Oliveri Transport Services Pty Ltd v The D-G of the Department of Transport of NSW & Anor S177/2001 [2002] HCATrans 267 (31 May 2002)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S177 of 2001

B e t w e e n -

OLIVERI TRANSPORT SERVICES PTY LTD

Applicant

and

THE DIRECTOR-GENERAL OF THE DEPARTMENT OF TRANSPORT OF NEW SOUTH WALES & THE STATE OF NEW SOUTH WALES

Respondents

Application for special leave to appeal

GLEESON CJ

CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 31 MAY 2002, AT 12.11 PM

Copyright in the High Court of Australia

MR J.C. KELLY, SC: May it please the Court, I appear for the applicant. (instructed by Harmers Workplace Lawyers)

MR M.H. TOBIAS, QC: May it please the Court, I appear with MR. R.P.L. LANCASTER for the respondents. (instructed by Deacons)

GLEESON CJ: Yes, Mr Kelly.

MR KELLY: Your Honours, the matters of principle raised by this matter, expressed at the broadest level, is how to reconcile and apply the principles in Thompson v Randwick Council on the one hand and Samrein v Metropolitan Water Sewerage & Drainage Board on the other, in the context of a case in which a non-revenue statutory power, if I may describe it in that way, is exercised as a means to raise revenue to fulfil a purpose which is otherwise within power.

GLEESON CJ: Another way of looking at it might be whether considerations of revenue are irrelevant to the exercise of a power.

MR KELLY: Yes, your Honour. Relevant or irrelevant, we would put that forward as a matter of great importance.

GLEESON CJ: Why would considerations of revenue or cost recovery be irrelevant when you are dealing with the kind of problem that confronted the authorities in the present case?

MR KELLY: They would be rendered irrelevant in the present case by reason of the terms of the power. If I can take your Honours to application book pages 78 and 79, your Honours will see at the top of 79 - your Honours appreciating that this particular statutory power was a power to vary the route or region defined in respect of a previous exclusive commercial contract area for the rendering of transport services. Your Honours will see there that the relevant section of the Act makes provision for variation by a determination under the section, the components of which appear in subsection (3), and your Honours will see:

A renewal of contract may be offered in respect of a varied region or route if the variation:

(a) is necessary to extend services in developing areas; or

(b) is necessary as a result of altered traffic conditions or for reasons of public safety; or

(c) is otherwise necessary for improvement of transport services in the public interest.

GLEESON CJ: Just remind us, Mr Kelly, what was the change that was going on here?

MR KELLY: The change was the building of what is known as the Liverpool to Parramatta transitway, which is a high speed - - -

GLEESON CJ: Is that a tollway?

MR KELLY: I do not think at the time that had been determined and I am not clear if it has been determined now.

CALLINAN J: Is it going to be a bus route, is it?

MR KELLY: Bus only, dedicated high speed - - -

CALLINAN J: It is going to cost up to $100 million.

MR KELLY: Indeed, unkind persons would say, "And considerably more than that." But, of course, in this case we are concerned with not a provision which goes to the construction of that piece of infrastructure but, rather, the provision of services upon it and it runs through a number of exclusive service areas. Under this Act there is a power upon the renewal of, in this instance, a five-year contract for a further five-year term. There is a power to vary the region or route under those defined circumstances. What happened here was a purported variation by excision from our area of the route along which the LPT was to pass and that included a number of roads along which we render transport services and continue to do so to this day.

GLEESON CJ: If that excision had not occurred, what would the practical result have been?

MR KELLY: The practical result would be that section 22(5) of this Act would apply. It is a provision which is set out, your Honours will see, at page 77 of the application book. It is a provision which, in effect, contemplates that there will be, during the course of a contract - in other words, while a commercial contract is on foot - with respect to a particular region or route, a determination that additional services would be provided or may need to be provided. In subsection (5) your Honours will see the provision contemplates an event in which "the exclusive rights of two or more contract holders" and it provides for it to be "the duty of all parties to endeavour to agree", and "all parties", we would contend, includes the Director-General and the contract holders of the various affected areas. That is a provision which would apply, had the Director not determined rather to take away from us what we already had and then, in effect, put it up for public tender, so as to raise revenue for the purpose of defraying the cost of construction of the road.

CALLINAN J: And would the parties then have access to the new bus way?

MR KELLY: Yes.

GLEESON CJ: But raising revenue to defray the cost of construction of roads goes back to the earliest days of this colony.

MR KELLY: Certainly.

GLEESON CJ: The original major roads in Sydney were toll roads.

MR KELLY: Yes, indeed. In Thompson, of course, a power in a local council to resume land for the purpose of building footpaths was held not to have been exercised for a proper purpose when an additional parcel of land was resumed for the purpose of being sold and the proceeds applied to defray the cost of the construction of the footpaths. In the present case, we would say that it is on all fours with Thompson and, indeed, Justice Rolfe, at first instance, so found. In the Court of Appeal, the Court of Appeal preferred to apply the principle in Samrein where, of course, the concept of a means to an end is introduced. Of course, in a case like Samrein what is there described as the means was the entry into a joint venture for the purpose of the acquisition and development of an office building.

The present case offers, I think for the first time, an example of a case where it is suggested that the raising of money is an acceptable means to, in this case, the end of the improvement of public transport services by the construction of the LPT. That is the pivotal and distinguishing feature of this case. Their Honours in the Court of Appeal preferred the view that although they did not give the same central significance to raising revenue as his Honour Justice Rolfe, they recognised, nevertheless, that that was part of the relevant purpose and they preferred to apply Samrein as a principle and hold that the raising of that revenue was within the concept of means.

CALLINAN J: How could you improve transport services in the public interest without, as a practical matter, raising revenue?

MR KELLY: Well, you cannot, your Honour, but, of course, this power is not a power to build. It is not a power to, as it were, provide a road. This is a power to vary a regional route in an existing contract. Indeed, if one looks at the bigger picture, the proposition which this case brings forward for consideration really applies to non-revenue raising powers generally. If it is now to be the case that the raising of revenue is an acceptable means to, as it were, any statutory end, then that creates a new and substantial additional head of power flowing from nothing more than the application of that general notion. Of course, one cannot construct the infrastructure in a transitway or, indeed, do any other building work without money, but in a case such as the present the question is whether the raising of revenue, which, of course, is always a means to an end - one could not find a better paradigm for a means to an end than to point to revenue or cash. Therefore, if, as a matter of principle, it is acceptable to have regard to the raising of revenue as an adjunct to the exercise of a non-revenue raising power, there is thus created a whole new and different range of power. We contend that the relevant principle is to be found in Thompson and it is to be applied here in the manner that Justice Rolfe carried out.

CALLINAN J: Another way of characterising what the council did in Thompson was to say that they were carrying on the business of real estate dealing, which could hardly be within the local authority's power. It is very difficult to say that that is in good faith. It really is a quite different case, I think.

MR KELLY: Except for this, your Honour, the Passenger Transport Act, which established this regime of the provision of passenger services by devolving exclusive service regions and making them subject of commercial contracts, the terms of which include the terms of the Act, in that context, the particular power relates only to the variation of the region or route.

If it were within the bounds of an exceptable exercise of power to raise revenue, that might logically be limited to revenue which relates to the variation of, in this case, the applicant's region or route. Whereas, what is here sought to be done is to raise revenue for something entirely outside that subject matter. It is, as the delegate indicated, to provide funds to build the entire LPT. The entire LPT does not exist in my client's exclusive contract region. Indeed, if I can take your Honours to page 103 of the application book, your Honours will see the very clear and strong terms in which the delegate expressed reasons for decision. At line 15 your Honours will see - and in this paragraph, paragraph 62, set out by Justice Giles, one has extracted the determination, the instrument itself, and the delegate says that:

Having reviewed all the available material, my primary reason for deciding a variation is necessary for the improvement of transport services in the public interest, is that the government need to be able to competitively tender for the provision of the LPT services to ensure those services deliver the best value to the taxpayer. It would not be in the public interest for the improvement of transport services, to commit over $200 million of public money to constructing the LPT and to constrain the right to provide services on that publicly funded infrastructure to the holders of existing commercial service contracts under the Act (which is what would occur -

and, indeed, your Honour sees that it is stressed that - - -

GLEESON CJ: That statement at line 18 is a little elliptical, is it not? It means, I presume, that the government needs to be able to call for competitive tenders for the provision of LPT services.

MR KELLY: In order to maximise its return, instead of going along the section 22(5) route, as it is contractually and legally obliged, we contend - - -

GLEESON CJ: But am I right that the expression "needs to be able to competitively tender" means needs to be able to call for competitive tenders?

MR KELLY: Yes, your Honour, yes. To invite people to offer as many millions as possible to enrich the government, albeit to - - -

CALLINAN J: No, to reimburse the government, not enrich the government.

MR KELLY: But it is at the expense of my client and the other exclusive contract holders through whose areas the infrastructure is applied. The LPT is certainly in the process of being constructed and, as your Honour rightly points out, there is a form of defraying of a cost, but it is, in our respectful submission, to the same end. What is here being referred to is something, on any view, extra and outside the ambit of the variation of the route and region. In my client's particular region, it is to raise money, having taken away from my client - - -

CALLINAN J: Your client would get a great windfall if the contract were renewed in its current terms, because your client would have access to this very fast and, no doubt, attractive bus freeway without paying anything in addition for it.

MR KELLY: That would be delightful if it were true, your Honour, but section 22(5) does not give my client any absolute right to run services on the new roadway, as it were.

GLEESON CJ: You mean, your client would have found itself in the process of mediation of some kind?

MR KELLY: Yes. It would go forward, under section 22(5), and proceed to honour the terms of the contract by endeavouring to agree on a just compromise of their respective rights and that is the occasion when prices would be determined and one would expect it to involve no windfall at all.

GLEESON CJ: Just a moment, prices would be determined in the context where your client had its foot on the rack.

MR KELLY: As would all other contract holders along the road.

GLEESON CJ: Along the road.

MR KELLY: Indeed, if one were to put the LPT completely out of mind and just imagine the construction of a brand new road in somebody's area, perhaps linking into the next man's area - - -

GLEESON CJ: Why could not this reasoning have been expressed differently, but to the same effect, by saying, "There has been, or there is about to be, a radical change in circumstances. We are about to spend $200 million of public moneys on substantially altering the circumstances in which these bus routes are operating"?

MR KELLY: They could have said that but, your Honour, it is all to the same effect, "We are building a new road through your area on which we want passenger services to be provided." There is nothing uncommon about that. That happens all the time. The only thing different about this one is that it is a bigger, shinier, newer road.

CALLINAN J: Has the Director-General yet determined that additional services should be provided under 22(1)?

MR KELLY: We would submit that the answer to that is yes, and it is to be found in, indeed, the same instrument.

CALLINAN J: Where do I find that, Mr Kelly?

MR KELLY: If your Honour turns to the beginning of the instrument on the previous page.

CALLINAN J: What is that, page 101, is it?

MR KELLY: Page 102, your Honour sees:

"Pursuant to my delegation . . . I believe it is necessary for the improvement of transport services in the public interest that the exclusive service region that applies to your existing commercial services contract . . . be varied.

It is implicit in that that there are to be additional transport services in the relevant area.

CALLINAN J: It is not, in fact, though a determination under 22(1)(a) though.

MR KELLY: It is not expressed to be.

CALLINAN J: Well, it is not in fact either, is it? It may be a pretty clear indication that there will be but - - -

MR KELLY: When one reads into the next paragraph, one sees that:

This variation is not to take effect until immediately prior to the time when contracts are executed . . . or his delegate - - -

CALLINAN J: But a determination that additional services should be provided would determine, would it not, what the additional services would be?

MR KELLY: Certainly, yes, your Honour.

CALLINAN J: And that has not happened.

MR KELLY: Correct, but what one sees, on any view of it, is a determination that there is to be a new road and there are to be services on that new road and that that is to take place during the term of the new contract, because it is here expressed:

It is anticipated that this will be, at the earliest 2001, but more likely 2003. The Department will keep you fully informed -

plainly, or rather, inferentially, the Director has gone down the section 23(4) route so that he will have something to sell on the open market by this process of competitive tendering as distinct from being burdened to honour his contractual and statutory obligations contained in section 22(5).

In our respectful submission, the language, in particular, the indication that the primary reason for deciding a variation is necessary is that the government needs to be able to competitively tender, makes it as plain as a pikestaff that the substantial purpose of this determination is to provide that revenue-raising opportunity and to keep it for the government, albeit at the expense of the contract holders, as his Honour Justice Rolfe found, and that it is no escape from that to introduce the language or logic of means to an end, because revenue raising is always a means to an end and, indeed, if that logic were available, then the decision in Thompson v Randwick Council would be quite different, because, in that case, there is no question that the money that was sought to be raised was to be applied to pay for the footpaths.

GLEESON CJ: Yes, thank you, Mr Kelly. Yes, Mr Tobias.

MR TOBIAS: Your Honour, the propositions we put are as follows. Firstly, it would be a Pyrrhic victory to the applicant in this case if leave was granted and ultimately the appeal succeeded, given the amendment to the legislation that has taken place in the meantime. We sent that up to your Honour. It is referred to in our written submissions. In fact, it would mean that between now and the time the appeal was heard, the issue as to whether or not the region of the applicant's contract would have excised therefrom the route of the transitway would become entirely academic.

The contract will have been renewed as at 17 February 2000 without any variation, if the appeal succeeded. On the Director-General making a determination as to a transitway route on the location now proposed for the Parramatta to Liverpool transitway through the applicant's region and its publication in the gazette pursuant to section 28G(1), that route is automatically excluded from that region and the service contract is varied accordingly pursuant to section 28I(1) and this is so, notwithstanding that the contract that is so varied was entered into before the new legislation commenced on 1 May last.

Therefore, in our respectful submission, there can be no public importance issue with respect to whether these contracts, that is, that of the applicant or any other service provider through whom the transitway route is to be located - there is no public importance issue as to whether those contracts can be varied pursuant to section 22 or section 24 in so far as that variation relates to the transitway routes, which is what this case is about. Therefore, in our respectful submission, in terms of revenue raising for a transitway there cannot be any relevant miscarriage of justice and only the question of costs are involved.

The second point we wish to make is this. My learned friend's submissions and the trial judge's decision proceeded upon the basis that there was a finding that, in fact, a purpose of the delegate of the Director-General was to maximise revenue. In relation to that, the finding of the unanimous Court of Appeal was to the contrary. At page 124 of the application book Justice Giles in paragraph 100 referred to the findings of Justice Rolfe to the effect that this was a revenue-raising exercise and that one of the purposes of the variation of the contract was for the purposes of raising revenue. In paragraph 101, on the next page, his Honour, having considered the material, came to an opposite view. In particular, just below line 30 in the last sentence of that paragraph, his Honour said:

The blunt revenue-generating purpose found by his Honour, taken out of the context of implementing the LPT for the benefit of public transport users, was in my opinion not to be found in Mr Elson's memoranda or the Delegate's letters.

Including that which my learned friend has referred your Honour to at page 103. His Honour returned and confirmed that finding at page 127, where at lines 10 to 15 he said:

The two are linked, and a hard and fast line between them can not be drawn, but on the finding of purpose as I have described I consider that the Director-General was concerned not with the prospect of more revenue to the Government but with the implementation of the LPT -

So there is a specific finding of fact, contrary to that of Justice Rolfe, that there was no purpose of revenue raising in any event.

CALLINAN J: And that simply depends upon the construction of a written document.

MR TOBIAS: That document and the material that preceded it. If you look at the document at page 103 and the critical paragraph to which your Honours' attention has been directed, the requirement that:

the government needs to be able to competitively tender for the provision of LPT services to ensure those services deliver the best value to the taxpayer -

and what is then referred to as $200 million of "publicly funded infrastructure", then, your Honour, with great respect, one cannot extract out of that the assertion that, in fact, that is just code for, "All we want to do is raise as much money as possible in order to defray the cost of this public expenditure." Obviously, the best value for the taxpayer, which appears in a number of other passages in the material, is referring to ensuring that given the publicly funded infrastructure, that the operator and the manner in which the operator conducts the transitway is, in fact, the most efficient possible and in that sense will give best value to taxpayers. Further to that, the requirements for competitive tender did not deal with the question of maximising revenue.

If your Honours go to page 88 of the book, there is a reference at the top of the page, in paragraph 35, in the document, being the document referred to in paragraph 29, being the 1999 PricewaterhouseCoopers government invitation for expressions of interest, in which there is a reference to the maximisation of revenue upon which Justice Rolfe attached himself, there is a reference by Justice Giles to, at the top of page 88, the fact that:

Section 4 of the document set out the mandatory requirements of expressions of interest. They were concerned with service (timetables, station facilities and integration with local or feeder services); system (ITS, buses, ticketing, passenger information); and finance and management. As to the last of these, the applicant had to indicate a fare structure, substantiate its financing capability, and provide an estimate of "any franchise payments it proposes to make . . . although it was said that the figures provided were -

only for "internal modelling".

GLEESON CJ: Yes, thank you, Mr Tobias. Mr Kelly.

MR KELLY: The short answer, your Honour, to my learned friend's point about the amending Act is that my clients had an accrued right to specific performance or damages in lieu thereof prior to that amending Act being passed. It was passed specifically to frustrate these proceedings, we venture to think, but it is not an Act which has any relevant application. Secondly, when it comes to findings of fact, the Court of Appeal made a slightly different finding to Justice Rolfe, but, nevertheless, a finding in which it was a critical component - - -

GLEESON CJ: What page, Mr Kelly?

MR KELLY: Page 126, paragraph 103. There your Honours will see:

In the present case, the end was the implementation of the LPT as an improvement of transport services in the public interest.

And then Justice Giles goes on to say:

The process of competitive tender, even with an element of revenue-generation, was part of the means to the end.

And that is the finding which poses the question.

GLEESON CJ: But your argument is that the element of revenue generation taints the rest.

MR KELLY: Yes, and poses the question of principle, just where does one draw the line when it comes to the application of this rule which permits means to ends to be looked at. In all the cases so far they are looking at other categories of means, like a joint venture agreement as a means to an end, whereas here, even on the Court of Appeal's finding, it is plain that the process of competitive tender, even with an element of revenue generation, was part of the means to the end, and that poses the question which, we respectfully submit, is a question of some considerable importance.

GLEESON CJ: On the facts found by the Court of Appeal which were open to that court and were, in some respects, different from the facts as found by the trial judge, the case turned on the application of general principles to the particular facts and circumstances, and there are insufficient prospects of success of an appeal to warrant a grant of special leave to appeal. The application is refused with costs.

We will adjourn until 2.00 pm.

AT 12.42 PM THE MATTER WAS CONCLUDED