Geraldton Bulk Handling Pty Ltd v Geraldton Port Authority - [2009] WASC 386

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: GERALDTON BULK HANDLING PTY LTD -v- GERALDTON PORT AUTHORITY [2009] WASC 386

CORAM: MASTER SANDERSON

HEARD: 25 NOVEMBER 2009

DELIVERED : 25 NOVEMBER 2009

PUBLISHED : 15 DECEMBER 2009

FILE NO/S: ARB 16 of 2009

BETWEEN: GERALDTON BULK HANDLING PTY LTD (ACN 100 105 388)
First Applicant
MOUNT GIBSON IRON LIMITED (ACN 008 670 817)
Second Applicant
MOUNT GIBSON MINING LIMITED (ABN 32 074 575 885)
Third Applicant
AND
GERALDTON PORT AUTHORITY (ABN 73 384 989 178)
Respondent

Catchwords:

Practice and procedure - Application for leave to issue subpoenas - Turns on own facts

Legislation:

Port Authorities Act 1999 (WA)

Result:

Leave to issue subpoenas granted

Category: B

Representation:

Counsel:

First Applicant               :     Mr S A Lee
Second Applicant          :     Mr S A Lee
Third Applicant             :     Mr S A Lee
Respondent:     Mr S K Dharmananda
Addressees:     Mr A Shuy

Solicitors:

First Applicant               :     Mallesons Stephen Jaques
Second Applicant          :     Mallesons Stephen Jaques
Third Applicant             :     Mallesons Stephen Jaques
Respondent:     Allens Arthur Robinson
Addressees:     State Solicitor for Western Australia

Case(s) referred to in judgment(s):

Nil

MASTER SANDERSON: This was the return of the applicants' application for leave to issue subpoenas directed to the Department of Treasury and Finance and the Department of Transport (the addressees). The issue between the applicants and the respondent was not whether the subpoenas would issue but what the terms of the subpoenas should be. After hearing argument I ordered the subpoenas be issued in a form which took into account some of the objections of the respondent but which, in my view, allowed the applicants all necessary access to relevant documents.
This matter progressed in a slightly unusual fashion. The two addressees to whom the subpoenas were directed did not raise any objection to the form of the subpoenas proposed by the applicants. There had been extensive discussions between the applicants and the solicitors for the addressees and any differences between them had been resolved. The objections that were taken were taken by the respondent. It must be remembered this was an application to issue subpoenas. Whether or not any documents produced pursuant to those subpoenas could be tendered in evidence was a matter for the arbitrator. This was not a case where the respondent's objections were founded upon claims of privilege - public interest immunity being the most likely ground of objection. On that basis it is somewhat difficult to see how the respondent could reasonably object to the terms of any subpoena which might issue. Nonetheless that point was not taken by the applicants and the matter proceeded on the basis that it was open to the respondent to object to the terms of the subpoenas directed to the addressees.
To understand the objections raised by the respondent, it is necessary to say something about the facts of the arbitration. What follows is a summary of facts taken from two affidavits of James Yu‑Wen Wang, the first sworn 4 November 2009, the second sworn 16 November 2009; the written submissions of both parties; and the oral submissions, particularly put on behalf of the applicants. This summary is not intended to be exhaustive. It sets out the basic facts which are relevant to the matters at issue between the parties.
The first applicant (GBH) and the third applicant (MGM) are wholly owned subsidiaries of the second applicant (MGI). GBH manages the receipt, storage, handling and ship loading of iron products and bulk materials including the iron products and bulk materials of MGM. The respondent is governed by the Port Authorities Act 1999 (WA) (the Act) and is responsible for running the port of Geraldton (the port). The port has a number of berths including, relevantly, berth 4 and berth 5.
In 2003 a $103 million Port Enhancement Project (PEP) was undertaken by the respondent to deepen the harbour basin and channel as well as to upgrade three of the six berths. The PEP included works undertaken in relation to berth 4. The West Australian government had previously indicated that its support of the PEP relied on the respondent reaching a formal Port Services Agreement with the applicants for the export of iron ore products from the port. The respondent and the applicants entered into a Port Services Agreement (PSA) in or around July 2002.
In 2007 ‑ 2008 a project was undertaken by the respondent which involved the extension of berth 5. It also involved the purchase of a customised 5,000 tonne per hour capacity iron ore ship loader and associated conveyers and mechanical equipment (the berth 5 expansion project). In or about April 2008 the berth 5 expansion project was completed. GBH exports iron ore through the port. In or about February 2008 GBH transferred its operations at the port from berth 4 to berth 5.
Pursuant to the PSA, GBH is liable to pay the respondent certain charges for services provided by the respondent. Pursuant to cl 24 of the PSA, any dispute which arises between the parties is to be referred first to mediation and, if that does not resolve matters, to arbitration. By letter dated 11 December 2008 the respondent sought to adjust the charges it rendered to the applicants pursuant to the terms of the PSA. The applicants have disputed the respondent's purported adjustment and variation of the charges. No settlement of the dispute has been reached and the matter is now to go to arbitration. The arbitration has been listed for two weeks commencing 1 February 2010.
In broad terms, there are three matters in dispute between the parties. First, the entitlement of the respondent to adjust and vary the charges under the PSA. Second, the validity of the respondent's purported adjustment of the charges for the 12 month period commencing 1 February 2009. Third, the obligation of GBH to pay the charges, as they may be adjusted, for the 12 month period commencing 1 February 2009. These three broad areas of dispute need to be examined a little more closely for the purposes of this application.
The applicants allege, and the respondent denies, that as part of the berth 5 expansion project, the parties in 2006 had agreed to a variation of certain terms in the PSA with respect to the charges payable. The terms of this alleged variation are different to the terms relied upon by the respondent to make the purported adjustment to the charges.
The applicants further allege, and again the respondent denies, that as part of the proposed berth 5 expansion project, the respondent had represented to the applicant that certain terms in the PSA with respect to the charges payable were varied. The terms of this alleged variation are different to the terms relied upon by the respondent to make the purported adjustment to the charges.
As an alternative to these two claims, the applicants say that if the terms of the PSA were not varied in 2006 as alleged, the parties are in dispute as to the proper construction of the terms of the PSA. As a variation on this argument the applicants allege that if the terms of the PSA were not varied in 2006 as pleaded by the applicants, the parties are in dispute as to whether the charges were adjusted by the respondent within the terms of the PSA as the respondent says it applies.
There is a further argument that is of some significance in this application. The applicants allege that if the terms of the PSA were not varied in 2006 as it alleges, then the respondent has not acted reasonably and fairly and/or in good faith in interacting with the applicants in relation to the matters the subject of the arbitration.
The Act governs the respondent's functions; the areas it controls and manages; and the way it operates. Prior to 1 July 2009 the former Minister for Planning and Infrastructure was responsible for the Act. On 1 July 2009 the former Department for Planning and Infrastructure was split into three new agencies, these being the Department of Planning, the Department of Transport and the Department of Regional Development and Lands. Presently, the Minister of Transport (the Minister) is responsible for the Act.
Pursuant to the Act the respondent's members of staff are required to observe a code of conduct. This code of conduct requires the board of the respondent, after consultation with the Commissioner for Public Sector Standards (the Commissioner), to prepare and issue a code, or codes, of conduct, setting out minimum standards of conduct and integrity to be observed by members of staff. The Commissioner may at any time report to the Minister on any matter relating to the observance by the respondent's members of the staff code of conduct that the Commissioner thinks should be brought to the Minister's attention. The respondent's board is required to deliver to the Minister, together with its annual report, a report on the observance by its members of staff of the code of conduct.
Further, pursuant to the Act the respondent is required to act in accordance with particular policy instruments. In particular, the respondent is required to perform its functions in accordance with its strategic development plan and statement of corporate intent as existing from time to time. The respondent is permitted to levy and collect in relation to its functions port charges. The port charges are to be determined by the respondent in accordance with prudent commercial principles and may allow for the making of a profit and depreciation of assets.
The respondent in performing its functions must act in accordance with prudent commercial principles and endeavour to make a profit. However, if there is any conflict or inconsistency between this duty and the duty on the respondent to act in accordance with either the strategic development plan or the statement of corporate intent then the profit objective takes second place.
The respondent's board must each year prepare and submit to the Minister, for the Minister's agreement, a draft strategic development plan. The plan is to cover a forecast period of five years or a lesser period agreed with the Minister. The plan must set out, among other things, the respondent's medium to long term objectives (including economic and financial objectives) and operational targets and how these objectives and targets will be achieved. The matters that will be considered by the respondent's board in preparation of the plan include pricing, financial requirements and customer service arrangements. The Minister has the power to revise a draft plan. The Minister is not to agree to a draft plan or agree to or direct any modification of the plan except with a concurrence of the Treasurer of Western Australia.
The respondent's board must each year prepare and submit to the Minister, for the Minister's agreement, a draft statement of corporate intent. This statement is to cover only one financial year. It must specify, among other things, estimates of operating revenue and expenditure; an outline of capital expenditure and borrowing requirements; proposed pricing arrangements; and the performance targets and other measures by which the performance may be judged. The Minister has the power to revise a draft statement. Again, the Minister may not agree to a draft statement, or agree to or direct any modification of a statement except with the Treasurer's concurrence.
Pursuant to pt 5 div 3 of the Act, the respondent is required to prepare half‑yearly and annual reports. In particular, the respondent must, for the first half of a financial year, give to the Minister and the Treasurer a report on the operations of the respondent. Each year the respondent must prepare and deliver to the Minister separate annual reports on the operations of the respondent. The annual report must include, among other things, a commentary on any significant issues relating to the performance of the respondent that were raised by any relevant statement of corporate intent. The annual report must also provide particulars of the impact of the financial position; profits and losses; and prospects of the respondent of any directions that were given by the Minister.
Pursuant to the Act, the Minister and the Treasurer, in effect, supervise the operations of the respondent. In particular, the respondent must get the Minister's approval before entering into certain transactions covered by s 40 of the Act. Essentially, s 40 limits the value of any transaction into which the respondent can enter without the Minister's approval. In turn, the Minister is not to give approval under s 40 without the concurrence of the Treasurer. Section 43 is slightly broader. It requires the respondent to consult the Minister before it enters upon any course of action that, in its opinion, amounts to a major initiative or is likely to be of significant public interest.
Section 72 of the Act allows the Minister to give directions to the respondent with respect to the performance of the respondent's functions. These directions can either be general or in relation to a particular matter. Once the direction becomes effective, the respondent is required to give effect to that direction. The respondent's board and the Minister, at the request of either, are required to consult together in relation to any aspect of the operations of the respondent. That is required by s 74. Pursuant to s 75 of the Act, the Minister is entitled to have information in the possession of the respondent and, where the information is in or on a document, to have a copy of that document.
The respondent is required to keep the Minister reasonably informed of the operations, financial performance and financial position of the respondent. If matters arise that in the opinion of the respondent's board may prevent or significantly effect achievement of the respondent's objectives outlined in its statement of corporate intent or targets under its strategic development plan, the respondent must promptly inform the Minister of the matters and its opinion in relation to them. The Minister, with the Treasurer's concurrence, may give the respondent a financial target for a financial year. This target may be varied from time to time.
Against that background the applicants say that the subpoenas are relevant to the following issues. First, whether the applicants and the respondent had agreed to certain variations to the PSA; the terms of such variations; and any communications between the respondent, the Minister and/or the Treasurer in relation to this issue. Second, whether the respondent had represented to the applicants that certain variations had been made to the PSA; the terms of such representations; and any communication between the respondent, the Minister and/or the Treasurer in relation to that issue. Third, the proper construction of the terms of the PSA, with respect to the charges payable by GBH. Fourth, how, and the basis upon which, the respondent calculated and adjusted the charges and any communication between the respondent, the Minister and/or the Treasurer in relation to that issue. Finally, whether the respondent has acted reasonably and fairly and in good faith in interacting with the applicants in relation to the matters in dispute.
It is clear, and there was no contest by any party, that the issue of subpoenas in these circumstances to the addressees was appropriate. As I have indicated above, by the time the matter was argued most of the issues between the parties had been resolved. The way in which the applicants approached the matter was to draft subpoenas which attached a schedule detailing the documents that were to be produced. The schedule was, in broad terms, in two parts. The first part contained a series of definitions. For instance, definition B, which referred to 'Berth 4' was defined to mean '… a 281 metre long concrete reinforced wharf face at the port with direct and connecting land side access to all sections leading to the wharf apron as shown on the plan annexed as Schedule 2'.
The second part of the schedule referred to 'Documents'. This section began with a temporal qualification in the following terms:
Only Documents created after 1 July 2001 and falling within the following categories are required to be produced.
There were 10 categories of documents. There were a number of subcategories within those 10 broad categories. Some of the subcategories were further limited by a temporal reference. For instance, category 5 refers to 'The half‑yearly and/or annual reports of respondent as referred to in pt 5 div 3 of the Act insofar as it relates to the:
(a)PEP (including the Berth 4 Works) in so far as the documents relate to or refer to matters before 30 July 2002'.
Helpfully, what the respondent's did was adopt this schedule and mark‑up a version which they said should apply. In some instances they wish to add certain words; in other instances they wish to strike through certain words. This sensible approach helped crystallise the issues.
The respondent's first concern was that there should be a definition of the term 'financial information' in the first section of the schedule. The definition proposed by the respondent was that the term meant '… business cases, financial modelling and variations to prices'. The phrase 'financial information' appeared in a number of paragraphs in pt 2 of the schedule. While it is true as counsel for the applicants pointed out, the addressees appeared to have no difficulty working out what was meant by the phrase, it seemed to me that nothing was to be lost by providing a definition so that everyone could be sure what documents precisely were required. Accordingly, I made an order that the schedule be amended to include a definition of 'financial information'.
The second objection raised by the respondent related to a further temporal limitation to be placed on the documents provided. Essentially, it was said on behalf of the respondent that there was no dispute the parties entered into the PEP. That being so, any documents in relation to the PEP created after 30 July 2002 were not related to a matter in issue and should not be the subject of a subpoena.
In my view, to limit the subpoena in this way is unreasonable. The applicants clearly think that these documents may relate to a matter in issue. They are entitled to investigate these issues thoroughly. As I indicated above, nothing in these reasons dictates that any documents produced pursuant to the subpoena will be admissible in the arbitration. That is a matter for the arbitrator. But in my view there is no warrant to impose the temporal limitation proposed by the respondent.
The final complaint of the respondent related to a confidentiality agreement which had been largely agreed between the parties. The respondent wished to have that agreement further amended so that not only the addressees of the subpoenas but the respondent could object to certain documents being produced. If objection was raised then the matter was to be referred to the arbitrator. It is somewhat difficult to see a circumstance where the respondent could take an objection when none was taken by the addressees. Nonetheless, the documents to be produced are undoubtedly commercially sensitive. I saw no difficulty in leaving it to the arbitrator to determine how and in what circumstances these documents ought be available to the applicants.
For these reasons I granted leave to issue the subpoenas proposed by the applicants in an amended form.