WMC Resources Ltd v Southern Cross Pipelines Australia Pty Ltd

[2002] WASCA 308

WMC RESOURCES LTD -v- SOUTHERN CROSS PIPELINES AUSTRALIA PTY LTD & ORS [2002] WASCA 308

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2002] WASCA 308
Court:	THE FULL COURT (WA)
Case No:	FUL:101/2002	Heard:	15 AUGUST 2002
Coram:	WALLWORK J PARKER J TEMPLEMAN J	Delivered:	21/11/02
No of pages:	20	Judgment Part:	1 of 1
Result:	Appeal allowed
Category:	B
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Parties:	WMC RESOURCES LTD SOUTHERN CROSS PIPELINES AUSTRALIA PTY LTD SOUTHERN CROSS PIPELINES (NPL) AUSTRALIA PTY LTD DUKE ENERGY POWER PTY LTD KENNETH COMININOS MICHAEL STATE OF WESTERN AUSTRALIA
Catchwords:	Practice and procedure Right to be joined in action Gas Pipeline Agreement Access to pipeline for third parties Whether proposed tariff applies to contract between appellant and first respondent First respondent commenced action Whether appellant entitled to be joined Whether its legal rights could be directly affected by any order made
Legislation:	Gas Pipelines Access (Western Australia) Act 1998 (WA), s 97(4) Goldfields Gas Pipeline Agreement Act 1994 (WA), s 4 Government Agreements Act 1979 (WA), s 3 Property Law Act 1969 (WA), s 11 Rules of the Supreme Court 1971 (WA), O 18 r 6(2)(b), O 56
Case References:	Homestyle Pty Ltd v City of Belmont & Anor [1999] WASCA 59 Lisafa Holdings v Commission of Police (1988) 15 NSWLR 1 Associated Growers' Co-Operative Ltd v Hubbard Property Pty ltd (1986) 42 SASR 321 Australian Competition and Consumer Commission v The News Corporation Ltd & Ors (1997) 79 FCR 117 Australian Oil Exploration Ltd v Lachberg (1958) 101 CLR 119 Bahr v Nicolay (No 2) (1988) 164 CLR 604 BHP Petroleum Pty Ltd v Oil Basins Ltd [1985] VR 756 Bidner v Queensland [2000] QCA 368 Bone v Commissioner of Stamp Duties [1972] 2 NSWLR 651 Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 Carr v Financial Corporation of Australia Ltd (No 1) (1981) 147 CLR 246 Ebner v Official Trustee in Bankruptcy (2001) 75 ALJR 277 Gascor v Ellicott [1997] 1 VR 332 Hall v Nominal Defendant (1966) 117 CLR 423 IOOF Australia Trustees Ltd v Seas Sapfor Forests Pty Ltd (1999) 78 SASR 151 Johnson v Johnson (2000) 201 CLR 488 Joseph Lynch Land Co Ltd v Lynch [1995] 1 NZLR 37 Leppington Pastoral Co Pty Ltd v Commonwealth (1997) 76 FCR 318 Licul v Corney (1976) 180 CLR 213 London Passenger Board v Moscrop (1942) AC 332 Makhoul v Barnes (1995) 60 FCR 572 Malouf v Malouf (1999) 86 FCR 134 Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 75 ALJR 679 Morrell v Mercantile Mutual Insurance (Australia) Ltd (1999) 21 WAR 451 Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52 R v Australian Broadcasting Tribunal; Ex Parte Hardiman (1980) 144 CLR 13 R v Commonwealth Conciliation and Arbitration Commission; Ex Parte Angliss Group (1969) 122 CLR 546 Re J.R.L.; Ex Parte C.J.L. (1986) 161 CLR 342 Re Martin; Ex Parte Amtron Australia Pty Ltd (1996) 62 FCR 438 Re Refugee Review Tribunal; Ex Parte H (2001) 75 ALJR 982 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 Trident General Insurance Co Ltd v McNeice Bros Pty Ltd (1988) 165 CLR 107 TXU Electricity v The Officer of the Regulator General [2000] 3 VR 93 Walker v Commonwealth Trading Bank of Australia (1985) 3 NSWLR 496 Westralian Farmers Co-Operative Ltd v Southern Meat Packers Ltd [1981] WAR 241 Wilander v Tobin [1997] 1 Lloyd's Rep 195 Wilson v Metaxas [1989] WAR 285

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : WMC RESOURCES LTD -v- SOUTHERN CROSS PIPELINES AUSTRALIA PTY LTD & ORS [2002] WASCA 308 CORAM : WALLWORK J

PARKER J
TEMPLEMAN J

HEARD : 15 AUGUST 2002 DELIVERED : 21 NOVEMBER 2002 FILE NO/S : FUL 101 of 2002 BETWEEN : WMC RESOURCES LTD

Appellant (Proposed Third Defendant)

AND

SOUTHERN CROSS PIPELINES AUSTRALIA PTY LTD
First Respondent (First Plaintiff)

SOUTHERN CROSS PIPELINES (NPL) AUSTRALIA PTY LTD
Second Respondent (Second Plaintiff)

DUKE ENERGY POWER PTY LTD
Third Respondent (Third Plaintiff)

KENNETH COMININOS MICHAEL
Fourth Respondent (First Defendant)

STATE OF WESTERN AUSTRALIA
Fifth Respondent (Second Defendant)

(Page 2)

Catchwords:

Practice and procedure - Right to be joined in action - Gas Pipeline Agreement - Access to pipeline for third parties - Whether proposed tariff applies to contract between appellant and first respondent - First respondent commenced action - Whether appellant entitled to be joined - Whether its legal rights could be directly affected by any order made

Legislation:

Gas Pipelines Access (Western Australia) Act 1998 (WA), s 97(4)

Goldfields Gas Pipeline Agreement Act 1994 (WA), s 4
Government Agreements Act 1979 (WA), s 3
Property Law Act 1969 (WA), s 11
Rules of the Supreme Court 1971 (WA), O 18 r 6(2)(b), O 56

Result:

Appeal allowed

Category: B

(Page 3)

Representation:

Counsel:

Appellant (Proposed Third Defendant) : Mr C L Zelestis QC & Mr G
H Murphy
First Respondent (First Plaintiff) : Mr M J Buss QC &
Mr A G Castledine
Second Respondent (Second Plaintiff) : Mr M J Buss QC &
Mr A G Castledine
Third Respondent (Third Plaintiff) : Mr M J Buss QC &
Mr A G Castledine
Fourth Respondent (First Defendant) : No appearance
Fifth Respondent (Second Defendant) : No appearance

Solicitors:

Appellant (Proposed Third Defendant) : Clayton Utz
First Respondent (First Plaintiff) : Minter Ellison
Second Respondent (Second Plaintiff) : Minter Ellison
Third Respondent (Third Plaintiff) : Minter Ellison
Fourth Respondent (First Defendant) : No appearance
Fifth Respondent (Second Defendant) : No appearance

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

Homestyle Pty Ltd v City of Belmont & Anor [1999] WASCA 59
Lisafa Holdings v Commission of Police (1988) 15 NSWLR 1

Case(s) also cited:

Associated Growers' Co-Operative Ltd v Hubbard Property Pty ltd (1986) 42 SASR 321
Australian Competition and Consumer Commission v The News Corporation Ltd & Ors (1997) 79 FCR 117
Australian Oil Exploration Ltd v Lachberg (1958) 101 CLR 119
Bahr v Nicolay (No 2) (1988) 164 CLR 604
BHP Petroleum Pty Ltd v Oil Basins Ltd [1985] VR 756


(Page 4)

Bidner v Queensland [2000] QCA 368
Bone v Commissioner of Stamp Duties [1972] 2 NSWLR 651
Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499
Carr v Financial Corporation of Australia Ltd (No 1) (1981) 147 CLR 246
Ebner v Official Trustee in Bankruptcy (2001) 75 ALJR 277
Gascor v Ellicott [1997] 1 VR 332
Hall v Nominal Defendant (1966) 117 CLR 423
IOOF Australia Trustees Ltd v Seas Sapfor Forests Pty Ltd (1999) 78 SASR 151
Johnson v Johnson (2000) 201 CLR 488
Joseph Lynch Land Co Ltd v Lynch [1995] 1 NZLR 37
Leppington Pastoral Co Pty Ltd v Commonwealth (1997) 76 FCR 318
Licul v Corney (1976) 180 CLR 213
London Passenger Board v Moscrop (1942) AC 332
Makhoul v Barnes (1995) 60 FCR 572
Malouf v Malouf (1999) 86 FCR 134
Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 75 ALJR 679
Morrell v Mercantile Mutual Insurance (Australia) Ltd (1999) 21 WAR 451
Pegang Mining Co Ltd v Choong Sam [1969] 2 MLJ 52
R v Australian Broadcasting Tribunal; Ex Parte Hardiman (1980) 144 CLR 13
R v Commonwealth Conciliation and Arbitration Commission; Ex Parte Angliss Group (1969) 122 CLR 546
Re J.R.L.; Ex Parte C.J.L. (1986) 161 CLR 342
Re Martin; Ex Parte Amtron Australia Pty Ltd (1996) 62 FCR 438
Re Refugee Review Tribunal; Ex Parte H (2001) 75 ALJR 982
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
Trident General Insurance Co Ltd v McNeice Bros Pty Ltd (1988) 165 CLR 107
TXU Electricity v The Officer of the Regulator General [2000] 3 VR 93
Walker v Commonwealth Trading Bank of Australia (1985) 3 NSWLR 496
Westralian Farmers Co-Operative Ltd v Southern Meat Packers Ltd [1981] WAR 241
Wilander v Tobin [1997] 1 Lloyd's Rep 195
Wilson v Metaxas [1989] WAR 285

(Page 5)

1 WALLWORK J: The appellant appeals against an order of this Court dismissing an application by it to be joined in an action between the first, second and third respondents as plaintiffs and the fourth and fifth respondents as defendants.

2 The learned Judge who made the order referred an application for leave to appeal from his decision to the Full Court to be heard at the same time as the proposed appeal. The State of Western Australia and the fourth respondent advised this Court that they did not intend to appear at the hearing of the application.

Background

3 The first respondent is a part owner of a gas pipeline. It is a party to a State Agreement which led to the construction of the pipeline. That Agreement was authorised and approved by the Goldfields Gas Pipeline Agreement Act 1994. It includes provisions regulating the terms upon which the pipeline owners may provide access to the pipeline for third parties. It provides in cl 21(3) that if uniform laws or subsidiary legislation become applicable to pipeline access, those laws "shall not have effect to the extent that the Joint Venturers can demonstrate that the uniform laws or subsidiary legislation… have or are likely to have a material adverse effect on the legitimate business interests of the Joint Venturers…."

4 The Agreement is a Schedule to the Goldfields Gas Pipeline Agreement Act 1994. Under the Agreement a part owner of the pipeline may reserve pipeline capacity (Initial Committed Capacity) for use by itself and its associates - which include unrelated persons approved by the Minister, cl 8(1). The appellant has been accorded status as an associate of the first respondent by ministerial approval under the Agreement and as such has access to Initial Committed Capacity ("ICC"). That access is under a Gas Transmission Agreement dated 29 September 1998 made between the appellant and the first respondent.

5 As stated above, cl 8 of the State Agreement has the effect that the joint venturers were entitled to reserve to themselves portion of the pipeline capacity. They could commit those portions to their use or that of their associates. With respect to the remaining capacity, the joint venturers could try to sell that to third parties for their use. The effect of cl 8.1 is that if the Minister approves some completely unrelated party as an associate, as he can do pursuant to the definition of "associate" in cl 1, a joint venturer which has reserved pipeline capacity to itself and its

(Page 6)

associates can make available that capacity on commercial terms to the approved associate, unaffected by other provisions of the Agreement by which, before the Gas Code came into effect, there was some degree of regulation of third party access. The provisions of the Agreement therefore give the Minister a role in regulating the terms upon which the joint venturers can make access available to third parties, but as between themselves and their associates they could agree on any terms. When the appellant obtained Ministerial approval to being an associate of the first respondent, the first respondent gave the appellant access to the first respondent's reserved capacity.

6 The Gas Pipelines Access (Western Australia) Act 1998 ("Gas Act") adopts a uniform law relating to pipeline access and that is the National Third Party Access Code ("NTPAC") for Natural Gas Pipelines Systems ("NGPS") ("the Code"). The Code applies to the relevant pipeline. It provides for a base service tariff called a Reference Tariff to be proposed by pipeline owners and approved by an independent Regulator who is the fourth respondent. Persons who have an interest in pipeline access such as the appellant are entitled to make submissions to the Regulator including as to the level at which a Reference Tariff should be set.

7 The pipeline is now owned by the first three respondents. The appellant has an agreement with the first respondent for access to the pipeline. Clause 10.2 of the agreement has the effect that if there is a tariff approved by the Regulator under the Code which is lower than the tariff otherwise applicable, the appellant obtains the benefit of the lower regulated tariff. The appellant's contract with the first respondent in effect provides that if the Regulator sets a tariff which is lower than the tariff which is otherwise applicable under the Transmission Agreement, the appellant gets the benefit of the lower tariff. That is the effect of cl 10.2 of the Agreement.

8 The appellant contends that it is reasonably arguable that as against the first respondent it has a legal contractual right to the benefit of a regulated tariff, if that tariff happens to be lower than the tariff otherwise applicable under the Transmission Agreement.

9 The first respondent, with the other pipeline owners, submitted an access arrangement to the Regulator for approval. Submissions were heard from interested parties, including the appellant. A draft decision was then published. The appellant has an opportunity to comment on that draft decision. The draft decision proposes a regulated tariff which is

(Page 7)

much lower than the tariff otherwise applicable under the appellant's contract with the first respondent.

The Action in which the Appellant wishes to be Joined

10 In the relevant action the first respondent pursues two broad claims for declarations, namely that:

(a) Pursuant to cl 21(3) of the State Agreement, the provisions of the Code (including those relating to the setting of a Reference Tariff) shall not have effect in relation to the pipeline on the ground that their application would have a material adverse effect on the legitimate business interests of the first respondent and other pipeline owners; and

(b) There are errors of law in the Regulator's draft decision which result in a misconstruction of cl 21(3) of the Agreement and of the Code.

11 With respect to the first claim, the first respondent contends that the application of the Code to the pipeline would constitute a "material adverse effect" upon it within the meaning of those words in cl 21(3) of the Agreement. The adverse financial consequences relied upon by the first respondent include the consequences of applying the proposed lower Reference Tariff to its Agreement with the appellant.

12 The appellant contends that it has enforceable rights under the Gas Transmission Agreement and the State Agreement which will be directly affected if the proposed declaration is made. Further, that its rights to invoke a Reference Tariff and to prevent the first respondent from taking steps to prevent the approval of a Reference Tariff for the pipeline, relate to a central element of the respondents' action.

13 The appellant also contends that it has rights related to the issue of "material adverse effect" under cl 21(3) of the Agreement. Those rights would arise if cl 10.2 is construed as incorporating the effect and operation of cl 21(3) which on the first respondent's case is an integral part of the action.

14 The appellant claims that if the first respondent is successful in its action the appellant's contractual right to invoke a lower Reference Tariff would be rendered nugatory because no Reference Tariff for the pipeline would be approved. Further, that it is no answer to suggest that the appellant may take later action to enforce its rights because a final

(Page 8)

decision would have been made that no Reference Tariff should be approved.

15 Counsel for the appellant further contended that the first three respondents (plaintiffs) were not approaching the Court to interpret a contract but rather as if the Court was the repository of the power to decide that the Code should not apply; that the Court was not being asked to order a Minister or the State to take action, but rather to order that the Code has a limited operation.

16 In its pleadings in the action, the State (the second defendant) contends that it is the Minister who determines "material adverse effect" pursuant to cl 21(3) and that it is the Minister whose determination would enable the Code to be effected. The first respondent denies that. It contends that it is not the Minister who has the relevant power but the Court.

17 As stated above, counsel for the appellant contended that if the first respondent is right in its contentions and the Court exercises the power to limit the operation of the Code, there would be no opportunity later for anyone else who was affected by the order, eg the appellant, to contend that that person had not been a party to the litigation and was not bound. The power would have been exercised finally if "material adverse effect" was declared in those circumstances. The Regulator could be stopped in the exercise of a statutory power.

18 The appellant also contends that the first three respondents have to establish in their action amongst other things; that the regulated tariff in the Code would have a material adverse effect on their legitimate business interests and that such an effect enlivens the power in the Court to order that the Code should not have such an effect. Further, that in order to prove the material adverse effect alleged, the first respondent intends to rely upon the financial effect it would suffer if the proposed draft regulated tariff applied to its contract with the appellant; that the first respondent points to the effect the proposed draft regulated tariff would have on other users as well as the appellant; that it wishes to rely upon the diminished revenue which would flow to it, if it had to charge the appellant the lower regulated tariff.

19 The appellant contends that it has agreed with the first respondent that the first respondent will give the appellant the benefit of a regulated tariff; that it is therefore inconsistent with the appellant's contract with the first respondent for the first respondent to seek to bring about a result

(Page 9)

where there is no regulated tariff; that the first respondent is seeking to deprive the appellant of a benefit which it has agreed under their contract, that the appellant should have.

20 The appellant contends that the first respondent relies on at least three statutes in support of its argument for a statutory power; that it seeks to find the power in s 97(4) of the Gas Pipelines Access (Western Australia) Act 1998, s 4 of the Goldfields Gas Pipeline Agreement Act 1994 and the Government Agreements Act 1979.

21 The first three respondents contend that s 97(4) of the Gas Pipelines Access (Western Australia) Act 1998 which adopts the National Third Party Access Code for natural gas pipeline systems, has the effect that the Regulator has no jurisdiction to apply relevant provisions of the Code to the Goldfields Gas Pipeline.

22 The appellant contends that s 97(4) of the Act does not provide that cl 21(3) of the State Agreement "shall take effect as if enacted." The subsection merely provides that nothing in the Act shall affect the operation of that sub-clause.

23 The Goldfields Gas Pipeline Agreement Act 1994 schedules the State Agreement. Section 4(1) of the Act provides that the Agreement is ratified. Section 4(2) provides that it is authorised. Section 4(3) provides "Without limiting or otherwise affecting the application of the Government Agreements Act 1979, the Agreement operates and takes effect despite any other Act or Law."

24 The appellant contends that there is a difference between a statutory provision which provides that "an instrument operates as if enacted" and one which provides that "an instrument operates and takes effect despite any other Act or Law." It submits that the Goldfields Gas Pipeline Agreement Act which provides that an agreement "operates and takes effect despite any other Act or law" is to prevent the implementation of the State Agreement from being unlawful, as for example, if an environmental approval had not been obtained.

25 The appellant submits that the Judge from which this application is brought was not asked to decide finally whether the appellant is correct in its contentions. He simply had to decide whether the points were arguable.

26 It was contended for the appellant that one issue was whether the words in s 4(3) of the Act supplied a head of power. The appellant's

(Page 10)

submission was that that question was plainly arguable as was the proposition that the Act in providing that the Agreement was "ratified" and "authorised" did not provide a head of power.

27 The appellant contends that on a proper construction of cl 21(3) there is no power in the Court to affect the regulated tariff in relation to its contract with the first respondent; that it is at the very least clearly arguable that any power to declare the Code not applicable on material adverse effect grounds did not extend to utilised Initial Committed Capacity, because pursuant to the second part of cl 21(3), the Code did not apply to the agreement between the first respondent and the appellant. This was because the joint venturers had been given complete freedom to contract on terms of their choosing; that in relation to their internal associates, related companies and anyone approved by the Minister, they stood outside the proposed regulation. It was submitted that the first three respondents did not have the right to obtain relief from the operation of the Code in relation to that portion of capacity which was not subject to the operation of the Code.

28 The appellant contends that the learned Judge at first instance concentrated on whether there was an absence of privity of contract in so far as the appellant was concerned but that that was not the correct approach.

29 The appellant wishes to be heard before the Court and to contend that any power exercised by the Court should not affect the appellant's contract; that if the Court is satisfied of material adverse effect on the legitimate business interests of the first respondent and makes a declaration that the Code did not have effect to the extent of that material adverse effect, that declaration should not touch the utilised "Initial Committed Capacity" (cl 21(3)) which is enjoyed by the appellant pursuant to its contract with the first respondent.

30 The appellant contends that the appellant and the first respondent consensually agreed that a regulated tariff would apply between them despite the fact that the joint venturers were not necessarily bound pursuant to cl 21(3) and were free to negotiate commercially in relation to utilised Initial Committed Capacity. They had agreed to invoke the regulated tariff. The appellant had contracted with the first respondent that if the Regulator delivered lower tariffs the appellant should get the benefit.

(Page 11)

31 The appellant contends that the first respondent has asked the Court to exercise a statutory power; that such an exercise will have a direct effect upon it; that its legal rights would be directly affected by the exercise of the power that is asked for by the first respondent. If the Court was to hold that the Regulator cannot set a tariff for the appellant it would directly affect the appellant's legal rights.

32 The appellant's prime contention is that an order made by the Court in accord with the respondents' contentions would affect the appellant because there will be no regulated tariff if the relief sought by the first respondent is given to it. Such relief would affect the appellant's legal rights because the appellant has a contractual right to a regulated tariff. The appellant wishes to contend that the material adverse effect power to give relief does not extend to utilised Initial Committed Capacity at all. It wishes to be heard when the Court is being asked by the first three respondents to exercise the power. It wishes to argue that there is no such power in the Court and that s 97(4) of the Gas Pipelines Access (Western Australia) Act 1998 is not enabling; also that s 4 of the State Agreement Act and s 3 of the Government Agreements Act do not supply a head of power.

33 The appellant further wishes to argue the question whether the State Parliament could invest a Judge with such a power as is contended for by the respondents. It contends that such a power would not be incidental to the performance of ordinary judicial power or for the resolution of a dispute; that such a power would be an interference with the judicial power. It would be an executive power.

34 The appellant wishes to argue that if there is such a power, it is not one which is conferred on the Court but rather on the Minister; that the power which the first respondent contends for is not a dispute resolution power.

35 It is contended that the first respondent wishes to inform the Court that if the first respondent has to accept a lower tariff it is going to cost the first respondent a lot of money. At the same time the respondent is contending that the appellant cannot be in the dispute; that the Court should exercise a power to stop the Regulator from setting a tariff to the extent of stopping him from setting it for the appellant. Further, the appellant wishes to contend that if there is an order to be made with some statutory force under cl 21(3) because material adverse effect has been proved, it may not be an order which says the Regulator should stop

(Page 12)

completely. The order might only go so far as to say that the regulated tariff shall not apply to "this portion of pipeline capacity".

36 The appellant submits that the Regulator must be left free to determine a regulated tariff which can apply to anyone who enjoys access to utilise the Initial Committed Capacity on terms consensually agreed with the joint venturers; that if A and B, without being obliged by law to do so, agree that the result of the Regulator's tariff shall apply in their contract, one of them cannot seek the exercise of a power to prevent the Regulator from bringing about a tariff which they have agreed should apply; that the effect of the first respondent's contentions is that the first respondent is asking the Court to look at the effect on the appellant's contract but does not want the appellant to be heard on the question.

37 The appellant contends that it can be joined in the action if it can show that there is an issue before the Court concerning: (a) as to whether the power is a lawful power; (b) as to whether it would affect the appellant and (c) as to whether it was validly conferred; that once it is seen that the power suggested is one which could have an effect upon the appellant's legal rights, the appellant should be permitted to be joined and to put its arguments.

Some of Respondents' Contentions

38 The first respondent's contention is that the Court is authorised under cl 21(3) of the Agreement to make the decision as to whether the first three respondents have demonstrated that there would be material adverse effect to their legitimate business interests. It requests the Court to make a declaration that the uniform law (the Gas Code) shall not have effect. It contends that it is the Court and not the Minister which has the authority pursuant to cl 21(3) to decide that material adverse effect has been demonstrated and to declare that the Gas Code shall not have effect.

39 The respondents submit that the appellant would not suffer a substantial or any injustice if the learned Judge's order which is appealed from remains unreversed and the appellant is required to commence separate proceedings; that there will be no issue estoppel as between the appellant and any of the parties to the pending proceedings in relation to any issues of fact or law in connection with the Gas Transmission Agreement, the State Agreement or the Code in consequence of their action. It is also said that the learned Judge's reasons do not constitute a binding precedent upon any other Judge of this Court; that if separate

(Page 13)

proceedings were issued by the appellant, a Judge could decide whether there should be a joint trial in relation to all or some of the issues.

40 The respondents contend that they are asking the Court to resolve a dispute between the State of Western Australia and the first, second and third respondents. That dispute relates to the proper construction of cl 21(3) and its interaction with the Code and the determination of whether, and if so to what extent, the Code in its terms, as applied or likely to be applied by the Regulator, will or will be likely to have a material adverse effect upon the legitimate business interests of the Joint Venturers. It is submitted that it is a misconstruction of that argument to contend that the respondents are saying that cl 21(3) confers some power upon the Court.

41 The first three respondents contend that cl 21(3) does not require the Joint Venturers to demonstrate the necessary effect to the Minister; that if there is a dispute between any relevant parties to the State Agreement concerning whether or not the Code, being a uniform law, has or does not have, the necessary effect, then any of the parties can obtain access for the resolution of that dispute through the general jurisdiction of the Supreme Court as a superior court of record.

42 It is submitted that in this case there are two defendants, being the State and the Regulator, each of whom has an interest in different parts of the issues which have been raised by the first, second and third respondents in the statement of claim. They are the proper contradictors to the declaratory relief which has been sought. I interpolate here to say that on that test, so has the appellant.

43 It is contended that the first three respondents are asking the Court to determine a dispute as to whether or not the uniform laws or subsidiary legislation will operate in any situation where the Joint Venturers can demonstrate that they will have a material adverse effect on their legitimate business interests; that those contentions are not seeking to make the Court a repository of power as contended by the appellant.

44 The respondents contend that it is a process of construction to determine whether Parliament intended to leave cl 21(3) unaffected by the later provisions of the Code; that one needs to look at all the instruments and statutes which are said to be relevant in order to see whether the Parliament intended, even in the later statute, that the provisions of the later statute should apply to the State Agreement; that the learned Judge

(Page 14)

found that the points which the appellant was endeavouring to agitate before him were simply without merit.

45 It is also submitted that it is important to bear in mind that the second and third respondents were not parties to the agreement between the appellant and the first respondent.

46 With respect to the constitutional question raised by the appellant concerning the Court being asked to exercise executive power it is said that the Court is not being made the repository of any power, executive or legislative, but that in the context of the pending proceedings, it is simply being asked to exercise its ordinary general jurisdiction in the resolution of the dispute.

47 It is submitted that pursuant to the agreement between the appellant and the first respondent there was no trust or promise by the first respondent which was implicit in the State Agreement and which operated for the benefit of the appellant as an associate; that the appellant could not give itself a right to be joined in the pending proceedings by saying that it was itself entitled to enforce some parts of the State Agreement by virtue of its status as an associate; that the requirements of s 11 of the Property Law Act 1969 have not been satisfied and the appellant is not able to establish that there was any trust or promise by the first respondent which was implicit in the State Agreement and which operated for the benefit of the appellant in its status as an associate. It was submitted that in any event the pending proceedings would not prevent the appellant from having access to the initial committed capacity in accordance with the terms of the Gas Transmission Agreement.

48 It was conceded for the respondents that it was possible that if they were successful in the pending proceedings, the Regulator may be prevented from approving a reference tariff under the Code in relation to the pipeline. That was a possibility. It was submitted however that even if that was the case, it was not the case that there would be no applicable regulatory regime under which tariffs were determined for the purposes of this pipeline because the State Agreement would continue to operate and tariffs could be redetermined pursuant to the existing approved tariff setting principles, in particular, Tariff-Setting Principle Number 12. It could not be said that there would be no regulatory regime and that cl 10.2 would be rendered nugatory. It was conceded that if there was any relevantly lower tariff under cl 10.2 then that might be availed of by the appellant to the extent that it is lower than the tariff prescribed under cl 10.1(b).

(Page 15)

49 The respondents relied on the learned Judge's reasons that there was no reason to assume that either the Regulator or the State of Western Australia, or both, will not be proper contradictors of the respondents' claims on issues going to the powers and procedures of the Regulator.

50 It was submitted that the respondents do not seek any declaratory relief in relation to cl 10.2 of the Agreement; that the relief which is sought by way of declaration is limited to the reference tariffs and related matters. That is apparent from the prayer for relief at pages 95 and 96 of the application book.

51 It was further submitted that there were matters of complexity which had been raised by the appellant and it would be best if the appellant issued separate proceedings so that these could be pleaded out. If necessary, some parts could be consolidated and argued with the present proceedings. That matter could be determined after separate proceedings were issued.

52 In answer to a question from the Bench, counsel for the respondents said:

"So that if we fail in the pending proceedings and the applicable tariff under the draft decision is not changed in the final decision then there will be a lower tariff. There may be some room for argument as to the precise construction and application of cl 10.2. Certainly if we fail on that point then the tariff would be lower and I think the learned Judge referred to that in his reasons …"

53 When asked whether, in the present proceedings, an objective was to prevent the Regulator approving an access arrangement which necessarily included the reference tariffs, counsel replied "The answer to your Honour's question, I suppose is yes, by that process of reasoning." When asked did that not have a direct effect on the interests of the appellant, it was submitted that it needed to be shown that it would have a direct effect on a legal right. It also needed to be shown that the appellant would be a necessary party to the proceedings.

Appellant's Reply

54 In reply it was submitted that it was in error to think that the statutory power could be exercised without giving those persons affected by its exercise natural justice. The appellant had an entitlement to be heard if a

(Page 16)

statutory power was to be exercised which affected its rights. It was submitted that if Parliament had reposed the power in the Court, how could it be supposed that Parliament's intention was that the Court would not hear from all of those who would be affected. Everybody affected by the proposed exercise of power should be before the Court. It was submitted that it is not only the appellant, but other people who have contracts for access to the pipeline who will be affected if regulated tariffs are precluded.

55 It is the appellant's contention that if there is an exercise of statutory power all those whose interests are affected are entitled to be heard. They are all the more entitled to be heard if the power is reposed in a Court, because if the power is reposed in a Court, the intention of Parliament was that it should be exercised in the judicial way, giving people a right of hearing - Lisafa Holdings v Commission of Police (1988) 15 NSWLR 1.

56 It was submitted that in relation to prerogative proceedings, O 56 r 7 of the Rules of the Supreme Court demonstrated that the Court should hear any person who desires to oppose an application and who appears to the Court to be a proper person to be heard, notwithstanding that the person has not been served with an Order Nisi or notice of motion. That Rule reflects a fundamental obligation on the Courts to give natural justice to litigants when an exercise of statutory power is sought to be impugned by prerogative proceedings. That if someone chooses to seek an exercise of power by the Court, and as in this case, to impugn the Regulator's exercise of his duties as well, then whether it is done by declaration or in some other way, the persons who have a right to be heard are the same. In this case, the respondents are contending that the Regulator's exercise of statutory power was wrong; that he made errors of law; that he took into account irrelevant considerations and that he failed to take into account relevant considerations. That was a challenge which could have been undertaken by a prerogative writ. If that occurred an interested person such as the appellant would be entitled to be heard because the Regulator exercises a statutory power. He has to consult interested parties. The appellant and others had made submissions to him. The respondents had come to the Court and asserted that in setting the reference tariff, the Regulator had misconstrued the statute. In effect, they were saying that they did not want any of their opponents before the Regulator to appear before the Court to support the Regulator's decision.

57 It was submitted that O 18 r 6 of the Rules was not designed to interfere with a person's right to natural justice where the substance of the action was a challenge to a statutory official's exercise of power. It was

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not designed to interfere with natural justice where the Court was being asked to exercise the power to determine material adverse effect and to decide to what extent the Code should apply.

58 It was submitted that the first three respondents had written to the appellant and in effect stated: Our clients' intend to rely in part in the action upon the impact of the Regulator's draft decision, and any final decision to similar effect, upon that portion of the pipeline capacity to which the appellant has access; that it was the first three respondents who wished to point to the appellant's contract and say to the Court: "Look at the effect on one of us".

59 It was submitted that the respondent had accepted that the appellant's construction of cl 10.2 was arguable. What the first respondent was saying was that on the proper construction of the Gas Transmission Agreement the statutory power in cl 21(3) was effectively incorporated and that the appellant by contract was affected by that power. The appellant then had a legal right to be heard upon the proper effect, the scope, the force of cl 21(3) because the first respondent was saying that cl 21(3) affects and qualifies the appellant's legal right to invoke the regulated tariff. The appellant was entitled to be heard on that. It would be too late if a Judge made an order under cl 21(3) stopping the Regulator "in his tracks".

Conclusion

60 In Homestyle Pty Ltd v City of Belmont & Anor [1999] WASCA 59 at [30] it is stated that a test for joinder under the Rules of the Supreme Court O 18 r 6(2)(b) is whether the appellant's rights against, or liabilities to, any party to the action, in respect of the subject matter of the litigation, will be directly affected by any order made in the proceedings.

61 In my view, the appellant's rights could be directly affected by any order made in the proceedings commenced by the first to third respondents in this case. This is because the appellant has legal contractual rights under its agreement with the first respondent to invoke any lower Reference Tariff which is approved by the Regulator in the exercise of his statutory powers.

62 I agree generally with the appellant's contentions and in particular that in so far as the Regulator is concerned, these proceedings have aspects in common with those where prerogative writs are usually sought.

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63 I would allow the appeal.

Orders to be Made

64 The appellant submitted that if it was successful the action should be sent to a different Judge for its future management because in the appellant's submission the learned Judge did not have sufficient regard to arguments which the appellant contends were clearly put. It was submitted that it was put to the learned Judge that the appellant was not an inter-meddler in a contract but was directly affected by an exercise of legislative power; that it was not a question of privity of contract. It was submitted that whether that argument was right or wrong it was not so hopeless as to be dismissed without finding its way into the reasons.

65 It was further submitted that the appellant's counsel had explained to the learned Judge that the appellant and the respondents had agreed to adopt the regulated tariff; that it was not sufficient to say that the regulated tariff did not directly affect the appellant.

66 Counsel referred to various parts of the reasons for judgment in which it was said that the learned Judge had erred. It was submitted that the learned Judge had not considered whether the appellant's arguments were fairly arguable but had dismissed them completely; that in one case the learned Judge had taken a proposition being put by the respondents as having been put by the appellant.

67 The appellant's counsel submitted that because a number of the appellant's arguments had been allegedly overlooked or wrongly interpreted, the learned Judge had not really addressed the essence of the appellant's case; also that he had not directed his mind to the question of whether the appellant's arguments were arguable. Therefore, the appellant was entitled to have its case considered afresh at every point by a Judge who had not previously dealt with the arguments. It was an appropriate case for the matter to be remitted to another Judge.

68 In my view, even if some of the appellant's arguments in this regard are accepted, this is a very complex matter and in such cases Counsel's arguments can be misinterpreted, particularly where there are so many statutes involved.

69 I would return the action to the same Judge.

70 PARKER & TEMPLEMAN JJ: The question for the Full Court, which arises under O 18 r 6(2)(b) of the Rules of the Supreme Court, is whether

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it is necessary for the appellant to be joined as a party to the proceedings brought by the first, second and third respondents, against the fourth and fifth respondents, so that "all matters in dispute … may be effectually and completely determined and adjudicated upon".

71 That question is answered by considering whether the appellant's rights against, or liabilities to any party to the action will be affected directly by any order made in that action: Homestyle Pty Ltd v City of Belmont & Anor [1999] WASCA 59.

72 Each of us has had the advantage of reading in draft the reasons prepared by Wallwork J, in which his Honour reviewed the various issues raised by the appellant. We agree generally with his Honour that it is arguable that the applicant's rights will be affected by orders which may be made in the action: and that the appellant has therefore made out a case to be joined.

73 There is a particular aspect of the appellant's case which, in our view, would warrant that conclusion in any event. We mention it expressly, because although raised before the learned primary Judge, his Honour did not refer to it in his reasons.

74 Adopting the nomenclature used by Wallwork J, it is the appellant's contention that the first, second and third respondents (the plaintiffs in the action) seek to have the Court order that the National Third Party Access Code has a limited operation. The result would be to prevent the Regulator from setting the terms of access to the pipeline: and hence, a tariff. This would have a direct effect on the appellant, because it would be denied the opportunity which it enjoys now, pursuant to its agreement with the first respondent, to pay a lower tariff for the transmission of gas. That is because, by cl 10.2 of the agreement, the tariff is the lower of that fixed by the agreement and that set by the Regulator.

75 The appellant's contention arises from cl 21.3 of the State Agreement, which provides that the Code shall not apply if the joint venturers who own the pipeline:

" … can demonstrate that (the Code) or subsidiary legislation … have or are likely to have a material adverse effect on the legitimate business interests of the Joint Venturers …"

76 It is not clear from cl 21.3, to whom the joint venturers are to make their demonstration.
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77 As we understood the submissions made by leading counsel for the respondents, he accepted that the demonstration would, or might be, made to the Court. If that is so, then the appellant is justified in its contention that the effect of cl 21.3 of the State Agreement is, or might be, to invest the Court with the statutory power to modify the Code.

78 If the Code is modified, in effect, by order of the Court, the appellant's rights may be affected irrevocably. In any event, the appellant should be permitted to argue that cl 21.3 does not have the construction referred to above: or that such a construction would result in an unconstitutional conferral of executive power on the judiciary.

79 In those circumstances, it is appropriate that the appellant be joined in the proceedings. However, we would not confine the appellant to this point. In our view, once joined it should have the same opportunity as any other party to choose the grounds on which it wishes to litigate.

80 We agree with Wallwork J that the action should be remitted to the learned primary Judge, and that his Honour should continue to manage it in the long causes list.

81 Interlocutory decisions and directions made by Judges in the course of managing long cause matters are subject to appeal: and there have been instances in which this Court has upheld appeals arising from such decisions. Despite that, it is preferable for the matter to continue under the supervision of the same Judge, who as the litigation proceeds, develops a familiarity with the issues and their complexities which is conducive to the efficient management of the action.

82 We see no reason to depart from the usual practice in this case.