Gracewood Australia Pty Ltd v State Water Corporation

Jurisdiction 10 The respondent submits that the Court has no jurisdiction to entertain the applicant's claim and that any such claim should be brought in the District Court or the Supreme Court. Even then, the respondent submits, the claim would be vulnerable to being struck out as disclosing no reasonable cause of action.

(a) the proceedings are within the Court's ancillary jurisdiction under s 16(1A) of the Land and Environment Court Act 1979 ; (b) the " matter " referred to in s 16(1A) to which its claim is ancillary is a matter referred to in s 19(h): namely, all matters in Part 2 Division 3 of the Water Act 1912 , which is entitled " Licences ".

12 The jurisdiction of the Land and Environment Court is set out in Part 3 Division 1 (ss 16-23) of the Land and Environment Court Act 1979. Sections 17 to 20 define and compartmentalise the Court's civil jurisdiction into Classes 1, 2, 3 and 4. Sections 16 and 19(h) provide:

(1) The Court shall have the jurisdiction vested in it by or under this or any other Act.

(1A) The Court also has jurisdiction to hear and dispose of any matter not falling within its jurisdiction under any other provision of this Act or under any other Act, being a matter that is ancillary to a matter that falls within its jurisdiction under any other provision of this Act or under any other Act.

(2) For the purposes of this Act, the jurisdiction of the Court is divided into 7 classes, as provided in this Division.

19 Class 3 - land tenure, valuation, rating and compensation matters

The Court has jurisdiction (referred to in this Act as "Class 3" of its jurisdiction) to hear and dispose of:

… (h) any other appeals, references or other matters which an Act provides may be heard and disposed of by the Court, being appeals, references or other matters that are not referred to in any other section of this Part. 13 Section 16(1A) was enacted following National Parks and Wildlife Service v Stables Perisher Pty Ltd (1990) 20 NSWLR 573 (CA) in which the Court of Appeal held that the Land and Environment Court has no jurisdiction to deal with a claim in tort for general damages. It has been held that "ancillary" is to be read as "incidental", "accessory" or "auxiliary": Scharer v State of New South Wales (2001) 53 NSWLR 299 (CA) at 308 [51] quoting Gleeson CJ in Nix and Dunn v Pittwater Council (1994) 84 LGERA 199 at 205. Thus, there must be a "matter" falling within jurisdiction, in relation to which the s 16(1A) matter is incidental, accessory or auxiliary. In Nix, Gleeson CJ stated that a claim for damages for nuisance could not reasonably be regarded as ancillary to Class 4 proceedings alleging the carrying out of unauthorised earthworks in breach of the Environmental Planning and Assessment Act 1979. In Scharer, Stein JA (Hodgson JA agreeing) held that a claim for damages for obstructing a right of way in a national park was ancillary to proceedings in this Court in its exclusive jurisdiction to enforce that right of way. In Neighbourhood Association DP 285121 v Murray Shire Council (2001) 117 LGERA 95 at [21], Pearlman J held that a claim for damages for negligence arising out of the installation of a sewerage system was not ancillary to a claim for alleged breaches of a development contract within the Court's jurisdiction. There is also a line of authority in this Court that before s 16(1A) can be invoked there must be a matter "pending before the court" to which another matter in the same proceedings can be said to be ancillary: Porter v Hunters Hill Council (2003) 131 LGERA 144 at [60], [63], [64] and the cases there cited (Pain J). In Newcastle City Council v Caverstock Group Pty Ltd [2008] NSWCA 249 at [50], Spigelman CJ (Bell JA and Handley AJA agreeing) said: It is clearly desirable, in the interests of avoiding further proceedings, that the Land and Environment Court should be able to determine whether or not a person who has made a payment pursuant to a condition of a consent which is challenged is entitled to a refund and, if so, how much. Although the legal principles involved in such proceedings are not within the usual jurisdiction of that Court, such an issue is so clearly related to the issues before the Court that they should be resolved together. It may be that the requisite jurisdiction is conferred by s 16(1A) of the Land and Environment Court Act , but that section was not relied upon in these proceedings… 14 Some provisions of Part 2 Division 3 (ss 10 - 18) of the Water Act 1912 provide for appeals to the Land and Environment Court against certain decisions of Magistrates, local land boards or the Ministerial Corporation relating to water licence applications: see ss 11(4), 13A(4) and 14(2). In these proceedings, the applicant alleges that the respondent erroneously calculated the actual water usage in a statement of water usage under a water licence allocation which (somehow) led to the applicant losing the opportunity of selling part of its water allocation to a mining company. I am unable to accept that the proceedings are ancillary to any matter in Part 2 Division 3 in respect of which the Court has jurisdiction. I can see no such matter to which the proceedings are so closely related that ancillary jurisdiction is conferred by s 16(1A). Further, there is no matter pending before the Court to which the matter the subject of these proceedings is ancillary. Consequently, in my opinion, the Court has no jurisdiction to entertain the proceedings and they should be dismissed.

No cause of action 15 Even if this Court has jurisdiction, in my opinion no reasonable cause of action has been disclosed for the claim for compensation. If the claim is intended to be a claim in tort for damages, the nature of the tort is not disclosed nor is its causal relationship to the alleged damages. For instance, there is no allegation in the filed material that the respondent was negligent or in breach of a statutory duty in allegedly misstating the amount of water used such that it is liable (in some way) in damages to the applicant. For this additional reason, I consider that the proceedings should be dismissed.

Costs 16 The respondent seeks an order that the applicant pay its costs, which the applicant opposes. The argument proceeded on the assumption that costs were governed by the special costs rule in r 3.7 of the Land and Environment Court Rules 2007. Rule 3.7 provides that in proceedings in Classes 1 and 2 and certain proceedings in Class 3 of the Court's jurisdiction, "The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances". In my opinion, where an applicant has failed to establish that the proceedings fall within those (or any) classes of the Court's jurisdiction, r 3.7 has no application. Consequently, the ordinary costs rule in civil litigation that costs follow the event applies, with the result that the applicant should pay the respondent's costs.

17 If I am in error and r 3.7 does apply, I consider that an order that the applicant pay the respondent's costs is fair and reasonable in the circumstances. Rule 3.7(3) sets out a non-exhaustive list of circumstances in which the Court might consider the making of a costs order to be fair and reasonable. They include a number of circumstances which have nothing to do with any unreasonable conduct by the losing party. Two of these circumstances are, first, that the proceedings involved as a central issue a question of law the determination of which was in one way or another potentially determinative of the proceedings, and, secondly, that a party had commenced a claim which did not have reasonable prospects of success. In my view, assuming that r 3.7 applies to these proceedings (contrary to my opinion), those two circumstances apply and it is fair and reasonable that the applicant pay the respondent's costs, particularly as the respondent put the applicant fairly on notice that it contested jurisdiction and would bring this motion.

18 In reaching that conclusion in relation to r 3.7 (on the assumption that it applies), I have taken into consideration the parties' submissions. The respondent submits that it is fair and reasonable in the following circumstances to order the applicant to pay its costs because: (a) the respondent has been in correspondence with the applicant for some time proposing that its dispute should be referred to a statutory ombudsman; (b) the respondent put the applicant on notice in correspondence over some time that it could see no jurisdictional basis for these proceedings and would, if necessary, proceed with this motion and seek costs; (c) the applicant created unnecessary diversions by asserting other jurisdictional bases which ultimately were not pressed; (d) the respondent was compelled to bring this motion in order to bring the jurisdictional issue to a head and this was a more responsible course than allowing the matter to play out to a substantive hearing when the jurisdictional issue would be dealt with; and (e) a jurisdictional issue does not form part of the traditional matrix of a merits appeal in Classes 1, 2 and 3 of the Court's jurisdiction. The applicant concedes that the respondent properly brought the motion, but submits that: (a) the referral of the matter to the ombudsman would not bring finality to the proceedings and its decision not to take that course should not be held against it; (b) the test on costs under r 3.7 should be whether it had a reasonably arguable case that the Court had jurisdiction; (c) the respondent acted in a high handed way in the events leading up to the litigation; (d) the applicant is an aggrieved person; (e) the applicant has not acted unreasonably in bringing the proceedings; and (f) the applicant was confronted with a legislative "nightmare" in determining which court had jurisdiction. I do not accept the test proffered by the applicant, for which no authority was cited; it has not been proved that the respondent acted in a high handed manner prior to the litigation; and the other circumstances referred to in the applicant's submissions do not affect my conclusion.

Orders 19 The orders of the Court will be as follows: 1. The proceedings are dismissed. 2. The applicant is to pay the respondent's costs.

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