Pacific National (ACT) Ltd v Queensland Rail

[2006] FCA 91

FEDERAL COURT OF AUSTRALIA

Pacific National (ACT) Limited (ACN 48 052 134 362) v Queensland Rail (ABN 47 564 947 264) [2006] FCA 91

ESTOPPEL - conventional estoppel - proprietary estoppel – equitable estoppel – estoppel in pais - claim that respondent estopped from interfering with occupation and control of rail terminal - claim that applicant’s occupation of terminal and expenditure on terminal and rail investment strategy was founded on assumption that long term lease would be granted - whether inducement to form assumption – whether assumption relied on - whether reasonable to rely assumption – whether detriment suffered

TRADE PRACTICES – misleading and deceptive conduct - claim that respondent made implied representation to applicant that it would act in good faith and take steps necessary to permit applicant to occupy and control terminal – whether representation made – whether reliance – whether causal link between alleged representation and expenditure by applicant on terminal and rail investment strategy

TRADE PRACTICES  - unconscionable conduct – claim by applicant that respondent’s refusal to provide long term lease, giving notice to quit, and pursuing cross-claim are unconscionable – whether applicant at special disadvantage -  whether unreasonable or bullying behaviour – whether illegitimate pressure applied

TRADE PRACTICES  - restrictive trade practices - claim of misuse of market power - owner out of possession – market definition – barriers to entry – whether substantial degree of market power – whether took advantage – whether proscribed purpose – rational business explanation

TRADE PRACTICES – restrictive trade practices – cross-claim of misuse of market power – applicant’s refusal to grant access - whether taking advantage of market power – whether proscribed purpose

National Rail Corporation (Agreement) Act 1991 (Qld) - ss 5, 6 and 7
Property Law Act 1974 (Qld) - ss 129 and 139
Queensland Competition Authority Act 1997 (Qld)

Trade Practices Act 1974 (Cth) - ss 46, 51AA, 51AC and 52

Trade Practices (Fair Trading) Act 1998 (Cth)
Transport Infrastructure (Railways) Act 1991 (Qld) - s 4(1)
Transport Infrastructure Act 1994 (Qld) - s 215

Ansett Transport Industries (Operations) Pty Limited v Commonwealth (1977) 139 CLR 54 cited
Attorney-General (Hong Kong) v Humphreys Estate (Queen’s Gardens) Limited [1987] 1 AC 114 referred to
Austotel Pty Limited v FranklinsSelfserve Pty Limited (1989) 16 NSWLR 582 referred to
Australian Broadcasting Corporation v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540 cited
Australian Competition and Consumer Commission v Oceana Commercial Pty Limited [2003] FCA 1516 referred to
Australian Competition and Consumer Commission v 4WD Systems Pty Limited (2003) 200 ALR 491 applied
Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Limited (2003) 214 CLR 51 referred to
Australian Competition and Consumer Commission v Safeway Stores Pty Limited (2003) 129 FCR 329 referred to
Australian Competition and Consumer Commission v Samton Holdings Pty Limited (2002) 117 FCR 301 referred to
Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Limited (2000) 104 FCR 253 cited
Baird Textiles Holdings Limited v Marks & Spencer Plc [2001] All ER (D) 352 (Feb) cited
Bond Brewing (NSW) Pty Limited v Reffell Party Ice Supplies Pty Limited (unreported, Supreme Court of NSW, Waddell CJ in Eq, 17 August 1987) distinguished
Boral Besser Masonry Limited v Australian Competition and Consumer Commission (2003) 215 CLR 374 cited
Brambles Holdings Limited v Carey (1976) 15 SASR 270 referred to
Branir Pty Limited v Owston Nominees (No 2) Pty Limited (2001) 117 FCR 424 cited
Briginshaw v Briginshaw (1938) 60 CLR 336 referred to
Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 referred to
Campomar Sociedad Limitada v Nike International Limited (2000) 202 CLR 45 referred to
Commonwealth of Australia v Verwayen (1990) 170 CLR 394 cited
Con-Stan Industries of Australia Pty Limited v Norwich Winterthur Insurance (Australia) Limited (1986) 160 CLR 226 referred to
Crabb v Arun District Council [1976] 1 Ch 179 referred to
Equuscorp Pty Limited v Glengallan Investments Pty Limited (2004) 218 CLR 472 referred to
Eslea Holdings Limited v Butts (1986) 6 NSWLR 175 referred to
Federal Commissioner of Taxation v Whitfords Beach Pty Limited (1982) 150 CLR 355
Jones v Dunkel (1959) 101 CLR 298 referred to
Foran v Wight (1989) 168 CLR 385 referred to
Generation Pty Limited v Power and Water Authority (2004) 210 ALR 312 referred to
Giumelli v Giumelli (1999) 196 CLR 101 referred to
Grundt v Great Boulder Pty Limited (1937) 59 CLR 640 referred to
Holiday Inns Inc v Broadhead [1974] 232 EG 951 referred to
Hope v Bathurst City Council (1980) 144 CLR 1 referred to
Hoyts’ Pty Limited v Spencer (1919) 27 CLR 133 referred to
Hurley v McDonald’s Australia Limited (2000) ATPR 41-741 cited
Inwards v Baker [1965] 2 QB 29 referred to
Ishac v David Securities Pty Limited (No 6) (1992) 7 ACSR 199 referred to
Kellow-Falkiner Motors Pty Limited v Nimorakiotakis [2001] ANZ Conv R 230 referred to Krakowski v Eurolynx Properties Limited (1995) 183 CLR 563 cited
Landsmiths Pty Limited v Hall (1999) 9 BPR 17,057 cited
Legione v Hateley (1983) 152 CLR 406 referred to
Long v Piper [2001] NSWCA 342 cited
Low v Bouverie [1891] 3 Ch 82 referred to
Melway Publishing Pty Limited v Robert Hicks Pty Limited (2001) 205 CLR 1 applied
Minister for Immigration and Ethnic Affairs v Kurtovic (1990) 21 FCR 193 referred to
Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273 referred to
Minister for Immigration and Multicultural Affairs v McDade (2001) 109 FCR 137 cited
Mobil Oil Australia Limited v Wellcome International Pty Limited (1998) 81 FCR 475 referred to
NT Power Generation Pty Limited v Power and Water Authority (2004) 219 CLR 90 distinguished
Plimmer v Mayor of Wellington (1884) 9 AC 699 referred to
Nigel Watts Fashion Agencies Pty Limited v GIO General Limited (1994) 8 ANZ Ins Cas 61-235 referred to
Payne v Parker (1976) 1 NSWLR 191 cited
Queensland Wire Industries Pty Limited v Broken Hill Pty Limited (1989) 167 CLR 177 referred to
Radaich v Smith (1959) 101 CLR 209 cited
Ramsden v Dyson [1866] 1 LRHL 129 referred to
Rural Press Limited v Australian Competition and Consumer Commission (2003) 216 CLR 53 referred to
Sebben v Partridge (unreported Supreme of South Australia, Lander J, 20 December 1994) referred to
Secured Income Real Estate (Australia) Limited v St Martins Investments Pty Limited (1979) 144 CLR 596 referred to
South Australia v Commonwealth (1962) 108 CLR 130 referred to
Standard Chartered Bank Aust Limited v Bank of China (1991) 23 NSWLR 164 referred to
Swain v Waverley Municipal Council (2005) 213 ALR 249 referred to
Taco Company of Australia Inc v Taco Bell Pty Limited (1982) 42 ALR 177 referred to
Tesco Supermarkets Limited v Nattrass [1972] AC 153 referred to
Thompson v Palmer (1933) 49 CLR 507 cited
Trade Practices Commission v Pioneer Concrete (Qld) Pty Limited (1994) 52 FCR 164 Eastern Express Pty Limited v General Newspapers Pty Limited (1992) 35 FCR 43 Commercial Union Assurance Company of Australia Limited v Ferrcom Pty Limited (1991) 22 NSWLR 389 referred to
Transfield Pty Limited v Arlo International Limited (1980) 144 CLR 83 referred to
United Dominions Corporation Limited v Brian Pty Limited (1985) 157 CLR 1 referred to
Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 cited
Winter Garden Theatre (London) Limited v Millennium Productions Limited [1948] AC 173 referred to
Wood v City of Melbourne (1979) 26 ALR 430 cited

Halsbury’s Laws of Australia, Vol 7 Corporations

JD Heydon, Trade Practices Law: Restrictive Trade Practices, Deceptive Conduct and Consumer Protection, LBC, Vol 1, Sydney

JD Heydon, (2004) Cross on Evidence (7^th ed) LexisNexis Butterworth, Sydney
P Feltham et al (2004) Spencer Bower’s Law Relating to Estoppel by Representation (4^th ed) Butterworths, London

PACIFIC NATIONAL (ACT) LIMITED (ACN 48 052 134 362) v QUEENSLAND RAIL (ABN 47 564 947 264)

NSD 690 of 2003

JACOBSON J
16 February 2006
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 690 of 2003

BETWEEN:	PACIFIC NATIONAL (ACT) LIMITED (ACN 48 052 134 362) APPLICANT/CROSS-RESPONDENT
AND:	QUEENSLAND RAIL (ABN 47 564 947 264) RESPONDENT/CROSS-CLAIMANT
JUDGE:	JACOBSON J
DATE OF ORDER:	16  February 2006
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The application be dismissed.

2.The cross-claim under s 46 of the Trade Practices Act 1974 (Cth) be dismissed.

3.The applicant is to deliver up possession of the AR terminal.

4.There is to be a stay of order three in accordance with the respondent’s undertaking to the Court.

5.The respondent is entitled to an order for payment of rental in accordance with s 139 of the Property Law Act 1974 (Qld) from the date of expiration of the notice to quit dated 26 May 2003.

6.   The parties are to bring in short minutes giving effect to the orders set out above and quantifying the amount payable by the applicant pursuant to order five.

7.   Costs reserved pending finalisation of the short minutes of order.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

table of contents

1.     Introduction

2.     Preliminary Matters

The pleaded assumptions and the case sought to be made by PN at the trial
The parties to these proceedings and the parties to the EA
The corporate state of mind of NRC
The corporate state of mind of QR

3.     The Factual Matrix

Background to the establishment of NRC: The Task Force Report and the Heads of Government Agreement
Queensland Cabinet considers benefits of establishing NRFC
The Establishment Agreement
Special Premiers’ Conference
The National Rail Corporation (Agreement) Act 1991 (Qld)
August 1991 - March 1993:  Preparation for the transfer of functions from QR to NRC
2 April 1993: Railway Freight Services Agreement
May 1993 - November 1993: State of Queensland defers decision to become a Shareholder of NRC
September 1993 - November 1993: NRC remains in occupation under the 4 April 1993 Heads and commencement of expenditure on AR terminal
30 June 1994: NRC defers request for transfer or lease of AR terminal
July - November 1994:  the emerging significance of the Hilmer Report
August 1994 - November 1994: the Proposed Long Term Track Access Agreement
May 1995 – September 1995: Disputes over charges for track access and request for long term agreement
September 1995:  NRC Board Meeting to consider impact of Hilmer Report
The East Coast Strategy
January 1996 – March 1997: negotiations for a new lease
27 March 1997: the “Change of Position” letter
April 1997: NRC approves capital expenditure after the change of position letter
July 1997 – April 1998:  Further Discussions about a long term lease; QR refuses to reconsider
August 1997 - January 1999:  NRC continues expenditure on East Coast Strategy
November 1998: Freightcorp requests access
The Third Amending Agreement
August 1999: The George Deutsch Report
7 September 1999: Queensland Transport favours common user facility
March 2000:  QR concern about hostile purchase of NRC
31 March 2000: QR considers George Deutsch Report
August 2000:  QR officers’ strategise about NRC’s proposed lease
September 2000:  Meeting between Mr Graham and Mr Scheuber; NRC’s proposal for long term access
October 2000:  Mr George’s memorandum to Mr O’Rourke; concern about loss of potential bargaining chip
November 2000:  Further discussions and correspondence about different positions taken by NRC, QR and Queensland Transport
Mr Graham’s letter of 13 November 2000; no obligation to grant long lease
February 2001:  Further strategising by QR
March 2001:  QR Presentation to NRC
April 2001: QR briefing paper for Mr Bredhauer
Meeting of 10 May 2001 and letters between Mr Graham and Mr Scheuber
July 2001:  More QR strategising
31 August 2001:  QR seeks approval from Queensland Government to terminate NRC’s tenancy
December 2001:  QR’s access undertaking
February 2002:  Completion of sale of shares in NRC; more strategising by QR
September 2002: Strategic options for QR
December 2002 – February 2003:  Preparation for issue of notice to quit
May 2003: Notice to Quit served; PN seeks interlocutory injunction and QR gives undertaking
10 November 2003: Access Agreement for nominated network
June 2004: QR seeks access to AR terminal
1 January 2005: QR’s offer to PN of a Licence
The Draft Terminal Services Agreement
Amendments to the Draft Terminal Services Agreement on 6 July 2005

4.     The evidence of the principal witnesses

Mr Graham’s evidence
Mr Butcher’s evidence
Mr Hanscomb’s evidence
Mr O’Rourke’s evidence
Mr Hearsch’s evidence

5.     Estoppel

The Relevant Principles of Estoppel
Contradictory and unclear evidence of the directors defeats the estoppel claim
The EA does not support the existence of the pleaded assumptions
The documentary record before and after the EA does not establish the estoppel claim
The estoppel claim fails because the assumptions are not clear and unequivocal
The estoppel claim fails because QR took no part in occasioning any of the assumptions
The claim of conventional estoppel fails because there was no assumption of existing facts and on other grounds
The equitable estoppel claim based on encouragement and failure to disclose facts
The proprietary estoppel claim is distinguishable from the Plimmer line of cases
The 1993 Freight Services Agreement does not assist PN’s case
Whether QR’s silence induced NRC to believe that QR had procured a long term lease
No reliance on pleaded assumptions
It was not reasonable for NRC to rely on the alleged assumptions
Detriment: the nature of the detriment claimed by NRC
The relevant legal principles of detriment
The fundamental reason why detriment has not been established
Reliance detriment: expenditure on the AR Terminal and the East Coast Strategy
Reliance detriment: lost opportunities
Operational Detriment
Not unconscionable for QR to depart from assumptions

6.     The Misleading Conduct Claim

7.     The unconscionable conduct claim

The Legislation
The conduct claimed to be unconscionable
The relevant legal principles of unconscionable conduct
Section 51AA is non-enlivened
Section 51AC is not attracted

8.     PN’s claim of misuse of market power

Introduction to PN’s section 46 claim
The Infrastructure Markets
The Linehaul Markets
Market Power
Whether QR has market power in the SG Rail Infrastructure Market
Whether QR has market power in the North Coast Rail Infrastructure Market
Whether QR has taken advantage: SG Rail Infrastructure Market
Whether QR has taken advantage: North Coast Rail Infrastructure Market
Whether QR had a proscribed purpose

9.     QR’s cross-claim under section 46

Market Power
Mr McNamara’s evidence on the Freightcorp issue
Mr Graham’s evidence on the Freightcorp issue
QR’s access applications
Mr Merrigan’s evidence
Professor Ferreira’s evidence
Mr Lawrence’s evidence
Conclusion in relation to QR’s applications for access

10.      Conclusion and orders

QR’s cross-claim for possession
Orders in the Proceedings

Schedule 1: Dramatis personae
Schedule 2: List of Acronyms
Schedule 3: Glossary
attachment a: colour plan of ar terminal

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 690 of 2003

BETWEEN:	PACIFIC NATIONAL (ACT) LIMITED (ACN 48 052 134 362) APPLICANT/CROSS-RESPONDENT
AND:	QUEENSLAND RAIL (ABN 47 564 947 264) RESPONDENT/CROSS-CLAIMANT

JUDGE:	JACOBSON J
DATE:	16 February 2006
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1.        Introduction

1In Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 (“Waltons”) at 423, Brennan J pointed to the difficulty of contending for an estoppel against a party’s freedom to withdraw from contractual negotiations. His Honour said that it is only if the first party induces the other to believe that the inducer, ie the first party, is already bound and that there is no freedom to withdraw, that it could be unconscionable for the first party to assert an entitlement to withdraw from the negotiations.

2Notwithstanding this difficulty, the applicant contends that the respondent is estopped from interfering with its occupation, management and control of a parcel of land comprising about 202,000 square metres and known as the Acacia Ridge Interstate Container Terminal (“the AR terminal”) near Brisbane in circumstances in which the respondent withdrew from negotiations for a 30 year lease.  The respondent owns an adjoining parcel of land comprising about 86,000 square metres.  This is known as the Q-link Terminal.  I will describe its location at [194].  The respondent conducts rail freight services from the Q-link terminal.  The applicant makes no claim to that terminal.  These proceedings are concerned solely with the applicant’s claim in respect of the AR terminal.

3The respondent owns the AR terminal, which is an intermodal terminal enabling the transfer of containers between trains and trucks which service the Brisbane area.  The applicant went into possession, and assumed the management and operational control, of the AR terminal on 5 April 1993.  It has remained in occupation, management and control ever since.  It occupied the AR terminal as a monthly tenant under an expired lease from April 1996 until its tenancy was purportedly terminated in May 2003.  It remained in occupation thereafter as explained below. 

4The applicant’s estoppel claim is based upon fourteen pleaded assumptions which are said to have formed the conventional basis upon which the parties to this proceeding conducted their relations.  In final address, four of the pleaded assumptions were not pressed.

5The applicant contends that the respondent is bound by a conventional estoppel or alternatively a proprietary estoppel or in the further alternative an equitable estoppel said to have arisen from the respondent’s encouragement of the applicant to assume control in the expectation that a 30 year lease would be negotiated.

6Underlying the assumptions is an agreement known as the Establishment Agreement (“EA”) entered into between the Commonwealth and a number of the States, including the State of Queensland, on 30 July 1991.  It is occasionally referred to in documents as the “Shareholders Agreement”.

7Until 1991, rail freight operations in Australia had been conducted by separate state owned railway companies.  Those operations had incurred disastrous losses.  The EA was an attempt to achieve micro-economic reform of the rail freight industry.  It was an exercise in co-operative federalism.  It provided for the incorporation of a single company, in which the governmental parties to the EA may hold shares, to conduct rail freight operations on a commercial basis.  The applicant, which was originally named National Rail Corporation Limited (“NRC”), was that company.

8The State of Queensland did not become a shareholder of NRC but it was subject to an obligation contained in cl 5(6)(a) of the EA to cause its rail authority to transfer ownership of, or for so long as NRC continues to conduct national interstate freight operations, give a lease of, or grant access to NRC in relation to assets owned by its rail authority and used in connection with interstate freight.  Queensland Railways was the State of Queensland’s rail authority when the EA was executed.  Queensland Rail (“QR”), the respondent, is its successor.

9Clause 5(6)(a) of the EA stated the framework through which the grant of ownership, lease or access rights was to be created.  In 1992, NRC identified the AR terminal as an asset required by it in accordance with that framework.  Clause 5(6)(a) then provided that the State of Queensland had a discretion as to which of the three stipulated forms of property right would be granted, that is, ownership, lease or access.  There is an issue between the parties as to whether the discretion was exercised.

10The concluding words of cl 5(6)(a) of the EA provided for the transfer of ownership or the grant of a lease or access rights to be on such commercial terms and conditions as were agreed between NRC and the State of Queensland.

11Apart from the terms of a three year lease, commencing with effect in April 1993, no commercial terms and conditions were agreed.  The three year lease was, for reasons dealt with later, a separate arrangement which was put in place outside the terms of the EA.

12Mr Vincent O’Rourke (“Mr O’Rourke”) who was the CEO of the respondent, and of its predecessor Queensland Railways, conceded in cross-examination that the control of the AR terminal which was transferred to NRC in April 1993 was in anticipation of a lease of up to 30 years being negotiated between the parties.  Mr O’Rourke also conceded that it was confidently expected between himself and Mr Vince Graham (“Mr Graham”) the Managing Director of NRC, that the necessary details for such a lease would be agreed between the parties and put in place.

13During the term of the three year lease NRC incurred or approved two relevant categories of capital expenditure.  The first was an amount of approximately $17 million on upgrading the AR terminal.  This expenditure included the construction of new railway track.

14The second item was an amount of approximately $200 million on what was known as the East Coast Strategy.  This was a capital investment strategy for the improvement of NRC’s competitiveness in rail freight on the east coast of Australia.  It was seen by NRC as an essential part of the establishment of an integrated national rail freight network.  It involved the purchase of new locomotives and expansion of existing east coast terminals, including the AR terminal, to cater for the running of longer trains.

15Between May 1996 and March 1997, NRC and the respondent held negotiations for a long term lease of the AR terminal.  The period of the lease, with options, would have provided for a tenure of 30 years.  The parties had not reached agreement on a number of essential terms of the lease by March 1997 when the negotiations ceased.  NRC conceded that the negotiations which took place up to that time were sincere and were conducted in good faith.

16On 27 March 1997, Mr O’Rourke wrote a significant letter to Mr Graham.  The letter stated that the respondent withdrew its “offer” of a 30 year lease.  Nevertheless, Mr O’Rourke stated that the respondent would negotiate in good faith an agreement to permit NRC to have access rights to the AR terminal.  This was the first time in the course of the negotiations in 1996 to 1997 that the respondent put forward to NRC a proposal of access rights rather than a long term lease.  The letter was referred to during the proceedings as the “change of position” letter.

17The substance of NRC’s claim in estoppel is that NRC and the respondent each assumed, and mutually adopted an assumption, that long term control of the AR terminal was transferred to NRC in accordance with the EA in April 1993 and that this was to continue for so long as NRC conducted national interstate freight operations.  It was also said that NRC and the respondent mutually assumed that a long term lease of 20 to 30 years would be negotiated in order to facilitate the transfer of control.  NRC’s case was that the terms of the lease were subsidiary to control of the AR terminal which passed to NRC in April 1993.  Other formulations of the estoppel claim were also pursued.

18NRC was said to have acted to its detriment in reliance upon these assumptions by incurring the two significant categories of expenditure to which I have referred. NRC also submitted that it was induced by the assumptions to refrain from pursuing political solutions or alternative dispute resolution mechanisms which were available to it. NRC also contended that it would suffer “operational detriment”, that is to say, adverse consequences for its rail freight operations in the ways set out at [867] – [868] below.

19The change of position letter was submitted by NRC to have been an unconscionable departure from the assumptions.  However, unlike most estoppel cases in which there is an unequivocal change of position that either is, or is not, unconscionable, these proceedings are complicated by the fact that the alleged departure from the assumption was accompanied by what amounted to an offer to compensate NRC for any detriment.  The offer was to negotiate in good faith for access rights in lieu of a lease.

20Indeed, the offer of compensation for NRC’s detriment did not stop with the change of position letter.  There have been extensive communications between the parties since March 1997 which bear upon the question of whether any detriment to NRC has been met by offers to provide access.  The respondent’s most recent offer, made shortly before the commencement of the hearing, and amended during the course of the hearing, is a lengthy Draft Terminal Services Agreement which has not been accepted by NRC.

21Thus, whilst denying that NRC has made good the basal elements of its estoppel claim, the respondent points to the following proposition stated by McHugh J in Commonwealth of Australia v Verwayen (1990) 170 CLR 394 (“Verwayen”) at 501 as a complete answer to the claim:-

“Once the detriment has ceased or been paid for, there is nothing unconscionable in a party insisting on reverting to his or her former relationship with the other party and enforcing his or her strict legal rights.”

22NRC puts its claim under both s 52 of the Trade Practices Act 1974 (Cth) (“the Act”) and estoppel but similar questions arise in each of the claims.

23NRC also claims that the respondent has engaged in unconscionable conduct in contravention of ss 51AA and 51AC of the Act. These claims turn largely upon strategies put forward by the respondent’s middle management, in particular during 2001, for avoiding any obligations on the State of Queensland under the EA and for the use of the AR terminal as a “bargaining chip” in efforts by the respondent to enter interstate markets for the supply of rail freight services.

24NRC’s other major claim is that the respondent, by giving NRC a notice to quit the AR terminal and claiming possession of it under a cross-claim, has taken advantage of its market power for a proscribed purpose in contravention of s 46 of the Act.

25This claim was influenced in part by the unique location of the AR terminal and the curious fact that railway track in Queensland is narrow gauge (3 foot 6 inches wide) whereas railway track on the east coast corridor is standard gauge (4 feet 8½ inches wide).

26The AR terminal is located between the City of Brisbane and the Queensland/NSW border (“the border”).  Rail track from the border to the AR terminal is standard gauge.  The respondent owns the track.

27The rail track running north from the AR terminal to Cairns is narrow gauge.  The respondent owns that track.

28The AR terminal has standard gauge and narrow gauge track.  It also has dual gauge track.  The AR terminal is the only terminal in Queensland which is capable of servicing substantial volumes of interstate rail freight service into and out of Queensland between standard and narrow gauge.

29There is standard gauge track from the AR terminal to the Fisherman Islands terminal at the Port of Brisbane (known as the Brisbane Multi-Modal terminal or “BMT”) but that track does not extend further along the north coast line to far north Queensland.

30The AR terminal is therefore an ideal location for the trans-shipment of freight between northern Queensland and the southern states.

31The respondent is a vertically integrated rail operator.  It conducts “above rail” interstate passenger and freight services in Queensland.  Since at least early 2005, it has conducted services between Queensland and the Southern terminals.  It owns and operates all the “below rail” narrow gauge infrastructure north of the AR terminal.  It also owns and operates the infrastructure comprising the standard gauge track in Queensland.

32NRC contends that since at least 1995 there has been a market for the supply of narrow gauge railway track infrastructure services north of the AR terminal (“North Coast Rail Infrastructure Market”) and a market for the supply of standard gauge railway track infrastructure services south of the AR terminal (“Standard Gauge Rail Infrastructure Market”).

33NRC also contends that QR has a substantial degree of power in each of those markets.

34NRC further contends that in seeking to resume control of the AR terminal and provide “mere” access rights to NRC, the respondent has taken advantage of its substantial degree of power in each of the infrastructure markets for the purpose of damaging NRC in its provision of rail linehaul services in two other markets.

35Those other markets are the supply of rail linehaul services on the north cost line between Brisbane and Cairns (“North Cost Rail Linehaul Market”) and rail linehaul services on the east coast corridor (“East Coast Rail Linehaul Market”).

36NRC’s claim under s 46 of the Act only bites if its estoppel claim fails. That is to say, it proceeds on the basis that NRC has no legal or equitable right to a 30 year lease and that when the notice to quit was given NRC was in possession of the AR terminal as a month to month tenant holding over under an expired lease.

37It would be a false dichotomy to suggest that there is a distinction between taking advantage of market power and taking advantage of property rights: see NT Power Generation Pty Limited v Power and Water Authority (2004) 219 CLR 90 (“NT Power”) at [125]. Property rights can be a source of market power attracting liability under s 46 of the Act.

38Nevertheless, NRC’s resort to s 46 to support its claim for a 30 year lease would appear to have startling consequences. It would seem to follow from NRC’s contentions that an owner of property which is an essential input in a market can be compelled to give a competitor exclusive possession of the property, rather than mere access to it, thereby depriving the owner from having access to the property other than by an application pursuant to Part IIIA of the Act.

39Unfortunately, my reasons for judgment are long.  The factual matrix covers a period of approximately 15 years from 1990 and culminates with the delivery by the respondent of its latest offer of access contained in the amended Draft Terminal Services Agreement on 6 July 2005.

40The principal witnesses were Mr Graham and Mr O’Rourke, but the dramatis personae is large.  I attach to my judgment as Schedule 1 a dramatis personae

41There were many acronyms and technical terms used to describe features of the rail infrastructure and rail linehaul markets to which I have referred.  I attach a list of acronyms at Schedule 2 and a glossary of terms at Schedule 3.

42NRC was privatised in 2002.  Its shares were purchased by a consortium owned by Toll Holdings Limited (“Toll”) and Patrick Corporation Limited.   The consortium completed the purchase of shares in NRC on 21 February 2002 and its name was thereafter changed to Pacific National (ACT) Limited (“PN”).  So far as possible I will refer to the applicant as NRC in all communications and events up to 21 February 2002.  I will endeavour to refer to it in all communications and events thereafter as PN.

43The respondent was established by the Government Owned Corporations (Queensland Rail) Regulation 1995 (“GOC Regulation”) with effect from 1 July 1995. It is the successor in law to Queensland Railways: see s 14(1) of the GOC Regulation. I will refer to the respondent as QR. For convenience it may sometimes be necessary to refer to Queensland Railways as QR but it is to be understood that a reference to “QR” in a communication or event prior to 1 July 1995 is to Queensland Railways.

44QR has two cross-claims against PN. The first is made pursuant to s 46 of the Act. It is, in effect, that PN has taken advantage of a substantial degree of power in the Standard Gauge Rail Infrastructure Market, through its control of the AR terminal, to refuse a number of requests for access made by QR and another company. It is contended that PN was motivated by an anti-competitive purpose proscribed by s 46 of the Act.

45The second cross-claim made by QR is for possession of the AR terminal. If PN fails in its claim to an entitlement to a 30 year lease or to remain in control of the AR terminal then it would seem to follow that QR must be entitled to succeed in its claim for possession. QR would also succeed in its claim for, what may be described as statutory mesne profits under s 139 of the Property Law Act 1974 (Qld) (“Property Law Act”).  The claim is for rental being double the rent which would have been payable immediately before the notice to quit was given.

2.        Preliminary Matters

The pleaded assumptions and the case sought to be made by PN at the trial

46I accept QR’s submission that NRC’s case suffers from the handicap of pleading multiple and conflicting assumptions.

47I also accept that only four of the pleaded assumptions have any bearing on the case conducted at the trial.  These are that:-

(1)QR would grant a lease or access to NRC of the AR terminal for so long as NRC carried on the business of interstate rail freight operations in Queensland on a commercial basis, or for at least 30 years.

(2)QR would provide NRC with access to the AR terminal in a way which would enable NRC to have the greatest prospect of securing its commercial viability.

(3)QR would permit NRC to occupy the AR terminal and to have control of the management and operation for so long as NRC carried on the business of interstate rail freight operations into Queensland, or for at least 30 years.

(4)In 1993 QR transferred control of the AR terminal to NRC on the basis that the transfer would be effective for so long as NRC carried on the business of interstate rail freight in Queensland, or for at least 30 years. 

48PN submitted that its case was not that QR promised NRC a long term lease.  That seems to be a disavowal of the first pleaded assumption set out above.  Notwithstanding this, the four assumptions set out above reflect precisely what was pleaded in the Statement of Claim.

49Ultimately, PN’s case as pressed in final address was that NRC and QR mutually adopted an assumption that control of the AR terminal was transferred to NRC on 5 April 1993 pursuant to the EA, with no “sunset provision”.  PN’s case was that the question of the form of the property rights was merely “formal” and “ancillary” to the control which had already passed.

50The alleged assumption that control had passed for a period, which may have been in perpetuity, appears to have its foundation in the fourth of the pleaded assumptions set out above.  The proposition that property rights were ancillary to control does not seem to have been pleaded.  In any event, for reasons given later, it has other difficulties.

The parties to these proceedings and the parties to the EA

51NRC was incorporated on 19 September 1991.  NRC was of course not a party to the EA but was established pursuant to it.

52The Commonwealth Government announced its intention to privatise NRC on 24 November 1996 but privatisation was not effected until February 2002 when the shares were sold to the Toll/Patrick consortium.

53Queensland Railways was established under the Transport Infrastructure (Railways) Act 1991 (Qld) (“TIR Act”).  The TIR Act provided that Queensland Railways’ predecessor, the Commissioner of Railways, which was a corporation sole, was continued in existence under the name Queensland Railways: see s 4(1) of the TIR Act.

54Queensland Railways was a legal entity, separate from the State of Queensland although it was an agency of the Queensland Government: see s 10(c) of the TIR Act.

55Queensland Railways was not a party to the EA.  The State of Queensland is not a party to these proceedings.

56Queensland Railways was dissolved by Reg 20(1) of the GOC Regulation, which established QR as its successor.

57QR is a government owned corporation: see Reg 19(2) of the GOC Regulation. Its shares are held equally by the Queensland Treasurer and the Queensland Department of Transport (also referred to as “Queensland Transport” or “QT” in documents). QR is not an agency of the Queensland Government.

The corporate state of mind of NRC

58In Krakowski v Eurolynx Properties Limited (1995) 183 CLR 563 at 582-3, the High Court approved the following statement of principle of Bright J in Brambles Holdings Limited v Carey (1976) 15 SASR 270 (“Brambles”) at 279:-

“Always, when beliefs or opinions or states of mind are attributed to a company it is necessary to specify some person or persons so closely and relevantly connected with the company that the state of mind of that person or those persons can be treated as being identified with the company so that their state of mind can be treated as being the state of mind of the company.”

59That is not to say that the state of mind to be attributed to a corporation must always be the state of mind of one particular officer: Brambles at 275 per Bray CJ; see also Wood v City of Melbourne (1979) 26 ALR 430 at 447.

60However, difficulties arise in ascertaining the state of mind of large corporations: Brambles at 275. Different board members may hold different beliefs and it is sometimes possible to look beyond the resolutions of the board to the deliberations of individual board members as well as those of senior management: Ishac v David Securities Pty Limited (No 6) (1992) 7 ACSR 199 at 200-201 per Young J and the authorities there cited.

61As Bray CJ said in Brambles at 276, a corporation cannot know or believe two contradictory things at once and it is rational belief, not schizophrenia which is to be attributed; see also Halsbury’s Laws of Australia, Vol 7 Corporations at [120-3045].

62Here, Mr Graham was “closely and relevantly connected” with all decisions taken by NRC in relation to the AR terminal during the period from about six months after the execution of the EA to 21 February 2002 when the shares were purchased by the Toll/Patrick consortium.  He was directly responsible for all dealings with respect to the AR terminal during that period.  He made the decisions as to what steps should be taken and his recommendations to the Board were accepted by the Board members.  There was evidence, in general terms, from a number of Board members, Mr Butcher, Mr Moore-Wilton, Mr Stanko and Mrs Yeoh, that they relied on Mr Graham.

63Whether NRC’s state of mind for the purpose of determining what, if any, assumptions were adopted, is confined to that of Mr Graham is not entirely clear.  PN accepted in final address that Mr Graham’s state of mind was “paramount”.  But it submitted that Mr Butcher’s assumptions were also relevant because of his regular discussions with Mr Graham.  Although PN called evidence from Mr Moore-Wilton, Mr Stanko and Mrs Yeoh, it did not submit that their states of mind were to be attributed to NRC.  That is hardly surprising because their assumptions were different from Mr Graham’s.  However, the same comment applies to Mr Butcher.

64Mr Graham did not assume that the State of Queensland or QR had any obligation in accordance with the EA to give NRC a long term lease.  He believed that the State had a choice but that the minimum content of the State of Queensland’s obligations under the EA was to provide access to NRC on terms that ensured NRC’s commercial viability.

65Mr Butcher expected that NRC would receive a long term lease.  His understanding was based upon his knowledge of the EA but he did not appreciate that the State of Queensland had a discretion to provide access rather than ownership or a long lease.  His belief was also founded upon a conversation held in December 1991 with Mr Hamill, who was then the Minister for Transport of the State of Queensland.

66Mr Moore-Wilton, Mr Stanko and Mrs Yeoh expected that NRC would have long term control of the AR terminal.  They recognised that there would need to be a written agreement reached to give effect to the right of control. 

67PN also called evidence from Mr Hanscomb, a senior executive of NRC, who had, in 1991, assisted Mr Moore-Wilton on the Committee of Officials (which was a Committee established to examine options for the funding of NRC) and assisted in drafting the EA.  His expectation was that there would be a lease.  I do not consider that his state of mind is to be attributed to NRC within the principle stated in Brambles.  His evidence has some bearing on Mr Graham’s expectations.

The corporate state of mind of QR

68Mr O’Rourke was the CEO of QR and its predecessor, Queensland Railways.  He was closely and relevantly connected with all dealings and decisions in respect of the AR terminal.  His state of mind can be treated as that of QR for the purpose of determining what assumptions QR held and he must be taken to have known what was in his mind as CEO of Queensland Railways. 

69The relevant period for determining on what assumptions QR acted and the conduct which is said to have induced NRC to act to its detriment is the period up to March 1997 or perhaps to the date of Mr O’Rourke’s letter of 25 March 1998.  The other relevant mind of QR in that period was Mr Hearsch.

3.        The Factual Matrix

Background to the establishment of NRC: The Task Force Report and the Heads of Government Agreement

70Most of the background to the establishment of NRC is taken from the Report of the National Freight Initiative (“NFI”) dated 20 July 1990 and the Report of the National Rail Freight Initiative Task Force dated 21 March 1991.

71In 1989-90 Australia’s interstate rail freight operations incurred an estimated combined loss of $377m.  Losses of this magnitude were a recurring feature of the interstate rail freight business.  Contributions to the losses varied between different operators.

72By 1990, governments, industry and the community were no longer prepared to accept these losses and the impositions they placed on the Australian economy.

73In October 1989, the NFI began to evaluate options for a viable interstate national railway freight business under single management.  The NFI was formed by representatives of five government owned railways, the ACTU, BHP, three major freight forwarders and Mr EWA Butcher (“Mr Butcher”) representing the Commonwealth Minister for Transport. 

74The objectives of the NFI were to formulate a proposal for the establishment of an efficient national rail freight enterprise providing profitable and competitive interstate services, and thereby to realise gains in economic efficiency. 

75The NFI recommended the establishment of a National Rail Freight Corporation (“NRFC”) with Commonwealth and State equity participation. 

76The NFI Report contained the following useful diagram of the proposed national rail freight network, showing inter alia, the terminals and marshalling yards proposed to be under NRFC control:-

77The NFI’s proposal called for an incorporated company integrated across State borders operating at cost levels significantly below those under the then existing fragmented rail systems.

78A table to the NFI Report listed the main assets owned by rail systems which were used to operate the interstate freight business.  The following appeared under the heading “Terminals”:-

“Queensland Railways …   Acacia Ridge (Part)”

79The reference to “part” was apparently to the interstate intermodal terminal which is the portion of the AR terminal that is the subject of these proceedings.

80The NFI considered that it was “especially important that the NRFC control all of the terminal facilities it needed to conduct its business”.  The NFI also stated that the NRFC should control its own operations within freight terminals, that is, shunting, transfers, material handling and documentation. 

81At a meeting of the Australian Transport Advisory Council on 7 September 1990, Commonwealth and State Transport Ministers agreed to establish an independent task force (“the Task Force”) to be responsible for developing detailed proposals on a wide range of issues relevant to the establishment of a “fully commercial” NRFC which would operate interstate rail freight services.

82The Task Force comprised the representatives of the governments of the Commonwealth, NSW, Victoria, Queensland, South Australia and Western Australia as well as representatives of the ACTU.  Mr Butcher was the Commonwealth’s representative and the chairman of the Task Force.

83The Task Force issued a report on 21 March 1991.  Prior to that date, on 31 October 1990, the Heads of Government of the Commonwealth the States and Territories, signed an historic agreement entitled “Heads of Government Agreement on the National Rail Freight Corporation” (“Heads of Government Agreement”).  The signatories included RJL Hawke for the Commonwealth and Wayne Goss for the State of Queensland.

84The Heads of Government Agreement provided that the Commonwealth, State and Territory Governments agreed to establish an NRFC for the purpose of conducting interstate rail freight operations with a view to it commencing business on 1 July 1991.

85The various governments agreed under the Heads of Government Agreement that the proposed NRFC would:-

·involve Commonwealth, State and Territory equity participation in a company incorporated under the Companies Code;

·encompass all the railways’ existing interstate freight business; and

·have a corporate goal to earn a commercial rate of return on its assets without reliance on government guarantees. 

86The Heads of Government Agreement also provided that the governments agreed that their positions on equity participation and commitment of assets to NRFC would be subject to their consideration of proposals and recommendations to be made by the Task Force.

87A number of broad conditions were recognised by the governments in the Heads of Government Agreement.  They included that the NRFC should be established and operate on a strictly commercial basis with a financially viable corporate plan.

88The conditions also included the following:-

“the NRFC shall have access (by ownership or other appropriate arrangements) to assets, including track infrastructure, necessary to achieve commercial viability.” 

89Nearly two weeks earlier, on 19 October 1990, Mr O’Rourke, who was then the Commissioner of Railways, wrote a memorandum to the Director-General of the Queensland Department of Transport expressing Queensland Rail’s support for the establishment of NRFC.  The memorandum pointed to consequential benefits for QR including elimination of losses on QR’s interstate standard gauge rail operations to the border, the possibility of increased traffic on the North Coast line and the improved chance of obtaining Commonwealth funding for the standard gauge connections from Acacia Ridge to Fisherman Islands.

90The Task Force Report stated that the fundamental question it was required to address was whether or not the NRFC could be commercially viable.  It said that its analysis suggested that the NRFC was a marginal prospect commercially.  Nevertheless, it said that the NRFC was a considerable improvement over separate interstate rail freight systems.  It also said that analysis suggested that NRFC “can be commercially viable” after an establishment phase.

91The Task Force considered that improvements in productivity and operational efficiency were crucial to NRFC’s commercial viability.  It said that these improvements required investment in infrastructure, communications and rolling stock as well as changes in work practices. 

92The Task Force proposed:-

“… that the NRFC be incorporated on 1 July 1991 and take over all the major capital city interstate rail freight terminals, with effect from 1 October 1991 …” (emphasis added)

93One of the reasons for this recommendation was that, as the Task Force observed, terminals are critical because they are the main point of contact with customers.

94The Task Force considered that equity shares for NRFC during its establishment phase (which was thought to be 1992 to 1996) should be, Commonwealth 34%, NSW 29%, Victoria 19%, Western Australia 16% and Queensland 2%.

95The Task Force also considered that there was a requirement during the establishment phase that NRFC receive financial assistance from its shareholders.  This was because NRFC would be taking over five loss making businesses and would be handicapped by past and prospective losses.

96Bankers’ Trust Corporate Finance (“BT”) was appointed by the Task Force to assess the commercial viability of NRFC.  BT examined anticipated profits and losses over a 15 year period under a number of different assumptions.  It is unnecessary to set out the four scenarios posited in BT’s calculations.

Queensland Cabinet considers benefits of establishing NRFC

97In a cabinet memorandum apparently dated 15 June 1991, Mr Hamill, who was then the Queensland Minister for Transport, set out a number of issues flowing from the proposed establishment of the NRFC.  He referred to the proposed execution of the EA which is detailed below, and said:-

“… In terms of assets Queensland will be expected to transfer control of both the interstate portion of the Acacia Ridge freight terminal and the interstate rail corridor between Acacia Ridge and the New South Wales border.” 

98Mr Hamill’s memorandum also pointed to the benefits for the State of Queensland of being a party to the EA without being a shareholder in it.  They included reduction of losses on interstate rail freight as a result of the NRFC attaining the “performance levels” contemplated by the Task Force Report.

99Two options were proposed by Mr Hamill.  The first was that Queensland take equity by transferring control of the required interstate assets to the NRFC.  The second was that Queensland have no equity but still transfer control of the relevant assets to the NRFC.  In exchange, Queensland would approach the Commonwealth to waive all present and future obligations associated with those assets.

100On 1 July 1991, the Queensland Cabinet decided that it favoured the State having no equity participation in NRFC but:-

“Cabinet considered that Queensland should transfer control of its relevant interstate rail assets to the NRC (to facilitate the establishment of the NRC).” 

The Establishment Agreement

101By an agreement made on 30 July 1991 between the Commonwealth and the States of NSW, Victoria, Queensland and Western Australia, the parties agreed to incorporate a public company, having as a principal objective the carriage of interstate rail freight on a national network: see cl 4(1)(a).  South Australia acceded to, and became a party to the EA later.

102Under the EA, the Commonwealth, the State of NSW, the State of Victoria and the State of Western Australia agreed to become shareholders of the company.  Those States were defined as “the States”.  The State of Queensland did not agree to become a shareholder but provision was made for it to become a shareholder in due course, if it elected to do so.  The State of Queensland was defined as the “Other State” and was included within the description “the Other States”.

103The States and the Other States had different rights and obligations under the EA.  These included the right to appoint directors and the obligation to subscribe funding.  Each of the States had that right and that obligation.  The Other States did not.

104Nevertheless, each of the States and the Other States agreed under the EA to cause their respective rail authorities to transfer ownership, give leases or grant access in respect of assets owned or controlled by those rail authorities and used by them in connection with interstate rail freight.  I will set out those provisions in some detail later.

105The EA commenced by reciting that in order to achieve micro-economic reform in the Australian rail industry the Commonwealth, the State and Territory governments had agreed that a company should be established for the purpose of conducting rail freight operations on a commercial basis compatible with the principles set out in the Heads of Government Agreement: see Recital A.

106Those principles were stated in Recital B which included the following:-

“(a)    that the Company will:-

(i)operate on a strictly commercial basis, with a financially viable corporate plan, and be subject to the Trade Practices Act 1974 (Commonwealth)

(ii)have access (by ownership or other appropriate arrangements) to the assets, including track infrastructure, necessary to achieve commercial viability;

…

(v)provide access on a commercial basis to the NRC network and to terminal facilities for private and public sector operators;

…”

107The Commonwealth, the States and the Other States agreed to take all practical steps to seek the enactment of legislation by their respective Parliaments to approve the EA and to provide for its implementation: see cl 3(1).

108Clause 4(1), to which I referred above, contained the agreement between the Commonwealth, the States and the Other States for the establishment of the company.  Clause 4(1)(b) provided for it to be incorporated under the name “National Rail Corporation Limited”. 

109Clause 4(2) provided for the Commonwealth to subscribe for ordinary and convertible shares in NRC and for it to transfer specified numbers of those shares to each of the States.

110Appointment of directors was dealt with in cl 4(4).  During the Establishment Period, which was the five year period commencing on the date of commencement of operations of NRC, there were to be nine directors.  Three were to be nominated by the Commonwealth, with one to be Chairperson of the Board.  Two directors were to be nominated by each of the States of NSW, Victoria and one by the State of Western Australia.  The remaining director, who was to be the Managing Director, was to be appointed by the Board.  Mr Butcher was subsequently appointed to be the Chairman and Mr Graham to be Managing Director.

111If any Other State became a shareholder during the Establishment Period, it had the right to nominate one director: see cl 4(6).

112Clause 5(1) bound the Commonwealth and the States, to the extent they were able, to procure NRC to, inter alia, commence and conduct national interstate rail freight operations.  Their obligations included procuring NRC to:-

“take over progressively from the rail authorities of the Commonwealth and the States, in whole or in part, functions of the type listed in Schedule 2 and the management of the associated assets pursuant to the provisions of this Agreement and the agreements entered into pursuant to subclauses 5(3), 5(4) and 5(5).”

113The functions listed in Schedule 2 included the operation of interstate rail freight terminals and freight terminal management.

114Clause 5(2) excepted the Other States from the obligation to procure NRC to take over the operations and management of interstate rail freight terminals.  The clause provided as follows:-

“The Commonwealth, the States and the other States will, and will cause their respective rail authorities to assist the Company, when requested by the Company, to undertake the matters set out in subclause 5(1), except in the case of the other States, in relation to the matters set out in paragraph 5(1)(f).”

115Clause 5(3) provided that, prior to and during the Transition Period, that is the first three year period from the commencement of operations of NRC, the Commonwealth and the States would cause their respective rail authorities to enter into contracts with NRC for the provision of interstate rail freight services to the NRC.  The means by which the price of the services was to be determined was set out.

116Clause 5(4) dealt with the transfer of functions from the Commonwealth and the States to NRC.  It provided that the Commonwealth and the States would cause their respective rail authorities to permit NRC to assume performance of the functions related to interstate rail freight of the type listed in Schedule 2.

117The obligations of the Commonwealth and the States to transfer ownership, give leases or grant access to assets of their rail authorities was contained in cl 5(5).  It provided relevantly:-

“The Commonwealth and the States shall, or shall cause their rail authorities to transfer ownership of, or for as long as the Company continues to conduct national interstate rail freight operations, give leases of, or grant access to the Company, in relation to any asset, owned or controlled by the Commonwealth or the State or their rail authorities, and used by their rail authorities in connection with interstate rail freight.  The Company, in its Corporate Plan, shall identify that a particular asset or class of assets is required by it.  The Commonwealth and the States shall have a discretion whether to transfer ownership, give a lease or grant access to the Company in relation to any asset required by it.  Transfer of ownership, lease or grant of access shall be given within a reasonable time following the request by the Company to make the asset available.  The objective is that all transfers of ownership, leases or grants of access shall be completed before the end of the Transition Period.”

118Clause 5(5) went on, in paragraphs (a) to (d) to set out detailed provisions for the implementation of the specified obligations.  Clause 5(5)(b) provided that where the Commonwealth or a Sate did not agree to transfer ownership or enter into a long lease of an asset, the predominant use of which was for interstate rail freight, NRC would be granted access to the asset pursuant to a contract, the terms and conditions of which would be agreed between the NRC and the Commonwealth or the State.

119The obligation of the Other States to transfer ownership, give leases or grant access to assets used by their rail authorities in interstate rail freight was contained in cl 5(6)(a).  It provided:-

“The other States shall, or shall cause their rail authorities to transfer ownership of, or for as long as the Company continues to conduct national interstate rail freight operations, give leases of, or grant access to the Company, in relation to any asset, owned or controlled by the other States or their rail authorities, and used by their rail authorities in connection with interstate rail freight.  The Company, in its Corporate Plan, shall identify that a particular asset or class of assets is required by it.  The other State in question shall have a discretion whether to transfer ownership, give a lease or grant access to the Company in relation to any asset required by it.  Transfer of ownership, lease or grant of access shall be given within a reasonable time following the request by the Company to make the asset available.  The objective is that all transfers of ownership, leases or grants of access shall be completed before the end of the Transition Period.  The transfers of ownership, leases and the grants of access shall be on such commercial terms and conditions as are agreed between the Company and the other State in question.”

120Clause 5(6)(b) provided that until all the transfers of ownership, leases or grants of access under cl 5(6)(a) were completed, the Other States would, or would cause their rail authorities to, enter into contracts with NRC for the provision of interstate rail freight services.  The means by which the price for those services was to be determined was set out.

121Clause 6 dealt with funding.  It also made provision for the Other States to become shareholders, with the consequent obligation to provide equity funding.  The mechanism for an Other State to become a shareholder was easier depending upon whether it elected to do so during the Transition Period or the Establishment Period.

122Clause 6(1) specified the initial equity funds which the Commonwealth and the States were bound to contribute.  The amounts were $295.8 million for the Commonwealth, $75.6 million for NSW, $35.1 million for Victoria and $8 million for Western Australia.  Provision was made for each of those polities to subscribe for convertible shares in NRC in amounts equal to the respective amounts of the initial funding obligations.

123The Commonwealth and the States also agreed to contribute additional equity funding during the Establishment Period in accordance with their respective proportionate shares specified in cl 6(2).

124Clause 6(3) to 6(7) made provision for the calculation of the number of ordinary and convertible shares to be issued to the Commonwealth and the States by reference to the value of assets transferred to NRC by way of ownership or long lease.

125Clause 6(8) made provision for the admission of the Other States as shareholders during the Transition Period.  An Other State which elected to become a shareholder during that period was required to contribute a minimum of $5 million in cash for shares and the Commonwealth and the States were bound to pass a resolution for the issue of the shares.  The Other State was also then bound to contribute additional equity funding in such proportion as was agreed between the Commonwealth and the States.

126If an Other State gave notice that it wished to become a shareholder during the last two years of the Establishment Period, the Commonwealth and the States were granted a discretion to pass a resolution for the issue of the shares on such terms and conditions as agreed between themselves and the Other State.

127If an Other State gave notice after the Establishment Period, it was given the right to purchase shares on the same terms as were offered to third parties: cl 6(10).

128Provision was made in cl 7 for alternative dispute resolution by conciliation or arbitration.  Disputes were defined to include disputes or differences as to the charges and terms and conditions for access to assets pursuant to cl 5(5)(a),(b),(c) and (d) and cl 5(6)(a).

129Clause 8 of the EA made provision for variation of its provisions by further agreement in writing.

Special Premiers’ Conference

130On 30 July 1991, the Heads of Government of the Commonwealth, States and Territories held a conference on a number of matters following which they issued a communiqué setting out the agreed outcome of their discussions.

131The communiqué referred to the signing, on the day of the conference, of the EA.  It recorded that although the State of Queensland did not wish to become an equity participant in NRC, it fully supported the establishment of NRC.

132The communiqué also recorded that the Queensland Government would contribute assets to NRC and that the Queensland Government was committed to:-

“providing the Corporation [ie NRC] with every assistance to enable it to have control over the interstate rail freight network.”

The National Rail Corporation (Agreement) Act 1991 (Qld)

133In accordance with its obligations under cl 3(1) of the EA, the State of Queensland enacted the National Rail Corporation (Agreement) Act 1991 (Qld) (“NRC Act”).

134In his Second Reading Speech on the introduction of the National Rail Corporation (Agreement) Bill on 26 November 1991, Mr Hamill said that the State of Queensland would not become a shareholder in NRC but that it assisted in its formation and would transfer “relevant interstate rail assets to the corporation on a long-term lease basis”.

135The NRC Act provides in s 5 that the EA is approved. Section 6 of the NRC Act provides that each party to the EA, and QR, may do anything authorised by the EA and must observe the provisions of the EA that are applicable to it.

136Section 7 of the NRC Act stipulates that if any shares in NRC are issued to the State of Queensland under the EA, they are to be held by an eligible Minister for the State.

137The NRC Act was assented to on 9 December 1991, ss 1 and 2 commenced on that date: see s 2, and the remaining provisions commenced on 21 December 1991.

August 1991 - March 1993:  Preparation for the transfer of functions from QR to NRC

138One week after the execution of the EA, Mr Richard Price, the Corporate Development Manager of QR, sent a memorandum dated 6 August 1991 to QR’s Executive Manager, Strategic Issues.  The memorandum was headed “Transfer of Responsibility for Interstate Freight in Queensland to National Rail Corporation.”

139The memorandum attached, amongst other things, a detailed listing of tasks to be performed and issues to be addressed.  It also attached a schedule of suggested responsibilities for facilitating the transfer of interstate rail freight operations in Queensland to NRC.

140The memorandum stated that a copy of the signed Heads of Government Agreement and the Memorandum and Articles of Association for NRC had been received from the Department of Transport.  It concluded with the following words:-

“This is a major project for QR and the management of the process and the commitment of staff need to be addressed soon.”

141The document listing issues involved in the transfer of interstate rail freight in Queensland to NRC included the following statement:-

“It is expected that NRC will want to takeover terminal operations as early as possible but it will be in its financial interests to defer this takeover of functions for 12 months.”

142The reason why the 12 month deferral was said to be in NRC’s interests was explained later in the document.  It was related to the provision in the EA for pricing of services under cl 5(6)(b) of the EA pending the transfer of ownership or leases or grant of access rights.

143The issues document also stated that it was suggested to be in QR’s interests to arrange the lease of the AR terminal and the border to the AR line as soon as possible so that NRC would be responsible for all costs.

144One of the issues referred to in the issues document was the Park Road siding which was owned by QR and situated outside of the AR terminal site.  The issues paper commented that “[a] short term lease is suggested here to encourage NRC to relocate to Acacia Ridge”.

145The memorandum of 6 August 1991 and its attachments were acknowledged by Mr O’Rourke to have been part of the serious planning work by QR officers concerning the transfer of interstate rail freight in Queensland to NRC.

146On 15 August 1991, QR established a steering committee, chaired by Mr O’Rourke, to oversee the transfer of interstate freight operations to NRC.  The members of the steering committee included Mr John Hearsch, the Group General Manager Freight and Mr Price.

147The minutes of the first meeting of the Steering Committee, held on 15 August 1991, stated that the General Manager, Express Freight, Mr PJ Case would proceed to investigate and arrange for the transfer of interstate freight terminal functions to NRC and liaise with NRC about timing.  It was noted in the minutes that Mr Case would shortly assume responsibility for operations at AR.

148The minutes also record a decision that QR should aim to have the lease of interstate freight terminals and the track from the border tunnel to Acacia Ridge in place by the date of commencement of operations by NRC.  This was to ensure that QR had no responsibility for costs or functions after that date.

149The Steering Committee established a working group to address all issues affecting freight.  Mr Case was appointed as Chair of the working group.  He sent a memorandum dated 19 August 1991 to other members of the working group proposing a meeting on 2 September 1991.  The other members of the working group included Mr Price and Mr Eades, the General Manager, Property.

150An attachment to the memorandum of 19 August 1991 recorded a statement that it was doubtful whether NRC would be in a position to assume responsibility for standard gauge operations in Queensland on 1 February 1992.  How long QR would continue to carry out those functions under contract to NRC was not then known.

151The second meeting of the Steering Committee was held on 10 September 1991.  Mr Case reported on the progress of the working group.  He reported a number of decisions taken by the working group in relation to “lease arrangements”.  The decisions included that the lease was to relate to the AR terminal and the corridor between AR and the border.  Also, a lease valuation was to be carried out to facilitate negotiations with NRC.

152On 11 September 1991, Mr Tony Drake, Group General Manager, Corporate Services, who was a member of the Steering Committee, sent a memorandum to Mr Eades.  Copies of the memorandum were sent to Mr Hearsch and Mr Case.  The memorandum stated that a number of decisions had been taken at a recent Steering Committee meeting.  These included:-

·the lease was to cover the AR terminal, with the exact boundaries to be determined by Mr Case, and south to the border encompassing “the normal rail right of way”, but excluding adjoining lands;

·the agreement should provide that Queensland Rail could also construct rail facilities within the same corridor;

·the lease rental should be for an initial three years with subsequent reappraisal; and

·the initial lease rental should cover costs and outgoings with no return on asset values.

153Mr Eades was also requested in the memorandum of 11 September 1991 to come up with a notional value of AR and the right of way to the border in case that was needed for negotiations with NRC.

154NRC was incorporated on 19 September 1991.  NRC’s Articles of Association provided that during the Establishment Period there was no right to transfer shares.  After the Establishment Period there were pre-emptive rights in favour of existing shareholders on the transfer of shares to third parties.

155There were further meetings of the working group in 1991 and 1992 to discuss progress of the various issues to be dealt with in connection with the transfer of responsibility of interstate freight to NRC.

156On 7 November 1991, Mr O’Rourke wrote to Mr Butcher recommending a number of items of capital expenditure or “deferred maintenance” for NRC.  He commented that previously QR had provided insufficient resources for these “essential investments” and that this was “a clear example of why we had to have an NRC!”.

157On 13 December 1991, there was a meeting of QR’s Steering Committee.  Mr Case put forward at the meeting a draft position paper on the transfer of interstate freight to NRC.  The position paper was marked “draft for discussion”.

158Mr Case’s draft position paper referred, under the heading of “Contractual/Legal Requirements” to the complexities of rail reserves for which QR did not have clear legal title.  Difficulties were envisaged in providing NRC with quiet possession of those areas.  Developing survey plans was thought to be impracticable at that stage. 

159The draft position paper proposed that a Heads of Agreement form the basis of the NRC business in Queensland.  “Running licences” were to be developed for NRC’s operational requirements.  Mr Case said that these would guarantee NRC access to the various business areas.  Running licences were proposed for areas including the following:-

“ - Border tunnel to Acacia Ridge
   - Acacia Ridge (defined area)”

160NRC produced its first corporate plan on 1 April 1992.  The corporate plan identified terminal management at AR as a function or asset to be transferred to NRC during the first year of the Transition Period under the EA.

161On 23 April 1992, Mr Graham wrote to Mr O’Rourke informing him that NRC’s first corporate plan was expected to be sent to shareholders early in the following month.  Mr Graham noted that included in the corporate plan, as required by the EA, was a nomination of functions and assets to be transferred to NRC and a proposed timetable for those transfers. 

162Mr Graham also stated that there would be a substantial amount of clarification and negotiation to be undertaken between NRC and QR.  He asked Mr O’Rourke to give consideration to nomination of a negotiating team.  He said that some of the issues may require discussion with the Queensland government and that he had no objection to a government representative being involved.

163On 1 July 1992, Mr RG Hartley, the Acting Director-General of the Queensland Department of Transport, wrote to Mr Graham about the division of responsibilities between the Queensland Government and QR.  Mr Hartley stated that, as discussions and negotiations develop between NRC and the Queensland Government and its agencies, it was appropriate to provide Mr Graham with “formal advice” on the relevant contact officer for “NRC matters”.

164Mr Hartley indicated that the Policy & Planning Unit of the Department of Transport would handle all “policy issues” such as the State of Queensland becoming a shareholder in NRC and the overall progress of the standard gauge rail link to the Port of Brisbane.  The name of a contact officer, Mr J Noye, was supplied.

165Mr Hartley also stated in the letter that QR would handle all “operational rail issues” and the detailed negotiations on those matters.  He said he did not expect there to be operational issues which could not be resolved between NRC and QR but, if a difficulty arose, NRC was to contact Mr Noye who would arrange for the issue to be raised with the Director General and the Minister for Transport.

166Mr Hartley’s letter concluded by stating that the State of Queensland was looking forward to becoming a shareholder in NRC.

167On 10 July 1992, Mr Graham wrote to Mr O’Rourke informing him that NRC’s first corporate plan was approved by its shareholders on that day.  The letter invited Mr O’Rourke to attend a meeting in Sydney on 20 July 1992 at which NRC would make a presentation on two matters; firstly, service contracts for the supply of rail services to NRC during the transition period, and secondly, the transfer of functions and selected assets from “the authorities” to NRC.

168Mr Case attended the presentation made by NRC on 20 July 1992.  He reported on it to Mr Hearsch in a memorandum of the same date.  The memorandum stated that Mr Affleck of NRC put forward a proposal to progress negotiations with QR on the two matters referred to above. 

169Mr Case’s memorandum referred to NRC’s proposed timetable which included the formation of three joint working parties to progress transfer of functions, identification of assets and service agreements.  He said that NRC would prefer to have a common Heads of Agreement for the service contracts.  He also said that the transfer of functions and assets must be completed by the end of the Transition Period.

170On 28 July 1992, Mr Butcher sent a letter to Mr Hamill referring to a recent indication by Mr Hamill that Queensland was considering taking up equity in NRC.  Mr Butcher noted that once funding became available, NRC was willing to recommend to the Commonwealth Minister for Land and Transport that he approve $30 million go towards the construction of standard gauge access at Fisherman Islands, subject to QR and NRC agreeing to the provision by QR to NRC of rail access from the AR terminal to Fisherman Islands for 25 years in particular terms.

171During July 1992, BHP Engineering Pty Limited was awarded a consultancy brief to prepare a Master Plan for NRC’s intermodal container terminals around Australia.  A Master Plan strategy for AR was produced in November 1992.  It included a proposal for the construction of Track A, to be 1,200 metres long, with construction to be completed by the end of June 1993.

172On 20 January 1993, Mr Hamill wrote to Mr Butcher.  Mr Hamill made reference to a draft Rail Freight Service Agreement which had been submitted by NRC to QR.  He went on to refer to the potential for Queensland to become a shareholder in NRC.  He said that this was dependent upon NRC contributing $10 million to the establishment of a standard gauge link to Fisherman Islands.  Mr Hamill sought clarification of NRC’s intentions regarding the contribution.

173On 2 February 1993, Mr Graham wrote to Mr O’Rourke.  The letter commenced by thanking QR for the cooperative manner in which negotiations for the Rail Freight Services Agreement had been conducted.  The letter included the following:-

“The main purpose of this letter is to make you aware of the next step we wish to take to put in place the transfer of terminal operating functions, which has been mentioned in earlier correspondence.  As discussed with your officers, it will be necessary for National Rail and Queensland Rail to negotiate a formal agreement to provide a framework within which we can operate the intermodal freight terminal at Acacia Ridge.  Fred Affleck and Simon Hanscomb will be contacting Peter Case in the next few days to commence this process.”

174The letter of 2 February 1993 also noted that the scheduled date for transfer of AR to NRC Management Control was 5 April 1993.  Mr Graham  said that in order to achieve this, it would be necessary to complete negotiation of a terminal operating agreement.

175As part of the planned handover, a meeting took place on 25 February 1993 between NRC and QR executives, as well as officers of the State Rail Authority of Queensland.  The NRC executives included Mr Fullerton and Mr Hanscomb.  The QR executives included Mr Case and Mr Eades.

176The written notes of the meeting record that the boundaries of the AR terminal and the handover point for NRC trains were still to be determined.

177On 4 March 1993, Mr Hamill met with Mr Butcher, Mr Graham, Mr O’Rourke, Mr Hartley and two other persons from Mr Hamill’s office.  There was a discussion about the issue of NRC’s proposed $10 million contribution to the construction of the standard gauge rail link to Fisherman Islands.

178A confidential written note of the meeting recorded that Mr Butcher and Mr Graham  made it clear that NRC was prepared to honour its “original intent” to make the $10 million contribution but that this was dependent upon Queensland Rail taking up shares in NRC, and:-

“the ‘packaging’ of that $10 million may need to be reviewed, in order that the NRC executives be seen to honour its fiduciary responsibilities under the Companies Act.”

179On 12 March 1993, NRC’s Corporate Services Manager, Mr Simon Hanscomb, wrote to Mr Case.  He referred to Mr Graham’s letter of 2 February 1993 concerning the transfer to NRC of interstate rail freight functions under the EA and, in particular, the transfer of terminal operating functions to NRC.

180Mr Hanscomb stated that meetings had been held between the “operations people” of NRC and QR to determine and, where possible, to progress various issues including the terminal area to be controlled by NRC. 

1180However, it seems to me that this analysis has a number of shortcomings.  In particular, Professor Ferreira acknowledged that he did not test for feasibility of implementation of his proposed services by following through how there might be effects or influences from other train services and on the interdependence of other resources at the AR terminal, such as storage capacity.

1181He acknowledged that in practice the critical terminal services are interdependent and that he had left this out of his first report.  His supplementary report failed to overcome this defect.

Mr Lawrence’s evidence

1182QR relied on a number of apparent concessions made by Mr Lawrence in cross-examination to support its argument that the statements made in Mr Smith’s letters, rejecting access, were not correct.

1183First, QR pointed to a statement in Mr Smith’s letter of 16 July 2004 that NRC did not have sufficient capacity due to the loading of the copper train.  This was said to be incorrect and to have been acknowledged as such by Mr Lawrence.

1184Mr Lawrence conceded that the copper train occupied only about 270 metres, leaving another 900 metres of vacant track.  However, I do not consider that Mr Lawrence went on to concede that the loading of the copper train was not an impediment to the introduction of the new service.  His answers on that topic were equivocal but he did not prevaricate.  Mr Lawrence was an honest witness who made concessions on various matters when it was appropriate to do so. 

1185It was put to Mr Lawrence that the statements in Mr Smith’s letter to the effect that NRC did not have capacity due to loading of the copper train, were incorrect.  The effect of Mr Lawrence’s evidence is that he resisted that proposition.  I accept his evidence.  He was the source of the information in Mr Smith’s letter.  It is therefore not to the point that Mr Smith was not called.

1186Second, QR relied on Mr Lawrence’s concession that since July 2004, QR has been able to process additional trains totalling about 3,500 metres in length.  However, that concession does not establish that NRC would have been able to accommodate the new QR services at the times and on the days that QR has sought access.  The additional 3,500 metres of trains did not coincide with the times sought in QR’s access applications.

1187QR seems to accept this, but relies on Mr Lawrence’s evidence that he would do anything to accommodate NRC’s trains; therefore NRC could similarly change its practices to accommodate QR’s trains.  I do not accept that it follows that NRC would have been able to accommodate QR, given the national basis of NRC’s network operations.

1188Third, QR submitted that despite sworn evidence in his affidavit that the AR terminal was operating at almost full capacity, Mr Lawrence conceded that this evidence was badly wrong.  However, the submission overstates Mr Lawrence’s evidence.  His answer was that it was badly wrong “on the way we were working, yes”.  This was a reference to the fact that since September 2004, NRC introduced some operational reforms including 3-stacking of containers, apparently taking into account suggestions made by Mr Merrigan.

1189In my view, Mr Lawrence’s concession was nothing more than an acceptance of the proposition that he was able to extract additional capacity from the AR terminal.  It does not establish the untruth of Mr Smith’s statement in the letter of 16 July 2004 and subsequent correspondence that the AR terminal did not have the capacity to accommodate the particular services at the times sought by QR.

1190It follows that I am not satisfied that the statements made in the relevant letters were incorrect.  Moreover, I am not satisfied that the statements were made otherwise than honestly in good faith.  It is true that Mr Smith was not called to give evidence, although a belated attempt was made to re-open to rely on his affidavit.  But it is unnecessary for me to make a finding that his evidence would not have assisted; cf Sebben v Partridge (unreported Supreme of South Australia, Lander J, 20 December 1994).  In that case, Lander J was of the view that a Jones v Dunkel inference was available where a defendant was not called, an unsuccessful attempt having been made to reopen after close of the defendant’s case.

1191However here, Mr Lawrence was the source of the relevant information in the letters and in any event, QR disavowed any suggestion that the statements were made dishonestly.  In these circumstances, I do not consider that Mr Smith’s evidence would have elucidated this particular matter: see Payne v Parker (1976) 1 NSWLR 191 at 201 per Glass JA.

Conclusion in relation to QR’s applications for access

1192I am not satisfied that NRC’s consideration of QR’s access applications involved anything other than a fair consideration of them on their merits, notwithstanding that NRC’s responses were based on an erroneous assumption as to the overall capacity of the terminal.  I do not consider that NRC was guilty of undue delay or obfuscation, as was suggested by QR.

1193Accordingly, I have come to the view that NRC’s failure to grant the access applications did not amount to taking advantage of market power.  The relevant connection between NRC’s market power and the impugned conduct was not, in my opinion, established.

1194Nor am I satisfied that NRC’s purpose in failing to grant the access applications was a proscribed purpose in contravention of s 46. Its purpose was the protection of the integrity of its national network. The position is not entirely analogous with that which arose in Rural Press.  Nevertheless, in my view, so long as NRC gave proper consideration to the access applications, which in my opinion it did, its purpose cannot be said to be to have been to prevent QR from engaging in competitive conduct in the relevant market.

10.      Conclusion and orders

QR’s cross-claim for possession

1195It follows from my rejection of PN’s estoppel claim and from my rejection of the claims of misleading conduct, unconscionability and breach of s 46, that QR is entitled to an order for possession. There is to be a stay of the order in accordance with the undertaking given by QR to the Court.

1196It also follows that QR is entitled to an order for payment by NRC of additional rent pursuant to s 139 of the Property Law Act.

Orders in the Proceedings

1197The orders I will make are as follows:-

1.That the application be dismissed.

2.That QR’s cross-claim under s 46 of the Trade Practices Act 1974 (Cth) be dismissed.

3.An order for PN to deliver up possession of the AR terminal.

4.That there be a stay of order three in accordance with QR’s undertaking to the Court.

5.That QR is entitled to an order for payment of rental in accordance with s 139 of the Property Law Act 1974 (Qld) from the date of expiration of the notice to quit dated 26 May 2003.

6.The parties are to bring in short minutes giving effect to the orders set out above and quantifying the amount payable by PN pursuant to order five.

1198It seems to me that costs must follow the event on both the application and the cross-claims.  However, if necessary, I will hear brief argument when the short minutes are handed up.

I certify that the preceding one thousand nine hundred and ninety eight (1198) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Associate:

Date:              16 February 2006

Counsel for the Applicant:	Mr B Walker SC with Mr A Leopold, Mr I Tonking and Mr R Foreman
Solicitor for the Respondent:	Clayton Utz
Counsel for the Respondent:	Mr B O’Donnell QC with Mr L Kelly
Solicitor for the Respondent:	Allens Arthur Robinson
Date of Hearing:	14 – 17, 21 – 24, 31 March; 1, 6 – 8, 11 – 15, 18 – 19, 21, 26 – 28 April; 8, 11 – 14 July; 1, 3 – 4, 8, 18 – 19, 22 – 24 August 2005
Date of Judgment:	16  February 2006

Schedule 1: Dramatis personae

Affleck, Fred

From at least April 1989:Assistant General Manager, Corporate Relations / Corporate Affairs, Australian National.

From at least March 1992 – March 2000:General Manager, Corporate Affairs, NRC.

Anderson, John

March 2001: eputy Prime Minister and Commonwealth Minister for Transport

Bainbridge, Philip

February 2004 to date: General Manager, Intermodal, PN.

Barty, Robert

Mid 1990s: Officer, QT

Blunt, NH

April 1997:Transport Analyser, Queensland Transport

Bredhauer, Stephen

29 June 1998 – 12 February 2004: Queensland Minister for Transport and Main Roads.

Buckley, Neil

1992-1998: various commercial and managerial positions with QR.

January 1999 – May 2002: Manager Business Development and subsequently General Manager, National Development Unit, QR.

May 2002 – April 2003: General Manager, Interail (now known as QR National Pty Ltd).

April 2003 – June 2004: General Manager, Mainline Regional Freight, QR.

July 2004 to December 2004: General Manager Containerised Freight, QR.

December 2004 to date: General Manager Business Development, QR.

Butcher, Edward

September 1990: Chairman of the National Rail Freight Initiative Task Force.

September 1991 – February 1997: Chairman, NRC.

Calvisi, Diana

Solicitor, Corporate Counsel Division, QR

Cantwell, Stephen

Group General Manager, Network Access Group, QR

Case, Peter

1991 – June 1994: General Manager Express Freight, QR. 

June 1994 – April 1998: General Manager Freight Operations, QR.

Di Bartolomeo, Lucio

1 July 1996 – February 2002: Managing Director, Freight Rail Corporation (FreightCorp).

Drake, Tony

Group General Manager, Corporate Services, QR

Group General Manager, Infrastructure Services, QR

Drew, David

Manager, Legal Services Division, QR

Corporate Counsel, QR

Company Secretary

Eades, David

June 1990 – September 1997: General Manager, Property, QR.  Reported to Tony Drake, Group General Manager, Corporate Services until 1994.  After that time, reported to Bob Scheuber.

June 1996 – January 1997: seconded by QR to the Queensland Department of Housing.

January 1997 – July 1997: headed up a Corporate Review Team to investigate costs and overheads at QR.

Ellerby, Peter

Senior Policy Advisor Queensland Department of Transport

Strategic Issues Group, Network Access Group, QR

Network Access Manager, QR

General Manager, Business Development Network Access, QR

Fontaine
(née Lowes), Jacqueline

August 1995 – August 1996: Business Development Officer, NRC.

August 1996 – June 1997: Manager Commercial Agreements, NRC.

June 1997 – November 1998: Manager Commercial, NRC.

Fullerton, John

August 1992 – March 1995: Chief Maintenance Engineer, NRC.

March 1995 – 1997: General Manager Customer Service, NRC.

1997-2002: Chief Operating Officer, NRC.

2002-2004: Divisional General Manager (Operation Services), PN.

September 2004 – date: Chief Executive Officer of FreightLink Pty Limited.

Gardiner, Peter

Manager Marketing & Planning, Network Access, QR

George, David

QR executive holding various positions, including:-

Executive Manager, Strategic Issues

Group General Manager, Coal and Mainline Freight

Group General Manager, Coal & Freight Services

Executive Manager, National Development

Gilchrist, Timothy

21 February 2002 to date: Accountant, Financial Controller, PN.

Graham, Vincent

1 February 1992 – 21 February 2002: Managing Director of NRC.

Griffin, Paul

January 1998 – March 2000: Regional Manager for Victoria, NRC.

March 2000 – July 2002: General Manager Intermodal, NRC.

July 2002 to date: Divisional Marketing Manager, Intermodal, PN.

Haase, Ken

General Manager, Express Freight, QR

Hamill, David

7 December 1989 – 21 February 1995: Queensland Minister for Transport and Minister Assisting the Premier for Economic and Trade Development.

29 June 1998 – 22 February 2001: Queensland State Treasurer.

Hanscomb, Simon

May 1992 – July 1994: Manager, Corporate Services, NRC.

July 1994 – February 1995: General Manager, Corporate Development, NRC.

February 1995 – June 1996: General Manager, Business Development, NRC.

July 1996 – July 1998: General Manager, Marketing, NRC.

Harris, Derek

From at least August 1993 – January 1994: Manager (Rail Policy Development), Department of Transport, NRC.

From approximately 1 February 1994 – March 1995: Senior Corporate Affairs Officer, NRC.

From approximately 29 March 1995 – October/November 1997:  Manager (Asset and Function Transfer), NRC.

From approximately December 1997 – September 1998: Business Development Manager, NRC.

From at least 15 May 2001: Manager (Freight Strategy), Rail Infrastructure Corporation.

Hearsch, John

May 1983 – January 1991: Chief General Manager Transport Operations, V-Line.

July 1989 – January 1991: General Manager Country Passenger Services, Public Transport Corporation.

January 1991 – May 1998: Group General Manager, Freight, QR. During that time, reported directly to Vince O’Rourke.

May 1998 to date: Consultant, John Hearsch Consulting Pty Ltd.

 Hunt, Dan

From at least September 1993: Senior Policy Advisor, QT.

From at least February 1995: Director (Policy and Planning), QT.

From at least September 1996 – October 2000: Executive Director (Transport Coordination and Rail, Ports and Aviation), QT.

From at least October 2000 – at least August 2001:  Acting Director General, QT.

Jenner, Thomas

Late 1970s: Property Division, QR.

Early 1990s -1998: Manager – Property Management, QR.

1998 to date: Property Consultant with General Outdoor Advertising.

Kitney, John

Mid 1990s: Chief Financial Officer, NRC

Lawrence, Michael

May 1999 – April 2001: Acting Terminal Manager, Acacia Ridge, PN.

April 2001 to July 2005: Terminal Manager, Acacia Ridge, PN.

McLeod, Duncan

1993 – 1998: Executive Engineer Track Development, NRC.

1998 – 2002: Manager Infrastructure and Access, NRC.

February 2002 to date: Manager, Infrastructure Resources, PN.

McNamara, John

October 1992 – January 1995: Queensland Account Manager, NRC.

January 1995 – February 2000: Regional Manager – Queensland, NRC.

October 2003 to date: General Manager – Intermodal, CRT Group Pty Ltd.

McNamara, Noon

June 2002 (approx) to date: Manager, Performance and Research, Operations Services Division, PN

Merrigan, Garry

January 1992 – April 1993: Terminal Manager of the Acacia Ridge Terminal.

April 1993 – April 1994: Terminal Manager of all QR terminals.

April 1994 – June 1999: Regional Manager, Melbourne, NRC.

September 1999 – 2000: Employed by QR on a contract basis.

Late 2000 to date: Consultant, GTM Nominees Pty Ltd.

Moore-Wilton, Maxwell

1990-June 1991: NSW representative on the National Rail Freight Initiative Task Force; Member of the Committee of Officials.

1992-1995: Director of NRC.

Oldfield, Martin

Manager, Planning and Research Freight

National Development Unit

O’Rourke, Vincent

1954 – late 1990: employed by State Rail Authority of NSW in a variety of positions.

8 October 1990 – 1 July 1991: Queensland Commissioner for Railways.

1 July 1991 – 30 June 1995: Chief Executive Officer, Queensland Railways.

1 July 1995 – 15 December 2000: Chief Executive Officer, QR.

Owen, Daniel

October 2000: Assistant Secretary, Rail Industry Land Transport Division, Commonwealth Department of Transport

Parkinson, Neal

From at least December 1992 – September 1995: Partner, Sly and Weigall.

From approximately September 1995 – December 1999: Partner, Deacons Graham and James.

From approximately August 2000 – 20 July 2001: Partner, Minter Ellison.

During which period Neal Parkinson was a principal provider of legal services to NRC.

Price, Richard

Corporate Development Manager

Manager Corporate Services

Chief Management Accountant

Roxburgh, Ian

1989-1990:  Director, Rail Policy, Commonwealth Department of Transport.

1990-1991:  Senior Adviser, National Rail Freight Initiative Task Force.

October 1991- 21 February 2002: Company Secretary, NRC.

Scheuber, Robert

Employed by QR since November 1974.

February 1990 – June 1995: Assistant Commissioner (Finance and Administration), Group General Manager (Financial Services) and Group General Manager (Finance and Information Services), QR.

January 1995 – December 2000: Deputy Chief Executive, QR.

16 December 2000 to date: Chief Executive Officer, QR.

Sharp, John

Mid 1990s: Commonwealth Minister for Transport

Smith, Mark

February 2002 – 1 July 2005:  Manager Access and Infrastructure, PN.

Stanko, Steve

April 1992 – August 1997: Director of NRC.

Stehbens, Helen

From at least August 1995:  Principal Policy Advisor, Rail and Port Authority Policy, QT.

From at least September 1998: Acting Executive Director (Transport Coordination and Logistics), QT.

From at least January 1999 – August 2003: Director, Acting Executive Director and then Executive Director (Rail and Port Authority) QT.

From at least December 2003: Acting Executive Director (Transport Coordination and Logistics), QT.

Williams, Alan

From at least March 2000 – May 2001: Director (Transport Economics and Strategy).

From May 2001- at least June 2002: Director (Transport Economics and Aviation), QT.

 Wilson, Bruce

From at least April 1998 – October 2002: Director General of Transport, QT.

Wilson, Ian

July 1998 – July 1999: Principal – Venture Strategist within the Venture Strategy Unit of the Strategic Issues Group, QR.

July 1999 – December 2000: National Logistics Manager – National Development Unit, QR.

January 2001 – December 2001: Regional Manager – North Queensland ,QRX.

January 2002 – August 2002: Transport Manager – Queensland,  Patrick Logistics.

August 2002 – February 2003: Manager – Terminals Development,  QR Network Access Group (NAG).

February 2003 to date: Manager, Terminal Access Services, QR Network Access Group (NAG).

Yeoh, Barbara

August 1993 – February 2002: Director of NRC.

Young, Peter

Mid 1990s: Deputy Chair, NRC Board

Schedule 2: List of Acronyms

AR	Acacia Ridge
BMT	Brisbane Multi-Modal terminal
BT	Bankers’ Trust Corporate Finance
C&FS	Coal and Freight Services section of QR
COAG	Council of Australian Governments
CRT	CRT Freight Group Pty Limited
EA	Establishment Agreement
NAG	Network Access Group
NFI	National Freight Initiative
NPV	Net Present Value
NRC	National Rail Corporation
NRFC	National Rail Freight Corporation
PN	Pacific National (ACT) Limited
QR	Queensland Rail (or, prior to 1 July 1995, Queensland Railways)
QRX	Queensland Railway Express
QT	Queensland Transport
RAC	Rail Access Corporation
TEU	Twenty foot equivalent units

Schedule 3: Glossary

1993 lease area	The area of the AR terminal which the 4 April 1993 Heads provided for NRC to enter into possession. A plan of the area appears at [193].
1993 plant lease	The lease over the lease of plant and equipment at the AR terminal referred to in the 4 April 1993 Heads.
1993 real estate lease	The lease over the 1993 lease area referred to in the 4 April 1993 Heads.
4 April 1993 Heads	Heads of Agreement for the assumption by NRC of management and operational control of the AR terminal which NRC and QR entered into on 4 April 1993.
Above rail	Services provided to the operations of trains, and is to be contrasted with below rail services (defined below).  These services include line haul, train configuration, crewing, rostering and crew management, train quality control, locomotive and wagon management including but not limited to booking, scheduling, supply and provisioning and bogey exchange and other gauge transhipment.
Administration Building	Building used for administrative purposes at the AR terminal; located near the junction of the entrance to the AR terminal and the Mainline track.
AR terminal	Acacia Ridge Interstate Container Terminal; the area of the AR interstate container terminal occupied by NRC.
Below rail	Services provided in respect of physical track and associated infrastructure such as signalling equipment including train control and scheduling.  It is to be contrasted with above rail services (defined above).
Change of position letter	Letter of 27 March 1997 from Mr O’Rourke to Mr Graham indicating QR’s change of position, withdrawal of offer of 10 year lease.
Committee of Officials	Committee established to examine options for the funding of NRC.
Common user terminal	Access to a terminal is made available to all parties (including the owner) pursuant to rights granted by law, eg under Part IIIA of the Act. It is to be contrasted with a multi-user terminal (defined below).
Competition Act	Queensland Competition Authority Act 1997 (Qld)
Corridor Access Agreement	An agreement negotiated between a rail operator and the owner of the track to garner access to train paths; such an agreement is necessary for a rail operator to run a train service into a terminal.
East Coast Rail Linehaul Market	Market for rail linehaul services on the east coast corridor.
East Coast Strategy	NRC’s capital investment strategy to secure the competitiveness and profitability of NRC’s east coast services.
Establishment Agreement (“EA”)	Agreement entered into in July 1991 between the Commonwealth of Australia and a number of States, including Queensland.  The agreement provided for micro-economic reform of the rail freight industry in Australia.  It is occasionally referred to in documents as the “Shareholders Agreement”.
Establishment Period	A term used in the EA to refer to the five year period commencing on the date of commencement of operations of NRC.
Functions letter	Letter of 4 April 1993 detailing the terminal management functions which NRC would assume at the AR terminal on 5 April 1993.
General Freight Access Agreement	Agreement dated 10 November 2003 in which QR granted PN access to nominated track.
George Deutsch	George Deutsch Consulting Pty Limited.  Retained in 1999 by NRC and QR to prepare a master plan for intermodal traffic at both the AR terminal and the Q-Link terminal over the next 25 years.
GOC Regulation	Government Owned Corporations (Queensland Rail) Regulation 1995
Heads of Government Agreement	Agreement signed by the Heads of Government of the Commonwealth the States and Territories on 31 October 1990 regarding the establishment of the National Rail Freight Corporation.
Hilmer Report	Report on the Independent Committee of Enquiry into Australia’s National Competition Policy, handed down in August 1993.
Interail	QR’s interstate rail freight operator.
Mainline Track	A standard gauge rail track running on the East Coast Corridor to AR.  Sometimes referred to as the Interstate Mainline Track.
Marshalling yards	An area at AR used for shunting and reconfiguring trains which was controlled by NRC under the three year lease.
Multi-user terminal	Access to a terminal to third parties is upon such terms as may be negotiated with the owner.  It is to be contrasted with a common user terminal (defined above).
Narrow gauge	Railway track 3 ft 6 inches wide, used in Queensland.
Network Access Group (“NAG”)	A business group within QR said to be separate from QR Operational Business Groups, with the primary function of managing the provision of Below Rail services in Queensland, including negotiation of access with access seekers and management of access agreements with access holders.
North Coast Access Agreement	Agreement dated 1 October 2004 in which QR granted PN non-exclusive access to operate train services on the North Coast line nominated track.
North Coast Rail Infrastructure Market	Market for the supply of narrow gauge railway track infrastructure services north of the AR terminal.
North Cost Rail Linehaul Market	Market for the supply of rail linehaul services on the north cost line between Brisbane and Cairns.
NRC Act	National Rail Corporation (Agreement) Act 1991 (Qld)
Q-Link terminal	QR’s narrow gauge terminal at AR.
Queensland Railway Express	Toll Holding’s North Queensland rail forwarding operation.
Queensland Transport	Queensland Department of Transport.
rail corridor	Strip of land at AR, extending from main line track to Kerry Road.  The corridor is owned by the State of Queensland, controlled by Queensland Transport, and subleased to QR; a portion of the Administration Building encroaches on this corridor.
Rail Access Corporation (“RAC”)	A corporation established by the NSW Government to separate ownership of rail infrastructure from the operation of the rail network and providing for the sale or access to the infrastructure through access agreement individually negotiated with RAC.
sidings	A term used in the rail industry to describe a short section of railroad track connected by switches with a main track.
Standard gauge	Railway track 4 ft 8½ inches wide, used on the East Coast Corridor.
SG Rail Infrastructure Market	Market for the supply of standard gauge railway track infrastructure services south of the AR terminal.
Steering Committee	Established by QR to oversee the transfer of interstate freight operations to NRC and chaired by Mr O’Rourke.
the Act	Trade Practices Act 1974 (Cth)
the border	Queensland/NSW border.
the Other States	A term used in the EA to refer to those states that did not agree to become shareholders of NRC.
the relevant conduct	A term defined by PN in its statement of claim to refer to certain conduct which PN claims that QR engaged which was unconscionable.
the States	A term used in the EA to refer to the shareholders of NRC under the EA, being the Commonwealth, NSW, Victoria and Western Australia.
the Task Force	An independent task force responsible for developing detailed proposals on issues relevant to the establishment of a “fully commercial” NRFC.
Third Amending Agreement	Agreement to amend the EA, entered into by  the Commonwealth and the States of NSW, Victoria, Queensland, Western Australia and South Australia on 22 March 1999.
TIR Act	Transport Infrastructure (Railways) Act 1991 (Qld)
Track A	A rail track constructed by NRC during the term of its lease which runs parallel to the Mainline track and is close to it.
Transition Period	A term used in the EA to refer to the first three year period from the commencement of operations of NRC.
Transport Infrastructure Act	Transport Infrastructure Act 1994 (Qld)
twenty foot equivalent unit (“TEU”)	The unit of measure used in the rail industry for measuring container sizes (ie all container sizes are broken down to a TEU).

attachment a: colour plan of ar terminal

The attached colour plan of the AR Terminal constitutes Attachment A to the judgment, referred to at [196].

The plan was admitted into evidence on 14 March 2005 as Exhibit 2.