The High Court’s recent Mayfield decision contains important guidance for parties contracting with the Federal, State or Territory governments and clarifies that private counterparties are not shielded from competition law merely because they contract with government.
It is a principle of statutory interpretation that a statute is presumed to not bind the Crown unless there is a contrary intention evident in the statute. This is referred to as “Crown immunity”.
A related concept, “derivative Crown immunity” can extend those protections to non-government parties. In Mayfield, and in the earlier and separate proceedings ACCC v NSW Ports it was argued that such a circumstance arose under the Competition and Consumer Act 2010 (Cth) (CCA) where a private party (NSW Ports) contracted with the State of New South Wales.
The CCA states that it does not apply to the Crown unless the Crown is “carrying on a business”. As such, Australian governments such as the State of New South Wales can be immune to the application of competition law where they contract with a private company even if that contract would ordinarily be prohibited by the CCA (for example, if a provision of the contract had the purpose, effect, or likely effect of “substantially lessening competition”).
However, if a government did enter into such a contract, where would that leave the private company that also signed? Is it similarly protected from the CCA via derivative Crown immunity? Or may it have breached competition law, even though its counterparty is completely immune?
In Mayfield, the High Court found that protection from the CCA did not extend to the government’s counterparty.
In 2013, the State of New South Wales privatised two of its ports under the Ports Assets (Authorised Transactions) Act 2012 (NSW) (PAAT Act). As part of the privatisation, the State entered into “Port Commitment Deeds” (PCDs) with NSW Ports.
The PCDs included compensation provisions requiring the State to compensate NSW Ports if container traffic was diverted away from the privatised ports to the Port of Newcastle.
In 2018, the ACCC launched proceedings against NSW Ports, claiming that the PCDs substantially lessened competition and contravened ss 45 and 45AD of the CCA. These proceedings were appealed to the Full Court of the Federal Court, which ultimately decided against the ACCC on the basis that derivative Crown immunity protected NSW Ports from the application of the CCA.
During these proceedings, Mayfield, which sought to develop a container terminal at Newcastle, commenced its own proceedings against NSW Ports. Following the determination in ACCC v NSW Ports, the Full Court of the Federal Court considered itself bound by the previous decision and decided that derivative Crown immunity applied.
Mayfield then appealed to the High Court.
The High Court clarified that “derivative Crown immunity” is a misleading label. It is neither a substantive immunity, nor something which is “derived” by private parties.
Rather, it is a corollary of Crown immunity – an outworking of the principle of statutory interpretation that legislation is presumed to not bind the Crown unless a contrary intention appears.
Derivative Crown immunity therefore only arises where applying a statute to a non-government party would be, in legal effect, an application of the statute to the government.
This could arise in several scenarios, such as the application of a statute to a non-government person when acting as an agent of the government. However, for the purposes of Mayfield, the relevant scenario was identified as one where application of the statute to a non-government party could have the effect of divesting the government of alegal right or interest.
The court considered various cases dealing with the application of derivative Crown immunity, including in the context of competition law, and identified the following limitations:
Section 2B of the CCA states that Part IV of the CCA binds the Crown in right of a State when it is carrying on a business. Conversely, the court determined, it must be that the State is not bound when it is not carrying on a business.
As such, Part IV did not apply to the State when formulating State policy with respect to the privatisation of the ports.
The court held that while derivative Crown immunity can extend to those who deal with the government, it is not the case that every person who contracts with the government will also be immune.
Instead, the relevant question in Mayfield was whether the application of the CCA to NSW Ports would involve the divesture of a proprietary, contractual or other legal right or interest of the State.
Did the PAAT Act afford a right capable of protection via derivative Crown immunity?
The court considered the nature of the rights afforded by the PAAT Act, which allowed for the restructuring of arrangements for the operation and regulation of the State’s port assets. The Treasurer was able to enter into “authorised transactions” under the Act, was afforded the ability to exercise all functions necessary or convenient for the purposes of an authorised transaction, and effect an authorised transaction in any manner considered appropriate.
The court held that the PAAT Act conferred no more than an authority and capacity for the State to contract. The PAAT Act afforded no additional right to require a counterparty to an authorised transaction to accept a transfer on whatever terms the Treasurer determined, including on terms which would otherwise breach the CCA. The capacity to contract afforded by the PAAT Act was subject to other State laws and exceptions.
That freedom was “essentially the same” as the freedom to contract which was examined by the court in Baxter. In that case, the court considered whether sections 46 and 47 of the Trade Practices Act 1974 (Cth) (TPA) (the predecessor of the CCA) applied to private companies contracting with the government in the supply of medical fluids and equipment. The court held there that derivative Crown immunity did not apply in circumstances where the relevant right identified was the government’s freedom to contract.
Among other things, the court determined that the extension of derivative Crown immunity in those circumstances would have been inconsistent with the TPA, including its purpose and objects. Immunity for a private party in those circumstances would also have resulted in that party benefiting from an immunity that even the government was not entitled to under the TPA (i.e. immunity when carrying on a business).
As such, the court in Mayfield held that Baxter had not been distinguished. Applying that decision the court concluded:
The matter of whether the PCDs do in fact substantially lessen competition in contravention of the CCA has been remitted to the Federal Court.
Consideration of unenforceability under the CCA
The judgment of Edelman J gave more direct consideration to another issue arising from the application of the CCA to NSW Ports. The consequence of its application would be that, to the extent its provisions contravene the CCA, those provisions would become unenforceable and severed from the PCDs (pursuant to s 4L,45 and 45DA of the CCA).
Edelman J agreed that invalidity of parts of the PCDs would cause the impairment of the existing legal situation of the government. However, that impairment was a consequential effect of the operation of the CCA on NSW Ports. It did not arise from any impairment of a legal relation of the State, and that despite its application the State remained at liberty to enter the PCDs.
As such, the loss of any contractual legal rights of the State under the PCDs as a consequence of the CCA applying to NSW Ports was held to not attract derivative Crown immunity.
Individuals and companies contracting with government should be aware:
Mayfield also demonstrates risks for governments contracting with private companies:
This article was written by, Darcy Milligan Senior Associate Corporate Commercial.
Mayfield Development Corporation Py Ltd v NSW Port Operations Hold Co Pty Ltd & Ors [2026] HCA 12.
ACCC v NSW Ports Operations Hold Co Pty Ltd [2021] FCA 720
CCA s 2A, 2B.
NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90.
ACCC v Baxter Healthcare Pty Ltd (2007) 232 CLR 1.
PAAT Act long title; ss 3, 4(1), 6, and 7(1).