Environment and Planning Alert

What you need to know

• The Victorian Government has passed the Water and Catchment Legislation Amendment Act 2021 (Vic), which will implement a raft of amendments to the Water Act 1989 (Vic). The amendments will come into force no later than 1 July 2023.
• The Amending Act introduces "Place of Take" approvals, which regulate place, rate and taking of water from a declared water system.
• The offence provisions of the Water Act have been bolstered: financial penalties have been increased, and a company director can be found personally liable for an increased number of offences. However, officers of corporations will have a new defence of due diligence for certain offences.

What you need to do

• Existing licence or registration holders, who will be automatically taken to hold an equivalent Place of Take Approval, should review the conditions of their approval to determine any impact on their operations.
• Water users should familiarise themselves with the expanded offence provisions and review internal processes to ensure that directors will be able to point to evidence of their due diligence in order to limit their personal liability.

On 26 October 2021, the Victorian Government passed the Water and Catchment Legislation Amendment Act 2021 (Vic) (Amending Act), which makes a number of changes to the Water Act 1989 (Vic). The Amending Act received Royal Assent on 3 November 2021 and the amendments discussed below will come into effect by no later than 1 July 2023.

The amendments are directed at regulating the taking of water and expanding the Minister for Water's powers in relation to the taking of unauthorised amounts of water from an approved place.

Key changes

Place of take approvals

The Amending Act will strengthen the Minister for Water's powers to regulate the place, rate and time that water is taken from regulated systems.

Significant changes to water supply and demand in the River Murray System over the past 20 years has made it increasingly difficult to move water to where it is needed, which can result in a shortfall in delivery volumes. It is anticipated that, while currently rare, shortfall event frequency will increase given the impacts of climate change and a drier and hotter climate.

The Amending Act creates two types of Place of Take Approvals:

• a "general place of take approval" (GPTA); and
• a "particular place of take approval" (PPTA).

Essentially, only a person with a GPTA can take water under a relevant water allocation from a place in a declared water system. A "relevant water allocation" is any water allocation other than one under a bulk entitlement or environmental entitlement that has not been assigned under the Water Act.

Anyone holding a relevant water allocation may apply to the Minister for a GPTA and the Minister may grant a GPTA subject to conditions.

In certain circumstances, the Minister must fix a notional rationing rate in respect of the GPTA. We understand that rationing rates are intended to reflect the rate in existing extraction share conditions that are fixed to a works licence under section 67 of the Water Act for the works (eg the pump) through which water could be taken for use on the land specified in the water-use licence or registration.

Water users will be able to manage their own delivery risk given rationing rates will be able to be traded within a declared system.

The Minister has additional broad powers to make general determinations in relation to GPTAs. For example, if the Minister believes that water supplies will not be sufficient to satisfy allocations (ie that there will be a shortfall), the Minister can make a restriction determination. This determination will prevent all GPTA holders in a rationing area from taking water at a rate which exceeds the rate specified in the determination. The Minister can also issue a determination prohibiting GPTA holders in a rationing area from taking water altogether.

The purpose of these amendments is to enable the Minister to respond quickly by making a determination when a shortfall event arises and as it unfolds, thereby minimising the impact of any shortfall.

In order to apply for a PPTA, a person must have a GPTA for the same place. The PPTA scheme regulates total amounts of water that can be taken from any given place. The Minister is required to publish the amount of water which can be taken under PPTA water allocations. If a person exceeds the amount of water they were approved to take under a PPTA, the Minister is empowered to deduct that amount from the person's future rights to take water under water allocations (either at that place, or at another place in the same declared water system).

The transitional provisions essentially provide that people who currently hold water-use licences or registrations will be automatically taken to hold equivalent GPTAs and PPTAs.

There are new offences for knowingly taking water without a required GPTA and/or PPTA and breaching a prohibition or restriction determination.

There are three tiers of offences for contravening a prohibition or restriction determination:

• knowingly contravening the determination which results in land, works or water being seriously damaged, or another person suffering substantial economic loss;
• recklessly contravening the determination which results in land, works or water being seriously damaged, or another person suffering substantial economic loss; or
• contravening the determination.

For the two most serious offences, committing an offence knowingly or recklessly, it is not necessary to prove that the person committing the offence knew or was reckless as to whether their actions would result in serious damage or substantial economic loss, only that they knowingly or recklessly committed the relevant offence.

It is also an offence to fail to comply with a condition of a GPTA, but this is not a tiered offence. This offence carries a penalty of 120 penalty units for an individual and 600 penalty units for a corporation (currently $21,808 and $109,044 respectively).

Notices of Contravention

The Water Act allows water authorities to issue a Notice of Contravention to anyone who contravenes:

• the Water Act, any relevant regulations or the water authority's by-laws;
• a requirement made by the water authority under the Water Act;
• a condition of a licence issued under the Water Act; or
• a prescription of an approved management plan for a water supply protection area.

The purpose of issuing a Notice is to require the person, or the owner of the property, to take specific actions to remedy the contravention within a timeframe set out by the water authority.

Non-compliance with a Notice is an offence under the Water Act. In addition, the water authority is empowered to take any action it deems necessary to remedy the contravention and subsequently recover its reasonable costs.

Currently, the wording of the provision only allows water authorities to issue a Notice after a contravention has occurred. In practice, this creates uncertainty in respect of what kind of evidence a water authority requires in order to ensure it is acting within power.

The Amending Act removes some of this uncertainty by amending the provision to allow a water authority to issue a Notice to a person "whom it reasonably believes has contravened…". This clarifies that a water authority does not need definitive proof of a contravention and will be acting within its statutory power if it forms a reasonable belief that a contravention has occurred.

Changes to offence provisions

A key aspect of the suite of changes is the expansion of the offence provisions in the Water Act. This includes:

• an increase in financial penalties for existing offences;
• expanding the derivative liability provisions in the Act to an additional number of offences; and
• introducing a defence for officers in relation to offences captured by the derivative liability regime.

For example, the previous penalty for non-compliance with a Notice was 20 penalty units (currently $3,634). Following the amendments, the penalty is increased significantly to:

• 120 penalty units for an individual (currently $21,808); and
• 600 penalty units for a corporation (currently $109,044).

These Notice penalties are expected to encourage compliance and serve as a deterrent to those individuals or corporations who might otherwise be unresponsive to a Notice. These penalties are in addition to any costs that may be recovered by a water authority if it carries out necessary action or works following non-compliance with a Notice.

In addition, a number of existing offence provisions will now be subject to the derivate liability regime in section 297 of the Water Act, which provides that, in the event of a breach of certain provisions of the Act by a corporation, any officer of that corporation can also be found guilty of that offence in their personal capacity.

An "officer of a corporation" excludes any employees and means:

• an officer within the meaning of section 9 of the Corporations Act 2001 (Cth); or
• for corporations that are not captured by the Corporations Act, any person who is concerned or takes part in the management of the corporation.

For example, the derivative liability regime has now been extended to a breach of a Notice.

However, the amendments create a new defence in relation to the criminal liability of officers of corporations. The defence is only available in respect of certain offences, being the taking or using water from a non-declared water system, interfering with a flow of water, wrongful taking of water, and taking water without a water share.

Under the defence, an officer does not commit an offence if they can point to evidence that presents a reasonable possibility that they exercised due diligence to prevent the commission of the offence by the corporation, and the contrary is not proved beyond reasonable doubt by the prosecution.

In determining whether "due diligence" was exercised, the court may consider:

• what the officer knew, or ought reasonably to have known, about the commission of the offence by the corporation;
• whether or not the officer was in a position to influence the corporation in relation to the offence;
• what steps the officer took, or could reasonably have taken, to prevent the commission of the offence by the corporation; and
• any other relevant matter.

These changes essentially switch the burden of proof to company directors (ie they will be guilty of the same offence as the corporation unless they can make out the due diligence defence for those offences where the defence is available).

Authors: Jane Hall, Partner; Lucas Spezzacatena, Lawyer.