Lee and Anor v Commonwealth of Australia & Anor

This matter concerned an application for special leave to appeal to the High Court of Australia. The applicants, Danny Lee and Joe Gropler, sought to challenge the validity of certain provisions of the *Water Act 2007* (Cth) and the Basin Plan made under it, arguing they infringed section 100 of the Constitution, which protects the reasonable use of the waters of rivers for conservation and irrigation. The respondents, the Commonwealth of Australia and the Murray Darling Basin Authority, contended that the legislation did not adversely affect the applicants' rights and that the constitutional questions raised were not properly before the Court.

The central legal issue was whether the *Water Act 2007* and the Basin Plan, by substantially reducing water usage rights, constituted a law with respect to the protection of the environment, thereby excluding the operation of section 100 of the Constitution, or whether they were laws that impacted upon trade and commerce, which would engage section 100. The applicants argued that the courts below erred in characterising the Act as primarily environmental legislation, submitting that the correct test for constitutional validity required an examination of the actual operation and effect of the law on rights and liabilities, rather than its perceived purpose. They contended that the Act directly impacted their water rights and livelihoods, and that any government policy or administrative measures to mitigate these impacts were irrelevant to the constitutional characterisation.

The applicants' primary argument was that the Federal Court had applied the wrong test for constitutional characterisation, focusing on what the Act was "concerned with" (environmental protection) rather than its subject matter and operation. They relied on principles established in cases like *Fairfax v Federal Commissioner of Taxation*, asserting that the inquiry should be about the nature of the rights, duties, powers, and privileges the legislation changes, regulates, or abolishes. The applicants further argued that the Act's provisions, such as mandating the identification of maximum water take quantities and imposing criminal sanctions for inconsistency with the Basin Plan, had a direct impact on their water access rights and livelihoods, and that these impacts were not fanciful or speculative, even if some consequences were deferred. They contended that the Act's operation, particularly in relation to interstate water flows and the definition of "take" and "conservation," demonstrated its connection to trade and commerce, thereby bringing it within the ambit of section 100.

The respondents countered that the *Water Act 2007* and the Basin Plan operated at a high level of generality and did not directly impact individual water rights holders under State law. They argued that the legislation contemplated that States would develop water resource plans to achieve the required reductions, and that the courts below had correctly found that the Act did not have the asserted effect on the applicants' rights. Consequently, the respondents submitted that no constitutional question arose, or alternatively, that the applicants lacked standing to challenge the provisions, as they would fail at the threshold of section 100 without reaching the more complex constitutional issues.