Port of Newcastle Operations Pty Limited v Glencore Coal Assets Australia Pty Ltd & Ors

[2021] HCATrans 142

[2021] HCATrans 142

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S33 of 2021

B e t w e e n -

PORT OF NEWCASTLE OPERATIONS PTY LIMITED (ACN 165 332 990)

Appellant

and

GLENCORE COAL ASSETS AUSTRALIA PTY LTD (ABN 163 821 298)

First Respondent

AUSTRALIAN COMPETITION TRIBUNAL

Second Respondent

AUSTRALIAN COMPETITION & CONSUMER COMMISSION

Third Respondent

KIEFEL CJ
GAGELER J
GORDON J
STEWARD J
GLEESON J

TRANSCRIPT OF PROCEEDINGS

BY VIDEO CONNECTION TO BRISBANE, SYDNEY AND MELBOURNE

ON TUESDAY, 7 SEPTEMBER 2021, AT 10.00 AM

Copyright in the High Court of Australia

____________________

KIEFEL CJ:   The record will show that I am sitting in Brisbane, Justices Gageler and Gleeson in Sydney, and Justices Gordon and Steward in Melbourne.  In accordance with the protocol for remote hearings, I shall announce the appearances for the parties.

MR C.A. MOORE, SC appears with MR D.J. ROCHE for the appellant.  (instructed by Clayton Utz)

MR N.J. YOUNG, QC and MR N.P. DE YOUNG, QC, together with MR M.P. COSTELLO, appear for the first respondent.  (instructed by Clifford Chance)

KIEFEL CJ:   The second respondent has a submitting appearance.

MR S.B. LLOYD, SC, together with MS C.M. DERMODY, appears for the Australian Competition and Consumer Commission, the third respondent.  (instructed by DLA Piper)

KIEFEL CJ:   Mr Lloyd, the role of the ACCC in these proceedings may need to be clarified by you at a later point, but we can deal with that when we come to you.

MR LLOYD:   Certainly, your Honour.

KIEFEL CJ:   Yes, Mr Moore.

MR MOORE:   May it please the Court.  The first topic of the appeal, and the first three appeal grounds, concern a question of who has a right to negotiate and is entitled to engage the statutory arbitral process against the provider of a declared service and in respect of what.  The service in question here, being in essence the shipping channels at the Port of Newcastle, was declared in 2016.

That declaration was revoked in 2019 and a more recent application to have the service redeclared has been unsuccessful, and we have provided the Court separately with last month’s decision of the Competition Tribunal in that regard, Application by New South Wales Mineral Council (No 3) [2021] A CompT 4, in which the Tribunal upheld the decision of the Minister not to redeclare the service – and I will come back to that decision if I might.

This appeal arises out of the only dispute which was notified to the ACCC in the period during which the service was declared. The present case is still on foot because the revocation of a declaration does not affect the arbitration of an access dispute that was notified before the revocation and that arises by virtue of the operation of section 44I(4) of the Competition and Consumer Act. I do not need to go to that section, but it is common ground that that is the effect of it.

The declared service in this case is set out in the judgment of the Full Court at paragraph 88 and I might go to that if I may.  It is in the core appeal book at page 197, paragraph 88, and it is defined as:

the provision of the right to access and use the shipping channels (including berths next to the wharves as part of the channels) –

which highlights that the berths are part of the shipping channels, that berths are in effect simply a section of water, a location at which a ship can dock:

at the Port of Newcastle (Port) by virtue which vessels may enter the Port precinct and load and unload at relevant terminals located within the Port precinct and then depart the Port precinct.

But the service, in effect, includes the full shipping channels.  The vessel can enter the Port, travel up the channel to the berth, load and unload and then depart.  The service is the provision of access to the shipping channels.  That involves, we submit, something that has a physical dimension, and shipping channels are accessed by vessels. 

Can I turn to the relevant statutory provisions - your Honours should have a joint book of authorities which contains the whole of Part IIIA at the date of the re‑arbitration of the dispute by the Tribunal.  Can I start with some definitions, which are found in sections 44B, and the relevant page is at page 18 of volume 1 of the joint book of authorities.  The first definition I wanted to go to is the definition of “provider”, and section 44B says that:

provider, in relation to a service, means the entity that is the owner or operator of the facility that is used (or is to be used) to provide the service.

So we are dealing with the use of a facility.  The definition of “service”, a little further down the page, is defined as being:

a service provided by means of a facility –

So the definition includes the term being defined, but in its ordinary meaning, a service means the provision of a facility to meet the needs or for the use of a person or thing, and it is:

a service provided by means of a facility and includes:

(a)the use of an infrastructure facility such as a road or railway line –

and, one might add, shipping channel, which is the oceangoing equivalent of a road.  So, the present situation falls within the inclusive subparagraph (a).  We are concerned here with the use of an infrastructure facility, being the shipping channels at the Port, and that concept, we say, is simple enough. 

Another important definition is the definition of “third party”, which is on the next page and “third party” does not have its ordinary meaning, it is really the second party:

third party, in relation to a service, means a person who wants access to the service or wants a change to some aspect of the person’s existing access to the service.

I may from time to time refer to the third party as the “access seeker”, just to avoid confusion with “third party” in its usual meaning, but if I do so I am using it in that sense of the defined term “third party”.  But the second limb of the definition sheds some light on the meaning of “access”.  It must be meaningful to speak of someone’s existing access, and it must be meaningful to speak of a change to some aspect of that existing access.

GLEESON J:   Mr Moore, in what sense is a shipping channel an infrastructure facility?

MR MOORE:   Well, the channel has to be excavated in order for it to be a useful channel, so it involves significant infrastructure and work in order to provide the channel.  It also has navigational buoys and the like to guide vessels, so that it is not just a natural piece of water at the Port of Newcastle and, indeed, when we come to the grounds 4 to 5, the value of the Port, upon which charges are set, involves to a very significant extent, the very significant costs of excavating the channels in order to provide, in effect, a passageway for vehicles.  So it is like a road in the ocean.

STEWARD J:   Just before you move on, Mr Moore, could I ask, the shipping channels are the subject of a licence to the Port, from memory.

MR MOORE:   Yes, it is a 99‑year lease.

STEWARD J:   No, no, I think it is a licence, not a lease, from memory.  Was there anything in evidence about what the terms of the licence were - are?

MR MOORE:   The licence was not in evidence.

STEWARD J:   Did it give the licence‑holder a right to dredge?

MR MOORE:   Yes.

STEWARD J:   So that is common ground, is it?

MR MOORE:   As I understand it.

STEWARD J:   All right, thank you.

GAGELER J:   Mr Moore, we have in the bundle of authorities, I think, rather than this part of the chronology, the Competition Tribunal decision from 2016 concerning the declaration of the service.

MR MOORE:   Yes, your Honour.

GAGELER J:   That refers to the existence of a lease rather than a licence of the channels.  Are we able to take what is said in that decision under the heading “Background” as setting out uncontroversial facts?

MR MOORE:   Your Honour, can I take that question on notice?  I understand there is a lease of the Port and there may be a licence of the channels.  So I might see if I can provide a reference that adequately summarises the circumstances.

GORDON J:   When you do that, Mr Moore, I would be grateful if you could take into account paragraph 228 on core appeal book 235, which sets out that the lease includes a licence to operate the shipping channels.  One of the difficulties I have – and I say it upfront – is that we do not actually know what the assets are here, do we?  There is no list of them anywhere.  We do not have a copy of the lease.

MR MOORE:   We do not have a copy of the lease.

GORDON J:   Or the licence.

MR MOORE:   Or the licence.  We do have some information about the nature of the assets in the course of the determination in relation to the cost of, in effect, reconstructing the Port.  So one has lots of information about what are the various aspects or parts of the Port that are the subject of the lease to the Port of Newcastle Operations.  There was no issue taken at any point to suggest that my client was not the person providing access to the services in a physical sense.  That was not the debate.  The debate was about whether access in a different sense was sufficient to attract the operation of the provisions.

Now, the term “access” is a term of central importance for the operation of Part IIIA and is used in many provisions of the part but is not the subject of any express definition.  It was evidently assumed that its meaning was plain and that may have some significance in a context where it has been suggested that it means “acknowledge access”, and that is not its ordinary meaning and involves a construction, we submit, which is non‑obvious.

At the very end of the joint bundle of authorities in volume 5 or Part E, the very last page, there is an excerpt from the Shorter Oxford English Dictionary as to “access”, which provides in definition 2:

Coming into the presence of or into contact with . . . approach, entrance.

and in definition 3:

Admittance (to the presence or use of) . . . The action or process of obtaining stored documents, data, etc.

In its ordinary meaning, we submit it refers to a physical concept but may also refer to obtaining permission.  If I have access to a particular premises then I may have physical access, I might have a key, for example, and I may have permission to enter.

The term has its conventional meaning in the present context.  If I am accessing a service where the service is the provision of a right of access to an infrastructure facility, then I am obtaining physical use of the facility and perhaps permission to use the facility.  That is appropriate in that the infrastructure used to provide the declared service will invariably be the subject of proprietary rights where compulsory access involves a significant impingement on those rights.  Now, notification of an access dispute is dealt with in section ‑ ‑ ‑

GAGELER J:   Mr Moore, it has been said in the case law, at least since Sydney Airport in the Full Court of the Federal Court, that access has its ordinary meaning and I understand your submissions to proceed on that basis. It is just a question of which nuance of the ordinary meaning is the appropriate one.

MR MOORE:   Yes.

GAGELER J:   A modern definition of “access” that you can find from just doing a standard computer search yields this meaning.  It is a right or opportunity to use or benefit from something.  If I ask you, do you have access to a computer or access to all sorts of things, I could be using it in that broad sense.  What is wrong with that broad sense here?  What is wrong with at its broadest saying access includes an opportunity to benefit from a service?

MR MOORE:   If that broad sense is divorced from the ability to obtain, in some sense, a physical access to something, then we would submit that is too broad.  One can have access, for example, to a computer network, but one has to have some mechanism by electronic means or otherwise to actually connect with that network.  It is not in, even in that sense, speaking of someone who merely obtains a benefit, and especially not merely an economic benefit, or a commercial benefit, from somebody else who is physically accessing something.

So, I readily accept, your Honour, it is not limited to a classical physical access in the sense that you are talking about computer access, then we might be talking about electronic access, but there is still some notion of obtaining some connection to something or some ability to enter into something by some means, electronic or otherwise, but not just benefit divorced from that notion.

GAGELER J:   Mr Moore, let me follow it up with this question.  We know that Glencore sells FOB.

MR MOORE:   Yes.

GAGELER J:   But imagine the situation where Glencore sold CIF.

MR MOORE:   Yes.

GAGELER J:   Would Glencore be an access seeker, in your submission?

MR MOORE:   If it sold CIF?  Yes, because ‑ ‑ ‑ 

GAGELER J:   Now, it is not operating the ship that uses the channel.

MR MOORE:   No, but it is, in most cases, chartering the ship, or it has some relationship with the ship owner.  I perhaps should have answered your Honour’s question with a little more caution.  If it were selling CIF in a way that meant it had no commercial control over the ship in any way, the Full Court referred to “commercial disposition”, a ship being at the commercial disposition of someone, then it might not be accessing the service, but if, in effect – a corporation has to act through agents, contractors, and the like, if it is directing, and by contractual means, the ship accessing the channel is responsible in that commercial sense for the ship, then, yes, it would be accessing the service.

KIEFEL CJ:   Mr Moore, while you are interrupted, is there an identifiable market to which the service is relevant?

MR MOORE:   Well, this – and I was going to come to this, your Honour, if I might, in relation to one of our ‑ ‑ ‑ 

KIEFEL CJ:   I am taking you out of sequence - that is fine, if you are coming to it.

MR MOORE:   The answer is quite a number of markets, and one of the – and when one comes to the declaration decision, one sees that.  Emphasis has been placed by the Full Court on the coal export market, but that was one of only five markets that were said to be relevant, and one of the points that we make is that if you are then dealing with a question of economic access, or economic interest, one would be looking at people who have economic connections in a whole variety of different markets, including the ones that were subject to the declaration decisions.

KIEFEL CJ:   Do you say that Glencore is operating in a different market depending on whether it is selling FOB or CIF?

MR MOORE:   It is certainly operating in the coal export market, but yes in the Full Court, for example, it was observed that if one is selling CIF then one may be operating in other markets as well, which one is not if one is simply selling FOB, where one is simply engaged in the commodities market, and that is paragraph 132 of the Full Court’s decision where that observation is made.  I am sorry, I think your Honour Justice Gordon has a question.

GORDON J:   Can I ask one question about this definition of “access” and your focus on physicality.  If one looks at here in this context in this market, in order to get access one has to pay relevantly, for present purposes, the navigation service charge.  The PMA Act imposes the obligation or identifies who it is who is to pay that charge and it is, as I understand it, payable by the owner of the vessel concerned.  We know that the owner is given an extended definition by 48(4)(b).  You do not need the physicality argument to succeed if, for example, Glencore had nominated itself as the owner of the vessel for the FOB contracts and was paying the charge because you would accept then they had access, would you not?

MR MOORE:   We would accept that they had access if they had the necessary relationship to the channels - if they were using the channels, accessing the channels in the ordinary meaning of “access”, but we do have ‑ ‑ ‑

GORDON J:   They are paying for use of them on my example.

MR MOORE:   Yes, but there is an issue, for example, as to whether the full breadth of section 48(4)(b), which seems to be a payment recovery mechanism ‑ ‑ ‑

GORDON J:   I am only focusing on payment recovery at the moment; I am not focusing on the broader contention put forward by Glencore.  My question is much narrower than that.

MR MOORE:   Yes, I understand that, your Honour, but even in that circumstance, if, for example, Glencore was making a representation or undertaking an obligation pursuant to section 48(4)(b), but was not in fact accessing, then there would be a question as to whether Glencore was an access seeker or a third party.  The width of the Ports and Maritime Administration Act cannot drive the proper definition of who is an access seeker, or a third party, I should say, within the meaning of the Competition and Consumer Act.

GORDON J:   But it certainly does, and it tells you who is both accessing and paying for access to the service.  It is a matter of fact.

MR MOORE:   It tells you who is liable, who may be liable to pay in a provision that provides a mechanism for recovery in a broad sense and the apparent purpose of that provision is to make sure that recovery is straightforward and is not impeded.  We do say that the term “access” has its conventional meaning in the present context and that ‑ ‑ ‑

GAGELER J:   I am sorry, Mr Moore.  Could you be quite precise about what you mean by “conventional meaning”.

MR MOORE:   Yes.  The conventional meaning of “access” is to obtain physical access, including in the ‑ ‑ ‑

GAGELER J:   Can you actually put it in words that do not use the defined expression, or the expression we are trying to define.

MR MOORE:   Yes, I am sorry, your Honour, that is – it is a risk, I understand.  It is obtaining physical entry to something, including in the electronic sense that your Honour put to me, and obtaining permission to enter something.

GAGELER J:   Can we just test that, please, by looking at the definition of “service” and the definition of the “third party”.

MR MOORE:   Yes.

GAGELER J:   Now, I think you said that we can relevantly treat the service as, paraphrasing paragraph (a) of that definition, use of the channels, so that is the service, use of the channels.  We go to the definition of “third party”.  That is someone who wants access to the use of the channels.

MR MOORE:   Yes, your Honour.

GAGELER J:   And that is, what, physical entry to use?  Is that what it is?

MR MOORE:   Yes, your Honour, and when one is talking about – and there is some duplication in there, because one looks at the definition of the “service”, for example.  It is defined as the provision of a right to access, and then if one reads that back into the definitions, there is a certain duplication involved.  There are provisions of rights to access, and the like, but yes, we say it involves a fairly simple concept, when one is dealing with the provision of an infrastructure facility, of using that facility.

GORDON J:   I am sorry to be difficult, Mr Moore, but I had understood that the definition you gave to Justice Gageler was also obtaining permission to enter something.

MR MOORE:   Yes.

GORDON J:   In other words, that one can pay a fee to get in.

MR MOORE:   Yes.

GORDON J:   Which is the reason why I was asking you before about the arrangements that are provided for under the PMA.  I mean, under these arrangements, the shippers pay to enter the Port, to enter the channel.  The obligation is imposed upon particular people.

MR MOORE:   Yes.

GORDON J:   They have a right, on the payment of the fee, to enter the channel, and I might pay the charge in order to ensure that a ship enters.  Why am I not then accessing the service, to the extent to which I pay that charge for that purpose?

MR MOORE:   Well, it would depend upon the relationship that you have to the vessel that is entering the port.  If you are entering the port because of, for example, your control or commercial disposition of the vessel, then I would have to agree with that proposition.  If you are only paying the charge through the outermost extremities of the definition in section 48(4)(b) – and I should go to that although this is ground 3 ‑ ‑ ‑

GORDON J:   I am happy for you to deal with ground 3, Mr Moore, but all I seek to make sure of is that I understand that this argument about physicality is actually – how it operates in the context of the service we are dealing with here and the way in which people, on the facts which are undisputed, access that service.

MR MOORE:   Yes.  Just to complete the point at the moment.  Subsection (4)(b) includes within its scope representations to the port authority that the person has functions.  In other words, it is a cost recovery mechanism whereby you can seek to recover from those who represent them.  They might have a function of the owner or accept an obligation to exercise those functions.

GAGELER J:   Mr Moore, what about 48(1)?  As I understand your submission, although section 48(1) brings within the definition of “owner” a person who owns the cargo, it is your position, as I understand it, that merely by reason of being the owner of the cargo, or some of the cargo that is on a ship is not enough to be somebody who seeks access to the shipping channels.

MR MOORE:   Of itself, no, although noting that in an FOB context Glencore does not own the cargo that is on the vessel because title has passed on the ship’s rail and we are dealing primarily here with the extension of this to Glencore in an FOB context.

GAGELER J:   On any view, there is not a perfect match between the State‑charging regime and the scope of the permissible arbitration.

MR MOORE:   I readily accept that, your Honour, and, indeed, that lies at the heart of our ground 3.  To say one does not derive simply from a State provision that provides who is responsible for a payment of a fee the statutory question that one has to address under Part IIIA as to who is accessing the service.

Now, notification of an access dispute is dealt with in section 44S at page 88 of the bundle of authorities.  Section 44S makes provision for the notification of an access dispute and the commencement of a bilateral compulsory arbitration by the ACCC between the facility owner or an operator, the provider, and the access seeker, the third party.  The scheme is what might be described as a negotiate/arbitrate model and that is because the provision commences by imposing a precondition:

If a third party is unable to agree with the provider on one or more aspects of access to a declared service –

So there has to be an inability to agree, it is a negotiation.  Then:

either the provider or the third party may notify the Commission in writing that an access dispute exists –

In this regard, can I turn briefly to the decision of this Court in BHP v National Competition Council 236 CLR 145, at paragraph 17, and that is in Part C or volume 3 of the joint bundle of authorities and the relevant paragraph is at page 387, being paragraph 17. In that decision, the Court observed that:

The consequence of a declaration of a service is that a “third party” –

being the person who wants access to the service:

is given what may be described as an enforceable right to negotiate access to the service.  The right to negotiate may be considered “enforceable” because, subject to constitutional limits . . . if a third party and a provider are unable to agree . . . the third party may notify the ACCC of the dispute . . . The ACCC then has the power to arbitrate such an access dispute -

Certainly what it means is that an access seeker has a right to treat with the access provider.  It follows that it is important, we submit, to be able to identify with some clarity who has that enforceable right to negotiate.  It is also important that the provider is able to ascertain with some clarity with whom do I have to treat a failure to ‑ ‑ ‑

STEWARD J:   Mr Moore, while you are in that territory, can I ask you this question.  Just think for the moment that “access” has the broader meaning that found favour below and which was suggested to you by Justice Gageler, so that you assume that Glencore has access to the shipping channels.  It is also unquestionably the case where coal is sold FOB that somebody is also seeking the very same access, the very same means, namely whoever is the operator of the vessel.

This is a private arbitration statutorily authorised between Glencore and the provider.  Is it your case that where there is somebody else accessing the regime in the same way, that Part IIIA, properly construed, would mandate that in order to deal with that party’s access they would need to be joined to the arbitration pursuant to section 44U and that is the proper way of dealing with their access and in this case their liability to pay the navigation charge?

MR MOORE:   Section 44U provides that the parties are the provider, the third party, which is simply the very person we are seeking to ascertain here, the access seeker, and any other person who applies in writing to be made a party and is acceptable as having a sufficient interest, but we would say that the fact that somebody could apply in writing to be made a party does not solve the difficulty that would arise if anyone who had an economic interest or commercial interest in the outcome of the arbitration could say, “I want to arbitrate the terms on which somebody else actively, in a physical sense, accesses this service”.

STEWARD J:   Well, that is why I asked.  Is…..where you are wanting to determine another person’s access.  The proper thing…..Part IIIA is you join them as a party.  You get them to come along to the…..

MR MOORE:   Yes, yes your Honour, and one of the difficulties we point to - it is one thing to talk about Glencore in this case and, indeed, our learned friends, or Glencore, make much of what they say is Glencore’s close connections with the Port, but if one adopts the definition that has been adopted by the Full Court, then people with different interests, and different economic interests, in various dependent markets, would then have an ability to notify an access dispute and have their own bilateral arbitration.

Your Honour is correct that if parties have an interest in such a bilateral arbitration by the access seeker, as we would say, properly defined, then they could apply to be a party under section 44U(c).  Glencore could apply to be a party to such an application, if Glencore had an interest in the terms on which the application was to be determined.

The reason that we are here, in a sense, one cuts to the practical chase, is that Glencore was the only party who notified a dispute during the period within which the service was declared and now that the service is no longer declared, there is no potential for other parties to notify disputes.

GORDON J:   Can I ask one other question about the framework, Mr Moore?

MR MOORE:   Yes, your Honour.

GORDON J:   Under 44S(2), on receiving the notification, the Commission itself makes an assessment of who, in effect, might be interested in the access dispute.  You have the provider, you have the access seeker, as you describe them, and then you also have:

any other person whom the Commission thinks might want to become a party to the arbitration.

MR MOORE:   Yes, your Honour.

GORDON J:   There are two questions.  Is it not, at the time of the access dispute, that the Commission itself turns its mind to that question, and, secondly, that might extend to, for example, the shippers of the FOB?

MR MOORE:   Well, it might, your Honour.  I agree, with respect, but it is also vital, for this scheme to work, that the ACCC is able to determine, with some clarity, who is the access seeker, because although other people can become parties, it is nevertheless a bilateral determination of rights between the access seeker and the access provider.  That is made plain by section 44B, which provides that a determination is a determination on access by the third party, in other words, the access seeker to the service.

It is not a determination on access by other people, and so it is necessary for the Commission to be able to identify, with clarity, who is entitled to commence this procedure, and who is entitled to have terms and conditions for their access, no one else’s, their access, determined.  One of the matters that we rely upon is that anyone with an economic interest can say, well, I am an access seeker, they can only determine the terms and conditions on their access.  They cannot, in effect, as a busybody, determine the terms and conditions of the access by the vessel.

Likewise, the provider has to know who is the person with the enforceable right, who is the person that I have to treat with, whose letter do I have to respond to and engage in the negotiation, or else they will be potentially turning up at the door of the ACCC with a notification of access dispute? 

Now, 44B, as I have just noted, provides that it must be determination on access by the third party to the service, and 44B(2) gives a breadth to deal with any matter relating to access, but subject to the important qualification, relating to access by the third party to the service, by the access seeker, including matters that were not the basis for notification on the dispute.

So that subsection does not permit one to deal with matters relating to access by some other person, and the determination may require the provider to provide access to the service by the third party, require the third party to accept and pay for access to the service, and so on.  Under section 44V(2)(c)…..may, and conventionally would, specify not just price but the terms and conditions of access.  An example of a determination by the ACCC is provided by the determination in the present case.  Can I just go to that briefly - it is in the core appeal book at page 143.

This was the determination by the ACCC.  It was modified in respect, you will see in a moment, by the Tribunal, but most of the terms remained unchanged.  So, without going through it or taking much time with it, one can see from the headings the type of matters that are dealt with - “Term”; “Backdating”; “Interest on backdated payment”; the scope of the determination; notification of an intention to use the service under clause 3.1; the “Price terms”; in clause 8, “Five‑yearly review”; what is described as a “True up” in clause 9; and then commencing in clause 10, some “Non‑price terms” such as invoicing, payment terms, and in clause 14, “Dispute resolution”.

So, unsurprisingly, there is not just a price determination, and the Full Court seemed to be very focused on determination of a price, but it is in fact determination of a potentially whole set of terms and conditions, and of course, in a given case, in access to a particular piece of infrastructure, the terms and conditions would include the manner of access.  It could provide, for example, priority access or times of access, or matters of that sort.

Indeed, someone might want to pay more for priority access and so the terms and conditions may reflect the particular value and the evidence that is put forward to the ACCC as to what should be the price for particular types of access.

GAGELER J:   Could one of the terms be that access is to be provided to the third party through a third party’s agent or special purpose corporate vehicle?

MR MOORE:   Pursuant to section 44B, it has to be accessed by the third party.  Of course, as I recognised earlier, third parties can act through - corporations may have to accept through agents.  So if you are talking about, for example, access to a site, yes that access could include access to an agent who has to in fact drive a car onto the site to take an easy example.

GAGELER J:   I am taking a harder example and that is a corporation within Glencore’s group, not Glencore the seller of coal.  Would that make a difference?

MR MOORE:   It would be permissible provided that it was Glencore that was accessing, by some recognised means, the service.  If Glencore, for example, was seeking access to vessels, then it may be that Glencore could provide that access by various means, but it would have to be Glencore accessing those services.  Your Honour has asked me could be some nominated person within the Glencore group and perhaps it could but provided it would be access by Glencore to the service.

That is not what is happening in the present case because all that is happening is Glencore is delivering coal to the Port, somebody else, being the customer, is arranging for collection of the coal at the Port.  That distinction is a material one for present purposes.  If one imagines a merchant who sells products online and offers delivery and sends out a van to deliver the package, that person is in a very different situation from a merchant who says, “I’ll sell you it but you can come and pick up the parcel at my door,” and the customer then drives over in a van to pick it up and it is tolerably clear that in the second situation the merchant is not accessing or using the van.

It is not helpful or accurate to say, as the Full Court effectively says here in paragraph 158, that the merchant is accessing the van when, by its online sale, it causes the van to arrive at its door.  One could equally say that delivery of the goods is not possible unless the van comes to the seller’s door.  But that is not informative of whether in fact the merchant on that example is using the van, accessing the van.

GLEESON J:   Mr Moore, what if the producer, here Glencore, had some elements of control over the ships - for example, it had stipulated rules about quality of ship or safety or turnaround time, would the question of access be kind of an evidentiary matter?

MR MOORE:   I think the answer to that question is yes, your Honour, one would have to look at what was the nature of the control over the ship.  Certainly, if Glencore is chartering a ship, for example, then Glencore would be accessing the service, and your Honour is putting to me, well, could there be relationships less than a charter, and that would be a factual inquiry.  But what it is not an inquiry on is simply saying, well, Glencore has an economic interest, financial interest, in the outcome of the export.

As I will come to, a great many people in the coal supply chain will have an economic interest in access.  One has a whole variety of dependent markets.  Somebody provides services to coal mines.  It is vitally dependent upon access being provided at the port.  If that access is not provided, their entire business ceases to exist.  They may even have an interest in the terms on which access is provided but that does not make them an access seeker within the statutory meaning.  The dispute ‑ where it really here arose because Glencore, of course, contended…..access…..all cases involved in the carriage of coal sold by Glencore.

Now, another provision that shed some light on the meaning of “access” is section 44ZO, which is at page 106 of the joint book of authorities, and that deals with the operation of final determinations and the timing of such operation.  In subsection (1), it provides:

If none of the parties to the arbitration applies to the Tribunal under section 44ZP for a review . . . the determination has effect 21 days after the determination is made.

But then provision is made in subsection (3) for backdating, which provides that:

a final determination may be expressed –

to provide – in effect, to operate from an earlier day.  Subsection (4) contains some limitations to that:

must not be earlier than –

the specified days in (a) and (b), if negotiation is commenced:

after the service became a declared service—the day on which the negotiations commenced –

and then at the very end of the section, subsection (4), it is provided that:

However, the specified day cannot be a day on which the third party did not have access to the service.

We would say that if one was simply dealing with economic access then it would be very difficult to ascertain what is the day on which a person had access to the service or did not have access to the service.

Now, as has been observed already, access to the shipping channels in the present case attracts a charge payable under the Ports and Maritime Administration Act and section 50 of that Act provides for the imposition of the navigation service charge.  If I can go to that briefly, it is at page 217 of the same volume:

A navigation service charge is payable in respect of the general use by a vessel of a designated port and its infrastructure –

apart from certain things, including the use of land‑based facilities or:

port access for cargo at the interface between the vessel and land‑based facilities for the purpose of stevedoring operations.

That is not within the conception of a navigation service charge.  The charge:

is payable on each entry by the vessel -

So one has to enter the port for the service to be payable and it is payable on the entry by the vessel and:

is to be calculated by reference to the gross tonnage of the vessel –

not the cargo.  The dispute in the present case concerned the quantum of the navigation service charge.  There was another charge, the wharfage charge, which is relevant, but importantly there was no dispute about that charge.  There was no section 44S notification of any dispute about the wharfage charge, which concerned a different function in the arbitration, and I will come to that.

STEWARD J: Mr Moore, just while you are in this territory, can I ask a very simple question, which may not matter one way or the other. What is the lawful basis for the Commission to determine a statutory State charge? I understand how it might determine as between private parties but is it as simple as section 109 of the Constitution, or what?

MR MOORE:   Would your Honour pardon me for one moment?  I am just having a section turned up, your Honour, which I think may address that.

STEWARD J:   You can answer it later on, if it helps.

MR MOORE:   Yes, I might take that on notice, because there is a provision, I understand, that deals with that.

STEWARD J:   This might be me being a busybody on this occasion.

MR MOORE:   No, not at all, your Honour, it is a relevant question.  I think the answer is provided by section 51, I apologise.

GORDON J:   It is 51(1), I think, is it not, Mr Moore?

MR MOORE:   That is right, your Honour, that:

The relevant port authority may fix navigation service charges.

So it gives, to my client, the discretion and ability to decide what the charge is, but then my client in turn is subject to the imposition of Part IIIA, in the same way that any infrastructure provider that is declared is subject to the operation of Part IIIA, which constrains their ability to set their own charges, including at levels involving monopoly pricing.

STEWARD J:   But does that mean that the Commission could not, for example, work out or determine a charge by a means other than by reference to gross tonnage?

MR MOORE:   It may have that consequence, yes.

STEWARD J:   All right, thank you.

MR MOORE:   Now, can I just note, for completeness, something, by going to a paragraph in a decision which is in Part D, volume 4 of the joint book of authorities bundle at page 555.  I do not need to say anything about this decision, which was an interlocutory – it was a decision of her Honour Justice Jagot in an interlocutory decision at the commencement of the process, but at paragraph [33], her Honour records the notification under section 44S, and as her Honour there records:

On 4 November 2016 Glencore notified the ACCC of an access dispute under s 44S(1).  In the notification Glencore sought arbitration by the ACCC on the “reasonable level of navigation service charges, and access terms, to be imposed by PNO on coal vessel users of the Service –

So it was a dispute about the navigation service charge, not any other charge, and Glencore expressly wanted determination of the charge to be imposed on what is described as:

coal vessel users of the Service ‑ ‑ ‑

GORDON J:   Just so that I am clear on the facts, Mr Moore, does that phrase “coal vessel users” include both CIF and FOB?

MR MOORE:   Yes.  Sorry, your Honour, I may need to clarify that answer.  By that I mean vessel carrying coal, whether the coal was sold either on an FOB basis or a CIF basis, yes, your Honour.

GORDON J:   That is correct, so when we are talking about coal vessel users, they are coal vessel users which both Glencore has chartered under CIF ‑ ‑ ‑ 

MR MOORE:   Correct.

GORDON J:   ‑ ‑ ‑ and FOB, where it has not chartered, but is selling free on board at the berth.

MR MOORE:   Yes, and your Honour is correct, with respect.  So from the outset, the dispute between the parties was, one, what is the quantum of the – appropriate quantum of the navigation service charge, but also, two, can Glencore through this means arbitrate the terms on which vessels that are not chartered by Glencore and which are simply vessels chartered by Glencore’s customers, or which the customer used to collect the coal when the coal was sold on FOB basis, are the terms on which those people accessed the service.

Now, the ACCC in its determination, and the Tribunal in its re‑determination, included that Glencore could not obtain a determination that simply applied to all shipments of Glencore coal regardless of who was undertaking the shipment, or who chartered the vessel that was accessing the shipping channels.  The ACCC, of course, has since changed its position following the decision of the Full Court, but both the ACCC and the Tribunal concluded that the scope of the determination should cover the terms of access when Glencore, either directly or by an agent, charters a vessel to enter the Port precinct and load Glencore coal.

The ACCC’s determination also included an extension to scope derived from the application of section 48(4)(b) of the Ports and Maritime Administration Act.  The Tribunal did not accept that extension, and the Full Court reinstated it, and that is the subject of the third appeal ground - I will come to that separately. 

The Full Court concluded that the arbitration should have a broader scope than that determined by the ACCC or the Tribunal.  Can I go to aspects of the Full Court’s reasons in that regard, and can I start with paragraph 46 on page 185, and there the court observed that:

the statutory authority to make a determination was not confined to the terms upon which the provider may be required to allow the third party to use the service . . . Rather, the language of these and other provisions of Part IIIA is consistently to the effect that the statutory focus is upon “access to the service”.  This language reflects the economic character of the legislation which his concerned with facilitating arrangements that will advance economic efficiency rather than simply facilitating the physical use of the facility.

Then, in 47:

a dispute as to commercial terms of access to the declared service sought by a particular third party for the purpose of securing the ability for another party to physically use the facility was within the scope of the statutory provision.

In 48, there was reference to the language of section 44V(2), that:

A determination could deal with “any matter relating to access”.

However, that observation, in the middle of paragraph 48, appeared to overlook the pattern that…..earlier, which is that section 44V(2) was limited to any matter relating to access of the third party, and that the section does not refer to or contemplate dealing with matters relating to access by some other persons.

GAGELER J:   Why is that?  Why can not one thing relate to another and relate to a third thing as well?  I mean, just as a matter of grammar, common usage, there is nothing in the language that makes it exclusive.

MR MOORE:   Well, it is not so much that it is exclusive, it is just that the breadth of the matters relating to access are matters relating to access by the third party, not, as the Full Court appeared to contemplate, particularly having regard to 47 and the relevant passage in 48, that it could be someone else’s use of the service.  So one still has to address the question of are we dealing with a matter relating to access by the third party.

GAGELER J:   If the answer to that is yes, then the fact that it might also relate to access by someone else cannot be determinative, can it?

MR MOORE:   I think I would have to accept that, your Honour, but not that it is connected to – the mere fact that one uses the word “relating” does not mean that one can determine access by third parties, and it must relate to access by the actual defined third party to the service, not some other person.

KIEFEL CJ:   Mr Moore, does your argument deny that Glencore obtains an economic benefit when it secures the ability of another party to physically use the facility?

MR MOORE:   No, our argument is simply that a mere economic benefit does not support a conclusion that Glencore is an access seeker.

KIEFEL CJ:   But it would support more generally notions of competition within markets.

MR MOORE:   Yes, it would, but it would do that for a potentially very wide range of people who might compete in various upstream markets, and we say the statutory scheme is not that or all of those multifarious people would be access seekers in respect of the vessel that is coming into the port.

KIEFEL CJ:   But within the market - I think you have identified that Glencore operates exporting coal - it would give it a benefit, give Glencore a benefit.

MR MOORE:   Yes, it could give Glencore a benefit under that market, except that – I will come to this in a moment – the determination decision turned on a particular construction of the criterion (a) and the Tribunal that concluded that the matter should be declared…..declaration would…..competition in any market.  That was because criterion (a) at that time required a comparison between access and no access and one could not have regard to the fact that the person was already obtaining access.

Criterion (a) has since been amended so that in fact now it requires consideration to what is the impact of declaration on competition and pursuant to that test the declaration was revoked, and it has not been able to be redeclared, consistently with the…..a declaration would not in fact promote competition in any relevant market.

We do draw attention to that because there is an aspect of the Full Court’s decision that seems to be driven by what is seen as the importance or need to ensure that Glencore has this access in order to promote competition in a downstream market and that was not the basis of the original declaration decision.  At paragraph 147 of the decision, just going to the Tribunal’s decision in 147 and 148, and then in 149 in the third sentence there is reference to the Tribunal paying:

little regard to the economic access or use of the channels as a necessary part of the export of coal.

Then at paragraph 155, the paragraph commences “Once one recognises” – picking up the reasoning from the earlier paragraphs at 46 to 48:

that the access or use is not limited in the physical way identified by the Tribunal . . . then the notion economic access or use will obtain equally whether by reason of Glencore selling on a CIF basis . . . or by reason of selling on an FOB basis . . . In each case its access and use is economic in that it does not physically control the vessel using the channels.  This is, with respect, entirely in accordance with the purpose of the declaration of the Service -

We would disagree with that description of what is occurring in respect of certainly some bases on which Glencore sells coal, but the issue in the present case was what is the scope of the determination insofar as it applies to Glencore selling coal on an FOB basis?  On that, it is clearly necessary to rely on some notion of economic access. 

We say this approach involves error, firstly because it does not conform to the natural and ordinary meaning of “access”; secondly, is intention with the legislative scheme which creates a bilateral arbitration model for the resolution of access disputes if potentially multiple parties with a mere economic interest could each determine the terms on which another person will use the declared service and you could have potentially multiple determinations in potentially inconsistent terms as to the terms and conditions of such access.

GORDON J:   Can I ask one practical question about that submission?

MR MOORE:   Yes, your Honour.

GORDON J:   Is that that you would have multiple parties applying to seek to determine the terms of other parties ‑ ‑ ‑

MR MOORE:   Yes.

GORDON J:   ‑ ‑ ‑ and how would the determination be drafted to effect that, and how would it bind the provider and the other party?

MR MOORE:   Well, that is the very difficulty, your Honour, that we say the Full Court did not grapple with, because if one has a determination – let us take an easy case of somebody who is controlling a ship and enters the port to collect coal and the determination sets the terms and conditions of that person’s access, and then another person says, well, I have an economic interest in those terms and conditions so I would like a determination in slightly different terms dictating the terms and conditions of that access.  There is no mechanism in the statutory scheme as to how one deals with those competing terms and conditions, and what the Full Court said in paragraph 151 at about line 40 was that:

the Port will, in effect, issue a ticket –

where Glencore is setting the terms and conditions:

for such ships to use the Port the cost of which will be borne by Glencore.

At 162 ‑ ‑ ‑

GORDON J:   Sorry, I keep interrupting I know, but just before I leave that, in a sense that is the proposition I put to you earlier this morning.  It seemed that the ticket idea was that Glencore was, in effect, paying the cost of the navigation service charge for the FOB - and I know you tell me that I am not to use the PMA but – not in a sense to drive the access question but it is a physical fact about how access is gained at this Port.  So the ticket idea was actually not a physical access, it was the right of access by the payment of a charge for FOB.

MR MOORE:   But as your Honour rightly put to me, even section 48 – we will come to the debate about (4)(b), but even section 48 was limited to circumstances that would not encompass Glencore simply determining the terms and conditions of someone else’s access, so this goes far beyond section 48(4)(b).  So what this is is some notion that by terms and conditions Glencore would get a ticket, an extra statutory notion which Glencore could then give to the benefit of the person who is actually navigating the shipping channel.  A further notion was set out in paragraph 162 at about lines 9 to 10:

another person who may have a right of access . . . and who may be subject to the NSC, can, through Glencore be given the ability or option of taking up Glencore’s arbitrated price.

The problem with that notion is the determination of terms pursuant to section 44V of the Act is not the comparing of an option, there is a binding arbitration.  So if the person who is using the channels as a determination of terms that apply to that use those are terms that are binding on PNO and binding on the user, and that is totally unclear, in our submission, how some other person could arbitrate different terms and then say, well, the person who is using the facility has the option of taking the alternative terms or, indeed, why that person has an option but PNO does not have any form of matching option.

These things are all outside the statutory scheme and underline the difficulties of simply saying that anyone who has an economic interest can…..arbitrate terms and conditions for someone else’s use.  Glencore, in its written submissions in this Court, perhaps recognising the width of the concept of economic interests, asserts at paragraph 39 of its written submissions that it is inaccurate to characterise Glencore as having a mere economic interest, and asserts that the need to use a facility will be considered “access” for the purposes of Part IIIA where, and they use this language, that use or access is required for a business to compete effectively in its relevant market.

A similar submission is made at paragraph 31 of the written submissions, and we say that, as well as having no grounding in the statute, that test is extremely difficult for either the access provider or the ACCC, who has to determine who is allowed to arbitrate these matters, is applying to.  Working out whether access is required for a business to compete effectively in its relevant market would ordinarily be a factual and analytical inquiry of considerable complexity, including, potentially, with the assistance of expert economists. 

Now, if I can go, in that regard, to the Competition Tribunal decision concerning the original declaration of this service - it is at volume 4 of the authorities, at page 504.  I am sorry, the technology has gone crazy at my end - can your Honours still hear me?

KIEFEL CJ:   Yes, we can, Mr Moore, but this might be an appropriate time for us to take the morning break.

MR MOORE:   Thank you.  Yes, may it please the Court.

AT 11.15 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.32 AM:

KIEFEL CJ:   Yes, Mr Moore.

MR MOORE:   Thank you, your Honour.  I was dealing just before the break with the argument or the suggested construction that use or access is required for a business to compete effectively in its relevant market and I was going to page 516 of the authorities bundle in volume 4 of Part D, which, at paragraph 37 of the original Tribunal decision declaring the service from 2016 identified five functionally distinct dependent markets relevant to access to the service which included the coal export market but included, for example:

(3)markets for the provision of infrastructure connected with mining operations including rail, road, power and water;

(4)markets for services such as geological and drilling services, construction, operation and maintenance ‑

and shipping services.  No doubt the very many participants in those diverse markets might very well say that their ability to compete effectively in their relevant market was dependent upon access.  We say that would impose a test of very uncertain content and application as to whether somebody is an access seeker.

While I am dealing with that decision, and I note that in paragraph 157 is the expression of the conclusion that if the criterion was dealing with what is the effect of declaration, then the Tribunal would not have been satisfied that increased access would promote a material increase in competition in the coal export market and it would follow the other four dependent markets.

Without taking the Court to it, can I provide a reference to the recent decision, Application by New South Wales Minerals Council (No  3) [2021]) A Comp T 4, which we provided separately to the Court because it was only decided last month, where the Competition Tribunal discussed the history of criterion (a) and its amendment.

That history included the conclusion of the Full Court in the Sydney Airport Corporation Case that the criterion required comparison between access and no access and thus, in effect, not having regard to whether access was in fact being provided absent declaration and that the criterion did not involve an inquiry about the effect of declaration and the Competition Tribunal discussed that at paragraph 41 of the decision and observed at paragraph 74 and following the conclusions of the original Tribunal decision, observing the Tribunal concluded that criterion (a) would not have been satisfied on the current approach, which is the reformed criterion (a) which now requires consideration being given effect.

The affected declaration is the decision in Sydney Airport which was also adopted by the Full Court in the Port of Newcastle Case.  A special leave application in that case was heard by this Court but by that time the legislation had been amended and leave was not granted.

GAGELER J:   Mr Moore, in paragraph 46 of that decision, an exposition of what the Tribunal says is now a relevant inquiry, was that controversial before the Tribunal in this matter?

MR MOORE:   No.

GAGELER J:   Thank you.

MR MOORE:   But we draw attention to that matter because we would say the supposed need for Glencore to have access to declared services, as opposed to access under the existing access regime at the Port, is certainly not a reason for construing the provisions in a way that we say goes beyond their ordinary meaning and operation.

That was one of the bases on which the Full Court seemed to give emphasis to the need to have a broad construction.  The second was simply a proposition that, because the legislation is a piece of economic legislation, that should lead to a broad construction, but the economic character of the legislation dealing with regulation of potential monopoly infrastructure is, we submit, served by ensuring that those who wish to access a service in the usual sense are able to do so, including by exercising their enforceable right of negotiation and that potential monopoly pricing is the subject of constraint.  It certainly does not require that every person who has a mere economic interest in the use by others is able to compel arbitrations on the terms of that use and, indeed, that is not likely to promote efficiency.

Can I turn to ground 2.  I can be shorter in relation to this ground.  Ground 2 concerned the question of whether, if a person is accessing the service in one respect, they can arbitrate the terms and conditions on which someone else is accessing the service in a different respect and in the present case this concerns the activities for which the wharfage charge was payable. 

That charge is a separate charge under the Ports and Maritime Administration Act.  It is dealt with at section 61 of that Act, at page 221 of the authorities bundle and it is payable in respect of the availability of a site at which stevedoring operations may be carried out.  Of course, I have already observed that section 50, the navigation service charge, carves out from its operation the use of land‑based port facilities and port access for cargo at the interface between the vessel and land facilities.

The wharfage charge received very little attention before the ACCC or the Tribunal for the simple reason that it was not the subject of any dispute between the parties and did not form part of the section 44S notification of a dispute.  It was relevant to the arbitration only in the sense that because the parties adopted a DORC approach to the valuation of the port depreciation optimised replacement cost, which was then used to produce some maximum allowable revenue, or MAR, that is, the amount you could charge each year based on the recoverable value of the asset, the amount payable in respect of the undisputed wharfage charge was then deducted which left the amount that was then attributable to the navigation service charge. 

GAGELER J:   Mr Moore, I am sorry, you took us earlier to the final determination made by the ACCC.

MR MOORE:   Yes.

GAGELER J:   It purports to determine a wharfage charge.

MR MOORE:   It does, and that was in effect not the subject of any dispute, but there is, in fact, a question as to whether it should have done that, because it was not the subject of an application, and it was not the subject of any dispute.  But what it needed to do was to deduct the wharfage charge from the allowable revenue to produce the navigation service charge.

GAGELER J:   Well, the dispute does not have to be as defined by the piece of paper that started it all off, does it?

MR MOORE:   Well, you do have to – because there is a precondition, there is a precondition which was that you failed to…..so that there is a gateway that you have to pass through, and you cannot pass through the gateway if you do not satisfy that precondition, and there was no dispute about wharfage charge.

example, Glencore in this case who actually bears the costs of the use of the Port, that actually serves to achieve the economic objectives of Part IIIA, whereas a narrow view which would tie the access just to physical access to somebody who maybe has no interest because they are in an economic position that they are able just to pass along the costs, that then undermines the ability of the Act to achieve its end and so we say that is significant.

Insofar as PNO say that one reason why a broader view is problematic is because there could be multiple different determinations and there is nothing in the legislation to identify how it works if there were multiple determinations.  We say that that is no different to ‑ if there are multiple pricing deeds where, for example, a shipowner might be able to engage under a pricing deed which has been agreed by a group of shipowners and a pricing deed which has been agreed by Glencore whose coal they are going to carry.

In both of those cases the person who is seeking access and who has a right to seek access under either of those deeds, they could simply rely upon the one that gives them the cheapest access.  That is exactly what PNO said in the case that they relied upon, in the New South Wales Minerals Council Case in paragraph 218.  That is their position and we say it is obviously right, that if there are multiple determinations, that is not a problem for the legislative scheme at all.  If somebody has an ability to access more than one determination then they are access seekers and they can rely upon whatever right they have under – if they have rights – multiple determinations.  That does not undermine, we say, the legislation.  It would support the…..consistent with the legislative outcomes.

May it please the Court, I see the time so I will not develop anything further.

KIEFEL CJ:   Thank you, Mr Lloyd.  Mr Moore, do you have anything in reply?

MR MOORE:   I do, if it please the Court.  Can I deal first with user contributions.  The submissions that have been made, principally by my learned friend, Mr Young, do not properly reflect what approach was taken by the Tribunal and, in particular, the suggestion the Tribunal excluded certain matters.

Can I go to the Tribunal decision.  The Tribunal was dealing, firstly, with a methodology, the DORC methodology, which is designed to look at efficient pricing.  At 278, a paragraph emphasised by my learned friend, Mr Lloyd, the Tribunal concluded that excluding assets:

from the DORC is . . . equivalent to deciding that not all the assets are required to provide the Service.

That aspect of the reasoning was adopted by the Full Court at paragraphs 177 and 178 where their Honours observed:

There is no demonstrated basis for conceptual validity in a measure that uses a DORC approach, but removes some of the cost to reflect the actual circumstances.

Because then you are not conducting a DORC valuation, you are not then looking at what would be an efficient non‑monopoly cost of providing the particular assets.  As their Honours observe at 178:

there has not been shown to be any error in that aspect of the Tribunal’s approach which involved a determination of the DORC value without regard to user contributions.  Therefore, it is not necessary to consider whether any such error might have been properly characterised as an error of law . . . It is simply not an error in approach.

The debate occurred at what is really the next stage.  Having worked out what is the efficient price of calculating for the use of these assets, should there nevertheless be some deduction from that price to reflect on some different basis the fact that there might have been some user contributions.  In that respect, the Tribunal in passages commencing at around paragraph 309, observed in an analysis that takes place over a number of pages that one really needs to look at the circumstances in which such contributions would be made.

For example, if somebody, in effect, enters into an arrangement with the State whereby they funded some aspect of an asset but obtained discounted or free access in return, on terms where that asset would then pass back to the State, it would be an extreme proposition to say that the State which then retained the ownership of the asset was unable to charge that asset to any person at any point in the future.

The Tribunal observed in a number of paragraphs that one would need to know what were the circumstances in which those contributions were made.  That was particularly relevant in the case of the channel‑deepening project where the State issued a levy but where the Tribunal found that at relevant times there was significant under‑recovery of charges.  So if somebody is getting access worth, say, $10 for $1 and then you impose a levy of $2 and then they are getting access worth $10 or $3 how is it relevantly to be said that they are user contributions, or they have funded an asset such that the State cannot recover things forevermore.

That was the debate that the Tribunal was dealing with, and in the conclusion that the Tribunal reached commencing at around 357 and 358.  Picking up – and consistent with the question your Honour Justice Gageler asked earlier – what, in effect, does it matter who contributed what?  What is the efficient pricing for the provision of an asset?  The prices should reflect the costs of assets whether through the DORC or some other approach and the hypothetical entrant would need all the assets to provide the declared service and require a return on the assets.

Then in 360 through to 365 the Tribunal noted that if one was going to make adjustments of the sort contended by the ACCC or Glencore for user contributions one would need to know something about the circumstances in which those were made and at 365 observed that there was no material before the Tribunal from which such adjustments could be made.

The contention of the ACCC in its original determination and Glencore throughout these proceedings has been a different one, which is that the mere fact that…..has been made regardless of the circumstances would require some deduction and some adjustment, and that was put on the basis that that was what was required by section 44X(1)(e) and, ultimately, that that was what was required by the pricing principles.

It was that matter which the Full Court was dealing with, and in the Full Court the conclusions at paragraph 288, which we complain about, the Full Court says that:

s 44X(1)(e) requires that there be regard to the value to the provider of extensions whose cost is borne by someone else.  It is not concerned with whether there were other aspects of the past that might have provided some benefit to the provider.

In other words, it appears to be accepting this contention that one simply looks at is there a contribution in fact regardless of the circumstances in which the contribution has been made.

Now, in relation to 44X(1)(e), as your Honour Justice Steward observed, the word used is “extensions”, it is not simply assets or contributions, and one has to understand that term in light of the scheme that applies in section 44V and section 44W and we submit that when the Court reads those sections together one will see that clearly they are dealing with a particular type of thing, being the extension made pursuant to a determination, and that explains the additional words in 44X(1)(e), including:

expansions of capacity and expansions of geographical reach –

picking up precisely the wording used in section 44V(2A).  Further it would be a curious thing indeed if the words “is borne” would somehow apply to something that was, in effect, expensed a very long time ago and then that led my learned friend, Mr Lloyd, to talk about, in effect, perpetual costs.  This is the first time we have heard of a notion of perpetual costs but it is not a coherent concept and, in fact, it is clear that 44X(1)(e) is not well adapted to dealing with matters of that sort.

So there is no mandatory requirement to take into effect the mere fact of a contribution regardless of the circumstances.  The Tribunal was engaged in a more sophisticated and nuanced examination.  The Full Court found that 44X(1)(e) mandated that requirement and we submit that 44X(1)(e) has not directed that that type of situation at all.

A submission was made that the DORC methodology was not a forward‑looking methodology.  In this regard can I refer to what the Tribunal said at paragraph 185 of its decision which referred to the observations of the – in the decisions of the East Australian Pipeline Cases:

the DORC methodology is a forward‑looking methodology in the sense that it considers the replacement cost of the asset using modern technology under modern conditions.

What it is not doing is looking at who or which costs in the past and in particular whether those costs are properly to be recovered.  It sidesteps all of those complex historical questions by simply finding out what is a competitive price for the use of the particular asset, being of course the asset that is now in the hands of PNO and which PNO could properly charge for and would be able to charge for in a competitive market.

By those means, I think I have also addressed the criticism to ground 5.  The point that we make is that the direction by the Full Court to not take into account various matters is inconsistent with the proper need to examine, if one was to have regard to the circumstances at all, the way in which the relevant expenses have been incurred.

Can I then turn briefly to the first grounds, grounds 1 to 3.  My learned friend, Mr Young, identified a contractual supply chain that included the railway line at the coal terminal.  In each case those activities were activities carried out on behalf of Glencore pursuant to a contractual arrangement.  However, we submit that…..which was somewhat buried by the analysis between those types of activities and what occurs once the coal passes the ship rail pursuant to an FOB contract. 

In the latter case what happens thereafter is not carried out on behalf of Glencore.  Glencore has no involvement in it or responsibility for it and it is activity conducted without any ongoing contractual relationship with Glencore.  Glencore does not enter into any relevant markets for the supply of shipping services, to pick up a point that your Honour Justice Gordon identified earlier on today, and Glencore does not pay for the service under section 48 either.

Therefore, in what sense pejoratively speaking is Glencore accessing that service?  What is the definition of “access” that will operate in all of the provisions of Part IIIA including where determining if access is hindered or identifying the day on which a person obtains access, if one is dealing with a type of access where in effect there is no involvement, no payment, no responsibility? 

Your Honour Justice Steward’s question about the destination port highlights this aspect, that what is the dividing line between the activity that ceases at the port rail – at the ship’s rail, sorry, which is Glencore thereafter has no responsibility for the carriage of the freight and any activity from that point onwards out of the Port into the foreign port?

Now, of course, the test cannot just be that Glencore obtains a benefit, because a potentially very long list of people may benefit in a variety of markets.  Glencore have pointed to other features such as economic burden, but without specifying if any of those are mandatory criteria for access.

Of course, my learned friend, Mr Young, could not identify any case where access to a service has been provided in a non‑physical sense, let alone in a sense where the access seeker has no involvement whatsoever in the activity the subject of the declaration, and therefore it is analogous to my example of the merchant who sells goods to be picked up, for example, by a customer, using a courier service.  No indicia are present that might suggest access, in even the broadest sense.  The merchant does not contract for it, they do not pay for it, they are not responsible for it in any way, they cannot direct its activity, it is not part of the transaction, and they do not enter any relevant market for that particular service.

We say, in what sense, again, rhetorically, does therefore the merchant access the service?  The present situation is analogous.  It is not really an answer, in our respectful submission, to say each case turns on its facts, because it has to be clear who has the enforceable right and what are the indicia that attract that enforceable right and the ability to arbitrate pursuant to section 44S and the subsequent provisions.  May it please the Court, those are the submissions for PNO.

KIEFEL CJ:   Yes, thank you.  The Court reserves its decision in this matter and adjourns to 10.00 am tomorrow.

MR MOORE:   May it please the Court.

AT 4.24 PM THE MATTER WAS ADJOURNED