ResourceCo Material Solutions Pty Ltd & Anor v State of Victoria & Anor [2016] HCATrans 164 (22 July 2016)

Last Updated: 29 July 2016

[2016] HCATrans 164

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M32 of 2016

B e t w e e n -

RESOURCECO MATERIAL SOLUTIONS PTY LTD (ACN 608 316 687)

First Plaintiff

SOUTHERN WASTE RESOURCECO PTY LTD (ACN 151 241 093)

Second Plaintiff

and

STATE OF VICTORIA

First Defendant

ENVIRONMENT PROTECTION AUTHORITY VICTORIA

Second Defendant

Directions hearing

GORDON J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 22 JULY 2016, AT 9.30 AM

Copyright in the High Court of Australia

MR P.J. HANKS, QC: Your Honour, I appear with MR G.A. HILL for the plaintiffs. (instructed by Davis Advisory)

MR R.M. NIALL, QC, Solicitor-General for the State of Victoria: May it please, your Honour, I appear with MS P.P. THIAGARAJAN for the first defendant. (instructed by Victorian Government Solicitor)

HER HONOUR: Good morning.

MR HANKS: Good morning. Your Honour has written submissions from both parties.

HER HONOUR: I have read them.

MR HANKS: Thank you, your Honour. Does your Honour have any questions that I need to answer?

HER HONOUR: You want to amend if there is a difficulty?

MR HANKS: If there is a difficulty, yes, your Honour. We do not think there is but if it would assist the Court and our friends we can - - -

HER HONOUR: It is a matter for you, Mr Hanks, I think in the end.

MR HANKS: Thank you. It might also be a matter for my friend if he thinks there is real difficulty.

HER HONOUR: All right. Let me have a chat to Mr Solicitor.

MR HANKS: Could I just make this point?

HER HONOUR: Yes, sure.

MR HANKS: As the pleading currently stands, we think that the allegation in paragraph 19 of the amended statement of claim captures – it may go wider than but it certainly captures the discrimination and protection which we say lies at the root of the breach of section 92. That is all I wanted to say, your Honour.

MR NIALL: Thank you, your Honour. Your Honour, of course, has seen our written submissions. Can I just encapsulate a couple of points in relation to those? Can we identify firstly some points about the pleadings, starting with the statement of claim, or the amended statement of claim, and if your Honour turns to paragraph 19 about which your Honour and my learned friend have just had an exchange, your Honour will see it alleges that 26(3) confers a competitive commercial advantage and then it introduces concepts of treating or dealing with – and we have made the point that treating and dealing with go wider than the particular discrimination identified or alleged in regulation 26(3) and that latter point may be dealt with by the proposed amendment.

But, in our submission, the concept of competitive commercial advantage is a conclusion of fact and it appears to rest on an assumption that better environmental standards puts one at a competitive disadvantage. Now, in our submission, that, of itself, does not necessarily follow, that is, the mere fact that - - -

HER HONOUR: That is argument for the Court, is it not? If you are right then you win.

MR NIALL: But, your Honour, there are – we meet the case at two bases. One is whether there is discrimination of a protectionist kind and what we say there is that the factors pleaded do not elucidate the nature of the competitive advantage and we deny it. Now, let us assume for the moment that the plaintiff is right and said, according to its submissions, that when one puts the facts in paragraphs 4 to 17 of the statement of claim, the competitive disadvantage inexorably follows.

HER HONOUR: Yes. You do not take issue with that? Sorry, you take issue with the consequence, but you do not take issue with the underlying premise of the proposition?

MR NIALL: We do not take issue with the underlying facts at 4 to 17.

HER HONOUR: So they are either good or they are bad.

MR NIALL: But not only are they either good or are they bad, the extent to which they are protectionist may be significant to the second question. So, on the first question, there is a threshold hurdle, is it a burden of a protectionist kind?

HER HONOUR: Yes.

MR NIALL: Your Honour and I have just had an exchange about that.

HER HONOUR: So we are not worried about that aspect – 4 to 17 is either good or bad – it is either right or wrong.

MR NIALL: If your Honour pleases.

HER HONOUR: So we are on to the second - - -

MR NIALL: But before one gets to the second one needs to know the nature of the competitive disadvantage and the extent of the competitive disadvantage because that is what we would be obliged to justify. I will take your Honour to examples. In our submission the nuances of the concepts and extent of protection - competition of advantage would be better revealed by trial than the bare bones of the pleading. That is, in essence, the point we make on the first point of protection. That is, looking at - - -

HER HONOUR: Are we dealing with the first question or the second question now?

MR NIALL: The first question of if there is protection, to what extent?

HER HONOUR: Yes.

MR NIALL: We still say that is an aspect of the first part of the case.

HER HONOUR: Yes.

MR NIALL: Having identified the protection and the extent of the protection we turn to the second part of the case and say is it justified.

HER HONOUR: I had understood from the way in which, in terms of extent of protection, set out in paragraphs 4 to – so we are looking at the burden, we are looking to work out what the burden is and we are asking what is the nature or extent of that burden, in a sense.

MR NIALL: We are, your Honour, but in - - -

HER HONOUR: Sorry, just let me finish.

MR NIALL: Yes, your Honour.

HER HONOUR: Is it not clear – and this is the point I cannot quite understand – when I read paragraphs 4 through to really 16, is it not there that the burden is identified, i.e. you cannot move your materials?

MR NIALL: The reason you cannot move your material - - -

HER HONOUR: That is the justification for it. I am talking about – you have broken it up into three bits, quite properly. This assumes that there is a burden. You are then talking about the extent of the burden before you get to justification and I understand the way you are putting it to me. We are dealing with the extent of the burden. Other than saying, which is what the plaintiffs say, we cannot move our waste, is that not the extent of the burden?

MR NIALL: In our submission it is - - -

HER HONOUR: That is what they plead.

MR NIALL: Yes, your Honour.

HER HONOUR: That is what you have to justify.

MR NIALL: We would insert another step.

HER HONOUR: So we have four steps now?

MR NIALL: No, no. The extent of the burden has two elements. One is the extent of the discrimination and your Honour will see that the extent of the discrimination is apparent on the face of the regulation, that is you cannot move – in the context of these pleaded facts. The other aspect of the burden is, is it of a protectionist kind?

HER HONOUR: That is your justification.

MR NIALL: No, with respect. We do not get to justification until we identify precisely the nature of the protection.

HER HONOUR: That is what you plead. You plead the protectionist aspects to it. You explain why it is that you are entitled to do what you do. You and I have had this debate. In a sense, you must plead the material facts as to why it is that the provision exists and why it is justified.

MR NIALL: Yes.

HER HONOUR: So when you say in your submissions we want a trial that misunderstands pleadings. Pleadings are not pleaded and completed after evidence. They are completed after discovery and all of the facts relevant to both those questions are in your camp. In fact it is embarrassing. It should be struck out – that part of your pleading, i.e. particulars are provided after evidence. That is not the way it works. Particulars are provided after discovery and particulars are not material facts.

MR NIALL: We recognise that, your Honour, and we are endeavouring to identify the material facts and the evidence - and we do not need to plead the evidence and we do not plead the evidence – which would be relevant to the contextual analysis of the extent of the protection because we measure the protection, not in this particular transaction but by reference to the larger market of waste production, bearing in mind on our case - - -

HER HONOUR: But you can plead those facts. As I said to you on a couple of occasions, you can plead those material facts.

MR NIALL: We have to the extent of the market. We have pleaded that in paragraph 19(c).

HER HONOUR: It has been dealt with by way of demurrer.

MR NIALL: Which would have the effect of admitting - - -

HER HONOUR: Yes.

MR NIALL: I appreciate that, your Honour, but when one gets to justification then – if I can move to the second question - in our submission, the plaintiff seeks to identify as a proposition that you can never generate levies for discouraged movement as a legitimate end to achieve the environmental objectives.

HER HONOUR: Sounds like a good question for the Full Court.

MR NIALL: The extent of justification of those questions, your Honour, we would advance as being answered in a factual context.

HER HONOUR: By reference to your material facts. See, you have a problem. I do not think the Court has a problem. The way I see it is you would never have a 92 case unless you had a trial. Here you have what you say are the material facts pleaded on each of the limbs, whether you have two questions, three questions or four questions – it does not matter how you break it up. You have admissions to the point of “We’re prepared to accept them, we just don’t say they are an answer” so in a sense it is the perfect world, I would have thought, for someone seeking to meet a 92 claim.

Contrary to what I think Mr Hanks and Mr Hill say in their submissions, yes, the plaintiffs have to make their case out – that is true. But for you, you do not, in one sense, have to prove any of the material facts that are pleaded and you have either pleaded what you have and what your case is, in terms of material facts, or you have not.

MR NIALL: Yes, your Honour.

HER HONOUR: I think if your proposition truly is that you cannot have a 92 without a trial that is a nice question for the High Court as well.

MR NIALL: Your Honour, I was not trying to make nice questions for the Full Court. Your Honour, can I hand up a copy of the decision of the Court in Castlemaine Tooheys and just examine for a moment, to put in context the approach taken on justification in Castlemaine Tooheys and there are differences of course but - - -

HER HONOUR: What is the proposition I am to get out of this?

MR NIALL: That facts are useful and, we would say, important in resolving justification, not just the material facts but the evidence which would support those material facts. Now, in Castlemaine Tooheys 169 CLR at 449, your Honour will see quite critically in the agreed facts, or the case stated – special case – buried in the middle of the page at the number “77” - - -

HER HONOUR: I have it.

MR NIALL: So this is critical, this is a critical fact to the extent of the burden:

By reason of the unavailability to the Bond Brewing Companies . . . the Bond Brewing Companies would incur substantial extra costs in using refillable bottles for that market compared with its major competitors in that market. By reason of the increased prices that it would be necessary to charge for the products of the Bond Brewing Companies to recover these increased costs, the Bond Brewing Companies would be unable to obtain a market share in excess of about 1 per cent of the market in packaged beer –

So that is the fact which goes to the extent of the burden.

HER HONOUR: That just, in effect, illustrates the point that you and I have been discussing. I accept, as you say, that the relevant constitutional facts must be set out. Just step back from this case. If pleadings close after discovery – but we do not need discovery in this case because the relevant elements or facts that you seek to rely upon are in your camp. So you have an obligation, but also an opportunity to plead those very material facts. As I said to you, I think at the last hearing, if there are facts that you want to rely upon you should put them in.

MR NIALL: Yes, your Honour.

HER HONOUR: At the moment, the way in which the demurrer works, the position remains we are happy to cop them and we say they do not get anywhere. I understand on the question of analysis - when we get to this question of justification there is an exercise in analysis but are they not all set out for present purposes in your defence?

MR NIALL: Just pausing there for a moment, this part of the case, of course, would be for the plaintiff to establish the extent of the burden in these terms. We say that the plaintiff has not sought to do that at all, other than identifying one particular transaction by reference to this regulation. I have observed that and then - - -

HER HONOUR: But that is a different question.

MR NIALL: I understand that, your Honour.

HER HONOUR: I thought we had got to the point where if the plaintiffs have failed to do that, then they fail.

MR NIALL: Yes, your Honour, but I just - - -

HER HONOUR: That is on the extent of the burden. Either 4 to 17 is sufficient on its face, or it is not.

MR NIALL: I appreciate that, but what I am identifying is that is the first part of the question.

HER HONOUR: Yes.

MR NIALL: I only identify it for the purposes of the analysis for this case, and then their Honours dealt with, in two separate judgments, the question of justification. There are a couple of justifications but, for present purposes, one of them, which was conservation of finite energy resources can be seen at 476 at the bottom, so we are now in the justification camp of the burden that I have just identified for your Honour:

It remains for us to consider the defendant’s argument that any disadvantage . . . is merely incidental to the implementation . . . The facts recited in the special case, so far as they relate to this issue, are extremely meagre and do little to substantiate the defendant’s argument. If all beer bottles –

and they go on to talk - - -

HER HONOUR: But that is you, is it not? This is my point. My point is that yes, the material facts have to be pleaded. This is the part of the case where you must set out what you want to rely upon.

MR NIALL: But, of course, your Honour, in our submission, their Honours, in the context of a special case are talking not about material pleaded facts. Their Honours in the first joint judgment at 477 at the top identify:

in the light of these facts, the legislature reasonably apprehended that the sale of beer in refillable bottles . . . constituted a threat to the State’s reserves of natural gas –

and the conclusion is in the middle of the page:

It follows that neither the need to protect the environment from the litter problem nor the need to conserve energy resources offers an acceptable explanation or justification - - -

HER HONOUR: That is your concern – your concern is that, as I understand it, there may be other things out there in the ether that might provide additional justification for the way in which you structured it. We do not know what they are at the moment. We might want to add them in later on.

MR NIALL: They would be evidence to establish - - -

HER HONOUR: And that is my point. We do not plead evidence – I understand that, but if pleadings were to close and demurrer has a role to play, as it should, and pleadings have closed, then all the material facts should have been set out.

MR NIALL: In our submission, as we read - - -

HER HONOUR: Bass.

MR NIALL: Castlemaine Tooheys – the analysis that is being undertaken would be one which would be undertaken on the material facts and all of the evidence, that is the material facts that are pleaded – and there is another passage at the bottom of 479:

The facts as to the litter problems referable to non-refillable beer bottles are also meagre.

I beg your Honour’s pardon, this in the judgment of Justices Gaudron and McHugh.

HER HONOUR: Yes.

MR NIALL: Then they go over on 480 – end of the first paragraph:

The facts, such as they are, fall short of establishing that the litter problems referable to non-refillable bottles –

Now, what we say about that, and I appreciate the point that your Honour is addressing with me, that we have identified – or we are permitted to identify when we see them - all the material facts, but what we advance is that that question of justification is best illuminated, not just by reference to material facts but all of the evidence that the parties would adduce on those questions so that the context, which will necessarily extend beyond material facts, are elucidated for the Court so that the justification can be analysed in a full factual context rather than the bare bones of the material facts as would be required to support a pleading.

HER HONOUR: Well, as I said, it may be a nice question for the High Court in a sense about the demurrer process because here we have in 19A set out what I call your justification paragraphs - they properly, in my view, cascade. A large part of it is dealt with by reference to things which people can look at – in other words, not only are the material facts set out but the things that you rely upon in order to justify those are materials that can be looked at. The policy questions which are identified are either a complete answer or they are not and at the moment they are admitted into the purposes of the demurrer.

I will put it another way, Mr Niall. One wonders, given they are the material facts that you rely upon properly and they cascade in the way they do, assume for the moment there is another potential fact out there one wonders what could be added to this list and one does not send a matter off for a massive trial just because there may be something out there in the ether.

MR NIALL: I understand that.

HER HONOUR: When it is in your camp. It is not a case where we have information elsewhere where somebody else needs to find it. I must say I find it difficult in those circumstances, given those facts, to think about that just because of that issue one should, in effect, abandon the process. As I said to you I think the further particulars, et cetera, under (b) and (c) are embarrassing for the reasons I have identified and should probably be taken out.

MR NIALL: If your Honour pleases. Can I just - - -

HER HONOUR: The Full Court might come to a different view, but I think it is important for present purposes that that issue be identified.

MR NIALL: If, for nothing else, the benefit of the broader factual context is important, we submit, for the development of principle. One sees in judgments very helpful context which are not necessarily material facts and not necessarily controversial but which are necessary to the understanding of the issues in which this particular regulation is to be applied. We emphasise that the plaintiff refers to the practical effect and the Court will be denied all of those things.

HER HONOUR: But will it? I mean, I do not want to get into the debate – we know the extent to which the plaintiff asserts the nature and extent of the burden, it is either good or bad. We then get to the protectionist question and whether or not it is justified and, as I said to you I think twice, if there are additional facts that you wish to plead then you should plead them.

MR NIALL: If your Honour pleases. Can I then just make two short points, your Honour, not related?

HER HONOUR: Yes, please.

MR NIALL: We have said everything we can say with respect to the writing. In terms of listing can I - - -

HER HONOUR: Can I just raise one thing and that is this proposed amendment by Mr Hanks. It seems to me it is probably advisable to meet your point and make it clear. Do you have any objection to that course?

MR NIALL: No, your Honour, and we may seek to just do some tidying up of the defence.

HER HONOUR: All right.

MR NIALL: That may or may not, your Honour, be relevant to something I am just about to say in relation to listing. Yesterday the Court – the parties received a communication about whether the matter, in the parties’ views, should proceed before six Justices or seven Justices.

HER HONOUR: Yes.

MR NIALL: We indicate a preference but can I just say something about that, your Honour?

HER HONOUR: Yes, sure.

MR NIALL: The composition of the Court is entirely, with respect, a matter for the Court and we do not wish to be heard on that. From my

mathematical computation and my discussions with Mr Hanks it is unlikely that the case could be listed before November in any event and, of course, there is nothing in the material which shows any particular urgency. So there is no reason on the material why the matter could not be heard in February, for example, but we are only dealing with a short period of time and for our part we say it is a matter for the Court but ultimately we would have - - -

HER HONOUR: You would rather in February before seven?

MR NIALL: If your Honour pleases, but ultimately – I just remarked to my learned friend about something that he said to me earlier, your Honour – that would also give - - -

HER HONOUR: What is the second point?

MR NIALL: That would also give the opportunity just to tidy those pleading points, your Honour. I think obviously the plaintiff needs only a matter of days and we might require 21 days or something of that order. But I am not looking for a time that would distort the timetable, your Honour.

HER HONOUR: I accept what you put to me about some time to fix it up. It may not be 21 days but you can have some time.

MR NIALL: But in terms of that, it - - -

HER HONOUR: I understand.

MR NIALL: If your Honour pleases. They are the only matters, unless I can assist your Honour.

HER HONOUR: No, thank you, Mr Solicitor. Mr Hanks.

MR HANKS: Your Honour, I do not believe I need to say anything to you about Castlemaine Tooheys which was quite a different case, but we will leave that and plan for the future.

HER HONOUR: Yes.

MR HANKS: We would seek leave to file a further amended statement of claim.

HER HONOUR: Statement of claim – yes, with the additions. That is fine.

MR HANKS: Yes, substituting - - -

HER HONOUR: Yes, you have that leave.

MR HANKS: Thank you, your Honour. We can do that – I am assuming it can be done today.

HER HONOUR: Why do I not give you till Monday just because things happen?

MR HANKS: So far as questions of listing are concerned, it should be clear that our client - our clients are commercial entities. They are in the business of waste disposal. The operation of regulation 26(3) is impeding that business. We have pleaded one opportunity to do business which has been lost by reason of the decision made by the second defendant, your Honour. I cannot say it is a critical urgency, but we would prefer very much that there be no delay, if this were possible, in the listing of the matter.

HER HONOUR: I think the reality is, as the Solicitor pointed out, that the matter could not be listed - - -

MR HANKS: Yes, I accept all that.

HER HONOUR: And given the short timeframe between November/December and February, I think it is more likely it will be listed before seven in February. Can I say this? It is more likely that you will get a judgment probably in exactly the same time period, given the Christmas break anyway.

MR HANKS: Yes, I understand that.

HER HONOUR: So I think there is reality in both the number and the process.

MR HANKS: I will stop pushing on the closed door, your Honour.

HER HONOUR: Well, it is realistic, I think.

MR HANKS: Yes, your Honour. I understand.

HER HONOUR: So if I give you leave by 4.00 pm on 25 July – which is Monday – to file and serve a further amended statement of claim. I need to give you leave to file and serve the reply and demurrer in the form that you gave to the Court on 20 July.

MR HANKS: I think that is right, although it is a demurrer to a defence - - -

HER HONOUR: Yes, I know, but let us give you leave and then there can be no doubt about it.

MR HANKS: Quite so, but it is a demurrer to a defence that has not yet been filed, an amended defence. That is what I apprehend. There is that concern about putting - - -

HER HONOUR: Well then, why do I not give you leave and we will wait and see and then you can, in effect, work out whether or not – so let us adjust that.

MR HANKS: Thank you, your Honour. I am sure we can do that by consent, if that is necessary.

HER HONOUR: I will make orders and then you can have a timetable to deal with it.

MR HANKS: Thank you, your Honour.

HER HONOUR: I will give you by 4.00 pm on 25 July to file and serve a further amended statement of claim.

MR HANKS: Yes.

HER HONOUR: How long do you need, Mr Niall, for your amended defence?

MR NIALL: We would ask for 21 days which would be the 15th, but we are in your Honour’s hands. The week before begins the 8th.

HER HONOUR: Given the timetable let us do it by the 8th while it is fresh in everyone’s mind. So by 4.00 pm on 8 August the first defendant file and serve an amended defence. Do you need seven days, Mr Hanks, for the reply and demurrer?

MR HANKS: I might, your Honour. Yes, thank you, I think that is a sensible precaution.

HER HONOUR: So by 4.00 pm on 15 August the plaintiffs file and serve any reply and demurrer to the amended defence.

MR HANKS: Thank you, your Honour.

HER HONOUR: Then what I think I will do then is – it is difficult to refer something to the Full Court without having it. That is the problem. So I think what I will do is – do the parties have objection to me making orders in chambers once I have looked at the demurrer.

MR NIALL: No, your Honour.

MR HANKS: No, your Honour.

HER HONOUR: You do not want to come back, do you? I am happy to see you but - - -

MR NIALL: No, your Honour. We do not think that is necessary, your Honour.

HER HONOUR: All right.

MR NIALL: We are happy to do so, of course, your Honour.

HER HONOUR: I think what I will do is adjourn this off - that is this directions off and after 15 August I will look to the papers and see whether or not it is appropriate. If it is appropriate then the orders will be in similar terms, I think, to those provided by you, Mr Hanks. That is, just so you are clear, Mr Solicitor, what were then paragraphs 2 through to 10 do you have any objection to any of those?

MR NIALL: No, your Honour. My understanding would be that it may be necessary for the Registrar to settle the demurrer or things like that.

HER HONOUR: No, I accept that.

MR NIALL: No, your Honour.

HER HONOUR: It is the reason why – I am more so putting it off to February because now we will have to wait to see what the pleadings look like in their final form, check to make sure it is an appropriate vehicle and then the plaintiffs will need to put together the demurrer book with agreement with you and then it will have to be settled by the Registrar. So I will not put timetables and dates in or make those orders until (a) I have looked at the pleadings again and – it may be in the meantime, Mr Hanks, that your side start to put together the book.

MR HANKS: Yes.

HER HONOUR: That will then at least not impose huge burdens on the Registrar to have to deal with it urgently.

MR HANKS: Thank you, your Honour.

HER HONOUR: Anything else, Mr Solicitor?

MR NIALL: No, thank you, your Honour.

HER HONOUR: Anything else, Mr Hanks?

MR HANKS: No, your Honour.

MR NIALL: I beg your Honour’s pardon, there is one other matter that we put in our submissions the name of the second defendant - - -

HER HONOUR: Has to be amended.

MR NIALL: Just to delete the word “Victoria”.

HER HONOUR: I will do that. The other thing is, Mr Solicitor, I expect that when the pleading comes back those particulars will be gone.

MR NIALL: May it please, your Honour.

HER HONOUR: Adjourn the Court.

AT 10.02 AM THE MATTER WAS ADJOURNED