Arnold & Ors v Minister Administering the Water Management Act 2000 & Ors

[2009] HCATrans 204

[2009] HCATrans 204

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S110 of 2009
  No 6 of 2009

B e t w e e n -

ALAN ARNOLD AND ORS

Appellants/Applicants

and

MINISTER ADMINISTERING THE WATER MANAGEMENT ACT 2000

First Respondents

STATE OF NEW SOUTH WALES

Second Respondents

COMMONWEALTH OF AUSTRALIA

Third Respondents

FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 28 AUGUST 2009, AT 10.02 AM

(Continued from 27/8/09)

Copyright in the High Court of Australia

FRENCH CJ:   Yes, Mr Walker.

MR WALKER:   Your Honours, may I take you back please to Morgan 74 CLR 421. If I may move to the second of the numbered propositions in their Honours’ reasoning about two‑thirds of the way down that page and draw to attention that one reading of that first paragraph of proposition (2) might be regarded also as completely outmoded. In particular, having referred to the Constitution as conferring:

no power to legislate with respect to intra‑State trade.  It gives no power to make laws with respect to trade between different parts of the same State.

One now must ask in terms of legislative competence whether those are statements which, without major modification, belied by an understanding of 51(xx) and, for example, other heads of power, which justify and support parts of the Trade Practices Act.

HEYDON J:   It means literally true what is said there, 51(i).

MR WALKER:   Yes, quite so, your Honour, and that is why I say on one reading it does evoke doubts about whether the reasoning does in fact, as we submit, wear an anachronistic air.  Page 453, about halfway down the page in the discussion about the copyrights patents power their Honours say:

It would be quite irrelevant to consider the law in relation to the power contained in s. 51(i) with respect to trade and commerce, because the law would obviously be a law with respect to patents –

et cetera.  Now, there is, of course, very considerable force for a number of purposes in that observation but, with respect, again it may not now be the way this Court would choose in the face of authority thereafter, that is, since Morgan, to refer to the deployment as a basis of legislative competence of 51(i) with such laws.

In the next paragraph there is, in our submission, a theory in relation to a so‑called hiatus that might appear on the unsuccessful interpretation argued in that case but, in our submission, that is very special to section 99 and it gives no support for an approach in relation to section 100.  Over to page 454, after that reasoning in proposition (3) could I draw to your Honours’ attention another reference in proposition (4) about two‑thirds of the way down that page.  They refer to:

the exercise of the power of the Commonwealth Parliament in relation to trade and commerce – a power which, as already stated, is derived from s. 51(i) of the Constitution and is therefore limited to inter‑State and foreign trade and commerce.

It is hard, with respect, to read that statement as one which can survive an understanding of the overlapping and concurrent availability of the various heads in 51(i).  That, of course, in proposition (4) is where one finds the observation which is argued to be authority in this Court today against us under section 100 because it is bundled together within that so‑called group of sections that their Honours refer to, sections 98 to 102.  Having referred to the relevant phrases varying in some particulars, their Honours say:

they are all intended to refer to the same subject matter, namely laws which the Parliament can make under the power conferred upon it by s. 51(i).

Now, there is a statement which would leave out of eligibility the regulation that we have referred to, namely, the means in this case by an obligation imposed by an agreement which itself is the mechanism by which the Parliament’s approved terms and conditions have been attached to financial assistance, the tied grant.  It could be seen, however, from what your Honours have read up to that point, that there is simply nothing in the case to show that this was a decision where there had been an argument about whether there could be other than legislative means of regulation within the meaning of that expression in section 100.  It therefore does not stand as authority against reliance upon an agreement.

At page 455, there is specific reference in the first full paragraph at about point 3 to section 100.  Having set out its terms, their Honours say it:

raises a question as to the relation between it and the defence power which is not unlike that raised by s. 99.

In our submission, there may be some aspects in which it is not unlike but there are certainly aspects where it is very unlike, and one is of course that 99 is concerned with preference finds absolutely no analogy in section 100’s talk, in guarantee terms, of protection against abridgement of the reasonable use to which the language of the section attaches the loaded and important term “right”.  Going back to that paragraph:

The prohibition their Honours said contained in the section would, if if it were construed as limiting the exercise of the defence power, limit it only in cases where the law of defence was also a law or regulation of trade or commerce‑

Pausing there, their Honours are using that concept not as an absurd or impossible concept but as a natural description of the a 51(vi) law being within the meaning of section 100, potentially by way of characterisation a regulation of, I stress “of”, trade or commerce.  Then the sentence finishes:

and not in other cases.

With great respect, that logic can be accepted.  How can section 100 apply to anything other than a law or regulation of trade or commerce?  It says so, it cannot travel any further.  But their Honours say of that result, that such a limitation could find no justification in reason in that case, and similar considerations apply in the case of section 99, in our submission, that last phrase is puzzling in its generality and again, looks only to similarities without noting the obvious dissimilarities. 

We would challenge, with great respect, the cogency of the proposition that there could be no justification in reason for a law under section 51(vi) that is not a law or regulation of trade or commerce, thereby escaping the guarantee in section 100. First proposition is, that is what the Constitution says. It is a guarantee only against the operation of a regulation of trade or commerce.

The second thing is, regarding a defence power, water in an arid continent, the notion that a zone north of the Brisbane line will be regulated by section 51(vi) law requiring all bores to be capped permanently so as to protect them from providing succour to an overland enemy, that is an obvious reason.  In our submission, these are comments which ought to be regarded as part of the reasoning to the conclusion in the case, but of such a broad, almost tangential sense that your Honours, in our submission, should be careful of extending their authority.

GUMMOW J:   One difficulty appears perhaps at page 455 in the fourth last paragraph:

This whole group of sections, including s. 99, should be read as applying only to laws which can be made under the power –

MR WALKER: That is a repetition of the proposition to which I drew attention at the foot of page 454 and that is, with respect, for the reasons I have already put, a problematic proposition, bearing in mind that the expression in section 100 is by no means the same as the expression of section 51(i). Section 51(i) is “laws with respect to” and then the limited category is named.

GUMMOW J:   Yes, I follow that.  They seem to be looking to the source of the power to make the law, rather than to ‑ ‑ ‑

MR WALKER:   The characterisation of the law.

GUMMOW J:   Yes, rather than to the legal or practical effect of the law.

MR WALKER:   Quite so, and, in our submission ‑ ‑ ‑

GUMMOW J:   So you ask yourself, is the legal or practical effect of this law one that regulates trade or commerce?

MR WALKER:   That is our argument, and that is why at the beginning of their first ‑ ‑ ‑

GUMMOW J:   Regardless of the source of the legislative power to make the law.

MR WALKER:   Yes, so that a readily imaginable 51(xx) law ought to be limited by the guarantee in section 100.  That, of course, will lead to the question that Justice Gummow has raised in relation to Howe’s Case to which I will come in just a moment.  At the foot of page 455, their Honours, it might be thought have left open some of the issues that might be thought to arise in the present case, about an inch from the bottom of the page:

Some day the question may arise whether a law which may be supported under s. 51 (i) and independently under some other power, such as external affairs, may fall under s. 99, but it is a question which does not arise in this case.

A fortiori, in our submission, in relation to the use of this authority concerning 51(i) and section 100 or, other powers under section 51 which are nonetheless used to enact a law or to regulate trade and commerce to be regulation of trade and commerce.  That is an important difference in the expression.  “Law or regulation of” - I stress the preposition “of” – “trade and commerce” is quite different in terms of examining what is being done from the more general embrace at the beginning of section 51 that applies to placitum (i). 

Could I simply draw to attention that Justice Starke’s reasoning - which you find in particular at the foot of 458 continuing over to about two thirds of the way down 459 - proceeded on quite different lines, fundamentally differing from the plurality, the majority, in terms of the proper approach to the characterisation question, but in any event there was a failure of the laws in question according to his Honour to answer the description of laws or regulations of trade and commerce.  He said they were laws or regulations relating to “the consumption of goods” which casts no further light on the present question.

So for all those reasons, your Honours, in our submission, Morgan’s Case, though with great respect properly seen by the Court of Appeal as requiring compelling the result to which the Court of Appeal came, was a case which this Court should now either confine, by which I mean refuse to extend to section 100, it being not a decision on section 100 but rather one that contains statements about section 100, or perhaps more realistically, we submit that this Court should overrule and depart from those parts of the reasoning in Morgan of which we have offered criticisms. 

Your Honours, may I now as briefly as I can, deal with the matters raised with me yesterday concerning the word “residents” in section 100.  Justice Gummow has drawn to attention the - it might be called famous dissent of Mr Justice Isaacs in Howe’s Case (1922) 31 CLR 290 and has also drawn to attention the comments of Justice Higgins, to which I will come.

Now, whether Howe’s Case provides any authority on section 100 must be doubted.  Three of the Justices refer to an argument about section 100, that is the meaning in 75(iv) ought to be the meaning in section 100, which is, one would have thought, an attractive start to an argument.  Two, Chief Justice Knox and Mr Justice Gavan Duffy, as we would characterise it, were not put off their preferred reading of the word in 75(iv) which would be natural persons only by the notion that section 100 might therefore also be limited to natural persons.  You will find that in particular in the passage commencing at the very foot of page 298 and continuing over to page 300. 

It is true that there is no holding, as it were, because it was not a section 100 case, there is no holding that it is natural persons only in section 100, and it is true that their Honours recognised that from the start of the argument of the identical meaning of the same word used in the same Constitution in different parts that one may be required, by context and language, to produce dissimilar meanings for dissimilar contexts. But after having recognised that, their Honours, from halfway down 299 to the resounding rhetorical question with which they conclude their reasoning on page 300:

Was this the intention of the framers of the Constitution or of the Imperial Parliament, which gave it legislative force?

They are suggesting that foreigners, that is, people who are not residents therein within the meaning of section 100, foreigners ought not to be able to provide the capital for or be interested in corporations and the corporations on the orthodox grounds that Mr Justice Isaacs had expounded, be given a residency and thereby foreigners, foreign capitalists, have the protection of section 100. 

Now, it all ends in a rhetorical question but, with great respect, one cannot read that passage explicitly and implicitly concerned with foreigners and the guarantee in section 100 without seeing those two Justices as rather inclined to limit section 100 to natural persons.  Mr Justice Isaacs does not consider the section 100 matter in any detail at all.  The reasoning of his Honour, starting at the top of page 321, section 5 of his reasons:

Corporations as “Residents.” –

which he introduces being –

the last link in the long chain of consideration which, in the circumstances, I have found necessary to pursue to establish the law of the case.

That does not involve reasoning of that kind.  Mr Justice Higgins, however, very much turned to the question and at the foot of page 334, about an inch and a half from the bottom, states that he is “not omitted to consider sec. 100” and refers immediately to what he calls, second last line, “the rights of a pastoralist company” and then says:

Perhaps it is sufficient to say that the words used are not the same as in sec. 75;

et cetera.  I will not read the whole of the passage.  But at the foot of that paragraph ending on page 335:

Whatever is the meaning of sec. 100, however, there is not, in my opinion, anything sufficient in that section to negative the ordinary meaning of the words “residents of States” in sec. 75.

FRENCH CJ:   The significance of this may depend to some extent on what kind of right we are talking about.  You spoke earlier yesterday of the non‑juristic right and certainly it is not used in the plural in relation to residents so the section does not in turn suggest the rights of residents but rather applies to residents the same word as it applies to a State. 

So if one thinks of it in a collective sense and, although this is not precisely expressed, one might see the right of the residents to reasonable use being expressed or exercised in a variety of ways including through corporations.  It still leaves you with the question of resident, of course, but once one gets away from individual rights to some sought of collective political sense of right, or at least wider than a juristic sense, part of the problem may go.  You are left with problems of definition, of course.  That question really has not been addressed, has it?

MR WALKER:   No.  So if the point mattered, in our submission, Howe is not authority in relation to section 100.  The position the appellants take is that this is not a matter essential to reasoning supporting a favourable outcome for our case and, therefore, the practice of the Court not to go into constitutional questions other than those which are necessary for disposition of the instant case would, we suggest, perhaps particularly apply, bearing in mind that any of this reasoning about 75(iv) is reasoning about the jurisdiction of this Court.  No small matter indeed.

We have, however, selected from the subsequent references to Howe’s Case some passages in certain authorities which may be useful in your Honours’ consideration of what, if anything, to do in relation to the authority of Howe.  In the interests of expedition we have reduced that to a note, which happens to also serve the purpose of putting some other citations for another argument before the Court which I would now seek leave to hand up.  Your Honours, could I then move back to the 51(xxxi) argument.

HAYNE J:   Just before you do that, can you give me the reference in the pleading to what is said to be the contravention of the right to reasonable use, that is, wherein is said to lie the contravention of 100?

MR WALKER:   Page 16, paragraph 36 about line 53 and following. 

HAYNE J:   The statement of the conclusion rather than anything else?

MR WALKER:   It is, but that is my answer to your question, I am sorry, your Honour.

HAYNE J:   I understand that.  I am provoked to ask the question by consideration of whether section 100, when it speaks of the right, is in truth treating the right as the collective right of the polity and its residents.

MR WALKER:   Or of the peoples, perhaps.

HAYNE J:   But it is a singular and collective right?

MR WALKER:   Yes, like, perhaps, the right of peaceable assembly which can be regulated, of course.

HAYNE J:   Of course, but where the impugned regulation is the regulation by encouragement requiring – I do not care what verb is used – the State to adjust water rights in a particular way.  It presupposes, I suspect, a content of right to reasonable use that is not articulated in the statement of claim.

MR WALKER:   Correct, it is not.

HAYNE J:   Do you feel able to articulate it now or am I asking too much?

MR WALKER:   No, I may not be able to do so, but I am prepared to essay it, your Honour.  The right affected by the regulation that we impugn in the case of each and every one of the applicants was at the time of that purported effect their right under their Water Act 1912 licences to draw the quantities of waters of rivers to which those licences entitled them. The Water Act 1912, including the conditions of their licences, regulated their exercise of that right, stemming, as that regulation did, from a regime predating any of the applicants’ enjoyment of the right which had abolished the common law right, using the word in the sense of liberty, which had appertained to all possessors of land in relation to bores.

The case which, by dint of the assumptions relevant for summary dismissal, noted not only in paragraphs 84 to 85 but also 88 of the Court of Appeal’s reasons, the case were it to have survived summary dismissal were we to succeed in the appeal on that point would require establishment that the reduction by 68 per cent of that quantity of water brought about a diminution of the enjoyment of the liberty to take water by it from bores on their land below the point which the Court would have to adjudicate as required for reasonable use of that resource.

FRENCH CJ:   The constitutional right cannot be defined by reference to statutory accidents, can it?

MR WALKER:   No.  I have been talking about the right affected by the regulation.

FRENCH CJ:   Yes.

MR WALKER:   The right of residents therein to reasonable use of the waters of rivers.  The constitutional right in section 100 must be understood as – given the history that it already – of regulation preceding Federation – must be understood not to be referring to some frozen view of the statutory regimes that existed at the time of Federation; this is not a control on States altering their regulation of irrigation, for example.  We would offer this explanation for the use of the word “right” as applied to residents or peoples, namely, that it recognises politically for the purposes of a constitutional guarantee the huge significance historically obvious, particularly after the 1890s, and economically critical, especially in the hinterland, for people to be able to get the water on and in their land.

The distinctions that have been observed in submissions, which in this regard we would adopt from ICM, about the differences between the mother country and the colonies in relation to the concern of the law in relation to water, riparian rights and the like, supplies a very strong corroboration of that importance.

CRENNAN J:   Does what is reasonable take into account to any extent the fact that the resource is a shared resource?

MR WALKER:   Yes, unquestionably.

HAYNE J:   Well, does that not lead to this conundrum for your argument, Mr Walker, that the diminution by the State of the collective entitlements to use of, you would say, a particular river is said to be achieved by regulation of trade or commerce which abridges the right of a State or the residents to the reasonable use of the river, and if the right of a State or of the residents is to be understood as the collective right, where lies the breach?

MR WALKER:   I think in the beginning of that question your Honour talked about a State law, if I understand your Honour, to mean a Commonwealth law or regulation?

HAYNE J:   The Commonwealth by its regulation, you say, is achieving the result that the State diminishes the collective use.

MR WALKER:   Yes, that is right.  Yes, our case, whether it be conundrum or not, is that the funding agreement, being a regulation of trade or commerce and relevantly appertaining to the Commonwealth, even if it also appertains to the State, is an abridgement of the right of the residents, who are my clients, to the reasonable use of the rivers referred to in paragraph 36 of the pleading.  I was asked, what is the right of my clients?  It is more than simply, I have to say, the right referred to in section 100.  It is the rights that were our 1912 Act licences and their reduction upon so‑called conversion, which is the object of our complaint, and we say the governmental operation by which that huge reduction in quantity of water was brought about, or was purportedly brought about, is within the abridgement of the right of the residents therein.  It is an abridgement.  The rights, when I am talking about the 1912 Act licences, are not the same as, they simply happen to be a manifestation of the enjoyment of the, what I will call, political economic right referred to in section 100.

CRENNAN J:   The rights under the Water Act 1912 licences are rights to extract water from a resource which is both a shared resource and a fluctuating resource.

MR WALKER:   Yes.

CRENNAN J:   Does that not complicate your argument about what is reasonable in relation to your clients?

MR WALKER:   It does not in this Court, because that is not a matter that we were ever permitted to try to prove, because of the summary dismissal case.  Putting future tense in, optimistically, your Honour, the answer to your question is yes, it will complicate the running of a trial.  When I say complicate, I am not aware of any case ever, and I have certainly never done an advice on evidence for proving the abridgement of reasonable use where the resource has the qualities that your Honour has drawn to attention.

CRENNAN J:   I suppose you are saying these points are arguable, and that is all you have to say?

MR WALKER:   Yes, and intensely factual.  For example, with any natural resource used for economic purposes which, being water, is also necessary for life, that is, that explains the special case made for domestic and livestock watering which was put to one side, with any such matter there will be what I might call styles of policy and regulation varying between the risk taking and the very prudent, and in New South Wales at least there are statutory requirements for a number of governmental decision‑making functions, some of which would be engaged in a water regime, that there be explicit consideration of and effect given to what is called the principles of economically sustainable development, and that gives rise again to questions of whether, for example, that requires of water as a resource that the so‑called storage component not be exhausted over time.

Assume the water is, in a case other than one protected by section 100, assume that it is antediluvian - ancient water.  The question obviously arises as to why should not that water be exhausted for people’s food given, for example, that the earth’s copper ore is, iron ore is dug up and used.  So there are huge questions of fact and they are fact which would ultimately go to a question of reasonable use, but for this appeal, given that the Commonwealth chose simply to say Morgan’s Case, you cannot run your section 100 argument, those are simply matters to be noted as not before this Court.  We accept that the word “reasonable” is a critical word, very complicating of a litigator’s life in section 100. 

Your Honours, may I now turn so as to complete what I wanted to say in supplement of our written submissions concerning section 51(xxxi).  Your Honours understand the way in which we put the case concerning the funding agreement, and also understand, I hope we have made clear I should say, how our case differs fundamentally from ICM’s in its approach to the Commonwealth statute, and how, on the facts of our case, we trace through to the invalidity or inoperativeness of the New South Wales regulation, given the proclamation’s reliance on the Plan and given the Plan’s vitiated making as a matter of administrative law in reliance upon the validity of the funding agreement.

That brings me to a question I think that Justice Gummow asked me yesterday concerning relief.  I referred in opening to the case having been winnowed down contention by contention.  Could I take your Honours to appeal book, 3, prayer 7.  The argument that I have been putting is about a case where the relief principally is that contained in prayers 7 (ii), (iii), (iv) and (v), but I would ask your Honours to note that at least in (iii) and (iv) the words “were void and” are probably inappropriate and that “inoperative” represents the extent of the declaration which would be sought. 

HEYDON J:   That stays in in little (ii) but comes out in (iii) and (iv).

MR WALKER:   I said at least in (iii) and (iv) - that would be a matter of argument, yes your Honour, it stays.  As a prayer for relief it would stay there but it would be a matter for argument.  “Inoperative” will do, in (ii) of course. 

KIEFEL J:   The judicial review component of irrelevant consideration gives rise to which of those ‑ ‑ ‑

MR WALKER:   All of them.

KIEFEL J:   All of them.

MR WALKER:   So it gives rise to – it knocks out the funding agreement.  Sorry I will start again.  The funding agreement’s invalidity knocks out the Plan.  The reference to the Plan in the proclamation means the proclamation is ineffective to apply Schedule 10 of the Act.  The non‑application of Schedule 10 of the Act means that the regulation does not attach to my client’s 1912 Act licences, and has not operated so as to reduce the quantities of water they are entitled to take.  I am sorry, the proper answer to Justice Kiefel’s question is the irrelevant considerations is an argument deployed against the making of the Plan ‑ ‑ ‑

KIEFEL J:   Yes.

MR WALKER:   ‑ ‑ ‑ and if, and only if that is successful ‑ ‑ ‑

KIEFEL J:   Yes.  That has a domino effect upon the others.

MR WALKER:   It brings the dominos down, yes.

GUMMOW J:   What is the relevant consideration again?

MR WALKER:   The mistaken belief that the funding agreement required the State to make a plan in those terms.  As I showed your Honours yesterday, the funding agreement did require that to be done in terms of the reduction and the limited compensation, and one goes to item 1 in the definition of project in the funding agreement, 1.8, to which I went, and, as recognised in the Court of Appeal, there is no mere coincidental relation between the funding agreement and the 2006 Plan.  The 2006 Plan was made to implement the funding agreement. 

The Court of Appeal also noted at paragraphs 84 to 85, of course, that the argument about irrelevant considerations involves matters of fact and overall appreciation rendering it quite inapt to determine that on summary dismissal case.  So that is another of these matters which we have not had an opportunity to explore and the Court of Appeal recognised would require investigation at trial.  So it is only by way of assumption for the purpose of summary dismissal that I refer to the 2006 Plan’s making being vitiated by reliance on the validity of the funding agreement.

HAYNE J:   But the relevant consideration is the existence of a legal obligation to effect a policy to which the State had put its name in making the agreement.

MR WALKER:   That is right. 

HAYNE J:   And that is not said to be now a case of dictation.

MR WALKER:   Your Honour, I would not use the word “dictation”.

CRENNAN J:   Or improper purpose.

MR WALKER:   I would not use improper purpose.

FRENCH CJ:   Or exercising a discretion according to a policy.

MR WALKER:   I probably would not do that.  Actually, the real irony there is ‑ ‑ ‑

GUMMOW J:   Which particular supports the way you are putting the case?

MR WALKER:   I am sorry, that is why I do rely upon the relevant consideration mingled as it is by reference to all of the phrases that your Honours have been so unkind as to confront me with as to what I would do at a trial.

HEYDON J:   But what you have been saying does not fit within paragraph 4.

MR WALKER:   No, your Honour, I say it does fit within paragraph 4 because ‑ ‑ ‑

HEYDON J:   It is not a dictation and not a requirement but merely a requirement voluntarily assumed by the State of New South Wales.

MR WALKER:   Yes, it is, but, in our submission, the notion of requirement for the purposes of the principles relating to 51(xxxi) and section 96 tied grants includes a requirement constituted by an obligation assumed, obviously voluntarily assumed, by the State entering an agreement, that is Magennis, that one does not say, if the legal obligations undertaken by an agreement which happens to be the way in which terms and conditions are imposed on a tied grant, it is not the case that voluntary entry into that state of obligation means that the position is one of mere inducing or encouragement.  That is the different between Magennis and other cases.

HAYNE J:   But the irrelevant consideration case you wish to advance at trial is that the Minister is to be understood as having acted as, is it, he or she did on the footing “the Commonwealth made me do it”, is that it?

MR WALKER:   “I must do it”.

HAYNE J:   Yes, “the Commonwealth makes me do this”.

MR WALKER:   Well, yes, your Honour, but only in the sense that at the point when the Plan is made and obviously at every point thereafter, the State was by then bound.  What your Honour puts to me in colloquial and, with respect, striking language is not true, however, of the entry into the agreement.  That is what I was about to say.  One of the ironies about reference to policy is that it is pretty plain from the first intergovernmental agreement in question, that is, the National Water Initiative, that all of this is in accordance with the policy of a number of the polities in Australia.

The Water Management Act, in fact, in provisions I have drawn to attention, I think sections 16 to 18, explicitly refers to taking into account government policy. Those are matters in relation to the irrelevant considerations argument which, for the reasons identified by the Court of Appeal in 84 and 85, need to be explored at trial and would not have or do not attract summary dismissal. We suffered summary dismissal for different reasons altogether.

FRENCH CJ:   When you say required to do the things that he did under the agreement, you mean in a sense that that is a legally enforceable agreement?

MR WALKER:   That is right.

GUMMOW J:   This question of legal enforceable agreements, what is the role of the Amphitrite principle in all of this?  New South Wales, it seems to be put to us, is obliging itself to the Commonwealth to exercise its statutory powers in various ways.

MR WALKER:   Your Honour, it is a principle very difficult to apply to agreements which have become very common in relation to imposition and working out of terms and conditions under section 96.  However, there is recognition in the provisions I have drawn to the Court’s attention, there is recognition in the funding agreement itself of what might be called conditions precedent to obligations being required to be observed in relation to appropriations on both sides for both polities.

GUMMOW J:   Amphitrite is discussed by Justice Mason to some degree in the Ansett Airlines Case 139 CLR 54 at 74.

MR WALKER:   Where Justice Mason in particular distinguishes between the availability of damages and an injunction – in our submission, the fact that one hopes relatively unthinkable situations of outright repudiation of an agreement such as the funding agreement, the fact that that may produce less than satisfactory remedy because, say, of confinement to damages is not a matter which in any way detracts from its enforceability.. It certainly does not detract from the fact that there is a requirement for the purposes of the 51(xxxi) principles in relation to section 96 which makes the section 96 laws, whether by way of appropriation or more, laws with respect to the acquisition of property.

KIEFEL J:   For the purposes of your judicial review point you have to proceed, do you not, upon the basis that it is not as to what the Minister may or may not have thought or what influenced his decision, but that save for the impact of constitutional difficulties, indeed prohibitions, that the agreement, the funding agreement, was legally binding?

MR WALKER:   Yes.

KIEFEL J:   You have to go that far because otherwise you are in the realm of irrelevant considerations as matters influential such as, we are doing this, the New South Wales Government is undertaking this in order to receive the funding which, at one level, of course, would be a perfectly correct inference.

MR WALKER:   Yes.

KIEFEL J:   So it is critical to your case that the agreement be enforceable as an agreement so that you can have an inference objectively obtained that New South Wales considered without identification of constitutional problems an obligation to amend the plan?

MR WALKER:   Well, yes and no, your Honour.  That is emphatically not an issue for this Court.  Whether this was an irrelevant consideration depends upon what part it played in decision making.  The Court of Appeal very clearly said that is not appropriate to be gone into on summary dismissal and we do not.  The case is – as to the component which I still press – the case that the Court of Appeal was saying involves assume it was taken into account in such a way as to provide administrative law relief as an irrelevant consideration.  The precise way in which it was put was a mistaken belief that the agreement required the property to be acquired on terms which were unjust, certainly not just.

CRENNAN J:   But Justice Kiefel is right, is she not, because you are talking about the irrelevant consideration is that the funding agreement required the State to make the reductions and if it is not legally binding, you are really in the area of an inducement rather than a requirement.

MR WALKER:   Your Honour, that is why I said yes and no in answer.

CRENNAN J:   Well, I wondered why you said yes and no.

MR WALKER:   So the first thing is, the way in which it actually played a part in the decision‑making, influencing, et cetera, was not a matter for the summary dismissal application, that is assumed in our favour.  But the yes part of the answer is this.  We must show the requirement of that funding agreement and the principal way I have put that – it may be the only viable way to put that in light of the principles to be argued – is that it was legally binding.  I do not want to go over the material upon which we rely to say and so it was.

There is another possibility thrown up by, as it were, the absence of significance given to questions of enforceability of the kind raised in argument in this case from the reasoning in Magennis.  The possibility exists, at least as a matter to be argued, that it need not be legally enforceable, it need only be a requirement as understood between polities, that is, the Commonwealth and the State, involved in section 96 terms and conditions. 

Now, to develop that argument we would simply say this.  The expression in section 96 is simply “terms and conditions” and does not talk about consensus ad idem in a sense of altering legal relations in a way that we call a contract, but they are terms and conditions for the grant of financial assistance.  Those are constitutional terms which happen, not coincidentally we suggest, to use expressions right at the heart of late 19th century understanding of the components of a contract; “terms and conditions”.  It was an expression, still is, but certainly was then an expression to talk about provisions of the contract. 

But they did not talk about a contract and they do not talk about an agreement, rather, they use an expression about what I might call provisions which, we would submit, without the need for actually binding contract in private law terms, are nonetheless to be seen as requirements.  One simply looks at the terms and conditions and asks whether, as a matter of understanding between polities, all of whom are to be presumed to act in accordance with their obligations assumed politically as well as their obligations assumed legally. 

When I say politically I do not mean the shifting or uncertain sands of political promises by politicians.  I mean undertakings under a constitutional mechanism, being the acceptance of money on terms and conditions under section 96.  That is what I mean by political, that is, relations between polities in a federation.  So New South Wales takes the money granted to it on terms and conditions.  If those terms and conditions compel rather than leave it as a matter of choice – and that is the difference that is important for my answer to Justice Kiefel – if they compel rather than leave it as a matter of choice the State to acquire property on unjust terms, then that is a Commonwealth law with respect to the acquisition of property, et cetera.  But it has to be compelled, not a matter of choice.

So, if the terms and conditions of the grant, properly construed, were that you need not raise those inner suburban streets for slum clearance, but if you do in your own choice we will pay you for the dislocation of the residence, then that would be a classic induce or encourage which on the jurisprudence in this Court would not be a law with respect to, et cetera.

KIEFEL J:   That attacks the funding agreement but at the level of the Minister’s decision to amend the plan how do you cross it over?  I mean if you put aside the funding agreement as legally enforceable or not, you are left with the Minister acting upon an assumption that the Commonwealth is able to fund the agreement.  That is objectively ascertained.

MR WALKER:   But, your Honour, our case is that the Minister took into account the funding agreement as a set of provisions that required the State to carry out the project in accordance with item ‑ ‑ ‑

KIEFEL J:   In order to obtain the funding.

MR WALKER:   No, because the funding agreement actually requires the State, says the State must, or the State will.  It does not say if the State ‑ when it comes to the Commonwealth’s obligation to pay, that is conditional upon the State complying with its obligations but it is not a Carlill v Carbolic Smoke Ball Company contract, it is not anybody who does do this will get this money.  It is not if you do this you will get that money.  It is you will do this, you have promised to do it.  In return, when you have done it to the Commonwealth’s satisfaction, you will get the money.

That is either an available or the proper, I should say, understanding of the funding agreement or not.  If it is, that is the Magennis requirement because it is clear that in Magennis that was exactly the same model, the New South Wales and Commonwealth had entered into an agreement of that kind.  The fact that there had been the voluntary action of entering into the agreement did not prevent it from being a requirement in the terms of the case considered in Magennis, which is the reason why I answered Justice Heydon’s question about that earlier to that effect. 

Your Honours, may I then briefly go to Magennis (1949) 80 CLR 382. The voluntary or policy consensus of the Commonwealth and the State can be seen in the pleading itself, page 384 paragraph 10. That could be analogised to the National Water Initiative in this case. The effect of the agreement, thus voluntarily entered into by the States, is pleaded on page 385, paragraph 12:

the State . . . was also required to resume or otherwise acquire certain land -

In the reasons of the Chief Justice, the question in his Honour’s estimation is that is set out at the foot of page 398 and one sees that at the occasion for the guarantee in question, in the Chief Justice’s words is when:

the Commonwealth . . . makes a law with respect to the acquisition of property for a purpose for which the Commonwealth Parliament has power to make laws.

Now, it is to be recalled that quite apart from 51(vi) as applied in that case there is also 51(xxxvi), that which gives the dual character to section 51(xxxi) laws, which is available for the dual character that a section 51(xxxi) law must have. Section 51(xxxvi) feeds, of course, directly by its reference to the category of provision in the Constitution to section 96 for the purposes of this case. Now, your Honours, I adopt, with respect, the exposition of the setting and context of both this case and Pye v Renshaw ‑ ‑ ‑

HAYNE J:   Yes, just before you depart from that reference to 51(xxxvi), which invites attention to Second Uniform Tax and the like, even if (xxxvi) were for some reason not to engage with 96, (xxxix) would necessarily engage with 96 in respect of the setting of terms and conditions as the Parliament thinks fit it would permit – at least Parliament, would it not – to pass a law setting those terms and conditions?

MR WALKER:   Yes, and that would then be execution of any power vested by the Constitution in the Parliament, yes.

HAYNE J:   The intersection between (xxxi) and ‑ ‑ ‑

MR WALKER:   And 96 can be through (xxxvi) or (xxxix).

HAYNE J:   Or (xxxix), yes.

MR WALKER:   Yes, I am sorry, I should have – yes, your Honour.

HAYNE J:   Yes.

MR WALKER:   Your Honours, this is a time appropriate for me to say very briefly something further about 96 itself.  We do not understand it is in issue at the Bar table about whether the statutory provisions of section 24 of the Water ‑ ‑ ‑

FRENCH CJ:   National Water Commission Act.

MR WALKER:   ‑ ‑ ‑ the National Water Commission Act failed to answer the description in section 96 of what Parliament may do.  I stress what Parliament may do.  In particular, we do not understand there is any argument about impossible or excessive delegation by means of the terms and conditions upon which the chief executive may administer financial assistance.  As we understand the matter it is accepted that Parliament can say the terms and conditions are those which in the administration of a financial assistance may be imposed from time to time by, for example, the Chief Executive Officer of the Commission.  Particularly that must be so in a case where there has been the overt, and in the statute acknowledged, antecedent entry into of the political compact of the National Water Initiative, referred to in the Act itself, which obviously permits of adjusted and flexible terms and conditions to deal with exigencies ‑ ‑ ‑

GUMMOW J:   What is the disagreement as to the impermissible nature of the conditions in this case?

MR WALKER:   I do not think anyone says that the funding agreement is constitutionally impermissible.  We understand that it is common ground by silence or otherwise that the financial agreement manifests the terms and conditions thought fit by Parliament by reason of section 24 of the Commission Act.  The disagreement about the terms and conditions in this case really goes, with great respect, to the matters that Justice Kiefel has been probing our argument on, that is, as to whether they are terms and conditions which one way or the other in the two ways I have put it require within the meaning of the reasoning in Magennis the State to acquire property on unjust terms.

We understand the argument against us is the encourage or induce character.  Perhaps it is said by reason of the naturally voluntary nature of any decision by a State either to enter a political compact or to undertake legal obligations.  It is said that that is enough to defeat the notion of requirement.  We say that that flies in the face of the whole reasoning in Magennis.  That cannot be right.  We think that is the disagreement, your Honour. 

As I say, I adopt, with respect, the exposition of the background and holdings in both Magennis and Pye v Renshaw by our learned friend, the Solicitor‑General for Victoria but, I hasten to say, none of the conclusions that followed from that.  But certainly I do not wish to repeat and I would very much like to have the benefit of adopting her exposition of that.  In relation to the agreement, in the Chief Justice’s reasons it has already been noted adequately at page 399 that all that was done was the authorisation.  That which was authorised, page 400, third paragraph, one notes clause 4 providing:

that the Commonwealth shall provide financial assistance and that the State shall initiate proposals for settlement –

et cetera.  Page 401, about halfway down:

The constitutional provision is not limited in terms to laws providing for the acquisition of property by the Commonwealth itself.

That is common ground –

The words are general –

We respectfully submit that that is an observation which is both obvious and important in this case.  We submit as well that there remains great force in his Honour’s further note about half an inch down:

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.

On the top of page 402, the conclusion, at the end of the paragraph that concludes at the top of that page, follows in a way that we submit still applies today.  We urge the direct application of the observations in the paragraph commencing “The next question” to the situation as it applies in this case.

GUMMOW J:   Is not the paragraph in 402 the provisions in the schedule and the statement:

but the whole subject matter of the agreement is the acquisition of property –

Now, then he says, “The provisions are . . . directed to”.  Now, how does that fit in with the notion of requiring that you have been dealing with in answering Justice Kiefel?

MR WALKER:   Because of the generality of “with respect to”. It means that the law authorising the agreement which requires the State to do something, if the something is an acquisition, is a law with respect to acquisition and that is why I draw to attention that passage on the previous page. In our submission, that is an ordinary language and in terms of the distribution of power and the observance of a guarantee in a federal Constitution it is a satisfying way in which to read that phrase with respect to 51(xxxi) and section 96 tied grants.

In the paragraph commencing at the foot of page 402, but particularly at the top of page 403, his Honour, with respect, puts a matter upon which we strongly rely, namely, in terms of the possible characterisations of the property.  That is a point where one could insert the note of section 51(xxxvi) and section 51(xxxix) being explicitly those which can go to section 96 so as to satisfy the requirement of section 51(xxxi) to which the Chief Justice is directing attention in that paragraph. 

We do not understand there is disagreement about what happens if the Commonwealth could not because the Acts did not authorise into the funding agreement, but if there is such a difference, we urge the direct application of the reasoning by the Chief Justice at the foot of page 403 to that issue.  The connection with the agreement in that case can be seen in the matters drawn to attention by the Chief Justice at the foot of page 405:

the State proposes to resume the land, not under the general provisions of State statutes which provide for paying the value of the land, but “for the purposes of” the agreement—

His Honour then notes, as assumed for the purpose of the argument, the pleading in the statement of claim.  That connection is no more direct than what exists in this case in relation to the 2006 Plan being for the purposes of carrying out the obligation in the funding agreement for it to be made.  The reasoning at the foot of page 410 of Mr Justice Dixon, in our submission, ought to be seen as reasoning which did not find favour, that is, it is reasoning at the heart of the dissent and, in our submission, notwithstanding some observations by his Honour in later cases to which I will come shortly, that is an argument which resembles arguments against us and on authority ought to be regarded as arguments that cannot succeed unless Magennis were to be opened up and overruled.  In particular, the sufficiency in that passage, according to his Honour’s reasoning, that:

The statute does not authorise the acquisition of property.  It contains no provision whatever about property.  It is entirely concerned with the execution of an agreement.

are passages which, in our submission, if available as argument about the possible engagement of section 51(xxxi) and section 96, has been rejected.  Another similarity between Magennis and the present case can be seen in the description by Mr Justice Williams at page 418 about point 7 on the page, the beginning of that paragraph, “The agreement is a joint scheme” and, in our submission, that is true certainly of the National Water Initiative leading into the funding agreement. 

Also, in Mr Justice Williams’ reasoning, Mr Justice Rich concurred in his judgment, at page 421 about an inch and a half down you see the opposite approach being taken to the nature of the statute which, as his Honours there puts it, “merely authorizes the execution of the agreement”.  For Mr Justice Dixon that was fatal to the argument.  For Mr Justice Williams it led to a step in quite the opposite direction.  That is the authority in this Court, namely:

so that, in order to determine its real effect, it is necessary to turn to the agreement itself.  The party which resumes the land under the agreement is the State.  The State agrees to resume the land –

It is not a matter of choice for the State, is what we would like to emphasise.  Page 424 in Mr Justice Williams’ reasoning, about two inches down:

The scheme would be in substance the same if the land was acquired jointly by the Commonwealth and the State . . . The acquisition of the necessary land is of the essence of the scheme. 

The reduction of the quantities of water is of the essence of the scheme in this case, leading to the conclusion that his Honour expresses halfway down that page.  In relation, therefore, to what actually happened in Magennis, which is different because the legal relations were framed differently, one sees then at the foot of that page:

The State Act is therefore an Act which has in law no operation.

That is because it authorises entry into something that the Commonwealth could not enter into and it was an agreement, as it were - it takes two to tango is we think the reasoning underlying that.  Mr Justice Webb at page 430, about an inch and a half up from the bottom, at the end of that main paragraph, in our submission, employs reasoning:

properly construed it contemplates, I think, a valid agreement.

That, in our submission, provides inexactly no doubt an analogy for the kind of reasoning which we would be employing if we were permitted at trial to run our irrelevant considerations argument in terms of the decision making of the State Minister under section 50.

Now, your Honours, in Pye the first matter to be noted is that one was dealing with a new legislative scheme - again, I adopt, with respect, what was said yesterday by Victoria on that matter in ICM - a new legislative scheme which overtly responded to Magennis, overtly responded to it, and removed the necessary validity of the agreement from the exercise of State power, which everyone in Magennis had accepted could have been done if the Commonwealth had not been involved, namely, to take land without fair compensation - could have been done by the State.

So Pye v Renshaw is, as it were, the judicial scrutiny of the legislative and executive attempts to get round or to overcome the frustration of the scheme effected by Magennis.  It survived the scrutiny because the very matters which were at the heart of the reasoning which I have noted in Magennis were altered utterly by the new scheme.  That is all that Pye stands for.  It certainly does not stand for an overturning of Magennis; nowhere is that done.

Pye, in short, can be seen as a pendant to Magennis.  Magennis laid down the principle, showed the State and Commonwealth how to get round that principle and Pye said they have got round it in this case.  As your Honours know that happened in other cases as well, to which I will make reference.

So Pye was examining the response to what, from the polities’ point of view, was the difficulty created by Magennis.  Upholding the efficacy of that response cannot be read, simply cannot be read, as saying there is no difficulty, Magennis is wrong.  To the very contrary, the fact that the attention was drawn to the efficacy of the response to Magennis shows that Pye adopts as its premise the correctness of Magennis. For example, in 84 CLR 58 at page 80 their Honours go to the very language of Mr Justice Webb in Magennis, “It cannot now” – I stress the word “now” – that is, after the response to Magennis by legislative amendment:

it cannot now be correct to say that, properly construed, the State Acts contemplate the existence of a valid agreement or of any agreement or scheme.

That, in our submission, shows the continued, and for Pye, the integral validity weight, authority of Magennis.  I note as well at the foot of page 81 reliance upon Magennis for the fundamental proposition that the State, of course, could operate on its own.  Then one sees at the top of page 82, first full sentence:

It is impossible to maintain that the validity of the resumption by the State can be affected if it chooses ‑

I stress the word “chooses” –

to co‑operate with the Commonwealth in the matter of closer settlement or to accept financial assistance from the Commonwealth.

That does not belie or in any way cast any doubt upon the reasoning about the requirement entered into by voluntary agreement, the requirement which had produced the opposite outcome in Magennis.  Could I go to what might be called the Parthian shot in the reasoning in Pye v Renshaw to be found on page 83.  Mr Ellicott referred yesterday to these matters and I would like to add these comments.  The argument that is being briskly disposed of in those last lines is one that your Honours have already seen and it ends with the proposition that:

the Commonwealth is not authorised by s. 96 or any other provision of the Constitution to provide money for a State in order that ‑

and I stress the expression “in order that” –

the State may resume land otherwise than on just terms.

Interpolating, to provide something in order that a person may do something – and I stress “may resume” – has a range of possibilities.  You can require them to do it or you can leave it open for them to do it.  You can remove their choice, you can leave them choice.  In this case the funding agreement left no choice.  In Magennis’ Case the agreement left no choice.  In Pye v Renshaw the arrangements between the executives obviously was one where choice was left. 

GUMMOW J:   So you say those words “in order that” would permit a situation of some gentlemen’s agreement between the ‑ ‑ ‑

MR WALKER:   Which was the case here, using the word “gentlemen” charitably.  But also the word “may”, your Honour sees there “may resume”, there is no “may resume” equivalent in our case and there was no “may resume” equivalent in Magennis’ Case.  You had to.

HAYNE J:   The subsequent working out of the litigation in Pye v Renshaw is reflected in part in the decision in this Court in Minister for Lands v Pye 87 CLR 469 which went on appeal to the Privy Council where the appeal was dismissed, see 90 CLR 635, and it would seem that though the brothers Pye did not succeed in their litigation they then threatened still further litigation leading to some settlement ultimately being arrived at that the acquisition would go forward at 1942 prices plus 40 per cent.

MR WALKER:   Litigation can succeed in a number of different ways, yes, your Honour.

HAYNE J:   Yes.

MR WALKER:   Now, we would wish to add this in relation to the support offered for the peremptory rejection of the argument I have just been noting set up, as it were, straw man style at the foot of Pye v Renshaw.  It is said to be the very argument which was rejected in Victoria v The Commonwealth.  Well, one looks in vain in Victoria v The Commonwealth for a just terms argument, and this is an argument which has at its heart - the argument which is being set up for destruction in this passage - has at its heart just terms. 

So, with great respect, that first part of the very brief, perhaps dismissive reasoning being given for rejecting that posited argument is simply insupportable.  The second one, the reference to the First Uniform Tax Case, has perhaps feelingly a citation from Chief Justice Latham. When one goes to 65 CLR 417, of course it is in the course of a passage which continues past that which the selection from which the selection is taken in Pye v Renshaw and in particular it can be seen on 418 – I will not take your Honours to it – that there is concern about the very difference that we have been drawing to attention, the difference between compulsion and choice, the choice being of course the notion that underlies the permissible encouragement or inducement by section 96 grants of acquisition of property on other than unjust terms.

Now, it has to also be noted, of course, that between 1942 and 1951 had fallen the decision and reasoning of Chief Justice Latham in Magennis itself.  There is no trace, and it is not hitherto – I have never been able to find any suggestion that the difference between Chief Justice Latham in the First Uniform Tax Case and Chief Justice Latham in Magennis exists as to any matter of principle concerning the notion of the illegitimate requiring by the Commonwealth through terms and conditions under section 96 of acquisition of property by a State on other than unjust terms. 

So that that passage quoted from Chief Justice Latham cannot, with respect, be understood as abolishing the difference between requirement, on the one hand, choice on the other, and certainly cannot be seen as casting any doubt on the decision in Magennis itself.

HAYNE J:   How much of that distinction is one which is apposite to individuals, but inapposite to a description of the conduct of polities?

MR WALKER:   In this, you will find the authorities noted by Chief Justice Latham include both, and certainly include individuals.  But there is certainly nothing in that discussion by the Chief Justice which suggests that there is any difference for the purposes of something he was not then discussing, relevantly – anything different in relation to section 51(xxxi), section 96, between the choice left open to a policy or the choice left open to an individual.  Section 96 simply will not apply, has no application relevantly, for individuals.

HAYNE J:   Exactly so, and the relevant realm of discourse is one of characterisation.

MR WALKER:   Yes, your Honour, that is why I ‑ ‑ ‑

GUMMOW J:   You are saying there is an untried and essential constitutional fact?

MR WALKER:   Yes, but it is a question of fact that we have not ever had a go at.  We have never been able to do it and we should not be ruled out of court forever, simply because that looks like a messy matter of fact. 

CRENNAN J:   Would you need to amend your further amended points of claim at paragraph 3 if you were to have the opportunity to explore that factual question?

MR WALKER:   Yes, and much else besides.  So our point about the so‑called draft notice of contention point is that certainly not a contention, absolutely flies in the face of a Coulton v Holcombe approach to the Commonwealth as a litigant, having disdained to run the point below here and, therefore, even less appropriate for it to be raised as just a discretionary reason with the rebarbative nature of the facts in question for special leave to be refused.

We are not asking this Court to go to those factual matters. We are asking for an opportunity to put our grievance that the Constitution has been infringed to the great detriment of my clients ‑ ‑ ‑

GUMMOW J:   Wait a minute, Mr Walker.  The first question is, is there a question of constitutional fact presented by the word “rivers” in section 100?

MR WALKER:   Yes.

GUMMOW J:   And if that is answered in accordance with Quick and Garran, end of the case.

MR WALKER:   But, your Honour, that cannot ‑ ‑ ‑

GUMMOW J:   We do not give into your hydrological evidence.

MR WALKER:   Our answer to that is that there is, in our submission, no way ‑ ‑ ‑

GUMMOW J:   Only we can authoritatively decide that first question, can we not?  If we decide it one way, then there is a constitutional fact that the species still requires evidence.  I accept that.

MR WALKER:   Yes, and, in our submission, it cannot be regarded as concluded that that can only be answered in the way which repels any attempt to tender evidence and argue fact.  That is because in Australia the notion of rivers and the water of rivers cannot possibly escape what your Honours know from photographs at times of flood about where the waters of rivers in this country go.  They do not stay within banks.  They go and they charge aquifers.  They are overflow on the surface and then they are elsewhere.  Well, are they waters of rivers or do they have to be those contained tamely within banks, like the laird’s trout stream?

HEYDON J:   The description of how floodwater behaves in Quick and Garran does not accommodate what you just said.  In other words, you have room to contend that being an incomplete statement, section 100 should be construed differently from the way they said it should.

MR WALKER:   Yes, that is what I do.  In our submission, Quick and Garran cannot possibly be the last word on the subject.  Indeed, it is not unfair to say it is probably the first word on the subject only.  We ought not be denied the possibility of running the waters of rivers point, which was one that they refused to run below.

HAYNE J:   Can I just understand what the waters of rivers point is?  Are you saying that is a point of fact?  Is there not logically prior to the debate about fact the constitutional meaning of the term “rivers” where it is used in 100?

MR WALKER:   Unquestionably, and “waters” though, “waters of rivers”.

HAYNE J:   Yes, I understand that.

MR WALKER:   Overflow is something which, in our submission, simply ‑ ‑ ‑

GUMMOW J:   The answer to Justice Hayne’s question is yes, is it not?

MR WALKER:   Yes, of course it is.  I was just adding one – it is not just “rivers”, it is “waters of rivers”.

HAYNE J:   I understand.

MR WALKER:   Yes.

HEYDON J:   Your point is to determine the meaning of a word in the Constitution just does not involve sitting in a chair and thinking about it.

MR WALKER:   No.

HEYDON J:   You need to have some concrete, particular, real, factual controversy which causes one to think harder than one would if it was just sitting in an armchair?

MR WALKER:   Yes.  In our submission, one is entitled – whether an unreformed originalist or otherwise – to know something about the facts of the water in question in the case in order to understand to what these words requiring interpretation are to be applied, to make it concrete, as Justice Heydon has put it, and in our submission, also to bear in mind from a purposive point of view what it is that must have been imported and must be understood now to be imported by the expression “waters of rivers” when one is talking about reasonable use of it by residents.

HAYNE J:   Is there some reason why we should not have this affidavit that both parties presumably agreed should not go into the appeal book because it was presumably seen as then not relevant but by which you now depend so heavily, Mr Walker?

MR WALKER:   Your Honour, it is not in the appeal book because of paragraph 88, because of paragraph 88 in the Court of Appeal.  This has arisen by draft notice of contention that came afterwards.  No, there is no reason.  We do not have enough copies to give it to your Honours now but we will have that supplied forthwith.

GUMMOW J:   Your canny solicitor has got a few there.

MR WALKER:   We all know about it.  We all know what is in it.

HAYNE J:   I am glad you do.  Are we going to be let into the secret?

MR WALKER:   May I say, what it proves is that we wished to raise matters of fact and would wish to present at trial, to borrow again Justice Heydon’s phrase, matters that rendered concrete rather than merely cogitative the case to which the constitutional expression “water of rivers” had to be applied. One last reference in this regard. In the National Water Initiative itself, in the appeal book at pages 31 and 37, you will see, in our submission – this cannot obviously affect the interpretation of the Constitution, but we say this is referring to things which were true of this continent in the 1890s as well as now.

What one will see at page 31 in objective 23 x) at about line 28, a reference to the “connectivity”.  Then on page 37 in outcome 58 i), starting just at line 60 and going over the page, a reference to water systems being “physically shared” and “hydrologic connections” et cetera. 

The notion that rivers does not just mean that channel upon which a paddle steamer could go, but other things as well, in our submission, is important.  Competition with navigation may affect irrigation use by other than, as it were, simply regulating access to the navigable channel.  The level of the river can be affected by works on and around it and calling on waters of the river in aquifers feeding the river and tributaries in a way where there may be great physical remoteness between the navigation and irrigation, but the relevant levels for navigation may not be maintained if the irrigation exceeds, et cetera, et cetera.

HAYNE J:   But one immediate issue that was live to those who were framing the Constitution was whether you could put a dam wall across the river which had a slight effect on navigability.

MR WALKER:   Yes, not the only thing that affects navigability - sucking out the water to irrigate your oranges will mean the boats are stranded.

CRENNAN J:   The other point is that the Water Act licences, well the Water Act itself of 1912 makes a very clear distinction between rivers and groundwater in terms of its operation and its licensing arrangements.

MR WALKER:   Without any doubt, your Honour.  The regime, I mean I have had to use the word “groundwater” very often.  What I am saying is that we sought, on the basis of Mr Williams’ evidence; we wanted to make it quite clear there are factual matters here necessary in relation to waters and rivers.

The response of the Commonwealth below was, “We are not going to argue that” and now they want to argue it here and, in our submission, to do it in a way which highlights the inappropriateness of that, to do it as an answer to special leave when our complaint is we have never had the opportunity that they are now trying to deny without any adjudication at all.  This is not complicated factual material as a sound discretionary reason to refuse special leave after the facts have been the subject of contest twice below.  This is one where we have never had it and it has never been put to the contest because of the choice of the Commonwealth not to run the point.  Now they want to run the point.  In our submission there is no merit in it.

BELL J:   Without being unduly pedantic, is that partly because the point was not very clearly articulated in the points of claim?

MR WALKER:   No, not all, your Honour.  The “waters of rivers” point is explicit in the points of claim, but in the Court of Appeal, paragraph 88 records the fact, there was no point raised about that.

BELL J:   I am raising a different matter.  I understand paragraph 88.  It is that apart from the bare assertion in paragraph 36, one does not see development of the argument that you complain was not picked up by your opponent.

MR WALKER:   One may say, with some trepidation, points of claim are not the place to find full flowering of an argument.  That is not to say that there were not other ways in which it could have been done.  However, the significance of Mr Williams’ affidavit was that it was shown that our forensic ambition included putting before the court geological and hydrological descriptions to render concrete the nature of the case to which this phrase would be applied.

I cannot say anything further about what is uncharitably to be called the pleading.  Your Honours, before I depart from a reply to the Commonwealth, I have not made it clear, I also adopt from ICM what the Commonwealth put about what I will call the bare section 61 point, which I think is extant against us in some written submissions but not in addresses.  In relation to that, there can be no such thing as a bare section 61 point in relation to section 96 because section 96 requires Parliament to act and sections 81 and 83 require there to be appropriations by a law.  In our submission, that is enough to dispose of the notion. 

What I would simply add, there is nothing inherent or necessary as a power of a polity to enter into agreements for the making of acquisitions of property on other than unjust terms.  That is to reintroduce a notion which since De Keyser’s Hotel would be, in our submission, in ordinary circumstances, looked at aghast.  Turning then to the matters raised on behalf of New South Wales, I have already noted that subsection (2A) of section 50 of the Water Management Act is material, if only in relation to section 16 and section 6.
           In relation to what I will call the Browning arguments – another irrigation case – the point, of course, is that the very large and difficult to define or limit scope of considerations that may be taken into account have to be those which may legitimately be taken into account.  For the reasons I have already put, we submit that if the funding agreement has the vices which we have tried to label it with, then it could not surely be legitimately taken into account.

The point was taken in relation to the funding agreement that the elements of description of the project in item 1.8, paragraphs c, d and e at appeal book pages 110 to 111, ought to incline your Honours to the view that it was not, in any relevant sense, enforceable.  I think the argument goes to the first of my two ways of putting it, namely legal enforceability as a contract in the full sense of that word – in the private law sense of that word.

In our submission, there has been no attempt, as it were, to develop sophisticated arguments of uncertainty and the like.  There is a general belittling of the words chosen by New South Wales itself as it undertook obligations which would attract money and which would involve the acquisition of private property.  Those words are at least sufficiently clear in those indicated parts of the definition project so that the Commonwealth could withhold money if the project was not carried out in accordance with them, as well as the other aspects of it, to the Commonwealth’s satisfaction, which was the bargain between the parties and that, with respect, is enforceability.

HAYNE J:   May I just take you back a moment Mr Walker to the waters and rivers point that we were speaking of earlier and considering the meaning to be given to the term “waters and rivers” in section 100, is it relevant to take account of writings contemporary to the making of the Constitution?  In particular, is it relevant to take to account the work by Mr Cox that was supplied to us in the ICM Case concerning artesian wells?  Now, before you answer that, may I explain why I invite attention to it.

MR WALKER:   Thank you, your Honour.

HAYNE J:   A lot of the work recorded by Cox is directed to identifying how much water there must be underground and the method chosen was to compare the amount of rainfall with the amount that flowed through the rivers to the conclusion that what is found underground must be very large because, as he says, in the Darling, that river alone disposed of only about 1.5 per cent of the rainfall on its catchment areas; happy days. 

MR WALKER:   I am sure evaporation plays some role too, your Honour, yes.

HAYNE J:   But what was understood to feed the aquifers was the rain seeping in and the river was seen as taking away some of that and as being distinct from the aquifer.  That is the purpose of my raising it with you. 

MR WALKER:   There are two parts to my answer.  Such material, in our submission, may with appropriate caution be considered if it bears sufficiently specific relation, preferably indicated by Convention Debates and associated material, to the drafting and eventual making of the constitutional term.  But what I might call an 11th edition Encyclopaedia Britannica approach, in our submission, would be dangerous, that is, to attempt in a no doubt incomplete way to put oneself in an armchair of the 1890s and to say these are the works on hydrology which may be available.  Even to say I know that parliamentary committees of the colonies referred to this report or the like, it would only be with great caution that one would use that to drive an interpretation of the constitutional provision.  So that is an answer that says it is not necessarily out of court but it may not have the attributes which really puts it into court.  That is the first part.

The second part is this.  Even if it had been referred to - and I am now hypothesising, I am not saying this is actually the case - say there was such a work that divided in the manner that Justice Hayne’s reading and question has illustrated, namely between rivers measuring by gauges what they carry away and rain, measuring by gauges what fell, presumably allowing something for evaporation and then saying there must be somewhere because otherwise it is a parched landscape, if one had no more than that kind of schema, it would plainly be very dangerous to say that that is descriptive of what we understand by “water of rivers”.  By definition it cannot be that which has not been carried away by the stream.

That is because of the connectivity between rivers into and out of rivers – it is not just into rivers, it is also out of rivers – with aquifers beyond the banks. Now, we all know of those which are obvious in that regard. They are called tributaries. They are all rivers then the tributaries. Eventually there comes a point where something is such a trickle that you might not want to call it a river, but it may still be the waters of rivers for various reasons. Overflow, I stress, is another example. The connectivity is the very matter that makes this a matter of fact in order to have the concrete case to which to apply the Constitution. May it please the Court.

FRENCH CJ:   Thank you, Mr Walker.  Solicitor.

MR SEXTON:   Your Honours, I wonder if we could have a short time to put in a note about sections 6 and 16 of the Water Management Act?  We just have not had a chance to turn our mind to it.  We could do it by the end of Wednesday of next week.

FRENCH CJ:   Yes, very well.

MR SEXTON:   Thank you, your Honours.

FRENCH CJ:   Yes, Mr Robertson.

MR ROBERTSON:   Thank you, your Honours.  If your Honours wish to have it, I have copies of the affidavit my learned friend referred to.

FRENCH CJ:   Yes.

MR ROBERTSON:   It was admitted in the Court of Appeal subject to relevance and it probably does not matter why things were or were not in the application book at this stage, but your Honours will recall that I raised this issue on the part‑heard special leave application.

FRENCH CJ:   Thank you.  The Court will reserve its decision.  The Court adjourns to 9.30 am on Tuesday, 1 September 2009.

AT 3.30 PM THE MATTER WAS ADJOURNED