Energy Safe Victoria v AusNet Electricity Services Pty Ltd [2024] VSC 385

DECLARATORY RELIEF - Whether Court can make declarations based on agreed facts and admissions - Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; (2015) 258 CLR 482 applied - ACCC v Coles Supermarkets [2014] FCA 1405 applied - ABCC v CFMEU [2017] FCAFC 113 applied.

1. Energy Safe Victoria (Energy Safe) is a Victorian regulatory authority, established as a body corporate under s 4 of the Energy Safe Victoria Act 2005 (Vic), and responsible for the enforcement of the Electricity Safety Act 1998 (Vic) (ESA), among other things.
2. Energy Safe alleges that AusNet Electricity Services Pty Ltd (AusNet) engaged in conduct which contravened s 120N(1) of the ESA.
3. AusNet is:

(a) the holder of a licence to distribute electricity issued pursuant to s 19 of the Electricity Industry Act 2000 (Vic);

(b) an Australian energy services delivery business, owning and operating more than $12 billion of electricity and gas network assets;

(c) the owner of the Victorian electricity transmission network, and one of five electricity distribution networks operating in Victoria; and

(d) entitled to recover $3.47 billion from consumers in respect of its distribution network over the 2021-2026 regulatory control period.

1. In advance of the final hearing, the parties filed joint submissions, as well as a statement of agreed facts for the purpose of s 191 of the Evidence Act 2008 (Vic).
2. The parties jointly submitted, and AusNet has admitted, that:

(a) on or about 30 June 2022, AusNet contravened s 120N(1) of the ESA, being a "civil penalty provision", by constructing and energising a new 34 metre span of polyphase high voltage bare wire (being a new "electric line" with a "prescribed specification" of 22 kV) at the intersection of Currajong Avenue and Maskells Hill Road, Selby (being within an "electric line construction area") and failing or omitting to "cover" it or place it underground; and

(b) that contravention continued from 30 June 2022 to 3 August 2023.

1. Energy Safe seeks, and AusNet consents to, orders as set out in the proposed minute of order comprising:

(a) a declaration that there has been a contravention by AusNet of s 120N(1) of the ESA;

(b) an order for the payment by AusNet of a pecuniary penalty to the Minister for Energy and Resources, in an amount of $200,000;

(c) an order that AusNet take specific action directed to preventing a recurrence of the contravention; and

(d) an order that AusNet pay Energy Safe's costs in the sum of $20,000.

1. Section 120N(1) of the ESA provides that a 'major electricity company' (MEC) must cover or place underground each new electric line that meets the prescribed specification that it constructs within an electric line construction area.
2. Section 120N(3) provides that an MEC that contravenes subsection (1) is liable to pay a pecuniary penalty:

(a) not exceeding $350,000 for each kilometre or a part of a kilometre of an electric line that is not covered or placed underground in accordance with that subsection; and

(b) in the case of a continuing contravention of subsection (1), a daily amount not exceeding $1,000 for each day that contravention continues after service on the MEC by Energy Safe of notice of that contravention.

1. Section 120T provides that if the Court is satisfied that a MEC has contravened a civil penalty provision the Court may make an order that the MEC pay a pecuniary penalty to the Minister in respect of each act or omission by the MEC as the Court determines.
2. In determining the amount of the pecuniary penalty to be paid, the Court may have regard to all relevant matters including:[1]

(a) the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission;

(b) the circumstances in which the act or omission took place; and

(c) whether the MEC has previously been found by the Court in a proceeding under Division 3 of Part 10A to have contravened a civil penalty provision.

1. Section 120V(1) relevantly provides that the Court, on an application by Energy Safe, may declare by order whether or not the MEC to which the application relates has contravened a civil penalty provision. Such order may include a requirement that the MEC take a specified action or adopt a specified practice for remedying the contravention or preventing a recurrence of the contravention.[2]

1. The applicable legal principles were not in dispute and were helpfully set out in the parties' joint submissions. In short:

(a) in relation to the Court acting upon agreed penalty submissions, the plurality of the High Court said in the case of Commonwealth v Director, Fair Work Building Industry Inspectorate:

Subject to the court being sufficiently persuaded of the accuracy of the parties' agreement as to facts and consequences, and that the penalty which the parties propose is an appropriate remedy in the circumstances thus revealed, it is consistent with principle and ... highly describable in practice for the court to accept the parties' proposal and to impose the proposed penalty.[3]

(b) in relation to the Court making declarations based on agreed facts and admissions:

(i) it is open to the Court to make declarations based on agreed facts and admissions, as distinct from evidence;[4] however

(ii) prior to making declarations, three requirements should be satisfied:[5]

• (A) the question must be real and not a hypothetical or theoretical one;
• (B) the plaintiff must have a real interest in raising it; and
• (C) there must be a proper contradictor.

The parties submitted and I accept that each of those requirements is satisfied in this case;

(c) the primary purpose of imposing a civil penalty is to 'put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the [legislation]';[6] and

(d) therefore, the penalty must not be a fixed amount which could be viewed by the contravenor or others as 'an acceptable cost of doing business'.[7]

1. Having regard to the statement of agreed facts and the parties' joint submissions, I am satisfied of the following matters:

(a) AusNet is a MEC within the meaning of s 3 of the ESA.

(b) In contravention of s 120N(1), AusNet failed to cover or place underground a new electric line meeting the prescribed specification that it constructed within an electric line construction area. More specifically, on or about 30 June 2022 AusNet constructed and energised a new 34 m span of polyphase high voltage bare wire (being a new "electric line" with a "prescribed specification" of 22kV) at the intersection of Currajong Avenue and Maskells Hill Road, Selby (being within an electric line construction area) and failing to cover it. I note that "cover" in relation to an electric line, means to install a system of insulation on a bare open wire in accordance with the relevant MEC's accepted bushfire mitigation plan.

(c) The contravention described in sub-paragraph (b) above continued from 30 June 2022 to 3 August 2023.

1. In light of those matters I have determined that AusNet is liable to pay a pecuniary penalty.
2. Further, having regard to the following matters I have determined the amount of the pecuniary penalty should be $200,000 as proposed by the parties:

(a) The maximum penalty that may be imposed for a contravention of s 120N(1) is $350,000 for each kilometre or a part of a kilometre of an electric line that is not covered or placed underground in accordance with s 120N(1).

(b) AusNet's contravention exposed the community to an increased bushfire ignition risk for around 50 weeks including during the entirety of the 2022/2023 bushfire season.

(c) Energy Safe is reliant on AusNet complying with s 120N(1) and is not easily able to identify breaches of s 120N(1) through field inspections, only through GIS data set comparisons from year to year.

(d) It took AusNet almost 12 months to identify the contravention and then took a further 47 days for AusNet to rectify the electric line once the contravention had been identified.

(e) If AusNet had better checks or systems in place, the contravening conduct could have been avoided entirely and would not have endured for as long as it did.

(f) AusNet's internal technical documentation failed to clearly express the requirements of s 120N(1). The design of the electric line was affected by that failure.

(g) AusNet is a very substantial company and an operator of essential infrastructure on the basis of a regulated monopoly.

1. These matters tend to support a penalty at the higher end of the range.
2. However, I have also had regard to the facts that:

(a) AusNet has not previously contravened a civil penalty provision;

(b) AusNet has cooperated with Energy Safe by reporting the uncovered electric line in its 2023 compliance report; and

(c) AusNet admitted the contravention and agreed to a penalty and other relief at a very early stage.

1. Further, I have determined it is appropriate for the Court to make the declaration sought by the parties by agreement because.

(a) it records the contravening conduct;

(b) it will serve the public interest in defining and publicising the type of conduct that constitutes a contravention of the ESA; and

(c) it may deter other persons (particularly MECs) from contravening the ESA, and deter AusNet from doing so in future.

1. Noting that AusNet's contravention of s 120N(1) was caused by the way in which its engineering and technical bulletin expressed the requirements of s 120N(1), I am satisfied it is appropriate to make the compliance orders proposed by the parties.

1. I will make orders in the form of Annexure A to these reasons.

AUSNET ELECTRICITY SERVICES PTY LTD (ACN 064 651 118)

1. This order is signed by the Judge pursuant to rule 60.02(1)(b) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) ('Rules').
2. This order is made by the Court pursuant to rule 59.07(1) of the Rules_._

1. On or about 30 June 2022, the defendant, a "major electricity company", contravened s 120N(1) of the Electricity Safety Act 1998 (Vic) (ESA) by constructing and energising a new 34 metre span of polyphase high voltage bare wire (being a new "electric line" with a "prescribed specification" of 22kV) at the intersection of Currajong Avenue and Maskells Hill Road, Selby (being within an "electric line construction area"), and failing or omitting to "cover" it or place it underground; and the contravention continued for the period between 30 June 2022 and 3 August 2023.

1. In respect of the defendant's contravention of s 120N(1) of the ESA, and:
   1. pursuant to s 120T(2), the defendant pay a pecuniary penalty to the Minister for Energy and Resources, in an amount of $200,000; and
   2. pursuant to s 120V(2)(b), the defendant, by no later than three months from the date of these orders:
      1. update all internal technical standards relating to the construction and energisation of new electric lines meeting the prescribed specification in an electric line construction area to refer to the requirements of the AusNet Bushfire Mitigation Plan (BFM) 10-01 and s 120N(1) of the ESA;
      2. deliver and communicate any updated internal technical standards and bulletins addressing the requirements of s 120N(1) of the ESA to its design service providers;
      3. review all other internal technical documents and design handbooks to ensure that all such documents clearly and consistently reflect the requirements of s 120N(1) of the ESA; and
      4. provide the plaintiff with a report detailing the actions taken in compliance with (i) to (iii) above, and copies of any updated documents.
2. The defendant pay the plaintiff's costs of $20,000.
3. Payment of the amounts referred to in paragraphs 2(a) and 3 above is stayed for a period of 28 days from the date of these orders.

[1] Electricity Safety Act 1998 (Vic), s 120T(4) ('ESA').

[2] ESA, s 120V(2)(b).

[3] [2015] HCA 46; (2015) 258 CLR 482, 507 [58] (French CJ, Kiefel, Bell, Nettle and Gordon JJ).

[4] ACCC v Coles Supermarkets [2014] FCA 1405, [74]-[76]; ABCC v CFMEU [2017] FCAFC 113, [93].

[5] Forster v Jododex [1972] HCA 61; (1972) 127 CLR 421, 437-438 (Gibbs J); ACCC v Coles Supermarkets [2014] FCA 1405, [74]-[76] (Gordon J).

[6] Trade Practices Commission v CSR Ltd [1990] FCA 521, [40] (French J) cited by a plurality of the High Court in Commonwealth v Director, Fair Work Building Industry Inspectorate & Ors [2015] HCA 46; (2015) 258 CLR 482, [55] (French CJ, Kiefel, Bell, Nettle and Gordon JJ).

[7] Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20; (2012) 287 ALR 249, 265 [62] (Keane CJ, Finn and Gilmour JJ); ACCC v Dateline Imports Pty Ltd (No 2) [2014] FCA 1222; (2014) 320 ALR 535, [26]-[27] (Rangiah J).