Oshlack v Rous Water - [2013] NSWCA 169

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation: Oshlack v Rous Water [2013] NSWCA 169
Hearing dates: 30 April 2013
Decision date: 12 June 2013
Before: Emmett JA at [1];
Gleeson JA at [21];
Preston CJ at LEC at [201]
Decision:
1. Grant leave to the appellant to amend Ground 1 of the second further amended notice of appeal in the terms of his oral application on 30 April 2013.
2. Appeal dismissed.
3. Appellant to pay the respondents' costs of the appeal.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:
ADMINISTRATIVE LAW - judicial review - grounds of review - validity of decision to construct and operate fluoride dosing plants - constructive failure to exercise jurisdiction - whether there was a misconception about the duty imposed on the decision maker
COSTS - costs discretion - whether discretion miscarried - whether decision of primary judge involved error
Legislation Cited: Environment Planning and Assessment Act 1979
Environmental Planning and Assessment Act Regulation 2000
Fluoridation of Public Water Supplies Act 1957
Interpretation Act 1987
Land and Environment Court Act 1979
Local Government Act 1993
Cases Cited: Craig v South Australia [1995] HCA 58; 184 CLR 163
Ex parte Hebburn Ltd; Re Kearsley Shire Council (1947) 47 SR (NSW) 416
Guthega Development Pty Ltd v Minister Administering National Parks and Wildlife Act 1974 (NSW) (1986) 7 NSWLR 353 Hoxton Park Residents Action Group Inc v Liverpool City Council [2010] NSWLEC 242
Hoxton Park Residents Action Group Inc v Liverpool City Council [2011] NSWCA 349; 81 NSWLR 638
Minister for Immigration v Yusuf [2001] HCA 30; 206 CLR 323
Notaras v Waverley Council [2007] NSWCA 333;161 LGERA 230
R v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170
Rockdale Beef Pty Ltd v Industrial Relations Commission of NSW [2007] NSWCA 128; 165 IR 7
Samad v District Court of New South Wales [2002] HCA 24; 209 CLR 140
Schroders Australia Property Management Ltd v Shoalhaven City Council [2001] NSWCA 74
Transport Action Group against Motorways Inc v Roads and Traffic Authority [1999] NSWCCA 196; 46 NSWLR 598
Ward v Williams (1955) 92 CLR 496
Category: Principal judgment
Parties: Al Oshlack (Appellant)
Rous Water (First Respondent)
Ballina Shire Council (Second Respondent)
Lismore City Council (Third Respondent)
Representation: Counsel:
J Johnson (Appellant)
N J Williams SC; V M Bosnjak (Respondents)
Solicitors:
Robert Balzola and Associates (Appellant)
Ashurst Australia (First and Second Respondents)

File Number(s): CA 2012/178722
Decision under appeal

Jurisdiction:

9106

Citation:

[2012] NSWLEC 111 (16 May 2012); [2012] NSWLEC 132 (7 June 2012)

Before:

Pepper J

File Number(s):

40570/2010

Judgment

EMMETT JA: This appeal concerns the validity of a decision made by the first respondent, Rous Water (Rous), to construct and operate four fluoride dosing facilities and a decision by the second respondent, Ballina Shire Council (Ballina), to construct a fluoride dosing facility. The appellant, Mr Al Oshlack, contended that Rous and Ballina were under a misapprehension that approvals for the fluoride dosing facilities granted by the Secretary of the Department of Health (the Secretary) amounted to a direction to them to fluoridate the water supply, that they had an obligation to fluoridate the water supply and that they had a deadline by which to fluoridate the water supply. Mr Oshlack contended Rous and Ballina acted under that misapprehension on the basis of incorrect legal advice that had been provided to them in connection with their consideration of the decisions in question.

The decisions in question were made under the Fluoridation of Public Water Supplies Act 1957 (the Fluoridation Act), an act to authorise and control the addition of fluorine to public water supplies and purposes connected therewith. Rous and Ballina are both bodies that supply water to the public and each is therefore a water supply authority under the Fluoridation Act.

Section 6 of the Fluoridation Act deals with the addition of fluorine to public water supplies. Section 6(1) provides that a water supply authority may add fluorine to any public water supply under its control. Under s6(1A), a water supplier authority must add fluorine to any public water supply under its control if directed to do so by the Secretary. Section 6(2) prohibits a water supply authority from adding fluorine to any public water supply except with the approval, or at the direction, of the Secretary. Under s 6(3), a person who is not a water supply authority must not add fluorine to any public water supply.

Under s 6(4), a water supply authority making application for the approval of the Secretary must specify the public water supply in respect of which the approval is sought and must furnish to the Secretary such information as the Secretary may require. Under s 6(5), the Secretary may approve or refuse any such application. Any approval is to be subject to a condition requiring the water supply authority to which the approval is granted to maintain the content of fluorine in the public water supply at a concentration specified in the approval. At any time after granting an approval, the Secretary may revoke the approval.

Section 4 of the Fluoridation Act provides for the constitution of the Fluoridation of Public Water Supplies Advisory Committee (the Committee). Under s 5, one of the functions of the Committee is to initiate and refer to the Minister administering the Fluoridation Act proposals with respect to the addition of fluorine to public water supplies. It is the duty of the Committee to consider and advise the Minister upon such matters and questions as the Minister may from time to time refer to it relating to, inter alia, any proposal with respect to the addition of fluorine to public water supplies, as well as the question of fluoridating a public water supply as referred to the Secretary for consideration under s 6A.

Section 6A is concerned with directions. Under s 6A(1), the Secretary may direct a water supply authority to add fluorine to a public water supply. Such a direction may be given only if the water supply authority has referred the question of fluoridating the public water supply to the Secretary for consideration and the Secretary has received the advice of the Committee. Thus, while the Secretary may only direct a water supply authority to add fluorine if the water supply authority has referred the question of fluoridating to the Secretary and the Secretary has received the advice of the Committee, the Committee may initiate and refer to the Minister proposals with respect to the addition of fluorine to public water supplies.

Section 6B of the Fluoridation Act deals with the discontinuance of fluoridation. Under s 6B(1), a water supply authority to which an approval has been granted or a direction has been given must not discontinue fluoridating the public water supply concerned unless the approval or direction is revoked by the Secretary. Under s 6A(4), the Secretary may revoke a direction at any time after giving the direction.

Each of Rous and Ballina is a public authority for the purposes of the Environment Planning and Assessment Act 1979 (the Planning Act). Under s 110(1) of the Planning Act, activity includes the use of land, the erection of a building and the carrying out of a work and approval includes a consent, license or permission or any form of authorisation. Section 111(1) of the Planning Act provides, relevantly, that a determining authority, in each consideration of an activity, must, notwithstanding any other provisions of the Planning Act or the provisions of any other Act, or of any instrument made under the Planning Act or any other Act, examine and take into account to the fullest extent possible all matters affecting or likely to affect the environment by reason of that activity. Sections 111(2), 111(3) and 111(4), without limiting 111(1), also require a determining authority to consider the effect of an activity on other matters specified in those provisions.

On 12 December 2007, an approval under s 6 of the Fluoridation Act was given to Rous to add fluorine to the Lismore local government area water supply. On the same day, a direction was given to Rous under s 6A of the Fluoridation Act to add fluorine to the Richmond Valley water supply. On 20 August 2009, an approval under s 6 was given to Rous to add fluorine to the Ballina Council local government area water supply and, on 11 December 2009, an approval under s 6 of the Fluoridation Act was given to Ballina to add fluorine to the Marom Creek water supply.

On 11 March 2010, Rous received legal advice from Blake Dawson, solicitors (Blakes). Among other things, Blakes advised Rous that it should seek approval for the extension of a deadline of 31 December 2008 for the commencement of the upward adjustment of fluorine to the water supply in the Lismore and Richmond Valley local government areas. A request of 22 March 2010 for an extension was refused. Rous then sought legal advice from Lindsay Taylor Lawyers (Taylors), who provided written advice on 16 April 2010. That advice was attached to the papers placed before the meeting of Rous on 21 April 2010. At that meeting, the advice of Blakes and the advice of Taylors were both noted and the meeting approved the construction and operation of fluoridation plants at Clunes, Dorroughby, Corndale and Knockrow.

At its meeting on 27 May 2010, Ballina considered the construction of a fluoridation plant at Marom Creek. The papers provided to the meeting referred to directions given to Rous to fluoridate the public water supply to Lismore, Richmond Valley and Ballina Councils, and, inaccurately, a direction to Ballina to fluoridate the supply from Marom Creek. At the meeting, Ballina approved the construction of the proposed fluoridation plant at Marom Creek.

One of the issues in the appeal is whether, once an approval is given under s 6 of the Fluoridation Act, an obligation is imposed upon the water supply authority to add fluorine to the public water supply under its control. Rous received advice from both Blakes and Lindsay Taylor to the effect that, once an approval of an application had been given by the Secretary under s 6(5), Rous had an obligation under the Fluoridation Act to proceed to add fluorine to its water supply. Mr Oshlack contends that that advice was erroneous.

Rous and Ballina dispute that the decision to proceed with fluoridation made by it and by Ballina was made on the assumption that the grant of an approval to fluoridate created an obligation to do so. In any event, Rous contends that the advice was not erroneous.

The question of the correctness of the advice turns on the distinction drawn in s 6 and s 6B between adding fluorine with the approval of the Secretary and adding fluorine at the direction of the Secretary. Mr Oshlack contended that, while a water supply authority is under an obligation to add fluorine if a direction is given, it is under no obligation if an approval is given. Rather, an approval is no more than the grant of power since, under s 6(2), adding fluorine without an approval, if no direction has been given, is an offence.

In essence, Mr Oshlack contended that the legal advice from Taylors was erroneous and that the legal advice influenced Rous and Ballina in making their decisions to proceed with the construction of fluoridation plants. Mr Oshlack contended that there was,therefore, a constructive failure by them to exercise jurisdiction in accordance with their duty under s 111 of the Planning Act. Thus, he contended that they were under a misapprehension as to the legal effect of the approvals that had been granted, namely, that they amounted to a direction to fluoridate, that they had an obligation to fluoridate and that they had a deadline by which they were required to fluoridate drinking water in the relevant water supply areas.

I have had the advantage of reading in draft form the reasons of Gleeson JA for concluding that the appeal should be dismissed. I agree with his Honour's conclusion and for his Honour's reasons for that conclusion.

In particular, I agree with Gleeson JA's conclusion that, on the proper construction of the Fluoridation Act, a water supply authority to which an approval has been granted under s 6, is not obliged to carry out the activity that is the subject of the approval. The grant of the approval does no more than empower the water supply authority to carry out the activity. Without the approval, it would be prohibited from doing so.

I also agree with the conclusion of Gleeson JA, for the reasons given by his Honour, that there was no error on the part of the primary judge in refusing to draw inferences that Ballina and Rous:

considered that they were compelled to make the decisions they did;
were somehow intimidated into making their decisions; and
improperly regarded themselves as bound or failed to take into account to the fullest extent reasonably possible all of the mandatory matters required to be considered under s 111 of the Planning Act.

I also agree that it was open to the primary judge to conclude that Rous and Ballina were not under a misapprehension as to the exercise of any power under s 111 of the Planning Act. The decisions in question did not involve the exercise of any power under the Planning Act. I agree with his Honour that the contention that Rous and Ballina purported to, but failed to, perform their statutory duties is inconsistent with the unchallenged findings and conclusion of the primary judge that they adequately discharged their duty. Accordingly, there was no jurisdictional error as contended for by Mr Oshlack.

Mr Oshlack also complained about the exercise of the discretion as to costs of the proceeding before the primary judge. For the reasons given by Gleeson JA, I agree that there was no error on the part of the primary judge in the conclusion as to costs reached by her Honour.

GLEESON JA: The appellant instituted Class 4 proceedings in the Land and Environment Court seeking declarations of invalidity in respect of decisions of the first and second respondents, and injunctions restraining them from undertaking any activity or work in reliance on those decisions being:

(1) the decision of the first respondent, Rous Water County Council (Rous Water), made on 21 April 2010 to approve "the construction and operation of Clunes, Dorroughby, Corndale and Knockrow Fluoridation Dosage Facilities" (the Rous Water decision); and

(2) the decision of the second respondent, Ballina Shire Council (Ballina Council) made on 27 May 2010, to approve the construction of a proposed fluoride dosing plant at Marom Creek, subject to certain conditions (the Marom Creek decision).

On 28 April 2011, Biscoe J answered two preliminary questions concerning whether an activity by a water supply authority pursuant to an approval or direction under s 6 or s 6A of the Fluoridation of Public Water Supplies Act 1957 (Fluoridation Act) to add fluorine to the water supply under its control, is subject to s 111 and s 112 of the Environmental Planning and Assessment Act 1979 (EPA Act) (Oshlack v Rous Water [2011] NSWLEC 73). Justice Biscoe held that:

(1) Rous Water was required to comply with s 111 and s 112 of the EPA Act when determining to approve the construction and operation of the Clunes, Dorroughby, Corndale and Knockrow fluoridation plants, except that insofar as any of those plants was the subject of the direction of 12 December 2007 to add fluorine to the Richmond Valley water supply, Rous Water was required to comply with s 111 but not s 112 of the EPA Act.

(2) Ballina Council was required to comply with the provisions of s 111 and s 112 of the EPA Act when determining to approve the construction of the Marom Creek fluoridation plant.

There is no appeal from this decision.

On 16 May 2012, Pepper J dismissed the substantive application challenging the respondents' decisions (Oshlack v Rous Water (No 2) [2012] NSWLEC 111). After further argument on the question of costs, on 7 June 2012, her Honour ordered the appellant to pay 75 per cent of the first and second respondents' costs (Oshlack v Rous Water (No 3) [2012] NSWLEC 132).

The statutory framework

Each of the respondents has the power under s 24 of the Local Government Act 1993 (the LG Act) to carry out activities appropriate to the current and future needs of the local community and the wider public, subject to the terms of the Act, the regulations and any other law. The activity involving the addition of fluorine to any public water supply is regulated by the Fluoridation Act. In broad terms, under the Fluoridation Act, a "water supply authority" may add fluorine to a public water supply under its control in certain circumstances, being with the approval (s 6) or at the direction (s 6A) of the Secretary of the Department of Health.

The term "water supply authority" is defined in s 3 of the Fluoridation Act to include "any person or body, corporate or unincorporate, who or which supplies water to the public". It is not disputed that Rous Water and Ballina Council are "water supply authorities" as defined under the Fluoridation Act.

The Fluoridation Act relevantly provides:

"6 Addition of fluorine to public water supplies

(1) Notwithstanding anything contained in any other Act, a water supply authority may, subject to the provisions of this section and the regulations, add fluorine to any public water supply under its control.

(1A) Notwithstanding anything contained in any other Act, a water supply authority shall, subject to this Act and the regulations, add fluorine to any public water supply under its control, if directed to do so by the Secretary.

(2) A water supply authority shall not add fluorine to any public water supply except with the approval of or at the direction of the Secretary.

(3) A person, not being a water supply authority, shall not add fluorine to any public water supply.

(4) A water supply authority making application for the approval of the Secretary under the provisions of this section shall specify in the application the public water supply in respect of which the approval is sought and shall furnish to the Secretary such information as the Secretary may in any case require.

(5)

(a) The Secretary may by notification published in the Gazette approve or refuse any such application.

(b) Such notification shall for the purpose of section 11 be deemed to be a regulation.

(c) Any approval granted by the Secretary under the provisions of this section shall be subject to:

(i) a condition requiring the water supply authority to whom the approval is granted to maintain the content of fluorine in the public water supply in respect of which the approval is granted at a concentration of not more than the maximum nor less than the minimum concentration (calculated as parts per million) specified in the instrument of approval,

(ii) a condition prohibiting such water supply authority from adding to such public water supply fluorine in a form other than that specified in the instrument of approval, and

(iii) such other conditions as may in any case be determined by the Secretary and specified in the instrument of approval.

(d) The Secretary may at any time after granting any such approval:

(i) revoke the approval,

(ii) revoke any condition attached to the approval other than a condition attached thereto pursuant to subparagraph (i) or (ii) of paragraph (c),

(iii) vary any condition attached to the approval, or

(iv) attach new conditions to the approval.

(6) Any person, not being a water supply authority, who contravenes or fails to comply with any of the provisions of this section or any water supply authority contravening or failing to comply with any of the provisions of this section or any of the conditions attached to an approval granted to it under the provisions of this section, shall be guilty of an offence against this Act.

6A Directions

(1) The Secretary may, by notification published in the Gazette, direct a water supply authority to add fluorine to a public water supply.

(2) A direction may be given only if the water supply authority has referred the question of fluoridating the public water supply to the Secretary for consideration and the Secretary has received the advice of the Committee as regards the question.

...

(3) A direction is subject to:

(a) a term requiring the water supply authority to maintain the content of fluorine in the public water supply at a concentration of not more than the maximum nor less than the minimum concentration (calculated as parts per million) specified in the direction,

(b) a term prohibiting the water supply authority from adding to the public water supply fluorine in a form other than that specified in the direction, and

(c) such other terms as may be determined by the Secretary and specified in the direction.

(4) The Secretary may at any time after giving a direction:

(a) revoke the direction,

(b) revoke any term attached to the direction, other than a term referred to in subsection (3) (a) or (b),

(c) vary any term attached to the direction, or

(d) attach new terms to the direction.

(5) Any water supply authority contravening a direction or any terms attached to the direction is guilty of an offence against this Act.

6B Discontinuance of fluoridation

(1) A water supply authority to which an approval has been granted or a direction has been given shall not discontinue fluoridating the public water supply concerned, unless the approval or direction is revoked by the Secretary.

(2) A water supply authority contravening this section is guilty of an offence against this Act."

During the hearing before Pepper J, the appellant abandoned its challenge to the respondents' decisions relying upon an alleged failure to comply with s 112 of the EPA Act. In abbreviated terms, s 112 of the EPA Act requires a determining authority not to carry out an activity or grant an approval in relation to an activity, being relevantly an activity that is likely to significantly affect the environment, unless the determining authority has obtained or been furnished with and has examined and considered an environmental impact statement (EIS) in respect of the activity. It is unnecessary to consider this provision further, other than noting that the circumstances in which the appellant claimed that the respondents had failed to comply with s 112 of the EPA Act, but ultimately withdrew this allegation at the hearing, are relevant to the challenge to the primary judge's costs orders.

The provisions of the EPA Act relevant to this appeal, being s 110 and s 111, are contained in Part 5 of that Act and relevantly provide:

"110 Definitions

(1) In this Part:

activity means:

(a) the use of land, and ...

(c) the erection of a building, and

(d) the carrying out of a work, and ...

but does not include:

(g) any act, matter or thing for which development consent under Part 4 is required or has been obtained, or ...

approval includes:

(a) a consent, licence or permission or any form of authorisation, ...

determining authority means a Minister or public authority and, in relation to any activity, means the Minister or public authority by or on whose behalf the activity is or is to be carried out or any Minister or public authority whose approval is required in order to enable the activity to be carried out.

111 Duty to consider environmental impact

(1) For the purpose of attaining the objects of this Act relating to the protection and enhancement of the environment, a determining authority in its consideration of an activity shall, notwithstanding any other provisions of this Act or the provisions of any other Act or of any instrument made under this or any other Act, examine and take into account to the fullest extent possible all matters affecting or likely to affect the environment by reason of that activity.

(2) Without limiting subsection (1), a determining authority shall consider the effect of an activity on:

(a) any conservation agreement entered into under the National Parks and Wildlife Act 1974 and applying to the whole or part of the land to which the activity relates, and

(b) any plan of management adopted under that Act for the conservation area to which the agreement relates, and

(c) any joint management agreement entered into under the Threatened Species Conservation Act 1995, and

(d) any biobanking agreement entered into under Part 7A of the Threatened Species Conservation Act 1995 that applies to the whole or part of the land to which the activity relates.

(3) Without limiting subsection (1), a determining authority shall consider the effect of an activity on any wilderness area (within the meaning of the Wilderness Act 1987) in the locality in which the activity is intended to be carried on.

(4) Without limiting subsection (1), a determining authority must consider the effect of an activity on:

(a) critical habitat, and

(b) in the case of threatened species, populations and ecological communities, and their habitats, whether there is likely to be a significant effect on those species, populations or ecological communities, or those habitats, and

(c) any other protected fauna or protected native plants within the meaning of the National Parks and Wildlife Act 1974."

Clause 228 of the Environmental Planning and Assessment Act Regulations (EPA Regulations) provides that, for the purpose of Part 5 of the EPA Act, certain factors must be taken into account when consideration is being given to the likely impact of an activity on the environment under s 111. The mandated factors are set out in cl 228(2) and relevantly include:

"(a) any environmental impact on a community ...

(l) any pollution of the environment;

(m) any environmental problems associated with the disposal of waste ...."

Pursuant to s 110 of the EPA Act, both the Secretary and the two respondents are "determining authorities" for the purpose of Part 5 of the EPA Act.

As noted by the primary judge, the duty imposed upon each respondent as the determining authority by s 111 of the EPA Act to "examine and take into account to the fullest extent possible all matters affecting or likely to affect the environment by reason of the activity" in question including the specified matters, is properly construed as qualified by the word "reasonably". That is, the respondents' duty is to examine and take into account the matters referred to in that section to the fullest extent reasonably possible (see Guthega Development Pty Ltd v Minister Administering National Parks and Wildlife Act 1974 (NSW) (1986) 7 NSWLR 353 at 366D-G; and Transport Action Group against Motorways Inc v Roads and Traffic Authority [1999] NSWCCA 196; (1999) 46 NSWLR 598 at [68]).

Approvals and direction to fluoridate

The following approvals were granted and direction was given by the Director-General of the Department of Health, and published, by way of notices, in the NSW Gazette:

(a) on 12 December 2007 pursuant to s 6A of the Fluoridation Act the Director-General of the Department of Health directed Rous Water to fluoridate the water supply of the local government area of the Richmond Valley Council;

(b) on the same day the Director-General approved, pursuant to s 6 of the Fluoridation Act, the addition by Rous Water of fluoride to the water supply of the local government area of Lismore City Council;

(c) on 20 August 2009 the Director-General approved pursuant to s 6 of the Fluoridation Act, the addition of fluoride by Rous Water of the water supply of the local government area of Ballina Council; and

(d) on 11 December 2009 pursuant to s 6 of the Fluoridation Act the Director-General approved the fluoridation by Ballina Council of the water supply of the local government area of that Council situated down stream of a proposed fluoride plant at Marom Creek.

The approvals and the direction were for the upward adjustment of fluoride in the water supply of 1 milligram per Litre (mg/L).

Each of the approvals and the direction were subject to three relevantly identical conditions or terms relating to the concentration and the form of fluorine to be used, and the date by which the upward adjustment of fluorine in each water supply area was to commence, namely:

"1. [The authority] may only add fluorine to the [geographical area] water supply in accordance with any provisions, directions or approvals made under the Fluoridation of Public Water Supplies Act 1957, the Code of Practice for the Fluoridation of Public Water Supplies made under that Act as amended from time to time, and the Fluoridation of Public Water Supplies Regulations 2007 or any subsequent Regulation made in its place; and

2. [The authority] shall maintain the content of fluorine in the [geographical area] water supply at a target concentration level of 1.0 mg/L with an overall accuracy of +/-5% and within an operating range of not more than 1.5 mg/L and not less than 0.9 mg/L and generally in accordance with the relevant provisions of the Code of Practice for the Fluoridation of Public Water Supplies; and

3. [The authority] shall have commenced the upward adjustment of fluorine in the [geographical area] water supply by no later than [date], unless otherwise approved by the Chief Dental Officer of NSW Health or that Officer's approved representative."

The specified dates in Condition 3 for commencing the upward adjustment of fluorine were respectively as follows:

"(a) the Richmond Valley Direction - 31 December 2008;

(b) the Lismore Approval - 31 December 2008;

(c) the Ballina Approval - 31 December 2010; and

(d) the Marom Creek Approval - 31 December 2010."

On 14 March 2011 the commencement dates for the upward adjustment at Lismore, Richmond Valley and Ballina was extended by the Chief Dental Officer to 30 June 2012.

Background facts

The detailed chronology of the decision-making processes of the respondents leading up to the two decisions challenged by the appellant, are set out by the primary judge in Rous Water (No 2) at [26]-[59]. It is necessary however to record the following facts which provide the context to the appellant's appeal.

Rous Water supplies bulk water to the local government areas of Lismore, Byron Bay, Ballina and Richmond Valley. On 19 July 2006, Rous Water resolved to support in principle the decision to fluoridate the water supply of its constituent councils, where a council advised that it supported fluoridation of its water supplies.

Lismore Council and Richmond Valley Council indicated support for the fluoridation of their water in July 2006. On 26 March 2009, Ballina Council indicated its support.

The construction and operation of fluoridation plants was required to be assessed under Part 5 of the EPA Act, with Rous Water as the determining authority in respect of the proposed Clunes, Dorroughby, Corndale and Knockrow fluoridation plants, and Ballina Council as the determining authority in relation to the construction of the proposed Marom Creek plant.

Rous Water engaged NSW Public Works to prepare a review of environmental factors (REF), which included an assessment of the four proposed fluoridation plants and also the Marom Creek plant. The draft REF prepared by NSW Public Works was placed on public exhibition and submissions from the public invited in December 2009.

On 4 February 2010, a report on the results of the public consultation and assessment of the draft REF was prepared for Rous Water by Mr Wayne Franklin, its Technical Services Director. The report noted various matters including, first that a failure to comply with an approval or direction was an offence under the Fluoridation Act, and that deadlines were prescribed for when Rous Water must commence to add fluorine; secondly, that over 90 per cent of the New South Wales population received fluoridated water and it could be expected that NSW Health has considered the potential impact on the environment of the use and disposal of fluoridated water; and thirdly, that confirmation that fluoridated water does not have a significant impact on the receiving environment would be sought from NSW Health.

On 8 February 2010, a Determining Authority's Report was provided to Rous Water by Newton Denny Chapelle (NDC), a planning, engineering and surveying consultancy. The report recommended that Rous Water should not determine the draft REF until adequate consideration had been given to the effect of the discharge of fluoridated water on the environment, which NDC considered had not been adequately evaluated in the draft REF.

On 15 February 2010, Dr Shanti Sivaneswaran, the Principal Advisor to the Department of Health's Centre for Oral Health Strategy wrote to Rous Water to confirm the Department's advice that the scientific evidence supports the fluoridation of water supplies as safe for the environment and beneficial for health. The letter also noted that a comprehensive literature review conducted in 1990 revealed absolutely no negative environmental impacts as a result of water fluoridation.

On 16 February 2010, NDC sent a letter to Rous Water referring to the NSW Department of Health letter dated 15 February 2010 and concluded that, in relation to the environmental impact of fluoridated water on the receiving environment, NSW Health in determining to add fluoridated water into the water supply had addressed that issue.

On 17 February 2010, Rous Water resolved to defer consideration and determination of the draft REF until full regard had been taken of the effects of discharge of fluoridated water to the environment and to seek legal advice on its options. Blake Dawson Solicitors (Blakes) were engaged to provide the legal advice.

On 19 February 2010, the Chief Dental Officer of NSW Health forwarded to Rous Water a letter from the EPA dated 25 June 2004. The 2004 EPA letter noted that, as part of its functions, it regulated activities according to the risk posed to the environment and human health and undertakes activities to improve scientific knowledge to inform and improve decision-making. The letter further noted that where artificially fluoridated water is supplied to NSW communities, the level of fluoride is not greater than 1 mg/L and that at this concentration fluoride is not considered environmentally harmful.

On 5 March 2010, NDC submitted to Ballina Council a Determining Authority's Report (the DAR) concerning the proposed fluoridation plant at Marom Creek. The report noted that the NSW Health letter dated 15 February 2010 to Rous Water addressed the issue of water fluoridation on the receiving environment and recommended that Ballina Council endorse the REF.

On 11 March 2010, Blakes provided legal advice to Rous Water. The advice considered, amongst other matters, whether the REF and the supplementary documents provided to Rous Water by NSW Health and the EPA adequately complied with s 111 of the EPA Act, whether a resolution to not determine the REF would expose Rous Water to any potential legal liability and what steps it recommended Rous Water take. Blakes concluded that the REF and the information provided by NSW Health and the EPA complied with the requirements of s 111 of the EPA Act and recommended Rous Water rely on those materials and assess the project under Part 5 of the EPA Act.

The aspect of the Blakes advice which is contentious in these proceedings was in the following terms:

"(d) Would a resolution in the form of the motion proposed for the meeting of Rous Water Council on 17 March 2010 in relation to the Project (Proposed Motion) [not to determine the [REF]) expose Rous Water to any potential legal liabilities?

2.1 In summary, our answers to the five questions are:

...

(d) the matters the subject of the Proposed Motion have already been addressed to the extent required by law.

Furthermore, the wording of paragraphs 1 and 3 of the Proposed Motion has the potential to expose Rous Water to legal liability, should a resolution in the form of the Proposed Motion be passed. In this regard, while the drafting is not free from ambiguity, these paragraphs of the Proposed Motion would appear to operate to require Rous Water to:

(i) not accept the advice already received from NSW Health and the EPA as to the benign impact of fluoridation on human health and receiving waters; and

(ii) commission independent investigative enquiries as to the likely impact on human health and receiving waters.

Should this occur, Rous Water would be exposed to ongoing liability for offences committed under sections 6(6) and 6A(5) of the FPWS Act, as a consequence of the delay in complying with condition 3 of each of the Lismore Gazette Notice and the Richmond Valley Gazette Notice. ..."

The Blakes advice also dealt with another issue, namely, whether the time provided for in Condition 3 of the approval and direction in respect of the Lismore and Richmond Valley water supply areas had been extended beyond 31 December 2008 in view of the statement in a letter to Rous Water from the Acting Chief Dental Officer of NSW Health dated 4 March 2009 that "now that the Australian Dental Association, NSW, has precipitated revisiting fluoridation at Ballina, it is clear that Rous will have to await the outcome of the Council's decision on the matter". Blakes noted that the intent of this statement was ambiguous as to whether it constituted an approval by the Chief Dental Officer of NSW Health for the purposes of Condition 3 and accordingly, there was an argument that Rous Water was committing ongoing offences under s 6(6) of the Fluoridation Act in respect of the Lismore Approval and s 6A(5) in respect of the Richmond Valley Direction.

Blakes advised Rous Water to request the Chief Dental Officer of NSW Health to provide written confirmation of his approval, pursuant to Condition 3 of the extension of the "deadline" of 31 December 2008 for the commencement of the upward adjustment of fluorine to the water supply in the Lismore and Richmond Valley local government areas.

On 17 March 2010, Rous Water resolved to seek approval from the Chief Dental Officer to extend the time to commence fluoridation of the public water supply in the Lismore, Richmond Valley and Ballina areas and, subject to that approval, seek a report on the cost of providing further expert advice from a professional environmental toxicologist to inform Rous Water on the effects of the discharge of fluorine into the environment.

On 22 March 2010, Rous Water wrote to NSW Health seeking an extension of time under Condition 3 of the approvals and direction until 31 January 2012. The extension was refused by the Chief Dental Officer on 26 March 2010, who also stated that Rous Water should comply with the relevant legislation.

Rous Water then sought legal advice from Dr Lindsay Taylor in respect of the refusal of an extension of time by NSW Health. The legal advice provided by Lindsay Taylor Lawyers on 16 April 2010 was relevantly in the following terms:

"Summary

5. The County Council is currently contravening a requirement of the Richmond Valley Direction and the Lismore Approval.

6. The County Council cannot lawfully decide to seek further expert advice before proceeding with the proposal.

7. The County Council has sufficient information within the meaning of s111 of the EPA to make a determination in relation to the environmental impacts of carrying out the Proposal.

8. The governing body of the County Council has no power under the Local Government Act 1993 (LG Act) to do otherwise than implement the Secretary's direction and approvals without delay.

9. The members of the governing body have a duty to ensure that the County Council does not contravene or continue to contravene the approvals or the direction.

10. Any member of the governing body who causes the County Council to breach the approvals or the direction places themselves in potential breach of the LG Act, including the County Council's Code of Conduct.

11. If so, a member would potentially be liable to a range of sanctions under the LG Act for misbehaviour and possibly of a surcharge being imposed.

Advice

...

17. In ordinary circumstances, I do not think that a statutory approval to do something creates an obligation to do the thing. However, I think the better view of the effect of the statutory scheme contained in the Fluoridation Act, and particularly the operation of s 6(5)(b) and s 6B, is that, once given, an approval given by the Secretary of the Department of Health under s6 must be implemented and complied with unless it is revoked by the Secretary under s 6B.

18. In other words, there is no discretion in a water supply authority to whom an approval has been given regarding the implementation of that approval.

19. It follows, in my view, that the combined effect of ss6 and 6A of the Fluoridation Act is that:

19.1 a water supply authority may only add fluorine to public water supply if it has either an approval or a direction to do so.

19.2 if the water supply authority is given a direction or an approval, then it must add the fluorine in accordance with any terms/conditions (Conditions) of that direction or approval.

20. One of the Conditions of the Lismore Approval and the Richmond Valley Direction is that the fluoridation of the relevant water supply commence by no later than 31 December 2008 unless otherwise approved by the Chief Dental Officer of NSW Health or that officer's approved representative. As there was no such approval by the Chief Dental Officer prior to 31 December 2008, it is not currently possible to comply with that Condition.

21. Blake Dawson advised the County Council that in relation to the Lismore approval and the Richmond Valley Direction that Rous Water is currently exposed to a penalty of up to $5,500.00 plus $550.00 per day for each day after 31 December 2008 until the day on which it commences the upward adjustment of fluorine in the water supply to the relevant local government area.

22. I note that a failure to commence something as required by a statutory notice will ordinarily happen once and for all if the thing is not done by the date stipulated: see EPA v Alkem Drums [2000] NSWCCA 416.

23. Therefore, in relation to the Lismore Approval and the Richmond Valley Direction, I am of the opinion that the County Council has breached Condition 3 once and for all in relation to the failure to commence fluoridation by the date specified.

24. Nevertheless, the County Council appears to be committing a continuing breach of Condition 2 of each of those notices in respect of the maintenance of the content of fluorine following that date.

25. I am therefore of the view that the County Council has breached the Richmond Valley Direction and Lismore Approval in so far as:

25.1 It was under an obligation to commence the addition of fluorine to the public water supply of those council areas by 31 December 2008, and

25.2 It has a continuing obligation to maintain the content of fluorine at a target concentration level of 1.0 mg/L with an overall accuracy of +/-5% and within an operating range of not more than 1.5 mg/L and not less than 0.9 mg/L and generally in accordance with the relevant provisions of the Code of Practice for the Fluoridation of Public Water Supplied.

26. It has been suggested that the letter from NSW Health dated 4 March 2009 may have constituted an approval under both Condition 3 of the Lismore Approval and Richmond Valley Direction in respect of a delayed commencement of the fluoridation of those relevant water supplies.

27. However, relying only on the part of the letter with which I have been briefed, I do not think that the letter can be taken to be such an approval as it was given after 31 December 2008. The breach of Condition 3 by the failure to commence fluoridation occurred, if at all, at that time."

The report to Rous Water for its meeting on 21 April 2010 attached the Lindsay Taylor legal advice, and stated that the key points of the legal advice were as follows:

"1. Council has no discretion or power to do otherwise than implement the Approvals and Direction issued by the Secretary of NSW Health, without delay and in strict accordance with the respective terms and conditions of those Approvals and Direction.

2. It is an offence for Council not to implement the Approvals and Direction. In relation to the Lismore Approval and the Richmond Valley Direction the time for implementation has now passed. Council is in continuing breach of both the Approval and Direction and is exposed to ongoing liability for non-compliance.

3. Council can not lawfully conduct any business at a meeting that is directed towards, or would have the effect of, beaching the Secretary's Approvals or Direction. In relation to Lismore City Council and Richmond Valley Council this includes any business that would further delay implementation of the Approval or Direction."

The report further stated that based on the legal advice, Rous Water had no alternative but to approve the REF and the DAR incorporating the letter dated 16 February 2010 from NDC and proceed to call tenders for the construction of the proposed fluoride dosing plants.

Under the heading "Conclusion" the report referred to the possible exposure to liability for both council and councillors noting that the legal advice stated that:

(1) Each councillor has a duty to ensure that Rous Water does not contravene or continue to contravene the Secretary's Approvals or Direction;

(2) Any member of the governing body who, in that capacity, either alone or in concert with other members, causes Rous Water to breach the Secretary's Approvals or Direction place themselves in potential breach of the Local Government Act 1993, including the Code of Conduct. Furthermore they expose themselves to a range of potential sanctions under that Act, including surcharging. The report further noted that it was clear from the legal advice that council was compelled to determine the REF for the construction and operation of the four fluoride dosing plants and to do otherwise would be unlawful and potentially give rise to legal action and possible imposition of a penalty against council or councillors.

On 21 April 2010, Rous Water resolved (on the casting vote of the Chairperson, with four councillors voting against the resolution) as follows:

"1. Note the legal advice dated 16 April 2010 provided by Lindsay Taylor Lawyers.

2. Note the legal advice dated 11 March 2010 provided by Blake Dawson.

3. Approve the findings in the Review of Environmental Factors and the Determining Authorities Report incorporating the letter dated 16 February 2010 from Newton Denny Chapelle.

4. Approve the construction and operation of the Clunes, Dorroughby, Corndale and Knockrow fluoridation plants to be undertaken in accordance with the recommendations in the Determining Authorities Report and the letter from Newton Denny Chapelle dated 16 February 2010.

5. Approve an amendment to the staff structure to include the addition of one full-time permanent position of Water Treatment Plant Operator.

6. Approve the General Manager to execute the capital works funding Agreement between the Health Administration Corporation for and on behalf of NSW Health, and Rous Water.

7. Call open tenders for the construction of the proposed fluoride dosing plants."

On 22 April 2012 Rous Water published a notice on its website giving notice of its decision the previous day and containing a statement by the Chair of Rous Water as follows:

"Rous Water has been instructed by NSW Health to provide fluoridated water to the Councils. Despite all the argument for and against the proposition, today's decision was simply about Council complying with that direction."

Ballina Council

In relation to Ballina Council, on 25 March 2010 it resolved to defer consideration of approval under Part 5 of the EPA Act of the proposed fluoridation plant at Marom Creek to its April meeting. Subsequently however, the matter was not placed on the agenda for the Ballina Council meeting scheduled for 22 April 2010 as the officers of Ballina Council wished to be in a position to assess the decision of Rous Water, which was expected to be made at the latter's meeting on 21 April 2010.

Ballina Council proceeded to consider approval of the Marom Creek fluoridation plant at its meeting on 27 May 2010. The report to Ballina Council for that meeting noted under the heading "Background" that "[t]he NSW Department of Health has directed Rous Water to fluoridate the public water supply under their control to Lismore, Richmond Valley and Ballina Councils and also directed Ballina Council to fluoridate the supply from Marom Creek". The latter statement was not an accurate description of the approval given to Ballina Council.

Under the heading "Options" the report noted two options for Ballina Council. First, to decline to approve the construction of the proposed fluoridation dosing plant at Marom Creek or secondly, to approve the construction of the proposed plant at Marom Creek, subject to the recommended conditions of the Determination Report. The latter was expressed to be the preferred option.

On 27 May 2010, Ballina Council resolved:

"That Council approves the construction of the proposed fluoridation dosing plant at Marom Creek WTP, subject to the recommended conditions of the Determination Report."

Appellant's contentions below

At the hearing before the primary judge, the appellant abandoned two challenges to the respondents' decisions, one founded upon s 112 of the EPA Act and the other upon the ground that the respondents' decisions were manifestly unreasonable, illogical or irrational. This left four issues for determination raised in the pleadings as follows:

(1) whether the respondents failed to comply with s 111 of the EPA Act and cl 228(2) of the EPA Regulations in making their respective decisions;

(2) whether Rous Water took into account an irrelevant consideration, namely, "erroneous" legal advice from Lindsay Taylor Lawyers;

(3) whether Rous Water "made an error of law" pursuant to s 111 of the EPA Act by acting on the belief that it had no power to exercise its jurisdiction other than to make the decision it did; and

(4) whether in making their respective decisions either respondent constructively failed to exercise its jurisdiction because it misconstrued its powers and duty pursuant to Part 5 of the EPA Act.

In relation to the fourth ground of review identified above, it may be observed that the appellant never identified before the primary judge, nor on the appeal, any relevant "power" conferred on the respondents by Part 5 of the EPA Act, in respect of which there was an alleged constructive failure to exercise jurisdiction.

Decision of primary judge

The primary judge rejected each of the appellant's grounds of review seeking to impugn the respondents' decisions (see Rous Water (No 2)).

First ground

As to the first ground of review (founded on s 111 of the EPA Act), the primary judge rejected the appellant's submission that the respondents failed to properly consider the impact of the relevant fluoridation activities on the environment because of an absence of information before either of them as to the fate of the fluoridated water and its interaction with, and impact upon, the receiving environment. The primary judge held (at [78]) that each of the respondents adequately discharged their duty pursuant to s 111 of the EPA Act and cl 228(2) of the EPA Regulations insofar as each took into account to the fullest extent reasonably possible all matters affecting or likely to affect the environment by the uplift in water fluoridation.

In making this finding, the primary judge (at [80]) rejected the appellant's submission that it was incumbent on the respondents to, independently from each other or from the Secretary of the Department of Health, undertake a comprehensive de novo investigation into the environmental effects of water fluoridation in order to comply with s 111 of the EPA Act.

In relation to the appellant's alternative submission that the respondents failed to give "proper, genuine and realistic consideration" to relevant matters contained in s 111 of the EPA Act, the primary judge noted (at [84]) the essence of the appellant's complaint was that the respondents considered themselves compelled by the direction and approvals given to them by the Secretary to the Department of Health to fluoridate the public water supplies under their control. Therefore, the appellants contended, the Secretary had not given proper, genuine or realistic consideration to the mandatory matters contained in s 111 of the EPA Act and cl 228(2) of the EPA Regulations.

The primary judge held (at [91]) that under this first ground of review the Court's task was to determine whether or not the respondents complied with s 111 of the EPA Act. Her Honour held that this was an objective inquiry and that even if the respondents held a subjective view that the material before them was inadequate, this was irrelevant. Rather, provided the respondents examined and took into account the relevant matters referred to in s 111 of the EPA Act and cl 228(2) of the EPA Regulations to the fullest extent reasonably possible, each respondent discharged its duty.

The primary judge held (at [92]) there was insufficient evidence upon which it could reasonably be concluded that the respondents were somehow intimidated into making their decisions as alleged by the appellant. Further, the primary judge held (at [96]) that it had not been demonstrated that by reason of either the Blakes advice or the Lindsay Taylor advice, the respondents regarded themselves as improperly bound or that either respondent failed to take into account to the fullest extent reasonably practicable the mandatory matters each was required to consider pursuant to s 111 of the EPA Act and cl 228(2) of the EPA Regulations.

In respect of the Ballina Council decision, the primary judge also held (at [100]) that the challenge on the ground of an alleged failure to comply with the EPA Act and EPA Regulations was premature, because the decision only related to the construction of the fluoridation dosing plant at Marom Creek, not the addition of fluorine and hence s 111 of the EPA Act was not yet engaged.

Second and thIrd grounds

As to the second and third grounds of review (taking into account irrelevant considerations and error of law pursuant to s 111 of the EPA Act), the primary judge dealt with these together, observing (at [103]) that they were essentially different formulations of the same complaint. The essence of this complaint was the purportedly erroneous nature of the legal advice insofar as it allegedly indicated to the respondents that they had no alternative but to immediately implement the Secretary's direction and approvals and that any failure to do so could result in sanctions.

The primary judge held (at [106]) that these grounds of review must fail in addition to the reasons given in respect of the first ground of review. First, it had not been demonstrated that the legal advice was erroneous. Secondly, there was nothing in the statutory power being exercised by Rous Water prohibiting consideration of arguably incorrect legal advice. Thirdly, the appellant was not able to identify what further expert advice or material Rous Water would have sought prior to making its decisions, and moreover, the effect that such information would have had on its decisions. Fourthly, even assuming the legal advice was wrong, at its highest this would amount to an error of fact made by the respondents, which was not reviewable.

Fourth ground

As to the fourth ground of review (constructive failure to exercise jurisdiction), the primary judge proceeded upon the basis (at [108]) that a constructive failure to exercise jurisdiction occasioned by taking into account an irrelevant consideration, or by Rous Water failing to apply itself to the task that s 111 of the EPA Act mandates must be undertaken, is clearly an error going to jurisdiction.

In respect of Rous Water, the primary judge held (at [109]) that the essence of this challenge was the same as the second and third grounds of review, namely, the reliance on the Lindsay Taylor legal advice. Hence the challenge was rejected for the same reasons given in respect of the second and third grounds.

In respect of Ballina Council, the primary judge considered (at [110]) that the complaint was identical (to that in respect of Rous Water). Her Honour noted that the substance of the legal advice given to Rous Water was known to Ballina Council at the time of the Marom Creek decision, and the two members of the Ballina Council were also councillors of Rous Water, both of whom were aware of the legal advice provided by Blakes and Lindsay Taylor to Rous Water.

The primary judge held (at [111]), that the appellant had not demonstrated any misapprehension by Ballina Council as to the exercise by it of any power under Part 5 of the EPA Act, notwithstanding that it had misdescribed in its minutes of the meeting at which the decision was made on 27 May 2010, that a direction had been given to the council, rather than only an approval.

Issues on appeal

The issues on appeal were substantially narrowed at the commencement of the hearing following the filing of a second further amended notice of appeal which abandoned Grounds 4, 6, 7 and 8. (These appeal grounds were directed to the first, second and third grounds of review below.) The remaining grounds of appeal were directed to two matters. First, the alleged constructive failure to exercise jurisdiction. Secondly, the costs order below.

During the hearing of the appeal, the appellant sought leave to amend Ground 1 relating to alleged incorrect legal advice received by the respondents, which was said to have influenced their decisions, to include another aspect of the advice concerning the "deadlines" in Condition 3 which was also said to be erroneous.

That amendment was opposed by the respondents on two grounds. First, that it raised a new issue which was not raised below and was inconsistent with the position put by the appellant on the hearing of the two preliminary questions. Secondly, there was no utility in granting the amendment because it was without merit. The respondents did not submit that the amendment caused them any particular prejudice. The court indicated that it would determine the amendment application as part of its determination of the appeal.

The amendment to Ground 1 should be permitted because it is not suggested that it would cause any prejudice to the respondents. However, for the reasons explained below, the amendment of itself does not assist the appellant's challenge to the respondents' decisions.

In summary, the issues as narrowed on appeal were as follows:

(1) Whether the primary judge erred in holding that it had not been shown that the legal advice dated 16 April 2010 was erroneous, when Justice Biscoe's findings in his decision of 28 April 2011 made plain that the legal advice was erroneous, because:

(a) in the case of an approval, the authority is not obliged to carry out the activity in accordance with the terms of approval but is merely empowered to do so;

(b) the letter dated 4 March 2009 (p 147, Blue) constituted an approval within the meaning of Condition 3 of each of the approval and direction gazetted (Ground 1).

(2) Whether the primary judge erred in failing to draw the inference that the legal advice received by the respondents had influenced their decisions, when the inference should have been drawn on the evidence that the legal opinions had influenced the decisions of the respondents (Ground 2).

(3) Whether the primary judge erred in finding that there was no constructive failure to exercise jurisdiction by the respondents, when the respondents were under the misapprehensions that the legal effect of the approvals they had been granted amounted to a direction to fluoridate, that they had an obligation fluoridate and that they had a deadline by which to fluoridate drinking water in each water supply area the subject of each resolution (Ground 3).

(4) Whether the primary judge erred in holding that there was no error in relying on the legal advice, even if it were wrong when reliance on the advice caused a constructive failure by the first respondent to exercise jurisdiction in accordance with its duty under s 111 of the EPA Act because the respondents were under the misapprehensions that the legal effect of the approvals they had been granted amounted to a direction to fluoridate, that they had an obligation to fluoridate and that they had a deadline by which to fluoridate drinking water in each water supply area the subject of each resolution (Ground 5).

(5) Whether, in the exercise of her discretion when making costs order against the appellant, the primary judge erred in finding:

(a) that the respondents had always denied that the question whether an environmental impact statement was required pursuant to s 112 of the EPA Act raises a question of jurisdictional fact, namely whether an activity is likely to have a significant effect on the environment, when the pleadings showed and the respondents conceded that the critical change to their pleading, from accepting to denying that the question whether an environmental impact statement was required pursuant to s 112 of the EPA Act raises a question of jurisdictional fact, was made in the week before the hearing; and

(b) that the appellant engaged in disentitling conduct in discontinuing his challenge under s 112 of the EPA Act (Ground 9).

This appeal lies as of right: Land and Environment Court Act 1979, s 58.

Issues which are not raised by this appeal

Having regard to the way in which the appellant pleaded and conducted his case below, and has cast his amended grounds of appeal focussing on the respondents' alleged constructive failure to exercise jurisdiction, it is important to record what is not in issue in this appeal.

First, there is no challenge to the decision of the primary judge in rejecting each of the other three grounds of review relied upon by the appellant below.

Secondly, there is no challenge to the primary judge's conclusion in relation to Ballina Council, that the appellant's attempt to impugn the Marom Creek decision on the basis of an alleged breach of the statutory duty in s 111 of the EPA Act was premature and ought to be dismissed for this additional reason.

Grounds 1, 2 and 3

The appellant submitted that appeal Grounds 1, 2 and 3 should be read together as part of the complaint that there was a constructive failure to exercise jurisdiction by the respondents.

Thus, the appellant submitted that the Lindsay Taylor legal advice dated 16 April 2010 was erroneous, that this legal advice had "influenced" the respondents' decisions and hence there was a constructive failure by the respondents to exercise jurisdiction in accordance with their duty under s 111 of the EPA Act. This was said to follow because the respondents were under the misapprehension that the legal effect of the approvals they had been granted by the Secretary amounted to a direction to fluoridate, that they had an obligation to fluoridate and they had a deadline (specified in Condition 3) by which to fluoridate drinking water in each water supply area the subject of each resolution.

The respondents' submissions highlighted that the appellant's complaint on appeal was somewhat differently framed to his challenge below. Before the primary judge, the appellant had contended that the respondents had failed to exercise jurisdiction by taking into account an irrelevant consideration, or had failed to apply itself to the task that s 111 mandates must be undertaken. The primary judge (at [106]) rejected the appellant's challenge based on these two complaints when dismissing the second and third grounds of review below. There is no appeal in respect of those findings or conclusions.

The respondents noted that the appellant now submits on appeal that the respondents misapprehended the nature or limits of their functions or powers by making an erroneous finding or reaching a mistaken conclusion as to the legal effect of the approvals, that is, they had no choice in the circumstances but to decide immediately to construct the fluoride plants.

The respondents submitted that the misapprehension relied upon by the appellant is in substance the inference the appellant says the primary judge should have drawn, but correctly declined to draw, in relation to the effect of the legal advice on the respondents' decisions. I consider this specific complaint below under Ground 2.

The respondents submitted that the decisions by the respondents were exercisable pursuant to their general powers under s 24 of the LG Act, as found by the primary judge (at [63]). There is no challenge to this finding of the primary judge.

The respondents also submitted that appeal Grounds 1, 2, 3 (and 5) proceed from a misconception about the duty imposed upon a decision maker by s 111 of the EPA Act, upon which the appellant's case below was based. The respondents highlighted that s 111 is a duty and not a power. That section imposes an obligation on the respondents to examine and take into account to the fullest extent (reasonably) possible all environmental effects of an activity. This duty involves an objective standard that has either been complied with or not, and the primary judge held it had. Again, there is no challenge to these findings.

In relation to the significance of the legal advice, the respondents' position was that it was correct but as it did not ultimately matter this was not put at the forefront of the respondents' submissions. It was permissible, they submitted, for the respondents to take account of legal advice that the Review of Environmental Factors and the supplementary documents provided to Rous Water by the NSW Department of Health and the EPA satisfied the requirements of s 111 of the EPA Act, as held by the primary judge (at [78] and [97]). The respondents submitted that what the legal advices said about other matters was irrelevant to compliance with s 111.

Was the legal advice wrong (Ground 1)

The appellant submitted that the legal advice from Lindsay Taylor was erroneous for two reasons:

First, that in the case of an approval, a water supply authority is not obliged to carry out the activity in accordance with the terms of the approval, but is merely empowered to do so.

Secondly, that the letter to Rous Water from the Acting Chief Dental Officer dated 4 March 2009 constituted an approval within the meaning of Condition 3 of the Lismore Approval and the Richmond Valley Direction extending the time for commencement of the upward adjustment of fluorine in the relevant water supply from no later than 31 December 2008 to an indeterminate date.

The first alleged error raises a question as to the proper construction of s 6, s 6A and s 6B of the Fluoridation Act. The second alleged error raises a question as to the alleged effect of the Acting Chief Dental Officer's letter of 4 March 2009 for the purposes of Condition 3 of the Lismore Approval and the Richmond Valley Direction.

The appellant accepted on the appeal that the correctness of the Lindsay Taylor legal advice was not an issue on the preliminary questions determined by Biscoe J. Nevertheless, the appellant submitted that the distinction between a direction and approval had been correctly recognised by Biscoe J on the preliminary questions, where his Honour said in Rous Water (No 1) at [39]:

"There is a great difference in the nature of the obligation to fluoridate under s 6(1A) created by a direction and the nature of a discretionary right to fluoridate under s 6(1) created by an approval."

The subject of the Lindsay Taylor advice and the earlier Blakes advice was whether Rous Water had sufficient material before it to satisfy s 111 of the EPA Act to proceed to an assessment of the environmental impacts of the proposed uplifts and construction of the fluoride dosing plants.

The primary judge noted (at [90]) that the Blakes advice did not mandate the outcome of the assessment under s 111 of the EPA Act, rather it stated that Rous Water had sufficient information to proceed to an assessment and that any failure to do so may result in a breach of the Fluoridation Act, in particular under s 6(6) and s 6A(5), as a consequence of its delay in complying with Condition 3 of the Lismore Approval and the Richmond Valley Direction.

The primary judge also considered (at [90]) that the Lindsay Taylor advice did not mandate the outcome of the assessment under s 111 of the EPA Act. However, the Lindsay Taylor advice was in more emphatic terms as to breach of the Fluoridation Act, if Rous Water did not comply with the approvals granted and the direction given to it by the Secretary: see [37] above.

In this regard, the Lindsay Taylor advice noted that:

(1) s 6 of the Fluoridation Act clearly distinguished between approvals granted and directions given by the Secretary;

(2) s 6(1A) made it clear that a water supply authority must add fluorine to a public water supply if a direction to do so is given by the Secretary;

(3) that there was no express equivalent provision that obliged a water supply, authority to act in relation to an approval to add fluorine to a public water supply, and ordinarily a statutory approval to do something does not create an obligation to do the thing;

(4) however, the better view of the effect of the statutory scheme in the Fluoridation Act and particularly the operation of s 6(5)(b) and s 6B is that, once given, an approval by the Secretary of the Department of Health under s 6 must be implemented and complied with, unless it is revoked by the Secretary under s 6B. That is, there is no discretion in a water supply authority to whom an approval has been given regarding the implementation of that approval, unless that approval had been revoked (which had not occurred).

I have concluded that the final part of the Lindsay Taylor advice (referred to in [85(4)] above) was erroneous insofar as it concerns the legal effect of an "approval" by the Secretary. On the proper construction of the statutory scheme contained in the Fluoridation Act, a water supply authority to whom an approval has been granted under s 6 is not obliged to carry out the activity the subject of the approval, but is merely empowered to do so. My reasons are as follows.

Effect of an approval under s 6

The starting point in the analysis is to observe that the language of s 6(1) of the Fluoridation Act is permissive. By use of the word "may", a water supply authority is empowered to add fluorine to any public water supply under its control, subject to the provisions of s 6 and the regulations.

Unless the contrary intention appears in the Fluoridation Act, the word "may" which is used to confer a power in s 6(1), indicates that the power may be exercised or not, at discretion: see Interpretation Act 1987 (NSW) s 5, s 9; Ward v Williams (1955) 92 CLR 496 at 505-506; Samad v District Court of New South Wales [2002] HCA 24; (2002) 209 CLR 140 at [33]-[34].

Next, s 6(2) contains a prohibition on a water supply authority adding fluorine to any public water supply with two means of lifting the prohibition, being either the grant of an approval (s 6) or the giving of a direction (s 6(1A)) by the Secretary to undertake such conduct.

The circumstances in which an approval may be granted or a direction given by the Secretary are different. The grant of an approval is subject to a prior application for the approval by a water supply authority (s 6(4)). By contrast, a direction may be given only if the water supply authority has referred the question of fluoridating the public water supply to the Secretary for consideration and the Secretary has received advice of the Fluoridation of Public Water Supplies Advisory Committee as regards that question.

In the case of a direction given by the Secretary, the use of the mandatory language "shall" in s 6(1A) makes clear that the power conferred on an authority by s 6(1), also imposes a duty to exercise the power in the circumstances where a direction has been given by the Secretary. That is, a direction given under s 6(1A) lifts the prohibition in s 6(2) and replaces it with an obligation on the water supply authority to add fluorine to the public water supply under its control on the terms attached to the direction (s 6A(3)).

In the case of an approval granted by the Secretary, the approval also lifts the prohibition in s 6(2) but nothing in s 6 creates an obligation on the water supply authority to whom an approval has been granted to fluoridate a public water supply under its control. Thus, a different effect is given by s 6 to an approval and a direction.

The next question is whether any other provisions of the Fluoridation Act indicate a contrary intention that an approval by the Secretary under s 6 creates an obligation. Two potential contrary indicators are the terms of s 6(6) and s 6B.

First, s 6(6) provides that a water supply authority which contravenes or fails to comply with any provisions of this section or the conditions attached to an approval is guilty of an offence.

Secondly, s 6B(1) provides that a water supply authority to which an approval has been granted or a direction has been given shall not discontinue fluoridating the public water supply concerned, unless the approval or direction (as the case may be) is revoked by the Secretary. Section 6B(2) provides that it is an offence for an authority to contravene this provision.

In my view, neither s 6(6) nor s 6B have the effect of altering the prima facie permissive nature of an approval under s 6. My reasons are as follows.

Section 6(6)

The differential effect of an approval and a direction by the Secretary is highlighted by the terms of the offence provision in s 6(6) in the case of an approval, compared to the offence provision in s 6A(5) in the case of a direction.

In the case of a direction, it is an offence for an authority to contravene or fail to comply with the direction or any terms attached to the direction (s 6A(5)). By contrast, in the case of an approval it is an offence if an authority contravenes or fails to comply with any provisions of s 6 or any conditions attached to an approval granted to it (s 6(6)). Two observations arise from the terms of s 6(6).

First, the reference to an authority contravening or failing to comply with the provisions of s 6 is clearly directed to the circumstance of an authority adding fluorine to any public water supply without the requisite approval or direction of the Secretary.

Secondly, the reference in s 6(6) to contravening or failing to comply with "any conditions attached to an approval" limits the scope of any offence in the case of an approval. Thus, it is an offence if a water supply authority fails to comply with the conditions attaching to the approval relating to the concentration and form of fluorine to be used (s 6(5)(c)(i) and (ii)) or any other condition attached to the approval (s 6(5)(c)(iii)).

However, it is not an offence under s 6(6) if the water supply authority does not engage in the conduct the subject of the approval. Failure to commence adding fluorine to the relevant public water supply area by any date specified in the conditions attaching to an approval (such as Condition 3 in this case) would only have the consequence that the approval was no longer in force. Hence the prohibition in s 6(2) would apply, absent a new approval under s 6 or a direction given under s 6A. It is not an offence under s 6(6) not to commence adding fluorine at all, by any date specified in the conditions attaching to an approval.

Section 6B

The appellant submitted that the language in s 6B ("a water supply authority to which an approval has been granted or a direction has been given shall not discontinue fluoridating ...") means in the case of an approval, if an approval is taken up and fluoridation commences. The respondents submitted that the Lindsay Taylor legal advice was correct i.e., the effect of s 6B is that an approval once granted must be implemented, unless revoked by the Secretary.

In my view, s 6B does not reveal a contrary intention that a water supply authority is obliged to carry out the activity permitted by an approval. My reasons are as follows.

First, the circumstance with which s 6B is concerned is conduct of an authority discontinuing fluoridating the public water supply under its control, in the absence of revocation of an existing approval or direction by the Secretary. The language of "shall not discontinue fluoridating ..." is directed to discontinuing an existing activity of fluoridating a public water supply.

Secondly, in the case of a direction, the statutory scheme is that failing to comply with a direction or any terms attached to a direction to add fluorine to a public water supply is an offence (s 6A(5)), and there is a separate offence if an authority discontinues fluoridating without the direction having been revoked by the Secretary (s 6B(2)).

Thirdly, and in contrast to a direction, in the case of an approval under s 6, there is no offence for failing to add fluorine to a public water supply under its control following the grant of an approval. The offence provisions are directed to two other distinct matters: (a) failing to comply with the conditions of an approval (s 6(6)); and (b) discontinuing fluoridating a public water supply under its control, absent revocation of the approval by the Secretary (s 6B).

It is not an offence for an authority to apply for and obtain an approval, but not to carry out the activity the subject of the approval. However, if an authority obtains an approval, it is an offence if the authority discontinues the permitted activity, that is fluoridating the public water supply, except if the approval has been revoked by the Secretary (s 6B(2)).

In summary, the power conferred on an authority by s 6 of the Fluoridation Act to add fluorine to a public water supply under its control where an approval has been granted by the Secretary, does not impose a duty on the authority to carry out the permitted activity the subject of the approval.

Condition 3 - extension of time

The appellant submitted that a letter from the Acting Chief Dental Officer of NSW Health dated 4 March 2009 constituted an effective approval under Condition 3 to extend for an indefinite period, the time by which Rous Water was to commence adding fluorine to the relevant water supply areas. That is, there was no longer any time limit in Condition 3 for the commencement of fluoridation of the relevant water supply in respect of either the Lismore Approval and the Richmond Valley Direction.

The respondents submitted that the 4 March 2009 letter from the Acting Chief Dental Officer was neither in form nor in substance an extension of the time specified in Condition 3. In my opinion, the respondents' submission is correct.

First, as to form, there is no reference in the 4 March 2009 letter to the terms of Condition 3 of either the Lismore Approval or the Richmond Valley Direction, or any request by Rous Water, let alone any decision by the Acting Chief Dental Officer, to approve an extension of the time specified in Condition 3.

Secondly, there is no evidence that Rous Water had requested an extension of time under Condition 3 of the relevant approval and direction prior to the 4 March 2009 letter. However, it did so subsequently (see [36] above).

Thirdly, as to substance, the words in the 4 March 2009 letter relied upon by the appellant, namely, "Rous will have to await the outcome of the Council's decision on the matter" (which the appellant submitted should be taken to be a reference to an impending decision of Ballina Council), are entirely inapt to constitute an approval of an extension of the time specified in Condition 3 for implementation of fluoridation of the relevant water supply areas of Lismore and Richmond Valley.

Fourthly, the apparent context of the 4 March 2009 letter is somewhat unclear on the evidence. The letter commences by referring to a letter from Rous Water of "13 February" regarding its frustration with delays in implementing fluoridation. There is also a reference to Rous Water's "Form 1" which is said to be in the process of being completed following identification by the Department of Water and Energy of issues that require changes to the original concepts provided to it by Rous Water. Neither the 13 February letter from Rous Water, or the Form 1 are in evidence. Insofar as the 4 March 2009 letter is to be taken to be referring to an impending decision of Ballina Council (as submitted by the appellant), the context appears to be its decision on 26 March 2009 indicating support for fluoridation of the Ballina Council water supply area (see [21] above). The apparent context of the 4 March 2009 letter does not justify the characterisation sought to be given to it by the appellant.

As amended on appeal, the appellant's complaint in Ground 5 is very similar to that in Grounds 1, 2 and 3. The essential difference is that it challenges the primary judge's conclusion, based on the assumption that the legal advice was wrong.

The appellant's written submissions dealt with appeal Grounds 4 and 5 together. The written submissions were primarily directed to Ground 4, which has now been abandoned. The essence of the appellant's complaint is that it is not for the legal advisers to Rous Water to dictate that a decision maker had no right to seek further material, if that material was a relevant consideration within the legislative scheme, here the EPA Act in carrying out its duty under s 111.

The respondents submitted that the legal advices from Blakes and Lindsay Taylor stated that there was sufficient material before the respondents to proceed to assess the environmental impacts under s 111 of the EPA Act, and the primary judge correctly considered that the legal advices did not mandate the outcome of an assessment under s 111. Rather they recommended that Rous Water proceed to assess the environmental impacts.

This ground of appeal fails for the same reasons as apply to Grounds 2 and 3. It involves the same complaint that the first respondent misconceived its duty under s 111 of the EPA Act. In my view, the appellant has not established error in the primary judge's refusal to draw this inference.

Ground 5 of the notice of appeal is not made out.

Ballina Council (Ground 8)

There is an additional reason why the challenge to the decision of Ballina Council must fail.

The primary judge held (at [100]) that the impugned decision concerned only the "construction of the proposed fluoridation plant", and was not a resolution to increase the fluoride levels in the relevant public water supply. Accordingly, there was no requirement at that time for Ballina Council to consider the "likely impacts" generated by the proposal in compliance with s 111 of the EPA Act and clause 228(2) of the EPA Regulations (compare the meaning of the words "likely impacts of that development" in s 79C(1)(b) of the EPA Act, considered in Hoxton Park Residents Action Group Inc v Liverpool City Council [2010] NSWLEC 242; and on appeal Hoxton Park Residents Action Group Inc v Liverpool City Council [2011] NSWCA 349; (2011) 81 NSWLR 638 at [44]-[48]). The primary judge concluded that any attempt to impugn the Marom Creek decision on the basis that Ballina Council had failed to consider the impact of any uplift in fluoridation was premature.

On the hearing of the appeal, the appellant abandoned Ground 8 which challenged the primary judge's conclusion in relation to the Marom Creek decision that s 111 of the EPA Act had not yet been engaged and hence the appellant's challenge was premature. It is unnecessary to express any view on whether the primary judge's conclusion in this regard was correct.

Having abandoned the challenge to the decision of the primary judge that s 111 of the EPA Act had not yet been engaged, the appellant's challenge to the Marom Creek decision alleging a constructive failure to exercise jurisdiction in accordance with Ballina Council's duty under s 111 of the EPA Act must necessarily fail.

Costs discretion (Ground 9)

The appellant submitted that the exercise of the costs discretion of the primary judge miscarried in Rous Water (No 3) and that the costs order below should be set aside.

It was further submitted that the cost discretion should be re-exercised by this court and that there should be no order against the appellant as to the costs of the expert evidence. It should be noted that the order sought in the second further amended notice of appeal that the respondents pay the appellant's costs below, was not pressed in either the appellant's written or oral submissions.

Unless the appellant can show some error of principle by the primary judge in the exercise of her discretion, or that she considered irrelevant matters, or failed to consider relevant matters, or made some manifest mistake, then this court will not interfere with the costs decision.

The appellant makes no complaint about the principles applied by the primary judge. Nor is any complaint made concerning the primary judge's apportioning the cost payable by the appellant so as to exclude the costs associated with Rous Water (No 1). Rather, the appellant complains that the primary judge erred in making certain findings of fact, namely, that:

(1) the appellant had engaged in disentitling conduct in discontinuing his claim based on s 112 of the EPA Act on the second day of the hearing; and

(2) the respondents had always denied that the question whether an EIS was required pursuant to s 112 of the EPA Act raised a question of jurisdictional fact when the critical change to the respondents' pleading from accepting to denying that the question whether an EIS was required pursuant to s 112 of the EPA Act raised a question of jurisdictional fact, was made in the week before the hearing.

It appears from the reasons in Rous Water (No 3) that the principal determinates of the cost application were that:

(1) There was disentitling conduct by the appellant occasioned by his late abandonment of two grounds of review on the second day of the hearing, being the ground founded upon s 112 of the EPA Act and the manifest unreasonableness ground.

(2) The respondents initially contended in their points of defence filed on 17 September 2010 that the question of whether or not an EIS is required pursuant to s 112 of the EPA Act may raise a question of "jurisdictional fact" in an appropriate case, and otherwise denied the paragraph in the appellant's points of claim alleging a jurisdictional fact in s 112.

(3) On 15 June 2011, the respondents filed a further amended points of defence which withdrew the admission of the allegation concerning a "jurisdictional fact" and pleaded a bare denial to that allegation. (In fact, the primary judge was in error in referring to a bare denial. The further amended points of defence pleaded a non-admission of this allegation.)

(4) Whatever may have been the understanding of the parties before Biscoe J on 14 March 2011 for the limited purpose of determining the separate questions, at no point did either respondent concede for the purposes of the final hearing that s 112 of the EPA Act required the establishment of a jurisdictional fact.

(5) On 15 June 2012, the appellant received the respondents' written submissions which included argument on whether s 112 of the EPA Act involved a jurisdictional fact. The appellant continued to prepare for the hearing, and on 17 June 2011 notified the respondents of the precise parts of his expert evidence upon which he intended to rely at the hearing.

(6) On 21 June 2011, the appellant first foreshadowed the possible abandonment of the s 112 claim following argument on the first day of the hearing, concerning the admissibility of the expert evidence of the appellant's principal scientific witness. The s 112 claim was abandoned the next day, 22 June 2011.

The respondents properly acknowledged on the appeal that the transcript before Biscoe J, which was not in evidence before the primary judge on the application for costs, reflected a concession made by the respondents on the hearing of the separate questions on 14 March 2011 admitting that, on the better view of the Court of Appeal authorities, s 112 of the EPA Act raised a question of jurisdictional fact.

Nevertheless, the respondents submitted that the costs order of the primary judge should not be disturbed because:

first, having regard to the terms of the defence filed by the respondents on 17 September 2010, the question of whether s 112 raised a jurisdictional fact was in issue between the parties until the admission was made before Biscoe J on 14 March 2011 and by that date much of the expert evidence to be relied upon by the parties had already been filed;

secondly, the primary judge correctly observed that at no stage did the appellant object to the filing of the amended defence on 15 June 2011;

thirdly, the appellant's explanation for abandoning the s 112 EPA Act challenge on the second day of the hearing (being 22 June 2012), namely that he considered it unlikely he would succeed on the question of whether s 112 raised a jurisdictional fact if the position was not agreed, was beside the point. The critical point was that the appellant brought and maintained an erroneous allegation that s 112 raised a jurisdictional fact;

fourthly, the appellant has not challenged the findings of the primary judge that two countervailing circumstances prevented the proceedings from being characterised as in the public interest, namely, the matters of public interest raised were narrow and concerned particular factual matters, and the appellant's disentitling conduct also included the late abandonment of the manifest unreasonableness ground of review.

In my view, the appellant has failed to demonstrate relevant error on the part of the primary judge in the exercise of the costs discretion.

First, the characterisation of the appellant's late abandonment of the challenge founded on s 112 of the EPA Act (and the manifestly unreasonable ground) as disentitling conduct was entirely justified.

The appellant made an allegation concerning the existence of a "jurisdictional fact" raised by s 112 which if accepted by the Court as being correct, would involve proof by evidence, including expert evidence, of whether the activity of adding fluorine to the water supply is likely to significantly affect the environment, or threatened species, populations or ecological communities, or their habitats.

Neither the qualified admission in the respondents' points of defence filed on 17 September 2010, nor the admission made on the hearing of the preliminary questions before Biscoe J in Rous Water (No 1) as to the better view of the Court of Appeal authorities, would obviate the need for the appellant to have satisfied the Court on the final hearing that, on its proper construction, s 112 of the EPA Act raised a "jurisdictional fact".

Secondly, the respondents change of position in its amended defence, of which the appellant complains, occurred relatively soon after the hearing of the preliminary questions in Rous Water (No 1) at which the concession referred to above was made by the respondents (that s 112 raised a jurisdictional fact), and the appellant did not object to the filing of the amended defence by the respondents.

Nor did the appellant complain at any time that he was prejudiced by the amended defence, because any costs associated with the filing of any expert evidence between 14 March 2011 and 15 June 2011, or prior to that period, would have been necessarily wasted.

Thirdly, the appellant continued to maintain his allegation concerning a "jurisdictional fact" raised by s 112 up until the second day of the hearing before the primary judge. It is irrelevant that the appellant asserts that he then considered it unlikely he would succeed at least in a lower court on the question of whether s 112 raised a jurisdictional fact if the position was not agreed between the parties. The parties could not by agreement ascribe a jurisdictional fact to s 112 of the EPA Act if that was not the correct construction of that provision as a matter of law.

In my view, the conclusion as to costs did not involve error on the part of the primary judge.

Conclusion

I propose the following orders:

(1) Grant leave to the appellant to amend Ground 1 of the second further amended notice of appeal in the terms of his oral application on 30 April 2013.

(2) Appeal dismissed.

(3) Appellant to pay the respondents' costs of the appeal.

PRESTON CJ of LEC: I have had the advantage of reading in draft the judgment of Gleeson JA. I agree with his Honour's conclusions on each of the grounds pressed on appeal and the orders proposed. I also agree generally with his Honour's reasons. I wish, however, to express briefly some particular reasons for my agreement. I gratefully adopt his Honour's summaries of the facts concerning the direction and the approvals to fluoridate, the events leading up and involving the making of the decisions by Rous Water to construct and operate four fluoridation plants (at Clunes, Dorroughby, Corndale and Knockrow) and by Ballina Shire Council to construct (but not operate) one fluoridation plant (at Marom Creek), the decision of the primary judge, and the statutory framework. I will use the same abbreviations as his Honour uses, such as the Richmond Valley Direction, Lismore Approval and Marom Creek Approval.

The decision-makers and their powers and duties

Critical to understanding, and dealing with, Mr Oshlack's grounds of appeal is identification of the administrative decision-making bodies and the powers and duties being exercised.

Rous Water is a county council for the purposes of Part 5 of the Local Government Act 1993 ('LG Act'). It has a governing body elected by its constituent councils, which are the Ballina, Byron, Lismore and Richmond Valley councils. Its area of operations includes areas within each of those four local government areas. Its functions are to provide potable water in its area of operations. Ballina Shire Council is a local government body under the LG Act.

Section 24 of the LG Act confers on a council the function to "provide goods, services and facilities, and carry out activities, appropriate to the current and future needs within its local community and of the wider public" subject to the LG Act, the regulations thereunder and any other law. The functions of a county council may comprise any one or more of the functions of a council under the LG Act: s 394 of the LG Act. Hence, a county council may have the functions under s 24 of the LG Act.

It was common ground between the parties in this case that, in deciding to approve the construction and operation of the various fluoridation plants, Rous Water and Ballina Shire Council were exercising a function under s 24 of the LG Act.

In exercising this function under s 24, Rous Water and Ballina Shire Council were bound to consider relevant matters and ignore irrelevant matters under the LG Act, and otherwise comply with the requirements of the LG Act.

In addition, however, s 111 of the Environmental Planning and Assessment Act 1979 ('EPA Act') required Rous Water and Ballina Shire Council to "examine and take into account to the fullest extent possible all matters affecting or likely to affect the environment by reason of" the activities of constructing and operating the fluoridation plants.

The crux of the appeal is the erroneous legal advice

On the appeal, Mr Oshlack's challenge to the decision of the primary judge, dismissing his judicial review challenge to the decisions of Rous Water to approve the construction and operation, and Ballina Shire Council to approve the construction, of fluoridation plants, revolved around the legal advice given to Rous Water on 16 April 2010 by Lindsay Taylor Lawyers before Rous Water and Ballina Shire Council made their respective decisions. Mr Oshlack contended that this legal advice was erroneous and that the primary judge erred in finding otherwise (appeal ground 1). The three other grounds of appeal pressed by Mr Oshlack were different ways in which he argued that the decisions of Rous Water and of Ballina Shire Council miscarried in law as a consequence of that erroneous legal advice. Mr Oshlack contended that the erroneous legal advice influenced the decisions of Rous Water and Ballina Shire Council (appeal ground 2); caused a constructive failure by Rous Water and Ballina Shire Council to exercise jurisdiction under s 24 of the LG Act to approve the construction and operation of the fluoridation plants (appeal ground 3); and caused a constructive failure by Rous Water to exercise jurisdiction in accordance with its duty under s 111 of the EPA Act to consider the environmental impacts of the construction and operation of four fluoridation plants (appeal ground 5).

The legal advice was erroneous

As to the first appeal ground, I agree with Gleeson JA for the reasons he gives (at [105]-[127]) that the legal advice was in error in stating that Rous Water was obliged to add fluoride to the public water supply in accordance with the Lismore Approval and that its failure to do so by the date specified in the Lismore Approval (31 December 2008) caused it to be exposed to ongoing liability for offences against s 6(6) of the FluoridationofPublic Water Supplies Act 1957 ('the Fluoridation Act').

This means that the primary judge erred in finding, at [106], that it had not been demonstrated that the legal advice was wrong. Appeal ground 1 is therefore made out.

Erroneous legal advice must be causative of legal error

However, establishing that the legal advice was in error in some respect, whilst necessary, is not sufficient by itself to render invalid the exercises of the power under s 24 of the LG Act or the duty under s 111 of the EPA Act by Rous Water or by Ballina Shire Council. The erroneous legal advice must be shown to be causative of the exercises of that power or that duty miscarrying in law.

On appeal, Mr Oshlack sought to do this in two ways. The first was said to be that the erroneous legal advice had "influenced" the decisions of Rous Water and Ballina Shire Council (appeal ground 2). However this, by itself, is legally insufficient. Influence alone has no legal consequence - the influence must involve legal error, such as causing the exercise of the power or duty to miscarry in law. For example, at trial, Mr Oshlack contended that the erroneous legal advice was an irrelevant consideration which Rous Water and Ballina Shire Council were bound to ignore, but which they instead took into account (ground 3 of the amended points of claim). That contention was rejected by the primary judge and Mr Oshlack did not press his appeal on that ground. Another example, which Mr Oshlack did press on appeal, was that the erroneous legal advice caused a constructive failure by Rous Water and Ballina Shire Council to exercise their jurisdiction to determine to approve the construction and operation of fluoridation plants (appeal ground 3) or to examine and take into account to the fullest extent possible the environmental impacts of those plants (appeal ground 5).

Hence, in order for Mr Oshlack to succeed, he needed to establish in what respect the erroneous legal advice influenced the exercise of the power or duty by Rous Water and Ballina Shire Council and how such influence had the legal consequence of causing the exercise of the power or duty to miscarry in law. Establishing appeal ground 2, therefore, was legally insufficient by itself to invalidate the exercises of power and duty by Rous Water and Ballina Shire Council and could only serve as a factual foundation for appeal grounds 3 and 5 which concern constructive failure by those bodies to exercise jurisdiction.

The focus of each of appeal grounds 3 and 5 was different. Appeal ground 3 concerned the decisions of Rous Water and Ballina Shire Council to approve the construction and operation of the fluoridation plants. These decisions were made exercising the function (which is a power) under s 24 of the LG Act. Hence, the jurisdiction which Mr Oshlack contended in appeal ground 3 that Rous Water and Ballina Shire Council constructively failed to exercise was the power under s 24 of the LG Act.

Appeal ground 5 concerned a different jurisdiction, being the duty on Rous Water under s 111 of the EPA Act to examine and take into account to the fullest extent possible all matters affecting or likely to affect the environment by reason of the activity of construction and operation of the four fluoridation plants.

I will deal with each challenged exercise of power and duty by Rous Water and Ballina Shire Council.

Exercise of power by Rous Water to approve construction and operation of fluoridation plants

In relation to the exercise by Rous Water of the power under s 24 of the LG Act to approve the construction and operation of four fluoridation plants, Mr Oshlack relied on the resolutions of the governing body of, correspondence of, and public notices issued by, Rous Water to show the influence of the erroneous legal advice on the decision of Rous Water to approve construction and operation of the four fluoridation plants. These resolutions and documents are summarised by Gleeson JA (at [38]-[61] and [136]-[140]).

Mr Oshlack submitted that an inference should be drawn from this material that Rous Water believed that it had no choice in the circumstances but to decide immediately to construct each of the fluoridation plants (at [24] of appellant's written submissions). The perceived compulsion was said to be both as to outcome (approving rather than refusing the construction) and timing (deciding immediately rather than deferring the decision).

Mr Oshlack submitted that the inference as to timing should be drawn from the fact that prior to receiving the legal advice, Rous Water had wanted to make further inquiries and consider further the environmental impacts of fluoridation, and had wanted to extend the deadline for fluoridation of water under the Richmond Valley direction and the Lismore Approval (at [14]-[16] of the appellant's written submissions), but after receiving the legal advice indicating that it had no discretion to do otherwise than to implement the direction and approval without delay and in accordance with their terms (at [18] of the appellant's written submissions), Rous Water resolved to approve the construction and operation of the fluoridation plants (at [19] of the appellant's written submissions). Mr Oshlack submitted that the inference as to outcome should be drawn from those facts as well as from the notice published on the Rous Water website the day after Rous Water's decision stating that the decision was simply about complying with NSW Health's direction (at [20] of the appellant's written submissions).

The primary judge rejected Mr Oshlack's argument that Rous Water believed it had no option but to resolve to approve the construction and operation of the fluoridation plants. First, the use by Rous Water of non-discretionary language in the material was explicable by recourse to similar language employed in s 6A (concerning directions) and s 6 (concerning approvals) of the Fluoridation Act and in the various notices published in the Gazette. Hence, the use of non-discretionary language did not permit an inference to be drawn that Rous Water felt compelled to make the decisions they did: at [87] and [88] of the primary judge's judgment.

Secondly, "the chronology of the decision-making process reveals that each [of Rous Water and Ballina Shire Council] engaged in its task in a cautious and thorough manner. That the vote by Rous Water was not unanimous (four councillors voted against the proposed resolution) strongly indicates, in my opinion, that its will was not overborne in the manner suggested by Mr Oshlack" (at [92] of the primary judge's judgment). The primary judge noted that:

... Rous Water had been considering these issues since 2005. There had been extensive public consultation. The Council had commissioned the REF, which examined the environmental impacts of the approved and directed activity in detail. NDC, the consultants engaged by the Council, required further assurance on the environmental impacts and obtained such assurance from the Department of Health. The Council then adopted the REF, incorporating as it did the material from the Department of Health. It was only after this process, which culminated in the provision of the two legal advices, that the Council proceeded to make a decision because the material before it was sufficient for it to do so; not because, as Mr Oshlack submitted, the legal advices dictated the decision it should make.

(at [97] of the primary judge's judgment).

In my view, Mr Oshlack has not established that the primary judge erred in failing to draw the inference that Ballina Shire Council considered itself compelled to decide to approve the construction and operation of the fluoridation plant.

First, the resolution of Rous Water to approve the construction and operation of the fluoridation plants does not positively establish this fact. It is true that the resolution in terms noted the legal advice. However, this only established that Rous Water considered it. It does not establish that Rous Water, after such consideration, felt compelled to make a decision that they did not otherwise wish to make of approving the construction and operation of the fluoridation plant.

Secondly, as the primary judge found, voting by the governing body of Rous Water reveals that there was a division of opinion between the councillors. The resolution was only passed on the casting vote of the chair. This does not support an inference that the governing body felt compelled to vote in only one way, being for approval.

Thirdly, as the primary judge also found, Rous Water had been considering the issue for many years, made many inquiries, and received many reports and advices. Mr Oshlack relied on this earlier consideration, and inquiries for further information and for extension of time, to support the drawing of an inference that Rous Water could not have changed its view and resolved to approve construction and operation of the plants unless it felt compelled to do so. But this is not the only rational inference that can be drawn. An equally available inference to be drawn is that, after years of consideration and inquiries, reports and advices, the governing body of Rous Water considered that the material before it was sufficient, and the governing body was ready to make a decision to approve or not approve the construction and operation of the fluoridation plants.

Accordingly, Mr Oshlack has not established that the erroneous legal advice so influenced Rous Water as to cause it to constructively fail to exercise the power under s 24 of the LG Act to approve the construction and operation of the fluoridation plants.

Exercise of power by Ballina Shire Council to approve construction of a fluoridation plant

In relation to the exercise by Ballina Shire Council of the power under s 24 of the LG Act to approve the construction of the Marom Creek fluoridation plant, Mr Oshlack submitted that, because Ballina Shire Council had been given the report that went to the Rous Water meeting on 21 April 2010 containing details of the legal advice, Ballina Shire Council must be taken to have also been under the same misapprehension as to the effect of the approval, that the approval was a direction, that it set a statutory deadline that had to be met, and that there was no discretion to be exercised by Ballina Shire Council than to do otherwise than implement the approval (at [22] of the appellant's written submissions). This argument fails for at least two reasons.

First, the legal advice was sought by and given to Rous Water not Ballina Shire Council, and its contents were directed to Rous Water's situation, particularly in regard to the Richmond Valley Direction and the Lismore Approval, rather than Ballina Shire Council's situation which concerned the Marom Creek Approval. The respect in which the legal advice was erroneous concerned the Lismore Approval which contained a condition requiring fluoridation by a date (31 December 2008) that had already expired. The legal advice was that the expiry of this date caused Rous Water to be exposed to ongoing liability for offences under s 6(6) of the Fluoridation Act. However, the relevant approval for the Marom Creek Project in Ballina Shire was the Marom Creek Approval granted on 11 December 2009. The date by which the condition of the Marom Creek Approval required fluoridation was 31 December 2010. That date had not expired by the time of the legal advice to Rous Water (16 April 2010), Rous Water's meeting (21 April 2010), or Ballina Shire Council's meeting (27 May 2010). The legal advice did not refer at all to the Marom Creek Approval, and the analysis of the Lismore Approval in the legal advice was inapplicable to Ballina Shire Council's prospective decision with respect to the Marom Creek fluoridation plant. Ballina Shire Council should not, therefore, be inferred to have been influenced by a legal advice that did not and could not apply to the decision it was to make.

Secondly, the evidence does not establish that Ballina Shire Council felt compelled, by reason of the legal advice provided to Rous Water, to make a decision to approve the construction of the Marom Creek fluoridation plant that it would not otherwise have made. First, there is no evidence that the collegiate body of Ballina Shire Council, which made the decision to approve construction of the Marom Creek fluoridation plant, received, considered, or was influenced by the report to the Rous Water meeting on 21 April 2010 that contained details of the legal advice to Rous Water or by the attachments to that report, including the actual legal advice. The report that did go to Ballina Shire Council's meeting of 27 May 2010 did not refer to the legal advice Rous Water had received or attach that legal advice. Secondly, the report to the Ballina Shire Council meeting expressly stated that there were two options for consideration, namely to decline to approve or to approve the construction of the Marom Creek fluoridation plant. This is inconsistent with the inference which Mr Oshlack submitted should be drawn that Ballina Shire Council believed that there was only one option, being to approve.

For these reasons, appeal grounds 2 and 3 have not been established by Mr Oshlack.

Exercise of duty by Rous Water to consider environmental impacts of fluoridation plant

Mr Oshlack submitted that the erroneous legal advice also caused a failure by Rous Water to exercise the duty under s 111 of the EPA Act (appeal ground 5). The argument was that Rous Water had, by its past conduct of resolutions and inquiries, evidenced a desire to continue to obtain and consider further information on the impacts on the environment of fluoridation. However, the legal advice stated that Rous Water had sufficient information within the meaning of s 111 in relation to the impacts of carrying out the proposals, that Rous Water could not lawfully decide to seek further expert evidence, and that the effect of seeking further advice would be to cause Rous Water to continue to commit offences against the Fluoridation Act. Mr Oshlack submitted that it was not for a lawyer advising Rous Water to dictate that a decision-maker had no right to seek further material if that material was a relevant consideration under s 111 of the EPA Act (at [27] of the appellant's written submissions).

The primary judge rejected Mr Oshlack's argument. The primary judge held that Rous Water had adequately discharged its duty under s 111 of the EPA Act to take into account to the fullest extent possible all matters affecting the environment by reason of the construction and operation of the fluoridation plants (at [78] of the primary judge's judgment). Determining whether or not Rous Water had complied with s 111 of the EPA Act was an objective inquiry. Thus, even if Rous Water had held a subjective view that the material before it was inadequate, this view was irrelevant (at [91] of the primary judge's judgment). Put another way, even if the legal advice was erroneous, and this had caused Rous Water not to obtain the further information it would otherwise have wished to obtain, this did not result in Rous Water failing to comply with s 111 of the EPA Act.

In any event, the primary judge held that there was insufficient evidence upon which it could reasonably be concluded that Rous Water was intimidated into making its decision (at [92] of the primary judge's judgment). Rather, it should be concluded that Rous Water proceeded to make its decision because the material before it was sufficient for it to do so (at [97] of the primary judge's judgment).

In my view, Mr Oshlack has not established that the primary judge erred in so holding. Even if the legal advice was erroneous in the respect earlier stated, this did not cause Rous Water to constructively fail to exercise the duty under s 111 of the EPA Act.

First, causation has not been established. The evidence does not establish that Rous Water, at the time it made its decision on 21 April 2010, still wished to obtain and consider further information but felt compelled not to do so by reason of the legal advice. As the primary judge found, an equally available inference is that Rous Water considered, by that time, that the material was sufficient to discharge its duty under s 111 of the EPA Act. That was the advice that had been given. Rous Water was entitled to accept it without feeling compelled to do so.

Secondly, the primary judge found that, objectively viewed, Rous Water had discharged its duty under s 111 of the EPA Act to examine and take into account to the fullest extent possible all matters affecting or likely to affect the environment by reason of the construction and operation of the four fluoridation plants. Mr Oshlack did not challenge this finding on appeal. In these circumstances, even if Rous Water had subjectively wished to examine and to take into account further information but felt compelled not to do so by the legal advice, there would not be a constructive failure to exercise the duty under s 111 of the EPA Act. The duty had already been exercised. This was the point the primary judge was making when her Honour stated that, even if Rous Water had held a subjective view that the material before it was inadequate, this view would be legally irrelevant.

Ground 5 is therefore not established by Mr Oshlack.

Conclusion: erroneous legal advice not causative of a constructive failure to exercise jurisdiction

In conclusion, Mr Oshlack has not established that the erroneous legal advice caused the exercise by Rous Water of either its power under s 24 of the LG Act to approve the construction and operation of four fluoridation plants or its duty under s 111 of the EPA Act to consider the environmental impacts of those plants to miscarry in law, or cause the exercise by Ballina Shire Council of its power under s 24 of the LG Act to approve the construction of one fluoridation plant to miscarry in law.

Exercise of costs discretion

I agree with the reasons of Gleeson JA that Mr Oshlack has not established that the primary judge's exercise of the costs discretion miscarried. Appeal ground 9 has not been established.

Disposition of the appeal

I agree with the orders proposed by Gleeson JA including that the appeal be dismissed and that the appellant pay the respondent's costs of the appeal.

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Decision last updated: 12 June 2013

Medium Neutral Citation:	Oshlack v Rous Water [2013] NSWCA 169
Hearing dates:	30 April 2013
Decision date:	12 June 2013
Before:	Emmett JA at [1]; Gleeson JA at [21]; Preston CJ at LEC at [201]
Decision:	1. Grant leave to the appellant to amend Ground 1 of the second further amended notice of appeal in the terms of his oral application on 30 April 2013. 2. Appeal dismissed. 3. Appellant to pay the respondents' costs of the appeal. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	ADMINISTRATIVE LAW - judicial review - grounds of review - validity of decision to construct and operate fluoride dosing plants - constructive failure to exercise jurisdiction - whether there was a misconception about the duty imposed on the decision maker COSTS - costs discretion - whether discretion miscarried - whether decision of primary judge involved error
Legislation Cited:	Environment Planning and Assessment Act 1979 Environmental Planning and Assessment Act Regulation 2000 Fluoridation of Public Water Supplies Act 1957 Interpretation Act 1987 Land and Environment Court Act 1979 Local Government Act 1993
Cases Cited:	Craig v South Australia [1995] HCA 58; 184 CLR 163 Ex parte Hebburn Ltd; Re Kearsley Shire Council (1947) 47 SR (NSW) 416 Guthega Development Pty Ltd v Minister Administering National Parks and Wildlife Act 1974 (NSW) (1986) 7 NSWLR 353 Hoxton Park Residents Action Group Inc v Liverpool City Council [2010] NSWLEC 242 Hoxton Park Residents Action Group Inc v Liverpool City Council [2011] NSWCA 349; 81 NSWLR 638 Minister for Immigration v Yusuf [2001] HCA 30; 206 CLR 323 Notaras v Waverley Council [2007] NSWCA 333;161 LGERA 230 R v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170 Rockdale Beef Pty Ltd v Industrial Relations Commission of NSW [2007] NSWCA 128; 165 IR 7 Samad v District Court of New South Wales [2002] HCA 24; 209 CLR 140 Schroders Australia Property Management Ltd v Shoalhaven City Council [2001] NSWCA 74 Transport Action Group against Motorways Inc v Roads and Traffic Authority [1999] NSWCCA 196; 46 NSWLR 598 Ward v Williams (1955) 92 CLR 496
Category:	Principal judgment
Parties:	Al Oshlack (Appellant) Rous Water (First Respondent) Ballina Shire Council (Second Respondent) Lismore City Council (Third Respondent)
Representation:	Counsel: J Johnson (Appellant) N J Williams SC; V M Bosnjak (Respondents) Solicitors: Robert Balzola and Associates (Appellant) Ashurst Australia (First and Second Respondents)
File Number(s):	CA 2012/178722
Decision under appeal	Jurisdiction: 9106 Citation: [2012] NSWLEC 111 (16 May 2012); [2012] NSWLEC 132 (7 June 2012) Before: Pepper J File Number(s): 40570/2010