Optus Networks Pty. Limited v. Gilsan (International) Limited - [2006] NSWCA 171

New South Wales

Court of Appeal

CITATION: Optus Networks Pty. Limited v. Gilsan (International) Limited [2006] NSWCA 171
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 29, 30, 31 May and 1 June 2006

JUDGMENT DATE:
5 July 2006

JUDGMENT OF: Beazley JA at 1; Hodgson JA at 2; McColl JA at 116

DECISION: The appeal of Optus should be allowed on the holding over issue and the retrospective effect of the confidential agreements; but otherwise its appeal and the cross-appeal of Gilsan should be dismissed.; Ordered that Short Minutes be brought in dealing with disposition of appeal and cross-appeal and with costs.

CATCHWORDS: CONTRACT - Construction of formula determining amount of payments - Implication as to terms on which business transacted after end of contractual period - Construction of term providing for adjustment of payments - EVIDENCE - Proof of law of foreign country without calling expert - Judicial notice as to whether books would be used in court of that country - Application of presumption of continuance.

LEGISLATION CITED: Evidence Act 1995 ss.174, 175

CASES CITED: Andar Transport Pty. Limited v. Brambles Limited [2004] HCA 28, 217 CLR 424
Brambles Limited v. Wail [2002] VSCA 150, (2002) 5 VR 169
Cable & Wireless PLC v. Federal Communications Commission, 12 January 1999 (166 Federal Reporter, 3rd Series, 1224)
David Securities Pty. Limited v. Commonwealth Bank of Australia (1992) 175 CLR 353
Goss v. Chilcott [1996] AC 788
Ralli Brothers v. CIA Naviera Sita y Aznar [1920] 2 KB 287

PARTIES: Optus Networks Pty. Ltd. - appellant
Gilsan (International) Limited - respondent

FILE NUMBER(S): CA 40656/05

COUNSEL: Mr. I.M. Jackman SC with Mr. A.S. Bell and Mr. Free for appellant
Mr. M.J. Slattery QC with Mr. F. Kunc for respondent

SOLICITORS: Gilbert & Tobin, Sydney for appellant
Gadens Lawyers, Sydney for respondent

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): SC50056/02

LOWER COURT JUDICIAL OFFICER: McDougall J

LOWER COURT DATE OF DECISION: 26 November 2004
11 February 2005
3 June 2005

LOWER COURT MEDIUM NEUTRAL CITATION: [2004] NSWSC 1077
[2005] NSWSC 38
[2005] NSWSC 518

CA 40656/05
SC 50056/02

BEAZLEY JA
HODGSON JA
McCOLL JA
Wednesday 5 July 2006

OPTUS NETWORKS PTY.LTD. v. GILSAN (INTERNATIONAL) LIMITED

Headnote

FACTS
Between December 1998 and May 2001, large sums of money were spent by customers in the USA on international telephone services to access “adult entertainment.” This money was divided between ATT (the originating carrier in the USA), Optus (the transit carrier), TVL (the terminating carrier) and Gilsan (the provider of the entertainment), pursuant to various agreements. In these proceedings, Gilsan sued Optus claiming Optus owed it money pursuant to the agreement between them. Relevantly to the appeal, the proceedings raised five issues:

(1) Whether “origination charges” referred to in the Payment Formula in this agreement extended to amounts which ATT was entitled to retain pursuant to confidential agreements with Optus.
(2) Whether in circumstances where each of the confidential agreements between ATT and Optus was expressed to apply for one calendar year and was entered into several months after the commencement of that year, business between them in the months of each year prior to entry into the agreement for that year was on the terms of the confidential agreement for the previous year.
(3) Whether each such agreement, when made, retrospectively affected the amount of “origination charges” as between Gilsan and Optus.
(4) Whether a Benchmark Order made by the Federal Communications Commission of the USA that purported to limit amounts payable to terminating carriers reduced the amount payable by Optus to Gilsan.
(5) Whether a provision providing for deductions from payments from Optus to Gilsan by reason of ATT’s refusal to pay Optus applied in respect of deductions made by ATT based on transactions of previous months.
The primary judge answered (1) yes, (2) no, (3) no, (4) no and (5) yes. Optus appealed from the decisions on (2), (3) and (4), and Gilsan cross-appealed from the decisions on (1) and (5).

HELD

Brambles Limited v. Wail

Andar Transport Pty. Limited v. Brambles Limited

(b) However, the Benchmark Order did not make payments in excess of the benchmarks set unlawful, did not justify ATT withholding payments to Optus, and did not reduce the amounts payable by Optus to Gilsan.

**********

CA 40656/05
SC 50056/02

BEAZLEY JA
HODGSON JA
McCOLL JA

Wednesday 5 July 2006

OPTUS NETWORKS PTY. LTD. V. GILSAN (INTERNATIONAL) LIMITED

Judgment

1 BEAZLEY JA: I agree with Hodgson JA.

2 HODGSON JA: Between about December 1998 and about May 2001, customers in the United States of America spent about US$100 million (about A$133 million) on telephone services for the purpose of accessing “adult entertainment” dispensed in Sydney by a Gibraltar company (Gilsan, the respondent and cross-appellant in this appeal).

3 One reason for the size of the total amount thus generated was that the telephone services were charged at rates referable to the prevailing rate of US$4 per minute for telephone calls between the USA and Vanuatu, a figure greatly in excess of that for telephone calls between the USA and Australia; but although the relevant telephone calls were made to Vanuatu telephone numbers they never in truth reached Vanuatu, but terminated in Sydney, where the “adult entertainment” was dispensed. This is but one of a number of curious features of the commercial transactions underlying the dispute in this case.

4 This amount of about US$100 million was divided between Gilsan and the providers of the telephone services, namely the American originating carriers AT&T (ATT) or its successor Concert Global Network Services Limited (Concert). (I will generally refer to each of them as ATT), the Australian transit carrier (Optus, the appellant in this appeal) and the terminating carrier Telecom Vanuatu Limited (TVL). Over the period in question, Gilsan received about US$30 million of this US$100 million, while TVL received about US$2 million. It appears that Optus received about $US14 million, and ATT retained the balance, about US$54 million. However, ATT claimed that it had overpaid Optus by an amount which would appear to be of the order of US$8 million, and it appears that Optus has refunded that amount, which would reduce its share (subject to these proceedings) to about $US6 million. ATT paid almost nothing to Optus in respect of the period January to May 2001, and the question of how much more, if anything, ATT should pay Optus in respect of that period has been dealt with in a confidential agreement between them; so it is not disclosed how much Optus received from ATT in respect of the period January 2001 to May 2001.

5 The proceedings in the Commercial List from which this appeal is brought concerned a claim by Gilsan against Optus for additional amounts as damages, equitable compensation or an account of profits, on the basis of an agreement made between them on 3 December 1998 (the Optus Agreement). Optus brought a cross-claim in the proceedings, claiming judgment for sums in various currencies, the US dollar equivalent of which totalled about US$2.5 million, mainly in respect of alleged overpayments made by it to Gilsan. (It will be convenient to express all sums of money in terms of US dollars, so any reference to dollars should be taken as a reference to US dollars unless the contrary is indicated.)

6 There was a 14-day hearing before McDougall J in September 2004, concerning a large number of issues agreed between the parties. Those issues were determined in the primary judge’s first judgment of 26 November 2004 ([2004] NSWSC 1077). Further issues were contested before the primary judge in December 2004, and they were determined in his second judgment of 11 February 2005 ([2005] NSWSC 38). A further nine issues (the quantum issues) were contested before the primary judge in May 2005, and were determined by his third judgment of 3 June 2005 ([2005] NSWSC 518).

7 The primary judge made orders on 27 July 2005, in which he answered 73 questions concerning issues under the Optus agreement, and gave judgment in favour of Gilsan for US$10,260,044.00 (which would increase Gilsan’s share of the US$100 million to about US$40 million, and reduce Optus’s share to about minus US$4 million, plus whatever it received confidentially from ATT).

8 Optus has appealed from parts of the first and second judgments, seeking orders varying the answers to 10 questions, setting aside the judgment in favour of Gilsan and giving judgment for Optus in the sum of US$1,307,013.00.

9 Gilsan has cross-appealed from parts of all three judgments, seeking orders varying the answers to 14 questions, and remitting the matter to the Court below for quantification of the amount payable by Optus to Gilsan.

CIRCUMSTANCES

10 The first agreement relevant to these proceedings was an agreement made between ATT, Optus and TVL, the terms of which are contained in a facsimile dated 25 June 1996 by TVL to ATT, with a copy to Optus (the Tripartite Agreement). The facsimile is in the following terms:

US$

AT&T 1.79

Optus 0.42

TVL 1.79

Total 4.00 (Cascade accounting)

Please confirm by return fax the date AT&T will commence transit via Optus. If you need any further information please contact me.

11 This was an agreement applying to telephone traffic between the USA and Vanuatu, in which ATT was the originating carrier (that is, the carrier in the country of origin of the call that originates the original traffic), Optus was the transit carrier (that is, the carrier that transmits the call to a carrier in the destination country, in those cases where the call does not go directly to the carrier in the destination country) and TVL was the terminating carrier (the carrier in the destination country).

12 The TAR mentioned in the agreement is the total accounting rate per minute of telephone traffic agreed by the three carriers, being an amount to be collected from the caller and divided among the three carriers. (It is not necessarily the same as the amount actually paid by the caller, which is called the collection rate and which may exceed the accounting rate.) The reference to cascade accounting invokes a system used in such cases whereby the originating carrier receives the TAR, retains its share and pays the balance to the transit carrier, which in turn retains its share and pays the remaining balance to the terminating carrier.

13 Thus, under the Tripartite Agreement, ATT would retain $1.79 of the $4.00 paid for each minute of telephone traffic, and pay $2.21 to Optus; and Optus would retain 42 cents of this and pay the remaining $1.79 to TVL.

14 This sharing of the TAR was in accordance with principles established by the International Telecommunications Union (ITU) and set out in its Recommendation D155 as revised in July 1996. Clause 3.3.2 of Recommendation D155 provides:

3.3.2 The accounting rate in a switched transit relation should normally be divided into two terminal shares and one or more transit shares, as applicable.

15 In August 1997, the USA Federal Communications Commission (FCC) issued a Report and Order concerning the international settlement rates that US carriers may pay foreign carriers to terminate international traffic originating in the USA. The Order established benchmarks to govern such rates, this being considered necessary because the settlement rates then paid by US carriers to foreign carriers to terminate US-organised traffic were in most cases substantially above the cost incurred by the foreign carrier, causing US consumers to pay artificially high prices and discouraging competition. For “Lower Middle Income” countries, which included Vanuatu, the Order specified a rate of 19 cents.

16 According to a decision of the United States Court of Appeals in the case of Cable & Wireless PLC v. Federal Communications Commission handed down on 12 January 1999 (166 Federal Reporter, 3rd Series, 1224), the Communications Act of the USA authorised the FCC to regulate such settlement rates, in particular by the following provisions. First, s.201:

(a) It shall be the duty of every common carrier engaged in interstate or foreign communication by wire or radio to furnish such communication service upon reasonable request therefor; …

Whenever, after full opportunity for a hearing, upon a complaint or under an order for investigation and hearing made by the Commission on its own initiative, the Commission shall be of opinion that any charge, classification, regulation, or practice of any carrier or carriers is or will be in violation of [the Act], the Commission is authorized and empowered to determine and prescribe what will be the just and reasonable charge or the maximum or minimum, or maximum and minimum, charge or charges to be thereafter observed, and what classification, regulation, or practice is or will be just, fair, and reasonable, to be thereafter followed. …

17 In its report, the FCC stated that it established “the rate at which a settlement rate agreed to by US international carrier satisfy that carrier’s obligation to comply with the ‘just and reasonable’ requirement of Sections 201 and 205”. It gave the date of implementation of the Order as 1 January 1998, and required US carriers to negotiate settlement rates with foreign correspondents in a transition period set out in a schedule that, in its application to Vanuatu, prescribed three years from implementation date.

18 In discussing enforcement of the benchmarks, the FCC said this:

185. Because we have found that settlement rates above the relevant benchmarks after the relevant transition period will not produce just and reasonable rates, we will take appropriate enforcement measures as may be necessary to ensure that U.S. carriers satisfy our benchmark requirements. As an initial measure, we will identify foreign carriers that are reluctant to engage in meaningful progress toward negotiating settlement rates at or below the relevant benchmark. We will convey to the responsible government authorities our concern about continued high settlement rates and the lack of meaningful progress, and seek their support in lowering settlement rates. In our contacts with the responsible government authorities, we will emphasize the need for cooperation in achieving the goal of cost-based rates, enlist their active support in achieving that goal, cite relevant lTU recommendations such as Recommendation D.140, and suggest further discussions that may be necessary.

186. When a foreign correspondent fails to respond to a U.S. international carrier's efforts to achieve a settlement rate that complies with the requirements of this Order, we will allow the U.S. international carrier to ask us to consider stronger steps. As it is clearly within the interest of a U.S. international carrier to negotiate rates at or below the relevant benchmark, we believe that we can rely primarily on such a carrier-initiated enforcement process. Pursuant to the procedures we adopt in this Order, a U.S. international carrier may file a petition that:

(1) demonstrates that it has been unable to negotiate a settlement rate with its foreign correspondent that complies with the rules and policies we adopt in this Order; and
(2) requests enforcement measures be taken to ensure that no U.S. carrier pays that foreign correspondent an amount exceeding the lawful settlement rate benchmark.

The U.S. international carrier should file its petition with the Office of the Secretary, Federal Communications Commission, 1919 M Street, NW, Room 222, Washington, DC 20554. The petitioning carrier must serve the foreign correspondent with a copy of the petition and a copy of the procedural rules governing replies to the petition. The foreign correspondent or other interested party will have thirty-five days from the date on which we place the petition on public notice to file comments or an opposition to the U.S. international carrier's petition. We will allow ten additional days for replies to any comments or oppositions.

187. We will ensure compliance with our settlement rate benchmarks. We believe that we have the authority to use any of the enforcement measures proposed in the Notice to respond to a carrier's petition. As we discuss in Section II.E. of this Order, our authority includes the ability to prescribe a change in settlement rates whenever we determine such rates to be unlawful. We do not at this time adopt any set enforcement mechanism, but will instead consider the individual circumstances surrounding each carrier-initiated petition to determine the appropriate enforcement action to take. We agree with AT&T that whatever enforcement action we take with regard to a complaint about a foreign correspondent's unwillingness to negotiate a settlement rate at or below the relevant benchmark must apply to all U.S. international carriers' dealings with that foreign correspondent in order for enforcement of our benchmarks to be effective.

188. Some commenters express concern that enforcement of the benchmark settlement rates will lead to reprisals against smaller carriers. We will continue to safeguard U.S. carriers against discriminatory treatment by foreign carriers by vigorously enforcing our ISP.

189. Although we decline at this time to anticipate exactly which enforcement measure would be appropriate in a given situation, we do agree with those commenters that argue that we should refrain from using one particular proposed enforcement mechanism. We believe that requiring U.S. international carriers to negotiate settlement rate agreements that provide for a fixed expiration date until a foreign carrier agrees to a reasonable schedule of reductions would impose unnecessary financial burdens on U.S. international carriers. Such an action by us would require carriers to be continually engaged in negotiations for short-term agreements. We find that the other proposed enforcement mechanisms will provide us with the ability to ensure compliance with our benchmarks.

Order

19 Later in the Order, this appears:

286. … We find that any settlement rates that exceed the relevant benchmark constitute an unjust and unreasonable “charge” or “practice” under Section 201. As a result, we declare settlement rates in excess of the relevant benchmark to be unlawful and not in the public interest.

20 Later again, there is the following passage:

Order

Order.

Order,

21 The body of the Order concludes with the following ordering clauses:

327. Accordingly, IT IS ORDERED that, pursuant to Sections 1, 2, 4(i), 201, 205, 214 and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151,152, 154(i), 201, 205, 214, 303(r), the rules, requirements and policies discussed in this Order ARE ADOPTED and Part 43 and 63 of the Commission's Rules, 47 C.F.R. Parts 43 & 63, ARE AMENDED as set forth in Appendix B.

Order

22 It will be seen that the Order contemplated that, at least from its implementation on 1 January 1998, ATT would negotiate with terminating carriers such as TVL to achieve the lower settlement rates during the transition period, which in TVL’s case was the three years to 1 January 2001. However, as will be seen, it appears that ATT undertook no such negotiations, but after 1 January 2001 took the stand that it should simply keep for itself the amount by which the amount otherwise payable to TVL exceeded 19 cents.

23 The next agreement of importance in this appeal is a confidential agreement between Optus and ATT made in March 1998, in the following terms:

1. PRINCIPLES
1.1 The purpose of this Agreement is to establish special transit arrangements between Optus and AT&T Corp. for Optus's U.S. originated switched transit service provided to AT&T.

1.2 This Agreement and all its contents is confidential between Optus and AT&T.

1.3 The Agreement is effective from January 1, 1998 through December 31, 1998.

1.4 Any accounting rate division of revenue calculation with the distant administration shall be based on standard regional charges informed by each supplier. All other discount charges referred on item 2 are confidential.

1.5 Optus's official transit fee to be used by AT&T when negotiating divisions of the accounting rate with distant administration is .35 SDR ($0.42) per minute which applies to all traffic covered by this agreement. This transit fee can be changed from time to time by Optus by providing thirty (30) days prior written notice to AT&T.

1.6 Busy-hours and completion rates to desired destinations will be mutually exchanged between AT&T and Optus, as well as expected traffic volumes and viability to route volume of traffic. To facilitate this procedure, both carriers will give each other all technical support and contact points.

1.7 While it is AT&T's intention to use the transit facilities of Optus, AT&T makes no guarantee of or commitment for any level of traffic.

2. CHARGES
2.1 All U.S. originated switched transit minutes via Optus to the world will be charged at the confidential rate of .05 SDR ($0.07) per minute except as noted below in 2.2.

Cook Islands +682 6XXXX

Diego Garcia +246 5XXX

Fiji +679 13XXXX

Hong Kong +852 17 NXXXXX (where N=2&4)

Niue +674 N XXX (where N=2,5,6,7,8,9)

Norfolk Island +673 3N XXXX (where N=5,6,7)

Maldives +960 95 XXXX

PNG +675 20XXXXX

Sakhalin Island +750 440 XXXXX

Seychelles +248 20 XXXX

Soloman Island +677 N XXXX (where N=1&8)

Tuvalu +688 N XXXX (where N=6,7,8)

Vanuatu +678 XXXX

The above destinations and area codes may be changed from time to time by Optus by providing thirty (30) days prior written notice to AT&T.

3. SETTLEMENTS
3.1 Transit settlements will be processed in the normal manner. Official transit fees are to be used in reporting all traffic. Cascade or Direct settlement will be used by the Parties depending upon the arrangements agreed with the distant operators.

3.2 The currency of payment chosen by both parties is U.S. Dollars.

24 The agreement applied to traffic to all parts of the world, not merely Vanuatu. In its application to traffic to Vanuatu, it had the following effect. Of the 42 cents which would go to Optus under the Tripartite Agreement, ATT retained 32 cents and passed on only 10 cents to Optus. Thus the cascade accounting would proceed as follows: ATT retains $2.11 and pays $1.89 to Optus, and Optus retains 10 cents and pay $1.79 to TVL. However, as we will see, ATT in fact paid Optus at the rate of $2.21 throughout 1998, 1999 and 2000, giving rise to the claimed overpayment of $8 million referred to earlier in this judgment.

25 This confidential agreement illustrates further curious features of the commercial transactions underlying this dispute. It involves a departure from the principles of ITU Recommendation D155, in departing from a 50/50 split between the originating carrier and the terminating carrier after payment of the transit carrier. Further, it seems ATT was to negotiate with other carriers on the basis that Optus, as transit carrier, was entitled to receive 42 cents per hour, and presumably to seek to achieve terms based on that figure; whereas under this confidential agreement, Optus was in fact to receive only 10 cents per hour. If, as would seem to be the case, the amount Optus was to receive was a material factor in these negotiations, the confidential agreement would appear, at first blush, to contemplate that ATT would be misleading those with whom it was negotiating, by suggesting that this amount was 42 cents per hour. However, it may be that the existence of such confidential agreements is notorious, so that the parties with whom ATT negotiated would not in any event take any notice of an assertion that Optus was entitled to receive 42 cents per hour, and so would not be misled by such an assertion.

26 Gilsan enters into the picture in late 1998. It devised a scheme for generating income for provision of adult entertainment, which worked in this way. A person would be offered the adult entertainment on the internet, and if the person took up the offer, a program would be put into effect that would disconnect the person’s regular internet connection and dial up a Vanuatu telephone number, so that the customer would be paying for the entertainment at a rate based on the cost of telephone traffic to Vanuatu. As we have seen, in the case of calls from the USA, this involved a TAR of $4.00 per minute. Gilsan would then have an agreement with one or more of the carriers which would return it some significant part of this $4.00.

27 On 24 November 1998, Gilsan entered into the following agreement with TVL:

BETWEEN
Telecom Vanuatu Limited, Telecom House, PO Box 146, Port Vila, Vanuatu (“PTT”)

AND
Gilsan (International) Limited, 57-63 Line Wall Road, Gibraltar (“SP”)

WHEREAS
(a) SP wishes to offer International Audiotex and International Internet Dial-up services from countries listed in Schedule A utilizing number ranges owned by PTT, and being routed via a host carrier (Host) to terminate in Call Centres with whom they have facilities.

(b) PTT wishes to provide SP with number ranges in support of the SP business;

PTT and SP have agreed upon the following arrangements:

1. PTT shall
1.1 issue number ranges to SP by mutual consent so that they may generate traffic to those numbers;
1.2 authorize Host to forward number ranges issued to SP to call centres nominated by SP;
1.3 advise all carriers of transit traffic to PTT that SP and Host are authorized to discuss transit rates and routing with such carriers for the purpose of handling the traffic that this Agreement relates to;
1.4 authorize Host to remit directly to SP the amount due in accordance with Schedule B of this Agreement to SP;
1.5 keep both SP and Host informed on a regular basis of any request for or actual accounting rate changes that distant carriers request or implement;
1.6 grant SP exclusive access to number ranges under their control for the purposes of offering International Internet Dialup service for a period of 12 months from commencement of service. After this period, continued exclusivity will depend upon SP generating a minimum of 100,000 minutes of traffic each month, as measured by Host. Should SP fail to deliver this volume of traffic for 3 consecutive months, PTT shall have the right to offer other suppliers the option to provide this service in addition to SP. In such circumstances, the rate offered to other suppliers will be no more than the rate offered to SP.

2. SP shall:-
2.1 advertise and promote the number ranges issued by PTT to general traffic minutes;
2.2 ensure that the call centre(s) have the appropriate equipment and software to handle the traffic;
2.3 exchange with Host technical information relating to the traffic in order that satisfactory interconnection can be achieved;
2.4 accept the ownership of PTT number ranges remains with PTT, although SP shall have beneficial use of such numbers during the life of this agreement, and for a period of 12 months thereafter;
2.5 remit to PTT any payment that it receives from the Host that is due to the PTT as a result of this agreement, within 45 days of the end of the month in which the payment is received.

3. PTT and SP will share the revenues generated, after all regular transit charges and charges by Host have been calculated, in accordance with the proportions set out in Schedule B hereto. Such revenue will be calculated on the basis of international telephone traffic as measured by Host and reported to PTT and SP.

4. All parties agree to keep the terms and conditions of this Agreement confidential between Parties and further that they will direct their respective directors, officers, employees, agents and representatives to keep confidential the content of this Agreement or information disclosed or which may be disclosed in this connection with the exception of information which becomes generally available to the public.

5. PTT shall not either directly or indirectly make any approach to enter into any arrangement or agreement with any sub-contractor of SP their directors, officers, employees (past and present), beneficial owners, agents acting on their behalf, associate or subsidiary of the sub-contractor, suppliers, for any services that SP or its subsidiary or associate companies provide for the duration of this agreement and for 18 months after the expiration of the same.

Schedule A

Originating Countries

Schedule B

Revenue Shares

28 This agreement applied to telephone traffic from all parts of the world, not just the USA, and not just via Optus. In so far as it applied to traffic subject to the Tripartite Agreement, it had the effect that Gilsan received $1.69 out of TVL’s $1.79 share.

29 On 3 December 1998, Optus and Gilsan entered into the following agreement:

BETWEEN
Optus Networks Pty Limited (ACN 008 570 330), 101 Miller Street, North Sydney, New South Wales 2060, Australia ("OPTUS")

AND
Gilsan (International) Limited, 57-63 Line Wall Road, Gibraltar ("SP")

WHEREAS
(a) SP wishes to offer International Audiotex and International Internet Dialup services from countries listed in Schedule A utilizing number ranges owned by Countries listed in Schedule B (“PTT”);
(b) OPTUS wishes to provide SP with telecommunications services in support of the SP business;

OPTUS and SP have agreed the following arrangements:
1. Optus will:-
1.1 negotiate with transit carriers, that carry traffic on behalf of the PTT, the transit rates for SP traffic in order that the maximum revenues can be achieved for the parties to this Agreement;
1.2 enter into arrangements with transit carriers that carry traffic on behalf of the PTT to route the traffic directly to OPTUS tor forwarding to SP;
1.3 route international traffic generated on SP's number ranges to SP's nominated call centre in Australia, or to a SP nominated call centre in another country;
1.4 pay PTT the amount due under Schedule B under normal traffic accounting and payment terms;
1.5 pay SP, for the duration of this Agreement and for twelve months thereafter, 75% of all monies due, as defined in Schedule C hereto, for each calendar month in which traffic was generated, 45 days from that month end;
1.6 pay SP, for the duration of this Agreement and for twelve months thereafter, 25% of all monies due, as defined in Schedule C hereto, for each calendar month in which traffic was generated, within 45 days of receiving payment from the distant and/or transit carriers. Such payment is to be made after deductions have been calculated for payments that have been overpaid as a result of a distant or transit carrier refusing to make payment for the traffic of any particular month;
1.7 for the duration of this Agreement and for twelve months thereafter, provide SP with daily and monthly Traffic Reports and a monthly Financial Report in a format to be agreed.

2. SP will:-
2.1 advertise and promote the number ranges issued by PTT to generate traffic minutes;
2.2 ensure that the call centre(s) have the appropriate equipment and software to handle the traffic;
2.3 exchange with OPTUS technical information relating to the traffic in order that satisfactory interconnection can be achieved;
2.4 request PTT to confirm that SP are authorised to use PTT's number ranges.

3 Both parties agree to keep the terms and conditions of this Agreement confidential and further that they will direct their respective directors, officers, employees, agents and representatives to keep confidential the content of this Agreement or information disclosed or which may be disclosed in this connection with the exception of information which becomes generally available to the public.

Schedule A

Originating Countries

Schedule B

Country Number Ranges Offered

Schedule C

Payment Formula
OPTUS will pay SP their share of the total accounting rate subject to deductions for OPTUS, origination and transit charges and the PTT share in Schedule B above.

30 The words “their share of” were added in handwriting to the typed words of the Payment Formula. It is the construction and effect of this Payment Formula that is at the heart of the issues in this case.

31 It is common ground that, under this Payment Formula, in its application to ATT/Optus/TVL traffic, the total accounting rate was $4.00 per minute, and the relevant deduction for Optus was SDR 0.175, which approximates to 25 cents, and can conveniently be treated as 25 cents. What is at issue is whether the deduction for “origination charges”, at the inception of the agreement, was $1.79, as provided in the Tripartite Agreement (as Gilsan contends) or $2.11, being the amount which could be retained by ATT under the 1998 confidential agreement (as Optus contends). If the former was correct, Optus should have accounted to Gilsan on the basis that Optus was to receive $2.21 per minute from ATT and pass on $1.96 per minute to Gilsan; while if the latter was correct, Optus should have accounted to Gilsan on the basis that Optus was to receive $1.89 per minute from ATT and pass on $1.64 per minute to Gilsan.

32 One fact found by the primary judge, and not challenged on appeal, was that, prior to entry into this agreement, Gilsan was aware that there were confidential agreements in the industry like that entered into by ATT and Optus, and that the amount payable to Optus by ATT in respect of ATT/Optus/TVL traffic was $1.89 per minute; although, as noted above, ATT was in fact paying Optus at the rate of $2.21 per minute, pursuant to what ATT and Optus later agreed to be a mistake.

33 Although the confidential agreement between ATT and Optus for 1998 ended on 31 December 1998, no similar confidential agreement for 1999 was made until 30 September 1999. The agreement then made, which was expressed to apply from 1 January 1999 to 31 December 1999, was in relevantly similar terms, except for cl.1.5, which was as follows:

1.5 Optus official transit fee to be used by AT&T when negotiating divisions of the accounting rate with distant extraeuropean administrations is 0.35 SDR/US$0.483 per minute which applies to all traffic covered by this agreement. This transit fee can be changed from time to time by Optus by providing thirty (30) days prior written notice to AT&T.

34 The confidential agreement for 1999 ended on 31 December 1999. No similar confidential agreement was made for 2000 until 4 August 2000. In the course of negotiations for that agreement, Tony Collins of Concert (the successor to ATT) sent the following email to Optus on 15 June 2000:

Following our discussions last week, I wanted to briefly summarise our position/thoughts on both the current and proposed Transit Buy arrangements via Optus. You will not (sic) that we have proposed the new rate of US$0.08 for our Transit Buy rate via Optus for 2000, however the divisions of revenues associated with the Vanuatu stream may vary, depending on whether Optus maintain the current 1999 STP (US$0.483) or change to your new proposed STP of .44SDR/US$0.61.

Please review and confirm your acceptance on the below proposal (both CTA rate & STP to be utilised in 2000) so that we may modify our Concert/Optus agreement (Transit Buy) and send to you for signature.

Vanuatu
1998
TAR = US$4.00
AT&T = US$1.79
Optus = US$0.42 (STP)
Vanuatu = US$1.79

CTA = US$0.10

AT&T declared traffic at US$2.21. Rebate due to AT&T is US$0.32 from Optus
Total Cascade Outpayment should be US$1.89

1999
TAR = US$4.00
AT&T = US$1.7585
Optus = US$0.483 (STP)
Vanuatu = US$1.7585

CTA=US$0.10

AT&T declared traffic at US$2.21. Rebate due to AT&T is US$0.3515 from Optus
Total Cascade Outpayment should be US$1.8585

Proposal going forward for 2000
via Optus (effective 1/1/00)
TAR=US$4.00
AT&T=US$1.7585
Optus = US$0.483 (STP) assuming Optus maintain the same STP for 2000 as 1999 (rather than .44SDR or US$0.61)
Vanuatu = US$1.7585

CTA = US$0.08

35 Also on 15 June 2000, Optus sent an email to Gilsan, in the following terms:

As mentioned to keep the traffic for 2000 we have to take an extra two cent drop to US$1.8385 in place of what DP expected US$1.89 so we are down by 5.15 cents. Presume you can live with that to ensure traffic continues.

36 The confidential agreement between ATT and Optus dated 4 August 2000, and expressed to apply from 1 January 2000 to 31 December 2000, was again relevantly similar to previous confidential agreements, except that the Optus confidential rate was 8 cents per minute rather than 10 cents per minute, and cl.1.7 was in the following terms:

1.7 C&W Optus' official transit fee to be used by Concert when negotiating divisions of the accounting rate with distant administrations is 0.44 SDR/US$0.61 per minute which applies to all traffic (except Vanuatu at US0.483) covered by this agreement. This transit fee can be changed from time to time by C&W Optus by providing thirty (30) days prior written notice to Concert.

37 In March 2001, ATT accounted to Optus in respect of the months of July to December 2000, and it accounted and paid for those months at the rate of $2.21 per minute.

38 As mentioned earlier, although the Benchmark Order contemplated that USA carriers would use the three year transition from 1 January 1998 to 1 January 2001 to negotiate with terminating carriers for lower settlement rates, it seems that ATT did little if anything towards negotiating with TVL prior to January 2001. Evidence was led of communications on the Benchmark Order between January 2001 and May 2001, set out in a Schedule to this judgment, the upshot of which was that ATT determined that it would pay TVL at the rate of 19 cents per minute from 1 January 2001.

39 Prior to learning that ATT would be reducing its payments from January 2001 by reason of the Benchmark Order, Optus paid Gilsan over $1.9 million in respect of traffic in January and February 2001. However, on 21 March 2001, Optus sent the following email to Gilsan:

After having met with ATT yesterday we have been advised that they will only be declaring the minutes for the Vanuatu traffic at a zero rate from Jan 2001 onwards (pending confirmation from the FCC regarding the reduction in rate for USA originated traffic to Vanuatu). This being the case we will also be declaring the minutes for Vanuatu traffic at zero rate from Jan 2001 and will be putting in place the necessary measures to recoup the payments recently made for the Jan 2001 traffic. If you require further clarification please contact either John Bragg or Samantha Bicknell.

40 A further confidential agreement was made between ATT and Optus on 31 May 2001, for the period 1 January 2001 to 31 December 2001, providing relevantly for an official transit rate of 61 cents per minute and a confidential rate of 8 cents per minute.

41 In about July 2001, ATT accounted to Optus at the rate of 27 cents per minute, made up of 8 cents for Optus and 19 cents for TVL, in respect of the period from January 2001 onwards.

42 The amounts paid by Optus to Gilsan pursuant to the agreement between them were agreed by the parties to be as follows:

Traffic
Month Total number
of minutes
per traffic month Rate paid per minute(US$) % paid Total paid
(US$)

A B C D

Jan 99 2,805 1.64 100 4,600

Feb 99 5,211 1.64 100 8,546

Mar 99 11,099 1.64 100 18,202

Apr 99 11,049 1.64 100 18,120

May 99 37,887 1.64 100 62,135

Jun 99 52,482 1.64 100 86,070

Jul 99 66,261 1.64 100 108,668

Aug 99 51,301 1.64 100 84,134

Sep 99 53,080 1.64 100 87,051

Oct 99 66,396 1.64 100 108,889

Nov 99 48,376 1.89 100 91,431

Dec 99 43,465 1.64 100 71,283

Adjustment to reflect reduction in rate to US$1.6085 per minute as per Dance email to Pearson of 19.6.00 (TB Ref 17.110).
253,283 minutes x US$0.0315 -$7,978

Jan 00 48,850 1.5885 100 77,598

Feb 00 55,968 1.5885 100 88,905

Mar 00 377,881 1.5885 100 600,264

Apr 00 768,337 1.5885 100 1,220,503

May 00 1,401,867 1.5885 90 2,004,179

Jun 00 2,460,922 1.5885 90 3,518,257

Jul 00 2,684,165 1.5885 90 3,837,416

Aug 00 3,026,817 1.5885 90 4,327,289

Sep 00 2,762,170 1.5885 90 3,948,936

47,257 1.5885 100 75,068

Oct 00 2,666,470 1.5885 90 3,812,119

Nov 00 1,993,330 1.5885 90 2,849,764

Dec 00 2,001,440 1.5885 90 2,861,359

--------------------------------------------- -----------------------

Subtotal 20,744,886

Jan 01 1,167,976 1.5885 75 1,391,497

Feb 01 914,117 1.5885 37.5 544,528

=========================== ============== ==============

Total 22,826,979 31,898,835

43 It was also agreed between the parties that there was further ATT/Optus/TVL traffic in the months of March, April and May of 2001, amounting to about 1 million, 800,000 and 150,000 minutes respectively. However, as indicated above, Optus made no payments to Gilsan in respect of that traffic.

44 Relevantly to this appeal, the following claims were made in the proceedings.

45 Gilsan claimed against Optus that it had been underpaid (1) because Optus had paid Gilsan on the basis that the originating charges were greater than $1.79, in reliance on the confidential agreements, so that Optus had paid Gilsan at the rate of $1.64 per minute and $1.5885 per minute, when it should have paid Gilsan at the rate of at least $1.96 per minute; (2) because Optus had not paid what was due in 2001, particularly in that it paid nothing for the months of March to May; and (3) because Optus had withheld money in reliance on cl.1.6 of the agreement, when it was not entitled to do so.

46 Optus cross-claimed for recovery of amounts it had paid Gilsan for January and February 2001, on the ground that, by reason of the Benchmark Order, it did not have to pay Gilsan any more than 2 cents per minute in 2001.

DECISION OF PRIMARY JUDGE

47 These claims gave rise to three broad issues:

48 On the first issue, the primary judge found that, from the time it was made, each confidential agreement had the effect of increasing the originating charges to the amount which ATT was entitled to retain under the confidential agreement, that is, initially $2.11 and subsequently $2.1415 and $2.1615. However, the primary judge also found that, in respect of the months of 1999, 2000 and 2001 before the confidential agreement for that year was made, the originating charges were only $1.79, so that Optus had underpaid Gilsan in respect of those months.

49 On the second issue, the primary judge found that the Benchmark Order did not operate to increase the amount of the originating charges to $3.73 or any other figure, so did not justify the deduction of any further amount from the amount which Optus was required to pay Gilsan. Accordingly, he found that Optus was liable to pay Gilsan substantial amounts in respect of 2001, particularly in the months of March, April and May.

50 On the third issue, the primary judge found that Optus was entitled to withhold the amounts which it withheld under cl.1.6, on the basis that Optus claimed.

ISSUES ON APPEAL

51 Optus has appealed against the primary judge’s findings that the confidential agreements did not increase the originating charges in the months of each year prior to the entry into the confidential agreement for that year, and also against his finding on the Benchmark Order issue.

52 Gilsan has cross-appealed against the primary judge’s findings as to the effect of the confidential agreements from the time that each such agreement was made, and against his findings on the clawback issue concerning cl.1.6.

53 I will deal in turn with the following issues:

(1) The effect of each confidential agreement, when made (raised in Gilsan’s cross-appeal).
(2) The application of the Payment Formula during the months of each year before the confidential agreement for that year was made (raised in Optus’s appeal).
(3) The Benchmark Order issue (raised in Optus’s appeal).
(4) The clawback issue (raised in Gilsan’s cross-appeal).

EFFECT OF CONFIDENTIAL AGREEMENTS

Submissions

54 Mr. Slattery QC for Gilsan submitted that the primary judge was in error in that he found that “their share” in the Payment Formula meant the share of Optus, in particular because anything that could possibly be regarded as the share of Optus had to be arrived at after deducting the originating charges; whereas if “their share” was taken to refer to an amount from which deductions were to be made, as must be the case if it meant the share of Optus, the originating charges were to be deducted from it again, giving rise to a contradiction.

55 Mr. Slattery submitted that this error affected the primary judge’s consideration of the question. He submitted that what “their share” meant was Gilsan’s share, which was to be determined by making deductions from the total accounting rate in accordance with the Tripartite Agreement: this was an objective criterion, not subject to being arbitrarily reduced by Optus. It was not reasonable to interpret the Payment Formula so that what Gilsan was to receive was subject to the control of Optus: this would be inconsistent with the guarantee of cash flow certainty given by cl.1.5 of the agreement.

56 Mr. Slattery also submitted that the effect of the Tripartite Agreement could not be varied without the participation of TVL, so that the 1999, 2000 and 2001 confidential agreements, purporting to vary the transit charge up by about 6 cents and thereby to reduce TVL’s terminating charge by about 3 cents, could not affect anyone apart from ATT and Optus: that is, it could not affect TVL or Gilsan. The primary judge was in error in rejecting this contention on the basis that TVL had bargained away all its rights except for 10 cents, because the TVL/Gilsan agreement related only to Gilsan traffic, whereas the Tripartite Agreement and the confidential agreements applied to all ATT/Optus/TVL traffic.

57 Mr. Slattery submitted that the fact that it could seem commercially unrealistic for Optus to agree to pay out $1.96, as contended by Gilsan, when it received only $1.89, from which it was also supposed to receive 25 cents, was not a weighty consideration. ATT/Optus/TVL traffic was only one aspect of what was dealt with by the Optus/Gilsan agreement, which also dealt with calls through Optus to TVL from other originating carriers in the USA and from originating carriers in other countries. So that the circumstance that Gilsan was found to have known that Optus was receiving only $1.89 from ATT was not a decisive factor.

Decision

58 In my opinion, although the language of the Payment Formula is loose, the better view is that “their share” refers to Gilsan’s share, because otherwise “their share” has to be subject to deductions which include the origination charges, when on any view the share of Optus is one arrived at after deduction of origination charges. What I think the Payment Formula is saying is that Gilsan’s share of the total accounting rate is a share which is subject to deductions from the total accounting rate of the specified charges.

59 It seems common ground that the words “and the PTT share” convey that the PTT share (that is, TVL’s share) is also to be paid to Gilsan (SP), so it makes sense that the Payment Formula required Optus to pay Gilsan both Gilsan’s share (“their share”) and TVL’s share. This is in fact what happened, because of the application of cascade accounting; although I note that cl.1.2 and Schedule B suggest that Optus should pay TVL direct.

60 However, I do not think any of this materially affects the construction of the Payment Formula.

61 In my opinion, the language and circumstances amply support the primary judge’s conclusion to the effect that what was to be paid on by Optus to Gilsan was what Optus was entitled to receive from originating carriers under Optus’s agreements with them, less the Optus fee of SDR0.175 (25 cents). In circumstances where, to the knowledge of both parties, the division of total accounting rates was often governed by confidential agreements as well as agreements like the ATT/Optus/TVL Tripartite Agreement, there is no reason to give agreements such as the latter pre-eminent status and to disregard confidential agreements. The circumstance that both parties proceeded on the basis that the relevant payments from ATT to Optus at the time were $1.89 per minute further confirms this approach.

62 Accordingly, the primary judge was correct to hold that “origination … charges” in the Payment Formula extended to all amounts which an originating carrier was entitled to retain out of the total accounting rate according to its agreement or agreements with Optus.

63 On that approach, so long as the confidential agreements were effectual as between ATT and Optus, it may not matter whether or not the Tripartite Agreement was effectually amended: at most, if that agreement was not effectually amended, this could mean that TVL’s entitlement to $1.79 per minute was not reduced by the 3 cents or so which would otherwise be consequential on the raising of Optus’s official rate by about 6 cents; so that ATT would be obliged by the Tripartite Agreement to continue to pay Optus TVL’s $1.79 in addition to the Optus 10 cents or 8 cents, rather than the lesser amount that was required by the confidential agreement.

64 However, as pointed out by the primary judge, in respect of Gilsan traffic TVL had bargained away to Gilsan all but 10 cents, so any claim concerning the 3 cents deficiency would be on behalf of Gilsan; and Gilsan was by the Payment Formula subject to whatever contractual arrangements were made between ATT and Optus, that is to the confidential agreement, which as between ATT and Optus effectively reduced TVL’s termination charge by about 3 cents.

65 In any event, in my opinion Gilsan bore the onus of proof on the question whether TVL had or had not consented to its termination charge being reduced by about 3 cents from the original $1.79. Gilsan was claiming it had been underpaid, and in my opinion it had to prove the elements necessary to make out this claim. It was not proved that TVL had not so consented.

66 Accordingly, Gilsan’s cross-appeal on this issue fails.

APPLICATION OF PAYMENT FORMULA BEFORE AGREEMENTS MADE

Submissions

67 Mr. Jackman SC for Optus submitted that the primary judge was in error in holding that the retrospective operation of each confidential agreement made between ATT and Optus could not affect rights that Gilsan had against Optus that had accrued before each agreement was made, by reason of cl.1.5 of the Optus/Gilsan agreement; and that the primary judge was also in error in holding that there should not be implied an agreement between ATT and Optus that the confidential agreement of a previous year should continue in the following year until a new agreement was made. On the latter point, Mr. Jackman relied on Brambles Limited v. Wail [2002] VSCA 150, (2002) 5 VR 169 at [54]-[62]. An appeal from that case was upheld by the High Court of Australia on another point, but the only judge to deal with this point in the High Court, Callinan J, agreed with the Victorian Court Appeal: Andar Transport Pty. Limited v. Brambles Limited [2004] HCA 28, 217 CLR 424 at [11], [29], [108]-[111].

68 Mr. Slattery SC submitted that cl.1.5 shows a clear intention that Gilsan have certainty as to its revenue, month by month, unaffected by any shortfall in payments from ATT to Optus. That purpose would be defeated if the retrospectivity argument succeeded. On the question of “holding over”, the inference could not be drawn that the parties intended a previous year’s agreement to continue, because they could have provided for holding over and did not, and on the contrary continued to express a clear termination date at the end of each year. Further, the conduct of ATT in paying at the higher rate was inconsistent with such an intention.

Decision

69 The question has to be approached having regard to my decision on the previous issue, to the effect that Gilsan’s entitlement depended on what Optus was entitled to receive from ATT pursuant to Optus’s agreements with ATT.

70 In determining the effect of Optus’s agreements with ATT, it is appropriate to have regard to the commercial reality that from March 1998 to May 2001 Optus negotiated only 10 cents per minute, later reducing to 8 cents per minute, in respect of traffic under its confidential agreements with ATT.

71 Against that, however, is the circumstance that until March 2001 ATT actually paid Optus at the rate of 42 cents per minute (plus TVL’s termination charge of $1.79 per minute). That payment was later agreed by ATT and Optus to be a mistake, and it was clearly a mistake in respect of the period in each year after the confidential agreement for that year had been entered into. Further, if the payments in the earlier part of each year were not mistakes, it was a mistake not to correct them after the agreements with retrospective effect had been entered into.

72 In my opinion, having regard to the commercial reality of the circumstances, the conduct of the parties in continuing to transact business after the end of each year, until the time that a new confidential agreement was entered into for the following year, did not manifest an intention to return to the rates provided under the Tripartite Agreement, which were plainly far removed from those indicated by current commercial reality. In my opinion, if ATT and Optus had not reached agreement in each year as to the rates to apply throughout the year, but had fallen into dispute as to the terms on which business had been done, the inevitable conclusion would be that their continuing to do business manifested an intention that it be on rates agreed for the previous year unless and until some new rates were agreed.

73 There is some force in the contention that the parties continued to contract in terms providing for definite end dates and no holding over, and that ATT in fact paid at the higher rate; but in my opinion those payments were clearly made by mistake, and the considerations set out in the previous paragraph are the weightier ones. This conclusion is consistent with Brambles and Andar, and the authorities referred to in those cases.

74 So the question of retrospective effect arises only in relation to the relatively small margin by which the amounts payable to Optus were reduced by the agreements of 1999 and 2000.

75 I accept Gilsan’s argument that cl.1.5 of the Optus/Gilsan agreement gives Gilsan a right to payment in accordance with contractual arrangements prevailing at the time when that payment is to be made, that is, 45 days after the end of the calendar month in question. Thus the 1999 agreement, made on 30 September 1999, could govern the payment for the month of August 1999, but not for the month of July 1999. The 75% payment in respect of July 1999, which had to be made in mid-September 1999, thus had to be calculated at the 1998 rate. The same applies for the 75% payments in respect of January to June 1999.

76 While I accept that cl.1.5 entitles Gilsan to payment of 75% of its entitlement, calculated on the basis in force at the time payment is required, I do not think it otherwise prevents Gilsan’s entitlement being affected retrospectively by the retrospective agreements between ATT and Optus. I have held that the Payment Formula depends upon what Optus is entitled to receive under its contractual arrangements with originating carriers such ATT; and cl.1.6 contemplates that adjustments have to be made for previous months because of shortfalls in what ATT pays Optus. Accordingly, subject to the operation of cl.1.5 and cl.1.6, in my opinion Gilsan’s entitlements can be retrospectively affected by agreements between ATT and Optus, at least so long as those agreements are genuine agreements negotiated at arm’s length (and there is no suggestion of the contrary here).

77 To the extent, if any, that Optus had in fact paid Gilsan at rates in excess of those required retrospectively by the confidential agreements of 1999 and 2000, a question would arise whether it could recover amounts by which those payments exceeded 75% of the rate retrospectively established by those confidential agreements, either as money had and received or by adjustments authorised by cl.1.6.

78 Mr. Jackman accepted that the excess would not be recoverable as money paid under a mistake of existing fact, but submitted that it would be recoverable for failure of consideration: David Securities Pty. Limited v. Commonwealth Bank of Australia (1992) 175 CLR 353 at 383, Goss v. Chilcott [1996] AC 788 at 798. However, he noted that the primary judge had upheld a change of position defence in the relation to other overpayments: [2004] NSWSC 1077 at [240]-[261].

79 I am inclined to the view that the Optus/Gilsan contract does show an intention that adjustments to moneys payable in accordance with the correct application of cl.1.5 at the time of that payment are to be those authorised by cl.1.6, so that recovery as money had and received, for example for failure of consideration, is excluded by the agreement; but in any event, I think that the change of position defence would apply to adjustments not in accordance with cl.1.6. However, in my opinion cl.1.6 should not be given a narrow interpretation. I will consider this further when I come to the issue directly concerning cl.1.6. In particular, in my opinion, where ATT has made an overpayment by mistake, and then successfully recovered the amount of the overpayment, this would amount to a “refusal to make payment” of any more than the amount correctly payable in accordance with the retrospective effect of the confidential agreements. Accordingly, subject to any other limitation on cl.1.6 (to be discussed later in this judgment), overpayments by Optus could be recovered.

80 To the extent, if any, that Optus paid Gilsan less than the rates applicable at the time (that is, before retrospective affectation), Gilsan establishes a debt to that extent arising at the date for payment; and the question then would be whether the retrospective reduction of the rates extinguishes that debt. It could be said that Optus could not be better off because it breached cl.1.5 at the time than if it had complied, so that the debt would be extinguished only if payment in accordance with the agreement could have been recouped under cl.1.6. Since it would appear that the overpayment could be recouped under cl.1.6, I do not think it is necessary to pursue this further.

81 Accordingly, Optus’s appeal on this issue succeeds.

BENCHMARK ORDER

Submissions

82 Mr. Jackman referred to ss.174 and 175 of the Evidence Act 1995, which are as follows:

174 Evidence of foreign law
(1) Evidence of a statute, proclamation, treaty or act of state of a foreign country may be adduced in a proceeding by producing:
(a) a book or pamphlet, containing the statute, proclamation, treaty or act of state, that purports to have been printed by the government or official printer of the country or by the authority of the government or administration of the country, or
(b) a book or other publication, containing the statute, proclamation, treaty or act of state, that appears to the court to be a reliable source of information, or
(c) a book or pamphlet that is or would be used in the courts of the country to inform the courts about, or prove, the statute, proclamation, treaty or act of state, or
(d) a copy of the statute, proclamation, treaty or act of state that is proved to be an examined copy.
(2) A reference in this section to a statute of a foreign country includes a reference to a regulation or by-law of the country.

175 Evidence of law reports of foreign countries

83 He submitted that the Benchmark Order and its effect were proved by production of the order itself and by the law report of the 1999 decision referred to above.

84 Mr. Jackman submitted that the Benchmark Order in its terms made payments in excess of the benchmarks unlawful, relying particularly on the ordering clauses, and the statement “We declare settlement rates in excess of the relevant benchmark to be unlawful and not in the public interest”.

85 Mr. Jackman referred to the principle that Australian law would not enforce performance of a contract contrary to the law of the place of performance: Ralli Brothers v. CIA Naviera Sita y Aznar [1920] 2 KB 287. Mr. Jackman accepted that under the Tripartite Agreement (and also the confidential agreement) payment by ATT to Optus was to be made in Australia (cf. Ralli at 290), where payment of the full contract price was lawful. Accordingly, he accepted that the Benchmark Order did not make the contracts illegal and did not bring about frustration.

86 However, Mr. Jackman submitted that, as found by the primary judge, the “origination charges” referred to in the Payment Formula included all amounts that ATT was lawfully entitled to retain; and the Benchmark Order had the effect that it was unlawful for ATT to pay TVL anything in excess of 19 cents per minute in respect of telephone traffic after 1 January 2001. Accordingly, in respect of that traffic, ATT was lawfully entitled to retain the whole of the total accounting rate, less the 8 cents it agreed to pay Optus and the 19 cents which was the most it could lawfully pay to TVL.

Decision

87 In some cases, it could be necessary to prove by expert evidence that a book containing reports of judgments is a book which is or could be used in courts of the country concerned, as referred to in s.175 of the Evidence Act; but in the case of volumes of the Federal Reporter containing decisions of the United States Court of Appeals, this Court can take judicial notice that those books would be so used.

88 In my opinion, the Benchmark Order is a regulation within s.174(2) of the Evidence Act, and the 1999 case relied on by Optus establishes that it was validly made. However, this case does not decide whether the Order directly makes certain conduct unlawful, or merely establishes a regime whereby compliance with the standards it sets can be enforced. Accordingly, that is a question which has to be determined by this Court.

89 In some cases, where the procedures under ss.174 and 175 of the Evidence Act are used, there could be a question whether the presumption of continuance applies. For example, if what is proved is taxation legislation for a year prior to the year under consideration in the case, it may be that the Court would not presume that the law was the same in all its details for subsequent years. Here, there is the possibility that the effect of the Benchmark Order was changed after August 1997, or after January 1999 when the case concerning the Benchmark Order was decided. However, the correspondence that is in evidence, including 2001 correspondence from the FCC, suggests that there was no relevant change, and in my opinion the Court should proceed on that basis.

90 The first question then is whether the Benchmark Order made payments in excess of the benchmarks requirements unlawful. The parts of the report relied on by Mr. Jackman do tend to suggest that it does; but on the other hand pars.[185]-[190], and [291], set out above, suggest the contrary.

91 In my opinion, the best indication of the intention disclosed by the Benchmark Order is to be found in the last sentence of par.[190]: what the FCC says there is that, if some other arrangement achieves its goals, “we will waive enforcement of the benchmark settlement rates”. Plainly, the FCC is there contemplating that in those circumstances there could continue to be settlements in excess of the benchmark rates, but that it would permit this to happen by waiving enforcement. That presupposes, in my opinion, that the settlements would not be per se unlawful. If the FCC contemplated that the settlements would be unlawful but were to be permitted, then surely it would have to do more than merely waive enforcement: it would have to reverse the effect of the Benchmark Order that made the settlements unlawful.

92 This consideration is confirmed by the preceding discussion of procedures to be adopted for enforcement, starting with identification of foreign carriers that are reluctant to engage in meaningful progress towards negotiating settlement rates, and involving further action only after the foreign carrier has failed to respond to a US carrier’s efforts to achieve settlement rates complying with the Order.

93 As far as ATT and TVL are concerned, it appears there was no negotiation by ATT in the years contemplated by the Order for such negotiation, and no preparedness to give anything in the negotiations undertaken in 2001. The policy of the Benchmark Order would appear to contemplate compliance with ITU recommendations, so that reduction of TVL settlement rates should be accompanied by reduction of ATT originating charges; but so far as the evidence goes, ATT did not respond to suggestions to that effect from TVL. It would appear that the pre-conditions set down by the Benchmark Order for enforcement of the benchmarks were not fulfilled by ATT, which simply went ahead and broke its contracts by retaining for itself the whole of the total accounting rate, apart from 8 cents for Optus and 19 cents for TVL.

94 No basis was suggested by ATT in its 2001 correspondence, or by Optus in its submissions to this Court, why ATT should in those circumstances be entitled, to the exclusion of all other interested parties, retain a windfall of about $1.60 per minute, particularly in circumstances where Optus, to whom ATT was contractually bound, had already entered into contractual arrangements which had the effect that TVL would in fact receive no more than 10 cents per minute. I see no justification for the suggestion that ATT should retain this $1.60 per minute, in breach of contractual requirements, rather than complying with those contractual requirements when the ultimate effect would have been that TVL receive no more than 10 cents per minute.

95 Accordingly, in my opinion the Benchmark Order gave no basis on which it could be said that ATT was lawfully entitled to retain more from the total accounting rate than the amount justified by the Tripartite Agreement and the confidential agreements with Optus, both because the Benchmark Order did not itself make it unlawful for ATT to pay TVL in excess of the benchmark settlement rate, and also because the arrangements made by Optus, to whom ATT was contractually bound, already ensured that TVL did not receive in excess of this settlement rate.

96 It was not submitted by Optus that the liability of Optus to Gilsan in respect of the months of January to May 2001 was in any event limited to amounts payable under cl.1.5, because of ATT’s refusal to pay at the appropriate rates for telephone traffic in those months. Such a submission could not in any event have succeeded: the onus of proving refusal to pay under cl.1.6 lay on Optus, and Optus did not lead evidence of how much it was paid in respect of those months under the confidential agreement it later made with ATT.

97 Accordingly, the appeal of Optus concerning the Benchmark Order fails.

CLAWBACK ISSUE

98 This issue concerns the application of cl.1.6 of the Optus/Gilsan agreement in a number of circumstances.

99 It often happened that ATT declared and paid Optus for fewer minutes of traffic than were measured on Optus’s switch for the relevant month. It was common ground that this amounted to a refusal to make payment within the meaning of cl.1.6, which could be relied on by Optus to ensure that the totality that it paid out to Gilsan for that month did not exceed the amount properly referable to the minutes declared and paid for by ATT.

100 However, it also happened that ATT made a payment to Optus for a particular month, and later recouped some of that payment by declaring negative minutes in respect of that month and deducting an amount corresponding to those negative minutes from the amount otherwise payable for that later month. Gilsan’s contention was that these “clawbacks” were not refusals to make payment within cl.1.6 and could not be relied on by Optus to justify adjustments made under that clause.

101 If such clawbacks were refusals to make payment, further issues arose. First, there was the question whether the refusal must be in respect of the month for which the cl.1.6 payment was then being made, or could it be in respect of any earlier month. Second, if there was a clawback sufficiently large to exceed the cl.1.6 payment which would otherwise be made for that month, could the excess of the clawback be carried forward to be deducted from the cl.1.6 payment for a future month?

102 The primary judge decided all these issues in favour of Optus.

Submissions

103 Mr. Slattery submitted that clawbacks were not refusals to make payment for the traffic of any particular month within cl.1.6. As regards the month in respect of which the clawback was made, payment had in fact been made for the traffic of that month; and as regards the month in respect of which the clawback was claimed, the traffic for that month was being paid for subject only to an offset based on factors arising from a previous month.

104 Further, Mr. Slattery submitted, “any particular month” in cl.1.6 referred back to “each calendar month” earlier in the clause: the deductions authorised by cl.1.6 must be based on refusals to make payment for the traffic of the month in respect of which the 25% was being paid. This excluded deductions in respect of clawbacks, which were always based on claims of overpayment in respect of previous months.

105 Mr. Slattery submitted that, for the same reason, Optus could not carry forward clawbacks to the extent that they exceeded the 25%. In addition to the previous reasons, this would disrupt the risk allocation provided by cls.1.5 and 1.6, to the effect that Optus bore up to 75% of the risk of non-payment by ATT while Gilsan bore up to 25% of that risk.

106 Finally, Mr. Slattery submitted that Optus and Gilsan had agreed to delete Optus’s usual clawback provision and replace it with cl.1.6. That usual provision was:

Any subsequent adjustment due to underpayment, undercollection or other withholding by the originating carrier shall be deducted from payments to [Gilsan] when details are known.

107 Clause 1.6 should not be interpreted so as to have a similar effect to this deleted clause.

Decision

108 I accept that cl.1.6 is different from the usual clawback provision, particularly in that the latter is not limited in its application to 25% or indeed any percentage of payments in respect of any month. The question is whether this omission affects the construction of the phrase “refusing to make payment” (in that it suggests that this is narrower than “underpayment, under-collection or other withholding”), and whether it affects the construction of the words “any particular month”.

109 In the first place, in my opinion it is clear that “any particular month” is not limited to the month in respect of which the 25% payment is being made. Although, as submitted for Gilsan, the Optus/Gilsan agreement was not limited to traffic from ATT, it did contemplate just one payment in respect of all traffic in each calendar month. Accordingly, the words in cl.1.6 “deductions” and “payments that have been overpaid” (plural in both cases) suggest that each payment of 25% could be subject to a plurality of deductions arising from refusals to make payment for traffic of a plurality of months. Further, the use of the words “any particular month” rather than “that month” suggests that the reference is not limited to the month in respect of which the 25% is being paid.

110 Next, in my opinion, “refusing to make payment” should not be given a narrow construction. Gilsan is given the right to 75% which cannot be cut down, and cl.1.6 is the only contractual provision which ameliorates the effect of this on Optus. The better view is that Optus has no right to re-claim any part of the 75% on the basis of mistake or want of consideration. In my opinion, when ATT makes a payment in respect of one month and then recoups part of that payment by making a deduction from a payment for a later month, it has thereby put itself in a position of refusing to that extent to make the payment for the traffic of the former month; and in addition, when not paying in full for the traffic of a later month because it has deducted such a clawback, it has also to that extent refused to make payment for the traffic of the later month. On either approach the condition for the application of cl.1.6 is satisfied.

111 Further, I see no reason why an excess of deductions allowable under cl.1.6 over the 25% payable in respect of any one month cannot be carried forward to be applied towards deductions from the 25% payable in respect of a later month. In my opinion, this is entirely in accord with the scheme of the agreement that Gilsan have an assured cash flow to the extent of 75% of the amount payable in respect of each month, unaffected by non-payment or late payment by the original carrier, and that Optus should be able to use the other 25% to make adjustments rendered appropriate by any non-payment by originating carriers.

112 Since the omission of Optus’s usual clawback clause is explained by the 75%/25% scheme, I do not think that this omission calls for any narrower construction of cl.1.6.

113 Accordingly, Gilsan’s cross-appeal on this point fails.

CONCLUSION

114 For those reasons, in my opinion the appeal of Optus should be allowed on the holding over issue and the retrospective effect of the confidential agreements; but otherwise its appeal and the cross-appeal of Gilsan should be dismissed.

115 I direct that Optus within 28 days either bring in agreed Short Minutes dealing with both the disposition of the appeal and cross-appeal and with costs, or else submit its proposed Short Minutes and written submissions in support thereof. In the latter event, I direct that Gilsan furnish its proposed Short Minutes and written submissions in support thereof within a further 14 days.

116 McCOLL JA: I agree with Hodgson JA.

**********

SCHEDULE
BENCHMARK COMMUNICATIONS JANUARY-MAY 2001

Further to our telephone conversation on the above. I propose that we meet in mid February in Sydney to negotiate a phased reduction of the TAR during this year. TVL will be open to all suggestions and inputs with a view to achieving a solution to our mutual benefit.

We have heard rumours that the TAR reduction for the Pacific destinations would not be applied at the same time. We are concerned that if Vanuatu is targeted this would unfairly favour some "bureaus" over others with consequent fallout in the market place. We therefore look for your assurance that no retro-active TAR reduction will be applied without our mutual agreement in the forthcoming negotiations.

I would re-iterate that TVL is prepared to enter into these negotiations in good faith with a view to managing the TAR reductions to achieve ATT's goals while providing a smooth and managed transition.

As per our meeting yesterday, this is to confirm our advice that where countries are subject to the benchmark order of the FCC, and where the FCC specifically mandates enforcement of a benchmark rate for a specific benchmark country, then Concert along with the other US carriers should comply with such specific ruling.

As discussed, retroactive Accounting Rates if mandated by the FCC would have to be complied with. We would not undertake any actions which may specifically place us in breach of any FCC rulings or mandates. We await further information from New Jersey on this outcome. Historically however, when the FCC benchmark has become mandated on a destination it has been usually effective from 1/01/XX aligned with the proposed target dates under the benchmark order.

You should be able to view the list of countries which are subject to the benchmark order for 2001 in the benchmark order on the FCC Website. It is understood that some 65+ countries are listed for benchmark compliance as from 01/01/01 under the 'Lower Middle Income' economic classification (as per the FCC Benchmark Order). In the Asia Pacific Region this includes countries such as Fiji, PNG, Indonesia, Philippines, Western Samoa, Vanuatu and others.

I am writing to you regarding a regulatory matter of great importance to the future of international telecommunications -- reform of the settlement rate system. As you know, the settlement rate system has undergone dramatic changes in recent years largely as a result of the pressure of global market forces. Countries worldwide have recognized the benefits to consumers of settlement rate reform. These countries have found that reducing settlement rates to more cost-based levels benefits consumers and carriers by encouraging lower prices, which in turn stimulates demand and improves carriers' productivity and profitability.

I respectfully request your urgent assistance in lowering the settlement rate between Vanuatu and the United States so that it approaches a more cost-based level. I hope you share my view that we can achieve this goal through joint efforts that will stimulate demand for telecom services and improve productivity to the benefit of consumers in both our countries.

As you are aware, in 1997 the FCC required that U.S. carriers negotiate settlement rates at or below a specified benchmark rate by the end of a specified transition period. Both the benchmark rate and the transition period vary according to the income level of the corresponding economy. The World Bank and the ITU classify Vanuatu as a lower middle income country. Therefore, U.S. carriers are required to reach a settlement rate of U.S. $0.19 with carriers in your country for traffic settled as of January 1, 2001. The full text of the FCC's policy is on our website. “ ” as International Settlement Rates . 12 FCC Rcd. 19806 (1997).

Carriers in at least 30 lower middle income countries have already negotiated 2001 settlement rates at or below U.S. $0.19 with U.S. carriers. These countries include Botswana, Bulgaria, Costa Rica, Guatemala, Poland, and Thailand with rates of U.S. $0.19 and Luthuania (sic) and Algeria with a rate of U.S. $0.13. However, the current settlement rate between Vanuatu and the United States is substantially above these rates at $2.00. As a result, U.S. carriers are not in compliance with the benchmarks policy.

To avoid the need for enforcement measures against U.S. carriers by the FCC, I ask your assistance in encouraging carriers in your country to negotiate a settlement rate of no more than U.S. $0.19 with U.S. carriers as soon as possible. If your staff have any questions concerning this matter they may call Kathryn O’Brien of my staff at (202) 418- 0439 .

Thank you for your time and attention. I look forward to working with you on this matter.

On 28 March 2001, TVL wrote to Concert as follows:

Good to speak to you yesterday. Here is my understanding of the points raised.

1. I will travel to Sydney on 9th April for discussions on the 10th/11th April regarding the ATT/Vanuatu accounting rate 2. You are still not mandated to negotiate on any rate other than the FCC benchmark rate. 3. Never-the-less you invite TVL to make a unilateral proposal that you could take back into your organization for consideration. 4. You have been advised by your NJ office not to make a proposal to Vanuatu on an acceptable accounting rate 5. You understand TVL’s desire to ensure that a reduction in accounting rate results in a reduction in the collection rate but refuse to link the two. Competitive market forces will result in a reduction in collection rate 6. TVL contends that the de-facto monopoly (audiotex) will mean that no collection rate reduction will naturally occur. The difference in accounting rates and collection rates for Pacific Island countries illustrates this. 7. TVL contends that a reduction in the accounting rate without a corresponding reduction in the collection rate would unfairly benefit ATT. 8. The FCC and Concert are raising letters regarding the accounting rate. You do not know the content of these letters.

It is our understanding from NY lawyers that the FCC would only become involved if a US carrier makes a complaint to the FCC. Has a complaint been made, on what basis and by whom? In such a case there is a timeframe allowed by the FCC for the overseas carrier to respond and give information. TVL would avail itself of this opportunity.

It is also our understanding that it is incumbent on the domestic (i.e. US) carrier to demonstrate that good-faith negotiations were tried but failed. We do not feel that this is the case. TVL is willing and prepared to negotiate with a view to achieving what we perceive is the ultimate goal of the FCC - the reduction in collection rates. We are prepared to negotiate a reduction in the accounting rate. This must result in a reduction in the collection rate and we therefore propose two scenarios: -
a) A linked reduction - whereby accounting rate and collection rate reductions are made near-simultaneously
b) A trial reduction - whereby a smaller reduction is made and the collection rate is observed. Following a fall in the collection rate - further reductions are negotiated.

We asked you for a contact point in your organization to discuss collection rates - we note that you were unable to find such a contact.

I would point out that the current collection rate from Vanuatu to ATT is US$2.04 per minute but from ATT to Vanuatu is US$5.40 per minute.

On 19 April 2001, the responsible Minister of Vanuatu wrote to FCC as follows:

Thank you for your letter to the Honourable Henry Taga. I have recently taken up the position of Minister of Public Utilities and Infrastructure.

I have discussed the matter with Telecom Vanuatu Ltd and have the following points to make.

Despite a higher collection rate in the USA ($5.40) for calls to Vanuatu than in Vanuatu (approx. $2.50) for calls to the USA there is significantly more traffic from the USA to Vanuatu than vice versa. While we accept that in most cases a lower settlement rate will encourage lower prices and help profitability of the overseas carrier – it clearly will not be so in this case.

It seems that ATT will not link the issue of collection rates and settlement rates, arguing that natural market forces will facilitate this. I would draw your attention to the case of our neighbour Tuvalu – the accounting rate was reduced to $3.00 and the collection rate increased to a massive $8.95 per minute!

On the issue of retroactive implementation of the settlement rate – TVL assert that ATT have actively encouraged traffic at the existing accounting rates. If a retroactive adjustment takes place this will amount to nothing more than profiteering by the domestic carrier unless a corresponding refund is made to the customers – a scenario we find somewhat unlikely.

Despite these objections TVL have initiated negotiations with ATT with a view to achieving the FCC benchmark rate by the end of 2001. We look for your support in ensuring that these substantial reductions result in a corresponding drop in the collection rate from the USA to Vanuatu by ATT.

This will benefit both the USA and Vanuatu by fostering trade and business links between our respective countries. We await ATT’s response to TVL’s constructive proposals.

I have asked the Managing Director of TVL to contact you directly to explain Vanuatu’s difficulties and position in this matter.

On 1 May 2001, Concert wrote to TVL as follows:

Vanuatu is classified by the World Bank and the ITU as a Lower-Middle Income economy (per capita GDP $726-2,895), and Concert is therefore required by the FCC Benchmark Order of 1997 to negotiate settlement rates at or below US$0.19 with TVL - Vanuatu, effective as of January 1, 2001.

On 22 May 2001, Concert wrote to TVL as follows:

Thank you for calling us to discuss Telecom Vanuatu’s concerns on the application of the FCC Benchmark rate to Vanuatu in 2001. We appreciate the quandary of your circumstances, but hope you can understand our position and obligation to pay at the benchmark rate in order to be in compliance with the 1997 FCC Benchmark Order.

Feb 14, 2001 – Martin Chin of Concert met with TVL (Rick Hall) in Sydney Australia. TVL was advised that if the FCC were to impose a benchmark rate for Vanuatu, Concert would have to comply with such an order. Concert did invite Rick Hall to provide an accounting rate reduction proposal for review at Concert HQ.

Concert HQ confirmed that the Benchmark Rate is applicable to Vanuatu in 2001. During calls with Optus and TVL (exact dates not recorded), Concert Australia relayed the message that Concert is required to comply with the Benchmark in regards to Vanuatu.

March 21, 2001 – Martin Chin e-mailed to Optus a clarification of the FCC Benchmark rates, indicating that the Benchmark rate would apply to Vanuatu. This was in response to a query from Optus.

March 28, 2001 – FCC Letter to Vanuatu Telecoms Minister re: Benchmark rate and effective date sent with a copy to TVL.

March 30, 2001 – Concern HQ (Eva Ting) sent letter to Rick Hall in Vanuatu, detailing the FCC Benchmark requirements and rates for Vanuatu. Copy to Optus.

April 11, 2001 – Rick Hall met with Concert (Martin Chin) in Sydney to discuss how to get around the Benchmark Order. Martin stressed very strongly that there was no way to get around the Benchmark rate or the Benchmark effective date.

Martin Chin advised TVL that the official Concert Benchmark Notification will be sent from Concert Route Management and TVL’s proposal would not be reviewed, given its non-compliance with the FCC Order.

May 1, 2001 - Concert (Evan Ting) sent letter to TVL with copy to Optus indicating that until agreement at benchmark rate is signed, Concert will settle an interim rate of $0.19 with TVL, effective as of January 1, 2001.

Vanuatu has also been specifically listed in Appendix C of the 1997 FCC Benchmark Order when it was originally issued. From the beginning, C&W has also been vocal in its opposition to the application of the order on its operations worldwide, which would indicate that C&W and its subsidiary companies are aware of the order and the countries it would impact.

As you also may be aware, the accepted industry understanding is that settlement payments are made to offset and compensate for the use of each other’s network to terminate calls, and are not linked to revenue sharing arrangements or subsidies of other costs incurred by the terminating carrier. Other than payments for cost termination on each other’s network, any other type of payments that are not cost-justified would set an unfortunate precedent and be difficult for Concert to justify on a legal and financial basis.

We sincerely regret the dilemma of your situation, but Concert has made its best efforts to communicate and negotiate with TVL as required by the FCC.

**********

05/07/2006 - Coversheet - Paragraph(s) Correction to barrister's name

CITATION:	Optus Networks Pty. Limited v. Gilsan (International) Limited [2006] NSWCA 171 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	29, 30, 31 May and 1 June 2006
JUDGMENT DATE:	5 July 2006
JUDGMENT OF:	Beazley JA at 1; Hodgson JA at 2; McColl JA at 116
DECISION:	The appeal of Optus should be allowed on the holding over issue and the retrospective effect of the confidential agreements; but otherwise its appeal and the cross-appeal of Gilsan should be dismissed.; Ordered that Short Minutes be brought in dealing with disposition of appeal and cross-appeal and with costs.
CATCHWORDS:	CONTRACT - Construction of formula determining amount of payments - Implication as to terms on which business transacted after end of contractual period - Construction of term providing for adjustment of payments - EVIDENCE - Proof of law of foreign country without calling expert - Judicial notice as to whether books would be used in court of that country - Application of presumption of continuance.
LEGISLATION CITED:	Evidence Act 1995 ss.174, 175
CASES CITED:	Andar Transport Pty. Limited v. Brambles Limited [2004] HCA 28, 217 CLR 424 Brambles Limited v. Wail [2002] VSCA 150, (2002) 5 VR 169 Cable & Wireless PLC v. Federal Communications Commission, 12 January 1999 (166 Federal Reporter, 3rd Series, 1224) David Securities Pty. Limited v. Commonwealth Bank of Australia (1992) 175 CLR 353 Goss v. Chilcott [1996] AC 788 Ralli Brothers v. CIA Naviera Sita y Aznar [1920] 2 KB 287
PARTIES:	Optus Networks Pty. Ltd. - appellant Gilsan (International) Limited - respondent
FILE NUMBER(S):	CA 40656/05
COUNSEL:	Mr. I.M. Jackman SC with Mr. A.S. Bell and Mr. Free for appellant Mr. M.J. Slattery QC with Mr. F. Kunc for respondent
SOLICITORS:	Gilbert & Tobin, Sydney for appellant Gadens Lawyers, Sydney for respondent
LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	SC50056/02
LOWER COURT JUDICIAL OFFICER:	McDougall J
LOWER COURT DATE OF DECISION:	26 November 2004 11 February 2005 3 June 2005
LOWER COURT MEDIUM NEUTRAL CITATION:	[2004] NSWSC 1077 [2005] NSWSC 38 [2005] NSWSC 518

Cook Islands	+682 6XXXX
Diego Garcia	+246 5XXX
Fiji	+679 13XXXX
Hong Kong	+852 17 NXXXXX (where N=2&4)
Niue	+674 N XXX (where N=2,5,6,7,8,9)
Norfolk Island	+673 3N XXXX (where N=5,6,7)
Maldives	+960 95 XXXX
PNG	+675 20XXXXX
Sakhalin Island	+750 440 XXXXX
Seychelles	+248 20 XXXX
Soloman Island	+677 N XXXX (where N=1&8)
Tuvalu	+688 N XXXX (where N=6,7,8)
Vanuatu	+678 XXXX

Traffic Month	Total number of minutes per traffic month	Rate paid per minute(US$)	% paid	Total paid (US$)
A	B	C	D
Jan 99	2,805	1.64	100	4,600
Feb 99	5,211	1.64	100	8,546
Mar 99	11,099	1.64	100	18,202
Apr 99	11,049	1.64	100	18,120
May 99	37,887	1.64	100	62,135
Jun 99	52,482	1.64	100	86,070
Jul 99	66,261	1.64	100	108,668
Aug 99	51,301	1.64	100	84,134
Sep 99	53,080	1.64	100	87,051
Oct 99	66,396	1.64	100	108,889
Nov 99	48,376	1.89	100	91,431
Dec 99	43,465	1.64	100	71,283
Adjustment to reflect reduction in rate to US$1.6085 per minute as per Dance email to Pearson of 19.6.00 (TB Ref 17.110). 253,283 minutes x US$0.0315	-$7,978
Jan 00	48,850	1.5885	100	77,598
Feb 00	55,968	1.5885	100	88,905
Mar 00	377,881	1.5885	100	600,264
Apr 00	768,337	1.5885	100	1,220,503
May 00	1,401,867	1.5885	90	2,004,179
Jun 00	2,460,922	1.5885	90	3,518,257
Jul 00	2,684,165	1.5885	90	3,837,416
Aug 00	3,026,817	1.5885	90	4,327,289
Sep 00	2,762,170	1.5885	90	3,948,936
47,257	1.5885	100	75,068
Oct 00	2,666,470	1.5885	90	3,812,119
Nov 00	1,993,330	1.5885	90	2,849,764
Dec 00	2,001,440	1.5885	90	2,861,359
---------------------------------------------	-----------------------
Subtotal	20,744,886
Jan 01	1,167,976	1.5885	75	1,391,497
Feb 01	914,117	1.5885	37.5	544,528
===========================	==============	==============
Total	22,826,979	31,898,835