Chronology
21 The relevant chronology of events is as follows.
22 In July 2012, Rio Tinto applied for a temporary licence.
23 On 6 July 2012, CSL submitted a notice in response to that temporary licence application. The voyage numbers were 11207006003, 11207006004, 11207006005 and 11207006006.
24 On 10 July 2012, by email Rio Tinto asked CSL for its freight indication for the cargoes CSL had challenged with the assumption of using CSL Brisbane. The email said: "As you know, MV CSL MELBOURNE is unsuitable for Bell Bay due to her LOA so we expect you to withdraw your challenge on the early October cargo (voyage number 11207006003)." This information was not considered by the delegate dealing with Rio Tinto's application to vary the temporary licence with which this application for judicial review is concerned.
25 By email later that day, 10 July 2012, CSL said that it would not be withdrawing its notice in response to the voyage number 11207006003 on the CSL Melbourne. "CSL acknowledge that there may be an issue with the length overall (LOA) of the vessel. However, as you know we have previously used this vessel for a Bell Bay discharge and dealt with safe access from the ship to the berth. We maintain that the CSL Melbourne can carry 25,000mt +/- 5% without loading in hold #1." CSL then went on to indicate rates for both the CSL Melbourne and the CSL Brisbane voyages of $29.70pmt. This information was not considered by the delegate dealing with Rio Tinto's application to vary the temporary licence with which this application for judicial review is concerned.
26 By email on 11 July 2012, CSL said it was not in a position to be able to revise its freight rate quoted the day before. It said the rate reflected the high costs of operating an Australian vessel on the Australian coast with Australian crews. The email continued:
We appreciate our good working relationship with Rio Tinto and we understand your concerns about the high cost of Australian shipping as compared to current foreign flag rates.
Our quoted freight rate is in accordance with the offer made to Pacific Aluminium for the carriage of Alumina from various Australian ports to Bell Bay from 2013 onwards.
We maintain our rates as quoted below. I would also like to confirm that this rate is for 4 cargoes, including the end December cargo.
The writer said she would forward a further response regarding the safety issue on the CSL Melbourne later that morning. This information was not considered by the delegate dealing with Rio Tinto's application to vary the temporary licence with which this application for judicial review is concerned.
27 Pacific Aluminium on behalf of Bell Bay Aluminium (BBA) as an affected third party under s 33 of the Act wrote a letter dated 11 July 2012 to the Minister. It said that small changes in cost per tonne could have significant impact on total operating costs. The letter also referred to the reliability of alumina supply as a central concern. It said that BBA was concerned that CSL had only one vessel which was able to perform the charters then under consideration and noted that in the past the charter services provided by CSL had been unreliable. The letter said that BBA did not have the logistical infrastructure or operational flexibility to adapt to that unreliability due to its current financial position and distance from its alumina source.
28 Rio Tinto sent an email on 11 July 2012 to the then delegate putting a number of matters by reference to s 34 of the Act and stating, in summary, there were significant grounds referred to that were both relevant and more than simply reasonable requirements of a shipper, "rather they are commercial imperatives for PACAL to maintain its business operations."
29 On 23 July 2012, Rio Tinto sent an email to the then delegate saying that the CSL Melbourne was considered by the terminal operators (Pacific Aluminium) to be far too big for the Bell Bay Terminal facility number one berth and stating in some detail the basis of that view. The letter attached plans providing a schematic of the berth in question, the mooring standard and associated guidelines and a checklist completed by BBA setting out the operational parameters governing a vessel's acceptance. In addition there was attached the Mooring Guide to Masters.
30 On 24 July 2012, Rio Tinto's email of 23 July 2012 and its attachments were forwarded to the Deputy CEO of the Australian Maritime Safety Authority (AMSA).
31 Also on 24 July 2012 the then delegate forwarded to CSL by email the material provided to her by Rio Tinto by email on 23 July 2012. The delegate said she was providing CSL with the opportunity to respond to this material.
32 By email dated 25 July 2012, CSL made a submission to the then delegate responding to the concerns of the shipper, Rio Tinto, on the basis that there were two issues in relation to the CSL Melbourne, vessel LOA and the subsequent safe access to the vessel.
33 As to the vessel LOA issue, CSL said that shippers had accepted vessels with an LOA of over 172 metres. A checklist for those vessels was attached which was said to show that each vessel was approved on the basis that hold number 1 would not be loaded. It was said the CSL Melbourne discharged 26,250mt of alumina at Bell Bay in August 2010 and cargo was not loaded in hold number 1. The vessel was rejected on the basis of RightShip, not LOA. The email attached a copy of the current RightShip rating. The email attached drawings showing the position of the CSL Melbourne on the wharf leaving either hold number 1 or hold number 5 empty. It was said that Rio Tinto guidelines showed the berth box to be 330 metres: the East dolphin was 109 metres from the edge of the berth, so the CSL Melbourne overhanging by a maximum of 59 metres should present no problems for safe mooring.
34 As to the second issue, safe access to the vessel, the email said that the CSL Melbourne had an aft gangway and if that gangway did not provide safe access to the wharf the vessel carried a ship's brow that could be placed anywhere along the wharf/ship's side to provide safe access to the vessel at all times.
35 This response was taken into account by the delegate considering Rio Tinto's application to vary the temporary licence, to which this application for judicial review relates. Unlike Rio Tinto's email to which it responded, it was not forwarded to the Deputy CEO of AMSA.
36 The temporary licence, number 0008TL0001, was issued to Rio Tinto and commenced on 30 July 2012.
37 On 6 August 2012, Rio Tinto made an application for variation under that temporary licence. The variation type was in respect of "new matters". Five voyages were specified (see s 51(2)(a) of the Act).
38 In each case the category of trade was "dry bulk"; the cargo description "alumina"; the load port was Gladstone; the discharge port Bell Bay; the volume amount 25,000 metric tonnes; and the expected loading dates as I have set out at [3] above.
39 On 8 August 2012 the Department notified relevant persons of the application, pursuant to s 30 of the Act.
40 By email sent on 10 August 2012, CSL notified the Department that it wished to submit a notice in response to the temporary licence application.
41 In relation to voyage number 1207006003, CSL said it had a General Licence Vessel available to perform the voyage and formally objected to the issuance of the temporary licence to Rio Tinto with respect to that voyage. CSL advised that the CSL Melbourne could perform the voyage. The vessel was an Australian licensed ship. A Transitional General Licence application had been lodged for the CSL Melbourne dated 8 August 2012. The CSL Melbourne was able to load at the Port of Gladstone and able to discharge at the Port of Bell Bay. Pursuant to s 34(3)(b) of the Act, CSL confirmed that the General Licence Vessel was equipped to carry the cargo as specified in the temporary licence application. The vessel was classed to and able to carry alumina; classed to and able to carry dry bulk cargo and classed to and able to load, carry and discharge 25,000 metric tonnes of alumina. Pursuant to s 34(3)(c) of the Act, CSL confirmed that the cargo could be carried in a timely manner on the General Licence Vessel.
42 In relation to the other three voyages presently in dispute, CSL advised that the CSL Brisbane could perform those voyages. The CSL Brisbane was an Australian licensed ship and also the subject of an application for a Transitional General Licence dated 8 August 2012. The CSL Brisbane was able to load at the Port of Gladstone and able to discharge at the Port of Bell Bay. Pursuant to s 34(3)(b) of the Act, CSL confirmed that the General Licence Vessel was equipped to carry the cargo as specified in the temporary licence application. The vessel was classed to and able to carry alumina; classed to and able to carry dry bulk cargo and classed to and able to load carry and discharge 25,000 metric tonnes of alumina. Pursuant to s 34(3)(c) of the Act, CSL confirmed that the cargo could be carried in a timely manner on the General Licence Vessel. Pursuant to s 34(3)(d) the Act, CSL confirmed that the vessel met the requirements of the shipper.
43 By email dated 13 August 2012 the General Manager, Shipping Policy Reform, Department of Infrastructure and Transport (the General Manager) informed Rio Tinto under s 32 of the Act that a notice in response from CSL had been received in relation to five voyages, including the four the subject of the present application to the Court. That email forwarded to Rio Tinto most of the text of the notice in response by CSL. The email from the General Manager also said that under s 32 of the Act, Rio Tinto had two business days to undertake negotiations with CSL and notify the delegate of the outcome of the negotiations.
44 By email dated 14 August, Rio Tinto asked CSL for its freight indication for the cargoes it had challenged. The email stated: "we expect the same to be in line with the market." The email also stated that the CSL Melbourne was unsuitable for Bell Bay due to her LOA and Rio Tinto expected CSL to withdraw its challenge on voyage number 11207006003.
45 On 15 August 2012, CSL responded to Rio Tinto's email saying that at that stage the CSL Melbourne would not be in position to meet the dates of the October shipment. CSL provided freight rates for the CSL Brisbane voyages.
46 By email dated 16 August 2012 Rio Tinto informed the General Manager that it had concluded negotiations with CSL.
47 The relevant parts of this email were as follows, including the indication from CSL for 2012 for these cargoes of AUD 29.70/Mt (flat) + BAF (at $1.87/Mt as of today) total freight $31.57 with demurrage AUD 35,000/HD. This indication of rates compared to 2010 rates of AUD 17.30/Mt (demurrage AUD 24,500/HD) and 2011 rates of AUD 18.20/Mt (demurrage AUD 14,000/HD):
1) Of the 5 cargoes applied for under the application, CSL have maintained their challenge for the last 4… [1207006004, 1207006005, 1207006006 and 1207006007] proposing to use the MV CSL BRISBANE.
…
2) Their offer in challenge remains as per the previous challenge in relation to application: 11207006, which can be summarised as follows:
3) [here quoting CSL's email of 15 August 2012 as to freight rates per the CSL Brisbane voyages]
4) This offer in challenge for the four cargoes listed below is unacceptable to the applicant.
5) It is unacceptable for the same reasons previously stated in relation to the challenge CSL made to the voyages listed in our application for variation to Temporary licence 008TL0001, which are repeated here for ease of reference and which should be read to apply to voyages 1207006004-7 under the current application.
…
6) In responding to the challenge from CSL and in asserting our request for a variation for new matters to be included in our temporary license we repeat the submissions we have made previously in relation to our application for variation to Temporary license 008TL0001. In particular in reference to the economic issues that arise in relation to CSL's offer in challenge, we comment as follows:
This is a comparison between CSL's initial offer in challenge (as per item 3 above) and "international" Owners' offerings on Bell Bay fixtures over the last 3 years. This comparison only applies to specific cargoes (outlined below).
…
[Here in relation to 2010, 2011 and 2012 there were set out the rates fixed with or indicated by CSL compared to other offers/indications from Owners over a range which for 2010 was USD 17 to USD 20s+/Mt; for 2011 was USD 17 to USD 18.50/Mt; and for 2012 was USD 17.50/Mt and USD 16.35/Mt. Demurrage rates were also compared.]
7) What is significant here is the change or uplift in the challenger's freight rate. Under the permit system its rates were almost competitive, under the [sic] this new license system as a GLO, it appears to believe that it holds a more dominant position. As can be seen from the previous offers CSL were more than capable of being market related with their pricing, yet this time under these challenges they have simply refused to move, even the second time around. These significantly higher rates are unacceptable to the applicant and are certainly not in the interests of the shipper and cannot be performed at that [sic] the quoted price for reasons that the shipper will make plain under submissions made pursuant to Sect 33 of the Act (see attached letter from PACAL dated 16 August 2012).
There was also reference to Rio Tinto seeking to insert a liquidated damages clause into any proposed charterparty with CSL. CSL refused to accept such a clause, leaving Rio Tinto exposed to an unacceptable risk that previously did not exist. The email continued:
9) A failure to find appropriately priced freight will compound the already difficult situation at Bell Bay, highlighted in the attached letter from PACAL, threatening its future viability. This would seem contrary to the purpose of the new legislation as it will not enhance in any way the encouragement to [sic] nor use of, GL vessels.
10) For ease of reference we have attached our submissions made in relation to the first application for a temporary license set out in our e-mail dated 11 July 2012, which we would ask you to read as applying to this response from CSL and our application for a temporary license for the 5 voyages above.
I interpolate that what is within s 32(2)(b) is the outcome of the negotiations. It is not clear which parts of the 16 August 2012 email are to be so described. I do not accept the applicant's suggestion that the outcome should be described in one word, either "failed" or "succeeded". In my view notifying the Minister of the outcome of the negotiations would extend to a report of why the negotiations succeeded or failed. On that approach paragraphs numbered 1 (including the table), 2, 3, 4 and possibly 5 of Rio Tinto's email of 16 August 2012 would describe the outcome. The balance of the email seems to me, on the scant evidence limited to the terms of the document, to be submissions rather than a notification of the outcome of the negotiations. Thus I do not accept the more expansive approach of the respondents. The only possible relevance of the point is to the issues of procedural fairness. But I observe that the basic scheme of the Act is that the notification of the outcome of negotiations under s 32(2)(b) may enable a decision to be made within the principal time limits in s 34(4) or s 54(1): to the extent that material is submitted outside that notification, being material not limited to the outcome of negotiations, additional procedural fairness obligations are more likely to arise.
48 The attached letter from Pacific Aluminium dated 16 August 2012 was in support of the submission by Rio Tinto acting as the agent for Pacific Aluminium. It said that BBA Aluminium, a wholly-owned subsidiary of Pacific Aluminium, was an affected third party under s 33 of the Act. The letter stated that in rejecting the offers put forward by CSL to date, and in addition to the logistical and safety issues raised in Pacific Aluminium's letter of 11 July 2012, BBA had been considering a number of key impacts which, it said, on the basis of the offers put forward by CSL to date, would add at least AUD $4,000,000 to the annual cost of production on freight alone. It specified the percentage of BBA's controllable costs represented by these additional costs together with $4,000,000 in additional costs already being absorbed by BBA since the loss of a direct international container service from the Bell Bay Port. The letter annexed two Figures dated July 2012, one being the cash costs of smelters in Australia and the other being the London Metal Exchange aluminium price history in Australian dollar terms.
49 By email dated 17 August 2012, the General Manager wrote to Rio Tinto asking for clarification of the freight rate being offered by CSL to Rio Tinto in regard to the four voyages 1207006004 to 120706007.
50 Rio Tinto replied by email on the same day confirming the rates offered by CSL set out in Rio Tinto's notification of the outcome of the negotiations dated 16 August 2012, which I have set out above. The email had as an attachment an email from July 2010 dealing with the then rates offered and agreed. In turn that email included a number of attachments.
51 By email dated 22 August 2012, the General Manager wrote to CSL requesting further information from it. It asked about Rio Tinto's advice that CSL had refused to insert a liquidated damages clause into the charter agreement for the carriage of the cargo for the four voyages specified. CSL responded by email dated 23 August 2012. It said that if, for whatever reason, there was an unexpected delay to a GL vessel and an alternative GL vessel could not arrive within the nominated laycan (laydays and cancelling), CSL would notify Rio Tinto and offer to source a foreign flag vessel and carry the cargo under the CSL Temporary Licence. This would be done at commercially acceptable terms to both parties, taking into account the use of a foreign flag vessel.
52 By email dated 22 August 2012 the General Manager wrote to Rio Tinto that it was her intention to seek advice from CSL on their proposed freight rate offer to Rio Tinto and the reasons for the 69 percent increase since the price offered in September 2011. The General Manager asked Rio Tinto to confirm that she could share the 2010, 2011 and 2012 prices with CSL.
53 Rio Tinto replied on 23 August 2012 agreeing to that course provided there was no obvious reference made to the identity of the shipowner/carrier. The email said it was a matter of public record which ships undertook those voyages. Rio Tinto would prefer that CSL obtain that information themselves as Rio Tinto were contractually obliged to be circumspect around sharing commercially sensitive information.
54 The General Manager in turn replied, by email a few minutes later, saying that it was her intention to remove all references to the international rates offered and by whom, and focus on why CSL had increased its own rate by 67 percent in one year.
55 By email also dated 23 August 2012, Rio Tinto said to the General Manager that it was surprised CSL had not already shared with the General Manager the rates they were prepared to offer and did in the end take when doing this business last time. The email continued:
If they weren't going to give that information to you, I see no reason why we shouldn't; indeed, it's the foundation of our argument.
They were 'relatively' competitive under the old regime, we don't understand why they still can't be or what might have changed? The difference then was only $1 - $2 different on the freight rate, now it's upward of $12.
The demurrage rate is also cause for concern.
56 By email dated 23 August 2012 the General Manager asked CSL to confirm that the CSL rates advised by Rio Tinto, as notified to the Department, were correct and, if they were correct what factors had caused the increase in CSL's current offer over the rates agreed with Rio Tinto in 2010 and 2011.
57 By email dated 27 August 2012, CSL responded, making some corrections. In relation to the rates agreed with Rio Tinto in 2010 and 2011, CSL said that those cargoes were considered trial cargoes and therefore CSL had been willing to compromise on the freight rate and corresponding revenue return. However, the email continued, on the CSL Brisbane voyage CSL made a cash loss of A$300,000, not including capital return and depreciation on the vessel, and on the CSL Melbourne voyage CSL made a loss of A$200,000, including capital return and depreciation. CSL added that the freight and demurrage rates as offered to Rio Tinto during negotiations for the temporary licence cargoes were reflective of owning and operating General Licence Vessels on the Australian coast.
58 By email dated 3 September 2012 the General Manager wrote to CSL requesting further information about the status of the 2010 and 2011 voyages from Gladstone and Bunbury respectively, to Bell Bay referred to in CSL's previous email. The General Manager asked whether Rio Tinto was made aware of the trial status of those voyages and that CSL was compromising on its freight rate. CSL responded by email dated 5 September 2012, relevantly as follows:
Both voyage negotiations were conducted on a spot basis relative to market. Whilst Rio Tinto understands the real costs of Australian shipping, they made it clear during the spot negotiations that they required CSL to be close to market rates in order to conclude negotiations. While CSL had the option at the time of objecting to an SVP application if negotiations failed, the internal decision was made to accept a close to market rate in order to prove the vessel capability of the CSL Melbourne and CSL Brisbane discharging at Bell Bay and ensure a good ongoing customer relationship with Rio Tinto.
The CSL Brisbane hybrid self unloading system was designed for the carriage of Alumina and the Bunbury-Bell Bay voyage was the first opportunity to trial this type of cargo. It is not unusual for a new self unloading vessel to meet market rates and therefore price below cost in order to prove the vessel's capabilities on a new cargo/trade.
The decision to conclude both voyages on the CSL Melbourne and CSL Brisbane on freight rates that did not cover costs was an internal strategic decision on the part of CSL to enable the vessels to perform on a trade that CSL was struggling to gain access to. Whilst Rio Tinto was verbally advised that these freight rates were below the cost of Australian vessels, it was not an explicit condition of the voyages.
59 By email dated 7 September 2012, the General Manager wrote to Rio Tinto requesting further information. This email covered the topics of the liquidated damages clause and "the increase in the freight rates offered to Rio Tinto in 2010, 2011 and 2012." The email asked whether Rio Tinto was satisfied with CSL's offer to discuss the sourcing of a foreign flag vessel to carry cargo in the event that one of its GL vessels was unable to arrive within the nominated laycan; and whether Rio Tinto was aware of the trial nature of the 2010 and 2011 voyages undertaken by CSL and whether Rio Tinto was advised by CSL that due to the trial nature of those voyages the corresponding freight rates were below the cost of Australian vessels.
60 Rio Tinto responded to those queries by email dated 7 September 2012. As to the liquidated damages point Rio Tinto said it was not satisfied with CSL's offer. Applications for variations would take too much time and would not adequately protect Rio Tinto without a liquidated damages clause as was proposed. It said that working through CSL to cover their own failure would be even less efficient and certainly more time-consuming, which was in neither party's interests.
61 As to the rates question, Rio Tinto said it was aware of the trial nature of the 2010 and 2011 voyages to the extent that the trials related to the physical capabilities/compatibilities of the vessels proposed. It said, however, the parties did not want to consider further commitment until those capabilities/compatibilities were assessed. It said there was no logic or relevance to the argument that because these were trial voyages the rates were obviously/necessarily lower or more competitive. Rio Tinto added it was not made party to the internal strategic decisions of CSL: negotiations with CSL at the time included an insistence on the part of Rio Tinto for competitive freight rates. CSL may well have alluded to their high operating costs, however, at the time of fixing those voyages, there was no agreement that those rates were at once off levels, which were below the operating costs of Australian vessels. The trial nature related to the physical fit of the vessels to the trade, not the freight rates charged.
62 This email, or the substance of it, was not provided to CSL.
63 By email to the Department on 17 September 2012, Rio Tinto said that the first voyage in its application, voyage number 1207006003, had not been challenged by a general licence holder, as indicated in Rio Tinto's email dated 16 August 2012, and asked for confirmation that Rio Tinto was authorised to perform that voyage under its temporary licence.
64 Rio Tinto sent a further email on 20 September 2012 to the General Manager asking for confirmation that it was authorised to perform voyage number 1207006003 under its temporary licence. On the same date there was a further email from Rio Tinto saying that it needed to secure the vessel in the shipper's interests, absent any "contest" to that voyage. Rio Tinto said it would appreciate an update from the delegate at the first available opportunity.
65 By email dated 21 September 2012, the General Manager wrote again to CSL. The information requested was whether the CSL Brisbane was able to meet the loading dates, discharge dates, able to carry the full cargoes required by Rio Tinto and whether it was equipped to carry both raw sugar and alumina on the same voyage and, if so, whether that was satisfactory to both Sugar Australia and Rio Tinto. That email was responded to by CSL by email dated 25 September 2012. Amongst other things CSL said that the CSL Brisbane would not be carrying both sugar and alumina on the same voyage for any of the three voyages listed. The correspondence resulted in CSL withdrawing its notice in response for voyage number 1207006004.
66 By email dated 2 October 2012, the delegate asked CSL for confirmation that the advice the Department had received for voyage number 1207006003 was correct and that CSL had previously advised Rio Tinto that the CSL Melbourne would not be available to meet the dates of that particular voyage. However, by email of the same date, CSL maintained that the notice in response for 1207006003 for the CSL Melbourne was still valid. In response to that email, on the same day the delegate sent an email to CSL asking whether it had advised Rio Tinto that the CSL Melbourne had become available, since the initial negotiations, to perform voyage number 1207006003. If CSL had so advised Rio Tinto, the delegate asked for evidence to that effect, including advice provided to Rio Tinto relating to relevant freight rates, loading dates, etc for the voyage. In response, by email of the same date, CSL said that it did not formally advise Rio Tinto that the CSL Melbourne was still available because Rio Tinto knew that the CSL Melbourne was available for this cargo. CSL said it did not provide Rio Tinto with updated terms or freight rates for the CSL Melbourne as the freight rate and terms were the same as those offered for the CSL Brisbane. CSL said the offer put forward for both vessels during the July negotiations was repeated during the August negotiations: the offer was exactly the same in both negotiations, thus Rio Tinto was aware that the same rate was applicable, regardless of the vessel. CSL stated it was willing to negotiate freight terms with Rio Tinto for voyage number 1207006003. CSL said that it did not advise the Department of withdrawal of the notice in response and so CSL understood the notice in response was still valid.
67 By email dated 3 October 2012, Rio Tinto told the General Manager that the vessel secured to perform voyage number 1207006003 was currently on its way to the loading port of Gladstone. The email sought the Department's earliest confirmation of the status of the voyage under Rio Tinto's temporary licence.
68 By email dated 3 October 2012 the delegate requested further information from Rio Tinto, specifically whether Rio Tinto was satisfied with the timing of voyages numbered 1207006005 and 1207006006 that CSL was proposing and whether Rio Tinto was advised by CSL that the CSL Melbourne had become available to perform voyage number 1207006003.
69 Rio Tinto sent an email by way of interim response dated 4 October 2012. Rio Tinto reiterated that the CSL Melbourne was deemed unsuitable for the trade due to safety concerns (overlength). It said that this was discussed extensively with the Department in July. Rio Tinto attached an email sent on 23 July 2012 to the Department on that topic, together with the attachments to that email. By email dated 4 October 2012, Rio Tinto said that the CSL Melbourne's unacceptability for the Bell Bay wharf had been discussed and explained to the Department previously. Nothing had changed that would make that vessel acceptable.
70 There were further email communications from Rio Tinto to the Department on 4 October and 5 October 2012 dealing with whether or not voyage numbered 1207006003 was or was not contested.
71 On 6 October 2012 the delegate spoke to the Deputy CEO of AMSA. She sought confirmation of the advice previously provided to the Department in response to the information provided by Rio Tinto on 23 July 2012 regarding the safety risks associated with an oversize vessel, such as the CSL Melbourne, berthing at Bell Bay Terminal Facility 1. The Deputy CEO of AMSA confirmed that he reviewed the material provided to him in July 2012 and also confirmed that operations involving an oversize vessel at that berth "can pose safety issues of the kind described by Rio Tinto. He advised that the manoeuvres required to move an oversize vessel up and down the berth to facilitate loading can put excessive load on lines, bollards and dolphins placing personnel, the vessel and the berth at risk."
72 On 6 October 2012 the delegate sent an email to CSL. That email read, relevantly:
I am a delegate of the Minister for the purposes of making decisions under the Act, including decisions in relation to applications for variations of temporary licences. Having considered the information submitted by both Rio Tinto and CSL, I propose to grant the application for a variation to the TL to include new matters, being voyages 120700603, 120700604, 120700605, 120700606, and 120700607 [sic]. In reaching this preliminary view, I have considered a range of information provided by both the applicant and the general licence holder. The key factors I have taken into account in forming my present view as to a decision are as follows:
Voyage 120700603 [sic] - Gladstone to Bell Bay - Vessel proposed by CSL - MV CSL Melbourne
Information provided to me by the applicant indicates that the MV CSL Melbourne is considered by the terminal operators (Pacific Aluminium) to be too big for the berth (Bell Bay Terminal Facility No 1) for safety, berthing and operational reasons. This information indicates that MV CSL Melbourne is too large to berth safely at Bell Bay Terminal Facility No 1 and may be refused permission to unload at the berth. The information provided by the applicant in regard to this issue was forwarded to CSL for response on 24 July 2010 [sic]. The Australian Maritime Safety Authority (AMSA) have confirmed that berthing a vessel of the size of the CSL Melbourne at Bell Bay Terminal Facility No 1 would pose safety concerns of the kind described by the applicant. I consider that these safety considerations are significant, and that they suggest that the MV CSL Melbourne does not meet the reasonable requirements of the shipper.
There was then a paragraph dealing with CSL's withdrawal of the notice in relation to voyage number 1207006004.
Voyages 120700605, 120700606 and 120700607 [sic] - Gladstone to Bell Bay - Vessel proposed by CSL - MV CSL Brisbane
In deciding an application object [sic] of the Act (s 34 (2)(f)) is a relevant consideration. Section 3 (1) of the Act states that "the object of this Act is to provide a regulatory framework for coastal trading in Australia that (a) promotes a viable shipping industry that contributes to the broader Australian economy". I am presently of the view that, having regard to the freight rates offered by CSL for use of the MV CSL Brisbane to undertake the 3 voyages listed above, refusing to grant the variation of the TL to include these three voyages would not be consistent with the object of the Act. It is acknowledged that a direct comparison between the freight rates offered for a vessel under a general licence and those for a vessel operating under a temporary licence is not determinative because the underlying cost structures are different. Nevertheless, it is apparent from the information provided by the applicant and confirmed by CSL, that the freight rates proposed by CSL are significantly higher, not only than those offered by a vessel operating under a temporary licence, but also than those previously offered by CSL to Rio Tinto to undertake the same voyage. The applicant has provided probative information about the impact that rates of the magnitude of those offered by CSL for this voyage [sic] would have on the future viability of aluminium operations in Bell Bay. The aluminium industry in Australia is experiencing unprecedented challenges to its viability due to depressed aluminium prices and the continued strength of the Australian dollar. The cost of alumina and the associated freight costs are significant to all smelters but particularly to the operations at Bell Bay because of its location. Small changes in cost per tonne can have a significant impact on overall operating costs. I am presently of the view that refusing to grant the variation to the TL in respect of this voyage [sic] would be likely to contribute to the undermining of the future viability of operations of Bell Bay Aluminium and thus would not contribute to the broader Australian economy or the long-term viability of the Australian shipping industry.
73 By email dated 8 October 2012, CSL responded and stated that it strongly disagreed with the factors taken into account by the delegate in coming to her preliminary view.
74 As to voyage number 1207006003, CSL said AMSA had no jurisdiction in determining the suitability of a vessel to berth and operate in Bell Bay. CSL said it was unaware of any study of the CSL Melbourne's suitability performed by AMSA and would appreciate a copy of their advice to the Department. CSL said the evidence supplied by Rio Tinto that the vessel was not able to moor in accordance with the guidelines was incorrect. CSL had supplied position diagrams to demonstrate that the vessel could be moored within the Rio Tinto guidelines but this appeared not to have been taken into account by the Department in its preliminary determination. CSL also stated that the CSL Melbourne had previously been accepted by the terminal operators under their own vetting criteria. CSL referred to other vessels being the La Bamba, the Cetus Star and the Alltrans. CSL said the CSL Melbourne should be accepted on the basis of these precedents. Also the CSL Melbourne discharged in August 2010 without incident with hold number 1 not being used. It was the intention of this voyage that the CSL Melbourne would not load its hold number 1. The terminal operator, Bell Bay Aluminium, was a related party to Rio Tinto and had a vested interest in ensuring the CSL Melbourne was rejected, even in contravention of their own guidelines.
75 As to voyage numbers 1207006005, 1207006006 and 1207006007, CSL said that granting the voyages in the temporary licence (TL) application would be in no sense promoting a viable shipping industry. CSL could only operate vessels on the Australian coast if they were fully utilised throughout the year. The loss to CSL was considerable if a vessel was not undertaking a voyage. Prolonged periods of time during which an Australian vessel was not undertaking a voyage would result in that vessel no longer being able to perform profitably on the Australian coast. Ultimately the vessel would be removed from the Australian coast and from the Australian Shipping Register. If the CSL Brisbane (or the CSL Melbourne) did not perform these voyages, they were likely to experience considerable idle time at a significant cost to CSL and the viability to remain on the Australian Shipping Register was severely compromised. CSL said that the aluminium industry was only a small part of the Australian economy, with the Bell Bay aluminium operations being an even smaller part of the aluminium industry. CSL disputed the claim that negative influences on those sectors of the economy were reflective of the broader Australian economy. CSL said the information from Rio Tinto regarding the impact of rates offered by CSL on the future viability of aluminium operations at Bell Bay had not been provided to CSL.
76 CSL said granting these TL applications would do the complete opposite to promoting a viable Australian shipping industry that contributed to the broader Australian economy in that such a decision in no way contributed to the broader Australian economy and denied access to Australian ships rather than promoting Australian shipping. CSL then referred to the freight rate and the reasons surrounding the freight rate differential between the present rates offered and the previously agreed freight rates. It said that it had made a $200,000 loss on the previous Gladstone-Bell Bay voyage. It said that to maintain a viable Australian shipping industry, the freight rate for coastal cargoes must be able to support operations of Australian vessels. CSL said that at no stage had Rio Tinto, on behalf of Pacific Aluminium, been willing to enter into freight rate negotiations with CSL for these Bell Bay cargoes. As no real negotiation took place, CSL was not aware of the upper limit that Rio Tinto would consider in terms of freight rate for an Australian vessel on the Gladstone-Bell Bay trade. CSL said that that day it had offered again to enter into freight rate negotiations with Rio Tinto, who again refused that offer and opted to wait for a decision on the TL application. Given that Rio Tinto had just agreed to a 3 year contract for Australian GL shipping for its Newcastle alumina requirements, after some negotiation, it seemed completely unreasonable to CSL that Rio Tinto would refuse to negotiate freight rates on their Bell Bay requirements.
77 CSL acknowledged that the aluminium industry in Australia was experiencing unprecedented challenges to its viability due to depressed prices and a high Australian dollar. CSL said that it too was experiencing unprecedented challenges to its viability. The same issues applied to the Australian steel industry and almost all manufacturers in Australia, yet those steel and other manufacturing industries still predominantly used Australian GL licensed vessels for their coastal trades.
78 CSL said that the freight rate information for the TL vessel had not been shared with CSL. CSL said that in previous correspondence it was made clear to CSL that the Department could not rely on any information provided by one party that was not shared or made available to the other party. CSL therefore requested that such information be supplied to it and CSL be given an opportunity to review and respond to that information prior to any decision being taken by the Department in respect of the TL applications.
79 By email dated 9 October 2012 the delegate notified Rio Tinto and CSL of the grant of Rio Tinto's temporary licence application in respect of five voyages, including the four voyages in contention. The licence, as varied, remained valid for 12 months from the date of original issue, being 30 July 2012.
80 In the email to CSL, the delegate included the following:
In reaching this decision I have considered information provided by the applicant and by CSL in this and other correspondence with the Department. In relation to your email below [CSL's email dated 8 October 2012], I provide the following information:
• AMSA has not made any 'determination' of the suitability of a vessel to berth in Bell Bay. AMSA, as the statutory maritime safety regulator, was consulted as an independent source of expert advice in relation to the advice provided to us by the applicant regarding safety concerns associated with berthing a vessel the size of the CSL Melbourne at the Bell Bay Terminal Facility No 1. The content of AMSA's advice has been provided to you in my email of 6 October (below).
• The information provided by Rio Tinto concerning freight rates and their impact on the overall operating costs for aluminium operations at Bell Bay was, to the extent that it is not commercial-in-confidence, provided to CSL, including in summary in my email of 6 October 2012. Similarly all information relating to freight rates, to the extent that it was not commercial-in-confidence, was provided to CSL and CSL have been afforded the opportunity to respond (refer email from Pauline Sullivan to Emily Gross dated 23 August 2012).
81 I note also that Rio Tinto sought to read into evidence an affidavit sworn on 19 October 2012 by Denis Lecoge, senior charterer of Rio Tinto. I admitted that affidavit subject to relevance. In my opinion the contents of that affidavit could be relevant on the basis that it goes to the state of knowledge of CSL of the matters in relation to which it complains of the denial of procedural fairness. Since procedural fairness depends on process and since under the Act, in the present circumstances, the process necessarily involved both Rio Tinto and CSL then, in my view, what Rio Tinto told CSL could be relevant even if the delegate did not know of the communications or their terms. For completeness I set out the substance of that material although I have not taken it into account in reaching the conclusions I have reached in relation to the alleged denials of procedural fairness.
82 Mr Lecoge said that Rio Tinto had a meeting with CSL on 29 March 2012. The day before the meeting, on 28 March 2012, Mr Janholt, General Manager - Account Management Marine, Rio Tinto, sent an email attached which was a copy of a presentation to suppliers prepared by the chief procurement officer of Pacific Aluminium describing the difficult operating conditions and threat of smelter closures faced, relevantly, by Bell Bay operations of Pacific Aluminium. Pacific Aluminium is a division of Rio Tinto Aluminium Ltd which operates two aluminium smelters, one of which is at Bell Bay in Tasmania.
83 Mr Janholt's main argument to renegotiate the rates offered by CSL was that transport cost is a significant cost element of the aluminium smelting operations at the two aluminium smelters.
84 The attachment to the email stated that Pacific Aluminium operated in a very difficult environment/set of circumstances and in order to continue business operations it must completely revise its operating model to lower costs so that it could become more resilient to the current and future headwinds. It said that three aluminium smelters operating within Australia, including Bell Bay, were under threat of closure.
85 Following the meeting on 29 March 2012, CSL wrote to Mr Janholt on 16 April 2012 saying, relevantly:
In March 2012 Rio Tinto, on behalf of Pacific Aluminium approached CSLA to assist in reducing costs associated with the manufacture of aluminium in Australia, including the transport costs. A number of factors including high USD/AUD exchange rates, the current international and domestic economic environment and the current regulatory environment were cited as contributors to the increased costs of the aluminium manufacturing sector. Rio Tinto requested CSLA to provide a proposal that could decrease the costs to Pacific Aluminium in the short term whilst being mutually beneficial to both parties in the longer term.
86 Mr Lecoge also deposed to discussions he had had with officers of CSL when CSL first challenged Rio Tinto's original application for the temporary licence in July 2012. Mr Lecoge said that in those discussions he reminded those officers of the earlier discussions with Mr Janholt and of the need to reduce freight costs due to the precarious circumstances for Pacific Aluminium using words to the following effect:
You know the costs pressures on PACAL. We explained those to you previously. PACAL cannot afford to pay freight at the levels that you are requiring.
87 Mr Lecoge also deposed to a conversation in which he tried to persuade the relevant officer of CSL that CSL's rates were way above the market rate and unacceptable for Bell Bay because they were not sustainable for Bell Bay. Mr Lecoge said that by "not sustainable" he meant that the extra cost pressure of such a high rate was not possible for Bell Bay in the present market. The officer of CSL listened to what he had to say. Her response was to talk about the high cost of operating Australian vessels.