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You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Abbey Mine Ltd v The Coal Authority [2007] EWHC 1189 (Admin) (18 May 2007) URL: https://www.bailii.org/ew/cases/EWHC/Admin/2007/1189.html Cite as: [2007] EWHC 1189 (Admin) |
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QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
ABBEY MINE LIMITED |
Claimant |
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- and - |
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THE COAL AUTHORITY |
Defendant |
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WordWave International Ltd
A Merrill Communications Company
190 Fleet Street, London EC4A 2AG
Tel No: 020 7421 4040 Fax No: 020 7831 8838
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Christopher Vajda QC & Josh Holmes (instructed by Nabarro Solicitors) for the Defendant
Hearing date:
28th March
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Crown Copyright ©
Mrs Justice Dobbs :
Background
Chronology
"In my opinion, the Corus application has a higher level of certainty of delivery of the project, in that finance to develop the project is available, Corus have a ready market for the coal; are proposing a single access site from existing industrial land, and are in no worse position than Abbey in relation to experience and expertise. There would, therefore, seem to be a greater likelihood of the best terms being achieved on disposal of coal to Corus. If following feasibility they choose to halt the project, the opportunity for yourselves and others to pursue the prospect will still exist" (156-7)
"As you are aware, the Authority is subject to the duties set out in the Coal Industry Act 1994 (the "Act") with respect to licensing. Under section 2(1), the Authority is subject to a clear obligation to carry out its functions in a manner which is "best calculated to secure" the matters set out in section 2(1) of the Act, which include "that an economically viable coal industry in Great Britain is maintained and developed …". The phrase "best calculated" requires the Authority, in the context of completing licence/lease applications to identify which applicant (if any) is more likely to secure those matters. Under section 2(2) it is also the Authority's duty to "have regard to the desirability of securing" the matters set out in that sub-section. In its consideration of the applications, and deciding which has most potential to enable the Authority to fulfil its duties under the Act, the Panel notes as follows: (i) Corus has submitted realistic production targets, whereas AML has overly optimistic targets, which in the Panel's view are unlikely to be achievable; (ii) Corus already has surface rights at its existing site. By contrast, AML has not clearly specified the location(s) of the mine and, hence, there is no certainty regarding its ability to acquire surface rights; (iii) Corus will find it easier to obtain planning consents on an existing industrial site; (iv) Corus put forward clear, tangible timeframes for its proposals whereas AML has been less clear; (v) The Panel considered the likelihood of either party proceeding with its application. The Panel understands that Corus has recently invested about £250 million at its Port Talbot site, which will provide a strong incentive to find a secure source of coking coal at a competitive price. The Panel notes that there are a number of companies with which you have been associated and which are involved in coal mining initiatives, which have failed to make tangible progress in carrying out mining operations, and this fact has raised concerns about AML's commitment to progress the Margam site; (vi) Corus has an existing and ready market for the coal, in that it has a need for coking coal at its own Port Talbot site. AML's market is more speculative, although in practice it is also likely to seek to sell coking coal to Corus, and proposes to supply steam coals into the power generation sector. In light of the above, the Authority considers that its Section 2 duties are best satisfied by proceeding with Corus' application. In particular, this application offers greater deliverability, i.e. a greater likelihood that coal reserves in the application area will be viably recovered and developed. Under section 2(2)(a), the Authority must have regard to the desirability of securing that licensees have "at their disposal such experience and expertise" in the carrying out of coal mining operations. The Panel accepts that AML currently has within the company greater "coal mining experience and expertise" and knowledge of matters relating to coal mining in the region. AML does, however, acknowledge that it will need to employ consultants to take forward the project. Corus intends to employ the relevant mining experience and expertise to progress its proposals, and consequently would also appear to be capable of having an appropriate level of experience and expertise at its disposal in order to pursue its proposals. Under section 2(1), the Authority is required to consider whether licensees have sufficient finance to carry on coal mining operations and to discharge their liabilities. The Panel considers that neither application is materially stronger in relation to the financing of their respective proposals. Both appear able to progress to the feasibility stage. In both cases, as and when an application for a full licence is made, the Authority would need to ensure that the development and mining proposals can be financed. In your submissions, you argued that the DMPP had failed to take account of the Authority's duties under Section 2(2)(b) of the Act, concerning the promotion of competition. The Panel has given careful consideration to the competition test, but in the present case the Panel does not feel there is any compelling reason why competition is better promoted by the AML bid than by the Corus bid, particularly in the light of the Authority's very clear conclusions regarding the deliverability of the bids having regard to section 2(1). Section 2(2)(b) refers to competition between "persons carrying on or seeking to carry on coal mining operations". The Panel having taken legal advice, sees no grounds for the argument that the awarding of the mining licence to a "customer" which is producing coal to satisfy its in-house requirements is not conducive to competition. AML's argument is in any event contradicted by the fact that it does itself intend that coals mined at Margam will be used in a proposed coal fired power station in which you claim a direct interest. The Panel also notes that you have, through other group companies, interests in a number of other mining sites in South Wales and are actively pursuing proposals to join with other coal mining interest. In these circumstances, it might even be argued that competition may in fact be better promoted by the licensing of a new entrant, which does not have any existing coal mining interests, to promote diversity of production and supply. Under Section 3(4) of the Act, the Authority has a duty, where it disposes of any interests or rights in or in relation to any land or other property, to secure the best terms reasonably available for disposal. This does not override the Authority's Section 2 duties with respect to licensing. AML has put forward a pricing proposal, which if it were to commence production could potentially produce higher financial returns, although it should be noted that the above comments concerning the viability of AML's proposals call into question the extent to which these financial returns are in fact likely to be achieved. The Panel is satisfied that, in the light of the competitive tender process for this site, the Authority is securing the best terms reasonably available, having regard to its Section 2 duties with respect to licensing " (189-191)
The Claimant's grounds
The process by which the decision was reached was wholly unfair and defective because:
i) The Authority's Guidance Notes were defective.
ii) The process was fundamentally unfair.
iii) The decision to grant the licence to Corus failed to take relevant material into account.
iv) The Authority took irrelevant and prejudicial material into account. (This ground was not pleaded and was raised only during the course of submissions)
v) The Authority's decision was anti-competitive and a breach of Chapters I and II of the Competition Act 1998 (and Articles 81 and 82 EC).
vi) The Authority's decision amounted to the grant of state aid to Corus contrary to Article 88(3) EC; and was a breach of section 2(2)(b) of the Coal Industry Act 1994.
Submissions
Defective process
a) The Authority's defective notes – lack of disclosure
b) The failure to invite Corus to the Review Panel hearing
c) Failure to disclose documents in front of the members of the Review Panel
d) Failure to give the Claimant the opportunity to deal with issues of concern
i) Track record
"The Panel notes that there are a number of companies with which you have been associated and which are involved in coal mining initiatives, which have failed to make tangible progress in carrying out mining operations, and this fact has raised concerns about AML's commitment to progress the Margam site".
ii) Time Frames
"Corus put forward clear, tangible Time Frames for its proposal whereas AML has been less clear."
This was an unfair and/or irrational conclusion for the Defendant to reach because a) the Claimant was not told that this might impact adversely on the application and b) it did not feature as a reason in the Interim Decision. Had this been raised, AML would have been able to submit a more detailed time frame immediately after the Review hearing. In any event the approach was perverse, as a genuinely meaningful timetable cannot be produced where the manner in which the venture would be taken forward is dependent on the results of exploration.
iii) Production Targets
e) Failure to take relevant matters into consideration in the decision making process
f). Taking into account irrelevant and prejudicial matters without giving the Claimant the opportunity to deal with them
i) The Welsh Assembly
ii) The synergy point
iii) The ready market
iv) Greek shipping company
v) Selling off to the highest bidder
g). Error of law
Competition law issues
h). The Authority's decision amounts to an anti-competitive agreement between undertakings contrary to Chapter I of the Competition Act 1998 and Article 81EC.
i) The Authority's decision infringes the Defendant's duty under Section 2(2)(b) of the Coal Industry Act 1994.
j) The decision was a breach of Chapter II of the Competition Act and Article 82 EC (Abuse of dominant position)
k) The decision amounts to State Aid contrary to Article 87 of the EC Treaty.
Discussion and decisions
Defective Process
a) The Authority's defective notes and disclosure
b) Failure to invite Corus to the Review hearing
c) Failure to disclose documents in front of the members of the Review Panel
d) Failure to give the claimant the opportunity to deal with issues of concern
i) Track record.
ii) Time Frames
iii) Production Targets
e) Failure to take relevant matters into consideration in the decision making process
f) Taking into account irrelevant and prejudicial matters without giving the claimant the opportunity to deal with them.
i) The Welsh Assembly
ii) The synergy point
iii) The ready market
iv) Greek shipping company
v) Selling off to the highest bidder
g) Error of law – failing to take into account the duty under Section 3(4) of the Act
Competition law issues
h) The Chapter I argument. The anti-competitive agreement.
i) The Authority's decision infringes the defendant's duty under Section 2(2)(b) of the Coal Industry Act 1994.
j) Abuse of dominant position.
k) State Aid
Conclusions