New South Wales [2013] NSWCA 318 South Australia v Tanner (1989) 166 CLR 161 Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 The Queen v Khazaal [2012] HCA 26; 246 CLR 601 Widgee Shire Council v Bonney (1907) 4 CLR 977 Williams v Melbourne Corporation (1933) 49 CLR 142 Texts Cited: P Herzfeld, T Prince and S Tully, Interpretation and Use of Legal Sources (2013) Thomson Reuters, p 383 O Jones, Bennion on Statutory Interpretation (6th ed 2013), p 238 Category: Principal judgment Parties: Environment Protection Authority (Appellant) Orchard Holdings (Respondent) Representation: Counsel: JC Giles (Appellant) RD Glasson (Respondent) Solicitors: Legal Services Branch, Office of Environment and Heritage (Appellant) ERA Legal (Respondent) File Number(s): 2013/210539 Decision under appeal Court or tribunal: Environment Protection Authority v Schon G Condon as liquidator for Orchard Holdings (NSW) Pty Limited (in liq) Jurisdiction: Supreme Court of New South Wales Citation: [2013] NSWSC 777 Date of Decision: 14 June 2013 Before: Young AJ File Number(s): 2012/248190 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment] Section 88(1) of the Protection of the Environment Operations Act 1997 (NSW) required the occupier of a waste facility to pay to the EPA such contribution as was prescribed by the regulations in respect of all waste received at the facility. The Protection of the Environment Operations (Waste) Regulation 2005 made provision for the calculation of contributions by reference to the occupiers records of tonnes of waste received at the site. Clause 6 applied where there were no or inadequate records. Clause 6 required the EPA to estimate the tonnes of waste at the waste facility. The respondent was the liquidator of a company which had operated a quarry and had also received substantial amounts of waste from off-site. The company had not kept accurate records of waste received. The EPA claimed that the company was required to pay a contribution calculated by reference to the waste at the site. The liquidator rejected the EPA's proof of debt. A judge dismissed the EPA's appeal, and the EPA appealed to the Court of Appeal. The Court held, dismissing the appeal: 1. The Regulation was to be construed as a whole and in its context: [43] Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355, Smalley v Motor Accident Authority of New South Wales [2013] NSWCA 318, Master Education Services Pty Ltd v Ketchell [2008] HCA 38; 236 CLR 101, applied. 2. As regulations are less carefully drafted and less keenly scrutinised than legislation, the textual variations on which the EPA relied had less weight: [44]-[45] and [51]-[52]. Liversidge v Anderson [1942] AC 206, O Jones, Bennion on Statutory Interpretation (7th ed 2013), followed. 3. The EPA's construction gave rise to a number of anomalies in operation, and it could be inferred that the regulation was drafted without active consideration being given to the case where a waste facility both produced and received waste: [46]-[50] and [53]. 4. The Act left it to the regulations to deal with the detail of the subject matter, and thereby conferred a broad regulation-making power: [58]. Morton v Union Steamship Co of New Zealand Ltd (1951) 83 CLR 402, applied. 5. The EPA's construction would result in a regulation inconsistent with the Act, because it was not an "estimate" "in respect of all" of the waste received at the site: [59]-[62], and because it would in substance be a penalty: at [63]. 6. A construction which would be within power should be preferred: at [64]. Widgee Shire Council v Bonney (1907) 4 CLR 977, Airservices Australia v Canadian Airlines International Ltd [1999] HCA 62; 202 CLR 133, applied. 7. That the regulation-making power was purposive, doubted: at [66]-[68]. Attorney-General (SA) v Corporation of the City of Adelaide [2013] HCA 3; 87 ALJR 289, Minister for Urban Affairs and Planning v Rosemount Estates Pty Ltd [1996] NSWSC 348; 91 LGERA 31, considered. 8. It was inappropriate to deal with the notice of contention, which was not fully argued, would impact other parties, was not free from difficulty and had not been determined by the primary judge: at [69]-[70]. Kuru v New South Wales [2008] HCA 26; 236 CLR 1, applied. Judgment 1. BATHURST CJ: I agree with Leeming JA. 2. McCOLL JA: I agree with Leeming JA's reasons and the orders his Honour proposes. 3. LEEMING JA: This appeal is about waste. More precisely, it is about the way in which the "contribution" payable to the appellant (EPA) in respect of waste received at a waste facility is to be calculated when, as here, no records have been kept. The primary judge dismissed an appeal from the respondent liquidator's rejection of the EPA's proof of debt because he considered that the EPA's calculation was not in accordance with law. For the reasons which follow, I have concluded that his Honour was right to do so. Factual background 1. The respondent was appointed, on 19 December 2007, the liquidator of Orchard Holdings (NSW) Pty Ltd (Orchard Holdings), a company which from around 2001 until July 2008 owned land at Patons Lane, Orchard Hills, near Penrith within the Sydney Metropolitan Area. From 2002, the land was subject to Environmental Protection Licence 11706 (EPL 11706), which authorised the extraction of no more than 130,000 tonnes of material per annum. EPL 11706 was held from 2002 until March or April 2007 by Erskine Park Quarry (NSW) Pty Ltd (Erskine Park Quarry); it was then transferred to Orchard Holdings. 2. The evidence established that the Patons Lane land contained a quarry, surrounded by bundwalls. An expert retained by the EPA determined that between December 2002 and 4 August 2007 the total increase in volume of three of the bundwalls was 644,366 cubic metres. There was no evidence to the contrary. 3. It was common ground that parts of the bundwalls contained waste which had not been generated at the property, and that parts comprised excavated natural material from the property itself. There was evidence that a "substantial amount of concrete, bricks, building rubble and gravel" had been brought onto the property, including some asbestos. However, the evidence also supported the conclusion that much of the material in the bundwalls was the product of quarrying on the site. To be precise, another expert retained by the EPA in 2009 took samples from 20 boreholes sunk into the bundwalls. Following an analysis of the samples from nine boreholes in the northern and south western bundwalls, the EPA's expert said that these bundwalls "comprise excavated natural material from the site itself". However, asbestos was found in a sample taken from borehole 12, in the bundwall on the western boundary, at concentrations warranting its removal to a licensed landfill site. Asbestos was also found (but at concentrations below reporting limits) in other boreholes, which the expert said was "provisionally suitable for retention on site". 4. According to a "Clean-Up Notice" issued pursuant to s 91 of the Protection of the Environment Operations Act 1997 (NSW) (Act) on 17 January 2007, officers of the EPA had conducted inspections in August, November and December 2006 and seen dog and trailer trucks containing building and demolition waste on the premises and an increase in the waste being stored there. 5. By letter dated 14 April 2008, the EPA advised that it had determined that inadequate records had been maintained to determine the amount of outstanding waste levy contributions in respect of EPL 11706. The letter referred to cl 6 of the Protection of the Environment Operations (Waste) Regulation 2005 (NSW) (Regulation), the formula it contains (namely, tonnage = volume in cubic metres x 2), and the fact that the clause was triggered where inadequate records of waste received had been kept. The letter stated: "A volumetric survey dated 25 March 2008 has determined that 644,366 cubic metres of waste have been added to the bundwalls between December 2002 and 4 August 2007. Doubled this equals 1,288,732 tonnes of waste and multiplying by the current levy rate of $38.60 equals $49,745,055.00 of waste levy contributions outstanding (A4 copy of volumetric survey enclosed)." 1. The EPA lodged a proof of debt dated 1 July 2008 in the amount of $49,745,055, reflecting its calculation of a contribution required to be paid pursuant to s 88(2) of the Act read with cl 6 of the Regulation, based on the EPA's estimate of the waste on the land. 2. Ultimately the liquidator rejected the EPA's proof of debt by notice dated 27 July 2012 (there was some correspondence between the EPA and the liquidator over the intervening four years, but the reason for the delay was otherwise unexplained in the evidence). Procedural background 1. The EPA appealed from the liquidator's decision pursuant to s 1321 of the Corporations Act 2001 (Cth). Its appeal was dismissed by the primary judge: [2013] NSWSC 777. The EPA's appeal to this Court is as of right, having regard to the amount of the proof of debt: Aroona Developments Pty Ltd (in liq) v Killen [2004] NSWCA 363; 50 ACSR 668 at [20]-[24]. 2. That said, the amount at stake for practical purposes is far less than $49 million. The liquidator's report to creditors dated 15 May 2012 disclosed that the land had been sold for some $7.1 million, but that there had been a payment of some $4.4 million to "Mortgagee and Secured Creditor", and suggests that Orchard Holdings' assets (excluding such claims as might be available to its liquidator) were in the order of $1.9 million. It said that Erskine Park Quarry and Orchard Holdings had similar shareholders and directors, that Erskine Park Quarry had been placed into voluntary administration in February 2006, that Steven Sarkis and Mona Kady were directors of Orchard Holdings until February 2006, both of whom were bankrupt, and that Mark Kady, Robert Kady and Paul Kady had become directors of Orchard Holdings from February 2006, of whom Paul Kady was bankrupt. The liquidator did "not consider [Mark and Robert Kady] to be of significant wealth". Although the liquidator had conducted extensive examinations and investigations, and considered there were causes of action for breaches of directors' duties and insolvent trading, he had determined, in the absence of any potential defendant with assets, not to take any action. 3. Accordingly, the EPA will in any event only recover a tiny fraction of the contribution to which it says it is entitled. However, to the extent that the EPA succeeds, its proof will plainly swamp the proofs lodged by all other creditors. 4. Although styled an "appeal", the proceeding before the primary judge was a hearing de novo in this Court's original jurisdiction: Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 340-341. There were no disputed questions of fact. 5. The primary judge found that the liquidator was justified in rejecting the claim. His Honour first identified (at [20]-[24]) questions which the parties had not asked him to rule upon (including whether the contribution amounted to an invalid tax and whether a State law could impose a liability upon a company in liquidation), and then proceeded on the basis that those questions were answered favourably to the EPA. His Honour tentatively accepted (at [24]-[25]) the EPA's submission that it did not matter that Orchard Holdings was not the occupier of the land for most of the period the subject of the contribution ("[t]his may be right, but does sound a rather harsh answer and seems to constitute another tear in the flesh for the doctrine of indefeasibility"); this issue is the subject of the liquidator's notice of contention. 6. His Honour's dispositive reasoning, in essence, was that cl 6(2)(b) of the Regulation did not authorise the calculation of a contribution in respect of the entirety of the amount of waste estimated by the EPA to be on the land. Picking up the language of "deeming" used by counsel, his Honour said (at [48], emphasis added): "What the regulation has purported to do is to deem what is at a site to be what is received at the site over the period of time. To my mind, that is outside the mandate given to the maker of the regulation. That mandate is to calculate the material received at the site, not to deem what is now on the site as being received at the site." Section 88 contributions calculated by cl 5 of the Regulation 1. It was common ground that s 88 of the Act applied. (Although neither Erskine Park Quarry nor Orchard Holdings was authorised to conduct a "waste facility", it was not disputed that at least to the extent that building waste including small amounts of asbestos had been brought onto the property, it answered the description of a "waste facility" (which is defined to include any premises used for the inter alia storage or disposal of "waste": see the Dictionary of the Act).) 2. Section 88(2) in the form it took in April 2008 provided (emphasis added): "The occupier of a waste facility to which this section applies is required to pay to the EPA in respect of all waste received at the facility such contribution as is prescribed by the regulations." 1. The principal regulation prescribed for the purposes of s 88(2) is cl 5 of the Regulation, which provides a series of formulas for the calculation of a contribution. It is not necessary for present purposes to reproduce or summarise all of those formulas. It is sufficient to observe that one of the formulas, in cl 5(2) and (4), determined the "SMA amount" for a particular financial year. (SMA is defined as Sydney Metropolitan Area, and the SMA amount is an amount for each tonne of waste received at a facility in that area.) In the case of years between 1 July 2006 and 30 June 2011, the SMA amount was determined by increasing the previous year's SMA amount by $7 ($6 for the year ended 30 June 2011) and multiplying the sum by an amount referable to the change in the CPI index. Very roughly, the consequence is to increase the SMA amount by $7 per year over a five-year period ($6 for the fifth year) above any change reflected in the CPI. Producers of waste in 2006 would therefore anticipate a $34 per tonne increase in the real cost of disposing of waste over the five year period. It may be inferred that the purpose was to put in place a rapidly but predictably escalating rate, so that producers of waste could take steps to recycle more and produce less waste. That accords with the statutory object recorded in s 3(d)(iii) to "prevent the degradation of the environment by the use of mechanisms that promote … the reduction in the use of materials and the re-use, recovery or recycling of materials". 2. It may be inferred that the $38.60 described as the "current levy rate" in the EPA's letter of 14 April 2008 represented the SMA amount at that time as a result of repeated application of the formula in cl 5(2) and (4); in any event, no challenge was made to that amount. 3. In addition to calculating the SMA amount, the various formulas in cl 5 include as an element in the calculation the tonnes of "waste that is received" in the year at the waste facility. Although (as counsel for the EPA conceded) the language is not as precise as it could be, there is no reason to doubt that, speaking generally, cl 5 has the effect of determining a contribution based on the product of the SMA amount for any given year and the tonnes of waste received in the particular year. Contributions calculated by reference to cl 6 1. The operation of clause 5 of the Regulation was qualified by cl 6(1), which provides that: "(1) Despite clause 5, the contributions payable for the purposes of section 88(2) of the Act by the occupier of a scheduled waste facility are to be calculated by the EPA in accordance with this clause if there are no records, or inadequate records, of the tonnage of waste received by the waste facility in the relevant year." 1. There was no issue, either before the primary judge or on appeal, that there were no or inadequate records of the tonnage of waste received at the premises, something which is the subject of a deeming provision in cl 6(7): "For the purposes of this clause, records are taken to be inadequate records if the EPA is of the opinion that they cannot be used to calculate the contribution payable under section 88 (2) of the Act because, for example, they are incomplete, inaccurate, inconsistent with other records (whether kept by the occupier of the waste facility concerned or another person or body) or the information contained in the records has not been obtained by using appropriate methods." 1. Clause 12 of the Regulation imposed requirements to keep records, which were to be accurate, and made available to an authorised officer on request. Breach of any of these requirements was an offence. Moreover, cl 13 required the occupier of a scheduled waste facility who was required to pay contributions under s 88 of the Act to provide monthly reports setting out the "quantity of waste received at the waste facility" that month, and its various types. Breach of this clause was also an offence. 2. Clause 6(1A) provided that cl 6 does not apply to or in respect of liquid waste other than trackable liquid waste; no party suggested that any question relating to liquid waste arose, and, save for one aspect of the question of construction, it may be put to one side. 3. The balance of cl 6, which is critical to the EPA's appeal, in the form it took over the whole of the relevant period, is as follows (emphasis added): "(2) The contribution payable is the SMA amount calculated: (a) in accordance with clause 5(2) for the year in which the EPA makes the determination of the amount of the contribution, and (b) in relation to each tonne of waste that is estimated by the EPA under subclause (3) as being at the waste facility concerned when the estimation is made. (3) The EPA is to estimate the tonnage of waste at the scheduled waste facility taking into consideration any or all of the following as the EPA considers appropriate in the circumstances: (a) in respect of waste other than liquid waste, a volumetric survey of the facility concerned carried out by a qualified surveyor, (b) available records in respect of the facility concerned, (c) any information provided by an authorised officer who has seen or inspected the facility, (d) any other information available to the EPA, such as video monitoring records, and records kept by persons not involved with the operation of the facility concerned. (4) If the EPA decides to base its estimate of the tonnage of waste received at the waste facility on a volumetric survey, it may (but need not) give the occupier of the waste facility a notice in writing: (a) requiring the occupier to ensure that such a survey is carried out by a qualified surveyor within 21 days after the date of the notice, and (b) requiring the occupier to ensure that a copy of the report of the qualified surveyor is forwarded to the EPA within 7 days after the occupier receives it. (5) The occupier of a waste facility must not fail to comply with a requirement of a notice referred to in subclause (4). Maximum penalty: 200 penalty units in the case of a corporation, 100 penalty units in the case of an individual. (6) Any estimation of the tonnage of waste at a waste facility made for the purpose of this clause is to use the following formula in converting cubic metres of waste to tonnes of waste: T = V x 2 where: T is the amount in tonnes of waste received. V is the volume in cubic metres of the waste determined by the volumetric survey." 1. It is convenient to notice the following uncontroversial matters in relation to cl 6 immediately. 2. First, cl 6 prevails over clause 5 ("Despite clause 5"). "Despite" is a word used in more modern legislation where once "notwithstanding" might have been used: Attorney-General (Cth) v Oates [1999] HCA 35; 198 CLR 162 at [33]. Its purpose is to ensure that the operation of cl 6 is unaffected by cl 5. 3. Secondly, the precondition to cl 6 applying is that there are no, or inadequate, records from which to determine the amount of waste that has been received at the facility. Plainly enough, the premise of cl 6 is that the occupier has (at least arguably) breached cl 12 and cl 13, such that some method other than relying on the records must be employed to determine the tonnes of waste in respect of which the s 88 contribution is to be calculated. 4. Thirdly, the operation of the balance of the clause starts with the cl 6(3) estimate. The calculation of the contribution in cl 6(2) cannot take place until the estimation is made (see cl 6(2)(b)), and the rights and obligations conferred by cl 6(4) and (5) are connected with one method which the EPA might choose to undertake the requisite estimation. 5. Fourthly, cl 6(3) imposes a duty upon the EPA to estimate the tonnage of waste ("The EPA is to estimate the tonnage of waste …"). The words "is to" are, in this context, words imposing an obligation: Doyalson Wyee RSL Club Ltd v Liquor Administration Board of NSW [2007] NSWSC 910 at [27]. 6. Fifthly, one way in which the EPA may discharge its obligation to estimate the tonnage of waste is to employ a volumetric survey. If so, it may (but need not) exercise the compulsive power in cl 6(4) to require the occupier to ensure that a qualified surveyor carries out a survey and a report be supplied to the EPA within 28 days. That is less oppressive, in the context of this industry, than it may at first seem. It may be noted that cl 14 requires all occupiers of scheduled landfill sites who are required to pay contributions under s 88 to cause a volumetric survey of the landfill site to be carried out each June and December by a qualified surveyor whose report is to be forwarded to the EPA. Further, the liquidator's report stated that Orchard Holdings was, as a condition of its development consent, "required to provide surveys of the Property to Penrith City Council at pre-determined intervals". 7. Sixthly, the result of a volumetric survey will be a volume, not a tonnage. In those circumstances, cl 6(6) requires that volume be converted to tonnages by the expedient of applying a factor of 2 tonnes per cubic metre. In that fashion, the duty imposed by cl 6(3) to obtain an estimation of tonnage, with which the SMA amount is to be multiplied to determine the contribution, is implemented. 8. Seventhly, there are textual distinctions between s 88(2) and the subclauses of cl 6, which have been emphasised when reproducing the provisions above. Section 88(2) speaks of "waste received at" the waste facility, as does cl 6(4). However, cl 6(3) refers to an estimation of "waste at" the facility, and that language is replicated in cl 6(2) and (6). Those differences were central to both parties' submissions at first instance and on appeal, and to the reasoning of the primary judge. The parties' submissions 1. It was common ground that the holder of EPL 11706 was entitled to store waste generated from the quarrying activities on-site, but that at some point in time, "waste" had been received at the Patons Lane land, that the land was therefore a "waste facility", that Orchard Holdings was, since March or April 2007 an "occupier" of the land, and that there were no records, or inadequate records, such that cl 6 of the Regulation was applicable. No evidence was adduced disputing the facts underlying the EPA's letter or the volumetric survey attached to it. 2. Mr Giles for the EPA submitted that cl 6 operated according to its terms, and that the fact that the volumetric survey would quantify not merely the waste received at the site, but also waste generated from the quarrying operations on the site, was not to the point. He said that s 88(2) authorised the payment of a contribution calculated "in respect of" all waste received, and where the occupier had chosen not to keep records and had mixed waste received at the site with waste generated on the site, then there was no reason why it should not pay a contribution calculated by reference to an estimation of the total amount. He emphasised the width of the words in s 88(2) "in respect of", and the textual differences in cl 6(2) and (3). He said, by reference to South Australia v Tanner (1989) 166 CLR 161 at 165, that the regulation-making power only extended to regulations which were "capable of being considered to be reasonably proportionate to the pursuit of the enabling purpose", and that cl 6 given its ordinary literal meaning satisfied that test. 3. In the main, Mr Glasson, for the liquidator, supported the reasoning of the primary judge. He contended that the Regulation could not validly bear the construction on which the EPA had relied, for two reasons: because it would extend beyond the scope of the Act, contrary to Shanahan v Scott (1957) 96 CLR 245 at 250, and because it would be inconsistent with the Act, contrary to the regulation-making power in s 323. 4. Mr Glasson also relied on a notice of contention, to the effect that Orchard Holdings could not be made liable for waste received prior to its becoming the occupier in March or April 2007. It is convenient to defer addressing this until the conclusion of these reasons. 5. The respondent's written submissions referred, as though they were relevant, to subclauses 6(2A), (2B) and (2C) in the Regulation. Those subclauses were only inserted with effect from 10 December 2008 (see the State Revenue and Other Legislation Amendment (Budget Measures) Act 2008 (NSW), Schedule 15, item [4]). It appears that either or both parties referred the primary judge to those subclauses, which explains why the primary judge mentioned them in the dispositive part of his Honour's reasons. It is obvious that especial care needs to be taken by the parties in litigation such as this, where the question of construction concerns an Act and Regulation in the form they took some 6 years ago, and where both have very regularly been amended. When the appeal was heard, the Court was assisted by the EPA providing a copy of both in the form they took in April 2008. Reasoning (a) Construction of s 88(2) and cl 6 1. The notice of contention aside, this is a narrow appeal. The construction of cl 6 of the Regulation only arises where, contrary to law, an occupier of a waste facility fails to keep records. Moreover, the difficulty which arises in this appeal is acute because the Patons Lane land was lawfully used as a quarry while the same land was at the same time unlawfully used to receive waste from other sites. It may be expected that in many and perhaps most cases, there will not be the same combination of waste generated on-site and waste unlawfully received from off-site. 2. That is to say, in many cases there will be no reason to doubt that a volumetric survey of the waste at a site will provide a reasonable basis upon which to estimate the volume of waste received at the site. 3. Before considering whether the regulation-making power has been exceeded, it is necessary first to ascertain the legal meaning of cl 6 of the Regulation. There are two competing constructions of cl 6. One, favoured by the EPA, respects the difference in language in cl 6(2), (3) and (6) and does not confine the estimate of waste to waste that has been received at the facility; it extends it to waste which is at the facility, irrespective of whether it is produced on-site or off-site. That favoured by the liquidator confines the regulation, by reference to the more restrictive words of s 88(2), to estimates of the waste which has been received at the facility. 4. The Regulation is to be construed as a whole and in its context. That is a basal principle of construction applicable to statutes: Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [69]; Smalley v Motor Accident Authority of New South Wales [2013] NSWCA 318 at [43]-[45]. The same principle extends to regulations: Master Education Services Pty Ltd v Ketchell [2008] HCA 38; 236 CLR 101 at [19]. Clearly cl 6 should be construed so that it has a coherent operation, notwithstanding the textual differences between "at" and "received at". Critical to the context of cl 6 is s 88(2) of the Act which required its making, which uses the language of waste received at a waste facility. 5. There is one further proposition of construction consequent upon cl 6 being delegated legislation. It is legitimate to have regard to the fact that regulations are less carefully drafted, and less keenly scrutinised, than primary legislation. The last three editions of Francis Bennion's work on Statutory Interpretation have observed that "the quality of drafting tends to be lower in the case of delegated legislation": see now O Jones, Bennion on Statutory Interpretation (6th ed 2013), p 238. In Liversidge v Anderson [1942] AC 206 at 223, Viscount Maugham said, of an argument resembling that of the EPA, that (references omitted): "Orders in Council making regulations pursuant to an Act of Parliament do not in general receive the same attention and scrutiny as statutes, and it is important to remember that, although they may be annulled, they cannot be amended in either House, so that errors in language, if detected, cannot be corrected. There are, of course, no three readings and no committee state in either House. In my opinion, it would be a mistake to attribute the same force to an alteration of language in an amending Order in Council as in an amending statute." 1. Substantially the same considerations apply in New South Wales. Undoubtedly, there is much less scrutiny of regulations by either chamber than of bills. Regulations must be laid before each chamber and may be disallowed by resolution under s 41 of the Interpretation Act 1987 (NSW), but that is quite different from the passage of a bill through the chambers and its receiving Assent. It is true that the Legislative Review Committee is to consider and report on both bills and regulations: Legislation Review Act 1987 (NSW), ss 8A and 9, but the function of that committee is not primarily to call for improved drafting. 2. Although the construction favoured by the EPA gives different meaning to different words, and accords with the ordinary literal meaning of cl 6(2) and (3), on analysis it gives rise to a series of anomalies. 3. First, the EPA's construction means that the power conferred by cl 6(4) and (5) is confined to those cases where the EPA's estimate is based on the tonnage of waste received. It follows that there is no special power within cl 6 to require an occupier who has failed to keep records to cause a survey to take place of the amount of waste at, as opposed to received at, the facility. Although in most cases nothing will turn on the distinction, it nevertheless seems to be an improbable result. 4. Secondly, there is a difficulty with the seemingly mandatory formula in cl 6(6). It is plain that it is open to the EPA to compel an occupier to cause a volumetric survey to be carried out of the waste received at the facility. It is clear that the volume derived from that survey must be converted to tonnes in order to discharge the duty imposed by cl 6(3). In order to do so, not only is there no obvious alternative aside from using the cl 6(6) formula, but also that subclause is in mandatory language ("Any estimation … is to use the following formula"). However, that subclause uses the language of "tonnage of waste at a facility". It follows that cl 6(6) applies to a volumetric survey pursuant to cl 6(4) of waste received at a waste facility, notwithstanding that it uses the language "waste at a waste facility". 5. That is to say, when cl 6(4) and (6) are considered together, that this is a case where, demonstrably, the textual difference between "at" and "received at" is not significant. The only operation that can be given to those subclauses, when read together, is that a volume determined by a survey of waste "received at" a waste facility is to be subjected to a conversion to tonnes in a subclause expressed to deal with waste "at" a waste facility. 6. Thirdly, a further point arises from cl 6(4). It would be one thing if cl 6(4) said "If the EPA decides to base its estimate on a volumetric survey, then it may …". However, cl 6(4) contains the additional words "If the EPA decides to base its estimate of the tonnage of waste received at the waste facility on a volumetric survey." That is to say, cl 6(4) seemingly proceeds on the assumption that on every occasion when the EPA fulfils its cl 6(3) duty to estimate by using a volumetric survey, it will be an estimate of the tonnage of waste received at the waste facility. To put the same point differently, the words of cl 6(4) sit ill with the EPA making an estimate based on a volumetric survey of anything other than waste received at the facility. 7. Fourthly, this is by no means a legislative scheme where the drafter has been assiduously precise in the use of language. As Mr Giles volunteered in his address, the legislation is less than "happily" drafted. It was not inaccurate for him so to describe it, although the following examples of infelicitous drafting are mine, not his. (a) Clause 6(2) describes the final calculation. It must surely be the product of the SMA amount (which is, despite its name, a rate in dollars per tonne) by the EPA's estimate of tonnes of waste. However, that is not what cl 6(2) says in terms. (b) Clause 6(3) uses the language of Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24 at 39 of considerations regard to which is mandatory ("taking into consideration") but then immediately detracts from the obligation so that it is close to contentless ("any or all of the following as the EPA considers appropriate in the circumstances"). In truth, paragraphs (a)-(d) in cl 6(3) identify four classes of information to which the EPA may have regard in performing its obligation to estimate the tonnage of waste. It would be conventional to use language conferring a power, rather than language imposing a precondition to the exercise of power, to achieve this end. (c) It might be thought from cl 6(6) that the formula it contains must be used in every estimation ("Any estimation of the tonnage … is to use the following formula"). But that cannot be so, because the clause applies, expressly, where a contribution is paid in respect of trackable liquid waste (cl 6(1A)), and it is most unlikely that a volumetric survey could be used to estimate the tonnage of trackable liquid waste. 1. In circumstances where it is clear that the drafter has been less than assiduously precise, a court ought to give less weight to the relatively minor divergences in wording on which the EPA's submission turned. 2. Fifthly, there is an explanation for the foregoing. In probably the majority of cases where records cannot be relied on, there will be no difference between waste received at a facility, and waste at a facility. Only when appreciable quantities of waste are generated on-site or when waste which has been received has been removed will there be a difference. The inference is open that the drafter has not, for that reason, given active consideration to the issue which arises acutely on the present facts, where a substantial amount of the waste on the land was generated on-site. 3. All those considerations detract from the undoubted attraction of giving a different legal meaning to the textual difference between "at" and "received at". Those considerations point to the conclusion that the references in cl 6(2), (3) and (6) to "waste at the facility" are to be read as shorthand for "waste received at the facility". That construction conforms with the text of s 88(2), which is the reason the clause has been brought into existence. That construction reconciles the anomalies referred to above and gives a coherent operation to the subclauses. 4. Moreover, for the reasons to be given below, that construction is confirmed by considerations of invalidity. (b) A broader construction would be ultra vires 1. Alternatively, let it be assumed that cl 6 on its proper construction authorised an estimate of the waste at the waste facility, and a calculation of the contribution on that basis. On that assumption, the question whether the Regulation is ultra vires the Act is presented squarely. If so, I consider that Mr Glasson's second ultra vires argument based on inconsistency should be accepted. I respectfully agree with the conclusion of the primary judge that the clause is inconsistent with the Act. 2. The first submission made by Mr Glasson was that the Regulation, if that be its construction, fell outside the scope of the Act. With this I cannot agree. 3. In accordance with a point raised by McColl JA during argument, I would read s 88 as falling within that category of legislation identified in Morton v Union Steamship Co of New Zealand Ltd (1951) 83 CLR 402 at 410 which "lays down only the main outlines of policy and indicates an intention of leaving it to the [Executive] to work out that policy by specific regulation". Section 88 is within Part 3.8 which is headed "Miscellaneous". It is the only section in that part dealing with contributions. And it does so in language which, expressly, leaves it to the Executive to make regulations to give content to the obligation to pay. Indeed, no enforceable obligation is created by s 88(2) at all until and unless a regulation is validly made. That is a very clear case of the situation described in Morton, in which case, as their Honours then said, "a power to make regulations may have a wide ambit", much wider than is the case when an Act "deals specifically and in detail with the subject matter to which the statute is addressed" (at 410). 4. However, Mr Glasson's second submission turned upon the fact that the regulation-making power is circumscribed by, inter alia, the requirement that they be "not inconsistent with this Act": s 323(1). That provision is the only source of regulation-making power for cl 6 of the Regulation. (Although s 88(5) provides that the regulations may provide for contributions to be calculated by reference to an estimate and such other factors as are specified in the regulations, there is no basis to conclude that the words "may provide" give rise to a separate source of power, being one which outflanks the restrictions in s 323(1), and the EPA made no such submission.) 5. Section 88(2) requires an occupier to pay a contribution which is "in respect of all waste received at the facility". It may readily be accepted that the subsection gives a wide scope for regulations to give content to the obligation. However, the regulation-making power is not unlimited. The words "in respect of" are a "relational term" whose extent turns on statutory context and purpose: The Queen v Khazaal [2012] HCA 26; 246 CLR 601 at [31]; Mine Subsidence Board v Jemena Ltd and Jemena Gas Networks (NSW) Ltd [2013] NSWCA 465 at [22]. 6. The words "in respect of" in s 88(2) are informed by the considerations that (a) the contribution is to be in respect of "all" waste received, (b) the section expressly authorises regulations which calculate an "estimate" (as opposed to a penalty), and (c) penalties are elsewhere imposed for non-compliance with the regime. 7. Test the matter this way. Suppose there are two occupiers of separate parcels of land, A and B. Neither A nor B kept any records. Occupier A produced 10,000 tonnes of waste from its quarrying operation on-site, and received 10,000 tonnes of waste from off-site. Occupier B received 15,000 tonnes of waste from off-site. On the construction favoured by the EPA, cl 6 brings about the result that Occupier A must pay a larger contribution that Occupier B. An operation which means that Occupier A, which received less waste than Occupier B but pays a larger contribution, is inconsistent with the statute which requires payment "in respect of all waste received", and is inconsistent with a regime which authorises the making of regulations permitting an estimate of the waste received. There must be a logical and non-capricious relationship between all of the waste received and the estimate of it. 8. The reality is, and as to this Mr Giles was commendably candid, there is an element of punishment in the construction favoured by the EPA. I recognise that it is only because an occupier has broken the law by failing to keep accurate records that cl 6 applies. However, the Regulation may not be used so as to construe, or expand, the terms of the Act: Master Education Services at [19], and there is a clear conceptual difference between an estimate and a penalty (the position is no different elsewhere in the law: cf Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79). Section 88(5) expressly provides that the regulations may calculate contributions on a basis which includes estimation, but says nothing about a penalty. Moreover, the Act and the Regulation impose penalties for non-compliance with the obligations to keep records and to provide reports. Further, s 88(3) imposes a maximum penalty in the case of a corporation of $1,000,000 for late payment of a contribution, plus $120,000 for each day the offence continues. Within that legislative regime, replete as it is with serious penalties, there is no sound basis to construe a regulation used to determine by way of estimate the contribution payable in respect of all waste received, as a further form of punishment. 9. For those reasons, if the Regulation bore the meaning for which the EPA contends, it would go beyond the regulation-making power. When there are two available constructions, one of which is within power, the second beyond power, the former should be preferred: Widgee Shire Council v Bonney (1907) 4 CLR 977 at 983; Airservices Australia v Canadian Airlines International Ltd [1999] HCA 62; 202 CLR 133 at [229]-[232], [408]. 10. Accordingly, I would conclude that on its proper construction cl 6 only authorises an estimate of waste received at the land at Patons Lane. That did not occur. The contribution calculated by the EPA did not comply with the Act or Regulation, and therefore no error is disclosed by the primary judge dismissing the EPA's appeal. (c) A purposive power? 1. It is sufficient to confine this aspect of the argument to ultra vires based on the express requirement that the regulation not be inconsistent with the Act. As noted above, the EPA maintained, beyond this, that the regulation needed to be capable of being considered to be reasonably proportionate to the enabling purpose. I doubt that is so. 2. It is clear law that the starting point is to determine "the true nature and purpose of the power" to make the regulation: Williams v Melbourne Corporation (1933) 49 CLR 142 at 155. It is clear that not every regulation-making power is conferred in purposive language such as that in South Australia v Tanner. That is why French CJ repeatedly emphasised in Attorney-General (SA) v Corporation of the City of Adelaide [2013] HCA 3; 87 ALJR 289 that the proportionality test was confined to "purposive powers entrusted to a public authority to make delegated legislation" at [58], "delegated legislation made in furtherance of a purposive power" at [59] and "delegated legislation made in the exercise of a purposive power" at [62] (emphasis added). In this Court, in Minister for Urban Affairs and Planning v Rosemount Estates Pty Ltd [1996] NSWSC 348; 91 LGERA 31, Handley JA said that a power to make a State environmental planning policy was "not purposive and its exercise is not required to be conducive to a statutory object": at 38 (the other members of the Court regarded the power as a purposive power). I agree with the statement by Mr Herzfeld that proportionality: "applies only where the empowering provision empowers subordinate legislation directed to a particular purpose, as opposed to subordinate legislation which has a connection to a particular subject matter": P Herzfeld, T Prince and S Tully, Interpretation and Use of Legal Sources (2013) Thomson Reuters, p 383. 1. Prima facie, the regulation-making power in s 323 to make regulations "for or with respect to any matter that by this Act is required or permitted to be prescribed" is one confined by reference to subject matter, not by purpose. If that is so, then the concession proffered by the EPA at first instance and in this Court was unwarranted. However, as nothing turns on it, and no argument was advanced on the issue, it is not necessary to decide the point. (d) Notice of contention 1. This Court heard full argument on the appeal. However, on the notice of contention, there was very little oral argument, and the written submissions were relatively slender. Moreover, although it would appear that the point determined by the appeal is of very narrow application, a determination of the broader question (namely, when is one occupier liable for contributions levied in respect of waste received at a time prior to the commencement of its occupation) would be apt to have very wide application. It is capable of applying whenever there is a transfer of a licence, or a transfer of the land. The question is made complex by the variety of other powers conferred on the EPA, including clean-up notices under s 91 which in turn can give rise to compliance cost notices under s 104 which, if registered, create a charge which is unaffected by change of ownership of the land: ss 107(2) and 107(5). 2. The duty of this Court, as stated in Kuru v New South Wales [2008] HCA 26; 236 CLR 1 at [12], is not necessarily to deal with all grounds of appeal, even those which are unnecessary to the outcome, but to consider whether to deal with them: Boorer v HLB Mann Judd (NSW) Pty Ltd [2014] NSWCA 100 at [51]. In the absence of full submissions on the point, in light of its difficulty and potential impact on other parties, in light of the fact that it was not finally determined by the primary judge, and in light of the certainty that anything that is said about the notice of contention can have no impact upon the parties to this appeal, it is appropriate not to deal with it. Orders 1. For those reasons, I propose that the appeal be dismissed, with costs. ********** Amendments 20 August 2014 - The final sentence in the second paragraph of the headnote has been amended to read "and the EPA appealed to the Court of Appeal" instead of "and the liquidator appealed to the Court of Appeal". Amended paragraphs: Headnote 09 February 2015 - In [15] the words "[t]hat seems to" replaced by "[t]his may". In [36] the word "the" inserted before the word "pursuit". In [44] reference to "7th ed" replaced by "6th ed". In [67] "Prince" replaced by "Herzfeld". In [69] references to s 106 replaced by references to s 107. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 February 2015