Nt Power Generation Pty Ltd v Power and Water Authority

• Jurisdiction: Australia Federal only
• Judge: Mchugh Acj,,Gummow,,Callinan And Heydon Jj.,Kirby J
• Judgment Date: 06 October 2004
• Neutral Citation: 2004-1006 HCA B,[2004] HCA 48
• Court: High Court
• Docket Number: D13/2003
• Date: 06 October 2004

NT Power Generation Pty Ltd

Appellant

and

Power and Water Authority & Anor

Respondents

[2004] HCA 48

McHugh ACJ, Gummow, Kirby, Callinan AND Heydon JJ

D13/2003

HIGH COURT OF AUSTRALIA

NT Power Generation Pty Ltd v Power and Water Authority

Trade practices — Market definition — Substantial degree of market power — Where statutory authority had a monopoly in the markets for electricity transmission and distribution services and for electricity supply — Where authority owned the transmission and distribution infrastructure — Where no transactions occurred in the transmission and distribution services market — Whether authority's control of the infrastructure gave it market power in both markets — Trade Practices Act 1974 (Cth), ss 46(1), 46(4)(c).

Trade practices — Misuse of market power — Taking advantage of market power — Proscribed purpose — Whether statutory authority's refusal of access to its infrastructure involved taking advantage of its market power or only of its proprietary rights — Whether refusal was due to a ‘direction’ from the Minister — whether Minister's purpose in giving direction meant authority's refusal was not for a proscribed purpose — Whether authority's regulatory role meant refusal was not for a proscribed purpose — Trade Practices Act 1974 (Cth), s 46(1) — Power and Water Authority Act (NT), s 16.

Crown — Immunity — Crown in right of the Northern Territory — Carrying on a business under the Trade Practices Act 1974 (Cth) — Exceptions — Where statutory authority had a monopoly in the markets for electricity transmission and distribution services and for electricity supply — Where authority owned the transmission and distribution infrastructure — Whether authority's exclusive use of the infrastructure was part of carrying on a business — Whether refusal of access to infrastructure was merely refusal of a ‘licence’ and thus not part of carrying on a business — Trade Practices Act 1974 (Cth), ss 2B, 2C(1)(b).

Crown — Immunity — Crown in right of the Northern Territory — ‘Emanation of the Crown’ — Where statutory authority established by the Territory Government was the sole beneficial owner of a trading corporation — Where corporation incorporated under general enactment for the incorporation of companies rather than specific statute — Where corporation acquired for specific Government purpose — Whether corporation was an ‘emanation of the Crown’.

Crown — Immunity — Crown in right of the Northern Territory — ‘Derivative Crown immunity’ — Where statutory authority established by the Territory Government was the sole beneficial owner of a trading corporation — Where corporation entered into contracts with third parties — Where financial interests of the Government potentially prejudiced by preventing enforcement of those contracts under the Trade Practices Act 1974 (Cth) — Where no legal or proprietary interests of the Government affected — Whether corporation could claim ‘derivative Crown immunity’.

Practice and procedure — Pleadings — Where points made in original pleadings but not relied on and no evidence called at trial — Whether points can be taken on appeal.

Words and phrases — ‘carries on a business’, ‘market power’, ‘take advantage of’, ‘derivative Crown immunity’, ‘emanation of the Crown’, ‘direction’, ‘licence’.

Competition Policy Reform Act 1995 (Cth), s 89.

Competition Policy Reform (Northern Territory) Act (NT), ss 14, 15.

Power and Water Authority Act (NT), s 16.

Trade Practices Act 1974 (Cth), ss 2B(1), 2C(1)(b), 4, 46(1), 46(4)(c), Schedule, Pt 1, cl 46.

1 Mchugh Acj,Gummow,Callinan And Heydon Jj. The appellant, NT Power Generation Pty Ltd (‘NT Power’), generated electrical power at a plant which it owned. It decided to sell power to consumers within the Northern Territory. It could not sell power without access to the existing electricity transmission and distribution infrastructure in and around Darwin and Katherine. That infrastructure was owned by the first respondent, Power and Water Authority (‘PAWA’).

Mchugh Acj,

2 PAWA, a body corporate constituted under s 4 of thePower and Water Authority Act (NT)1 (‘the PAWA Act’), was subject to the directions of the Minister for Essential Services for the Northern Territory (s 16). It operated a vertically integrated electricity enterprise. It generated electricity or purchased electricity generated by others; it transported that electricity from generation sites to distribution points via transmission equipment; it then transported it from distribution points to the customers via distribution equipment, and charged the customers. NT Power requested that PAWA supply the electricity transmission and distribution infrastructure services needed for its plan to sell electricity to consumers in competition with PAWA. Though there was no safety, technical or other problem preventing PAWA from acceding to that request, on 26 August 1998 PAWA rejected it. Thereafter PAWA maintained that stand.

3 While the field of legal controversy arising from that rejection was broader in the courts below, in this appeal three principal questions arise about the construction and application of theTrade Practices Act 1974 (Cth) (‘the Act’) and related legislation.

4 The first question is whether s 2B, which creates an exception to the immunity that PAWA (as an emanation of the Northern Territory Government) would otherwise enjoy from s 46 of the Act so far as PAWA ‘carries on a business’, applied to PAWA's conduct2. The second question is whether,

assuming that the Act did apply to PAWA's conduct, PAWA's rejection of NT Power's request contravened s 46 of the Act3.

5 At trial, the Federal Court of Australia (Mansfield J) answered the first question favourably to PAWA4. It therefore dismissed NT Power's application for relief. Though it was not strictly necessary for him to deal with the second question, he adopted the helpful course of doing so, and reached conclusions favourable to NT Power5.

6 In the Full Court of the Federal Court of Australia, Lee and Branson JJ agreed with the trial judge on the first question6, and Finkelstein J dissented7. Hence the appeal was dismissed. Though it was unnecessary for the Full Court to answer the second question, they followed the trial judge's lead in addressing it: Branson and Finkelstein JJ agreed with the trial judge's conclusions8, while Lee J disagreed9.

7 The third question arising in this appeal relates to certain conduct of the second respondent, Gasgo Pty Ltd (‘Gasgo’), a wholly owned subsidiary of PAWA. The trial judge held that the Act did not apply to it10; hence he did not determine whether it had contravened s 4611. Lee and Branson JJ agreed with the trial judge12; Finkelstein J disagreed13.

8 The ensuing reasons establish that the contentions of the appellant are correct, and that the appeal should be allowed against both respondents.

9 In view of the number and complexity of the controversies in the appeal, it is desirable to set out the order in which they will be examined.

10 It is proposed, first, to summarise the statutory background and then the factual circumstances of the dispute, before turning to the question of whether PAWA was carrying on a business within the meaning of s 2B. That question involves consideration of the reasoning of the courts below, of what PAWA's business activities were, of how the trial was conducted in relation to that issue, and of the correct construction of s 2B. It also involves an analysis of whether PAWA's refusal of NT Power's request fell within an exception to s 2B created by s 2C(1)(b).

11 It is then necessary to deal with numerous arguments advanced by PAWA against the conclusion that it contravened s 46, namely that there was no relevant market because of a want of transactions; that it had no market power because of s 46(4)(c); that it did not take advantage of its market power, because it took advantage only of its proprietary rights, or because it only did what the Minister for Essential Services directed it to do under s 16 of the PAWA Act; and that the trial judge wrongly inferred an exercise of market power from PAWA's purpose, confused the effect of PAWA's conduct with its purpose, confused the existence of market power and its exercise, and made incorrect, and failed to make correct, assumptions in analysing whether PAWA took advantage of market power.

12 Finally, it is proposed to consider whether Gasgo was part of the Northern Territory Government, and whether it was in any event able to rely on what was called ‘derivative Crown immunity’.

13 The reasons are organised as follows:

The statutory background	[14]–[29]
The factual circumstances	[30]–[45]
The s 2B issue	[46]–[88]
– The reasoning of the courts below	[46]–[51]
– PAWA's business activities	[52]–[55]
? PAWA's argument on the conduct of the trial	[56]–[63]
– Refusal of access to protect PAWA's retail business	[64]
– The correct construction of s 2B	[65]–[87]
– Conclusion on s 2B	[88]
Was PAWA's refusal within the exception to s 2B created by s 2C(1)(b)?	[89]–[103]
Contravention of s 46	[104]–[153]
– Electricity infrastructure market or electricity carriage market?	[104]–[111]
– Section 46(4)(c) and market power	[112]–[121]
– Taking advantage of proprietary rights not market power?	[122]–[126]
– Was a direction given under s 16 of the PAWA Act?	[127]–[138]
– Erroneous inference from purpose?	[139]
– Confusion between purpose and effect?	[140]–[141]
– Confusion between existence and exercise of market power?	[142]
– Failure to make correct assumptions about a market?	[143]–[150]
– Alternatives available to the NT Government	[151]–[152]
– Conclusions on s 46	[153]
Section 46 and Gasgo	[154]–[190]
– Gasgo's role...