BHP Billiton Iron Ore v The National Competition Council

TRADE PRACTICES - consideration of the meaning of the term 'service' in s 44B of the Act and the meaning of the words of exclusion 'the use of a production process' in the definition of that term and the exception to the exclusion - meaning of production process considered - consideration of whether access sought to a step in a production process also excluded - consideration of the background to the introduction of Part IIIA of the Act and the vice sought to be addressed by the introduction of Part IIIA into the Act

PRACTICE AND PROCEDURE - consideration of the principles informing the circumstances in which a Judge of the Court might elect not to follow an earlier decision of a single Judge of the Court - consideration of the principles informing the admissibility of expert evidence

COURTS AND JUDICIAL SYSTEM - precedent - decision on statutory construction - circumstances in which previous decision should not be followed

EVIDENCE - consideration of the principles informing the admissibility of expert evidence

Trade Practices Act 1974 (Cth), ss 2, 44AA, 44B, 44D, 4E, 44F(1), 44F(2)(a), 44F(2)(b), 44F(4), 44G(2), 44G(2)(a) - (f), 44H, 44H(1), 44H(9), 44S, 44U, 44V, 44V(2), 44V(3), 44W, 44W(1), 44X(1), 44X(1)(a), 44ZP, 44ZZCA Trade Practices Amendment (National Access Regime) Act 2006 (No. 92, 2006) Sherman Act 1890, 15 U.S.C. 1 Trade Practices Amendment (National Access Regime) Act 2006 Acts Interpretation Act 1901 (Cth), s 15AA, s 15AB Evidence Act 1995 (Cth), ss 55(1), 76(1), 79 Federal Court Rules, O 10.1(2)(j)

Rail Access Corp v New South Wales Minerals Council Ltd (1998) 87 FCR 517 Hamersley Iron Pty Ltd v National Competition Council 91999) 164 ALR 203 Australian Communist Party v The Commonwealth (1951) 83 CLR 2 Oil Basins Limited v BHP Petroleum Pty Ltd (unreported, Full Court of the Supreme Court of Victoria, 27 May 1988) Houssein v Under Secretary, Department of Industrial Relations and Technology (NSW) (1982) 148 CLR 88 Australian Capital Television Pty Ltd v Commonwealth (1992) 177 CLR 106 Lee Vanit v The Queen (1997) 190 CLR 378 BHP Billiton Iron Ore Pty Ltd v The National Competition Council [2006] FCA 1764 Hematite Petroleum Pty Ltd & Anor v The State of Victoria (1983) 151 CLR 599 Hicks v Minister for Immigration and Multicultural Affairs & Indigenous Affairs [2003] FCA 757 Takapana Investments Pty Ltd v Teco Information Systems Co. Ltd (1998) 82 FCR 25 Towney v Minister for Land and Water Conservation for New South Wales (1997) 147 ALR 402 Esso Australia Resources Ltd v Federal Commissioner of Taxation (1997) 150 ALR 117 La Macchia v Minister for Primary Industries and Energy & Anor (1992) 110 ALR 201 Hamilton Island Enterprises Pty Ltd v FCT [1982] 1 NSWLR 113 Bank of Western Australia Limited & Ors v Commissioner of Taxation (1994) 55 FCR 233 Bradley v Armstrong (1981) 55 FLR 355 Re Rothercroft Pty Ltd (1986) 4 NSWLR 673 Deputy Commissioner of Taxation v Access Finance Corporation Pty Ltd (1987) 8 NSWLR 557 Magman International Pty Ltd & Ors v Westpac Banking Corporation (1991) 32 FCR 1 Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485 Nezovic & Anor v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 133 FCR 190 Marr v Australian Telecommunications Corporation & Ors (1991) 34 FCR 82 Farah Constructions Pty Ltd & Ors v Say‑Dee Pty Ltd [2007] HCA 22 Rail Access Corporation v New South Wales Minerals Council Ltd (1998) 87 FCR 517 Re Queensland Co-operative Milling Association Ltd; Re Defiance Holdings Ltd (1976) 25 FLR 169 NT Power Generation Pty Ltd v Power and Water Authority & Anor (2004) 219 CLR 90 CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 Boral Besser Masonry Ltd v Australian Competition and Consumer Commission (2003) 215 CLR 374 Re Michael; Ex parte Epic Energy (WA) Nominees Pty Ltd (2002) 25 WAR 511 Visa International Service Association v Reserve Bank of Australia (2003) 131 FCR 300 Woodside Energy Ltd v Commissioner of Taxation 155 FCR 357 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 Neowarra v Western Australia (No. 1) (2003) 134 FCR 208 Ramsay v Watson (1961) 108 CLR 642 HG v R (1999) 197 CLR 414 Trade Practices Commission v Arnott's Ltd (No. 5) (1990) 21 FCR 324

H Hartman and J Mutmansky, Introductory Mining Engineering (2nd ed, 2002) C E Gregory, A Concise History of Mining (1980) The BHP Recreation Review vol 12(1) (1934) reprinted in Light Railways No 164 (April, 2002) Annual Report of the Mines Department (1915) (Qld) The Great Cobar Copper-mining Company Tramway Act 19884 (NSW) Wills' Mineral Processing Technology (7th ed, 2006) J Gilchrist, Extraction Metallurgy (3rd ed, 1989) C Bodsworth, The Extraction and Refining of Metals (1994) R D Walker, Modern Ironmaking Methods (1986) C Moore & R I Marshall, Steelmaking (1991) National Competition Policy: Report by the Independent Committee of Inquiry (August 1993) by Professor Hilmer, M Raynor and G Taperell Competition Principles Agreement, 11 April 1995 Arbitrary Refusals to Deal and the 'Essential Facility' Doctrine, Antitrust Law, Areeda and Hovenkamp, 2nd Ed, Vol. IIIA Essential Facilities: An Epithet in Need of Limiting Principles, Professor Phillip Areeda, 58 Antitrust Law Journal p 841 The Essential Facilities Doctrine under US Antitrust Law, Professor Robert Pitofsky, Donna Patterson and Jonathan Hooks, 70 Antitrust Law Journal 443 The Essential Facilities Doctrine and Intellectual Property Rights: A Response to Pitofsky, Patterson and Hooks, Paul Marquardt and Mark Leddy, 70 Antitrust Law Journal 847 National Third Party Access Code for Natural Gas Pipeline Systems

BHP BILLITON IRON ORE PTY LTD v THE NATIONAL COMPETITION COUNCIL AND FORTESCUE METALS GROUP LIMITED VID 14 of 2007

BHP BILLITON IRON ORE PTY LTD and BHP BILLITON MINERALS PTY LTD v THE NATIONAL COMPETITION COUNCIL and FORTESCUE METALS GROUP LIMITED wad 6 of 2007

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

JUDGES: SUNDBERG, FINKELSTEIN & GREENWOOD JJ DATE OF ORDER: 5 octobER 2007

1. The appeal is dismissed.
2. The appellant pay the costs of the respondents of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

between: BHP BILLITON IRON ORE PTY LTD and

AND: THE NATIONAL COMPETITION COUNCIL and

JUDGES: SUNDBERG, FINKELSTEIN & GREENWOOD JJ DATE OF ORDER: 5 octoBER 2007

1. The appeal is dismissed.
2. The appellants pay the costs of the respondents of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: BHP BILLITON IRON ORE PTY LTD

AND: THE NATIONAL COMPETITION COUNCIL and

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

between: BHP BILLITON IRON ORE PTY LTD and

AND: THE NATIONAL COMPETITION COUNCIL and

JUDGES: SUNDBERG, FINKELSTEIN & GREENWOOD JJ DATE: 5 oCTOBER 2007

SUNDBERG J 1 Each appeal should be dismissed. I agree generally with Greenwood J's reasons for taking this course. I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg .

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: BHP BILLITON IRON ORE PTY LTD

AND: THE NATIONAL COMPETITION COUNCIL and

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

between: BHP BILLITON IRON ORE PTY LTD and

AND: THE NATIONAL COMPETITION COUNCIL and

JUDGES: SUNDBERG, FINKELSTEIN & GREENWOOD JJ DATE OF ORDER: 5 octoBER 2007

FINKELSTEIN J 2 This case raises an important question arising under Part IIIA of the Trade Practices Act 1974 (Cth) upon which different views have been expressed, both at trial level and now on appeal. The differences can be attributed substantially to the lack of precision in the language of Part IIIA, resulting in different approaches to the construction of the relevant provisions. The point in issue is how to apply an apparently simple statutory expression, "production process", to uncontested facts. 3 There is a description of the relevant provisions of Part IIIA in the judgment of Greenwood J. It will suffice for me to restate the chief features, omitting unimportant qualifications. In broad outline, Part IIIA establishes a regime to facilitate third party access to the services of certain essential facilities. The purpose is to encourage competition in markets downstream or upstream of the market for the services. In the main, the problem that Part IIIA seeks to address is that of the vertically integrated firm with a natural monopoly facility in one market which, by refusing to share its facility, is able to foreclose competition in upstream or downstream markets. Not every owner of a natural monopoly facility is a vertically integrated firm. It may be integrated horizontally and capable of extracting monopoly rents in the market in which it operates. This is regulated elsewhere by price control. 4 The first step in the process of obtaining access is that the third party applies to the National Competition Council asking it to recommend that a particular "service" be declared: s 44F. It will be necessary later to return to the definition of "service". The Competition Council can only recommend that a service be declared if it is satisfied, among other things, that: (a) access to the service would promote competition in at least one market, other than the market for the service; (b) it would be uneconomical for anyone to develop another facility to provide the service; and (c) the facility is of national significance: s 44G(2). If the Competition Council makes a positive recommendation the Minister must either declare or decide not to declare the service: s 44H. In making his (or her) decision the Minister must be satisfied of the same matters as must the Competition Council in making a recommendation: s 44H(4). If a declaration is made the third party and the owner or operator of the service must attempt to reach agreement on the terms and condition of access. Where the parties are unable to reach agreement the terms and conditions will be determined by the Australian Competition and Consumer Commission (ss 44S, 44U, 44V), whose decision is subject to review by the Australian Competition Tribunal: (s 44ZP). 5 The matters about which the Competition Council and the Minister must be satisfied before making their respective determinations show that the services to which access may be given are those provided by significant bottleneck facilities. The facilities often form an essential foundation for maintaining a modern economy. They include transportation and communications systems, power facilities, ports (including airports) and harbours, water systems and so on. The underlying assumption is that if access is given to natural monopoly facilities, consumer welfare will be enhanced by the competition that will result. 6 "Service" is defined in s 44B to mean "a service provided by means of a facility and includes: (a) the use of an infrastructure facility such as a road or railway line; (b) handling or transporting things such as goods or people; (c) a communications service or similar service; but does not include: (d) the supply of goods; or (e) the use of intellectual property; or (f) the use of a production process; except to the extent that it is an integral but subsidiary part of the service." There are three things to note about this definition. First, a service is a service provided "by means of a facility". In Rail Access Corp v New South Wales Minerals Council Ltd (1998) 87 FCR 517 the Full Court said this showed the "service" was "separate and distinct from a facility" and "may consist merely of the use of a facility". Second, at least according to the argument in this case, the examples of services that are given in paras (a), (b) and (c) are themselves qualified by the exclusions in paras (d), (e) and (f). This argument is not, however, self-evidently correct. Another possible construction is that a service includes without qualification each of the services described in paras (a), (b) and (c) and only excludes other services that meet the descriptions in paras (d), (e) and (f). In other words, paras (d), (e) and (f) qualify "services" but not the kinds of services described in paras (a), (b) and (c). But as no party has contended for this construction it is not appropriate to consider it any further. 7 The third point about the definition is that the expression "production process" is itself not defined. It was common ground both at trial and on appeal that the expression is not a term of art and should be given its ordinary meaning. The problem is that the expression is slippery and it is not at all clear what it means and how it should be applied to the facts. 8 It is to the facts that I now turn. The appellant, BHP Billiton Iron Ore Pty Ltd, in its capacity as manager, conducts mining operations in four areas in the Pilbara region of Western Australia. The mines are located in four mining areas known as Newman, Yandi, Area C and Goldsworthy. The lessees of the mining tenements (and thus the owners of the ore extracted from the mines) are participants in various joint ventures, each comprising a BHP company holding a majority interest, several Japanese companies and, dependent upon the tenement, Australian subsidiaries of Chinese or Korean steel mills owners. 9 As manager of operations the appellant is responsible for producing ore to meet the requirements of the steel mills to which the ore is sold. The steel mills (which in some cases are related to participants in the joint ventures) specify the physical and chemical properties of the ore they wish to purchase. The requirements differ from mill to mill for a variety of reasons, including the type of blast furnace used by the mill, what coke or other fuel is used in the milling process and the type of ore mix required by the mill. 10 The activities that are undertaken to produce iron ore in broad outline involve the following steps. (I put to one side the precursors to mining, such as prospecting and exploring the ore body as well as developing the mine). The first activity is mining: the extraction of iron ore from the mineral deposits. The appellant has provided only a brief description of its mining activities, but it seems to follow the basic production cycle: drill + blast + load + haul. First, blocks of ore that are to be mined are identified and prepared for blasting by drilling holes to preset depths. Explosions are placed in the holes and the ore and associated waste is blasted. The waste is removed usually by front-end loaders, extractors or shovels and is hauled by truck to waste storage areas. The ore is loaded onto haul trucks and taken to a crusher. Where the trucks are too large to dump ore directly onto the crusher or the ore is not needed for immediate use, it is deposited in stockpiles. For an excellent discussion of the production cycle, see H Hartman and J Mutmansky, Introductory Mining Engineering (2nd ed, 2002), especially ch 5. 11 The final step in the basic production cycle, haulage, has an interesting history. What follows is based on C E Gregory, A Concise History of Mining (1980). In the earliest days of underground mining, for example gold mining in ancient Egypt, the gold ore was transported in panniers by slaves. In Mitterberg, ore was carried in leather bags; at Laurium in ancient Greece, it was carried or dragged in wicker baskets. Agricola, a German scholar sometimes referred to as "the father of mineralogy", wrote of the use of wheelbarrows in underground mines where the work face was a considerable distance from the shaft. In the 17th century in British coal mines, coal was hauled in baskets called 'corves' loaded onto sleds. Pit ponies were introduced in the 18th century to haul corves, by then known as trams. 12 Following its development the locomotive became a common method of haulage, especially in large mines. The first steam locomotive was built in 1801 by Richard Trevithick, a Cornish mining engineer, for use in coal mines. The first surface railway was erected in a coal mine in 1804. In 1814 George Stephenson, another mining engineer who in 1825 built the first passenger railway, constructed a steam locomotive to operate at the Killingworth Colliery. 13 Rail haulage has a long history in Australian mining. The following are but a few examples. The once famous Sons of Gwalia Mine, formerly operated by the Broken Hill Proprietary Company Ltd, obtained power generated by gas turbines. Wood supplies needed for the boilers were transported by rail on a twenty inch track for a distance of forty miles: The BHP Recreation Review vol 12(1) (1934) reprinted in Light Railways No 164 (April, 2002). A two foot gauge railway four miles in length connected the MacGregor and Woolaroo Mines in Queensland to the main line. Three train loads carried fifty tonnes of ore per day to Ballara, carrying firewood, mine timber and general stores as return loading: Annual Report of the Mines Department (1915) (Qld). Railways were used at the Great Cobar Mine, one of Australia's great copper mines, for a range of purposes including carrying ore from the crushing plant to the smelter and transporting firewood. The Great Cobar Copper-mining Company Tramway Act 1884 (NSW) authorised the construction and operation of the railway. 14 Once ore is mined it must be concentrated or freed from the minerals that are of no value (gangue) to prepare the ore for the extraction of valuable metal. The process is called ore dressing, mineral dressing or milling. The first step in ore dressing is to reduce in size (comminution) the lumps of ore recovered from the mine. This is achieved first by crushing, which may involve primary, secondary and tertiary crushing, followed by grinding: see generally Wills' Mineral Processing Technology (7th ed, 2006). All ore from the appellant's mines undergoes primary crushing at the mine site. The ore, other than ore taken from the Goldworthy mine, also undergoes secondary crushing and screening at the mine site. Following crushing, the ore is stockpiled prior to being railed to Port Hedland. 15 The appellant operates two heavy haulage single track rail lines between its mining operations in the Pilbara and Port Hedland: the Newman line, that runs 426 km from Mount Whaleback in the Newman mining area and the Goldsworthy line, that runs 210 km from the Yarrie mine in the Goldsworthy area. 16 The appellant has two facilities at Port Hedland. Both have crushing and screening plants and stockpiling and shiploading facilities. Ore from Goldsworthy undergoes secondary crushing at the port. Tertiary crushing of all ore occurs at the port. 17 The next step in ore dressing is classification or sorting. The object is to further separate the valuable mineral from the gangue. For useful discussions of these activities see J Gilchrist, Extraction Metallurgy (3rd ed, 1989); C Bodsworth, The Extraction and Refining of Metals (1994); Wills' Mineral Processing Technology (7th ed, 2006). A simple method of classification is screening. Other methods include flotation, electrostatic separation and magnetic separation. The evidence is all but silent on this aspect of the appellant's operations. 18 Beneficiation, often considered a part of ore dressing, is the process by which ore with a low iron grade is mixed with a higher grade ore. This is a very cost-effective process. There is a beneficiation plant at Mount Whaleback. 19 When ore or concentrate (fines) is too small for use in the blast furnace it must be re-formed into lumps of appropriate size and strength. This process is referred to as agglomeration. There are two commonly used methods of agglomeration: pelletising and sintering: J Gilchrist, op cit, ch 5; C Bodsworth, op cit, at paras 1.4 and 4.3. Pelletising involves pressing the fines into briquettes or pellets, sometimes with a suitable binder, in a drum or on a rotating disc. Pellets are normally produced by the miner. Sintering is the consolidation of metal powder by heat at a temperature below the melting point of the metal. Sintering is usually carried out by the steel mill. 20 Ore is often blended, usually prior to sintering or pelletising: J Gilchrist, op cit at 343. There are two main purposes for blending. One is to meet the requirements of a particular steel mill. The other is to maximise the ore resource by the blending of a range of diverse ores. Blending can be carried out by the steel mill, particularly if the mill agglomerates fines by sintering: R D Walker, Modern Ironmaking Methods (1986) at 44; see also the diagram in C Moore & R I Marshall, Steelmaking (1991) at 55. 21 Blending occurs at various stages of the appellant's activities. In some cases it begins when the ore is stacked on and removed from the stockpiles at the mine (although the evidence is scant about what actually occurs), in the loading and unloading of iron ore from the trains and by the stacking and reclaiming of iron ore on and from stockpiles at the port. Principally, blending occurs through the disciplined stacking and reclaiming methods at the port. It is in this respect that the management of the rail link is of critical importance. Blending is achieved by combining at Port Hedland trainloads of calculated quantities of specific ores from particular mines to produce the required grade of ore. This requires a complex system of rail scheduling to ensure that the correct tonnage and grade of ore is transferred in the required sequence. 22 The final stage in steelmaking is the extraction of the metal from the ore. This is a two stage process. The first is the production of an impure metal by smelting. The second is the removal of impurities by refining. Until quite recently BHP, the predecessor of the parent company of the appellant, owned and operated several steel mills. Indeed, for many years BHP was Australia's only steelmaker. The mills were disposed of in 2000. 23 Fortescue seeks access to the rail link from the Pilbara to Port Hedland as well as to the "associated infrastructure", including track structures, bridges, passing loops, track control systems, sidings, maintenance and protection systems and the roads and other facilities which provide access to the railway line route. The appellant says that the Competition Council cannot recommend that a declaration be made because use of the rail link involves "use of a production process" and hence is not a "service" within the meaning given to that term by s 44B. 24 In summary, the appellant's argument goes this way. The appellant manages its mine, rail and port operations as "an integrated system". Each port is operated "with the objective of optimising the integrated system as a whole, rather than seeking to optimise the individual aspects of the mine, rail and/or port operations." The rail link is "a fully integrated component of [the appellant's] iron ore operation." So it is said that all of the appellant's activities constitute a single production process and the rail link is a part of that process. 25 The judge accepted that as manager of the operations the appellant conducts a highly integrated process from mining iron ore to producing the product that is sold to the steel mills. There is no challenge to that finding. Based on the evidence it is difficult to see how the finding could be challenged. There is, however, a dispute whether the judge went any further. He did find that the steps engaged in by the appellant to create two finished products (Newman high grade fines and Newman high grade lump) constituted a single production process "which commence[s] at the mine [and] does not finish until the finished product is produced at the port." Each respondent says this did not amount to a finding that all the appellant's activities are to be characterised as a single production process. That may be so, although it is likely that the judge would have reached that conclusion. At any rate, the position taken by the respondents, in the alternative, was that if the judge had made a finding that there was a single production process his finding was in error. 26 Having regard to the way the judge disposed of the case it made no difference whether the appellant conducted one or more production processes. The judge said the only relevant question was whether the facility to which access was sought (that is the rail link) could, in isolation from other parts of the operation, be described as a production process. Having observed that the facility (the rail link) "does not involve a process of transformation" he concluded that it could not "in itself constitute a production process." 27 On appeal each respondent contended, among many other contentions, that what was involved in the Pilbara and at Port Hedland was not a single production process. In its written submissions Fortescue stated that: "[The appellant] does not have only one production process in the Pilbara for the purposes of producing iron ore products. There are a number of iron ore production processes managed by [the appellant] at various locations in the Pilbara." Mr O'Bryan QC, Fortescue's counsel, said it was "as plain as a pikestaff [that] it's not one production process, couldn't possibly be." He described the separate processes as including drilling and blasting, crushing and beneficiation. He said the rail link was "simply a link between the mining production operations [at the Pilbara] and the port production operations, neither more nor less." 28 Mr Scerri QC, who appeared for the Competition Council, put a similar argument. Mr Scerri said of the appellant that "it engages in a whole lot of activities all of which are undoubtedly productive". He went on to say there were "several productive - production processes" involved. When asked to identify the processes he said "they start at mining: extraction, screening … And there is - the last one is at the port where they mix some of the stockpiles." His point also was that the only function of the rail link was to move iron ore from the place of one production process to another; it was itself not part of any production process. 29 In my opinion it is of critical importance to determine what production process is, or what production processes are, conducted by the appellant. It is only when the process is (or the processes are) identified that it is possible to analyse the role played by the rail link in that process (or processes) for the purpose of deciding whether or not the rail link is part of a production process. 30 I should indicate at the outset that I incline to the view Fortescue and the Competition Council are correct in their submission that the activities engaged in by the appellant involve several production processes. Moreover, the identification of those processes is not, as the appellant would have it, much assisted by the fact (not challenged and undoubtedly correct) that the appellant conducts a highly integrated operation. 31 The appellant based its one process argument on Hamersley Iron Pty Ltd v National Competition Council (1999) 164 ALR 203, a case substantially on all fours with the case at bar. There Robe River Iron Associates, a joint venture, sought access to a rail link used by Hamersley Iron Pty Ltd in its mining operations in the Pilbara. The mining operations were in all respects the same as those conducted by the appellant. The judge, Kenny J, found that the rail link was not a "service" within s 44B because it was part of Hamersley's production process. In summary, the judge's process of reasoning was as follows. First, Kenny J held that the expression "production process" meant "the creation or manufacture by a series of operations of some marketable commodity": 164 ALR at 213. Second, Kenny J found that the only marketable commodity produced by Hamersley was an "export product", namely iron ore in the condition it was sold to steel mills. Third, the judge found that "[e]ach step in the production process [of the export product], including the use of the railway line for the carriage of ore in accordance with a recipe for a batch of product, [was] part of a highly integrated operation designed to make the export product": 164 ALR at 216. In particular "Hamersley's use of its railway line [was] an integral (indeed, essential) operation in Hamersley's production process": 164 ALR at 216. It was a "necessary component of an integrated set of operations which constitute its production process": 164 ALR 220. That is, Hamersley's production process extended from the commencement of its mining operations at the mines to the completion of the product that it sells, namely the export product: 164 ALR at 213. Put another way, the railway link did not merely convey ore by rail from mine to port, it was equivalent to a piece of machinery that, in combination with other pieces of machinery and processes, manufactured an export product. 32 There are several critical aspects to this reasoning. The first is that a production process is a series of "highly integrated operations" necessary to produce a "marketable commodity". The "integrated operations" were not simply physically integrated operations. To the contrary, in many respects physically distinct operations were involved and they were integrated only on an organisational basis. Indeed, the operations were integrated in a manner one would expect of an efficient profit maximising firm that has successive stages of production under its control. 33 The second critical aspect of the reasoning is that the production process must produce a "marketable commodity". It seems reasonably clear that Kenny J had in mind the production of a commodity for which there is an existing market or, if there be no existing market (as for example if a new good was produced), a commodity for which a market is likely to be established. I doubt Kenny J was contemplating merely an article that was capable of being sold. Every article will find a buyer at the right price. On the other hand, it is possible, perhaps likely, that Kenny J did consider the relevant commodity to be that which Hamersley produced for sale whether or not at any earlier stage of the process there had come into existence a commodity for which there was a market. 34 The third critical aspect is the manner in which it was determined that a particular operation is included in a production process. The test proposed is that the operation "is a necessary component of an integrated set of operations which constitute [the] production or process" to create a marketable commodity: 164 ALR at 220. This test makes irrelevant whether any particular operation is a primary or secondary operation or whether it makes a direct or indirect contribution to the production of the commodity. 35 The Hamersley case dealt with another issue that is of relevance to the instant case. Robe River was seeking access to part only of Hamersley's production process, namely the rail link. Kenny J found that the rail link was "an operation integral and essential to the production process" and that use of an integrated or essential aspect of the process is use of the process itself. She explained (164 ALR at 219): "[T]he use of a production process extends, in my view, not merely to the use of the whole process but also to the use of any operation (or step or procedure) that is integral (and perhaps essential or non-subsidiary) to that process as a whole." 36 If the reasoning in Hamersley were applied to this case the conclusion as regards the production process would be different. In Hamersley the marketable commodity produced was export grade iron ore, the production of which was completed at the port. Here, a marketable commodity (that is, a commodity that was exchanged for value) was produced before being railed to port. Ownership of ore from several mines (eg MAC, Western 4 and Jimblebar) changed hands before railing, in some cases before and in other cases after primary crushing. The exchange value does not appear in the appeal papers, but seems to have been in evidence at trial. Thus, the judge should have reached the conclusion that the appellant managed several production processes. 37 But, as I have said, the judge appears to have decided, or would have decided, that the appellant's activities constituted a single operation. He described the appellant's activities in the following way: "[Its] overall objective … is to produce cargoes of iron ore products that meet customers' expectations as to product specifications, grade variability, tonnages and timeliness. … To consistently meet these expectations, [the appellant] uses an integrated approach to its mining, rail and port operations and marketing. … [B]y adding together each of the various operations, [the appellant] operates its production of iron ore as a whole from mine to port for the purpose of the overall objective of [the appellant]." As regards the rail link he said: "[The appellant's] use of the rail line is an operation which contributes to the creation of its finished product, and can even be seen as essential (as the [the appellant's] existing operations attest) to the creation of the final export product. Without the rail line, there would be no connection between mine and port." If there was one production process Hamersley required the judge to hold that access to the rail link, being an essential part of the production process, would amount to access to the process. Nonetheless the judge found in favour of Fortescue. Although he decided that the use of the rail link was essential to the creation of the export product, he parted company with Kenny J on the importance to be attached to the fact that the rail link was an integral part of the operation. As I have explained, the judge confined his attention to the rail link and asked whether that constituted a "production process" considered in isolation to the production process of which it formed an essential part. Because the judge found that "in itself the rail line does not create or make anything", he could not characterise it as a production process. 38 I do not agree in the approach taken by the judge. Nor, for that matter, do I accept all that was decided in Hamersley. A convenient place to begin the explanation is with the meaning of "production process". In the present context, the term "production" is used as an abstract noun and it means the act or process of producing. The composite expression "production process" refers to the process by which inputs (including labour) are transformed into outputs. Such a definition, however, is of little assistance, at least in a case like this. 39 Defining a process by reference to inputs and outputs immediately raises the question: what inputs and what outputs? Putting inputs to one side, the approach in Hamersley was to define the output as a "marketable commodity". That at least established the point at which the production process came to an end. But proceeding on the basis that the relevant output is a marketable commodity is bound to create problems. Often, for example, it is not clear whether a commodity is marketable, particularly if not currently being traded. Must one then decide whether the commodity it likely to find a market? Is that consideration to be determined by factors affecting the producer or the market at large? There is, in any event, an anterior question: Why is it necessary for the output to be a commodity and to be marketable? Perhaps to an economist an output must have an exchange value. To a producer, however, the output need not be marketable. It may be sufficient if the output be an input for another process. 40 A far more serious problem is that by tying the identification of the process to an output with a particular characteristic (such as a marketable commodity) the activities that constitute the production process will be identified by the choice of the output. The result will be that dependent upon the choice of output the activities may be few or many. By way of example, the production process for producing iron ore will involve far less activities than the production of export quality iron ore. 41 Another problem with the definition is that it pays little regard to operations that are in fact separate, either in a structural or physical sense. Nor does it take into account the reason why a particular firm has organised its operations either as an integrated unit or separately, though I appreciate that some processes may be intrinsically integrated or separate. 42 If the process is to be marked out as "a highly integrated operation" (as Kenny J would have it) or as "a systematic sequence of integrated operations" (the view of the majority), the manner in which a firm is organised will determine the outcome. By way of further example, a vertically integrated firm that owns both oilfields and refineries would be able to integrate its operations so as to have only one production process. Yet, if there is separate ownership of the oilfields and refineries, there will be at least two production processes. That the structure of the firm could dictate the number of production processes that exist can hardly have been intended. 43 In any industry it is common to find more than one output and more than one production process. How are they to be identified? The place to begin is to consider the position from the perspective of those who know the industry. Among them there is likely to be consensus as regards the particular process or processes that are involved. So, in a case like this, a judge armed with the knowledge of a mining engineer and a metallurgist is better equipped to determine what production processes are involved in mining and metal extraction than a judge aided by just a dictionary. If in the opinion of industry participants there are separate production processes involved, no amount of integration of those processes will reduce the number of processes. I do not mean to deny that the integration of activities may (I emphasise "may") be a factor to consider in marking out a production process, but it will never be determinative. 44 In an attempt to get a broad understanding of what a proper analysis is likely to disclose I have looked at many textbooks (the kind of 'accepted' and 'serious' works to which, in Australian Communist Party v The Commonwealth (1951) 83 CLR 2, 196,Sir Owen Dixon said judges may have regard) dealing with mining, mineral processing and steelmaking, some of which I have already identified. The impression to be gained from those texts is that what the judge has described as an integrated process is, as the respondents contend, made up of several discrete production processes, although, in the absence of further evidence and argument, I could not confidently say how many processes are involved or, for that matter, precisely where one process ends and the next begins. Still, some conclusions seem tolerably clear and, I suspect, would be relatively uncontroversial to a mining engineer and metallurgist. 45 The first is that mining ore is a stand alone production process. Here I am referring to the steps involved in physically separating ore from the earth, namely drilling and blasting the rocks, excavating the material from the mine site and then hauling the material to an area adjacent to the mine: H Hartman & J Mutmansky, Introductory Mining Engineering (2nd ed, 2002) at para 1.5. This view is in line with the position taken in the oil and gas industry, where oil and gas is said to be produced when it is physically separated from the earth. Later processes, designed to create marketable commodities such as natural gas or stabilised crude oil, are regarded as separate production processes: see eg Oil Basins Limited v BHP Petroleum Pty Ltd (unreported, Full Court of the Supreme Court of Victoria, 27 May 1988), a case that, by the way, dealt with the production of unstabilised crude oil, which at the time was not a marketable product. 46 It should be made clear that, to this point, the operations to which I refer are those that contribute directly to the severance of ore from the earth. They are not the only operations involved in mining. There are support operations, often called auxiliary operations, without which mining cannot take place. The textbooks do not present a uniform picture as to whether the auxiliary operations should be treated as part of the mining production process. Perhaps there is no one answer. Some auxiliary operations, for example, the generation and supply of power to the mine, may be regarded as separate and distinct processes. So also might health services, roads and airports. Others, such as dust control, pumping and drainage, waste disposal and the maintenance of equipment, are so closely connected with the mining operation that they are likely to be treated as part of the mining production process. The evidence is silent about the nature of the auxiliary operations in the Pilbara and how they are to be regarded. 47 Haulage by rail within, or to and from, a mine site may be difficult to characterise because it can fall on either side of the (direct and indirect) divide. Rail transport that is used to haul ore from the stopes to the crushers or stockpiles makes a direct contribution to the production of ore and is likely to be treated as part of the mining production process. The same is true of haulage by haulage trucks, shuttle cars and conveyors that are used for that purpose. On the other hand, where rail is used to transport men or equipment to the mine, the use may be auxiliary and not regarded by the mining industry as part of the mining production process. 48 The identification of a service as auxiliary serves another important function. If one goes back to the definition of "service" one will see that while a production process is not to be regarded as a "service", a production process that "is an integral but subsidiary part of the service" is within the definition of "service". Auxiliary services, or at least some auxiliary services, may properly be characterised as an integral but subsidiary part of a service and hence not covered by the production process exception. 49 After the mining operation has produced ore (that is, after the miner has completed his task) the metallurgist takes over. I have described some of the activities of the metallurgist. The first is ore dressing. Several physically separate processes are involved: crushing, grinding and concentrating. Different equipment at different locations is used in each stage. Still, the standard reference books appear to treat ore dressing as a single enterprise. 50 Next there is agglomeration, either by pelletising or sintering. Agglomeration is treated in the textbooks as distinct from ore dressing, and it seems that pelletising and sintering are separate processes. It is difficult to make any comment about whether blending is a separate process. Some texts treat blending as an aspect of mineral processing or ore dressing and others as a step in smelting. Perhaps the better view is that blending is independent of either of those processes. 51 My comments concerning the division of operations into particular stages while in line with the respondents' submissions are only tentative, based as they are on the writings of authors whose object was not to identify a production process but to explain what is involved in steelmaking. In order to decide whether there is one production process or several production processes involved in preparing export grade ore and, if several, which processes are direct or auxiliary, requires a more in depth analysis. Moreover, without that analysis it is not possible to determine whether the rail link to Port Hedland make any direct or indirect contribution to production. Thus it is not possible to determine whether the rail link is available for access under Part IIIA. 52 I acknowledge that for different reasons neither the judge nor the majority think it necessary to carry out such an analysis. The judge said that if the part of the production process to which access is sought is itself not "transformative" it could not be treated as a production process. The majority take the view that the phrase "the use of a production process" does not cover access to a part of a production process. There is a qualification. The majority say that "a particular production process may well be made up of a highly integrated and inter-dependent set of steps contained within a particular physical environment such as a factory, plant or smelter such that a service sought by a third party in terms of use of [part of the process] would constitute the use of the production process." This is to deal with the situation where the "use of that step is likely to be so invasive and disruptive to the operator's use of the integrated production process (or other parts of the production process) that the third party in substance and effect is, through that use, engaged in the use of the production process." 53 With great respect, I cannot accept either the view of the judge or the majority on this issue. As regards the majority view, their approach has its own inherent problems. One is with the qualification. Without further explanation it is simply not possible to tell when it will operate. Even the explanation for the qualification suggests that the qualification will in a practical sense be difficult to apply. For one thing, the concept of "invasive and disruptive" is highly subjective. For another, dependent upon how an operation is set up, access to part of an operation may be disruptive in one circumstance or at one point in time but not in other circumstances or at different times. 54 Interestingly, the Competition Council expressly declined to adopt the majority's approach to the construction of the definition, although it was in its interest to do so. Perhaps the Competition Council foresaw how things might play out if that approach were adopted. And, in my view, the results would be so unreasonable that they could not have been within the contemplation of Parliament. Two examples will suffice, although there are many others. 55 The first concerns the electricity industry. For the most part, electric power is produced by generators. Power plants are vital to the national economy. From the standpoint of equipment needed and maintaining an operating routine, the load demanded by users would ideally be of constant magnitude and steady duration. But industrial processes and domestic users impose highly variable demands upon the capacity of a power plant. To meet the variable load conditions, large power plants house several generators. The most economically efficient generators operate 24 hours a day to secure base-load, that is, to meet the bulk of demand. The less efficient, usually smaller units, capable of rapid start up, are put to use for incremental or peak-load - when demand is high. 56 Let it be assumed that the generation of electricity at a power plant with both base-load and peaking generators constitutes a single production process. On the majority view, if a third party seeks access to some but not all the generators at the plant, the third party is not seeking access to a production process. I cannot accept an approach that requires that conclusion. When the Hilmer Report dealt with the electricity industry it contemplated a regime that would allow access to electricity transmission grids, without which competition would be impaired or shut out, but not to electricity generators, the owners of which operated in a competitive market. As a result legislation has been put in place to establish an open access regime to transmission and distribution lines for those who generate electricity. The legislation does not deal with access to generation facilities which would still be covered by Part IIIA. 57 The second example I have in mind is a gas processing facility such as the one located at Longford which supplies most of Victoria's natural gas. There is a description of the operations at Longford in Longford Royal Commission, The Esso Longford Gas Plant Accident (1999). Gas and associated hydrocarbons are delivered to the Longford plant by pipeline from three main fields off-shore in the Bass Strait. In simplified form, processing takes the following course. The gas and liquids enter a slugcatcher which separates the liquids from the gas. The liquid is then processed separately from the gas. The gas is passed through molecular sieves to remove water vapour and hydrogen sulphide. The gas is then transferred to absorbers where lean oil absorbs the ethane, propane and butane contained in the gas. The oil is then enriched and removed for treatment. The gas is subject to further treatment and is ultimately sold as natural gas. As it turns out, there are three separate gas plants that process the gas that flows into the Longford facility. There is also a crude oil stabilisation plant at Longford that processes oil from other Bass Strait fields. 58 In my understanding there is at Longford either one production process or two processes, one for gas and the other for oil. Regardless of my view, let it be assumed that those who work in the gas industry would characterise Longford as a single production facility. If the phrase "the use of a production process" is construed not to cover part of a production process, a third party could obtain access to part only of the Longford facility, say the crude oil stabilisation plant or one or two gas plants. I doubt whether any such thing was intended. The Hilmer Report referred to the desirability of third party access to gas pipelines and there is now in place a national regime that permits that to occur. Gas plants are not covered by the regime. 59 I observe in passing that the view of the majority relies in no small measure on the expressio unius principle. Time and again the High Court has said that this maxim must be applied with care: Houssein v Under Secretary, Department of Industrial Relations and Technology (NSW) (1982) 148 CLR 88, 94; Australian Capital Television Pty Ltd v Commonwealth (1992) 177 CLR 106, 213. Once it was referred to as no more than a "weak reed": Lee Vanit v The Queen (1997) 190 CLR 378, 399. In any event, the principle can only be applied if it is clear that the provision was intended to make exhaustive provision with respect to the topic. Here there is no room for the maxim. 60 To conclude this aspect, the task, as always, is to construe the relevant legislation having regard to its object and purpose and, when appropriate, taking into account the consequences that would follow from a particular construction, if more than one construction is available. I have made clear why I favour a construction that would deny access to part of a production process. Such an approach found favour with Kenny J in Hamersley and I agree in her reasons on this issue. 61 As regards the approach of the judge, I agree with the majority that he is in error in holding that as a matter of construction a third party is entitled to access to a part of a production process provided that part is not transformative. 62 I repeat that neither the findings made by the judge nor the evidence in the appeal book enables me to determine whether the steps beginning with the mining of ore and ending with the creation of export grade iron ore constitute one or several production processes or whether the rail link to Port Hedland is part of a production process or, if it matters, an auxiliary operation. Importantly, if, as seems likely, there are several processes involved, it will be necessary to consider in some detail what function the rail links perform - do they directly contribute to the blending process or are the rail links merely the means by which ore is taken from one place of production to another. As I have explained, those questions should be answered primarily from the perspective of those who understand and know the industry. Accordingly, I would allow each appeal with costs and remit the matters for rehearing. I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: BHP BILLITON IRON ORE PTY LTD

AND: THE NATIONAL COMPETITION COUNCIL and

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

between: BHP BILLITON IRON ORE PTY LTD and

AND: THE NATIONAL COMPETITION COUNCIL and

JUDGES: SUNDBERG, FINKELSTEIN & GREENWOOD JJ DATE OF ORDER: 5 octoBER 2007

A synopsis of the essential contentions on the appeal 63 This is an appeal from orders of Middleton J (supported by his Honour's reasons in BHP Billiton Iron Ore Pty Ltd v The National Competition Council [2006] FCA 1764, 'BHP Billiton v NCC'), made in two proceedings heard together in which the appellant (in each appeal) BHP Billiton Iron Ore Pty Ltd ('BHP BIO') unsuccessfully sought in Victorian proceedings (1641/2004) a declaration that: … the bulk iron ore rail track transportation services provided by the Mt Newman rail facility (the Mt Newman rail track service) as defined in Part 5.1 of the application (the Access Application) filed by the Second Respondent under s 44F(1) of the Part IIIA of the Trade Practices Act 1974 (Cth) (the Act) and dated 11 June 2004 is not a service within the meaning of s 44B of the Act. and the second respondent (in each appeal) Fortescue Metals Group Limited ('Fortescue') successfully obtained in Western Australian proceedings (WAD39/2005) a declaration that: The bulk iron ore rail transportation services provided by the Goldsworthy rail facility, as defined in Part 5.1 of the applicant's application filed under s 44F(1) of the … Act and dated 11 June 2004, is a service within the meaning of s 44B of the Act. 64 The first respondent in each appeal is the National Competition Council ('the Council'). 65 The answer to the question to be resolved in each of these appeals is said in oral submissions by the appellant and the second respondent to be a simple and uncomplicated one derived from an orthodox application of the plain and ordinary non‑technical meaning of the words defining the term 'service' in s 44B of Part IIIA of the Trade Practices Act 1974 (Cth) ('the Act') to the unchallenged findings of fact by the primary judge (with the exception of one contention on the part of the appellant as to a finding not made by the primary judge) yet each party contends for an entirely different construction and thus a different simple and uncomplicated answer. 66 The question to be resolved is whether a service sought by Fortescue of 'use' of a 295 kilometre section of a 426 kilometre rail line operated by the appellant from Mt Whaleback in the Newman mining area in the Pilbara region of Western Australia to Nelson Point at Port Hedland described as the Mt Newman Railway Line; 'use' of a 17 kilometre section of a 210 kilometre rail line operated by the appellant from East Pilbara to Finucane Island, Port Hedland described as the Goldsworthy Railway Line; and 'access' to associated infrastructure including, among other things, train control systems, signalling systems, communication systems and maintenance and protection systems used by the appellant, the subject of Fortescue's application (s 44F(1) of the Act) to the Council for a recommendation of the Council to the Commonwealth Treasurer (s 44D) that the service be declared for the purposes of Part IIIA of the Act, is within the definition of the term 'service' in s 44B of the Act. 67 The relevant words and expressions contained in s 44B are these: In this Part, unless the contrary intention appears: provider, in relation to a service, means the entity that is the owner or operator of the facility that is used (or is to be used) to provide the service; service means a service provided by means of a facility and includes: (a) the use of an infrastructure facility such as a road or railway line; (b) handling or transporting things such as goods or people; (c) a communications service or similar service; but does not include:

(f) the use of a production process; except to the extent that it is an integral but subsidiary part of the service; third party in relation to a service, means a person who wants access to the service or wants a change to some aspect of the person's existing access to the service … 68 The content of the question is whether the service sought by Fortescue is 'a service provided by means of a facility' having regard to the words of inclusion in the definition of service, ('and includes (a) the use of an infrastructure facility such as a road or railway line') and, if so, whether the service is the use of a production process thus enlivening the words of exclusion ('but does not include (f) the use of a production process'). There is however an exception to the exclusion with the result that use of a production process is nevertheless a service to the extent that the production process used is 'an integral but subsidiary part of the service'. 69 The heart of the appeal is this. 70 The appellant contends that the primary judge made findings of fact that BHP BIO carries on the business of mining, blending and processing various grades or types of iron ore in the Pilbara region of Western Australia for the 'overall objective' of producing marketable commodities of iron ore which meet the relevant contract specification for each transactional sale. In order to achieve that overall objective, BHP BIO conducts an integrated and continuous process involving mining activity, railing different types, grades and quantities of ore to the Port in accordance with sequencing and scheduling arrangements it determines as operator of the rail haulage infrastructure (and related services) and stockpiling and blending of various grades of iron ore at the Port for loading. 71 The appellant says that the findings of the primary judge make it clear that a production process is used by BHP BIO which extends from the commencement of mining operations in the Pilbara region and ends at the Port when the final product is created; the use of the rail line between the mine and the Port contributes to the creation of the finished product; the rail line can be seen as essential to the creation of the final export product; and the rail line necessarily forms part of the process of production of a marketable commodity by BHP BIO. 72 The appellant says that although the primary judge did not find as a fact that BHP BIO uses a single continuous production process, the primary judge did find that each of the activities undertaken by BHP BIO commencing with mining operations in the Pilbara and ending with the creation of the final export product at the Port are sufficiently integrated that one single process of production of a marketable commodity occurs and thus a single production process in which the rail operation contributes in a way described by the primary judge as 'essential'. 73 The appellant accepts that the definition of service in s 44B of the Act includes use of a railway line as an inclusive illustration of the use of an infrastructure facility. However, the appellant says that the exclusion from such a service effected by the phrase 'but does not include (f) the use of a production process' does not mean that the integrated production process from mine to Port is to be used by Fortescue before the exclusion is enlivened but rather, use of an essential part of an integrated production process is 'the use of a production process'. The appellant says the use of a production process, as a matter of construction of the plain and ordinary meaning of the words, comprehends the use of a part of such a process. The phrase might be read as including words of addition such as 'the use of a production process or any part of a production process' or the phrase might simply be construed in a way which is said to convey its contended ordinary meaning. The contended meaning might be said to be consistent with a conception derived from National Competition Policy: Report by the Independent Committee of Inquiry (August 1993) by Professor Hilmer, M Raynor and G Taperell ('the Hilmer Report') which informed the thinking of the Council of Australian Governments (COAG) leading to the Competition Principles Agreement between the Commonwealth and the States and Territories of 11 April 1995 and which gave rise to the formulation and introduction of Part IIIA into the Act as a statutory mechanism for affording third party access to publicly and privately owned nationally significant natural monopoly infrastructure (an example of which is rail infrastructure), constrained however by a recognition that production processes (perhaps including use of a part of a production process), in principle, ought not to be a service susceptible of an access declaration. That question will require consideration in these reasons. 74 Since the service sought by Fortescue is the use of a section of the rail line which is an integral and essential part of the production process used by BHP BIO, the appellant says the service is necessarily the use of its production process and thus the exclusion operates to remove the use of the rail line from the definition of 'service'. 75 The appellant contends that the primary judge although not expressly finding that use of a part of a production process satisfies the exclusion, must necessarily have so proceeded in adding an 'unwarranted gloss' to the natural meaning of the words of exclusion by concluding that use of an integral or essential part of a production process is not use of a production process unless the part used is 'transformative'. The primary judge considered that use of the rail link must itself be a process that transforms, modifies or alters the state of the ore. His Honour concluded that if use of the rail link is simply the movement of ore from one place to another such as the mine site after the completion of treatment processes to the Port where further processes of blending occur, the transportation step adds nothing to the transformation of the commodity either by way of processing or bringing a commodity to contract specification and accordingly, there is no use of a production process. 76 The appellant says that use of an integral part of a production process may or may not be 'transformative'. It simply doesn't matter. What matters, it is said, is that the part of the production process to be used by Fortescue is, at least on the facts of this case, an integral and essential part of a production process. Therefore, as a matter of construction, a seeker of access to a service cannot, in effect, 'cherry pick' those parts of a production process that are not 'directly' transformative if those parts are an integrated part of the whole. The appellant says that the relevant inquiry is into the sequence of processes or activities undertaken by BHP BIO making up its production process as the party engaged in the conduct of the operation as found and whether the service as formulated seeks out the use of a part of that production process. The appellant says Fortescue's formulation of the service does so and is necessarily the use of BHP BIO's production process. Moreover, the appellant says there is no warrant for conducting as the primary judge thought necessary an analysis of the 'essential character' of the part of the service sought by the access seeker to determine whether that part is transformative or otherwise. The words of exclusion do not require such an analysis. The analysis simply focuses upon whether the part to be used is part of a production process as found. 77 The appellant further contends that there is no warrant on the facts of this case in analysing whether the rail link is simply an interconnecting infrastructure facility between a production process or series of production processes (such as extraction and subsequent processing operations) upstream of the rail link and further production processes (such as stockpiling and blending) downstream of the rail link at the port. If the purpose of the analysis is to isolate whether there are a series of discrete production processes used by BHP BIO which each exhibit a beginning and an end point linked by an infrastructure facility for the movement of ore in a particular state of processing from one place of processing to another, the findings of the primary judge are said to have foreclosed that analysis and, consistent with relevantly analogous authority, the transportation step is part of a production process (Hematite Petroleum Pty Ltd & Anor v The State of Victoria (1983) 151 CLR 599). 78 So far as the exception is concerned, the logical outworking of the appellant's contention seems to be this. If use of a part of a production process is construed as 'the use of a production process' and the service the subject of the application for a declaration recommendation is formulated in terms of the use of that part, the use would be neither integral as the service is itself the use of that part (not merely an integral part of the service) nor subsidiary (a lesser part of a broader service). In such a case, the exception to the exclusion would not operate and thus use of the part would remain excluded from the scope of a 'service' as, 'the use of a production process', for the purposes of paragraph (f) of the definition. 79 The appellant further contends that the primary judge in analysing the 'essential character' of the rail line; isolating whether use of the rail line is itself transformative of the ore; and in rejecting emphasis upon an integrated sequence of steps directed to the objective of creating a 'marketable commodity' as indicia of a production process, erred by failing to apply the reasoning of Kenny J in Hamersley Iron Pty Ltd v National Competition Council (1999) 164 ALR 203 ('Hamersley') and wrongly concluded on facts found by the primary judge to be indistinguishable from those in Hamersley that her Honour's reasoning was 'plainly incorrect' or 'plainly wrong'. 80 The appellant says (among other things) her Honour's reasoning that a production process is a systematic series of operations directed towards the creation or manufacture of something [32]; and use of a production process 'extends not merely to the use of the whole process but also to the use of any operation (or step or procedure) that is integral (and perhaps essential or non‑subsidiary) to that process as a whole' [51], is correct and the five identified reasons of the primary judge in refusing to apply the reasoning in Hamersley are unsound. Fortescue says Hamersley is wrongly decided however the facts of this case are in any event distinguishable from those of Hamersley. The Council supports the reasoning of the primary judge that Hamersley is plainly wrong. 81 The question of the proper construction according to settled principles of interpretation of the term 'service' in s 44B of the Act is now before a Full Court. In construing the meaning of the term, however, it should be remembered that substantial argument was advanced before Kenny J in support of the reasoning adopted in Hamersley, eight years ago. The appellant supported and urged upon the Court the merits of that reasoning before the primary judge. The appellant continues to support the reasoning on appeal. The primary judge noted that Fortescue supported the notion of 'production process' adopted in Hamersley but contended that Kenny J made errors of principle in her reasoning so as to lead her to the wrong conclusion (BHP Billiton v NCC [103]). Both the appellant and Fortescue contend for a simple and uncomplicated answer to the proper construction of the term which recognises a different approach to the construction question. 82 In such circumstances a question arises as to whether the better course on the part of a primary judge at trial considering facts found to be indistinguishable from the facts of the previous authority and addressing the proper meaning to be attributed to the same statutory provisions considered in the earlier authority, may well be to express points of analytical departure from the earlier reasoning; express disagreement with the conclusion in the earlier authority as a matter of applied principle; express concern as to the consequences for the resolution of the immediate case in applying the authority; yet follow and apply the authority. Such a course in the face of a primary judge's reservations about the soundness of the earlier reasoning may well result in proceedings in the case in an exercise of the Court's appellate jurisdiction where the question as a matter of binding authority can be resolved. A foundation for a case stated to a Full Court may not, in the circumstances, be realistic. 83 The circumstances in which a judge in the exercise of the Court's original jurisdiction might find a decision of a single judge of the Court to be 'plainly wrong' should be approached with real and deliberative caution and would generally involve that class of case where for one reason or another there is transparent error such as the consideration of an incorrect statutory instrument in the resolution of the controversy; consideration of a provision of a statute in a form not enacted at the relevant date of the events or a failure to consider a provision of an Act relevant to the disposition of the cause, thus causing the analysis to fall into error; a failure to apply having regard to the issues raised by the controversy, a binding decision of a Full Court of this Court or the High Court; a failure to apply a decision of a Full Court of this Court, an intermediate Court of Appeal of another jurisdiction or an authority of the High Court expressing a clear persuasive emphasis of opinion in favour of a particular conclusion (particularly concerning legislation of the Commonwealth Parliament); or some other circumstance that has caused a dispositive adjudication of the controversy to miscarry. 84 That minds might differ on a question is not a foundation for a conclusion that a decision supported by exposed reasons for judgment after full argument, is plainly wrong. 85 The difficulty however lies in preserving that degree of important flexibility necessary to enable a judge to do justice between the parties to a controversy inherent in a dispositive adjudication of that controversy when a judge is persuaded that an earlier authority is wrong (apart from illustrations of the kind above) balanced with the importance of consistency and certainty in the administration of the law. The question is always a matter of careful judgment. 86 The circumstances which might properly lead to a departure from an earlier authority will necessarily vary according to the content of the case and the issues and therefore no prescriptive rules ought to be formulated. However, the point of equilibrium in that balance might be reached by recognising the required emphasis necessary in concluding that an earlier authority is 'plainly wrong' or 'clearly wrong'. In cases where a party advised and represented by experienced senior counsel properly discharging the duty owed to the Court urges upon the Court the merits of the reasoning of the authority in the resolution of the immediate case, it would be difficult to conclude that the authority is 'plainly wrong' notwithstanding that a judge might reach an entirely different view of the proper construction of the provision against the background of the facts found and thus conclude that the early authority is wrongly decided. There is a distinction between concluding a decision is wrongly decided and a conclusion that an earlier authority is 'plainly wrong' and thus ought not to be applied and followed. 87 Some of the authorities are these. 88 Judges of this Court 'should follow an earlier decision of another judge unless of the view that it is plainly wrong' (Hicks v Minister for Immigration and Multicultural Affairs & Indigenous Affairs [2003] FCA 757, per French J [75] (a case in which the earlier authority exhibited a failure to have regard to a relevant definitional section of an Act although the ultimate construction was found to be correct); Takapana Investments Pty Ltd v Teco Information Systems Co. Ltd (1998) 82 FCR 25 per Goldberg J ('I consider as a matter of judicial comity I should follow earlier decisions of single judges of this court unless I am satisfied the decision is clearly wrong' at p 32, - a refusal to follow earlier reasoning found to be in tension with a decision of the High Court); Towney v Minister for Land and Water Conservation for New South Wales (1997) 147 ALR 402 per Sackville J (adopting a test of departure if satisfied the earlier decision is 'clearly wrong') at p 412; Esso Australia Resources Ltd v Federal Commissioner of Taxation (1997) 150 ALR 117 per Foster J (adopting a test of 'I should follow the earlier decisions unless I am persuaded to the contrary' at p 121 - a case where High Court authority ought to have been followed in an earlier determination); La Macchia v Minister for Primary Industries and Energy & Anor (1992) 110 ALR 201 per Burchett J (adopting the statement in Halsbury, 4th Ed, Vol 26, para 580 that 'a judge of first instance will as a matter of judicial comity usually follow the decision of another judge of first instance unless he is convinced that the judgment was wrong', a p 204). 89 Burchett J further observed that as an expression of 'a usual or general rule, the following statement of Rogers J in Hamilton Island Enterprises Pty Ltd v FCT [1982] 1 NSWLR 113 at 119 is consistent with the proposition I have quoted from Halsbury: "In my view it is of cardinal importance in the proper administration of justice that single judges of State Supreme Courts in exercise of Federal jurisdiction should strive for uniformity in the interpretation of Commonwealth legislation. Unless I were of the view that the decision of another judge of coordinate authority was clearly wrong, I would follow his decision"; see also: Bank of Western Australia Limited & Ors v Commissioner of Taxation (1994) 55 FCR 233 per Lindgren J at p 255; Bradley v Armstrong (1981) 55 FLR 355 per Fox J and Connor J at pp 356 and 361; Re Rothercroft Pty Ltd (1986) 4 NSWLR 673 per Kearney J at p 679; Deputy Commissioner of Taxation v Access Finance Corporation Pty Ltd (1987) 8 NSWLR 557 at p 558 per Samuels JA; Magman International Pty Ltd & Ors v Westpac Banking Corporation (1991) 32 FCR 1 per Hill J at 20; Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485 per Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ at p 492; Nezovic & Anor v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 133 FCR 190 per French J at p 206 [52] observing 'where questions of law and in particular statutory construction are concerned, the view that a judge who has taken one view of the law or a statute is "clearly wrong" is not likely to be adopted having regard to the choices that so often confront the courts particularly in the area of statutory construction'; Marr v Australian Telecommunications Corporation & Ors (1991) 34 FCR 82 per Hill J at p 85; and Farah Constructions Pty Ltd & Ors v Say‑Dee Pty Ltd [2007] HCA 22. 90 Fortescue's position is this. 91 Fortescue supports the reasons of the primary judge; contends that the correct analytical approach is to identify the service formulated by the access seeker in its application to the Council and therefore recognise that Fortescue seeks a service of use of the rail track; although use of the rail track necessarily requires access to signalling, maintenance and other track services conducted or provided by the appellant, the nub of the service is use of inert extensive rail infrastructure from the Pilbara region to Port Hedland; such use is a central and orthodox conception of a service for the purposes of Part IIIA consistent with the statutory objectives sought to be achieved by the enactment of Part IIIA; the question to be resolved in the face of reliance by the operator of the rail track on paragraph (f) of the definition is whether use of the rail track is a process that creates a product or transforms something from one state to another; that question does require an assessment of the essential nature of a rail line; since a rail line is a transportation means, nothing creative or transformative occurs in the use of a rail line and therefore there is no use of a production process. 92 Fortescue says that the question of whether use of the rail track is use of a production process is informed by recognising the distinction between use of the track as an infrastructure use and use of a rail haulage service for the transportation of iron ore. In the taxonomy of the rail industry, these services are respectively described and well understood as 'below rail' and 'above rail' services. The distinction is recognised as an accurate separation of services in Rail Access Corporation v New South Wales Minerals Council Ltd (1998) 87 FCR 517 per Black CJ, Wilcox and Goldberg JJ. 93 The relevance of the distinction is that 'below rail' use of the track is said to be, in effect, one further step removed from an activity of the operator and whereas the appellant contends the transportation or haulage activity is part of a production process, Fortescue says access to each rail line as compared with an attempt to secure access to a transportation service makes it even clearer that no 'process' is involved at all in the proposed use. 94 Fortescue further says that the appellant undoubtedly conducts a series of production processes which are transformative of the ore upstream of each rail line; further production processes take place at the Port such as stockpiling and blending; and the character of each rail line is an inter‑connecting infrastructure facility which links discrete processes which commence and end within the limits of the physical activity each separate process requires. 95 The Council supports the reasoning of the primary judge on all issues of construction; contends that a production process is the creation or making of a product or the transformation of one thing into another and that use of a production process means 'apply or exploit' a process for a transformative purpose; supports the reasoning of the primary judge in concluding Hamersley is plainly wrong; and contends, in effect, that the appellant's approach to the construction of paragraph (f) of the definition would broaden the reach of the exclusion thus narrowing the scope of a service for the purpose of Part IIIA in a way inconsistent with the objectives of the Part IIIA as use of any non‑transformative step along the way to production of a marketable commodity would be excluded from the term 'service'. 96 The essential point of departure between the appellant and the first and second respondents as a matter of methodology is that Fortescue and the Council contend the definition starts with a service postulated by a third party access seeker and asks quite precisely whether that service is (rather than imprecise analogues such as 'involves' or 'in relation to' or 'in connection with') the use of a production process. The boundary and therefore the focus of the inquiry of whether the service is the use of a production process is determined it is said by the content of the service itself (rather than the integration of that use with other parts of the operator's sequence of processes) which necessarily invites an assessment of the essential character of that use to determine whether according to the plain and orthodox meaning of the term 'the use of a production process', an act of enhancement, modification, transformation or alteration of the state of the ore occurs, in that use. 97 That construct of the definition is said to be consistent with accepted principles of construction and a function of the structure of the definition informed by its context in Part IIIA and the objects of the Act. 98 As a result of such a view, if the service sought by the access seeker is the use of a production process, that use is not a service within the s 44B definition unless the exception to the exclusion operates. Since the production process in such a construct is the entirety of the use, it is neither integral to a broader service nor a subsidiary part of that broader service. 99 These issues represent grounds 1 to 8 of the grounds of appeal. The appellant says by grounds 9 and 10 that the primary judge erred in concluding that economic expert evidence adduced by the parties was admissible to inform the court as to the nature and context in which Part IIIA is to operate and by ground 11 that the primary judge erred by failing to find that the appellant had only one overall production process for the purposes of producing all of its iron ore products.

The service sought by Fortescue 100 Fortescue applied to the Council under s 44F(1) of the Act for a declaration recommendation for the following service: (1) the use of the Facility, being: (a) that part of the Mt Newman Railway Line which runs from a rail siding that will be constructed near Mindy Mindy in the Pilbara to port facilities at Nelson Point in Port Hedland, and is approximately 295 kilometres long …; (b) the part of the Goldsworthy Railway Line that runs from where it crosses the Mt Newman Railway Line to port facilities at Finucane Island in Port Hedland, and is approximately 17 kilometres long … (2) access to the Facility's associated infrastructure, including, but not limited to: (a) railway track, associated track structures, over or under track structures, supports (including supports for equipment or items associated with the use of the railway); (b) bridges;

(d) train control systems, signalling systems and communications systems; (e) sidings and refuges to park rolling stock; (f) maintenance and protection systems; and (g) roads and other facilities which provide access to the railway line route.

The findings of fact of the primary judge 101 The unchallenged findings of the primary judge are these. 102 The appellant carries on the business of the mining, blending and other processing of various types of iron ore in the Pilbara region of Western Australia on behalf of various unincorporated joint ventures for the purpose of producing bulk iron ore products for sale [1]. 103 The iron ore originates in four mining areas in the Pilbara region consisting of the Newman mining area, Yandi mining area, Area C and the Goldsworthy mining area [2]. 104 The Mt Newman railway line is constructed on Crown land known as the Mt Newman Rail Corridor leased from the State of Western Australia by the participants in the unincorporated Mt Newman Joint Venture comprising BHP Billiton Minerals Pty Ltd ('BHPBM') 85%, Mitsui‑Itochu Iron Pty Limited ('Mitsui') 10% and Itochu Minerals and Energy of Australia Pty Ltd ('Itochu') 5% ('Mt Newman JV'). The Goldsworthy railway line is constructed on Crown land, known as the Goldsworthy Rail Corridor and leased from the State of Western Australia by the participants in the unincorporated Mt Goldsworthy Mining Associates Joint Venture ('Goldsworthy JV') comprising BHPBM 85%, Mitsui 7% and Itochu 8% [3] and [4]. 105 The appellant operates both the Mt Newman railway line and the Goldsworthy railway line in its capacity as manager of the respective joint ventures [6]. 106 The Newman mining area consists of four mines leased by the Mt Newman JV (Mt Whaleback, Orebodies 29 and 30, Satellite Orebody 25 and Orebody 18) and one mine Jimbledar, owned by the Wheelara Joint Venture participants. The appellant operates all mines [57], [58] and [59]. 107 The Yandi mining area consists of four mines (C1, C5, E2 and W4) leased as to the first three by the Goldsworthy JV and as to W4 by the W4 joint venture participants. The appellant operates all mines. The area C mine is owned by particular unincorporated joint venture participants and operated by the appellant. The Goldsworthy mining area consists of two mines owned by the Goldsworthy JV participants and operated by the appellant [60], [61], [62], [63] and [64]. 108 The appellant also operates two port facilities on opposite sides of Port Hedland Harbour, Nelson Point and Finucane Island connected by a 1.4 kilometre under harbour tunnel conveyor belt [7]. 109 The appellant conducts and manages an integrated and continuous process in the production of iron ore products which ([65] and the final sentence of [66]) include: (a) drilling and blasting of ore at the mine; (b) the removal of waste from the ore; (c) the collection and hauling of the ore; (d) pre‑crusher stockpiling; (e) crushing and screening the ore to reduce the particle size (in some cases); (f) beneficiation (in some cases) of the ore to increase the grade of iron in the ore; (g) post‑crusher stockpiling (in some cases); (h) train loading;

(i) railing different types, grade and quantities of ore to the Port in accordance with sequencing and scheduling determined by the appellant; (j) unloading at the Port; (k) secondary (in some cases) and tertiary crushing and screening of the ore at the Port; (l) stockpiling and blending (in some cases) of the ore at the Port to satisfy product specifications; (m) reclaiming the ore from stockpiles at Port; (n) re‑screening to remove undersize material; and (o) ship loading. 110 The appellant produces six finished iron ore products from its operations consisting of Newman High Grade Lump ('NHGL'), Newman High Grade Fines ('NHGF'), Yandi Lump, Yandi Fines, MAC Lump and MAC Fines [67]. 111 Prior to September 2006, the appellant produced two other ore products from the Goldsworthy mining area known as Goldsworthy Medium Grade Lump ('GMGL') and Goldsworthy Medium Grade Fines ('GMGF'). Although the appellant suspended production of GMGL and GMGF from September 2006, BHP BIO continues to mine ore within the Goldsworthy mining area with the majority of the mined ore being stockpiled at the mine site. The appellant rails approximately 240,000 tonnes of ore per annum from the Goldsworthy mining area to the Port where that ore is included in the blend of ores used to produce NHGL and NHGF products. NHGL and NHGF are blends of ore from mines in the Newman mining area (and the Goldsworthy mining area). Ore from each of these mines undergoes primary and secondary crushing at the mine. It is then stockpiled at each mine and railed to Port in a form known as 'run of mine' ('ROM') ore. The ore then undergoes tertiary crushing if necessary, and screening and is stockpiled, blended and in the case of lump, re‑screened as finished products at the port [68] and [69]. 112 Yandi Lump and Fines are blends of ore from the mines located in the Yandi mining area. The Yandi 1 and Yandi 2 fines are blended at the Port to produce the Yandi Fines finished product. The lump ore from Yandi 2 is blended into stockpiles at the port prior to loading and shipment. During the ship loading process it is re‑screened with the screened fines being blended with other Yandi Fines [70]. 113 MAC Lump and Fines are produced from ore sourced from Area C. The ore undergoes primary, secondary and tertiary crushing at the mine and is screened and stacked onto one of three lump stockpiles and one of three fines stockpiles at the mine. At the port, lump and fines from Area C are distributed onto stockpiles. Lump undergoes further screening prior to shipment. Screened fines are further blended with fines stockpiles at the port [71]. 114 While most of the ore railed from the mines in the Newman mining area undergoes further processing at Port Hedland including crushing and blending prior to being loaded onto a ship, some ore from Area C and Yandi mining areas proceeds directly to ship from port car dumpers as direct to ship ore ('DSO'). This occurs with only two of the appellants products, Yandi Fines and MAC Fines. DSO is in any event mixed with other ore from port stockpiles in the cargo holds which is described as 'in ship blending'. The proportion of DSO in any particular product mix is approximately 20% Yandi Fines and 25% MAC Fines [72]. 115 All of the iron ore produced by the appellant (other than the small proportion of Yandi Fines and MAC Fines that constitute DSO) is blended at port facilities. The blending at port occurs through the process of creating blending stockpiles at the port and through the process of reclaiming the ore from the stockpiles. Lump products must be re‑screened at the port as lump products suffer physical degradation from the handling process between the mine and the port stockpile [73]. 116 The appellant uses a production and grade control system for its mining, rail and port operations, described as a Continuous Stockpile Management System ('CSMS'). The CSMS is used in the appellant's operations from mine to ship loading at the port. It assists in the development of the daily blend for each mining area and determines the required sequence of trains necessary for the appellant's operation and requirements for finished iron ore products [55]. 117 As to the rail operations, the findings are these. 118 The appellant uses the Mt Newman Railway Line to provide rail haulage services to the Mt Newman JV and Wheelara JV of ore from the Mt Newman mining area to Nelson Point; uses the Mt Newman Railway Line and Goldsworthy Railway Line to provide rail haulage services to the Goldsworthy JV, JW4 JV and Area C Joint Venture participants, of ore to Nelson Point or Finucane Island; and uses the Goldsworthy Railway Line and the Mt Newman Railway Line to provide rail haulage services to the Goldsworthy JV of ore to Nelson Point [75]. 119 The cost of the use of the rail line facilities (and the rail transportation services) is charged to the mining joint venture participants on a tolling basis by the appellant based on a fee calculated by reference to a rate of return on the notional value of the assets deployed [76]. 120 Having regard to these findings of fact, his Honour concluded: 77. It seems clear that the overall objective of BHP BIO's operations is to produce cargoes of iron ore products that meet customers' expectations as to product specifications, grade variability, tonnages and timeliness. Whether they do or do not meet customers' expectations is not a matter of evidence before me, only that this is the objectives sought by BHP BIO. 78. To consistently meet these expectations, BHP BIO uses an integrated approach to its mining, rail and port operations and marketing. When I refer to an integrated approach, I mean by adding together each of the various operations, BHP BIO operates its production of iron ore as a whole from mine to port for the purpose of the overall objective of BHP BIO. 79. BHP BIO's use of the rail line is an operation that contributes to the creation of its finished product, and can even be seen as essential (as BHP BIO's existing operations attest) to the creation of the final export product. Without the rail line, there would be no connection between mine and port. The CSMS has been developed to ensure that carrying or conveying of iron ore over the rail line meets BHP BIO's overall objective. Of course, in itself the rail line does not create or make anything - it conveys the iron ore as part of the overall operation designed by BHP BIO to meet customers' expectations. 121 In considering whether Hamersley is distinguishable on its facts from those of the present case, the primary judge made these further observations as to the facts of this case: 131. In particular, BHP BIO's operations in these proceedings effectively consist of carrying iron ore over the railway line in a planned sequence as part of making up 'the recipe' for the iron ore eventually blended and stockpiled. 138. It is still necessary for me to assess whether the production process used by BHP BIO produces the actual marketable commodities at the port. … Where a marketable commodity is produced by BHP BIO at the port, all of the integrated series of operations by which that marketable commodity is produced will constitute the production process under the Hamersley construction. 140. The process by which BHP BIO produces the six finished iron ore products for export at Port Hedland involves an integrated series of operations as has been described above. 141. However, the process by which BHP BIO produces each of its six bulk iron ore products differ to some extent. Despite this, BHP BIO submitted that it has only one overall production process for the purposes of producing all of its iron ore products. In the alternative, BHP BIO submitted that it conducts more than one production process to the extent that the operations by which the different products are produced differ. … I do not accept BHP BIO's first submission that it has only one overall production process for all its products. However, I do accept its alternative submission. To the extent that the process by which each marketable commodity is produced differs, the use of the Mt Newman and Goldsworthy Services in that process will also differ. Therefore, applying Hamersley, there would be more than one production process, but still from mine to port and involving the use of the railway line. 143. Fortescue submitted that these port operations, under which ore from some of the mines is further crushed, screened and blended and ore from other mines is blended and screened are separate production processes to those undertaken at each of the mines. 144. Applying Hamersley, I do not accept this submission. The extent to which the ROM ore undergoes further development in order to produce some other marketable commodity, different physical or chemical constitution, in this case NHGL and NHGF, necessarily means that the production process for NHGL and NHGF, which commences at the mine, does not finish until the finished product is produced at the port. 146. The evidence clearly shows that all six of BHP BIO's final export products, apart from the small proportion of Yandi Fines and MAC Fines loaded as DSO, are produced at the port, after transportation on the relevant rail facilities. Accordingly, in relation to all of BHP BIO's products (or 'marketable commodities') on the Hamersley construction the production process extends from the commencement of mining operations at the mines and ends at the port, when the final product is created. 122 Fortescue proposes to carry on the business of mining, refining and sale of iron ore in the Pilbara region. Fortescue is an equal share participant with Consolidated Minerals Limited in the Pilbara Iron Ore Joint Venture which holds tenements at Mindy Mindy which are 295 kilometres south east of Port Hedland; approximately 17 kilometres from the Mt Newman Railway Line; within a 75 kilometre radius of the Newman mining area; and 285 kilometres from the Goldsworthy Railway Line and Goldsworthy mining area. Fortescue seeks access to the service provided by parts of each railway line in order to haul iron ore from a rail siding to be constructed near the Mindy Mindy mine to Port Hedland.

The provisions of the legislation 123 The object of the Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision of consumer protection (s 2). Competition takes place in a market characterised by a field of rivalry and substitution possibilities (s 4E; Re Queensland Co‑operative Milling Association Ltd; Re Defiance Holdings Ltd (1976) 25 FLR 169). 124 The objects of Part IIIA of the Act recited in s 44AA of the Act are to: (a) promote the economically efficient operation of, use of and investment in the infrastructure by which services are provided, thereby promoting effective competition in upstream and downstream markets; and (b) provide a framework and guiding principles to encourage a consistent approach to access regulation in each industry. 125 Although this statement of the objects of Part IIIA was introduced into the Act with a commencement date of 18 August 2006 by the Trade Practices Amendment (National Access Regime) Act 2006 (No. 92, 2006), well before the application by Fortescue to the Council, the Council contends s 44AA simply recites as a matter of clarity the central purpose of the Part to promote economic efficiency thereby promoting rivalry in markets upstream and downstream of relevant infrastructure satisfying guiding principles for access specified by Part IIIA. 126 Those objects are achieved by a declaration process. 127 A third party seeking access to a service by means of a facility may apply (s 44F(1)) to the Council for a recommendation to the designated Minister (in this case the Commonwealth Treasurer) that the service be declared. The Council must advise the service provider of the application (s 44F(2)(a)); must consider whether it would be economical for anyone to develop another facility that could provide part of the service (s 44F(4)); and must, having regard to the objects of Part IIIA, recommend to the Minister that the service be declared or not declared (s 44F(2)(b)). The Council cannot recommend that a service be declared unless it is satisfied of all of the following s 44G(2) matters: (a) that access (or increased access) to the service would promote a material increase in competition in at least one market (whether or not in Australia) other than the market for the service; (b) that it would be uneconomical for anyone to develop another facility to provide the service;

(c) that the facility is of national significance, having regard to: (i) the size of the facility; or (ii) the importance of the facility to constitutional trade or commerce; or (iii) the importance of the facility to the national economy; (d) that access to the service can be provided without undue risk to human health or safety; (e) that access to the service is not already the subject of an effective access regime; (f) that access (or increased access) to the service would not be contrary to the public interest. 128 Section 44G(2)(a) was also amended by Act No. 92, 2006 to introduce the notion that access would promote 'a material increase in' competition rather than an increase in competition. On receiving the application, the Minister must, having regard to the objects of Part IIIA, declare or not declare the service (s 44H(1)); and consider 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 matters recited in s 44H(4) which are the same considerations recited in s 44G(2)(a) to (f). The Minister must publish his or her reasons within 60 days after receiving the Council's recommendation and a failure to do so is taken as a decision not to declare (s 44H(9)). Once declared, the third party and the service provider might negotiate an agreement on all aspects of access to the service (such as allocation of train paths, track operating protocols, methodology for the calculation of an access fee) or, failing agreement, notify the Australian Competition and Consumer Commission ('ACCC') of an access dispute (s 44(S)) thus invoking an arbitration by the ACCC between the service provider, the third party and any person the ACCC considers to have a sufficient interest. 129 The consequence of declaration of a service is that it brings the possibility of an independent arbitration of 'any matter relating to access by the third party to the service' (s 44V(2)) to the negotiation of those terms and if no agreement is reached, an entitlement to invoke an arbitration by the ACCC. 130 The s 44AA objects of promoting the economically efficient operation of, use of and investment in infrastructure so as to promote 'effective competition' in markets upstream and downstream of that infrastructure on the one hand and the preservation of the 'legitimate business interests of the provider' and the 'provider's interest in the investment in the facility' (s 44X(1)(a)) on the other hand, lies in the application of important provisions of the Act in the arbitration process that address the scope of the subject matter the ACCC may determine in an arbitration (s 44V(2), s 44V(3)); the restrictions imposed on the ACCC in making a determination (s 44W); and the mandatory requirement upon the ACCC to take into account particular matters (s 44X(1)). 131 Because declaration can only occur when both the Council and the Minister are satisfied that it would be uneconomical for anyone to develop another facility and the service provider may be perceived to be unconstrained in extracting monopoly tariffs in the use of the facility, the object of promoting the 'economically efficient operation of and use of the infrastructure' is apt to be achieved by an arbitrated determination setting an access fee that reflects a construct of 'efficient competition' in which inefficient costs notionally have been competed away; capacity of the facility optimised and risk weighted rates of return struck on asset values set to reflect a particular depreciation methodology. 132 Section 44V(2) provides: (2) A determination may deal with any matter relating to access by the third party to the service, including matters that were not the basis for negotiation of the dispute. By way of example, the determination may: (a) require the provider to provide access to the service by the third party; (b) require the third party to accept, and pay for, access to the service; (c) specify the terms and conditions of the third party's access to the service; (d) require the provider to extend the facility; (da) require the provider to permit interconnection to the facility by the third party (e) specify the extent to which the determination overrides an earlier determination relating to access to the service by the third party. 133 Consistent with the operation of ss 44W(1) and 44X(1), s 44V(3) provides that a determination does not have to require the provider to provide the third party with access to the service. 134 The restrictions imposed upon the ACCC in making a determination are set out in s 44W(1) in these terms: (1) The Commission must not make a determination that would have any of the following effects: (a) preventing an existing user obtaining a sufficient amount of the service to be able to meet the users' reasonably anticipated requirements, measured at the time when the dispute was notified; (b) preventing a person from obtaining, by the exercise of a pre‑notification right, a sufficient amount of the service to be able to meet the person's actual requirements; (c) depriving any person of a protected contractual right; (d) resulting in the third party becoming the owner (or one of the owners) of any part of the facility, or of extensions of the facility, without the consent of the provider; (e) requiring the provider to bear some or all of the costs of extending the facility or maintaining extensions of the facility; (f) requiring the provider to bear some or all of the costs of interconnections to the facility or maintaining interconnections to the facility. 135 The Commission is required by s 44X(1) to take the following matters into account in making a final determination: (aa) the objects of this Part; (a) the legitimate business interests of the provider, and the provider's investment in the facility; (b) the public interest, including the public interest in having competition in markets (whether or not in Australia); (c) the interests of all persons who have rights to use the service; (d) the direct costs of providing access to the service; (e) the value to the provider of extensions whose cost is borne by someone else; (ea) the value to the provider or interconnections to the facility whose cost is borne by someone else; (f) the operational and technical requirements necessary for the safe and reliable operation of the facility; (g) the economically efficient operation of the facility; (h) the pricing principles specified in section 44ZZCA. 136 It can be seen from these provisions that the declaration process and ultimately the setting of the terms of third party access involves many checks and balances involving assessment of a third party application by the Council; a procedural and deliberative process undertaken by the Council; satisfaction by the Council of all of the s 44G(2) criteria; a recommendation to the Minister; independent consideration and satisfaction by the Minister of all of the same statutory criteria; agreement on terms between the provider and the third party and if no agreement, arbitration by the ACCC of any matter relating to access; and the striking of the balance sought to be effected by ss 44AA, 44W(1) and 44X(1) and the pricing principles prescribed by s 44ZZCA. 137 These checks and balances are formulated for the statutory purpose of ensuring that only a service susceptible of an application under s 44F(1) to the Council is made the subject of a declaration recommendation; a declaration by the Minister; and rendered subject to the possibility of a arbitral determination under s 44V(2). The requirement that both the Council and the Minister be affirmatively satisfied of the statutory criteria operates upon a broad inclusive definition of the term 'service' which includes the use of a railway line.

The meaning of the term 'service' in s 44B 138 The declaration process recognises that a third party may seek access to a service. Access to certain infrastructure requires the provision of particular services. The carriage of third party gas through a pipeline requires the operator of the pipeline to provide a transmission service and the acceptance, transmission and distribution of electricity generated by a third party generator requires the provision of transmission and distribution services. However, third party access to some infrastructure might simply require use of the infrastructure facility together with access to such other services of the provider that make that use possible. Two immediate examples are the use of a roadway by a third party or its contractors and the use of a railway line. 139 Section 44B recognises that the term 'service' means a service provided by means of a facility and includes the use of an infrastructure facility such as a road or railway line. Such third party use is a service by definition and the owner or operator of the facility so used is a 'provider' of the service. The term 'facility' is not defined nor is the term 'infrastructure facility'. However, the criteria in s 44G(2)(a), (b) and (c) and s 44H(4)(a), (b) and (c) indicate the characteristics a facility must exhibit in order for the Council to make a declaration recommendation and the Minister, a declaration. Although Part IIIA does not use terms such as natural monopoly infrastructure or bottleneck infrastructure these sections of the Act make it clear that the Council and the Minister must be satisfied that it would be uneconomical for anyone to develop another facility to provide the service; that access to the service will promote a material increase in competition in a relevant market and that the facility is nationally significant in the sense described in the Act. 140 Notwithstanding the inclusion of the use of a railway line as a service, that use will be excluded by paragraph (f) of the definition if the use is 'the use of a production process'. The term 'production process' is not defined in Part IIIA or otherwise defined in the Act. Kenny J in Hamersley concluded that the term 'service' in s 44B of the Act means 'a series of operations by which a marketable commodity is created or manufactured' [34] and that having regard to the introduction of Part IIIA into the Act as a result of the Competition Principles Agreement between the Commonwealth and the States and Territories of 11 April 1995 in response to the recommendations of the Hilmer Report recommending the adoption of a statutory access regime, the purpose of the paragraph (f) exclusion is to 'protect the viability of investments made by those who had invested in, for example, the processes of production' [46]. Her Honour concluded that the scope of the exclusion would be narrowed and its purpose defeated if all of the 'series of operations' making up the production process must be shown to comprise the use sought by the third party. Therefore, 'use of a production process may not only involve incorporating it into a larger operation; it is also possible to "use a production process" by using (employing, applying, exploiting) part of that process' [51]. 141 Her Honour concluded that 'use of a production process extends, in my view, not merely to the use of the whole process but also to the use of any operation (or step or procedure) that is integral (and perhaps essential or non‑subsidiary) to that process as a whole' [51]; use of the railway line was part of the process of making up the 'recipe' for a particular batch of product; the railway line was both integral and essential to Hamersley'sproduction process; and Hamersley'suse of the railway line 'is an operation upon which other operations necessarily depend for the creation of its export product' [41]. 142 The primary judge disagreed with that construction of paragraph (f) for these reasons (recognising that the primary judge was satisfied the facts in the present case are indistinguishable from those in Hamersley). 143 First, Kenny J placed too much reliance upon dictionary definitions of the term 'production' and 'process' rather than the meaning the terms might bear contextually within Part IIIA of the Act. 144 Secondly, although reference to dictionary definitions of these words is a legitimate starting point, the phrase 'production process' is a composite phrase which exhibits an emphasis upon 'a process of production, being a production process which in itself makes or creates one thing into another, not being so much a series of operations covering relevantly in Hamersley, mine to port operations' [118] [emphasis added]. The primary judge was of the view that if one focuses upon the concept of 'a series of operations' as emblematic of a production process 'one readily moves to the conclusion in Hamersley that the "production process" includes the entire operation from mine to port' [118] rather than the essential character of use of the rail line. 145 The primary judge concluded that the 'most ordinary and natural meaning of the composite term does not comprehend a series of operations'; diverts attention from the use sought by the third party and fails to recognise that the 'railway line in itself is not designed to make or create anything' [119] [emphasis added]. 146 Thirdly, the notion that a production process is a series of operations leading to the creation of a marketable commodity cannot be found in the plain language of the words or dictionary references and is drawn from an analysis of a number of cases which have as their point of statutory focus regimes that are 'so dissimilar that there is no warrant to introduce the concept of "marketable commodity" into the meaning to be given to a "production process"' [120] and [121]. 147 The primary judge concluded that the 'main enquiry' is to define what is a 'production process'. In looking at the most natural and ordinary meaning of the words found in the exclusion in para (f), one is not directed to an enquiry as to what is 'a marketable commodity' [121]. 148 Fourthly, Kenny J, in the primary judge's view, correctly concluded that 'use of a production process most commonly imparts the notion of a user making use of a production process to create the product or products which the process of production is designed to create'. However, that view in the opinion of the primary judge, necessarily leads to a different conclusion that the natural and ordinary meaning of the term 'a production process' requires analysis of whether the use exhibits a process of creation of the product or products to be produced [122]. 149 Fifthly, rather than asking the question of whether the service sought by the third party constitutes the use of a production process, Kenny J asked a once removed question of whether the service sought by the third party 'involves' the use of a production process which connotes the earlier notion that it is sufficient to enliven the exclusion if use of the railway line is one operation (an 'integral (and perhaps essential or non‑subsidiary) [step in] the process as a whole', Kenny J, Hamersley [51]) in a series of operations used by the owner or operator making up a production process. 150 Kenny J drew support for her view of the scope of the phrase 'use of a production process' from the Competition Principles Agreement and the Hilmer Report as the policy instruments identifying, in effect, the vice to be addressed by the introduction of Part IIIA into the Act. The primary judge also relied upon expressions of opinion contained in the Hilmer Report as informing the meaning of the term 'service'. 151 The Hilmer Report recognised that in some markets the introduction of effective competition requires 'competitors to have access to facilities which exhibit natural monopoly characteristics and hence cannot be duplicated economically (essential facilities)', p 239; rail tracks are an example, p 240; the owner of such a facility can reduce service and extract monopoly rents, p 239; and where vertically integrated, an owner might restrict access to facility services in order to condition, eliminate or reduce competition in dependent markets, p 240. The Hilmer Report noted that this is the vice or abuse to be addressed and therefore 'mechanisms to guard against potential abuses of this kind are expected to play a vital part in pro‑competitive reforms in network industries such as electricity, gas and rail', p 239. 152 One solution to this identified abuse was perceived to involve full structural separation of monopoly services from competitive or contestable services, p 241. Another solution involved guaranteeing access to such facilities by 'special legislative regimes', p 242. 153 Although s 46 of the Act contains a prohibition upon taking advantage of a substantial degree of power in a market for a prescribed purpose, the efficacy and utility of the section as an instrument of guaranteed access to essential facilities and thus a solution to the problem of abuse of natural monopoly power was thought to present real difficulties. The High Court subsequently recognised s 46 as an alternative access path but noted the 'notoriously difficult task of satisfying the criteria of liability [under s 46 of the Act]' (NT Power Generation Pty Ltd v Power and Water Authority & Anor (2004) 219 CLR 90 at p 122 [85] per McHugh A‑CJ, Gummow, Callinan and Heydon JJ). 154 More profound limitations were thought to exist in developing an essential facilities doctrine within the scope of the Act analogous to the United States doctrine based on the Sherman Act (Sherman Act 1890 (sometimes cited as Sherman Antitrust Act), 15 U.S.C. 1; 51 Cong. ch. 647; 26 Stat. 209), as to the elements of which, see: Arbitrary Refusals to Deal and the 'Essential Facility' Doctrine, Antitrust Law, Areeda and Hovenkamp, 2nd Ed, Vol. IIIA, 7D‑3; Essential Facilities: An Epithet in Need of Limiting Principles, Professor Phillip Areeda, 58 Antitrust Law Journal p 841; The Essential Facilities Doctrine under US Antitrust Law, Professor Robert Pitofsky, Donna Patterson and Jonathan Hooks, 70 Antitrust Law Journal 443; The Essential Facilities Doctrine and Intellectual Property Rights: A Response to Pitofsky, Patterson and Hooks, Paul Marquardt and Mark Leddy, 70 Antitrust Law Journal 847 (and the authorities discussed in this literature). As to the perceived limitations or constraints upon the utility of the doctrine in the United States itself, Areeda and Hovenkamp (supra) observe at p 173 [771(c)], 'Lest there be any doubt, we state our belief that the essential facility doctrine is both harmful and unnecessary and should be abandoned'. 155 The preferred mechanism recommended by the Hilmer Report was the adoption of a legislative regime conferring an entitlement upon third parties to seek access to essential facilities recognising however the importance of efficiencies to a market economy of a general freedom of contract owners might exercise in their dealings with third parties. The Report recognised the need to 'carefully limit the circumstances in which one business is required by law to make its facilities available to another', p 248; identified criteria of national significance which might aid in that decision and noted that the criteria might be satisfied in relation to electricity transmission grids, major gas pipelines, major rail‑beds and ports 'but not in relation to products, production processes or most other commercial facilities. Whilst it is difficult to define precisely the nature of the facilities and industries likely to meet these requirements, a frequent feature is the traditional involvement of government in these industries, either as owner or extensive regulator', p 251. 156 In making those observations, the Hilmer Committee was, of course, conflating the process of identifying a service that might be susceptible of an application for access by a third party and satisfaction of the criteria which would ultimately lead to the provision of access to a third party. 157 The need to limit the circumstances in which an owner or operator of a business might be required to make its facilities available to a third party was said to be grounded on the need to preserve incentives for investment, p 248. 158 The Hilmer Report does not further deal with the content of the conception of a production process. 159 The Competition Principles Agreement provided for the adoption of statutory arrangements for the provision of access to third parties of services provided by means of significant infrastructure facilities. The agreement reflects many of the central concepts ultimately adopted in Part IIIA of the Act but does not deal with the exclusion from the notion of service of a production process. The Explanatory Memorandum for the Competition Policy Reform Bill 1995 (upon introduction to the House of Representatives taking account of amendments made by the Senate) for the amendment of the Act to introduce Part IIIA noted: 168. An important definition is that for 'service'. It specifies that 'service' means a service provided by means of a facility and includes such things as the use of a road or railway line, the handling or transporting of goods and people, and communications services. The definition of 'service' does not however, include the supply of goods, the use of intellectual property, or the use of a production process except to the extent that such a service is an integral but subsidiary part of the service. 160 The Act was further amended by the Trade Practices Amendment (National Access Regime) Act 2006 effective from 18 August 2006. The Explanatory Memorandum for the Bill in the House of Representatives describes at paragraph 3.16 aspects of the services susceptible of access and the exclusion of a production process. However, that paragraph, like the above paragraph, is merely descriptive of the exclusion and not the content of it. 161 The words 'use of a production process' should be construed in accordance with their ordinary meaning having regard to the context of Part IIIA within the Act; the purpose of the Act and that Part; and the principles reflected in CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at 408 per Brennan CJ, Dawson, Toohey and Gummow JJ and s 15AA of the Acts Interpretation Act 1901 (Cth). In Hamersley, Kenny J concluded that the word 'production' means 'the action of producing, bringing forth, making or causing' (Oxford English Dictionary) and 'the act of producing; creation; manufacture' (Macquarie Dictionary). Her Honour concluded that the word 'process' means 'a continuous and regular action or succession of actions, taking place or carried on in a definite manner, and leading to the accomplishment of some result; a continuous operation or series of operations' (Oxford English Dictionary) and 'a systematic series of actions directed to some end' (Macquarie Dictionary) [32]. Her Honour concluded that the 'term "production process" ordinarily means, I think, the creation or manufacture by a series of operations of some marketable commodity' [32]; the words 'use of' ordinarily import the idea of 'employing, applying, operating or exploiting the thing used' [50]; and 'to use a production process, then, is, in some way to employ, apply or exploit a process directed to production. Most commonly, a user makes use of a production process to create the product or products which the process of production is designed to create' [51]. 162 The proper approach to the construction of the term 'service' in the context of the Act with particular reference to Part IIIA is this. 163 The definition starts with properly identifying the service sought by the third party. The exclusion contained within paragraph (f) asks the question of whether that use is the use of a production process which necessarily asks 'whose production process?' and 'what production process?' The production process is that of the operator or owner of the railway line facility. That entity is the 'provider' for the purposes of Part IIIA. The answer to the question of what production process, involves an analysis of the systematic integrated sequence of operations used by the operator leading to the production or transformation of something. Since a production process is normally deployed for the purpose of producing something capable of supply in a market, the notion that the end point of the process of production or transformation might result in a marketable commodity might well be a matter that warrants analysis in any given case. However, a production process might comprise a sequence of steps that, for example, include drilling and blasting operations; the extraction of ore and waste material from the mine site; the removal of waste; the collection and haulage of ore; crushing and screening; beneficiation, stockpiling (mining operations). Those steps might commence with extraction and conclude with ore in a changed state yet not a marketable commodity. Nevertheless, the sequence of steps might represent a systematic sequence of integrated operations which logically give rise to a factual conclusion that they comprise a production process. 164 That transformed material might then be transported to another place where steps are taken to further transform the ore into another state so as to constitute a marketable commodity or some other state of transformation. Those steps might well on the facts of any given case constitute another entirely separate production process inter‑connected by a rail haulage step that links separate production processes that have a beginning and an end point upstream of a rail link and a beginning and end point downstream of the rail link. Intuitively in this case, one might think steps or processes upstream of a 426 kilometre rail line are likely to be separate and distinct from those conducted at or near the port or end point of the rail link. 165 Paragraph (f) requires an analysis by the trial judge of the sequence of operations integrated or otherwise to determine the content of the production process in a particular case. In this case, the primary judge concluded on the facts that the appellant conducts, manages and operates an integrated and continuous process including all of the steps set out at [109] of these reasons in which the use of rail track infrastructure and the provision of haulage services to each unincorporated mining joint venture is an essential step (see [101] - [121] of these reasons and particularly [120] and [121]). 166 Having identified the production process in question and thus determined its scope and content, the question asked by paragraph (f) is whether the service sought to be used by the third party is the use of that production process. 167 In this case, plainly it is not. 168 Fortescue simply seeks access to a service defined in terms of the use of the railway line and related infrastructure and access to a bundle of services (provided by the appellant as operator of the rail line service on behalf of the joint ventures) to enable use of the railway line to occur (allocation of train paths, monitoring of trains, signalling services, maintenance services and those services identified in paragraph (b) of Fortescue's application set out at [38] of these reasons). 169 The language of paragraph (f) confines itself to the use of a production process. It does not contain words of express extension such as 'or part of a production process'. Prima facie, if a production process is found on the facts to comprise integers A, B, C, D, E and F and the service sought by the third party is the use of integers B and C, the service sought by the third party is not the use of a production process as found. 170 The question is not whether integers B and C (comprising steps in a production process) the subject of the third party's proposed use, is use of a production process on the footing that those steps are shown to be 'transformative' of the ore. If the phrase 'the use of a production process' includes, as a matter of proper construction consistent with the purposes of the Act, a step in a production process, there may be many steps in a production process that are not in themselves transformative but are integral and essential to the production process. If the exclusion is properly enlivened by use of an essential non‑subsidiary step in a production process, it would seem odd as a matter of statutory construction that the step must be transformative. 171 The appellant contends that paragraph (f) as a matter of plain and ordinary language necessarily includes a step in a production process and there is no requirement that the step be transformative. 172 I do not accept that the phrase 'the use of a production process' includes a step in a production process for the purposes of paragraph (f). 173 The appellant contends that such a view deprives the owner or operator of the production process of the exclusion by enabling a third party to secure access to a part of a production process. However, the Parliament defined the scope of the exclusion by the language it chose in the context of Part IIIA as an access code having regard to the objects of that Part and the Act as a whole. There is no reason to conclude that the Parliament did not say what it meant and meant what it said by confining the exclusion to the use of a production process comprising, according to orthodox language, the integers or sequence of operations comprising the production process and not expressly extending the exclusion to a part of that process. A service defined by a third party in terms of a step in a production process will ultimately only become accessible to the third party if the Council is satisfied of all of the s 44G(2) criteria; the Minister is satisfied of all of the s 44H(4) criteria and the ACCC is satisfied having regard to the provisions discussed earlier that access ought to be provided to the third party at all. 174 The construction that use of a part of a production process does not constitute use of a production process is additionally informed by this consideration. In dealing with what might be regarded as the first limb of the service definition, the Parliament expressly considered the significance within Part IIIA of the circumstance that a part of the service provided by means of a facility might be able to be developed by another person. The Parliament put that consideration in this way in s 44F(4), 'In deciding what recommendation to make, the Council must consider whether it would be economical for anyone to develop another facility that could provide part of the service'[emphasis added]. Similarly, the Parliament in s 44H(2) said, 'In deciding whether to declare the service or not, the designated Minister must consider whether it would be economical for anyone to develop another facility that could provide part of the service' [emphasis added]. 175 Since the Parliament has expressly turned its legislative mind to the question of a part of a service and the implication of that conception for Part IIIA, it is unlikely as a matter of construction that the Parliament intended the notion of a part of a production process to be brought within the concept of the use of a production process for the purposes of the exclusion. The Parliament chose not to do so by express language and it seems that Parliament's election not to introduce words of express choice indicate that the production process exclusion is to operate only in circumstances where the service sought by the third party is the use of the integrated sequence of operations comprising the production process as found on the facts and not any one of those steps. That choice of words by the Parliament necessarily limiting the scope of the exclusion is consistent with giving full voice to the broad inclusive scope of a service as contemplated by the first limb of the definition and is consistent with the statutory checks and balances brought to bear in determining whether such a service might ultimately be made the subject of an access declaration and then reduced to terms by arbitration (if necessary). It is also consistent with a purposive approach to construction of the term 'service' and the role and meaning of the words of exclusion having regard to the vice or potential abuses sought to be avoided or cured (see [151] - [156]) of these reasons by rendering a service provided by particular infrastructure (including rail line infrastructure) subject to an access regime within an Act the purpose of which is, in part, to enhance the welfare of Australians through the promotion of competition. It is also consistent with the internal structure of the definition with a broad inclusive service, limitations upon the scope of the term by the words of exclusion relevant here (without reference to a part of a production process) and further qualified by an exception that nevertheless brings a use of a production process within the scope of a service if the use of the production process is an integral but subsidiary part of the service. This internal structure reinforces the paramountcy of the first limb of the definition consistent with rendering significant natural monopoly infrastructure susceptible of an access application to the Council for a declaration recommendation. 176 Such a construction is said to lead to anomalous results concerning a production process in conventional applications such as a factory, plant or smelter as a third party would then be able to configure a service being the use of a step in an industrial production process and secure access. Examples might include the movement of goods or apparatus on a conveyor belt, the movement of material by means of a gantry or some other apparatus over a defined distance, 200 ‑ 500 metres, for example, within a steel mill or a system for the transportation of, for example, anodes (carbon material) along a long line of electrolytic reduction cells in an aluminium smelter to enable anodes to be replaced. Each of those steps constitutes a step in an integrated sequence of operations and none of them are transformative. Each of them might then be said to be a service susceptible of access to a third party having regard to whatever possible broader use might be made of such use in the context of the third party's operation. 177 It seems to me that the conception of an exclusion from a 'service', of 'the use of a production process' recognises that a particular production process may well be made up of a highly integrated and inter‑dependent set of steps contained within a particular physical environment such as a factory, plant or smelter such that a service sought by a third party framed in terms of use of the above postulated exemplars of the problem would constitute the use of the production process. 178 However, the reason that result might follow is not because of a general rule of construction of paragraph (f) that use of a part is use of the whole but rather that use of a step forming part of a highly integrated and inter‑dependent set of steps in a particular production process may, upon proper analysis of the facts, only be consistent with the use of a production process predominantly because use of that step is likely to be so invasive and disruptive to the operator's use of the integrated production process (or other parts of the production process) that the third party in substance and effect is, through that use, engaged in the use of the production process. To extrapolate from that class of case to a general proposition that use of a production process involves the use of any part (even an essential part) inverts the question asked by paragraph (f). That question is whether use of the service is the use of a production process. Not every use of a part will satisfy the statutory test of whether the third party use is use of a production process. The question always is, on a proper forensic analysis of the very particular facts of contended use by the third party, does that use constitute in substance and effect the use of the production process? The question will always be determined on a careful analysis of the facts of each particular case and hypothetical analogues of the case in question will never reveal the answer to the question posed in the actual controversy. Selecting hypothetical analogues in an attempt to try and find a ubiquitous answer for all cases is dangerous and confusing. The point of principle is that the question asked by paragraph (f) is always the same question and is to be answered on the facts of each case rather than by reference to a general rule of construction that use of a production process necessarily includes use of a part of a production process. The starting point required by the language of paragraph (f) is that use of a production process is the use of the sequence of operations comprising the production process as found. 179 In this case, the service sought by Fortescue is not the use of the production process. Might the use of the rail track and associated services involve that class of case where there is such a highly integrated and highly inter‑dependent sequence of operations such that use of the track and associated services can only be consistent with the use of the production process? In answering that question, it is important to look to the actual facts of the production process. In this case, the production process involves a set of operations spread over a very significant distance. That part of the production process Fortescue seeks to use is a 295 kilometre section of the 426 kilometre Mt Newman Railway Line and a 17 kilometre section of the 210 kilometre Goldsworthy Railway Line and related track services. Having regard to all of the findings of fact noted at [101] to [121] of these reasons, Fortescue's use is not of the kind or character having regard to the production process in question that use of that part, on the facts, is use of the production process.

The evidence of the economic experts 180 As to grounds 9 and 10, the primary judge noted that no party asserted that the term 'production process' has a technical or specialised meaning in economics; the words must be construed in accordance with their most ordinary and natural meaning; and the phrase 'use of a production process' must be so construed against the background of a purposive approach to interpretation. The parties sought to adduce oral and written evidence from economic experts: Mr H I Ergas on behalf of the appellants; Mr G J Houston called by Fortescue and Professor P G P Rey called by the Council. Mr Ergas and Professor Rey sought to give evidence of the meaning of the term 'production process' from an economic perspective; formulate an economic test for the boundaries of the term and express an opinion as to those facts and matters that would be relevant in determining whether the rail 'services' constitute a production process within the meaning of the economic construct defining the term. Mr Houston sought to give evidence of an economic test of a 'marketable commodity' and express an opinion as to the facts relevant in determining economic separability of the various stages of the appellant's iron ore operations. 181 The appellants contended that the evidence of all economists was ultimately inadmissible in exposing an understanding of words of ordinary meaning and that the application of the definition of the term 'services' to the facts, is simply not a matter for economists. The Council contended that economic evidence is admissible in order to provide 'context' to the task of interpreting Part IIIA of the Act; the Act is an economic statute; and economic theory and economic literature can properly be considered in the statutory construction task. 182 Fortescue placed reliance upon the relevance of the economic evidence to the question of the economic distinction between above and below rail services. 183 The primary judge correctly rejected on grounds of relevance the admissibility of the economic evidence and expert opinions as to the 'preferred interpretation or [an explanation of] how the words of a statute would be expected to be applied to the circumstances of the case'. The appellants contended that the economic evidence was irrelevant to a contextual explanation of the purposes of Part IIIA or the 'production purpose' exclusion; Professor Rey's observations can be seen to derive from extrinsic materials available to the court; and no explanation of those materials from an expert is either required or admissible. The primary judge reached these conclusions. 172. … However, I have found helpful the discussion of the economic experts as to the nature and the context in which Part IIIA is to operate, although in this regard this has been no more than an elaboration of the relevant legitimate extrinsic material referred to me by the parties. I see nothing inappropriate in the court having regard to and admitting into evidence expert evidence to inform itself as to the nature of and the context in which Part IIIA is to operate, just as it would be appropriate for the court to consider any economic writings on the subject. …By admitting the expert evidence for this purpose, the material is presently in evidentiary form and all the parties know precisely the extent of the material that is before the court and that which is to be considered by the court. 184 In so concluding, the primary judge relied upon observations in Boral Besser Masonry Ltd v Australian Competition and Consumer Commission (2003) 215 CLR 374 at 454 [247]; Re Michael; Ex parte Epic Energy (WA) Nominees Pty Ltd (2002) 25 WAR 511 at 544 [107]; Visa International Service Association v Reserve Bank of Australia (2003) 131 FCR 300 at 439 [665] and Woodside Energy Ltd v Commissioner of Taxation 155 FCR 357 at 373 and 374 [52] - [55]. 185 The appellants contend on appeal that the evidence of the economic experts is inadmissible as irrelevant. The evidence was admitted on the basis of contextual elaboration of the extrinsic material. The evidence is relevant if it is evidence that if accepted could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding (Evidence Act 1995 (Cth), s 55(1)). Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed (s 76(1)) although, if a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge (s 79). The normal role of an expert is to give an opinion based on clearly identified facts (Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705), almost invariably assumed to be the facts, on the footing that those facts provide a proper foundation for an opinion within the demonstrated discipline or field of specialised knowledge of the expert witness. Although s 79 of the Evidence Act seems to operate on the footing that the opinion of a person wholly or substantially based on specialised knowledge is not precluded by s 76(1) in the absence of proven foundation facts (Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd (2002) 55 IPR 354 [10]; Neowarra v Western Australia (No. 1) (2003) 134 FCR 208), little or no weight will be given to such an opinion (Ramsay v Watson (1961) 108 CLR 642) although the central point may simply be the question of admissibility, not weight (HG v R (1999) 197 CLR 414 at [39] - [44]; Trade Practices Commission v Arnott's Ltd (No. 5) (1990) 21 FCR 324 at 327-330). That question does not arise here. In this case, the experts did not seek to offer an economic opinion related to disputed or undisputed facts probative of a matter in issue. They sought to offer an historical or contextual explanation as an elaboration of extrinsic material going to Part IIIA of the Act. It is difficult to see how that evidence is truly admissible except perhaps in that unusual category of 'expert non‑opinion evidence' descriptive of a relevant element of the economic discipline concerning the evolution of economic concepts of access to natural monopoly infrastructure, without offering any opinion about facts in issue. In any event, the material is capable of being received by the court and considered by force of Order 10, rule 1(2)(j) of the Federal Court Rules, by way of a submission rather than admissible evidence. 186 The reception of the material did not, in any event, affect the result. 187 As to ground 12, the primary judge refused to accept the appellant's submission that it had only one overall production process for the purposes of producing all of its iron ore products. However, by [141] ([121] of these reasons) the primary judge concluded that the appellant conducts one production process for each of the different products and in that sense there is more than one production process. However, the content of the process is 'still from mine to port and involving the use of the railway line' [141]. The Council on appeal took the position that although there are a number of evident production processes and no express finding of a single production process, the findings of the primary judge 'obviously … would be consistent with … a single production process'. 188 Fortescue makes two submissions that should be mentioned. The first is that the decision of Kenny J in Hamersley can be distinguished from the facts of the present case on the footing that in this case a 'marketable commodity' is brought into existence by the appellant upon the completion of a sequence of operations constituting a production process upstream of the rail link in any event as products capable of being loaded direct to ship are created at the end of that process. That may be true but the findings of fact recognise that there is a continuous production process for each of the commodities which commences at the mine and concludes at the port. The notion of a marketable commodity is but one matter to be considered in determining the boundary of a production process. The findings of the primary judge were open on the evidence. 189 The second matter concerns the utility of the distinction between an 'above rail' or 'below rail' service. In this case, Fortescue, in some respects, also seeks to obtain use of the rail line just as BHP BIO has access to and use of the railway line. The appellant has access to and use of the rail track from the unincorporated joint venture lessees of the Mt Newman Railway Line and the Goldsworthy Railway Line (below rail use) for the purpose of conducting rail haulage transportation services (above rail services) for each of the unincorporated mining joint ventures based on a tolling fee [118] to [121] of these reasons. The primary judge found that the use of the rail line in each case is an essential step in a production process from mine to port [141] and such use comprehends both the above and below rail services. To the extent (wrongly in my view) that relevance is said to be found in focusing upon the rail use and haulage step within the production process and isolating whether that step is itself a transformative step, the distinction between above and below rail services seems ultimately not to the point when the third party seeks not just use of the track but, in addition, a bundle of services to which it needs access in order to make the contended use of rail line infrastructure of any utility, and in particular, services such as the train control systems, communications systems, signalling systems, maintenance and protection systems and other such requirements.

Some further observations 190 I have now had the benefit of reading the draft observations of Finkelstein J and simply wish to make these comments. 191 In this appeal, the findings of fact of the primary judge are not challenged (Mr Myers (the appellant) Tp1, L22; Mr O'Bryan (Fortescue) Tp37, L35) except in two respects to be mentioned shortly. No party advances a proposition that the findings of fact of the primary judge were not open on the evidence (see [101] - [122] of these reasons). Nor does any party seek to set aside or disturb any finding of fact. The two respects are these. First, the appellant says the primary judge should have found there is one production process deployed by the appellant from mine to port not a separate production process for each product from mine to port. Secondly, Fortescue says in the alternative to its primary contention as to the correctness of the decision at first instance, that in respect of some of the appellant's products a 'marketable commodity' is produced upstream of the railing of iron ore with the result that a 'production process' for those particular products is exhausted prior to railing. Argument was however advanced as to the precise content of the findings of the primary judge. Part of the reason, no doubt, why there is no challenge to the findings of fact is that Fortescue takes the position that it does not matter whether there is one production process or several production processes 'maybe up to 20 if you wanted to atomise the processes' (Tp 42, L 36‑47; Tp 43, L 1‑7) because the nub of the matter is that 'railing produces nothing'. 192 Fortescue's primary contention that the reasoning of Middleton J is 'absolutely correct' is made against the background of the finding that the appellants 'integrated and continuous process' of production of iron ore products includes the 15 activities described at [65] and [66] of his Honour's reasons and the finding that in order to meet 'customer's expectations', the appellant conducts an 'integrated approach to its mining, rail and port operations … as a whole from mine to port' so as to serve its 'overall objective' of producing its products to the specification, grade and quality required by customers and on time. That mine to port approach includes a railway step 'essential … to the creation of the finished product' integrated through use of the CSMS program and each 'production process' for each of its six products is 'still from mine to port and involving the use of the railway line' (see the findings noted at [121] of these reasons). The point of distinction made by the respondents is that whilst none of these findings are challenged, it remains open to conclude that one or more (perhaps many) of the steps comprising the integrated sequence of steps from mine to port each constitute a discrete 'production process' some of which are linked by a rail line that in itself produces nothing. The unchallenged findings described above however seem clearly enough to be findings of an integrated production process from mine to port for each of the appellant's six products arising out of a detailed analysis of all of the evidence going to the production steps and processes deployed by the appellant taking account of the degree of integration of those steps along a continuum from mine to port particularly having regard to the implications of such a finding in light of the reasoning in Hamersley based upon facts thought by the primary judge to be indistinguishable from those before him. The primary judge has found a 'production process' for each product extending from mine to port including the use of the railway line although because the rail step within that production process is non‑transformative, no use of a production process arises. 193 Consistent with no challenge to the essential findings of fact, counsel for the appellant in addressing the questions on appeal, did not refer the court to any part of the appeal book other than the judgment of the primary judge. Similarly, counsel for Fortescue referred to only one document (apart from the judgment of the primary judge) consisting of a schematic plan of the sequence of process steps in evidence at the hearing undertaken from mine to port including the rail step, by the appellant, extracted from the evidence. Counsel for the Council referred to no part of the appeal book other than the judgment. 194 Since there is no challenge to the essential findings of fact but rather a question of what findings were made by the primary judge; the proper approach to the construction of the term 'service' and the production process exception; and the application of those terms to the facts as found, it seems to me that the exercise of judicial power in the disposition of the appeal and thus the quelling of the controversy, does not involve a forensic analysis of the many and varied elements making up, in the broad, the notions of a mining operation, extraction of ore, the production cycle, ore concentration, ore dressing, milling, sorting, beneficiation, concentration of fines, blending, sintering, pelletising, haulage and other steps for the purposes of identifying other findings of fact that either ought to have been made or might have been made by the primary judge examining the evidence or that evidence together with other evidence which might have been led. 195 It also seems to me difficult to identify a proper basis upon which recourse might be made in the exercise of the appellate jurisdiction to commentaries external to the record on factual matters in controversy at the hearing by authors of texts dealing with these processes such as Hartman and Mutmansky, Introductory Mining Engineering, 2nd Ed (2002); the BHP Recreation Review, Vol. XII, No. 1 (1934); Wills' Mineral Processing Technology, 7th Ed (2006) and the three works quoted by his Honour authored by J Gilchrist, C Bodsworth and R D Walker respectively. It is not suggested this material falls within s 15AB of the Acts Interpretation Act 1901 (Cth). 196 Such material or like evidence by industry participants needs to be adduced in evidence before the primary judge and tested and, where relevant would, no doubt, be the subject of expert evidence informing findings of fact on all of the evidence before the primary judge. 197 The only challenge to a finding of fact (apart from the appellant's contention that the primary judge should have found one production process not a separate production process for each product from mine to port) is found in ground 4 of Fortescue's Notice of Contention on the footing that, in the alternative to the primary contention, in respect of some of the appellant's products, a 'marketable commodity' was produced upstream of the railing of ore with the result that a 'production process' for those particular products was exhausted prior to railing. Fortescue says therefore that the primary judge wrongly concluded, in relation to all of the appellant's products, that a production process extends from the commencement of mining operations at the relevant mine and ends when the final product is created at the port. For some products, Fortescue says the production process does not so extend because a finished or marketable commodity was brought into existence upstream of the rail step. However, the findings of the primary judge (see [121] of these reasons) that the appellant, although not deploying only one production process for the purpose of producing all of its iron ore products, nevertheless deployed 'more than one production process [having regard to the different products] but still from mine to port and involving the use of the railway line', was plainly open on the evidence. 198 His Honour also considers that certain anomalies might arise out of the notion that a production process is only relevantly used if all of the integers comprising that process are shown to be engaged subject to the qualification noted at [177] - [178] of these reasons. His Honour refers to the consequences for operators or owners of vertically integrated facilities such as oil fields and refineries and some other examples including electricity infrastructure. It should be remembered that vertically integrated ownership or control of infrastructure assets does not mean the functional activity undertaken at each step of a vertical chain is integrated especially in the sense contemplated by the primary judge in considering the application of the notion of a production process to the facts before him. These examples are apt to be misleading analogues in the absence of a very detailed understanding of all of the relevant facts bearing upon the particular question to be addressed in the context of those facts. No useful assumptions can be made in the abstract. In addition, a number of these industries because of their very particular structural circumstances or arrangements are governed by industry specific statutory access regimes such as those governing gas pipelines reflected in the Gas Pipelines Access Law based upon legislation passed by the Commonwealth and States and Territories providing for the National Third Party Access Code for Natural Gas Pipeline Systems and the statutory arrangements regulating the National Electricity Market ('NEM') in relation to generation, transmission and distribution of electricity. 199 Having regard to all of these considerations, each appeal must be dismissed with costs. I certify that the preceding one hundred and thirty-seven (137) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

Counsel for the Appellants: A Myers QC P Crutchfield M O'Bryan

Solicitor for the Appellants: Blake Dawson Waldron

Counsel for the First Respondent: C Scerri QC I Stewart

Counsel for the Second Respondent: N O'Bryan SC J Giles

Solicitor for the Second Respondent: DLA Phillips Fox

Date of Hearing: 30 April 2007

Date of Judgment: 5 October 2007