Metjac Holdings Pty Ltd v Minister for Sustainability, Environment and Conservation

[2019] SASCFC 12

Supreme Court of South Australia

(Full Court)

METJAC HOLDINGS PTY LTD v MINISTER FOR SUSTAINABILITY, ENVIRONMENT AND CONSERVATION

[2019] SASCFC 12

Judgment of The Full Court

(The Honourable Chief Justice Kourakis, The Honourable Justice Parker and The Honourable Auxiliary Justice Tilmouth)

8 February 2019

ENVIRONMENT AND PLANNING - COURTS AND TRIBUNALS WITH ENVIRONMENT JURISDICTION - SOUTH AUSTRALIA - ENVIRONMENT, RESOURCES AND DEVELOPMENT COURT AND ITS PREDECESSORS - POWERS ON APPEAL

ENVIRONMENT AND PLANNING - ENVIRONMENTAL PLANNING - PLANNING SCHEMES AND INSTRUMENTS - SOUTH AUSTRALIA - GENERALLY

ENERGY AND RESOURCES - WATER - WATER MANAGEMENT - WATER USAGE RIGHTS - WATER ALLOCATION

STATUTES - ACTS OF PARLIAMENT - INTERPRETATION - INTERPRETATION ACTS AND CLAUSES - PARTICULAR ACTS AND ORDINANCES - SOUTH AUSTRALIA

This appeal relates to a decision made by the Environment, Resources and Development Court (the ERD Court) on appeal under the Natural Resources Management Act 2004 (SA) (the NRM Act). The ERD Court set aside a decision made by the Minister for Sustainability, Environment and Conservation (the Minister) to grant a water access entitlement to the appellant, Metjac Holdings Pty Ltd (Metjac).

An unusual feature of the case is that Metjac had appealed to the ERD Court on the ground that its water allocation was insufficient and sought a larger allocation. However, the ERD Court accepted the Minister’s contention that the allocation had been issued in error and that Metjac had no entitlement to water. Accordingly, the ERD Court set aside the decision made by a delegate of the Minister to allocate water and remitted the matter to the Minister for further consideration. Metjac contends that the ERD Court erred by considering, in the absence of a cross appeal, the validity of the Minister’s decision to allocate water when the only issue raised by its appeal was the quantum of the allocation.

Held, per Parker J (Kourakis CJ and Tilmouth AJ agreeing), dismissing the appeal:

1.  Where their power has been validly delegated, the Minister is bound by his delegate’s decision and cannot repudiate the decision simply because he does not regard it as being correct (at [82]).

2.  There was no denial of procedural fairness to Metjac (at [83]-[86]).

3.  Having been informed about an alleged error in the administration of the water allocation scheme, public policy considerations suggest that it was appropriate for the ERD Court to decide the validity of the water allocation as a preliminary point (at [88]-[89]).

4.  The fact that the ERD Court Rules 2003 (SA) (ERD Court Rules) did not provide a specific procedure for the Minister to contend that his own decision was wrong, could not, of itself, prevent the Court from considering the preliminary question (at [90]-[93]).

5. The ERD Court was required by the statutory directions in ss 21(1)(a) and 21(1)(c) of the Environment, Resources and Development Court Act 1993 (SA) (ERD Court Act) to decide the validity of the water licence and allocation before considering quantum (at [91]-[93]).

6. The orders of the ERD Court were supported by s 204 of the NRM Act (at [94]).

7. Section 164R(1) of the NRM Act required that when the Minister decided Metjac’s application on 27 April 2016, he must do so in accordance with s 164N(12) of the NRM Act (at [96]-[102]).

8.  A statutory direction that a decision must be made in accordance with the law in force at the time of the decision, rather than the earlier law that operated when an application was made, does not give the new law a retrospective operation. The new law is being applied prospectively to the making of the decision (at [97]).

9. The words used in s 164R(1) of the NRM Act manifest a clear intention to displace the statutory presumption in s 16(1)(c) of the Acts Interpretation Act 1915 (SA) that accrued rights are not affected by amending legislation (at [99]).

10. It is at the point when the Minister decides a licence application under s 146 of the NRM Act that he is required to form an opinion concerning the future water requirements of an existing user in accordance with s 164N(2) (at [118])

11. Section 164N of the NRM Act is directed towards the making of a water allocation to meet the future water needs of the applicant (at [119]-[121]).

Held, per Kourakis CJ (Tilmouth AJ agreeing):

1.  The powers conferred on the ERD Court should not be construed to be subject to an implied limitation that no order can be made which detracts from an appellant’s entitlements (at [3]-[4]).

2. After the enactment of s 164N(12) of the NRM Act, any arrangement to transfer a contingent or future entitlement to a person other than the ultimate purchaser of the land will not be effective unless that purchaser is bound by the arrangement (at [8]-[9]).

Held, per Tilmouth AJ:

1.  Failure to exercise jurisdiction to test the validity of the water allocation would produce outcomes which are inconsistent with achieving the ecological and sustainable use of water resources (at [127]).

Natural Resources Management Act 2004 (SA) ss 3, 7, 124, 125 128, 132, 146, 150, 152, 157, 164N, 164R, 204; Natural Resources Management (Review) Amendment Act 2013 (SA); Natural Resources Management (Western Mount Lofty Ranges—Prescribed Watercourses) Regulations 2005 (SA) regs 4, 5; Water Resources Act 1997 (SA) s 7; Water Resources Act 1990 (SA) s 32; Environment, Resources and Development Court Act 1993 (SA) ss 21, 33; Environment, Resources and Development Court Rules 2003 (SA); Acts Interpretation Act 1915 (SA) s 16, referred to.
Attorney-General (Qld) v Australian Industrial Relations Commission (2002) 213 CLR 485, applied.
(2016) 217 LGERA 108 Mayalukalily Pty Ltd v Minister for Sustainability, Environment and Conservation; Minister for Sustainability, Environment and Conservation v Zander (2014) 120 SASR 207; Shahi v Minister for Immigration and Citizenship (2011) 246 CLR 163; Comptroller-General of Customs v Kawasaki Motors Pty Ltd (1991) 103 ALR 661; Michelmore v Minister for Environment and Conservation (2004) 137 LGERA 306; Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597; R v The War Pensions Entitlement Appeal Tribunal; Ex parte Bott (1933) 50 CLR 228, considered.

METJAC HOLDINGS PTY LTD v MINISTER FOR SUSTAINABILITY, ENVIRONMENT AND CONSERVATION
[2019] SASCFC 12

Full Court:      Kourakis CJ, Parker J and Tilmouth AJ

1. KOURAKIS CJ:    I would dismiss the appeal for the reasons given by Parker J and for these brief additional reasons.

2. Section 202 of the Natural Resources Management Act 2004 (SA) (the NRM Act) does not confer any right of appeal on the Minister or any of the statutory officers appointed pursuant to its provisions. The reason for the omission is obvious enough. The NRM Act enacts an administrative scheme for the regulation of the State’s natural resources in which the rights and regulations of persons to exploit those resources are determined by the Minister and the statutory officers. Plainly then, there is no utility in conferring a right of appeal on a decision maker under the NRM Act against his or her own decision, whether made personally or pursuant to a delegation of the administrative power. However, the appeal conferred by s 202 of the NRM Act is not exclusive of other forms of review. The validity of a decision made under the NRM Act may be called into question by judicial review proceedings and applications for a declaration.

3. No such proceedings have been brought in this case but the availability of such proceeding informs the proper construction of s 204 of the NRM Act. As Parker J observes in [94] of his Honour’s reasons, the powers conferred on the ERD Court are wide enough to support an order varying the allocation by reducing it, or even reversing, the decision to make an allocation. The question raised by the Minister’s contention on this appeal is whether the powers should be construed subject to an implied limitation that no order can be made which detracts from an appellant’s entitlements.

4. I would answer the question in the negative for the following reasons.

   
   

   First, the proposed implication would unnecessarily result in a multiplicity of proceedings.  Secondly, as Parker J observes, an unwarranted allocation to an appellant, in the generality of cases, is made at the expense of the entitlements of others, or the sustainability of the protected resources.  Thirdly, it is generally undesirable that a judicial merits review of an administrative decision be exercised on a false or doubtful premise about the legality of that administrative decision.

5. On the appellant’s contention that its entitlements accrued on the prescription of the watercourse, I add the following.

6. Section 164N(1)(a) of the NRM Act does not confer a right to a transferrable quantity of water. It only allows an existing user, which must be someone with actual access to the watercourse, to continue to access the watercourse until all of the applications are determined.

7. Section 164N(1)(b) of the NRM Act does not provide an entitlement to any quantity of water; it only entitles an existing user ‘to be granted … the necessary water management authorisations’ subject to such determinations as the Minister may make pursuant to subs (2) and (7). The right granted by s 164N(1)(b) is a right to participate in the distribution of the resource duly made in accordance with the provisions of s 164N(1)(b).

8. It is that right to participate which may, subject to the Minister’s consent, be transferred pursuant to s 164N(9) of the NRM Act. Prior to the enactment of s 164N(12) of the NRM Act, the right to participate may have been transferred to a purchaser of land that contained existing user rights, or to another person. However, by force of s 164N(12), the rights of an existing user to participate in the distribution are transferred to the purchaser of that land.

9. It follows that, after its enactment, any arrangement to transfer a contingent or future entitlement to a person other than the ultimate purchaser of the land will not be effective unless that purchaser is bound by the arrangement. 

10. PARKER J:  This appeal relates to a decision made by the Environment, Resources and Development Court (the ERD Court) on appeal under the Natural Resources Management Act 2004 (SA) (the NRM Act). The ERD Court set aside a decision made by the Minister for Sustainability, Environment and Conservation (the Minister) to grant a water access entitlement to the appellant, Metjac Holdings Pty Ltd (Metjac).

11. An unusual feature of the case is that Metjac had appealed to the ERD Court on the ground that its water allocation was insufficient and sought a larger allocation.  However, the ERD Court accepted the Minister’s contention that the allocation had been issued in error and that Metjac had no entitlement to water.  Accordingly, the ERD Court set aside the decision made by a delegate of the Minister to allocate water and remitted the matter to the Minister for further consideration. Metjac contends that the ERD Court erred by considering, in the absence of a cross appeal, the validity of the Minister’s decision to allocate water when the only issue raised by its appeal was the quantum of the allocation.

    The grounds of appeal

12. Metjac’s grounds of appeal in this Court are as follows:

    1. The ERD Court of South Australia erred as a matter of law in setting aside the decision of the Minister.

    Particulars

    1.1 The ERD Court erred in holding that the date ("the relevant date") as at which the Minister (and the Court on appeal) was required assess what share of the consumptive pool will meet Metjac's future requirements for the purposes of s.164N of the Natural Resources Management Act 2004 ("the Act") was the point at which a water allocation is to be made.

    1.2 The ERD Court erred in failing to hold that the relevant date was:

    1.2.1 13 October 2004, being the end of the establishment period for the Western Mount Lofty Ranges Prescribed Watercourses; or

    1.2.2 20 October 2005, being the date of the declaration of the Western Mount Lofty Ranges Prescribed Watercourses as prescribed watercourses; or

    1.2.3 17 April 2006, being the date of Metjac's application for a water licence as an existing user; or

    1.2.4 31 October 2008, being the end of the prescribed period for the Western Mount Lofty Ranges Prescribed Watercourses.

    1.3 The ERD Court erred in holding that from the making of an application within 6 months of the declaration of the resource as a prescribed resource until the time of the formation of the Minister's opinion under s.164N(2), the existing user does not have a transferable right under the Act (except by operation of s.l64N(12)).

    1.4 The ERD Court erred in holding that a water access entitlement is not transferable unless and until it is a water access entitlement under a licence.

    1.5 The ERD Court erred in failing to hold that at as the relevant date Metjac held a transferable entitlement to a water allocation by reason of s.164N(9) of the Act.

    1.6 The ERD Court erred in holding that Metjac's application necessarily relates specifically to Allotment 50.

    1.7 The ERD Court erred in holding that Metjac was ineligible to receive a water licence or an allocation of water under its application in relation to Allotment 50.

    1. 8 The ERD Court erred in determining that, when the Minister came to form his opinion, and at all times after the transfer of the property out of the ownership of Metjac on 3 March 2010, the only decision lawfully open to the Minister under s.164N was that Metjac's future requirement for water on Allotment 50 was nil.

    1.9 The ERD Court erred in holding that as at 27 April 2016, when the Minister decided Metjac's application for a licence and a water allocation, Metjac had no further requirement for water on Allotment 50 because it had no interest or entitlement to acquire an interest in Allotment 50.

    1.10 The ERD Court erred in holding that the only valid opinion the Minister or the Court on appeal, properly informed, could have come to in relation to the application at any time subsequent to 3 March 2010, when Metjac sold the land, was that the future requirement of Metjac for water on Allotment 50 was nil.

    1.11 The ERD Court erred in holding that s.164N(12) had operation in respect of a divestment of land prior to its enactment on 16 August 2013.

    1.12 Further, or in the alternative to paragraph 1.11 above, the ERD Court erred in holding that s.164N (12) of the Act operates to divest Metjac of its entitlement to be granted the necessary water management authorisations.

    1.13 The ERD Court erred in setting aside the decision of the Minister in the absence of a cross-appeal by the Minister and/or on the determination of the preliminary question.

13. Notwithstanding the compendious nature of the grounds of appeal, the respondent submits that, in essence, the issues raised by the appeal are as follows:

    ·First, whether Metjac was entitled to a water allocation on the basis that it had been an “existing user” within the meaning of the NRM Act at the time it lodged its licence application even though, at the time of the Minister’s decision and thereafter, it did not hold any interest in irrigable farming land and had no future requirement for water.

    ·Secondly, if the answer to that question is “no”, whether the ERD Court exceeded its jurisdiction by setting aside the Minster’s decision in the absence of a cross-appeal.

    Background

14. The matter proceeded before the ERD Court based on agreed facts and a book of documents that effectively comprised the departmental file.[1]  It is necessary to set out the agreed facts relevant to this appeal and to also refer to the matters prescribed under the Natural Resources Management (Western Mount Lofty Ranges—Prescribed Watercourses) Regulations 2005 (SA) (the Regulations).

    [1]    The relevant Department of the South Australian Government was sucessively entitled as the Department of Water, Land and Biodiversity Conservation and the Department of Environment, Water and Natural Resources.

    ·1 July 2001 – establishment period for the Western Mount Lofty Ranges Prescribed Watercourse commenced under reg 5(1) of the Regulations.

    ·8 October 2002 – Metjac lodged development application to create on Allotment 50 a water diversion from Pedlar Creek and an offstream dam for the purpose of an Aquifer Storage and Recovery Plan (ASP). Water would be pumped from the dam to irrigate vines and to re-charge an underground aquifer. Metjac’s intention was that re-charging of the aquifer would give it “credits” so as to permit additional water to be taken from the aquifer to irrigate other properties that it owned in the McLaren Vale area.

    ·Approximately June 2003 – Metjac concluded purchase of Allotment 50.

    ·30 April 2003 to 21 September 2005 - Metjac was invoiced a total of $154,349.07 by its contractors for work done on the ASP.

    ·23 February 2004 – The Department of Water, Land and Biodiversity Conservation approved the construction of a weir on Allotment 50.

    ·13 October 2004 – establishment period concluded under reg 5(1).

    ·14 October 2004 – prescribed period commenced under reg 5(2).

    ·20 October 2005 – Western Mount Lofty Ranges Prescribed Watercourse declared to be a prescribed watercourse under reg 4.

    ·17 April 2006 – Metjac applied for a water allocation as an existing user.

    ·24 November 2008 – receivers and managers appointed to Metjac.

    ·31 December 2008 – prescribed period concluded under reg 5(2).

    ·3 March 2010 – Allotment 50 sold by the receivers to Mr and Mrs Scott‑Smith.

    ·10 November 2010 – Metjac returned to the control of its directors and shareholders.

    ·5 August 2014 – a departmental officer telephoned and emailed Metjac offering three options in respect of its application. Those options were:

    a.      Transfer licence voluntarily to Mr and Mrs Scott-Smith;

    b.     Obtain the allocation and lease it to Mr and Mrs Scott-Smith; or

    c.     Hold the licence.

    ·18 August 2014 – Metjac advised the Minister in writing that it elected to hold the licence.

    ·27 April 2016 – water licence granted to Metjac with a water allocation of 22,880 kl in respect of Allotment 50.

    ·8 June 2016 – Metjac appealed against the volume of water allocated on the basis that it was inadequate.

    The legislative scheme

15. At common law, the right to make use of water was exercisable by the owner or occupier of land adjoining a water course under the doctrine of riparian rights.[2]  The owner or occupier of land adjoining a water course was entitled to extract and use water for ordinary purposes even to the point of the exhaustion of the resource.  An “ordinary purpose” included domestic use and the watering of livestock.  However, water could only be taken for an extraordinary purpose to the extent that the use was reasonable and the rights of other holders of riparian rights were not affected. Commercial irrigation was regarded as an extraordinary purpose.  A riparian right was held by the owner or occupier of land, was attached to the land and could not be assigned separately from the land.

    [2]    See generally Thomson Reuters, The Laws of Australia (at 29 January 2019) 14 Environment and Natural Resources, ‘9 Water’ at [14.9.1530]-[14.9.1570] and the cases cited therein.

1. Before referring to the relevant provisions of the NRM Act, it is necessary to refer to the nomenclature used in the Act to identify and define the relevant statutory rights. The term “water management authorisation” is defined in s 3 to mean, amongst other things, a water licence or a water allocation. A “water licence” is defined to mean a licence granted by the Minister under s 146. Paragraph (a) of the definition of “water allocation” in s 3 provides that, in respect of a water licence, the term means the allocation of water under the terms of the licence in accordance with Chapter 7 Part 3 Division 2 and includes, if the context so requires, a component or part of such an allocation, or water available in connection with the entitlement.

2. Section 124(8) of the NRM Act provides that rights at common law in relation to the taking of naturally occurring water are abolished.[3] As a result of the abolition of riparian rights in South Australia, any right to take water is derived solely from the NRM Act. Section 124(1) provides that, subject to the NRM Act and any other contrary Act or law, a person who has lawful access to a watercourse may take water for any purpose.

   [3] Section 7(9) of the antecedent Water Resources Act 1997 (SA) was in identical terms to s 124(8) of the NRM Act. Section 32 of the earlier Water Resources Act 1990 (SA) continued the existence of riparian rights, but made them subject to the right of the Minister to take such quantities of water as he or she thought fit and also the right of any other person to take water under a water recovery licence. The taking of water from a proclaimed watercourse, lake or well was limited to use for domestic purposes and the watering of stock.

3. Section 124(3) of the NRM Act provides that, subject to certain specified exceptions of no present relevance, water may only be taken from a prescribed watercourse pursuant to either an authorisation under s 128 or a water allocation that relates to the relevant water resource.

4. A notice published by the Minister in the Gazette under s 128 may authorise the taking of water from a prescribed watercourse for a particular purpose specified in the notice.  There is no notice relevant to the present matter. 

5. Section 125(1) empowers the Governor, by regulation made on the recommendation of the Minister, to declare that a watercourse is a prescribed watercourse.  Section 125(5) requires that before a recommendation is made to the Governor the Minister must publish a notice in the Gazette and in certain newspapers outlining the proposed recommendation and the reasons for it. Interested persons must be invited in the notice to make written submissions to the Minister about the proposal within a specified period.  The notice must also be served upon all councils in the area that will be affected by the proposed regulation. 

6. The Minister must have regard to all submissions made in accordance with the notice published under s 125(5) before making a recommendation to the Governor.  There has been no suggestion in the present proceedings that these procedural requirements were not properly observed.  Watercourses in the Western Mount Lofty Ranges were prescribed by reg 4 on 20 October 2005.

7. Section 146 empowers the Minister to grant a water licence with a water access entitlement. Section 146 relevantly provides as follows:

   146—Nature of water licences

   (1) The Minister may grant a licence (a water licence) in respect of a prescribed watercourse, lake or well or in respect of the surface water in a surface water prescribed area or part of a surface water prescribed area.

   (2) A water licence provides an entitlement to the holder of the licence to gain access to a share of water available in the consumptive pool or consumptive pools to which the licence relates, as specified by the licence and after taking into account any factors specified by the relevant water allocation plan or prescribed by the regulations (and this entitlement will be called a water access entitlement).

   (3) A water access entitlement is subject to—

   (a)     a determination of the Minister under subsection (4); and

   (b)     any other provision of this Act that operates with respect to the licence or the water access entitlement; and

   (c)     the conditions attached to the licence.

   (4) The Minister will from time to time, by notice in the Gazette, determine the volume of water that is to be made available from a consumptive pool for allocation under this Act during a period specified by the Minister.

   (5) The Minister may, by further notice in the Gazette, vary a determination under subsection (4).

   …

   (8) A water licence is personal property and may pass to another in accordance with the provisions of this Act or, subject to this Act, in accordance with any other law for the passing of property.

8. It is apparent that under s 146(2) the holder of a water licence is entitled to gain access to the share of water available in the consumptive pool that is specified in the licence. That entitlement is their water access entitlement. The actual amount of water available to the holder of a water access entitlement will be governed by the determination made by the Minister under s 146(4) specifying the volume of water to be made available from the relevant consumptive pool during the specified period. Thus, for example, the Minister might limit the volume of water that is to be made available because of excess demand, environmental considerations or during a time of drought. In other words, the water access entitlement does not guarantee that a licence holder will have access to a specified volume of water. Instead, they will be entitled to a share of the water that is determined from time-to-time by the Minister to be available in the relevant consumptive pool.

9. Section 146(8) provides that a water licence is personal property and may pass to another in accordance with the provisions of the NRM Act or, subject to the Act, in accordance with any other law for the passing of property. Section 150 governs the transfer of licences. A transfer requires the approval of the Minister (s 150(4)). Section 150(8) requires that the Minister’s decision to grant or refuse approval to transfer must be consistent with the relevant water allocation plan, made in the public interest and consistent with any requirement prescribed by regulation.

10. A water allocation is also personal property (s 152(6)). The transfer of an allocation requires the approval of the Minister (s 157(2)).  Section 157(5) imposes the same requirements upon the grant or refusal of Ministerial approval to transfer an allocation as appear in 150(8) with respect to water licences. The Minister may also refuse to permit transfer of an allocation if the holder has been in breach of a condition attached to the licence or if a water levy remains unpaid (s 157(4)).

11. The fact that both a water licence and a water allocation are held separately from the land, each of which constitutes a form of property and may be assigned to another (albeit subject to Ministerial approval), are important distinguishing features from riparian rights held at common law. A riparian right could not be assigned separately from the land to which it related and was simply a part of the bundle of rights attached by the common law to ownership or possession of particular land.

12. Section 164N provides for the allocation of water to existing users upon a watercourse being prescribed under s 125. Section 164N provides as follows:

    164N—Allocation on declaration of prescribed water resource

    (1) On declaration of a watercourse, lake or well as a prescribed watercourse, lake or well or declaration of a part of the State as a surface water prescribed area, an existing user of water from the water resource concerned—

    (a)     may, subject to a restriction or prohibition under section 132, continue to use water without a water management authorisation until the end of the prescribed period or, if he or she applies for any necessary water management authorisation (depending on the circumstances of the particular case) within 6 months after the publication in the Gazette of the regulation declaring the resource to be a prescribed resource, until all relevant applications have been granted or refused;

    (b)     is, subject to subsection (3), entitled to be granted, without the payment of any purchase price, the necessary water management authorisations, subject to any determination by the Minister under subsection (2) after consultation with the existing user.

    (2) The water access entitlement that applies under subsection (1)(b) will be the share of a consumptive pool that will, in the opinion of the Minister, meet the future requirements of the existing user—

    (a)     based on his or her reasonable requirements during the establishment period; or

    (b)     for water for a development, project or other undertaking to which he or she was legally committed or in respect of which he or she had committed significant financial or other resources during the establishment period; or

    (c)     under both paragraphs (a) and (b).

    (3) If at the expiration of the prescribed period, the aggregate of water access entitlements assigned to existing users under subsections (1) and (2) exceeds, in the opinion of the Minister, the capacity of the resource, the Minister may—

    (a)     reduce each water access entitlement proportionately; or

    (b)     reduce each water access entitlement pursuant to a scheme set out in the regulations.

    (4) Before determining the capacity of the resource, the Minister must prepare a report assessing the need for water of ecosystems that depend on the resource for water.

    (5) The Minister must make the report publicly available.

    (6) An existing user may appeal to the ERD Court against a determination or decision of the Minister under subsection (1) or (2).

    (7) Subject to a restriction or prohibition under section 132, a person who is not an existing user may take water from the water resource without a water management authorisation until the end of the prescribed period.

    (8) If the quantity of water available for allocation exceeds the entitlements of existing users, the Minister may allocate the excess in accordance with this Act and the relevant water allocation plan.

    (9) An entitlement under subsection (1)(b) may be transferred to another person with the approval of the Minister but subject to any requirement or limitation prescribed by the regulations.

    (10) In this section—

    establishment period in relation to the declaration of a water resource means the period prescribed for the purposes of this definition by the regulation declaring the resource to be a prescribed resource being a period that ends at the commencement of the prescribed period;

    existing user means, subject to subsection (11), a person—

    (a)     who took water from the resource at any time during the establishment period; or

    (b)     who did not take any water during that period but who needs water for a development, project or undertaking to which he or she was legally committed or in respect of which he or she had, in the opinion of the Minister, committed significant financial or other resources during the establishment period;

    prescribed period in relation to a water resource commences on the date of publication in the Gazette, a newspaper circulating generally throughout the State or a local newspaper (whichever occurs first) of the notice inviting submissions in relation to the proposed regulation declaring the resource to be a prescribed resource and ends on the date specified for that purpose in the regulation.

    (11) A person ceases to be an existing user if the person does not make the necessary applications under subsection (1) within 6 months after publication in the Gazette of the regulation declaring the resource to be a prescribed resource.

    (12) If a person who is an existing user under a preceding subsection divests himself or herself of land (or an interest in land) in relation to which the rights of an existing user arises under those subsections—

    (a)     the person who acquires the land (or the interest in land), or any successor to that person, will be regarded as the existing user in substitution for the earlier existing user (and to obtain the benefit of any action or commitment taken or made by an earlier existing user); and

    (b)     those subsections will apply subject to any modifications necessary to take into account the operation of this subsection, and such other modifications as may be prescribed by the regulations.

13. Subsection 164N(12) was added to the NRM Act by the Natural Resources Management (Review) Amendment Act 2013 (SA) and came into operation on 16 August 2013.

14. Subject to s 164N(3), the further effect of s 164N(1)(b) is that an existing user of water is entitled to be granted, without the payment of any purchase price, a water management authorisation subject to any determination made by the Minister under s 164N(2).

15. Section 164N(3) empowers the Minister to reduce each water access entitlement if, in his or her opinion, the aggregate of water access entitlements assigned to existing users under subsections (1) and (2) exceeded the capacity of the resource. Such a reduction may be made either proportionately or in accordance with a scheme set out in the Regulations.

16. It is of central importance to this appeal that s 164N(2) provides that the water management authorisation that an existing user is entitled to be granted under s 164N(1)(b) will be the share of the consumptive pool that, in the opinion of the Minister, will meet the future requirements of the existing user based on either their reasonable requirements during the establishment period or their requirements for water for the purposes of a development, project or other undertaking to which they were legally committed or had committed significant resources during the establishment period.

17. This examination of the legislative scheme may be concluded by referring to s 164R(1) of the NRM Act which provides as follows:

    164R—Law governing decisions under this Part

    (1) If a decision is being made under this Part with respect to—

    (a)     an application for a water management authorisation; or

    (b)     a water allocation (including in relation to a water allocation under an IWETS); or

    (c)     the variation of a water management authorisation; or

    (d)     the transfer of a water management authorisation (including with respect to an interest in a water management authorisation),

    the law to be applied in deciding the matter, and the provisions of the regional NRM plan that are relevant to the consideration or determination of the matter (including in any subsequent review or appeal proceedings (whether brought under this Act or not)), is the law in force, and the provisions of the regional NRM plan as in force, at the time that the matter falls to be decided, considered or determined (including when that time is the time of any decision on a review or appeal).

    The ERD Court decision

18. The ERD Court held that, leaving aside the operation of s 164N(12), an existing user does not have a transferrable right under the NRM Act until the Minister has made a decision under s 164N(2). The right that an existing user has to take water in the period between the lodgement of their application and the making of the Minister’s decision is not transferrable. The licence and water allocation, if granted, are personal property and can be transferred subject to the NRM Act. However, a water access entitlement is not transferrable unless and until it becomes a water access entitlement under a licence.

19. The ERD Court found that the only decision lawfully open to the Minister under s 164N was to find that the future requirement for water by Metjac in relation to Allotment 50 was nil. On that basis, the ERD Court considered that it was not necessary to decide whether s 164N(12) was applicable but did so in the interests of completeness. The ERD Court rejected the contention made by counsel for Metjac that to apply s 164N(12) to the Minister’s decision in accordance with s 164R would give s 164N(12) a retrospective operation. Section 164R required s 164N(12) to be applied at the time the decision to grant a licence and water allocation was made. The ERD Court also rejected the submission that Metjac had not divested itself of ownership of Allotment 50. The ERD Court found that the contract entered by the company for the sale of land was a divestment regardless of whether at that time it was under administration or under the control of its directors.

20. For these reasons, the ERD Court held that at the time the Minister made his decision with respect to Metjac’s application for a licence and a water allocation, it had no further requirement for water on Allotment 50 because it had no interest or entitlement to take water for use on Allotment 50.  The only valid opinion open to the Minister when he considered the grant of a licence was that from the time the land was sold the future requirement of Metjac for water on Allotment 50 was nil.  The ERD Court also noted that Metjac could not use the allocation that had been given to it because it could not, on the facts presented to the Court, comply with condition 1 attached to the licence, which required that the water only be used on Allotment 50.  The ERD Court set aside the decision made by the Minister on 27 April 2016 to grant Metjac a water allocation and remitted the matter to him for further consideration.

    The appellant’s submissions

    Grounds 1 and 2

21. Ground 1 of the notice of appeal contends that the ERD Court erred by holding that the relevant date for the purpose of assessing the share of the consumptive pool required to meet Metjac’s future water requirements for the purposes of s 164N of the NRM Act was the point at which a water allocation was to be made. Metjac submits that the relevant date is 20 October 2005, when watercourses in the Western Mount Lofty Ranges were prescribed.

22. Alternatively, Metjac contends in Ground 2 that the entitlement of an existing user to a water licence and an allocation arises upon a watercourse being prescribed. Metjac also submits that having regard to the manner in which the Minister was required to determine water access entitlements for existing users under s 164N(1), the relevant date must not be later than 31 October 2008, being the end of the prescribed period. Section 164N required the Minister to determine the future requirements of Metjac as well as other existing users.

23. Metjac also submits that s 164N(3) suggests that the relevant date is before the end of the prescribed period, as the provision envisages that water access entitlements for existing users under ss 164N(1) and (2) will already have been “assigned” and are liable to be reduced.

24. In the alternative, Metjac submits that the relevant date was 13 October 2004, being the end of the establishment period.  The Minister was required to form an opinion of the future requirements of existing users based upon events that had occurred during the establishment period, i.e. their reasonable water requirements during that period and their requirements for a development to which they were legally committed or had committed significant resources during the establishment period.  Metjac supports that contention by reference to the decision of the ERD Court in Mayalukalily Pty Ltd v Minister for Sustainability, Environment and Conservation.[4]

    [4] (2016) 217 LGERA 108.

25. In the further alternative, Metjac submits that the relevant date was 17 April 2006, being the date of its application for a water licence as an existing user.  The Minister was required to form an opinion as to the future water requirements of Metjac based upon the matters contained in its application.  All existing users were required to apply for an allocation within six months of the declaration that the Western Mount Lofty Ranges watercourses were prescribed, i.e. any application was required to be made by 20 April 2006.  At that date the Minister was able to assess the total volume of the consumptive pool and the claims of all existing users for a share of that pool.  The assessment by the Minister of the future requirements for water of existing users was informed by events occurring during the establishment period.

1. Metjac submits that at all times before the end of the establishment period on 31 October 2008 it had future requirements for water and was entitled to be granted the necessary water management authorisations (being a water allocation and a water licence) subject to any contrary determination by the Minister under s 164N(2). Metjac submits that the fact that Allotment 50 was sold after the relevant date is irrelevant to the determination of the Minister. The position is analogous with that considered in Mayalukalily, where the ERD Court found that the Minister was not permitted to take into account the history of the use of the land outside of the establishment period.[5] 

   [5] Ibid at 125 [47] (Costello J).

2. This Court held in Minister for Sustainability, Environment and Conservation v Zander that a water allocation is intended to occur once and for all.[6] The allocation will apply thereafter unless varied in accordance with the NRM Act. If the actual use or intended future use identified during the establishment period subsequently changed, that could not affect the assessment by the Minister of the future requirements of Metjac as at the relevant date. Metjac contends that in this respect the NRM Act is to be contrasted with statutory provisions which require an applicant to meet criteria at the time of their application and which require the decision maker to continue to be satisfied of those matters at the time the decision was made.[7]

   [6] (2014) 120 SASR 207 at 220-221 [35]-[46] (Gray and Stanley JJ), 226-227 [68]-[74] (Vanstone J).

   [7]    See, eg, Shahi v Minister for Immigration and Citizenship (2011) 246 CLR 163 at 174 (French CJ, Gummow, Hayne and Bell JJ).

3. Metjac also observes that a change in an applicant’s water needs after the relevant date could not affect the rights of a successor in title as an existing user. That principle is established by s 164N(12).

   Grounds 3, 4 and 5

4. Metjac submits that the errors asserted in appeal grounds 3, 4 and 5 arise because of the mistaken conclusion by the ERD Court that no property right in a water licence or allocation accrues before the Minister makes a decision to issue a licence or assess a water allocation. This conclusion is said to be plainly contrary to s 164N(9) which permits an entitlement under s 164N(1)(b) to be transferred to another person with Ministerial approval, provided that any requirement or limitation prescribed by the regulations is met. Furthermore, Metjac submits that s 164N(3) suggests that an “assignment” of a water allocation might occur prior to the determination of the Minister under s 164N(3). Metjac contends that this situation occurred in Mayalukalily.

   Grounds 6, 7, 8, 9 and 10

5. Metjac contends that the central premise underlying each of appeal grounds 6, 7, 8, 9 and 10 is the submission that its application was not limited to its water requirements in respect of Allotment 50, but also extended to the other properties referred to in the application. The application also extended beyond the time that Metjac retained ownership of Allotment 50. The fact that a water licence and a water allocation (or part thereof) are transferrable indicates that the continued ownership into the future (i.e. after the application) of the land in respect of which the application was made is not a necessary condition for the issue of a licence or an allocation. Section 164N(12) specifically contemplates that an existing user might divest itself of the land or an interest in the land.

6. Metjac also submits that the fact that a water licence and a water allocation can be transferred means that continued use of the water in accordance with the use that had existed during the establishment period is not a necessary condition for the issue of a licence or an allocation.

   Ground 11

7. Metjac contends in ground 11 that the ERD Court erred in holding that s 164N(12) applied to a divestment of land prior to its commencement on 16 August 2013. Section 164N(12) was not enacted before Metjac ceased to be the owner of Allotment 50. Section 164R requires that:

   the law to be applied in deciding the matter … including in any subsequent review or appeal proceedings … is the law in force … at the time that the matter falls to be decided, considered or determined (including when that time is the time of any decision on a review or appeal).

   In the present case, Metjac submits that the “matter … to be decided” is its future requirements and “the time that the matter falls to be decided” is the relevant date identified in accordance with the preceding submissions.

   Ground 12

8. Additionally or alternatively to ground 11, Metjac contends in ground 12 that the ERD Court erred in holding that s 164N(12) operated to divest its entitlement to be granted the necessary water management authorisations. Metjac submits that even if s 164N(12) operates retrospectively, it does not operate to extinguish automatically the existing user rights of Metjac. Whether some or all of those rights have been transferred depends upon the terms of the agreement made between Metjac and Mr and Mrs Scott-Smith. Metjac was able to transfer ownership of Allotment 50 independently of the water rights. Metjac seeks to draw support for that submission from a statement published by the Minister in a document entitled A Guide to Water Licences and Water Allocations in the Western Mount Lofty Ranges.[8] 

   [8]    Available for download at Department for Environment and Water, Responding to a proposed water licence package <>

   Metjac submits that the amendment of the Act to include s 164N(12) was intended to make clear that a reference to an “existing user” will extend to a successor in title. That proposition is said to be supported by the Second Reading speech.[9] Section 164N(12) was not intended to divest water rights and if that was the intention plain language would have been required. In the absence of any evidence that Mr and Mrs Scott-Smith had acquired the water rights to which Metjac was entitled under the application, s 164N(12) was not relevant.

   [9]    South Australia, Parliamentary Debates, House of Assembly, 27 October 2010, 1792. 

   Ground 13

9. Ground 13 contends that the ERD Court erred by setting aside the Minister’s decision to allocate water in the absence of a cross‑appeal by the Minister.  Metjac appealed to the ERD Court against the decision to allocate 22,880 kl.  It contended that the allocation was insufficient because the Minister had ignored a significant part of its application.  That ground of appeal did not put before the ERD Court the correctness of the decision by the Minister to issue a water licence and allocation to Metjac, rather than Mrs and Mrs Scott-Smith.  The notice of appeal also did not challenge the determination of the Minister that Metjac had “future requirements” for water.

10. Metjac further submits that the Minister did not have a right under the NRM Act to challenge his own decision to issue a licence or his decision to grant a water allocation. The Minister had stated on 23 March 2016 that his proposal to allocate 22,880 kl was “based on the scale and type of your commitment to water use during the establishment period”. The Minister further stated on 27 April 2016 that “[y]our water licence application has been assessed based on your reasonable requirements during the establishment period (1 July 2001 to 14 October 2004) and with consideration as to the sustainable extraction limits to water management areas across the region”.

11. Metjac submits that the role of the Minister was to form an opinion concerning the share of the consumptive pool that would meet its future requirements.  Upon forming that opinion and having decided to issue a licence and grant an allocation, the Minister was functus officio. [10]  This was the case even though an appeal to the ERD Court is an appeal de novo. 

    [10]   Comptroller-General of Customs v Kawasaki Motors Pty Ltd (1991) 103 ALR 661 at 667 (Beaumont J).

12. The power of the ERD Court under s 204(a) of the NRM Act to “confirm, vary or reverse any decision … appealed against” should not be construed to permit the Minister to be granted an order reversing on the grounds of a non-jurisdictional error a different decision that he had made. That was the case even though the appeal to the ERD Court was de novo. 

13. Although s 33 of the Environment, Resources and Development Court Act 1993 (SA) (the ERD Court Act) confers a general power to cure irregularities, Metjac submits that this power should only be exercised where it is just and equitable to do so. The ERD Court did not consider the exercise of its powers under s 33.

14. Metjac also complains that it was not given notice that the Minister was asserting that the licence and water allocation had been issued in error and should be revoked.  It asserts that the contention that the licence had been issued in error was advanced for the first time in response to its submissions. 

15. Metjac also submits that the Minister should not be permitted to contend that its entitlement as an existing user was not capable of transfer or assignment prior to the issue of the water management authorisation.  Metjac seeks to support that contention by reference to an email message sent to it by a departmental officer on 27 October 2010.  The message enquired with Metjac whether the new owners of Allotment 50 intended to irrigate the property.  If so, the officer suggested that it would be necessary to transfer the water licence application.

    The respondent’s submissions

16. When the application was decided in 2016, the Minister accepted that Metjac was an “existing user” due to its commitment of significant financial resources to the development of an irrigation project on Allotment 50 during the establishment period.  Metjac was allocated a volume of water that reflected its reasonable requirements for water as assessed by the delegate of the Minister as at the date of its application and by reference to the commitments it had made to the development of Allotment 50 during the establishment period.  However, at the date the application was determined, Metjac had no future need to draw water from Pedlar Creek for the project relating to Allotment 50.  The project could not be implemented as Metjac no longer owned the land on which the dam had been build and where the aquifer was to be recharged through the bore.  Furthermore, from 2010 Metjac had no interest in any of the land referred to in the application that had been intended to benefit from the re-charging of the aquifer.

    Whether the ERD Court could consider the validity of the allocation

17. While Metjac appealed against the quantum of water allocated, the Minister’s legal representative pointed out at the compulsory conciliation conference in the ERD Court that the Minister’s delegate had erred. Metjac should not have been granted any allocation as it had no future requirement for water.  That became a preliminary question to be determined by the Court because, if the Minister’s contention was correct, there was no need to consider the quantum allocated.  The ERD Commissioner presiding at the conference referred the preliminary question of Metjac’s entitlement to any water allocation to a judge for determination. 

18. The respondent further contends that it is quite apparent from the transcript of the directions hearings that the parties agreed that the correctness of the decision to allocate water should be decided as a preliminary question.  Metjac was always on notice that the question before the Court was whether the Minister had power to allocate water to Metjac.

19. The respondent also notes that there is no requirement, nor any provision, in the Environment, Resources and Development Court Rules 2003 (SA) (the ERD Court Rules) providing for the Minister to file a document contending that his own decision was erroneous and should be reversed. The ERD Court is required by s 21(1)(a) of the ERD Court Act to act with a minimum of formality. Furthermore, the ERD Court is expressly empowered by s 204(a) of the NRM Act to substitute any decision that ought to have been made in the first instance. It is also clear that the ERD Court stands in the shoes of the Minister and the hearing is to be conducted de novo on the merits.[11] 

    [11]   Michelmore v Minister for Environment and Conservation (2004) 137 LGERA 306 at 316-317 [61] (Perry J).

20. For these reasons, the respondent contends that the ERD Court had jurisdiction to decide the appeal on the basis that the Minister ought not to have issued any water allocation regardless of whether a party had expressly raised that issue.  The respondent acknowledges that exercise of this jurisdiction was subject to compliance with the rules of procedural fairness but this requirement was satisfied.

    Application of s 164N(12)

21. Section 164N(12) had not been enacted when Metjac made its application on 17 April 2006 but was in force when the Minister’s decision was made in 2016. Section 164R(1) required the Minister to apply the law in force when he made his decision. The respondent therefore submits that the Minister was required to apply s 164N(12). The ERD Court was also required by s 164R(1) to apply the law in force at the time of its decision. However, the law had not changed in the period from when the Minister made his decision until the ERD Court reached its conclusion.

22. The respondent submits that the combined effect of s 164N(12) and s 164R(1) is that both the respondent and the ERD Court were required to find that the purchasers of Allotment 50 must be substituted as the existing user upon the sale of the allotment. Whether or not Mr and Mrs Scott-Smith would be eligible to receive a water allocation depended upon their future requirements. If they did not intend to implement the vine irrigation project on Allotment 50 proposed by Metjac, they would not have a future requirement for water and an allocation could not be granted. However, if the Scott-Smiths intended to implement the project, they would be entitled to receive water as the deemed existing user pursuant to s 164N(12). In either situation Metjac would not be entitled to receive an allocation.

23. The respondent submits that there is nothing unfair about such a result.  Metjac had not paid, and was not required to pay in the future, any purchase price relating to its application for water.[12]  Upon Metjac divesting its land, it had no future requirement for any water.  The prescription of the Western Mount Lofty Water Resources had not made Metjac any worse off.

    [12] Section 164N(1)(b).

24. Section 164N(12) is expressed in general terms and can apply to situations where the Minister has not yet determined an application. The effect of s 164N(12) was to terminate the status of Metjac as an existing water user and to substitute Mr and Mrs Scott-Smith. However, Metjac lost nothing because it had no future requirement for water once it disposed of the land.

25. The respondent acknowledges that s 16 of the Acts Interpretation Act 1915 (SA) creates a presumption that a statutory amendment should not be taken to affect an accrued right in the absence of a contrary intention. However, the respondent submits that Metjac had no accrued right prior to the statutory amendment. That is because Metjac’s application had to be refused on the basis that it had no future requirement for water following the disposal of Allotment 50. Alternatively, the respondent submits that if Metjac did have an accrued right, when read as a whole, the NRM Act extinguished that right because of the clear legislative intention to substitute the purchaser in all cases.

    The situation if s 164N(12) does not apply

26. The respondent submits that 164N(12) provides a complete answer to this appeal but also contends that, even if s 164N(12) is disregarded, the outcome is not changed.

27. Section 164N establishes a scheme to prioritise the allocation of scarce water resources. The effect of s 164N(1) is that an existing user may take as much water as they wish until all relevant applications have been granted or refused by the Minister. Thereafter, the taking of water by an existing user is governed by their allocation. A person who is not an existing user as defined in s 164N(10), may also take water without an authorisation until the end of the prescribed period. After that time they cannot take water without a licence.

28. The respondent submits that s 164N clearly permits the continuation of existing agricultural operations and also the implementation of projects to which resources have been devoted in the establishment period to continue to receive water without paying a purchase price.

29. The respondent also submits that there is nothing in s 164N which indicates that an existing user who has no future need for water was intended to receive, without payment, a valuable tradeable allocation of water that could be sold to another person. Both the text and context of s 164N make it clear that if there is no future requirement for water at the time the Minister makes his decision, then no allocation should be granted.

30. Not only had Metjac sold Allotment 50 after it applied for a water allocation as an existing user, and well before the decision of the Minister was made, but it had also disposed of other land in the McLaren Vale area that was mentioned in its application.  Thus, not only did Metjac not have a future requirement for water in respect of the project to be developed on Allotment 50, it also did not need the water to recharge the aquifer.

31. Any “entitlement” under s 164N(1)(b) is subject to the grant of a water management authorisation endorsed with an allocation to be assessed by the Minister. The quantum of that allocation cannot be known until the Minister has made the decisions referred to in s 164N(2) and (3).

32. The respondent submits that the appellant’s arguments imply that an existing user has a right, at the time the resource is prescribed, to transfer a future unknown quantity of water which will only become usable by the transferee once all existing user applications are decided and licences issued. The appellant further implies that the Minister is legally obliged, if so required, to consider approval of the future transfer without knowing the quantum of the transfer. The respondent submits that these readings of s 164N(9) are impossible.

33. The respondent also submits that the appellant is incorrect in its suggestion that the ERD Court erred by deciding that the fate of Metjac’s application for water depended upon its ownership of Allotment 50.  When the Minister made his decision, Metjac did not own Allotment 50 and the project could no longer be carried out.  Furthermore, at that time Metjac no longer owned any of the land mentioned in the application that would benefit from the proposal to set up an offsetting credit by returning water to the aquifer. 

34. While water allocations are granted in respect of the use of water on land, and that allocation may be transferred to others, this does not prove that the Minister must grant an allocation to an existing user who no longer needs water because they have sold the land.

35. The respondent submits that there are compelling textual and contextual considerations supporting its submission that an allocation should not be granted if there is no future requirement for water. 

36. In the respondent’s submission, if the position was not changed by the enactment of s 164N(12), the purchaser of a property from an existing user after the establishment period would not have been entitled to continue drawing water beyond the end of the prescribed period. Even if that interpretation is not correct, the respondent submits that there is no basis to suppose that an existing user was intended to receive a commercial bonus in the form of a tradeable water allocation that they would not have received if the resource had not been prescribed.

1. Even if that interpretation is not correct, the respondent submits that there is no basis to suppose that an existing user was intended to receive a commercial bonus in the form of a tradeable water allocation that they would not have received if the resource had not been prescribed. 

2. Not only had Metjac sold Allotment 50 after it applied for a water allocation as an existing user and well before the decision of the Minister was made, but it had also disposed of other land in the McLaren Vale area that was mentioned in its application.  Thus, not only did Metjac not have a future requirement for water in respect of the project to be developed on Allotment 50, it also did not need the water to recharge the aquifer.

3. The respondent also submits that s 164N(9) puts it beyond doubt that a water allocation endorsed on a licence granted to an existing user is intended to be transferrable, subject to the approval of the Minister and any relevant limitations imposed by the regulations. However, s 164N(9) does not provide that there is an entitlement to an allocation that may be transferred prior to the decision of the Minister to grant a licence.

   Consideration

4. At all relevant times the Minister accepted, and continues to accept, that Metjac was entitled to apply for a water management authorisation as an existing user of water. 

5. The decision to allocate water to Metjac was made by a delegate of the Minister. It has not been suggested that the decision maker had not been validly delegated the relevant powers by the Minister. Thus, at law, the decision must be treated as if it had been made personally by the Minister. The Minister is bound by his delegate’s decision and cannot repudiate the decision simply because he does not regard it as being correct.[13] However, the threshold issue in this appeal is whether the ERD Court had jurisdiction to consider and decide upon the contention advanced by the Minister that the decision to allocate water to Metjac was contrary to the NRM Act and therefore not valid.

   Ground 13 - whether the ERD Court could determine the validity of the water allocation as a preliminary question?

   [13]   The Minister might arguably have considered that the decision was made outside jurisdiction and therefore treated it as a nullity in accordance with the decision of the High Court in Ministerfor Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597. However, that did not occur and the question was only touched upon briefly in the course of oral submissions following a question from the Bench. It is unnecessary to decide the point.

6. Metjac has complained that it was not given notice that the Minister asserted that its licence and water allocation had been issued in error contrary to the NRM Act and should be revoked. It also asserts that the contention that the licence and allocation had been issued in error was advanced for the first time in response to its submissions.

7. The transcripts of the several directions hearings conducted in the ERD Court clearly establish that Metjac’s complaint about lack of notice is not correct.  The Minister’s legal representative stated at a directions hearing on 7 September 2016 that the Minister considered that the allocation had been incorrectly issued to Metjac and should have been granted to the current owner of the relevant land.  Mr Claudio Curtis, a director of Metjac, made brief submissions at that hearing opposing the Minister’s contention that it was not entitled to a water licence and allocation. The Minister’s contention was reiterated at the directions hearings held on 6 October 2016 and 12 January 2017.  While the transcripts of the directions hearings held on 7 September 2016, 6 October 2016 and 12 January 2017 and the respective records of outcome do not expressly refer to the fact that the matter was being set down for preliminary argument about the Minister’s contention that the water allocation was issued in error[14], any uncertainty on the part of the appellant was removed by subsequent events.

   [14]   The point may possibly have been decided at a conciliation conference, of which there are no transcripts.

8. The Crown Solicitor again reiterated the Minister’s position in a letter dated 5 May 2017 sent to the Registrar of the ERD Court and copied to Metjac’s solicitor.  The letter complained that a draft statement of agreed facts prepared by Metjac’s solicitor was not relevant to the preliminary issue set down by the Court for argument.  A further directions hearing was then held on 11 May 2017 (being one week before the hearing of the appeal in the ERD Court).  Counsel for Metjac (not being the person who appeared on the appeal in this Court) indicated that if the Court considered that the validity of the licence should be decided as a preliminary point he was prepared to argue that point the following week and would provide an outline of argument in the meantime.  The appellant’s outline of argument was dated 15 May 2017 and filed on 16 May 2017, i.e. two days prior to the hearing of the appeal.  The outline sought to address the Minister’s contention that the water allocation was issued in error and that Metjac had no entitlement. 

9. In view of the preceding history, I reject the suggestion that Metjac was somehow taken by surprise by the matters dealt with at the appeal hearing on 18 May 2017.  Most importantly, there was no denial of procedural fairness.

10. I turn to the question of whether the ERD Court had jurisdiction and power to determine the validity of the decision to grant a water licence and water allocation to Metjac in the absence of a cross appeal by the Minister. 

11. Once the Court was informed about an alleged error in the administration of the water allocation scheme that significantly benefited Metjac over others competing for access to water, a failure to inquire into that issue might lower public confidence in the fairness of the scheme and the functioning of the ERD Court. From that perspective it would have been highly undesirable for the ERD Court to decide Metjac’s appeal about the quantum of its water allocation without considering whether it was actually entitled to be granted a licence and allocation.

12. While the preceding public policy considerations suggest that it was appropriate for the ERD Court to decide the validity of the allocation as a preliminary point, whether or not the Court possessed the necessary jurisdiction and power to do so depends upon the proper construction of both the NRM Act and the ERD Court Act.

13. The respondent correctly observes that there is no provision in the ERD Court Rules that authorised the Minister to file a document contending that his own decision was wrong and should be set aside.  However, the Minister’s assertion that it was necessary to decide the validity of the allocation as a preliminary point was raised on multiple occasions in directions hearings and in correspondence and was accepted by the Court before the appeal hearing. For the reasons that follow, the fact that the Rules did not provide a specific procedure could not, of itself, prevent the Court from considering the preliminary question.

14. Section 21(1)(a) of the ERD Court Act requires the Court to act with a minimum of formality and s 21(1)(c) directs the Court to act according to equity, good conscience and the substantial merits of the case and without regard to legal technicalities and forms. While Metjac had appealed against the quantum of its water allocation, and the Minister had not cross appealed, the obligation to decide cases in accordance with their substantial merits required the ERD Court to decide the validity of the allocation before considering the quantum once a serious question about that issue was put before the Court.

15. Moreover, the lack of a specific procedural provision in the Rules entitling the Minister to call into question the decision made by his delegate could not prevail over the obligation placed upon the ERD Court to act with a minimum of formality and without regard to legal technicalities and forms. The important consideration was that both parties were well aware of the question that the Court was to consider and had adequate time to prepare. I find that the ERD Court was required by the statutory directions contained in paragraphs (a) and (c) of s 21(1) of the ERD Court Act to decide the validity of the water licence and allocation before considering the quantum.

16. There is a further consideration in support of that conclusion. Section 33(2) of the ERD Court Act empowers the Court to order that an application or appeal be amended if it appears to the Court that the appeal could be resolved in a manner that is fair to all if certain modifications to the appeal were made and it would be conducive to the expeditious administration of justice if those powers were exercised. While the ERD Court did not expressly direct that the proceedings were to be modified, the practical effect of the approach adopted at the directions hearings was to achieve that result. In my view, it was plainly fair to all parties and conducive to the expeditious administration of justice if the validity of the water allocation was decided as a preliminary point.

17. I turn to consider whether the ERD Court had power to determine that the water allocation was not validly issued. Section 204 of the NRM Act empowers the ERD Court, on hearing an appeal, to confirm, vary or reverse any decision and substitute the decision that should have been made in the first instance. The Court may also remit the subject matter of an appeal to any person or body for further consideration. The orders made by the Court were supported by s 204. I would dismiss Ground 13 of the notice of appeal.

    The application of s164N(12)

18. Section 164N(12) commenced operation on 16 August 2013. Thus, the provision was not in force when Metjac lodged its application for a water allocation on 17 April 2006, but was in operation when the Minister made his decision to issue the licence on 27 April 2016.

19. Section 164R(1) provides that if a decision is to be made under Part 3 of Chapter 7 of the NRM Act with respect to, amongst other matters, a water allocation, the law to be applied in deciding such a matter is the law in force at the time of the decision (including the time of any decision on a review or appeal). For the reasons that follow, s 164R(1) required that when the Minister decided Metjac’s application on 27 April 2016 he must do so in accordance with s 164N(12).

20. A statutory direction that a decision must be made in accordance with the law in force at the time of the decision, rather than the earlier law that operated when an application was made, does not give the new law a retrospective operation. The new law is being applied prospectively to the making of the decision.

21. Even if it were the case that the making of the application by Metjac for a water licence and allocation in 2006 had conferred upon it a vested right to have its application decided in accordance with the law and facts as they stood in 2006, any such right could be removed by the enactment of subsequent legislation. However, in order to rebut the statutory presumption created by s 16(1)(c) of the Acts Interpretation Act, it would be necessary for the legislation to manifest a clear intention to remove any vested right that may exist.[15]

    [15]   Attorney-General (Qld) v Australian Industrial Relations Commission (2002) 213 CLR 485.

22. I find that the words used in s 164R(1) of the NRM Act manifest a clear intention to displace the statutory presumption in s 16(1)(c) of the Acts Interpretation Act that accrued rights are not affected by amending legislation.

23. For completeness, I also record my view that the only rights that accrued to Metjac upon the making of its application were those specifically conferred by s 164N and also the right to have its application decided according to law.

24. Section 164R(1) expressly required that when the Minister decided Metjac’s application on 27 April 2016 he must do so in accordance with the law then in force. That law included s 164N(12). Therefore, s 164R(1) required the Minister to apply s 164N(12) when Metjac’s application was determined. On appeal, the ERD Court was also required to apply s 164N(12).

25. Section 164N(12) stipulates that if an existing user divests themselves of land in relation to which their rights as an existing user arose under a preceding subsection of s 164N, the person who acquires the land or their successor will be regarded as the existing user in substitution for the earlier existing user. The substituted existing user will be able to obtain the benefit of any action or commitment made by an earlier existing user. The clear effect of that provision is that, from the time Allotment 50 was sold by the administrator of Metjac, Mr and Mrs Scott-Smith were substituted for Metjac as the existing user. Thus, Mr and Mrs Scott-Smith were entitled to be granted without the payment of any purchase price a water allocation in accordance with s 164N subject to the Minister being satisfied under s 164N(2) that they had a future requirement for water. Metjac lost its entitlement to be granted a water licence and allocation upon the transfer of Allotment 50.

    The position if s 164N(12) did not apply

26. While I consider it very clear that the Minister was required to make his decision in accordance with s 164N(12), and that provision operated in the manner that I have indicated, because the ERD Court considered the position if s 164N(12) did not apply, and that issue has been fully argued on this appeal, I will also consider the matter.

27. The Regulations commenced operation on 20 October 2005. Regulation 4 declared that the specified watercourses were prescribed. That declaration brought s 164N(1) into operation. Subject to any emergency restriction or prohibition imposed under s 132, because Metjac applied for an authorisation within six months of the resource being prescribed it was entitled under s 164N(1)(a) to continue to use water without a water management authorisation until such time as all relevant applications were granted or refused by the Minister.

28. Section 164N(1)(b) also entitled Metjac to be granted, without the payment of any purchase price, the necessary water management authorisations. That entitlement was subject to any determination made by the Minister under s 164N(2) after consulting with Metjac as the existing user and also subject to any determination under s 164N(3).

29. Section 164N(2) empowered the Minister to determine the quantum of the water access entitlement that Metjac was entitled to be granted in accordance with s 164N(1)(b). In determining the share of the consumptive pool[16] that could be allocated to Metjac as an existing user it was necessary for the Minister to form an opinion as to the future requirements of Metjac for water:

    1Based on its reasonable requirements during the establishment period; or

    2Its need for water for the project upon which it had committed significant financial or other resources during the establishment period; or

    3Under both (a) and (b).

    [16]   In substance, the definition of “consumptive pool” in s 3 refers to the water available as a resource within a particular part of a prescribed water resource as determined under a water allocation plan or by the Minister.

30. As the respondent has stressed in its submissions, the reference to “reasonable requirements” in s 164N(2)(a) required the Minister to be satisfied that the use by Metjac of water during the establishment period was reasonable. Thus, if Metjac had been using water in an inefficient or extravagant fashion or in some other way that the Minister did not consider to be reasonable, then it was necessary for the Minister’s conclusion on that question to be taken into account by the Minister when he formed his opinion as to Metjac’s future water requirements.

31. Section 164N(3) empowered the Minister to reduce each water access entitlement proportionately or in accordance with a scheme set out in the regulations if, in the opinion of the Minister, the aggregate of water access entitlements assigned to existing users under subsections (1) and (2) exceeded the capacity of the resource. The Minister was required to form this opinion by reference to the aggregate of entitlements assigned as at the expiration of the prescribed period. The prescribed period commenced on 14 October 2004 and ended on 31 December 2008 in accordance with reg 5(2) of the Regulations.[17]

    [17] See the definition of “prescribed period” in s 164N(10) of the NRM Act.

32. The appellant contends that s 164N(3) tends to suggest that the relevant date was prior to the end of the prescribed period because it envisages that water access entitlements provided to existing users under subsections 164N(1) and (2) will already have been “assigned” and are therefore liable to be reduced at the expiration of the prescribed period. For the reasons that follow, I do not accept that contention.

33. The “prescribed period” is defined in s 164N(10) to mean the period specified in a notice inviting submissions in relation to the proposed regulation declaring the relevant water resource to be a prescribed resource. The notice published in the Gazette on 14 October 2004 stated that the closing date for the making of submissions concerning the proposal to prescribe watercourses in the Western Mount Lofty Ranges area was 25 March 2005. The Regulations subsequently came into effect on 20 October 2005. Regulation 5(2) stated that the prescribed period was to end on 31 December 2008.

34. At first glance there appears to be an incongruity between the date fixed as the closing date for submissions and the end date of the prescribed period. It might be thought that the two dates should be the same. However, that is not the case. The effect of the definition of “prescribed period” in s 164N(10) is that the period will commence on the date the relevant notice is published in the Gazette and end on the date fixed in the Regulations. Given that the submissions invited in the notice will concern the proposed making of a regulation prescribing a watercourse, the closing date for submissions must necessarily be prior to the promulgation of the Regulations. Given that the Regulations will stipulate the end of the prescribed period, the latter date must be on or after the making of the Regulations. Thus, the two dates cannot be identical.

35. The expiration of the prescribed period had three purposes under the statutory scheme established by s 164N. It identified for the purposes of s 164N(3) the date by reference to which the Minister was required to form his opinion as to whether the aggregate of water access entitlements assigned to existing users exceeded the capacity of the resource. For those exiting users who did not apply for an authorisation within six months, the expiration of the prescribed period also identified under s 164N(1)(a) the cessation of their right to take water without an authorisation. It served the same purpose under s 164N(7) in relation to those who were not existing users.

36. I do not consider that the use of the word “assigned” in s 164N(3) indicates that the date when future water requirements must be determined is the end of the prescribed period. In my view, the “assignment” of water entitlements to existing users under subsections (1) and (2) of s 164N is, in substance, merely a transitional assignment which served as part of the factual basis for the Minister to form his opinion under s 164N(3).

37. The fact that an entitlement to be granted a water management authorisation under subsection 164N(1)(b) may be transferred to another person with the approval of the Minister under s 164N(9) is not inconsistent with the preceding conclusion. Subject to any limitation imposed by the Regulations (there is none at present) and subject also to the other requirements of s 164N, such a transfer confers upon the recipient the right hitherto held by the applicant to be granted a water management authorisation by the Minister.

1. I consider the assignment referred to in s 164N(3) to be transitional because until such time as the Minister grants a water licence and entitlement under s 146, an existing user who has applied within the required six months derives their entitlement to water from s 164N(1)(a). That entitlement continues only until all relevant applications have been granted or refused. Thus, the purported “assignment” under s 164N(3) is merely a step in the process of computing the ultimate allocation to an existing user.

2. The fact that the permission granted by s 164N(1)(a) for an existing user who has applied within the required six months to continue to take water comes to an end when all relevant applications have been granted or refused, makes clear that there will be a decision making process whereby the Minister grants or refuses all relevant applications. The only relevant decision making process provided for in the NRM Act is the grant of a licence under s 146.

3. It is only when the Minister has determined under s 164N(3) the capacity of the prescribed resource in light of the need for water of ecosystems that depend upon it, and also considered the aggregate of water access entitlements assigned to existing users in accordance with s 164N(1), that he or she is able to decide the allocation to be attached to licences issued under s 146. As I have said, until such time as the Minister makes those determinations an existing user holds only a transitional right to take water in accordance with s 164N(1)(a).

4. It is at the point when the Minister decides a licence application under s 146 that he is required to form an opinion concerning the future water requirements of an existing user in accordance with s 164N(2). The Minister made that decision on 27 April 2016. At that time Metjac had long since ceased to be the owner of Allotment 50 and had no future requirements of water for use on that allotment. Metjac had also ceased to be the owner of other land referred to in its application. It also had no capacity to use the facilities on Allotment 50 to top up the aquifer so as to make water available for use on the other land that it formerly owned. For these several reasons, the only conclusion open to the Minister was that Metjac had no future need for water and was therefore not entitled to an allocation.

5. The textual considerations referred to by the respondent support the conclusion that an allocation must not be granted if there is no future requirement for water. Section 164N(2) expressly requires the Minister to address the question of what allocation will “meet the future requirements of the existing user” when forming an opinion as to the quantum of the allocation and not at some earlier time. The allocation granted by the Minister operates prospectively.

6. As the respondent has submitted, the natural reading of s 164N is that the Minister is to provide an allocation that meets the future requirements for water that will exist after the application is considered and the licence granted. The required opinion must be based upon the assessment of future requirements as they exist at the time the opinion is formed. Section 164N does not require the Minister to form an opinion as to the share of the consumptive pool that reflects the past requirements of the existing user.

7. The contextual considerations referred to by the respondent also support the conclusion that s 164N is directed towards the making of an allocation to meet the future water needs of an applicant. The NRM Act rations the future use of water as a scarce resource. When viewed in that context, the legislature cannot have intended that allocations of water will be given to those who will not use them in the future. That would be inconsistent with the statutory objects set out in s 7 of the NRM Act, in particular, the achievement of ecologically sustainable development and the sustainable use of water resources.

8. I reject the contention by Metjac in Ground 2 that the date its future water requirements were to be determined by the Minister was 20 October 2005 when the relevant watercourses were prescribed. That declaration simply brought into operation the processes set out in s 164N to which I have already referred. Metjac’s contention disregards the steps after proclamation of a resource that must be taken under s 164N before an application for the allocation of water may be granted or refused by the Minister under s 146. For the same reason, I also reject the several alternative dates proposed by the appellant in Ground 2.

9. For these reasons I consider that s 164N, prior to the enactment of subsection (12), produced the same result as later expressly provided for in subsection (12). Because Metjac no longer had a need for water at the time the Minister made his decision, it was not entitled to an allocation.

   Conclusion

10. I am not persuaded by any of the 13 Grounds of Appeal advanced by Metjac. I would dismiss the appeal.

11. TILMOUTH AJ:  I concur in the judgment of Parker J and the orders proposed therein.  I further agree with the additional reasons written by Kourakis CJ.

12. I add the following brief comments in support of the conclusion that the Environment, Resources and Development Court retained the jurisdiction to entertain the submission that the subject water allocation was issued in error.

13. The remit contained in and s 21(1)(c) of the Environment, Resources and Development Court Act 1993 (SA) directing the Court to ‘act according to equity, good conscience and the substantial merits of the case’, is as Evatt J explained in The King v War Pensions Entitlement Appeal Tribunal; Ex parte Bott (1933) 50 CLR 228, 256, ‘designed to evolve a method of inquiry best calculated to prevent error and elicit truth’. As Parker J demonstrates, the failure to exercise jurisdiction to test the validity of the water allocation, would produce potential injustice to Mr and Mrs Scott-Smith and at the same time, both result in Metjac unfairly receiving ‘a commercial bonus in the form of a tradeable water allocation’ to which it was not entitled because it had no future need for water, and unjustifiably preference it over others competing for access to scarce and valuable water resources. Those outcomes are inconsistent with achieving the ecological and sustainable use of water resources.