Perth Airport Pty Ltd v Qantas Airways Ltd [No 3] - [2022] WASC 51

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   PERTH AIRPORT PTY LTD -v- QANTAS AIRWAYS LTD [No 3] [2022] WASC 51
CORAM:   LE MIERE J
HEARD:   13 SEPTEMBER 2021
DELIVERED          :   18 FEBRUARY 2022
FILE NO/S:   CIV 3147 of 2018
BETWEEN:   PERTH AIRPORT PTY LTD
Plaintiff
AND
QANTAS AIRWAYS LTD
First Defendant
JETSTAR AIRWAYS PTY LTD
Second Defendant
AIRLINK PTY LTD
Third Defendant
NETWORK AVIATION PTY LTD
Fourth Defendant
EXPRESS FREIGHTERS AUSTRALIA PTY LTD
Fifth Defendant

Catchwords:

Restitution - Quantum meruit - Reasonable remuneration for aeronautical services - Comparable transactions - Long run average cost - Building block model

Evidence - Hearsay rule - Admissibility of ACCC and Productivity Commission Reports - Whether reports are 'public documents'

Legislation:

Airports Act 1986 (Cth)
Harbors Act 1913 (SA)
Productivity Commission Act 1998 (Cth)

Result:

Remuneration determined

Category: B

Representation:

Counsel:

Plaintiff	:	Mr N J Young QC, Mr M Rush QC, Ms C Dermody & Mr P Walker
First Defendant	:	Mr J Sheahan SC, Dr B Kremer & Mr E Heenan
Second Defendant	:	Mr J Sheahan SC, Dr B Kremer & Mr E Heenan
Third Defendant	:	Mr J Sheahan SC, Dr B Kremer & Mr E Heenan
Fourth Defendant	:	Mr J Sheahan SC, Dr B Kremer & Mr E Heenan
Fifth Defendant	:	Mr J Sheahan SC, Dr B Kremer & Mr E Heenan

Solicitors:

Plaintiff	:	DLA Piper Australia - Melbourne
First Defendant	:	MinterEllison
Second Defendant	:	MinterEllison
Third Defendant	:	MinterEllison
Fourth Defendant	:	MinterEllison
Fifth Defendant	:	MinterEllison

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

AMP Henderson Global Investors Ltd v Valuer General [2004] NSWCA 264; (2004) 134 LGERA 426
Angelopoulos v Sabatino [1995] SASC 5230; (1995) 65 SASR 1
Astway Pty Ltd v Council of the City of the Gold Coast [2008] QCA 73; (2008) 159 LGERA 335
Australian Competition and Consumer Commission v Metcash Trading Ltd [2011] FCA 967; (2011) 282 ALR 464
Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53; (1982) 149 CLR 600
BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783
Expectation Pty Ltd v Pinnacle VRB Ltd [2004] WASCA 261
Foletta v Merri Creek Quarry Pty Ltd [1951] VLR 149
Hill v Clifford [1907] 2 Ch 236
Ioannou v Demetriou [1952] AC 84; [1952] 1 All ER 179
John Nominees Pty Ltd v Dixon [2003] WASCA 51
Kane Constructions Pty Ltd v Sopov [2005] VSC 237; (2006) 22 BCL 92
Lyell v Kennedy (1889) 14 App Cas 437
Mann v Paterson Constructions Pty Ltd [2019] HCA 32; (2019) 267 CLR 560
Mercer v Denne [1904] 2 Ch 534
Mitchell v Canal Rocks Beach Resort [2002] WASCA 331
Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221
PQ v Australian Red Cross Society [1992] 1 VR 19
R v Halpin [1975] QB 907; [1975] 3 WLR 260
R v Karger [2001] SASC 64; (2001) 83 SASR 1
Re HIH Insurance Ltd (in liq) [2015] NSWSC 790
Re Staples; Ex parte Baker v Staples (1996) 67 FCR 541
Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234
Sopov v Kane Constructions Pty Ltd [No 2] [2009] VSCA 141; (2009) 257 ALR 182
South Australian Harbors Board v South Australian Gas Co [1934] HCA 45; (1934) 51 CLR 485
Stinchcombe v Thomas [1957] VR 509; (1957) ALR 1027
Stohl Aviation v Electrum Finance Pty Ltd (1984) 5 FCR 187
Sturla v Freccia (1880) 5 App Cas 623; [1874 ‑ 80] All ER Rep 657
United Group Rail Services Ltd v Rail Corporation New South Wales [2009] NSWCA 177; (2009) 74 NSWLR 618
Yeoman's Row Management v Cobbe [2008] UKHL 55; [2008] 1 WLR 1752

Table of Contents

Summary

Overview

The plaintiff

The defendants

Perth Airport

The airport

Terminals

Airfield

Other services

Non-aeronautical business activities

General Aviation precinct

Prices and charges for Aeronautical Services

Prices and charges generally

Prices and charges for the period 1 July 2011 to 30 June 2018

Heads of agreement and Development agreement

Prices and charges for the period from 1 July 2018

Building block models

Consolidation of Qantas' operations in Airport Central

PAPL invoices and Qantas' payments

Expert evidence

Quantum meruit - legal principles

Claim for restitution

Standards for assessing reasonable remuneration

Standards for assessing reasonable remuneration to PAPL

Value of aeronautical services

Admissibility of public reports

Public Documents Exception

The rule

Productivity Commission Reports

ACCC Monitoring Reports

Submissions

Experts use of reports

Gamma

Introduction

Distribution rate

Dr Lally's methodology for estimating distribution rate

Mr Houston's methodology for estimating distribution rate

Utilisation rate

Dr Lally's methodology for estimating utilisation rate

Mr Houston's methodology for estimating utilisation rate

Dr Hern's methodology for estimating utilisation rate

Analysis of gamma issues

Distribution rate

Utilisation rate

Gamma

Asset Beta

Introduction

Dr Hird's methodology to estimating asset beta

Dr Hern's methodology to estimating asset beta

Analysis of asset beta issues

Comparator set

Aspects of estimation technique

Relative risk assessment

Implications of regulatory precedent

Estimated asset beta

WACC

Introduction

Dr Hird's methodology for estimating WACC

Dr Hern's methodology for estimating WACC

Analysis of WACC issues

Market risk premium

Risk free rate

Cost of debt

Comparator set to determine leverage

WACC estimate

Opening Asset Base and Operating Expenditure

Introduction

Qantas' position

Opening asset base

Operating expenditure

PAPL's position

Opening asset base

Operating expenditure

Analysis

Opening asset base

Operating expenditure

Depreciation of Terminal 3

Introduction

Framework

PAPL's position

Qantas' position

Useful life

PAPL's position

Qantas' position

Qantas' response to PAPL's position

Capacity constraints

Stand capacity

Split operations

Forecourt capacity

Depreciation in the building block model & APP

PAPL's position

Qantas' position

Capital Expenditure

PAPL's position

Qantas' position

Analysis

Value of the aeronautical services

Introduction

Mr Houston's methodology

Mr Siolis' methodology

Analysis

LE MIERE J:

Summary

Between 1 July and 17 December 2018 (the Relevant Period), the plaintiff, PAPL, provided aeronautical services at Perth Airport to the defendants, who I will refer to collectively as Qantas. At the time, there was no contract between PAPL and Qantas governing the price or other terms and conditions of that use. The parties' previous contract had expired on 30 June 2018. It is common ground that Qantas must pay fair and reasonable remuneration for the services provided and accepted. The question in this case is, what is the fair and reasonable remuneration to be paid by Qantas to PAPL for those aeronautical services?
From 1 July 2018, PAPL has invoiced Qantas for the use of the aeronautical services at rates which PAPL considered to be fair and reasonable. Qantas did not pay PAPL for the aeronautical services at the rates invoiced by PAPL. Qantas paid PAPL for the aeronautical services at rates which they considered to be fair and reasonable, which are lower than the rates charged by PAPL.
There are five passenger terminals at Perth Airport. They are known as Terminal 1 (T1), Terminal 1 Domestic (T1D), Terminal 2 (T2), Terminal 3 (T3), and Terminal 4 (T4). Terminal 3 was used during the Relevant Period by Qantas for domestic and international flights. One of the Qantas airlines (Jetstar) used international terminal services at T1.
PAPL submits that prices for aeronautical services at Perth Airport agreed between PAPL and other airlines is the best evidence for, and the most relevant, contemporaneous, objective measure of, the value of the aeronautical services used by Qantas in the Relevant Period.
PAPL submits that the services provided to Qantas were relevantly identical to those provided to the other contracted airlines which entered aeronautical services agreements (ASAs) with PAPL, and precisely the same facilities were used to provide airfield services and international terminal services at T1.
PAPL submits that in calculating a fair value for the aeronautical services the court should adopt the comparable transactions methodology of Mr Houston, an economist with expertise in competition and regulatory matters. Broadly, Mr Houston's method is to assess the average prices paid by other airlines for aeronautical services at Perth Airport and arrive at a reasonable price to be paid by Qantas by adjusting those prices to reflect any differences in the circumstances under which the services were provided to Qantas.
PAPL submits that, adopting that methodology, the charges to be paid by Qantas are:[1]
(a)rates per passenger:
(i)$17.35 for international terminal and airfield services;
(ii)$11.418 for domestic terminal services;
(iii)$6.178 for airfield services; and
(b)$11.909 per landed tonne for non‑passenger aircraft.
[1] E0013, _0008 at [17b].
PAPL submits that the reasonableness and fairness of the sum it claims (and prices sought) is confirmed by:
(a)the prices agreed and paid by Qantas until 30 June 2018;
(b)Qantas passenger tickets issued after 1 July 2018 continuing to include airport charges reflecting prices paid by Qantas to Perth Airport until 30 June 2018;
(c)the per passenger economic profit earned by Qantas on flights to and from Perth Airport materially exceeding the per passenger prices claimed by PAPL for the Relevant Period; and
(d)the comparable prices being at or close to PAPL's minimum willingness to accept (or supply) which it equates to the cost to PAPL of providing the services, calculated using a building block model.
PAPL used building block models to inform its discussions with airline customers on the aeronautical prices to apply over the proposed seven‑year period commencing on 1 July 2018. PAPL used a similar approach to inform pricing in both the 2002 and 2011 agreements with airline customers. In those negotiations, PAPL stated that this approach, and the inputs to it, are consistent with the Aeronautical Pricing Principles (APP) established by the Commonwealth government and developed by the Productivity Commission over three successive public inquiries dating back to 2002.
The underlying principle of a building block methodology is the calculation and summation of a return of and on capital, efficient operational expenses, and tax. Similar approaches are used by the Australian Competition and Consumer Commission (ACCC), the Australian Energy Regulator (AER) and jurisdictional regulators such as the Independent Pricing and Regulatory Tribunal (IPART) in New South Wales in setting maximum allowable prices in price‑controlled infrastructure sectors.
Qantas submit that a fair and reasonable price should be determined by a direct assessment of the efficient costs of the aeronautical services provided by PAPL to Qantas using PAPL's building block models.
Qantas submit that this approach is the industry standard and was used by both PAPL and Qantas to calculate prices for the agreement which expired on 30 June 2018 and during failed negotiations to agree a replacement agreement to apply from 1 July 2018. Qantas submitted that some of the inputs used by PAPL in its building block models during the failed negotiations were incorrect or unreasonable. Qantas submitted that fair and reasonable prices should be calculated using the PAPL building block models with the adjusted inputs proposed by Qantas.
From 1 July 2018, Qantas paid PAPL for aeronautical services at prices it considered to be reasonable by taking the PAPL building block model and making adjustments to reflect inputs Qantas considered to be correct or reasonable. After the joint expert conclaves and reports were completed Qantas paid PAPL the difference between what it had paid during the Relevant Period and what it would have paid using the lowest price supported by its expert evidence as calculated by Mr Siolis and in the case of freighter aircraft the price per landed tonne of MTOW as used by Mr Houston in his building block model calculation. As a result, Qantas has paid to PAPL for aeronautical services at prices it submits are fair and reasonable as follows:
(a)rates per passenger (ex GST) of:
(i)$6.97 for international passenger services using T1 and T3;
(ii)$6.02 for domestic passenger services using T3; and
(iii)$3.99 for domestic and international airfield services;
(b)$10.83 for freight and non-passenger aircraft.
The primary relief claimed by PAPL is a claim for all unpaid amounts for aeronautical services provided by PAPL during the Relevant Period calculated by reference to the fair and reasonable price for such services or, alternatively, restitution of the enrichment received by each defendant from its use of the aeronautical services provided by PAPL during the Relevant Period.
However, the parties agreed that the court should deliver judgment stating the price for terminal services and airfield services that will provide fair and reasonable remuneration to PAPL. The parties will then calculate the amount due to PAPL (if any) for the Relevant Period.
For the reasons which follow, I find that the per passenger prices for terminal services and airfield services that will provide fair and reasonable remuneration to PAPL for the Relevant Period are:

Aeronautical service

Price

Airfield (domestic and international)

5.383

International passenger services (T1 and T3)

9.336

Domestic passenger services (T3)

8.436

Freight and non-passenger services (per landed tonne MTOW)

10.83

Overview

The plaintiff

The plaintiff, PAPL, is a privately held corporation owned by institutional investors. PAPL operates Perth Airport under a lease with the Commonwealth government dated 1 July 1997 pursuant to the Airports Act 1986 (Cth) as an airport lessee company and an airport operator company. Perth Airport is the fourth busiest airport in Australia with intrastate, interstate, and international flights.

The defendants

The defendants, whom I will refer to collectively as Qantas, are members of the Qantas group of companies. The Qantas group is Australia's largest domestic and international airline.
The first defendant (Qantas Airways Limited), the second defendant (Jetstar), the third defendant (Qantas Link), and the fourth defendant (Network Aviation) conduct airline passenger services from Perth Airport. Qantas and Jetstar conduct both domestic and international airline passenger services. Qantas Link and Network Aviation conduct domestic but not international airline passenger services. The fifth defendant (Express Freighters) conducts domestic airline freight services. Jetstar, Qantas Link, Network Aviation and Express Freighters are wholly owned subsidiaries of Qantas.

Perth Airport

The airport

Perth Airport is located on an area of land known as the 'Perth Airport Estate' (Airport Site).
Other than Perth Airport, there are no commercial aerodromes that support large passenger jet aircraft in the Perth region.

Terminals

There are five passenger terminals at Perth Airport. They are known as Terminal 1, Terminal 1 Domestic, Terminal 2, Terminal 3, and Terminal 4.
Terminal 1, Terminal 1 Domestic and Terminal 2 are in a precinct known as 'Airport Central'. Terminals 3 and 4 are in a precinct known as 'Airport West'. Jetstar used Terminal 1 during the Relevant Period for international flights.
Terminal 3 was used during the Relevant Period by Qantas, Jetstar, Qantas Link and Network Aviation for domestic interstate and intrastate flights. Terminal 3 was also used by Qantas for international flights.
Terminal 4 was operated and controlled by Qantas under a lease during the Relevant Period. Terminal 4 is not the subject of a claim in this proceeding. The lease was dated 31 December 1987 and was amended by deeds of agreement dated 15 October 1996 and 17 September 2002. The lease ran from 31 December 1987 to 30 January 2019. The lease term was until 30 December 2018, but a one‑month holdover of the lease to 30 January 2019 was agreed between PAPL and Qantas.
During the Relevant Period, PAPL provided Jetstar with 'terminal services' at Terminal 1 and Qantas, Jetstar, Qantas Link and Network Aviation with terminal services at Terminal 3. The parties agree that access to the following items is within the definition of 'terminal services':
(a)visual navigation aids and nose‑in guidance systems for aircraft;
(b)common use aprons;
(c)inwards and outwards baggage systems (eg baggage make‑up areas and reclaim facilities and hold and cabin luggage screening equipment);
(d)toilets for passengers and staff;
(e)directional signage;
(f)flight information systems;
(g)check‑in and service desks (except to the extent provided by Qantas);
(h)facilities to allow passengers to board aircraft including boarding gate desks;
(i)aerobridges in Terminal 3 and Terminal 1, or where passengers do not board aircraft via an aerobridge, access to the aircraft apron and where required bussing services to the aircraft apron;
(j)facilities in which passengers may wait prior to boarding an aircraft;
(k)emergency and public address systems;
(l)public areas including public amenities, lifts, and escalators, and moving walkways in Terminal 1 (Terminal 3 has no moving walkways);
(m)forward airline support area services, such as areas to park ground service equipment; and
(n)in relation to international passengers, public areas in Terminal 1 and Terminal 3 for passenger processing by Commonwealth government border agencies.

Airfield

The airfield at Perth Airport is located within the airside boundary.
There are two runways at Perth Airport: the main runway (north‑south direction) and the cross runway (north‑easterly to south‑westerly direction). To access the runways, aircraft use taxiways. Aircraft also use taxiways (and taxilanes) to access aircraft parking positions.
The airfield also comprises the following infrastructure and areas:
(a)remote aprons and aircraft parking;
(b)taxilanes for aircraft to access aircraft parking positions;
(c)aircraft storage areas;
(d)airside roads and grounds (including directional signage);
(e)lighting; and
(f)ground service equipment parking areas.
During the Relevant Period, PAPL provided Qantas with 'airfield services', being access to and use of the areas and infrastructure referred to in the preceding paragraphs.

Other services

During the Relevant Period, PAPL also provided to Qantas:
(a)infrastructure to enable Qantas to access their aircraft, facilities and premises on the Airport Site, such as landside roads, the terminal forecourt area, footpaths and passenger pick up and drop off areas for Terminal 1 and Terminal 3; and
(b)infrastructure to support all operations in Terminal 1 and Terminal 3 and on the airfield, such as electricity, water, and sewer infrastructure.
The terminal, airfield and other services referred to are the 'Aeronautical Services'.
PAPL is the only provider of aeronautical services to regular passenger transport (RPT) aircraft for the Perth region.

Non-aeronautical business activities

PAPL also conducted non‑aeronautical business activities from which it derived revenue, and in respect of which it incurred and paid costs, during the Relevant Period, including:
(a)leasing designated areas in Terminal 1, Terminal 3 and other terminals at Perth Airport to retail operators;
(b)leasing office premises to businesses within Terminal 1, Terminal 3 and other terminals at Perth Airport, and leasing industrial and office premises elsewhere on the Perth Airport Estate;
(c)operating public and leased carparks on the Perth Airport Estate, and providing areas for car rental concessions and access to taxi and rideshare services; and
(d)leasing designated areas within Terminal 1, Terminal 3 and other terminals at Perth Airport and elsewhere on the Perth Airport Estate for advertising.

General Aviation precinct

The Airport Site includes an area known as the General Aviation precinct, located adjacent to Terminal 4. The precinct primarily comprises hangars leased to smaller commercial operators (which provide charter flight services), and private aircraft. It is not generally used for regular passenger traffic operations.
Network Aviation operates charter flight services from the General Aviation precinct as well as from Terminal 3.

Prices and charges for Aeronautical Services

Prices and charges generally

PAPL charges airlines in respect of airfield and terminal services, each time an aircraft lands at or departs from the airport.
There are generally different prices for each of airfield services, domestic terminal services, and international terminal services. Sometimes, though, a composite price might be negotiated or agreed, for airfield services and terminal services (as occurred for the international airlines in the 2018‑19 financial year, where there was a single international passenger charge which included both airfield and terminal services).
For aircraft carrying passengers, the amount which the airline pays PAPL for Aeronautical Services is generally calculated on a rate per passenger basis. That is, the number of passengers on the relevant flight is multiplied by the relevant price for airfield services and terminal services.
For aircraft not carrying passengers, or where passenger numbers are not available, the amount which the airline must pay PAPL is calculated on a rate per landed tonne basis (based around the maximum take‑off weight (MTOW) of the aircraft). That is, the landed tonnage of the aircraft multiplied by the relevant price for airfield services. The relevant rate per landed tonne may change if the aircraft lands or takes off during a peak period.
Aircraft not carrying passengers will generally only pay the airfield charge. They generally do not use, and therefore will not be required to pay for, terminal services.

Prices and charges for the period 1 July 2011 to 30 June 2018

In the period between 1 July 2011 and 30 June 2018, PAPL: negotiated and agreed long‑term prices and services agreements (PSAs) with all major domestic and international airlines that used Perth Airport, including Qantas; and had in place 'Conditions of Use' (CoU) for airlines which made use of Perth Airport in that period, but did not have a long‑term PSA with PAPL.
The PSAs and the CoU (as applicable) provided the terms and conditions on which PAPL provided Aeronautical Services in this period, including the prices which PAPL charged for the Aeronautical Services.
PAPL entered a PSA with Qantas on 22 August 2011 (PSA). That agreement remained in force until 30 June 2018.
Immediately prior to 30 June 2018, the prices payable by Qantas under the PSA for Aeronautical Services were:
(a)for terminal services at Terminal 1: [redacted] per passenger;
(b)for terminal services at Terminal 2: [redacted] per passenger;
(c)for airfield services (passenger aircraft): [redacted] per passenger; and
(d)for airfield services (non‑passenger aircraft): [redacted] per tonne MTOW.
The PSA also prescribed a price for terminal services at Terminal 3. However, for these services Qantas were also entitled to rebates under the T3 Rebate Agreement between PAPL and Qantas in 2011, in force until 30 June 2018. Taking account of these rebates, the effective price payable for terminal services at Terminal 3 by Qantas immediately prior to 30 June 2018 was approximately [redacted] per passenger.
The prices payable for Aeronautical Services by other airlines which entered PSAs with PAPL, immediately prior to 30 June 2018, are identified in the following tables:
For the period prior to 30 June 2018, the prices for Aeronautical Services under the CoU were arrived at by taking the highest agreed price between PAPL and an airline (and set out in a PSA) for a particular service, and then adding 10% to that amount. PAPL says that the increase reflected the 'spot' nature of the transactions under the CoU, and the additional risk, including not being able to recover fees, to PAPL in providing services other than under a long‑term PSA.

Heads of agreement and Development agreement

PAPL and Qantas entered into an agreement in writing on 10 December 2016, which set out the terms and conditions, including prices, on which Qantas could operate specified international airline passenger services from Terminal 3, and the terms on which the parties would work towards consolidation of Qantas operations in the new terminal facilities to be situated in Airport Central. Qantas acknowledged PAPL's intention to consolidate all domestic and international services in Airport Central. [redacted] (the 'Heads of Agreement').
PAPL and Qantas entered into a second agreement in writing on 4 May 2017, which restated the terms and conditions on which Qantas could operate specified international airline passenger services from Terminal 3, and the terms on which the parties would work towards consolidation of all Qantas domestic and international operations in the new terminal facilities to be situated in Airport Central and the cessation of operations from Terminal 3 and Terminal 4. Qantas acknowledged PAPL's intention to consolidate all domestic and international services in Airport Central. [redacted] It was known as the Development Agreement ‑ Terminal 3, Perth Airport (the 'Development Agreement').

Prices and charges for the period from 1 July 2018

The PSAs agreed between PAPL and all other airlines expired on 30 June 2018.
From about 2017 onwards, PAPL began consulting and negotiating with airlines on the pricing and other terms and conditions of access for the period from 1 July 2018. To support this process, PAPL created an online consultation data room in which it made available documents relevant to PAPL's aeronautical pricing proposals. The data room and supporting documents were made accessible to all airlines and to any other interested person or organisation who wished to register for access.
PAPL responded to queries and comments from airlines and met with airline representatives as part of the negotiation process.
At the conclusion, and as a result, of this process, PAPL:
(a)concluded long‑term ASAs with all major domestic and international airlines that use Perth Airport, except Qantas (with which agreement was not able to be reached); and
(b)separately put in place updated 'Conditions of Use' (2018 CoU) for airlines or other aircraft operators which made use of Perth Airport, but did not enter into a long‑term ASA.
The ASAs entered into with domestic carriers (such as Virgin Group, REX, and Alliance Airlines), and the 2018 CoU, set out the terms and conditions on which PAPL would provide aeronautical services to airlines in the period from 1 July 2018 to 30 June 2025, including the prices which PAPL would charge, and the airlines would pay for the aeronautical services.
In relation to negotiations with international airlines represented by BARA (Board of Airline Representatives of Australia Inc), one year hold‑over agreements were entered into in 2018 extending the expired PSAs, with new long‑term ASAs then executed in 2019 and 2020.
The prices agreed with airlines for the period 1 July 2018 to 30 June 2019 are summarised (alongside the CoU prices) in the following table:

The PSA and T3 Rebate Agreement expired on 30 June 2018. Following expiration of the PSA and the T3 Rebate Agreement there has been no contract between PAPL and Qantas in relation to the provision of aeronautical services by PAPL to Qantas, and PAPL and Qantas have not agreed on the price payable by Qantas for the aeronautical services provided by PAPL during the Relevant Period.
The Heads of Agreement and Development Agreement remain in force.

Building block models

Qantas and PAPL used building block models in negotiations in 2011 to arrive at the PSA, and in the negotiations in 2017‑2018 to attempt to arrive at a new ASA. In its submissions, PAPL emphasised that whilst negotiations for new ASAs with Qantas and other airlines were informed by building block models, and the building block models put forward by PAPL were the starting point for negotiations, the final agreement was a matter for commercial negotiation. Qantas say that during the 2017‑18 negotiations, PAPL evaluated offers from all airlines (not just Qantas) by reference to building block models, which were used to calculate an implied weighted average cost of capital (WACC)[2] ‑ which gave PAPL's rate of return on the assets in the models.
[2] The weighted average cost of capital (WACC) represents a firm's average cost of capital. The weighted average cost of capital represents the firm's required rate of return because it expresses the return that shareholders demand in order to provide the company with capital. A firm's WACC is likely to be higher if its stock is relatively volatile or if its debt is seen as risky because investors will demand greater returns.
PAPL's Perth Airport Aeronautical Pricing Model Methodology October 2017 document[3] states that PAPL used the building block methodology to inform its discussions with airline customers on the aeronautical prices to apply over the proposed seven‑year period commencing on 1 July 2018 and a similar approach was successfully used to inform pricing in both the 2002 and 2011 agreements with airline customers. PAPL states it is confident this approach, and the inputs to it, are consistent with the APP established by the Commonwealth government and developed by the Productivity Commission over three successive public enquiries dating back to 2002.
[3] F0375.
The document states that the underlying principle of building block methodology is the calculation and summation of the return of and on capital, efficient operational expenses, and tax. It says that similar approaches are used by the ACCC, the AER and jurisdictional regulators such as IPART in New South Wales in setting maximum allowable prices in price-controlled infrastructure sectors. PAPL's models calculate prices each year that when applied to forecast passenger volumes create a revenue stream, the present value of which is the same as the present value of the annual building block allowable revenues.
The building block methodology has been adopted by PAPL to estimate the cost of providing aeronautical services. The building block model approach allows for a return on invested capital, return of invested capital (depreciation), forecast operational costs and an estimate of tax (including imputation credits). The objective of the building block methodology is to estimate the total revenue that an efficient provider will require each year over a modelling period to recover its efficient costs, including the return on invested capital consistent with the commercial and regulatory risks of the business.
Qantas submit that the key sticking point in the negotiations were two inputs into the building block model ‑ WACC and accelerated depreciation. 'Accelerated depreciation' refers to the remaining useful life attributed to T3.

Consolidation of Qantas' operations in Airport Central

Qantas can only operate all their operations from the Airport Central precinct once:
(a)new terminal facilities are constructed and available for use; and
(b)the new runway, parallel to the main runway and to the east of Airport Central (the 'New Runway'), and taxiways connecting the New Runway to existing infrastructure, are constructed and available for use.
The new terminal facilities and the New Runway and taxiways connecting the New Runway to existing infrastructure will not be constructed and available for use by 31 December 2025. Due to circumstances that include the impact of COVID, construction of the new terminal facilities and the New Runway has been delayed. The New Runway will not be available for use until the financial year commencing 1 July 2026 and ending 30 June 2027. The new terminal facilities will not be available for use until the financial year commencing 1 July 2029 and ending 30 June 2030. However, Qantas do not admit that the New Runway and new terminal facilities will be ready and available for use during those financial years respectively.
Construction of the new terminal facilities has not commenced. A major development plan for the project must be approved by the Commonwealth Minister for Infrastructure, Transport and Regional Development (the 'Minister') before construction can commence. At the date of trial, the Minister had not approved a major development plan for the new terminal facilities. Procurement for those construction works has also not commenced.
No agreement has been reached with Qantas in relation to their contribution to the funding of the new terminal facilities and the New Runway and taxiways.
A major development plan for the New Runway project was approved by the Minister on 21 November 2020. Construction of the New Runway has not commenced. Save for the engagement of design consultants and environmental consultants, procurement for those construction works has also not commenced.
PAPL has not to date agreed any plan for the staging of the reconstruction works required under the major development plan to upgrade the existing taxiway system with any airline user of Perth Airport. A major development plan for the taxiways connecting the New Runway to existing infrastructure must be approved by the Minister before construction can commence. At the date of trial, the Minister has not approved a major development plan for those taxiways. Procurement for those construction works has also not commenced.

PAPL invoices and Qantas' payments

PAPL invoiced Qantas for their use of aeronautical services at Perth Airport during the Relevant Period.
From 1 July 2018 to 30 September 2018, PAPL invoiced Qantas for their use of the Aeronautical Services at rates per passenger (ex GST) of:
(a)per passenger:
(i)$17.833 for international terminal and airfield services;
(ii)$10.47 for domestic terminal services; and
(iii)$5.945 for domestic airfield services;
(b)a rate per landed tonne (ex GST) of $10.826 for airfield services for aircraft not carrying passengers; and
(c)a minimum rate of $224.785 (ex GST) per aircraft for airfield services during 'peak periods' (between 05:30 and 07:30 and between 15:00 and 16:00 on weekdays).
From 1 October 2018, PAPL invoiced Qantas for their use of aeronautical services at:
(a)rates per passenger (ex GST) of:
(i)$19.616 for international terminal and airfield services;
(ii)$12.070 for domestic terminal services; and
(iii)$6.539 for domestic airfield services;
(b)a rate per landed tonne (ex GST) of $11.909 for airfield services for aircraft not carrying passengers; and
(c)a minimum rate of $247.263 (ex GST) per aircraft for airfield services during peak periods.
Qantas paid PAPL part (but not all) of the invoiced amounts. Qantas paid PAPL at:
(a)rates per passenger (ex GST) of:
(i)$10.61 for international terminal services (T1 and T3) and airfield services;
(ii)$5.35 for domestic terminal services (including regional charters) using T3; and
(iii)$3.40 for domestic airfield services (including regional charters);
(b)a rate per landed tonne (ex GST) of MTOW of $8.684 for airfield services for aircraft not carrying passengers; and
(c)the minimum rate per aircraft for airfield services during peak periods invoiced by PAPL (set out in [72(c)] and [73(c)] above).
On 2 September 2021, Qantas made an additional payment to PAPL to increase the amount paid for services (as set out in [10] above).

Expert evidence

Both parties adduced expert evidence from economists. Expert evidence is of critical importance in at least two respects. The first is whether PAPL had or exercised market power in negotiating prices for aeronautical services with other airlines. Those issues are important in considering whether, as PAPL submitted and Qantas denied, those prices are market prices and are the most relevant and probative facts to guide the court in its assessment of reasonable remuneration for the services PAPL provided to Qantas or alternatively are relevant to that assessment.
The second set of issues addressed by the experts concerns the efficient costs of PAPL providing aeronautical services calculated using PAPL's building block models. The outcome of the models depends on the inputs. The inputs include the opening asset base, capital expenditure during the pricing period, the period over which the assets are to be depreciated (the useful life of the assets) and the variables asset beta,[4] gamma[5] and WACC. Much expert evidence was directed to what values for asset beta, gamma and WACC should be used as inputs into the PAPL building block models.
[4] Asset beta will be discussed later in greater detail, for now it is sufficient to note that in broad terms asset beta measures the risk of a firm's equity or debt relative to the economy.
[5] Broadly, gamma is the value of tax imputation credits. A decrease in gamma increases the prices and an increase in gamma decreases the prices.
PAPL adduced evidence from expert economists Gregory Houston, Dr Thomas Hird and Dr Anthony Webber. Qantas adduced evidence from George Siolis, Dr Richard Hern and Dr Martin Lally.
Mr Houston and Mr Siolis participated in two expert conclaves. The first concerned the value of aeronautical services provided by PAPL and addressed the issues of PAPL's market power, and the comparable prices method of valuation adopted by Mr Houston. The second concerned the cost of aeronautical services using the PAPL building block models with inputs proposed or discussed by the participants in the other conclaves. Dr Hird and Dr Hern participated in conclaves to discuss the appropriate asset beta and WACC. Mr Houston, Dr Hern and Dr Lally participated in a conclave to discuss the appropriate gamma.
Registrar Hosking presided over each of the conclaves and moderated the conclaves and facilitated the preparation of each of the joint expert reports which the experts produced from each conclave.
The experts gave their evidence in a series of concurrent evidence sessions. Registrar Hosking lead the experts in presenting their concurrent evidence before each party had an opportunity to direct questions to each of the experts.
After the trial was concluded the court determined the appropriate inputs to be used in calculating prices by PAPL's building block models. With the agreement of the parties, Registrar Hosking then conferred with Mr Houston and Mr Siolis in relation to the inputs determined by the court. Mr Houston and Mr Siolis then produced an agreed outcome of the prices produced by the PAPL building block models using the inputs determined by the court and a brief report summarising the process.[6]
[6] The experts' report is E0020.

Quantum meruit - legal principles

Claim for restitution

PAPL's claim is for reasonable remuneration for the aeronautical services it provided to Qantas in the Relevant Period minus the amount paid by Qantas. The claim to recover a reasonable amount was referred to as a quantum meruit claim but is recognised by the parties to be a claim to recover a reasonable sum by way of restitution.
PAPL is entitled to reasonable remuneration for the services it provided to Qantas. The criterion for valuation has been expressed in various ways, including:
•so much in money as the plaintiff reasonably deserves to have;[7]
•the fair and reasonable value;[8]
•fair and reasonable remuneration;[9]
•reasonable remuneration;[10]
•a fair and reasonable rate of remuneration;[11] and
•such sum as the court considers just and reasonable.[12]
[7] Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221, 257, 259, 262.
[8] Sopov v Kane Constructions Pty Ltd [No 2] [2009] VSCA 141; (2009) 257 ALR 182.
[9] Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221, 257, 259, 262.
[10] Mann v Paterson Constructions Pty Ltd [2019] HCA 32; (2019) 267 CLR 560 [19], [164].
[11] South Australian Harbors Board v South Australian Gas Co [1934] HCA 45; (1934) 51 CLR 485, 499; Mann v Paterson Constructions Pty Ltd [2019] HCA 32; (2019) 267 CLR 560 [203].
[12] Stinchcombe v Thomas [1957] VR 509; (1957) ALR 1027, 1031.

The court is not free to indulge 'idiosyncratic notions of what is fair and just'[13] when deciding what amount a plaintiff is entitled to as restitution. The court must assess the reasonable remuneration by an appropriate standard.
[13] Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221, 256.
In Mann v Paterson Constructions Pty Ltd,[14] Nettle, Gordon, and Edelman JJ[15] and Gageler J[16] in a separate judgment confirmed that a reasonable remuneration is a question of fact and that reasonable remuneration is usually measured at the market value of the services rendered. All their Honours referred with approval to the judgement of Dixon J in South Australian Harbors Board v South Australian Gas Co[17] (Harbors Board).
[14] Mann v Paterson Constructions Pty Ltd [2019] HCA 32; (2019) 267 CLR 560 [92].
[15] Mann v Paterson Constructions Pty Ltd [2019] HCA 32; (2019) 267 CLR 560 [203].
[16] Mann v Paterson Constructions Pty Ltd [2019] HCA 32; (2019) 267 CLR 560 [92].
[17] South Australian Harbors Board v South Australian Gas Co [1934] HCA 45; (1934) 51 CLR 485.
Counsel for Qantas submitted that Harbors Board is binding authority for the proposition that the appropriate measure of reasonable remuneration where there are no other suppliers is an assessment of the efficient costs of the plaintiff in providing the relevant services, including a reasonable return on capital. PAPL denies that Harbors Board is authority for that proposition and submits that it is distinguishable from this case.
The Harbors Act 1913 (SA) vested exclusive control and management of all harbours in South Australia in the South Australian Harbors Board (Board). The Board granted the Gas Company a lease of land at Osborn. By cl 15 of the lease the Board covenanted that it would within three years from the commencement erect adequate coal handling appliances for the purpose of discharging and handling coal and the lessee shall have the right of taking delivery from the plant at such point as may be mutually agreed. The lease did not stipulate the amount to be charged by the Board for the use of its plant. The Gas Company spent a large sum upon the construction of its own plant in connection with this project, but there was a significant delay in the completion of the Board's plant.
The Board used its plant and equipment to deliver coal both to the Gas Company and to another company, the Electric Supply Co. There were, however, differences in the system of conveyors and bins that were used for each of these customers. The relevant service performed by the Board consisted of the unshipment of coal and its delivery onto the Gas Co's conveyors by means of the Board's coal handling plant. To justify the undertaking and its financial expenditure on installing its plant, the Board had to install all appliances required for the delivery of coal to the consumers expected to use it, which included the Gas Co and the Electric Supply Co. That required the installation of plant capable of unloading a quantity of coal several times greater than that delivered to the Gas Co, because otherwise coal could not be discharged from the ship with sufficient rapidity.
The Harbors Act provided that the Board may charge for the use of its plant but required that the charges be reasonable. By the time the Board's plant was completed and put into operation, the Gas Company and the Board had been unable to agree upon the amount of the charge that the Board would levy for its services in discharging, handling, and delivering coal to the Gas Company's new plant.
The Governor had made a regulation purporting to fix the amount at 3s per ton of coal delivered, with an additional 1d per tonne for tween deck vessels and with certain rebates. This regulation was revoked, and the Board passed a resolution adopting the same charges and rebates. The Board levied a uniform charge on all its customers of the amount specified in the regulation and the resolution. Subsequently, the Board claimed from the Gas Company remuneration for the use of its plant during 1930 and 1931 at the rate specified by the regulation and the resolution. The High Court held that the regulation having been revoked provided no basis for the charge. The court held that the Board was entitled to charge for its services, but the Act required the charges be reasonable. The question before the court was whether the sum sought by the Board, based on a charge of 3s per tonne plus 1d was reasonable.
The first judgement was delivered by Starke J. His Honour said that the reasonableness of a charge is a question of fact.[18] His Honour referred to the statement of the trial judge that the ordinary principle of assessment is the fair market value of the service, the charge ordinarily made for the same sort of service. However, his Honour observed:[19]
But in the case of public utilities it is seldom possible to appeal to an ordinary market rate or charge, and one is necessarily driven to a consideration of the capital expended upon the public undertaking and the revenue thereof as a basis for determining the reasonableness of the charge made or claimed for the use of the same (490).
[18] South Australian Harbors Board v South Australian Gas Co [1934] HCA 45; (1934) 51 CLR 485, 490.
[19] South Australian Harbors Board v South Australian Gas Co [1934] HCA 45; (1934) 51 CLR 485.
Justice Starke observed that on an enquiry as to the reasonableness of its charges, the Board should be allowed a fair return upon any capital expended upon the plant.
Justice Dixon, with whom Evatt and McTiernan JJ agreed, held that the Board was entitled to 'a fair and reasonable rate of remuneration, in other words, a quantum meruit'.[20] In a passage repeated with approval in Mann v Paterson Constructions Pty Ltd, Dixon J said:[21]
Upon a quantum meruit, usually the value of services is assessed by reference to charges commonly made by others for like services. But in the present case no such standard is available (501).
[20] South Australian Harbors Board v South Australian Gas Co [1934] HCA 45; (1934) 51 CLR 485, 499.
[21] South Australian Harbors Board v South Australian Gas Co [1934] HCA 45; (1934) 51 CLR 485.
His Honour continued:[22]
No doubt the cost of discharging coal at other wharfs by other methods cannot be excluded from consideration as altogether irrelevant, because, for example, probably it would not be considered reasonable for the Harbors Board to demand a greater sum than the Gas Company would pay if it adopted some such alternatives at Osborne. But, in the circumstances of the present case, the primary or initial factor in the estimate of a fair and reasonable rate must be the revenue expenses reasonably incurred by the Harbors Board in equipping itself to perform the services contracted for and in their performance (501).
[22] South Australian Harbors Board v South Australian Gas Co [1934] HCA 45; (1934) 51 CLR 485.
Justice Dixon considered that the court was not to fix the rate for all customers, it was concerned only with the Gas Company. Nevertheless, the guiding consideration in estimating the fair and reasonable rate for the Gas Company must be the total amount of the expenditure on revenue account reasonably incurred by the Board in providing all the services performed by the plant. That amount must be reduced to a rate per ton to be of use in estimating a rate of charge. In computing the quantity of coal which should be regarded as bearing the total expenditure, his Honour did not adopt the quantity which went through the plant, because in the relevant period it did not represent the amount of custom which might reasonably have been obtained by the Board if the plant had been completed. His Honour adopted the quantity which is equivalent to the amount of coal the Board would probably have handled had the plant been in full working order. His Honour accepted that a reasonable rate of profit should be included in the charge.
Harbors Board is not binding authority that there is a rule or principle that where there are no other suppliers, reasonable remuneration must be assessed as the efficient costs of the plaintiff in providing the relevant services. Nevertheless, the High Court held that whilst a reasonable remuneration is a question of fact depending on all the circumstances, assessment of the efficient costs of the plaintiff in providing the services is the usual method for calculating reasonable remuneration when there is no market giving rise to a market price. In Harbors Board no other standard for assessing reasonable remuneration was considered and the report does not disclose any evidence allowing for any other standard to be adopted. Nevertheless, the statements by Starke and Dixon JJ establish that the usual method for calculating reasonable remuneration when there is no market giving rise to a market price is the efficient costs, including profit, of the plaintiff in equipping itself to perform and in performing the services, that is return of and on capital and operating expenses.
PAPL submits, but Qantas do not agree, that Harbors Board can be distinguished from this case on two principal bases. The first is that, unlike PAPL, the Board was not subject to regulatory or other forms of constraint.
It is not correct that the Board was not subject to regulatory or other forms of constraint. Justice Starke set out relevant aspects of the regime,[23] including s 63 of the Harbors Act, which provides that the Board 'may make reasonable charges' for the use of its plant, Qantas submit that the Board was more heavily regulated than PAPL, in that it was subject to specific legislative direction to charge only a reasonable sum, whereas PAPL does not have its price regulated by statute. Further, Qantas submit that the distinguishing fact asserted by PAPL is not relevant. Qantas submit that in Harbors Board and in this case, the plaintiff sought a quantum meruit and in both cases there were no other suppliers of the services. Qantas submit that in that circumstance in that case and in this case, the reasonable remuneration is fixed by reference to reasonable costs (including a reasonable profit).
[23] South Australian Harbors Board v South Australian Gas Co [1934] HCA 45; (1934) 51 CLR 485, 490.
Secondly, PAPL submits this case is distinguishable from Harbors Board in that in this case there are criteria against which the reasonableness of the prices sought by PAPL can be measured, other than the efficient costs of providing the services:
(a)the prices most recently negotiated and agreed between PAPL and airlines other than Qantas (reflected in ASAs);
(b)the discount rate for the net present value calculation for unplanned capital expenditure, as recorded in the ASAs;[24]
(c)the prices paid by airlines without long term contracts, which used Perth Airport's Aeronautical Services (under Perth Airport's CoU) between 1 July and 17 December 2018;
(d)the charges previously paid by Qantas, and other airlines under contracts with Perth Airport which expired on 30 June 2018 (viz, the PSAs);
(e)the airport charges passed on by Qantas to their customers; and
(f)the profit per passenger earned by Qantas on routes to and from Perth Airport.
[24] See, for example, F0520 (Virgin ASA), _0053 [3.4(d)(iv)].
Qantas submit that PAPL's argument that there are 'criteria' against which reasonableness' can be 'measured' is a straw man built on a false premise. The false premise is that Dixon J 'left open' looking at 'the cost of discharging coal at other wharves operated by the Harbors Board'.
Justice Starke had identified that the Harbors Board had 'exclusive control and management of all harbors in the State and of navigation therein and of all such harbor works as are not private property',[25] and that the coal traffic at Port Adelaide was, by its determination, concentrated at one site, 'at Osborne on the Port River, alongside the works of the Electric Supply Co'. The Board leased to the Gas Company a site at Osborne that was on the other side of the Electric Supply Co's works.[26] The Gas Company 'spent a large sum upon the construction of plant on the site at Osborne', and the Board discharged coal by 'temporary devices' to the Gas Company until the Board's plant was ready.[27]
[25] South Australian Harbors Board v South Australian Gas Co [1934] HCA 45; (1934) 51 CLR 485,487.
[26] South Australian Harbors Board v South Australian Gas Co [1934] HCA 45; (1934) 51 CLR 485, 495 and 487 ‑ 488.
[27] South Australian Harbors Board v South Australian Gas Co [1934] HCA 45; (1934) 51 CLR 485,496.
Qantas submit, and I accept, that there were no other 'wharves' at Port Adelaide by which the Board discharged coal. Rather, Dixon J's statement was addressed to alternative means of unloading coal at the Osborne site that might instead have been employed other than the newly built plant. That is why Dixon J said it would not 'be considered reasonable for the Harbors Board to demand a greater sum than the Gas Company would pay if it adopted some such alternatives at Osborne'. That is, if the Board had charged a sum far in excess of what it would have cost to use stevedores or the temporary methods it in fact used, it would not be a reasonable charge. It is in that context that one would look at the 'cost of discharging coal at other wharves by other methods', at Osborn, as it would assist in determining by how much the Board's new plant exceeded those costs.
This is confirmed by Dixon J immediately proceeding to outline the context that the Gas Company had disputed the reasonableness of the Board recovering the cost of the new plant, because:[28]
… [D]uring the first of the two years for which the Board claimed, its plant was incomplete and it performed its contract only by resort to extraneous appliances. It was evident on that ground alone that no safe guidance could be obtained from the actual cost incurred during that year. Further, in the next year, the Harbors Board had not secured the handling of anything like the anticipated proportion of the coal coming to Adelaide, and to distribute the fixed charges over the actual quantity only of coal passing through the plant would produce a rate per ton which could not fairly be demanded of the Gas Co. For these reasons and the additional reason that the plant was designed on a much larger scale than was needed to deal with the amount of coal found in the event available, his Honour said that he could not accept the actual experience of the plant during the period in question as a fair guide to the value of the services rendered (501).
[28] South Australian Harbors Board v South Australian Gas Co [1934] HCA 45; (1934) 51 CLR 485 (Dixon J).
That is also confirmed by Dixon J's reference to the dispute as being:[29]
The service performed by the Harbors Board for which the Court was required to fix a fair and reasonable rate of remuneration consisted in the unshipment of coal and its delivery on to the Gas Co.'s conveyers by means of the Board's coal-handling plant (500).
[29] South Australian Harbors Board v South Australian Gas Co [1934] HCA 45; (1934) 51 CLR 485.
Qantas further submit that the other criteria against which PAPL proposes the reasonableness of the prices sought by PAPL can be measured are not comparable, by which I take Qantas to submit that they are not appropriate criteria for assessing reasonable remuneration for the aeronautical services provided to Qantas in the Relevant Period.
As to PAPL's first criterion - the prices most recently negotiated and agreed between PAPL and airlines other than Qantas reflected in ASAs - Qantas say that the prices paid by other airlines for terminal services provided through other terminals are not 'comparable'. I accept that the services are not the same. Whether they are comparable is a matter of fact and degree.
As to PAPL's second criterion - the discount rate for the net present value calculation for unplanned capital expenditure as recorded in the ASAs - Qantas submit, and I agree, that the discount rate is not relevant.
As to PAPL's third criterion - prices paid by airlines without long‑term contracts, which used PAPL's aeronautical services (under PAPL's CoU) during the Relevant Period - Qantas say that the prices paid by airlines without contracts are not comparable; they are set 10% higher than the highest cost and involved terminals other than T3. I agree with Qantas. The CoU prices are not negotiated prices. They are unilaterally set by PAPL. They are arbitrarily set 10% above the highest prices negotiated with other airlines for services provided from other terminals.
As to PAPL's fourth criterion - the charges previously paid by Qantas and other airlines under contracts with PAPL which expired on 30 June 2018 (the old PSAs) - Qantas say that those charges are not comparable since they were calculated by reference to building block models in 2011 according to the then‑current opening asset base, forecast expenditure, and WACC, noting that WACC will change as economic circumstances (particularly the risk‑free rate) changes. I agree that the charges are not comparable. They were set at a time when the cost of providing the services was different and the negotiations were informed by different cost considerations.
As to PAPL's fifth criterion - the airport charges passed on by Qantas to their customers - I agree with Qantas that the charges referred to are not relevant. PAPL is referring to airport charges recorded on passenger tickets. The evidence is that these 'charges' were amounts lodged with the International Air Transport Association and could not be updated without a new contract having been made with the airport operator. The evidence does not establish that the charges were passed on to customers in any relevant sense.
As to PAPL's sixth criterion - the profit per passenger earned by Qantas on routes to and from Perth Airport - that is not a comparable price. Reasonable remuneration is the value of the services provided, not any profit gained by the recipient of the services in undertakings which use those services.

Standards for assessing reasonable remuneration

Harbors Board and Mann v Paterson Constructions Pty Ltd confirm that reasonable remuneration is usually measured at the market value of the services rendered. Harbors Board confirms that where there is no market rate, the court will usually assess reasonable remuneration to be the cost of providing the services, including profit or return on capital. The cost is not necessarily the actual costs incurred but the efficient cost. Thus, in Harbors Board, Dixon J assessed the cost per ton of delivering coal to be not the actual cost per ton in the years in question but what the cost per ton would have been if the plant had been fully operational, that is operating efficiently.
In Enrichment in the Law of Unjust Enrichment and Restitution, AVM Lodder[30] writes that the practical reality is that the available evidence of the market value will differ between cases and there will be different ways of ascertaining that value that may be appropriate in particular cases. Lodder further says that there are several decisions that focus on the cost to the claimant of performing the services in calculating the award[31] and that this is part of a developing consensus[32] that the award is to be calculated on a cost‑plus basis, that is the cost to the claimant of the work plus a reasonable profit margin.

Standards for assessing reasonable remuneration to PAPL

[30] AVM Lodder, Enrichment in the Law of Unjust Enrichment and Restitution, Hart Publishing (2012), 80 ‑ 81.

[31] Lodder refers to Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234, 276; Kane Constructions Pty Ltd v Sopov [2005] VSC 237; (2006) 22 BCL 92; J Edelman and E Bant, Unjust Enrichment in Australia (2006) 118 ‑ 119.

[32] Yeoman's Row Management v Cobbe [2008] UKHL 55; [2008] 1 WLR 1752 [42] and cases listed at fn 81 including Sopov v Kane Constructions Pty Ltd [No 2] [2009] VSCA 141; (2009) 257 ALR 182 [33] ‑ [40].

PAPL submits that the prices most recently agreed between PAPL and other airlines provide the most relevant and probative evidence to determine reasonable charges for the aeronautical services provided to Qantas. PAPL further submits that the cost to PAPL of providing aeronautical services to Qantas has only marginal relevance in assessing reasonable charges for those services and should be used as no more than a general crosscheck on the charges assessed by reference to the prices agreed between PAPL and other airlines.
Qantas submit that both those propositions are wrong. Qantas submit that the appropriate measure of reasonable remuneration where there are no other suppliers, as in this case, is an assessment of the efficient costs of PAPL in providing the aeronautical services, including a reasonable return on capital. Qantas submit that the efficient cost of providing the aeronautical services should be assessed using the building block models designed by PAPL which were the basis for setting prices under the expired ASA and the unsuccessful negotiations for a new PSA with inputs appropriate for assessing costs in 2018.
Reasonable remuneration is calculated, not by reference to the loss suffered by the plaintiff or the actual gain to the defendant, but by reference to the reasonable market value of the benefit conferred on the defendant. In most cases, the efficient cost of the services (including a reasonable profit margin) will provide an accurate objective measure of the value of the benefits conferred on the defendant. Assuming the services are provided in a competitive market, efficient cost is a method of objectively ascertaining the market rate.
Assessing reasonable remuneration by actual costs rather than efficient costs is wrong in principle even though in some instances it may produce the same result.
If the services are provided in a monopolistic or other non-competitive market, the prices at which the services are or have been provided will not necessarily represent reasonable remuneration. Prices charged by a monopolistic supplier are not competitive market prices but regulatory or other restraints on the supplier might produce the same result.
Reasonable remuneration for the aeronautical services provided by PAPL should be assessed having regard to the following propositions. First, reasonable remuneration is a question of fact. Secondly, reasonable remuneration is usually measured as the market value of the services rendered, that is charges commonly made by others for like services. Thirdly, there is no relevant market price where there is a monopoly supplier, that is there are no charges commonly made by others for like services. Fourthly, where there is no market for the supply of like services, the usual method for assessing reasonable remuneration is the capital (including return on capital) and operating costs incurred in providing the services. Fifthly, the relevant costs are not the actual costs incurred but the efficient costs in providing the services. Sixthly, other facts may be relevant in assessing reasonable remuneration; for example, remuneration calculated in accordance with the contract price under an unenforceable contract.[33] Seventhly, prices at which a monopolistic supplier provides services to buyers may be relevant where regulatory or other restraints on the supplier produce prices that would prevail in an effectively competitive market. Eighthly, in determining whether prices charged by a monopolistic supplier subject to regulatory or other restraints are prices that would prevail in an effectively competitive market, it is relevant to compare the prices charged with the efficient cost of providing the services.

Value of aeronautical services

[33] Mann v Paterson Constructions Pty Ltd [2019] HCA 32; (2019) 267 CLR 560.

Later in these reasons I will compare the different methodologies advocated by PAPL and Qantas to be used to determine fair and reasonable prices for the aeronautical services provided by PAPL to Qantas at Perth Airport during the Relevant Period. As I have said, PAPL advocates a 'comparable transactions' approach to determine those prices whereas Qantas advocates that the prices should be the efficient cost of providing the services determined by using PAPL's building block models with appropriate inputs. The consideration of the competing methodologies requires a comparison between the outcomes of the two approaches as well as the rationale for and justification of each approach. That is in part because in determining whether prices charged by a monopolistic supplier are prices that would prevail in an effectively competitive market, it is relevant to compare the prices charged with the efficient cost of providing the services.
It is convenient to consider the appropriate inputs to PAPL's building block models before comparing the two methodologies. Accordingly, I will now consider the appropriate inputs to PAPL's building block model which are in contest. Those are the values for asset beta, gamma, WACC, opening asset base, operating expenditure and the remaining useful life or depreciation of Terminal 3.
I will first address an issue concerning admissible evidence. The parties tendered reports and submissions from or to the ACCC and the Productivity Commission. Parts of those reports were considered by some of the experts in their expert witness reports. The principal issue is whether those reports and submissions are admissible as exceptions to the hearsay rule for public documents. A second issue is whether, to the extent that the reports or submissions are not themselves admissible in evidence, the evidence of the experts referring to parts of those reports is admissible.

Admissibility of public reports

Public Documents Exception

During the course of trial, an issue arose between the parties as to the admissibility of a number of documents prepared by public authorities under the common law exception to the hearsay rule for 'public documents'. The documents comprise:
(a)four reports of the Productivity Commission on airport regulation (PC Reports);
(b)ACCC airport monitoring reports between 2009 and 2021;
(c)ACCC airline monitoring reports between 2009 and 2021 (together, ACCC Monitoring Reports); and
(d)submissions of the ACCC and Qantas Airlines to the Productivity Commission (Submissions).

The parties agree that the ACCC reports fall within the public documents exception, though disagree the extent to which the contents are admissible. The parties further agree that the Submissions fall outside of the public documents exception. In contest is whether the Productivity Commission reports fall within the exception, and if they do the extent to which they do.
For the reasons that follow, I find that the PC Reports are not admissible under the public documents exception; that the ACCC Monitoring Reports are admissible under the public documents exception and that the submissions of the ACCC and Qantas to the Productivity Commission are not admissible under the public documents exception.

The rule

PAPL submits that there are three criteria to be satisfied, being the document is:
(a)made for the purpose of the public making use of it, and being able to refer to it;
(b)made under a duty to inquire into the circumstances recorded in the document; and
(c)intended to be retained.
These criteria are set out in Sturla v Freccia by Selborne LJ.[34]
[34] Sturla v Freccia (1880) 5 App Cas 623; [1874 ‑ 80] All ER Rep 657.
Qantas submit there are four criteria to be satisfied. Those are set out by Lane LJ in R v Halpin[35] and are:
(a)the document must be brought into existence and preserved for public use on a public matter;
(b)the document must be open to public inspection;
(c)the entry must be made promptly after the events which it purports to record; and
(d)the entry must be made by a person having a duty to inquire and satisfy himself as to the truth of the recorded facts.
[35] R v Halpin [1975] QB 907; [1975] 3 WLR 260, 261 ‑ 262.
In my view, the criteria set out by Lane LJ referred to by Qantas are the criteria applied by Australian judges when determining whether a document is a public document.[36] Those criteria in R v Halpin are a development of the law following Sturla v Freccia.
[36] See eg Stohl Aviation v Electrum Finance Pty Ltd (1984) 5 FCR 187; Re Staples; Ex parte Baker v Staples (1996) 67 FCR 541, 544.
PAPL submits that the rule constitutes an exception to both the hearsay and opinion rules. Qantas submit that the rule is only an exception to the hearsay rule. I do not consider that the authorities support PAPL's submission. The type of evidence that has been received under the public documents exception is evidence of fact. For example, photographs,[37] maps,[38] and records of births and marriages.[39] When it comes to reports accepted under the rule, these reports have been taken as evidence of matters such a land ownership,[40] or the fact of whether a medical practitioner has been struck off the record.[41]
[37] John Nominees Pty Ltd v Dixon [2003] WASCA 51 [101].
[38] Foletta v Merri Creek Quarry Pty Ltd [1951] VLR 149.
[39] Lyell v Kennedy (1889) 14 App Cas 437, 448 ‑ 449.
[40] Mercer v Denne [1904] 2 Ch 534, 544.
[41] Hill v Clifford [1907] 2 Ch 236.
Qantas submit that the type of evidence that is admissible under this rule is the data which a public authority was bound to collect. I accept this submission, as it is in line with the type of evidence that is historically accepted under the rule and supports the proposition that opinion evidence is not admissible under this rule.
All parties agree that there is an additional requirement that the duty to inquire must be one of a judicial or quasi-judicial nature.[42] I am satisfied that this is a requirement that arises from the authorities.

Productivity Commission Reports

[42] Ioannou v Demetriou [1952] AC 84; [1952] 1 All ER 179, 186.

I am not satisfied that the Productivity Commission Reports are admissible under the public documents rule.
Qantas accept that the PC reports satisfy elements 1 and 2 of Lane LJ's test. I agree. The PC reports were brought into existence to promote public understanding, amongst other reasons. Further, the Productivity Commission has a statutory duty to inquire into the matters.[43]
[43] Productivity Commission Act 1998 (Cth) ss 11(2), 15(1), 16.
As to the second element, Qantas submit that although the report itself is open to public inspection, a number of the submissions were confidential and heavily redacted, limiting the public's ability to correct the accuracy of statements. PAPL made no submissions on this point.
As I have decided that the third element of the test is not satisfied below, it is not necessary for me to decide this point. However, I consider that the confidential nature of the submissions does weigh against the PC Reports' admission under the rule.
As to the third element, Qantas submit that the language of 'an entry' implies that the public document will record information or objective data soon after an event occurs, not amount to a report making evaluations or determinations years after relevant events, from a number of competing sources. Separately, Qantas submit that the nature and contents of the PC reports are readily distinguishable from the type of evidence typically accepted under the rule. I agree. The PC reports make evaluations, assessments and recommendations on the basis of a range of submissions and evidence. In this way, they are largely matters of opinion, and not a record of data collected for a public purpose. Furthermore, while the Productivity Commission has a duty under the Productivity Commission Act 1998 (Cth) to hold inquires and report to the Minister, the nature of those inquiries is not judicial or quasi‑judicial in the sense that they are not for the purpose of determining facts. Rather, they are for the dominant purpose of making policy recommendations, rather than recording data.
I consider that these considerations are all related. I accept Qantas' submissions that for these reasons the PC Reports are not documents of the type admissible under the public documents rule. I am further persuaded by the submission that the Productivity Commission's remit is analogous to a Royal Commission, of which the findings are not admissible evidence.[44]
[44] Re HIH Insurance Ltd (in liq) [2015] NSWSC 790.
I do not accept the Productivity Commission reports (PC reports) as evidence under the public documents exception.

ACCC Monitoring Reports

The parties agree that the ACCC Monitoring reports are admissible under the public documents exception. I agree. The ACCC monitoring reports are distinguishable from the PC reports. Their dominant purpose is to record empirical data regarding airport and airline pricing.
PAPL submits that the airport monitoring reports are admissible as to findings but conclusions on the quality of airport services, prices, costs and profits, other findings, observations or conclusions are not admissible, as it was not part of the ACCC's duty of inquiry.
I agree with PAPL's submission that not all findings in the ACCC monitoring reports are admissible. For example, findings about the limits of its price monitoring function are not findings of identifiable data, as described above.
However, the conclusion that large airports face minimal constraints put to Mr Houston I find is a matter on which the ACCC had a duty to report and is therefore admissible under the rule. However, I find that this is only prima-facie evidence of the matter.[45]

Submissions

[45] Hill v Clifford [1907] 2 Ch 236 (Cozens‑Hard MR & Buckley LJ).

The parties agree that the submissions to the Productivity Commission are not admissible under the public documents exception. I agree. In particular, neither Qantas, nor the ACCC were under a statutory obligation to provide such submissions, and those submissions were not prepared with a duty to undertake inquiries.
I find that the submissions by Qantas and the ACCC to the Productivity Commission are not admissible under the public documents exception.

Experts use of reports

I find that the PC Reports are not admissible into evidence as public documents. However, passages from those reports were referred to by the experts in the course of their evidence. For example, Mr Houston and Mr Siolis refer to parts of Productivity Commission reports in their joint expert report on the valuation of aeronautical services provided by Perth Airport.[46] That evidence was admitted without objection.
[46] Exhibit 193.
An expert witness is entitled to draw upon the corpus of knowledge available in their field of expertise. The parts of a Productivity Commission reports which were referred to by an expert witness and received into evidence may only be used for a limited purpose. Where an expert witness bases evidence on material in an authoritative publication, it is the evidence of the witness which is before the court. The publication itself is not evidence of the truth of the statements within it. Where the witness refers to, or quotes from, an authoritative publication as correctly stating a fact or opinion, what is referred to or quoted is part of the testimony of the witness.[47]
[47] PQ v Australian Red Cross Society [1992] 1 VR 19, 34 (McGarvie J), R v Karger [2001] SASC 64; (2001) 83 SASR 1 [67] (Mullighan J).
Accordingly, whilst the reports of the Productivity Commission are not admissible and are not evidence in this proceeding, references to passages in those reports by an expert witness are admissible and are evidence in this proceeding of the opinion of the expert.

Gamma

Introduction

Gamma is a variable or input to the building block models. Most directly, gamma is a deduction to the building block allowance for corporate tax. It is a deduction to the building block allowance because it represents the proportionate extent to which the benchmark cost of corporate taxes forecast to be paid by PAPL are captured as a form of value by its equity investors, thereby reducing the cost of capital provided by those investors.[48]
[48] C0003, _0139 at [449(a)].
Mr Houston is PAPL's expert on gamma and Dr Lally and Dr Hern are Qantas' experts on gamma. The experts agree that the widely accepted approach by economic regulatory bodies in Australia has been to interpret the variable gamma as the product of two components: distribution rate and utilisation rate.[49]
[49] E0014, _0007 at [20].
All three experts give their opinion as to an estimate of the utilisation rate, but only Mr Houston and Dr Lally provide an estimate of distribution rate. Mr Houston and Dr Lally prepared individual reports addressing both components of gamma. In his expert report on the WACC, Dr Hern provided an estimate of the utilisation rate. All experts participated in an expert conclave and subsequently produced a joint expert report (JER) on gamma (with Dr Hern's contribution limited to the utilisation rate component).
Dr Lally and Mr Houston agree that the distribution rate is the proportion of imputation credits created (by the payment of corporate taxes) that are distributed to shareholders by way of franked dividends.[50] However, they disagree on how the distribution rate should be estimated.[51]
[50] E0014, _0010 at [46].
[51] E0014, _0015 at [76].
The experts also disagree on the definition or description of the utilisation rate, with the bases for their disagreement impacting their opinions as to the preferred estimation method:[52]
(a)Mr Houston's preferred description is:
the value of imputation credits distributed (to shareholders) as a proportion of their face value;
(b)Dr Lally's preferred definition is:
a weighted average over the utilisation rates of the individual investors, with 1 if the investor can fully utilise them and 0 otherwise;
(c)Dr Hern's preferred description is:
the value to investors of utilising imputation credits per dollar of imputation credits distributed or, in other words, the extent to which investors can use the imputation credits they receive to reduce their tax (or receive a refund).
[52] E0014, _0007 at [20(b)] and _0010 at [49].
Gamma is relevant to the market risk premium parameter in the WACC, in that the value adopted for the utilisation rate component of gamma must be the same value adopted in estimating the market risk premium.[53] This is the reason Dr Hern only considers the utilisation rate component of gamma, because only this component has an interaction in estimating the WACC.

Distribution rate

Dr Lally's methodology for estimating distribution rate

[53] E0014, _0029 at [141].

In his individual report on gamma, Dr Lally observes that distribution rate is a parameter that can vary over companies, and as such the best estimate for a particular company might seem to involve using only data for that company. However, Dr Lally suggests this is unsuitable in a building block situation because the company might alter its distribution rate in the future to manipulate the estimate. Dr Lally therefore favours using a market-wide estimate, with such an estimate weighting companies in proportion to their value. Accordingly, Dr Lally considers that in conducting such an estimation, the focus should be on the most valuable companies in Australia.[54]
[54] E0008, _0003 at [10].
However, in the gamma JER, Dr Lally gives a different view as to his preferred approach to estimating distribution rate. He states that given the distribution rate is a parameter specific to each company, the natural starting point in estimating it in this proceeding is the distribution rate for PAPL. Using information derived from PAPL's financial statements, Dr Lally calculates the distribution rate for PAPL as 0.986, being an estimate for its aeronautical operations.[55] Dr Lally suggests that prima facie, this would appear to be the appropriate estimate. However, consistent with the concern expressed in his individual report on gamma, Dr Lally acknowledges if that estimate were to be used in this proceeding, PAPL might expect it to be used in future proceedings and therefore may seek to reduce it as to increase its allowed revenues under the building block models.[56]
[55] E0014, _0012 at [56].
[56] E0014, _0012 at [57].

Later in the JER, Mr Houston and Mr Siolis present a series of tables containing prices the experts have calculated to reflect various combinations of inputs to PAPL's aeronautical pricing models.[576] Based on a review of those tables it is apparent that the price Mr Siolis presents elsewhere as a price for international passenger services using T1 or T3, appears to be derived from PAPL's T1 international model. The resulting prices appear under columns titled 'T1I price, per passenger' in the series of tables presented by the experts.[577]
[576] E0017, _0009 at [17] and __0011 to _0022.
[577] E0017, _0021.
In Mr Houston's first report on the value of aeronautical services, he presents prices derived from the building block models in terms of (among other things) 'Terminal 1 International' and 'Terminal 3'.[578] However, the prices Mr Houston presents based on his comparable transaction methodology clearly contemplate one price for international terminal services and one price for domestic terminal services.[579]
[578] E0004, _0069 at [291] and Table 5.1.
[579] E0013, _0008 at [19] and Table 2.1.
In providing the prices produced by the PAPL building block models using the inputs determined by the court, Mr Houston and Mr Siolis presented those prices with reference to (among other things) 'Terminal 1 International' and 'Terminal 3'.
For the reasons set out above, I consider it appropriate that the 'Terminal 1 International' price (that is, the price derived from the Terminal 1 International building block model) is the price for international passenger services using T1 and T3, and the 'Terminal 3' price (that is, the price derived from the Terminal 3 building block model) is the price for domestic passenger services using T3. This is reflected in the prices presented in the table at [607].
As set out above, I consider the price for services provided by PAPL to Qantas should be no more than the prices agreed between PAPL and Virgin (for domestic services) and BARA (for international services), given the greater scale of Qantas. While the prices agreed with Virgin and BARA are confidential, I confirm that is the case, with one exception. That exception relates to [redacted] and does not change my view regarding the inputs I have determined in respect of the aeronautical pricing models.
Accordingly, I consider the prices set out in the table in [607] above to be fair and reasonable remuneration for those aeronautical services provided by PAPL to Qantas during the Relevant Period.
As for freight and non-passenger services, PAPL's preferred position is $11.909 per tonne MTOW, on Mr Houston's comparable transaction methodology.[580] Using the building block methodology, PAPL's position appears to be a price of $10.826 per tonne MTOW.[581] Qantas submit that if their case is accepted in its entirety, PAPL will recover nothing in this action in that it has been paid what it ought to have been paid.[582] The additional payment Qantas made to PAPL on 2 September 2021 reflected a price of $10.83 per tonne MTOW for freight and non-passenger services. Qantas' preferred position regarding the price for freight and non‑passenger services therefore appears to be $10.83 per tonne MTOW.
[580] E0013, _0008 at [19] and Table 2.1.
[581] E0004, _0069 at [291] and Table 5.1.
[582] C0004, _0008 at [18].
The price for freight and non‑passenger services agreed between PAPL and [redacted] during the relevant period was $10.826.[583] On Mr Houston's comparable transaction methodology, he applies the CoU 10% uplift to that price to arrive at the price of $11.909 per tonne MTOW.
[583] J0010, _0002 and E0007, _0052 at [203(d)] and Table 3.
Having accepted Mr Siolis' contentions that CoU prices are intended for use in circumstances different to those of Qantas and determined it is inappropriate to apply a 10% uplift to the comparable transaction prices, I also find that it is inappropriate to apply a 10% uplift to the price for freight and non‑passenger services. I consider $10.826 per tonne MTOW (rounded to $10.83 as paid by Qantas to PAPL) to be fair and reasonable remuneration for freight and non-passenger services provided by PAPL to Qantas during the Relevant Period.

I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.

CR
Associate to the Honourable Justice Le Miere

18 FEBRUARY 2022

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: PERTH AIRPORT PTY LTD -v- QANTAS AIRWAYS LTD [No 3] [2022] WASC 51 (S)
CORAM:   LE MIERE J
HEARD:   18 FEBRUARY 2022
DELIVERED          :   24 FEBRUARY 2022
FILE NO/S:   CIV 3147 of 2018
BETWEEN:   PERTH AIRPORT PTY LTD
Plaintiff
AND
QANTAS AIRWAYS LTD
First Defendant
JETSTAR AIRWAYS PTY LTD
Second Defendant
AIRLINK PTY LTD
Third Defendant
NETWORK AVIATION PTY LTD
Fourth Defendant
EXPRESS FREIGHTERS AUSTRALIA PTY LTD
Fifth Defendant

Catchwords:

Costs - Costs of issues - Who is the successful party - Whether issues discrete and severable

Costs - Special costs order - Whether prudent litigator would retain four counsel

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

Plaintiff awarded costs of action with the exception of four issues
Special costs order granted

Representation:

Counsel:

Plaintiff	:	Mr M Rush QC & Mr P Walker
First Defendant	:	Mr E Heenan
Second Defendant	:	Mr E Heenan
Third Defendant	:	Mr E Heenan
Fourth Defendant	:	Mr E Heenan
Fifth Defendant	:	Mr E Heenan

Solicitors:

Plaintiff	:	DLA Piper Australia - Melbourne
First Defendant	:	MinterEllison
Second Defendant	:	MinterEllison
Third Defendant	:	MinterEllison
Fourth Defendant	:	MinterEllison
Fifth Defendant	:	MinterEllison

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

Perth Airport Pty Ltd v Qantas Airways Ltd [2019] WASC 460
Perth Airport Pty Ltd v Qantas Airways Ltd [No 3] [2022] WASC 51
Stanley v Philips [1966] HCA 24; (1966) 115 CLR 470
Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388

LE MIERE J:

Summary

The primary relief claimed by the plaintiff, PAPL, is a claim for unpaid amounts for aeronautical services provided by PAPL to the defendants, Qantas, between 1 July and 17 December 2018 (the Relevant Period) calculated by reference to the fair and reasonable price for such services or, alternatively, restitution of the enrichment received by each defendant from its use of the aeronautical services provided by PAPL during the Relevant Period.
The parties agreed that the Court should deliver judgment stating the price for terminal services and airfield services that will provide fair and reasonable remuneration to PAPL. On 18 February 2022, I published reasons for judgment (Principal Judgment) in which I stated the per passenger prices for terminal services and airfield services that will provide fair and reasonable remuneration to PAPL for the Relevant Period.
I subsequently made orders by consent that the defendants pay PAPL a total of $7.66 million together with interest of $1.86 million.
These reasons for judgment deal with what orders should be made in relation to the costs of the action. For the reasons which follow there should be orders:
1.The defendants pay the plaintiff's costs of the action including reserved costs but excluding the costs of the following issues:
(a)the value of gamma;
(b)the benefit or profit earned by Qantas on flights to and from Perth;
(c)the fees or prices charged to Qantas by other Australian airports; and
(d)whether, practically, Qantas are and were able to use Terminals 3 and 4 beyond 2025 because of capacity constraints.
2.The plaintiff pay the defendants' costs of the following issues:
(a)the value of gamma;
(b)the benefit or profit earned by Qantas on flights to and from Perth;
(c)the fees or prices charged to Qantas by other Australian airports; and
(d)whether, practically, Qantas are and were able to use Terminals 3 and 4 beyond 2025 because of capacity constraints.
3.Pursuant to s 280(2) of the Legal Profession Act 2008 (WA), the costs payable to any party pursuant to the orders above are to be taxed:
(a)without reference to the limits provided for in Table B at cl 13 of the Legal Practitioners (Supreme and District Courts) (Contentious Business) Determination 2020 (2020 Scale) or cl 14 of the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2018 (2018 Scale);
(b)without reference to the hourly rates and the daily rates provided for solicitors (senior, junior and restricted), Clerks and Paralegals, Junior Counsel and Senior Counsel in Table A at cl 11 of the 2020 Scale or cl 12 of the 2018 Scale; and
(c)including reasonable allowances for work undertaken by Senior Counsel and Junior Counsel, and on the basis that the plaintiff is to be allowed the costs of four counsel, including two senior counsel.

Judgment sum and interest

The fair and reasonable amount which Qantas should pay to PAPL for aeronautical services during the Relevant Period, applying the prices determined in the Principal Judgment, is $28.73 million. Qantas has paid PAPL $21.07 million.
The parties agreed that, applying the prices determined in the Principal Judgment, Qantas must pay PAPL $7.66 million together with interest of $1.86 million. I made orders accordingly.

Costs

PAPL's proposed orders

PAPL proposes the following orders:
1.The defendants pay the plaintiff's costs of and incidental to the proceeding, including reserved costs, to be taxed if not agreed.
2.Pursuant to section 280(2) of the Legal Profession Act 2008 (WA), the costs payable to the plaintiff pursuant to order 1 herein are to be taxed:
(a)without reference to the limits provided for in Table B at cl 13 of the Legal Practitioners (Supreme and District Courts) (Contentious Business) Determination 2020 (2020 Scale) or cl 14 of the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2018 (2018 Scale)
(b)without reference to the hourly rates and the daily rates provided for solicitors (senior, junior and restricted), Clerks and Paralegals, Junior Counsel and Senior Counsel in Table A at cl 11 of the 2020 Scale or cl 12 of the 2018 Scale; and
(c)including reasonable allowances for work undertaken by Senior Counsel and Junior Counsel, and on the basis that the plaintiff is to be allowed the costs of four counsel, including two senior counsel.
Qantas proposes the following orders:
1.The plaintiff pay the defendants' costs of and incidental to the proceeding, including reserved costs, to be taxed if not agreed, save for the defendants' costs relating to the weighted average costs of capital.
2.The defendants pay the plaintiff's costs of and incidental to the proceeding, to be taxed if not agreed, relating to the weighted average costs of capital.
3.Pursuant to section 280(2) of the Legal Profession Act 2008 (WA), the costs payable to any party pursuant to the orders above are to be taxed:
(a)without reference to the limits provided for in Table B at cl 13 of the Legal Practitioners (Supreme and District Courts) (Contentious Business) Determination 2020 (2020 Scale) or cl 14 of the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2018 (2018 Scale)
(b)without reference to the hourly rates and the daily rates provided for solicitors (senior, junior and restricted), Clerks and Paralegals, Junior Counsel and Senior Counsel in Table A at cl 11 of the 2020 Scale or cl 12 of the 2018 Scale; and
(c)including reasonable allowances for work undertaken by Senior Counsel and Junior Counsel, and on the basis that the party is to be allowed the costs of 3 counsel, including only 1 senior counsel.

Courts discretion to award costs

The costs of proceedings are in the discretion of the court.[584] The discretion as to the award of costs must be exercised judicially but is otherwise unconfined. When making an order for costs, the court should generally look to the rules of court rather than to decided cases. All cases are different and fact specific.
[584] Supreme Court Act 1935 (WA) s 37.
Order 66 r 1 of the Rules of the Supreme Court 1971 (WA) (RSC) introduces the general rule ‑ the court will generally order that the successful party recover their costs. Nevertheless, a party who has enjoyed substantial success will not necessarily recover the entirety of their costs. The effect of RSC O 66 r 1(2) is that the court may depart from the general rule where a claim by a party for an unreasonably excessive amount has resulted in costs being unnecessarily or unreasonably incurred. Furthermore, RSC O 66 r 1(3) provides that the court may make separate orders which reflect the outcome of different issues.
Whilst these rules reflect the discretion of the court to depart from the general rule, it is convenient to start by considering which party was the successful party. PAPL and Qantas each submitted that they were the successful party.

Success and the general rule

What constitutes success in proceedings is to be determined by 'the reality of the circumstances involved in the case'.[585] Professor Dal Pont describes the successful party as the party 'who on the whole succeeds in the action'.[586]
[585] Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96; (2019) 54 WAR 388 [50].
[586] Dal Pont G E, Law of Costs (5th ed, 2021) [8.2].
The starting point for the exercise of the court's discretion is that costs follow the event. To work out who is the successful party the court has to ask: 'who, as a matter of substance and reality, has won?' In a commercial case, it is important to identify which party is to pay money to the other.
Qantas submits that it was the successful party for a number of reasons. First, Qantas submits that PAPL failed to recover the amount demanded. Qantas argues as follows. The dispute arose because the parties were unable to agree prices for aeronautical services. PAPL invoiced Qantas at rates well above the reasonable value of the services. The effect of the court's determination is that the remuneration demanded by PAPL was unreasonably high and that which Qantas had been willing to pay was too low. That the amount determined is higher than that for which Qantas contended has no more weight than the fact that it is lower than the sum for which PAPL contended. The making of an order for payment of a sum of money to PAPL does not mean that PAPL 'on the whole' succeeded in the action. On the contrary, and significantly, PAPL's case as to how the services should be valued was rejected and Qantas' was accepted.
Secondly, Qantas submits that it succeeded on a substantial majority of the issues and therefore should have its costs of and incidental to the proceeding save for the sole substantial issue one which PAPL was successful, that is the weighted average cost of capital (WACC).
I do not accept those arguments. In a commercial case where the plaintiff asserts that an amount is owing to it and the defendant denies that any amount is owing to the plaintiff, a plaintiff which ends up receiving payment should generally be characterised as the overall winner of the action. In commercial litigation the dispute is ultimately about money. In deciding who was the successful party, the most important thing is to identify the party who is to pay money to the other. That is the surest indication of success and failure.
Both parties turned out to have been overoptimistic in their claims as to what was fair and reasonable remuneration for the aeronautical services provided by PAPL to Qantas ‑ PAPL's claim was too high, and Qantas' claim was too low. That is not uncommon in commercial litigation. In such a case the plaintiff should normally be regarded as the successful party within O 66 r 1(1). The plaintiff has been forced to bring proceedings in order to recover the sum awarded. It has done so, and its claim has been vindicated to that extent.
It is wrong to equate success on issues, even important issues which took up a great deal of time, with success in a more general sense. All of the facts and circumstances must be taken into account. The court needs to survey the whole battlefield. The application of the general rule requires consideration of the overall relative success of the parties in respect of the dispute that brought them to court, not which party has won on individual issues. Approached in that way I consider PAPL was the successful party.

Costs of issues

For organisational purposes the parties' submissions and the Principal Judgment were organised under a number of broad issues ‑ quantum meruit legal principles, admissibility of public reports, gamma, asset beta, WACC, opening asset base and operating expenditure, depreciation of Terminal 3 and value of aeronautical services. These were discrete issues in the sense that each was considered separately, and different evidence and arguments were addressed to each. However, they were not discrete in that they were interrelated and all lead to the eventual outcome. The quantum meruit legal principles underpinned the approach to the calculation of fair and reasonable remuneration. The admissibility of public reports affected what evidence might be considered in relation to the other issues. Asset beta is an input into the WACC. Gamma, WACC, operating asset base and operating expenditure and depreciation of Terminal 3 are inputs into or relevant to the building block model calculation. The building block model calculation was fundamental to the court's assessment of fair and reasonable remuneration for the aeronautical services. In that sense each of the identified 'issues' are interdependent or related to each other and all inform the calculation of the fair and reasonable remuneration for the aeronautical services.

Affidavit of Ms Newbold

Qantas relies on an affidavit of Beverley Newbold affirmed on 21 February 2022. Ms Newbold is a partner in Minter Ellison and has the carriage of and is responsible for the conduct of the proceeding on behalf of Qantas. She has 23 years of experience in taxation and assessment of costs in complex litigious matters.
Ms Newbold describes the practice of time recording which she oversaw on this matter. She affirms that it will be possible for a costs consultant and taxing officer to discern in the vast majority of time narrations what activities and related costs were undertaken in relation to what issues
Ms Newbold affirms that between 17 December 2018 and 27 November 2020 it was necessary for Qantas to conduct its discovery and approach its defence of the proceedings on the basis that it might have to defend against any and all of the methodologies that PAPL had suggested might be applicable. At the first strategic conference on 20 March 2019, PAPL referred, amongst other methodologies, to 'the benefit that is derived in a profitability sense from Qantas' use of the services'. Qantas denied that that was a relevant methodology. The court found that it was not a relevant methodology.[587] PAPL's introduction of the Qantas profit or benefit occasioned substantial costs to Qantas for discovery, preparation and consideration of expert reports and lay witness statements, joint expert conclave on valuation methodology and JER 1 in preparation for and time at trial.
[587] Perth Airport Pty Ltd v Qantas Airways Ltd [No 3] [2022] WASC 51 [112], [561].
Ms Newbold affirms that PAPL required discovery of categories of documents including the Profit Categories and Other Airports Category. The other airports category refers to documents relating to the fees or prices charged to Qantas by other Australian airports. Qantas incurred substantial costs in giving discovery in relation to those issues. Specifically, Ms Newbold affirms:
I am informed by Mr Aiolfi, and believe, that Mr Aiolfi reviewed and allocated the time entries to the Profit, Benefit and Other Airports Categories to confirm that narrations relating to review of those documents were distinguishable from other discovery categories. His estimate of the total discovery costs associated with the Profit, Benefit and Other Airports Categories is that those categories alone involved Qantas incurring legal costs of at least $1.1 million (ex-GST). This figure relates to costs incurred on discovery alone and does not include the preparation of evidence relevant to PAPL's methodological propositions or time spent on this issue during trial. Further, this estimate is an underestimation of the actual discovery costs associated with the Profit, Benefit and Other Airports Categories due to the occasional instances of a time entry being generic and not connected to one of the Profit, Benefit and Other Airports Categories (e.g. 'undertaking second level review of documents' or 'attending meeting with Minter Ellison review team to discuss updated discovery categories'), or relating to one of the Profit, Benefit and Other Airports Categories plus another unrelated category. Mr Aiolfi excluded those narrations from his calculations. It is also an underestimation as it does not include the costs of processing these documents, nor any time incurred by Counsel and Minter Ellison discussing how to approach difficult judgments about documents' relevance and confidentiality. I am satisfied that with time, in the course of preparation for taxation (if necessary), additional costs will be readily identified.

PAPL raised the issue of passing on of airport charges to customers. The court found the evidence did not establish that the charges were passed on to customers in any relevant sense. Qantas incurred costs of discovery in relation to this issue.

Qantas' analysis of the issues

Qantas submits that the primary and most significant issue between the parties was how the reasonable value of the services provided by PAPL should be determined and that the court rejected PAPL's case both as a matter of law and as inapt in the circumstances of the case. Qantas submits that PAPL's introduction of its 'comparable transaction' methodology and 'benefit' to Qantas created a discrete and separable issue on which PAPL wholly failed. Ms Newbold's affidavit affirmed 21 February 2022 sets out the cost burden to Qantas of this issue and Qantas' repeated reservations of rights with respect to such cost burden.
Qantas submits it was wholly successful and PAPL unsuccessful on the determination of gamma.
Qantas concedes that the estimation of asset beta 'was one of the two issues on which PAPL enjoyed some success' but that success was not unqualified nor was PAPL's ultimate figure adopted.
Qantas accepts that the determination of the other input parameters for PAPL's WACC ‑ the market risk premium, risk-free rate, and cost of debt ‑ was an issue on which PAPL had substantial success. Qantas says it is the only issue on which PAPL had substantial success.
Qantas submits that disputes about items of operating expenditure including marketing costs did not make any material contribution to the parties costs of the proceeding.
Qantas submits that the rate of depreciation to be applied to Terminal 3 was a significant issue to which substantial parts of lay evidence, cross‑examination, and submissions was directed. Qantas submits that it was determined 'having regard to the reality of the case' in Qantas' favour. Qantas submits that the court:
(a)accepted Qantas' submissions and evidence that they would not encounter capacity constraints by 2025 on the basis of aircraft stands;
(b)accepted Qantas' position on whether it could or would split operations across terminals;
(c)accepted Qantas' evidence that forecourt capacity would not be constrained before 2024; and
(d)rejected PAPL's contention that depreciation treatment was a matter for PAPL and accepted Qantas' submission that it was a matter for the Court to determine inputs to the model that were reasonable and reflected efficient outcomes.
PAPL argued for a depreciation based on a useful life of 7 years, Qantas argued for 20 years. The Court found that a 13-year useful life for the Terminal 3 assets was reasonable. In doing so, the court:
(a)relied on the 20-year useful life used in the models underpinning the 2011 PSA;
(b)observed that in PAPL's own calculations in September 2017 the useful life was considered to be far longer than 7 years;
(c)was not persuaded, having regard to all of the evidence, that Terminal 3 had no useful life beyond 2025;
(d)rejected PAPL's contention that Qantas could not use Terminal 3 after 2025, both as a matter of law and fact; and
(e)found that it was 'unreasonable' for PAPL unilaterally to have imposed a shortened useful life for Terminal 3 on Qantas [517]. The court determined a useful life of 13 years. Qantas submits that PAPL introduced the 'accelerated' depreciation of Terminal 3 is an issue and was wholly unsuccessful.
Qantas submits that the only issue in dispute on which PAPL had unqualified success was the determination of the market risk premium, risk free rate, and cost of debt components of the WACC, the costs of which are readily identified in the costs referable to one set of expert evidence, the result on asset beta was equivocal and on all other issues, Qantas was either the outright successful party or was substantially successful.
Qantas submits that if the court does not determine to leave the quantification of costs relating to WACC to the parties' agreement or taxation, then adopting an impressionistic assessment reflecting time taken at trial, it would be open to the court to award PAPL no more than 10% of its costs and Qantas 90% of its costs (or, netting them, that PAPL pay 80% of Qantas' costs). However, Qantas submits that in circumstances where costs relating to WACC are readily separable, and where significant costs were incurred prior to trial, Qantas submits that the more appropriate approach is to make orders in terms of its minute.

PAPL submissions on costs of issues

PAPL submits that an order for costs on an issues basis is not appropriate in this action. PAPL submits that the fundamental contest was whether Qantas had paid PAPL a fair and reasonable price for the aeronautical services and PAPL was wholly successful on as pleaded cause of action. PAPL submits that to embark upon an issue‑by‑issue analysis of the proceeding would be oppressive and an unjustified use of judicial resources, including on taxation.
PAPL submits the matter is not be approached by a detailed review of which party 'won' individual arguments or submissions or had particular pieces of conflicting evidence preferred by the court to that presented by the other. That approach is apt to descend into a re-run of the trial and add to the uncertainty and complexity of litigation, and the time and cost of costs arguments. Further, such an exercise is apt to overlook the significance of particular issues in contributing (or not) to the successful party making out its entitlement to relief, having regard to the pleaded issues, which must be a key consideration in any assessment of success.
PAPL submits that the complexity involved in addressing costs by reference to issues can be illustrated by the building block model and its various inputs. In relation to those inputs, there were many issues and sub issues involving questions of fact and expert opinion. Each of the issues had different degrees of significance in terms of its ultimate effect on the prices derived in the time taken in addressing it. An analysis of such matters in relation to the building block model alone would be very complex and require the court to form a view about such matters in respect of opening asset base, depreciation, forecast capital expenditure, operating expenditure, WACC (including cost of debt, risk‑free rate, asset beta, equity beta, market risk premium, cost of equity, and leveraged) and gamma. PAPL submits it enjoyed substantial success on many of these points while in some instances, such as depreciation and gamma, the court did not accept each party's position.
PAPL concedes 'the court did not embrace PAPL's submission that comparative transactions with other airlines should be the primary point of reference for determining a fair and reasonable price' but says the court did not accept Qantas' submission that prices agreed with other airlines were irrelevant or that Harbours Board stood for the principle that in a market with a single supplier, reasonable remuneration can only be accessed by reference to the efficient costs of the plaintiff.
PAPL submits that where, as here, the factual context is novel, the matter is important, and the court is engaged in an evaluative task that involves determining what weight to afford to various factors or circumstances, it would be contrary to justice toward costs of issues against the successful party unless the justification were very clear.
PAPL submits that if the court considers that Qantas should be awarded costs of issues on which it succeeded then the appropriate course would be to award PAPL a reduced amount of costs by a percentage reduction in the amount to which PAPL would otherwise be entitled. PAPL submits that any reduction should be very modest and the court should take into account complications which it considers will arise in the taxation of costs.

Costs of issues – decision

PAPL though generally successful, has, by the introduction of some issues on which it failed or did not pursue, increased the costs. The court may order PAPL to pay the costs of such issues. For the reasons stated by the Court of Appeal in Strzelecki, the power to apportion costs in this way should only be exercised where there are discrete and severable issues on which PAPL failed, and which added to the cost of the proceedings in a significant and readily discernible way.
There are a number of issues on which PAPL failed, or which it did not pursue, which are sufficiently discrete and severable, and which added to the cost of the proceedings in a significant way which is sufficiently discernible to warrant an order that PAPL pay the costs of those issues. The issues are as follows.
The first issue is the value of gamma. The court rejected Mr Houston's opinion that the distribution rate should be based on ATO tax data and rejected his reliance on dividend drop-off studies for the utilisation rate. The court rejected Mr Houston's suggestion that data from all companies should be used to determine the distribution rate and accepted Dr Lally's opinion that only data from listed companies should be used. The value the court determined for the distribution rate was one of the estimates propounded by Dr Lally and for the utilisation rated was the estimate given by Dr Hern, which was also one of the estimates given by Dr Lally. PAPL was wholly unsuccessful on the issue of the value of gamma. The issue added significantly to the costs of the proceeding and is a sufficiently discrete and severable issue.
The second issue is the benefit or profit earned by Qantas on flights to and from Perth Airport. PAPL argued that the per passenger economic profit and by Qantas on flights to and from Perth Airport materially exceeded the per passenger prices claimed by PAPL for the Relevant. And that was a factor supporting the charges it claimed should be paid by Qantas.[588] The court found that the profit per passenger earned by Qantas on routes to and from Perth Airport is not a comparable price. The court held that reasonable remuneration is the value of the services provided, not any profit gained by the recipient of the services in undertakings which use those services.[589] In effect, the court held that the profit per passenger earned by Qantas on routes to and from Perth Airport was not a relevant consideration. Ms Newbold affirmed that the costs of discovery in relation to that matter were substantial. The issue added significantly to the costs of the proceeding and is a sufficiently discrete and severable issue.
[588] Perth Airport Pty Ltd v Qantas Airways Ltd [No 3] [2022] WASC 51 [8].
[589] Perth Airport Pty Ltd v Qantas Airways Ltd [No 3] [2022] WASC 51 [112], [561].
The third issue is the fees or prices charged to Qantas by other Australian airports. PAPL did not advance that argument at trial. However, PAPL required Qantas to give discovery of documents relating to that issue. Indeed, PAPL applied for and obtained an order that Qantas give discovery of documents relating to the fees or prices charged to Qantas by other Australian airports.[590] Ms Newbold affirmed that the costs of discovery in relation to that matter were substantial. The issue added significantly to the costs of the proceeding and is a sufficiently discrete and severable issue.
[590] See Perth Airport Pty Ltd v Qantas Airways Ltd [2019] WASC 460 [2] ‑ [7].

The fourth issue is whether Qantas were able to use Terminal 3 beyond 2025. PAPL contended that Terminal 3 did not have a useful life beyond 2025 because, amongst other things, capacity constraints practically prevented its use by Qantas beyond 2025.
A significant amount of evidence was adduced by the parties regarding whether, practically, Qantas are and were able to use Terminals 3 and 4 beyond 2025. The court essentially accepted Qantas' contentions and rejected PAPL's contentions concerning capacity constraints at Terminal 3 beyond 2025. As I have said a significant amount of evidence was directed to that issue. The issue added significantly to the costs of the proceeding and is a sufficiently discrete and severable issue.
I am not satisfied that there are any other issues on which PAPL failed and Qantas succeeded which added significantly to the costs and which are sufficiently discrete and severable issues. Mr Houston's comparable transaction methodology is not a discrete and severable issue on which PAPL failed, and which added to the cost of the proceedings in a significant and readily discernible way for two reasons. First, the court did not find that the comparable transactions, that is prices PAPL agreed with other airlines, irrelevant. The court had regard to the reasonableness of the results of the building block method in the light of all other relevant evidence, which included the comparable transactions.[591] Secondly, the issue concerns expert evidence of Mr Houston and Mr Siolis. That evidence and the experts' consideration of the underlying transactions, their comparability and their context are intertwined with their consideration of and evidence concerning other aspects of what is a market price or appropriate price for aeronautical services.
[591] Perth Airport Pty Ltd v Qantas Airways Ltd [No 3] [2022] WASC 51 [603], [615].
In the context of a long and complex commercial trial, the issue of Qantas passing on airport charges to customers did not add sufficiently to the costs of the to make appropriate to make an order requiring a separate assessment of costs of the issue.

Exercise of discretion as to costs

PAPL should have the costs of the action except for the costs of the four issues I have identified. For the assistance of the taxing officer, the costs of the action include the common costs, that is items of work that serve as much the purpose of the other issues as those of which Qantas has been awarded the costs. Qantas should have the costs of the four issues I have identified. The costs of those issues are the costs of work referable to those issues alone.
I have decided to award Qantas the costs of the issues I have identified rather than deduct a proportion of the costs awarded to PAPL because I am unable to form any proper estimate of the costs incurred in relation to those issues relative to the costs incurred in the action as a whole.

Special costs order

In my opinion, the amount of costs allowable in respect of this matter under the relevant costs determinations is inadequate because of the unusual difficulty and complexity and importance of the matter and it is appropriate to make a special cost order pursuant to Legal Profession Act 2008 (WA) s 280(2). The parties agree that the special costs order should be as I have set out earlier in these reasons except for one matter. PAPL submits that the order should include reasonable allowances for work undertaken by senior counsel and junior counsel and on the basis that the plaintiff is to be allowed the costs of four counsel, including two senior counsel. Qantas submits that the cost payable by Qantas to PAPL should not be taxed on the basis that PAPL should be allowed the costs of a second senior counsel. Qantas submits that the resources Qantas deployed at the trial, and the result, demonstrate that one was sufficient.
The test in determining whether a successful litigant should be allowed the costs of multiple counsel is whether a reasonable and prudent person acting with ordinary prudence would have ventured into the court without that many counsel. Professor Dal Pont refers to judicial observations to the effect that it is unusual to allow a successful party the cost of three counsel. The matter should be approached objectively. In Stanley v Philips,[592] the issue was whether a successful plaintiff in a personal injuries case should be allowed the cost of two counsel. In an often‑quoted passage Barwick CJ said:
This Court in Kroehn v. Kroehn expressed a test for deciding whether the fees for two counsel should be allowed in a party and party taxation. The question propounded by Griffith CJ when he says: 'Would a prudent person not compelled by poverty come into Court in such a ease without two counsel?' must be understood in relation to the basic matter in issue, which is the presentation of the case to ensure a just adjudication. The question is not whether a man in seeking his own maximum advantage would be imprudent not to engage counsel of a particular level of experience or skill. The question is whether the services of more than one counsel are reasonably necessary for the adequate presentation of the case.
[592] Stanley v Philips [1966] HCA 24; (1966) 115 CLR 470, 478 ‑ 479.
The same test applies to the deployment of four counsel. The question is not whether PAPL in seeking its own maximum advantage would be imprudent not to engage four counsel, including two senior counsel, the question is whether the services of four counsel including two senior counsel are reasonably necessary for the adequate presentation of its case.
Relativity is relevant. Qantas deployed three counsel, including one senior counsel, for the presentation of its case. PAPL deployed four counsel including two senior counsel. However, this is not a case where all counsel deployed were attending court at the same time or attending to the same tasks so as to give rise to multiple fees being charged to carry out work that could reasonably have been done by one senior and one junior counsel. PAPL submits that both senior counsel were not performing the same tasks. The trial was not conducted in that manner. It was reasonable for two senior counsel to be engaged to perform largely separate and discrete roles during the trial. Mr Young QC and Mr M Rush QC each addressed different aspects of PAPL's case and took different witnesses. I am satisfied that the deployment of two senior counsel and two junior counsel was reasonably necessary for the adequate presentation of PAPL's case. For the assistance of the taxing officer, I note that whilst PAPL's costs are to be assessed including reasonable allowances for work undertaken by Senior Counsel and Junior Counsel, and on the basis that the party is to be allowed the costs of four counsel, including two senior counsel, the taxing officer should not allow costs for senior counsel carrying out the same tasks. The same observation applies to the two junior counsel deployed by each party.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

CR
Associate to the Honourable Justice Le Miere

24 FEBRUARY 2022

Aeronautical service	Price
Airfield (domestic and international)	5.383
International passenger services (T1 and T3)	9.336
Domestic passenger services (T3)	8.436
Freight and non-passenger services (per landed tonne MTOW)	10.83