AUSTRALIAN COMPETITION TRIBUNAL
Lakes R Us Pty Ltd [2006] ACompT 3
ACCESS REGIME – refusal by designated Minister to declare a service – application to Australian Competition Tribunal for review of decision – review hearing dates fixed – application for leave to withdraw application for review – procedural power of Tribunal – application for leave to withdraw opposed – public interest – no effective contradictor – leave therefore granted.
Trade Practices Act 1974 (Cth) s 44K, s 44ZZP
Trade Practices Regulations 1974 reg 22, reg 26
Asia Pacific Transport Pty Ltd [2003] ATPR 41-920 cited
Re United Permanent Building Society Ltd (1976) 26 FLR 129 cited
Re Country Television Services Ltd (1984) 73 FLR 68 cited
Nursing Agencies Association of Australia (2003) ATPR 41-936 cited
File No 2 of 2006
RE: APPLICATION FOR REVIEW, PURSUANT TO SECTION 44K OF THE TRADE PRACTICES ACT 1974, OF THE DECISION BY THE ACTING NSW PREMIER TO NOT DECLARE WATER AND TRANSPORT SERVICES PROVIDED BY HYDRO LIMITED AND STATE WATER CORPORATION
BY: LAKES R US PTY LTD
FRENCH J (Deputy President)
31 MAY 2006
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RE: APPLICATION FOR REVIEW, PURSUANT TO SECTION 44K OF THE TRADE PRACTICES ACT 1974, OF THE DECISION BY THE ACTING NSW PREMIER TO NOT DECLARE WATER AND TRANSPORT SERVICES PROVIDED BY SNOWY HYDRO LIMITED AND STATE WATER CORPORATION
BY: LAKES R US PTY LTD
Applicant
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DATE: |
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WHERE MADE: |
THE TRIBUNAL DETERMINES THAT the applicant have leave to withdraw its application.
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THE TRIBUNAL: |
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DATE: |
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PLACE: |
REASONS FOR RULING ON APPLICATION FOR LEAVE TO WITHDRAW
Introduction
1 On 9 January 2006 the Acting Premier of New South Wales, decided, on the recommendation of the National Competition Council (NCC), not to declare, under Pt IIIA of the Trade Practices Act 1974 (Cth) (the Act), water storage and transport services provided by Snowy Hydro Ltd (Snowy Hydro) and the State Water Corporation (State Water). Lakes R Us Pty Ltd (Lakes R Us) which had applied for the declaration then applied to the Australian Competition Tribunal (the Tribunal) for review of the Minister’s decision.
2 Lakes R Us had difficulties in formulating its case and failed to comply with a Tribunal direction for the filing of witness statements. On 26 May 2006 the company applied for leave to withdraw its application.
3 For the reasons which follow, I will grant leave to Lakes R Us to withdraw its application. The time and money that has been wasted by parties involved in the application as well as the wasted time of the Tribunal is to be regretted. It may be that the case throws up the need for some strengthening of the Tribunal’s procedures.
The Access declaration scheme
4 Part IIIA of the Act sets up a legislative scheme under which owners of essential facilities can be required to provide access to those facilities for third parties. The scheme involves a two step process. The first is declaration of a service under Pt IIIA. The second is negotiation or arbitration of an access regime in relation to the service.
5 The declaration process is dealt with in Div 2 of Pt IIIA. If a service is declared and access is unable to be agreed between the owners and a third party seeking access, their dispute can go to arbitration under Div 3. Declaration is therefore the gateway through which a service is brought into the access regime framework.
6 The steps leading to declaration begin with an application to the NCC for a recommendation that a particular service be declared (s 44F(1)). The application can be made by a designated Minister or by ‘any other person’. Upon receiving an application the NCC must recommend to the designated Minister that the service be declared or that it not be declared (s 44F(2)).
7 On receiving a declaration recommendation, whether it be positive or negative, the designated Minister must either declare or not declare the service (s 44H(1)). The Minister’s decision is subject to review by the Tribunal. Review may be sought by the service provider when the Minister declares a service (s 44K(1)) or ‘by the person who applied for the declaration recommendation’ when the Minister has decided not to declare a service (s 44K(2)).
The Lakes R Us application
8 On 8 October 2004 Lakes R Us applied to the NCC for a recommendation that water storage and transport services provided by facilities operated by Snowy Hydro and State Water be declared under Pt IIIA. The application covered two ‘services’ defined in terms of the use of each of the facilities of Snowy Hydro and State Water:
1. A water storage and transport service provided by Snowy Hydro using the Snowy Mountains Hydro-Electric Scheme (Snowy Scheme).
2. A water storage and transport service provided by State Water using the Blowering Dam and Burrinjuck Dam facility.
9 On 10 November 2005 the NCC recommended to the designated Minister, the Premier of New South Wales, that the services the subject of the application should not be declared. The NCC was not satisfied that declaration would promote competition in a dependent market. Nor was it satisfied that declaration would not be contrary to the public interest.
10 On 9 January 2006 the Acting Premier of New South Wales, decided, under s 44H(1) of the Act not to declare the water storage and transport services provided by Snowy Hydro and State Water. The Minister agreed with the NCC’s recommendation that the application by Lakes R Us did not satisfy the criteria for declaration in that declaration would not promote competition in a dependent market and would be contrary to the public interest. On 30 January 2006 Lakes R Us applied to the Tribunal under s 44K of the Act, for review of the Minister’s decision.
The procedural history
11 At a directions hearing on 20 February 2006 the President of the Tribunal, Goldberg J, gave leave to the State of South Australia, the Premier of New South Wales and the Murray Darling Basin Commission to intervene in the proceeding. Snowy Hydro and State Water as the providers of the ‘service’ became parties pursuant to reg 22B(2) of the Trade Practices Regulations 1974.
12 The President made a series of directions establishing a timetable for steps to be taken prior to the hearing of the application. These included a direction that Lakes R Us should file and serve on each of the parties by 13 March 2006 a statement of facts, issues and contentions asserted by it. There were directions for the filing of responding statements. To the extent that facts could be agreed, a statement of agreed facts was to be filed and served by 24 April 2006. Directions were also made for the filing and serving of lay witness statements. Those from Lakes R Us were to be filed and served by 1 May 2006 and from the other parties by 22 May 2006, with statements in reply from the applicant by 7 June 2006. Lakes R Us was also to file and serve any expert witness statements by 8 June 2006. Other procedural directions were made leading up to the fixing of a hearing date. The parties were given leave to approach the Tribunal to list the matter for further directions on reasonable notice.
13 The statement of facts, issues and contentions relied upon by Lakes R Us was filed on or about 14 March 2006. There was concern on the part of some respondents that the statement failed adequately to identify the case that Lakes R Us was advancing and did not provide a sufficient basis for the formulation of responding statements. As a result a directions hearing was convened on 13 April 2006.
14 At the directions hearing on 13 April 2006 I made directions that on or before 26 April 2006 Lakes R Us file an amended statement of facts, issues and contentions identifying its positive public interest case, the markets in which competition would be promoted, how it was said competition would be promoted in such markets and why access to the facility was said to be access to a service. Consequential timetabling orders for the filing of statements of facts, issues and contentions by the respondents were also made. The parties were to file and serve a statement of agreed facts by 11 May 2006. Lakes R Us was to serve lay witness statements by 17 May 2006 and the respondents to do likewise by 7 June 2006. Further directions were made with respect to the filing and service of expert witness statements, the preparation of a review book and a tender bundle and the filing and service of written submissions. Paragraph 16 of the directions confirmed that the matter was listed for hearing on 1 August 2006.
15 The applicant filed a supplementary statement on 26 April 2006. Statements of facts, issues and contentions were subsequently filed by the Premier of New South Wales on 5 May 2006, by Snowy Hydro and State Water on 9 May 2006 and by the Murray Darling Basin Commission on 9 May 2006.
16 By a letter dated 12 May 2006 Mr Spier, a director of the applicant wrote to the Tribunal advising that he did not think any agreed statement of facts was achievable unless the parties were prepared to use the NCC’s report as a basis for agreement. On 17 May 2006 the NCC filed its response to the statement of facts, issues and contentions lodged by other parties.
17 On 17 May 2006 Mr Spier sent an email to all parties in the following terms:
‘The Applicants lay statements were due today.
The Applicant is not in a position, at the moment, to file any statements.
In fact the Applicant has some serious issues to consider in relation to the matter before the Tribunal.
The Applicant seeks your approval to an extension for the time for the filing of its lay statements until Friday, 25 May 2006.
The Applicant will, of course, agree to any follow on changes to the timetable set by Deputy President French.’
18 Snowy Hydro and State Water consented to the extension of time but did not propose to seek any extension of the time fixed for the filing of their own statements. The Premier agreed to an extension but indicated that additional time might be required for his lay witness statements. The Murray Darling Basin Commission opposed the proposal.
19 On 24 May 2006 Mr Spier on behalf of Lakes R Us informed the Tribunal that the applicant would seek leave to withdraw its application. The matter was relisted for hearing the applicant’s application for leave to withdraw on 26 May 2006.
The application for leave to withdraw
20 At the directions hearing on 26 May 2006 Mr Spier applied, on behalf of Lakes R Us, to withdraw its application for review of the Minister’s decision. He did so on the basis of the uncertain future of the Snowy Hydro Scheme in light of its pending privatisation. He said that ‘… the collection of evidence and the actual running of the application had become impossible’. His application was opposed by Snowy Hydro and State Water. Mr Gageler SC argued that there was no consequence, relevant to the review application, that would flow from any change of ownership of the facilities in issue. The possibility of such a change had existed for a long time. He submitted that the determination of the review was in the public interest. In particular, the question whether the facility was a ‘service’ for the purpose of Pt IIIA was a matter of importance, which should be determined. On the part of his clients there had been considerable work and expenditure undertaken in preparing for that aspect of the hearing. Mr Gageler submitted that the application for review should proceed. The other parties did not oppose the grant of leave to withdraw.
The statutory framework
21 The statutory provisions of most direct relevance here are those which deal with the powers and procedures of the Tribunal.
22 Section 44K provides for review of a decision by a designated Minister to declare or not declare a service. The relevant parts of the section are as follows:
‘(2) If the designated Minister decides not to declare a service, an application in writing for review of the designated Minister’s decision may be made by the person who applied for the declaration recommendation.
…
(4) The review by the Tribunal is a re-consideration of the matter.
(5) For the purposes of the review, the Tribunal has the same powers as the designated Minister.
(6) The member of the Tribunal presiding at the review may require the Council to give information and other assistance and to make reports, as specified by the member for the purposes of the review.
…
(8) If the designated Minister decided not to declare the service, the Tribunal may either:
(a) affirm the designated Minister’s decision; or
(b) set aside the designated Minister’s decision and declare the service in question.
(9) A declaration, or varied declaration, made by the Tribunal is to be taken to be a declaration by the designated Minister for all purposes of his Part (except this section).’
23 Section 44ZZP is a regulation making power found in Pt IIIA which provides:
‘The regulations may make provision about the following matters in relation to the functions of the Tribunal under this Part:
(a) the constitution of the Tribunal;
(b) the arrangement of the business of the Tribunal;
(c) the disclosure of interests by members of the Tribunal;
(d) determining questions before the Tribunal and questions that arise during a review;
(e) procedure and evidence, including the appointment of persons to assist the Tribunal by giving evidence (whether personally or by means of a written report).
24 Part 2 of the Trade Practices Regulations 1974 includes regulations relating to applications to the Tribunal under s 44K of the Act. Regulation 20A(1) prescribes the form of such applications. Regulation 22 confers a general power on the Tribunal to give directions as to certain matters as follows:
‘(1) Without limiting the generality of the powers of the Tribunal under the Act or these Regulations, the Tribunal may, in any proceedings before the Tribunal, give directions:
(a) for securing, by means of preliminary statements of facts and contentions, and by the production of documents, that all material facts and considerations are brought before the Tribunal by all persons participating in any proceedings before the Tribunal; and
(aa) with respect to evidence in proceedings before the Tribunal, including the appointment of persons to assist the Tribunal by giving evidence (whether personally or by means of a written report); and
(b) with respect to the representation in any such proceedings of persons having a common interest in the proceedings.
(2) The powers of the Tribunal to give directions under subregulation (1) may be exercised by the Tribunal constituted by a presidential member.’
25 Regulation 26 provides, inter alia:
‘(1A) Subject to subsection 172(3) of the Act and to these Regulations the failure by a person in or in relation to a proceeding or matter before the Tribunal to comply with a provision of these Regulations or with a direction of the Tribunal under these Regulations does not, unless the Tribunal otherwise directs, prevent the proceeding or matter being dealt with as if the person has complied with the provision or direction.’
There is no sanction provided for the disobedience of, or failure to comply with, a Tribunal direction.
26 In addition to the provisions of the Act specifically directed to the functions of the Tribunal under Part IIIA and the associated Regulations, it is necessary to have regard to Div 2 of Pt IX of the Act. Part IX of the Act is concerned with review by the Tribunal of determinations of the Commission. It was part of the Act from the outset. Division 1 of Pt IX deals with applications for review of Commission authorisation determinations and so has no application to these proceedings. Division 2 of Pt IX is entitled ‘Procedure and Evidence’. It deals generally with the procedures of the Tribunal. The generality of those provisions allows for their application to proceedings taken before the Tribunal under other Parts of the Act. The question is whether they apply to applications under s 44K for the review of declaration decisions.
27 Part IIIA of the Act makes only limited provision for the procedures to be adopted by the Tribunal in dealing with applications made under it. Section 44ZQ expressly excludes the application of the procedural provisions (ss 103 – 110) in Div 2 of Pt IX to the review by the Tribunal of access decisions by the ACCC. This indicates that these provisions would otherwise apply to the review of decisions under Pt IIIA. In particular it supports the conclusion that the general procedural provisions in Pt IX apply to the review of declaration decisions under s 44K.
28 There is an apparent procedural distinction between the review of access determinations and other kinds of review by the Tribunal, albeit that distinction is apparent in part from the provisions of the Trade Practices Regulations. Under the Regulations the review of an access determination by the Tribunal is to be held in private unless otherwise agreed by the parties (reg 28K). However reviews to which Div 2 of Pt IX apply are to be in public unless the Tribunal otherwise directs (s 106). It may be that the exclusion of the general procedural provisions in Div 2 from access determination reviews reflects the commercial sensitivity of the matters which may be considered in such proceedings before the Tribunal. In any event I am satisfied, and it was not in dispute, that s 103 of the Act applies to the procedures of the Tribunal in an application for review of a declaration decision under s 44K. In Asia Pacific Transport Pty Ltd [2003] ATPR 41-920 the Tribunal, with Hely J presiding, said, in the context of a review relating to a ministerial declaration that (at [7]) ‘[t]he Tribunal has a general discretion to conduct and regulate its own proceedings in accordance with s 103(1) of the TPA…’.
29 Relevantly for present purposes, s 103 of the Act provides:
‘(1) In proceedings before the Tribunal:
(a) the procedure of the Tribunal is, subject to this Act and the regulations, within the discretion of the Tribunal;
(b) the proceedings shall be conducted with as little formality and technicality, and with as such expedition, as the requirements of this Act and a proper consideration of the matters before the Tribunal permit; and
(c) the Tribunal is not bound by the rules of evidence.
(2) The powers of the Tribunal with respect to matters of procedure in particular proceedings may be exercised by the Tribunal constituted by a presidential member.’
Whether the Tribunal has power to give leave to withdraw
30 The decisions which the Tribunal is authorised to make in disposing of an application to review a ministerial decision not to declare a service are:
(a) to affirm the designated Minister’s decision;
(b) to set aside the ministerial decision and declare the service in question (s 44K)
31 Where an applicant decides not to pursue its application, seeks leave to withdraw it and is given leave to withdraw, the Tribunal makes neither of the above decisions. The effect of allowing an applicant to withdraw is to treat the application as though it were no longer on foot, that is to say, as though no application had been made. In my opinion, it is open to the Tribunal to give leave to withdraw the application. The power, which is procedural, may be found in s 103(1)(a). It may be exercised by the Tribunal constituted by a presidential member.
32 The mere lodgment of an application has no interim effect upon a ministerial decision to not declare a service. The withdrawal of the application therefore has no effect upon the decision. It stands. This case can be contrasted with the case of an application to review a decision by the designated Minister to make a declaration. The lodgment of the application has the effect that the declaration ‘does not begin to operate until the Tribunal makes its decision on the review’ (s 44I(2)).
33 The present case is similar to that which faced Northrop J as President of the Tribunal in Re United Permanent Building Society Ltd (1976) 26 FLR 129. In that case the Building Society had been refused an authorisation by the Trade Practices Commission and had applied to the Tribunal for a review of that determination. The Commission granted an interim authorisation pending the review. Prior to the Tribunal hearing the Building Society notified the Registrar of its wish to withdraw the application. Northrop J observed (at 131):
‘The application for review did not affect the operation of [the] interim authorization. The withdrawal of the application for review does not affect the operation of that interim authorization. Accordingly, it is my opinion that the withdrawal of the application to review does not necessitate the making of a determination by the tribunal.
In these circumstances I propose to exercise the power conferred by s 103 of the Act and to treat the withdrawal of the application for review as a matter of procedure. This does not require the making of an order or determination by the tribunal.’
His Honour then directed the withdrawal of the application.
34 Re Country Television Services Ltd (1984) 73 FLR 68 involved an application to the Tribunal for the review of an authorisation determination made by the ACC relating to rules and procedures of the Federation of Australian Country Television Stations (FACTS). The review application was largely directed to certain conditions attaching to the authorisation and to the time limits upon its operation.
35 The Trade Practices Commission submitted that an application could not be withdrawn and the Tribunal must proceed to determine it under s 102 of the Act by affirming, setting aside, or varying the Commission’s determination. It submitted that the application could be withdrawn only by leave of the Tribunal and opposed the grant of leave on the ground that the authorisation was academic as the applicant was no longer proceeding with the conduct the subject of the authorisation. If the authorisation stood, the public could gain a false impression that future conduct of FACTS was protected by it. It would remain on foot unless set aside by the Tribunal. Lockhart J referred to Re United Permanent Building Society Ltd and said (at 70):
‘Rules of court generally provide for the discontinuance of proceedings and they define the circumstances in which a moving party may discontinue as of right or by leave. No such provision appears in the Act or the Trade Practices Regulations governing proceedings before the Tribunal. The withdrawal of applications raises difficult concepts and has been the subject of some discussion by courts in various contexts, including bankruptcy proceedings, where petitioning creditors have sought the court’s leave to withdraw petitions to sequestrate a debtor’s estate, rather than an order of the court that they be dismissed.
…
Although procedures before courts, including bankruptcy petitions, are different in nature to applications for review before the Tribunal, they nevertheless suggest that caution should be exercised before deciding that an applicant for review has a right to withdraw his application so that, upon the withdrawal taking effect according to its terms, the Tribunal’s functions and powers thereupon cease. The proceedings before the Tribunal are not merely inter partes: they involve the public interest.’
The three members of the Tribunal on which Lockhart J presided in that case, then considered whether leave should be granted to the applicant to withdraw its application. They saw no good purpose in keeping the application alive and leave to withdraw was granted.
36 In Nursing Agencies Association of Australia (2003) ATPR 41-936, the President of the Tribunal, Goldberg J, sitting with Professor D Round and Ms M Starrs, considered an application for leave to withdraw a review application in respect of an authorisation determination. Goldberg J referred to Re United Permanent Building Society Ltd and Re Country Television Services Ltd and then said (at [12]):
‘In circumstances where an applicant for review pursuant to s 101 of the Act wishes to withdraw the application for review, the Tribunal is of the view that the appropriate order to make is that leave be granted to withdraw the application rather than that the applicant be directed to withdraw the application. To the extent to which there is a difference between the procedure adopted in United Permanent Building Society Ltd (supra) and Re Country Television Services Limited (supra), the Tribunal prefers the approach taken in the latter case.’
37 The other members of the Tribunal then joined in with Goldberg J in determining the merits of the application for leave and stated (at [15]- [16]):
‘Although the application for review was initiated by a private party and not a public body, the proceeding before the Tribunal is not only a proceeding inter partes. The proceeding also involves issues relating to the public interest. It was fundamental to the determination of the Commission that the arrangements for which the authorisations were sought were likely to result in a benefit to the public and that that benefit would outweigh the detriment to the public constituted by any lessening of competition that would be likely to result from the arrangement.
As the applicant for review does not wish to proceed with the review and as the only other party who indicated an intention to participate in the review other than the Department of Human Services, Code Blue, does not wish to proceed with the review, the Tribunal does not consider that there is any reason in the public interest why the review should be maintained. Accordingly the Tribunal grants leave to the applicant to withdraw its application for review.’
38 Where an applicant for review of a decision not to declare a service is the only proponent of the view that a declaration ought to be made a serious question arises as to the practicality of requiring the application to proceed. There is no provision under the Regulations under which the Tribunal can effectively compel an applicant to participate in any substantive way in a review application. There are no sanctions for non-compliance with the Tribunal’s directions.
39 It may be accepted, as Mr Gageler contends, that there is a question of public importance involved in the application, namely whether the relevant facility is a service. To proceed to make an administrative determination of such a question on the basis of a case presented, effectively from one side of the question only, may well be against the public interest. It could lead to a decision uninformed by all relevant evidence and argument. In so saying, it may be accepted that the NCC has a more neutral role to play than other parties. However the NCC itself has recommended against declaration and could hardly be expected to adopt the role of a vigorous contradictor. Moreover, if the relevant facility were held to be a service there are other issues which would have to be considered in determining whether the Minister’s decision should stand. Such a procedure seems to invite what amounts to an advisory opinion from the Tribunal about the nature of the service and given the likelihood that the Tribunal would not have access to the full range of evidence and argument relevant to the question of characterisation, it is likely to militate against the public interest. Moreover it does not appear that such a determination would bind any other party.
40 In my opinion there is no practical alternative to the grant of leave to Lakes R Us to withdraw and, in the exercise of my powers under s 103(2) of the Act, I will grant leave.
41 Having regard to the procedural history of this matter, which has already been outlined, there is a real question whether Lakes R Us had the capacity and ultimately the willingness to properly prepare for and present its case in this application irrespective of issues about the privatisation of the facility. The result has been that the other parties have wasted time and resources, as has the Tribunal. The provisions of the Act and the Regulations do not presently make adequate provision which would enable the Tribunal to ensure that parties to proceedings before it conduct those proceedings diligently and expeditiously.
42 Mr Gageler, not surprisingly, on behalf of Snowy Hydro and the State Water, sought as a condition of any leave to withdraw, that Lakes R Us be prevented from making any fresh application to the NCC for a declaration in respect of the Snowy Hydro facility. I am not satisfied, however, that the Tribunal has the power to impose any such condition on any future application. The extraction of an undertaking to like effect as a condition of leave to withdraw would be of questionable validity. The Tribunal is not a court, it does not issue injunctions and cannot give injunctive effect to formal undertakings made to it. It is to be hoped that cases such as the present in which there has been a plainly under-prepared and under-resourced applicant evidently struggling to comply with Tribunal directions and unable realistically to present its application, will be a rarity.
43 For the preceding reasons I give leave to Lakes R Us to withdraw its application.
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I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Ruling herein of the Honourable Justice French. |
Associate:
Dated: 31 May 2006
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Mr H Spiers appeared on behalf of Lakes R Us Pty Ltd |
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Counsel for Snowy Hydro Limited and State Water Corporation: |
Mr S Gageler SC |
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Counsel for National Competition Council: Solicitor for National Competition Council: Counsel for the Premier of New South Wales: Solicitor for the Premier of New South Wales: Counsel for Murray Darling Basin Commission: Solicitor for Murray Darling Basin Commission: |
Mr M Lockett Australian Government Solicitor Ms C Miller NSW Crown Solicitors Office Mr P Armitage Blake Dawson Waldron |
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Date of Hearing: |
26 May 2006 |
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Date of Judgment: |
31 May 2006 |