BHP Billiton Iron Ore Pty Ltd v National Competition Council

BHP Billiton Iron Ore Pty Ltd v National Competition Council - [2008] HCA 45 - HCA 2008 case summary — Zoe

[27]

The railway lines are managed and operated by BHP Billiton Iron Ore Pty Ltd ("BHPBIO"), which was treated in the proceedings as the "Provider" of the services identified in the Application. This company conducts the business of mining, refining and selling iron ore from four discrete mining areas in the Pilbara region in Western Australia, namely the Newman mining area, the Yandi mining area, the Area C mining area and the Goldsworthy mining area. It does so in its capacity as the manager of various unincorporated joint ventures conducted under agreements approved by legislation of Western Australia, in particular the Iron Ore (Mount Newman) Agreement Act 1964 (WA) ("the Mt Newman Act") and the Iron Ore (Mount Goldsworthy) Agreement Act 1964 (WA) ("the Mt Goldsworthy Act").
BHPBIO itself is not one of the joint venturers. The iron ore mined in the relevant mining areas is transported from mine to port using the Mt Newman railway line and the Goldsworthy railway line, which intersect at a point near Port Hedland. All train movements are conducted from a control centre at Port Hedland. Each line is a single gauge heavy haulage railway line constructed upon land in the State of Western Australia ("Crown land") which pursuant to the provisions of the Mt Newman Act[3] and the Mt Goldsworthy Act[4] is leased at a peppercorn rental from Western Australia by the participants in the relevant unincorporated joint ventures.
At Port Hedland port operations, using infrastructure located at Nelson Point and Finucane Island, involve the handling of iron ore which is crushed and screened (in some instances), blended in stockpiles (in most instances), reclaimed and loaded onto ships (where in some instances further blending occurs) for transportation to customers.
All mining tenements relevant to these proceedings are held from the State of Western Australia which has granted long term leases to explore and exploit the mineral resources in exchange for royalties paid to the State. The respective joint venturers are lessees, sub‑lessees or assignees. In the Newman mining area the mines and pits, with one exception, are leased by participants in the Mt Newman Joint Venture. The exception, known as Jimblebar, is an asset of another joint venture with other participants. The Yandi mining area, with the exception of the "W4" area, is leased by the same participants as the Goldsworthy Joint Venture. W4 is an asset of another joint venture with other participants. The Area C mining area is an asset of the POSMAC Joint Venture and the Goldsworthy mining area is an asset of the Goldsworthy Joint Venture.
The primary judge found:

[50]

Upon receiving such a recommendation, the Minister must either declare or decide not to declare the service, having regard to "whether it would be economical for anyone to develop another facility that could provide part of the service" (s 44H(2)). The Minister cannot declare a service unless satisfied of all of the six matters stated in s 44H(4) in the same terms as those appearing in s 44G(2) and set out above. If the Minister does not publish either a declaration or a decision not to declare the service within 60 days after receiving the declaration recommendation, the Minister is deemed to have decided not to declare the service (s 44H(9)). A refusal attracts the right given to an applicant by s 44K to seek review by the Tribunal.
The consequence of a declaration of a service is that a "third party" (which is defined in s 44B to include "a person who wants access to the service") is given what may be described as an enforceable right to negotiate access to the service. The right to negotiate may be considered "enforceable" because, subject to constitutional limits (stated in s 44R[8]), if a third party and a provider are unable to agree upon an arrangement for the third party to have access to the declared service, the third party may notify the ACCC of the dispute (s 44S). The ACCC then has the power to arbitrate such an access dispute and, in general, "must make a written determination on access by the third party to the service" (s 44V(1)).
Access to the declared service is, however, not a necessary or ultimate result of the arbitration (s 44V(3)). Further, s 44W provides that the ACCC must not make a determination that would have any of certain prescribed effects. These include the effect of "preventing an existing user obtaining a sufficient amount of the service to be able to meet the user's reasonably anticipated requirements, measured at the time when the dispute was notified" (s 44W(1)(a)).
It appears that if either of the services to which Fortescue seeks access are services within the meaning of Pt IIIA, then BHPBIO would properly be regarded as providing that service to itself. Therefore it would be an "existing user" whose interests would be afforded the protection given by par (a) of s 44W(1), which is described above. The ACCC must also take into account the seven matters listed in s 44X(1), in addition to any other matters which it considers relevant[9]. A party to a determination has the right to apply in writing to the Tribunal for review of the determination (s 44ZP(1)). Such a review is a "re‑arbitration" of the access dispute, for which purpose the Tribunal has the same powers as the ACCC (s 44ZP(3) and (4)).
It should be added that s 44ZZN confers an entitlement to payment of compensation by the Commonwealth in some circumstances where a determination would result in an acquisition of property[10].

[51]

It should be emphasised that the litigation which has reached this Court does not concern a dispute as to the terms of access to a declared service. It has arisen at the first stage of the Pt IIIA processes, namely the response by the NCC to the Application made by Fortescue.
In September 2004 the NCC invited submissions on a preliminary matter concerning the jurisdiction of the NCC to deal with the Application. This was whether the service defined by Fortescue was a "service" within the meaning of the definition in s 44B of the TPA. In November 2004 the NCC published its decision and reasons determining that it had jurisdiction over the Application as it pertained to the Mt Newman railway line, but not with respect to the Goldsworthy railway line.
As already mentioned, the NCC considered that since the Mt Newman railway line and Goldsworthy railway line were "two services provided to two separate facilities each of which is owned by a different group of operators", the Application should be treated as two separate applications for the declaration of the two specified and distinct services provided by means of the two railway lines, respectively referred to as "the Mt Newman railway line service" and "the Goldsworthy railway line service".
BHPBIO submitted to the NCC that the railway lines were an integral and non‑subsidiary part of its production processes for saleable iron ore. In November 2004 the NCC concluded that since at least one marketable commodity produced at the Area C mining area was transported over the Mt Newman railway line, the Mt Newman railway line service was not the use of a production process and therefore was a "service" within the meaning of s 44B. On the other hand, the NCC considered that no marketable commodity was transported by BHPBIO over the Goldsworthy railway line. It followed that the use of the Goldsworthy railway line service was "use of a production process" and was therefore excluded from the definition of "service". The jurisdiction of the NCC was said by it to depend upon whether a service within the meaning of s 44B could be identified and, accordingly, it had jurisdiction with respect to access to the Mt Newman railway line service but not to the Goldsworthy railway line service.
The NCC then considered the Application in relation to the Mt Newman railway line service and, on 22 March 2006, recommended to the Minister pursuant to s 44F(2)(b)(i) of the TPA that the Mt Newman railway line service be declared. After 60 days, the Minister having taken no steps in relation to the recommendation, the Minister was deemed by s 44H(9) to have taken a decision not to declare the Mt Newman railway line service.

[60]

It may be accepted that the expression "a production process" in par (f) of the definition of "service" has what in Hamersley Iron Pty Ltd v National Competition Council[14] was identified as its ordinary meaning of "the creation or manufacture by a series of operations of some marketable commodity". It also may be accepted that the use of the rail tracks and associated infrastructure by BHPBIO is integral to the series of operations that constitute the CSMS. But this is the production process of BHPBIO to produce the marketable commodities in which the joint venturers trade. That is not the production process of Fortescue.
However, the appellants observe that Fortescue has applied for the declaration of a service for the use of rails, train control systems, signalling systems and communication systems. This is said to be a "service" which BHPBIO "provides to itself as part of its production process". The appellants conclude that because this is the service Fortescue seeks, "that service is properly characterised as 'the use of a production process'". They add that although the rail lines would be used by Fortescue for its own purposes rather than for the purpose of conducting the CSMS production process of BHPBIO, that circumstance is not relevant to the characterisation of the service.
As Fortescue rightly submitted, it does not follow from the fact that BHPBIO uses the relevant track and associated infrastructure as part of the production process of BHPBIO, that use by Fortescue (or another access seeker) of that track and infrastructure would be excluded from the definition of "service" as being "the use of a production process".
The Application does not seek access with use of the rolling stock of BHPBIO or the addition of its stock to trains operated by BHPBIO in the course of the CSMS. That would present a possibly decisive distinction from what is contemplated by the Application. But it is not this case.
No doubt BHPBIO uses the rail track and associated infrastructure as part of the integrated CSMS process which is directed to shipment of iron ore to Port Hedland. However, the issue before this Court is whether the use of the service, which engages par (a) of the definition, to meet the needs of the access seeker also answers the description of the use by the access seeker of the BHPBIO production process. The answer must be in the negative. What Fortescue seeks is the use of a facility that BHPBIO uses for the purposes of its production process. That use does not fall within par (f) and so does not deny the operation of the definition in s 44B and the engagement of Pt IIIA.
Only this construction of par (f) is consistent with a reading of the definition of "service" in s 44B of the TPA in a way that would advance the attainment of the large national and economic objectives of Pt IIIA, as revealed in the legislative text enacted by the Parliament, the report that preceded its enactment, and the Minister's second reading speech. Whilst it cannot be said that the appellants' construction is one that is untenable, the construction which is preferred by the respondents and which has been accepted is more appropriate to advancing the overall objectives of Pt IIIA than that urged for the appellants. It also is more consistent with the approach to construction of such legislation adopted by this Court many times over the past ten years[15].
The circumstance that the CSMS production process employed by BHPBIO involves the use of integers which the access seeker wishes to utilise for its own purposes does not deny compliance with the definition of "service". Further, if upon satisfaction of the six matters required by s 44H(4) the declaration sought by Fortescue were to be made, the terms on which access were granted would necessarily be determined by taking into account the legitimate business interests of BHPBIO (s 44X(1)(a)). That would be a question for another, and a later, day.

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