Consideration
103 Mr and Mrs Rose as the prospective applicants must establish that they have a belief that they may have a right to relief under s 60 of the ACL and must demonstrate that belief is reasonable, either by material known to them or by material subsequently placed before the Court: see Pfizer at [120]. Essential's position is that Mr and Mrs Rose's belief that they may have a claim based on a breach of s 60 of the ACL is not reasonably held because the claim is "so far-fetched as to not even be arguable".
104 In determining Mr and Mrs Rose's application, it is necessary to have regard to the structure and requirements of r 7.23 of the Rules. Insofar as r 7.23(1)(a) is concerned, the relevant inquiry is whether I am satisfied that Mr and Mrs Rose as prospective applicants reasonably believe that they may have a right to obtain relief in the Court from the prospective respondent, Essential. In order to defeat an application for preliminary discovery it is necessary to show either that "the subjectively held belief does not exist" or that if it does "there is no reasonable basis for thinking that there may be (not is) such a case": Pfizer at [121].
105 Essential does not challenge Mr Rose's subjectively held belief that he and Mrs Rose may have a right to relief arising out of the ACL Claim. Rather, its opposition amounts to a contention that Mr and Mrs Rose can have no reasonable basis for thinking that there may be a case for breach of s 60 of the ACL. As I understand its submissions, Essential seeks to argue that no reasonable person apprised of what Mr and Mrs Rose have put before the Court would think that a right to obtain relief might exist: see Pfizer at [125].
106 In my opinion, by reference to the evidence relied on by them, Mr and Mrs Rose have established that they have a reasonable belief that they may have a right to obtain relief against Essential based on an alleged breach of s 60 of the ACL. Essential's attempts to displace that reasonable belief have not succeeded. My reasons for reaching that conclusion follow.
107 Essential raises a number of technical and somewhat complex legal arguments as to why Mr and Mrs Rose could not reasonably believe that they may have a right to obtain relief based on the ACL Claim. Those arguments, at their highest, establish that the bases for the alleged claim are contestable or that the "internal legal mechanics" are arguably faulty. But they do not rise to the level required to conclude that Mr and Mrs Rose could not reasonably believe that they may have a right to obtain the relief.
108 First, Mr and Mrs Rose rely on the Connection Contract to establish that they may have a right to relief against Essential based on the ACL Claim.
109 The Connection Contract applies to the "customer" if the premises, that is, the address at which the customer connection services are provided, are connected to Essential's distribution system and there is no other customer connection contract in place with Essential for those premises. It was not in dispute that the Land was so connected and that the Connection Contract applied as at the date of the Tathra Bushfire.
110 Under cl 5.1 of the Connection Contract Essential agrees to do three things: to provide customer connection services which includes "services relating to the flow of energy to" relevantly the Land; to meet other obligations set out in the Connection Contract; and to comply with the energy laws which relevantly are national and State laws and rules relating to energy and the legal instruments made under those laws and rules. Mr and Mrs Rose contend that that clause should be given its ordinary and natural meaning and that "energy laws" is not confined in any way. It includes for example reg 5 of the ES Regulation which provides that a network operator must take all reasonable steps to ensure that the design, construction, commissioning, operation and decommissioning of its network, or any part thereof, are safe. In that way Mr and Mrs Rose say that on the Connection Contract alone it is arguable that the services that are provided include compliance with that regulation which is a requirement that Essential operate the network safely.
111 Essential argues that the Connection Contract should be construed narrowly. In summary it says that the Connection Contract is limited to the customer's ability to receive electricity from the network, i.e. connection services and not network services, and that the reference to "energy laws" should be read such that it is confined to those laws that are "relevant to the Connection Contract" and thus which concern the provision of connection services. In contrast, Mr and Mrs Rose contend that the Connection Contract should not be construed so narrowly and that the reference to "energy laws" should not be confined in the way contended for by Essential.
112 The proper construction of the Connection Contract is not a matter to be determined on this application. The construction contended for by Mr and Mrs Rose is not such that no reasonable person apprised of the material now before the Court would believe that a right to obtain relief based on the ACL claim might exist. Essential raises a number of complex legal arguments as to why Mr and Mrs Rose's construction should be rejected. These are matters to be determined at a trial after hearing fully from the parties and considering the material in detail and not on an application of this nature. Suffice to say on the material presently before the Court I am satisfied that the construction of the Connection Contract contended for by Mr and Mrs Rose gives rise to a reasonable belief that they may have a claim for relief against Essential based on the ACL Claim.
113 Secondly, Mr and Mrs Rose contend that the services provided by Essential extend to ensuring that its network is generally safe, that they, together with others, indirectly fund Essential's operations and those funds are not used only for each person's specific network connection but are used to enable Essential to operate a safe network for the benefit of all its customers.
114 Mr and Mrs Rose rely on a number of documents in support of that contention including the following:
(1) a document titled "Distribution Network Growth Strategy - CEOP2092 2019-2024" dated June 2018 which includes:
(a) in the executive summary under the heading "strategy synopsis" that "Essential … is committed to using reasonable and practical methods to deliver cost-effective capacity and supply quality performance within our distribution network" and a "distribution growth investment forecast summary" which summarises the forecast capital investments for the period 2019-24 for "distribution growth investment" and "network technology investment" based on historical expenditure patterns. The "primary needs and justifications" for those investments are said to include:
(i) minimising bushfire ignition network causes that may result from overloaded, or under protected equipment; and
(ii) ensuring equipment is safely operated within design ratings; and
(b) in the background section under the heading "history and need for an electrical distribution network" that "our current lifestyle depends on the availability of a safe and reliable power supply"; and
(2) Essential's annual report for 2016-17 which includes:
(a) in the chief executive officer's review that "affordability also continues to be a key customer challenge" and that Essential "recognises this and is focused on delivering network charge reductions for customers over time, alongside improved financial performance";
(b) in the section "year in review" that Essential "continued its path of transformation based on four core objectives" which included "continuous improvement in safety culture and performance" and delivery of "real reductions in customers' network charges", that its customers told it that "affordability and reliability continue to be key concerns" and that Essential's "focus remains on minimising charges and improving services"; and
(c) in the section "enduring" under the heading "customer engagement" that:
The electricity industry is undergoing significant change as it responds to customer demand for lower prices, energy alternatives and greater control of their electricity supply.
As [Essential's] business evolves and adapts to the opportunities this presents, the business needs to ensure its plans deliver what customers want and allow it to keep improving safety, efficiency, productivity and delivery cost. [Essential's] understanding of what customers value, need and expect from the business, now and into the future, is critical information for decision-making and business planning.
115 Mr and Mrs Rose also rely on a 2019-24 regulatory proposal prepared by Essential which summarises Essential's "proposed five-year plan for operating and maintaining NSW's largest electricity network from 2019 to 2024" in which:
(1) the message from the chief executive officer includes:
The [Essential] network is funded though charges that form part of the electricity bills issued by your retailer. Each bill covers everything from electricity generation to transmission, distribution ([Essential]), retail and State and Federal Government charges. With [Essential's] distribution network charges (tariffs) making up around 37 per cent of the typical total bill, our revenue is set by the Australian Energy Regulator (AER).
Every five years, we submit a Regulatory Proposal to the AER, which lays out exactly what we plan to do and the funding we'll need to do it. The AER reviews our Proposal, considers customer feedback, and tells us how much we can charge customers to cover the next five years of operations.
Our Proposal's key objectives are to deliver a safe, reliable and efficient electricity network for customers; limit increases in distribution network charges for customers and deliver long-term price stability; set the business up to service customers' future needs in a rapidly evolving energy ecosystem; and deliver satisfactory shareholder returns.
(2) under the heading "funding a safe and reliable network" it is noted that the revenue requirement outlined in the proposal to "ensure the network is available and operating safely is $5.1 billion over the five years" and that "this revenue enables us to operate and maintain a safe, reliable and efficient network"; and
(3) under the heading "listening and acting" it provides that "safety is essential for doing business", "customers expect safety to be fundamental to everything we do", "safety remains our number one priority" and "customers see our distribution costs are good value for money at around 37% of a typical residential bill".
116 That material and other material like it which was before me in evidence is sufficient to establish that arguably the services provided by Essential extend beyond connection services to the provision of a safe network and that Mr and Mrs Rose (and others like them) are customers who indirectly pay and/or fund Essential for the provision of a network.
117 Mr and Mrs Rose rely on the decisions in Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd (1985) 7 FCR 509 (Castlemaine) and Australian Competition and Consumer Commission v Flight Centre Ltd (No 2) (2013) 307 ALR 209; [2013] FCA 1313 (ACCC v Flight Centre) to support their proposition that the term "supply" has been widely construed and that the absence of a contract does not preclude reliance on s 60 of the ACL.
118 Castlemaine was an appeal from a decision concerning the exclusive dealing provisions of the then Trade Practices Act 1974 (Cth) (TPA). The primary judge had found that there had been a breach of s 47(6) of the TPA and a threat of a breach of s 47(7) of that Act. Relevantly, s 47(6) of the TPA provided that a corporation engages in the practice of exclusive dealing if it: supplies, or offers to supply, goods or services; supplies, or offers to supply, goods or services at a particular price; or gives or allows, or offers to give or allow, a discount, allowance, rebate or credit in relation to the supply or proposed supply of goods or services by the corporation, on the condition that the person to whom the corporation supplies or offers or proposes to supply the goods or services will acquire goods or services of a particular kind or description directly or indirectly from another person.
119 The appeal was dismissed by majority (Fox J dissenting). At 532 Lockhart J considered the meaning of "supply" noting that it was a word of wide import and that the subject matter of the TPA and its purposes did not call for any reading down of its ordinary meaning. His Honour said that "[t]he prohibited supply is essentially the supply of goods or services pursuant to business transactions", citing Commonwealth v Sterling Nicholas Duty Free Pty Limited (1972) 126 CLR 297.
120 A similar approach to the meaning of the word "supply" was taken in ACCC v Flight Centre in the context of s 76 of the TPA where at [129]-[131] Logan J said:
[129] "Supply" is defined by s 4C of the TPA but in an inclusive circular way; materially:
• in s 4:
supply, when used as a verb, includes:
(a) in relation to goods - supply (including re-supply) by way of sale, exchange, lease, hire or hire-purchase; and
(b) in relation to services - provide, grant or confer; and, when used as a noun, has a corresponding meaning, and supplied and supplier have corresponding meanings.
• in s 4C:
(d) a reference to the supply or acquisition of services includes a reference to the supply or acquisition of services together with property or other services, or both;
[130] Such is the breadth of the ordinary meaning of the word "supply", "[t]o provide, or provide with, something. a. trans; to furnish or provide (a person) with something; (in early use) to satisfy the wants of, provide for; (now usually) to furnish with regular supplies of a commodity. Freq. with with" (Oxford English Dictionary, online edition, accessed 14 Nov. 2013), I doubt that the inclusive quality of the s 4 definition adds much, if anything, to the meaning of the word for the purposes of the TPA. It has long been regarded as a word of wide import: Commonwealth v Sterling Nicholas Duty Free Pty Ltd (1972) 126 CLR 297 at 309; [1972-73] ALR 23 at 30. That said, statutory context and subject matter, scope and purpose of the Act and the provision in which a term appears are always relevant considerations when considering its meaning. The addressing of the restrictive trade practices to which Part IV of the TPA is directed and of which ss 45 and 45A are paradigms "can only be understood if economic theory and writings are considered": Boral Besser Masonry at [247] per McHugh J. To recognise this is not to violate the warning in Visy Paper against the substitution of economic jargon for the language of the TPA but rather to recognise that the context in which the term, "supply" appears in the TPA is in an Act which "combines legal and economic analysis": Boral Besser Masonry at [247] .
[131] Bearing this in mind, it may readily be accepted that the inclusive qualities in the definition of the word "supply" confirm what its breadth of ordinary meaning would suggest, which is that it is not necessary for a person to be in a contractual relationship with a consumer in order for that person to be a supplier of a service to that consumer. To this extent, the commission's submission may be accepted. IMB and IMB Appeal, in which the meaning of s 47 of the TPA was considered, do not, in my view, support a further extension of the embrace of the word "supply" such that, in the different context of ss 45 and 45A of the TPA, where "supply" and "acquire" are not generally augmented by the adverbs, "directly or indirectly", procuration or facilitation by an agent of a service (the air travel) provided by that agent's principal is also a "supply" of that service by the agent.
121 The material relied on by Mr and Mrs Rose, including the authorities set out above, provide a proper basis for them to reasonably believe that they may have a right to relief against Essential arising out of the ACL Claim even absent the Connection Contract. Essential's attempt to undermine that reasonable belief goes no further than to challenge or contest the basis upon which Mr and Mrs Rose put their claim. It does not rise to the level of establishing that no reasonable person apprised of the matters put before the Court would think that a right to obtain the relief might exist. That is not to say that the issues raised by Essential are not arguable. They are but they are arguments to be ventilated and considered on another occasion, if a proceeding is commenced and a claim in the nature which Mr and Mrs Rose believe they may have is in fact made.
122 Given the conclusion I have reached about the ACL Claim it is not necessary for me to consider the jurisdictional issue raised by Essential. That issue would only arise for determination if Essential was successful in establishing that Mr and Mrs Rose's belief that they may have a claim for relief based on the ACL Claim was not reasonably held, which it has not done.
123 In the context of the jurisdictional issue Mr and Mrs Rose also submitted that in any proceeding commenced against Essential in which they claim the contemplated relief, the Court will be required to decide matters arising under the Insurance Contracts Act 1984 (Cth) (IC Act) at least to determine the application of s 67 of that Act and the rights of Mr and Mrs Rose and other potential group members and their insurers given that both insured and uninsured losses have been incurred by Mr and Mrs Rose and presumably other potential group members. Mr Petrovski gave evidence that if proceedings are commenced relief will be sought under s 67 of the IC Act and that both insureds and insurers will be conducting the proceedings in accordance with, and maintaining rights arising under, s 67 of the IC Act. As this issue was raised in the context of this Court's jurisdiction to make the orders sought by Mr and Mrs Rose pursuant to r 7.23 of the Rules, I do not propose to consider the submissions relating to it any further.