BHP Billiton Iron Ore Pty Ltd v The National Competition Council & Anor [2008] HCATrans 119 (7 March 2008)

Last Updated: 11 March 2008

[2008] HCATrans 119

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M120 of 2007

B e t w e e n -

BHP BILLITON IRON ORE PTY LTD

Applicant

and

THE NATIONAL COMPETITION COUNCIL

First Respondent

FORTESCUE METALS GROUP LIMITED

Second Respondent

Office of the Registry
Perth No P45 of 2007

B e t w e e n -

BHP BILLITON IRON ORE PTY LTD

First Applicant

BHP BILLITON MINERALS PTY LTD

Second Applicant

and

THE NATIONAL COMPETITION COUNCIL

First Respondent

FORTESCUE METALS GROUP LIMITED

Second Respondent

Applications for special leave to appeal

KIRBY J
HAYNE J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 7 MARCH 2008, AT 9.32 AM

Copyright in the High Court of Australia

__________________

MR N.J. YOUNG, QC: May it please the Court, I appear with my learned friend, MR M.H. O’BRYAN, for the applicants. (instructed by Blake Dawson Lawyers)

MR S.J. GAGELER, SC: If the Court pleases, in each matter I appear for Fortescue Metals Group, which is the second respondent but the principal contradictor. (instructed by DLA Phillips Fox)

MR C.M. SCERRI, QC: Your Honours, in both matters I appear for the National Competition Council with MR I.B. STEWART. We are the first respondent but, as Mr Gageler said, we are not the principal contradictor. (instructed by Clayton Utz Lawyers)
KIRBY J: Yes, but I saw that you had some very delicate gavotte that you were playing in this case and I gather the bottom line is you support the grant of special leave?

MR SCERRI: No, we oppose it, your Honour.

KIRBY J: You do?

MR SCERRI: Yes, your Honour.

KIRBY J: I thought you indicated that you could see very powerful reasons here. However, I must have misread that.

MR SCERRI: Your Honour, we say there is a matter of public importance and that cannot be denied, but we say the decision below was clearly correct.

KIRBY J: At page 466 you say that “The Council supports that aspect of the applications for special leave”.

MR SCERRI: Yes, that was meant to refer to the public importance aspect, your Honour.

KIRBY J: That is a pretty important issue.

MR SCERRI: Yes, your Honour.

KIRBY J: Yes, all right. We note your strange position, but we will try and clarify that later if we need to.

MR SCERRI: Yes, your Honour.

KIRBY J: Mr Young, you read an affidavit of Daniel Preston which is at page 156 of the application book. Was there a note that another affidavit has come in?

MR YOUNG: Yes, your Honour, 29 February is the date of the second affidavit.

KIRBY J: Is there any opposition to the Court reading these affidavits?

MR GAGELER: No, your Honour.

KIRBY J: Yes, we note it. You say it is a very important matter?

MR YOUNG: Yes, your Honour.

KIRBY J: Yes, all right. You can sit down. We are going to hear Mr Gageler.

MR GAGELER: I do not deny that the case is one of immense practical and commercial significance but the same is true almost by definition of any case arising under Part IIIA of the Trade Practices Act. It is almost part of the statutory formula.

KIRBY J: Yes, but we have Justice Finkelstein in dissent, we have Justice Kenny with an earlier decision which Justice Middleton said was plainly wrong. We have an undoubtedly important question of statutory interpretation. It is said that it is of great national economic importance and there are huge sums at stake. It has the fingerprints of special leave written all over it.

MR GAGELER: It has those fingerprints, your Honours, but at the end of the day when all of the Pilbara dust has settled, this is really a very straightforward case and it is a case in which the answer arrived at by the Full Court, three judges of the Federal Court when one includes Justice Middleton at first instance, is plainly right which is just another way of saying, as did Justice Middleton at first instance, that Justice Kenny who was persuaded to take a different view at first instance 10 years ago was plainly wrong. Can I just show your Honours why I say that the case is so simple.

If your Honours look at page 15 of the application book you see the relevant statutory definition, the definition of “service” that appears in section 44B of the Trade Practices Act, and one is concerned here with the application of the exclusionary provision in paragraph (f). One reads that definition with the principal provision into which it slots – that is at page 13 – section 44H(4) which provides for the declaration of a service. The inquiry that the definition mandates in that context is extremely straightforward.

You ask, what is the putative service for which the declaration is sought and when you ask that question here, the answer is very straightforward. Here, the putative service for which declaration is sought is nothing more than the use of a particular railway line that links a mine to a port. Now, what does “use” mean in this particular context? It means nothing more than the ability of a third party to run a train along that line so that the third party can provide a haulage service. Nobody wants to touch BHP’s trains running along the line. Nobody wants to use BHP’s haulage service.

KIRBY J: They say they have a highly integrated production process which involves their using their railway line for which they invested capital and which they paid for when it suits them.

MR GAGELER: I will deal with that, your Honour. You have identified the service as not their use of their railway line; that is incredibly important. You then ask, is use by a third party of the railway line to run the third party’s trains along the railway line use of a production process. Answer, no, really for two reasons. One is running a train along a railway line does not change anything into anything, it is not itself a process of production, that should be the end of the story.

KIRBY J: I think an economist would laugh at that proposition.

MR GAGELER: Well, the transport economist would not, your Honour.

KIRBY J: But it is not part of the production process.

MR GAGELER: Running a train? Well, not at all. The hauling service which is used by a particular user to run the train, they may be a part of the particular users - - -

KIRBY J: It may be required by the scheme of the statute. I am just saying I do not think an economist would find that very persuasive, but a lawyer might, of course.

MR GAGELER: Well, if your Honours grant special leave you will see some economic evidence about all of this. But the point that I am coming to is the fact that when BHP runs its train along the railway line, it might be engaged in a process of production, is really just not to the point. The service for which declaration is sought is not BHP’s hauling service, and that is really - - -

HAYNE J: Well, the fundamental distinction you would have us draw is between the train and the track.

MR GAGELER: Between the service - - -

HAYNE J: No, between the train and the track, and that is the only point you are making, is it not?

MR GAGELER: That is the point that I am making.

HAYNE J: Well, that is either good or bad, but why is it unarguably good, Mr Gageler? Why do you distinguish between the train and the track on which it runs?

MR GAGELER: Well, I am distinguishing – if I can put it in slightly economic terms, between functional levels, between an above rail service and a below rail service.

HAYNE J: I understand that.

MR GAGELER: It is a distinction that has been drawn by the Full Court of the Federal Court for a decade in this field, and it is pretty fundamental to an understanding of the service for which a declaration is sought. The alternative - - -

HAYNE J: But in a statutory context where specific reference is made to a road and a railway line you say that production process is relevantly to be understood as BHP’s collection of prime mover and cars?

MR GAGELER: What BHP does with its collection of prime movers and cars, yes, yes, which are engaged in a process, not the railway line. Your Honours understand the point, and I do not think I will labour it further.

KIRBY J: Mr Scerri.

MR SCERRI: Your Honours, we adopt what Mr Gageler says. We say that is the distinction.

KIRBY J: Could you just help me on the functions of your client, the Council? Why is it not submitting to the orders of the Court? Is it part of its statutory function to take a view of the meaning of the statute and to advance that before the Court?

MR SCERRI: Yes, your Honour. The Full Court decided, I forget how long ago now, quite a while ago, that because of the Council’s special role and expertise in this area it should take a part in proceedings and assist the court.

KIRBY J: Where you have these divisions of opinion quite strongly expressed in the Federal Court, why is it not in the interests of the Council’s statutory functions to have that clarified and determined conclusively by the highest Court?

MR SCERRI: We say that the inconsistency or the lack of the contradiction is overstated, your Honour. Everybody from Justice Middleton to now has agreed that Hamersley was wrongly decided, there is consistency on that. Justice Finkelstein said, you need more evidence that it might or might not be within the exception. The majority were quite clear - - -

HAYNE J: Just as to that, will that question arise if leave were to be granted, that is, will the question arise of remitter or decision?

MR SCERRI: We assume not, your Honour.

HAYNE J: It is not immediately apparent to me why it should not arise. It seems to me that there is at least a view that would read the Act as using an expression which is to be applied to a series of technical facts rather than using an expression which has a technical meaning, which is to be elucidated by reference to the evidence of mining engineers or other forms of professional discipline.

MR SCERRI: We strongly agree, your Honour, with respect, that it all depends on the facts. As Justice Greenwood said, it depends on the facts. The facts here are clear. Now, in relation to Justice Finkelstein’s dissent, we say there were plenty of facts before the court as to what part the transportation from the mine to the port played.

HAYNE J: But whether or not the factual material is ample or scant, the underlying question of principle would be whether the statute is using a term whose meaning is to be elucidated by reference to expert evidence.

MR SCERRI: We say there was adequate expert evidence, your Honour. We agree with the principle that it is to be elucidated by the facts of the case.

HAYNE J: The facts, but not expert opinion about the application of - - -

MR SCERRI: No, certainly not.

HAYNE J: - - - ordinary English language to particular facts, however highly technical those facts may be.

MR SCERRI: Quite right, your Honour. So we say the decision is clearly right. There is in fact little difference between what Justice Greenwood and Justice Middleton said. Again, the applicant has overstated and misstated Justice Greenwood’s reasoning. He did not say it does not apply to use of a part of production process. He said, it does not necessarily apply, it depends upon the facts. On these facts he then said, it is quite clear that running the trains, Fortescue or someone else running the trains, does not use BHP’s production process. That is really where we have ended up. It is true and it cannot - - -

KIRBY J: Does it come down in your submission to the fact that though you accept that the question of public importance is raised concerning the meaning of these phrases in the Act and you support the application for special leave to that extent, you say that there is no real ambiguity even though the judges of the Federal Court found ambiguity?

MR SCERRI: Yes, we say they expressed it in different terms, your Honour, that the majority and Justice Middleton are really saying the same thing. We also say, because it is so fact dependent, this is not an appropriate vehicle for this Court to deal with the matter.

KIRBY J: But every case involving this part of the Act is going to be very fact intensive, one would think, and every different relationship is going to present different factual details.

MR SCERRI: Certainly, but within a continuum of cases that are at the fringe or at the margins, they would be - - -

KIRBY J: Is that how you would distinguish the earlier reasons of Justice Kenny, that they were fact specific?

MR SCERRI: No, we say Justice Kenny was wrong, your Honour. We say that consistently.

KIRBY J: Wrong.

MR SCERRI: It is one area we have been consistent. In relation to the facts, there are an endless variety of cases. We say the facts in this case fall so clearly within these provisions that it is not an appropriate vehicle. That is really all we are saying.

HAYNE J: Insofar as you are playing a role of an active contradictor, a subject into which I presently do not go, do you make any point other than a distinction between train and track?

MR SCERRI: Not really, your Honour, no. They are our submissions, your Honours.

KIRBY J: Reasonable minds might have different views on that and have.

MR SCERRI: Not really, your Honour. Justice Middleton, Justice Greenwood, Justice Sundberg all came to the same conclusion. Justice Finkelstein said “We need more facts”. No one has agreed with the proposition that the exception applies, no one has. They have used slightly different words to explain it, but no one has agreed with the proposition that the applicant puts.

KIRBY J: Thank you very much.

MR SCERRI: Thank you, your Honours.

KIRBY J: We do not need your assistance on this occasion, Mr Young. You had an easy ride.

The Court grants special leave to appeal in this matter. How long would you estimate the case would take before the Full Court?

MR YOUNG: One day.

HAYNE J: How extensive is the record?

MR YOUNG: The record is very extensive.

HAYNE J: How much of it do we need?

MR YOUNG: It depends on the question your Honour asked about remitter and whether the construction requires one to go beyond Justice Middleton’s findings of fact.

HAYNE J: Much will turn on what relief you seek in your notice of appeal, will it not?

MR YOUNG: Yes, we seek declarations to the opposite effect of the declarations made in the courts below.

KIRBY J: But is that what this Court would do in a case which everyone seems to agree is fact specific? Would we not simply indicate what the correct construction of the Act is and if it is different from that reached by the majority in the Full Court, send the matter back to the Full Court to be determined in accordance with that construction?

MR YOUNG: If the Court adopted the construction for which we contend, which is essentially Justice Kenny’s construction, the factual findings made by the trial judge are unchallenged and they would be sufficient to ground the declaratory relief we seek; that is to say, Justice Middleton found as a fact that the operation of the rail line was both integral and essential to the production process engaged in by BHP. If those two factual findings connect with the appropriate construction, then it would be appropriate to make the declaratory orders.

HAYNE J: The question I asked and perhaps should not have is really directed to whether we are going to end up with a record that is larger than we need or is it a matter where a single Justice should be concerned to control the record or should we be leaving it to the parties, what should we be doing? What I for my part do not want to end up with is X volumes of appeal book where we refer to 100 pages rather than 5,000 or whatever it is.

KIRBY J: Which is our usual fate.

MR YOUNG: Yes, that is very understandable. In this case there was no dispute as to the facts. Relevantly the facts were undisputed and it was all found in affidavit evidence. The Court may need the record in the sense of all of the affidavit material, but the task of ascertaining the critical facts should be a relatively confined one. To the extent, if at all, it is necessary to go beyond Justice Middleton’s factual findings, some of his factual findings were in a sense encompassed in his observation that the facts were indistinguishable from those found by Justice Kenny in Hamersley. There may be a need to go to the record simply because his Honour, Justice Middleton, expressed his factual findings quite shortly.

KIRBY J: The record will show Justice Hayne’s concern, which I share and I am sure Justice Crennan too. The Registrar will keep in touch with the parties and if there is a need, the matter will be listed before a single Justice for directions.

MR YOUNG: Yes, if your Honour please.

KIRBY J: The Court will now adjourn in order to reconstitute for the third and fourth applications.

AT 9.52 AM THE MATTER WAS CONCLUDED