The North Queensland Export Terminal (previously known as the Adani Abbot Point Terminal Pty Ltd) was in the Queensland Court of Appeal yesterday, appealing a decision made by the Supreme Court in August 2020 in relation to a contractual dispute regarding handling charges.
Located near Bowen in North Queensland, the North Queensland Export Terminal is a deep-water export terminal with a nameplate capacity of 50 million tonnes per annum. Adani acquired the 99-year leasehold of the terminal from the Queensland Government in 2011.
Eight mining companies have contracts in place to ship their product through the terminal. In August 2017, the North Queensland Export Terminal commenced proceedings against four of these companies, Lake Vermont Resources, QCoal, Byerwen Coal and Sonoma Mine, in the Queensland Supreme Court.
The claim brought by North Queensland Export Terminal in the Queensland Supreme Court related to a contractual dispute for the non-payment of terminal handling charges by the users. The users then brought a counter-claim alleging that North Queensland Export Terminal had engaged in unconscionable conduct.
Contractual dispute claim
The user companies disputed the 2018, 2019, 2020 and 2021 financial year handling charges passed through by North Queensland Export Terminal from the port operator on the basis that North Queensland Export Terminal had not demonstrated the charges are reasonable having regard to the efficient operation of the Terminal.
They have elected to not pay 50 per cent of the user charges billed to them over each of these four years. The proceeding concerned the 2018 and 2019 charges. North Queensland Export Terminal lead expert evidence and evidence from former employees of the Operator in support of why these port charges were reasonable.
Unconscionable conduct claim
In 2016, a former user of the port, a subsidiary of Rio Tinto (QCPL), elected to exit from its take or pay contract to ship nine million tonnes per annum of coal through the port until 2028.
The company entered into a legal agreement with North Queensland Export Terminal to assign its port capacity to a third party, Bravus Mining and Resources (formerly Adani Mining Pty Ltd) from July 2022 and to terminate its User Agreement with North Queensland Export Terminal.
In an arbitration award handed down in May 2019, former High Court judge Michael McHugh AC QC ruled that these arrangements were lawful and in accordance with the parties’ contractual arrangements. However, the four port user companies claimed that while legal, this agreement was unconscionable as it had the effect of increasing their port charges.
They argued the payment received by North Queensland Export Terminal from the former user should have been used to offset the amounts they are charged to use the port.
Recent Queensland Court of Appeal decision
The North Queensland Export Terminal’s appeal was successful in overturning the findings of the trial judge in respect of alleged unconscionable conduct and in relation to terminal handling charges.
“We are particularly pleased that the court has unanimously found that North Queensland Export Terminal did not engage in unconscionable conduct,” a North Queensland Export Terminal spokesperson said.
“We are also pleased that the decision on the 2018 and 2019 terminal handling charges is now resolved in our favour.”
“We look forward to the implementation of the orders of the Court of Appeal as we move forward with the operations of North Queensland Export Terminal.”
The full judgement can be accessed here: www.sclqld.org.au/caselaw/QCA/2021/187
