Water Administration Ministerial Corporation v Jones

Court of Appeal (NSW)|2005-05-19|Before: Giles JA, Hodgson JA, Levine J

CITATION: Water Administration Ministerial Corporation v Jones [2005] NSWCA 181

JUDGMENT OF: Giles JA at 1; Hodgson JA at 48; McClellan AJA at 51

DECISION: (1) Appeal allowed in part; (2) Set aside the declaration in para 2 and the order in para 4 of the minute of order; (3) Respondent pay the appellant's costs of the appeal and have a certificate under the Suitors Fund Act if otherwise qualified.

Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193; CASES CITED: Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597.

Water Administration Ministerial Corporation - Appellant PARTIES: Donald Jones - Respondent

B Green - Appellant COUNSEL: N Perram - Respondent

Legal Service Branch, Department of Infrastructure, Planning and Natural Resources - Appellant SOLICITORS: Jackson Smith - Respondent

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41066/04 SC 30041/02

GILES JA HODGSON JA McCLELLAN AJA

Thursday 9 June 2005 THE WATER ADMINISTRATION MINISTERIAL CORPORATION v JONES Judgment 1 GILES JA: The substantive question in this appeal is whether the appellant is required to issue to the respondent licences for sinking bores on his family's properties "Roeta and "Iota", near Hillston in mid-western New South Wales. If issued, the licences will be very valuable to the respondent. 2 The applications for the licences were made in 1998 under the Water Act 1912 ("the Act"). The Act was repealed by the Water Management Act 2000, by which the issue of such licences, within the category of aquifer access licences, is now governed. It was common ground that, through transitional provisions, the respondent's applications continued to be governed by the Act as if it had not been repealed. 3 For the reasons which follow, in my opinion the appellant is not required to issue the licences.

The Act 4 The Act was a consolidation of seven statutes dealing with water rights, water and drainage, drainage promotion and artesian wells, and was frequently amended in the years after 1912. The result fell short of current standards in statutory expression. Licences for sinking bores were addressed in Division 3 of Part 5. 5 By s 112 of the Act, a bore could not be sunk, enlarged, deepened or altered, other than by the Crown, without a licence issued under Part 5 of the Act. It was an offence to contravene the section. 6 Section 113 provided - " 113 Application for licence

(1) Application for a licence for any new bore, or for enlarging, deepening, or altering any existing bore, shall be made to the Ministerial Corporation in the form prescribed, accompanied by the prescribed plans and descriptions, together with a statement of the purposes for which it is proposed to utilise the water.

(2) On application being so made, and if in the opinion of the Ministerial Corporation the bore is or will be an artesian bore or the circumstances so warrant, the Ministerial Corporation shall cause to be advertised once in the Gazette and once in a public newspaper circulating in the neighbourhood where the bore or the site thereof is situate a notice: (a) acknowledging the receipt of the application, and

(b) requesting all persons interested to inform the Ministerial Corporation whether they support the application or object thereto, and if they do so object, the reasons therefor, and

(c) stating the last day on which such information will be received and the name or official designation and address of the person to whom it should be sent.

(3) An application for a licence in respect of any bore that was constructed before the commencement of this subsection (as inserted by the Water Legislation Amendment Act 1999 ) is not required to be advertised in accordance with subsection (2)." 7 Section 113A, inserted in 1997, provided for gazettal of an order placing an embargo on any further applications for licences with respect to sub-surface basins considered unlikely to have more water available than sufficient to meet the requirements of existing licensees and other requirements. Applications after the date on which the order took effect were invalid and had to be rejected. 8 Section 114, in which the reference to "the preceding section" was plainly to s 113 and not s 113A, provided - " 114 Inquiry

(1) The Ministerial Corporation may where, in its opinion, the circumstances so warrant, and after the day mentioned in paragraph (c) of subsection (2) of the preceding section, cause a public inquiry to be held as to the desirability of granting the application. The inquiry shall be held by the local land board. The Ministerial Corporation shall cause particulars as to the time, date, and place of the inquiry to be advertised once in the Gazette and once in a public newspaper circulating in the neighbourhood where the bore or the site thereof is situate. The local land board shall report in writing to the Ministerial Corporation upon the inquiry.

(2) All persons whose interests appear to be affected by the granting of the application shall be permitted to attend at the inquiry and be heard in support of, or in opposition to, the granting of the application." 9 Section 115 provided - " 115 Issue of licence

(1) In any case where an application has not been advertised pursuant to section 113 (2) the Ministerial Corporation shall, as soon as practicable after it has investigated and considered the application and on payment of the prescribed fee, issue a licence to the applicant in the prescribed form, subject to such limitations and conditions as it may deem fit and proper.

(2) In any other case the Ministerial Corporation shall: (a) where an inquiry has been held pursuant to section 114 and the local land board reports in favour of the issuing of a licence, or

(b) where no inquiry has been held pursuant to section 114 and the Ministerial Corporation decides to grant the application, on payment of the prescribed fee issue a licence to the applicant in the prescribed form, subject to such limitations and conditions as it may deem fit and proper."

The dealing with the applications 10 The respondent made his applications on 31 August 1998. They were accompanied by a letter from an agricultural consultant indicating that the respondent wished to have an additional water allocation for "Roeta" of 3992 megalitres and a water allocation for "Iota" of 6600 megalitres. 11 The appellant wrote to the respondent on 8 December 1998 advising him of concern that the current level of allocation for the relevant groundwater resource might exceed its sustainable yield, and stating that it had introduced a statutory embargo taking effect on 23 October 1998. It was recognised that the respondent's applications had been received prior to the embargo, but it was said that the appellant was not in a position to make a determination upon them until it was satisfied that the total level of allocations did not exceed the sustainable yield for the resource. A hydro-geological study was being made, and the appellant said it would make determinations upon the completion of the study. 12 On 14 May 1999 the appellant wrote to the respondent informing him that the preliminary work for the study had been completed and had suggested that there should be no further allocations issued. A more detailed study was necessary over a much longer period of time. It was said that the respondent might wish to withdraw his applications, but that he could leave his applications in abeyance and that if he did not reply it would be assumed that he wished to continue with them. 13 The respondent did not withdraw the applications. There was further correspondence, including an explanation on behalf of the respondent of a proposal to develop 500 hectares of land to olive production requiring an additional 4000 megalitres of water allocation and a request that consideration of the applications not be deferred. A Ministerial reply dated 2 February 2000 said that it would be inappropriate for any new groundwater allocations to be considered until the results of the study were to hand. 14 In a memorandum dated 13 August 2001 an officer of the appellant stated that the current licensed entitlements exceeded current estimates of sustainable yield by approximately two and a half times and that it would "not be appropriate to issue additional entitlements that clearly cannot be supported by the aquifer". Under the heading "Action" he recommended that the respondent and the applicants in another 27 applications be sent "show cause" letters, that their responses be considered and that the appellant "take formal action to refuse the applications". Under the heading "Recommendation" he recommended "[t]hat the Regional Director approves action to refuse the pre-embargo groundwater licence applications in [the groundwater area]". The Regional Director endorsed his approval. 15 The appellant wrote to the respondent on 3 September 2001, stating as to each of the applications - "The Department is concerned that the amount of licensed entitlement already issued may exceed the current estimate of sustainable yield. Therefore it is not appropriate for the Department to issue additional entitlements that clearly cannot be supported by the aquifer as that would greatly erode the reliability of existing licence holders. Therefore the Department intends to refuse your application for a bore licence for irrigation and farming purposes. One month from the date of this letter the Department will formally refuse your application unless you show cause why your application should not be refused." 16 At some time prior to 20 February 2002 the appellant "form[ed] the opinion not to advertise pursuant to s 113(2) of the Water Act 1912". These were the terms of an interrogatory directed to the appellant and answered in the affirmative. There was no other evidence as to the formation of the opinion. We were told that it was common ground that the bores the subject of the applications would not be artesian bores, and presumably that was how they were regarded at the time. While it is not necessary so to conclude, a readily available inference is that the opinion was formed because the concern over additional water allocations was such that refusal of the applications was likely, so that advertisement of the applications was thought to be pointless. The memorandum of 13 August 2001 made no mention of advertisement. 17 On 28 February 2002 the appellant wrote to the respondent refusing his applications. It is evident from the letter that a submission had been received in response to the appellant's letter of 3 September 2001, but it was not in evidence. From the terms of the refusal, the study had indicated that the groundwater resource could not "sustain further growth in entitlement", and it was said that - "[u]sing the accepted principles of sustainable resource management, it was consequently decided that all applications for new bore licences in GWMA 012, lodged during the moratorium period, must be refused". 18 The respondent's solicitors had written to the appellant in September 2001 challenging on administrative law grounds what they saw as refusal of the applications by the letter of 3 September 2001. This was misconceived, as the letter was not a refusal (although it certainly foreshadowed refusal). On 28 May 2002 the respondent commenced proceedings for a declaration that the refusal by the letter of 28 February 2002 was void, alternatively an order in the nature of certiorari that the decision to refuse be quashed, and an order in the nature of mandamus that the appellant consider and determine the applications according to law. 19 On 3 July 2002 the appellant wrote to the respondent's solicitors - "The Water Administration Ministerial Corporation accepts that it has not made a decision in accordance with the Water Act, 1912. In the circumstances the Ministerial Corporation withdraws its letter of 28 February, 2002 advising its determination refusing the application and will now proceed to consider the application in accordance with the Act." 20 The letter went on to propose that the respondent's proceedings should be dismissed with costs in his favour. There was reference to the appellant obtaining legal advice following the commencement of the proceedings, consequent upon which the letter was sent, but there was no better explanation in the evidence of the appellant's withdrawal of the letter of 28 February 2002. We were informed that the appellant took the view that, by the operation of s 115(1) of the Act, an application for a licence could not be refused unless there had first been advertisement, because unless there had been advertisement it was a case where the application had not been advertised and the appellant was obliged to issue a licence. Again, it is not necessary to come to a conclusion; one would think the memorandum of 13 August 2001 provided grounds for challenging the refusal. 21 There was correspondence about disposal of the respondent's proceedings. At least to begin with, the respondent was content that the appellant should reconsider his applications, but he wanted the proceedings to remain on foot. Then it seems he proposed amendment to the proceedings, to which the appellant did not agree. The evidence was incomplete. 22 On 30 August 2002 the appellant advertised the applications in the Gazette and an appropriate newspaper, in accordance with s 113(2) of the Act. There was no evidence explaining the formulation of the opinion that there should be advertisement. It may have been because of the appellant's view previously mentioned, but whatever the reason the appellant was then obliged to receive and consider any responses. 23 The appellant received four objections to the issue of the licences. It did not put the objections to the respondent or give him an opportunity to address them. 24 In a memorandum dated 22 January 2003 an officer of the appellant said that the licensed entitlements for the groundwater area "already exceeds the sustainable yield and to issue any additional entitlement will impact upon the reliability of the aquifer for existing licence holders", and recommended that the applications be refused "as to issue the entitlement requested by [the respondent] would be irresponsible management of an already over-allocated groundwater resource". 25 The recommendation was approved, and on 11 February 2003 the appellant wrote to the respondent informing him - "The Department has processed and assessed your applications. Four objections were received to the applications. The grounds of the objections being the aquifer is already over committed and granting of additional licences will impact upon the aquifer and existing licence holders. The Department believes the sustainable yield of the aquifer cannot support any new licensed entitlements. Using principles of sustainable resource management, the Department therefore has decided to refuse your two applications."

The decision of the trial judge 26 The respondent's proceedings were amended in March 2003 to claim the relief to which the judge in due course acceded. The proceedings were heard by Levine J on 16 October 2003. His Honour gave judgment on 9 November 2004. 27 The judge -

(a) declared null and void and of no effect the "decisions made by [the appellant] … on 28 February 2002 to refuse the [respondent's] applications …";

(b) declared null and void and of no effect and quashed the "decisions made by [the appellant] after 28 February 2002 to advertise [the respondent's] applications … ";

(c) declared null and void and of no effect and quashed the "decision made by [the appellant] on or about 11 February 2003 to refuse [the respondent's] applications … ";

(d) ordered that the appellant - " … in accordance with s 115(1) of the Water Act 1912, on payment of the prescribed fee by [the respondent], issue a licence to [the respondent] in the prescribed form, subject to such limitations and conditions as [the appellant] may deem fit and proper in respect of the bore licence applications … "; and

(e) ordered the appellant to pay the respondent's costs. 28 His Honour summarised at some length the parties' submissions. He did not engage at any length in explanation of his own path to his conclusions, or resolution of the competing submissions. 29 It is tolerably clear that his Honour held that the refusal of 28 February 2002 was of no effect ((a) above), and made the order that a licence be issued ((d) above), upon acceptance of the respondent's principal argument founded on the formation prior to 20 February 2002 of the opinion not to advertise the applications pursuant to s 113(2) of the Act. The argument, which was essentially repeated before us, was as follows. By regard to s 113(2), formation of the opinion necessarily carried with it that the appellant had formed the opinions that the bores would not be artesian bores and that the circumstances did not warrant advertisement. Once the opinions were formed, they could not be changed and it became impossible for the applications to be advertised. There was thus fulfilled the initial words in s 115(1) of the Act, "[i]n any case where an application has not been advertised pursuant to s 113(2)", the formation of the opinions providing the answer to the question of when the words were fulfilled. Thereupon, by force of "shall" in s 115(1), the appellant was required to issue the licences, and the investigation and consideration to which that sub-section referred went only to the limitations and conditions which the appellant might deem fit and proper. In what was said to be a separate argument, once the opinions were formed the respondent acquired a vested right to have the licences issued. 30 On this basis, it seems that the other declarations that the later decisions to advertise and to refuse the applications were of no effect ((b) and (c) above) were consequential, the decisions being ineffective because the appellant was already required to issue the licences and the later decisions were irrelevant. 31 Thus the concluding paragraphs of the judge's reasons, immediately before he made his declarations and orders, were - "93 Whilst it must be acknowledged that the results are peculiar, in an area apparently plagued with complexities, the construction of s113 as advanced by the plaintiff to my mind is correct. The negative opinion was formed, and as a consequence of that s115 is triggered in the plaintiff's favour, as a matter of right, on the proper construction of the section. I am persuaded that the exercise of the power constituted by the formation of the opinion, upon a proper construction of s113, is not an exercise of a power that can be exercisable from "time to time" . Once the negative opinion in relation to advertising is formed, the power to form that opinion is spent, triggering the rights of the plaintiff under s115. Section 38 [sic: s 48] of the Interpretation Act does not apply to obviate that outcome. That being so, all subsequent actions leading ultimately to a refusal of the licences in effect were the exercise of power in a state of artificiality unsupported by the legislative scheme.

94 The construction of s113 is critical and I accept the plaintiff's submissions in regard thereto." 32 It is not clear that the judge accepted the second argument for the respondent, an argument as to denial of procedural fairness. The argument was that in deciding to change from the opinion not to advertise pursuant to s 113(2) of the Act to the contrary opinion demonstrated by the advertisement on 30 October 2002, the appellant had not given the respondent notice and the opportunity to be heard. The judge recorded at [72] the submission that, if the decision to change the opinion was itself a nullity, "the original negative opinion stays in place and because the negative opinion stays in place, the statutory right arises under s 115". As I read the reasons, his Honour did not act upon the argument. 33 It is also not clear that the judge accepted the third argument for the respondent, also an argument as to procedural fairness. The argument was that in deciding to refuse the licences in early 2003, the objections which had been made had not been conveyed to the respondent and a hydrogeological model material to the capacity of the groundwater resource had not been made known to him, so that he was unable to make submissions on those matters. Probably his Honour did act upon this argument, because he said, in a context of the February 2003 refusal - "91 I am persuaded of the cogency of the argument advanced for the plaintiff that other submissions could have been made by the plaintiff on the matters contained in the documentary material before me and added to, as I have remarked, in the non-substantial nature of the evidence of Mr O'Rourke."

The question on appeal 34 Whether or not the judge had so held, the appellant accepted on appeal that there had been a denial of procedural fairness in deciding in early 2003 that the applications should be refused. It therefore did not ask that the declaration that the refusal of 28 February 2003 was of no effect ((d) above) and the costs order ((f) above) be set aside. 35 The appellant accepted that its refusal of the applications conveyed by the letter of 28 February 2002 was ineffective, although not for the reason found by the judge but because in the appellant's view it could not refuse the applications unless there had first been advertisement. The appellant asked that the declaration that the refusal of 28 February 2002 was of no effect ((a) above) be set aside, but since its stance was that in the absence of advertisement it had no jurisdiction to refuse an application the declaration should stand. It is neither necessary nor appropriate to go into whether the appellant is correct in this stance. 36 The appellant contended that it had not become obliged to issue the licences, and could advertise as it had done on 30 August 2002 and then decide whether or not the licences should be issued. It acknowledged that s 115(1) of the Act required that, where an application had not been advertised pursuant to s 113(2), it issue the licence the subject of the application, albeit a licence subject to such limitations and conditions as it deemed fit and proper (which would be controlled by Wednesbury unreasonableness). But the appellant submitted that the obligation to issue the licence took effect only at the end of a process in which an initial decision not to advertise pursuant to s 113(2) could be changed, and that the opinion not to advertise on which the respondent relied could be changed and had been changed so that this was not a case where the applications had not been advertised. Therefore, the appellant said, the issue of the licences was subject to s 115(2).

Decision 37 Sections 113, 114 and 115 of the Act provided for a procedure to be followed, from the making of an application for a licence to the issue or refusal of the licence. They did not specifically refer to refusal, which was left as the result of non-issue. The procedure involved opinions of the appellant along the way to issue or non-issue. The first opinion was whether the bore was or would be an artesian bore or the circumstances warranted advertisement. If that opinion was formed, there had to be advertisement. After advertisement came the second opinion, whether the circumstances warranted a public inquiry. If that opinion was formed, there had to be a public inquiry. 38 Absence of the opinions took dealing with the application for a licence down one or another of different paths. If followed to the end, a non-advertisement path led (adopting the appellant's view) to issue of the licence. If followed to the end, an advertisement and non-public inquiry path led to issue or non-issue of the licence according to the appellant's decision. There was no reason, as a matter of sensible bureaucratic action, for the appellant to be irrevocably committed to either path. It was still required to investigate and consider the application, or to decide whether or not to issue the licence. In the investigation and consideration and the consideration of the decision, it could well come to one or both of the opinions where it had initially not done so. Any opinion initially formed would have been with less than complete investigation and consideration of the application or the decision whether or not to issue the licence, with the possibility of error and the prospect of better understanding leading to a different opinion. 39 It would unduly hamper the discharge of its functions in dealing with an application for a licence if the appellant were unable to change its opinions, so that a different and more appropriate path were followed. It could become apparent that an initial opinion that the bore was or would not be an artesian bore was incorrect. In the investigation and consideration, the appellant could come to the opinion that the circumstances warranted advertisement, perhaps in contemplation of a public inquiry depending on the information received. Indeed, it could be that dealing with the application for a licence went down the non-advertisement path because the appellant erroneously failed to address whether or not the bore was or would be an artesian bore or the circumstances warranted advertisement. The appellant must have been able to correct that error. 40 The ability to change the opinion better fulfilled the purpose of the licensing provisions. The legislature must have considered that there should be advertisement if the bore was or would be an artesian bore because of the interest of other landowners in taking water from the artesian resource. If an opinion initially formed, or erroneous failure to form an opinion, could not be corrected, the interests of other landowners would be affected in the manner the legislature had thought called for the opportunity for them to be involved in the decision-making process, but they could not have an involvement. 41 In Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193 Gummow J said at 211 - "There was 'an inconvenient common law doctrine of somewhat uncertain extent to the effect that a power conferred by statute was exhausted by its first exercise' Halsbury's Laws of England (1st ed), Vol 27, p 131. However, s 33(1) of the Acts Interpretation Act 1901 (Cth) (which was modelled upon s 32(1) of the Interpretation Act 1889 (UK)) provides that where an Act confers a power or imposes a duty, then unless the contrary intention appears, the power may be exercised and the duty shall be performed 'from time to time as occasion requires'. But in any given case, a discretionary power reposed by statute in the decision maker may, upon a proper construction, be of such a character that it is not exercisable from time to time and it will be spent by the taking of the steps or the making of the statements or representations in question, treating them as a substantive exercise of the power. The result is that when the decision maker attempts to resile from his earlier position, he is prevented from doing so not from any doctrine of estoppel, but because his power to do so is spent and the proposed second decision would be ultra vires. The matter is one of interpretation of the statute conferring the particular power in issue." 42 The equivalent to s 33(1) of the Acts Interpretation Act 1901 (Cth) is s 48(1) of the Interpretation Act 1987 (NSW). See also Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597, somewhat remote from the present case but supporting that whether a decision-maker can reconsider its decision depends on whether the statute under which the decision is made "manifests an intention to permit or prohibit reconsideration in the circumstances that have arisen" (per Gleeson CJ at [8]). 43 On the interpretation of the Act, I do not think that forming an opinion that an application should not be advertised pursuant to s 113(2) was the exercise of a power which, once exercised, was spent. The statutory power was to issue a licence on limitations and conditions. The opinion was an administrative step in directing the dealing with the application down a non-advertisement path. The formation of the opinion was not required to be communicated to the applicant (and the formation of the opinion in the present case was not communicated to the respondent). Under the legislative scheme, whether there should be advertisement giving notice of an application so that other landowners could become involved, and whether the involvement would be by a public inquiry, was left to the opinions of the appellant, but there was nothing in the nature of the decisions entrusted to the appellant by which a decision of non-advertisement or non-public inquiry was final and precluded a change of opinion. There was sound reason why change of mind should have been possible, in the interests of proper sharing of the groundwater resource. 44 Section 115(1) of the Act did not require that the appellant be committed to an initial opinion that a bore would be an artesian bore and the circumstances did not warrant advertisement, or to the absence of an opinion on those matters. The words "[i]n any case where an application has not been advertised pursuant to section 113(2)" did not have that effect. They looked to the end of the dealing with the application, after the investigation and consideration - nothing in s 115(1) required the non-event to precede embarking on investigation and consideration. It was only at the end of the consideration, with maintenance of any initial opinion, that it could be said that the application had not been advertised. 45 It may be that in the present case the change of opinion was not because the appellant came to the view that the bores would be artesian bores or that, other than as a prerequisite to refusal of the applications, it came to the view that the circumstances warranted advertisement. That has not been investigated, and for present purposes it does not matter. The appellant was not precluded by formation of its initial opinion from subsequently forming the opinion to advertise the applications pursuant to s 113(2) of the Act, and s 115(1) did not operate to require it to issue the licences. 46 This result is not overcome by attack on procedural fairness grounds upon the decision to advertise the applications. If it were necessary to afford procedural fairness and there was failure to do so, the result would not be that the initial words in s 115(1) were fulfilled so that the licences had to be issued. The result would be that advertisement of the applications had to be reconsidered, with the process of dealing with the applications still not at an end. But I can see no sufficient reason why it was necessary to give the respondent notice of a possible opinion that the applications should be advertised and the opportunity to be heard. The respondent submitted that he should have had that opportunity because advertisement would take away a vested right, the right by the operation of s 115(1) to have the licences issued. That begged the question. Section 115(1) did not operate in his favour if there was advertisement.

Orders 47 The declarations and orders made by Levine J were taken out in a minute of order entered on 19 January 2005. By reference to the minute of order, I propose orders -

Set aside the declaration in para 2 and the order in para 4 of the minute of order.

Respondent pay the appellant's costs of the appeal and have a certificate under the Suitors Fund Act if otherwise qualified. 48 HODGSON JA: I agree with the orders proposed by Giles JA and with his reasons. I would add the following comments. 49 Mr. Perram for the respondent submitted that s.115 of the Water Act required the issue of a licence in any case where an application had not been advertised; and that such a case arose once a decision had been taken under s.113 of the Act not to advertise. 50 However, s.115 itself contemplates investigation and consideration of the application following an initial decision not to advertise; and plainly that investigation and consideration could result in a better understanding of the application, including a better understanding of whether or not the bore would be an artesian bore and of other circumstances of the application. I do not believe it could have been intended that the Ministerial Corporation would be precluded, by an initial decision not to advertise, from revisiting the question of advertisement, for example if it came to the opinion (contrary to its initial opinion) that the bore would be an artesian bore. 51 McCLELLAN AJA: I agree with Giles JA. **********

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