Glover v Australian Ultra Concrete Floors Pty Limited

Background 7 I do not propose to descend into much of the lengthy detail of the case in this judgment. PN has pleaded three separate heads of claim. The first is a claim in conventional or promissory estoppel, the effect of which is to preclude QR from denying that PN is entitled to a 30-year lease of a railway terminal at Acacia Ridge, near Brisbane ("the AR Terminal"). The AR Terminal is owned by QR. 8 The second head of claim is for unconscionable conduct under sections 51AA and 51AC of the TPA. The various steps taken by QR to recover possession of the terminal are said to be unconscionable. The third head of claim is abuse of market power under section 46 of the TPA. It is said that QR's efforts to recover possession of the terminal, which is presently occupied by PN, are for the purpose of preventing PN, its shareholders or relevant companies from entering or competing in certain markets for rail line haulage services. 9 The estoppel claim is founded upon a number of common assumptions said to have been created by QR during the period from 1991 until 20 March 1997, when they are said to have been resiled from orally, and 27 March 1997, when they were allegedly resiled from in a letter of that date. 10 It is unnecessary to set out the detail of the matters relied upon by PN as engendering the assumptions. However, I will set out the terms of clause 5(6)(a) of the Establishment Agreement ("the EA"), which is central to the estoppel claim. 11 The EA, which was entered into on 30 July 1991, provided for the establishment of PN, then known as National Rail Corporation ("NRC")) as a government owned corporation to conduct interstate rail freight services throughout Australia in order to stem the massive losses which were then being incurred by state government owned railways engaged in interstate rail freight. The Commonwealth government and State governments, including Queensland, were parties to the EA. Queensland was not a shareholder of NRC, but it was an "other state" which bound itself to certain obligations, including in particular to clause 5(6)(a) as follows:- "5(6)(a) The other States shall, or shall cause their rail authorities to transfer ownership of, or for as along as the Company continues to conduct the national interstate rail freight operations, give leases of, or grant access to the Company, in relation to any asset, owned or controlled by the other States or their rail authorities, and used by their rail authorities in connection with interstate rail freight. The Company, in its Corporate Plan, shall identify that a particular asset or class of assets is required by it. The other State in question shall have a discretion whether to transfer ownership, give a lease, or grant access to the Company in relation to any asset required by it. Transfer of ownership, lease or grant of access shall be given within a reasonable time following the request by the Company to make the asset available. The objective is that all transfers of ownership, leases or grants of access shall be completed before the end of the Transition Period. The transfers of ownership, leases and the grants of access shall be on such commercial terms and conditions as are agreed between the Company and other State in question." 12 The state of Queensland is not a party to these proceedings. It is plain from what Mr Walker said at transcript page 1432, lines 5 to 6, that PN has deliberately chosen to sue only QR, which is a different entity from the state of Queensland. 13 QR was established by section 6 of the Government Owned Corporations (Queensland Rail) Regulation 1995 (Qld). It is a body corporate which is the successor to Queensland Railways; see sections 10 and 17. QR is a government owned corporation but, unlike its predecessor Queensland Railways, it is not an agency of the government of Queensland; see section 2.7 of the Transport Infrastructure (Railways) Act 1991 (Qld). 14 Mr O'Rourke was the Queensland Commissioner of Railways from 8 October 1990. He was appointed Chief Executive Officer ("CEO") of Queensland Railways from 1 July 1991 and was CEO of QR from 1 July 1995 to 15 December 2000. Mr Scheuber is the current CEO of QR. He has held that position since 16 December 2000. Both Mr O'Rourke and Mr Scheuber have given evidence in the case. Mr O'Rourke was in the witness box on 11 and 12 April 2005. Mr Scheuber gave evidence on 13, 14 and 15 April 2005. 15 PN went into possession and took control and management of the AR Terminal on 5 April 1993. Initially, PN's occupation was pursuant to an agreement for a three-year lease, although the precise terms were yet to be settled. PN's case is that the three-year lease was an interim arrangement not affecting the rights granted under the EA. From early 1996 until March 1997 the parties engaged in negotiations for a long-term lease of the terminal. 16 PN is alleged to have incurred or undertaken very considerable expenditure in reliance on the assumptions. The expenditure is said to consist of a sum of approximately $19 million, which was spent on or in relation to the AR Terminal, and an amount in excess of $200 million on PN's "East Coast Strategy". 17 The pleading of detrimental reliance is contained in [59] to [63] of the third further amended statement of claim. The evidence in the case appears to suggest that much of the expenditure was incurred or committed to by about the end of 1995 or, in any event, prior to QR's letter of 27 March 1997. QR stated in the letter to PN that it was withdrawing its "offer" of a long-term lease of the AR Terminal. 18 On 25 March 1998 QR wrote to PN stating that QR intended to take over the management and operation of the AR Terminal. There have been numerous communications between the parties since that date. The agreed tender bundle comprises approximately 50 volumes of documents, including documents which run to 2004. 19 Significant events after March 1998 include the privatisation of PN, which became effective on 21 February 2002 by the completion of the sale of the shares held in PN by the Commonwealth and state government shareholders, and a notice to quit the AR Terminal given by QR to PN on 26 May 2003. 20 Under clause 14 of an agreement known as the Third Amending Agreement to the EA, the completion of the sale of the shares in PN had the effect that all rights and liabilities of the parties to the EA ceased with effect from that date. However, PN contends that by that date the estoppel was already cemented so that the amendments to the EA could not deprive it of whatever rights in law or equity were effective as at 21 February 2002. 21 In [61(e)] of its further amended defence and cross-claim filed on 1 March 2005, QR pleads that clause 5(6) of the EA contemplates that PN would be granted ownership, a lease or right of access to the AR terminal upon the exercise of a discretion by the state of Queensland. Importantly, QR pleads in [61(e)(1a)] that the state of Queensland did not exercise its discretion pursuant to clause 5(6) at any material time. It is unnecessary to refer to other parts of the existing defence and cross-claim, but it is necessary to observe that references are made in various paragraphs of the pleading to documents post-dating the letters of 23 March 1997 and 25 March 1998. 22 The amendments to PN's claim of unconscionable conduct under section 51AC of the TPA are to be found in [135(c)] of the third further amended statement of claim. There was a claim of unconscionable conduct under section 51AC of the TPA in the previous version of the statement of claim, but [135(c)] introduced seven new matters in the dealings between the parties focusing in particular on the period from 1997 to 2004 as grounds for the claim of unconscionable conduct. I will set out the whole of [135(c)] as follows:- "135. Alternatively, any or all of the Relevant Conduct (insofar as it was engaged in after 1 July 1998) was unconscionable in contravention of section 51AC of the TPA having regard to: … c. the failure of the Respondent to act in good faith, given the circumstances referred to in paragraph (a) above and, further, given the following facts, matters and circumstances: (i) the Respondent, faced with what it understood to be a literal interpretation of clause 5(6)(a) of the Establishment Agreement (interpreting "access" in the sense in which that word is used in the phrase "track access", i.e., as conferring only a right to access akin to the access one has under a track access agreement), on the one hand, and, on the other hand, an interpretation of that provision which gave effect to what the Respondent had always understood to be the underlying intention of clause 5(6)(a) (interpreting "access" in a way which would confer long term control of the Acacia Ridge Terminal on the Applicant), chose despite the Assumptions and despite having adopted the latter interpretation at all times until about the time of the announcement referred to in paragraph 64 above, to adopt the former interpretation from about that time; Particulars (A) See the briefing note of February or March 2001 (QDR.01.098.0053) ("QR is choosing to interpret it in the sense that has been ascribed to track access"); (B) See background paper sent by the Respondent's Acting Chief Executive (Mr David George) on 27 April 2001 to Queensland Transport (QTR.001.0005.0002, at 0009) ("literal"); (C) After the Establishment Agreement was entered into, Queensland Railways proceeded on the assumption that the only question in relation to the Acacia Ridge Terminal was which parts of the intrastate/interstate freight areas were to be identified as assets required by the Applicant for the operation of its interstate freight services - see memo dated 6 August 1991 by Mr Richard Price (QDR.01.078.0041); and notes/minutes of meetings of the "Transfer of Responsibility for Interstate Freight to NRC Steering Committee" (the establishment of which Committee was referred to by Mr O'Rourke in his memo of 29 August 1991 - QDR.01.077.0263) on 2 September 1991 (QDR.01.077.0265), 10 September 1991 (QDR.01.077.0256) and 3 October 1991 (QDR.01.077.0192-0209, including various attachments to the minutes). See also submission number S0142 (QDR.01.060.0151, at 0153) (third paragraph) which was approved by the Queensland Railways board on 1 June 1993 (QDR.01.188.0020, at 0021) ("In order for the NRC to carry out their interstate freight operations it is envisaged that a long term (20 years plus) operating lease, will be negotiated with the NRC, for use of the Acacia Ridge Terminal") and the Information Paper dated 31 March 1998 (QDR.01.024.0149, at 0149) ("control of the interstate rail container terminal at Acacia Ridge was transferred from QR to NRC in anticipation of a long term (up to 30 years) lease being negotiated between the parties"); (ii) In and after 1999, after the Third Amending Agreement to the Establishment Agreement had been made, QR adverted to the fact that after the date of any sale of the shares in the Applicant, none of the partiesto the Establishment Agreement would have any further rights or obligations under the Establishment Agreement; Particulars See QTR.001.0005.0002, at 0004, first paragraph (27 April 2001); see also QTR.001.0005.0055, at 0063 and QDR.01.087.0229, at 0236 (third dot point in the case of both documents) (4 July 2001); (iii) The Respondent sought to take advantage of that fact by using the Acacia Ridge Terminal as a bargaining chip in any future efforts to enter "the interstate markets", after the expiration (on the sale of the Applicant) of the Respondent's obligations under the Establishment Agreement and under section 6 of the National Rail Corporation (Agreement) Act 1991(Qld); Particulars (A) See "draft negotiation strategy"/"Discussion Paper" of 4 July 2001 (QTR.001.0005.0055, at 0063 and QDR.01.087.0229, at 0236) (third dot point in the case of both documents) ("This can be used to QR's/QT's advantage"); see also QR Board Submission created on 21 November 2001 (QDR.01.084.0216, at 0217) ("window of opportunity"); and see QDR.01.020.0009, at 0010 (second dot point) (6 December 2001) ("as of when it is sold"); (B) See QDR.01.089.0099, at 0111 (paragraph 6.4) ("bargaining power"); (iv) The Respondent represented to the Queensland Department of Transport that there had been major obstacles to agreeing on the terms of a long term lease with the Applicant, when in truth there were no such obstacles; Particulars (A) See letter dated 1 April 1998 by Mr O'Rourke - QTR.001.0008.0003, at 0004, last paragraph); (B) See letter dated 10 December 1996 by Ms Calvisi - PNL.001.006.0366; (v) The Respondent appreciated that, in the circumstances referred to in paragraphs 62(c), 132 and 135(a), (b) and (c)(ii) above, it had significant bargaining strength in its dealings with the Applicant in respect of the Acacia Ridge Terminal, and that the Applicant had a corresponding lack of bargaining power, and the Respondent sought to exploit that position; Particulars (A) See QDR.01.098.0053, at 0055 (February/March 2001) (with arbitration "it is likely that the process will take years, the NRC sale will be finalised and they would not have achieved their objective of long term access to the terminal. The damage to the value of NRC would have been done before the process was completed"); see also QDR.01.084.0214, second paragraph ("negotiating table"); and QDR.01.089.0099, at 0111 (paragraph 6.4) ("bargaining power"); (B) See also the particulars to paragraph 2 (iii) above. (vi) Despite having asserted on and after 27 March 1997 (as to which see paragraph 65 above) in substance that an important objective of the Respondent in purporting to withdraw its offer of a long term lease was the need for the Acacia Ridge Terminal to be operated as a multi-user facility, that was not in fact an important objective of the Respondent. Rather, from about the time of the announcement referred to in paragraph 64 above, the Respondent, in seeking to regain possession and control of the Acacia Ridge Terminal, had as substantial purposes the purposes referred to in paragraphs 111A and 124A above and in addition a desire to use the Acacia Ridge Terminal; Particulars (A) as a lever for its entry into interstate rail freight operations despite not having any detailed plan until about 2002 for such expansion and despite the fact that Queensland Railways had from the time of the formation of the Applicant abandoned its involvement in interstate railfreight operations (including the Acacia Ridge Terminal) in order to shed the financial burden it had been incurring by virtue of such involvement and had treated the formation of the Applicant as representing the introduction of a "seamless" single commercially based interstate rail freight organisation; (B) in part to avoid having to incur expenditure at the Respondent's intrastate terminal in the Acacia Ridge precinct; Particulars (A) Discussions Mr O'Rourke had with KPMG on 23 January 1997 giving rise to the "Aims" referred to in QDR.01.063.0228, at 0229 (especially paragraph 1(c)) (27 January 1997); (B) See QDR.01.086.0155, at 0156 (16 October 2000); QTR.003.0001.0184-0185 (20 October 2000); and QDR.01.089.0099, at 0101 (subparagraph (vi), third dot point) and at 0112 (paragraph 7.1, third dot point) and at 0114 (paragraph 7.2, third paragraph); (C) See memo dated 19 October 1990 by Mr O'Rourke - QTR.001.0003.0166; (vii) The Respondent did not engage in any genuine attempt to negotiate the Applicant's assertions that it required long term control of the Acacia Ridge Terminal, instead treating the regaining of possession and control by the Respondent (with arrangements for access by the Applicant) as not negotiable. Particulars See Mr Wilson's Fifth Affidavit." 23 QR's response to [135(c)] of the third further amended statement of claim in the proposed second further amended defence is found in [113D] as follows:- 113D. Further, as to paragraph 135 of the statement of claim, Queensland Rail: (a) says that, insofar as the Relevant Conduct is alleged in paragraph 130 to have been engaged in in connection with the possible supply of services, namely a long term lease of the Acacia Ridge Terminal, then the price of acquiring such services would have been in excess of $3,000,000 within the meaning of s.51AC(10), (11) and s.4B(2)(d) of the Trade Practices Act 1974; (b) says that s.51AC has no application to such alleged conduct; (c) says in the alternative to (a) and (b): (i) as to subparagraph (c)(iv), Queensland Rail: (A) denies representing to the Queensland Department of Transport that there had been major obstacles in agreeing on the terms of a long term lease; (B) says there had not been agreement on the terms of a long term lease; (C) alternatively, if the representation was made, that representation did not influence the decision of the State of Queensland in exercising its discretion under clause 5(6) of the Establishment Agreement or in adopting the policy objectives that: (i) steps should be taken to maximise rail freight traffic through the Acacia Ridge Terminal; (ii) there should be multi-user commercial access to the Acacia Ridge Terminal, with the terminal being managed by Queensland Rail; (iii) there should be common user access to the marshalling yards and common user roads managed by the network access group of Queensland Rail; (iv) the Applicant should have access to the Acacia Ridge Terminal on commercial terms, that access being sufficient to operate the Applicant's then current business in terms of utilisation of terminal capacity, with access to any future growth of capacity by negotiation; (D) Queensland Rail has given effect to the State's exercise of discretion and policy objectives in its dealings with the Applicant; (ii) as to subparagraph (c)(ii), Queensland Rail: (A) says that it was aware that the effect of the third amending agreement to the Establishment Agreement was that upon the sale of the shares in the Applicant the Establishment Agreement would terminate, such that the parties to it would not have any further rights or obligations under the Establishment Agreement; (B) says that Queensland Rail did not act in such a way as to take advantage of that consideration; (C) after the third amending agreement, Queensland Rail proceeded with negotiations with the Applicant so as to give effect to the policy objectives of the State of Queensland (referred to in subparagraph (c)(i)(C) above); (D) Queensland Rail sought to negotiate an access agreement with the Applicant between the time of the third amending agreement and the time of the sale of the Applicant's shares; Particulars The negotiations are contained in or are to be inferred from: (i) a letter from the Applicant to Queensland Rail dated 22 February 2001; (ii) a letter from Queensland Rail to the Applicant dated 8 March 2001; (iii) a presentation by Queensland Rail at a meeting between the parties on 9 March 2001; (iv) a meeting between representatives of the Applicant and Queensland Rail on 10 May 2001; (v) a letter from the Applicant to Queensland Rail dated 15 May 2001; (vi) a letter from Queensland Rail to the Applicant dated 29 May 2001; (vii)an e-mail from Mr. George of Queensland Rail to Mr. Graham of the Applicant dated 4 July 2001; (viii) an e-mail from Ms. Fairburn of the Applicant to Queensland Rail; (ix) a letter from the Applicant to Queensland Rail dated 24 August 2001. (iii) as to subparagraph (c)(iii), Queensland Rail says: (A) the use of the Acacia Ridge Terminal in the manner pleaded in subparagraph (c)(iii) was not an objective of the State of Queensland or of Queensland Rail; (B) Queensland Rail has not acted so as to make use of the Acacia Ridge Terminal in the way pleaded in subparagraph (c)(iii); (C) Queensland Rail has not made its various offers to the Applicant of access to the Acacia Ridge Terminal conditional upon the Applicant granting Queensland Rail access to other terminals; (iv) as to subparagraph (c)(vi), Queensland Rail says: (A) it was an important policy objective of Queensland Rail in declining to grant a long term lease of the Acacia Ridge Terminal to the Applicant, that the terminal should be operated as a multi-user facility; (B) in giving effect to that objective, Queensland Rail was giving effect to a policy objective of the State of Queensland; (C) Queensland Rail otherwise denies the allegations in that subparagraph; (v) Queensland Rail otherwise denies the allegations in paragraph 135(c) of the statement of claim." 24 It is to be noted that QR's proposed amendment in [113D(c)] of the defence proceeds upon the basis that the state of Queensland has exercised its discretion under clause 5(6)(a) of the EA; see in particular (113D(c)(i)(C) and (D)]. 25 Mr Walker concedes that leave is not required to make the amendments contained in [113D] which are responsive to [135] of the third further amended statement of claim. He says that, apart from requiring further particulars of a number of the sub or sub subparagraphs, he has no objection to that part of the pleading. The proposed amendment to [61(e)] of the defence is as follows:- "(e) as to the claimed loss of opportunity to seek to ensure the shareholders under the Establishment Agreement achieved a solution- (i) clause 5(6) of the Establishment Agreement contemplates, relevantly, that the Applicant would be granted ownership, a lease or right of access to the Acacia Ridge Terminal upon the exercise of a discretion by the State of Queensland; (ia) the State of Queensland did not exercise its discretion pursuant to clause 5(6) at any material time prior to March 1997; (iab) thereafter, the State of Queensland exercised its discretion pursuant to clause 5(6) to grant the Applicant access to the Acacia Ridge Terminal; Particulars The discretion was exercised by: (A) the approval of the course taken by Queensland Rail of refusing to grant a long term lease of the Acacia Ridge Terminal to the Applicant, and instead offering the Applicant rights of access to the Acacia Ridge Terminal. The approval of the State of Queensland was communicated by it in or is to be inferred from: (i) the absence of any disagreement or contrary direction from either the Queensland Minister for Transport or the Queensland Department of Transport to the course taken by Queensland Rail; (ii) the letter from the Queensland Department of Transport to Queensland Rail dated 7 September 1999; (iii) the letters from the Queensland Minister for Transport dated 14 March and 9 August 2001 to each of the Ministers for Transport of the Commonwealth, New South Wales and Victoria; (iv) the letter from the Queensland Department of Transport to Queensland Rail dated 26 October 2001; (B) alternatively, the decision of the Queensland Minister for Transport that the Applicant should be granted access to the Acacia Ridge Terminal but not ownership or a lease. The decision was expressed in: (i) the letter from the Queensland Department of Transport to Queensland Rail dated 7 September 1999; (ii) the letters of the Queensland Minister for Transport of 14 March and 9 August 2001 to each of the Ministers for Transport of the Commonwealth, New South Wales and Victoria; (iii) the letter from the Queensland Department of Transport to Queensland Rail dated 26 October 2001. (ii) clause 5(6) requires that any such grant be on commercial terms; (iii) no such terms have been agreed for the grant to the Applicant of a long term lease or right of access to the Acacia Ridge Terminal; (iiia) alternatively, the discretion under clause 5(6) was not at any time exercised in such a way as to grant to the Applicant a long term lease of the Acacia Ridge Terminal; (iv) Queensland Rail repeats and relies on paragraph 15(e) hereof; (v) the claimed lost opportunity is and has always been of no substance." 26 Mr Walker submits that this paragraph is not responsive to the new grounds of the unconscionable conduct claim. Moreover, he points to the fact that [61(e) (1a) and (1ab)] reverse the position previously taken, i.e, that the state of Queensland did not exercise the discretion under clause 5(6), in order to now plead that the state of Queensland did exercise the discretion. He submits that leave should not be granted to make the amendment. 27 Mr O'Donnell submits that [61(e) (1a) and (1ab)] merely bring the pleading into line with the new [113D], which provides that the discretion was exercised by the state of Queensland. He therefore submits that the new [61(e)] is responsive and, accordingly, that leave is not required. 28 In his affidavit in support of this application, Mr Rankin swears that in response to the amendments to [135] of the third further amended statement of claim, Mr O'Donnell asked him to contact the Ministers of Transport who held office from 1997 to 2001. Those Ministers were Mr Bredhauer and his predecessor, Mr Johnson. Mr Rankin explains in his affidavit that prior to Mr O'Donnell's request it had not occurred to him or to any other member of QR's legal team that Mr Bredhauer or Mr Johnson might be relevant witnesses in relation to the estoppel claim. He said that previously it was his belief the state of Queensland had not exercised the discretion at any time up to 21 February 2002, but he says that his belief now appears to be erroneous. He says this upon the basis of what appears in Mr Bredhauer's affidavit and from a closer examination of documents covering the period from 27 March 1997 to late 2001. 29 Mr Rankin accepted in cross-examination that all of those documents were in QR's possession, power or control because they were QR's own documents, or were documents obtained under subpoena from the Queensland Department of Transport. He accepted that the documents had been in the possession of QR's legal team, in some cases for years. However, the effect of Mr Rankin's evidence under cross-examination was that the documents were looked at more closely in light of the amendments of the unconscionable conduct claim. He said that senior counsel who had held the brief for QR until about November 2004 had focused the legal team's attention on documents in the period in particular up to 27 March 1997, but that a different view was taken by Mr O'Donnell more recently when the events after that date were highlighted in the new matters pleaded as unconscionable conduct on 15 March 2005. 30 Mr Rankin sets out in [10] of his affidavit the steps taken to obtain Mr Bredhauer's evidence. Contact was made on 31 March 2005. A solicitor assisting Mr Rankin spoke to Mr Bredhauer on 4 April 2005. There was a meeting with him on 8 April 2005, a draft affidavit was prepared over the weekend of 9 and 10 April 2005, and the solicitor caused a draft to be sent toMr Bredhauer on 11 April 2005, with further drafts being dispatched on 12 to 13 April 2005, with the affidavit finally being sworn on 19 April 2005. 31 The significance of these dates is quite stark. It will be recalled from what I said above that Mr O'Donnell entered the witness box on 11 April 2005, and Mr Scheuber on 13 April 2005. Cross-examination of those witnesses had, as I have already mentioned, been completed on 19 April 2005 when Mr Bredhauer's affidavit was delivered. It is plain that there was a lively appreciation in QR's legal team when Mr O'Rourke and Mr Scheuber were in the witness box that QR may wish to call Mr Bredhauer. Mr Rankin conceded this in the following passage of his cross-examination:- "If you look at the timing of events in paragraph 10 of your affidavit you would accept, would you not, that there was a lively and detailed appreciation of the possible import of Mr Bredhauer a sa witness in your team immediately before and during my cross-examination of Mr O'Rourke; if you look at the dates?---Can you refresh me as to when Mr O'Rourke was cross-examined? It started on 11 April?---Yes. Are you able to tell his Honour why, in keeping with appropriate conduct as a commercial litigator and professional colleague and pursuant to both rules of Court and of the profession in relation to the efficient administration of justice, that not one syllable of warning or premonition was given that a ministerial office holder with whom Mr O'Rourke dealt concerning matters the subject of lively dispute between the parties was given to the applicant or to the Court while that cross-examination was proceeding?---I believe that it was. When do you say that occurred?---My recollection is - and I haven't gone back and checked this - when Mr O'Donnell opened orally he raised not Mr Bredhauer's name but that a decision by the state, as we now know it happened, occurred. Now, I will concede that Mr Bredhauer's name was not mentioned - - - It could have been, couldn't it?---It could have. Are you able to explain to his Honour why that was not done, bearing in mind that Mr Bredhauer as a Minister had dealings with Mr O'Rourke, the witness under cross-examination?---I can only say that until such time as an affidavit was sworn it wasn't clear to me just what Mr Bredhauer would say. Do you now regard that as an adequate explanation for not apprising either the Court or the applicant of the fact that a Minister of whose existence everyone had already known for a long time may be the subject of an application for the filing of late evidence?---I regard the opening by Mr O'Donnell as being sufficient to that end. You don't regard that as unmeritoriously cagey on your part, do you?---I don't, and I must say I relied on senior counsel to make a decision about what would and would not be advised to you as our opponents and to the Court, and Mr O'Donnell opened the case as he saw fit. Leaving aside senior counsel's opening, which has its own function, you accept, don't you, that in terms of shaping and accomplishing a cross-examination, knowledge that there may be evidence of important officers of state with whom a chief executive had dealt during the period which was the subject of cross-examination would be a material and relevant matter for your opponents to consider and for the Court to consider in relation to case management; you would accept that, wouldn't you?---I would, subject to a qualification. What's the qualification?---That until such time as the deponent has indicated a commitment to a position that it would be premature to do so."

32 The relevant parts of Mr O'Donnell's opening, to which Mr Rankin referred in the abovementioned passage, occurred on 8 April 2005 and appear at Transcript from p917, line 31, to p918, line 29 as follows:- "Hence, on our case it was, at all times on the proper construction of clause 5(6), open to the State to grant access to the terminal to NRC but not on terms that necessarily included control or ensured NRC's commercial viability. It is our case that at no time was it raised with Mr O'Rourke or other officers of QR what would be terms necessary to ensure NRC's commercial viable. That is a concept, again, with multiple interpretations and possibilities. Nothing was ever worked out in 1993 or subsequently. It is our case that the real assumption on which the various directors of the applicant acted was essentially one as to how the exercise of the discretion might come to be exercised under clause 5(6). QR was not the decision maker under clause 5(6). The applicant was really proceeding upon how the state of Queensland would act, not on how QR would act. The only assumption one could make about QR was that whatever decision the State of Queensland made, they could expect QR would give effect to it. Ultimately what occurred was a decision was made not to grant a long-term lease or to give access on terms which included control in 1997, but we say that was essentially a decision by the State. Mr O'Rourke's evidence is that he, before writing the crucial letter, canvassed that matter with the Minister's office and received tantamount approval, that he subsequently communicated the ongoing developments after that time to the Minister's office and to the Department of Transport and received tacit approval from them. Subsequently, the Commonwealth- - - HIS HONOUR: Was it tacit approval? They didn't say "no". MR O'DONNELL: They didn't say "no" and they didn't direct him to do otherwise than according to the course that he had adopted. Subsequently, the Commonwealth and the States approached the Minister for Transport directly and he then communicated in terms that the discussion taken was to refuse a long-term lease but to give access but on terms that the applicant will not control the terminal. The applicant's real complaint, on our case, is not as to QR's conduct but as to the way in which the discretion came to be exercised. Some of the applicants had beliefs based upon the interpretation of the agreement as to how the discretion would be exercised. Some, such as Mr Butcher, had a belief based upon what Mr Hamill said as to how the State of Queensland would exercise the discretion when it came to do so. But ultimately it was that exercise of discretion which does appoint the applicant, rather than QR, withdrawing from any promise or assumption it had generated." (emphasis added) 33 It is plain that the "crucial letter" referred to in the first part of the highlighted passage was the letter of 27 March 1997. 34 In his first affidavit sworn 9 September 2004, Mr O'Rourke refers in [245] to communications with Mr Johnson before writing the letter of 27 March 1997. He says he was informed by QR of QR's intention to communicate to PN that QR "would withdraw from negotiations for a long-term lease". 35 There is no reference in the affidavit of 9 September 2004 to communications with Mr Bredhauer, except in [252], which refers to communications relating to a proposed joint venture between QR and Toll Holdings during the year 2000. 36 In [8] to [10] of his second affidavit, Mr O'Rourke refers to communications with the Minister's office after 27 March 1997. He says in [10]:- "…Following the letter there was no direction to QR from either the Minister's office or from the Department of Transport that QR should grant a long-term lease to NRC or should change the approach it has been taking on this issue. I took the absence of any such contrary indication as amounting to approval by the Minister and the Department of Transport to the course that QR had taken on this issue. This was confirmed in a letter to me from the Director-General of the Department of Transport dated 7 September 1999." 37 In his affidavit, Mr Bredhauer says in [12] that shortly after he became Minister of Transport in June 1998 he became aware that QR was proposing not to grant PN a long lease and that QR was itself proposing to take over the management of the AR terminal to operate it as a multi-user terminal. He says he became aware of this by reason, inter alia, of briefings from Mr O'Rourke. At [16] Mr Bredhauer says he decided in early to mid-1999 that the state of Queensland should not grant PN ownership or a long lease. I will set out the paragraph in full:- "Although I cannot now recall precisely when I made the decision, I decided that the State of Queensland should not grant NRC ownership or a long term lease over the Acacia Ridge Terminal. My best recollection is that I made the decision in early to mid 1999. I say this because I have been shown document QDR.01.025.0171/TB Vol 29 19990907 which is a letter from Mr Wilson to Mr O'Rourke dated 7 September 1999. That letter reflects the decision that I had made. I note the following comments in the letter: It is requested that Queensland Rail not progress any arrangement for not granting a long term lease to [NRC], or any other action that might result in [NRC] or any other party (including Queensland Rail) having exclusive access to a facility which must be considered of strategic importance to the State. These comments reflected my view at the time." 38 In [18] Mr Bredhauer says that after about October 2001 the Commonwealth, Victoria and New South Wales ministers were pressing the state of Queensland to provide access to PN on terms that allowed it to control operations at the AR terminal. However, Mr Bredhauer says he recorded his position that there should be a multi-user terminal in letters referred to in that paragraph. 39 Mr Bredhauer refers in [20] to a memorandum from Mr Scheuber dated 24 December 2002 and to his written approval to the course proposed in the memorandum. In [22] Mr Bredhauer says that at a meeting with Mr Scheuber on 8 May 2003, Mr Bredhauer formally approved the implementation of QR's proposal to recover control of AR. 40 In [23] to [25] of his affidavit, Mr Bredhauer in effect denies the pleaded improper objectives set out in some of the subparagraphs of [135] of the third further amended statement of claim. I will set out those paragraphs of Mr Bredhauer's affidavit as follows:- "In making the decision I refer to above, I did not hold the view that if QR regained the management and operation of the Acacia Ridge Terminal it should make access to the terminal conditional upon QR being granted access to rail terminals elsewhere. My objective was to increase the number of train operators using the Acacia Ridge rail facility and as a result, my view was that QR should make access available to NRC and other train operators, regardless of whether or not those operators gave QR access rights elsewhere. Also, in making the decision I refer to above, I was not influenced by any consideration of delaying QR's negotiations with NRC until after the sale of the shares in NRC. In my letter to Mr Anderson of 9 August 2001 (which I refer to above) I noted that at that time QR had offered NRC a terminal services agreement, which NRC had under consideration. I also noted that I was pleased to see that management teams at NRC and QR were working on matters that would determine the nature of the access NRC would have to the facility. In making the decision I refer to above, I was not influenced by any communication from QR to the Queensland Department of Transport to the effect that there had been major obstacles to agreeing the terms of a long-term lease with NRC. My view was that such a lease should not be granted regardless of difficulties or otherwise in negotiating the terms of it." 41 In my view, the proposed new [61(e) (1a) and (1ab)] of the proposed defence cannot be said to be purely responsive to the new grounds of unconscionable conduct added by [135]. It is true that the new subparagraphs of the defence seek to bring the defence to the estoppel claim into line with the new and largely unobjectionable amendments in [113D]. However, to allow this to be done without leave would be to permit a party to reverse its case by an amendment made through the backdoor after five weeks of hearing. An amendment which does that cannot be said to be responsive, and leave is required. So too of course is leave required to rely on Mr Bredhauer's affidavit, which seeks to provide the evidentiary foundation for the reversal of course in the pleading. 42 The position which governs amendments made at this stage of a hearing is not so much covered by what the High Court said in State of Queensland v J.L. Holdings Pty Limited (1997) 189 CLR 146, where the amendments were sought some time before the hearing, but rather are addressed in the following remarks of Tamberlin J in Patrick v Capital Finance Pty Limited [2003] FCA 206 ("Patrick") at [10] as follows:- "The conduct of a lengthy complex commercial proceeding, such as the present, may, as the case is prepared and progresses, involve fine assessments as to what documentary or oral evidence ought to be adduced and as to whether or not to cross-examine a witness. If it is thought desirable to cross-examine then decisions need to be made and instructions obtained as to the nature and extent of the cross-examination. In the effective presentation of a case these matters are decided by the specific issues raised in the pleadings. If there are substantial variations in the issues raised then the way in which the case is conducted may be significantly different. Often, but not always, at the close of proceedings, to permit significant amendments that raise issues which, practicably, cannot be effectively addressed, may cause substantial injustice to the other parties. This principle is of particular significance in the present case where the application to amend is sought at the close of evidence in circumstances where extensive amendments were permitted prior to and after the commencement of the hearing." 43 There are observations to similar effect by Crennin J in Gold Peg International Pty Ltd v Kovan Engineering (Australia) Limited [2004] FCA 1601 at [13] - [14]. 44 Mr Walker, in his submissions, pointed out that he had planned and accomplished the cross-examination of Mr O'Rourke and Mr Scheuber, which included their dealings with the ministerial office, not only by what he did ask but also by what he decided not to ask. These submissions point to the sort of considerations stated by Tamberlin J in Patrick. Mr Walker also relied on what he called the "uncollegiate" behaviour of QR's legal team in failing to notify PN's representatives that Mr Bredhauer may be called at the time when Mr O'Rourke and Mr Scheuber were cross-examined. He submitted that the case now proposed to be run was not foreshadowed in Mr O'Donnell's opening, that a sophisticated and well-advised respondent has deliberately chosen a course of conduct and that the discretionary considerations cannot be cured by re-calling Mr O'Rourke and Mr Scheuber. 45 Mr Walker also submitted that the matters now proposed to be relied upon could not be central to the case and that they have the potential to cause disruption to the trial well out of proportion to the issues which properly fall for consideration as the real issues in the case. 46 In my view, it is plain that the proposed amendments to [61(e)] and the calling of the evidence of Mr Bredhauer were not foreshadowed in Mr O'Donnell's opening. The first part of the highlighted passages above was plainly a reference to the communications with the Minister's office before the letter of 27 March 1997 was written and the reference to subsequent communications and "tacit approval" reflects Mr O'Rourke's evidence in his supplementary affidavit. 47 The reference in the second part of the highlighted passage from the opening to the subsequent communications between the Minister and the Commonwealth and the states is apparently to some of the letters referred to by Mr Bredhauer at [18] of his affidavit. Plainly Mr Bredhauer's name was not mentioned. Moreover, if what was said was an attempt to depart from the pleading of the existing [61(e)] of the defence, it was not stated in clear terms. At most, it was what Allsop J in White v Overland [2001] FCA 1333 at [4] called "leaving footprints to be uncovered later in an attempt to say that a matter was always in issue". I will set out His Honour's remarks in that paragraph in full:- "However, by way of general principle I would simply like to make perfectly plain my view that in the efficient and proper conduct of civil litigation, even civil litigation hard fought between parties, it should always be recognised that in the propounding of issues for trial the parties should take steps to ensure that all relevant parties to the dispute are cognisant of what the issues are. Any practice of quietly leaving footprints in correspondence or directions hearings to be uncovered some time later in an attempt to reveal that a matter was always in issue should be discouraged firmly. Even if something has been said, where it is evident, or indeed suspected, that the other side is proceeding on the basis of a misconception or has not appreciated something, as a general rule, efficiency, common sense and an appreciation of the costs and resources (both public and private) likely to be wasted by confusion in litigation will mandate that a party through his or her representative ensure that the other is not proceeding on a misconception or that the other does appreciate something that has been said. Litigation is not a game. It is a costly and stressful, though necessary, evil. To paraphrase Roscoe Pound from "The Causes of Popular Dissatisfaction with the Administration of Justice" (1906) 29 ABA Rep 395, 404-406, the "sporting theory of justice" and any behavioural manifestation of it should be seen as a survival, or better, a relic, of the days when a lawsuit was a fight between two clans: cf Jackamara v Krakouer (1998) 195 CLR 516 at 526-527 per Gummow and Hayne JJ. Representatives do not owe duties to the other side's client. They owe duties to their own client. But no one's interests are advanced by litigation proceeding on assumptions which are seen or suspected to be false. This is very much the case when an issue, if it is to be propounded, might endanger the instructions of those acting for the other side. In saying this I need make no reference to the well-known responsibility of the Crown and emanations of the Crown to act at all times as model litigants beyond referring to what was said by the Full Court of this Court in Scott v Handley [1999] FCA 404 at [43] ff. I would expect no less than that which I have indicated of bitterly competitive commercial parties in the hardest fought of cases. In the long run, the only consequence of keeping issues hidden or not clearly identifying them is to disrupt the business of the court leading to the waste of valuable public resources and to lead to the incurring of unnecessary costs by the parties, costs which ultimately have to be borne by someone." 48 Heydon JA referred to this passage with approval in Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116 ("Nowlan") at [28]. 49 It is true that the references in the remarks of Heydon J and Allsop J are to correspondence and directions hearings, but the same approach applies to an opening of a case. 50 As Ipp JA said in Glover v Australian Ultra Concrete Floors Pty Limited [2003] NSWCA 80 at [59]: "the ambush theory of litigation is now dead". He referred in saying this to the observations of Heydon JA and Allsop J, which I have mentioned. Ipp JA pointed out at [60] that the "cards on the table" theory is now common practice in many jurisdictions. It is in this court. 51 There is strong public interest in requiring the full disclosure of a party's case both before trial and during the course of the trial, particularly where a party is fully aware of a planned change of course in litigation, especially so where witnesses are in the box and their cross-examination has been shaped and directed by the state of the pleadings at that point. 52 Having said that, I accept what Mr Rankin said in cross-examination that a decision was not taken to notify Mr Bredhauer's evidence until the affidavit was sworn. It was proper for Mr Rankin to rely on the advice of Mr O'Donnell as senior counsel for QR. But, in my opinion, the cards on the table theory required Mr O'Donnell to at least notify Mr Walker and the court that he may be calling Mr Bredhauer, who may say that the decision was taken by the state of Queensland, and he should have done so before Mr O'Rourke was called. 53 If, as Mr O'Donnell submits, he foreshadowed that evidence in his opening on 8 April 2005, it would have been a simple matter to say in clear terms that he may well take such a course, even if it was not yet certain. After all, if it was sufficiently in his mind for him to believe he was foreshadowing it to the court, it would not have taken much to direct Mr Walker's attention to it or to inform the court in advance of such a possible step. In any event, as I have said, I reject the submission that he did foreshadow it in his opening. 54 I would also observe that, in my opinion, QR's position in this litigation is analogous to that of the executive branch of the government, which should ordinarily act as a model litigant in proceedings such as this. As Mahoney JA said in P & C Cantarella v Egg Marketing Board for the State of New South Wales [1973] 2 NSWLR 366 at 383:- "The duty of the executive branch is to ascertain the law and obey it. If there is any difficulty in ascertaining what the law is, as applicable to a particular case, it is open to the executive to approach the court, or afford the citizen the opportunity for approaching the court, to clarify the matter. Where the matter is before the court, it is the duty of the executive to assist the court to arrive at the proper and just result." 55 Despite all that I have said against the exercise of the discretion to allow the amendment and against permitting Mr Bredhauer's affidavit to be relied upon, there are considerations in favour of allowing both those steps even at this late stage. First, I accept Mr Rankin's evidence that it was not until [135] of the third further amended statement of claim was filed at the commencement of the hearing that closer consideration was given to some of the documents in the period from 27 March 1997 to late 2001. I accept that in the light of this consideration a different view was taken as to the effect of these documents on the question of whether the state of Queensland exercised the discretion under clause 5(6)(a) of the EA. Whether the view initially taken was the correct one is a matter which can only be determined at the final hearing. 56 Second, whilst I accept the full force of what Mr Walker said about shaping his cross-examination of Mr O'Rourke and Mr Scheuber, it seems to me that the question of whether Mr Bredhauer exercised the discretion in early to mid-1999 is a discrete issue which is unlikely to be affected by, or to have affected, what Mr Walker put to Mr O'Rourke or Mr Scheuber. This is particularly so in light of Mr O'Rourke's evidence that he believed he had tacit approval from the government to refuse to grant ownership or a long lease. 57 I should add here that it may be appropriate for PN to object to some portions of Mr Bredhauer's affidavit, and I will confine his evidence to matters which are strictly relevant to the pleading and to the case thus far conducted in relation to dealings between QR and the Department of Transport or the Minister in the relevant period. 58 In my view, and it is only a preliminary one, the question of whether Mr Bredhauer exercised the discretion can be no answer to the estoppel claim because, if the assumptions and reliance are made out, all the necessary events occurred before the discretion was exercised, whether by QR or the state of Queensland. 59 My preliminary view is that there is force in the other criticisms made by Mr Walker of the proposed amendment. However, he did not submit it was futile or hopeless. Nevertheless, as presently advised, QR considers that this amendment and the evidence which supports it assist in making good QR's defence that the assumptions, if any, were as to how the state of Queensland would act and that the state did act in the manner now alleged. They also go to the claim of unconscionable conduct as pleaded in [135(c)] of the third further amended statement of claim. I am not prepared to shut QR out from running this defence if it wishes to do so, particularly in light of Mr Walker's concession that he does not have a substantive objection to the amendments to [113D] of the defence which assert inter alia that the state of Queensland exercised the discretion to refuse ownership or a long lease. 60 Finally, the course proposed by QR will have cost considerations for the trial no matter what the final outcome. It may well be that QR will have to pay all of the costs occasioned by the amendment to [61(e)] and by the calling of Mr Bredhauer's evidence, particularly if witnesses such as Mr O'Rourke or Mr Scheuber have to be re-called. Hopefully they will not because, as I have said, the issue now raised seems to me to be a discrete one. Nevertheless, I will reserve the costs of this application and of the amendments, as well as the question of any additional costs occasioned by the amendment or by calling Mr Bredhauer's evidence. 61 The orders I will make are as follows. First, I will grant leave to amend the defence to add the new [61(e)] in the document, which I will initial and date and leave with the papers. Second I will make order one in the notice of motion filed on 21 April 2005. Third, I will consider at an appropriate time any additional directions arising from the orders that I have made. Finally, I will reserve costs. I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Associate: Date: 2 May 2005 Counsel for the Applicant: Mr B Walker SC with Mr A Leopald, Mr I Tonking and Mr R Foreman

Counsel for the Respondent: Mr B O'Donnell QC with Mr L Kelly

Solicitor for the Respondent: Allens Arthur Robinson