Martin v Chief Executive, Primary Industries Corporation

[1994] QLC 29

[1994] QLC 29

 

 

LAND COURT

BRISBANE

24 JUNE 1994

Re: Appeal under section 4.26 of the Water Resources Act 1989 (A93-75)

Ernest Ross Martin and May Ross Martin
  v.
  Chief Executive, Primary Industries Corporation

(Hearing at Toogoolawah)

D E C I S I O N

This is an appeal against the decision of the Chief Executive, Primary Industries Corporation, to reduce the in conjunction allocation authorised by Waterworks Licences Nos. R-05238 and R-33687, from 147 megalitres to 80 megalitres, on the ground that the licensees have not, to the satisfaction of the Chief Executive, beneficially used the water which they were entitled to divert under the Waterworks Licences.  Annexed to the appellants' notice of appeal are the following grounds of appeal:

"1.The decision to reduce the allocation is contrary to the applicants' understanding of the Commission's and the Minister's published opinions. 

2.Places a contingency upon the prospect of success of a leaseholding entered into with another, prior to the notification.

3.Based too much upon expediency, as opposed to the reasonable justice of the measures usually adopted by the Commissioner.

4.Throws very serious doubt upon the viability of the farm/farms.

5.Does not consider the fact that the Commission's policies make it most unlikely that the lost allocation could ever be regained, regardless of our future needs.

6.Placed too great an emphasis on our failure to beneficially use the allocation and too little on our (a) needs under proper management (b) farming economic climate (c) our financial situation and measures for correction (d) human impact. 

7.Extreme lowering of the farm's market value and loss of premium which was originally paid. 

8.Inconsistent with the treatment meted out to others in less dire circumstances and is too arbitrary. 

9.Does not appear to properly consider the comparatively heavy nature of the soil.  "

A tenth ground of appeal was withdrawn at the commencement of the hearing.

Mr ER Martin appeared and gave evidence on behalf of the appellants, while evidence for the respondent was given by Mr SG Moller, Mr BJ Faulkner and Mr PJ Miller.
           There is no real dispute as to the background of this matter.  Waterworks Licence No. 05238 was transferred to the appellants on 13 April 1981, authorising a 65 mm centrifugal pump on Lockyer Creek for the irrigation of small crops, fodder and lucerne.  The expiry date of the licence was 31st March, 1982  and it licence was subsequently renewed until 30th June, 1987.  The licence had an annual water allocation of 147 megalitres in conjunction with Waterworks Licence No. 33687. 
           This latter Waterworks Licence was also issued to the appellants on the same date authorising an 80 mm centrifugal pump on Lockyer Creek for the irrigation of small crops, lucerne and grain.  The expiry date of this licence was 30th June, 1987. 
           A water use notice was sent to the appellants on 8th November, 1985, comparing their annual water use over the previous three years with the average use of other irrigators in the Lower Lockyer Project area.  The notice was a standard notice sent to all irrigators in that project, although it showed, among other things, that the average use by the appellants over the past three years was 70 megalitres, or 48 per cent of their nominal allocation of 147 megalitres. The notice pointed out that it was a condition of the waterworks licences to make beneficial use of the water allocation and that where the licensee fails to beneficially use water, the Commissioner may require the licensee to show cause why the licence should not be cancelled or the allocation reduced.  However, at that time no further action was taken.
           In due course the appellants applied for renewal of both licences and  they were renewed to 30th June, 1990.  Then on 22nd May, 1990, the appellants again applied for renewal of both licences and they were renewed to 30th June, 1993. 
           In 1991 the Water Resources Commission undertook a beneficial use review of all licences in the Lower Lockyer Project.  As part of the review, a letter with a statement of water use was sent to the appellants on 3 April 1991, stating that their general level of water use had consistently been below their entitlement.  Of their water allocation of 147 megalitres, average use over the five years from 1985-86 to 1989-90 was 10 megalitres per annum.
           The appellants were requested to advise whether their present allocation genuinely met their intended water demands and whether there was any scope for adjustment.  The Commission expressly reserved the right to request them to show cause as to why their allocation should not be reduced.
           Mr Martin's reply dated 22nd April, 1991, indicated that the appellants would require their full allocation of 147 megalitres by mid-1993.
           On 9th September, 1991, the appellants were requested to show cause as to why their water allocation should not be reduced to 80 megalitres.  Mr Martin's reply dated 7th October, 1991 stated the appellants' reasons for not using their allocation and these included the appellants' preferred management practices, seasonal conditions, financial and family circumstances and the problems caused by the build-up of sand at a pump site which, the letter stated, was soon to be resolved and pumping would commence "at once". 
           However, again no action was taken and expiry notices for both waterworks licences were forwarded to the appellants in June 1993.  Applications for renewal of both waterworks licences were received at the Water Resources' Gatton office on 10th June, 1993, in which the appellants stated that the pump authorised by Licence No. 33687 was installed, while the pump authorised by Licence No. 05238 was being reinstalled.
           Following the beneficial use review undertaken in 1991, the then Acting Regional Engineer for the South Eastern Region, Mr BJ Faulkner, suggested that the Brisbane and Gatton Offices undertake a beneficial use review of each waterworks licence when it came due for renewal.  This became the practice in the Gatton office and the appellants' licences were reviewed accordingly.  Because of their history of water use for the previous five years, it was decided that their nominal allocation should be varied.
           The appellants were therefore requested by letter dated 29th July, 1993, to show cause why their water allocation should not be reduced to 40 megalitres.  The letter explained that following the 1991 show cause notice, the appellants had indicated that by progressively increasing their water use it was likely they would be utilising their full allocation by mid-1993.         However, the recorded water usage for the preceding five years showed that there had been no use of water for the years 1988/89 to 1990/91 or for the year 1992/93.  The only use of water in that period was 14 megalitres (corrected to 14.5 megalitres) in the year 1991/92.  The letter went on to say that as the appellants had failed to beneficially use the water allocation to at least a level approximating the district average over the past five years, the respondent proposed to reduce their allocation to 40 megalitres.  They were requested to show cause as to why their water allocation should not be reduced.
           Mr Martin replied on 22nd August, 1993, stating a number of reasons for the low water use.  He also stated that in 1991 he had telephoned the Water Resources Commission and explained his difficulties to Mr Faulkner.  Mr Faulkner had assured him that the Commission was not about depriving people of their licences and that the matter would be reviewed in five years' time.  Mr Martin said that he was left with a clear understanding that his efforts were recognised and that some flexibility would be allowed to the appellants prior to the next review.  No mention was made of a July 1993 review.  Mr Martin contends that the respondent should honour the undertaking given by Mr Faulkner.
           On 1st September, 1993, Mr Stephen George Moller, manager of the Gatton Office of the Department of Primary Industries (Water Resources), accompanied by Mr Graham Bayliss, technical officer at Atkinson Dam, visited the appellants' property to further examine the situation.  Mr Moller stated that pumps were observed on the creek bank at both the pump sites, but they were not installed or operative, and main lines and power were not connected.  An attempt had been made to fix the downstream site, but it was apparent that both pumps had not been used for a lengthy period.  There was no obvious evidence of cultivation or irrigation on the appellants' property.
           Mr Moller has been delegated by the Chief Executive to make decisions in respect of beneficial use reviews.  The matters that he took into consideration in making the decision were summarised in his statement of evidence:

"1)E R and M R Martin's water use records do not indicate an increase in water usage.

2)No sincere effort had been made in recent years to utilise the allocation attached to the property.

3)Lack of evidence of cultivation indicate no real demand for irrigation.

4)Some consideration could be given to the `promises' that Mr Martin alleges the then Regional Engineer made at the time when the previous beneficial use review was conducted in 1991/92."

Mr Moller decided to vary the nominal allocation.  Accordingly, Licence Nos. 05238 and 33637 were renewed to 30th June, 1995, but the "in conjunction nominal allocation" was reduced to 80 megalitres.  The licences were sent to the appellants under cover of a letter dated 19th October, 1993.
Subsequently, in accordance with section 4.26(3) of the Water Resources Act 1989, the Martins appealed to the Land Court against the decision of the Chief Executive.
           Mr Martin gave evidence that the appellants purchased the subject land approximately 13 years ago and experienced a series of disasters when they were endeavouring to grow various crops.  After some years their financial position was such that curtailment of farming was the only prudent option, with their two sons working off the farm and Mr Martin doing some cattle dealing.  He said that, with some difficulty, their financial situation has improved.
           The appellants' intention to return to farming received a setback with a family tragedy and an associated financial loss.  During this period efforts were made to sell the farm or to lease it.
           Mr Martin said that initially the appellants were unaware of the beneficial use requirement of the waterworks licences and that they must, to use his expression, "use it or lose it".  During their period of adversity the possibility of losing their water allocation did not occur to them. 
           Mr Martin could not say when they became aware of the beneficial use condition, but that any consciousness of it was tempered by the fact that the Commission did not appear to be concerned to enforce it.  They reasoned that so long as they managed to pay the required fees, their allocation would be secure.  Mr Martin said that when he became aware of the situation, he intensified his efforts to either sell or lease the farm, which proved difficult in the  economic circumstances.
           Mr Martin said that he had a telephone conversation with Mr Phillip Miller in the respondent's Brisbane Office and stated he was not satisfied with the manner in which the manager at Gatton was handling the beneficial use review of his licence.  He told Mr Miller the difficulties he was having and explained the reasons for not using the water allocation. 
           Mr Martin alleges that Mr Miller told him to put his concerns in writing and he would be given two years of grace and then "a year to make up your mind".  Accordingly, he said, he wrote a letter to the Gatton office.  He could not remember the date of the conversation with Mr Miller, but said it took place after the appellants received the notification of the reduction in their water allocation.
           Both Mr Faulkner and Mr Miller admit to having telephone conversations with Mr Martin, but both deny giving him any undertakings with regard to his water allocation.
           Mr Faulkner recalled having two telephone conversations with Mr Martin  while he was Acting Regional Engineer.   The first was following the 1991 show cause notice.  He said that he spoke to Mr Martin for some time about why beneficial use reviews are carried out and would have mentioned that they were carried out at about five yearly intervals.  However, he had no recollection of advising Mr Martin that his water allocation would not be reviewed for five years.
           Mr Faulkner said that he told Mr Martin that he should contact the manager of the Gatton office and explain the reasons why the appellants had not used their water allocation and why it should not be reduced.  Mr Faulkner undertook to advise the Gatton office of their telephone discussion and subsequently did so. 
           Mr Martin rang Mr Faulkner a second time, objecting to not being allowed to temporarily transfer some of his water allocation.  Mr Faulkner said that he again told Mr Martin to discuss this matter further with the Gatton office because it was the manager's decision. 
           Mr Faulkner explained that he had suggested to staff in the Brisbane and Gatton offices that a beneficial use review be carried out each time a waterworks licence was due for renewal, as this was more appropriate than a periodic general review of all licences.
           Mr Miller, Manager, Water Projects, Brisbane District, gave evidence that he could recall two occasions when Mr Martin telephoned the Brisbane Office.  On the first occasion Mr Martin stated that he wanted to discuss his water allocation with the District  Manager, as he was not satisfied with the manner in which the Gatton manager was handling the beneficial use review of his licence.  Mr Martin then went on to discuss the reasons for not using the water and Mr Miller requested Mr Martin to put his concerns in writing to the District Manager, Brisbane.   He did not record the discussion.  Mr Miller thought he recalled another telephone inquiry by Mr Martin regarding capital charges.  Once again he did not record this discussion, but Mr Miller denies giving Mr Martin any undertakings concerning his water allocation in either telephone call.
           In this regard I accept the evidence of Mr Faulkner and Mr Miller.  It is probable that Mr Martin has misinterpreted what they said to him in these telephone conversations.
           In his letter of 22nd August, 1993, Mr Martin stated that the appellants were negotiating to lease the farm, "stipulating the need to use the allocation".  He tendered a copy of the instrument of lease dated 15th October, 1993, leasing the whole of the land, excluding the house, to a Peter James Weldon for a period of three years.  The schedule to that lease contains a condition that "The lessee agrees to familiarise himself with the schedule of terms for Licence R-33687 and in particular to adhere to the requirement imposed by [condition] 1.002 [that] `the licensee shall, to the satisfaction of the Commissioner, beneficially use the water which is entitled to be diverted under this licence'".  While there is no mention of the amount of water to which the lessee is entitled, Mr Martin said that the lessee is aware of the circumstances and that the lease is not conditional on the water allocation being 147 megalitres.
           In his letter to the appellants dated 27th October, 1993, Mr Moller acknowledged the lease of the portion of the farm and the requirement that the lessee utilise the water allocation.  The letter contained the following paragraph:

"If you provide this office with proof of the lease and proof of the lessee's commitment to utilise water, the matter could be investigated further and some arrangement might be able to be made.  However, as I emphasised during our conversation, there is only a possibility that some arrangement could be made.  This does not imply that an arrangement will be made or that an allocation of 147 ml would be reinstated."

In an office memorandum dated 9th September, 1993, on the subject of the beneficial use review, Mr Moller set out the factors that he had considered in making his decision about the appellants' allocation.  In deciding to reduce the allocation to 80 megalitres and not to the 40 megalitres as indicated in the show cause letter, Mr Moller concluded that "some consideration should be given for the `promises' that the regional engineer made in 1991."
           I turn now to consider whether in the circumstances of this case, the reduction of the appellants' water allocation was appropriate.
Under the provisions of section 4.26(4) of the Water Resources Act 1989, this Court may confirm, vary or revoke the decision of the Chief Executive. The burden of proving their grounds of appeal lies on the appellants. As I see it, there are two issues to be decided in this appeal. First, did Mr Moller act with procedural fairness? Second, did Mr Moller, as delegate of the Chief Executive, improperly exercise his power in reducing the nominal allocation to 80 megalitres?
           In respect of the first question, the appellants were given an opportunity to be heard, first by replying to the show cause notice and second, when on receipt of Mr Martin's written reply, Mr Moller, in company with Mr Bayliss, called upon Mr Martin and discussed the matter.
           On this evidence, I am convinced that the rules of natural justice were complied with and that the appellants were given ample opportunity to be heard.  However, the duty of the respondent extends further than that.  It clearly extends to giving consideration to all relevant matters. 
This then leads to the second question. It is clear that section 4.19 of the Water Resources Act 1989 authorises the Chief Executive to require that a licence be subject to a term that the licensee must beneficially use the water that he is entitled to take or use under the licence to the satisfaction of the Chief Executive. This continues a similar provision contained in the previous Water Act. A copy of Waterworks Licence No. 05238 dated 29th September, 1982, was tendered containing as Clause No. 2, "The Licensee, after installing the work, shall to the satisfaction of the Commissioner beneficially use the water he is entitled to divert under this Licence."
           The combined effect of section 4.21 and section 4.25 give the Chief Executive the power to vary a licence following an application for renewal.  Where a licensee has failed to comply with a term of his licence, the Chief Executive may call upon him to show cause why the licence should not be amended.  Where the licensee fails to show cause, the Chief Executive may vary the licence by reducing the amount of water that the holder thereof is entitled to take and use under the licence. 
           Mr Martin argues that the actions of the respondent have lulled the appellants into a false sense of security.  They first received a water use notice in 1985, but no action was taken.  A beneficial review was conducted in 1991 and Mr Martin's response to a show cause notice appeared to have been accepted and no action was taken.  Mr Martin argues that he had no reason to suspect that the result would be any different this time.
           Mr Moller was not at the Gatton office in 1985 or 1991.  However, it appears from the evidence that the delegate of the Commissioner accepted Mr Martin's excuses, as a number of licensees had their water allocations reduced following the 1991 review.  In conducting the 1993 review at the time of the appellants' application for renewal of their licences, Mr Moller said that he had regard principally to the history of water use over the last 10 years and particularly over the last five years.  He considered this to be the most relevant consideration and when pressed, said that he had no regard to Mr Martin's age or financial circumstances or intentions.  He made the decision objectively and treated all licensees alike.

In taking this approach, did Mr Moller adopt an inflexible application of what he believed to be policy and excluded from consideration relevant factors raised by Mr Martin?
           Mr Moller said that he regarded lack of water use as the principal and overriding criterion.  However, it is clear that he took other things into account.  He gave some consideration to the alleged promises made by the regional engineer in 1991.  Again in considering the effect of the lease of the farm, he indicated that some arrangement might be made.  Although he said that he assessed each case objectively, it is clear that Mr Moller was aware that he should have regard to matters other than water use. 
           Should Mr Moller have excluded from consideration the other matters raised by Mr Martin?  In this regard I found the evidence of Mr Faulkner to be most helpful.  Mr Faulkner admitted that there are no general guidelines in respect of beneficial use reviews.  Each district manager exercises them as he thinks fit, because of the different circumstances in each catchment area.  Mr Faulkner was of the opinion that other matters should be taken into account in addition to the extent of water use.  He thought that most, if not all, of the matters raised by Mr Martin were relevant.  He would have given each factor a weighting and, because of the appellants' past history, the water use record would have been weighted more heavily than other factors.  Indeed, he said that after consideration of all factors, he may even have reduced the water allocation further than had Mr Moller.  However, he stressed that Mr Moller was the delegated decision maker.
           From the evidence it would seem that by having regard to the limited additional factors that he did take into account, Mr Moller modified the reduction in water allocation from 40 megalitres to 80 megalitres.  If he had taken into account the other factors which Mr Faulkner says are relevant, it is only reasonable to assume that he would have modified that reduction even further. 
           On the other hand, the appellants have misunderstood their entitlement to a nominal water allocation of 147 megalitres.  Mr Martin thought that they had an absolute right.  It is clear that they do not.
In dealing with the provisions of the Water Act 1926, the predecessor to the present Water Resources Act, Member of the Land Court, Mr S Dodds, in Shooter v. The Commissioner of Irrigation and Water Supply (1972) 39 CLLR 11, said at p.19:

"Then, what a licensee gets under the Act is only a license for a period.  At the end of that period he must apply for renewal and the Act, as amended in 1964, clearly shows that renewal is not as of right.  The Commissioner has many alternatives to renewal, and must consider the application to see if any of the alternatives should be applied.  One of the alternatives is refusal of the license and others are reduction in amount of water or in the amount of land irrigated. ...  Here the words are plain and unambiguous and the Commissioner's duty when considering an application for renewal of a license is clear.  It is true that there seems to be no right of objection to a renewal application, but I think the Statute plainly enough requires the Commissioner to consider all alternatives in the light of all requirements on the stream at date of renewal, including applicants desiring a share of the water.  To do otherwise, to adopt the view that a licensee, once he constructs his licensed work, obtains a vested interest which should only be interfered with if he misuses it or is guilty of misconduct, so that he can regard his license as something he can expect to be renewed as of right is again to put the clock back and revive the mischiefs in the repealed Act which the present Act set out to cure." 

This passage was quoted in Moir v. The Commissioner of Water Resources A91-82, a decision of the then Member (later President) of the Land Court, Mr DM White, dated 3 July 1992 (not reported).  In that case Mr White pointed out at p.4 of his decision:

"Historically, a condition to that effect is contained in licences.  The condition in the licences, the subject of this appeal, reads as follows -

`2.200AThe licensee, after installing the bore, shall to the satisfaction of the Commissioner beneficially use the water which is entitled to be withdrawn under this licence.'

It follows under the scheme of legislation that if a licence is not beneficially used it will surely be amended or die, in which event the water will be allocated elsewhere; for example, to a new irrigator."

In the present case, even if Mr Moller had taken the matters raised by Mr Martin into account, he would still have placed most weight on the history of water use extending back to 1982.  However, he might also have considered the lack of action by the Commission, or any follow-up to warn the appellants after the earlier show cause notice, that further excuses would not be accepted. 
           After consideration of all the relevant factors, including the reductions in allocations of other licensees following beneficial use reviews in 1991 and 1993, I have come to the conclusion that the Chief Executive had ample reason to make a reduction in water allocation.  However, in the circumstances of this case, I find that a reduction to 100 megalitres would be more appropriate.  These waterworks licences are due for renewal on 30th June, 1995.  At that time the Chief Executive will be able once again to consider all relevant matters, including the record of water use since the last renewal, in deciding whether the water allocation should be further reduced.
           Accordingly, the appeal is allowed and the decision of the Chief Executive is varied and the water allocation authorised by Waterworks Licence Nos.
R-05238 and R-33687 is reduced from 147 megalitres to 100 megalitres.

MEMBER OF THE LAND COURT