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High Court of Australia Transcripts |
Last Updated: 25 August 2009
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S24 of 2009
B e t w e e n -
ICM AGRICULTURE PTY LTD ABN 32 006 077 765
First Plaintiff
ICM AUSTRALIA PTY LTD ABN 49 005 120 703
Second Plaintiff
HILLSTON CITRUS PTY LIMITED ABN 45 100 483 243
Third Plaintiff
and
THE COMMONWEALTH OF AUSTRALIA
First Defendant
NATIONAL WATER COMMISSION
Second Defendant
THE STATE OF NEW SOUTH WALES
Third Defendant
THE MINISTER ADMINISTERING THE WATER MANAGEMENT ACT 2000 (NSW)
Fourth Defendant
FRENCH CJ
GUMMOW J
HAYNE J
HEYDON
J
CRENNAN J
KIEFEL J
BELL J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON TUESDAY, 25 AUGUST 2009, AT 10.16 AM
(Continued from 24/8/09)
Copyright in the High Court of Australia
__________________
FRENCH CJ: Yes, Mr Ellicott.
MR ELLICOTT: Your Honours, on the question of usufruct, Jowitt’s Dictionary of English Law - and I do not have a copy of this but if I could just read it:
Usufruct, the right of reaping the fruits (fructus) of things belonging to others, without destroying or wasting the subject over which such right extended -
Now, without spending a lot of time I just wanted to test that against what exists here. What is happening is that water is percolating through the soil and it is moving and, therefore, it does not remain stationary and this right, which perhaps is a very unusual right, but the common lawyers have had to work it out and they have worked it out by saying it is an interest in land because as the lawful occupier at a moment in time or moments in time you can take it and use it.
It is not like a usufruct in the sense that you are using something which belongs to others and you are not in the process of destroying it. Perhaps one can say that because water is a consumable and therefore is put to use as soon as it hits the surface, it either goes to the farm garden or whatever or to the irrigator in the context we are talking about, therefore it is gone. It is not so much destroyed. Scientists will tell us what happens to the water, but so far as the notion of usufruct is concerned, I would submit it is not appropriate to this particular common law right. Chasemore v Richards does have a reference to the usufruct of the river and I would suggest that in that context it is used as a descriptive noun which is not necessarily meant in a legal sense. But if it is meant in a legal sense, it is not the same as percolating water and there is a distinction in the cases.
Your Honours, passing from that, on the question of what is the object of the Water Act I wanted to draw attention to the Irrigation, Water, Crown Lands and Hunter Valley Flood Mitigation (Amendment) Act 1966. Section 4B was added. There should be an additional copy in relation to that Act under tab 17 of the State’s legislation. Section 4B added the provision as to Crown vesting:
(1) The right to the use and flow and to the control of all sub-surface water shall vest in the Commission for the benefit of the Crown and in the exercise of that right the Commission, by its officers, servants and agents, may enter any land and take such measures as may be thought fit or as may be prescribed -
and then these words, I would submit, are significant in giving one an idea of what the Act is about –
for the conservation and supply of such water, its more equal distribution and beneficial use, its protection from pollution and for preventing, removing or rendering ineffective any unlawful interference with or obstruction to such flow.
Those give a perspective, we would submit, which to some extent fits in with the section which followed it and was put into the Water Administration Act 1986 to which I referred yesterday.
Your Honours, can I quickly go back to what I was dealing with last night and then go on to deal with the matter that Justice Gummow asked me about yesterday, how the reduction took place. I was taking the Court to paragraphs at pages 113 and 114. These are important not only in terms of knowing what the plaintiffs do and how this matter comes to the Court, but also important in terms of informing the Court to some degree about issues relating to just terms.
Your Honours have a lot of experience in valuation. If there was an assessment of compensation to provide just terms, there would be matters relating to profits, whether equipment had become redundant, et cetera, flowing from what we say was an acquisition of property on other than just terms. Paragraph 107 deals with the variety of crops. Paragraph 108 gives the Court an indication of the – your Honours, appreciating that this is a very large aggregation and there are bores which are over the property and there are significant capital investments and channels and the maintenance of those bores.
Paragraph 109 describes 5,000 hectares or 12,500 acres divided into 10 paddocks and had been developed by 1 February 2008. It describes the flood irrigation but mainly spray irrigation. Your Honours will appreciate – and this is part of what causes the problem – that there have been great advances in irrigation, mainly more efficient. They save labour and they, of course, deal with a continuing problem in the use of water in agriculture and that is evaporation.
FRENCH CJ: All this goes to the proposition that the conversion has a significant economic impact on your client’s operations - - -
MR ELLICOTT: That is right, your Honour.
FRENCH CJ: Do we need to know more than that at the moment?
MR ELLICOTT: Can I quickly show your Honours - - -
FRENCH CJ: I mean, we have read this.
MR ELLICOTT: My answer is no, but can I show your Honours some idea of the scale of this. If your Honours go to volume 4 at page 1503. It is annexure 65. This is really right out on the Western Plains, your Honours. Your Honours will see there there is a middle channel and there is an irrigator that travels along the channel. It goes for seven kilometres and it is one kilometre wide. That is an irrigator, a lateral irrigator your Honours will have seen as you travel around the country, circular pivot irrigators. They have the virtue of placing the water fairly close to the crop and obviously scientific measures have been taken to develop these so that they move laterally, or they move in a circle and they move in unison. But the point is that there are very large water saving features about what is done. Your Honours might say, well, there are 18,638 megalitres, and my friends will say it, even if your Honours do not, and try and have your Honours think that therefore surely they can give up 12 or 13,000 - - -
FRENCH CJ: I do not think that kind of argument is going to really turn the day, Mr Ellicott, and I am not sure that you are advancing your case by focusing on it.
MR ELLICOTT: I am not going to deal with it then, your Honour. I will not take that any further. Your Honours, under 110, that deals with the surface water entitlements and there is approximately 13,980 megalitres of river water or surface water. I need not trouble your Honours with pages 116 and 117. There is a paragraph 114 which is important in terms of understanding how the two water sources operate.
They have to be co-ordinated, and 115 explains why surface water is much more significant at times because of its lower cost and therefore is used as distinct from groundwater. But in the years that have passed since 2003/4, there has been no or very minimal allocation of river water. At volume 4, if I could just take your Honours quickly to that, page 1258, it is annexure 57, it shows allocations since 1980 and 1981 and, your Honours, I am more concerned to show your Honours the second page, although the earlier pages tell their own history.
You will notice that in a given year it may start off at a very low figure and during the year because it rains the allocation from the Wyangala Dam increases, but since 2002/3, which is approximately when the drought set in, there has been, in effect, a nil or very low allocation since that time. It explains why in those periods of drought there was a great reliance on groundwater, and so the two areas adjust to one another economically and in relation to markets and other matters.
There are two properties, one is Cowl Cowl. At page 119 and over the page the property which is an orchard business at Hillston Citrus is dealt with. That is a much smaller property of about 1,000 acres, 404 hectares, and it had a licence for 2,800 megalitres of water for the orchard. An orchard of course, and your Honours will perhaps notice this, there is high security water and general security water.
High security will be given to towns and given to stock and domestic purposes and it will also be given to areas such as orchards and vineyards because they need it during the summer. The whole enterprise, which is ongoing in relation to those agricultural activities, would be decimated if water was not made available. It would not be worthwhile in Australia going into those businesses if you did not have high security water and come at the beginning. The lower security or general security is used for ordinary crops like cereals and others and their entitlements are shown on the use of water on 121. Page 122 indicates to your Honours the effect of all that.
On pages 122 to 125 there is set out paragraphs which deal, first of all, with valuation and indicate that in relation to the valuation of areas of rural land under the Water Act licence system the value of the water was added to the value of the land under a section of the Valuation of Land Act. From 135 there is a description of the use of licences as part of the security that is given and, in other words, it is treated as if it is a valuable part of the property. There is a reference to Schedule 10 of the Water Management Act and you will find there provisions which deal with the “Continuation of Security Interests” and they refer to security interests which exist over the licences under the Water Act. So, your Honours, that is the issue in relation to that.
Now, your Honours, I am proposing to deal with acquisition of property on just terms. I have dealt yesterday with the issue of property and taken your Honours to the Act. I do not propose, unless your Honours want me to, to go back to the issue of property and now deal with whether there has been an acquisition of property. Now, Justice Gummow asked me yesterday how did this reduction take place and that is basic to knowing precisely whether there has been an acquisition of what we say is property. That means, of course, in accordance with the authorities that there must be an acquisition in the sense that although something may be extinguished, you must show that there has been some discernable benefit or advantage which goes to, in this case, the State.
To deal with it in the broad, what we are saying is that the funding agreement, when we come to it – and your Honours may well have read it already – had as its object the reduction of entitlements. There is no doubt about that. That is what it was about. The Commonwealth agreed to fund to the extent of one half, which was initially 50 million and later increased slightly to 62.5 million. The agreement provides, in effect, when you look at its provisions, that the Commonwealth pays the money when these reductions come into effect.
There is no doubt that the Commonwealth is paying its share for that purpose, that is, for the acquisition, and therefore the agreement, which we say is an agreement not like an agreement normally between governments, as perhaps my friends would describe it, not like the agreement which in minority Justice Dixon described the agreement in Magennis’ Case, this agreement is very precise. As we go through it, your Honours, I will be submitting that it does show a clear intention on the parties to enter into ordinary legal relations.
That is not necessarily essential to our argument, but if one is troubled about what Justice Dixon said in minority in Magennis’ Case, then we would say that in this case it is different, and for good reason, based on the form of the agreement itself. In the end, the purpose was for the Commonwealth to fund the acquisition of property by the State and we say on unjust terms.
If I could take your Honours to the State Water Management Act as at 1 July 2004 at tab 30. It is in the second volume. There is also a green set, not to confuse your Honours. I think for the purpose of what I am about to put to your Honours we can use the one at tab 30, but I have prepared my notes based on that. It is the relevant one, it is at 2004 for present purposes.
The point of this is to - if I can just explain that under the agreement, which was entered into on 4 November 2005, it talks about the reduction in entitlements and it talks about the conversion of entitlements. I am going to this Act, which was the Act as at 1 July 2004, to show that in that Act at that time there was a process of conversion which was actually followed in early 2008 and that what the parties were contemplating, under the agreement when we come to it, was that this process of conversion take place. If your Honours go to Schedule 10, your Honours will find “Conversion of former entitlements to access licences and approvals”. It says in clause 1:
This schedule applies:
(a) to each category or subcategory of access licence that relates to a part of the State or water source to which Part 2 or Chapter 3 applies by operation of a proclamation under section 55A -
Now, when we come later to it, your Honours will find that such a proclamation was made:
(b) to each type or kind of approval that relates -
similarly to those parts. Under this Act, you had approvals to equipment, or the bore equipment, and you had approval to access. The access approval was separated off apparently so that it could be transferred outside the ownership, et cetera. That clause 1 is very significant to understand what is happening. If your Honours go to Part 2, “Conversion of former entitlements”:
Subject to this Schedule, an entitlement that, immediately before the appointed day, was in force under 1912 Act, the 1948 Act or the 1994 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 . . .
(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 –
That subclause 1(a)(ii) is very significant, and in relation to identifying what happened because, first of all, if your Honours go back to section 55A – if your Honours might pardon me a moment, there is some confusion apparently.
FRENCH CJ: You should be referring to 3(1)(a), should you?
MR ELLICOTT: Your Honours, if I go to tab 34. Apparently what I was reading was something that had been substituted, “If the relevant management plan regulates - - -
HAYNE J: Sorry, where are you reading from in tab 34?
MR ELLICOTT: I am now reading from tab 34 and I am reading from Schedule 10 and it is 13 of 30 up the top. Do your Honours have that?
HAYNE J: Yes.
MR ELLICOTT: If you go to 3(1)(a)(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 . . . for a different quantity –
It makes no difference, but I thank my friend for that. If your Honours go to 55A - - -
GUMMOW J: Tab 34 is supposed to be historical version for 1 November 2006. I thought we were looking at the state of the legislation before the inter-government agreement.
MR ELLICOTT: I think you had better explain your book. Would you mind if the Solicitor just explains this book, your Honour.
HAYNE J: Which book? The New South Wales book or the Commonwealth book?
MR GAGELER: If it assists, your Honour, I can tell your Honours about the legislation, or at least what version of the - - -
GUMMOW J: The Commonwealth book is the form as it was before the agreement, is it not?
MR GAGELER: As at the date of the agreement, so what you have in the Commonwealth book - - -
GUMMOW J: It does not have 3(1)(a)(ii).
MR GAGELER: No, that came in - - -
FRENCH CJ: The proclamation actually did not happen until 2008.
MR GAGELER: The proclamation happened in 2008. The legislation as at the time of the agreement is that in the green book, very shortly after the agreement – I have a note but I would not be able to find it on my feet – like a few days after the agreement. There was an amendment to the 2000 Act and the 2000 Act as relevantly amended and as implemented in 2008 one finds behind tab 34. So, relevantly, the only change was to the form of Schedule 10, clause 3 and the addition of clause 3(1)(a)(ii), which Mr Ellicott was reading.
MR ELLICOTT: Yes. The amendment to Schedule 10 was brought about by Act No 118 of 2005 with effect from 7 December 2005, so just shortly after the agreement.
HEYDON J: If it is shortly after the agreement, how does it tie in with the agreement?
MR ELLICOTT: Your Honour is asking me?
HEYDON J: Well, I would just like some enlightenment. We seem to be going around in circles so I am getting dizzy.
MR ELLICOTT: Your Honour is quite right.
HEYDON J: If the crucial date is the date of the agreement, what does it matter that an amendment took place a few days afterwards? Maybe that can be demonstrated.
MR ELLICOTT: It does not. Your Honour is perfectly right. Your Honours, for the present purposes of this argument I have taken your Honours to Schedule 10. I want to take your Honours now to section 55A and 55A – and I am looking at tab 34 - - -
FRENCH CJ: Just before we go to that, to address Justice Heydon’s concern, maybe others, the funding agreement was entered into, the conversion of which you complain is part of a process which in a sense commenced with a proclamation made under section 55A of the Water Management Act on 30 January 2008, is that correct?
MR ELLICOTT: That is right, yes.
FRENCH CJ: And as a result of that, clause 3(1)(a) of Schedule 10 as it then stood, having been amended since the agreement, was applied to effect the conversion of which you complain?
MR ELLICOTT: Yes. But what we are concerned about initially and fundamentally is the validity of the agreement and therefore one has to look at the version, we submit, at the time of the agreement. From my part, I do not believe there is any material difference, but we must be accurate about - - -
KIEFEL J: But, Mr Ellicott, the conversion is not effected until January 2008, is it?
MR ELLICOTT: No. What we are attacking is the agreement and the agreement was authorised by an Act which we say is invalid and we say that that agreement was invalid ab initio and that what was happening in January of 2008 was that there was being put into effect an invalid agreement.
KIEFEL J: But do you not have to identify when the acquisition of property took place?
MR ELLICOTT: No, with respect. What we have to identify is whether the Act was invalid or, if the Act did not authorise it, whether the agreement was invalid. If the agreement was invalid, then we say that anything that the State did thereafter was of no effect and we have arguments under questions 2 and 3 and 4 in relation to that.
KIEFEL J: But is not the acquisition to which the agreement refers that which New South Wales intends to carry out pursuant to the conversions in clause 3(1)(a) (i) or (ii)?
MR ELLICOTT: Your Honour is right, with respect, in that regard, that they did purport to acquire the property, using our language not theirs, in January 2008. But they did it believing, we say, that the agreement was valid. Our submission is that that order and that regulation are either invalid or inoperative and that they did not effect what was then an invalid – they purported to effect what was an invalid acquisition, in other words, it had no support.
For reasons which we develop, we will submit that those actions by the State in January 2008 were, on the one hand, in relation to the order invalid and in relation to the proclamation possibly invalid but certainly inoperative because the proclamation and the regulation depended on the validity of that order that was made on 11 January 2008. So although your Honour is quite correct in saying – and I agree that that is when an acquisition or a purported acquisition took place, that we say it is invalid. But in terms of infecting it with invalidity, we rely on the invalidity of the agreement.
FRENCH CJ: That is critical to your argument.
MR ELLICOTT: Yes.
FRENCH CJ: Is it a result of that that the legal enforceability of the agreement is also critical?
MR ELLICOTT: No.
FRENCH CJ: What does validity mean absent legal enforceability?
MR ELLICOTT: It means that there was no basis in law under the Constitution for that agreement. It had no effect whatsoever. It was not something that could be pursued by the Commonwealth because on analysis it would result on an acquisition of property on otherwise than just terms for a purpose in respect of which the Commonwealth Parliament can pass laws. That is the basis on which we put it. Enforceability is, in our submission, talking about legal enforceability of all the clauses.
True it is that the Commonwealth cannot force the State Parliament to do certain things. It cannot force the State Treasury to do certain things. But the agreement provides for what will happen in enforceable terms, we say, if the State does not provide or if the State does not acquire and therefore in its terms it is legally enforceable. Whereas Justice Dixon, I think, in Magennis was saying, well, this is just an ordinary agreement between governments and they are not intended to be enforceable, but this one, in our submission, was. That is the sense in which we use enforceability, but we are not saying that the Commonwealth can force the State Treasury to do something or the Minister to do something.
I should just reserve this in relation to the Minister. It is an area for debate as to whether, if a State has power to do something under delegated legislation, a court would intervene, but I doubt very much whether this case is going to turn on an issue like that. I do not, for the moment, see it going that far because if the invalidity is there in the agreement there is no basis upon which these acts should be taken. But that is an argument further down the track.
GUMMOW J: Is there not involved – you may be quite right – in this some attention to the relationship between the executive authority of the Commonwealth under section 61 of the Constitution and the authority of the Parliament to make laws with respect to acquisition under 51(xxxi)?
MR ELLICOTT: Yes, and, your Honour, I was going to deal with that, but your Honour asked me to explain how the reduction took place and I thought I would deal with that. But I should be coming back to executive power. It actually comes first in the questions, but as we are on this path I will follow it through, if the Court pleases.
BELL J: Can I just understand this, Mr Ellicott? As part of your argument concerning the provision made under the Act at the date of the agreement you took us, in fact, to the provisions of Schedule 10, clause 3(1)(a)(ii). Do I understand that that is not material since it appears that that provision was not enacted at the date, and for your purposes the provisions of Schedule 10, as they stood in the version at tab 30, is equally pertinent? That is, taking us to clause 3(1)(a)(ii) added nothing to the argument. Is that so?
MR ELLICOTT: Well, it adds something to the argument because in order to understand how the conversion takes place - and it starts with Schedule 10 - if there is a water sharing plan in relation to a particular area then the conversion does not take place under Schedule 10 of the Act directly, as it would under 3(a)(i). It takes place under 3(a)(ii) and then that only operates if there is an effective water management plan and one then has to go back to these other provisions to see how that plan comes into existence and how the orders become relevant that we have just been talking about.
BELL J: As I understood it, clause 3(1)(a)(ii) did not form part of the Act at the date of the agreement.
MR ELLICOTT: There was at the date of the agreement a clause 3(1)(a)(ii) and there has been a slight difference as to what form it took, but whatever form it took, it in substance said the same thing. I apologise for that and I will have to identify precisely which form it is, but in substance it will make no difference, in our submission.
BELL J: I understand. We do not have it in our materials but - - -
MR ELLICOTT: I think you have it but I am not clear at the moment as to which one is the relevant one.
BELL J: I see.
MR ELLICOTT: You can say I am confused, but I have been confused by various versions coming in, but I can go on with the argument and give your Honours a note as to that. The next section is 55A which applies this part if a proclamation is made. This is relating to access licences:
This Part applies to:
(a) each part of the State or each water source, and
(b) each category or subcategory of access licence that relates to that part of the State or that water source,
that is declared by proclamation to be a part of the State or water source –
et cetera. Now. remembering that clause 1 of Schedule 10 referred to 55A and also referred to 88A. Part 2, as we have just read, relates to access licences and 88A deals with approvals. One has to have in mind that they split the water licence, if I can use this expression, into two. They did not really. Whereas the water licence gave the holder the right to put the bore down and maintain it and take and use the water for the purposes of water management under this new Act, there is an access licence that deals with the taking of the water and there is an approval licence that deals with the equipment that you use to take the water up. The next section to go to is section 45:
The Minister may at any time, by order published in the Gazette, amend a management plan:
(a) if satisfied it is in the public interest to do so, or
(b) in such circumstances, in relation to such matters and to such extent as the plan so provides -
when there were certain provisions relating to what has to be done in order to make such an order. That is the section under which the Minister purported to act on 11 January 2008. There had been previously gazetted a water management plan in relation to the Lower Lachlan but it had not come into effect and the Minister at this time made the order which had the effect of amending that plan and which then came into effect on 1 February 2008.
FRENCH CJ: Just in terms of the terminology, I think the order that he made referred, did it not, to the Lower Lachlan water sharing plan? I think that is an aspect of, or a species of a management plan under the Act.
MR ELLICOTT: It is, yes.
FRENCH CJ: Yes.
MR ELLICOTT: But it is that plan that he was amending - - -
FRENCH CJ: The water sharing plan.
MR ELLICOTT: That water sharing plan, yes. Now, can I take your Honours to volume 2 of the special case at 343 which is the funding agreement. It will appear from the signatures at 389 that it was made on 4 November 2005. It is an agreement for achieving sustainable groundwater entitlements and it does become significant to some extent later on to note that it is the:
COMMONWEALTH OF AUSTRALIA, as represented by and acting through the National Water Commission –
That goes to executive power, what the Commonwealth was doing. For present purposes, if I can take your Honours to clauses 4 and 5. Under 4:
Subject to sufficient appropriations for the Programme and the State’s compliance with this Agreement, the Commonwealth will provide the State with the Funding at the times, on the conditions and in the manner specified in Item 2 of the Schedule.
The program is defined at page 350:
means the Water Smart Australia programme administered by the Commonwealth and under which the Commonwealth is able to provide the Funding to the State -
When we come to the National Water Commission Act, your Honours will find that a fund was set up under section 40 of that Act and that under section 42, the Minister having awarded assistance, that assistance can be given. So it is relating in effect, we say, to the National Water Commission Act. The project means the project described in item 1 of the schedule and if your Honours go to the schedule which is at 371, 1.2:
The Commission administers the Water Smart Australia programme (‘the Programme’) on behalf of the Australian Government. Through the Programme the Commonwealth is able to provide funding from the Australian Government Water Fund for activities that assist in implementing the National Water Initiative (NWI).
Now, the Australian Government Water Fund is defined at 348 as meaning:
the fund announced by the Prime Minister on 13 September 2004 and includes the Australian Water Fund Account established under section 40 of the National Water Commission Act 2004 (Cth) -
If your Honours do not mind moving on two tracks at the one time, I am pointing out a number of the reasons why we will be submitting that the executive power that is being exercised is section 61 in relation to executing a law of the Commonwealth, the law being the National Water Commission Act and that is an important part of that.
FRENCH CJ: Just to get the sequence right, the National Water Commission Act is related to an intergovernmental agreement described generically as the National Water Initiative, is it not?
MR ELLICOTT: Yes.
FRENCH CJ: And it is purported, at least if one looks to the second reading speech and explanatory memorandum and so forth, to be an implementation objectives under that agreement?
MR ELLICOTT: Yes, that is right. And we have the National Water Initiative in here.
FRENCH CJ: Then the water smart program, which is referred to in the explanatory memorandum and I think in the second reading speech, does not actually find an appearance anywhere in the Act?
MR ELLICOTT: Not those words, but - - -
FRENCH CJ: Nor in any Appropriation Act, as far as I can see?
MR ELLICOTT: The Australian Government water fund finds - - -
FRENCH CJ: It is set up under the Act.
MR ELLICOTT: Set up under the Act. There is no doubt that this program which was put up by the State which was for achieving - - -
FRENCH CJ: This was a State proposal. It put a project proposal up to the Prime Minister, did it not?
MR ELLICOTT: Yes, and he approved it. I have to, in relation to executive power, take your Honours back to how it all began.
FRENCH CJ: I am sorry I have diverted you from the funding agreement.
MR ELLICOTT: But I had better move forward on this. Now, your Honours, at 1.6:
The Project requires the State to:
Now, “Objectives” in 1.7:
And 1.8 is the significant part of the project:
The methodology has to be reviewed by two committees that are embraced by this agreement –
I think that may be the first point where the word “convert” is used and –
Then they are to receive a supplementary access licence under k –
C. was in the agreement initially –
that is 10 years after the plan. There are milestones at 1.15 that have to be achieved:
On 379, 2 is the provision that relates to Commonwealth funding:
2.1 The maximum funding for the Project is $55,000,000, which represents $50,000,000 being the amount of Funding to be provided by the Commonwealth for the Project and $5,000,000 being the total GST payable in accordance with clause 4.
2.2 Subject to the requirements of item 2.3, the Funding will be paid by electronic funds transfer at the times and in the manner specified in this item 2 of the Schedule –
Initial payment, $450,000. Progress – milestone:
Completion of all Milestones up to and including Milestone 7 -
Milestone 7 is after the water sharing plans commence. Then:
A maximum of $50,000.000 payable in accordance with payment schedule provided to the Commonwealth by the State (see Milestone 6) and which may involve payment by instalments) -
That is what I meant when I said earlier that the Commonwealth did not pay any money until the conversion took place. State contributions are dealt with in clause 3. So, your Honours, that completes that analysis which goes to the reduction of entitlements. In other words, what the agreement contemplated was conversion and that conversion was something which the Management Act at that time provided for - - -
FRENCH CJ: This was a State objective. I mean, this was a State proposal to the Commonwealth.
MR ELLICOTT: Yes.
FRENCH CJ: The agreement and the terms that you have taken us to are entirely consistent with the project as submitted to the Commonwealth by the State.
MR ELLICOTT: Yes, your Honour. It is all consistent with the National Water Initiative.
FRENCH CJ: That is how they get the money.
MR ELLICOTT: That is how they get the money, yes. It can be traced back, as I will hopefully be able to do very quickly a little later. If your Honours go to special case book 1 at 103 and special case book 3 at 1069, these relate to the orders that were made. I want to be clear again that what I am submitting is first of all that the agreement was invalid. As part of that argument we say that what it contemplated was a conversion as at that date prescribed by the Water Management Act. This is what happened later, which we say was invalid, there being at that stage an agreement which had been struck down by the Constitution.
What this shows is an indication of how, in effect, the Act was contemplating this might be done. Now, your Honours will see at page 1070 it is made pursuant to section 45(1). There was a minute which appears at 1098, and could I just take your Honours to it:
Now, your Honours will recall that that was the project which was put up by the State. That is the project referred to in the funding agreement and that is the money that is supposed to be provided under it. Now, that is important, in our submission, because it shows that what the Minister is doing he was doing under that agreement and pursuant to the legislative support which was given, we say, by the National Water Commission Act. It explains that the plan has been delayed until 1 February to allow it to be aligned with changes made to the Act and the recent approvals under the joint $130 million NSW and Australian Government’s, et cetera, plan.
The amendments that were made included amendments to clause 25 – I am sorry. It did not amend 25, it added subclauses at page 1075, 25A, 25B which are not relevant, 25C is relevant and deals with:
For each entitlement referred to in Column 1 of Schedule 4 applying to the licences listed in Column 2 of Schedule 4 –
Now, Schedule 4 you will find at 1092 and 1093 –
that are to become aquifer access licences in this groundwater source at the commencement of this Plan, the total share component –
is to be equal –
For those Water Act property entitlements not listed in Column 1 of Schedule 4 that are to become aquifer access licences in this groundwater source at the commencement of this Plan, the individual share component will be calculated –
And (2) and (3) right through to the end of that particular clause, subclause 25C(3), relate to the plaintiff’s Water Act licenses because none of those that are referred to in Schedule 4 relate to the plaintiffs.
What we have is a method for determining what shall happen to those particular entitlements in subclauses 2 and 3 and this order, in effect, purports to amend the plan and to do so with a view to it coming into operation, as they would have seen it, on 1 February 2008, but that is the amendment, that is the order and - - -
FRENCH CJ: Do you say upon the conversion of your client’s licences to aquifer access licences, their entitlements are to be calculated by reference to 25C?
MR ELLICOTT: That is it.
FRENCH CJ: Is there some, I hesitate to ask this, simple statement of the principle which informs the math?
MR ELLICOTT: I know of none, your Honour, but my friends may know - - -
FRENCH CJ: I mean there is obviously a reference to historical extraction history and so forth.
MR ELLICOTT: Yes, I think there are attempts at it, but it depends whose mind is reading it, your Honour.
FRENCH CJ: All right.
MR ELLICOTT: But I will endeavour to assist your Honour with that. If we go past that, your Honours will come to - - -
HAYNE J: Just before you leave this, did the application of the formulae in 25C to the plaintiff result in an alteration in the amount of the entitlement?
MR ELLICOTT: No, it resulted in an extinguishment of the entitlement. Let us say it is a property right. The access licence is a new species of property right and it has special conditions attached to it and it is in the context of the new Act and it is impossible, in our submission, to say, although one can see it in the broad as being a reduction in entitlement, what is actually happening to what we say is property is that it is either sterilised or extinguished or it is destroyed. It does not have any existence thereafter and therefore it is not a reduction in entitlement.
FRENCH CJ: There are a number of megalitres that you can take out under an aquifer access licence which, on your case, is less than a number of megalitres you could take out under the licences that you had prior to the conversion. Is that not the answer?
MR ELLICOTT: Yes, that is right.
FRENCH CJ: That is done by applying this mathematical formula. Is that the position?
MR ELLICOTT: That is done by – the difference in the entitlement under the licence is calculated by that formula - - -
FRENCH CJ: Yes.
MR ELLICOTT: - - - but the conversion – the replacement is the word that is used - what is happening is that the access licence and an approval replace - - -
FRENCH CJ: You are saying that is extinguished and this is - - -
MR ELLICOTT: The point of my remarks is to be careful to say that we are not submitting that it is actually a reduction in entitlement. At 1145, in the same volume, your Honours will find at 1147 after the objective council minute that the Governor, pursuant to “55A(1) and 88A . . . do, by this my Proclamation, declare” and, in effect, that had to be done, as your Honours recall, in order to relate these provisions to those – that is provisions relating to access licences and approvals to the process that was being undertaken. At 1149 there is the explanatory note:
The Water Management Act 2000 is the primary legislation . . . It provides for the making of water sharing plans for individual water sources.
The Water Sharing Plan for the Lower Lachlan Groundwater Source 2003, as amended . . . is scheduled to commence on 1 February 2008. The Proclamation and Regulation give effect to the transfer of the Lower Lachlan Groundwater Source to the Water Management Act 2000.
The Proclamation is made pursuant to section 55A . . .
The Water Management (General) Amendment (Lower Lachlan) Regulation 2008 modifies the provisions of Schedule 10 to the Water Management Act 2000 –
That is where it fits in –
which replaces entitlements held under the Water Act 1912 with aquifer access licences for the Lower Lachlan Groundwater Source, establishes supplementary water access licences for the Lower Lachlan Groundwater Source and sets out the respective share components for any aquifer access licence –
and the Proclamation then appears. The Regulation, the important part of that, 29R:
New share components for existing Part 5 entitlements –
at page 1156, and 1157 at regulation 29R(3):
The volumes specified in Columns 2 and 3 of Schedule 4D in relation to any Part 5 entitlement (or group of Part 5 entitlements) have been calculated in accordance with the methodology set out in clauses 25C and 25D of the Water Sharing Plan for the Lower Lachlan –
That is the one that was amended on 11 January 2008. Of course if that was invalid or had no effect then this could have no effect because it depended for its operation on that amendment being valid.
Now, at page 1160 your Honours might like to put a circle around – there are three just up from the bottom – “70BL030978” – do your Honours have those - and the following two, those are the Cowl Cowl bore licences. The last one, leaving one out, is the Hillston Citrus bore licence, and your Honours will see the aquifer access licences 5198 and 933 respectively. They are called share components or units and no doubt trying to see them as part of a trading system when we have a water exchange.
HAYNE J: Is there anything in the special case that relates shares to volume of water?
MR ELLICOTT: I think paragraph 124 may go a distance. I am not sure it goes as far as your Honour would direct that - - -
HAYNE J: I am simply asking, Mr Ellicott. I just wish to understand.
MR ELLICOTT: Your Honour, it says at 124(a) at page 122 of volume 1:
(a) in the case of ICM Agriculture and ICM Australia:
(i) aquifer access licence WAL15274, held by them as tenants in common which entitles them to a share component of 5,198 units -
A share component is equal to one megalitre.
CRENNAN J: In the methodology used for that, do I understand correctly that that took into account prior use?
MR ELLICOTT: Yes, it is called history of extraction and it took the highest number and averaged them out of the previous five years as part of the calculation and it is a bit complex but - - -
FRENCH CJ: It is a defined variable in the math we saw in the earlier order.
MR ELLICOTT: It took into account active and inactive water. Your Honour can see that if those decisions are made at a time of doubt when water may or may not be used, because it is not only the availability of water but it is also the summer heat, it is the markets and other things, whether something breaks down, how much water you use, but particularly in times of drought, if you take history of extraction that includes drought years, you are likely to get a lesser sum. Anyhow it worked out at 5,193 and 933 respectively.
BELL J: The history of extraction method had been proposed by New South Wales as a means of effecting a reduction in entitlements prior to the date of the agreement. Is that accepted?
MR ELLICOTT: That is right, your Honour. They had originally - they were going to do it across the board and they chose this other method. Your Honours, I want now to develop the argument, as we are on the track of acquisition, by referring to some of the cases as quickly as I can. I appreciate it is an area where your Honours are fairly familiar but there are certain aspects.
In principle we say that this case is the same as in the Newcrest Case. That is a broad statement but it is necessary to go to the case itself. Your Honours will be familiar that it related to a mining lease in the Northern Territory; that it raised the question of section 122 and the application of section 51(xxxi) in relation to laws under section 122.
It was not resolved in that case but it was resolved recently in Wurridjal’s Case by your Honours. It also held that there was an acquisition of property in relation to the mining lease in circumstances where the Conservation Act introduced a section or contained a section which, in effect, sterilised the first 1,000 metres which it said could not be mined. The main judgment in that is Justice Gummow. Chief Justice Brennan at 530 in the middle of the page:
Under its mining leases, Newcrest had the right exercisable against the Commonwealth as reversioner to mine for, extract and take away minerals from the leased land during the term of the lease. When that land was included in Kakadu National Park, Newcrest’s rights to carry on operations for the recovery of minerals were extinguished.
By force of the amendments of the Conservation Act . . . the Commonwealth was left in undisturbed possession of the minerals on and under the land included in Kakadu National Park. The Commonwealth’s interest in respect of the minerals was enhanced by the sterilisation of Newcrest’s interests therein. In my opinion, by force of the impugned proclamations, the Commonwealth acquired property from Newcrest. The property consisted not in a right to possession or occupation of the relevant area of land nor in the bare leasehold interest vested in Newcrest but in the benefit of relief from the burden of Newcrest’s rights to carry on “operations for the recovery of minerals”.
Justices Toohey and Gaudron agreed with Justice Gummow at 560 and 561 respectively, and could I take your Honours to the judgment of his Honour at 595 to 597. In this passage, his Honour summarises the relevant principles. I hesitate to read it, not because of the great weight, but because your Honours have read it probably recently a couple of times, but it is a summation of relevant principles in relation to the placitum, but it is also couched in terms of a consideration of whether section 122 is subject to section 51(xxxi).
When it comes to this particular set of circumstances, it is necessary to emphasise the principle of interpretation of liberal construction. I take your Honours now to 603, where your Honour says:
The above considerations indicate that the legislative power conferred by s 122 is not immunised from the operation of constitutional guarantee. Nevertheless, the Commonwealth referred to various matters which it submitted supported a construction which excluded from the operation of par (xxxi) any law of the Parliament which was supported, solely or concurrently with another head of power, as a law made in exercise of the power conferred by s 122 of the Constitution.
I am referring to this, simply because one of the arguments that we will be putting when we come to it, is that if the only power that supports the National Water Commission Act is section 96, we say that the same principles apply to section 96 as applied to section 122, that is to say that it cannot only be a law with respect to providing financial assistance, but it can also be a law with respect to the acquisition of property for a purpose in respect of which the Parliament can pass laws, namely to provide assistance to the States, and if it is not on just terms then the provision, if it can be so interpreted, is invalid. That depends on whether your Honours accede to, or not, to other submissions we make, shortly, I hope, that the nationhood power, or trade and commerce, also support the National Water Commission Act. At page 616:
In Gowan v Christie at the top Lord Cairns described a “mineral lease” as understood by the common law. His Lordship said it was:
“liberty given to a particular individual, for a specific length of time, to go into and under the land, and to get certain things there if he can find them, and to take them away, just as if he had bought so much of the soil.”
It is not difficult to use those words, change a few, to get the same idea in relation to percolating water. There is a consistency between the two ideas of mining and of taking water. In the case of mining you are looking for a particular substance. Unfortunately, people have to extract it by bringing it all to the surface. It would be much better for the environment if it was like water but water comes up through the bore, but it is still part of the subterranean. At pages 617 and 618 your Honour said towards the end of 617:
Counsel for the appellants submitted that the provisions of the 1939 Ordinance for the granting by the Administrator of gold-mining leases . . . did not produce the result that Newcrest lacked the necessary root of title . . . The state of affairs reflected the practice, consistent with the terms of the 1939 –
This is an introduction to an analysis of the mining regulations but an important part of it is what appears about a third of the way down in a proviso that was part of the lease terms:
“PROVIDED FURTHER that WE may at any time, without compensation to the lessee, resume possession of any portion of the surface of the land hereby demised for the construction thereon of roads, tramways or railways, including all necessary approaches thereto, or for any other public purpose whatsoever.”
Now, one might have thought that if that was in the mining lease, and indeed your Honours, there is one thing about my friends they are consistent. They wanted to use that provision in relation to the mining lease to say that this was not a case of acquisition of property. It could have been done under the mining lease. Justice Gummow did not agree with that and we use that in support of our argument in this case. At 633 his Honour deals with acquisition of property. Towards the foot:
None of the provisions relied upon by the appellants is expressed in direct language as effecting an acquisition of any property. However, the question is whether, even if not formally, the appellants effectively have been deprived of “the reality of proprietorship: by the indirect acquisition, through the collective operation of the provisions of the Conservation Act, of “the substance of a proprietary interest”.
Now, we use that to support our submission that what is happening here is in substance the same, only we do have what is an interest in land and it has disappeared and our reality of proprietorship in relation to that interest has disappeared.
I have referred earlier in these reasons to the passage in the judgment of Dixon J in Bank of NSW v The Commonwealth which supports these propositions.
The appellants refer to the rights enjoyed in respect of the mining tenements under the 1939 Ordinance. These included, in the terms of the grants in the prescribed forms, a grant and demise of the relevant parcel of land and all the mines . . . together with -
and his Honour repeats that clause.
The appellants say that, in substance, the Commonwealth and the Director acquired identifiable and measurable advantages. In the case of the Director, those advantages were the acquisition of the land freed from the rights of Newcrest to occupy and conduct mining operations thereon and, in the case of the Commonwealth, the minerals freed from the rights of Newcrest to mine them. In accordance with the authorities, that is sufficient derivation of an identifiable and measurable advantage to satisfy the constitutional requirement of an acquisition.
His Honour over the page, halfway down:
There, the prohibition on export of the painting -
referring to Waterhouse -
left the owner free to retain, enjoy, display or otherwise make use of the painting and left him free to sell . . . Here, there was an effective sterilisation of the rights constituting the property in question That this is so is only emphasised upon a consideration of the contrary submission made by the Commonwealth and the Director. It is true, as they submit, that the mining tenements were not, in terms, extinguished. It is true also that Kakadu extended only 1,000 m beneath the surface. But, on the surface and to that depth, s 10(1A) of the Conservation Act forbade the carrying out of operations for the recovery of minerals. The vesting in the Commonwealth of the minerals to that depth and the vesting of the surface and balance of the relevant segments of the subterranean land in the Director had the effect, as a legal and practical matter, of denying to Newcrest the exercise of its rights under the mining tenement.
Your Honours, I notice the time. Might I just give your Honours references to passages that we would rely on. There is Georgiadis v Australian and Overseas Telecommunications Corporation which.....refer to because it is an important passage. At the foot of page 305 and in the middle of the page:
It is often said in relation to constitutional guarantees and prohibitions that “you cannot do indirectly what you are forbidden to do directly”.
That comes from Wragg –
That maxim is, in fact, an important guide to construction, indicating that guarantees and prohibitions are concerned with substance not form.
That proposition is also helpful in considering whether or not conditions and terms applied when under laws which are laws under section 96 need to be in the Act or, in other words, whether on the face of the Act you have to find that it is a law with respect to the acquisition or whether you can by derivation through a power under the Act which is clearly indicating that such a thing can be done you can look at an agreement that is entered into as was done in Magennis. You cannot do indirectly what you are forbidden to do directly –
Within that context, it is relevant to consider, by way of example, a vested cause of action against the Commonwealth –
and that is dealt with –
Accordingly, “acquisition” in s 51(xxxi) extends to the extinguishment of a vested cause of action, at least where the extinguishment results in a direct benefit or financial gain . . . and the cause of action is one that arises under the general law. The position may be different in a case involving the extinguishment or modification of a right that has no existence apart from statute. That is because, prima facie at least and in the absence of a recognized legal relationship giving rise to some like right, a right which has no existence apart from statute is one that, of its nature, is susceptible of modification or extinguishment. There is no acquisition of property involved in the modification or extinguishment of a right which has no basis in the general law and which, of its nature, is susceptible to that course. A law which effected the modification or extinguishment of a right of that kind would not have the character of a law with respect to the acquisition of property –
There are other dicta which indicate that it does not mean that simply because the right has no reference other than the statute that it cannot still be property within the terms of section 51(xxxi). Can I just give your Honours these references; Mutual Pools [1994] HCA 9; 179 CLR 155 at 172 and 173, Australian Tape Manufacturers [1993] HCA 10; 176 CLR 480 at 510 and 511, Health Insurance Commission v Peverill [1994] HCA 8; 179 CLR 226 at 237, AG (NT) v Chaffey [2007] HCA 34; 231 CLR 651, paragraphs 18 to 27, Smith v ANL 204 CLR 493, paragraphs 7 to 10. There are cases which are important in the minds of the defendants; Minister for Primary Industries v Davey 47 FCR 151 at 162 point 9 to 163, and 171 and 172, Bienke v Minister for Primary Industry and Energy 125 ALR 151 at 155 and 186 to 190 in Justice Gummow’s judgment and in the Full Court at 135 ALR 128, 143 to 146.
Now, it would take some time to go through Bienke. I do not think I need to, your Honours, but it is an important case. If it turns out that there is anything I need to go to, I can perhaps do it in reply. Bienke is important in this respect, that when you read the quotation from Harvey’s Case about the nature of the right, the right is very much the beneficiary’s right, not a private right, but a public right. Justice Gummow in that case regarded that as a very important distinction and we would submit that it is indeed a very important distinction. In this case it is a private right. It is one that is known to the common law. Indeed, there is a lot to be said for the view that it is in substance identical to the common law right.
Now, your Honours, I have dealt with what the agreement does, so I have no need to go back to that, but it is clear that in the process of conversion the licences are replaced by access licences and approval licences and the result of that process, as we submit, is that the bore licences are extinguished. So the question arises whether that is an acquisition of property. It is not just a reduction in entitlement, and the process that results from that replacement, first of all, gives the State a distinct benefit or advantage, as was said in a number of cases – Mutual Pools at 124. That benefit need only be slight, that is Australian Tapes at 499 and 500.
It need not correspond to what was taken, his Honour Justice Gummow said that in Newcrest. An interest which enabled up to 18,638 megalitres or 2,800 megalitres to be extracted from the land was extinguished. It was a proprietary nature and therefore being extinguished, the interest in land to the extent to which it was granted by the licence, merges back with the State. In substance, it is no different to what happened in Newcrest.
The first 1,000 metres became sterile and therefore the Commonwealth was able to pursue its purpose, that is to say, of preserving a mineral-free park at Kakadu. You can say that not only was it of a proprietary nature, the return, but it was measurable in the sense that it was so many megalitres and the State was free to exercise control over the use of that 18,000 plus 2,800 megalitres untrammelled by the plaintiff’s right to use it. As it turned out they were free to use part of that, if you like, to put it that way, but certainly free to not deplete what was able to be provided by granting 5,193 and 933 megalitres respectively. It is borne out by the fact that they were to replace the bore licences with aquifer access licences for those amounts.
In the end it is a practical matter, I suppose, your Honours. It is both legal and practical, as his Honour Justice Gummow said in the Newcrest Case. We would submit that on the face of it and in accordance with principle it was an acquisition of property. Was it on just terms? We would submit that it was not on just terms. There is nothing in the agreement and of course there is nothing in the Act which prescribes anything like just terms.
Normally, when you go back to the acquisition cases of agricultural commodities there were plans or schemes under which the particular commodity was marketed after acquisition. The resultant figure that was arrived at per bushel amounted to what the Court considered was fair compensation. But at least that was a fair way, the Court said, of determining what was the value of that which was taken. The terms were just and it was a fair, if you like, compromise in those difficult circumstances which might occur either in wartime or alternatively might occur in peacetime with wheat acquisition and other commodity acquisitions.
But that is not this case. This case is quite different to that. There is an identifiable property right, in our submission. One looks in those circumstances in vain in the agreement for any way of working out whether or not just terms are given. My friends are saying, as we understand them, that somehow it is all very fair but when you look at it what is fair seems to be encompassed to some extent by a concession that they made in the statement of defence – both the State and the Commonwealth - in relation to that matter.
If your Honours go to volume 1 at 66 in relation to the Commonwealth, (b)(ii) at the bottom:
admit that if –
there are very admissions in it, your Honours –
there has been any acquisition of the plaintiffs’ property within the meaning of s 51(xxxi) of the Constitution, then the first and second plaintiffs have not been provided full monetary compensation for such acquisition in that, as at 1 February 2008, the sum of the value to the first and second plaintiffs of their land and licences formerly held under the Water Act (including their value as a going concern) would have been greater than the sum of the value to the first and second plaintiffs of their land and replacement licences and approvals under the Water Management Act (including their then value as a going concern) and the structural adjustment payment referred to in sub-paragraph 3(h) above.
Now, if one looked at the agreement one might say, well what do they get? They get in return an access licence and they get structural adjustment, but there is no way of using that as a means of a test to say that just terms have been provided.
FRENCH CJ: The structural adjustment payments are said in the agreement to be ex gratia. Does it ever rise above that in any subsequent instrument? There is no reference, there is no regulation or - - -
MR ELLICOTT: No, there are no regulations or anything that deal with that. That is simply arrived at - - -
FRENCH CJ: It is really entirely administrative.
MR ELLICOTT: - - - through an administrative process, which does not find any precise location in either the agreement or the schedule to the agreement. So that, in our submission, this is a case where one is looking, or has to look, either in the Act or in the agreement, which we say the Act authorises. We have to look in either to find a method whereby just terms is arrived at. We would submit this is a clear case where just terms have not been provided.
FRENCH CJ: I suppose the State agreeing to make “up front and ex gratia structural adjustment payments” is an agreement to make payments which it is not – at least on from its perspective – legally obliged to make.
MR ELLICOTT: From its perspective, yes. It says – I assume it says – it was not obliged to make them. But I suppose in a political sense using political language they might have felt they should, particularly as in relation to water – surface water – the Commonwealth pays $1,250 a megalitre. If your Honours do compare the two licences your Honours will find a somewhat similarity in the rights that exist in relation to water licences for surface water and for groundwater licences.
The Commonwealth, in its submissions, says that what was substituted was a realistic and sustainable version of the entitlements lost, but we would submit under no circumstances is there anything in the special case, or in the agreement, which would enable one to reach that conclusion, and I simply remind your Honours again of what I said earlier this morning in relation to the plaintiff’s property itself, where one has this large aggregation with all this equipment, which may have turned out to be redundant in the circumstances, because what is left is, in the face of what the government fears, and all of us might fear, that drought might continue and groundwater may become a more significant part of what may be used.
But if it has been given in the past, then it is entitled to the same compensation, in a sense – that is to say, a basis – one can say that the market for surface water is a reasonable assessment of just terms if a licence was acquired for surface water, but the groundwater – the attempt to deal with groundwater does not provide any market-based relationship whatsoever. It is an area for valuers to become involved, and in the process, all that there was to go around was a fixed sum, and that was $110 million as it turned out – and then there was, actually as it happened, a reduction in the amount that was due to an amendment in the reduction for the Lower Lachlan from 56 per cent to 50 per cent – so that the 119,000 megalitres that had to be found was reduced to 108,000 megalitres.
FRENCH CJ: Just getting back to a kind of overview, looking to questions 1(a) and (b) in the special case, you say they should both be answered as “yes”.
MR ELLICOTT: Yes.
FRENCH CJ: In support of the answer “yes” to 1(a), you would contend that whatever power is conferred by the National Water Commission Act does not extend to entering into an agreement of the kind that was made in this case, and that is on the basis, presumably, that the power conferred by the National Water Commission Act should be read within constitutional limits.
MR ELLICOTT: Well, your Honour, we are going to make an attempt to convince the Court that that Act picked up the National Water Initiative, and that the National Water Initiative never contemplated anything but what was to happen under this agreement, and that in implementing it – they were oblivious to the fact, maybe – I have to say maybe, but on the surface of reading what happened, it never occurred to them that they should provide just terms. They simply said we will reduce the entitlements, and there is some reference in the earlier period to providing structural adjustment, but never any mention of there being some just terms.
So because the National Water Commission Act is so positive as being set up in order to implement the National Water Initiative we say that, indeed, the Act authorised an agreement which contained the provisions that it does contain and therefore is invalid. If that proposition is not accepted, the other way we would put it is that the funding agreement clearly is referable to executive power, confined by the National Water Commission Act, and that if the Act is to be interpreted as within constitutional power, as his Honour the Chief Justice put to me, then the agreement was invalid, because it went outside the power, the executive power that was granted.
We say that there is no executive power beyond the National Water Commission Act because it is so definitive about the whole matter. The agreement itself is in the train of the development of the National Water Initiative and there is no way that one can find the executive power anywhere else. Theoretically there could be a combination of section 61 and placitum (xxxix) as the Court discussed in Pape’s Case, but where does one find it? Where does one find the statutory basis under placitum (xxxix) in order to implement the agreement?
Because the agreement does involve the appropriation of money, it must have an authority to spend and the authority to spend is very difficult, we would say impossible, to find except outside, in this case, the National Water Commission Act. So the argument is rather circular and many pages are taken up by the Commonwealth and State submissions in trying to avoid the consequence of the executive power being located in the National Water Commission Act. I can only further those submissions by taking your Honours to that Act. It is the National Water Commission Act 2004. It commenced on 17 December 2004. It is located in volume 1, behind tab 1. The object of the Act, section 3:
is to establish the National Water Commission, as an independent statutory body, as required by the National Water Initiative . . .
Australian Water Fund means the Australian Water Fund announced by the Minister on 13 September 2004.
Australian Water Fund Account means the Australian Water Fund Account established by section 40.
The CEO is referred to and he is the person who signed the agreement:
COAG Water Reform Framework means the agreement, executed by COAG in 1994 to reform the management and regulation of Australia’s water resources . . .
NWI or National Water Initiative means the Intergovernmental Agreement . . . 25 June 2004 –
The functions of the National Water Commission, which was established by section 6, are, inter alia:
to assist with the implementation of the NWI, and to undertake activities that promote the objective and outcomes of the NWI –
Now, your Honours, I could read all that, but, your Honours, our submission is that when you read the functions and the special functions and the specific functions and giving advice that are dealt with under italics in that section, it is absolutely clear that the functions of the Commission are to implement and assist in the implementation of the National Water Initiative. They advise on matters, for instance, (d):
if requested to do so by the Minister, to advise and make recommendations to the Minister in relation to:
(i) the Australian Water Fund; or
(ii) any other Commonwealth program that relates to the management and regulation of Australia’s water resources - - -
FRENCH CJ: As well as advising and assessing in the functions.
MR ELLICOTT: Yes. Then when we get to a CEO at Part 4, section 24:
(1) The functions of the CEO are:
(a) to administer financial assistance, awarded by the Minister to particular projects relating to Australia’s water resources, from:
(i) the Australian Water Fund Account; or
(ii) any other Commonwealth program referred to in subparagraph 7(1)(d)(ii); and
(b) to manage the day-to-day administration of the NWC.
(2) All acts and things done in the name of, or on behalf of, the NWC by the CEO are taken as having been done by the NWC.
The funding agreement we have looked at was signed by the CEO on behalf of the Commonwealth. He, of course, was doing it on behalf of the National Water Commission. Your Honours will notice that under the funding agreement the Commonwealth is defined in a way that includes the Commission. I will give your Honours a reference to that. The Commonwealth is defined at volume 2 at page 348:
means the Commonwealth of Australia, as represented by and acting through the Commission (or any other Australian Government authority, department or agency that is, from time to time, responsible for the administration of this Agreement) and, where the context admits, its delegates, officers, employees and agents.
There is absolutely no doubt that what was done was done under this Act. Going through to section 40, “Establishment of the Australian Water Fund Account”, the account “is established by this section”, and the note is that it is “only part of the Australian Water Fund”. The account “is a Special Account for the purposes of the Financial Management and Accountability Act”. Section 21 of the Financial Management and Accountability Act is the provision:
If another Act establishes a Special Account and identifies the purposes of the Special Account, then the CRF is hereby appropriated for expenditure for those purposes, up to the balance for the time being of the Special Account.
HAYNE J: What have you just read from, Mr Ellicott?
MR ELLICOTT: Section 21 of the Financial Management and Accountability Act.
HAYNE J: Do we have that text in the bundle?
MR ELLICOTT: I do not think we do. In the explanatory memorandum there is a reference to it. It is page 16 of tab 2, volume 1, of the State’s legislative material. But, your Honours, that particular provision I do not think appears in any of the statutes.
FRENCH CJ: I think in the materials the only reference we have to it is the amendment that was made in 2008, which took it out of the range that we see there.
MR ELLICOTT: What is important, in a sense, central, is 42:
Purposes of Account
The purposes of the Special Account, in relation to which amounts may be debited from the Account, are:
(a) to provide financial assistance that is:
(i) awarded by the Minister to particular projects relating to Australia’s water resources; and
(ii) determined by the Minister to be provided from the Account –
We would say there was no question that it was pursuant to that that the agreement was entered into and that when the Minister awarded the assistance – and that was the Prime Minister in this case – the chief executive officer had authority to administer financial assistance awarded under section 42. So that it was all within the confines of the National Water Commission that this took place.
HAYNE J: What struck me at page 353 of special case book volume 2 was that clause 4.1 of the funding agreement was introduced by the words “Subject to sufficient appropriations for the Programme”. Do we need to understand the path by which that subject clause was met? That is, do we need to understand what was meant by “Subject to sufficient appropriations”? Do we need to know where or how the appropriations were made?
MR ELLICOTT: Your Honour, we are submitting that section 40 is the starting point when it says - subsection (2):
The account is a special Account for the purposes of the Financial Management and Accountability Act 1997.
That is my reason for reading section 21 and I apologise.
HAYNE J: But section 21, at least as reproduced, at page 16 of tab 2 of the legislation bundle speaks of:
a standing appropriation of the CRF to enable payments up to the balance for the time being of the Special Account –
which at least invites attention to how you determine what is the balance for the time being of the special account. That rather suggested to my mind, perhaps quite wrongly, that the balance for the time being of the special account was to be determined by some other piece of legislation or at least legislative instrument.
MR ELLICOTT: There are the Appropriation Acts of the various years which achieve that - - -
HAYNE J: All by reference to outcome appropriation and all the difficulties that we looked at in Combet about that?
MR ELLICOTT: Well, yes, your Honour, but I would submit no difficulty here because the appropriations each year, when followed through, do link up with the account and, therefore, they provide the funds. But what we are concerned about is not affected by that provision because we say that it is nevertheless a law with respect to the acquisition of property on otherwise than just terms, et cetera.
HAYNE J: I understand that is a branch of your argument, but I am directing particular attention to that branch of your argument which I understand to be a separate branch that depends upon the funding agreement being described as an “enforceable agreement”, whatever that may mean for these purposes. In particular, when I read the funding agreement, the obligations undertaken by the Commonwealth are expressed to be subject to sufficient appropriations. The further obligations undertaken by the Commonwealth, at the risk of undue abbreviation, can be described as obligations of auditing expenditures made by the State in satisfaction of the particular obligations that the State undertakes.
Now, to the extent to which you say that the funding agreement is a binding agreement, do I need to understand how it is that the subject clause in clause 4.1 at page 353 operates or was satisfied? If I do not need to, so be it, but my question is do I need to follow it?
MR ELLICOTT: I do not think your Honour needs to but your Honour may find some assistance in the Appropriation Acts. The question your Honour is putting to me, as I hear it, your Honour, is really saying to me, is this agreement enforceable. You have been saying this several times. Your Honour, I think I have already said this, but in terms of that part of the agreement which does require an instrumentality other than the State or the Commonwealth Executive to do something which is a superior authority, namely the Parliament, or the State Parliament, then those particular requirements cannot be forced upon either the Commonwealth or the State respectively.
In other words, if the particular body does not appropriate then the result is that certain steps can be taken - it is not merely audit, it is recovery and if, for instance, there is a failure to reduce the amounts to – I referred to, your Honour will recall, 1.8 in the schedule that requires reductions in the Lower Lachlan of 56 per cent - if that is not achieved by a date in, I think it is 2016, then there are certain payments have to be made by the State or the Commonwealth. Those obligations, we say, are legally enforceable obligations. This agreement is in terms of legal obligation. Even, we would say, the State, although it was a bit reticent about signing the agreement in the form in which it was, it ultimately signed it and it must accept the consequences of signing it, that is to say, that it was intended, so far as it went, to contain enforceable obligations.
In the special case there are statements to the effect that the Commonwealth intends to make payments, but at the end of the day we are going back to the agreement and the question is, was that agreement valid or invalid? Was it supported by the National Water Commission Act, or was it not? Does it find any other executive support? In our submission, even if it was a purely government agreement it would be invalid and would not justify the steps that were taken.
Now, your Honours, the second reading speech is found in the State’s volume 1 at tab 3. My purpose in doing this and going back to the beginning of this National Water Initiative is – and, indeed, the second reading speech – not so much an interpretation of a provision except that which says that it is implementing the National Water Initiative. There is in the second reading speech on the second page a reference to the National Water Initiative. Over the page on page 3, on the first column at the top:
The government has pledged $2 billion over five years to establish the Australian Water Fund . . .
Firstly, $1.6 billion will be invested over five years in the Water Smart Australia Program . . .
These projects include . . .
assisting New South Wales and Victoria with structural adjustment for over-allocated ground water systems. We have a situation where farmers have done nothing wrong–they have used licence entitlements given to them by governments, in some cases for over many decades–and they are now expected to bear much of the cost of restoring balance to those systems. The community has benefited from the use of that water in terms of jobs, economic performance, food, fibre and all those things. There needs to be fairness in a reasonable apportionment of the bearing of the costs of restoring those systems to sustainability. That is the Australian way. But it is more than that. I think it is an incredibly important principle of justice and fairness –
Well, his principle of justice and fairness, we say, did not go far enough. It did not ensure that our clients and others throughout New South Wales and elsewhere did not get proper compensation or just terms for the taking of their property. Now, what this does is link up with the National Water Initiative. Your Honours, this means going to volume 2.
I am pursuing the argument that the National Water Commission Act authorises this agreement and the consequence being that that part of it which does authorise it is invalid. If your Honours go to volume 2, 129. This is the COAG meeting of February 1994 and water resource policy is dealt with and there is the start of also the Competition Council. At page 131 there is a reference to “WATER RESOURCE POLICY” and at 132 at line 40:
The speed and extent of water industry reform and the adjustment process will be dependent on the availability of financial resources to facilitate structural adjustment and asset refurbishment.
So they have this concept in mind as far back as 1994. At 147 “WATER RESOURCE POLICY” will be found referred to. At 149, 4(a):
the State Government members of the Council, would implement comprehensive systems of water allocations or entitlements backed by separation of water property rights from land title and clear specification of entitlements in terms of ownership, volume, reliability, transferability and, if appropriate, quality –
Then there are provisions there that contemplate, for instance, 5(b):
where it is not already the case, that trading arrangements in water allocations or entitlements be instituted once the entitlement arrangements have been settled.
This relates both to surface water and to groundwater.
FRENCH CJ: Is there anything specifically relating to reduction?
MR ELLICOTT: In relation to what, your Honour?
FRENCH CJ: To reduction of extraction. I could not see it. It all really focused on the economic reform, was it not?
MR ELLICOTT: Not directly, but 5(b), “once the entitlement arrangements have been settled”. I am not trying to extract more out of it than I can. It is a lead up to the National Water Initiative which picks it up and I - - -
FRENCH CJ: This is all out of the Hilmer Report ultimately.
MR ELLICOTT: Yes. Now, at 195 one finds – it is called an occasional paper but it is allocation and use of groundwater and it has been prepared by the Agriculture and Resource Management Council of Australia and New Zealand and 4.1 deals with sustainability. “Key Reforms” at page 200 under 4.1:
Although groundwater use, at a State or National level, is well below the total assessed sustainable yield, nonetheless, in many specific areas allocations and/or use is in excess of the sustainable yield. In addition there is no single understanding or definition of sustainable yield across Australia. As any definition of sustainable yield embraces a range of technical –
I will not read all that, but that is clearly relevant.
FRENCH CJ: This is prepared as a sort of advisory paper, is it not, feeding into the COAG reform.
MR ELLICOTT: Yes, but it becomes part of the stream of thought in relation to the matter, if one wants to trace it back.
4.3 Groundwater | Surface Water Management
Then in 4.6:
It has been estimated that 26 million ML/year of groundwater is available on a sustainable basis in Australia. Of this, it is estimated that about 15% is actually used in an average year. The amount of water that has been allocated (or committed to use) is difficult to estimate because of the variety of means of defining allocations . . .
While overall usage is well within sustainable limits, use at the local scale in many areas is known to exceed availability, and the consequences of overdraw are being experienced or are expected in the future. Good groundwater management requires an understanding of the level of sustainable availability, allocation and use, particular at aquifer scales.
Annexure 5 is the tripartite initiative. It is at 213, and:
A meeting between representatives of Senior Officials, CRR, Steering Group –
I simply point to 1.1:
Clause 4(a) is to be interpreted as requiring a “comprehensive system” of establishing water allocations to be in place which recognises both consumptive and environmental needs. The system is to be applicable to both surface and ground water. However, applications to individual water sources will be determined on a priority needs basis . . .
For the second tranche, the legislative and institutional framework to enable the determination of water entitlements and trading of those entitlements should be in place.
It talks about implementation action, attachment 3 to that, at page 223, “Sustainable yields have been assigned to all the State’s high risk aquifers” and there is reference to the Lower Lachlan as one of them.
FRENCH CJ: This is a State paper?
MR ELLICOTT: Yes, I think it is, your Honour. This is the New South Wales draft allocation and trading implementation program. What they are doing is simply identifying these low risk and high risk – and if you go to page 227, the “Central West Region”, the Upper Lachlan is indicated in the first two rectangles. “Inland High Risk Aquifers” at 228 is the Upper Lachlan. The National Resource Management Ministerial Council is dealt with at 231. This contained a definition of sustainable yield at 232 at the top:
Sustainable groundwater yield is defined as:
“The groundwater extraction regime, measured over a specified planning timeframe, that allows acceptable levels of stress and protects dependent economic, social, and environmental values.”
“Storage depletion” at the bottom can be “unacceptable”. Then comes the National Water Initiative. It starts at 235.
There is a need to read this to some degree because of its relationship to the Act. I do not propose to do more than point out the sections that are, in our submission, relevant.
Implementation is dealt with at clause 8 on the next page and 9(iii) will:
be developed cooperatively between States and Territories which share water resources to ensure appropriate co-development of those actions which are of a cross-jurisdictional nature . . .
At 14:
In relation to the Murray-Darling Basin (MDB) . . .
“ROLES AND RESPONSIBILITIES”, there are set out the roles of the, inter alia:
OBJECTIVES
KEY ELEMENTS
Actions
26 . . .
Those are all very important. For instance, 31 deals with access entitlements: specify the essential characteristics; be exclusive, be able to be traded; be able to be subdivided; be mortgageable; be enforceable and enforced. On 242 “Addressing Currently Overallocated and/or Overused Systems” is dealt with. This is the significant part of it. At 43:
The Parties further agree that with respect to surface and groundwater resources not covered by the individual NCC endorsed implementation plans, and subject to paragraph 38, States and Territories will determine in accordance with the relevant water plan, the precise pathway by which any of those systems found to be overallocated and/or overused as defined in the water planning process will be adjusted to address the overallocation or overuse, and meet the environmental and other public benefit outcomes.
Assigning risks is dealt with. At 97, page 255:
States and Territories will consult with affected water users, communities and associated industry on . . .
c) the scale of the changes sought and the speed . . . and
d) the risk assignment framework -
There is in Schedule A at page 258, if your Honours look at those, “Implementation”. “Water access entitlements and planning framework”:
substantial completion of plans to address any existing overallocation for all river systems . . .
Water access entitlements to be defined and implemented.
Water to meet environmental and other public benefit outcomes . . .
Water plans to be prepared . . .
Substantially complete addressing overallocation as per NCC commitments.
The whole document is consistent with the agreement and with the Act. I do not think there is anything else in that that I want to refer to.
FRENCH CJ: That might be a convenient moment, Mr Ellicott. How are you going for time? Without wanting to constrain you in any way, can we just get an idea.
MR ELLICOTT: Your Honour, I will try and finish by 3 to 3.15.
FRENCH CJ: All right, thank you. The Court will adjourn until 2.15.
AT 12.47 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.16 PM:
FRENCH CJ: Yes, Mr Ellicott.
MR ELLICOTT: Your Honours, could I take your Honours to volume 2 at page 275 which is the communiqué issued by the Council - COAG on 25 June 2004 and that, in summary, deals with the National Water Initiative in terms of, I guess, a press statement. The one relevant part is at about line 38 on page 275:
a commitment to addressing overallocated systems as quickly as possible, in consultation with affected stakeholders, addressing significant adjustment issues where appropriate -
It rather underlines the fact that they are not really thinking in terms of anything significant going to them, except what they describe as appropriate.
I will not read that further because it only summarises the National Water Initiative agreement itself. Your Honours, at page 285 and in the context of the funding agreement and the National Water Commission Act having come into force on 17 December 2004, the Premier of New South Wales writes to the Prime Minister on 9 February 2005 and there is attached to it in the third paragraph a brief outline of this project prepared in the format requested by the NWC as enclosed:
The NSW and Commonwealth Governments have been negotiating the Groundwater Entitlement Reduction and Financial Assistance Package for some time. There is now a real expectation on the part of irrigators in the over-allocated groundwater systems that the NSW and Commonwealth governments will expedite the implementation of this project.
At page 287 the package is set out and it indicates that six major inland systems have been identified including the Lower Lachlan:
The NSW Government has proposed the Groundwater Entitlement Reduction and Financial Assistance Package to provide a methodology for reducing individual entitlements and to assist in managing the impact of the reductions on licence holders.
The Groundwater Entitlement Reduction and Financial Assistance Package will deliver the proposed NSW and Commonwealth Governments’ capped contributions –
Your Honours, that document is – and I think it is enough just to leave it at this that it really is consistent with what happened under the funding agreement but obviously it has to be read in greater detail but at 7 on page 288:
The NSW Government has budgeted $55 million for the project. This budget commitment is contingent upon matching Commonwealth Government funding. It is proposed the Commonwealth provide matching capped funds through the Australian Water Fund . . .
The project has been under technical development for some time. Terms of reference and operating protocols are being developed for the Groundwater Adjustment Committee –
The reference:
This budget commitment is contingent upon matching Commonwealth Government funding -
is important in the context of the making of the order, that is to say, the order of 8 January 2008 because we say that the State was not doing other than implementing the agreement which, we say, was invalid. We argue from that that the order itself was invalid but I have not dealt with that. There is a letter then from the New South Wales Cabinet Office to the National Water Commission and it sets it out in greater detail. At point 2, the fourth bullet point on page 292:
Currently, reductions in these Plans are based on across the board cuts. This will need to be amended to entitlement reduction giving consideration to History of Use (HOU).
That is where that came in –
The Water Sharing Plans have been developed to be consistent with the requirements of the National Water Initiative. They aim to achieve sustainable levels of groundwater extraction . . .
This project has been designed to deliver a capped contribution of $110 million in total, comprising $100 million in the form of up-front ex gratia structural adjustment –
The objectives and outcomes include the third dot point:
To provide financial assistance, based on loss of entitlement, to affected groundwater licence holders in the form of structural adjustment payments to manage the impacts of entitlement reductions on the licence holders.
Not compensation. “Need for Australian Water Fund Contribution” is dealt with in 4. The second dot point:
The reductions in water access entitlements will have a significant financial impact on licence holders. Entitlement holders in the six identified areas hold entitlements that are significantly in excess of sustainable yield. Reducing entitlements in these systems to sustainable yield will therefore have a substantial impact on groundwater users in these areas. These users account for a significant proportion of the nation’s irrigated primary industries.
As if they have to justify it. We say that the justification lies in the Constitution.
The NSW Government is committed . . . A failure to attract an AWF contribution will result in insufficient financial assistance to help affected users adjust to the reduction of groundwater entitlement to within sustainable yield.
FRENCH CJ: This does not look like the pathway or a pathway to the Commonwealth doing something indirectly which it cannot do directly because of the limitations imposed by section 51(xxxi). This is a State saying it has got an anterior commitment and asking for money to help or to meet it.
MR ELLICOTT: Yes.
FRENCH CJ: Does that not affect how one looks at this funding agreement?
MR ELLICOTT: No, your Honour. The funding agreement is part of the National Water Initiative and the National Water Initiative is an initiative of all the governments and the Commonwealth is as much behind it as the States. What is behind it is Commonwealth money in large part, but also Commonwealth interest in the proper management in the national interest of Australia’s water resources and it not only extends to this groundwater, but also to the surface water as well and to other issues of pollution, et cetera, and providing South Australia with water.
It is not compensation. “Need for Australian Water Fund Contribution” is dealt with in 4, the second dot point:
The reductions in water access entitlements will have a significant financial impact on licence holders. Entitlement holders in the six identified areas hold entitlements that are significantly in excess of sustainable yield. Reducing entitlements in these systems to sustainable yield will therefore have a substantial impact on groundwater users in these areas. These users account for a significant proportion of the nation’s irrigated primary industries.
As if they have to justify it. We say that the justification lies in the Constitution:
FRENCH CJ: This does not look like a pathway to the Commonwealth doing something indirectly which it cannot do directly because of the limitations imposed by section 51(xxxi). This is a State saying it has an anterior commitment and asking for money to help or to meet it. Does that not affect how one looks at this funding agreement?
MR ELLICOTT: No, your Honour. Your Honour, the funding agreement is part of the National Water Initiative and the National Water Initiative is an initiative of all the governments and the Commonwealth is as much behind it as the States. What is behind it is Commonwealth money, in large part, but also Commonwealth interest in the proper management in the national interest of Australia’s water resources. It not only extends to this groundwater, but also to the surface water as well and to other issues of pollution, et cetera, and providing South Australia with water, et cetera.
FRENCH CJ: Would it have made a difference if the Commonwealth had not been party to a national water initiative but indicated a willingness to entertain applications for section 96 grants to enable the States to do what they wanted to do under it?
MR ELLICOTT: Your Honour, it may be – I only say it may be – that if there was simply an announcement that there was no relationship between the providing of funding and the reduction of entitlements – I use that as a comprehensive phrase – that section 51(xxxi) would not affect it. But where, as here – and we only have to deal with this case – the position is that the Commonwealth indeed sets up a National Water Commission Act pursuant to the desires of all the governments in the National Water Initiative and having done that provides for a fund out of which assistance can be given and it is within the contemplation of that Act that that assistance can be given by agreement, the method chosen is important. What the Commonwealth did was to choose an agreement which was partly, we say in the sense discussed this morning and largely an agreement which was enforceable in the sense that one might treat it as any commercial agreement.
In some respects, it is, as I have said, not enforceable in the sense that you can tell governments what to do, or parliaments, rather, what to do. But what it does is make the payments conditional on an acquisition of property, as we put it, and therefore it is a law under which property is being acquired by a State for a purpose in respect of which the Commonwealth can pass laws. That is the issue. That is what the Court has to determine. In our submission, it is not just simply the State saying “We would like to do this and this is how we do it.” They say, “We cannot do it, in any event, without your payment and your payment is therefore not just a help along the way. It is condition to it. We cannot do it otherwise.”
That is what they have said and they have said it not only there but elsewhere. That being so, it takes on not so much the compulsion, but it takes on the character of section 51(xxxi) and that is the issue. You cannot get away from that simply by saying, well, they could have done it in another way. The statement that you cannot do indirectly what you are prohibited from doing directly is really only referential in this case, but it is supported by Magennis’ Case, and that is that you can not do under an agreement, authorised by a statute, what would be forbidden to be done by the terms of the statute itself. That is the sense in which that adage becomes important in relation to 51(xxxi), not in relation to the question whether the State could have done it differently.
Pye v Renshaw indicates that the State did do it differently and that in those circumstances the Court, including two who had sat in Magennis’ Case, the Court said that that was not a breach of section 51(xxxi). In circumstances where counsel were arguing in the broad terms, as if I was arguing here, I think Sir Garfield Barwick was the counsel, and he was trying to get it up based on statements made by the various governments in relation to what was being done. It is not what we are doing here.
We are dealing with an agreement where the governments have done it and in a context where they are concerned truly, if for no other reason than political reasons, to make sure that the stakeholders are consulted and in some way the stakeholders will, through some broad committee, agree to what is being done, not recognising necessarily the rights of individual irrigators who are not party to these discussions and who have perhaps a different view of the constitutional guarantee and of the nature of the right that they have got. So that is the context in which we put it, your Honours.
At 295, 7:
The underlying [principle] for the financial assistance is that the NSW and Commonwealth Governments each bear one third of the estimated cost of the entitlement reduction (i.e. a $50 million contribution from each Government).
It is interesting that that is how they assess it in a very broad sense. They are only giving them two thirds, not that they are giving them two thirds but that is how the broad political mind was working. The second-last dot point:
No financial assistance will be paid until the commencement of the Water Sharing Plans as no reduction in entitlement occurs until the commencement of the Plans.
Over the page:
The NSW Government has already paid out approximately $11.4 million –
That was in relation to the Namoi and they soften it a bit by saying well, we are not going to ask for any money for that, but:
The proposed NSW Government budget commitment is $58.4 million, contingent on $55 million provided by the Commonwealth Government through the Australian Water Fund . . .
This budget commitment is contingent upon matching Commonwealth Government funding of $55 million. It is proposed the Commonwealth Government provide matching capped funds through the Australian Water Fund.
At 10.1 they deal with the consistency with the National Water Initiative and the two-thirds proposition is repeated again in the fourth dot point under “Risk Assessment” at 9. The Lower Lachlan is shown and the figures are shown in the table on page 299. That figure of 119,417 is exactly the figure that I think appears in item 1.8(e). There is a further document annexed of August 2004 which says that – against line 40:
Should the Australian Government decline to contribute $55 million, the NSW Government will proceed with the current approach for the Namoi of reducing equally the groundwater licence entitlements and with the current arrangements for the provision of financial assistance.
So what was proposed was not if you do not do it we will do it. It was something quite different that they would have done and would not have met the requirements of the National Water Initiative. At page 305 and onwards there are pages which are examples and I would not stay to interpret them for your Honours. Even if I could I think it would not end up in any significance to the argument, but there are ways in which they try and work out the financial assistance. In no way does it enable one to connect it with the agreement or tell one whether or not it amounts to an attempt to provide just terms.
At 311, just before I go further, there is an important point, “Total Proposed Assistance”:
Assistance will be paid up to a maximum of two-thirds of the lost value of a licence holder’s water asset to a maximum of $103 million for all water sources, contingent upon the provision of joint funding from the Australian Government. Any payments made previously under the Groundwater Structural Adjustment Package (GSAP) will be deducted from an individual licence holder’s Financial Assistance . . .
Should total Financial Assistance for groundwater adjustment to all affected systems exceed $103 million, payments to individual licence holders will be scaled proportionally to meet the funding available.
HAYNE J: What are we meant to get out of all of this, Mr Ellicott? That is an internal draft document in the New South Wales department. Is this in amplification of the admitted fact, or fact you say is admitted, that there is no just terms?
MR ELLICOTT: Your Honour, the State documents came and they went into the special case. I am simply using them as being consistent with what we say, that there was here a pathway which went to the National Water Commission Act, that went through to this agreement and was expressed in the agreement. I do not think I need to – I use the word “labour” – labour it any further. I would be accused of something I have been accused of before when Justice Taylor said, “Mr Ellicott, your argument does not improve by repetition, something counsel often forget.”
Your Honours, the Prime Minister replied to that and that is annexure 14. It is referred to in paragraph 13, special case, at page 83. On 9 June the Prime Minister wrote back and that appears at volume 2 at page 340.
FRENCH CJ: That is a media release.
MR ELLICOTT: That is a media release. Then there is an amendment to the special case. I do not know whether that has been approved by the Court. I am not suggesting it would not be, but it has been filed and I am now referring to that. I am assuming it would be.
FRENCH CJ: I have no difficulty with that.
MR ELLICOTT: It attaches the Prime Minister’s minute when he approved of it. It is really linking up with the Australian Government Water Fund and authorising payments of the adoption of this as a project or making an award of assistance to the State and it provides for a total funding of 110 million over two years, Australian Government Water Fund contribution, 55 million. That appears at the bottom of page 4. I am not reading the note because it really is consistent with the proposal to implement the National Water Initiative.
Your Honours, it is our submission that the executive power being exercised in relation to the funding agreement was the executive power to execute a law of the Commonwealth under section 61. In this case the law of the Commonwealth was the National Water Commission Act which clearly emanated from the National Water Initiative and implemented its objectives. It was chosen as the means and the only means, on the face of it, that has come to attention through which that initiative was to be implemented in a statutory and administrative sense.
The National Water Commission Act section 3 established the Commission as a requirement of the National Water Initiative. Section 7(1)(a) gives the general function “to assist with the implementation”. Section 40 establishes the Australian Water Fund Account and section 42 authorises a method for providing financial assistance.
The fund specified under the agreement, out of which funding is to come, is the Australian Government Water Fund and that, of course, is the fund referred to in section 40 of the Act. The agreement is in terms which, in our submission, fall within the power to provide assistance, that is to say financial assistance can be awarded and it is appropriate that it be done by agreement. It could be done by an announcement, it could be done in many ways, but in this case it was done by agreement and that, therefore, one has to look at the agreement.
Its clear objective – that is the objective of the agreement – is to reduce entitlements and provide structural adjustment, and these are objects which are essential to meeting the objectives of the National Water Initiative. We would submit, your Honours, that it is beyond argument indeed that the executive power exercised in providing financial assistance from the Australian Government Water Fund emanates from the National Water Commission Act and nowhere else.
It is also our submission that the National Water Commission Act purports to authorise entry into the agreement by the Commonwealth. As such, it becomes an Act to that extent which provides for the acquisition of property. In this case - - -
HAYNE J: What provision of the National Water Commission Act authorises the making of the agreement?
MR ELLICOTT: Section 42, and read with section 24(1), that is to say, sections 40, 42, read with section 24(1) and one would have to add to that the function of the Commission to assist with the implementation, which is 7(1)(a), of the National Water Initiative.
FRENCH CJ: You say the making of the agreement by the CEO on behalf on the Commonwealth falls within the scope of administering financial assistance in 24(1)(a)?
MR ELLICOTT: Yes.
HAYNE J: Administering financial assistance awarded by the Minister?
MR ELLICOTT: Awarded by the Minister, yes. Therefore, to that extent, as I have submitted, it was a law with respect to the acquisition of property which offended section 51(xxxi) because it was implementing the National Water Initiative which in turn embraced the notion of reducing entitlements without concern to just terms. The Act is, in our submission, on all fours with Magennis’ Case. I will take your Honours to Magennis’ Case [1949] HCA 66; 80 CLR 382. The agreement here is more in the class of an agreement between governments. The agreement is described briefly. It is set out in the statement claim, I think, which appears at 384 and 385:
9. In or about the year 1945 an agreement was made between the Commonwealth of Australia of the one part and the State of New South Wales of the other part, the terms of which are set forth in the first schedule to the War Service Land Settlement Agreements Act 1945 (No.52 of 1945).
10. By that agreement it was recited that at a conference of Commonwealth and State Ministers on 22nd August, 1945, certain proposals were agreed to with a view to the settlement on land . . .
11. By the terms of and for the purposes of that agreement the Commonwealth was required to make provision for the payment of certain moneys to the State and to persons settling on the said lands.
12. By the terms of that agreement the State in addition to providing certain moneys for the purposes of the scheme was also required to resume or otherwise acquire certain land at a value not exceeding that ruling on 10th February 1942.
13. By the War Service Land Settlement Agreements Act 1945 (No 52 of 1945) the Commonwealth purported to authorize that agreement. By the War Service Land Settlement Agreement Act 1945 (No 6 of 1946) the State of New South Wales purported to ratify that agreement.
14. The State of New South Wales has threatened and intends to resume . . .
That is in the pleading. At page 401, your Honours, to some extent I need to read this. Your Honours have read it no doubt many times. The reason is that the submission is made that this case be overruled. This case, of course, has not gone untouched in terms of being applied or cited over the years since it came into the books. Your Honours will have recited it perhaps in earlier judgments of your Honours. To that extent, your Honours will, I would submit, find that it has entered the jurisprudence in relation to section 51(xxxi) and although it did take a step which might have surprised Sir Owen Dixon, it nevertheless stands in the same area of discourse which this Court has stood in in relation to section 51(xxxi), namely to give it a liberal interpretation and with a view to ensuring that the adage does not apply, we were discussing earlier, and to give effect to what has now been acknowledged to be a guarantee in the Constitution.
Indeed, when you look at section 51(xxxi) one would ask what does it really achieve? The only thing it does achieve is the guarantee. If it were left out of the Constitution altogether it would mean that the various powers would operate so as to enable the acquisition of property by the Commonwealth but without any guarantee of just terms. One might say in constitutional terms that is all it does, and so the importance of enforcing that guarantee in whatever way its head rears is very significant.
It matters not, we would submit, whether the agreement is enforceable or whether it is what you might perhaps in ordinary day-to-day terms be an agreement between governments, which is based greatly on the art of the possible, the Parliament’s will to back it up with funds and not by recourse to courts of law. I will not repeat what I have already said in relation to the agreement itself. The passages begin at 401. Importantly, in the middle of the page:
The constitutional provision is not limited in terms to laws providing for the acquisition of property . . . itself. The words are general –
In other words, this is consistent with the liberal interpretation. It is obvious, because it would have been simple to imply the words “by the Commonwealth” in there.
It is obvious that the constitutional provision could readily be evaded if it did not apply to acquisition by a corporation constituted by the Commonwealth or by an individual person authorized by a Commonwealth statute to acquire property. Further, the present case shows that the constitutional provision would be quite ineffective if by making an agreement with a State for the acquisition of property upon terms which were not just the Commonwealth Parliament could validly provide for the acquisition of property from any person to whom State legislation could be applied upon terms which paid no attention to justice. The question whether the constitutional requirement applies to acquisitions in pursuance of Commonwealth law other than acquisition by the Commonwealth itself was mentioned-
His Honour refers to that.
I agree that, as legislation with respect to the subject of the acquisition of property can be enacted by the Commonwealth Parliament only by virtue of the power conferred by s. 51 (xxxi.), all such Commonwealth legislation must affirmatively provide just terms for such acquisition . . .
The next question which arises is whether the Commonwealth legislation . . . is legislation with respect to the acquisition of property. It is submitted for the defendants that a law cannot fall within this category unless it is either a law which directly acquires property by force of its own terms or creates a previously non-existing power . . . All such laws doubtless would be laws with respect to the acquisition of property. But there is nothing in the words . . . which supplies any warrant for limiting the application of this provision to laws which fall within the classes mentioned.
The provisions in the schedule to the Commonwealth Act are provisions of an agreement and not of a statute. It is true that the Act is a law authorizing only the execution of the agreement, but the whole subject matter of the agreement is the acquisition of property upon certain terms and conditions for certain purposes. The provisions of the agreement are directed to the acquisition of property and the agreement becomes effective in achieving its objective of the settlement of discharged servicemen only when property has been acquired. I can see no reason whatever for holding that a law approving an agreement of such a character as this is not a law with respect to the acquisition of property.
It is next said for the defendants that the Commonwealth Act is a law with respect to the re-establishment in civil life of discharged servicemen and is not a law with respect to the acquisition of property. A law providing for such re-establishment is a law which falls within the defence power . . . The fact that the settlement of ex-servicemen is a defence purpose is the circumstance which makes the law a law for a purpose with respect to which the Commonwealth Parliament has power to make laws. But this fact most obviously does not show that it is not also a law with respect to the acquisition of property. All Federal laws for the acquisition of property are required by s.51 (xxxi.) also to be laws for a purpose in respect of which Parliament has power to make laws. Accordingly there is nothing in the objection that the Act is not an Act with respect to the acquisition of property for the reason (true in itself) that it is an Act with respect to a defence purpose. Similarly there is no substance in the objection that the Act is an Act giving financial assistance to States (Constitution, s. 96) and is therefore not a law with respect to the acquisition of property.
Your Honours, it would be difficult, indeed impossible for me to put more eloquently the argument that we would want to put in this case, but we would submit that all of it is consistent with the purpose of the constitutional guarantee and is unexceptionable. Needless to say, the defendants are seeking the Court’s order or ruling that this be never followed. It would be a retrogressive step in constitutional interpretation, in our submission:
Upon the allegations in the statement of claim it is clear that under the agreement it is intended that land should be acquired for a Commonwealth purpose upon terms which necessitate paying for the land compensation which represents its value . . . It follows that the Act is an Act with respect to the acquisition of property upon terms which are not just and is therefore invalid.
He then deals with the position of the State, and I need to read that in relation to question 2:
But the legislative power of the State Parliament is not limited by any requirement of just terms and, therefore, it is submitted for the defendants that the State legislation approving and ratifying the agreement, Act No 6 of 1946, the War Service Land Settlement Agreement Act 1945, is valid even if the Commonwealth Act is invalid. But that which the State Act approves is an agreement made between the State and the Commonwealth. If the agreement cannot validly be made by the Commonwealth then it cannot be valid as an agreement between the State and the Commonwealth. The agreement cannot be valid as an agreement in the case of the State and invalid as an agreement in the case of the Commonwealth. The operation of the agreement depends at all points upon action by the Commonwealth in pursuance of the agreement and upon the undertaking and performance by the Commonwealth of definite pecuniary obligations under the agreement. The State Parliament has not enacted the terms of the agreement as provisions of a statue, but has only approved the making of the agreement as an agreement. If the agreement completely fails on the side of the Commonwealth it also completely fails as an agreement on the side of the State. The result therefore is that as the State legislation only approved that which was treated by the legislation as amounting to an agreement if executed by both the Commonwealth and the State, and as that agreement is not valid, the State also is not bound by the agreement and the State Act approving the execution of the agreement therefore did not come into operation. The result is not that the State Act is invalid, but simply that it has no effect.
Your Honours, that passage equally applies to this case except there is no Act of the State Parliament in this case which affirms the agreement. In this case there are steps taken which result – and in this case the result occurs. In Magennis’ Case it had not occurred. In this case it does occur that by dint of State legislation, unless it is put aside, then the objective, which is the objective of acquiring property under a Commonwealth Act of Parliament on otherwise than just terms, is effected.
HAYNE J: Does the reasoning of Chief Justice Latham in Magennis to the conclusion that the agreement was infirm on the Commonwealth side start from the premise that the Commonwealth Act was invalid because it, that Act, was to be characterised as a law with respect to acquisition?
MR ELLICOTT: Yes, I think it does.
HAYNE J: Does your argument start from the premise that the agreement is invalid, or does it start from the premise that the National Water Commission Act is invalid?
MR ELLICOTT: It starts with the premise that the National Water Commission Act is invalid because it authorises this agreement and this agreement is in no different standing, in constitutional respects, than the agreement in Magennis’ Case.
FRENCH CJ: The answer to the contention put against you that this is a reverse engineering, if you like, of the characterisation of the Act by reference to the funding agreement you must go back to the National Water Initiative and use that to inform your characterisation of the National Water Commission Act must you not because they did not have to go down the route of a funding agreement to provide the funding assistance? That is just an accident of what happened in this particular case.
MR ELLICOTT: No, it is important to see what has happened. The National Water Initiative is only a means of giving content to the National Water Commission Act. It was as if it was set out in it.
FRENCH CJ: Yes, that is what I am putting to you, that your argument is really that one looks – that is why you have taken us through this history, as I understood it, to create a pathway along which you say the National Water Commission Act is set up; when you have a look at the National Water Initiative, the second reading speech and so forth, with a view to funding, inter alia, the reduction of entitlements.
MR ELLICOTT: Yes, but, your Honour, it does not flow from that that the Act is valid because it is the Act which does that which, whoever they are, but certainly the Commonwealth, the Commonwealth Executive wishes to achieve. That is to say, it wishes to achieve because it is said that it will support the initiative. It does not say that it will give assistance, it says it will support the initiative, and this is the way in which it says it will do it, ultimately. It says it will set up a fund and that fund will be utilised to provide assistance in relation to projects. Now that, in a sense, lies outside the terms of the National Water Initiative itself.
It is a policy announced by the Prime Minister, John Howard, in relation to water reform at a Commonwealth level and the involvement of the Commonwealth in the Murray-Darling Basin, and this is part of it, and as such it is a Commonwealth Executive initiative, it is not a State Executive initiative. The Commonwealth Executive is putting into place a National Water Initiative proposal that is to set up the water commission, but one part of the National Water Initiative you do not find is that any obligation or requirement or suggestion that the Australian Government Water Fund be established or that Water Smart Australia policy should be adopted, of which it was a part. This is of the same order. It is not a mirror of something which the States were going to do anyhow. It does not affect the characterisation, in other words, of the National Water Commission Act.
Your Honours, Justice Williams, of course, was in agreement, as was Sir William Webb. Justice Williams at 420 to 421, it has the same substance as Sir John Latham and at 422 to 425. Justice Dixon deals with it at 407 and 408 and obviously he was in the minority. At the foot of page 407:
According to recitals contained in the agreement, it was made in order to carry into effect proposals agreed to at a conference . . .
The plaintiff contends that the agreement is not binding upon the Commonwealth as a valid and enforceable obligation. From this it goes to the proposition that the State statute is not effective to resume its land at the value prescribed by the proviso.
I am quite unable to perceive how this second proposition follows from the first. The State law cannot be invalid, that is, unless some inconsistent Federal law is produced.
If, because of the unenforceability of the agreement, s 4(3) ceases to authorize the resumption of the plaintiff’s land or s 4(4)(b) for that reason does not operate to restrict the value which may be assessed or determined, it must be because the State enactment so intends. But how possibly could such an intention be extracted from the provisions?
He really takes the view, as he expresses over the page in the middle:
It is, I think, a question whether the agreement could be treated as a contract enforceable by suit. Certainly many clauses are not susceptible of legal enforcement. Surely the operation of the State statute does not depend on the question.
That is Sir Owen Dixon’s approach. It was not accepted by the majority. It does place a very limited perspective, with very great respect, particularly having regard to his Honour’s adoption of a very liberal view of – and the importance of section 51(xxxi) – a very limited restriction on the characterisation of a law with respect to the acquisition of property.
GUMMOW J: Mr Ellicott, in Magennis it was clear enough that there was Commonwealth power under section 51(vi), was it not?
MR ELLICOTT: I am sorry.
GUMMOW J: There could have been a purpose of the Commonwealth under section 51(vi), defence.
MR ELLICOTT: Yes, that is right.
GUMMOW J: So what the State was doing was acquiring property for a purpose for which the Commonwealth itself could have legislated under section 51(vi). But if the Commonwealth had done so in plain terms, it would have had to give just terms. So there was a concurrence of power. Where is the concurrence of power in this case? If the Commonwealth had legislated directly to resume these licences, how could it have done so?
MR ELLICOTT: One of the arguments put against the plaintiffs - - -
GUMMOW J: In the present case, today’s case?
MR ELLICOTT: No, I am just saying one of the arguments put against the plaintiffs was that it was the law, with respect to giving financial assistance, and Sir John Latham said at page 403:
Similarly, there is no substance in the objection that the Act is an Act giving financial assistance to the States (Constitution, s 96) and is therefore not a law with respect to the acquisition of property.
What he was discussing was this dual aspect.
GUMMOW J: We all know laws can have many characters now. They were not so clear about that in 1949, but that is all gone.
MR ELLICOTT: But this is what – this may be the start of the rot. This statement is a little perceptive because he is really saying even if this Act did depend on section 96 section 96 is a law with respect to which the Parliament – it is for a purpose in respect of which the Parliament can pass laws. Section 96, having regard to its history, is certainly not to be put in a special category to enlarge it even further. I mean, it is enough to – it is a wonder the States are even putting this argument, because it is a great threat to their power, but section 96, to put it in a different category to section 122, I would submit, is not logical because section 96 itself is a purpose and a very significant purpose, as it has turned out, to provide assistance to the States, and it is a legislative provision. It is a section which authorises the Parliament to grant financial assistance, and on no basis of logic could one say without – I say with great respect, of course, because I could be wrong – but I would submit that on no basis of logic could it be suggested that a law under section 96 by itself was not a law for a purpose in respect of which the Parliament can pass laws.
So that even if the Act is not an Act with respect to another head of power, as this was in Magennis, namely defence, then it is enough that it is a law with respect to 96, but apart from that, there is a lot to be said, we would submit, for the view – and I know your Honours had trouble with this in Pape’s Case – this is a law with respect to trade and commerce within section 51(i). There is no doubt that water is vitally connected with interstate and international trade and commerce. Much of the commerce of that degree has come out of the use of water in inland Australia and these – the Lachlan Valley, for instance, is of course an area where a great deal of the country’s produce comes, and is used in interstate trade. In the second reading speech, at tab 3, I will just read it – I read it this morning, but just to remind your Honours:
It is also relevant to make the point that Australian farmers using that 70 per cent of consumed water produce enough food and fibre-depending on how you cut the numbers up-for somewhere between 70 million and 90 million people, many of whom of course are not in Australia. By definition, there are only 20 million Australians, so a great deal of that product is exported. That water is used to feed and clothe us and many of our fellow human beings in other countries. It is also terribly important in an economic sense.
And, your Honours, this fits in with this view that it would be within Commonwealth power to regulate water in relation to the administration for the purposes of international trade and commerce. That sounds a large say, but when you come to think of it, if water is such a vital resource to the nation, then the intervention of the Commonwealth is one that is natural in that area of trade and commerce. Now, that is not an indication that the Commonwealth is likely to do it at any given time. There is a traditional view that somehow it is the area for the States, but it looms large. There are many areas where the Commonwealth does not intervene where it could. In this area it stood back. But in relation to this particular piece of legislation, we would submit that it could be supported by the trade and commerce power.
For similar reasons, it could be supported, in our submission, under the nationhood power. It goes beyond national interest. The power to harness our water resources in the interests of the nation and not in the interest of the States is vital to national development. It just is an issue which is looming in Australian politics probably for the first time in a way. You have only got to instance the issues that can arise in matters such as, for example, a well known example of Cubbie Station. That raises very serious problems about whether, in relation to the nation, and the use - - -
FRENCH CJ: Well, I think if you are going to talk to us about this, it really needs to be grounded in the factual situation that we have before us and on the special case.
MR ELLICOTT: Well, your Honour, not for the purposes of this argument.
FRENCH CJ: Well, it starts to sound like rather broad-brush social science and political science. I think we need to get a bit more focused on just what is the power, if any, that you say and the basis upon which that power is invoked in this case.
MR ELLICOTT: Well, your Honour, if there are issues which go beyond State borders into other areas of the Commonwealth in relation to water, well, that is a reason why, in the interest of the nation, there should be some intervention by the Commonwealth. Now, I can only put that to your Honours. It is akin to the trade and commerce power but if there is a nationhood power for the Executive, and this Court has often said there is, why should it not be matched by legislative power?
If there is a growing tendency, as there may be in the Court, to ensure that Commonwealth spending be kept within limits that are legislative, why should not the executive power of nationhood involvement in joint interest agreements with the States, why should they not also be reflected in Commonwealth power at a legislative level? We would submit that the Act is equally supported in that respect.
In fact, there are reasons why it might be said that under our Constitution the Executive is not able to go beyond legislative power except in very well-defined areas. One of them has been said to be the nationhood power. So whether you look at it separately, as I was attempting to do until your Honour told me to get back to law and leave politics alone, at least in the area of executive power if these things can be done, it should be matched, and not only as a matter of logic but as a matter of constitutional supremacy of Parliament, it should be matched by an acknowledgment that in that area there is equivalent legislative power.
In relation to the question whether a law under section 96 is a law in respect of which Parliament can pass laws, reference has been made to the decision in what is called the DOGS Case, Ex Rel Black [1981] HCA 2; 146 CLR 559 at 576, then the judgment of Sir Garfield Barwick which we quoted in our submissions and Justice Wilson at 649 and 651. Your Honours, Pye v Renshaw [1951] HCA 8; 84 CLR 58 two of the Justices were in Magennis. This case does not overrule Magennis, quite clearly, and it is based on there being an agreement which is of the nature that some of your Honours put to me, that is, an agreement between governments which is not enforceable and where the State had taken steps which take it outside the description of a law with respect to the acquisition of property on other than just terms. At page 78, two-thirds of the way down:
It was held by the majority . . . was a law with respect to the acquisition of property, that it did not provide for just terms, and that it was therefore in excess of the power conferred by s 51(xxxi) of the Constitution and void. It was said to follow that the agreement executed in pursuance of the Act was not binding on the Commonwealth, and, because the agreement was not binding on the Commonwealth, it was held that there was nothing upon which the State Act No 6 of 1946, which purported to approve and ratify the agreement, could operate. That Act was treated as simply inoperative.
There is then a reference to what Sir John Latham said at the foot of the page:
As has already been pointed out, the legislative power of the State is not affected by s 51(xxxi) of the Constitution If a State Act provides for the resumption of land on terms which are thought not to be just, that is of no consequence legally: it cannot affect in any way the validity of the Act –
and that is repeated.
Counsel for the plaintiff did not indeed profess to attack the validity or efficacy of any State legislation. The argument was that the Executive was using the power of resumption for a purpose which was not a purpose for which the power was given by Parliament. The decision of Roper CJ in Eq was primarily a decision on a demurrer, and they said that, for the purposes of the demurrer and for the purposes of this appeal, the allegations in the statement of claim must be assumed to be true. And they said that, if those allegations were true, they disclosed that the particular resumption in question was not authorized by the State legislation.
Now, your Honours, the argument in that case proceeded on a very broad base and certainly not in any way with the specificity of the agreement in this case. Really, the case in Pye v Renshaw turned on the fact that the State legislation had been changed in the meantime and the result was that the State was not affirming any agreement with the Commonwealth. It was simply going ahead and exercising its own powers.
Now, there is no bootstrap operation possible with this in this case, that is to say that the States can say we were going along merrily to do this and we were going to do it anyhow and the Commonwealth Government came along and gave us some money and we did not really need it. We were going to do it anyhow, but it was good to have it and they gave it to us. All they were doing was approving something we were going to do anyhow. That argument does not operate here.
In the case of Pye v Renshaw it seems to have operated in the sense that, although the State at first had said we will do it your way by having valuations expressly in the legislation approved at 1942 values, instead of doing it that way the Commonwealth agreement still remained, but the State did not affirm it and, therefore, there was no statutory affirmation. They simply went away and did it themselves. If that turns out to be in a given case not within section 51(xxxi) so be it. Future courts may think – I am not asking this Court to say it – but future courts could well think that Pye v Renshaw was wrong and not Magennis’ Case.
So far as Magennis’ Case and Pye’s Case are concerned they deal with two distinct matters and Magennis’ Case, in our submission, should not be overruled and Pye v Renshaw should be distinguished. The Commonwealth’s argument is that somehow it can combine section 61 and placitum (xxxix) in order to achieve this result. But it comes exactly to the same thing because they need – in order to achieve the result – legislation under section 51(xxxix). The only legislation that seems to be about is the National Water Commission Act. They cannot rely on an appropriation. That seems to be one of the consequences of Pape’s Case. They must find some lawful means, that is to say a statute of the Commonwealth, which justifies the spending of money.
FRENCH CJ: You say whatever the constitutional support for the National Water Commission Act it is a law with respect to the acquisitioning of property and in this case other than on just terms?
MR ELLICOTT: Yes. Your Honours, we say that the answer to questions 1(a) and (b) in each case is yes. Your Honours, question 3, we would submit, it may not be contentious, I do not think it is, but it would seem to follow that if the answer to question 2 is yes, then 3 should follow. But so far as 2 and 4 are concerned, those are questions which are quite fully documented in our submissions but they are very important. Question 2 is important to us because the State is saying, “Well, we have done it and you cannot do anything about it.” Our answer to that is to say two things.
our Honours, in Minister for Primary Industries and Energy v Austral Fisheries [1993] FCA 45; 40 FCR 381, a decision of Justices Lockhart, Beaumont and Hill, an issue arose as to the validity of an exercise of power under the Fisheries Act, but in the course of it there was reference to a number of authorities which were based on the view that the exercise of delegated legislation that was taking place in that case was so unreasonable that the exercise should be set aside because it was exercised in the manner that was capricious and unreasonable. At the foot of page 381 there is a reference to Lord Diplock in Mixnam’s Properties and he said this, which we rely on here:
The various special grounds upon which subordinate legislation has sometimes been said to be void – for example, because it is unreasonable; because it is uncertain; because it is repugnant to the general law or to some other statute – can, I think, today be properly regarded as being particular applications of the general rule that subordinate legislation, to be valid, must be shown to be within the powers conferred by the statute. Thus, the kind of unreasonableness which invalidates a by-law is not the antonym of ‘reasonableness’ in the sense of which that expression is used in the common law, but such manifest arbitrariness, injustice or partiality the Court would say: ‘Parliament never intended to give authority to make such rules; they are unreasonable and ultra vires’ . . . Some doubt is cast on the correctness of ‘uncertainty’ as a separate ground of invalidity by the speeches in the House of Lords in the recent case of Fawcett Properties Limited v Buckingham County Council [1961] AC 636; but if the Courts can declare subordinate legislation to be invalid for ‘uncertainty’ as distinct from unenforceable, as in the case of a clause in a statute to which it is impossible to ascribe a meaning, this must be because Parliament is to be presumed not to have intended to authorise the subordinate legislation authority to make changes in the existing law which are uncertain.
FRENCH CJ: This all goes to the proposition, as I understand it – correct me if I am wrong – that the three Acts referred to in question 2 were invalid because they were informed.....by a false assumption, the false assumption being the validity and lawfulness of the funding agreement. Then the alternative argument which you seem to run, as I understand your submissions, at around about paragraph 116 and before, is that the State cannot validly do something in furtherance of a Commonwealth law enacted in breach of the constitutional guarantee of just terms.
MR ELLICOTT: Yes, your Honour. The first proposition relies on what his Lordship says there – that because it is repugnant to the general law or to some other statute and we would submit that is to such a degree that in terms of reasonableness a court would say Parliament never intended to give authority to make such rules. We would submit that in terms of an order in this case that, when made, the State Minister of course would have been oblivious to the fact, if your Honours so hold, that the agreement was invalid and that it was invalid because it breached a basic guarantee of the Constitution, that is to say that what he was doing was in furtherance of an Act which was repugnant to the Constitution.
Of that one would say Parliament would never have intended to give the authority under section 45 of the Water Management Act to the Minister to do something that was repugnant to the Constitution because factually – and we have set out extensively in our submissions in-chief the facts that relate to the question whether or not the State was intending by this Act, through the Minister, to carry out the agreement. We would submit that when the Court looks at the facts the Court would have to come to the conclusion that he was acting in furtherance of the agreement in performance of it and not otherwise.
So the factual basis is there. It is a question whether it can really be said that this order, if made in circumstances where in the Magennis Case it was inoperative in this case – and this question did not arise in Magennis – whether the Act was repugnant to the Constitution. We would submit for the reasons we have expressed in our submissions that that is so. It has to be repugnant to the Constitution because you have to have the basic premise that the agreement is invalid and therefore it should not be carried into effect.
It is not a question of whether it is enforceable or not, that is not the question. The question is should it be done? Should this act be undertaken? What are you doing? I am doing an unconstitutional act. It is something that I should not do, if one is reading the conscience of the Minister.
GUMMOW J: Do you have any support out of covering clause 5 for these submissions as to the impact on the State officers?
MR ELLICOTT: Your Honours, I would submit it would – I would submit we would get support for that from there, your Honour, yes, without question. I suppose it is putting in, in terms of the covering clauses, what I am seeking to get by way of unreasonableness, but it still probably has to be based on unreasonableness in order to get rid of the delegated legislation Act that was undertaken.
On the other hand, in terms of enforceability, one can say that covering clause 5 may have more to do with the other argument that we put and that is when you look at 106 of the Constitution, which is prefaced by subject to this constitution, covering clause 5 and the proposition that we have put in our submissions, namely that if what a State is purporting to do under State law is an act which is repugnant to the Constitution or is against a declaration of invalidity, then what is done is accepted from section 106, from State legislative power, including delegated power, and for that reason, again we would say whether you go through the method of applying the doctrine of unreasonableness or whether you go through section 106 and covering clause 5, you get to the same result.
In substance, it is really the same thing. The words “repugnant to the general law or to some other statute”, those are words which have a strong basis in the common law, and we would submit that they apply here. Your Honours, the last proposition - so we would submit that the answer to that question is yes.
In relation to the last question, your Honour, that is question 5, it is our submission that this only arises, obviously, because if the answer to 3 is no, it does not appear that there would be any other remedy. In other words, here is a guarantee in a Constitution and there are some cases which say that, quite clearly, there are cases which say that so far as the legislation is concerned, if it is unconstitutional, well, nobody has a private remedy.
FRENCH CJ: You are addressing question 4 here?
MR ELLICOTT: Question 4 yes, your Honour. I said question 5, I am sorry, question 4. Those particular cases, however, are clearly distinguishable. They relate to people who do not have any special right to complain. If they do have a special right to complain, in the past they seem to have had a right to proceed in tort or contract. Question 4 is based on there not being such a remedy in this case because what has happened is that these licences have disappeared and all that is left is to find some way of retrieving the just terms that are the basis upon which the question is asked and how do you get it if you do not have an action in contract or tort or some other action? There would not be an action, for instance, for misfeasance of public office or anything of that description in tort and it does not appear that there would be any other basis upon which the plaintiffs could claim.
Now, there are cases – and Kruger is one of them – that deal with this question, but they deal with it in relation to other matters. If there is an area, however slight it may be, and this may be a very narrow set of events, that there should be something which has a value and suddenly cannot be retrieved by an action for detinue or cannot be satisfied in damages by an action for conversion, as you could not in relation to the extinguishment of these rights, then where does one go?
Now, in our submission, the only area is the area of there being, as there are under American constitutional law in relation to their Bill Of Rights, which is quite different to what I am putting, an action under the Constitution under which a claim could be made for damages against the Commonwealth for this unconstitutional conduct because undoubtedly it lies at their doorstep that it has occurred.
One can wax eloquent on the proposition. One can talk about Magna Carta and the like and go right back into history but by itself that may do an advocate not much good. What does good is the proposition that there should be a guarantee under our Constitution and that there should be an instance where there is no remedy for the loss of that guarantee, and why should there not be a cause of action against the Commonwealth under the Constitution.
There is no reason in ultimate logic for - if there is a difference between logic and ultimate logic - but to explain what I mean there is no reason in logic why an action that stems from the Constitution is somehow inconsistent with the whole constitutional fabric. There is a tendency in the cases, James v The Commonwealth and the like, to express the view that somehow this is legislative action and therefore there can be no remedy that lies there. It has to be in contract or tort.
Now, that is not necessarily – not too different faces because the area of tort and the area of contract may not necessarily provide all the remedies that the breach of the Constitution might provide. There must be room, for instance, in some cases for injunctive relief in relation to constitutional breaches and if there are then the Court would intervene and that is a right of action that springs from the Constitution. Why should not a positive right occur where you get a positive guarantee, not just a freedom, not just a negative such as you have signed to establish a religion, et cetera? Why should that occur? If the Commonwealth is clearly establishing a religion can somebody, can the Attorney-General of the State stop them? We would submit, yes. If the State was intervening and could satisfy the Court that that was so, that would be a right that sprang from the Constitution and - - -
HEYDON J: That would be getting an injunction against the enactment of legislation because section 116 says “shall not make any law”.
MR ELLICOTT: Yes, that is right.
HEYDON J: An injunction before an Act of Parliament was passed.
MR ELLICOTT: That is why I say that would be an injunction, whereas this is positive. “Thou shall have just terms”. If you cannot get it, why does not – in other words, is this not the situation that what the courts are saying is “Well, when we have looked at this before, we have always been able to say you are either not entitled, because you cannot complain as an individual, if Parliament has passed an invalid law, or if you are affected in your property you can come and you can get relief under contract or tort”. That has been the answer but never has a court been faced before with this very limited area that we are putting and, we would submit, there is every reason in logic, but basically in justice, to imply into the Constitution in this case that if we are entitled to just terms and cannot get it by the setting aside of the State orders and the regulation we cannot do that, then our clients are entitled to an action under the Constitution within that limited area.
If, in logic, it has to be given more widely, then the answer that the courts can take in most cases might well be, well, you have not got just terms and your property has been converted and therefore you can sue in tort, or if it is a case of detinue, you can sue in detinue and therefore you do not have to rely on the constitutional right of action. In other words, we are not opening up a large field of judicial proceedings if a particular piece of legislation in a case like this is seen as breaching a fundamental constitutional guarantee.
Your Honours, the cases we would say that have said there is no such provision, no such right under the Constitution, such as Kruger’s Case were not dealing with this case, they never thought of it, and it is understandable partly because it was not a case about it. One Justice of the Court, Sir William Deane, has said one sentence about it and said that there is not a right of action, in the Dam’s Case, but his judgment not on that particular matter but generally, he was in dissent on that particular aspect of the case.
He obviously was not giving vent to it in a case like this, and we would submit that that it is not a reason that the matter has been encompassed by judges on other occasions in broad statements because section 51(xxxi) has not been the subject matter of consideration. So, your Honours, for those reasons we would submit that your Honours should answer the questions as I have submitted to your Honours.
FRENCH CJ: Thank you, Mr Ellicott. Yes, Mr Solicitor?
MR GAGELER: Your Honours, can I take five minutes to locate the funding agreement fairly precisely within its constitutional and statutory setting and then can I move directly from there to deal with the arguments of the plaintiffs based on section 51(xxxi) of the Constitution.
Within volume 5 of the special case, the only relevant information is contained at page 8 about line 22 where your Honours see the record of what is in substance a decision of the Prime Minister as Minister administering the National Water Commission Act, the decision under section 42(a)(i) to award financial assistance to the project, and your Honours will note the terms of that decision subject to the finalisation of a satisfactory funding agreement with the relevant State. The capacity of the chief executive officer to enter into the funding agreement, we say, is located in section 24(1)(a)(i).
GUMMOW J: I am sorry, Mr Solicitor, what is the significance of the minute on pages 8 and 9?
MR GAGELER: That is the document that recorded the decision of the Prime Minister relevantly under section 42(a)(i) of the Act. He did not quite use the language of section 42(a)(i) of the Act, but that is the way in which it necessarily operates and that is reflected in what is recorded in paragraph 13 of the special case.
GUMMOW J: Paragraph 13?
MR GAGELER: Paragraph 13. So that is statutory step one. One then finds the capacity of the CEO to enter into the agreement in section 24(1)(a)(i) of the National Water Commission Act. One finds the authority of the CEO to enter into the agreement as agent for the Commonwealth, in our submission, as actual authority to be inferred from the decision of the Prime Minister read against the terms of the Act. One finds, in our submission - - -
GUMMOW J: Sorry, what do we get out of 24(1)?
MR GAGELER: That the functions of the CEO are to administer financial assistance awarded by the Minister for particular projects - - -
GUMMOW J: Just stopping there for a minute.
MR GAGELER: Yes.
GUMMOW J: This is a sort of a sideways operation by the legislature. When it says “awarded by the Minister”, that carries with it the power of the Minister to award, does it?
MR GAGELER: No, I am sorry, your Honour.
GUMMOW J: Or is that found elsewhere?
MR GAGELER: The award is found in section 42. Again, it is by implication, but it is not an unusual form of drafting. So the power of the Minister to award one finds in section 42(a)(i), and that is what the Prime Minister did. One then finds the CEO having functions of administering financial assistance awarded by the Minister.
That function is, in our submission, I believe, to be uncontroversial, sufficient to support the capacity of the chief executive officer to enter into the funding agreement. The next point that I moved to was the authority of the chief executive officer to contract or to enter into the agreement as agent for the Commonwealth. That, in our submission, was actual authority to be inferred in the circumstances from the terms of the Prime Minister’s decision.
HAYNE J: To make what sort of agreement, Mr Solicitor?
MR GAGELER: An agreement that would permit the funding of the project.
HAYNE J: But an agreement remedial by political means, enforceable by political means, an agreement enforceable by legal means, an agreement of uncertain enforceability? What sort of agreement is contemplated?
MR GAGELER: The agreement is contemplated within the scope of the authority is one that would permit the funding, the financial assistance to be administered and the authority, in our submission, should be interpreted as broadly as that. So far as the terms of this agreement are concerned, the relevant terms, that is, the provision of financial assistance under clause 4.1, is clearly enough qualified by the need for an available appropriation and the corresponding relevant commitment of the State could not be enforceable as a matter of contract law.
HAYNE J: You have a submission to jurisdiction and a choice of law clause swirling around in the agreement as well.
MR GAGELER: Your Honour, it is a potential complexity if there were to be an issue as between the parties to the agreement, but for present purposes, nothing turns on that. Your Honours, in our submission, the power of the Commonwealth to enter into the agreement as principal lies in section 61 of the Constitution. Sufficiently, one can look to the concluding words of section 61, the executive power:
extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth.
Relevantly, such laws, as made from time to time, grant under or for the purposes of section 96 financial assistance to the State of New South Wales for the purpose of the project. We agree almost with Mr Ellicott, but we do not agree that the exercise of executive power in the present case should be treated as being confined in some narrow way to the execution of a statutory power arising under the National Water Commission Act. It is an exercise of executive power extending to the execution and maintenance of such section 96 grant as may from time to time exist.
Your Honour Justice Hayne has already drawn attention to the qualification that appears at the beginning of clause 4.1 of the funding agreement, that is, that the funding is to be available subject to an appropriation. Your Honours will have seen in the special case at paragraphs 20 to 23 that there has been a change over time in the appropriation that would be available for payments to be made pursuant to the funding agreement. Originally and for some time, the available appropriation was within section 21 of the Financial Management and Accountability Act. Your Honours have been taken to this.
GUMMOW J: Not to the text.
MR GAGELER: Not to the text. Your Honours probably should look to the text.
GUMMOW J: Where do we find it?
MR GAGELER: The Act was on our list of authorities. If your Honours do not have it I will skip over the text. I can state sufficiently what is in the text. It links with section 42 of the National Water Commission Act which established the Australian Water Fund account as a special account and section 21 appropriated moneys up to the balance of that special account for the purposes of the special account relevantly for the purposes identified in section 42 of the National Water Commission Act.
FRENCH CJ: One might be forgiven for thinking that 42 was drafted on the assumption that the Minister’s power derived from the Appropriation Act.
MR GAGELER: It works well enough looked at in an adjusted light, your Honour.
HAYNE J: What is it that fixes the balance, Mr Solicitor? Section 21 speaks of a balance.
MR GAGELER: Your Honour will see it spelt out in paragraphs 20 to 23 of the special case. There were Appropriation Acts that placed funds into the special account, resulting in a balance within the special account for some time. That balance was then reduced to zero by debiting – by the Act that one sees noted in paragraph 22 of the special case, the Financial Framework Legislation Amendment Act 2008.
Currently, as noted in paragraph 23 of the special case, an available appropriation can be found in Appropriation Act (No 1) 2009-2010 which your Honours have within the third and fourth defendant’s bundle of legislative material volume 1, tab 10 - it is relevantly section 8 - the administered item lying in outcome 4 for the Environment, Water, Heritage and the Arts portfolio.
GUMMOW J: I am sorry. You took us to section 8.
MR GAGELER: Pardon, your Honour.
GUMMOW J: Just explain that again. You are looking at Appropriation Act (No 1).
MR GAGELER: The appropriation one finds in the Schedule, page 66, last page that your Honours have been given, Outcome 4. We have not bothered your Honours with the portfolio statements but one can see this program is falling within Outcome 4. That is to be read with section 8.
GUMMOW J: There is some discussion in the submissions from various parties as to there being legislative grant for national assistance under section 96.
MR GAGELER: Yes.
GUMMOW J: Where in this material would one find that which one could identify as a grant, a legislative grant, financial assistance to a State.
MR GAGELER: Initially in section 42 of the - - -
GUMMOW J: That just talks generally, does it not?
MR GAGELER: Financial assistance is referred to generally, that is right.
GUMMOW J: Where does one see it pinned down to a State?
MR GAGELER: One does not see it pinned down in the legislation to the State. One reads financial assistance in section 42 as financial assistance capable of being provided within the legislative powers of the Commonwealth and one finds sufficiently for present purposes - - -
GUMMOW J: Well, the question is, what does the expression “the Parliament may grant financial assistance” mean in section 96 in terms of, what is it that constitutes the grant in order to answer section 96? That is what I am trying to find out. There is a question of construction at section 96.
MR GAGELER: Section 96, yes.
GUMMOW J: Which I do not think has ever been explored.
MR GAGELER: Well, it has been certainly assumed and stated on a number of occasions that an appropriation is sufficiently a grant of financial assistance under section 96, that is to say, although a grant may take other forms, an appropriation for the purpose of payment to a State amounts to a grant of financial assistance for the purposes of section 96. I can take your Honour in due course to the passages that support that view. Certainly in the second Uniform Tax Case that was said by Chief Justice Dixon and Justice Fullagar with the agreement of other judges of the Court.
HAYNE J: Overnight I would be assisted if you could reduce to writing the way in which you say the Financial Management and Accountability Act 1997 engaged with sections 40 and 42 of the National Water Commission Act. In particular, I would be interested to understand better than I now do what it was they had fixed a balance for the special account when, for example, I go to the only statute we presently have, Financial Framework Legislation Amendment Act 2008, which is after the events with which we are concerned, I think, which fixed a balance at 320 million, but also took away from the CEO of the National Water Commission the function of administering financial assistance.
MR GAGELER: Yes.
HAYNE J: So that at whatever you say is the relevant time or are the relevant times, I would be interested if you could be good enough, please, to put on paper the way in which these particular provisions operated with respect to this particular scheme.
MR GAGELER: Yes, certainly.
GUMMOW J: I was trying to find out how the regime of standing appropriations operates through section 96. The appropriation here is the modern form of appropriation that you have just taken us to.
MR GAGELER: Yes.
GUMMOW J: It has a motherhood statement about water.
MR GAGELER: If it is correct, as it has always been assumed that a grant of financial assistance to a State can take the form of an appropriation then - - -
GUMMOW J: The question then is what sort of appropriation, how specific an appropriation.
MR GAGELER: There may be a question about that, but in our - - -
GUMMOW J: Of course it goes on to talk about conditions, does it not? It assumes there may be conditions attached.
MR GAGELER: It assumes there may be conditions but does not necessitate conditions nor, as the cases emphasise, does it require that the conditions be legislated conditions. It is, going back to the Roads Case, sufficient that the conditions appear in an agreement between the Commonwealth and the States and it is sufficient that the terms and conditions be such as might be determined by a Commonwealth Minister or a Commonwealth administrator from time to time.
So, your Honour, there is simply no reason, according to the authorities or in principle, in our submission, for reading down the nature of a grant under section 96 so as to be a particular form of appropriation or to require the terms and conditions on which the money is granted to fall within any particular strictures. I will come to those cases in due course.
Your Honours, I was about to start at the beginning with the premise of our learned friend’s case. It appears to us that the premise of the entirety of the plaintiff’s case is that when you look at the funding agreement as at the date it was entered into what was required of the State, as a condition of payment by the Commonwealth, was properly characterised within the terminology of section 51(xxxi) of the Constitution as an acquisition of property otherwise than on just terms. I want to start by attacking that premise.
The funding agreement I will go to only once and briefly. Your Honours have looked at it. It is within volume 2 of the special case book at page 343. The relevant date, that is, the date of entry, is 4 November 2005. One sees that at page 389. Within the funding agreement, within the body of the funding agreement, the critical parts are clause 4.1 to which your Honours have already turned, clause 5.1, which has the State agreeing to carry out the project, and clause 6.2, which has the State spending the funding only paragraph (a) for the purposes of the project.
“Project” is defined at page 351 by reference to the Schedule and turning to the Schedule, which is at page 371, there is a short description of the project at the bottom of the page, particularly paragraph 1.6 subparagraph a. The objectives of the project can be seen in paragraph 1.7, relevantly, subparagraph a, and the activities involved in the project are then in paragraph 1.8, in particular, subparagraphs e, i and j, and what one sees in particular from subparagraph e is that what was required of the State was a reduction of water entitlements relevantly to the Lower Lachlan groundwater system so as to achieve after 10 years a specified overall reduction in entitlements.
The origin of the figures, that is, the megalitre figures and the percentage figures that one sees in paragraph e, lies in the table at page 299. This formed part of the application for funding submitted by New South Wales and what you see there when you compare the numbers is that the reduction was that which was seen to be required to move from the existing licence entitlement levels for the Lower Lachlan, some 219,000 megalitres in entitlements under existing licences under the 1912 Act, to what was perceived to be a sustainable yield of 96,000 megalitres. That explains the reduction figure.
The notion of a sustainable yield, your Honours have seen already explained at page 232, at the top of the page. That was the accepted definition, the subject of considerable debate and consideration. That was the accepted definition at the time. At page 223, your Honours will see the way in which that notion of sustainable yield was applied by the State of New South Wales. At page 223, line 30 it is said that:
Sustainable yields have been assigned to all the State’s high risk aquifers. Sustainable yields will be assigned to all other aquifers by June 2000. The sustainable yield is that proportion of the long term average annual recharge to a groundwater system available for consumptive use. Sustainable yield calculations have built in an explicit proportion of recharge to be set aside as an environmental provision. This proportion ranges from 50% to 90%, but has been set, for most systems, at 70% of recharge.
I am about the turn the statutory scheme at the time.
FRENCH CJ: Yes, well that might a convenient moment, thank you. The Court will adjourn until 10.15 tomorrow.
AT 4.17 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 26
AUGUST 2009
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