The Director-General of the Department of Transport of New South Wales & Anor v Oliveri Transport Services Pty Ltd

PARTIES : The Director-General of the Department of Transport of New South Wales & Anor - Appellants Oliveri Transport Services Pty Ltd - Respondent JUDGMENT OF : Mason P at 1; Meagher JA at 2; Giles JA at 3

LOWER COURT JURISDICTION : Supreme Court - Equity Division LOWER COURT ED(Com List) 50028/00 FILE NUMBER(S) : LOWER COURT Rolfe J JUDICIAL OFFICER :

COUNSEL : M H Tobias QC & R P L Lancaster - Appellants J C Kelly SC & N A Confos - Respondent SOLICITORS : Deacons - Appellants Harmers - Respondent CATCHWORDS : ADMINISTRATIVE LAW - determination to vary the routes within a region for operation of bus services on renewal of the contract for their operation - statute empowers variation if necessary for improvement of transport services in the public interest - whether determination vitiated because made for ulterior purpose - whether determination vitiated by uncertainty - finding as to purpose - not to derive maximum revenue from competitive tender of excised routes within the region - distinction between the means to an end and the end - purpose within the power - determination not uncertain. D. Passenger Transport Act 1990; Passenger Transport Amendment Act 1997; LEGISLATION CITED : Road Transport (General) Act 1999; Statute Law (Miscellaneous Provisions) Act (No 2) 1999; Transport Administration Act 1988. Fawcett Properties Ltd v Buckingham County Council (1961) AC 636; Knuckey v Commissioner of Taxation (1998) 87 FCR 187; Minister for Aboriginal Affairs v Peko-Walsend Ltd (1986) 162 CLR 24; CASES CITED: Pelechowski v The Registrar, Court of Appeal (1999) 198 CLR 435; Samrein Pty Ltd v Metropolitan Water, Sewerage and Drainage Board (1982) 56 ALJR 678; Television Corportation Ltd v The Commonwealth (1963) 109 CLR 59; Thompson v The Council of the Municipality of Randwick (1950) 81 CLR 87; Warringah Shire Council v Pittwater Provisional Council (1992) 26 NSWLR 491. DECISION : 1. Appeal allowed; 2. declarations and orders 2 and 3 made by Rolfe J on 14 February 2001 set aside, and in lieu thereof order that the summons be dismissed; 3. Respondent to pay the appellants' costs of the appeal, and to have a certificate under the Suitors Fund Act if otherwise qualified.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40134/01 ED(Com List) 50028/00 MASON P MEAGHER JA GILES JA

Friday 20 July 2001 THE DIRECTOR-GENERAL OF THE DEPARTMENT OF TRANSPORT OF NEW SOUTH WALES & ANOR V OLIVERI TRANSPORT SERVICES PTY LIMITED

1 MASON P: I agree with Giles JA. 2 MEAGHER JA: I agree with Giles JA. 3 GILES JA: The respondent ("Oliveri") entered into a contract with the first appellant ("the Director-General") under which it had an exclusive right to operate bus services within a defined region. The contract was for a term of five years, and Oliveri had a qualified entitlement to renewal for a further term. The Director-General determined, purportedly within the qualification, that the contract should be renewed only with the excision of a particular route within the region. Rolfe J held that the determination was flawed, and that Oliveri was entitled to renewal without the excision of the route. This summary does not do justice to the detail and complexity of the issues in the appeal from his Honour's decision, but will serve as a guide to what follows.

The legislation 4 By s 38(1) of the Transport Administration Act 1988 the Director-General is to "take all steps as are, within available financial resources, necessary to ensure the provision of safe, efficient, adequate and economic passenger services". By s 38(2) and s 104E(1), he may enter into contracts with any person for the provision of any such services. The Passenger Transport Act 1990 ("the Act"), the operation of which is expressly saved by s 104E(2) of the Transport Administration Act , includes and regulates one way in which he can discharge his function, that is, by the operation of public passenger services under fixed term contracts between the Director-General and operators. 5 The objects of the Act in s 4 include - "(e) to encourage public passenger services that meet the reasonable expectations of the community for safe, reliable and efficient passenger transport services, and (f) to encourage co-ordination of public transport services."

6 Part 3 of the Act addresses "regular passenger services", by the definition in s 3 relevantly meaning public passenger services conducted according to regular routes and timetables. "Public passenger services" is relevantly defined to mean the carriage of passengers for a fare or other consideration by motor vehicle along a road or road related area. The word "road" and the phrase "road related area" are defined as having their meanings in the Road Transport (General) Act 1999. "Road" means an area that is open to and used by the public and developed for, or has as one of its main uses, the driving or riding of motor vehicles. "Road related area" has an extended meaning, namely - "(a) an area that divides a road, or (b) a footpath or nature strip adjacent to a road, or (c) an area that is open to the public and is designated for use by cyclists or animals, or (d) an area that is not a road and that is open to or used by the public for driving, riding or parking vehicles, or

(f) any other area that is open to or used by the public that has been declared under section 9 to be an area to which specified provisions of this Act or the regulations apply."

7 Section 16(1) of the Act provides that the terms and conditions on which any regular passenger service is to be carried on are to be set forth in a contract between the Director-General and an operator. A contract so entered into is defined in s 3 as a service contract. By s 16(3), a person who carries on a regular passenger service otherwise than under the authority of a service contract is guilty of an offence. By s 17 a service contract must make provision for a number of stated matters and may make provision for a number of other matters. The stated matters include the period for which the contract operates and standards of safety for passengers and the public and of vehicle maintenance. 8 By s 18 of the Act service contracts may be classified as "commercial" or as "non-commercial" for the purpose of determining how the contract holder is to be remunerated. Under a commercial contract the holder's remuneration comes from passengers' fares. Under a non-commercial contract the holder's remuneration comes from payment by the Crown to the holder in the manner provided by the contract. Relevantly to these proceedings, which are concerned with a commercial contract, a commercial contract is to be entered into for a term of five years. 9 By s 19 of the Act a commercial contract must fix a scale of maximum fares, and the way they are to be fixed and specified is stated; under a non-commercial contract, provision may be made for adjustments in respect of any shortfall or surplus resulting from the difference between the agreed contract price and any revenue generated by fares. 10 By s 20 of the Act a service contract must fix a scale of minimum service levels. Section 20(3) and (4) provides - "(3) In fixing the scale for a service to be carried on under a commercial contract, regard should be had to: (a) the needs of the community to be served by the service; and

(b) the average service levels for the time being prevailing in the industry with respect to communities which have similar population densities and which are in other respects comparable. (4) For the purposes of subsection (3)(b), average service levels may be analysed with respect to significant time categories such as peak work-based journey periods, shopping off-peak hours, Sundays and holidays and so forth."

11 Sections 21, 22, 23 and 24 of the Act deal with the grant of exclusive rights under a service contract for a region or route of operation, with the provision of new services under a commercial contract, the renewal of a commercial contract, and the variation of the region or route of operation. The form of s 23 relevant to these proceedings, however, is the form prior to its repeal and replacement by the Passenger Transport Amendment Act 1997 ("the Amending Act") (see s 3 and Schedule 1 [15]). This is because by s 64(3) and Schedule 3 cll 6 and 9(3) of the Act, the clauses being transitional provisions added by the Amending Act, s 23 in its earlier form is taken to continue to apply, to the exclusion of the new s 23, to a "commercial regular passenger service contract" that was in force at the time the repeal became effective and had not by then been renewed, but ceases to apply on the date of first renewal of the contract. 12 Taking the earlier form of s 23, these provisions are and were - " Exclusive rights 21(1) A service contract must specify a region or route of operation. (2) A route may proceed across land or water or both, and a region may consist of a geographical or navigational area or both. (3) A commercial contract operating on a particular route is to confer on the holder the exclusive right to operate regular passenger services on that route. (4) The right conferred on a holder by subsection (3) precludes the Director-General from subsequently entering into a contract with any other person for the operation of a similar service along a route sufficiently proximate that it would result in substantial competition with the service carried on by that holder. (5) A commercial contract operating in a region may either: (a) confer on the holder the exclusive right to operate regular passenger services in the region; or

(b) confer on the holder a right to operate such services in the region, being a right that is an exclusive right except with respect to a route or routes specified in the contract or in a variation made to the contract. New services 22(1) If, while a commercial contract is on foot with respect to a particular region or route:

(a) the Director-General determines that, in the public interest, additional services should be provided in that region or on, or in proximity to, that route; and

(b) the holder of the contract declines to vary the contract, or enter into a new contract, for the provision of those additional services,

the holder thereby waives the exclusive right to operate regular passenger services in that region or on that route, but only to the extent necessary to enable the operation of those additional services by someone else.

(2) The Director-General may propose the terms and conditions of any variation of the holder's contract or of any new contract to be offered to the holder.

(3) Subsection (1) does not apply if, considering the nature and extent of the proposed additional services, the terms and conditions proposed by the Director-General are unreasonable in light of the provisions of this Act and the regulations and the circumstances of the case.

(4) For the purposes of subsection (3), the average level of fares prevailing in the industry for comparable services must be considered, together with any other matters relevant to the circumstances of the case.

(5) In the event that additional services proposed by the Director-General affect the exclusive rights of two or more contract holders, it is the duty of all parties to endeavour to agree on a just compromise of their respective rights. Failing such an agreement, the exclusive rights of any one of them (called the ''first holder'') are, to the extent necessary to enable the additional services to be performed by someone else, extinguished by this subsection when:

(a) a variation of contract is effected, or a new contract is entered into, with another holder so affected, if the proposed additional services are likely to reduce patronage of the services operated by that other holder to a greater extent than they would reduce those of the first holder; or

(b) a new contract is entered into jointly with two or more other holders, patronage of whose services is likely to be reduced to any such greater extent.

(6) Section 28 applies to subsection (5) as though all the holders affected were bound by a common agreement.

23(1) At the end of the term of a commercial contract, and thereafter from time to time at the end of each term for which the contract is renewed in accordance with this section, the holder is entitled to a renewal of the contract for a further term of 5 years, unless: (a) the holder's previous performance under the contract has been unsatisfactory in a manner and to an extent that would have enabled the contract to be cancelled during its term if the Director-General had taken steps to do so; or

(b) the region or route of operation of the contract is varied in accordance with section 24. (2) If a contract is renewed, it is to be renewed, with due regard to the provisions of this Part relating to fares and other matters, on the same basis as if it were an original contract, and in such a manner as to preserve the exclusive rights of the holder. (3) If the region or route of operation of the contract is varied under section 24, the holder (unless otherwise disentitled) is entitled to a further contract if the variation consists of a minor extension or diminution of the region or route, or is otherwise of a sufficiently minor character that a further contract may be entered into in substantially the same terms as the previous contract. (4) An entitlement under subsection (3) is to be regarded for the purposes of this Act as an entitlement to renewal of the previous contract. (5) The rights of a holder under this section are to be taken to be satisfied if the holder declines to enter into a renewed contract, drawn up and duly tendered to the holder, whose terms meet all the requirements of this Part. Variation of region or route

24(1) The region or route of operation of a service contract cannot be varied during the term of the contract except by consent of the parties.

(2) The region or route of a commercial contract offered pursuant to section 23 as a renewal of a previous contract must be the same as the region or route defined in respect of that previous contract except by consent of the parties or by a determination of the Director-General under this section.

(3) A renewal of contract may be offered in respect of a varied region or route if the variation:

(a) is necessary to extend services in developing areas; or

(b) is necessary as a result of altered traffic conditions or for reasons of public safety; or

(c) is otherwise necessary for improvement of transport services in the public interest." 13 In the course of the correspondence between the Director-General and Oliveri to which I will come, and in the making of the determination, all concerned acted on the current form of s 23 of the Act. Before Rolfe J there was dispute over whether the earlier form of s 23 had come to be the current form because the Amending Act had itself been repealed by the Statute Law (Miscellaneous Provisions) Act (No 2) 1999. His Honour held that the repeal did not reinstate the earlier form of s 23, because it left the Act in its amended form: the repeal simply tidied up the statute book. His Honour's attention was not drawn to the transitional provisions, and in the result his Honour also acted on the current form of s 23 of the Act. It was common ground on appeal that this was incorrect. 14 Subsection (7) of the current form of s 23, on which Rolfe J particularly acted, is broadly equivalent to subss (1) and (5) of the earlier form of s 23: it reads - "(7) A commercial contract is to be renewed by the Director-General for a further period of 5 years if the contracted operator, on the Director-General's assessment, has met the objectives and standards prescribed by the performance assessment regime that were applicable during the term of the contract, unless the region or route of operation of the contract is varied in accordance with section 24 or the operator declines to take up a renewal."

However, the current form of s 23 does not include equivalents to subss (3) and (4) of the earlier form of s 23. 15 By s 25 of the Act a service contract can be assigned with the consent of the Director-General, and by s 26 it can be varied, suspended or cancelled by the Director-General if the holder is in serious or persistent breach of contract , is convicted of certain offences, or loses necessary accreditation as a service operator. 16 By s 27 of the Act -

27(1) In addition to any other fee payable under this Act, a contract fee is payable to the Director-General when a service contract for a regular passenger service is first awarded or is subsequently renewed. (2) The Director-General may determine the amount of the fee, subject to any maximum amount prescribed by the regulations. (3) The fee should reflect the administrative costs associated with negotiating, preparing and entering into the contract and the estimated costs associated with subsequent monitoring and assessment by the Director-General of the holder's performance."

"28(1) Every contract entered into for the purposes of this Part is to be taken to include all the provisions of this Part (section 16 excepted) that confer or impose any rights, powers or duties on the parties, and any contravention of such a provision may be remedied at law or in equity as though the provision were one to which the parties had by contract agreed."

The contract 18 The contract was described as a commercial service contract, contract No R031. It was dated 18 February 1995. It began with the recitals - "A. In accordance with the provisions of the Transport Administration Act 1988 the Director-General is required to ensure the provision of safe, efficient, adequate and economic passenger services; B. The Holder has agreed to provide to the Director-General Regular Passenger Services in accordance with the Schedules attached hereto on the terms and conditions hereinafter set out."

19 In cl 1 of the contract "Regular Passenger Service" was defined as having the same meaning as in the Act. By a further definition, "School Services" meant bus services for the carriage of school children. "Service" was defined to mean each Regular Passenger Service and School Service shown at Schedule 6. Schedule 6 listed a number of Regular Passenger Services by route number and place of commencement and place of termination, often with an intermediate place. It also listed a number of School Services, described as such services "that operate outside of contract area", by place of commencement to stated schools in the morning and the stated schools to place of termination in the afternoon and often some at least of the roads to be traversed. 20 By cl 2 of the contract it was to have a term of five years. 21 Clause 3 of the contract provided - " 3. Agreement for Services 3.1 The Holder will provide Regular Passenger Services and School Services in accordance with this Agreement.

3.2 The Holder is hereby given an exclusive right to operate the Service in the Regional Service Area with the exception of those routes specified in Schedule Eight."

22 "Regional Service Area" was defined in cl 1 to mean "each regional service area as set out in Schedule Five". 23 Schedule 5 set out more than an area. Its first page said - "1. Regional Service Area. 2. Routes".

The second page was a colour-coded key to the third page. The third page was a map which outlined a region, by the key the "Proposed boundary of the region". It also delineated routes from and outside the boundary of the area and occasionally from and inside the boundary of the area, by the key being either routes of a third party which operated partly within the region or along the boundary of the region or routes of "the operation concerned" which operated into a neighbouring region. 24 Schedule 8 to the contract took up the routes of a third party which operated partly within the region or along the boundary of the region. It was headed "Excluded Routes", and with reference to the key provided - "Excluded routes are those marked on map R031 in Schedule 5 by colours corresponding to f, g, h and i in the explanation of colours attached at Schedule 5, as routes of a third party which operate partially within the region and not subject to a travelling restriction."

25 By cl 5 of the contract Oliveri agreed to "[d]evelop and provide all Services within the boundaries of the Regional Service Area as depicted at Schedule five". Oliveri was required to provide the Director-General with information "in respect of Services introduced by the Holder within the Regional Service Area …", from which it seems that Oliveri was not limited to the routes in Schedule 6 but could if it wished provide other Regular Passenger Services or School Services within the Regional Service Area: whether this is a correct understanding of the contract does not matter for this case. The clause dealt with fares, route and timetable particulars, service levels, vehicle and driver standards, and a great many other matters which it is not necessary to detail. 26 There was provision for termination of the contract, in essence for default, and by cl 12 (reflecting s 23(1) of the Act) - " Renewal At the end of the term of this Agreement, on the basis that this Agreement is in force at that time, the Holder will be entitled to a renewal for a further five year term unless: (a) the Holder's previous performance under this Agreement has been unsatisfactory in a manner and to an extent that would have enabled this Agreement to be cancelled during its term if the Director-General had taken steps to do so; or

(b) the region or route of operation of he Agreement is varied in accordance with section 24 of the Act."

27 Reflecting s 28 of the Act, cl 16 of the contract provided - " Application of the Act Part 3, sections 17 to 28 of the Act form part of this Agreement." 28 The contract contemplated, although it did not expressly so provide, that Oliveri would be remunerated by fares collected from passengers. Rolfe J recorded that Oliveri had paid "an administration fee of several thousand dollars", no doubt in accordance with s 27 of the Act. The contract does not seem to have fitted precisely within the alternatives in s 21 of the Act, in that it specified a region but also specified some routes (for School Services) going outside the region. However, it was common ground in the proceedings that the contract relevantly fell within s 21(5)(b), as a contract operating in the region outlined in the map in Schedule 5 conferring on Oliveri an exclusive right to operate regular passenger services in the region except with respect to the routes in Schedule 8.

The Liverpool-Parramatta Transitway 29 At some time in 1999 PriceWaterhouseCoopers ("PWC") on behalf of the Government invited expressions of interest in the operation of bus services on the Liverpool-Parramatta Transitway ("the LPT"). 30 Section 1 of the invitation document read - " 1. The NSW Government's Transport Objectives In an integrated approach to improving Sydney's air quality, providing real transport choices and reducing car dependency, the New South Wales government has announced a number of public transport initiatives in its transport strategy document Action for Transport 2010. These include extensions to the passenger rail system and introducing an innovative network of seven rapid bus-only Transitways in Western Sydney. The 90 Km Transitway network is an important regional public transport system that will provide high quality, frequent and fast travel between centres, and serve areas away from the rail network. It is envisaged that the Transitways will be delivered through a productive partnership between government and the private sector. In the case of the Liverpool-Parramatta Transitway (LPT), this will broadly see the NSW Government delivering the station and roadway infrastructure for a 30 km rapid busway system - at a strategic estimated cost of $200 million - and LPT passenger services being provided by a bus operator under contract to the Government. It is in line with a partnership approach that this request for Expressions of Interest in the operation of LPT services now opens the opportunity for innovative bus service operators to meet the service requirements for an important public transport infrastructure initiative."

31 Section 3 of the document began with what was described as the background to the Liverpool-Parramatta Transitway project - "The proposal to develop a public transport corridor in the region served by the LPT was first considered some 30 years ago, and was confirmed with the gazettal of Sydney Regional Environmental Plan No 18 (SREP18) in 1989. In 1997 a preliminary feasibility study of the SREP18 Corridor was undertaken. It suggested that a bus-based Transitway system would be feasible, subject to some adjustment of the corridor's alignment to serve industrial areas. It pointed out that fewer that 5% of the 25,000 then existing employees in the industrial areas of Smithfield, Wetherill Park and Yennora use public transport for their journey to work. Most of these public transport users have to change modes from bus to rail on their journey to work. These trips are for the most parts slow, complicated, indirect and inconvenient compared to private car trips." 32 There was then reference to a number of Government announcements of its commitment to build the LPT and of its features. The features included that local bus services would be "integrated with the LPT". It was said that seven "rapid bus-only" Transitways were proposed, and that the first was "the 30 km Liverpool-Parramatta route via Wetherill Park and Merrylands, consisting of 20 km of new, bus-only roadway and 10 km of on-road bus priority facilities". The "key benefits" of the LPT were described - "The Liverpool-Parramatta Transitway Overview Report, prepared by PPK Environment & Infrastructure, which confirmed the value of an extended LPT servicing Smithfield-Wetherill Park, outlines the key benefits of the proposal including: · Servicing the growth of Parramatta as Sydney's second business district, with employment in this regional centre targeted to grow from 30,000 to 60,000 by 2021 · Providing the regional public transport connections for the first time through the Smithfield-Wetherill Park industrial area (with 25,000 workers, one of the Sydney's top five employment areas) · Directly serving servicing the industrial area from the western part of Fairfield local government area - from which one in four workers travels every day to a job in Smithfield-Wetherill Park · Improving public transport access to a range of other regional attractors - including Liverpool CBD and station, the Prairiewood, Bonnyrigg and Wet Merrylands commercial centres, educational institutions including Miller and Wetherill TAFEs, Fairfield Hospital and other medical facilities, and a considerable catchment of residential suburbs."

33 In section 3.4 discussing the types of bus service in the region "serviced by the LPT", between reference to "dedicated LPT services" and "express or limited stop services", the document read - " 3.4.2 Local or feeder services Under the terms of the Passenger Transport Act 1900 (Attachment B) the NSW Government is presently contracted with local service contract holders to provide regular passenger services on principally East-West routes in the region served by the LPT (see regional map at appendix B). (A sample existing contract document is at Appendix C.) These contracts are for a five-year term but are renewable at the end of that five-year period. All of these contracts will be up for renewal prior to the completion of the LPT. Under the terms of the Passenger Transport Act 1900, the NSW Government is required to offer to existing local service contract holders the right to continue to operate bus services on those existing routes for a subsequent five-year period, unless the NSW Government decides that the routes need to be varied in accordance with certain criteria set out in the legislation. Based on an assessment of the relevant criteria, variations may include: · Route diversions to ensure that each route intersected with the LPT at at least one location where passengers could transfer conveniently · Timing changes to ensure that all bus services arriving at a major destination did so in a way that allowed interchange between all bus services. It is expected that a network of feeder buses operating on a pulse timing system would focus on major stations like Bonnyrigg and Prairiewood. These local services would typically follow a similar route to express buses in the area (see below) but at a lower peak frequency. In peak periods such services would serve local trips not needing to use the LPT, e.g. services to the heavy rail Main Southern Line and town centres. In the off-peak when most express services would not operate, the feeder routes would also provide, in combination with the dedicated service, a region-wide service."

34 Section 3.5 of the document described the LPT's physical characteristics. The description included in more detail how the LPT would have a dedicated bus-only roadway or bus-only and bus priority lanes along existing roads. Succeeding sub-sections of section 3 described how buses would be modern, air-conditioned, and "clean and green"; would offer enhanced security; and would run with the benefit of an "Intelligent Transport System" ("ITS") to maximise reliability, efficiency and user-friendliness. 35 Section 4 of the document set out the mandatory requirements of expressions of interest. They were concerned with service (timetables, station facilities and integration with local or feeder services); system (ITS, buses, ticketing, passenger information); and finance and management. As to the last of these, the applicant had to indicate a fare structure, substantiate its financing capability, and provide an estimate of "any franchise payments it proposes to make to the NSW Government (including payments for the use of the LPT) and/or any alternative financial arrangements (allowing for any payments from the NSW Government under existing subsidy schemes)", although it was said that the figures provided were "for the purposes of the NSW Government's internal modelling and will not be used as part of the assessment of Expressions of Interest". 36 The general information for applicants in section 5 of the document included - " 5.2 Franchise Payments/Subsidies The NSW government has a range of transport, social and environmental objectives to be achieved by the service. The NSW Government's key financial criteria are based on value for money, and the NSW government wishes to maximise any franchise payments made by the successful Applicant to the NSW Government for the right to use the route and correspondingly minimise the payment of any subsidy to the applicant. Specifically Applicants should note that the NSW Government has not at this stage determined whether any School Student Transport Scheme program payments will be made in respect of the LPT dedicated service. 5.3 Commercial Terms Subject to the NSW Government's reserved right to adopt an alternative process to that outlined in this document (see Section 7.1), it is expected that the Expression of Interest process will lead to a competitive tendering stage. A successful tenderer will receive a contract for the LPT dedicated service which may include a contract to meet the minimum standards set out in Section 3.12. That contract will detail the sharing of responsibility between the NSW Government and the Applicant for meeting required standards. It is expected that liquidated damages would apply where the Applicant failed to meet minimum service requirements. Further detail on specific contract provisions will be provided at the tender stage, subject to the NSW Government's decision to proceed." Initial correspondence 37 By a letter dated 21 October 1999 solicitors wrote to PWC on behalf of Oliveri and other operators, suggesting that the proposed Transitway services so far as on public roads would be regular passenger services within s 22 of the Act. The solicitors suggested that the right to operate the services could not be awarded to someone else under the regime in that provision, and said that their clients did not wish their "contractual and statutory rights" to be compromised. The solicitors also said - "We also note that in Part 5.2 of the Expression of Interest document reference is made to a franchise fee that may be payable by the successful tenderer. Could you please confirm whether this franchise fee will be payable to the current holders of commercial contracts in the proportion to which their existing services are likely to be impacted." 38 PWC replied by a letter dated 28 October 1999. They said that they had legal advice that s 22 of the Act was "not applicable to the EOI process, given the nature and scope of the services to be considered and the timeframe in which those services are likely to be introduced". They also said - "In relation to your question regarding franchise fees, it is not correct to assume that franchise payments will be payable to current holders of commercial contracts. The definition of a Franchise Payment/Subsidy is outlined in section 5.2 of the Document. To further clarify this definition, we note that the NSW Government is seeking to obtain the best value for money on all its transport projects in line with its transport objectives, which are well publicised. As a result, it wishes to maximise any franchise payments made by the successful Applicant to the NSW Government and (accordingly) minimise any subsidies paid by the NSW Government to that Applicant." 39 The solicitors replied in turn by a letter dated 10 November 1999. They maintained that the proposed services were "covered by" s 22 of the Act, and reserved all their clients' rights.

The Director-General's determination 40 The Director-General wrote to Oliveri by a letter dated 2 December 1999 - "As you will be aware, the NSW Government is currently evaluating proposals relating to the construction, and operation of services on, a dedicated bus only Liverpool to Parramatta Transitway ("LPT"). These proposals may involve the operation of a bus service through the region currently serviced by Oliveri Transport Services Pty Ltd (Oliveri) under its commercial service contract for the region R031. The terms of this contract gives Oliveri the exclusive right to provide regular passenger services in the region R031. This contract is due to expire on the 18th February 2000. Under the terms of the contract, Oliveri has a right to renewal unless · Oliveri's performance under the contract has been unsatisfactory in a manner or to an extent that would have enabled the contract to be cancelled during its term, if the Director-General had taken steps to do so; or · The region or route of operation of the Agreement is varied in accordance with Section 24 of the Passenger Transport Act 1900 ("the Act"). The provisions of section 24 are set out as follows: [here s 24 was set out] The relevant section of the proposed LPT in the R031 region is located within the Prospect Arterial Road Reservation. From the north the proposed LPT crosses Brown Road through a signalised bus priority intersection, then crosses North Liverpool Road through a signalised bus priority intersection and continues within the Prospect Arterial Road Reservation on bus only roadway, yet to be constructed, south to Hoxton Park Road. You are referred to figures 5.1c and 5.1d of the enclosed LPT Overview Report. The proposed LPT alignment is subject to detailed design and environmental assessment. Given the nature of the LPT proposal, I believe it is necessary to consider whether a variation to the current service region to which Oliveri's contract applies is required on the grounds set out in section 24 of the Act. The purpose of this letter is to invite you to provide me with written submissions on whether such a variation is necessary and to address any other matter that you consider relevant. I would appreciate it if you would provide me with your submissions by close of business on Wednesday 22 December 1999. …". 41 Oliveri replied by a letter dated 12 December 1999. Much of the letter may not have been responsive. It included, however, that Oliveri's legal advice was that "the LPT Service will be subject to Section 22 of the Passenger Transport Act", and that a joint expression of interest submitted by Oliveri and other operators was a "joint compromise" within that provision. It acknowledged the power of variation under s 24 of the Act, but said that Oliveri's advice "indicates that section 24 does not give your Department the right to add an additional exception for the purposes of Section 22(5)(b) to the renewed contract". It is not particularly clear what Oliveri was saying about the operation of s 24, but the letter concluded with the assertion that there was "no requirement or justification whatsoever for any variation of Commercial Contract R031 under the terms of Section 24 of the Passenger Transport Act". 42 Mr Ross Elson, who signed above the title Manager, Contracts & Compliance, Bus, Ferry & Light Rail Services, then wrote to Oliveri on behalf of the Department of Transport by a letter dated 24 December 1999. He noted Oliveri's letter of 12 December 1999, and said - "In your submission, it is noted that you have not provided the Department with information on · Any impact (financial or otherwise) on your company if the current exclusive service region in Commercial Contract R031 was varied in the manner outlined in my letter to you of 2 December 1999; and · Any other information as to why the proposed variation is not necessary for improvement of transport services in the public interest. It would be desirable for you to provide this information to assist the Director-General in making his decision under the provisions of section 24 of the Act. Accordingly, I would appreciate it if you could provide me with any further submissions on this matter (including the information referred to above) on or before Friday 7 January 2000. It is anticipated that a decision will be made shortly there after [sic]." 43 The solicitors, now acting only for Oliveri, replied complaining about an unreasonable deadline. While maintaining that the time allowed had been reasonable, Mr Elson extended the time to 17 January 2000. 44 The solicitors provided a detailed reply by a letter dated 17 January 2000. It included contentions to the effect that, because Oliveri's contract was for a region, s 24(3) of the Act permitted only variation of the region, not variation by excision of a route within the region; and that, if this was incorrect, s 22 of the Act adequately covered the introduction of a new service, because the operators had submitted a joint expression of interest whereby the new service could be introduced pursuant to s 22(5) so that there could not be a necessity to vary the contract satisfying s 24(3). This was summed up - "In our strong submission, due to the operation of Section 22 and the approach of the four affected operators, the proposed variation is clearly not necessary to ensure the introduction of the Transitway services. The improvement can be achieved by adherence to the Section 22(5) process. The only effect of the proposed variation would be to deprive our client of its right to either participate in the provision of the Transitway services or to receive compensation in relation to the losses it would suffer on existing services due to the introduction of the Transitway services. The variation would not, in any way, impact upon the nature of quality of Transitway services which are provided to the public once the Transitway opens. In our submission Section 24(3) will only apply where under the terms of the contract in its unvaried form the services will not adequately be provided to the public." 45 Mr Elson then prepared a memorandum addressed to Ms Jennifer Aldred, Director, Sydney and Western Region, dated 25 January 2000. Ms Aldred in due course made the determination as delegate of the Director-General pursuant to s 40 of the Transport Administration Act , and I will refer to her as "the Delegate". It is desirable to spend a little time on the memorandum. 46 Section 1 of the memorandum stated its purpose as - "To advise of the need to consider a variation of the region to which the Oliveri Transport Services Pty Ltd (Oliveri's) commercial service contract applies in accordance with section 24 of the Passenger Transport Act ('the Act')".

47 Section 2 of the memorandum sought to set out and summarise the effect of relevant portions of ss 23 and 24 of the Act. It erroneously regarded s 23(7) of the current form of s 23 as applicable, but noted that Oliveri "have performed their services adequately," so that the relevant qualification on the right of renewal was variation under s 24. It summarised s 24 - "Section 24(2) states that a renewal must be for the same region or route as under the previous contract unless a determination is made by the Director-General under s 24. Section 24(3) would allow the Director-General to vary the region in the public interest to which the previously contracted services applied, if such a variation is necessary for the improvement of transport services in the public interest."

48 Section 3 of the memorandum, under the heading "The Introduction of Transitways", described the Western Sydney Transport Strategy announced in June 1997 to improve public transport services in the greater western area of Sydney; the LPT announced in May 1998; and the transport plan "Action for Transport 2010", an integrated transport plan announced in November 1998 as - " … the blueprint for government investment and transport outcome which included an [sic] commitment to invest an estimated $770 million over ten years to transform Sydney's public transport network for the next century." 49 This section of the memorandum included that the greater western area had experienced a massive population growth in low density areas; that the transport strategy had a catch-up phase, an expansion phase and a sustainable growth phase; and that important to it was the establishment of the Transitway policy to improve public transport in the region. Transitways were said to be "a key element of the integrated transport plan", with the LPT the first Transitway to be constructed at an estimated cost of $200 million. 50 Section 4 of the memorandum was headed "Community and Regional Benefits of Transitways". It had a number of sub-headings against a series of dot points, each with descriptive matter. The sub-headings were "Improved transport choice leading to increased use of the public transport system"; "Increased accessibility of regional destinations"; "Improved transport system performance"; "Provision of high-quality public transport facilities"; "Integrated transport plan"; "Improved air quality"; "Job creation effects"; "Positive economic performance"; "Integrated network"; "Public Transport Corridor"; and "LPT Overview Report and Environmental Impact Statement". The descriptive matter was to the effect that the LPT would bring benefits of the kinds indicated by or connected with the subject-matters of the sub-headings. 51 Section 5 of the memorandum was headed "LPT service delivery implications". It was said that a service specification had been developed for the LPT, the standards in which exceeded and were different from those in existing service contracts under s 16 of the Act. After reference to Oliveri having the exclusive right to provide regular passenger services in the area to which its contract applied, it was said that s 22 of the Act contained "a mechanism by which additional services, such as services using the LPT, can be provided during the term of the contract". The "mechanism" was described, and the additional "mechanism" in s 22(5), and it was said that "the mechanisms contained in section 22 are not sufficient to ensure the cost-effective, efficient and integrated provision of new services on the LPT in the public interest". 52 The memorandum continued - "Accordingly, it is submitted that a variation to the region R031 is necessary for the improvement of transport services in the public interest. This variation proposed is to exercise the LPT route from the exclusive rights provided in the R031 region. The reasons in support of the proposed variation are set [sic] as follows: · Capacity to negotiate cost effective and integrated services It is crucial to the effective delivery of the LPT service that the service is provided as part of a Transitway Network for Western Sydney and it is essential LPT services can be fully integrated into this network. If no variation was made, the Director-General must offer the right to provide fully integrated services across the entire Transitway Network to one of the incumbent operator(s). To limit the Director-General's flexibility in this way, will greatly reduce the value of the public's $770 million investment in this project. The ability to deliver a network of services in a way that delivers the best value to the taxpayer requires the flexibility to offer this right to all interested parties. The constraints placed on the Director-General by negotiation under section 22 is of particular concern if the Government wanted to introduce the transitway services in stages. Section 22 would require a negotiation with existing operators for each and every stage of the implementation process and would prevent the Government from varying or modifying rights when additional stages are introduced. The inefficiency and complexity of negotiating and renegotiating service agreements with existing bus operators at every stage of the implementation process would further diminish the value of the public's investment in this project · Service levels The Director-General must offer services under section 22 on terms and conditions that are not unreasonable having regard to the provisions of the Act, the regulations and the circumstances of the case. This includes an evaluation of the average levels of fares prevailing in the industry for comparable services - section 22(4). There is no guarantee, and indeed considerable doubt, as to whether this would allow terms of the kind envisaged for the LPT service levels. For a start, it will be difficult to determine an average level of fares for comparable or relevant minimum service levels given the unprecedented nature of the LPT proposal. The public interest would be diminished and a number of the public benefits listed in section 4 not realised, if the proposed LPT service levels and appropriate fare levels could not be realised. · Vehicle Standards: The LPT vehicle standard included in the LPT Service Specification requires all vehicles to be not more than three years of age at commencement of the project, with average fleet age not to exceed five years and no individual bus age to exceed seven years subsequently. In addition all vehicles must comply 100% to the draft Disability Standards for Accessible Public Transport Services, have air conditioning and generate low or zero emissions (improving air quality, as stipulated in Action for Air). Clause 5.4(h) of the current contract requires [that] the average of all vehicles used to perform the Services does not exceed 12 years. Again it is doubtful if section 22 would allow the Director-General to require Oliveri or any other current bus operator to provide the specified LPT vehicle standard. · Intelligent Transport System The LPT Service Specification requires the service operator participate in an Intelligent Transport System. The main components of this system are the establishment of Bus Control Room (BCR), Real time information at stations and on board, security systems at stations and on board, communication system encompassing vehicles, stations, BCR and RTA's Traffic Management Centre. The LPT service operator will manage a BCR using state of the art technology. This BCR may be made available to all other Transitway operators. All of these requirements, except onboard security cameras are not required under the current Oliveri contract. Many of the features of the Intelligent Transport System benefit the community by providing improved personal security, accurate travel information and reliable services. It is doubtful if section 22 would allow, the Director-General to [require that?] these features are provided in any new contract to provide LPT services negotiated under section 22." 53 Section 6 of the memorandum, under the heading "Comment", referred to some of the correspondence with Oliveri and its solicitors and to some advice and other information received from the Director-General's solicitors and from the Department's internal resources. 54 The memorandum then concluded with sections 7 and 8 -

" 7. Concluding Summary In order for the Director-General to be able to make a determination under S24(3)(c) as outlined above, it must be clearly demonstrated that the variation to the existing region of the Oliveri contract to exclude the LPT route is necessary for the improvement of transport services in the public interest. Sections 3 and 4 of this submission demonstrate the benefit to the public of the Transitway Network as shown in the Government's Action for Transport 2010 document. Section 5 demonstrates that it is likely that these benefits will not be fully realised if [the] LPT route is included in Oliveri's exclusive service region as the provision of the LPT services in that region could only be offered to Oliveri or other existing bus operators, pursuant to the provisions of section 22 of the Act. Accordingly a variation is required for the improvement of services in the public interest and Oliveri's renewed contract should be varied accordingly. 8. Recommendation You can make a draft determination, as permitted under section 40 of the Transport Administration Act 1988, that Oliveri's Contract R031 be varied under section 24 of the Act by removing that route which is proposed to be used by the LPT (attached as Tab I). A copy of the attached draft determination to Oliveri's [sic] for your signature is attached." 55 The memorandum provided for the Delegate the alternatives "approved/not approved/noted". She circled "approved", and added her signature and the date 25 January 2000. 56 The Delegate also signed a letter to Oliveri dated 25 January 2000. It was headed "Draft determination under section 24 of the Passenger Transport Act", and was clearly enough in the form of the draft determination attached to the memorandum. It read "Thank you for your submissions of 16 December 1999, 4 January and 17 January 2000. I have noted their contents. Pursuant to my delegation under section 40 of the Transport Administration Act, I have made a draft determination under section 24 of the Passenger Transport Act to vary the service region R031 to apply on renewal of your existing commercial services contract for that region. This determination is subject to my consideration of any further submission you may wish to make. The variation proposed is to exclude from the exclusive service region the route to be used by the Liverpool to Parramatta transitway ("LPT"). The exact variation is set out in Schedule Eight of the proposed commercial service contract, a copy of which I attach for your consideration. My reason for varying the service region is because it is necessary for the improvement of transport services in the public interest. As you would be aware, the NSW Government will be investing an estimated $770 million dollars in constructing the Western Sydney Transitway Network project and an estimated $200 million on the LPT component of the project. The public interest requires that this substantial investment in the improvement of public transport services is operated in a way that delivers the best value to the taxpayer. It would diminish the improvement of transport services in the public interest, if the Director-General were only able to offer the right to operate the transitway service to existing bus operators, particularly as it may be essential for LPT services to be fully integrated into the broader transitway and public transport network. Secondly, the LPT service specifications (including but not limited to minimum service levels, vehicle standards and intelligent transport systems) being considered are very different to the terms and conditions contained in the current commercial services agreement. As you would be aware, if Oliveri retains the existing service region for a new five year period, then during that period the Director-General can only offer existing bus operators the right to provide LPT services on terms and conditions that are not 'unreasonable' having regard to the Act, the regulations and the circumstances of the case. I have concerns that specifications of the kind being considered for the LPT may be viewed as unreasonable for the purposes of section 22. This may mean that the proposed LPT specifications could not be required as mandatory terms and conditions offered to existing bus operators to provide LPT services under section 22. The level of public benefit derived from public funds invested in the LPT would be greatly diminished if these service specifications could not be insisted upon by the Director-General. For these reasons, I believe a variation to the Oliveri service contract is required for the improvement of transport services provided by the transitway system in the public interest. As stated above, this view is subject to any further submissions you may wish to make. Please ensure that any further submissions are provided by no later than close of business on Friday 11 February 2000. I will issue my final determination shortly after that." 57 It is not entirely clear what the Delegate meant by "the exact variation" in the third paragraph of this letter. A draft contract accompanied the letter, but the words on the page headed as Schedule 8 were unchanged. The copy of the draft contract in the appeal papers had an additional page following the page headed as Schedule 8, being a map on which were marked the LPT and other proposed Transitways and the bus routes of a number of operators, including Oliveri. Presumably this page was intended to be part of Schedule 8, and to indicate the LPT so far as within Oliveri's region as an additional excluded route. 58 Oliveri's solicitors replied to the Delegate by a letter dated 15 February 2000. They identified from the draft determination two grounds for the view that variation was necessary for the improvement of public transport services in the public interest. One was "that it is necessary that the LPT services be fully integrated into the broader transitway and public transport network". The second was "that the minimum service levels the Director-General would require on the transitway might be considered unreasonable having regard to the Act, the regulations and the circumstances of the case". It was said that the variation was not necessary for full integration because the respondent could integrate its services with those of other public transport providers, and that it could not be in the public interest for the improvement of public transport services that the Director-General "have the power to introduce a new service that is an unreasonable service within the terms of Section 22(3)". Other matters were put forward with a view to dissuading the Delegate from acting in accordance with the draft determination, and legal proceedings were foreshadowed if she did so. 59 Mr Elson prepared a further memorandum to the Delegate dated 16 February 2000. He commented on the matters in the letter of 15 February 2000, but proffered the view that "the proposed variation is required for the improvement of services in the public interest and Oliveri's [sic] renewed contract should be varied accordingly". He recommended that the Delegate make a final determination that the contract be varied under s 24 of the Act "by removing that route which is proposed to be used by the LPT", and attached a final determination for signature if approved. 60 The Delegate was presented with the same alternatives of "approved/not approved/noted". She circled "approved", and added her signature and the date 16 February 2000. 61 The Delegate signed a letter to Oliveri dated 17 February 2000. It was headed "Determination under Section 24 of the Passenger Transport Act and Offer of New Commercial Services Contract". The later date is the only reason for doubting that it was in the form of the final determination attached to the memorandum of 16 February 2000, and I infer that it was. 62 The letter of 17 February 2000 referred to the solicitors' letter, and said that the letter and other relevant material had been reviewed. It continued - "Pursuant to my delegation under section 40 of the Transport Administration Act , I believe it is necessary for the improvement of transport services in the public interest that the exclusive service region that applies to your existing commercial services contract (Contract No R031) be varied pursuant to section 24 of the Passenger Transport Act ('the Act'). The variation is to be made by excising from the region the route that is to be used by the Liverpool to Parramatta transitway ('LPT'). The exact nature of the variation is the route of the LPT through the contract region as set out in Schedule Eight of the new commercial services contract which is being offered to you for the period 18 February 2000 to 17 February 2005. A signed copy of this contract is attached for your execution. This variation is not to take effect until immediately prior to the time when contracts are executed by the Director-General or his delegate to provide services on the LPT route (as set out in Schedule Eight of the contract). It is anticipated that this will be, at the earliest 2001, but more likely 2003. The Department will keep you fully informed about the actual date upon which the variation is to commence and ensure you receive reasonable notice of that date. Having reviewed all the available material, my primary reason for deciding a variation is necessary for the improvement of transport services in the public interest, is that the government needs to be able to competitively tender for the provision of the LPT services to ensure those services deliver the best value to the taxpayer. It would not be in the public interest for the improvement of transport services, to commit over $200 million of public money to constructing the LPT and to constrain the right to provide services on that publicly funded infrastructure to the holders of existing commercial service contracts under the Act (which is what would occur if your contract was renewed without the variation). However, it should be stressed that this decision will in no way exclude Oliveri from participating in the LPT competitive tender process and indeed the Government welcomes the participation of Oliveri in the tender process. I have also noted your comments in relation to the Director-General's capacity to negotiate the provision of additional services using the mechanism available under section 22 of the Act. Given my findings above, I do not believe it is necessary to form a concluded view on the adequacy of this mechanism for the provision of service specifications of the kind being envisaged for the LPT and have disregarded that factor for the purposes of this decision. In terms of the impact of the variation on the provision of other bus services in the contract region, I have noted your concerns. However, based on the material before me, any potential impact on the capacity of Oliveri to provide services in the region can be considered at a later stage and does not reduce the need for the variation based on the above finding."

63 The letter went on to comment on amendments to the contract said to reflect 1997 amendments to the Act. It asked that both copies of the contract be executed and returned, and noted that the fee of $2,160 payable for the contract had already been paid. 64 The contract accompanying the letter was in fact not signed. It provided for a commencement date of 18 February 2000, and took the same form as the contract of 18 February 1995. The excluded routes in Schedule 8 now included "The Transitway route is that which is marked as the LPT Transitway on the attached Map figure 1, Schedule Five", and the map part of Schedule 5 showed a route so marked crossing the delineated region. The conditions of the contract now included that the respondent would use its best endeavours "to connect to (the bus stops applicable to) services provided on the Transitway within a 5 or 10 minute time band of that service, to allow connectivity." There was nothing about the variation taking effect only when the Director-General executed contracts to provide services on the LPT route. 65 The LPT route as marked would in part be on newly constructed roadway which might not be a road or a road related area, but in part was on a road or a road related area over which Oliveri would otherwise have been able to operate exclusive services.

The renewal of the contract 66 By a letter to the Delegate dated 17 February 2000 Oliveri's solicitors said that Oliveri was "protesting the purported exercise of power by the Director-General pursuant to section 24", and that it was "therefore, on the basis of s 23 of the Act, taking up renewal for a further term of five years a service contract in the terms of the Commercial Services Contract entered into on 18 February 1995". 67 The Director-General's solicitors replied by a letter dated 18 February 2000 noting that Oliveri had "rejected out client's offer of the renewed contract that was varied pursuant to a determination made by the Director-General's delegate", saying that renewal was not offered to Oliveri on any other basis, and saying that as Oliveri was not prepared to enter into the renewed contract which had been offered the Director-General would "have no option but to call for tenders for the provision of regular passenger services in the applicable region under termination yesterday of the contract entered into on 18 February 1995". A period for reconsideration was afforded. 68 There was further correspondence in which Oliveri's solicitors maintained that Oliveri was entitled to a renewal on the terms of the previous contract, and indeed that a renewal had "arisen by operation of law", and the Director-General's solicitors maintained that there was no more than an offer on the terms of the varied contract. The offer made by the Director-General was not accepted Oliveri. The proceedings at first instance 69 By a summons filed on 24 March 2000 Oliveri commenced proceedings in which it claimed, so far as presently material - "1. A declaration that the determination purported to have been made on or about 17 February 2000 by Ms Jennifer Aldred in her capacity as a delegate of the first defendant under section 40 of the Passenger Transport Act 1990 (the Act) that the exclusive service region which applies to Commercial Services Contract No R031 made between the plaintiff and the first defendant for and on behalf of the second defendant and dated 18 February 1995 (the contract) be varied by excising from the region the route that is to be used by the Liverpool to Parramatta transitway (the LPT) (the determination) is ultra vires void and of no legal effect. 2. A declaration that upon the proper construction of section 24 of the Act and in the events which have happened, the offer of renewal of the contract purported to have been made by the said Ms Jennifer Aldred in her capacity as a delegate of the first defendant by letter to the plaintiff dated 17 February 2000, was not an offer of renewal of the contract in respect of a region or route in relation to which that variation was necessary for improvement of transport services in the public interest within the meaning of section 24 of the Act, or at all. 3. A declaration that, by operation of section 23(7) of the Act, the plaintiff is entitled to a renewal of the contract for a further period of 5 years from 18 February 2000 without excising from Contract Region R031 the route that is to be used by the LPT. 4. An order that the defendants specifically perform and carry into the effect a renewal of the contract for a further period of 5 years from 18 February 2000 without excising from Contract Region R031 the route that is to be used by the LPT." 70 The proceedings were heard by Rolfe J on 11 December 2000. His Honour gave judgment on 14 February 2001. In summary, his Honour found and held that the Director-General exercised his powers for the significant purpose of creating a situation in which the Government could derive more money by a competitive tender process and in doing so deprive Oliveri of the benefit of a renewal to which it would otherwise have been entitled without such cost, and that this was a purpose ulterior to the powers conferred by s 24(3) so that the Director-General's decision, by the Delegate, was vitiated; that in any event Oliveri was entitled to a renewed contract pursuant to s 22 of the Act and its entitlement could not be defeated by recourse to s 24; and that apart from the purpose in the exercise of the power to vary the contract, the offer made by the Director-General was uncertain, the uncertainty being in when the excision operated and how Oliveri's routes meshed with the LPT. His Honour made the declarations claimed in para 1, 2 and 3 of the summons and an order as claimed in para 4. 71 It will be of assistance to go to Rolfe J's reasons in some detail. 72 Although dealt with later in his Honour's judgment than the purpose in the exercise of the power to vary the contract, on his Honour's reasoning the entitlement pursuant to s 22 of the Act was logically the primary ground for Oliveri's success at first instance. It is appropriate first to go to his Honour's reasons in that respect, but noting that when considering s 24 his Honour had expressed the view that para (c) of s 24(3) was "intended to capture the general types of matters specified in sub-ss (a) and (b)": see para 86 in the passage from his Honour's reasons set out in para [80] below. 73 In recounting the facts his Honour set out or summarised to the submissions by Oliveri's solicitors in reliance on s 22 of the Act. After referring to the part of Mr Elson's memorandum of 25 January 2000 in which Mr Elson referred to the "mechanisms" in s 22, his Honour said that it was - " … transparently clear that in their private considerations, as opposed to their public posturing, the defendants understood the force of the submission based on s 22 and appreciated that its provisions would not enable them to bring about the desired result. Accordingly, it was stated that recourse should be had to the variation procedure in s 24." 74 After setting out the Delegate's draft determination of 25 January 2000, his Honour observed, "another reason was thereby disclosed for not following the procedure laid down by s 22, which was unrelated to the purpose of the section". 75 At a later point his Honour expressed the opinion that "for the reasons stated, the matter should have been dealt with by reference to s 22". As I understand the judgment, the reasons stated were - "96 The Contract was for a period of five years from 18 February 1995. Before its expiry the Director-General had determined that the LPT was to provide an additional service, which would be both within the plaintiff's exclusive region and/or on or in proximity to routes to which the plaintiff was entitled.

97 In these circumstances, the Director-General was, in my opinion, obliged to act conformably with sub-s.(2), the plaintiff by virtue of s.22(1)(b) having the right to decline to vary the Contract or to enter into a new one for the provision of the additional services, the section obviously providing that the Holder should have the right, in effect, of first refusal to provide services to the additional route.

98 The circumstance in relation to the LPT is further made the subject of s.22 by virtue of its passing through and over the exclusive regions and routes of other contract holders. In those circumstances s.22(5) is called into play.

99 The solicitors for the plaintiff have advised the defendants and their solicitors on a number of occasions that the provisions of s.22 are applicable. The defendants and their solicitors have rejected this contention.

100 In my opinion, the future operation of the LPT was one which fell to be determined by s.22 and it should have been dealt with on that basis. It is quite obvious that the essential purpose of s.22 is to deal with new services in a way which will not, save for action on the part of the person holding the Contract, deprive the Holder of its rights but will, to the extent of the new services, augment them.

101 I do not consider that the Act provides a manner in which the defendants can avoid the obligation imposed by s.22 by resort to s.24. Section 22 makes it quite clear that new services, at least in the first instance, are to be offered to the existing Holder and, provided that it is agreeable and the other provisions of the section are met, the Contract is varied to give it the right to the new services. The LPT is an instance of a provision of a new service and the rights of the plaintiff to rely on the provisions of s.22 and to protect the conferred contractual rights cannot be defeated by recourse to the provisions of s.24.

102 Thus, once it is seen that specific reference is made to what shall happen in the event of new services, being additional services, the defendants are not, in my opinion, permitted to over-ride the rights intended to be preserved, unless the conduct of the Holder allows that to be done. Accordingly, the general provisions of s.24(3)(c) are not intended to achieve that end, but to give effect, in the way I have sought to describe, to the type of considerations in s.24(3)(a) and (b)." 76 It is not clear that his Honour granted relief on the basis that the Director-General's determination purportedly pursuant to s 24 of the Act was a nullity because the only way the contract could have been varied was pursuant to s 22. He appears rather to have regarded the impropriety of the Director-General's purpose as underlined by the resort to s 24 when s 22 was the true, and only, relevant provision: but if s 22 was the true, and only, relevant provision, the purpose in exercising the power conferred by s 24(3) would be irrelevant. I do not think it necessary further to consider his Honour's reasoning in this respect: as will appear, I take a different view of the relevance of s 22 of the Act. 77 Going to the vitiation of the Director-General's decision because the powers conferred by s 24(3) were exercised for an ulterior purpose, it was common ground that Rolfe J correctly directed himself by reference to Thompson v The Council of the Municipality of Randwick (1950) 81 CLR 87 at 105-7, Minister for Aboriginal Affairs v Peko-Walsend Ltd (1986) 162 CLR 24 at 39-41 and Warringah Shire Council v Pittwater Provisional Council (1992) 26 NSWLR 491 at 510, 520-21 and 523. Sufficiently for present purposes, an administrative decision made in the exercise of a statutory power may be impugned for improper purpose if the power was exercised not for the purpose for which it was granted but for an ulterior purpose. The ulterior purpose need not be the sole purpose, and there may be an improper purpose if it is a substantial purpose in the sense that no attempt would have been made to exercise the power in that way if it were not for that purpose. This required finding the Director-General's purpose and deciding whether it was ulterior to the power conferred by s 24(3). 78 As to the purpose, early in the reasons his Honour recorded Oliveri's submission to the effect that maximising revenue from a competitive tender process was a major purpose and the Director-General's submission to the effect that there was "no evidence to support the view that any part of the purpose of [the Director-General] was to maximise revenue". He said of the latter submission - "In my opinion this submission must be rejected. There cannot be the slightest doubt, on any fair reading of the correspondence, the Expression of Interest document and the internal memoranda, that the dominant purpose of the defendants, in seeking to vary the plaintiff's Contract, was to ensure that the defendants would be able to seek competitive tenders for the whole of the LPT without the right to do so being constrained by rights of the holders of existing Commercial Service Contracts under the Act." 79 Later in the reasons his Honour said - "77 The Delegate discloses that her primary reason for deciding that the variation is necessary for the improvement of transport services in the public interest is that the Government needs to be able to competitively tender for the provision of the LPT services to ensure those services deliver the best value to the taxpayer. The meaning of those words is not entirely clear. The ability to competitively tender for the provision of such services is clear enough. It means that the Government can seek tenders, on a competitive basis, for the use of the LPT.

78 But it is not clear what is meant by the delivery to the taxpayer of the best value. That could mean the quality of services, or it could mean a return to the Government on the money it spent to build the LPT. If the quality of services was the matter to which the Delegate was adverting then her consideration would, in my opinion, have been directed to the matters provided for by sub-s.(3). However, the next sentence may lead to a different conclusion. She has the view that it would not be in the public interest to have committed over $200m of public money, which obviously must mean money from the public as a whole rather than simply from those who would or might use the LPT, and to constrain the right to provide services "on that publicly funded infrastructure" to the holder of an existing Contract. This approach is highlighted by the next sentence, which states that the plaintiff is not to be precluded from participating in the tender process, i.e. the competitive tender process, with the consequence that if its tender were successful it would be granted, at least in part but at a cost to it, that to which it was otherwise entitled by virtue of the right to renewal without payment pursuant to the tender process.

79 Thus the Delegate formed the view that there should be a variation to enable the Government "to competitively tender" because, if the Government could not, the plaintiff would retain the exclusive rights in the region, including on the LPT, subject only to the exclusions in the Contract.

80 When one goes back to the Expression of Interest document it is to be noted that clause 4.3.3 provides for the indicative franchise payments proposed to be made to the Government, and clauses 5.2 and 5.3, which I have set forth in paragraphs 30 and 31, make the Government's position clear.

81 I have set out what appears under the heading "Franchise Fees" in the letter from PriceWaterhouseCoopers to the solicitors for the plaintiff of 28 October 1999 in paragraph 35.

82 The Act committed the decision to the Delegate. However, the terms of the Expression of Interest and PriceWaterhouseCooper's letter are consistent with the approach put forward by the Delegate in giving her reasons. They are also consistent with the internal Government memoranda.

83 The question then is whether the plaintiff has satisfied me that the Delegate did not exercise her powers for a permissible statutory purpose, but for the ulterior purpose of creating a situation in which the Government could derive more money by a competitive tender process and, in doing so deprive the plaintiff of the benefit of a renewal to which it would otherwise have been entitled without such cost. An anterior question is whether that is what the Government proposed to do, and it is to that question that I shall turn first. Mr Einfeld submitted that there was no evidence which would support a finding that the Government had any such purpose. I reject that submission. Firstly, the documents emanating from PriceWaterhouseCooper make it apparent that was a significant purpose. Secondly, the internal memoranda are consistent with the implication of that purpose. Thirdly, the terms of the Delegate's Determination, which is the essential document, puts the real purpose and basis for her decision beyond doubt." 80 As to whether the purpose was ulterior to the power conferred by s 24(3), In para [70] of his reasons Rolfe J referred to the obligation to renew in (the current) s 23(7) of the Act (the correct provision was the earlier s 23(1)) and expressed the view that the renewal pursuant to s 24 in respect of a varied region or route was "clearly contemplating a varied region or route offered to the party entitled to the renewal". He said that s 24(3) was "not concerned with reducing services but maintaining them for the benefit of the public, in circumstances where they are carried out by the party entitled to the renewal", and continued - "71 The matter can be exemplified in this way. If the submissions for the defendants are correct the renewal process could be rendered illusory, because the defendants could offer greatly restricted, and hence commercially unviable, areas to those entitled to renewals on the basis that it was more cost effective from the Government's point of view to have one entity carrying out the work previously performed by a number. The fact that in the present case it is said that only a small part of the plaintiff's area of operation will be removed does not deny the proposition that the right to remove a small part, in purported exercise of the power in s.24(3)(c), carries with it the right to remove a large part. However, s.24(3)(c) is concerned with regard being had to circumstances in which a contract will be renewed if the variation is otherwise necessary for improvement of transport services in the public interest, and where that improvement, on a proper construction of the Act, will be implemented by the party entitled to the renewal. Hence the renewal is offered, i.e. to the Holder, in respect of a varied region or route, and the conditions are to be fulfilled by the Holder. Section 24 cannot, in my opinion, be construed as allowing the Delegate to take away services without, at least, providing other services in substitution therefor." 81 After finding the purpose as earlier set out, his Honour said - "84 That conclusion does not, however, necessarily dispose of the issue whether the Delegate exercised her powers improperly. Section 24(3) is concerned with a renewal of contract in respect of a varied region or route. It is clear from the matters which must be found to be necessary before such a variation can be made that they relate to the provision of a transport service in an area or on a route. There is no power to vary for the purpose of implementing Government policy decisions generally about transport services.

85 A Holder has an entitlement to a renewal of the general area in which it operates with this in mind and, for example, it could hardly be within the contemplation of sub-s.(a) that because it was necessary to extend services at Byron Bay, a Holder in the Albury area should have a variation requiring it to operate in Byron Bay. Similarly, altered traffic conditions or reasons of public safety obviously relate to circumstances existing in the general area in which the Holder operates.

86 Sub-section (c) is, in my opinion, a provision intended to capture the general types of matters specified in sub-ss.(a) and (b). It is clearly contemplated that the variation will improve the service, and this is recognised this by its opening words "or is otherwise necessary". That for which it must be necessary is the improvement of the transport service in respect of the routes or region specified in the Contract. The words "in the public interest" do not, in my opinion, expand the section to a consideration of the general public interest of the Government in the expenditure of part of the State's revenue for transport services. They refer to the more limited public interest in improving transport services, i.e. the provision of such services on the routes or in the area to which the Contract relates. If this were not so a contract could be varied because of considerations of planning and policy which had nothing to do with the region in which or the routes on which the Holder was entitled to operate and to the renewal of the rights to which the Holder had a prima facie statutory and contractual right.

87 In my opinion, it is not permissible to expand those words beyond that context by saying that they justify putting in place a variation for the purpose of allowing the Government to derive through a competitive tender process more revenue. This can be put another way. The words do not permit a variation of the Contract to deprive the Holder of that to which it would otherwise be entitled, unless the reason is that to do so meets one of the tests in s.24 and, certainly, they do not permit a variation which is made with the intention of giving part of the Holder's route to another person because that person is prepared to pay more for it, or forcing the Holder to obtain the renewal by buying that to which it would otherwise be entitled at no such cost.

88 The Holder must be entitled to regulate its affairs on the basis that it will not be deprived of a region or route so as to make that region or route a more financially valuable commodity with which the Government could deal, or a less financially valuable commodity for the Holder. That, in essence, is what is sought to be achieved by the Government in the present case. The Government has sought to bring about a variation so as to deprive the plaintiff of some of its routes, so that it can then deal with them to its greater financial advantage. The Delegate's letter says so.

89 Mr Einfeld submitted that it was obviously better to have one Holder operating the LPT and that it would lead to gross inefficiencies for that not to happen. There was no evidence to support this proposition and it was not the reason the Delegate advanced for coming to her decision. However, even if his submission is correct, it directs attention to the wrong question. The submission further discloses that the purported variation was driven by a general policy consideration which involved, inter alia, the deprivation of the Holder's rights, unless the Holder was prepared to pay money it was not otherwise obliged to pay. 90 For these reasons I am satisfied that the Delegate exercised her power for an ulterior purpose, which was, at least, a primary purpose, which is sufficient to vitiate her decision." 82 Going finally to uncertainty, early in his reasons Rolfe J said that the offer of a renewed contract must be of "a definite area for a definite period"; his Honour continued to the effect that the result of the determination was that Oliveri would not have a certain contract as varied because it was not known when the variation would take effect. In this connection he treated the draft contract accompanying the letter of 17 February 2000 as "not reflective of" the terms of the determination, and said that the Director-General had failed to furnish to Oliveri "a renewal which gives effect to what was apparently intended to be the variation". 83 His Honour later asked himself "what offer did [the Director-General] make to [Oliveri], which was capable of acceptance". After his consideration of s 22 of the Act, he said - "103 Mr Kelly put the uncertainty submission in two ways. Firstly, he said that if the decision of a competent authority was so unreasonable that no be said that a reasonable authority could ever have come to it, and that ordinarily a decision will be invalid for uncertainty if it cannot be given a sensible or ascertained meaning and if it is uncertain in its operation. He submitted that where the empowering legislation may be construed as authorising only decisions characterised by certainty of expression and operation, uncertainty in either respect may lead to invalidity.

104 Secondly, he submitted, based on conventional principles of offer and acceptance, there can be no binding and enforceable obligation unless, at the least, the essential or critical terms have been agreed, and that in the context of s.24(3) the word "offer" means presented for acceptance, which, on acceptance, would become a binding and enforceable contract.

105 He submitted that the terms and conditions were inconsistent and uncertain, such inconsistency arising between the terms of the draft Contract and the terms on which it was offered, in relation to the variation. He further said that a variation, which is not to take effect until some future unspecified time for which the draft Contract makes no provision, and which never may take effect, is not a variation of the type contemplated by the Act.

106 Mr Einfeld submitted that there was no uncertainty in the decision, on the basis that the lack of precision about the date of practical commencement of services along the LPT and the fact that the plaintiff could continue to operate as it had until a date certain was reached were not matters going to the validity of the Delegate's decision. He continued that the plaintiff was told "in the clearest terms that a decision had been taken to offer a renewal of contract in respect of a varied region and a copy of the contract was attached". He continued:- 'The fact that there is, as a matter of practical reality, a period during which the excision of the LPT route will not affect the plaintiff's bus operations does not make the decision uncertain as a matter of administrative law.'

He elaborated by saying that there was no uncertainty in contracting to the effect that the bus services to be provided to the plaintiff will be provided in a region that will, at a future, albeit unspecified, date to be notified by the Director-General, exclude the route of the LPT.

107 Far from resolving the problem to which Mr Einfeld referred, this submission pointed up the difficulties it presented. Firstly, there was no provision in the draft Contract tendered for the excision of the route of the LPT at some date in the future. Assuming, as the submission did, that the words of Schedule Eight amounted to the excision of the LPT there was no provision in the draft Contract which delayed the operation of that. In those circumstances, an acceptance of the draft Contract would, on the argument presented, have involved an incorporation into it of the Delegate's determination. Accordingly, there was the uncertainty as to when the excision operated, and, if it did not operate immediately the obligation of the plaintiff to maintain the services on the excised route.

108 Secondly, there was the uncertainty as to when, on Mr Einfeld's submission, the excision would take effect. Absent any provision in the draft Contract providing for that, it would seem that the variation provision would have to apply and that, so it seems to me, and subject to any argument about "good faith", would seem to be merely an agreement to agree.

109 Thirdly, there is the very real difficulty where portions of the non-excised routes coincide with the LPT. At those points the plaintiff's route, presumably, would terminate at the LPT and then restart after leaving the LPT. An example of this appears in the western area of the region on the LPT. There is a length of the LPT running north/south over part of which, near the words "Oliveri's Transport Service P/L", the plaintiff has an exclusive route. The draft Contract does not provide for an alternative route for the plaintiff around the LPT so that passengers can be taken to their desired destinations.

110 The matters to which I have referred are of significance to the plaintiff. It is obliged to provide buses with certain qualities and characteristics, staff and the basic infrastructure for running the service conformably with the draft Contract. By seeking to engraft onto the draft Contract the condition or term that the plaintiff should not be entitled to use the LPT route at some time, the defendants have reduced the plaintiff's ability to make informed commercial decisions. The Delegate's letter provides a period of potentially three years during which the plaintiff may or may not, on the view propounded by the defendants, have to operate the services, i.e. 1 January 2001 to 31 December 2003. But one example of a problem this could cause is in clause 5.4(h), which requires the average age of vehicles not to exceed twelve years. That could lead to the plaintiff's having to replace a vehicle or vehicles, say in mid-2001, without any guarantee that they would be used in the service for any time sufficient to justify the cost of replacement." 84 His Honour concluded that the determination should therefore be "set aside" not only on ulterior purpose grounds, but also because it was "relevantly for a consideration of an administrative law decision, uncertain"; and he said that as well "the offer to renew the Contract, which [the Director-General] was obliged to make to [Oliveri], was uncertain". 85 The part played by uncertainty in his Honour's reasoning and in the grant of relief is not entirely clear. It seems to have been a ground for concluding that the Director-General's determination was vitiated, a ground additional or alternative to that of ulterior purpose: the determination was vitiated because it was uncertain. So far as it was further said, apparently with contractual considerations in mind, that the offer to renew the contract was uncertain, an offer which in his Honour's view the Director-General was obliged to make to Oliveri, I am unsure of his Honour's point. If the determination was ineffective, then Oliveri was entitled to renewal of the contract without the excision of the LPT route, see s 23(1) and s 24(2) of the Act. Quite apart from uncertainty, the offer did not fulfil that entitlement. Perhaps his Honour's point was that the offer fulfilled that entitlement so far as the excision of the LPT route would not take immediate effect, but not so far as at some uncertain time the LPT route would be excised. Again it is not necessary further to consider his Honour's reasoning: in the appeal uncertainty was relied on only as an additional or alternative ground for concluding that the Director-General's determination was vitiated.

The appeal 86 The Director-General submitted that Rolfe J was in error in so far as he saw s 22 of the Act as the relevant source of power to vary Oliveri's contract. He said that s 22 and s 24 serve different purposes, the former being concerned with the provisions of additional services during the currency of a contract and the latter being concerned with variation of a region or route, including by excision, at the time of renewal of a contract. In my opinion the submission should be accepted. 87 Section 22(1) takes as its starting-point that the contract confers on the contract holder entitlement to an exclusive right to operate regular passenger services in a region or on a route - that right is given by s 21. It permits the contract holder's exclusivity to be overcome if two conditions are satisfied. One condition is that the Director-General has determined that additional services should be provided in the region or on, or in proximity to, the route. The other condition is that the holder of the contract has declined to provide the additional services. The context is, and is expressed to be, that the contract is on foot and the holder of the contract is invited to agree to a variation of the contract or a new contract whereby the holder will provide the additional services, being a variation or new contract on reasonable terms and conditions: see the opening and closing words of s 22(1) and s 22(2) and (3). Section 22(5) does not broaden this context. 88 Oliveri submitted that the implementation of the LPT fell within s 22 in that it would bring additional services within Oliveri's region, and that if the Director-General determined that the additional services should be provided it was necessary that Oliveri's exclusivity be overcome pursuant to s 22 by the Director-General proposing a variation of its contract or a new contract, being a variation or a new contract on reasonable terms, and Oliveri declining to vary the contract or enter into the new contract. This, however, does not give proper regard to the s 22 context of the contract being on foot, a part of the context which is underlined by the separate provision for renewal and variation on renewal in ss 23 and 24. 89 Oliveri suggested that the Director-General's determination in the present case was made while its contract was on foot, which is correct in a temporal sense, but the operation of s 22 in my opinion involves a proposed variation to an existing contract while it is on foot or a proposed new contract adding to an existing contract while it is on foot (or possibly replacing the existing contract when it would otherwise continue on foot). Section 22 does not operate, in my opinion, when there is renewal upon expiry of the term of a contract. At that time there is no question of overcoming the exclusivity conferred by the contract on the contract holder. The contract holder's entitlement, and the power to vary it, are governed by ss 23 and 24, which provisions clearly extended at the time to diminution of the contract holder's region or route (see s 23(3)). 90 The Director-General then submitted that Rolfe J was in error in his view of the operation of s 24(3). As has been seen, his Honour considered that a variation pursuant to s 24(3) could not be by way of reduction of services and had to leave the holder of the contract being renewed as the provider of the services in respect of the varied region or route (see in particular paras 70 and 71 in his Honour's reasons extracted and set out in para [80] above). 91 Section 24 must be considered together with s 23. Under s 23 in its earlier form the contract holder had an entitlement to renewal unless its performance had been unsatisfactory or "the region or route of operation of the contract is varied in accordance with section 24" (s 23(1)). If there was a variation under s 24, if the variation, which might be by extension of the region or route or by diminution of the region or route, was minor, the contract holder was still entitled to renewal, but not otherwise (s 23(3), (4)). Section 24 then fleshed out both the entitlement and the variation. The entitlement was to a contract for the same region or route as in the expired contract unless the Director-General determined that the offer of a renewed contract should be in respect of a varied region or route, and the determination could be made if the variation was necessary as set out in s 24(3)(a), (b) or (c). Thus the contract holder's entitlement was significantly qualified. If the Director-General determined that there should be a variation, at best the contract holder was entitled to an offer of renewal for a varied region or route, and if the variation was other than minor it has no entitlement to renewal at all. 92 With respect, I can not agree that s 24(3) is limited in the manner indicated by Rolfe J. Section 24(3)(b), for example, would permit reduction in services if the altered traffic conditions or reasons of public safety so required. Even if "otherwise" in s 24(3)(c) means that the necessities in s 24(3)(a) and (b) must be for improvement of transport services, improvement of transport services is not inconsistent with reduction - it depends on need. And there is nothing in s 24 to preclude variation whereby another operator provides services in part of the region or on some of the routes previously serviced by the holder of the contract being renewed. 93 It may be that his Honour was distracted by the current form of s 23 of the Act. By s 23(7) it gives an entitlement to renewal similar to that in the earlier s 23(1). The entitlement is subject to variation in accordance with s 24, but is not subject to the further qualification in the event the variation is other than minor. Considering the provisions together, the earlier s 23 contemplated major variation to region or route, including their diminution. Oliveri submitted that cl 12 of the contract gave it an entitlement not subject to the further qualification, but s 23 of the Act of its own force and the importation of (inter alia) s 23 by cl 16 of the contract required that, as a matter of construction of the contract, cl 12 was not exhaustive and the statutory regime applied. 94 Section 24(3)(c) is in ample terms. It empowers variation if variation is "necessary for improvement of transport services in the public interest", necessity no doubt not meaning that it is essential but that it is reasonably required (cf Pelechowski v The Registrar, Court of Appeal (1999) 198 CLR 435 at 452 and cases there cited). From the word "otherwise", the necessity need not involve extension of services in developing areas or regard to altered traffic conditions or reasons of public safety, and the necessity is conditioned by regard to the general criteria of improvement of transport services and the public interest. There is no reason, in my opinion, to confine such regard within the boundaries of the region of the holder of the contract being renewed or to the area covered by the routes of that contract holder - putting aside a hypothesis such as variation in respect of a region in Albury said to improve transport services in Byron Bay by altered resource allocation, regard may be had to improvement of transport services and the public interest in respect of the greater western area of Sydney. Proper planning and provision of passenger transport services in order to meet the objectives in s 4(e) and (f) of the Act is against such a narrow approach. 95 The question then is whether the Director-General determined to vary Oliveri's contract for a purpose ulterior to the power conferred by s 24(3), a power conditioned only in the manner I have described. The Director-General submitted that he did not, first because the purpose found by Rolfe J was not an improper purpose and secondly because the finding of the purpose was erroneous and the true purpose was not an improper purpose. 96 It is preferable to go immediately to the finding of the purpose. There was some debate about whether the determination was constituted by the Delegate's letter of 17 February 2000 or by her approval of Mr Elson's memorandum of 16 February 2000. In my opinion the determination was by the letter. It said it was the determination, and the approval did not necessarily adopt everything Mr Elson wrote but rather adopted the final determination attached to the memorandum. Of more importance, however, is where the Director-General's purpose may be found. The letter of 17 February 2000 provides a direct statement of purpose, but regard may be had to all the decision-making document, commencing with the letter to Oliveri of 2 December 1999, in relation to the purpose. 97 The Delegate stated in the letter of 17 February 2000 her primary reason "for deciding a variation is necessary for the improvement of transport services in the public interest". She had s 24(3)(c) directly in mind, and Mr Elson's memoranda and the draft determination clearly focussed on that provision. 98 The primary reason stated in the letter of 17 February 2000 was "that the government needs to be able to competitively tender for the provision of the LPT services to ensure those services deliver the best value to the taxpayer". The need, and the notion of best value to the taxpayer, were explained - "It would not be in the public interest for the improvement of transport services, to commit over $200 million of public money to constructing the LPT and to constrain the right to provide services on that publicly funded infrastructure to the holders of existing commercial service contracts under the Act (which is what would occur if your contract was renewed without the variation)." 99 This is consistent with the memoranda and the draft determination. In short, the LPT would significantly improve transport services; that improvement could not be achieved, or at least could not be as effectively achieved, unless Oliveri's contract was varied so that there could be a competitive tender for the LPT services; it was in the public interest that there be the improvement, and that there be the improvement in conjunction with the variation so that the LPT and the public money for the LPT would bring better improvement than if Oliveri's contract was not varied. The reasons put forward by Mr Elson in sections 4 and 5 of the memorandum of 25 January 2000 and the summary in its section 7, particularly the inefficiency in having a number of operators each exclusively providing services on that part of the LPT within its region or on a route followed by the LPT, were valid reasons, and it was open to the Delegate to come to the conclusion she did. 100 Rolfe J went further, and found that the Director-General's purpose was "creating a situation in which the Government could derive more money by a competitive tender process and, in doing so deprive [Oliveri] of the benefit of a renewal to which it would otherwise have been entitled without such cost" (see paragraph 83 in the passage from his Honour's reasons set out in para [79] above). He gave effect to this when he said that s 24(3)(c) did not "justify putting in place a variation for the purpose of allowing the Government to derive through a competitive process more revenue", that a variation could not be made to give a contract holders' route to a person who was prepared to pay more for it or force the contract holder to buy a renewal to which it was otherwise entitled, and that the variation was "so as to deprive [Oliveri] of some of its routes, so that [the Government] can then deal with them to its greater financial advantage" (see paragraphs 88-90 in the passage set out in para [81] above). 101 In my respectful opinion, this was not warranted. So far as the PWC invitation document supported such a purpose, as his Honour thought it did, that document was remote from the Delegate's consideration of the determination. No doubt a competitive tender could bring franchise fees greater than the fees which would be payable pursuant to s 27 of the Act, and the Delegate's reference to competitive tender did reflect that document, but the emphasis in Mr Elson's memorandum was not on deriving maximum revenue by the competitive tender process but on obtaining timely implementation of the LPT and best performance from the operator of the LPT services. There is in any event no objection to maximisation of franchise payments so that the expenditure of public money in order to bring better improvement should be less - that can be part of the improvement of transport services in the public interest. The blunt revenue-generating purpose found by his Honour, taken out of the context of implementing the LPT for the benefit of public transport users, was in my opinion not to be found in Mr Elson's memoranda or the Delegate's letters. 102 In addressing whether the Director-General's purpose was ulterior to the power conferred by s 24(3), it is necessary to bear in mind the distinction between the means to an end and the end itself. In Samrein Pty Ltd v Metropolitan Water, Sewerage and Drainage Board (1982) 56 ALJR 678 the power to resume land was exercised by the Board in order to erect a tower building in joint venture and transfer half the space to the joint venturer. The holding that the purpose was within power was supported on the ground that the end was to provide office space for the Board and the joint venture was a means to the end. In Knuckey v Commissioner of Taxation (1998) 87 FCR 187 the Commissioner established a programme for examining the practices of tax agents with a view to educating them and modifying their practices. It was held that, even though the purpose of educating or modifying the behaviour of tax agents was not provided for in the relevant legislation, it was not an end in itself but was "a step along the way to the achievement of the proper and overall purpose of ascertaining the taxable income of taxpayers" (at 199). 103 In the present case, the end was the implementation of the LPT as an improvement of transport services in the public interest. The process of competitive tender, even with an element of revenue-generation, was part of the means to the end. In my opinion, the Director-General's purpose in determining that Oliveri's contract should be varied, understood in the manner I have described, was within the scope of s 24(3)(c), and it is not necessary to consider the Director-General's submission that it was in any event within s 24(3)(a) or (b). 104 Oliveri suggested that variation by excision of a route could not improve transport services, although it drew back from the corollary that a variation could only enlarge a region or add a route. Such a narrow view of the power in s 24(3) can not be accepted, and is clearly contrary to the terms and purpose of the legislation. The variation did not have to improve transport services of itself - it had to be necessary for the improvement of transport services, the implementation of the LPT. Oliveri further submitted that the power was limited to improvement of transport services in an "immediate operational sense", as distinct from consequential financial improvement. The two are linked, and a hard and fast line between them can not be drawn, but on the finding of purpose as I have described I consider that the Director-General was concerned not with the prospect of more revenue to the Government but with the implementation of the LPT, an improvement in transport services in the public interest. 105 Going then to uncertainty, an administrative decision will be invalid if it can be given no meaning, that is, if its ambiguity can not be resolved: Fawcett Properties Ltd v Buckingham County Council (1961) AC 636 at 678; see also Television Corporation Ltd v The Com monwealth (1963) 109 CLR 59 at 70-71. The Director-General submitted that the determination was of impeccable certainty, namely that Oliveri's contract should be varied (strictly, "[t]he variation is to be made") by excision from Oliveri's region of the route of (strictly, "to be used by") the LPT. The following comment, that the variation was not to take effect until immediately prior to the time when contracts were executed by the Director-General or his delegate to provide services on the LPT route, was said to be no more than lack of precision about the date of practical commencement of services along the LPT. 106 Important to the Director-General's submission was his contention that, contrary to the view apparently taken by Rolfe J (see paragraphs 109-110 in the passage from his Honour's reasons set out in para [81] above), the excision did not mean that roads or road related areas which would otherwise be open to use by Oliveri became unavailable for its use. Rather, the Director-General said, the excision by adding the route of the LPT to the excluded routes in Schedule 8 of the contract meant only that Oliveri no longer had an exclusive right to operate services over so much of that route as was on roads or road related areas. So, it was said, the variation had the immediate legal effect of qualifying Oliveri's exclusivity, although when the practical consequence of another operator using the LPT would occur was not known. Further, the variation presented no difficulty in how Oliveri's route meshed with the LPT. 107 I consider it correct that the effect of the variation was on Oliveri's exclusivity. Oliveri was obliged to provide Regular Passenger Services and School Services within the Regional Service Area, but it only had the exclusivity conferred by cl 3.2 of the contract. That exclusivity was "with the exception of those routes specified in Schedule eight", so what was lost by inclusion of the route of the LPT in Schedule 8 - called excision - was not use of the route so far as it was on roads or road related areas but exclusive use of the route. 108 The submission as to the Delegate's letter of 17 February 2000 is more difficult. The Delegate wrote of the variation taking effect, and commencing, at a later time, which is not the language of having practical consequences. However, the letter should be read together with the contract attached for execution by Oliveri, which had an immediate addition of the LPT route to Schedule 8, and as a matter of construction of the letter I consider that the submission should be accepted. Reading the letter and the contract together and putting it in the language of the Act, it was determined to offer a renewal of the contract in respect of a varied region (s 24(3)) such that Oliveri had a right to operate services in the region being an exclusive right except with respect to some routes now including the LPT route (s 21(5(b)). The Delegate then told Oliveri that another operator to provide services on the LPT route would not be appointed for some time, and that Oliveri would be given reasonable notice of that event. 109 It was not necessary for Rolfe J to deal with alternative grounds for vitiation of the determination, namely, that the Director-General , by the Delegate, took into account an irrelevant consideration; failed to take into account a relevant consideration; and made a decision which was Wednesbury unreasonable. Oliveri ought to uphold his Honour's decision by a notice of contention raising those grounds. 110 The irrelevant consideration on which Oliveri relied was stated as "the need to be able to competitively tender for the provision of services on the LPT". For reasons I have already given, when seen as part of the necessity for improvement of transport services in the public interest I do not think that was an irrelevant consideration. 111 The omitted relevant consideration was stated as "whether the relevant services could be provided using the mechanism available under section 22 of the Act". As has been seen, there was much correspondence about s 22 of the Act, and its possible operation was considered in Mr Elson's memorandum of 25 January 2000. The Delegate adverted to it in the letter of 17 February 2000, saying that she did not think it necessary to form a concluded view "on the adequacy of this mechanism for the provision of service specifications of the kind being envisaged for the LPT" and that she had disregarded "that factor" for the purposes of the decision. Given what Mr Elson had written, in my view, there was not a failure to take into consideration the availability of s 22, and it was taken into consideration but put aside because of doubt that the mechanism was adequate. Section 24 was there to be used, and the Director-General was not obliged to take up the difficulties in use of s 22, if it was available at all. 112 The Wednesbury unreasonableness was said to be that - " … by making the need to competitively tender the primary factor, or indeed the only factor, the delegate gave that consideration such excessive weight as to make the exercise of discretion manifestly unreasonable and by using the power to vary a route or region at the point of renewal as a device to circumvent or constrain the rights of a contract holder under section 22 is so unreasonable that no reasonable decision maker would act in that way." It is sufficient to say that I do not consider the Delegate acted in that way. 113 Finally, and perhaps as something not raised before Rolfe J, Oliveri submitted that the determination in the letter of 17 February 2000 was not in truth a determination within s 24 of the Act. This was a variation of the uncertainty point. It was said that the letter did not expressly state that the region or route had been varied, and that at most there was a possibility of variation to take effect or commence at an unknown future time. For reasons earlier given, I consider that there was an immediately effective determination.

The result 114 I propose the following orders -

1. Appeal allowed. 2. Declarations and orders 2 and 3 made by Rolfe J on 14 February 2001 set aside, and in lieu thereof order that the summons be dismissed. 3. Respondent to pay the appellants' costs of the trial and of the appeal, and to have a certificate under the Suitors Fund Act if otherwise qualified.

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