NSW Ports returns to the Federal Court as Mayfield Development Corporation Pty Ltd (Mayfield) continues its action over the Port of Newcastle container penalty. Mayfield is owned 61 per cent by A.P.Moller-Maersk A/S and 39 per cent by Anglo Ports Pty Ltd.

Mayfield was required to pay the penalty in 2013 as a consequence of the NSW state government committing to paying NSW Ports for loss of income due to Mayfield’s activities in the Port of Newcastle. Mayfield has not disclosed details of its claim. The penalty was included in Mayfield’s Term Sheets with the government.

The penalty is used by the government to make it uneconomical to develop a container terminal at the Port of Newcastle. The penalty kicks-in when container volumes exceed a minimal threshold level, currently equivalent to four container ship visits a year. For every container over the threshold level, the Port of Newcastle must pay the government equivalent wharfage at Port Botany, effectively doubling the cost of shipping lines visiting the Port of Newcastle.

The government announced its container port policy in July 2012. A container terminal will not be developed at the Port of Newcastle before Port Botany reaches capacity followed by Port Kembla. Implementation of this policy is by means of the Port of Newcastle penalty. A container terminal has not been developed at the Port of Newcastle because of the penalty.

The government concealed the penalty, which was exposed by “The Newcastle Herald” in July 2016.

The Port of Newcastle was leased for the purpose of applying the penalty. Unless the port was leased, the government was likely to contravene the “Competition and Consumer Act 2010” (CCA).

Only a court can determine a breach of the CCA. The government required Mayfield to pay the penalty in August 2013. Shortly after the government announced, in October 2013, that no decision had been made to lease the port, the negotiation with Mayfield was terminated.

The negotiation was terminated because the penalty was likely to be illegal under the CCA.

Authority to lease the Port of Newcastle existed under the “Ports Assets (Authorised Transactions) Act 2012” (PA Act). When the PA Act was amended in July 2013 to authorise leasing the Port of Newcastle, the government concealed its decision to require Mayfield to pay the penalty. Advice about the penalty was not sought from the ACCC.

Greg Cameron