Oliveri v Dept Transport - [2001] NSWSC 45

No judgment structure available for this case.

CITATION: Oliveri v Dept Transport [2001] NSWSC 45

CURRENT JURISDICTION: Equity Division
Commercial List

FILE NUMBER(S): SC 50028/00

HEARING DATE(S): 11/12/00

JUDGMENT DATE:
14 February 2001

PARTIES :

Oliveri Transport Services Pty Limited - Plaintiff
The Director-General of the Department of Transport of New South Wales - First Defendant
The State of New South Wales - Second Defendant

JUDGMENT OF: Rolfe J

COUNSEL : Mr J.C. Kelly SC/Mr R.T. Beech-Jones - Plaintiff
Mr M.L.D. Einfeld QC/Mr R.P.L. Lancaster - Defendants

SOLICITORS: Harmers Workplace Lawyers - Plaintiff
Deacons - Defendants

CATCHWORDS: Legislative Repeal and Amendment - The effect of the repeal of an amending Act on the Act which it amended, where the amended Act is neither repealed nor altered: held the repeal of the amending Act, especially by a Revision Act does not, in itself, amend the principal Act to the extent of the amendments. - Administrative Law - Whether decision purportedly made under a statutory provision should be set aside on the basis that it was made for an ulterior purpose and was uncertain: held that it should be - Contracts - An offer of renewal of a contract must be certain: held there was a lack of certainty in the offer

LEGISLATION CITED: Passenger Transport Act 1990
Transport Administration Act 1988
Transport Licensing Act 1931
Passenger Transport Amendment Act 1997
Statute Law (Miscellaneous Provisions) Act (No 2) 1999
National Parks and Wildlife Act 1974
Non-Indigenous Animals Act 1997
Petroleum (Submerged Lands) Act 1982

CASES CITED: Pearce & Geddes "Statutory Interpretation in Australia" (4th Edition)
Thompson v Randwick Corporation (1950) 81 CLR 87
Thompson and Warringah Shire Council v Pittwater Provisional Council (1992) 26 NSWLR 491
Rapa v Patience & Ors (McLelland J - 4 April 1985 - unreported)
Karger v Paul [1984] VR 161
Kovacevic v Tycan Australia Pty Limited (McLelland J - 25 June 1991 - unreported)

DECISION: 1. Declarations in terms of paragraphs 1, 2 and 3 of the plaintiff's Summons dated 10 March 2000; 2. An order in terms of paragraph 4 of the plaintiff's Summons dated 10 March 2000; 3. The defendants to pay the plaintiff's costs of the proceedings.; 4. The exhibits be returned at the expiration of twenty-eight (28) days from to-day's date unless within that time an appeal against this decision has been brought.

I N D E X

PARA

Introduction
(i) The Contract 1
(ii) Which Statutory Provisions Apply? 4
(iii) A Return To The Contract 11
(iv) The Liverpool Parramatta Transitway 22
(v) The Delegate’s Determination 23
(vi) Subsequent Correspondence 32

The Delegate’s Determination 55

The Pleadings 62

Submissions For The Parties 64

The Entitlement To Renewal 74

A Renewal Contract 91

Conclusions Thus Far 111

A Further Submissions By Mr Einfeld 112

The Effect Of Section 28 118

Conclusions 128

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

ROLFE J

WEDNESDAY, 14 FEBRUARY 2001

50028/2000 - OLIVERI TRANSPORT SERVICES PTY LIMITED v THE DIRECTOR-GENERAL OF THE DEPARTMENT OF TRANSPORT OF NEW SOUTH WALES & ANOR

JUDGMENT

HIS HONOUR:

Introduction

1 On 18 February 1995, the first defendant, Director-General of the New South Wales Department of Transport for and on behalf of the second defendant, The State of New South Wales, for which defendants Mr M.L.D. Einfeld of Queen’s Counsel and Mr R.P.L. Lancaster of Counsel appeared, entered into Commercial Service Contract No. R031, (“the Contract”), pursuant to the provisions of Section 16 of the Passenger Transport Act 1990, (“the Act”), with the plaintiff, which is a commercial bus operator and for which Mr J.C. Kelly of Senior Counsel and Mr R.T. Beech-Jones of Counsel appeared.

2 In the Contract, in which the plaintiff is referred to as “the Holder”, it undertook to provide bus services in a specifically designated area in the Liverpool-Green Valley area of south western Sydney for five years. The Contract recited that it was entered into to comply with the first defendant’s obligations under the Transport Administration Act 1988 to ensure the provision of safe, efficient, adequate and economic passenger services, and that the plaintiff had agreed to provide to the first defendant Regular Passenger Services in accordance with the Schedules to the Contract and on the contractually stipulated terms and conditions. It was agreed that the plaintiff provided the services conformably with the contractual requirements and otherwise in a completely satisfactory manner. On entering into the Contract it paid an administration fee of several thousand dollars, but otherwise it paid nothing to the defendants for the right to provide services, and the defendants paid nothing to it for doing so. The plaintiff was remunerated by the fares it collected.

3 Clause 16 of the Contract states that ss.17 to 28 of the Act “form part of this Agreement”. The short title to the Act states that it is an Act to regulate public transport services; to repeal the Transport Licensing Act 1931 and certain other enactments; and for other purposes. It was assented to on 22 June 1990. The Passenger Transport Amendment Act 1997, (“the Amending Act”), was assented to on 10 July 1997. It amended, relevantly for present purposes, ss.4, 23 and 27 of the Act. The Statute Law (Miscellaneous Provisions) Act (No 2) 1999, (“the Revision Act”), repealed the Amending Act as from 3 December 1999.

4 The matter was argued initially before me on the basis that the effect of the repeal of the Revision Act was to restore the original provisions in the Act devoid of all provisions of the Amending Act. After I reserved my decision, Mr Einfeld sought to withdraw the prior admission to that effect, and he now has submitted that the effect of the Revision Act was to repeal the Amending Act, “but it did not purport to and it did not, repeal the amendments to the Principal Act which had been introduced by the Amending Act”. Put shortly, Mr Einfeld’s submission is that only the Amending Act is repealed, but that that does not have the effect of repealing the amendments that Act made to the Act and he points to the fact that the reprint of the Act dated 14 December 1999 contains the amendments inserted in it by the Amending Act.

5 Mr Kelly does not accept that the repeal has the effect for which Mr Einfeld contends. He has submitted that in paragraphs 7, 8 and 9 of the Summons the plaintiff asserted the effect of the operation of ss.23(7), 24(2) and 24(3)(c) of the Act, to which the defendant responded, in paragraphs 4(a) and (b) of its Points of Defence that it admitted that ss.23 and 24, as in force on 18 February 1995, formed part of the Contract, but said that s.23(7) did not.

6 Mr Kelly’s submission continued that s.23(7) was inserted into the Act by the Amending Act and that the plaintiff apprehended that the defendants made the assertion concerning s.23(7) because the Amending Act was repealed, the repeal being of “the whole Act”. Alternatively, he submitted that if the repeal did not have the effect for which he contended, namely to restore the Act to the form in which it was enacted in 1990, “it does not follow that the Plaintiff’s submissions as to ‘uncertainty’ must fail as the Defendants now contend in paragraph 9 of their further submissions”. I shall return to his submissions on this point.

7 It is convenient to dispose of the effect of the repeal of the Amending Act immediately, so that one can focus on the applicable statutory provisions. Mr Einfeld has submitted that when an amending act introduces amendments to the principal act, those amendments remain part of the principal act until it is amended in a way which removes or changes them. He pointed to the fact that the Revision Act, which repealed the whole of the Amending Act, also repealed s.65 and Schedule 4 of the Act and then separately the whole of the Amending Act, and submitted that the purpose of repealing the Amending Act was not to change the substantive law, but to “tidy up” the statute book by removing legislation incorporated in that which it amended.

8 In my opinion this submission should be accepted. The effect of an amending act is to amend the principal act. The principal act is then in different terms and the repeal of the amending act, whilst disposing of it, cannot, without more, change the terms of the principal act. For that to occur there would have to be a repeal of or amendment to the provisions of the principal act. This view is supported by a consideration of the Revision Act. Section 2.45 makes an amendment to s.60 of the Act. If any other amendments were intended one would have expected to find them made in the same way. Schedule 4, in dealing with repeals, repeals nineteen Acts of which seventeen are stated to be amendment Acts. In several instances Acts, which those amending Acts had amended, are amended in part e.g. the National Parks and Wildlife Act 1974, the Non-Indigenous Animals Act 1997, the Act and the Petroleum (Submerged Lands) Act 1982.

9 In my opinion, this indicates that the clear legislative intention was to amend Principal Acts only to the extent stated, leaving the amendments incorporated in them by the amending Acts as operative provisions. The Revision Act provides in s.4 that each Act is to the extent indicated in the Schedule repealed. The explanatory note states that Schedule 4 repeals more recent amending Acts where the amendments have been incorporated in a reprint of the relevant principal Act, as has happened in the reprint of this Act. In those circumstances I consider that the Act, which contains the relevant provisions, is the Act as amended by the Amending Act and the Revision Act, all of which is incorporated in the reprint dated 14 December 1999.

10 This approach, at least in relation to State legislation, is consistent with that adopted by the authors of Pearce & Geddes “Statutory Interpretation in Australia” (Fourth Edition) par 7.24.

11 Section 17 states what a service contract must provide, and s.18(4) states that a commercial Contract, “is to be entered into for a term of 5 years”. Sections 19 and 20 provide respectively for scales of fares and minimum service levels. Section 21(1) requires that the Contract specify a region or route of operation, and sub-ss.(3), (4) and (5) state:-

“(3) A commercial contract operating on a particular route is to confer on the holder the exclusive right to operate regular passenger services on that route.

(4) The right conferred on a holder by sub-section (3) precludes the Director-General from subsequently entering into a contract with any other person for the operation of a similar service along a route sufficiently proximate that it would result in substantial competition with the service carried on by that holder.

(5) A commercial contract operating in a region may either:

(a) confer on the holder the exclusive right to operate regular passenger services in the region; or

(b) confer on the holder a right to operate such services in the region, being a right that is an exclusive right except with respect to a route or routes specified in the contract or in a variation made to the contract.”

12 Clause 3.2 of the Contract provides:-

“The Holder is hereby given an exclusive right to operate the Service in the Regional Service Area with the exception of those routes specified in Schedule Eight.”

13 Section 22 is concerned with new services, and provides:-

“22(1) If, while a commercial contract is on foot with respect to a particular region or route;

(a) the Director-General determines that, in the public interest, additional services should be provided in that region or on, or in proximity to, that route; and

(b) the holder of the contract declines to vary the contract, or enter into a new contract, for the provision of those additional services,

the holder thereby waives the exclusive right to operate regular passenger services in that region or on that route, but only to the extent necessary to enable the operation of those additional services by someone else.

(2) The Director-General may propose the terms and conditions of any variation of the holder’s contract in any new contract to be offered to the holder.

…

(5) In the event that additional services proposed by the Director-General affect the exclusive rights of two or more contract holders, it is the duty of all parties to endeavour to agree on a just compromise of their respective rights. Failing such an agreement, the exclusive rights of any one of them (called the ‘first holder’) are, to the extent necessary to enable the additional services to be performed by someone else, extinguished by this sub-section when:

(a) a variation of contract is effected, or a new contract is entered into, with another holder so affected, if the proposed additional services are likely to reduce patronage of the services operated by that other holder to a greater extent than they would reduce those of the first holder; or

(b) a new contract is entered into jointly with two or more other holders, patronage of whose services is likely to be reduced to any such greater extent.

(6) Section 28 applies to sub-section (5) as though all the holders affected were bound by a common agreement.”

14 Sub-section (1) is concerned with the requirement, in the public interest, for the provision of additional services in an otherwise exclusive region or in proximity to a route granted under a commercial Contract. It contemplates that in those circumstances the Holder of the Contract is entitled, in effect, to first right to provide those additional services, which right is waived if that Holder declines to vary its Contract or enter into a new Contract in respect of them.

15 Sub-section (5) is concerned with the position of two or more Contract Holders and calls, firstly, for the parties to try to reach a compromise, and, secondly, provides for the consequences if that does not happen.

16 Section 23 deals in sub-ss.(1)-(6) with performance assessment. Sub-section (7) provides:-

“A commercial contract is to be renewed by the Director-General for a further period of 5 years if the contracted operator, on the Director-General’s assessment, has met the objectives and standards prescribed by the performance assessment regime that were applicable during the term of the contract, unless the region or route of operation of the contract is varied in accordance with section 24 or the operator declines to take up a renewal.”

17 It is not in issue in the present case, as I have noted, that the plaintiff has met the objectives and standards, nor that it will decline to take up a renewal. The real issues are whether “the region or route of operation of the contract” has been varied conformably with and pursuant to s.24 and, if it has, whether the draft renewal Contract is uncertain.

18 Section 24 provides:-

“24(1) The region or route of operation of a service contract cannot be varied during the term of the contract except by consent of the parties.

(2) The region or route of a commercial contract offered pursuant to section 23 as a renewal of the previous contract must be the same as the region or route defined in respect of that previous contract except by consent of the parties or by a determination of the Director-General under this section.

(3) A renewal of contract may be offered in respect of a varied region or route if the variation:

(a) is necessary to extend services in developing areas; or

(b) is necessary as a result of altered traffic conditions or for reasons of public safety; or

(c) is otherwise necessary for improvement of transport services in the public interest.”

19 Clause 12 of the Contract provides:-

“At the end of the term of this Agreement, on the basis that this Agreement is in force at that time, the Holder will be entitled to a renewal for a further five year term unless:

(a) the Holder’s previous performance under this Agreement has been unsatisfactory in a manner and to an extent that would have enabled this Agreement to be cancelled during its term if the Director General had taken steps to do so; or

(b) the Region or Route of operation of the Agreement is varied in accordance with Section 24 of the Act.”

20 Section 28 provides:-

“28(1) Every contract entered into for the purposes of this Part is to be taken to include all the provisions of this Part (section 16 excepted) that confer or impose any rights, powers or duties on the parties, and any contravention of such a provision may be remedied at law or in equity as though the provision were one to which the parties had by contract agreed.

(2) In proceedings for any such remedy, every duty imposed on either party by any such provision is to be regarded as a duty performable for the benefit of the other party.

(3) To the extent that an adequate alternative remedy is provided by this section, no other proceedings by way of judicial review of any decision or action of the Director-General may be taken by or on behalf of the holder of a service contract.”

21 Section 4 sets forth the objects of the Act. Sub-sections (e) and (f) state that they are:-

“(e) To encourage public passenger services that meet the reasonable expectations of the community for safe, reliable and efficient passenger transport services, and

(f) To encourage co-ordination of public transport services.”

22 At some time in 1999 PriceWaterhouseCoopers issued a Request for Expressions of Interest in the Operation of Bus Services on the proposed Liverpool-Parramatta Transit Way, (“LPT”). When built it will be a thirty kilometre rapid busway system which the New South Wales Government is building at an estimated cost of $200m and which it proposes to service by “a bus operator under contract to the Government”. It will run from Parramatta to Liverpool through portion of the plaintiff’s region and, in several places, coincides with routes on which the plaintiff conducts services pursuant to the Contract.

23 The first issue in the present case arises because a Delegate of the Director-General has purported to make a determination under s.24, which affects the rights of the plaintiff in respect of a renewal of the Contract. Whilst there is some dispute as to whether the determination was made by the approval of a memorandum on 16 February 2000 or, as the plaintiff maintains, by a letter from the Delegate of 17 February 2000, the nature of the dispute is more readily understood by quoting portion of the latter letter, which is headed:-

“Determination Under Section 24 of the Passenger Transport Act and Offer of New Commercial Services Contract.”

“Pursuant to my delegation under Section 40 of the Transport Administration Act, I believe it is necessary for the improvement of transport services in the public interest that the exclusive service region that applies to your existing commercial services contract (Contract No R031) be varied pursuant to Section 24 of the Passenger Transport Act (‘the Act’). The variation is to be made by excising from the region the route that is to be used by the Liverpool to Parramatta Transit Way (‘LPT’).”

24 The letter sets out a number of other matters to which it will be necessary to refer but, for the moment, it is sufficient to say that the plaintiff challenges the determination on various bases, which, in the end, amount to an assertion that the variation is ultra vires and was made for an ulterior purpose, which it is said is disclosed in the following paragraph of the letter:-

“Having reviewed all the available material, my primary reason for deciding a variation is necessary for the improvement of transport services in the public interest, is that the Government needs to be able to competitively tender for the provision of the LPT services to ensure those services deliver the best value to the taxpayer. It would not be in the public interest for the improvement of transport services, to commit over $200 million of public money to constructing the LPT and to constrain the right to provide services on that publicly funded infrastructure to the holders of existing commercial service contracts under the Act (which is what would occur if your contract was renewed without the variation).”

25 The plaintiff’s basic attack is that the variation suffers from the deficiencies to which I have referred because far from seeking to achieve the permissible statutory purposes, the defendants are simply seeking to raise further revenue through the competitive tender process, which would not be possible if the plaintiff was the only party entitled to use part of the LPT. The defendants assert that there is no evidence to support the allegation that this is the purpose. In any event, they submit, even if it were, it does not necessarily follow that that is not a proper matter necessary for improvement of transport services in the public interest. The plaintiff also asserts that the Determination is uncertain.

26 The request for expressions of interest advised prospective applicants that while the document represented the Government’s current intentions, the Government reserved the right to discontinue, alter and/or re-commence the process described as it sees fit and at its absolute discretion.

27 In paragraph 3.4.2 reference is made to the existing contracts with local service Contract Holders:-

“These contracts are for a five-year term but are renewable at the end of that five-year period. All of these contracts will be up for renewal prior to the completion of the LPT. Under the terms of the Passenger Transport Act 1990, the NSW Government is required to offer to existing local service contract holders the right to continue to operate bus services on those existing routes for a subsequent five-year period, unless the NSW Government decides that the routes need to be varied in accordance with certain criteria set out in the legislation.

Based on an assessment of the relevant criteria, variations may include:

· Route diversions to ensure that each route intersected with the LPT at at least one location where passengers could transfer conveniently.

· Timing changes to ensure that all bus services arriving at a major destination did so in a way that allowed interchange between all bus services.”

28 In Part 4.3, under the heading “Financial and Management Requirements”, the document deals with the proposed fare structure, and the financing capability to undertake the responsibilities involved with providing the service.

29 Clause 4.3.3, which is headed:-

“Indicative Franchise Payments or Alternative Financial Arrangements”,

“Applicants are required to provide their best estimate (at the time of submission) of any franchise payments it proposes to make to the NSW Government (including payments for the use of the LPT) and/or any alternative financial arrangements (allowing for any payments from the NSW Government under existing subsidy schemes).

The basis of these figures must be provided in as much detail as is practicable. Applicants should note that the figures provided under this requirement are for the purposes of the NSW Government’s internal modelling and will not be used as part of the assessment of Expressions of Interest.”

30 Part 5.2, under the heading “Franchise Payments/Subsidies”, states:-

and the NSW Government wishes to maximise any franchise payments made by the successful Applicant to the NSW Government for the right to use the route and correspondingly minimise the payment of any subsidy to the Applicant

31 Part 5.3 is headed “Commercial Terms”, and states:-

“Subject to the NSW Government’s reserve right to adopt an alternative process to that outlined in this document (see Section 7.1), it is expected that the Expression of Interest process will lead to a competitive tendering stage.

A successful tenderer will receive a contract for the LPT dedicated service which may include a contract to meet the minimum standards set out in Section 3.12. That contract will detail the sharing of responsibility between the NSW Government and the Applicant for meeting required standards. It is expected that liquidated damages would apply where the Applicant failed to meet minimum service requirements.

Further detail on specific contract provisions will be provided at the tender stage, subject to the NSW Government’s decision to proceed.”

32 On 21 October 1999 the solicitors for the plaintiff, who are also the solicitors for three other bus companies in the area which are also Holders of one or more commercial Contracts for regions through which the proposed LPT will pass, wrote to PriceWaterhouseCoopers. At page 2, they said that a review of the Expression of Interest document made it clear that the LPT would run on public roads for ten kilometres and that in those circumstances the services would be “regular passenger services” and would fall within the scope of s.22 of the Act. They continued that they had advised their clients that the right to operate the transit way services could only be awarded to an operator, other than one of their clients, in the event that each of their clients declined to provide the additional services and the proposed additional services were reasonable, and:-

“We have also advised our clients that in the event that two or more of our clients wish to provide the new services, the right to provide the services should be determined following the Director-General and our clients’ agreeing on a just compromise of their respective rights in accordance with s.22(5) of the PTA. We have informed our clients that our expectation is that the Department of Transport would be in receipt of similar legal advice and that our clients should not be concerned that their contractual and statutory rights will be compromised during this process. Could you please let us know as a matter of great urgency if this is not the case.”

33 The letter went on that it was assumed that the statement in Section 4.3.2 did not apply to existing Contract Holders, and noted that in Part 5.2 reference was made to a franchise fee that may be payable by the successful tenderer. It sought confirmation that the franchise fee would be payable to the current holders of commercial contracts in the proportion to which their existing services were likely to be impacted.

34 On 28 October 1999, PriceWaterhouseCoopers replied stating that they had obtained legal advice in relation to the applicability of s.22 and, in particular s.22(5), which indicated that its provisions are not applicable to the Expression of Interest process “given the nature and scope of the services to be considered and the timeframe in which those services are likely to be introduced”.

35 Under the heading “Franchise Fees”, the letter continued:-

The definition of a Franchise Payment/Subsidy is outlined in Section 5.2 of the Document. To further clarify this definition, we note that the NSW Government is seeking to obtain the best value for money on all its transport projects in line with its transport objectives, which are well publicised. As a result, it wishes to maximise any franchise payments made by the successful Applicant to the NSW Government and (accordingly) minimise any subsidies paid by the NSW Government to that Applicant

36 On 2 December 1999 the Director-General, Mr Murray, wrote to the plaintiff advising that as it was aware the Government was evaluating proposals relating to the construction and operation of services on a dedicated bus only Liverpool to Parramatta transit way. It said that those proposals may involve the operation of a bus service through the region currently serviced by the plaintiff under the Contract. It acknowledged that the terms of the Contract gave the plaintiff “the exclusive right to provide regular passenger services in the Region 031”, and that the Contract was due to expire on 18 February 2000. It further noted the plaintiff’s right to renewal subject to the statutory provisions, including the right to vary, and suggested that a variation was necessary because of the proposed route of the LPT. The letter invited the plaintiff to provide written submissions on whether such a variation was necessary.

37 On 12 December 1999 the plaintiff responded stating that it, together with three other commercial contractors whose existing routes are affected by the LPT proposal, had submitted an Expression of Interest. The letter dealt with legal advice in relation to s.22, and:-

“7. Legal advice obtained by this company indicates that, subject to meeting the Performance Assessment regime, this company has an absolute right to renewal of its five year contract. Under s.24(1) of the Act, the region for the renewed contract can be varied if it is deemed to be in the public interest for improvement of transport. However our advice indicates that s.24 does not give your Department the right to add an additional exception for the purposes of s.22(5)(b) to the renewed contract.

8. Legal advice obtained by this company indicates that s.24 only gives the Department the right to vary the regional operation of a commercial contract for a region in a renewed contract and then only where it is necessary for the improvement of transport services in the public interest. The contractor has the right to determine bus routes within the contracted region (based on a formula outlined in the Minimum Service Levels policy) in order to ensure commercial viability.

It is my understanding the commercial contracts of the three other operators affected by the LPT have already been renewed without any application of s.24 of the Act. Any application of s.24 to only this company’s renewal would be clearly discriminatory.”

38 On 24 December 1999, the first defendant responded seeking information to assist him in making his decision under s.24. There was some further correspondence about extending the time for doing that and, on 17 January 2000, the solicitors for the plaintiff sent a detailed submission as to the power of the first defendant to carry out the variation and, on the assumption that there was power contrary to the view expressed, that it could only be exercised if the requirements of s.24(3) were met. The argument was put that whilst s.24(3) dealt with variations, the situation whereby a new service is required was dealt with in s.22 and, in particular, the point was made that sub-s.(5) “covers the situation where a new service is needed in the public interest and the new service will impact on the exclusive rights of more than one commercial contract holder”. The submission continued that that sub-section was relevant to the LPT as the exclusive rights of four operators holding commercial Contracts “will be impacted”. It was stated that they had, as part of the Expression of Interest process, indicated to the Department that they were prepared to have good faith negotiations and work together to ensure that the LPT services were provided in the public interest.

39 The gravamen of the submission was stated on page 4, thus:-

“In our submission all three of the s.24(3) factors contemplate a situation whereby the variation of the Contract is necessary, either because changed conditions mean existing services need no longer be provided or because it is necessary to ensure new services will be adequately provided to users of the public transport system. For the variation to be necessary, therefore, the variation must be necessary to ensure the services are provided to the public.

In our strong submission, due to the operation of s.22 and the approach of the four affected operators, the proposed variation is clearly not necessary to ensure the introduction of the transit way services. That improvement can be achieved by adherence to the s.22(5) process. The only effect of the proposed variation would be to deprive our client of its right to either participate in the provision of the transit way services or to receive compensation in relation to the losses it would suffer on existing services due to the introduction of the transit way services. The variation would not, in any way, impact upon the nature or quality of transit way services which are provided to the public once the transit way opens.

In our submission s.24(3) will only apply where under the terms of the contract in its unvaried form the services will not adequately be provided to the public.”

40 On 25 January 2000, an internal memorandum was prepared by the first defendant. It set out a history of the matter and the perceived advantages of the LPT.

41 Attention was then directed to the renewal of the plaintiff’s Contract, it being said that it “must be renewed on the same terms that apply in the current Contract, except where s.24 applies to a variation of region or route”.

42 Under the heading “Effect of Section 22”, it was acknowledged that the section contained a mechanism by which additional services, such as those contemplated by the LPT, could be provided during the term of the Contract. It was acknowledged that that required the Director-General to offer the right to provide the additional services to the plaintiff, and that if the plaintiff refused its exclusive right was extinguished. It also acknowledged that the terms and conditions upon which the Director-General might offer that right “must not be ‘unreasonable’ in the light of the provisions of the Act, regulations and the circumstances of the case”.

43 After some further consideration of s.22 and under the heading “Need to Vary Oliveri Contract”, it was stated:-

“It is submitted that the mechanisms contained in section 22 are not sufficient to ensure the cost-effective, efficient and integrated provision of new services on the LPT in the public interest.

Accordingly, it is submitted that a variation to the region R031 is necessary for the improvement of transport services in the public interest. This variation proposed is to excise the LPT route from the exclusive rights provided in the R031 region.”

44 The reasons supporting that approach were based on the fundamental proposition of the Department that it was crucial to the effective delivery of the LPT service that it is provided as part of a transit way network for western Sydney and it is essential for LPT services to be fully integrated to the network. The material to which I have referred makes it transparently clear that in their private considerations, as opposed to their public posturing, the defendants understood the force of the submission based on s.22 and appreciated that its provisions would not enable them to bring about the desired result. Accordingly, it was stated that recourse should be had to the variation procedure in s.24.

45 The memorandum concluded:-

“7. Concluding Summary

In order for the Director-General to be able to make a determination under s.24(3)(c) as outlined above, it must be clearly demonstrated that the variation to the existing region of the Oliveri contract to exclude the LPT route is necessary for the improvement of transport services in the public interest.

Sections 3 and 4 of this submission demonstrate the benefit to the public of the transit way network as shown in the Government’s Action for Transport 2010 document.

Section 5 demonstrates that it is likely that these benefits will not be fully realised if LPT route is included in Oliveri’s exclusive service region as the provision of LPT services in that region could only be offered to Oliveri or other existing bus operators, pursuant to the provisions of s.22 of the Act.

Accordingly a variation is required for the improvement of services in the public interest and Oliveri’s renewed contract should be varied accordingly.

8. Recommendation

Transport Administration Act

A copy of the attached draft determination to Oliveri’s for your signature is attached.”

46 The memorandum did not explain why the perceived benefits would not be fully realised if the LPT route was included in the plaintiff’s exclusive service region. There was no suggestion that the plaintiff was not operating its routes properly and, as will appear, the plaintiff was expressly invited to tender for the LPT, a course which would hardly have been taken if it was not thought that the plaintiff could fully realise its potential benefits.

47 On 25 January 2000, the Delegate wrote to the plaintiff stating that she had made a Draft Determination under s.24 to vary the service region to apply on renewal of the plaintiff’s existing commercial services contract for the region in Contract R031, which determination was subject to her consideration of any further submission the plaintiff may wish to make.

48 She said the variation proposed to exclude from the exclusive service region the route to be used by the LPT, and that the exact variation was set out in Schedule Eight of the proposed Commercial Service Contract, a copy of which she attached for consideration. She said the reason for varying the service region:-

“.. is because it is necessary for the improvement of transport services in the public interest”.

49 The letter continued:-

“As you would be aware, the NSW Government will be investing an estimated $770 million in constructing the Western Sydney Transitway Network project and an estimated $200 million on the LPT component of the project.

The public interest requires that this substantial investment in the improvement of public transport services is operated in a way that delivers the best value to the taxpayer. It would diminish the improvement of transport services in the public interest, if the Director-General were only able to offer the right to operate the transitway service to existing bus operators, particularly as it may be essential for LPT services to be fully integrated into the broader transitway and public transport network.

Secondly, the LPT service specifications (including but not limited to minimum service levels, vehicle standards and intelligent transport systems) being considered are very different to the terms and conditions contained in the current Commercial Services Agreement. As you would be aware, if Oliveri retains the existing service region for a new five year period, then during that period the Director-General can only offer existing bus operators the right to provide LPT services on terms and conditions that are not ‘unreasonable’ having regard to the Act, the regulations and the circumstances of the case.

I have concerns that specifications of the kind being considered for the LPT may be viewed as unreasonable for the purposes of section 22. This may mean that the proposed LPT specifications could not be required as mandatory terms and conditions offered to existing bus operators to provide LPT services under section 22.

The level of public benefit derived from public funds invested in the LPT would be greatly diminished if those service specifications could not be insisted upon by the Director-General.

For these reasons, I believe a variation to the Oliveri service contract is required for the improvement of transport services provided by the transitway system in the public interest.

As stated above, this view is subject to any further submissions you may wish to make.”

50 Another reason was thereby disclosed for not following the procedure laid down by s.22, which was unrelated to the purpose of the section.

51 The new contract, stamped “draft”, was annexed and Schedule 8, which is headed “Excluded Routes”, stated:-

“Excluded routes are those marked on map R031 in Schedule 5 by colours corresponding to f, g, h and i in the explanation of colours attached at Schedule 5, as routes of a third party which operate partially within the region and not subject to a travelling restriction.

The Transitway route is that which is marked as the LPT Transitway on the attached Map 1, Schedule Five.”

52 On 15 February 2000, the solicitors for the plaintiff wrote to the Delegate concerning to the Draft Determination. The letter disputed the two reasons put forward, namely that it was necessary that the LPT services be fully integrated into the broader transitway and public transport system, and that the minimum service levels the Director-General would require on the transitway may be considered “unreasonable” having regard to the Act, the regulations and the circumstances of the case.

53 The letter concluded that the plaintiff was committed to participate in the provision of transitway services and integrating them into existing services and that in the event of a determination being made under s.24 to the effect of the draft, the plaintiff would immediately seek to have the decision of the Director-General reviewed by a review panel.

54 In an internal memorandum of 16 February 2000 it was suggested to the Delegate that the plaintiff had not submitted substantive information in support of its claims, and it was recommended that the Delegate make a final Determination varying Contract R031 under s.24 of the Act by removing the route proposed to be used by the LPT.

55 On 17 February 2000, the Delegate sent her Determination purportedly made under s.24 to the plaintiff. The substantive portion stated:-

“Pursuant to my delegation under section 40 of the Transport Administration Act, I believe it is necessary for the improvement of transport services in the public interest that the exclusive service region that applies to your existing commercial services contract (Contract No R301) be varied pursuant to section 24 of the Passenger Transport Act (‘the Act’). The variation is to be made by excising from the region the route that is to be used by the Liverpool to Parramatta Transitway (‘LPT’).

The exact nature of the variation is the route of the LPT through the contract region as set out in Schedule Eight of the new commercial services contract which is being offered to you for the period 18 February 2000 to 17 February 2005. A signed copy of this contract is attached for your execution.

This variation is not to take effect until immediately prior to the time when contracts are executed by the Director-General or his Delegate to provide services on the LPT route (as set out in Schedule Eight of the Contract). It is anticipated that this will be, at the earliest 2001, but more likely 2003. The Department will keep you fully informed about the actual date upon which the variation is to commence and ensure you receive reasonable notice of that date.

Having reviewed all the available material, my primary reason for deciding a variation is necessary for the improvement of transport services in the public interest, is that the government needs to be able to competitively tender for the provision of the LPT services to ensure those services deliver the best value to the taxpayer. It would not be in the public interest for the improvement of transport services, to commit over $200 million of public money to constructing the LPT and to constrain the right to provide services on that publicly funded infrastructure to the holders of existing commercial service contracts under the Act (which is what would occur if your contract was renewed without variation).

However, it should be stressed that this decision will in no way exclude Oliveri from participating in the LPT competitive tender process and indeed government welcomes the participation of Oliveri in the tender process.

I have also noted your comments in relation to the Director-General’s capacity to negotiate the provision of additional services using the mechanism available under section 22 of the Act. Given my findings above, I do not believe it is necessary to form a concluded view on the adequacy of this mechanism for the provision of service and specifications of the kind being envisaged for the LPT and have disregarded that factor for the purposes of this decision.

In terms of the impact of the variation on the provision of other bus services in the contract region, I have noted your concerns. However, based on the material before me, any potential impact on the capacity of Oliveri to provide services in the region can be considered at a later stage and does not reduce the need for variation based on the above finding.”

56 On 17 February 2000, the solicitors for the plaintiff wrote to the Delegate stating that they were instructed to protest against her determination and, on 18 February 2000, the solicitors for the defendants wrote to the solicitors for the plaintiff referring to the rejection of the offer of the renewed Contract and stating that in view thereof the defendants “regrettably” had no option but to call for tenders for the provision of regular passenger services in the applicable region.

57 On 24 February 2000, the solicitors for the plaintiff responded, inter alia, that the letter from the Delegate did not contain an offer capable of acceptance. It referred to the new Contract, which was unsigned, and to the statement in the letter that the variation is not to take effect until immediately prior to the time when the Director-General executed contracts to provide services on the LPT route, which it noted may be at the earliest in 2001 but more likely in 2003. The letter said:-

“Nothing in the unsigned contract makes provision for the variations to take effect upon a future date.”

58 The letter next referred to the fact that the variation was made for the ulterior purpose of raising revenue, upon which point it expanded. It also pointed out that the fact that the date of services on the LPT was contingent upon the happening of the various future events referred to in the letter:-

“.. defeats the requirement that any variation be ‘necessary’ for improvement of transport services in the public interest”.

59 By letter dated 1 March 2000, the solicitors for the defendants asserted that if the plaintiff had signed and returned the Contract, the defendants would have been bound to sign it. It said:-

“The accompanying letter from Ms Aldred merely reflects the fact that the transitway excluded from the contract is not yet in use and is not likely to be used before 1 January 2001.”

60 The plan shows the exclusive area of the plaintiff edged in yellow, and the LPT bisecting it from north to south and more to the western end and, at the point of the bisection corresponding with an existing plaintiff’s route. After passing through the plaintiff’s region the LPT turns in an easterly direction and then a northerly direction and finally coincides with an east-west route of the plaintiff leading into Liverpool.

61 The evidence on which the parties proceeded are the documents comprised in Exhibit A.

62 By a Summons issued on 10 March 2000 the plaintiff sought various declaratory relief as to the validity of the Determination of 17 February 2000 and consequential relief.

63 The parties furnished the following Agreed Statement of Issues:-

“1. Whether the determination purported to have been made pursuant to s.24(3)(c) or, further or alternatively, s.24(3)(a) of the Passenger Transport Act 1990 (NSW) (‘the Act’) by Ms Jennifer Aldred in her capacity as a delegate of the first defendant (‘the delegate’) on or about 17 February 2000 (‘the determination’) that the exclusive service region made the subject of the Commercial Services Contract No R031 made between the first defendant (‘the Director General’) on behalf of the second defendant (‘the State’) and the plaintiff (‘Oliveri’) in relation to Contract Region R031 dated 18 February 1995 (‘the contract’) be varied by excising from that region the route that is proposed to be used by the Liverpool-Parramatta Transitway (‘the LPT’) is ultra vires, void and of no legal effect, in particular:

(a) whether the determination was made bona fide and for the purpose for which the power to make a determination under section 24(3)(c) or, further or alternatively, section 23(3)(a) of the Act was conferred;

(b) whether the delegate, in making the determination, had regard to irrelevant considerations;

(c) whether the delegate, in making the determination, failed to have regard to relevant considerations; and

(d) whether the determination was unreasonable and uncertain.

2. Whether section 28(3) of the Act applies in the circumstances so that the plaintiff is precluded from raising the issues in paragraph 1 above.

3. Whether the offer of renewal of the contract purported to have been made by the Director General by letter dated 17 February 2000 was a renewal of contract ‘offered’ in respect of a varied region or route that was ‘necessary for improvement of transport services in the public interest’ within the meaning of section 24(3) of the Act or ‘necessary to extend services in developing areas’ within the meaning of section 24(3)(a), or at all.

4. Whether a renewal of the contract has arisen for a further term of 5 years from 18 February 2000 in respect of the Contract Region R031, including the route of the LPT, by operation of section 23 of the Act.

5. Whether the plaintiff is entitled to an order for specific performance of the contract for renewal for a further term of 5 years, an injunction to restrain the anticipated breach of contract by the defendants or damages in lieu of specific performance or an injunction.”

64 Mr Kelly’s first submission was that whilst the purpose for which a determination may be made under s.24(3) is the improvement of transport services in the public interest, the Delegate’s letter of 17 February 2000 makes it clear that her primary reason for deciding that the variation was necessary:-

“.. is that the government needs to be able to competitively tender for the provision of the LPT services to ensure those services deliver the best value to the taxpayer.”

65 The submission continued that the desire to maximise the return by being able to have an unrestricted tender process was a revenue raising function and not one necessary for improvement of transport services in the public interest.

66 It is necessary, in order to appreciate fully the thrust of this submission to keep firmly in mind the objects of the Act, which include, pursuant to ss.4(e) and (f), encouraging public passenger services that meet the reasonable expectations of the community for safe, reliable and efficient passenger transport services, and co-ordination of public transport services. Similarly, the Contract requires attention to such matters. Therefore, so Mr Kelly submitted, when one looked to the words “for improvement of transport services in the public interest” as being an elaboration on the matters set forth in s.24(3)(a) and (b) in a more general way, one was looking to the provision of public transport of an improved nature and, in those circumstances, he submitted it was impermissible to seek to use sub-s.(c) where there was the ulterior purpose of seeking to raise additional finances. He relied upon the often stated reasons of the High Court in Thompson v Randwick Corporation (1950) 81 CLR 87 at pp.105-107. That case also covers the point that the ulterior motive need not be the sole purpose, if it is a substantial purpose.

67 Mr Kelly submitted that it was clear from the Determination that the maximising of revenue from a competitive tender process was a major purpose and, as such, was an ulterior purpose.

68 Mr Einfeld responded that the LPT was to be built at an envisaged cost of some $200m, and that operators will be invited to tender to operate once it is in operation. He continued that if the plaintiff maintained the right to use the transit way over a small area “it would lead to massive inefficiency” in circumstances where only two small portions of the plaintiff’s route would be affected, and that its efficient operation demanded that there be only one operator. He accepted that an administrative decision made in the exercise of a statutory power may be impugned for improper purpose, if the power was exercised for a substantial purpose which was improper, in the sense that no attempt would have been made to exercise the power in that way if it were not for that purpose: Thompson and Warringah Shire Council v Pittwater Provisional Council (1992) 26 NSWLR 491. He continued that the decision would not be invalidated unless the plaintiff established that no attempt would have been made to rely on s.24(3)(c) but for the revenue raising proposal.

69 Mr Einfeld also made the submission that there was no evidence to support the view that any part of the purpose of the defendants was to maximise revenue. In my opinion this submission must be rejected. There cannot be the slightest doubt, on any fair reading of the correspondence, the Expression of Interest document and the internal memoranda, that the dominant purpose of the defendants, in seeking to vary the plaintiff’s Contract, was to ensure that the defendants would be able to seek competitive tenders for the whole of the LPT without the right to do so being constrained by rights of the holders of existing Commercial Service Contracts under the Act.

70 When one goes back to the terms of the Act and the Contract, s.23(7) imposes an obligation on the Director-General to renew the Contract if certain conditions are met. It is not an issue in the present case that those conditions were met. The only circumstances in which that obligation can be avoided is if the region or route of operation of the Contract is varied in accordance with s.24 or, although not relevant for present purposes, the operator declines to take up a renewal. The renewal pursuant to s.24 in respect of a varied region or route is, in my opinion, clearly contemplating a varied region or route offered to the party entitled to the renewal. Section 24(3) is not concerned with reducing services but maintaining them for the benefit of the public, in circumstances where they are carried out by the party entitled to the renewal.

71 The matter can be exemplified in this way. If the submissions for the defendants are correct the renewal process could be rendered illusory, because the defendants could offer greatly restricted, and hence commercially unviable, areas to those entitled to renewals on the basis that it was more cost effective from the Government’s point of view to have one entity carrying out the work previously performed by a number. The fact that in the present case it is said that only a small part of the plaintiff’s area of operation will be removed does not deny the proposition that the right to remove a small part, in purported exercise of the power in s.24(3)(c), carries with it the right to remove a large part. However, s.24(3)(c) is concerned with regard being had to circumstances in which a contract will be renewed if the variation is otherwise necessary for improvement of transport services in the public interest, and where that improvement, on a proper construction of the Act, will be implemented by the party entitled to the renewal. Hence the renewal is offered, i.e. to the Holder, in respect of a varied region or route, and the conditions are to be fulfilled by the Holder. Section 24 cannot, in my opinion, be construed as allowing the Delegate to take away services without, at least, providing other services in substitution therefor.

72 This point leads on to several others. Firstly, the party to which the renewal must be offered must be given a definite area for a definite period. The draft Contract does not do that. It purports to excise part of the route from the commencement, which was clearly not intended. Thus, the Determination is not reflected in it. It is stated to be the excision of the route used by the LPT, but it is unknown when the variation is to take effect. The letter suggests that it will be “at the earliest 2001, but more likely 2003”. It does not condescend to any specificity as to when in those three years the variation may come into effect and the draft Contract does not deal with the point. In the meantime the plaintiff is apparently obliged to maintain the standard of services on the total route, for the contrary was not suggested, without being aware of when, if the Determination is otherwise valid and can affect the draft Contract in the manner for which the defendants contend, it may be obliged to reduce the area of its operation. Whilst that causes problems, obviously enough, for the operation of the service, the more acute problem is that the defendants have simply failed to provide a Contract to the plaintiff reflective of these terms.

73 Mr Einfeld responded that the draft Contract left nothing to be determined in the future because, although the area of the LPT was excised, that excision would not take effect until the LPT was built, notwithstanding that the draft Contract did not say so, and the defendants stated that they would give reasonable notice as to when this will occur. The defendants have simply failed to furnish to the plaintiff a renewal which gives effect to what was apparently intended to be the variation.

74 It was not in issue that the plaintiff is entitled to a renewal of its Contract for a further period of five years. That right flows firstly from s.23(7), which requires the Director-General, in the circumstances of this case, to do so and, secondly, from clause 12 of the Contract, which I have quoted in paragraph 19.

75 Section 24 provides that the region or route cannot be varied during the term of the Contract except by consent; that the region or route offered pursuant to s.23 as a renewal of a previous contract must be the same as the region or route defined in the previous contract except by consent, which has not been forthcoming in the present case, or by a determination of the Director-General under that section. Sub-section (3) provides that a renewal may be offered in respect of a varied region or route, if the variation is necessary either to extend services in developing areas, or as a result of altered traffic conditions or for reasons of public safety; or:-

“is otherwise necessary for improvement of transport services in the public interest”.

76 The variation specified in the Delegate’s letter of 17 February 2000 states that she believes that it is necessary for the improvement of transport services in the public interest that the exclusive service region be varied pursuant to s.24 by excising from the region the LPT route.

77 The Delegate discloses that her primary reason for deciding that the variation is necessary for the improvement of transport services in the public interest is that the Government needs to be able to competitively tender for the provision of the LPT services to ensure those services deliver the best value to the taxpayer. The meaning of those words is not entirely clear. The ability to competitively tender for the provision of such services is clear enough. It means that the Government can seek tenders, on a competitive basis, for the use of the LPT.

78 But it is not clear what is meant by the delivery to the taxpayer of the best value. That could mean the quality of services, or it could mean a return to the Government on the money it spent to build the LPT. If the quality of services was the matter to which the Delegate was adverting then her consideration would, in my opinion, have been directed to the matters provided for by sub-s.(3). However, the next sentence may lead to a different conclusion. She has the view that it would not be in the public interest to have committed over $200m of public money, which obviously must mean money from the public as a whole rather than simply from those who would or might use the LPT, and to constrain the right to provide services “on that publicly funded infrastructure” to the holder of an existing Contract. This approach is highlighted by the next sentence, which states that the plaintiff is not to be precluded from participating in the tender process, i.e. the competitive tender process, with the consequence that if its tender were successful it would be granted, at least in part but at a cost to it, that to which it was otherwise entitled by virtue of the right to renewal without payment pursuant to the tender process.

79 Thus the Delegate formed the view that there should be a variation to enable the Government “to competitively tender” because, if the Government could not, the plaintiff would retain the exclusive rights in the region, including on the LPT, subject only to the exclusions in the Contract.

80 When one goes back to the Expression of Interest document it is to be noted that clause 4.3.3 provides for the indicative franchise payments proposed to be made to the Government, and clauses 5.2 and 5.3, which I have set forth in paragraphs 30 and 31, make the Government’s position clear.

81 I have set out what appears under the heading “Franchise Fees” in the letter from PriceWaterhouseCoopers to the solicitors for the plaintiff of 28 October 1999 in paragraph 35.

82 The Act committed the decision to the Delegate. However, the terms of the Expression of Interest and PriceWaterhouseCooper’s letter are consistent with the approach put forward by the Delegate in giving her reasons. They are also consistent with the internal Government memoranda.

83 The question then is whether the plaintiff has satisfied me that the Delegate did not exercise her powers for a permissible statutory purpose, but for the ulterior purpose of creating a situation in which the Government could derive more money by a competitive tender process and, in doing so deprive the plaintiff of the benefit of a renewal to which it would otherwise have been entitled without such cost. An anterior question is whether that is what the Government proposed to do, and it is to that question that I shall turn first. Mr Einfeld submitted that there was no evidence which would support a finding that the Government had any such purpose. I reject that submission. Firstly, the documents emanating from PriceWaterhouseCooper make it apparent that was a significant purpose. Secondly, the internal memoranda are consistent with the implication of that purpose. Thirdly, the terms of the Delegate’s Determination, which is the essential document, puts the real purpose and basis for her decision beyond doubt.

84 That conclusion does not, however, necessarily dispose of the issue whether the Delegate exercised her powers improperly. Section 24(3) is concerned with a renewal of contract in respect of a varied region or route. It is clear from the matters which must be found to be necessary before such a variation can be made that they relate to the provision of a transport service in an area or on a route. There is no power to vary for the purpose of implementing Government policy decisions generally about transport services.

85 A Holder has an entitlement to a renewal of the general area in which it operates with this in mind and, for example, it could hardly be within the contemplation of sub-s.(a) that because it was necessary to extend services at Byron Bay, a Holder in the Albury area should have a variation requiring it to operate in Byron Bay. Similarly, altered traffic conditions or reasons of public safety obviously relate to circumstances existing in the general area in which the Holder operates.

86 Sub-section (c) is, in my opinion, a provision intended to capture the general types of matters specified in sub-ss.(a) and (b). It is clearly contemplated that the variation will improve the service, and this is recognised this by its opening words “or is otherwise necessary”. That for which it must be necessary is the improvement of the transport service in respect of the routes or region specified in the Contract. The words “in the public interest” do not, in my opinion, expand the section to a consideration of the general public interest of the Government in the expenditure of part of the State’s revenue for transport services. They refer to the more limited public interest in improving transport services, i.e. the provision of such services on the routes or in the area to which the Contract relates. If this were not so a contract could be varied because of considerations of planning and policy which had nothing to do with the region in which or the routes on which the Holder was entitled to operate and to the renewal of the rights to which the Holder had a prima facie statutory and contractual right.

87 In my opinion, it is not permissible to expand those words beyond that context by saying that they justify putting in place a variation for the purpose of allowing the Government to derive through a competitive tender process more revenue. This can be put another way. The words do not permit a variation of the Contract to deprive the Holder of that to which it would otherwise be entitled, unless the reason is that to do so meets one of the tests in s.24 and, certainly, they do not permit a variation which is made with the intention of giving part of the Holder’s route to another person because that person is prepared to pay more for it, or forcing the Holder to obtain the renewal by buying that to which it would otherwise be entitled at no such cost.

88 The Holder must be entitled to regulate its affairs on the basis that it will not be deprived of a region or route so as to make that region or route a more financially valuable commodity with which the Government could deal, or a less financially valuable commodity for the Holder. That, in essence, is what is sought to be achieved by the Government in the present case. The Government has sought to bring about a variation so as to deprive the plaintiff of some of its routes, so that it can then deal with them to its greater financial advantage. The Delegate’s letter says so.

89 Mr Einfeld submitted that it was obviously better to have one Holder operating the LPT and that it would lead to gross inefficiencies for that not to happen. There was no evidence to support this proposition and it was not the reason the Delegate advanced for coming to her decision. However, even if his submission is correct, it directs attention to the wrong question. The submission further discloses that the purported variation was driven by a general policy consideration which involved, inter alia, the deprivation of the Holder’s rights, unless the Holder was prepared to pay money it was not otherwise obliged to pay.

90 For these reasons I am satisfied that the Delegate exercised her power for an ulterior purpose, which was, at least, a primary purpose, which is sufficient to vitiate her decision: Thompson v The Council of the Municipality of Randwick (1950) 81 CLR 87 at pp.105-107 and Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 at pp.39-41.

91 If my conclusion is wrong, there was, none-the-less, an obligation to offer a renewal Contract. This required the making of a contractual offer, which complied with the provisions of the Act and the Contract, which was certain and capable of being accepted. In my opinion, for the reasons stated, the matter should have been dealt with by reference to s.22. However, on the assumption that it should have been considered pursuant to s.24(3)(c) the question is what offer did the defendants make to the plaintiff, which was capable of acceptance.

92 The draft contract, as with the Contract, provided a variation clause acknowledging that there may be changes to the conditions and requirements during its course, whereupon the parties agreed to meet and discuss in good faith any changes, which would then be reduced to writing and signed by each party. Assuming the defendants’ entitlement to excise the LPT route, that was not to be done until some unspecified date between 2001 and 2003. Although it was said that there was to be no variation until the events following the completion of the LPT, the draft Contract made no such provision. Any variation would thus have to be subject to the variation clause and there would have to be further negotiations. It is not difficult to imagine that the nature of the negotiations would depend on all the circumstances, which then existed.

93 It is to be noted that under the heading “Provider Services” there has been added, in the draft, sub-clause (f) whereby the plaintiff is to use its best endeavours to connect to the bus stops applicable to services provided on the Transitway within a five or ten minute time band of that service, to allow “connectivity”.

94 In Schedule Eight the excluded routes, which cannot readily be discerned, do not include the LPT, the reference to it being:-

“The Transitway route is that which is marked as the LPT Transitway on the attached Map 1, Schedule 5”.

95 The view to which I have come is, in my opinion, supported by the requirements of s.22. Sub-section (1) provides that if while a commercial contract is on foot with respect to a particular region or route, the Director-General determines that, in the public interest, additional services should be provided in that region or on, or in proximity to, that route and the Holder of the Contract declines to vary it, or to enter into a new one for the provision of those additional services, the Holder waives the exclusive right to operate regular services in that region or on that route, but only to the extent necessary to enable the operation of those additional services by someone else.

96 The Contract was for a period of five years from 18 February 1995. Before its expiry the Director-General had determined that the LPT was to provide an additional service, which would be both within the plaintiff’s exclusive region and/or on or in proximity to routes to which the plaintiff was entitled.

97 In these circumstances, the Director-General was, in my opinion, obliged to act conformably with sub-s.(2), the plaintiff by virtue of s.22(1)(b)having the right to decline to vary the Contract or to enter into a new one for the provision of the additional services, the section obviously providing that the Holder should have the right, in effect, of first refusal to provide services to the additional route.

98 The circumstance in relation to the LPT is further made the subject of s.22 by virtue of its passing through and over the exclusive regions and routes of other contract holders. In those circumstances s.22(5) is called into play.

99 The solicitors for the plaintiff have advised the defendants and their solicitors on a number of occasions that the provisions of s.22 are applicable. The defendants and their solicitors have rejected this contention.

100 In my opinion, the future operation of the LPT was one which fell to be determined by s.22 and it should have been dealt with on that basis. It is quite obvious that the essential purpose of s.22 is to deal with new services in a way which will not, save for action on the part of the person holding the Contract, deprive the Holder of its rights but will, to the extent of the new services, augment them.

101 I do not consider that the Act provides a manner in which the defendants can avoid the obligation imposed by s.22 by resort to s.24. Section 22 makes it quite clear that new services, at least in the first instance, are to be offered to the existing Holder and, provided that it is agreeable and the other provisions of the section are met, the Contract is varied to give it the right to the new services. The LPT is an instance of a provision of a new service and the rights of the plaintiff to rely on the provisions of s.22 and to protect the conferred contractual rights cannot be defeated by recourse to the provisions of s.24.

102 Thus, once it is seen that specific reference is made to what shall happen in the event of new services, being additional services, the defendants are not, in my opinion, permitted to over-ride the rights intended to be preserved, unless the conduct of the Holder allows that to be done. Accordingly, the general provisions of s.24(3)(c) are not intended to achieve that end, but to give effect, in the way I have sought to describe, to the type of considerations in s.24(3)(a) and (b).

103 Mr Kelly put the uncertainty submission in two ways. Firstly, he said that if the decision of a competent authority was so unreasonable that no be said that a reasonable authority could ever have come to it, and that ordinarily a decision will be invalid for uncertainty if it cannot be given a sensible or ascertained meaning and if it is uncertain in its operation. He submitted that where the empowering legislation may be construed as authorising only decisions characterised by certainty of expression and operation, uncertainty in either respect may lead to invalidity.

104 Secondly, he submitted, based on conventional principles of offer and acceptance, there can be no binding and enforceable obligation unless, at the least, the essential or critical terms have been agreed, and that in the context of s.24(3) the word “offer” means presented for acceptance, which, on acceptance, would become a binding and enforceable contract.

105 He submitted that the terms and conditions were inconsistent and uncertain, such inconsistency arising between the terms of the draft Contract and the terms on which it was offered, in relation to the variation. He further said that a variation, which is not to take effect until some future unspecified time for which the draft Contract makes no provision, and which never may take effect, is not a variation of the type contemplated by the Act.

106 Mr Einfeld submitted that there was no uncertainty in the decision, on the basis that the lack of precision about the date of practical commencement of services along the LPT and the fact that the plaintiff could continue to operate as it had until a date certain was reached were not matters going to the validity of the Delegate’s decision. He continued that the plaintiff was told “in the clearest terms that a decision had been taken to offer a renewal of contract in respect of a varied region and a copy of the contract was attached”. He continued:-

“The fact that there is, as a matter of practical reality, a period during which the excision of the LPT route will not affect the plaintiff’s bus operations does not make the decision uncertain as a matter of administrative law.”

107 Far from resolving the problem to which Mr Einfeld referred, this submission pointed up the difficulties it presented. Firstly, there was no provision in the draft Contract tendered for the excision of the route of the LPT at some date in the future. Assuming, as the submission did, that the words of Schedule Eight amounted to the excision of the LPT there was no provision in the draft Contract which delayed the operation of that. In those circumstances, an acceptance of the draft Contract would, on the argument presented, have involved an incorporation into it of the Delegate’s determination. Accordingly, there was the uncertainty as to when the excision operated, and, if it did not operate immediately the obligation of the plaintiff to maintain the services on the excised route.

108 Secondly, there was the uncertainty as to when, on Mr Einfeld’s submission, the excision would take effect. Absent any provision in the draft Contract providing for that, it would seem that the variation provision would have to apply and that, so it seems to me, and subject to any argument about “good faith”, would seem to be merely an agreement to agree.

109 Thirdly, there is the very real difficulty where portions of the non-excised routes coincide with the LPT. At those points the plaintiff’s route, presumably, would terminate at the LPT and then restart after leaving the LPT. An example of this appears in the western area of the region on the LPT. There is a length of the LPT running north/south over part of which, near the words “Oliveri’s Transport Service P/L”, the plaintiff has an exclusive route. The draft Contract does not provide for an alternative route for the plaintiff around the LPT so that passengers can be taken to their desired destinations.

110 The matters to which I have referred are of significance to the plaintiff. It is obliged to provide buses with certain qualities and characteristics, staff and the basic infrastructure for running the service conformably with the draft Contract. By seeking to engraft onto the draft Contract the condition or term that the plaintiff should not be entitled to use the LPT route at some time, the defendants have reduced the plaintiff’s ability to make informed commercial decisions. The Delegate’s letter provides a period of potentially three years during which the plaintiff may or may not, on the view propounded by the defendants, have to operate the services, i.e. 1 January 2001 to 31 December 2003. But one example of a problem this could cause is in clause 5.4(h), which requires the average age of vehicles not to exceed twelve years. That could lead to the plaintiff’s having to replace a vehicle or vehicles, say in mid-2001, without any guarantee that they would be used in the service for any time sufficient to justify the cost of replacement.

111 For the reasons given, I am of the opinion that the Delegate’s Determination should be set aside on the grounds that it was determined for an ulterior purpose and was, relevantly for a consideration of an administrative law decision, uncertain. I am also of the opinion that the offer to renew the Contract, which the defendants were obliged to make to the plaintiff, was uncertain.

112 Mr Einfeld submitted that if his submissions in relation to the Act, the Amending Act and the Revision Act were correct, so that the Act incorporated the 1997 amendments and “relevantly as to s.4 (as to which see below) and s.23 (copy update attached), in the result the plaintiff’s submission as to uncertainty must fail”.

113 The further submission continued that because of the initial view taken of the amendment to the statute, he had refrained from making a submission based on the terms of s.4(e) and (f), which was introduced into the Act by the Amending Act and to which provisions I have referred. He submitted that the objects of the legislation:-

“.. now specifically advert to the legislative purposes of achieving efficient passenger transport services and encouraging co-ordination of public transport services. The variation to the plaintiff’s contract, which, as we submitted last Monday, was necessary to achieve the integrated operation of the LPT service by a single operator (e.g. Exhibit A70), is in furtherance of these objectives.”

114 Mr Kelly responded to this portion of the further submissions by noting that the uncertainty was said to have two components. The first was that the Determination incorporated into the proposed new Contracts the amendments made by the Amending Act when they were not effective, being material referred to in the second half of page 2 of the Determination. Put shortly that part of the Determination dealt with performance standards. However, as I have said on several occasions, this was not a matter relevant to the present case in which there was no issue but that the plaintiff performed the services required of it in accordance with the Contract.

115 Mr Kelly submitted that the other and primary basis on which “uncertainty” was called in aid:-

“.. was that which is evidenced from the first one and half pages of that letter, namely the inconsistency and uncertainty as to the date upon which the variation is said to take effect when one has regard to the proposed contract”.

116 I have dealt with these various submissions.

117 Finally, Mr Kelly referred to reliance on s.4(e) and (f). He submitted that these did not assist as the Contract contained its own provisions for renewal and, in any event, those objectives do not assist the defendants’ attempts to resist the submissions of the plaintiff. I think, for the reasons I have given, that this is correct. At the risk of repetition, I think it is correct because the power the Delegate was purporting to exercise was pursuant to s.24(3)(c). Further, whilst the additional objectives appeared there was no amendment to that section to pick up the generality of the wording of the objectives. I have suggested reasons why s.24(3)(c) does not have the wide operation for which the defendants contended.

118 I have quoted s.28. Mr Einfeld submitted that it contained privative provisions in the sense that the parties are confined to the contractual provisions and are to be treated, for the provision of remedy of any breach of contract, including one arising from the terms of the Act, as if they were contractual provisions with the consequence that the right to judicial review is excluded and the plaintiff can only look to damages for breach of contract.

119 Sub-section (1) of s.28 provides that any contravention of any provisions of Part 3, with the exception of s.16, may be remedied at law or in equity as though the provision were one to which the parties had by contract agreed. The right of renewal, of course, does not flow only from the Act, but also from the Contract, however the right to vary pursuant to s.24 comes only from the Act, which is incorporated in the Contract.

120 Sub-section (3) provides that no other proceedings by way of judicial review of any decision or action of the Director-General may be taken by or on behalf of the Holder “to the extent that an adequate alternative remedy is provided by this section”.

121 For Mr Einfeld’s submission to succeed, he must satisfy the Court that an adequate alternative remedy is provided by the section for the wrongful use of the power imposed by s.24. I am not satisfied that an action for damages is an appropriate remedy. The nature of the case indicates the complexity of any such action and the difficulties which would confront the plaintiff in seeking to prove the quantum of its loss. Whilst an action for damages involving such difficulties may be an “alternative remedy”, I do not consider it is “an adequate” one.

122 Mr Kelly relied, however, upon certain principles, which apply in circumstances where a power has been misused. He submitted that there were remedies available in those circumstances.

123 Mr Kelly referred firstly to the decision of McLelland J in Rapa v Patience & Ors (4 April 1985 - unreported). The defendants were the trustees of a superannuation fund of which the plaintiff was a member. He made a claim on the fund based on total and permanent disablement, which the fund manager rejected but, in doing so, stated that the plaintiff was entitled to benefits on the basis of early retirement. His Honour set out the facts of the claim at some length and that the plaintiff was seeking a declaration to the effect that he was entitled to benefits from the fund on the basis of total and permanent disablement. The plaintiff submitted that in so far as the trustees had a discretion it had miscarried for a variety of reasons.

124 His Honour then considered the terms of the Trust Deed and the rules and came to the conclusion that the trustees had not exercised their discretion in a proper manner. This led to a consideration of the grounds on which the performance by trustees of such functions could be successfully challenged. He was of the view, as had been stated by McGarvie J in Karger v Paul [1984] VR 161, that the grounds were that the discretion was not exercised in good faith; or upon real and genuine consideration, which includes consideration of the wrong question; or in accordance with the purposes for which it was conferred; or where the trustees disclosed, otherwise than in the course of the proceedings in which the discretion was challenged, their reasons for the exercise of discretion and that those reasons were not sound.

125 His Honour concluded that the exercise of discretion was based upon a vitiating error.

126 Mr Kelly nextly relied upon his Honour’s decision in Kovacevic v Tycan Australia Pty Limited (25 June 1991 - unreported). In that case he was dealing with the admissibility of a document and he said:-

“The present position is that even if the opinion of the Association were to be shown to have been vitiated by a consideration of some irrelevant matter in the manner contended for by the plaintiff, the result would not be to establish that the plaintiff was entitled to benefits on the basis that he was totally and permanently disabled. In properly constituted proceedings the consequence of such a finding, if it were made, would be that the Association had failed to fulfil its obligation to form an opinion on the matter on proper grounds and the appropriate remedy would be to compel the Association to reconsider the matter in the proper way. In other words, the Court would not arrive at its own opinion as to the question which the scheme vests in the Association for decision; the function of the Court would be to ensure that the Association reached a decision in the proper way.”

127 Accordingly, Mr Kelly submitted, that even if it was correct to say that the remedy of judicial review was not open, none-the-less an improper exercise of power could be remedied in the manner to which his Honour referred, which fell within the terms of s.28. In my opinion that submission should be accepted.

128 I am of the opinion that the plaintiff has established an entitlement to the declarations set forth in paragraphs 1, 2 and 3 of its Summons dated 10 March 2000. No submissions were put that, as a matter of discretion, declarations should not be made. I am also of the opinion that the plaintiff is entitled to an order in terms of paragraph 4 and to an order for costs.

129 1. I make declarations in terms of paragraphs 1, 2 and 3 of the

4. I order the exhibits be returned at the expiration of twenty-eight (28) days from to-day’s date unless within that time an appeal against this decision has been brought.

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Last Modified: 02/14/2001

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Citations

Oliveri v Dept Transport [2001] NSWSC 45

Cases Citing This Decision

0

Cases Cited

3

Statutory Material Cited

8

Ngurli Ltd v McCann [1953] HCA 39

Austral Monsoon Industries Pty Ltd v Pittwater Council [2009] NSWCA 154

CITATION:	Oliveri v Dept Transport [2001] NSWSC 45
CURRENT JURISDICTION:	Equity Division Commercial List
FILE NUMBER(S):	SC 50028/00
HEARING DATE(S):	11/12/00
JUDGMENT DATE:	14 February 2001
PARTIES :	Oliveri Transport Services Pty Limited - Plaintiff The Director-General of the Department of Transport of New South Wales - First Defendant The State of New South Wales - Second Defendant
JUDGMENT OF:	Rolfe J

COUNSEL :	Mr J.C. Kelly SC/Mr R.T. Beech-Jones - Plaintiff Mr M.L.D. Einfeld QC/Mr R.P.L. Lancaster - Defendants
SOLICITORS:	Harmers Workplace Lawyers - Plaintiff Deacons - Defendants
CATCHWORDS:	Legislative Repeal and Amendment - The effect of the repeal of an amending Act on the Act which it amended, where the amended Act is neither repealed nor altered: held the repeal of the amending Act, especially by a Revision Act does not, in itself, amend the principal Act to the extent of the amendments. - Administrative Law - Whether decision purportedly made under a statutory provision should be set aside on the basis that it was made for an ulterior purpose and was uncertain: held that it should be - Contracts - An offer of renewal of a contract must be certain: held there was a lack of certainty in the offer
LEGISLATION CITED:	Passenger Transport Act 1990 Transport Administration Act 1988 Transport Licensing Act 1931 Passenger Transport Amendment Act 1997 Statute Law (Miscellaneous Provisions) Act (No 2) 1999 National Parks and Wildlife Act 1974 Non-Indigenous Animals Act 1997 Petroleum (Submerged Lands) Act 1982
CASES CITED:	Pearce & Geddes "Statutory Interpretation in Australia" (4th Edition) Thompson v Randwick Corporation (1950) 81 CLR 87 Thompson and Warringah Shire Council v Pittwater Provisional Council (1992) 26 NSWLR 491 Rapa v Patience & Ors (McLelland J - 4 April 1985 - unreported) Karger v Paul [1984] VR 161 Kovacevic v Tycan Australia Pty Limited (McLelland J - 25 June 1991 - unreported)
DECISION:	1. Declarations in terms of paragraphs 1, 2 and 3 of the plaintiff's Summons dated 10 March 2000; 2. An order in terms of paragraph 4 of the plaintiff's Summons dated 10 March 2000; 3. The defendants to pay the plaintiff's costs of the proceedings.; 4. The exhibits be returned at the expiration of twenty-eight (28) days from to-day's date unless within that time an appeal against this decision has been brought.