Gracewood Australia Pty Ltd v State Water Corporation
[2008] NSWLEC 292
•15 October 2008
Land and Environment Court
of New South Wales
CITATION: Gracewood Australia Pty Ltd v State Water Corporation [2008] NSWLEC 292 PARTIES: APPLICANT:
RESPONDENT:
Gracewood Australia Pty Ltd
State Water CorporationFILE NUMBER(S): 10646 of 2008 CORAM: Biscoe J KEY ISSUES: Jurisdiction :- respondent issued statement to applicant that applicant had used virtually all of its annual water allocation under licence issued under Water Act 1912 (NSW) - whether applicant's claim for alleged resultant lost opportunity of selling water allocation is within the jurisdiction of the Court.
Costs:- where proceedings purportedly brought in Classes 1, 2 and 3 of the Court's jurisdiction are outside jurisdiction and disclose no reasonable cause of action.LEGISLATION CITED: Environmental Planning and Assessment Act 1979 (NSW)
Land and Environment Court Act 1979 (NSW), ss 16, 17, 19(h), 20, 23, Pt 3 Div 1
Land and Environment Court Rules 2007 (NSW), r 3.7
Uniform Civil Procedure Rules 2005 (NSW), r 13.4
Water Act 1912 (NSW), ss 11(4), 12, 13A(4), 14(2), Pt 2 Div 3CASES CITED: National Parks and Wildlife Service v Stables Perisher Pty Ltd (1990) 20 NSWLR 573
Neighbourhood Association DP 285121 v Murray Shire Council (2001) 117 LGERA 95
Newcastle City Council v Caverstock Group Pty Ltd [2008] NSWCA 249
Nix and Dunn v Pittwater Council (1994) 84 LGERA 199
Porter v Hunters Hill Council (2003) 131 LGERA 144
Scharer v State of New South Wales (2001) 53 NSWLR 299DATES OF HEARING: 15 October 2008 EX TEMPORE JUDGMENT DATE: 15 October 2008 LEGAL REPRESENTATIVES: APPLICANT:
Mr N. Carney
SOLICITORS:
Baldock Stacy & NivenRESPONDENT:
Mr B. Green
SOLICITORS:
State Water
JUDGMENT:
THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES
BISCOE J
15 October 2008
10646 of 2008
EX TEMPORE JUDGMENTGRACEWOOD AUSTRALIA PTY LTD v STATE WATER CORPORATION
1 HIS HONOUR: The respondent, State Water Corporation, moves under r 13.4 of the Uniform Civil Procedure Rules 2005 to strike out or dismiss the application of the applicant, Gracewood Australia Pty Ltd, on the grounds that no reasonable cause of action is disclosed or the proceedings are an abuse of the Court’s process. The respondent submits that that is so because the proceedings:
- (a) are not within the Court’s jurisdiction;
(b) in any event, disclose no reasonable cause of action.
2 The applicant is a fruit and vegetable farmer with a property at Canowindra on the Belubula River. On 1 July 2003 the applicant was issued with a water licence under s 12 of the Water Act 1912 (NSW). Condition 7 provided:
- In respect of each year commencing on 1st July during which the volumetric water allocation scheme for Belubula River system is in force, not more than a maximum quantity of 1433.2 megalitres of water, including 256.2 megalitres of high security water for irrigation, 5 megalitres for stock and 1172 megalitres for irrigation or such other maximum quantity as may be specified by the Department of Land and Water Conservation from time to time, shall be taken from Belubula River during any such year under this licence…
3 Under condition 7, the maximum high security water allocation was 261.2 megalitres (the total of the figures of 256.2 and 5). Pursuant to condition 7, for the year to 30 June 2008, the applicant was allocated 130.6 megalitres high security water on 1 July 2007 and was allocated a further 130.6 megalitres high security water on 21 December 2007. The 1172 megalitres referred to in condition 7 was referred to as a low security water allocation: its availability was dependent upon a certain trigger and it is not directly relevant to these proceedings.
4 Condition 1 of the licence required the licensee to install to the satisfaction of the licensor an appliance or appliances for the measurement of the quantity of water diverted or taken. The applicant did not comply with Condition 1 until some time after May 2008. There were allegations on behalf of the respondent to the applicant during the second half of 2007 that the applicant was unlawfully taking low security water, an allegation which the applicant denied. This appears to have led to the suspension of the applicant’s licence for a period of a month or so in the second half of 2007.
The proceedings
5 The Application was filed on 6 August 2008. It purports to be an application in Classes 1, 2 and 3 of the Court’s jurisdiction. It states that the appeal is against “The deduction of 132.5 mega litres of water pursuant to License [sic] No 70SL090900 of the High Security Water Allocation”. It annexes the “decision” of the respondent with which the appeal is concerned, which it describes as “Copy of Statement of Water Allocation 1 July 2007 to 30 June 2008 (based on meter reading on 22/05/2008)”.
6 The annexed statement relevantly records the high security water allocation during the year ended 30 June 2008, and then purports to record the usage of high security water against that allocation during that year as follows:
Date Event Transactions Balances Allocation Allocation High High 01/07/2007 Current Allocation Low 0% High 50% 130.6 130.6 07/11/2007 Usage from 1/7/07 to 7/11/07 -67.7 62.9 21/12/2007 Allocation increase to Low 0%, High 100% 130.6 193.5 14/01/2008 Usage from 8/11/2007 to 14/1/2008 -64.8 128.7 27/03/2008 Usage from 14/1/2007 to 27/3/2008 -24.0 104.7 01/04/2008 Temporary transfer out -100.0 4.7 22/05/2008 Usage from 27/3/2008 to 22/5/2008 0 4.7
7 The applicant’s precise complaint emerges more clearly in paragraphs 14 and 15 of its Statement of Facts and Contentions filed on 11 September 2008, as follows:
15. The Applicant seeks the following: -14. The Applicant contends that the Ministerial Corporation has wrongfully deducted 130.6 Mega-litres from his high security water allocation when in fact he did not take the water.
- a. Reinstatement of the full entitlement of the water allocated to him.
b. Compensation for the lost opportunity of selling 100 Mega-litres of High Security water allocations to a mining company.
8 The applicant contends that it only used about three megalitres of its high security allocation of water in the year ended 30 June 2008. Thus, it challenges almost the whole of the water usage assessments in the respondent’s statement annexed to the Application (i.e. 67.7, 64.8 and 24.0 megalitres). It is common ground that the applicant transferred 100 megalitres of its high security water allocation to a third party (recorded in the statement as a “Temporary transfer out” on 1 April 2008).
9 It emerged in the applicant’s oral submissions that the claim for “Reinstatement of the full entitlement of water allocated” to the applicant is a claim for a declaration that the respondent overstated the amount of water usage in the respondent’s statement. Since the Application was not filed until after the expiry of the licence year ended 30 June 2008, there is no utility in any such declaration, of itself. The applicant’s real claim, as it acknowledged in oral submissions, is therefore for “Compensation for the lost opportunity of selling 100 megalitres of high security water allocation to a mining company”. This claim is apparently based, in some way, upon the respondent’s statement (relevantly set out at [6] above) that the high security water allocation for the relevant year had been almost all used. If the respondent’s statement was correct, it would have left virtually nothing that could be sold to the mining company. However, there is nothing before the Court to indicate what the cause of action is that would give rise to this claim for compensation (for example, negligent misrepresentation), even assuming that the cause of action was within the Court’s jurisdiction.
Jurisdiction
10 The respondent submits that the Court has no jurisdiction to entertain the applicant’s claim and that any such claim should be brought in the District Court or the Supreme Court. Even then, the respondent submits, the claim would be vulnerable to being struck out as disclosing no reasonable cause of action.
11 The applicant submits that:
(a) the proceedings are within the Court’s ancillary jurisdiction under s 16(1A) of the Land and Environment Court Act 1979 ;
(b) the “ matter ” referred to in s 16(1A) to which its claim is ancillary is a matter referred to in s 19(h): namely, all matters in Part 2 Division 3 of the Water Act 1912 , which is entitled “ Licences ”.
12 The jurisdiction of the Land and Environment Court is set out in Part 3 Division 1 (ss 16-23) of the Land and Environment Court Act 1979. Sections 17 to 20 define and compartmentalise the Court’s civil jurisdiction into Classes 1, 2, 3 and 4. Sections 16 and 19(h) provide:
16 Jurisdiction of the Court generally
(1) The Court shall have the jurisdiction vested in it by or under this or any other Act.
(1A) The Court also has jurisdiction to hear and dispose of any matter not falling within its jurisdiction under any other provision of this Act or under any other Act, being a matter that is ancillary to a matter that falls within its jurisdiction under any other provision of this Act or under any other Act.
(2) For the purposes of this Act, the jurisdiction of the Court is divided into 7 classes, as provided in this Division.
19 Class 3—land tenure, valuation, rating and compensation
matters
…The Court has jurisdiction (referred to in this Act as “Class 3” of its jurisdiction) to hear and dispose of:
(h) any other appeals, references or other matters which an Act provides may be heard and disposed of by the Court, being appeals, references or other matters that are not referred to in any other section of this Part.
13 Section 16(1A) was enacted following National Parks and Wildlife Service v Stables Perisher Pty Ltd (1990) 20 NSWLR 573 (CA) in which the Court of Appeal held that the Land and Environment Court has no jurisdiction to deal with a claim in tort for general damages. It has been held that “ancillary” is to be read as “incidental”, “accessory” or “auxiliary”: Scharer v State of New South Wales (2001) 53 NSWLR 299 (CA) at 308 [51] quoting Gleeson CJ in Nix and Dunn v Pittwater Council (1994) 84 LGERA 199 at 205. Thus, there must be a “matter” falling within jurisdiction, in relation to which the s 16(1A) matter is incidental, accessory or auxiliary. In Nix, Gleeson CJ stated that a claim for damages for nuisance could not reasonably be regarded as ancillary to Class 4 proceedings alleging the carrying out of unauthorised earthworks in breach of the Environmental Planning and Assessment Act 1979. In Scharer, Stein JA (Hodgson JA agreeing) held that a claim for damages for obstructing a right of way in a national park was ancillary to proceedings in this Court in its exclusive jurisdiction to enforce that right of way. In Neighbourhood Association DP 285121 v Murray Shire Council (2001) 117 LGERA 95 at [21], Pearlman J held that a claim for damages for negligence arising out of the installation of a sewerage system was not ancillary to a claim for alleged breaches of a development contract within the Court’s jurisdiction. There is also a line of authority in this Court that before s 16(1A) can be invoked there must be a matter “pending before the court” to which another matter in the same proceedings can be said to be ancillary: Porter v Hunters Hill Council (2003) 131 LGERA 144 at [60], [63], [64] and the cases there cited (Pain J). In Newcastle City Council v Caverstock Group Pty Ltd [2008] NSWCA 249 at [50], Spigelman CJ (Bell JA and Handley AJA agreeing) said:
- It is clearly desirable, in the interests of avoiding further proceedings, that the Land and Environment Court should be able to determine whether or not a person who has made a payment pursuant to a condition of a consent which is challenged is entitled to a refund and, if so, how much. Although the legal principles involved in such proceedings are not within the usual jurisdiction of that Court, such an issue is so clearly related to the issues before the Court that they should be resolved together. It may be that the requisite jurisdiction is conferred by s 16(1A) of the Land and Environment Court Act , but that section was not relied upon in these proceedings…
14 Some provisions of Part 2 Division 3 (ss 10 – 18) of the Water Act 1912 provide for appeals to the Land and Environment Court against certain decisions of Magistrates, local land boards or the Ministerial Corporation relating to water licence applications: see ss 11(4), 13A(4) and 14(2). In these proceedings, the applicant alleges that the respondent erroneously calculated the actual water usage in a statement of water usage under a water licence allocation which (somehow) led to the applicant losing the opportunity of selling part of its water allocation to a mining company. I am unable to accept that the proceedings are ancillary to any matter in Part 2 Division 3 in respect of which the Court has jurisdiction. I can see no such matter to which the proceedings are so closely related that ancillary jurisdiction is conferred by s 16(1A). Further, there is no matter pending before the Court to which the matter the subject of these proceedings is ancillary. Consequently, in my opinion, the Court has no jurisdiction to entertain the proceedings and they should be dismissed.
No cause of action
15 Even if this Court has jurisdiction, in my opinion no reasonable cause of action has been disclosed for the claim for compensation. If the claim is intended to be a claim in tort for damages, the nature of the tort is not disclosed nor is its causal relationship to the alleged damages. For instance, there is no allegation in the filed material that the respondent was negligent or in breach of a statutory duty in allegedly misstating the amount of water used such that it is liable (in some way) in damages to the applicant. For this additional reason, I consider that the proceedings should be dismissed.
Costs
16 The respondent seeks an order that the applicant pay its costs, which the applicant opposes. The argument proceeded on the assumption that costs were governed by the special costs rule in r 3.7 of the Land and Environment Court Rules 2007. Rule 3.7 provides that in proceedings in Classes 1 and 2 and certain proceedings in Class 3 of the Court’s jurisdiction, “The Court is not to make an order for the payment of costs unless the Court considers that the making of an order as to the whole or any part of the costs is fair and reasonable in the circumstances”. In my opinion, where an applicant has failed to establish that the proceedings fall within those (or any) classes of the Court’s jurisdiction, r 3.7 has no application. Consequently, the ordinary costs rule in civil litigation that costs follow the event applies, with the result that the applicant should pay the respondent’s costs.
17 If I am in error and r 3.7 does apply, I consider that an order that the applicant pay the respondent’s costs is fair and reasonable in the circumstances. Rule 3.7(3) sets out a non-exhaustive list of circumstances in which the Court might consider the making of a costs order to be fair and reasonable. They include a number of circumstances which have nothing to do with any unreasonable conduct by the losing party. Two of these circumstances are, first, that the proceedings involved as a central issue a question of law the determination of which was in one way or another potentially determinative of the proceedings, and, secondly, that a party had commenced a claim which did not have reasonable prospects of success. In my view, assuming that r 3.7 applies to these proceedings (contrary to my opinion), those two circumstances apply and it is fair and reasonable that the applicant pay the respondent’s costs, particularly as the respondent put the applicant fairly on notice that it contested jurisdiction and would bring this motion.
18 In reaching that conclusion in relation to r 3.7 (on the assumption that it applies), I have taken into consideration the parties’ submissions. The respondent submits that it is fair and reasonable in the following circumstances to order the applicant to pay its costs because: (a) the respondent has been in correspondence with the applicant for some time proposing that its dispute should be referred to a statutory ombudsman; (b) the respondent put the applicant on notice in correspondence over some time that it could see no jurisdictional basis for these proceedings and would, if necessary, proceed with this motion and seek costs; (c) the applicant created unnecessary diversions by asserting other jurisdictional bases which ultimately were not pressed; (d) the respondent was compelled to bring this motion in order to bring the jurisdictional issue to a head and this was a more responsible course than allowing the matter to play out to a substantive hearing when the jurisdictional issue would be dealt with; and (e) a jurisdictional issue does not form part of the traditional matrix of a merits appeal in Classes 1, 2 and 3 of the Court’s jurisdiction. The applicant concedes that the respondent properly brought the motion, but submits that: (a) the referral of the matter to the ombudsman would not bring finality to the proceedings and its decision not to take that course should not be held against it; (b) the test on costs under r 3.7 should be whether it had a reasonably arguable case that the Court had jurisdiction; (c) the respondent acted in a high handed way in the events leading up to the litigation; (d) the applicant is an aggrieved person; (e) the applicant has not acted unreasonably in bringing the proceedings; and (f) the applicant was confronted with a legislative “nightmare” in determining which court had jurisdiction. I do not accept the test proffered by the applicant, for which no authority was cited; it has not been proved that the respondent acted in a high handed manner prior to the litigation; and the other circumstances referred to in the applicant’s submissions do not affect my conclusion.
19 The orders of the Court will be as follows:
1. The proceedings are dismissed.
2. The applicant is to pay the respondent’s costs.
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