Springfield City Group Pty Ltd v Pipe Networks Pty Ltd - [2023] QCA 172

SUPREME COURT OF QUEENSLAND

CITATION:

Springfield City Group Pty Ltd v Pipe Networks Pty Ltd [2023] QCA 172

PARTIES:

SPRINGFIELD CITY GROUP PTY LTD
ACN 055 714 531
(appellant)
v
PIPE NETWORKS PTY LTD
ACN 099 104 122
(respondent)

FILE NO/S:

Appeal No 15888 of 2022
SC No 2798 of 2016

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane – [2022] QSC 255 (Bond JA)

DELIVERED ON:

25 August 2023

DELIVERED AT:

Brisbane

HEARING DATE:

7 June 2023; 8 June 2023

JUDGES:

Bowskill CJ and Morrison and Flanagan JJA

ORDERS:

1. The appeal be dismissed.

2. The appellant pay the respondent’s costs of the appeal.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – IMPLIED TERMS – GENERALLY – where the appellant contracted with the respondent – where the appellant agreed to finance the construction of a fibre optic cable network between Brisbane and Springfield – where the respondent constructed, operated and maintained that network for the appellant – where the respondent installed their own fibre optic cable network in the pits and conduits which accommodate the appellant’s network – where the appellant contends that the respondent must be regarded as contractually constrained against constructing and operating that duplicate network either as a matter of the proper construction of the contract or by the implication of relevant terms – whether the respondent breached the contract

TORTS – INTERFERENCE WITH PROPERTY – INTERFERENCE WITH GOODS – TRESPASS TO GOODS – OTHER MATTERS – where the respondent constructed, operated and maintained a fibre optic cable network for the appellant – where in so doing, the respondent installed their own fibre optic cable network in the pits and conduits which accommodate the appellant’s network – where the appellant contends that it owns a part of the infrastructure, known as the Landcorp infrastructure, which accommodates the appellant’s network – where the appellant contends that the respondent committed a trespass and conversion by accessing and laying the duplicate network in the Landcorp infrastructure – whether the appellant has any rights in relation to the Landcorp infrastructure that would support a trespass or conversion case – whether the respondent committed a trespass or conversion

TORTS – INTERFERENCE WITH PROPERTY – INTERFERENCE WITH GOODS – CONVERSION AND DETINUE – CONVERSION – OTHER PARTICULAR CASES – where the respondent constructed, operated and maintained a fibre optic cable network for the appellant – where in so doing, the respondent installed their own fibre optic cable network in the pits and conduits which accommodate the appellant’s network – where the appellant contends that, during the installation of the duplicate network or at some later time, the respondent’s independent contractors spliced into particular fibres of cable which should be regarded as the appellant’s – where the appellant contends that the respondent specifically instructed its independent contractors to perform that splicing – whether the respondent converted the relevant fibres by using them

Telecommunications Act 1997 (Cth), s 7, s 42
Trade Practices Act 1974 (Cth), s 4D(2)

Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104, cited
Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420; [2011] NSWCA 342, cited
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25, cited
Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; [1982] HCA 24, considered
Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389, cited
Commonwealth Bank of Australia v Barker (2014) 253 CLR 169; [2014] HCA 32, cited
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12, cited
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, cited
Fouldes v Willoughby (1841) 8 M & W 540; [1841] EngR 735, cited
Grocon Constructors (Victoria) Pty Ltdv APN DF2 Project 2 Pty Ltd [2015] VSCA 190, considered
H Lundbeck A/S v Sandoz Pty Ltd (2022) 96 ALJR 208; [2022] HCA 4, cited
Hollis v Vabu Pty Ltd (2001) 207 CLR 21; [2001] HCA 44, cited
Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (2023) 97 ALJR 194; [2023] HCA 6, distinguished
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37, cited
Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204; [1946] HCA 46, followed
Pilbara Iron Ore Pty Ltd v Ammon [2020] WASCA 92, cited
Realestate.com.au Pty Ltd v Hardingham (2022) 97 ALJR 40; [2022] HCA 39, cited
Rendell v Associated Finance Pty Ltd [1957] VR 604; [1957] VicRp 88, distinguished
Re Ronim Pty Ltd [1999] 2 Qd R 172; [1998] QCA 444, cited
Slaveski v Victoria [2010] VSC 441, cited
Springfield City Group Pty Ltd v Pipe Networks Pty Ltd [2022] QSC 255, related
Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 161; [2006] HCA 19, cited
Westpac Banking Corporation v Hughes [2012] 1 Qd R 581; [2011] QCA 42, cited

COUNSEL:

J C Sheahan KC and G J Handran KC, with W LeMass, for the appellant
S W Couper KC and D P de Jersey KC for the respondent

SOLICITORS:

McBride Legal for the appellant
RBG Lawyers for the respondent

THE COURT: The appellant, SLC, is the owner and developer of an urban area in south-east Queensland, known as Springfield.
The respondent, PIPE, carries on the business of providing installation and maintenance services concerned with telecommunications infrastructure, fibre optic networks, and internet exchange products and services.
PIPE is a licensed carrier pursuant to Part 3 of the Telecommunications Act 1997 (Cth) (Telecommunications Act).
In late 2004 and 2005, representatives of SLC and PIPE held discussions and exchanged documents, including proposals, for the installation of a fibre optic network between the Brisbane CBD and the Springfield CBD.
PIPE had initially proposed that it would also construct a data centre in Springfield. A data centre is a place used to house the infrastructure needed to service modern business computing requirements.[1] This aspect of PIPE’s proposal did not proceed, and the “Polaris Data Centre”, as it became known, was constructed by others.[2]
[1]Springfield City Group Pty Ltd v Pipe Networks Pty Ltd [2022] QSC 255 at [6] (Reasons).
[2]Reasons, [10].
The learned primary judge explained fibre optic cabling as follows:[3]
“Fibre optic or ‘dark fibre’ cabling is comprised of multiple individual strands of glass fibre ‘cores’. Each individual core provides the transmission medium for data in the form of light encoded with digital information. Each core is comprised of a single glass fibre, cladding to contain the light, and a protective coating. A fibre optic cable is comprised of multiple individual fibres or cores, typically grouped in multiples of 12 within tubing, which tubed groups are then contained within a sheath. Thus, a single fibre optic cable might contain 72, 144, or 216 cores within a single sheath, and would be referred to as a 72f, 144f, or 216f cable.”
[3]Reasons, [7].
On 7 November 2005, the parties entered into two written agreements, the IRU Agreement and the Wholesale Fibre Service Agreement (WFS Agreement).
By the IRU Agreement, SLC agreed to finance the construction by PIPE of a fibre optic cable network between Brisbane and Springfield. “IRU” was an acronym which, although not specifically defined by the terms of the IRU Agreement, was construed by the primary judge as a reference to “Indefeasible Right to Use”.[4] His Honour described the general nature of the IRU Agreement as follows:[5]
“The IRU Agreement was a long-term contract the evident goal of which was that SLC would obtain a guaranteed ability to use a 72-core fibre optic capacity in a fibre optic cabling network between Springfield and the Brisbane CBD for at least 15 years, but possibly as long as 30 years.”
[4]Reasons, [144].
[5]Reasons, [10].
The WFS Agreement sets out the terms on which SLC agreed to supply, and PIPE agreed to acquire, Individual Fibre Services[6] over the fibre optic cable network the subject of the IRU Agreement.[7]
[6]An “Individual Fibre Service (or IFS)” is defined by cl 1.1 of the WFS Agreement as the provision of fibre optic capacity over a single core of the Network and between each of the Network Access Points (which were identified physical points in Springfield and in Brisbane and which formed the network boundaries of each IFS).
[7]Reasons, [187].
The IRU Agreement and the WFS Agreement cross-refer to each other, and entry into the WFS Agreement was a condition precedent to completion of the IRU Agreement.
Commencing in about late 2005, pursuant to the IRU Agreement and WFS Agreement, PIPE constructed, operated and maintained for SLC, a 72-core fibre optic cable network, along two paths (the eastern path and the western path) from the Brisbane CBD to the Springfield CBD (the Network).
Part of the Network was accommodated in infrastructure on land owned by Queensland Rail. This was known as the “On-Rail” section. It was a condition precedent to completion of the IRU Agreement that PIPE and Queensland Rail entered into a binding agreement in respect of the construction and use of the On-Rail section of the Network.[8] The other part of the Network, which was not accommodated in infrastructure on land owned by Queensland Rail, was known as the “Off-Rail” section.
[8]IRU Agreement, clause 2.1.
The construction of the Network occurred in two phases, Phase One and Phase Two. By about February 2006, Phase One, which was defined as the western leg of the Network,[9] was constructed and connected to the part of the University of Southern Queensland campus at Springfield known as the World Knowledge Centre. The On-Rail section of Phase One, which ran from Brisbane to Goodna, involved SLC being allocated 72f of a 216f cable, with 72f being allocated to Queensland Rail and 72f being allocated to PIPE.
[9]IRU Agreement, clause 1.1.
There was also an Off-Rail section of Phase One from Goodna to Springfield which involved a single 72f cable.
For the section of the eastern path from Brisbane to Hillcrest, the original 72f used for the Network had been part of a 144f cable. This cable had been installed in conduit owned by Telstra and was originally part of an existing network. Of the 144f cable, 72f was allocated to SLC and the remaining 72f was allocated to PIPE.[10]
[10]Reasons, [233].
Subsequent to Phase One being constructed, a decision was made by SLC to relocate the western path via an alternative route within the Springfield CBD so that the Network connected to the Polaris Data Centre instead of to the World Knowledge Centre. This relocation was to be completed by, in, or about 2008.
The primary judge explained the relocation of the Network as follows:[11]
“Between late 2007 and early 2008, SLC caused civil works to be carried out by other contractors by which Sinnathamby Boulevard was extended to the Polaris Data Centre. During the performance of those civil works, SLC caused those other contractors to install telecommunications pits and 100mm pipe conduit (the Landcorp infrastructure) below ground and on either side of the pathways leading into the Polaris Data Centre…”
[11]Reasons, [230].
His Honour further explained:[12]
“The installation of 72f cable into the Landcorp infrastructure required:
(a)the relocation of the Springfield end of the Phase One pathway from its initial end point in the World Knowledge Centre to the final end point in the Polaris Data Centre; and
(b)the completion of the Springfield end of the Phase Two pathway in such a way that it connected up to the Polaris Data Centre.”
[12]Reasons, [232].
Construction of the Network was completed by, in, or about 2008, at which time both the eastern and western paths terminated at the Polaris Data Centre at Springfield.
At some unspecified time before July 2009, PIPE decided to install its own fibre optic cable network in the same pits and conduit as those which accommodate the Network. PIPE’s intention was to supply access to its own fibre optic network to persons wishing to have access for the purpose of using that network between Brisbane and Springfield. The primary judge referred to PIPE’s network as the “Duplicate Network”.
The Duplicate Network, however, was not literally a duplicate of the Network. As explained by the primary judge, the Duplicate Network was comprised of 216f cable whereas the Network was comprised of 72f cable. Further, the Duplicate Network did not involve any hauling of new cable along the western path of the Network north of Goodna or the eastern path of the Network north of Hillcrest. This was because, as outlined above, PIPE had already been allocated 72f of the 216f cable for the On-Rail section of Phase One from Brisbane to Goodna. It had also been allocated 72f of the 144f cable which had been installed in Telstra’s conduit for the section of the eastern path from Brisbane to Hillcrest.[13]
[13]Reasons, [261], [220], [223].
In about November 2009, PIPE, through independent contractors, commenced and completed the installation of the 216f cables along the eastern and western paths of the Network.[14]
[14]Reasons, [256].
This not only involved PIPE accessing the Landcorp infrastructure, but also resulted in independent contractors on 19 occasions splicing fibres of the 216f Duplicate Network cable into fibres of the existing 72f Network cable which SLC either owned or had an Indefeasible Right to Use. It remains unclear whether that splicing occurred during the original installation of the Duplicate Network or at some time thereafter.
In 2011, SLC discovered that PIPE had underpaid it approximately $488,000 in respect of revenue generated by the Network. In August 2011, Strategic Directions,[15] on behalf of SLC, commissioned a cable and service audit of the Network. As found by the primary judge, this audit led not only to identification of the billing discrepancy but also to SLC discovering that PIPE had installed the Duplicate Network in the pits and conduit where the Network was installed. It appeared that PIPE, since August 2009, had been connecting customers to the Duplicate Network instead of to the Network.[16]
[15]SLC had previously engaged The Strategic Directions Group Pty Ltd (Strategic Directions) as a consultant to develop an Information and Communications Technology masterplan: Reasons, [3].
[16]Reasons, [294].
SLC sued PIPE, relevantly for damages for breach of contract, trespass and conversion. These claims, as well as others, were dismissed by the primary judge.
This appeal raises for consideration the following four issues:
1.   Did the primary judge err by finding that it was not a term of the IRU Agreement (either as a matter of construction or implied) that PIPE would not use or occupy any of the facilities (including the pits and conduit), or the space available within the conduit housing in relation to the Off-Rail section of the Network, because those facilities were, and that space was, to be available for request by SLC to upgrade the Fibre Capacity of the Network pursuant to clause 10.2 of the IRU? (Issue 1: The alleged Non-Occupation Term);[17]
2.   Did the primary judge err in finding that it was not a term of the IRU Agreement and WFS Agreement (either as a matter of construction or implied) that PIPE would not compete with the Network or enable its associates and related entities to compete with the Network at all or, alternatively, compete with the Network by using any of the facilities (including the pits and conduit) relating to the Network? (Issue 2: The alleged Non-Compete Term);[18]
3.   Did the primary judge err in dismissing SLC’s claim for damages for trespass in relation to PIPE installing part of the Duplicate Network in the Landcorp infrastructure? More specifically, did the primary judge err in concluding that the Landcorp infrastructure was subject to the IRU Agreement and WFS Agreement and the division of ownership rights contemplated by those agreements? (Issue 3: The ownership of the Landcorp infrastructure);[19] and
4.   Did the primary judge err in dismissing SLC’s claim for damages for trespass and conversion in relation to PIPE’s use of SLC’s fibre capacity? (Issue 4: PIPE’s use of SLC’s fibre capacity).[20]
[17]Grounds 4 and 5 of the Notice of Appeal; Fifth further amended statement of claim, paragraph 2QAA; RB 187.
[18]Grounds 6 and 7 of the Notice of Appeal; Fifth further amended statement of claim, paragraph 2QAAA; RB 187.
[19]Grounds 9 and 10 of the Notice of Appeal.
[20]Grounds 8, 11 and 12 of the Notice of Appeal.
The relevant clauses of the IRU Agreement
The primary judge’s explanation of the relevant clauses of the IRU Agreement is not contentious and appears at [144] to [186] of the Reasons.
The Recitals set out the background to the IRU Agreement:
“A PIPE holds a Carrier Licence and is a CSP.
BPIPE has entered into arrangements for the construction, operation and maintenance of the Network.
CSLC has agreed to finance the cost of construction of the Network, subject to the terms of this agreement.
DSubject to the terms of this agreement, SLC will own the fibre optic cable in the Off-Rail section of the Network and PIPE will own all the infrastructure relating to the Off-Rail section of the Network.
EPIPE has an exclusive right to use, and grant sub-rights to use, the On-Rail sections of the Network and agrees to grant SLC an Indefeasible Right to Use the Fibre Capacity on the On-Rail section of the Network on the terms of this agreement.”
The capitalised terms in the Recitals are defined terms in clause 1.1. Those definitions relevantly include:
“Carrier means a carrier under the Telecommunications Act.”
“Carrier Licence means a licence of that name granted under the Telecommunications Act.”
“CSP means a carriage service provider under the Telecommunications Act.”
“C/CSP means a Carrier or CSP.”
“Non-C/CSP means a person who is neither a Carrier nor a CSP.”
“Fibre Capacity means the 72 core fibre optic capacity between the Network Access Points contained in each Phase of the Network.”
“Indefeasible Right to Use means an exclusive, indefeasible right to use.”
“Network means 72 cores of fibre optic capacity On-Rail and a 72 core fibre optic cable Off-Rail to be installed in accordance with the Network Specifications, as shown on the plan in Schedule 1.”
“Off Rail means in relation to the Network the sections which are not On-Rail.”
“On Rail means in relation to the Network the sections which are deployed on land owned by Queensland Rail.”
“Title-Relevant Element means, in relation to a Phase of the Network, the fibre optic cable in the Off-Rail Section of that Phase.”
The primary judge considered that the Recitals introduced a number of inter-related concepts.[21] First, Recitals B and C identified the principal division of roles between PIPE and SLC, namely that PIPE would arrange for the construction, operation and maintenance of the Network and SLC would finance the cost of construction.
[21]Reasons, [145]–[148].
The second concept, introduced by Recitals D and E, is the ownership and use of the On-Rail and Off-Rail sections of the Network. In relation to the Off-Rail section, SLC would own the fibre optic cable and PIPE would own all the infrastructure (including “all pits and conduits”[22]). In relation to the On-Rail section, PIPE would have an exclusive right to use, and grant sub-rights to use, that section of the Network but agreed to grant SLC an Indefeasible Right to Use the Fibre Capacity on that section.
[22]IRU Agreement, clause 4.1(d).

The third concept, introduced by Recital A, concerns regulatory compliance matters.
As mentioned, it was a condition precedent to completion of the IRU Agreement that PIPE entered into an agreement with Queensland Rail in respect of the construction and use of the On-Rail section of the Network. The agreement with Queensland Rail sought to protect SLC’s Indefeasible Right to Use the On-Rail section of the Network (granted to SLC under the IRU Agreement) in the event that an insolvency event occurred in respect of PIPE.
Clause 3 dealt with the installation and provision of the Network. Clause 3.1 contained PIPE’s obligation to install Phase One and commission the Fibre Capacity for Phase One. This was subject to payment by SLC of the Phase One Installation Charge.
Clause 3.2 expressed PIPE’s obligation to install Phase Two, to commission the Fibre Capacity for that Phase, and to make the Fibre Capacity for that Phase available to SLC. SLC was required to give PIPE a written request for the construction of Phase Two.
The written request for the construction of Phase Two triggered other requirements under clause 3.2. Clause 3.2(c)(i) provides:
“3.2 Phase Two
…
(c)If SLC requests PIPE to construct Phase Two under clause 3.2(a) or 3.2(b):
(i) PIPE will submit an order under the Wholesale Agreement to acquire from SLC two Individual Fibre Services on each Phase of the Network for a fee of $3,000 inclusive of GST per month per Individual Fibre Service with the single Restriction that PIPE may not resell the Fibre Capacity on each Individual Fibre Service; …”
Clause 4.1 granted SLC an Indefeasible Right to Use the Fibre Capacity on the Network. It provides:
“4.1 Grant of Indefeasible right to use
Subject to this agreement, by giving notice in accordance with clause 3.4(a) or clause 3.4(b), PIPE grants SLC an Indefeasible Right to Use the Fibre Capacity on the Phase specified in the notice from the date of the notice until the end of the Term on the basis that:
(a)PIPE will throughout the Term provide that Fibre Capacity in accordance with the Service Levels;
(b)SLC has exclusive use of that Fibre Capacity (including the right to resell or sub-lease the Fibre Capacity) during the Term;
(c)PIPE may intercept, without any prior or subsequent notification to SLC or to Fibre Capacity Users, communications carried over the Fibre Capacity in order to meet any lawful request or direction of a law enforcement or other agency which has powers to require interception and SLC agrees to provide all reasonable assistance to PIPE in respect of PIPE's power to intercept communications;
(d)subject to clause 5.7, SLC will own the Title-Relevant Element in each Phase and PIPE will own all the infrastructure relating to the Off-Rail section of the Network, including without limitation all pits and conduits. SLC and its appropriately skilled nominees or agents have the right, at SLC’s cost and on reasonable notice to PIPE, to access the pits and conduits at SLC’s sole risk.
(e)PIPE has an exclusive right to use, and grant sub-rights to use, the On-Rail sections of the Network and agrees to grant to SLC an Indefeasible Right to Use the Fibre Capacity on the On-Rail section of the Network on the terms of this agreement.
(f)subject to clause 4.1(d), to the fullest extent permitted by law PIPE retains all intellectual property rights and all other rights of ownership in the Network and the Network Specifications;
(g)PIPE grants SLC a royalty-free licence for the term of this agreement to use the intellectual property rights in the Network and the Network Specifications, including the right to reproduce the Network Specifications, for the sole purpose of exercising SLC’s rights under this agreement;
(h)on or before the payment to be made by SLC under clause 7.1(b) of this agreement becoming due, PIPE will deliver to SLC a letter from Queensland Rail addressed to SLC which includes an undertaking by Queensland Rail that on the occurrence of an Insolvency Event in respect of PIPE or on any other termination of the agreement between Queensland Rail and PIPE in respect of the Network, Queensland Rail must ensure that the Indefeasible Right to Use the On-Rail section of the Network granted to SLC under this agreement is maintained for the term of this agreement;
(i)PIPE undertakes not to increase the number of Network. Access Points beyond the number set out in Schedule 4; and
(j)subject to on each occasion its prior approval being given, not to be unreasonably withheld or delayed, each party grants the other party a limited licence for the term of this agreement to use its logos, brands and trade marks solely for the purpose of assisting with the resale or sub-lease of Fibre Capacity.”
The primary judge, in analysing clause 4.1, made the following six observations:[23]
[23]Reasons, [160]–[165].
“First, the clause expressed PIPE’s grant of an ‘Indefeasible Right to Use’ on particular bases. Those bases must be regarded as expressing promissory terms.
Second, ‘Indefeasible Right to Use’ was defined as ‘an exclusive, indefeasible right to use.’ Two things must be noted:
(a)First, the right conferred was only an exclusive right in relation to the ‘Fibre Capacity’, that term being defined in the limited way already mentioned, namely ‘the 72 core fibre optic capacity between the Network Access Points contained in each Phase of the Network’, with Network itself defined as ‘72 cores of fibre optic capacity On-Rail and a 72 core fibre optic cable Off-Rail to be installed in accordance with the Network Specifications, as shown on the plan in Schedule 1.’ It was plainly not expressed as an exclusive right to use the infrastructure within which the Fibre Capacity was provided.
(b)Second, the mechanism by which the right was conferred differed as between the On-Rail and the Off-Rail sections of the Network, rights to the former only capable of being conferred because PIPE had contracted with Queensland Rail for the construction and use of the On-Rail part of the Network, and obtained from Queensland Rail an exclusive right to use, and to grant sub-rights to use, that part of the Network.
Third, subject to cl 5.7, the parties agreed that ‘SLC will own the Title-Relevant Element’ in each Phase. As to this:
(a)‘Title-Relevant Element’ was defined to mean ‘in relation to a Phase of the Network, the fibre optic cable in the Off-Rail Section of that Phase’.
(b)The term was expressed in the future tense, because, first, the Title-Relevant Element had yet to be built and, second, the agreement provided that the passing of title would be conditional in some respects. Clause 5.7 provided that title to the Title-Relevant Element of each Phase of the Network would pass to SLC on payment of the final instalment of the applicable installation charge, except if PIPE had not obtained a nominated carrier declaration in respect of that element. (Ultimately, as SLC paid the requisite monies and PIPE obtained the requisite NCD, title to the Title-Relevant Element must be taken to have passed.)
(c)SLC did not own the cable in the On-Rail section of the Network. There were two reasons for that conclusion. First, the contemplated contract between PIPE and Queensland Rail justifies the assumption that either Queensland Rail or PIPE must have owned that cable. Second, cl 4.1(f) provided that ‘to the fullest extent permitted by law’ PIPE retained all other rights of ownership in the Network.
Fourth, the parties agreed in cl 4.1(d) that ‘PIPE will own all the infrastructure relating to the Off-Rail section of the Network, including without limitation all pits and conduits.’ As to this:
(a)This was consistent with the terms of Recital D, the inclusion providing the elaboration of what was within the conception of ‘infrastructure’.
(b)The term was expressed in the future tense because the infrastructure had yet to be built. Notably, the mutual promise that PIPE would ‘own’ was not conditional. Notably also, ‘ownership’ was ‘ownership’ in a real sense. That was why in the same clause it was necessary to provide that SLC had the right at its costs and upon notice to access the pits and conduits. Without that qualification, PIPE’s ownership rights would have permitted it to exclude SLC.
(c)It will be necessary to return to this obligation in the context of the eventual connection of the Network to the Polaris Data Centre via the Landcorp 100mm conduit. Would the Landcorp 100mm conduit be regarded as ‘infrastructure relating to the Off-Rail section of the Network’? If so, would the promise that PIPE would own that infrastructure extend to the Landcorp 100mm conduit?
(d)Prima facie, the right of ownership would be seen to carry with it the right to use what is owned, as one sees fit, subject to any particular limitations. One agreed limitation was that, by cl 4.1(i), PIPE undertook not to increase the number of Network Access Points beyond the number set out in Schedule 4.
Fifth, when the chapeau to cl 4.1 is read with cl 4.1(d) and cl 4.1(f), one can see that the parties had agreed that one of the bases on which SLC would obtain its Indefeasible Right to Use was that that ‘to the fullest extent permitted by law’ PIPE would retain ‘all other rights of ownership in the Network’. The clause did not define what such other rights might include. The retention of ‘all other rights’, ‘to the fullest extent permitted by law’ operate specifically to emphasise and confirm that the right of ownership was intended to carry with it the right to use what was owned, as the owner saw fit, subject to particular expressed constraints.
Sixth, it would be inconsistent with the terms of cl 4.1 to regard the exclusive, Indefeasible Right to Use conferred to SLC as extending to an exclusive indefeasible right to use the infrastructure. There was certainly a right to use the infrastructure to an extent, because the infrastructure carried the cable and there was a right to use Fibre Capacity, which could only be fulfilled by use of the cable. But there could not be any suggestion that the right to use was exclusive.”
Clause 5 concerns PIPE’s obligations, including its regulatory obligations. Clauses 5.1 and 5.2 provide:
“5.1    Regulatory – general
PIPE must:
(a)use its best endeavours to:
(i)      obtain an NCD in relation to the Title-Relevant Element of each Phase by that Phase’s RFS Date; and
(ii)     maintain that NCD for the remaining period of the Term;
(b)for each NCD that is obtained under clause 5.1 (a), and for the period that the NCD is in place, comply with all of PIPE’s Carrier obligations, including those under its Carrier Licence, in relation to each Title-Relevant Element to which the NCD applies;
(c)maintain all Authorisations necessary to:
(i)      construct the Network and otherwise to provide the Fibre Capacity to SLC for the Term of the agreement;
(ii)     own the Network, except in relation to the Title-Relevant Elements for which title is transferred to SLC under clause 5.7; and
(iii)    subject to clause 5.3, operate the Network and provide Fibre Capacity to Fibre Capacity Users over the Network, regardless of whether title to the Title-Relevant Elements has passed under clause 5.7; and
(d)subject to clause 5.3, do all things necessary in respect of the Network, including the performance of PIPE’s Carrier obligations, which are required to be done under the Telecommunications Act or as otherwise required by law.
5.2Regulatory – NCD best endeavour obligations
PIPE’s best endeavour obligations under clause 5.1(a) to acquire an NCD in relation to the Title-Relevant Element of each Phase includes an obligation:
(a)to prepare and submit to the ACMA an application and all required accompanying documents to become the nominated Carrier in relation to that Title-Relevant Element;
(b)upon the invitation of the ACMA, to make submissions in support of the NCD application or in support of the NCD not being revoked by the ACMA;
(c)to pay all application fees, annual fees, universal service obligation levies or others fees, costs or charges which PIPE incurs by reason of PIPE’s application for the NCD; and
(d)not to communicate to the ACMA a withdrawal of its consent to the NCD. To avoid doubt, such a withdrawal would be a wilful breach of clause 5.1(a).”
“NCD” is defined to mean a nominated carrier declaration of that name granted under the Telecommunications Act. In essence, a NCD is a formal declaration to the Australian Communications and Media Authority (ACMA) that a carrier is managing and maintaining telecommunications infrastructure on behalf of a third party in accordance with their carrier licence.[24]
[24]Reasons, [54].
Clause 5.3 deals with PIPE’s “CSP Obligations”. A CSP Obligation is defined as an obligation imposed on SLC by law, including under the Telecommunications Act or the Telecommunications (Consumer Protection and Service Standards) Act 1999 (Cth), by reason of SLC being or becoming a CSP (that is, a carriage service provider under the Telecommunications Act). As a general proposition, the IRU Agreement categorises such obligations as either In-scope or Out-of-scope CSP Obligations. Under clause 5.3(a), PIPE is required to perform or procure the performance of each In-scope CSP Obligation. Subject to provisions not presently relevant, PIPE has no obligation to comply with or perform Out-of-scope CSP Obligations.[25]
[25]IRU Agreement, clause 5.3(e)(i).
The primary judge considered that PIPE’s regulatory obligations informed the ownership structure established by clause 4.1. His Honour considered the regulatory regime in detail at [56] to [58] of the Reasons. In particular, reference was made to s 42 of the Telecommunications Act, which provides that owners of network units are prohibited from using the network unit, either alone or jointly with one or more other persons, to supply a carriage service to the public unless either the owner held a carrier licence itself or there was a NCD in force in relation to the network unit. It was common ground between the parties, and the primary judge accepted, that the Network was subject to s 42.[26] His Honour considered that if PIPE and SLC contracted on the basis that PIPE owned both the infrastructure and the cable, then SLC would not be an owner for the purposes of s 42 and would not be required to hold a carrier licence. SLC could therefore avoid the onerous regulatory responsibilities associated with holding such a licence. If, however, SLC wished to own both the infrastructure and the cable, it would become subject to the prohibition in s 42 and would need either its own licence or an in-force NCD.[27]
[26]Reasons, [59].
[27]Reasons, [61].
As the primary judge recognised, although PIPE would own the Network, except for the cable in the Off-Rail section, there was nevertheless a risk that SLC might be regarded as falling within the statutory definition of carrier or carrier service provider and be rendered the subject of statutory obligations. To that end, by clauses 5.1 and 5.2, the parties agreed that, to the extent permitted by law, PIPE would perform or procure the performance of such obligations.[28]
[28]Reasons, [169].
The fact that PIPE would assume as far as possible all regulatory obligations is further emphasised by clause 5.7(b) which deals with title to the Title-Relevant Element of each Phase of the Network. Title would not pass if PIPE had not obtained a NCD by the RFS Date[29] for the relevant Phase. As correctly observed by the primary judge, the effect of clause 5.7(b) was that the fibre optic cable in the Off-Rail section of the relevant Phase would not pass to SLC if PIPE had not obtained a NCD.[30]
[29]That is, the date on which the relevant Phase is “ready for service” and made available to SLC.
[30]Reasons, [174].
Clause 5.5 deals with PIPE’s maintenance obligations in respect of the Network. Clause 5.5(a) provides:
“5.5    Maintenance
(a)Subject to clauses 7.4 and 7.5, PIPE will maintain the Network throughout the Term:
(i)      in accordance with Schedule 3;
(ii)     with all due care and skill; and
(iii)     such that the Network conforms with the Network Specifications.”
Clause 5.6 addresses the design and construction risk associated with the Network. It provides:
“5.6 Design and construction risk
PIPE acknowledges that:
(a)it bears all risk in the functionality of design, and in the construction, of the Network; and
(b)SLC is relying upon the skill, knowledge and judgment of PIPE in the design and construction of the Network,
and warrants that at the Phase One RFS Date in the case of Phase One and at the Phase Two RFS Date in the case of Phase Two it has designed and will construct the Network so as to satisfy the Network Specifications.”
Clause 6 deals with the resale or sub-lease of Fibre Capacity. It provides:
“6.     Resale or sub-lease of Fibre Capacity
6.1Right to resell or sub-lease
Subject to this agreement, SLC has the right to resell or sub-lease any part or all of its Fibre Capacity to a Fibre Capacity User for a period not exceeding the Term on the terms set out in this clause 6 and the Wholesale Agreement.
6.2Access to wholesale pricing
(a)PIPE undertakes to offer Fibre Capacity Users and SLC its wholesale (Carrier) pricing in respect of connections to the Network Access Points.
(b)SLC must use its best endeavours:
(i)      to introduce PIPE to potential Fibre Capacity Users which require connection to the Network Access Points; and
(ii)     to encourage potential Fibre Capacity Users to consider the terms of an offer made by PIPE in respect of connection to the Network Access Points.
6.3Connection of Carrier Fibre Capacity Users
If requested by SLC, PIPE must connect C/CSP Fibre Capacity Users to the Network in accordance with the following principles:
(a)SLC must issue PIPE with a C/CSP connection order containing the C/CSP’s details, technical contacts, estimated completion date, service type and core counts (the services are to be provided at Network Access Points only).
(b)PIPE must liaise with the C/CSP for connection to the Network, stipulating certain minimum standards on which connection must occur. Such minimum standards must not be unreasonable, or designed to discourage the C/CSP from connecting to the Network.
(c)PIPE will carry out all work on the Network where the other C/CSP interfaces including inserting, splicing, re-sealing and racking up work at SLC’s cost. PIPE will charge SLC for such work for an amount equal to the reasonable costs incurred by PIPE to carry out the work. The other C/CSP will be responsible for all work to get its fibre optic cable to the Network Access Points and preparing it for jointing.
(d)PIPE will carry out testing from the Springfield end by requesting that the other C/CSP loop its customer end fibre transmit to receive. PIPE will make the results available to the other C/CSP.”
Both in its written submissions and oral argument before this Court in relation to the alleged Non-Compete Term, SLC emphasises its obligation under clause 6.2(b)(i) to use its best endeavours to introduce PIPE to potential Fibre Capacity Users which require connection to the Network Access Points.
Clause 6.2(b)(i) contains two defined terms. “Fibre Capacity User” is defined by clause 1.1 to mean a person (either a C/CSP or a Non-C/CSP):
“(a)to whom SLC asks PIPE to supply part of the Fibre Capacity directly;
(b)to whom SLC or PIPE resells or sub-leases part of the Fibre Capacity or allows to distribute part of the Fibre Capacity;
(c)who SLC allows to use part of the Fibre Capacity; or
(d)to whom SLC supplies any services which use or rely on part of the Fibre Capacity.”

The second defined term is “Network Access Points” which means the network access points as shown on the plan in Schedule 4. Schedule 4 contains three maps. The first map shows a network access point located in Makerston Street in the Brisbane CBD. The second map shows a network access point in Ann Street in the Brisbane CBD. The third map is headed “Network access points to be located in this general area” with the general area being the Springfield CBD. In simple terms, a Network Access Point is a physical location at which a Fibre Capacity User may connect to either end of the Network cable in order to send and receive traffic.[31]
[31]RB 1114.
Clause 6.2(b) is considered in more detail below in relation to Issue 2.
As observed by the primary judge, the IRU Agreement contemplates the possibility that SLC might during the term of the contract wish to make changes to the Fibre Capacity.[32] To that end, clause 10 provides:
[32]Reasons, [177].
“10.    Change in Fibre Capacity and Technology
10.1Notification of changes
As soon as reasonably practicable after becoming aware of any material reduction in the Fibre Capacity, PIPE must notify SLC in writing of:
(a)the extent of the reduction; and
(b)if the reduction is not of a permanent nature, the likely period during which the Fibre Capacity will be affected.
10.2Upgrade of Fibre Capacity
(a)At any time during the Term, SLC may issue a written request to PIPE (Upgrade Request Notice) to upgrade its Fibre Capacity on either Phase One or Phase Two (Upgrade).
(b)The Upgrade Request Notice must refer to Phase One or Phase Two and must specify the additional Fibre Capacity required.
(c)Within 21 days of receiving the Upgrade Request Notice, PIPE must provide SLC with written notice of the estimated costs (both for installation and any additional operation and maintenance fee) and the proposed date of delivery of the Upgrade.
(d)The parties must agree the costs and delivery timing of the Upgrade before the works required to carry out the Upgrade are commenced.
10.3Obsolescence
(a)After the Fibre Capacity is made available to SLC in accordance with clause 3.4 of this agreement, and without derogating from PIPE's obligations under clause 5, PIPE has no obligation:
(i)      to upgrade or improve that Fibre Capacity to ensure that its performance is equal to the performance of fibre capacity offered on networks other than the Network from time to time; or
(ii)     otherwise to enhance the performance of the Fibre Capacity.
(b)Notwithstanding clause 10.3(a), PIPE undertakes to notify SLC from time to time during the Term if it reasonably believes that improved or changed technology would, if implemented on the Network, enhance the performance of the Fibre Capacity.
(c)PIPE further undertakes to consult with SLC with regard to the estimated cost and timing of delivery to implement improvements or upgrades to the Network agreed under this clause 10.3.”
Clause 10 is relevant to a consideration of Issue 1, the alleged Non-Occupation Term. It is, however, convenient at this stage to record the primary judge’s observations as to the operation of clause 10:[33]
“Enforceable ‘variations’ clauses in construction contracts require the contractor to perform any directed changes to contract work in return for an alteration to the contract price assessed either by reference to agreed rates or some objective criteria. Clause 10 was not drawn in that way. It did not in terms impose an obligation on PIPE to comply with requests by SLC for upgrade or enhancement to Fibre Capacity other than by notifying SLC of what the requested work would cost and how long it would take to carry out and then attempting to reach an agreement on costs and timing. I make the following observations:
(a)Clause 10.2 permitted SLC at any time during the contract term to request an upgrade to Fibre Capacity on Phase One or Phase Two.
(b)The first obligation which the clause imposed on PIPE was the obligation to provide a written estimate of costs and delivery timing. The parties expressed their agreement that ‘[t]he parties must agree the costs and delivery timing of the Upgrade before the works required to carry out the Upgrade are commenced’. But that wording did not impose any obligation on PIPE to perform the requested upgrade works at all. The evident assumption was that unless agreement was reached on the cost and delivery time for the performance of the works, no obligation to perform the works could exist.
(c)That conclusion finds further express support on the limitation stated in cl 10.3. Once Fibre Capacity in each Phase was made available under cl 3.4 (which, with some oversimplification, means the Phase was completed by PIPE, paid for by SLC, and made available for use by [SLC]), PIPE expressly had no obligation to upgrade or improve Fibre Capacity for the purpose mentioned in cl 10.3(a)(i), or ‘otherwise to enhance the performance of the Fibre Capacity’.”
[33]Reasons, [178].
As to other clauses of the IRU Agreement, it is sufficient to note that clauses 11.2, 12.1(c), 12.2(c) and 23 seek to exclude the implication of terms into the agreement. Both clauses 12.1(c) and 12.2(c), for example, seek to exclude all terms, conditions and warranties implied into the agreement by statute or otherwise. Clause 23 provides that the agreement constitutes the entire agreement between the parties as to its subject matter.
Clause 13 contemplates the agreement having a term of 15 to 30 years.
Finally, clause 15 deals with confidentiality. By clause 15.1(a), each party agreed to keep confidential the Confidential Information (which is a term defined by clause 1.1).
The relevant clauses of the WFS Agreement
The Recitals to the WFS Agreement record:
“ASLC has an indefeasible right of use in relation to the On-Rail section of the Network, and will, under the IRU Agreement and in accordance with the terms of the IRU Agreement, either own the fibre optic cable in, or have an indefeasible right of use in relation to, the Off-Rail section of the Network.
BOn the terms of this agreement and of each Order, SLC agrees to supply and PIPE agrees to acquire Individual Fibre Services from SLC.”
As already observed, the WFS Agreement sets out the terms on which SLC agreed to supply, and PIPE agreed to acquire, Individual Fibre Services over the Network the subject of the IRU Agreement. Clause 2 of the WFS Agreement provides:
“2.     Ordering and provisioning
(a)From time to time, but not before the Effective Date, PIPE may submit an order to SLC for one or more IFSs (Order).
(b)For each Order, PIPE and SLC may negotiate:
(i)      the installation fee;
(ii)     the recurring fee, and the period (Recurring Period) to which each recurring fee applies (eg a Month, or a year);
(iii)     the Restrictions and the Restriction breach fee;
(iv)     maintenance service levels and corresponding rebates; and
(v)     the Minimum Period,
that will apply to each ordered IFS (Key Terms).
(c)If PIPE and SLC reach agreement upon the Key Terms for an Order:
(i)      SLC will confirm such agreement, and the Key Terms on which agreement was reached, by notice to PIPE; and
(ii)     SLC will supply arid PIPE will acquire each IFS comprised in the Order in accordance with the Key Terms and otherwise in accordance with this agreement and the Network Specifications.
(d)To avoid doubt:
(i)      the amount of a Key Term agreed by the parties in relation to an IFS may be ‘nil’ (for example; a nil provisioning fee, or nil Restrictions);
(ii)     SLC has no obligation to negotiate the Key Terms for, or accept, an Order submitted by PIPE.”
The primary judge noted that in accordance with clause 2(d)(ii), SLC has no obligation to accept an order submitted by PIPE. His Honour further observed:[34]
“It will be recalled that pursuant to cl 3.2 of the IRU Agreement, if SLC requested the construction of Phase Two of the Network, PIPE was obliged under the IRU Agreement to submit an order under the WFS Agreement to acquire two IFSs on each Phase of the Network for a fee of $3,000 including GST per month. Notably, SLC was not obliged to accept that offer. But apart from that requirement that such an offer be made, neither contract imposed any obligation on PIPE to order any particular number of IFSs from SLC, or on SLC to supply any particular number of IFSs to PIPE.
Indeed, as mentioned, under cl 6 of the IRU Agreement, SLC had the right to sell or sub-lease all or any of its IFSs. That right extended to include users who might be PIPE’s competitors. The unambiguous effect of the WFS Agreement was that SLC, in its absolute discretion, could exclude PIPE from using any of the IFSs in favour of third-party carriers or carriage service providers. In such circumstances, PIPE would not have the opportunity of obtaining revenue by acquiring IFSs under the WFS Agreement and using the acquired IFSs to its benefit.”
[34]Reasons, [190]–[191].
Unlike the IRU Agreement, the WFS Agreement expressly provided that it commenced on 7 November 2005 and expired 15 years later unless terminated earlier. The WFS Agreement did not contain any provision for extension of that term.
Issue 1: The alleged Non-Occupation Term
The Non-Occupation Term was pleaded by SLC as follows:[35]
[35]RB 187; Fifth further amended statement of claim, paragraph 2QAA.
“It was an implied term of the IRU that the defendant would not use or occupy any of the facilities (including the pits and conduit), or the space available within the conduit housing or in relation to the Off-Rail section of the Network because those facilities were, and that space was, to be available for requests by the plaintiff to upgrade the Fibre Capacity of the Network pursuant to clause 10.2 of the IRU.
Particulars
By reference to the whole of the IRU and the Wholesale Fibre Service Agreement, in particular the provisions referred to above, and the commercial context as known to the parties at the time the agreements were entered into as set out in paragraphs 1 to 2JA above the implied term referred to in paragraph 2QAA above:
(i)is reasonable and equitable;
(ii)is necessary to give business efficacy to the contract;
(iii)was so obvious that it went without saying;
(iv)is capable of clear expression; and
(v)does not contradict any express term of the IRU or the Wholesale Fibre Service Agreement.”
Before the primary judge, SLC contended that PIPE was not entitled to use the Network infrastructure to accommodate a competing network. SLC submitted that the space within the infrastructure was to be available to accommodate any request made by it to upgrade the Fibre Capacity of the Network pursuant to clause 10.2 of the IRU Agreement.[36]
[36]Reasons, [12], [321].
The primary judge’s reasoning in concluding that the alleged Non-Occupation Term was not a term – express or implied – in the IRU Agreement was based primarily on his Honour’s construction of clause 10.2 which is set out at [53] above.
The primary judge’s analysis, however, commenced with a more fundamental rejection of SLC’s case. The overarching difficulty for SLC, which affected not only the alleged Non-Occupation Term but also the alleged Non-Compete Term, was identified by his Honour as follows:[37]
“The first of the many problems facing SLC is that it is conceptually wrong to think of the Network as SLC’s network or of the infrastructure used by PIPE as SLC’s infrastructure. Part of the Network (known as the ‘On-Rail’ part) was accommodated in infrastructure on land owned by Queensland Rail. In that part of the Network, SLC did not even own the relevant fibre optic cable let alone the infrastructure, but had contracted only for a guaranteed right to use fibre optic capacity in cable which was owned by someone else. And in the other part of the Network (known as the ‘Off-Rail’ part) although SLC owned the cable (or at least part of the cable), the cable itself was accommodated in infrastructure (including all pits and conduits) which SLC had specifically agreed would be owned by PIPE. Indeed, subject to those provisions, SLC had agreed that PIPE retained all other rights of ownership in the Network ‘to the fullest extent permitted by law’. The evidence reveals that the infrastructure which PIPE used for the Duplicate Network was infrastructure which SLC had agreed that PIPE owned.” (footnotes omitted)
[37]Reasons, [13].
The primary judge rejected SLC’s contention that the alleged Non-Occupation Term was to be found in the language of the IRU Agreement, read as a whole and with the WFS Agreement. His Honour determined that there was nothing in the language of either agreement which supported the proposition that the IRU Agreement should be construed as containing any such term.[38]
[38]Reasons, [322].
The “real argument”, as recognised by the primary judge, was whether PIPE should be regarded as implicitly constrained against conducting itself in the way contended because so conducting itself would necessarily render impossible performance of the obligations imposed on PIPE by clause 10.2.[39] His Honour rejected this contention, relevantly, on two bases. First, as set out at [53] above, clause 10.2 does not impose any obligation on PIPE to perform any work the subject of an Upgrade Request Notice. Secondly, PIPE’s obligation under clause 10.2(c) to provide SLC with written notice of the upgrade’s estimated costs is not rendered incapable of being performed by PIPE using or occupying any of the space within the infrastructure. As the primary judge observed:[40]
“… [T]he first obligation imposed on PIPE by … clause [10.2] is the obligation to provide a written estimate of costs and delivery timing within 21 days of receipt of the notice. Obviously, that estimate of costs and time would have to be prepared by reference to whatever state of affairs existed at the time of receipt of the Upgrade Request Notice and which would affect the assessment of the costs of performing the works the subject of the notice and of the time which would be taken to perform the works. But there is no reason to think that the impugned conduct would render that obligation impossible of performance, so as to give rise to an implicit constraint on PIPE’s ability to use space in the conduit which it owned. The process of estimation would simply take into account the fact of the work which had been done by PIPE in relation to the conduits which it owned and whatever impact that work had on the proper assessment of costs and time. I make the following observations:
(a)Having regard to the defined terms used in cl. 10.2, an Upgrade Request Notice is a request to upgrade ‘Fibre Capacity’ as defined, namely ‘the 72 core fibre optic capacity between the Network Access Points contained in each Phase of the Network’.
(b)PIPE admitted that the Fibre Capacity of the Network could be upgraded by hauling additional fibre optic cable or cables and that the words ‘upgrade the Fibre Capacity of the Network’ in clause 10.2 should be construed accordingly.
(c)Let it be assumed, for the sake of analysis, that during the contract Term SLC had issued an Upgrade Request Notice that the 72-core fibre optic capacity be upgraded by requiring an additional Fibre Capacity of 720 cores. PIPE’s obligation would then be to prepare an estimate of the time and cost necessary to bring about such an upgrade to Fibre Capacity.
(d)The estimation process would require a consideration of the costs of bringing about that result which would in turn require consideration of how an additional cable might be hauled between the Network Access Points contained in each Phase of the Network.
(e)To comply with the notice, PIPE would have to work out the cost of bringing about that result, however it could be achieved. One option inevitably to be considered would be the costs of hauling the cable through the existing infrastructure (in the west (1) Queensland Rail conduit north of Goodna and (2) conduit owned by PIPE the remaining part of the path, and in the east Telstra lease conduit north of Hill Crest [sic] and conduit owned by PIPE the remaining part of the path), whatever that cost was. But, if, at the time the request was made, the requested upgraded Fibre Capacity could not be accommodated by the Queensland Rail conduit, or the Telstra lease conduit, or PIPE’s conduit (or, for some reason, was rendered more difficult and costly of performance), PIPE’s task would be to work out the time and cost of complying with the request even if it had to be performed in some other way, perhaps by installing additional conduit. Once it responded to the request by providing the estimate, it would have complied with its obligation.” (footnotes omitted)
[39]Reasons, [323].
[40]Reasons, [325].
The primary judge also rejected SLC’s contention that the alleged term should be implied in fact[41] on the basis that it did not meet the Codelfa[42] tests:[43]
“[C]ontrary to SLC’s contention, the term does not meet the Codelfa tests. In Campbell v Backoffice Investments Pty Ltd,[44] the High Court approved the observation made by Young CJ in Eq that ‘where there is an express term in a contract, it is almost impossible for the court to imply a term that operates in the same area.’[45] It is not necessary to give business efficacy to the IRU Agreement. As to the distinction between necessity and mere desirability, see Australis Media Holdings Pty Ltd v Telstra Corporation Ltd[46] discussed at [355] below. Without the implication of the term, the evident goal of the IRU Agreement (namely that SLC would obtain a guaranteed ability to use a 72-core fibre optic capacity in a fibre optic cabling network between Springfield and the Brisbane CBD for at least 15 years) would still be achieved. And if SLC wished to obtain additional fibre optic capacity, it could still do so, albeit at an appropriate cost. Further, that the IRU Agreement contained such a clause is not so obvious as to go without saying. Especially is that so in light of the contractual conferral on PIPE of ownership rights in the infrastructure. It is not immediately obvious why PIPE should have any constraint on its ability to use that which it owns in any way which it determines is to its commercial advantage, so long as it can perform what it has promised to perform.” (original footnotes)
[41]In the sense described in Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 at 185 [21].
[42]Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 404.
[43]Reasons, [330].
[44](2009) 238 CLR 304 at 358 [168] per Gummow, Hayne, Heydon and Kiefel JJ and 330 [57] per French CJ agreeing. See also Beerens v Bluescope Distribution Pty Ltd (2012) 39 VR 1 at 37 [159] per Tate JA (with whom Redlich JA agreed).
[45]Campbell v Backoffice Investments Pty Ltd (2008) 66 ACSR 359 at 450 [557].
[46](1998) 43 NSWLR 104 at 124–125.
Further, the primary judge considered that implying the alleged term would contradict clauses 11.2(b), 12.1(c) and 12.2(c) of the IRU Agreement (and their equivalents in the WFS Agreement[47]) and be otherwise inconsistent with clause 23 of the IRU Agreement (which is the entire agreement clause).[48]
[47]Namely clauses 8.1(c), 8.2(c) and 9.2(b) of the WFS Agreement.
[48]Reasons, [330]–[331].
On appeal, SLC submits that the alleged Non-Occupation Term is either an express term of the IRU Agreement (in the sense that the term was implicit in the language of the agreement construed as a whole) or a term that should be implied in fact to give the IRU Agreement business efficacy. It identifies two bases for this submission.[49]
[49]Appellant’s outline, paragraphs 74 to 80.

As to the first basis, SLC submits that a reasonable businessperson in the position of the parties would have appreciated that a second or new cable might be hauled through the On-Rail and Off-Rail sections of both legs of the Network at the end of the serviceable life of the original 72f cable (expected to be 15 years), or at any time, to increase the capacity of the Network. In this respect, SLC pleaded that on the proper construction of clause 10.2, the words “upgrade the Fibre Capacity of the Network” included hauling an additional fibre optic cable or cables in order to increase the number of cores available on the Network.[50] PIPE admitted that, if clause 10.2 was enforceable, the Fibre Capacity of the Network could be upgraded by hauling additional fibre optic cable or cables and that the words “upgrade the Fibre Capacity of the Network” in clause 10.2 should be construed accordingly.[51]
[50]RB 177; Fifth further amended statement of claim, paragraph 2L(oAB).
[51]Defence to the fifth further amended statement of claim, paragraph 4I(a)(vi).
Notably, this aspect of SLC’s submission proceeds on the assumption that PIPE would be obliged to comply with an Upgrade Request Notice. On this footing, SLC contends that the defined terms used in clause 10.2 reveal that the contemplated upgrade is one which can only be accommodated by PIPE hauling additional cable or cables through the existing conduit, and not any other conduit (which would need to be installed if the remaining space in the existing conduit had been otherwise occupied by PIPE). SLC submits that any other construction of PIPE’s alleged obligation would go beyond the natural and ordinary meaning of the language used in clause 10.2(a). As to the language of the clause, SLC emphasises the definitions of “Fibre Capacity”, “Phase One” and “Phase Two”. As already observed, Fibre Capacity means the 72 core fibre optic capacity between the Network Access Points contained in each Phase of the Network. Phase One means the western leg of the Network, marked red on the plan in Schedule 1. Phase Two means the eastern leg of the Network, marked blue on the plan in Schedule 1. Schedule 1 depicts a route for the western and eastern legs of the Network and also a schematic cross-section view of the typical Off-Rail cable installation (which is reproduced at [151](e) of the Reasons). The duct which was to encase the fibre optic cable measured 50mm in diameter.
In oral submissions, SLC also referred to an undated pre-contractual proposal from 2005 as evidence that the parties contemplated ex ante the hauling of additional cable.[52] In this proposal under the heading “End of Life Issues” is a table entitled “Network Section and End of Life Issues” which contains a column headed “Cable End of Life Issues” which contemplates in four instances that “[n]ew cable can be hauled. Two cables per right of way possible.” Two other entries in that table, however, identify that “new sub-duct may have to be laid. QR have safety concerns in doing it any other way.”
[52]TS 1-35 lines 17 – 25; RB 1105–1120.
As to the second basis, SLC submits that the existence of the alleged Non-Occupation Term follows from the contention that PIPE’s ability to access the conduit was constrained in that PIPE was not permitted to carry out work on its facilities “for any reason” outside of Planned Outage Periods. This constraint, SLC submits, is imposed by clause 5.5 of the IRU Agreement, which obliges PIPE to “maintain the Network” in accordance with Schedule 3. Item 5.1 of Schedule 3 requires that “[w]here possible, PIPE will give SLC the period of notice set out in Table 1 of Schedule 3 in relation to any Planned Outage Periods”. Relevantly, Schedule 3 defines “Planned Outage Periods” to mean:
“… the period during which PIPE, or a party on behalf of PIPE, may carry out work on its facilities, networks or systems for any reason, including arising out of or in connection with:
(a)installation of infrastructure;
(b)maintenance requirements (including Scheduled Maintenance); and
(c)infrastructure upgrades.”
It suffices to observe that insofar as the IRU Agreement obliges PIPE to comply with Schedule 3 it does so not as a freestanding promise to comply with Schedule 3 but merely as part of a promise to maintain the Network (as defined) in accordance with Schedule 3.[53] As a result, contrary to SLC’s submission, PIPE’s ability to access the conduit is constrained only when performing maintenance on the Network, and not otherwise. This second basis does not advance SLC’s position.
[53]Reasons, [154].
For the following reasons, neither does the first basis.
In essence, SLC submits that the alleged Non-Occupation Term is implicit in the language of the IRU Agreement or, alternatively, should be implied in fact, because SLC’s alleged right to have its Fibre Capacity upgraded could otherwise be rendered nugatory by PIPE installing, as it did, the Duplicate Network and effectively using any remaining space in the existing conduit.
In Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (Laundy Hotels),[54] which was relied upon by SLC, the plurality quoted with approval the following principle stated in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd:[55]
“It is well established that the terms of a commercial contract are to be understood objectively, by what a reasonable businessperson would have understood them to mean, rather than by reference to the subjectively stated intentions of the parties to the contract. In a practical sense, this requires that the reasonable businessperson be placed in the position of the parties. It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it.”
[54](2023) 97 ALJR 194 at [27].
[55](2017) 261 CLR 544 at 551 [16], citing Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656–657 [35].
In Laundy Hotels, the key provision was clause 50.1 headed “Dealings Pending Completion”. It provided:[56]
“Subject to clause 50.2, from the date of this contract until Completion, the Vendor must carry on the Business in the usual and ordinary course as regards its nature, scope and manner and repair and maintain the Assets in the same manner as repaired and maintained as at the date of this Contract and use reasonable endeavours to ensure all items on the Inventory are in good repair and in proper working order having regard to their condition at the date of this Contract, fair wear and tear excepted.” (original emphasis)
[56]Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (2023) 97 ALJR 194 at [9].
As observed by the plurality, the obligation in clause 50.1 was for the Vendor to carry on the Business from the date of the contract until the sale of the Business was complete. The “Business” was defined to be “the hotel business … which operates pursuant to the Licence”. The Licence, which was annexed as Schedule 5 to the contract, was subject to conditions imposed by the Liquor Act 2007 (NSW) and regulations. In those circumstances, the plurality accepted that clause 50.1 implicitly incorporated an inherent requirement for the Business to be carried on “in accordance with law”:[57]
“It is not necessary to do more than construe cl 50.1 in its context to conclude that the obligation on the Vendor to ‘carry on the Business in the usual and ordinary course as regards its nature, scope and manner’ incorporated an inherent requirement to do so in accordance with law. That is, the obligation imposed on the Vendor was to carry on the Business in the manner it was being conducted at the time of contract to the extent that doing so was lawful. There was no obligation (and could not have been an obligation) imposed on the Vendor to carry on the Business unlawfully. It is not necessary to have recourse to either the doctrine of implied contractual terms to impose on the Vendor an obligation to carry on the business to the extent that it was lawful, or the possible consequences of supervening illegality resulting in suspension rather than frustration of the contractual obligation imposed by cl 50.1.”
[57]Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (2023) 97 ALJR 194 at [28].
In H Lundbeck A/S v Sandoz Pty Ltd (Lundbeck),[58] Edelman J observed:
“There are ephemeral borders, to which lawyers sometimes cling, between three categories of interpretation of words in legal instruments: (i) interpretation of the meaning of express words in a clause; (ii) drawing inferences that recognise implications within a clause; and (iii) drawing inferences that recognise the implication of a new ‘term’. All three are ‘an exercise in interpretation’.[59] All three are concerned with ‘what the [instrument] actually means’.[60] And all three involve drawing inferences and recognising matters that are implied in the sense that they are not confined to the semantics of literally expressed meaning. For instance, like the latter two categories, even the first category will often involve drawing inferences from context by recognising explicatures from the express text.[61] In all three categories, context and purpose supply additional information for the meaning that combines with the literal text. By this means, the ‘implication is included in [the meaning of] what is expressed’.[62]
The distinction between the three categories can be so fine that in the same case some members of this Court have treated the interpretation exercise as falling within one category while others have treated it as falling within another category.[63] A decision that can illustrate the fine distinction is Prenn v Simmonds,[64] which was considered by Mason J in Codelfa Construction Pty Ltd v State Rail Authority (NSW).[65] As Mason J explained, the expression considered in that case, ‘profits of RTT’, was held to mean ‘the consolidated profits of the group of companies consisting of RTT and its subsidiaries’ by interpretation of the meaning of an express word – profits – having regard to surrounding circumstances. But the reasoning in Prenn v Simmonds might equally have been expressed as recognising an implication as though the word ‘consolidated’ appeared before ‘profits’ or as recognising an implied term that ‘profits of the RTT group shall be treated as profits of RTT’.
Despite the close, perhaps inseparable, association between these three categories of interpretation, it can sometimes appear as though courts are applying a different test for interpretation in each different category. Putting to one side any issue concerning whether ambiguity is required before extrinsic circumstances and context can be considered,[66] a constraint which does not arise in relation to the meaning of written documents or instruments generally,[67] a simple approach is generally taken in the category where the meaning of express words is concerned. In that category, the task of interpretation is commonly said simply to be a matter of ascertaining what would have been intended by a reasonable person in the position of the parties, with inferences about that meaning to be drawn from the information reasonably available to the parties.[68]” (original footnotes)
[58](2022) 96 ALJR 208 at 227 [93]–[95].
[59]Codelfa Construction Pty Ltd v State Rail Authority(NSW) (1982) 149 CLR 337 at 345; 56 ALJR 459; Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 at [22]; 88 ALJR 814.
[60]Attorney-General (Belize) v Belize Telecom Ltd [2009] 1 WLR 1988 at [22]; [2009] 2 All ER 1127 at 1134; Commonwealth Bank of Australia v Barker (2014) 253 CLR 169 at [22]; 88 ALJR 814.
[61]Sperber and Wilson, Relevance: Communication and Cognition, 2nd ed (1995), p 182; Carston, Thoughts and Utterances: The Pragmatics of Explicit Communication (2002), pp 116–125. And see Haugh, “The Intuitive Basis of Implicature: Relevance Theoretic Implicitness versus Gricean Implying” (2002) 12 Pragmatics 117 at 123–130.
[62]Merchant Service Guild of Australasia v Newcastle And Hunter River Steamship Co Ltd (No 1) (1913) 16 CLR 591 at 624. See also Lubrano v Gollin & Co Pty Ltd (1919) 27 CLR 113 at 118; R v Rigby (1956) 100 CLR 146 at 151; Wurridjal v Commonwealth (2009) 237 CLR 309 at [120]; 83 ALJR 399.
[63]Compare, for instance, the approaches in Lewis Construction (Engineering) Pty Ltd v SouthernElectric Authority (Qld) (1976) 50 ALJR 769 at 770–771 (Barwick CJ in dissent); at 773-775 (Gibbs J); at 777 (Stephen and Murphy JJ).
[64]Prenn v Simmonds [1971] 1 WLR 1381 at 1388; [1971] 3 All ER 237 at 243.
[65]Codelfa Construction Pty Ltd v State Rail Authority(NSW) (1982) 149 CLR 337 at 348; 56 ALJR 459.
[66]Codelfa Construction Pty Ltd v State Rail Authority(NSW) (1982) 149 CLR 337 at 352; 56 ALJR 459, considered in Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 at [17](b); Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633 at [78]–[79]; Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 at [110]; 89 ALJR 990.
[67]Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514 at [83]; 93 ALJR 582.
[68]Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at [11]; 76 ALJR 246, quoting Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912; [1998] 1 All ER 98 at 114. See also Attorney-General (Belize) v Belize Telecom Ltd [2009] 1 WLR 1988 at [16]; [2009] 2 All ER 1127 at 1132.
In Realestate.com.au Pty Ltd v Hardingham,[69] Edelman and Steward JJ stated:
“Contract terms are either expressed in words or not expressed in words. If a term is expressed in words, whether written or oral, it is called an express term. If the term is not expressed in words, then it must be a term that is implied from the circumstances, including the conduct of the parties.
As to express terms, since language is imperfect, the meaning of many express terms will include implications, such as explicatures arising from the words expressed and implicatures supplementing the words expressed: ‘language itself could not function if it did not sit atop a vast infrastructure of tacit knowledge about the world’.[70] Nevertheless, the term, as a whole, remains an express term: the implication, from the words in their context, is ‘included in and part of that which is expressed’,[71] is ‘contained in the express words of the contract’[72], or is a necessary supplement to the words of the term.
In interpreting an express term, implications derived from and ‘underlying the words’ make sense of the ‘parties’ expressed intentions, however obscure and ambiguous the language that may have been used, to give a reasonable meaning to that language if it can do so without doing complete violence to it’.[73] The process is still one of interpreting the words expressed between the parties. The term as a whole – including any implications from the words – remains an express term.
It is only when an implication is sufficiently independent of the express terms, and can be seen as the subject of an entire term, that it will be treated as an implied term. But there can be a very fine line between, on the one hand, an implication contained in an express term and, on the other hand, an implied term.[74]” (original footnotes)
[69](2022) 97 ALJR 40 at [102]–[105].
[70]Pinker, The Blank Slate: The Modern Denial of Human Nature (2002), p 210.
[71]Lubrano v Gollin & Co Pty Ltd (1919) 27 CLR 113 at 118, cited in Wurridjal v Commonwealth (2009) 237 CLR 309 at [120]; 83 ALJR 399, MZAPC v Minister for Immigration and Border Protection (2021) 95 ALJR 441 at [166]. See also Merchant Service Guild of Australasia v Newcastle and Hunter River Steamship Co Ltd (No 1) (1913) 16 CLR 591 at 624, quoted in R v Rigby (1956) 100 CLR 146 at 151, MZAPC v Minister for Immigration and Border Protection (2021) 95 ALJR 441 at [166].
[72]Carlton and United Breweries Ltd v Tooth & Co Ltd (unreported, Supreme Court, NSW, 11 June 1985) at 19; summarised in Carlton & United Breweries Ltd v Tooth & Co Ltd (1985) 6 IPR 319 at 320. See also Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at [28]; Rankin Investments (Qld) Pty Ltd v CMC Property Pty Ltd [2021] QCA 156 at [78].
[73]Whishaw v Stephens [1970] AC 508 at 517, 522; Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633 at [100].
[74]H Lundbeck A/S v Sandoz Pty Ltd (2022) 96 ALJR 208 at [93]–[94].
No error has been demonstrated concerning the primary judge’s finding that there was nothing in the language of either the IRU Agreement or the WFS Agreement which supported the proposition that the IRU Agreement should be construed as containing the alleged Non-Occupation Term as an express term. The present case is far removed, for example, from the situation considered by the High Court in Laundy Hotels. As already observed, the Business in that case was defined as one which “operates pursuant to the Licence”. That Licence was subject to conditions imposed by a legislative scheme which conferred powers on an authority to cancel or suspend licences in the event of noncompliance. By so defining the Business, the express terms of the contract exposed the centrality of the lawful operation of the Business. Indeed, “[w]ithout the Licence …, there would be no ‘Business’”.[75] The necessary consequence was that the requirement to carry on the Business in accordance with law was “inherent within the words [of clause 50.1] construed in the context of the whole contract”.[76] The present case, however, is not one where the alleged Non-Occupation Term is, to use the language of Edelman J in Lundbeck, “included in the meaning of what is expressed”. For the reasons explained at [84]–[87] below,[77] a proper construction of what is expressed in clauses 4.1(d), 10.2 and 10.3 does not support SLC’s submission that the alleged Non-Occupation Term is an express term that is implicit in the language of the IRU Agreement.
[75]Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (2023) 97 ALJR 194 at [31].
[76]Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (2023) 97 ALJR 194 at [36].
[77]These reasons are equally relevant to whether the alleged term is an express term in the sense that it is implicit in the language of the IRU Agreement.
In determining that the alleged Non-Occupation Term should not be implied in fact, the primary judge applied the relevant principles stated in Codelfa. Those principles include the requirement that the alleged term be necessary to give business efficacy to the IRU Agreement. This requirement was explained in Grocon Constructors (Victoria) Pty Ltdv APN DF2 Project 2 Pty Ltd:[78]
“The condition that an implied term ‘must be necessary to give business efficacy to the contract’ requires consideration of whether the term is necessary for the purposes of ‘giving to the transaction such efficacy as both parties must have intended that at all events it should have’, making the agreement work or avoiding an unworkable situation. Where the express terms of an agreement are sufficient to give it the business efficacy the parties intended it to have, it will not become necessary to imply additional terms. However, a term may be commercially necessary, in order for the contract to be workable in a business sense, notwithstanding that it can operate without the term.” (footnotes omitted)
[78][2015] VSCA 190 at [142]. See also Re Ronim Pty Ltd [1999] 2 Qd R 172 at [18], where the Court (de Jersey CJ, Pincus and Thomas JJA) considered that although a contract may be able to operate without the alleged implied term, the business efficacy requirement will nevertheless be satisfied where that contract could not do so “effectively” in the term’s absence.

Notwithstanding PIPE’s admissions in the RDS, the primary judge considered it necessary for SLC to prove that the fibres which were the subject of its allegation were part of the Network.[156] At trial, SLC sought to identify the fibres comprising the Network by reference to the completion packs issued by PIPE in respect of each Phase of the Network. Those completion packs listed the Network fibres by reference to their CQ number. SLC reasoned that the path of the Network fibres could then be mapped by reference to the appropriate line diagram for each CQ Number.
[156]Reasons, [421].
In finding that SLC had failed to establish the first required fact, his Honour considered that SLC’s proposed approach to identifying the Network fibres relied on two assumptions which had not been proved.[157] Those assumptions were that:[158]
“(i)‘To identify each continuous core between Brisbane to Springfield, PIPE identified and mapped each continuous path of the Network in ‘fibre line diagrams’.’ …
(ii)The fibre line diagrams were accurate and reliable as to the situation in the ground.”
[157]Reasons, [424].
[158]Reasons, [422](b).
The primary judge was not satisfied that the line diagrams accurately mapped the Network path. His Honour reasoned as follows:[159]
“True it was that PIPE had, in compliance with its disclosure obligations, disclosed each of the fibre line diagram documents on which SLC now relies. Pursuant to UCPR r 227(2) they were admissible in evidence against PIPE as relevant and being what they purported to be. But the fibre line diagrams did not on their face purport to be documents which were the outcome of such a purposive activity by PIPE as would justify the assumptions referred to in [422](b) above. So far as the fibre line diagrams were concerned there was no evidence that to identify for each continuous core between Brisbane to Springfield, PIPE had identified and mapped each continuous path of the Network in ‘fibre line diagrams’. Nor was there evidence that the documents concerned were the outcome of such a purposive activity. Nor was there evidence that the details in the documents were accurate and reliable as to the situation in the ground. SLC argued that a Jones v Dunkel inference should be drawn against PIPE because PIPE failed to call anyone to negate the inference which SLC sought to draw. But SLC had the onus of proof. The mere existence of the documents did not justify the inference which SLC sought to draw. In my view SLC’s evidence did not rise to the stage where it could be said that the inference for which SLC contended was open or that there was a case requiring an answer by PIPE. Had it reached that stage then the absence of any evidence to the contrary from PIPE’s witnesses might have been important.
The truth of the matter was that there was a Jones v Dunkel inference to be drawn, but it was one adverse to SLC. I make the following observations:
(a)The fibre line diagrams on which SLC relied, which are identified at [425] to [426], concerned the period in which the relevant hauling and splicing and labelling of cable was done by Optilinx. SLC called Mr Van Hecke of Optilinx. He was personally involved in all this work. Yet counsel for SLC did not take Mr Van Hecke to any of those documents, or seek to have him identify them, explain what they meant (or at least what they meant to the independent contractor which, on SLC’s case, must have been acting on them), or otherwise seek to support the assumptions referred to in [422](b) above. This failure was notable and unexplained. I would infer that his evidence would not have assisted SLC’s case concerning the fibre line diagrams.
(b)I reach that inference based on SLC’s failure to question Mr Van Hecke on any of these matters in chief: cf Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418.
…
I am not prepared to accept the correctness of the conclusion which SLC contends for based on its analyses of the documents because it requires me to draw inferences about the documents which I am not prepared to draw. I do not reach the requisite state of positive satisfaction …”
[159]Reasons, [427]–[429].
The primary judge considered that the inference drawn against SLC was further supported by Mr Van Hecke’s evidence in cross-examination (as set out at [163] above) and the failure by SLC’s counsel to seek clarification on the point set out at [164] above.[160]
[160]Reasons, [428].
However, as PIPE conceded in its written submissions and at the hearing of the appeal, the primary judge’s conclusion fails to appreciate that the identity of the 72 fibres comprising the Network was not in issue in the proceedings.[161] It was a matter which, between the parties inter se, was an admitted fact by virtue of the RDS.[162] It follows that the primary judge erred in concluding that SLC had failed to establish precisely which 72 fibres made up the Network.
[161]Respondent’s outline, paragraph 86; TS 1-53 lines 7 – 14.
[162]RB 400.
The issue requiring determination by this Court is whether PIPE’s use of SLC’s Fibre Capacity was intentional. This issue was not addressed by the primary judge given his Honour’s conclusion in respect of the first required fact.[163]
[163]Reasons, [430].
To make out the tort of conversion, it must be shown that the alleged tortfeasor intended to interfere or deal with the goods by exercising dominion over them.[164] As Dixon J observed in Penfolds Wines Pty Ltd v Elliott (Penfolds Wines):[165]
“An intent to do that which would deprive ‘the true owner’ of his immediate right to possession or impair it may be said to form the essential ground of the tort.”
[164]Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 at 229. See also Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420 at [124].
[165](1946) 74 CLR 204 at 229.
In Penfolds Wines, Dixon J considered that no conversion had been committed by the respondent “because, on [the respondent’s] part, there [was] no act, and no intent, inconsistent with the appellant’s right to possession and nothing to impair or destroy it”.[166] His Honour observed:[167]
“To fill the bottles with wine at the request of the person who brought them could not in itself be a conversion. It was not a use of the bottles involving any exercise of dominion over them, however transitory. There was, of course, no asportation and the older cases to the effect that an asportation of chattels for the use of the person taking them, or of a third person, may amount to a conversion can have no application. In any event, an intention cannot be imputed to the respondent of taking to himself the property in the bottles or of depriving the appellants thereof or of asserting any title therein or of denying that of the appellants. It was not an act derogating from the proprietary right of the appellant. There was no user on the footing that the respondent was owner or that the appellants had no title, in short no act of ownership.” (emphasis added)
[166]Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 at 224.
[167]Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 at 229–230.
In submitting that PIPE’s interference was intentional, SLC contends that the relevant act of conversion was PIPE’s “use” of the Network fibres. SLC submits that this act of conversion was performed by PIPE, not an independent contractor, meaning that even if an independent contractor spliced into the Network by mistake, that would not result in PIPE being excused for its conversion of SLC’s fibres.[168] SLC contends:[169]
“[W]hilst the act of conversion is ‘an intentional act or dealing with goods inconsistent with or repugnant to the rights of the owner’ (emphasis added),[170] the relevant intention is the wrongdoer’s intention to take possession (Rendell v Associated Finance Pty Ltd [1957] VR 604 at 613). For that reason, a party acting in good faith, under a mistake, can wrongly convert another person’s property (Slaveski v Victoria [2010] VSC 441 at [302]).” (original emphasis, original footnotes)
[168]Appellant’s outline in reply, paragraph 83; TS 1-54 – 1-55.
[169]Appellant’s outline in reply, paragraph 79.
[170]Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420 at [124].
This submission cannot be accepted. It misidentifies the relevant act to which the intentional aspect of the tort of conversion must attach in the present case. In circumstances where the Duplicate Network was installed by independent contractors, mere “use” of the Network fibres by PIPE is not sufficient. Without more, such “use” of the Network cannot be said to have involved any exercise of dominion over the particular fibres. For an intention to exercise dominion over the Network fibres to be imputed to PIPE, it must be shown that PIPE instructed its independent contractors to splice into the particular fibres (which in fact were SLC’s fibres).
Once the issue of intention is so understood, the decision in Rendell v Associated Finance Pty Ltd (Rendell)[171] provides no support for the position advanced by SLC and is distinguishable. Properly understood, Rendell involved an intentional act of the type discussed by Dixon J in Penfolds Wines, namely an act “which would deprive ‘the true owner’ of his immediate right to possession”. In Rendell, the Court (Lowe, O’Bryan and Barry JJ) found that the defendant company had converted the complainant’s engine when the company’s agent repossessed a truck from a third party under a hire-purchase agreement. At the time of repossession, the company was unaware that, after the third party took possession, the original engine had been substituted for an engine owned by the complainant.[172] Relying on the principle established in Fouldes v Willoughby,[173] the defendant company submitted that its agent did not know the engine in the truck was the complainant’s and, therefore, could not be presumed to have intended to exercise any dominion over it.[174] In rejecting this submission, the Court reasoned:[175]
“This principle, however, does not help the defendants in this case. On the evidence as it stands, the proper inference is that Connley, when he took possession of the motor truck, knew that it had an engine in it, and intended to repossess the whole vehicle including the engine. He intended to repossess the truck under a claim of right for the person whom he believed to be the true owner, namely the finance company. As the evidence stands, it is proper also to infer that he intended to exercise dominion over the whole truck, including its engine. It does not matter that he was mistaken as to what engine was attached to the truck or that he believed the finance company to be the owner of that engine.” (emphasis added)
[171][1957] VR 604.
[172]Rendell v Associated Finance Pty Ltd [1957] VR 604 at 613.
[173](1841) 8 M & W 540 at 548–549.
[174]Rendell v Associated Finance Pty Ltd [1957] VR 604 at 612.
[175]Rendell v Associated Finance Pty Ltd [1957] VR 604 at 612–613.
In Rendell, unlike the present case, the defendant company’s agent intended to exercise dominion over the whole truck, including its engine. Had it been proved in Rendell that the defendant company’s agent was unaware that any engine was in the truck, the Court acknowledged that “the asportation of the engine might well not [have been] a conversion for the reason that he had no intention of exercising any dominion over it”.[176] The company, by its instruction to its agent to take possession of the truck including its engine, rendered itself liable for the intentional act of its agent.[177]
[176]Rendell v Associated Finance Pty Ltd [1957] VR 604 at 613.
[177]Rendell v Associated Finance Pty Ltd [1957] VR 604 at 613.
It remains that for SLC’s trespass and conversion claims to succeed, SLC must establish that PIPE instructed its independent contractor to splice into the particular fibres (which in fact were SLC’s fibres). Both parties argued the appeal on this basis. An intentional instruction to splice into the particular fibres would be a sufficient foundation to render PIPE liable for the intentional tort.
In seeking to establish that PIPE gave such an instruction, SLC relies on the directions contained within the SOW documents for the Duplicate Network and the line diagrams that it alleges accompanied those documents. As noted at [161] above, the SOW documents purported to record the instructions given by PIPE to independent contractors to perform work “as per line diagram”. In particular, SLC relies on the fact that the line diagrams directed independent contractors to “break” splices at certain joints forming part of the Network.[178] There is no occasion, according to SLC, to “break” splices when connecting segments of a new cable; rather, segments of the new cable are spliced at particular pit locations to form a continuous connection. Therefore, a direction to “break” a splice at an existing joint is evidently a direction to break an existing connection. Together with the fact that the splicing occurred no less than 19 times (which, SLC submits, suggests some degree of intent), it is SLC’s submission that these documents give rise to an inference that PIPE instructed its independent contractors to break into joints on the Network.[179]
[178]Appellant’s outline, paragraph 139.
[179]Appellant’s outline, paragraphs 135 and 142.
The evidence does not support such a conclusion.
As the primary judge observed in the passage extracted at [162] above, the line diagrams, which were undated, were not in fact attached to the SOW documents that SLC alleges they were associated with. Accurate as the line diagrams may be, it was necessary for SLC to prove that they were associated with, and in fact accompanied, specific SOW documents. Absent such proof, an inference of the kind contended for by SLC cannot reasonably arise from, or be justified by, the mere existence of documents. In seeking to establish that the line diagrams did in fact accompany specific SOW documents, SLC relies on the fact that they were produced as consecutive documents by PIPE in compliance with its disclosure obligation.[180] While that may be so, the issue is that which was identified by the primary judge, namely that counsel for SLC did not take Mr Van Hecke (who was SLC’s witness) to the line diagrams or seek to have him identify them; explain what they meant (or at least what they meant to the independent contractor which, on SLC’s case, must have been acting on them); or identify whether the information which might be inferred from them could be regarded as a reliable record of the works which Optilinx performed in compliance with the SOW document.[181] Although Mr Van Hecke gave evidence that Optilinx’s work for PIPE declined from 2010 onwards, several of the SOW documents and line diagrams relied upon by SLC relate to splicing work which, according to the estimated date of the documents, was performed on the Duplicate Network prior to the end of 2010.[182] In such circumstances, SLC ought to have taken Mr Van Hecke to at least the line diagrams said to be associated with those SOW documents.
[180]Appellant’s outline, paragraph 138; TS 2-50 lines 36 – 50.
[181]Reasons, [267], [428](a).
[182]These include the SOW documents or line diagrams which purportedly relate to CQ5510, CQ5114, CQ5133, CQ4978, CQ5580 and CQ6027.
SLC’s failure to do so is notable in circumstances where Mr Van Hecke’s evidence in cross-examination was that PIPE gave no instruction to Optilinx to splice fibres of the 216f Duplicate Network cable into fibres of the existing 72f Network cable. Mr Van Hecke also found it difficult to imagine a rational reason why such an instruction would be given and opined that if the alleged splicing had occurred, it would have been “a mistake”. Although Mr Van Hecke could not speculate as to the work done by other contractors, there is no reason to suggest, based on his evidence, that PIPE would ever have instructed any contractor to splice into the Network. The cables were to be kept distinct,[183] and at no point did SLC identify any reason why PIPE would have needed, let alone wanted, to instruct a contractor to splice into the Network fibres.
[183]RB 2144 lines 16 – 20.
It is against that background that SLC seeks to rely on specific line diagrams, the status of which is unclear and about which SLC has asked its own witness nothing to establish that they were in fact an instruction associated with a specific SOW document. In those circumstances, no inference can be drawn regarding whether particular line diagrams were associated with particular SOW documents or whether particular line diagrams were in fact provided to contractors. That is, the mere existence of the line diagrams, without more, does not justify the inference that SLC seeks to draw.[184]
[184]Reasons, [427].
The arguments against this conclusion are unpersuasive. It is appropriate to briefly address them.
First, SLC seeks to limit the utility of Mr Van Hecke’s evidence by emphasising that he was not a “splicer”.[185] In spite of that fact, as managing director, he oversaw Optilinx’s day-to-day operations and was considered by the primary judge to be a “knowledgeable and helpful witness”.[186] In those circumstances, the fact that Mr Van Hecke was not a splicer is not a sufficient reason to discount the unequivocal responses that he gave.
[185]Appellant’s outline, paragraph 127.
[186]Reasons, [428].
Secondly, the sheer number of occasions on which PIPE admits in the RDS to using SLC’s Fibre Capacity is not evidence that the splicing could only have occurred at PIPE’s instruction. There are several plausible explanations as to how it may have occurred, at least one of which was expressly identified by Mr Van Hecke. His evidence was that a contractor “may have simply grabbed the wrong fibres”.[187] This ought to be accepted, particularly in circumstances where SLC did not take objection to the particular question, nor seek to re-examine Mr Van Hecke as to his response.
[187]RB 2144.
Finally, each of the line diagrams on which SLC relies contains a written notation at the top of the first page which states, “If the fibre number doesn’t match the fibre colour call project manager listed on SOW”.[188] In some instances, the notation goes on to include the words “before splicing/breaking”.[189] Despite being an observable reference to a SOW document, the notation itself does not assist in identifying the particular SOW document to which the line diagram relates or determining whether the line diagram is in fact that which was provided to the relevant contractor. It goes no further than, for example, the direction which appears in the SOW documents to perform work “as per line diagram”. Without more, this evidence is not sufficient to displace the unequivocal evidence of Mr Van Hecke, which was accepted by the primary judge, in circumstances where he was not asked to identify which documents were provided with a SOW document.
[188]See, for example, RB 1494.
[189]See, for example, RB 1424.
PIPE identifies that in some instances, there is no SOW document that purportedly relates to fibre circuits which are the subject of allegations in the RDS.[190] In other instances, there are multiple undated line diagrams which purportedly deal with the same section of fibre core.[191] While there is in fact no material difference between those multiple line diagrams, these observations simply serve to highlight the difficulty associated with identifying whether a specific line diagram corresponds to a specific SOW document, and whether the line diagrams on which SLC relies were in fact provided to the relevant contractor.
[190]RB 708.
[191]See, for example, RB 1506–1510.

The evidence before the primary judge did not support a finding that PIPE intentionally interfered with SLC’s Fibre Capacity by instructing its independent contractor to splice into the Network fibres. On this basis, SLC’s trespass and conversion claims must fail.
In circumstances where SLC’s evidence has not risen to the stage where the inference for which SLC contends is open, PIPE does not have a case to answer. It is therefore immaterial that PIPE failed to call any evidence to the contrary.
Given that SLC has failed to establish that PIPE’s interference was intentional, it is unnecessary to consider the notice of contention by which PIPE contends that the primary judge’s decision to dismiss the trespass and conversion claims ought to be upheld on additional grounds.
Disposition
The following orders should be made:
1.The appeal be dismissed.
2.The appellant pay the respondent’s costs of the appeal.

CITATION:	Springfield City Group Pty Ltd v Pipe Networks Pty Ltd [2023] QCA 172
PARTIES:	SPRINGFIELD CITY GROUP PTY LTD ACN 055 714 531 (appellant) v PIPE NETWORKS PTY LTD ACN 099 104 122 (respondent)
FILE NO/S:	Appeal No 15888 of 2022 SC No 2798 of 2016
DIVISION:	Court of Appeal
PROCEEDING:	General Civil Appeal
ORIGINATING COURT:	Supreme Court at Brisbane – [2022] QSC 255 (Bond JA)
DELIVERED ON:	25 August 2023
DELIVERED AT:	Brisbane
HEARING DATE:	7 June 2023; 8 June 2023
JUDGES:	Bowskill CJ and Morrison and Flanagan JJA
ORDERS:	1. The appeal be dismissed. 2. The appellant pay the respondent’s costs of the appeal.
CATCHWORDS:	CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – IMPLIED TERMS – GENERALLY – where the appellant contracted with the respondent – where the appellant agreed to finance the construction of a fibre optic cable network between Brisbane and Springfield – where the respondent constructed, operated and maintained that network for the appellant – where the respondent installed their own fibre optic cable network in the pits and conduits which accommodate the appellant’s network – where the appellant contends that the respondent must be regarded as contractually constrained against constructing and operating that duplicate network either as a matter of the proper construction of the contract or by the implication of relevant terms – whether the respondent breached the contract TORTS – INTERFERENCE WITH PROPERTY – INTERFERENCE WITH GOODS – TRESPASS TO GOODS – OTHER MATTERS – where the respondent constructed, operated and maintained a fibre optic cable network for the appellant – where in so doing, the respondent installed their own fibre optic cable network in the pits and conduits which accommodate the appellant’s network – where the appellant contends that it owns a part of the infrastructure, known as the Landcorp infrastructure, which accommodates the appellant’s network – where the appellant contends that the respondent committed a trespass and conversion by accessing and laying the duplicate network in the Landcorp infrastructure – whether the appellant has any rights in relation to the Landcorp infrastructure that would support a trespass or conversion case – whether the respondent committed a trespass or conversion TORTS – INTERFERENCE WITH PROPERTY – INTERFERENCE WITH GOODS – CONVERSION AND DETINUE – CONVERSION – OTHER PARTICULAR CASES – where the respondent constructed, operated and maintained a fibre optic cable network for the appellant – where in so doing, the respondent installed their own fibre optic cable network in the pits and conduits which accommodate the appellant’s network – where the appellant contends that, during the installation of the duplicate network or at some later time, the respondent’s independent contractors spliced into particular fibres of cable which should be regarded as the appellant’s – where the appellant contends that the respondent specifically instructed its independent contractors to perform that splicing – whether the respondent converted the relevant fibres by using them Telecommunications Act 1997 (Cth), s 7, s 42 Trade Practices Act 1974 (Cth), s 4D(2) Australis Media Holdings Pty Ltd v Telstra Corporation Ltd (1998) 43 NSWLR 104, cited Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420; [2011] NSWCA 342, cited Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25, cited Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; [1982] HCA 24, considered Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389, cited Commonwealth Bank of Australia v Barker (2014) 253 CLR 169; [2014] HCA 32, cited Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12, cited Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, cited Fouldes v Willoughby (1841) 8 M & W 540; [1841] EngR 735, cited Grocon Constructors (Victoria) Pty Ltdv APN DF2 Project 2 Pty Ltd [2015] VSCA 190, considered H Lundbeck A/S v Sandoz Pty Ltd (2022) 96 ALJR 208; [2022] HCA 4, cited Hollis v Vabu Pty Ltd (2001) 207 CLR 21; [2001] HCA 44, cited Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (2023) 97 ALJR 194; [2023] HCA 6, distinguished Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37, cited Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204; [1946] HCA 46, followed Pilbara Iron Ore Pty Ltd v Ammon [2020] WASCA 92, cited Realestate.com.au Pty Ltd v Hardingham (2022) 97 ALJR 40; [2022] HCA 39, cited Rendell v Associated Finance Pty Ltd [1957] VR 604; [1957] VicRp 88, distinguished Re Ronim Pty Ltd [1999] 2 Qd R 172; [1998] QCA 444, cited Slaveski v Victoria [2010] VSC 441, cited Springfield City Group Pty Ltd v Pipe Networks Pty Ltd [2022] QSC 255, related Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 161; [2006] HCA 19, cited Westpac Banking Corporation v Hughes [2012] 1 Qd R 581; [2011] QCA 42, cited
COUNSEL:	J C Sheahan KC and G J Handran KC, with W LeMass, for the appellant S W Couper KC and D P de Jersey KC for the respondent
SOLICITORS:	McBride Legal for the appellant RBG Lawyers for the respondent