Zander v Minister for Sustainability, Environment and Conservation
[2013] SASC 149
•9 October 2013
SUPREME COURT OF SOUTH AUSTRALIA
(Land and Valuation Division)
ZANDER & ANOR v MINISTER FOR SUSTAINABILITY, ENVIRONMENT AND CONSERVATION
[2013] SASC 149
Judgment of The Honourable Chief Justice Kourakis
9 October 2013
ENERGY AND RESOURCES - WATER - WATER MANAGEMENT - WATER USAGE RIGHTS - WATER ALLOCATION
ENERGY AND RESOURCES - WATER - WATER MANAGEMENT - WATER MANAGEMENT PLANS
This is an appeal against a determination of a preliminary question by a Judge of the Environment, Resources and Development Court of South Australia. The question concerned the proper construction of a provision of the Barossa Water Allocation Plan made for the Barossa Prescribed Water Resources Area. The appellants are landholders in the Barossa Area and also hold a licence to take water for irrigation. The water available to them is surface water held in dams on their land and underground water.
The Barossa Water Plan provided that where a licence holder drew his or her allocation from several sources, the allocation was to be assigned to one or a number of water sources available to the licence holder. The Minister assigned the appellant’s water allocation equally between surface water and underground water. The appellants want the assignment to be made in such a way which allows them flexibility in the amount that they draw from each source. The Minister denied that he could do so consistently with the Barossa Water Plan. On appeal to the ERD Court, the Judge answered the following preliminary question in the negative:
“Does the WAP (and Principle 5.2.14 in particular) permit the allocation of water on licence 3859 (subject to conditions) so that –
(a) each individual resource nominated on the licence has a maximum volume allocated to it/them; and
(b) the total amount that may be taken from all or any resource in any water use year does not exceed 42 ML; but
(c) the sum of the volumes nominated on the licence to each of the individual resources exceeds 42 ML?”
Held (allowing the appeal):
(1) The preliminary question should be answered in the affirmative (at [33]).
(2) Appeal allowed, judgment of the ERD Court set aside and substituted as the answer to the preliminary question, yes (at [37]).
Natural Resources Management Act 2004 (SA) s 156, referred to.
Dockside Holdings Pty Ltd v Rakio Pty Ltd (2001) 79 SASR 374, considered.
WORDS AND PHRASES CONSIDERED/DEFINED
"assignment", "assign", "apportionment"
ZANDER & ANOR v MINISTER FOR SUSTAINABILITY, ENVIRONMENT AND CONSERVATION
[2013] SASC 149Land and Valuation Division
KOURAKIS CJ: This is an appeal from a determination of a preliminary question by a Judge of the Environment, Resources and Development Court of South Australia (the ERD Court). The question determined by the Judge concerned the proper construction of a provision of a water allocation plan made in June 2009, pursuant to the Natural Resources Management Act 2004 (SA) (the Act), for the Barossa Prescribed Water Resources Area (the Barossa Water Plan and the Barossa Area respectively). The appellants are landholders in the Barossa Area, and also hold a licence to take water for irrigation. The water available to them is surface water held in dams on their land, and underground water.
Prior to the making of the Barossa Water Plan, water licenses in the Barossa Area authorised the taking, at the discretion of the licence holder, of surface water, underground water or watercourse water, sufficient to irrigate a fixed area of land for a specified horticultural or viticultural purpose (the area based allocation). The Barossa Water Plan required that the area based allocations endorsed on licences be converted to volumetric allocations. It provided that where a licence holder drew his or her allocation from several sources, the allocation was to be assigned to one, or a number, of the water sources available to the licence holder. The principles of the Barossa Water Plan governing the conversion to a volumetric allocation and the assignment of that allocation appear in Section 5.2, and provide:
5.2Conversion of Area Based Allocations to Volumetric Allocations
…
8. All area based allocations will be converted to a volume, based on the formula in principle 9 below, the area endorsed on the licence and the conversion factors outlined below in Table 15.
9. Allocated volume (ML) = area endorsed on licence (ha) x conversion factor (ML/ha) provided that where a surface water allocation relating to a dam is converted to a volume, the resulting allocation may not exceed the total storage capacity of the dam. For the purposes of this principle, the dam storage capacity is deemed to be as stated on the licence unless a more accurate volume has been determined by a licensed surveyor using a method acceptable to the Minister.
10. An exemption to Principle 9 may be granted where a dam with a storage capacity of less than 5 ML that is located on a permanently flowing stream, is filled with ‘top up’ flows to meet allocation throughout the irrigation season, or that is filled by episodic flow events on an ephemeral stream. This exemption may be granted only if records demonstrate reliability of supply and the historic application of this system.
11. For those crops not covered by Table 15, area based allocation will be converted to a volume based on the area endorsed on the licence, the average water use from the 03/04 to 06/07 water use years, and a reasonable theoretical crop water requirement. Assessments of water use and theoretical crop water requirements will be made on a case by case basis based on the assessment of technical information, recognised standards and the capacity of the resource.
…
14. In the case of a single licence endorsed with an area based allocation which can be taken from more than one resource, the licence will be varied in accordance with the principles in section 5.2. In addition the following principles will also apply:
a)Allocations converted to a volume in accordance with section 5.2 will be assigned to a resource/s using the following hierarchy:
·surface water, followed by
·underground water, followed by
·watercourse water.
b)Surface water will be allocated first, up to a maximum of 70% of dam storage capacity. Dam storage capacity is as defined in principle 9.
c)The assignment of an allocation to a resource/s takes into account
·historical use of the resource; and
·any other information the Minister deems appropriate.
The Minster for Environment and Conservation (the Minister) is empowered on the making of a new water allocation plan to vary the licence allocation regulated by that plan.[1] Section 156(1) of the Act limits the Minister’s power to making a variation only when it is necessary to do so to remove an inconsistency between the licence and the new plan:
[1] Natural Resources Management Act 2004 (SA), s 156(1).
156—Variation of water allocations
(1) A water allocation may be varied by the Minister—
…
(c)at any time if there has been an alteration to the water allocation plan for the water resource to which the water allocation relates and the variation is necessary, in the opinion of the Minister, to prevent the water allocation from being inconsistent (as to the basis on which the water allocation is determined) or seriously at variance (as to the conditions of the water allocation) with the plan;
The appellants’ licence was converted to a volumetric allocation of 42 ML of water. The Minister assigned that allocation equally between surface water and underground water. The capacity of the appellants’ dams is about 128 ML which, as can be seen, far exceeds their volumetric allocation. The volume assigned to surface water is just 15% of the volume held in the dams.
The appellants wish the assignment of the volumetric allocation to be made in a way which allows them some flexibility in the amount that they draw from each source, so that in high rainfall years they can use relatively more surface water and adopt the converse course in dry years. The Minister denies that he can do so consistently with the Barossa Water Plan. On an appeal against the Minister’s assignment, the parties submitted the following preliminary question to the Judge of the ERD Court:
“Does the WAP (and Principle 5.2.14 in particular) permit the allocation of water on licence 3859 (subject to conditions) so that –
(a)each individual resource nominated on the licence has a maximum volume allocated to it/them; and
(b)the total amount that may be taken from all or any resource in any water use year does not exceed 42 ML; but
(c)the sum of the volumes nominated on the licence to each of the individual resources exceeds 42 ML?”
The Judge answered the question in the negative. For the reasons which follow I would answer it in the affirmative.
The Barossa Water Plan
The Barossa Water Plan regulates the use of surface water, underground water and watercourse water in the Barossa Area. The Barossa Area is centred approximately 60 kilometres north-east of Adelaide and includes the townships of Tanunda, Lyndoch, Williamston, Nuriootpa and Angaston.
One of the concerns of the plan is to maintain environmental flows in the watercourses of the Barossa Area. The Barossa Water Plan recognises the interdependence of all three of the water resources which it regulates. The use of surface water for irrigation, stock and domestic purposes in the Barossa Area was assessed and the volume collected in the dams calculated. The impact of land development on water sources in the Barossa Area is summarised in Section 2 of the Barossa Water Plan. A manifest purpose of the Barossa Water Plan is to address the impact of development in two ways. The first is to allow greater environmental flows by limiting the total volume of water captured and stored in dams. The second is to allow low flows to bypass dam storage altogether.
The Barossa Water Plan acknowledges that while it is known that significant interactions occur between surface water, watercourse and underground water, assigning quantities to each of the sources is difficult due to the lack of data and the complex nature of the surface and underground water systems of the Barossa Area.
The Barossa Water Plan notes that underground water levels between 2001 and 2004 have remained stable or risen. Primarily, that stability is attributed to decreased underground water use because of increasing importation of water for irrigation purposes by a dedicated pipeline from the River Murray, referred to as the Barossa Irrigation Line or by its acronym BIL. A note on climate change in Section 3.2 of the Barossa Water Plan records a consensus amongst climatologists that average annual rainfall will decrease.
Section 4.4 of the Barossa Water Plan discusses the capacity of watercourses and surface water resources to meet demand. It notes that in the development of the plan it was “concluded that the current level of development approximates the sustainable extraction level for surface water and watercourse allocations” but that close monitoring will be required over the five years after the adoption of the Barossa Water Plan. The discussion anticipates that a review of allocations will be conducted after the conversion to volumetric allocations has allowed water use to be better quantified. The section concludes with the opinion that the water resources of the Barossa Area do not have a capacity to meet any increase in demand and that importation of water would be necessary in that event.
Section 5.4 of the Barossa Water Plan restricts future allocation of surface water. It also allows a rollover of up to a maximum of 30% of the surface allocation which is not used at the end of a water use year.
Principle 7.2.56 of the Barossa Water Plan limits the construction of additional water storages and dams. Principle 7.2.54 provides that the combined capacity of all dams on a property must not exceed 30% of the annual run off of that property. That section also sets out in Table 16 the Total Allowable Dam Storage Volume for each sub-catchment area of the Barossa Area. In five of the nine sub-areas the maximum dam storage has been reached, but not surpassed, and in the remaining four subareas a total of about 150 ML was available for further dam storage construction.
Construction of Principle 5.2.14
I start with these observations. First, I accept that the meaning of the word “assigned” in Principle 5.2.14 includes apportioned. So much is clear because Principle 5.2.14 expressly contemplates that a licensee may be allowed to draw his or her allocation from more than one source.
Secondly, I acknowledge that the apportionment of the allocation to different water sources has the effect that the licence holder’s water use will be limited not just by an annual total draw but also by reference to the source from which the water is taken. Whereas, prior to the apportionment, a licence holder could draw all of the annual allocation from one source, or from a number of sources in the proportion of his or her choice. An apportionment between sources pursuant to Principle 5.2.14 will necessarily limit that choice. Once the allocation is made the licence holder may still choose to take water from just one source but only to the maximum volume assigned to that source. Equally, the licence holder may still choose to draw up to the total allocation from several of the sources, in such proportion as he or she sees fit, but only to the limit of the volume assigned to each of the sources.
Thirdly, it should be noticed that the hierarchy in subparagraph (a) of Principle 5.2.14 encourages the use of surface water over other sources. The implication in Principle 5.2.14 is that as much of the total allocation as can reasonably be sourced in every year from surface water shall be assigned to that source. The affidavit of Mr Poppleton explains the object to which the hierarchy is directed. The first “take” of water to fill the allocation was designed to come from surface water because, having already been captured in dams, it would be lost to seepage and evaporation if not used.
Subparagraph (b) of Principle 5.2.14 imposes a limit on the allocation to surface water of 70% of the licence holder’s dam storage capacity. Even in the absence of evidence, the most obvious reasons for that limitation are that:
·there may be a significant level of water loss by evaporation or leakage from dams;
·the dams may not be filled in poor rainfall years.
The September 2006 report of Mr Savadamuthu, the Principal Hydrologist at the Department of Environment, Water and Natural Resources (“the Department”), to Mr Poppleton, a Water Planner with the Department, shows that the 70% limit in Principle 5.2.14 is probably intended to address that water loss.[2] It is unlikely that the 70% limit is intended to discourage dam use because, as I earlier observed, the use of surface water is prioritised by Principle 5.2.14(a). Moreover, Principle 5.2.9 allows an assignment of up to 100% of the capacity of dams where surface water is the only source. It is unlikely that the 70% limit in the assignment of the allocation for the minority of licences which authorised drawing from multiple sources was a surface water reduction measure when 100% of the dam capacity can be assigned to the majority of licence holders who could access water only from that source. Indeed, Principle 5.2.10 allows for an allocation of more than 100% of the capacity of small dams of no greater value than 5 ML located on permanently flowing streams which replenish the dam over the course of the year. Those provisions show that it was not part of the mischief to which Principle 5.2.14 was directed to under-utilise surface water collected in dams.
[2] See also, Consultation Report March 2008.
I acknowledge that Mr Savadamuthu, in his September 2006 report, expressed the view that limiting the use of surface water to just 30% of the dam’s capacity would allow overflow in the winter months to replenish natural water courses. However, that is not the approach adopted by the Barossa Water Plan.
In determining the apportionment, which advocates a balance between prioritising surface water use and recognising the limits on dam storage of water, historical use will be important, and it is therefore not surprising that it is expressly mentioned as a relevant consideration in subparagraph (c).
Finally, it is necessary to make the trite observation that the volume of surface water can vary greatly from year to year depending on weather conditions, in order to expose some relatively less obvious implications of that climatic phenomenon. If evidence is needed of that notorious fact, it is found in paragraph 25 of the report exhibited to the affidavit of Mr Savadamuthu, the Principal Hydrologist at the Department. When assigning a portion of the allocation to surface water the Minister will have to take care not to over-assign the allocation to surface water lest, in low rainfall years, the surface water collected by a licence holder is less than the amount assigned, leaving the licence holder, in fact, with less water than his or her annual allowance.
My point can best be illustrated by the following tables prepared for a hypothetical licence holder with a 90 ML annual allocation who draws underground water and surface water from dams, with a capacity of 100 ML, but which only fill in good rainfall years. The first table assigns the maximum 70% of dam capacity to surface water.
High Rainfall Low Rainfall 1 Total allocation 90 ML 90 ML 2 Surface water allocation (70% of maximum capacity) 70 ML 70 ML 3 Underground water allocation 20 ML 20 ML 4 Dam capacity 100 ML 100 ML 5 Volume surface water captured 70 ML 35 ML 6 Water available under licence (3 + 5) 90 ML 55 ML 7 Effective reduction in licence allocation (1 - 6) Nil 35 ML 8 Unused surface water (5 - 2) Nil Nil
To avoid the risk of a de facto reduction of the licence holder’s allocation in low rainfall years, the Minister may be inclined to reduce the assigned proportion of surface water to 35% of dam capacity with the following results:
High Rainfall Low Rainfall 1 Total allocation 90 ML 90 ML 2 Surface water allocation 35 ML 35 ML 3 Underground water allocation 55 ML 55 ML 4 Dam capacity 100 ML 100 ML 5 Volume surface water captured 70 ML 35 ML 6 Water available under licence (3 + 5) 125 ML capped at 90 ML 90 ML 7 Effective reduction in licence allocation (1 - 6) Nil Nil 8 Unused surface water (5 - 2) 35 ML Nil
The changed apportionment ensures that the licence holder’s effective allocation is not diminished, but it also has the effect that in high rainfall years trapped surface water remains unused whilst underground water, which the hierarchy is plainly calculated to protect, is needlessly used. That result is contrary to the principles of sustainability on which the Barossa Water Plan is premised and the object of the hierarchy created by Principle 5.2.14(a). The absurdity of denying Principle 5.2.14(a) the flexibility of more fully utilising already captured surface water where there are multiple sources is well illustrated by the dam capacity in this case. Even if all 42 ML was assigned to surface water, only about 35% of the dam capacity would be utilised.
Not only is there a tension between the diminished apportionment to surface water and the objectives of the Barossa Water Plan but my hypothetical licence holder is likely to incur greater cost in pumping lower quality water to irrigate his or her crops. I pause here to observe that the last-mentioned circumstance, where it exists, will give the licence holder a strong motive to use surface water over underground water where there is a choice.
I can now turn to the construction urged by the appellants. It is their contention that an assignment of a range of water quota to each of the available water sources is consistent with Principle 5.2.14. On that construction the hypothetical licence holder I postulated might have a range of between 35 ML to 70 ML of his or her allocation assigned to surface water and an amount of between 55 ML and 20 ML assigned to underground water, provided that the annual amount taken from both sources does not exceed 90 ML. On an assignment so framed, a licence holder is likely to take an amount approaching the limit of the surface water allocation in a good rainfall year, because of the incentive to which I earlier referred,[3] and an amount approaching the minimum surface water allocation in a poor rainfall year. The effect of the assignment of a variable portion of the allocation governed by the maximum and minimum assignments can be expressed as assignments in these terms:
[3] The lower cost to pump water from the dam and the higher quality water.
1 Surface water 35 ML 2 Underground water 20 ML 3 Surface water or underground water in the licence holder’s discretion 35 ML
To my mind, on an apportionment in those terms the annual allocation has been “assigned to a resource/s” consistently with Principle 5.2.14(a). That is certainly so for the portions exclusively assigned to surface water and underground water; and the assignment of the remainder to either source in the discretion of the licence holder is, at least, not inconsistent with there being an assignment in accordance with Principle 5.2.14. The consistency with Principle 5.2.14 is even more apparent when it is appreciated, as the tables show, that such an assignment in those terms may more effectively prioritise the use of surface water than the assignment of all of the allocation in fixed proportions.
I acknowledge the force of the submission that an assignment of the whole of the annual allocation to surface water and another source or sources jointly, with the licence holder retaining a discretion, which all licence holders once held, to select the source from which to draw the entire allowance, is inconsistent with Principle 5.2.14. Accepting that contention for present purposes, it seems to me that an assignment which would allow a licence holder to choose the water source for the entire allocation would be inconsistent with Principle 5.2.14 because it does not assign the allocation in accordance with the hierarchy in Principle 5.2.14(a). In particular, it does not do so in accordance with the implied requirement to assign so much of the allocation to surface water as might reasonably be drawn from that source by the licence holder in every year.
It may be that, even more fundamentally, an apportionment allowing the licence holder an unrestricted choice of source is not an “assignment of an allocation to a resource/s” at all, but I am not convinced that that is so. I would prefer to treat it as an assignment, but one which does not meet the purpose of Principle 5.2.14.
The Minister has raised several other objections to the construction which would allow an assignment of part of the allocation to be filled from either source. It is said that it would make management and monitoring of the water resources of the Barossa Area more difficult. It is not at all obvious to me that that would be so. Volumetric allocations and the assignment of those allocations to different water sources presupposes that measurements will be taken of the water drawn. Even if all of the allocation is assigned to one or the other of the available sources, or if it is assigned in fixed proportions between them, it will not be known whether or not water was drawn from all of the authorised sources, and to what extent, until after the water use year has ended.
It is also contended that an assignment of a portion of the allocation for discretionary use as between several sources (a discretionary assignment) cannot be accommodated by the principles governing transfer of water allocations in Section 6 of the Barossa Water Plan, and the principles regulating rollover credits for allocations not taken. It is submitted that because a discretionary assignment cannot be accommodated by those provisions, it is implicitly precluded as a form of assignment under Principle 5.2.14. I accept that a discretionary assignment adds a level of complexity in the application of those principles but it can, nonetheless, be accommodated in the following way. For each water use year in which the licence holder wishes to transfer an allocation, the licence holder will have to nominate his notional use of the resources covered by the discretionary assignment. The volumes available for transfer will be calculated on the basis of that nomination. If less than the full allocation is transferred, the licence holder’s use of the water sources on his land in that year will be limited accordingly. The unused portion of an allocation, where there is a discretionary assignment, can be calculated by reference to the minimum or maximum allowance for one source, depending on the extent of use of the other source. Where there is an unused allocation for both sources, the licence holder will again have to nominate the apportionment on which the rollover credit is to be calculated.
Finally, I deal with the Minister’s contention that the purpose of the Barossa Water Plan is to remove the licence holder’s choice of water source by assigning allocations to one source or another. It is certainly true that the implementation of the Barossa Water Plan will have the effect of removing the wide choice between water sources which licence holders once enjoyed but it does not follow that removal of choice is, in itself, an objective of the Barossa Water Plan. Accepting for present purposes that a construction which favours preservation of property rights is out of place in the statutory regulation of the public’s water resources, there is still much to be said for recognising the benefit of allowing some discretion in the management of those resources on the ground, by licence holders who are aware of the climatic variations from year to year. As I earlier observed, the purpose of Principle 5.2.14 is to optimise the use of surface water. A construction which authorises the allocation of a kind which allows some discretion as to the water source for a portion of the allocation may promote in some, if not many cases, that purpose.
For the above reasons, I hold that the question should be answered in the affirmative. I therefore allow the appeal, set aside the judgment below and substitute as the answer, yes.
Post script
It hardly needs to be said but in the interests of certainty I make clear that my construction of Principle 5.2.14 leaves open the question whether, in the circumstances of this case, an assignment which allows some choice between sources for part of the allocation should be made. My construction of Principle 5.2.14 is not based on the particular circumstances of the appellants but on the discernment of the mischief to which the Barossa Water Plan is directed. In particular, my construction is informed by the manifest difficulty which might be faced in some cases in optimising the use of surface water, if the power to assign is limited to assigning the entirety of the allocation inflexibly between surface water and other sources. As I have endeavoured to explain, that difficulty is caused by the notorious variations in rainfall which are a feature of the South Australian climate.
I record that the respondent objected to the appellants advancing a purposive construction of Principle 5.2.14 by reference to the objectives of the Barossa Water Plan and some features of its drafting history because they did not support their construction of Principle 5.2.14 in that way before the ERD Court. However, the appellants have consistently contended for the same answer to the preliminary question. There is no good reason to limit the arguments they put in support of their construction of Principle 5.2.14 on appeal.[4] It is in the interests of justice to allow them to do so, particularly given the public interest in the proper management of the resource. Nor is it of any consequence that the appellants attempted to put arguments by reference to their own particular farming circumstances when the merits of the assignment for which they contend are yet to be dealt with.
[4] Dockside Holdings Pty Ltd v Rakio Pty Ltd (2001) 79 SASR 374.
As I have already observed, my construction is based on an assessment of the broader purpose of the principle and the mischief to which it is directed. The merits of whether such an assignment should be made in this case remain to be determined on the remittal of the matter to the ERD Court.
Conclusion
The orders of the Court will be:
1. Appeal allowed.
2. Set aside the judgment of the ERD Court.
3. Answer to the preliminary question: Yes.
4. Remit the matter to the ERD Court.
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