FEDERAL COURT OF AUSTRALIA

Obeid v Australian Competition and Consumer Commission [2014] FCAFC 155

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellants pay the respondents’ costs of the appeal as agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT

INTRODUCTION

1    This is an appeal from a decision of the primary judge who dismissed an application seeking to have set aside two notices issued by the first respondent, the Australian Competition and Consumer Commission (‘ACCC’), pursuant to s 155(1)(c) of the Competition and Consumer Act 2010 (Cth) (‘CC Act’). The notices are relevantly in the same form and they are addressed to the first appellant and the second appellant respectively (‘Notices’). The appellants when before the primary judge sought declarations under s 163A(1)(aa) of the CC Act that the Notices were not validly issued, and orders in the nature of certiorari and prohibition pursuant to s 163A(1)(b).

2    The investigative power conferred by s 155(1) requires that the Chairperson of the ACCC (among others) has reason to believe that a person is capable of providing information, producing documents or giving evidence relating to “a matter that constitutes, or may constitute, a contravention of” the CC Act. To be valid a notice must specify a “matter” which, after allowing for undiscovered facts, does or may amount to a contravention of the CC Act: SA Brewing Holdings Ltd v Baxt (1989) 23 FCR 357 at 371-372 per Fisher and French JJ; Seven Network Ltd v Australian Competition and Consumer Commission (2004) 140 FCR 170 at [49] per Sackville and Emmett JJ.

BACKGROUND

3    The primary judge set out the background to the proceedings and the Notices (see [3] to [7] of the primary judge’s reasons), and the parties in this appeal agreed upon a narrative statement (subject to one minor matter of no consequence) which more fully elaborates on this background.

4    Before going to this narrative, it is useful to set out a brief summary of the background as provided by the primary judge.

5    In September 2008, the Department of Primary Industries (‘DPI’) issued invitations to a limited number of companies to lodge expressions of interest (‘EOIs’) for coal exploration licences over 11 areas in New South Wales; the process was extended to a larger group of companies in January 2009 with a lodgement date of 16 February 2009 (‘EOI Process’). The relevant areas for the purposes of the appeal are the Mount Penny and Glendon Brook areas (‘Relevant Areas’).

6    On 12 December 2007, the whole of New South Wales was declared a “mineral allocation area” in relation to coal under the Mining Act 1992 (NSW) (‘Mining Act’). As the Mining Act was then enacted, this had the result that a person could apply for a coal exploration licence under s 13(1) only with the consent of the Minister under s 13(4). The Minister had power to grant or refuse to grant an application for an exploration licence under s 22. The Minister could have elected to conduct a public tender process under ss 14 and 15 of the Mining Act, but he elected to conduct the limited EOI Process. In relation to the Relevant Areas, the invitations in the EOI Process were relevantly for the grant of exploration licences where no licence existed.

7    To further understand the Notices, it is important to note that:

(a)    Loyal Coal Pty Limited (‘Loyal’) was formerly named Monaro Coal Pty Ltd and it was a subsidiary of Monaro Mining NL (‘Monaro’);

(b)    Monaro and Cascade Coal Pty Limited (‘Cascade’) submitted EOIs to the DPI to be awarded exploration licences for the Relevant Areas (among other mining areas);

(c)    Loyal came to be owned by a company called Voope Pty Limited (‘Voope’). In its July 2013 report entitled “Investigation into the Conduct of Ian McDonald, Edward Obeid Senior, Moses Obeid and Others” (‘ICAC Report’) the Independent Commission Against Corruption (‘ICAC’) found that Voope and Buffalo Pty Limited (‘Buffalo’) were controlled by the Obeid family and their associates; and

(d)    ICAC also found that the landowners referred to in the Notices include companies controlled by the Obeid family or in which they had interests.

8    As the primary judge observed, the pivotal allegation of the Notices is set out at paragraph 1. It provided:

On or around 5 June 2009, Cascade and Buffalo (including Buffalo’s associates), two of whom, namely Cascade and Loyal, were competitive with each other for the acquisition of services, namely the right to apply for the necessary approvals for mining activities in the Relevant Areas from the Crown, made a contract or arrangement or arrived at an understanding (CAU) containing the following provision(s):

a.    Loyal will withdraw bids from a tender process and refrain from pursuing a competing bid in respect of the Relevant Areas;

b.    Cascade will grant Buffalo a right to a 25% interest in its mining venture in respect of Mt Penny tenement; and

c.    Cascade will enter into an agreement with the Landowners; and / or

d.    Cascade will purchase the relevant land, fund the Landowners’ mortgages and mutually assist the Landowners in Cascade’s pursuit of the tender process.

9    The Notices then allege:

    First, that the CAU had a substantial purpose of “preventing, restricting or limiting the right to apply for the necessary approvals for mining activities from the Crown by Buffalo (including Buffalo’s associates)” and, during the period 9 June 2009 to at least 21 October 2009, the CAU was given effect in breach of s 45 of the CC Act; and

    Second, that the CAU had a substantial purpose of directly or indirectly ensuring that “in the event of a request for bids in relation to … a right to apply for the necessary approvals for mining activities one party would bid (namely Cascade), but one or more other parties would no longer bid by withdrawing from the bid and refraining from further bidding (namely Buffalo, including Buffalo’s associates)” and, during the period 9 June 2009 to at least 21 October 2009, the CAU was given effect in breach of ss 44ZZRG and 44ZZRK of the CC Act on or after 24 July 2009.

10    In further elaboration upon this background, the agreed narrative statement (putting aside the inconsequential matter in dispute) was as follows:

1.    The background to this matter was the subject of an investigation and report by the Independent Commission Against Corruption (ICAC) which report was published in July 2013 and entitled “Investigation into the Conduct of Ian McDonald, Edward Obeid Senior, Moses Obeid and others” (AB B/84) (“ICAC Report”). For present purposes, a sufficient description of that background is as follows.

2.    Under s22 of the Mining Act, the Minister may grant or refuse an application for an exploration licence. Sections 13 – 15 of the Mining Act provide two methods by which applications for exploration licences may be made. First, ss 13(1) – (3) provide for any person to apply for an exploration licence, however, s 13(4) provides to the effect that where an application relates to land within a mineral allocation area, an application cannot be made except with the consent of the Minister. Sections 14 and 15 provide for public tenders for exploration licences.

3.    On 9 September 2008, the New South Wales Department of Primary Industries (DPI) invited expressions of interest (EOI) from a select group of persons for exploration licences under the Mining Act in respect of 11 coal exploration areas, including an area described as Mount Penny and an area described as Glendon Brook (AB B/66). This invitation was overtaken by another issued in January 2009 (AB B/70). Mount Penny is located near the town of Bylong, NSW (Mount Penny area). Glendon Brook is located near the town of Singleton, NSW (Glendon Brook area). One of the persons invited to submit an EOI (not originally, but subsequently) was Cascade Coal Pty Limited (Cascade).

4.    By inviting EOIs from a limited class of persons, the DPI did not pursue the process of public tenders for exploration licences provided for in ss 14 – 15 of the Mining Act. On the basis that the Mount Penny area and the Glendon Brook area were “land within a mineral allocation area”, the DPI treated the EOIs as applications for consent to apply for an exploration licence under s13(4) of the Mining Act which, if successful, may be followed by an application for, and grant of, a licence.

5.    Prior to the issue of the invitations for EOIs, [in August 2008] Monaro Mining entered into an agreement with Voope Pty Limited (Voope) which ICAC described as allowing Voope “to acquire 80% of the benefit acquired by Monaro Mining [from the mining venture] at no cost” (ICAC Report, AB B/84 p91). ICAC found that Voope was a company associated with the Obeid family (ICAC Report, AB B/84 p13). ICAC also found that the Obeid family (or companies associated with them) owned or had interests in properties which covered a substantial proportion of the Mount Penny area (Mount Penny properties) (ICAC Report, AB B/84 p75).

6.    The invitation for EOIs stated that the successful applicant would, within 30 days of the grant or transfer of the exploration licence, or the Minister granting consent to apply for a new exploration licence, be required to pay an assessment fee of $10,000, one-off payments (which, in relation to the Mount Penny and Glendon Brook areas, were identified as $1 million and $300,000 respectively), such additional financial contributions as were included in the EOI and the standard Application for Exploration Licence fee of $600 plus $600 per square kilometre (ICAC Report, AB B/84 p93; AB B/67 p9).

7.    The closing date for the receipt by the DPI of EOIs (as extended) was 16 February 2009 (ICAC Report, AB B/84 p106). Both Monaro Mining and Cascade submitted EOIs in relation to (inter alia) the Mount Penny and Glendon Brook areas. In its EOI for the Mount Penny area dated 21 November 2008, Monaro Mining specified an additional financial contribution of $25 million (AB B/68 p21). In its EOI for the Glendon Brook area, Monaro Mining offered an additional financial contribution of $5 million (AB B/73 p19). Monaro Mining stated in its EOI that, if successful, it would ask that the exploration licence be awarded to one of its wholly owned subsidiaries, which (in the events which happened) was to be Monaro Coal Pty Limited (Monaro Coal) (AB B/68 p21). In its EOI of 16 February 2009, Cascade did not provide for a specific additional financial contribution, but offered to negotiate for one once relevant mine development plans had been determined (AB B/84 p31).

8.    By May 2009, the Committee within DPI considering the EOIs had decided that Monaro Mining should succeed in relation to the EOI for (inter alia) the Mount Penny and the Glendon Brook areas (ICAC Report, AB B/84 p106). A factor in its decision was that the additional financial contributions offered by Monaro Mining were superior to the other bidders (AB B/73 p19 – 20). [The inconsequential matter in dispute arose as to the decisiveness of this factor].

9.    However, ICAC found that five things then happened. First, on 22 May 2009 Monaro Mining and Voope entered into an agreement by which Voope assumed responsibility and control of Monaro Mining’s EOI, Monaro Coal changed its name to Loyal Coal Pty Limited (Loyal) and all the shares in Loyal were transferred to Voope (ICAC Report, AB B/84 p107 - 108). Second, between 28 May 2009 and 31 May 2009, the then Minister for Primary Industries and Mineral Resources, the Hon Ian Macdonald (the Minister), informed Mr Moses Obeid of the result of the evaluations of the EOIs by the DPI (ICAC Report, AB B/84 p112). Third, a series of meetings occurred in May and June 2009 between members and associates of the Obeid family and officers of Cascade (ICAC Report, AB B/84 p109 – 110). Fourth, Buffalo Resources Pty Limited (Buffalo) was incorporated on 3 June 2009. The shareholders and directors of Buffalo were persons associated with the Obeid family. ICAC found that Buffalo was controlled and (subject to another person’s interest) owned by the Obeid family (ICAC Report, AB B/84 p110). Fifth, on 5 June 2009, Cascade entered two agreements, the first with Buffalo (the purported joint venture agreement) and the second with the entities that owned the Mount Penny properties (the property agreement) (ICAC Report AB B/84 p110 – 111); AB B/74; AB B/75)).

10.    ICAC found that the purported joint venture agreement was “intended to outline the commercial terms on which both Buffalo and Cascade intend to establish a joint venture with the specific purpose of exploring and developing the Mount Penny Coal Release Area” (“the Area”) (AB B/74). The key terms of the purported joint venture agreement were to the following effect:

a.    subject to Cascade being granted an exploration licence, Cascade and Buffalo agreed to form a purported joint venture company or unincorporated purported joint venture (JV) to explore and develop the exploration licence and pursue the grant of mining approval over the Area and pursue the grant of exploration licences and mining approvals over certain identified areas contiguous to the Area (contiguous areas);

b.    in consideration of Buffalo and (inter alia) Loyal withdrawing Loyal’s EOI in relation to the Mount Penny and Glendon Brook areas and undertaking not to pursue the grant of mining rights to the Area, any contiguous areas or the Glendon Brook area, Cascade agreed to:

i.    vest 100% of its interest in the exploration licence(s) granted as a result of the EOI process in the JV; and

ii.    grant Buffalo a 25% interest in the JV.

11.    The purported joint venture agreement was amended on 6 June 2009. Those amendments removed the reference to an unincorporated purported joint venture and provided for Buffalo to pay a consideration of $1 for its 25% interest in the JV. They also provided for Buffalo’s contribution to the JV to consist of assisting Cascade to explore and develop the exploration licence, assisting Cascade to obtain mining approvals and making available its expert knowledge of the Area with further exploration and review of the contiguous areas (AB B/76).

12.    ICAC found that the key components of the property agreement were that, if Cascade won its bid for the Mount Penny exploration licence, it would purchase the Mount Penny properties for four times their market value (ICAC Report, AB B/84 p111). The property agreement also provided for Cascade to assist the owners of the Mount Penny properties to refinance the mortgages on their properties at an interest rate of 0% or, at its option, pay all interest on the existing mortgages (AB B/75).

13.    On 9 June 2009, Loyal wrote to the DPI and withdrew its EOI for (inter alia) the Mount Penny and Glendon Brook areas (AB B/77).

14.    On 19 June 2009 the Director General of the DPI wrote to Cascade informing it that it had been selected as the successful EOI applicant for the awarding of exploration licences for the Mount Penny and Glendon Brook areas and inviting it to apply for the exploration licences for those areas. The Director General was a delegate of the Minister for (inter alia) the granting of consent under s 13(4) of the Mining Act (AB B/69). Cascade was required to pay the sums of $1,010,000 (in relation to Mount Penny) and $310,000 (in relation to Glendon Brook), being the assessment fees of $10,000 and the one-off payments of $1 million and $300,000 for Mount Penny and Glendon Brook respectively, as well as the standard application fee for an exploration licence (AB B/78; AB B/79).

15.    On 10 August 2009, the DPI wrote to Mr John McGuigan, a director of Cascade, confirming that the Minister had given consent pursuant to s 13(4) of the Mining Act for Cascade to apply for an exploration licence for coal over the Mount Penny area. (AB B/80-E). On 24 August 2009, Mr McGuigan wrote to the DPI attaching the application by Cascade for the Mt Penny licence, related information and prescribed fees and asking for the exploration licence for Mt Penny to issue in the name of Mt Penny Coal Pty. Ltd (AB B/80).

16.    On 21 October 2009 the Minister issued exploration licences under s22 of the Mining Act to Glendon Brook Coal Pty Limited (in respect of the Glendon Brook area) and Mt Penny Coal (in respect of the Mount Penny area) (the Licences). Both of those companies were subsidiaries of Cascade. The Licences were contained in deeds executed by officers of the Cascade subsidiaries and the delegate of the Minister. Clause 2 of the Licences required the licence holder to pay to the Minister in Sydney royalties at the rates specified in respect of minerals recovered from the land (AB B/81; AB B/82).

17.    In February 2011, ICAC commenced an investigation in connection with the above matters and, in July 2013, delivered the ICAC report.

11    In addition to the references to the Mining Act referred to in the agreed narrative, reference should also be made to s 23, which sets out the process which would have been followed if the DPI (or the Minister) had decided to conduct a public tender process for exploration licences under ss 14 and 15 of the Mining Act.

12    Section 23 at the relevant time, provided:

23    Power of Minister in relation to tenders

(1)    After considering a tender in respect of land in respect of which one tender only is lodged, the Minister:

    (a)    may grant an exploration licence to the tenderer, or

    (b)    may refuse the tender.

(2)    After considering all tenders in respect of land in respect of which more than one tender is lodged, the Minister:

(a)    may grant an exploration licence to any one of the tenderers and refuse the other tenders, or

(b)    may refuse all of the tenders.

(3)    Without limiting the generality of subsections (1) and (2), a tender may be refused on the ground that the tenderer has been convicted of an offence against this Act or the regulations or any other offence relating to mining or minerals.

(4)    For the purposes of this section, only one tender is lodged in respect of land if no other tender is lodged in respect of the land or any part of the land.

SALIENT FACTUAL MATTERS

13    The following salient factual matters are important in understanding the primary judge’s approach to the interpretation of the Notices and the operation of the relevant provisions of the CC Act.

14    The DPI and the Minister invited EOIs for the purposes of determining whether to give his consent under s 13(4) of the Mining Act, and the granting of an exploration licence. The considerations relevant to that decision were set out in the invitation for EOIs (referred to by the primary judge as “EOI Information Documents”). Those considerations included contributions to the revenue of the State for the Minister’s consent. The contributions to the revenue of the state included what were referred to by the primary judge as “Additional Financial Contributions”, which were substantial. Upon the giving of the Minister’s consent, the successful applicant had the expectation that it would be “awarded” the exploration licence upon the terms of the EOI and the EOI Information Documents.

15    In this regard, the EOI Information Documents set out the primary obligations of the successful applicant and expressly stated that the successful applicant “will be awarded a coal exploration licence for the area(s) for an initial period up to five years, pursuant to the Mining Act 1992” and that the exploration licences “over these areas will be awarded by part transfer of the existing titles held by the Crown where applicable or the grant of a new exploration title”.

16    In the events which occurred, the Minister and Cascade acted consistently with the process outlined in the EOI Information Documents.

17    No party suggested that this process was beyond power, or that the Minister in giving consent took into account irrelevant considerations. In considering whether to give consent, the Minister would have been constrained by the subject matter, the scope and the purpose of the Mining Act: see Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, 40 per Mason J. It is to be observed, however, that the Mining Act does seem to envisage (if the tender process was not adopted) two separate decisions – the Minister’s consent under s 13(4), and a separate determination on the application for an exploration licence: see s 22. If the tender process was adopted, the successful tenderer or tenderers would then be granted the explanation licence: see s 23.

18    Putting this to one side, the letters sent from the DPI dated 19 June 2009 and 10 August 2009 (referred to in the agreed narrative), were consistent with the process envisaged by the EOI Information Documents. They indicated (impliedly and expressly) that the Minister had given consent under s 13(4) of the Mining Act, that the exploration licence had been awarded to the successful applicant, that the Minister had asked for a formal application to be made for the exploration licence, and that the required financial contributions needed to be made.

19    It seems that as the primary judge suggested, a contractual regime may have come into existence as part of the EOI Process adopted, on the terms of the letters providing notification of the Minister’s consent.

20    Within the above EOI Process, the DPI and the Minister engaged in a competitive private tender among companies selected by the DPI, designed to elicit and maximise Additional Financial Contributions. While many of the payments required to be paid to the DPI were designed to cover costs and there are standard application fees for an exploration licence which would not change any regulatory nature of the interaction, the Additional Financial Contributions went beyond this and were commercial in character.

21    Further, the primary judge found that the DPI used the EOI Process on several occasions and sought and received very substantial Additional Financial Contributions (amounting to hundreds of millions of dollars) during a boom in coal prices. In the EOI Process which included the Relevant Areas, seven out of ten exploration licences were awarded to the highest bidder, expressly because of the size of the proposed Additional Financial Contribution, and the total of the Additional Financial Contributions for these ten areas was approximately $36 million (before Monaro/Loyal withdrew its EOI in relation to the Relevant Areas).

22    In addition, as recognised by the primary judge, only one criterion of the EOI Process might be thought to be “governmental” in nature: overall benefits of the proposal to the region and the State considered by reference to employment, benefit to local and regional communities and to infrastructure. Otherwise, the criteria were usual commercial criteria which one would expect any commercial owner of a potentially valuable mineral deposit to consider: a plan for exploration and mine development, plans to maximise resource recovery and coal utilisation, details of infrastructure development to transport coal from the site, details of timeframes, demonstrated technical and financial competence and the level of Additional Financial Contributions proffered.

LEGISLATIVE PROVISIONS

23    We now go to the relevant provisions of the CC Act.

24    Section 45 of the CC Act relevantly provides:

45    Contracts, arrangements or understandings that restrict dealings or affect competition

    …

(2)    A corporation shall not:

(a)    make a contract or arrangement, or arrive at an understanding, if:

(i)    the proposed contract, arrangement or understanding contains an exclusionary provision; or

(ii)    a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or

(b)    give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision:

(i)    is an exclusionary provision; or

(ii)    has the purpose, or has or is likely to have the effect, of substantially lessening competition.

(3)    For the purposes of this section and section 45A, competition, in relation to a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, means competition in any market in which a corporation that is a party to the contract, arrangement or understanding or would be a party to the proposed contract, arrangement or understanding, or any body corporate related to such a corporation, supplies or acquires, or is likely to supply or acquire, goods or services or would, but for the provision, supply or acquire, or be likely to supply or acquire, goods or services.

25    Section 4D of the CC Act relevantly provides:

4D Exclusionary provisions

(1)    A provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if:

(a)    the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any 2 or more of whom are competitive with each other; and

(b)    the provision has the purpose of preventing, restricting or limiting:

(i)    the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons; or

(ii)    the supply of goods or services to, or the acquisition of goods or services from, particular persons or classes of persons in particular circumstances or on particular conditions;

by all or any of the parties to the contract, arrangement or understanding or of the proposed parties to the proposed contract, arrangement or understanding or, if a party or proposed party is a body corporate, by a body corporate that is related to the body corporate.

(2)    A person shall be deemed to be competitive with another person for the purposes of subsection (1) if, and only if, the first-mentioned person or a body corporate that is related to that person is, or is likely to be, or, but for the provision of any contract, arrangement or understanding or of any proposed contract, arrangement or understanding, would be, or would be likely to be, in competition with the other person, or with a body corporate that is related to the other person, in relation to the supply or acquisition of all or any of the goods or services to which the relevant provision of the contract, arrangement or understanding or of the proposed contract, arrangement or understanding relates.

26    Liability under ss 44ZZRG(1) and 44ZZRK(1) turns on whether a contract, arrangement or understanding to which a corporation is a party contains, or the corporation gives effect to, a “cartel provision”. Section 44ZZRD defines “cartel provisions”. The relevant provisions are as follows:

44ZZRD Cartel provisions

(1)    For the purposes of this Act, a provision of a contract, arrangement or understanding is a cartel provision if:

(a)    either of the following conditions is satisfied in relation to the provision:

(i)    the purpose/effect condition set out in subsection (2);

(ii)    the purpose condition set out in subsection (3); and

(b)    the competition condition set out in subsection (4) is satisfied in relation to the provision.

(2)    The purpose/effect condition is satisfied if the provision has the purpose, or has or is likely to have the effect, of directly or indirectly:

(a)    fixing, controlling or maintaining; or

(b)    providing for the fixing, controlling or maintaining of;

the price for, or a discount, allowance, rebate or credit in relation to:

(c)    goods or services supplied, or likely to be supplied, by any or all of the parties to the contract, arrangement or understanding; or

(d)    goods or services acquired, or likely to be acquired, by any or all of the parties to the contract, arrangement or understanding; or

(e)    goods or services re-supplied, or likely to be re-supplied, by persons or classes of persons to whom those goods or services were supplied by any or all of the parties to the contract, arrangement or understanding; or

(f)    goods or services likely to be re-supplied by persons or classes of persons to whom those goods or services are likely to be supplied by any or all of the parties to the contract, arrangement or understanding.

(3)    The purpose condition is satisfied if the provision has the purpose of directly or indirectly:

…

(c)    Ensuring that in the event of a request for bids in relation to the supply or acquisition of goods or services:

(i)    one or more parties to the contract, arrangement or understanding bid, but one or more other parties do not; or

(ii)    2 or more parties to the contract, arrangement or understanding bid, but at least 2 of them do so on the basis that one of those bids is more likely to be successful than the others; or

(iii)    2 or more parties to the contract, arrangement or understanding bid, but not all of those parties proceed with their bids until the suspension or finalisation of the request for the bids process; or

(iv)    2 or more parties to the contract, arrangement or understanding bid and proceed with their bids, but at least 2 or them proceed with their bids on the basis that one of those bids is more likely to be successful than the others; or

(v)    2 or more parties to the contract, arrangement or understanding bid, but a material component of at least one of those bids is worked out in accordance with the contract, arrangement or understanding.

(4)    The competition condition is satisfied if at least 2 of the parties to the contract, arrangement or understanding:

(a)    are or are likely to be; or

(b)    but for any contract, arrangement or understanding, would be or would be likely to be;

in competition with each other in relation to:

…

(i)    if paragraph (3)(c) applies in relation to a supply of goods or services — the supply of those goods or services; or

(j)    if paragraph (3)(c) applies in relation to an acquisition of goods or services — the acquisition of those goods or services.

27    Section 44ZZRB defines “bid” and “party” as follows:

bid includes:

(a)    tender; and

(b)    the taking, by a potential bidder or tenderer, of a preliminary step in a bidding or tendering process.

party has a meaning affected by section 44ZZRC.

28    Section 44ZZRC provides as follows:

44ZZRC Extended meaning of party

For the purposes of this Division, if a body corporate is a party to a contract, arrangement or understanding (otherwise than because of this section), each body corporate related to that body corporate is taken to be a party to that contract, arrangement or understanding.

29    “Services” is defined in s 4(1) of the CC Act as follows:

services includes any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce, and without limiting the generality of the foregoing, includes the rights, benefits, privileges or facilities that are, or are to be, provided, granted or conferred under:

(a)    a contract for or in relation to:

(i)    the performance of work (including work of a professional nature), whether with or without the supply of goods;

(ii)    the provision of, or the use or enjoyment of facilities for, amusement, entertainment, recreation or instruction; or

(iii)    the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction;

(b)    a contract of insurance;

(c)    a contract between a banker and a customer of the banker entered into in the course of the carrying on by the banker of the business of banking; or

(d)    any contract for or in relation to the lending of moneys;

but does not include rights or benefits being the supply of goods or the performance of work under a contract of service.

CONSIDERATION

30    The central argument advanced by the appellants was that the “services” specified in the Notices, were not “in trade or commerce” as required by the definition of “services” in s 4(1) of the CC Act, focussing in this regard on the activities of the DPI and the Minister as the supplier of the alleged “services”.

31    It is not contentious that “in trade or commerce” means activities or conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character: see Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594, 604.

32    The appellants submitted that the specified services were no more than the rights and benefits provided by the Minister as part of the exercise or potential exercise of statutory power, closely governed by the Mining Act. They argued that such an exercise or potential exercise of statutory power does not have any trading or commercial character so as to fall within the extended definition of “services”. It was then submitted that even though the specified services may be in relation to commercial activities of other parties, such as Loyal and Cascade, the exercise or potential exercise of statutory authority is not in trade or commerce. Further, the appellants submitted that the businesses of Loyal and Cascade can have no relevance to the question because the words “provided, granted or conferred” indicate that the question must be determined from the “supply” perspective having regard to the use of that combination of words in the definition of “supply” in the CC Act, not from the point of view of the person who “acquires” the service. It was submitted that the absence of the word “accept” (or a synonym thereof) is similarly significant.

33    The Notices rely on a possible contravention of s 45(2)(a)(i) because the CAU is said to have contained an exclusionary provision. Both s 4D (the definition of “exclusionary provision”) and s 45(3) (the definition of “competition” in s 45(3)) turn on whether, but for a provision of the CAU, the parties to it would be, or would be likely to be, in competition and would, or would be likely to, “supply or acquire … goods or services”. Similarly, s 44ZZRD(3)(c) sets out when the “purpose condition” in s 44ZZRD(2) is satisfied and it relates to “bids in relation to the supply or acquisition of goods or services”.

34    As we have said, the appellants’ main focus in this appeal, as it was before the primary judge, was upon the meaning of “services” in s 4(1) of the CC Act. They submitted that as the services specified in the Notices do not fall within the meaning of “services” the following consequences arise:

(1)    there is no “market” or “competition in any market” for the purposes of s 45(3) of the CC Act; and

(2)    the two companies referred to in the Notices were not “competitive with each other” for the purposes of s 4D(2) of the CC Act;

therefore:

(3)    there is no exclusionary provision for the purposes of s 45 of the CC Act; and

(4)    there is no cartel provision within the meaning of s 44ZZRD of the CC Act.

35    Whilst there was extensive debate about the ambit of the definition of “services”, this appeal can be disposed of even if the appellant’s approach to that term is accepted and the operation of the substantive provisions is confined to instances where the supplier of services (in this appeal, the Minister) is acting in trade and commerce. This is so for the following reason.

36    As we have endeavoured to illustrate by reference to the EOI Process, this was not a situation of a mere application for a licence renewal or approval in a statutory or regulatory context without more: see Gold and Copper Resources Pty Ltd v Newcrest Operations Ltd [2013] NSWSC 281 and Street v Luna Park Sydney Pty Ltd (2009) 223 FLR 245. Nor was this just a process involving the deliberative act performed by the Minister in the exercise of his duty: see eg IW v City of Perth (1997) 191 CLR 1.

37    By the EOI Process here adopted, the Minister set out a commercial basis for approval of the right to explore for the State’s coal reserves. The analysis of the deliberative process in these circumstances leads to the conclusion that the Minister involved himself in the providing of a right, benefit or privilege in a commercial setting. This involvement of the Minister was not only preparatory to the exercise of his power under s 13(4) of the Mining Act, but was part of the process of determining the successful applicant for an exploration licence in a commercial setting. It would seem (as the primary judge concluded) that this process was conducted on other occasions, where the State obtained hundreds of millions of dollars in revenue, obviously in trade or commerce. In undertaking the EOI Process, the Minister was engaging on a commercial basis with those who were invited to provide EOIs. Of course, each of the appellants were engaged in trade or commerce in seeking the consent of the Minister and the exploration licence.

38    As the primary judge observed, this “gave the State the opportunity to realise large sums of money through the EOI Process even if no coal was ever mined from any of the areas”: see [108] of the reasons of the primary judge.

39    In terms of the definition of “services”, there is at the very least the following right, benefit, or privilege being provided by the Minister in trade or commerce: the right to participate in the EOI Process, which involved applying for the Minister’s consent leading to the grant of the necessary approvals for mining activities. Therefore, even on the approach of the appellants, we find that there is an “exclusionary provision” with the meaning of s 4D, and “competition” within the meaning of s 45(3) of the CC Act.

40    Similarly in relation to the cartel provisions, putting aside the separate argument raised by the appellants as to the operation of s 44ZZRD (to which we will come), the bids were in relation to the supply or acquisition of “services”. The bidding occurred with the invitations to tender being put out on a commercial basis by the Minister on behalf of the State, and as set out in the EOI Process Documents with the view to maximise financial gain or revenue to the State.

41    We now turn to the Notices to consider their scope in light of the operation of the CC Act. In our view, the ambit of the phrase “the right to apply for the necessary approvals for mining activities” in the Notices is then clear, following upon the interpretation we have given to the word “services”. In the circumstances of the Mining Act, and in the knowledge of what occurred in the EOI Process, the right to apply for the “necessary approvals” (plural), readily encompasses the seeking of the Minister’s consent under s 13(4), the right to apply for the exploration licences, and the possible contractual right to seek the awarding of an exploration licence upon being the successful applicant.

42    We should interpolate that even if the specified services in the Notices do not encompass the possible contractual right conferred on the successful applicant in the EOI Process, this would not impact on our conclusion. Even if the language used in the Notices to describe the specified services was confined to both or either of the right to apply for the Minister’s consent or the right to apply for the exploration licence, it would be sufficient to uphold the validity of the Notices. For the reasons we have given, both these rights arise in the context of the EOI Process, which is commercial in character.

43    The above reasoning would dispose of the appeal, other than dealing with the separate ground of appeal in relation to the cartel provisions of the CC Act. Before returning to this ground, we should make some observations on the definition of “services” as this was the subject of some debate.

44    As a preliminary observation, it is to be recalled that the process of construction of statutory provisions starts with the words of the statute, read in context: see, for example, Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at [47]. The task before us is to interpret the term “services” as it appears in the substantive provisions, relevantly s 45 and the cartel provisions, in light of the purpose and object of those provisions.

45    As stated in Thiess v Collector of Customs (2014) 250 CLR 664 at [22]-[23]:

[22]    Statutory construction involves attribution of meaning to statutory text. As recently reiterated:

‘“This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text’. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text.”

[23]    Objective discernment of statutory purpose is integral to contextual construction. The requirement of s 15AA of the Acts Interpretation Act 1901 (Cth) that “the interpretation that would best achieve the purpose or object of [an] Act (whether or not that purpose or object is expressly stated …) is to be preferred to each other interpretation” is in that respect a particular statutory reflection of a general systemic principle. For:

“it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.”

(citations omitted)

See also the comments of McHugh J in Kelly v R (2004) 218 CLR 216 at [103] in relation to the function of a definition not being to enact substantive law, but to aid in construing the statute.

46    In analysing the definition of “services”, the primary judge considered its historical context in some detail. This was a useful analysis, although we are mindful that legislative history and extrinsic material cannot displace the statutory text, nor is their examination an end in itself: see Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at [39].

47    The definition of “services” was replaced in whole by the Trade Practices Amendment Act 1977 (Cth) (‘1977 Act’), s 4G was renumbered as s 4H and the new s 4H did not contain a paragraph (d); s 4H is in the same form in the CC Act. As the primary judge usefully indicated, the differences between the 1977 Act definition of “services” and the 1974 Act definition are demonstrated by the markings below, struck through are words which no longer appear, underlining is an addition to the language of the 1974 Act:

services includes, without limiting the generality of that expression, the rights or benefits that are to be provided under — any rights (including rights in relation to, and interests in, real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce, and without limiting the generality of the foregoing, includes the rights, benefits, privileges or facilities that are, or are to be, provided, granted or conferred under —

(a)    a contract for or in relation to —

(i)    the performance of work (including work of a professional nature but not including work under a contract of service), whether with or without the supply of goods;

(ii)    the provision of, or of the use or enjoyment of facilities for, amusement, entertainment, recreation or instruction; or

(iii)    the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction;

(b)    a contract of insurance; or

(c)    a contract between a banker and a customer of the banker entered into in the course of the carrying on by the banker of the business of banking, or any other contract for or in relation to the loan of moneys; or

(d)    any contract for or in relation to the lending of moneys;

but does not include rights or benefits being the supply of goods or the performance of work under a contract of service;

48    Adopting the nomenclature of the primary judge, we will call the words after “includes” up to “in trade or commerce” the “Rights Extension” and we will call the words after “without limiting the generality of the foregoing” the “Revised Contracts Extension”.

49    There was some criticism made by the appellant of the primary judge for failing to take into consideration the differences in the Swanson Committee Report (referred to by the primary judge at [61]), and the subsequent legislation that was introduced into Parliament in 1976, and after the proroguing of Parliament, introduced again in 1977. Undoubtedly there were differences in the terms of the legislation introduced into Parliament following upon the Swanson Committee Report, both in 1976 and 1977, but these differences do not affect the conclusion of the primary judge at [71] and [72]:

[71]    There is nothing in the Swanson Committee Report or in the explanatory memorandum for either of the 1976 Bill or the 1977 Act which suggests that the definition of “services” adopted in the 1977 Act primarily by the inclusion of the Rights Extension was intended to be limiting of the definition in the 1974 Act. To the contrary, the intention appears to have been to ensure that the meaning was extended to include interests in land to the extent constitutionally possible, in line with the express provisions relating to leases and licences in ss 4H and 47(8) as well as s 53A.

[72]    The amendments contained in the Revised Contracts Extension do not materially alter the Contracts Extension. I consider that the Revised Contracts Extension extends the ordinary meaning of “services” and that there was no intention to limit its scope by the adoption of the Rights Extension.

50    The appellants also relied heavily on the argument that the word “includes” was exhaustive or exclusive, so as to limit the operation of the definition “services” to situations where the supplier of the services is in trade or commerce. We do not accept that argument for the following reasons.

51    Throughout the different definitions in s 4(1) the draftsperson has been mindful of the distinction between “includes” and “means”. Usually a definition that uses the word “includes” is not intended to be exhaustive. Merely because a definition is expressed to “include” a number of items that fall within the ordinary meaning of a word does not mean the definition is necessarily exhaustive: see Federal Commissioner of Taxation v St Hubert’s Island Pty Ltd (In Liq) (1978) 138 CLR 210, 216. Where, as in s 4(1), a pattern has been established as to the use of “includes” and “means”, the Court would normally accept that distinction as being deliberately adopted: see Cohns Industries Pty Ltd v Deputy Federal Commissioner of Taxation (1979) 37 FLR 508, 510-11.

52    Looking at the text of the definition “services” there is no reason to conclude the term “includes” is exhaustive. Whilst it includes services that would come within the ordinary meaning of that word, it also includes services not within the ordinary meaning (eg rights or interests in relation to real or personal property). The historical context described by the primary judge confirms that the term “includes” is not meant to be exhaustive.

53    Therefore, in interpreting the term “services”, unless a contrary intention appears in the substantive provisions being applied, the ordinary meaning of the term “services” is to be adopted along with the specified services in the definition itself.

54    In Adamson v New South Wales Rugby League Limited (1991) 31 FCR 242, 262, Wilcox J correctly observed that:

As a reference to any standard dictionary will show, although the word “services” has a wide application, it imports always the notion of some assistance or accommodation being made available by one person to another.

55    In any event, the phrase “provided, granted or conferred” is used in connection with “in trade or commerce” in the Rights Extension, to indicate that the relationship or dealing as a whole must be of a trading or commercial nature, and not that the right, benefit, privilege or facility be a trading or commercial activity of the supplier. If focus only on the supplier were intended, then it would have been appropriate to use a formulation which includes the term “supplier” or “supply”.

56    Further, the substantive provisions do not compel a conclusion that the relevant commercial activities are those of the provider of “services” considered in isolation from the acquirer. In fact, they indicate the contrary intention. We agree with the ACCC’s submission before the primary judge that such a requirement would be artificial and would undermine rather than promote the object of the legislation and give it an interpretation “perilously close to capricious”. For instance, in s 4D(1)(b), the definition of “exclusionary provision” indicates that a provision of a contract, arrangement or understanding is an exclusionary provision if it prevents, restricts or limits the acquisition of services as well as the supply of those services — here, the relevant competition is for the acquisition of the services. The proscription is not in the definition of “services”; it is in s 45 taken with s 4D, which relevantly relates to conduct of an acquirer of services. Similarly, the acquisition of services is a relevant test under s 44ZZRD in relation to the cartel provisions.

57    Finally, in considering the term “services” the primary judge also considered the Revised Contract Extension. We do not need to deal with that issue having regard to the approach we have taken on this appeal.

58    Therefore, the Notices are valid for all of the foregoing reasons.

59    The primary judge, after deciding to dismiss the application because her Honour was not satisfied that the specified services in the Notices were not “services” as defined, did not regard it necessary to consider the other challenge to the Notices in connection with the cartel provisions of the CC Act.

60    The primary judge stated at [121]:

The applicants did not otherwise challenge the Notices relating to a possible contravention of s 45. The ACCC suggests that it is not necessary for me to deal with the issue of whether the Notices disclose possible contravention of ss 44ZZRG and 44ZZRK if the applicants fail in their challenge based on the definition of “services”. I accept this submission because it is apparent from the face of the Notices that the alleged contraventions under s 45 and the cartel conduct provisions rely on the circumstances alleged in paragraph 1 of the Notices so that the applicants would be required to provide the same material in response to the “cartel conduct” and the s 45 “matters” set out in the Notices. This is not a strike out application and it should not be treated as one.

61    We see force in this approach. Despite the contention of the appellants to the contrary, the same material would be required to be provided in response to the “cartel conduct” and to s 45 matters, even in relation to the intent or motives of the relevant actors.

62    However, we find that the other ground of challenge to the Notices relating to the cartel provisions can be disposed of readily in this appeal.

63    The focus of our attention must be upon the text of s 44ZZRD(3)(c)(i) and (iii).

64    The argument of the appellants is that the words “ensuring” and “in the event of” in the relevant provisions have a temporal element: the provisions only apply if the bid is made after a contract, arrangement or understanding is formed. Further, the CC Act involves the notion of bidding or proceeding with a bid, it being submitted that there was no “request” for bids after the contract, arrangement or understanding came into existence. It is to be recalled that the Notices refer to the contract, arrangement or understanding being made on or around 5 June 2009. The relevant invitations of EOI occurred earlier.

65    We see nothing in the text or context of s 44ZZRD, or its purpose or object that would restrict the operation of s 44ZZRD(3)(c)(i) or (iii) to instances where the request for bids is made after the contact, arrangement or understanding is made or arrived at by the parties.

66    The operation of s 44ZZRD(3) must be read in the context of s 44ZZRD, particularly s 44ZZRD(1). The “purpose condition” set out in s 44ZZRD(2) must be satisfied for there to be a “cartel provision” referred to in s 44ZZRD(1). If a contractual provision has the purpose of (directly or indirectly) ensuring that in the event of a request for bids in relation to the supply or acquisition of services certain things occur (such as one or more parties not bidding or proceeding with a bid) then the “purpose condition” is satisfied.

67    Section 44ZZRD(3) is directed to the effect of the contract, arrangement or understanding reached by the parties in relation to a bid. This will depend upon the contract, arrangement or understanding, and the nature of the bid. A bid may not necessarily be a one-off event, and may be seen as a continuing tendering process; for example, if there is an opportunity to withdraw a tender or alter its terms after the initial bid is made by a party.

68    The phrase “ensuring that in the event of a request for bids” in s 44ZZRD(3)(c) does not need to have any temporal connotation to make grammatical sense, and there is no purpose in so restricting the phrase’s operation. There is no logical reason to differentiate between the situations where the bid is made before or after the contract, arrangement or understanding is formed.

69    In the event that s 44ZZRD(3)(c)(i) does not apply, s 44ZZRD(3)(c)(iii) could apply in the circumstances alleged in the Notices. The provisions of the CAU may be said to have the purpose of ensuring that in the circumstances of (or in the event of) there having been a request for a bid directed to two or more parties to the CAU, one party (for instance) then agrees not to proceed until the later prescribed point of time. This is the scenario sought to be investigated by the ACCC in the Notices, as particularly set out in paragraph 1 of the Notices. This is a scenario that fits within the text and purpose of s 44ZZRD(3)(c)(iii).

70    Therefore, this further ground of invalidity of the Notices cannot be sustained.

CONCLUSION

71    For the above reasons, the appeal will be dismissed with costs.

Associate:

Dated:    20 November 2014