Australian Energy Regulator v Pelican Point Power Ltd

BESANKO J: 1 I made certain orders in this proceeding on 5 October 2023. I was asked to make additional orders or to deliver a further set of reasons. I decline to do so and these are my reasons for that decision. 2 The background to the issues addressed in these reasons is set out in the principal reasons I delivered on 20 September 2023 in Australian Energy Regulator v Pelican Point Power Ltd [2023] FCA 1110. Paragraphs 1 to 9 inclusive of those reasons should be read with these reasons. 3 An order that whether PPPL contravened the law be tried separately from, and in advance of, the determination of what relief (including civil penalty) should be granted was proposed in minutes of order advanced by the AER and made at the first case management hearing of the proceeding. There was no argument or contention by either party to the effect that that order could not or should not be made. The matter thereafter proceeded on that basis with significant evidence being filed by each party dealing with the issue of the contravention of the law and a complex hearing dealing with that issue. It was only during closing addresses when I raised with counsel for the AER the issue of the relief that the AER was seeking, being declarations and civil penalties, that counsel for the AER suggested that because of the terms of s 44AAG of the Competition and Consumer Act 2010 (Cth) two orders, one involving declarations of contraventions of the law (if that was the outcome) and a second involving the imposition of civil penalties, was not, or at least may not, be permitted by the terms of the relevant section. The terms of the section relevant in this context are as follows: (1) The Federal Court may make an order, on application by the AER on behalf of the Commonwealth, declaring that a person is in breach of: (a) a uniform energy law that is applied as a law of the Commonwealth; or (b) a State/Territory energy law. (2) If the order declares the person to be in breach of such a law, the order may include one or more of the following: (a) an order that the person pay a civil penalty determined in accordance with the law; … 4 The order I made upon handing down my reasons dealing with the issue of the contravention of the law was that the AER prepare draft minutes of order which reflected the conclusions in the reasons. 5 The AER prepared draft minutes of order and the declarations which it sought are as follows: 1. By each of its 24 short term PASA submissions made after 3 February 2017 for each future or current trading interval during the 8 February 2017 trading day, the Respondent contravened cl 3.7.3(e)(2) of the National Electricity Rules (NER) by submitting short term PASA availability of values between 216 megawatts (MW) and 235 MW that did not represent its current intentions and best estimates as to the physical plant capability of the Pelican Point Power Station that could be made available on 24 hours' notice, which was at least 320 MW. 2. The Respondent contravened cl 3.13.2(h) of the NER, by failing to notify the Australian Energy Market Operator (AEMO) promptly on or after 3 February 2017: (a) in respect of each trading interval on the 8 February 2017 trading day, that the short term PASA availability of the Pelican Point Power Station, which the Respondent previously submitted to AEMO on 2 February 2017 at 9:11 am, had increased from 220 MW to at least 320 MW; and (b) in respect of the 8 February 2017 trading day, that the medium term PASA availability of the Pelican Point Power Station, which the Respondent previously submitted to AEMO on 27 January 2017, had increased from 224 MW to at least 320 MW. 6 The AER also advanced programming orders for a hearing and disposition of the issue of relief. Those orders are not relevant for present purposes. The AER filed and served short submissions (3 pages) in support of the declarations it sought. In other words, the AER advanced reasons in support of each of the declarations it sought. 7 For its part, PPPL filed and served submissions (7 pages) with respect to the declarations sought by the AER the evening before a hearing scheduled to take place on 3 October 2023. Those submissions identified reasons the Court should not make the declarations sought by the AER and advanced an alternative declaration as "appropriate". The matters raised by PPPL are summarised later in these reasons. 8 Neither the AER nor PPPL had been given leave to file written submissions with respect to the declarations sought by the AER. 9 At a short hearing on 3 October 2023, counsel for the AER said that he had recently been reminded of the issue of "jurisdiction" previously raised by the AER. The concern of the AER was not that the Court could not make declarations, but that if it did so, the Court might then be functus officio and unable to impose civil penalties. Counsel described the point as a novel one which arises because of the particular words used in s 44AAG. He submitted that those words may be compared and contrasted with the sections dealing with contraventions of the Corporations Act 2001 (Cth) giving rise to civil penalties (see ss 1317E and 1317G of the Corporations Act) where a court is able to make declarations in one order and impose civil penalties in a second order. At that stage, what counsel for the AER asked me to do was to deliver a ruling indicating the terms of the declarations of contravention which I was minded to make based on the reasons for the ruling. Counsel for PPPL said that he had had effectively no notice of the point raised by the AER and needed to take instructions. 10 On 4 and 5 October 2023, there were two relatively short hearings (because of other commitments) during which each party was given the opportunity to address the Court's power to make declarations before the hearing on relief which, having regard to the relief sought in the Originating application, is a hearing concerning the imposition of civil penalties. The parties also had an opportunity to address the objections to the declarations proposed by the AER as set out in PPPL's written submissions. 11 At the hearing on 4 October 2023, counsel for the AER reiterated its position that it sought further reasons from the Court as to the declarations it was minded to make. I was invited to provide reasons setting out the terms of the proposed declarations. For its part, PPPL indicated that it did not oppose the Court not making an order for a declaration at this time. PPPL put forward the declaration it submitted was appropriate if the Court was minded to make a declaration. That declaration is as follows: By its short term PASA submission made on 7 February 2017 at 9:56 in respect of trading intervals 12 to 48 during the 8 February 2017 trading day, the Respondent contravened cl 3.7.3(e)(2) of the National Electricity Rules (Version 88) by submitting short term PASA availability of less than 320 MW. 12 The AER submitted that there would be utility in the Court indicating the declarations it was minded to make in that it would provide a clear basis for the evidence and submissions with respect to the issue of the imposition of civil penalties. In addition, it would provide a basis for discussions between the parties as to the appropriate monetary penalties. I accept that there may be some advantages of the type identified. 13 The AER referred to ss 21 (Declarations of right), 22 (Determination of matter completely and finally) and 23 (Making of orders and issue of writs) and indeed s 37M (The overarching purpose of civil practice and procedure provisions) in the Federal Court of Australia Act 1976 (Cth) as matters providing a strong context for a consideration of the course it proposed. I should add that insofar as the AER went further and relied on one or more of these sections as a source of the power to make the declarations it sought, I would reject that contention in light of the express terms of s 44AAG. 14 The AER also referred to Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2014] FCA 148 (Cement Australia). In that case, Greenwood J published reasons in a complex matter and made a number of declarations and orders. His Honour noted the following (at [1]): … The declarations were described as interim declarations and the orders were directed to the preparation and submission of formal orders for the consideration of the Court arising out of an analysis by the parties of the reasons for judgment identifying the various findings on the various contended contraventions … 15 His Honour explained why he had made the declarations he did and the reasons he called them interim declarations as follows (at [10]-[11]): 10 The declarations are described as interim declarations. They were made as explanatory declarations in the sense described above pending the submission of proposed final declarations by the parties for the consideration of the Court. They are "interim declarations" in the sense that they are designed to operate pending only the resolution of any question about the final formulation of the declarations (and orders), recognising of course that there is also to be a pecuniary penalty hearing as soon as reasonably possible. 11 However, the declarations are not "interim" in any sense in which lawyers or the Court would understand them to have an "interlocutory" function pending trial. They were short-form declarations made after a trial of the principal controversy. They were made pending the final formulation of the declarations and orders which would emerge from careful consideration by the parties of the reasons for judgment. They are not otherwise interlocutory. The law simply does not recognise, unlike an injunction, an interim or interlocutory declaration as to a state of affairs pending the trial of the very matter to be determined at trial and the subject of the particular controversy. There should be no confusion in the use of the term interim so far as the declarations made on 10 September 2013 are concerned. 16 The AER argues by analogy with the Cement Australia case that I can and should do a similar thing here, not necessarily in making orders, but rather in providing clear reasons indicating the declarations I would make or was minded to make. 17 I do not gain any assistance from the decision in Cement Australia. The issue in this case did not arise in Cement Australia and whatever the legal basis for the "interim declarations" was in Cement Australia, it is not what I am being asked to do here. I am not being asked to provide "conclusionary shorthand interim statements of the outcome" (at [6]) or "short-form declarations" (at [11]). 18 The question at the outset is whether the Court can make final declarations now and nevertheless preserve the power to impose civil penalties in a second order. In the result, neither side argued that the Court could do that. The words of s 44AAG seem to be against such a course, but at the same time, there would not appear to be any reason Parliament would consider the practice of determining the issue of contravention first and separately from relief to be undesirable. That is a course commonly adopted in matters of this nature and there is nothing in the nature of the alleged contraventions in this case which would distinguish them from, for example, contraventions of the Corporations Act (ss 1317E and 1317G). Nevertheless, the words of s 44AAG seem clear. 19 Next, it is to be noted that there is no such thing as an interim or interlocutory declaration (Magman International Pty Ltd v Westpac Banking Corporation (1991) 32 FCR 1 at 15 per Beaumont J). In Ho v Grigor [2006] FCAFC 72; (2006) 151 FCR 236, the Full Court said the following (at [54]): The power of the Court, conferred by s 23, to make orders including interlocutory orders is undoubtedly a wide one. It must be capable of application to a considerable range of subject matter jurisdictions and a diversity of matters within those jurisdictions. Broadly speaking, any decision of a court which imposes an obligation on one or more of the parties (eg procedural directions and interlocutory or final injunctions) or finally determines the rights and liabilities of the parties to litigation will fall within the scope of an 'order' under s 23. The dismissal of an action involves a rejection of a claimed entitlement to relief and to that extent determines rights and liabilities in the proceeding. A final judgment by way of a declaration is 'an order' if it determines, in a binding way, rights and/or liabilities of one or more of the parties. This is so even though it does not take the form of a direction - Warramunda Village Inc v Pryde (2002) 116 FCR 58 at [65] to [70] per Finkelstein J and cases there cited. However as Gummow and Hayne JJ said in Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 (at 590 [128]): '"Interlocutory declaration" is a form of order not known to the law...' (See for a discussion of the position in England, Zamir I and Woolf H, The Declaratory Judgment (4th ed, Sweet & Maxwell, 2000) at 89-94.) 20 I do not consider that the Court can make declarations (interim or otherwise) at this stage without compromising the Court's ability to impose civil penalties at a later stage. It seems to me the issue really boils down to whether I should give further reasons directed to the issues raised in PPPL's submissions with respect to the declarations. I could do that and it may lead to further clarification. It may not and may lead to further disputation. It would mean a further set of reasons before final orders are made. In the circumstances, I do not consider that desirable and efficient and I consider the best course to be to order the exchange of further evidence and submissions and the fixing of dates for a final hearing. The arguments raised on the submissions, including arguments about what can and cannot be raised, will be dealt with at the final hearing. 21 The submissions made by PPPL that the declarations proposed by the AER did not reflect the findings in the principal reasons, or did not specify the conduct said to constitute a contravention, or went beyond the pleadings, or characterised conduct as contravening which was not contravening, involved a number of points. The following is a summary of those matters. They provide the context for this decision. 22 I start with the second declaration. 23 First, with respect to the second declaration, PPPL submits that the declaration should not be made because it identifies contraventions which were not part of the AER's case. As to the declaration in 2(a), it was not part of the AER's case that cl 3.13.2(h) of the NER was contravened by any of PPPL's ST PASA submissions. The AER's case as set out in its Originating application and Concise Statement was that PPPL had contravened cl 3.13.2(h) by failing to notify AEMO of changes to submitted information and that submitted information was its MT PASA submissions, not its ST PASA submissions. The AER's response is that if this is a change or departure in its case, that circumstance is nevertheless of no consequence because it does not extend the case temporally or involve any rules not considered in the course of the case or raise any new questions of fact or cause any prejudice to PPPL. As to the declaration in 2(b), PPPL's submission is that the AER's case as to its MT PASA submissions failed in the sense the AER failed to establish any contraventions of cl 3.7.2(d) and the AER cannot now raise a case that there were any contraventions of cl 3.13.2(h) related or linked to the MT PASA submissions. The AER's response to this submission is that there has been no departure from the case previously advanced and the Court has simply found a later date to be relevant. 24 Secondly, and this applies to both declarations, PPPL submits that the reference to "at least" 320 MW should be removed and left simply as 320 MW because that was the case which was run by the AER and the case found by the Court. That, so it was said, was the basis of the evidence of the experts in terms of their examination of the availability of gas supply and gas transport. The AER's response to this submission is that the declarations it proposes do accurately reflect the findings and the terms of the NER. 25 I turn to the first declaration. 26 Thirdly, with respect to the first declaration, PPPL submits that PASA availability is expressed in terms of available in a particular period, "including any physical plant capability that can be made available during the period, on 24 hours' notice". As I understand it, this is a submission to the effect that any ST PASA submission made less than 24 hours prior to a relevant trading interval cannot be a contravention insofar as it is based on a failure to include physical plant capability that "can be made available". The AER's response to this submission is two-fold. First, it is not a matter squarely raised at the trial. Secondly, if the matter is relevant, it is relevant to penalty, not liability. 27 Fourthly, with respect to the first declaration, PPPL submits that it cannot be held responsible for further contraventions with respect to PASA submissions which did no more than accurately adjust for temperature changes or involved rebids. The prior submission may involve contraventions, but a further submission to reflect temperature changes or rebids in circumstances in which all fields must be completed, would not involve further contraventions. The AER's response is that this matter is not relevant to liability. It may be relevant to penalty. 28 Fifthly, with respect to the first declaration, PPPL submits that it would not reflect the contraventions found if it did not reflect the fact that GT12 was only available on 8 February 2017 to be operated in accordance with the 8 February counterfactual because it had been run for an extended period on 7 February 2017. The steps in this argument are as follows. The evidence about the availability of gas supply and gas transport did not go beyond the 8 February counterfactual, that is, gas supply and gas transport for GT12 for approximately four hours. GT12 was only available to be run for four hours (or put another way, for less than eight hours) on 8 February 2017 because it had been run for an extended period on 7 February 2017 and unless there was a clear plan to run it for an extended period on 7 February 2017, the running of GT12 for an extended period would not have been known to PPPL until it occurred or until shortly before it occurred. Put another way, what this factual matter means is that it could not be part of PPPL's current intention and best estimate until the extended running of GT12 on 7 February 2017 was known to have occurred, or perhaps it was known that it was very likely to occur. The AER's response to this submission is that it is inconsistent with the findings in the principal reasons. 29 Sixthly, with respect to the first declaration, PPPL submits that the reference to "each future or current trading interval during the 8 February 2017 trading day" should be a reference to "each future trading interval during the 8 February 2017" because there can be no contravention of cl 3.7.3(e) of the NER by submissions made during current "trading intervals" which are 30 minute periods ending on the hour (EST) or on the half hour. In other words (as I understand it), the submission is that PASA availability for a particular 30 minute trading interval is either correct or incorrect at the start of the trading interval and it cannot be correct at the beginning and become incorrect during the trading interval. The AER's response to this submission is that it does not accept the interpretation of the NER which underlies it. 30 Finally, with respect to the first declaration, PPPL submits that the declaration would more accurately reflect the findings of the Court if it actually referred to the first ST PASA submission after 3 February 2017 and that is, and was found in the principal reasons at [677] to be, a ST PASA submission made at 11.00 on 6 February 2017. It is not part of the AER's case that there was any contravention by PPPL by failing at any particular time to make a ST PASA submission. The AER's response to this submission is that the declaration it proposes does reflect the findings of the Court. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Besanko.