Australian Petroleum Pty Ltd v Australian Competition & Consumer Commission
[1997] FCA 175
•10 MARCH 1997
CATCHWORDS
JUDICIAL REVIEW - extension of time - factors considered - public interest - respondent on notice - detriment suffered by applicant if extension not granted - absence of explanation
JUDICIAL REVIEW - whether alleged decisions and conduct were made under s 87B Trade Practices - whether undertakings made pursuant to s 87B Trade Practices Act are an enactment - whether decisions were made under the undertakings
Administrative Decisions (Judicial Review) Act 1977: ss 3, 11
Trade Practices Act 1974: s 87B
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Australian National University v Lewins (1996) 138 ALR 1
Chittick v Ackland (1984) 1 FCR 254
General Newspapers Pty Limited v Telstra Corporation (1993) 45 FCR 164
Hunter Valley Developments Pty Limited v Cohen (1984) 3 FCR 344
Johns v Australian Securities Commission (No 2) (1992) 35 FCR 146
NSW Aboriginal Land Council v Aboriginal and Torres Strait Islander Commission (1995) 131 ALR 559
AUSTRALIAN PETROLEUM PTY LIMITED v AUSTRALIAN AND CONSUMER COMMISSION
NG 866 of 1996
LOCKHART J.
SYDNEY
10 MARCH 1997
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 866 of 1996
)
GENERAL DIVISION )
BETWEEN:AUSTRALIAN PETROLEUM PTY
LIMITED
Applicant
AND: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Respondent
JUDGE MAKING ORDER: LOCKHART J.
WHERE ORDER MADE: SYDNEY
DATE ORDER MADE: 10 MARCH 1997
MINUTE OF ORDER
THE COURT ORDERS THAT:
The time within which application may be made to the Court for an order of review of the decisions and conduct of the respondent made or engaged in on or about 24 September 1996 and 11 or 12 September 1996, be extended to 2 November 1996;
The application for an order of review filed by the applicant on 1 November 1996 shall be deemed to be the due filing of such an application;
The objection to competency be upheld with respect to decisions and conduct numbered (4) and (5) in the application for an order of review; but otherwise be dismissed;
There shall be no order for costs of either party of the motion for extension of time;
The respondent shall pay two-thirds of the applicant’s costs of the objection to competency including reserved costs, if any.
NB: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 866 of 1996
)
GENERAL DIVISION )
BETWEEN:AUSTRALIAN PETROLEUM PTY
LIMITED
Applicant
AND: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Respondent
10 March 1997
REASONS FOR JUDGMENT
LOCKHART J.
Introduction and Facts
This is an application by Australian Petroleum Pty Limited (the applicant) for an order of review, pursuant to ss. 5 and 6 of the Administrative Decisions (Judicial Review) Act 1977 (’the ADJR Act’), of certain alleged decisions and conduct of the Australian Competition and Consumer Commission (the respondent). I say ‘alleged decisions’ and ‘alleged conduct’ because the respondent contends that any decisions made by it or conduct engaged in by it are not relevant decisions or conduct, as the case may be, for the purposes of the ADJR Act.
The application was not filed within the time prescribed under the ADJR Act, so the applicant filed a notice of motion for an extension of time, which is opposed by the respondent. The respondent filed a notice of objection to competency of the application.
The application for an order of review asserts that the respondent, in making the alleged decisions and engaging in the alleged conduct, denied natural justice and procedural fairness to the applicant, exercised its power improperly, unreasonably and for an improper purpose. The application also asserts that the respondent has no authority to engage in certain of the alleged conduct.
The only matters before the Court at this stage of the case concern the applicant’s motion for an extension of time for filing the application for an order of review; and the issues raised by the respondent’s objection to competency.
The facts are not in dispute.
Pioneer International Limited (‘Pioneer’), Caltex Australia Limited (‘Caltex’) and Ampol Limited (‘Ampol’) informed the respondent on 3 November 1994 that they were considering a proposal to merge the refining and marketing businesses of Ampol and Caltex (the ‘R & M Businesses’) and stated that they would be seeking an informal clearance from the respondent. The respondent examined the matter, held discussions with the parties and sought information from the parties which they furnished to the respondent. The respondent formed the view that the proposed merger would be likely to substantially lessen competition in the supply of petroleum products in a number of geographic areas in contravention of s. 50 of the Trade Practices Act 1974 (‘the Trade Practices Act’). The parties maintained that the merger would not contravene s. 50, but gave undertakings to the respondent pursuant to s. 87B of the TradePracticesAct, without admissions, to address the respondent’s concern. The respondent agreed to accept the undertakings in order to address its concerns about the erosion of competition.
On 28 March 1995 Pioneer, Caltex and Ampol gave written undertakings to the respondent, which it accepted pursuant to s. 87B of the Trade Practices Act.
The Undertakings recited that Pioneer and Caltex were parties to the undertakings in their capacity (a) as shareholders of the companies which owned and operated the R & M Businesses which were proposed to be merged, and (b) as the companies which would be equal shareholders in the merged entity. It was also recited that Ampol was a party as the company which would, following the merger, be owned in equal shares by Pioneer and Caltex and which would own, directly and through subsidiaries, the R & M Businesses. Ampol is described in the undertakings as the ‘Merged Entity’ and it gave the undertakings in that capacity.
The written undertakings cover 22 typed pages. I will refer to the undertakings which are of particular relevance to the present issues.
Under the heading ‘1. SALE OF TERMINALS’, paragraph 1.1(a) provides that the Merged Entity (defined in the undertakings as the company “presently named Ampol Limited which directly or through its subsidiaries will following the merger own the R & M Businesses and, where the context requires, include subsidiaries of Ampol after the Date of the Merger”) will invite offers to purchase the freehold or leasehold interests of the Merged Entity in certain seaboard terminals or storage facilities which are specified in six sub-paragraphs, the relevant one for present purposes being specified in (iii) as ‘Spotswood, at Blackshaw Road, Spotswood, Victoria’. Spotswood is on the seaboard in Victoria.
Paragraph 1.2 provides that the Merged Entity will call for expressions of interest from prospective purchasers of the Surplus Terminal within one week after the Date of the Merger in the manner prescribed by that sub-paragraph.
Paragraph 8 entitled ‘Dispute Resolution’ contains provisions, inter alia, for Pioneer, Caltex, the Merged Entity and the Commission to appoint an ‘independent dispute resolution advisor’ (‘the Advisor’) on terms satisfactory to the Advisor and as the parties and the Commission agree in the event of dispute arising between them (paragraph 8.5).
Paragraph 9 is important; it reads as follows:
'9. RENEGOTIATION AMENDMENT AND REVOCATION
9.1 Caltex, Pioneer, Ampol and the Commission acknowledge that these undertakings have been given to facilitate certain outcomes in relation to competition in markets for the sale and purchase of petrol in Australia. In the event that there is a material change in conditions in those markets from those existing at the date of these undertakings which is not caused directly or indirectly as a result of the implementation of these undertakings, Caltex, Pioneer, Ampol and the commission will review these undertakings, and negotiate in good faith the amendment or revocation of all or any of these undertakings so as to remedy any detriment to the competitive position of the Merged Entity which is likely to result from the operation of the undertakings in the changed market conditions.
9.2 For the avoidance of doubt the commencement of operation of a terminal having facilities that are capable of and are offered for use for the importation storage and distribution of petrol by independent petrol suppliers (other than a Surplus Terminal) shall constitute a material change in conditions in the state market in which the terminal is located.'
Paragraph 9.1 has become a central paragraph in the light of the circumstances which I shall relate.
In a letter dated 29 January 1996 the solicitors for the applicant wrote to the respondent saying that:-
. the applicant was continuing to pursue the sale of ‘Surplus Terminals’ in accordance with the undertakings;
. there had been a change in circumstances in the market for the supply of petroleum products in Victoria, in the result of which the applicant wished to review the undertakings in so far as they obliged it to dispose of the Surplus Terminal at Spotswood, and to amend the undertakings by deleting sub-paragraph 1.1(a)(iii);
. the change in circumstances was the construction of an independent petrol terminal at Hastings in Melbourne which had been completed since the date of the undertakings and had become operational and available for use for the importation, storage and distribution of petrol to independent purchasers;
. the applicant understood (a) that a company called Wickland Corporation had entered into a contract for the purchase of the Hastings Terminal, with the aim of importing petrol and offering to sell it ‘ex terminal gate’ to independent purchasers, and (b) that term agreements had been entered into with at least one major independent purchaser;
. Wickland would undertake the procurement, transportation and storage of refined petroleum products and may provide a blending facility for petroleum feed stocks, as it does at other locations throughout the world;
. Wickland is a potential purchaser of Surplus Terminals from the applicant having become a ‘Qualified Purchaser’ under the Terms of the Undertakings (I need not refer to this definition);
. Wickland Corporation operates petroleum terminals in the Caribbean, on the North American West Coast and at locations in Asia; it is also active in oil trading in California, Singapore and the Caribbean, in downstream marketing in the North American West Coast and in natural gas marketing in the United States of America;
. as the Hastings Terminal had become operational, there was a clear basis for the Undertakings to be reviewed pursuant to paragraph 9.1;
. the commencement of operations at the Hastings Terminal achieved the outcome in relation to competition in the Victorian market which the Commission sought to obtain by the sale of Spotswood;
. therefore, the sale of Spotswood was no longer necessary to achieve the Commission’s objective;
. further, the value of Spotswood to potential purchasers seeking to continue to operate the facility as a petrol terminal was likely to have been substantially diminished as a result of the completion of the Hastings Terminal;
. if the applicant is required to proceed with the disposal of Spotswood in accordance with the terms of the Undertakings it is likely that it will suffer competitive and financial detriment not intended by the terms of the Undertakings without achieving any stated competition objectives of the respondent;
. the applicant therefore sought the agreement of the respondent to eliminate the obligation to sell Spotswood by deleting sub-paragraph 1.1(a)(iii) of the Undertakings.
Correspondence then passed between the applicant and the respondent. By letter dated 27 May 1996 the solicitor for the respondent informed the solicitors for the applicant that the respondent had given instructions that, on the basis of the information contained in a letter of 24 May 1996 from the solicitors for the applicant, the respondent accepted that the Hastings Terminal has commenced operations for the purposes of paragraph 9.2 of the Undertakings.
Between May and September 1996 there were extensive negotiations between the applicant and the respondent by correspondence and in meetings, concerning the Spotswood terminal.
At a meeting on 5 September 1996 at the respondent’s offices in Sydney attended by representatives of the applicant and the respondent, one of the persons present representing the respondent said ‘that the Commission is not persuaded that Australian Petroleum will suffer any detriment from the sale of Spotswood’. Another officer of the respondent said to the solicitors for the applicant:
'Any removal of the obligation to see Spotswood would be entirely disproportionate to the detriment suffered by Australian Petroleum.'
On 6 September 1996 the solicitor for the applicant wrote a letter to the solicitor for the respondent concerning a number of issues about the Spotswood Terminal which I need not recite. The solicitor for the respondent replied by letter dated 12 September 1996 stating, inter alia:
'SPOTSWOOD TERMINAL
The ACCC has noted all the points made in your letter and, while no useful purpose would be served by responding in detail in respect of all of the points (some of which the ACCC does not agree), the bottom line is that the Commission is not prepared to agree to the appointment of “an advisor” under clause 8.5 of the undertakings or to the appointment of the advisor to mediate the dispute. Accordingly, I am instructed to advise that the ACCC requires APPL to sell the Spotswood Terminal in accordance with its obligations under clause 1 of the undertakings. In that regard I look forward to the provision as soon as possible of the list of proposed receivers and managers as contemplated in clause 1.6(a) of the undertakings.'
Over the course of the following two weeks the applicant sought to persuade the respondent to reconsider its position. On 17 September 1996 the solicitors for the applicant wrote a letter to the solicitor for the respondent seeking reasons for what was said to be the Commission’s decisions:
· not to continue to negotiate in good faith; and/or
· that there is no detriment to the competitive position of APPL likely to result from the sale of the Spotswood Terminal in the changed market conditions; and/or
· that the Commission will not agree to relieve APPL from the obligation to offer the Spotswood Terminal for sale to remedy any such detriment.’
The solicitor for the respondent replied by letter dated 18 September 1996 stating relevantly:
· the Commission has negotiated in good faith and was prepared to continue negotiations in good faith but, at the meeting in Sydney on 5 September 1996, you stated that APPL saw no point in any further negotiations;
· APPL has not demonstrated any relevant detriment justifying release from its obligation to sell the Spotswood Terminal pursuant to the Undertakings;
· in the circumstances, the Commission will not agree to relieve APPL from the obligation to sell the Spotswood Terminal.
As regards paragraph 3 of your letter in which reference is made to the “decision”, I advise that the ACCC takes the view that there has been no such decision. The ACCC’s requirement that APPL sell the Spotswood Terminal conveyed on page 2 of my letter dated 12 September 1996 is a consequence of APPL’s obligations under the Undertakings which it gave to the Commission under section 87B of the Trade Practices Act on 28 March 1995.’
On 20 September 1996 the solicitors for the applicant wrote to the solicitor for the respondent again seeking to persuade the respondent to reconsider its position, including the following paragraphs:
'At our meeting in Sydney on 5 September 1996, APPL merely observed that the continuation of discussions between the parties in relation to the sale of the Spotswood Terminal was unlikely to resolve this issue and, in good faith, proposed that the matter be referred to an “advisor” to assist the parties to resolve the matter. The ACCC has rejected that proposal.
APPL remains willing to continue negotiations and believes that the appointment of a Selling Agent at this time would be counterproductive to further negotiations.
...
APPL maintains that the ACCC has made a decision as to the matters described in the second paragraph of my letter of 17 September 1996, the consequence of which is that no amendment to the undertakings has been agreed, and APPL is likely to suffer detriment as a result. APPL also maintains that it has demonstrated likely detriment from the sale of the Spotswood terminal for which the only appropriate remedy is to be relieved of its obligations to offer the Spotswood terminal for sale.
...'
The solicitor for the respondent replied by letter dated 24 September 1996 stating, so far as relevant:
'While the Commission was prepared to continue the good faith negotiations in Sydney on 5 September 1996, the ACCC accepted the view expressed on behalf of APPL at that time that no useful purpose would be served by any further negotiations. The Commission is of the view that the position has not changed since that time and, accordingly, declines to re-open the negotiations.
Further, the ACCC sees no useful purpose in further explaining the estimate as to contestable petrol sales outlined at the Sydney meeting.
...'
The solicitors for the applicant then wrote to the solicitor for the respondent on 25 September 1996 stating relevantly:
'I am instructed to reiterate that our client, Australian Petroleum Pty Ltd (“APPL”) did not suggest on 5 September 1996 that further negotiations should cease. Rather, APPL proposed, in good faith, a basis upon which the parties could continue to negotiate with a greater likelihood of resolving the matter. APPL did not terminate negotiations and remains willing to continue negotiations.
APPL has now suggested two alternative bases upon which the parties could continue negotiations, each of which is more likely to facilitate a resolution than the basis upon which discussions were held during the period to 5 September.
APPL does not understand why the Commission has refused to continue to negotiate.
As to our request for an explanation of the basis of the ACCC’s estimates in relation to contestable petrol sales volumes in Victoria, the ACCC may see no useful purpose in further explaining the estimate, but APPL can only assume from the ACCC’s refusal to provide an explanation that there was no reasonable basis for the estimates.
We are instructed to advise that if the ACCC persists in its refusal to continue negotiations on either of the bases suggested by APPL (ie, with the assistance of an advisor, or upon the provision of further information and economic opinion)then APPL may have no alternative but to institute proceedings to seek a remedy for detriment which results or is likely to result from the actions of the ACCC in this matter.'
The solicitor for the respondent replied by letter of 30 September 1996 stating relevantly:
'The ACCC considers that as APPL has had ample opportunity to put forward material to substantiate its claimed likely incremental detriment and has not done so, no such detriment can be substantiated. Further, the ACCC considers that the good faith negotiations have taken place and been concluded and that no reasonable basis has been shown for the negotiations to be re-opened.
As regards the ACCC’s estimates of contestable petrol sales volumes, you will recall that the estimates were based upon your client’s internal records copies of which were provided to the ACCC last year in relation to the (then) proposed merger and that the way in which those estimates were arrived at was explained by reference to these records and discussed with your client’s representatives at the meeting on 5 September 1996.
Accordingly, the ACCC’s position remains that it requires APPL to proceed with the arrangements for the sale of the Spotswood Terminal in accordance with the provisions of the Undertakings.'
Further correspondence followed.
On 22 October 1996 the respondent was informed orally by the applicant’s general counsel that the applicant intended to seek judicial review.
On 1 November 1996 the applicant filed the application for an order of review.
The application for an order of review seeks to review the alleged decisions and conduct of the respondent, defined as follows:
'1. On or about 24 September 1996 that it would not consent pursuant to s. 87B(2) of the Trade Practices Act 1974 (Cth) (Act) to the withdrawal or variation of the Undertakings given pursuant to section 87B of the Trade Practices Act 1974 by the applicant, Pioneer International Limited and Caltex Australia Limited to Trade Practices Commission (of which the respondent is the lawful successor) on 28 March 1995 (Undertakings).
2. On or about 24 September 1996 that it would not continue to negotiate or re-open negotiations in good faith with the applicant for the amendment or revocation of the Undertakings to the extent that they require the applicant to offer to sell the Spotswood Terminal.
3. On or about 11 September 1996 that it would not appoint, or agree to the appointment of, an independent dispute resolution advisor under clause 8.5 of the Undertakings.
4. On or about 11 September 1996, that there was no detriment to the competitive position of the applicant likely to result from the sale of the Spotswood Terminal in the circumstance which had by then arisen.
5. On or about 11 September 1996 that it would not relieve the applicant of its obligation to offer to sell the Spotswood Terminal in accordance with the Undertakings by amending or revoking that obligation as it was entitled to do in accordance with clause 9.1 of the Undertakings.'
The application states that the applicant had status to bring the proceeding as a person aggrieved by the decisions because:
'The applicant is aggrieved by the decisions because Clause 1 of the Undertakings requires the applicant or a selling agent appointed by the applicant to offer the Spotswood Terminal for sale to a Qualified Purchaser (as defined in the Undertakings) unless there is a material change in market conditions which is not caused by the implementation of the Undertakings. In that event (which the applicant contends, and the respondent agrees, has occurred) the applicant and the respondent are required to review the Undertakings and negotiate in good faith the amendment or revocation of any of the Undertakings so as to remedy any detriment to the competitive position of the applicant which is likely to result from the operation of the Undertakings in the changed circumstances. The applicant is likely to suffer detriment from the changed circumstances and from the decisions the subject of this application.'
The reference in the application to decisions made ‘on or about 11 September 1996’ is to decisions, the notice of which was conveyed in a letter of 12 September 1996 from the solicitor for the respondent to the solicitors for the applicant under the heading ‘Spotswood Terminal’.
Extension of Time
The application for an order of review was filed on 1 November 1996. The decisions sought to be challenged by the applicant are described in the application as being made on 11 September (this probably should be 12 September, namely the date of the relevant letter from the solicitor for the respondent to the solicitors for the applicant; so argument proceeded on the basis that it was 12 September. I shall assume it was made, if at all, on 12 September).
The calculation of the commencing period of the 28 days for which s. 11 provides is not free from difficulty. The prescribed period for the purposes of s. 11(1)(c) is the period commencing on the day on which the decision is made and ending on the 28th day after:
‘(a) “the day on which a document setting out the terms of the decision is furnished to the applicant” if the decision sets out the findings on material questions of fact, refers to the evidence or other material on which those findings were based and gives the reasons for the decision -; or
(b) in a case to which paragraph (a) does not apply:
(i)if a statement in writing setting out those findings, referring to that evidence or other material and giving those reasons is furnished to the applicant otherwise than in pursuance of a request under sub-section 13(1) not later than the twenty-eighth day after the day on which a document setting out the terms of the decision is furnished to the applicant - the day on which the statement is so furnished;
(ii)if the applicant, in accordance with sub-section 13(1) requests the person who made the decision to furnish a statement as mentioned in that sub-section - the day on which the statement is furnished, the applicant is notified in accordance with sub-section 13(3) of the opinion that the applicant was not entitled to make the request, the Court makes an order under sub-section 13(4A) declaring that the applicant was not entitled to make the request or the applicant is notified in accordance with sub-section 13A(3) or 14(3) that the statement will not be furnished; or
(iii)in any other case - the day on which a document setting out the terms of the decision is furnished to the applicant.’
On one view, so far as the decision of 12 September 1996 is concerned, the period of twenty-eight days would run from that date and would expire on 10 October. There was a request for reasons made on behalf of the applicant to the respondent in a letter dated 17 September 1996 which was refused on 18 September 1996; so on this view twenty-eight days would run from 18 September and therefore expire on 16 October 1996. On yet a third view, the twenty-eight day period would run from 24 September 1996 (the date of the letter from the solicitor for the respondent to the solicitors for the applicant when the Commission declined to reopen the negotiations) and the prescribed period would expire on 22 October. On any view of the matter the application was filed out of time. But, whatever the commencing point be for the calculation, the worst from the applicant’s point of view (if the time commenced to run on 12 September) is that the filing of the application was approximately three weeks out of time.
The applicant relied upon the following matters:
the fact that the respondent was never left in any uncertainty about whether or not its decision would be subject to challenge. Reliance was placed by the applicant upon the letter of 17 September 1996 from the applicant’s solicitors to the respondent’s solicitors seeking a written statement of the reasons for decision not to relieve the applicant from the obligation to offer the Spotswood Terminal for sale;
on 22 October 1996 the respondent was informed orally that the applicant intended to seek judicial review;
the absence of any prejudice to the respondent, and the undoubted prejudice to the applicant if its application for a variation of the Undertaking be unlawful;
the public interest in reviewing the legality of the decision affecting a significant part of commerce, namely, the petroleum industry; and
the public interest in determining the question whether or not decisions made under either s. 87B of the Trade Practices Act or undertakings accepted pursuant to that provision are reviewable by this Court.
The respondent opposed the motion for an extension of time on the following grounds:
the prescribed period of twenty-eight days must not be ignored. It is the prima facie rule that proceedings commenced outside that period will not be entertained; and reliance was placed upon Hunter Valley Developments Pty Limited v Cohen (1984) 3 FCR 344 at 348;
one of the paramount matters for consideration by the Court is the explanation by the applicant of the delay which has occurred. Here no explanation has been offered. Reference was made in this respect to Johns v Australian Securities Commission (No 2) (1992) 35 FCR 146 per Black C.J. and von Doussa J. at 153;
the applicant cannot say that it was insufficiently advised because it was represented by lawyers at all material times;
relevant to the public interest is the fact that the Undertakings set out a regime for the timely disposal of Surplus Terminals in circumstances in which there is continuing anti-competitive detriment flowing from the merger; and
it does not appear that the application for judicial review is of such substance that an extension of time becomes appropriate.
In my opinion the extension of time should be granted. The respondent was informed by letter from the applicant’s solicitors to the respondent’s solicitor dated 25 September 1996 that proceedings would be instituted by the applicant if the respondent did not change its mind with respect to the matters in issue; so the respondent was on clear notice from that time of the applicant’s intention to sue. The written statement of reasons for the decision of the respondent was sought on behalf of the applicant on 17 September 1996.
It is clear that the respondent could never have entertained any doubt at any material time about whether its decision to institute proceedings would be challenged by the applicant.
It is not appropriate to determine on a final basis what detriment, if any, will be suffered by the applicant if its application for a variation of the Undertaking be unlawful; because the matters alleged to constitute the detriment or some of them, raise questions of fact which are difficult, if not impossible, and certainly inappropriate, to determine at this stage.
In my opinion a seriously arguable case has been established of detriment to the applicant. The Hastings Terminal has commenced operations within the meaning of paragraph 9.2 of the Merger Undertakings. Commencement of those operations may be a material change in conditions in the Victorian market for the sale of petrol which has occurred before the sale of the Spotswood Terminal. Commencement of the Hastings operations is likely to result in some detriment to the competitive position of the applicant within the meaning of paragraph 9.1 of the Undertaking, a matter which was not envisaged in March 1995 when the undertakings were given. The likely detriment to the competitive position of the applicant as a result of the commencement of the operations of the Hastings Terminal may be at least equal to, if not greater than, the likely detriment which the sale of the Spotswood Terminal would have caused if the Hastings Terminal had not commenced operations.
There is no evidence of detriment likely to be sustained by the Commission if the motion for extension be allowed.
There is public interest in reviewing the correctness in law of the alleged decisions because plainly they will have an impact on the petroleum industry. There is also a public interest in the determination by the Court of the question whether or not decisions made pursuant to undertakings of the kind with which this case is concerned are reviewable by the Court.
The absence of any specific explanation by the applicant of the reason for the delay is not of any real significance in this case for reasons mentioned earlier. However, the correctness of the principle enunciated in Johns that one of the paramount matters for consideration by the Court is the explanation by an applicant of delay which has occurred cannot be doubted; but each case must be considered in the light of its own facts and circumstances.
The motion for extension of time is therefore granted.
Competency of the application
Submissions
Counsel for the respondent submitted that the impugned ‘decisions and conduct’ are not reviewable under the ADJR Act for the following reasons:
the applicant was not seeking to withdraw or vary the Undertakings or seeking the respondent’s consent to this course; therefore no question arises concerning the operation of s. 87B of the Trade Practices Act. Correspondence discloses, it was submitted, that the applicant wished to review the Undertakings and to amend them;
it follows that the impugned decision or conduct referred to in paragraph 1 of the application was not made or engaged in;
the decision or conduct referred to in paragraphs 2, 3 4 and 5 of the application is each described in the language of paragraph 9.1 of the Undertakings, namely, ‘negotiate in good faith, amendment, revocation, appoint an independent resolution advisor and detriment to the competitive position’, language remote from the terms of s. 87B;
the applicant cannot therefore succeed unless it can establish that what the respondent did constituted a decision made under an enactment or the engagement in conduct for the purpose of making such a decision;
the enactment cannot be the Trade Practices Act since what the respondent did was pursuant neither to an express provision of the Act, nor to an implied requirement or authorization;
what the respondent did was not a decision under an instrument made under the Trade Practices Act as the applicant asserts, assuming that the Undertakings are such an instrument;
the content of an Undertakings is a matter of agreement. If the agreement itself is breached it may be enforced by means specified within the Trade Practices Act and by the Federal Court rather than by means outside that Act in other courts;
the respondent is a body corporate (s. 6A of the Trade Practices Act). A contract entered into by a corporation under a general power to enter into contracts is not given force and effect by the empowering statute; the validity and effect of the contract being determined not by the ADJR Act, but by the ordinary laws of contract: General Newspapers Pty Limited v Telstra Corporation (1993) 45 FCR 164 at 173 and 194;
courts are slow or reluctant to engage in judicial review of contractual behaviour;
to be an ‘instrument made under’ an Act within the meaning of s. 3(1) of the ADJR Act, the relevant document must be made ‘in pursuance of’ or ‘under the authority of’ an Act; it must be a document under which decisions of an administrative character may be made; it must be of such a kind that it has the capacity to affect legal rights and obligations; and it must be able to be altered unilaterally by the authority which made it. Reliance was placed on Chittick v Ackland (1984) 1 FCR 254 especially per Lockhart and Morling JJ. at 263-6, which stands in marked contrast to the Undertakings in this case, because they are entered into as a matter of agreement with capacity to effect legal rights and obligations acquired only by agreement, and are not derived from statutes. Reliance was placed upon Burns v Australian National University (1982) 40 ALR 707 and on appeal (1982) 43 ALR 25; also see Australian National University v Lewins (1996) 138 ALR 1;
even though the Trade Practices Act authorizes the respondent to enter into undertakings (that is, to make contracts), action under such contracts is not without more made ‘under an enactment’. The action is contractual, not statutory; and
none of the matters described in the application as decisions or conduct were substantive, final or operative and determinative and therefore were not conduct engaged in for the purpose of making a decision. Nor were the actions of the respondent ‘conduct’, since they were not matters of procedure: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; NSW Aboriginal Land Council v Aboriginal and Torres Strait Islander Commission (1995) 131 ALR 559.
Counsel for the applicant argued that:
. there was a refusal of consent by the respondent. That refusal constitutes the making of a ‘decision’ and, for the purposes of s. 87B(2), such a refusal may be either an express or an implied refusal. Section 3(1) of the ADJR Act defines the ‘making of a decision’ as including a reference to ‘refusing to give a ... consent’. In this case there has been either an express or an implied refusal, as evidenced by the facts to which reference has already been made;
. the ‘refusal’ was either a decision made under s. 87B of the Trade Practices Act or under the Undertakings accepted by the respondent (those Undertakings being an instrument made under the Trade Practices Act, and thus an ‘enactment’ as defined by s. 3 of the ADJR Act);
. the decision of the respondent is a decision under s. 87B(2) of the Trade Practices Act because to grant or refuse consent by the respondent is a ‘decision’ which s. 87B(2) ‘authorizes’. Even if the decision to refuse to vary the Undertakings is a decision under the Undertakings; and, even if it be correct that such Undertakings are not themselves an ‘enactment’; such a decision may nevertheless remain a ‘decision’ under s. 87B and hence be reviewable. Cases such as Burns are distinguishable because they had a single source of authority, namely, the relevant contract; s. 87B in the present case, however, remains a source of power to ‘withdraw or vary’ an undertaking. These were the submissions of counsel for the applicant with respect to the refusal.
Turning to the decisions under the Undertakings, counsel for the applicant submitted that they are reviewable because:
such decisions are ‘conduct’ engaged in for the purpose of making the reviewable decision;
such ‘decisions’ are ‘decisions under the Undertakings, that document being relevantly an enactment’.
Each of the decisions sought to be reviewed is a final decision. The fact that subsequent decisions may have to be made does not preclude an earlier decision of its ‘finality’ if such a decision is itself the last step in the fulfilment of an obligation imposed by an enactment.
Findings
In my opinion, the proper analysis of the discussions and correspondence between the parties, culminating in the letter of 24 September 1996 from the solicitor for the respondent to the solicitors for the applicant (there are two letters of that date; the relevant one is the letter which commences with a reference to the fax from the solicitors for the applicant dated 20 September 1996), is that the respondent refused to consent (a) to the withdrawal or variation of the Undertakings to invite offers to purchase the relevant interests in the Spotswood Terminal and (b) to the amendment of the Undertakings by deleting paragraph 1.1(a)(iii). It is plain that the applicant sought to be excused from its undertaking to sell the Spotswood Terminal and that the respondent required the applicant to sell that terminal. In substance there was a refusal by the respondent to consent to the application by the applicant for an amendment of Undertaking 1.1(a)(iii). The refusal of consent by the respondent was the making of a decision by it.
Section 3(2) of the ADJR Act provides that a reference to the making of a decision includes a reference to refusing to give a consent, which is what occurred here. Hence, the refusal was the making of a decision within the meaning of the ADJR Act.
In my opinion this decision of the Commission was a decision made under s. 87B(2) of the Trade Practices Act because the grant or refusal of consent by the Commission to the withdrawal or variation of an undertaking given by a person pursuant to s. 87B(1) and accepted by the Commission, is a decision which is authorized by s. 87B(2). Section 87B(1) and (2) provide as follows:
'(1) The Commission may accept a written undertaking given by a person for the purposes of this section in connection with a matter in relation to which the Commission has a power or function under this Act (other than Part X).
(2) The person may withdraw or vary the undertaking at any time, but only with the consent of the Commission.'
The source of the respondent’s power to consent to a withdrawal or variation of an undertaking given under s. 87B(1) is sub-s. (2) itself.
If this conclusion were incorrect, it would be necessary to consider whether the Undertakings would answer the description of an ‘instrument’ made under the Trade Practices Act; and thus be by definition an ‘enactment’ within the meaning of s. 3(1) of the ADJR Act. Section 3(1) relevantly provides that an ‘enactment’ means, amongst other things, an instrument made under an Act.
Although it is not strictly necessary to decide this question with respect to the respondent’s refusal to consent to the withdrawal or variation of the Undertakings and their amendment by deleting paragraph 1.1(a)(iii), it is necessary to decide the question concerning the other decisions challenged in this proceeding.
For a document to be an ‘instrument’ under the ADJR Act, it must derive its force or effect from the terms of an Act. It must also have the capacity to affect legal rights and obligations: Chittick v Ackland at 262-264; General Newspapers Pty Limited v Telstra Corporation (1993) 45 FCR 164 per Davies and Einfeld JJ. at 170 (Gummow J. agreeing at 194). See also Australian National University v Lewins (1996) 138 ALR 1 per Keifel J. at 9-10 and Lehane J. at 16.
The Undertakings were given ‘to address the Commission’s concerns’ about the effect of the merger on the supply of petroleum products to independent wholesalers and retailers, and otherwise (see the matters appearing under the heading ‘Background’ in the Undertakings).
The primary, if not sole, purpose of the Undertakings was to allay these concerns of the respondent and to gain acceptance by the respondent of them under s 87B(1). The possible contravention of s 50 of the Act was central to the respondent’s concerns. The respondent has several powers in relation to contraventions of s 50, including the right to seek injunctive relief under s 80 before or after the contraventions have occurred; to sue for the recovery on behalf of the Commonwealth of a pecuniary penalty (ss 76 and 77); and to seek orders from the Court for divestiture of shares or assets acquired in contravention of s 50. Thus, the Undertakings were given for the purposes of s 87B in connection with matters in relation to which the respondent has powers or functions under the Act.
That the Undertakings were given for the purposes of s 87B is also demonstrated by the fact that the respondent may apply to the Court or an order under s 87B(4) if the respondent considers that the giver of the Undertakings has breached any of its terms. In that event, the Court may make orders of the kind referred to in s 87B(4), namely:
'(4) If the Court is satisfied that the person has breached a term of the undertaking, the Court may make all or any of the following orders:
(a)an order directing the person to comply with that term of the undertaking;
(b)an order directing the person to pay to the Commonwealth an amount up to the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach;
(c)any order that the Court considers appropriate directing the person to compensate any other person who has suffered loss or damage as a result of the breach;
(d)any other order that the Court considers appropriate.'
The Undertakings owe their force and effect to s. 87B of the Trade Practices Act. They have the capacity to affect legal rights and obligations; and in fact do affect them.
The Undertakings answer the description of an ‘instrument’ made under the Trade Practices Act.
The other decisions challenged in the application (i.e. other than the decisions to refuse to allow withdrawal or variation or amendment of the Undertakings) are the following (I use the numbering adopted in the application for an order of review):
(2) the decisions not to continue to renegotiate or reopen negotiations in good faith with the applicant for the amendment or revocation of the Undertakings to the extent that they require the applicant to offer to sell the Spotswood Terminal (see paragraph 9.1 of the Undertakings);
(3) the decision not to appoint or agree to the appointment of an Independent Dispute Resolution Advisor under paragraph 8.5 of the Undertakings;
(4) the decision that there was no detriment to the competitive position of the applicant likely to result from the sale of the Spotswood Terminal in the circumstances which had by then arisen (ie. on or about 11 September 1996) (paragraph 9.1 of the Undertakings); and
(5) the decision that the respondent would not relieve the applicant of its obligations or offer to sell the Spotswood Terminal in accordance with the Undertakings.
The decision (2) above is a reviewable decision. It concerns paragraph 9.1 of the Undertakings, and is a refusal to do what the paragraph requires the respondent to do (whether the factual basis for the making of the decision exists does not call for this Court’s decision; as the only question presently under consideration is the technical question of whether the decision was made under an enactment.) The decision was made under the Undertakings (paragraph 9.1) and was therefore made under an enactment for the purposes of the ADJR Act.
Decision (3) above is a reviewable decision. It arises directly from paragraph 8.5 of the Undertakings. It was a decision made under the Undertakings and has the necessary quality of finality about it.
Decision (4) above arises from paragraph 9.1 of the Undertakings. But the respondent’s finding of no detriment is not a final decision in the sense addressed by Mason C.J. in Bond. It is not the last step in the fulfilment of an obligation imposed by the Undertakings; it is a step on the road to enlivening the obligations imposed by paragraph 9.1 to review the relevant Undertakings and negotiate in good faith their amendment or revocation.
The decision 5 above is really a restatement of the principal decision dealt with earlier, so it does not call for separate consideration.
The objection to competency must be dismissed except with respect to the decisions (4) and (5) above.
There should be no order for costs of either party of the motion for extension of time. The applicant was seeking an indulgence; but it should not have to pay the respondent’s costs since the respondent’s opposition to the extension has been unsuccessful.
The respondent should pay two-thirds of the applicant’s costs of the objection to competency including reserved costs, if any. The applicant has largely succeeded. Little time was spent on decisions (4) and (5) above.
The Court makes the following orders:
(1) that the time within which application may be made to the Court for an order of review of the decisions and conduct of the respondent made or engaged in on or about 24 September 1996 and 11 or 12 September 1996, be extended to 2 November 1996;
(2) that the application for an order of review filed by the applicant on 1 November 1996 shall be deemed to be the due filing of such an application;
(3) that the objection to competency be upheld with respect to decisions and conduct numbered (4) and (5) in the application for an order of review; but otherwise be dismissed;
(4) that there shall be no order for costs of either party of the motion for extension of time;
(5) that the respondent shall pay two-thirds of the applicant’s costs of the objection to competency including reserved costs, if any.
I hereby certify that this and
the preceding thirty-seven (37)
pages are a true copy of the
reasons for judgment herein of
the Honourable Justice Lockhart.Associate
Dated: 10 March 1997
0
15
0