CSL Australia Pty Ltd v Minister for Infrastructure and Transport
[2014] FCAFC 10
•26 February 2014
FEDERAL COURT OF AUSTRALIA
CSL Australia Pty Limited v Minister for Infrastructure and Transport [2014] FCAFC 10
Citation:
CSL Australia Pty Limited v Minister for Infrastructure and Transport [2014] FCAFC 10
Appeal from:
CSL Australia Pty Ltd v Minister for Infrastructure and Transport (No 3) [2012] FCA 1261;
CSL Australia Pty Ltd v Minister for Infrastructure and Transport [2013] FCA 152Parties:
CSL AUSTRALIA PTY LIMITED v MINISTER FOR INFRASTRUCTURE AND TRANSPORT and RIO TINTO SHIPPING PTY LTD
File number(s):
NSD 2083 of 2012
NSD 409 of 2013Judge(s):
ALLSOP CJ, MANSFIELD J & RARES J
Date of judgment:
26 February 2014
Catchwords:
ADMINISTRATIVE LAW – temporary shipping licences issued under Coastal Trading (Revitalising Australian Shipping) Act 2012 (Cth) – judicial review of decision to issue varied temporary licence – decision by delegate of the Minister – whether failure to take into account relevant considerations – whether taking into account irrelevant considerations – whether object of the Act is a mandatory consideration – procedural fairness – content of procedural fairness under the Act – whether failure to give an opportunity to consider and make submissions – whether failure to disclose material – irrationality or illogicality – whether delegate misconstrued the Act
STATUTORY INTERPRETATION – objects of the Coastal Trading Act – objects as an aid to interpretation – where objects appear conflicting
STATUTORY INTERPRETATION – object and scope of Pt 4 Div 2 of the Coastal Trading Act
ADMINISTRATIVE LAW – exercise of discretion under s 10(b)(ii) of the Administrative Decisions (Judicial Review) Act 1975 (Cth) – whether s 107 of the Coastal Trading Act provides “adequate review” for the purposes of s 10(b)(ii) of the ADJR Act – discretion to refuse relief under s 39B of the Judiciary Act 1903 (Cth)
Legislation:
Acts Interpretation Act 1901 (Cth) ss 15AA, 15AB
Administrative Appeals Tribunal Act 1975 (Cth) s 32B
Administrative Decisions (Judicial Review) Act 1975 (Cth) ss, 10(2)(b)(ii), 13(1)
Coastal Trading (Revitalising Australian Shipping) Act 2012 (Cth) ss 3, 7, 13, 14, 15, 16, 21, 22, 27-35, 36, 37, 40, 41, 51, 53, 54, 56, 58, 59,61, 62, 63, 76, 77, 83, 107
Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Act 2012 (Cth) Sch 2, Part 3, cl 10, 11, 12, 13(1), 16
Fair Work Act 2009 (Cth)
Federal Court of Australia Act 1976 (Cth) s 25(6)
Federal Court Rules 2011 (Cth) r 30.02
Judiciary Act 1903 (Cth) s 39B
Navigation Act 1912 (Cth) Pt VI
Seafarers Rehabilitation and Compensation Act 1992 (Cth)
Shipping Reforms (Tax Incentives) Act 2012 (Cth)
Shipping Registration Act 1981 (Cth) ss 8, 9, 14, 15A, 15B, 17, 61AA
Shipping Registration Amendment (Australian International Shipping Register) Act 2012 (Cth)
Tax Laws Amendment (Shipping Reform) Act 2012 (Cth)
Workplace Relations Act 1996 (Cth)
Workplace Relations Regulations 2010 (Cth)Cases cited:
Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 applied
Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88 cited
Australian Securities and Investments Commission v DB Management Pty Ltd (2000) 199 CLR 321 applied
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 applied
Civil Aviation Safety Authority v Administrative Appeals Tribunal [2001] FCA 1319; 33 AAR 439 cited
Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 293 ALR 257 applied
Craig v South Australia (1995) 184 CLR 163 applied
CSL Australia Pty Ltd v Minister for Infrastructure and Transport (No 3) [2012] FCA 1261 referred to
CSL Australia Pty Ltd v Minister for Infrastructure and Transport [2013] FCA 152 referred to
Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 197 ALR 389 cited
EL Oldendorff & Co GmbH v Tradex Export SA (The ‘Johanna Oldendorff’) [1974] AC 479 distinguished
FAI Insurance v Winneke [1982] HCA 26; 151 CLR 342 applied
Heydon’s Case (1584) 3 Co Rep 7a (76 ER 637) applied
Kamha v Australian Prudential Regulation Authority [2007] FCA 1422; 98 ALD 49 considered
Kirk v Industrial Court (New South Wales) (2010) 239 CLR 531 applied
Minister v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24 applied
Minister for Immigration and Citizenship v Li (2013) 297 ALR 225 applied
Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 cited
Murphyores Inc Pty Ltd v Commonwealth [1976] HCA 20; 136 CLR 1 cited
Plaintiff M61/2010E v The Commonwealth (2011) 243 CLR 319 applied
Project Blue Sky v ABC [1998] HCA 28; 194 CLR 355 applied
R v Commonwealth Court of Conciliation and Arbitration; ex parte Ozone Theatres (Aust) Ltd [1949] HCA 33; 78 CLR 389 cited
R v Hunt; Ex parte Sean Investments Pty Ltd (1979) 180 CLR 322 applied
R v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327 applied
Swan Hill Corporation v Bradbury [1937] HCA 15; 56 CLR 746 cited
Telstra Corporation Ltd v Australian Competition and Consumer Commission (2008) 176 FCR 153 applied
Telstra Corporation Ltd v Australian Competition Tribunal (2009) 175 FCR 201 applied
Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 cited
Wilson v State Rail Authority of New South Wales (2010) 78 NSWLR 704 referred toDate of hearing: 15 and 16 May 2013 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 392 Counsel for the Appellant: Mr AW Street SC with Mr JS Emmett and M Sech Solicitor for the Appellant: Norton White Counsel for the First Respondent: Dr KA Stern SC with Mr BD Kaplan Solicitor for the First Respondent: Clayton Utz Counsel for the Second Respondent: Dr JG Renwick SC with Mr AM Stewart Solicitor for the Second Respondent: Holman Fenwick Willan
IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NSW DISTRICT REGISTRY
GENERAL DIVISION
NSD 2083 of 2012
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: CSL AUSTRALIA PTY LIMITED
AppellantAND: MINISTER FOR INFRASTRUCTURE AND TRANSPORT
First RespondentRIO TINTO SHIPPING PTY LTD
Second Respondent
JUDGES:
ALLSOP CJ, MANSFIELD J & RARES J
DATE OF ORDER:
26 FEBRUARY 2014
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
Appeal NSD 2083/2012
1. Cross-appeals allowed in part.
2. Declaration 1 made by the Court on 21 November 2012 be set aside.
3. Cross-appeals otherwise dismissed.
4. Appeal allowed in part, with no consequential variation to the orders made by the Court on 21 November 2012.
5. Parties file short submissions on costs within 14 days.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NSW DISTRICT REGISTRY
GENERAL DIVISION
NSD 409 of 2013
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: CSL AUSTRALIA PTY LIMITED
AppellantAND: MINISTER FOR INFRASTRUCTURE AND TRANSPORT
First RespondentRIO TINTO SHIPPING PTY LTD
Second Respondent
JUDGES:
ALLSOP CJ, MANSFIELD J & RARES J
DATE OF ORDER:
26 FEBRUARY 2014
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
Appeal NSD 409/2013
1. Appeal allowed.
2. Set aside orders of the Court on 1 March 2013, and in lieu thereof, order:
(a) dismiss the interlocutory application of the respondent;
(b)order a case be stated for the Full Court as to the decision of the delegate on 14 December 2012 to be heard concurrently with the appeal in appeal NSD 2083 of 2012;
(c) the costs of the proceedings be the parties’ costs in the Full Court.
3. Declare that the decision of the Minister by his delegate made on 14 December 2012 in respect of voyage 120700612 (formerly 1207006007) was affected by an error of law arising from a misunderstanding of the effect of ss 32 and 34 of the Coastal Trading (Revitalising Australian Shipping) Act 2012 (Cth).
4. Respondents pay the appellant’s costs of the appeal
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NSW DISTRICT REGISTRY
GENERAL DIVISION
NSD 2083 of 2012
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: CSL AUSTRALIA PTY LIMITED
Appellant
AND: MINISTER FOR INFRASTRUCTURE AND TRANSPORT
First RespondentRIO TINTO SHIPPING PTY LTD
Second Respondent
JUDGES:
ALLSOP CJ, MANSFIELD J & RARES J
DATE:
26 FEBRUARY 2014
PLACE:
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NSW DISTRICT REGISTRY
GENERAL DIVISION
NSD 409 of 2013
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: CSL AUSTRALIA PTY LIMITED
Appellant
AND: MINISTER FOR INFRASTRUCTURE AND TRANSPORT
First RespondentRIO TINTO SHIPPING PTY LTD
Second Respondent
JUDGES:
ALLSOP CJ, MANSFIELD J & RARES J
DATE:
26 FEBRUARY 2014
PLACE:
SYDNEY
REASONS FOR JUDGMENT
ALLSOP CJ
These are appeals against orders made by two judges of the Court, Robertson J in CSL Australia Pty Ltd v Minister for Infrastructure and Transport (No 3) [2012] FCA 1261 and Katzmann J in CSL Australia Pty Ltd v Minister for Infrastructure and Transport [2013] FCA 152. They concern the operation of the Coastal Trading (Revitalising Australian Shipping) Act 2012 (Cth) (“the Coastal Trading Act” or “the Act”), which was part of a suite of legislation passed by Parliament in 2012, the aim of which was to revitalise the Australian shipping industry by reforms to the coastal trading regime, the creation of an international shipping register and by making various taxation changes and providing fiscal incentives, in respect of the industry. The Act provides for a regime of general and temporary licences for the carriage of passengers and cargo on the coastal trade. Under the regime the Minister is authorised to make decisions about the grant of temporary licences for voyages in respect of which general licence holders are interested. These appeals concern decisions made by the Minister with regard to the grant and variation of temporary licences.
Context
Whilst close examination of the text of the Coastal Trading Act will be necessary, the context of the Act (as part of the suite of legislation) needs to be understood. The following contextual background is to be found in a number of public documents by way of reports of inquiries that are identified below, in the second reading speech to the Bill in March 2012 and in the Revised Explanatory Memorandum to the Act.
The decline in the size, and the deterioration in the state, of the Australian shipping industry and of ships flying the Australian flag have been matters attracting the concern of industry and government for many years before 2012. The decline and deterioration were reflected in decreasing numbers of ocean-going vessels registered on the Australian Ship Register under the Shipping Registration Act 1981 (Cth) (“the SR Act”) and the increasing age of the vessels remaining on the Register.
There were, and always have been, competing economic and social pressures and interests in any policy or policies directed to the shipping industry. Australia has a large export economy of agricultural, mining and industrial exports, for the health of which economy competitive freight rates are essential. With a large coastline and a large continental land mass, coastal shipping is a potentially important means of domestic transport. The development of Australian skills and jobs in the maritime sector provides an important body of national human resources for both peace and war time.
One critical feature of Australian flagged shipping has been its high cost base relative to international competitors, who could run and maintain vessels at a significantly lower cost than could Australian owners and operators.
These forces led, for many years, to the protection of coastal shipping by a system of cabotage whereby Australian-flagged vessels or vessels that paid crew Australian wages were given preference in carriage. To the extent that Australian shippers of cargo (that is the cargo interests) could not obtain coastal carriage on internationally registered vessels, their freight rates were higher than they would have been had such foreign-flagged vessels been available.
Over the years from the 1980s, a number of inquiries were conducted and reports written that were directed at the appropriate governmental policy changes for the revitalisation of a competitive Australian shipping industry.
In the early 1980s, a committee (the Crawford Committee) comprised of shipowner and union representatives recommended a financial package for the industry involving accelerated depreciation of ships that achieved an approved crewing level and an extended investment allowance.
In 1985, the Minister for Transport (the Hon Peter Morris) established a Maritime Industry Development Committee which produced a report focusing on shipboard management and work practices. Legislation was introduced to provide capital assistance in the purchasing of ships.
In 1988, a Shipping Reform Task Force was established by the government to develop a strategy for the development of the industry. Its recommendations dealt with capital grants, accelerated depreciation, and crewing reductions.
In 1994, a taxation rebate scheme was introduced.
In 1996, the taxation rebate scheme, capital grants and accelerated depreciation were abolished. Thereafter, a “Shipping Reform Group” was established by the Minister. It reported in 1997. The recommendations of that group comprised three essential matters: (a) significant labour market reforms to address the very high Australian crewing costs (even by reference to ships using “quality” ship registers such as the Norwegian Second Register); (b) exposure of the industry to international competition by reducing, and ultimately eliminating, cabotage; and (c) taking steps to equalise the competitive position of Australian shipping by setting up a second shipping register (an Australian Second Register) as well as a suite of “reform-linked equity measures” – a PAYE tax rebate, accelerated depreciation, relief in respect of capital gains tax, company tax and payroll tax.
The report of another review was published in 2003, the “Independent Review of Australian Shipping”. The review was undertaken by former transport Ministers (of Liberal/National and Labor party governments) the Hon John Sharp and the Hon Peter Morris. Their recommendations were: (a) changes to the SR Act permitting Australian entities to register ships outside Australia; (b) changes to the taxation legislation concerning the taxation of Australian seafarers earned overseas, and the introduction of a tonnage tax; and (c) the development in Australia of best international practice. The review saw as essential the need for clarity and certainty of government policy and regulation and the development of shipping services at competitive prices. The report also pointed out the deleterious economic consequences for Australia of a weak, declining and uncompetitive shipping industry.
In October 2008, the House of Representatives Standing Committee on Infrastructure, Transport, Regional Development and Local Government published the results of its inquiry into coastal shipping and regulation, entitled “Rebuilding Australia’s Coastal Shipping Industry”. Its recommendations included reform of the regulation of coastal shipping, the development of a national approach to maritime safety, taxation changes, including a tonnage tax and taxation relief for seafarers earning wages off-shore, the reintroduction of accelerated depreciation, national port development, workers compensation reforms, and the creation of a national maritime training authority. The report reviewed the regulatory framework for the coasting trade. It is unnecessary to deal with the operation of the then system in detail. Cargo was shipped around Australia under the regime of Part VI of the Navigation Act 1912 (Cth). Vessels could be licensed thereunder to participate in the coasting trade, whether Australian flagged or not; but operators were required to pay and provide Australian rates of pay and conditions. Ships not licensed under Part VI could participate in the coasting trade by obtaining permits under Pt VI – either single voyage or continuing voyage permits. Ships operating under such permits were not obliged to have crews paid Australian wage rates or provided with Australian conditions. Ministerial Guidelines existed in relation to the issue of such permits.
Different participants in the industry had different views as to the operation of this system. The debate as to the liberality, flexibility, clarity and effectiveness (or otherwise) of the permit system reflected the different economic interests of those in the industry. Importantly, the Committee said the following at [3.28]-[3.31] of its report:
3.28 This debate highlights that fact that the Australian coasting shipping industry would be better served by clearer guidance reflected in the Navigation Act, its regulations and ministerial guidelines.
3.29 The current government’s stated policy is to ensure the competitiveness and sustainability of the coastal shipping sector within Australia’s domestic transport sector. Implicit within this statement is the expectation that when at all possible, Australian ships utilising Australian crew, being paid Australian wages and conditions should be employed in the carriage of domestic cargo, as the Navigation Act originally intended.
3.30 Clarification of the licensing and permitting provisions of Part VI of the Act, so that its language better reflects the Act’s intent, is the first step towards achieving the Government’s policy. This will allow the coastal shipping industry to develop and compete within Australia’s domestic transport sector without facing direct competition from international permit ships, which were intended to fill a capacity gap in the Australian shipping task rather than be utilised in favour of Australian shipping.
3.31 The Committee is aware that in 2000, the DITRDLG completed a review of the Navigation Act 1912. This review did not consider Part VI of the Act. Therefore, the Committee recommends that the Government complete the review of the Navigation Act 1912, and then amend Part VI in order to clarify the language in the Act. This will better align coastal shipping legislation with government’s policy to foster a viable coastal shipping industry in a competitive domestic transport sector.
(emphasis added)
The Committee continued at [3.35]:
The Ministerial Guidelines will then need to be tightened so that permits are once again used by shippers as a means of coping with fluctuations in demand, and short periods of increased demand where existing ship capacity falls short.
The Committee report then turned to recommendations concerning a second register, financial incentives, a possible tonnage tax, accelerated depreciation, use of visas for foreign crews, workers compensation reforms, and wages and conditions under the Workplace Relations Act 1996 (Cth).
After this review, the Minister for Transport convened a Shipping Policy Advisory Group comprising shippers, shipowners and unions to advise on implementation of the recommendations of the 2008 review. A discussion paper was released in 2010.
The discussion paper contained a section on the regulatory environment. The proposal was for general unlimited licences for Australian operated and flagged vessels and temporary licences for time limited access. The discussion paper stated:
This will be based on an assessment of a business case, which supports the long term interests of a competitive Australian Shipping Industry, including explicit consideration of the employment of Australian seafarers and numbers of vessels in the Australian trading fleet, and taking into account the proposed operations of both the individual ship and the applicant’s broader fleet.
…Regardless of the final arrangements, the overriding test for the issue of Temporary Licences will be that applicants must demonstrate that granting the licence is in the long-term interests of a sustainable and competitive Australian shipping industry.
The reference to the “Australian shipping industry” is to be understood as including not only ships registered on the general register, but also those to be registered on the proposed Australian International Shipping Register also addressed in the discussion paper.
In late 2011 and early 2012 exposure drafts of legislation were released for public discussion, and detailed discussion with industry occurred.
The above very general outline, taken from the reports of the various bodies that have investigated the Australian shipping industry over the years, reveals the recognised problems with the Australian shipping industry: a declining and ageing fleet, the lack of a fiscal environment conducive to investment in shipping, high labour costs, and a lack of flexibility in crewing options. The competing interests of shippers (cargo interests) for the lowest freight rates and of remaining shipowners for freight rates high enough to provide a return above a high domestic cost base, in the context of the national interest in the development of jobs in an industry vital to an efficient domestic transport system, are self-evidently not apt for easy solution. By 2012, the problems and competing interests had concerned policy makers and governments for over 30 years.
It was in this broad context that in 2012 a suite of legislation was introduced into and passed by the Australian Parliament. The above context can be seen as the broad mischief against which the legislation is to be construed and interpreted.
The 2012 legislation
The suite of legislation in the 2012 reforms comprised the following:
(a) the Coastal Trading Act and the Coastal Trading (Revitalising Australian Shipping) (Consequential Amendments and Transitional Provisions) Act 2012 (Cth) (“the Transitional Provisions Act”);
(b) the amendments to the SR Act to create an Australian International Shipping Register by the Shipping Registration Amendment (Australian International Shipping Register) Act 2012 (Cth);
(c) taxation reforms to introduce exemptions for income tax for ship operators, accelerated depreciation, rollover relief concessions, changes to royalty withholding tax and other tax changes in the Tax Laws Amendment (Shipping Reform) Act 2012 (Cth) and the Shipping Reforms (Tax Incentives) Act 2012 (Cth). No tonnage tax was introduced.
Earlier, in 2010, the regulations under the Fair Work Act 2009 (Cth) were amended to require all vessels operating in the coasting trade (including international vessels) to comply with the Fair Work Act, and pay Australian wages (even to foreign crew).
On 22 March 2012, the Minister for Infrastructure and Transport (the Hon Anthony Albanese MP) spoke on the second reading of the suite of bills (that he called the government’s “Stronger Shipping for a Stronger Economy Reforms”) in the House of Representatives. I am conscious of the limitations of the use of second reading speeches in the construction and interpretation of the words employed by Parliament in its function of law-making. This is especially so for present purposes in the light of the amendments to s 3(1) of the Act after the second reading speech to include paras (e) and (f). Nevertheless, as an aid to understanding the context and mischief to which I have already referred, the speeches are valuable.
The Minister referred to the decline in fleet numbers, the large maritime task undertaken by foreign ships, the need to act to prevent the Australian shipping industry dying. He said:
This package is an integrated suite of reforms which address fiscal, regulatory and workforce aspects of our nation’s shipping industry.
This is the most far-reaching overhaul of the Australian shipping industry since 1912.
These reforms level the playing field and provide the industry with a stable fiscal and regulatory regime to encourage investment and promote our international competitiveness.
…
The lack of an Australian shipping industry that can compete in the international marketplace is a lost national opportunity.
…
I previously stated that this bill is the most significant overhaul of our coastal trading arrangements since they were introduced early last century.Back in 1912 when those provisions were debated in the House the role of British-owned shipping companies in the Australian coastal trade was the subject of much discussion.
One hundred years later, the debate has moved on.
We have one of the most liberal coastal trading regimes in the world.
Unlike the United States, Canada or various European Union countries, Australia recognises that there is a legitimate role for foreign flagged vessels in our domestic shipping industry.
Under the provisions of this bill this will not change.
Nothing in this package of bills closes our coast.
However, we are making transparent the decision-making processes which determine a foreign vessel’s participation in Australian domestic shipping.
In support of this, a new three-tier licensing system will replace the antiquated system of licenses and permits.
…
(emphasis added)He referred to general licences, temporary licences and emergency licences, and continued.
In creating a temporary licence we are moving away from the current system where companies apply on a permit by permit basis.
However, we have maintained the flexibility provided by the permit system, through the creation of a licence variation process.
Temporary licence holders will be able to vary their licence to increase the number of voyages that will be undertaken or to vary the details of those voyages that have already been authorised.
General licence holders will have the opportunity to nominate for these voyages.
Again, this will be an open and transparent decision-making process.
…
Transparency is a cornerstone of this new model and the bill provides for strengthened reporting and publishing arrangements, to enable all industry participants to better understand the shipping market and to support more informed decision making.Commercially sensitive information will not be released.
…
There has been some debate regarding the industrial arrangements for vessels engaged in the domestic coastal trade.This government made the decision in 2009 that vessels operating in the coastal trade will be subject to the provisions of the Fair Work Act.
This was implemented through the Fair Work Act Regulations 2010.
It is this government’s policy that this scope of coverage will not change.
These vessels are operating in the domestic economy and these seafarers are entitled to be paid Australian wages.
This bill is the key to the regulatory framework – a framework that supports Australian coastal shipping, while allowing for the participation of foreign vessels.
It is a framework that will enhance our participation in international trade and underpin the Australian industry with generous tax concessions that level the playing field between Australian shipping and its international competitors.
He then referred to worforce skill development and the establishment of the Maritime Workforce Development Forum.
The final element of the reform package is labour productivity.
We are committed to aligning Australian productivity practices with the best in the world.
To do this, we will need a compact between industry and unions.
This compact must include changes to work practices, a review of safe manning levels and the use of riding gangs on coastal vessels.
This compact is essential to the reform agenda.
Negotiations between industry and the unions are progressing. Before I close, I would like to thank those in the industry who share our vision for a revitalised Australian shipping industry – the ship owners, unions and shippers who have worked constructively with the government since 2007 to develop this package.
This package of legislation is the product of a long and thorough process of consultation and review.
A number of considerations of context and text should be considered and borne in mind in the construction and interpretation of the Coastal Trading Act. The task is to ascribe meaning to the text chosen by Parliament. Context is invaluable in order to understand the background, including the mischief, of the legislation. It is an error, however, to divine a chosen political, social or economic policy from historical contextual comments and infuse the chosen text with such chosen assumptions. This is especially so in a subject matter the regulation of which may be directed or influenced by diverse factors, which diversity reflects a range of economic interests. Nevertheless, what is clear from the public and Parliamentary debate over 30 years is a concern to revitalise an important industry by the introduction of features that were seen as likely to stimulate an Australian shipping industry: an appropriate regulatory framework, labour market reforms, a new international shipping register and taxation reform and incentives.
The Coastal Trading Act
In discussing the provisions of the legislation in question, I propose to make some remarks about the meaning and scope of some of the important provisions. Those remarks are made with the benefit of the arguments of the parties in both appeals.
The object (in the singular) of the Coastal Trading Act is to provide a regulatory framework for coastal trading that does six things set out in paras (a)-(f) of s 3(1):
(a)promotes a viable shipping industry that contributes to the broader Australian economy; and
(b)facilitates the long term growth of the Australian shipping industry; and
(c)enhances the efficiency and reliability of Australian shipping as part of the national transport system; and
(d)maximises the use of vessels registered in the Australian General Shipping Register in coastal trading; and
(e) promotes competition in coastal trading; and
(f)ensures efficient movement of passengers and cargo between Australian ports.
The multifactorial aims of the regulatory framework may, to a degree, have some tension amongst them, for example, the promotion of competition in coastal trading with the maximisation of the use of General Shipping Register vessels. The notion of promotion of competition in coastal trading has a number of elements. One aspect, referred to in the report of the Parliamentary Standing Committee in 2008 is the competition between coastal shipping and road and rail transport in the domestic transport sector. This aspect is reflected also in para (c) of s 3(1). This perspective of competition would or might see (as stated at [3.29] of the Standing Committee’s Report) Australian ships, using Australian crew being employed “when at all possible” in the carriage of domestic cargo. The promotion of such domestic competition would or may see Australian ships being given the right to carry coastal trade cargo, even in the face of cheaper (or more “competitive”) freight alternatives from foreign ships. In other words, the promotion of domestic “competition” may not lead to the lowest freight rate for an Australian shipper, when set against foreign-flagged competition. That said, the reforms to the taxation system, the setting up of an Australian International Register and the pressure of foreign-flagged vessels having the opportunity to participate in the coasting trade would or may be seen to promote the efficiency of Australian shipping and to foster a greater capacity to compete realistically with foreign-flagged shipping.
The above considerations and the broad context that I have described lead one to think that the framework to be provided by the Coastal Trading Act is likely to be one in which a significant degree of latitude is given to the government of the day to administer any coastal trading regime informing itself of contemporary economic and social conditions and any relevant policy issues arising therefrom, by reference to up-to-date data; rather than a framework fixed in an inflexible way by reference to given or enshrined factors. Such administration of the regime would be a subject apt for the expression of government policy, conforming with the object of the Act, which policy could be publicly known.
The object set out in s 3(1) is sought to be achieved by the means identified in s 3(2):
(a)ensuring that a vessel that is used to engage in coastal trading under a general licence has unrestricted access to Australian waters;
(b)ensuring that a vessel that is used to engage in coastal trading has access to Australian waters under a temporary licence that is limited in time and to voyages authorised by the licence;
(c)ensuring that a vessel that is used to engage in coastal trading under an emergency licence has the access to Australian waters required to deal with the emergency to which the licence relates.
The phrase “coastal trading” is defined in s 7 of the Act, in a way that does not differentiate between Australian registered shipping and foreign-flagged shipping.
General licences
Part 4 Div 1 deals with general licences: Pt 4 Div 2 with temporary licences; and Pt 4 Div 3 with emergency licences. Unless authorised by a licence, engagement in the coasting trade gives rise to liability for a civil penalty: s 83.
A general licence authorising a vessel to engage in coastal trading may be granted to the owner of, or other person relevantly interested in, a vessel registered on the Australian General Shipping Register: s 13. Each application must relate to only one vessel. All seafarers on a general ship must be Australian citizens, or permanent residents, or holders of a visa permitting performance of the work he or she does on the vessel. An application may be varied: s 14. In deciding upon an application, the Minister (under s 15 (2)) may have regard to:
(a)evidence that the vessel is registered in the Australian General Shipping Register;
(b)a statement that each seafarer working on the vessel, when the vessel is used to engage in coastal trading:
(i) is or will be an Australian citizen; or
(ii) is or will hold a permanent visa; or
(iii)is or will hold a temporary visa that does not prohibit the seafarer from performing the work he or she performs on the vessel;
(c) such information as is prescribed by the regulations;
(d) the application fee prescribed by the regulations.The Act provides for prompt decision-making by the Minister in relation to such a licence - within 10 business days after the making of the application: s 15(3). In the absence of a decision within this time frame, the general licence is taken to be granted for five years: s 17, being the maximum period for a general licence: s 16(1). Once a general licence is granted, information about the licence and the licence must be placed on the Departmental website: s 16(2).
A general licence is subject to the conditions imposed by s 21; and the Minister may impose additional conditions on a general licence: s 22, as long as such conditions are not inconsistent with the conditions under s 21, which are:
(a)the vessel to which the licence relates must continue to be registered in the Australian General Shipping Register;
(b)when the vessel is used to engage in coastal trading, each seafarer working on the vessel must:
(i) be an Australian citizen; or
(ii) hold a permanent visa; or
(iii)hold a temporary visa that does not prohibit the seafarer from performing the work he or she performs on the vessel;
(c)when the vessel is used to engage in coastal trading, a copy of the licence must be displayed on the vessel in a conspicuous place accessible to all persons on board;
(d)the holder of the licence must comply with the reporting requirements under section 27;
(e)the holder of the licence must comply with any other condition prescribed by the regulations.
Each financial year, a general licence holder must report to the Department upon the numbers of passengers carried and the ports of embarkation, and disembarkation; and upon cargo carried – kinds, volume, loading and unloading ports: s 27. The Minister is to place on the Departmental website a summary of all such reports: s 27(4).
Temporary licences
Section 28 (in Pt 4 Div 2) provides for the application for temporary licences. An owner, charterer, master or agent of a vessel, or a shipper may apply for a temporary licence to enable a vessel to engage in coastal trading over a 12 month period. Section 28(2) identifies the following relevant information that must be specified in the application in (a)-(h).
(a)the number of voyages, which must be 5 or more, to be authorised by the licence;
(b) the expected loading dates;
(c) the number of passengers expected to be carried (if any);
(d) the kinds and volume of cargo expected to be carried (if any);(e)the type and size, or type and capacity, of the vessel to be used to carry the passengers or cargo (if known);
(ea) the name of the vessel (if known);
(f)the ports at which the passengers or cargo are expected to be taken on board;
(g)the ports at which the passengers are expected to disembark or the cargo is expected to be unloaded;
(h)such other information as is prescribed by the regulations.
Once such an application is made, the Minister must within two days publish the application on the Departmental website (deleting confidential information or personal details); and the Minister must notify every general licence holder and any body or organisation that the Minister considers would be directly affected, or whose members would be directly affected by the grant of the application. Thus, not only all general licence holders, but also such bodies as maritime unions and shipper associations would be notified.
Section 31 then provides for a response (a “notice in response”) by a general licence holder within two days of the publication of the temporary licence application on the website. The contents of that notice in response are provided for by paras (a), (b) and (c) of s 31, as follows:
(a) stating that:
(i)all of the passengers specified in the application could be carried under the holder’s general licence; or
(ii)all of a particular kind of cargo specified in the application could be carried under the holder’s general licence; or
(iii)all of the passengers and all of a particular kind of cargo specified in the application could be carried under the holder’s general licence; or
(iv)all of the passengers and all of the cargo specified in the application could be carried under the holder’s general licence; or
(v)one or more voyages specified in the application could be undertaken under the holder’s general licence; and
(b)if subparagraph (a)(i), (ii) or (iii) applies—identifying which passengers or cargo could be so carried; and
(c)if subparagraph (a)(v) applies—identifying which voyage or voyages could be so undertaken.
Sections 32 and 33 provide for the process after a notice in response. Within two days, the applicant for the temporary licence is given a copy of any notice in response: s 32(1). Within a further two days, the applicant for the temporary licence must undertake negotiations with each general licence holder who gave a notice in response and notify the Minister in writing of “the outcome of the negotiations”: s 32(2). The nature of the negotiations is described in s 32(3) and (4) as follows:
(3)For the purposes of paragraph (2)(a), the applicant must negotiate, with each holder of a general licence who gave a notice in response, in respect of the following matters:
(a) whether, and to what extent, the vessel authorised by the holder’s general licence is equipped to carry the passengers or cargo specified in the application;
(b) whether those passengers or cargo can be carried in a timely manner.
(4)If an application relates to the carriage of cargo, negotiations under subsection (3) in relation to the application must have regard to the requirements of the shipper of the cargo.
The word “negotiate” in s 32(3) can be understood as “confer for the purpose of arranging some matter by mutual agreement”: Shorter Oxford English Dictionary. The subject matter of the negotiations comprises the two matters in subs (3): the suitability of the vessel for carriage of the cargo, and timely carriage. The requirements of the shipper of the cargo mentioned in subs (3) relate to the matters the subject of the negotiation: suitability of the vessel and timeliness of carriage. This is because the negotiations under subs (3) (that cover only those two matters) must have regard to the shipper’s requirements, implicitly in respect of those important matters. Any requirements (or desires) of the shipper as to freight rates or as to special clauses in the contract of carriage (other than such as deal with the subject matter of the negotiations in paras (a) and (b) of s 32(3)) do not fall within the phrase “requirements of the shipper in s 32(4). Thus, the commercial attractiveness, or otherwise, of the carriage by the general licence holder, whether because of freight rates or other commercial considerations, is irrelevant to the negotiations mandated by the Act. Those negotiations concern the subject matter in paras (a) and (b) of s 32(3).
Section 33 provides for comments by third parties, as follows:
Within 2 business days after the day the application is published under section 30, written comments on the application may be given to the Minister by:
(a) a person (other than the holder of a general licence) who would be directly affected if the application were, or were not, granted; or
(b) a body or organisation that would be directly affected, or whose members would be directly affected, if the application were, or were not, granted.
Section 34 then provides for a decision by the Minister. Subsection (2) sets out the matters to which the Minister may have regard:
(a)whether the applicant has previously held, or applied for, a temporary licence;
(b) whether the applicant has previously held a licence that was cancelled;
(ba)if the application relates to cargo and a vessel registered in the Australian International Shipping Register—both:
(i) whether the applicant owns the cargo and the vessel; and
(ii) whether the cargo is to be carried on the vessel;
(c)whether the applicant has been issued with an infringement notice under this Act;
(d) any written comments received by the Minister in relation to the application;
(e) any report given to the Department by the applicant under section 62;
(f) the object of this Act;
(g) any other matters the Minister thinks relevant.Subsection (3) sets out the matters to which the Minister must have regard if there has been a notice in response:
(a) the outcome of negotiations, as notified by the applicant under paragraph 32(2)(b);
(b) whether, and to what extent, the vessel authorised by the holder’s general licence is equipped to carry the passengers or cargo specified in the application;
(c) whether those passengers or cargo can be carried on the expected loading dates or within 5 days before or after the relevant date;
(d) if the application relates to the carriage of cargo—the reasonable requirements of a shipper of the kind of cargo specified in the application.Subsection (3) is substantially directed to the negotiations that were mandated under s 32. Paragraph (a) deals with the outcome of those negotiations; para (b) deals with the suitability of the ship, the subject of the negotiations in s 32(3)(a); para (c) deals with a central aspect of timeliness of carriage that was the subject of negotiation in s 32(3)(b) – the loading dates; and para (d) deals with reasonable requirements of a shipper of the kind of cargo specified in the application. The requirements of the shipper to which the negotiations under s 32(3) must have regard are substantially directed to the suitability of the vessel and timeliness of carriage. Such matters, of course, would be affected by the kind of cargo. A ship may not be equipped for cargo of a particular kind or may not be able to carry a kind of cargo in a timely manner that is critical for the kind of cargo in question. The coherence of the subjects in s 34(3) with the subjects of negotiation in s 32(3) and (4), and the central place of suitability of a vessel for carriage of specified cargo and timeliness of carriage in shipping make it understandable that these matters are the subject of compulsory negotiations in s 32 and of mandatory regard by the Minister in his or her decision-making.
Section 32(4) refers to “the requirements of the shipper” (that is the shipper in question); whereas s 34(3)(d) refers to “the reasonable requirements of a shipper of the kind of cargo specified in the application”. This difference does not disengage s 34(3)(d) from s 32(3) and (4). Section 34(3)(d) does not refer to any requirements of a shipper. What is being addressed are reasonable requirements of a shipper of that kind of cargo. The words “of the kind of cargo” play an important role in qualifying the subject of the reasonable requirements. Different cargoes have different requirements attending safe and expeditious carriage. Such requirements will generally relate to the suitability of the ship in terms of state, characteristics and equipment, and timely carriage. It is important to recognise that the terms of s 34(3)(d) provide for mandatory consideration by the Minister. So construed, it limits such reasonable requirements to these crucial considerations regarding carriage, such matters being clearly apt for mandatory consideration.
If a shipper has a requirement or a desire (which may be reasonable) that does not relate to the suitability of the vessel for that kind of cargo, such as some commercial consideration such as the rate of freight or such as might concern some aspect of the carriage that is unrelated to the kind of cargo specified, that requirement will not be a mandatory consideration under s 34(3)(d). That does not mean, however, that the Minister cannot take that matter into account. It may be a matter that the Minister thinks relevant under s 34(2)(g). Further, the shipper may not be related in any way to the applicant for the temporary licence (unlike the position here with Rio Tinto and Pacific Aluminium). When there is no such relationship the shipper’s views about freight rates and any other commercial terms will be made known under s 33.
The application is to be decided within 15 business days: s 34(4); if it is not, the licence is taken to be granted: s 36.
If the licence is granted, the Minister must notify the holders of general licences who gave notices in response: s 37(3) and publish relevant information about it on the Departmental website: s 35(2).
If an application for a temporary licence is refused, the Minister must give the applicant reasons and must cause the decision to be published on the Departmental website.
A temporary licence is subject to the conditions imposed by s 40, and any additional conditions imposed by the Minister under s 41.
A temporary licence may be varied under subdivision C of Div 2 (ss 43-49) (variation of matters authorised by a temporary licence) and under Subdiv D of Div 2 (ss 50-58) (variation to include new matters). The latter provisions are relevant to this appeal.
The application to vary the temporary licence to include new matters must specify the same matters as required by s 28(2) to be specified in the original application. (See [39] above): s 51(2).
Sections 30 to 34 apply in relation to an application to vary: s 53.
The Minister must decide an application for variation within seven business days: s 54; in default of which decision the variation is taken to be granted: s 56.
If an application for variation is refused, the Minister must give reasons and publish them on the Departmental website: s 58.
At least two business days before the actual loading date for a voyage authorised by a temporary licence, the holder must notify the Minister of details of the voyage set out in s 61(a)-(g). Further, the holder must give to the Department a report of each voyage within 10 days of completion of the voyage containing the details set out in s 62.
The Minister has the power to cancel a temporary licence after the giving of a show cause notice: s 59. The basis for such a notice is the belief by the Minister on reasonable grounds that a condition of a temporary licence has been contravened: s 59(1). A show cause notice may also be issued under s 63, which is in the following terms:
(1) The Minister may give a written notice (a show cause notice) to the holder of a temporary licence under subsection 59(1) if the Minister considers that, having regard to:
(a) the number of voyages authorised by the temporary licence; and
(b) the loading dates authorised by the temporary licence; and
(c) the ports at which passengers or cargo are taken on board; and
(d) the ports at which passengers disembark or cargo is unloaded; and
(e) whether the licence has been varied under Subdivision C or D of this Division, and if so, how many times; and
(f) the provisions of Division 1 of this Part for the grant of a general licence;
the temporary licence is being used in a way that circumvents the purpose of the general licence provisions or the object of this Act.(2) If subsection (1) applies, paragraph 59(3)(b) applies as if it required the Minister, after considering any written statement given in accordance with the show cause notice, to be satisfied that the temporary licence is being used in a way that circumvents the purpose of the general licence provisions or the object of this Act.
(emphasis added).There are two concepts referred to in subss (1) and (2): the purpose of the general licence provisions, and the object of the Act. The latter is expressly stated in s 3(1). The former is not expressly stated in terms. The following, however, can be gleaned from the Act in its historical context. First, ships under general licences were to have authority to engage in the coastal trade: s 13(1). Secondly, para (d) of s 3(1) reveals an element of the object of the Act is to maximise the use of general licences. Thirdly, the general licence holders are intended to have the opportunity to undertake voyages proposed to be undertaken by vessels under temporary licences. These considerations assist in coming to a conclusion that the purpose of the general licence provisions is to further the unrestricted access of such vessels to the coasting trade and to assist in maximising the use of such vessels in the coasting trade, subject to the other aspects of the object of the Act.
Sections 64 to 74 deal with emergency licences. It is unnecessary to discuss these provisions.
Sections 76 and 77 deal with the Minister requesting further information to decide an application for a general or emergency licence (s 76) and for a temporary licence or a variation thereof (s 77). Section 77(4) suspends the running of time under s 34(4) and 54(1), as follows:
(4)A day is not to be counted as a business day for the purposes of subsection 34(4) or 54(1) if it is:
(a) on or after the day the Minister asks a person for further information under subsection (1); and
(b) on or before the day the Minister notifies the person that the further information provided satisfies the Minister’s request.As with general licences, the Act requires prompt decision-making by the Minister in respect of any application for a temporary licence. The timeframes are tight: for publication and notification of an application for a temporary licence (two days: s 30); for the giving of a notice in response (two days: s 31); for the undertaking of negotiations between the applicant and the general licence holder (two days: s 32); for the comments of third parties (two days: s 33); for the making of the decision (15 days from the making of the application: s 34 subject to the period between the notice in response and the end of the negotiation period, not counting: s 34(5) and subject to operation of s 77); and for the deciding upon a variation (seven days: s 54).
Before turning to the applications and decisions here, one further matter should be noted. Subject to the breadth of available considerations in s 34(2)(g), no provision of the Act makes freight rates (proposed by the general licence holder or the temporary licence applicant) an identifiable consideration. No information about freight rates (or any other aspect of the commercial terms of any proposed carriage) is required in the application under s 28; it is not the subject of compulsory negotiation between the general licence holder and the applicant under s 32(2)-(4); it is not an aspect of the requirements of the shipper under s 32(4), or of the reasonable requirements of a shipper of the kind of cargo specified in the application: s 34(3)(d); it is not part of the information which the Minister must cause to be published on the Departmental website under s 35(2) after grant of a temporary licence; and it is not part of the information required to be specified in the licence: s 37(2).
The applications and decisions here
In July 2012, the second respondent, Rio Tinto Shipping Pty Ltd (“Rio Tinto”) applied for a temporary licence for a number of voyages. The appellant, CSL Australia Pty Ltd (“CSL”) gave a notice in response in respect of the voyages. A body of communications between Rio Tinto and CSL and the delegate of the Minister took place up to the issue of the temporary licence on 30 July 2012. The proceedings before the two primary judges do not concern the granting of the temporary licence, but rather the granting of an application to vary the temporary licence that was made by Rio Tinto on 6 August 2012. The application for variation was made under s 51, in respect of new matters, for five voyages for the carriage of alumina from Gladstone to Bell Bay, in volumes of 25,000 mt per voyage for expected loading dates in October, November and December 2012 and January and February 2013. Some of the voyages were covered by the temporary licence that had already been granted, but nothing turns on that.
On 10 August 2012, CSL gave a notice in response in respect of all five voyages: 1207006003 for loading date 11 October 2012, 1207006004 for loading date 11 November 2012, 1207006005 for loading date 4 December 2012, 1207006006 for loading date 4 January 2013, and 1207006007 for loading date 1 February 2013. (I will refer to these as voyages 003, 004, 005, 006, and 007.) In relation to voyage 003, CSL nominated CSL Melbourne. In relation to voyages 004, 005, 006 and 007, CSL nominated CSL Brisbane to perform the voyages. Both CSL Melbourne and CSL Brisbane were the subject of an application for a transitional general licence, which licences were granted on 8 August 2012.
Later, CSL withdrew its challenge to voyage 004.
At this point, it is convenient to refer to some of the communications that had taken place after the application for the temporary licence and before its issue. After CSL had submitted a notice in response to the temporary licence application, Rio Tinto, by email on 10 July 2012, asked CSL for its freight indication for the cargo CSL had challenged, assuming the use of CSL Brisbane. The email made reference to another ship, CSL Melbourne. The email stated:
As you know, CSL Melbourne is unsuitable for Bell Bay due to her LOA [length overall] so we expect you to withdraw your challenge on the early October cargo …
By email the same day, CSL said that it would not be withdrawing its notice in response in respect of the voyage to which CSL Melbourne had been nominated. The email continued:
CSL acknowledged that there may be an issue with the length overall…of the vessel. However, as you know, we have previously used this vessel for a Bell Bay discharge and dealt with safe access form the ship to the berth. We maintain that the CSL Melbourne can carry 25,000 mt +/- 5% without loading in hold #1.
CSL then provided a freight rate for both CSL Melbourne and CSL Brisbane voyages of $29.70 pmt.
Rio Tinto then questioned this freight rate.
On the following day, 11 July 2012, CSL emailed Rio Tinto and said that it was not in a position to revise the freight rate quoted the day before, the rate reflecting the high costs of operating an Australian vessel on the Australian coast with Australian crews.
On 11 July 2012, Pacific Aluminium on behalf of Bell Bay Aluminium (companies to which Rio Tinto was related) as an affected party under s 33 of the Act, wrote a letter to the Minister. That letter stated that small changes in costs per tonne could have significant impact on the operating costs of Bell Bay Aluminium. The letter also referred to the reliability of alumina supply as a central concern. The letter said that Bell Bay Aluminium was concerned that CSL had only one vessel which was able to perform the charters then under consideration and stated that, in the past, charter services provided by CSL had been unreliable. Also on 11 July 2012, Rio Tinto sent an email to the delegate of the Minister, putting matters the subject of s 34 of the Act in relation to the requirements of Pacific Aluminium.
On 23 July 2012, Rio Tinto sent an email to the delegate saying that CSL Melbourne was considered by the terminal operator (Pacific Aluminium) to be too big for the Bell Bay terminal facility No 1 berth because of its length overall.
On 24 July 2012, this email of Rio Tinto, together with its attachments, was forwarded to the Deputy CEO of the Australian Maritime Safety Authority (“AMSA”). Also on that day, the delegate forwarded to CSL by email the material provided by Rio Tinto by email of 23 July 2012 saying that she was providing CSL with an opportunity to respond to this material.
By email the following day, 25 July 2012, CSL made a submission to the then delegate responding to the concerns of Rio Tinto. CSL stated that vessels with a length overall of greater than the maximum length overall stated by Rio Tinto had been berthed at Bell Bay on the basis that one hold would not be loaded. The email stated that CSL Melbourne had discharged 26,250 mt of alumina at Bell Bay in August 2010, and cargo was not loaded in hold No 1. The email attached drawings identifying the position of CSL Melbourne on the relevant wharf, leaving one hold (with a No 1 or No 5 empty). The email also dealt with safe access to the vessel, identifying that CSL Melbourne had an aft gangway, or, in the alternative, a brow that could be placed anywhere along the ship’s side to provide safe access at all times.
On 6 August 2012, Rio Tinto made the application for variations of the temporary licence. This was sent to CSL on 8 August 2012.
On 10 August 2012, CSL provided the notice in response referred to at [65] above, which was provided to Rio Tinto on 13 August.
On 14 August 2012, Rio Tinto sent an email to CSL asking for freight indications for the cargoes challenged, saying “we expect the same to be in line with the market.” The email also asserted CSL Melbourne’s unsuitability for Bell Bay due to her LOA. The email also gave notice of a requirement for a liquidated damages clause said to be necessary to cover Bell Bay Aluminium’s loss should the general licence ship be unable to perform a voyage, without Bell Bay Aluminium having a back up temporary licence.
CSL responded the following day, 15 August, giving freight rates for CSL Brisbane for the second to fifth voyages. The email stated that CSL Melbourne would not be available for the first voyage. So, at this point the debate about her suitability for berthing at Bell Bay because of her LOA was not pursued.
Not all the documents referred to above from 10 July to 25 July 2012 were considered by the delegate dealing with Rio Tinto’s application for variation of the temporary licence. The emails on 10 and 11 July 2012 were not so taken into account.
On 16 August 2012, Rio Tinto informed the general manager that it had concluded negotiations with CSL. During those negotiations, CSL led Rio Tinto to believe that CSL Melbourne would not be nominated by CSL for voyage 003. This was because of her anticipated employment on another voyage of which Rio Tinto was aware. Rio Tinto arranged a chartered vessel to undertake that voyage before CSL, in early October, restated its desire for CSL Melbourne to undertake voyage 003, the arrangements for the other voyage having changed. I will return to this when examining the events of early October 2012.
The email sent by Rio Tinto to the General Manager stating that negotiations had concluded stated that the challenge was only in relation to the last four voyages concerning CSL Brisbane. The proposed freight rates were identified. The unacceptability of CSL’s position to Rio Tinto was stated and explained by reference to their earlier position outlined when the application for a temporary licence was being considered. There were two aspects to the opposition to CSL Brisbane. The first was an assertion that on a previous occasion CSL Brisbane (though a suitable vessel) had presented in an unclean condition and outside the laycan period causing delay. The second was a complaint about the freight rate. A comparison was made with freight rate charged under the earlier permit system. The earlier rates were said to be “almost competitive” and the comment was made that CSL “appears to believe that it holds a more dominant position” under the new licence system. Rio Tinto provided a comparative quote (implicitly from a foreign-flagged owner) of USD 17.50 pmt compared to CSL’s AUD 29.70 pmt. Rio Tinto also cited a July 2012 loading (of an unnamed ship) fixed at USD 16.35 pmt. The email also referred to the liquidated damages clause. This was explained as a consequence of the change from the prior permit system under which an emergency permit could be obtained. The email also referred to the viability of operations at Bell Bay, a subject that was taken up in a submission under s 33 of the Act attached to the email.
Before turning to that attached submission, it should be noted that the primary judge (Robertson J) at [47] of his reasons discussed the question of whether all of the email could be characterised as the notification of the “outcome of the negotiations” for the purposes of s 32(2)(b). His Honour said:
[47] … I interpolate that what is within s 32(2)(b) is the outcome of the negotiations. It is not clear which parts of the 16 August 2012 email are to be so described. I do not accept the applicant’s suggestion that the outcome should be described in one word, either “failed” or “succeeded”. In my view notifying the Minister of the outcome of the negotiations would extend to a report of why the negotiations succeeded or failed. On that approach paragraphs numbered 1 (including the table), 2, 3, 4 and possibly 5 of Rio Tinto’s email of 16 August 2012 would describe the outcome. The balance of the email seems to me, on the scant evidence limited to the terms of the document, to be submissions rather than a notification of the outcome of the negotiations. Thus I do not accept the more expansive approach of the respondents. The only possible relevance of the point is to the issues of procedural fairness. But I observe that the basic scheme of the Act is that the notification of the outcome of negotiations under s 32(2)(b) may enable a decision to be made within the principal time limits in s 34(4) or s 54(1): to the extent that material is submitted outside that notification, being material not limited to the outcome of negotiations, additional procedural fairness obligations are more likely to arise.
Paragraphs 1, 2, 3, 4 and 5 dealt with the following subject matters: a statement of the proposed voyages (1); the nature of CSL’s offer (including freight rates) (2 and 3); the unacceptability of CSL Brisbane because of past performance issues (4 and 5). Paragraphs 6-10 insofar as they dealt with complaints about the freight rate were not considered by Robertson J to be a description of the outcome. I agree. I would add in addition to the reasons the reasons given by him that the relevant negotiations that are to be undertaken for the purposes of s 32 (and s 34(3)) do not include the subject of freight rates.
The attached letter of 16 August 2012 was from Pacific Aluminium (the parent company of Bell Bay Aluminium) and was said to provide “further economic context”. The letter then went on to assert the economic impact on the operations at Bell Bay of the quoted freight rate. The primary judge described the relevant contents of the letter at [48] as follows:
[48]… BBA had been considering a number of key impacts which, it said, on the basis of the offers put forward by CSL to date, would add at least AUD $4,000,000 to the annual cost of production on freight alone. It specified the percentage of BBA’s controllable costs represented by these additional costs together with $4,000,000 in additional costs already being absorbed by BBA since the loss of a direct international container service from the Bell Bay Port. The letter annexed two Figures dated July 2012, one being the cash costs of smelters in Australia and the other being the London Metal Exchange aluminium price history in Australian dollar terms.
On 17 August 2012, the General Manager made a request under s 77 for information from Rio Tinto. The enquiry concerned the freight rate put forward by CSL and the earlier freight rate in 2010. Rio Tinto replied on the same day, confirming CSL’s present offer and setting out the 2010 CSL freight rate of USD 17.30 pmt, from an opening offer of USD 19.95 pmt. Rio Tinto reiterated the competitive price from a foreign-flagged owner of USD 17.50 pmt. Reference was also made to a fixture in July 2012 of an unnamed vessel at USD 16.35 pmt.
On 22 August 2012, the General Manager wrote to CSL also seeking further information under s 77. In the context of referring to the outcome of the negotiations under s 32, she referred to the request for a liquidated damages clause and the changed regulatory environment. CSL responded the next day, 23 August, saying they could provide an alternative vessel at commercially acceptable terms.
Also on 22 August, the General Manager wrote to Rio Tinto informing it of her intended enquiries of CSL and asking Rio Tinto to confirm that she could share the 2010, 2011 and 2012 “prices” that included those of the foreign-flagged vessels, with CSL. The following day, 23 August, Mr Mannion of Rio Tinto approved the use of the information but said “provided there is no obvious reference to the identity of the shipowner/carrier”. To this, the General Manager replied on the same day:
My intention is to remove all references to the international rates offered and by whom, and focus on why CSL has increased its own rate by 67% in one year.
Mr Mannion then responded almost immediately qualifying his earlier response about disclosure:
Sorry, I jumped to the wrong space: thinking ‘market’ comparisons. I am surprised CSL haven’t already shared with you the rates they were prepared to offer and did in the end take, when doing this business last.
If they weren’t going to give that information to you, I see no reason why we shouldn’t; indeed, it’s the foundation of our argument.
They were ‘relatively’ competitive under the old regime, we don’t understand why they still can’t be or what might have changed?
The difference then was only $1-$2 different on the freight rate, now it’s upward of $12. The demurrage rate is also cause for concern.On 23 August 2012, the General Manager wrote to CSL seeking further information under s 77. Again, expressed as in the context of referring to the outcome of the negotiations under s 32, she referred to freight rates previously charged by CSL in 2010 and 2011 of
AUD 17.30 and AUD 18.20 for CSL Melbourne and CSL Brisbane which information had been provided by Rio Tinto. The email requested that CSL:1.confirm that the rates advised by Rio, as outlined above, are correct; and
2.if they are correct, could you advise what factors have caused the increase in your current offer over the rates agreed with Rio in 2010 and 2011.
The assumption that appears to have been made in this request was that freight rates were part of the subject matter for compulsory negotiation under s 32. For the reasons discussed above, they were not.
CSL responded to this on 27 August 2012. The primary judge described the content of the email at [57]:
[57] … In relation to the rates agreed with Rio Tinto in 2010 and 2011, CSL said that those cargoes were considered trial cargoes and therefore CSL had been willing to compromise on the freight rate and corresponding revenue return. However, the email continued, on the CSL Brisbane voyage CSL made a cash loss of A$300,000, not including capital return and depreciation on the vessel, and on the CSL Melbourne voyage CSL made a loss of A$200,000, including capital return and depreciation. CSL added that the freight and demurrage rates as offered to Rio Tinto during negotiations for the temporary licence cargoes were reflective of owning and operating General Licence Vessels on the Australian coast.
It is to be recalled that on 23 August 2012, the General Manager indicated to Rio Tinto that she was not going to make any reference to any comparative international freight rates but would “focus on why CSL has increased its own rate by 67% in one year”.
On 3 September 2012, the General Manager sought further information from CSL about the 2010 and 2011 voyages. She asked whether Rio Tinto was made aware of the trial status of the earlier voyages and that CSL was losing money on its freight rates then charged.
CSL responded on 5 September 2012 in terms quoted by the primary judge in [58] of his reasons:
Both voyage negotiations were conducted on a spot basis relative to market. Whilst Rio Tinto understands the real costs of Australian shipping, they made it clear during the spot negotiations that they required CSL to be close to market rates in order to conclude negotiations. While CSL had the option at the time of objecting to an SVP application if negotiations failed, the internal decision was made to accept a close to market rate in order to prove the vessel capability of the CSL Melbourne and CSL Brisbane discharging at Bell Bay and ensure a good ongoing customer relationship with Rio Tinto.
The CSL Brisbane hybrid self unloading system was designed for the carriage of Alumina and the Bunbury-Bell Bay voyage was the first opportunity to trial this type of cargo. It is not unusual for a new self unloading vessel to meet market rates and therefore price below cost in order to prove the vessel’s capabilities on a new cargo/trade.
The decision to conclude both voyages on the CSL Melbourne and CSL Brisbane on freight rates that did not cover costs was an internal strategic decision on the part of CSL to enable the vessels to perform on a trade that CSL was struggling to gain access to. Whilst Rio Tinto was verbally advised that these freight rates were below the cost of Australian vessels, it was not an explicit condition of the voyages.
On 7 September 2012, the General Manager sought further information from Rio Tinto under s 77. It put CSL’s responses on the liquidated damages clause and the 2010 and 2011 freight rates to Rio Tinto for comment. Rio Tinto responded on the same day. The primary judge summarised the response at [60] and [61] of his reasons:
[60] Rio Tinto responded to those queries by email dated 7 September 2012. As to the liquidated damages point Rio Tinto said it was not satisfied with CSL’s offer. Applications for variations would take too much time and would not adequately protect Rio Tinto without a liquidated damages clause as was proposed. It said that working through CSL to cover their own failure would be even less efficient and certainly more time-consuming, which was in neither party’s interests.
[61] As to the rates question, Rio Tinto said it was aware of the trial nature of the 2010 and 2011 voyages to the extent that the trials related to the physical capabilities/compatibilities of the vessels proposed. It said, however, the parties did not want to consider further commitment until those capabilities/compatibilities were assessed. It said there was no logic or relevance to the argument that because these were trial voyages the rates were obviously/necessarily lower or more competitive. Rio Tinto added it was not made party to the internal strategic decisions of CSL: negotiations with CSL at the time included an insistence on the part of Rio Tinto for competitive freight rates. CSL may well have alluded to their high operating costs, however, at the time of fixing those voyages, there was no agreement that those rates were at once off levels, which were below the operating costs of Australian vessels. The trial nature related to the physical fit of the vessels to the trade, not the freight rates charged.
During September, Rio Tinto sought confirmation from the General Manager that it could fix a vessel under the temporary licence for voyage 003 given the lack of opposition expressed by CSL in relation to CSL Melbourne.
On 28 September 2012, CSL dropped its challenge to the November voyage by CSL Brisbane, voyage 004.
On 2 October 2012, the delegate asked CSL for confirmation of the correctness of information that had been received from Rio Tinto (in the email describing the outcome of the negotiation and in the communications in September) that CSL was not challenging voyage 003 (for which CSL Melbourne had originally been nominated). This withdrawal of challenge by CSL had been earlier communicated to Rio Tinto by CSL. By email of the same date, CSL advised that it now pressed its challenge to voyage 003. Rio Tinto had assumed that it could charter a vessel for that voyage. The explanation of CSL was described by the primary judge in [66] of his reasons. Rio Tinto was informed of CSL’s position on 3 October 2012. The vessel that Rio Tinto had secured was on its way to Gladstone. Objection to CSL Melbourne was then made on 4 October by Rio Tinto by reviving the concern about LOA of the vessel and the concern about her suitability for berthing at Bell Bay that had been taken up in Rio Tinto’s email of 23 July.
On 6 October 2012, the delegate contacted AMSA about the Bell Bay berthing issue for CSL Melbourne The primary judge described this in [71] of his reasons:
On 6 October 2012 the delegate spoke to the Deputy CEO of AMSA. She sought confirmation of the advice previously provided to the Department in response to the information provided by Rio Tinto on 23 July 2012 regarding the safety risks associated with an oversize vessel, such as the CSL Melbourne, berthing at Bell Bay Terminal Facility 1. The Deputy CEO of AMSA confirmed that he reviewed the material provided to him in July 2012 and also confirmed that operations involving an oversize vessel at that berth “can pose safety issues of the kind described by Rio Tinto. He advised that the manoeuvres required to move an oversize vessel up and down the berth to facilitate loading can put excessive load on lines, bollards and dolphins placing personnel, the vessel and the berth at risk.”
As referred to at [77] above, AMSA and CSL had, on 24 July 2012, been supplied with the Rio Tinto email of 23 July; but AMSA was never given CSL’s response of 25 July referred to at [78] above.
On 6 October 2012, the delegate sent to CSL an email containing a preliminary view that the temporary licence should be varied. The substance of the email was set out by the primary judge at [72] of his reasons, as follows:
I am a delegate of the Minister for the purposes of making decisions under the Act, including decisions in relation to applications for variations of temporary licences. Having considered the information submitted by both Rio Tinto and CSL, I propose to grant the application for a variation to the TL to include new matters, being voyages 120700603, 120700604, 120700605, 120700606, and 120700607 [sic]. In reaching this preliminary view, I have considered a range of information provided by both the applicant and the general licence holder. The key factors I have taken into account in forming my present view as to a decision are as follows:
Voyage 120700603 [sic] - Gladstone to Bell Bay - Vessel proposed by CSL - MV CSL Melbourne
Information provided to me by the applicant indicates that the MV CSL Melbourne is considered by the terminal operators (Pacific Aluminium) to be too big for the berth (Bell Bay Terminal Facility No 1) for safety, berthing and operational reasons. This information indicates that MV CSL Melbourne is too large to berth safely at Bell Bay Terminal Facility No 1 and may be refused permission to unload at the berth. The information provided by the applicant in regard to this issue was forwarded to CSL for response on 24 July 2010 [sic]. The Australian Maritime Safety Authority (AMSA) have confirmed that berthing a vessel of the size of the CSL Melbourne at Bell Bay Terminal Facility No 1 would pose safety concerns of the kind described by the applicant. I consider that these safety considerations are significant, and that they suggest that the MV CSL Melbourne does not meet the reasonable requirements of the shipper.
There was then a paragraph dealing with CSL’s withdrawal of the notice in relation to voyage number 1207006004.
Voyages 120700605, 120700606 and 120700607 [sic] - Gladstone to Bell Bay - Vessel proposed by CSL - MV CSL Brisbane
In deciding an application object [sic] of the Act (s 34 (2)(f)) is a relevant consideration. Section 3 (1) of the Act states that “the object of this Act is to provide a regulatory framework for coastal trading in Australia that (a) promotes a viable shipping industry that contributes to the broader Australian economy”. I am presently of the view that, having regard to the freight rates offered by CSL for use of the MV CSL Brisbane to undertake the 3 voyages listed above, refusing to grant the variation of the TL to include these three voyages would not be consistent with the object of the Act. It is acknowledged that a direct comparison between the freight rates offered for a vessel under a general licence and those for a vessel operating under a temporary licence is not determinative because the underlying cost structures are different. Nevertheless, it is apparent from the information provided by the applicant and confirmed by CSL, that the freight rates proposed by CSL are significantly higher, not only than those offered by a vessel operating under a temporary licence, but also than those previously offered by CSL to Rio Tinto to undertake the same voyage. The applicant has provided probative information about the impact that rates of the magnitude of those offered by CSL for this voyage [sic] would have on the future viability of aluminium operations in Bell Bay. The aluminium industry in Australia is experiencing unprecedented challenges to its viability due to depressed aluminium prices and the continued strength of the Australian dollar. The cost of alumina and the associated freight costs are significant to all smelters but particularly to the operations at Bell Bay because of its location. Small changes in cost per tonne can have a significant impact on overall operating costs. I am presently of the view that refusing to grant the variation to the TL in respect of this voyage [sic] would be likely to contribute to the undermining of the future viability of operations of Bell Bay Aluminium and thus would not contribute to the broader Australian economy or the long-term viability of the Australian shipping industry.
The email concluded:
I expect to make a decision in relation to this application on Tuesday, 9 October 2012. Should CSL wish to make submissions in relation to the contents of this email, these must be received by email to myself with a copy to [email protected] by 5.00pm on Monday, 8 October 2012.
In contrast, a temporary licence has a condition that the ship be on the international register, but has no conditions as to a ship’s crew (s 40). The three objects of the international register identified in s 15A of the Shipping Registration Act complement, in part, the single object in s 3(1) of the Act. There is an interrelationship in the two Acts between the object in s 15A(b) (providing an internationally competitive register to facilitate the long term growth of the Australian shipping industry) and element (b) in s 3(1) (providing a regulatory framework for coastal in Australia that (b) facilitates the long term growth of the Australian shipping industry).
What is striking about the process identified in the Act in ss 30-37 and the criteria in s 63(1), is the absence of any reference to prices or freight rates (for carriage of passengers or cargo) or the costs that the applicant, general licence holder or shipper will incur to perform the voyages. The prescribed subject of matter of the negotiations under s 32(3) and (4) concerns only the physical characteristics of the general licensee’s vessel’s equipment to carry the cargo and her degree of availability to do so. When s 32(4) refers to the negotiations under s 32(3) having regard to the requirements of the shipper of the cargo, it means what it says – namely, those requirements of the shipper that relate to the vessel’s equipment and availability. There is no requirement for the negotiations under s 32(3) that the applicant and general licensee discuss commercial issues such as freight rates or contractual terms. Rather, the regulatory regime is concerned with whether the general licensee’s unrestricted access to Australian waters to provide its cargo services should be affected by the issue of a temporary licensee permitting the applicant to be able to perform a voyage or voyages that the general licensee’s vessel is capable of undertaking. Hence, the power in s 63(1) to cancel a temporary licence is also actuated by its use in respect of voyages, loading dates, loading and discharge ports, previous variations and the provision relating to the grant of a general licence. Again, s 63(1) does not deal with freight rates or commercial terms as a possible mechanism for misuse of a temporary licence.
Third parties who either become aware of the application through the Department’s website or by the Minister’s direct notification under s 30(b)(ii), also have two business days to make “written comments on the application” if they are directly affected by it (s 33). The Minister is given power in s 34 to decide the application and must do so (subject to any extensions under ss 34(5) or 77) within 15 business days after the application was made (s 34(4)): i.e. ordinarily within nine business days of being notified of the outcome of the negotiations under s 32(2)(b).
Critically, s 34(3) prescribes four mandatory considerations to which the Minister must have regard in making his decision on whether to grant a temporary licence, namely, first, the outcome of the negotiations as notified by the applicant under s 32(2)(b), and his objective assessment of each of the three matters that were substantially the subject of those negotiations. That is, s 34(3) requires the Minister to consider the applicant’s report to him of whether it agreed with the general licensee as to the extent to which its vessel was equipped to carry the cargo and it could do so in a timely manner, having regard to the actual shipper’s requirements, if any, and then to consider for himself, whether the vessel is, in fact, so equipped, whether, in fact, it can carry the cargo or can do so within five days of the expected loading dates having regard to the reasonable requirements (as to the two subject matters in s 32(3)) of a shipper of the kind of cargo specified in the application.
The task under s 34(3) involves the Minister considering objectively whether the general licensee’s vessel could perform the voyage, and do so within the particular timeframe of five days before and after the expected loading dates, having regard to the reasonable requirements of a shipper of the kind of cargo in question. Such reasonable requirements could involve issues such as the ship’s cargoworthiness, the characteristics of the proposed cargo, (e.g. whether it consists of perishable goods), the capacity of a vessel to handle specialised cargo, or whether there are possible residues or contaminants from prior cargoes that may adversely affect the kind of cargo to be carried. However, the reasonable requirements referred to in s 34(3)(d) that the Minister must consider are those specified in ss 32(3) and 34(3)(b) and (c), and do not extend to commercial issues such as freight rates or contractual terms or the economic position of a shipper, such as Pacific Aluminium. The mandatory considerations in s 34(3) concern, and only concern, the subject matter of the specific negotiation topics prescribed in s 32(3) and (4).
However, the Minister is also entitled, pursuant to s 34(2), to have regard to other matters, whether or not he receives a notice in response to an application from a general licence holder. Those include matters going to past conduct of the applicant (s 34(2)(a), (b), (c)), whether any proposed vessel is on the international register, any ownership relationship between the applicant with both the vessel and cargo to be carried on her (s 34(2)(ba)), any written comments provided to the Minister under s 33 (s 34(2)(d)), any reports as to the applicant’s performance under previous temporary licences that the applicant had provided under s 62 (which requires such reports to be given to the Department no later than 10 business days after the end of each voyage authorised by a temporary licence) (s 34(2)(e)), and critically, the object of the Act and “any other matters the Minister thinks relevant” (s 34(2)(f) and (g)).
There is a fundamental difference between the operation of ss 34(2) and (3). That is because the former is permissive while the latter is mandatory in relation to matters to which the Minister must or may have regard. This difference will be examined below in these reasons.
The provisions of s 63(1) are instructive on how the Minister will have regard to matters under s 34(2)(f) and (g). That is because an application for the grant or variation of a temporary licence cannot be used, anymore than such a licence if issued could be used, to circumvent, as s 63(1) provides, “the purpose of the general licence provisions or the object of this Act”. The transparency of the process for the grant, variation and utilisation of a temporary licence involves publication of details of the voyages, loading and discharge dates and ports and cargo carried. None of the mandatory steps in the process is concerned with commercial terms or freight rates. Moreover, ss 34(3) and 63(1) direct attention to the importance, in the regulatory framework, of the general licence provisions and the capacity of a general licensee’s vessel to perform, in a timely manner, the carriage of the cargo sought by the applicant for a temporary licence.
If the Minister decides to grant a temporary licence, s 35(2) identifies the details of the licence that must be published on the Department’s website, s 40 specifies the conditions to which it is subject and s 37(2) identifies the matters that the licence itself must specify, none of which relate to commercial terms or freight rates. If the Minister decides to refuse the application for the temporary licence he must give written notification of that decision to the applicant with his reasons, and must publish his decision (but not reasons) on the Department’s website (s 39(2)).
The process for a variation of a temporary licence prescribed by Subdiv D of Div 2 of Pt 4 of the Act is similar to that in Subdiv A, and specifically follows ss 30-34, except that, as s 53 provides, the Minister can also have regard to any prior applications for a variation of a temporary licence made by the applicant. Thus, s 51(2) requires the applicant to specify similar details of the proposed voyages as are required by s 28(2), and s 57(2) requires any varied licence to specify the matters set out in s 37(2), none of which concern commercial terms or freight rates.
Where a statute requires a decision-maker to have regard to one or more particular matters, he or she must take each such matter into account and give it weight “as a fundamental element in making his determination”: R v Hunt; Ex parte Sean Investments Pty Ltd (1979) 180 CLR 322 at 329 per Mason J; R v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327 at 333 per Gibbs CJ, 338 per Mason J; Telstra Corporation Ltd v Australian Competition and Consumer Commission (2008) 176 FCR 153 at 181 [103], [105] per Rares J, applied in Telstra Corporation Ltd v Australian Competition Tribunal (2009) 175 FCR 201 at 242 [267] per Jacobson, Lander and Foster JJ.
Here, s 34(3) requires the Minister to consider the matters it specifies as the central elements in his deliberative process. He may also have regard, and give weight, to matters referred to in s 34(2), mindful that the weight given to those matters could not justify the grant of a temporary licence that would be used, as s 63(1) indicates, in a way that circumvents the purpose of the general licence provisions or object of the Act. Thus, the purpose of power to grant a temporary licence is not available to be used a means for an applicant to circumvent the purpose of the general licence provisions or the object of the Act.
The purpose of the general licence provisions is to enable a general licensee to seek to carry any cargo available in the coastal trade and to give it unrestricted access to Australian waters to do so. The general licensee will have employed a crew on its vessel and become subject to the obligations of an employer under the Fair Work Act and the Seafarers’ Rehabilitation and Compensation Act, none of which will apply to any ship the subject of the temporary licence. The mandatory criteria, the subject of negotiations required under ss 32(2)-(4) and fundamental to the Minister’s deliberative process under s 34(3), deal with the capacity of the vessel in terms of equipment, time and suitability of any general licensee(s) who has (or have) given a notice in response to an application for a temporary licence to carry the identified cargo having regard to the reasonable requirement of a shipper of that kind of cargo in respect of those subjects. Ordinarily, if the general licensee’s vessel is equipped, available and suitable to carry the cargo as required, the Minister would give those matters weight as a fundamental element in his consideration of whether to grant a temporary licence that would have the consequence of supplanting the general licensee from using its ship to do so.
The legislation passed cognately with the Act contemplated that there would be two markets for Australian shipping – the coastal trade and the international market (see s 3(1)(c), (d), (e) and (f) of the Act and s 15A(6) of the Shipping Registration Act). Moreover, element (d) in s 3(1) of the Act makes maximisation of the use in coastal trading of vessels in the general register an integral part of the regulatory framework: i.e. the use of a general licensee’s vessels where it is available and satisfies the criteria in s 34(3). That construction is reinforced by s 63(1). If the Minister considers that, under s 34(3), a general licensee’s vessel is ready and able to perform the carriage of cargo that is the subject of a temporary licence application, the central elements in the statutory deliberative process will have been determined adversely to the applicant.
Nonetheless, the Minister can still exercise a discretion to grant the application having regard to considerations in s 34(2), but not in such a way that the purpose of the unrestricted access of the general licensee to perform the carriage or the object of the Act is circumvented (s 63(1)). Thus, s 34(2)(ba) allows the Minister to give weight to the consideration that the applicant owns both the vessel, which is also in the international register, and cargo and the cargo will be carried on that vessel. Ordinarily, the use of an applicant’s own ship to carry cargo it also owns would not be likely to circumvent the purpose of the general licence provisions or the object of the Act. That is because such an applicant would be proposing to use its own ship in the course of its own business, as opposed to bringing into Australian waters or the coastal trade a ship not on the general, or perhaps the international, register for a purpose that, prima facie, would infringe the entitlement of the general licensee to use its ship to perform the carriage.
Similarly, s 34(2)(d) enables the Minister to have regard to any comments he receives under s 33 from persons, other than a general licensee including the shipper, including, unions or business associations who, or whose members, are directly affected by the determination of the application. In addition, the Minister may also have regard to the object of the Act and any other matters he thinks relevant under s 34(2)(f) and (g). The potential scope of matters available for the Minister’s consideration, particularly under s 34(2)(d) and (g), is broad. However, the discretion to decide whether to grant a licence and the subject matter to which the Minister may have regard are not completely at large as s 63(1) demonstrates. The factors in s 34(2) permit the Minister to have regard, for example, to the economic consequences for a shipper or consignee of the alternatives presented by use of the general licensee’s or applicant’s vessel for the carriage of the cargo.
The decision whether to grant a temporary licence is, after all, that of the Minister, or his delegate. It may have political consequences, hence the flexibility offered to the Minister by the authority in s 34(2)(d) and (g) to have regard to comments of persons directly affected or other matters he thinks relevant.
Nonetheless, the Minister must exercise the discretions to grant or refuse an application or variation in ss 34(1) or 53 reasonably, having regard to the matters in s 34(3) and such, if any, of the matters in s 34(2) as he considers appropriate in the circumstances, including the object of the Act. This involves a weighing process. There is a well recognised division between the role of an administrative decision-maker to assess the merits of a proposed exercise of a statutory power or discretion by weighing criteria properly open to him or her and the function of the Court in judicially reviewing the lawfulness of that exercise. The Court does not have the function of considering whether it agrees with the merits of the decision-maker’s choice. Rather, the function of the Court in such a judicial review is to consider whether the decision-maker acted lawfully in accordance with the process and statutory criteria that conferred the power on him or her to do so. But, sometimes, the weighing process undertaken by the decision-maker can itself miscarry.
Recently (and after Robertson J gave his reasons) the High Court explained the applicable principles in Li 297 ALR 225. There, Hayne, Kiefel and Bell JJ said (297 ALR at 247 [67]; and see too at 236 [23]-[24] per French CJ, 257-258 [109]-[112] per Gageler J):
“In Klein v Domus Pty Ltd [(1963) 109 CLR 467 at 473], Dixon CJ said that where discretions are ill-defined (as commonly they are) it is necessary to look to the scope and purpose of the statute conferring the discretionary power and its real object. The ordinary approach to statutory construction, reiterated in Project Blue Sky [194 CLR 355], requires nothing less. The legal standard of reasonableness must be the standard indicated by the true construction of the statute. It is necessary to construe the statute because the question to which the standard of reasonableness is addressed is whether the statutory power has been abused [H W R Wade and C Forsyth, Administrative Law, 10th ed, Oxford University Press, Oxford, 2009, p 296].” (emphasis added)
Their Honours said that a decision-maker must understand his or her statutory powers and obligations (297 ALR at 248 [71]) and continued (297 ALR at 249-250 [72], [75]-[76]):
“[72]… Further, in Minister for Aboriginal Affairs v Peko-Wallsend Ltd [(1986) 162 CLR 24 at 41], Mason J considered that the preferred ground for setting aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to an irrelevant factor of no importance, is that the decision is “manifestly unreasonable”. Whether a decision-maker be regarded, by reference to the scope and purpose of the statute, as having committed a particular error in reasoning, given disproportionate weight to some factor or reasoned illogically or irrationally, the final conclusion will in each case be that the decision-maker has been unreasonable in a legal sense.
...
[75]In Peko-Wallsend, [162 CLR at 41-2; referring, inter alia, to Wednesbury Corporation [1948] 1 KB at 230; and Parramatta City Council v Pestell (1972) 128 CLR 305 at 328; [1972-73] ALR 811 at 825-6] Mason J, having observed that there was considerable diversity in the application by the courts of the test of manifest unreasonableness, suggested that “guidance may be found in the close analogy between judicial review of administrative action and appellate review of a judicial discretion”. House v R [(1936) 55 CLR 499 at 504-5] holds that it is not enough that an appellate court would have taken a different course. What must be evident is that some error has been made in exercising the discretion, such as where a judge acts on a wrong principle or takes irrelevant matters into consideration. The analogy with the approach taken in an administrative law context is apparent.
[76]As to the inferences that may be drawn by an appellate court, it was said in House v R [55 CLR at 505] that an appellate court may infer that in some way there has been a failure properly to exercise the discretion “if upon the facts [the result] is unreasonable or plainly unjust”. The same reasoning might apply to the review of the exercise of a statutory discretion, where unreasonableness is an inference drawn from the facts and from the matters falling for consideration in the exercise of the statutory power. Even where some reasons have been provided, as is the case here, it may nevertheless not be possible for a court to comprehend how the decision was arrived at. Unreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification.” (emphasis added)
Consideration – the first decision
Robertson J considered that element (d) in s 3(1) did not apply to the making of the first decision because neither CSL Melbourne nor CSL Brisbane was registered in the general register. That was because CSL held only a transitional general licence for each ship and, as such, there was no provision in any of the legislation that enabled either ship to be registered in the general register. The Transitional Act altered the process for applying for general licences under Div 1 of Pt 4 of the Act, but Sch 2 item 16 deemed that the Act and any other law of the Commonwealth “apply in relation to a transitional general licence as if it were a general licence”. One purpose of the Transitional Act was to provide a transitional general licence for a person who intended to obtain a general licence for a ship but could not do so immediately (Sch 2 item 12(2)).
The literal reading of element (d) in s 3(1) of the Act, adopted by Robertson J, creates a substantive distinction between the general licence provisions of the Act depending on whether a ship is registered on the general register or is intended to be so registered. However, that distinction was not intended because the Transitional Act deemed the Act to apply to a transitional general licence issued for a ship “as if it were a general licence”. The reference to maximising the use in coastal trading of vessels registered in the general register in element (d) of s 3(1), although expressed to apply to the Act when fully operational, was clearly intended when read in the context of the Act and the Transitional Act as a whole, including s 63(1), to refer to vessels with general licences but to include, during the implementation phase for the Act, those with transitional general licences. The purpose of the general licence provisions of the Act would not be served by the literal construction of element (d) of s 3(1) adopted by his Honour: Australian Securities and Investments Commission v DB Management Pty Ltd (2000) 199 CLR 321 at 338 [34]-[35] per Gleeson CJ, Gaudron, Gummow, Hayne and Callinan JJ.
The delegate was wrong to have had regard to the fact that CSL Melbourne and CSL Brisbane were not registered in the general register in arriving at the first decision. She should have had regard to the transitional general licences as if they were general licences and treated the two ships as if they were registered in the general register for the purposes of the first decision.
His Honour also considered that the omission of “Australian” before “viable shipping industry” in element (a) of s 3(1) had significance. The Act contemplates that ships on the general and international registers will be engaged in coastal trading in Australia. The regulatory framework for which the Act provides deals particularly with the licensing of ships in both those registers. The use of ships under emergency licences is an exceptional situation to which element (a) of s 3(1) was not directed. His Honour was correct to reject CSL’s argument that sought to read down the identity of the expression “viable shipping industry” to being simply one of Australian nationality. Element (a) is concerned with promoting a shipping industry on a sound commercial footing that can contribute to the broader Australian economy. The Act leaves at large the nature of that contribution, no doubt for good reason. It envisages the existence of an industry that enables Australia to transport goods and passengers by sea in coastal trading, internationally and in intra-State trade. The regulatory framework for coastal trading is intended as a means to promote such a viable industry. His Honour was correct to give element (a) a broad construction.
The several elements in s 3(1) constitute aspects of the Parliament’s intention for the purposes to be achieved by the new regulatory system in the Act. They deal with various issues of policy that will not always tend in the same direction but rather will require the Minister or other decision-maker to balance sometimes competing aspects in reaching a decision. For example, the maximisation of use of vessels under general licences (element (d)) is likely to lead to the general licensee seeking higher freight rates to recoup the higher overheads caused by the application of Australian employment laws, crew wage rates and the cost of supplies in Australia as compared to foreign flagged ships or those in the international register. On the other hand, the promotion of competition in coastal trading (element (e)) may be achieved by allowing more temporary licences with cheaper freight rates to compete with general licensees’ vessels for work. That element is not limited in the way CSL contended to competition between general licensees. There is no reason to read element (e) in any sense other than its natural and ordinary meaning: DB Management 199 CLR at 338 [34]-[35].
Against those factors, the promotion of a viable shipping industry that contributes to the broader Australian economy and the facilitation of the long term growth of the Australian shipping industry (elements (a) and (b)) may require the Minister to strike a balance or different balances over time. For example, the Minister may favour a period of dominance for general licences over temporary ones so as to enable the general licensees to establish themselves and their enterprise, before a later opening up that market to more temporary licences in order to encourage price competition. The reconciliation of tensions between each of the six elements is a matter of political responsibility for the Minister in administering the Act.
Accordingly, CSL’s argument that, in effect, the object in s 3(1) necessarily favoured general licensees fails to accommodate the potential interaction of the broad range of elements it comprises. The Act provides for a regulatory framework that requires the Minister to give weight, as a fundamental element in making his determination, to the position of a general licensee whose ship meets the mandatory criteria in s 34(3): Sean Investments 180 CLR at 329. However, the Act, as recognised in the object in s 3(1), the means to achieve that object set out in s 3(2) and the discretionary considerations listed in s 34(2), provided that the Minister can also have regard to, and be swayed by, other considerations that he considers merit the grant of a temporary licence in all of the circumstances.
However, his Honour erred to the extent that he considered that the prescribed negotiation process and the notification of its outcome under s 34(3)(a) included other requirements of the or a shipper that were outside the topics specified in ss 32(3) or 34(3)(b) and (c). He correctly rejected CSL’s unqualified submission that the object of the Act was to allow the general licensee to nominate to carry particular cargo if its ship met the requirements for the proposed voyage. As his Honour observed, that construction would ignore s 34(2) of the Act. However, he also considered that CSL’s construction ignored the role of s 32(4) and the notification of the outcome under s 34(3)(a). With respect, the purpose served by s 32(4) is not to extend the subject matters in s 32(3) beyond the equipment and availability of the general licensee’s vessel’s suitability to carry the shipper’s cargo. That is why s 34(3)(d) creates an objective criterion for what a reasonable shipper of the kind of cargo specified in the application could require.
Sometimes the fact that a ship has just had one cargo in its hold may make the hold unsuitable for another kind of cargo that, ordinarily, she reasonably could load. There is no reference to contractual terms or freight rates in any of the statutory criteria relevant to an application, consideration and grant of a temporary licence. A shipper inevitably will want a cheaper freight rate if it can find one. This cannot be a “requirement” of the kind referred to in s 32(3) and (4) which the Minister must have regard to when informed of the outcome of the negotiations under s 34(3)(a). Robertson J was correct to find, however, that ss 33, 34(2)(d) and (g) did allow the Minister to receive information about and consider matters of concern to a shipper such as commercial terms and freight rates and to take into account the impact of his decision on a person in Pacific Aluminium’s position. But, when the Minister considers those matters they are not mandatory, and, ordinarily, would not have or be given the weight of considerations that form a fundamental element in the making of his decision.
The evidence before Robertson J showed that the statutory process was diverted for an extraordinarily long time in exploring the issues of commercial terms (concerning the liquidated damages clause) and freight rates, when those were matters that had no express place in that process. The Act does not contemplate that, ordinarily, the Minister can or should determine whether to grant a temporary licence depending on what two commercial parties might wish to achieve in a negotiation about contractual matters. However, the Minister could have regard under s 34(2)(d), for example, to a complaint that a general licensee was seeking to exploit its position by demanding excessive freight rates or taking unreasonable stances on contractual terms. But, the evaluation of the consequences of issues raised under s 34(2)(d) or (g) is a matter for the Minister to assess on the merits. In doing so, he will only be constrained by the considerations of reasonableness in his weighing and evaluative process as explained in Li 297 ALR at 247 [67], 249-250 [72], [75]-[76].
The disposition of the appeal
It is now possible to summarise the appropriate conclusions on the grounds of appeal. First, his Honour erred in concluding that the Minister was not obliged to have regard to the object of the Act in s 3 (Ground 1). Secondly, he was correct to hold that the expressions “shipping industry” and “competition” in elements (a) and (e) of s 3(1) should be understood in their natural and ordinary meanings (Ground 3(a) and (c)). However, he erred in holding that element (d) in s 3(1) did not apply to a vessel the subject of a transitional general licence (Ground 3(b)). Thirdly, CSL was only partly successful in its criticism of his Honour’s construction of how the power in s 34(1) is affected by the mandatory considerations in s 34(3). Contrary to his Honour’s view, the Minister is not required to have regard to the outcome of any negotiations on matters other than the two specified in s 32(3) as affected by the requirements of the shipper in respect of those two matters. However, the Minister may have regard, under s 34(2)(d), and (g), to other matters including freight rates, the economic interests, profitability and costs of the shipper or receiver, the effect of his decision on Pacific Aluminium’s aluminium operation at Bell Bay and freight rates (Grounds 2, 4, 5 and 6).
His Honour remitted to the Minister the application for a variation of the temporary licence in respect of voyages 6 and 7. The delegate made the second decision in respect of voyage 7 in light of his Honour’s reasons. In those circumstances, it is not necessary to formulate additional declarations in respect of the first decision when the declarations made by his Honour dealt adequately and correctly with the relevant errors that he found the delegate had made. Rather, it is appropriate to consider the errors in the second decision, for which the delegate gave her reasons in order to determine what declarations are appropriate.
The Minister’s cross-appeal
The Minister’s cross-appeal must be dismissed. Robertson J was correct to find that the Minister denied CSL procedural fairness in failing to provide AMSA with CSL’s email of 25 July 2012. As he found, the delegate relied on AMSA’s Mr Kinley’s expert advice given to her on 6 October 2012 on only part of the information before her, without taking into account CSL’s material dealing with the previous safe berthing of CSL Melbourne at Bell Bay. His Honour found that the delegate had considered that material. However, when she communicated AMSA’s advice to CSL she failed to tell it that AMSA had not known of, or expressed a contrary view about, the substance of CSL’s email of 25 July 2012. Accordingly, CSL was unaware of that omission. The procedural unfairness of asking for an expert’s opinion on only some of the relevant material relating to an important issue, omitting to brief the expert with the material put by the party adversely affected, and then asking it, in ignorance of that omission, to comment on the expert’s opinion or view is self-evident. How was CSL to know how to respond when not properly apprised of what material the decision-maker or expert had considered?: cf Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 225 CLR 88 at 95-97 [16]-[18] and see too at 97 [19] per Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ.
Here, Robertson J found that the delegate told CSL in her email of 6 October 2012 that she had regard to CSL’s freight rates being “significantly higher than those offered by a vessel under a temporary licence”. But, he found that this unspecific assertion did not communicate to CSL the substance of Rio Tinto’s disagreement, in its email of 7 September 2012, with CSL’s statements as to the nature of the 2010 and 2011 voyages, the consequent effects on rates and the basis of that disagreement. Hence, his Honour found, correctly, that the delegate had denied CSL procedural fairness.
The Minister’s cross-appeal on that finding of a denial of procedural fairness must also be dismissed. His Honour’s finding that it was possible for CSL to respond to, had it been told of, the substance of Rio Tinto’s assertions in its email of 7 September 2012 was correct for the reasons he gave. As he found, there had been a live issue as to whether the rates were lower in 2010 and 2011 as a result of the trial involved in the earlier voyages. That occurred in the context of the issue generated in the emails up to Rio Tinto’s email of 7 September 2012. This concerned the cogency of the comparison between the trial rates and those CSL sought in 2012 and whether, in fact, those rates were comparable at all. The delegate did not indicate to CSL in her email of 6 October 2012 that she had put its material to Rio Tinto or that she had received the latter’s 7 September 2012 detailed response.
Accordingly, CSL was not in a position to offer a meaningful response to Rio Tinto’s most recent submission that the delegate had taken into account, because CSL had not been told of the substance of that submission or given an opportunity to respond to it. Contrary to the Minister’s argument, there was no sufficient urgency to excuse the delegate from providing CSL with procedural fairness on this issue. It is not necessary to deal with CSL’s notice of cross-contention.
The Minister’s and Rio Tinto’s submissions on the stated case
The Minister argued that the delegate was entitled under s 34(2)(g) to have regard to Pacific Aluminium’s requirement for CSL to provide an unconditional liquidated damages clause and that such clauses can be seen to address elements (a), (c) and (e) in s 3(1) of the Act. He contended that it was open to the delegate to consider, as a question of fact, that such a clause would operate as an incentive for CSL to perform any contract for carriage of the shipper’s cargo in the circumstances. In contrast, Rio Tinto argued that the delegate did not consider this question under s 34(2)(g) but rather did so under s 34(3)(d): i.e. as a mandatory consideration. It contended that the scope of permissible considerations was very broad. The Minister and Rio Tinto argued that the delegate was entitled to consider that a liquidated damages clause could be a reasonable requirement of a shipper of the cargo in question for the purposes of s 34(3)(d). In addition, the Minister argued that s 34(2)(f) and (g) enabled the Minister to have regard to whether CSL would offer the shipper such a clause. The Minister contended that if the delegate mistook her source of power as s 34(3)(a) rather than s 34(2)(g), that did not invalidate the second decision since the power to grant a variation existed in either case.
Next, both respondents submitted that the delegate was entitled to have regard to the outcome of the negotiations in respect of freight rates under s 34(3)(a) or as a matter that she thought relevant under s 34(2)(g).
Consideration – the stated case
The second decision was invalid because the delegate had regard to both the liquidated damages and freight rates issues as mandatory considerations under s 34(3)(d). For the reasons given above, neither of those matters was capable of being a requirement of a reasonable shipper and neither had any place in the statutory negotiation process under s 32(3) and (4).
The delegate’s mistake in identifying the source of her power to have regard to those two matters meant that she addressed their consideration on the erroneous premise that she was required to give each of them weight as a fundamental element in making the second decision: Sean Investments 180 CLR at 329. That was not what the Act required or authorised. The delegate could have considered those matters under s 34(2)(d) or (g) as explained above, but she did not have to do so. Her reasons made clear that she regarded herself as bound to consider each of those matters and did so. It is not possible for the Court to disentangle or leave undisturbed that erroneous thought process. The point is that if the delegate had not had the incorrect understanding that s 34(3)(d) required her to consider each or one of those matters, she may or may not have chosen to have regard to them or it under s 34(2)(d) or (g).
The second decision involved the delegate making an error of law by identifying a wrong issue, namely what s 34(3)(d) required her to have regard to in making her decision: Craig v South Australia (1995) 184 CLR 163 at 176; Kirk v Industrial Court (New South Wales) (2010) 239 CLR 531 at 572 [67] per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ.
For these reasons, declarations should be made reflecting that the second decision was invalid because of the delegate’s jurisdictional errors arising from her erroneous construction and application of s 34(3)(d).
Conclusion
CSL has been partially successful in the appeal from Robertson J on its substantive arguments and in resisting the Minister’s cross-appeal. The cross-appeal should be dismissed with costs. Although it was not appropriate to make additional declarations in the appeal from Robertson J, the issues of the proper construction of the Act and cognate legislation were necessarily relevant to both matters before the Full Court. Since preparing these reasons, I have had the privilege of reading the Chief Justice’s reasons. Save for an order reflecting my conclusion that the cross appeals should be dismissed, I agree with the other orders that he has proposed.
I certify that the preceding one hundred and fifty-two (152) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. Associate:
Dated: 26 February 2014
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