McKenzie v New South Wales

[2017] NSWSC 661

Supreme Court

New South Wales

Medium Neutral Citation:

McKenzie v New South Wales [2017] NSWSC 661

Hearing dates:

24 April 2017

Date of orders:

24 April 2017

Decision date:

24 April 2017

Jurisdiction:

Equity - Duty List

Before:

Parker J

Decision:

Proceedings dismissed

Catchwords:

CONTRACTS – offer and acceptance – inaction by offeree – consideration – summary judgment
EQUITABLE ESTOPPEL – promissory estoppel – promise by silence – detrimental reliance – summary judgment
COMMONWEALTH CONSTITUTION – use of waters of rivers for conservation or irrigation - no action by Commonwealth government – summary judgment

Legislation Cited:

Commonwealth Constitution, s 100
Supreme Court Act 1970 (NSW), s 63
Water Management Act 2000 (NSW), ss 329, 335, 336A, 336C

Cases Cited:

Munday v Gill (1930) 44 CLR 38
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7

Category:

Principal judgment

Parties:

Hugh Malcolm Roy McKenzie (First Plaintiff)
Kerrie Lee McKenzie (Second Plaintiff)
State of New South Wales (First Defendant)
Tracey Lawson, personally and acting as Regional Manager, Water Regulation North/North Coast (Second Defendant)

Representation:

First Plaintiff in person

 

Counsel:
R Horsley (Defendants)

  Solicitors:
Crown Solicitor’s Office (Defendants)

File Number(s):

2016/326851

Publication restriction:

Nil

Judgment – EX TEMPORE

1. This is an application by the defendants for the summary dismissal of, or alternatively, the striking out of the Statement of Claim against them in the proceedings. The plaintiffs in the proceedings are individuals who, it appears, are the owners of rural property at Pappinbarra on the mid-north coast. The first defendant is the State of New South Wales. The second defendant is an officer of the State Department of Primary Industries concerned with water; her official title is said to be the Regional Manager of Water Regulation North/North Coast.

2. These proceedings have been occasioned by a dispute between the plaintiffs and the relevant officers of the Department of Primary Industries, acting on behalf of the State, concerning two dams on the plaintiffs' property. Officers of the Department visited the plaintiffs' property and inspected it on 5 February 2014.

3. Correspondence ensued between the plaintiffs and the Department. On 4 March 2016, the Department wrote to the plaintiffs serving a Direction pursuant to the Water Management Act2000 (NSW), s 329 (“the Direction”). The Direction alleged that the dams in question did not have a water management work approval in force. The measures required to be taken under the Direction were the removal of the dams and certain consequential earthworks. The Direction required the works to be carried out by 30 June 2016.

4. The Water Management Act provides that failure to comply with a valid direction is an offence (s 336C), for which substantial fines may be imposed. It also provides (s 336A) that if a person fails to take the measures specified in such a direction, the Minister may authorise any other person to take those measures instead and may recover the costs of doing so as a debt due to the Ministerial Corporation in a court of competent jurisdiction.

5. The Act also provides (s 335) that the Minister may apply to the Land and Environment Court for an injunction directing any person to whom a direction has been given to comply with the direction. If such an order were made by the Land and Environment Court, failure to comply with it would carry the usual sanctions associated with failure to comply with an injunction, namely, punishment for contempt.

6. Towards the end of June 2016 the plaintiffs prepared and sent to the Department a document headed "Notice". The Notice bears a typed date of 23 June 2016, but the date of signature is given as 28 June 2016. It was, apparently, signed before a Justice of the Peace on that date. After initial recitation of various alleged facts and references to case law and statute, the Notice proceeded as follows:

12.   Take notice that you are hereby required to provide full disclosure, full legal and lawful verification, full legal and lawful validation, and full legal and lawful proof to our own full satisfaction of each of the following non-negotiable points within seven days of receipt of this Notice:

1. Provide a certified copy of the proclamation certificate for the Water Management Act 2000 and for each and every other act or acts you intend to refer to and/or rely upon for your alleged authority and/or your alleged authority to issue directions to us, impose fines and other penalties upon us, damage pour (sic) property, and harm us financially; and

2.   Provide full disclosure of the capacity in which you are acting and provide proof both legally and lawfully of your authority to so act; and

3.   Provide proof both legally and lawfully that you have authority to act on behalf of the “Minister”; and

4.   Provide proof both legally and lawfully by the provision of the act(s) and statute(s) that you can enter our property without our express consent, and provide a certified copy of the proclamation certificate for all such act(s) or statute(s); and

5. Provide proof both legally and lawfully that you are exempt from Section 5 of the COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT 1900 (IMP) – Operation of the Constitution and laws; and

6. Provide proof both legally and lawfully that the Water Management Act 2000, the Water Act 1912 and associated Regulations are exempt from complying with Section 100 of the COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT 1900 (IMP) (Nor abridge right to use water); and

7. Provide proof both legally and lawfully that you and the Water Management Act 2000, the Water Act 1912, and associated Regulations are exempt from complying with Section 117 of the COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT 1900 (IMP) (Rights of residents in States) with regard to the State of Victoria regulations or VIC, WATER ACT 1989 and therefore give you authority to disadvantage us; and

8.   Provide proof both legally and lawfully that you are exempt from Section 109 of the COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT 1900 (IMP) (Inconsistency of laws); and

9.   Provide proof both legally and lawfully that you are exempt from Section 8, sub section 12 of THE IMPERIAL ACTS APPLICATION ACT 1980 (Victoria) which states “All promises of fines and forfeitures of particular persons before conviction are illegal and void” under Section 117 of the COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT 1900 (IMP); and

10.   Provide both legally and lawfully by the provision of the act(s) and statute(s) that you are exempt from the terms and conditions of the Trespass Notice clearly displayed on the boundary of our property and provide a certified copy of the proclamation certificate for all such act(s) or statute(s).

13.   All Proclamation Certificates detailed herein must be certified by the Secretary of State and by the Secretary of the Commonwealth of Australia.

14.   You must provide your full disclosure, your full lawful verification, your full lawful validation, and your full lawful proof detailed herein in an affidavit signed in wet ink and sworn with full commercial and criminal liability.

15. If you fail to provide the full disclosure and/or fail to provide the required proof in the required format as detailed herein within seven (7) days of receipt of this notice it will be proof both legally and lawfully that the alleged actions required under the Direction CIRAM 01081-2013 are void and of no affect.

16.   If you fail to provide the full disclosure and/or fail to provide the required proof in the required format as detailed herein within seven (7) days of receipt of this notice it will be proof both legally and lawfully that you have made a false and misleading statement in order to obtain a financial advantage by deception.

17.   If you fail to provide the full disclosure and/or fail to provide the required proof in the required format as detailed herein within seven (7) days of receipt of this notice it will be proof both legally and lawfully that you have no legal standing and that your claim is fraudulent and that you are both legally and lawfully bound to cease and desist any and all action against us forthwith; and

18.   If you fail to provide the full disclosure and/or fail to provide the required proof in the required format as detailed herein within seven (7) days of receipt of this notice and you fail to cease and desist any and all action against us it will be proof both legally and lawfully that you have entered into a full and binding bilateral contract to pay us for services rendered, tasks performed and material supplied by us for the consideration listed in the Schedule of Fees attached hereto.

7. The schedule of fees referred to in paragraph 18 consists of a page of categories of potential expenditure with rates specified. For instance, against "Court Costs", a figure is given of $10,000 per attendance plus $1000 per hour or part. Figures are also provided for court document preparation, accounting, administration and stationery, reply to correspondence, research and the like. There is a further item, which is identified as "Injury - commercial, economic, mental, emotional, physical, medical". The figure for that is $10,000 per day or part. The last item on the list described as "overdue payment fee" is 10 per cent of the invoiced amount per day. There was no response to this document from the Department.

8. Similar further documents styled "Notice of Fault" and dated 8 July 2016 and 22 July 2016 were given by the plaintiffs to the Department, purportedly, by way of giving a further opportunity to respond to the demands made in the initial Notice.

9. On 15 August 2016, the plaintiffs prepared a further "Notice of Irrevocable Estoppel by Acquiescence" which was sent to the Department. Following initial recitals of a similar nature to those in the earlier documents, but briefer, the Notice of Irrevocable Estoppel by Acquiescence stated:

I hereby serve Notice that your failure to provide your full disclosure, full legal and lawful verification, full legal and lawful validation, and full legal and lawful proof to our own full satisfaction as detailed in paragraph 7 herein has created a permanent and irrevocable estoppel by acquiescence, forevermore barring you from bringing any and all claims, legal actions, orders, demands, lawsuits, costs, levies, penalties, damages, interest, liens and expenses whatsoever, against us.

10. On 28 September 2016, the Crown Solicitor responded, not admitting the asserted facts and extending time to 28 October 2016 to comply with the departmental Direction.

11. On 2 November 2016, these proceedings commenced by the filing of a Statement of Claim. The relief claimed is as follows.

1.   HMR & KL McKenzie seek a declaration that the three Notices, detailed herein, served on the DPI: 28 June 2016 (Annexure 3), 11 July 2016 (Annexure 4), 22 July 2016 (Annexure 5), witnessed by a Justice of The Peace, served on the defendant's, by Registered Post have a valid legal basis.

2.   HMR & KL McKenzie seek a declaration that the failure by the defendant's to refute the claims in the three Notices constitutes an admission that all points of the three Notices are agreed to by the defendant.

3.   HMR & KL McKenzie seek a declaration that the failure by the defendant's to provide the proofs and disclosures binds the defendant to cease to exercise any claimed powers under Notice Quo Warranto.

4.   HMR & KL McKenzie seek a declaration that the failure by the defendant's to refute the fees detailed and the invoice in the Notices constitutes an admission that all fees are agreed to, due and payable by the defendant's.

5.   HMR & KL McKenzie seek a declaration that the Estoppel by Acquiescence witnessed by a Justice of The Peace and served by Registered Mail on the defendant's is legal and binding.

6.   That the defendant's pay HMR & KL McKenzie their outstanding invoice and late fees as set out below

12. The questions raised for me by the present application are, first, whether the pleaded claim is sustainable in its current terms and, second, whether, if it is not, I should dismiss the proceedings in their entirety or, alternatively, give the plaintiffs leave to replead.

13. There are major difficulties with the formulation of the Statement of Claim. I do not propose to go through the document in detail. So far as the prayers for relief are concerned, it is sufficient to note that paragraphs 2, 3 and 4 purport to seek a declaration that conduct of the defendants amount to some sort of admission. This is misconceived.

14. The purpose of a declaration is for the Court to determine the legal status or incidence of a particular relationship, or the legal status of property. An admission is merely evidence which may, in proceedings, lead the Court to make such a declaration, or to make some other substantive order. It is inappropriate to plead admissions and it is still more inappropriate to seek relief in the nature of a declaration as to the making of an admission. If conduct is an admission, evidence can be led of it in the hearing and the Court, if satisfied that the evidence is admissible, can then consider that admission, along with other relevant evidence, in determining whether to make a finding as to whether the fact in question has been established.    

15. The real substance of the claims for relief appears to me to lie in paragraphs 1 and 5, which seek a declaration as to the effectiveness of the plaintiffs’ Notices, and in paragraph 6, which seeks payment of a sum of money, which is apparently conceived of as amounts which the State is obliged by contract or by estoppel to pay, on account of the alleged trespass and perhaps other conduct.

16. The question which I must determine on this application is whether such claims are sustainable under the law.

17. It is difficult to summarise all of the material which has been put forward in support of the plaintiffs' claim in the Statement of Claim and in the Notices to which it refers. However, it seems to me that there are three elements, in particular, which the plaintiffs rely upon to ground the relief sought.

18. In the first place, the plaintiffs refer in their documents to a statement by Dixon J, as he then was, in Munday v Gill (1930) 44 CLR 38. His Honour's statement is not quoted, but from the paraphrase given, the reference is to a passage at page 92 of the report.

19. That case concerned summary convictions which had been obtained against miners who were picketing a coal mine being operated by "scabs" at Rothbury in the Hunter Valley in 1929.

20. Various points were taken on behalf of those who had been convicted about the way in which the proceedings had been conducted and the sufficiency of the evidence to sustain the convictions under the statute in question, which prohibited action taken by injury or intimidation to compel someone to take a course they were not legally compelled to take, or to desist from a course which they were legally entitled to take. The passage in question from Dixon J is as follows:

It is said, however, that the evidence did not establish an unlawful assembly because it did not prove that the men working or about to work at Rothbury were legally entitled to do so. This contention rests upon the fact that during his cross-examination a witness said these men were employed at less than rates fixed by the “award governing the industry”. The award was not put in evidence, and no reliance was placed upon the point before the justices where it might have been met by evidence that these men were not entitled to the benefit of any award, nor employed by a person bound by it.

Of course the burden rested upon the informant of proving every ingredient the offence charged, including the lawfulness of the acts from which those intimidated were compelled to abstain.

21. His Honour went on to conclude that the circumstances of the case and the evidence led was sufficient to sustain an inference that the work was lawful and, accordingly, the relevant requirement of the legislation was satisfied.

22. The decision of Dixon J was agreed to by Rich J. The other members of the majority, Gavan Duffy and Starke JJ, delivered a separate judgment, which reasoned to similar effect.

23. The second element of the plaintiffs' case fastens on the giving of the Notices and the failure by the State, after being challenged in the Notices to respond, to provide any response to them. The theory behind the plaintiffs' case is that the State's failure to respond has created a contract between the State and the plaintiffs, obliging the State to pay the plaintiffs the amounts claimed, or the amounts specified in the schedule of fees; or, alternatively, that, by way of estoppel, the State is obliged to make such payments as if it had a contractual obligation to do so.

24. Some of the plaintiffs' documents refer to what is described as an estoppel "per rem judicatam". This is a different type of estoppel recognised in the law and the plaintiffs' claim is plainly one in the nature of equitable estoppel of the type dealt with by the High Court in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.

25. The third element of the plaintiffs' case is reliance on s 100 of the Constitution of the Commonwealth. That section provides:

The Commonwealth shall not, by any law or regulation of trade or commerce, abridge the right of a State or of the residents therein to the reasonable use of the waters of rivers for conservation or irrigation.

26. I, therefore, proceed to consider each of these three elements and the extent to which they might sustain claims for relief along the lines of those pleaded by the plaintiffs.

27. As to the statement of principle by Dixon J, the context is critical. His Honour was not saying that the prosecuting authorities in that case, independently of any proceedings, had an obligation to explain or justify the legality of their actions before acting. What he was saying was that, if a prosecution was brought, then there is an obligation on the prosecutor to prove every aspect of the prosecutor's case, including, if disputed, the validity of the legislation underlying it.

28. It is always open to a defendant to action taken by the State to contest constitutional validity of that action. When I say this, I include, not just compliance with the Commonwealth Constitution, but compliance with any requirements of the State constitution, of the action taken; if the Court concludes that the legislation is not valid, then the Court will ignore the legislation, treat it as void, and any legal action which rests upon the foundation of that legislation will fail. But this is in the context of proceedings brought against the subject by the State.

29. The State has and had no obligation to explain, or to justify to the plaintiffs, the legal basis for the Direction in question. It was enough for the State to assert the validity of the legislation. If further action is taken by the State on the basis of the Direction, for instance, if the State brings proceedings to prosecute the plaintiffs for failure to comply with it, or seeks to recover the cost of undertaking the works itself, or brings proceedings in the Land and Environment Court seeking an injunction, then the State will need, in those proceedings, if the validity of the legislation is challenged, to sustain its validity. But until that point is taken, that is, action is taken by the State against the plaintiffs, the State has and had no obligation to enter into a debate about the Constitution, or other factors, which the plaintiffs appear to have thought affected the validity of the Act.

30. Accordingly, it seems to me that, to the extent that the Notices proceed on the assumption that the State was under some sort of obligation to explain itself, they were misconceived.

31. As to the question of contract, an essential element of any contract is that the parties exchange mutual promises supported by consideration, namely, some act, or forbearance, which the law regards as valuable. It is possible to make or vary contractual obligations by silence, but only if the context of the silence is such as to show that the silent party is promising to undertake the action in question. Even then, there must be a promise supported by consideration. The facts alleged by the plaintiffs in their Statement of Claim fall far short of establishing any such arguable contractual obligation. Silence cannot be converted into a promise by the simple expedient of making a peremptory demand for someone to agree to something, or to do something, or else they would be deemed to have agreed.

26. There is no context of previous dealings between the State, on the one hand, and the plaintiffs, on the other, which could plausibly support the conclusion of an agreement in the terms alleged by the plaintiffs. In making that statement, I, of course, take into account the nature of the alleged contract and the extravagant figures given by the plaintiffs in their schedule of fees including what the plaintiffs would characterise as services rendered in the form of reading documents which the State might send them, and the like. The Notices, in my opinion, amount to a futile unilateral attempt to impose a liability on the State without any arguable basis for asserting that, in the objective circumstances of the case, the State has assented to the terms proposed.

27. I also fail to see how the plaintiffs' inaction after the Notices were served could properly be considered as consideration, which would be sufficiently valuable in the eyes of the law to support a contract. The relevant actions had all taken place before the Notices by the plaintiffs were served and, so far as I can see, there is nothing which was done thereafter which would amount to consideration which would be recognised by the law so as to make any promise by the State binding.

28. So far as promissory estoppel is concerned, an essential component of that doctrine is that, as the name suggests, the defendant must have made a promise to conduct itself on the basis of a particular legal relationship between the parties. Again, in an appropriate context, that promise may be taken to arise from silence. But for reasons I have already given, it is my opinion that the circumstances identified by the plaintiffs fall far short of an arguable case of any promise by the State along the lines contended for by the plaintiffs.

29. Furthermore, another requirement of an estoppel is that there be some form of reliance by the plaintiffs on the promise, which is, as the law describes it, a detrimental reliance, that is, that the plaintiffs have taken action which now cannot be reversed. Without such detrimental reliance, even an express promise will not be enforceable by way of estoppel.

30. Again, essentially for similar reasons as I have given in relation to contract, I am of the view that there is no reasonable prospect of the plaintiffs establishing any such reliance on the supposed promise by the State.

31. That brings me to s 100 of the Constitution. I do not need to consider the various requirements of that statute in terms of reasonable use or whether the reference to use of waters of rivers for conservation or irrigation would be attracted in the case of the dams in question. There is no evidence before the Court that would allow that to be considered on this application.

32. The fundamental problem is that s 100 is a restriction on the power of the Commonwealth government. What it does is prevent the Commonwealth government, in relation to certain laws, from abridging rights of the States, or ordinary citizens. No action of the Commonwealth government is in issue in this case; what is in issue is a direction issued by the State. I cannot see any plausible basis on which it could be contended that the Water Management Act is invalidated by s 100 of the Constitution.

33. I am, therefore, satisfied that the claims as pleaded in the Statement of Claim are hopeless in the form in which they are pleaded and that the Statement of Claim needs to be struck out.

34. The remaining question is whether I should give the plaintiffs leave to replead, if they can, some other form of action or, perhaps, a similar form of action, but properly supported by the relevant ingredients.

35. One aspect which has given me pause is that the Statement of Claim asserts that the visit by the departmental officers in February 2014 to their property was a trespass. The State disputes that the visit was a trespass but, as a matter of pleading, once it is alleged that the Departmental officers set foot on the plaintiffs' land, if it is admitted that they did, the State will need to justify their visit to the property. Accordingly, should the plaintiffs wish to pursue the allegation of trespass, it would be open to them to allege, in the proper form, that they were in possession of the property and that the State officers had set foot on it and then leave it to the State to justify the entry.

36. If the State was unable to do so, the plaintiffs would be entitled to damages. Their entitlement would be as a matter of right to nominal damages. Even if no actual damage to the property, or to the plaintiffs' other interests, were established, an action would still be maintainable by the plaintiffs for trespass. I say nothing about the likelihood of success of such an action, but it is clear to me that the plaintiffs, should they wish, would be entitled to bring such a claim against the State.

37. I should make it clear that if such a claim is brought, the only relief the plaintiffs would be entitled to would be damages, either nominal as a matter of right, or additional damages, such as compensatory damages, if they were able to demonstrate some sort of loss attributable to the trespass, either in the form of damage to the land, or perhaps to some other interest of the plaintiffs.

38. The plaintiffs are not entitled to the figure which they have nominated in their Statement of Claim. If they wish to sustain a claim for damages, they will need to prove actual loss and they cannot escape that requirement by asserting that there has been some sort of promise by the State to pay a particular figure on account of the trespass; I have concluded that part of the plaintiffs' case is hopeless.

39. In these circumstances, I have asked myself whether it would be better, rather than dismissing the proceedings entirely, to give the plaintiffs an opportunity to replead. In that regard, I have considered the effect of s 63 of the Supreme Court Act 1970 (NSW). It might perhaps be said that now that the Court has some familiarity with the matter, it would be more efficient for any further claim to be brought back to the Court. However, on the balance, I have concluded that this is not a step I should take.

40. I have concluded that the plaintiffs might propound a claim for damages, but I am far from satisfied whether when they consider the matter fully they will do so. There are real questions about whether the State would, indeed, be in a position to justify the entry into the premises; furthermore, on the material before me, I see nothing to suggest that the plaintiffs have incurred any substantial damage as a result of that entry. I would not wish to give the plaintiffs any encouragement in the belief that if they reformulate their claim as a claim for trespass, they will receive any relief from the court, even if they establish a trespass, which is of value to them; and I think they should consider very carefully indeed whether they should pursue any such trespass claim.

41. If they consider that they should do so, then it will be possible to bring that trespass claim in the Local Court, or the District Court; or, at least, having regard to the apparent absence of any substantial damage to the plaintiff, that would appear to be the appropriate venue for such a proceeding. Should the plaintiffs bring their claim, it would be more efficient and much less costly for it to proceed in the Local Court or, perhaps, the District Court, focussed on that single issue, than to incur the expense of keeping these Supreme Court proceedings alive.

42. I do not consider that s 63, in these circumstances, obliges me to give the plaintiffs another opportunity to plead in the Supreme Court.

43. Accordingly, I order that the proceedings be dismissed.

44. I also order that the plaintiffs pay the defendants’ costs of the proceedings, including, of course, the costs of the present application.

**********

Decision last updated: 29 May 2017