The Owners of Smiths Beach Resort Strata Plan 49006 v Hadley - [2024] WASC 137

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   THE OWNERS OF SMITHS BEACH RESORT STRATA PLAN 49006 -v- HADLEY [2024] WASC 137
CORAM:   STRK J
HEARD:   18 APRIL 2024
DELIVERED          :   19 APRIL 2024
PUBLISHED           :   22 APRIL 2024
FILE NO/S:   CIV 1427 of 2024
BETWEEN:   THE OWNERS OF SMITHS BEACH RESORT STRATA PLAN 49006
Plaintiff
AND
ALLEN CHARLES HADLEY
Defendant

Catchwords:

Equity - Injunction - Water easement - Whether the plaintiff has established a serious question to be tried - Whether the balance of convenience favours relief - Turns on own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 52

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff	:	KJ de Kerloy
Defendant	:	MG Pendlebury

Solicitors:

Plaintiff	:	Glen McLeod Legal
Defendant	:	Vallve Legal

Cases referred to in decision:

Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76; (2017) 55 WAR 36
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
Wellard Land Holdings (WA) Pty Ltd v Barker Mortgages Pty Ltd [2018] WASC 27

STRK J:

Introduction

The Owners of Smiths Beach Resort Strata Plan 49006 on 18 April 2024 applied for urgent interlocutory injunctive relief and other orders. The application was made by chamber summons in a proceeding commenced by writ of summons also filed on 18 April 2024 by The Owners of Smiths Beach Resort Strata Plan 49006 as plaintiff and Allen Charles Hadley as the defendant.
As recorded in the indorsement of claim to the writ of summons, the plaintiff's claim is for injunctive relief and damages against the defendant arising from what the plaintiff contends is the defendant's breach of material terms of a Water Agreement Deed of Easement dated 23 May 2005 (defined in the indorsement of claim and in these reasons as the Water Agreement). In the indorsement, the alleged breach is described as follows:
In breach of the Water Agreement the defendant:
(a) has stopped and/or alternatively has evinced an intention to stop or reduce the supply of water from his property at Lot 4 on Diagram 56110 Volume 1531 Folio 365 to the Smiths Beach Resort owned by the plaintiff at Lot 2 on Deposited Plan 45279 (Smiths Beach Resort).
(b) has failed to use all reasonable endeavours to locate another source of water on the defendant's property for the purposes of continuing the supply of water to Smith Beach Resort in accordance with the Water Agreement; and
(c) has failed expeditiously to do and execute the documents necessary to ensure the continuing supply of water to the Smiths Beach Resort in accordance with clause 14 of the Water Agreement including executing an authority from the defendant to the plaintiff to permit the plaintiff on his behalf to negotiate with the Department of Water and Environmental Regulation to obtain the appropriate short-term license to increase the amount of water which the defendant can supply to Smiths Beach Resort and executing any amendment to the existing licence or new license to continue his water supply obligations under the Water Agreement.
By the substantive proceeding, the relief claimed by the plaintiff against the defendant is first, a mandatory injunction requiring the defendant:
(a)to continue the supply of water from his property at Lot 4 on Diagram 56110 volume 1531 folio 365 to the Smiths Beach Resort; and
(b)to execute such things, deeds and documents as are necessary to give effect to the terms under the Water Agreement including executing an authority from the defendant to the plaintiff to permit the plaintiff on his behalf to negotiate with the Department of Water and Environmental Regulation to obtain a short‑term license to increase the amount of water which the defendant can supply to Smiths Beach Resort and execute any amendment to the existing licence or new license to continue supplying water to Smiths Beach Resort.
The second part of the relief claimed against the defendant in the substantive proceeding is a claim for damages and interest thereon at such a rate and for such period as the Court shall think fit under s 32 of the Supreme Court Act 1935 (WA).
The application for urgent interlocutory injunctive relief was accompanied by a certificate of urgency provided by Glen McLeod Legal, the solicitors for the plaintiff, in which it was certified that the application was of such an urgent nature as it required to be listed and heard immediately. The Court acceded to the request and the application for injunctive relief was listed at 4.00 pm on 18 April 2024.
The application was supported by the affidavit of Rodney Alexander Shea sworn on 18 April 2024, to which Mr Shea annexed documents marked RAS‑1 to RAS‑14. Mr Shea is one of the co‑owners of the plaintiff and is a director of the original developer of the Smiths Beach Resort, Starvale Corporation Pty Ltd. Mr Shea sits on the council for the plaintiff and has had direct involvement in the management of the resort and the various agreements regarding water supply to the resort.
Subject to the objections ruled upon at the hearing on 18 April 2024, Mr Shea's affidavit was read. Further, the application was supported by an undertaking as to damages proffered by the plaintiff in the usual form, signed by Mr Shea as co-owner of the plaintiff who was duly authorised by the other co-owners to sign the undertaking. Counsel for the plaintiff also relied upon a written outline of submissions filed on 18 April 2024.
The defendant was given notice of the application and counsel for the defendant appeared at the hearing to oppose the grant of interim injunctive relief. Counsel for the defendant read the affidavit of Montgomery James Vallve sworn on 18 April 2024, to which Mr Vallve had annexed documents marked MJV1 to MJV9. Mr Vallve is a solicitor employed by Vallve Legal, the solicitors for the defendant.
At the hearing, various concessions were made for the purposes of the application for interim injunctive relief. Counsel for the plaintiff moved for orders that were more limited than those promoted in the chamber summons. The plaintiff sought orders requiring:
(a)the defendant execute an authority permitting Mr Glen McLeod of Glen McLeod Legal to correspond and negotiate with the Department of Water and Environmental Regulation on behalf of the defendant with respect to a short-term license to increase the amount of water which the defendant can supply to the plaintiff; and
(b)the defendant continue to supply water to the plaintiff pursuant to the Water Agreement up to the annual water entitlement of 27,700 kilolitres.
After hearing counsel in the late afternoon of 18 April 2024, I reserved my decision until 9.30 am the next day. On 19 April 2024 orders were made in favour of the plaintiff. Given the urgency of the application, I gave a brief outline of my reasons and indicated that I would publish my reasons for decision, which would include complete references to materials and evidence before the Court, and complete citations of authorities relied upon in the disposition of the application. My reasons are set out below.

Factual background

The plaintiff owns and operates Smiths Beach Resort, which is situated on the south-west coast of Western Australia. Mr Shea deposed that between the date of his affidavit and 18 July 2024 Smiths Beach Resort would expect to host approximately 925 guests, and that 48 people are employed at the resort.[1]
[1] Affidavit of RA Shea sworn 18 April 2024 par 29.
The defendant is the owner of land from which the plaintiff, through pipeline infrastructure, draws water from a bore on the defendant's land. I understood from the correspondence annexed to Mr Vallve's affidavit that the defendant and his brother, Richard Thomas Hadley, were the former owners of the Smiths Beach Caravan Park (and the land on which it operated), and on that land, the Smiths Beach Resort and the Canal Rocks Apartments were later built.[2] From correspondence annexed to Mr Vallve's affidavit I also understand that during the sale of the land in 2005, in order to continue the supply of water to the site, the defendant and his brother entered into agreement with the purchasers for the supply of water from land owned by them on Hensley Road, Yallingup. Water has been drawn from bores and fed via a pipe directly to the Smiths Beach Resort, from where it has also been diverted to supply Canal Rocks Apartments and a public ablution block.[3]

The Water Agreement

[2] Affidavit of MJ Vallve sworn 18 April 2024, MJV3.

[3] Affidavit of MJ Vallve sworn 18 April 2024, MJV3.

Annexed to Mr Shea's affidavit were a number of agreements which concern the taking of water. The controversy as between the parties concerns the proper construction of the Water Agreement dated 23 May 2005 referenced by the plaintiff in the indorsement of claim. A copy of the Water Agreement (which was registered as Easement J300036) was annexed to Mr Shea's affidavit and marked RAS-2.
The parties to the Water Agreement were the defendant and Richard Thomas Hadley (as the 'Grantor') and Starvale Corporation (as the 'Grantee'). The Water Agreement was entered into prior to the registration of Strata Plan 49006, and I understood that the covenants on the part of the Grantor and Grantee in the Water Agreement now bind and benefit the defendant and the plaintiff, respectively. I did not understand this to be contentious.
The defendant's property upon which the bore is situated is described in the Water Agreement as the 'Servient Tenement'. The plaintiff's property upon which Smiths Beach Resort is now situated is described in the Water Agreement as the 'Dominant Tenement'. The Water Agreement provides at cl 1.3(a) that the easement created by the Water Agreement is for the benefit of the Dominant Tenement and burdens the Servient Tenement. The grant of easement is effected by cl 2, which provides as follows:
2.GRANT OF EASEMENT
Subject to the terms of this Deed, the Grantor, as owner of the Servient Tenement grants to the Grantee as owner of the Dominant Tenement FULL AND FREE RIGHT for every person who is, at any time, entitled to an estate or interest in possession in the Dominant Tenement and every person authorised by him, from time to time:
(a) to take the water from the Bore on the Servient Tenement and drain or pump such water from the Servient Tenement on to the Dominant Tenement or into holding tanks on the Dominant Tenement;
(b) to maintain, repair and replace pumps, bore equipment and holding tanks on the Affected Land for the purposes of pumping water to the Dominant Tenement;
(c) to connect to any existing supply of power by Western Power Corporation to the Servient Tenement provided any connection is separately metered or capable of separate measurement;
(d) to construct and maintain an underground power supply across the Servient Tenement for the purposes of connecting any water pump to the South West Interconnected System operated by Western Power Corporation; and
(e) to maintain, repair and replace a line of water pipes or cables not less than 750 centimetres underground on the Servient Tenement adjacent to the existing piping (as at the date of this Deed) for the purpose of supplying water to the Dominant Tenement.
The Grantee is afforded rights under the Water Agreement to enter upon the Servient Tenement for prescribed purposes connected with ensuring the continued supply of water, subject to express obligations and indemnities in favour of the Grantor. Among other things, the Water Agreement also prescribes certain rights and obligations concerning repair and maintenance, and it deals with the costs of electrical power, the transfer of the Servient Tenement, succession and termination.
Clause 8 of the Water Agreement concerns assurance and registration of the easement, and provides as follows:
8. ASSURANCE AND REGISTRATION
(a) Each party covenants and agrees with the other that it shall do and execute such things, deeds and documents as are necessary on its part to give effect to the terms of this Deed with all due expedition and diligence.
(b) Without restricting the generality of the foregoing, each party covenants and agrees at the request of the other to sign all applications and other documents and procure all necessary consents and do all things necessary to expeditiously procure the registration of this document at the Department of Land Information, Midland pursuant to the provisions of the Transfer of Land Act 1983 (as amended).
Clause 14 of the Water Agreement also concerns continuation of supply and provides as follows:
14. CONTINUATION OF SUPPLY
(a)Notwithstanding the other terms of this Deed, but subject to clause 14(b), the Grantor shall ensure the Servient Tenement continues to supply to the Dominant Tenement the same volume and quality of water supplied by the Servient Tenement to the Dominant Tenement as at the date of this Deed.
(b)The Grantor's obligation under clause 14(a) shall be reduced to the extent that the volume and quality of the available water is affected by matters outside the reasonable control of the Grantor.
(c)If, outside the reasonable control of the Grantor, the volume or quality of water supplied by the Servient Tenement to the Dominant Tenement is reduced, the Grantor will use all reasonable endeavours to locate another source of water on the Servient Tenement for the purposes of continuing the supply of water to the Dominant Tenement in accordance with this Deed. The Grantee must pay 67 per cent of the costs incurred by the Grantor under this provision.
(d)The Grantor will expeditiously do and execute such things, deeds and documents as are necessary to properly give effect to the terms of this clause 14.
(e)Without limiting the generality of the preceding parts of this clause 14, the parties agree that if, at any time after scheme water becomes available to the Servient Tenement, the natural water supply available to the Servient Tenement is deficient to provide adequate water supplies to the Dominant Tenement, the parties will use all reasonable efforts (including making applications for any necessary consent or approval) to connect the scheme water to the pipeline which supplies water from the Servient Tenement to the Dominant Tenement. As part of this process, each of the Grantor and the Grantee will install meters to measure their respective usages of the scheme water and will pay the supplying authority's consumption charges pro rata to the amounts of scheme water consumed by each of them.
While there is some evidence that scheme water is now available to the Servient Tenement,[4] there is no evidence that the natural water supply available to the Servient Tenement is deficient to provide adequate water supplies to the Dominant Tenement. What has occurred is that the plaintiff requires a greater volume of water to supply its resort facilities than the defendant's annual water entitlement under the licence presently held by the defendant to take water.

Licence to take water

[4] Affidavit of RA Shea sworn 18 April 2024, RAS-6 (page 76).

Mr Shea deposed that to the best of his knowledge, the defendant obtained a licence to take water under s 5 (as it then was) of the Rights in Water and Irrigation Act 1914 (WA), which licence was issued by the Department of Water and Environmental Regulation in 2009 (described in his affidavit as the 2009 Licence). Further, Mr Shea deposed that on or around October 2019, the defendant obtained a renewal of the 2009 Licence under licence number GWL156922(3) (described in his affidavit as the 2019 Licence) from the Department of Water and Environmental Regulation. Mr Shea annexed to his affidavit a copy of the 2019 Licence (marked RAS-5), which among other things records:
(a)that the named licensee is the defendant;
(b)an annual water entitlement of 27,700 kilolitres;
(c)that authorised activities include the taking of water for the water supply for 'Tourist parks and Resort facilities', and the irrigation of a specified number of hectares of lawns and gardens for the Smiths Beach Resort;
(d)that authorised activities also include the taking of water for ablution block purposes (which I understood to be for the purposes of the public toilet block at Smiths Beach), and the taking of water for the water supply for 'Tourist parks and Resort facilities' and the irrigation of a specified number of hectares of lawns and gardens for the Canal Rocks Apartments;
(e)that the duration of the licence is from 29 October 2019 to 30 October 2029;
(f)that the annual water year for the water taken under that licence is 1 July to 30 June; and
(g)that the licence was granted subject to the Rights in Water and Irrigation Regulations 2000 (WA).

Developments leading to the commencement of the proceeding

Annexed to Mr Shea's affidavit was correspondence as between the plaintiff and the defendant (through their legal representatives) concerning the continued supply of water pursuant to the Water Agreement from 23 March 2024. Annexed to Mr Vallve's affidavit was correspondence as between the plaintiff and the defendant sent in 2021, 2022, 2023 and 2024 concerning the continued supply of water pursuant to the Water Agreement, which recorded negotiations between the parties as to matters in issue between them, and their competing views as to their respective rights and obligations under the Water Agreement.
By a letter dated 23 March 2024, the defendant represented to the plaintiff that 25,000 of the permitted 27,700 kilolitres of water had been taken as at 19 March 2024; that he did not intend to allow water to be taken in excess of the annual water entitlement; and that he would cease the supply of water to the plaintiff at 27,700 kilolitres. The defendant's position as to the proper interpretation of the Water Agreement was also there described.[5]
[5] Affidavit of RA Shea sworn 18 April 2024, RAS-6.
The respective position of each party as to the taking of further water, and their respective rights and obligations under the Water Agreement, was ventilated in correspondence up to 17 April 2024.[6] There was little if any common ground. What becomes plain upon reviewing that correspondence is that the proper construction of the rights and obligations of the parties to the Water Agreement were and remain in issue; the plaintiff's repeated requests that the defendant apply to increase the annual water entitlement under the 2019 Licence have been refused; the offers made on behalf of the plaintiff to assist with the making of an application to increase the annual water entitlement under the 2019 Licence and to meet the costs of the same have been refused unless the plaintiff agrees to enter into a deed, the effect of which would terminate the Water Agreement and release the defendant.
[6] Affidavit of RA Shea sworn 18 April 2024, RAS-7 - RAS-9, RAS-12, RAS-13.
By an email communication sent on 11 April 2024, the defendant informed the plaintiff that 26,600 kilolitres of water had been used as at 1 April 2024.
On 12 April 2024 the representatives of the plaintiff sent an email communication to Ms Kelly Joyce concerning the supply of water to the Smiths Beach Resort.[7] The purpose of the communication was to seek a grace period for an interim exceedance of the annual water entitlement while the plaintiff finalises an agreement with the Water Corporation for an alternative supply of water. From Ms Joyce's response of 16 April 2024, I understood Ms Joyce to be the Natural Resource Management Officer, Geographe Capes District for the Department of Water and Environmental Regulation.[8] The position of the Department of Water and Environmental Regulation was outlined by Ms Joyce on 16 April 2024 in the following terms:
Thank you for your email. The department acknowledges the notification of the potential overuse of the annual water entitlement under GWL 156922 (Smiths Beach Resort). Please note, licensee's need to ensure that all water use efficiency measures are in place and that alternative water sources are instigated. Licensee's and water users should have drought contingency plans in place to ensure they meet all water demand scenarios. The department does not tolerate exceedance of licence annual water entitlements and unauthorised taking of water is an offence under the Rights in Water and Irrigation Act 1914.
The department also acknowledges that the resort is currently in negotiations with the Water Corporation about alternative supply. The department may be able to consider a short-term non-renewable licence over a duration of 2-3 months as an interim measure to cover the increase in water demand, subject to assessment of the sustainability of the groundwater resource to meet the increase in water demand and details confirming the connection and timing to the Water Corporation scheme supply network to meet the longer-term water requirements of the Resort.
[7] Affidavit of RA Shea sworn 18 April 2024, RAS-10.
[8] Affidavit of RA Shea sworn 18 April 2024, RAS-11.

After receipt of Ms Joyce's communication on behalf of the Department, a further request made by the plaintiff to the defendant to authorise the plaintiff to negotiate a short-term licence on behalf of the defendant was refused by the defendant, and the defendant reiterated that it was open to the plaintiff to find alternative sources of water.
On 17 April 2024 the plaintiff was informed through Mr Vallve that the defendant had turned off the bores, and that on 1 July 2024 the bores would be turned back on.[9]
[9] Affidavit of RA Shea sworn 18 April 2024 par 26, RAS-13.
Mr Vallve deposed (based on his instructions) that as at 18 April 2024, 27,473 kilolitres had been used since 1 July 2023, leaving 227 kilolitres remaining; that on average, the plaintiff had been drawing approximately 95 kilolitres each day; and if the defendant was compelled to resume supply, the annual water entitlement would be exceeded in about two days.[10] Mr Vallve further deposed that the defendant shut off the two bores late on 16 April 2024 and intended to retain the presently remaining 227 kilolitres of the allocation for the benefit of the plaintiff in the event of fire or other emergency at which time he would restart the pumps or allow the plaintiff to do so.[11]
[10] Affidavit of MJ Vallve sworn 18 April 2024 pars 8.9, 8.10.
[11] Affidavit of MJ Vallve sworn 18 April 2024 par 9.1.
Mr Vallve further deposed that he was instructed by the defendant that since at least December 2023 the defendant had informed the plaintiff's site manager that the defendant was concerned that water usage was too high and that the annual water entitlement would be exceeded.[12]
[12] Affidavit of MJ Vallve sworn 18 April 2024 par 9.3.
Before making this application the plaintiff's legal representatives prepared an application for an additional temporary licence, and informed the Department of Water and Environmental Regulation by an email dated 17 April 2024 of the intention to file the application as soon as authority was given by the defendant.[13] The defendant has refused to provide the requested authority. As at 18 April 2024 the plaintiff had limited water available in holding tanks and expected that it would imminently have no access to water.

Detriment

[13] Affidavit of RA Shea sworn 18 April 2024 par 32, RAS-14.

Mr Shea among other things deposed to accommodation at the Smiths Beach Resort being frequently booked out for months at a time, particularly during the warmer months between October and April; that if the water supply was cut off to both the Smiths Beach Resort and the Canal Rocks Apartments, a large number of tourists would be impacted, which would have a significant impact on the reputation of the Smiths Beach Resort; that stopping the supply of water to the Smiths Beach Resort would have enormous financial and reputational impacts on the Resort, and on tourism in the region; 48 people are employed at the Smiths Beach Resort; and between the date of his affidavit and 18 July 2024, Smiths Beach Resort would expect to host approximately 925 guests.
Although no supporting books and records of the plaintiff were tendered, Mr Shea deposed that between the date of his affidavit and 18 July 2024, the plaintiff expected to lose in excess of $2 million resulting from the lack of water supply. For the purposes of this application, I accepted that cessation of the supply of water to the Smiths Beach Resort for any extended period would have significant financial implications for the plaintiff.

Alternative supply of water

There was evidence of the defendant having suggested in strong terms that it was open to the plaintiff to find alternative sources of water, and it was the defendant's position that the plaintiff ought to have done so before now. There was no evidence before the Court of the plaintiff having explored alternative short term sources of water (such as 'trucking in' water to site as had been suggested to the plaintiff by the defendant). I was informed by counsel for the plaintiff that all options were presently being explored.

Disposition

The principles governing the grant of interlocutory injunctive relief are well established, and were summarised by Beech J in Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [7] ‑ [13], Newnes JA (with whom McLure P and Corboy J agreed) in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [87], and the Court of Appeal in Sino Iron Pty Ltd v Mineralogy Pty Ltd[No 2] [2017] WASCA 76; (2017) 55 WAR 36 [130] ‑ [131]. There was no dispute as between the parties as to the principles to be applied in the determination of the plaintiff's application. In short, it is necessary for the applicant for relief to show that there exists a serious question to be tried, or a prima facie case, and that the balance of convenience favours the grant of an injunction.
Where a party seeks a mandatory injunction, no more stringent or different legal test is to be applied than that which is applicable in seeking a prohibitory injunction.[14] Ultimately, the question is as to the balance of the risk of injustice, and in considering that balance the Court must take into account the nature and consequences of the particular injunction sought.[15]

Serious question to be tried

[14] Mineralogy Pty Ltd v Sino Iron Pty Ltd [76] - [86].

[15] Twinside Pty Ltd v Venetian Nominees Pty Ltd [12]; Wellard Land Holdings (WA) Pty Ltd v Barker Mortgages Pty Ltd [2018] WASC 27 [9].

I now turn to the consideration of whether or not there is a serious question to be tried in relation to the plaintiff's claim.
Where an applicant seeks an interlocutory injunction, the applicant must identify the legal or equitable rights which are said to be determined at the trial and in respect of which the final relief is sought.
The plaintiff seeks to enforce its rights under the Water Agreement. It says that there is a serious question to be tried as to the proper construction of the Water Agreement, and whether the defendant is in breach of his obligations under that agreement.
There is weight in the submission made on behalf of the plaintiff that properly construed, the amount of water which the plaintiff has the 'FULL AND FREE RIGHT' to take pursuant to the Water Agreement is not limited by cl 14(a) of the Water Agreement.
It would appear arguable that the plaintiff's 'full and free right' to take water is reinforced by the obligation of the defendant under cl 8(a) of the Water Agreement to do and execute such things, deeds and documents as are necessary on its part to give effect to the terms of the Water Agreement with all due expedition and diligence. That is, it is arguable that the Water Agreement, properly construed, imposes upon the defendant a positive obligation to maintain a licence to take water, and to take steps as are necessary to increase the annual water entitlement to give effect to the 'full and free right' afforded to the plaintiff to take water from the Servient Tenement.
Further, it would appear arguable that cl 14(a), properly construed, does not set the upper limit (by reference to the volume and quantity) of the defendant's obligation to continue to supply water to the plaintiff. There is a serious question to be tried as to whether, properly construed, cl 14(a) instead affords the plaintiff the protection of a minimum obligation on the part of the holder of the Servient Tenement to ensure that it continues to supply to the Dominant Tenement the same volume and quality of water supplied by the Servient Tenement to the Dominant Tenement as at the date of the Water Agreement, which minimum obligation may be reduced to the extent that the volume and quantity of the available water is affected by matters outside the reasonable control of the defendant as Grantor.
There is a serious question to be tried as to whether s 14 is evoked in the circumstance now deposed to and if so, whether an extraction limit pursuant to a regulatory license, which has the effect that once reached it may starve the Dominant Tenement of the water the plaintiff needs for the running of the Smiths Beach Resort, is a matter 'outside of the reasonable control of the Grantor'. And if it is, there is a serious question to be tried as to what the defendant is obliged to do under cl 14(d) to properly give effect to cl 14.
To establish a serious question to be tried, the plaintiff does not need to prove that it is more probable than not that he will succeed at the final hearing. It is enough that the plaintiff shows a sufficient likelihood of success to justify in the circumstances the grant of relief. That is, show that there is a sufficient likelihood that the defendant is in breach of the Water Agreement by having stopped the supply of water to the plaintiff; and/or by refusing expeditiously do and execute such things, deeds and documents as are necessary to properly give effect to cl 14 of the Water Agreement (which the plaintiff says now is, at the least, authorising Mr McLeod to correspond with and negotiate on the defendant's behalf a short-term non-renewable licence over a duration of 2-3 months as an interim measure to cover the increase in water demand).
I do not intend to express any final or conclusive views as to the proper construction of the Water Agreement. For the purpose of the application before me, I accepted that there was a serious question to be tried as to whether the defendant has breached the Water Agreement by his actions, and I was satisfied to the requisite standard that the plaintiff had made out a relatively strong prima facie case.

Balance of convenience

I accepted counsel for the defendant's submission that the requisite strength of the prima facie case and the balance of convenience were not independent considerations. Further, I proceeded on the basis that the more the balance of convenience supports the respondent, and the more serious the consequences for a respondent, the stronger will be the prima facie case the applicant may need to establish to support an interlocutory injunction. Conversely, in a case where the balance of convenience strongly favours the applicant, then the strength of the prima facie case required to support the interlocutory injunction diminishes.
I proceeded on the basis that although the Court will often examine the strength of a case for an interlocutory injunction, the Court will not normally undertake a preliminary trial and will rarely attempt to resolve disputes of fact.[16] The extent to which the Court will consider the merits of disputes as to legal issues will depend on the circumstances of the case. There is no inflexible rule in this regard.
[16] Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618, 622.
The grant of an injunction involves balancing the injustice which might be suffered by the defendant if the injunction is granted but the plaintiff later fails at trial, against the injustice which might be suffered by the plaintiff if the injunction is not granted and plaintiff later succeeds at trial.
As to the balance of convenience, on the evidence before me I was satisfied that it favoured the grant of the curtailed relief sought.
In so finding, I weighed in the balance the significant harm to the plaintiff of not granting the relief sought, which would leave the plaintiff without access to the remaining water (that is, water within the bounds of the annual water entitlement), and unauthorised to take steps in furtherance of a short-term non-renewable licence for its benefit. The potential injustice and damage to the plaintiff of imminently being left without water was significant, whereas the potential injustice and damage to the defendant if the relief sought was granted appeared to be significantly less.
I understood that if a mandatory interim injunction was granted on the limited terms in the end proposed on behalf of the plaintiff, Mr McLeod would forthwith engage with the Department of Water and Environmental Regulation, but the plaintiff would not be entitled without further order to compel the defendant to enter into a short-term non-renewable licence on terms acceptable to the Department. The limited authority sought could not properly be construed as a serious interference with the defendant's rights as a landowner, if his contention that there had been no breach of the Water Agreement by him was ultimately upheld.
I did not propose to make an order which would give Mr McLeod unfettered authority to bind the defendant in his dealings with the Department. What in the end was proposed on behalf of the plaintiff was an authority sufficient to allow Mr McLeod to engage and negotiate with the Department of Water and Environmental Regulation as to the terms of a short‑term non‑renewable licence. Then, if terms acceptable to the Department of Water and Environmental Regulation were identified, it was intended that Mr McLeod would present them to the defendant for his consideration and approval, and then, only if the defendant were to refuse to enter into and be bound by a short‑term non‑renewable licence on terms acceptable to the Department of Water and Environmental Regulation, then the plaintiff might apply to the Court for further relief.
There appeared to be little to no detriment to the defendant to compel him to give his written authority for such a limited purpose. On the plaintiff's construction of the Water Agreement, such an order compelled the defendant to authorise Mr McLeod to do the defendant's behalf what the plaintiff says the Water Agreement obliged the defendant to do in any event - that is, to do such things necessary to give effect to the terms of the Water Agreement.
Further, there appeared to be little to no detriment to the defendant to compel him to continue to supply water to the plaintiff pursuant to the Water Agreement up to the annual water entitlement of 27,700 kilolitres. I understood that the defendant was not withholding water for his own benefit for emergency or other purposes, and the defendant's own needs with respect to water were not reliant upon his own access to the remaining 227 kilolitres of the annual allocation. As noted above, there was some evidence that scheme water had become available to the defendant's land.[17]
[17] Affidavit of RA Shea sworn 18 April 2024, RAS-6 (page 76).
Mr Vallve's evidence was that he was instructed that the defendant intended to retain the presently remaining 227 kilolitres of the allocation for the benefit of the plaintiff in the event of fire or other emergency at which time he would restart the pumps or allow the plaintiff to do so.[18] While neither counsel was in a position to address the entitlement to access water in an emergency beyond an annual water entitlement, it struck me as a strange notion that in an emergency, the authorised use of water would be limited to the annual water entitlement (particularly as the licence to take for authorities activities makes no reference to firefighting).
[18] Affidavit of MJ Vallve sworn 18 April 2024, par 9.1.
The plaintiff (properly) did not seek an order compelling the defendant to supply water in excess of the annual water entitlement. Further, if the defendant's supply to the plaintiff of the remaining 227 kilolitres is pursuant to an order of this Court compelling supply, one would expect that the order and circumstances would afford the defendant protection against criticism for not retaining that amount for firefighting purposes.
I also weighed in the balance that the plaintiff had been on notice of the defendant's views as to the parties' respective rights and obligations under the Water Agreement for some time; that the defendant had suggest in strong terms that it was open to the plaintiff to find alternative sources of water; and that there was an evidentiary lacuna as to whether alternative water might be available to the plaintiff through trucking in water or otherwise (the Court having only been informed by counsel for the plaintiff that all options were being explored by the plaintiff).
After weighing in the balance all of the evidence before me, I concluded that there appeared to be a greater risk of injustice being done if I refused to grant the mandatory injunction (in the form ultimately promoted) in favour of the plaintiff and the plaintiff later succeeds, than if I refused and the defendant later successfully defends the proceeding. I accepted that there was a serious question to be tried, and the balance of convenience favoured the grant of injunctive relief.

Conclusion and orders

In light of the limited relief pressed on behalf of the plaintiff, this was not a case where the practical impact of the grant of an interlocutory injunction was that the litigation was effectively determined. For these reasons, subject to the plaintiff's undertaking as to damages, I granted injunctive relief in favour of the plaintiff. Upon hearing from counsel as to the precise form of the orders on 19 April 2024, I made orders in the following terms:
1.The defendant shall sign a written authority in favour of Glen McLeod of Glen McLeod Lawyers, authorising him to correspond and negotiate with the Department of Water and Environmental Regulation on behalf of the defendant with respect to the obtaining of a short-term license to increase the amount of water which the defendant can supply to the plaintiff, which authority shall be in the form annexed to these orders, and which authority shall not be withdrawn by the defendant without a further order of the Court.
2.Within 48 hours of all the written correspondence as between Mr Glen McLeod and the Department of Water and Environmental Regulation pursuant to the authority, a copy of such correspondence will be provided to the defendant's legal representatives by Glen McLeod Legal.
3.Within 48 hours of substantive oral communications as between Mr Glen McLeod and the Department of Water and Environmental Regulation pursuant to the authority, a summary of such communication will be provided by email to the defendant's representatives by Glen McLeod Legal.
4.Until further order, the defendant must continue to supply water to the plaintiff pursuant to the Water Agreement Deed of Easement dated 23 May 2005 up to the annual water entitlement of 27,700 kilolitres, being the entitlement prescribed by the licence to take water granted to the defendant under s 5C of the Rights in Water Irrigation Act 1914 (WA) (as it then was).
The form of the authority annexed to the orders made was as follows:
AUTHORITY
I hereby authorise Glen McLeod of Glen McLeod Legal to act on my behalf to correspond and negotiate with the Department of Water and Environmental Regulation regarding a short-term license to increase the amount of water which can be taken from Lot 4 on Diagram 56110 Volume 1531 Folio 365.
Signature: _________________________
Allen Charles Hadley
Date: 19 April 2024
I considered the grant of interlocutory relief in these terms to be the minimum relief necessary to do justice between the parties.
The inclusion of the reporting orders (orders 2 and 3 of the orders reproduced above) was at the request of counsel for the defendant, and were made without objection on behalf of the plaintiff. Counsel for the defendant further submitted that the authority ought expressly provide for a limit as to the volume of water above the annual water entitlement that might be the subject of correspondence and negotiation with the Department of Water and Environmental Regulation on behalf of the defendant. No particular volume was advanced on behalf of the defendant as being appropriate. In the end, I considered that such a constraint would not be necessary for the protection of the defendant in circumstances where the authority did not permit Mr McLeod to bind the defendant, and the defendant would be given an opportunity to be heard as to the reasonableness and necessity of any further relief sought on behalf of the plaintiff.

At the conclusion of the hearing the parties were encouraged to confer in relation to the early mediation of the proceeding. In the course of the hearing I also raised the possibility of an early trial given that the controversy appeared to focus upon the proper construction of the Water Agreement. I made orders admitting the proceeding into the Commercial and Managed Cases List, granting the parties liberty to apply, and reserved the costs of the application.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SE
Associate to the Judge
22 APRIL 2024