The Pilbara Infrastructure Pty Ltd v Brockman Iron Pty Ltd [No 2]

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: THE PILBARA INFRASTRUCTURE PTY LTD -v- BROCKMAN IRON PTY LTD [No 2] [2014] WASC 345

CORAM: EDELMAN J

HEARD: 18 - 20 AUGUST 2014

DELIVERED : 26 SEPTEMBER 2014

FILE NO/S: CIV 2512 of 2013

BETWEEN: THE PILBARA INFRASTRUCTURE PTY LTD
Plaintiff
AND
BROCKMAN IRON PTY LTD
First Defendant
ECONOMIC REGULATION AUTHORITY
Second Defendant

Catchwords:

Statutory interpretation - Implications into regulations - Meaning of s 8 of the Railways (Access) Code 2000 (WA) - Whether implication should be made that a proposal is 'genuine' - Whether proponent must have a real intention to use and promise to use railway infrastructure - Whether proposal must be made for a sole subjective purpose of carrying on rail operations - Whether proposal must be for a sole subjective purpose of carrying on rail operations - Whether proposal must be for immediate access - Degree of precision that is required in a proposal for indication of times for access - Whether there is a requirement that proponent have a genuine intention to negotiate or a genuine intention to make an agreement

Legislation:

Economic Regulation Authority Act 2003 (WA)
Evidence Act 1995 (Cth)
Interpretation Act 1984 (WA)
Railway and Port (The Pilbara Infrastructure Pty Ltd) Agreement Act 2004 (WA)
Railways (Access) Act 1998 (WA)
Railways (Access) Code 2000 (WA)

Result:

Action dismissed

Category: B

Representation:

Counsel:

Plaintiff:     Mr B Dharmananda SC, Mr M J Feutrill & Mr C P K Russell
First Defendant             :     Mr B J A Coles QC & Mr K J Mony De Kerloy
Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Allen & Overy
First Defendant             :     Herbert Smith Freehills
Second Defendant         :     State Solicitor for Western Australia

Cases referred to in judgment:

A & S Ruffy Pty Ltd v Federal Commissioner of Taxation [1958] HCA 18; (1958) 98 CLR 637
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 2
Allen v Flood [1898] AC 1
Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10; [2009] 1 WLR 1988
Benedetti v Sawiris [2013] UKSC 50; [2013] 3 WLR 351
Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336
Carr v Western Australia [2007] HCA 47; (2007) 232 CLR 138
Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378
Collector of Customs v Agfa‑Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389
Collector of Customs v Pozzolanic Enterprises Pty Ltd [1993] FCA 322; (1993) 43 FCR 280
Commonwealth Bank of Australia v Barker [2014] HCA 32
Construction Forestry Mining and Energy Union v Mammoet Australia Pty Ltd [2013] HCA 36; (2013) 248 CLR 619
Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5; (2000) 199 CLR 135
De Gruchy v The Queen [2002] HCA 33; (2007) 211 CLR 85
Director of Public Prosecutions (Nauru) v Fowler [1984] HCA 48; (1984) 154 CLR 627
Dodd v Tamigi [2008] WASCA 21
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471
Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 246 CLR 498
Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 87 ALJR 98
Forge v Australian Securities and Investments Commission [2004] NSWCA 448; (2004) 213 ALR 574
Inco Europe Ltd v First Choice Distribution (a firm) [2000] 2 All ER 109; [2000] 1 WLR 586
IW v City of Perth [1997] HCA 30; (1997) 191 CLR 1
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Lane v Registrar of Supreme Court (NSW) [1981] HCA 35; (1981) 148 CLR 245
Marshall v Watson [1972] HCA 27; (1972) 124 CLR 640
Martin v Federal Commissioner of Taxation [1953] HCA 100; (1953) 90 CLR 470
Mayor of Bradford v Pickles [1895] AC 587
Minister for Immigration and Citizenship v SZJGV [2009] HCA 40; (2009) 238 CLR 642
Netglory Pty Ltd v Caratti [2013] WASC 364
Newcastle City Council v GIO General Ltd [1997] HCA 53; (1997) 191 CLR 85
News Ltd v South Sydney District Rugby League Football Club Ltd [2003] HCA 45; 215 CLR 563
Plaintiff M70/2011 v Minister of Immigration and Citizenship [2011] HCA 32; (2011) 244 CLR 144
Purvis v New South Wales [2003] HCA 62; 217 CLR 92
R W Miller & Co Pty Ltd v Krupp (Australia) Pty Ltd (1991) 34 NSWLR 129
Rajski v Carson (1988) 15 NSWLR 84
Rala Information Services Pty Ltd v Australian Trade Commission [1997] FCA 805; (1997) 78 FCR 46
Re Michael; Ex parte Epic Energy (WA) Nominees Pty Ltd [2002] WASCA 231; (2002) 25 WAR 511
RFD Ltd v Harris [2008] WASCA 87
Schellenberg v Tunnel Holdings Pty Ltd [2000] HCA 18; (2000) 200 CLR 121
Taylor v Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 306 ALR 547
The Commissioner for Corrective Services v RAJ [2014] WASC 338
The Owners of the Ship 'Shin Kobe Maru' v Empire Shipping Company Inc [1994] HCA 54; (1994) 181 CLR 404
The Pilbara Infrastructure Pty Ltd v Brockman Iron Pty Ltd [2014] WASC 286
The Pilbara Infrastructure Pty Ltd v Economic Regulation Authority [2014] WASC 346
Wentworth Securities Ltd v Jones [1980] AC 74
Western Bank Ltd v Schindler [1977] Ch 1
Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509
X v Australian Prudential Regulation Authority [2007] HCA 4; (2007) 226 CLR 630

Texts cited:

Ekins R, The Nature of Legislative Intent (2012)

Finnis J, Intention and Identity: Collected Essays: Volume II (2011)

Hayne K, 'Statutes, Intentions and the Courts: What Place does the Notion of Intention (Legislative or Parliamentary) Have in Statutory Construction?' (2013) 13(2) Oxford University Commonwealth Law Journal 271

Heydon J D, Cross on Evidence (9th ed, 2013)

Table of Contents

Introduction
The central Code provision relevant to this litigation: section 8
The scheme of the Railways (Access) Act 1998 (WA) and the Code

The Railways (Access) Act 1998 (WA)
The Code

The rationale of the Act and the Code
The facts and the foundation of TPI's case

Chronology of relevant facts
The Marillana Project's obstacles as at 15 May 2013
Brockman Iron's motive and intention in making the access proposal

Motive to obtain commercial rail haulage terms
Motive to negotiate for a favourable access agreement
Intentions of Brockman Iron

The detail of the proposal by Brockman Iron
TPI's case

Issue 1 (Intention to use and promise to use)
Issue 2 (Sole purpose)
Issue 3 (Real and genuine intention to negotiate and timing)

Issue 1: Intention to use and promise to use

The manner in which the case was pleaded and run
The obstacles to TPI's 'construction'

The first obstacle: no textual basis for the requirements
The second obstacle: no occasion to fill a gap in the legislation
The third obstacle: the lack of clarity of any implication
The fourth obstacle: the impossibility of determining the relevant intention
The fifth obstacle: inconsistency with other provisions of the Code
The sixth obstacle: the economic inefficiency of TPI's implications
The seventh obstacle: the impossibility TPI's approach creates for the Regulator

Conclusion on issue 1

Issue 2: Sole purpose

The obstacles to TPI's construction

The first obstacle: the language of s 8(2)(b)
The second obstacle: the language of s 36(2)(b) of the Code
The third obstacle: confusion of motive and purpose
The fourth obstacle: the impossibility of TPI's approach for the Regulator
The fifth obstacle: provisional findings on the evidence

An abuse of process submission
Conclusion on issue 2

Issue 3: Real and genuine intention and timing

Sub-issues (i) and (ii): A genuine intention to negotiate or to make an agreement

The first obstacle: no textual basis for the requirements
The second obstacle: no gap in the Code
The third obstacle: the lack of clarity of any implication
The fourth obstacle: inconsistency with other provisions of the Code
The fifth obstacle: the impossibility TPI's approach creates for the Regulator
The sixth obstacle: provisional findings on the evidence

Sub-issue (iii): A requirement of clarity

The first obstacle: the text of s 8(3)(b)
The second obstacle: the text of other Code provisions
The third obstacle: the unworkability of a requirement for precision
The fourth obstacle: the information in the proposal

Sub-issue (iv): A requirement of immediacy?

The first obstacle: every proposal relates to a future use
The second obstacle: the problem of implication
The third obstacle: the uncertainty of the proposed implication
The fourth obstacle: an error in TPI's premise
The fifth obstacle: inconsistency with other provisions of the Code

Conclusion on issue 3

Conclusion
Appendix 1: Admissibility rulings

1. Admissibility of expert reports

(i) Ms Jaffer
(ii) Mr Andrawes, Mr Walker, and Mr Schepis

2. Admissibility of documents in the trial bundle
3. My approach to the inadmissible evidence in these reasons

EDELMAN J:

Introduction

On 15 May 2013, the first defendant, Brockman Iron, submitted a 200‑page document entitled 'Proposal for Access to Part of TPI Below Rail Infrastructure'.[1] Brockman Iron's proposal was for access to rail infrastructure owned by the plaintiff, TPI.
[1] Exhibit 1/133.
This trial and the related judicial review application[2] were concerned with issues arising from Brockman Iron's proposal. Although thousands of pages of evidence and submissions raised numerous factual and legal issues, the overarching question in this trial can be stated shortly: was the 'proposal' a valid proposal within the meaning of the Railways (Access) Code 2000 (WA)? If it was not a valid proposal then TPI will have no obligation under the Code to negotiate with Brockman Iron concerning access by Brockman Iron to TPI's rail infrastructure.
[2] The Pilbara Infrastructure Pty Ltd v Economic Regulation Authority [2014] WASC 346
The related judicial review application, for which my separate reasons are also published today,[3] concerned the floor and ceiling prices that will structure any negotiations conducted under the Code. The Economic Regulation Authority (the Regulator) made a determination of floor and ceiling prices for Brockman Iron's proposed access. In the judicial review application TPI says that the Regulator erred in its calculation of the ceiling price by an amount which, over the proposed life of access, is more than $2 billion. Brockman Iron appeared but did not play any active part in the judicial review proceedings. The Regulator played an active part in the judicial review application but did not play any active part in the trial which is the subject of these reasons.
[3] The Pilbara Infrastructure Pty Ltd v Economic Regulation Authority [2014] WASC 346.
One of the sources of TPI's complaints in this trial is that Brockman Iron's proposal for access was only one of a number of possible solutions that Brockman Iron contemplated for the transport of iron ore from its Marillana mine to the Port Hedland port. The proposal for access considered by Brockman Iron involved access to TPI's rail infrastructure using Brockman Iron's or a third party's rolling stock. A second possibility was a commercial haulage agreement with companies including the parent company of TPI. A commercial haulage agreement would involve another company using its own rail facilities and rolling stock to transport Brockman Iron's iron ore. A third possibility was Brockman Iron obtaining its own railway, probably in conjunction with other companies (described as the East Pilbara Independent Railway Alliance). Each of these possibilities faced significant hurdles.
The core of TPI's case was essentially that the hurdles for an access agreement were so great, and the prospect of Brockman Iron being in a position to enter into an access agreement was so slim, that Brockman could not have intended to enter into an access agreement or even to enter into negotiations. TPI also alleged that Brockman Iron had impermissible motives (described as a purpose) in making its proposal. Those motives were said to be Brockman Iron's desire to gain leverage for negotiations for a commercial haulage agreement with TPI's parent.
My ultimate conclusion is that Brockman Iron made a valid proposal. For a number of reasons I reject each of TPI's submissions. The most basic reason for my conclusion is that TPI's proposed construction of each of the relevant clauses of the Code involves a near‑complete rewriting of the clause. As Brockman Iron succinctly summarised the point in written closing submissions, TPI's position essentially involved the relevant clauses to be read as if the following underlined words were included with the existing statutory text and definitions in plain text:
Section 8(1):
Only a corporation, partnership, trustee or other person who has and identifies genuine requirements for actual use of railway infrastructure and who is in a position to make, and who is genuinely prepared to make, an immediately binding and definite commitment for the definite actual use of railway infrastructure may make to the railway owner a proposal for an agreement which, if made, will embody on the part of the proponent, a definite intention to use and definite promises for the use of railway infrastructure by the corporation, partnership, trustee or other person commencing within 12 months of the proposal.
Section 8(2)(b):
A proposal can be made by an entity for the genuine purpose of carrying on rail operations under a binding access agreement made under the Code which is for the actual use of the railway infrastructure commencing within 12 months of the proposal, and for no other purpose and any proposal which is motivated by other subjective intentions or purposes of any one or more of the entity's directors (such as the purpose of obtaining information from the railway owner, reserving capacity for possible future use of the route or using a proposal as a means of pressing or encouraging a railway owner to enter into a different agreement to an access agreement) is invalid.

The central Code provision relevant to this litigation: section 8

The provision of the Code which is central to this litigation is s 8.
Section 8(1) of the Code provides that an entity 'may make to the railway owner a proposal in writing for access by the entity'.
Section 8(2) provides that a proposal can be made -
(a) only in respect of a route to which this Code applies; and
(b) for the purpose of carrying on rail operations, and for no other purpose.
Section 8(3) provides that the proposal must -
(a) specify the route, including the railway infrastructure, to which access is sought; and
(b) indicate the times when the access is required; and
(c) set out the nature of the proposed rail operations; and
(d) be accompanied by a notice in writing of the proponent's intention to enter into negotiations for an access agreement under this Code.

The scheme of the Railways (Access) Act 1998 (WA) and the Code

The Railways (Access) Act 1998 (WA)

On 11 April 1995, the Commonwealth of Australia and the States and Territories entered the Competition Principles Agreement. The purpose of the Competition Principles Agreement was set out in the preamble. The preamble explained that the Council of Australian Governments had agreed to the principles of competition policy articulated in the report of the Hilmer Committee, the National Competition Policy Review. It said that the parties intend to achieve and maintain constant and complementary competition laws and policies which will apply to all businesses in Australia regardless of ownership.
Clause 6 of the Competition Principles Agreement is entitled 'Access to Services Provided by Means of Significant Infrastructure Facilities'. That clause provided that a State or Territory may provide a facility concerning an access regime to significant infrastructure facilities where
(i) it would not be economically feasible to duplicate the facility;
(ii) access to the service is necessary in order to permit effective competition in a downstream or upstream market; and
(iii) the safe use of the facility by the person seeking access can be ensured at an economically feasible cost and, if there is a safety requirement, appropriate regulatory arrangements exist.[4]
[4] Competition Principles Agreement, 11 April 1995, as amended, cl 6(3).
The Competition Principles Agreement provided in cl 6(4) that a State or Territory access regime should incorporate principles including that:
(a)Wherever possible third party access to a service provided by means of a facility should be on the basis of terms and conditions agreed between the owner of the facility and the person seeking access.
(b)Where such agreement cannot be reached, Governments should establish a right for persons to negotiate access to service provided by means of a facility.
(c)Any right to negotiate access should provide for an enforcement process.
(d)Any right to negotiate access should include a date after which the right would lapse unless reviewed and subsequently extended; however, existing contractual rights and obligations should not be automatically revoked.
(e)The owner of a facility that is used to provide a service should use all reasonable endeavours to accommodate the requirements of persons seeking access.
The approach taken in the Railways (Access) Act 1998 (WA) (the Act) to implement the Competition Principles Agreement is an approach of 'agreement or arbitration'.[5]
[5] See especially Railways (Access) Act 1998 (WA) s 4(2).
The Act in its long title provides that its purposes are
providing for the establishment of a Code governing the use of certain facilities for rail operations by persons other than their owners;
conferring on the Economic Regulation Authority monitoring, enforcement and administrative functions for the implementation of the Code; and
specifying the kind of arrangements that railway owners are to have in place for the purposes of that implementation[.]
The railway infrastructure to which the Act applies includes the railway owned by TPI and any new railway which is connected to it and declared by the Minister to be part of the railways network.[6] Section 2A of the Act provides that the main object of the Act is to
establish a rail access regime that encourages the efficient use of, and investment in, railway facilities by facilitating a contestable market for rail operations.
[6] Railways (Access) Act 1998 (WA) s 3(2) ('railways network', 'TPI Railway and Port Agreement'), s 4(2)(b), s 5.
Section 4(1) provides that the Minister is to establish a Code in accordance with the Act to give effect to the Competition Principles Agreement in respect of railways to which the Code applies.
Section 4(2) provides that provision is to be made for a number of matters in the Code including:
(a)for railway infrastructure to be available for use by persons other than the railway owner to carry on rail operations in accordance with -
(i)agreements with the railway owner; or
(ii)determinations made by way of arbitration;
(b)prescribing -
(i)which parts of the railways network; and
(ii)which railway infrastructure associated with those parts,
are to be so available;
(c)setting out -
(i)provisions that are to govern the content of agreements and determinations referred to in paragraph (a);
(ii)rights, powers and duties that are to apply to and in relation to the negotiation, making, and implementation of agreements; and
(iii)duties and requirements in relation to the provision of access that are to be complied with by the railway owner;
and
(d)for the Regulator to have supervisory and other functions for the purposes of the Code, including a function of determining certain requirements in relation to access that are to be binding on the railway owner, a person making a proposal for access under the Code, and an arbitrator.
The Regulator is defined in s 3(1) of the Act as the 'Economic Regulation Authority established by the Economic Regulation Authority Act2003 [(WA)]'.

Part 5 of the Act is concerned with enforcement and includes s 35 which provides that nothing in pt 5 affects the enforcement of an access agreement as a contract, or the availability of damages for a breach of the agreement. In contrast with the preservation of potential claims for damages for a breach of an access agreement, s 36(1) of the Act provides that a breach of obligations imposed by the Code does not give rise to an action for damages (although injunctions can be sought under s 37).
Section 20(1) of the Act provides that the Regulator is responsible for monitoring and enforcing compliance by railway owners with the Act and the Code, and also has the functions given by particular provisions of the Act and Code. Those functions include the obligation upon the Regulator to take a number of matters into account in performing its functions under the Act or the Code. Those matters include the economically efficient use of the railway infrastructure.[7]

The Code

[7] Railways (Access) Act 1998 (WA) s 20(4)(g).

The Code commenced operation on 1 September 2001.[8] The Code applies to railway routes, including rail infrastructure owned by TPI.[9]
[8] See Railways (Access) Code 2000 (WA) s 2; Government Gazette of Western Australia, 28 August 2001, page 4795.
[9] Railways (Access) Code 2000 (WA) sch 1, item 52; Railway and Port (The Pilbara Infrastructure Pty Ltd) Agreement Act 2004 (WA).
The Code expressly permits the parties to choose to negotiate an agreement for access otherwise than under the Code. If they do so then nothing in the Code applies to or in relation to the negotiations or any resulting agreement.[10]
[10] Railways (Access) Code 2000 (WA) s 4A(1).
In very broad terms, and omitting considerable detail, the manner in which the Code regime operates involves the following key steps.
(1)The owner publishes information. The railway owner must publish required information concerning its standard access agreement and matters such as a map showing the geographical description of the railway network, and details concerning the route sections of the railway network including matters such as track and formation characteristics, running times of existing trains, and total gross tonnage of all trains operated in a particular period (gross tonnage meaning the total of the weights of the rolling stock of the train and of the freight carried).[11]
(2)A proponent can request further information from the owner. An entity that is interested in making a proposal in respect of a particular route may ask the railway owner in writing to provide the entity with information including an initial indication of the current available capacity of the route, the price that the entity might pay for access and the terms, conditions and obligations that the railway owner would want to be included in any access agreement. A very short time period, 14 days, is provided for the railway owner to respond to this request.[12]
(3)A proponent can make a proposal. An entity may make to the railway owner a proposal in writing for access by the entity. There are requirements for the subject matter of the proposal, the purpose of the proposal, and other matters that must be contained within the proposal.[13]
(4)The owner can require proof of various matters. Within seven days after a proposal is received the owner must acknowledge receipt of it.[14] The owner must also inform the proponent whether the owner requires the proponent to show that (1) the proponent has the managerial and financial ability to carry on the proposed rail operations,[15] and (2) the proponent's operations are within the capacity of the route or expanded route.[16]
(5)The proponent may withdraw the proposal. Withdrawal must occur prior to a referral to arbitration, but otherwise a proponent may withdraw a proposal at any time before entry into an access agreement.[17]
(6) Arbitration concerning compliance with proof required by the railway owner. An arbitration will be held between the parties if there is a compliant proposal,[18] and the railway owner has notified the proponent that it is not satisfied of all of the matters in s 14 and s 15 of the Code (see point (4) above), and the proponent notifies the railway owner that there is a dispute between them in relation to whether the railway owner's notice is justified.[19]
(7)The railway owner must negotiate in good faith with the proponent. The obligation to negotiate is subject to the proponent providing proof of the matters in point (4) above[20] or determination by an arbitrator that the requirements of s 14 and s 15 of the Code have been met.[21] It also does not arise until the proponent notifies the railway owner of the proponent's readiness to begin negotiations.[22]
(8)Proponent can refer to arbitration if the railway owner refuses to negotiate or negotiations fail. The proponent can refer a dispute with the railway owner to arbitration in various circumstances.[23] Those circumstances include if the proponent has made a compliant proposal and either (i) the railway owner refuses to negotiate,[24] or (ii) there is no agreement by the termination date for negotiations on the provisions to be contained in an access agreement,[25] or the parties jointly declare before the termination day that negotiations have broken down.[26] The determination in the arbitration may deal with any matter relating to use by the proponent of the railway infrastructure[27] and may require the proponent to 'use, and pay for, railway infrastructure'[28] and may 'specify the terms and conditions on which the other party may use railway infrastructure'.[29]
(9)Termination of arbitration if proponent's referral was vexatious, dispute is lacking in substance or proponent has not engaged in negotiations in good faith. The arbitrator can terminate an arbitration at any time, without making a determination if, at any time, the arbitrator thinks that either (i) the referral was vexatious, (ii) the subject matter of the dispute is trivial, misconceived, or lacking in substance, or (iii) the proponent has not engaged in negotiations in good faith.[30]
(10)Proponent may elect not to give effect to the arbitrator's determination. The proponent may elect not to give effect to an arbitrator's determination within 14 days of being notified of the determination.[31]
[11] See Railways (Access) Code 2000 (WA) s 6, s 7A ‑ s 7E, sch 2.
[12] Railways (Access) Code 2000 (WA) s 7(1), s 7(2).
[13] Railways (Access) Code 2000 (WA) s 8.
[14] Railways (Access) Code 2000 (WA) s 9(1)(a).
[15] See Railways (Access) Code 2000 (WA) s 14.
[16] See Railways (Access) Code 2000 (WA) s 15.
[17] Railways (Access) Code 2000 (WA) s 9A.
[18] Railways (Access) Code 2000 (WA) s 25(1)(b).
[19] Railways (Access) Code 2000 (WA) s 18, s 25(2)(b).
[20] Railways (Access) Code 2000 (WA) s 13(2)(a).
[21] Railways (Access) Code 2000 (WA) s 32.
[22] Railways (Access) Code 2000 (WA) s 13(2)(b), s 19(3)(b).
[23] Railways (Access) Code 2000 (WA) s 26(1).
[24] Railways (Access) Code 2000 (WA) s 25(2)(a).
[25] Railways (Access) Code 2000 (WA) s 25(2)(c)(i).
[26] Railways (Access) Code 2000 (WA) s 25(2)(c)(ii).
[27] Railways (Access) Code 2000 (WA) s 33(2)(a).
[28] Railways (Access) Code 2000 (WA) s 33(3)(b).
[29] Railways (Access) Code 2000 (WA) s 33(3)(c).
[30] Railways (Access) Code 2000 (WA) s 35.
[31] Railways (Access) Code 2000 (WA) s 34(2).

The rationale of the Act and the Code

An expert report was given by Ms Jaffer on instructions from TPI.[32] For the reasons explained in Appendix 1 to these reasons, the evidence from Ms Jaffer is admissible. Ms Jaffer has been an economic consultant in Australia and the United Kingdom for almost 30 years. She has considerable experience in pricing and regulation of infrastructure services, including that of rail access services.
[32] Exhibit E (Expert Report of Ms Jaffer).
In a passage of Ms Jaffer's report which was relied upon by senior counsel for both parties Ms Jaffer explained the relationship between the negotiation and arbitration provisions in the Code:[33]
When makings [sic] its recommendations on National Competition Policy, the Hilmer Committee did not intend for a regulated access regime to replace commercial negotiations. Rather access regulation was intended to provide a last resort when commercial negotiations fail and thereby strengthen the incentive for a natural monopolist to negotiate in the first instance.
...
Since arbitration is costly, in terms of uncertainty, time and cost, the threat of arbitration provides an incentive to reach agreement. The threat of arbitration also serves to condition the negotiations. For example, if an infrastructure service provider expected that an arbitrator would remove monopoly rents from a proposed access price, the service provider would have an incentive to negotiate a lower price with the access seeker in order to avoid a worse outcome under arbitration.
[33] Exhibit E (Expert Report of Ms Jaffer) page 5.

The facts and the foundation of TPI's case

In light of the manner in which this case was run, as well as the extremely comprehensive submissions and evidence I received, it is necessary to set out the key facts, chronologically, and my findings on the key factual issues concerning motive and intention. Although I ultimately conclude that all these matters are irrelevant to each of the questions of construction involved, they provide the background and framework by which those questions can be understood. They could also have been relevant if I had accepted a concession made by senior counsel for Brockman Iron that Brockman Iron's proposal would not be valid if Brockman Iron did not intend to enter good faith negotiations for an access agreement.[34]

Chronology of relevant facts

[34] ts 335 - 336 (20 August 2014).

At all times Brockman Iron has held a mining tenement over ground which contained iron ore within the Pilbara region of Western Australia. Brockman Iron's mining plans over this tenement were described in its proposal for access to TPI's rail infrastructure as the 'Marillana Project'.
The factual foundation of TPI's case is concerned with allegations about (i) the position of Brockman Iron at the time that Brockman Iron made its proposal on 15 May 2013 for access to TPI's rail infrastructure, and (ii) the subjective intention and purpose attributable to Brockman Iron concerning the making of its proposal. Although thousands of pages of exhibits were tendered, much of TPI's case was uncontroversial. The documentary exhibits speak for themselves. However, some of the inferences to be drawn from those documents were in dispute and I explain my conclusions on those matters below.
As I have explained at [29], it appeared to be common ground that Brockman Iron's proposal would not be valid if it did not intend to enter good faith negotiations for an access agreement. Although I do not accept this concession, I accept and proceed on the common ground that the relevant date for assessing any intention is the date of the proposal, 15 May 2013.
The background to the status of the Marillana Project as at 15 May 2013 was as follows.
Between 2007 and 2009, Brockman Iron arranged for various preliminary mine studies to be undertaken.[35] Brockman Iron required these studies because within the mining industry feasibility studies of increasing accuracy and precision provide gateways for a project's development.[36]
[35] Exhibit 1/1, page 54.
[36] Exhibit C (Expert Report of Mr Walker) [16].
Brockman Iron needed three to four further years of feasibility studies which were estimated by expert evidence at trial to cost between $40 million and $60 million. The feasibility studies were required before Brockman Iron could evaluate the technical and economic feasibility of its project to the standard of a bankable feasibility study. The objective of a bankable feasibility study is to provide potential funders of a project with a level of confidence about the technical feasibility and economic viability of the project that will support a decision to invest in the project. It is usually the last in a series of feasibility studies conducted on a proposed project.[37]
[37] Exhibit C (Expert Report of Mr Walker) [15], [21(b)].
In 2010, Brockman Iron obtained a report described as a 'Definitive Feasibility Study'. A definitive feasibility study is undertaken before a bankable feasibility study. The definitive feasibility study typically addresses technical, logistical and operational aspects of a mining project to determine an estimated financial return for that project.[38] An expert resources economist, Mr Walker, said that Brockman Iron's 'Definitive Feasibility Study' did not meet the requirements for a definitive feasibility study.[39] Nevertheless, the Definitive Feasibility Study estimated the total capital cost of the project, without contingency costs, as at the second quarter of 2010, to be $1.6 billion for stage 1 and $555 million for stage 2.[40] It also said that, in 2010, Brockman Iron's Marillana Project faced two major or 'critical' strategic risks.[41] These risks were (i) delayed access to port and infrastructure (which was required to transfer iron ore from the Marillana Iron Ore Process Plant to the Port Hedland port), and (ii) inability to raise adequate finance in accordance with its schedule. These risks remained in May 2013.
[38] Exhibit C (Expert Report of Mr Walker) [21(a)].
[39] Exhibit C (Expert Report of Mr Walker) [24], [26].
[40] Exhibit 1/1, page 17.
[41] Exhibit 1/1, page 45.
In late 2011, Brockman Iron obtained a Front End Engineering and Design Report. This established the Capital Cost Estimate for the overall Marillana Iron Ore Process Plant and associated infrastructure to be $2.18 billion.[42]
[42] Exhibit 1/13, page 755.
In 2011, Brockman Iron also obtained a Mining Study which was intended to update the mining portion of the 'Definitive Feasibility Study'.[43]
[43] Exhibit 1/16, page 938.
On 6 January 2012, the first prospect of a proposal for access to TPI's rail infrastructure was raised in an email to the directors of Brockman Iron's ultimate parent from the Chief Financial Officer of Brockman Iron. It was described as a 'potential "back up" rail solution'.[44] The board of Brockman Iron's parent decided to progress this application on 6 February 2012.[45] By March 2012, Brockman Iron's solicitors, Freehills, had been engaged to draft the access application.[46] It was recognised that there were problems with the access 'solution' including that the access solution did not affect the port development costs, and that the access solution was not preferred by investors.[47]
[44] Exhibit 1/18, page 1074.
[45] Exhibit 1/20, page 1081.
[46] Exhibit 1/21, page 1090.
[47] Exhibit 1/34, page 1248.
In March 2012, Brockman Iron obtained an internal Brockman Iron report set out various risks for the project. One of those risks was '[i]nability to access NWI Port Capacity Allocation'. This risk was described as 'catastrophic'.[48]
[48] Exhibit 1/27, page 1150.
The reference to NWI is to an alliance formed between Brockman Iron and other companies, including Atlas Iron Ltd, for purposes which included the goal of development of the port facilities at Port Hedland by negotiation with the Port Hedland Port Authority. The alliance agreement did not provide for any mechanism for dividing the cost of any development among the participants.[49]
[49] Exhibit 1/2, page 575 - 576.
On 30 March 2012, Brockman Iron obtained a report which concluded that the lowest capital cost for NWI to develop port infrastructure was $2.29 billion for an initial 30 mtpa [million tonnes per annum] capacity.[50] The same month, Brockman Iron also obtained a 'Definitive Feasibility Study for Multi User Iron Ore Export Port Facility ‑ Port Headland' which defined the first stage of a port development.[51]
[50] Exhibit 1/24, page 1102.
[51] Exhibit 1/25, page 1128.
On 11 April 2012, a rail and port strategy workshop was held.[52]
[52] Exhibit 1/28, page 1153; Exhibit 1/29, pages 1162, 1167.
On 30 April 2102, a report based on that workshop said that the rail and port components of the Marillana Project had not been defined to a suitable level commensurate for that needed for a definitive feasibility study.[53] The rail and port solutions were described as having 'no certainty at this stage'.[54]
[53] Exhibit 1/29, page 1162.
[54] Exhibit 1/29, page 1184.
On 2 May 2012, Brockman Iron observed in a memorandum that NWI has undertaken detailed studies into the provision of a 50 mtpa facility for ore receival, storage and ship loading facilities at South West Creek in Port Hedland. It was also observed that Brockman Iron and Atlas Iron Ltd were in the process of negotiating a Shareholders' Agreement for NWI, to enable NWI to obtain a lease from the Port Hedland Port Authority for the development of the proposed port facilities.[55] An infrastructure task force was established by Brockman Iron.[56]
[55] Exhibit 1/30, page 1210.
[56] Exhibit 1/30, page 1211.
On 14 May 2012, the minutes of Brockman Iron's parent company described a view expressed by a senior officer that the only viable port solution was to make the NWI plan work.[57] Brockman Iron was also exploring a rail haulage agreement with TPI's parent company.[58]
[57] Exhibit 1/32, page 1233.
[58] Exhibit 1/32, page 1233.
On 20 August 2012, Brockman Iron's parent entered into an agreement with Aurizon Operations Ltd (then called QR Ltd) and Atlas Iron which was described in other documentary evidence as the Pilbara Independent Rail Alliance Study Agreement.[59] The alliance between these parties was described in the documentary evidence as the East Pilbara Independent Railway (EPIR) Alliance. The goal of the alliance was to develop jointly a railway to transport iron ore from the various mines with which the companies were involved to the Port Hedland port.
[59] Exhibit 1/35, page 1256.
On 4 September 2012, KPMG provided Brockman Iron with a 'Baseline Review' for the project. The Baseline Review made the following observations and conclusions.
(i)The Marillana Project was yet to satisfy the objectives of the pre‑feasibility phase for a typical major capital project investment.[60]
(ii)There was no stakeholder management plan nor were there plans to deal with immediate stakeholders to resolve port and rail issues. Immediate action was recommended to address these 'key gap[s]'.[61]
(iii) The assessment of the rail and port solutions proposed at the 11 April 2012 workshop was 'qualitative only';[62] the rail and port solutions were still significant issues.[63]
(iv)There was a lack of progress in developing the alternatives from that workshop and the uncertainty about cost, risk, and timeframe for each option.[64]
(v)The port and rail were critical path areas that are currently only the focus of limited Brockman management.[65]
(vi)There was a lack of various clear business strategies[66] and a lack of alignment of investment alternatives with a clear corporate or financing strategy.[67]
[60] Exhibit 1/36, page 1298.
[61] Exhibit 1/36, page 1301.
[62] Exhibit 1/36, page 1302.
[63] Exhibit 1/36, page 1309.
[64] Exhibit 1/36, pages 1302, 1314.
[65] Exhibit 1/36, page 1312.
[66] Exhibit 1/36, page 1303.
[67] Exhibit 1/36, page 1304.
The report queried whether the project was viable.[68]
[68] Exhibit 1/36, page 1304.
The report also provided a 'project schedule and timeline' as Appendix 3. On that timeline, (i) a Heads of Agreement would be executed for port and rail options in August 2012, and (ii) a bankable feasibility study would be obtained in July 2013, and (iii) mine operations would commence in 2016 with port and rail completion three months later.[69]
[69] Exhibit 1/36, page 1339.
On 25 September 2012, Brockman Iron sought to recommence negotiations with TPI concerning a rail haulage agreement (by which TPI would transport Brockman Iron's ore using TPI's rail infrastructure and trains).[70] Brockman Iron's goal was (i) developing this haulage proposal, in parallel with (ii) developing the EPIR Alliance solution, and (iii) retaining the option of serving an access application on TPI.[71]
[70] Exhibit 1/39, page 1368.
[71] Exhibit 1/39, page 1369.

In October 2012, Brockman Iron's parent entity appointed an executive committee (EXCO) to assist Brockman Iron's parent with its day to day management and oversight.
On 8 November 2012, the Port Hedland Port Authority sent a term sheet to Brockman Iron containing terms for the development of the port.[72] The term sheet was progressively updated over time. Its terms included a requirement that NWI provide the Port Hedland Port Authority with evidence of financial capability for the development by 30 June 2013.[73]
[72] Exhibit 1/98.
[73] Exhibit 1/98, pages 2064, 2067.
On 21 February 2013, the minutes of a meeting of Brockman Iron EXCO disclosed a decision to withhold funding from NWI for the port solution until the shareholders of NWI completed a shareholders' agreement.[74] Brockman Iron EXCO soon expressed frustration, on 3 April 2013, that Atlas Iron (or AGO) had not progressed the shareholders' agreement that had been in negotiations since 2 May 2012.[75] Later, on 3 May 2013, the funding for NWI was limited to $315,000 per quarter for operating costs and a further $300,000 per quarter for lease negotiation costs.[76]
[74] Exhibit 1/73, page 1896.
[75] Exhibit 1/100, pages 2103, 2104.
[76] Exhibit 1/126, page 2289.
On 8 March 2013, NWI recommenced negotiations with the Port Hedland Port Authority after a 'year-long hiatus'.[77]
[77] Exhibit 1/84, page 2009.
On 13 March 2013, the first draft of the access proposal was sent to Brockman Iron EXCO.[78]
[78] Exhibit 1/91, page 2035; Exhibit 1/91A, page 2034A.
On 17 April 2013, NWI presented a 'High Level Project Timeline' dated 12 April 2013 to a meeting with the Port Hedland Port Authority.[79]
[79] Exhibit 1/137, page 2574.
On 19 April 2013, the Chief Executive Officer of Brockman Iron's Australian parent sent an 'Infrastructure Alternatives Business Case' to directors of Brockman Iron's ultimate parent.[80]
[80] Exhibit 1/117, page 2161,
On 3 May 2013, Brockman Iron limited the costs for progressing the respective solutions in the following way: $315,000 per quarter for NWI's operating costs with a further $300,000 per quarter for lease negotiation costs; and $315,000 per quarter for the East Pilbara Independent Railway (EPIR) Alliance. The mine expenditure was limited to metallurgical test work.[81]
[81] Exhibit 1/126, page 2289.
On 8 May 2013, Aurizon provided Brockman Iron's Australian parent with a presentation concerning Aurizon's proposed involvement with the NWI alliance. Aurizon provided an indicative timeline for an integrated port solution by the end of 2013.[82]
[82] Exhibit 1/129, page 2305.
On 15 May 2013, Brockman Iron's ultimate parent approved its access proposal and Brockman Iron made its access proposal.[83]
[83] Exhibit 1/132, page 2324.
On 16 May 2013, in a presentation by NWI to EXCO,[84] various estimates were made for the timeline to 'first ore on ship'. The presentation did not consider a timeline based on access to TPI's railway infrastructure. But, on the other NWI rail and port possibilities (the EPIR and port solutions), the timeline showed that port funding was contemplated by early 2016 and construction completed at the port by early 2019.[85] These matters, including the 'parallel' timeline for the port, had been known to Brockman Iron in April 2013.[86] And in April 2013, Brockman Iron considered that an independent port solution was the most likely but it knew that an independent port solution presented 'the highest development risk and highest capital cost alternative' to the alternative of sharing existing port facilities.[87]

The Marillana Project's obstacles as at 15 May 2013

[84] Exhibit 1/137, page 2542.

[85] Exhibit 1/137, page 2563.

[86] Exhibit 1/137, page 2574.

[87] Exhibit 1/117, page 2184.

As at 15 May 2013, Brockman Iron had no finance. Investigations in relation to finance, including from Chinese parties, had been made but no finance had been obtained.[88]
[88] Exhibit 1/20, page 1088 (6 February 2012); Exhibit 1/32, page 1234 (May 2012); Exhibit 1/33, page 1242 (June 2012).
Brockman Iron's ultimate parent had provided a letter of support for Brockman Iron's proposal, saying that it 'wishes to ensure a successful outcome from the Proposal for itself and its subsidiary Brockman Iron'.[89] But the uncontradicted expert evidence was that the funds that Brockman Iron's ultimate parent had available for the Marillana Project on 15 May 2013 were just over $4 million.[90]
[89] Exhibit 1/133, page 2362.
[90] Exhibit A (Expert Report of Mr Andrawes), page 3.
In July 2012, Brockman Iron had estimated the costs of the project for which funding was required as follows:[91]
(i) the mine:  $2.1 billion.
(ii)rail cost:  $1.18 billion.
(iii)port cost:  $1.96 billion.
[91] Exhibit 1/34, page 1246.
These costs would vary according to the different solutions to the problem of how the iron ore would be transported from the mine to the port. A Brockman Iron estimate on 29 October 2012 of the costs of each different solution was as follows:[92]
HaulageAccess agreement          Own rail
Mine $2.1 bn                $2.1 bn  $2.1 bn
Rail $1.0 bn                $1.0 bn  $2.5 bn
Port0-$2.3 bn             $2.3 bn  $2.3 bn
Total$3.1-5.4bn           $5.4bn  $6.9bn
[92] Exhibit 1/46, page 1401.
As I have mentioned, 'haulage' describes an agreement where another company (such as TPI) would transport Brockman Iron's iron ore from the Marillana Project site to the Port Hedland port. Two different types of haulage possibilities were haulage to the port or haulage to the port and 'port services'.[93] The various 'own rail' solutions (such as the EPIR solution) involved building or acquiring a new railway.
[93] Exhibit 1/67, page 1853.
Mr Walker (who I have explained is an expert resources economist), identified three areas as 'central to the feasibility of the entire project'.[94] These were:[95]
(i) access to port infrastructure;
(ii) addressing the project risks inherent in the processing; and
(iii) technical marketing leading through to agreements with major customers.
[94] Exhibit C (Expert Report of Mr Walker) [34].
[95] Exhibit C (Expert Report of Mr Walker) [33].
As to the access to port infrastructure, one possibility was the use of (and payment for) port services held by other companies. The prospect of this was assessed in April 2013 as generally low, although in the case of access to TPI's port infrastructure it was assessed as having a 'medium chance in the medium term'.[96]
[96] Exhibit 1/99, page 2099 - 2100.
The alternative, also with a medium chance in the medium term, was to invest independently in development of the port and to obtain a lease. This would need to be undertaken with Atlas Iron.[97] SKM, the consultant engineers to NWI, had estimated the cost of the independent port solution to be $3.14 billion for the full 50 mtpa project or $2.29 billion for an initial 30 mtpa.[98] That would require port finance to be raised, and a Port Bankable Feasibility Study would need to be obtained. That study would take 18 to 24 months in theory, probably longer in practice.[99]
[97] Exhibit 1/99, page 2100.
[98] Exhibit 1/24, page 1102; Exhibit 1/17, page 1071.
[99] Exhibit C (Expert Report of Mr Walker) [43].
Mr Schepis, a civil engineer experienced in infrastructure projects, gave evidence of his opinion that based upon a cost of development of the port of approximately $2.29 billion,[100] a completed Port Bankable Feasibility Study would cost between $60 million and $100 million.[101] The earliest date of completion would be 18 months from an agreed start date.[102] He also estimated that the final investment decision was, at best, achievable at the end of 2016, which would see port construction and commissioning completed by approximately the end of 2019.[103]
[100] Exhibit B (Expert report of Mr Schepis) page 8.
[101] Exhibit B (Expert report of Mr Schepis) page 10.
[102] Exhibit B (Expert report of Mr Schepis) page 10.
[103] Exhibit B (Expert report of Mr Schepis) page 11.
As to the risks inherent in processing, Mr Walker said that the processing route described in Brockman Iron's 2010 'Definitive Feasibility Study' represents a high risk and high operating cost design[104] with a significant risk of plant operating cost overruns.[105] Brockman Iron would need to implement a test program which would take between 24 and 36 months and would cost between $10 million and $20 million.[106]
[104] Exhibit C (Expert Report of Mr Walker) [47].
[105] Exhibit C (Expert Report of Mr Walker) [50].
[106] Exhibit C (Expert Report of Mr Walker) [51].
As to the issues concerned with marketing and obtaining customer agreements, Mr Walker explained that using Brockman Iron's estimates his assessment of 'delivered' costs of iron ore to China would be between US$62 and US$75 per tonne.[107] Strong relationships with customers would be needed if the iron ore price continued to decline.[108] Technical marketing would be needed to produce test results which would enable Brockman Iron to obtain letters of intent or memoranda of understanding with potential customers.[109] Mr Walker's estimate for technical marketing for the Marillana Project was a period of three years with a total cost of $10 million to $15 million.[110]
[107] Exhibit C (Expert Report of Mr Walker) [60].
[108] Exhibit C (Expert Report of Mr Walker) [63].
[109] Exhibit C (Expert Report of Mr Walker) [64] - [69].
[110] Exhibit C (Expert Report of Mr Walker) [70].
In summary, as at May 2013 the following was the position.
(i) Brockman Iron had not obtained the necessary regulatory approvals, consents, land tenure and access rights to develop a mining project including in respect of port infrastructure.[111]
(ii)Brockman Iron had no finance for the multi‑billion dollar Marillana Project; Brockman Iron's parent company had just over $4 million to commit to the project.
(iii)Brockman Iron had no bankable feasibility study to take to financiers. The cost of such a study would be around $50 million.[112] Brockman Iron had not raised the finance to carry out that study.[113] Mr Walker said that he had never known such a study to come in under budget.[114] A bankable feasibility study will take between three and four years.[115]
(iv)Brockman Iron had no port solution. Unless space at the port could be leased from an existing holder of space, it would be necessary to engage in construction (with approval from the port authority). This would require a Port Bankable Feasibility Study which would cost between $60 million and $100 million and would take between 18 and 24 months. Brockman Iron had estimates concerning the port solution in relation to various other rail options which estimated port access by 2019.
(v)Brockman Iron had no buyer for any iron ore which was mined.
(vi)Brockman Iron did not propose engaging a Bankable Feasibility Study or negotiations for key project contracts until its infrastructure solution was resolved.
(vii)Construction of the project could not commence until a final investment decision was made. That decision had not been made.[116] That decision could take between two and four years from completion of the bankable feasibility study.[117]
[111] Further re-amended Statement of Claim [7(c)]; First Defendant's Second Further re-amended Defence [7(ba)].
[112] Exhibit C (Expert Report of Mr Walker) [71].
[113] Further re-amended Statement of Claim [7(a)]; First Defendant's Second Further re-amended Defence [7(ba)].
[114] Exhibit D (Supplementary Expert Report of Mr Walker) [30].
[115] Exhibit C (Expert Report of Mr Walker) [73].
[116] Further re-amended Statement of Claim [7(e)]; First Defendant's Second Further re-amended Defence [7(ba)].
[117] Exhibit C (Expert Report of Mr Walker) [74].
During trial, senior counsel for Brockman Iron accepted the inevitable which was that a late 2016 commencement date for access cannot now be achievable.[118] Objectively, and assessed with the benefit of hindsight and expert evidence, it was also not likely to have been achievable in May 2013.

Brockman Iron's motive and intention in making the access proposal

[118] ts 345 (20 August 2014).

A considerable part of TPI's case was devoted to questions of attribution of knowledge. It is not necessary to descend into those questions of attribution because there was no real dispute that all of the matters above that derived from Brockman Iron documents were matters known to Brockman Iron. Nor was there any real dispute about attribution of any of the statements in the relevant documents to Brockman Iron for the purposes of determining the intention and motives of Brockman Iron. Many of the statements relied upon were made by (i) the Chief Executive Officer of Brockman Iron's Australian parent, (ii) a person who had carriage of the access proposal, or (iii) the Chief Financial Officer of Brockman Iron's Australian parent and also (from 2012) Brockman Iron's ultimate parent.
For instance, one of the points upon which TPI placed very significant emphasis was Brockman Iron's knowledge of the NWI document that showed, on various models, a timeline for construction and development of port access which would take until 2019. Senior counsel for Brockman Iron expressly accepted that Brockman Iron knew of this document.[119]

Motive to obtain commercial rail haulage terms

[119] ts 350 (20 August 2014).

The documentary evidence leaves little doubt that a significant motive behind Brockman Iron's access proposal on 15 May 2013 was to attempt to compel TPI's parent company to provide more economic terms for a rail haulage agreement (by which TPI would transport Brockman Iron's iron ore using TPI's rail infrastructure and trains). This conclusion is supported by a number of documents.
First, on 6 February 2012, the Chief Financial Officer of Brockman Iron's Australian parent company informed the board that the access application 'would be a viable threat to [TPI's parent]' and one which TPI would want to avoid at great cost, forcing it to negotiate a haulage agreement.[120]
[120] Exhibit 1/20, page 1085. See also Exhibit 1/118, page 2191.
Secondly, on 25 September 2012, when Brockman Iron sought to recommence negotiations with TPI concerning a rail haulage agreement, a file note prepared for Brockman Iron by the General Manager for Project Development described the option of serving an access application on TPI's parent as one 'which will ultimately force them to a haulage negotiation'.[121]
[121] Exhibit 1/39, page 1369.
Thirdly, there is the coincidence of timing that on 11 March 2013, at the same time that Brockman Iron asked TPI's parent to provide Brockman Iron with more commercial terms for a haulage agreement,[122] the Chief Executive Officer of Brockman Iron said in an attachment to an email that lawyers had been engaged to assist with the preparation of an access proposal (which had been planned earlier) to be submitted in March 2013.[123]
[122] Exhibit 1/85, page 2012.
[123] Exhibit 1/86, page 2015.
Fourthly, on 19 March 2013 the executive director and Chief Executive Officer of Brockman Iron's Australian parent emailed the Brockman EXCO and senior management at Brockman Iron's Australian parent saying that 'the idea behind the Access Application is to force [TPI's parent] to have a more reasonable discussion with us on the haulage agreement'.[124] The Chief Executive Officer said that this view 'reflects the board's position'.[125]
[124] Exhibit 1/91, page 2034.
[125] Exhibit 1/92, page 2037.
Ultimately, this motive was not disputed by Brockman Iron. In closing written submissions, senior counsel for Brockman Iron accepted that Brockman Iron's intentions were reflected in its April 2013 Board paper.[126] That Board paper had considered three options:[127]
(i)Option 1: The East Pilbara Independent Railway (EPIR) with integrated rail and port.
(ii) Option 2: Haulage by TPI (or its parent).
(iii)Option 3: Third party haulage on the TPI railway to the NWI port facility.
[126] Brockman Iron's closing written submissions, 20 August 2014 [31].
[127] Exhibit 1/130, page 2307 - 2308.
Option 3 involved the access proposal, and the board paper described how Brockman Iron had taken the first optional step under this option in 'advancing the Access Proposal'.[128] In written closing submissions, Brockman Iron then accepted that the following statement represented the motives of Brockman Iron:[129]
Brockman's negotiating position in Option 3 is strongest and provides the best available opportunity to achieve a Rail Access outcome to use the TPI rail infrastructure and/or provide the best commercial leveraging position to achieve a satisfactory negotiated outcome with any potential haulage provider. This is because the price and terms of a Rail Access arrangement should deliver a combined above and below rail tariff of as low as A$7/[wet metric tonne] to A$10/[wet metric tonne], subject to capital investment. This would be less than achievable through negotiation by FMG/TPI and/or any future haulage provider.

Motive to negotiate for a favourable access agreement

[128] Exhibit 1/130, page 2308.

[129] Brockman Iron's closing written submissions, 20 August 2014 [31].

Although I conclude that a dominant motive of TPI in making the proposal was TPI's desire to obtain commercial terms for a haulage agreement, I accept that another motive was to negotiate for the possibility of a favourable access agreement.
My conclusion that TPI had this second motive is based on the documentary evidence. However, even apart from the documentary evidence, there is an inherent unlikelihood about TPI's position that Brockman Iron had no motivation to negotiate for an access agreement. Brockman Iron could have withdrawn its proposal at any stage after it was made. It did not do so. It chose instead to contest these substantial, and no doubt extremely expensive, proceedings which, as I explain in the conclusion to these reasons, are only a step towards negotiations for an access agreement which must 'relate' to the proposal.[130] Whatever Brockman Iron's other motives, there is a significant unlikelihood in these proceedings being so vigorously pursued in the absence of one motive being to negotiate for a possible access agreement.
[130] See Railways (Access) Code 2000 (WA) s 36(1)(a).
In any event, my conclusion that in making the proposal Brockman Iron had a motive to obtain a possible access agreement is based on six matters. These six matters combined with (i) the manner in which Brockman Iron ran its case concerning admissibility, and (ii) my conclusions below about the legal issues concerning intention and purpose raised by TPI, have the effect that this is not a case where the failure by Brockman Iron to call any witnesses assists in drawing any adverse inference.[131]
[131] Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298; Schellenberg v Tunnel Holdings Pty Ltd [2000] HCA 18; (2000) 200 CLR 121, 142 - 143 [51] (Gleeson CJ & McHugh J).
First, if the price of an access agreement were favourable, and if Brockman Iron had met the prerequisites for negotiation (including having financial ability to enter an access agreement), then an access agreement was a genuine option for Brockman Iron, even if the likelihood was that the cost might mean that it was not the 'base' or 'preferred' case. This position is reflected in the 3 April 2013 minutes of the EXCO of Brockman Iron where it was recorded that the Executive of Brockman Iron's ultimate parent 'would only support the Access Proposal if it is just one option being pursued, rather than the base case'.[132]
[132] Exhibit 1/101, page 2107.
Secondly, numerous documents reveal that Brockman Iron intended to pursue a number of rail and port solutions alongside the possible TPI (through its parent) haulage solution as well as other haulage solutions with other companies as potential providers of the haulage. One solution that it intended to pursue alongside haulage was rail access through the EPIR Alliance. Another solution that it intended to pursue concurrently was an access agreement (sometimes described as Project Kakoda). The access agreement was contemplated on numerous occasions up to the time of the proposal in May 2013 as a further possible, and independent, solution, including:
(i)from minutes of Brockman Iron's Australian parent (6 February 2012)[133] to its infrastructure taskforce (3 April 2013);[134] and
(ii)references in a draft business case in April 2013 presented by the Chief Executive Officer of Brockman Iron's Australian parent to officers of Brockman Iron's ultimate parent which argued that 'Brockman should be advancing all credible alternatives to secure a rail solution for Marillana'[135] and that a 'third party haulage option' (ie access) which involved Brockman Iron negotiating with TPI for Brockman Iron to be allocated time slots on the TPI railway was 'considered achievable'.[136]
[133] Exhibit 1/20, page 1085.
[134] Exhibit 1/100, page 2104.
[135] Exhibit 1/117, page 2182.
[136] Exhibit 1/117, page 2180.

Thirdly, the real possibility of an access solution is supported by one set of financial estimates of cost for an access agreement which, as explained above at [66], were considerably cheaper than the EPIR solution, although Brockman Iron continued to explore the EPIR solution, which in April 2013 had been advocated as the 'central case'.[137]
[137] Exhibit 1/99, page 2097.
Fourthly, there was a view within Brockman Iron, expressed by the Chief Financial Officer (of Brockman Iron's Australian parent and also its ultimate parent) as late as 29 October 2012. This view was that 'the best way to advance the project is to make an access application and work with the [Regulator] to secure the best Access deal available and buy trains and engage an operator and run [Brockman Iron] trains on the [TPI] rail system for the life of [the mine].'[138]
[138] Exhibit 1/46, page 1402.
Fifthly, although the date in the proposal for access (late 2016) was, with hindsight, unrealistic, I do not accept that the use of this date in the proposal was a fiction (in the sense that it was known by Brockman Iron to be impossible but dishonestly included in the proposal).
One difficulty with the dishonesty submission made by TPI is that there is no apparent reason why this date would be dishonestly chosen. As senior counsel for TPI properly accepted, if the date were the only obstacle to the proposal then the proposal could simply have been withdrawn with a new date inserted.[139]
[139] ts 375 (20 August 2014).
Another difficulty is that, read as a whole, the proposal did not suggest that a date of late 2016 was certain or fixed. The proposal said that '[s]pecific information about the exact date' would be provided later.[140] Internal communications within Brockman Iron from the Chief Financial Officer of Brockman Iron's Australian parent and also of its ultimate parent had said that the intended commencement was late 2016 but that this was dependent upon the rail and port solutions.[141]
[140] Exhibit 1/133, page 2342.
[141] Exhibit 1/221, page 4095.
A further difficulty with the dishonesty submission is that there are a number of other explanations that are more likely than dishonesty.[142] One is a lack of focus upon this matter by those preparing the proposal, perhaps in the knowledge that this matter would be subject to negotiation and that the proposal had left open the possibility of a different 'exact' date. Another explanation is a lack of complete communication between all those involved in the proposal of all the matters[143] that showed the extreme unlikelihood of a port solution by the end of 2016. Another is that the date was selected in an extremely ambitious way based on (for example) other hopes for port development such as Aurizon's 8 May 2013 proposed involvement with the NWI alliance where Aurizon provided an indicative timeline for an integrated port solution by the end of 2013.[144]
[142] See also Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336; Netglory Pty Ltd v Caratti [2013] WASC 364 [442].
[143] See eg Exhibit 1/211, page 3957 (20 March 2013); Exhibit 1/208, page 3925 (21 March 2013); Exhibit 1/213, page 3961 (28 March 2013).
[144] Exhibit 1/129, page 2305.
Yet another difficulty with the dishonesty submission is that even if the end of 2016 date were a fiction, this would not be sufficient for a finding that there was no motive to attempt to obtain a possible access agreement. As I explain below, the access proposal was only a proposal: all the matters in the proposal could be varied by agreement between the parties.[145]
[145] See Railways (Access) Code2000 (WA) s 36(1)(b).
A still further reason why the chosen timing was not evidence of a lack of motive to pursue an access agreement is that, as I explain above, a port solution by leasing space from an existing company might have been very unlikely but it was not impossible by late 2016.
Finally, and yet another reason why the evidence concerning timing does not show a lack of motive to pursue an access agreement, was that it was possible, although perhaps very unlikely, that an access agreement could be reached by which Brockman Iron could pay for access to TPI's rail infrastructure, even if there was some delay before the rail infrastructure would be used. This point was conceded by senior counsel for TPI.[146] This would, of course, require Brockman Iron to have obtained funding and entered into an access agreement for future access but it means that a delay in a port solution might not have been fatal.
[146] ts 260 (19 August 2014).
Sixthly, there might ordinarily be doubt whether a person had a motive to enter negotiations for an access agreement if that person were unable to commit to an agreement on any possible terms. But that usual assumption depends upon the person expecting negotiations to occur immediately. This was not the case with Brockman Iron. This point was explained by the Chief Financial Officer of Brockman Iron's Australian parent (and also of its ultimate parent) to other board members of Brockman Iron's ultimate parent. The Chief Financial Officer explained, correctly as it turned out, that he believed that TPI would resist the access agreement process, including by court action, in a process which could potentially take longer than 12 months.[147] Negotiations were expected to be subject to a long delay. As I explain in the conclusion to these reasons, it could reasonably have been expected, and might still be expected, that even upon the determination of this trial there will be still substantial obstacles and likely delay before negotiations could occur.

Intentions of Brockman Iron

[147] Exhibit 1/18, page 1074.

One of Brockman Iron's dominant motives for negotiations was to gain leverage over TPI in obtaining a haulage agreement on commercial terms. But this motive is not inconsistent with an additional motive of entering into negotiations and an intention to do so.
As I have explained at [32], it appeared at one point during oral submissions that senior counsel for Brockman Iron accepted that Brockman Iron must have an intention to negotiate in order for its proposal to be valid. I consider this point in much more detail in relation to the second issue raised by TPI. It suffices to say at this point that if Brockman Iron made this concession of law then I do not accept it. For a start, from where does the requirement for this intention to negotiate derive? As I explain later in these reasons, it is neither an express nor an implied obligation in the Code. Nor was any submission made that such an obligation arose as a result of a common law equivalent of the Civilian concept of abuse of rights.[148] More than a century after the decisions in Allen v Flood[149] and Mayor of Bradford v Pickles,[150] a general concept of abuse of rights could not be adopted into the common law by a side wind.
[148] eg Bürgerliches Gesetzbuch § 226: Die Ausübung eines Rechts ist unzulässig, wenn sie nur den Zweck haben kann, einem anderen Schaden zuzufügen (the exercise of a right is not lawful if the only purpose of the exercise is to inflict damage).
[149] Allen v Flood [1898] AC 1.
[150] Mayor of Bradford v Pickles [1895] AC 587.
In any event, for four reasons I conclude that Brockman Iron had any required intention that might be implied under the Code.
First, as I have explained, one of Brockman Iron's motives in making its proposal was to enter negotiations with TPI for an access agreement. That motive is consistent with an intention to enter negotiations.
Secondly, and in any event, motive or purpose is a different concept from intention. In other contexts, the difference between these concepts has been emphasised.[151] Brockman Iron's two motives in making the access proposal are therefore different matters from its intentions concerning the exercise of its statutory rights under the Code. Brockman Iron's intentions, in furthering each of those motives which it had, were to employ the statutory process, and the statutory steps I have described. There was no suggestion that Brockman Iron had any intention of abandoning the statutory process at any stage.
[151] De Gruchy v The Queen [2002] HCA 33; (2007) 211 CLR 85, 98 [51] (Kirby J); Purvis v New South Wales [2003] HCA 62; 217 CLR 92, 140 [150], 143 [164] (McHugh & Kirby JJ, not dissenting in relation to this distinction).
TPI pleaded that Brockman Iron's motive (in the sense of its 'purpose' or 'cause') in making its proposal was to cause TPI's parent company to negotiate terms for a conditional agreement for haulage and ship-loading of Brockman Iron's iron ore from Marillana.[152] But the end goal of that motive was not inconsistent with Brockman Iron's alternative motive of a possible access agreement. The end goal was the same: getting the iron ore from the Marillana mine to the port.
[152] Further re-amended Statement of Claim [7E(a)].
Brockman Iron's primary motive is therefore entirely compatible with an intention to enter negotiations. In fact, Brockman Iron's primary motive concerning leverage would be entirely defeated if Brockman Iron did not intend to enter into the statutory negotiations and also intend to exercise its statutory rights.
Thirdly, intention cannot be considered in a vacuum. The most meaningful way to refer to intention is the intention to exercise statutory rights. It is less meaningful to speak of an intention to negotiate or an intention to enter an access agreement. The latter species of intention, to the extent that they are meaningful, are just glosses on the terms of the Code.
Further, as I explain in more detail later, it is confusing at best, meaningless at worst, to speak of an intention to enter into an access agreement. Does that mean an intention to enter an access agreement at any cost and on any conditions? That is plainly not a requirement of the Code. But, otherwise, asking whether there is an intention to enter an access agreement generally invites the response, 'on what terms'? No decision could be made in the absence of terms. Hence, the admitted fact that Brockman Iron had not decided to use TPI's railway as its transport option therefore is little more than an admission that no terms had been agreed.[153] That is the reason for negotiations.
[153] Further re-amended Statement of Claim [7(f)]; First Defendant's Second Further re-amended Defence [7(ba)].
Fourthly, it was never part of TPI's case that the proposal was a sham. As Brockman Iron put the point in its closing written submissions, it was 'not alleged ... that the access proposal was a sham that would be jettisoned if some negotiated outcome was not achieved'.[154] A sham refers to a transaction which was intended not to have the 'apparent, or any, legal consequences'.[155]
[154] Brockman Iron's closing written submissions, 20 August 2014 [29].
[155] Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471, 486 [46] (the Court).

The detail of the proposal by Brockman Iron

As I have explained, on 15 May 2013 Brockman Iron made a proposal, purportedly under the Code, for access to TPI's railway infrastructure.[156] The proposal was nearly 200 pages long. Brockman Iron explained that it was seeking access 'to support its export solution for the Marillana Project. Finalisation of the infrastructure solution is critical to the commercial and timely development of the Marillana Project'.[157]
[156] Exhibit 1/133.
[157] Exhibit 1/133, page 2339.
The central features of the proposal were as follows.
The proposal said that the forecast annual production for the Marillana Mine is up to 20 million tonnes per annum. It asserted that the mine is scheduled to commence production late in 2016 with a projected mine life of more than 20 years.[158]
[158] Exhibit 1/133, page 2331.
The proposal said that Brockman Iron had completed all key planning work for the Marillana Project, up to commencement of the bankable feasibility study stage. It said that the next stage will be the completion of a Bankable Feasibility Study once the infrastructure solution for the Project is resolved.[159] The Bankable Feasibility Study, as well as negotiations for key project contracts, would commence only when there was sufficient certainty about the infrastructure solution.[160] The Bankable Feasibility Study would then inform the final investment decision for the Marillana Project.[161]
[159] Exhibit 1/133, page 2340.
[160] Exhibit 1/133, page 2341.
[161] Exhibit 1/133, page 2340.
In relation to issues of capacity, the proposal explained that 'Brockman's mine planning shows a production profile ramp up over the first two years of production (2017 - 2018).'[162]
[162] Exhibit 1/133, page 2343.
If the project went ahead, Brockman Iron said that it planned to export iron ore from the Marillana Mine through Port Hedland where it said that it had 'a preferential position to participate in at least 18.5 Mtpa and up to 50 Mtpa of port capacity through a proposed development at South West Creek'.[163]
[163] Exhibit 1/133, page 2340.
The proposal said that a 'port spur line' of around 16 kilometres would need to be built from the destination of TPI's rail line to unloading facilities at the port.[164]
[164] Exhibit 1/133, page 2346.
The proposal explained the reasons why access rights were sought:[165]
(1)'to operate train services along the TPI Railway ... to allow for the haulage of Product [iron ore] from the Marillana Mine to South West Creek in Port Hedland port, where Brockman has a preferential position to participate in at least 18.5 Mtpa and up to 50 Mtpa of port capacity; and
(2)to commence train services late in 2016 for a duration of 20 years, with an option to extend by mutual agreement, based on allocated cyclic Train Paths, with a limited number of scheduled Train Paths to support the usual operations of a mine.'
[165] Exhibit 1/133, page 2331.

TPI's case

TPI's pleaded case was amended a number of times. Some of the occasions on which it was amended appeared to involve minor amendments (such as the inclusion of the word 'genuine') but which potentially involved major change. TPI crystallised the issues in this action in its written submissions prior to trial.[166] Although the three issues expressed in its written submissions did not replicate precisely its pleadings, the trial was conducted on the basis of that opening position.
[166] TPI's written submissions, 12 August 2014 [3] ‑ [11].
The three issues agitated by TPI were as follows.

Issue 1 (Intention to use and promise to use)

Whether s 8(1) of the Code requires that a proposal be 'for the making of an agreement for the use of railway infrastructure, that is, for the making of an agreement which (if made) will embody, on the party of the proponent, a definite intention to use, and definite promises for the use of, the relevant railway infrastructure'.[167]

Issue 2 (Sole purpose)

[167] TPI's written submissions, 12 August 2014 [5].

Whether s 8(2)(b) of the Code requires that 'the sole purpose for which a proposal may be made is the purpose of actually carrying on the operation of rolling stock upon railway infrastructure, and not the purpose of obtaining a right to do so, at some future time, if various future uncertain events occur and various future decisions are made by the proponent and others and if the proponent then decides to carry on the operation of rolling stock on the railway'.[168]

Issue 3 (Real and genuine intention to negotiate and timing)

[168] TPI's written submissions, 12 August 2014 [6].

Whether s 8(1) and s 8(3)(b) of the Code require that 'a proposal must be genuine, ie, whether it must be made with a real and genuine intention to negotiate for, and if acceptable terms are reached, to make an agreement to use railway infrastructure and whether it must state the proponent's genuine requirements, including the time from which the proponent genuinely requires a right to use railway infrastructure'.[169] Further related sub-issues concerned whether the time for the commencement of use in the proposal should be immediate, and whether the time for commencement in the proposal should be definite, and not uncertain.
[169] TPI's written submissions, 12 August 2014 [7].

Issue 1: Intention to use and promise to use

The manner in which the case was pleaded and run

It is important to identify the precise manner in which this issue was put by TPI. The manner in which the issue was identified above did not correspond precisely with TPI's pleading. One difference was the omission in written submissions of an allegation that Brockman Iron was required to intend to pay for the use of rail infrastructure. The differences in formulation illustrate the difficulty in the exercise of statutory construction (really, implication) which TPI faced in this submission.
TPI never resiled from its pleading, and its case, as follows:[170]
On the proper construction of the Code, a proposal by an entity for access is and can only be a genuine proposal for an agreement in writing by which that entity intends and agrees to make, and pay for, actual use of specified railway infrastructure and, where applicable, the right to use land managed and controlled by the railway owner and the right to construct and operate a rail or other connection to the railway infrastructure, for the purpose of using a railway owner's railway infrastructure (ss 8(1), 8(3)).
[170] Further re-amended Statement of Claim [6].
This crucial pleading is not easily comprehended. It was neatly broken down in oral opening submissions as involving an intention to make a rail agreement and an intention to pay for the actual use of TPI's railway.[171] On this basis, TPI's case was that all of the following, in combination, were part of the requirements for a 'proposal' under s 8(1).
(i) It must be a proposal for an agreement in writing.
(ii) The entity must intend to make an agreement for actual use of specified railway infrastructure and other applicable matters.
(iii) The entity must intend to pay for, actual use of specified railway infrastructure and other applicable matters.
[171] ts 109 (18 August 2014).
TPI then pleaded[172] that Brockman Iron's purported proposal was not such a proposal, in that it was in fact a proposal for an agreement by which, in effect, Brockman Iron would only use and pay for the use of railway infrastructure of TPI and would only be bound to perform the provisions of the agreement in the event that, at some future time, Brockman Iron (amongst other things) does the following things which it has not yet done:
(a)raises sufficient finance to carry out a study, of a kind that would be relied upon by prospective financiers in deciding whether to invest in or advance funds for, the development of an iron ore mining project upon tenements held by Brockman, relating to the technical feasibility and economic viability of such a mining project;
(b)causes such a study to be carried out and the study concludes that such a mining project would likely be technically feasible and economically viable;
(c)obtains (and fulfils all applicable conditions of) all necessary regulatory approvals, consents, land tenure and access rights, to develop such a mining project, including in respect of requisite port infrastructure;
(d)raises sufficient finance to develop such a mining project including requisite port infrastructure and finance to enable it to meet the financial obligations pleaded in paragraph 9(b) below;
(e)decides to develop, and proceeds with development of, such a mining project, including requisite port infrastructure or otherwise obtains access to such infrastructure; and
(f)decides that it wishes to use TPI's railway as the means of transporting iron ore produced from its tenements to the coast of Western Australia.
[172] Further re-amended Statement of Claim [7].

I consider that the case was of such a nature that the rates for Counsel and Senior Counsel might fairly arguably be taxed above Scale rates. But the same conclusion does not apply to the other legal practitioners on the evidence before me.
Overall, my assessment is that based on the evidence and on my assessment of the nature of this case, I am satisfied that there is a fairly arguable case that a taxing officer might properly allow costs for the rates of a Counsel or Senior Counsel at an amount greater than the amount allowable under the Scale for preparation of the defence, preparation of the case, preparation before trial and required conferrals, and appearing at trial. I reiterate that this does not suggest in any way that such an allowance will be made or that the allowance will approximate the amount charged.
In relation to each of these matters, the fairly arguable case that rates of a Counsel or Senior Counsel would be allowed at an amount greater than the amount allowable under the Scale is due to the importance of the case to the parties which, in turn, reflected the complex manner in which the case was run, particularly having regard to the usual run of cases. Although this issue is one which is essentially a value judgment to be made by the court and is not 'a question that I think is usually assisted by elaborate or detailed argument',[305] in the introduction to these reasons I have outlined some of the reasons for my impression concerning the fair arguability of a need for counsel of a level of seniority requiring rates beyond Scale rates.
[305] O'Rourke v P & B Corporation [2008] WASC 36 [25] (Martin CJ).
It is necessary, however, to emphasise one point. At various points in submissions and evidence, TPI argued that Brockman Iron's case had been presented with economy. For instance, counsel relied on affidavit evidence that during the 2.5 day hearing, Senior Counsel for Brockman Iron spoke for only 2.6 hours.[306] But, as counsel for TPI acknowledged orally on this application, an economy of oral presentation time, or an economy of written submissions, is not the same as an economy of effort. Indeed, the two can sometimes be inversely related. Nor does an economy of oral or written submissions suggest that counsel of less seniority might have been appropriate. Often it will take considerable time and consideration, and the experience and judgement of very experienced counsel, for a decision to be made not to oppose a particular point or not to make a particular submission.
[306] Affidavit of Mr Van Brakel, sworn 3 December 2014 [7(c)].

(i) Defence

The Scale makes provision in Item 3(b) for 10 hours preparation of a defence by a Senior Practitioner. The total ceiling cost is $4,510. The approximate cost initially said in affidavit evidence to have been incurred by Brockman Iron is almost ten times the Scale limit, $43,000.[307] Then, in subsequent affidavit evidence, a draft bill of costs was included which substantially increased this amount. That draft bill, prepared by counsel who appeared for Brockman Iron on this application, suggested that the cost of preparation of the defence was $56,295.20.[308] This was said to include the defence, amended defence, further amended defence, further re-amended defence, and second further re-amended defence.
[307] Affidavit of Ms Di Russo, sworn 31 October 2014, CDR 5, page 17.
[308] Affidavit of Ms Di Russo, sworn 18 December 2014, page 17.
I am satisfied based upon my knowledge and impression of the case that there is a fairly arguable case that a taxing officer might properly allow costs for more than 10 hours of preparation of a defence. Although the defence was brief, consisting of around 17 paragraphs, the legal and factual issues raised by TPI needed to be understood and considered as part of the process of pleading the defence. Those legal and factual issues were not simple, the core issue was important and had never been previously decided, and the matter was of significant commercial significance to the parties. The defences were signed by Senior Counsel and Counsel for Brockman Iron. Senior Counsel for Brockman Iron spent 3.75 hours working on the defence and, as counsel for TPI properly conceded, an uplift of the rates for Senior Counsel would require an uplift of the limit on costs allowed for the Defence.
As for the number of hours required for the preparation of the defence, I take into account that a substantial amount of the cost, perhaps a majority of it, will have been incurred as a consequence of four different versions of TPI's statement of claim, including a re-amended defence which prompted a strike out application by TPI.[309] These are costs that O 66 r 3 the Rules of the Supreme Court 1971 (WA) require TPI to bear, in the absence of a contrary order. Counsel for TPI submitted that the costs of these amendments that TPI will be required to bear are costs that stand outside the Scale for the purposes of a taxation. Counsel for Brockman Iron said that these costs fell within the Scale Item for a defence. Neither counsel made any detailed submissions concerning the proper construction of the Rules on this point. My tentative view is that there is nothing in O 66 r 3 that would take the costs of amendment outside the Scale, although there may be an issue whether the reference to a 'defence' in the Scale includes an 'amended defence'. Counsel for Brockman Iron only sought the increase in the Scale for work done on both the defence and amendments to the defence. If the Scale were to include both, counsel for TPI conceded that the Scale limit on hours for a defence should also be raised. Since there is common ground between the parties that the limit for hours of work for a defence should be increased if the Scale included both the defence and amendments to the defence, and since a taxation will need to consider the costs of amendments to the defence in any event, it is sufficient to increase the limit on this basis. It is not necessary to determine the construction of O 66 r 3 or issues concerning costs of amendments to a defence that are not 'occasioned by' the amendment.
[309] The Pilbara Infrastructure Pty Ltd v Brockman Iron Pty Ltd [2014] WASC 286.
The limits for the rate for preparation of the defence, the time limit of 10 hours for preparation of the defence, and the corresponding total amount of costs that can be claimed for this item should be lifted.

(ii) Giving discovery

The 2012 Scale relevant to discovery in this case provides in Item 7(b) for 'giving discovery' of up to 10 hours of the time of a Senior Practitioner for a total limit of $4,510.
The discovery sought by TPI was wide ranging. Counsel initially submitted that Brockman Iron's costs incurred in relation to discovery was in excess of $53,000. But the draft bill of costs now seeks $19,492.
TPI properly conceded that the limit on hours spent for giving discovery, and the corresponding total amount that could be claimed, should be removed. That order is appropriate. But there is no sufficient basis to suggest, and I do not accept that it is fairly arguable, that the ceiling rate for a Senior Practitioner for discovery should be uplifted. As I have explained, it was not even apparent from the evidence that discovery was performed by a Senior Practitioner, still less a Senior Practitioner who charged about Scale rates. Nor do I consider it fairly arguable that the nature of the work reasonably required this.

(iii) Preparation of case

The Scale item for preparation of the case, Item 17, provides for a limit of 120 hours by a Senior Practitioner, which is a limit of $54,120 under the 2012 Scale and $56,760 under the 2014 Scale.
Brockman Iron initially said that it incurred $98,000 of costs.[310] In its subsequently prepared draft bill of costs this became $117,761.[311] There was no evidence of the seniority of any person or persons involved with the preparation of the case, other than evidence concerning preparation done by Senior Counsel.
[310] Affidavit of Ms Di Russo, sworn 31 October 2014, CDR 5, page 17.
[311] Affidavit of Ms Di Russo, sworn 18 December 2014, page 18.
Brockman Iron did not provide any evidence concerning the rates charged by the particular practitioners who were involved in preparation of the case or the number of hours that those practitioners had worked. As I explained during an exchange with counsel, it would only have taken a sentence to say that some of the practitioners involved in preparation of the case were those who charged at rates above the Scale, and that the overall hours spent by practitioners in preparation of the case was beyond the 120 hour limit.
In any event, as a matter of my impression of the case and based upon the material before me, I do not consider that it is fairly arguable that the costs for preparation by a Senior Practitioner would be taxed at a rate above the Scale, or that more than 120 hours of work would be allowed on a taxation.
A number of points about this impression should be explained.
First, I assume that none of the time charged for preparation of Brockman Iron's case would include time spent for preparation by Senior Counsel or Counsel which is included in the items discussed below. Otherwise there would be double counting. So all of the time that is included in the limit of up to 3.5 days of preparation pre-trial by Senior Counsel and Counsel falls outside this Item.
Secondly, Brockman Iron did not tender any lay or expert witness statements. Nor did it cross examine any of the witnesses for TPI. And although there was a considerable amount of evidence provided by TPI which Brockman Iron had to consider, Brockman Iron's objections to this evidence were generally expressed on a global relevance basis.
Thirdly, I accept that some of the preparation of the case might have been done by Counsel or Senior Counsel in place of a Senior Practitioner, apart from the immediate pre-trial preparation limit of 3.5 days. This is not uncommon and it appears to be the case from the bills provided by Senior Counsel. To the extent that such preparation of the case was done by Counsel or Senior Counsel, then those limits should be lifted for the reasons I have already explained.

(iv), (v) Preparation and first day of trial (Senior Counsel and Counsel)

Item 20(a) and 20(b) of the Scale provide for 3.5 days of preparation and for the first day of trial, to a limit of $30,195 (Senior Counsel) and $17,325 (Counsel). For the reasons I have explained above, the limit for the rates for Senior Counsel and Counsel provided in the Scale should be lifted. This has the consequence, for the same reasons, that the $30,195 and $17,325 limits should also be lifted.
As counsel for Brockman Iron conceded orally, although not in written submissions, the time periods of 3.5 days of preparation and the first day of trial should not be lifted. These time periods equate to 45 hours. Based on the invoices of Senior Counsel which were annexed to the affidavit evidence on this application, Senior Counsel spent just over 32 hours in preparation and first day of hearing and Counsel spent fewer than 40 hours in preparation and first day of hearing. There is no fairly arguable case that the number of hours will be taxed at more than 45 hours of preparation and hearing by Senior Counsel or Counsel.

(vi), (vii) Second and third day of trial (Senior Counsel and Counsel)

Items 20(c) and 20(d) of the Scale provide for a second and subsequent day of trial to a limit of $3,850 (Counsel) and $6,710 (Senior Counsel). For the reasons I have explained above, the limit for the rates for Senior Counsel and Counsel provided in the Scale should be lifted. In this case, I consider that this should have the consequence, for the same reasons, that the $3,850 and $6,710 limits should also be lifted for the second day of trial.
As counsel for Brockman Iron conceded orally (although not in written submissions), the limit for the total amount does not need to be lifted for the third day of trial. The trial concluded before lunch on the third day. I do not consider that it is fairly arguable that the taxed cost for the third day could exceed $3,850 and $6,710 even if rates for Counsel or Senior Counsel were used above Scale. The cost for fewer than 5 hours of work (including significant time before and after the hearing) would not exceed $6,710 for Senior Counsel (ie $1342 per hour for 5 hours) or $3,850 for Counsel (ie $770 per hour for 5 hours).
I note in passing that although Senior Counsel charged a 'fee on brief' of $10,000 for the third day of hearing, which included a conference after Court, it is not clear whether this amount effectively included a cancellation fee. As counsel for TPI submitted, such fees have been held in this Court to require strong grounds before they are borne by the other party.[312] As Wilcox J said in Australian Federal Police v Razzi:[313]
[312] The Owners of 'Kintail', 17 The Coombe, Mosman Park, Strata Plan 21483 v Camm (Unreported, WASC, Commissioner Pringle QC, Library No 950558, 13 October 1995) 9.
[313] Australian Federal Police v Razzi (1991) 30 FCR 64, 66 - 67.
The practice of demanding 'cancellation fees' can rest only on the premise that, if a case does not proceed or finishes early, the barrister will be left without remunerative work. But, except perhaps for beginners at the Bar who are unlikely in any event to be able to command a 'cancellation fee', the premise is rarely well‑founded in point of fact. Most established barristers find that their problem is over-employment, not under‑employment. For most, some unexpected time out of court is a welcome opportunity to catch up with chamber work. At a time when legal fees are so onerous as to exclude from significant litigation all but the wealthy and the legally-aided, any new practice which further increases costs requires meticulous justification. I am not aware of any attempted justification of 'cancellation fees'. It seems to me that it would be desirable for Bar Councils and Law Societies to examine such fees, and perhaps issue a ruling or some guidelines, before the practice becomes firmly entrenched.
That was said more than two decades ago. It appears that it is not as uncommon today for a party to agree to pay a cancellation fee for a senior barrister. But whether that fee should be borne by the other party to the litigation is a different matter. The Scale of costs has not yet included in it the recoverability of costs for work which was not done. In the absence of any evidence concerning practice or the reasonable need for such a fee or even that such a fee was charged in this case, I do not consider that it is fairly arguable that this could be recovered on a taxation of the costs in this case. In oral submissions, counsel for Brockman Iron did not submit the contrary.
Ultimately, and in any event, I do not consider it fairly arguable that the cost for a final day of hearing would exceed $6,710 for Senior Counsel or $3,850 for Counsel.

(viii) Pre-trial matters

Item 24(a) of the Scale provides for pre‑trial, mediation, conferrals or other conferences where required by the Court or by practice direction. There is no limit to the number of hours that can be claimed for this item. For the reasons expressed above, I consider that to the extent that Senior Counsel or Counsel were involved with these matters, the hourly rates for Senior Counsel and Counsel should be lifted. In the circumstances I have described concerning the involvement of Senior Counsel and Counsel at rates above Scale, it is fairly arguable that a taxing officer would allow rates above Scale for the involvement of those counsel in pre-trial matters required by the court.
Counsel for Brockman Iron submitted that there was doubt concerning whether Item 24(a) would apply to the conference between counsel on 28 May 2014 in relation to Brockman Iron's objections to TPI's evidence. I do not understand why this would not be included in Item 24(a). But counsel for TPI properly conceded that any doubt that existed could be removed by an order that TPI pay Brockman Iron's costs of that conference within Item 24(a).

(ix) Cost of trial transcript

No provision is made in the Scale for the cost to Brockman Iron of obtaining the trial transcript. The conduct of modern litigation makes that cost almost essential in any substantial Supreme Court litigation that lasts for more than a day where there are ongoing issues and questions raised by the trial judge. The parties agree that an order should be made that TPI pay Brockman Iron's cost of obtaining a copy of the trial transcript.

(x) Strike out application

Item 10(a) of the Scale provides for a limit of $11,550 for a chamber summons with 2 days' preparation and one day of hearing. Brockman Iron's draft bill of costs provides for $21,811 for the cost of this chamber summons.
An uplift of this item was not sought in the chamber summons for special costs. It was not sought in Brockman Iron's initial submissions. It was raised in fresh supplementary submissions filed 'in reply'.
The strike out application was discussed briefly at a directions hearing. The applicant initially sought a one hour hearing. But both parties were content for the application to be decided on the papers. The one day hearing provided for in the Scale was not required. The point would not have taken two days of preparation. Brockman Iron filed eight pages of submissions on 7 August 2014. They were signed by Senior Counsel and Counsel. Based on my impression of the case, there is no fairly arguable case that the amount of the bill for the chamber summons to strike out could tax at an amount higher than the Scale. However, the limit on the rates for Counsel and Senior Counsel in preparing for this strike out application should be lifted for the reasons I have explained.

Conclusion

Orders should be made as follows:
(1)Any taxation of the first defendant's costs on the basis that the limits on costs allowable under the Legal Practitioners (Supreme Court)(Contentious Business) Determination 2012 (WA) and the Legal Practitioners (Supreme Court)(Contentious Business) Determination 2014 (WA) (the Scales) be varied pursuant to s 280(2) of the Legal Profession Act 2008 (WA) in respect of
(a)Items 3(b) (defence) and 7(b) (giving discovery)
(i)by removing the limits on the hours allowed;
(ii)by removing the limit for recoverable costs; and
(iii)in relation to Item 3(b) only, by removing the limit on rates in so far as work was done by Counsel or Senior Counsel;
(b)Items 20(a), 20(c) (first, second day of trial, Counsel), 20(b), 20(d) (first, second day of trial, Senior Counsel)
(i)by removing the limit for recoverable costs; and
(ii)by removing the maximum allowance for rates for both Senior Counsel and Counsel; and
(c)Items 10(a) (strike out), 17 (preparation of case), 20(c) (third day of trial, Counsel), 20(d) (third day of trial, Senior Counsel), 24(a) (pre-trial)
(i)by removing the maximum allowance for rates for work performed on these Items by Senior Counsel and Counsel only.
(2)The plaintiff pay the first defendant's costs of the conference between Counsel on 28 May 2014 within Item 24(a).
(3)The plaintiff pay the first defendant's cost of obtaining the transcript of the trial of the action.

[2014] WASC 345

26 September 2014