NT Power Generation Pty Ltd v Power & Water [1999] FCA 1549 (3 November 1999)

Last Updated: 12 November 1999

CATEGORY: NO QUESTION OF PRINCIPLE

FEDERAL COURT OF AUSTRALIA

NT Power Generation Pty Ltd v Power & Water Authority [1999] FCA 1549

NT POWER GENERATION PTY LIMITED (ACN 061 314 921) v POWER AND WATER AUTHORITY and GASCO PTY LIMITED (ACN 009 627 801)

D5 OF 1999

MANSFIELD J

3 NOVEMBER 1999

DARWIN

IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY	D 5 OF 1999

BETWEEN:	NT POWER GENERATION PTY LTD (ACN 061 314 921) Applicant
AND:	POWER AND WATER AUTHORITY First Respondent GASCO PTY LTD (ACN 009 627 801) Second Respondent GASCO PTY LTD (ACN 009 627 801) Cross Claimant NT POWER GENERATION PTY LTD Cross Respondent

JUDGE:	MANSFIELD J
DATE:	3 NOVEMBER 1999
PLACE:	DARWIN

REASONS FOR DECISION

1 I propose to give my ruling on the objections to the documents which are all those pages of the bundle of documents which is presently MFI A38. I will deal with them in sequence. As the rulings which I propose to give will make evident, some of the individual documents can be dealt with quite quickly.

2 The tender is essentially based upon s 69 of the Evidence Act 1995 (Cth) ("the Act") but in one or two cases an objection has been taken on the grounds that the documents are simply not relevant in any event. If a document contains relevant material, to qualify under s 69 of the Act, it must be a business record as described in s 69(1)(a) containing a "previous representation", terms which are defined expansively in the dictionary to the Act. Essentially, the document must contain a recording of information, including, if relevant, an opinion which itself is relevant, and which recording is made for the purposes of the business. It is also necessary that the representation which is sought to be proved is a representation about which the maker can be reasonably supposed to have had personal knowledge, or to have received information from a reliable source which had that knowledge. The personal knowledge may be inferred from the contents of the document or from other sources. Those matters are dealt with in ss 69(2) and (5) of the Act.

3 In one or two of the instances, the documents have been proffered at least in part not to adduce hearsay evidence, but to prove the fact of that document's existence or to prove the fact of the document being sent, received or considered. In another couple of instances, the document is tendered to prove the fact of a particular individual having made a representation as to a state of knowledge or belief or opinion or as to a state of facts, and which it is sought to be visited on the first respondent itself, in particular, certain documents apparently authored by Mr Gardner, its Chief Executive Officer at material times. If a document has that relevance, the document may be admissible notwithstanding the rule against hearsay under ss 81 and 87 of the Act.

4 It was also contended, in respect of some of the documents, that if they otherwise are admissible, their utility is of such little weight that having regard to the considerations to which ss 135 of the Act directs attention, I should reject the tender.

5 I will now consider the individual documents. I do so by reference to the numbered pages in MFI A38. Each of the documents, I am told, and it is apparently accepted by the respondents, is a document discovered by the respondents and discovered with a description which is reflected in the description in the index to the book of documents MFI A38. I am therefore assuming that there is no more refined or detailed description of the documents available to the applicants than that which is contained in the index.

6 The first document at pages 1-3 is entitled "Competition Policy Issues With Electricity". It is obviously a draft. It is unsigned. It has no author identified. I infer from its contents that it was prepared after January 1999. It is said that it may tend to prove the sorts of issues which the respondents had under consideration at a time relevant to these proceedings. As with all documents that are challenged, I have considered its contents and the use to which it is sought to put them. I am not satisfied in respect of this document, given its form, the inability to attribute it to anyone and the extensive handwritten alterations to it, that it is part of the process of recording information for the purposes of the first respondent. I do not receive that document.

7 The next document is at pages 4-6. It is an unsigned document, but it apparently emanates from the office of Mr Clifford, the Director of Market Management for the first respondent. It is tendered, as I understand it, for two purposes: first to show a state of awareness or knowledge of the first respondent in so far as it records such information, and secondly to show the attitude or state of mind of Mr Clifford as that is contained within the document, with a view to attributing that state of mind to the first respondent. In my view, the document meets the requirements of s 69 to show the state of awareness of the first respondent on matters which are material to these proceedings and I propose to receive it. I do not need to go beyond that to determine whether it shows the policy attitude or opinions of the first respondent, through Mr Clifford. I do not think that necessarily he has been shown to have that authority, that is to be authorised to express those views on behalf of the first respondent. But that may emerge later in the evidence. At present I receive it on the basis outlined.

8 The third document challenged is at pages 7-10 of MFI A38. It is undated and unsigned, but I infer from its contents that it was prepared after 26 June 1998 and was prepared by the first respondent or someone in its offices. In so far as it records factual material, (that is at pages 7-8), in my view it meets the requirements of s 69 and I propose to receive it. Pages 9 and 10, apart from having quotations extracted from certain legislation, is headed "Rationale behind issue of licence". As the document's author is not identified, and as the document has come into existence after the issue of the licence to which it refers, I am not prepared to infer that the person who prepared it either had the authority to record that information on behalf of the first respondent, or had the personal knowledge qualifying that person to do so. Other evidence may show that the document can be evidence of that fact. I therefore propose to receive that document only for the purpose of it demonstrating factual material within the knowledge of the first respondent. It may be used for the wider purpose only if other evidence justifies that course.

9 The next material is at pages 163-176 of MFI A38. It is a draft audit report in relation to the companies Gasco Pty Ltd, the second respondent, and Darnor Pty Ltd. Darnor Pty Ltd is a shareholder in NT Power Transmission Pty Ltd. It was identified that the relevant purpose of the tender was to prove the facts which appear in the last paragraph of the section under the heading `Results' on page 171. The document is obviously a draft. I do not know whether final audited accounts were ever prepared and signed off, and if they were, whether they have been discovered. I am prepared to infer for the purposes of the tender that this document is the best evidence the applicant has as to the facts which the applicant seeks to prove in the paragraph to which I have referred. In my view, that document is capable of proving the views of Ernst and Young in relation to the affairs of Darnor Pty Ltd at the time of that draft. They may not be final views, but if they are not, then the final accounts (if any) should be able to be tendered without difficulty and to demonstrate what those final views are. Such final views, if they are different, will carry weight which the draft will not carry. Beyond the tender of any final accounts, I would not expect additional evidence to be necessary to controvert that which is sought to be proved by this document, if it is sought to do so. I think there is some relevance in proving that facts of which Ernst and Young have knowledge by their audit process. I accordingly propose to receive that document.

10 The next material which is challenged is at page 264 of MFI A38. It is an internal minute of the Northern Territory Treasury from "Graduate" to Director Capital Financing, dated 18 August 1999. It is titled "Power Facilities Proprietary Limited request for access to the Darwin-Katherine transmission line". I was told that the purpose of the tender was to show the fact of that topic being addressed by the Treasury of the Northern Territory in August of 1998. I think it is capable of doing that. I am not satisfied, under s 69, that the detailed contents of that memorandum are matters about which the author, whoever that person may have been, had knowledge so as to qualify the document otherwise to be admitted. Nor am I satisfied that, to the extent to which it expresses opinions or states of mind, that the author has the authority to express those opinions or states of mind as opinions or states of mind attributable to the respondents. For the limited purpose of showing that the topic was under consideration by the Northern Territory Treasury in 1998, I will receive that document, but not otherwise.

11 I will defer ruling on pages 326-327 to which objection has been taken as it has been suggested that those pages are now in their final version in exhibit A11.

12 Pages 328-329 of MFI A38 comprise a draft minute, apparently on the letterhead of the Under Treasurer and touching relationships between the first respondent and the applicant. The name of Mr Clarke, the Under Treasurer, appears but the document is not signed. To the extent to which Mr Clarke's knowledge of a statement of affairs is relevant, as I think it is, I propose to receive that document. I do not think that the document proves that that draft, or a final document in that form, was in fact conveyed to the two ministers to whom the draft is addressed. Also, I do not think that it proves the state of mind of the respondents. However, in conjunction with other evidence which may be led in the proceedings, it may ultimately have that evidentiary effect. In my judgment, the document meets the requirements of s 69 in respect of Mr Clarke's state of knowledge, and it provides a potential springboard to show that that was also the knowledge of the respondents. I propose to receive the document.

13 The next document is at pages 347-351 of MFI A38. It is a document of the first respondent, on its letterhead, again in draft and apparently to be signed by Mr Gardner, its Chief Executive Officer. I am of the view that it is a business record, and is capable of showing Mr Gardner's knowledge and his attitude in relation to the matters to which it refers. In my view, it is also arguable that that document shows the state of knowledge of the first respondent and its attitude in relation to those matters, given Mr Gardner's position in the first respondent. Whether it does so is ultimately to be determined in the light of all the evidence. I do not think, if it is otherwise relevant, that the document tends to prove that that document, or a final document in that form, was sent to the minister or to the Treasurer. I would not infer from that document that it can or does represent the government's state of mind, as distinct from the state of mind of the first respondent. Other evidence may take the matter further. However, I propose to receive the document for the reasons given.

14 I propose to receive the document at pages 352-354 of MFI A38 on the same basis. It has the same features. It is also to be signed by Mr Clarke, the Under Treasurer as well as Mr Gardner, but there is nothing which indicates that Mr Clarke has seen or signed that document, or approved its contents. I am prepared to treat it as a business record of the first respondent because it is under the letterhead or heading of the first respondent and therefore falls into the same category as the previous document.

15 The next document is at pages 367-372 of MFI A38. It has the same characteristics as the previous two documents. For the same reasons I will receive it. Again I do not think that, at present, it goes beyond showing the state of knowledge or the attitude of Mr Gardner, and probably the state of knowledge of the first respondent and possibly its attitude. The extent to which it is probative of those matters, or other matters, will have to be determined in the light of the whole of the evidence at the end of the case.

16 The next document is at pages 398-400. It is dated erroneously. It is apparently of the date 8 October 1998 or possibly 1997. It is unsigned. It is a draft. It is apparently prepared by Mr Tregilgas, who I was told is a consultant to the first respondent. It was sent to Merrill Lynch Fay Richwhite, who during 1998 were preparing a consultant's report for the Northern Territory Government with respect to the first respondent. The purpose of the tender was to establish Mr Tregilgas' view as set out in item 1 at the top of page 399 touching the question of when customers of electricity in the Northern Territory could be "contestable". That view is asserted in one sentence, and is unexplained. If it is a document emanating from Mr Tregilgas as a consultant it is, as his memorandum says, his own thoughts on the key regulatory elements and some initial parameters as a basis for discussion. If it is to be tendered as the expression of his views upon that matter, I do not consider that it would carry much weight. On the other hand, if it is received for that purpose, apart from the limited weight which it would carry because of the form in which that view is expressed, its admission as evidence may cause both an undue waste of time in the proceedings and may be unfairly prejudicial to the respondents. They will have to respond to it as a form of opinion evidence when the opinion is unexplained, when it is a preliminary opinion for discussion purposes only, and in the light of other evidence which has been directed to that topic by experts from both sides. Accordingly, I do not propose to receive that document.

17 The next challenged document was at pages 401-403 of MFI A38. It seems to me that the pages contain two separate documents. In the index to the court book they have been so described. As I understood the submission, it is really the document at pages 402-403 which is sought to be relied upon. At present I see nothing in the document at page 401 which carries a relevance to receive it in these proceedings. If I have misunderstood the purpose of the tender of that page, I am prepared to hear counsel again on the matter. In respect of the document at pages 402-403, it contains an assessment by an entity or business called PA Consultants on the business improvement opportunities available to PAWA as a fully privatised entity. That topic has been addressed in the course of evidence. It is therefore a relevant topic. The views expressed by PA Consultants are not explained. I do not know how they were arrived at. They would therefore not carry much weight. If the opinions are important, I do not know whether the author of this document could have given evidence. It seems to me that, to receive the document as opinion evidence from PA Consultants, without explanation of the foundation for the opinions which are there expressed, when compared to the detailed expression of opinions on such matters in the Merrill Lynch report (as it has been called) would be unfairly prejudicial to the respondents. They would not know how those views were expressed, and would be unable to test them. Accordingly, I do not propose to receive the document for that purpose. I have given consideration as to whether that document might otherwise be received as proof of the fact of those views having been expressed. I do not see how that fact itself carries any weight. I accordingly do not propose to receive that document.

18 There remains the documents which are presently MFI R19. The applicant wishes to tender them.

19 On 24 September 1999, I refused an application by the applicant to amend the statement of claim to add an additional allegation in a proposed par 23(c) that the first respondent, from about March 1999, had been entering into long term contracts with consumers in the electricity supply market and is continuing to attempt to enter into those contracts. It seemed to me that that was a discrete contravention of s 46 of the Trade Practices Act 1974 (Cth) which was sought to be alleged. For the reasons then given, I did not allow the amendment. I did, however, rule that certain aspects of the conduct of the first respondent in entering into such long term contracts as evidenced by MFI R19 documents may have some relevance to the existing proceedings. I said that such documents, that is the long term contracts and contracts concerning any policy of the first respondent for entering into long term contracts with consumers, may be relevant to the proceedings both on the question of damages and possibly on the issue as to the exercise of market power by the first respondent.

20 I had in mind in relation to the issue of damages that those contracts, if sufficiently extensive in scope, might impinge upon the capacity of the applicant to compete in the market for the sale and supply of electricity in the Darwin-Katherine area, if it were to succeed in its claim. Having almost reached the point at which the applicant's case is to be closed, I am now not of the view that that material will advance the applicant's claim for damages. There has been no evidence of any such further contracts. I directed that any such further contracts should be discovered, so I suspect there are no further contracts discovered. I have also heard in detail the way in which the applicant formulates its claim for damages and the way in which, from cross-examination, that claim has been contested. I am no longer of the view that those documents touch on the issue of damages.

21 The other aspect is the question of whether they touch on the exercise of power in the market as it alleged by the applicant against the first respondent. At the time of that ruling on 24 September 1999, I had not seen the proposed expert evidence on the topic of market power or its exercise from the respondents. That proposed evidence has now been filed. I have had an opportunity of reading it. It is from Professor David John Teece. In the summary of his conclusions, he touches on the topics of market definition, market power, the right of first refusal (relevant to the second respondent), and then some discrete issues. He says:

"There are legitimate reasons to deny premature entry into electricity generation and sale."

and he explains why he says that. I must therefore treat that topic in some way as being relevant to the proceedings. The applicant has sought to adduce evidence to demonstrate that, whether or not there are such legitimate reasons to deny it access to the infrastructure, they are not the reasons of the respondents. In my judgment, these documents may touch upon that issue, although I think probably only peripherally.

22 I propose, therefore, to receive in evidence those documents presently marked for identification, R19. They will become exhibit A59. As they were confidential when first marked, I accept that they remain confidential. I make an order that the documents which are now exhibit A59 not be published other than to counsel and solicitors for the parties. I am aware that I have previously directed that parts of those documents be otherwise available. But I no longer see that as necessary. If it is necessary, an application can be made to vary that order.

23 The documents which presently are marked for identification A38 will be received as Exhibit A38 excluding the documents at pages 1-3, 398-400, 401-403 and 326-327, the latter two pages simply having been deferred. I order that, for the time being, exhibit A38 be confidential and not be published to any party other than to counsel and solicitors except for pages 27, 32-34, 40-54, 138-143, 177-218, and 280. I give liberty to apply to vary that confidentiality order.

I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Decision herein of the Honourable Justice Mansfield.

Associate:

Dated: 9 November 1999

Counsel for the Applicant:	Mr I M Barker QC, Mr A J Bannon SC and Mr A A Henskens
Solicitors for the Applicant:	Colin Biggers & Paisley
Counsel for the Respondents:	Mr B Oslington QC, Mr L Foster SC, Mr J Nicholas and Mr A I Tonking
Solicitors for the Respondents:	James Noonan
Date of Hearing:	3 November 1999
Date of Decision:	3 November 1999