Case: Hamersley Iron Pty Ltd v National Competition Council (1999) 164 ALR 203
Outcome: referred to
It is significant to recall that all parties needed to confront the principal question in the proceedings on the basis there existed only one previous decision of the Court that of Hamersley Iron Pty Ltd v National Competition Council (1999) 164 ALR 203 (' Hamersley ') which dealt with the interpretation of the term "use of a production process" within s 44B of the Act and which involved a very similar factual scenario to the proceedings. Fortescue's principal contention was that, applying the "marketable commodity" test to the factual scenario as contended for by Fortescue, a "marketable commodity" was produced in BHPBIO's operations before the iron ore was railed to the port. As an alternative contention, Fortescue sought to distinguish Hamersley on a number of grounds. 30 BHPBIO had good legal grounds for its position and conducted itself in the litigation reasonably and appropriately. Nevertheless, BHPBIO was the losing party, and Fortescue would ordinarily be entitled to its costs. However, despite Fortescue's ultimate success in the proceedings, I did not find in favour of Fortescue on certain factual and legal issues or inquiries. Nevertheless, I do not consider it appropriate in the circumstances to disentitle Fortescue to its whole costs in the proceedings. 31 The conduct of Fortescue in this proceeding was neither inappropriate nor unreasonable. Fortescue structured its case primarily on the basis of the correctness of the decision in Hamersley . Therefore, it seems to me that seeking to apply the "marketable commodity" test as expounded in that decision was an entirely appropriate and reasonable approach. Further, it seems to me that Fortescue seeking in the alternative to distinguish the Hamersley decision on a number of grounds was similarly appropriate and reasonable. In addition, I do not see any inappropriate or unreasonable behaviour on the part of Fortescue in its approach to putting BHPBIO to proof on factual matters or contentions. The Court accepted in essence the actual process and operations as contended for by BHPBIO. However, the conclusions of the Court were determined objectively and not by reference to BHPBIO's own subjective views or characterisations, or by reference to the subjective views or characterisations of the witnesses called on behalf of BHPBIO. Fortescue was entitled to test the evidence put forward by BHPBIO, especially in respect of such subjective views and characterisations. 32 In Hamersley , the learned trial judge held the term "production process" meant "a series of operations by which a marketable commodity is created or manufactured": at 213. The test required, as a question of "fact and degree", a consideration of "the actual operation of the activities in question, considered as a whole": at 213. The evidence as to "marketable commodity", whilst it may be separately identified, was all part of the material the Court needed to consider in determining the actual operation of the activities in question. Accordingly, it does not seem unreasonable for Fortescue to have approached in the way it did the material placed before the Court. The principal question for determination in the proceedings was not a mere matter of statutory interpretation of the term "the use of a production process" that could be dealt with by demurrer. Rather, the Court was required to consider, in detail, the factual evidence of BHPBIO's operations and apply the construction of the term "the use of a production process", whether that construction be the one set out in Hamersley , or the construction for which the Court ultimately found. There does not seem to me to be any element of unreasonableness or inappropriateness in Fortescue directing its evidence, submissions and cross-examination to the application of that test to the facts of this case. 33 This is not the end of the inquiry. As I have indicated, the exercise of the discretion to make an order as to costs is not just limited to a consideration of the reasonableness or appropriateness of the conduct of a party in connection with the proceedings. It may also be appropriate to discount an order in favour of a successful litigant in circumstances where it has lost certain issues or inquiries which can clearly be treated as distinct and severable. 34 At the outset, I do not consider that the matters upon which Fortescue was unsuccessful were relevantly distinct or severable although they can be identified. Rather, the matters on which Fortescue was unsuccessful were alternative arguments in support of the one principal question in the proceedings, that is, whether either of the relevant services was a "service" within the meaning of s 44B of the Act. The matters raised by Fortescue were sufficiently linked to this principal question in the proceedings. Fortescue did not seek to raise a separate matter for determination by way of a positive defence. 35 However, to the extent the issues or inquiries upon which Fortescue lost can be identified, and even if they be relevantly distinct and severable, in my view, none of the matters sought to be addressed by Fortescue were so disproportionate to the whole case, or so lacked merit, or so adversely impacted upon the economy and efficiency of the proceedings, according to case management principles, as to warrant an order to deprive Fortescue of some or all of its costs. As I have said, I was required to consider in detail the factual evidence and apply that evidence to the construction of the term "use of a production process", which Fortescue reasonably contested. The ultimate ends of justice would not be served by Fortescue not recovering its costs because of its failure on some identifiable (or even distinct and severable) issues or inquiries, when those issues or inquiries needed to be canvassed as being material to the reaching of a decision.