21st Century Promotions Aust P/L v Telstra Corp No. Scciv-98-902

21^st CENTURY PROMOTIONS AUSTRALIA PTY LTD v TELSTRA CORPORATION
[2001] SASC 299
Full Court: Doyle CJ, Perry and Bleby JJ

DOYLE CJ This action began with an application for an injunction on 8 July 1998. 21^st Century Promotions Australia Pty Ltd (“Century”) sought an injunction restraining Telstra Corporation (“Telstra”) from terminating or disconnecting telecommunication services that Telstra provided to Century.
Leading up to the application was a history of dispute between Telstra and Network Digital Australia Pty Ltd (“NDA”) about money owed by NDA to Telstra for telecommunication services provided to NDA. NDA and Century were apparently controlled by the same people. In that context NDA arranged for Century to take over its business, and set about transferring to Century the lines (I will use this term to refer to various telecommunication services) provided by Telstra. NDA was an internet service provider, and the arrangement was for Century to take over this business as well.
Injunctive orders were made, and this led to a series of applications to the court over the terms of the orders and claimed breaches of the orders.
The proceedings were instituted on 8 July1998 when an injunction was first sought. In the course of the applications to the Court relating to injunctions, orders were made for an early trial. The trial began in November 1998. The first and only witness for the plaintiff was Mr Maine. He was unwell at the time, and I understand that the trial came to a halt after four days because of his ill health. His cross-examination had begun, but did not advance far. The cross-examination was never completed because Mr Maine later died.
In April 1999 the injunction granted to Century was dissolved because of its failure to comply with the requirement to pay money into court. After a considerable delay the trial resumed in January 2000, when Telstra’s witnesses were called. During part of Telstra’s case, Century was not represented. As will appear, in a number of respects the evidence is in an unsatisfactory state, contributed to by the fact that Mr Maine did not complete his evidence, and the fact that for some of the trial Century was unrepresented.
In his reasons the Judge dealt with four claims made by Century. The Judge dealt only with the issue of liability, orders having been made that there be a separate trial of the issue of liability and of damages.
The first claim, called the transferred lines claim, was based on an allegation by Century that Telstra disconnected certain lines that it had earlier transferred to Century without notice to Century and in breach of contract.
The second claim was called the estoppel claim. Century claimed that Telstra wrongly failed to transfer from NDA to Century a connection or line called an OnRamp which had been provided to NDA. Century alleged that Telstra was estopped from disconnecting the OnRamp connection or from refusing to transfer it to Century.
The third claim, the service guarantee claim, alleged a failure by Telstra to connect certain lines within the time specified by a standard having statutory force.
The fourth claim, the trade practices claim, alleged that Telstra’s refusal to transfer the OnRamp connection was a contravention of s 46 of the Trade Practices Act 1974 (Cth) (“the TPA”). The Judge also dealt with a counterclaim by Telstra for moneys owed to it.
The Judge dismissed Century’s claims, and entered judgment for Telstra on the counterclaim for the sum of $11,550.06.
The service guarantee claim
The Telecommunications (Customer Service Guarantee) Standard 1997 (“the Standard”) was made by the Australian Communications Authority in exercise of a power conferred by s 234(1) of the Telecommunications Act 1997 (Cth).
It is not disputed that Telstra is bound by the Standard. The Standard required Telstra to comply with a request by a customer for connection “to a specified service” within a period determined pursuant to the Standard. Contravention of the Standard results in a liability to pay damages according to a scale found in the Telecommunications (Customer Service Guarantee) Scale of Damages 1997 (“the Damages Standard”).
Century ordered 20 faxstream lines from Telstra for use in connection with its business. Century alleged that Telstra undertook to connect the lines by 14 April 1998, but failed to do so until 17 July 1998. The Judge appears to have made no finding about the date by which Telstra was required to connect the lines, if the Standard applied. It seems to have been common ground that Telstra agreed to connect the lines, but for various reasons did not do so until 17 July 1998.
The Judge found that faxstream lines were not a specified service for the purpose of the Standard, and accordingly it did not apply; that damages could not be awarded in any event because the Damages Standard had not been proved; but that Telstra had not established that the delay in making the connection was due to circumstances beyond its control, which would have been a defence to the claim if established.
The Standard applies to a request “for connection to a specified service”. A “specified service” relevantly means “the standard telephone service”. The “standard telephone service” is defined in the Standard as follows:
“‘standard telephone service’ means a standard telephone service within the meaning of the Act supplied by means of:
(a) a public switched telephone service line; and
(b) a telephone handset that does not have switching functions.”
The reference to the Act is a reference to the Telecommunications Act 1997 and s 17 of that Act relevantly provides as follows:
“(1)A reference in a particular provision of this Act to a standard telephone service is a reference to a carriage service for each of the following purposes:
(a)    the purpose of voice telephony;
(b)    if:
(i)voice telephony is not practical for a particular end-user with a disability (for example, because the user has a hearing impairment); and
(ii)another form of communication that is equivalent to voice telephony (for example, communication by means of a teletypewriter) would be required to be supplied to the end-user in order to comply with the Disability Discrimination Act 1992;
the purpose of that form of communication;
(c)    a purpose declared by the regulations to be a designated purpose for the purposes of that provision;
where:
(d)    the service passes the connectivity test set out in subsection (2); and
.............
(2)A service passes the connectivity test if an end-user supplied with the service for a purpose mentioned in paragraph (1)(a), (b) or (c) is ordinarily able to communicate, by means of the service, with each other end-user who is supplied with the same service for the same purpose, whether or not the end-users are connected to the same telecommunications network.
............”
Century’s request was for the connection of faxstream lines. These were to be connected to its premises. The Judge said that without expert technical evidence he could not make any sense of the definitions, and appears to have dismissed the claim on that basis. In my opinion the evidence before the Judge was sufficient to require him to decide whether or not the Standard applied. The relevant evidence was a good deal less than one would have expected, coming only from Mr Maine, who spoke as an experienced customer of Telstra, and Mr Spencer, a Telstra employee without technical qualifications. Nevertheless, in my opinion the evidence was sufficient to require the Judge to decide whether or not the Standard applied.
It seems clear enough that the lines to be connected to Century’s premises for the faxstream connection were the same lines that would be used to connect a standard telephone service. I refer here to the lines from the relevant exchange to the premises. The same lines would have been run from the exchange to the premises if the request was for connection to the standard telephone service. But Century wanted the lines to enable it to operate modems that would process data. I am unsure from the evidence whether Century wanted to use the lines for a facsimile machine, or whether they were for use with computers, but nothing turns on this. The lines were called faxstream lines because, although from the customer’s premises to the exchange they were the same as ordinary telephone lines, from exchange to exchange transmission is digital. This was the effect of Mr Maine’s evidence. Mr Spencer appeared to accept the correctness of what he said, explaining that faxstream was used for data services rather than voice services, and the data could be used for facsimile machines or computers. The significant point, for the purposes of the case, is that Century’s request was not for a connection which Century intended to use for “the purpose of voice telephony”. It was a request for a connection which Century intended to use for the transmission of data to and from facsimile machines or computers. On the other hand, as I have already said, the line from Century’s premises to the exchange was the same line as would be used if the request had been for a connection for “the purpose of voice telephony”. It also appeared to be common ground, on appeal, that once the connection was made, Century could have plugged a telephone handset into the connection, and could have used it for the purpose of voice telephony.
In fairness to the Judge I should say that the evidence about all this was not as clear as it might have been, and clearly was not given by technical experts.
The issue is whether the Standard applies when a customer requests the connection of a line that could be used for the purpose of voice telephony by means of a public switched telephone service line and handset, whatever the intended use of the connection actually is, or whether it applies only if the intended use of the connection, when the request is made, is for the purpose of voice telephony by means of a telephone handset. Mr Manetta, counsel for Century, contended for the former meaning. Mr Clayton QC, counsel for Telstra, contended for the latter meaning.
In support of the former meaning, Mr Manetta made the obvious point that if the copper line which was connected could be used either for a facsimile machine, or for a computer, or for voice telephony using a telephone handset, it would be odd if the application of the Standard depended on the particular proposed use. As well, the connection might be requested for one purpose and then later the purpose might change.
I acknowledge the force of that point, but in my opinion the Standard did not apply. In my opinion the statutory definition of “standard telephone service” is based on the proposed use of the carriage service. Relevantly, the purpose or proposed use is voice telephony. The Standard applies when such a carriage service, that is a carriage service for the purposes of voice telephony, is to be supplied by means of a public switched telephone service and a telephone handset. The statutory reference to the purpose of voice telephony suggests, quite strongly, that a service is a standard telephone service only if it is intended to be used for the purpose of voice telephony, and not simply because it is a service which could be used for that purpose. The reference in the Standard to the fact that the service is supplied by means of a telephone handset further suggests that the Standard is dealing with services intended to be used for the purpose of voice telephony, and not merely services that could be so used.
I can well understand why the Standard might so provide. The evident purpose is to give priority for the connection of services to be used for conventional telephone purposes. It is obvious that, for policy reasons, priority might be given to such requests. That explains the language used in the Standard. The fact that the Standard could be exploited by, say, requesting the connection of a standard telephone service and then later using it for a computer or facsimile machine, merely demonstrates that the statutory definition can be exploited. If the Standard applied because of the type of line connected, it is not easy to understand why the Standard is expressed as it is, and in particular why it refers to the use of a telephone handset. On Mr Manetta’s argument, a service is a Standard telephone service if it could be used for voice telephony by means of a telephone handset. If that were the intention, one would expect the drafter to say so.
For those reasons, the Judge correctly dismissed the claim. The Standard did not apply.
In my opinion the Judge was wrong when he relied on the failure to prove the Damages Standard. First, the issue of damages had been reserved for a later trial. Secondly, as Mr Clayton ultimately conceded, the Damages Standard was handed up during the trial, but without being tendered and marked as an exhibit. Under the circumstances, the handing up of the Damages Standard sufficed to put that statutory instrument before His Honour.
Mr Clayton did not challenge the finding by the Judge that Telstra had failed to establish a reasonable excuse for its delay.
For these reasons I would dismiss the appeal against the dismissal of the service guarantee claim.
During the course of the appeal, the Court refused leave to Mr Manetta to tender further evidence bearing on the meaning of the Standard. The evidence was a report by the Australian Communications Authority dated December 1999. Mr Manetta suggested that it would show that the Authority interpreted the Standard in the manner that he contended. The Court took the view that the meaning of the service guarantee was a question of law, and that the Authority’s opinion could not be used to interpret it.
The estoppel claim
This claim relates to a connection or service called an OnRamp service. NDA used OnRamp services in its business as a provider of internet services. I gather that OnRamps were essential for such a business.
Century pleaded that pursuant to the arrangement for the transfer of lines and services from NDA to Century, Mr Maine asked Telstra on 7 May 1998 and 29 May 1998 to transfer a particular OnRamp connection to Century. The requests were made orally in telephone conversations between Mr Maine and Mr Quirk, a Telstra employee. After the second of these conversations Mr Maine faxed to Telstra a written application for provision of an OnRamp service. Although the Application Form is appropriate for a new connection, Mr Maine wrote on it the words “change of leasee (sic)”, which he said reflected the fact that it was a transfer from NDA to Century. Century claimed that Telstra did not inform it that it would not transfer the OnRamp, or had not transferred the OnRamp, that Telstra’s failure to do so was an implied representation that the OnRamp would be transferred, and that relying on this representation Century assumed a responsibility to customers for providing an internet service using the OnRamp connection. This was said to have happened about 4 June 1998. Century claims that because it acted to its detriment on the representation, Telstra was estopped from refusing to connect the OnRamp for Century, or was estopped from disconnecting it, and that Century is entitled to damages for the later disconnection of the OnRamp or for the refusal to connect Century.
The Judge rejected this claim. The claim rested entirely on Mr Maine’s evidence, except to the extent that some of the Telstra documents were relied on as well. The Judge found Mr Maine’s evidence in support of this claim to be unreliable in a number of respects. The unreliability may have been partly due to Mr Maine’s state of health. Conversations crucial to this claim were with Mr Quirk. The Judge found specifically that Mr Maine’s evidence about these conversations was unreliable. Mr Maine also gave evidence about dealings with Telstra between February 1998 and May 1998 over amounts owed by NDA to Telstra. The Judge expressed “serious doubt” about Mr Maine’s bona fides in relation to this matter.
This part of the case suffers particularly from the fact that Mr Maine was not cross-examined on the relevant issues before he fell ill, and from the fact that when Mr Quirk gave evidence Century was unrepresented, and its lay representative made no attempt to cross-examine Mr Quirk on crucial matters.
It is convenient to put aside the questions of law that would arise in connection with this claim, and to focus on the factual issue of whether Telstra, by the conduct of its employees, so conducted itself as to represent to Century that the OnRamp had been transferred to Century, or would immediately be transferred to Century, as of about 29 May 1998. The claim cannot succeed unless such a representation by conduct is established. Telstra had no duty to agree to the transfer, nor was it under an affirmative obligation to inform Century that it had not yet agreed to the transfer.
From about February 1998 at least, through to May 1998 and beyond, there was an on going and apparently escalating dispute between NDA and Telstra over payment of moneys claimed by Telstra for various telecommunication services provided to NDA. In April and May Telstra threatened NDA with disconnection on several occasions. There were discussions and correspondence about the unpaid accounts. In early May solicitors acting for NDA wrote to Telstra, informing it that the amounts claimed were disputed. There were further negotiations and discussions. Telstra continued to threaten disconnection. At times it was not clear which lines or services were being referred to. The multiple services provided, and the fact that different kinds of charges were involved, probably contributed to an element of confusion. However, while the details are not clear, it is very clear from the evidence that during April and May Telstra was pressing for payment of substantial amounts owed to it, and was threatening NDA with imminent disconnection.
Mr Maine said that in early May he spoke by telephone to Mr Quirk, who said that he would arrange for the transfer of the OnRamp service, but that Century might not be able to keep the same number as NDA used, because of the debt owed by NDA to Telstra. That did not trouble Mr Maine. He was happy to have a new number, as long as he kept the service. Then on 29 May, late in the afternoon, Mr Maine became aware that the OnRamp was not working. I gather that it was unclear whether this was due to a technical problem, or to a disconnection, but my impression from Mr Maine’s evidence is that he thought it was just a technical problem. On 29 May he rang Mr Quirk at about 4.55 pm, wanting the connection restored immediately. According to Mr Maine, Mr Quirk said that he would get it reconnected immediately, and while Mr Maine was still on the phone to him the OnRamp connection was restored. Mr Quirk said that the OnRamp “went down” because he had made a mistake, and had not had it transferred. Mr Quirk faxed the Application Form earlier referred to to Mr Maine, so that Mr Maine could apply for the transfer of the OnRamp to Century. Mr Maine’s evidence does not really explain why the form was sent, the inference perhaps being that the mistake by Mr Quirk related to a need for a completed Application Form. The evidence suggests that Mr Maine completed the form and faxed it immediately to Mr Quirk. Thereafter, Mr Maine said, the OnRamp was connected until 8 July when it was disconnected. It was the disconnection, or the threat of disconnection on 8 July, which led Century to seek an injunction.
Mr Maine never received confirmation that the OnRamp had been transferred. But he said in evidence that he was not told that it had not been transferred. He said he was not told that the transfer might be refused because of credit risks associated with Century. He seems to have acknowledged that Mr Quirk would have understood that Mr Maine was involved in NDA and in Century.

Having read the relevant evidence from Mr Maine, I agree with the Judge’s comment that the evidence is confusing. At times Mr Maine himself said that he was confused about events. He was unwell at the time. As I have already mentioned, Mr Maine was not able to be cross-examined on any of this material.
Mr Quirk gave evidence. His evidence was quite different. He said that the first conversation related to other lines, not to the OnRamp. He agreed that on the second occasion Mr Maine wanted to transfer the OnRamp to Century. Mr Quirk said that he told Mr Maine that the relevant form would have to be completed, that he faxed the form to Mr Maine, and told Mr Maine that he would submit the form once it was completed. He said he told Mr Maine that credit checks would be made and that written confirmation of the transfer would be provided if it was made. Mr Quirk said that he was a sales consultant, and his role was to pass the application on to the “provisioning department”. He told Mr Maine that. By implication Mr Quirk was saying that the connection or reconnection of a service such as an OnRamp was not a matter for him. Mr Maine’s version of the conversation was never put to him.
The evidence about the status of the OnRamp connection from the end of May until July is unclear. It seems clear that there were some threatened disconnections about 8 July. Evidence from Mr Maine, on one of the injunction applications, suggests that he was told the disconnection was because Telstra had not been paid, and that Telstra was not willing to provide services to NDA or to any company associated with it. Mr Maine said that he was told this by Mr Spencer. We were referred to this evidence without objection. But the evidence about the OnRamp connection from the end of May to July remains unclear. Some other evidence suggests that the line was in a kind of no-man’s land, operative but not linked to or belonging to NDA. Telstra records suggest that the OnRamp had in fact been disconnected.
The Judge found that the reason for Mr Maine ringing Mr Quirk on 29 May was that Mrs Quirk (who worked in another part of Telstra), had in fact disconnected the OnRamp on 21 May. At times the Judge refers to 20 May as the date of the disconnection, but my impression is that it was on 21 May. Mrs Quirk did this because NDA had not paid Telstra the moneys that Telstra was claiming, and because a series of demands for payment or for a satisfactory explanation of the disputed items had not been met. Mrs Quirk gave evidence to this effect, relying to some extent on Telstra records. Her evidence was about steps taken in the context of a long-standing dispute about NDA’s account.
The Judge preferred the evidence of Mr Quirk to that of Mr Maine. He accepted Mrs Quirk’s evidence that she disconnected the OnRamp on 20 May or 21 May. As I mentioned earlier, the Judge had real doubts about the reliability of Mr Maine’s evidence.
That being so, the claim had to fail. On the Judge’s findings, nothing done by Telstra amounted to a representation to Mr Maine that Telstra, despite its dispute with NDA, had agreed unconditionally to transfer the OnRamp to Century. To the contrary, on the Judge’s findings, Telstra had disconnected the OnRamp on 21 May, gave no assurance that it would be reconnected (Mr Quirk merely said to submit an application), nor did the Judge find that the OnRamp had in fact been reconnected.
Mr Manetta attacked these findings on various bases. He challenged the acceptance of Mrs Quirk’s evidence about the disconnection, on the basis that she was reconstructing from records that were not clear. He said it was beyond belief that Mr Maine would have allowed the OnRamp to remain unconnected from 21 May to 29 May, bearing in mind that it was critical for NDA’s business. He said that the reconnection on 29 May (assuming it happened) showed that all that had occurred was a temporary and mistaken (due to Mr Quirk’s error) disconnection that day. He pointed to the fact that on about 21 May Mr Maine requested the disconnection of other lines used by NDA, saying that Mr Maine would not have done this if there was any doubt about continued access to the OnRamp.
In my opinion the attack fails. The Judge had the benefit of seeing Mrs Quirk. He found her to be a reliable witness. The relevant parts of her evidence read at times as if she was somewhat reliant on Telstra records, but it is another thing to say that the Judge should not have accepted her quite firm evidence that she did disconnect the OnRamp. The Judge preferred Mr Quirk’s version of the crucial conversation on 29 May. Once Mr Maine’s version of that conversation was rejected, there was really little left. The evidence about the status of the OnRamp after 29 May is puzzling. But one cannot simply accept, as Mr Manetta invited us to do, that the OnRamp was still used by Century after 29 May, and indeed that it was being used between 21 May and 29 May. I cannot see why other witnesses from Century could not have been called to prove a matter like this.
In the end, in my opinion the Judge’s finding that the alleged representation was not made out was soundly made. I would dismiss this ground of appeal.
The transferred lines claim
This claim relates to a number of lines which, in April 1998, Telstra transferred from NDA to Century. Century claims that in breach of contract Telstra disconnected the lines without notice on 8 July 1998.
The issue at trial was whether Telstra was entitled to act as it did, if it had in fact disconnected the line.
It was agreed that the contract between Telstra and Century was on Telstra’s General Terms and Conditions (“the Terms”) which were proved in evidence. Under the Terms Telstra had the right to cancel a service if “the Customer does not pay a bill by the date for payment”. There is no requirement in the Terms to give advance notice of a cancellation on this basis. When the proceedings were instituted on 8 July, and the application for an injunction was made, Century had not paid a number of accounts which had fallen due. Accounts had been sent to Century for these lines, specifying the amounts due. At trial Mr Spencer gave evidence that on 8 July the lines had not been disconnected. There may have been some minor exceptions to this. He said that on 8 July he was told of the injunction, and the disconnections were not made. It is clear from the court records that there were subsequent disputes about compliance with the injunction. The Judge has not made a clear finding about this evidence, but my impression is that he did not make an affirmative finding that the lines had been disconnected. He simply said that Century had no claim for damages “Even if the defendant disconnected the services concerned .....”. Nor was there a finding about just when the lines were disconnected, if they were disconnected, and on appeal we were not taken to evidence that established that. The Judge went on to say that any breach occurring after 8 July 1998, the institution of the proceedings, would have been a new cause of action requiring new proceedings.
In my opinion the terms should be interpreted as permitting Telstra to cease providing services upon the failure to pay an account by the due date. A contract under which there is a continuing provision of services is one in relation to which, in my opinion, a court will readily conclude that breach of an obligation as significant as payment for the services will entitle the provider of the services, forthwith, to cease providing them. Century’s argument appeared to be that because time was not expressly said to be of the essence, Telstra had no right to terminate for non-payment without first giving notice, presumably notice making time of the essence in relation to payment. Presumably, on Century’s argument, Telstra would have to give notice making time of the essence, and in the meantime continue to provide the relevant services. This seems to me to be unrealistic. I consider that the Terms should be interpreted as entitling Telstra to terminate a service without further notice in the event of failure to pay an amount owing by the due date.
Nor does the evidence, confusing as it is, satisfy me that the relevant services had already been disconnected. In the circumstances, I consider that a threatened disconnection to take effect on 8 July was not a repudiation of the contract between Telstra and Century. There was a long history of negotiations in the present case, and of deferrals of threatened disconnections. And in any event the injunction granted on 8 July brought the threats to an end for the time being. It seems to me quite artificial to regard Telstra as being in breach of its contract on 8 July, bearing in mind that, subject to various disputes, the injunctions then continued in force for some months.
To my mind the real issue is whether, at some later stage, there was a breach of contract by Telstra, but the prospects of Century succeeding in that respect seem exceedingly remote. By then it had had plenty of notice of the amounts claimed, and had failed to comply with the terms of injunctions protecting it. It could hardly be said that, when the injunctions were dissolved, Telstra was not entitled to terminate the provision of services.
In my opinion the Judge rightly dismissed this claim.
The trade practices claim
This claim also relates to the OnRamp service.
This claim arises from Century’s request to Telstra to transfer the OnRamp to Century, with a view to Century then having the service provided by another provider of telecommunication services, Optus Communications Pty Ltd (“Optus”). Century claims that it was entitled to use the OnRamp through equipment belonging to Telstra, but under arrangements which would have substituted Optus as the service provider. Century would be liable to Optus, and Optus would in turn be liable to Telstra for future charges.
Century alleged that Telstra had a substantial degree of power in the telecommunications market in Australia, and that in refusing to transfer the OnRamp service to Century, Telstra was taking advantage of its market power for the purpose of preventing the entry of Optus into that market. This is alleged to be contrary to s 46 of the TPA. Section 46 provides as follows:
“46   Misuse of market power
(1)    A corporation that has a substantial degree of power in a market shall not take advantage of that power for the purpose of:
(a)eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market;
(b)preventing the entry of a person into that or any other market; or
(c)deterring or preventing a person from engaging in competitive conduct in that or any other market.
.........
(4)    In this section:
(a)a reference to power is a reference to market power;
(b)a reference to a market is a reference to a market for goods or services; and
(c)a reference to power in relation to, or to conduct in, a market is a reference to power, or to conduct, in that market either as a supplier or as an acquirer of goods or services in that market.
...........
(7)    Without in any way limiting the manner in which the purpose of a person may be established for the purposes of any other provision of this Act, a corporation may be taken to have taken advantage of its power for a purpose referred to in subsection (1) notwithstanding that, after all the evidence has been considered, the existence of that purpose is ascertainable only by inference from the conduct of the corporation or of any other person or from other relevant circumstances.”
By its Defence Telstra admitted that it had a substantial degree of power in the telecommunications market in Australia.
The Judge said that no evidence had been adduced to enable the applicable market to be defined, and for that reason alone, the claim under s 46 must fail. He also found that Telstra acted as it did “for credit management reasons” and not with a view to preventing competition. For those reasons he dismissed the claim.
The central allegation against Telstra is that by refusing to transfer the OnRamp connection to Century, Telstra took advantage of its power in a market for the purpose of preventing the entry of Optus into that market.
As the Judge said, the application of s 46 requires that one identify the relevant market. As Mason CJ and Wilson J said in Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1989) 167 CLR 177 at 187:
“The analysis of a s.46 claim necessarily begins with a description of the market in which the defendant is thought to have a substantial degree of power. In identifying the relevant market, it must be borne in mind that the object is to discover the degree of the defendant’s market power. Defining the market and evaluating the degree of power in that market are part of the same process, and it is for the sake of simplicity of analysis that the two are separated.”
The Judge said that no evidence to identify the market had been led, and he could take the claim under s 46 no further. In that respect I agree with the Judge. In many cases one would expect some expert evidence to assist the court, although that would not always be necessary. A court must be careful about making untutored findings about the nature and extent of the relevant market. Granted, Telstra admitted in its defence that it had substantial power in the telecommunications market. But the nature and extent of that market remained undefined by the evidence. In particular, the part played by Optus in that market, assuming that it is a market for the purposes of s 46, was not identified, nor was there any evidence that identified the significance in that market of the provision of OnRamp services.
Nor, in my opinion, can the relevant market simply be equated with the particular product in question, in this case OnRamp services, as submitted by Mr Manetta. Without the assistance of evidence that was not there, there is no way of telling whether the provision of such a service constitutes a market, and if it does, the nature and extent of that market.
It is one thing to say, as I am prepared to assume, that there is a market or series of markets involving the provision of telecommunication services, including OnRamp services, that Telstra is a participant in that market or some or all of those markets, and that in some of them it is likely that it has a substantial degree of power. It is another thing, without being able to identify the relevant market with any confidence, or to assess the degree of that power, to say simply that the facts suggest that Telstra has a substantial degree of power (unidentified as to extent) in a telecommunications market which also remains unidentified. The judgments of the members of the High Court in Queensland Wire demonstrate the need for a greater degree of precision than the evidence makes possible in this case. It is not possible to proceed on the basis of an amorphous market in which Telstra is said to have substantial market power. In saying this I do not suggest that it was necessary for Century to identify the relevant market with precision. I say no more than that I agree with the Judge that the evidence before him did not enable him to identify in a meaningful sense either a relevant market or Telstra’s power in that market.
The Judge went on to find, in any event, that there was no evidence that Telstra had acted for one of the proscribed purposes set out in s 46. He found that Telstra refused to transfer the OnRamp because moneys were owed by NDA, and because Telstra “was anxious to avoid in the plaintiff a duplication of what had occurred in NDA”. Assuming that Century was able to identify a market in which Telstra had a substantial degree of power, it had to prove that Telstra took advantage of that power for a proscribed purpose, namely, preventing the entry of Optus into that market. I express the proscribed purpose in that fashion because that is how I understood it to be put in the case, but I recognise the possibility that the proscribed purpose was one of the other statutory purposes. Nothing turns on that.
I accept that what Telstra did prevented Optus from providing OnRamp services to Century. But, and this is part of the problem about the lack of evidence about the market, whether that could be regarded as preventing Optus from entering the market is another question. My impression is that Optus was already an active competitor with Telstra in the provision of a number of services, including OnRamp services. But perhaps the answer is that what Telstra did prevented Optus from engaging in competitive conduct, to the extent that it prevented Optus from providing OnRamp services to Century.
Putting all that to one side, the question remains whether in acting as it did Telstra took advantage of its market power for a proscribed purpose.
It was not necessary for that purpose to be Telstra’s sole purpose. It was sufficient if the purpose was a “substantial purpose”: see s 4F of the TPA. As s 46(7) makes plain, the relevant purpose can be inferred from what Telstra did. Nevertheless, it remains necessary to reach a conclusion about whether the proscribed purpose was a substantial purpose of Telstra.
Century’s submission is that Telstra refused to transfer the OnRamp connection to Century to prevent Optus from becoming a competitor in the provision of OnRamp services, which Optus could have done by supplying services to Century using the OnRamp connection made available by Telstra. The details of how this would happen were not made clear. The submission was that Telstra could achieve its purpose, or act in this way, only because of its control over the availability to Century of OnRamp connections.
The contrary view is that Telstra refused to transfer the OnRamp connection to Century because it viewed that refusal as a means of extracting payment from Century, or at least of avoiding any further dealings with Century, which it wished to do because of its bad experience with NDA and subsequently with Century.
There was no clear evidence about the relationship that would ensue between Century, Optus and Telstra, had Telstra agreed to transfer the OnRamp connection to Century. Nor is there any worthwhile evidence about the role of Optus in the market involving the provision of OnRamp services. There is no evidence to suggest that Telstra wished to exclude Optus from such a market, but I am prepared to assume that Telstra and Optus were competitors in a market that involved the provision of OnRamp services, and so it was perhaps open to the Judge to draw an inference of such a wish.
In considering whether it was proved that Telstra took advantage of its market power for a proscribed purpose, I bear in mind what was said by the majority of the High Court in Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (t/as Auto Fashions Australia) [2001] HCA 13; 178 ALR 253; the majority said at [24]-[26]:
“The statutory prohibition, which applies to a firm that has a substantial degree of power in a market, is (relevantly) against taking advantage of that power for the purpose of preventing another from engaging in competitive conduct in that or any other market.
Although there are two aspects of that prohibition, they are inter-related. The practical significance of that relationship may vary according to the circumstances of particular cases, or classes of case.
It was held by this court in Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd, that the expression ‘take advantage of’ does not mean anything materially different from ‘use’, and does not require conduct which is predatory or morally blameworthy.” (citation omitted)
I also bear in mind, as the majority subsequently observed at [31] that:
“Purpose, in this connection, involves intention to achieve a result.”
Even if Telstra had no significant market power in a relevant market, it was at liberty to decline to have further dealings with Century. Moreover, I would find that it would have so decided, even if it had no substantial market power. That is, I am satisfied on the evidence that Telstra would have refused to deal any further with Century, because of its unsatisfactory dealings with Mr Maine, whatever the market and whatever the level of Telstra’s market power. Of course, in a differently constituted market, that decision by Telstra might not have prevented Optus from supplying OnRamp services to Century. But, as I have said, I consider that on the evidence the proper conclusion is that Telstra would have acted the same way even if it did not have whatever market power it had.

This point is relevant because in Melway the majority said, referring to the decision in Queensland Wire, at [50]:
“A majority of the court considered that the way to test whether BHP was taking advantage of its power was to ask how it would have been likely to behave in a competitive market. Exactly how competitive such a market might be, and the assumed structure of such a market, were open questions. The important thing was that, once it was concluded that in a competitive market BHP would have been constrained to supply QWI, and that BHP’s ability to refuse to supply resulted from the absence of such constraint, it followed that, in refusing to supply (for an anti-competitive purpose), BHP was taking advantage of its market power.”
The majority in Melway said that this was an appropriate way to test the application of s 46, at least in a case of refusal to supply: at [66].
In the present case I would reach a contrary conclusion, as I have indicated, and the reasoning of the majority in Melway is authority supporting the view that this suggests that it was not established that Telstra had taken advantage of its market power for a prescribed purpose.
This is not to overlook the fact that Telstra’s decision excluded Optus or prevented it from engaging in competitive conduct only because of the control, and perhaps market power, that Telstra exercised through its control over OnRamp connections. But it remains necessary to distinguish between purpose and effect, that being the distinction drawn by s 46. As the majority said in Melway at [67]:
“Freedom from competitive constraint might make it possible, or easier, to refuse supply and, if it does, refusal to supply would constitute taking advantage of market power. But it does not follow that because a firm in fact enjoys freedom from competitive constraint, and in fact refuses to supply a particular person, there is a relevant connection between the freedom and the refusal. Presence of competitive constraint might be compatible with a similar refusal, especially if it is done to secure business advantages which would exist in a competitive environment.”
It is also relevant that there is no evidence to suggest that Telstra made a practice of refusing to supply OnRamp connections which would be used by competitors in the market that included the provision of OnRamp services. There is no evidence that it was, as a matter of practice, refusing to supply OnRamp connections when they were to be taken over or provided by Optus. That is, there was nothing to suggest that Telstra wanted to keep Optus out of the market that included the provision of OnRamp services, unless one was to infer that it would wish to do so if it could, simply because Optus was a competitor. All that Telstra did was to refuse to transfer the connections to Century unless its debts were paid. This suggests to me an absence of any anti-competitive purpose: cf Natwest Australia Bank v Boral Gerrard Strapping Systems Pty Ltd (1992) 111 ALR 631 at 637 French J. It was open to the Judge to find that Telstra’s only purpose was to terminate dealings with customers in whom Mr Maine had a substantial involvement and to secure recovery of the moneys that it claimed were owing to it by NDA and Century.
This is all somewhat hypothetical, because of the uncertainty about the nature of the relevant market, and the nature and extent of Telstra’s market power in that market. However, to the extent that it was open to the Judge to reach a conclusion about this further issue, I agree with the Judge that it was not shown that either Telstra had taken advantage of market power or that it had done so for a proscribed purpose.
I add that Mr Manetta pointed to an email by Mr Spencer to another Telstra employee, in which Mr Spencer enquired whether Telstra could “block the transfer of services to Optus, or another carrier, if there are outstanding amounts with Telstra?”. I would not give that enquiry the sinister meaning which Mr Manetta suggested. It appears to me to amount to no more than an enquiry, understandably made, about the lawfulness of Telstra acting as it wished to act, to secure repayment, bearing in mind that a consequence of the proposed course of action would be to block the transfer of services to Optus. This enquiry did no more than recognise an obvious feature of the situation, and leave open the question of whether the purpose with which Telstra acted was a proscribed purpose.
For these reasons, I would dismiss this aspect of the appeal.
For present purposes I have assumed that Century was otherwise entitled to claim damages under s 82 of the TPA, and that the absence of evidence about whether Optus wished to deal with Century is not an obstacle to the claim succeeding and, as I mentioned earlier, I have assumed that a single instance of conduct with a prescribed purpose may contravene s 46, notwithstanding that it might be shown that in many other cases Telstra had permitted customers to acquire identical or similar services from Optus, using equipment or lines belonging to Telstra.
The counterclaim
The Judge found that Telstra’s counterclaim was proved.
The appeal against the judgment for Telstra on the counterclaim rests on a submission that after 8 July 1998 there was no contract between Century and Telstra. The submission is that services were provided by Telstra to Century in compliance with injunctions granted by the court, and not pursuant to a contract.
In my opinion there is no real merit in the argument. The Judge refused to allow Telstra any amount in respect of services provided after 30 October 1998, the date of filing of the counterclaim. It is not disputed that, in obedience to the injunctions, Telstra continued to supply services to Century. On the discharge of the injunctions, Telstra was entitled either to payment under a contract with Century or pursuant to the undertaking as to damages given by it when the injunction was granted. There is no reason why payment pursuant to the undertaking should not be claimed and allowed at the ordinary rate at which Telstra would have charged for the relevant services. This is particularly so when the injunction was granted on the basis that Century was alleging that it had contractual rights to the continuation of services.
In my opinion, whatever the basis of the award, Telstra was entitled to payment at its usual rates. There is nothing to be achieved by setting aside the counterclaim and ordering that there be an enquiry as to damages payable by Century under the injunction.
For those reasons I would dismiss the appeal against the decision in respect of the counterclaim.
Conclusion
I would dismiss the appeal against the dismissal of the claim and the appeal against the judgment entered on the counterclaim.
PERRY J I agree that the appeal should be dismissed for the reasons given by Doyle CJ. I have nothing to add to those reasons.
BLEBY J I agree.

[2001] SASC 299

29 August 2001