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High Court of Australia Transcripts |
Last Updated: 29 March 2012
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Melbourne No M155 of 2011
B e t w e e n -
THE PILBARA INFRASTRUCTURE PTY LTD (ACN 103 096 340)
First Appellant
FORTESCUE METALS GROUP LIMITED (ACN 002 594 827)
Second Appellant
and
AUSTRALIAN COMPETITION TRIBUNAL
First Respondent
HAMERSLEY IRON PTY LTD (ACN 004 558 276)
Second Respondent
HAMERSLEY IRON-YANDI PTY LTD (ACN 009 181 793)
Third Respondent
ROBE RIVER MINING CO PTY LTD (ACN 008 694 246)
Fourth Respondent
NORTH MINING LTD (ACN 000 081 434)
Fifth Respondent
PILBARA IRON PTY LTD (ACN 107 216 535)
Sixth Respondent
RIO TINTO LIMITED (ACN 004 458 404)
Seventh Respondent
MITSUI IRON ORE DEVELOPMENT PTY LTD (ACN 008 734 361)
Eighth Respondent
NIPPON STEEL AUSTRALIA PTY LTD (ACN 001 445 049)
Ninth Respondent
SUMITOMO METAL AUSTRALIA PTY LTD (ACN 001 444 604)
Tenth Respondent
BHP BILLITON IRON ORE PTY LTD (ACN 008 700 981)
Eleventh Respondent
BHP BILLITON MINERALS PTY LTD (ACN 008 694 782)
Twelfth Respondent
Office of the Registry
Melbourne No M156 of 2011
No M157 of
2011
B e t w e e n -
THE PILBARA INFRASTRUCTURE PTY LTD (ACN 103 096 340)
First Appellant
FORTESCUE METALS GROUP LIMITED (ACN 002 594 827)
Second Appellant
and
AUSTRALIAN COMPETITION TRIBUNAL
First Respondent
ROBE RIVER MINING CO PTY LTD (ACN 008 694 246)
Second Respondent
NORTH MINING LTD (ACN 000 081 434)
Third Respondent
PILBARA IRON PTY LTD (ACN 107 216 535)
Fourth Respondent
RIO TINTO LIMITED (ACN 004 458 404)
Fifth Respondent
MITSUI IRON ORE DEVELOPMENT PTY LTD (ACN 008 734 361)
Sixth Respondent
NIPPON STEEL AUSTRALIA PTY LTD (ACN 001 445 049)
Seventh Respondent
SUMITOMO METAL AUSTRALIA PTY LTD (ACN 001 444 604)
Eighth Respondent
BHP BILLITON IRON ORE PTY LTD (ACN 008 700 981)
Ninth Respondent
BHP BILLITON MINERALS PTY LTD (ACN 008 694 782)
Tenth Respondent
Office of the Registry
Melbourne No M45 of 2011
B e t w e e n -
THE NATIONAL COMPETITION COUNCIL
Applicant
and
HAMERSLEY IRON PTY LTD (ACN 004 448 276)
First Respondent
HAMERSLEY IRON-YANDI PTY LTD (ACN 009 181 793)
Second Respondent
ROBE RIVER MINING CO PTY LTD (ACN 008 694 246)
Third Respondent
NORTH MINING LTD (ACN 000 081 434)
Fourth Respondent
PILBARA IRON PTY LTD (ACN 107 216 535)
Fifth Respondent
RIO TINTO LIMITED (ACN 004 458 404)
Sixth Respondent
MITSUI IRON ORE DEVELOPMENT PTY LTD (ACN 008 734 361)
Seventh Respondent
NIPPON STEEL AUSTRALIA PTY LTD (ACN 001 445 049)
Eighth Respondent
SUMITOMO METAL AUSTRALIA PTY LTD (ACN 001 444 604)
Ninth Respondent
BHP BILLITON IRON ORE PTY LTD (ACN 008 700 981)
Tenth Respondent
BHP BILLITON MINERALS PTY LTD (ACN 008 694 782)
Eleventh Respondent
FORTESCUE METALS GROUP LIMITED (ACN 002 595 872)
Twelfth Respondent
THE PILBARA INFRASTRUCTURE PTY LTD (ACN 103 096 340)
Thirteenth Respondent
THE AUSTRALIAN COMPETITION TRIBUNAL
Fourteenth Respondent
Office of the Registry
Melbourne No M46 of 2011
B e t w e e n -
THE NATIONAL COMPETITION COUNCIL
Applicant
and
ROBE RIVER MINING CO PTY LTD (ACN 008 694 246)
First Respondent
NORTH MINING LTD (ACN 000 081 434)
Second Respondent
PILBARA IRON PTY LTD (ACN 107 216 535)
Third Respondent
RIO TINTO LIMITED (ACN 004 458 404)
Fourth Respondent
MITSUI IRON ORE DEVELOPMENT PTY LTD (ACN 008 734 361)
Fifth Respondent
NIPPON STEEL AUSTRALIA PTY LTD (ACN 001 445 049)
Sixth Respondent
SUMITOMO METAL AUSTRALIA PTY LTD (ACN 001 444 604)
Seventh Respondent
BHP BILLITON IRON ORE PTY LTD (ACN 008 700 981)
Eighth Respondent
BHP BILLITON MINERALS PTY LTD (ACN 008 694 782)
Ninth Respondent
FORTESCUE METALS GROUP LIMITED (ACN 002 595 872)
Tenth Respondent
THE PILBARA INFRASTRUCTURE PTY LTD (ACN 103 096 340)
Eleventh Respondent
THE AUSTRALIAN COMPETITION TRIBUNAL
Twelfth Respondent
FRENCH CJ
GUMMOW J
HAYNE J
HEYDON
J
CRENNAN J
KIEFEL J
BELL J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON THURSDAY, 8 MARCH 2012, AT 10.03 AM
(Continued from 7/3/12)
Copyright in the High Court of Australia
____________________
FRENCH CJ: Yes, Mr Gleeson.
MR GLEESON: Thank you, your Honours. What I have left in reply are two points which will take me about 10 minutes. In relation to the matter raised late yesterday, we do wish to make an application for leave to amend the notice of appeal. Perhaps I should make that application first.
FRENCH CJ: Yes, very well.
MR GLEESON: Two matters that we do not take are – we do not contend that the 2010 amendment applies to this matter, this application for review, the transitional provisions dispose of that point. Secondly, we do not take a point that this is not a proceeding. The consequence of that is that provisions such as section 103 of the Act apply to this review. Your Honour Justice French sitting in the Tribunal in 2006 dealt with that matter in Re Lakes R Us Pty Ltd [2006] ACompT 3; 200 FLR 233 and your Honour held, after analysing the statutory provisions and in the light of some earlier decisions, that section 103 was available in this sort of matter.
That case does, however, confirm the public interest nature of the review process and that it is not inter partes litigation. That arose because Mr Gageler, for one of the persons before it, submitted that although the applicant had lost interest in the review because the review had been triggered the Tribunal had a power and a duty, he said, to continue with the review. Your Honour, as a matter of discretion, allowed the applicant to withdraw and the matter did not go any further.
The application I do wish to make concerns the question whether the Tribunal has misconceived the nature of the matter which was before the Minister, the nature of the matter before it and its role by way of reconsideration. It is a point that - - -
GUMMOW J: Just looking at Re Lakes at page 239, paragraph 28, the Deputy President says:
it was not in dispute, that s 103 of the Act applies - - -
MR GLEESON: That is so, your Honour. Your Honour the Chief Justice sitting there did though make some observations of your own about textual constructions which would produce that result, one of them being that referred to in paragraph 27. For our part, we do not wish to contend that your Honour’s construction of the Act in that case was wrong.
FRENCH CJ: Well, is it a matter for the parties? Let us suppose there is a different view, does that not affect if there were to be a remitter to the Tribunal the nature of the proceeding that would follow?
MR GLEESON: It certainly would, your Honour.
HAYNE J: Does it not therefore affect the way in which we frame our order?
MR GLEESON: Yes, I accept that.
HAYNE J: Is it therefore a matter for the parties where we are confined in some way by the points that you take or do not take?
MR GLEESON: No, you are not confined by that. The point I wish to take – and I will hand up my proposed document in a moment if I can – concerns section 44K itself and whether the Tribunal has misconceived, as I say, the matter that was before the Minister, the matter that was before the Tribunal and what is involved in the Tribunal’s role by way of reconsideration. Could I hand to your Honours, at least in the Hamersley application, a proposed amended notice of appeal – the application is in similar form in the other matters – and invite your Honours to consider the material marked up on page 4.
The error that we wish to rely upon commences in paragraph 24 of the Tribunal’s reasons. The first sentence is correct, clearly. The second sentence, we submit, is incorrect because the Tribunal has conceived that what it is required to do is to reconsider each application afresh and there is referring to the applications which Fortescue originally made to the NCC for a declaration recommendation.
It uses that term “application” in the earlier paragraphs from 8 onwards and it uses it in contradistinction to the NCC declaration recommendation. Under the Act, the true effect of our original applications was only to trigger a process before the NCC which resulted in it exercising its powers producing a declaration recommendation. When that declaration recommendation was received by the Minister, we wish to contend that the Minister’s task under section 44H, as identified in paragraph (d) of our proposal, was to decide in the light of that declaration recommendation and having regard to any other proper inquiries whether to declare or not declare.
The significance of that is that the declaration recommendation is not merely a fact which triggers the Minister’s power and duty under section 44H. It becomes an essential ingredient of the decision-making process. The Minister is to give real and realistic, indeed, we would assert fundamental consideration to that recommendation and decide whether to declare or not to declare.
That sits with the statutory scheme because the NCC will be not only an expert body but a body that has engaged in a process of public submissions and has placed before the Minister an opinion and findings on each of the relevant criteria. If that is right, when the matter comes to the Tribunal under 44K, the matter that we submit it is looking at is the correctness of that decision of the Minister made in the light of two things, in particular, the declaration recommendation and secondly, any issues which have been identified by the applicant for review in the application filed under regulation 22A.
What seems to have happened instead in paragraph 24 of the Tribunal is because it thought it was reconsidering afresh Fortescue’s original applications, which were now spent, it considered that this allowed the parties, gave the parties a right to put before the Tribunal anything they thought material to any issues they wished to raise and it was that perception that this had become inter partes litigation which we submit explains paragraph 26. It is a stark fact that in the entirety of the lengthy reasons of the Tribunal what we do not find is any analysis of the declaration recommendation. We find no reference to it. We find no reference to the Minister’s decision itself. What we have, as it were, is the Tribunal considering afresh Fortescue’s original application.
If I could ask your Honours to go to volume 1, please, to the Minister’s decision commencing at page 3 in the Hamersley matter. That tightly woven decision and set of reasons, we submit, correctly understood the task before the Minister. We see at page 5 at line 30 that the Minister was directly addressing himself to the NCC’s recommendation and he was drawing on the evidence relied upon by the NCC and the findings of the NCC.
When each criterion is then addressed there are references to the NCC declaration and the findings that the Minister was making by reference to them. For example, in relation to (f) at page 11, while the Minister has opened a prism for (f) broader than what I have submitted in-chief, what the Minister has done from lines 40 and following is to say, “I have then considered the NCC’s opinion that risks of declaration and costs of access can be substantially mitigated by the sorts of matters we have referred to as stage 2, and over the page, the Minister’s decision based on the recommendation was that those mechanisms were adequate to manage any risks that might result.
Now, we would wish to submit that the process of a reconsideration under 44K, whatever view be taken on the question the Court has raised about whether it is a proceeding, must be one focused on the correctness of a decision by a Minister in the face of a recommendation; that is critical and fundamental to the process. Your Honours, that leads to our proposition in (e) that the entire process miscarried because no consideration was given to the central document. Could I just explain (f) and (g).
Your Honours have raised the issue in Osland as to the breadth of the expression “public interest”. Now, I will make a couple of submissions in reply if I can on that, but if one were to take a view that public interest here is operating in something like an Osland sense where what is placed before the Minister is the task of an evaluative discretionary judgment on a range of matters which might bear upon the public interest relevant to access, that is being done against the fact that the NCC recommendation has examined that question of the public interest in detail, taken submissions and provided a whole series of findings for the Minister to consider.
The point we would wish to raise for consideration under (f) is that bearing in mind that the Tribunal, while an administrative body, includes a Chapter III judge acting persona designata, there must be some limits upon the notion that a judge would be deciding, as it were, in that person’s own mind questions which were purely political. Now, section 44K, of course, is to be read consistent with the Constitution and the way in which we would conceive section 44K to not raise a Wilson problem would have two elements to it.
One is that within paragraph (f) there are constraints from the surrounding text which render it something not simply an open-ended political consideration, but, secondly, to the extent the Tribunal is asked to have a reconsideration of what the Minister did, is the Tribunal’s approach really one of saying, given that there may be a variety of conceptions of the public interest in this circumstance, am I satisfied that the Minister has not applied a conception of the public interest that was not open on the material before him, particularly the NCC recommendation.
If I am satisfied that no error of that sort has crept in then it is not for me, me as the Tribunal including the Chapter III judge, to say that if I were the Minister and I were simply acting politically unconstrained by other considerations, I would evaluate the public interest differently. That is the matter in paragraph (f).
The final matter in paragraph (g) which really overlaps much of what I have already put is that to the extent the Tribunal went down the Dixon path, which, as Mr Moore has shown, was central to us losing on (f), you do not see on page 11 that Dixon was evaluated by either the Minister or apparently the NCC as having anything to do with (f). It seems to have been an example of the Tribunal considering “I can open the remit as widely as I like in respect to any matters which I would like to look at”, and the paragraph in the Tribunal’s reasons which I have taken the Court to where there is a degree of engineering the future for the Pilbara, which is paragraph 1324, we would submit is outside the scope of a reconsideration exercise under section 44K.
The manner in which I have sought to put this application in argument would not require a resolution of the proceedings question for this reason, that whatever the Tribunal did by way of taking in material believing it was resolving inter partes dispute - - -
FRENCH CJ: The proceedings – section 103 is ancillary to whatever function is conferred upon the Tribunal.
MR GLEESON: The function, and so if the central function was one where it lost sight of the matter before it, the matter before the Minister and its function, then the nature of any remitter should that arise to the Tribunal would be one directing it to act in accordance with law as laid down by this Court which would be requiring it to apply its mind to its function. Now, what that would mean is, we are not putting a hardline proposition that the Tribunal could never have considered anything other than the declaration recommendation. Clearly, it could require reports from the NCC under subsection (6) on any view, but whatever broader powers it had under section 103 were to be exercised consonant with the function and the function did not involve the matters that I have sought to address.
KIEFEL J: Was the NCC recommendation – did it form any part of the dialogue between the parties and the Tribunal? That might be a difficult question given the breadth of the transcript.
MR GLEESON: Yes. I think from my review I could say at least this much. A number of the arguments Rio was wishing to run and did run and thus were the subject of dialogue were arguments which were re-canvassing matters where the NCC had provided a very detailed evaluation such as paragraph (f). So there was consonance or a similarity between many of the arguments, but whether the dialogue focused more narrowly, as it really should have, namely, the correctness of a decision in the face of, let us look at that particular declaration - - -
KIEFEL J: But I suppose more to the point, the applications brought by the parties did not really address questions arising from the recommendations or the declaration upon which it was made.
MR GLEESON: The application by Rio is in volume 1 at page 30, and that is required by regulation 22A to set out factual contentions and issues. The factual contentions at pages 32 through to 33 really talk about the Rio facilities and do not raise factual contentions about whether Fortescue will build the Dixon line at any point in time. Then the issues as the applicant sees them are raised.
If I might particularly refer to the issues in relation to (f), paragraphs 40 and 41 and 42, they were the issues which Rio sought to raise, bearing in mind that under 44K(1) it is the only person who can challenge what is otherwise a binding Minister’s decision. What we would seek to raise by paragraph (d) was that the Tribunal ought to have – its function was to look at the correctness of the Minister’s decision, particularly in the light of the declaration and through the prism of issues which Rio identified in this document. So the matter before the Tribunal in the end becomes the correctness of the Minister’s decision in the face of a recommendation, having regard to issues raised by the applicant for review.
GUMMOW J: Is there any setting aside of the Minister’s declaration? Does section 44K directly deal with that? If it is to be set aside, I suppose, the Minister should be the recipient of it. It should be some sort of party. If there is a debate as to the existence or nature rather than the actual particular exercise of power, the Minister may have an interest in being heard.
MR GLEESON: We would not dissent from that, your Honour. The Minister was not joined in the review. The parties to the review were Rio under subsection (1) as the service provider and Fortescue pursuant to its right under the regulation 22B as the person who had made the original application.
The only other matter I wanted to just say in support of the application is to address it, it may be that the difference between the parties is that we contend that Fortescue’s status within the review was a status conferred by regulation 22B based on the historical fact that it had made the original application for recommendation. The content of Fortescue’s original application was irrelevant to defining the matter before the Tribunal. On the other hand, the declaration recommendation is a part of the content of the matter because it is the very thing the Minister was considering.
It may be put and perhaps I will leave it to be put that we have misapprehended what the matter is but that is how we see the matter. One way of testing it perhaps would be this. If the Minister had simply received the declaration recommendation and put it in the drawer and said, “It is merely a fact which now allows me to look at the criteria” would that have been error? We would submit that would be error by the Minister and if he is bound to give it consideration so must the Tribunal on the review.
If the broader proceedings point were being considered, that would go more fundamentally to whether there was power to receive this body of evidence. The point I am seeking to put is at a level of whether, assuming power, the not only receipt but then the attempt to resolve that body of evidence as per inter partes litigation exceeded the statutory function. Your Honours, that is what I wanted to say in support of the application.
There was one other matter; Justice Heydon asked where or how did Fortescue take a protest. The direct answer to that is at volume 4, page 1746, paragraph 101 and 1747, paragraph 106. The protest does not go beyond what I accepted in your Honour Justice Bell’s question yesterday.
FRENCH CJ: Yes, thank you, Mr Gleeson. We will hear from you further in reply in a moment. So far as the other parties are concerned, we will hear from the other parties immediately if they wish to say anything in relation to the question of whether the amendment should be allowed. But we anticipate that there would probably be a desire to put in written submissions perhaps, both on that question and on the substance of the proposed amendments. We might also need to hear whether there is any
need, having regard to the matters which you have raised, for the issue of a section 78B notice. Yes.
MR YOUNG: If the Court pleases, we do oppose the amendment, and the second step was going to be to propose what your Honour the Chief Justice has just mentioned, that is to say, the application itself and the substantive issues it raises should be the subject of written submissions sequentially delivered. So what we have to say by way of opposition is relatively brief at the moment. We have only had less than an hour to consider the form of the amendment.
In our submission, the proposed amendment should be assessed according to special leave criteria. There are reasons for that I would like to very briefly develop. Can I start with the paragraph of the Tribunal’s reasoning that Mr Gleeson started with, paragraph 24. It is at page 1959. The Tribunal there gives two foundations for the reception of additional material. The first is the nature of the proceeding under section 44K. The second concerns the application of the rules of procedural fairness which is addressed at page 1960. The Court will need to consider, if leave is granted, the extent to which this material was necessitated as a matter of fairness by reasons of changes in the actual facilities and changes in the market circumstances of the three relevant markets between the date of the NCC recommendation and the date of the Tribunal hearing. That was more than 12 months and during that period the GFC intervened.
The Tribunal was dealing with four separate applications for review about four different facilities; the Goldsworthy line, the Mount Newman line, the Hamersley line and the Robe line. They were in different ownership. They operated according to different technologies and different operating practices and they had different levels of congestion, and all those matters have changed in the period between the NCC recommendation and the Tribunal’s considerations. The market circumstances, the assessment of the competitive effect in the market had altered very substantially between the two dates, as had the plan and implementing expansions for each of the lines because the market circumstances were such that the companies were moving to accelerate production as quickly as possible, especially as matters picked up in the latter part of 2009 and those new circumstances necessarily had to be taken into account by the Tribunal, whether under section 44K, which we say properly authorised it, or whether as a matter of procedural fairness.
That, in a way, is background to this submission. The questions posed by the amendment cannot and ought not to be considered in a factual vacuum. Insofar as there is a question of pure law raised by, say, paragraphs 5(a) and (b) of the notice of appeal, it needs to be considered in the light of the practical ramifications for the Tribunal’s jurisdiction of confining its decision to material that was before the NCC, when it made its recommendation, or the Minister. That may compel the Tribunal to make a decision based on matters that have been rendered irrelevant and may oblige it to cease or fail to take account of matters that had become relevant, so that the questions ought not to be approached in a vacuum. They shade into matters of fact.
That becomes more evident as you move through the subparagraphs of paragraph 5 of the proposed amendment. Paragraph (c), of course, overstates the position. Of that body of material, it is hard to be precise, but roughly two-thirds related to facilities that are not the subject of this appeal, the Goldsworthy and BHP facilities. In addition, the NCC led evidence before the Tribunal to raise points that it had not raised in its recommendation or before the Minister. In particular, the contention that a strict natural monopoly cost function test should be applied rather than a net social benefit test. The NCC advanced the evidence of Mr Sundakov and some other evidence going to market circumstances saying that those matters had changed as well.
The way criterion (b) was put to the Minister was on the basis of the existing Tribunal authorities and the net social benefit test. So paragraph (c) needs to be understood in a particular factual context. It is unclear what (d) entirely means to us in the closing phrase in the light of the declaration recommendation, does not seem to be a contention that the declaration recommendation is limiting or that the Minister and then the Tribunal is confined to the four corners of the recommendation. It is simply suggesting that it is to be influential in some vague way.
Then the issues identified by the applicants, Mr Gleeson went to our application. It raises all of the issues that were addressed before the Tribunal. All the Tribunal did was to receive, whether by way of procedural fairness or under section 44K – and it may not matter in the end – more detailed information about extant issues that were extant before the Minister. The exception to that probably is the matter pressed by the NCC, the strict natural monopoly, which was the subject of contesting expert evidence.
The next matter strays even further into the facts, paragraph (e), “failing to give a fundamental or real and realistic consideration” – whatever those words mean – “to the declaration recommendation”. It is not suggested it is confining of jurisdiction. Then it continues, “and the material identified by the Council as relevant”. So that seems to suggest the Council has a free hand to introduce additional material but not the affected parties. Paragraph (f) is difficult to follow, with all due respect to my learned friend, even with his oral explanation. The explanation referred to the limits on the power exercisable by a judge sitting as President of the Tribunal. Now, we are not sure what is to be made of that, but it is an entirely new issue. It has not been mentioned to this Court thus far.
Lastly, as to (g), well, that is a factual matter. The Minister and the NCC recommendation considered the likely development of alternative facilities, but because they were looking at the matter in 2007 and 2008, they mentioned the Kennedy line, as the Minister’s set of reasons says, as an alternative, but the Dixon line and the proposals for the Dixon line emerged after the NCC recommendation. They first emerged in a confidential briefing by Mr Forrest to the Premier of Western Australia as a project that he wished to expedite in September 2008; that is after the NCC and ministerial process.
So insofar as there is evidence about the Dixon line it was addressing an issue addressed by the Minister in the NCC recommendation, but it was addressing changed circumstances relating to that issue, namely the emergence of a new alternative line in addition to the Kennedy line, which was expressly considered. So in short, this amendment, if it were to be permitted, raises matters of fact that go beyond, and even to the extent they do not, they are tied to a context in which the legal matter is sought to be raised. All of those submissions lead us to submit to this Court that the proper place to raise these issues was in the application for review to the Full Court.
These matters were not raised in the application to the Full Court therefore the Full Court did not consider these matters as alleged errors of law and those matters not being before the Full Court the Full Court has not, in that sense, made an appealable error of law and this is an appeal from the Full Court. The other consequence is that this Court is denied the benefit of an analysis of these matters by the Full Court in circumstances where the Full Court was fully apprised of all of the facts including the relevant economic and technological changes between the two points of time. It is for that reason that we submit, well, first that we oppose the application, secondly we submit that if it is to be advanced it should have the special leave criteria applied to it.
FRENCH CJ: What do you say about the significance of the matters raised in this ground 4 - the formulation of any orders that this Court might make if the matter, for example, were to end up going back to the Tribunal?
MR YOUNG: If this Court were to conclude that the matter before the Tribunal was confined to an examination of the correctness of the Minister’s decision it would have implications for remitter. We accept that, your Honour.
FRENCH CJ: That would be so whether or not this is raised as a ground of appeal, would it not?
MR YOUNG: If there is any substance in it, yes, your Honour. We, of course, will, in due course, submit there is not.
FRENCH CJ: Yes, I understand that.
MR YOUNG: The other matter that the Court should be aware of expands on the reference to the Lakes R Us Case. There is not only that decision, but there is a long 30-year course of settled authority about the merits jurisdiction of the Competition Tribunal and before it, the Trade Practices Tribunal, under cognate provisions and also there are other cases other than - - -
HAYNE J: In the course of your written submissions, would you give some attention to how truly cognate those other provisions are. So far as I can tell on a quick look, the only place where you find the expression “reconsideration” used in connection with the task of the Tribunal is in Part IIIA. Now, perhaps, I am wrong but it is, I think, at least a possible view.
MR YOUNG: Your Honour, so far as our researches have gone thus far and they have necessarily been less than complete, your Honour is right, we have not been able to identify an authority. But there is a reason for that. Section 44K operates against a background of deemed decisions. The Mt Newman decision was not an actual decision by the Treasurer. He failed to act within the time under section 44H(9). A deemed decision occurred. So that a concept of decision – reconsideration of the decision would not quite capture that circumstance nor would the word “rehearing” in section 101(2). So, there may be an explanation for the choice of a special word.
FRENCH CJ: It might be useful – I mean, I have not had time to look at it myself, but it might be useful to see whether that statutory review model has any antecedents in other administrative review statutes. I do not think it is used in the AAT Act but I may be wrong.
MR YOUNG: “Reconsideration” is not but the AAT Act is a very relevant source of authority.
HAYNE J: “Reconsideration”, I think, is found in sections 44K, 44L, 44N, 44PG, PH, ZZ, BF and ZX in the Act as it then stood at the relevant times.
MR YOUNG: Yes. I am aware it is used, your Honour, in a number of places.
HAYNE J: Sometimes spelt with a hyphen, sometimes without, which does not help.
MR YOUNG: The only point I was endeavouring to make at the moment is not to put a detailed submission but to say that in terms of special leave criteria this argument would represent a departure from settled authority. There is a long line of authority in the Tribunal and there are authorities - - -
FRENCH CJ: By authority you mean decisions of the Tribunal?
MR YOUNG: I mean decisions of the Tribunal by well-respected figures, your Honour, if I could add that.
FRENCH CJ: It does not do you any good at all.
MR YOUNG: But there are authorities to like effect, including authorities in this Court, dealing with other administrative reviews. But that would be a criterion if this were thrown up in a special leave application and because of the circumstances I have outlined we submit that the criteria ought to be applied to this application.
There is a further factual question which would have to be addressed by the Court in due course and the materials presently are not before the Court. For instance, the NCC declaration is not in the appeal book – I am sorry, recommendation is not in the appeal book. Nor is the Court aware of the submissions that were made to the NCC and the issues that were raised with the NCC.
Those matters may become relevant and the difference between the position in terms of the state of the facilities, the state of the markets, state of competition and so forth, then and relevantly when the Tribunal decided the matter, that will have to be examined because everything that the Tribunal did may be well able to be supported on the basis that these are all matters of changed circumstances which it was necessarily obliged to consider, even if there is a confinement of the scope of the matter. A result that might otherwise be reached would be far from sensible.
So the Court may need to consider whether the material that was received was necessitated by the change in circumstances and therefore within whatever jurisdiction is determined to exist, or within the scope of the rules of natural justice.
KIEFEL J: Just in relation to change of circumstances, the time limits which the statute provides which should ordinarily be applied might say something about the nature and scope of the Tribunal’s role, just as a matter of statutory construction. That is no doubt something that the parties will address.
MR YOUNG: Well, in due course we will address that, your Honour, but for the Tribunal - - -
KIEFEL J: Yes, of course, I am just flagging it.
MR YOUNG: For the Tribunal they are extendable. For the Minister there is a guillotine. There is a deemed decision not to declare.
FRENCH CJ: Both the NCC and the Tribunal have extension provisions?
MR YOUNG: Yes, your Honour. Now, for those reasons, we submit that there are strong grounds to oppose the application. I cannot develop them fully now. We would like the opportunity of doing so in writing and we do not oppose the course of developing both the opposition to the leave, the grounds for the opposition, as well as the substantive issues in the one set of submissions, as it were. More or less, the course that would be taken, if this were a special leave application, the special leave application were referred to the Full Court.
FRENCH CJ: Thank you, Mr Young.
MR YOUNG: If your Honour pleases.
FRENCH CJ: Mr Archibald.
MR ARCHIBALD: If the Court please, we would wish to file written submissions both on the question of amendment and on the substantive issues sought to be raised by the amendment. Because of the opacity of a number of the matters that are raised, we do submit that it is important that the submissions be sequential – to use my learned friend, Mr Young’s, expression – so we understand better what it is that is being raised and what the content of the arguments are and then we will be better able to engage, if we file, answering submissions in writing. That is all we would wish to say on the matter at the moment.
FRENCH CJ: Thank you, Mr Archibald. Mr Solicitor?
MR GAGELER: Your Honours, the NCC sought and was granted leave to intervene solely on criterion (b). We would seek to expand the
application for leave to intervene to cover the amendment and the substantive ground to be raised by the amendment.
FRENCH CJ: Yes, you will have that leave.
MR GAGELER: We would seek to file written submissions slightly after the respondents so as to avoid duplication. If the Court pleases?
FRENCH CJ: Mr Gleeson, if you were to file your written submissions within 14 days dealing both with supplementing anything that you have said orally in relation to why the amendment should be allowed and then the substance of it, the merits of it, and then a further 14 days for the respondents thereafter, and then seven days after that for the NCC and then the further seven days for reply submission.
MR GLEESON: I am grateful for that, your Honour.
FRENCH CJ: Now, you will need to give careful attention to the question whether there is any constitutional point arising. If there is not, that is the end of that but if there is, then of course there would be the obligation to issue a 78B notice.
MR GLEESON: Your Honours, if it is convenient, we would within that same period of 14 days, if there is a 78B necessity, we would issue it within that time and I would also wish within that time to make sure that the final form of what I have offered both meets Mr Archibald’s opacity concern and I would like, if possible, since I have only considered it overnight, to see whether we are saying anything about the proceedings point. At the moment we are not, but if we took a different view on that, I would wish the opportunity, if possible, to include it in the document in 14 days.
GUMMOW J: Well, there will be no constitutional point unless you get leave, will there?
MR GLEESON: That is so, your Honour.
GUMMOW J: There may be if you do.
MR GLEESON: Yes. I am familiar with the Court’s discussion recently on when 78B notices are issued relative to special leave.
FRENCH CJ: I think that is right, Mr Gleeson, that we would not require you to issue a 78B notice unless and until we give leave.
MR GLEESON: Yes. So at the moment we will prepare the submissions on the basis they deal with the leave question plus the substantive argument we wish to address.
FRENCH CJ: Yes, that is right. All right. Now, would you like to finish your reply?
MR GLEESON: Thank you, your Honours. What I had left on criterion (b) was to answer two questions raised from the Court if I can. Firstly, Justice Crennan asked about how the respondents would apply their private profitability test if it were the law and the Chief Justice asked whether Mr Young’s test did include the vertically integrated operator and he disavowed that. Those matters are addressed in the Tribunal in two places - paragraphs 956, first of all, where Rio’s preferred view - - -
CRENNAN J: Sorry, what paragraph?
MR GLEESON: Paragraph 956 on page 2171. Rio’s preferred view was that “anyone” included:
“any particular individual who can be identified”, including, for example, mining companies whose iron ore is sufficiently valuable to subsidise the cost of building the alternative rail facility.
So that was clearly put as the primary position. To the extent Mr Young put yesterday a softer position that you would look at a stand-alone rail haulage company, his test is still going to have this element of challenge to it. The decision-maker will have to examine the rationality of an entire business case involving revenue and cost to identify whether there is a return. How would a standalone haulage operator predict revenue? That in turn must depend on price which must depend on how much of the market demand you will obtain.
CRENNAN J: In the context of this question I think Mr Archibald suggested there were many feasibility studies in evidence.
MR GLEESON: Very easy, do an NPV and feasibility studies, he said.
CRENNAN J: That is right.
MR GLEESON: A feasibility study, of course they exist from the viewpoint of a market participant deciding whether to make or consider an investment decision, but for this purpose, injecting it into the statute, the task for the decision-maker, especially given it is in the negative, it would be uneconomic, is to positively satisfy yourself that there could not be a rational business case which would involve you in having to predict whether those feasibility studies when translated into the real world would or would not enable successful long-term entry, and that can only depend upon whether whatever assumptions are in there about price, achieving market demand, how the incumbent might respond to you given that they can price cheaper because they have sunk costs, et cetera, all of that exercise, we submit, is foreign to what criterion (b) is about.
HAYNE J: How does that exercise differ from the exercise undertaken by any group of banks considering an investment proposal?
MR GLEESON: That group of banks makes a commercial decision in respect to such an investment proposal and takes the risk on it. Here the exercise contemplated is that a decision-maker, the Minister on advice of the NCC, is having to postulate, that is, first of all create that document and then negative the rationality of any such case over a 20 year period. On the approach we prefer, because criterion (b) is solely about cost structure, not revenue, the exercise, which is one the NCC is well equipped to provide expert advice on, is simply, what is the cost of meeting the total industry demand from two facilities as opposed to one?
Your Honour Justice Kiefel asked a question about the European position. We have provided two documents. One is the railway directive which specifically deals with railways and is an open access regime to everyone with no competition or bottleneck criteria. We have also provided the commentary on Article 82 where, in particular, paragraph 83 shows that even in Europe the language being used for the test concerns the effective duplication and efficient sources of supply. So we would not accept that Europe has adopted, even within its very different statutory context, a private profitability model as opposed to the efficiency concerns that we see in the objects.
KIEFEL J: I thought that Bronner’s Case, however, the Advocate General’s opinion which was adopted by the European Court of Justice, suggested that the matter of whether or not a facility was indispensable, I think was the translated term, was assessed by reference to how competitors in the market.
MR GLEESON: Yes. What paragraph 83 of the commentary says is that we are looking at effective duplication and efficient sources of supply and that concept of effective and efficiency, we submit, is very close to our objects.
The last point on criterion (b) was that Mr Gageler said that there was a theoretical but not material difference between his approach and ours which concerned whether, when one identifies the costs, one moves beyond productive costs to allocative or dynamic costs. We agree with him that point is immaterial to the outcome of this case and it was immaterial to Duke and we would respectfully submit that given that was not an issue in this case, there is no need for the Court to resolve the out of bounds of the costs taken into account under the natural monopoly test.
Your Honour Justice Bell asked some questions about Duke and the net social benefit test. It is probably apparent we do not propound any version of the net social benefit test. There is a tension between those paragraphs of Duke at the end and those at the beginning. Those at the beginning, we would submit, are closer to the correct position.
Your Honours, the final matter just concerned (f). I did wish to take up what some members of the Court asked about the Osland approach and how that would sit with our argument.
FRENCH CJ: Osland was simply replicating what was said in O’Sullivan v Farrer?
MR GLEESON: Yes. I will not trespass here into the matters that we would be seeking to raise later. Accepting that public interest may open this wide frame, it is still subject to such restrictions as are discerned from the text and the purpose of the Act. The particular statutory context in Osland, of course, was the decision-maker was given a power to grant access where an opinion was formed that the public interest required access. So the central focus was solely that.
In summary, these are the matters of context that we submit would impose constraints on paragraph (f). The first is that it is not the sole criterion but it sits within a group of six which work co-operatively together and it cannot subsume everything that goes before. The second, perhaps taking up something your Honour Justice Kiefel put to Mr Young, is that the satisfaction of criterion (a) and (b) have identified a competition problem in the dependent market which is the central focus of Part IIIA thereby giving effect to the objects and that has created the primary need under Part IIIA to grant the right to negotiate.
The focus being on that dependent market and access being the means to improve competition in it, that imposes some constraint upon (f) being used to open up inquiries into very different markets and somehow say, “I would prefer not to allow the promotion of competition which (a) and (b) have identified to occur because instead I think it is better to have more iron ore for Australia.” So (f) in that way is constrained by the primary object in (a) and (b). That is the second constraint. The third, which we have already mentioned, is that (f) is limited by an appreciation of what stage 2 is intended to allow to occur. I will not repeat that.
The fourth is, where the parties are perhaps considerably apart, that what Mr Young put yesterday is that under (f) you have to contemplate what he described as the range of foreseeable demand in the market and answer (f) with respect to the whole range. In effect, that creates the problem identified in-chief which is you assume under (f) all of the market demand may go on the facility and you then ask whether you believe stage two would play out favourably. The central vice in that is that the actual access under stage two may be smaller.
Could I give your Honours a reference to the Tribunal at paragraph 711 where the Tribunal found that at modest levels of access, up to 10 or 20 million tonnes per annum, there would be minimal impact on the incumbent. There would be no delay issue, no problem with expansions. Now, on his approach, that form of access never is permitted because of the assumption that access might be at the other end of the range. The final constraint is – and this concerns the duplicative lines – the satisfaction of criterion (b) shows it is economically inefficient for Australia to duplicate the Rio line and what might be described as the loss of having multiple competing natural monopoly facilities is, in fact, a benefit to Australia, not a cost in that circumstance. I am grateful to your Honours for allowing me that extra time.
FRENCH CJ: Thank you, Mr Gleeson. Subject to the further submissions we receive, the Court will reserve its decision. The Court will now adjourn to reconstitute for the next matter.
AT 11.07 AM THE MATTER WAS ADJOURNED
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