Australian Steel Company (Operations) Pty Ltd v Sec Victoria & Anor

[2006] HCATrans 157

[2006] HCATrans 157

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M193 of 2003

B e t w e e n -

THE AUSTRALIAN STEEL COMPANY (OPERATIONS) PTY LTD

Plaintiff

and

STATE ELECTRICITY COMMISSION VICTORIA

First Defendant

ORIGIN ENERGY ELECTRICITY LIMITED

Second Defendant

Office of the Registry
  Melbourne  No M159 of 2004

B e t w e e n -

ORIGIN ENERGY ELECTRICITY LIMITED

Plaintiff

and

STATE ELECTRICITY COMMISSION OF VICTORIA

Defendant

Summonses

KIRBY J

TRANSCRIPT OF PROCEEDINGS

FROM MELBOURNE BY VIDEO LINK TO SYDNEY

ON MONDAY, 27 MARCH 2006, AT 10.03 AM

Copyright in the High Court of Australia

__________________

MS M.M. GORDON, SC:   May it please the Court, I appear with my learned friend, MS K.L. WALKER, for the plaintiff in M193, which is the first proceeding, your Honour.  (instructed by Arnold Bloch Leibler)

MR J.E. MIDDLETON, QC:   If your Honour pleases, I appear with my learned friend, MR M.K. MOSHINSKY, for the State Electricity Commission of Victoria, the first defendant in No M193 of 2003, and is the defendant in M159 of 2004.  (instructed by Victorian Government Solicitor)

MR J.B.R. BEACH, QC:   If your Honour pleases, I appear for Origin Energy with MS K.L. EMERTON.  It is the second defendant in proceeding M193 of 2003 and the plaintiff in proceeding M159 of 2004.  (instructed by Blake Dawson Waldron)

HIS HONOUR:   Is there any representation for Powercor?

MS GORDON:   No, there is not, your Honour.

HIS HONOUR:   Should I not hear what they have to say, if anything, in response to a summons?

MS GORDON:   The position is, your Honour, they were served with a copy of the application at the end of last year, so in that sense the application for joinder proceeds in the usual form.

HIS HONOUR:   Yes, but were they aware of the summons before the Court this morning?

MS GORDON:   My instructions are they were issued with the summons which was issued on 10 October 2005.  They were not told the matter had been listed for hearing this morning.  I understand from my learned friend Mr Beach that he has some information in relation to that matter.

HIS HONOUR:   I will hear what Mr Beach has to say.

MR BEACH:   Your Honour, Origin’s solicitors have been in touch with Powercor and Powercor’s legal representatives.  I think it is fair to say that it is likely that I will ultimately receive a brief to also act for Powercor.  They are aware of the proceedings this morning.  They have deliberately chosen not to attend this morning, presumably on the basis that Origin’s position will sufficiently overlap with their position, certainly for the purposes of this morning’s directions hearing.

HIS HONOUR:   On that basis I am content to proceed for the time being anyway.  Normally one likes to hear what a party who is sought to be brought into Court has to say either for or against that course, but at the moment we will just proceed and I will then give some further thought to that question later.

MS GORDON:   If your Honour pleases.  Towards the end of Friday we had arranged to be sent to the Court some minutes of proposed orders which are the subject of agreement between the plaintiff and the first defendant in M193 and which have been the subject of discussion also with Mr Beach’s client.  Has your Honour been provided with a copy of that facsimile?

HIS HONOUR:   I have a document which I was handed about half an hour ago by the Registry which is in M159 of 2004.

MS GORDON:   There is also a set of orders sent to your Honour’s office last Friday in M193.  They were being sent under cover of a letter from my instructors, Arnold Bloch Leibler.

HIS HONOUR:   Yes, I have a minute of proposed orders in M193.  Do I understand that that indicates that as between the parties the parties are content that the matter should proceed in this Court and should be supplemented by a special case which separates and tenders to the Full Court of this Court the constitutional question which the plaintiff wishes to argue?

MS GORDON:   Yes.  The position is, your Honour, that those orders are agreed subject to two changes I will take you to in a moment between the plaintiff and the first defendant, and the second defendant neither opposes nor consents to them.  The effect of them is to enable pleadings to close and, as your Honour has pointed out, for a special case to be formulated and the subject of discussion between the parties, the matter may come back before your Honour for further directions.

HIS HONOUR:   It is not entirely a matter for the parties themselves.

MS GORDON:   I understand, your Honour.

HIS HONOUR:   The Court has to consider whether or not it is appropriate for the matter to proceed in this Court or whether the appropriate order is to remit the proceedings to the Federal Court.  I must say to you, Ms Gordon, that having read the papers and the submissions, my original impression was that if there is an outstanding factual question which relates to the issue of novation, then ordinarily that question, if it be necessary to the determination of the matter, would be remitted to another court.  That would be the course that I would be inclined to take, so I would like to be satisfied that if it is necessary to join another party in these proceedings, that that necessity arising out of, as I understand it, the question of the novation of contractual arrangements between the parties, if that is a necessary question, why that question should not or the whole proceedings should not be remitted to another court in order that that question be determined first.

MS GORDON:   There are two answers I may make to that, your Honour.  The first is this, that the concept that pleadings will close will determine the extent to which, if any, there is any dispute about that novation question.  That is the reason why it has been the subject of discussion and agreement in large part that the matter should proceed in that way.

The second is that, putting to one side the novation question, even if it was to remain in dispute, there would remain before this Court an issue about the constitutional validity of the smelter reduction amount that would be required to be determined, in our submission, regardless of the novation question.  That is another reason why it is proposed that we put forward the special case to deal with that question in order for the parties to consider it.

HIS HONOUR:   But if that is so, then the constitutional question could proceed on the present pleadings as between the present parties without the necessity to join another party who is not before me and whose defences I do not know.  If those defences were to raise a factual question, I have to say to you quite bluntly that that is a question which first would not in my present view be appropriate to be determined by the High Court and, second, it would not be appropriate for the High Court to leave that matter outstanding if it was truly a necessary matter for determination to reach the constitutional question.

On that footing my immediate inclination in reading the papers was that the whole matter should be remitted to another court in order that all factual matters should be disposed of.  However, I would not have that view if as between Powercor and the other parties there was no defence or disagreement as to the factual questions that would allow the whole matter to be determined in the High Court.

MS GORDON:   As I said to your Honour, the parties presently propose the matter proceed in the manner outlined in the minutes to address both of those concerns.  The plaintiff’s position remains that there will be a constitutional question regardless of the form of it, in the sense of regardless of the dealing with the novation question.  In those circumstances the appropriate place for that matter to be resolved is in this Court.  But we have heard what your Honour has had to say about that matter.

HIS HONOUR: Is it really appropriate that it should be determined in this Court? I know the meandering course of the Court’s jurisprudence over the decades in the issue of section 90 of the Constitution, but the Court did resolve that question in the Ha Case.  Would one not ordinarily resolve such questions and simply leave it to intermediate courts or other courts to apply the jurisprudence of this Court reserving this Court’s part in any such matters to issues of dispute that still then remain or issues of constitutional dispute that are appropriate to be dealt with by the High Court?

MS GORDON:   It is submitted that there is a constitutional question here.  It is that which is identified in the statement of claim as proposed to be amended.  That is an issue which this Court, which is the constitutional court, should address.  It is true that Ha took the jurisprudence to a very step down the road but it is submitted having regard to the nature of the allegation, it is appropriate that this Court be the court to determine it.  What is proposed in relation to the matters of procedure is to facilitate the Court’s consideration of whether or not it should take that issue.  As the parties have set out in the minutes of proposed orders, those orders are an attempt by them in order to identify and narrow the issues so that the issue is one which is appropriate to stay in this Court.

HIS HONOUR:   Essentially my difficulty when I read the papers was that you say – and it is in paragraph 4 of the outline of plaintiff’s submissions – that:

there is a question as to Powercor’s liability to TASCO for moneys paid by TASCO to Powercor under the Sale Agreement.  Powercor is thus necessary for the determination of these proceedings.

The difficulty I had in reading that is if Powercor is necessary for the determination of the proceedings and if its proper part in the proceedings is dependent on the resolution of a factual question, a mixed question of fact and law, namely the effect of the novation, and if that is a step necessary to your reasoning towards the constitutional question, then my reaction was that there is no way that the High Court would become involved as a first instance court to resolving those factual questions.  Ordinarily they would be remitted to another court.

MS GORDON:   We understand that was the point that you were seeking to raise, your Honour.  That is why the minutes of directions propose there be closed off pleadings in order to determine whether or not that remains a live issue.  Powercor is a necessary party for the reasons set out in those orders at the moment but it is not essential for the determination of the constitutional question.  That raises a separate question about whether or not they are a necessary and proper party for the proceedings generally.  We understand that that is the position that has to be rectified at the outset.

HIS HONOUR:   Can I explain my concern.  When I first sat in the Court of Appeal I was generally favourable to severance of issues and the resolution of issues which if resolved in a particular way would terminate the entire proceedings.  Justice Mahoney, who sat with me, was not in favour of that course and pointed to the fact that it often led to fragmentation, to separate appeals, to challenges and so on.  I came over the years to see that there was a lot of wisdom in Justice Mahoney’s position.

In this Court, if matters are remitted to another court, they not only resolve factual questions and the law on subsidiary questions, but sometimes they lead to matters going away and this Court does not have to be determined.  They mean that this Court has the reasons of another court disposing of all the issues and refining them and presenting them in a precise way for consideration.  They give parties rights of appeal to determination of subsidiary issues which they lose if they are heard in this Court and they prevent the fragmentation of the issues ex post by our resolving questions and then, if there are any residual matters, sending them back to other places. 

So I have come over time to see the wisdom in the view that it is better usually that matters should follow the ordinary course, be resolved completely, factual questions determined, the special leave process taken and this Court given the opportunity in the normal way to act as the final appellate and constitutional court of the nation.  That is why when I saw your paragraph 4 I must admit alarm bells began to ring.

MS GORDON:   I understand your Honour’s concern.  The submission we would make is at the moment that concern is premature.  We would ask the Court to reconsider that question once pleadings have closed in the form which we proposed in the minutes of proposed orders, because it seems to us, in our submission ‑ ‑ ‑

HIS HONOUR:   Is it your understanding that that is the wish of the other parties that are before the Court today?

MS GORDON:   I am sorry, your Honour, I missed that question.

HIS HONOUR:   Is it your understanding that that is the unanimous wish of the present parties in the proceedings?

MS GORDON:   It is by consent with the first defendant and the second defendant neither opposes nor consents to it.  In other words, their position is it should proceed in that way.

HIS HONOUR:   So effectively I would simply be making the consent orders and postponing the issue of remitter to a later stage when I would know better what the refined issues were.  At that stage that would tender the problem that I have exposed to you this morning.

MS GORDON:   Yes, your Honour.

HIS HONOUR:   That is the course that you suggest that I should take?

MS GORDON:   That is our submission, your Honour.

HIS HONOUR:   I would be content to take that course but I have signalled to you my anxiety that if there is an unresolved factual premise at least as between certain parties for this Court embarking upon the constitutional question, then my present inclination subject to hearing all relevant parties would be to either remit that question or to remit the entire proceedings to another court, probably the Federal Court, in order that that

matter should be resolved and the issue then tendered to this Court with all subsidiary questions out of the way and by the usual process, which is the special leave process.

MS GORDON:   If your Honour pleases.  Could I outline to your Honour the proposed minor amendments to the orders which have been the subject of discussion since they were provided to your Honour last Friday.

HIS HONOUR:   Yes.  These are in 193 of 2003?

MS GORDON:   Yes, your Honour.

HIS HONOUR:   Very well.  What are the amendments?

MS GORDON:   Paragraph 4, if we could insert an upper case “A” after the number 4, so it becomes order 4A.  It is then proposed that there be a new paragraph 4B which will read as follows:  “On or before 4.00pm on 10 April 2006, the Second Defendant file and serve any Amended Cross‑Claim.”  Then if you would turn the page to paragraphs 8 and 9 and insert the word “Amended” before “Cross-Claim” in the last line of each of those paragraphs.

HIS HONOUR:   So it reads: 

Defence to the Cross-Claim of the Second Defendant.

MS GORDON:   So it should read:  “serve any Defence to the Amended Cross‑Claim of the Second Defendant.” and in paragraph 9, “Defence to the Amended Cross-Claim.”

HIS HONOUR:   I see.  Yes, very well.

MS GORDON:   They are the only amendments, your Honour.

HIS HONOUR:   I might hear what Mr Middleton has to say about the matters that I have raised with you, if anything.  He may not want to say anything about it insofar as you are simply suggesting that I amend ‑ ‑ ‑

MR MIDDLETON:   If your Honour pleases.  We understand the concern that your Honour has expressed but we thought and joined in consenting to these minutes on the basis that it was preferable that the Court had all the close of pleadings of all the parties before it before a final decision was made as to whether there will be a remittal or special case.  That is the reason we have consented to these minutes.

Our instinctive reaction, I may say to the Court, is that it is a matter which probably will be remitted and may not be a case that can have a special case to the High Court because there will be some factual issues that we have identified already that we propose to raise in our amended pleading and then you have of course the issue of the other party.  We thought at the moment the preferable course and the more logical and procedurally appropriate course was to have all the matters before the Court in the pleadings and then that decision could be made and the arguments agitated before your Honour.

HIS HONOUR:   So that there is no doubt about what I said earlier, if in fact there is a settlement of the factual questions, then, given the importance of the issue raised in the litigation, given the very large amount of money that is involved in it, given the parties and their level of representation before the Court, given the delay that would be involved in remitter, I would be inclined to keep the matter in this Court and have the constitutional question determined by the Court.  My concerns that were earlier expressed related only to whether there is a step on the path to this Court’s economical and appropriate determination of the constitutional question that would involve outstanding factual issues.  If there are, then I think the normal course of this Court would be to remit those issues or the whole proceedings to be determined in another court first.

MR MIDDLETON:   We understand what your Honour has indicated ‑ ‑ ‑

HIS HONOUR:   You are content that I simply make these issues today and then leave the matter over for an interval so that we can see what the added party wishes to say, if anything, once formally joined and whether it has been possible to resolve the factual questions as between all of the parties and whether at that stage a special case can be agreed and then at that point the issue of remitter can be properly decided.

MR MIDDLETON:   That is our approach, your Honour.  I should mention one other factor, however, not only in relation to factual issues that may arise, but of course this is a restitutionary claim and there may be issues that prevent the claim in restitution being successful irrespective of the outcome of the excise point.  That is a matter which will need to be agitated before your Honour when we next come back before you.  As I said, they are matters we reserve our position on:  leave these directions we would propose as they are and then we can see where the land lies when we come back before you.

HIS HONOUR:   Yes, very well.  That would be the course I would be inclined to take at this stage.  Mr Beach, do you have anything to say in addition to what Mr Middleton has said?

MR BEACH:   Just a few matters, your Honour.  It ought not to be assumed that the novation point is a necessary anterior step before you get to the constitutional point.  If there is a novation, then my client, Origin, still has the constitutional point to deal with and so does the SECV.  If there has been no novation, then all that happens is that Powercor then comes into play with the constitutional point.  In terms of the claims against the current two defendants, whichever way the novation question is answered, you will still have the constitutional point.  So the novation point is not an anterior step except in relation to the proposed claim against Powercor.  That is the first point.

The second point is that Ha did not deal with an issue that is relevant to the present case and that is whether electricity is “goods” within the meaning of section 90. That is a very interesting issue and your Honour will appreciate there has been some previous jurisprudence in the trade practices area in that context prior to an amendment to the Trade Practices Act that deems “goods” to include electricity.  So there is an additional constitutional issue in this case that is not raised in Ha.

The third point is yes, Mr Middleton is correct in saying that there are restitutionary issues that arise, but they are all hypothetical until such time as the Court has dealt with the constitutional question. In other words, it is right to say that there are these residual restitutionary issues and whether there has been a change in position but they only arise if there has been a mistake in law, and obviously that depends upon the constitutional question. So there are those additional issues but they are all hypothetical at the present time until the section 90 issue is dealt with.

As I said earlier, it is likely that I will get a brief and have the privilege of also acting for Powercor and I suspect that my submissions on the next occasion are going to be similar to what I have said.  So we in this respect would support the constitutional issue being dealt with first in this Court because, depending upon which way that is dealt with, there will not be any need to address any broader issues on novation or indeed on the restitutionary or discretionary considerations.  So I am a little bit less pessimistic than Mr Middleton about this matter remaining in this Court and what I would say is that I would be more optimistic than Mr Middleton on any issue, your Honour.

HIS HONOUR:   I have learned from experience that you are an optimistic advocate.

MR BEACH:   The other matter, your Honour, is that there was a set of directions submitted to your Honour this morning in M159 of 2004.

HIS HONOUR:   Yes, I received those.

MR BEACH:   Those directions are put by the two parties to that proceeding as consent orders, so if your Honour could also make those orders as well.

HIS HONOUR:   Yes.  You are content that I make those orders, Mr Middleton?

MR MIDDLETON:   Yes, I am, your Honour.

HIS HONOUR:   In matter No 193 of 2003 I make the orders contained in the agreed minute of proposed orders which I have amended in terms that counsel for the plaintiff has asked.  I initial that document.  The orders will be made in accordance with its provisions.  Necessarily, I do not at this stage determine whether the proceedings, or any part of the proceedings, should be remitted to another court.

In matter No 159 of 2004 I make orders in accordance with the draft minutes of order which have been sent to the Court.  They too are agreed to by both parties.  I initial the draft minutes of order.  The orders of the Court will be in accordance with those draft orders.  Necessarily, the making of those orders does not determine the question of whether those proceedings in conjunction with, or separately from, the proceedings in M193 of 2003, should be remitted to another court.  That is a question which will be determined by this Court at a later stage.

As to the fixing of the time for re‑listing of this matter, I think it is better, rather than attempting to do it now, if the parties were to discuss the matter with the Registry when the cases are ready for re‑listing.  A date can then be assigned in accordance with the convenience of the parties and the convenience of the Court.  Costs are reserved.

MS GORDON:   Yes, they are dealt with in paragraph 14.

HIS HONOUR:   I should say, perhaps to you Mr Beach, that I was conscious of the pervasive quality of the constitutional question.  I had not missed that it is in a sense fundamental to all of the proceedings.  However, in a way I was alerted to the issue of remitter by the fact that the plaintiff appeared to say that the joinder of Powercor was necessary for the determination of the proceedings.  If such joinder is dependent on a decision on a factual question, then that may be relevant to the issue of remitter.  I think we have explored all those issues.  They can be explored again, if they are still relevant, when the matter comes back to the Court for directions when the parties have explored the factual issues and also when they have explored whether it is possible to have a special case prepared which tenders the constitutional question in a proper form and on a proper basis to the High Court.

MR BEACH:   Thank you, your Honour.

HIS HONOUR:   I will adjourn the Court now until 11.00 am this morning when another summons will be heard.

AT 10.31 AM THE MATTERS WERE CONCLUDED