FEDERAL COURT OF AUSTRALIA

Obeid v Australian Competition and Consumer Commission [2014] FCA 839

THE COURT ORDERS THAT:

1.    The application is dismissed.

2.    The applicants pay the respondents’ costs as agreed or taxed.

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

REASONS FOR JUDGMENT

1    By originating application filed on 20 May 2014, the applicants seek 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) (Act and CC Act). The notices are dated 22 April 2014, they are relevantly in the same form and they are addressed to the first applicant and the second applicant respectively (Notices). The applicants seek 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) have 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 (SAB v Baxt) at 371-372 per Fisher and French JJ; Seven Network Ltd v Australian Competition and Consumer Commission (2004) 140 FCR 170 (Seven Network v ACCC) at [49] per Sackville and Emmett JJ.

3    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 (NSW); the process was extended to a larger group of companies in January 2009 with a lodgement date of 16 February 2009 (EOI Process). The focus of this application is whether the ACCC is authorised to exercise its powers pursuant to s 155(1)(c) of the CC Act to issue notices to investigate an alleged contract, arrangement or understanding between persons (or their associates) who lodged EOIs in relation to the Mount Penny and Glendon Brook areas (Relevant Areas) of NSW.

4    On 12 December 2007, the whole of NSW was declared a “mineral allocation area” in relation to coal under the Mining Act 1922 (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) (Ministerial Consent). 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. Instead he elected to conduct the limited EOI Process. The invitations in the EOI Process were for transfer of existing licences in relation to areas for which the DPI already had an exploration licence or for the grant of exploration licences where no licence existed; Mt Penny and Glendon Brook fell into the latter category.

Notices

5    The background to the Notices is explained in more detail at [10]. Based on that background it may aid understanding to say at this point that:

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

    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);

    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

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

6    It is fair to say that the pivotal allegation of the Notices is set out at paragraph 1. It provides:

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.

7    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.

Issue

8    The issue raised by the application is whether the Notices specify a matter that constitutes or may constitute a contravention of ss 44ZZRG and 44ZZRK of the CC Act (criminal and civil liability for giving effect to a “cartel provision” (defined in s 44ZZRD) in the period after 24 July 2009) and s 45 of the CC Act (arrangements or understandings between competitors that restrict dealings or affect competition).

9    The grounds pursued by the applicants are narrowly cast:

(1)    whether the “services” specified in the Notices, namely “the right to apply for the necessary approvals for mining activities in the Relevant Areas from the Crown” fall within the meaning of “services” in s 4(1) of the CC Act and, more particularly, whether those services are “in trade or commerce”; if not, they say there can be no contravention of s 45 or ss 44ZZRG or 44ZZRK; and

(2)    whether the CAU specified in the Notices contained a “cartel provision”, and more particularly a “purpose condition”, within the meaning of s 44ZZRD, which is a precondition to contravention of ss 44ZZRG and 44ZZRK.

Background

10    The background events, as the parties have agreed (without admissions) that they should be understood for the purposes of the application, were set out in [3] to [20] of the ACCC’s submissions, with the addition of the information in 16A:

3.    The background to this matter was the subject of 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” (Joint Tender Bundle (JTB), tab 19, (ICAC report)). For present purposes, a sufficient description of that background is as follows.

4.    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.

5.    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 (JTB, tab 1). This invitation was overtaken by another issued in January 2009 (JTB, tab 5). 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).

6.    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.

7.    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, p91). ICAC found that Voope was a company associated with the Obeid family (ICAC report, p13). Also, 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, p75).

8.    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, p93, tab 2, p9).

9.    The closing date for the receipt by the DPI of EOIs (as extended) was 16 February 2009 (ICAC report, 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 (JTB, tab 3, p21). In its EOI for the Glendon Brook area, Monaro Mining offered an additional financial contribution of $5 million (JTB, tab 8, 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) (JTB, tab 3, 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 (JTB, tab 7, p 31).

10.    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, p106). A critical factor in its decision (if not the decisive factor) was that the additional financial contributions offered by Monaro Mining were superior to the other bidders (JTB, tab 8, p19 – 20).

11.    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, 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, 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, p 109 – 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 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, p110 – 111); JTB, tab 9 and tab 10)).

12.    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”) (JTB, tab 9). 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.

13.    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 (JTB, tab 11).

14.    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, 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 (JTB, tab 10).

15.    On 9 June 2009, Loyal wrote to the DPI and withdrew its EOI for (inter alia) the Mount Penny and Glendon Brook areas (JTB, tab 12).

16.    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 (JTB, tab 4). 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 (JTB, tab 13 and 14).

[16A    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. (JTB, tab 15E). 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 (JTB, tab 15).]

17.    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 (JTB, tab 16 and 17).

18.    ICAC found that Cascade thereafter spent millions of dollars on exploration activities at Mount Penny and, another Cascade subsidiary, Mount Penny Properties Pty Limited, spent over $500,000 making monthly mortgage repayments on the Mount Penny properties (ICAC report, p120).

19.    On 11 May 2010 Buffalo wrote to Cascade, referring to the purported joint venture agreement of 5 June 2009 and stating that, in entering into the purported joint venture agreement, Buffalo was acting as bare trustee and that Buffalo was to be replaced as trustee of that trust and all its rights and obligations assumed by South East Investments Pty Limited (South East) (JTB, tab 18). That letter was signed and acknowledged on behalf of Cascade. ICAC found that South East was an Obeid associated company (ICAC report, p 14).

20.    In February 2011, ICAC commenced an investigation in connection with the above matters and, in July 2013, delivered its report. In its report (at p113) ICAC noted a submission by Counsel Assisting that “the agreement for Monaro Mining to withdraw its bid was arguably an illegal agreement, in the sense that it breached Part IV of the Trade Practices Act 1974”.

11    After the hearing, the parties were invited to, and they did, provide written submissions in relation to cases and a report referred to in these reasons which had not been the subject of their written and oral submissions.

Relevant Law

Principles

12    The parties acknowledged that the approach which the Courts have taken to determining the validity of a s 155 notice under the Trade Practices Act 1974 (Cth) (the predecessor of s 155 of the CC Act) was summarised in Seven Network v ACCC by Sackville and Emmett JJ at [49]:

The authorities have established a number of propositions concerning the interpretation of s 155(1) of the TP Act. They include the following:

(i)     In a context where refusal or failure to comply with a s 155 notice is punishable by imprisonment or fine, the notice must:

(a)    convey with reasonable clarity to the recipient the information that must be furnished; and

(b)     disclose that the ACCC is entitled to require the recipient to furnish the specified information:

Pyneboard Pty Ltd v Trade Practices Commission (1982) 57 FLR 368 at 374, per curiam.

(ii)     The second of these requirements will not be satisfied unless it appears from the notice that the information sought is information “relating” to one or more “matters” of a kind described in s 155(1): Pyneboard v TPC at 375; SA Brewing v Baxt at FCR 369-70; ALR 115–17; Bannerman v Mildura Fruit Juices Pty Ltd (1984) 2 FCR 581 at 584 per Bowen CJ and Neaves J. However, the question whether a notice discloses the necessary “relatedness” is not to be approached in an “over-technical or hypercritical way”: Pyneboard v TPC at 376. Moreover, the “relatedness” is to a proper inquiry into the suspected offences: Panelboard Pty Ltd v Trade Practices Commission (1981) 59 FLR 395 at 407, per Fox J.

(iii)     Section 155(1) does not require the Chairperson of the ACCC to have “reason to believe” that a specified matter constitutes or may constitute a contravention of the TP Act. The Chairperson must, however, have reason to believe that the relevant person is capable of furnishing information relating to the matter specified in the notice: WA Pines v Bannerman at 179, per Brennan J (with whom Bowen CJ agreed); TNT Australia Pty Ltd v Fels [1992] ATPR 40,595 (41-190), at 40,598-40,599, per Gummow J. It follows that the Chairperson or other officer must believe that the person to whom the notice is directed is capable of furnishing information relating to the facts known or suspected: WA Pines v Bannerman at 180. In addition, there must be facts in existence which are sufficient to induce that belief in a reasonable person: George v Rockett at 112.

(iv)     The word “matter” in s 155(1) is to be construed in its ordinary sense of an affair or thing: Melbourne Home of Ford Pty Ltd v Trade Practices Commission (1979) 36 FLR 450 at 474, per Franki and Northrop JJ; SA Brewing v Baxt at 369. It refers to a body of facts which constitutes or may constitute a contravention of the TP Act. Whether or not the relevant body of facts constitutes a contravention is a matter of law and does not turn on the perception or knowledge of the ACCC or its officers: WA Pines v Bannerman at 179.

(v)     When s 155(1) speaks of a matter which may constitute a contravention, it refers to a body of facts not fully known and which may, when fully known, reveal themselves as constituting a contravention: WA Pines v Bannerman at 179. The words “may constitute” enable a court to judge from the material in the notice whether, if other facts which may or may not have occurred come to light, the whole body of facts would constitute a contravention: SA Brewing v Baxt at 370. It is not necessary for the Court to determine whether a contravention has occurred; but equally it will not “idly speculate” or “draw on improbable circumstances” to uphold a notice: SA Brewing v Baxt at 370. An alternative formulation is that the Court can take account of facts which may “reasonably be suspected” to have occurred: WA Pines v Bannerman at 179.

(vi)     Where the matter referred to in the notice, after allowing for undiscovered facts, is incapable of amounting to a contravention, the issue of the notice is not a valid exercise of the power conferred by s 155(1): SA Brewing v Baxt at 371–2.

(vii)     In view of the principle that a court should not adopt an “over-technical or hypercritical approach” to the construction of a notice, there is no requirement that the notice “plead” all the facts necessary to constitute a contravention or possible contravention of the TP Act: SA Brewing v Baxt at 370.

(viii)     Information which tends to negative a suspected contravention or liability to conviction or which tends to exculpate a person suspected to be a party to a contravention, is within the ambit of s 155(1). It follows that an inquiry under s 155 may relate to a defence or possible defence available to the suspected person: WA Pines v Bannerman at 180.

13    Both the applicants and the ACCC referred to the decision of the High Court in Thiess v Collector of Customs [2014] HCA 12, the applicants for the proposition at [22] and the ACCC for the proposition at [23] (footnotes deleted):

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.”

14    There is an important balance to be achieved in considering applications of this kind, which is referred to in SAB v Baxt at 371: first, it is fundamental that the proper progress of legitimate investigations is not disrupted by what may amount to demurrer or strike out motions on the terms of a s 155 notice, and second, if the “matter” referred to in the notice is incapable, after allowing for undiscovered facts, of amounting to a contravention, then the issue of the notice is not a valid exercise of power.

15    The ACCC also submits that an application to set aside a s 155 notice is a “poor vehicle” for determining whether the circumstances of this case involve “services” within the meaning of s 4 of the CC Act because of the need to determine mixed issues of fact and law. The ACCC says the Court should have regard to the observation of Fisher and French JJ in SAB v Baxt at 374 that it is “only if the question being posed virtually answers itself in the negative that the Court could dispose of the issue in proceedings of this kind”. The applicants contended that in the context in which these Notices are issued, on the question of “services”, “the factual matrix is disclosed in the material that is before the Court.”

Legislative provisions

Contracts, arrangements and understandings affecting competition and exclusionary provisions

16    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, 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.

17    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.

Cartel provisions

18    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”. It is common ground that the “purpose/effect” condition can be left to one side for present purposes:

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.

…

(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.

19    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.

20    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.

Services

21    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) turn on whether, but for a provision of the CAU, 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”.

22    The applicants’ first ground is that the service specified in the Notices does not fall within the meaning of “services” under s 4(1) of the CC Act. They say that as a consequence:

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

(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.

What are the “services” referred to in the Notices?

23    The parties agree that the identification of “services” is critical to the possibility of a contravention of s 45 and s 44ZZRG/s 44ZZRK. There is, however, an important point of difference between the parties as to what the “services” which the ACCC has specified in the Notices are capable of encompassing, and much of the divergence in their argument about the application of the definition of “services” in the CC Act turns on this difference.

Submissions on the nature of the Specified Services

24    The Notices state that Loyal and Cascade 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” (Specified Services). The provisions of the alleged CAU are said to have “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)”.

25    Mr Williams, Senior Counsel for the applicants, says the statement of the Specified Services employed in the Notices is an “awkward expression” which must take its content from the Mining Act. If that is done, Mr Williams submits, it is “a right to apply for the [Minister’s] consent that is the relevant service”. He says it cannot comprise the Ministerial Consent itself or any other benefit which might flow from obtaining Ministerial Consent such as the right to apply for an exploration licence or the grant of the licence. He submits that the Notices cannot derive validity from a broader specification of a right than the nature of the framework of the Mining Act permits.

26    The ACCC says that the language used in the Specified Services is a reference, “in the first instance, to the right obtained by the provision of ministerial consent … and also the subsequent grant of an exploration licence under s 22 of the Mining Act”.

Mining Act and EOI Process

27    The Specified Services cannot validly extend beyond a matter which could amount to a contravention of the CC Act, assuming the Specified Services fall within the definition of “services” in the CC Act, which will be considered separately. It is necessary to identify with precision what the Specified Services are; relevant to this is consideration of the EOI Process and the Mining Act.

28    The Mining Act as in force in 2008-2009 prohibited any person from prospecting or mining “any publicly owned mineral” without an authority which was in force in relation to that mineral and that land: s 5. Coal is such a mineral (Sch 2 of the Mining Regulations 2003 (NSW) (Mining Regulations), which was current in 2008-2009) and it was reserved to the Crown under s 5 of the Coal Acquisition Act 1981 (NSW). Any person may apply for an exploration licence: s 13(1) of the Mining Act. After considering an application for an exploration licence, the Minister can grant or refuse to grant the licence: s 22 of the Mining Act. The grant of an exploration licence does not guarantee the grant of a mining licence; that is a different process with different considerations. An exploration licence is nonetheless a commodity which can be bought and sold.

29    In December 2007, the whole of NSW was designated a “mineral allocation area”. As it was enacted in 2008-2009, s 13(4) of the Mining Act provided:

An application that relates to land within a mineral allocation area may not be made, except with the consent of the Minister, in relation to any group of minerals that includes an allocated mineral.

30    A person could therefore request Ministerial Consent to apply for the grant of an exploration licence or the Minister could elect to conduct a more limited expression of interest process. The Minister could also invite tenders for exploration licences for an allocated mineral by advertising in a newspaper under s 14 of the Mining Act .

31    In September 2008, the DPI issued invitations to selected companies to submit EOIs for the award of exploration licences for 11 possible coal exploration areas, including Glendon Brook in the Hunter Coalfield and Mt Penny in the Western Coalfield. An Expression of Interest Information Document (EOI Information Document) dated August 2008 was issued and it indicated that only people who were invited to lodge an EOI could do so; the closing date was 24 November 2008. In January 2009, the DPI issued a further EOI Information Document which indicated that the NSW Government had changed its policy and had decided to extend the opportunity to submit an EOI to other small and medium companies which had contacted the DPI and the Minister before 24 November 2008, and to others who may seek to be included by the new closing date of 16 February 2009. Companies which had lodged EOIs in the original process (which included Monaro) could elect to have them considered in the extended process, revise them or withdraw them.

32    The August 2008 and January 2009 EOI Information Documents are otherwise relevantly the same. Under the heading “Call for Expression of Interest” Clause 1.1 provides:

The Minister for Mineral Resources in New South Wales, Australia, invites Expressions of Interest for the awarding of an exploration licence in respect of the following eleven (11) coal exploration areas (Figure 1), pursuant to the Mining Act 1992: …

Glendon Brook and Mt Penny were included in the list. The clause goes on to say:

…

Expressions of interest for more than one area may be submitted. An individual application must be made for each area of interest.

The Department of Primary Industries will establish an evaluation team from experts on its staff and elsewhere in government. The team will evaluate the Expressions of Interest using a consistent process approved by an independent probity auditor.

The successful applicant/s will be awarded a coal exploration licence of the area(s) for an initial period up to 5 years, pursuant to the Mining Act 1992.

…

Exploration rights over these areas will be awarded by part transfer over the existing titles held by the Crown where applicable or the grant of a new exploration title. The continued tenure of the exploration licence during the initial period and any subsequent renewal period will be subject to compliance with agreed commitments and title conditions. The Department of Primary Industries is not bound to accept any of the proposals.

33    This clause does not expressly address the issue of Ministerial Consent, although the grant of a new exploration licence would have required it.

34    The EOI Information Documents then set out in some detail the information which the DPI required to evaluate the EOIs and how they would be evaluated. Section 6.2 set out evaluation criteria which included the proposed exploration program, a conceptual mine development proposal, conceptual mine development plans to maximise resource recovery and coal utilisation, details of any proposed infrastructure development, a summary of overall benefits of the proposal to the region and the State, commitment to implementing sound work programs, an indicative timeframe, demonstrated technical competence, financial qualifications and the financial contributions (including any additional financial contributions) to be made under Section 7.

35    Section 7 sets out the “[f]inancial obligations of successful applicant for exploration licence”. The obligation is expressed as follows:

As part of the Expression of Interest commitments, for each release area the successful applicant/s, will within 30 days from the date of a registration of part transfer of the current exploration licence or within 30 days of the Minister granting consent to apply for a new exploration licence, be required to pay: …

This is the only mention of Ministerial Consent in the EOI Information Documents.

36    The amounts which the successful applicant would be required to pay under Section 7 (Section 7 Payments) within 30 days of transfer of a licence or Ministerial Consent being given comprised: a $10,000 assessment fee (to cover the DPI’s EOI administration, advertising and evaluation costs); a one off payment of $300,000 for Glendon Brook and $1 million for Mount Penny (as a contribution towards the DPI’s Coal Development Fund for continued coal exploration, which included all required refunds of public moneys); and “additional financial contributions [which] may be included as part of an applicant’s Expression of Interest” (Additional Financial Contributions). The successful applicant would also be required to pay the Application for an Exploration Licence fee of $600 plus $600 per square kilometre, and an environmental security deposit.

37    Section 9 of the EOI Information Documents provides:

The Department of Primary Industries is not bound to accept any Expression of Interest. The decision in relation to the selection of the successful Expression of Interest applicants to be awarded any exploration licence will be final.

Section 9 addresses the fact that there may be no successful applicants, and protects the NSW Government from any suggestion that it must accept the “best” EOI or any EOI at all.

38    There is no statement in the EOI Information Documents reserving to the Minister the right to give or refuse Ministerial Consent to a successful applicant (or to refuse to transfer part title where that is relevant); the obligation to make Section 7 Payments is simply predicated on transfer of part title or Ministerial Consent being given. The Section 7 Payments are stated not to be refundable. Clause 1.1 straightforwardly expresses that the successful applicant will be awarded the exploration licence. An open interpretation of the final paragraphs quoted at [32] is that the Minister will do all things necessary, including giving Ministerial Consent and granting the licence under s 22 of the Mining Act, to a successful applicant who submits an application in the required form and makes the Section 7 Payments, subject to the DPI reserving the right not to select any EOI.

39    The evaluation team (which is referred to in the EOI Information Documents) prepared a document entitled “Coal Release Areas Evaluation of Expressions of Interest” dated May 2009. The report indicates that by 16 February 2009, three companies had submitted an EOI for the Glendon Brook area and four companies had submitted EOIs for the Mt Penny area; Monaro and Cascade were two of the companies in each case.

40    Monaro had indicated that it would make Additional Financial Contributions of $5 million in relation to Glendon Brook and $25 million in relation to Mount Penny. The evaluation team reported that these Additional Financial Contributions far exceeded those of other EOIs for those areas. Cascade did not state the amount of any Additional Financial Contribution but indicated its preparedness to negotiate payments once mine development plans had been determined.

41    The copy of the report included in the Tender Bundle provided to the Court did not include the evaluation page for one of the 11 areas. For seven of the ten areas included in the Tender Bundle, the evaluation team found that the preferred EOI was the one which had the greatest Additional Financial Contribution. In the other three, while the successful applicant had offered a lower Additional Financial Contribution, the successful applicant (the same company in each case) had contiguous mining areas and they were said to provide “greater certainty to development”, “synergies for development and opportunities for maximising existing infrastructure” and to have a “better overall outcome to the region and the State”.

42    Although the evaluation team considered Monaro’s EOI superior for each of the Relevant Areas, Loyal withdrew Monaro’s EOI on 9 June 2009, apparently before the successful EOI applicant for the Relevant Areas had been selected by the Minister or his delegate.

43    On 19 June 2009, the Director-General of the DPI wrote two letters to Mr John McGuigan of Cascade, one relating to each of the Relevant Areas. The letters were relevantly in the same terms (as written):

I am pleased to inform you … I have selected Cascade Coal Pty Limited as the successful EOI applicant for the awarding of the exploration licence over the subject area for a period of up to 5 year, subject to standard and special exploration licence conditions.

Accordingly I now invite Cascade Coal Pty Limited to apply for the exploration licence over the area as defined in the Coal Release Areas EOI Information document.

The Department of Primary Industries will shortly forward to you a set of draft special conditions for the exploration licence to which Cascade Coal Pty Limited will need to accept, prior to the Minister for Mineral Resources granting the exploration licence over the subject area. These special conditions will reflect the various conditions and requirements specified in the Coal Release Areas EOI Information document, plus the specific proposals and commitments made by your company in its successful EOI.

With respect to the required financial contributions of A$1,010,000 (inclusive of any applicable duties or taxes), I wish to advise that payment is required of this amount to the NSW Department of Primary Industries according to the timeframes specified in the Coal Release Areas EOI Information document. Your company will also be required to pay the standard Application fee for an Exploration Licence for Group 9 (coal) of A$600+A$600 per square kilometre … An environmental security deposit to be calculated based on the proposed work program is also payable at the time of awarding of the exploration licence.

It should be noted that receipt of the non-refundable payments for awarding exclusive exploration rights over the Mt Penny coal resource for an initial period of up to five years to Cascade Coal Pty Ltd, does not in any way imply that a future mining proposal is guaranteed to receive project approval under the NSW Environmental Planning & Assessment Act 1979. Such a project approval is required prior to any future mining lease being granted.

44    On 10 August 2009, the Manager of Coal & Petroleum Tiles and Systems wrote to Mr McGuigan. The letter confirmed that the Minister had given consent under s 13(4) of the Mining Act for Cascade and went on to cover essentially the same material as in the 19 June letter: inviting Cascade to apply for the exploration licence for Mt Penny and addressing the obligation to make the Section 7 Payments. It is not clear why the second letter was required given that the Director-General was a delegate of the Minister for the purpose of giving consent under s 13(4) of the Mining Act and there must be a strong inference from the 19 June 2009 letter that consent had been given, since it invites an application in required form to be made for an exploration licence and indicates that the Section 7 Payments must be made. It is also consistent with the process envisaged by the EOI Information Documents.

45    On 24 August 2009, Cascade wrote to the DPI attaching the application by Cascade for the exploration licence for the Mt Penny area, together with related information and Section 7 Payments, and asking for the exploration licence to be issued to a subsidiary. On 21 October 2009 the Minister issued exploration licences under s 22 of the Mining Act to subsidiaries of Cascade. The licences were contained in deeds executed by officers of the Cascade subsidiaries and the delegate of the Minister.

Consideration

46    The EOI Information Documents set out the primary obligations of the successful applicant and expressly state 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”.

47    The EOI Information Documents do not address in any detail the requirement to obtain Ministerial Consent; it is merely a trigger for Section 7 Payments by the successful applicant. The grant of Ministerial Consent to the successful applicant appears to be an assumption of the EOI Information Document. The correspondence between the DPI and Cascade treats the application for a licence in required form as mechanical because the EOI Information Document and the EOI submitted in response to it addressed the material issues. For instance, the correspondence indicates that although the licences would be subject to conditions, the conditions would be as outlined in the EOI Information Documents or otherwise standard so that there was certainty about how this mechanical issue would be addressed. In the events which occurred, the Minister and Cascade acted consistently with the process outlined in the EOI Information Documents.

48    It therefore appears that a contract may have been formed on 19 June 2009 when the DPI notified Cascade that it was the successful applicant for the Relevant Areas and invited Cascade to lodge applications in the required form for exploration licences together with required Section 7 Payments. Alternatively, a contract may have been formed on 10 August 2009 when the DPI confirmed that Ministerial Consent had been given. Consistent with the EOI Information Documents, Cascade as the successful applicant was then obliged to make the Section 7 Payments and had the right to lodge an application for the exploration licences. It is likely that if the Minister had refused to grant an exploration licence following receipt of an application in required form and the Section 7 Payments from the successful applicant, the NSW Government would have been contractually liable. At the very least, as a result of the EOI Process Cascade (or its nominated subsidiary) had the right to make an application for the exploration licences.

Finding on the nature of the Specified Services

49    I reject the applicants’ contention that the “services” specified in the Notices should be characterised as the right to apply for Ministerial Consent. There is nothing in the Mining Act which indicates that an application must be made for Ministerial Consent; contrast s 13(1) which specifically envisages applications for exploration licences. It is possible to view the EOIs as applications for Ministerial Consent ancillary to the awarding of the exploration licences. I consider that it was implicit in the EOI Information Documents that Ministerial Consent would be given to the successful applicant without the need for any further application or negotiation of any material terms; the grant would be on the terms of the EOI and the EOI Information Documents. On this basis, I reject the applicants’ arguments that the Specified Services should be characterised as a mere opportunity to negotiate which could not amount to “services” for that reason: see Adamson v New South Wales Rugby League Limited (1991) 31 FCR 242 at 262 per Wilcox J (Sheppard and Gummow JJ agreeing) (Adamson).

50    Having regard to the EOI Process and the Mining Act, I am satisfied that the language used to describe the Specified Services in the Notices is apt to encompass (1) Ministerial Consent given to the successful applicant under the EOI Process; (2) the statutory right (which flows from the Ministerial Consent) to apply for the exploration licences for the Relevant Areas; and (3) a possible contractual right conferred on the successful applicant in the EOI Process to apply for the exploration licences which may have encompassed contractual remedies if the licences were not granted.

51    I am not satisfied that the language used to describe the Specified Services in the Notices is apt to extend to the grant of the exploration licences. The Specified Services refer expressly to “the right to apply for the necessary approvals”. To this extent I do not accept the meaning of the Specified Services for which the ACCC contended.

Are the Specified Services “services” as defined in the CC Act?

52    “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.

53    The applicants say that even though the use of the word “includes” in the definition of “services” invites enquiry as to whether the definition is inclusive of the ordinary meaning of “services” or exhaustive, it is not necessary to determine this question because, in their submission, the Specified Services do not fall within the ordinary meaning of “services”.

54     The ACCC says that the definition of “services” is inclusive and operates cumulatively on the ordinary meaning of the word: Commissioner of Taxation (Cth) v St. Hubert’s Island Pty Limited (in liq) (1978) 138 CLR 210 at 216. This accords with the most usual interpretation of defined terms which employ the word “includes”: see Pearce DC and Geddes RS, Statutory Interpretation in Australia (7th edition, 2011, LexisNexis Butterworths) at 248 to 252. The ACCC argues that this was the approach taken by Wilcox J in Adamson at 262:

The definition does not stipulate that the services to which it refers must be services supplied pursuant to a contract, understanding or arrangement; although, as they do have to be provided etc “in trade or commerce” this will generally be the position. So perhaps the mere fact that the opportunity to negotiate arises outside of any contractual context is not an answer to the appellants’ argument. And it is true that the definition is framed in inclusive, rather than exhaustive, terms. Nonetheless, the definition refers to those things which, as a matter of ordinary English, are known as services, subject to any relevant exclusion [sic inclusion] under one of pars (a) to (d). 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. It is impossible to regard a mere freedom to negotiate with a person as the supply by that person of “services” to the prospective negotiator.

55    There is some ambiguity in the quoted paragraph because in the first sentence Wilcox J says “they”, presumably the “services”, “do have to be provided etc “in trade or commerce”” (hence why his Honour says that they are usually supplied under a contract, understanding or arrangement); this may be consistent with treating the definition as exhaustive. Justice Wilcox then refers to the fact that the definition is framed in inclusive terms and to the meaning of “services” as a matter of ordinary English, which is consistent with treating the definition as inclusive. The remark, insofar as it refers to “in trade or commerce” appears to be an aside and not necessary to the final decision that it is impossible to regard a “freedom to negotiate” as a service.

56    It is instructive to consider the legislative history of the definition of “services”.

The legislative history of the definition of “services” in s 4(1)

57    The definition of “services” which was adopted in the Trade Practices Act 1974 (Cth) (1974 Act) was as follows:

services includes, without limiting the generality of the expression, the rights or benefits that are to be provided under -

(a)    a contract for:

(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 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;

58    This definition is simple: it adopts the ordinary meaning of “services” and extends it to include benefits provided under certain classes of contract. I will call the extension the “Contracts Extension”. I note that the Contracts Extension is an elaboration of the extended definition which appeared in the Trade Practices Act 1965 (Cth) which was as follows:

“services” includes, without limiting the generality of the expression, the rights or benefits that are to be provided under an agreement for -

(a)    the performance of work (otherwise than under a contract of service), whether with or without the supply of goods;

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

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

59    The Contracts Extension overcomes limitations on the broad concept of “services” identified by the High Court in Employers’ Mutual Indemnity Association Limited v Federal Commissioner of Taxation (1943) 68 CLR 165 (Employers’ Mutual), albeit in the different context of determining whether the plaintiff was a “co-operative company” established for the purpose of carrying on a business having as its primary object “the rendering of services to its shareholders” for the purposes of s 117 of the Income Tax Assessment Act 1936-1940 (Cth).

60    By majority (Latham CJ, Starke and Williams JJ), the High Court held that it was not the “rendering of services” merely to make a contract (such as issuing an insurance policy) or to perform an obligation undertaken in the course of an ordinary commercial contract (such as investigating or paying insurance claims). In Revesby Credit Union Co-operative Limited v Federal Commissioner of Taxation (1965) 112 CLR 564 (Revesby Credit Union) at 577-578, McTiernan J explained the differences between the judgments of the members of the High Court in Employers’ Mutual (citations incorporated into the text):

The Shorter Oxford Dictionary defines “service” as “the act of helping or benefiting”, and in the plural, “friendly or professional services”. This is a broad definition. It would include all the things contemplated by the word “services” in the common phrase “goods and services”. It would include any consideration given in the performance of any ordinary commercial contract, as well as all those activities more specifically called services, which do not actually involve the production or processing of goods, for instance, banking and financing, transportation, and insurance. In the case of Employers’ Mutual Indemnity Association Ltd. v. Federal Commissioner of Taxation (1943) 68 C.L.R. 165 the Full Court had to consider whether a mutual insurance company in issuing policies and in investigating and either resisting or paying on claims was engaged in “the rendering of services” to its policy holders. The Court with Rich J. and myself dissenting held that neither the issuing of insurance policies nor the investigation, resisting and paying of claims was “the rendering of services” to the policy holders. In the opinion of Latham CJ. “the rendering of services” must involve the doing of work of some kind. The mere making of a contract, such as the issuing of an insurance policy cannot be put into this category, even though work may be done in pursuance of the contract. Furthermore, the Chief Justice did not regard ordinary commercial dealing on terms acceptable to each party as the rendering of services. But he did not further define the phrase. I would have thought that the performance of work for the benefit of another if in pursuance of a contract would fall within the Chief Justice's general definition but this has been specifically excluded if it merely amounts to a performance of consideration already promised. Starke J. held that “the rendering of services” necessarily involved the “doing of a positive act” and his example was the shearing of sheep. The third majority opinion, that of Williams J., decided that the services which are to be rendered must be of the kind that could result from a contract of services and accordingly must involve a personal and confidential relationship so as to make them unenforceable specifically in Equity. The minority opinions of Rich J. and myself agreed that the word “services” refers to services of the same nature as those rendered by a business enterprise in satisfying the business needs of persons having recourse to it. It is immediately apparent that the majority judgments do not reveal a common opinion as to the nature of “the rendering of service”. However in the light of the decision the broad meaning of the phrase csannot be adopted. But what restriction is to be placed on it? I consider that “the rendering of services” should consist of the doing of an act for the benefit of another, which is more than the mere making of a contract and which goes beyond the performance of an obligation undertaken in the course of an ordinary commercial contract.

61    As part of the general law, it is likely that these decisions were taken into account in drafting the definition of “services” in the 1974 Act so as to avoid doubt about whether these rights were included.

62    In December 1976 the then Minister for Business and Consumer Affairs, the Honourable John Howard, introduced the first version of the Trade Practices Amendment Bill 1977 (1976 Bill) which contained a suite of amendments to the 1974 Act designed to implement the recommendations of the Report to the Minister for Business and Consumer Affairs of August 1976 that was prepared by the Trade Practices Act Review Committee (commonly known as the Swanson Committee Report): see the explanatory memorandum to the 1976 Bill. The 1976 Bill lapsed when the Parliament was prorogued.

63    Among other things, the proposed amendments addressed the decision of the High Court in Quadramain Pty Ltd v Sevastapol Investments Pty Ltd (1976) 133 CLR 390 that the scope of s 45 (as it was then enacted) did not extend to covenants running with land which limited the conduct of a trade (at least as between persons who were not party to the creation of the restraint). The Swanson Committee Report suggested (at [4.40]) that the Trade Practices Act “should extend, as far as constitutionally possible, to all covenants running with the land as to the uses to which the land itself may be put which have, or are likely to have, a substantial adverse effect on competition in a market for goods or services”. After considering the manner in which the Trade Practices Act should deal with commercial leases, the Committee concluded (at [4.47]) “we recommend that the Act should specifically state that the leasing and licensing of land is a service for the purposes of sections 45 and 47 of the Act”. At [9.46]-[9.49], the Swanson Committee Report considered whether Part V of the 1974 Act should be extended to interests in and dealings with land, and expressed the view at [9.48] that the technique adopted to refer to land would require co-ordinated drafting. At [9.78] it is suggested that amendments to the definition of “goods” or “services” alone would not be enough to address the major abuses that occur in relation to land, and it recommended that specific provisions be introduced dealing with false and misleading statements in the promotion of land transactions.

64    The 1976 Bill proposed only a minor amendment to the Contracts Extension of the definition of “services” to delete paragraphs (b) and (c) and to replace them to read (markings to show changes):

(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;

65    The 1976 Bill also proposed a new s 4G:

In this Act-

(a)    a reference to a contract shall be construed as including a reference to a lease of, or a licence in respect of, land or a building or part of a building and shall be so construed notwithstanding the express references in this Act to such leases or licences;

(b)    a reference to making or entering into a contract, in relation to such a lease or licence, shall be read as a reference to granting or taking the lease or licence;

(c)    a reference to a party to a contract, in relation to such a lease or licence, shall be read as including a reference to any person bound by, or entitled to the benefit of, any provision contained in the lease or licence; and

(d)    the granting or renewal, or the taking, of such a lease or licence shall, except for the purposes of section 47, be deemed to be the supply, or the acquisition, as the case may be, of a service.

66    The explanatory memorandum for the 1976 Bill explained the purpose of the proposed s 4G as follows:

Land transactions

24. The Bill deals specifically with false representations and other misleading or offensive conduct in relation to land (clause 26, new section 53A). Leases and licences of an interest in land are defined as services for the purpose of the Act (clause 5, new section 4G).

67    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. The differences in the 1977 Act definition of “services” from 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;

68    For ease of reference, I will call the words after “includes” up to “in trade or commerce” the “Rights Extension” and I will call the words after “without limiting the generality of the foregoing” the “Revised Contracts Extension”.

69    The explanatory memorandum for the 1977 Act (as enacted with effect from 1 July 1977) at item 27 deals with the amendment to the definition of “services” as follows:

Land transactions

The Bill deals specifically with false representations and other misleading or offensive conduct in relation to land (new section 53A, clause 29). Leases and licences of an interest in land are defined as services for the purpose of the Act (see definition of “services”, new section 4(1), clause 5(m)).

70    In Taperell GQ, Vermeesch RB and Harland DJ, Trade Practices and Consumer Protection (2nd edition, 1978, Butterworths) at [420], the authors suggest that the amendment to the definition of “services” was an important part of the response to the Swanson Committee’s recommendations. That appears to be correct.

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.

73    In Chapman v Luminis Pty Ltd (No 4) (2001) 123 FCR 62 at [175] (Chapman v Luminis), von Doussa J made an obiter remark to the effect that the Revised Contracts Extension should be interpreted as being subject to the words “in trade or commerce” because of the use of the words “rights, benefits, privileges and facilities” in both the Rights Extension and the Revised Contracts Extension. For the reasons above, I do not consider that reasoning persuasive.

74    Against this background, the following questions need to be addressed:

(b)    are any of the Specified Services “services” within the ordinary meaning of “services”?

(c)    if not, are any of the Specified Services “services” within either of the two limbs of the extended definition of “services”?

Ordinary meaning of “services”

75    The ACCC submits, in answer to the applicants’ assertion that the Specified Services do not constitute “services” within the ordinary meaning of the word, that the applicants have not explained why they say that is the case. Further, the ACCC says the ordinary meaning of “services” is broad enough to encompass the Specified Services: in Adamson at 262, Wilcox J 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.

76    This characterisation is undoubtedly correct. The Macquarie Dictionary provides 33 definitions of “service”, including: (1) an act of helpful activity, and (2) the supplying or supplier of any articles, commodities, activities, etc, required or demanded. However, the legislative context is determinative of what can be encompassed by the term “services”.

77    The legislative purpose of trade practices legislation was originally to regulate restrictive trade practices and later to afford consumers protection in their dealings in goods and services as well; that might mandate a more expansive view of “services”, perhaps along the lines suggested by McTiernan J in Employers’ Mutual and Revesby Credit Union. However, in view of the decisions in Employers’ Mutual and Revesby Credit Union and the fact that some form of contracts extension has been included in the definition of “services” since 1965, I consider that it would not be open to me to find that a contractual right to apply for the exploration licences for the Relevant Areas falls within the ordinary meaning of “services”.

78    This leaves the issue of Ministerial Consent and the consequent right to apply for an exploration licence – are they “services”?

79    In IW v City of Perth (1997) 191 CLR 1 (IW v City of Perth), the High Court (by majority) dismissed an appeal brought by IW in relation to alleged unlawful discrimination under the Equal Opportunity Act 1984 (WA) (Equal Opportunity Act). The appeal was brought because the City of Perth Council (Council) refused to grant planning approval for use of particular premises as a centre for people with HIV by an organisation of which IW was a member. Section 4 of the Equal Opportunity Act defined “services” inclusively and expressly included “services of the kind provided by a government, a government or public authority or a local government body”.

80    After acknowledging the width of the term “services”, Brennan CJ and McHugh J found at 11 that “wide as the definition is, in our opinion it is not capable of including a refusal to exercise the statutory discretion … to approve the use of premises for use other than as a shop”. Their Honours acknowledge (at 12-13) that “the Act is not necessarily inapplicable to a council activity because the council, acting as a deliberative body, makes a decision refusing to provide the relevant services or because the refusal is made in the exercise of a statutory power”. They went on to say (at 16-17):

In determining whether a person has refused to provide a service within the meaning of the Act, it is necessary to identify with precision what service has allegedly been refused to that person and what service or services the alleged discriminator provides. The appellant does not assert, and the Tribunal did not find, that the relevant service which the City provides was the consideration of an application for approval. There was clearly no refusal to provide such a service. Rather, the appellant asserts that it was the refusal to approve the application that was the refusal of the service which the Council provided. However, the City did not provide any service of giving approvals. Conversely, it did not provide any service of refusing approvals. The Council, acting on behalf of the City, merely had a duty to consider applications and a discretionary power to refuse or approve those applications unconditionally or on conditions.

81    After noting the obligation of the Council to examine applications taking into account such matters as the orderly and proper planning of the locality and the preservation of the amenities of the locality, and the fact that the Council had the right to grant or refuse the application, Brennan CJ and McHugh J went on to say:

The process by which the Council considers applications for approvals is not in our view arguably describable as a service that it provides to applicants for planning approval. Rather it is a power to process applications for the protection and general benefit of the residents of the City. If the Council delays making its decision for more than sixty days, it is deemed to have refused the application. A process that can lead to such a result can hardly be described as providing a service to the applicant. If within the statutory period, the Council considers the application, it is bound to consider various matters and interests which may be contrary to the interests of the applicant and which may result in the refusal of the application. If the application succeeds, the applicant no doubt receives a benefit or advantage. But not every process or activity which results in a benefit or advantage to an individual is a service that is provided to that individual. When the deliberative and quasi-judicial nature of the application process is identified and analysed, it cannot sensibly be described as a “helpful activity” provided by the Council to applicants for planning approval. The Council is an adjudicator, not a servant of an applicant.

82    Dawson and Gaudron JJ described “services” as a word of complete generality. They found that “services”, in its ordinary meaning, was apt to include the administration and enforcement by the Council of the planning scheme and agreed with the Tribunal that the Council was thereby providing a service to residents. However, they thought that the Tribunal erred when it proceeded from this step to the conclusion that the exercise of the discretion to grant approval was itself a service because it misdescribed the Council’s discretion. They said at 24:

The appellant’s argument that the first respondent’s refusal of planning approval was a refusal to provide a service cannot be sustained. Once the service in issue is identified as the exercise of a discretion to grant or withhold planning approval, a case of refusal to provide that service is not established simply by showing that there was a refusal of planning approval. Rather, it is necessary to show a refusal to consider whether or not approval should be granted. And that case is foreclosed by the very matter of which the appellant complains, namely, the Council’s refusal to grant approval.

83    Toohey J also noted that the definition of “services” in the relevant Act was inclusive of its ordinary wide meaning, as well as “services of the kind provided by a government, a government or public authority or a local government body”. Toohey J thought it too narrow an approach to consider the relevant service to be consideration of the application in question. He saw the service as the consideration of the application and its disposition, saying at 28:

Consideration of an application is of itself hardly a service; it is the disposition of the application which either provides or refuses the service. In the manner of that refusal there may be discrimination.

84    Gummow J also noted that “services” and its variants are of wide and varied meaning and that services may be rendered to an individual by conduct tending to the welfare or advantage of that person. His Honour said at 44:

There is no reason in logic or good sense to deny the proposition that the Council may be engaged in the provision of services, not only to the community as a whole, but also to individual applicants who invoke the exercise of the powers of the Council under the town planning law. There is no dichotomy here between the discharge of statutory functions and the provision of services to those seeking the discharge of these functions.

His Honour concluded at 45 that the Council did not refuse to provide services; it did not refuse to accept or deal with the application. He further concluded (having regard to the particular provisions of the statute) that the Council did discriminate in the manner in which it provided the services.

85    Kirby J also noted that the concept of “services” is an extremely wide one “and by no means confined to the provision of tangible things”. His Honour concluded that the word should be given its meaning in the context and for the purposes of the legislation in question. He concluded that “services”, read in its context, “includes the provision by a local government body, such as the Council, of a planning decision to alter the permissible use of premises, without which such use would be unlawful”.

86    The applicants submit that the common thread of the judgments in IW v City of Perth is that the ordinary meaning of “services” is broad and its extent must be taken from its context. They say that the context of anti-discrimination legislation mandates a broad interpretation, as acknowledged by the High Court. They also say that the breadth and nature of work involved in a planning scheme for a city means that it is of an entirely different nature to the granting of mining approvals. They say that the reasoning of Brennan CJ and McHugh J is to be preferred because, first, the other judgments give particular weight to the context of anti-discrimination legislation and, secondly, the judgment of Brennan CJ and McHugh J is aligned with the decision of the House of Lords in R v Entry Clearance Officer; Ex parte Amin [1983] 2 AC 818.

87    Despite the applicants’ submission to the contrary, it is clear that it would not be “idle speculation” (as referred to in SAB v Baxt at 370) to form the view that the Minister’s consent and the right to apply for an exploration licence can be construed as a “service” within the ordinary meaning of the word. Each is undoubtedly a “helpful act” or “accommodation” which the successful applicant under the EOI Process would derive.

88    All of Brennan CJ, McHugh, Dawson, Gaudron and Gummow JJ expressly envisaged that consideration of an application for approval could be construed as a service. The right to apply for an exploration licence would, by force of s 22 of the Mining Act, carry with it the right to be considered for the grant of an exploration licence because the Minister’s power to grant or refuse a licence exists only “after considering an application for an exploration licence”.

89    While it is true that Brennan CJ and McHugh J considered that, in the context of the planning scheme under which the particular approval was sought in IW v City of Perth, the process of consideration of applications was not a service but a deliberative act performed in the exercise of a duty, the circumstances of the EOI Process adopted by the Minister are different. There is nothing in s 13(4) of the Mining Act which guides the Minister in determining whether or not to consent to an application for an exploration licence being made. Section 3A, which sets out the objects of the Mining Act, did not come into force until 2010 and there was no objects provision before that. Sections 13(2) and 13(3) set out the information which is required when an application is made, and information of a similar kind was required in the EOI Process from a person who submitted an EOI. Section 22 allows the Minister to give or withhold the grant of a licence, the only guidance being that the Minister may take into account whether someone has been convicted of an offence against the Mining Act or any other Act relating to minerals and mining.

90    Further, the CC Act is directed to regulating restrictive practices and protecting consumers from unfair practices: there is no reason to give the ordinary meaning of “services” restrictive application. Although the Full Court of the Federal Court in Queensland Aggregates Pty Ltd v Trade Practices Commission (1981) 38 ALR 217 indicated at 221 that “services” should not be interpreted in an expansive way, the limitation discussed in that case was that “services” should not include the payment of money or the supply of goods. In a context where the supply of goods is also (and often similarly) addressed in the legislation, that is not a substantial limitation. In my view, the Full Court’s reasoning would not preclude a finding that Ministerial Consent and the right to apply for an exploration licence which by force of s 22 of the Mining Act requires the Minister to consider the application before deciding whether to grant or refuse to grant a licence are “services” having regard to the purpose of regulating restrictive and unfair practices for which the CC Act and its predecessors were enacted.

Rights Extension

91    While I hold the view that the Specified Services may fall within the ordinary meaning of “services”, there was considerable argument addressed to the question of whether the Specified Services fall within the Rights Extension. The Rights Extension is very broad and includes not only rights (including rights in relation to, and interests in, real and personal property), but also “benefits, privileges or facilities”. The Specified Services can readily be categorised as any one or all of a right, benefit, privilege or facility. Ministerial Consent to apply for an exploration licence is a right or privilege which the Minister is free to give or withhold in his or her absolute discretion and the right to apply for an exploration licence is a privilege or benefit which is not freely available and potentially confers substantial value.

92    The area of controversy is whether the Specified Services are “provided, granted or conferred in trade or commerce”. 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 Limited v Nelson (1990) 169 CLR 594 (Concrete Constructions) at 603-604.

93    The applicants say that the Specified Services are 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 and the Mining Regulations. They argue that such a potential does not have any trading or commercial character so as to fall within the extended definition of “services” and they rely on Chapman v Luminis at [178]. They say 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: see Unilan Holdings Pty Ltd v Kerin (1992) 35 FCR 272 at 277; Auswest Timbers Pty Ltd v Secretary to the Department of Sustainability and Environment [2010] VSC 513 at [161]. Further, the applicants say 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: they say that the absence of the word “accept” (or a synonym) is significant.

94    The ACCC submitted that there is nothing in the definition of “services” to compel a conclusion that the relevant commercial activities are those of the service provider considered in isolation from the acquirer. The ACCC says 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” makes it clear 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. Similarly, acquisition of services is a relevant test under s 44ZZRD in relation to the cartel provisions. The ACCC contends that the line of authority commencing with Concrete Constructions and including the cases cited at [93] above consider the phrase “in trade or commerce” in the context of s 52 of the 1974 Act (now s 18 of the Australian Consumer Law in Sch 2 of the CC Act). The proscription in s 52 was against “conduct” undertaken in trade or commerce so the relevant inquiry is whether the activities of the person making the representation are conducted in trade or commerce. In this case, 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.

95    I accept the applicants’ submission that there is no reason why the expression “in trade or commerce” should be treated any differently in the definition of “services” even if the issue has relevance under Part IV of the 1974 Act/CC Act; I do not see any reason in the legislation why the cognate expressions should be treated differently: see Kline v Official Secretary to the Governor General (2013) 249 CLR 645 at [32].

96    Having said that, I also consider that even though the words “provided, granted or conferred” are used, reflecting the definition of “supply”, the gravamen of this phrase in connection with “in trade or commerce” in the Rights Extension is that the relationship or dealing as a whole be of a trading or commercial nature, not that the right, benefit, privilege or facility be a trading or commercial activity of the supplier. If focus on the supplier were intended, then it would have been appropriate to use a formulation which includes the term “supplier” or “supply”. In this context, I consider that the words “provided, granted or conferred in trade or commerce” envisage a dealing as a whole, so that while it might be clearer if the words “or accepted” (or similar) were included, I do not consider that they are necessary.

97    This view is consistent with the legislative history of the definition of “services”. It is also consistent, not only with the High Court’s approach in Concrete Constructions, but also with a number of cases, albeit in the context of s 52 of the 1974 Act, which indicate that the nature of the relationship between a regulator or Minister and a company seeking an approval or licence does not have the character of a potential or actual trading or commercial dealing.

98    Gold and Copper Resources Pty Ltd v Newcrest Operations Ltd [2013] NSWSC 281 (Gold and Copper Resources v Newcrest) was a case of alleged misrepresentation to the DPI by Newcrest in connection with an application to renew an exploration licence. Stevenson J considered argument concerning the relationship between the DPI and Newcrest at [111]-[118]:

111     Mr Newlinds submitted that the circumstances in this case are different from the mere submission by a regulated party to a regulator because:

“The EL application is, in effect, an application to enter into a commercial dealing with the State to pursue mining activities for the parties’ common pecuniary benefit. [The Act] establishes a form of statutory joint venture between the EL holder and the State, whereby the former will prospect for, and may ultimately extract, minerals (most or all of which are owned by the State), and the latter will receive a royalty for minerals it could not otherwise easily access of sell.

112     Mr Newlinds’ submission relied upon the following propositions:-

(a)    in NSW minerals are, generally, reserved to the Crown;

(b)    the Crown, by the Minister, is empowered by the Act to grant exploration licences;

(c)    exploration licences are granted to enable holders to explore for minerals with a view to seeking a lease to mine those minerals;

(d)    the holders of the mining lease are entitled to extract minerals;

(e)    any party extracting minerals must pay a royalty to the Crown; and

(f)    the Crown thus has a direct commercial interest in the exploration for minerals, the mining for minerals, and the receipt of royalties for minerals so mined.

113     The question is whether the holder of an exploration licence under the Act engages “in” trade or commerce when it makes a submission to the governing department administering the Act.

114     In this case, by making the Second Statement, Newcrest represented to the Department that it had had discussions, or some other form of communication with GCR that enabled it to predict that, in the year commencing 1 July 2009, its proposed work “will include” a survey using the Technology “in conjunction with” GCR.

115     The Second Statement was made in the course of a communication by Newcrest to the Department in which Newcrest was seeking to show that “special circumstances” existed that would warrant renewal of the whole of EL 3856 and EL 1024 for five years.

116     This was an occasion remote indeed from any potential “commercial dealing” between GCR and the Department of the kind postulated in Mr Newlinds’ submissions; namely the extraction by GCR of minerals and the payment of royalties to the Department. Such activities would only take place if, having exercised its rights under the exploration licences, Newcrest was able to satisfy the Department that it should be granted a mining lease over the areas the subject of the exploration licences and only if, having obtained such mining leases, minerals were extracted.

117     Whether or not Newcrest and the Department would then be in a “potential or actual trading or commercial dealing or relationship” (Street v Luna Park Sydney Pty Ltd (2009) 223 FLR 245 at [218] per Brereton J (a matter about which I express no opinion)), I think it clear that no such relationship existed between Newcrest and the Department at the time of the Second Statement. At that point, Newcrest’s relationship with the Department was that of licence holder and government authority responsible for determining whether that licence should be renewed. That was not, in my opinion, a commercial relationship.

118     My conclusion is that the Second Statement was not made “in trade or commerce”.

99    In Street v Luna Park Sydney Pty Ltd [2009] NSWSC 1 at [218], Brereton J found that the relationship between an applicant for planning approval and the planning authority did not have a trading or commercial character and that this is so even where a fee is payable. At [215]-[216], Brereton J summarised the position as follows:

[215] Thus the touchstone of conduct being “in trade or commerce” is that the corporation’s conduct be towards persons, whether or not consumers, with whom the corporation has or may have dealings of a trading or commercial character, and that the conduct be in the course of the corporation carrying on its trading or commercial activities. It tends significantly in favour of a conclusion that the corporation was acting in trade or commerce that there is a potential or actual trading or commercial dealing or transaction between the corporation and the person to whom the conduct is directed [Village Building Co Ltd v Canberra International Airport Pty Ltd [2004] FCA 133; (2004) 134 FCR 422 [62] (Finn J)]. On the other hand, it tends against conduct being “in trade or commerce” if there is no trading or commercial dealing or relationship between the person engaging in the relevant conduct and the person to whom it was directed [Plimer v Roberts (1997) 80 FCR 303 at 307]. While promotional activities in relation to or for the purposes of the supply of goods or services to actual or potential consumers bear a trading or commercial character [Concrete Constructions, 604], actions for the purpose of establishing, maintaining or protecting a business are not for that reason alone in trade or commerce [Village Building Co Ltd v Canberra International Airport Pty Ltd [2004] FCA 133; (2004) 134 FCR 422, [62] (Finn J)], and the fact that conduct has as its purpose or effect or both the maintenance or protection or a business is insufficient to make the conduct in trade or commerce [Village Building Co Ltd v Canberra International Airport Pty Ltd [2004] FCAFC 240; (2004) 139 FCR 330, [59] (Full Court)]. Promotional activities not directed at persons having a potential or actual trading or commercial dealing or transaction with the corporation are not in trade or commerce [Village Building Co Ltd v Canberra International Airport Pty Ltd [2004] FCA 133; (2004) 134 FCR 422, [62] (Finn J)].

[216] There are circumstances in which representations to a regulatory authority for the purpose of securing the performance of its statutory functions can be in trade or commerce [Brown v Riverstone Meat Co Pty Ltd (1985) 60 ALR 595; Merman Pty Ltd v Cockburn Cement Ltd (1988) 84 ALR 521; Village v Canberra Airport [2004] FCA 133; (2004) 134 FCR 422, 438 [58]]. In Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169, the Full Federal Court held that it was arguable (for the purposes of surviving a summary dismissal application) that a statement made by a company to the ACCC in the course of seeking consent to the sale of one of its businesses might be “in trade or commerce”, where the obtaining of consent was part of an overall sale transaction, the sale itself being indisputably in trade or commerce. However, as Mr Clarke submitted, it is at least equally arguable that what was involved were representations to the ACCC as regulator, and not to the applicant in trade or commerce.

100    On these authorities, Ministerial Consent and application for an exploration licence have a regulatory character which would exclude them from being considered as being undertaken in trade and commerce absent some other factor. Are there other factors?

101    In the course of argument my attention was drawn to cases which deal with when a State Government might be taken to carry on business and be in trade and commerce. State of New South Wales v RT & YE Falls Investments Pty Ltd (2003) 57 NSWLR 1 (NSW v Falls) dealt with the analogue of s 52 under the Fair Trading Act 1987 (NSW) in the context of the acquisition of cattle by the NSW Department of Agriculture in an effort to eradicate Bovine Johne’s disease and the sale of carcasses to recoup money: see [129]-[135] per Hodgson JA; the representations were found not to have been made “in trade and commerce”. RP Data Ltd v State of Queensland (2007) [2007] FCA 1639 dealt with an alleged misuse of market power under s 46 of the 1974 Act in relation to use of real estate and valuation data collected under the Land Titles Act 1994 (QLD) in the provision of data services. The respondent supplied real property data in bulk to licensees, including the applicant, and “over the counter” to the public: see [55]-[60] per Collier J. Supply of bulk data was found to be in trade or commerce while the “over the counter” supply of information was found to be in fulfilment of a governmental function. While the question of whether the Crown in right of NSW was carrying on a business for the purposes of s 2B of the CC Act is not directly relevant in this case, the ACCC submitted, and I accept, that the considerations expressed in those cases have relevance to the question of whether the Specified Services were “provided, granted or conferred in trade or commerce”, even if the Specified Services are part of the exercise of statutory powers.

102    In this case, the ACCC submitted that before 1981, when coal rights were reserved to the State of NSW, coal had been privately owned and the grant of exploration or mining rights was an ordinary commercial activity of citizens, so that there is nothing inherently governmental about the sale of exploration and mining rights. This argument was not considered by Stevenson J in Gold and Copper Resources v Newcrest.

103    More importantly, the DPI engaged in the EOI Process which was a competitive tender among companies selected by the DPI and designed to elicit and maximise Additional Financial Contributions. While many of the Section 7 Payments 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 cannot be characterised in this way.

104    It appears that the DPI used the limited expression of interest 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: see ICAC Report at 18, 93-94. As indicated at [41] above, 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. Without knowing the amount raised in relation to one area, the total of the Additional Financial Contributions for these ten areas was approximately $36 million (before Monaro/Loyal withdrew in relation to the Relevant Areas).

105    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 infrastructure benefits. Otherwise the criteria were usual commercial criteria which one would expect any 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.

106    Activities which might be considered to be more “governmental” in character would be conducted only if the exploration was successful and the exploration licence holder or some other person proposed to develop a mine; for instance, assessment under the Environmental Planning and Assessment Act 1979 (NSW). These were not part of the EOI Process nor did they in any way inform the Minister’s discretion as a matter of law. The discretion of the Minister in relation to giving consent under s 13(4) or in relation to the grant of an exploration licence was effectively unconfined under the Mining Act.

107    As Spigelman CJ pointed out in NSW v Falls at [24], determining whether any activity undertaken by a government is performed “in trade or commerce” requires some degree of precision about the conduct under consideration. However, as suggested by Sheller JA at [47], the answer is also intuitive as much as determined by a process of reasoning.

108    I am satisfied that it would not be “idle speculation” to consider that the Specified Services are “services” for the purposes of the CC Act. The Specified Services were the “deliverable” of an EOI Process which was not essentially governmental in character despite the fact that Ministerial Consent is a creature of the Mining Act and the grant of an exploration licence is also governed by that Act. The EOI Process was conducted on a commercial, business-like basis, whether or not the DPI can be characterised as carrying on a business in conducting it, and accepting that it is an activity remote from coal extraction from which significant royalties would be derived. The conduct of the EOI Process on this commercial basis appears to have been designed to maximise competition for, and financial gain from, the right to explore for the State’s coal reserves, as any private party might have done if the State had not reserved the mineral to itself. On the basis of the matters drawn to my attention in these proceedings, it appears that the DPI made a commodity of Ministerial Consent and the right to apply for an exploration licence, which 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.

Revised Contracts Extension

109    I said at [48] that it appeared that a contract had been formed when the Minister named the successful applicant in the EOI Process, or at the latest when Ministerial Consent was granted triggering obligations to pay Section 7 Payments within 30 days. The Section 7 Payments are set out at [36] above. Might, without undue speculation, such a contract fall within paragraph (a)(iii) of the definition of “services”?

110    For ease of reference, paragraph (a)(iii) provides as follows:

(a)    a contract for or in relation to:

…

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

111    The Macquarie Dictionary relevantly defines “royalty” as:

3. a prerogative or right belonging to a sovereign.

4. a royal domain; realm.

…

6. a compensation or portion of proceeds paid to the owner of a right, as a patent, for the use of it.

7. an agreed portion of the proceeds from his or her work, paid to an author, composer, etc.

8. a royal right, as over minerals, granted by a sovereign to a person or company.

9. any such rights granted by their owner to another.

10. the payment made for such a right.

112    It relevantly defines “levy” as:

1. a raising or collecting, as of money or troops, by authority or force.

2. that which is raised, as a tax assessment or a body of troops.

–verb (levied, levying)

–verb (t) 3. to make a levy of; collect (taxes, contributions, etc.).

4. to impose (a tax): to levy a duty on imported wines.

113    It relevantly defines “tribute” as:

3. a rent, tax, or the like, as that paid by a subject to a sovereign.

4. anything paid as under exaction or by enforced contribution.

5. chiefly SA (in opal mining) one’s share when working on a partnership basis.

6. the state of being liable or the obligation to make such payment.

–verb (t) 7. Mining to work a mine for a share of the product.

114    The Macquarie Dictionary defines “exaction” as “the act of exacting” or “extortion”. More usefully, the Oxford English Dictionary relevantly defines “exaction” as (among other things):

The action of demanding and enforcing payment (of fees, taxes, penalties, etc); an instance of the same.

115    The ACCC made the point in submissions that the language for the forms of remuneration referred to in paragraph (a)(iii) is most commonly used in connection with payments to the Crown. The notion of a “royalty” was originally exclusively associated with payments made to the Crown. This point is well made. Further, the Contracts Extension has included such rights since 1965, a further reason for interpreting the Contracts Extension as not being subject to the “in trade or commerce” qualification in the Rights Extension.

116    Having regard to these definitions, the characteristics of the remuneration referred to in (a)(iii) are that the payments are either:

a.    related to a right of use, for instance, royalties are commonly paid for mineral exploration or extraction or for use of intellectual property, or

b.    in the nature of a tax or other form of contribution or impost, usually (but not necessarily) importing some element of systematic collection or imposition.

117    The Section 7 Payments, payable within 30 days of Ministerial Consent, were:

a.    $10,000, being an assessment fee to cover the DPI’s cost of administering, advertising and evaluating the EOI Process. This payment is not related to the successful applicant’s enjoyment of any right conferred under the contract: it appears to be an exaction in the nature of a levy or tribute;

b.    A one off payment ($300,000 for Glendon Brook and $1 million for Mt Penny) as a contribution towards the DPI’s Coal Development Fund for continued coal exploration. These payments also appear to be in the nature of a levy or a tribute, unrelated to any enjoyment that the successful applicant would have under the contract; and

c.    The Additional Financial Contribution, which is more difficult to categorise. While it is an amount voluntarily proposed by an applicant, the amount of the Additional Financial Contribution was an evaluation criterion and therefore relevant in determining who would be named the successful applicant. An applicant will have felt competitive compulsion to propose an amount even though there was no legal compulsion. It was the determinative criterion in the evaluation of seven of ten exploration licences. Cascade did not nominate an amount in its EOIs for the Relevant Areas. The amount is properly characterised as consideration for the Ministerial Consent and the right to apply for the exploration licences. In the circumstances it might answer the description of a “tribute” but it is not necessary for me to determine whether the Additional Financial Contribution falls within paragraph (a)(iii) as other Section 7 Payments can be characterised as tributes or levies.

118    I note that the successful applicant would also be required to pay the standard application fee of $600 + $600 per square kilometre on lodgement of the application in exercise of the right to apply. This payment, which is also mentioned in Section 7, similarly has the character of a levy.

119    I consider that the Section 7 Payments (with the possible exception of the Additional Financial Contribution) and the licence fees mentioned in Section 7 of the EOI do have the character of an exaction in the nature of a levy or tribute with the result that it would not be “idle speculation” to consider that these payments are remuneration for the Specified Services within paragraph (a)(iii) of the Revised Contracts Extension.

Conclusion

120    For these reasons I am not satisfied that the Notices are invalid because of a failure to disclose a “matter that constitutes or may constitute a contravention of” the CC Act. I am not satisfied that the Specified Services are not “services” within s 4(1) of the CC Act.

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.

122    I therefore dismiss the application and order that the applicants pay the respondent’s costs as agreed or taxed.

Associate:

Dated:    8 August 2014