Minister for Environment and Conservation v Wylie Group Pty Ltd - [2005] SASC 127

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
MINISTER FOR ENVIRONMENT AND CONSERVATION v WYLIE GROUP PTY LTD
Judgment of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Vanstone and The Honourable Justice White)
6 April 2005
STATUTES - ACTS OF PARLIAMENT - INTERPRETATION
ENERGY AND RESOURCES - WATER RESOURCES
An appeal from the decision of a single Judge in the Environment, Resources and Development Court - the respondent was growing lucerne and undertook a project to grow olives in an area that was declared a 'surface water prescribed area' under the Water Resources Act 1997 (SA) - the Minister granted the respondent a licence with water allocation for the lucerne but not for the olives - in the Environment, Resources and Development Court the respondent successfully challenged the Minister's exclusion of the olive project from the water allocation - on appeal to this Court - interpretation and application of Water Resources Act 1997 (SA) s36(1) and s36(2)(b) in reference to 'project', 'legally committed' and 'committed significant financial or other resources' - appeal allowed.
Water Resources Act 1997 (SA) s 8(2), s 9, s 36; Development Act 1993 (SA) s 44(1), s 55, s 56; Environment Resources and Development Act 1993 (SA) s 30(2); Development Regulations 1993 (SA) Reg 48, referred to.

MINISTER FOR ENVIRONMENT AND CONSERVATION v WYLIE GROUP PTY LTD
[2005] SASC 127
Full Court: Doyle CJ, Vanstone and White JJ

DOYLE CJ: This is an appeal against a decision of the Environment Resources and Development Court (“the ERD Court”), allowing an appeal to that Court against a decision by the Minister for Environment and Conservation (“the Minister”) under the Water Resources Act 1997 (SA) (“the Act”).
The issue is whether the ERD Court was correct in holding that Wylie Group Pty Ltd (“Wylie”) was entitled to have endorsed on a water licence a water taking allocation, under a provision of the Act that protects an “existing user” (as defined by the Act) when a part of the State is declared to be a “surface water prescribed area”, with the result that restrictions on the taking of water come into force.
Introduction
Under s 8(2) of the Act, the Governor may by regulation “declare that part of the State is a surface water prescribed area”.
When that declaration is made, s 9 of the Act immediately imposes restrictions on the taking of water from the prescribed area. The holder of a water licence is authorised to take water, but there is an obvious need to deal with the position of water users in the period of time that is likely to elapse between the making of a declaration and the Minister making a decision on licence applications by existing water users.
S 36 of the Act is intended to protect the position of an “existing user” as defined. Relevantly, s 36 provides as follows:
“36Allocation 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 16, continue to use water without a licence until the end of the prescribed period or, if he or she applies for a licence within six months after the publication in the Gazette of the regulation declaring the resource to be a prescribed resource, until the application is granted or refused;
(b)is, subject to subsection (3), entitled to have endorsed on the licence without the payment of a purchase price a water (taking) allocation determined by the Minister under subsection (2) after consultation with the existing user.
(2)    The water allocation will be the quantity of water that will, in the opinion of the Minister, meet the future requirements of the existing user -
(a)based on his or her reasonable requirements in 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 before the commencement of the prescribed period; or
(c)under both paragraphs (a) and (b).
…
(7)    Subject to a restriction or prohibition under section 16, a person who is not an existing user may take water from the water resource without a licence until the end of the prescribed period.
…
(10) In this section -
‘the 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 before the commencement of the prescribed period;
‘the 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 he or she does not apply for a water licence within six months after publication in the Gazette of the regulation declaring the resource to be a prescribed resource.”
The section provides protection to those who are taking water during the establishment period (a period that will precede a declaration under s 8). The section also protects a person who is not taking water during that period, but, who “needs water” for a project (I will use this term as a convenient shorthand for “development, project or undertaking”) to which the person was “legally committed or in respect of which he or she had, in the opinion of the Minister, committed significant financial or other resources before the commencement of the prescribed period” (a period that comes after the establishment period, that will also begin before the making of the declaration under s 8 and, in this case, which finished almost two years after the making of the declaration).
By s 36(1) an existing user has two entitlements. First, by s 36(1)(a) a right to continue to use water without a licence. Second, by s 36(1)(b), an entitlement, if a licence is granted, to a water taking allocation.
The allocation is determined under s 36(2). If the person was taking water during the establishment period, the allocation is based on the person’s “reasonable requirements” in that period. Whether the person was taking water or not, and provided the person qualifies as an existing user, there is an entitlement to water for a project to which the person was “legally committed”, or in respect of which the person had “committed significant resources” (I use that expression as a convenient shorthand for the second concept expressed by s 36(2)(b)) before the commencement of the prescribed period.
The former allocation is based on requirements in the establishment period, which in the present case ran from 30 June 1995 until 11 May 2000. The other allocation is based on a legal commitment, or a commitment of significant resources made before the prescribed period begins, and that period in the present case began on 11 May 2000. The declaration under s 8(2) of the Act was made on 2 November 2000.
There seems to have been no dispute that Wylie was an existing user by virtue of it taking water (to irrigate lucerne) during the establishment period. Nor was it disputed that Wylie was entitled to a licence and to a water taking allocation based on its requirements to irrigate lucerne being grown on its property.
The issue at both stages was whether a proposal to grow olive trees over much of the relevant land was a project to which Wylie was “legally committed” or in respect of which Wylie had “committed significant resources” before 11 May 2000.
Relevant facts
It is possible to simplify the statement of relevant facts to some extent. There was no real dispute about the facts.
In November 1998 Wylie acquired an option to purchase 807 hectares of land at Makin in the south-east of South Australia. About 80 hectares were being irrigated for lucerne seed. The land was considered suitable for growing olive trees.
Wylie acquired the option over the property at Makin with a view to growing olives on most of it. The success of the plan depended on Wylie being able to take water to irrigate the olives.
Wylie’s initial plan, in late 1998, was to divide the land into about 19 lots, and sell them to investors. Wylie would manage the project for the investors.
Over a period of some months Wylie investigated the feasibility of its proposal, and obtained advice and reports on various aspects of the proposal. It paid for this advice and these reports.
In December 1998 Wylie wrote to the Minister’s Department outlining its proposal, and asked for confirmation that Wylie would be granted an appropriate water allocation.
In late 1998 or early 1999 Wylie learned of certain restrictions on the use of water in the area (the details do not matter), and that the area might be prescribed under s 8.
On 2 March 1999 the Minister granted to Wylie an interim authorisation to irrigate 128 hectares of olives on the land, in addition to the 80 hectares being irrigated for lucerne seed. The authorisation operated until January 2000. The letter from the Minister’s Department indicated that the grant of further authorisations for the taking of water would depend on the circumstances at the time.
On 10 March 1999 the local council approved Wylie’s application under the Development Act 1993 (SA) for the division of the land into 19 allotments and for a change of use of the land to an olive plantation.
On 25 March 1999 Wylie exercised its option to purchase the land. Shortly thereafter certain third parties appealed against the development approval granted to Wylie.
During March of 1999 Wylie became concerned about the fact that it had no assurance that it would be allocated the water required to develop the olive tree plantings. It was concerned that if it did not use the interim allocation it might lose its status as an existing user. It considered that it was not practical to plant out 128 hectares of olive trees, relying on the interim allocation, if it did not have an assurance that it would be granted a water allocation for the balance of the project.
In March 1999, Wylie applied for authorisation to irrigate the 128 hectares for lucerne seed rather than olives, as an interim measure, and in June 1999 the Minister’s Department granted that application.
In about July and August 1999, Wylie obtained permits for wells to be used in connection with irrigating the 128 hectares, had bores drilled and did other work in connection with the bores.
In August 1999, because of concerns about delays caused by the opposition to the division of the land into 19 allotments, Wylie lodged a new application with the local council for development approval under the Development Act. It abandoned its proposal to divide the land into 19 allotments. The new development application sought approval for the development of the land as a single allotment, incorporating up to 634 hectares of olive trees, a buffer zone 500 metres wide on the northern boundary, and a further 86 hectares being used to grow lucerne seed. It remained Wylie’s intention to manage the development for investors, although the basis for their investments had yet to be determined.
By this time Wylie had spent about $71,000 obtaining advice on and in connection with the proposal to divide the land into 19 allotments.
The local council granted the new development approval in September 1999.
In October 1999 Wylie ordered 1,500 olive trees, and paid a deposit of $3,150 in respect of them. Some fencing of the land was carried out at a cost of about $4,000. In February 2000 Wylie paid a contractor about $16,000 for the construction of a central track or roadway on the property to enable access to the lucerne crops and proposed olive trees. Apparently lucerne was also planted and was being irrigated.
The olive trees just referred to were not planted on the land. As Wylie ultimately failed to obtain the desired water allocation, the trees were planted on another property owned by Wylie in September 2003.
In January 2000 Wylie purchased a further 1,000 olive trees for $5,000. These were sold some time later, at a profit.
In April 2000 the Minister’s Department informed Wylie that at least for the time being the water taking allocation previously granted to Wylie would not be increased.
The prescribed period, the commencement of which is the relevant date under s 36(2)(b), began on 11 May 2000.
On 2 November 2000 the Governor declared the relevant area to be a “surface water prescribed area”, exercising the power under s 8 of the Act. The area is the “Tintinara-Coonalpyn Prescribed Wells Area”.
Wylie applied for a water licence on 5 April 2001, doing so within the time required by s 36(1)(a).
Wylie made various attempts to obtain approval for a water taking allocation that would enable it to irrigate an additional 423 hectares of olives (I assume additional to the existing approval for 128 hectares of olives) but the application was unsuccessful. There was a possibility of the application being further considered, but there was clearly a real risk that it would not be successful.
On 21 March 2003 a licence was issued to Wylie. Wylie was granted a water taking allocation. The allocation appears to have been for 80 hectares of lucerne and 128 hectares of olive trees. The Minister declined to make an allocation in respect of the further 500 hectares on which Wylie proposed to grow olive trees.
Wylie appealed to the ERD Court against the refusal of its application on 29 April 2003. The appeal was treated as challenging the refusal of an allocation, under s 36(2)(b), in respect of the proposed planting of olive trees.
In view of the uncertainties surrounding the availability of water, Wylie decided to sell the land, and did so in May 2003 for $1.32m. About $880,000 of this was attributed to the land, and the balance was attributed to buildings, plant and equipment. Wylie had paid about $605,000 to acquire the land. Its total expenditure on the land and the development of the land was about $1.31 m (see the schedule below).
We were informed during the course of submissions that in the event of this Court upholding the decision of the ERD Court to grant Wylie the allocation it sought, that allocation will pass to the purchaser of the land, and the purchaser will make an additional substantial payment to Wylie.
The evidence before the ERD Court indicated that another reason for Wylie disposing of the land was that, for a variety of reasons, and quite apart from the difficulties relating to water, the prospects of interesting investors in the project had diminished.
The Judge was provided with evidence of the expenditure by Wylie on the land, prior to the commencement of the prescribed period on 11 May 2000 (see the schedule below). In broad terms Wylie had spent about $71,000 in connection with the proposal to divide the land into 19 allotments. Wylie spent about $50,000 on labour and vehicle and tractor expenses, which the Judge was prepared to treat as expenditure on the olive tree development. The Judge found that the total “financial commitment” to the project by Wylie was about $737,000, of which about $605,000 was attributable to the purchase of the land, and about $52,000 was attributable mainly to interest on the money used to purchase the land.
The Court identified the project as a 635 hectare olive orchard, with a 500 metre wide olive free buffer strip on the northern boundary, and an access road running roughly down the centre of the land from a road on the southern boundary to the buffer strip, and including an area irrigated for the growing of lucerne seed.
The Court reversed the Minister’s decision. The Court held that Wylie was legally committed to the project. The Court held also that it was a project to which Wylie had made a significant commitment.
The Court directed a grant of a water taking allocation in the quantity sought by Wylie in its licence application.
Issues on appeal
By s 30(2) of the Environment Resources and Development Court Act 1993 (SA) an appeal lies to this Court as of right on a question of law and by leave on a question of fact. Leave not having been granted, the appeal is limited to a question of law unless this Court considers it appropriate to grant leave to appeal on a question of fact.
The Solicitor-General, Mr Kourakis QC, appearing for the Minister on the appeal, did not argue that Wylie’s decision in 2003 to abandon its proposal and to sell the land was an obstacle to its success on the appeal to the ERD Court.
As I have recorded above, the Court identified the project for the purposes of s 36 as a 635 hectare olive orchard, with a 500 metre wide olive free buffer strip on the northern boundary, an access road running roughly down the centre of the land, and including an area irrigated for the growing of lucerne seed. Because that was the project on foot at the relevant time, the Court treated the proposal to divide the land into 19 allotments to be sold to individual investors as not part of the relevant project. Accordingly, the Judge excluded expenses attributable to that feature of the proposal.
Mr Kourakis supported the Judge’s reasoning in that respect. As he pointed out, at the commencement of the prescribed period the proposal was for the development of the land as a single unit.
Mr Hayes QC, counsel for Wylie, did not argue that the Judge had wrongly identified the project. He agreed that it was the proposal for which development approval was granted in September 1999. But, by Notice of Alternative Contention, he argued that costs in relation to irrigation for lucerne seed, and in relation to the division of the allotment into separate titles, were all part of the evolution of the project and should have been included. I will return to that issue.
The outcome of the appeal turns on the meaning to be attributed to subparagraph (b) of the definition of “existing user” and on the meaning to be given to the same expressions found in s 36(2)(b) of the Act. I turn to that issue.
The purpose of s 36 is reasonably clear. It is to provide some protection and preference for existing users when restrictions come into force. Protection is provided to people who are actually using water. It is also provided to those who are sufficiently involved in, or committed to, a proposed use of water to make it appropriate to give them protection and a degree of preference. I will refer to such persons as “new users”. Because water is a finite resource, and demand might well exceed supply, s 36 limits the category of persons entitled to protection and to preference. It also gives the Minister, by s 36(3), power to reduce allocations if the allocations made exceed the capacity of the resource.

Parliament has used two concepts to identify new users. First, the concept of being “legally committed” to a project. Second, the concept of having “committed significant financial or other resources” in respect of a project. Neither concept is a precise one.
If a person claims to be a new user because the person is legally committed to a project, the person will have to identify the project with a reasonable degree of certainty. The person will have to identify the obligation or duty which leads to the conclusion that the person is legally committed, and doing so will naturally help identify the project. But there might be aspects of the project in respect of which the person is not legally committed, but which should be regarded as part of the project.
The concept of a commitment of significant resources in respect of a project is more open ended. It is likely to be more difficult to identify a project by reference to resources committed than by reference to a legal commitment.
The notion of a legal commitment carries with it the idea of an obligation to carry through or to complete a project, because of a legal liability attaching to the failure to do so. Such a liability might arise under a contract to carry out a project, a breach of the contract being likely to result in an award of damages or an order for specific performance. As a matter of ordinary language, an obligation resulting from that kind of liability would be regarded as a legal commitment, even though the payment of damages may mean that the person in question need not carry through the project.
Exposure to prosecution for failure to complete a project might cause one to say that the person was legally committed to the project. That would depend on all the circumstances. One would not say that a person was legally committed to a project merely because a failure to complete the project might or would attract a fine. It would be necessary to consider all the circumstances. One would have to conclude that exposure to the risk of prosecution and a fine was a detriment of sufficient gravity or significance to cause one to conclude that its effect amounted to a legal commitment to complete the project. It would not be necessary to consider how the particular licence applicant would react. It is rather a question of whether, having regard to the likely consequence of a failure to complete the project, one would say as a matter of ordinary language that the applicant was legally committed to the project because of the legal consequences of a failure to complete the project.
In my opinion the idea underlying this aspect of the definition of “existing user” is the concept of some kind of legal commitment or obligation to carry a project through, producing a situation in which a water allocation is needed. Parliament has decided that in that circumstance it is appropriate to grant a water allocation.
Despite the apparent simplicity of the concept of being “legally committed”, each case will have to be considered on its own merits and in the light of all the circumstances. There are no hard and fast rules that can be laid down.
The Judge found that Wylie was legally committed to the project. The first step in her reasoning was that the construction of the track or road in February 2000 amounted to “substantial work” for the purposes of Reg 48 of the Development Regulations 1993 (“the Regulations”). Accordingly, Reg 48 operated to provide that the development consent granted to Wylie would lapse at the expiration of three years from the grant, that is, it would lapse in September 2002, unless the development “has been substantially or fully completed” within that time. The second step in her reasoning was, as best I can tell, a conclusion that if the development was not completed by September 2002, the result would be “a partially built development which is not authorised”: at [24]. Mr Hayes argued that the Judge must have meant that Wylie was legally committed because a failure to complete the project within the three years would expose Wylie to prosecution for an offence under s 44(1) of the Development Act. That provision makes it an offence to “undertake development contrary to this Division”.
I am not satisfied that failure to complete the project would expose Wylie to prosecution under this provision. The development of the land was an approved development, and when the road was made Wylie did not undertake development contrary to the relevant division. Moreover, there was no proof that Wylie could not have reinstated the land to its original state, rather than completing the project.
Mr Hayes called in aid s 55 and s 56 of the Development Act. Section 55 gives the ERD Court power to act if a development approval is granted, but the development is not “substantially completed” within the required time and the approval lapses. The Court has powers that include power to require the removal of a building, and the reinstatement of land to its condition before the commencement of the development. Section 56 gives the Court power, if an approved development has been substantially but not fully completed and the approval lapses, to require the landowner to complete the development. Mr Hayes submitted that having commenced development, and because Wylie could be required either to reinstate the land to its original state, or to complete the development, as a matter of ordinary language Wylie was legally committed to the project.
I do not accept this submission.
First of all, if Wylie had left things as they were when it sold the land, it is not obvious that it would have been ordered to reinstate the land. After all, it had done no more than create a track or road across the land. But even if that order was made, I do not consider that the risk of that order being made is a risk of the kind or of such magnitude that one would say that Wylie was legally committed to the project. The risk of Wylie being ordered to complete the project seems quite remote. As I said earlier, each case has to be approached on its own facts. My conclusion, on the facts of this particular case, is that the existence of the powers conferred by s 55 and s 56 of the Development Act is not in the circumstances of this case a reason to conclude that Wylie was legally committed to the project, if that is what the Judge had in mind.
No other basis for deciding that Wylie was legally committed to the project was identified.
For those reasons I disagree with the Judge’s conclusion that Wylie was legally committed to the project. Her Honour erred in law in her interpretation of s 36(2)(b). If the error is an error of fact, leave to appeal should be granted to so argue, having regard to the significance for future cases of the proper application of the relevant statutory expression.
The Judge also found that as at 11 May 2000 Wylie had “committed significant financial … resources” to the project: at [34].
The Judge had before her an agreed schedule of expenditure. This listed, as I understand it, all expenditure on, and in connection with, the land that Wylie had acquired. There is no dispute that the expenditure had been incurred. The brief description of the purpose of the expenditure was also, apparently, agreed. In the second column appear amounts that the parties agreed were expended in connection with the proposal to grow lucerne seed. In the fourth column are amounts which Wylie contended were expended in connection with the proposal to grow olives. The Minister, while not contesting the fact of expenditure, denied that these amounts could be regarded as part of a financial commitment in respect of the project for which Wylie sought a water taking allocation. The schedule is set out below.

Item
Agreed as financial commitment to lucerne Agreed as financial commitment to olives Disputed Commitment

Freehold Fee
Development Application costs

Irrigation plan (PIRSA consultant)

Legal fees in defending development approval

Purchase price of land

Application for bore permits x 3

Drill bore for 74ha pivot

I Gemmell consultancy fees

Drill bore for 54 ha pivot

Prepare ground for pivots, purchase of seed/fertiliser

Application to vary development approval

Irrigation pivots

Olive trees

Internal fencing

Ariad water meters

1000 olive trees

Service road constructed by D Gericke

Relocation of 80ha pivot

Tatiara Council rates

Insurance

Labour

Interest

Vehicle and Tractor expenses

97.50
12620.00

13370.00
19645.60

333806.00

2120.00
3190.00

12570.00

26426.75
28607.11
27385.99

84.00

1500.00
4588.00
950.00

16966.00

605185.59

75000.00

3150.00

5000.00
16140.00

1795.51
873.00
41882.75
52603.13
6846.50

TOTAL

479838.95

84.00

834600.48

The Judge accepted that most of the expenditure in the fourth column represented a financial commitment to the project that she had identified. She excluded the second and fourth items in the fourth column, and all but $25,000 of the sixth item, on the basis that this was expenditure attributable to the division of the property into 19 allotments, a proposal abandoned by September 1999. She said that the other amounts in that column, amounting to almost $737,000, represented a financial commitment to the project. There appears to be an undisclosed error in Her Honour’s calculations. I agree with Mr Hayes that the correct amount is approximately $763,000. However, nothing turns on the difference.
The Judge rejected an argument advanced by the Minister to the effect that the commitment was not significant because the total cost of the project would be of the order of $6m, and the commitment represented by the expenditure in question was not a significant proportion of that total. I agree that that submission should have been rejected. The significance of a commitment of financial resources does not turn on the proportion that the resources committed bear to the resources required to complete a project. I agree also with the Judge’s rejection of a submission that the fact that not much had been done to advance the project was a reason to conclude that there had not been a commitment of significant financial resources. A project might be of such a kind that significant financial resources would be committed before there would be any indication, on the site, that the project was substantially underway.
The Judge rejected a submission that it was relevant to consider the amount that had been spent by another landowner on a comparable olive orchard, leading to a conclusion that because that landowner had spent substantially more, Wylie’s commitment was not a significant one. I agree that that was an irrelevant enquiry.
The Judge rejected a submission by counsel for the Minister that expenditure represented a financial commitment only if the expenditure was a “sunk cost”, or in other words was irrecoverable. The submission was that the land could be sold or devoted to another use, and so the expenditure did not represent a financial commitment. The Judge said at [29]:
“It seems to me that when, as here, land is purchased specifically for a project, within the time frame for the realistic commercial undertaking of the project, then that land has been ‘committed’ to that project in the relevant sense.”
Having rejected those contentions, Her Honour concluded that Wylie had committed significant financial resources to the project. In this respect I consider that the Judge erred.
Mr Kourakis argued that the purpose of s 36 was to balance hardship to a new user, the interests of other users, and the need to protect a finite resource. I agree that that is another way of describing the purpose of s 36, but to do so does not help much in deciding what the statutory language means.
Mr Kourakis submitted that the section calls for what he described as an “evaluative judgment”. There will be a commitment of significant financial resources only if the commitment is significant in the context of the establishment of irrigated projects in the area in question. This submission seemed to call for a comparison between the commitment made by Wylie to its project, and the commitment made by others to other projects in the area. He said that the Minister had access to the relevant information. He submitted that another relevant consideration is the proportion of the expenditure committed to the total expenditure required. I have already said that I do not accept either of those arguments.
However, I consider that there is force in his submission that, having regard to the context, financial resources should be treated as committed to a project only if they are, as he put it, more or less “irretrievably committed” to the project. He argued that an investment in land in particular was to be excluded, at least when, as here, the land had other profitable uses and also could be resold. The ability to recoup the expenditure on the land by devoting it to another use, or by selling it, meant that the expenditure on the land should not be treated as a commitment of financial resources.
Mr Hayes, on the other hand, submitted that financial resources are committed to a project if they are allocated to a project or used for it. He supported the Judge’s approach. By a Notice of Alternative Contention he argued that all amounts in the schedule were committed to the project. It was a single project for olives and for lucerne. The ability to recoup the expenditure through sale of the property and of plant and equipment was irrelevant.
I have already said that in my opinion the idea of a legal commitment to a project carries with it the notion of an obligation to carry through with a project to the end, because of the legal consequences flowing from a failure to do so. The underlying concept is of a legal consequence the effect of which is to compel the licence applicant to complete the project.
It is significant that the same word, “committed”, is used a second time. This suggests that the same underlying concept is used. That is, that there must be a practical (as distinct from legal) compulsion to carry the project through. A practical compulsion will exist if significant resources have been committed to the project that will be lost or irrecoverable if the project is not completed. That consideration points to the conclusion that financial and other resources are committed in respect of a project if the licence applicant is at risk of losing them, or losing the benefit of them, should the project not proceed. Putting it the other way around, it suggests that for the purposes of s 36 financial and other resources are not committed to a project if, and to the extent that, they can be recouped or retrieved, either by using the relevant land and equipment for another purpose, or by the sale of the land and equipment on the land.
In coming to this conclusion I am not substituting the purpose of the section for its meaning. I have used the apparent purpose of the provision, and the context in which it operates, and the use of “committed” on two occasions, to come to a conclusion that financial and other resources are committed for the purposes of s 36 not simply because they are expended, or have been prospectively allocated, but only if they are likely to be irrecoverable should the relevant project not proceed to fruition.
The meaning that I attribute to “committed” is a meaning that the word is capable of bearing, although it is also capable of bearing the wider meaning for which Mr Hayes contends. But the circumstances in which the provision operates, and the statutory context, suggest that “committed” is to be given the narrower meaning that I have identified. Parliament is likely to have intended to protect those whose choice of action is significantly constrained or circumscribed, not those who are free to proceed with a project or not. That appears to be the idea underlying s 36.
However, I agree with Mr Hayes to this extent. For the purposes of s 36 it is necessary to identify the financial and other resources that have been committed to (expended on) the project. For that purpose the project is not to be narrowly defined. It may well be that Wylie was entitled to have taken into account its expenditure in connection with the proposal to divide the land into 19 allotments. That was a step along the way in the course of the project. I am inclined to think that it is expenditure that can properly be regarded as expenditure on the project. However, for reasons that will appear, a conclusion that the Judge erred in this respect does not alter the fact that the appeal should be allowed. On the other hand, I am inclined to agree that the Judge was right to exclude for relevant purposes the costs incurred in connection with development of the land for growing lucerne seed. The proposal for which a water taking allocation was refused was the proposed olive plantation. That is a distinct aspect of the overall proposed development. As the challenged decision related to that aspect of the development, it seems to me right to focus on that as the project, at least in the circumstances of this particular case. However, as will once again appear in due course, my view is that even if all expenditure on the land should have been taken into account, the Judge’s decision should be reversed.
The approach that I favour provides adequate protection for new water users. To the extent that significant financial and other resources are at risk, they will be protected. If significant financial and other resources are not at risk, they will not be protected. It is unlikely that Parliament intended to give statutory protection and preference to a new user who is not at risk of suffering loss of any significant financial and other resources, if denied access to water for the purposes of the proposed new users.
One can understand that Parliament would have regarded a legal commitment to a project (in the sense of a commitment to complete the project) as a reason to grant protection and preference. Likewise in the case of those who are at risk of losing significant financial and other resources if a project is not completed.
Conversely, it would be an odd result if statutory protection and preference was given to those who were not at risk of suffering any significant loss of financial and other resources in the event of them being denied a water taking allocation. Bearing in mind that water is a limited resource, and that demand might exceed supply, there is no good reason to provide protection for persons in that category. That is why “committed” should not be treated as a synonym for “used for”.
This conclusion is fortified by a point made by Mr Kourakis. A landholding would always (as best I can tell) be a condition or prerequisite for a person to be an existing user for the purposes of s 36. A long term landholder who decides to use land for a particular purpose has committed the resource represented by that land to that purpose, as much as has a person who, like Wiley, acquires land for a particular purpose. It seems to be a consequence of the submission for Wylie that a landowner who decides to use a valuable parcel of land for a particular purpose, and who takes some steps in that direction, is now to be regarded as having committed the financial resource that the land represents to the project in question.
It will remain a question of fact in each case whether a licence applicant is at risk of losing financial or other resources, expended on or committed to a particular project, should that project not proceed. I realise that it may well be difficult to come to a decision. It may be relatively easy to decide whether or not land can be put to an alternative use that will enable all or most of the resources committed to the relevant project to be put to good use. Deciding whether land can be sold on terms that will enable expenditure on the land to be recouped may be more difficult.

The case now before the Court was argued on the basis that the land and plant in question had been sold for approximately $1.32 million, which is slightly more than the total amount set out in the agreed schedule. The schedule includes about $81,000 for interest. While it may be that Wylie has not fully recouped its expenditure on the project, on the material before the Court there is no reason to conclude that Wylie has expended significant financial and other resources that it has not been able to recoup. The appeal was also argued on the basis that it was appropriate to have regard to the fact of the sale and the amount realised on sale, in deciding whether Wylie had committed significant resources. It was not argued that the sale, coming after the commencement of the prescribed period, should be disregarded.
Taking all of that into account, I conclude that the Judge erred in law in deciding that Wylie had “committed significant financial or other resources” in respect of the project. On the correct approach to the statutory expression, Wylie had not committed significant financial or other resources to the project. Having regard to what later occurred, substantially all of its expenditure on the project was recoverable.
An alternative approach, for which Mr Kourakis contended, is that land should not be regarded as a financial resource committed to a project. The submission is that because land will usually be able to be put to an alternative use, or will usually be saleable, it should not be regarded as a committed financial resource, as distinct from a resource used in connection with a project. However, as it seems to me, the meaning to be given to the expression “committed” leads to the conclusion that the same approach is to be taken to land and to improvements to the land and plant and equipment used on the land.
It is unnecessary to grapple with the question of what is a significant commitment. However, because the matter was argued, and because of its importance for future cases, it is appropriate to express some views on the topic. A commitment is not significant simply because it is significant from the point of view of the person making the commitment. That approach would give rise to an entirely subjective enquiry. Nor is a commitment significant only if it is significant compared with the commitment made by other water users undertaking comparable projects. That approach would give rise to an almost impossible enquiry. Nor is there any reason why Parliament should have had that meaning of “significant” in mind. Nor can I see any reason to think that Parliament intended that a commitment be significant only if the commitment so far made is a significant part of the overall commitment that will be required. That approach would give an undue emphasis to the progress made with a particular project, as distinct from the objective significance of the commitment. In my opinion if resources have been committed, the significance of the commitment is to be determined by asking whether the resources are significant in the sense of being substantial or sizeable. That is a relatively common, if colloquial, use of the word “significant”. This requires an objective assessment of the resources involved. I accept that it will involve having regard, to some extent, to the activity involved. By that I mean that the significance of the resources is to be assessed from the stand point of persons who use water, subject to the Act, and bearing in mind, in a very general way, the sort of cost that is involved in the development, project or undertaking that involves the use of water under the Act. Unfortunately, I am unable to be any more precise than that. Deciding whether a commitment is significant will often be a difficult factual question.
Conclusion
For the reasons that I have given, the Judge was wrong in deciding that Wylie was an “existing user” for the purposes of s 36 of the Act, and was wrong in concluding that Wylie was entitled to a water taking allocation endorsed upon its licence. The appeal should be allowed. The decision of the ERD Court of 2 September 2004 should be set aside. For that decision should be substituted an order dismissing the appeal against the Minister’s decision.
VANSTONE J: I agree with the orders proposed by the Chief Justice and with the reasons he has given.
WHITE J: I agree with the orders proposed by the Chief Justice. I also agree with his reasons. There is nothing which I wish to add.