AGL Energy Ltd v Queensland Competition Authority & Anor; Origin Energy Retail Ltd v Queensland Competition Authority & Anor (No 2) [2009] QSC 116

SUPREME COURT OF QUEENSLAND CITATION: AGL Energy Ltd v Queensland Competition Authority & Anor; Origin Energy Retail Ltd v Queensland Competition Authority & Anor (No 2) [2009] QSC 116 PARTIES: AGL ENERGY LTD ACN 115 061 375 (Applicant) v QUEENSLAND COMPETITION AUTHORITY (First Respondent) MINISTER FOR MINES AND ENERGY (Second Respondent) ORIGIN ENERGY RETAIL LTD ACN 078 868 425 (Applicant) v QUEENSLAND COMPETITION AUTHORITY (First Respondent) MINISTER FOR MINES AND ENERGY (Second Respondent) FILE NO/S: BS 7793 of 2008 BS 8576 of 2008 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON: 14 May 2009 DELIVERED AT: Brisbane HEARING DATE: 14 May 2009 JUDGE: McMurdo J ORDER: In both BS 7793/08 and BS 8576/08: 1. The decision of the Queensland Competition Authority (“the Authority”) dated 30 May 2008 be set aside. 2. The matter be remitted to the Authority for a -- 1 of 6 -- 2 decision according to law and according to these orders. 3. The Authority recalculate the 2007-2008 benchmark retail cost index, and decide the benchmark retail cost index for 2008-2009 on or before 29 May 2009 (“Remade Decision”). 4. The Authority calculate notified prices for the 2008- 09 tariff year by reference to the Remade Decision and, by gazette notice, publish those notified prices (2008-2009 Notified Prices). 5. The gazette notice referred to in the preceding order be in terms and be published so that the 2008-2009 Notified Prices take effect immediately before the commencement of the 2009-2010 tariff year. 6. The Authority calculate notified prices for the 2009- 2010 tariff year by reference to the Remade Decision and the 2008-2009 Notified Prices. 7. There be liberty to apply. In BS 7793/08 only: 8. The Authority pay to AGL Energy Ltd one-half of its costs of the proceedings. In BS 8576/08 only: 9. Origin Energy Retail Ltd pay the Authority’s costs thrown away as a result of Origin Energy Retail Ltd’s abandonment of the relief sought in ground three of its application for review but that otherwise the Authority pay one-half of Origin Energy Retail Ltd’s costs of and incidental to the proceedings. CATCHWORDS: ENERGY AND RESOURCES – ELECTRICITY – ELECTRICITY AUTHORITIES AND UNDERTAKINGS – QUEENSLAND – where Act requires decided prices to continue as notified prices until pricing entity decides new notified prices even though decided prices have been set aside – where tariff must be based on “relevant tariff component” ADMINISTRATIVE LAW – JUDICIAL REVIEW – PROCEDURE AND EVIDENCE – COSTS – where applicants were successful on first issue – where respondents were successful on second issue – where neither party was entirely successful on third issue – where overall outcome favoured applicants – where second applicant abandoned one ground of review immediately prior to hearing – where “costs follow the event” – whether “the event” is the issue or the proceedings as a whole -- 2 of 6 -- 3 Electricity Act 1994 (Qld) s 90, s 91B, s 91D UCPR r 681, r 684 Interchase Corporation Ltd (in liq) v Grosvenor Hill Queensland P/L (No 3) [2003] 1 Qd R 26 Bucknell v Robins [2004] QCA 474 BHP Coal Pty Ltd & Ors v O&K Orenstein & Koppel AG & Ors (No. 2) [2009] QSC 64 COUNSEL: N C Hutley SC, with R C A Higgins, for AGL Energy P J Flanagan SC, with J M Horton, for Origin Energy Retail J McKenna SC, with M Hoch, for the Authority P J Freeburn SC, with A A Horneman-Wren, for the Minister SOLICITORS: Gilbert + Tobin for AGL Energy Clayton Utz for Origin Energy Retail Mallesons Stephen Jaques for the Authority Crown Law for the Minister [1] On 28 April 2009 I gave judgment declaring that the decision of the Queensland Competition Authority (“the Authority”) dated 30 May 2008 was not made in accordance with the Electricity Act 1994 (Qld) in two respects. As requested by the parties, I adjourned until today the question of what further orders, including orders as to costs, should be made consistently with that judgment. [2] The parties now agree on those orders, except as to costs. I will make orders which are substantially those which are agreed, and which are as follows: 1. The decision be set aside. 2. The matter be remitted to the Authority for a decision according to law and according to these orders. 3. The Authority recalculate the 2007-2008 benchmark retail cost index, and decide the benchmark retail cost index for 2008-2009 on or before 29 May 2009 (“Remade Decision”). 4. The Authority calculate notified prices for the 2008-09 tariff year by reference to the Remade Decision and, by gazette notice, publish those notified prices (“2008-2009 Notified Prices”). 5. The gazette notice referred to in the preceding order be in terms and be published so that the 2008-2009 Notified Prices take effect immediately before the commencement of the 2009-2010 tariff year. 6. The Authority calculate notified prices for the 2009-2010 tariff year by reference to the Remade Decision and the 2008-2009 Notified Prices. -- 3 of 6 -- 4 7. There be liberty to apply. [3] It is necessary that I say something in explanation of those orders. The applicants, AGL Energy Ltd and Origin Energy Retail Ltd, have proved that the Authority’s decision which set tariffs for the year to 30 June next was not made according to law. The practical consequence is that those tariffs were not as high as they would have been if the decision had been made according to the Act and the Regulations. But it is not for this court to quantify what should have been the tariffs and AGL and Origin do not ask the court to do so. What they have sought is an order that the matter go back to the Authority for recalculation of the relevant components of the indexation formula and, in turn, of the prices for the current year. [4] As I noted in the principal judgment, the applicants’ purpose was not to be able to charge higher prices for the current year (that is, the year to 30 June next). Their concern was that the Authority’s errors would affect prices in following years. [5] This explains why, as all parties proposed and as I have ordered, the recalculated prices for the 2008-2009 year will be gazetted but with effect only at a point immediately before the commencement of the 2009-2010 tariff year. This may be done under s 90(9) of the Act which provides that notified prices take effect on a day later than the date of gazettal if that is stated in the notice. [6] It is that recalculated 2008-2009 price which will become the component Ty-1 in the application of the formula under s 91D. What is required under this regime, in terms of s 91B(1), is “the annual indexation of tariffs in the current tariff schedule to the extent the tariffs, or components of the tariffs, will continue to apply in the next tariff year…”. By s 91B(4), “[e]ach tariff indexed under this division applies from the start of the relevant tariff year”. So what must be subjected to indexation is the “current tariff schedule” which is that in force immediately prior to the commencement of that year. In terms of s 91D(1), “the relevant tariff component for the preceding tariff year” is that which is effective immediately prior to the commencement of “the relevant tariff year”. [7] I turn to the question of costs. AGL seeks an order against the Authority for its costs of the proceedings. The Authority argues that it should pay but one-third of AGL’s costs. [8] Origin seeks an order against both the Authority and the Minister for the payment of its costs of the proceedings, save for an issue which it abandoned prior to the hearing. It concedes that it should pay the costs thrown away by the abandonment of that issue. Each respondent argues that there should be no order for costs in favour of Origin. [9] As appears from the principal judgment, in essence there were three questions in these proceedings by the time of the hearing. AGL and Origin succeeded on the first of them but failed on the second. On the third question, which again was one of statutory interpretation, I accepted neither side’s argument in its entirety. The practical outcome of my decision on the third question was nevertheless favourable to AGL and to Origin. I could not quantify the impact but it is not suggested that it is inconsequential. The outcome on the third question is fairly described as one in which the applicants enjoyed substantial success. -- 4 of 6 -- 5 [10] In terms of r 681 of the Uniform Civil Procedure Rules, AGL and Origin argue that costs should follow the event, which they say is that the Authority’s decision has been set aside. The Authority agrees that costs should follow the event. But the arguments part company as to what constitutes “the event”. The Authority cites Interchase Corporation Limited (in Liquidation) v Grosvenor Hill Queensland Pty Ltd (No. 3)1 where McPherson JA (with whom McMurdo P and Thomas JA agreed) said: “[84] These authorities show that the structure and language of the new r 689(1) has not introduced any marked change in the practice governing awards of costs in Queensland. Costs are, as they were before, in the discretion of the court. They follow the “event” which, when read distributively, means the events or issues, if more than one, arising in the proceedings unless the court makes some other order that is considered ‘more appropriate’. It is not by this intended to suggest that there has been a reversion to a regime under which costs of separate issues must now be determined. The practice of doing so was responsible for so much litigation in England that the rule was eventually altered to place costs within the general discretion of the court or judge: see Judicature Act 1925, s.50(1). Rule 689(1) may fairly be regarded as producing the same result as prevailed before it came into force, although it now does so in somewhat different language and is structured in a slightly different way….” The rule which was then r 689(1) is now r 681(1). [11] What constitutes “the event”, for a particular proceeding such as this, might be the subject of debate. As McPherson JA discussed, the word “event” in this context derived from the practice of common law courts prior to the Judicature Act, where trials took place with a jury, and the events could be defined by reference the questions put to the jury.2 In the present case there were three distinct questions but each was a legal question and success upon any of them would have resulted in the decision being set aside. Further, the question of what constitutes “the event” is affected by r 684(1) which provides that the court may make an order for costs in relation to a particular question in, or a particular part of, a proceeding. This suggests that in some cases at least, a particular question in a proceeding will not correspond with “an event”. [12] In any case, the court has a discretion to order that the costs will not follow the event, and as McPherson JA said in Interchase Corporation Limited (in liq) v Grosvenor Hill Queensland Pty Ltd (No. 3): “It is not by this intended to suggest that there has been a reversion to a regime under which costs of separate issues must now be determined.”3 [13] I am unpersuaded that rules 681 and 684 displace the well-settled principle that, in general, a successful party in litigation should have an order of costs in its favour. That principle has been confirmed since Interchase in the Court of Appeal in, e.g., 1 [2003] 1 Qd R 26 at [84]. 2 [2003] 1 Qd R 26 at [82]. 3 [2003] 1 Qd R 26 at [84]. -- 5 of 6 -- 6 Bucknell v Robins.4 I adhere to what I said on this subject in BHP Coal Pty Ltd & Ors v O&K Orenstein & Koppel AG & Ors (No. 2). 5 [14] The starting point then is that AGL and Origin have been substantially successful. However, they failed on the second question which was clearly a matter of some practical importance and which must have required a significant expense in the preparation for and conduct of the respective cases. It is unrealistic to attempt to quantify that expense. But in my view it would be unjust for the respondents to have to pay the applicant’s costs which resulted from it. This was not simply an alternative argument for the same outcome. Nor was it analogous to, for example, a claim for a higher amount of damages than was awarded. I infer that had the Authority conceded the first and third questions, this second question would have been pursued. The respondents had no choice but to resist the applicants’ argument on this question. [15] It is undesirable that there be a distinct order for costs of that question, because of the potential for that to lead to a further dispute in the assessment process. The better course is to reduce the amount of costs recoverable overall by AGL, but only to an extent where the order fairly represents the outcome of the proceedings overall. The order will be that the Authority pay to AGL one-half of its costs of the proceedings. [16] I turn to Origin’s costs. The expense resulting from the issue which was abandoned was undoubtedly substantial. But I am unable to fairly relate that to the overall costs of the proceeding. It is preferable then to make the distinct order which Origin seeks. Apart from that abandoned point, it is appropriate that Origin have one-half of its costs for the same reasons as in the AGL case. Origin sought its costs also against the Minister. There is no utility in ordering costs against the Minister as well as the Authority and the ultimate burden will be borne in the same place. It is also relevant that the AGL order is against the Authority only. The Minister seeks no order for costs. In Origin’s proceedings it will be ordered that the applicant pay the first respondent’s costs thrown away as a result of the applicant’s abandonment of the relief sought in ground three of its application for review but that otherwise the first respondent pay one-half of the applicant’s costs of and incidental to this proceeding. 4 [2004] QCA 474 at [17]. 5 [2009] QSC 64. -- 6 of 6 --