Committee of the Trangie Nevertire Irrigation Scheme v Smith
[2013] NSWSC 128
•13 February 2013
Supreme Court
New South Wales
Medium Neutral Citation: Committee of the Trangie Nevertire Irrigation Scheme v Smith [2013] NSWSC 128 Hearing dates: 11/02/2013 and 12/02/2013 Decision date: 13 February 2013 Jurisdiction: Equity Division - Commercial List Before: McDougall J Decision: Plaintiffs entitled to injunctions sought; to bring in draft orders.
Catchwords: CONTRACTS - interpretation - whether the construction of a new pipeline and the lining of existing water channels constituted the "implementation, maintenance and administration" of the existing irrigation scheme - whether approval obtained from the members for the works - members informally but effectively approved and ratified the subject works - whether easement over a portion of the defendant's land should be granted - grant of an easement reasonable in the circumstances Legislation Cited: The Co-Operatives Act 1992 (NSW) Category: Principal judgment Parties: The Committee of the Trangie Nevertire Irrigation Scheme (First Plaintiff)
Trangie Nevertire Co-operative Limited (Second Plaintiff)
John Rodney Smith (First Defendant)
Thornton Pastoral Co Pty Limited (Second Defendant)Representation: Counsel:
R J Weber SC / B Le Plastrier (Plaintiffs)
J M Ireland QC (Defendants)
Solicitors:
Lovett & Green Pty Ltd (Plaintiffs)
McGirr Lawyers (Defendants)
File Number(s): 2013/3201
Judgment (EX TEMPORE - REVISED 18 FEBRUARY 2013)
HIS HONOUR: The first plaintiffs are the Executive Committee of an unincorporated Association known as the Trangie Nevertire Irrigation Scheme (the Association). As its name suggests, the Association maintains and operates an irrigation scheme, drawing water from the Macquarie River (the Scheme).
The second plaintiff (the Co-operative) is an incorporated body which is said to be the alter ego and agent of the Association for various purposes.
The defendants are land holders in the Trangie area and members of the Association.
The plaintiffs say that they are entitled to have access to the defendants' land to carry out substantial upgrading works for the Scheme, where it crosses the defendants' land. The plaintiffs say, further, that the defendants are bound to grant easements over their lands, to allow the Co-operative to maintain and repair the irrigation works.
The plaintiffs base their claim on a Deed made on 5 May 1970. The defendants acknowledge that they are bound by the terms of the Deed, properly construed. They say, however, that on its proper construction and in the events that have happened, the plaintiffs do not have the asserted rights.
The real issues in dispute
The parties stated the issues as follows:
1. Whether the construction of the S&D Pipeline constitutes the 'implementation, maintenance and administration' of the Scheme pursuant to the provisions of clause 70 of the Deed.
2. Whether the plaintiffs or any of them has a right to be granted an easement by the first or second defendants over all or any part of the defendants' lands having regard to the terms of clause 71 of the Deed.
3. If so, what are the terms and extent and of the right which the plaintiffs are entitled to be granted under any such easement.
4. Alternatively to paragraphs 2 and 3, whether the plaintiffs or any of them are entitled to any right by way of contractual licence or otherwise obliging the defendants to permit entry to their land for the purposes of:
a. Construction of the S&D Pipeline; or
b. Lining the existing channels constructed on the defendants' land.
5. Whether the first or second defendants or either of them is bound by the terms of document entitled 'Memorandum of Agreement' signed by the first defendant on 26 November 2009:
a. To grant an easement over the first defendant's land and if so in what terms;
b. To grant any other right of access to the plaintiff's contractors over the first defendant's land and if so on what terms?
6. Whether the [Co-operative] has been appointed an agent of the first plaintiff and if so when and for what purposes?
7. Whether on 25 November 2009, the [Co-operative] validly adapted its new rules having regard to s.111 and s.189 of the Co-Operatives Act 1992.
There are six points to be made in relation to the statement of issues. The first relates to the term "S & D pipeline". That refers to a pipeline which is intended to convey water for stock and domestic purposes. It is common ground that the Scheme, as formulated by the Deed, covered both water used for irrigation purposes and water used for stock and domestic purposes.
Secondly, the plaintiffs did not press issue 5. They did however rely on the memorandum in question, and equivalent memoranda signed by other members, for other (non-contractual) purposes.
Thirdly, the plaintiffs submitted that issue 6 ought not be raised, although agency (which was alleged in the amended commercial list statement) was "not admitted" by the defendants.
Fourthly, the plaintiffs submitted, in my view correctly, that issue 7 was not raised on the pleadings.
Fifthly, the final submissions for the defendants agitated an issue as to the extent or width (in legal and physical terms) of the easement sought. The plaintiffs submitted, again in my view correctly, that this issue had not been pleaded. I add that it does not appear, except perhaps under cover of issue 3, in the statement of issues.
Finally, I have talked, as does the statement of issues, in terms of rights claimed by the plaintiffs. Not all members of the Association are parties. However, the defendants have not raised, as an issue, that the first plaintiffs, as the Committee of the Association, have no standing or right to compel performance of any obligation owed to the Association as a whole (that is to say, to all members). Nor have the defendants submitted that the proceedings are defective for want of parties.
The nature and operation of the Scheme
The Scheme was established to supply water to members of the Association both for irrigation purposes and for stock and domestic use. As originally planned and constructed, the System (to adopt the word used in the Deed to describe the works) consisted of a network of unsealed earthen channels dug into the ground and open to the elements. Water is pumped down those channels from the Macquarie River. The channels are used to convey water for both purposes - that is to say, both for irrigation purposes and for stock and domestic purposes.
Over time, and as one might expect, the channels have become less efficient. They have suffered from subsidence, silting and erosion. The extreme drought in the first decade of this millennium increased water losses out of the system, both through evaporation and through absorption into the underlying soil.
Also as a result of the drought, water allocations were reduced. It is inherent in the nature of the System that it is less efficient when smaller rather than larger amounts of water are pumped through it.
A consequence of all these factors was that members on the geographical extremities of the Scheme could not access all their water entitlements.
The Association developed practices that sought to address these problems. However, there were both practical and financial problems associated with the solutions adopted. Of their very nature, they were in the nature of bandaid solutions.
Accordingly, the Association turned its mind to how the Scheme and the System might be improved, and how the delivery of water might be facilitated in a more efficient way. That appears to have started to exercise the minds of members of the Associations from about mid 2005.
The first step was the commissioning of a strategy for planning changes to the Scheme. The report that was received dealt with the problems, including lack of reliable supply, in particular at the extremities of the Scheme. That report was provided to members for consideration.
As one might expect, attention was focused in particular on attempting to minimise losses from the System through evaporation and through soakage. The report considered a number of ways in which this might be achieved. One such way was the use of piping, or a combination of piping and channels.
In April 2008, the Commonwealth Government announced a scheme for providing funding to selected applicants to help them use water more efficiently. The ultimate aim of that scheme is to secure Australia's long term water supplies. Members of the Association considered modernising the System with the use of Commonwealth funding.
The Association commissioned Western Land Planning to prepare a modernisation plan. A draft plan was prepared in January 2009. It was discussed at a special general meeting of members of the Association. The members resolved unanimously that they should endorse the draft plan "to go forward".
Consideration of the modernisation plan did not end there. It was discussed at a Committee meeting of the Association on 6 February 2009. That meeting also considered correspondence with the Commonwealth Government in relation to funding. The Committee meeting resolved to ask Western Land Planning to prepare an engineering design and an application for funding.
In its final version, the modernisation plan identifies a number of problems with the supply of water. Those problems relate, in particular but not exclusively, to the supply of stock and domestic water through the channels. Those problems include "prohibitive" losses, and the issue, to which I have referred more than once, of disadvantage to members on the Scheme's extremities.
The Association determined to make an application for funding. For various reasons, it was necessary that the application be made by an incorporated body, and not by the unincorporated Association. The decision was taken to use the Co-Operative as the vehicle for the application. This meant, among other things, that the rules of the Co-Operative would require amendment.
An information meeting for members of the Association was held on 9 November 2009. They were told, among other things, that it was proposed to use the Co-operative in the way that I have just outlined. They were told, further, that the Co-operative would need to change its rules, and that a meeting of its members would be held on 25 November 2009 for this purpose.
That meeting was held. The members of the Co-operative resolved to adopt new rules. The objects of the Co-operative, as adopted, included the power to enter into a funding agreement with the Commonwealth. I note at this stage that there is an almost entire, if not exact, overlap between the membership of the Association and the membership of the Co-operative.
A few days later, on 27 November 2009, the funding application was submitted. It set out in some detail a scheme for increasing the efficiency of water delivery by providing a piped system for the delivery of stock and domestic water, such piping to be separate from the irrigation channels. It provided, further, for the irrigation channels themselves to be upgraded and lined, and to be used for the delivery of irrigation water only.
That funding application was successful. The Commonwealth agreed to pay $115 million to enable the modernisation plan, as described in the funding application, to be implemented.
Accordingly, on 3 June 2010, a meeting of the Association's committee authorised the Co-operative to sign the funding agreement with the Commonwealth, but on behalf of the Association. As I have indicated, the agreement that was signed set out in some detail all salient features of the works that have in fact been commenced and, to a large extent, completed.
The Co-operative entered into a design and construct contract with a consortium of Macmahon Contractors Pty Limited and ADASA Sistemas SA (the contractor).
The work to be performed by the contractor included the detailed design of the works of modernisation, surveying the line of and laying the stock and domestic water pipeline, and repairing and lining the irrigation channels.
As I have noted, the channel crosses land owned by the defendants. It is proposed to construct a section of the stock and domestic water pipeline on the defendants' land, parallel and adjacent to (but outside the bounds of) the channel. The work is complete up to the eastern and western extremities of the relevant land of the defendants, although some work remains to be done, both near the defendants' land and to the extreme northwest and western points of the scheme, in relation to smaller pipes used to supply stock and domestic water to individual land holders.
Completion of the proposed work over the defendants' lands, or construction of equivalent works in some form of diversion across other lands, is necessary for properties to the west of the defendants' lands to have the benefit of the upgraded System.
Relevant provisions of the Deed
The Scheme is effectively defined in recital B of the Deed, read in conjunction with recital A. I set out those recitals and, for completeness, recital C which records the agreement to constitute the Association.
A. the Members who have executed these presents are the applicants for an authority for a joint water supply scheme under Part II of the Water Act 1912 as amended of the State of New South Wales (such authority being hereinafter referred to as "the Authority") for stock and domestic purposes and irrigations by pumping water from the Macquarie River in the said State.
B. in order to provide water for such purposes and irrigation channels and other works are to be constructed plant and equipment and other property are to be acquired and services to be provided (all of which are included where the context permits in the expression "the Scheme").
C. the Members who have executed these presents have agreed to constitute an association to be known as "Trangie-Nevertire Irrigation Scheme" (hereinafter called "the Association") comprising themselves as the first members for the purpose of implementing maintaining and administering the Scheme.
Clause 1 of the Deed provides that on execution of it by not less than sixty of those named in the schedule, the Association will be constituted. It sets out the purpose for which the Association is constituted and, in general powers, the way in which those purposes are to be fulfilled.
1. By the execution of these presents by not less than sixty (60) of the persons named in the Schedule hereto such executors hereby constitute the Association for the purpose of implementing maintaining and administering the Scheme and for such other purposes relating to the Scheme as may from time to time be determined by the Association in accordance with the powers herein conferred on it and declare that the Association is a non-profit making organisation formed for the benefit of the members with all necessary powers to give effect to the aforesaid purposes including power to borrow money on such terms as it shall deem fit and to acquire and dispose of real and personal property and any interest therein and to the effect the orderley and efficient distribution and use of the water supply available under the Authority and otherwise and under any renewal of the Authority or under any water right and to define and regulate the rights and liabilities of the Members and to govern the collection by way of calls of money for the payment of the charges and expenses (hereinafter referred to as "calls") incident to the Scheme and its implementation maintenance and administration and such other purposes as aforesaid AND IT IS HEREBY EXPRESSLY AGREED AND DECLARED:
(a) that these presents shall be a nullity until they shall be duly executed by not less than sixty (60) of the said persons but shall immediately upon being so executed come into full force and effect binding upon and enuring for the benefit of the sixty (60) executors and shall thereafter upon due execution of them respectively become binding upon and ensure for the benefit of such (if any) of the other persons named in the Schedule hereto who shall duly execute these presents on or before the date first hereinbefore mentioned and
(b) that for the purposes of computing the number of executors of these presents The Minister for Agriculture in and for the said State shall be counted as two (2) persons by virtue of his Acerage Entitlement of five hundred (500) acres.
Clause 2 contains some definitions. Of particular relevance are the definitions of Scheme Irrigation System and System, and Plans and Specifications. I set out those definitions.
"the Scheme Irrigation System" and "the System" means the channels works and equipment of the Scheme so designated or to be so designated on the Plans and Specification and any variations thereof duly approved by the Committee but does not include any channels works or equipment of a Member downstream (going away from the channel on which such turnout is situated) from my turnout forming part of the Scheme Irrigation System.
"the Plans and Specifications" means the Plans and Specifications approved or to be approved by the Committee showing the Scheme Irrigation System or any part thereof and signed by a majority of the Committee for identification and as evidence of such approval and any amendments made thereto in accordance with these presents.
Clause 7 provides that the business of the Association "including the implementation, maintenance and administration of the Scheme" is to be managed by the Committee. It then provides that "[w]ithout limiting the generality of the foregoing", the Committee is to have the powers set out in subcls (a) to (m).
Although the parties' submissions ranged wider, I think that it is necessary to set out only the introductory words, or "chapeau", of clause 7 and then subcl (c).
7. The business of the Association including the implementation maintenance and administration of the Scheme shall be managed by the Committee which may pay out of the funds of the Association all such expenses of and incidental thereto as it thinks fit any may exercise all such powers of the Association and do on behalf of the Association all such acts as may be exercised ahd [sic] done by the Association and as are not by these presents required to be exercised or done by the Association in general meeting subject nevertheless to the paramount right of the Association in general meeting to manage its business to the exclusion of the Committee in such matters as it shall think fit and by special resolution to vary or rescind any resolution or decision of the Committee but no such special resolution by the Association in general meeting shall invalidate any prior acts of the Committee which would have been valid if such special resolution had not been passed. Without limiting the generality of the foregoing it is declared that the Committee shall have inter alia the following powers.
...
(c) To vary the Plans and Specifications and (after or during construction or installation) the System if the Committee decides that such variations are desirable for the benefit of the Members.
PROVIDED ALWAYS that any substantial variation shall first be referred to the Association in general meeting for approval.
...
Although I have not set it out, I note that subcl (m) authorises the Committee to appoint the Co-operative to be the agent or trustee of the Association and to enter into contracts relating to the implementation, maintenance or administration of the scheme in that capacity.
Clause 70 provided for each member of the Association to grant the Committee and its contractors, agents and employees full access to the members' land for the purposes of implementation, maintenance and administration of the scheme.
70. Each member hereby grants to the Association the members of the Committee its contractors agents and employees the right to the free access at all times into upon and out of the land to which his Acreage Entitlement relates with or without plant equipment and materials to implement maintain and administer the Scheme such access to be gained and work to be done with as little interference as is practicable with the Member's use of such land.
By clause 71, each member agreed on request to grant or procure the grant of an easement over the members' land if it was thought by the Committee to be necessary or desirable for the proper implementation, maintenance and administration of the scheme to do so.
71. Each member agrees on request to grant or procure for the benefit of or appurtenant to any land served by or within the System or owned beneficially by the Association which the Committee may designate free of charge and in registrable form such easements or other rights over land owned or leased by him as may be deemed by the Committee to be necessary or desirable for the proper implementation maintenance and administration of the Scheme such easements or other rights to be in such form as the Committee shall determine and for this purpose each Member hereby constitutes and appoints the Chairman for the time being of the Association his attorney with power to do all things and execute all documents for the purpose of granting perfecting and registering such easements with the Registrar-General and such other authorities as the Committee may determine and of granting and perfecting such other rights. All survey and legal costs stamp duty and registration fees incurred in relation to such easements and other rights shall be met by the Association.
Implementation, maintenance and administration of the Scheme
This is the key concept underlying cls 7, 70 and 71 of the Deed. It is of course also the key concept, or rationale, for the existence of the Association itself. That is made clear by cl 1.
It follows that the concept of implementation, maintenance and administration is, one way or another, the key to the understanding and decision of the first four issues.
In each case, attention is focused on the implementation, maintenance and administration of the Scheme. The Scheme is identified or defined in recital B, understood by reference to recital A. It is the Scheme for the construction of channels and other works to provide water for the purposes of stock and domestic use and irrigation identified in recital A.
The works in question are the System: those which provide water for the relevant purposes. And they are also, by reference to the definition of "Scheme Irrigation System" and "System" in cl 2, the works from time to time comprising the physical infrastructure. I say "from time to time" because the definition itself contemplates, as does cl 7(c), that the System may be varied over time.
That, in rather verbose terms, is the Scheme, for the implementation, maintenance and administration of which the Association is constituted. It is, likewise, the Scheme, the implementation, maintenance and administration of which is vested by cl 7 of the Deed in the Committee.
The specific powers given in subcls (a) to (m) of cl 7 do not define or limit the width of the general power set out in the chapeau. But they do provide some assistance in understanding the extent of that power. Thus, cl 7(c) specifically authorises the Committee, among other things, to vary the System once it has been constructed or installed.
As I have noted, the System comprises the channels, works and equipment of the Scheme as designated in approved plans and specifications or in approved variations.
Thus, in effect, the powers given to the Committee by cl 7(c) include the power to make changes to the System once it is installed and up and running.
That power is one to be exercised subject to conditions. The first condition is that the Committee think it desirable to exercise the power for the benefit of members. The second condition, in the case of substantial variations, is that the Association in general meeting approve of those variations.
In this case, the works in question comprise in substance:
(1) a totally new way of delivering stock and domestic water to members; and
(2) upgrading, to render more efficient and less wasteful, the channels for delivering irrigation water (and, of course, using the channels only for that purpose).
The works thus comprise modifications, to and maintenance and upgrading of, the means by which water is delivered for the purposes of the Scheme. In terms of clause 1 of the Deed, the works may thus be described as works seeking to effect the orderly and efficient distribution and use of the available water.
In my view, the works in question are properly described as works carried out or to be carried out in the course of or for the purpose of at least the maintenance and administration of the Scheme. That follows, I think, from the nature of the works themselves and from the objectives or purposes of the Scheme as the Deed describes them.
Further, and quite separately, the works would fall within cl 7(c) if the necessary qualifications, to the exercise of the power given by that subclause, are met.
Substantial variation
To my mind, the works do constitute a substantial variation to the System. As originally constructed and operated, the System was based on the use of unlined earthen channels for the distribution of both stock and domestic and irrigation water. The area of intrusion of the works onto members' lands was limited accordingly. It was said, I think, that the channels, including their embankments, were about 20 metres wide overall.
The proposed works will effectively double (and, to the extent carried out, have effectively doubled) the affected area of each member's land. Further, there is a separate and novel (to the Scheme) method of conveying water for stock and domestic purposes. Finally, the channels themselves are getting a substantial makeover.
Lining the channels has significant impacts apart from lessening water loss. The defendants at least have allowed their beasts to drink from the earthen channels. No doubt, other members did the same. Once the channels are lined, that will not happen, because of the risk of the damage to the liner. Indeed (and unlike the former situation), the area of the works (including the area where the pipeline is laid) is to be fenced off. As I understand it, that is specifically to prevent animals from watering in the channel.
It follows, in my view, that the new system of delivery of water for the purposes of the scheme differs in substantial ways from the old. Thus, for the purpose of clause 7(c), it was necessary that the members approve it in general meeting.
Approval in general meeting
I do not think that cl 7(c) requires that the members approve the detailed "for construction" plans of the work, or even the detailed design of the works. What members are required to approve, so that it may be implemented by the Committee, is the underlying concept. In my view, they have not done so in general meeting.
There are two records of general meetings of members at which the modernisation plan (or project) was discussed.
The first meeting was held on 15 January 2009. A draft of the modernisation plan prepared by Western Land Planning was presented to the meeting and explained. As I have noted, the meeting resolved to "endorse the modification plan to go forward".
However, what was presented did not spell out the works to be done. It presented four alternative proposals. They included proposals for lining the channels, or replacing them entirely with pipes, or keeping them and supplementing them with pipes. Those proposals related to the supply of water for irrigation purposes. The plan (and its drafts) stated that a way of providing water for stock and domestic purposes could only be finalised once a decision was made as to lining the channels or using pipes.
Thus, the endorsement given at the meeting of 15 January 2009 could only have been an endorsement "in principle" to pursue investigation of modernisation. It could not amount to endorsement, let alone approval, of the concept, or outline, of what was subsequently selected. That was not put to the meeting.
The second meeting was held on 3 June 2010. There is no doubt in my mind that, by then, members were fully aware of the nature and substance (although not fine detail) of the proposed works. By then, application for funding had been made. The application provided, among other things, details of the kind of works that would be carried out if funding were granted. The application outlined the substance of the plan that was ultimately designed and constructed.
That information was available to all members to inspect. I have no doubt that, bearing in mind the importance of the subject matter to members of the Association, they did take the opportunity to inform themselves of the nature of the proposal.
The minutes of the meeting in question show clearly that those present were fully aware not just of the general nature but also of the detail of the proposed modifications.
The resolutions passed at that meeting were as follows:
(1) to sign a Funding Agreement with the Commonwealth as soon as practicable;
(2) to obtain a design and costing report for the project;
(3) to report back to a general meeting of the Members [(I infer, of the Association)] for final approval binding on the Members to proceed with the Project.
I should have noted that the first resolution was directed not to the committee of the Association but to the Board of the Co-operative. That is so notwithstanding that the meeting was in form at least one of the Association rather than the Co-operative. It reinforces the point I have made already as to the substantial if not entire overlap between the memberships of the two bodies.
The resolutions which I have just set out were qualified by a further resolution, or proposition:
That this meeting acknowledges that the Board cannot proceed until the Members sign the necessary water transfer documents forthwith to enable the Board to proceed, sign the Funding Agreement and meet the deadlines specified by the Funding Agreement.
The third of the resolutions that I have set out makes it clear that there would be no approval before the first two resolutions had been satisfied, and before a further meeting was called for the purpose of giving "final approval".
There is no evidence of any other meeting of members of the Association at which anything resembling approval of the project was given.
I note that, on 9 November 2009, there was an "information meeting" of members of the Association. The purpose of the meeting was to inform members of the various legal steps that would be necessary to enable the project to proceed. Those steps included:
(1) changing the rules of the Co-operative so that it could make the application for Commonwealth funding and thereafter, if funding were approved, undertake the works on behalf of the Association; and
(2) the signing, by members, of various documents that were seen as necessary or desirable for the proposal to proceed.
The minutes do not record that any resolution was passed at all, let alone a resolution that could be taken as signifying approval for the project.
Approval outside general meeting
I have no doubt that, individually, the members of the Association have approved overwhelmingly the proposal. Leaving aside for a moment the defendants, the members have done all that is thought to be necessary or desirable to support the project and to enable works to proceed. They have:
(1) signed a Memorandum of Agreement, by which among other things they endorsed the modernisation plan (and I note that the elements of the plan were well and truly defined, and known to members, by then);
(2) granted the required access to and easement over their lands;
(3) supported the necessary changes to the rules of the Co-operative;
(4) agreed (by the memorandum) to vote "in person or by proxy in support of any general meeting of the scheme to endorse the modification plan and the [funding] application"; and
(5) done whatever is necessary, as part of the implementation of the plan, in respect of their then existing water entitlements.
I note that the first defendant, Mr John Smith, signed a memorandum of agreement. Further, all the defendants at one stage or another indicated their support for the stock and domestic water pipeline proposal.
There is other evidence of the members' support for, and hence by inference approval of, the modernisation plan. It is not necessary to go to the detail of that evidence.
Mr Ireland of Queen's Counsel, who appeared for the defendants, submitted that any agreement that has the ability to affect proprietary rights should be construed and applied strictly. I have no doubt that the proposition is, as a general one, correct. But in my view, for reasons that I shall give in a moment, it is irrelevant.
The purpose of approval in general meeting is to ensure that the committee cannot make substantial changes to the System without the support of members. In my view, that purpose has been met, in a functional if not a technical sense, in the present case.
Had a meeting of members of the Association been called, all those who signed the memorandum would have been bound, in honour at least although not as a matter of contract, to support the project. Further, I infer from what has happened, they would have done so. Again, I except the defendants from this conclusion.
In those circumstances, it seems to me that all members of the Association other than the defendants must be taken as having approved or ratified what has been done in the implementation of the modernisation plan. That extends, in my view, to ratification or approval of the works. That is so whether the members are considered in their capacity as members of the Association or in their capacity as members of the Co-operative. In that latter capacity, of course, they have caused to be taken all the necessary steps required so that the Co-operative can play its part in the implementation of the project.
Issue 1: cl 70
Clause 70 deals with access to land for the purpose of implementation, maintenance and administration of the Scheme. In my view, it is concerned with the Scheme (and thus the System) as they stand from time to time. The anterior question - of how the Scheme or the System came to have the form they did at the time the need for access is asserted - is irrelevant to cl 70.
So far as cl 70 is concerned, the point is that, for the reasons I have given, the members of the Association have - informally but effectively - allowed the modernisation plan to proceed. They have - again informally but effectively - consented to and if necessary ratified the Committee's implementation of the modernisation plan, including through the Co-operative as the agent of the Association. Those matters represent the facts or the realities against which the requirement for access is to be assessed.
In short, for those reasons, it seems to me that the modernisation plan, and the works that have been carried out to date in pursuance of it, form part of the Scheme. Likewise, the physical works done form part of the System. And that is so, in each case, regardless of whether the correct procedures were followed (to the letter, or at all). I reiterate that in my view there is abundant evidence to show that the Association as a whole has decided, informally but effectively, to proceed.
Thus, the task of the Committee is to implement, or to continue the implementation of, the modernisation plan. That task is part of the Committee's general power, given by the chapeau to cl 7 of the deed, of implementation, maintenance and administration.
In those circumstances the key question, for the purpose of cl 70, is not whether the correct procedures have been followed to get the Scheme and the System to the state that they are in at present. It is, rather, what the Committee is to do in the state of affairs that exists. Specifically, it is what the Committee is to do in relation to the implementation of the modernisation plan so far as it has proceeded.
On that analysis, it is clear that the requirement for access is justified. The modernisation plan works - what I have from time to time called the project - cannot be completed without access to the defendants' land, except (perhaps) at considerable expense and delay. Even that qualification assumes that there is a viable alternative way to do the works. Although there was some discussion of possible alternatives, it has not been proved that there is any practicable or viable alternative way, and that there is no legal impediment to its adoption.
Thus, focusing (as I think is required) on the state the works are at rather than on the question of consent to the works getting to that stage, I have no doubt that the requirement for access is justified.
For those reasons the question posed by issue 1 should be answered "yes".
Issue 2: cl 71
Likewise, the requirement under cl 71 for an easement must be considered in the context of the Scheme and the System as they stand at the time the easement is sought. Accordingly, and for the reasons given in relation to the first issue, the question posed by issue 2 should be answered "yes".
Issue 3: terms of the easement
Clause 71 requires that the easement be:
(1) "deemed by the Committee to be necessary or desirable for the proper implementation maintenance and administration of the scheme"; and
(2) "in such form as the Committee shall determine".
It is obvious that the Committee has formed the view - for that is what I take the word "deemed" to require - that the easement has the necessary quality. It is easy to see why. The easement sought allows the laying of the stock and domestic pipeline on the defendants' land. It allows access for the purposes of repair and maintenance. And it puts the respective rights and obligations of the parties on a sounder footing - registration - than a merely contractual foundation. The weaknesses in merely contractual rights have been exposed by the litigation in this very case.
I accept that the effect of the grant (including the entitlement to fence off the area of the easement) will be to sterilize part of the defendants' land. I accept that, hitherto, the defendants have used their land right up to the embankment, and that they will lose the benefit of a strip of land about ten metres wide on each side of the embankment if the easement is granted and fenced off.
Mr Ben Smith, the son of Mr John Smith, calculated the lost area at about 24 hectares. I think that this calculation is flawed because it was based, as I understand it, on the overall width of the easement. The central part - the channel - is unavailable in any event. But regardless, I do not think that the loss of an area of about 24 hectares is unreasonable. That loss, be it 24 hectares or, as I think more likely, about 10 to 12 hectares - is to be put in the context of the three affected parcels of land, which are farmed together, having an overall area of about 3,400 hectares.
The easement seeks access for the Co-operative and its agents. The Co-operative is not a party to the Deed. Hence, it cannot compel the grant of an easement in its favour. But it is for the Association to make a decision as to what is necessary or desirable. There is nothing in the words of cl 71 to preclude an easement in favour of a third party, being the party that will actually do the work or procure it to be done.
Put shortly, an easement in favour of the Association or its servants or agents from time to time for the necessary purposes could not be objectionable. I see no reason to think that it is made objectionable because one of those agents is specifically named.
Thus, I conclude that the answer to the question posed by issue 3 is that the Association is entitled to have an easement granted in the terms sought.
Issue 4: license
It follows from what I have said, including as to cl 70, that the question posed by this issue should be answered "yes".
Issue 5: the Memorandum of Agreement
The plaintiffs, who propounded this issue, abandoned it in the course of the hearing.
Issue 6: agency
On the view to which I have come, this issue leads nowhere.
Were it necessary to decide, I would conclude that there is an abundance of evidence to show that the Association and the Co-operative stand in the relationship of principal and agent for the purposes of the modernisation plan, and that they have done so at least since the Co-operative, with the express authority of the Association, submitted the funding proposal to the Commonwealth Government.
That funding proposal provided that any funding would go to the Co-operative so that the Co-operative could carry out or cause to be carried out the works. That is what the Association intended to happen. And that is precisely what has happened.
Issue 7: adoption of the new rules
This issue does not arise on the pleadings. The plaintiffs have been denied the opportunity to meet it by evidence. The evidence on which Mr Ireland relied is not so obviously conclusive that it could be said that there was nothing the plaintiffs could say in response.
Further, and on the view that I take on the proper construction of cls 70 and 71, the issue goes nowhere.
Thus, I do not propose to decide issue 6.
Conclusion and orders
The first plaintiffs have made good their claim to injunctive relief. Mr Ireland accepted that, if I were to come to the conclusions that I have, it would be appropriate to grant that relief. He accepted that it would be inappropriate and unjust to leave the plaintiffs (at least, the first plaintiffs) to their rights in damages.
The first plaintiffs have also made good their claim to the grant of an easement.
Prima facie, the plaintiffs should have their costs, but I will hear the parties on that.
The summons seeks relief in terms of documents which are said to be annexed (and which are in evidence) but which were not in fact annexed. In those circumstances, the appropriate order is to direct the plaintiffs to bring in short minutes of order to give effect to these reasons.
The exhibits are to be handed out.
The question of damages was reserved for separate and posterior determination. Since there may be some live issue of damages, I stand the balance of the proceedings over to the directions list on 1 March 2013.
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Decision last updated: 26 February 2013
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