Sharkey v Minister Administering the Water Management Act 2000

Background

1. In November 2012, Mr Sharkey purchased a land holding ("Lot 51"), to which was attached a water licence, issued in 2003 under the Water Act 1912, for the purpose of irrigation.
2. The Water Management Act 2000 prescribes a system of "regulated" c.f. "unregulated" rivers, and that part of the regime that deals with unregulated rivers may involve prescribed water sharing plans. The legislative scheme prescribes different "appointed days" for "regulated" c.f. "unregulated" parts of the Murray River: 1 July 2004 for the regulated part, and 30 January 2012 for the unregulated part.
3. Mr Herzfeld, counsel for the respondent, explained the complex legislation to the Court, and the difference in view as between the parties is represented in a diagram included in the Minister's submissions. Mr Sharkey did not demur from that exposition, and I need not repeat it in full here.
4. The question the Minister now wants separated concerns how transitional provisions in the Water Management Act 2000 interact with the 2003 licence to determine "what kind of water access licence under the new Act the applicant is entitled to" (Tp3, L50 - p4, L1). (The Minister says, but the applicant disputes, that those provisions operated on 30 January 2012 to convert the irrigation licence to a "water access licence").
5. The regulated part of the Murray River is that part of it "from the upper limit of the storage of Hume Dam downstream to the South Australian border" (subs par 8), and the rest of it is "unregulated".

The Issues

1. The substantive dispute between the parties is whether Mr Sharkey's "previous" licence applied to the regulated or unregulated part of the Murray (T16.12.16, p6, LL29 - 34): If the applicant's previous licence was with respect to the regulated part of the Murray River then on 1 July 2004 it was converted into a regulated river water access licence. If, on the other hand, the applicant's previous licence was with respect to the unregulated part of the Murray River then it was converted on 30 January 2012 into a different kind of water access licence, namely the unregulated species of water access licence.
2. Mr Herzfeld said of the issue in the case (Tp6, LL36 - 48): So the dispute between the parties is whether the previous licence that he held was with respect to the regulated or the unregulated part of the Murray River, and that dispute turns firstly on the construction of the expression from the upper limit of the storage of the Hume Dam downstream to the South Australian border. That's the construction dispute, and to be clear, your Honour will have seen none of this turns on any administrative decision being made, it's not a case of some decision maker, the Minister or delegate, saying I have decided to convert your licence into a regulated or unregulated water access licence. It's simply the operation of the transitional provisions on their own terms which either convert you into a regulated or an unregulated licence, so this isn't a judicial review of administrative decision case. ...
3. As he later noted (Tp7, LL1 - 2): It's common ground that the water level of the Hume Dam when full is at an elevation of 192 metres AHD.
4. At the relevant point the river land slopes east-to-west, so water "pools" against the dam wall. The Minister argues that the upper limit of the Dam is where you find land inundated at 192mAHD. The applicant argues that the upper limit of the Dam extends up-river, till the riverbed is at 192mAHD.
5. As the Minister says (Tp7, LL31 - 35), once the Court decides which is the correct construction, the factual issue to be then decided will turn on survey evidence identifying "where the land for the first time gets above 192mAHD, or, if the applicant is right, where the riverbed first gets above 192mAHD".
6. The Minister argues that the question for any surveyors depends on the correct construction of the relevant provisions, so the question of construction should be separated, and decided first, as a "preliminary issue".

The Principles

1. The applicant's case does not seek judicial review of any administrative decision ([13] above), and the parties do not disagree as to the relevant principles which govern the question of separation.
2. Those principles are now well-settled: see discussion of them, and of key relevant authorities, by Robson J in Royal Motor Yacht Club (Broken Bay) New South Wales Pty Ltd v Northern Beaches Council [2016] NSWLEC 87, especially at [7] - [11]. See also Principal Healthcare Finance Pty Limited v Council of the City of Ryde [2016] NSWLEC 88, per Pain J, at [4].
3. I adopt and will follow the principles which both Pain and Robson JJ have set out, and which the Minister has fairly summarised in his written submissions on the present motion (par 24): Will separation of a question promote early resolution of the case, or narrow the issues, and/or will it deal with a question of statutory construction of general importance?

The Arguments

1. The Minister argues that the proposed separate question will not involve any contested evidence, and is a "point of construction of general importance" to the new water regime (Tp8, LL1 - 6). If the issue of construction is not resolved first, the trial will require competing survey evidence on both possible constructions, involving duplication and wasted costs (LL12 - 21). Answering the separate question might resolve the whole case, or a least narrow the factual dispute, so as to render it suitable for a joint survey.
2. The applicant submits that expert surveying evidence may be required anyway, for the Court to understand what is meant by the upper limit of the dam (Tp8, LL7 - 9 and LL46 - 48, and p9, LL26 - 31) - the "upper limit of the storage of Hume Dam" is a factual issue requiring expert evidence. He said (Tp9, LL32 - 42): ... my position is that the storage area is a horizontal line from the top of the dam wall up the river to the river bed rising 192 metres. The position of the Minister is that it is a percentage of that area, and that percentage is determined, the division is determined, by a line drawn from bank to bank. Now, there doesn't seem to be any statutory recognition of that method of division. It seems to be a unilateral position made by the Office of Water to so divide the waters. Whether that's a correct matter of division or an incorrect matter of division, in my submission is a matter of expert evidence and of the understanding of a water storage area within the water industry.
3. He submits that the separation of the question proposed by the Minister is "putting the cart before the horse" (Tp10, LL10 - 11), and "highly prejudicial" to him, in that (LL15 - 17) he "may be cut off from calling relevant evidence which would have assisted the Court in the interpretation of the particular water sharing plan".
4. He has put into evidence a survey indicating that the "water in front of Lot 51 is below 192" (Tp10, L28). If evidence is not called when the statute is being construed, the Court will be operating "in a vacuum when understanding the Hume Dam's storage area".
5. Mr Sharkey is also very critical of the credibility and policies of the Office of Water in its classification work (Tp10, LL38 - p11, L5).

Discussion

1. I reserved my decision, so that I could consider Mr Sharkey's affidavit, and other material in the Court file, leaving aside his criticisms of the actions and policies of the Office of Water, in order to assess the prospect of his being prejudiced by what superficially would seem an appropriate separation of legal and factual issues.
2. The Crown Solicitor, acting for the Minister, wrote to Mr Sharkey on 15 November 2016, proposing separation of the construction question, presenting the diagram repeated in Mr Herzfeld's written submissions, and noting that: In order to resolve the factual issue, in a manner that is cost effective and efficient for both parties, my client proposes that, if my client's construction is held to be correct, the parties thereafter jointly procure a survey, the upfront costs of which would be shared equally. The results of the survey would be binding on both parties. I note that it would not be sufficient, as you suggest at paragraph [21] of your affidavit of 9 November 2016, for the survey to simply ascertain the height of the bank of the Murray River adjacent to your property. Rather, the survey would need to ascertain the point, east of the dam wall, on each side of the river, where the bank first reaches an elevation of 192m AHD, in order to identify the precise location of the boundary between the upper limit of the storage of the Hume Dam and the river above the Hume Dam on my client's construction. The reason a survey adjacent to your property would not be sufficient, is that it is possible the land would reach an elevation of 192m AHD further to the west of your property, but then might fall in height.
3. In Mr Herzfeld's written submissions, the Minister put to the Court that (pars 26 - 29): 26. If the issue of construction is not resolved first, it will be necessary for the parties each to obtain competing expert survey evidence on both of the constructions for which the parties contend. That would involve unnecessary duplication and therefore wasted time and costs. 27. If the issue of construction is resolved first, it may well be that there is no further factual dispute, because it is apparent, in light of the correct construction, on which side of the line Lot 51 falls. If so, both the parties and the Court would avoid all of the costs and time associated with the expert evidence referred to above. 28. However, even if there remains a question of fact, which must be resolved by competing survey evidence, at least the surveys will be conducted by reference to a single issue (ie the construction determined by the Court), avoiding the wasted costs referred to above. 29. Indeed, the Minister has proposed that, if the construction advanced by the Minister is held to be correct, the parties jointly procure a survey to determine the factual question. That would be a cost effective manner of proceeding. But it is only possible if the legal question of construction is resolved first.
4. In his reply to Mr Sharkey's oral submissions, Mr Herzfeld opined that the parties, at the end of the argument summarized above, may have "some level of agreement" that the construction issue must be resolved before any survey evidence is considered (Tp11, LL10 - 21). The Minister has no desire to "shut out" Mr Sharkey from leading evidence directed to the question of construction (Tp11, LL30 - 35).
5. Mr Herzfeld asked (Tp12, LL5 - 10) that the separate question be stated, and directions given in respect of a hearing on the question, including in respect of any "expert evidence directed to that question".

Conclusion

1. I am satisfied that, on the established tests, the construction question should be separated, that such a course will not prejudice Mr Sharkey's position, and that the Minister will agree upon appropriate directions to allay Mr Sharkey's fears that such a course will prejudice his substantive factual/surveying case.
2. I, therefore, make the following orders: 1. That, pursuant to Rule 28.2 of the Uniform Civil Procedure Rules 2005, the proper construction of the expression "the upper limit of the storage of the Hume Dam" be determined as a preliminary question. 2. That the matter be listed before the Registrar forthwith for the fixing of a hearing date for the preliminary question, and for the making of any necessary directions regarding that hearing. 3. That the costs of the parties on this Notice of Motion form part of their costs of the hearing and determination of the preliminary question.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 May 2018