Tasmanian Times

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche


The risk to Gunns. NAB ‘ceasing to be a substantial holder’

Pulp mill site works, September 011. Pic: Code Green

Gunns are preparing to face court in their battle to have their planning permits validated after the expiry date.

There are two cases against them; one in the local Magistrates Court and one in the Supreme Court.

The former was brought by Lucy Landon-Lane and the Pulp-the-Mill group at their own expense and whatever public contributions were available. This was prior to the second action being brought in the higher court by another group. As the higher court judgement carries more weight than a local court, Lucy Landon-Lane decided to withdraw their case and wait on the verdict of the pending Supreme Court case.

Not so Gunns.

In a move on the advice of their lawyer, Stuart McElwaine, they have stated they wish this case to proceed. For reasons of their own, they would like to have a lower court judgement. For them there are a few reasons.

Firstly, any judgement in the lower court could influence the outcome of a judgement in the upper court or they could argue that it makes a Supreme Court case unnecessary if it goes in their favour.

Secondly, if the case proceeds in the lower court and it defaults for reasons of punitive costs, then Gunns can claim a victory going into the Supreme Court. They will certainly do it publicly, if not legally, to boost their flagging share price.

Thirdly, it is a much cheaper option then a Supreme Court case, and possibly less demanding on their accounting practices for their assumed expense of $240 million for this ‘substantial commencement’. The Government has agreed to abide by the court decision without specifying which court.

The case is possibly being used as a deterrent to prevent other legal challenges and to potentially bankrupt anyone who wishes to challenge them. It also acts as a delaying process, in which time they could gain the advantage with the government to change the laws.

However, Gunns themselves are also taking a severe risk, as any adverse judgement, even in a local court, could defeat their project and they will only proceed with this court action if they think they will win. It would also make a Supreme Court challenge unnecessary if they were to lose this one, and if they wanted to challenge the verdict, they would have to take it to court themselves, with all the attendant costs.

It is my belief that basically they are bluffing and hoping for a default judgement. However, a failure this time will have far more serious consequences for THEM!

The ANZ Bank will be watching and so will any JVP. They can’t afford to lose and they could be setting themselves up for a fall. Another court case is just an added risk, and I wouldn’t bet on Gunns winning.

Maybe Pulp-the-Mill should accept the challenge and NOT withdraw!

• Judy: What are the implications of NAB’s recently posted announcment on Gunns’ ASX website: “Notice of ceasing to be a substantial shareholder”: HERE

Author Credits: [show_post_categories parent="no" parentcategory="writers" show = "category" hyperlink="yes"]


  1. Pilko

    January 4, 2012 at 1:37 pm

    #20 The irony is that the sleight of hand (March 14 2007) by Gunns and the Tasmanian Government intended to bypass community and planning commission opposition exacerbated it….massively.
    When the history of the Gunns Pulp Mill proposal is written it will show that Gunns killed its own project with the help of the Tasmanian Government by refusing to recognise the legitimacy of the Tasmanian People as a stakeholder. The importance of taking communities with you in relation to the development of large scale industry is widely documented. Greg L’Estrange has made some clumsy attempts since taking the helm, but too much damage had been done before he took the reigns from John Gay. Gunns with the help of its political friends killed their own project because they treated Tasmanians like idiots.

  2. Valleywatcher

    January 4, 2012 at 12:12 pm

    #20 – Michael “…….have had a material affect (sic) on the progress of the project to date by scaring off potential investors…..” Might I say, Michael – politely, of course – that this and similar statements are absolute poppycock. Gunns did a fine job all by themselves of frightening off “potential investors” by coming up with a project that does not stack up very well as an investment project and any potential investor, once the relevant due diligence into this project is done, has run a mile at breakneck speed to distance themselves from it.

    Do you really believe that the opposition to this project from local community groups and environmental concerns would have really made one iota of difference if the numbers had really stacked up? If that were the case, then whaling in the Sothern Ocean would have ceased decades ago.

    Sorry buster, this project was a dead horse from day one – flogging it even more won’t bring it to life!

  3. David Obendorf

    January 4, 2012 at 2:21 am

    David [comment #19] I’d really like to know who actually owns this 11 cent-a-share company these days? It must be down to playing brokerage games on the slightest of rises and falls of one or two cents over transactions of several millions of shares.

    Is this now the last game for hedge funds and back-room boys in banks that Gunns owes money to?

  4. Michael Lorenz

    January 4, 2012 at 1:25 am

    Comparing the construction of a complex industrial facility requiring years of planning and resource preparation, the major undertaking of the assembly of the capital structure (credit card won’t do), long lead times for machinery procurement and construction resources and a seemingly interminable approval process…, comparing that to the construction of a house seems to be a little on the glib side, to my way of thinking.

    Further complicating matters are the well-funded interests that attempt to block the project at every turn, and which, it could be argued, have had a material affect on the progress of the of the project to date by scaring off potential investors and I dare say hampering the negotiations for potential forward sales contracts (most large capital ventures require that a substantial part of the output be spoken for). This opposition needs to be taken into account when considering whether to allow this project to proceed. Which, I presume, is what these court actions by groups opposing the project are presumably designed to achieve.
    Any decision, direct or indirect, to halt the project at this stage would be unwise, in my opinion. 🙂

  5. David Mohr

    January 3, 2012 at 7:42 pm

    Gunns Ltd down to 11 cents a share!

  6. john hayward

    January 3, 2012 at 4:29 pm

    Posters should be careful not to impose their own understanding of Australian law on either of these cases. It’s apples and whatever.

    John Hayward

  7. David Obendorf

    January 3, 2012 at 9:28 am

    Karl Stevens [comment #14] asks, ‘Anybody listening at TCT?’

    More generally I can guarantee that Gunns Ltd and the personnel having carriage for their legal defense will be reading these comments. On-line google alerts are so useful for the more avid followers to keep up.

    Now that this matter is in the hands of the TCT’s legal team it is they who need to distill the facts of this long-running, contorted storyline.

    Barnaby sums it up well in comment #13: ‘If this is passed, then a precedent will be set that would allow any house builder who buys some materials to claim a ‘substantial commencement’ to building his house without the necessity of actually doing any work on the site at all! The Magistrate might not like that.’

  8. Len Fulton

    January 1, 2012 at 12:58 pm

    Editor’s note: comment deleted see points 1 & 2 of the TT code http://oldtt.pixelkey.biz/index.php/pages/legalbits

  9. Barnaby Drake

    January 1, 2012 at 10:13 am

    In September 2008 Gunns defaulted on their commencement and by kind courtesy of the government, the planning permits were extended for another three years. At the time, they did not claim a commencement by spending money and the site clearing and roading was not deemed a ‘substantial’ commencement, hence the need for an extension.

    As this is purely a technical matter legally, then let’s be technical.

    If the above is true, can any money spent up to that time qualify as a later commencement if it did not do so at the time? If this is the case, only money spent AFTER September 2008 can be deemed to be part of this new arrangement, and that is a substantially lesser amount. What percentage of the cost of the project can be deemed a commencement if no site work has been done?

    Hope the Magistrate is good at arithmetic!

  10. Karl Stevens

    January 1, 2012 at 1:58 am

    Barnaby Drake 13. The IIS was completed before the permit came into effect. It was part of the terminated RPDC process. I would like to see the $35 million Toshiba steam turbine re-valued and tended as evidence. TCT could include the $20 million Andritz boiler tubes and evaporators as well. Anybody listening at TCT? The ‘long-lead-time items’ have probably been over valued.

  11. Barnaby Drake

    December 31, 2011 at 8:37 pm

    I would think that any money spent on the project prior to receiving the planning permit cannot be considered as a commencement on that same permit. I do not know if the IIS was done before planning permission was granted. If it was, that and all similar monies spent before receiving that permit cannot possible be seen as a ‘substantial commencement’ on a permit that did not exist at the time.
    Secondly, there were several clauses that made this permit conditional, and until these matters had been resolved, such as effluent control and modelling etc, which required Federal approval, no commencement was possible before these permissions had been received. Money spent on this modelling was to validate the permit, so it is difficult to see how something that is required to gain this permit can actually be classed as a ‘commencement’ on the the actual terms of the permit itself, which is what the planning laws require.

    It could be found that Gunns has spent far less on this ‘commencement’ than they have stated, which will not impress either a JVC or the ANZ Bank. That is just one of the risks they take by proceeding with this case.

    Here is the tricky part for the Magistrate. If it is found for instance, that only 30% of the money claimed was actually expended on the project, that would make the expenditure to cost ratio
    $80 Million to $2.4 billion, or, 1:30 ratio.

    If this is passed, then a precedent will be set that would allow any house builder who buys some materials to claim a ‘substantial commencement’ to building his house without the necessity of actually doing any work on the site at all!

    The Magistrate might not like that.

  12. john hayward

    December 31, 2011 at 5:17 pm

    As a clarification for Maddie, #5, I should add that things preposterous may well be standard practice in the Tas legal system.

    At one point not long ago. McElwaine sent me a bill for some $870 as an estimated charge for his services to Gunns in an application for Special Leave to appeal to the High Court.

    Among the problems with this was that Gunns was not involved in the application, and had never tendered a bill to me before someone in the Tas SC had certified that I had received the bill and failed to pay it.

    The HC registrar was plainly annoyed and embarrassed, and the bill was withdrawn, but nothing more was done.

    John Hayward

  13. William Boeder

    December 31, 2011 at 5:15 pm

    Barnaby and others I endorse your comments, I too have often wondered how their can be those persons whom dwell in our society that will pit themselves against the betterment of our environment and to aid the State’s people, yet will eagerly engage in supporting the most ever hostile corrupting influences to have dwelt inside our Tasmanian shores?

    Were the system of law enacted in the manner of “a benefit to our communities and our societies in general,” (as against the fact that we are predisposed to accept and respect even these very worst of outcomes as have commonly been the resultant legal fixative that issues from the likes of our Tasmanian Supreme Court,) Well then, so much the better for all humankind.

    The action by those pursuing these anti-the-people legalistic endeavours that go on to worship the evils in our society, leaves me wholly perplexed and hugely disappointed that such worst outcomes are so bitterly fought for by a group of legal bulldog practitioners, whom indeed relish the substantive complexity of our virulent Tasmanian legal system.

    When the officiating Judge’s decision is ultimately produced and or announced, we the people that will most often become the most adversely affected, are predisposed or programmed to respect such toxic and ludicrous outcomes of this Tasmanian legal system?

    So relevant is the oft repeated axiom, that the very system of law (in our Tasmania,) is a wild Ass.
    (Or equally a family of wild and hostile Ass.)

  14. Garry Stannus

    December 31, 2011 at 2:20 pm

    1 Validity/Expiration of the Mill Permit: This is the big one. If the permit is held to have expired, the Gunns Pulp Mill Project will have experienced a colossal haymaker punch. However it is by no means clear that TCT will win on this one. The original definition of the Project has been amended (Apr 2005) since being recognised in the State Policies and Projects (Project of State Significance) Order 2004.

    [read it at http://www.austlii.com/au/legis/tas/num_reg/spaposso8220042004n111600.txt/cgi-bin/download.cgi/download/au/legis/tas/num_reg/spaposso8220042004n111600.txt and compare it to its present form in Section 3 PMAA]

    Both sides are aware of a High court ruling on the question of substantial commencement which required more than planning, earthworks and concrete slabs yet did not include planning work. The unknown area is to what extent Gunns’ endeavours, such as the Draft IIS have become part of ‘the Project’ by adoption and to what extent money spent ($200m?) can be claimed to have been spent on the project and the extent to which the spending of such an amount of money represents a ‘substantial commencement’ of the project, estimated at costing $2.5b?

    I am not optimistic on this first element of the TCT case. Neither am I cynical. I can see that our case could fail with the judge quite honestly accepting that the project has substantially commenced. I can also envisage the contrary … that by the time the Permit is said to have expired, Gunns had only logged the pulp mill footprint and had failed to substantially commence the project.

    A question I would expect the Court to consider is the nature of simple commencement. Was the project started by the development of the Draft IIS, or by the setting up of the Southern Star Corporation, or the purchase of some plant, the roading and the logging and the creation of the Community Liaison Committee? Has the project started at all? You would think that the answer to that would have to be yes. Substantial? Feeling lucky mister?

    2 As for the Dam Permits, there is no question but that they have expired. Gunns wouldn’t admit it publicly, but upon their expiration being pointed out, Gunns immediately moved to seek new permits to replace those which had expired. The TCT will win that element of their legal case. One element of three for certain…

    3 I believe they will win the third element of their case, which is that the Dam Committee’s authority to issue new permits has been removed by section 9* of the PMAA. However in saying this, I caution that there is possibly some wriggle room in the wording of the legislation, so it could possibly go against the TCT.
    *CORRECTION: In my earlier comment at #3, I relied on memory and incorrectly referred to Section 8 of the PMAA as preventing the issuing of new dam permits to Gunns. (I couldn’t access the Tas Online Legislation website – still can’t but got around the problem by going to AustLII at http://www.austlii.edu.au/ – a wonderful resource) It is not Section 8 of the PMAA that prevents the issuing to Gunns of new dam permits, but rather Section 9, which states:
    (PMAA 2007) “9. Provisions of Acts, planning schemes, &c., not to apply to project
    (1) The provisions of any Act, planning scheme, special planning order or interim order –
    (a) requiring the approval, consent or permission of any person in connection with any use or development in relation to the project; or
    (b) empowering any body to grant or refuse its consent to any such use or development; or
    (c) prohibiting any such use or development; or
    (d) permitting any such use or development only upon specified terms or conditions; or
    (e) regulating or permitting the regulation of any such use or development –
    do not apply to the project. ”

    I think a reasonable person reading that section would agree that it means that as far as the pulp mill project is concerned, the dam committee have had their power to approve, disapprove etc taken from them by the PMAA.

  15. Garry Stannus

    December 31, 2011 at 2:14 pm

    The case had originally been brought in Hobart Magistrates Court for PTM by Roland Browne. It was then transferred to Launceston. The advent of the TCT case, which involves him as well, saw him hand over the PTM case to Bleyer Lawyers. I am presuming that Stephen Estcourt is likewise no longer involved in the PTM case, though I think I am correct in stating that he was originally engaged to prosecute the case and that he is now appearing for TCT.

    Obviously there has been a strategic decision to concentrate resources on the more comprehensive action. I am personally disappointed that PTM is seeking to withdraw, though I ‘accept their call’ on it.

    As I perceive it, the essential difference between the two cases, is that the PTM case asserts that Gunns is breaking the law, while the TCT case seeks a legal judgement on the status of the Pulp Mill Permit. One case is ‘criminal’, the other is not. And yet essentially, the two cases will hinge on the same one thing … the validity/expiration of the Pulp Mill Permit.

    The PTM Case [from http://www.greenleft.org.au/node/49028 – an informative article]:
    The charge is that on August 30 and beyond, Gunns undertook the development of land at the East Tamar Highway Long Reach site by carrying out earthworks on that land for the purposes of constructing a pulp mill where Gunns had no permit for that, or any development of that land under the George Town Planning Scheme 1991, or otherwise, contrary to and in breach of the Land Use, Planning and Approvals Act 1993, s.63 (2).
    “The Court will be asked to decide if the permit has lapsed or not. That is, the Court will be asked to determine the validity of the permit and will have to decide if there has been substantial commencement of the project.”

    -I doubt that a decision in the Launceston Magistrates Court could create a legal precedent which would overturn our planning laws.

    -PTM have said that should their request to discontinue be refused, they will not ‘press their case’. I assume this means that they would not present argument in the magistrate’s court and Gunns would be left with the field to themselves.

    So, could they win, if forced to continue and if they were to ‘press their case’? Possibly not. See my next comment with regard to the TCT case. And how would PTM and TCT rearrange their matters in such an instance?

  16. Garry Stannus

    December 31, 2011 at 1:34 pm

    Editor / Barnaby:
    Please, will you correct the reference to the High Court in the body of the article? It is an obvious error of fact, yet to leave it uncorrected in the article is to allow readers to believe there is a High Court action. There is not, as I have pointed out in #3: the TCT action is in the Tasmanian Supreme Court. (I think it appears 6 times) – thank you in anticipation, Garry. Ed: The correction has now been made.

  17. David Obendorf

    December 31, 2011 at 10:36 am

    The other consideration here is to ask the very simple question of why? Why, commence a Magistrates’ Court proceeding against Gunns Ltd in Launcestion and then commence, very soon afterwards, in the Supreme Court with ditto?

    The game of law and politics is to anticipate the next ‘chess move’ from your opponents – hired-Gunns with legal nous (named already) know this inside out – they make their career out of it.

    This absurd parody is more delusional than “Alice in Wonderland”!

  18. Barnaby Drake

    December 31, 2011 at 1:01 am

    If a judgement were to go in Gunns favour it would set a precedence and overturn a goodly section of the Planning Laws, and I do not see too many judges wanting to do that, especially in a Magistrates Court.

    ‘Substantial commencement’ equates to ‘Money talks’!

  19. Maddie

    December 30, 2011 at 9:04 pm

    #4 “It is preposterous that a respondent insists on a prosecution being continued”. That’s right John. I remember when I first heard it I scratched my head and thought, this is most unusual surely! Then my mind turned to Gunns and it made sense ;(

  20. john hayward

    December 30, 2011 at 6:52 pm

    I wouldn’t bet a cent on Gunns losing under the plasticene law of the Tassie courts.

    As for PTM’s case, It is preposterous that a respondent insists on a prosecution being continued. PTM will be hit for the costs of withdrawing at this stage, but Gunns and McElwaine can’t run up a bill against a party which has withdrawn, at least not in Australian law.

    John Hayward

  21. Garry Stannus

    December 30, 2011 at 1:46 pm

    CORRECTION: The other case, instigated by the Tasmanian Conservation Trust, is not in the High Court, but rather, is in the Tasmanian Supreme Court. It is seeking, amongst other things, a declaration that the Pulp Mill Permit has expired.

    The two other elements of the TCT’s case pertain to some of the dams to do with the project. The TCT is therefore also seeking a determination from the Court that the dam permits (treated separately under the PMAA) also expired and that the ACDC (dam committee) has no power to issue new permits to replace those which had expired. The argument here I expect would revolve around section 8 of the PMAA which removes the ability of the ACDC acting under the Water Management Act from being able to consider, accept or reject any activity relating to the Pulp Mill Project.

    The dam committee has already ‘ruled’ that it does have the power to approve new permit applications for these dams and has indeed approved two of Gunns permit applications. I am ignorant as to the status of a third dam permit application – its location has been difficult to exactly ascertain from the years of documentation. I wonder if in fact, its planned location has erred by locating part of it on the river frontage reserve. However, this last matter is just my own speculation.

    PTM had advised the magistrate (22nd Dec) that since commencing the proceedings in the magistrate’s court, the TCT case had subsequently been lodged in the Supreme Court, and that essentially, it had rendered their own case redundant by duplication. Furthermore, they told the magistrate that as they were a not-for-profit group with limited resources, it made better sense not to waste their limited resoures in pursuing a case that in any case was to be heard by a superior court.

    Gunns lawyer argued against PTM’s request to discontinue their court action. Essentially, their lawyer argued that to allow the case to simply be discontinued, would leave it open to being revived at any time in the future. He also argued that Gunns, having had charges brought against it in the court, was entitled to have them heard, and entitled to defend itself against the PTM case. (conducting works without a valid permit)

    The magistrate adjourned the case till 12th Jan 2012 – on which day he will give a decision as to whether PTM can ‘discontinue’ the case or not. If not, then it should be an interesting day in the court.

    [My remarks on the PMAA and the WMA are from memory, since at the moment, the ‘Tasmanian Legislation Online service is out of order. The Premier’s office is co-incidentally closed for the holidays]

  22. Maddie

    December 30, 2011 at 10:52 am

    Thanks Barnaby. It is obviously a conundrum for PtM and I’m sure they haven’t taken the decision to withdraw lightly. There is always the concern too about bias considering the history of this whole sorry saga. I can see your point though. One thing that’s been a constant all these years is that Gunns are masters at bluffing. Pity they weren’t playing with cards instead of our lives.
    BTW you made a little slip – ‘sustainable’ commencement instead of substantial. Ed:Now fixed. I forgot, Barnaby!x

  23. David Obendorf

    December 30, 2011 at 10:29 am

    Ahh! the shenanigans of Tasmania’s legalese on display again… thank you, Barnaby.

    Of course any magristrate with his eye to the legal profession and his or her career within it would be wishing the Gunns ‘poison chalice’ was not put before their court room! And of course any legal eagle knowing the ambience of Tasmanian society, very few magistrates (or judges) would demur against the substantial political and bureaucratic tide that is likely to tsunami their careers should a judgement be so God-like as to shake the very ground from under Gunns Ltd!

    Too incredible? But what courage that would that!

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