Aurizon Network Pty Ltd v Queensland Competition Authority - [2018] QSC 246

SUPREME COURT OF QUEENSLAND

CITATION:

Aurizon Network Pty Ltd v Queensland Competition Authority & Ors [2018] QSC 246

PARTIES:

AURIZON NETWORK PTY LTD ACN 132 181 116

(applicant)

v

QUEENSLAND COMPETITION AUTHORITY

(first respondent)

and

ANGLO AMERICAN METALLURGICAL COAL PTY LTD ACN 076 059 679

BM ALLIANCE COAL OPERATION PTY LTD
ACN 096 412 752

BHP BILLITON MITSUI COAL PTY LTD
ACN 009 713 875

CORONADO CURRAGH PTY LTD ACN 009 362 565

GLENCORE COAL PTY LTD ACN 082 271 930

IDEMITSU AUSTRALIA RESOURCES PTY LTD
ACN 010 236 272

JELLINBAH MINING PTY LTD ACN 052 251 000

LAKE VERMONT RESOURCES PTY LTD
ACN 114 286 841

PEABODY ENERGY AUSTRALIA COAL PTY LTD
ACN 001 401 663

YARRABEE COAL COMPANY PTY LTD
ACN 010 849 402

(second respondents)

FILE NO:

SC No 4539 of 2018

DIVISION:

Trial Division

PROCEEDING:

Originating Application

DELIVERED ON:

30 October 2018

DELIVERED AT:

Brisbane

HEARING DATE:

22 and 23 October 2018

JUDGE:

Jackson J

ORDER:

The order of the court is that:

1.       The application is dismissed.

2.       The applicant pay the first respondent’s costs of the proceeding.

3.       Reserve the question of costs between the applicant and the second respondents.

CATCHWORDS:

ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – PROCEDURAL FAIRNESS – BIAS – APPREHENSION OF BIAS – where draft decision made on draft access undertaking under Queensland Competition Authority Act 1997 (Qld) in relation to central Queensland coal network rail infrastructure – where chair of authority about to be appointed chair of Port of Newcastle – where Port of Newcastle might benefit from reduction in throughput of central Queensland coal network rail infrastructure – where investigation being conducted and draft decision issued –where application for judicial review for apprehended bias – where applicants submit that interest in appointment as chair of Port of Newcastle might cause the fair-minded lay observer to reasonably apprehend that the authority might not bring an impartial mind to the conduct of the investigation of the draft access undertaking and ‘decision’ to issue the draft decision – whether hypothetical lay observer is taken to be aware of certain facts – whether facts known to hypothetical lay observer give rise to apprehension of bias

TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – SUPERVISION – OTHER BODIES – where applicants submit that chair of first respondent did not disclose alleged conflict of interest in accordance with Queensland Competition Authority Act 1997 (Qld) s 219 – whether chair of first respondent had a direct or indirect interest in an issue being considered by the authority – whether contravention of s 219

Judicial Review Act 1991 (Qld), s 21
Queensland Competition Authority Act 1997 (Qld), s 173(1)(d), s 219

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, cited
Baker v Palm Bay Island Resort Pty Ltd (No 2) [1970] Qd R 210, cited
Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1, cited
British American Tobacco Australia Services…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] QSC 246
Decision Date: 30 October 2018

CaseChat Overview and Summary

Aurizon Network Pty Ltd, along with three other companies involved in the supply of coal, brought a judicial review application against the Queensland Competition Authority (QCA) and two other respondents regarding the approval of a Draft Access Undertaking for the Central Queensland Coal Network (CQCN) rail infrastructure. The applicants sought to challenge the draft decision issued by the QCA, claiming that the chair of the QCA was likely to be appointed as chair of the Port of Newcastle and that this interest could create a reasonable apprehension of bias in the decision-making process. Additionally, the applicants argued that the chair of the QCA did not disclose a conflict of interest as required by the Queensland Competition Authority Act 1997 (Qld).

The court was required to determine whether the applicants had established that the chair of the QCA had a direct or indirect interest in the outcome of the investigation, which might cause a fair-minded lay observer to apprehend bias. The court also needed to decide whether the chair of the QCA had breached the disclosure requirements of the Act. The central issue was whether the hypothetical lay observer, aware of the relevant facts, would apprehend bias in the decision-making process.

The court held that the hypothetical observer would not reasonably apprehend bias on the part of the chair of the QCA. The court considered that the interest in the potential appointment to the Port of Newcastle was speculative and did not give rise to a reasonable apprehension of bias. The court also concluded that the chair of the QCA had not breached the disclosure requirements of the Act, as there was no direct or indirect interest that needed to be disclosed. Consequently, the application for judicial review was dismissed, and the applicants were ordered to pay the costs of the proceeding to the first respondent. The question of costs between the applicant and the second respondents was reserved for further determination.

In summary, the court found that the applicants had not demonstrated a reasonable apprehension of bias in the decision-making process of the QCA and that the chair had not breached the disclosure requirements of the Act. The judicial review application was dismissed, and the applicants were ordered to pay the costs of the proceeding to the first respondent, while the question of costs between the applicant and the second respondents was reserved.

Orders

Orders of the court

The order of the court is that:

1. The application is dismissed.

2. The applicant pay the first respondent’s costs of the proceeding.

3. Reserve the question of costs between the applicant and the second respondents.

Background

Background to the litigation

The second respondents are companies who supply thermal and metallurgical coal into the “seaborne coal market” as the applicant calls it. Their coal is transported over the CQCN to the coal terminals for shipping. In that way, the CQCN constitutes part of the supply chain from coal producers to buyers. There are constraints within the CQCN relating to the loading of trains, train capacity, scheduling of trains and unloading of trains between the mines and the coal terminals. Background to the Draft Access Undertaking Use of the CQCN for providing transportation by rail is taken to be a service declared by the Ministers under Part 5, Division 2 of the Queensland Competition Authority Act 1997 (Qld) (“QCA Act”).[1] Part 5 of the QCA Act establishes a third party access regime. Under Division 7 of Part 5, the Authority may give a written notice to an owner or operator of a declared service requiring the owner or operator to give the authority a draft access undertaking for the service.[2] Where the Authority is given a draft access undertaking, it may conduct an investigation for approving the draft access undertaking.[3] Part 6 applies to an investigation.[4] In conducting the investigation, the Authority is expressly obliged to comply with natural justice.[5] The Authority may either approve the draft access undertaking or refuse to approve it and give notice of the way in which the Authority considers it is appropriate to amend the draft access undertaking.[6] [1]Queensland Competition Authority Act 1997 (Qld), s 250(1).[2]Queensland Competition Authority Act 1997 (Qld), s 133(1). [3]Queensland Competition Authority Act 1997 (Qld), s 145.[4]Queensland Competition Authority Act 1997 (Qld), s 147.[5]Queensland Competition Authority Act 1997 (Qld), s 173(1)(d).[6]Queensland Competition Authority Act 1997 (Qld), s 134(2) and 136(5). At all material times to this proceeding, there has been an approved access undertaking in place, known as “UT4”. UT4 was due to expire on 30 June 2017. On 11 May 2016, the Authority issued an “Initial Undertaking Notice” to the applicant requiring it to give a “Draft Access Undertaking” for the period commencing 1 July 2017. In July 2016, the Authority issued a “Statement of Regulatory Intent” as to how it proposed to manage the process of assessment and approval. Among other things, it stated that the Authority would conduct an investigation into the Draft Access Undertaking and would publish a “Draft Decision” to provide stakeholders with an opportunity to comment on the Authority’s positions before making the final decision whether or not to approve the Draft Access Undertaking. On 30 November 2016, the applicant provided the required Draft Access Undertaking to the Authority in response to the Initial Undertaking Notice. It provided an accompanying submission. On 2 December 2016, the Authority issued a “Notice of Investigation”.[7] [7]Queensland Competition Authority Act 1997 (Qld), s 146.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Supported by its reports, the applicant proposed in the Draft Access Undertaking:(a)WACC of 6.78 percent;[8](b)maintenance costs of $921 million;[9] and(c)MAR of $4.892 billion.[10][8]Affidavit of JD Powell filed 27 September 2018, Exhibit JDP-1, page 256 of the Draft Access Undertaking.[9]Affidavit of LK Burton filed 30 April 2018, Exhibit LB-2, referred to at page 255 of the Draft Decision.[10]To be calculated in accordance with clause 6.6.3 of the Draft Access Undertaking.Draft Decision The Draft Decision is also a lengthy document. It is divided into an introductory section of 19 pages and 21 further sections, followed by 15 appendices from Appendix A to Appendix O, in total 530 pages. The structure of the parts is as follows:(a)Section 1: Risk, Revenues and Reference Tariffs – Overview;(b)Section 2: Risk and the Regulatory Framework;(c)Section 3: The Regulatory Asset Base and Depreciation;(d)Section 4: Inflation Forecast and RAB Indexation;(e)Section 5: Rate of Return;(f)Section 6: Volume Forecasts;(g)Section 7: Operating Cost Allowance;(h)Section 8: Maintenance Cost Allowance;(i)Section 9: Schedule F – Reference Tariffs and Take or Pay;(j)Section 10: Draft Access Undertaking Provisions – Overview;(k)Section 11: Preamble and Intent & Scope;(l)Section 12: Ring-Fencing;(m)Section 13: Negotiation Framework;(n)Section 14: Access Agreements;(o)Section 15: Pricing Principles;(p)Section 16: Available Capacity Allocation & Management;(q)Section 17: Capacity and Supply Chain Management;(r)Section 18: Network Development & Expansions;(s)Section 19: Connecting Private Infrastructure;(t)Section 20: Reporting, Compliance and Audits;(u)Section 21: Dispute Resolution and Decision Making. There are many points of agreement and disagreement between the terms of the Draft Access Undertaking proposed by the applicant and the views of the Authority expressed in the Draft Decision. The Draft Decision would allow: (a)WACC of 5.41 percent;[11](b)maintenance costs of $817 million;[12] and(c)MAR of $3.983 billion.[13] [11]Affidavit of LK Burton filed 30 April 2018, Exhibit LB-2, page 62 of the Draft Decision.[12] Affidavit of LK Burton filed 30 April 2018, Exhibit LB-2, page 256 of the Draft Decision.[13] Affidavit of LK Burton filed 30 April 2018, Exhibit LB-2, page 4 of the Draft Decision. These are major points of disagreement between the terms of the Draft Access Undertaking proposed by the applicant and the views of the Authority expressed in the Draft Decision.Authority’s internal process At the material times there were three members of the Authority, including Professor Green who was the chair. In February 2017, the members of the Authority received a board discussion paper which proposed the framework and approach to assess the Draft Access Undertaking. In March 2017, the members of the Authority considered and gave “in principle” approval to a board paper concerning the averaging period to be used, among other things, for determining time variant WACC parameters, subject to overall assessment of the Draft Access Undertaking.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Aurizon Network Pty Ltd v Queensland Competition Authority & Ors [2018] QSC 246
PARTIES:	AURIZON NETWORK PTY LTD ACN 132 181 116 (applicant) v QUEENSLAND COMPETITION AUTHORITY (first respondent) and ANGLO AMERICAN METALLURGICAL COAL PTY LTD ACN 076 059 679 BM ALLIANCE COAL OPERATION PTY LTD ACN 096 412 752 BHP BILLITON MITSUI COAL PTY LTD ACN 009 713 875 CORONADO CURRAGH PTY LTD ACN 009 362 565 GLENCORE COAL PTY LTD ACN 082 271 930 IDEMITSU AUSTRALIA RESOURCES PTY LTD ACN 010 236 272 JELLINBAH MINING PTY LTD ACN 052 251 000 LAKE VERMONT RESOURCES PTY LTD ACN 114 286 841 PEABODY ENERGY AUSTRALIA COAL PTY LTD ACN 001 401 663 YARRABEE COAL COMPANY PTY LTD ACN 010 849 402 (second respondents)
FILE NO:	SC No 4539 of 2018
DIVISION:	Trial Division
PROCEEDING:	Originating Application
DELIVERED ON:	30 October 2018
DELIVERED AT:	Brisbane
HEARING DATE:	22 and 23 October 2018
JUDGE:	Jackson J
ORDER:	The order of the court is that: 1. The application is dismissed. 2. The applicant pay the first respondent’s costs of the proceeding. 3. Reserve the question of costs between the applicant and the second respondents.
CATCHWORDS:	ADMINISTRATIVE LAW – JUDICIAL REVIEW – GROUNDS OF REVIEW – PROCEDURAL FAIRNESS – BIAS – APPREHENSION OF BIAS – where draft decision made on draft access undertaking under Queensland Competition Authority Act 1997 (Qld) in relation to central Queensland coal network rail infrastructure – where chair of authority about to be appointed chair of Port of Newcastle – where Port of Newcastle might benefit from reduction in throughput of central Queensland coal network rail infrastructure – where investigation being conducted and draft decision issued –where application for judicial review for apprehended bias – where applicants submit that interest in appointment as chair of Port of Newcastle might cause the fair-minded lay observer to reasonably apprehend that the authority might not bring an impartial mind to the conduct of the investigation of the draft access undertaking and ‘decision’ to issue the draft decision – whether hypothetical lay observer is taken to be aware of certain facts – whether facts known to hypothetical lay observer give rise to apprehension of bias TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – SUPERVISION – OTHER BODIES – where applicants submit that chair of first respondent did not disclose alleged conflict of interest in accordance with Queensland Competition Authority Act 1997 (Qld) s 219 – whether chair of first respondent had a direct or indirect interest in an issue being considered by the authority – whether contravention of s 219 Judicial Review Act 1991 (Qld), s 21 Queensland Competition Authority Act 1997 (Qld), s 173(1)(d), s 219 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, cited Baker v Palm Bay Island Resort Pty Ltd (No 2) [1970] Qd R 210, cited Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1, cited British American Tobacco Australia Services…