21 Clauses 9, 10 and 23(1) provide:
" 9 Entitlements with no specified quantity of water to continue under former Acts
(1) Despite any other provision of this Schedule:
(a) neither an access licence nor an approval arise in relation to an entitlement if, immediately before the appointed day, the entitlement was for an unspecified quantity of water or for a quantity of water yet to be specified, and
(b) in any such case, the 1912 Act, the 1948 Act or the 1994 Act, as the case requires, is taken to continue to apply to the entitlement until such time as a quantity of water is specified under that Act in relation to the entitlement, or until the entitlement ceases to be in force under that Act, whichever occurs first.
(2) Parts 2 and 3 of Chapter 3, and this Schedule (apart from this clause) apply to the entitlement from the day the quantity is specified in relation to the entitlement:
(a) as if that day were the appointed day, and
(b) as if the entitlement entitled the person or body to take the specified quantity of water.
...
10 Owners to hold new access licences if occupier or predecessor did not obtain entitlement
(1) This clause applies to an entitlement if, on the appointed day, the owner of the land to which the entitlement relates (the landowner ) is not the same person as the person who is in occupation of the land (the current occupier ).
(2) The entitlement is taken to have been replaced by an access licence held by the landowner, and not by the current occupier, to the extent to which the entitlement was originally granted otherwise than to the current occupier or a predecessor in title of the current occupier.
(3) The access licence referred to in subclause (2) is taken to be the subject of a term transfer (within the meaning of section 71N) to the current occupier.
(4) Despite section 71N, the term transfer referred to in subclause (3) continues in force until the current occupier ceases to be entitled to occupy the land.
…
23 Entitlements held by 2 or more co-holders
(1) Subject to subclause (2), 2 or more co-holders of a replacement access licence are taken to hold the access licence:
(a) if the Minister has a record of the shares in which the former entitlement was held immediately before the appointed day, in the same shares as the former entitlement was so held, or
(b) in any other case, as tenants in common with the entitlements conferred by the licence under section 56 apportioned equally between them. "
22 Although the licence under the Water Act did not expressly specify the quantity of water that could be taken, it was common ground and an admitted fact that as at 1 July 2004 the licence under the Water Act was converted to, inter alia, an access licence under the Water Management Act.
23 Pursuant to s 16 of the Water Act the water licence under that Act was deemed to be held by and enure for the benefit of the lawful "occupier" of Narooma, as that word was defined in s 5. Mr Shepherd, who appeared for the plaintiff, submitted that as at 1 July 2004 the plaintiff was the occupier of Narooma and entitled to take water under the licence issued under the Water Act. He submitted that the plaintiff became entitled to the access licence under the Water Management Act pursuant to clause 3 of Schedule 10 to that Act.
24 Mr McInerney, who appeared for the defendant, submitted that the deceased and only the deceased held or was entitled to the benefit of the licence under the Water Act. He submitted that because the deceased was the holder of "any tenure of the land" within the meaning of s 5, it did not matter who was in actual occupation. I do not accept that argument. Section 16, when read with the definition of "occupier" in s 5, cannot be read as if it provided alternatives as to who was deemed to be the holder of the licence and entitled to its benefit. Although para (a) of the definition of occupier refers to alternative categories of persons, its sense is that an occupier is the holder of any tenure of the land, but, if it is shown that some other person is in actual occupation of the land, then that other person is the occupier. That is how the section has been understood (Water Administration Ministerial Corporation; In re McLure (1995) 88 LGERA 278 at 285; O'Keefe v Water Administration Ministerial Corporation [2010] NSWLEC 9 at [75]-[80]).
25 Next, Mr McInerney submitted that the deceased was an occupier of the property as at 1 July 2004. I accept that submission.
26 Mr Shepherd for the plaintiff submitted that the deceased was no longer an occupier of the property because by 1 July 2004 he was not capable of carrying out and did not carry out any substantial farming operation on the property. He visited the property but all such work was carried out by the plaintiff. However, it does not follow that the deceased ceased to be the occupier of the land. The deceased was in occupation of the land because he had his cattle on it. That the deceased relied on the plaintiff to do much of the work needed for the property does not mean that the deceased did not occupy the land, any more than if he had employed a worker on wages to work the land for him. He was in actual possession and using and enjoying the land.
27 Mr McInerney submitted that if that were so then it did not matter whether the plaintiff was also in actual occupation of the land. He submitted that as the "holder of any tenure of the land" was in actual occupation it could not be shown that "some other person" was in actual occupation. He submitted that before the land owner would cease to be recognised as the occupier under the definition in para (a), the occupation of "some other person" must be to the exclusion of the land owner. I do not accept that submission. In interpreting para (a) of the definition of "occupier", the singular includes the plural (Interpretation Act 1987 (NSW) s 8(b)). If the plaintiff and the deceased were both in actual occupation of the land, then they would be "some other persons" in occupation, that is, persons other than the holder of the tenure. The deceased would not be disqualified from being an occupier because some other person, namely the plaintiff, was also an occupier. They would both be occupiers of the land within the definition.
28 Mr McInerney submitted that the plaintiff was not an occupier of the land within the definition. There is no doubt that insofar as any human was in physical occupation of the land the plaintiff was in such occupation. He regularly went to the land and did the necessary work on it to raise crops and graze cattle. If he had only done those things on behalf of his father then I would accept that he was not a person in actual occupation within the meaning of the definition. If, for example, a company was the lessee of land and physical occupation was taken by its agents, one would not expect Parliament to have intended that the agents rather than the persons for whom they were acting were entitled to the benefit of the licence. But although the plaintiff did work the land for his father's benefit, he also worked the land for his own benefit. His cattle as well as the deceased's cattle were on the land. Mr McInerney argued that more was required to satisfy the definition that the other person be in "actual occupation of the land". He submitted that merely being in occupation through the licence or permission of the land owner was not sufficient, and some greater title to occupy was required. What that title might be was not defined. Mr McInerney relied upon statements of Bryson J in Elders Rural Finance Limited v Westpac Banking Corporation at 13,446 quoted at para [14] above and at 13,447:
" In my view the right to whatever water rights might exist under the Water Act 1912 is involved in and is not separable from ownership of the land in any estate which would give direct or indirect control over lawful occupation of the land. In my opinion the entitlements and the rights under them were incapable of alienation, except as a consequence of alienation of the land itself, and the mortgages of 30 May 1988 are quite ineffective to alter whatever right then existed in the land including the water rights involved in land ownership. "
29 Counsel submitted that Bryson J tied the concept of occupation to ownership and the right to control the occupation of land and that for the plaintiff to be in "actual occupation", more was required than the mere presence of the plaintiff on the land under licence from the owner.
30 I do not understand Bryson J in the passages cited to be expressing any view as to the nature of the occupation which would suffice for a person to be in actual occupation of the land within the meaning of para (a) of the definition of "occupier". Sections 16 and 17 conferred the benefit of the licence on the lawful occupier. As Bryson J said, the owner has control over who is in lawful occupation of the land. I see nothing in his Honour's reasons that would deny the status of lawful occupier to a person in physical occupation of the land by licence of the land owner revocable at will. That was the position of the plaintiff. His licence to occupy the deceased's land was never revoked.
31 The parties were agreed that on 1 July 2004 the water licence originally issued under the Water Act converted to a water access licence and approval pursuant to Schedule 10 of the Water Management Act. I take it that they were agreed that the licence under the Water Act sufficiently specified the quantity of water that the licence holder was entitled to take such that to that extent it was replaced by an access licence under the Water Management Act (Schedule 10, cl 3(1)(a)). Unless cl 10 of Schedule 10 applies, the result would be that as both the plaintiff and the deceased were entitled to the benefit of the licence under the Water Act, they would both be entitled to the access licence under the Water Management Act. Mr Shepherd for the plaintiff submitted that they would hold the access licence under the Water Management Act as joint tenants. I do not agree. The access licence to which they would both be entitled under cl 3 of Schedule 10 is a "replacement access licence" within the meaning of cl 23. The effect of cl 23 is that they would hold that access licence as tenants in common in equal shares.
32 However, in my view, cl 10 of Schedule 10 applies. As at 1 July 2004 the deceased as owner of the land was not "the same person as the person who is in occupation of the land". The persons in occupation of the land were the plaintiff and the deceased and they were not the same person as the deceased. The effect of sub-cl 10(2) is that the licence under the Water Act is taken to be replaced by an access licence held by the deceased and not by the "current occupier" (the deceased and the plaintiff) "to the extent to which the [licence] was originally granted otherwise than to the current occupier …". Clause 10(2) looks not to who is deemed to have been the holder of the licence and entitled to its benefit, but to the identity of the person to whom the licence was originally granted. The licence was originally granted to the deceased alone. Licences had been issued under the Act in the business name owned by the deceased from the 1960s but they were amalgamated and a new licence was issued to the deceased in 1989. That licence was renewed in 1994 and 1999. The effect of cl 10(2) is that the licence under the Water Act is taken to have been replaced by an access licence held by the deceased alone. However, by cl 10(3) and (4) that access licence is taken to be the subject of a term transfer to continue in force until the "current occupier" ceases to be entitled to occupy the land. Clause 10(3) and (4) shows a legislative intention to preserve the rights of occupiers of land in respect of the licence formerly held under the Water Act whereby they were entitled to the benefit of the licence for so long as they were in occupation. The "current occupier" as at 1 July 2004 was both the deceased and the plaintiff. The better construction of clause 10 is that the plaintiff as one of the current occupiers would not cease to occupy the land until he ceased to occupy it. The occupation did not cease on the death of the deceased. It follows that the plaintiff is entitled to a term transfer under s 71N until he ceases to occupy the land. Pursuant to that term transfer he is entitled to the water entitlements conferred by the licence and is responsible for the payment of fees and charges under the licences in compliance with the terms and conditions of the licence.
33 The relevant property held by the defendant as executrix for those entitled under the will is the reversion of the access licence. The plaintiff is entitled to use the water the subject of the licence for his farm, but unless the reversion in the licence has passed to him under the will, he would not be entitled to transfer the access licence to a purchaser of the property (unless he remained in occupation after sale and even then only for so long as he remained in occupation).
34 The access licence was registered in the name of the deceased but no term transfer was registered in the name of the plaintiff. It was not suggested that the register was conclusive.
35 Thus the question of the construction of the deceased's will is not whether the access licence passes to the defendant as residuary beneficiary or to the plaintiff as devisee of "my rural property known as 'Narooma'", but to which of them the access licence subject to the term transfer passes.
Construction of the will
36 A question arose as to the admissibility of the plaintiff's affidavit on the construction of the will. Mr McInerney submitted that evidence of facts known to the deceased at the time he made the will was not admissible to construe the will. He objected to evidence as to the nature of the Narooma property, including that it has a river frontage, to the use to which the property had been put, to how the plaintiff and the deceased had worked the property, the effect that the absence of the water entitlement would have on the carrying capacity of the property, and as to how that water entitlement was used during the testator's lifetime to produce feed crops.
37 Evidence is admissible of the circumstances surrounding the testator so as to put the court in the testator's "armchair". The evidence in question was of that description (see e.g. D Haines, Construction of Wills in Australia (2007) LexisNexis Butterworths at [5.9]). The evidence in question was not direct evidence of the testator's subjective intentions. Mr McInerney submitted that no evidence of surrounding circumstances was admissible to ascertain what property is meant by the description in the will where the property was actually described (citing Abernethy v Simpson [2007] NSWSC 186 at [19]). But in this case the question is to ascertain what the testator meant by the descriptive words he used. Evidence of surrounding circumstances is admissible for that purpose.
38 Because the deceased died on 24 January 2008 s 21 of the Probate and Administration Act 1898 (NSW) applies to its construction. That section provides:
" 21 A will to speak from the death of the testator
Every will shall be construed with reference to the real and personal estate comprised in it, to speak and take effect as if it had been made immediately before the death of the testator, unless a contrary intention appears by the will ."
39 At the date of the testator's death he held the access licence (subject to the term transfer), which was personal property capable of being transferred independently of land without the need for ministerial consent (Water Management Act, ss 71N, 57 and Regulation 8 of the Water Management (General) Regulation 2004). Hence Mr McInerney submitted that the access licence was not part of "my rural property known as 'Narooma'", but passed as residue.
40 Mr Shepherd submitted the will expressed a contrary intention to its taking effect as if it had been executed immediately before the testator's death. A specific bequest suffices to express a contrary intention (McBride v Hudson (1962) 107 CLR 604 at 616; R Geddes, C Rowland & P Studdert, Wills, Probate and Administration Law in New South Wales (1996) LBC at [21.02]). The distinction between specific and general bequests is not always easy to draw. Nor is s 21 determinative of the present question. The question is what is denoted by the bequest of "my rural property known as 'Narooma'". If that question is considered at the date of the will, then the licence then held under the Water Act would not have been property which passed under that gift. As the licence under the Water Act could only be held for the benefit of the occupier of the land, the plaintiff, as the inheritor of Narooma, would obtain the benefit of the licence. But that would not be because the licence was property transmitted by will, but because, through the operation of ss 16 and 17 of the Water Act, the plaintiff would be deemed to be the holder of the licence and entitled to the benefit of the licence through his ownership and occupation of Narooma. The licence only became transmissible property after the date of the will when it was converted to an access licence under the Water Management Act.
41 Thus I think that Mr Shepherd's submission, if accepted, would be fatal to his case on this point. But I do not accept it. I think the will speaks from immediately before the testator's death. I do not consider that the gift of "my property known as 'Narooma'" is a sufficiently specific bequest to express a contrary intention. An analogous case is Castle v Fox (1871) LR 11 Eq 542 where the testator devised "his mansion and estate called Cleeve Court". The gift was held to include additions to the Cleeve Court estate acquired after the will. The devise was not sufficiently specific to express a contrary intention to its operating immediately before the time of the testator's death. So in this case, if the deceased had acquired additional lands or sold some of the lands forming Narooma between the date of his will and the date of death, the gift would operate in respect of whatever was the property known as Narooma at his death.
42 However, the legislative position as at the date of the will is not without its significance. One can infer from the terms of the will that the testator intended to leave to his son all that was appurtenant to the operation of the property as a farm. This was his interest in the livestock, farm, plant and equipment and also the proceeds of a bank account in the name of "A R Martin and Sons". That name was taken from the deceased's father's operating name. Mr Shepherd submitted that the account in question was one used in the operation of the farm. There was no express evidence to this effect. However there is evidence that the deceased carried on his business as a farmer under the name A R Martin and Sons. Narooma was the only real property owned by the deceased. It is a reasonable inference that the bank account was the bank account used in connection with the property. I accept that the deceased's intention as expressed in the will were that all assets connected with the property should pass to the plaintiff.
43 Nonetheless, the question is not simply whether the deceased would have intended the access licence to pass to the plaintiff had he known and been able to appreciate that a new species of property had come into existence after he made his will, which was connected with the property and would enhance its value. Rather the question is what the deceased intended by the words he used. If the position is considered at the time of the will, for the reasons I have given, the deceased is not to be taken to have intended then that his rights to the water licence would pass to the plaintiff under the will, because those rights, even if considered as an asset, were not transmissible by will but rather would attach to a gift of the property by force of statute. If considered at the date of the testator's death, it is hard to say that the access licence was part of the property known as Narooma when it was personal property which no longer had a necessary connection with the land. As Mr McInerney submitted, whilst the entitlement under the water access licence to extract 237 units of water from the Murrumbidgee Regulated River Water Source could be used at Narooma, it could equally be used anywhere else in the Murrumbidgee Regulated River Water Source.
44 It is not a legitimate process of construction to ask what the testator would have intended had he been able to turn his mind and had turned his mind to the question as to how the property which came into existence after the will was to be disposed of. Rather the question is (considering the matter at the time of the testator's death) what he intended to be denoted by the expression in "my rural property known as 'Narooma'". In Perrin v Morgan [1943] AC 399, Viscount Simon LC said (at 406):
" … the fundamental rule in construing the language of a will is to put upon the words used the meaning which, having regard to the terms of the will, the testator intended. The question is not, of course, what the testator meant to do when he made his will, but what the written words he uses mean in the particular case - what are the 'expressed intentions' of the testator. "
45 The difficulty with concluding that because it appears from the will that the testator intended to leave the farm and things appurtenant to it to the plaintiff, his reference to the property should be taken to include a reference to his interest in the access licence, is that after July 2004 the access licence was not appurtenant to the land.
46 Mr Shepherd submitted that use of the water entitlement was essential for the proper working of the land. I accept that without the use of the water entitlement, or an equivalent entitlement, the property would not be capable of carrying the number of cattle which it carried during the testator's lifetime. Mr Shepherd argued that the gift of Narooma carried with it the gift of all that was necessary for the running of the farm as it had been run in the testator's lifetime. The difficulty with that submission is that the plaintiff is entitled to enjoy the water entitlement for so long as he remains in occupation of the property. It is not necessary for his enjoyment of the property that he be entitled to the reversion of the access licence. If he cannot sell the access licence with the property, he will receive less on the sale than he would if he were able to sell the access licence with the property, but that does not mean that the reversion of the access licence is necessary for the running of the farm in his hands.
47 I conclude that the reversion of the access licence did not pass to the plaintiff under the will.
48 For these reasons, and subject to any submissions that may be made for the Minister, I consider that the defendant is beneficially entitled to the access licence subject to a term transfer in favour of the plaintiff. I will stand the matter down for the Minister to be served and for counsel to bring in short minutes of order. Because both parties have had a measure of success, but not complete success, my prima facie view is that there should be no order as to costs. I will hear submissions on costs if either party seeks a different order.