Port of Newcastle Operations Pty Ltd v Glencore Coal Assets Australia Pty Ltd

• Jurisdiction: Australia Federal only
• Judge: Kiefel CJ,Gageler,Gordon,Steward,Gleeson JJ
• Judgment Date: 08 December 2021
• Neutral Citation: [2021] HCA 39
• Court: High Court
• Docket Number: S33/2021

[2021] HCA 39

HIGH COURT OF AUSTRALIA

Kiefel CJ, Gageler, Gordon, Steward and Gleeson JJ

S33/2021

Port of Newcastle Operations Pty Limited

Appellant

and

Glencore Coal Assets Australia Pty Ltd & Ors

Respondents

Representation

C A Moore SC with D J Roche for the appellant (instructed by Clayton Utz)

N J Young QC with N P De Young QC and M P Costello for the first respondent (instructed by Clifford Chance)

S B Lloyd SC with C M Dermody for the third respondent (instructed by DLA Piper)

Submitting appearance for the second respondent

Competition and Consumer Act 2010 (Cth), Pt IIIA, ss 44X(1)(e), 44ZZCA.

Ports and Maritime Administration Act 1995 (NSW), ss 48(4), 50, 51, 67.

Trade practices — Competition — Access to services — Where declared service under Pt IIIA of Competition and Consumer Act 2010 (Cth) (“Act”) for provision of right to access and use certain infrastructure at Port of Newcastle (“Port”) — Where operator of Port fixed navigation service charge and wharfage charge under Ports and Maritime Administration Act 1995 (NSW) for use of certain port infrastructure — Where access dispute concerned amount of navigation service charge and wharfage charge — Whether Australian Competition Tribunal (“Tribunal”) erred in determining range of circumstances in which navigation service charge payable — Whether Tribunal erred in determining amount of navigation service charge — Meaning of “access” in Pt IIIA of Act — Construction of s 44X(1)(e) of Act — Application of pricing principles in s 44ZZCA of Act.

Words and phrases — “access”, “access dispute”, “competition”, “declaration of a service”, “depreciated optimised replacement cost”, “essential facility”, “navigation service charge”, “physical use”, “pricing principles”, “provider”, “regulated asset base”, “service”, “third party”, “use”, “user contributions”.

ORDER

• 1. Vary the orders of the Full Court of the Federal Court of Australia made on 24 August 2020 by inserting a new order 5: “The determination according to law by the Tribunal on remitter pursuant to order 1 be confined to redetermining the scope of the Navigation Service Charge.”

• 2. Appeal otherwise dismissed.

1 Kiefel CJ, Gageler, Gordon, Steward and Gleeson JJ. This is an appeal by special leave from a decision of the Full Court of the Federal Court (Allsop CJ, Beach and Colvin JJ) 1 given on an appeal on questions of law from a decision of the Australian Competition Tribunal 2. The appeal raises issues of statutory construction central to the operation of Pt IIIA of the Competition and Consumer Act 2010 (Cth) (“the Act”).

2 The appellant is Port of Newcastle Operations Pty Limited (“PNO”). Since 2014, PNO has been the lessee from the State of New South Wales of the Port of Newcastle and has been the “operator” of the Port under the Ports and Maritime Administration Act 1995 (NSW) (“the PMA Act”).

3 The Port is one of the largest coal exporting ports in the world. The Port is the only commercially viable means of exporting coal from more than 30 operating coal mines in the Hunter Valley.

4 PNO, in its capacity as operator of the Port, relevantly controls use by those involved in the export of coal of two categories of facility at the Port. One is the loading berths, located at the three terminals at the Port, at which ships are loaded with coal for export. The other is the shipping channels, through which ships entering the Port must pass to reach the loading berths and through which ships once loaded must again pass to exit the Port. The shipping channels were constructed by dredging and associated public works undertaken by the State of New South Wales at various times over the course of more than a century before the State leased the Port to PNO.

5 The first respondent is Glencore Coal Assets Australia Pty Ltd (“Glencore”). It is the largest producer of coal in the Hunter Valley. It owns or operates roughly a third of the mines producing the coal that is exported through the Port.

6 To facilitate the export through the Port of the coal that Glencore produces at its mines, Glencore has entered into a series of long term “take or pay” contracts with downstream service providers. It has organised for the coal to be transported from the mine to the Port under long term contracts both with rail haulage providers and separately with Australian Rail Track Corporation, which provides

use of the track. It has organised for the coal then to be loaded onto ships berthed at one of the three terminals located at the Port, under a long term contract with the coal loader operating at that terminal

7 Most of the coal produced by Glencore that is by those means transported by rail from the mine to the Port and there loaded onto ships berthed at a terminal is sold by Glencore to overseas buyers under “free on board” (“FOB”) contracts. Under a standard FOB contract, the seller is required to deliver the goods sold onto a ship nominated by the buyer at the named port of shipment. The buyer bears all shipping and subsequent costs. The buyer is typically the charterer of the ship, the terms on which the ship is chartered by the buyer being a matter of separate contractual arrangement between the buyer and the owner or operator of the ship. Some of the coal is sold by Glencore to overseas buyers under “cost, insurance and freight” (“CIF”) contracts. Under a standard CIF contract, the seller is required to contract for and pay the costs and freight necessary to bring the goods to the named port of destination and is required to contract for insurance cover against the buyer's risk of loss or damage to the goods. The seller is typically the charterer of the ship, the terms on which the ship is chartered by the seller being a matter of separate contractual arrangement between the seller and the owner or operator of the ship.

8 The other respondents to the appeal are the Tribunal and the Australian Competition and Consumer Commission (“the ACCC”). The Tribunal has appropriately entered a submitting appearance. The ACCC has chosen to present submissions which support the decision of the Full Court. Whether the litigious posture of the ACCC is consistent with the principle in R v Australian Broadcasting Tribunal; Ex parte Hardiman 3 was touched on but not developed in the course of the hearing. The absence of further consideration in these reasons of the posture of the ACCC should be understood as neither condemnation nor condonation.

9 To allow the issues raised in the appeal to be understood, it is appropriate to set out the scheme of Pt IIIA of the Act and to note the relevant provisions of the PMA Act before going on to record the procedural history and to examine the reasoning of the Tribunal and of the Full Court.

Part IIIA of the Act

10 Part IIIA of the Act is headed “Access to services”. The Part was inserted into the Act, then known as the Trade Practices Act 1974 (Cth), by amendment in 1995 (“the 1995 Act”) 4. Insertion of the Part implemented a provision of the Competition Principles Agreement 5 agreed to by the Council of Australian Governments (“COAG”) that year in accordance with a recommendation in the report two years earlier of the National Competition Policy Review chaired by Professor Fred Hilmer (“the Hilmer Report”) 6. Introduction into the Commonwealth Parliament of the Bill for the 1995 Act was preceded by release by COAG for public comment of a package of material containing an exposure draft both of the Bill and of the Competition Principles Agreement (“the Information Package”) 7.

11 Following an extensive review by the Productivity Commission in 2001 8, Pt IIIA was amended in 2006 (“the 2006 Act”) 9. Aspects of the Part in the form inserted by the 1995 Act were considered by this Court in 2008 10. Other aspects of the Part in the form amended by the 2006 Act were subsequently considered by this Court in 2012 11. Following a further review of the Part by the Productivity

Commission in 2013 12 and consideration of the Part in the context of a more general review of competition policy undertaken by the Competition Policy Review chaired by Professor Ian Harper which reported in 2015 (“the Harper Review”) 13, the Part was amended most recently in 2017 (“the 2017 Act”) 14

12 Part IIIA is economic and pro-competitive in its orientation. The first of its two express objects, inserted by the 2006 Act following a recommendation of the Productivity Commission in 2001, is to “promote the economically efficient operation of, use of and investment in the infrastructure by which services are provided, thereby promoting effective competition in upstream and downstream markets” 15. That is the principal object of the Part. It alludes to the operation of its central provisions.

13 The second of the two express objects, also inserted by the 2006 Act following a recommendation of the Productivity Commission in 2001, is to “provide a framework and guiding principles to encourage a consistent approach to access regulation in each industry” 16. It alludes not to the operation of central provisions of the Part but to provisions which apply the framework and principles established by the Part in the pursuit of the principal object to facilitate industry-specific access regimes 17 and to guide the structure and content of State and Territory access regimes 18. For present purposes, the second object can be put to one side.

14 The expression of the principal object of the Part clarifies the solution which Pt IIIA provides to what was identified in the Hilmer Report as “the ‘essential facilities’ problem”. The Hilmer Report explained the problem as follows 19:

“Some economic activities exhibit natural monopoly characteristics, in the sense that they cannot be duplicated economically. While it is difficult to define precisely the term ‘natural monopoly’, electricity...