Ord Irrigation Cooperative Ltd v Department of Water - [2018] WASCA 83

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT :   THE COURT OF APPEAL (WA)
CITATION:   ORD IRRIGATION COOPERATIVE LTD -v- DEPARTMENT OF WATER [2018] WASCA 83
CORAM:   BUSS P
MURPHY JA
MITCHELL JA

HEARD:   7 MARCH 2018
DELIVERED          :   28 MAY 2018
FILE NO/S:   CACV 77 of 2017
BETWEEN:   ORD IRRIGATION COOPERATIVE LTD
Appellant
AND
DEPARTMENT OF WATER
Respondent

ON APPEAL FROM:
Jurisdiction              :   STATE ADMINISTRATIVE TRIBUNAL
Coram:   PRESIDENT, JUSTICE J C CURTHOYS
Citation: ORD IRRIGATION COOPERATIVE LTD and DEPARTMENT OF WATER [2017] WASAT 85
File Number             :   DR 340 of 2015

Catchwords:

Administrative law - water licensing - power of Minister to reduce annual water entitlement on the renewal of a licence to take water - onus and standard of proof on review application before State Administrative Tribunal - whether misstatement by Tribunal as to onus and standard of proof constituted a material error of law - whether Tribunal misconstrued administrative policies - whether any misconstruction constituted an error of law

Legislation:

Rights in Water and Irrigation Act 1914 (WA), s 5C, sch 1 cl 15, 22
State Administrative Tribunal Act 2004 (WA), s 27, 29, 32

Result:

Leave to appeal granted
Appeal allowed
Tribunal's decision set aside
Matter sent back for reconsideration by a differently constituted Tribunal

Category: A

Representation:

Counsel:

Appellant	:	Mr B W Walker SC & Ms F Ashworth
Respondent	:	Mr A J Sefton & Ms C A Ide

Solicitors:

Appellant	:	Kingfisher Law
Respondent	:	State Solicitor's Office

Case(s) referred to in decision(s):

Apache Northwest Pty Ltd v Department of Mines and Petroleum [2012] WASCA 167
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Catena v Australian Securities and Investments Commission [2011] FCAFC 32; (2011) 276 ALR 25
Commissioner of Consumer Protection v Carey [2014] WASCA 7
Craig v South Australia (1995) 184 CLR 163
DWN042 v Republic of Naurubi [2017] HCA 56; (2017) 92 ALJR 146
Field Development Solutions Pty Ltd v SC Projects Australia Pty Ltd [2015] WASC 60
Forrest & Forrest Pty Ltd v Minister for Mines and Petroleum [2017] WASCA 153; (2017) 51 WAR 425
Forrest & Forrest Pty Ltd v Minister for Mines and Petroleum [2018] WASCA 32
Jacob v Save Beeliar Wetlands (Inc) [2016] WASCA 126; (2016) 50 WAR 313
Kirk v Industrial Court (NSW) [2010] HCA 1; (2010) 239 CLR 531
Lu v CEO, Department of Child Protection [2013] WASC 385; (2013) 236 A Crim R 147
McDonald v Director-General of Social Security (1984) 1 FCR 354
Medical Board of Australia v Woollard [2017] WASCA 64; (2017) 51 WAR 32
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24
Minister for Immigration v Gray (1994) 50 FCR 189
Ord Irrigation Cooperative Ltd and Department of Water [2017] WASAT 85
Paradis v Settlement Agents Supervisory Board [2007] WASCA 92; (2007) 33 WAR 361
Placer Dome Inc v Commissioner of State Revenue [2017] WASCA 165
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4; (2018) 92 ALJR 248
Stead v State Government Insurance Commission (1986) 161 CLR 141
Sydney Water Corporation v Caruso [2009] NSWCA 391; (2009) 170 LGERA 298
Thirteenth Beach Coast Watch Inc v Environmental Protection Authority [2009] VSC 53; (2009) 29 VR 1
Trade Practices Commission v Tooth (1979) 142 CLR 397
Traut v Faustmann Brothers Pty Ltd (1983) 77 FLR 98
Yao-Jing v Minister for Immigration (1997) 74 FCR 275
Yu Feng Pty Ltd v Maroochy Shire Council [2000] 1 Qd R 306

Table of Contents

Introduction
Ground 1: power to reduce water entitlement on renewal of licence

Provisions of the Act

Licensing requirement
Purpose of licensing requirement
Grant of licences
Renewal of licences
Amendment of licence
Transfer of water entitlements
Review by Tribunal

Tribunal's approach
Appellant's submissions
Respondent's submissions
Disposition of ground 1:

Annual water entitlement as a constituent element of a licence
'Inclusion' of a term, condition or restriction in a licence
Significance of compensation rights
Conclusion as to ground 1

Ground 2: alleged failure to exercise statutory function

Statutory context
The Tribunal's approach

Onus and standard of proof
The Ord River System
Legislation and policy
OIC's water usage
Appropriate methodology for determining water entitlement
Disputes as to crop water use requirements
Sandalwood
Sugarcane
Double cropping
Calculation of annual water requirements
Other matters
Tribunal's conclusion and orders

OIC's submissions generally
Onus and standard of proof

OIC's submissions
Respondent's submissions
Disposition

Misapprehension as to status of the original decision

OIC's submissions
Respondent's submissions
Disposition

Orders made by Tribunal
Receipt of factual material

Factual material to which the particular relates
Course of proceedings in the Tribunal
OIC's submissions
Respondents' submissions
Disposition

Conclusion as to ground 2

Ground 3: alleged error of law in construing policies

Policy 11
Ord Surface Water Allocation Plan
The Tribunal's approach
OIC's submissions
Respondent's submissions

Disposition

Application to amend grounds of appeal

Orders

JUDGMENT OF THE COURT:

Introduction

In 2014, the appellant (OIC) applied to the Minister for a renewal of its licence to take water from the Ord River and Ord River Basin.
OIC had previously been granted a licence which operated from 30 September 2004 to 31 August 2009 (Licence 1). Licence 1 was issued under s 5C of the Rights in Water and Irrigation Act 1914 (WA) (Act). That licence had been renewed for the period 7 April 2010 to 31 March 2014 (Licence 2). Licence 1 and Licence 2 both specified an 'annual water entitlement' of 335 gigalitres (GL). Each licence was expressed to be subject to a number of 'terms, conditions and restrictions', one of which was to the effect that OIC must not take more than the specified annual water entitlement in any calendar year.
The Minister's delegate decided to renew the licence for the period from 14 August 2015 to 13 August 2025 (Licence 3). The annual water entitlement specified in Licence 3 was 225 GL. One of the specified 'terms, conditions and restrictions' of Licence 3 was that OIC must not take more than that annual water entitlement in any calendar year.
OIC, which had objected to the reduction in its annual water entitlement, applied to the State Administrative Tribunal for a review of a decision 'as to any term, condition or restriction included in a licence'.[1] During the proceedings before the Tribunal the respondent conceded that the annual water entitlement should be increased from 225 GL to 246.3 GL. On 19 June 2017, the Tribunal made orders that the review application was dismissed and that the annual water entitlement for Licence 3 be fixed at 246.3 GL.[2]
[1] Section 26GG(1)(c) of the Act.
[2] Ord Irrigation Cooperative Ltd and Department of Water [2017] WASAT 85 (primary decision) [347].
OIC now seeks leave to appeal from the decision of the Tribunal to this court. Such an appeal can only be brought on a question of law.[3]
[3] Section 105(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act); as to which see Paradis v Settlement Agents Supervisory Board [2007] WASCA 92; (2007) 33 WAR 361 [53] - [57].
OIC's grounds of appeal allege that the Tribunal made four errors of law. The questions of law arising from those grounds, and the answers to those questions, are set out below:
(1)Does the Minister have power to reduce the annual water entitlement of a licence under s 5C of the Act when deciding to renew a licence?[4]
Answer:       Yes.
(2)Did the Tribunal fail to understand its statutory function of deciding for itself the correct and preferable decision as to the annual water entitlement under Licence 3?
Answer:       Yes, by incorrectly proceeding on the basis that, since OIC was the applicant, the onus was on OIC to prove its case that the annual water entitlement should be 335GL on the balance of probabilities.
(3)Did the Tribunal deny procedural fairness to OIC, by failing to permit OIC a reasonable opportunity to present its case, when it refused to receive expert evidence on which OIC sought to rely?[5]
Answer:       No.
(4)Did the Tribunal err in law by construing departmental policies, to the effect that only savings made from efficiency gains above expected efficiency targets would be immune from recoupment, as applying to existing licences?[6]
Answer:       No.
[4] Senior counsel for OIC accepted that the question of law raised by ground 1 could be characterised in these terms at appeal ts 43.
[5] Senior counsel for OIC explained that ground 2 was intended to raise both questions 2 and 3 at appeal ts 66 ‑ 68.
[6] Senior counsel for OIC accepted that the question of law raised by ground 3 could be characterised in these terms at appeal ts 45.
The affirmative answer to the second question is given in circumstances where there is a reasonable possibility that the Tribunal's decision was influenced by its misapprehension as to the nature of its statutory function. It follows that the appeal should be allowed, the decision of the Tribunal should be set aside and the matter sent back to a differently constituted Tribunal for reconsideration.
Our reasons for reaching the above conclusions are set out below.

Ground 1: power to reduce water entitlement on renewal of licence

Ground 1 contends that the Tribunal erred in law in failing to find that the respondent, and therefore the Tribunal, did not have power under the Act to change the water entitlement under OIC's licence as part of a decision to renew the same. This raises the first question of law identified at [6] above.

Provisions of the Act

Licensing requirement

Section 5C(1) of the Act relevantly provides:
A person must not:
(a)take water from any watercourse … to which this section applies; or
(b)cause or permit any of those things to be done,
except under and in accordance with:
(c)a right conferred by:
(i)section 9, 10, 20, 21, 22 or 25A; or
(ii)a local by‑law of the kind referred to in section 26L(3)(d); or
(iii)another written law;
or
(d)a licence under this section granted by the Minister in accordance with Schedule 1.
Breach of that provision is an offence.
A 'watercourse' includes a river and any collection of water (including a reservoir) into, through or out of which a river flows.[7] Section 5A of the Act vests the right to the use and flow, and to the control, of the water at any time in any watercourse in the Crown except as allocated under the Act or another written law. There is no dispute that the Ord River and associated dams from which OIC removes water is a watercourse to which s 5C of the Act applies.
[7] Section 3(1) of the Act.
The term 'take' is defined in the following terms:[8]
[8] Section 2(1) of the Act.
take, in relation to water, means to remove water from, or reduce the flow of water in, a watercourse, wetland or underground water source, including by:
(a)pumping or siphoning water; or
(b)stopping, impeding or diverting the flow of water; or
(c)releasing water from a wetland; or
(d)permitting water to flow under natural pressure from a well; or
(e)permitting stock to drink from a watercourse or wetland,
and includes storing water during, or ancillary to, any of those processes or activities.
Section 5C(3) provides that Schedule 1 to the Act has effect to make provision for and in relation to the licences referred to in s 5C(1)(d) of the Act.

Purpose of licensing requirement

The objects of pt III of the Act, in which s 5A and s 5C are located, include:[9]
[9] Section 4(1) of the Act.
(a)to provide for the management of water resources, and in particular:
(i)for their sustainable use and development to meet the needs of current and future users; and
(ii)for the protection of their ecosystems and the environment in which water resources are situated, including by the regulation of activities detrimental to them;
and
(b)to promote the orderly, equitable and efficient use of water resources.
The reference to 'use and development' in s 4(1)(a)(i) above includes use and development for domestic, commercial, recreational, cultural and navigational purposes.[10] The Minister is to seek to ensure that these objects are achieved, and other persons are to do so to the extent that they have relevant functions under pt III of the Act.[11]

Grant of licences

[10] Section 4(2) of the Act.

[11] Section 4(3) of the Act.

Schedule 1 to the Act makes provision for the grant and renewal of licences under s 5C of the Act. Clause 3 identifies the persons who are eligible to hold a licence. There is no dispute that OIC is eligible to hold a licence under s 5C of the Act.
Clause 4 and cl 5 deal with applications for a licence. Clause 4 requires that an application for a licence be made by an eligible person in a form specified for the purpose by the Minister. The application must include, or be accompanied by, any plans or other information that are stated in the form to be required. Clause 5 provides for regulations as to the advertising of, and right to make submissions on, applications for a licence.
Clause 6 applies where the Minister proposes to refuse an application for a licence, or grant a licence subject to the inclusion of a term, condition or restriction that the Minister considers is inconsistent with the terms of the application. Where cl 6 applies, the Minister must notify the applicant of the Minister's proposal and the applicant's right to make written submissions, or be heard by a person designated by the Minister for that purpose, before the Minister makes a decision on the application. The applicant then has 30 days to make written submissions, to which the Minister must have regard before making a final decision.
Under cl 7(1), the grant or refusal of an application for a licence, and the terms, conditions and restrictions to be included in the licence, are at the discretion of the Minister. That discretion is expressly subject to cl 8, which requires the Minister to refuse to grant a licence to a person who the Minister considers would not be willing to comply with the terms, conditions and restrictions that would be included in the licence. In addition, cl 7(3) and cl 7(4) provide for specific grounds for refusing to grant a licence. These are where the applicant has been convicted of an offence against the Act, or where the Minister considers that the applicant lacks the resources to carry out the activities to which the licence relates. Under cl 9, the Minister may only grant a licence to a person who is eligible to hold the licence.
In exercising the discretion conferred by cl 7(1), the Minister is to have regard to all matters that the Minister considers relevant including, under cl 7(2), whether the proposed taking and use of water:
(a)are in the public interest; or
(b)are ecologically sustainable; or
(c)are environmentally acceptable; or
(d)may prejudice other current and future needs for water; or
(e)would, in the opinion of the Minister, have a detrimental effect on another person; or
(f)could be provided for by another source.
Clause 7(5) provides:
Without limiting subclause (1), terms, conditions and restrictions prescribed or imposed for the purposes of that subclause may relate to any matter provided for by the Appendix to this Schedule.
The matters provided for by the Appendix to sch 1 include the taking, use and disposal of water.
The Minister is to notify the applicant and any person who made submissions on the application of the outcome of the application. The notification must include 'the terms, conditions and restrictions to be included in the licence'.[12] The Minister must notify the applicant of the reasons for a decision to refuse the application, or to grant the application subject to the inclusion of a term, condition or restriction that the Minister considers is inconsistent with the terms of the application.[13]
[12] Clause 10(1) of sch 1 to the Act.
[13] Clause 10(2) of sch 1 to the Act.
A licence may be granted or renewed for a fixed period or an indefinite duration, as stated in the licence or the renewal.[14]
[14] Clause 12 of sch 1 to the Act.
Clause 15(1) enables regulations to prescribe terms, conditions and restrictions that are to be taken to be included in licences. No such regulations have been made. Clause 15(2) provides that the Minister may, at the Minister's discretion, include in a licence additional terms, conditions or restrictions, 'but clause 7(2) applies to the exercise of that discretion'. Clause 15(3) provides that, without limiting cl 15(1) or (2), terms, conditions and restrictions prescribed or imposed for the purposes of those subclauses may relate to any matter provided for by the Appendix to sch 1.
Clause 17 enables the Minister to impose a condition requiring the payment of compensation in certain circumstances where the grant or amendment of a licence will, in the Minister's opinion:
result in the quantity of water that any other licensee or person (an affected person) will be able to take being reduced to less than the water entitlement of that person.
For this purpose, 'water entitlement' means the quantity of water that a person is entitled to take under the Act or under a licence.[15]
[15] Clause 17(4) of sch 1 to the Act.
Clause 18 provides for the Minister's powers where a licensee fails to comply with any term, condition or restriction included in a licence. Under cl 18(1), if 'a licensee fails to comply with any term, condition or restriction included in a licence, the Minister may direct the licensee to comply with that term, condition or restriction'. Clause 18(2) requires the direction to be given by notice in writing served on the licensee and to specify the time within which the direction is to be complied with. Under cl 18(3)(a), if a licensee to whom a direction has been given does not comply with the direction within the specified time, or any additional time allowed by the Minister, the licensee commits an offence. In those circumstances the Minister may, under cl 18(3)(b), do all or part of whatever the direction requires to be done, and recover the costs and expenses incurred by the Minister as a debt due by the licensee.

Renewal of licences

Clause 22(1) provides for the form of, and fee payable for, an application for the renewal of a licence that is in force for a fixed period.
Clause 22(2) governs the exercise of the Minister's discretion on an application to renew a licence. It provides:
On an application for renewal of a licence, the licence is to be renewed unless:
(a)the renewal would be inconsistent with [a local by-law or water management plan]; or
(b)the Minister is of the opinion that, if the application for renewal was an application for the grant of a licence, the Minister would exercise the discretion under clause 7(2) to refuse to grant the licence; or
(c)it is a term of the licence that it is not renewable; or
(d)a term, condition or restriction included in the licence has not been complied with; or
(e)in the opinion of the Minister there are sufficient grounds for the exercise of the power to cancel the licence under clause 25.
Clause 22(3) applies the provisions of cl 6 (concerning submissions of an applicant on an application for the grant of a licence) to an application for the renewal of a licence. The provisions of cl 6(2), (3) and (4) are applied in the same way as they apply to an application for a licence where the Minister proposes:
(a)to refuse an application for renewal of a licence; or
(b)to renew a licence subject to the inclusion of a term, restriction or condition that the Minister considers is inconsistent with the terms of the application for renewal.

Clause 22(4) in essence provides that:
(1)Clause 8 (which requires the Minister to refuse to grant a licence to a person who the Minister considers would not be willing to comply with the terms, conditions and restrictions that would be included in the licence); and
(2)Clause 10(2) (which concerns the Minister's notification of a decision adverse to the applicant and reasons for the decision),
apply to an application for renewal in the same way as they apply to an application for a licence.
Under cl 22(5), a licence which would otherwise expire after application has been made for its renewal but before the Minister has made a decision as to that renewal remains in force until that decision is made.

Amendment of licence

Clause 23 and cl 24 of sch 1 to the Act deal with the amendment of licences. Clause 23 is concerned with the 'amendment of the licence' on the application of the licensee. Clause 24(1) provides that, subject to cl 24 and cl 26, the Minister may, by notice in writing given to the licensee:[16]
(a)vary the duration of a licence; or
(b)vary, add to or remove any term, condition or restriction included in the licence; or
(c)include any new term, condition or restriction in the licence.
[16] Clause 24(1) of sch 1 to the Act.
Clause 24(2) provides for the only circumstances in which the Minister may exercise the power to amend a licence. Clause 39 provides that compensation is payable by the Minister in some, but not all, of those circumstances. For example, no compensation is payable where the licensee consents,[17] where the Minister is of the opinion that the exercise of the power is necessary to prevent serious damage to life or property[18] or where:[19]
in the opinion of the Minister, the quantity of water that may be taken under the licence has consistently not been taken.
[17] Clause 24(2)(a) of sch 1 to the Act.
[18] Clause 24(2)(c) of sch 1 to the Act.
[19] Clause 24(2)(d) of sch 1 to the Act.
Another circumstance in which the licence may be amended without compensation being payable is where 'the licence confers authority for the Minister to do so'.[20]
[20] Clause 24(2)(j) of sch 1 to the Act.
Examples of circumstances in which the Minister may amend a licence and compensation is payable include where:[21]
[21] Clause 24(2), cl 39(1)(a), cl 39(1)(c)(i) of sch 1 to the Act.
(b)in the opinion of the Minister, the exercise of the power is necessary or desirable:
(i)due to the detrimental effect of actions authorised by the licence on another person; or
(ii)to protect the water resource to which the licence relates from unacceptable damage; or
(iii)to protect the associated environment from unacceptable damage;
or
…
(e)in the opinion of the Minister, the exercise of the power is necessary or desirable:
(i)in the public interest; or
(ii)because the water resource to which the licence relates is insufficient to meet demand or expected demand; or
(iii)otherwise to more effectively regulate the use of that water resource.
Where the Minister proposes to amend the licence without the licensee's consent, the Minister must notify the licensee of the proposal and the licensee's right to make written submissions, or be heard by a person designated by the Minister for that purpose, before the Minister makes a decision to exercise the power to amend the licence.[22] The licensee may make written submissions within the period specified in the notice,[23] and the Minister must have regard to those submissions before making a final decision.[24]

Transfer of water entitlements

[22] Clause 26 of sch 1 to the Act.

[23] Clause 26(5) of sch 1 to the Act.

[24] Clause 26(6) of sch 1 to the Act.

Clauses 28 - 38 provide for the transfer of water entitlements to the Minister or, with the Minister's approval, to another person who holds, or is eligible to hold, a licence. For these purposes, the term 'water entitlement' is defined in the following terms:[25]
water entitlement, in relation to a licence, means the quantity of water that the licensee is entitled to take under the licence, and includes part of a water entitlement.

Review by Tribunal

[25] Clause 28 and cl 37 of sch 1 to the Act.

Under s 26GG(1) of the Act, an aggrieved applicant for a licence or licensee may apply to the Tribunal for a review of a decision by the Minister under sch 1:
(a)to refuse an application for the grant or renewal of a licence under section 5C (a licence); or
…
(c)as to any term, condition or restriction included in a licence.

Tribunal's approach

The Tribunal noted that cl 22 does not specify that the licence must be renewed on the same terms. The Tribunal considered it to be implicit in cl 22(3)(b) that the Minister may renew a licence subject to the inclusion of a term, restriction or condition that the Minister considers is inconsistent with the terms of the application for renewal. The Tribunal held that the Minister plainly had power to renew the licence on different terms, restrictions or conditions.[26]
[26] Primary decision [338].
The Tribunal said that the proposed renewal of OIC's licence plainly included a term, restriction or condition that was inconsistent with the terms of the application for renewal in that the application for renewal did not seek an extension of the term or a reduction in the water entitlement.[27]
[27] Primary decision [339].
After referring to the terms of cl 22(3)(b) and cl 24(1), the Tribunal concluded:[28]
Obviously, the words used in the two clauses are different. However, the Tribunal does not accept that the there is any difference in substance. If the words used in cl 22(3)(b) were to 'vary' but not to 'add or remove', the OIC's argument might have some substance. However, the term 'inclusion' in cl 22(3)(b) is to be read with the word 'inconsistent' in the same subclause. It is an inconsistency that gives the Minister the power to include different terms, conditions and restrictions.
The Tribunal finds that cl 22(3)(b) permits the Minister to renew a licence and to include a term that is inconsistent with the terms of the application for renewal.
The terms proposed by the renewal are plainly inconsistent with the OIC's application, as is evidenced by the terms of the OIC's application to this Tribunal. The Minister had jurisdiction to include the proposed terms altering the AWE in the grant of Licence (3).

OIC's submissions

[28] Primary decision [342] - [344].

On appeal, OIC's written submissions contend that the power to reduce an annual water entitlement on an application for renewal of a licence must derive from cl 22(3)(b) of sch 1 to the Act.[29] It submits that cl 22(3)(b) only empowers the Minister to 'renew a licence subject to the inclusion of a term, restriction or condition'. OIC contends that cl 22(3)(b) does not confer power to reduce an annual water entitlement for two reasons. First, an annual water entitlement does not constitute a 'term, condition or restriction' of a licence. Secondly, variation of an annual water entitlement does not constitute an 'inclusion' in the licence.[30]
[29] Amended Appellant's Submissions pars 12 - 16.
[30] Amended Appellant's Submissions par 17.
As to the first of these matters, OIC submits that provisions of the Act referring to a 'water entitlement' indicate that the Minister must determine the water entitlement when granting the licence. The water entitlement can only be changed in limited circumstances.[31] OIC submits that it is implicit that water entitlement is a fundamental element of a licence.
[31] Amended Appellant's Submissions par 22.
OIC submits that a licence under s 5C has four constituent elements or integers, each of which has to be present in order for there to be anything answering the description of a licence at all. These elements or integers are: the licensee; the source from which water may be taken; the quantity of water which may be taken and the purpose for which water may be taken.[32] OIC submits that a water entitlement is the licence or permission itself and is not a mere term, condition or restriction of a licence.[33] OIC says that it follows that a change in a water entitlement cannot be effected as an inclusion of a 'term, restriction or condition' under cl 22(3)(b). OIC contends that the words 'term, condition or restriction' never comprehend the quantity of water which may be taken under the licence.[34]
[32] Appeal ts 8 - 9, 13.
[33] Appeal ts 8 - 10, 20, 25.
[34] Appeal ts 32.
As to the second matter, OIC submits that, even if water entitlement could be construed as a term, condition or restriction, cl 22(3)(b) does not confer power to change that entitlement on licence renewal. OIC contends that the Act stipulates specific circumstances in which changes to water entitlements can be made, involving either consent of the licensee and/or an act of the Minister in respect of which there are compensatory consequences. OIC says that it would undermine that regime to construe a general power such as that implied by cl 22(3)(b) (or for that matter by cl 24(1)(b) or cl 24(1)(c)) as permitting a non‑consensual change to water entitlement which avoids a compensatory consequence.[35] OIC says that the power in cl 22(3)(b) allows the Minister to add new conditions, but not to vary conditions which existed in the licence being renewed.[36]
[35] Amended Appellant's Submissions par 28.
[36] Appeal ts 33 - 34.
In that context, OIC submits that the ordinary meaning of 'inclusion' is that the thing being included did not previously exist as part of the body of things to which it is then included. This is confirmed by cl 24(1), which distinguishes between the power to 'vary, add to or remove any term, condition or restriction included in the licence', on the one hand, and to 'include any new term, condition or restriction in the licence', on the other hand.[37] As the water entitlement has always formed part of the licence, any change as part of the renewal of the Licence cannot be characterised as the 'inclusion of a term, condition or restriction'. Rather, it would more properly be characterised as the variation by way of reduction of a pre‑existing term, condition or restriction.[38]

Respondent's submissions

[37] Amended Appellant's Submissions pars 35 - 39.

[38] Amended Appellant's Submissions par 37.

The respondent submits that the quantity of water which may be taken under a licence is a 'term, condition or restriction' of the licence within the ordinary meaning of those words understood in their context and having regard to the purpose of the Act. As to context, the respondent particularly relies on the preconditions in cl 24(2), which relate to the manner and quantity of water that may be taken, as indicating that the specification of a water entitlement is a 'term, condition or restriction' which may be amended. The respondent also submits that this outcome is consistent with the purpose of the Act, and it would be anomalous if the Minister could not reduce a water entitlement because it was not a 'term, condition or restriction'.[39]
[39] Amended Respondent's Submissions pars 9 - 19.
The respondent says that the Act does not provide for all non‑consensual changes to water entitlements to attract a compensatory consequence. The respondent particularly points to the power to amend a licence where, in the Minister's opinion, the quantity of water that may be taken under the licence has consistently not been taken. Further, the respondent submits that the structure of the Act distinguishes between situations where a licensee is disadvantaged by a unilateral amendment, suspension or cancellation of a licence during the term of that licence and where the Minister changes the terms of a licence at the time of renewal, or refuses to renew a licence.[40]
[40] Amended Respondent's Submissions pars 20 - 26.
The respondent submits that the power to include a term, restriction or condition when renewing a licence is not confined to the inclusion of new conditions.[41]
[41] Amended Respondent's Submissions pars 27 - 30.
The respondent also points to an alternative source of power. It submits that the Minister was empowered to reduce OIC's water entitlement under cl 24(2)(d) of the Act, on the basis that the quantity of water that may be taken under OIC's licence has consistently not been taken. The respondent says that it relied on both cl 22(3)(b) and cl 24(2)(d), and complied with the procedural requirements of both provisions. The respondent contends that, in those circumstances, it was open to the Tribunal also to rely on the power in cl 24(2)(d) of sch 1 to the Act.[42]

Disposition of ground 1:

Annual water entitlement as a constituent element of a licence

[42] Amended Respondent's Submissions pars 31 - 32.

For the following reasons, we do not accept OIC's submission that the annual water entitlement is a fundamental element of the licence itself and is not a term, condition or restriction of the licence.
First, there is nothing in the language of s 5C of the Act, or sch 1 to the Act, which expressly requires either a licence or an application for a licence to specify an annual water entitlement. Clause 4 of sch 1 only requires an application for a licence to be in a form specified by the Minister. There is no statutory requirement for the specified form to require an applicant to indicate the quantity of water sought to be taken under the licence. There is no logical imperative to specify in every case the quantity of water which the licence authorises the holder to take. An example where there may be no imperative to specify an annual water entitlement is where a licence authorises water to be taken for the domestic purposes of a house and its associated garden in an area with a large unallocated supply. Another example is where a licence authorises water to be taken for firefighting purposes. These examples are not merely hypothetical, as they involve uses expressly contemplated by the specified form which OIC actually completed.[43]
[43] Being part of Exhibit 2 before the Tribunal (located at tab 55 in the Respondent's Section 24 Bundle of Documents).
Secondly, the idea that the specification of a quantity of water which may be taken is integral to a licence is inconsistent with the activities constituting the 'taking' of water for which a licence may be required. Under the definition of 'take' identified at [12] above, a licence may be required for the removal of water from a watercourse by permitting stock to drink from a watercourse. A licence may also be required where a person reduces the flow of water in a watercourse by stopping, impeding or diverting the flow of water. In either case, there may be no means of accurately measuring the quantity of water which is taken, so that any limitation as to the quantity of water which may be taken under the licence would be practically unenforceable.
Thirdly, no licence is required where a person takes water from a watercourse under and in accordance with a statutory right referred to in s 5C(1)(c) of the Act. Those rights are not conferred in terms which specify the quantity of water which may be taken in exercise of the right. For example, s 9 of the Act gives the owner of riparian land the right to take water from certain watercourses for 'the domestic and ordinary use of himself and of his family and servants' and (subject to an exception) watering cattle or other stock. Section 10 gives an equivalent right for certain watercourses vested in the Crown to which there is access by a public road or reserve at the point at which the water is taken. In a context where the Act does not specify any quantity of water which may be taken in the exercise of rights referred to in s 5C(1)(c), there is no reason to imply a requirement for a licence referred to in s 5C(1)(d) to do so.
Fourthly, on OIC's construction it is not open to the Minister, by term, condition or restriction, to reduce the quantity of water that is sought to be taken in an application for a licence. The Minister can only refuse the application and indicate that an application for a lesser quantity would be likely favourably considered.[44] That outcome, for which OIC contends, is inconsistent with cl 6(1)(b) of sch 1, which contemplates that a licence may be granted subject to the inclusion of a term, condition or restriction that the Minister considers is inconsistent with the terms of the application.
[44] Appeal ts 12 - 13.
Fifthly, the Act requires that, in exercising the discretion to include terms, conditions and restrictions in a licence under cl 7(1) and cl 15(2) of sch 1, the Minister must have regard to the matters specified in cl 7(2) of sch 1. Those matters include whether the proposed taking and use of water are ecologically sustainable, are environmentally acceptable and whether the proposed taking and use may prejudice other current and future needs for water. The Act requires that the Minister, when exercising the discretion to include terms, conditions and restrictions, must have regard to matters which are most obviously affected by the quantity of water which may be taken under a licence. That requirement strongly suggests that the terms, conditions and restrictions may relate to the quantity of water which may be taken under a licence.
Sixthly, OIC's construction creates incongruities in relation to the circumstances in which a licence may be suspended, cancelled, or renewal of the licence refused, by the Minister.
Clause 25(1) empowers the Minister to suspend or cancel a licence. Clause 25(2) identifies the circumstances in which that power may be exercised, which include where the licensee is convicted of an offence against the Act or 'has contravened or failed to comply with any term, condition or restriction included in the licence'. Clause 22(2)(d) provides that the Minister is not required to renew a licence where 'a term, condition or restriction included in the licence has not been complied with'. The Minister is also not required to renew a licence if of the opinion that 'there are sufficient grounds for the exercise of the power to cancel the licence under clause 25'.[45]
[45] Clause 22(2)(e) of sch 1 to the Act.
If the quantity of water which may be taken under a licence cannot be the subject of a term, condition or restriction, then taking more water than was authorised would not ordinarily provide grounds for suspending, cancelling or refusing to renew a licence. Grounds for taking that action would ordinarily only be established if the licensee was convicted of an offence against s 5C(1) of the Act. By contrast, contravention of terms, conditions and restrictions dealing with other matters less central to the objects of the Act would provide grounds for taking that action, whether or not the licensee had been convicted of any offence. Such incongruities do not arise if terms, conditions and restrictions may regulate the quantity of water which may be taken under a licence.
Seventhly, cl 24(1) of sch 1 provides for the Minister to vary, add to or remove any term, condition or restriction included in the licence or include any new term, condition or restriction in the licence. Clause 24(2) provides for the grounds on which the Minister may do so, including that, in the Minister's opinion, the quantity of water that may be taken under the licence has consistently not been taken,[46] or the relevant water resource is insufficient to meet actual or expected demand.[47] Those grounds, which are concerned with the quantity of water that may be taken under the licence, indicate that the authorised quantity may be the subject of a term, condition or restriction that may be varied, added to or removed under cl 24(1) of sch 1 to the Act.
[46] Clause 24(2)(d) of sch 1 to the Act.
[47] Clause 24(2)(e)(ii) of sch 1 to the Act.
Finally, and most significantly, a specification of the quantity of water the licensee is entitled to take under the licence falls within the natural and ordinary meaning of a 'term, condition or restriction' relating to the taking of water. The context of the other provisions of the Act, discussed above, tends to confirm that natural and ordinary meaning, which is not inimical to (indeed, is consistent with) the specified objects of the Act.

'Inclusion' of a term, condition or restriction in a licence

OIC's submission based on the use of the term 'inclusion' in cl 22(3)(b) must also be rejected.
The Act consistently uses the term 'include' or 'inclusion' to refer to the incorporation of a term, condition or restriction in a licence. Clause 6(1)(b) requires the Minister to give notice when the Minister proposes to grant a licence subject to the 'inclusion of a term, condition or restriction' that the Minister considers is inconsistent with the terms of an application for the grant of a licence. Clause 7(1) provides for the 'terms, conditions and restrictions to be included in the licence' to be in the Minister's discretion. Clause 15(1) provides for regulations to prescribe 'terms, conditions and restrictions that are taken to be included' in licences, while cl 15(2) gives the Minister a discretion to 'include in a licence any term, condition or restriction' additional to those referred to in cl 15(1). Clause 18 provides for the Minister's powers where a licensee fails to comply with 'any term, condition or restriction included in a licence'. Clauses 22(2)(d) and cl 25(2)(c)(ii) refer to other actions which may be taken when a licensee contravenes 'any term, condition or restriction included in the licence'. The use of these phrases does not suggest any distinction between terms, conditions and restrictions which are imposed when a licence is first granted and those which are subsequently added to a licence.
It is also significant that the 'renewal' provided for in cl 22 of sch 1 to the Act is not the extension of the term of the renewed licence. Clause 12(1)(a) of sch 1 provides for a licence to be granted or renewed for a fixed period. Clause 22(5) provides for a licence which would otherwise expire after application has been made for its renewal but before the Minister has made a decision as to renewal, to remain in force until that decision has been made. Under these provisions a licence expires at the end of the fixed period or when a decision about renewal is made. It ceases to have effect at that time. In that context, the reference to renewal is clearly to the grant of a new licence for an additional period. As the renewed licence is a new licence, rather than the extension of an existing licence which remains in force for an extended term, there is no occasion for cl 22(3)(b) to refer to the variation of an existing condition. All conditions of the renewed licence are imposed, or 'included' in the new licence, when it is granted.
In any event, there is a further difficulty with OIC's submission based on the use of the word 'inclusion' in cl 22(3)(b) of sch 1 to the Act. The submission assumes that cl 22(3)(b) is the source of the power, and therefore delimits the extent of the power, to impose terms, conditions or restrictions in the licence. That assumption is misplaced. Clause 22(3)(b) identifies when the procedural requirements in cl 6(2) ‑ (4), for the giving of notice and the making and consideration of submissions, apply. It assumes the existence of a power to include terms, conditions and restrictions which are inconsistent with the terms of an application for renewal, but does not itself confer the power to do so. The power is not conferred by cl 22(2), which requires the Minister to renew a licence except in specified circumstances. Clause 22 does not itself confer power to include terms, conditions and restrictions in a licence. Rather, the power for the Minister to include terms, conditions and restrictions in a licence is found in cl 15(2) of sch 1 to the Act. Clause 15(2) provides:
The Minister may, at the Minister's discretion, include in a licence any term, condition or restriction additional to those referred to in subclause (1), but clause 7(2) applies to the exercise of that discretion.
Clause 15 does not confine the power to include terms, conditions and restrictions to the point at which the first licence is granted. Clause 15 would be redundant if it were so confined, as cl 7(1) makes provision at that point. Clause 15(2) empowers the Minister to include terms, conditions and restrictions at the point of renewal as well as at the point of grant of a licence. In either case, the inclusion of the terms, conditions and restrictions is at the Minister's discretion. In exercising the discretion, the Minister is required to have regard to the mandatory relevant considerations identified in cl 7(2)(a) ‑ (h) of sch 1 to the Act. Otherwise, the Minister is to have regard to all matters that the Minister considers relevant.
Following the hearing of the appeal, the court identified cl 15(2) as a possible source of the power to include terms, conditions and restrictions on the renewal of a licence. The court invited the parties to file supplementary written submissions as to whether cl 15(2) was the source of the power and, if so, any significance that conclusion may have for the determination of the grounds of appeal. Written submissions by both parties accepted that the preferable construction was that cl 15(2) was the source of the power to include terms, conditions and restrictions on the renewal of a licence.
It may be that one of the matters which the Minister will consider relevant when exercising the power conferred by cl 15(2) in respect of a renewed licence is the terms, conditions and restrictions to which the former licence was subject. However, the broad terms in which the power is expressed in cl 15(2), read with cl 7(2), is inconsistent with the Minister being bound to include the same conditions in the new licence as were included in the expiring licence. The concept of 'renewal', in an appropriate context, can include renewal on different terms and conditions from those included in an expiring instrument.[48] Clause 22(3)(b) makes it clear that 'renewal' under cl 22 may be on different terms, conditions and restrictions than those contained in an expiring licence. Clause 15 gives the power to include different terms, conditions and restrictions on renewal of an expiring licence.

Significance of compensation rights

[48] See Trade Practices Commission v Tooth (1979) 142 CLR 397, 406 - 407, 419, 429, 434.

We do not accept OIC's submission that provision for compensation for damage resulting from the amendment, suspension or cancellation of a licence in certain circumstances demands a construction contrary to that adopted above. It is one thing to provide compensation where rights conferred by a licence are taken away during the term of the licence, and another to provide compensation in respect of events occurring after the expiry of the licence. In the former case, there is an effect on vested rights; in the latter the effect is only on rights that the applicant for renewal may have hoped to acquire. Even during the term of a licence, not all damage is compensable. For example, the variation of terms, conditions or restrictions on the ground that, in the opinion of the Minister, the quantity of water that may be taken under the licence has consistently not been taken does not give rise to a claim for compensation.[49] There is no valid reason to strain to construe the provisions of the Act in a manner which ensures that the kind of change proposed in this case can only be made in a manner which engages the compensation provisions of cl 39 of sch 1 to the Act.

Conclusion as to ground 1

[49] See cl 24(1)(b), cl 24(2)(d) and cl 39(1) of sch 1 to the Act.

For the above reasons, the Minister does have power to reduce the annual water entitlement of a licence granted under s 5C of the Act when deciding to renew the licence. That power is conferred by cl 15(2) of sch 1 to the Act, which authorises the Minister to include in the renewed licence terms, conditions and restrictions which are different from those included in the expiring licence. The amount of water which may be taken under the licence can be the subject of a term, condition or restriction included in a licence which is granted or renewed under the Act.
It is unnecessary to determine the respondent's alternative submission, summarised at [50] above, that cl 24(2)(d) provided an alternative source of power to reduce the annual water entitlement. Had it been necessary to decide, we would not have held that cl 24(2)(d) provided authority to vary the condition in Licence 3. As Licence 3 was granted at the same time as the reduction in OIC's annual water entitlement, it would not have been open to the Minister to form the opinion that the quantity of water that may be taken under 'the licence' (ie, Licence 3) had consistently not been taken. At the time, there had been no opportunity for OIC to have taken the quantity of water that was permitted to be taken under Licence 3.

Ground 2: alleged failure to exercise statutory function

Ground 2 alleges that the Tribunal erred in law by failing to exercise its statutory function of deciding for itself the correct and preferable decision in relation to the annual water entitlement of OIC's licence. A number of particulars to that ground are set out, which are specifically addressed below. This ground raises the second question of law identified at [6] above.
During the hearing of the appeal, senior counsel for OIC indicated that the ground should also be read as alleging a failure to accord OIC procedural fairness by failing permit OIC a reasonable opportunity to put its case.[50] That contention raises the third question of law identified at [6] above.

Statutory context

[50] Appeal ts 66 - 68.

The Act is an 'enabling Act' for the purposes of the SAT Act, and the Tribunal exercises its review jurisdiction when it deals with a review of decisions made under the Act.[51]
[51] Section 17 of the SAT Act.
In exercising its review jurisdiction the Tribunal is to deal with a matter in accordance with the SAT Act and the enabling Act (which may modify the operation of the SAT Act in relation to the matter).[52]
[52] Section 18 of the SAT Act.
Section 27 of the SAT Act makes the following provision in relation to review proceedings:
(1)The review of a reviewable decision is to be by way of a hearing de novo, and it is not confined to matters that were before the decision‑maker but may involve the consideration of new material whether or not it existed at the time the decision was made.
(2)The purpose of the review is to produce the correct and preferable decision at the time of the decision upon the review.
(3)The reasons for decision provided by the decision‑maker, or any grounds for review set out in the application, do not limit the Tribunal in conducting a proceeding for the review of a decision.
Section 29(1) ‑ s 29(3) and s 29(5) make the following relevant provision in relation to the Tribunal's powers in the exercise of its review jurisdiction:
(1)The Tribunal has, when dealing with a matter in the exercise of its review jurisdiction, functions and discretions corresponding to those exercisable by the decision‑maker in making the reviewable decision.
(2)Subsection (1) does not limit the powers given by this Act or the enabling Act to the Tribunal.
(3)The Tribunal may:
(a)affirm the decision that is being reviewed; or
(b)vary the decision that is being reviewed; or
(c)set aside the decision that is being reviewed and:
(i)substitute its own decision; or
(ii)send the matter back to the decision‑maker for reconsideration in accordance with any directions or recommendations that the Tribunal considers appropriate,
and, in any case, may make any order the Tribunal considers appropriate.
…
(5)The decision‑maker's decision as affirmed or varied by the Tribunal or a decision that the Tribunal substitutes for the decision‑maker's decision:
(a)is to be regarded as, and given effect as, a decision of the decision‑maker; and
(b)unless the enabling Act states otherwise or the Tribunal orders otherwise, is to be regarded as having effect, or having had effect, from the time when the decision reviewed would have, or would have had, effect.
Subject to presently immaterial exceptions, the Tribunal is bound by the rules of natural justice.[53] It is generally not bound by the rules of evidence or any practices or procedures applicable to courts of record.[54] The Tribunal is to act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.[55]
[53] Section 32(1) of the SAT Act.
[54] Section 32(2)(a) of the SAT Act.
[55] Section 32(2)(b) of the SAT Act.
The Tribunal may admit into evidence the contents of any document despite non‑compliance with any time limit or other requirement specified in the rules in relation to that document or service of it.[56] The Tribunal may inform itself on any matter as it sees fit.[57] To the extent that the practice or procedure of the Tribunal is not prescribed by or under the SAT Act or the enabling Act, it is to be as the Tribunal determines.[58]
[56] Section 32(3) of the SAT Act.
[57] Section 32(4) of the SAT Act.
[58] Section 32(5) of the SAT Act.
By s 32(6)(c) of the SAT Act, the Tribunal is to take measures that are reasonably practicable:
to ensure that the parties have the opportunity in the proceeding:
(i)to call or give evidence; and
(ii)to examine, cross‑examine or re‑examine witnesses; and
(iii)to be heard or otherwise have their submissions considered.
Section 32(7)(a) of the SAT Act requires the Tribunal to ensure that all relevant material is disclosed to the Tribunal so as to enable it to determine all of the relevant facts in issue in a proceeding. Section 34(1) of the SAT Act empowers the Tribunal to give directions at any time in a proceeding and do whatever is necessary for the speedy and fair conduct of the proceeding.

The Tribunal's approach

Onus and standard of proof

In referring to preliminary matters, the Tribunal made the following observation, under the heading 'Onus', as to the onus and standard of proof, which OIC seeks to impugn:[59]
Since the OIC is the applicant, the onus is on the OIC to prove its case that the AWE should be 335GL. The standard of proof is on the balance of probabilities.

The Ord River System

[59] Primary decision [24].

The Tribunal made the following findings about the Ord River system.[60]
[60] Primary decision [39] - [45].
The Ord River and its tributaries provide water for irrigated agriculture, including the OIC, mining industry, hydroelectricity generation and the local environment.
Water from the Upper Ord catchment is stored in Lake Argyle. The Water Corporation is licensed by the respondent to store and release the water in Lake Argyle.
Pursuant to an agreement between the Water Corporation and Pacific Hydro Limited, water is released from Lake Argyle through a hydropower station to generate electricity. Water is also occasionally released from Lake Argyle through irrigation valves which bypass the power station.
Water released from Lake Argyle through the power station or irrigation valves flows down the Ord River and into Lake Kununurra.
The water that is stored in Lake Argyle is a shared water resource that can be released to provide benefits for both irrigation and hydroelectric power generation (as well as to meet the downstream environmental, Indigenous, community, recreational and tourism needs). The Ord River Dam is also used for flood protection of the downstream towns.
The Tribunal noted that water is a public resource and that the management of the Ord River system requires a balancing of competing interests. Those interests include other existing irrigators, the developers of new agricultural lands, hydroelectricity generation and local Indigenous, community, recreational and tourism values. In assessing the correct and preferable decision as to OIC's water entitlement, the Tribunal bore in mind that the decision has to be made from the broader perspective of the users and potential users of water from the Ord River system, rather than simply that of OIC.[61]

Legislation and policy

[61] Primary decision [50] - [53].

The Tribunal recognised that primacy must be given to the requirements of the Act, and that policy is applied in the context of the Act. It rejected a submission by OIC, based on the approach taken under the legislation of other States, that OIC should have a fixed entitlement to 335GL of water, on the basis that this provides OIC irrigators with certainty and sufficient flexibility to respond to changing market conditions.[62]
[62] Primary decision [54] - [73].
The Tribunal referred to two policies adopted by the respondent and its predecessor. In general terms those policies, as applied by the respondent, provided for the respondent, when renewing licences, to 'recoup' licensees' water entitlements which have never been used or which have not been used for more than two consecutive years. The reason for recouping unused water entitlements was that maintaining reliability for unused entitlements would mean that the dam storage level that triggers restrictions on electricity generation would be higher than was necessary. In addition, unused water entitlements could be made available to other users. This 'recoupment' was not applied to water savings made from gains in distribution efficiency (the percentage of water diverted from the Ord River offtake that is delivered to the farm gate)[63] above the efficiency target (80% for OIC).[64]

OIC's water usage

[63] Primary decision [47].

[64] Primary decision [74] - [98].

After setting out the licensing and decision-making history,[65] the Tribunal found that the following table accurately sets out OIC's water usage from 2008 to 2014 and established that OIC had consistently underused its annual water entitlement since 2008.[66]
[65] Primary decision [99] - [140].
[66] Primary decision [143] - [144].

Water year	Area irrigated (ha)	Volume diverted (GL)	Percentage of annual entitlement %	Volume used on-farm (GL)	Dry season distribution efficiency %
1/01/2008 to 31/12/2008	14284	171.467	51%	133.296	81
1/01/2009 to 31/12/2009	15423	174.871	52%	149.144	84
1/01/2010 to 31/12/2010	15363	155.788	47%	112.957	77
1/01/2011 to 31/12/2011	15363	153.953	46%	111.218	76
1/01/2012 to 31/12/2012	15061	150.778	45%	108.016	74
1/01/2013 to 31/12/2013	15032	142.211	42%	93.409	76
1/01/2014 to 31/12/2014	15059	146.924	44%	108.498	74

Appropriate methodology for determining water entitlement

The Tribunal noted that the approach taken in calculating the appropriate annual water entitlement for Licence 1 and Licence 2 was to predict the water usage by reference to the predicted types of crops to be grown and the predicted water required for each of those crops. That same methodology was adopted by both parties in presenting their case as to the appropriate annual water entitlement for Licence 3. The Tribunal noted OIC's criticism of the methodology and the difficulties in forecasting. However, it said that difficulties in forecasting did not mean that the crop water requirements method of calculation should be abandoned in the absence of any viable alternative.[67]

Disputes as to crop water use requirements

[67] Primary decision [145] - [153].

The Tribunal noted that the parties largely agreed the crop water use requirements. The exceptions were sandalwood (referred to as silviculture in the various tables prepared by the parties), sugarcane and double cropping.[68]

Sandalwood

[68] Primary decision [154].

The Tribunal concluded that a guide prepared by the Department of Agriculture and Food in about 1983 (DAFWA Guide) was the only evidence to which any weight could be given as to the crop water requirements for sandalwood. The 'in paddock crop irrigation requirement' for sandalwood indicated in the DAFWA Guide was 9.4ML/ha. The Tribunal said that it upheld an objection to the receipt of emails attached to a report of Mr Peter Jacob, an expert called by OIC, which sought to establish a crop water requirement for sandalwood of between 13.5ML/ha and 15.6ML/ha. The Tribunal accepted there may be some force in OIC's submissions as to the age of the DAFWA Guide. However, in the absence of any other evidence of any weight, the Tribunal found that the appropriate allowance for the crop water requirement for sandalwood was 9.4ML/ha.[69]

Sugarcane

[69] Primary decision [156] - [175].

The Tribunal accepted the evidence of Mr Rohan Prince, one of the respondents witnesses, to the effect that a reasonable crop water requirement for sugarcane was 14.3ML/ha. It preferred Mr Prince's evidence over the oral evidence of two witnesses called by OIC, Mr Robert Boshammer and Mr David Menzel, who said that they had grown sugarcane and considered the appropriate water requirement to be higher. This was on the basis that OIC's witnesses' statements were very general with little supporting explanation as to how they reached a particular figure. Mr Prince's evidence was supported by two published reports annexed to his statement and his analysis. The Tribunal found Mr Prince's evidence to be supported by a scientific rigour which was completely lacking in OIC's witnesses' evidence.[70]
[70] Primary decision [176] - [188].
The Tribunal also noted that, in order to grow sugarcane, a mill will need to be established. Sugarcane was discontinued as a result of the closure of the local sugar mill. The Tribunal said that an annual water entitlement of 246.3GL makes a very substantial allowance for sugarcane, which is a high water use crop, when in fact it is unlikely that a sugar mill will be built within the period of Licence 3. In these circumstances the Tribunal regarded a figure of 246.3GL, which is substantially based on sugar cane, as more than generous.[71]

Double cropping

[71] Primary decision [188] - [192].

The Tribunal accepted Mr Prince's conclusion in relation to a reasonable crop water requirement for double cropping (where two annual crops are grown within the year or growing period) of 4.550 ML/ha. Evidence called by OIC indicated a higher requirement based on crops being grown for fodder, which had a higher water requirement. The Tribunal rejected that aspect of OIC's case essentially on the basis that, in the absence of any market, cropping for fodder was speculative.[72]

Calculation of annual water requirements

[72] Primary decision [193] - [208].

The Tribunal therefore accepted the respondent's contentions as to the appropriate crop water requirements, which were set out in exhibit 17 and indicated an annual water requirement of 246.3GL.[73]
[73] Primary decision [209].
The Tribunal did not accept evidence questioning the accuracy of measuring devices employed by OIC to measure water use. The Tribunal said that the obligation is on OIC to report water use. If OIC wished to rely on the inaccuracy of the data then, in the view of the Tribunal, it should have gathered accurate data and led such evidence. The Tribunal noted that, in any event, even if there are deficiencies in the measuring devices, OIC's use has never been close to its annual water entitlement of 335GL.[74]
[74] Primary decision [211] - [217].
The Tribunal rejected OIC's contention that the annual water use entitlement calculation should be based on a distribution efficiency of 78%, rather than 80%. The Tribunal noted that a distribution efficiency target of 80% has been long standing. It considered there to be no basis for using a lower figure of 78%. The Tribunal said that a policy that encourages water efficiency is to be preferred. The Tribunal also noted that higher targets of 85% and 90% are set in new areas, so that OIC has already had the benefit of a lower target to reflect the technology installed by OIC members.[75]
[75] Primary decision [218] - [223].
The Tribunal rejected a contention that a further 20% allowance should be made for dry years, on the ground that there was no evidentiary basis for such a finding.[76]
[76] Primary decision [224] - [233].
Having made the findings referred to above, the Tribunal accepted that the appropriate annual water entitlement for the renewed licence was 246.3GL, calculated in accordance with exhibit 17.[77]

Other matters

[77] Primary decision [234].

Having reached that conclusion, the Tribunal dealt with a number of other matters, to which it is unnecessary to specifically refer.[78]

Tribunal's conclusion and orders

[78] Primary decision [235] - [335].

The Tribunal expressed its conclusion in the following terms:[79]
The Ord Surface Water Allocation Plan is a very detailed policy that takes into account a wider range of relevant factors.
The [annual water entitlement] of 246.3GL granted by the Department for Licence (3) is appropriate and is consistent with the policies in the Allocation Plan. The Tribunal is satisfied that the policies contained in the Allocation Plan are lawful and do not produce an unjust decision in the circumstances of this case.
The correct and preferable decision is that the [annual water entitlement] for Licence (3) is 246.3GL.
[79] Primary decision [345] - [347].
The Tribunal made the following orders:
1.The application is dismissed.
2.The Annual Water Entitlement for SWL156287(3) for the Ord River Cooperative Ltd is fixed at 246.3 gigalitres.

OIC's submissions generally

The particulars to ground 2 and OIC's submissions contend that the Tribunal failed in a number of particularised respects to discharge its statutory function of reaching for itself the correct and preferable decision as to the appropriate annual water entitlement to be specified in Licence 3.

Onus and standard of proof

OIC's submissions

OIC contends that the Tribunal erred by identifying the onus and standard of proof in the manner referred to at [82] above.[80]
[80] Amended Appellant's Submissions par 48.
OIC submits that there is no onus of proof in review proceedings in the Tribunal. Rather, OIC submits, the Tribunal must stand in the shoes of the decision-maker and exercise (or not) the power the subject of review afresh and determine the correct and preferable decision. OIC submits that the concept of onus of proof is not appropriate to administrative inquiries and decision-making.[81]
[81] Amended Appellant's Submissions pars 47, 49, citing McDonald v Director-General of Social Security (1984) 1 FCR 354, 356 ‑ 358, 366, Yao-Jing v Minister for Immigration (1997) 74 FCR 275, 288 and Catena v Australian Securities and Investments Commission [2011] FCAFC 32; (2011) 276 ALR 25 [33].
Alternatively, OIC submits that if there was to be an applicable onus in the proceedings of the Tribunal, the respondent bore the onus of proving that the power to include a term, condition or restriction inconsistent with the application for renewal should be exercised.[82]
[82] Amended Appellant's Submissions par 51.
OIC submits that the Tribunal's error as to onus is not answered by the references to 'correct and preferable' scattered throughout the primary decision. OIC submits that the Tribunal erroneously proceeded on the basis that OIC was required to demonstrate error by showing that the original decision was not the correct and preferable one.[83]
[83] Amended Appellant's Submissions par 56.
Quite apart from the erroneous allocation of onus, OIC submits that the Tribunal erred by applying the civil standard of proof to the ultimate conclusion which the Tribunal was to draw as to the correct and preferable decision, as opposed to applying it to the finding of facts which were potentially relevant to the exercise of that discretion.[84]

Respondent's submissions

[84] Amended Appellant's Submissions pars 57 - 63.

The respondent accepts that neither party before the Tribunal had a legal onus of proof.[85] The respondent ultimately accepted that the Tribunal's reference to onus of proof should be understood as referring to the legal (rather than merely a practical) onus.[86] The respondent also ultimately accepted that it could not be said that OIC bore a practical onus of adducing material which established that its annual water entitlement should be 335GL. The respondent correctly accepted that, in a hypothetical (albeit unrealistic) case where the only material before the Tribunal was the expiring licence and the application for renewal, the Tribunal could properly conclude that there was no reason to change the terms of the expiring licence. The respondent accepted that the manner in which the Tribunal may deal with the review application in the absence of evidence illustrates the point that OIC did not bear any 'practical onus'.[87]
[85] Amended Respondent's Submissions par 35.
[86] Amended Respondent's Submissions par 39.
[87] Appeal ts 79 - 84.
However, the respondent submits that the Tribunal's incorrect reference to onus of proof was not a material error because no occasion arose for the onus of proof to be applied. The respondent contends that the Tribunal considered the evidence adduced and positions adopted by the parties and made factual findings and its ultimate decision without resort to onus.[88] The respondent says that, in an appeal on a question of law, the error of law must affect the Tribunal's decision and an immaterial error will not suffice.[89] The respondent accepts that the error will be material unless this court is satisfied that there was no reasonable possibility that the error influenced the result in the Tribunal.[90]

Disposition

[88] Amended Respondent's Submissions par 41.

[89] Amended Respondent's Submissions par 40, citing Lu v CEO, Department of Child Protection [2013] WASC 385; (2013) 236 A Crim R 147 [20]; see also Thirteenth Beach Coast Watch Inc v Environmental Protection Authority [2009] VSC 53; (2009) 29 VR 1 [55].

[90] Appeal ts 80 - 81, 87 - 88.

In a review proceeding before the Tribunal, it is generally undesirable to refer even to a 'practical onus' of proof. That is because reference to an 'onus', even if what is being referred to is only a practical onus, tends to distract from the critical terms of the legislation which define and delimit the Tribunal's powers and the circumstances in which those powers may be exercised. For example, a licensing statute will commonly provide that the decision-making authority may only grant a licence if satisfied that the applicant is a fit and proper person to hold a licence. In such a case the Tribunal, standing in the shoes of the decision-maker, will only be empowered to grant a licence if the material before the Tribunal satisfies the Tribunal that the applicant is indeed a fit and proper person. In such a case, there may strictly be no legal error in referring to an applicant having at least a practical onus of placing, or pointing to, material before the Tribunal which shows that he or she is a fit and proper person. As this example illustrates, the concept of a de novo hearing is not necessarily incompatible with one party bearing an onus.[91] However, even where an onus arises from the nature of the power being exercised by the Tribunal, it is better to employ the statutory language of the provision which defines the conditions for the valid exercise of the power which the Tribunal exercises.
[91] See Traut v Faustmann Brothers Pty Ltd (1983) 77 FLR 98, 104 - 105, 110 ‑ 111.
The observations we have made in relation to 'onus' and 'practical onus' are, of course, subject to the provisions of the particular enabling Act.[92]
[92] See, for example, in the context of the Taxation Administration Act 2003 (WA), Placer Dome Inc v Commissioner of State Revenue [2017] WASCA 165 [206] - [214].
In the present case, the Tribunal's conclusion as to onus was not expressed by reference to the nature, limits and extent of the power to include terms, conditions and restrictions in a renewed licence.
As noted above, the source of that power is cl 15 of sch 1 to the Act. That power arises in circumstances where the holder of an expiring licence makes an application for renewal of the licence under cl 22(1) of sch 1 to the Act. The occasion for the exercise of the power will only arise where none of the circumstances referred to in cl 22(2)(a) ‑ (e) prevail, so that 'the licence is to be renewed'. The Act identifies the matters referred to in cl 7(2) as mandatory relevant considerations to which the Minister, or the Tribunal standing in the Minister's shoes, must have regard when the occasion for the exercise of the power arises.
However, while the Act identifies those mandatory relevant considerations, it does not condition the exercise of the power by a requirement that a particular circumstance objectively exists, or by the existence of the Minister's opinion on or satisfaction of any matter. Rather, the determination of what terms, conditions and restrictions are to be included in the licence, in addition to those prescribed by regulations,[93] is 'at the Minister's discretion'.[94] The terms, conditions and restrictions included in the expiring licence may be a consideration which the Minister considers relevant and takes into account. However, the terms of the Act do not identify any starting point from which the Minister must be persuaded to depart.
[93] Clause 15(1) of sch 1 to the Act.
[94] Clause 15(2) of sch 1 to the Act.
In the present case, the Minister's delegate decided, in the exercise of that power, to include in Licence 3 a term, condition or restriction that OIC must not, in any water year, take more water than the annual water entitlement of 225 GL specified in the licence.
Section 26GG(1)(c) of the Act allowed OIC to apply to the Tribunal for a review of the decision to include that term, condition or restriction in Licence 3. Section 27(1) of the SAT Act required that the Tribunal's review of that decision be by way of a hearing de novo. In the context of the SAT Act, the phrase 'hearing de novo' bears its ordinary meaning recently described in Forrest & Forrest Pty Ltd v Minister for Mines and Petroleum:[95]
An appeal by way of hearing de novo involves a fresh hearing, and the appellate body may overturn the decision appealed from regardless of error. It is an exercise of original, not appellate, jurisdiction. Where the statutory provision indicates that the appellate body is required to 'make such order as it thinks fit', this is an indication that the appellate body's powers are not constrained by the need to identify error on the part of the decision-maker, but, rather, it is obliged to give its own decision on the evidence before it.
[95] Forrest & Forrest Pty Ltd v Minister for Mines and Petroleum [2018] WASCA 32 [61].
Under s 27(1) of the SAT Act the Tribunal is not confined to matters that were before the Minister. The Tribunal's review may involve the consideration of new material (whether or not it existed at the time the decision was made). Under s 27(2) of the SAT Act, the purpose of the review is to 'produce the correct and preferable decision at the time of the decision upon the review'. Under s 27(3), the Tribunal's review is not limited by the reasons for decision provided by the Minister. These provisions make it plain that the applicant for review does not bear any legal or practical onus of identifying error in the Minister's decision, or showing that there should be some departure from that decision.
Under s 29(1) of the SAT Act, in exercising its review jurisdiction the Tribunal had the functions and discretions corresponding to those exercisable by the Minister in making the reviewable decision. In that manner, the limits on the Minister's power to include terms, conditions and restrictions governed the exercise of the Tribunal's review jurisdiction. Although s 29(1) does not limit the powers given by the SAT Act or the Act to the Tribunal,[96] the powers of the Tribunal to affirm, vary or set aside the Minister's decision, conferred by s 29(3) of the SAT Act, must be exercised by reference to the limits on the Minister's power to include terms, conditions or restrictions in the licence. The Minister's decision as affirmed, varied or substituted by the Tribunal is to be regarded as, and given effect as, a decision of the Minister under the Act.[97] These provisions of the SAT Act direct attention back to the limits of the Minister's power to include terms, conditions and restrictions under the Act. The Minister's power is not expressed in terms of an onus and does not provide for any starting point from which the Minister or Tribunal must be persuaded to depart.
[96] See s 29(2) of the SAT Act.
[97] Section 29(5)(a) of the SAT Act.
In this statutory context, the function of the Tribunal was to consider the material before it and form its own view as to any appropriate annual water entitlement to be included in Licence 3. It was to do so having regard to the considerations identified in cl 7(2) of sch 1 to the Act. Neither OIC nor the respondent bore any legal or practical onus in relation to that matter.
The Tribunal's statement that the onus was on OIC to prove its case that the annual water entitlement should be 335GL on the balance of probabilities was clearly in error. It implied that the annual water entitlement would be that specified by the Minister unless the contrary was proven by OIC. That passage of the Tribunal's reasons revealed a misunderstanding of the nature of the function which the Act and SAT Act required the Tribunal to undertake.
In Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd,[98] Gageler J observed:
The common law presumption of statutory interpretation that has come to be adopted in Australia can therefore be stated as being that a statutory conferral of decision-making authority on a person or body other than a court is conditioned by an implied statutory requirement that the person or body can validly exercise that authority only on a correct understanding of the law applicable to the decision to be made. The presumption is similar in concept and in operation to the common law presumptions of statutory interpretation which support statutory implication of conditions of reasonableness and procedural fairness. (citations omitted)
[98] Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4; (2018) 92 ALJR 248 [75].
We agree with that observation, which reflects that adopted by this court in Forrest & Forrest Pty Ltd v Minister for Mines and Petroleum.[99] There is nothing in the Act or the SAT Act to rebut that presumption of statutory interpretation. The Tribunal's misunderstanding as to onus involved a failure to exercise the jurisdiction entrusted to it by Parliament. Such an error of law is jurisdictional.[100]
[99] Forrest & Forrest Pty Ltd v Minister for Mines and Petroleum [2017] WASCA 153; (2017) 51 WAR 425 [91].
[100] Kirk v Industrial Court (NSW) [2010] HCA 1; (2010) 239 CLR 531 [72]; Craig v South Australia (1995) 184 CLR 163, 177 ‑ 178.
OIC was entitled to a review of the Minister's decision in which the Tribunal conducted a de novo hearing without OIC bearing any onus to show that a departure of the decision under review was justified. The Tribunal's misunderstanding of the nature of the function it was performing, reflected in its statement about onus identified at [82] above, deprived OIC of its right to such a review.
Section 105 of the SAT Act confers jurisdiction on this court to examine for legal error what has been done in the Tribunal. Despite the description of the proceedings in this court as an 'appeal', s 105 confers original jurisdiction not appellate jurisdiction. The proceedings are in the nature of judicial review. They are not an 'appeal' by way of rehearing. Where a statute confers what is described as an 'appeal' from an administrative decision, and the 'appellate' court's jurisdiction is enlivened, it is necessary to identify the nature of the jurisdiction and the duties and powers of the 'appellate' court.[101]
[101] See Commissioner of Consumer Protection v Carey [2014] WASCA 7 [72], [163]; Medical Board of Australia v Woollard [2017] WASCA 64; (2017) 51 WAR 32 [152] - [154].
We accept that only an error of law that affects the Tribunal's decision can be the subject of an appeal on a question of law, and that an immaterial error of law will not suffice.[102] It will seldom be appropriate, on an appeal on a question of law, to affirm the decision of the Tribunal where the error involves such a fundamental misunderstanding of its function because the court is of the view that the same result would have followed if the Tribunal's decision had not been infected by that jurisdictional error. It could only be appropriate to do so where the same result is inevitable or there is no reasonable possibility that the error could have had any impact on the reasoning process actually adopted by the Tribunal.[103]
[102] Lu v CEO, Department of Child Protection [20].
[103] See, by analogy, Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, 353 and Stead v State Government Insurance Commission (1986) 161 CLR 141, 145 - 146. As to the latter case cf DWN042 v Republic of Naurubi [2017] HCA 56; (2017) 92 ALJR 146 [21].

OIC submits that, in these circumstances, the Tribunal's refusal to have regard to Attachment PJ3 involved a failure to discharge its statutory function to make the correct and preferable decision. OIC says that this could only be done by taking into account all relevant evidence presented by the parties as to the crop water requirements for sandalwood. OIC also contends that the Tribunal denied it procedural fairness by failing to permit OIC a reasonable opportunity to present its case.[140]

Respondents' submissions

[140] Amended Appellant's Submissions par 81.

The respondent submits that the basis on which the Tribunal refused to have regard to Attachment PJ3 or permit Mr Barnes to be called was the imperative to accord procedural fairness to the respondent. The basis was not the hearsay nature of the evidence. The purpose of the Tribunal's programming orders was to ensure that the parties had advance notice of the expert evidence and a proper opportunity to meet and respond to the expert evidence.[141] Until the entirety of Mr Barnes' evidence (including his qualifications and the basis for his opinions) was apparent, the respondent could not know whether a responsive statement or conferral would be required.[142] Admission of oral evidence of Mr Barnes or Attachment PJ3 in the manner proposed by OIC would have been procedurally unfair to the respondent. The Tribunal was entitled to rely on the evidence adduced by the respondent as to crop water requirements for sandalwood. The respondent says that the Tribunal did not act contrary to the requirements of the SAT Act or natural justice in refusing to admit Attachment PJ3.[143]

Disposition

[141] Amended Respondent's Submissions par 48.

[142] Amended Respondent's Submissions par 55.

[143] Amended Respondent's Submissions par 60.

The respondent's submissions in relation to this particular should be accepted. The Tribunal was entitled to, and did, make programming directions for the purpose of ensuring expert evidence was adduced in a manner which was procedurally fair to both parties. Those directions were made for the 'speedy and fair conduct of the proceeding'.[144] OIC's failure to comply with those directions meant that the respondent did not have any prior opportunity to assess the evidence (by a person whose qualifications were unknown) or consider whether to obtain and adduce responsive evidence. The respondent could only have been given a reasonable opportunity to respond to the proposed evidence by an adjournment of the proceedings. In the circumstances, it was open to the Tribunal to exercise its discretion to disallow the proposed evidence, and no express or inferred error in the exercise of that discretion is established.
[144] Section 34(1) of the SAT Act.
Nor has it been established that there was any failure by the Tribunal to accord procedural fairness to OIC in refusing to admit the proposed evidence. OIC had a reasonable opportunity to adduce expert evidence in the review proceedings in accordance with the Tribunal's directions. Its failure to take advantage of that opportunity did not make the Tribunal's review procedurally unfair.
We note that there is no complaint about the fact that the Tribunal's decision to refuse to admit the email chain was not made clear, and was not appreciated by counsel for the respondent, until its reasons were published.[145]
[145] Appeal ts 68 - 69.
In our view there is nothing to be gained in comparing the Tribunal's decision to refuse to receive Mr Barnes' emails with the receipt over objection of the DAFWA Guide.[146] The DAFWA Guide was a published document produced by a government department for purposes other than the review proceeding. The Tribunal was entitled to treat it differently from a chain of emails from a person whose qualifications were unknown that were sent for the purposes of the proceedings.
[146] See Tribunal ts (23/11/16) 397.
In our view, this particular to ground 2 has not been established.

Conclusion as to ground 2

In our view, ground 2 is established so far as it contends that the Tribunal misunderstood the nature of its statutory function by erroneously imposing an onus and standard of proof on OIC. The particulars to ground 2 have not otherwise been established.

Ground 3: alleged error of law in construing policies

Ground 3 contends that the Tribunal erred in law by construing relevant policies as permitting a 'recoupment' of 'unused water entitlement' that was a result of OIC's investment in water use efficiency. The relevant polices which it is alleged the Tribunal misconstrued are Statewide Policy No 11: Management of Unused Licensed Water Entitlements, published by the respondent's predecessor in November 2003 (Policy 11) and the Ord Surface Water Allocation Plan, published by the respondent in September 2013 (Plan).
Ground 3 seeks to raise the fourth question of law identified at [6] above. At issue is whether the Tribunal's understanding of the policies was incorrect and, if so, whether the Tribunal can be said to have erred in law in misconstruing the policies.

Policy 11

The introduction to Policy 11 indicates that the intent of the policy includes reducing unused licensed water entitlements to a minimum, and ensuring that licensed water entitlements are fully utilised for the benefit of the licence holder, the community and the State.[147] The policy is expressed to apply Statewide to all licences issued under the Act.[148]
[147] Section 1.2 (Green AB 6).
[148] Section 1.4 (Green AB 7).
Generally, unused water entitlement is that part or all of the licensed annual water entitlement that has not been taken (used) for more than three consecutive years. Generally, an entitlement is considered unused where the water is available to be taken and the licensee chooses not to do so.[149] Policy 11 indicates that the management of unused licensed water entitlements will be in accordance with cl 24(2)(d) of sch 1 to the Act.[150]
[149] Section 2.1 (Green AB 8).
[150] Section 3 (Green AB 9).
Policy 11 contemplates that the respondent's predecessor will assess a licensee's continuing requirement for the full water entitlement at various stages, including during an application to renew the licence. A differential approach will be adopted as demand for accessing the water resources increases. In areas where greater than 30% but less than 70% of the sustainable limit has been allocated, the respondent's predecessor will not actively pursue the recovery of unused entitlements.[151] It appears from the Plan (discussed below) that the allocation in the Main Ord River sub-area falls within this range.
[151] Section 4.1, 4.2, 4.4 (Green AB 10 - 11).
In a section dealing with water conservation, Policy 11 states:[152]
Where a licensee has implemented efficiency methods and reduced the water requirements, the licensee will have the opportunity to sell or lease any water saved that is excess to requirements.
The Commission will not recoup unused water entitlements that are a result of investment in water use efficiency. However, it is expected that the water saved will be utilised, either through trading or expansion of the existing operation.

Ord Surface Water Allocation Plan

[152] Section 4.11 (Green AB 15 - 16).

The summary section of the Plan identifies its purpose in the following terms:[153]
This water allocation plan sets out how we will allocate and license surface water from existing infrastructure in the Ord River area to manage the competing demands of irrigation, hydroelectricity generation and the lower Ord environment, while also recognising the river's social and cultural values. The plan will guide water licensing in the transition to full allocation from the existing infrastructure.
[153] Summary, page ix (Green AB 30).
The summary identifies the allocation limit of 750GL/yr at a very high reliability from the Main Ord sub-area (in which OIC is licensed) of which, as at January 2013, 335GL/yr has been licensed to OIC. It discusses the areas from which water for irrigation expansion will be diverted.[154]
[154] Summary page ix (Green AB 30).
The summary refers to power station water release rules which will allow, among other things, for 750GL/yr of water from the Main Ord sub-area to be available in 95% of years. The summary states:[155]
We will adjust water entitlements to match water use (as far as is practical) to maximise the amount of water available for irrigation and hydroelectricity production at each stage of irrigation development. To achieve this, we will review and adjust existing licences (Water Corporation and OIC) when applications for more than 30 GL/yr of new entitlements are made and/or as electricity demands change.
This will ensure that future irrigation expansions can access secure, reliable water while maximising hydroelectricity production while irrigation expands. (emphasis added)
[155] Summary page xi (Green AB 32).
Chapter 1 of the Plan identifies the Ord River expansion project which was underway, and was expected to see demand grow rapidly over the next five years. The identified purposes of the Plan include the need to balance new irrigation demand with the growing demand for hydroelectricity and the needs of the downstream environment.[156] The Plan area and sub-areas are identified,[157] and portrayed in Figures 1 and 2.[158] OIC's licence relates to the Main Ord sub-area.
[156] Plan page 1 (Green AB 34).
[157] Plan page 2 (Green AB 35).
[158] Plan pages 3 - 4 (Green AB 36 - 37).
Chapter 2 of the Plan identifies the following expected outcomes of the Plan:[159]
•secure and reliable water supplies for a strong and expanding irrigation industry
•a healthy lower Ord River environment
•as much hydroelectricity production as possible, within the limits of the water needed by irrigators and the downstream environment
•traditional Indigenous access, water-based tourism and recreational opportunities that complement the irrigation, environmental and power outcomes.
[159] Plan page 8 (Green AB 41).
Chapter 3 of the Plan identifies the current and projected water demands, and the manner in which water is distributed. It notes the entitlement of OIC to take water under Licence 2. The Plan notes that, in recent years, OIC has taken less than 200GL/yr. This is said to be due largely to changed cropping and the closure of the sugar mill since the issuance of Licence 1 in 2004.[160] The Plan identifies proposed irrigation expansion and deals with the water demands for hydroelectric power generation.
[160] Plan page 13 (Green AB 46).
Chapter 4 of the Plan identifies the allocation limits for the various sub‑areas and describes how those limits were determined. In the Main Ord sub-area, 350GL of the 750GL/yr allocation limit has been granted. The Plan notes that much of the remaining 400GL/yr is expected to be granted for irrigation expansion in Western Australia, with a portion needed should irrigation expansion proceed in the Northern Territory.[161]
[161] Plan pages 25 - 26 (Green AB 58 - 59.
Chapter 5 deals with water licensing. After describing the current situation (including OIC's supply of water to 15,363ha of farmland), the Plan states:[162]
[162] Plan pages 34 - 35 (Green AB 67 - 68).
Changes to licensing as irrigation developments proceed
New irrigation developments around the current Stage 1 area and in the new M2 area will be drawing on the 750 GL/yr allocation limit for the Main Ord subarea. The department will assess and grant new licence entitlements in stages, as each new irrigation area proceeds. This will maximise access to water for further irrigation expansion within the allocation limit, and ensure power generation is not unnecessarily restricted before water is fully utilised for irrigation expansion.
For each new licence entitlement we will:
•grant annual water entitlements to match justified crop needs and efficient water use for the area under irrigation
•recoup unused water from existing licensees at times of their licence renewal, or if necessary when we grant new licences for new developments
•adjust water release rules and restrictions to maintain reliability.
Unused water entitlements will be recouped because maintaining reliability for unused entitlements would mean the storage level that triggers restrictions on electricity generation would be higher than it needs to be. We will make provision for reasonable changes in crop types from year to year, such as a move to higher-water-use crops. Also, savings made from efficiency gains above expected efficiency targets will not be recouped and can either be used to expand production or be traded. (emphasis added)
Chapter 5 of the Plan refers to adjusting dam release and restriction trigger levels when granting new water entitlements from the Main Ord sub-area, to ensure that irrigation requirements (on average) are fully supplied on 95% of years. The Plan states that this approach will optimise the 750GL/yr allocation from the Main Ord sub-area.[163]
[163] Plan page 35 (Green AB 68).
Table 8 in Chapter 5 of the Plan identifies a number of local licensing policies specific to the Plan area. Item 2.1 relates to 'Setting water entitlements and distribution efficiency targets for water service providers'. It states:[164]
The department grants water entitlements to irrigation water service providers on the basis that overall water use will be efficient. The current water service provider has an 80 per cent distribution efficiency target. For new areas, an 85 per cent distribution efficiency target is appropriate given that Total Channel Control systems are being used in new areas. This will increase to 90 per cent once a balancing storage connected to the M2 channel is built.
[164] Plan page 48, Table 8, (Green AB 81).
The balance of the Plan deals with monitoring the Ord River, and implementing and evaluating the Plan.

The Tribunal's approach

Ground 3 seeks to impugn the following passages of the Tribunal's reasons as revealing an error of law:[165]
The Tribunal does not accept that the OIC should be entitled to the benefit of savings efficiencies achieved by the OIC's investment where the efficiencies are below 80%. The OIC started off a low base. As noted above, an 80% target already reflects a lower target than any new developments. The OIC agreed to a target of 80%. The OIC should only be entitled to any savings efficiencies above 80%. The Tribunal does not accept that the benefit is redirected elsewhere. What the policy requires is that the OIC should reach a minimum level of efficiency as part of the overall system.
The fact that achieving a target of 80% may require significant investment on the part of the OIC is not of itself a reason to reduce the target. In effect, the OIC seems to be arguing that it should never have to reach the target it agreed to.

OIC's submissions

[165] Primary decision [282] - [283].

OIC submits that the above passages reveal a misconstruction of the Plan and Policy 11.
OIC submits that, under Policy 11 made in November 2003, the respondent would not seek to recoup unused water entitlements that were a result of investment in water efficiency.[166] OIC says that the unchallenged evidence before the Tribunal was that OIC had spent over $4 million in upgrading infrastructure to improve water use efficiency, resulting in savings of 54,940ML.[167]
[166] Amended Appellant's Submissions par 88.
[167] Amended Appellant's Submissions par 89.
OIC says that, in September 2013, the Plan adopted a new policy. The new policy was that only savings made from efficiency gains above expected efficiency targets would be immune from recoupment.[168] However, OIC says that on the proper construction of the Plan, the new policy only applied to new irrigation developments and new licence entitlements. OIC says that the new policy does not apply to entitlements which existed in September 2013, including the annual water entitlement under Licence 2.[169]
[168] Amended Appellant's Submissions par 91.
[169] Amended Appellant's Submissions pars 96 - 97.
In oral submissions, senior counsel for OIC explained that the error involved misconstruing the following passage of the Plan, which is in the longer passage set out at [185] above:
For each new licence entitlement we will:
…
•recoup unused water from existing licensees at times of their licence renewal, or if necessary when we grant new licences for new developments. (emphasis added)
Counsel contended that the reference to 'existing licensees' in this passage is to licensees who have been granted new licences after the Plan was published who then come to renew those licences.[170]
[170] Appeal ts 57.
OIC says that the Tribunal erred in law in its construction of Policy 11 and the Plan. OIC says that the proper construction of those written documents is a question of law which may be the subject of an appeal to this court.

Respondent's submissions

The respondent says that the construction of a policy which does not have statutory force or other direct legal effect is not a question of law, but is rather a question of fact concerning the respondent's past practice and future intentions. The respondent says that ground 3 does not concern a 'question of law' which may be the subject of an appeal to this court.[171]
[171] Amended Respondent's Submissions pars 62 - 69.
Further, the respondent says that the Tribunal did not misconstrue the policy documents. It particularly relies on the reference to recouping 'unused water from existing licensees at times of their licence renewal' in the passage of the Plan set out at [193] above. It says that the Plan contemplates that the consideration of a new large scale irrigation entitlement will cause the respondent to consider all large scale irrigation licences, including those granted before that Plan was adopted.[172]

Disposition

[172] Amended Respondent's Submissions pars 70 - 73.

There will be circumstances in which the Tribunal's misconstruction of a non-statutory policy will constitute an error of law, giving rise to a question of law that may be the subject of an appeal under s 105 of the SAT Act. For example (without being exhaustive):
(1)A serious misunderstanding of a policy to which the Tribunal is bound[173] to have regard may constitute a failure to have regard to a mandatory relevant consideration.[174]
(2)The misapprehension of the effect of a policy document may also, as a matter of fact, lead the Tribunal to a misunderstanding of the nature or limits of its statutory function.[175]
(3)The misconstruction of a policy document which has some legal effect may involve an incorrect conclusion about the legal effect of the document.[176]
(4)A plain misreading of a policy document may be wholly unsupported by the material before the Tribunal, so as to constitute a finding of fact in the absence of evidence.[177]
[173] As to when an administrative decision-maker is bound to have regard to a particular consideration, see Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, 39 ‑ 40. See also Jacob v Save Beeliar Wetlands (Inc) [2016] WASCA 126; (2016) 50 WAR 313.
[174] Minister for Immigration v Gray (1994) 50 FCR 189, 208, 211.
[175] Gray (208).
[176] Yu Feng Pty Ltd v Maroochy Shire Council [2000] 1 Qd R 306, 335 ‑ 336.
[177] Australian Broadcasting Tribunal v Bond (355 ‑ 356); Woollard [154]; Paradis [54].
We do not accept OIC's contention that the misconstruction of any written document which does not itself have legal effect necessarily constitutes an error of law. It may well be that a misapprehension about what the document says would be no more than an error of fact, of the same nature as a misunderstanding of oral testimony. That such a misapprehension may affect, even decisively, the exercise of an administrative discretion does not convert an error of fact into an error of law.

OIC also puts its case as to error of law on three narrower bases, contending that.
(1)The Plan is a consideration to which the legislation required the Tribunal have regard.[178] This is on the basis that the Plan was a matter which the Tribunal (standing in the Minister's shoes) considered relevant within the meaning of cl 7(2) of sch 1 to the Act. OIC submits that cl 15(2) and cl 7(2) therefore required the Minister (and the Tribunal) to have regard to that matter. OIC contends that a misconstruction of the policy is an error of law of the first kind identified at [198] above.
(2)The Tribunal's construction of the policies was so plainly incorrect that there was no basis in the material before the Tribunal to allow it to make the finding of fact as to the effect of the policies.[179] In that manner, OIC asserts that the Tribunal made an error of law of the fourth kind identified at [198] above.
(3)On the proper construction of the Act, if the Tribunal may have regard to policies (without being bound to do so), it is implicitly prohibited from taking account of the false effect of the policy documents.[180]
[178] Appellant's Supplementary Submissions pars 16 - 17, withdrawing a submission made in the course of oral argument at appeal ts 118.
[179] Appeal ts 51 - 52.
[180] Appeal ts 49 - 51.
While these contentions assert errors of law, we are not satisfied that the Tribunal's understanding as to the application of the policies was incorrect.
The different operation of Policy 11 and the Plan was geographic rather than merely temporal. Policy 11 applied to all licences issued across the State. The Plan applies only to part of the Ord River catchment in the north-eastern Kimberley.[181] Two significant features of water allocation in that area, addressed by the Plan, were the expansion projects which were expected to be accompanied by a rapid escalation in demand for water, and the need to balance the water requirements of hydroelectricity generation with other uses, including irrigation.
[181] See Plan pages 2 - 4 (Green AB 35 - 37).
In that context, the Plan, read as a whole, provides for action to be taken when new irrigation developments are assessed and new licences granted. In those circumstances, the policy is to 'recoup unused water from existing licensees at times of their licence renewal'.[182] That is, when a new licence is granted, recoupment from existing licences will be undertaken at the time of the renewal of those existing licences. In a context where OIC was licensed to take 350GL of the 750GL/yr allocation limit, it would make little sense to exclude OIC from this requirement. Further, the passage from the summary quoted at [180] above makes it plain that OIC is an existing licensee whose water entitlement will be adjusted in implementation of the Plan.
[182] Plan page 35 (Green AB 68).
For these reasons, the Tribunal's finding as to the effect of the policies was correct. It has not been established that the Tribunal made a factual finding in the absence of evidence, or decided the review application on a false understanding of the meaning of the policy documents. It did not fail to have regard to a mandatory relevant consideration. Given these conclusions, it is unnecessary to determine whether the Act implicitly prohibited the Tribunal from taking account of any 'false effect' of the policy documents. Ground 3 is not established.

Application to amend grounds of appeal

OIC's supplementary written submissions contend that the Tribunal failed to have regard to the mandatory relevant considerations stipulated at cl 7(2)(a), (b), (e), (f), (g) and (h) of sch 1 to the Act. The submissions also seek leave to amend the grounds of appeal to introduce that contention.
These submissions and the proposed ground introduce a new matter, which extends beyond the scope of the supplementary submissions invited by the court. It is unnecessary to deal with the application for leave to amend the grounds, given OIC's success on ground 2. OIC does not seek any different orders in the event that it were to succeed on the proposed new ground in addition to ground 2.

Orders

The partial success of ground 2 means that leave to appeal should be granted, the appeal allowed and the decision of the Tribunal should be set aside. Both parties accepted (correctly in our view) that, in this circumstance, it was appropriate to send the matter back to the Tribunal for reconsideration by a differently constituted Tribunal.[183] We would hear from the parties as to the form of the final orders, and as to costs.
[183] Appeal ts 3, 98.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

ET
RESEARCH ASSOCIATE/ORDERLY TO THE HONOURABLE JUSTICE MITCHELL

28 MAY 2018