There is absolutely no requirement to return or divert following the loss of one engine.
However if you declare a PAN you are going to have a hard time explaining why you then carried on for 8 hours.
Diverting an hour or so away (ie BNE or MEL) is one thing but to fly on for 8 hours is going to be hard to justify if you then had another problem on arrival or almost ran out of fuel like BA did a few years ago.
I mean what's the point in having a curfew if aircraft can bust it willy nilly any time they like just because an engine was underperforming?
Actually if Sydney Airport were smart they'd ask how many people filed a noise complaint (not many I would suggest) and then use it as ammo for extending the curfew!
I mean if it's good enough for Biz Jets its good enough for everyone else.