KENNETH COMININOS MICHAEL, WESTERN AUSTRALIAN INDEPENDENT GAS PIPELINES ACCESS REGULATOR

THE HONOURABLE CLIVE MORRIS BROWN, MINISTER FOR STATE DEVELOPMENT, TOURISM, SMALL BUSINESS

THE HONOURABLE ERIC STEPHEN RIPPER, MINISTER FOR ENERGY

Administrative law - Prohibition - Revision of draft decision by Regulator - Detailed statutory stages for decision - Whether application premature - Whether rights sufficiently affected - Prohibition available - Declaratory relief granted instead of prerogative relief - Regulators undertaking to act in accordance with declaratory relief

Contract - Agreement between State and joint venturers to construct and operate a gas pipeline - Agreement ratified by statute - Agreement to take "effect despite any other Act or law" - Provisions of Agreement purporting to limit the application to pipeline of future Acts and laws - Whether provisions affect the operation of a future Act

Energy and resources - Gas - National Third Party Access Code for natural Gas Pipeline Systems 1997 - "Covered Pipeline" - Third Party access to pipeline - Assessment for approval by Regulator of proposed Access Arrangement - Whether Regulator acting beyond jurisdiction in considering Agreement binding on State and present owners of pipeline purporting to limit the application of future Acts and laws to the pipeline

Gas Pipelines Access (Western Australia) Act 1998 (WA), s 4(1), s 97(4)

Goldfields Gas Pipeline Agreement Act 1994 (WA), s 4(3)

Government Agreements Act 1979 (WA), s 3

Iron Ore (McCameys Monster) Agreement Authorization Act 1972, s 3

National Third Party Access Code for Natural Gas Pipeline Systems 1997

The State of Western Australia : Mr G T W Tannin SC & Ms J C Pritchard

Wiluna Gold Pty Ltd : Mr J Gilmour QC & Mr C W Lockhart

Tourism, Small Business : Mr G T W Tannin SC & Ms J C Pritchard

Minister for Energy : Mr G T W Tannin SC & Ms J C Pritchard

Duke Energy WA Pty Ltd : Mr M J Buss QC & M A G Castledine

The State of Western Australia : State Crown Solicitor

Gas Pipelines Access Regulator : Corrs Chambers Westgarth

Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564

Amherst v Walker (James) Goldsmith & Silversmith Ltd (1980) 254 E G 123

Annetts v McCann [1990] HCA 57; (1990) 170 CLR 596

Attorney-General (NSW) v Quin (1990) 170 CLR 1

Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406

Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99

Australian Casualty Co Ltd v Federico [1986] HCA 32; (1986) 160 CLR 513

Borg v Smith [1991] VicRp 55; [1991] 2 VR 161

BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266

Cabal v Attorney-General (Commonwealth) [2001] FCA 583; (2001) 113 FCR 154

Century Metals and Mining NL v Yeomans [1989] FCA 273; (1989) 40 FCR 564

Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337

Commonwealth Aluminium Corporation Ltd v Attorney-General [1976] Qd R 231

Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5; (2000) 199 CLR 135

Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163

Donald Crone Association Pty ltd v Bathurst City Council, unreported; NSWLEC; 19 October 1998

Haocher v Minister for Immigration & Ethnic Affairs [1990] HCA 22; (1990) 169 CLR 648

Hollioake v WA Cricket Association (1994) 11 WAR 423

Hot Holdings Pty Ltd v Creasy (1996) 185 CLR 149

In Re the Judiciary Act 1903 - 1920 and in Re the Navigation Act 1912 - 1920 [1921] HCA 20; (1921) 29 CLR 257

King-Brooks v Roberts (1991) 5 WAR 500

Kioa v West [1985] HCA 81; (1985) 159 CLR 550

Lewis Construction (Engineering) Pty Ltd v Southern Electric Authority of Queensland (1976) 50 ALJR 769

Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181

McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579

Minister for Immigration and Ethnic Affairs v Teoh [1995] HCA 20; (1995) 183 CLR 273

Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323

Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 2] [2001] WASCA 135; (2000) 24 WAR 25

Re Manufacturing Grocers' Employees Federation of Australia & Anor [1986] HCA 23; (1986) 160 CLR 341

Re Minister for Immigration & Multicultural Affairs; Ex parte Lam (2003) 77 ALJR 699

State Drug Commission (NSW) v Chapman (1987) 12 NSWLR 447

Sydney Training Depot Schnapper Island Ltd v Minister for Sport, Recreation and Tourism (1987) 14 ALD 464

T A Miller Ltd v Minister of Housing and Local Government [1968] 1 WLR 992

TC Whittle Pty Ltd v T & G Mutual Life Society Ltd (1977) 52 ALJR 173

Timbarra Protection Coalition Inc v Ross Mining NL [1999] NSWCA 8; (1999) 46 NSWLR 55

WMC Resources Ltd v Southern Cross Pipelines Australia Pty Ltd [2002] WASCA 308

1 PARKER J: This is the return of an order nisi for a writ of prohibition. Further declaratory relief is also sought which will be considered later in these reasons.

2 The order nisi was granted by Scott J on 10 June 2003 on the motion of WMC Resources Ltd ("WMC").

3 The order nisi calls on Dr Kenneth Comininos Michael the Western Australian Independent Gas Pipelines Access Regulator (the "Regulator") to show cause. That office is constituted pursuant to s 27(1) of the Gas Pipelines Access (Western Australia) Act 1998 (the "Access Act").

4 The issues that have arisen concern the Goldfields Gas Pipeline (the "pipeline") by which natural gas from gas fields off the northwest coast of the State in the vicinity of Karratha is transmitted from Yarraloola, near Karratha, to Kalgoorlie and Kambalda in the Goldfields region of the State and to other locations in between.

5 The pipeline is a "Covered Pipeline" under the National Third Party Access Code for Natural Gas Pipeline Systems 1997 (the "Code"). The Code is one of two elements of the Gas Pipelines Access Law (the "Access Law") which is applied as a law of Western Australia by s 9 of the Access Act.

6 WMC has access to the pipeline for the purpose of gas transmission pursuant to an agreement, made originally with the then owners of the pipeline and another, dated 29 September 1998, as varied by a further agreement and a deed of novation both dated 23 December 1998.

7 The present owners of the pipeline are Southern Cross Pipelines Australia Pty Ltd, Southern Cross Pipelines (NPL) Australia Pty Ltd and Duke Energy Power Pty Ltd (together "the owners"). The owners appear in opposition to the grant of prohibition and other relief.

8 The Code requires the owner of a Covered Pipeline to submit to the Regulator for approval a proposed Access Arrangement containing terms for pipeline access, including a Reference Tariff (Code s 2.2, s 2.5, s 3.3), ie the Reference Tariff determines the basis on which the owner may charge for access by third parties such as WMC to the pipeline. The Regulator must issue a draft decision and subsequently, after reviewing and considering further submissions on the draft, a final decision in that regard (Code s 2.13, s 2.16, s 2.19). In some situations identified in the Code there may even be required a further final decision. Section 97(3) of the Access Act made specific provision for the submission for approval of a proposed Access Arrangement under the Code in respect of the pipeline.

9 The owners of the pipeline submitted a proposed Access Arrangement in December 1999 and the Regulator published a draft decision in April 2001. On 6 November 2002 the Regulator announced he intended to amend his draft decision, in light of the decision of this Court in Re Michael; Ex parte Epic Energy (WA) Nominees Pty Ltd [2002] WASCA 231; (2002) 25 WAR 511. He has not yet published an amended draft decision or a final decision.

10 It is in respect of an issue which the Regulator has announced he will consider in the course of amending his draft decision that the writ of prohibition is sought.

11 The Regulator appeared by counsel and indicated his intention to abide by the decision of the Court. Otherwise the Regulator has not participated in these proceedings.

12 The pipeline was constructed pursuant to the Goldfields Gas Pipeline Agreement (the "State Agreement") which was ratified by the Goldfields Gas Pipeline Agreement Act 1994 ("the "Agreement Act"). The State of Western Australia and its instrumentalities were and are parties to that Agreement. The Agreement was with the then Joint Venturers. The owners stand today in the place of the original Joint Venturers for the purposes of the State Agreement.

13 The State and two of its Ministers, the Minister for State Development, Tourism and Small Business and the Minister for Energy also appeared. The Minister for State Development is the Minister responsible for the administration of the Access Act. There is an issue whether it is that Minister or the Minister for Energy who is to perform certain relevant functions under the State Agreement. In these reasons, I will generally refer to the State and the two Ministers who appeared, collectively, as the State.

14 Newmont Wiluna Gold Pty Ltd ("Newmont") also appeared by counsel. It also has access to the pipeline for the transmission of gas. It generally supported the contentions of WMC.

15 While the proceedings are directed to the grant of a writ of prohibition, in view of the indication of the Regulator by his counsel that he will abide the decision of the Court, the applicant is now content that declaratory relief would be adequate in respect of the main issue. As indicated earlier, declaratory relief is also sought in respect of another issue.

16 By an announcement on 6 November 2002 the Regulator stated that he proposed to consider the effect of cl 21(3) of the State Agreement on the application of the Code to the pipeline. In effect, the applicant contends it is beyond the statutory power and function of the Regulator to do so. It is supported in this by the State and Newmont.

17 The owners advance the opposite view. While they accept the Regulator does not have legal authority to determine, with binding legal effect, the meaning and legal force of cl 21(3) of the State Agreement and its effect, if any, in law on the application of the Code to the pipeline, or whether the objective facts exist on which the operation of cl 21(3) (whatever that operation may prove to be) depends, it is submitted that the Regulator's duty not to exceed the limits of his statutory function or jurisdiction implies a competence to consider the legal limits of that jurisdiction in order that he not exceed those limits.

18 This submission appears to depend on the view, for which the owners contend, that in circumstances provided by the first limb of cl 21(3) of the State Agreement, the Code does not apply to the pipeline. On that basis, it is submitted that the Regulator may properly undertake the enquiry concerning cl 21(3) which he proposes, for the purpose of forming the Regulator's own view whether, in the circumstances as he sees them, the Code does not apply to the pipeline or as to the extent to which it applies. The owners contend further, that in reaching his decision on the owners' application for approval of an Access Arrangement, the Regulator might properly take that into account the conclusions he reaches as to the effect of cl 21(3) on the application of the Code to the pipeline.

19 The State Agreement was entered into on 28 March 1994. The preamble to the State Agreement inter alia indicates that its purpose was to enable the then Joint Venturers, with the State's assistance, to build, own and operate a gas transmission pipeline to enable the Joint Venturers to have a reliable and cheaper supply of energy for their operations in the goldfields, and to enable others also to have access to the pipeline on fair and reasonable terms and conditions for the transmission of natural gas to the goldfields and to other points along the route for their respective purposes. This is seen by the preamble to be in the interests of the economic development of the inland Pilbara and Goldfields regions of the State.

20 The Agreement was ratified by the Agreement Act which was Assented to on 3 May 1994. Section 4 of that Act provides:

"4(1) The Agreement is ratified.

(2) The implementation of the Agreement is authorized.

(3) Without limiting or otherwise affecting the application of the Government Agreements Act 1979, the Agreement operates and takes effect despite any other Act or law."

By-laws were contemplated by the State Agreement. Section 5 of the Access Act provides:

5. By-laws may be made for the purposes of and in accordance with the Agreement and the by-laws:

(a) must be published in the Gazette;

(b) take effect and have the force of law on their publication in the Gazette, or at a later date fixed by the by-laws;

(c) ...

(d) ...

(e) ..."

21 By its ratification of the State Agreement in s 4(1) the Access Act inter alia confirmed the authority of the Premier, who executed the Agreement for the State, to act in this matter and accepted the binding effect on the State of the State Agreement as a matter of contract. By s 4(2) the implementation of the State Agreement was expressly authorised. The legal operation and effect of s 4(3) of the Access Act is material to this application. By s 4(3) the State Agreement operates and takes effect "despite any other Act or law". It is not provided that the State Agreement has the force of law (contrast s 5(b)), or that the provisions of the State Agreement take effect "as though enacted in this Act" which is a frequently found type of provision in development agreements in this State; see for example the Iron Ore (McCameys Monster) Agreement Authorization Act 1972, s 3. Rather, the language of s 4(3) suggests that, relevantly, its object and legal effect was to ensure the validity and the effective operation of the contractually agreed provisions of the State Agreement, notwithstanding the existence of provisions in another enactment or written law of the State that might otherwise create some obstacle to the validity of the agreement, or to the implementation of what had been agreed. In effect, the general body of law in the State was not to stand in the way of the implementation of the agreement.

22 While in Sankey v Whitlam (1978) 142 CLR 1 the High Court was concerned with the effect of s 105A of the Commonwealth Constitution, which differs in some respects from s 4(3) of the Agreement Act, observations in that decision are helpful in this case. As was said by Gibbs ACJ at 29:

"A written law which authorizes or approves of the making of a contract does not thereby render a breach of the contract unlawful; that result is brought about by the rules of the common law. Where a law of the Commonwealth does no more than approve of or validate an agreement, the purpose of breaking that agreement could not be said to be 'unlawful under a law of the Commonwealth'. ...

The Financial Agreement purports to be an agreement, not a law. It was not made by any legislature, although it received legislative approval and ratification. It may be varied or rescinded by the parties."

"The law of contract gives to such agreements their binding force, which is then protected from the effects both of statute and of constitution. The failure to perform an obligation under such an agreement results in breach of contract but not in 'unlawfulness under' s 105A(5)."

"The distinction between a statutory provision which merely gives validity to a contract and makes its provisions binding on the parties, thereby overcoming some obstacle to its validity or operation, and one which goes further by imposing a statutory obligation on the parties to carry out the terms of the contract, thus giving them the force of law, is well brought out in the judgment of Lord Cairns LC in Caledonian Railway Co v Greenock & Wemyss Bay Railway Co (1874) LR 2 Sc & Div 347 at 349. In that case, the statute not only 'sanctioned and confirmed' the antecedent agreement, it also required the parties to carry out the provisions of the agreement. ... Of the second provision his Lordship went on to say:

' ... when an agreement between two companies who are coming for an Act of Parliament is scheduled to the Act of Parliament, and when an enactment is found in the body of the Act that each company shall be required to implement and fulfil all the provisions and stipulations in the agreement, every provision and stipulation in that agreement becomes as obligatory and binding on the two companies as if those provisions had been repeated in the form of statutory sections.'

The distinction so made between a statutory provision giving validity to an agreement and one which goes further so as to impose a statutory obligation to carry out the provisions of the agreement has been accepted and acted upon in later cases ...

Section 105A does not impose any separate statutory obligation on the Commonwealth and the State to carry out the provisions of the agreement. It makes the agreement binding on the parties, but that is to give its provisions the binding force which they have as contractual provisions. Section 105A(3), by empowering the Parliament to make laws for the carrying out by the parties of the agreement, suggests that the imposition of a statutory obligation to perform the Agreement was a matter left for Parliament to determine.

The plaintiff strongly relies on the last clause in s105A(5). But to say that the contract is binding, notwithstanding anything contained in constitutions or laws, is to preserve its validity and operation immune from the impact that those constitutions and laws might otherwise have on the contract. The unique status thereby given to the Agreement is the product of s 105A(5) which is itself the relevant fundamental law. It is not a status which the Agreement acquires because it is a fundamental law or even a law. It remains a contract, though one with very special qualities. It is not converted from a contract into a law with each of its clauses having the character of a statutory provision ..."

"There is, however, a long established distinction between, on the one hand, legislation which merely gives validity to a contract and makes its provisions binding on the parties, notwithstanding that their agreement cannot alone produce that result because of some lack of power or some other source of invalidity, and on the other hand, legislation which imposes a statutory obligation on the parties to carry out the terms of the contract, a provision which gives to those terms themselves the force of law. The distinction is a fine one and not perhaps wholly satisfactory, but nonetheless it is well established by decisions, both in England and in this Court."

26 I am not able to see that s 4, in particular s 4(3), of the Agreement Act has the effect that the provisions of the State Agreement have the force of law or that they create statutory duties and obligations. Although the State Agreement is scheduled to the Agreement Act its terms are not thereby given statutory force. While the Agreement has been ratified, and its implementation is authorised, and it operates and takes effect despite any other Act or law, the terms of the State Agreement remain contractual terms with force and effect as a contract. As such it is binding on the parties to the contract and not on others.

27 Section 4(3) of the Agreement Act also expressly preserves the operation of the Government Agreements Act 1979 (the "GA Act"). The parties accept that the State Agreement is a Government agreement for the purposes of the GA Act.

3. Operation and effect of Government agreements

For the removal of doubt, it is hereby expressly declared that -

(a) each provision of a Government agreement shall operate and take effect, and shall be deemed to have operated and taken effect from its inception, according to its terms notwithstanding any other Act or law; and

(b) any purported modification of any Act or law contained, or provided for, in such a provision shall operate and take effect so as to modify that other Act or law for the purposes of the Government agreement, and shall be deemed to have so operated and taken effect from its inception, according to its terms notwithstanding any other Act or law."

29 Like s 4 of the Agreement Act, this provision does not purport to give to the provisions of the State Agreement the force of law. Much that has been said about s 4(3) of the Agreement Act also applies to s 3 of the GA Act. The terms of a Government agreement such as the State Agreement remain contractual terms although they operate and take effect notwithstanding any other Act or law.

30 Thus, in my view, the effect of s 4(3) of the Agreement Act and s 3 of the GA Act, separately and in combination, is not to give to the provisions of the State Agreement the force of law. They are contractual provisions, binding, insofar as their terms create binding legal obligations, as such on the parties to the State Agreement by the force of the common law, and having no binding legal force on those who are not parties.

31 That brings me to the provision of the State Agreement which is at the heart of this case. Among many other matters, provision was made in the Agreement with respect to access to the pipeline by third parties for the transmission of gas (cl 21(1)). By cl 21(2) the terms and conditions of access by third parties were to be subject to and in accordance with by-laws or, failing by-laws, on "non-discriminatory fair and reasonable terms and conditions". To this end the Joint Venturers were required by cl 20 to report annually to the Minister all requests by third parties for use of the pipeline, the extent to which each request had been met and with a full explanation wherever a request was not met. Further, by cl 20(11) the Joint Venturers were to meet with the Minister responsible for the administration of the Act, as requested, to consider the extent to which the pipeline was meeting the needs of industry generally within the region served by the pipeline.

21(1) The Governor in Executive Council may, upon recommendation of the Energy Minister, make, alter and repeal by-laws relating to terms and conditions for access to and use by Third Parties of the Pipeline which incorporate and are in all material respects consistent with the approved proposals, the provisions of Clause 20 and the tariff setting principles applicable from time to time under Clause 22. The Energy Minister shall consult with Joint Venturers prior to making any such recommendation and, in making any such recommendation, shall have due regard for (inter alia):

(a) the legitimate business interests of the Joint Venturers;

(b) the interests of all third parties holding contracts for transmission services in the Pipeline; and

(c) the operational and technical requirements necessary for the safe and reliable operation of the Pipeline.

If the Joint Venturers at any time consider that any by-law made under this Agreement has, as a result of altered circumstances, become unreasonable or inappropriate, then the Joint Venturers may recommend to the Energy Minister such alteration or repeal as they believe should be made and, if requested by the Joint Venturers the Energy Minister will consult with the Joint Venturers with regard thereto.

(2) In the event of uniform laws or subsidiary legislation being promulgated for petroleum and gas pipeline operation in Western Australia then, subject to subclause (3) any by-laws made under subclause (1) shall cease and determine on the expiry of two years after the coming into operation of the uniform laws or subsidiary legislation.

(3) The uniform laws and subsidiary legislation referred to in subclause (2) shall not have effect to the extent that the Joint Venturers can demonstrate that the uniform laws or subsidiary legislation there referred to have or are likely to have a material adverse effect on the legitimate business interests of the Joint Venturers but in any event, insofar as any such uniform laws or subsidiary legislation may purport to apply to the Initial Committed Capacity, such of those uniform laws or that subsidiary legislation shall only so apply to the extent that the Initial Committed Capacity is, from time to time, unutilised."

33 The Access Act and the Access Law including the Code are uniform laws within the scope of cl 21(2) and (3). The owners of the pipeline, who now stand in the place of the Joint Venturers under the State Agreement, contend that the Access Act and the Access Law especially the Code has, or is likely to have, "a material adverse effect on the legitimate business interests of" the owners. That being so, they contend that, by cl 21(3), the Code "shall not have effect to the extent that [they] can demonstrate" this to be the case.

34 It appears the owners have put this to the Regulator, whose statutory powers and functions relevantly derive entirely from the Access Act and the Access Law including the Code.

35 By his notice or announcement of 6 November 2002 the Regulator said:

"In amending the Draft Decision, I also intend to address certain jurisdictional issues associated with the interaction between s 97(4) of the GPAA and sub-clause 21(3) of the agreement ratified by the [State Agreement].

The following matters will be the subject of the amendments to the Draft Decision:

• the effect of sub-clause 21(3) of the State Agreement on the application of the ["Code"] insofar as it relates to the [pipeline].

36 The Regulator went on to explain the procedure he intended to follow in three stages. With relevance to the present case he said:

• The first stage will involve applying the Code without consideration of whether subclause 21(3) of the State Agreement affects the applicability of the Code. ...

• Part 1 of the amended Draft Decision will be issued and the current owners of the [pipeline] will be invited to demonstrate, by way of written submission, whether the application of the Code, as set out in Part 1 of the amended Draft Decision, materially adversely affects their legitimate business interests within the meaning of sub-clause 21(3) of the State Agreement.

• ... Part 2 of the amended Draft Decision would set out my assessment of the extent to which the Code applies, in light of the submission by the current owners of the [pipeline] on the applicability of sub-clause 21(3) of the State Agreement, to Part 1 of the amended Draft Decision.

• Following consideration of submissions on Parts 1 and 2 of the amended Draft Decision, I will then proceed to prepare my Final Decision."

37 By a further facsimile letter from the solicitors for the Regulator to the solicitors for WMC dated 17 February 2003 the Regulator's position and intentions were further explained in the following terms:

" ... the Regulator does not, at present, accept that the donee of any power in the first limb of clause 21(3) of the Goldfields Gas Pipelines Agreement dated 23 March 1994 ("State Agreement") is the Minister. However, we also confirm that the Regulator does not contend that he is the donee of any power in cl 21(3) of the State Agreement.

As discussed, the Regulator intends to adopt to the procedure set out in his notice dated 6 November 2002, which involves the Regulator issuing a 2 part revised Draft Decision. The second part will set out the Regulator's views on various jurisdictional issues, including the issues associated with cl 21(3) of the State Agreement. However, the purpose of this second part of the revised Draft Decision is not for the Regulator to make a conclusive and binding decision on those issues, including the application of cl 21(3) of the State Agreement. Rather, as advised in our letter to you dated 26 November 2002, the second part of the revised Draft Decision will set out the views of the Regulator as an administrative decision maker, as to his jurisdiction to implement the Code. We confirm that any views expressed by the Regulator as to his jurisdiction are not an attempt to make a qausi judicial determination; see R v Hickman [1945] HCA 53; (1945) 70 CLR 598 at 618."

38 By a further facsimile letter from the solicitors for the Regulator to the solicitors for WMC dated 16 April 2003 the Regulator's position and intentions were canvassed more extensively in the following terms:

"As you know, s 97(3) of the Gas Pipelines Access (Western Australia) Act 1998 (WA) ('the Access Act') requires the owners of the pipeline to submit a proposed access arrangement for the Pipeline and the applicable information for the purposes of the Code. Clearly, the Access Act contemplated that the Regulator would have to make a decision in relation to the access application under the Code, otherwise the requirement to submit the application would be redundant. However, s 97(4) of the Access Act provides that nothing in that section is to be taken to affect the operation of cl 21(3) of the State Agreement which provides that the Code shall not have effect to the extent that the owners of the Pipeline can demonstrate that the Code has or is likely to have a material adverse effect on the legitimate business interests of the owners. The Code is a law of some complexity the application of which depends upon approvals to be given by the Regulator. Conceptually, it may not be possible to understand how the Code may affect the owners of the Pipeline until it is known whether the Regulator would approve the access arrangement proposed by the owners.

We are aware that there are various views as to the proper interpretation of cl 21(3). One issue of interpretation concerns the party to whom the owners must demonstrate material adverse effect. There appear to be at least three options:

(a) the adverse effect must be demonstrated to the relevant minister as the other party to the State Agreement;

(b) the adverse effect must be demonstrated to the party entrusted with administering the law that is said to have an adverse effect, in this case, the Regulator in relation to the Code; or

(c) the adverse effect is a standard that qualifies the circumstances in which laws may apply, the scope of which must be interpreted by parties to ensure they comply with the law, but which ultimately can only be adjudicated upon by a court.

There may also be an issue, to which you appear to allude in your letter, as to whether the Code has any operation as a law until a decision has been made, perhaps by the Minister or perhaps by the court, that the precondition to the application of the law, namely an absence of material adverse effect on the legitimate business interests of the owners of the Pipeline, has been demonstrated. The alternative to this position is that the Code operates in respect of the Pipeline, but its field of operation is limited to those applications where as a consequence there would be no material adverse effect on the legitimate business interests of the owners.

If the latter alternative is the proper construction, then the Regulator is bound to carry out his statutory function which requires him to make a decision about the access application which the owners of the Pipeline have been required by law to submit to the Regulator. In the course of making that decision, the Regulator has to form his own view about what cl 21(3) means. The Regulator accepts that h is not entrusted with a jurisdiction to make a binding decision as to the proper construction of cl 21(3). However, a decision maker in the position of the Regulator is obliged to consider such jurisdictional questions which are necessary to be considered as a part of the process of making the decision entrusted to the decision maker.

The procedure which the Regulator has announced is designed to ensure that any view formed by the Regulator about the meaning of cl 21(3) and whether the owners of the Pipeline can demonstrate that the Code would have a material adverse effect on legitimate business interests is kept separate from that part of his decision that concerns how the Code would apply if it does have effect with respect to the Pipeline. This process has been established so as to ensure that once any issue as to whether the Code applies has been finally resolved, the Regulator's decision can be implemented to the extent that the Code has been found to apply."

39 The Access Act makes further provision of significant relevance to this application. In these provisions the State Agreement is referred to as "the ratified Agreement". Section 97 of the Access Act provides:

"Temporary continuation of access arrangements for the Goldfields Gas Pipeline, and continuation of certain rights

(1) The existing access arrangements for the gas transmission pipeline that is the subject of the ratified Agreement are taken to be an approved Access Arrangement under the Code until 1 January 2000.

(2) In subsection (1) -

'existing access arrangements' means the provisions of clause 20 of the ratified Agreement.

(3) The Joint Venturers, as defined in the ratified agreement, are to submit to the local Regulator before the end of the period of 9 months following the commencement of section 9 of this Act -

(a) a proposed Access Arrangement; and

(b) the applicable Access Arrangement Information,

for the purposes of the Code in respect of the pipeline referred to in subsection (1).

(4) The references in subclause (3) of clause 21 of the ratified Agreement as in force immediately before the commencement of section 9 of this Act to 'uniform laws or subsidiary legislation' and to 'uniform laws and subsidiary legislation' include the provisions of the Gas Pipelines Access (Western Australia) Law, and nothing in that Law or in this section is to be taken to affect the operation of that subclause.

(5) Nothing in subsection (4) prevents the parties to the ratified Agreement from, in accordance with its terms, varying or rescinding clause 21(3) or entering into a fresh provision in place of it.

(6) In this section -

'ratified Agreement' means the Agreement within the meaning in section 3 of the Goldfields Gas Pipeline Agreement Act 1994."

40 Both cl 21(2) and (3) of the State Agreement are very curious provisions. It is difficult, at least in the first instance, to grasp the intention of the parties in reaching agreement in these terms, and the intention of the Parliament and the effect it has produced in enacting s 97(4) of the Access Act.

41 Both cl 21(2) and (3) contemplate the making of a future law or laws of the State. Necessarily, this is by action of, or under authority delegated pursuant to, a future enactment of the Parliament.

42 The terms of cl 21(2) indicate an intention of the parties that by-laws, being delegated legislation under the Agreement Act, "shall cease and determine on the expiry of two years" after the promulgation of the contemplated future law. It appears that, in fact, no by-laws have ever been made under the Agreement Act. The point of concern is, however, had by-laws been made, what was the intention of the parties to the State Agreement and what is the legal effect cl 21(2).

43 Clause 21(3) provides that the contemplated future uniform laws and subsidiary legislation "shall not have effect" to the extent that the Joint Venturers can demonstrate the matter specified. Further, the second limb of cl 21(3) provides that the contemplated future uniform laws and subsidiary legislation "shall only apply to the pipeline to the extent that the Initial Committed Capacity is, from time to time, unutilised, notwithstanding that "the uniform laws or subsidiary legislation purport to apply to the Initial Committed Capacity".

44 Both the first and the second limb of cl 21(3) purport directly to affect and determine the extent to which future legislation of the State will operate in its application to the pipeline. In each case that is, and could only be, a matter determined by future legislative action of the Parliament. Clause 21(2) cannot operate of its own force, but it is conceivable that it could be given effect by the repeal of the by-laws. To the extent that this requires action by the Executive Government of the State it is possible that effect could be given to this provision, especially as s 4(2) of the Agreement Act authorises its implementation. However, the act of repealing such by-laws is subject to disallowance by the Parliament. In any event, different legislative provision might be made by the Parliament in the contemplated future uniform laws or subsidiary legislation. That is a matter to be determined by future legislative action of the Parliament.

45 It is not apparent on what basis the parties to the State Agreement could purport to reach agreement as to future legislative action by the Parliament. As a matter of fundamental constitutional principle, no parties, not even the State acting by its Executive Government, can purport to bind the Parliament in respect of legislative action. Effect cannot be given to these provisions as a matter of contract by this or any court. In my view, it is clear from the nature of the subject matter of cl 21(2) and (3) that the parties cannot have intended these two subclauses to have binding contractual force and effect. Further, whatever the intention of the parties, cl 21(2) and (3) cannot be enforced by the courts as binding contractual provisions. They can only be seen as expressions of comfort as between the parties to the contract, as to what they each then expected or hoped would be the course of future events. No doubt these provisions in the State Agreement may reflect some degree of moral commitment by each of the parties to the future courses contemplated, but in no sense can it be accepted that a legally binding obligation to give effect to what is contemplated by the two subclauses was intended, or achieved as a matter of contract.

46 The ratification of the State Agreement by the Parliament by its enactment of s 4 of the Agreement Act in 1994 is not effective to overcome this fundamental difficulty. Even if it could be said that Parliament had committed itself to the terms of cl 21(2) and (3), which is not my view, there is the glaring constitutional problem that the Parliament in 1994, and now, has no constitutional capacity to bind a future Parliament to a course of legislative action; Kartinyeri & Anor v The Commonwealth [1998] HCA 22; (1998) 195 CLR 337. Albeit in the context of the legislative power to repeal, the words of Brennan CJ and McHugh J at [16] of that decision reveal the underlying constitutional principle:

" ... The Parliament cannot bind itself or its successor Parliaments not to amend the laws it makes. Anson states the general rule:

'One thing no Parliament can do: the omnipotence of Parliament is available for change, but cannot stereotype rule or practice. Its power is a present power, and cannot be projected into the future so as to bind the same Parliament on a future day, or a future Parliament.'"

The principle was stated succinctly by Latham CJ in The South-Eastern Drainage Board (South Australia) v The Savings Bank of South Australia [1939] HCA 40; (1939) 62 CLR 603 at 617:

"It is recognized as a general principle of English constitutional law that one Parliament cannot bind its successor ..."

47 It is therefore necessarily the case that no provision in a contract which purports to bind, or would have the effect of binding, the State to a course of future legislative action by the Parliament can be binding or enforceable. The position would be no different if the Parliament had purported to give such a provision of an agreement binding force as a Statute of the State, although, as indicated earlier, Parliament has not purported to do that in this case. As indicated earlier, in my view, it is clear from the subject matter of each of cl 21(2) and c 21(3) that the parties to the State Agreement cannot have intended these two subclauses to have binding contractual force and effect.

48 Because of those matters, I would note that s 4(3) of the Agreement Act really has no work to do in respect of cl 21(2) and (3) of the State Agreement. No Act or law of the State, in 1994 or now, impedes or precludes the operation and effect of cl 21(2) and (3). These are merely provisions in an agreement which have no contractually binding force.

49 There is the further question of the force and effect of s 97 of the Access Act which is set out earlier. Section 97(4) and s 97(5) make express reference to cl 21(3) of the State Agreement. The critical provision is in s 97(4), which, when read with s 3(1), provides relevantly:

" ... nothing in [the Access Law] or in this section is to be taken to affect the operation of [sub-clause (3) of clause 21]."

50 Section 97(5) further provides that s 97(4) does not prevent the parties to the State Agreement varying or rescinding cl 21(3) or entering into a fresh provision in place of it.

51 It was accepted by the owners that cl 21(3) of itself, did not affect and is not capable of affecting the application of the Access Law to the pipeline. Rather, it is submitted, in terms of legislative force, it is s 97(4) which circumscribes the application of the Access Law to the pipeline to the extent that the first and/or second limbs of cl 21(3) apply.

52 The primary difficulty with that submission is the language of s 97(4). By its terms s 97 clearly recognises the existence of cl 21(3) and the relevance of the State Agreement to the question of access by third parties to the pipeline. Section 97(1) in effect deems the Access Arrangements under the State Agreement to be an approved Access Arrangement under the Code for a determined initial period. Section 97(3) expressly requires the Joint Venturers to submit to the Regulator a proposed Access Arrangement. Expressly, s 97(4) confirms that the Access Law (ie including the Code) is a uniform law or subsidiary legislation within the meaning of s 21(3). Section 97(4) then concludes by providing that "... nothing in the Law or this section is to be taken to affect the operation of [cl 21(3)]".

53 The owners found their submission as to the present legal effect of cl 21(3), for the purposes of the Regulator, on s 97(4). It is this provision, they submit, which has changed the legal force and effect of cl 21(3), at least for these purposes. Yet the express words of s 97(4) relevantly are that "... nothing in this section is to be taken to affect the operation of [cl 21(3)]." For the reasons already given, the operation and force of cl 21(3), s 97(4) aside, is as a term of a contract, one which does not give rise to enforceable legal obligations even between the parties to the contract. By its words, s 97(4) does not affect that operation. In my view, the owners cannot escape those plain words. The operation of cl 21(3) remains as it was before the enactment of s 97(4). It then had no force or effect to circumscribe the application of the Access Law (including the Code) to the pipeline. In my view, that remains the position.

54 The owners, as I understand it, submit that the terms of s 97 reveal some legislative recognition of a force or operation of cl 21(3) different from that to which I am persuaded, or at least an intention to achieve that result. It is true that s 97 recognises the existence of a State Agreement (the ratified Agreement) and its application to the pipeline, and gives to cl 20 of the State Agreement (the "existing Access Arrangements" s 97(2)) a specific new force and effect. With respect to cl 21(3) however, apart from making clear that the Access Law is within the scope of the phrases used in cl 21(3), the Parliament has expressly not affected its operation. I can only read this to mean that whatever was its previous operation, remains its operation. The apparent legislative intention was not to introduce any change in respect of its operation, whether an expressed or an implied change. While it could be said that Parliament would not have gone to the lengths it has in s 97(4) if it thought that cl 21(3) had no statutory or legally enforceable effect, that appears to me to beg the question. If there was an unresolved question as to the legal force of cl 21(3), which appears quite likely as the subclause seems to have been viewed quite differently by the different parties to the State Agreement, then Parliament may very well have seen it important to ensure that the status quo, whatever that might prove to be, should not be disturbed. On that basis, s 97(4) would serve to ensure that the Parliament kept faith with the parties to the State Agreement and did not disturb the operation of what had been earlier ratified.

55 Section 97(5) does not appear to me to add anything further to this question. It serves to make clear that the legislative pronouncement in s 97(4) is not intended to prevent the parties to the State Agreement varying or rescinding cl 21(3) by mutual agreement, or agreeing a fresh provision to replace it, as could have been done before the enactment of s 97(4).

56 The Regulator's functions and powers with respect to a proposed Access Arrangement to the pipeline is determined by the Code, read with the other element of the Access Law and the Access Act, cf s 36. Section 97 of the Access Act makes the express provisions which have been identified earlier, the effect of which is to modify in specific ways, for a limited period, the operation of the Code in its application to the pipeline. Quite apart from s 97, the State Agreement would, in fact, be relevant to the operation of the Code in its application to the pipeline and to the functions of the Regulator, eg Code, s 2.24(b) and s 2.25, s 8.10(f) and (g).

57 Provisions such as Code, s 2.24(b) operate in respect of "firm and binding contractual obligations" of the owners of the pipeline, and Code, s 2.25 in respect of "a contractual right". To the extent that the State Agreement contains provisions which, as a matter of contract, give rise to a firm and binding contractual obligation or contractual rights they are directly relevant to the Regulator's functions. There is no provision, however, to which our attention has been drawn, which makes all the terms of the State Agreement relevant to the Regulator's functions. For the reasons given, cl 21(3) is not of a character which brings it within the scope of provisions such as s 2.24(b) or s 2.25.

58 Whatever the legal force and effect of cl 21(3) as between the parties to the State Agreement, I am not able to read its provisions as conferring, or purporting to confer, any role or function or jurisdiction on the Regulator. For one thing, the Regulator did not exist, nor did the Code, at the time cl 21(3) was agreed. Secondly, it would not be competent for parties by agreement to purport to confer jurisdiction on a statutory official. Thirdly, the words of cl 21(3) do not admit of such a construction.

59 It is a possible view that by cl 21(3) the parties contemplated that the Joint Venturers should "demonstrate" the existence of the state of affairs which is spelt out to a party to the contract. If that be so, that person would more obviously be either the Minister for Energy who is mentioned in cl 21(1) and (2) or the Minister for the time being responsible for the administration of the Act, who is referred to in cl 22(1). The Governor in Executive Council is also referred to in cl 21(1). Alternatively, the parties to the State Agreement may have contemplated that the Joint Venturers should bear the burden of demonstrating the existence of that state of affairs to an independent body such as a court in some properly constituted proceedings, or even perhaps to an arbitrator pursuant to cl 37 of the State Agreement. Other possibilities may be identified. While those are possibilities, although subject to varying degrees of probability, I cannot see anything in cl 21(3) to suggest or to imply that the Regulator should be the person to whom the existence of that state of affairs should be demonstrated, whether in the present or any circumstances.

60 It follows, in my view, that as the Code now clearly applies to the pipeline, the relevant role of the Regulator is that for which the Code provides, subject only to the limited interim modifications for which s97(1), (2) and (3) of the Access Law provide. For the reasons given, I can see no basis on which s 97(4) may properly be read and applied so as to circumscribe the application of the Code to the pipeline, whether in the circumstances contemplated by cl 21(3) of the State Agreement, or otherwise.

61 The announcement by the Regulator as to the course he proposes to follow with reference to cl 21(3), and the correspondence of his solicitors in amplification of that, reveals that it was the understanding of the Regulator that, if the present owners (being in the place of the original Joint Venturers) could demonstrate the existence of the state of affairs contemplated by cl 21(3) then the application of the Code to the pipeline was, in those circumstances and to the extent contemplated by cl 21(3), circumscribed. In that event, he saw that his function or jurisdiction would be correspondingly circumscribed. He appeared to ascribe this to the operation of s 97(4) of the Access Act. While it appears that he accepted that it was not for him to make a final and binding determination whether the application of the Code to the pipeline has or is likely to have a materially adverse effect on the legitimate business interests of the" owners, that being the state of affairs contemplated by cl 21(3), the Regulator took the view that he should form a view on that question in an effort to determine the extent of his jurisdiction, in the hope that thereby he might avoid acting in excess of his jurisdiction.

62 Were it the case that the application of the Code to the pipeline was, in law, circumscribed in the circumstances and to the extent contemplated by cl 21(3) of the State Agreement, then some support may be found for the proposed efforts of the Regulator to determine the limits of his jurisdiction: eg R v Hickman [1945] HCA 53; (1945) 70 CLR 598 at 606, 617-8; Re Adams & The Tax Agents' Board (1976) 12 ALR 239 at 242; Trajkovski v Telstra Corporation Ltd (1998) 81 FCR 459 at 466-7; Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at 351 [82].

63 However, for the reasons given, that is not the position. The application of the Code to the pipeline will not be circumscribed, whether or not the state of affairs contemplated by cl 21(3) of the State Agreement can be demonstrated by the owners to exist. That being the case, in my view, the course which the Regulator has set himself is not one which he is required or authorised to undertake. It proceeds on the basis of an error in law and would involve him in acting in excess of his jurisdiction. While the Regulator is in control of his own procedure, cf s 36(3) of the Access Act, as the owners submit, this is not a case of the determination of an appropriate procedure within the exercise of jurisdiction. It is a case of acting beyond jurisdiction.

64 The course which the Regulator proposes to follow would involve a decision being made, at least for the purpose of the Regulator determining the limits of his jurisdiction, whether or not the Code applied to the pipeline. A decision on that matter would involve, in the present circumstances, a sufficiently direct effect on the legal rights and interests of WMC to give it standing to bring this application. While the matter presently being considered by the Regulator is a draft decision and not a final decision, the scheme of the Code in respect of the decision making process of the Regulator, cf Code, s 2.13 - s 2.19, provides a closely regulated process leading from a draft decision to a final decision, and in some circumstances a further final decision. At each stage the Regulator is required to decide whether he proposes to approve the Access Arrangement, if not, he must state the amendments which would have to be made in order for him to approve it. Amendments so identified have a continuing force to the end of the decision making process, unless the Regulator is later satisfied that those amendments have been incorporated or that the reasons for requiring them have been otherwise addressed. It is thus the statutory scheme that a view taken by the Regulator in a draft decision is very likely to prevail to the end of the decision process. In light of this, it is my view that the present application is not premature and that the relief might properly be granted at this stage.

65 Prohibition might properly be granted at this stage as the Regulator proposes to act in excess of his jurisdiction: R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Company Proprietary Ltd [1953] HCA 22; (1953) 88 CLR 100 at 117 - 119. However, as the Regulator will abide the decision of the Court, declaratory relief is adequate.

66 Other submissions are made in respect of this main issue. Given the view I have taken, however, it is unnecessary for me to consider them in these reasons.

67 I am conscious that in a number of respects views expressed, and conclusions reached, in these reasons, differ from those expressed by E M Heenan J in Southern Cross Pipelines Australia Pty Ltd & Ors v Kenneth Comininos Michael, Western Australian Independent Gas Pipelines Access Regulator & Anor [2002] WASC 149, on which the owners rely. His Honour was there concerned with an application by the present applicant to be joined as a defendant in an action concerning the pipeline between its owners and the Regulator and the State. In the action, the owners sought to challenge the validity of the draft decision of the Regulator, but on the basis of a failure to have proper regard to a term or terms of the Access Agreement which, the owners sought to contend, were relevant to the Regulator's decision and which were directed to the protection of the economic interests of the owner. WMC is not a party to the contract. Its access to the use of the pipeline was pursuant to a different contract. While his Honour accepted that there would be a flow-on effect to the charges for access by WMC to the pipeline, in the circumstances and having regard to the contractual and statutory provisions applicable, this was not seen by his Honour to found a reasonable case on which it could be contended that WMC's rights or interests would be sufficiently directly affected to warrant it being joined in the action.

68 By virtue of the nature of the application his Honour saw it to be unnecessary and undesirable to make any final determination of the construction or interpretation of the statutory and contractual instruments in issue, which are essentially those in issue in these proceedings. His Honour therefore set out to confine himself to eliminating only arguments which appeared to him to have no reasonable prospects of success. At [30] of his Honour's reasons, consideration was given to cl 21(3) of the State Agreement. It was noted that WMC submitted there was "a contentious constitutional issue" and had foreshadowed it would contend there was "no power for the Minister to curtail or modify the application of some other law or general application on the strength of a clause such as cl 21(3) in a contract to which the State was a party". His Honour went on to observe at [30]:

" ... That proposition could be accepted if the clause had no greater force and application than the agreement of the contracting parties. However, I do not consider that there is any other reasonable conclusion which can be drawn than that all the provisions of the [State Agreement] by the Ratifying Act of 1994, and by the Government Agreements Act 1979, took effect and operated according to their terms notwithstanding any other Act or Law. If there is any inconsistency between the [State Agreement] as ratified, and some other subsequent legislation of the State, it will become a matter of statutory interpretation to determine how, and to what extent, the two allegedly conflicting provisions are to operate in combination. In other words, I do not consider that there is any reasonable basis for an argument that the [Agreement Act], or the Agreement as ratified thereunder, is beyond the legislative competence of the Parliament of this

State or is subject to any constitution or question about its validity."

Further detailed consideration was given to this issue at [55-58]. It appears from [30] and [55]-[58] this his Honour regarded the terms of cl 21(3) as having force of law and being within the legislative competence of the Parliament. For the reasons given, I regret that I am led to a different conclusion in these respects.

69 The applicants also ask that the Court grant declaratory relief in respect of a question concerning the construction of cl 21(3) of the State Agreement. To whom, it is asked, are the Joint Venturers to demonstrate that the Access Law including the Code, has or is likely to have a material adverse effect on the legitimate business interests of the Joint Venturers?

70 Earlier in these reasons, I briefly canvassed a number of possible answers to that question. Apart from deciding that it was not the Regulator, it is not necessary to answer that question to decide the main issue in this application. The view I have taken of the main issue makes the answer to this secondary question irrelevant for the purposes of the Regulator's function. As between the parties to the State Agreement, WMC not being a party, the question may well be of interest but no issue is yet joined between them requiring an answer to that question.

71 In the circumstances, I am of the view that it would be inappropriate for the Court to make any declaration in respect of that question on this application. It would really be an advisory opinion. As a matter of discretion, I would refuse to grant declaratory relief in respect of this secondary issue. It is therefore unnecessary to enter into any consideration of it.

72 I would, therefore, propose that declaratory relief be granted in respect of the main issue to reflect the decision I have reached. I would hear counsel as to the precise form of the declaration.

73 TEMPLEMAN J: I have had the advantage of reading in draft the reasons published by Parker J. I agree with those reasons and the disposition proposed by his Honour. There is nothing I wish to add.

74 MILLER J: I have had the opportunity of reading in draft the reasons for judgment of Parker J and I agree with his Honour that declaratory relief should be granted in respect of a primary issue in the proceedings to reflect the decision his Honour has reached. I respectfully agree with his Honour's reasoning. There is nothing further I wish to add.