The council is not commenting after lodging a statement of claim with the NSW Supreme Court on Wednesday alleging it is owed $5 million under the conditions of an exploration licence deed of agreement signed by Ridgelands Coal Resources and former NSW resources minister Chris Hartcher in February, 2013.

The deed’s “special conditions” required Ridgelands to establish a community fund “as soon as reasonably practical” after the exploration licence was granted over more than 7600 hectares of land at Wybong, and to pay $5 million into the fund over the five years of the licence.

It also required the company to “publicise to the local community the existence of the community fund and guidelines for applying for grants”.

The council has indicated it knew nothing about the condition or the fund until Ridgelands representatives met with the council on July 26 and allegedly said the company “only needed to contribute $500,000” to the fund, before the five-year exploration lease deadline expires in February, 2018.  

The deed raises questions about NSW Government knowledge of the unpaid community fund because of conditions requiring Ridgelands to provide “bi-annual written reports to the Minister through the Director Industry Coordination” detailing payments made and projects funded.

The company was also required to “respond to any request for information from the minister related to the status and progress of the community fund”.

In its statement of claim Muswellbrook Council alleges secrecy around the deed condition raises questions about whether NSW Government representatives “have not and do not care whether the local community obtains the benefit” of the condition.

Lock the Gate Hunter spokesman Steve Phillips said the unknown deed conditions “really highlight the disregard by companies and the government for the community and local government when the supposed beneficiaries don’t even know about it”.

On its website Ridgelands confirms “development of a community fund is in accordance with licence conditions and guidelines during the exploration project”, but gives no details and makes no reference to a deed of agreement, “special conditions”, the size of the fund or reporting requirements.

The council has asked the court to order Ridgelands to immediately establish the $5 million fund within two days of the matter being heard, if its claim is successful.

It alleges the company has breached a section of the Mining Act by failing to establish the fund, an offence that carries a $1.1 million maximum penalty and further penalty of $110,000 for each day it remains in breach.

The controversial licence over the Wybong land was first granted by disgraced former resources minister Ian Macdonald in 2010, triggering a $122 million licence payment by Ridgelands. It was strongly opposed by Wybong residents who said a mine would destroy one of the last remnants of vegetation in the valley. 

In the final deed signed by Mr Hartcher, only months before he was forced to stand down during an Independent Commission Against Corruption investigation, Ridgelands agreed to establish the $5 million community fund during the five-year exploration licence period, and pay at least $150 million to the NSW Government if the lease is approved in 2018.

Mr Phillips said there had been no sign of any community engagement or work by Ridgelands, and the secret deed conditions were “not a surprise”.

“The community and local government have so little say over mining, and this highlights the complete disregard for the people on the ground,” he said.

“Why should the licence be renewed on this project? It’s a beautiful part of the valley.”

Ridgelands Coal Resources did not respond to phone and email requests for comment. Its website said the Wybong site was its “only current coal interest in NSW”, and no drilling had started under the licence. The exploration licence area includes farms and homes.

The Department of Planning was preparing a response.