P and O Ports Ltd v Dampier Port Authority

[2000] WASC 105

P & O PORTS LTD -v- DAMPIER PORT AUTHORITY & ANOR [2000] WASC 105

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2000] WASC 105
Case No:	CIV:1306/1998	Heard:	27-28 MARCH 2000
Coram:	WHEELER J	Delivered:	3/05/00
No of pages:	22	Judgment Part:	1 of 1
Result:	Plaintiff's claim dismissed
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Parties:	P & O PORTS LTD DAMPIER PORT AUTHORITY WESTERN STEVEDORES (DAMPIER) PTY LTD
Catchwords:	Statutes Interpretation Operation and effect of statutes Statutory powers and duties Contracts Construction and interpretation of contracts Delegation of powers of statutory authority Fettering of future exercise of powers of statutory authority Validity of agreement
Legislation:	Dampier Port Authority Act 1985, s 4, s 8, s 14, s 17, s 18, s 19, s 20, s 21, s 22, s 23, s 24, s 25, s 26, s 27, s 28, s 29, s 30, s 31, s 31(1) s 32, s 32(4), s 33, s 36, s 37, s 48, s 49, s 50, s 51, s 52, s 53, s 54, s 55, s 59 Interpretation Act 1984, s 5 Port (Easements, Leases and Licences) Regulations 1994 Port (Functions) Act 1993, s 5, s 6, s 7, s 12, s 12(7), s 13, s 14
Case References:	Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund [1998] HCA 49; (1998) 194 CLR 247 Shop Distributive and Allied Employees' Association v Minister for Industrial Affairs (1995) 183 CLR 552 Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1977) 139 CLR 54 Australian Conservation Foundation v The Commonwealth (1980) 146 CLR 493 City of Camberwell v Camberwell Shopping Centre Pty Ltd [1994] 1 VR 163 Commonwealth v Verwayen (1990) 170 CLR 394 Dainford Ltd v Smith (1985) 155 CLR 342 Enoka v Shire of Northampton (1996) 15 WAR 483 Ex parte Forster; re University of Sydney (1963) SR (NSW) 723 FAI Insurances Ltd v Winneke (1982) 41 ALR 1 Gardner v Dairy Industry Authority of New South Wales (1997) 18 ALR 55 Grundt v Great Boulder Mines Pty Ltd (1937) 59 CLR 641 O'Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1 P & O Ports Ltd v Dampier Port Authority, unreported; SCt of WA (Parker J); Library No 980169; 2 April 1998 Public Service Association of South Australia Inc v South Australia (1997) 68 SASR 461 R v Wray (1981) 2 NSWLR 653 Thompson v Palmer (1933) 49 CLR 507 Waltons Stores (Interstate) v Maher (1988) 164 CLR 387 Watson's Bay and South Shore Ferry Co Ltd v Whitfield (1919) 27 CLR 268

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION : P & O PORTS LTD -v- DAMPIER PORT AUTHORITY & ANOR [2000] WASC 105 CORAM : WHEELER J HEARD : 27-28 MARCH 2000 DELIVERED : 3 MAY 2000 FILE NO/S : CIV 1306 of 1998 BETWEEN : P & O PORTS LTD

Plaintiff

AND

DAMPIER PORT AUTHORITY
First Defendant

WESTERN STEVEDORES (DAMPIER) PTY LTD
Second Defendant

Catchwords:

Statutes - Interpretation - Operation and effect of statutes - Statutory powers and duties

Contracts - Construction and interpretation of contracts - Delegation of powers of statutory authority - Fettering of future exercise of powers of statutory authority - Validity of agreement

Legislation:

Dampier Port Authority Act 1985, s 4, s 8, s 14, s 17, s 18, s 19, s 20, s 21, s 22, s 23, s 24, s 25, s 26, s 27, s 28, s 29, s 30, s 31, s 31(1) s 32, s 32(4), s 33, s 36, s 37, s 48, s 49, s 50, s 51, s 52, s 53, s 54, s 55, s 59

(Page 2)

Interpretation Act 1984, s 5
Port (Easements, Leases and Licences) Regulations 1994
Port (Functions) Act 1993, s 5, s 6, s 7, s 12, s 12(7), s 13, s 14

Result:

Plaintiff's claim dismissed

Representation:

Counsel:

Plaintiff : Mr C G Colvin
First Defendant : Mr P C S Van Hattem
Second Defendant : Mr P C S Van Hattem

Solicitors:

Plaintiff : Jackson McDonald
First Defendant : Freehill Hollingdale & Page
Second Defendant : Freehill Hollingdale & Page

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

Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund [1998] HCA 49; (1998) 194 CLR 247
Shop Distributive and Allied Employees' Association v Minister for Industrial Affairs (1995) 183 CLR 552

Case(s) also cited:

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564
Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1977) 139 CLR 54
Australian Conservation Foundation v The Commonwealth (1980) 146 CLR 493
City of Camberwell v Camberwell Shopping Centre Pty Ltd [1994] 1 VR 163
Commonwealth v Verwayen (1990) 170 CLR 394
Dainford Ltd v Smith (1985) 155 CLR 342
Enoka v Shire of Northampton (1996) 15 WAR 483
Ex parte Forster; re University of Sydney (1963) SR (NSW) 723


(Page 3)

FAI Insurances Ltd v Winneke (1982) 41 ALR 1
Gardner v Dairy Industry Authority of New South Wales (1997) 18 ALR 55
Grundt v Great Boulder Mines Pty Ltd (1937) 59 CLR 641
O'Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1
P & O Ports Ltd v Dampier Port Authority, unreported; SCt of WA (Parker J); Library No 980169; 2 April 1998
Public Service Association of South Australia Inc v South Australia (1997) 68 SASR 461
R v Wray (1981) 2 NSWLR 653
Thompson v Palmer (1933) 49 CLR 507
Waltons Stores (Interstate) v Maher (1988) 164 CLR 387
Watson's Bay and South Shore Ferry Co Ltd v Whitfield (1919) 27 CLR 268

(Page 4)

WHEELER J:

Factual Background

1 For a number of years, the plaintiff carried on business as a stevedore at the Dampier Public Wharf ("the Wharf"). Its access was not at that time the subject of any formal document.

2 In July 1996, the first defendant ("the DPA") engaged a consultant to conduct a review which included the operational and management arrangements for the Wharf. In March 1997, the DPA granted the plaintiff ("P&O") a non-exclusive licence to use the Wharf to carry out stevedoring activities for a term of one year, commencing on 1 May 1997. Clause 9 of that agreement provided:

"If we wish to grant to a person an interest in the Dampier Public Wharf inconsistent with the rights granted to you under this document, we may terminate your rights under this document by giving you seven (7), days written notice …".

3 This clause had been the subject of some negotiation. It was not signed by P&O prior to 1 May. Rather, certain matters were referred to P&O's solicitors for clarification. On 6 May 1997, P&O advised the DPA that, while their legal advice indicated that there were no grounds for "challenging the ambit of the authority's statutory powers", P&O drew attention to the commercial implications of the clause and expressed the view that a reasonable period would be significantly greater than seven days. Certain other matters in relation to that clause were also raised. On 20 May 1997, the General Manager of the DPA replied to P&O that the clause would not be changed, in order to ensure consistency with documents entered into by other users of the Wharf. The letter continued:

"However, the more substantial nature of P&O Ports' operations is acknowledged and, in the event of wanting to exercise the rights of this clause, the Authority would make all reasonable endeavours to provide P&O Ports with maximum notice.

The typical circumstances in which this provision would be utilised is if the Authority's current Expressions of Interest process for the … Wharf leads to tenders for exclusive rights to provide stevedoring services or undertake an overall management function on the Wharf."

4 At some time, the licensed agreement was signed on behalf of P&O.
(Page 5)

5 Also in May 1997, a stevedoring company, called "Oil & Gas Stevedoring", which was later taken over by the second defendant, commenced providing stevedoring services at the Wharf. Prior to this time, P&O had been the only stevedore providing services at the Wharf.

6 The DPA's reference to the situations in which it might seek to terminate P&O's licence is explained by events arising out of the review of the arrangements for the Wharf. On 2 April 1997, the DPA had written to P&O advising that one of the outcomes of the review was a decision by the DPA to "explore alternative management arrangements for the Dampier Public Wharf, such as a facilities management contract". The DPA sought expressions of interest from companies such as P&O, and in due course advertised publicly for expressions of interest. The DPA advised P&O that it was invited to make a submission, being "either an expression of interest to participate or just to express your company's views on this matter". In early May, P&O did submit an expression of interest for the management of the Wharf. I do not think it is necessary to describe detail of those proposals.

7 In late May 1997, the DPA decided to invite five parties, including P&O and the second defendant, to tender for the right to be granted a lease over the Wharf and/or to provide management services at the Wharf. In June 1997, the DPA announced that it had decided to invite tenders for the granting of a lease over the Wharf. P&O and the second defendant were included in that shortlist. A copy of the draft operating agreement and lease was sent to P&O in September 1997 and P&O's tender was submitted in that month.

8 In November 1997, the DPA indicated to all Wharf users, including P&O, that the second defendant was the successful tenderer for a lease at the Wharf. The DPA advised users of some of the terms and conditions of the lease, including that the second defendant had the exclusive right to arrange for the provision of, inter alia, stevedoring services, which the second defendant could provide itself, could provide by sub-contractors, or could provide simply by granting access to the Wharf to other service providers.

9 In January 1998, following certain correspondence from P&O, the DPA advised P&O by letter that an agreement had been concluded with the second defendant to take effect on 6 April 1998, giving the second defendant quiet enjoyment of the Wharf. The DPA enclosed a notice of termination of P&O's access to the Wharf and of its lease of office space at the Wharf, which it held on a monthly tenancy. The notice of

(Page 6)

termination under the access permit was expressed to take effect from 6 April 1998.

10 There was certain further correspondence, and on 26 February 1998, the DPA sent a facsimile to P&O in relevantly the following terms:

"As you are aware, the Authority has recently granted Western Stevedores an Operating Agreement and Lease covering the Dampier Public Wharf for the next five years. This was following a tendering process in which P&O Ports participated.

The Operating Agreement and Lease grants Western Stevedores quiet enjoyment of the premises and places an obligation on them to provide or procure the Stevedoring service.

Therefore, the Authority is not presently in a position to grant you or any other company a licence to supply stevedoring services on, or use of, the Dampier Public Wharf during the term of that Operating Agreement and Lease."

Legal Issues

11 The plaintiff challenges the DPA's power to grant the second defendant a lease, and to enter into an agreement with the second defendant, in the terms of the lease agreement entered into by the defendants. The plaintiff does not challenge the DPA's power to enter into contracts or to grant leases, but relies upon two general principles. The first is that it alleges there has been an improper delegation of the functions of the DPA to the second defendant by that agreement. The relevant principle is conveniently described in De Smith's "Judicial Review of Administrative Action", 4th ed (1980) 298-309. In particular, at 298, the learned authors summarise it in this way:

"A discretionary power must, in general, be exercised only by the authority to which it has been committed. It is a well known principle of law that when a power has been confided to a person in circumstances indicating that trust is being placed in his individual judgment and discretion, he must exercise that power personally unless he has been expressly empowered to delegate it to another."

12 It is asserted that by the agreement a number of functions are improperly delegated to the second respondent, and/or are delegated in

(Page 7)

circumstances making it impossible for the DPA to comply with certain of its statutory obligations.

13 It is also submitted by the plaintiff that the agreement has the effect of improperly fettering the future exercise of certain of the statutory powers of the DPA. It is submitted that a statutory authority may not, by contract, impose an anticipatory fetter upon the future exercise of a statutory power or discretion, and that a contract which purports to do so is invalid. This agreement is said to be an unlawful fetter, for the next five years (that being the duration of the agreement) upon certain important functions of the DPA.

14 This is a case in which, in my view, it is not necessary to set out further the relevant legal principles. The answers to the questions raised by the plaintiff will be found in an examination of the terms of the relevant statutes (of which there are a number) and of the agreement.

15 The first and second defendants deny that the agreement constitutes either an impermissible fetter on, or an improper delegation of, the powers of the DPA. They further submit that the plaintiff has no standing to raise those issues. They also submit that, by its participation in the "tender process" and its failure, at any time prior to entry into of the agreement by the DPA, to raise any issue of illegality, the plaintiff is estopped from raising the issues which it seeks to maintain in this action.

Standing

16 Issues of standing received relatively recent consideration in Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund [1998] HCA 49; (1998) 194 CLR 247. It is sufficient, I think, for the purposes of this action, to refer to the joint judgment of Gaudron, Gummow and Kirby JJ. At 265 at par 46 their Honours apply principles enunciated in Shop Distributive and Allied Employees' Association v Minister for Industrial Affairs (1995) 183 CLR 552 at 558 per Brennan, Dawson, Toohey, Gaudron and McHugh JJ. While there is a requirement that a plaintiff have "a special interest in the subject matter of the action" it is to be remembered that the rule is flexible and that "the nature and subject matter of the litigation will dictate what amounts to a special interest".

17 The circumstances of the Bateman's Bay case demonstrate as Gaudron, Gummow and Kirby JJ observed at par 48 of that decision that, "the circumstance that the plaintiff conducts commercial activities in

(Page 8)

competition with those which it seeks to restrain is not necessarily insufficient to provide it with a sufficient interest in the subject matter of the action". At par 52, their Honours had regard to the interest which the respondents in that case had as a matter of "practical reality" in the observance by the appellants of statutory limitations upon their activities.

18 Even if it be accepted for the purposes of the present case that the plaintiff has no right to be granted a licence to conduct stevedoring activities on the Wharf, or even any right to have an application for such a licence considered, the fact is that for very many years the plaintiff did conduct such activities. The DPA granted it a licence to carry on such activities and indicated that it recognised the commercial significance of those activities to the plaintiff. It appears from the materials before me that the sole reason for the termination of that licence was the grant of the inconsistent interest, which the plaintiff alleges to be beyond power. It is not unreasonable to assume that, were an agreement of this type be declared to be beyond the power of the DPA, the plaintiff might well be permitted to return to carrying out that commercial activity, apparently of significance to it, which it carried out at the Wharf prior to the first and second defendants entering into this agreement. This is not merely a situation of commercial competition. It appears to be a situation in which the very act of which the plaintiff complains has occasioned it considerable commercial detriment. While it might not have a legal right to have that detriment reversed should the agreement be beyond power, it might reasonably expect that, as a matter of practical reality, that would be the case. In my view that is sufficient to found standing in the circumstances of this case.

The Functions of the DPA

19 The statutory framework has altered since the time at which this agreement was entered into. I think it is only necessary, for the purposes of this decision, to have regard to the law as it was at the relevant time. I turn first to the Dampier Port Authority Act 1985 ("the Port Authority Act").

20 By s 4 of the Port Authority Act, the DPA is established as a body corporate able to do, subject to the Act, all that bodies corporate may do, and having the functions imposed on it by or under the Act. (By s 5 of the Interpretation Act 1984, "functions" includes powers, duties, responsibilities, authorities and jurisdictions). The area of the DPA is defined. It consists of a very large area of water and an area of land, of which the Wharf is a small portion.

(Page 9)

21 By s 8, the DPA is to consist of five members; two are appointed by the Governor; one is either the General Manager or Harbour Master; and the other two are appointed by the Governor on the nomination of the two private enterprise entities referred to as "the Company" in the Iron Ore (Hamersley Range) Agreement and as the "joint venturers" in the North West Gas Development (Woodside) Agreement respectively. It is convenient to note at this stage that a number of the provisions of the Act are concerned with the relationship between the DPA and those entities. It is not necessary to set out those provisions for present purposes.

22 Meetings of the DPA may be convened by the Minister or the Chairman (s 14). Sections 17-20 provide for the appointment of a General Manager, officers, employees, and "special constables" by the DPA. Sections 21-29 deal with the property of the DPA. All lands of the Crown within the port, marine navigational aids not owned by the Commonwealth, all wharfs, wharf sheds and railways within the port are vested in the DPA for the purposes of the Port Authority Act (s 21); port land is not to be sold without the approval of the Governor or the Minister (s 23); and port land is exempt from rates and taxes, with the proviso that local governments and other statutory authorities may levy rates and other charges in respect of land, houses and buildings that are for the time being let or occupied for private purposes (s 28).

23 The "principal" functions are set out in s 30. Subject to the Port Authority Act, the DPA is to "operate as a commercial organisation"; this appears not to be a function but a general principle governing the exercise of functions. Its functions are:

"(a) to operate the Port safely and efficiently;

(b) to manage its affairs so as to ensure that its revenues, taking 1 year with another, are not less than sufficient to meet all its expenditures;

(c) to recover, as far as possible, the cost of the facilities and services provided by the Port Authority from the users of those facilities and services; and

(d) subject to the functions referred to in paragraphs (a), (b) and (c) -


(i) to control, manage and develop the Port in the manner best suited to the trade being carried

(Page 10)

through it and such other trade as may be attracted to the Port; and

(ii) to protect and enhance the environment of the Port."

24 The duties of the DPA set out in s 31 and s 32 are: subject to certain State agreements, to plan the development and safe and efficient operation of the Port; cause to be maintained and preserved all property; ensure safety; ensure optimum use of its services; and to formulate and maintain and implement environmental management plan for the Port.

25 Powers of the DPA include power to do "all such things as are necessary or convenient to be done for or in connection with the performance of its functions" (s 33). It may, with the Minister's approval, carry out a variety of works and may make and maintain roads, railways and so on (s 36). It may also exercise such powers additional to those referred to in s 36 as: improve the use of its available resources; do not adversely affect its ability efficiently to perform its functions under the Port Authority Act; and relate to the activities of a port (s 36). A person acting under its express or implied authority may make a contract on behalf of the DPA in the same manner as if the DPA were a natural person (s 37).

26 Port charges are dealt by s 48 to s 59. By s 48, the DPA may, with the approval of the Minister, make regulations under s 59 providing for the levying of port dues and wharfage charges. Wharfage charges are to be separately charged and payable only on vessels using the DPA's Wharf facilities. Port dues are to be separately charged, payable on each vessel entering the port at a rate assessed on its gross tonnage, and applied only to defraying certain costs incurred by the DPA. Neither port dues nor wharfage charges are defined expressions.

27 By s 55 the DPA may authorise an officer or employee or any other person to collect port charges (which expression includes port dues and wharfage charges) on its behalf. Section 59 permits the Governor to revise prescribed port charges if, in the opinion of the Governor, the DPA has not in any financial year collected and received port charges, rents and revenues sufficient to provide for its lawful expenditure, or alternatively, has in any financial year collected port charges, rents and revenues more than sufficient to provide for its lawful expenditure, or if for any other reason the Governor thinks fit to do so.

(Page 11)

28 Also relevant to the powers of the DPA is the Port (Functions) Act 1993 (the Functions Act"). This is an Act which applies to a number of ports and port authorities. Where a provision in the Functions Act conflicts with a provision of a Port Authority Act, the Functions Act prevails unless the Port Authority Act expressly provides to the contrary.

29 By s 5, each port authority is an agent of the Crown in right of the State; by s 6 the Minister may give directions in writing to a port authority with respect to the performance of its functions; and by s 7 the Minister is entitled to have information in the possession of the port authority. By s 12, a port authority may provide such facilities and services as it considers are necessary for, or in connection with, the effective operation of its port, which facilities and services include stevedoring. Any charges for services are to be "determined by the port authority in accordance with prudent commercial principles". By s 13, for the purpose of performing its functions, a port authority may enter into an agreement with any other person, and by s 14, a port authority may grant an easement, lease or licence in respect of "the whole or any part of the lands vested in it for any purpose it considers fit"; it is entitled to do so without the approval of the Minister if the term of the easement, lease or licence is less than five years (s 14 and Port (Easements, Leases and Licences) Regulations 1994). It is to be noted that s 12, s 13 and s 14 are found together in Division IV (Additional Functions) of Part II of the Functions Act.

30 It seems to me to follow as a matter of legislative intent from s 12 and s 13 of the Functions Act that it was expressly contemplated by the legislature that a port authority might enter into an agreement with another person for the purpose of providing services, which include stevedoring. It would also appear that the provision of such a service is a purpose for which it would be open to a port authority to grant a lease or licence.

The Agreement

31 The document in issue in these proceedings is called an "Operating Agreement and Lease". The document does contain provisions generally to be found in leases, including a covenant for quiet enjoyment, but these are very substantially qualified and restricted by other provisions of the document. It is not necessary to characterise it for the purpose of this matter as either a lease or grant of some other interest. For that reason I simply refer to the document as the "agreement".

32 In order to understand the agreement, it is necessary to refer to certain definition provisions. They are:

(Page 12)

"DPA's Rights means:

(a) [a right to install conduits, pipes and cables]

(b) the right to exercise the DPA's rights under the Agreements; [these being agreements between the DPA and certain other parties for limited purposes eg between Woodside Offshore Petroleum and the DPA for vessels at the wharf];

(c) all other rights, powers and remedies in favour of or exercisable by the DPA, contained or implied in this Document or granted by law;"

33 "Operational duties" means the second defendant's obligations contained in the Second Schedule and any other obligation "concerned, directly or indirectly, with the performance or delivery of the Prescribed Services or any other Service;"

34 "Prescribed Services" includes a stevedoring service.

35 "Operator's Obligations" means the agreements and obligations contained or implied in the agreement or imposed by law with which the second defendant must comply.

36 "Operator's Rights" means the right to use certain fixtures, plant and equipment and all other rights in favour of the second defendant contained or implied in the agreement.

37 "Permitted Person" means an agent, employee, contractor etc of the second defendant, or any person visiting the Wharf with the express or implied consent of such a person.

38 "Permitted Purpose" means the management, operation and supervision of the Wharf, including the provision to all vessels using the Wharf of services, including prescribed services.

39 "Service Criteria" means, in relation to the provision of a service, complying with relevant provisions of the agreement, including key performance indicators where applicable, complying with all relevant legislation and regulations, complying with all applicable health, welfare and safety standards, complying with industry best practice, ensuring adequate resources, and in relation to prescribed services provided by, or on behalf of the second defendant, ensuring continuity on a 24-hour per day, 7-day per week, 52-weeks per year basis, save for port holidays.

(Page 13)

40 By cl 2 of the agreement, the DPA leases the Wharf and grants the Operator's Rights for the term, subject to the observance and performance of the Operator's Obligations, and reserving to the DPA the "DPA's Rights".

41 Clause 3 provides that except as provided in the agreement, and subject to the performance of the Operator's Obligations, the second defendant may quietly hold the premises and enjoy the Operator's Rights without interruption or disturbance from the DPA.

42 Clause 4 provides that the DPA may grant or transfer an interest in the Wharf, subject to obtaining the second defendant's prior consent in writing if the grant or transfer would "materially and permanently" derogate from the Operator's Rights. This is clearly a significant qualification to the right of quiet enjoyment.

43 By cl 13.3, the DPA may at any time during the term establish a capital works program and may carry out structural or capital works to the premises, with which the second defendant must co-operate. By cl 13.6, with respect to any work which the second defendant is obliged to carry out under the agreement, the DPA may by notice to the second defendant elect to carry out that work itself at the cost of the second defendant, and in such case the second defendant must permit it to do so.

44 The second defendant has, as one would expect, a number of duties under the agreement. It must comply with the operational provisions and observe and perform the operational duties to the satisfaction of the DPA. The operational provisions are set out at length in the second schedule to the agreement. They include the following.

45 The second defendant acknowledges that notwithstanding that it is granted a lease, the lease does not confer the right to exclusive possession. It must allow service providers reasonable access to the premises, to provide services requested by the Master of a vessel or other wharf user, if the service does not consist of a prescribed service (which prescribed services include stevedoring). It must provide prescribed services in accordance with the service criteria; it may do this itself or may subcontract. It may grant service providers requested by Masters, agents, or owners of vessels, access to the Wharf in order to provide a service, but is not obliged to do so unless it is directed to do so by the DPA on the ground that it is in breach of its obligations. If a third party service provider or Wharf user makes a complaint that they have been denied reasonable access to the Wharf, or have been treated unfairly, that

(Page 14)

complaint must be referred to the DPA, which will finally determine the merits of the complaint.

46 It must report certain matters to the DPA on a daily basis and others at longer intervals. It must establish, develop and maintain practices, procedures and systems acceptable to and approved by the DPA in relation to management and operation of the Wharf and provision of prescribed services, including practices and procedures governing Wharf operations and safety, occupational health and safety, environmental management and planning, and so on. It must permit the DPA substantial rights of inspection and review.

47 It may levy certain categories of charges, including stevedoring charges, with the maximum amount which it may charge for each prescribed service being specified in the third schedule. It must meet certain key performance indicators, they being; continuity of operation of prescribed services, no increase in costs to users of the Wharf, no increase in maximum service prices specified in the third schedule (subject to certain exceptions), Wharf users being satisfied with the operation of the Wharf, and certain other matters. In addition, the second defendant must comply with the Dampier Public Wharf Operating and Safety Procedures published by the DPA, and must keep the Wharf and other parts of the premises open and available for use by vessels and persons who require the Wharf for any of certain specified purposes.

48 It must permit entry to the DPA to verify compliance with its obligations, to exercise the DPA's rights and for a variety of other purposes, including "any other purpose which the DPA considers … necessary". The DPA is to give reasonable notice of entry, except that it may enter on demand in certain circumstances (which include the exercise of any of its statutory rights, powers, duties or functions).

49 There is an attempt to deal in the agreement itself with the possibility of conflict between any of the DPA's statutory functions and the agreement. The drafting of this provision, cl 47, does not appear to me to dispel any confusion which might otherwise exist. It reads as follows:

"47.1 Statutory powers add to express powers

The powers conferred on the DPA by or under a statute are in addition to the powers conferred on the DPA by this Document, except to the extent inconsistent with the terms and provisions expressed in this Document.

(Page 15)

47.2 Statutes which alter agreement of Parties

If at any time and for so long as:


(a) a statute applies to this Document;

(b) a provision of that statute conflicts with a provision of this Document; and

(c) under that statute the conflicting provision of that statute prevails,


each conflicting provision of this Document is deemed to be amended to the extent necessary to resolve the conflict with that statute.

47.3 The DPA's statutory functions

Nothing contained in or implied by this Document has the effect of constraining the DPA or placing any fetter on its statutory rights, duties, powers and functions, including those contained or referred to in the Dampier Port Authority Act 1985, the Dampier Port Authority Regulations 1989 and the Ports (Functions) Act 1993."

50 So far as cl 47.1 is concerned, read in isolation, this would tend to suggest that where the agreement purports to fetter statutory powers, the agreement is to be effective to do so. It is not clear precisely what is contemplated by this clause, but it may be applicable, for example, where the DPA would otherwise, by statute, have power to lease the Wharf, so as to confirm that a consequence of the express terms of the agreement will be that that power, having been purportedly exercised in favour of the second defendant, will not be exercised in favour of any other party during the term of the agreement.

51 So far as cl 47.2 is concerned, it is difficult to imagine the circumstance in which a provision of a statute conflicts with a provision of the agreement, and the statutory provision does not prevail. If the statute on its face does not purport to apply in respect of this agreement or an agreement of this type, there will of course be no conflict. The clause is perhaps intended to make it clear that the agreement is not intended to exclude or limit the scope of the DPA's statutory powers; although the intention not to do so would appear to me to be clear from the other provisions of the agreement.

(Page 16)

52 Clause 47.3 is relatively clear in its terms, although it appears that it should not be understood as widely as perhaps appears on its face. For example, it seems relatively clear that the grant of quiet enjoyment and the requirement that the second defendant's consent be obtained to the grant of interests that would "materially and permanently" derogate from the second defendant's rights is plainly intended to limit the exercise of the DPA's statutory powers to grant interests, notwithstanding the apparent effect of cl 47.3.

53 It appears to me that the best way to approach cl 47 is to construe the agreement as a whole, disregarding the terms of cl 47. If, on such a construction, any part or parts of the agreement then appear to represent an impermissible delegation of the DPA's powers or an impermissible fettering of its future exercise of powers, the apparent intention of cl 47 is that such part or parts should be struck down. That would be my understanding of the effect of the general law in any event. The severance provision in cl 48 would then operate so as to sever out that part or parts.

Delegation or Fettering

54 As I understood the plaintiff's argument, it was conceded that in certain circumstances the DPA could act in a manner which would, to an extent, fetter the future exercise of statutory powers. For example, it was conceded that the power to grant a lease necessarily fettered, during the term of the lease, the power to grant an interest inconsistent with that lease. What was said, was that the breadth of the control given to the second defendant under the agreement, together with the fact that the DPA bound itself to act in accordance with the agreement during its term, meant that the DPA had in effect abdicated to the second defendant its statutory functions and powers during the term of the agreement. It is therefore, I think, convenient to consider the delegation and fettering issues together, since they are interlinked.

55 The plaintiff characterises the agreement in the following way. First, the plaintiff says that it is not to the point that the Wharf is, in area, a very small proportion of the total area of the port, nor that the quantity of cargo unloaded through the Wharf is a very small quantity of the cargo coming into the port as a whole. It says that the evidence is that this is the only Wharf to which the public generally has access, other facilities being dedicated apparently to particular State agreements. For that reason, it is an important part of the operations of the DPA as a whole.

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56 I accept, as a matter of principle, that what is relevant is not the size of the facility which is the subject of the agreement, but the importance of that facility to the operations of the DPA. It appears not to be in issue between the parties that at some stage, a facility will be so insignificant that it might be open to the DPA simply to contract with a private operator for its operation and maintenance. However, the plaintiff took the position that this was a very significant facility.

57 Next, the plaintiff submitted that it was clear from the Port Authority Act that the DPA was to be the "operator" of the port: that is, the party causing or directing its functioning, managing and directing its operation, or keeping it working or in operation (see Oxford Dictionary and Macquarie Dictionary). At its broadest, the plaintiff said the effect of the agreement is that the Wharf is to be operated as a private facility and not as a public facility. This, it was said, creates a private monopoly out of a public asset and compromises the supervision of Parliament and the Minister and the public accountability of the DPA. In argument, a number of themes were developed.

58 First, it was said that the provision for quiet enjoyment meant that the Wharf was to be enjoyed by the second defendant without interruption or disturbance by the DPA and that it was clear from the terms of the agreement that the second defendant would have the exclusive right to provide a range of prescribed services to the exclusion of other potential service providers. These were the aspects which pointed to a "private monopoly".

59 There are two aspects of the "private monopoly" argument. The first appears to be directed to the monopoly component. It is not possible, in my view, to see any express or implied statutory prohibition on the monopoly provision of services at a port in the light of s 12 of the Functions Act, which permits a port authority to provide services itself and which does not suggest that it may not provide them to the exclusion of other service providers, together with the provisions of s 13, which permit a port authority to enter into an agreement for the purpose of performing its functions. If a port authority forms a view that the safe and efficient operation of the port will be enhanced by ensuring that only one service provider provides a service of a particular type, I do not see any statutory reason why it should not be permitted to give effect to that view.

60 The other aspect of this argument seems to be that by agreeing with the second defendant that the second defendant will perform a variety of services, the DPA is putting it out of its power to determine who may

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perform the services, even if it takes the view that they may be more efficiently performed by others. To an extent, this is true.

61 To the extent that the DPA arranges with a particular service provider to provide a service for a period of time, it is, if it concludes a binding agreement, putting it out of its power to determine that that service will be provided by someone else. However, it is difficult to see how a decision that a service is most efficiently provided by a particular service provider can ever be given effect to if the DPA is not permitted to enter into binding agreements; a private operator appears to me to be unlikely to commit itself to any particular level and continuity of service in the absence of some guarantee that for some period of time. There will be some commercially acceptable volume of work for it to do.

62 It is therefore too extreme a submission, in my view, to assert that any agreement of this kind is an impermissible fettering. Much will depend upon the term and upon the conditions of the agreement. In this case, the agreement is one for five years duration and there is reserved to the DPA a right to determine complaints revolving around the provision of services at the Wharf, which complaints may be made by third party service providers or by any Wharf user (Second Schedule cl 2.5). Further, as is clear from the other provisions to which I have already referred, the DPA retains a substantial measure of control over the way in which the services are to be provided, including the monitoring of performance indicators, the other reporting procedures, and finally, the right of the DPA to retake possession of the Wharf on the occurrence of an event of default (which term includes a failure to provide continuity of prescribed services or to meet key performance indicators).

63 Second, it was said that the obligation on the part of the second defendant to establish, develop and maintain practices, procedures and systems, was to be judged by reference to performance indicators and service criteria, rather than the views of the DPA. It was said that the statute indicated that the DPA was to be the relevant decision maker in respect of matters such as safety and environmental protection, whereas the terms of the agreement make it clear that the relevant systems were to originate in decisions made by the second defendant.

64 The difficulty with this aspect of the submission, is that the satisfaction of the DPA is at a number of points in the agreement made a criterion of the acceptability of the systems devised by the second defendant, and that decisions made by the DPA may determine the way in which the second defendant carries out the function both of devising and

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of implementing those systems. In particular, cl 17.1 makes it clear that operational provisions must be complied with to the satisfaction of the DPA, and that it is the DPA's Wharf Operating and Safety Procedures which must be complied with.

65 Further, in cl 2.7 of the Second Schedule dealing with operational provisions, it is clear that the practices, procedures and systems developed are to be those "acceptable to the DPA". To take a concrete example of the operation of this clause, discussed during the course of argument, it would seem to me that cl 2.7 would be entirely consistent with one of the relatively few specific duties imposed by statute on the DPA, being s 32 of the Port Authority Act, which requires the DPA to formulate and maintain an environmental management plan for the port. The second defendant's duty to develop and maintain practices relating to environmental management and planning for the Wharf are not, as I read the agreement, intended to be in substitution for that broad duty, even in respect of the Wharf. The way the two would fit together, one would envisage, would be by the DPA's formulation of an overall environmental management plan for the port, which would include relevant environmental issues and appropriate environmental practices relevant to the Wharf; the DPA would then determine whether it approved more detailed environmental management and planning systems devised by the second defendant which would, in order to be approved, presumably have to be consistent with the plan formulated pursuant to s 32. The DPA's implementation of its environmental management plan pursuant to s 32(4) of the Port Authority Act would be in the first instance indirectly by ensuring that the second defendant carried out those procedures, or if necessary directly by carrying out work or entry onto the premises pursuant to the rights reserved to it under cl 13.6 and cl 20 of the agreement.

66 It is perhaps convenient at this point to attempt a global view of the relevant statutory provisions and of the agreement. The principal functions, in the sense of duties, of the DPA, are described very broadly and in a manner which appears to me to suggest that they may be carried out by the DPA adopting a planning and supervisory role, as well as by the DPA adopting a more active role in which it directly manages all aspects of the port function itself. The first indication is I think found in s 30 where the DPA is "operate as a commercial organisation". This suggests that the statute is concerned with questions of efficiency of operation and appears to me to be inconsistent with an intention that the DPA shall itself operate all aspects of the port where it is not efficient to do so. Its function to "operate the Port safely and efficiently" I do not take

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to indicate that the authority by itself or by employees directly employed by it must do so, but rather that it must manage the functioning of the port so as to ensure safety and efficiency (see "operate" Macquarie Dictionsary). That conclusion is reinforced by the provisions of s 31(1) of the Port Authority Act, which expresses the DPA's duties in terms - "cause", "ensure", "plan" - which suggest a broad planning and supervisory role rather than necessarily requiring a direct day-to-day carrying out of operations by the DPA itself.

67 Turning to the provisions of the agreement, while it purports to give the second defendant quiet enjoyment of the Wharf, and does permit the second defendant to carry out a variety of activities on the Wharf, in the course of which the second defendant may chose not to allow any other service provider to provide certain services, the role of the DPA in the overall planning and supervision of the activities of the second defendant clearly appears from the terms of the agreement to which I have already referred. The DPA has not only rights to receive reports and to inspect, but has a direct involvement in the activities carried out in the sense that any systems devised by the second defendant in relation to Wharf operations must be to the satisfaction of the DPA, and the second defendant must meet the agreed performance indicators to the satisfaction of the DPA. It seems to me that in entering into an agreement of this kind, the DPA has chosen a means, which the relevant statutes appear to permit, adapted to the very broad duties imposed upon it.

68 The only provisions of the agreement which have caused me some doubt have been those which permit the second defendant to make charges for services at the Wharf up to a specified maximum, which may be CPI adjusted. There are two problems with these provisions. First, as the plaintiff points out, if the costs of operating the Wharf and providing services at the Wharf fall, then the DPA appears to have no power to reduce those charges. This is said to be inconsistent with the scheme of the Port Authority Act, which provides for recovery of cost rather than exploitation of the Wharf to generate profits for the operator.

69 Although the interaction of the provisions of the lease and of the relevant statutes at this point are not easy to follow, it appears to me that so far as port charges, as defined by the Port Authority Act are concerned (ie port dues, wharfage charges and port improvement rates) there is no difficulty. So far as port dues are concerned, the agreement provides for the DPA to continue to collect them. So far as other port charges are concerned, the power of the DPA to make regulations pursuant to s 99 providing for such charges, and the power of the Governor to revise port

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charges pursuant to s 59, are unaffected. It seems to me, however, that rather than port charges under the Port Authority Act, the difficulty, if any, arises in relation to charges for services pursuant to the Functions Act.

70 Clause 3.2 of the Second Schedule provides that the second defendant may levy certain categories of charge in respect of the prescribed services. A maximum is specified in each case, with provision for adjustment by CPI or alternatively, adjustment upward by agreement in certain circumstances. However, it is not clear from the terms of the agreement how those maxima were derived. Assuming that the DPA has in effect, by the agreement, engaged or empowered the second defendant to perform the function of providing those services, it appears to me that the provision of s 12(7) of the Functions Act must apply to charges for those services; that is, they are to be "determined by the Port Authority in accordance with prudent commercial principles".

71 There then seem to me to be a number of possibilities. One is that in setting the maxima under the agreement, the DPA applied prudent commercial principles to whatever information was available to it about likely costs and movement in costs during the term of the agreement, and did comply with s 12(7) by "determining" those maxima. Alternatively, it may be that s 12(7) requires the DPA not merely to set a maximum, but to determine the amount of the charge for each service and that it has failed to do so, or perhaps, alternatively, it may be that in determining the maxima it did not do so in accordance with "prudent commercial principles" but there is no evidence in relation to this point.

72 It does appear to me therefore, that the provisions of the agreement relating to the charges which may be levied by the operator may be invalid, either on the basis that the DPA may not have applied prudent commercial principles in agreeing what those maxima should be, or, alternatively, that the DPA may be impermissibly delegating to the second defendant its statutory function pursuant to s 12(7) of the Functions Act. However, although charges for services are no doubt commercially an important part of the agreement, any invalidity does not appear to me to be a matter of such significance for the functioning of the Wharf that the whole agreement should thereby be invalidated. Rather, if those provisions are invalid (as to which I express no concluded view, having not had the benefit of argument directed expressly to this point or of evidence as to how the maxima were set) it would be possible to sever them pursuant to cl 48, the severance clause, of the agreement.

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Conclusion

73 While in my view the plaintiff has standing to challenge the entry into the agreement by the first defendant, the agreement is not invalid as an impermissible delegation or fettering of the first defendant's statutory powers. It is therefore not necessary for me to consider the estoppel argument raised by the first and second defendants. I would dismiss the plaintiff's claim.