South Australian Harbors Board v South Australian Gas Company [1934] HCA 45

South Australian Harbors Board v South Australian Gas Company [1934] HCA 45 - HCA 1934 case summary — Zoe

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cranes, hoisting and weighing machines and other apparatus for facilitating the loading and discharging of vessels, and such other conveniences upon or near the wharves, docks and platforms vested in the Board, as it thinks expedient for the trade of the harbor. About August 1921, the Board concluded that the coal traffic at Port Adelaide should be concentrated at one site, and adequate coal-handling appliances erected for the purpose of discharging and handling coal. The principal importers of coal into South Australia, in order of tonnage imported, were the Railways and Government departments, the South Australian Gas Co. (hereinafter called the Gas Co.), the Electric Supply Co., and the Municipal Tram Co. Conferences were held between the Board and representatives of the importers, including the Gas Co. It was agreed that the plant should be capable of handling 500,000 tons of coal per annum, and it was estimated that the cost of handling the coal from ships to trucks would be 2s. 2d. per ton. The site selected was at Osborne on the Port River, alongside the works of the Electric Supply Co. The Board offered, and the Gas Co. accepted, a lease of a block of land at the Osborne site, separated only from the works of the Electric Supply Co. by a strip of land required for the Board's purposes. The lease was for ninety-nine years from and including 1st January 1924 at a rental calculated in the manner provided by the lease. It was agreed (clause 17) that the land leased might be used for the purposes of and in connection with the business and operations of the lessee and in particular (without in any way limiting the generality of the preceding words of this clause) for carrying on the manufacture of gas and by-products of coal and for storing coal and other materials for the purposes of the lessee's operations. The following covenant on the part of the Board was contained in the lease (clause 15): "That the lessor shall within three years from the commencement of the said term erect or cause

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to be erected" on the Osborne site "adequate coal-handling appliances for the purpose of discharging and handling coal and the lessee shall have the right of taking delivery from the said plant or from any plant that may be erected in lieu thereof at such point in such plant as may from time to time be mutually agreed as being convenient of all coal required to be delivered by the lessee but any structure erected by the lessee for such purpose shall not unreasonably obstruct any traffic or operations of the lessor and in default of the said plant being so erected by the date mentioned the lessee shall have the right to determine this lease but such determination shall not affect any claim by either party against the other in respect of any antecedent breach of any covenant or condition herein contained." The Board erected a modern coal-handling plant at the Osborne site at a cost of £247,708. The cost of the plant, excluding telphers, conveyers, and bins, was £146,716. Telphers are unloading appliances erected on pontoons, and those acquired by the Board cost £16,507, and bins (of which there were forty) and conveyers cost it £84,485. The Gas Co. also proceeded to erect works on the site leased to it including a conveyer to take coal from the Board's conveyers into the Gas Co.'s works. This plant, for handling and storing its coal in its Osborne works, cost the Gas Co. £53,492, which included £1,165 paid to the Board as the cost of connecting the Gas Co.'s conveyers with those of the Board. The Board's plant was not completed within three years from 1st January 1924. Up to 28th October 1928 no facilities were available. From 28th October 1928 to 27th March 1930, unloading took place, but only by means of the basket system. From 27th March 1930 until 15th January 1931, telphers were used for the purpose of unloading coal. The plant was complete and in use on and from 15th January 1931. The Gas Co.'s plant was complete and ready for use about July 1928. During the period from 28th October 1928 to 15th January 1931, and after the expiration of that period, coal arrived for the Gas Co. and was discharged by the Osborne plant. The Gas Co. discharged at the Osborne works from 28th March 1928 to Ist September 1931 (both days inclusive) some 139,661 tons of coal, and the Board claimed for discharging the coal at the rate of 3s.

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The Board's claim rests substantially upon the allegation that the Board, at the request of the Gas Co., discharged coal from various vessels by means of its plant at Osborne and delivered it upon the conveyer belt belonging to the Gas Co. The provisions of sec. 63 of the Harbors Act recognize the right of the Board to charge for the use of its plant, but require that the charges be reasonable. The Board, to quote the words of the section, " may make reasonable ' charges for the use of such depdts, sheds, engines, cranes, hoisting and weighing machines, and other apparatus and conveniences." Soon after the revocation of the regulation already mentioned, the Board, in August of 1930, pursuant to sec. 63, resolved that a maximum rate of 3s. per ton should be charged for the discharge of coal at Osborne, and with an addition of one penny per ton for the discharge of coal from *tween-deck vessels. The resolution provided for rebate allowances if the tonnage of coal discharged at Osborne exceeded certain quantities, but these quantities were never reached in the periods in question in this case. A resolution of the Board, however, cannot determine the reasonableness of the charge ; that is a matter, if the charge be challenged, which must be deter- mined by a competent Court. Napier J., as I follow his judgment, accepted the maximum charge fixed by the resolution as a reasonable and adequate charge for the discharge and delivery of coal through the bins into trucks at Osborne. But that finding has been challenged on this appeal. The reasonableness of a charge is, I agree, a question of fact. But reasonableness depends upon the circumstances in which, and the time at which, the charge is made. The ordinary principle of assessment, says Napier J., is "' the fair market value of the service," in other words, the charge ordinarily made for the same sort of service. But in the case of public utilities it is seldom possible to appeal to an ordinary or market rate or charge, and one is necessarily driven to a consideration of the capital expended upon the public undertaking and the revenue thereof as a basis for deter- mining the reasonableness of the charges made or claimed for the use of the same.

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But it is said that the Gas Co. does not use the bins and takes delivery of its coal on its own conveyer belt. Thisistrue. Napier J, found that under normal conditions the cost to the Board of the storage in the bins and loading into trucks was no less than 8d. per ton, and that this sum represents the proportion of the 3s. rate fairly attributable to this service. Further, he held that the cost to the Gas Co. of the service of its own conveyer belt was far more than 8d. per ton. The evidence warrants these findings, and they were hardly challenged on this appeal. The learned Judge said that the operations of the plant were " fairly divisible into three distinct stages: (1) the unloading, (2) the conveyance, (3) the service of the bins for storing and loading. The defendant company" he added " dispenses with the last mentioned, but the plaintiff Board is seeking to charge for the delivery of the coal at the rate of 3s. per ton, plus an additional 1d. per ton in the case of 'tween-deck vessels, being the flat rate that it has adopted, without regard to the manifest fact that the defendant company is not using the bins, but has provided, and uses, its own means of performing this part of the service." And he thus concludes that a fair and reasonable charge for unloading the coal and delivering it to the Gas Co.'s conveyor was 2s. 4d. per ton, with an additional 1d. per ton in the case of *tween-deck vessels. That estimate is based, as already appears, on the flat rate of 3s. less 8d. per ton for the service of the bins. But too much stress, it seems to me, is here laid upon the order of the operations. The plant was erected for the purpose of concentrating the discharge of coal at one site in Port Adelaide, thus giving quicker discharge to ships, and, as it was hoped, reducing the costs of discharge. Coal-handling plant and appliances that would expeditiously and effectively discharge any imported coal were therefore necessary, and storage bins became an essential part of the plant, not only for the purpose of giving ships quick discharge,

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Gas Co. would be only £1,870. In my opinion, the revocation of a regulation has, in the absence of some statutory provision to the contrary, the same effect as was produced at common law by the repeal of a statute. A right conferred or an obligation imposed by a statute did not survive its repeal. " It must be considered as a law that never existed, except for the purpose of those actions which were commenced, prosecuted, and concluded whilst it was an existing law" (per Pindal C.J. in Kay v. Goodwin (1)). The application of the doctrine to subordinate legislation is considered in Victorian Stevedor- ing and General Contracting Co. Pty. Ltd.and Meakes v. Dignan (2). The law of South Australia contains no general enactment preserving, after the repeal of statutory regulations, rights and liabilities arising under them. But sec. 16 of the Acts Interpretation Act 1915 provides that the repeal or expiry of an Act of Parliament shall not affect rights and liabilities which have accrued thereunder, and on behalf of the Harbors Board it is contended that the power of the Governor in Council is conferred by its Act in such terms as, for the purpose of this provision, to place the regulations in the same situation as statutes. Sec. 106 of the Harbors Act 1913 provides that they shall be of the same effect as if contained in Part II. of the Act. It is suggested that both the revoked regulation and the revoking regula- tion are given by this provision the status of Acts of Parliament, and, therefore, the same consequences flow from the original promulgation and subsequent revocation as if done by statute. In my opinion the section does not alter the results of revoking a regula- tion. It is directed to the operation which regulations shall have while on foot. They will, in pursuance of its requirement, be interpreted by reference to the definitions contained in sec. 33, be enforced, where they provide no penalty, by that prescribed by sec. 124, and be proceeded on under Division IX. But they do not become statutes within the meaning of the Acts Interpretation Act, nor are those of its provisions, which are limited to defining the operation of statutes, made applicable. It follows that after the repeal of the regulation any liability it imposed of its own force upon the Gas Co. came to an end.

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The subsequent resolution of the Harbors Board adopting the rate and rebates prescribed by the regulation cannot, in my opinion, operate to impose liability as an exercise of authority and indepen- dently of contract. Sec. 63 enables the Board to make charges for the use of its apparatus and conveniences, subject to the condition that the charges shall be reasonable. It does not mean, however, to give an authority to levy the charges, independently both of regulation and of agreement. If the Gas Co. were not entitled to the use of the coal-handling plant, the adoption and notification of the rate, provided it be not unreasonable, would be enough to fix the Gas Co. with a contractual liability to pay it, because the Gas Co. after notification continued to avail itself of the services performed by the plant. But, notwithstanding the argument made on behalf of the Board to the contrary, I think that clause 15 of the lease means that during its currency the Gas Co. shall have a right to the services of the plant. Perhaps mutual agreement upon the point at which coal should be delivered was a condition precedent to the acquisition of an absolute right. But that condition has been fulfilled, and I cannot accept the construction of the clause which makes it necessary for the parties to agree as to the point of delivery upon every occasion the plant discharges coal consigned to the company. The Harbors Board has not disputed its power to enter into the bargain contained in the lease. The result of the view expressed is that the Board was not free to stipulate what remunera- tion it should receive for delivering coal to the Gas Co. through its plant, but was bound by clause 15 to deliver coal for whatever reward it would be entitled by law to receive. As there was no regulation fixing by law the rate payable, I think it necessarily follows that the amount to which the Harbors Board is entitled is that which is found as matter of fact to represent a fair and reasonable rate of remuneration, in other words, a quantum meruit. To the determination of such a rate Napier J. addressed himself. Although it is a question of fact, its answer depends very much upon the methods of reasoning which are pursued, and the appeal against the judgment resolves itself into an attack upon the correctness of the principles adopted by Napier J.

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The plant constructed by the Harbors Board which delivered the coal to the Gas Co. is of a very elaborate and expensive description. Four travelling jib cranes are supported upon a wharf. They are armed with grabs by which the coal in a collier's hold is seized, raised and deposited in receiving hoppers, whence it falls upon belt conveyers running parallel with the wharf. The belt conveyers carry it to apron feeds that deliver it on to a pair of conveyers which carry it at right angles and upwards to a point where it may be discharged upon other conveyers. At this point a cross-conveyer belonging to the Gas Co. runs off to its premises, and another belong- ing to the Electric Supply Co. runs off to its premises, and a system of forty bins commences over which conveyers run. The bins appear to be arranged in four parallel rows of ten each, and four conveyers carry the coal over them and discharge it into them. By switches coal can be sent by the Gas Co.'s conveyer, by the Electric Supply Co.'s conveyer or into the Harbors Board's bins by one of the conveyers. Each bin has a capacity of 275 tons. The purpose of the bins is to contain the coal pending its discharge therefrom into railway trucks underneath. The expeditious discharge of colliers contributes materially to the reduction of the landed cost of coal and forms one object which the plant was designed to achieve. The grab can unship the coal at a rate of 400 tons an hour, but it would be impossible to remove it by means of trucks at anything like that rate. Containers in which it can accumulate are, therefore, a necessary part of the plant. Excluding the telphers, upon which £16,507 was spent, the plant is said to have cost £231,000 to erect. Of this sum, about £84,500 is attributable to the bins and the conveyers over them. The Gas Co. installed a plant upon its premises for dealing with its supplies of coal at a cost of about £53,500, including the cost of the conveyers. The service performed by the Harbors Board for which the Court was required to fix a fair and reasonable rate of remuneration consisted in the unshipment of coal and its delivery on to the Gas Co.'s conveyers by means of the Board's coal-handling plant.

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construction of permanent works by both parties which might be operated together to the advantage of each of them. Upon a quantum meruit, usually the value of services is assessed by reference to charges commonly made by others for like services. But in the present case no such standard is available. No doubt the cost of discharging coal at other wharves by other methods cannot be excluded from consideration as altogether irrelevant, because, for example, probably it would not be considered reasonable for the Harbors Board to demand a greater sum than the Gas Co. would pay if it adopted some such alternatives at Osborne. But, in the circumstances of the present case, the primary or initial factor in the estimate of a fair and reasonable rate must be the revenue expenses reasonably incurred by the Harbors Board in equipping itself to perform the services contracted for and in their performance. That this was so appears to have been fully recognized by Napier J. But he was confronted by the fact that, during the first of the two years for which the Board claimed, its plant was incomplete and it performed its contract only by resort to extraneous appliances. It was evident on that ground alone that no safe guidance could be obtained from the actual cost incurred during that year. Further, in the next year, the Harbors Board had not secured the handling of anything like the anticipated proportion of the coal coming to Adelaide, and to distribute the fixed charges over the actual quantity only of coal passing through the plant would produce a rate per ton which could not fairly be demanded of the Gas Co. For these reasons and the additional reason that the plant was designed on a much larger scale than was needed to deal with the amount of coal found in the event available, his Honor said that he could not accept the actual experience of the plant during the period in question as a fair guide to the value of the services rendered. But he found that a fair charge for the complete service of delivering coal out of ships through the plant into trucks under the bins was, or at least did not exceed, the three shillings resolved upon by the Harbors Board. This finding he made for four reasons. The amount was fixed by the Board itself: the original estimate for this work had been 2s. 2d.: when the cost of unloading into trucks at Port Adelaide was no longer

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it on to the company's conveyers is outweighed by other considera- tions which appear to me to show that, in arriving at a fair and reasonable reward for the service obtained by the Gas Co., such an apportionment of the costs and charges incurred by the Harbors Board ought not to be made. The plan to which the Gas Co. adhered when it took its lease was that the Harbors Board should undertake the responsibility of erecting a plant for the discharge of nearly all the coal shipped to Adelaide. A chief merit of the plan lay in the possibility of thus obtaining a reliable means of expeditiously discharging colliers and delivering coal to consignees at rates which would diminish as the quantity handled increased. To justify the undertaking financially the plant installed by the Harbors Board must include all the appliances required for the delivery of coal to the consumers expected to use it. To make it possible to conduct the operations at low charges, it must unload a quantity of coal several times greater than that imported by the Gas Co. A principle object being rapidity of discharge, it was essential to provide an adequate means of holding the coal discharged from the colliers pending its necessarily slower removal by trucks. A plant con- structed to fulfil these purposes operates as a whole; its parts are interdependent. If the bins did not exist, the rapid discharge of 400 tons an hour would be impossible, unless the Gas Co. took the coal. Its conveyers are designed to accept coal at the maximum rate at which the Board's cranes and conveyers can deliver it. But when the switch diverts coal on to the Gas Co.'s conveyers at this rate, the conveyers over the Board's bins are thrown into idleness, and the bins, except for what they already contain, cease to fulfil their function. It is immaterial to the Board, which must maintain the bin system, whether the Gas Co. uses it or not, except that, if the Gas Co. did use the bins, a greater space would be utilized. As events have turned out, this space is available. In emergency, as for instance, if the Gas Co.'s plant failed, or if a strike took place, it might be compelled to use the bins.

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Court

Decision date

Before

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Judgment (97 paragraphs)

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