Arnold and Ors v Minister Administering the Water Management Act 2000 & Ors [2009] HCATrans 91 (1 May 2009)

Last Updated: 6 May 2009

[2009] HCATrans 091

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S6 of 2009

B e t w e e n -

ALAN ARNOLD AND ORS

Applicant

and

MINISTER ADMINISTERING THE WATER MANAGEMENT ACT 2000

First Respondent

STATE OF NEW SOUTH WALES

Second Respondent

COMMONWEALTH OF AUSTRALIA

Third Respondent

Application for special leave to appeal

FRENCH CJ
GUMMOW J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 1 MAY 2009, AT 2.51 PM

Copyright in the High Court of Australia

MR B.W. WALKER, SC: If it please the Court, I appear with my learned friends, MR P.T. TAYLOR, SC and MR P. KING for the applicants. (instructed by Taylor & Whitty Solicitors)

MR A. ROBERTSON, SC: May it please the Court, I appear with my learned friend, MR C.L. LENEHAN, for the third respondent. (instructed by Australian Government Solicitor)

FRENCH CJ: Yes, Mr Robertson, it might be of assistance to us to have your submissions on why special leave should not be granted.

MR ROBERTSON: Yes, thank you, your Honours. Your Honours, the third respondent’s submission in relation to the application is in two parts. One is that the section 100 of the Constitution point should go no further, for reasons which I will endeavour to expand upon, but as to the balance, that is what I will call broadly the acquisition of property point, the third respondent is content for the special leave application to be referred in the sense of referred to a Full Court to be heard in association with S24 of 2009, which is the ICM Agriculture matter which is listed for directions before your Honour the Chief Justice.

As to the section 100 point, your Honours, could I take the Court to page 123 of the application book to show your Honour that it is, as articulated and in truth, a discrete point. Your Honours will see that as paragraph 4 on page 123 of the application book. That is the proposition that:

The New South Wales Court of Appeal –

at the specified paragraphs –

erred in holding that the National Water Commission Act 2004 –

that is a Commonwealth Act –

and the 2005 Funding Agreement were not laws or regulations of trade or commerce within the meaning of section 100 of the Constitution.

His Honour the Chief Justice, if I could then take your Honours to where that point is shortly developed in the judgment of the New South Wales Court of Appeal, paragraphs 89 at the foot of page 103 of the application book:

The focus of attention in the present proceedings . . . was upon the words “by any law or regulation of trade or commerce”.

Then his Honour referred to Morgan v Commonwealth, where your Honours will recall that the Court said that that was limited to laws to be made under 51(i). Paragraph 90:

The applicants do not contend that the laws in question in the present case are capable of answering that description.

Then in the next three paragraphs his Honour the Chief Justice articulates why we would submit this is not an appropriate vehicle, or a suitable vehicle, to explore the differences between what three of the Justices said in Tasmania v Commonwealth and Justice Deane’s approach. Your Honours will recall that Justice Deane took a potentially broader view.

GUMMOW J: Yes, what was that broader view?

MR ROBERTSON: The broader view was in essence, your Honour, that the reference to trade or commerce in section 100 may not be limited to 51(i) but may extend to intrastate trade, law or regulation of the intrastate trade. But the point we make here is that, as the Chief Justice said in 93 - - -

GUMMOW J: But a law with respect to a trading corporation could be a law regulating trade or commerce, could it not? That is what the Trade Practices Act does.

MR ROBERTSON: It could be. But the point I am making, your Honour - - -

GUMMOW J: But it was not understood at the time of Morgan, I imagine.

MR ROBERTSON: One would not think so, no, in light of Huddart Parker. But the point I am making, your Honour, is that 93 his Honour the Chief Justice says:

the conclusion of Deane J is also applicable. No statute or agreement relied upon by the applicants can be characterised as a “law or regulation of trade or commerce”.

In our respectful submission, for that reason it is not a suitable vehicle. There is no trade or commerce pleaded or otherwise identified. The matter is at large in respect of what the law or regulation of trade or commerce might be. The other reason that we call in aid, as your Honour would have seen from our written submissions, is that, of course, section 100 is directed to – although this was not a point that was developed below but none the worse for that we would submit – it is directed to the reasonable use of the

waters of rivers and one thing the State plan is not about is about the waters of rivers. It is a plan about ground water and the extraction of ground water.

FRENCH CJ: Percolating channels? Percolating or in channels?

MR ROBERTSON: So, it is entirely general, to answer your Honour the Chief Justice’s question, that the matter is put at a very indefinite level, not suitable, we would submit, to pursue the matters that may otherwise fall for consideration under section 100.

FRENCH CJ: There is no factual exposition of where the ground water comes to or comes from?

MR ROBERTSON: Not at all. There is no factual exposition, there is nothing pleaded. The whole section 100 proposition is developed in I think a line and a half of the application that your Honours do not have. But in case your Honours ask me, well, what is the difference between this aspect of the matter and the original jurisdiction matter which I mentioned before, the difference is that that matter does not involve section 100, so there is no, as it were, convenient reason to attach this part of this case to that case.

So, your Honours, at the risk of repetition, it is entirely broad and general terms and, for that matter, not a suitable basis on which to explore the scope of section 100, either the majority view in Tasmanian Dam or the minority view or, indeed, any other view of section 100.

GUMMOW J: So looking at the draft notice of appeal at page 123, your position would involve excising 4?

MR ROBERTSON: Excising 4, yes. Those are the submissions for the third respondent, if your Honours please.

FRENCH CJ: Thank you, Mr Robertson. Mr Walker?

MR WALKER: Your Honours, can I focus on the ground 4 argument. Ground 4 refers not only to the National Water Commission Act but also to the funding agreement and it raises the question which, in our submission, is fully ripe for consideration as to whether an agreement, be it valid or invalid by reason of 51(xxxi) and section 96, is nonetheless a regulation of trade, commerce, et cetera, within the meaning of section 100.

My learned friend at the end of the argument about section 100 referred to the question of river or rivers. That, however, as is recorded in the application book page 105, paragraph 94, was not a matter upon which the Commonwealth took any stand in the argument below. We, the applicants, and, in our respectful submission, as well the Court is entitled, as it were, to take the Commonwealth on the basis of the disputes which it wished to raise in terms of the appropriate matter of law which, after all, they bore the persuasive burden on in the summary judgment. I am reminded, actually, if you go back to page 103 in paragraph 88 one sees how the Chief Justice recorded the matter below.

The Commonwealth chose not to fight on the basis, in any event, these are not rivers, and for those reasons the matter is, indeed, ripe between these parties, bearing in mind the way in which the Commonwealth has raised the point. It is the Commonwealth that says, on the basis of what you have said against us section 100 is not available. In our submission, that is now a ripe question that this Court can attend to.

GUMMOW J: Attend to with a declaration of invalidity, that is the problem, is it not? So you have a law of the Commonwealth that is declared invalid generally, as it were, on what appears to be some factual concession where the fact may be a constitutional fact.

MR WALKER: I cannot say it is a factual concession, it goes no further, I believe – my friend will correct me if I am wrong, and I invite him to do so – it goes no further than the assumed correctness in an argument on the basis of pleadings. Now, in answer to Justice Gummow, that is certainly not a concession.

GUMMOW J: I mean, is there an injunction sought here or something of that nature?

MR WALKER: No.

GUMMOW J: Some specific inter partes relief? You see what I am getting at. One might grant or decline some specific inter partes relief without moving to the border area of a general declaration, but that does not seem to be this case.

MR WALKER: No, it is not. Whether or not invalidation would proceed from the section 100 argument would depend, of course, upon the course and outcome of that argument. One alternative is that section 100 may inform the means by which the funding agreement, if it alone was seen as the regulation in question, was regarded as an irrelevant consideration for the purposes of the State administrative law which is the ultimate way – see paragraph 117 of the Chief Justice’s reasons at pages 111 and 112 – we would seek to put it.

Now, we accept, as my learned friend has fairly put it, that the argument about section 100 would involve us in putting that Morgan should not be followed, that is, it does not completely capture the possible operation of section 100.

FRENCH CJ: Insofar as this emerges out of a summary judgment and so far as the issue raised by Mr Robertson is a live one, there are facts of a constitutional character, I suppose, are there not, which could only be determined, if not agreed, in the Land and Environment Court on a remitter to them?

MR WALKER: Yes, but it is to be borne in mind, of course, that we stand before you as a group of farmers whose rights, if we are right, have been affected and finally and this will be the end for us.

FRENCH CJ: I am just looking to how it works.

MR WALKER: So, in our submission, that is not a reason for this Court not to grant special leave. It is a reason for this Court to understand that an outcome favourable to us, if special leave be granted, will still require a short, sharp factual determination, were these rivers. That, in our submission, is a matter which this Court would probably want to have remitted had this been in the original jurisdiction, in any event.

FRENCH CJ: If you were successful in obtaining special leave and succeeding on the appeal, the matter would simply go back to the Land and Environment Court and you would fight the whole thing out on its merits, subject to whatever legal binding determinations come out of a final appeal.

MR WALKER: Yes, quite so. It will be a radical effect on the litigation. There will not be an issue as to whether these streams of water are rivers within the meaning of section 100 of the Constitution if we cannot succeed in the argument we propose on that second limb, discrete limb, of the case. That, in our submission, is not a reason not to grant special leave, particularly bearing in mind that we are at our extreme point in the litigation. If we cannot get special leave, it will never be known whether, assuming these were rivers, section 100, et cetera.

Now, for those reasons, in our submission, it is of critical importance to note that, yes, we do challenge the completeness of Morgan as a statement of the operation of section 100. It does not mean it was wrong to say that 51(i) is an obvious source of the kind of legislation that section 100 speaks to, but, in our submission, the language of section 100 is so far from being an accurate and complete summary of section 51(i) that even without attending to the transformation of the corporation’s power in the interim one is entitled to question whether Morgan ought to be left, as it were, unexamined by another Bench of this Court.

In our submission, the expression “any law or regulation of trade or commerce” is an expression which naturally invites attention to why the federal aspects of trade and commerce which delineate the power in 51(i) have not in any way been reproduced. I appreciate this is an argument contra Morgan, but it is an argument from first principles which apply to a case of this kind where there has been an attempted scheme of co-operation between Commonwealth and State and where there is a section 96 overlay. It is, in our submission, a matter that does not fall within any express reasoning in Morgan itself.

In particular, there has been no authoritative statement that the kind of funding agreement which holds out money pursuant to Council of Australian Government’s deliberation in terms which require in this case no more than two-thirds of the value of entitlements to be paid at the relevant time for compensation, whether that purported regulation of the trade and commerce which comprises the dealing in and the use for commercial purposes of one’s water entitlements is clearly something within section 100 as well as caught by section 51(xxxi).

It is for those reasons, in our submission, that though they be, we accept, discrete points and though it is appropriate for the reasons my friend put in opening that the 51(xxxi) and section 96 matter be either the subject of a grant now or be stood over to be attended to in tandem with ICM. The section 100 case is also deserving of that, bearing in mind that it has been argued on the basis of the assumed facts to which I have drawn attention.

Your Honours, otherwise the parties agree in relation to what ought to happen. The party’s agreement may be totally irrelevant to your Honours but, in our submission, what can be seen evocatively from the ICM Case so far as we have been able to understand that – and I am grateful to our friends in that case for having shown us material – show that there are very important issues that need to be addressed and that they would be better addressed, in our submission, with the potential assistance – I stress the potential assistance – of our case as well as ICM being available to be considered by the same Bench.

Now, one expedient that occurred to me and I have discussed with my learned friend, if I may take the liberty, one expedient would be for our special leave application to stand over to be heard, to be called on immediately following argument in ICM, assuming – and I intend no impertinence here – assuming that ICM is to be heard in the case in the Court, say, on a special case.

FRENCH CJ: So if we were to grant special leave in your case, the way in which it will be dealt with in relation to ICM can be a matter for subsequent direction, and indeed will be - - -

MR WALKER: Yes.

FRENCH CJ: I mean, at the moment you are responding in part perhaps to some written submissions that have been filed in ICM by the State and the Commonwealth.

MR WALKER: Yes.

FRENCH CJ: That can be dealt with later on this afternoon.

MR WALKER: Yes. Your Honours, in our submission, the issues are self-evidently very important. The law in relation to 51(xxxi) and 96 can hardly be regarded as settled beyond argument. The relationship between Magennis and Pye is problematical. The application of Pye, which the Chief Justice below thought was straightforward in this case, is, in our submission, not so. The section 100 point raises, for the reasons I have put, matters which may usefully be attended to at the same time. May it please the Court.

FRENCH CJ: Thank you, Mr Walker.

MR ROBERTSON: We say two things in reply, your Honours; one, to make good the proposition that the section 100 issue would come to the Court in an entirely abstract way and therefore should not be allowed to come to the Court. Could I ask your Honours to turn to page 79 of the application book where at paragraph 22 about line 30 the Chief Justice records in the last sentence of his Honour’s paragraph 22, “No relief is sought with respect to the Funding Agreement”. So the proposition that this is a suitable vehicle to explore whether or not the funding agreement is a law or regulation within section 100, in my respectful submission, does not exist.

The second and last point I would wish to make, your Honours, if I could ask the Court to look at page 134 – and this may be no more than a flourish, as it were, by my learned friend. Page 134 is not a page that we attached to the submissions when we were dealing with them in writing otherwise we would have said something about it, but my learned friend referred to, as I understood him, “two-thirds”, and your Honours can see that between lines 30 and 40 against the letter C, “each structural adjustment”. That was a clause or sub-clause of the agreement that had been deleted long before. So, your Honours, it has got nothing to do, as far as I can see, with the section 100 point, unless your Honours think that it is there; it is not.

So, your Honours, in my respectful submission, what I first articulated would be an appropriate course, that is, as a matter of flexible procedure, if I can put it that way, the non-section 100 points can be referred in the manner in which I articulated it in opening and we would respectfully submit your Honours would delete clause 4 of the draft notice because of its abstract nature not providing a suitable basis for any progress, as it were, or clarification.

FRENCH CJ: Thank you. Mr Walker, do you have any comment on the observation in relation to the absence of any relief sought in connection with the funding agreement?

MR WALKER: It is true that there is no relief in terms of what I will call set aside, but then one does not have to do that. The argument is that the agreement has - - -

FRENCH CJ: Its connection with the statute?

MR WALKER: Yes. The argument is that the statute cannot authorise the agreement in Magennis and therefore, taken into account as an agreement, it was an irrelevant consideration by the State administrator, the Minister making the water plan. It is the water plan at State level that is what we seek to set aside. It is not a complete description of the situation to say that no relief is sought with respect to the agreement. Relief is sought on the basis of the agreement’s invalidity, but it is not for us to set aside the agreement.

We merely, as a step in our reasoning, say, well, that cannot be authorised by Commonwealth enactments, 51(xxxi), Magennis and contra Pye v Renshaw, that is, distinguish ourselves from Pye v Renshaw, this is not a case where it is simply a matter of seeing whether the State or the State authorities have behaved in accordance with the State legislation, rendering irrelevant the invalidity of a funding agreement, because in this case, as has been observed, the extra element of legal reasoning is for us to say that this is an administrative decision you made as to the content of the water plan with its huge effect on our property, that an administrative decision was made on the basis of, actuated by, we would say, dictated by, this agreement as an agreement, qua agreement, with the status of an agreement, and that not being so, that is an irrelevant consideration. Now, no such argument was put in Pye v Renshaw.

Now, if that is not seeking relief with respect to the funding agreement, so be it. We are not seeking relief with respect to it. We are content that it be invalid, we do not need it to be set aside. Its invalidity is a matter of law. It does not require any court order, but it is not true that we do not take advantage of its invalidity, we do.

GUMMOW J: How do you read section 100 into the Acts? What is the regulation by the Commonwealth?

MR WALKER: It is the funding agreement either on its own or together with the provisions of the Natural Resources Management (Financial Assistance) Act, the objects of which include making agreements for the management of natural resources with objects that include what I am going to characterise as commercial or mercantile objectives, not limited to them at all. We say that that falls within a description of a regulation of trade and commerce and that it has an effect of a kind that we have characterised in our argument. That is how I fit the facts of section 100, the funding agreement, and the Commonwealth enactment. If it please the Court.

FRENCH CJ: Thank you, Mr Walker. The Court will grant special leave in relation to grounds 2 and 3 of the notice of appeal and refer the question of whether special leave should be granted on ground 4 to a Full Court. Now, this would be, assuming it were a stand alone, two days, Mr Robertson?

MR ROBERTSON: Yes, I think it would be fair to say. If it was joined with the other matter it would be perhaps two and half to three altogether.

FRENCH CJ: Thank you.

AT 3.16 PM THE MATTER WAS CONCLUDED