Example: Competing Facility Provisions

36. Interaction with transport network

36.1 Transport network support

(a) Principal Road Interfaces

The State must afford support to the Freeway equivalent to the support the State affords to other freeways by:

(i) managing the Principal Road Interfaces, having regard to the status of the Freeway as a freeway, to a level comparable to that afforded to other freeways;

(ii) expeditiously and diligently progressing maintenance (including incident management and obstruction removal) and repair of the Principal Road Interfaces in a manner and to a level similar to that afforded to other principal road interfaces for freeways;

(iii) if upgrading a Principal Road Interface, expeditiously and diligently progressing that upgrading, in a manner and to a level similar to that afforded to other principal road interfaces for freeways; and

(iv) procuring in a manner and to a level similar to that afforded to other freeways, that there will be no interference with the flow of traffic on the Principal Road Interfaces due to damage to, or a failure to expeditiously and diligently progress the repair of damage to, such Principal Road Interfaces (other than damage caused by a Concessionaire or any of its Associates).

(b) Exception to transport network support

The State will not be considered to have failed to provide the support required under clause 36.1(a) (Principal Road Interfaces):

(i) because of a failure to undertake new road works, unless that failure was due to discrimination against the Freeway relative to other freeways;

(ii) because of a failure to upgrade the capacity of a Principal Road Interface;

(iii) because of an act done in the course of the day to day activities of the State or its Associates in the management of the transport network, being activities which are expeditiously and diligently progressed and applied, as appropriate, throughout equivalent aspects of the transport network;

(iv) to the extent the failure is due to a Concessionaire or any of its Associates breaching a Transaction Document;

(v) because of a failure caused by an event beyond the reasonable control of the State or its Associates except to the extent that the State or its relevant Associates do not seek to overcome or mitigate the effects of that event in a manner and to a level comparable to that which would be afforded to other freeways in similar circumstances; or

(vi) because of the State or its Associates implementing transit lanes on the Eastern Freeway, Maroondah Highway or Cheltenham Road or giving public transport priority on Burwood Highway or Wellington Road.

36.2 Consequences of failure to provide State support

A failure by the State to provide the support required of it under clause 36.1 (Transport network support) will not constitute a breach of this Deed but may give rise to a Relevant Effect under clause 45 (Key Risk Management Regime).

36.3 No restriction on State

(a) No restriction on network changes

Each Concessionaire acknowledges and agrees that the Project Documents do not restrict, or require the exercise of, any right or power of the State, its Associates or any Council to develop, manage or change the metropolitan region's transport network (including road and public transport networks) other than the Freeway.

(b) Examples

Accordingly, without limiting clause 36.3(a) (No restriction on network changes), the State, its Associates and any Council will be entitled on their own account, and to authorise others to exercise, or not exercise, any right or power they would otherwise have had, to:

(i) construct new Toll Roads, freeways and other roads;

(ii) connect new or existing Toll Roads, freeways and other roads to the Freeway;

(iii) extend, alter or upgrade existing freeways and other roads;

(iv) construct new public transport routes or services;

(v) extend, alter or upgrade existing public transport routes or services;

(vi) extend, alter or upgrade existing ports or inland cargo transfer and storage facilities; or

(vii) construct new ports or inland cargo transfer and storage facilities.

36.4 Proximate State Work

(a) State's right to carry out activities

Each Concessionaire acknowledges and agrees that the State or its Associates may do any one or more of the following (each a Proximate State Work):

(i) connect any road or other means of vehicle, public transport, pedestrian or bicycle access to the Freeway;

(ii) construct, maintain or repair any road or other means of vehicle, public transport, pedestrian or bicycle access above or below the Freeway;

(iii) connect to, construct, maintain or repair Utility Infrastructure (in whole or in part) under, on or above the Project Area or the Freeway;

(iv) connect to, construct, maintain or repair any other infrastructure or improvement (in whole or in part) under, on or above the Project Area or the Freeway; and

(v) anything reserved for the State or its Associates under clause 3 (Reservations) of the Freeway Lease, and whether as a consequence of use or development of the Median or otherwise.

(b) Restrictions

The State must not (and must procure that its Associates do not), undertake any Proximate State Work to the extent that Proximate State Work is carried out in reliance on this clause 36.4 (Proximate State Work) and not in reliance on the Project Legislation, Road Management Act, any other agreements or arrangements with either or both of the Concessionaires or some other right under Law:

(i) subject to clause 36.4(i)(ii) (Tolling responsibility), unless the State agrees to fully compensate the Concessionaires for:

(A) any net adverse impacts on the Construction Activities or the Operation Activities;

(B) any adverse cost consequences (less any cost savings) for the Concessionaires; and

(C) any adverse revenue consequences for, the Concessionaires to the extent due to any adverse effect on:

(I) the free flow of traffic onto, along or from the Freeway at its designed volume and speed; or

(II) the Construction Activities or the Operation Activities,

to the extent due to the Proximate State Work, otherwise than to the extent that any such net adverse impacts or such adverse costs or revenue consequences:

(D) were not specified in the notice given by the Concessionaires under clause 36.4(c) (Advice as to impact); or

(E) arose due to a failure in whole or part by the Concessionaires to comply with clause 36.4 (Proximate State Work); or

(ii) so as to permanently prevent the Concessionaires from undertaking the Project.

(c) Advice as to impact

With respect to any Proximate State Work which the State (or its Associates) propose be undertaken, the Concessionaires must as soon as reasonably practicable, and in such detail and with such supporting evidence as the State may reasonably request, provide the State with a notice setting out:

(i) their estimate of the costs to the Concessionaires (with no allowance for profit margin to the Concessionaires, a reasonable allowance for risk to a Contractor or Relevant Entity on goods or services procured by the Contractor or Relevant Entity from a third party (which allowance is disclosed to the State in accordance with the notification requirements of this clause 36.4 (Proximate State Work)) and, in respect of goods or services provided by the Contractor or Relevant Entity itself, a reasonable allowance for profit margin), arising from the proposed Proximate State Work being carried out, including:

(A) all direct and indirect costs (including costs of augmenting the Tolling System) and the costs of repairing, reinstating or managing any damage to the Works, the Temporary Works or the Freeway to the extent caused by the Proximate State Works; and

(B) any costs savings; and

(ii) their estimate of the positive or negative revenue impact during the Concession Period of the proposed Proximate State Work being carried out and the reasons for that revenue impact;

(iii) if the request is made prior to the last Date of Close-Out:

(A) the effect (if any) of the proposed Proximate State Work on:

(I) the achievement of (as applicable) Relevant Milestone Dates, each Planned Date for Freeway Section Completion, each Late Completion Date, Tolling Completion and Close-Out for each Section;

(II) the Design and Construction Program; and

(III) the Project Plans; and

(B) the extension of time (if any) required to the Planned Date for Freeway Section Completion or the Late Completion Date (as applicable) for each Section affected by the proposed Proximate State Works, with details of the basis for this extension (including evidence demonstrating compliance with clauses 20.4(f)(ii) and (iii) (Condition precedent));

(iv) the effects (if any) of the proposed Proximate State Work on:

(A) the workmanship or durability of any part of the Works, the Temporary Works or the Facilities (including any items of plant or equipment forming part of the Facilities) and any warranties with respect to the Works, the Temporary Works or the Facilities;

(B) the provision of the Facilities for use by the general public for the safe, efficient and continuous passage of vehicles;

(C) traffic flow on, onto and off the Freeway during the Concession Period;

(D) the Construction Activities or the Operation Activities;

(E) the ability to handover the Facilities in accordance with the terms of this Deed;

(F) the performance of any other of the Concessionaires' obligations under the Transaction Documents; and

(G) any relevant information related to carrying out the proposed Proximate State Works; and

(v) a description of any potential new Liability (or increase in any existing potential Liability) for which the Concessionaires will be at risk due to the Proximate State Work.

(d) Concessionaires' notice requirements

The Concessionaires' notice referred to in clause 36.4(c) (Advice as to impact) must be prepared:

(i) on an open book basis with respect to both the Concessionaires' internal costs and the costs of the Contractors or Relevant Entities and any subcontractor of any of them (and to this end the Concessionaires must allow the State review and audit rights sufficient to verify that the

Concessionaires' notice has been prepared on an open book basis); and

(ii) in a manner so that there is no double counting.

(e) State Notice

If the State (or its Associates) propose to undertake Proximate State Work then:

(i) the State must give the Concessionaires reasonable notice that the State intends to do so; and

(ii) the Concessionaires must cooperate with the State to enable the State to undertake the Proximate State Work.

(f) Estimate of compensation/extension of time

(i) If the State gives the Concessionaires notice that it (or its Associates) intend to undertake Proximate State Work under clause 36.4(e)(i) (State Notice) then, prior to the commencement of the Proximate State Work, the parties must seek to:

(A) agree any amount of compensation and, subject to clause 36.4(f)(iv) (Estimate of compensation/extension of time), the scope of any indemnity or insurance reasonably required against any new or increased Liability identified by the Concessionaires under clause 36.4(c)(v) (Advice as to impact) which the Concessionaires are seeking to include in their notice under clause 36.4(c) (Advice as to impact); and

(B) agree the extension of time (if any) required to the relevant Planned Date for Freeway Section Completion for each Section or the relevant Late Completion Date (as the case may be).

(ii) If the State and the Concessionaires fail to agree:

(A) the amount of that compensation or the extension of time (if any) required to the relevant Planned Date for Freeway Completion or the relevant Late Completion Date (as the case may be); or

(B) subject to clause 36.4(f)(iv) (Estimate of compensation/extension of time), the scope of any indemnity or insurance reasonably required against a new or increased Liability identified by the Concessionaires under clause 36.4(c)(v) (Advice as to impact), prior to the commencement of the Proximate State Work, either the State or the Concessionaires may refer the matter directly for expert determination under clause 73 (Expert determination).

(iii) For the purposes of clauses 36.4(f)(i) and (ii) (Estimate of compensation/extension of time), the parties agree that:

(A) the State will not be required to indemnify either Concessionaire for any indirect, consequential or pure economic loss or pay any compensation for the cost of any insurance for such loss; and

(B) amounts due by FinCo or the Concessionaires to pay or repay the Project Debt on the due date for payment (without regard to any acceleration of the obligation to pay or repay) are not regarded as indirect, consequential or pure economic loss.

(iv) The requirements of clauses 20.4(f)(ii) and (iii) (Condition precedent) are conditions precedent to the Concessionaires' entitlement to an extension of time to the relevant Planned Date for Freeway Section Completion or the relevant Late Completion Date (as the case may be) pursuant to clause 36.4(f) (i)(B) (Estimate of compensation/extension of time).

(v) In determining a Dispute under clause 36.4(f) (ii) (Estimate of compensation/extension of time) the expert appointed under clause 73 (Expert determination) must (without limiting clause 36.4(f) (iv) (Estimate of compensation/extension of time)) have regard to and make a determination in a manner consistent with the matters contained in clauses 20.4(f)(iv), (v), (vi), (viii) and (ix) (Condition precedent).

(vi) The relevant Planned Date for Freeway Section Completion or the relevant Late Completion Date (as the case may be) will be extended by the time (if any) agreed under clause 36.4(f)(i) (Estimate of compensation/extension of time) or determined by the expert under clause 36.4(f)(ii) (Estimate of compensation/extension of time).

(g) Proximate State Work

If the State or its Associates decide to undertake Proximate State Works, then:

(i) the Concessionaires must:

(A) give the State and its Associates sufficient access to the Licensed Areas and the Leased Areas to enable the State to plan, design, investigate or undertake the Proximate State Works;

(B) cooperate with the State and its Associates to allow implementation of the Proximate State Works, including allowing the management of traffic on, entering or leaving the Freeway to facilitate the State and its Associates managing traffic on or in the vicinity of the Freeway; and

(C) take all reasonable steps to mitigate any Loss suffered by it or adverse impact on, or adverse cost or revenue consequences for, the Project as a result of the Proximate State Work including:

(I) mitigating the effect of any temporary lane closure which is required; and

(II) complying with its obligations under clause 36.4(i)(i) (Tolling responsibility) as soon as practicable;

(ii) the State must, and must procure that its Associates will, with the cooperation of the Concessionaires, minimise to the extent practicable any disruption to the Construction Activities or the Operation Activities.

(h) Maintenance responsibility

Upon the completion of any Proximate State Work, unless the State otherwise elects. Concessionaire's operation, maintenance and repair obligations under this Deed will apply to the Proximate State Work as if the Proximate State Work formed part of the Freeway to the extent that the Proximate State Work is located on, above or under the Licensed Area or the Leased Area, except for the Proximate State Work which the State advises Concessionaire that it is not required to maintain.

(i) Tolling responsibility

(i) Concessionaire is responsible for temporarily or permanently augmenting the Tolling System so as to avoid any untolled use of the Freeway during the carrying out of, or following completion of. Proximate State Work.

(ii) With respect to any untolled use of the Freeway arising, or augmentation of the Tolling System to be carried out, in connection with any Proximate State Work, the relevant part of the compensation to which the State is required to agree under clause 36.4(b)(i) (Restrictions) will be both:

(A) the reasonable incremental cost of augmenting the Tolling System to avoid such untolled use of the Freeway; and

(B) the revenue foregone less costs saved due to that untolled use of the Freeway to the extent only that that revenue loss was unavoidable notwithstanding that Concessionaire has fully complied with its obligations under clause 36.4(g) (Proximate State Work).

(j) Power to operate

Each Concessionaire acknowledges and agrees that the State or its Associates, as applicable, may operate any road, or other means of vehicle, public transport, pedestrian or bicycle access. Utility Infrastructure or other infrastructure or improvement (in whole or in part) connected to, on, above or under the Freeway or the Project Area unless this Deed provides that such operation is the right or obligation of Concessionaire.

(k) Concessionaire's warranty

Each Concessionaire:

(i) warrants that the impact of any Proximate State Work (including any detrimental impact on the Concessionaires' performance of their obligations under this Deed) is limited to the impact specified in a notice given by the Concessionaires under clause 36.4(c) (Advice as to impact) and agreed or determined under clause 36.4(f) (Estimate of compensation/extension of time); and

(ii) acknowledges and agrees that the Concessionaires will be entitled to the compensation and extension of time (if any) agreed or determined under clause 36.4(f) (Estimate of compensation/ extension of time) but will not be entitled to any other Claim arising out of or in respect of or in connection with the Proximate State Work, except to the extent that a Concessionaire is entitled to claim an extension of time under clause 20.4 (Delays) in respect of a Knock-on Effect.