NT Power Generation Pty Ltd v Power and Water Authority - [1999] FCA 828

FEDERAL COURT OF AUSTRALIA
NT Power Generation Pty Ltd v Power & Water Authority [1999] FCA 828
NT POWER GENERATION PTY LIMITED (ACN 061 314 921) v POWER AND WATER AUTHORITY and GASCO PTY LIMITED (ACN 009 627 801)
D5 OF 1999
MANSFIELD J
24 SEPTEMBER 1999
ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA

NORTHERN TERRITORY DISTRICT REGISTRY

D 5 OF 1999

BETWEEN:

NT POWER GENERATION PTY LTD
(ACN 061 314 921)
Applicant

AND:

POWER AND WATER AUTHORITY
First Respondent

GASCO PTY LTD
(ACN 009 627 801)
Second Respondent

GASCO PTY LTD
(ACN 009 627 801)
Cross Claimant

NT POWER GENERATION PTY LTD
Cross Respondent

JUDGE:

MANSFIELD J

DATE:

24 SEPTEMBER 1999

PLACE:

ADELAIDE

REASONS FOR DECISION

There are three issues now before the Court, all of which arise out of the awareness or realisation of the applicant that the first respondent has been entering into long-term contracts for the supply of electricity, announced apparently by its newsletter published in September 1999. At about the same time, the first respondent issued a media release dated 16 September 1999 announcing that from 1 April 2000 competition in the supply of electricity in the Northern Territory will be available, and that new suppliers of electricity, presumably including the applicant, will be able to use the first respondent’s network to deliver electricity to customers. It is unnecessary to explore whether the applicant knew earlier than September of that prospect or of that intention.
As a result of that information the applicant has made three applications.
The first is to amend the statement of claim by adding a proposed par 23(c) seeking to allege that during the period of refusal pleaded in pars 23(a) and 23(b), that is from about 12 March 1999, the first respondent has entered into long-term contracts with consumers in the electricity supply market and is continuing to attempt to enter into those contracts. The effect of that amendment, if allowed, would be to admit an allegation that the first respondent has engaged in that conduct, that is entering into long-term contracts for the supply of electricity to consumers, which it then alleges itself contravenes s 46 of the Trade Practices Act1974 (Cth). That application is opposed.
The second application is by notice of motion of the applicant of 20 September 1999 for an order restraining the first respondent from entering into contracts for the supply of electricity to third parties, other than contracts which may be terminated at will.
The third application, by the same notice of motion is to insist upon compliance with a notice to produce given by the applicant to the respondent and also dated 20 September 1999 requiring the production of extensive documents, including all files, notes, memoranda, letters, contracts, or other documents dealing with or relating to long term contracts - that is, any contract other than one which may be terminated at will - entered into by the first respondent for the supply of electricity and sale of electricity to third parties in the Darwin and Katherine area from 12 March 1999 to the present. In response to that third issue, the respondents have applied to set aside that notice to produce by notice of motion dated 21 September 1999.
The first respondent has produced, without acknowledging its obligation to do so, contracts for the supply of electricity which it says are the only contracts which are not terminable at will and which have been entered into with consumers since 12 March 1999. One of those contracts is in respect of the Alice Springs area. Four of the other eight contracts are for the term of one year, and the other four carry terms varying between three and five years. Several of those contracts have a clause headed “Meet the Market Clause”, which gives the first respondent the opportunity to be informed of any lower price offered by a competitor of the first respondent, including by obliging the consumer to provide information of any such offer and considerations relating to it, and then to meet that lower price.
I have considered the applications, and the contentions made in support of them. I do not propose to allow the amendment as sought. It is my judgment that the proposed amendment, in effect, gives rise to a new cause of action. If it is permitted it will not constitute a cause of action based upon the refusal of the first respondent to provide the applicant with access to its electricity infrastructure, but it will give rise to a cause of action by the first respondent in the exercise of its market power in the electricity supply market in an entirely different way. That new cause of action is one which the Court is not empowered to permit to be raised by amendment simply because it is a new cause of action. I rely upon the decision of Moore J in Pollack v Retravision (New South Wales) Ltd (23 December 1996, unreported) and in particular the discussion of his Honour at the bottom of page 3 and at the top of page 4 of the reasons which have been provided to me. To the extent to which evidence of such conduct may otherwise be relevant, I think that the necessary documents have been discovered or at any rate now produced. I will deal with that aspect further when I turn to the notice to produce.
I have also considered the application for the injunction. At this point of the proceedings, it is undesirable that I express any view one way or the other on the arguments as to whether there is a serious question to be tried. I am disposed to decide the application on the assumption that there is a serious question to be tried which would entitle, subject to discretionary considerations, the applicant to the relief sought. However, I am not prepared to make the order sought, having regard to the balance of convenience. I will briefly explain my reasons for that conclusion.
The first consideration is that the contracts in question, to the extent to which they represent long-term commitments, or any further such contracts may, if the applicant otherwise succeeds in this proceeding, be the subject of appropriate remedial orders under ss 82 and 87 of the Trade Practices Act 1974, which would enable the Court to give the consumers with whom those contracts have been entered into the opportunity to no longer maintain those contracts or to maintain them in a different form. I do not say that that would be an appropriate order, but it has not been contested by counsel for the first respondent that the Court would have power to make such an order if the applicant were to succeed in its application. That order might be much more confined, including giving the consumers who are parties to those contracts the opportunity to accept varied terms in relation to them, rather than simply to avoid them altogether.
The second thing which bears on my mind is another aspect of the interests of those consumers. At the present time, the first respondent has announced that it proposes to admit competitors to the electricity supply and sale market, and to provide those competitors with access to its electricity infrastructure from 1 April 2000. I do not use the term ‘market’ in any special way. It is common ground that there is a market of that kind. Consumers may have doubts about what may happen at that time, but they may presently be in a position where they are able to negotiate terms with the first respondent more favourable than would otherwise be the case. I do not think it is in the interests of those consumers that that opportunity should be removed from them, at least in circumstances where it is accepted by the first respondent that I can, to an appropriate extent, undo all or parts of those contracts in the interests of the consumers, and in the interests of the applicant, if I decide this case in favour of the applicant.
The third consideration arises from the announcement of the first respondent as to what will occur from 1 April 2000. There are in the period from 12 March 1999 only eight contracts entered into in respect of the Darwin‑Katherine area. Any consumer now dealing with the first respondent will know by virtue of that announcement that there will be open competition, at least in some form, from 1 April 2000. I suspect that significant consumers in the market are already aware of the current proceedings, and of the prospect of the applicant being a competitor in that market, if not as a result of any decision in this case, at least from 1 April 2000 in any event. Consumers may deal with the first respondent in the light of that knowledge. There is therefore, looked at in another way, no ongoing pressing circumstance which would compel consumers, if they were reluctant to do so, to enter into a long-term contract with the first respondent rather than to await a period now of some six months until open competition.
I am also of the view that damages would be an adequate remedy in any event, in conjunction with the power of the Court to make orders under ss 82 and 87 in relation to any long-term contracts entered into by the first respondent. I have also taken into account the limited number of contracts which have been entered into. I have not sought to identify the extent to which the contracts entered into, or future contracts, might impinge upon the total market for the supply of electricity in the Darwin-Katherine area. It is apparent from the last six months or so of contracts that the amount of electricity so contracted to date is relatively small. It is also apparent from other evidence in the case that the capacity of the applicant, if it is permitted by virtue of any decision of the Court to get access to the infrastructure of the first respondent, is not to serve anywhere near 100 per cent of the market for electricity in the Darwin-Katherine area. Unless it became apparent that further contracts entered into by the first respondent between now and any judgment were likely seriously to impact upon the ability of the applicant to get access to customers within the market were it to succeed in the case, I think the amount of electricity involved in the contracts presently produced at present is relatively slight. In those circumstances, I think that any adverse consequences to the applicant by such conduct – if the applicant succeeds in their claim – can be remedied satisfactorily without the need for the injunctive relief sought being granted.
I have specifically not taken into account in deciding to refuse the injunction at this point the circumstance to which my attention was drawn in submissions that the applicant may not have offered the usual undertaking in a suitable form in support of the injunction which it sought. For the other reasons which I have expressed on the balance of convenience, it is unnecessary to do so.
I accordingly decline to grant the injunction sought.
There remains the third application concerning notice to produce, and the motion to set it aside.
In my view, the contracts which have been produced, and any further contracts which may be entered into by the first respondent which are of a long term nature (and I will deal with that briefly in a moment) are discoverable as they may be relevant to the proceedings, both on the question of damages and possibly on the issue as to exercise of the market power by the first respondent. It is also my view that if the first respondent has formulated a policy for entering into long-term contracts with consumers which reflects, or might reflect, upon the way in which it is exercising that power in the market, such material may also be relevant. Beyond that I do not think that the detailed nature of the documents which are the subject of the notice to produce are necessary or should be required to be produced at this point.
I therefore direct on the applicant’s notice of motion, par 2, that the first respondent produce to the applicant from time to time and within seven days of the execution of any such contract, any contract for the supply of electricity entered into from 12 March 1999 concerning the Darwin-Katherine geographical area and which involves a term for a period of supply of electricity extending beyond 30 June 2000. I pick that time, somewhat arbitrarily, as representing any contracts now of nine months or more duration and on the assumption that such contracts entered into up to this time have been disclosed. I also direct that the first respondent should discover and produce to the applicant, subject to any appropriate confidentiality orders, any document recording any policy or plan or strategy or recording any proposed policy or plan or strategy of the first respondent for entering into contracts for the supply and sale of electricity to consumers in the Darwin-Katherine geographical area for a period of or in excess of twelve months in term and any minute of meeting of the first respondent at which any such policy or plan or strategy or proposed policy or plan or strategy has been considered and addressed.
In making that order I am not to be taken as assuming that the first respondent has not already discovered such material. It may have done so. It seems to me that, given the exigencies of timing, it is simply more convenient at this point to make that order rather than to debate that question and so that the matter is beyond doubt.
Other than those orders, I decline to make any further order on par 2 of the notice of motion of the applicant of 20 September 1999. It may be that the documents to be produced pursuant to that order, to the extent to which they have not already been produced, might in time lead to a different picture and a more drastic picture being presented to the applicant and which may warrant the applicant renewing its application for interlocutory relief. For that purpose, and to reserve the respondent’s rights, I propose otherwise to adjourn both the notices of motion of 20 September and 21 September to a date to be fixed.
I will reserve the question of costs of the argument on those three issues.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Decision herein of the Honourable Justice Mansfield.
Associate:
Dated: 4 November 1999

Counsel for the Applicant: Mr I M Barker QC,
Mr A J Bannon SC
and Mr A A Henskens

Solicitors for the Applicant: Colin Biggers & Paisley

Counsel for the Respondents: Mr L Foster SC,
Mr J Nicholas
and Mr A I Tonking

Solicitors for the Respondents: James Noonan

Date of Hearing: 24 September 1999

Date of Decision: 24 September 1999

IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY	D 5 OF 1999

JUDGE:	MANSFIELD J
DATE:	24 SEPTEMBER 1999
PLACE:	ADELAIDE

Counsel for the Applicant:	Mr I M Barker QC, Mr A J Bannon SC and Mr A A Henskens
Solicitors for the Applicant:	Colin Biggers & Paisley
Counsel for the Respondents:	Mr L Foster SC, Mr J Nicholas and Mr A I Tonking
Solicitors for the Respondents:	James Noonan
Date of Hearing:	24 September 1999
Date of Decision:	24 September 1999