Murray Irrigation Limited v ICW Pty Ltd and Meares Nominees Pty Ltd

KEY ISSUES: Environmental Offences :- Taking water without authority - Interfering with water meter - Circumstantial evidence case - Strict liability - Vicarious liability for wrongdoing of employee

LEGISLATION CITED: Water Management Act 2000 (NSW)

Plomp v The Queen (1963) 110 CLR 234; Barca v The Queen (1975) 133 CLR 82; Attorney-General's Refence (No. 1 of 1983) (1983) 2 VR 410; Tiger Nominees Pty Ltd v State Pollution Control Commission (1992) 25 NSWSR 715; CASES CITED: Director General Department of Land and Water Conservation v Greentree (2003) 131 LGERA 234; Queensland Stations Pty Ltd v Federal Commissioner of Taxation (1945) 70 CLR 395; The Commissioner of Taxation v Barrett (1973) 129 CLR 395; Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16; State of NSW v Lepore (2003) 212 CLR 511

PROSECUTOR J. Webster SC T. Howard

SOLICITORS Francis Kelly Grant

DEFENDANT A.J. Bellanto QC C. Moschoudis

SOLICITORS Paul Kenny & Associates

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

50026-50031 of 2004 Murray Irrigation Limited v ICW Pty Ltd and Meares Nominees Pty Ltd

JUDGMENT A. Introduction 1 The Defendants, which are two related companies own and operate a mixed farming property of some 3400 hectares known as "Bultarra" situate at Woomboota, are each charged with multiple offences against the Water Management Act 2000 in connection with the supply of irrigation water to the farm by the Prosecutor which is an Irrigation Corporation constituted under that Act. 2 Both Defendants have pleaded not guilty to the charges, which by consent were heard together. Of the four charges laid against the Defendant ICW Pty Limited two allege separate offences against s 346(1)(b) of the Act and two allege separate offences against s 347(1) of the Act. 3 The Defendant Meares Nominees Pty Limited is charged with one offence against each of the same sections. These sections respectively provide as follows: 346 Destruction, damage and interference with certain works (1) A person must not destroy, damage or interfere with: (b) any meter (regardless of who owns it or has the control and management of it) that is used for measuring the quantity or quality of water in, or passing through, a water supply work or drainage work, 347 Taking water from public or private works (1) A person must not take water from any water supply work that is owned by, or is under the control and management of, the Minister, the Ministerial Corporation, a water supply authority, an irrigation corporation, a private irrigation board, a private drainage board or a private water trust, except with the authority of the minister, that corporation, board or trust. 4 The two s 347(1) charges laid against ICW Pty Limited allege two separate charge periods - the first period being from 15 March 2003 to 8 April 2003 and the second period being from 1 April 2003 to 8 April 2003. At the hearing both charge periods were amended to specify the period from 11 March 2003 to 8 April 2003. 5 The s 347(1) charge laid against Meares Nominees Pty Limited is in respect of the period 15 March 2003 to 8 April 2003. The two s 346(1)(b) charges laid against ICW Pty Limited and the one s 346(1)(b) charge laid against Meares Nominees Pty Limited allege that each offence occurred "on or about 8 April 2003". 6 The separate offences under s 346(1)(b) and s 347(1) with which each Defendant is charged are closely related offences, according to the Prosecution evidence adduced at the trial, in as much as the s 347(1) offences ("taking water without authority") are said to have been committed as a direct and obvious consequence of the acts constituting the s 346(1)(b) offence ("interfering with a meter… measuring the quantity of water…") namely the lifting out of their emplacements of three separate dethridge wheels which were designed to regulate and measure the flow of irrigation water from the Prosecutor's supply infrastructure onto the Defendants' property "Bultarra". 7 The Prosecution evidence adduced at the trial presented an entirely circumstantial evidence case against the Defendants. That evidence was not challenged by the Defendants except for their severe criticism of the evidence of a private investigator, Mr Michael Duncan, who had been commissioned by the Prosecutor to investigate the circumstances of the alleged offences. Mr Duncan's evidence was relevant to the Defendants' assertion made during the course of the Prosecutor's investigations (including those conducted by Mr Duncan) and confirmed in their testimony at trial that the person responsible for the commission of all offences the subject of the six charges brought against the Defendants was a causal itinerant employee named Andrew Crawley. Putting that issue aside for the moment not only did the Defendants not challenge the circumstantial evidence adduced by the Prosecutor but at their trial they admitted a number of matters of fact pursuant to s 184 of the Evidence Act 1995. Some of the admitted facts (which I shall presently record) may have enlivened the evidentiary presumption created by s 367(2)(b) of the Act which provides as follows: 367 Evidentiary certificates (2) In proceedings for an offence against this Act or the regulations: (b) evidence that water was taken from a water source by means of a water supply work situated on specified land is evidence that the water was taken from the water source by the person who was the landholder of the land at the time the water was taken. 8 As a result of the course of the trial (including the gamut and nature of the Prosecution evidence (including the facts formally admitted by the Defendants)) there is only one issue in dispute in respect of the elements of each of the s 346(1)(b) and s 347(1) charges, namely whether each of the Defendants was relevantly "the person" who committed the relevantly proscribed acts of: (i) interfering with the meter; and

(ii) taking water without authority. 9 In seeking a determination adverse to the Defendants of this disputed issue in respect of each of the offences charged the Prosecutor rightly acknowledges that it is incumbent upon it to eliminate any rational hypothesis that is consistent with the Defendants' innocence, and that in the circumstances of the present cases this means that the Prosecution must effectively rebut the Defence case that the Defendants are not responsible for the actions of their itinerant casual worker, Andrew Crawley: Plomp v The Queen (1963) 110 CLR 234; Barca v The Queen (1975) 133 CLR 82; Attorney-General's Reference (No. 1 of 1983) (1983) 2 VR 410. 10 This approach is consistent with the final defence submissions, which stated that the cases require the following issues to be determined by the Court:

1. Has the prosecution proved beyond reasonable doubt that Andrew Crawley did not attend the property?
2. If Crawley was on the property, what was his status?
3. If he was an employee, was he acting within the scope of his employment when he raised the three dethridge wheels at D086/1; D094/1 and D091/2?
4. If he was acting within the scope of his employment, are the defendants vicariously liable? 11 Before considering the disputed issues it is necessary to briefly summarise the undisputed evidence because it provides the context for the required consideration and determination of the disputed issues. B. The Undisputed Evidence 12 Since much of the Prosecution evidence is captured by the Defendants' formal admissions (Exhibit 7), they should be stated in full, as follows:
5. The prosecutor, Murray Irrigation Limited ("MIL"), is an irrigation corporation as defined in the Water Management Act 2000.
6. The defendants are pastoral companies growing irrigation crops on landholdings in the Deniboota district within MIL's area of operations. During the offence period the landholdings were managed by Robert Chancellor Meares and Robert Archer Meares.
7. ICW Pty Limited is, and was at all relevant times, the registered proprietor of landholdings D086 (comprising Lots 1 & 2 DP 24286) and D094 (comprising Lot 1 DP 86887 and Lots 22, 23, 80, 83, 88 & 89 DP 86887). Meares Nominees Pty Limited is, and was at all relevant times, the registered proprietor of landholding D091 (comprising Lot 1 DP 229209).
8. At the time of the alleged offences, MIL supplied water to each of the above landholdings, including to the points of supply identified by the parties as D086/1 D094/1 and D091/2.
9. At each of these points of supply, there is, and was at all relevant times, a metering device called a dethridge wheel, which was used by the defendants on the subject landholdings to take water from the MIL main supply channel. A dethridge wheel is a "meter" for the purposes of s 346(1)(b) of the Water Management Act and a "water supply work": within the meaning of the Act.
10. The channels through which water supplied by MIL flows to its end use are water supply works within the meaning of the Act.
11. During the period from 11 March 2003 to 8 April 2003, water was taken from the MIL main supply channel onto landholdings D086 through supply point D086/1 without authority.
12. During the period from 11 March 2003 to 8 April 2003, water was taken from the MIL main supply channel onto landholding D094 through supply point D094/1 without authority.
13. During the period from 1 April 2003 to 8 April 2003, water was taken from the MIL main supply channel onto landholding D091 through supply point D091/2 without authority.
14. On the night of 8 April 2003, the dethridge wheels at each of supply points D086/1, D094/1 and D091/2 were interfered with: each of them was raised out of its emplacement by the use of chocking devices such that water from the MIL main supply channel was flowing onto each landholding without being metered. 13 The Prosecution evidence which is not subsumed by the Defendants' admitted facts may be briefly summarised as follows: (i) The Prosecutor is an irrigation corporation, which is licensed to carry on the business of supplying water under Part 4 of the Water Management Act .

(ii) The Prosecutor provides irrigation and ancillary services to some 2,400 farms located within its area of operations on the New South Wales side of the Murray River. (iii) The Prosecutor is a corporation limited by shares with approximately 2,400 shareholders being farmers who are entitled to water entitlements under the corporation's Memorandum and Articles of Association.

(iv) Each Defendant is a member/shareholder of the corporation with an annual water entitlement. (v) A member of the corporation who wishes to take water as part of its annual entitlement places an order with the corporation (usually by telephone order) and pays for the water supplied pursuant to the order.

(vi) When an order for water is placed water is diverted from one of the corporation's water supply channels to the member's landholding to the "point of supply" where there is included as part of the installation a dethridge wheel which includes a meter to measure the quantity of water supplied to the landholding.

(vii) The order for the supply of irrigation water specifies the number of revolutions for the dethridge wheel which regulates the inflow of water eg a setting of eight revolutions per minute delivers in a 24 hour period approximately 10.56 mega litres of water. (viii) As at April 2003 because of the existence of a protracted drought when water was in short supply and demand was high the annual water allocation to members of the corporation was reduced to 8% being the lowest allocation on record. (ix) On 7 March 2003 the Defendant ICW Pty Limited placed an order for the supply of irrigation water to its property D086 requesting supply to commence on 15 March 2003 at the rate of 8 revolutions per minute and on 13 March 2003 placed a separate order for the supply of irrigation water to its property D094 requesting supply to commence on 15 March 2003 at the rate of 8 revolutions per minute. (x) On 31 March 2003 the Defendant Meares Nominees Pty Limited placed an order for the supply of irrigation water to its property D091/2 requesting supply to commence on that day at the rate of 8 revolutions per minute. (xi) Water was supplied to the Defendants' farm in accordance with the terms of the orders. (xii) On 7 April 2003 an employee of the corporation whose duty it was to daily check the water supplied to landholders (including checking the dethridge wheels and reading the meters each Monday during the supply of water) observed irregularities in the recordings on two of the dethridge wheels in as much as the meters had recorded significantly less quantities of water than the expected quantities, having regard to the settings of the dethridge wheels (8 revolutions/minute). The next day (8 April 2003) he reported his observations of these irregularities to his supervisor. (xiii) Following the report of irregularities, the supervisor instructed another employee of the corporation to inspect the Defendants' property that night (8 April 2003). Between 8pm and 9pm, that night two employees of the corporation inspected each of the three dethridge wheels receiving water supply on the Defendants' property and observed that each of the dethridge wheels had been lifted from their emplacement and chocked by either timber posts or bricks allowing water to flow onto the Defendants' property without engaging the dethridge wheels and therefore not being metered. After photographing each of the uplifted dethridge wheels the employees placed the wheels back in their rightful positions. (xiv) The Water Distribution Manager of the corporation has estimated that during the relevant charge periods the total discrepancy between the water supplied to the Defendants' property and the supply recorded on the meters of the three dethridge meters was some 201 mega litres which according to the flow rates set for each of the dethridge wheels, would have required the three dethridge wheels to have been collectively out of their respective emplacements for some 214 hours in the three week period (involving some 504 hours). C. The Disputed Facts 14 The disputed facts are confined to the issue raised by the Defendants that they were not the persons who had committed the offences but it was a casual or temporary employee named Andrew Crawley who had lifted the dethridge wheels. Evidence on this issue is found in the following sources: (i) The recollection of interview conducted by the corporation's General Manager and its Secretary of Mr Robert Meares, Senior, on 17 April 2003. Mr Meares has lived on the farm "Bultarra" since he left school in 1963. His father purchased the property in 1932 and it has remained in the Meares family since then. He and his son, Robert Meares Junior manage the property on behalf of the Defendant companies. They also employ a full time manager David Chalmers. Mr Meares Senior was contacted by the corporation secretary Mr Elsbury on 15 April 2003. That conversation and the subsequent interview are recorded in the affidavit of Mr Elsbury which includes the following paragraphs: · Following a report by staff in relation to the operation of dethridge wheels on landholdings D086, D094 and D091 I telephoned Mr Robert Meares on Tuesday 15th April 2003. · I said, "Its Warren Elsbury, Secretary of Murray Irrigation". He said, "Robert Meares." I said, "Have you received the letters and certificates that I have sent to you about the wrongful diversion of water from your holdings?". He said, "Yes." I said, "We would like to interview you at Murray Irrigation." He said, "An employee, Crawley, had lifted the wheels. I have sent him packing back to Melbourne. What do I have to do to get the wheels going again?" · We arranged to meet at our office at 12 noon on Thursday 17th April 2003. · On 17th April I met Robert Meares in the reception area of the MIL offices. I then brought him up to the Board room on the first floor of the building where George Warne the General Manager was and I said to Robert, "This is George Warne our General Manager." He said, "Robert Meares" and he and George shook hands. George Warne said, "Robert we invited you here to talk about the recent illegal diversion of water from Holding 94, 91 and 86." I said, "Have you received my letters and certificates pertaining to this wrongful diversion of water faxed and mailed to you earlier this week. They were also sent to ICW Pty Limited at Pellicano & Fiovannucci at 2 Palmerston Grove, Oakleigh, Victoria." He said, "Yes and they have sent me a copy of what you sent them." I said, "Robert, this is a serious matter and before we go any further I need to advise you that whatever is said in this meeting is being recorded and whatever you say may be used against you in Court." George Warne said, "You should be aware that if you choose to you can say nothing." Meares said, "Why?" George Warne said, "Because it's possible that the company may choose to take legal action against you." I said, "These are very serious offences. The action taken to date is under the Constitution and Water Supply Contract of Murray Irrigation but in addition the Water Management Act provides for very hefty penalties particularly for corporation." · Meares made no reply. · I said, "A night patrol, on 8th April 2003, found three of your wheels lifted, on Holdings D094, 91 and 86. They were lifted from their emplacements and water in each case was flowing onto the landholding without being measured. He said, "I was not responsible. An employee Andrew Crawley was the young fellow responsible. As a result of his actions he has been sent back to Melbourne". I said, "Why is he responsible?" Meares said, "He had specific instructions not to waste any water and he obviously did it at his own discretion." I said, "We would like to talk to him." Meares said, "Why?' I said, "Because we would like to talk to him about the circumstances in which he lifted the wheels." Meares said, "He has gone back to Melbourne." I said, "Can you give me his address and telephone number so I can get in touch with him." Meares said, "I will ring them through to you as soon as I get home." (ii) The affidavit of the corporation's General Manger, Mr Warne, also contains his recollection of the interview of Mr Meares Senior, which generally is consistent with the longer version contained in Mr Elsbury's affidavit. It also annexes Mr Warne's file note of the interview. The affidavit states that the corporation was never supplied with the address or telephone number of Andrew Crawley. (iii) The evidence of Michael Duncan, Private Investigator, is contained in two affidavits, his written reports to the corporation and his oral testimony. His brief from the corporation was to find and interview Andrew Crawley. He worked on the brief in 2003 and 2004 in the course of which he interviewed Mrs Meares (the wife of Mr Meares Senior) Mr Robert Meares Junior in May 2003 and in January 2004 and again in September 2004 and in 2004 he twice interviewed Mr David Chalmers (the Manager of "Bultarra"). His efforts to locate Mr Andrew Crawley who may have worked at the Defendants' property for a brief period of 2 or 3 weeks in 2003 proved unsuccessful. (iv) The evidence of Mr Meares Senior and Mr Meares Junior is to the effect that Mr Meares Junior offered Andrew Crawley a casual job at the Defendants' farm in March 2003 during the absence on annual leave of David Chalmers. The job offer occurred when Mr Meares Junior had a chance meeting with him at a hotel. Crawley was looking for work and Meares offered him food and accommodation in exchange for his working on the farm. Mr Meares Junior supervised Andrew Crawley's work on the farm and he was given responsibility for irrigating the winter crop seed that had been planted. Mr Meares Junior had shown him how to operate the irrigation channels on the farm once the irrigation waters were supplied to the property via the three dethridge wheels. Mr Meares Senior left it to his son to supervise Crawley's daily work on the farm. He himself met Crawley and would see him on the farm from time to time during the day. 15 The Prosecutor urges the Court to find that Andrew Crawley is a fiction invented by Messrs Meares Senior and Junior to avoid responsibility for the offences charged against the Defendants. Alternatively the Prosecutor submits that if Crawley existed the hypothesis that he would have lifted the dethridge wheels on his own initiative is entirely implausible. "Why would he do it?" the Prosecutor asks rhetorically. To conclude that Crawley is a fiction invented by Messrs Meares Senior and Junior means that I would have to entirely reject their testimony on this issue. To do so, would involve the rejection of the testimony of two persons who were most impressive witnesses of excellent character and standing who were extensively cross-examined but without their testimony or credit suffering any impairment whatsoever. To reject their testimony because according to the Prosecutor's submission it is implausible that a person in Crawley's position would, on his own initiative, do what was obviously done to the dethridge wheels is to engage in speculation. Ultimately I am entirely unpersuaded by the Prosecutor's effort to rebut the Defence case that the relevant acts were done by Crawley and that in doing them he was not acting on instructions to do so received from Mr Meares Senior or Mr Meares Junior. 16 However this conclusion does not mean that the Prosecution case must fail because the Prosecutor submits that should the Court accept the Defence case the Defendants are vicariously liable for the wrongdoing of their employee. D. Are the Defendants vicariously liable for the wrongdoings of their employee? 17 The Prosecutor submits that the two offences with which each Defendant is charged are offences of strict liability and are offences imposing vicarious responsibility. Reliance is placed upon the reasoning and conclusions of the Court of Criminal Appeal in so holding in respect of the offence of polluting waters created by the Clean Waters Act - see Tiger Nominees Pty Limited v State Pollution Control Commission (1992) 25 NSWSR 715 and in so holding in respect of the offence of clearing native vegetation created by the Native Vegetation Conservation Act - see Director General Department of Land and Water Conservation v Greentree (2003) 131 LGERA 234. 18 By parity of reasoning the Prosecutor submits that the offences charged in the present cases, appreciated in the light of the express objects of the Water Management Act (vide s3) also should be interpreted as imposing strict liability and vicarious liability. In my opinion this submission should be accepted. 19 The remaining question is whether the Defendants are to be held to be responsible for the wrongful acts of Andrew Crawley. Here the Defendants submit that Crawley's status as an employee is doubtful but that in any event his wrongful acts were more in the nature of a "frolic of his own" rather than as an improper mode of carrying out his duties in the course of his employment. 20 In my judgment the status of Crawley was that of an employee of the Defendants albeit a temporary and casual employee whose work or labour was entirely subject to the control and supervision of Mr Meares Junior; see Queensland Stations Pty Ltd v Federal Commissioner of Taxation (1945) 70 CLR 395; The Commissioner of Taxation v Barrett (1973) 129 CLR 395; Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16. 21 I am also satisfied that the Defendants are vicariously liable for the wrongdoing of their employee by applying the established legal test to the facts that are established by the evidence of Mr Meares Senior and Mr Meares Junior, concerning the work undertaken by Crawley (namely the irrigation of the fields by directing the water supplied by the corporation into the irrigation channels on the farm) and the fact that the work was entirely subject to the control and supervision of Mr Meares Junior. I take the established legal test to be that stated in the following passage from the judgment of Gleeson CJ in State of New South Wales v Lepore (2003) 212 CLR 511 at 536: To point to a vivid example of conduct by an employee that is not in the course of employment is a useful method of elucidating the concept, but it may be of limited assistance in resolving difficult borderline cases. It is clear that if the wrongful act of an employee has been authorised by the employer, the employer will be liable. The difficulty relates to unauthorised acts. The best known formulation of the test to be applied is that in Salmond, Law of Torts in the first edition in 1907(95), and in later editions (96): an employer is liable even for unauthorised acts if they are so connected with authorised acts that they may be regarded as modes - although improper modes - of doing them, but the employer is not responsible if the unauthorised and wrongful act is not so connected with the authorised act as to be a mode of doing it, but is an independent act. 22 The application of the relevant defining principles from the Law of Torts was applied in Tiger Nominees in elucidation of the relevant limits of vicarious criminal liability. In so applying those principles there is no suggestion in the present case that Crawley's wrongdoing was for his own benefit. The irrigation water supplied to the Defendants' farm, but not recorded by the meter on the dethridge wheels by virtue of Crawley's interference with the dethridge wheels, was received by the Defendants' landholding and in that sense was for the Defendants' benefit. In the result I am satisfied that Crawley's wrongful act was so connected with his authorised act as to be a mode of doing it (albeit an improper mode). In so concluding I have not relied upon s 367(2)(b) of the Water Management Act because its application to the present case has not been demonstrated and poses obvious difficulty. E. Conclusions and Orders 23 For all the foregoing reasons I find that the Prosecution has established beyond reasonable doubt that the Defendants are guilty of the several offences with which they are charged. 24 I adjourn the proceedings to a date to be allocated for the purpose of any hearing necessary on sentence. Liberty to restore on 3 days' notice.

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