Bathurst Regional Council v Natural Resources Access Regulator

Case •

[2022] NSWSC 846

•

28 June 2022

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Bathurst Regional Council v Natural Resources Access Regulator [2022] NSWSC 846
Hearing dates: 17 June 2022
Date of orders: 28 June 2022
Decision date: 28 June 2022
Jurisdiction:Common Law
Before: Basten AJ
Decision:

(1)   Direct that the Natural Resource Access Regulator be named as the defendant.

(2)   Declare that the primary obligation of the Council with respect to the discharge of water from the Winburndale Dam, pursuant to the condition DK3944 of Approval No 80CA723483, is to release from the dam a volume of water equal to the daily inflow, but not exceeding the daily capacity of the 300mm discharge pipe, given the water level of the dam.

(3)   Otherwise dismiss the amended summons.

Catchwords:

ADMINISTRATIVE LAW – judicial review of official caution – effect of caution on legal rights – availability of declaration – establishing basis of alleged error

ENVIRONMENT AND PLANNING – water – water management work approval – interpretation – condition to maintain outflow equal to lesser of inflow or pipe capacity – condition to release percentage of storage conserved in preceding inflow event – determining volume of releases

ENVIRONMENT AND PLANNING – offences – penalty notice offence – use of water supply work otherwise than as approved – effect of official caution – Water Management Act 2000 (NSW), s 91B – Fines Act 1966 (NSW), s 23A

Legislation Cited:

Fines Act 1996 (NSW) ss 19A, 23A

Natural Resources Access Regulator Act 2017 (NSW), s 4

Water Act 1912 (NSW)

Water Management Act 2000 (NSW) ss 91B, 365

Water Management (General) Regulation 2018 (NSW), Sch 7

Cases Cited:

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; [1992] HCA 10

Hot Holdings Pty Ltd v Creasy (1996) 185 CLR 149; [1996] HCA 44

Category:Principal judgment
Parties: Bathurst Regional Council (Plaintiff)
Natural Resources Access Regulator (Defendant)
Representation:

Counsel:
Mr M Seymour / Mr C Koikas (Plaintiff)
Ms Z Heger / Mr A Brown (Defendant)

Solicitors:
Paul Laurence Crennan, Crennan Legal (Plaintiff)
Erin Lea Gavin, Department of Planning Industry and Environment (Defendant)
File Number(s): 2020/215879
Publication restriction: None

Judgment

  1. BASTEN AJ: Winburndale Dam is a small water storage work with a maximum capacity of 1,700 megalitres (ML), situated some 21km east of Bathurst. The Bathurst Regional Council is the holder of a water access licence issued under the Water Management Act 2000 (NSW) which entitles it to take 1,000ML a year for the purpose of “town water supply”. Separately from the licence, the Council has an Approval under the same legislation to “construct and use” the dam and a diversion pipe that carries water from the dam to Bathurst.

  2. The dam provides a small part of the city’s water needs. The Council has a separate licence to take some 17,500ML from Ben Chifley Dam. The water from Winburndale Dam is used primarily for non-potable purposes, including watering parks and gardens and for sale to commercial users.

  3. The current proceedings were commenced by the Council by a summons filed in the Land and Environment Court on 23 July 2020. On 8 October 2021 the proceedings were removed into this Court and an amended summons was filed on 29 November 2021. The respondent was named as “Department of Planning Industry and Environment trading as Natural Resource Access Regulator”. Administratively, it appears that the Regulator is located within the Department, but it is a separate agency and a body corporate. The Department is not a person. The proper respondent is the Natural Resources Access Regulator, being a body corporate established by the Natural Resources Access Regulator Act 2017 (NSW), s 4. It is a NSW Government agency. The Regulator should have been identified as the defendant in the proceedings and will be so identified as a result of directions given in this judgment.

  4. As well as taking water from Winburndale Dam for its own purposes, conditions of the Approval to construct and use the dam included obligations to release water into the Winburndale Rivulet, which flows in a north-westerly direction until it meets the Macquarie River.

  5. There are numerous holdings along the rivulet below the dam, which either enjoy water access licences or have statutory riparian rights. It appears from the correspondence in evidence in this case that the Regulator had received complaints from landowners below the dam about the failure of the Council to release water from the dam in accordance with the conditions of its Approval. After carrying out some investigations and obtaining information from the Council, on 5 June 2020 an officer of the Regulator issued a show cause notice to the Council stating that the investigations found that releases from the dam to the rivulet were not compliant with a condition DK3944 of the Approval. The non-compliance was said to constitute a contravention of s 91B(2) of the Water Management Act. The letter invited an explanation as to why the Regulator should not take action in response to the alleged offence.

  6. The show cause notice apparently had an attachment which provided “more information about the alleged offence and our investigation”. It is not clear whether that attachment was in evidence: it was not attached to the letter. Without it, it is difficult to know precisely how the Regulator assessed there to be a breach of, or non-compliance with, the Council’s obligations under the Approval.

  7. The Council’s response was not to take issue with the calculations in the attachment, but to assert a different understanding of the conditions of the Approval. That submission was rejected by the Regulator which, on 3 July 2020, issued a formal caution to the Council stating that there had been a breach of s 91B(2) of the Water Management Act but that, having regard to guidelines issued under the Fines Act 1996 (NSW), the Regulator considered it appropriate to issue an official caution for the alleged offence. The letter set out, by way of explanation, the interpretation of the relevant conditions of the Approval. It also gave advice as to what it means to receive an official caution. As there is a dispute as to the availability of relief in this Court, it is convenient to set out that advice. The letter read:

“NRAR [the Regulator] will retain a copy of this Official Caution on file. If you commit an offence under the [Water Management Act] in future, NRAR may take into account this Official Caution in determining the most appropriate enforcement action. Such action may involve the issue of a penalty notice or the commencement of a prosecution.

The issuing of this Official Caution does not prevent NRAR from taking alternative enforcement action for the alleged offence, if it becomes apparent that an alternative response is more appropriate.”

Conditions of Approval

  1. As noted above, the Approval related to two works, identified as “overshot dam” and “diversion pipe”. The dam was so described because the crest involved a spillway for the discharge of water by way of overflow when the dam was full. The diversion pipe was described in one of the conditions of the water management works as a “gravitation main immediately below the dam, authorised by this approval”. An important element of the pipe was the requirement that it be fitted with a 300mm valve, and a stop valve or other control device. The relevant conditions read as follows:

DK3752

A   When the water level in the dam, authorised by this approval, is below its crest level, flows entering the storage must be released through the 300mm valve to ensure the release of:

(i)   20% of the increment of the storage conserved in the preceding flow event, or

(ii)   50% of the increment of the storage conserved in the preceding flow event when a drought declaration has been made by the NSW Government, or

(iii)   80% of the increment of the storage conserved in the preceding flow event when exceptional circumstances have been announced by the Commonwealth Government in response to prolonged drought.

B   Water must be released from the dam only:

(i)   on request from the relevant licensor, and

(ii)   when inflows have been recorded for not more than 28 days before the request.

…

DK3944

The 300mm valve must be operated to maintain a flow in the watercourse downstream of the dam. The flow must be equal to the flow entering the storage of the dam or the capacity of the 300mm pipe, whichever is the lesser discharge.

  1. The submissions in this Court addressed the relationship between condition DK3752 and condition DK3944. The Council submitted that reading the two conditions coherently, the former (DK3752) operated when the water level in the dam was below its crest level (so that there was no water spilling over) and imposed an obligation on the Council to release 20% of the increment of the preceding flow event. (It was agreed that the phrase “flow event” referred to inflow from the rivulet above the dam.) The effect of condition DK3752 was to specify the volume of water which was to be released. Consistently, as submitted by the Council, the purpose of the second condition (DK3944) was to identify the rate of flow, which was either the full flow through the 300mm pipe or the rate of inflow, whichever might be the lesser.

  2. This construction gave rise to a further question, namely, did par B of DK3752 govern par A? The opening words of par B, that “[w]ater must be released from the dam only” when two conditions were satisfied, suggested that it did. If so, it was necessary for there to be a request from the licensor (now understood to be the Regulator) before the terms of Part A were engaged. Although the position of the Council appears to have vacillated on this point, in this Court the Council submitted that par B was a self-contained condition and did not qualify the generality of par A. On that approach, the word “only” may have been emphatic as to the need for both of the specified conditions to be satisfied. In other circumstances, the general obligations in par A operated.

  3. The Regulator submitted that DK3752 was self-contained and provided for releases only where a request had been made by the licensor (and the relevant inflows had been recorded within the specified period). By contrast, DK3944 was a continuing obligation attaching to the operation of the dam. That was indicated by the purpose of the releases, namely “to maintain a flow in the watercourse downstream of the dam”.

  4. Although, as the Council conceded, the Regulator’s construction was certainly arguable and may have been the more obvious reading of the alternative readings on an initial consideration, nevertheless, having regard to the practical operation of the conditions, that reading undermined the purpose of the dam, namely to store water. Unless the volumetric constraints in DK3752 were of general application, it submitted, there would be no conserved flows to which DK3752 could apply and little opportunity form the dam to serve its function of water storage.

  5. In order to assess the contentions broadly outlined above, it is convenient to provide some further factual and statutory background.

Background

  1. Winburndale Dam was constructed in 1933. Similar conditions applied to the operation of the dam when its use was governed by the Water Act 1912 (NSW), prior to the commencement of the Water Management Act on 1 January 2001. The Council relied upon the historical conditions. The Regulator submitted that it was inappropriate to have regard to the earlier versions of the approvals under different legislation, but contended that, if regard were had to them, they supported the interpretation of the current conditions proposed by the Regulator.

  2. It is appropriate to have regard to the earlier versions of the conditions, whilst acknowledging that some changes may have been intended to achieve a different outcome, but others not. The earlier versions provide a context which would certainly have been known by and taken into account by the person preparing the current conditions. No doubt there have been physical changes in the environment, particularly those which constitute the effects of climate change, which were almost certainly known or anticipated, when the Approval was given under the Water Management Act. However, there have been, otherwise, no changes to the physical environment in which the conditions operated.

  3. The first licence was granted by the Water Conservation and Irrigation Commission under the Water Act in October 1933. Condition (2) reflected the wording of the present condition relating to the construction of the pipe, requiring that it had a specified discharge capacity (measured in gallons per day, but equivalent to some 12.27ML per day). Interestingly, it specified the “minimum head” under which that capacity should be met, namely 5ft. As the evidence revealed, there are major differences in flow with a 300mm outlet pipe depending on the dam level. Thus, when the dam level is at the crest, the flow is 396 litres per second (L/s); when the level is 15m below the spillway, the flow is reduced to 88L/s, less than 25% of the maximum flow.

  4. Having identified the requirement to construct a pipe with that capacity, condition (2) required that the Council,

“unless otherwise directed by the Commission shall maintain by means of this pipe a continuous flow in Winburndale Creek, as follows: ꟷ

(a)   A flow of not less than 160,000 gallons per day when the discharge in the creek upstream of the storage is greater than 160,000 gallons per day; or

(b)   A flow not exceeding that in the creek upstream of the storage when such flow is 160,000 gallons per day or less.”   

  1. The 1933 licence also contained condition (4) in the following terms:

“(4)   In the event of freshets occurring in the creek upstream of the dam when the level of the water in the reservoir is below the crest of the dam the licensee shall, if and when called upon to do so by the Water Conservation and Irrigation Commission in the public interest, release a flow through the pipe referred to in Condition (2) at such rate, not exceeding 2,700,000 gallons per day as the said Commission may direct, provided that such release exceeding a rate of 160,000 gallons per day shall not be maintained for any continuous period exceeding 7 days; provided further that the licensee shall not be called upon to release from the storage reservoir more than 20% of the increment of storage during such freshets.

For the purpose of this condition a freshet in the creek upstream of the dam will be such flow therein as will cause an increment of storage in the dam of two million gallons or more.”

  1. These conditions were repeated in similar terms when the licence was renewed on 9 March 1939. However, on 20 December 1993, condition (2) was simplified to read as follows:

“(2)   Subject to Condition (4) the licensee shall discharge into Winburndale Creek through the dam or from the gravitation main immediately downstream of the dam:

(a)   a flow of not less than 8.42 litres per second when the discharge in the creek upstream of the storage is greater than 8.42 litres per second.

(b)   a flow not exceeding that in the Creek upstream of the storage when such [flow] is 8.42 litres per second or less.”

  1. The substance of condition (4) was unchanged, although the rates were changed to L/s and a freshet was defined as “such flow therein as will cause an increment of storage in the dam of 9 millimetres”, meaning no doubt an increase in the level of the water stored in the dam of that depth. It was a remarkably precise measurement. (When the dam was full that amount would be discharged through the 300mm pipe in less than two hours.)

  2. The imperial measure of 160,000 gallons per day is roughly equivalent to 727kL per day; thus, the flow rate of 8.42L/s remained equivalent to that which the condition had earlier prescribed in gallons per day. However, as noted above, even when the dam volume was reduced to 44ML, the flow was ten times that required by condition (2), namely 88L/s.

  3. Two significant changes were made in 2004. First, condition (2) was divided into two parts, so that the requirement for the 300mm valve became condition (2) and the flow requirements became condition (3) which read as follows:

“(3)   When a flow is entering the storage of the dam the valve… shall be so operated as to maintain a flow in the watercourse downstream of the said dam equivalent to the flow entering the storage of the dam for the time being or the capacity of the said pipe, whichever is the lesser.”

The cap on the required outflow was thus no longer expressed in terms of a volume.

  1. Secondly, condition (4) was reworked so as to read:

“(4)   In the event of flows entering the storage when water levels in the dam are below crest level, the licensee must release a flow through the valve referred to in Condition (2) that will release:

(A)   20% of the increment of storage conserved in the proceeding flow event or;

(B)   50% of the increment of storage … when a drought declaration has been made… or;

(C)   80% of the increment of storage … when exceptional circumstances funding has been announced by the Commonwealth Government in response to prolonged drought.

These flows are only required to be released upon request from the Department … when inflows have been recorded not more than 28 days before the request.”

Consideration of the conditions of the Approval

  1. Although in each of the forms set out above the conditions operated as conditions of a licence issued under the Water Act, they continue into the current conditions of the Approval. Three changes have been made to achieve the form of the current conditions DK3752 and DK3944. First, the latter provision is now the fourth condition under a heading “Water Management Works”, whereas it used to appear before what is now condition DK3752, that now being the first in the list of conditions. That change in order raises a question as to whether, if DK3944 was originally intended to have a general or primary operation, it was now to be treated as subservient to DK3752. There is nothing in the legislation which explains the change in the order of the conditions; nor do the instruments themselves suggest that the change in order is material.

  2. Secondly, it is clear from the historical versions that what is now par B of DK3752 was in the past clearly a qualification to the operation of what is now par A. Again, there is nothing in the legislation, or the instruments, to suggest that that change was necessary or had particular significance. The inference is that pars A and B must continue to operate together.

  3. Thirdly, the condition in DK3752 as to the water level being below crest level, was not found in the opening terminology of the condition in versions prior to 1993. Rather, condition (4) historically commenced by reference to “freshets” (being sudden surges in the stream above the dam), suggesting that that factor was the primary point of engagement with the obligation to release water.

  4. It is difficult to be sure whether some of the changes were thought to be significant or were merely a matter of modernising the language and tidying up the structure. The continuity of the underlying purposes is readily apparent. Further, it would be a large step to read DK3944 as other than what was formerly clearly a general requirement, because it now occurs at the end, rather than the beginning, of the list of conditions. When it preceded what has become DK3752 (now the first condition), it was clearly of general operation and not restricted, either by reference to freshets, or by the need for a request from the licensor. Something more would be required to read DK3944 as limited to circumstances where DK3752 is not engaged.

  5. The Council relied on three contentions to overcome these considerations. First, it submitted that DK3944 specified only a rate of flow and had no volumetric limitation. By contrast, DK3752 was precise as to the volumetric limitation. It was therefore necessary to invoke DK3752 to impose a volumetric limit on the discharges required by DK3944.

  1. In my view, that contention carries little weight. DK3944 does have a volumetric limitation which is, in effect, similar to that in DK3752. DK3944 requires the release of water (subject to the capacity cap) at a flow “equal to the flow entering the storage of the dam”. No doubt the quantity is variable, but the volume to be released is dependent upon the volume entering the dam. When the rain ceases and the run-off comes to an end, there will be no obligation to discharge water from the dam. That is, subject to the cap, the whole of the inflow must be released as it occurs. Once the inflow ceases, the obligation to discharge ceases.

  2. Secondly, the Council submitted that DK3752 operated whenever the storage was below crest level, there being no spill-over, so that a fair reading of DK3944 was that it applied in other circumstances. That was logical, it was submitted, because there was only a limited need to release inflows when the dam was overflowing.

  3. That submission would have had little weight when DK3944 came earlier in the list of conditions than did DK3752. More importantly, the submission implies that the obligation to release the whole of the inflow is only engaged when the water is at or above crest level and therefore there is a spill-over of the inflow. That gives rise to an incoherent result. The alternative conclusion is that DK3944 also applies when the water level is below the crest. The fact that there are indeed different volumetric calculations to be made in each case gives weight to the Regulator’s submission that DK3752 must be read as a whole and thus the constraints in par B apply to the obligation imposed by par A.

  4. The third of the Council’s contentions is more troubling. It asserted that, if there were a general obligation to release the whole of the inflow, the dam will not perform its primary function of water storage. However, given the capacity cap on releases, the force of the contention will turn on factual matters to which limited attention was paid in the submissions.

  5. Some indication as to the practical issues may be gleaned from two sources in the evidence. The first was Table 3 in a Hydrological Assessment Report dated 15 December 2020 prepared for the Council [1] which was headed “300mm Outlet Pipe Capacity”. The second was a document entitled “Winburndale Dam 5 Years Daily Data” prepared by the Council and forwarded to the Regulator under cover of a letter dated 1 April 2021. [2]

    1. Ex A, p 96.

    2. Ex A, pp 385-427.

  6. When the volume of the dam was at 10% of full storage, the outlet pipe had a capacity of 20.2ML/day. When the dam was full, the capacity was 34.2ML/day. No doubt it was true that storage might be enhanced by the lower capacity when the dam was less full. However, there remained a question as to whether the capacity of the pipe in fact imposed any significant constraint on the required release of water.

  7. Based on the figures provided by the Council in 2021, the total inflows to the dam exceeded the capacity of the pipe, during the period from 1 July 2018 until 5 May 2020, on the following occasions:


Date

Inflow (ML/day)

Dam level (ML)

Pipe capacity

(ML/day)

15/12/18

89

1271

32

20/12/18

45.5

1367

32.5

21/12/18

69.6

1433

33

12/1/19

335.6

1815

34

13/4/19

94.7

1727

34

4/5/19

44.7

1628

33/34

5/5/19

45.4

1671

33/34

6/5/19

43.6

1712

34

18/9/19

51.3

1586

33

7/3/20

34.3

1045

30.5

8/3/20

35

1077

30.8

4/4/20

34.6

1139

30.5

5/4/20

210.75

1347

32.5

6/4/20

59

1403

32.5

30/4/20

38

1270

32

1/5/20

143

1605

33.5

2/5/20

125

1699

34

3/5/20

131

1799

34

  1. In summary, there were three days in the second half of 2018 in which inflow exceeded the capacity of the pipe; in the first half of 2019 there were five days; in the second half of 2019 there was only one day. By contrast, from 7 March 2020 until 5 May 2020, the inflow exceeded capacity on nine days. By 5 May, the dam was at, or close to, full storage.

  2. If one includes the first half of 2018 in these figures, there was one day (12 February 2018) when the total inflow exceeded 39ML and two days in mid-May (11 and 12 May) when total inflow was a little over 30ML and probably equal to the capacity of the discharge pipe. On 17 May the inflow was 35.7ML, which would have resulted in storage of some 3ML for that day. Overall, the excess of inflow over pipe capacity in 2018, calculated on a daily basis, was approximately 115ML.

  3. A very rough calculation suggests that in 2018, if inflows had been discharged to the full capacity of the discharge pipe, total inflows of 1,885ML would have resulted in the storage of 115ML. Because there appear to have been one or two significant storms in 2019, although the total inflow was 1,215ML, the storage in that year would have been in the order of 446ML. While these calculations may be inaccurate (the Court received no assistance from the parties in this respect) they provide some support for the Council’s contention that release in accordance with the terms of DK3944 would severely undermine the storage function of the dam. However, accepting that to be so, it is by no means clear that there is any alternative reading of DK3944 which would avoid that result. What the expectations of inflows may have been when the condition was first drafted is not known.

  4. For these reasons, the Council’s reading of DK3944 must be rejected. DK3944 operates according to its terms and not subject to any implied limitations.

Other Matters

  1. That conclusion may be enough to resolve the present proceeding, but two uncertainties attach to the manner in which the Regulator has proceeded.

  2. First, the email chain between the water regulation officer and the relevant Council officer, which commenced in July 2018, stated that, “[t]he landholders downstream of Winburndale Dam have requested that the Department implement condition DK3752-00001”. It was in that context that information as to the dam inflows and releases was sought. Information was then supplied. Further records were sought in May 2019, noting that further concerns had been raised, given the ongoing drought conditions, and a further request had been made for the Department to implement DK3752. In response, the Council sought information as to the drought status of the area.

  3. It is not necessary to review all of the material, except to note that on 6 April 2020, two months prior to the show cause letter, the Regulator wrote to the Council noting that there had been a 97ML increase in storage between 6 and 9 March 2020 but that the Regulator did not intend to request a release of water at that time (because of the limited benefit to downstream users beyond about two kilometres below the dam). Rather, it encouraged the Council to engage with the rivulet water users and discuss their needs. It was not clear until the show cause letter was received that the Regulator’s concern was compliance with DK3944.

  4. The second matter concerns the alleged non-compliance with DK3944. Without knowing the basis of the non-compliance alleged, it is not possible to be sure whether the Regulator in fact adopted a construction of the provision which was consistent with that set out above. There must, however, have been practical difficulties in applying the requirements of the clause. As the Council noted in providing information to the Regulator, there was no system for monitoring inflows (nor did the licence conditions or the Approval conditions require such a system). Accordingly, at that stage the Council supplied information, not as to inflows into the dam, but by way of a proxy for inflows, namely, rainfall in Bathurst some 21km to the west. [3] No doubt it was possible to make some calculation of inflows, knowing the amount of water being released from time to time, the amount taken off by the Council pursuant to its licence, and making allowance for leakage and evaporation. (There were figures for leakage given in the correspondence.) That exercise appears to have been first undertaken in 2021. [4]

    3. Ex A, pp 115-124.

    4. See [33] above.

  5. On 1 April 2021, some nine months after the caution was issued, the Council supplied five years of records relating to releases from the dam. These showed daily figures and monthly and annual summaries for inflows and releases from the dam. Broadly speaking, the inflows appear to be calculated by reference to the change in dam level per day, to which is added the amount that was released on that day. There appear to have been inflows even when rain did not fall for some time. It is also clear that for some periods, for example in January 2019, in the middle of the period over which the caution applied, that there were days when there was no apparent inflow and yet there were environmental releases recorded. During November and December 2019, the total inflow was less than 13ML and the environmental releases in the order of 40ML.

  6. On the understanding of condition DK3944 set out above, there must have been compliance with that condition during those periods. On the other hand, taken on a monthly average, it is also apparent that in most months the environmental releases constituted a small proportion of the inflows.

  7. There was ample basis for the Regulator to consider that there had been non-compliance at some stages, but not throughout the entire period identified in the caution. Whether the Regulator correctly applied DK3944 is unclear. This point may, however, be put to one side: it was not an issue addressed in the proceedings.

Relief

  1. The primary concern of the parties was a practical one, namely, to obtain a ruling from the Court as to the proper construction of the conditions of the Approval. Nevertheless, the Council sought an order that the official caution be set aside. The Regulator resisted that relief on the basis that the decision had no effect on legal rights and therefore, consistently with the reasoning of the High Court in Hot Holdings Pty Ltd v Creasy,[5] relying on the earlier decision in Ainsworth v Criminal Justice Commission,[6] there was no right to relief in the nature of certiorari.

    5. (1996) 185 CLR 149 at 159 (Brennan CJ, Gaudron and Gummow JJ); [1996] HCA 44.

    6. (1992) 175 CLR 564 at 581-582 (Mason CJ, Dawson, Toohey and Gaudron JJ) [1992] HCA 10.

  2. The Regulator submitted that the statutory precondition to the issue of a caution was, pursuant to s 19A(1) of the Fines Act 1996 (NSW), a belief on reasonable grounds that the person has committed a penalty notice offence. Pursuant to the Water Management Act, s 365(2), an authorised officer “may serve a penalty notice on a person who appears to the authorised officer to have committed a penalty notice offence”. The offence in the present case was a breach of s 91B(2) by the Council which, as the holder of a water supply work approval, used the water supply work otherwise than as authorised by the approval. That offence is identified as a penalty notice offence pursuant to the Regulation made under the Water Management Act. [7]

    7. Water Management (General) Regulation 2018 (NSW), Sch 7.

  3. In the context of this regime, the authority of the Regulator to issue a caution turned, not on the fact that an offence had been committed, but on the reasonable belief of the officer to that effect. Further, the Regulator submitted that a penalty notice did not determine legal rights because the person served with such a notice was entitled to elect to have the matter dealt with in court: Fines Act, s 23A. Although the issue was not addressed in submissions, it may be doubted that that election is available where a penalty notice has not issued, but only a caution.

  4. The Council submitted that the issue of the caution had legal consequences. In particular, the Regulator was entitled to take it into account, should there be a subsequent contravention of the Water Management Act, in determining what action to take.

  5. It is not necessary to determine for present purposes whether an officer has reasonable grounds to consider an offence has been committed in circumstances where a legal error has been made for the purposes of forming the belief. That is because it is not possible to be sure what interpretation or facts the officer relied on. Ultimately, the Council’s application for an order setting aside the caution should be refused on the basis that it has not been established that the caution was issued on a wrong legal basis. Neither party was concerned to address information which has been referred to above which might have revealed the true basis upon which the officer acted in issuing the caution notice.

  6. In the circumstances, where both parties appear to be satisfied that a declaration is the most appropriate relief, the Court should take that course. But the declaration cannot usefully address the validity of the caution.

  7. A declaration was sought in the amended summons in relation to the operation of both the Approval conditions DK3752 and DK3944. Order 3 sought a declaration that the former condition regulated the volume of the flow of water to be released from the dam, whilst the latter regulated the rate of flow of the release. For reasons explained above, I do not accept that that is the correct reading of either condition. By way of alternative, the Council sought a declaration in relation to both conditions largely in conformity with the reasoning set out above. However, there are difficulties in formulating appropriate declarations. On the one hand, if the declaration merely recounts the language of the condition, it takes the matter no further. On the other hand, if aspects of the condition are omitted, the declaration may be inaccurate.

  8. Despite the practical difficulties attending its operation, it is appropriate to identify in a declaration the operation of condition DK3944. The other condition was not the basis of the alleged breach which led to the caution and it is not appropriate to address its operation. However, the difficulty with a declaration in relation to DK3944 is to know how it should be understood temporally. The evidence did not reveal any capacity to monitor the inflows as they occur and synchronise the discharge. The declaration expresses the obligation in terms of daily flows because that appears to be the degree of precision the Council has achieved, albeit retrospectively. Condition DK3944 does not refer to daily flows; rather the capacity limit implies a mechanism for establishing continuous equivalence. The practical operation of the dam may require an agreement between the Council and the Regulator.

Orders

  1. It will be open to the parties, in the usual way, to seek a variation of these orders within 14 days of the date of judgment. The parties expressly reserved their positions with respect to costs. However, I should indicate that I am not presently inclined to make any order as to the costs of the proceeding. Both litigants are public authorities seeking to resolve a dispute as to the basis of water releases required by a statutory scheme carrying penal consequences for breach. The Council has raised an issue of some public importance, the resolution of which may not be entirely satisfactory to either party. How daily inflows are to be monitored is unclear. How the officer could have been satisfied of a continuing breach of condition DK3944 over a period of some 22 months is equally unclear.

  2. Accordingly, the Court makes the following orders:

  1. Direct that the Natural Resource Access Regulator be named as the defendant.

  2. Declare that the primary obligation of the Council with respect to the discharge of water from the Winburndale Dam, pursuant to the condition DK3944 of Approval No 80CA723483, is to release from the dam a volume of water equal to the daily inflow, but not exceeding the daily capacity of the 300mm discharge pipe, given the water level of the dam.

  3. Otherwise dismiss the amended summons.

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Endnotes

Decision last updated: 28 June 2022

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Cases Citing This Decision

1

Bathurst Regional Council v Natural Resources Access Regulator (No 2) [2022] NSWSC 1113
Cases Cited

3

Statutory Material Cited

5

Ainsworth v Criminal Justice Commission [1992] HCA 10
Martin v Taylor [2000] FCA 1002
Ainsworth v Criminal Justice Commission [1992] HCA 10