Lee and Anor v Commonwealth of Australia and Anor

[2012] HCATrans 306

Replacement Transcript

[2012] HCATrans 306

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  No C5 of 2012

B e t w e e n -

DANIEL THOMAS LEE AND GRAEME PETER JAMES GROPLER

Plaintiff

and

COMMONWEALTH OF AUSTRALIA

First Defendant

MURRAY DARLING BASIN AUTHORITY

Second Defendant

Directions hearing

FRENCH CJ

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 29 NOVEMBER 2012, AT 10.15 AM

Copyright in the High Court of Australia

MR P.E. KING:   If your Honour pleases, I appear for the plaintiffs.  (instructed by Maloney Anderson Legal)

MR C.L. LENEHAN:   May it please the Court, I appear with MS D.M. FORRESTER for the defendants.  (instructed by Australian Government Solicitor)

HIS HONOUR:   Yes, Mr King.  It is your summons, I think.

MR KING:   It is, your Honour.  To assist the Court, your Honour, I have a pristine copy of the Water Act, if it is of any assistance.

HIS HONOUR:   Yes, thank you.  Which print is this, by the way?

MR KING:   This is reprint No 1.  So far as I am aware, Salmat who issues these things, it is the latest one.  There was a proposed amendment, 2012, which was placed before the House, I think about a month ago, but we say that that amendment does not affect any issue in the case.  Indeed, if anything, it advances the plaintiff’s case, but I will deal with that if necessary, your Honour.

HIS HONOUR:   Yes, all right.

MR KING:   If your Honour pleases, we move on the summons.  There have been some discussions between the parties, but before I specify the precise orders that we would ask your Honour to make, can I address three issues which have been raised by the correspondence and the submissions from the defendants received yesterday and then set out our proposal.  Three objections, your Honour, were taken to the proceedings as we conceive it by the defendants.  The first which is set out in a letter of 19 November attached to Mr Anderson’s affidavit and Ms Nance’s affidavit are to the effect that the proceedings were not properly constituted as representative proceedings.

We have two observations to make about that.  Firstly, we say that the legal reason given in the letter of 19 November has no substance and, secondly, we say that the so‑called practical reason is of, to say the least, no merit.  If I can just deal briefly with each.

In the letter of 19 November, paragraph 4, objection is taken in the third sentence to the breadth of the class.  However, your Honour, we would say two things about that.  That is the legal reason it is said that the matter cannot be representative proceedings.  Firstly, there is no such criterion in the relevant rule and, so far as we are aware, no authority would suggest that that is a proper objection to a representative proceeding and I refer to rule 21.09.1 which simply requires numerous persons having the same interest in any proceeding.

The second reason that that has no substance, having regard to the statement of claim and in particular paragraphs 3 to 6 and paragraph 20, is that in terms of history, topography and interest, the plaintiffs, and the persons they purport to represent, have a real interest which is the same.

Can I just briefly mention a little history, your Honour?  In 1896, Sir Alfred Deakin presided over a royal commission appointed by the Victorian Government into the new settlers who started their farms, their small farms – about 20 hectares, about 40 acres in those days – in the Murray region, semi‑arid regions between ‑ ‑ ‑

HIS HONOUR:   Mr King, I am not going to hear about the history at this stage.

MR KING:   No.

HIS HONOUR:   There is a question obviously about the constitution of the representative class.  Whether or not you have an entitlement to commence the proceeding by reference to the group that you have defined in paragraph 4 of the statement of claim, the question whether or not the proceedings continue as a representative proceeding is a matter which can be contested because it is subject to the discretion of the Court or a Justice to otherwise order under rule 21.09.1.  So I take that what the defendants have put in their submissions is flagging at least the existence of a dispute about the appropriateness of the continuance of these proceedings as representative proceedings.  I am not getting into the merits of it at the moment.

MR KING:   No.

HIS HONOUR:   The question we are really addressing here is whether these proceedings as representative or otherwise should continue in this Court or be remitted to another.  Now, the problem that you face is that there is (a) a dispute about the continuance of the proceedings as representative proceedings on the group presently defined and, indeed, the utility of that, but more substantially I think the question of potential factual disputes of considerable scope, particularly with reference to things such as the discriminatory effect of legislation, the existence of water markets and so forth and of course, some of the historical matters upon which you yourself are relying in the statement of claim.

So focusing upon - without trying to get into the, as it were, background merits of the claims – focusing upon the nature of the proceedings having regard to the pleading, the question really is should it be continued in this Court by reference of questions to the Full Court which you seek in your submissions or should it be remitted to the – the appropriate court I imagine would be the Federal Court in the Melbourne Registry.

One matter which concerns me is looking at the statement of claim and some of the matters that have been raised it seems to me that this case is going to require a fair bit of management to get it into shape for hearing and that is not the kind of function which this Court ordinarily undertakes and I think Justice Brennan, in a case which was referred to by the defendants in their submissions, made that point.  So perhaps if you can address those issues for me.

MR KING:   Of course.

HIS HONOUR:   The question is really can you crystallise questions of law disentangled from disputed questions of fact which make this suitable to refer to a Full Court and deal with them.

MR KING:   We say we can, your Honour.  If I can just deal with the three points that were raised against us, two of them, we say, really fall away.  We say there is no substance in the representative proceeding point.  I will not go into that further now.  We say that on the question of whether there is a matter, that has now fallen away according to the submissions that we received yesterday and it seems that the respondents contend that it is no longer a question as to whether there is a matter by reason of the making of the plan in the interim period.  I do not know if that is their real position, but in any event, our respectful submission is that there is no substance in that either having regard to the test adumbrated by Justice Kitto in Fairfax and Justice Kiefel in Pape and your Honour in that and in JT.

So the only real issue then comes back to disputed questions of fact.  When one looks at my friend’s written submissions one sees that in truth there is at the end of the day – the real concern that he has about disputed questions of fact are constitutional facts, that is to say, facts upon which he would rely to show that the law in response to the challenge under section 100, sections 99 and 92 is reasonably appropriate and adapted such that the invalidating aspects are overcome by the saving aspects.

Now, what we have said to my friend is this, that we would seek to discuss with him and those instructing him the critical constitutional facts which he says are necessary to be determined to support his case.  We do not think they are of much moment or, indeed, of any great range, notwithstanding what appears to be the complexity of the matter and that in relation to any critical facts that are relevant to the plaintiff’s claim, which again we would say are much narrower than might otherwise be suggested by my friend’s letter, that they can be the subject of consultation and that the matter come back in say around about four weeks with a view to determining then on a more sound basis whether or not the matter can go forward to the Full Court.

I have spoken to my friend and I understand he does not oppose an adjournment in view of the matters that we put in our letter yesterday and the further submission we brought to the Court yesterday afternoon in response to his submission. Can I say this, your Honour? If your Honour has a look at section 100 there are, at the end of the day, really only two questions – section 100 of the Constitution, I am sorry, your Honour.

HIS HONOUR:   Yes.

MR KING:   Does section 100 apply – and these are the matters set out in paragraphs 17 to 19 of the statement of claim – that is, is the Act a law or regulation of trade or commerce.  Now, that is very much a question for this Court.  The second question is does the law abridge the right of residents to the reasonable use of waters of rivers.  Our case is that whatever the word “abridge” means, it does not mean purge or abolish.

HIS HONOUR:   What is the right that you assert, the right of the residents?

MR KING:   That is the right referred to, that is to the reasonable use of the waters of rivers for conservation or irrigation.

HIS HONOUR:   Where is that right asserted in the statement of claim?  Can you just take me to that part of the pleading?

MR KING:   In paragraphs 6c and 8c there is an assertion about the licence and those are publicly available documents.  In paragraphs 20 ‑ ‑ ‑

HIS HONOUR:   This is a water use licence issued under what?

MR KING:   In the case of Mr Lee it is issued under the Water Act 1989, but it has now become a tradeable right or a tradeable water right under the Commonwealth Act as defined in section 4.

HIS HONOUR:   Are you equating that to the constitutional right to the reasonable use of waters of rivers?

MR KING:   Subject to the matters in paragraphs 17 through to 20, and in particular 20.

HIS HONOUR:   That is a factual statement about enjoyment of reasonable use.

MR KING:   Based on history of use as established in each of the licences.

HIS HONOUR:   What does that have to do with the existence of a right for the purposes of section 100?

MR KING:   Because it is the measure, the licence is a measure of the right to reasonable use.  Say, for example, in the case of Mr Lee, when he was issued his current licence there is quite detailed correspondence which is available between him and the Victorian Government setting out the basis upon which that licence was issued, bearing in mind the traditional crops that he has grown and the use that he has adopted.

HIS HONOUR:   What I am trying to understand is whether paragraph 20, in its reference to the historical use of the waters by each plaintiff, is seeking to give content to the right which it is said is abridged, contrary to section 100, by the Water Act.

MR KING:   Yes, so in other words – no, in short, it is their use of the waters of the river Murray for irrigation.

HIS HONOUR:   But that brings in a factual inquiry, does it not, going to the content of the right, given the way you have framed it?

MR KING:   Yes and no.  Yes, because it does assume they have used some water, but no because the way the Act is structured – and this is the legal question we have raised is that we say that the word “right”, whatever it means in section 100 does not mean an absence of a right and that the words “reasonable use” do not mean zero use.  So it cannot be gainsaid so, your Honour, it would be nonsensical for the defendants to suggest that in the circumstances set out in paragraphs 4 to 6 of the statement of claim which can hardly be gainsaid, their title to land, their ownership of the licence are matters on the public record.

HIS HONOUR:   So the rights protected by section 100 on the approach that you are taking in the statement of claim, they include or extend to individual use rights issued under State statutes?

MR KING:   Now categorised as tradeable water rights under this Act.

HIS HONOUR:   Yes, but it is what happens to be granted by a State statute at any particular time, is it?

MR KING:   Not now, your Honour.  Now, it is under the Water Act.

HIS HONOUR:   Yes, but that could change tomorrow, could it not?

MR KING:   Not really.

HIS HONOUR:   I am looking at the constitutional use of the word in section 100 which looks to the future across a variety of possible scenarios.

MR KING:   Absolutely.

HIS HONOUR:   What I am trying to understand is whether the right of the residents, which you seek to invoke in this pleading, is a right which is to be ascertained by some factual inquiry today.

MR KING:   The only constitutional fact which is to be ascertained by that inquiry is (a) whether or not they are irrigators, that is use the waters of the river Murray for irrigation or conservation, and we say that constitutional fact cannot be in doubt, and whether or not zero use is reasonable use.  Once one reaches that situation one has a live issue because as we have said whatever “reasonable use” means it cannot mean zero use and whatever “right” means it cannot mean an absence of the right.

Now, it is interesting your Honour raises that question “right” because the defendants in the Arnold Case – and there is a hint of it in the letter of the AGS in this case – suggest that the word “right” means a mere political right.  But what is a mere political right in a constitution.

HIS HONOUR:   I am not concerned about the merits of the debate between you and the defendants.  What I am concerned about is the nature of the debate and the extent to which it brings in factual issues because that is critical to the question whether the matter can be dealt with by reference to questions of law to the Full Court of this Court or whether it should be referred or remitted to the Federal Court.

MR KING:   Certainly, your Honour.  We respectfully submit, your Honour, that it can be dealt with by remitter to the Full Court because of the drastic nature of the legislation and the minimal facts, constitutional facts necessary to be disclosed to address that issue.  Indeed, one might even say that all that Mr Lee and Mr Gropler have to do is to show that they are irrigators, they take water from the Murray and they have lost that right by reason of a Commonwealth law.

In Quick and Garran there is a detailed discussion of those issues and, interestingly enough, the learned authors come down in favour of the plaintiffs on the first point, that is to say that there is no Commonwealth power for that purpose.  But the learned authors also make the point that the phrase “reasonable use” is a question of law classically for the Court itself to determine because it does involve, or may involve, a determination by reference to legal considerations of what is reasonable.

Our respectful submission, your Honour, is that in the circumstances of this case it is not a live issue, that is to say any question about whether or not these gentlemen have taken water from the river Murray.  Your Honour, the same goes for the section 99 point because, again, one only needs to look at the Act to see that it carves up the Basin into areas by reference to States and then discriminates as between those areas in different States.

Now, my friend in his written submissions yesterday says there might be constitutional facts which show that that is reasonably appropriate and adapted. Well, what we have said to him is tell us what those facts are and we will probably agree with them and then we can ask the Court to decide whether or not that is sufficient. Then he said in relation to section 92, the case classically, in effect, does not fall within Cole v Whitfield.  We acknowledge that.  It is not a Cole v Whitfield case but it is our position that that question alone can be decided by this Court, no other court.  That would be a reason against referral to another court.

What has happened here is that State water markets have been abolished and a protected Commonwealth market has been established within the limits of the States which has the consequence of – that protection discriminates against the interstate trade and commerce that has been abolished.  Now, there is a question as to whether or not Cole v Whitfield covers the field.  That certainly is correct, but that question, and ultimately the issues that arise here on that issue as well, we say are legal issues. 

We had regard, your Honour, to what your Honour the Chief Justice said, together with your colleagues, Justices Gummow, Hayne, Crennan and Bell in Betfair v Racing New South Wales [2012] HCA, especially paragraph 45 where your Honour cited with approval the observations of the Full Court of the Federal Court in saying that:

The relevant inquiry as to whether a law or other governmental measure operates in fact to impose a protectionist burden on interstate trade contrary to s 92 of the Constitution is not concerned to vindicate a right in individual traders to carry on their business as they wish. The inquiry is whether the individual trader, as a participant in interstate trade is subject to a differential burden by reason of the operation of the law or measure in the common circumstances of the trade. The differential burden must be imposed by the law or executive measure ­

Here, the Act creates a potential market.  It abolishes interstate trade and commerce and imposes a new protected market in lieu of that which it has abolished.  Interestingly enough, at paragraph 110 in Justice Kiefel’s judgment, there is reference to the phrase of the need to show “the creation of a protective barrier of some kind around the local market”.  We say that those passages focus on the operation of the law itself and it is those focuses which are the core of the argument that we wish to advance here, your Honour, in favour of the proposition for which we contend.

HIS HONOUR:   You rely in your section 92 pleading upon the pleaded existence of State water markets?

MR KING:   The existence of State water markets, yes, your Honour.

HIS HONOUR:   So that is a factual matter?

MR KING:   We acknowledge that, your Honour, but those State water markets are referred to and described in the State Water Act.  For example, the Water Management Act (NSW) specifically describes that market and how it works. Likewise the Victorian Act and we would be very surprised if once we have – and it is also the subject of Commonwealth public record in the reports of the National Water Commission. Those records are the full extent of any necessary factual examination to decide that question.

HIS HONOUR:   You say at 43:

The Basin water market is not as free as the State water markets, and impairs trade and commerce among the States.

MR KING:   That is right, your Honour.

HIS HONOUR:   That is part of your 92 pleading.

MR KING:   Yes.  We have not been asked for particulars of that, but the particulars are as set in 42.  It is another way of putting the case in 42.  In other words, what we are saying, your Honour, is this, that Cole v Whitfield does not necessarily cover the field as to the meaning of trade and commerce “among the States” and I am stressing those words from section 92 “shall be absolutely free”. But that paragraph does not add anything further in terms of fact, your Honour.

What we propose in short is this, your Honour, that the matter go over for a short period - in discussion with my friend he consents to that course – that the discussions which we have attempted to have with him now occur.  We have also formulated some questions which we think would be – which in the light of his letter he might consider appropriate to ask the Full Court and in the meantime seek to agree the facts as indeed happened in ICM Agriculture v The Commonwealth or, alternatively, adopt a demurrer approach, which we think is his real position as happened in Wurridjal and, I think, in JT International, recent cases in the Court.

HIS HONOUR:   Now, the questions that you want referred to the Full Court, are they the ones set out in your outline of submissions filed on 31 October?

MR KING:   They are, your Honour, but we have refined them or we have suggested to the respondents in our letter of yesterday that they might be refined further.  For example, in relation to the section 100 and section 99 points, if your Honour has a look at section 11 of the Act, your Honour will see some provisions which perhaps might interest your Honour.  Perhaps I should start with section 9.  Section 9 of the Act says:

This Act . . . relies on –

amongst other things, section 51, the trade and commerce power.  Does your Honour see that?  Then one goes to section 11, a reading down provision.  Now, what this section does is, in effect, say to the Court well if the Act would be invalid because of sections 99 or 100 – which we say it is – then the Court should not read it that way because it was the intention of the Parliament not to rely on the trade and commerce power.  But our short answer to that is this.  The whole Act depends upon a Commonwealth water market being established to redistribute water away from users such as our clients to their great harm and suffering.

So we say that the dictation to the Court that is comprised in section 11 would itself be invalid and that the Court itself will conduct the characterisation of the Act and that, of course, is the critical question as to the objectives of the Act set out in Part 1 and the management of the Act set out in Part 2, neither of which are referral provisions under section 51(xxxvii).

So our first question in our letter yesterday suggested that that may be a starting point, that is whether or not section 11 itself is valid and then we say that the next issues – and we want to set this out in further submissions to your Honour and to my friends – about section 100 are really twofold.  Is the Water Act a law to which section 100 applies and does the Act abridge the right to the reasonable use of the waters of rivers for irrigation or conservation and we say the answer to both those questions is yes.

In a section 99 case, the first question is, is the Act a law to which section 99 applies?  We say it is.  Second, does that law give preference to any part of a State over part of another State?  The answer to that is yes as well.  On the section 101 point, which my friend acknowledges in his own submissions is a legal question and is novel – we acknowledge that it has not been put to any court before, but then again nor has section 100 ever been considered before except in Arnold where it was held that it did not apply. On the section 101 point is does that give rise to any constitutional duty in the Parliament or any constitutional guarantee, to which we say the answer is yes, and if it does, does the Parliament have that duty and we say the answer to that is yes and that is being breached. On the section 92 case, the first question is, is Cole v Whitfield an exclusive statement of the operation of section 92 and the second question is ‑ ‑ ‑

HIS HONOUR:   Sorry, the questions that you are referring to, are those the questions which are set out at the end of an email or letter from your instructing solicitors to the Australian Government Solicitor dated 28 November?

MR KING:   They are not, but it reflects those issues.

HIS HONOUR:   It says the proposed referred questions are following and that affidavit annexing that letter was filed.

MR KING:   Yes, that is right, your Honour.

HIS HONOUR:   Are the questions written down somewhere that you are referring to?  I thought I had been taken to those but they do not seem to correspond with what you are telling me now.

MR KING: I apologise, your Honour. Can I go back to the letter of yesterday that your Honour is now referring to? Yes, those are the proposed referred questions and we say they address the issues that have been raised by my friend in his correspondence, but of course, we have not had the opportunity to discuss them with him, nor have we had the opportunity to discuss with him the constitutional facts which he contends are relevant to the section 99 point and, if any, the section 92 point.

What we suggest, your Honour, is that in the intervening period the parties will have a reasonable opportunity to consider those alternative propositions to the ones we set out in our summons and any constitutional facts which either of the parties considers is necessary or appropriate.

HIS HONOUR:   You appreciate, Mr King, it is not just a matter of agreement or consent between yourself – or the plaintiffs and the defendants.

MR KING:   Of course, your Honour.

HIS HONOUR:   The question of remitter is a matter also for the Court.  If I form the view, and at the moment I have some real concerns that this proceeding is going to need a lot of case management to get it into shape and to, as it were, tease out what are really the factual issues that have to be either determined or agreed and that is going to take some time and some considerable judicial input, then it would seem to me that the appropriate course would be to remit it to the Federal Court.  So it is not just a matter of a consent to an adjournment from Mr Lenehan.

MR KING:   The difficulty we faced on the latter question that your Honour has just raised is that the submission that was put to us yesterday, which we have not had a chance to examine and which we would like to do so and we think there are proper responses to it, we of course do not suggest for one minute that any issue of damages or other relief should be dealt with in another court.

HIS HONOUR:   No, I understand that, I have read that.  Yes, you have said that in your submissions.

MR KING:   But it is the key constitutional issues, that is the Act itself which we say infringes these protections that directly relate to our clients’ interests that we would wish to have resolved.  One of the problems with referral, your Honour, and we would wish to set this out in a reply submission, is that at least in relation to an aspect of the section 100 point and the 99 point, which is our fall‑back case dealing with Morgan and an aspect of the section 92 point, namely the Cole v Whitfield argument, really cannot be decided by any court other than this Court.

So we say that my friend is really treading water, he is really trying to raise factual issues which are not real factual issues in the context of this case, that at the end of the day the case is going to be determined by reference to what the Parliament has done and the factual issues will not become or, indeed, are not the real focus of the plaintiff’s case.  Their case is concerned with showing that the Parliament has transgressed the protections built for them specifically.

It is hard to think of a section in the Constitution which is more specific in aiming at the protection of small horticultural farmers along the river Murray than this section. It was part of our constitutional compact and that is what they wish to have determined and we would like the opportunity, your Honour, to take up the issues raised yesterday and we think that a short adjournment will have utility, together with the comments made from your Honour, the benefit of those comments, in identifying precise questions based on clear facts.

HIS HONOUR:   Yes, all right.  I will hear from Mr Lenehan now.  Yes, Mr Lenehan.

MR LENEHAN:   Thank you, your Honour.  Your Honour, I should first make clear that the reference to a consent to an adjournment was made on this basis.  Yesterday, in the submissions filed by my friend, my friend indicated that the plaintiffs were unaware of the fact that the Murray Darling Basin plan had been made and suggested that they needed some time to consider that.  That was something that had been mentioned in the defendants’ submissions as ‑ ‑ ‑

HIS HONOUR:   Their attack on the Act though does not depend upon the existence of any particular plan.  Is that right?

MR LENEHAN:   Yes.

HIS HONOUR:   I mean there may be very important practical considerations, of course, but in terms of the constitutional attack.

MR LENEHAN:   I think that is right, your Honour.  That is as that appears to us.  Nevertheless, there were references to the plan in the pleading and it would seem to us if they were to remain it should be to the current form of the plan.  So our consent to the adjournment was made on that basis and specifically not to facilitate some sort of agreement or discussions between the parties as to an agreement as to a special case or agreed facts.  It remains the concern of the defendants that that process is unlikely to be fruitful and there is unlikely to be, for the reasons that have emerged in the discussion between your Honour and my friend, an agreement on those matters.

My friend has suggested that perhaps there has been some backtracking on the part of the defendants in relation to what I will call the pleading points, and those are the points raised in the letter from my solicitors.  I should make clear that that is not the case, that nevertheless I understand from what your Honour has said that the main point that your Honour is concerned by is the question of whether there are contested facts in issue in the proceeding and whether therefore the matter should be remitted to the Federal Court.

HIS HONOUR:   It may not be just a matter of contested facts.  It may be a matter of refining the legal and factual questions pleaded in the statement of claim.

MR LENEHAN:   Yes, your Honour.  As an example of that, the first question that my friend just took your Honour to, that seems to be some sort of, I will call it a Chapter III question that he says emerges from section 11, your Honour will look in vain to find that in the pleading at the moment.  It is simply not there and the first we knew of it was last night.  So there seems to be some sort of evolving case in that regard.

In terms of the likelihood of facts which the Court is necessarily going to have to form a view on for the purposes of determining the claim, it is perhaps useful to illustrate that by reference to two examples.  The first is the one that your Honour explored with my friend, that is the section 100 issue and the reasonable use or the abridgement of the relevant right to the waters of rivers.

HIS HONOUR:   It is a right to the “reasonable use”.  The question I was raising was what is the nature of that right?  What are the debates one might have about the nature of that right and to what extent are they informed by factual questions or historical questions?

MR LENEHAN:   Exactly, and your Honour sees in the paragraph of the pleading that my friend took your Honour to – that is paragraph 20 – that in part it seems to be said by the plaintiffs that one determines that – this is looking at the particular to paragraph 20i – by reference to some sort of inquiry as to the historical measure of use extending back to 1885.  If that is so then that is going to be necessary in undertaking that inquiry to consider all sorts of factual matters including what is an industry standard, what are the historical measures of use.  But, in any event, the Commonwealth’s position as to that question is likely to involve some sort of perhaps threefold defence.

The first might be that “reasonable use” in section 100 means some sort of environmentally sustainable level of take and that might mean no more than what is determined by the body upon whom statutory authority is relevantly conferred has ascertained that that is the level that water should be taken.  That, of course, would not involve much in the way of facts.

But drilling down further, there are two other possible defences available to the defendants.  The second might be to say that the notion is qualified by – being determined by some sort of rationing process and that of course would involve questions about the process that the authority undertook to arrive at its assessment of the level at which water should be taken.  That would bring in facts as to the scientific evidence that was available, the quantity of water that is taken, the purpose for which it is taken, all matters which necessarily involve facts in potentially factual disputes.

Then drilling down further there would be a further available defence for the defendants which would be, if you like, a full‑blown factual inquiry and given that, as my friend has said, there is a paucity of authority on section 100, one could not rule out any of those possibilities and in formulating a special case, one would need to accommodate all of them and a single Justice considering referring a matter to the Full Court would not, of course, preclude those possibilities by trying to eliminate aspects of the special case.

For those reasons, in the defendants’ submissions, there is necessarily going to be a large volume of potentially relevant material and because of that large volume necessarily a considerable prospect, in my submission, of the parties being unable to reach agreement on it.  As your Honour has referred to, it also raises the prospect of a real need for case management.  I can illustrate the likelihood of factual difficulties by reference to another example if your Honour wishes me to.

HIS HONOUR:   Yes.

MR LENEHAN:   If your Honour goes to the section 92 claim, which starts at paragraph 36, and your Honour invited my friend to perhaps address this point - I did not understand from his answer how it was addressed. You see in paragraph 37 a reference to, as your Honour said, some form of State water markets and they seem to be defined by reference to the Acts and, for the defendants’ part, they would not necessarily accept, assuming that there is such a water market, that the Acts are as far as you go. There may well be other factual material relevant in that regard.

But if you go then to paragraph 42 and the last two lines of that paragraph, there seems to be contemplated an inquiry into not just what seems to be in 37 the Basin State markets comprising some form of water market, but some sort of national water market that is extending throughout Australia which naturally brings in questions of substitutability and my friend referred to Betfair – which simply were not in issue in Betfair because in Betfair of course one had the internet.  One is here dealing with water entitlements that might be in a completely geographically separate part of Australia and between which there will be no substitutability and you can imagine that is water entitlements in Western Australia.

So there seems to be an incoherence at the heart of my friend’s case and he seems to place some importance on the notion that one compares the position in 42 of the Basin State entitlement holders to other entitlement holders elsewhere in Australia which seems to contemplate some form of national market and yet in 37 there seems to be a more limited Basin market.

That illustrates, in my submission, that there is going to be some form of necessary factual inquiry and one would assume some sort of contest as to the nature of that market illustrated by the very fact that my

friend in his pleading does not seem to be able to present a coherent picture of what exactly is involved there.

My friend also made reference, and this is really just by way of clarification, your Honour, to the possibility of there being zero use or a zero limit imposed by the Act.  That seems to revolve around the notion of sustainable diversion limit.  Just to direct your Honour to that, you see that in section 22 of the Act and there is a table there.  One finds the notion of sustainable diversion and it is in item 6 of the table.

HIS HONOUR:   These are matters which have to be included in a basin plan or the Basin plan.

MR LENEHAN:   That is correct, your Honour.  The notion of sustainable diversion limits is described in item 6 as:

The maximum long‑term annual average quantities of water that can be taken, on a sustainable basis –

So there is no suggestion in there that one can, on an arbitrary basis, reduce entitlements or allocations to zero.  The notion is that it is a maximum level that is environmentally sustainable and you see that made good in section 23 of the Act and you will see in item 6 in the right‑hand column:

The limit must comply with section 23.

It is said in 23(1):

A long‑term average sustainable diversion limit . . . must reflect an environmentally sustainable level of take.

Then that term, in turn, is defined in section 4 and it is:

the level at which water can be taken from that water resource which, if exceeded, would compromise –

those aspects of the water resource.  So, again, it is not some sort of arbitrary power to reduce allocations or entitlements to zero.  It is the “not too much, not too little” notion.  It is a particular threshold and, indeed, if the Minister or the authority purported to provide for an SDL which was an arbitrary setting at zero, that would exceed the statutory limits of the Act, in my submission.  Unless there is anything further that I can assist you with.

HIS HONOUR:   No, thank you, Mr Lenehan.  Yes, Mr King.

MR KING:   Thank you, your Honour.  Just dealing with the last point, your Honour, my friend did not refer your Honour to section 22 and the issues in item 7 and section 24 about temporary diversion provisions.

HIS HONOUR:   You referred me, I think, to item 6.

MR KING:   Yes, but if your Honour then goes to the way that the Act operates, for example, section 24(3) contemplates:

The temporary diversion provision . . . may be zero.

That is due in the transition period and that period, indeed, has arisen right now.  So there are other indications that the Act may have the consequence for which we contend and we did not understand my friend’s letter of the 19th to suggest the contrary.  So it is the legal operation of the Act which is the focus of our concern.

My friend interestingly made some observations about reasonable use and he acknowledged that the first way he would put the “reasonable use” case is purely legal, but we say, your Honour, that the second and third ways in which he puts it itself ultimately are legal questions.  They are dealt with in some detail in Quick and Garran at pages 890 to 892.  The learned authors take particular interest in the American cases and some of the early English cases, some of which your Honour looked at in ICM Agriculture v The Commonwealth.

Interestingly enough, there is an early opinion of your Honour’s predecessor, Sir Isaac Isaacs, dated 1906 which looks at this whole issue from the point of view of the residents and what do “residents” and what do “States” mean in section 100 and what are the protections that are provided for by section 100, a matter of great importance in the early days of the new nation and, indeed, we say today.

So we would certainly take heed of what my friend says and we would seek to raise those issues with him.  We point out, your Honour, in paragraph 13 of his written submissions, lodged yesterday, my friend makes the point:

it is unlikely . . . that all such matters will be able to be agreed –

There has been no attempt.  Mr Godwin, my junior, contacted my friend and he just did not get back to him.  All we got was a letter and we say that the first two issues in that letter have fallen away.  It cannot be gainsaid that this is properly a representative proceeding and secondly it is clear now, in the context of his submission yesterday, no longer contested, it is a matter.  The real issue he is now saying is the facts get in the way of the Full Court deciding the case. 

But we would like the opportunity, which we have not had, and which he now consents to, to address that issue to see with some goodwill if the parties can reach agreement.  We certainly wish to have that opportunity and I have invited my friend this morning to inform us what are the constitutional facts he is referring to in (e) above.

If your Honour goes through his list of so‑called unresolved questions of fact in paragraph 10 of his submissions, your Honour will see that in fact they are somewhat opaque, indeed one might say fall away.  The issue in (a), as I have submitted, ultimately is a question of law as described in those passages in Quick and Garran to which I have referred.  The issue he has raised in (b) is, well we have asked him in our letter, are you really contesting that there are State water markets.  The MDBA governs and is now running, in effect, those markets.  They are set out in the National Water Commission annual reports.

The issue in (c) we say is ultimately a question of law.  The issue in (d) is a matter peculiarly appropriate for the High Court to decide.  The issue in (e) is a matter for him.  If he wants to tell us some constitutional facts as to why the Act is reasonably appropriate and adapted to address the section 99 point, well, let us have those facts.  The issue in (f) we do not seek to have decided.  It is not appropriate to decide in this Court.

So when one actually looks at what he is saying there is not much there.  We think it would be fruitful if the opportunity is now taken as we propose in our directions and which my friend does not oppose.  But I appreciate it is ultimately a matter for your Honour.  I do direct your Honour’s attention to those points to show that, in fact, we are not that far apart, not as far as my friend might suggest, looking at his own written submissions in paragraph 10 and our response of late yesterday, when we only got the submissions yesterday.

So, your Honour, our respectful submission is that the appropriate directions are as set out in the submissions in support of our summons filed in accordance with the High Court Rules. It may be, your Honour, that item 3 should add the words “any amended statement of claim as appropriate”. My friend referred to the fact that the final version of the plan has now been made and the statement of claim is factually in error in referring to that. We say that helps our case because, on the section 92 case, all the Court will be doing is comparing what was with what now is and the fact that the Basin plan has come into existence is a state of facts that transmogrifies the whole circumstance and addresses any factual difficulty under section 92.

Accordingly, your Honour, we would ask that the matter go before approximately four weeks or such period as your Honour considers appropriate or, alternatively, we suggest it be relisted on a date to be fixed by the Court, either in December or early in the New Year.

HIS HONOUR:   Thank you, Mr King.

MR KING:   Thank you.

HIS HONOUR:   By proceedings commenced by writ of summons on 13 September 2012, the plaintiffs, as representatives of a group of water users said to have the same interests, seek declarations that particular parts of the Water Act 2007 (Cth) are invalid by operation of ss 100 and/or 99 and/or 92 of the Constitution, and on other bases.

The plaintiffs filed a summons for directions, returnable today, and were seeking referral of certain questions for determination by a Full Court of this Court. The defendants have made submissions opposing referral and seeking remitter of the proceedings to the Federal Court pursuant to s 44 of the Judiciary Act 1903 (Cth) on the basis, inter alia, that there are questions of fact raised on the statement of claim which are unlikely to be able to be resolved by agreement and which would make a proceeding by way of demurrer inappropriate.

The plaintiffs today have sought an adjournment of this directions hearing for a period of a few weeks in order to enable discussions to take place between their representatives and those of the defendants, with a view to agreeing facts which would support a case stated and referral of questions of law to a Full Court.  The defendants were prepared to consent to an adjournment, but only on the basis that the very recent publication of the Basin Plan, made under the Water Act 2007 (Cth), is a matter which requires consideration by the plaintiffs and may affect their pleading.  However, that consent was not offered on the basis that it is likely that there will be an agreement about the facts suitable to support a case stated and referral of questions to the Full Court.

Section 44(1) of the Judiciary Act 1903 (Cth) provides that:

Any matter other than a matter to which subsection (2) applies that is at any time pending in the High Court, whether originally commenced in the High Court or not, or any part of such a matter, may, upon the application of a party or of the High Court’s own motion, be remitted by the High Court to any federal court, court of a State or court of a Territory that has jurisdiction with respect to the subject‑matter and the parties, and, subject to any directions of the High Court, further proceedings in the matter or in that part of the matter, as the case may be, shall be as directed by the court to which it is remitted.

The question of remitter and whether the proceeding should be permitted to continue in this Court is therefore a matter, not just for the parties, but for the Court.  In that connection, Brennan CJ in Ravenor Overseas Inc v Readhead (1998) 72 ALJR 671 at 672 said:

The power of remitter contained in s 44 of the Judiciary Act 1903 (Cth) is designed to ensure that this Court is not diverted from its principal functions by the need to hear and determine matters in the original jurisdiction which could properly be brought in an Australian trial court.

Nor, I would add, should this Court be diverted from its principal functions by the need to engage in intensive case management in order to ensure that a proceeding brought in this Court, and in respect of which it is sought to refer a case stated to the Full Court, is in an appropriate form and brought on an appropriate basis to support such a referral.  Having read the statement of claim and the submissions and affidavits of the parties and having regard to what has been said orally this morning, I am not satisfied that there is or is likely to be, without intensive case management, a proper basis in agreed or uncontested facts to refer questions of law to the Full Court.  Nor is there likely to be a proper basis upon which a demurrer could be filed and entertained.

The possibility arises that there may be a number of directions hearings in this Court imposing costs on the parties which will not yield any useful result within a reasonable time in terms of a case stated or a demurrer.  It is in the interests of the parties therefore that the application be remitted to a court which is in a position to case manage it to ensure pleadings are adequately refined and issues formulated and which is in a position to try questions of fact which may be in contest, as well as to determine the legal issues which arise on the basis of those matters of fact.

If the matter proceeds on appeal to this Court, this Court will have the benefit of findings of fact, to the extent that they have been in contest, and also the analysis of legal questions by the courts below.  I propose therefore to make a remittal order.  The order will be:

1.The proceeding be remitted to the Federal Court at the Melbourne Registry.

2.The proceeding continue in that Court as if the steps already taken in the proceeding in this Court have been taken in that Court.

3.The Registrar of this Court forward to the proper officer of that Court photocopies of all documents filed in this Court.

4.The costs of the summons be costs in the proceeding.

5.The costs of the proceeding to the date of remission, including the costs of this order, are to be according to the scale applicable to proceedings in this Court and thereafter according to the scale applicable to that Court and in the discretion of that Court.

The Court will now adjourn.

AT 11.26 AM THE MATTER WAS CONCLUDED