Transurban slugged with multimillion dollar hit over ‘unjust fees’ charged to ConnectEast
The country’s biggest toll road operator will be forced to stump up millions of dollars after it ‘unjustly’ skimmed extra fees off ConnectEast.
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The nation’s biggest toll operator will be forced to pay back millions of dollars to a competitor, after losing a case in Victoria’s Supreme Court.
Transurban told the market on Thursday morning it would have to pay ConnectEast – the operator of Melbourne toll road EastLink – at least $40m after it was accused of “unjustly enriching” itself by skimming extra cash in fees.
Transurban’s court loss comes after the competition regulator last year prevented it from obtaining a majority stake in Horizon Roads, which bought ConnectEast in 2011.
“A confidential Supreme Court of Victoria judgment has been received in relation to litigation commenced by ConnectEast (owner of EastLink) against Transurban in relation to fees payable by ConnectEast under a tolling services arrangement with Transurban,” Transurban Group CEO Michelle Jablko told the ASX.
“The judgment, which is subject to a court-ordered confidentiality regime imposed on the parties, requires compensation payable by Transurban to ConnectEast for a period of four sample years (2015, 2017, 2019 and 2020).
“The proceeding was commenced in 2020 and the statement of claim referred to a fee in the order of $10m per year for each year since 2009.”
A full version of the judgment about the case is set to be published in February, but a ConnectEast spokesman said Justice Kathryn Stynes reasoned that “the amount of the roaming fee that has been charged by (Transurban) to ConnectEast should be substantially lower than the fee that has been paid”.
The spokesman said Justice Stynes – who leads the Victorian Supreme Court’s technology, engineering and construction list – reasoned that the only costs Transurban was allowed to pass on to ConnectEast were additional costs they would otherwise incur and “and only if (Transurban) does not receive compensation for those costs in some other way”.
EastLink is a 39km toll road that connects the Eastern, Monash, Frankston and Peninsula Link freeways in the eastern suburbs of Melbourne.
Transurban, a $40bn behemoth that operates toll roads internationally, flagged it would consider appealing the judgment , which could push the matter into a fifth year after it was first lodged in 2020.
It had previously denied allegations from ConnectEast that the value of a fee charged for servicing “roaming agreements” was too high.
The legal dispute was about a fee of 18c that is sparked by cars with a CityLink e-tag or account trips on the EastLink.
Under an agreement signed by Australian toll-road operators, different companies offer their own e-tags, but drivers can seamlessly travel on most toll roads and still pay their fees without needing a different account with each toll road operator.
To facilitate this, Transurban charges and receives their own customers’ toll fees as they travel on the EastLink.
They then pay EastLink that money, minus the fee of 18c.
EastLink initially agreed to the value of the fee – which, according to the statement of claim, is adjusted by CPI annually – but three years ago lodged its case. claiming “CityLink has been enriched … in respect of each transaction”.
EastLink argued the fee, which has been charged since 2009, is too high, and Transurban should pay it back.
According to a table attached to its statement of claim, between January 1, 2009 and October 31, 2020 more than 525 million CityLink customers drove on the EastLink.
If Transurban kept 18c for every one of those trips, it could be up for more than $100m.
The money will not come out of customers’ hip pockets.
Originally published as Transurban slugged with multimillion dollar hit over ‘unjust fees’ charged to ConnectEast
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