Sita Qld Pty Ltd v State of Queensland

THE CHIEF EXECUTIVE OF THE DEPARTMENT OF TRANSPORT (QUEENSLAND)

RAYMOND GRAHAM CLARK AND YVONNE HAZEL CLARK TRADING AS CLARK'S LOGAN CITY BUS SERVICE

History 1 Until 2 October 1995, a company called Coachtrans Australia Pty Ltd carried on the business of transporting passengers by bus between Brisbane and the Gold Coast, including between Brisbane and Logan City, Logan City and the Gold Coast and within the Gold Coast. At that time, the second applicant ("Harlingdale") carried on a similar business in those areas. On 2 October 1995, the first applicant ("Sita") acquired both businesses and has subsequently conducted them under the names "Coachtrans Australia" and "Pacific West" respectively. The acquisition of the Harlingdale business included the acquisition of Passenger Licence 146 issued pursuant to the State Transport Act 1960 (Qld), authorizing the carriage of passengers by road between Brisbane and Coolangatta with intermediate stops. On 26 February 1996, the second respondent ("Queensland Rail") commenced to operate a rail service between Brisbane and Helensvale with connecting bus services provided by the fifth respondent ("Surfside") from Helensvale railway station to destinations on the Gold Coast. The rail link now extends to Robina.

Statutory Regulation 2 Central to much of the applicants' case is the Transport Operations (Passenger Transport) Act 1994 (Qld) (the "TOPT Act"). Prior to September 1994, passenger bus services were controlled by various acts of the Queensland Parliament which were then repealed and replaced by the TOPT Act. That Act is not easy to understand, and so rather than quote lengthy extracts from it, I will attempt to explain its general effect. Its purpose appears to be to encourage the provision by private operators of bus services in various areas and on particular routes, and to ensure the quality of the services provided. It confers responsibilities upon persons described as the "Minister" and the "Chief Executive", although it does not identify these persons. It is reasonable to assume that the references are to the Minister administering the Department of Transport (assuming the existence of such a department) and the permanent head of that department, who may also be those "persons" joined as the third and fourth respondents. At the hearing of the present motion, I raised the question of the appropriateness of the joinder of such "persons". Mr Harrison QC, for the applicants, asserted such appropriateness, but I remain unconvinced. I understand that counsel are considering the matter. For present purposes, I will assume that the third and fourth respondents are respectively the Minister and the Chief Executive referred to in the TOPT Act and refer to them accordingly. That Act confers express powers and responsibilities upon the Chief Executive to enter into contracts for the provision of transport services. It contemplates the possible need to offer incentives to operators, including limitations on competition and financial assistance. 3 Chapters 5, 6 and 12 of the TOPT Act are presently relevant. It is best to commence with ch 6. Section 38(1) defines a "service contract" as a contract between the Chief Executive and an operator of a public passenger service for an identified area or route. Section 42 authorizes the Chief Executive to declare "that a service contract will be required to provide a public passenger service of a specified kind for a specified area or route". Although the language might suggest that the obligation upon the Chief Executive is to declare the existence of a need for such a service, the intention is rather that he or she declare that such a service not be provided in the relevant area or on the relevant route unless the provider is a party to a service contract. This follows from s 43. Section 38(2) permits the inclusion in a service contract of an exclusive right to operate a public passenger service in a particular area or on a particular route where a regulation has been made pursuant to s 36, provided that the Chief Executive has made a declaration pursuant to s 42. Section 36 (which is the only section in ch 5) authorizes the making of a regulation declaring that a public passenger service is to be provided with "market entry restrictions" in certain circumstances, which appear to be those likely to justify granting a monopoly in order to encourage an operator to provide a service which would otherwise be uneconomical. 4 The relevant provision of ch 12 is s 143B, which was inserted in 1997. It provides that the Chief Executive may enter into an agreement "providing for help from the State for a transport function only if the Minister has approved the basis on which the help is to be provided." The section then sets out appropriate considerations for the guidance of the Minister. The term "help" is defined to include funding and financial or other assistance. The term "transport function" is defined to mean:- A function under this Act or that is necessary or incidental to achieving the objectives of this Act but does not include:- (a) funding or other financial assistance under s 52; or (b) arrangements under s 144; or (c) financial arrangements under s 172C - s 172F. 5 The inter-relationship between s 143B and s 52 is a little difficult to understand. I will return to that matter at a later stage.

The Applicants' Claims 6 The applicants' claims (with references to relevant paragraphs in the statement of claim) are as follows:- (1) For breach of an agreement allegedly entered into by a former Minister for Transport on behalf of the first respondent ("Queensland") with Sita for the provision of a bus service (pars 9-11); (2) For breach by Queensland and the second respondent ("Queensland Rail") of anti-monopoly legislation (pars 12-37); (3) For misfeasance in public office in connection with the fixing of rail fares (pars 38-41); (4) For unconscionable conduct arising out of the same facts as (2) and (3) above (par 41A); (5) For irregularities in the establishment of restrictions under the TOPT Act in connection with the Gold Coast and Logan areas (pars 42-62); (6) For negligence and breach of statutory duty in the management of the TOPT Act (par 63-65); (7) For misleading and deceptive conduct and negligence in making representations as to the entitlement of the applicants to conduct certain transport operations (pars 66-75); (8) For breach of contract arising out of the same facts as (7) (pars 76-78); (9) In estoppel, based on the same facts as (7) and (8) (par 79); (10) For misfeasance in public office arising out of the same facts as (5), (6) and (7) (pars 80-88); and (11) For interference with trade and illegal compulsion arising out of the same facts as (2), (5), (6), (7) and (10) (par 89).

The Present Motion 7 Queensland, Queensland Rail, the Minister for Transport and the Chief Executive now move to dismiss or strike out claims (1), (2), (3), (4), (7), (8), (9), (10) and (11) pursuant to O 20 r 2 or O 11 r 16.

(1) Contract Claim 8 In paras 9-11 of the statement of claim, it is alleged that on 20 December 1997, a former Minister for Transport ("Mr Johnson") agreed with Sita that Queensland would enter into a "Coolangatta-to-Brisbane route service contract" with Sita under s 143B of the TOPT Act, containing certain specified terms, including that Queensland pay to Sita $2.60 per kilometre travelled by buses operated by Sita on that route. Sita also undertook to operate bus services in lieu of rail services at certain times. Queensland undertook to call tenders for a "commercial service contract" between Brisbane airport and the Gold Coast, only existing operators being permitted to tender. Mr Johnson later repudiated the agreement. Sita seeks damages from Queensland for breach of contract. 9 This claim poses numerous problems. The reference to a "Coolangatta to Brisbane route service contract" suggests that Sita expected to become party to a service contract pursuant to ch 6, a term of which would provide for financial assistance in the provision of the relevant service. However, for reasons which are not immediately obvious, a bus route between Coolangatta and Brisbane is probably excluded from the operation of ch 6. This is because s 39 prescribes certain categories of public passenger service for which service contracts may be required, including "scheduled passenger services" and other services which are not presently relevant. The term "scheduled passenger service" is defined in Sch 3 so as to exclude a "long-distance scheduled passenger service". The latter term is also defined, and although it is not absolutely clear, it was accepted in argument that the Coolangatta-Brisbane route was such a service, rather than a "scheduled passenger service". The pleading also refers to a "commercial service contract". This expression is found in s 50(2) of the TOPT Act, which is also part of ch 6. Part 2 (of which s 50 forms part) applies only to "scheduled passenger services". (See s 49.) The primary source of the alleged agreement as pleaded is the document attached to the statement of claim as Sch 1, which document was allegedly before the Minister and Mr Sita at the time of the negotiations in question. Both the pleading and the scheduled document refer to s 143B of the TOPT Act. The latter also refers to the Chief Executive as a contracting party. 10 All of these references lead to the inevitable inference that, notwithstanding the fact that the Coolangatta-Brisbane route is not a scheduled passenger service, the pleader was alleging that the parties had agreed that Sita receive a service contract pursuant to ch 6. This poses other problems. Mr Johnson, as Minister, had no power to enter into a contract pursuant to ch 6 or pursuant to s 143B. The appropriate contracting party in each case was the Chief Executive, although the Minister's consent was necessary to any financial assistance offered pursuant to s 143B. Financial assistance could also be made available as a term of a ch 6 contract pursuant to s 52, but again, any such financial assistance was subject to the approval of the Minister. 11 This highlights the difficulty to which I have previously referred in connection with the operation of ss 52 and 143B. The exclusion from the definition of "transport function" in s 143B of "funding or other financial assistance under s 52" was probably intended to exclude from the operation of s 143B, service contracts containing their own provisions for funding assistance pursuant to s 52. The provision of funding pursuant to s 52 might be a "transport function" as defined in s 143B if there were no express exclusion thereof. It is difficult to see any reason for the Chief Executive to enter into an agreement to provide financial assistance in connection with the provision of financial assistance. The structure of these provisions, to say the least, is inelegant. 12 Queensland submits that it was beyond Mr Johnson's power to make an agreement of the kind alleged, simply because a contract pursuant to ch 6 or s 143B, could only be made by the Chief Executive. Paragraph 9 of the statement of claim does not plead that Mr Johnson entered into a service contract, but rather that he agreed that Queensland would enter into a "route service contract". Assuming this to be a reference to a service contract pursuant to ch 6, and quite apart from the question of whether a contract with the Chief Executive under the Act would be binding upon Queensland, Mr Johnson could not bind himself contractually in a way which would also fetter the exercise of the discretion conferred upon the Chief Executive by the TOPT Act. 13 There is clear authority for the proposition that:- When the administration of particular functions of government is regulated by a statute and the regulation expressly or impliedly touches the power of contracting, all statutory conditions must be observed and the power no doubt is no wider than the statute contemplates. See State of New South Wales v Bardolph (1934) 52 CLR 455 at 496 per Rich J, approved by the Judicial Committee of the Privy Council in Cudgen Rutile (No 2) Ltd v Chalk [1975] AC 520 at 533. This general rule also prevents the fettering of a discretion. In Cudgen at p 533 their Lordships said:- It follows as a logical consequence that when a statute, regulating the disposal of Crown lands, or of an interest in them, prescribes a mode of exercise of the statutory power, that mode must be followed and observed: and if it contemplates the making of decisions, or the use of discretions, at particular stages of the statutory process, those decisions must be made, and discretions used, at the stages laid down. From this in turn it must follow that the freedom of the minister or officer of the Crown responsible for implementing the statute to make his decisions, or use his discretions, cannot validly be fettered by anticipatory action; and if the minister or officer purports to do this, by contractually fettering himself in advance, his action in doing so exceeds his statutory powers. 14 Similarly, in Attorney-General (NSW) v Quin (1989-90) 170 CLR 1 at 17, Mason CJ said:- The executive cannot by representation or promise disable itself from, or hinder itself in, performing a statutory duty or exercising a statutory discretion to be performed or exercised in the public interest, by binding itself not to perform the duty or exercise the discretion in a particular way in advance of the actual performance of the duty or exercise of the power … . 15 It cannot have been within Mr Johnson's power as Minister to contract to fetter the discretion of the Chief Executive in exercising any power pursuant to the TOPT Act. 16 Despite the clear intention to the contrary in the pleading, the applicant submits that what is intended is an allegation that Mr Johnson was exercising some residual prerogative power to enter into the contract in question, and that the contract referred to in the pleading as a "route service contract" was not a service contract of the kind contemplated by the TOPT Act, but a contract also to be entered into in exercise of the general prerogative power of government. The detailed statutory regime established by the TOPT Act appears to regulate many aspects of the provision of passenger services. It is difficult to identify room for such prerogative power. Any asserted exercise of such a power would require careful examination in this respect. 17 The present pleading is, in my view, embarrassing in that it expressly refers to the TOPT Act and adopts terminology similar to, or identical with terminology used in that Act in such a way as to create a clear perception that Sita is claiming an entitlement to a service contract pursuant thereto. If that is not the intention, as much should be made clear. Further, any pleading of a contract entered into by Mr Johnson in exercise of the prerogative power of the Crown for the provision of bus services should identify the proposed services and terms in such a way as to make it clear that such contract is not inconsistent with the TOPT Act. The contract claim as presently pleaded should be struck out as embarrassing.

(2) Monopolization 18 Paragraphs 12-37 raise the issue of abuse of market power. Sita claims damages from Queensland and Queensland Rail. This cause of action is complicated by the relevant statutory provisions. In a broad sense, reliance is placed upon s 46 of the Trade Practices Act 1974 (Cth) (the "Trade Practices Act")but in fact, the application demonstrates that Sita relies upon the provisions of the Competition Policy Reform (Queensland) Act 1996 (Qld) (the "Competition Act"), which adopts most of the provisions of the Trade Practices Act, including s 46, although the latter section is amended in a material particular. 19 Section 46 of the Trade Practices Act prohibits a corporation, having a substantial degree of power in a particular market, from the use of such power for certain purposes. Section 82 permits a claim for damages resulting from any breach thereof. Section 4 defines "corporation" to mean:- … a body corporate that:- (a) Is a foreign corporation; (b) Is a trading corporation formed within the limits of Australia or is a financial corporation so formed; (c) Is incorporated in a territory; or (d) Is the holding company of a body corporate of a kind referred to in paragraph (a) (b) or (c) … . 20 In general, prior to 1995, the Trade Practices Act did not bind the Crown in right of the states. In 1995, s 2B was enacted, providing that, to the extent that the Crown in right of a state is carrying on business, either directly or by an authority of the state, Pt IV (which includes s 46) and related provisions of that Act (presumably including s 82) apply to it. This did not create a right of action against the Crown in right of a state for a breach of s 46 because s 46 applies only to corporations. A state is not a corporation as defined. This problem appears to have been overcome by the Competition Act, which adopts what is called the "Schedule version" of Pt IV. In particular, s 46 is amended by deleting reference to a "corporation" and inserting reference to "a person". The applies to the construction of the Competition Code adopted by the Competition Act (which includes the Schedule version of Pt IV). Pursuant to s 22, the expression "person" includes a body politic or corporate as well as an individual. The State of Queensland is presumably a body politic and therefore included in the term "person" in the Schedule version of Pt IV. The effect is that s 46, in its amended form, and substantially all of the provisions of the Trade Practices Act, in so far as they are relevant to a claim under s 46, apply to Queensland. However s 13 of the Competition Act makes it clear that such application is limited to actions taken in carrying on business, either directly or by an authority. The term "authority" is defined in s 4 of the Trade Practices Act (adopted by s 3(2) of the Competition Act) in relation to a state, to mean:- (a) A body corporate established for a purpose of the State … by or under a law of the State …; or (b) an incorporated company in which the State … or a body corporate referred to in paragraph (a) has a controlling interest … . 21 For present purposes, it is not disputed that Queensland Rail was carrying on a business at all relevant times. Therefore it is at least arguable that Queensland was carrying on that business through Queensland Rail. 22 The Schedule version of s 46 relevantly provides as follows:- (1) A person (the "first person") who has a substantial degree of power in a market shall not take advantage of that power for the purpose of: (a) eliminating or substantially damaging a competitor of the first person or of a body corporate that is related to the first person in that or any other market; (b) preventing the entry of a person into that or any other market; or (c) deterring or preventing a person from engaging in competitive conduct in that or any other market. (1A) For the purposes of subsection (1): (a) the reference in paragraph (1)(a) to a competitor includes a reference to competitors generally, or to a particular class or classes of competitors; and (b) the reference in paragraphs (1)(b) and (c) to a person includes a reference to persons generally, or to a particular class or classes of persons. (2) If: (a) a body corporate that is related to a person (the "first person") has, or 2 or more bodies corporate each of which is related to the one person (the "first person") together have, a substantial degree of power in a market; or (b) a person (the "first person") and a body corporate that is, or a person (the "first person") and 2 or more bodies corporate each of which is, related to the first person, together have a substantial degree of power in a market; the first person shall be taken for the purposes of this section to have a substantial degree of power in that market. (3) In determining for the purposes of this section the degree of power that a person (the "first person") or bodies corporate has or have in a market, the Court shall have regard to the extent to which the conduct of the first person or of any of those bodies corporate in that market is constrained by the conduct of: (a) competitors, or potential competitors, of the first person or of any of those bodies corporate in that market; or (b) persons to whom or from whom the first person or any of those bodies corporate supplies or acquires goods or services in that market. (4) In this section: (a) a reference to power is a reference to market power; (b) a reference to a market is a reference to a market for goods or services; and (c) a reference to power in relation to, or to conduct in, a market is a reference to power, or to conduct, in that market either as a supplier or as an acquirer of goods or services in that market. (5) Without extending by implication the meaning of subsection (1), a person shall not be taken to contravene that subsection by reason only that the person acquires plant or equipment. (6) This section does not prevent a person from engaging in conduct that does not constitute a contravention of any of the following sections, namely, sections 45, 45B, 47 and 50, by reason that an authorization is in force or by reason of the operation of section 93. (7) Without in any way limiting the manner in which the purpose of a person may be established for the purposes of any other provision of this Act, a person may be taken to have taken advantage of the person's power for a purpose referred to in subsection (1) notwithstanding that, after all the evidence has been considered, the existence of that purpose is ascertainable only by inference from the conduct of the person or of any other person or from other relevant circumstances. 23 I proceed upon the basis that Queensland and Queensland Rail are "related" for the purposes of subs 46(2) and that their combined market power should therefore be treated as the power of each of them for all present purposes. (See s 4A of the Trade Practices Act and s 4 of the Competition Act.) 24 It is important to note that power is market power in a market for goods or services and that a reference to power in relation to, or to conduct in a market is a reference to power or conduct as a supplier or acquirer of goods or services. The extent of a person's market power is to be measured having regard to the extent to which that person's conduct in the market is affected by competition in the market place and/or by the conduct of suppliers and/or consumers. In Trade Practices Commission v Pioneer Concrete (Qld) Pty Ltd (1994) 52 FCR 164 at 172, Sheppard J said that subs 46(3) did not mean that substantial market power for the purposes of s 46 must be derived only from factors operating in the market. The other members of the Court (Jenkinson and Drummond JJ) appear to have accepted this view, as do I for present purposes. Nevertheless, factors outside the market are only relevant to the extent that they affect power in the market because such power is the focus of s 46. 25 The first requirement in applying this section is to identify the relevant market. The applicants have identified it as that for the provision of public passenger transport services between Brisbane and the Gold Coast along the "Brisbane/Gold Coast public transport corridor". It is not clear whether this includes transport between various points, including Brisbane, the Gold Coast and places in between, or only transport between a terminus in Brisbane and one on the Gold Coast. It is alleged in pars 13 and 14 that Sita and Queensland Rail are competitors in that market. As Sita operates road transport, it is implicit in this allegation that rail and road transport are largely "substitutable". (See s 4E of the Trade Practices Act.) 26 It is now necessary to identify the power in the market allegedly held by Queensland and/or Queensland Rail. That has been particularized as follows:- (a) Queensland Rail is able to carry on business in the market using its infrastructure, plant and equipment without commercial regard to the net commercial benefits from that use. (b) Queensland Rail is able to charge prices for its services that are unrelated commercially to the cost of: (i) the infrastructure plant and equipment used in providing those services; (ii) other costs of providing those services. (c) Queensland Rail is not subject to the constraint of providing those services at a price that will provide a commercial return, in that it is able to rely on Queensland to provide support of the kind referred to in paragraph (e); (d) Queensland Rail is thereby able to price those services independently of the pricing of its competitors. (e) Queensland, by reason of its position as a body funded by taxation and grants, is able to and does provide financial assistance to Queensland Rail for its conduct of the Brisbane/Gold Coast rail link, both by way of direct grants and by way of cross-subsidisation of capital and operating costs. (f) Queensland controls the variable message signs along the highway between Brisbane and the Gold Coast which provide a facility which Queensland Rail uses to seek business from its and Sita's potential customers, that is to say, private motorists travelling between Brisbane and the Gold Coast. (g) Queensland has power under the TOPT Act, by the Chief Executive, to impose restrictions on Sita's manner of conduct of its business including the business it conducts in competition with Queensland Rail, and power to deprive Sita of its right to carry on business by its power under section 17 as the authority administering the operator accreditation system established by that Act. 27 Notice of intention to amend to add sub-pars 9(f) and (g) was given at the hearing. Sub-paragraph 9(f) relates to advertising signs on the Pacific Highway, which Queensland controls. That appears to have little to do with power in the identified market. Sub-paragraph 9(g) seems to assume that Queensland may lawfully use the TOPT Act for the purpose of advancing the business interests of Queensland Rail at the expense of road transport competitors. There is nothing in the TOPT Act to justify that view. Further, any legitimate exercise of power under the TOPT Act would be a governmental function rather than a business function, and therefore not caught by the Competition Act. (See ss 13 and 15 of the Competition Act.) The inclusion of par 9(g) as a particular of market power is therefore misconceived. 28 The remaining particulars focus upon the fact that Queensland Rail is allegedly freed from normal commercial considerations in its operations, including fixing fares, by the availability of existing infrastructure, plant and equipment and the availability of funding from Queensland, on a non-commercial basis. The validity of these assertions may be doubted but must be assumed for present purposes. The thrust of the particulars seems to lie in sub-par (d) which provides:- Queensland Rail is thereby able to price those services independently of the pricing of its competitors. 29 The significance of this paragraph is a little obscure. At first blush, it might be thought to be an allegation that Queensland Rail's freedom from commercial cares also relieves it from the need to take account of competing prices in fixing its fares. As the effect of competing prices is normally to keep prices down, inoculation against the effects of price competition might be seen as a classic example of the undesirable effects of monopolistic power. However it subsequently appears that Sita's complaint is of Queensland Rail's low fares, facilitated by the alleged funding arrangements. It is said that Queensland Rail is able to charge lower fares than its bus-operating competitors because of the availability of public funding and therefore, at least in theory, to attract a larger proportion of the market. It is not alleged that Queensland Rail holds any particular proportion of the market. Indeed, paragraph 39(b) suggests that at some stage, there was a fear that Queensland Rail was not doing well in attracting business and that low fares were necessary in order that it do so. In substance, Sita pleads that a competitor which has access to resources, without more, has market power. Since most, if not all business entities have some access to resources, this seems unlikely to be correct. Sita also implies that Queensland is willing to subsidize Queensland Rail to whatever extent is necessary. 30 For present purposes, I assume that access to such finance may be relevant to the assessment of the extent of market power. This assumption is really contrary to the major argument advanced by Queensland and Queensland Rail at the hearing. They submitted that in funding Queensland Rail, Queensland was performing a governmental function, not carrying on a business, and that such conduct, and the receipt of the funds by Queensland Rail were therefore unaffected by the Competition Act. There is a respectable argument to that effect, but I consider that it probably involves questions of fact and a more detailed consideration of ss 13 and 15 of the Competition Act than was undertaken by the parties. Further, I am of the opinion that there is a more fundamental question which may render that issue irrelevant. It is the adequacy of the pleading to raise a claim under s 46. After the hearing, I referred this matter to the parties, and they have submitted appropriate written arguments. 31 Given the considerations prescribed by subs 46(3) it is difficult to see how a litigant can seek to ventilate a claim under s 46 without pleading a great deal more than mere financial power. As much appears from the cases. In Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1988-89) 167 CLR 177 at 187-190, Mason CJ and Wilson J considered the concepts of power and market. Their Honours said:- The analysis of a s 46 claim necessarily begins with a description of the market in which the defendant is thought to have a substantial degree of power. In identifying the relevant market, it must be borne in mind that the object is to discover the degree of the defendant's market power. Defining the market and evaluating the degree of power in that market are part of the same process, and it is for the sake of simplicity of analysis that the two are separated. Accordingly, if the defendant is vertically integrated, the relevant market for determining degree of market power will be at the product level which is the source of that power: see the discussion of market power below. After identifying the appropriate product level, it is necessary to describe accurately the parameters of the market in which the defendant's product competes: too narrow a description of the market will create the appearance of more market power than in fact exists; too broad a description will create the appearance of less market power than there is. Section 4E directs that a market is to be described to include not just the defendant's product but also those which are "substitutable for, or otherwise competitive with", the defendant's product. This process of defining a market by substitution involves both including products which compete with the defendant's and excluding those which because of differentiating characteristics do not compete. In Hoffmann-La Roche v Commission ("Roche") ([1979] 1 ECR 461) the Court of Justice of the European Communities said ([1979] ECR at p 516): The concept of the relevant market … implies that there can be effective competition between the products which form part of it and this presupposes that there is a sufficient degree of interchangeability between all the products forming part of the same market in so far as a specific use of such products is concerned. Conversely, in determining in United Brands v Commission ("United Brands") ([1978] 1 ECR 207) whether other fruits should be excluded from the market which bananas served, the European Court said ([1978] 1 ECR at p 227): For the banana to be regarded as forming a market which is sufficiently differentiated from other fruit markets it must be possible for it to be singled out by such special features distinguishing it from other fruits that it is only to a limited extent interchangeable with them and is only exposed to their competition in a way that is hardly perceptible. See also Re Queensland Co-operative Milling Association Ltd ((1976) 25 FLR 169 at pp 190-191) (explaining that the defining feature of a market is substitution). After the market has been delimited, the question is whether the defendant has 'a substantial degree of power' within that market. Market power can be defined as the ability of a firm to raise prices above the supply cost without rivals taking away customers in due time, supply cost being the minimum cost an efficient firm would incur in producing the product: see Fuller, 'Article 86 EEC: Economic Analysis of the Existence of a Dominant Position', European Law Reports, vol 4 (1979) 423, at p 428. Section 46(3), which was added in 1986 by the Trade Practices Revision Act, provides that in determining the degree of market power a court should consider 'the extent to which the conduct of [the defendant] in that market is constrained by the conduct of … competitors, or potential competitors …'. The Explanatory Memorandum accompanying the Trade Practices Revision Act stated (par 46) that s 46(3) was designed to achieve an approach similar to that adopted by the European Court in determining market power for purposes of Art 86 of the EEC Treaty. The Memorandum mentioned Europemballage and Continental Can v Commission ("Continental Can") ([1973] 1 ECR 215, United Brands and Roche, the last two being cases to which we have already referred. In Continental Can the European Court recognized the necessity of considering potential competition in determining the degree of market power: a dominant position in the market for light metal containers for canned meat and fish cannot be decisive, in so far as it is not proved that competitors in other fields of the market, for light metal containers cannot by a mere adaptation, enter this market, with sufficient strength to form a serious counter-weight. Courts have often looked to market share to determine degree of market power: see, eg American Tobacco Co v United States ((1946) 328 US 781, at p 797, per Judge Learned Hand. But as s 46(3) and the passage from Continental Can which we just quoted suggest, a large market share does not necessarily mean that there is a substantial degree of market power. To borrow the words from Reed J's opinion for the Court in United States v Columbia Steel Co ((1948) 334 US 495, at p 528, 'the relative effect of percentage command of a market varies with the setting in which that factor is placed.' A large market share may well be evidence of market power (see Roche), but the ease with which competitors would be able to enter the market must also be considered. It is only when for some reason it is not rational or possible for new entrants to participate in the market that a firm can have market power: see Continental Can. There must be barriers to entry. As Professor F M Scherer has written, 'significant entry barriers are the sine qua non of monopoly and oligopoly, for … sellers have little or no enduring power over price when entry barriers are nonexistent': Scherer, Industrial Market Structure and Economic Performance, 2nd ed (1980), p 11. Barriers to entry may be legal barriers - patent rights, exclusive government licences and tariffs for example. Barriers to entry may also be a result of large 'economies of scale'. Where the economies of scale in a market are such that the minimum size for an efficient firm is very large relative to the size of the market, it may be that potential competitors will be dissuaded from entering the market by the apprehension that only one firm would survive. 32 Dawson J said at p 198-200:- Section 46 of the Trade Practices Act 1974 (Cth) in its present form prohibits a corporation that has a substantial degree of market power in a market for goods or services from taking advantage of that market power for certain purposes. The section throws up two basic questions. The first asks what degree of market power is required. The second asks what constitutes taking advantage of market power. Lying behind both of those questions is the concept of the market, a concept which is sometimes dealt with in a more complex manner than is necessary. A market is an area in which the exchange of goods or services between buyer and seller is negotiated. It is sometimes referred to as the sphere within which price is determined and that services to focus attention upon the way in which the market facilitates exchange by employing price as the mechanism to reconcile competing demands for resources: see Stigler and Sherwin, 'The Extent of the Market', Journal of Law and Economics, vol 28 (1985) 555, at p 555. In setting the limits of a market the emphasis has historically been placed upon what is referred to as the 'demand side', but more recently the 'supply side' has also come to be regarded as significant. The basic test involves the ascertainment of the cross-elasticities of both supply and demand, that is to say, the extent to which the supply of or demand for a product responds to a change in the price of another product. Cross-elasticities of supply and demand reveal the degree to which one product may be substituted for another, an important consideration in any definition of a market. This is reflected in s 4E of the Trade Practices Act which provides: For the purposes of this Act, 'market' means a market in Australia and, when used in relation to any goods or services, includes a market for those goods or services and other goods or services that are substitutable for, or otherwise competitive with, the first-mentioned goods or services.' (My emphasis.) Important as they are, elasticities and the notion of substitution provide no complete solution to the definition of a market. A question of degree is involved - at what point do different goods become closely enough linked in supply or demand to be included in the one market - which precludes any dogmatic answer: see Times-Picayune v United States ((1953) 345 US 594, at p 612). The process is an inexact one as may be illustrated by reference to the concept of a sub-market which has been employed from time to time. In Re Queensland Co-operative Milling Association Ltd ((1976) 25 FLR 169, at pp 190-191, the Trade Practices Tribunal observed: The distinction between markets and sub-markets can be merely one of degree. Sub-markets are the more narrowly defined, typically registering some discontinuity in substitution possibilities. Where the defining feature of a market is the existence of close substitutes (whether in demand or supply), the defining feature of a sub-market is the existence of still closer and more immediate substitutes. Sub-markets may be especially useful in registering the short-run effects of change; but they may be misleading if used uncritically to assess long run competitive effects. Too rigid an approach in defining a market is apt to lead to unrealistic results. In this case the submission was made that, Australian Wire Industries Pty Ltd ("AWI") and The Broken Hill Proprietary Co Ltd ("BHP") being treated as one, there was no market for Y-bar. But the existence or non-existence of sales of a product cannot conclude whether a market exists or not. It must be sufficient to constitute a market that there is a product for exchange, regardless of whether exchange or negotiation for exchange has actually taken place. In truth, the need to define the relevant market arises only because the extent of market power cannot be assessed otherwise than by reference to a market. The term 'market power' is ordinarily taken to be a reference to the power to raise price by restricting output in a sustainable manner. See Landes and Posner, 'Market Power in Antitrust Cases', Harvard Law Review, vol 94 (1981) 937, at p 937: Sullivan, Antitrust (1977), p 30; Areeda and Turner, Antitrust Law (1978), vol II, p 322; Easterbrook, 'The Limits of Antitrust', Texas Law Review, vol 63 (1984) 1, at p 20; Fuller, 'Article 86 EEC: Economic Analysis of the Existence of a Dominant Position', European Law Reports, vol 4 (1979) 423, at p 428. But market power has aspects other than influence upon the market price. It may be manifested by practices directed at excluding competition such as exclusive dealing, tying arrangements, predatory pricing or refusal to deal: see Standard Oil Co v United States ((1911) 221 US 1, at pp 55-59); United States v E I Du Pont De Nemours & Co ((1956) 351 US 337, at pp 389, 391-392; 54 AM Jur 2d, Monopolies. The ability to engage persistently in these practices may be as indicative of market power as the ability to influence prices. Thus Kaysen and Turner define market power as follows: A firm possesses market power when it can behave persistently in a manner different from the behaviour that a competitive market would enforce on a firm facing otherwise similar cost and demand conditions. (Kaysen and Turner, Antritrust Policy (1959), p 75) See also Re Queensland Co-operative Milling Association Ltd ((1976) 25 FLR, at pp 188-189). Market power is thus the advantage which flows from monopoly or near monopoly and consistently with that notion s 46(3) of the Trade Practices Act provides: … (The sub-section follows.) 33 It has been said that in this decision, Dawson J "took a broader view of market power and how to detect its presence" than did Mason CJ and Wilson J. See ATPR 5-045. I doubt whether this is strictly correct. The latter members of the Court were seeking to define market power whilst Dawson J was describing evidence of its presence. In any event, Sita's case, as pleaded, satisfies neither approach. Nothing in the pleading would lead to the conclusion that Queensland Rail could raise its prices without losing business. Thus the definition of "market power" advanced by Mason CJ and Wilson J is not met. Dawson J considered that market power must flow from monopoly or near monopoly. It is not pleaded that Queensland Rail enjoyed such a position in the market. I note that in Pioneer Concrete (Qld) Pty Ltd & Ors v Trade Practices Commission (unreported - Matter No B 34/95 - 10 March 1995) Brennan J (as his Honour then was), in argument, expressed doubt as to whether this observation by Dawson J was intended only to reflect the facts of the case in question. My own view is that his Honour was not speaking in such a limited way. 34 In Queensland Wire, the High Court apparently approved earlier observations of the Trade Practices Tribunal in Re Queensland Co-operative Milling Association Ltd (1976) 8 ALR 481 at 516-7 as follows:- Competition is a process rather than a situation. Nevertheless, whether firms compete is very much a matter of the structure of the markets in which they operate. The elements of market structure which we would stress as needing to be scanned in any case are these:- (1) the number and size distribution of independent sellers, especially the degree of market concentration; (2) the height of barriers to entry, that is the ease with which new firms may enter and secure a viable market; (3) the extent to which the products of the industry are characterized by extreme product differentiation and sales promotion; (4) the character of 'vertical relationships' with customers and with suppliers and the extent of vertical integration; and (5) the nature of any formal, stable and fundamental arrangements between firms which restrict their ability to function as independent entities. Of all these elements of market structure, no doubt the most important is (2), the condition of entry. For it is the ease with which firms may enter which establishes the possibilities of market concentration over time; and it is the threat of the entry of a new firm or a new plant into a market which operates as the ultimate regulator of competitive conduct. … It follows that the identification of markets must be the essential first step in assessment of present competition and likely competitive effects. In our view the usefulness of the 'market' concept goes beyond the determination of market concentration to the identification of rivalrous relationships between sellers. Yet we stress that market definition can be but a first step; and we agree with Mr Brennan when he said that mere specification of markets cannot be determinative by itself of some ultimate issue. … Before giving our reasons we should explain our understanding of the market concept, and of the relationship between 'markets' and 'sub-markets'. We take the concept of a market to be basically a very simple idea. A market is the area of close competition between firms or, putting it a little differently, the field of rivalry between them (if there is no close competition there is of course a monopolistic market). Within the bounds of a market there is substitution - substitution between one product and another, and between one source of supply and another, in response to changing prices. So a market is the field of actual and potential transactions between buyers and sellers amongst whom there can be strong substitution, at least in the long run, if given a sufficient price incentive. Let us suppose that the price of one supplier goes up. Then on the demand side buyers may switch their patronage from this firm's product to another, or from this geographic source of supply to another. As well, on the supply side, sellers can adjust their production plans, substituting one product for another in their output mix, or substituting one geographic source of supply for another. Whether such substitution is feasible or likely depends ultimately on customer attitudes, technology, distance, and cost and price incentives. It is the possibilities of such substitution which set the limits upon a firm's ability to 'give less and charge more'. Accordingly, in determining the outer boundaries of the market we ask a quite simple but fundamental question. If the firm were to ;give less and charge more' would there be, to put the matter colloquially, much of a reaction? And if so, from whom? In the language of economics the question is this: From which products and which activities could we expect a relatively high demand or supply response to price change, ie a relatively high cross-elasticity of demand or cross-elasticity of supply? The distinction between markets and sub-markets can be merely one of degree. Sub-markets are the more narrowly defined, typically registering some discontinuity in substitution possibilities. Where the defining feature of a market is the existence of close substitutes (whether in demand or supply), the defining feature of a sub-market is the existence of still closer and more immediate substitutes. Sub-markets may be especially useful in registering the short-run effects of change; but they may be misleading if used uncritically to assess long run competitive effects. 35 One other case is worthy of consideration in this context. It is the decision of the Full Court in Arnotts Limited v Trade Practices Commission (1990) 97 ALR 555. I cite the case solely for the purpose of demonstrating the detailed and considered approach necessarily taken to the identification and description of a market and the roles of the various players in it. In particular, at 580-583, the Court identified barriers to entry as possibly the only aspect of market power always arising for consideration in identifying market power. At 582-3, in the context of an analysis of the biscuit market in Australia, their Honours said:- Some of the theoretical barriers to entry do not apply to the present case. As we see the evidence, it indicates five potential barriers to entry: the difficulties facing a competitor by reason of Arnotts' position as market (65% share) and price leader; the capital cost which would be incurred by another organization which sought to compete with Arnotts across a broad product range; the strength of brand loyalty enjoyed by Arnotts; the competitive advantages ensuing from Arnotts' economies of scale and range; and the difficulty which a competitor would face in obtaining sufficient supermarket shelf space to support an 'across the range' operation. The five matters are, of course, entwined. Sita's case, as pleaded, would not permit such an exercise or anything remotely like it. 36 Sita relies primarily upon the decision of Cooper J at first instance in Trade Practices Commission v Pioneer Concrete (Qld) Pty Ltd (1994) 50 FCR 160. I have referred previously to that matter on appeal to the Full Court and to the subsequent application for special leave in the High Court. Sita also relies on those decisions. Application was made to Cooper J to strike out aspects of the pleading in a claim pursuant to s 46. His Honour declined to strike out passages alleging economic power. It is clear, however, that the pleading did not rely upon a bare assertion of such power. It dealt also with access to raw materials, diversification, positions in similar markets, a non-competitive arrangement with another supplier in the market, and existing excess production capacity. On appeal, the Full Court upheld the decision. The High Court, on the application for special leave (supra), said:- In the context of an application to strike out paragraphs of the statement of claim, we consider that the actual decision of the Full Court was correct. The case may establish that financial resources are arguably relevant to a s 46 claim, but it does not establish that such resources are sufficient to found such a claim. Further, the adequacy of the statement of claim was not in issue. 37 The present statement of claim says little about factual matters of the kind considered relevant in Queensland Wire and in the other cases to which I have referred. In particular, there is no reference to barriers to entry, described as "the sine qua non of monopoly and oligopoly …". (See Queensland Wire (supra) at 189). The Full Court in Arnotts (supra) at 580, considered that barriers to entry might well be the only "inflexible rule" with respect to the factors relevant in determining whether or not "a participant enjoys a dominant position in the market". The difference between "dominant" and "substantial" is not relevant for present purposes. It is true that Sita refers to the TOPT Act, but in this context, it does not plead any power to restrict entry to the market for transport services between Brisbane and the Gold Coast. The importance of such a consideration in this case is easily demonstrated. Even accepting Sita's assertion that Queensland Rail's conduct, if continued, will eventually force it (and presumably, all other bus-operators) out of business, the benefit to Queensland Rail would be, at best, transient. As soon as it sought to increase prices to an economic level, it would again be faced with competition from bus-operators entering or re-entering the market, assuming no significant barriers to entry. In other words, Queensland Rail's alleged willingness to trade unprofitably will not create long-term dominance in the market in the absence of such barriers. 38 The real problem with the pleading is its focus on economic power to the exclusion of all other relevant market factors. This has resulted in its failing to describe the market in a way which would permit assessment of the degree of market power held by Queensland Rail. As was said in Queensland Wire (per Mason CJ and Wilson J at 187 and Dawson J at 200), the need to identify the market arises only because of the need to assess the degree of market power. Pleading the existence of a market, without more, does not raise a s 46 claim; nor does the pleading of a fact which may or may not be a basis for market power. Sub-section 46(3) clearly invites a comparison of the respective positions of competitors and potential competitors for the purpose of determining degrees of market power. That exercise cannot be performed in the absence of information about those competitors and the context in which they compete or may compete. Sita has not attempted to address these issues. For example, it has not addressed:- (1) The question of "substitutability" - To what extent is Queensland Rail, as a rail operator, in competition with bus operators? A railway line can serve only one fixed route whilst bus operators have flexibility about the routes which can be served. To what extent are customers likely to use the train if it does not run fairly close to their preferred embarkation/disembarkation points? (2) Capacity - Does the existing railway line have the capacity to meet the whole or a substantially increased part of the demand for public transport between Brisbane and the Gold Coast? (3) Price - I have already pointed out that nothing is said about Queensland Rail's capacity to raise its prices without loss of custom. (4) Market share - Nothing is said about market share. It may be that, as the cases say, large market share does not necessarily indicate great market power, but it is a relevant factor. (5) Bars to entry - The cases make it clear that consideration of bars to entry is significant in any exercise of this kind. I have previously demonstrated its relevance in this case. 39 As I understand it, consideration of market power may require consideration of all of these factors and perhaps many others. I am not an economist and cannot offer an expert opinion in that regard. Such opinions as I have offered are based upon the common approach taken in the various cases, leading me to the conclusion that to assert market power based solely upon economic power is meaningless. There is nothing in any of the cases which would suggest that it is possible to infer from such power alone, or from that power coupled with the other allegations to which I have referred under this heading, that Queensland Rail has substantial market power in the identified market. In those circumstances, the allegation should be struck out as embarrassing. 40 The alleged acts of abuse of market power also pose problems which I will mention briefly:- (a) It is alleged that the Minister for Transport set the fare at a particular rate by "signing a briefing note, a copy of which is contained in Schedule 2". It is not clear to me why that action should set the fare. No reference is made to any authority for such an act. However, for present purposes, I accept at face value the assertion that the Minister so acted. (b) The question, then, is whether he was exploiting market power. As there is no allegation that he was acting on behalf of Queensland Rail, it is difficult to see how he could have been exercising its market power (assuming the existence of such power). If, on the other hand, he was acting on behalf of Queensland, then, in the absence of any allegation as to the basis for his so acting, it is impossible to know whether his conduct was in connection with a business and therefore subject to the Competition Act. (c) Subsequent allegations as to Queensland Rail's charging low fares are meaningless in the absence of demonstrated market power. (d) It is also alleged that Queensland has abused its market power by allowing its variable message advertising signs situated on the Gold Coast highway to be used by Queensland Rail, but not permitting Sita to use them. As I have said, those signs have nothing to do with Queensland or Queensland Rail's power in the identified market. (e) It is alleged that Queensland Rail has been guilty of misleading advertising. This also has nothing to do with market power. (f) It is alleged that on 2 and 4 June 1997, one Parsons, Acting Executive Director (Public Transport) in the Department of Transport, made declarations pursuant to s 42 of the TOPT Act which had the effect of preventing Sita from carrying passengers between the Gold Coast and Brisbane, including between Logan and Brisbane and Logan and the Gold Coast. Obviously, this was not conduct by Queensland Rail. The allegation appears to be another indirect attempt to introduce Queensland into the market by virtue of its capacity to control road transport under the TOPT Act. I have dealt with this matter. (g) Sita complains of the refusal by Queensland Rail to participate in integrated ticketing services with it and to permit it to operate a connecting service out of the Helensvale railway station. Sita also complains of the choice of the Helensvale railway station, rather than the Coomera station, as the point from which to operate a connecting bus service to a nearby theme park. It may be that if appropriate market power were pleaded, these claims could be further ventilated, but that is not possible on the pleadings in their present form. 41 In the circumstances pars 12-37 should be struck out as embarrassing.

(3) Misfeasance in Public Office - Rail Fares 42 This is a claim for damages by Sita against Queensland and Queensland Rail. It is alleged that the Minister for Transport and Queensland Rail were guilty of misfeasance in public office by virtue of the conduct particularized in pars 16-26 of the statement of claim, which is the same conduct as is complained of in the monopolisation claim. It is further alleged that they intended to harm Sita by capturing its share of the market (presumably for the benefit of Queensland Rail) and to enhance or avoid damage to the political standing of the Minister for Transport and the government by avoiding trains running on the Brisbane/Gold Coast rail service while substantially empty. 43 The relevant conduct includes:- (a) Setting a low fare (pars 16 and 21); (b) Charging that fare until 23 January 1997 and a slightly higher fare thereafter (pars 17-18 and 21); (c) Relying upon government funding to maintain those fare levels (pars 19 and 20); (d) Setting the one-way fare at a level which would ensure that passengers did not take the train one way and the bus in the other direction (par 19); (e) Not permitting Sita to use highway signs whilst allowing Queensland Rail to do so (pars 22-24); (f) Refusing to enter into an "integrated ticketing system" and service co-ordination with Sita (par 25); (g) Misleading advertising (par 25A); (h) Making a declaration pursuant to s 42 of the TOPT Act (par 25B); (i) Preventing Sita from operating a service out of the Helensvale railway station integrated with the rail service; and (j) Maintaining Helensvale (rather than Coomera) as the interchange point for transport to a theme park. 44 This conduct is said to have been in contravention of ss 18, 19, 20, 121 and 122 of the Government-Owned Corporations Act 1993 (Qld) (the "GOC Act") and necessarily to have resulted in the Chief Executive breaching his obligations under s 10 of the TOPT Act. The Minister at the relevant times was Mr Johnson, although a number of the complaints are of continuing misconduct, and so it may be that other ministers were also involved. I repeat my caveat as to the appropriateness of the joinder of the Minister for Transport. 45 This cause of action lies against the holder of a public office. The claim against Queensland is presumably based upon the assumption that it is vicariously liable for the acts of Ministers of the Crown in their respective offices. A corporation may commit this tort if it occupies a public office, and a corporation may be vicariously liable for torts of this kind committed by its employees. It is not pleaded that Queensland Rail occupied a public office. This is a matter of some importance. As was recently demonstrated in the decision of the Court of Appeal (Qld) in R v McCann [1998] 2 Qd R 56, the question of what constitutes a public office is often difficult. I see no basis for assuming that every government-owned corporation occupies such an office. There is also no claim of vicarious liability against Queensland Rail. This claim against it must be struck out. 46 The only allegation against the Minister is that he fixed the rail fares, that they were not fixed at such a level as to cover costs and yield a profit, and that this conduct contravened ss 18, 19, 20, 121 and 122 of the GOC Act and caused the Chief Executive to breach the TOPT Act. The GOC Act is designed to facilitate and encourage the efficient performance of functions by government-owned bodies. I am told that Queensland Rail was corporatized on 1 July 1995, then becoming subject to that Act. It is said that the Minister's conduct contravened s 18 which provides:- The objectives of corporatization are to be achieved through application of the key principles of corporatization and their elements. 47 The rather Delphic nature of this provision is clarified somewhat by s 19 which identifies four principles - clarity of objectives, management autonomy and authority, strict accountability for performance and competitive neutrality. Section 20 provides:- (1) Under corporatization the key objectives of a GOC are to be commercially successful in the conduct of its activities and efficient in the delivery of its community service obligations. (2) The commercial success and efficiency of a GOC are to be measured against its financial and non-financial performance targets. 48 Section 121 provides as follows:- (1) The "community service obligations" of a GOC are obligations to perform activities that the GOC's board establishes to the satisfaction of the shareholding Ministers- (a) are not in the commercial interests of the GOC to perform; and (b) arise because of a direction, notification or duty to which this section applies; and (c) do not arise because of the application of the following key principles of corporatisation (and their elements) - (i) Principle 3 - Strict accountability for performance; (ii) Principle 4 - Competitive neutrality. (2) This section applies to the following directions, notifications and duties - (a) a direction given to the GOC's board under section 107 (Special procedures in relation to draft corporate plan); (b) a direction given to the GOC's board under section 110 (Modifications of corporate plan); (c) a direction given to the GOC's board under section 117 (Special procedures in relation to draft statement of corporate intent); (d) a direction given to the GOC's board under section 120 (Modifications of statement of corporate intent); (e) a notification given to the GOC's board under section 123 (Reserve power of shareholding Ministers to notify board of public sector policies); (f) a direction given to the GOC's board under section 124 (Reserve power of shareholding Ministers to give directions in public interest); (g) a direction given to the GOC's board under section 161 (Reserve power of shareholding Ministers to direct that asset not be disposes of); (h) a statutory duty to perform activities (including any economic development activities or activities of a regulatory or policy formulation nature) that arise under an Act applying specifically to the GOC or GOCs generally. 49 Section 122 provides as follows:- (1) The community service obligations that a GOC is to perform are to be specified in its statement of corporate intent. (2) The costings of, funding for, or other arrangements to make adjustments relating to, the GOC's community service obligations are also to be specified in its statement of corporate intent. (3) The statement of corporate intent is conclusive, as between the Government and the GOC, of - (a) the nature and extent of the GOC's community service obligations; and (b) the ways in which, and the extent to which, the GOC is to be compensated by the Government for performing its community service obligations. 50 It is said that the Minister's direction as to fares contravened ss 18, 19, 20, 121 and 122 in that Queensland Rail thereby breached the principle of competitive neutrality by competing on unequal terms with Sita, using the benefit of subsidies, and provided a subsidized community service other than in accordance with s 121 and s 122. While all of this may be true, the Minister's direction was given in January 1995, before Queensland Rail was corporatized and became subject to the GOC Act. Its legality must be judged at that time. In any event, no attempt has been made to identify the basis of the Minister's authority to fix the fares. Similarly, no attempt has been made to demonstrate, either in the pleading or in argument, why he was bound to fix a fare which covered costs and showed a profit. The GOC Act does not appear to have that effect. 51 As to the plea that the Minister's direction necessarily resulted in the Chief Executive breaching his obligations under s 10(1)(a)(iii), (iv) and (v), (b) and (c) of the TOPT Act, these provisions relate to the general responsibility of the Chief Executive to ensure that public passenger transport is efficient and cost-effective. No attempt is made in the pleading to identify the way in which it is said that the Chief Executive was compelled to breach his duty. There is no express obligation to ensure that each service always runs at a profit. In the absence of particulars of the allegedly necessary breaches of the various statutory provisions, this pleading is embarrassing. Paragraphs 38, 39, 40 and 41 must be struck out.

(4) Unconscionable Conduct 52 This is a claim by Sita for relief under the Trade Practices Act against Queensland Rail, based upon an allegation that it violated Sita's reasonable expectations and caused hardship to it. The relevant conduct is that alleged in pars 17-26, which is outlined above in connection with the misfeasance claim. Paragraph (a) of that outline is not presently relevant as it refers to conduct by the Minister, not Queensland Rail. Queensland Rail's conduct is said to have been unconscionable because of the circumstances alleged in pars 15 and 38(b) to 40. Paragraph 15 provides particulars of "market power", par 38(b) relates to the alleged contraventions of the GOC Act and par 38(c) alleges breaches by the Chief Executive of his obligations under the TOPT Act necessarily resulting from conduct by the Minister and Queensland Rail. Paragraph 39 alleges that the Minister and Queensland Rail engaged in the conduct pleaded in par 16-26 in order to harm Sita and to enhance or, in the alternative, to avoid damage to the political standing of the Minister and the government. Paragraph 40 alleges loss. 53 This claim relies upon s 51AA of the Trade Practices Act which provides:- A corporation must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories. 54 The section appears to have the effect of rendering conduct which is unconscionable under state law a breach of s 51AA of the Trade Practices Act, so that the remedies prescribed by that Act are available for such a breach. It may be that the circumstances in which a court will intervene where unconscionable conduct is shown, and the remedies which are available, are infinitely flexible, but I have been directed to no authority for the proposition that the conduct complained of in this case constituted unconscionable conduct according to the law of Queensland, assuming that to be the relevant state. 55 This plea is, in reality, an attempt to enforce statutory obligations which either do not otherwise apply to Queensland Rail, or may not otherwise be enforced by Sita. The thrust of the case appears to be that the alleged availability of government funding gave Queensland Rail an unfair advantage over, and power to injure Sita and that Sita was accordingly vulnerable. For these reasons, it is asserted that Queensland Rail ought to have complied with the provisions of the GOC Act, the TOPT Act, the principles of competitive neutrality expounded in certain paragraphs of the Policy Framework for Commercialisation of Government Service Functions and the Competitive Principles Agreement between the Commonwealth, the States and the mainland Territories. The logic of this assertion quite escapes me. It is then alleged that "such conduct amounted to taking unconscientious advantage of such power". This is a statement of social policy rather than legal reasoning. It is said that Sita had reasonable expectations in acquiring various businesses, "that Queensland and its instrumentalities would not engage in unfair competition and would conform to the principles of competitive neutrality". No basis is given for this expectation and in particular, no conduct of Queensland Rail is alleged to have led to it. Numerous complaints are made, primarily concerning subsidies, and it is then alleged that "Queensland Rail engaged in such conduct assisted by the Chief Executive and/or officers of the Department of Transport and Main Roads". It is also alleged that Queensland Rail engaged in such conduct "with the assistance of Queensland through the Premier and Treasurer, by the Premier and Treasurer rejecting the findings of the Queensland Competition Authority that Queensland Rail had breached the principles of competitive neutrality". 56 All of this is said to lead to the conclusion that Queensland Rail's conduct has: (1) violated Sita's reasonable expectations; and (2) caused hardship to Sita … 57 I adopt the observations made by counsel for Queensland Rail that these paragraphs of the statement of claim merely pick up a number of allegations made elsewhere in the pleading, weave them together with language borrowed from equity and describe the resulting fabric as unconscionable conduct within the meaning of the unwritten law of Queensland. I am unpersuaded that any arguable cause of action is demonstrated. I would strike out par 41A.

(7), (8) and (9) Misleading and Deceptive Conduct, Negligence, Contract and Estoppel 58 These claims are made in paras 66 to 79 and appear to be by both Sita and Harlingdale against all respondents. The fifth and sixth respondents are not parties to this motion. Paragraph 66 pleads:- Before and during negotiations for the compromise referred to in paragraph 56 Queensland and Surfside represented to Mr Bowman that Harlingdale could continue, unimpeded, to operate the Harlingdale/Gold Coast services notwithstanding any service contract between Queensland and Surfside. 59 Particulars were provided of this allegation as follows:- At a meeting between the representatives of Coachtrans and Surfside to discuss the just compromise, the representatives of Surfside informed the representatives of Coachtrans that Surfside would not pay compensation for the Harlingdale service on the north of the Gold Coast and that Harlingdale could continue that service. In a letter dated 20 January 1997 from Mr McShea, Executive Director (Public Transport) to Mr Sita, Mr McShea confirmed that Queensland had no objection to Harlingdale continuing to operate the service on the northern end of the Gold Coast. 60 Sections 56 and 57 of the TOPT Act provide that when it is proposed that there be a service contract pursuant to s 42, which will have the effect of preventing existing operators from continuing to provide existing services, any such operator must be given the first opportunity to provide the service in question. Sections 56 and 58 provides that where there are multiple existing operators, they are to be given an opportunity to develop a form of rationalisation, joint operation, amalgamation or other arrangement which will achieve a just compromise of their respective rights. Sections 57 and 58 require the Chief Executive to give appropriate notices to institute the relevant processes. The "negotiations" particularized above were allegedly conducted pursuant to ss 56, 57 and 58 the TOPT Act, following a s 42 declaration. The existing pleading appears to assert that in the course of those negotiations, binding representations were made concerning Coachtrans and Harlingdale's services. 61 Sita and Harlingdale now concede that the letter of 20 January 1997 cannot support the allegations in the pleadings. Thus, as pleaded, they rely only upon the first paragraph of the particulars, which alleges no conduct on the part of Queensland, Queensland Rail, the Minister for Transport or the Chief Executive. In argument, Sita and Harlingdale sought to support these claims, indicating an intention to amend the particulars to reflect the content of pars 95-98 of their outline of argument. They wish to rely upon pars 49, 50, 51, 52, 53, 54 and 56 of the statement of claim, which paragraphs relate to complaints concerning the declaration pursuant to s 42. On the basis of these facts, Sita and Harlingdale assert:- Harlingdale and Coachtrans were entitled to take it from all of that that, notwithstanding the proposed service contracts, they would be able to carry out their existing services through the relevant service contract areas, and thus the non-giving of notice to them conveyed that those services would not be affected. This justifies the allegation in par 66 that "before and during negotiations for the compromise referred to in par 56 Queensland and Surfside represented to Mr Bowman that Harlingdale … could continue unimpeded to operate the Harlingdale/Gold Coast services notwithstanding any service contract between Queensland and Surfside. 62 In effect, Sita and Harlingdale say that Coachtrans and Harlingdale acted in reliance upon an alleged representation that their services were not adversely affected by the s 42 declaration, which representation was constituted by the Chief Executive's failure to give them notice under s 57 and/or s 58. It may be possible to constitute these various causes of action out of such facts, but the pleading in its present form does not do so. Further, one suspects that to succeed, Sita and Harlingdale will have to overcome the fact that Coachtrans and Harlingdale were presumably aware of all relevant facts concerning the declaration and its potential effects on their respective operations. I also note that the relevant paragraphs do not allege the declaration under s 42, which allegedly resulted in the obligation to give the notices in question. It may be that reliance is placed upon an earlier allegation of such a declaration, but this should be made clear. In the absence of such pleading, it is impossible to determine who ought to have received notices as alleged. That, in turn, affects the assertion that Coachtrans and Harlingdale relied upon not having received such notices as a ground for inferring that their services would not be affected by the s 42 declaration. The basis of Sita's claim is unclear. I have grave reservations about this cause of action, but it would be best to leave further consideration of it until such time as the applicants have produced an appropriate pleading. Paragraphs 66-79 should be struck out as against Queensland, Queensland Rail, the Minister for Transport and the Chief Executive.

(10) Misfeasance in Public Office - Gold Coast and Logan Service Areas 63 This claim is contained in pars 80, 81 and 83-88 of the statement of claim. It appears to be the claim made in par 2 of the amended application, a claim by Sita against Queensland. The only other claim for misfeasance in public office is in par 8, which is a claim by both applicants against Queensland, relating to the fixing of rail fares, a matter which appears not to be presently relevant. The factual basis of the claim is conduct of the Governor-in-Council and Chief Executive in connection with declarations made under the TOPT Act. Paragraph 80 asserts that the relevant conduct is that alleged in pars 42 to 70. Those paragraphs refer to numerous decisions by the Governor-in-Council, the Chief Executive, the Director - Passenger Transport and one Parsons, Acting Executive Director (Public Transport). Paragraph 81 then alleges that the Governor-in-Council and the Chief Executive acted beyond their power and breached the rules of natural justice with respect to those various decisions, that they recklessly disregarded means of ascertaining the extent of their power and that they knew that their declarations and decisions were calculated to cause or involved a foreseeable risk of harm. 64 The pleading, as a whole, is embarrassing because it rolls up all of the conduct in question into one bundle and then makes generalized allegations about all of it. Some of that conduct was not conduct of the Governor-in-Council or of the Chief Executive, despite the wording of par 80. Paragraph 82 alleges that Queensland intended to cause harm to Sita. Queensland's intention, as opposed to that of each of the nominated office-holders, appears to be irrelevant. As Queensland is not an office-holder, it can only be vicariously liable for this tort. Paragraph 84 relates to conduct by the Acting Executive Director as occupier of a public office. The relevance of this is not clear, but it appears to be a further distinct basis for the claim of misfeasance in public office. 65 The embarrassing nature of the pleading hides a more fundamental weakness. The actions referred to in pars 42 to 70 occurred in October 1994, November 1994, December 1994, August 1995 and February 1996. The conduct referred to in par 84 appears to have occurred not earlier than 9 June 1997. Sita commenced to carry on the relevant businesses on 2 October 1995, after most of the particularized conduct, save for the opening of the railway line in February 1996 (par 68) and attempts to stop Sita operating its services (pars 69 and 84). The 1994 and 1995 conduct could only justify claims by Harlingdale or Coachtrans as Sita was not carrying on business at that time. Opening of the railway line could hardly have constituted misfeasance in public office. As to the other matter, if Sita was entitled to operate its services, it could have so asserted at the time. This part of the pleading is so convoluted as to be embarrassing. It ought be re-pleaded. The reference to "the successors in title of Harlingdale and Coachtrans" in par 81 is nothing more than a pleader's flourish. Paragraphs 80-88 of the statement of claim should be struck out. (11) Interference with Trade by Unlawful Means and Illegal Compulsion 66 This is a claim by Sita against Queensland. The conduct complained of is that alleged in pars 16 to 26, 42 to 70 and 84. It is said that such conduct was unlawful and that it "constrained Sita to refrain from carrying on its existing business to its full potential for profit". Paragraphs 16 to 26 67 Much of the conduct alleged is that of Queensland Rail and therefore would not seem to ground a claim against Queensland in the absence of a plea of vicarious liability. Further, with the exception of par 25A, none of the acts complained of appears to be unlawful. Paragraph 25A, which might arguably constitute misleading and deceptive conduct, was conduct by Queensland Rail.

Paragraphs 42 to 70 and 84 68 Paragraphs 42 to 62 allege various steps taken by the Governor-in-Council, the Minister and officers of the Department of Transport, including the Chief Executive, allegedly pursuant to the TOPT Act. It is then alleged that the various acts were void, either because necessary conditions precedent to the exercise of particular powers had not been satisfied, or because of a denial of natural justice, or for improper purpose. Paragraphs 63 to 65 allege negligence in the administration of the TOPT Act, causing damage to Harlingdale and Sita. Paragraphs 66 to 70 allege misleading and deceptive conduct and negligence arising out of the alleged representation that Harlingdale could continue to operate the bus service. Paragraph 84 alleges that Queensland, by the Executive Director of the Department of Transport, prohibited Sita from continuing its Logan service at some time not earlier than 9 June 1997. 69 The attack upon this aspect of the pleading depends primarily upon the decision of the High Court in Sanders v Snell (1998) 157 ALR 491, especially at 499-504. Whilst the High Court (Gleeson CJ, Gaudron, Kirby and Hayne JJ, Callinan J dissenting in part) avoided a definitive statement as to the ambit of this tort, their Honours' provisional view is highly persuasive. At p 500 their Honours said:- We do not think it is necessary to decide in this case whether a tort of interference with trade or business interests by an unlawful act should be recognized in Australia. For present purposes, it is enough to consider one element of that tort: the element of unlawful act. The tort that is emerging, or has emerged in the United Kingdom, is a tort of interference with trade or business interests by an unlawful act directed at the persons injured. The element of unlawfulness is essential to the definition of the tort. … 70 At p 501-2 their Honours continued:- There are, however, several reasons for concluding that a want of procedural fairness by the appellant before giving the direction that he gave to the bureau is not conduct that can be characterized as "unlawful means" for the purposes of this tort. First, such authority as there is in relation to economic torts suggests that the conduct of which complaint was made in this case is not "unlawful means". It has been held in Canada that a failure to provide natural justice will prevent a defendant from relying on performance of statutory functions as a justification for procuring a breach of contract. But that is not to say that such conduct is "unlawful" in the relevant sense. The expression "unlawful means", like other expressions used in this area, may be apt to mislead. … 71 Their Honours then quoted from the judgment of Bowen LJ in Mogul Steamship Co v McGregor Gow & Co (1889) 23 QBD 598, ending with the sentence: The term "wrongful" imports in its turn the infringement of some right." 72 Their Honours then continued:- "Infringement of some right" may well be a useful description of what is meant by saying in this context that the alleged tortfeasor engaged in an unlawful act. And "infringement of some right" is an expression that usually would not be apt to describe conduct that is beyond power. But it may be doubted that "infringement of some right" is, or is always, a sufficient description of what is unlawful means for the purposes of the economic torts generally or the tort now under consideration. In Mengel [(1995) 185 CLR 307] the Court overruled Beaudesert Shire Council v Smith [(1966) 120 CLR 145]. It thus rejected the proposition for which Beaudesert stood: that "a person who suffers harm or loss as the inevitable consequence of the unlawful, intentional and positive acts of another is entitled to recover damages from that other". And it did so having first noted that the preferable view of Beaudesert (and the view favoured in later cases that had considered it) was that an "unlawful act" was intended to refer to an act forbidden by law rather than an unauthorized act in the sense of an act that is ultra vires and void. The majority judgment in Mengel noted that it seemed that the "embryonic or emerging tort" of interference with trade or business interests by an unlawful act does not extend to all unlawful acts and "at least in that regard, it is in need of further definition". The rejection of Beaudesert is, however, consistent with confining what is an unlawful act for the purposes of this tort (if, that is, the tort is to be recognized in this country). It is also consistent with (or at least not inconsistent with) excluding from the definition of what is an unlawful act for this purpose acts whose only "unlawful" aspect is that they are unauthorized in the sense that they are ultra vires and void. The guidance from authority is necessarily uncertain at the moment: the tort is embryonic or emerging. Considerations of principle, however, provide a more certain guide and require that unauthorized acts of the kind just mentioned are excluded from the understanding of what is an unlawful act for the purposes of this tort. If they are not excluded, the tort of interference with trade or business interests by unlawful act would cover the whole of the field now covered by the tort of misfeasance in public office or would cover that field and much more, thereby extending the liability of public officers very greatly. 73 Their Honours then considered, at some length, considerations relating to the tort of misfeasance in public office and continued (502):- Equating the tort of misfeasance with a tort of wrongful interference with economic interests or subsuming the tort of misfeasance in that latter tort would pay too little regard to the different considerations that we have mentioned. For present purposes it may be accepted that the tort of misfeasance in public office extends to acts by public officers that are beyond power, including acts that are invalid for want of procedural fairness. But to establish that tort, it is not enough to show the knowing commission of an act beyond power and resulting damage. 74 Their Honours then quoted, with apparent approval, an extract from Mengel which included the following passage at 503:- And principle suggests that misfeasance in public office is a counterpart to, and should be confined in the same way as, those torts which impose liability on private individuals for the intentional infliction of harm. For present purposes, we include in that concept acts which are calculated in the ordinary course to cause harm, as in Wilkinson v Downton, or which are done with reckless indifference to the harm that is likely to ensue, as is the case where a person having recklessly ignored the means of ascertaining the existence of a contract, acts in a way that procures its breach. 75 Their Honours then continued:- For the purposes of deciding Mengel, the majority considered it sufficient to proceed on the basis that the tort requires an act which the public official knows is beyond power and which involves the foreseeable risk of harm but noted also that there seems much to be said for the view that misfeasance extends to the situation of a public official recklessly disregarding the means of ascertaining the extent of his or her power. There would be no work to be done by the tort of misfeasance if what is an unlawful act for the purposes of that tort is the same as it is for the tort of unlawful interference with trade or business interests and if questions of knowledge and intention are to be resolved in both cases according to the same test. Further, if the knowledge or intention required for the tort of misfeasance is of a different kind from the knowledge or intention required for the other tort, the potential for expanding the liability of public officials by resorting to a tort of unlawful interference with trade or business interests is obvious (especially if both torts are enlivened by the same kinds of unlawful act). Because misfeasance in public office is concerned with performance of public duties, and because the tort of unlawful interference is concerned primarily with private, not public interests, misfeasance in public office should not be subsumed in some wider economic tort. In particular, what is an unlawful act for the purposes of one tort is not necessarily an unlawful act for the purposes of the other. … If the appellant's conduct amounted to misfeasance in public office and his conduct caused damage to the respondent, he will be liable to the respondent on that account. If, however, his conduct did not amount to misfeasance in public office (because he lacked the requisite intention for that tort) he should not be held liable for a wrongful interference in the economic interests of the respondent when his interference did not constitute his procuring a breach of the employment agreement. 76 This decision indicates that the tort of interference in economic relations ought not generally be seen as available to extend the ambit of a public officer's liability for his acts beyond that described by the tort of misfeasance in public office. Further, the judgment suggests that the conduct required to constitute the tort must be forbidden by law rather than merely unauthorized by it in the sense of an act which is "ultra vires and void". The present claim relies upon conduct which was allegedly "ultra vires and void" rather than forbidden. 77 Sita seeks to avoid this difficulty by asserting that the conduct complained of was relevantly unlawful because it constituted misfeasance in public office, or was negligent or in breach of statutory duty. I have already held that no case of misfeasance in public office is made out on the pleadings. In any event, the approach of the High Court in Sanders would discourage any attempt to so "overlap" the two causes of action. As to negligence and breach of statutory duty, there is the further difficulty to which I have previously referred that most of the acts complained of occurred prior to Sita's commencing business. Sita can hardly complain of the effects upon its business of acts committed prior to its commencing to conduct that business. As to the acts which occurred after Sita commenced business, criticism of them appears to depend upon the allegations in par 48A, which are incomprehensible. I am not sure whether Sita also seeks to rely on its allegations of misleading and deceptive conduct, but as I have struck out that claim, it does not matter. This claim should also be struck out as embarrassing. 78 There has been no attack upon the pleading of claims (5) and (6). I make no observation concerning them. 79 Because of the wide range of issues, and because some points were expanded during oral argument, it may be as well to hear the parties further after publication of these reasons and before making final orders. I will hear further submissions as to appropriate orders and as to costs. I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.

Counsel for the Applicant: L Harrison QC L Boccabella

Counsel for Respondent: R V Hanson QC P Flanagan