Tubbo Pty Ltd v Minister Administering the Water Management Act 2000; Harvey v Minister Administering the Water Management Act 2000

Court of Appeal (NSW)|2008-10-13|Before: Spigelman CJ, Allsop P

Background Facts 8 The judgment of Justice Jagot sets out in a comprehensive, chronological manner the background to the relevant decision-making process and the steps taken by all relevant participants up to and including the promulgation of the 2006 Amendment Order. Her Honour's judgment has not been questioned in any way in this respect. It is, accordingly, unnecessary in this judgment to repeat her Honour's findings. It is sufficient to highlight the significant background facts particularly relevant to the determination of the issues that remain in dispute. 9 Pursuant to the Water Act 1912 numerous bore licences had been issued entitling their owners to access groundwater sources. Concern grew during the 1990s that groundwater sources were being depleted and, specifically, that the total amount of groundwater that could theoretically be removed pursuant to extant licences was unsustainable unless entitlements were reduced. The Lower Murrumbidgee Groundwater Sources are one of six distinct areas which were affected in this manner. The process of reducing entitlements affected important commercial interests and impinged upon the reliance which licence holders had placed upon those entitlements when making decisions about investment on their rural properties. 10 In February 2003 the government of New South Wales gazetted the 2003 Plan which proposed to reduce groundwater entitlements on an across-the-board basis to about 52 percent of the pre-existing entitlements. A challenge to the validity of the 2003 Plan was rejected in this Court. (Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources [2005] NSWCA 10; (2005) 138 LGERA 11.) That Plan was not formally commenced. A few months after its gazettal the Commonwealth announced a National Water Plan, which proposed substantial Commonwealth financial assistance to address the problems that had arisen with respect to access to water, including the depletion of groundwater sources. 11 As a result of the Commonwealth intervention, the New South Wales government changed its policy so as to replace the across-the-board reduction with a new policy which recognised actual historical rates of extraction. Instead of an equal percentage reduction of a licence holder's theoretical entitlement under the Water Act 1912, the new policy was to be determined, in large measure, in accordance with the extent to which, in relevant periods identified in the formula, the licence holder had in fact extracted water pursuant to a licence (referred to as the "history of extraction" in the materials). Accordingly, persons, like the present appellants, who, for various reasons, had used a low proportion of their entitlements during the specified periods, would be significantly disadvantaged under the new proposal in comparison with the effect upon them of an across-the-board percentage cut applicable to all licence holders. 12 The basic objective of the 2003 Plan was to establish a sustainable yield in the long term for each water source by identifying an extraction limit which specified in quantitative terms, albeit subject to variation, the total amount of water able to be extracted per year in terms of the calculated recharge, being the quantity by which, as then computed, the source is replenished during a year was directed to ensure that drawing rights would be sustainable in the long term. The 2006 Amendment Order altered the way that objective was to be achieved in the manner I have identified, ie from across-the-board reductions to reductions based on history of extraction. 13 The new policy was carried into effect in the form of a mathematical formula contained in cl 25C of the 2003 Plan, as introduced by the 2006 Amendment Order. The formula provides a basis for computation of the "share component" of the aquifer access licences into which the entitlements under the Water Act 1912 were converted by the 2003 Plan. A share component entitles a licence holder to draw on a specified or computed amount of water. 14 Only four entitlements under the Water Act 1912 are identified in Sch 5 of the 2003 Plan as amended, the exclusion from which is the subject matter of these proceedings. Pursuant to cl 25C(4), the share component is expressed in a quantified total amount of megalitres per year. The sum of these megalitres constitutes, the Court was informed, one and a half percent of the total water that may be extracted. 15 The operation of the cl 25C formula for determining the entitlement involves a computation commencing with a component to secure a minimum allocation of 100 megalitres per year, multiplied by a component derived from the history of extraction. The history of extraction calculation takes account of average extraction multiplied by a quantity composed of the annual average recharge minus quantities for which the plan otherwise provides, such as the volume of planned environmental water, local water utility access licence share components, the volume of domestic and stock access licenses, the volume of entitlements which are less than or equal to 100 megalitres, and the sum of all of the share components specified in Sch 5. 16 The effect of this formula is, accordingly, that any increase in the quantity of water available pursuant to Sch 5 would have resulted in a decrease in the quantity of water available to all other licence holders, save insofar as they are otherwise protected in the formula. This was a zero sum game. 17 The appellants assert that there was a particular "criterion" which was adopted for the purpose of determining which specific licences would be included in what became Sch 5. Schedule 5, and therefore the 2006 Amendment Order and the 2003 Plan as amended, simply lists certain Water Act 1912 entitlement numbers and their associated licences. The so-called "criterion" is not expressed in any way in the 2006 Amendment Order. 18 What the appellants characterised as the "criterion" for inclusion in Sch 5 was identified in the documentation as follows: "Late developer entitlement holders who demonstrate to the regional groundwater verification committee that they had developed their irrigation business based on a proven expectation that the Murrumbidgee Groundwater Water Sharing Plan would be implemented with ' across-the-board' cuts would have their Final New Entitlement adjusted accordingly." [Emphasis added] 19 It was recognised during the course of the formulation of the history of extraction approach that there would be what was called, at first, in the internal documentation, "anomalies" and which was eventually characterised as the identification of "special circumstances". This factor raised the question of how fairly the history of extraction approach would apply to specific cases. 20 For some part of the period of internal development of the new plan, it appears to have been proposed that the "special circumstances" or "anomalous" cases would be dealt with by additional financial compensation. In the event, it appears that, by reason of the fact that only four such cases were identified as deserving of special treatment in this respect, the licence holders involved were in fact given a special entitlement to water, rather than financial compensation. 21 The basic structure of the decision-making process, culminating in a Ministerial submission, was set out by Jagot J: "[124] By 5 August 2004, a body called the Groundwater Adjustment Committee (or GAC) was established to provide advice to the Director-General of the Department and Minister. The genesis of this committee is unclear but it involved numerous Departmental officers, representatives of relevant catchment management authorities, the chief executive of the NSW Irrigators' Council (which I understand to be an industry representative body), a representative of the Commonwealth, and others. The GAC's objectives included considering proposals for methods to reduce entitlements on the basis of history of use. Its functions included providing advice on these potential methods and processes and guidelines for assessing anomalies arising from the methodologies. According to the GAC's terms of reference the catchment management authorities were to be responsible for consulting with water user groups and licence holders about methodologies for reducing entitlements and related assistance. The catchment management authorities were also identified as responsible for reviewing the water sharing plans and making recommendations to the Minister about the plans. The GAC was to assist the catchment management authorities in their allotted tasks. [125] In June 2005 the Commonwealth and NSW Governments announced an Achieving Sustainable Groundwater Entitlements Program (or ASGE program), including a financial assistance package to help water users manage the reduction in their entitlements. [126] By July 2005 at least two other committees had been established, the Groundwater Adjustment Advisory Committee and the Groundwater Adjustment Officials Committee (known as the GAAC and GAOC respectively). The objectives of the GAAC included considering proposals for alternative entitlement reduction methods based on history of extraction or equivalent methods and consequential changes to water sharing plans. Its specific functions included advising the GAOC on these methods and related issues and 'processes and guidelines for assessing special circumstances arising from entitlement reduction and assistance methodology'. Membership of the GAC and the GAAC was similar." 22 In December 2005, as part of a detailed information package about the ASGE programme, it was announced that a ground water verification committee would be established in each region to, inter alia, identify the history of extraction for each licence holder. 23 Furthermore, her Honour said: "[140] On 6 March 2006 the Murrumbidgee Catchment Management Authority issued a media release saying that the Murrumbidgee Regional Groundwater Verification Committee (MRGVC) had been established to review estimates of licence holders' history of extraction where the holder disagreed with the Department's estimate and that the MRGVC would give advice to the Director-General of the Department on this issue consistent with the outcomes of the groundwater assistance package." 24 After the Committees had undertaken their tasks in each of the six groundwater regions, departmental officers prepared a report for the Minister, based on the Committees' Reports, recommending the adoption of the 2006 Amendment Order incorporating, relevantly, Sch 5. 25 The appellants directed attention to the committee processes which led to the ultimate recommendation that Sch 5 take the form that it did. I do not find it necessary to trace the permutations of this process. I am content to proceed on the basis that the Minister accepted the assessment of his advisers, first that in order to qualify for "special circumstances" a licence holder had to establish that investment had been based on the assumption that the across the board cuts approach would be implemented, and second, that the appellants had failed to establish this. 26 As indicated in par [7] above the appellant's complaint is that they did not receive a hearing as to whether this "criterion" should be adopted or as to whether they satisfied it in any event.

The Legislative Scheme 27 The relevant power that was exercised in the present case is the power to amend a management plan pursuant to s 45 of the Act which I have set out at par [4] above. Section 45 is found in Ch 2 of the Act entitled "Water management planning". 28 Jagot J summarised the legislative scheme: "[9] The Water Management Act commenced on 1 January 2001. The objects of the Act (s 3) are to 'provide for the sustainable and integrated management of the water sources of the State for the benefit of both present and future generations'. [10] Chapter 2 concerns water management planning. It includes obligations for those exercising functions under the Act to promote the water management principles in s 5 and to give effect to the State Water Management Outcomes Plan (the SWMOP) made under s 6 (see s 9). Part 2 Ch 2 provides for the constitution of management committees for any water management area. [11] Part 3 of Ch 2 deals with management plans prepared by committees constituted under Pt 2 of Ch 2. [12] Div 1 of Pt 3 deals with certain preliminary matters. Under s 16 a management plan is to be consistent with various instruments of policy, including the SWMOP. Section 17 specifies the kinds of provisions that a management plan may contain. Section 18 imposes obligations on a management committee to 'have due regard to' matters when formulating a draft management plan, including the 'socio-economic impacts of the proposals considered for inclusion in the draft plan'. [13] Divisions 2 to 7 of Pt 3 deal with the provision of management plans with respect to water sharing, water use, drainage management, floodplain management, controlled activities, and environmental protection. Where a plan provides for water sharing it must contain core provisions (s 20(1)) dealing with the establishment of environmental water rules, the identification of requirements for water within the area or from the water source to satisfy basic landholder rights, the identification of requirements for water for extraction under access licences, the establishment of access licence dealing rules for the area or water source, and the establishment of a bulk access regime for the extraction of water under access licences, having regard to these rules and requirements. [14] Division 8 of Pt 3 contains the procedures for making management plans. The procedures include notification of nominated bodies of certain general matters about the draft plan (s 36) and public exhibition of the draft plan (s 38). The management committee is to consider submissions before re-submitting the draft plan to the Minister. Under s 41 the Minister may make a management plan by order published in the Gazette. Section 42 provides that a management plan may be amended by a subsequent management plan made in accordance with Pt 2. However, s 42 does not limit the operation of Div 9 of Pt 3 (s 42(2))." 29 With respect to the exercise of the relevant power, her Honour concluded, after reference to the statutory context: "[227] The nature of the power in s 45(1)(a), considered in this statutory context, is inconsistent with the application of the duty of procedural fairness. Adopting the language of the various decisions discussed above, it is a power that, if exercised, will affect a large and potentially indeterminate number of people. Even where apparently directed to any one individual or to an identifiable class, all other individuals with an interest in the water source will be affected by reason of the interlinked interests involved. It is a power exercisable from time to time to enable the Minister to manage a limited resource consistently with the water management principles, conditioned not on the interests of any individual but the Minister's view of the public interest. Factors influencing the Minister may be both foreseen and unforeseen. They will involve potentially conflicting considerations about a basic resource. Resolution of these considerations is a political endeavour for which the Minister takes political responsibility. For these reasons I do not accept the applicants' submissions that an exercise of power under s 45(1)(a) is conditional on the giving of procedural fairness." 30 Amongst the matters to which her Honour had earlier drawn attention were: · A water management plan is a tool to implement the objects and water management principles set out in ss 3 and 5 of the Act [202]; · Plans are intended to be flexible so as to respond to exigencies arising during the life of the plan [202]-[203]; · Plans must be consistent with other instruments that embody government policy, including policies which represent outcomes of high level political processes encompassing "environmental, social and economic issues as well as inter-governmental agreements and international agreements" [204]; · The water management areas envisaged by the statute involve plans over large areas within the State [205]-[206]; · The water management principles, insofar as they deal with water sharing, "recognise the potential for conflict between competing principles and provide for conflict resolution" [203]; · The power of amendment in s 45 is exercisable in three circumstances, none of which relate to the individual circumstances of licence holders [213]; · A water source requires the protection of various interests, identified in the water management principles, which interests will "interact and potentially compete with one another" and "every drop of water that is necessary to protect the water source is a drop not available for any other purpose". For example, water required to protect ecosystems or basic landholder rights, recognised in the principles, is not available for persons extracting under other rights. Accordingly "[a]n adjustment of any one interest through a plan will tend to adjust all other interests at least to some extent. Specifically, any benefit in terms of access to water to any one interest affected by a plan will be a form of detriment to each and every other interest affected by the plan" [208]; · Plans make provision for rules determining priorities. This is another example of plans adjusting competing interests in a manner that will affect the interests of all [209]; · "A plan represents the outcome of a series of adjustments or compromises between interlinked and potentially competing interests in a dynamic resource" which must give effect to high level government policy [214]; · A plan operates against a background of political controversy, relevantly arising from the change in policy requiring adjustment of entitlements to ensure sustainable use [215]; · The potential for political controversy relevantly extended to the change in the basis for achieving sustainable use from across-the-board cuts to reliance on historical extraction [216]. 31 Her Honour's outline of the legislative scheme, as summarised above, should be accepted, save in one respect to which I will refer. 32 I also set out s 47 which relevantly provides: "(1) The validity of a management plan may not be challenged, reviewed, quashed or called into question before any court in any proceedings, other than before the Land and Environment Court in proceedings commenced within the judicial review period. (2) The judicial review period in respect of a management plan is: (a) the period of 3 months after the date the plan was published in the Gazette, except as provided by paragraph (b), or (b) in relation to a provision of the plan that was inserted by an amendment of the plan (other than an amendment under section 45(1)(c)), the period of 3 months after the date that the amendment was published in the Gazette. A judicial review period does not arise as a result of the extension of the duration of a management plan. … (5) The provisions of or made under this Act and the rules of natural justice (procedural fairness), so far as they apply to the exercise of any plan-making function, do not place on a designated person any obligation enforceable in a court (other than in the Land and Environment Court in proceedings commenced within the judicial review period). (6) Accordingly, no court (other than the Land and Environment Court in proceedings commenced within the judicial review period) has jurisdiction or power to consider any question involving compliance or non-compliance, by a designated person, with those provisions or with those rules so far as they apply to the exercise of any plan-making function. (7) This section is not to be construed as applying the rules of natural justice to the exercise of plan-making functions for the purposes of proceedings instituted within the judicial review period. …"

The Judgment: Procedural fairness 33 Her Honour referred to well-known authorities on the duty of procedural fairness and noted that, save in one respect, the issue between the parties centred on the application of well-known principles. The respect in which the parties differed was that the appellants submitted that a particular statutory power may or may not be the subject of the duty, depending on the circumstances of the particular exercise of the power. The respondent, however, submitted that there had to be a single and consistent answer to the question whether a particular power attracted the duty and, accordingly, either the duty applied to a power or it did not. If it applied, the content of the duty could vary but not its existence. 34 Her Honour set out a number of principles applicable when determining the existence of a duty to accord procedural fairness. Her Honour proceeded to outline at length the process by which the 2006 Amendment Order was made, relevantly, in terms of the adoption of Sch 5. 35 With respect to the issue of principle between the applicants and the respondent her Honour clearly indicated a preference for the approach of the respondent. She said: "[199] The applicants relied on the many authorities indicating the flexible or 'chameleon like' qualities of procedural fairness in support of these submissions. In my view, however, these references concern the content of the duty rather than its application. Moreover, if the duty is as flexible as the applicants' submissions propose then it is difficult to understand the focus on resolution of disputes about procedural fairness by reference to the flexible content of the duty. The usual question, on the applicants' approach, would not be the requirements of procedural fairness in the particular case, but whether the duty applies to the particular exercise of power. This is the opposite of the formulation in Kioa v West at 585. Authorities that might be thought to support the applicants' approach (for example, Dunlop v Woollahra Municipal Council [1975] 2 NSWLR 446 and White v Ryde Municipal Council [1977] 2 NSWLR 909), on analysis, do not. Those disputes also were ultimately resolved at the content rather than the duty stage. Brennan J clearly advocated a 'universal answer' to the question of duty ( Kioa v West at 611). That approach is consistent with the observation in Alphaone at 550C - D. Although Brennan J's approach to the source of the duty has not found favour (see, for example, the discussion in Vanmeld at [50]) there is no dispute in the authorities that the issue of duty (and content) is primarily resolved through a process of statutory construction. McWilliam v Civil Aviation Safety Authority (2004) 142 FCR 74 at [43], referred to by the applicants, is not authority to the contrary as it is dealing with 'decisions of an administrative character' for the purpose of the Administrative Decisions (Judicial Review) Act 1977 (Cth). [200] I have considerable difficulty accepting the proposition that an orthodox process of statutory construction could lead to a conclusion of a legislative intention that a single power might or might not be subject to the duty depending on the manner of exercise. As noted, the authorities relied on by the applicants do not support that approach. I consider that there either is or is not a duty to provide procedural fairness as a condition of the exercise of the power of amendment in s 45(1)(a). The content of the duty (if applicable) may vary depending on the particular circumstances of the exercise of the power, but its existence does not. Given the variable content of the duty, this conclusion may be of little practical significance." 36 Her Honour proceeded to analyse the statute in the way that I have summarised at pars [28]-[30] above. Her Honour set out a number of propositions which emerge from that analysis as follows: "[218] First, every person with an entitlement under the 1912 Act throughout the State is potentially subject to the transitional arrangements under Sch 10. [219] Secondly, once a proclamation is made under s 55A with respect to a water source, every person with an entitlement under the 1912 Act relating to the water source becomes potentially subject to those transitional arrangements through the application of a plan and regulation for the purposes of cl 3(1)(a)(ii) of Sch 10. [220] Thirdly, the process of conversion authorised by the statute involves two options (getting the same quantity of water or a different quantity of water). As soon as the prospect of a different quantity of water arises for any licence holder, the statutory focus on the protection of the water source and its dependent ecosystems, and the scheme for available water determinations and priority, means that the interests of every person or body affected by the plan (including not just licence holders, but those with special interests in protecting dependent ecosystems) are interlinked and potentially competing. In consequence, every decision that the provisions of a plan embody involves an adjustment between one interest and all other interests (or, in other language, a potential detriment or adverse conclusion). [221] Fourthly, the power to amend a plan if the Minister is satisfied that it is in the public interest to do so, which is exercisable from time to time, will itself necessarily involve an adjustment between one interest and all other interests. [222] These matters indicate that if the Minister's exercise of power to amend a plan if satisfied that it is in the public interest to do is conditioned on the giving of procedural fairness, then the duty would be owed to each and every person with any interest potentially affected by the plan." 37 Her Honour's ultimate conclusions were expressed as follows: "[225] As the respondent submitted, this statutory context suggests that an exercise of power to amend a plan under s 45(1)(a), properly analysed, does not involve an impact on individuals in the requisite direct and immediate sense, irrespective of the form or manner of any particular exercise of the power. Any amendment to a plan will necessarily impact on all people with any interest in the water source as a class even though the impact itself might be different. This is so whether the relevant provision is expressed in general terms or (as in Sch 5) by reference to individual licences. Hence, in the present case every provision of the amendment order affected licence holders by reference to their status as members of the class of holders of licences to be converted into access licences. Within that class every adjustment affected (albeit differently) every member of the class. … [227] The nature of the power in s 45(1)(a), considered in this statutory context, is inconsistent with the application of the duty of procedural fairness. Adopting the language of the various decisions discussed above, it is a power that, if exercised, will affect a large and potentially indeterminate number of people. Even where apparently directed to any one individual or to an identifiable class, all other individuals with an interest in the water source will be affected by reason of the interlinked interests involved. It is a power exercisable from time to time to enable the Minister to manage a limited resource consistently with the water management principles, conditioned not on the interests of any individual but the Minister's view of the public interest. Factors influencing the Minister may be both foreseen and unforeseen. They will involve potentially conflicting considerations about a basic resource. Resolution of these considerations is a political endeavour for which the Minister takes political responsibility. For these reasons I do not accept the applicants' submissions that an exercise of power under s 45(1)(a) is conditional on the giving of procedural fairness." 38 It is also pertinent to note her Honour's observations at [226] with respect to s 47 which I have set out above. Her Honour said: "Section 47(5) refers to the rules of natural justice (procedural fairness) in the context of the jurisdiction of this Court (overcoming the effect of Edmondson ) and must be read in the light of s 47(7)." 39 This is a reference to this Court's decision in Warringah Council v Edmondson [2001] NSWCA 1. In that case a Council successfully appealed from a judgment of the Land and Environment Court which had declared a tender process to be void and of no effect. The Land and Environment Court had found that the Council failed to accord procedural fairness which the Court characterised as a "contravention of or failure to comply with the Act". 40 On the appeal it was accepted (incorrectly in my opinion) that the Land and Environment Court did not have jurisdiction to determine such a matter if the duty to accord procedural fairness was a common law duty. (Edmondson at [5].) Fitzgerald JA, with whom Meagher and Powell JJA agreed, applied my analysis in Vanmeld Pty Ltd v Fairfield City Council [1999] NSWCA 6; (1999) 46 NSWLR 78, that High Court authority had established that the duty was a doctrine of the common law (at [20]) and, accordingly, no basis for the exercise of the jurisdiction had been established.

The Judgment: Content of Duty 41 In the alternative to her finding that there was no duty to accord procedural fairness, her Honour proceeded to reject each appellants' case on the basis that, if there was any duty, the content of the duty did not extend in favour of the appellants in the way for which they contended. 42 Her Honour's ultimate conclusion was expressed in the following way: "[254] … The Minister did not owe the applicants a duty of procedural fairness when making the amendment order. Alternatively, if he did, the content of the duty did not require the Minister to hear or consider submissions from individual licence holders about the reasons why they should be treated as having special circumstances." 43 Her Honour's analysis of the second basis for dismissing the appellants' cases stated expressly that the various "matters" which she had considered in the context of finding that there was no duty were "equally relevant to content"(at [229]). Her Honour referred to her earlier analysis of the statutory scheme for the conclusion that the obligation to accord procedural fairness, if any, did not "necessarily require the giving of an opportunity to present an individual case or present a case individually" (at [231]). 44 Her Honour indicated (at [232]) that the formal announced procedure did not suggest that the Minister would undertake a review of the submissions on special circumstances. She added: "[233] Nor, practically, could the Minister be so bound. The consultation process concerned the basis for water sharing in water sources across six regions. All 1405 licence holders across the six regions were invited to dispute their history of extraction. About 335 did so with many others using the opportunity to present a case as a late developer or as having special circumstances. After responses by the Department there were still 187 licence holders who requested a further review by the regional groundwater verification committees. As discussed above any attempt to maintain a meaningful distinction between cl 25C(4) of the plan (making Sch 5 operative) and cl 25C(5) (or any other water sharing provision such as cl 25C(3)) founders when confronted by the way in which the plan actually operates. [234] If the applicants are correct about the duty requiring the Minister to consider the individual circumstances of licence holders then the applicants' submissions do not disclose any logical reason to limit the duty to those claiming special circumstances. A licence holder disputing their history of extraction and a licence holder claiming special circumstances both involved the interests of the individual (at least as posited by the applicants). [235] On this basis the Minister would have had to consider the responses of all 1405 licence holders (or at least an accurate summary of each of their cases). Moreover, on the applicants' approach to the duty, the Minister would have had to inform each and every one of them about any adverse conclusion before being able to proceed further. As I have said, every time the Minister accepted one person's submission it would be potentially adverse to every other person with an interest in the same water source because the interests are interlinked and potentially competing. This 'would be unworkable, because it would lead to an infinite regression of counter-disputation' ( South Sydney City Council at [267]). It would also be incapable of achieving the statutory objective of 'the sustainable and integrated management of the water sources of the State for the benefit of both present and future generations'. [236] For these reasons, I do not accept that any duty of procedural fairness required the Minister to provide any licence holder with an opportunity to present an individual case or present a case individually ( Gardner at 552C). The applicants did not suggest that any person or body other than the Minister (such as the MRGVC) owed a duty of procedural fairness."

The Judgment: Breach 45 An issue has arisen between the parties as to whether her Honour determined the issue of breach. In my opinion, for the reasons given below, her Honour did determine the question, albeit on a particular basis. 46 At par [254] of her judgment, set out at [42] above, her Honour referred, by way of summary, to two alternative bases for dismissing the claim: no duty and restricted content of any duty. This summary did not, in terms refer to breach. 47 Nevertheless, much of her Honour's analysis of the second alternative - the content of the duty - applies equally to the issue of breach of duty, however formulated. 48 For example, after referring to the appellants' submission that "the amendment order was invalid because the Minister failed to consider the individual circumstances of the applicants", her Honour commented: "[244] … The department's review of the various submissions received during the exhibition period raising issues of individual unfairness is telling. The comment on the submissions about individual unfairness (which I infer was endorsed by the Minister given his referral to the review and comments in the letter of 18 September 2006 seeking concurrence from the Minister for the Environment) was 'Cabinet has endorsed the default method of entitlement reduction as recommended by the Murrumbidgee CMA after extensive consultation'." 49 Furthermore, her Honour also expressly addressed the position if the Minister was subject to a duty, and the content of the duty extended to a duty to consider individual circumstances. She said: "[246] If the Minister was subject to a duty of procedural fairness in making the amendment order and the duty required the Minister to consider individual submissions of licence holders as to why the history of extraction approach ought not to apply to them, then the facts disclose only one real issue. The issue is simply that, having reviewed the submissions and worked out the framework within which it was agreed that the regional verification committees should assess submissions for special circumstances, the submissions as made were passed on to the MRGVC without the applicants (or, presumably, other licence holders) being informed of the framework. In this regard I accept that the period of December 2002/February 2003 to June 2004 and the assumption of 52% of entitlements were not obvious or self-evident to those seeking to escape the application of the history of extraction approach (see OzEpulse Pty Ltd at [55]-[56]). Further, the communications from the NSW Irrigators' Council did not make them so (recognising that the NSW Irrigators' Council was not representing the Minister but was merely a member of the GAAC and MRGVC). But the process must be considered as a whole to determine the question of breach of any duty . [247] The framework or criteria emerged from consideration of the submissions themselves. The process never involved more than looking at the submissions already made. In this sense, there were no 'secret criteria' to obtain special circumstances as the applicants submitted. When submissions were invited and made there were no criteria at all other than the published rules with respect to history of extraction. [248] When making recommendations as to whether any licence holder had special circumstances the MRGVC, as Mr Painting said, considered each individual case on its merits and generally recommended that there were special circumstances where licence holders could demonstrate purchase, investment and development between December 2002/February 2003 and June 2004 on the assumption that there would be a cut in entitlements to 52% of entitlements under the 1912 Act. This is consistent with the documentary evidence. [249] … documents demonstrating the process of consideration show that, but for the time period between December 2002/February 2003 and June 2004 and the assumption of 52% of entitlements guiding the purchase, investment, or development potentially relevant factors were identified (rather than mandated), and were subject to the express overriding requirement that each individual licence holder's submission claiming special circumstances be carefully considered. The process adopted by the MRGVC shows that each licence holder's submission was carefully considered across the full range of matters raised." [Emphasis added] 50 In my opinion, this passage of her Honour's reasons should be understood as a finding that there was no breach of any duty to accord procedural fairness. This is strongly indicated by the last sentence of [246]. The subsequent paragraphs find as a fact that the so called "criterion" emerged in the course of considering the submissions actually made, which submissions were "carefully considered" and "considered…on their merits". On this approach there was no occasion to offer a hearing about what should be the "criterion" or its application to the appellants. This reasoning suggests a finding that there was no breach of duty, albeit on a particular basis. 51 The respondent asks this Court to uphold her Honour's reasoning in this respect. However, the respondent also seeks to support the finding that there was no breach on a different basis, to which I will refer.

Determining the procedural fairness issue 52 Some of the submissions were concerned with the precise jurisprudential character of the process of statutory interpretation that is necessarily involved in determining whether a duty exists. 53 For the reasons I set out in Vanmeld supra at [50], [53]-[54], High Court authority binding on this Court, commencing with Kioa v West (1985) 159 CLR 550, establishes that the duty is a common law doctrine that is subject, as all such doctrines are, to statutory modification. As I subsequently noted in Minister for Local Government v South Sydney City Council [2002] NSWCA 288; (2002) 55 NSWLR 381 at [10]-[13], there are indications that the High Court may now take a different view. (In addition to the cases to which I referred in South Sydney City Council I would now add Applicant VEAL of 2002 v Minister for Immigration Multicultural and Indigenous Affairs [2005] HCA 72; (2005) 225 CLR 88 at [10] fn 6; Ferdinands v Commissioner for Public Employment [2006] HCA 5; (2006) 225 CLR 130 at [36] fn 44.) There is also an additional reference which treats the issue as open. (See Applicant NAFF of 2002 v Minister for Immigration Multicultural and Indigenous Affairs [2004] HCA 62; (2004) 221 CLR 1 at [53].) However, the earlier cases have not been superseded, let alone overruled. This Court should continue to follow them as it has done before. (eg Edmondson supra at [20]; South Sydney City Council supra at [6]-[9], [15], [297] and Lesnewski v Mosman Municipal Council [2005] NSWCA 99; (2005) 138 LGERA 207 at [56], [61]. I note that my critical observations in South Sydney City Council about Edmondson at [14]-[16] were not directed to this issue.) 54 On this basis the issue is whether the legislation manifests a clear statement of Parliamentary intention that procedural fairness is not required with respect to the exercise of the particular statutory power. The alternative view, frequently asserted by Brennan CJ, is that the issue is only one of statutory interpretation to determine Parliament's intention. However, I note that the principle of the law of statutory interpretation, to the effect that Parliament will not be taken to abrogate procedural fairness without a clear statement to that effect, is, itself, a principle of the common law. (As acknowledged by Brennan J in FAI Insurances Ltd v Winneke (1982) 151 CLR 342 at 409-410. See also Jarratt v Commissioner of Police (NSW) [2005] HCA 50; (2005) 224 CLR 44 at [26] per Gleeson CJ.) 55 However, it is not, in my opinion, necessary to resolve the legal issues that have been posed in this respect. I do not find it necessary for purposes of disposing of this appeal, to review the first basis adopted by Justice Jagot, that is, that no duty of procedural fairness could arise with respect to the exercise of the power in s 45 of the Act in any circumstances. 56 I have referred at [30] above to her Honour's finding at [205]-[206] that the water management areas envisaged by the statute involve plans over large areas within the State. The plans for the six regions, the subject of the decision-making process under consideration, were of that character. However, s 19(2) of the Act expressly states: "19(2) The water sharing provisions of a management plan may apply to the whole or any part of a water management area, or to the whole or any part of one or more water sources within a water management area." [Emphasis added] 57 I prefer not to determine, until necessary to do so, whether a management plan could never give rise to a duty to accord procedural fairness. 58 I accept that it is arguable that the legislative scheme under consideration is of a character that Parliament must be taken to have necessarily intended to exclude an obligation to accord procedural fairness and to have done so even with respect to an element of a water sharing plan which is directed to the individual circumstances of an affected person. (See eg Save the Showground for Sydney Inc v Minister for Urban Affairs and Planning (1997) 95 LGERA 33 at 50-53; Vanmeld supra at [73].) However, it is unnecessary to determine this case on that basis. 59 As noted in par [7] above the appellants' case in the present appeal involved alternative rights. First, for a right to be heard with respect to the determination of the adoption of a "criterion" for inclusion in Sch 5. Secondly, for a right to be heard as to whether or not they satisfied the "criterion". The focus of the appellants' case is the fact that, notwithstanding the breadth of the overall decision-making process, in a particular respect the statutory power was in fact exercised by reference to the personal circumstances of licence holders and was, therefore, directed to the particular rights and interests of the appellants. Accordingly, they submit, in that respect a duty to accord procedural fairness arose. 60 The appellants approached this appeal on the basis that the relevant statutory power was capable in some circumstances of being exercised in a way which directly affected rights and, accordingly, imposed the duty. They submit that the two respects in which they complain were such circumstances. It is convenient to adopt the foundational assumption of the appellants' case, without determining whether it is correct. The critical question then becomes the second submission ie were the two respects in which they complain matters which give rise to the duty. 61 The judgment of Jagot J considers the relevant issues and, in my opinion, convincingly establishes that there was, in the circumstances of this case, no duty of either character for which the appellants contend. In this regard her Honour's analysis of what she characterised as the issue of the content of the duty is applicable and sufficient. I note again that that analysis commenced with the proposition that the whole of her reasoning on the existence of any duty at all was also directly relevant to the issue of content of duty. (See at [229].) 62 It is sufficient to approach this case at the level of content by identifying the particular interests said to be adversely affected and to inquire what procedural fairness required in the full range of relevant circumstances. In this regard, authorities on other statutory regimes may be indicative, but are rarely of significant assistance. 63 I apply the approach of Mason J in Kioa v West supra, where his Honour said at 585: " … [T]he expression 'procedural fairness' more aptly conveys the notion of a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case. The statutory power must be exercised fairly, ie, in accordance with procedures that are fair to the individual considered in the light of the statutory requirements, the interests of the individual and the interests and purposes, whether public or private, which the statute seeks to advance or protect or permits to be taken into account as legitimate considerations ..." 64 His Honour went on to say: "The critical question in most cases is not whether the principles of natural justice apply. It is: what does the duty to act fairly require in the circumstances of the particular case? … [I]n general, it will be a matter of determining what the duty to act fairly requires in the way of procedural fairness in the circumstances of the case. A resolution of that question calls for an examination of the statutory provisions and the interest which I have already mentioned." 65 This approach has been applied numerous times. See eg most recently SZBEL v Minister for Immigration and Multicultural and indigenous Affairs [2006] HCA 63; (2006) 228 CLR 152 at [26]. 66 In the present case the basic interests deserving of protection were the pre-existing Water Act 1912 entitlements. The principal impact upon these interests of the appellants was the adoption of policies for reducing those entitlements. The 2003 Plan transformed the Water Act 1912 licences into licences under the Water Management Act 2000. No complaint is made about that. 67 The first policy adopted was to reduce the total demand of all persons with an interest in accessing water to sustainable levels in, relevantly, the Lower Murrumbidgee Groundwater Sources. No complaint is, or could be, made with respect to this policy and its impact upon the appellants. 68 The second factor, which had particular impact upon the appellants in the present proceedings, was the determination, contrary to an earlier policy decision, that the reduction of each licence holder's entitlements would not be based on an across-the-board percentage cut, but would be determined in accordance with the history of their use of those entitlements. Again no complaint could be, or has been, made with respect to the adoption of this policy and its impact upon the appellants. 69 It is of significance to note that the appellants make no complaint about these two "criteria" (ie reduction to sustainable levels and the history of extraction principle) which had the principal and primary impact upon their pre-existing rights. These two "criteria" were clearly polycentric policy decisions of a political character affecting a large number of persons to which procedural fairness had no application. 70 The focus of attention of the appellants' case is on the "criterion" for selection for inclusion in Sch 5. That focus reveals its character as an application for the modification of the consequences once the two primary "criteria" had done their work. 71 It is true that what is sought on the submissions is a restoration to the situation that would have applied if the first policy decision (across-the-board cuts) had not been modified. However, that modification did in fact occur, about which the appellants likewise make no direct complaint. 72 The position of the appellants, for purposes of determining what fair procedures required in the circumstances of the case, should be considered as analogous to a person applying for a licence or some other indulgence. I do not wish to revive the old idea that there is a clear distinction between "application" cases and "deprivation" cases. (See M Aronson, B Dyer and M Groves, Judicial Review of Administrative Action, 4th ed (2009) Lawbook Coat [7.100]. Nevertheless, this element is a factor entitled to some weight when determining the content of any duty. 73 In the context of the statutory scheme as a whole and the circumstances of the case, in my opinion, fairness did not require the appellants to be given a hearing with respect to the decision to grant the indulgence to some but not others, whether by the adoption of the so called "criterion" for inclusion or in the determination of whether the "criterion" applied to a particular licence holder. 74 The nature of the statutory decision-making process was fully analysed by Justice Jagot as set out at pars [27] -[30], [36]-[37] above. I agree with her Honour's identification of the critical features of the legislative scheme, save in the respect to which I referred at [56] above. In this regard I particularly emphasise the following features of the scheme: · The statutory power is to be exercised in the public interest, for purposes of serving a wide range of broadly expressed policy objectives of a character that overlap, conflict and are incommensurable with each other; · Alteration of any component part of the framework carries with it a potential effect on each other component part; · The particular component about which the appellants complain involves a subsidiary element of a complex decision-making process; · Even with respect to this subsidiary element, the decision necessarily affected the conflicting interests of a large number of entitlement holders, not merely the more limited range of entitlement holders to whom the characterisation of "special circumstances" was capable of applying; · The very structure of the formula, identified at [15]-[16] above, necessarily meant that every inclusion in Sch 5, reduced the entitlements of virtually every other licence holder. 75 In this context, the directly relevant "criterion" was the broad principle of "special circumstances". This, in itself, invokes the full range of policy objectives required to be addressed and the full scope and intensity of the conflicting interests required to be reconciled when formulating a plan or an amended plan. In this context no individual component of the decision-making process - including the process of identifying what "special circumstances" would be accepted - can be severed from the entirety of the decision-making process. In any event, the selection of the criterion, considered separately, itself gives rise to the same polycentric decision affecting numerous persons in a context of conflicting interests. 76 It may be the case, as the appellants submitted, that looking at the decision-making process from the perspective of Sch 5 one can identify a power that can be exercised to affect an identifiable and small class of licence holders. (Reliance was placed on Botany Bay City Council v Minister for Transport and Regional Development (1996) 66 FCR 537 at 553 and 555; Vanmeld supra at [62], [74], [96].) 77 However, this is not a consideration entitled to determinative weight in the relevant context, where the range of multifarious considerations and conflicting interests were such that no single component of this complex and integrated scheme should serve as a starting point for the relevant analysis. The focus of attention must be the scheme as a whole, including the entire formula set out in cl 25C. 78 The appellants also referred to authorities which indicated that a duty to accord procedural fairness can exist in circumstances where a statutory power was to be exercised in the context of policy decisions or in a matter when the dominant consideration was the public interest. (Reference was made to FAI Insurances Ltd v Winneke supra at 398; South Australia v O'Shea (1987) 163 CLR 378 at 388-389: Minister for Arts, Heritage and Environment v Peko-Wallsend Ltd (1987) 15 FCR 274 at 305-306; Barratt v Howard [1999] FCA 1132; (1999) 92 IR 350 at [2], [52]-[54]; Clarence City Council v South Hobart Investment Pty Ltd [2007] TASSC 16; (2007) 152 LGERA 24 at 23, 61.) 79 However, the fact that such considerations are not necessarily determinative, does not prevent them having considerable force in the circumstances of a particular case. The present is a case in which the multiplicity of considerations, together with the broad range of interconnected, conflicting and incommensurable interests, is such that the decision-making process involved in a particular component part is simply overwhelmed by the whole. The elements of policy involved in the exercise of a power directed to achieving the public interest, in a context affecting numerous interests, is entitled to significant weight in the present context. 80 Even though Sch 5 itself can be seen as affecting specific, identifiable rights and interests, any addition to the schedule must impinge upon the interests of virtually every licence holder, albeit to a small extent when compared with the effect upon licence holders such as the appellants. Nevertheless, the number of persons necessarily affected by the decision is entitled to significant weight. 81 On the evidence some 1405 license holders in the six plan areas were potentially affected. In the particular groundwater source to which the 2003 Plan applies, there were some 176 licence holders. The decision about which the appellants complain could have had some effect on most, if not all, of them. 82 Furthermore, I have set out at [49] above pars [247]-[248] of her Honour's judgment, in which she concludes that there was no "criterion" for determining what would constitute "special circumstances". Rather the selection of persons for inclusion in Sch 5 emerged during the course of considering each "individual case on its merits" and "generally" those who satisfied the so-called "criterion" were accepted. 83 All licence holders, including the appellants, were given the opportunity of identifying why they should be granted an additional entitlement by reference to the most general of criteria, "special circumstances". The decision as to which of the many such circumstances is capable of answering, and in fact answers, that generalised, intrinsically indeterminate test, is a matter for which a broadly based rule of thumb is entirely appropriate. 84 This is an example of a situation which arises frequently. A decision-maker receiving submissions is not generally subject to a duty to disclose a proposed conclusion, unless it is of a character that could not reasonably be anticipated. (See eg Victims Compensation Fund Corporation v Nguyen [2001] NSWCA 264; (2001) 52 NSWLR 213 at [40]; South Sydney City Council supra at [256]-[263].) That is not suggested to be the case here. Particularly where numerous persons are affected, as is the case here, the process for which the appellants contend, to adopt Mason P's words "would be unworkable, because it would lead to an infinite regression of counter disputation". (South Sydney City Council supra at [267].) 85 In addition to these reasons, I agree with the observations of Jagot J at [233]-[236] set out at [44] above. 86 In my opinion the above analysis is determinative with respect to the first matter raised, ie an opportunity to be heard on the determination of the "criterion" for selection. It is relevant also with respect to the second matter, ie an opportunity to be heard with respect to whether the appellants satisfied the criterion. However, as this alternative is clearly directed to the appellants' particular circumstances, and does not raise the same issue of impracticability in the sense of excessively burdening the decision-making process, additional observations are appropriate. 87 It would have been practical, as the appellants submitted, for the process of receiving further submissions to be confined to the more limited class of persons who had in fact made submissions with respect to "special circumstances". However, practicality, whilst a necessary condition, is not sufficient. 88 The appellants were given the opportunity to make submissions as to whether their circumstances were relevantly 'anomalous' or 'special'. I proceed on the assumption (to be further considered below with respect to breach) that they had no opportunity of addressing whether they satisfied the "criterion". Nevertheless, they had an opportunity of identifying the basis of any grievance they had. I do not see why, in all the circumstances, fairness required a further round, or probably rounds, of decision-making to give the appellants an opportunity of saying that the characterisation, apparently common to those whose submission was supported, should be expanded or expressly further addressed and applied in the case of each appellant. 89 The fact that an opportunity of substance had been made available is itself a significant circumstance when determining the content of the duty in a particular case. The appellants were in the best position to identify their specific grievance. They did so. Their cases were rejected. 90 In my opinion, in the whole of the circumstances, fairness did not require that each person potentially affected be given an opportunity to be heard on the application of the "criterion" to them. The decision-maker did not apply a criterion as such. The decision-maker received each case put forward and decided to accept some. Those accepted shared a common characteristic. Procedural fairness did not require each disappointed applicant to be given a further opportunity to apply for a more favourable outcome.

Determining the Issue of Breach 91 The respondent sought to uphold her Honour's decision on the basis that, even if there was a duty of a relevant kind, there had been no breach. The respondent's case in this respect was based on the proposition that each licence holder was given the opportunity to put its case for "anomalies" or "special circumstances". The so-called "criterion" did not exist at the beginning of the process. As a result of considering the submissions a "common characteristic" emerged amongst the licence holders which the relevant committees decided should be accepted as the basis for selection into Sch 5. 92 This was the basis upon which her Honour held that there was no breach in pars [246]-[249] of her judgment set out at [49] above. I agree with her Honour's judgment in this respect. 93 Each licensee was given an opportunity to identify any reason why they should be treated in a manner more favourable than the history of extraction policy would allow. Although the internal committee processes identified the so-called "criterion" at an early stage it was not applied without consideration of the merits of each case. Her Honour's finding to that effect should be upheld. In the event, as the respondent submitted, the licences included in Sch 5 shared a common characteristic. That was determined by the application of a broad rule of thumb which is perfectly acceptable in a policy based decision-making process affecting numerous persons. 94 In oral submissions the respondent relied on the course of events to which I will refer below, as an alternative basis for the conclusion that there had been no breach. Both parties, the Minister submitted in this Court, had an opportunity to address the so-called "criterion". Indeed, the Harvey appellants expressly did so. 95 This submission applies to both matters of which the appellants complain: the adoption of the "criterion" and whether they, in any event, satisfied it. The submission is, however, particularly pertinent to the latter. 96 The appellants contend that her Honour made no such finding in her judgment and that it is inappropriate for this Court to make such a finding. Furthermore, the appellants submit that there is no notice of contention raising this issue. 97 Although her Honour did not determine breach on this basis, it is open to this Court to do so. The relevant evidence is not contested and it was not suggested that any further evidence could have been available. 98 Her Honour does make all the relevant findings of primary fact. The issue is one of inference from uncontested facts. The appellants did not suggest that they would suffer any prejudice. The relevant issues have been fully addressed by the parties and it is unnecessary to require a formal notice of contention. 99 In any event, the respondent did file a notice of contention to the effect that her Honour's judgment should be upheld on the basis of the exercise of the discretion to refuse relief. Although the respondent's relevant submissions were made in the context of addressing breach, rather than discretion, futility would be a proper basis for upholding the actual notice of contention filed. 100 This Court should determine this alternative submission on breach. 101 The Tubbo appellants reasserted in this Court their position that they were unaware of the "criterion" developed during the decision-making process and, accordingly, never had an opportunity of making a submission with respect to the applicability of the formula to them prior to the promulgation of the amendment order. In the case of the Harvey appellants, for reasons which will appear, they did make such a submission, but in this Court they contended that that submission was not taken into account. 102 The respondent accepted that the Tubbo appellants did not actually become aware of the "criterion". In their case the issue is whether they had an opportunity of addressing the "criterion". 103 By letters of 23 March 2006, the Tubbo appellants submitted what they described as an "Anomalies case". It is unnecessary to set out the detail. It is sufficient to state that, in substance, the letter objected to the reduction of its entitlement on the basis of the timing of their substantial investment, which prevented the use of the entitlements during the period relevant to computing history of extraction. 104 After the process which determined the content of Sch 5, and before the promulgation of the 2006 Amendment Order, a draft of the proposed amendment was made available publicly for comment. The media release of 25 August 2006 announcing the draft contained a statement on behalf of the Department of Natural Resources to the effect: "I would encourage all interested parties to read the information sheet on the draft key amendments and make a written submission before the closing date, which is the 8th September 2006. A list of all draft amendments to the clauses in the plan is also available." 105 The information sheet was entitled "Key Amendments to the Water Sharing Plan for the Lower Murrumbidgee Groundwater Sources". That document contained the following statement: "Each licence holder has been advised by the Department of Natural Resources of their history of extraction volumes for the nominated years under this calculation method and asked to verify their yearly extraction volumes. Where discrepancies between the Department and licence holder's records of extraction could not be resolved, the matter was referred to the Murrumbidgee Regional Groundwater Verification Committee, which made a recommendation on each individual's history of extraction and considered the special circumstances of entitlement holders who made investment decisions based on the gazetted water plan ." [Emphasis added] 106 This statement clearly indicates that the scope of "special circumstances" was identified with what the appellants have referred to as the "criterion", namely that those circumstances would extend only to entitlement holders "who made investment decisions based on the gazetted water plan", being the proposed 2003 Plan, incorporating across the board reductions without reference to history extraction. 107 By letter of 4 September 2006, the Harvey appellants put a case directed, in large measure, to establishing their entitlement to be considered for inclusion in the list of those who satisfied the particular special circumstances criterion. Their letter said: "Please find enclosed comments on amendments proposed to the Water Sharing Plan as well as documentation relating to our water dependent investments both pre and post 2003. We are disappointed that the verification committee did not seek these details to further investigate our special circumstance. It is also disappointing that they have failed to advise us as to how they differentiated between water dependent investments we have made and those of others. We ask that our case be looked at again with a view to special consideration. Several other license holders who have found themselves in the same circumstances of large water dependent investment have had their cases addressed and dealt with in a seemingly equitable manner. We ask for no more than this and to that end we attach descriptions and dates of investments made in recent years based on the only knowledge we had prior to Dec 2005 that the WSP was to be a 52% entitlement cut across the board. Our main concern and issue is that that the plan appears to be fundamentally flawed in that the Government has done a complete reversal of policy announced in 2003 but yet has not made provision for the individual cases that have been severely and adversely affected by the changing of the methodology of formulating the WSP from the 52% across the board entitlements as gazetted in 2003 to the HOE principle without any public disclosure until December 2005. We fall into this category and although presenting our case to the verification committee still find ourselves left in a totally untenable position having invested hugely on water dependent structures underpinned and guaranteed by the bore water. As you can ascertain by the attached documents we have invested very heavily basing the investment initially on our original entitlement and continuing our development upon receiving notification that the entitlement would be reduced to 52%. All my research has failed to reveal any evidence that the HOE principle for allocating entitlements was to be adopted until 2005." 108 It is clear that, at the time of the invitation to make submissions, an opportunity was given to all the appellants to make submissions as to the applicability of the 2006 Amendment Order to them. The Harveys took advantage of that opportunity. 109 A departmental report was prepared with respect to the responses to the public exhibition of the draft of the 2006 Amending Order. That report categorised the 41 responses in various ways. Under the heading of "Formula for reduction of entitlements", 29 individual and one industry submission were summarised including a submission summarised in the following manner: "9 Flawed, as complete reversal of policy, and has not considered all individual cases in a fair manner." 110 The terminology employed in this respect is a clear reference to par [3] of the Harvey appellants' letter of 4 September 2006, quoted above, which uses the formulation: "The plan appears to be fundamentally flawed in that the Government has done a complete reversal of policy announced in 2003 but yet has not made provision for individual cases that have been severely and adversely affected by the changing of the methodology …" 111 The clear inference from this documentation is that the Harveys made a submission on the very issues raised in this appeal and that the relevant decision-makers rejected their submission on the merits. 112 In this Court, Mr Prince, who appeared for the Harvey appellants, submitted that there was other documentation within the department which indicates that there was no consideration given to their submission. 113 By letter of 2 March 2007 the Director General of the department wrote to the Harvey appellants rejecting their complaints, but did so only with reference to an earlier submission of April 2006. That letter, together with the internal departmental memorandum on which it is based and which is itself undated, although clearly written sometime after October 2006, made frequent reference to an earlier submission by the Harveys in April 2006, but made no reference at all to the detailed submission of September 2006. 114 It is odd that the author of the memorandum and the draft letter sent in March 2007 did not make any reference to the detailed submission of 4 September 2006, which clearly superseded the submission of April 2006. One of the authors of the advice to the Minister following the public exhibition process was a person through whom the draft letter was said to pass, although on the copy of the memorandum in evidence there is no indication that he actually approved the memorandum and the letter. 115 It appears that the author of the memorandum and draft, which became the letter of 2 March 2007, had overlooked the submissions of September 2006. However, that is not a sufficient basis for an inference that the persons responsible for coordinating the responses to the public exhibition, including the response of the Harvey appellants, had done so. 116 As set out above, there is a clear indication in the materials prepared for the Minister, prior to the promulgation of the 2006 Amendment Order, that the Harvey submission was taken into account. The fact that it was apparently not taken into account in a process which occurred within the department subsequent to the promulgation of the amendment does not justify an inference that it was not taken into account prior to the promulgation of the amendment. 117 In the case of the Tubbo appellants there is no suggestion that they made a submission expressly directed to the application of the "criterion" to them. As I have said, the respondent accepts that they did not know about the "criterion". It does appear that they failed to read and/or appreciate that there was a statement in the materials calling for final submissions which constituted what they characterise as a "criterion". The submission that they made in response to the call was to reiterate their fundamental objections to the entire scheme. They did not take up the opportunity afforded to them to make detailed submissions with respect to the matters of which complaint is now made. That does not, however, constitute a breach of the obligation, if any, to accord procedural fairness. Any such duty requires that an opportunity be given, not that it be understood. It cannot be suggested that the information sheet was obscure or misleading. 118 In any event, with respect to the assertion that they were denied an opportunity of establishing that they met the "criterion", the evidence adduced on the part of the Tubbo appellants in the present case, far from establishing any basis for asserting that they might have been able to make out a case for inclusion in Sch 5, contradicted any such proposition. 119 The relevant affidavit evidence asserted: "(b) the applicants and its key employees were made aware of the proposed 'across-the-board' cuts by various means during 2002 and 2003; (c) the applicants were never advised that the criteria for obtaining special consideration included a requirement that the licence holder demonstrate that its investment decisions during 2003 and 2004 were guided by the gazetted water sharing plan which stated 'across-the-board' cuts to 51.4%; (d) from the time the proposed water sharing plan with 'across-the-board' cuts was first made public in about early 2003 there had been much ongoing anger, unhappiness and debate in rural, farming and political communities in and around the Murrumbidgee valley and there seemed no basis to assume, with any degree of confidence, that the water sharing plan in the form originally proposed would ever come into effect; (e) as the proposed water sharing plan with 'across-the-board' cuts was delayed time and again, and the general controversy about the plan continued it appeared increasingly unlikely that it would ever take effect in that form; (f) during 2003 to mid-2004, my general expectation and that of the applicants was that whatever water sharing plan eventually came into effect would strike a fair balance between all licence holders and take into account licence holders who had invested capital with the expectation of being able to use their 'inactive' water entitlements; (g) during 2003 to mid-2004, although the applicants and I hoped for and expected a much better and much fairer outcome, my absolute 'worst case' expectation was that the applicants would receive at least 51.4% of their current annual entitlement every year thereafter; … (l) if the applicants had been offered the alternative of receiving the entitlement proposed under the original water sharing plan, being 'across-the-board cuts' to 51.4% of its original entitlement, estimated at 10,662 megalitres per annum, instead the entitlements they ultimately received under the amended water sharing plan, comprised of an aquifer access licence 9,606 megalitres per annum, an initial supplementary access licence of 1,284 megalitres for the first year and 'financial assistance' of approximately $200,000, the applicants would have been significantly better off with and elected to receive the 'across-the-board cuts' instead; and (m) if the applicants had been given the opportunity to address these issues as part of the special circumstances process, it would have done so as set out in this paragraph." 120 The Tubbo appellants incurred substantial expenditure both before and after the announcement of the 2003 Plan. It appears that this was a critical consideration in their exclusion from Sch 5. The relevant comment in the final advice to the Minister, as approved, was: "The company invested in irrigation infrastructure before and during the watersharing Plan". 121 It is not apparent that Tubbo would have been included in Sch 5 to some degree on the basis of their expenditure if they had asserted, contrary to their actual assertions, that the subsequent expenditure was made in reliance on the 2003 Plan. It would not be appropriate for this Court to proceed on a basis contrary to the sworn evidence adduced on their behalf. In any event, that is of no account as to whether there was a breach of the obligation to accord procedural fairness. 122 It may be that this is an issue which is best considered under the exercise of discretion. However, the Tubbo appellants have not established that there was anything they could or would have said which would have led to their inclusion in Sch 5 pursuant to the applicable criterion. 123 In my opinion, for the above reasons, even if the respondent had been subject to a duty to accord procedural fairness in either of the respects advanced on this appeal, there was no breach of that duty.

Conclusion 124 The appeals should be dismissed with costs. 125 ALLSOP P: I have had the privilege of reading in draft the reasons of the Chief Justice. I agree with them and with the order proposed by him. 126 SACKVILLE AJA: I have had the advantage of reading the judgment of the Chief Justice. I gratefully adopt his analysis of the issues and of the statutory framework. I agree with his Honour that the appeals should be dismissed. 127 I wish to comment briefly on three matters: · the nature of the relief sought by the appellants; · the application of a duty to accord procedural fairness to an exercise of the statutory power to amend a water management plan; and · whether there was any breach of the requirements of procedural fairness.

THE RELIEF SOUGHT 128 Two appeals have been heard together. Each appeal is from the judgment of the primary Judge, who dismissed two applications which had been heard together. The appellant or appellants in each appeal were separately represented, but the notices of appeal, in substance, were identical. 129 The notices of appeal identify the first error in the judgment below to be her Honour's failure to hold that the Minister's exercise of power under s 45(1)(a) of the Water Management Act 2000 (NSW) ("WM Act") was subject to a duty to accord procedural fairness to the appellants in respect of the making on 26 September 2006 of the Water Sharing Plan for the Lower Murrumbidgee Groundwater Sources 2003 Amendment Order 2006 ("Amendment Order"). All other grounds of appeal concerning the duty to accord procedural fairness focus on the Minister's exercise of power under s 45(1)(a) to make the Amendment Order. 130 The notices of appeal claim that the primary Judge should have found that: · the Minister was obliged to consider the individual submissions of licence holders adversely affected by the Amendment Order; and · the Minister failed to accord procedural fairness to the appellants, in that he applied the criteria for determining whether special circumstances existed but did not disclose the content of the criteria to the appellants. 131 The principal orders the appellants seek are that the appeal be allowed and that in lieu of the orders made by the primary Judge: · an order be made that the Amendment Order is ultra vires and of no effect; and · a declaration be made that the appellants' licences under the Water Act 1912 (NSW) ("1912 Act") were replaced on 1 October 2006 (the commencement date of the Water Sharing Plan for the Lower Murrumbidgee Groundwater Sources 2003 ("Plan as Amended")) with an access licence for the same quantities of water specified in the licences issued under the 1912 Act. 132 The appellants' objective in the appeals seems to be to obtain relief which effectively restores their entitlements to extract water under the licences granted to them pursuant to the 1912 Act. It is, however, difficult to see how the appellants could attain this objective, even assuming that they make out their claims to have been denied procedural fairness. 133 The original Water Sharing Plan for the Lower Murrumbidgee Groundwater Sources 2003 ("Original Plan") was made under s 50 of the WM Act and published in the Gazette on 28 February 2003. It was expressed to take effect on 1 July 2003. As her Honour explained (at [120]), the Original Plan was a necessary step in the conversion of bore licences to aquifer licences. The aquifer licences were to provide for share components of approximately 51.4 per cent of existing entitlements implementing a policy of across-the-board cuts in groundwater extraction entitlements. 134 Commencement of the Original Plan was deferred on numerous occasions, in order to accommodate the Commonwealth's national water plan and the decision by the New South Wales Cabinet on 4 March 2004 to consider "ways of minimising impacts on regional economies by greater acknowledgement of historical use". On 10 August 2005, the Department announced that commencement of the Original Plan had been deferred until July 2006. As events transpired, there was a further deferment until 1 October 2006. 135 On 25 August 2006, the Department announced that the key amendments proposed to the Plan had been released for public exhibition. The closing date for submissions was specified to be 8 September 2006. As the primary Judge found: "the documents for exhibition included an information sheet, the draft amendments with a brief explanation for them [and] a submission form for submissions".

The draft amendments included Sch 5, which specified the aquifer access licence share component for four licences, being those licences which the Murrumbidgee Regional Groundwater Verification Committee (" MRGVC ") had recommended to the Groundwater Adjustment Advisory Committee (" GAAC ") should be adjusted to allow for special circumstances. The effect of including these licences in Sch 5 was to preserve the holder's entitlement to 51.4 per cent of the previous entitlement, instead of the lesser entitlement that would have resulted from the application of an historical extraction criterion to the particular licences. 136 The Amendment Order was published in the Government Gazette on 29 September 2006 and was expressed to commence on 1 October 2006. It provided that the Plan as Amended would come into force on the same date. 137 On 27 September 2006, a proclamation was made pursuant to s 55A of the WM Act declaring, as from 1 October 2006, that Parts 2 and 3 of Chapter 3 of the WM Act (dealing with access licences and approvals respectively) applied to the Plan as Amended. As will be seen, the effect of the proclamation was to make entitlements under the 1912 Act subject to the transitional arrangements incorporated in Sch 10 to the WM Act. 138 On 1 October 2006, the Water Management (General) Amendment Regulation 2006 ("WMA Regulation") also came into force. It amended the Water Management (General) Regulation 2004, by modifying the provisions of Sch 10 to the WM Act (conversion of former entitlements to access licences and approvals) in relation to access licences that arose under Sch 10 as a consequence of the proclamation under s 55A of the WM Act. In particular, WMA Regulation reg 29B provided that specified entitlements under the 1912 Act were taken to have been replaced by an aquifer access licence with a share component of the volume specified in Sch 4A to the WMA Regulation. The entitlements were calculated in accordance with cll 25C and 25D of the Plan as Amended (reg 29B(3)). In addition, the WMA Regulation reg 10(1) provided that an available water determination for the purposes of s 59(2) of the WM Act was to be published on the Department's website. 139 Clause 1 of Sch 10 to the WM Act states that the Sch 10 applies to each category or subcategory of access licence that relates to a water source to which Part 2 of Chapter 3 of the WM Act applies by operation of a proclamation under s 55A. Clause 3 of Sch 10 provides that an entitlement that, immediately before the appointed day, was in force under the Water Act is taken to have been replaced: "(a) to the extent to which it entitles any person or body to take a specified quantity of water, by an access licence held by that person or body (subject to such of the conditions of the entitlement as are applicable to an access licence): (i) for the quantity of water so specified, or (ii) if the relevant management plan, and regulations made for the purposes of this paragraph, indicate that a different quantity of water calculated in accordance with a specified methodology may be taken under an access licence issued in relation to the water management area or water source to which the management plan applies - for a different quantity of water calculated in accordance with that methodology, …" 140 The appellants' argument appears to be that, assuming they were denied procedural fairness in relation to the formulation and application of the special circumstances criteria, the whole of the Amendment Order is of no effect. While they accept that the Minister might cure the defects arising from the want of procedural fairness, they say that, pending any remedial action, the Original Plan remains in force and is unaffected by the Amendment Order. 141 The appellants contend that the Original Plan does not specify a "different quantity of water calculated in accordance with a specified methodology" within the meaning of cl 3(1)(a)(ii) of Part 2 of Sch 10. This is said to follow because no available water determination (being a determination as to the availability of water for the various categories of access licences) has ever been made under s 59 of the WM Act in relation to the Original Plan. Thus cl 3(1)(a)(i) of Part 2 of Sch 10, so the appellants argue, has the effect that the replacement access licence is taken to be for the volume of water specified in the appellants' licences under the 1912 Act. The relief sought by the appellants reflects this reasoning process. 142 There are at least two matters which present difficulties in the appellants' path, insofar as they seek the relief identified in the notices of appeal. 143 First, as Spigelman CJ has pointed out, no challenge is made to the Original Plan's transformation of licences under the 1912 Act into licences under the WM Act. As his Honour also points out, no complaint is made about the policy implemented by the Original Plan of reducing the total demand of all licence holders with an interest in the groundwater sources to sustainable levels (specified in the Original Plan, as 27,000 megalitres for the deep groundwater source (cl 27(1)(b)), compared with over 500,000 megalitres in entitlements from the same source under the 1912 Act). Nor do the appellants complain about the Amendment Order's policy of substituting a history of extraction methodology in place of the uniform percentage cuts incorporated in the Original Plan. 144 These points emerge clearly from the appellants' submissions in chief. The appellants say that their complaint concerns the primary Judge's finding that the Minister did not owe them a duty of procedural fairness when he made a decision under the WM Act: "which involved a case-by-case and individual consideration of the circumstances of a particular class of licence holders who would be adversely affected by the [Plan as Amended]".

In particular, they complain of: "the failure to disclose to the Appellants the criteria by which they would be assessed for additional entitlements , so as to allow them a real opportunity to have their submissions considered in the process established by the Minister for that purpose". (Emphasis added.) 145 It follows that the appellants' complaints concern only to the failure to accord procedural fairness in relation to the formulation and application of the special circumstances "criterion". Had the appellants received the opportunity they claim they were denied, and had they succeeded in persuading the Minister that they satisfied the special circumstances criterion, the most favourable outcome they could have hoped for was the inclusion of their licences in Sch 5 of the Plan as Amended. As the appellants' submissions acknowledge, this would have freed them from the historical extraction formula, but would have placed them in the same position as other Sch 5 licence holders who satisfied the special circumstances requirement. At best, the appellants would have been entitled only to 51.4 per cent of their entitlements under the 1912 Act, not 100 per cent of those entitlements. 146 Secondly, although the Original Plan was expressed to take effect on 1 October 2003, its commencement was repeatedly deferred. The only plan that was ever brought into force was the Plan as Amended. It was never intended that the Original Plan should actually come into force in the manner implied by the relief sought by the appellants. Had it done so, no doubt an available water determination would have been made in relation to it. 147 Assuming the appellants were denied procedural fairness as they claim, it does not follow that they are entitled to the declaratory relief they seek. It would be odd, to say the least, if a denial of procedural fairness in relation to one aspect of the making of the Amendment Order should entitle the appellants to be restored to a position they could never have enjoyed, even if their representations to the Minister had been wholly successful. Moreover the relief they seek is premised on the actual operation of the Original Plan in a manner that was never intended by the Minister. 148 It is not necessary to consider whether the relief sought by the appellants would be refused on discretionary grounds (as the respondent contends) or on the basis that the particular denial of procedural fairness could not lead to an order setting aside the Amending Order in its entirety or declaring it to be of no effect: cf Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11; 209 CLR 597 at [45]-[46], [58] per Gaudron and Gummow JJ; [151]-[153] per Hayne J; compare at [63]-[64] per McHugh J; Minister for Local Government v South Sydney City Council [2002] NSWCA 288; 55 NSWLR 381 at [155] per Mason P (with whom Spigelman CJ and Ipp JA agreed). It is enough to say that, in my opinion, the appellants could not obtain the full extent of the relief they seek, even if they made out their case founded on a failure to accord them procedural fairness. 149 As was discussed in argument, it might be possible to frame declaratory or other relief more narrowly tailored to the appellants' case. Any such relief might give rise to other issues, such as the utility of a more restrictive declaration. These questions need not be pursued further.

PROCEDURAL FAIRNESS AND THE POWER OF AMENDMENT 150 I agree with Spigelman CJ that it is not necessary to determine whether the primary Judge was correct to reject the proposition that: "an orthodox process of statutory construction could lead to a conclusion of a legislative intention that a single power might or might not be subject to a duty depending on the manner of exercise". 151 Spigelman CJ points out that in determining whether the power to make or amend a management plan can ever give rise to a duty to accord procedural fairness, it may be necessary to take account of s 19(2) of the WM Act. This sub-section provides that the water sharing provisions of a management plan may apply to the whole or any part of a water management area or of a water source. 152 I would add that in considering whether the power in s 45(1) of the WM Act to amend a management plan can ever attract a duty to accord procedural fairness, it may be necessary to take account of the procedural requirements that must be followed in making a management plan in the first place. These include notification of certain matters to each holder of an access licence within the relevant management area (s 45(1), (2), although a failure does not affect the validity of the plan: s 45(3)); public exhibition of a draft plan (s 38); an opportunity for licence holders and others to make submissions to the Minister (s 39); and consideration of the submissions by the management committee responsible for preparing the plan (ss 39(2), 40(1)). 153 If it is correct that a management plan can be amended under s 45(1) without ever attracting any obligation to accord procedural fairness, the entitlements of individual access licence holders could be adversely affected without them being afforded any opportunity provided to them to comment on the proposals or to correct any misapprehension by the decision-maker, for example in relation to historical patterns of water extraction. This would presumably be so even if the amendment affected the entitlements of only a few licence holders and appeared to treat them less favourably than others similarly situated. In effect the Minister would have the choice of amending a plan by following the procedure laid down in Ch 2, Pt 3, Div 8 of the WM Act, which lays down stringent procedural safeguards, or the procedure laid down in s 45(1), which is subject to no such safeguards. 154 This may be the correct construction of s 45(1) of the WM Act. But it might be thought somewhat incongruous, in the context of the particular scheme created by the WM Act, that the power to amend a water management plan is never constrained by the requirements of procedural fairness regardless of the nature or effect of the amendment, while the making of the plan itself is subject to detailed statutory safeguards. Notwithstanding that the amending power is to be exercised in the public interest, I do not think that the manner of exercise of the power is necessarily always irrelevant to the existence of an obligation to accord procedural fairness to a licence holder. Nor do I think the authorities necessarily require a court to choose between one of only two alternatives - that the exercise of a particular statutory power is always subject to the requirements of procedural fairness or that it is never subject to those requirements. For example, I do not read the comment in Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 at 590, to which her Honour referred, as applying to all statutory powers, regardless of the content of the power or the range of circumstances in which the power might be exercised. However, the resolution of this issue can also be left to another day.

A BREACH OF PROCEDURAL FAIRNESS? 155 I agree with Spigelman CJ that the primary Judge correctly found that the framework or "criterion" for the determination of special circumstances emerged from a consideration of the submissions themselves and that there was no "secret" criterion. Accordingly, there was no occasion for the Minister to provide the appellants with an opportunity to make representations as to what should be the appropriate criterion for the determination of special circumstances. 156 I also agree with Spigelman CJ that even if there was an obligation to afford procedural fairness on the question of whether the appellants could demonstrate special circumstances, there was no breach of that obligation. The Harvey appellants put their case to the Minister within the specified period and their submissions were considered. The Tubbo appellants had the opportunity to do the same, but did not take advantage of it. In any event, as Spigelman CJ points out, the Tubbo appellants could not have shown that they satisfied the special circumstances requirement.

CONCLUSION 157 I agree with the orders proposed by Spigelman CJ. **********

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.

CITATION: Tubbo Pty Ltd v Minister Administering the Water Management Act 2000; Harvey v Minister Administering the Water Management Act 2000 [2008] NSWCA 356

Applicant NAFF of 2002 v Minister for Immigration Multicultural and Indigenous Affairs [2004] HCA 62; (2004) 221 CLR 1 Applicant VEAL of 2002 v Minister for Immigration Multicultural and Indigenous Affairs [2005] HCA 72; (2005) 225 CLR 88 Barratt v Howard [1999] FCA 1132; (1999) 92 IR 350 Botany Bay City Council v Minister for Transport and Regional Development (1996) 66 FCR 537 Clarence City Council v South Hobart Investment Pty Ltd [2007] TASSC 16; (2007) 152 LGERA 24 Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 578 FAI Insurances Ltd v Winneke (1982) 151 CLR 342 Ferdinands v Commissioner for Public Employment [2006] HCA 5; (2006) 225 CLR 130 Harvey v Minister Administering the Water Management Act 2000; Tubbo Pty Ltd v Minister Administering the Water Management Act 2000 [2008] NSWLEC 165; (2008) 160 LGERA 50 Jarratt v Commissioner of Police (NSW) [2005] HCA 50; (2005) 224 CLR 44 CASES CITED: Kioa v West (1985) 159 CLR 550 Lesnewski v Mosman Municipal Council [2005] NSWCA 99; (2005) 138 LGERA 207 Minister for Arts, Heritage and Environment v Peko-Wallsend Ltd (1987) 15 FCR 274 Minister for Local Government v South Sydney City Council [2002] NSWCA 288; (2002) 55 NSWLR 381 Minister for Immigration and Multicultural Affairs v Bharwaj [2002] HCA 11; (2002) 209 CLR 597 Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources [2005] NSWCA 10; (2005) 138 LGERA 11 Save the Showground for Sydney Inc v Minister for Urban Affairs and Planning (1997) 95 LGERA 33 South Australia v O'Shea (1987) 163 CLR 378 SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63; (2006) 228 CLR 152 Vanmeld Pty Ltd v Fairfield City Council [1999] NSWCA 6; (1999) 46 NSWLR 78 Victims Compensation Fund Corporation v Nguyen [2001] NSWCA 264; 52 NSWLR 213 Warringah Council v Edmondson [2001] NSWCA 1

LOWER COURT MEDIUM NEUTRAL CITATION: Harvey v Minister Administering the Water Management Act 2000; Tubbo Pty Ltd v Minister Administering the Water Management Act 2000 [2008] NSWLEC 165

5 In the application of the test of "special circumstances", no individual component of the decision-making process can be severed from the entirety of the polycentric decision-making process, involving interconnected and incommensurable interests in the context of the public interest. The focus must be on the scheme as a whole, including the formula for allocation entitlements. [75]-[79] [125] [126] Botany Bay City Council v Minister for Transport and Regional Development (1996) 66 FCR 537; Vanmeld Pty Ltd v Fairfield City Council [1999] NSWCA 6; (1999) 46 NSWLR 78; FAI Insurances Ltd v Winneke (1982) 151 CLR 342; South Australia v O'Shea (1987) 163 CLR 378; Minister for Arts, Heritage and Environment v Peko-Wallsend Ltd (1987) 15 FCR 274; Barratt v Howard [1999] FCA 1132; (1999) 92 IR 350; Clarence City Council v South Hobart Investment Pty Ltd [2007] TASSC 16; (2007) 152 LGERA 24 referred to.

9 The appellants had the opportunity to air any grievance. Fairness did not require the appellants to be afforded further opportunities as it would risk an infinite regression of counter disputation. [84] [88] [90] [125] [126] Minister for Local Government v South Sydney City Council [2002] NSWCA 288; (2002) 55 NSWLR 381 applied.

(2005) 138 LGERA 207

At a glance

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Judgment (15 paragraphs)

Legislation Cited (3)

Cases Cited (39)

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