Telstra Corp Ltd v NBN Co Ltd

[2014] NSWSC 940

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:	Telstra Corporation Limited v NBN Co Limited [2014] NSWSC 940
Hearing dates:	01/07/2014, 02/07/2014, 03/07/2014 and 04/07/2014
Decision date:	17 July 2014
Jurisdiction:	Equity Division - Commercial List
Before:	McDougall J
Decision:	Plaintiff entitled to substance of relief sought. Parties to bring in draft orders.
Catchwords:	CONTRACTS - construction and interpretation - commercial contract - giving proper and plain meaning to words used in the contract - whether transition from one contract to another involved imposition of a new and different contractual regime or a supplementation of the existing regime - whether adjustments made to prices in the interim term cease to have effect when the interim term ended and the agreement term commenced. PRACTICE AND PROCEDURE - Judgments and orders - Application for Suppression Order - whether suppression order should be granted in relation to confidential information - where significant risk of public detriment if information were not suppressed - whether suppression orders should be made on balance
Legislation Cited:	Court Suppression and Non-publication Orders Act 2010 (NSW)
Cases Cited:	Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184 Electricity Generation Corporation v Woodside Energy Ltd (2014) 306 ALR 25
Category:	Principal judgment
Parties:	Telstra Corporation Limited (Plaintiff) NBN Co Limited (Defendant)
Representation:	Counsel: IGA Archibald QC / A Shearer (Plaintiff) AJ Sullivan QC / J Hutton (Defendant) Solicitors: King & Wood Mallesons (Plaintiff) Ashurst Australia (Defendant)
File Number(s):	2013/326323

Judgment

1. HIS HONOUR: On 23 June 2011, the plaintiff (Telstra) and the defendant (NBN Co) entered into a series of what they called "Definitive Agreements". Under those agreements, and on the terms stated in them, Telstra agreed to supply defined telecommunications infrastructure services to NBN Co, and NBN Co agreed to pay for the services supplied. NBN Co required those services to enable it to construct and deliver the National Broadband Network.

1. The term of the Definitive Agreements was 35 years from their "Commencement Date". NBN Co had the right, on certain conditions, to extend that term by two further (consecutive) terms of 10 years.

1. The principal agreement, called the Infrastructure Services Agreement (the Services Agreement), provided, among other things, for the charges payable by NBN Co to Telstra for the provision of services to be adjusted for movements in the Consumer Price Index (CPI), and for other matters. The parties are at odds as to the proper construction and application of the relevant clause, cl 21, of the Services Agreement. That is the issue with which these reasons deal.

Factual background

1. Telstra owns and operates fixed telecommunications infrastructure throughout Australia. Telecommunications services, including broadband services, are provided over that infrastructure.

1. NBN Co is responsible for the design, construction and operation of the National Broadband Network.

1. The particular items of infrastructure to which NBN Co sought access are known as:

(1) ducts;

(2) exchange rack spaces;

(3) dark fibre (DF) links; and

(4) lead-in conduits (LICs).

1. Ducts are essentially tubes or piping in which cabling is conveyed. They also include associated infrastructure such as pits and manholes that give access to them. NBN Co wished to use Telstra's extensive network of ducts to carry its cabling and such-like material.

1. Exchange racks are racks within Telstra's exchange buildings. NBN Co wished to be able to install its equipment on those racks.

1. Dark fibre is passive (also called "unlit" or "dark") optical fibre that carries communications between exchange buildings.

1. LICs are conduits that run continuously from particular premises to the first access point in Telstra's network outside those premises.

1. On 20 June 2010, Telstra and NBN Co entered into an agreement described as "Financial Heads of Agreement" (the heads of agreement). Clause 3 of and Schedule 2 to that agreement were expressed not to be binding (cl 2(a)). The balance of the heads of agreement was expressed to be legally binding (cl 2(b)).

1. Clause 3 of the heads of agreement set out the basis on which the parties hoped to negotiate towards what became the Definitive Agreements, and the proposed structure of those agreements. Schedule 2 set out the "Commercial Terms" that were to form the basis of the parties' negotiation towards the Definitive Agreements.

1. By cl 4 of the heads of agreement, the parties were bound to "negotiate in good faith the entry into and the terms of the Definitive Agreements".

1. A year later, on 23 June 2011, the Definitive Agreements were made. Those agreements included, as well as the Services Agreement, a deed known as the Implementation and Interpretation Deed (the Implementation Deed).

1. The Implementation Deed commenced to operate on its date of execution, 23 June 2011. However, the commencement of the Services Agreement was subject to a number of conditions precedent. There was a specified "End Date", 20 December 2011. If the conditions precedent were not satisfied by then, the Implementation Deed would automatically terminate, and the other Definitive Agreements would not become binding. The End Date was extended, by a deed amending the Implementation Deed, to 30 March 2012.

1. Because NBN Co wanted immediate access to Telstra's infrastructure facilities, the Implementation Deed contained terms under which that access would be provided (and paid for) from the Execution Date, 23 June 2011, until 11:59 pm on the date immediately preceding the "Commencement Date" of the Services Agreement. That period of time was defined as the "Interim Term". The terms on which that access would be provided were set out in Part C of the Implementation Deed. They were known as the "Interim Access Terms".

1. The conditions precedent were satisfied by, and the Commencement Date was agreed to be, 7 March 2012. On that day, the Services Agreement became operative. The parties agreed (cl 42.1(a)) that the Services Agreement would be taken to have commenced on the Execution Date, 23 June 2011, on the basis that, among other things, it comprised the Interim Access Terms during the Interim Term and the terms specified in its cl 3.1 on and from the Commencement Date, 7 March 2012.

1. In summary, the Interim Access Terms (the contractual terms on which Telstra gave access to its infrastructure facilities during the Interim Term, and pursuant to which NBN Co was obliged to pay for that access) did not change between 23 June 2011 and 11:59 pm on 6 March 2012. However, the contractual source of those terms did change. Up until 11:59 pm on 6 March 2012, those terms derived their contractual force from the Implementation Deed. On and from 7 March 2012, those terms were taken to have derived their contractual force from the Services Agreement.

1. Further, on and from 7 March 2013, the relationship between the parties was taken to have been governed always (from 23 June 2011) by the Services Agreement, but the terms imposed on that relationship were in effect expanded on and from 7 March 2012. (This last point follows because the Interim Access Terms were a subset of the totality of the terms set out in the Services Agreement.)

1. The Interim Access Terms included cl 21 of the Services Agreement, which is the clause requiring annual charges and other matters to be adjusted. Accordingly, as that clause dictates, the annual charges were adjusted on 1 January 2012. Thereafter, Telstra invoiced NBN Co at the higher rate for services actually provided, and for a while NBN Co paid at that higher rate.

1. NBN Co contends that its liability to pay charges at the higher rate ceased on the Commencement Date of the Services Agreement. Accordingly, it has refused to pay at the higher rate for access and other services rendered and charged after that date. That is significant not only for the year in question, 2012. Because effectively the CPI adjustments compound then, assuming that the CPI always increases, the effect over the 35, 45 or 55 year term of the Definitive Agreements may be very great indeed. It was suggested in the course of argument that the net present value of the difference between the parties' positions, over the full possible term of 55 years, could be many millions of dollars.

The question for decision

1. Against that background, the parties agreed that the real question for decision is whether, on the proper construction of the terms of the Implementation Deed and the Services Agreement and in the events that have happened, CPI adjustments to the charges payable by NBN Co for infrastructure services provided by Telstra under the Services Agreement applied from 1 January 2012 or from 1 January 2013.

Relevant provisions of the agreements

1. To say that the agreements are complex would be to engage in understatement of a degree unbecoming in judicial reasons. The parties' debates ranged widely over their terms, and over the lengthy "Dictionary" of definitions, contained in the Implementation Deed, that was taken up in all the other Definitive Agreements. I shall attempt to keep citation of the terms of the agreements to the bare minimum necessary to understand what follows.

1. Part C of the Implementation Deed set out the Interim Access Terms. It did so in part by incorporating specified clauses (or parts of clauses) of the Services Agreement into Part C.

1. However, to accommodate the interim nature of the arrangements, there were some important changes. References in the Services Agreement to:

(1) "the Agreement" or "the Infrastructure Services Agreement" were taken to be references to "the Interim Access Terms";

(2) the "Commencement Date" were taken, with presently irrelevant exceptions, to be references to the "Execution Date" (23 June 2011); and

(3) the "Agreement Term" were taken to be references to the "Interim Term".

1. The Dictionary defined the Interim Term as follows:

Interim Term means the period commencing on the Execution Date and ending on the earlier of:

(a) 11:59pm on the date immediately before the Commencement Date;

(b) the date of termination of Part C of the Implementation and Interpretation Deed; and

(c) the Trigger Date.

1. The "Trigger Date" was in effect any day, before the Commencement Date, on which (should it occur) the Implementation Deed was validly terminated.

1. Clauses 43 and 45 of Part C dealt with charging and adjustments. I set them out:

43. Charging

43.1 Infrastructure Service charges during Interim Term

Clauses 18.1, 18.2, 18.3, 18.8 and 20 of the Infrastructure Services Agreement are incorporated into and form part of this Part C as if set out in full.

43.2 O&M Services charges during the O&M Term

(a) Clauses 18.1, 18.2, 18.3, 18.8 and 20 of the Infrastructure Services Agreement are incorporated into and form part of this Part C as if set out in full.

(b) This clause 43.2 applies on and from the Trigger Date.

(c) The charges that are payable under the O&M Access Terms for the O&M Services (and the relevant Infrastructure Units) must be calculated in accordance with the O&M Access Terms.

(d) The parties acknowledge and agree that, on and from the Trigger Date:

(i) item 2 of Annexure D of the Infrastructure Services Agreement (as incorporated into this Part C) does not apply; and

(ii) The annual charges that apply pursuant to items 1.1, 3.1 and 4.1 of Annexure D of the Infrastructure Services Agreement (as incorporated into this Part C) are each increased by multiplying the relevant applicable amount by 1.2.

...

45. Costs for Remediation Undertaken by NBN Co

Clause 22 of the Infrastructure Services Agreement is incorporated into and forms part of this Part C as if set out in full.

1. Clause 18.1 of the Services Agreement dealt with payment for DF links, rack spaces and duct sections. Clause 18.1(a), dealing with the first two of those items, provides as follows:

18.1 Infrastructure Services Charges - DF Links, Rack Spaces and Duct Sections

(a) In relation to the Quantity of each DF Link and Equivalent Rack Space and except to the extent otherwise specified in the Agreement, NBN Co must, in accordance with the Agreement, pay Telstra for the relevant Infrastructure Service (including the right to access and use that Infrastructure Unit), the Quarterly Charge for each Contract Quarter during the period that:

(i) begins on the Date of Handover of that Infrastructure Unit; and

(ii) ends on the expiry of the Agreement Term or earlier termination of the Agreement.

1. Clause 18.1(b) contained essentially similar words (that is to say, words obliging NBN Co to pay for Duct Access Service "the Quarterly Charge" for each Contract Quarter during" a defined period). It is not necessary to set out that paragraph, nor the succeeding paragraphs of cl 18.1.

1. Clause 18.3 imposed on NBN Co an obligation to pay an annual reservation fee for Equivalent Rack Spaces and Rack Spaces. Nothing in particular turns on this clause, and it is not necessary to set it out.

1. LICs were the subject of different payment arrangements. That is because, in effect, NBN Co did not pay an access charge but, rather, made a payment in return for which it received title. (That is one of the reasons why cl 18.4 was not adopted as an Interim Access Term; the parties, understandably, did not want the transfer of title to happen until they were assured that the Definitive Agreements would commence to operate according to their terms.)

1. Clause 18.4 reads as follows:

18.4 Payment for LICs

NBN Co must pay Telstra the one-off charge set out in the Price List for each LIC that is Handed Over to NBN Co in accordance with clause 14 of the LIC Access Service Module or clause 42.4.

1. The expression "Quarterly Charge" is defined in the Dictionary set out in Schedule 3 to the Implementation Deed. It means:

... for DF Links, Equivalent Rack Spaces and Duct Sections, the relevant annual charge set out in Annexure D, divided by four.

1. Annexure D is found in the Services Agreement, not in the Implementation Deed. It provides for an annual charge, on a unit basis, for duct sections; for a one-off fixed charge in respect of LICs; and for an annual charge for Equivalent Rack Spaces. There is a claim for confidentiality in the figures (and in much else of the agreements). Both because I think that the claim to confidentiality is justified, and because the figures do not matter in any event, I shall not descend further into the detail.

1. Annexure D also specifies a unit price as the annual charge payable by NBN Co in relation to DF links. Again, the pricing is confidential, and it is not necessary to refer to it or to the basis of its application.

1. Clause 19 dealt with the topic of "Take-or-pay adjustments". It too is the subject of a claim for confidentiality. I shall not set out its terms, although aspects of cl 19.4 (which were agreed not to be confidential) were the subject of submissions. I shall refer to those at the appropriate point.

1. Clause 21 dealt with the topic of "CPI and tax adjustments". It is sufficient to set out clause 21.1, which states the adjustment formula for access charges to ducts, rack spaces and dark fibre:

21.1 CPI adjustments - annual charge

The annual charge for each Infrastructure Unit identified in sections 1, 3 and 4 of the Price List, will be adjusted on 1 January every year during the Agreement Term in accordance with the following formula:

A= B x C

D

where:

A means the annual charge (if any) for the relevant Infrastructure Unit that will be payable from and including that 1 January;

B means the annual charge (if any) for the relevant Infrastructure Unit that was payable on the day prior to that 1 January;

C means the weighted average of the Consumer Price Index All Groups for the eight Australian capital cities, last published by the Australian Bureau of Statistics before that 1 January; and

D means the weighted average of the Consumer Price Index All Groups for the eight Australian capital cities, last published by the Australian Bureau of Statistics before the previous 1 January.

1. The "Price List" is Annexure D to the Services Agreement.

1. The "Agreement Term" is defined to mean, so far as it is relevant:

Agreement Term means:

(a) for the purposes of the Infrastructure Services Agreement, the Initial Agreement Term and if NBN Co exercises the option in accordance with:

(i) clause 4.2 of the General Terms, the Extended Agreement Term; and

(ii) clause 4.3 of the General Terms, the Further Extended Agreement Term; and

...

1. As its heading indicates, cl 21 also dealt with changes in the tax rate. I set out cls 21.8, 21.9:

21.8 Charge rate adjustment if Tax Rate change

If there is any change to the Tax Rate at any time, and from time to time, during the Agreement Term, the charges payable under clause 18.1 and clause 18.4 (after any adjustment under clause 21.1 and clause 21.4) are adjusted as follows from the date the change to the Tax Rate comes into effect:

[charge rate] x 0.7 x 1/(1 - Tax Rate)

21.9 Charge rate adjustment if not fully assessable to Telstra

If the whole or any part of a charge (exclusive of GST) under the Agreement (after any adjustment under clause 21.1, clause 21.4 or clause 21.8) that is payable to Telstra by NBN Co is not:

(a) included in Telstra's assessable income (as defined in the ITAA 1997) for any income year;

(b) taken into account in calculating a net amount that:

(i) is included in Telstra's assessable income (as defined in the ITAA 1997); or

(ii) Telstra can deduct (as defined in the ITAA 1997) from its assessable income for any income year; or

(c) taken into account in calculating a capital gain or capital loss under Part 3-1 of the ITAA 1997 (which is not disregarded) for any income year,

(such whole or part of the charge being an Untaxed Amount), the charge is reduced by an amount calculated in accordance with the following formula:

Untaxed Amount x Tax Rate

1. There were other changes relating to tax charges. Again, although for reasons that are not entirely clear to me, they were the subject of a claim for confidentiality. In any event, it is not necessary to set them out.

1. Clause 42 of the Services Agreement dealt with the "Application of Interim Access Terms". The first three subclauses were the subject of debate (extensive, in the case of the first two). I set them out:

42 Application of Interim Access Terms

42.1 Consequence of Commencement Date

With effect on the Commencement Date:

(a) without limiting clause 42.1(b)(i), Part C of the Implementation and Interpretation Deed is terminated in its entirety (but to avoid doubt such termination does not affect Part B of the Implementation and Interpretation Deed);

(b) the Agreement will be taken to have commenced on the Execution Date except that:

(i) during the Interim Term, the Agreement comprises the Interim Access Terms;

(ii) on and from the Commencement Date, the terms of the Agreement are as specified in clause 3.1; and

(iii) for the purposes of determining whether or not Infrastructure Units are Available for the purposes of clause 15, clause 16 and clause 17, acts and omissions during the Interim Access Term are applicable to such determination; and

(c) any act or omission of a party (including exercise of any right, or any act in relation to a Dispute) under the Interim Access Terms, except where a Claim has been made under the Interim Access Terms before the Commencement Date in relation to that act or omission, is taken to have been an act or omission for a party under the Agreement.

42.2 Acknowledgements

The parties acknowledge and agree that by reason of clause 42.1(b):

(a) any Provisional Order or Order placed by NBN Co under Interim Access Terms will be taken to have been placed by NBN Co under the Agreement on the Date of NBN Co Order under the Interim Access Terms;

(b) any consent, approval or agreement provided on a date under the Interim Access Terms for a specific matter will, on and from the Commencement Date, be taken to have been provided for that matter on the same date under the Agreement;

(c) if a party is granted a right under the Interim Access Terms to an Infrastructure Unit or Intellectual Property Right for the Interim Term and the Agreement grants the same right to that Infrastructure Unit or Intellectual Property Right, then the terms and conditions of the Agreement apply to NBN Co's right to the Infrastructure Unit or Intellectual Property Right;

(d) any costs, Losses, charges, or other amounts paid or payable by a party under the Interim Access Terms will, on and from the Commencement Date, except to the extent it relates to settlement of any Claim made under the Interim Access Terms before the Commencement Date, be taken to have been paid or to be payable under the Agreement; and

(e) if any acts, obligations or works in relation to any Infrastructure Services were partially performed or part completed by a party under the Interim Access Terms as at the Commencement Date, then on and from the Commencement Date:

(i) those acts or works will be taken to have been performed or completed by a party

under the Agreement;

(ii) those acts or works will be completed by the party in accordance with the Agreement as specified in clause 3.1; and

42.3 Release

(a) On and after the Commencement Date, if, in respect of any act or omission, a Claim can be made by a party under both the Interim Access Terms (such claim under the Interim Access Terms, the Part C Claim) and, including by reason of clause 1.2(b) of the Agreement, the Agreement, then the Claim must be made under, and will be governed by, the provisions of the Agreement.

(b) Each Releasing Party releases the Released Persons of the other party in relation to Release Subject Matter in accordance with clause 32.10 of the Implementation and Interpretation Deed (as incorporated by reference into the Agreement under clause 1.2); and

(i) Releasing Party means each of Telstra and NBN Co;

(ii) Released Persons of a party means that party and each of its Related Entities, and each of their respective Representatives (in their capacity as Representatives); and

(iii) Release Subject Matter means the Part C Claim.

The parties' submissions

1. Each party provided lengthy and complex written submissions, and built on those with detailed oral submissions. Without doing injustice or undue violence to those submissions, I propose to extract what I see as being the essential points, so that the reasons that follow may be understood.

1. Mr Archibald of Queens Counsel, who appeared with Mr Shearer of Counsel for Telstra, emphasised what he said was the relevant principle of interpretation: that the meaning of a commercial contract is to be determined by what a reasonable business person would have understood its terms to mean. He relied on what French CJ, Hayne, Crennan and Kiefel JJ had said in Electricity Generation Corporation v Woodside Energy Ltd (2014) 306 ALR 25 at [35], emphasising their Honours' affirmation of the principle that the Court should if possible give "a commercial contract a businesslike interpretation", and should seek to avoid construing it to make "commercial nonsense" or to achieve "commercial inconvenience".

1. Mr Archibald submitted that cl 42.1 of the Services Agreement was intended to "achieve efficient, appropriate and seamless continuity in respect of" the supply of services by Telstra to NBN Co, from the Execution Date, through the Commencement Date, and for the life of the contract. That was achieved, he submitted, by the statement in cl 42.1(b) to the effect that, with effect from the Commencement Date, the Services Agreement is taken to have commenced on the Execution Date.

1. Next, Mr Archibald submitted, cl 21 of the Services Agreement was made one of the Interim Access Terms. He noted that, with effect from 1 January 2012, the relevant access and other charges were adjusted in accordance with cl 21. He submitted that, on and from 7 March 2012, that adjustment must be taken to have been made under the Services Agreement, although at a time when its terms comprised only the Interim Access Terms. It followed, he submitted by reference to the concept of annual charge, that the adjusted charges were to apply until 31 December.

1. Mr Archibald then focused attention on the terms of cl 21. He submitted that what it did was adjust "the annual charge for each Infrastructure Unit identified in" the relevant part of the Price List. The effect, Mr Archibald submitted, was to replace the number existing in the Price List, at the time the adjustment was made, with the number resulting from the adjustment process; and that happened from year to year.

1. Mr Archibald noted that cl 21 itself imposed no obligation to pay, nor did the Price List. That obligation was imposed by cl 18, which (through the definition of Quarterly Charge) did so by reference to the Price List.

1. Mr Archibald submitted that the cessation of the Interim Term, and the occurrence of the Commencement Date, had no impact on the adjustment that had been effected, nor on the charges thus adjusted. Thus, he submitted, the Annual Charge to be adjusted on 1 January 2013, for each element of infrastructure services, was the charge that had been adjusted from 1 January 2012.

1. Mr Archibald relied on cl 42.2 of the Services Agreement. He submitted that by it, the parties acknowledged, among other things, that one effect of cl 42.1(b) was that the CPI adjustment as at 1 January 2012 must be taken to have occurred under the Services Agreement. That followed, he submitted, from cl 42.2(d): in particular, its concluding words "taken to have been paid or to be payable under the Agreement" (in the Services Agreement, the expression "the Agreement" is a reference to the Services Agreement).

1. Mr Archibald submitted that the construction for which Telstra contended made business sense, and satisfied the evident intention of the parties. That intention he identified as being that Telstra should continue to receive, in substance at least, a constant real value of the after tax return from the cash flows that would be generated over the life of the Definitive Agreements.

1. Mr Sullivan of Queens Counsel, who appeared with Mr Hutton of Counsel for NBN Co, submitted that the proper starting point was the literal or grammatical meaning of the words used in the Services Agreement. He referred to what Leeming JA had said in Mainteck Services Pty Ltd v Stein Heurtey SA [2014] NSWCA 184 at [99].

1. Mr Sullivan emphasised that what cl 21.1 (and the other subclauses of cl 21) required was that the relevant annual charge "will be adjusted on 1 January every year during the Agreement Term". Cutting through the forest of definitions, the expression "Agreement Term" means the period of 35 years from the Commencement Date, together with any extensions pursuant to exercise of the options to extend given to NBN Co.

1. Mr Sullivan relied on the detailed negotiations between the parties, and submitted that the CPI start date had been a matter of specific and detailed negotiation. I am not sure of the relevance, either in principle or in practice, of those negotiations.

1. Mr Sullivan ventured onto surer ground when he submitted that the parties, commercially sophisticated and well advised as they were, should be taken objectively to have intended that the words chosen by them in the formal instruments by which they expressed their bargain would have their plain meaning: particularly in the case of words that were, like "Agreement Term", expressly defined.

1. Taking that approach, Mr Sullivan submitted that the first occasion for adjustment - the first "1 January" of a "year during the Agreement Term" - was 1 January 2013.

1. Mr Sullivan submitted that the approach taken by Telstra was "not a legitimate exercise in contractual construction, but a wholesale redrafting of the terms of the ISA to suit Telstra's commercial interests in light of events that have occurred since the Definitive Agreements were entered into". That, he submitted, was impermissible.

1. Mr Sullivan's oral submissions focused far more closely on cl 42 than had his written submissions. I do not mean to be critical in saying this. In oral submissions, Mr Sullivan contended that the effect of cl 42 was to impose two separate contractual regimes on the parties' relationship. The first was the regime during the Interim Term, on the basis of the Interim Access Term. Thereafter, after a one minute hiatus, on and from the Commencement Date the terms were as stated in cl 3.1 of the Services Agreement. (I have not set out cl 3.1. It states explicitly what is comprised in the Services Agreement. There is no controversy as to its terms.)

1. Thus, Mr Sullivan submitted, the adjustment that took place as at 1 January 2012 (pursuant to cl 44 of the Implementation Deed, which incorporated cl 21 of the Services Agreement into the Implementation Deed "as if set out in full"), was an adjustment under the Interim Access Terms. Those Interim Access Terms, he submitted, ceased to have any relevant effect on and from the Commencement Date, when the full terms of the Services Agreement (as specified in cl 3.1) took effect.

1. It followed, Mr Sullivan submitted, that the adjustment as at 1 January 2012 was an adjustment for the purposes of the Interim Access Terms only. He submitted that, when the Commencement Date arrived and the full terms of the Services Agreement commenced to operate, they included Annexure D (the Price List) as it had been written, and unaffected by what had happened under the Interim Access Terms.

1. In short, Mr Sullivan submitted (in his written submissions at [62]), there were two CPI adjustment regimes: one under the Interim Access Terms, which operated up until the Commencement Date, and the other under the cl 3.1 terms, which operated on and from the Commencement Date.

1. Each of Mr Archibald and Mr Sullivan adverted to what he said were inconsistencies or arbitrary results following from the approach to construction taken by the other. Each of them sought to rebut those charges. I do not think that it is necessary to go into the detail.

Decision

1. In my view, the substance, although not all the detail, of Mr Archibald's submissions should be accepted. I shall express, as briefly as the nature of the case allows, my reasons for that conclusion. I should however say at the outset that those reasons are based on what, in my view, is the proper and plain meaning of the words used. If there is any difference between the respective approaches to construction for which Mr Archibald and Mr Sullivan contended, it does not need resolution. Having said that, I do not perceive any difference of significance.

1. In the events that have happened - specifically, the occurrence of the Commencement Date and the contractual impact of that event - the parties' contractual relationship is to be taken always, from the Execution Date, as having been governed by the Services Agreement. That is what cl 42.1(b) says.

1. However, the applicable contractual terms, taken (since 7 March 2012) to have been imposed, or enforced, by the Services Agreement differ. In the first phase of the contractual relationship, from the Execution Date until 11:59 pm on 6 March 2012, those terms were the Interim Access Terms. From midnight on 6/7 March 2012, those terms were the terms specified in cl 3.1 of the Services Agreement.

1. Although it is not essential to the conclusion to which I have come, I should note that the Interim Access Terms are not something totally different to, or inconsistent with, the cl 3.1 terms. The Interim Access Terms are, as Part C of the Implementation Deed makes clear, a subset of the cl 3.1 terms. They are in effect so much of the cl 3.1 terms as the parties appear to have thought were necessary to facilitate interim access to the specified elements of Telstra's infrastructure, pending satisfaction (or otherwise) of the Conditions Precedent.

1. In effect, the transition from the Interim Access Terms to the cl 3.1 terms involved not so much the imposition of a totally new and different contractual regime but, rather, the supplementation of the existing regime with further terms.

1. As I have noted, Mr Sullivan submitted that the CPI adjustment that was effected on 1 January 2012 was effected under the Interim Access Terms. That submission is, to a point, correct. It is correct for the period from 1 January 2012 up until 11:59 pm on 6 March 2012. And although it was made on terms specified in the Services Agreement, the contractual power to make, and the contractual obligation to pay, those adjusted charges were imposed by the Implementation Deed.

1. That situation changed on and from 7 March 2012. True it is that the adjustment remained one made temporally during the Interim Term, and (without temporal limitation) on the basis of the Interim Access Terms. But, since 7 March 2012, the contractual justification for the adjustment must be taken to have been imposed by the Services Agreement. That, it seems to me, is the necessary consequence of the chapeau to cl 42.1(b).

1. That is why I have said (at [69]) that I accept Mr Sullivan's submission on this issue up to a point.

1. However, it seems to me, the crux of the issue between the parties is to be found in cl 21 of the Services Agreement. That is the clause that requires CPI (and other) adjustments. And, as Mr Archibald submitted, the way that cl 21 works is by adjusting, in some cases, "[t]he annual charge for each Infrastructure Unit identified in sections 1, 3 and 4 of the Price List". In the case of the LIC charge, it adjusts "[t]he one-off charge for each LIC identified in section 2 of the Price List".

1. Accordingly, each year, cl 21 operates by adjusting the annual charges, or one-off charges, stated in the Price List (and by adjusting other amounts referred to in it, by making tax rate changes, and other changes). The essential point to my mind is that, in respect of charges or amounts stated in the Price List, the process of CPI adjustment has the contractual effect of substituting the adjusted figure for the existing figure, and of doing so on an annual basis, on 1 January in every year of the term. It is as if the parties had produced a new Price List, adjusted in accordance with cl 21, for each year of the term.

1. That view of the operation of cl 21 on the Price List finds some support in some parts of the language of cl 19.4 of the Services Agreement. In that subclause, it is made clear that the Price List is to be understood as from time to time it is adjusted. The prices in the Price List are to be understood as those ruling from time to time by virtue of those adjustments.

1. The obligation to pay is imposed by cl 18. And, again as Mr Archibald submitted (and I do not think that Mr Sullivan submitted to the contrary), it is an obligation to pay imposed by reference to the charges stated in the Price List. It must thus be taken to be an obligation to pay the charges stated as adjusted from time to time in accordance with cl 21.

1. Returning to the particular facts of this case, the effect of the cl 21 adjustment during the Interim Term was to increase the relevant charges by whatever was the CPI factor. The effect of cl 42.1(b) is that the adjustment so performed is taken to have been an adjustment made under the Services Agreement, although constituted by the Interim Access Terms and not by the full suite of terms called up by cl 3.1.

1. Accordingly, in my view, the termination of the Interim Term and the occurrence of the Commencement Date had no relevant effect. The charges and amounts set out in the Price List had been adjusted. That is a matter of fact. Come 7 March 2012, that adjustment was taken to have been one made under the Services Agreement. The fact that it was made pursuant to the Interim Terms and not the cl 3.1 terms does not seem to me to make any difference. What matters is its contractual force as an adjustment made under an agreement (the Services Agreement) that is taken always to have been in existence, and including (through the Interim Access Terms) a clause requiring that adjustment to be made.

1. Further, on and from 7 March 2012, the access charges as they had been adjusted on 1 January 2012 were to be taken as having been payable under the Services Agreement. That is an inevitable consequence of the retrospective operation that cl 42.1(b) gave to the Services Agreement. Thus, from 7 March 2012 (and on 1 January 2013), those adjusted charges fell within integer B in the adjustment formula.

1. As I have noted, Mr Sullivan submitted that cl 21.1 focuses on adjustments "during the Agreement Term". That is correct. It is also correct to say, as Mr Sullivan submitted, that the Agreement Term commenced on 7 March 2012. However, those points do not seem to me to have any relevant consequence.

1. What cl 21.1 does (and what the other subclauses do) is authorise an adjustment of charges or other amounts stated in the Price List, in accordance with the stated formula, on 1 January every year. It follows, and I accept Mr Sullivan's submission, that the first adjustment that could have been made during the Agreement Term was that falling to be made on 1 January 2013.

1. However, acceptance of that submission, and of the contractual state of affairs expressed in it, does not answer the issue between the parties. It does no more than expose the next, and to my mind crucial, question: what was it that was to be adjusted on 1 January 2013?

1. For the reasons I have given, what was to be adjusted was the Annual Charge, or other charge or amount, for Infrastructure Units and other matters identified in the relevant sections of the Price List, payable under the Services Agreement immediately before 1 January 2013. In other words, the 1 January 2013 adjustment operated on the already adjusted charges and other amounts stated in the Price List. The adjustments made on 1 January 2012 did not cease to have effect simply because the Interim Term came to an end and the Agreement Term commenced.

1. Telstra sought declaratory relief to the effect (very broadly) that the adjustment that occurred on 1 January 2012 was effective for the whole of that year, and that the charges so adjusted were themselves to be adjusted thereafter. It is entitled to appropriate declaratory relief.

1. Telstra sought also judgment for unpaid charges. The amount is not controversial. However, Telstra claims interest in accordance with the relevant contractual provisions up until the date of judgment. I do not propose to attempt that calculation.

Confidentiality; suppression orders

1. The court book originally comprised some ten volumes, with a supplementary volume and another volume labelled "Confidential". One party or the other claimed that much of the material in all the volumes was confidential, and ought be the subject of a suppression order pursuant to the CourtSuppression and Non-Publication Orders Act 2010 (NSW) (the Suppression Act), or equivalent orders pursuant to the Court's inherent powers.

1. The grounds on which a suppression order may be made are stated in s 8 of the Suppression Act:

8 Grounds for making an order

(1) A court may make a suppression order or non-publication order on one or more of the following grounds:

(a) the order is necessary to prevent prejudice to the proper administration of justice,

(b) the order is necessary to prevent prejudice to the interests of the Commonwealth or a State or Territory in relation to national or international security,

(c) the order is necessary to protect the safety of any person,

(d) the order is necessary to avoid causing undue distress or embarrassment to a party to or witness in criminal proceedings involving an offence of a sexual nature (including an act of indecency),

(e) it is otherwise necessary in the public interest for the order to be made and that public interest significantly outweighs the public interest in open justice.

(2) A suppression order or non-publication order must specify the ground or grounds on which the order is made.

1. I made an interim suppression order at the conclusion of the hearing, on 4 July 2014. I said that I would deal with the applications for long-term orders in these reasons. In my view, the orders sought should be made. I now explain why that is so.

1. The volume of material comprised in the court book exceeded what was necessary for the resolution of the issue between the parties, even if one were to take a more favourable view than I have done of Mr Sullivan's reliance on negotiations. Accordingly, the parties gave consideration to the extent of the material that needed to be tendered, and sought to redact that material so as to avoid tendering parts of documents that were both confidential and irrelevant.

1. That process had beneficial results. The amount of material ultimately tendered was less than had originally been placed into the court book. And the volume of material that was said to be confidential, within the material proposed to be tendered, was diminished.

1. Reviewing the material in what has been tendered which is said to be confidential, some of it is plainly so, and should be protected. Some of the other claims for confidentiality are less obvious. However, in circumstances where the claims are supported by detailed affidavit evidence which is not of itself implausible (let alone irrational), and where orders under the Suppression Act may be reviewed, I think the better course is to make the orders sought.

1. I take that view because the resolution of the construction issues requires consideration of the relevant terms of the agreements in their contractual setting. An understanding of the way in which those terms operate cannot be divorced from the confidential material within that which is tendered. To my mind, the proper administration of justice requires that the Court be fully informed on all relevant aspects of the parties' dealings.

1. If there were no suppression order, the achievement of that purpose would expose the parties to the very real risk that their confidential information would become public property, able to be exploited by competitors, tenderers and the like. When one takes into account the large sums of money involved, and the fact that the National Broadband Network is an initiative of the Australian Government which has involved the expenditure of large sums of public money, that is an unacceptable risk. Likewise, Telstra is a publicly listed and held corporation, in which millions of Australians have invested either directly or indirectly.

1. It does not seem to me to be desirable that the parties should be put to the choice of either arguing their cases on the basis of inadequate material or having their confidential information become public and exploitable to their disadvantage.

1. That analysis (in respect of the ground specified in s 8(1)(a) of the Suppression Act) is also relevant to the public interest analysis permitted by s 8(1)(e) of the Suppression Act. It seems to me that the considerations to which I have referred involve a very significant risk of public detriment, both directly (through NBN Co) and indirectly (through Telstra).

1. On the other hand, the public interest in open justice is great indeed. It is fundamental that anyone should be able to be present in the hearing of proceedings in this Court and other courts. The right to be present, and to observe the administration of justice, is diminished if it cannot be informed by an understanding of the material that the parties put before the Court and on which the Court bases its decision.

1. However, in considering that element, it seems to me that there will be more than enough, in the material that has been tendered in respect of which no suppression order was sought or will be made, to satisfy the public interest in the open administration of justice.

1. On balance, I conclude, as I have indicated, that appropriate suppression orders should be made.

1. Because the Definitive Agreements run for many years, the orders sought seek to encompass that term. In my view, bearing in mind that the options may never be exercised, the better course is to make the orders for the balance of the 35 year term. It would be open to the parties to apply to have them renewed at the expiry of that term.

1. Equally, if anyone has an interest in obtaining access to the material the subject of the suppression orders, they may make application pursuant to s 13 of the Suppression Act. Whilst I do not wish to speculate on the reasons why such an application might be made, it is at least conceivable that there will be changes in circumstances, over what will otherwise be the life of the orders, that would justify both the making of the application and, perhaps, that it should succeed.

1. For those reasons, the suppression orders made on 4 July 2014 are to be continued, subject to the further order of the Court, up until and including 6 March 2047.

Conclusion and orders

1. The real question for decision (see at [22] above) should be answered "1 January 2012". Thus, Telstra is entitled to declaratory relief and to a money judgment for the amount underpaid, together with interest. As at present advised, I see no reason why it should not have, as well, an order for its costs.

1. The orders made on 4 July 2013 pursuant to the Court Suppression and Non-Publication Orders Act 2010 (NSW) are continued, subject to the further order of the Court, up until and including 6 March 2047.

1. The best course is to allow the parties to work out the precise form of the orders to be made. Accordingly, the only further order that I make at this stage is to stand the matter over to 9:30 am on 31 July 2014 for the making of final orders. If there is any disagreement as to the form of the orders, I will deal with it on that occasion.

1. If the parties are able to agree, before that date, on the orders to be made, they have liberty to approach in chambers.

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Decision last updated: 17 July 2014