Plaintiff v First Defendant

1 The plaintiff, Goulburn-Murray Rural Water Authority ("GMW"), is and was at all material times a "Rural Water Authority" within the meaning of the Water Act 1989 (Vic) ("the Act"). GMW is the statutory authority responsible for an irrigation district known as the Goulburn Murray Irrigation District ("the GMID") which includes an area known as the Woorinen Irrigation Area ("the Woorinen Area").[1]

2 The defendant, Rawalpindi Nominees Pty Ltd ("Rawalpindi"), is and was at all material times the sole registered proprietor of land at Woorinen South comprising part of Crown Allotments 29 and 30 in the Parish of Woorinen ("the Property").

3 This case concerns a dispute about, in broad terms, whether Rawalpindi agreed to participate in a pipeline project, to make a capital contribution to that project and to pay certain tariffs based on an agreed capacity share.

4 The irrigation channel distribution system in and around Woorinen was built in the early 1900's and by the early 1980's much of the channel had deteriorated to the stage where it was becoming uneconomic to repair. GMW decided to replace the existing open irrigation channel system with a pipeline supplied from a new pumping station on the Murray River ("the Project").

5 The preliminary Project design provided two options;

(i) to only provide service to the existing area including a part of the Number 9 channel but it did not allow for any expansion in the area;

6 GMW decided to proceed with option (ii). Under this option, the additional capital cost for the infrastructure would be funded by the beneficiaries of the expansion because the State Government funding had been sought on the basis that the Project would deliver water savings by comparison with the old concrete lined channel systems. That justification for funding did not apply to any new customers who might participate in the Project but were not previously supplied from the concrete channel system. Option (ii) included farm land that was outside the GMID, such as the Property and a neighbouring property owned by the Curries.

7 The Woorinen pipeline was designed and constructed on the basis that it would supply a certain quantity of water to various properties along the length of the pipeline. Each customer was entitled to a capacity share, that is a certain amount of water per day expressed as a volume in megalitre ("ML") per 24 hour period. It was imperative to know, at an early stage, the exact volume of water to be supplied at particular locations along the length of the pipeline as this ultimately determined the number and size of the pumps and pipes.[2]

8 The preliminary design of the Project was conducted by the Snowy Mountain Engineering Company. The contract for the final design was awarded to Egis Consulting ("Egis") and Optimatics Pty Ltd ("Optimatics"). The sizing of the Project was completed in September 2000 and the first design was completed in May 2001.

9 There were cost benefits to existing irrigators in expanding the Woorinen Area to include new irrigators.[3] The cost per ML of capacity share would come down dramatically if large new properties such as Rawalpindi came into the Project. The payback time for the capital expenditure on the Project was also reduced (from 40 to 32 years) with a consequent saving in interest.[4]

10 The Project and pump system was completed in 2003 and consists of 5 pumps and 49 kilometres of pipes of varying diameter.[5] The Project was designed to provide a maximum daily flow rate of 294ML, which included a 28ML capacity share for Rawalpindi.[6] The 294ML per day capacity was determined on 28 June 2000. [7]

11 The Property is not "connected" to the Project. The nearest tapping point on the Project is 2km or more from the boundary of the Property. The cost of constructing a pipeline from the tapping point to the Property was at least $600,000. This cost would be borne by Rawalpindi, not GMW.

12 In December 2000 GMW submitted a proposal to the Minister for Water to expand the GMID to include the Property (among other properties). On 20 February 2001 a delegate of the relevant Minister approved the proposal with effect from the date of publication in the Victorian Government Gazette ("the Order"). On 1 March 2001 the Order was published in the Victorian Government Gazette.

13 GMW has levied, and proposes to continue to levy, pipeline charges on the Property (including but not limited to the capital contribution specified in an alleged agreement between Rawalpindi and GMW) on the basis that the Property is part of the GMID and of the Woorinen Area.

14 Rawalpindi has not paid any amounts to GMW in respect of the alleged Project charges.[8]

15 The central issue in the proceeding is whether on or about 15 September 2000 Rawalpindi entered into an agreement with GMW the terms of which were:

(i) GWM would design and construct the Project so as to provide sufficient capacity for Rawalpindi to have capacity available to it of 28ML per day;

(ii) GMW would make available to Rawalpindi a tapping point located at the nearest suitable point on the pipeline in the area serviced by its existing irrigation scheme from which Rawalpindi could draw water within its 28 ML capacity;

(iii) Rawalpindi would pay to GMW the capital contribution of $4,500 ML per day capacity, being a total of $128,000, half upon signing of a formal record of the agreement and half upon the provision of a tapping point from which Rawalpindi could draw water; and

(iv) Rawalpindi and GMW would execute a formal record of the agreement.

16 It is convenient to refer to the alleged agreement as the Rawalpindi Agreement.

17 GMW contends that the Rawalpindi Agreement arose from a conversation between Lester McDonald Haw ("Haw"), a representative of GMW, and Jeffrey Reid ("Reid") on 18 June 2000 and a letter from Reid to Haw dated 15 September 2000. I return later to the substance of the conversation of 18 June 2000 and the letter of 15 September 2000. Reid is the second defendant. GMW contends that at all material times Rawalpindi acted through the agency of Reid.

18 In the alternative, GMW claims that by its conduct Rawalpindi is estopped from denying that:

(i) the Property is properly part of the GMID and more particularly is properly part of an area within the District known as the Woorinen Area;

(ii) the Property is now part of the GMID and the Woorinen Area; and

(iii) Rawalpindi is obliged to pay Project charges, including but not limited to the capital charges specified in the Rawalpindi Agreement as and when they fall due.

19 GMW seeks declaratory relief, the payment of the capital charge specified in the Rawalpindi Agreement, damages, interest and costs. The specific declarations sought are:

(i) that the Property is properly part of an area within the GMID known as the Woorinen Area;

(ii) that the Property has a capacity share of 28 ML per day properly allocated to it; and

(iii) that there is an agreement in place between GMW and Rawalpindi to the effect of the Rawalpindi Agreement.

20 Rawalpindi denies entering into the Rawalpindi Agreement and said that the parties did not intend for there to be a binding agreement in the absence of a written agreement executed by GMW and Rawalpindi. By counterclaim Rawalpindi seeks a declaration that the Order is void to the extent that it purports to include the Property within the GMID.

21 I propose to first provide an overview of the evidence and then turn to deal with the issues.

22 The following witnesses were called on behalf of GMW:

23 Lester McDonald Haw ("Haw")[9] was the Area Manager for the Torrumbarry Irrigation Area of GMW at the relevant time. The district of Woorinen lies within the Torrumbarry Irrigation Area which in turn is part of the GMID. Haw occupied a senior management position, reporting to his immediate supervisor John Mapson ("Mapson") (GMW's Manager Water Services) and through Mapson to the GMW Board. The GMW Board directed the management team about how the corporation should be managed and set the policy framework. Haw was not at liberty to depart from any GMW Board resolution. Part of Haw's responsibility was to keep Mapson, and therefore the GMW Board, informed of matters relevant to the corporation's questions within his area. Haw's key role was customer service and consultation associated with the Project.

24 In the course of his evidence Haw tended to overstate matters in a way which was favourable to the GMW's case. Four examples serve to illustrate this point.[10] The first concerned a public meeting held on 15 June 1999. Haw has very little recollection of the meeting.[11] In the course of cross examination he volunteered two details about what occurred at the meeting, but later conceded that he was incorrect in respect of those matters. He agreed that the two matters he had volunteered were intended to suggest that Reid and Rawalpindi were more involved and informed from an earlier stage than they in fact were.[12]

25 The second example concerned a meeting on 22 May 2000 and the differences between what Haw said in his statement and what appeared in his file note of the meeting. These issues are dealt with at paragraphs 102-104 of the judgment.

26 The third example concerned a conversation between Haw and Colin Findlay on 1 September 2000. Haw's recollection of this conversation was dependant on his file note.[13] Haw's file note did not support what he said in paragraph 38 of his statement regarding what was said during this conversation. In cross examination Haw acknowledged that his statement "beefed up" his file note and it might have been better if paragraph 38 had not appeared in his statement.[14]

27 The fourth example concerned some differences between Haw's diary note of a conversation with Reid on 15 January 2002 and his statement at paragraphs 49-52. In cross examination Haw conceded that his statement incorrectly referred to the discussion as a telephone conversation when in fact it took place at the Property. Haw agreed that the diary note did not say that Reid was keen to proceed with the development and he could not recall why he had included those words in his statement. Haw agreed that he could not say now that that was something Reid had said.

28 Two further matters also impact on Haw's credibility. Haw conceded that in a memorandum to a member of the GMW Executive Management Team dated 4 September 2000 he falsely stated that three new developers (one of whom was Rawalpindi) had actually signed a formal agreement to be included into the Woorinen Area. Haw acknowledged that this was an important memorandum, especially as the matter was going to the GMW Board.[15]

29 Haw made a similar admission in relation to a statement he made at a meeting on 2 October 2000. The meeting dealt with, among other things, the concern of some of the existing irrigators that if the incoming landowners failed then the remaining irrigators would face increased charges for water. Haw told Barry Steggall MLA and the others present that all of the developers had signed agreements to be in the Woorinen Area. In cross examination Haw acknowledged that this statement was not true and in the case of Rawalpindi it was a significantly misleading statement.[16]

30 A consideration of all of these matters has led me to treat Haw's evidence with a significant degree of caution.

31 Peter Linden Koetsveld ("Koetsveld")[17] was the Assistant Manager for the Torrumbarry Irrigation Area of GMW at the relevant time. Part of his role, from time to time, was to implement the 'Guidelines for irrigation development in the Goulburn Murray region'.[18]

32 Leslie John Thompson ("Thompson")[19] is currently retired but was the Assets Engineer in Kerang for the Torrumbarry Irrigation District of GMW at the relevant time and until 4 July 2003. Thompson was involved in the planning and construction of the Project. He was a member of the Woorinen Irrigation Infrastructure Working Group ("the Working Group") from its inception until it ceased.

33 Eric Ross Kelly ("Kelly")[20] is currently retired but between 2000 and 2005 he was the Co-ordinator of Water Administration with GMW. In that capacity he was responsible for the administrative processes involved in either the inclusion or excision of properties into or out of the GMID.

34 Geordie McKinlay ("McKinlay")[21] is a civil engineer employed by GMW as a senior project manager in the Kerang office.

35 Andrew Augustus Coburn ("Coburn")[22] worked in the Swan Hill Office of Elders Real Estate as a representative real estate salesman in 2004. In mid-2004 Reid engaged Coburn to sell the Property.

36 Benjamin Simpson-Thoulis ("Simpson-Thoulis")[23] is the Manager for Land Entitlements for GMW. In his statement he set out the various accounts sent by GMW to Rawalpindi.

38 Jeffery Reid ("Reid")[24] was a farmer and a Director and Secretary for Rawalpindi from 17 May 1997 to 19 February 1995 and again from 23 January 2003 to the present. The break in his directorship was due to bankruptcy. Reid's father purchased the Rawalpindi land in 1951. After his father's death in August 1995 the Rawalpindi land was left through a trust to Reid, his brother and his sister. Reid bought out his brother and sister using Rawalpindi as his vehicle. In 1996 Rawalpindi became the registered proprietor of the Reid farm.

39 About three and a half years ago Reid suffered extensive head and spinal damage in a motor vehicle accident. He has been assessed as being 28 per cent disabled. The accident affected his memory and capacity to absorb information. In Reid's oral evidence he stated that "prior to the accident ... I felt I could absorb things a lot quicker but now I find I am a lot slower in doing that and there is - some short memory is OK, some is no good, and some long term is OK, and some no good".[25]

40 Counsel for GMW submitted that Reid was evasive and non-responsive. I am not persuaded that Reid was evasive in his evidence but accept that his answers were often non-responsive. He made an honest attempt to recall what took place but to some extent his recollections were influenced by the substantive position taken by Rawalpindi, ie. there would be no formal agreement until investors had been locked in. I have taken that matter into account in assessing his evidence.

41 Colin Findlay ("Findlay")[26] was an irrigation consultant in the Shepparton area. Findlay acted for Robert Currie ("Currie") in relation to irrigating his property and securing water from GMW. Shortly after commencing work for Currie, Findlay began providing advice to Reid and Janet Free.

42 Counsel for GMW submitted that Findlay was a partisan witness. There were some unexplained inconsistencies in Findlay's evidence[27] and these led me to treat his evidence with a degree of caution; but I reject the proposition that he was "manifestly argumentative" or a "partisan witness".

43 Janet Barbara Free ("Free")[28] was a payroll officer with the Swan Hill Rural City Council, partner of Reid and had been a director and secretary of Rawalpindi since 1995.

44 Free struck me as a straightforward witness who was making an honest attempt to recall events which took place some time ago.

45 In May 1997 the Working Group was established by GMW in consultation with the Swan Hill Rural City Council. This followed a public meeting to determine the best method of overcoming problems associated with the deteriorating concrete lined channels at Woorinen. The Working Group resolved that the best outcome for Woorinen was a pipeline system supplied from a new pumping station on the Murray River.

46 A public meeting was held at the Woorinen Soldiers Hall on Tuesday 15 June 1999, chaired by Barry Steggall MLA. Thompson addressed the group in relation to the design issues; Coburn and Chris Scriven addressed the group in relation to tariff and price issues, and Koetsveld and Haw addressed the group in relation to boundary issues.[29] During the course of the meeting the attendees were informed of the two stage process for landowners outside the GMID to become part of the Project. The landholders were first asked for an initial commitment to the Project and then asked to make a final decision and commitment.

47 Reid and Free attended the meeting. Reid remembered that a lot of people attended and that it was set up like a sales pitch, but there was a lot of opposition, and people were asking many questions. Reid recalled hearing from Barry Steggall MLA that the new system would be "so good that even Israelis would come back to have a look at it". He recalled being handed an agenda.[30]

48 According to Reid two options were under consideration for expansion of the irrigation district to include dry land on the edge of the irrigation district which could be suitable for horticulture. The Rawalpindi land was not included in either of the options, but their neighbour's land (owned by Currie), was included in the second option. Hence it appeared to Reid that expansion into the Rawalpindi land seemed possible. At that time Reid was aware that the new irrigation techniques such as drippers and microjets were available, which would make irrigation of his land more feasible.[31]

49 After the meeting concluded, Reid and Free spoke to Thompson and discussed the possible inclusion of their property in the scheme, since the idea of developers coming into the area to either buy or lease current dry-land seemed attractive to them.

50 Free said that at that stage she had no idea how much it would cost, if anything, to get involved in the Project but thought that it would cost a lot of money to set the farm up if they were going to use irrigation.[32] Free recalled saying to Thompson that it was far too expensive for them and they would not be doing it.[33] Free also said that she told Thompson that they would not be in a position to develop the land themselves and that if they were to become part of the scheme it would be because they had secured developers. If that wasn't possible, then Free said that they would not go ahead with it.[34]

51 Thompson recalled a conversation with Reid and Free after the meeting "in vague terms" but he did not recall the specific conversation.[35] He did not remember (but did not deny) being told that they would not be in a position to develop the Property themselves and that if they were to become part of the Project it would be through outside developers.[36]

52 I accept Free's evidence as to the substance of her conversation with Thompson.

53 Koetsveld said that he spoke to either Reid or Free (he cannot recall which) and arranged an appointment for Thompson to attend the Property to conduct an interview at 9.00am on 30 December 1999.[37]

54 Thompson said that he met Reid and Free on 30 December 1999 when he attended the Property. According to Thompson he interviewed them in the kitchen and they told him that they were interested in being involved in the Project. Thompson informed them that if they wished to be part of the development they would have to make a capital contribution towards the cost of constructing the Project. He did not tell them how much their capital contribution would be because at that stage he did not know.[38] A calendar entry showing the appointment is at court book 454.

55 Thompson said that he filled in a pro forma questionnaire during the meeting. A search of GMW's records had not turned up any such questionnaire in relation to Rawalpindi.[39]

56 Thompson said that the meeting took place in the kitchen.[40] He described it as an old style farmhouse with a wood stove. He recalled that Free was boiling the water for tea either on the stove or using a jug.[41]

57 Reid and Free had no recollection of any such meeting taking place.[42]

58 Free had no recollection of Thompson ever coming to the Rawalpindi farmhouse when she was present.[43] Free also described her kitchen as it was in December 1999 - it had a hot plate, a wall oven and an electric kettle, there was no wood stove.[44]

59 I prefer Free's evidence and find that Thompson is mistaken in his recollection of this meeting.

60 In March 2000 it was determined that the Project would cost $18.916 million if it was expanded to include the Patterson, Ward, Currie and Rawalpindi properties. All of these properties were outside the GMID, in what was referred to as the Southwest Zone. Without including the Currie land or the Property, the cost of constructing the Project would be $16.8 million. A table of the costs is at court book 509-511.[45]

61 At GMW's Woorinen Management Group[46] ("the Management Group") meeting on 9 March 2000 it was agreed that an offer would be put to Reid and Free, among others. The Management Group was aware that the Property was remote from the end of the proposed pipeline and was located to the south of the Currie's property and had a significant higher elevation. The Property did not have a water allocation but the owners had an interest in developing the Property as a horticulture enterprise.[47] The Property was not included in the preliminary designs of the expanded project and as a result of the higher elevation and the location at the end of the proposed pipeline, the design had to be significantly changed with increased pressure and pipe sizes. It was agreed that an offer would be made to Reid and Free that they could become part of the Project if they paid a significant contribution to the increased capital cost of the Project which would result from their inclusion. It was thought by some within GMW that the requirement to make a capital contribution would serve the purpose of verifying the financial viability of the landholder.[48] Minutes of the meeting are at court book 517-518 and the table of the costs at court book 527.[49]

62 On 15 March 2000 Haw had a telephone discussion with Reid. Haw told Reid that as his property was outside the Woorinen Area it would not qualify for the government grant. Haw also told Reid that his property and the Currie properties were significantly elevated compared to other properties in the Woorinen Area. Because Reid's property was 4.5 metres higher and the Curries' property was 2.5 metres higher, the entire pipeline would need to be enlarged in order to provide a minimum of three metre head pressure at their properties. Haw told Reid that an additional land owner contribution would be required to pay for the capital work to ensure that these works did not negatively impact on the balance of the land owners. The additional capital cost would have to be in the order of $1.2 million and that the capital contribution he would have to pay would be approximately $130,000 and that the balance would have to be paid by the Curries. The figure of $130,000 was derived from the table of project costs set out at court book 527 apportioned as at 14 March 2000 for the Woorinen Area.[50] Haw also told Reid that if the Curries chose not to proceed then Reid's contribution would be significantly higher, possibly in the order of $500,000. Reid said that this was the first time he had heard of the need for a capital contribution and regarded this as uneconomical. Haw did not dispute the proposition that this was the first time that Reid had heard of the need for a capital contribution.[51] Haw made a file note of this conversation, which is at court book 528.

63 Haw acknowledged that what he was doing during the course of this conversation was exploring whether or not Reid might be interested in proceeding with entry into the GMID on the terms put to him.[52] Haw also stated that he was confirming earlier discussions with Reid but he was unable to recall when those earlier discussions occurred and conceded that they were not referred to in his witness statement or supported by his file notes.[53]

64 Reid did not remember the particular discussion but believed that it would have been one of the first proper conversations that he had with Haw. During this first conversation with Haw, Reid said that he was interested in finding out more of the implications of bringing the Rawalpindi land into the irrigation district. Prior to this conversation he had not appreciated that GMW was intending to charge a capital contribution in respect of previously unconnected land coming into the irrigation district.

65 Reid said that when Haw told him that the capital contribution payable by Rawalpindi would be in the order of $130,000 and even up to $500,000 if the Curries did not proceed, he told Haw that he regarded it as uneconomic.[54] Reid remembered saying to Haw that "I regarded it as uneconomic and there is no way knowing that I was in a position to raise any of that sort of money anyway".[55]

66 By letter dated 27 March 2000, Findlay wrote to Thompson on Reid's behalf.[56] Reid said he vaguely recalled instructing Findlay to do this. The letter is in the following terms:

"Findlay Consulting Group have been engaged to prepare a development plan for Currie, whilst J. Reid will engage FCG when he knows all of the options for water supply to his property have been researched. Could you provide cost details and GMW views on the following.

If Currie was to require connection to the property boundary, what would his costs be for 80 hectares Viticulture

or 100 hectares Viticulture

or 200 hectares Viticulture

4ml/ha water usage

If GMW supplied Currie a tapping at Lake Road and Woorinen South Road intersection, what costs would Currie incur, for the same proposed areas listed above.

We discussed a possible further option off a spur to serve CA 18, 19 & 53E which is close to the existing pump site of Currie's. Could you again indicate the costs and G-MW views on this supply point using the same area component.

J. REID

Reid's property is located further south on CA 30 Parish of Woorinen. Reid claims he has available 400 hectares that could be developed. He is not anticipating to develop it alone, possibly involving outside investors. I have put it to him to consider 80 to 200 hectares maximum using say 4ml/ha.

Reid is serious about the development but finds the costs associated with supplying him a service to the property boundary is too high. Both Currie and Reid have discussed a joint pipeline arrangement but require further information.

What is G-MW view on this syndicate arrangement if Currie/Reid manage the pipeline from the tapping point. They both have storages that could provide the buffer needed for irrigation supply.

Do both Currie and Reid pay for the tapping and booster pumps and what additional easements are necessary for the pipeline.

Please provide the costs that Reid would incur if he and Currie were to manage the private pipeline and Reid was to develop similar areas as listed for Currie.

The area components listed are mainly to identify the costs to both parties for the Supply of Water to their properties.

Please outline the tariff structure and when these tariffs apply.

I look forward to your response."

67 Haw saw this letter at around the time it was received by GMW and said that he understood that Reid did not contemplate developing the Property alone, but possibly by involving outside investors.[57] Haw also acknowledged that the letter suggested that at that time Reid did not regard himself as being fully informed about his options.[58]

68 The letter made clear that Reid was not proposing to develop the Property on his own and that he thought that the cost of connecting the Property to the Project was too high. This was also the understanding of Haw and Thompson.

69 Thompson also saw this letter and understood that Reid did not anticipate developing the Property alone and was looking to outside investors. While Reid was serious about the development he found the costs associated with connecting to the Project to be too high.[59]

70 In a memorandum dated 4 April 2000 to his supervisor Mapson, Haw recommended that Reid's property be included in the Woorinen Area "subject to their agreement to an appropriate capital charge".[60] In cross examination Haw was unable to identify the basis upon which he had interpreted Reid or Findlay as having said that the owners of the Property intended to have their property in the Woorinen Area. Haw acknowledged that on reflection the recommendation was "poor judgment" on his part.[61]

71 By letter dated 5 April 2000 Haw replied to Findlay's letter: [62]

"R. Currie & J. Reid

Proposed New Development: Woorinen

I refer to your letter dated 27th March 2000 and subsequent discussions with Mr Geordie McKinlay of this office. The investigations into the cost of supplying your client's lands have been completed and the following information is provided.

The attached plan details the two supply points mentioned in your letter and it has been assumed that your client will be responsible for all costs associated with taking supply from the nominated source to the property boundary.

The investigations undertaken to date include the hydraulic modelling of the network, estimating the cost of upgrading the infrastructure to supply the nominated additional peak capacity in the network and modelling the impact on rates and charges. The modelling has confirmed that there are no significant cost savings between sites "A" and "B" however the information shown below assumes that all supplies to both Currie and Reid are taken from the same point on the network.

Project capital cost of works to supply the nominated peak daily capacity

Unit cost based on landowner contribution

$/ML

1. Flow rates in excess of the nominated capacity share may be supplied however during period of peak demand supply may be limited to the agreed capacity share. Ie. if you nominate a capacity share of 12ML/d then during peak demand periods the flow will be restricted to 12 ML/day. For large holding, the provision of a large storage may allow you to optimise the nominated capacity share and minimise annual rates and charges.
2. The capacity share of 24ML/d is cheaper per unit than 4.8ML/d. It is apparent that under the proposed tariff structure which is based on a number of small holdings, it is more cost effective to service one larger holding than a number of small holdings. This is reflected in the capital contribution.
3. There is no apparent difference in cost between the two service points shown on the plan.
4. The capital contribution nominated in the table relates to the total capacity share nominated. For example if the developers require a total capacity share of 12ML/day than the total capital contribution will be $300,000. At this preliminary stage it can be assumed that the capital contribution can be prorated in proportion to the capacity share quoted in the table. Any significant variation will need to be modelled to confirm the capital contribution required.
5. Your client will need to confirm their capacity share requirements by the 18th April 2000 and be in a position to enter into a formal agreement with the Authority prior to the 12th of May 2000. This agreement will require your client to request that their holdings be included into the Woorinen irrigation Area.
6. The capital contribution will need to be lodged with the Authority on request. It is expected that 50 percent will need to be lodged on entering into the agreement and the remainder when the service point is provided.
7. As part of the project G-MW will install a suitably sized direct connection to supply water to Currie & Reid properties. G-MW has no objection to the developers entering into a syndicate or Body Corporate agreement, provided that there is delegated representative who deals with G-MW exclusively.

The developers would need to supply their own booster pump(s) if the pressure at the offtake point is insufficient for on farm needs. The minimum agreed pressure at any offtake in the network is 3m.

Please call me regarding this matter if you have any further queries."

72 The letter attached a plan that detailed two supply points. It indicated that Rawalpindi would be responsible for all costs associated with taking supply from the nominated source to the Property's boundaries.

73 GMW's reply to Findlay's letter described the capital contribution required for nominated capacity shares but made no reference to the associated tariff costs. Hence the letter did not fully respond to Findlay's request that GMW identify the costs for the supply of water to the Currie and Reid properties.[63]

74 In his evidence Haw explained that the reference in point five of the letter to "a formal agreement" referred to the final commitment GMW was looking for from landowners who came into the GMID.[64]

75 Haw acknowledged that at this stage there was not much to lead him to think that Rawalpindi was going to be brought inside the GMID, apart from the expression of interest and the inquiries that had been made.[65]

76 Reid met with Findlay on 7 April 2000, and Findlay showed him GMW's response. GMW required Rawalpindi to sign a formal agreement. Reid recalled that Findlay asked him to sign a letter which GMW could show potential investors to confirm Rawalpindi's consent to being included in the scheme. Reid said he agreed to do so because he understood that this was necessary to confirm Rawalpindi's interest in the scheme. In a letter to Reid dated 7 April 2000, Findlay called this "initial approval" to be included in the extended irrigation district.[66] Reid said that this made sense to him because he figured it would be a waste of everyone's time if, after a long search for investors, some were finally found but Rawalpindi refused to cooperate.[67]

"Re: R CURRIE & J REID

Thank you for your response to both our client's enquiry.

Both Currie and Reid have expressed they wish to confirm their holdings be included into the Woorinen Irrigation Area.

The capacity requirement to be shared between both parties is a maximum of 24ml/day however it is understood during peak demand there will be period the flow will be restricted to 12ml/day.

The landholder capital contribution is understood by both parties to be $108,000 with a nominated capacity of 24ml/day. Both landholders understand this to be shared equally if the capacity is split 12ml/day both ways.

Our clients will endeavour to meet with GMW in the near future to enter into a formal agreement.

If there is any other costs involved I would appreciate you informing us of these additional costs so our clients can prepare there business plans for staging their development."[68]

78 Reid said that it never occurred to him that there could be any financial implications arising as a result of that letter. Reid was always under the impression that Rawalpindi needed to execute the formal agreement if it wanted to proceed.[69]

79 Haw was asked whether around this time he gave any indication to Findlay that he wanted some sort of written confirmation that Reid was still interested in being in the Woorinen Area. Haw was unable to recall whether he had but acknowledged that it was possible that he had.[70]

80 GMW conceded that the 7 April 2000 letter was a preliminary indication of Reid's interest, rather than representing a final commitment.[71]

81 On 10 May 2000, Haw met with Currie, Reid and Findlay. Thompson was also present at that meeting. In his statement Haw said that the following discussions occurred during this meeting:

"(a) the discussions focused on an offer from G-MW for connection to the Woorinen Pipeline with a capital cost of $108,000 shared between the Curries and Reid (being the lowest cost option of the four options set out in the table on page 1 of the 5 April 2000 letter);

(b) we discussed ownership of the properties and were told that properties were owned by Robert Currie, by Bruce Currie, and by Rawalpindi Nominees Pty Ltd. We were told that Jeff's son, Troy Reid, and Jeff's partner, Jan Free were the directors of Rawalpindi. We were also told that the combined area of the properties was 800 hectares;

(c) I said that for the process to proceed each of the landowners would need to agree to include their property into the Woorinen Irrigation Area to protect G-MW's investment. I told Reid and Currie that G-MW would have a claim against them in the event of their indebtedness to G-MW under the Water Act.

(d) I told Reid and Currie that they would have to pay a capital contribution of $108,000 between them, based on a 24 ML capacity, but that the investments by G-MW was around $1 million;

(e) I said that if they decided to share a pipeline they would have to establish a body corporate with a single contact with G-MW;

(f) Colin Findlay said that he was working with developers, Liverno Property Pty Ltd, who were likely to fund horticultural projects on the Curries' and Reid's land. He told us that the developers had a good reputation including currently working on other projects with him, including a 400 hectare olive development in the Shepparton Region where the land was purchased with minimum water at $3,000 per hectare. He said that Liverno's proposal was to develop the Currie and Reid land, establish the enterprises and sell them off through a marketing group;

(g) Findlay said that at least one of the developers was keen to inspect properties the following week and would be looking at additional land for development. He said that one of these developers was 90% certain to go ahead;

(h) Les and I explained that details were to be presented to the G-MW executive team the following Monday and that the Board of Management would be approached the following Thursday for project approval. We said that the tenders had been let for designers with a total cost of around $600,000 with very tight time frames and deadlines established. As a result there was minimal opportunity to push the deadline out and community pressure was strengthening to see the project commenced;

(i) I said that the connection point for Currie and Reid was scheduled for 2002-2003 which would allow significant time to secure investors, but an immediate commitment was required. I also said that with minor modifications to the design, connection could be arranged as early as 2001-2002 but not at the full capacity of 24 megalitres initially. I told Reid, Currie and Findlay that in the extreme two weeks grace could be accommodated but that they had to get back to us on the capacity which they required within that time;

(j) We discussed the maximum water use limits and we all acknowledged that this depended on the drainage capabilities, crop type and irrigation methods. Colin Findlay said that the project would require significant water entitlement to be purchased, and commented that the current market price was $720 per megalitre. Les [Thompson] and I pointed out that temporary water was an alternative;

(k) Findlay said that Currie and Reid both wished to go ahead with the proposal at a combined commitment of a minimum of 24 megalitres per day. He also said additional capacity may be required and that, if so, we would be advised within 2 weeks. Les Thompson had calculated that the capital cost of $4,500 per megalitres remained constant in the event that Reid and Currie elected for a greater capacity than 24 ML, so I told Reid and Currie that their capital contribution would be calculated on the basis of $4,500 per megalitre. I said that 50% would be required on signing and 50% when the pipeline became operative, and that they would be responsible for delivery of water from the G-MW to their properties. Findlay, Currie and Reid all expressed agreement with that course of action.

(l) I said that G-MW would prepare formal agreements, reflecting the agreements reached in the meeting, for signing as soon as possible. Colin Findlay said that he would advise us of any additional capacity share requirements over and above the 24 megalitres per day as soon as possible, but at the latest within two weeks."[72]

82 Haw prepared a file note in relation to that meeting and dated it 11 May 2000 which is at court book 723-724.

83 Haw could not recall saying at the meeting on 10 May 2000 that the tariff structure that would apply if the Property came into the Woorinen Area had not been finalised.[73]

84 Haw agreed that from at least the meeting of 10 May 2000 he knew that Reid was not the owner of the Property; that he was not a director of the company that was the owner; and that Reid would not be the person signing any formal agreement or making any formal agreement on behalf of Rawalpindi.[74]

85 In cross examination Haw agreed that there was no handshake or anything at this meeting and nothing was signed.[75]

86 Findlay also made some notes of this meeting and he broadly agrees with Haw's notes of the meeting but makes the following comments in relation to the "Agreed Outcomes":

• "I agree with the capacity share minimum of 24 megalitres per day but I do not recollect the offer of additional capacity share which if required would have to be advised ASAP.

• I agree that the capital charge of $108,000.00 was required on a 50/50 split, 50% on signing and 50% on connection but I do not agree that it was Currie and Reid who would be paying this charge. It would be paid by the developers.

• I also disagree that it was Currie and Reid who "will be responsible for delivery of water from GMW pipelines to the properties which will include a pump station, power, supply lines, etc." It was the developers who would be responsible for this connection."[76] Haw cannot recall if this was said.[77]

87 Findlay's evidence was that at the meeting he said that it would be impossible for Reid and Currie to undertake the Project because of the cost involved.[78] Findlay cannot remember whether Haw, Thompson or Reid said anything in response to his statement.

88 Findlay recalled giving an estimate to Reid for the cost of a private pipeline from the tapping point to his pipeline. At a flow rate of 24ML Findlay estimated the cost would be $1.1 million based on his experience with other schemes. He could not recall[79] whether the water would be brought to the boundary or delivered from one of the two points on the plan.

89 In cross examination it was put to Findlay that at the meeting on 10 May 2000 no one actually said the capital contribution would be paid by the developers and not by Reid and Currie. Findlay rejected this proposition and stated "[n]o, it had been said many times at meetings and many times to Lester [Haw]".[80]

90 Thompson recalled the meeting but did not take notes. He said that the meeting focussed on the supply of irrigation water to the Currie and Reid properties, the areas to be irrigated and the capacity share required to service the lands. According to Thompson:

• They were told they would have to pay a capital contribution which was linked to the capacity share they required to service their properties and that they would be responsible for the cost of the infrastructure from the pipeline to their properties;

• Findlay was assisting Currie and Reid, and was looking to have developers involved in the development of the properties and expressed confidence that such developers could be found; and

• Currie and Reid wanted more time to determine whether they required a greater capacity share on the pipeline. They were told there was a degree of urgency in finalising their capacity shares, so GMW could finalise the design of the pipeline.[81]

91 Thompson's recollection was that Currie and Reid wanted 24ML capacity between them, of which Reid wanted 4ML.[82] Thompson also recalled telling Currie and Reid that the cost of connecting to the Project and bringing water to their land by private pipeline would be in the order of $600,000.[83] Thompson estimated the distance between the Project and the Property was about 2 kilometres, plus or minus 100 metres.[84]

92 Thompson could not recall Findlay saying that Currie and Reid would not be paying the capital charge themselves and that it would be paid only if outside investors were found.[85]

93 While he could not recall Findlay saying that Rawalpindi would not be paying for the connecting pipeline and that they would only proceed if developers could be found Thompson thought that it was what was said.[86] Nor could Thompson recall Findlay saying that Rawalpindi could not proceed on its own, but he thought it was likely that is what Findlay said.[87] Thompson also thought that Findlay may have said that Rawalpindi could not enter the Project without outside investors.[88]

94 Reid was shown a diary note[89] that Haw made of a meeting on 10 May 2000 and vaguely remembered the meeting but not the specific details.

95 Reid believed that at the meeting he emphasised to Haw and Thompson that Rawalpindi would not be able to enter into the Project without investors who would provide the capital. Reid believed an immediate commitment was sought but that he was not in a position to give an immediate commitment - or any commitment at all until investors had been secured.

96 Reid recalled that at this point in time everyone (including himself)[90] was optimistic that investors would be found but did not recall any discussion about what would occur if investors weren't found.

97 Having reviewed the Agreed Outcomes from this meeting, as diarised in Haw's diary note, Reid recalled that this was the first time that GMW had decided that it was not planning on building the connection from the Project to the Currie property or the Property, even at the expense of the landowners. This made Reid think that it might be a bit harder to secure investors, but everyone remained optimistic and so did Reid. Reid remained optimistic that investors could be found until mid-2001.[91]

98 I accept Findlay's recollection of this meeting and prefer it to Haw's recollection. Findlay's version is broadly consistent with Thompson's recollection.

99 A meeting of the GMW Board took place the week after the meeting of 10 May 2000. The Board resolved that:

"... for properties outside the Woorinen Irrigation Area, landowners be required to enter into an agreement with the authority to acknowledge the agreed capacity share and that the holding be brought into the Woorinen Irrigation Area so that they come under the authority's control." [92]

100 No suggestion was made to the Board at that time that there had been any agreement reached with Rawalpindi in relation to any capacity share requirement for its land.[93]

101 Haw could not recall if he was made aware of the GMW Board resolution at the time but thought it "highly likely" that he was made aware of it.[94] Haw agreed that at that time he was still trying to reach agreement with Rawalpindi about capacity share and the Property's entry into the Woorinen Area.[95]

102 On 22 May 2000, Haw and Thompson met with Findlay, Rob Cattrill ("Cattrill") and Peter Giljohann ("Giljohann") and landowners Free, Reid and Currie The meeting was arranged by Findlay. At paragraph 24 of his statement Haw said that the following matters were discussed:

(a) Thompson provided an overview of the pipeline including project details and time frames, tariff charges and pricing and some of the key issues discussed in the earlier meeting on 10 May 2000;

(b) Thompson said that the Curries and the Reids had committed to a total of 24 megalitres per day capacity share, and that the agreed capital charge for that capacity share would be $108,000 based on $4,500 per megalitre. He also said that if they wanted a greater capacity share they would need to decide quickly;

(c) Jack Butler provided an industry perspective together with the long history of the Woorinen Irrigation Area. He said that returns per hectare from stone fruits at that stage ranged from $20,000 to $100,000 with an average of around $50,000. He said that 30-40 different fruits were being grown to spread the risks and maximise the spread of available labour between November and the end of April;

(d) Kerry Gammon told us that Gammon Enterprises were highly successful in growing stone fruits in the Woorinen Area with particular emphasis on export markets. She explained the advantages of the Woorinen area, which included long shelf life for local produce, as a result of the soil types, climate and management. She told us about exporting to China and the advantages the Woorinen Area had over the Goulburn Valley; and

(e) Caroline Welsh then addressed us on the incentives and government grants available to growers. She told us that the Brack's Government, similar to the Kennett Government was keen to expand the horticultural industry, based on sustainability. She said that there were whole farm plan rebates of up to 75% to a maximum of $133 per hectare. There were grants of up to $2,000 for connection to water supply and grants of $2,500 for connection to power. She advised us there were additional grants available through Goulburn-Murray 2000 Plus. Peter Giljohann then addressed us in relation to Liverno Property Pty Ltd and what it did. He told us that they were focusing on investment projects such as the Olive Grove at Kialla.

103 Haw prepared a file note in relation to that meeting and dated it 23 May 2000.[96]

104 There are a number of differences between what is set out at paragraph 24 of Haw's statement and his notes of the meeting:

• At paragraph 24(a) Haw said Thompson provided details of the tariff charges. The file note said that Thompson agreed to provide such details, it didn't say that he did provide such details at the meeting. Haw did not have a good recollection about this aspect of the discussion and was not able to say whether tariff charges were discussed at the meeting or not;[97] and

• At para 24(b) Haw said that Thompson said "the Curries and the Reids had committed to a total of 24 megalitres per day capacity share". Haw could not recall that being said at the meeting and there is no mention of it in his file note of the meeting.[98] Haw was unable to offer any explanation as to how this got into his statement given that he could not recall it being said and it doesn't appear in his file note.[99]

105 Reid said that he was aware that Haw had a diary note[100] of a meeting that he apparently attended on 22 May 2000 but he did not specifically remember the meeting.[101]

106 Findlay has no recollection of why the capacity share for Reid would be increased to 28ML per day. He also said that there is nothing in this diary notes which indicated any contact with prospective developers who would have enquired about increasing the water share to 28ML and he was not working on any form of plan or design at that time which would have reflected a capacity share of that magnitude.[102]

107 On 24 May 2000 Haw wrote to Cattrill and Giljohann of Liverno Pty Ltd ("the Liverno Investors") in the following terms:

"Proposed Woorinen Development

Thank you for the opportunity to meet on Monday, and discuss issues relating to possible developments in the Woorinen area. The following notes may assist in finalising your decisions and ensure that the issues are clearly understood:

• For the process to proceed, an agreement will be required with each separate landowner to include the properties into the Woorinen Irrigation Area.
• An initial capacity share of 24 ML/d has allocated to Currie and Reid's properties pending confirmation. The 24 ML/d is the maximum daily flow rate that is available during periods of peak demand. During non peak periods, flow rates of 30 to 40 ML/d may be available.
• A capital charge of $108,000.00 will be required, on a 50/50 split between Currie and Reid, with 25% required on signing, 25% in twelve months, and 50% on connection to the network. See Plan attached.
• Currie and Reid (or subsequent owners) will be responsible for delivery of water from the GMW pipeline, to the properties, which will include a pump station, power, supply lines, etc.
• G-MW will require a body corporate for property owners to be established, with a single point of contact where more than one property is supplied from a single outlet.
• Col Findlay to advise of required arrangements, including additional capacity share requirements ASAP, but by 2 June 2000.
• The revised four part tariff is covered in the attached document, and the following issues should be noted:
  • The service fee of $200 is an annual fixed fee
  • The entitlement fee of $6ML is also an annual fixed fee, based on the volume of water right held
  • The capacity fee is an annual fixed charge of $2,000/ML/d, based on the amount of pipeline capacity held by the property. Once the pipeline design is commenced, there is virtually no chance of changing this capacity
  • The usage fee is an annual variable charge of $20/ML, dependant on the amount of water actually used
• With the capacity share concept at Woorinen, and permanent water right is not essential dependant on the level of risk required, and annual purchase of temporary water is an alternative

Please note the aerial photos included, and the land capability study information attached.

If we can be of further assistance, please do not hesitate to call Les Thompson or myself."[103]

108 Haw could not recall why he was providing information about the tariff structure to potential investors, rather than to Reid or Currie.[104] But he acknowledged that at this time it was 'highly likely' that there would be no agreement between Rawalpindi and GMW without the involvement of either the Liverno Investors or some other investor.[105]

109 Thompson acknowledged that the tariff information was provided to the Liverno Investors because it was their money that was going to be used to pay the various amounts set out in the letter if the proposal went ahead.[106]

110 Haw then had a series of telephone conversations with Findlay (on 2, 8 and 9 June 2000)[107] concerning the status of the negotiations between the Liverno Investors and the landowners. At paragraph 27 of his statement Haw said that Findlay told him that "Liverno was not interested in leasing the Curries' property and therefore had little interest in allowing the Curries to share their pipeline to Reid's property" (emphasis added). Haw acknowledged that at that stage it was assumed that the Liverno Investors would be paying for the pipeline to connect the Project to the Property.[108]

111 By a letter[109] dated 5 June 2000, the Liverno Investors wrote to Rawalpindi with what was expressed as an offer in relation to the Property.[110] Reid recalled thinking that it was an entirely unsatisfactory offer because it left so much unclear. Reid spoke to his accountant, John Lewin of LSA Partners Pty Ltd about the offer.[111]

2.11 The 18 June 2000 telephone conversation between Haw and Reid

112 Haw telephoned Reid on 18 June 2000. According to Haw, Reid told him that they were almost certain to proceed and would "go it alone" if Giljohann "did not come to the party".[112] Haw said that Reid told him that he required a capacity share of 28ML per day and that he was not sure if he would require any additional capacity share for 20 hectares that he intended to subdivide, but he said that he needed to talk to Findlay.

113 Reid did not specifically recall this conversation. He read Haw's file note and denied that he told Haw that Rawalpindi would proceed alone if it did not do a deal with the Liverno Investors[113] and denied telling Haw he required 28ML per day capacity.[114]

114 I deal later with the conflict between Haw and Reid as to what was said during their conversation of 18 June 2000.

115 At the time of his conversation with Reid on 18 June 2000, Haw knew that Reid would not be the person making any formal commitment on behalf of Rawalpindi and Haw did not regard Rawalpindi as having made any final commitment to the Project at that time.[115]

116 There was no further conversation between Haw and Reid between 18 and 26 June 2000.[116]

117 On 20 June 2000 Rawalpindi's accountant responded to the Liverno Investors' offer in the following terms:[117]

"Further to your letter dated 5th June 2000 to Rawalpindi Nominees Pty Ltd we comment as follows:

Our clients were expecting an offer to acquire approximately 891 acres or 941 acres outright and enter into a Contract shortly and that you would immediately take over the liability for the upgrade of supply of water from Goulburn-Murray Water.

We now refer to your offer for further clarification.

1. a. There is no details of the lease as to dollar amounts, CPI and out of pockets.
2. a. The commencement date is too far away.
3. a. Would you please advise us of the expected development by you and over what period of time and what size, approximately?
4. a. Soil tests would be undertaken when? By whom? At your cost?
5. a. You would immediately undertake payment of the Goulburn-Murray water liability in relation to the upgrade and guarantee the ongoing payments.
6. a. The ground survey is to be conducted when you settle.
7. a. The required price was $1,000 per acre and now the option term is for to long a period and the purchase price must include CPI and relate to a valuation price at settlement.
8. a. What agreement would be required if the 50 acres including the house is excised?
9. a. We agree.
10. a. Our clients could be interested in progressive Contract of Sale whereby part of the land is acquired in years 1, 2 & 3 at a sensible price.
11. a. Any unused portion of the farm is to be share farmed by Rawalpindi Nominees Pty Ltd at a nominal fee on a year to year basis.

We look forward to your early reply." (emphasis added)

118 Reid and Free were provided with the draft of this letter before it was sent and had an opportunity to provide input.[118]

119 In cross examination Free and Reid were asked about the reference in the letter to the "liability for the upgrade of supply of water from GMW". In particular they were asked about the nature of the liability referred to:

"Mr Williams: The letter makes it clear that what the purchaser Liverno Olives would be doing if they were to make you an offer along the lines that your accountant is asking them to make, they would be taking over Rawalpindi's liability to Goulburn-Murray Water?

Ms Free: If anybody was going to develop the land, it would be their responsibility to get the water through Goulburn-Murray to our property."[119]

120 When asked what liability was being referred to Reid said:

"That has got me stumped, I'm not too sure. I can't answer that, I just don't know exactly what it referred to."[120]

121 By 26 June 2000 the final deadline for customers to make a commitment to participate in the Project had been extended a number of times. The deadline could not be further extended because GMW had to notify the designers (Egis and Optimatics) of the total capacity required for the Project by no later than 28 June 2000. In order to meet that deadline Haw had to report to the project manager by midday on 26 June 2000 as to the capacity shares to be taken up by all the customers who were to be involved in the Project. Haw could not recall telling Reid about the deadline at midday on 26 June 2000 and conceded that had he made such an ultimatum it was highly likely that he would have made a file note.[121] There is no such file note. Such an ultimatum was made to one of the other landowner, John Nosatti.[122] But I am not persuaded that any such ultimatum was made to Reid.

122 On 26 June 2000 Haw sent a memorandum to Colin Gundrill ("Gundrill") (GMW Corporate Services)[123] informing him of the final outcome of discussions with customers who had decided to enter the GMID to participate in the Project. The memorandum stated that Rawalpindi had agreed to a capacity share of 28 ML and would be paying a capital contribution of $126,000. Haw asked Gundrill to arrange for a formal agreement to be prepared for Rawalpindi.[124]

123 Prior to 26 June 2000 Haw had not taken any steps to have Rawalpindi sign a formal agreement or pay part of the capital contribution.[125] Haw proceeded on the assumption that Rawalpindi had agreed to participate in the Project, rather than on anything explicitly said to him. Haw's assumption was based on the Findlay/Reid letter to him of 7 April 2000. Haw agreed that this letter represented an initial commitment to the Project but that it was not the final commitment he needed going ahead.[126]

124 On 28 June 2000 GMW informed Egis that the final peak demand for the Project was 294 ML per day (pump station capacity).[127] The figure of 294ML per day included an allocation of 28ML per day to Rawalpindi.[128]

125 Haw wanted formal agreements prepared in order to ensure that the four landowners concerned (one of which was Rawalpindi) were brought into the irrigation district with their consent.[129]

126 On 11 July 2000 Rawalpindi received a letter[130] from GMW enclosing the Rawalpindi Agreement for execution.[131] The covering letter asked that the Rawalpindi Agreement be signed and returned "together with your agreed 25% contribution of $31,500.00".[132] Haw did not recall when the capital contribution to be paid on the signing of the formal agreement changed from 50 per cent to 25 per cent.[133] The Rawalpindi Agreement was in the following terms:[134]

127 In relation to paragraph five of the Rawalpindi Agreement, the Property has never been declared a "serviced property" under s 144 of the Act.[135] Haw could not recall saying anything to Reid or Free to the effect that tariffs would apply irrespective of whether a connecting pipeline was built. Haw agreed that this was an important matter and that if he had explained it to Reid and Free it was "highly likely" he would have made a note of it.[136] There is no such file note. Reid recalled that he did not execute the Rawalpindi Agreement because he was not able to do so without a corresponding commitment from investors.

128 Haw knew it was highly likely that the 25 per cent capital contribution would not be paid unless investors were obtained.[137]

129 GMW did not receive back the signed agreements. Haw said he did not believe this was significant because he had assumed that the landowners would sign the Rawalpindi Agreement.[138] Prior to 1 September 2000 Haw took no steps to follow up Reid about the signing of the Rawalpindi Agreement.

130 In cross examination Haw conceded that he regarded the failure to pay the capital contribution as significant but was unable to explain why he had not followed up the payment of the first instalment.[139]

131 In August 2000 a number of GMW's existing customers raised concerns regarding the financial viability of the Project. One of the concerns was about what would happen if the landowners coming into the GMID were not able to pay the tariffs required of them.[140] These concerns led Haw to think that he needed to ensure that the new entrants, including Rawalpindi, signed their agreements.

132 On 1 September 2000 Haw received a telephone call from Angelo Leonardi ("Leonardi"). Leonardi was one of a group of Woorinen landowners opposed to the idea of new participants (including Rawalpindi) being included in the Woorinen Area and being part of the Project. Leonardi told Haw that his group required a guarantee from GMW that if any of the new developers went broke the existing customers would not be financially penalised. If GMW did not respond favourably to the ultimatum within 10 days, a public meeting would be called by his group with a view to stopping the Project from proceeding altogether.[141]

133 Haw's conversation with Leonardi prompted him to consider the risks to GMW if the new participants (including Rawalpindi) failed to meet their commitments to GMW given that Rawalpindi had been allotted 28ML per day (10% of the total capacity of the Project). At this point Haw started to think that he may have been wrong to assume that Rawalpindi was part of the Project.[142] Haw agreed that the situation at that time was a "mess".[143]

134 On 1 September 2000 Haw spoke to Findlay. In his statement at paragraph 38 Haw said:

"He (Findlay) said that he and his clients were well aware of their financial obligations to GMW in connection with the project."

135 Haw's file note of this conversation is at court book 1007, it said, relevantly:

"He and his clients are well aware of the concepts, costs, etc of the Woorinen pipeline project."

136 In cross examination Haw acknowledged that his file note did not say that Findlay's clients were well aware of their financial obligations to GMW.[144] It was then put to Haw that he had put in paragraph 38 of his statement to 'beef up' his file note. Haw replied that it might have been better if it had not appeared in his statement.[145]

137 In a memorandum dated 4 September 2000 Haw informed Garry Smith (a member of the GMW Executive Management Team at that time) of the concerns of the Leonardi group. Haw recommended that the Executive Management Team be advised of the issues "to enable appropriate responses to be given to the Board and Parliamentarians".[146] The memorandum refers to Leonardi's ultimatum and said:

"The driver behind this ultimatum was the acknowledgement at the second meeting by GMW, that three new developers had not actually signed a formal agreement to be included into the Woorinen Irrigation Area. This has since been completed." [emphasis added]

138 Haw was asked about this memorandum and in particular the above statement, during cross examination. Haw conceded that the statement "[t]his has since been completed" was false as no formal agreement had been signed by Rawalpindi.[147]

2.14 The 5 September telephone conversation between Haw and Reid

139 On 5 September 2000 Haw telephoned Reid and said that he told him that GMW was getting anxious about delays in the signing of the Rawalpindi Agreement. According to Haw, Reid said that Findlay had arranged for developers to look at the Property the following day. Haw said that GMW had agreed to vary the previously agreed conditions by reducing the capital contribution that had to be paid immediately and accepting bank guarantees in lieu of actual payment of the deposit. Haw said that he told Reid that GMW had spent a significant amount of money on designing the Project in good faith on the basis that they had committed to be a part of the Project and that their commitment to the pipeline was not linked to the sale of the Property to developers or getting finance. Haw said that he told Reid that he (Reid) had given GMW a verbal commitment to take the 28 ML capacity [this was a reference to the conversation on 18 June 2000[148]] and had signed letters requesting the inclusion of the properties into the Woorinen Area [the reference to the Findlay/Reid letter of 7 April 2000[149]]. According to Haw, Reid did not dispute what he said and that Reid said that his son, who was to sign the Rawalpindi Agreement jointly with Free, was in Melbourne. According to Haw, Reid said that he would arrange to get the Rawalpindi Agreement signed that week. Haw's file note of the telephone discussion is at court book 1025. Haw was unable to say when he wrote his file note of this conversation but it would not have been as late as 15 September 2000.[150]

140 Reid did not remember this conversation but said that if Haw had said that Rawalpindi was bound whether or not investors were found he would have challenged that because he had always said he had no intention of signing the Rawalpindi Agreement until investors were secured.[151]

141 Reid rejects the proposition that he told Haw that he would make appropriate arrangements to get the Rawalpindi Agreement signed that week.[152]

2.15 The 13 September telephone conversation between Haw and Free

142 On 13 September 2000 Haw spoke to Free by telephone. Free told Haw that she would not be signing anything until the deal with the developers had been finalised. Haw's evidence was that he said that an agreement had already been reached and that they had made a commitment to take water from the Project and that there was no turning back. Haw's file note of the discussion is at court book 1025-1026. I deal with Free's evidence about this conversation later.

2.16 The 14 September telephone conversation between Haw and Reid

143 On 14 September 2000 Haw telephoned Reid at 9.00pm. According to Haw, Reid said that he was committed to the Project and the conditions of the Rawalpindi Agreement. Reid also said that his son who was a director of Rawalpindi was in Sydney and that he would forward a letter to GMW's Kerang office by Friday 15 September 2000, confirming his position. Reid did not recall this conversation. In particular he did not recall reinforcing his commitment to the Project and the Rawalpindi Agreement conditions, although he was always willing to be part of the Project if investors could be found.[153]

144 On 15 September 2000 Reid had Free draft a letter for him which he subsequently signed. Free faxed the letter to Haw. The letter is in the following terms:

"This is to confirm that I, Jeffrey Robert Reid, on behalf of Rawalpindi Nominees, am willing to be included in the development of the Goulburn Murray Water Authority, Woorinen Pipeline Scheme Agreement.

The land nominated is crown allotments 29 and 30, Bulga Road, Woorinen Parish."[154]

145 Free acknowledged that the letter was intended to be seen by GMW as a communication from Rawalpindi.[155]

146 Reid said that the letter did not go into detail or contain a request for a particular capacity share because he "knew that the details including the number of capacity shares would all depend on what any investors wanted".[156]

147 After 15 September 2000 Haw acted as if the Rawalpindi Agreement had been signed and for at least the next nine months did not press Reid or Free to sign the Rawalpindi Agreement.[157]

148 On 19 September 2000 Haw sent a memorandum to Rod Kilmartin (GMW Land and Water Management) seeking the inclusion of the Property, among others, in the Woorinen Area. The memorandum said, relevantly:

"The Woorinen Irrigation Area boundary is in the process of being finalised to allow confirmation by the Board however a number of inclusions are required as discussed. The following landowner's properties need to be included in the Woorinen Irrigation Area (GMID) as a matter of urgency. This will allow GMW to secure the business risk of the cost of the pipeline development, and future rates and charges.

We received earlier advice from John Adams on the process required to include these outside district landowners. John drafted the agreements, which have now all been signed and returned, with the exception of Reid. (Rawalpindi) Reid has signed two separate letters (see Doc No 418565) requesting inclusion, and therefore should also be included into the Area.[158]

149 The two separate letters referred to in Haw's memorandum dated 19 September 2000 are the Findlay/Reid letter of 7 April 2000 and the Reid letter of 15 September 2000.[159]

150 Even though Haw knew Rawalpindi had not agreed to the terms of the formal Rawalpindi Agreement, including the provisions about tariffs, he went ahead and directed that Rawalpindi be included in the irrigation area as a matter of urgency.[160] Haw conceded that in retrospect it was a very significant decision to go ahead and include Rawalpindi in the Woorinen Area without the signed Rawalpindi Agreement.[161]

151 After September 2000 a number of conversations took place between GMW's representatives (primarily Haw) and Reid relating to the Rawalpindi Agreement. GMW also wrote to Rawalpindi on a number of occasions. These matters were largely dealt with in Haw's witness statement at paragraphs 46-66. I do not propose to deal with these matters in detail. Having regard to GMW's contentions as to when the Rawalpindi Agreement was concluded, the events after 15 September 2000 can be characterised as post contractual conduct. Such matters (including Reid's efforts to sell the Property and the evidence of Coburn in that regard) are relevant in determining whether or not a contract was concluded.

152 In this case, there were protracted negotiations between the parties, but no formal contract had been executed. In such circumstances there will often be some doubt about whether finality of agreement has been reached. This is essentially a question of intention, objectively ascertained from the language the parties have used[162] and inferred from their conduct.

153 The central question is this: What would a reasonable person infer or deduce from observing the totality of the dealings between the parties?

154 A contract may be inferred from the acts or conduct of the parties. Where the intention of the parties is equivocal, subsequent conduct or correspondence can be used to determine whether or not a contract was concluded.[163] For this purpose, I have had regard to the post contractual conduct (see paragraphs 147-151 of the judgment).

155 In some circumstances an informal agreement, or statement of intention, may not give rise to any legal obligations until the execution of a formal contract. It is a question of intention. In Masters v Cameron[164] the High Court held that such cases fall into one of three categories:

(i) the parties may intend to be bound immediately, though expressing a desire to draw up their agreement in a more formal document at a later stage; or

(ii) they intend to be bound immediately but may wish the operation of a particular clause or term be delayed pending the drawing up of a more formal document; or

(iii) they intend to postpone the creation of contractual relations until a formal agreement is drawn up and executed.[165]

156 The essence of the Court's task in the present matter is to determine the relevant facts and decide which is the applicable category in the circumstances.

157 In determining the existence of a binding contract the law is concerned with the objective manifestation of both the fact of agreement and the intention to enter into a binding agreement. The subjective intention of the parties is immaterial. As their Honours Gaudron, McHugh, Hayne and Callinan JJ observed in Ermogenous v Greek Orthodox Community of SA Inc,:[166]

"Because the search for the "intention to create contractual relations" requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word "intention" is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties.'

158 To be binding the parties must have reached a concluded bargain and must have intended that their agreement would bind them and have legal effect.

159 As previously mentioned, GMW contended that the Rawalpindi Agreement arose from a conversation between Haw and Reid on 18 June 2000 and a letter from Reid to Haw dated 15 September 2000.

160 There is conflict in the evidence of Haw and Reid regarding the substance of 18 June 2000 conversation.

161 In his statement Haw said that Reid told him that they were almost certain to proceed and would "go it alone" if Giljohann "did not come to the party", and that Reid also said that he required a capacity share of 28ML per day.[167]

162 Reid did not specifically recall the conversation but denied he told Haw that Rawalpindi would proceed alone if it did not do a deal with the Liverno Investors[168] and denied telling Haw he required 28ML per day capacity.[169] At paragraph 48 of his affidavit Reid said that "[t]here is no way that I said this. It simply would not have been possible for Rawalpindi to proceed alone."

163 Haw's file note of the discussion is at court book 833 and said:

"Discussions with the following, on Sunday 18 June 2000 ...

• Certain to proceed, and will go alone if Peter does not 'come to the party'

• Capacity share of 28ML/d, but not sure if that includes his subdivided 20ha - need to talk to Colin Findlay."

164 The reference to "Peter" is a reference to Giljohann of the Liverno Investors.[170]

165 I have already commented on some unsatisfactory elements of Haw's evidence which have led me to treat his evidence with a significant degree of caution. In this instance I am not persuaded that Reid said the words attributed to him by Haw. There are five reasons for my conclusion in this regard.

166 First, in cross examination Haw became less certain of what was said during the conversation. He said that he "can't be explicit" about whether Reid used the actual words "certain to proceed" but that is what he believed Reid said.[171] Nor was Haw "absolutely sure" that Reid had actually said that he would "go it alone" but that was what he had written in his contemporary record of the conversation.[172] Haw acknowledged that his recollection of this conversation was based on his file notes though he had "some recollection" of the conversation.[173]

167 Second, the disputed phrases were not put in inverted commas in Haw's file note and when he wanted to quote exact words he sometimes put them in inverted commas.[174]

168 Third, if Reid had used the words attributed to him it would have represented an extraordinary change from his previous position. Prior to this conversation Reid had consistently said that Rawalpindi could not proceed to a final agreement without investor support. This apparent shift in Reid's position was put to Haw and he replied that it could only have been based on a new developer but conceded that Reid had not told him he had a new developer[175] and nor had Findlay said that Reid would go it alone.[176] In this regard Haw's file note of a discussion with Findlay on either 14 or 16 June 2000[177] noted that "Peter Gilgrahann [Giljohann] will ring and confirm issues". In cross examination Haw agreed that this note was consistent with Giljohann having a key role as the most likely investor to come up with the money to enable the Property to be brought into the GMID.[178]

169 In order to go it alone Reid would also have had to come to some sort of arrangement with the Curries about the shared pathway from the tapping point on GMW's pipeline to the Property. Haw said that he had no basis for thinking that that had happened.[179]

170 Fourth, the expression "certain to proceed" appeared elsewhere in Haw's file notes in respect of other conversations with other individuals. Haw's note of his conversation with Findlay a few days before the Reid conversation of 18 June 2000 stated that Findlay said that Reid was "almost certain to proceed".[180] Haw said that the words "almost certain to proceed" were the words actually used by Findlay in the conversation and that his file note is not simply his conclusion based on what Findlay said.[181] However, it seemed unlikely that Haw can accurately recall this aspect of that conversation when he was so heavily dependent on his file notes in respect of other conversations. Earlier in his evidence Haw had conceded that without his file notes he had very little independent recollection about what was said in any of the meetings.[182]

171 Haw also had a telephone conversation with Giljohann and his file note of that conversation also uses the phrase "almost certain to proceed". In cross examination it was suggested to Haw that the repetition of that phrase in his file notes meant that he had the same summation of what was said, rather than those actual words being used by both Findlay and Giljohann. In response to this suggestion Haw said "[i]t could be interpreted that way".[183] I agree. Indeed I think it is the most likely explanation.

172 Finally, at the relevant time Haw was under considerable pressure to finalise the capacity share arrangements and in my view this coloured his interpretation of what was said by Reid in this conversation.

173 By 26 June 2000 the final deadline for customers to make a commitment to participate in the Project had been extended a number of times. The deadline could not be further extended because GMW had to notify the designers EGIS and Optimatics of the total capacity required for the Project by no later than 28 June 2000. In order to meet that deadline Haw had to report to the project manager by midday on 26 June 2000 as to the capacity shares to be taken up by all the customers who were to be involved in the Project.[184]

174 I am not persuaded that Haw's file note accurately records what Reid said, rather, it is Haw's overly optimistic summation of the conversation.

175 For the reasons given I am not persuaded that Reid said that he was certain or almost certain to proceed and would go it alone if Giljohann did not come to the party. I think it more likely that Reid said he would not go it alone if Giljohann did not come to the party. Nor am I persuaded that Reid said he required a capacity share of 28ML per day. Based on these findings the conversation of 18 June 2000 provides very little support for GMW's contention.

176 I now turn to the letter of 15 September 2000. As noted earlier the letter is in the following terms:

"This is to confirm that I, Jeffrey Robert Reid, on behalf of Rawalpindi Nominees, am willing to be included in the development of the Goulburn Murray Water Authority, Woorinen Pipeline Scheme Agreement.

The land nominated is crown allotments 29 and 30, Bulga Road, Woorinen Parish."[185]

177 GMW contended that the reference to the "Goulburn-Murray Water Authority Woorinen Pipeline Scheme Agreement" refers to the agreement forwarded to Rawalpindi by GMW on 11 July 2000; the Rawalpindi Agreement. This was the only document produced in the proceedings which uses this expression.

178 Free could not remember where the words in the letter "Woorinen Pipeline Scheme Agreement" came from but accepted that it was possible they came from the Rawalpindi Agreement forwarded to Rawalpindi by GMW on 11 July 2000.[186] Reid was also asked about this in cross examination and he rejected the proposition that the letter was intended to confirm a willingness to be included in the area on the basis of the Rawalpindi Agreement. Reid said that any agreement was subject to securing investors.[187] Reid rejected the suggestion that the reference in the letter of 15 September 2000 to the Woorinen Pipeline Scheme Agreement was a reference to the document he got on 11 July 2000.[188]

179 It is important to place this letter into context. The parties' intentions could be ascertained from the conversations and dealings that took place between them before and after the letter was signed.[189] The parties' subjective intention is not relevant.

180 In early September 2000 it was starting to come into Haw's mind that he may well have been wrong to assume that Rawalpindi was part of the Project.[190] Rawalpindi's putative capacity share of 28ML amounted to about 10 per cent of the total capacity of the Project. Haw acknowledged that if Rawalpindi was not in the Project it would present "a difficulty" and a mess.[191]

181 Around this time existing irrigators were expressing their concern to GMW about the financial implications for them in the event that proposed new customers ("the New Developers") failed. Leonardi, a representative of concerned GMW customers, issued an ultimatum to GMW to the effect that unless GMW guaranteed the existing customers that if any new developers go broke the existing customers would not be financially penalised, a public meeting would be called to stop the Project. That ultimatum was a matter of serious concern to Haw at the time.[192]

182 In his telephone conversation with Reid on 5 September 2000 Haw said that GMW was "getting anxious". In his oral evidence Haw agreed that that remark could be construed as an understatement.[193]

183 On 13 September 2000 Haw spoke to Free by telephone. Free told Haw that Findlay was still negotiating an agreement with the developers and that she would not be signing anything until the deal with the developers had been finalised. Haw knew Free was a director of Rawalpindi and that her signature was necessary for an agreement to go ahead. Haw did not tell Free that if she did not sign the Rawalpindi Agreement, Rawalpindi would not be part of the Project.[194] Haw's evidence is that he told Free that Rawalpindi had already committed and that Free said they had not, or words to that effect.[195] Free told Haw not to call her at work again.[196] There is no real dispute about the substance of this conversation.

184 At that time Haw felt he had hit a real obstacle with Free and knew that the Rawalpindi Agreement would not be signed without developers so long as she was a director of Rawalpindi.[197]

185 Free recalled numerous telephone calls from Haw during this time. At paragraph 21 of her affidavit she said:

" During this period, Lester Haw had called me at work over and over again, always seeking to convince me that Jeff and I should sign the agreement. I don't have a record of all times Lester Haw telephoned me during this period, but there were plenty. He often called on our home phone, and he probably called me at work about 8 or 10 times. Each time I spoke to him, I felt pressure to sign the agreement or to get Jeff to sign it".

186 On 14 September 2000 Haw telephoned Reid at 9.00pm. Haw agrees that he told Reid that he needed something from him to show that Rawalpindi was still interested in being part of the Project and that Reid agreed to provide a letter for that purpose.[198] Haw did not tell Reid that if he provided such an indication it would be treated as being as good as a signed formal agreement.[199] Indeed Haw conceded that if he had said that then there is no way that Free would have sent the letter[200] and that it was "highly likely" that Reid would not have provided such a letter.[201]

187 Haw's file note of this conversation (court book 1026) said:

• "Jeff reinforced his commitment to the [p]roject and agreement conditions

• Discussed his current circumstances and noted his son who is a director is currently in Sydney

• Agreed to forward a letter reinforcing these statements to the Kerang office by COB Friday 15 September 2000."

188 During cross examination Haw agreed that the first dot point of his file note was his conclusion about the effect of what Reid had said to him. He could not precisely recall the words used.[202]

189 The reference to Reid's "current circumstances" in the second dot point of the file note was a reference to his financial embarrassment (he was bankrupt).[203] Haw acknowledged that it should have been pretty clear to him at the time that Reid was not flush with funds.[204]

190 In re-examination Haw recalled that there had also been discussion about when Reid would come out of bankruptcy and he believed it was a few months out. Haw also said it was "highly likely" that during this discussion Reid told him that when he came out of bankruptcy Troy Reid would stand down as a director and Reid would take his place.[205] This gave Haw a "certain amount of surety - or reassurance".[206]

191 As noted earlier, Reid did not recall this conversation. In particular he did not recall reinforcing his commitment to the Project and agreement conditions, although he was always willing to be part of the Project if investors could be found.[207]

192 Haw did not tell either Free or Reid that the 15 September 2000 letter would be treated by him as being as good as signing the Rawalpindi Agreement.[208]

193 In my view the context makes it clear that the parties' mutually intended that the letter of 15 September 2000 was to show that Rawalpindi was still interested in being a part of the Project. What then are the consequences of all of this? As I have mentioned, GMW contends that there was a concluded agreement between the parties - the Rawalpindi Agreement.

194 Rawalpindi contended that the circumstances of this case fall within the third category in Masters v Cameron,[209] that is, the parties intended that they not be bound unless and until they executed a formal contract.

195 In addition to the evidence as to what was said in the various conversations two general contextual matters support Rawalpindi's contention.

196 The first such matter is Haw's evidence that there was a two stage process for landholders outside the GMID to become part of the Project. The landholders were first asked for an initial commitment to the Project, followed by further discussions so that everything was understood and then the landholder made a final decision and commitment to the Agreed Outcomes. This two stage process was reflected in the "Draft Business Rules for the Woorinen Infrastructure Project" developed by Haw in June 1999.[210] The purpose of the two stage process was to ensure that no one was forced to enter into the Project against their will.[211]

197 The second general contextual matter supporting Rawalpindi's contention was the fact that GMW forwarded a number of formal agreements to Rawalpindi for execution and return. Two of the agreements sent were in broadly similar terms and concerned Rawalpindi's participation in the Project. Those agreements were sent on 11 July 2000 and 15 June 2002.[212] A third agreement was sent on 27 July 2004 and it sought a commitment to repay a debt based on accrued charges and tariffs.[213] GMW's representatives (particularly Haw) made repeated attempts to have those agreements signed. None of the agreements were signed by Rawalpindi.

198 Counsel for GMW sought to explain Haw's persistent desire to have a formal agreement signed by characterising Haw as "a bureaucrat" who "has been told he should have a written agreement. He wants to dot the I's and cross the T's".[214]

199 But Haw's evidence did not support counsel's contention. Haw agreed with the proposition that entering into a formal agreement with GMW was always regarded as a critical step and that the payment of the capital contribution (or part of it) was another critical part of the way the landowners commitment was meant to be demonstrated.[215]

200 There were aspects of Haw's evidence in chief that, seen in isolation, may be said to support the view that he regarded the signing of the Rawalpindi Agreement as a mere formality. But these statements were heavily qualified in cross examination.

201 At paragraph 35 of his statement Haw said that when GMW did not receive back the signed agreements he "did not believe that was significant". But when cross examined about this, Haw agreed that it was important to get the agreements signed[216] and it was significant that no part of the capital contribution had been paid. As previously mentioned the first instalment of the capital contribution was payable on the signing of the agreement.

202 At paragraph 35 of his statement Haw said that he regarded the signing of the written agreements as "just a formality", but under cross examination Haw accepted that this statement was "not really right".[217]

203 Finally, at paragraph 55 of his statement Haw said that in a telephone conversation with Reid on 21 May 2002 he told Reid that "because their land had been included into the Woorinen Area, the rates and charges now applied even if the agreement was not signed, but that I still wanted it signed to tie up the loose ends". But under cross examination Haw accepted that this statement was "quite misleading".[218]

204 The importance that GMW attached to the execution of a formal written agreement was also evidenced by the financial incentives GMW offered to induce Reid to sign such an agreement. The original agreement forwarded to Rawalpindi on 11 July 2000 provided that the capital contribution of $126,000 would be paid in three instalments: "25% ($31,500) of which is due on signing, 25% (31,500) in the twelve months from the date of this agreement and 50% ($63,000) due when connection to the pipeline is effected". The offered terms were then modified in a telephone conversation between Haw and Reid on 5 September 2000. In his statement Haw said, at paragraph 40:

"I said that Goulburn Murray Water had agreed to vary the previously agreed conditions by reducing the capital contribution that had to be paid immediately and accepting bank guarantees in lieu of actual payment of the deposit."

205 On the basis of my findings regarding the conversation between Haw and Reid on 18 June 2000; the 15 September 2000 letter; and the contextual matters set out above, I have concluded that this case falls within the third category in Masters v Cameron.[219] The parties intended that they not be bound unless and until they executed a formal contract. It follows that GMW's claim for declaratory relief must fail. GMW's alternate claim is based on estoppel. It relied on the same substratum of facts as the primary claim. In view of my findings as to those facts that claim also fails, a point conceded by counsel for GMW.[220] For completeness, I also note that to make good the estoppel, GMW would have had to show that it relied on the actions of Reid or Rawalpindi. There is a marked lack of particularity in the evidence as to when GMW was committed to expanding the capacity of the pipeline. Such lack of particularity makes it difficult to assess the actions or conduct of Rawalpindi that were said to give rise to the estoppel. I now turn to consider Rawalpindi's counterclaim.

206 Rawalpindi's counterclaim seeks a declaration that the Order which purportedly included Rawalpindi in the GMID is void and that Rawalpindi is not within the GMID. The background to the Order in question may be briefly stated.

207 In early October 2000 Kelly prepared a proposal to be tabled at the GMW Board meeting to be held on 19 October 2000 to approve an extension and excision of land from the GMID. At that time Kelly was responsible for the administrative processes involved in the inclusion or excision of properties from the GMID. Among the properties proposed for inclusion in the GMID was Rawalpindi.

208 On 19 October 2000 the GMW Board resolved that Rawalpindi be included in the GMID. Kelly then arranged to have an advertisement placed in the Weekly Times of 25 October 2000, 1 November 2000 and 8 November 2000 giving notice that GMW was intending to extend the boundary of the GMID by incorporating Rawalpindi, and other named properties.[221] A similar notice was published in the Government Gazette of 26 October 2000.[222] No notice was sent to Rawalpindi.[223]

209 No submissions were received within the one month period after the notices were advertised.

210 On 20 February 2001 a delegate of the relevant Minister made an order for the extension of the GMID to incorporate Rawalpindi. The Order was published in the Government Gazette on 1 March 2001.[224]

211 By letter dated 14 June 2001[225] Haw wrote to Reid and Free advising them that the Property had been included in the Woorinen Area and that as a consequence they would be responsible for rates and charges imposed by GMW. The letter goes on to say:

"On connection to the new pipeline, which is likely to be in August 2003, you will be responsible for the full tariff and charges, as follows:

Service fee $100

Bulk water fee @ $6 per ML/d of water right held $0

Capacity share fee; 28 ML/d at $2000 per ML/d $56,000

Usage Fee; Based on actual use @ $20 per ML/d $0

Total Cost $56,100

Should you require further advice on any of the above issues, please contact Peter Koetsveld, Ph: 54510157 or myself 54510111.

I also remind you that your total capital contribution for the pipeline project, based on a capacity share of 28ML/d, is $126,000. As agreed $63,000 (50%) is due on 7 September 2001 (12 months from the date of the agreement). The balance of $63,000 is due when the pipeline is able to be connected to your works. This is anticipated in mid 2003.

Please sign the enclosed Agreements as discussed earlier, and return to G-MW. A copy will be returned to you at a later stage."

212 Haw cannot recall why he fixed upon 7 September 2000 as the date of "the agreement" in this letter. It was likely that he had in mind that Bruce Currie, Reid's neighbour, had signed his agreement on 7 September 2000.[226]

213 Rawalpindi contended that the inclusion of the Property in the GMID is invalid for want of compliance with s 96 of the Act.

214 At the relevant time s 96 set out, among other things, the statutory process for extending irrigation districts, it states:

"96. New water, sewerage and waterway management systems

(1) If a council proposes, or two or more councils jointly propose, to have water supply, sewerage or waterway management works constructed for the whole or any part of its or their municipal district or districts, the council or councils may submit the proposal to the Minister.

(2) If an Authority (other than a council) proposes -

(a) to set up a new water, sewerage or waterway management district; or

(b) to extend its existing water, sewerage, waterway management or irrigation district -

the Authority may, subject to sub-sections (3) and (4), submit the proposal to the Minister.

(3) An Authority must not submit a proposal for a new or extended water, sewerage or waterway management district if the area to be covered is within the area of interest of another Authority.

(4) An Authority must not submit a proposal for -

(a) a new or extended sewerage district unless the area to be covered is within the Authority's water district; and

(b) a new or extended waterway management district unless the area to be covered is within the catchment for the Authority's water district -

unless the Minister in writing exempts the Authority's proposal from the operation of this sub-section.

(5) The Minister may exempt an Authority which submits a proposal for an extended water, sewerage, waterway management or irrigation district from any provisions of sub-section (6), (7) (other than paragraph (c)(i)) or (8).

(6) A proposal must be in the form required by any guidelines issued by the Minister.

(7) The Authority or council making the proposal must -

(a) give notice of the proposal to -

(i) all councils that are affected by the proposal; and

(ii) any person which the Authority or council reasonably believes may be affected or to which it is directed by the Minister to give notice; and

(b) make the proposal available for inspection free of charge at its office during its office hours; and

(c) publish a notice of the proposal -

(i) at least once every week for 3 consecutive weeks in a newspaper circulating generally in the area to which the proposal relates; and

(ii) in the Government Gazette, after all other notices under this sub-section have been given or published.

(8) A notice under sub-section (7) must state that -

(a) submissions on the proposal are invited; and

(b) a submission should set out the grounds for any objection raised in it; and (c) submissions must be received by the Authority or council within 1 month after the publication of the notice in the Government Gazette.

(9) If any submissions are made within one month after publication in the Government Gazette of the notice of the proposal, the Authority must consider them and, if it decides to proceed with the proposal, it must notify the Minister of its decision and send copies of the submissions to the Minister.

(10) The Minister may refuse the proposal or approve it, with or without any changes.

(11) If the Minister approves a proposal, with or without any changes, the Minister must give effect to the approval by making an Order published in the Government Gazette which -

(a) declares a new water, sewerage or waterway management district and nominates a council or an Authority to manage and control it; or

(b) extends an existing water, sewerage, waterway management or irrigation district."

215 Rawalpindi contended that the extension of the GMID was void to the extent that it purported to include the Property within the district. There were two grounds to this contention:

(ii) Rawalpindi did not receive notice of the proposed extension as required under ss 96(7)(a) and (8) of the Act; and

(iii) the notices that were given of the proposed extension did not comply with s 96(8) of the Act because:

(a) the notices did not invite submissions on the proposed extension as required by s 96(8)(a);

(b) the notices did not state that submissions must be received within one month after the publication of the notice in the Government Gazette as required by s 96(8)(c); and

(c) GMW failed, as required by s 96(7)(c)(iii), to give notice of the proposed extension in the Government Gazette after all other notices under s 96(7) had been given or published.

216 GMW rejects the Rawalpindi's contention and seeks a declaration that the Property is properly part of an area within the GMID known as the Woorinen Area.

217 GMW's primary submission was based on what it said was a blanket exemption from the need to comply with ss 97(7)(a)(i) and (ii) of the Act. It is said that such an exemption was provided by the relevant Minister in a letter to GMW dated 25 November 1997 from the Minister's delegate. The terms of the relevant letter are set out below:

"DISTRICT EXTENSIONS AND DIMINUTIONS

Thank you for your letter to the Minster for Agriculture and Resources concerning the diminishment and extension of the Goulburn Murray Irrigation District that was received on 27 October 1997. I have been asked to respond on his behalf.

The Minister has granted an exemption to Goulburn-Murray Water from the requirements of section 96(7)(a)(i) and (ii) of the Water Act 1989 in relation to proposed extensions of the Goulburn Murray Irrigation District.

This exemption has been granted pursuant to section 96(5) of the Act.

Yours sincerely

David Heeps

Director, Water Agencies"[227]

218 This letter was in reply to a letter from GMW to the Minister,[228] in the following terms:

" Goulburn-Murray Water submitted Order Plans for the diminishment of the East and West Loddon Water Works District and for the diminishment and extension of the Goulburn Murray Irrigation District on 1 October 1997.

The extension of the Goulburn Murray Irrigation District is administered under Section 96 of the Water Act (1989).

The Authority hereby requests your approval to be exempt from Section 96, (7), A1&A2 on the grounds that the Goulburn Murray Irrigation District is being extended on application by the property owners and after a full investigation by Goulburn-Murray Water.

This request for an exemption is made under Section 96(5) of the Water Act (1989)."[229]

219 I am not persuaded that the letter of 25 November 1997 provided a blanket exemption as contended by GMW. The letter is in response to a specific request for an exemption in respect of a particular proposal for the diminishment and extension to the GMID.

220 GMW's letter to the Minister did not seek a blanket exemption. GMW's request to the Minister was for "an exemption" and it was supported by the circumstances which pertained in that particular case, namely, that the proposal to extend the GMID was "on application by the property owners after a full investigation by Goulbourn Murray Water".

221 It seems unlikely that the Minister would have responded to such a request by granting a general exemption. The reasons advanced by GMW in support of its request for an exemption (the extension of the GMID was an application by the property owners themselves and there had been a full investigation by GMW) only support the grant of an exemption in that particular case. Those reasons provide no basis for the grant of a general exemption because it cannot be assumed that the same circumstances would be present in all future cases.

222 The Minister may exempt an Authority from the requirements of subsections (6) and (7) (other than paragraph 7(c)(i)) or (8). GMW's letter to the Minister only sought an exemption from the requirements of s 96(7)(a)(i) and (ii). The Minister's response was similarly confined. Despite having the power to exempt the Authority from ss 96(6) and (8) the exemption granted was limited to the statutory provisions referred to in GMW's request. This suggested that the Minister's letter only intended to deal with the particular circumstances set out in GMW's letter.

223 I note that GMW's contention derived some support from the language used in the second paragraph of the letter from the Minister's delegate: "The Minister has granted an exemption ... in relation to proposed extensions of the Goulbourn Murray Irrigation District".[230] The expression "proposed extensions" was not qualified by reference to the particular proposal being advanced by GMW at that time. Had the letter referred the grant of an exemption in relation to "the proposed extensions" the matter would have been beyond doubt. But even so, I am not persuaded that the absence of such a qualifying word carries GMW's argument the required distance. The letter makes no direct reference to the grant of a general or blanket exemption. Indeed the letter refers to the grant of "an exemption" and given that it was written in response to a request relating to a particular proposal it should be read as being confined to the scope of the request made.

224 Even if my characterisation of the Minister's letter is wrong the GMW's argument would still not succeed because of the scope of the exemption power.

225 The Minister's power to exempt an Authority from certain parts of s 96 is conferred by s 96(5). That subsection provides that the Minister may grant an exemption to "an Authority which submits a proposal for an extended ... irrigation district...". The word "proposal" should probably be read to include the plural, proposals,[231] but even so the language of s 96(5) strongly suggests that an exemption may only be granted in respect of specific proposals submitted to the Minister. Such a power would not extend to the grant of a general exemption applicable to all prospective proposals. This construction also accords with common sense. It would be expected that the Minister would wish to scrutinise the reasons for an exemption in each particular case.

226 The purposes of the Act and the context also support a narrow rather than an expansive construction of s 96(5). Section 1 sets out the purposes of the Act, one of which is:

(e) to maximise community involvement in the making and implementation of arrangements relating to the use, conservation or management of water resources.

227 Section 96 is directed at the achievement of this purpose. The section sets out a statutory procedure to ensure that affected persons are accorded procedural fairness before an irrigation district is extended. The provision may be classified as beneficial in nature and hence the power to grant an exemption should be strictly construed in order to preserve the beneficial effect of the provision.[232]

228 A strict approach to the construction of s 96(5) is also warranted because the subsection is a restriction on the procedural fairness to be accorded to those affected by proposals to extend irrigation districts.

229 In this context it is relevant to note that s 96 gives effect to the general proposition that a public official or body having the power to affect the rights of a person is bound to accord him or her procedural fairness before exercising the power. As Mason J said in Kioa v West:[233]

'The law has now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention.'

230 Similarly in Annetts v McCann[234] Mason CJ, Deane and McHugh JJ said:

'It can now be taken as settled that, when a statute confers power upon a public official to destroy, defeat or prejudice a person's rights, interests or legitimate expectations, the rules of natural justice regulate the exercise of that power unless they are excluded by plain words or necessary intendment.'

231 It is also to be noted that the extension of an irrigation district has important consequences for the land owners affected. Subject to s 259 of the Act an Authority may impose fees on properties within its district. Tariffs have been levied on the Property in reliance on this power.[235] S 268 provides that an authority may require the owner of a property to meet or contribute to the cost of any works that are used or will be able to be used (directly or indirectly) for services which will benefit the property. GMW is seeking to have Rawalpindi make payments towards the capital cost of the Project pursuant to this power.

232 In the event that fees imposed under a tariff or a capital contribution under s 268 are unpaid for at least three years after they become due, the Authority may sell, or cause to be transferred to itself, the property in relation to which the fees and costs have been levied (s 278).

233 Having regard to the consequences which may flow from inclusion in an irrigation district the statutory procedure in s 96 assumes greater significance. This provides another reason for adopting a narrow construction of the exemption power in s 96(5).

234 For the reasons given s 96(5) does not empower the Minister to grant a general exemption in respect of any prospective proposal.

235 Having disposed of GMW's blanket exemption contention I now turn to consider the legal consequences of non compliance with the requirements of s 96.

236 I find that there have been two departures from the requirements of s 96, namely:

(i) Rawalpindi was not given the notice required by s 96(7)(a)(ii) and (8); and

(ii) the public consultation period prescribed by s 96(7)(c) and (8) was foreshortened.

237 The second departure arose because, contrary to s96(7)(c), GMW published notices in the Weekly Times on 25 October 2000, 1 November 2000 and 8 November 2000, but published notice in the Government Gazette on 26 October 2000 rather than after the other notices had been given. The result was that the consultation period concluded on 26 November 2000 rather than some time not before 9 December 2000.

238 GMW conceded non compliance with these requirements but said that Rawalpindi had "informal notice" as to the proposal to include the Property in the GMID at some stage, but not as to the timing. It was submitted that such "informal notice" constituted substantial compliance with the statutory requirement.[236]

239 I reject the proposition that there had been "substantial compliance" with the requirements of s 96(7)(a)(ii) and (8). Rawalpindi was informed about the Project in various discussions in which they expressed interest in the Property being included in the GMID as part of that proposal. But at no stage was Rawalpindi told that GMW was submitting a proposal to the Minister to extend the GMID to include the Property (among others) and that any objections Rawalpindi might wish to make could only be made until a specified date. As with many things, timing is everything. The failure of GMW to notify Rawalpindi at the relevant time necessarily means that there was no compliance with s 96(7)(a)(ii) and (8).

240 Of course the fact that the act of including the Property in the GMID was done in breach of the provisions of s 96 does not necessarily mean that the act was invalid. As the High Court said in Project Blue Sky Inc v Australian Broadcasting Authority:[237]

"An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition. Unfortunately, a finding of purpose or no purpose in this context often reflects a contestable judgment. The cases show various factors that have proved decisive in various contexts, but they do no more than provide guidance in analogous circumstances. There is no decisive rule that can be applied; there is not even a ranking of relevant factors or categories to give guidance on the issue." [citations omitted][238]

241 Hence, whether the departures from the requirements of section 96 in this case result in the invalidity of the Order is dependent upon the legislative purpose. Is the legislative purpose of s 96 to invalidate any act that fails to comply with those requirements?

242 Section 96 has two relevant purposes. The first is to stipulate a statutory procedure to ensure that affected persons are accorded procedural fairness before an irrigation district is extended. The second is to enable the Minister to make a decision fully informed of the relevant circumstances.

243 The statutory procedure required the Minister to make the final decision regarding boundary extensions. As part of that process, the Minister is required to be informed of any submissions made in response to the statutory notice. The Minister was not told that Rawalpindi had declined to sign the Rawalpindi Agreement put forward, or that notice under the section had not been given to them even though the Property was within the proposed extended district.

244 The power to extend an irrigation district is of special importance. It is vested in a Minister. The Authority is only the applicant for the exercise of the power. As mentioned earlier, the exercise of the power enlivens all the powers and functions of the relevant authority in relation to the affected land, including the power to impose fees and charges. S 96 is designed to ensure that there is a minimum period of formal public consultation and that affected persons are formally advised of the proposal and invited to make submissions. Failure by an authority to comply with the procedures laid down in the section can enable that authority to acquire enhanced statutory powers to the prejudice of the very persons whose interests the provision is intended to protect.

245 Part of the section 96 process is that, before the Minister makes any decision, the Authority that is seeking an extension must provide material to the Minister including any submissions it has received (s 96(9)). The section envisages that the Authority will fully inform the Minister before the decision is made. That did not happen in this case.

246 Had the Minister been informed of the true situation, namely, that Rawalpindi did not wish to be part of the Project unless it first secured investors, the Minister would have needed to decide (under s 96(10)) whether to:

(a) approve the proposal despite the circumstances pertaining to the Property;

(b) make changes to the proposal before approving it to take account of those circumstances (for example, by excising the Property from the extension); or

(c) refuse the proposal in light of those circumstances.

247 As a result of the course taken by the Authority the Minister never made any of these decisions, nor was he advised that they needed to be made. Rawalpindi contended that as a consequence the approval process miscarried.

248 GMW advanced a number of points in support of the proposition that non compliance with s 96 does not go to invalidity. GMW relied on four general factors:

(i) The availability of judicial review was said to tell against the view that a failure to accord procedural fairness automatically leads to invalidity;[239]

(ii) The potential interference with an individual's property rights needed to be balanced against the fact that the Act is for the public good and GMW was a "responsible authority" within the legislative scheme. It is relevant to have regard to the public inconvenience which would result from a finding of invalidity;[240]

(iii) The decision maker (the Minister) is not the person who had to comply with the procedural fairness obligations in s 96 and the Minister's powers under ss 96(10) were wider than simply rubber stamping a proposal or declining to do so; and

(iv) The Order in question affected other landowners, not just Rawalpindi.

249 In relation to the last matter it was submitted that the Court can only make a declaration that the whole Order was invalid. The declaration of invalidity cannot be limited to Rawalpindi. I do not agree. The Court has a broad discretion as to the form of declaratory relief and I am satisfied that it extends to granting relief in the form sought.

250 In relation to the scope of the Minister's power, I accept that ss 96(10) empowers the Minister to approve a proposal "with or without any changes." GMW contended that the exercise of such a power may mean that a proposal would be approved with changes and that there would be no requirement that notice be given to affected persons of such changes. Two things may be said about ss 96(10). The first is that the power to approve a proposal "with changes" is unlikely to be construed such as to enable radical changes to the proposal as submitted.[241] The second point is that the exercise of such a power would be amenable to judicial review.

251 I have had regard to all of the matters advanced on behalf of GMW in relation to the validity issue but in my view the legislative purpose points to the necessity of strict compliance with the requirements of s 96(7)(a)(ii) and (8). These provisions require an authority to notify affected persons and invite them to make submissions within a stipulated period. The legislative purpose is to invalidate any act that fails to comply with these requirements.[242] I have reached this conclusion having regard to the following matters:

(i) The purpose of s 96 and in particular the fact that it provides a statutory code for affording procedural fairness to affected persons. The provision of notice is fundamental to the notion of procedural fairness.[243] In this case the obligation to give notice also extends to the content of the notice (ie. the requirements of s 96(8). In Deputy Commissioner of Taxation v Woodhams[244] the High Court observed:

"It is the legislative purpose to be served by the giving of a ... notice that determines the nature and extent of the information necessary to satisfy the requirement to set out details ... Absence of information will involve a failure to provide necessary details if, without such information, the notice will not fulfil the purpose for which it is required to be given."[245]

Here the purpose of the notice will not be fulfilled unless the content of the notice invites submissions setting out the grounds of any objection to the proposal and specified the period within which such submissions must be received by the Authority.

Provisions intended to allow affected persons to make submissions in opposition to a proposal have often been interpreted as producing an invalid result in the event of non compliance.[246]

(ii) An order made pursuant to s 96 affects the property rights of the landowners affected (see paragraphs 231-232 above) In such circumstances the failure to comply with a requirement to notify affected persons has been held to render the relevant act invalid.[247] In R v Epsom and Ewell Corp; Ex parte RB Property Investments (Eastern) Ltd[248] a provision requiring 28 days notice to be given to the occupier of a house before the execution of a demolition order was held to require strict compliance.[249] Similarly in WMC Resources Ltd v Lane[250] it was held that the failure to give notice to persons whose interests may be affected by a native title claim made subsequent steps taken in relation to the claim invalid.

In this context it is also relevant to note that there is a presumption against a parliamentary intention to infringe upon common law rights and freedoms.[251] In the United Kingdom that presumption has been described as an aspect of the 'principle of legality' governing the relationship between parliament, the executive and the courts.[252]

Writing extra judicially Spigelman CJ[253] has described the principle of legality as a unifying concept which should be used to encompass a range of more specific interpretive principles. Among the rebuttable presumptions nominated for consideration under the rubric of the principle are the presumptions that parliament did not intend:

• to invade fundamental rights, freedoms and immunities

• to deny procedural fairness to persons affected by the exercise of public power;[254] and

• to interfere with vested property rights.[255]

The principle of legality also supports the conclusion that non compliance with the notice requirements in s 96(7)(a)(ii) and (8) renders the subsequent order invalid.

(iii) The objects of the Act and in particular object s 1(e) (see paragraph 226 above).

(iv) The affirmative language of ss 96(7) and (8) and in particular the use of the word "must". It is also relevant to note that the requirement to give notice in ss 96(7)(a)(ii) is predicated on the Authority forming a reasonable belief that a person may be affected by the proposal. It would be an odd outcome if an Authority formed such a belief but then failed to act on it, with not consequent effect on validity.[256]

(v) Ss 96(5) provides that the Minister may exempt an Authority which submits a proposal for the extension of an irrigation district from, relevantly, the requirement in ss 96(7)(a)(ii) to notify persons which the Authority reasonably believes may be affected. If non compliance with ss 96(7)(a)(ii) does not affect the validity of a s 96 order, why did the legislature consider it necessary to provide scope for an exemption from these requirements? It is also relevant to note that the exemption power is reposed in the Minister, not the Authority. In this case, the Authority effectively usurped the Minister's power and exempted itself from the requirement to give notice.

(vi) Finally, the Act expressly provided that in other circumstances a departure from legal requirements is not to affect validity. S 305C provides that failure to comply with s 32 of the Interpretation of Legislation Act 1984 (Vic) does not affect validity where an order or instrument made under various sections incorporates matter contained in another document. One such section is s 96(11). As Parliament has not provided that a departure from the terms of s 96(7) or (8) does not affect the validity of an order under s 96(11) the contrary intention may be inferred.

252 The purported inclusion of the Property in the GMID was invalid. I grant Rawalpindi's application for a declaration that the Order is void to the extent that it purports to include the Property in the GMID.

253 For completeness I note that Rawalpindi submitted that in the event the extension of the GMID to bring the Property into the district was valid, then the tariffs which GMW purportedly applied to the Property were unlawful. This alternative argument turns on the proper construction of s 259 of the Act. As I have concluded that the purported inclusion of the Property in the GMID was invalid, it is unnecessary for me to consider Rawalpindi's alternate submissions.

[3] Transcript of Proceedings_, Goulburn Murray Rural Water Authority v Rawalpindi Nominees & Anor_ (Supreme Court of Victoria, Ross J, 1,2,3,4,11 and 12 March 2010) ("TP") 209, lines 27-29.

[8] Other than certain payments by way of government drought assistance rebate, which is not relevant for present purposes.

[9] Exhibit P1, TP 30-43, 43-160, 161-169.

[13] Ibid 123, lines 10-17; 124, lines 5-9.

[15] Ibid 124, lines 23-25; 125, lines 29-31.

[16] Ibid 145, lines 29-31; 146, lines 1-5, Court Books of Proceeding ("CB") 1069.

[17] Exhibit P2, TP 171-183; 173-180; 181-182.

[19] Exhibit P3, TP 182-194; 194-212; 212-222; 222-224.

[20] Exhibit P4, TP 229-230; 230-233; 234.

[21] Exhibit P5, TP 235-237; 237-249; 249-250.

[22] Exhibit P6, TP 251-260; 260-264; 264.

[23] Exhibit P7 (note: Simpson-Thoulis was not called to give evidence).

[24] Exhibit D2, TP 290-292; 292-417; 418-424.

[26] Exhibit D3, TP 425-431; 431-460; 460-464.

[27] See GMW's final written submissions dated 11 March 2010, [18] - [23].

[28] Exhibit D4, TP 464-466; 466-498; 498-500.

[29] The newsletter inviting customer to attend at the meeting is at court book 337-345, and the presentation material is at CB 359-372; Exhibit P1 [10].

[32] TP 69, lines 10-11; 470, lines 1-6.

[37] Exhibit P2 [ 7]; CB 1591.

[41] TP 218, lines 29-31; 219 lines 1-6.

[42] Exhibit D2 [22-23], TP 302, lines 10-31; 303 lines 1-15.

[46] A local group of GMW managers that met infrequently: TP 64, lines 30-31; TP 65, lines 1-2.

[55] TP 310, lines 1-7; 312, lines 22-25.

[80] Ibid 459, lines 29-31; 460, lines 1-19.

[82] TP 193, lines 27-31; 194, lines 1-6.

[87] Ibid 206, line 31; 207, lines 1-4.

[97] Exhibit P1 [24]; CB 775-6; TP 91, lines 9-31; 92, lines 1-20.

[118] TP 321, lines 25-31; 322, lines 1-5; 477, lines 3-19.

[120] Ibid 362, lines 24-26; Cf TP 362-367.

[121] Ibid 110, lines 9-16, 111, lines 12-16; see also 325, lines 23-31.

[125] TP 110, line 31; 111, lines 1-5.

[126] Ibid 112, lines 6-31; 113 lines 1-2.

[140] Ibid 121, lines 2-10; CB 938-939.

[149] Ibid 127, lines 21-31; 128, lines 1-3, CB 615.

[153] Exhibit D2 [62-64], Ibid 384, lines 24-31; 385, lines 1-11.

[158] Summary of evidence document, 41 [155].

[159] Ibid 140, lines 11-28; CB 1034.

[160] Ibid 142, lines 6-10; CB 1034.

[162] Australian Broadcasting Corp v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, 548-550 (Gleeson CJ, Hope and Mahoney JA agreeing).

[163] Husain v O & S Holdings (Vic) Pty Ltd [2005] VSCA 269, (Unreported, Chernov, Nettle and Ashley JJA) [51] Nettle JA.

[164] [1954] HCA 72; (1954) 91 CLR 353 (Dixon CJ, McTiernan and Kitto JJ).

[165] NC Seddon and MP Ellinghaus, Cheshire and Fifoot's Law of Contract (9th ed, 2008) 243. For completeness I note that a fourth category is now generally accepted, namely, where the parties intend to be bound immediately by the terms which they have agreed upon but expect to make a further contract containing additional terms: Graham Evans Pty Ltd v Stancraft Pty Ltd [1999] FCA 1670.

[166] (2002) 209 CLR 95, 105-06.

[176] Ibid 104, lines 29-31; 105, lines 1-5.

[181] TP 99, lines 27-31; 100, lines 1-11.

[183] Ibid 100, line 31; 101, lines 1-3.

[186] TP 490, lines 11-31; 491, lines 1-31.

[189] Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, 332-4 (Mahoney JA) and 337-338 (McHugh JA).

[199] Ibid 141, line 31; 142, lines 1-5.

[201] Ibid 141, line 31; 142, lines 1-5.

[207] Exhibit D2 [62-64]. TP 384, lines 24-31; 385.

[209] [1954] HCA 72; (1954) 91 CLR 353, 360 (Dixon CJ, McTiernan and Kitto JJ).

[210] CB 356-358; TP 52, lines 18-31; 53, lines 1-5

[212] CB 897-900, and CB 1256-1259 respectively.

[219] [1954] HCA 72; (1954) 91 CLR 353.

[220] TP 671, lines 23-31, 672, lines 1-24.

[226] Exhibit P1 [46]; TP 149, lines 10-17.

[228] A point conceded by counsel for GMW, TP 233, lines 21-29.

[231] s 37(c) Interpretation of Legislation Act 1984 (Vic).

[232] See Goundar v Minister for Immigration, Local Government and Ethnic Affairs [1994] FCA 1435; (1994) 54 FCR 300, 307-308 (Burchett J); Richardson v ACT Health and Community Care Service [2000] FCA 654; (2000) 100 FCR 1, 5-6 (Finkelstein J and Heerey J agreeing).

[233] [1985] HCA 81; (1985) 159 CLR 550, 584.

[234] [1990] HCA 57; (1990) 170 CLR 596, 598; cited with approval in Jarratt v Commissioner of Police (NSW) [2005] HCA 50; (2005) 224 CLR 44, 56 [24] (Gleeson CJ), 61 [51] (McHugh, Gummow and Hayne JJ) and 88 [138] (Callinan J).

[235] Rawalpindi contended, for various reasons, that there is no power to impose such tariffs. For reasons which will become apparent it is unnecessary for me to determine that issue.

[237] [1998] HCA 28; (1998) 194 CLR 355.

[238] [1998] HCA 28; (1998) 194 CLR 355, 388-389 (McHugh, Gummow, Kirby and Hayne JJ).

[240] Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355, 392 (McHugh, Gummow, Kirby and Hayne JJ).

[241] Addicoat v Fox (No 2) [1979] VicRp 37; [1979] VR 347.

[242] Absent a waiver by the person to be notified - but that is not relevant to the circumstances of this case.

[243] Hodgkinson v Companies Auditors and Liquidators Disciplinary Board (1994) 50 FCR 504, 507 (Drummond J).

[244] [2000] HCA 10; (2000) 199 CLR 370.

[245] Ibid 384 (Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ).

[246] Bradbury v London Borough Council of Enfield [1967] 1 WLR 1311; Scurr v Brisbane City Council [1973] HCA 39; (1973) 133 CLR 242; Sandvik Australia Pty Ltd v Commonwealth of Australia and Another (1989) 89 ALR 213

[247] SS Constructions Pty Limited v Ventura Motors Pty Limited [1964] VicRp 32; [1964] VR 229, 239-240 (Gillard J)

[248] [1964] 1 WLR 1060

[249] Cf: Cooper v The Board of Works for the Wandsworth District [1863] EngR 424; [1863] 14 CB NS 180, cited with approval in Gladstone v Armstrong [1908] VicLawRp 67; [1908] VLR 454, 464 (A'Beckett J).

[250] (1997) 73 FCR 366.

[251] Potter v Minahan [1908] HCA 63; (1908) 7 CLR 277, 304 (O'Connor J); Bropho v Western Australia [1990] HCA 24; (1990) 171 CLR 1, 18 (Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ); Coco v R [1994] HCA 15; (1994) 179 CLR 427, 436-437; (Mason CJ, Brennan, Gaudron and McHugh JJ); K-Generation Pty Limited v Liquor Licensing Court [2009] HCA 4; (2009) 237 CLR 501, 519-20 (French CJ).

[252] R v Secretary of State for the Home Department; Ex parte Pierson [1997] UKHL 37; [1998] AC 539, 587 (Lord Steyn); R v Secretary of State for the Home Department; Ex parte Simms [1999] UKHL 33; [2000] 2 AC 115, 131 (Lord Hoffman).

[253] Hon JJ Spigelman, 'Principles of legality and the clear statement of principle' (2004) 79 ALJ 769.

[254] Commissioner of Police v Tanos [1958] HCA 6; (1957) 98 CLR 383, 395-96 (Dixon CJ and Webb J).

[255] Clunies Ross v Commonwealth [1984] HCA 65; (1984) 155 CLR 193, 199-200 (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ).

[256] See generally SS Constructions Pty Ltd v Ventura Motors Pty Ltd [1964] VicRp 32; [1964] VR 229 and Thorne v Doug Wade Consultants Pty Ltd(Parkville Wade House case) [1985] VicRp 48; [1985] VR 433.