Emu Rider Pty Ltd ATF the trustee for Griffiths Investment Trust v Minister administering the Water Management Act 2000

[2025] NSWLEC 64

Land and Environment Court

New South Wales

Medium Neutral Citation:

Emu Rider Pty Ltd ATF the trustee for Griffiths Investment Trust and Others v Minister administering the Water Management Act 2000 [2025] NSWLEC 64

Hearing dates:

15-17 April 2025, 27-29 May 2025, 5 and 6 June 2025 (respondent’s written submissions), 16 June 2025 (applicants’ written submissions)

Date of orders:

24 June 2025

Decision date:

24 June 2025

Jurisdiction:

Class 4

Before:

Preston CJ

Decision:

The Court:

(1) Declares that the replacement floodplain harvesting access licences, which took effect on 21 February 2022 and which the applicants were taken to hold, are invalid.

(2) Declares that the Minister administering the Water Management Act 2000 failed to publish information in relation to the models adopted on 21 February 2022, in breach of cl 23G(2) of the Water Management (General) Regulation 2018 (as then in force).

(3) Declares that the Minister administering the Water Management Act 2000 failed to give to the applicants written notice and 28 days in which to make submissions about the proposed share components for the replacement floodplain harvesting access licences and to consider such submissions, in breach of cl 23F of the Water Management (General) Regulation 2018 (as then in force).

(4) Declares that the Minister administering the Water Management Act 2000’s determinations of the share components of the replacement floodplain harvesting access licences held by the applicants, made on 21 February 2022 under cl 23C(2) of the Water Management (General) Regulation 2018 (as then in force), are invalid.

(5) Orders the Minister administering the Water Management Act 2000 to pay the applicants’ costs of the proceedings.

Catchwords:

JUDICIAL REVIEW – water access licence – replacement floodplain harvesting access licence – regulations for conversion of actual or proposed floodplain water usage into licence – proclamation applying statutory part to water source – regulations made prior to application proclamation – whether regulations invalid – whether application proclamation identified incorrect water source – whether compliance with statutory scheme for issuing licence – requirement to adopt models to determine share component of licence – whether decision to adopt models was legally unreasonable – requirement to publish information in relation to models – failure to do so – whether previously issued documents satisfied notice requirement – requirement to give notice and opportunity to make submissions on proposed share component – failure to do so – whether previous consultation satisfied notice requirement – requirement to consider submissions – failure to do so – whether consideration of submissions from previous consultation satisfied requirement – whether denial of procedural fairness – requirement to use models in determining share component – whether use of utility program as well as models breached requirement – whether statutory notice given for licence to take effect

COSTS – indemnity costs – heads of agreement for settling proceedings – whether Minister’s conduct in breaching heads of agreement warranted indemnity costs

Legislation Cited:

Interpretation Act 1987 (NSW), ss 26, 30, 41

Water Management (General) Amendment (Lower Namoi and Border Rivers Floodplains) Regulation 2020

Water Management (General) Regulation 2011, cl 4, sch 3

Water Management Amendment Act 2014 (NSW)

Water Management (General) Regulation 2018, cl 252(1)

Water Management (General) Amendment (Floodplain Harvesting Access Licences) Regulation 2021

Water Management (General) Amendment (Floodplain Harvesting Access Licences) Regulation 2022, cl 23K

Water Management (General) Amendment (Floodplain Harvesting Access Licences) Regulation 2023

Water Management (General) Amendment Regulation 2021, cls 23A, 23B, 23C, 23F, 23G, 23H, 23I, 23J, 23K

Water Management Act 2000 (NSW), Dictionary, ss 4A, 11, 45, 50, 55A, 56, 57, 57A, 61, 63, 66, 67 68A, 400, sch 9 cl 98

Cases Cited:

Arnold v Minister administering the Water Management Act (No 6) [2013] NSWLEC 73

Arnold v Minister administering the Water Management Act 2000 [2014] NSWCA 386

Elliott v Minister Administering Fisheries Management Act 1994 (2018) 97 NSWLR 1082; [2018] NSWCA 123

Harrison v Schipp [2001] NSWCA 13

Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242

Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18

Nathanson v Minister for Home Affairs (2022) 276 CLR 80; [2022] HCA 26

Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11

Ramsay v Minister for Lands and Water; Hospitality and Racing, The Minister administering the Water Management Act 2000 (2023) 258 LGERA 260; [2023] NSWCA 299

Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6

Smith v East Elloe Rural District Council [1956] AC 736

Tubbo Pty Ltd v Minister Administering the Water Management Act 2000; Harvey v Minister Administering the Water Management Act 2000 (2008) 302 ALR 299; [2008] NSWCA 356

Texts Cited:

Floodplain Management Plan for the Border Rivers Valley Floodplain 2020, cl 4

NSW Border River Regulated River Water Source 2021, cl 4

Proclamation in pursuance of sections 55A and 88A (2009-298)

Water Management (Application of Act to Certain Water Sources) Proclamation 2022, cl 4

Water Sharing Plan for the NSW Border Rivers Regulated River Water Source 2021, cls 4, 65

Water Sharing Plan for the NSW Border Rivers Regulated River Water Source 2009, cl 4

Water Sharing Plan for the NSW Border Rivers Regulated River Water Source Amendment Order 2022

Water Sharing Plan for the NSW Border Rivers Regulated River Water Source Amendment Order 2022

Category:

Principal judgment

Parties:

Emu Rider Pty Ltd ATF the trustee for Griffiths Investment Trust (First Applicant)
Andrew Stanley Brown (Second Applicant)
Georgia Hadley Brown (Third Applicant)
Wenaline Pty Limited (Fourth Applicant)
RMI Pty Limited (Fifth Applicant)
Edward Alexander Hickson (Sixth Applicant)
Minister Administering the Water Management Act 2000 (Respondent)

Representation:

Counsel:
S Prince SC, A Searle (Applicant)
H El-Hage SC, M Dalla-Pozza (Respondent)
Solicitors:
HWL Ebsworth Lawyers (Applicant)
Department of Climate Change, Energy, the Environment and Water (Respondent)

File Number(s):

2022/343912

Publication restriction:

NIL

JUDGMENT

Challenge to replacement floodplain harvesting access licences

1. Emu Rider Pty Ltd and five other applicants (collectively ‘Emu Rider’) are landholders in a catchment in northwestern New South Wales referred to as the NSW Border Rivers Water Management Area. Emu Rider challenges decisions of the Minister administering the Water Management Act 2000 (NSW) (WM Act) relating to the issue to the applicants of replacement floodplain harvesting access licences for the NSW Border Rivers Regulated River Water Source and a decision of the Minister on 2 October 2024 to refuse to consider amending the licences under s 68A of the WM Act.

2. In the Second Further Amended Summons, Emu Rider raises nine grounds of review of the decisions relating to the replacement floodplain harvesting access licences (grounds 1-9), one ground relating to the decision not to amend the licences (ground 10), and one ground relating to an alleged breach of the heads of agreement which the parties had entered into in an endeavour to settle the proceedings (ground 11). By the end of the hearing, Emu Rider pressed the last two grounds only in relation to the costs order that should be made.

3. The nine grounds of review of the decisions relating to the replacement floodplain harvesting access licences concerned five steps in the statutory process for the issue of the replacement floodplain harvesting access licences.

4. The first step was the making of the Water Management (General) Amendment Regulation 2021 (the 2021 Regulation), published on 17 December 2021, purportedly pursuant to s 57A of the WM Act. Emu Rider claimed that the 2021 Regulation was made before a proclamation was made under s 55A of the WM Act declaring Chapter 3, Part 2 of the WM Act (in which s 57A is located) to apply to the relevant water source, the NSW Border Rivers Regulated River Water Source. This is ground 1 (the invalidity of the 2021 Regulation ground).

5. The second step was the proclamation under s 55A of the WM Act applying Chapter 3, Part 2 of the WM Act to the NSW Border Rivers Regulated River Water Source. The Water Management (Application of Act to Certain Water Sources) Proclamation 2022, published on 18 February 2022, declared that Chapter 3, Part 2 of the WM Act applies to the Water Sharing Plan for the NSW Border Rivers Regulated River Water Source 2021 (Water Sharing Plan). The Water Sharing Plan, published on 2 July 2021, applies to the NSW Border Rivers Regulated River Water Source within the Border Rivers Water Management Area (the water source) (cl 4(1)). The water in the water source “consists of the water between the bed and banks of all rivers that have been declared by the Minister to be regulated rivers and that is available to New South Wales…” from identified parts of the Pindari Dam water storage, Severn River, Macintyre River, Barwon River and Dumaresq River (cl 4(2)).

6. Emu Rider claimed that this proclamation did not declare Chapter 3, Part 2 of the WM Act to apply to the floodplain for these rivers of the water source but only the rivers themselves. The water in the water source was limited to the water between the bed and banks of the rivers and did not extend to water on the floodplain. Water on a floodplain is capable of being a water source under (b) of the definition of “water source” in the Dictionary to the WM Act.

7. Emu Rider contended that the consequence was that the 2021 Regulation did not authorise the issue of a replacement floodplain harvesting access licence for the water source of water on the floodplain, but instead only for water between the bed and banks of the rivers in the NSW Border Rivers Regulated River Water Source. This is ground 2 (the wrong water source ground).

8. The third step was the consultation with landholders and consideration of landholders’ submissions under cl 23F of the 2021 Regulation. Clause 23F of the 2021 Regulation sets two preconditions to the exercise of the power to determine the share component for a replacement floodplain harvesting access licence for an eligible landholder. The first is that the Minister must give written notice to the landholder and a period of 28 days in which the landholder may make submissions about the proposed share component for the landholder (cl 23F(a)). The second is that the Minister must consider any submissions received from the landholder within the 28 days (cl 23F(b)).

9. Emu Rider claimed that the Minister’s delegate did not comply with these preconditions before she determined the share components for the replacement floodplain harvesting access licences issued to Emu Rider and the other applicants. The Minister’s delegate determined under cl 23C(2) of the 2021 Regulation the share components for the replacement floodplain harvesting access licences on 21 February 2022 and purported to give written notice of the final share components under cl 23K(1) of the 2021 Regulation on the same day. The Minister did not give written notice of the purported share component under cl 23F before making the final determinations of the share components. This is ground 3 (the failure to notify ground).

10. Emu Rider raised two grounds in the alternative to the failure to notify ground, to address the argument raised by the Minister that she had “otherwise” complied with the requirement to notify landholders and consider their submissions than under cl 23F of the 2021 Regulation.

11. The Department of Planning, Industry and Environment, one year before the Minister’s delegate made the final determinations of the share components under the 2021 Regulation, and before the 2021 Regulation was made and came into force, had invited the landholders to make submissions about the then advised proposed share components. That invitation, by letter dated 18 February 2021, limited the submissions the landholders could make to only concern “an error or omission in the application of the licence determination process with reference to our policy implementation guidelines or the proposed amendments to the Water Management (General) Regulations 2018.” Emu Rider claimed that this limitation on the submissions that could be made caused the letter of 18 February 2021 not to be written notice for the purposes of cl 23F of the 2021 Regulation (apart from the fact that the letters predated the 2021 Regulation). This is part of ground 4 (the ineffective notice ground).

12. The ineffective notice ground concerned the statutory process of consultation under cl 23F of the 2021 Regulation. Emu Rider also claimed that the process of consultation failed to give the applicants a real and genuine opportunity to make submissions on issues and information adverse to them in breach of the common law duty of procedural fairness. This is the other part of ground 4 (the denial of procedural fairness ground).

13. Emu Rider and the other applicants did make submissions in response to the invitation in the letter of 18 February 2021. Those submissions, as well as submissions by other landholders, were determined by the Department to be “out of scope” as they were not limited to identifying “an error or omission in the application of the licence determination process.” A summary of the submissions, noting that they were out of scope, was attached to a briefing note to the Minister’s delegate before she made the final determination of share components on 21 February 2022. Emu Rider claimed that the Minister’s delegate did not consider the submissions themselves, only a summary of the submissions, in breach of cl 23F(b) of the 2021 Regulation. This is ground 5 (the failure to consider submissions ground).

14. The fourth step was the adoption of models for determination of share components of the replacement floodplain harvesting access licences under cl 23G(1) of the 2021 Regulation and publishing of information about the models under cl 23G(2) of the 2021 Regulation. Emu Rider challenged both the timing and legal unreasonableness of the decision of the Minister’s delegate to adopt three models for determining the share components of the replacement floodplain harvesting access licences. The timing of the decision to adopt the models is challenged in ground 6, while the legal unreasonableness of the decision to adopt the models is challenged in grounds 7 and 9.

15. As to timing, the Minister’s delegate adopted three models on 21 February 2022, the same day she made the final determinations of the share components of the replacement floodplain harvesting access licences. Emu Rider claimed that the decision to adopt the models under cl 23G(1) needed to be made before written notice to the landholders inviting submissions about the proposed share components under cl 23F was given. That was not done. No written notice under cl 23F was ever given and the letter of 18 February 2021 inviting submissions on the proposed share components was given a year before the Minister’s delegate adopted the models under cl 23G(1) on 21 February 2022. This is the first part of ground 6 (the timing of model adoption ground).

16. Clause 23G(2) of the 2021 Regulation requires the Minister to publish on the Department’s website certain information about the models (set out in (a) to (d)). Emu Rider claimed that the publication of this information about the models under cl 23G(2) needed to be done after the Minister adopted the models under cl 23G(1). This was not done. The Minister did not publish any information about the models after adopting the models on 21 February 2022. The Department did publish on its website a year and a half earlier in 2020, two reports, one termed a Model Build Report and the other termed a Model Scenarios Report. Emu Rider claimed the publication of these reports in 2020 was not the publication required by cl 23G(2) of the 2021 Regulation, not only because of the timing but also because the reports did not contain the information required by cl 23G(2) of the 2021 Regulation. This is the second part of ground 6 (the failure to publish model information ground).

17. Emu Rider challenged in grounds 7 and 9 the Minister’s decision to adopt the models in a number of ways relating to the models’ compliance with s 57A of the WM Act and cl 23G to cl 23J of the 2021 Regulation, including:

1. the models were not for the water source declared in the proclamation of the NSW Border Rivers Regulated River Water Source, but instead for the water source of water on the floodplain for those rivers;

2. the models did not represent the floodplain declared by the Water Management (General) Amendment (Lower Namoi and Border Rivers Floodplains) Regulation 2020, published on 11 September 2020, to be a floodplain, namely the Border Rivers Valley Floodplain, but instead the larger area of the Border Rivers Valley, which extended into Queensland to the north and the New England Tableland to the east, amongst other areas;

3. the models did not take into account rainfall runoff and overtopping, two forms of overland flow water flowing over the floodplain;

4. the models were not capable of converting the actual or proposed floodplain water usage of each eligible landholder into a share component of a replacement floodplain harvesting access licence;

5. the models were not capable of representing the estimated volume of water that is used by each landholder’s eligible water supply work for the water source; and

6. the models were not capable of being used to ensure that any adjustment required to ensure the long-term average annual extraction limit, or the floodplain harvesting part of the limit, is not exceeded, is proportionately allocated to each landholder who has an eligible water supply work for the water source by way of the share components of the replacement floodplain harvesting access licences.

18. Emu Rider claimed that the Minister’s decision under cl 23G(1) to adopt the models, in circumstances where the models did not comply with s 57A(1) of the WM Act and cl 23G to cl 23J of the 2021 Regulation, was legally unreasonable (ground 7) or attended by jurisdictional error (ground 9) (the model adoption grounds).

19. The fifth step was the Minister’s delegate’s determination of the share components of the replacement floodplain harvesting access licences under cl 23C(2) of the 2021 Regulation. Clause 23C(2) requires the Minister to determine the share component of a replacement floodplain harvesting access licence “by using the 3 models referred to in Division 3 that apply to the regulated river water source….” Emu Rider claimed that the Minister’s delegate did not use the three models that were adopted under cl 23G(1) of the 2021 Regulation to determine the share components of the replacement floodplain harvesting access licences issued to Emu Rider and the other applicants, as instead a separate utility program external to the models was used to determine the share components. This is ground 8 (the failure to use models ground).

20. Emu Rider also claimed that the notice given by the Minister to Emu Rider and the other applicants on 21 February 2022, purportedly under cl 23K(1) of the 2021 Regulation, was ineffective to cause the replacement floodplain harvesting access licences to take effect, or those persons to be taken to hold the licences, from 21 February 2022. The 2021 Regulation was disallowed by the NSW Legislative Council on 24 February 2022. A later regulation was made, the Water Management (General) Amendment (Floodplain Harvesting Access Licences) Regulation 2022 (the 2022 Regulation), published on 1 July 2022. The 2022 Regulation contained cl 23K in the same terms as cl 23K in the 2021 Regulation. Emu Rider claimed that cl 23K of the 2022 Regulation could not operate to cause the replacement floodplain harvesting access licences determined in accordance with the 2021 Regulation to take effect, as it only applied to determinations of share components of licences determined in accordance with Division 2 of the 2022 Regulation.

18. Emu Rider further contended that the later action by the Minister on 3 and 12 August 2022 to send to landholders a letter and an email advising of the commencement of, and enclosing a copy of, the replacement floodplain harvesting access licences and statement of conditions was ineffective to cause the licences to take effect or the landholders to be taken to hold the licences, as those licences provided in August 2022 were not determined in accordance with the 2022 Regulation.

Challenge should be upheld

22. I have determined that Emu Rider has established certain grounds of review, being the failure to notify ground, the ineffective notice ground, the failure to consider submissions ground, the timing of model adoption ground and the failure to publish model information ground. I do not uphold the invalidity of the 2021 Regulation ground, the wrong water source ground, the model adoption grounds or the failure to use models ground. It is unnecessary to determine the denial of procedural fairness ground. The statutory non-compliances involved in the grounds of review that I uphold are material and invalidate the replacement floodplain harvesting access licences issued to the applicants. The replacement floodplain harvesting access licences issued to the applicants should be declared to be invalid.

23. In this event, it is unnecessary to decide finally Emu Rider’s arguments concerning whether and if so when the replacement floodplain harvesting access licences took effect under cl 23K of the 2021 Regulation or the 2022 Regulation or the validity of the conditions imposed on the licences. The declaration of invalidity of the licences will operate retrospectively, so that there will no longer be licences.

24. As Emu Rider has been successful in establishing the invalidity of the replacement floodplain harvesting access licences, the Minister should be ordered to pay the applicants’ costs of the proceedings. The costs of the proceedings include the parties’ attempts to settle the proceedings, including costs incurred in negotiating and implementing the heads of agreement between the parties. Although Emu Rider sought for costs incurred after the Minister allegedly breached the heads of agreement to be awarded on an indemnity basis, rather than a party and party basis, I do not consider that the Minister’s conduct justifies awarding costs on an indemnity basis. Costs of the proceedings should be awarded on a party and party basis.

Legislative history

25. To understand the grounds of review which raise non-compliances with provisions of the WM Act and 2021 Regulation, it is instructive first to explain the statutory scheme for the conversion of actual or proposed floodplain water usage by landholders into replacement floodplain harvesting access licences. I will start in this section with a summary of the history of legislative amendments, proclamations and Ministerial orders before I explain in the next section how the statutory scheme works.

26. Part 2 of Chapter 3 of the WM Act concerns access licences. The Part applies to a part of the State (such as a water management area) or a water source, and a category or subcategory of access licence that relates to that part of the State or that water source, that is declared by proclamation to be a part of the State or water source, and category or subcategory of access licence, to which the Part applies (s 55A(1)).

27. An “access licence” is defined in the Dictionary to the WM Act to mean “an access licence referred to in section 56.” Section 56 of the WM Act provides that an access licence entitles its holder to specified shares in the available water within a specified water management area or from a specified water source (referred to as the share component) and to take water at specified times, at specified rates or in specified circumstances, and in specified areas or from specified locations (referred to as the extraction component) (s 56(1) of the WM Act).

28. A “water source” is defined in the Dictionary to the WM Act:

“water source means the whole or any part of—

(a)  one or more rivers, lakes or estuaries, or

(b)  one or more places where water occurs on or below the surface of the ground (including overland flow water flowing over or lying there for the time being),

and includes the coastal waters of the State.”

29. The first limb of the definition of “water source” includes water in the rivers and other water bodies themselves. The second limb of the definition includes overland flow water flowing over or lying for the time being on land, including land that is declared by the regulations to be a floodplain (see the definition of “floodplain” in the Dictionary to the WM Act).

30. Section 57 of the WM Act specifies the categories of access licences. Prior to the legislative amendment of Part 2 of Chapter 3 of the WM Act in 2014, s 57(1) did not expressly specify a category of floodplain harvesting access licence, but s 57(1)(l) did provide for “such other categories of access licence as may be prescribed by the regulations.” The Water Management (General) Regulation 2011, which was the regulation in force at the time of the legislative amendments of Part 2 of Chapter 3 of the WM Act in 2014, prescribed as a category of access licence for the purposes of s 57(1) of the WM Act a “floodplain harvesting access licence” (cl 4(1)(c)).

31. Section 57(2) of the WM Act also provided that: “Subcategories of any category of access licence may be prescribed by the regulations”. The Water Management (General) Regulation 2011 prescribed, for the purposes of s 57(2) of the WM Act, that “each subcategory specified in Column 2 of the Schedule 3 in relation to a category of access licence referred to in Column 1 of that Schedule is a prescribed subcategory of the category so referred to” (cl 4(2)). Schedule 3 specified in Column 2 one subcategory of floodplain harvesting access licence specified in Column 1, which was “environmental.”

32. As earlier noted, by s 55A(1) of the WM Act, Part 2 of Chapter 3 of the WM Act only applies to a water source and a category or subcategory of access licence that relates to that water source, once a proclamation declares the water source and category or subcategory of access licence, to be ones to which Part 2 applies. As a consequence, proclamations needed to be made declaring specified water sources and categories or subcategories of access licence relating to those water sources to be water sources and categories or subcategories of access licences to which Part 2 applies.

33. One of these proclamations concerned the NSW Border Rivers Regulated River Water Source. The proclamation, being termed the ‘Proclamation in Pursuance of sections 55A and 88A (2009-298)’, published on 26 June 2009 and commenced on 1 July 2009, declared that:

“(a) Part 2 of Chapter 3 of that Act applies to each water source to which the Water Sharing Plan for the NSW Border Rivers Regulated River Water Source 2009 applies, and to all categories and subcategories of access licence (other than floodplain harvesting access licences) in relation to any such water source, and

(b) Part 3 of Chapter 3 of that Act applies to each water source to which the Water Sharing Plan for the NSW Border Rivers Regulated River Water Source 2009 applies, and to all water use approvals and water supply work approvals in relation to any such water source.”

34. The Water Sharing Plan for the NSW Border Rivers Regulated River Water Source 2009, to which the proclamation referred, was made under s 50 of the WM Act and published earlier on 29 May 2009. The water source in respect of which the Water Sharing Plan applied was declared to be the Border Rivers Regulated River Water Source and comprised “all surface water between the bed and banks of all rivers” from the identified parts of the Pindari Dam water storage, Severn River, Macintyre River, Barwon River and Dumaresq River (cl 4(1)). This water source was within the Border Rivers Water Management Area constituted by the Ministerial order made on 23 November 2001 (cl 4(2)).

35. The Water Sharing Plan was stated not to apply to “waters within aquifer water sources underlying this water source or to water on land adjacent to this water source” (cl 4(3)). The reference to “this water source” is a reference to the Border Rivers Regulated River Water Source described in cl 4(1). This description of the water source in cl 4(1) and (3) could be amended by the Minister to provide for the harvesting of water from the floodplain (cl 4(5)).

36. It can be seen that the proclamation and the earlier Water Sharing Plan applied Part 2 of Chapter 3 of the WM Act to the NSW Border Rivers Regulated River Water Source (which was limited to the water in the rivers but not water on land adjacent to the rivers), and to all categories and subcategories of access licence relating to that water source, “other than floodplain harvesting access licences.”

37. The upshot was that prior to the legislative amendment of Part 2 of Chapter 3 of the WM Act in 2014, that Part applied to the NSW Border Rivers Regulated River Water Source but not to the category of access licence of a “floodplain harvesting access licence” or subcategory of that access licence of “environmental”.

38. A landholder needed to apply under s 61 of the WM Act and be granted under s 63 of the WM Act a category of access licence other than a floodplain harvesting access licence to take water from a water source in the NSW Border Rivers Regulated River Water Source falling within the first limb of the definition of “water source” in the Dictionary to the WM Act, but not water from a water source falling within the second limb of the definition. Landholders could take or use water from land that is a floodplain in the NSW Border River Regulated River Water Source without an access licence. That entitlement of landholders to take or use water from a floodplain without holding an access licence was sought to be regulated by the legislative amendments of the WM Act in 2014.

39. Part 2 of Chapter 3 of the WM Act was amended by the Water Management Amendment Act 2014. The amendments, published on 17 September 2014 and coming into force on 1 January 2015, concerned floodplain harvesting access licences. Four amendments are relevant. First, the insertion in s 57(1) of the additional categories of access licences of floodplain harvesting (regulated river) access licences (in (k1)) and floodplain harvesting (unregulated river) access licences (in (k2)).

40. Second, the insertion of s 57A making special provisions relating to floodplain harvesting access licences. Section 57A provides:

“57A   Special provisions relating to floodplain harvesting access licences

(1)  The regulations may make provision for or with respect to the conversion of actual or proposed floodplain water usage by landholders into any of the following categories or subcategories of floodplain harvesting access licences (replacement floodplain harvesting access licences)—

(a)  floodplain harvesting (regulated river) access licences,

(b)  floodplain harvesting (unregulated river) access licences,

(c)  any other categories or subcategories of floodplain harvesting access licences prescribed for the purposes of section 57 (1) (l) or (2).

(2)  Without limiting subsection (1), the regulations may make provision for or with respect to the following—

(a)  the circumstances in which actual or proposed floodplain water usage by landholders will give rise to replacement floodplain harvesting access licences,

(b)  the terms and conditions of replacement floodplain harvesting access licences,

(c)  the share components of replacement floodplain harvesting access licences (including the process for the determination of such share components),

(d)  the determination of applications for approvals for flood works or other works (whether made under this Act or the Water Act 1912) in connection with floodplains in respect of which replacement floodplain harvesting access licences will arise,

(e)  the establishment, functions and procedure of advisory committees to provide advice to the Minister on matters in connection with any scheme prescribed by the regulations for the creation of replacement floodplain harvesting access licences (including providing for the application of section 397 to the acts or omissions of such committees or their members).

(3)  Regulations made for the purposes of this section have effect despite any provisions of this Act (including Schedule 10) that are specified by the regulations.

(4)  A floodplain harvesting (regulated river) access licence, or other category or subcategory of floodplain harvesting access licence, that nominates a regulated river water source is taken to authorise the taking of water from the floodplain for the river and, accordingly, any water taken under that licence from that floodplain is to be treated as having been taken from the regulated river water source for the purposes of this Act or any management plan that applies to the river.

Note.

For example, the taking of water from a floodplain under a floodplain harvesting (regulated river) access licence otherwise than in accordance with the water allocation for the licence will be an offence under section 60C even though it was not directly taken from the regulated river to which the licence relates.

(5)  In this section—

floodplain water usage by landholders means the taking or use of water by landholders (whether or not under an approval, licence or other authority) from land that is, or is to become, a floodplain.

Note.

The Dictionary defines floodplain to mean land declared by the regulations to be a floodplain.”

41. Third, the insertion of cl 98 in Schedule 9 of the WM Act which contains the savings and transitional provisions. Clause 98 provides:

“98   Amendments concerning floodplain harvesting access licences

(1)  Part 2 of Chapter 3 is taken not to have commenced to apply to any category of floodplain harvesting access licences in connection with a place or water source regardless of whether or not that category was expressly excluded from a previous application proclamation for the place or source.

(2)  A previous application proclamation for a place or water source is a proclamation under section 55A made with respect to the place or water source that was published before the day on which section 57A was inserted by the amending Act.

Note.

A proclamation under section 55A operates to apply Part 2 of Chapter 3 to parts of the State or water sources specified by the proclamation.

(3)  This clause applies despite section 55A (or a proclamation made under that section) or Schedule 10.

(4) However, nothing in this clause limits the application of section 57A (as inserted by Schedule 1.13 to the amending Act), or any regulations made for the purposes of that section, to the conversion of actual or proposed floodplain water usage by landholders into floodplain harvesting access licences in connection with a water source to which subclause (1) applies.”

42. Fourth, the amendment of cl 4(1)(c) of the Water Management (General) Regulation 2011 to omit as a prescribed category of access licence, “floodplain harvesting access licence” and in Schedule 3 of that Regulation to omit the matter relating to floodplain harvesting.

43. These legislative amendments in 2014 activated the operation of Part 2 of Chapter 3 of the WM Act to floodplain harvesting access licences. Although s 57(1) of the WM Act and cl 4(1)(c) and Schedule 3 of the Water Management (General) Regulation 2011 had made provision for floodplain harvesting access licences, the proclamation under s 55A of the WM Act applying Part 2 of Chapter 3 of the WM Act to the NSW Border Rivers Regulated River Water Source expressly excluded its operation to floodplain harvesting access licences.

44. The savings provision in cl 98 of Schedule 9 to the WM Act did not change this position. Clause 98(1) of Schedule 9 to the WM Act provided that Part 2 of Chapter 3 of the WM Act was taken not to have commenced to apply to the category of floodplain harvesting access licence under the unamended s 57(1) of the WM Act and unamended cl 4(1)(c) of the Water Management (General) Regulation 2011 in connection with the NSW Border Rivers Regulated River Water Source, regardless of the fact that that category of access licence was expressly excluded from the previous application proclamation for that water source, which was published on 26 June 2009, under s 55A of the WM Act. This deeming operation of cl 98(1) did not, however, limit the future application of s 57A of the WM Act, or any regulations made for the purposes of s 57A, to the conversion of actual or proposed floodplain water usage by landholders into replacement floodplain harvesting access licences in connection with the NSW Border Rivers Regulated River Water Source (cl 98(4) of Schedule 9 to the WM Act).

45. This meant that proclamations under s 55A of the WM Act and regulations for the purposes of s 57A of the WM Act could be made to apply Part 2 of Chapter 3 of the WM Act to the NSW Border Rivers Regulated River Water Source and the categories and subcategories of floodplain harvesting access licences referred to in s 57A(1) that relate to the NSW Border Rivers Regulated River Water Source.

46. A proclamation applying Part 2 of Chapter 3 of the WM Act to this water source and these categories or subcategories of access licences was made in 2022, the Water Management (Application of Act to Certain Water Sources) Proclamation 2022. It was published and commenced on 18 February 2022. The proclamation declared that Part 2 of Chapter 3 of the WM Act applies to the “Water Sharing Plan for the NSW Border Rivers Regulated River Water Source 2021” (cl 4(a)(vii)) and “the following categories of access licences and its subcategories relating to the water sources mentioned in paragraph (a) –

1. floodplain harvesting (regulated river) access licences,

2. floodplain harvesting (unregulated rivers) access licences.” (cl 4(b)).

47. This proclamation applying Part 2 of Chapter 3 of the WM Act to the NSW Border Rivers Regulated River Water Source and to the categories or subcategories of floodplain harvesting access licences relating to that water source overcame the effect of cl 98(1)-(3) of Schedule 9 to the WM Act, as permitted by cl 98(4) of that Schedule.

48. Notwithstanding these legislative amendments to the WM Act in 2014 making provision for replacement floodplain harvesting access licences, no regulations were made under s 57A of the WM Act for another seven years. In the meantime, however, other regulations were made under s 400 of the WM Act declaring certain land in the NSW Border Rivers Valley to be a floodplain. “Floodplain” is defined in the Dictionary to the WM Act to mean “land declared by the regulations to be a floodplain”. The Water Management (General) Amendment (Lower Namoi and Border Rivers Floodplains) Regulation 2020, published on 11 September 2020, amended cl 252(1) of the Water Management (General) Regulation 2018 to declare certain land in the Border Rivers Valley Floodplain to be a floodplain for the purposes of the definition of “floodplain” in the Dictionary to the WM Act and amended Schedule 6 of that Regulation to insert Part 5, which is a map of the Border Rivers Valley Floodplain.

49. The Minister also made, by order under s 50(1) of the WM Act, various plans for the Border Rivers Valley Floodplain and NSW Border Rivers Regulated River Water Source. The first plan was the Floodplain Management Plan for the Border Rivers Valley Floodplain 2020, published on 11 September 2020. The plan applied to the Border Rivers Valley Floodplain (cl 4(1)). The boundaries of the Border Rivers Valley Floodplain were shown on the Floodplain Management Plan Map in Appendix 1. The boundaries of the Border Rivers Valley Floodplain shown in that Map accorded with the boundaries of the Border Rivers Valley Floodplain shown in the map in Part 5 of Schedule 6 of the Water Management (General) Regulation 2018 inserted by the amendment on 11 September 2020.

47. The second plan, made by the Minister under s 50(1) of the WM Act, was the Water Sharing Plan for the NSW Border Rivers Regulated River Water Source 2021. This plan, published on 20 July 2021, was a replacement management plan in relation to the NSW Border Rivers Regulated River Water Source and replaced the Water Sharing Plan for the NSW Border Rivers Regulated Water Source 2009. The plan applied to the NSW Border Rivers Regulated Water Source within the Border Rivers Water Management Area (cl 4(1)). This was defined to be the water source. The Border Rivers Water Management Area was constituted by Ministerial order made under s 11 of the WM Act published on 23 November 2021. The Water Sharing Plan declared that the water in the water source defined in cl 4(1) “consists of the water between the bed and banks of all rivers that have been declared by the Minister to be regulated rivers and that is available to New South Wales…” from the identified parts of the Pindari Dam water storage, the Severn River, the Macintyre River, the Barwon River and the Dumaresq River (cl 4(2)).

48. This Water Sharing Plan was amended by a Ministerial order under s 45(1) of the WM Act, the Water Sharing Plan for the NSW Border Rivers Regulated River Water Source Amendment Order 2022, published on 29 July 2022. The amendments were of no direct relevance to the challenges in these proceedings.

49. Whilst these regulations and orders were being made, work was underway to prepare regulations for the purposes of s 57A of the WM Act to effect the conversion of actual or proposed floodplain water usage by landholders into replacement floodplain harvesting access licences to be held by those landholders.

50. The first regulation that was made was the Water Management (General) Amendment (Floodplain Harvesting Access Licences) Regulation 2021, published and commenced on 30 April 2021. The regulation was tabled in the Legislative Council on 4 May 2021 and disallowed in the Legislative Council on 6 May 2021.

51. The second regulation that was made was the Water Management (General) Amendment Regulation 2021. This has been referred to earlier as the 2021 Regulation. It was published on 17 December 2021 and commenced on 14 February 2022. However, this regulation too was disallowed in the Legislative Council on 24 February 2022. Although the 2021 Regulation was only in force for 10 days, the decisions and actions of the Minister impugned in these proceedings, purportedly made under Part 2A of the 2021 Regulation, occurred in these 10 days.

52. The third regulation that was made was the Water Management (General) Amendment (Floodplain Harvesting Access Licences) Regulation 2022. This regulation was published and commenced on 1 July 2022, but again was disallowed in the Legislative Council on 21 September 2022. This regulation has been referred to earlier as the 2022 Regulation. The 2022 Regulation was in force when the Minister purported to give notice of the replacement floodplain harvesting access licences to eligible landholders in August 2022.

53. The fourth regulation that was made was the Water Management (General) Amendment (Floodplain Harvesting Access Licences) Regulation 2023. This regulation was published and commenced on 3 February 2023 and has not been disallowed in the Legislative Council. It is the current regulation.

Synopsis of the statutory scheme

57. With this legislative history in mind, I will explain how Part 2 of Chapter 3 of the WM Act and Part 2A of the 2021 Regulation operate.

58. The scheme established by s 55A and s 57A of the WM Act and Division 2A of the 2021 Regulation for the conversion of actual or proposed floodplain water usage by landholders into replacement floodplain harvesting access licences is separate and distinct from the scheme for the application for and grant of other categories of access licences. The critical difference is that there is no process of application by a landholder for a category or subcategory of a floodplain harvesting access licence or determination of such an application by the Minister granting or refusing to grant the licence. That is the process for other categories of access licence, with an application being made under s 61 of the WM Act and the application being determined under s 63 of the WM Act, with conditions on any grant of a licence being determined under s 66 of the WM Act. But the process under s 57A of the WM Act and Part 2A of the 2021 Regulation is the different process of converting actual or proposed floodplain water usage by a landholder into a category or subcategory of floodplain harvesting access licence. It is because this process is one of conversion of floodplain water usage into access licences that the resulting licences are referred to as “replacement floodplain harvesting access licences” (in s 57A(1) of the WM Act). The regulations made for the purposes of s 57A(1) of the WM Act, in this case the 2021 Regulation, set out how this conversion process is to be undertaken.

59. The first step in the conversion process is not the making of an application for an access licence by a landholder under s 61 of the WM Act, but instead the determination by the Minister of the eligibility of a landholder for a replacement floodplain harvesting access licence. This determination is made under cl 23B of the 2021 Regulation. An “eligible landholder” is defined in cl 23A to mean “a landholder eligible for a replacement floodplain harvesting access licence under clause 23B”. A “landholder” means “a landholder of land located on a floodplain who uses or used, or proposed to use, water from the floodplain”. The eligibility of a landholder depends on the Minister’s satisfaction under cl 23B(2) concerning a water supply work capable of floodplain harvesting being constructed on the landholder’s land as at 3 July 2008.

60. If the Minister determines that a landholder is eligible for a replacement floodplain harvesting access licence under the clause, the Minister must determine the share component of the replacement floodplain harvesting access licence under Division 2 of Part 2A of the 2021 Regulation (cl 23B(5)). A share component is defined in s 56(1)(a) of the WM Act to be “specified shares in the available water within a specified water management area or from a specified water source.” This determination of the share component of the replacement floodplain harvesting access licence can only occur after undertaking the other steps in the conversion process required in Divisions 2 and 3 of Part 2A of the 2021 Regulation.

61. Clause 23C(2) of the 2021 Regulation requires the Minister to determine the share component of a replacement floodplain harvesting access licence for an eligible landholder “by using the 3 models referred to in Division 3 that apply to the regulated river water source.” Division 3 of Part 2A of the 2021 Regulation concerns the models for determination of share components. Clause 23G provides for the adoption and publishing of three models for a water source for the purposes of determining the share component of a replacement floodplain harvesting access licence under cl 23C for the water source. These are the second and third steps in the conversion process.

62. The second step of the adoption of the models is prescribed by cl 23G(1) of the 2021 Regulation:

“The Minister must adopt the following models for a water source for the purposes of determining the share component of a replacement floodplain harvesting access licence under clause 23C for the water source—

(a) the current conditions model,

(b) the eligible water supply works scenario model,

(c) the plan limit compliance scenario model.”

63. The three models referred to in cl 23G(1)(a), (b) and (c) are described in cl 23H, cl 23I and cl 23J of the 2021 Regulation:

“23H   Current conditions model

(1) The current conditions model represents—

(a) the total number of water supply works, whether or not eligible water supply works, for the water source, and

(b) the estimated volume of water that is used by the water supply works for the water source.

(2) The current conditions model is used to determine the percentage, if any, by which the estimated volume of water used by all water supply works for the water source—

(a) exceeds the long-term average annual extraction limit, and

(b) 23I must be reduced to comply with the long-term average annual extraction limit.

23I   Eligible water supply works scenario model

(1) The eligible water supply works scenario model represents—

(a) the total number of eligible water supply works, and

(b) the estimated volume of water that is used by the eligible water supply works for the water source.

(2) The eligible water supply works scenario model is used to determine the estimated volume of water that is capable of being used by—

(a) a landholder’s eligible water supply work for the water source, and

(b) all eligible water supply works for the water source.

23J   Plan limit compliance scenario model

(1) Division 4 The plan limit compliance scenario model is based on—

(a) the proposed share components of the replacement floodplain harvesting access licences for the water source, and

(b) the existing or proposed bulk access regime for the water source in relation to floodplain harvesting, and

(c) existing or proposed water sharing provisions of a management plan for the water source that deal with the matters specified in the Act, section 21(a) and (c) in relation to floodplain harvesting.

(2) The plan limit compliance scenario model is used to ensure that if an adjustment is required to ensure the long-term average annual extraction limit, or the floodplain harvesting part of the limit, is not exceeded, the adjustment is proportionately allocated to each landholder who has an eligible water supply work for the water source.”

64. The three models referred to in cl 23G(1), and described in cl 23H, cl 23I and cl 23J, are different from one another but when applied sequentially allow for a determination of the share component for a replacement floodplain harvesting access licence. The first model, the current conditions model, is used “to determine the percentage, if any, by which the estimated volume of water used by all water supply works for the water source— (a) exceeds the long-term average annual extraction limit, and (b) must be reduced to comply with the long-term average annual extraction limit” (cl 23H(2)). The second model, the eligible water supply works scenario model, is used “to determine the estimated volume of water that is capable of being used by— (a) a landholder’s eligible water supply work for the water source, and (b) all eligible water supply works for the water source” (cl 23I(2)). The third model, the plan limit compliance scenario model, uses outputs from the first two models “to ensure that if an adjustment is required to ensure the long-term average annual extraction limit, or the floodplain harvesting part of the limit, is not exceeded, the adjustment is proportionately allocated to each landholder who has an eligible water supply work for the water source” (cl 23J(2)).

65. These three models allow for the determination of the share component of a replacement floodplain harvesting access licence for a landholder in the following way. The current conditions model first calculates the estimated volume of water that is used by all water supply works for the water source and then compares this estimated volume of water to the long-term average annual extraction limit for the water source. If the estimated volume of water exceeds the limit, which is almost inevitable having regard to landholders’ current, high-level floodplain water usage, the current conditions model calculates the percentage by which the estimated volume of water must be reduced to comply with the limit. This percentage reduction is a water source-wide calculation. But this reduction must be proportionately allocated to individual landholders to ascertain the reductions that are required in each landholder’s floodplain water usage. This requires the use of the other two models.

66. The eligible water supply works scenario model breaks down the estimated volume of water that is used by all water supply works for the water source, determined by using the current conditions model, into the estimated volume of water that is capable of being used by all eligible water supply works for the water source (which will be less than that used by all water supply works for the water source) and by each landholder’s eligible water supply work for the water source. These figures allow for the calculation of the proportion that the estimated volume of water that is capable of being used by each landholder’s eligible water supply work for the water source bears to the estimated volume of water that is capable of being used by all eligible water supply works for the water source.

67. These outputs from the current conditions model and the eligible water supply works scenario model are then used as inputs in the plan limit compliance scenario model. The current conditions model calculated the reduction in the estimated volume of water that is used by all water supply works for the water source, which is required to ensure that the long-term average annual extraction limit is not exceeded. The eligible water supply works scenario model provided the estimated volume of water that is capable of being used by each landholder’s eligible water supply work for the water source and the proportion that that estimated volume of water bears to the estimated volume of water that is capable of being used by all eligible water supply works for the water source. These outputs from those models allow the plan limit compliance scenario model to proportionately allocate the percentage reduction calculated by the current conditions model to each landholder who has an eligible water supply work for the water source.

68. Using this third model, the estimated volume of water that is capable of being used by each landholder’s eligible water supply work for the water source (which equates to the landholder’s actual or proposed floodplain water usage) is reduced by the volume of water that the plan limit compliance scenario model determines is the proportionate allocation of the adjustment required to ensure the long-term average extraction limit for the water source is not exceeded. The difference between these two volumes (the estimate volume of floodplain water usage and the proportionately allocated reduction in the volume of water to ensure the extraction limit is not exceeded) is the share component of the replacement floodplain harvesting access licence. A share component is a specified share in the available water from a specified water source (see s 56(1)(a) of the WM Act). In the context of floodplain water usage, a share component refers to a specified share in the estimated volume of water that complies with the long-term average annual extraction limit or the floodplain harvesting part of that limit.

69. The determination of the share component of the replacement floodplain harvesting access licence using these models enables the conversion of a landholder’s actual or proposed floodplain water usage into a replacement floodplain harvesting access licence. The conversion is of the estimated volume of actual or proposed floodplain water usage into a share component of a replacement floodplain harvesting access licence, which is a specified share in the available floodplain water in the water source. The specified share in the available floodplain water in the water source will almost inevitably be less than the volume of actual or proposed floodplain water usage by a landholder, as a result of the proportionate allocation of the reduction required to ensure that the long-term average annual extraction limit is not exceeded. The conversion is therefore not between equivalent volumes of floodplain water – there will be a reduction in the volume of floodplain water the landholder is entitled to take or use under a replacement floodplain harvesting access licence from the volume of the actual or proposed floodplain water usage by the landholder.

70. The third step in the conversion process is the publishing of information about the three models under cl 23G(2), which provides:

“The Minister must publish on the Department’s website the following information in relation to the models—

(a) a description of the model,

(b) the objectives for the model,

(c) the matters that the model represents,

(d) the data that the model relies upon.”

71. Because of the differences between and interrelationship of the three models referred to in cl 23G(1), the requirement in cl 23G(2) to publish the specified information “in relation to the models” is to be understood as requiring publishing of the specified information in relation to each of the three models. The information on the matters specified in (a) to (d) of cl 23G(2) will be different for each of the three models, even if there might be some overlap in the information with respect to some matters. The different information is a consequence of the different statutory requirements for what each model is to represent (in cl 23H(1), cl 23I(1) and cl 23J(1)) and how each model is to be used (in cl 23H(2), cl 23I(2) and cl 23J(2)).

72. Before the Minister may make the final determination under cl 23C(2) of the share component of a replacement floodplain harvesting access licence for a landholder using the three models referred to in Division 3, the Minister must give the landholder written notice and an opportunity to make submissions about the proposed share component. This is the fourth step in the conversion process. Clause 23F of the 2021 Regulation sets out this process of consultation:

“23F   Final determination of share components

The Minister may determine the share component for a replacement floodplain harvesting access licence for an eligible landholder only if—

(a) Division 3 the landholder is given, whether under this clause or otherwise, written notice and 28 days in which to make submissions about the proposed share component, and

(b) the Minister has considered submissions received from the landholder within the 28 days.”

73. After the Minister has considered submissions received from the landholder under cl 23F, the Minister may make the final determination under cl 23C(2) of the share component of the replacement floodplain harvesting access licence for the landholder. This is the fifth step in the conversion process. In making this determination of the share component, the Minister must use the three models the Minister adopted under cl 23G(1).

74. The sixth step in the conversion process is the giving of written notice to the landholder under cl 23K of the 2021 Regulation. Clause 23K provides:

“23K   Issue of replacement floodplain harvesting access licences

(1) A replacement floodplain harvesting access licence takes effect, and the eligible landholder is taken to hold the licence, only after the Minister gives written notice to the landholder of—

(a) the category of the replacement floodplain harvesting access licence, and

(b) the final share component of the licence determined in accordance with Division 2.

(2) The categories of replacement floodplain harvesting access licence are—

(a) for an eligible landholder if, on 3 July 2008, a regulated river access licence was in force in relation to the land on which the landholder’s eligible water supply work is located—a floodplain harvesting (regulated river) access licence, and

(b) otherwise—a floodplain harvesting (unregulated river) access licence.

(3) A water supply work is taken to have been nominated under the Act, section 71W in relation to an eligible landholder’s replacement floodplain harvesting access licence if the work—

(a) is capable of floodplain harvesting, and

(b) is located on the eligible landholder’s land, and

(c) is specified in a water supply work approval on the date the access licence takes effect.”

75. Clause 23K operates to cause the replacement floodplain harvesting access licence to be issued. This is necessary because the conversion process does not involve either an application by a landholder for, or a determination by the Minister of an application to grant, a replacement floodplain harvesting access licence. There needs to be a deemed issue of the replacement floodplain harvesting access licence. This is achieved upon the Minister giving written notice in accordance with cl 23K of the category of the replacement floodplain harvesting access licence (the categories are specified in cl 23K(2)) and the final share component of the licence determined in accordance with Division 2 (and in particular under cl 23C(2) after consultation with the landholder under cl 23F).

76. Upon the giving of written notice in accordance with cl 23K, the conversion of the actual or proposed floodplain water usage by the landholder into a replacement floodplain harvesting access licence is effected. The replacement floodplain harvesting access licence takes effect and the landholder is taken to hold the licence.

77. This explanation of the operation of s 57A of the WM Act and Part 2A of the 2021 Regulation accords with the explanation of the Court of Appeal in Ramsay v Minister for Lands and Water; Hospitality and Racing, The Minister administering the Water Management Act 2000 (2023) 258 LGERA 260; [2023] NSWCA 299 (Ramsay) at [49]-[53].

The invalidity of the 2021 Regulation ground

78. The 2021 Regulation was published on 17 December 2021 and commenced on 14 February 2022. The proclamation under s 55A of the WM Act applying Part 2 of Chapter 3 of the WM Act to the NSW Border Rivers Regulated River Water Source was published and commenced on 18 February 2022. The proclamation therefore commenced four days after the 2021 Regulation commenced.

79. Emu Rider contended that this commencement of the 2021 Regulation before the proclamation meant that the 2021 Regulation is invalid. The proclamation applying Part 2 of Chapter 3 of the WM Act to the relevant water source needed to have been made before the 2021 Regulation could be made under s 57A of the WM Act. The absence of a proclamation under s 55A at the time the 2021 Regulation was made and commenced meant that Part 2 of Chapter 3 of the WM Act, including s 57A, did not apply to the NSW Border Rivers Regulated River Water Source.

80. The Minister disagreed with this contention for three reasons. First, The Minister submitted that the power to make regulations for the purposes of the WM Act lies not in s 57A, but rather in s 400 of the WM Act. Section 57A imposes limitations on the regulations that can be made under s 400 but it is not an independent source of power. Hence, the absence of a proclamation under s 55A declaring that Part 2 of Chapter 3 of the WM Act applies to the NSW Border Rivers Regulated River Water Source did not invalidate the 2021 Regulation which was made under s 400 of the WM Act.

81. Second, the Minister submitted that s 57A of the WM Act did not make a proclamation under s 55A of the WM Act applying Part 2 of Chapter 3 of the WM Act to the NSW Border Rivers Regulated River Water Source a precondition to the exercise of the power to make the 2021 Regulation. Textually, s 57A neither expressly nor impliedly requires a proclamation under s 55A before regulations may be made for the purposes of s 57A. Contextually, s 55A neither expressly nor impliedly precludes the making of regulations for the purposes of s 57A before the making of a proclamation under s 55A.

82. Third, the Minister submitted that s 26 of the Interpretation Act 1987 (NSW) applies to permit the making of the 2021 Regulation even if s 57A had not commenced. The Minister submitted that the 2021 Regulation is an instrument of a legislative character (within s 26(1)). If s 57A is the sole source of power to make the 2021 Regulation (contrary to the Minister’s first proposition) and if a proclamation under s 55A is a precondition to the making of a regulation under s 57A (contrary to the Minister’s second proposition), then the presumption in s 26(1)(c) of the Interpretation Act would authorise the making of the 2021 Regulation: see Elliott v Minister Administering Fisheries Management Act 1994 (2018) 97 NSWLR 1082; [2018] NSWCA 123 at [61]-[63].

83. I reject the invalidity of the 2021 Regulation ground. The power to make regulations for the purposes of s 57A lies not in s 57A itself but in s 400 of the WM Act. Regulations of the kind referred to in s 57A(1) making provision for or with respect to the conversion of actual or proposed floodplain water usage by landholders into replacement floodplain harvesting access licences are made under the general regulation-making power in s 400(1) of the WM Act. That power (as it existed at the time the 2021 Regulations were made) enables the making of regulations “for or with respect to any matter that by this Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act.” Section 400(1) of the WMC Act was subsequently amended, but the amendment is of form and not substance. The matter in s 57A of the conversion of actual or proposed floodplain water usage by landholders into replacement floodplain harvesting access licences is a matter referred to in s 400(1) of the WM Act for or with respect to which regulations may be made. The terms in which that matter is specified in s 57A might constrain the terms of the regulations that may be made under s 400(1), but do not displace the power in s 400(1) to make regulations for or with respect to that matter.

84. Section 57A operates independently of s 55A of the WM Act. Section 57A came into force when the Water Management Amendment Act 2014, which inserted s 57A in Part 2 of Chapter 3 of the WM Act, commenced on 1 January 2015. From that time, regulations could be made under s 400(1) of the WM Act for the purposes of s 57A, regardless of whether or not a proclamation had been made under s 55A of the WM Act. Any regulations made for the purposes of s 57A might not apply to any particular water source, so as to enable the conversion of actual or proposed floodplain water usage by landholders into replacement floodplain harvesting access licences for that water source, until a proclamation under s 55A declaring that Part 2 of Chapter 3 of the WM Act applies to that water source. But that is a matter of the application of the regulation, not the power to make the regulation. Section 55A is concerned with the first, not the second. Section 55A(1) provides that Part 2 of Chapter 3 of the WM Act applies to a water source, and a category or subcategory of access licence that relates to that water source, that is declared by proclamation to be a water source and category or subcategory of access licence to which Part 2 applies. Section 55A(1) says nothing about the making of regulations for the purposes of s 57A of the WM Act. Neither s 55A nor s 57A prescribes the making of a proclamation under s 55A to be a precondition to the making of regulations for the purposes of s 57A of the WM Act.

85. This construction of s 55A, s 57A and s 400 of the WM Act does not depend on application of s 26 of the Interpretation Act. That section is not relevant. The power to make the 2021 Regulation was in s 400 of the WM Act, which had commenced at the time, but that power to make regulations for the purpose of s 57A was constrained by the terms of s 57A, which had also commenced at the time. Section 26 of the Interpretation Act is not concerned with this situation.

86. For these reasons, the 2021 Regulation is not invalid for being made before the proclamation under s 55A was made. I reject the invalidity of the 2021 Regulation ground.

The wrong water source ground

87. The proclamation under s 55A of the WM Act, published and commenced on 18 February 2022, declared that Part 2 of Chapter 3 of the WM Act applies to the particular water source of the NSW Border Rivers Regulated River Water Source within the Border Rivers Water Management Area. This was the water source referred to in cl 4(1) of the Water Sharing Plan for the NSW Border Rivers Regulated River Water Source 2021, to which the proclamation declared Part 2 of Chapter 3 of the WM Act applies. The water in that water source was specified in cl 4(2) to consist of “the water between the bed and banks of all rivers that have been declared by the Minister to be regulated rivers and that is available to New South Wales…” from the identified parts of the Pindari Dam water storage, Severn River, Macintyre River, Barwon River and Dumaresq River.

88. Emu Rider contended that this specification of the water source to which Part 2 of Chapter 3 of the WM Act applies did not include overland flow water on the floodplain for those rivers. The term “water source” is defined in the Dictionary to the WM Act to include two sources of water:

“water source means the whole or any part of—

(a)  one or more rivers, lakes or estuaries, or

(b)  one or more places where water occurs on or below the surface of the ground (including overland flow water flowing over or lying there for the time being),

and includes the coastal waters of the State.”

89. Water in the second limb of the definition of “water source” includes “overland flow water”, which is defined in s 4A(1) of the WM Act:

“(1) In this Act, overland flow water means water (including floodwater, rainfall run-off and urban stormwater) that is flowing over or lying on the ground as a result of—

(a)  rain or any other kinds of precipitation, or

(b)  rising to the surface from underground, or

(c)  any other process or action of a kind prescribed by the regulations.”

90. The NSW Border Rivers Regulated River Water Source the subject of the proclamation is a water source falling within the first limb of the definition of “water source”, but not within the second limb of that definition. The proclamation did not declare water within the second limb of the definition of “water source”, including overland flow water, and categories or subcategories of access licences that relate that water source, to be a water source and categories or subcategories of access licences to which Part 2 of Chapter 3 of the WM Act applies.

91. The consequence, Emu Rider submitted, was that the proclamation did not specify the relevant water source to which the 2021 Regulation needed to be directed. The 2021 Regulation prescribed the process by which the conversion of actual or proposed floodplain water usage by landholders into a replacement floodplain harvesting access licence is effected. The term “floodplain water usage” is defined in s 57A(5) of the WM Act:

“floodplain water usage by landholders means the taking or use of water by landholders (whether or not under an approval, licence or other authority) from land that is, or is to become, a floodplain.”

92. A “floodplain” is defined in the Dictionary to the WM Act to mean “land declared by the regulations to be a floodplain.” The Water Management (General) Amendment (Lower Namoi and Border Rivers Floodplains) Regulation 2020 declared certain land in the Border Rivers Valley Floodplain to be a floodplain for the purpose of this definition of “floodplain”. The Border Rivers Valley Floodplain was depicted in the map in Part 5 of Schedule 6 of the Water Management (General) Regulation 2018.

93. As a consequence, the floodplain water usage by landholders that was to be converted into replacement floodplain harvesting access licences under the 2021 Regulation was the taking or use of water by landholders from land within the Border Rivers Valley Floodplain. This water is a water source within the second limb of the definition of “water source”, but it does not fall within the NSW Border Rivers Regulated River Water Source declared by the proclamation to be the water source to which Part 2 of Chapter 3 of the WM Act applies.

94. Emu Rider submitted, therefore, that the 2021 Regulation did not authorise the conversion of the actual or proposed floodplain water usage by landholders into replacement floodplain harvesting access licences. All of the steps taken, purportedly pursuant to the 2021 Regulation, to effect the conversion were based on the wrong water source, the NSW Border Rivers Regulated River Water Source instead of the Border Rivers Valley Floodplain water source. Accordingly, the replacement floodplain harvesting access licences issued to Emu Rider and the other applicants are invalid.

95. The Minister contested this ground, relying on s 57A(4) of the WM Act. That subsection provides:

“(4)  A floodplain harvesting (regulated river) access licence, or other category or subcategory of floodplain harvesting access licence, that nominates a regulated river water source is taken to authorise the taking of water from the floodplain for the river and, accordingly, any water taken under that licence from that floodplain is to be treated as having been taken from the regulated river water source for the purposes of this Act or any management plan that applies to the river.”

96. The replacement floodplain harvesting access licences issued to Emu Rider and the other applicants nominated the NSW Border Rivers Regulated River Water Source. The Minister submitted that the effect of s 57A(4) is to authorise the landholders to take water from the floodplain for the rivers in the NSW Border Rivers Regulated Water Source, so that any water taken under those licences from that floodplain is treated as having been taken from the regulated river water source for the purposes of the WM Act.

97. I reject the wrong water sources ground. It is true that the proclamation in terms nominated the water source to be that described as the NSW Border Rivers Regulated River Water Source, which did not extend to water on the floodplain for the rivers in that water source, within the second limb of the definition of “water source”, including overland flow water. But this did not cause the 2021 Regulation to be inoperative or ineffective with respect to the conversion of actual or proposed floodplain water usage by landholders into replacement floodplain harvesting access licences. This conversion required identification of the floodplain water usage by landholders, which is the taking or use of water by landholders from land that is within the relevant floodplain. The relevant floodplain in this case is the Border Rivers Valley Floodplain. The map of that floodplain in Part 5 of Schedule 6 to the Water Management (General) Regulation 2018 includes within its boundaries the identified parts of the rivers comprising the NSW Border Rivers Regulated River Water Source.

98. Assessment of the actual or proposed floodplain water usage by landholders necessarily involves consideration of the water on the floodplain, including water falling within the second limb of the definition of “water source” and overland flow water. That consideration of that water is not precluded by the proclamation declaring that Part 2 of Chapter 3 of the WM Act applies to the water source of the NSW Border Rivers Regulated River Water Source. This proclaimed water source may be geographically limited to include only water between the bed and banks of the rivers specified within that water source, but application of the 2021 Regulation to that water source did not preclude consideration of the taking or use of water from the floodplain for those rivers.

99. Clause 57A(4) of the WM Act is confirmatory of the permissibility of consideration of the taking or use of water from the floodplain in the application of regulations made for the purposes of s 57A. Although s 57A(4) does not deem the proclaimed regulated river water source to include water on the floodplain for the river, that is to say, it does not deem the proclamation under s 55A of the regulated river water source to be broader than it states, it does operate to authorise the taking of water from the floodplain for the river and to treat any such water as having been taken from the regulated river water source. This deeming effect would not be necessary if it was not permissible to consider the taking or use of water by landholders from the floodplain for the river in converting the actual or proposed floodplain water usage by landholders into replacement floodplain harvesting access licences.

100. For these reasons, the limitation of the declaration by proclamation of the application of Part 2 of Chapter 3 of the WM Act to the NSW Border Rivers Regulated River Water Source, and not to water in the Border Rivers Valley Floodplain, did not in itself affect the validity of the replacement floodplain harvesting access licences issued to Emu Rider and the other applicants. This conclusion is only in relation to this ground, and not later grounds concerned with the models used to determine the share component of the replacement floodplain harvesting access licences. I will deal with those other grounds later.

101. I reject the wrong water source ground.

The failure to notify ground

102. Clause 23F of the 2021 Regulation sets two preconditions to the Minister’s power to determine the share component of a replacement floodplain harvesting access licence for a landholder. The first is to give the landholder written notice and 28 days in which to make submissions about the proposed share component (cl 23F(a)). The second is to consider any submissions the landholder makes within the 28 days about the proposed share component (cl 23F(b)). Emu Rider contended that the Minister failed to comply with both of these preconditions before determining the share components of the replacement floodplain harvesting access licences issued to the applicants.

103. It was not contested that the Minister did not give written notice under cl 23F of the 2021 Regulation to the applicants about their proposed share components before the Minister determined under cl 23C(2) the share components for the replacement floodplain harvesting access licences issued to the applicants. The Minister’s delegate adopted the models under cl 23G(2), determined the share components under cl 23C(2) and gave written notice about the replacement floodplain harvesting access licences under cl 23K(1), all on the same day, 21 February 2022. The Minister’s delegate’s justification for doing so was that there had been non-statutory consultation with the applicants about the proposed share components a year beforehand, and this consultation could suffice to satisfy the statutory requirement for consultation under cl 23F of the 2021 Regulation.

104. By letter dated 18 February 2021, the Department of Planning, Industry and Environment had written to Emu Rider and other landholders inviting them to make submissions about the then advised proposed share components. That invitation expressly limited the submissions the landholders could make to concern only “an error or omission in the application of the licence determination process with reference to our policy implementation guidelines or the proposed amendments to the Water Management (General) Regulations 2018.”

105. The Minister maintained in the proceedings the position the Minister’s delegate had taken that the letter of 18 February 2021 was notice for the purposes of cl 23F of the 2021 Regulation. The Minister relied on the words “or otherwise” in cl 23F(a) of the 2021 Regulation as authorising consultation otherwise than under cl 23F of the 2021 Regulation.

106. I reject the Minister’s argument and uphold the failure to notify ground. The statutory process for conversion of actual or proposed floodplain water usage by landholders into replacement floodplain harvesting access licences is self-contained in Part 2A of the 2021 Regulation. Part 2A prescribes the process that must be followed to effect the conversion. All steps in that statutory process must be taken and no steps outside that statutory process can have effect as a step in the statutory process.

195. In the present case, none of the six ways identified by Emu Rider caused the models not to answer the descriptions or achieve the purposes of cl 23H, cl 23I or cl 23J of the 2021 Regulation, or not to achieve the overarching purpose of s 57A of the WM Act. At most, these ways were respects in which the models might not adequately achieve the purposes of cl 23H, cl 23I or cl 23J of the 2021 Regulation or the purpose of s 57A of the WM Act. But the adequacy of the models in achieving these purposes is a matter within the discretion of the Minister to decide.

196. The first two ways concerned the models taking into account, firstly, water on the floodplain for the rivers in the proclaimed water source of the NSW Border Rivers Regulated River Water Source and not only water between the bed and banks of those rivers and, secondly, water in the larger area of the Border Rivers Valley and not only water in the declared floodplain of the Border Rivers Valley Floodplain. For the reasons I gave in rejecting the wrong water source ground, there is no statutory limitation on the models considering overland flow water on the floodplain, and not just water in the rivers in the proclaimed water source. Likewise, there is no statutory limitation on the models considering overland flow water flowing from outside and into a declared floodplain. Either way, such overland flow water is part of the estimated volume of water used by all eligible water supply works for the water source that is to be reduced to ensure that the long-term average annual extraction limit is not exceeded and then converted into share components of replacement floodplain harvesting access licences for each landholder who has an eligible water supply work for the water source. The models are to be used to determine those share components.

197. The last four ways concerned the adequacy of the models’ consideration of rainfall runoff and overtopping, two forms of overland flow water. The models did deal with such overland flow water, although indirectly at the valley-scale rather than directly at the farm-scale. That indirect consideration of overland flow water did not cause the models not to be models within the description or for the purposes of cl 23H, cl 23I or cl 23J of the 2021 Regulation. Reasonable minds may differ as to how overland flow water ought to be taken into account by the models. The Minister’s delegate’s decision to adopt the models which indirectly dealt with overland flow water was within the decisional freedom afforded by cl 23G(1) of the 2021 Regulation. The models could not be said to be so inadequate and unreliable as to be of no use whatsoever in determining the share components of replacement floodplain harvesting access licence: see Arnold v Minister administering the Water Management Act 2000 [2014] NSWCA 386 at [107].

198. I reject the model adoption grounds.

The failure to use models ground

229. The final ground of review challenged the Minister’s delegate’s decision under cl 23C(2) of the 2021 Regulation to determine the share components of the replacement floodplain harvesting licences. Clause 23C(2) requires the Minister to determine the share component of a replacement floodplain harvesting access licence “by using the 3 models referred to in Division 3.” Emu Rider contended that the Minister’s delegate did not use the three models that were adopted under cl 23G(1) of the 2021 Regulation to determine the share components of the replacement floodplain harvesting access licences issued to the applicants, but also used a separate utility program to determine those share components.

230. Emu Rider submitted that the requirement in cl 23C(2) to use the three models to determine the share component is to be construed as requiring this task to be performed only using the three models. That construction follows from the mandatory language in which cl 23C(2) is expressed: the Minister “must” determine the share component of a replacement floodplain harvesting access licence “by using the 3 models referred to in Division 3.” The three models referred to in Division 3 are the current conditions model, the eligible water supply works scenario model and the plan limit compliance scenario model. The mandatory direction in cl 23C(2) to determine the share component by using these specified models would be undermined if the share component were to be determined using a computer program other than or in addition to those models. That would be to perform the statutory duty otherwise than in accordance with its terms. Emu Rider submitted that another way of expressing this jurisdictional error is that to determine the share component by using a program other than or in addition to the adopted models is to take into account an irrelevant matter, being a matter which is not provided for in the 2021 Regulation.

231. Emu Rider submitted that the evidence established that the Minister’s delegate’s determination of the share components of the replacement floodplain harvesting access licences issued to the applicants used a utility program external to the adopted models. The utility program itself was not in evidence but the Minister tendered a description of the utility program prepared by Mr Brown, the Department’s expert, for the purpose of his participation in the joint experts’ conference. This document did not exist at the time the Minister’s delegate adopted the models and determined the share components on 21 February 2022, although the utility program itself existed at that time.

232. Mr Brown’s document summarised how the utility program was used to determine the share components. In the “FAQ” section, the document stated:

“How is the utility [program] used with the Source model to calculate FPH entitlements in the Border Rivers?

The utility program was developed outside of the Border Rivers river system model and has been used in other valleys.

The utility program does calculate entitlement shares as part of an optimisation process to speed up the modelling process. However, it provides an estimate that is independent of the broader interactions that are explicitly modelled in the Border Rivers river system model. The final estimate of entitlement shares are determined by the Border Rivers river system model taking into consideration the broader interactions between water users.

Should the utility be seen as part of the modelling suite that determines FPH entitlements?

No. The utility program is an optimisation tool that is independent of the final model determination it is not essential that this is described in the Model Scenario[s] report. This would be analogous to describing the optimisation algorithms used to calibrate rainfall-runoff and parts of river system models in the model calibration report. This is not the case but rather the paper or documentation relevant to this algorithm is cited rather than written in the report.

Are entitlements determined by the utility or the model?

The entitlements were calculated by this tool in a feedback process whereby the tool came up with an estimate of entitlements and then this was checked in the model and then run through the utility program again until the results in the Border Rivers river system model were acceptable. The final point of truth is the Border Rivers river system model not the utility program.”

233. Mr Brown explained in oral evidence that the utility program was used by taking outputs (proposed share components) from the models, loading those outputs into a spreadsheet in the utility program, applying algorithms in the utility program to the spreadsheet to estimate what the next iteration of the proposed share components should be, and plugging those proposed share components back into the models to see if they meet specified criteria. This iterative process is repeated until the modeller is satisfied that the proposed share components meet the criteria (Transcript 16/04/25, 132-133).

234. Mr Brown explained that this iterative process merely sped up the determination of the share components using the models but did not substitute a different methodology for determining the share components. Mr Brown explained in his expert report of 7 April 2025 that the utility program was “a post-processing tool that assisted the modeller to iterate towards a distribution of floodplain harvesting entitlement shares that best met the policy objective of equalising reductions in share that were required to maintain compliance with the valley limits.” The utility program “made estimates of share distributions based on the current model outputs which would best meet the objective. The model was then iterated until share estimates were not changing materially between iterations, then the final numbers were put back in the model for manual inspection and checking by the modeller, with modellers making manual adjustments as needed.” Mr Brown stated that the utility program “sped up the iteration process but did not decide the final number” (at [122]-[124]). Mr Brown noted that without the utility program, “the modeller could make iterations manually and arrive at the same point, but over a longer time” (at [125]).

235. Emu Rider’s experts, Mr Martin and Mr Barma, were not in a position to contest this description of how the utility program was used in conjunction with the models because the utility program was written in Python computer programming language with which they were unfamiliar; they were not provided by the Department with an interface which would allow them to operate the utility program; and the use of the utility program was not demonstrated by the Department to them during the joint expert conference process. Nevertheless, Mr Barma, drawing on his “broad understanding about how the allocation and accounting process works,” accepted Mr Brown’s explanation of how the utility program worked and was used, namely that it sped up the iterative process (Transcript 16/04/25, 128). In cross examination, Mr Martin agreed with Mr Brown’s summation of how the utility program was used, but did not agree with Mr Brown’s view that the modeller would reach the same conclusion as would be reached by using the model alone by using the utility program in conjunction with the model or by manually performing the model iterations (Transcript 16/04/25, 126). Mr Martin said there was not “a single answer to the iterative process that is involved in determining the entitlements” and that the utility program, in having a “different starring point”, could influence the end result (Transcript 16/04/25, 126).

236. Emu Rider submitted that even if Mr Brown’s explanation of how the utility program was used were to be accepted, this still demonstrates that the determination of the share component was not made using the three models only, as required by cl 23C(2) of the 2021 Regulation.

237. The Minister submitted that this ground of review must fail on a factual level. The Court would accept Mr Brown’s explanation of how the utility program was used to speed up the process of determination of the share components using the models, as Mr Brown explained in his expert report at [122]-[126]. The utility program did not replace the models.

238. The Minister submitted that this use of the utility program did not cause the determination of the share components not to be made “by using the 3 models” for the purposes of cl 23C(2) of the 2021 Regulation. The three models were used to determine the share components. The utility program merely sped up the process of determining the share components by using the models.

239. I reject the failure to use models ground. Mr Brown’s explanation of how the utility program was used to speed up the process of determining the share components by using the models shows that the models were in fact used to determine the share components, as was required by cl 23C(2). The process the models used to determine the share components was an iterative one, testing successive iterations of share components against specified criteria. As I have earlier explained, the models interact to suggest how the reduction in estimated volume of water used by eligible water supply works for the water source, which is required to ensure that the long-term average annual extraction limit is not exceeded, should be proportionately allocated to each landholder who has an eligible water supply work for the water source. The proportionate allocation of this reduction between landholders is used to determine the share components for each landholder. Different criteria are used to determine what the proportionate allocation of the adjustment should be made. This results in successive iterations of proposed share components. The models are used to provide these iterations of share components, but the process takes time. The utility program made this iterative process more efficient and quicker, but it did not substitute different methodology or criteria for those used in the models.

240. In these circumstances, the Minister’s delegate did not determine the share components for the replacement floodplain harvesting access licences issued to the applicants otherwise than in accordance with cl 23C(2) of the 2021 Regulation or by taking into account an irrelevant matter. The failure to use models ground is not established.

Issue of replacement floodplain harvesting access licences

241. The Minister’s delegate purported to give written notice to the applicants under cl 23K(1) of the 2021 Regulation on the same day she determined the share components of the replacement floodplain harvesting access licences for the applicants. The letter dated 21 February 2022 gave notice of the category of the replacement floodplain harvesting access licence (a floodplain harvesting (regulated river) access licence) and the final share component of the licence (which varied for the different landholders).

242. The letter of 21 February 2022 did not, however, enclose a copy of the replacement floodplain harvesting access licence, the water supply works approval or the associated statement of conditions, but instead advised that those documents would be sent later. The letter anticipated these documents would be sent after 1 July 2022, when “the relevant rules for the licence will commence in the Water Sharing Plan for the NSW Border Rivers Regulated River Water Source 2020.” The Department advised the landholders that water could not be taken under the licence until this occurs.

243. As events happened, the Department did not provide to the landholders the replacement floodplain harvesting access licences until August 2022. On 3 August 2022 the Department wrote to landholders advising that:

“Your floodplain harvesting WAL [Water Access Licence] was determined by the department on 21 February 2022. You were sent notification of your share component at that time.

There are conditions which apply to WALs in the Plan area which are based on the rules prescribed in the Plan. Your water access licence conditions are reflected in the amendments to the Plan which commenced on 29 July 2022, and corresponding a [sic] Statement of Conditions is enclosed for your information. Soon your WAL Certificate will be sent to you from the Land Registry Service.”

244. On 12 August 2022, the Department emailed the landholders advising that “the licensing framework for floodplain harvesting has commenced across the Gwydir and Border River valleys” and attaching electronic copies of documents, including “Floodplain harvesting commencement letter, your statement of approval and water infrastructure plan for your water supply work approval” and “Statement of Conditions for your Water Access Licence.”

245. Emu Rider submitted that none of the letters or the email constituted written notice for the purposes of cl 23K(1) of the 2021 Regulation. The letter of 21 February 2022 was not such a notice as the final share component notified in the letter was not “determined in accordance with Division 2,” as required by cl 23K(1)(b), for the reasons raised in the various grounds of review. The letter of 3 August 2022 and the email of 12 August 2022 were issued after the 2021 Regulation had been disallowed, so that neither of that correspondence could be a notice under cl 23K of the 2021 Regulation.

246. Moreover, Emu Rider submitted, the conditions of the replacement floodplain in harvesting access licence attached to the email of 12 August 2022 were created sometime after the 2021 Regulation was disallowed, probably after the Water Management (General) Amendment (Floodplain Harvesting Access Licences) Regulation 2022 commenced on 1 July 2022. The 2022 Regulation was in force at the time the letter of 3 August 2022 and email of 12 August 2022 were sent, although the regulation was later disallowed in the Legislative Council on 21 September 2022. The imposition of conditions on the replacement floodplain harvesting access licences was, therefore, not done pursuant to the 2021 Regulation and the notified conditions could not be conditions of a licence that determined the share component of the licence in accordance with Division 2 of the 2021 Regulation.

247. Emu Rider submitted that the conditions of the licence were also not imposed directly pursuant to cl 23K of the 2022 Regulation. Clause 23K of that regulation was in the same terms and operated in the same way as cl 23K of the 2021 Regulation. In terms, the clause did not authorise the imposition of conditions on a replacement floodplain access licence that takes effect by operation of the clause. The power to impose conditions on an access licence lies elsewhere, in s 66 of the WM Act. Section 66(1) provides that “an access licence is subject to such conditions as the Minister may from time to time impose,” which must include mandatory conditions and may include discretionary conditions.

248. Emu Rider submitted that s 66(1)(a) of the WM Act requires mandatory conditions to be attached to the licence whenever it is granted under the WM Act. There is no scope for mandatory conditions to be attached at a later point in time, except by operation of s 66(1AA) of the WM Act. This provision automatically applies subsequent new conditions introduced by regulations to the licence as and when they are made law. This is consistent with s 66(1A) which provides that the “mandatory conditions (other than conditions imposed by regulations) do not have effect unless they are included in the terms of the licence.” This must mean that the mandatory conditions must be included at the point in time when the licence is issued.

249. Emu Rider submitted that on the Minister’s case, the replacement floodplain harvesting access licences were issued on 21 February 2022. Emu Rider disputed this, because of the various non-compliances with the requirements of Division 2 of Part 2A of the 2021 Regulation, but submitted that even if that were to be correct, the time to impose the mandatory conditions on the licence would have to be on 21 February 2022 when the licence was taken to be issued. But this was not done. No conditions, including mandatory conditions, were imposed on the licence until 5 August 2022 in the statement of conditions. Emu Rider submitted there was no power to impose mandatory conditions at that time.

250. Emu Rider further submitted that the conditions imposed on the licence were not in fact mandatory conditions. Contrary to the Minister’s submission, the conditions were not required to be imposed by cl 65 of the Water Sharing Plan for the NSW Border Rivers Regulated River Water Source 2021, as:

“(i)   Condition MW8018-00002 does not correspond to cl. 65(4) of the WSP as asserted by the Minister because the condition extends to take from ‘uncontrolled flows’ thus beyond the restricted take to ‘overland flow’ as provided for in cl 65 (4);

(ii)   Condition MW6983-00003 specifies the wrong email address for notice contrary to cl 65 (1) of the WSP read together with cl 64 of the WSP upon which reliance is placed by the Minister. The WSP specifies an address of [email protected] (see the Note in the July 2022 WSP) to be included in the conditions; whereas, the conditions themselves specify notice to [email protected]

(iii)   The remaining conditions cannot be mandatory in accordance with cl 65 (5) of the WSP because that clause requires the imposition of conditions that ‘give effect to Division 1A of Part 8’, however in the WSP relied upon by the Minister in her submissions, there is no Division 1A of Part 8 to that WSP and no other instrument is specified in cl.65(5) to which reference is made.”

251. Emu Rider submitted that in these circumstances the purported imposition of conditions on the replacement floodplain harvesting access licences issued to the applicants was outside power and the conditions were invalid.

252. The Minister submitted that the letter of 21 February 2022 sent to the applicants constituted written notice for the purposes of cl 23K(1) of the 2021 Regulation, as it advised of both the category of the replacement floodplain harvesting access licence and the final share component of the licence. The Minister reiterated her earlier submissions that the share component of the licence had been determined in accordance with Division 2 of Part 2A of the 2021 Regulation. Although the letter of 21 February 2022 did not provide the licence or the conditions of the licence, as those were to be provided after 1 July 2022, the provision of these documents was not necessary in order for the licence to take effect pursuant to cl 23K(1) of the 2021 Regulation. All that mattered was that the letter gave notice of the two matters in cl 23K(1)(a) and (b). Clause 23K thereupon operated to cause the licence to take effect and the landholder to hold the licence.

253. The Minister submitted that each replacement floodplain harvesting access licence so issued was preserved by operation of s 41(3) and s 30(1)(b) and (c) of the Interpretation Act. Section 41(3) provides that the disallowance of a statutory instrument has the same effect as its repeal. Section 30(1) provides that the repeal of an Act or statutory rule does not:

“(b) affect the previous operation of the Act or statutory rule or anything duly suffered, done or commenced under the Act or statutory rule, or

(c)  affect any right, privilege, obligation or liability acquired, accrued or incurred under the Act or statutory rule.”

254. The Minister submitted that the replacement floodplain harvesting access licence taken to have been issued on 21 February 2022 by cl 23K(1) of the 2021 Regulation was a right that accrued from that date. That licence entitled the landholder to a share component of the available floodplain water from the water source. The licence, and the entitlement conferred, were a “right” for the purposes of s 30(1)(b) of the Interpretation Act.

255. The Minister submitted the later imposition of conditions on the access licence taken to be issued on 21 February 2022, notified to landholders on 3 and 12 August 2022, was authorised under s 66 and s 67 of the WM Act. The Minister submitted that the conditions imposed on the replacement floodplain harvesting access licence were mandatory conditions which must be imposed under s 66(1)(a) of the WM Act. By s 66(1AA) of the WM Act, an access licence is subject to any mandatory conditions imposed by the WM Act or the regulations. By s 67(3) of the WM Act, mandatory conditions referred to in s 66(1)(a) of an access licence may be imposed, amended, revoked or suspended by the Minister whenever it is necessary to do so in order to enable compliance with or to give effect to the WM Act or the regulations or a relevant management plan.

256. The Minister submitted that the conditions included in the statement of conditions issued to the applicants dated 5 August 2022 were required to be imposed by cl 65 of the Water Sharing Plan for the NSW Border Rivers Regulated River Water Source 2021 (as amended by the Water Sharing Plan for the NSW Border Rivers Regulated River Water Source Amendment Order 2022, published on 29 July 2022). The Minister submitted:

“a.   the condition under the heading “Reporting” was required to be imposed by cl. 65(1) of the Water Sharing Plan,

b.   condition MW8018-00002 was required to be imposed by cl. 65(4), and

c.    the remaining conditions were required to be imposed by cl. 65(5).”

257. The Minister submitted that the requirement in s 67(1) of the WM Act to consult with landholders before imposing conditions on an access licence does not apply to mandatory conditions of an access licence, only discretionary conditions. As the conditions imposed on the replacement floodplain harvesting access licence were all mandatory conditions, there was no requirement for the Minister to consult with the landholders who were taken to hold the licences before imposing the conditions on the licences.

258. I find that the replacement floodplain harvesting access licences did take effect, and the applicants were taken to hold the licences, upon the Minister sending the letter of 21 February 2022 to the applicants. That letter constituted written notice for the purposes of cl 23K(1) of the 2021 Regulation. The letter of 21 February 2022 contained notice of the two matters specified in cl 23K(1) of the category of the replacement floodplain harvesting access licence and the final share component of the licence. This was sufficient to engage the operation of cl 23K(1) to cause the replacement floodplain harvesting access licence to take effect and the eligible landholder to hold the licence.

259. It may be accepted that the final share component of the licence notified in the letter was not determined in accordance with Division 2 of Part 2A of the 2021 Regulation, for the reasons I have given earlier. But the determination of the share component of the licence remains valid until it is set aside by this Court. There was a determination of the share component of the licence on 21 February 2022, and an earlier determination of the eligibility of each applicant for a replacement floodplain harvesting access licence, which engaged the operation of cl 23K(1) of the 2021 Regulation. The written notice that was given on 21 February 2022 was sufficient for the licences to take effect. Unless and until a court of competent jurisdiction declares the licences to be invalid, they had legal effect: see Smith v East Elloe Rural District Council [1956] AC 736 at 769.

260. The replacement floodplain harvesting access licences that cl 23K(1) caused to take effect are, however, liable to be declared invalid as not having been issued in accordance with Part 2A of the 2021 Regulation, for the reasons I have given. That is the order I will make. This declaration of invalidity will operate retrospectively to declare the licences to be invalid from the time they purported to take effect, which was on 21 February 2022.

261. This retrospective operation of the declaration of invalidity makes it unnecessary to decide whether the Minister’s purported imposition of conditions on the licence was outside power. Whether or not the conditions in the statement of conditions dated 5 August 2022 were validly imposed on the licence, the licence as a whole will be declared invalid. Any conditions of the licence will therefore fall with the licence.

The relief to be granted

262. I have upheld five grounds of review establishing non-compliance with critical steps in the statutory process for the conversion of the actual or proposed floodplain water usage by landholders into replacement floodplain harvesting access licences. Each of these statutory non-compliances is material and invalidates the replacement floodplain harvesting access licences taken to have been issued to the applicants. The licences should accordingly be declared invalid.

263. Emu Rider also sought, in the Second Further Amended Summons, other declarations concerning the determinations and actions of the Minister. Many of these related to grounds of review that I have rejected. However, some of these concern grounds of review I have upheld. I will make declarations to give effect to my findings that the Minister did not comply with cl 23C(2), cl 23F and cl 23G(2).

Costs of the proceedings

264. Emu Rider has been successful in its challenge to the replacement floodplain harvesting access licences and certain associated decisions and actions of the Minister. Costs should follow the event. This course was not opposed by the Minister.

265. Emu Rider claimed, however, that costs should be awarded on an indemnity basis, rather than a party and party basis, after a certain date by reason of the Minister’s unreasonable conduct in breaching an agreement the parties had entered into with a view to settling the proceedings. That conduct was the subject of the challenge in grounds 10 and 11, but Emu Rider only pressed these grounds in relation to the indemnity costs order it claimed the Court should make.

266. The parties participated in a mediation, conducted by an acting commissioner of the Court, which resulted in the parties entering into a Heads of Agreement on 5 September 2023. The agreement provided for the parties to undertake a process to identify any deficiencies in the models adopted by the Minister to determine the share components of the replacement floodplain harvesting access licences as well as a mechanism to address the deficiencies. That mechanism included the Minister exercising the power under s 68A(1) of the WM Act to amend the share components of the replacement floodplain harvesting access licences to address any identified deficiencies in the models.

267. The process included Emu Rider’s experts providing to the Department’s experts a report identifying the deficiencies in the models. This was addressed in paragraph [6]:

“The Applicants’ Experts will provide to the Department’s Experts a single report addressing the additional data that the Applicants’ Experts say should be taken into account in order to produce more accurate modelling in respect of Access Assumptions, Breakout Relationships and Local Catchment Analysis, and any other specific issues with modelling assumptions that the Applicants’ Experts have identified.”

268. Paragraph [7] of the Heads of Agreement provided that:

“The Applicants’ Experts will meet with the Department’s Experts to discuss and review the report provided under paragraph [6].”

269. To give effect to paragraph [7], the parties’ experts met and discussed Emu Rider’s experts’ report provided under paragraph [6] and prepared a joint report setting out the matters agreed and disagreed between them.

270. Paragraph [8] of the Heads of Agreement provided:

“Following the completion of the process described in paragraphs [6] and [7] the Department will:

a. prepare and provide to the Applicants any further draft models and identify any recommendations that the Department is minded to take the Minister or the Minister’s delegate;

b. the Department’s Expert will meet with the Applicants’ Experts at which time the Applicant’s Experts can ask questions and make submissions about the assumptions and process by which the Department reached the proposal.”

271. Emu Rider submitted this is where the process agreed upon ceased. On 14 August 2024, Ms Giselle Howard, Executive Director for Water Planning at the Department, determined that the Department would not prepare any further models or identify any recommendations that the Department was minded to make to the Minister or the Minister’s delegate. Although there were further meetings of the parties’ experts between 14 August 2024 and 2 October 2024 with a view to resolve this impasse, these meetings were not successful. On 2 October 2024, Ms Howard gave reasons for the decision not to prepare any further models or identify any recommendations. Those reasons were endorsed by Mr Isaacs, the Executive Director of Water Knowledge at the Department.

272. Emu Rider claimed that the Department’s and Minister’s delegate’s decisions not to proceed with the process agreed in the Heads of Agreement breached paragraph [8] of the Heads of Agreement. Emu Rider claimed that the decision not to proceed to amend the share components took into account irrelevant matters of the work, time, cost and resources required to address the deficiencies identified in the models, asked the wrong question of whether the models were fit for purpose, and failed to make the decision in accordance with s 57A of the WM Act and Part 2A of the 2021 Regulation.

273. Emu Rider claimed that as a result of the Minister’s breach of the Heads of Agreement, the applicants have suffered loss and damage in the form of the costs and expenses of proceeding with the litigation, which would not be addressed by an order for costs on a party and party basis.

274. The Minister contested that the decision not to proceed with the process in the Heads of Agreement constituted such unreasonable conduct as would warrant the Court making an order for costs on an indemnity basis. The Minister submitted that the process agreed in the Heads of Agreement expressly contemplated that the Department may decide not to prepare any further models or make any recommendation to the Minister or the Minister’s delegate to amend the share components of the licences. That discretion is permitted in paragraph [8]. The Minister submitted that the Department’s decision not to proceed further with the process of amending the models and the share components was a reasonable exercise of that discretion. The Minister disputed that the Department’s decision was affected by error in the ways alleged by Emu Rider, but even if so, that did not cause the making of the decision to be such unreasonable conduct as would justify the award of indemnity costs.

275. I am not satisfied that the Minister’s decision not to proceed further with the process agreed in the Heads of Agreement justifies the ordering of costs on an indemnity basis rather than the usual party and party basis.

276. The ordinary rule is that “a successful party usually secures no more than an order that its costs should be paid on a party and party basis”: Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 at 248. An award of indemnity costs is ordinarily only made, except for where is some special entitlement, where the party against whom a costs order is to be made has engaged in some unreasonable action, including relevant misconduct, in connection with the conduct of the proceedings. The rationale for an award of costs on an indemnity basis in this situation is “more fully or adequately to compensate the successful party to the disadvantage of what otherwise would have been the position of the unsuccessful party in the absence of such delinquency on its part”: Oshlack v Richmond River Council (S208/1996) (1998) 193 CLR 72; [1998] HCA 11 at [44]. The relevant “delinquency” is of the unsuccessful party in the unreasonable conduct of the proceedings: Harrison v Schipp [2001] NSWCA 13 at [134].

277. In the present case, the conduct of the Minister in deciding not to proceed further under the Heads of Agreement to amend the models to determine the share components of the replacement floodplain harvesting access licence issued to the applicants and thereafter to amend the share components of the licences under s 68A(1) of the WM Act did not constitute relevant delinquency so as to justify ordering the Minister to pay Emu Rider’s costs on an indemnity basis.

278. The process agreed by the parties under the Heads of Agreement was an iterative one, the taking of one step informing the action or decision of the parties as to the next step to be taken. The taking of the step in paragraph [6], the provision of Emu Rider’s experts’ report to the Department’s experts, informed the taking of the step in paragraph [7], the joint conference of the experts to discuss that report. That joint conference of the experts informed the taking of the step in paragraph [8]. The Department would consider Emu Rider’s experts’ report provided under paragraph [6] and the joint report provided under paragraph [7] and decide whether to prepare any further draft models or identify any recommendations that the Department is minded to make to the Minister (under paragraph [8](a)). The Department was not obliged to prepare any further draft models or make any recommendations to the Minister; it had a discretion as to whether to do so.

279. As events transpired, the Department decided not to prepare any further draft models or make any recommendations to the Minister. The Department’s reasons for doing so were not unreasonable. These included the work, time, cost and resources that would be required in order to prepare models addressing the issues raised by the parties’ experts and that the models adopted by the Minister were sufficiently fit for the purpose of determining the share components of replacement floodplain harvesting access licences. Minds may differ as to the correctness or sufficiency of these reasons, but this does not make the reasons manifestly unreasonable.

280. In any event, the Minister’s decision not to proceed with the agreed process for attempting to settle the litigation is not properly to be characterised as relevant unreasonable action, or relevant misconduct, in connection with the conduct of the proceedings. The impugned decision of the Department was not to recommend to the Minister the amendment of the share components of the licences. Such amendment might, but not necessarily would, remove the basis for the challenge to the licences made by Emu Rider in the proceedings. The amendment to the share component of any particular applicant’s licence might be viewed by that applicant to be insufficient, for example. Under paragraph [9] of the Heads of Agreement, Emu Rider and the other applicants had a discretion to decide whether, if the Minister did amend the share components of the licences, they would continue or discontinue the proceedings. The Minister’s decision under paragraph [8] and the applicants’ decision under paragraph [9], therefore, concerned not so much the conduct of the proceedings but the discontinuance of the proceedings. The making of either decision by the Minister or the applicants is not relevant action in connection with the conduct of the proceedings.

281. For these reasons, the order that the Minister pay the applicants’ costs of the proceedings should be on the usual party and party basis and not an indemnity basis. Such an order will cover the costs of the applicants in negotiating and acting in pursuance of the Heads of Agreement, as these costs can be considered to be costs of the proceedings.

Orders to be made

282. The Court:

1. Declares that the replacement floodplain harvesting access licences, which took effect on 21 February 2022 and which the applicants were taken to hold, are invalid.

2. Declares that the Minister administering the Water Management Act 2000 failed to publish information in relation to the models adopted on 21 February 2022, in breach of cl 23G(2) of the Water Management (General) Regulation 2018 (as then in force).

3. Declares that the Minister administering the Water Management Act 2000 failed to give to the applicants written notice and 28 days in which to make submissions about the proposed share components for the replacement floodplain harvesting access licences and to consider such submissions, in breach of cl 23F of the Water Management (General) Regulation 2018 (as then in force).

4. Declares that the Minister administering the Water Management Act 2000’s determinations of the share components of the replacement floodplain harvesting access licences held by the applicants, made on 21 February 2022 under cl 23C(2) of the Water Management (General) Regulation 2018 (as then in force), are invalid.

5. Orders the Minister administering the Water Management Act 2000 to pay the applicants’ costs of the proceedings.

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Decision last updated: 24 June 2025