Telstra Corporation Limited v Commonwealth of Australia

[2007] HCATrans 663

[2007] HCATrans 663

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S42 of 2007

B e t w e e n -

TELSTRA CORPORATION LIMITED

Plaintiff

and

COMMONWEALTH OF AUSTRALIA

First Defendant

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Second Defendant

PRIMUS TELECOMMUNICATIONS PTY LIMITED

Third Defendant

OPTUS NETWORKS PTY LIMITED

Fourth Defendant

CHIME COMMUNICATIONS PTY LIMITED

Fifth Defendant

XYZED PTY LIMITED

Sixth Defendant

POWERTEL LIMITED

Seventh Defendant

REQUEST BROADBAND PTY LIMITED

Eighth Defendant

NEC AUSTRALIA PTY LIMITED

Ninth Defendant

MACQUARIE TELECOM PTY LIMITED

Tenth Defendant

AMCOM PTY LIMITED

Eleventh Defendant

ADAM INTERNET PTY LIMITED

Twelfth Defendant

AGILE PTY LIMITED

Thirteenth Defendant

GLEESON CJ
GUMMOW J
KIRBY J
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 14 NOVEMBER 2007, AT 10.20 AM

(Continued from 13/11/07)

Copyright in the High Court of Australia

GLEESON CJ:   Yes, Mr Solicitor.

MR BENNETT:   If the Court pleases.  I have three remaining short matters I wanted to say about the acquisition of property before I come to the question of whether the regulation exception, if I can call it that, in very general terms.  The first of the three ‑ ‑ ‑

KIRBY J:   Could I just ask for your help on this?  You remember that a great part of your written argument is addressed to the characterisation of the law, and you addressed that issue yesterday, and I am just still troubled along the lines that I put to Mr Archibald that the problem with your theory that you look at the characterisation of the law is that virtually every law is going to have multiple characters and is going to have characters other than the acquisition of property.  Generally that is incidental to achieving the object of the law.

If one took the approach you have urged upon us in this case you would run the risk that you would really write the constitutional guarantee out of the provisions of section 51(xxxi) and that cannot be. So where has the Court most clearly identified that problem and addressed it, because I realise that 51 talks of the law with respect to, therefore that is the ultimate legal question, but if you take your view it seems to me the problem will be it will be rare that a law only yields to a characterisation that it is with respect to the acquisition of property.

MR BENNETT:   Yes.  Your Honour, I will come to that.  We will be submitting it is not a matter of single characterisation.  It is a matter of seeing if the law satisfies a particular test which has been established by the Court as an exception to the general principle.  That is a better way of putting it.  One of the ways one justifies that exception is by reference to characterisation, but I will demonstrate there are other ways it can be justified.

The three concluding points are these. First, there was mention made, I think by your Honour Justice Kirby, about modern types of property, economic property and so on, when I was talking about the United States takings cases. There is of course no reason why section 51(xxxi), like any other section of the Constitution, should not be applied to modern technology and new concepts.

KIRBY J:   There is a reason, and that is the originalist conception of the Constitution which occasionally for your purposes you urge on us.

MR BENNETT:   Yes, your Honour, but even the originalist approach would permit a degree of denotation. If the Constitution says “transport” that is not confined to horses and carts.

KIRBY J:   We will not go there.

MR BENNETT:   No, your Honour. There are problems where one is dealing with something where there is no proprietary right but an economist would say there is property. Perhaps the best example is goodwill. Let us assume the Commonwealth had power under one of its powers to manufacture and sell widgets and the Commonwealth passes a law setting up a scheme under which it manufactures widgets and sells them very, very cheaply, thus undercutting and destroying the businesses of existing widget manufacturers. Their goodwill may have been destroyed by the Commonwealth legislation. Their auditors and economists would say that was an asset they had, but no one would say the Commonwealth had acquired something under section 51(xxxi).

KIRBY J:   That is really an incongruity case though.

MR BENNETT:   Well, we would submit it is simply a case where it is not property for the relevant purpose.

KIRBY J:   The problem with incongruity is it has to be incongruous for a reason, and the difficulty sometimes is expressing what that reason is.

MR BENNETT:   Yes.  I will come to incongruity, your Honour, in a moment.  The second preliminary matter in relation to the question of acquisition and property individually is that my learned friend’s case seems to place enormous emphasis from the point of view perhaps of something analogous to taking on the connection and reconnection of the jumper leads.  Now, of course, a jumper lead is really nothing more than a wire with a connector at each end, and your Honours have seen the diagrams, one just plugs it into one thing and plugs it out of another thing.

My friend says once it is plugged into the port that leads to the access seeker’s equipment the access seeker suddenly has control of and possession of, if you like, the loop.  That, we submit, is simply a false analysis.  The mere sending of the impulse – the mere powering of the impulse down the wire is a very trivial part of the overall process.  There are many people who are using in a sense the loop when an access seeker obtains access to it.  In one sense the customer is using it, in another sense Telstra is using it, and in another sense the access seeker may be using it.

To hear my friend’s argument one would almost think that the little note on the diagrams saying “Access Seeker Equipment” is personified and a person is standing there controlling the loop by what is done in relation to it and that, in my respectful submission, is really not an accurate characterisation, any more than it is an accurate characterisation to say that a television channel is using a television set where the consumer watches that channel on it or the electricity company is using a kettle, an electric kettle, and the consumer turns it on.  The fact that you just send a few electrons down a wire does not mean that you are using everything that goes on in relation to it.

KIRBY J:   I wish I understood all this.  I mean, I really do not understand the technology.  I will read about it, try to understand it, but I suspect that we lawyers are using phrases and expressions that engineers would laugh at.  I do not know, but I just do not understand it, and the cold diagram in the stated case does not help to elucidate it for me.

MR BENNETT:   Well, your Honour, one can say this, that the – let me just take your Honour to the stated case, page 398 of volume 2.  Your Honour, the basic concept is very simple.  Children sometimes take two tin cans, or they used to when I was young, and make a hole in the bottom of each and tie a piece of copper wire so it goes between the two tin cans, and if the two children are next door neighbours they can then by stretching the wire between the houses talk to each other by talking into the tin cans and listening at the tin cans.  This is a little more sophisticated than that because, of course, it has to have a switching system, which is no doubt incredibly complicated, which achieves the result that any person can telephone any other person anywhere.

But if your Honour looks at the diagram in figure 1 it really is very simple.  This system is based on wires.  A wire at some point has to go from the person initiating the call described in the technical material as the “A party” and the person receiving the call described as the “B party”.  The B party is somewhere over to the right of this diagram.  Your Honour sees at the top the Telstra CAM and from that, although it is not shown on the diagram, there is a wire which goes into a switching system and ultimately wires will lead to the B party, to the party at the other end of the phone.

KIRBY J:   Well, they are not shown here.

MR BENNETT:   No, that is not shown, but I am just explaining it, your Honour.  Then if one looks at the bottom, the access seeker equipment, a wire goes from that into some general switching thing and ultimately to the other person’s phone.  Now, the local loop, one disconnects the old jumper at the top and puts in a new jumper.  That just means in its long tortuous journey from the A party to the B party at one point it goes through the Telstra equipment rather than the access seeker’s equipment or vice-versa.  It is a fairly simple concept.

KIRBY J:   That is simple enough, but when it is going through the new jumper, is it not the case that no one else can go through that new jumper?   That is the point Mr Archibald is urging on us.  In that sense, there is a little barrier at the beginning saying “You just cannot come in; it is being used”.

MR BENNETT:   Well, your Honour, only one person can talk on a phone at once.  If one has a normal telephone in a single local loop, only one person ‑ ‑ ‑

KIRBY J:   That sounds as though you are therefore taking away Telstra’s opportunity to use it for other purposes including Telstra’s retail customers.

MR BENNETT:   Telstra can use it for any purpose it needs to use it for.  The primary purpose it needs to use it for, which it retains, is the ability to say to the customer, “Please come back.  I offer you this incentive.  If you do, I will be your server again.  Here is the wire I will do it through.”

KIRBY J:   I do not want to take up the Court’s time.  Everyone else in the whole courtroom may understand all this perfectly.  I will take my own time to understand it.

MR BENNETT:   No, your Honour, I am sorry, if I am saying something which is not clear, please tell me.  Telstra has that ability.  That is clear.  No one disputes that.  It has the ability to endeavour to – the key to all this is that the home owner, the customer, has said, “I select Optus, I select Macquarie, or I select Telstra or whatever”.  That is the key to it.  Once the home owner does that, no one else has any use for it.  It is not a question of Telstra being deprived of use.  If the home owner goes back to Telstra, it has the use.  That is the first thing.

The second thing is even while the access seeker has use, for the reasons we have given, there are things that Telstra uses it for in one sense of the word.  One is if the customer chooses to override for a particular call and use Telstra, another is if the call terminates with that customer and originated with Telstra, it may go through Optus equipment and there may be some adjustments between Telstra and the access seeker, but the benefit of being able to do that is still available.

The Act itself says, as I have said, that if Telstra has any use for it it can make it.  The only reason that my friend says “We are excluded”, he only gets that from two things.  One is the customer does not want to use it so there is no scope for Telstra to use it.  The customer does not want to use Telstra so there is no scope for Telstra to supply services to it, any more than if I do not want to catch a particular ‑ ‑ ‑

KIRBY J:   I understand that point.  What is the second point?

MR BENNETT:   The second is my friend places reliance on the fact that it is linked up to the access seeker’s equipment and goes through that equipment and he characterises that in a dramatic way, by reference to the jumper leads, as the property being taken away from him and given to someone else temporarily.  We submit that is just a false characterisation of it.  It is just in its journey through the system it happens to be connected at this point to some Optus equipment.  That is adjusted in various ways in relation to the payments between various participants in the industry.

It is not, we would submit, in any sense of the word acquisition of property.  The way my learned friend puts it, when the Telstra technician comes and moves the jumper lead he is somehow taking the property away from Telstra and giving it to the access seeker which is, in my respectful submission, a mischaracterisation of what occurs.

HAYNE J:   Does not this branch of the argument seek to describe forms of commercial exploitation of particular physical elements by reference to a single, not to say monolithic, conception of property and are we not here facing competing submissions which fasten upon particular elements of what is essentially the commercial exploitation and various forms of commercial exploitation of physical elements.  You want to put the classification “no acquisition” on it.  Mr Archibald wants to put “acquisition” on it.

MR BENNETT:   Yes.  Your Honour, one can ‑ ‑ ‑

GUMMOW J:   Just before you answer that, Mr Solicitor, and it may help you, can one look at section 152AZ which is at page 175 of the Trade Practices Act? Section 152AZ, you see, says:

A carrier licence held by a carrier –

and I guess that is what Telstra has –

is subject to a condition that the carrier must comply with:

(a)      any standard access obligations –

Right?

MR BENNETT:   Yes.

GUMMOW J:   Then that is linked with section 62 of the Telecommunications Act, if you have that handy.  That is the Telecommunications Act at page 350 of the booklet. Section 62 of the Telecommunications Act says:

A carrier licence is subject to the condition set out in section 152AZ ‑

then section 42, which Mr Archibald took us to yesterday says, in effect, you cannot use this network for this purpose, or these activities, unless you hold a carrier licence.

MR BENNETT:   Yes.

GUMMOW J:   So, the focus on the acquisition of the wire and ask what is compensation for interference with the wire is to ignore what may be the fact that objectively, as a chattel, the wire is worth nothing.  Its value comes from the fact that there is attached to its use a carrier licence which has attached to it the requirement of 152AZ of the access regime.

MR BENNETT:   Yes, and, your Honour, not only that but it is not a piece of property.  The wire is not owned by Telstra in any sense at all except a statutory sense.  It is not property.  It is a fixture.  It would be the property of the owner of the land but because of a provision in the legislation Telstra is permitted to retain property in it.  So it only has the asset because of this scheme.  It is not a normal asset that one owns in a ‑ ‑ ‑

GUMMOW J:   It is not a normal asset in the sense that it has a head, two arms and two legs.  It is an asset which is sterilised unless there is compliance with – an asset, the use of which for its commercial purpose is sterilised unless there is compliance with this regulatory structure.

MR BENNETT:   Yes, precisely.

KIRBY J:   Does that not bring you to Justice Hayne’s question that you have to really ask yourself whether operating in today’s age, as you have conceded it must, the Constitution is not limited to property which has a head and two arms and legs. Property will take over time different forms as technology changes.

MR BENNETT:   Of course it will, your Honour, we accept that.

KIRBY J:   I am sure from Telstra’s point of view the wires it has would seem to be property, and very valuable property.

GUMMOW J:   But their value comes from this – they have no value unless there is compliance with the statutory system.

MR BENNETT:   Precisely, your Honour.  Not only – and that is ‑ ‑ ‑

KIRBY J:   This is federal statute and it is a question of whether the statute as it has been developed and amended over time has taken away what was once given.

MR BENNETT:   Your Honour, but that brings one to the third aspect, which I have not got to yet, this question of regulation of assets as part of a general statutory scheme, and I will come to that.

KIRBY J:   Sorry, I interrupted your answering Justice Hayne’s question.

MR BENNETT:   Yes.  Well, my answer is that is a very significant reason why it comes within the regulated industry exception which I will come to in a moment.  But in relation to the question of is there an acquisition of property, it is a relevant factor thereto because the type of asset involved is an asset only conferred by the scheme, as in the fishing cases.  If one looks at Davey and Bienke, the Commonwealth set up a scheme under which people were given units in a fishery.  They are no doubt valuable assets.

The fishermen can sell them and deal with them and mortgage them and make their living from them. They are very valuable assets, but they are assets inherently part of having no existence separately from a statutory scheme which is inherently capable of variation, and that is why these categories inherently capable of variation, part of the regulated scheme, statutorily created assets and so on, are all in a sense part of the same qualification to section 51(xxxi), and that is something to which I am about to come in a minute.

Now, in relation to that exception – this is the final part of my submissions, although a substantial part – this Court has in many cases, none of which leave is sought to overrule, laid down very clearly that there is a qualification in this area.  Now, one has to concede it is a qualification which has fuzzy edges.  It is a qualification which is difficult to define, and it is a qualification which is put in a number of different bases, and it may or may not have a number of different categories.

The one central characteristic of it is that when it applies the acquisition can be seen as being something incidental rather than as something significant in itself. One can illustrate this by reference to a number of obvious examples. If one takes the bankruptcy area, a law acquiring property for the official receiver to have an office in clearly falls within section 51(xxxi). It is abstracted from the bankruptcy power by the acquisition power, if one wants to use that phrase.

It is more in substance an acquisition than something done under the bankruptcy power in another way of putting it.  It is, of course, done both under the bankruptcy power and under the acquisition power, and this Court has accepted on many occasions that one can have dual characterisation.

The exception does not depend on saying this is not a matter of bankruptcy, this is a matter of acquisition of property, but it depends rather on the general characterisation of what is done.  At the other extreme in the bankruptcy area is the sequestration example.  That is one of the incongruity examples.  Clearly it would be quite incongruous to suggest that there is an acquisition of property where the bankrupt’s assets are vested in the official trustee.  That is a case where the bankruptcy power itself clearly implies that it has to operate as a qualification to the acquisition of property power.

An intermediate example in bankruptcy might be a law requiring a creditor to refund a preference or the proceeds of an execution just prior to bankruptcy.  That is a matter of regulation of the rights of creditors inter se and creditors and debtors as part of the law of bankruptcy.  Incidentally, it involves someone paying money to someone.  But to describe it as an acquisition of property would be wrong.  It is perhaps in the intermediate exception; it may be in the incongruity exception.

I apologise for doing this so frequently but it makes it easy.  If one goes to the lighthouses power, the acquisition of land for a lighthouse is clearly the acquisition of property, but a law in the course of regulating private lighthouses which said that there would be visits by inspectors and the inspector is entitled on a visit to have made available for his or her use a room in the lighthouse and the exclusive occupation of that room would be squarely incidental.  It would not constitute an acquisition of property even if it involves taking away the right to possession of some part of a person’s land for a short period.  Similarly, there are laws saying that the inspector could use the lighthouse owner’s photocopier to make copies of documents as part of the inspection would be in that category.

Laws saying that a person who is given a right to go on to premises and seize documents has the right to use a photocopier there to make photocopies without compensation in one sense clearly acquires property.  In another sense it is clearly incidental to the regulation of taxation, the customs duties or whatever is being dealt with by the criminal law concerned.

May I show your Honours the way that has been dealt with in the cases.  The first is Nintendo (1994) 181 CLR 134. There is a passage in the majority judgment of six Justices of this Court which puts it in terms of the intention used as a means of construing the Constitution. At the top of page 160 their Honours said this:

It is well settled that s.51(xxxi)’s indirect operation to reduce the content of other grants of legislative power is through the medium of a rule of construction, namely, that ‑

one can ‑

treat” the conferral of “an express power, subject to a safeguard, restriction…as inconsistent with “any construction…which would mean that they included the same subject…and so authorized the same kind of legislation but without the safeguard, restriction ‑

This was argued fairly extensively in the Work Choices Case, as your Honour Justice Kirby indicated.

That operation of s. 51(xxxi) to confine the content of other grants of legislative power, being indirect through a rule of construction, is subject to a contrary intention either expressed or made manifest in those other grants.

Some grants clearly encompass the making of…..  The example of that is copyrights, patents of inventions and designs and trademarks.  Clearly it is of the essence of law in relation to that that they can impact on existing proprietary rights.  That point is made at the bottom of the page.

So that is an example of a power which by its nature necessarily may involve what would otherwise be the acquisition of property.  Bankruptcy power is another example.  But, their Honours go on to say, “The cases also” and we place great emphasis on the word “also” at the top of page 161.  This is a separate category:

establish that a law which is not directed towards the acquisition of property as such –

and that is a convenient phrase –

but which is concerned with the adjustment of the competing rights, claims or obligations of persons in a particular relationship or area of activity is unlikely to be susceptible of legitimate characterization as a law with respect to the acquisition of property . . . The Act is a law of that nature.

The Act there was in the field of intellectual property –

It cannot properly, either in whole or in part, be characterized as a law with respect to the acquisition of property for the purposes of that section.  Its relevant character is that of a law for the adjustment and regulation of the competing claims –

That puts it in language of a characterisation but it can also be regarded as saying that one is concerned when one applies the rule of construction with overall or predominant characterisation as one of the elements.  It is not inconsistent, we would submit, with the cases that say things can have two characterisations.  The next case is Airservices Australia v Canadian Airlines 202 CLR 133.

GUMMOW J:   That is a case in which we need to understand the regulatory structure, I think, which gave rise to this lien and which is asserted, unsuccessfully, I think, to be an acquisition on unjust terms.

MR BENNETT:   Yes.  Your Honour, I was using it solely, for present purposes, for the statement by your Honour at page 497 where you cited Australian Tape Manufacturers and your Honour adopted the phrase:

a genuine adjustment of the competing rights, claims or obligations of persons in a particular relationship –

and if that relation needs to be regulated in the common interest the law is likely to fall outside the section because it is unlikely that any acquisition of property which is an incident of the operation of that law will have imparted to the law the character which attracts 51(xxxi).

Obviously, if your primary purpose is you are acquiring property for its own sake that is one thing, but where the acquisition is incidental it is obviously more likely to be incidental if all that is being acquired is a limited use.  Here, of course, we say it is not even that, it is a service rather than a use, but assuming I fail on that, what is being acquired is a very limited form of property.

GLEESON CJ:   Does the history of the matter make a difference?  Suppose a new industry involving new technology were to be commenced tomorrow and exercising some legislative power the Commonwealth said, “You may construct facilities of that kind and use them for the purpose of that business provided you submit to a regulatory access regime under which competitors will have access to it”.  Is that different from a situation where 50 or 100 years ago somebody who enjoyed a monopoly installed equipment and then a long time later government regulation came on the scene and said you must make that equipment available to your competitors?

MR BENNETT:   It may be different in degree, your Honour, but probably not in kind.  I will be coming in a moment to the characteristics of the present legislation, which we submit bring it clearly within the rule I am describing.  But if I can just finish describing, there are two other cases I wanted to mention very briefly.  The first is Mutual Pools (1993) 179 CLR 155. I only wanted to refer to one aspect of it, and that was a passage cited by my learned friend at page 187 from the judgment of Justices Deane and Gaudron, and my learned friend used this passage to say that because the examples given by their Honours are all examples of the incongruity category, therefore he draws from that the illogical conclusion which does not flow from it that that is the sole reach of the category, and of course, one cannot do that.

When one gives examples either as a justice writing a judgment or as counsel arguing a case one frequently endeavours to use vivid examples which demonstrate the point clearly.  That does not mean that one’s submission or the proposition which appears in the judgment is limited to the example or limited in some ejusdem generis way to the categories of the example, and in my submission, it is unfair to their Honours to read their judgment in that way.

KIRBY J:   What is the page you are referring to?

MR BENNETT:   Page 187, your Honour.  In the middle of the page at about point 4 just below their Honours names they say:

There are some kinds of acquisition which are of their nature antithetical to the notion of just terms ‑ ‑ ‑

KIRBY J:   Well, that is incongruity, is it not?  Like a fine or forfeiture.  To give it back on just terms would destroy the whole point of it so it is incongruous.

MR BENNETT:   It can also apply to the type of exception referred to by Justice Gummow in the passages I have taken your Honour to and referred to in the other passages, the exception in relation to the regulation of an area in which people are engaged where is incidental ‑ ‑ ‑

KIRBY J:   The problem with the expression “a genuine attempt” is it might be as genuine as you like and Treasury and Attorney-General’s might have sat down, genuine as they could be, but it just did not happen to be just, which is what the Constitution promises.

MR BENNETT:   Well, your Honour, here one has a network, the aim of which is to achieve what is ungrammatically described as any – to any communication, and that network obviously has to be regulated, historically has been regulated and so on.  If aspects of that involve saying for the purpose of connecting the A party to the B party someone in the industry has control of some aspect of the movement of the impulses and someone in industry pays money to someone else in the industry where they both contribute in some way to that movement, that one would have thought is classically the type of regulation where any acquisition of property is incidental.

Of course one can have an acquisition of property by something quite trivial, but that does not mean that where the acquisition is simply an incidental making available of some sort of use and being subject to some sort of adjustment between people ‑ ‑ ‑

GUMMOW J:   It is not just between the operators.  All of this is about assisting the position of customers by offering them competition.

MR BENNETT:   Yes.

GUMMOW J:   And this is the price that is being paid as between operators.

MR BENNETT:   Yes.  Your Honour, the final passage I wanted to refer to before I come to the facts on that aspect is WMC 194 CLR 1. In paragraph 87, in a passage in the judgment of Justice McHugh ‑ ‑ ‑

GUMMOW J:   Paragraph 87?

MR BENNETT:   At the bottom of page 38, paragraph 87.

GUMMOW J:   That was Justice Gaudron, I think.

MR BENNETT:   The Commonwealth v WMC Resources.

GUMMOW J:   That was Justice Gaudron, I think.

MR BENNETT:   I am sorry, Justice Gaudron.  I was looking at the head of the page.  It is the conclusion of Justice Gaudron’s judgment.  Her Honour says:

The argument that s 51(xxxi) does not apply to areas external to Australia is not supported…The argument that the Consequential Provisions Act is, in essence, a law for the adjustment of competing rights and interests overlooks the fact that a law may have more than one character.

We accept that.

In my view, a law which effects an acquisition of property will only escape characterisation ‑

under that placitum ‑

if it adjusts competing claims or interests as part of the general regulation of some subject matter or area of the law or if it is “an incident of, or a means for enforcing, some general regulation of the conduct, rights and obligations of citizens or in relationships or areas which need to be regulated in the common interest”.

That, we submit again, is a useful passage.  Your Honour Justice Kirby took a contrary view in this case.

KIRBY J:   The use of “citizens” is a bit suspect there.

MR BENNETT:   Yes.  That is taken, I think, from Mutual Pools & Staff.  It is a flourish that is sometimes used inaccurately in judgments and in other places.  Where one talks of the rights of the citizen, one often is talking about rights of people generally.

KIRBY J:   Some constitutions do limit rights to citizens, but ours generally does not.

MR BENNETT:   I was going to say, your Honour, at the risk of attracting controversy, that the phrase “rights of citizens” is a hendiadys, which has a meaning independent of its composite and ‑ ‑ ‑

KIRBY J:   I am waiting for you to bring in “night and day”, Mr Solicitor.

MR BENNETT:   I have already referred to the fuzzy border between the areas and said that does not matter.  So I have incorporated that by implication.

The features here which bring this case within the category of this type of regulation are a number of – there are a number of them.  The first is the one I have referred to about the fact that this property only exists because of the Act, otherwise Telstra would not own it at all.  It would just be the property of the owners of the land in which it is buried.  The second is the history, and ‑ ‑ ‑

HAYNE J:   But again that proposition is confusing or running together the thing and the legal rights in respect of the thing, and I suspect that the analysis, if it is to be adopted, by reference to notions of adjustment of competing claims and interests must keep sharply distinct.  The concept of property as a thing and the concept of property as rights in respect of a thing, the regulation to which reference is made would appear to be regulation of legal rights and privileges with respect to things where it is the legal rights and privileges which are asserted to be the object of acquisition, not the thing.  I assume you would not deny, would you, that an Act which said all of the physical telecommunications infrastructure is to be vested in infrastructure corporation would constitute an acquisition of property, sure.

MR BENNETT:   Yes, that would have the character, the necessary predominant character, yes.

HAYNE J:   But here where we are concerned with commercial exploitation of a thing we are concerned with the right or the power or the privilege, I am not sure which, to exploit a thing.

MR BENNETT:   The regulatory exception can apply to things as things, and the best example of that is the photocopy paper in the example I gave of the Commissioner of Taxation or a police officer being entitled to use the owner’s photocopier and paper to copy a document there and take it away.  There is a trivial piece of property taken, but it is a thing, and the predominant character of what has occurred is not the expropriation of paper.  That is an incidental aspect of what has occurred.  So I accept what your Honour puts to me and it assists, with respect, in relation to the characterisation of what has occurred here as rights rather than a thing, but we do submit that whether it is regarded as the thing or the rights the exception is capable of operating.

In relation to the history of this, we have provided your Honours with a short document, a short submission, entitled “Legislative History”.  I do not propose to take your Honours right through that, but what is interesting about this history is something that appears in paragraph 17 in relation to the 1989 legislation.  At that time there were three carriers, Telecom, OTC and AUSSAT.  They were all effectively Commonwealth quangos, to use a neutral word, and the Telecom and OTC became Telstra, AUSSAT became Optus in very general terms.  That is an oversimplification, too.

But what is important is this, that between three Commonwealth controlled and owned entities the one which had a certain degree of independence, as these bodies tend to, a carrier was entitled to request AUSTEL, which was the regulator, to direct another carrier to make available a network or facility for its use, et cetera.  In other words, the concept of one carrier using another applied even when all the carriers were Commonwealth owned.  That rather suggests that when these assets became divided up they were assets of a type which had been dealt with in that way.

Now, I do not suggest that there is some sort of legal disability which passes with the assets because of that, but it is of significance in applying the regulatory exception to look at the fact that these assets were assets which traditionally or under prior legislation even when all Commonwealth owned were dealt with that way.

GUMMOW J:   They are mentioned in section 69 of the Constitution, are they not? They came across to the Commonwealth, “posts, telegraphs, and telephones”. They went to the Commonwealth. They are transferred.

MR BENNETT:   Yes.  I do not know that too many of the local loops predated Federation, your Honour.

HAYNE J:   I am not so sure about that.

MR BENNETT:   Maybe some of them did.

GUMMOW J:   Well, paragraph 5 – what you have just handed up.

MR BENNETT:   The analogy, really, for present purposes, and I stress it is only an analogy, is the law of implied easements where your Honours recall that if a person owned two blocks of adjoining land and housed, say, some relatives in one and some relatives in the other and those people habitually used paths across the other pieces of land to get to their land, that is not an easement, of course, it is over one’s own land.  It is what one is doing over one’s own land.  But, when one split it up, the common law would in certain circumstances imply easements where there had been the continuous and apparent quasi‑easements.

Here where the Commonwealth was everybody it required its individual components to engage in this activity of making available components of the network to other operators and it is very much a traditional characteristic of the type of property we are concerned with.  In that sense, we submit, the history supports the characterisation we seek to attribute.  I will not take your Honours through the whole of the paper but I do adopt it as part of my submissions.

The third thing is, of course, that when one is seeking to achieve any communication through a whole lot of wires and exchanges and technology, different aspects of which are owned by different people, one can hardly imagine a clearer situation where it is necessary to have some degree of regulation which may include who sends messages along whose equipment for the purpose of getting the message from A to B.  We submit that is so clearly inherent in and incidental to the scheme that it is not something which one would regard, looked at overall, as an acquisition of property.

GLEESON CJ:   Is it part of this proposition that if you get away from the idea of property, like Blackacre or wires, to rights of commercial exploitation, these rights, or rights of this kind, are of their nature such that it is inherently likely that you are going to have to share them with somebody?

MR BENNETT:   Yes.

GLEESON CJ:   No government is going to allow every operator in this field to construct its own network.

MR BENNETT:   Yes.  Your Honour, the clearest example of that – one example is Santos v Chaffey in this Court a few weeks ago, the area of adjustment of rights of injured workers and employers and insurance companies.  Another example is the fishing cases and the clearest one is Minister for Primary Industry and Energy v Davey 47 FCR 141. I will not take your Honours to it. It is a decision of Chief Justice Black, Justice Burchett, and your Honour Justice Gummow in the Federal Court.

What was said there was that units in a fishery are simply – the regulation of units in a fishery is part of a scheme.  There may be property, in one sense, the property in the legal sense of the word but they are property inherently capable of being regulated and to regulate it is not to acquire it even if the regulation may result in a particular case in a winner and a loser, but we stress that applies whether you treat what is acquired here as part of a bundle of rights or as some sort of right to do something in relation to a particular piece of someone else’s property.  Whichever of the two ways you regard it it is inherently, we submit, within what this Court has laid down in the cases I have referred to.

Finally, may I just make this concluding remark that there are, of course, many benefits which a participant in the scheme gets.  One gets the ability to send one’s messages through the regulated network from the A party to the B party and one gets the benefit that one has something that would not otherwise be one’s property or preserved as one’s property, notwithstanding it is a fixture, and one has the myriad benefits which Telstra gets from being a participant in the industry.

In that context, an adjustment which facilitates the regulation of that industry should not be seen in the same way as an acquisition of property simpliciter would be.

KIRBY J:   Telstra, of course, does not deny these benefits.  It just says, well, there are benefits and there are acquisitions and for acquisitions you have to pay just terms.  I mean, it is all a question of how you analyse it.

MR BENNETT:   It is, your Honour, but one has to ask what is an ‑ ‑ ‑

KIRBY J:   I just do not think it is much use saying, well, there are benefits, because that is irrelevant to the problem.

MR BENNETT:   It is not irrelevant in this sense, your Honour.  It is relevant to the question of the participant in an industry participating in that industry and part of the price is that the industry is regulated and regulation may involve, as incidental to regulation, things that might otherwise be treated as acquisitions.  Here, of course, we say we do not even get to that stage because there is no acquisition and no relevant property and so on, but if one does ‑ ‑ ‑

KIRBY J:   The problem is that all legislation will include regulation of some kind and where you draw the line against, say, Mr Archibald’s horror story of you saying, “Well, it’s part of our regulation now.  We’re just going to take it back from Optus and we’re going to make it part of a public system” you could not seriously argue that that would not be acquisition on just terms of its property.  So it is difficult to say when it is regulation and when it is acquisition.  This is an area of the Court’s jurisprudence, in my respectful opinion, where it is quite difficult and it is very difficult to have clear pathways.

MR BENNETT:   Your Honour, the line is very hard to draw and there will no doubt be borderline cases.  This is not a borderline case.  This is a case, for all the reasons I have given, where there is simply not in the sense of the placitum an acquisition of property.  One only gets an acquisition of property here by looking at little things in isolation and ignoring everything else.  My friend looks at the unplugging and plugging of the jumper leads and says, “Look, our property is being taken away from us and given to someone else for a period and the only person who can use it is the person to whose equipment it is connected”, and so on.

Those are matters of characterisation and he looks at those and says, well, look at them in total isolation and there is an acquisition of property.  We say look at the overall scheme and these things are incidental to it.  If you look at the photocopy paper, there is an acquisition of property.  If you look at nothing more than the fact that a sheet of paper that was the property of a person has been taken away by the Commissioner of Taxation.

GLEESON CJ:   The history could be important or could be relevant, could it not?  Let me give this example.  A lot of US litigation about compulsory access to essential facilities of which an example is a ski lift going up a mountainside with different resort operators wanting their customers to have access to the ski lift.  If somebody wants to build a ski lift, Macquarie Bank, if you like, or a particular resort operator, and the government says, “You can build that with all the environmental consequences that has provided you allow your competitor, or the manager of a ski resort on the other side of the mountain to use it or to sell tickets to customers who want to use that ski lift”, then that might be one thing.

Might it be different in terms of acquisition of property if that lift has been there for 20 years and legislation is then introduced requiring the owner or operator of the lift to make it available to customers of its competitor?

MR BENNETT:   We submit a difference of degree but not of kind.  The first would be a stronger case for coming within the exception than the second.  We are assuming there is a State border along this ski lift so that it is within Commonwealth power to regulate the ski ‑ ‑ ‑

KIRBY J:   No, maybe they are corporations.

GLEESON CJ:   I am not putting it as a question of power.  I am just putting it as a question of what constitutes an acquisition of property.  There are State laws about acquisitions of property, too.

MR BENNETT:   Yes.  Where one acquires a mere right to use, that falls in the class of charter referred to in the Australasian United Case.  Where the ski lift operator is still operating the ski lift, what has been acquired is a service not ‑ ‑ ‑

GLEESON CJ:   But the operator of the resort on the other side of the mountain can sell tickets to skiers which will entitle them to ride on the lift.

MR BENNETT:   Yes, and what has been acquired from the owner of the lift is a service rather than property in that example because the owner continues to operate the lift, can stop it and start it for safety reasons and can put people in the other chairs on the lift and hang other chairs from it and so on.

KIRBY J:   Do you say that the 20 year later acquisition of that service or imposition of that obligation is not an acquisition of property?

MR BENNETT:   It is acquisition of a service, your Honour.

KIRBY J:   And therefore not of a property?

MR BENNETT:   Yes.

KIRBY J:   I think an economist would laugh at that suggestion.

MR BENNETT:   An economist would laugh at the Australasian United Shipping Case.  Fortunately the law is not dictated by economists.

GUMMOW J:   Economists speak with many tongues.

MR BENNETT:   They do, your Honours, and I could tell many anecdotes but I will refrain from doing so.

KIRBY J:   I am sure economists would have equal comments on lawyers.  It is just that we have the last word.

MR BENNETT: Yes, well, we do, your Honour. No one has ever suggested that section 51(xxxi) needs to be construed as requiring that all legislation must maintain economic equivalence. It could not possibly be construed in that way. The chair lift example might be closer to the boundary than this example and it would be a more difficult example to get into the regulatory exception but it might be a clear example in relation to the Australasian United Case.  So one way or the other one may get there.

Those, your Honours, subject to making it clear that I formally adopt everything in my submissions and have not intended to waive anything I have not referred to in them, those are the submissions in relation to acquisition of property.  I should formally also adopt the submissions on acquisition of property by the second defendant.

GLEESON CJ:   Thank you, Mr Solicitor.  Yes, Mr Young.

MR YOUNG:   My submissions will address the just terms argument and I will confine my submissions to legal submissions going to the operation of Part XIC and the relevant provisions of the Telecommunications Act 1997.

KIRBY J:   Would you remind me of your interest to support the Commonwealth in this respect?

MR YOUNG:   Yes.  We support the interests of the Commonwealth.  In fact, we have divided the argument between Mr Bennett and myself to ensure that there ‑ ‑ ‑

KIRBY J:   I am just curious why a body which takes on under its statute a semi‑neutral and regulatory responsibility has a part as an interest in the matter.

MR YOUNG:   This case, your Honour, goes to the legal operation of Part XIC.

KIRBY J:   Why are you concerned whether Telstra gets compensation or gets a particular compensation?

MR YOUNG:   We are the specialist body charged with the administration and enforcement of Part XIC and also the enforcement of the relevant provisions of the Telecommunications Act 1997. This case is not directed towards any particular decision or conduct of the ACCC, it is a case about the legal operation of the provisions of Part XIC and the Telecommunications Act which, relevantly, my client is charged with the administration of.

KIRBY J:   I realise that, but it does not seem to touch upon a claim for just terms by the plaintiff.

MR YOUNG:   Your Honour, the argument that is put about just terms is twofold: first, that immediately enforceable access obligations arise by force of section 152AR; and, secondly, that results in a disconnect with section 152EB; and, thirdly, that the provisions of arbitral decision‑making processes under sections 152CM, CR, et cetera, are incapable of affording just terms. They are all questions of law turning on the legal operation of the provisions of this part and also section 591 of the Telecommunications Act.  We therefore, in our submission, do have a direct interest in putting legal submissions as to the meaning and operation of the relevant legislation.

HAYNE J:   That is to advocate a particular construction of the Act?   What role is it of the regulator to advocate a particular construction, rather than simply to administer the law as ultimately determined?

MR YOUNG:   Your Honour, we do submit it is a relevant role for the ACCC to put submissions as to the correct legal construction of these provisions of Part XIC.  It is a specialist area.

GUMMOW J:   This is a chevron doctrine, is it?

MR YOUNG:   No, your Honour, it is not.  To overcome any difficulty, Mr O’Bryan and myself are instructed to appear for the Commonwealth – with Mr Bennett and Mr Horan to put the second part ‑ ‑ ‑

KIRBY J:   But the Commonwealth has finished its submission.

GLEESON CJ:   We will give you leave to reopen.

MR YOUNG:   If your Honour pleases.  Can I turn to Part XIC and deal firstly with the argument that section 152AR creates immediately enforceable access obligations.  In our submission, on the proper construction of Part XIC, section 152AR works in combination with section 152AY to define the content of enforceable access obligations and, in short, the access obligations referred to in section 152AR are not enforceable within the scheme of this part until terms and conditions of access have been finalised in one or other of the ways contemplated by Part XIC.

GUMMOW J:   What is the scheme of this, Mr Young?  The Commonwealth makes the payments under EB, tops it off as it were, but it does not make – it is the competitor who makes the other payments.

MR YOUNG:   Under the arbitration process, yes, your Honour.

GUMMOW J:   Yes, so what is the legislative scheme?  Why is there this bifurcation?

MR YOUNG:   Well, the legislative scheme bifurcates it in that way because access is a means of providing an overall efficient and competitive telecommunications system.  If another commercial party seeks access for commercial purposes, that is, to compete and offer a better product to consumers, the scheme of the legislation is that in the first instance they should pay for that access.  The priority under the legislation is that the amount of payment and other terms and conditions of access should be resolved primarily by agreement, and I will take the Court through provisions that demonstrate that priority accorded to agreement.

If agreement cannot be achieved or if the access provider does not unilaterally undertake appropriate terms and conditions, there is an arbitral process that is established.  It is an arbitral process which is then concerned to hear submissions from Telstra, if that be the access provider, or the access seeker as to an appropriate set of terms and conditions of access including price, and the role of the Commission is to hear and determine that dispute in a fair manner and to arrive at a fair settlement, taking into account the criteria stated in the Act.

The criteria are the same criteria that reflect the objects of Part XIC and also the objects of the Telecommunications Act that establish the licence regime in the first place.  Only if the commercial parties who seek and gain advantages from access arrive at a result or the Commission determines a result by way of arbitration, that is, one that does not afford a fair and reasonable compensation, then there is a safety net, and the Commonwealth picks up the bill of the safety net.  That is the scheme.  There is a similar scheme that runs through the Telecommunications Act and then culminates in section 591 which is the equivalent safety net provision in the Telecommunications Act.

GLEESON CJ:   Presumably upon the hypothesis that you only get to this point if somebody has persuaded the Federal Court that the ACCC’s determination has not yielded justice?

MR YOUNG:   Yes.  The curious thing about Telstra’s proposition is that they attack the scheme, the mechanism, the criteria or the manner of determination, not any particular outcome.  Telstra’s reply says it is no part of their case to say that any outcome that will be arrived at is necessarily unfair or unreasonable.

GUMMOWJ:   Did they say that?

MR YOUNG:   Yes, it is towards the end of their reply, your Honour.  It is paragraph 64 on page 16 of Telstra’s written reply.  I mention that point because it is a point that has arisen in the United States under the takings clause but I am concerned with the assessment of just compensation where there is a takings rather than the question whether there is a taking or not.  There are two United States Supreme Court decisions, Duquesne and Verizon referred to in Optus’ written submissions at paragraph 38, that make this point.  The principle adopted by the United States Supreme Court in assessing just compensation under the Fifth Amendment requires that the outcome be examined to determine whether it is just or unjust.

KIRBY J:   I must admit, I read that to mean you, the High Court, are not concerned precisely with what just terms requires.  You are concerned with whether the constitutional prescription is attracted and you do not have to try and work it out.  That is how I read it.

MR YOUNG:   Yes, well, I am using it in this fashion, your Honour.  Your Honour may recall Mr Archibald made a number of submissions that there could be no assurance of just terms under the arbitration process.  He gave two instances, your Honours.  The first was that there was a power to backdate any arbitration determination back to the date of the inception of the dispute, but his complaint was that it was a power to backdate, not an assurance that there would be a backdating.  He made the same point about interest, that is, there was a power to award interest where there was some shortfall of payments or shortfall of compensation under whatever interim arrangements existed whether by way of agreement or interim determination and he made the same point. 

There is a power in section 152DNA(6) at page 238 to require the payment of interest, but no prescription that interest must be awarded at some prescribed rate.  So his complaint is with the methodology set up, not the complaint that an outcome is unfair or unreasonable or unjust.  The point I make simply about that is that way of attacking the statutory scheme for the provision of fair and reasonable compensation is at odds with authorities in this Court and it is also at odds with the approach adopted by the United States Supreme Court.

It is not good enough to attack the scheme that the legislature has set down for the determination of just terms.  One needs a concrete outcome to determine whether the outcome is just or unjust in terms of the constitutional guarantee.  I will come to that in more detail but, we would submit, that is the overall scheme of Part XIC.

KIRBY J:   The more you explain your role and your standpoint before this Court the more anxious I have to tell you I am that what you are doing is consistent with what this Court said in Bond v Australian Broadcasting Tribunal and has repeatedly said in many cases since.  I just say that to you because I would not want to criticise the role that has been taken by the Commission without giving you the opportunity to deal with that later if you want to.

MR YOUNG:   Yes, thank you, your Honour, I will consider your Honour’s comment.

KIRBY J:   See, we have to sit here and supervise a lot of tribunals and neutral bodies in the Commonwealth and our task could be increased if we had them all coming along and not submitting.

MR YOUNG:   The point I am making, your Honour, is that the scheme set down by the legislation I am simply submitting is one that is reasonably adapted and capable of arriving at a provision of fair and reasonable compensation.  That is the approach adopted in this Court in cases such as Grace Brothers.

Our learned friend inverts the Grace Brothers approach and says the scheme must fail the constitutional test unless it provides an assurance that in every one of the very many cases to which it might apply it will necessarily produce a fair and reasonable outcome.  My submission is that that is the wrong test as postulated both by this Court and, by analogy, by the United States Supreme Court in dealing with a similar task, that is, the assessment of just compensation under the Fifth Amendment.

My submissions do not go to any particular application of the criteria because that is not at issue in this case.  Can I go back to section 152AR and make this submission.  It is our submission that the scheme of the part is that that section works in conjunction with section 152AY and it is only working together that they define an enforceable access obligation.  Scattered through the part, one finds references to compliance with access obligations on terms and conditions.

That, for instance, appears in 152AR(9) itself at page 160.  It appears in section 152AY(2).  Compliance on terms and conditions and it appears in section 152CP(2)(c) and that is the formula that is repeated, always putting together compliance with obligations with terms and conditions.  Unless 152AR and AY are read together the part does not operate harmoniously because it produces, on Telstra’s argument, a disconnect with the safety net in section 152EB.

HEYDON J:   Mr Young, does that mean that on request under 152AR by a service provider the access provider could say, “I am not going to supply anything until we reach an agreement about the terms and conditions”?

MR YOUNG:   Subject to the ability of the Commission to make an interim determination requiring that access be provided and the Commission has that power.  What has happened in practice, as the stated case shows, is that Telstra has propounded a set of terms and conditions of access, access seekers have entered into what are called the LSS and ULLS agreements in the stated case which are effectively provisional terms and conditions of access which contain a provision that they are without prejudice to the right of the access seeker to notify a dispute.  That is what has happened in practice and that what the stated cases says in that regard.  So, an interim arrangement could be made either by agreement or by the Commission’s interim determination, if necessary.

GLEESON CJ:   But if there is an impasse the Commission can break the impasse by making an order?

MR YOUNG:   Yes, the power to make an interim determination is in 152 CPA at page 216.

HEYDON J:   Is an interim determination a determination?  Yes.

MR YOUNG:   Yes.

HEYDON J:   “A determination may be expressed to be ‑ ‑ ‑

MR YOUNG:   It is to be read, your Honour Justice Heydon, in the light of the final determination provision on the preceding page, page 215, 152CP.  The Court will see that one of the exemplified determinations that may be made under (2)(a) is to “require the carrier or provider to provide access to the declared service by the access seeker”.  So a determination that access must be provided can be made on a final or interim basis.

HEYDON J:   So your argument is basically – if you agree you are not in a position to contend that acquisition was on unjust terms what you should have done was just not agree, but if you do not agree and you are forced to a determination it is the determination that causes the acquisition, not the statute?

MR YOUNG:   Yes, that is the consequence of a – the interpretation we are advancing of 152AR and AY which produces harmonious operation of the whole part and gives life to 152EB.

GUMMOW J:   Can you just explain that again, Mr Young?  The harmony?

MR YOUNG:   The harmony is that if one adopts the construction that it is only 152AR and AY operating in conjunction that produces enforceable access obligations with terms and conditions of access, then it is the determination which in cases of disagreement which will be the final step in any acquisition of property and that would thereby satisfy the opening condition of section 152EB.

GUMMOW J:   Thank you.

MR YOUNG:   That leaves aside the finalisation of terms and conditions by agreement or by unilateral undertaking by Telstra, but those two situations do not call for a need for just terms because Telstra as a commercial organisation has agreed the terms and conditions including price, or it has unilaterally by undertaking, accepted a set of terms and conditions including price.  So the only circumstance in which you have a need for just terms is where there is a determination, as the second but necessary step in the establishment of enforceable access obligations to which ‑ ‑ ‑

HAYNE J:   You use the expression “enforceable access obligations” for present purposes confining attention to 152AR(3) read in the fashion you say it should be read.  Do you say that an access provider although requested to do so by a service provider need not supply the service without agreement or determination?

MR YOUNG:   The answer is essentially yes.  There may be a question whether, given that there is a power to compel the provision of access, whether the structure of 152AR suggests that there is some need to negotiate or proceed to undertake or have finalised by way of determination the set of terms and conditions of access because the sword is hanging there, as it were.  But subject to that minor qualification – and it is probably only an observation about the practical working out of these provisions – my answer would be yes.  In our submission, your Honour, what 152AR(3) does is to describe the obligations at a high level of generality.  It does use language that “provide a must, if requested, supply” et cetera.

My learned friend rather put it, as we understood it, “If you don’t like the rules of the game you pick up your bucket and you go home”.  The very matter of which we complain is that we cannot pick up our bucket and take it home.  What this declaration does in respect of our property, our bucket, is to say, “You cannot cease to use it and take it away and leave it unused.  You must make it available – you must make the bucket available, you must give the bucket to the other player and let that other player do with the bucket what they will.”

KIRBY J:   That is because it is a very old bucket that was made in much earlier times from the blood and sweat of the people of Australia.

MR ARCHIBALD:   The point applies equally to a new bucket and an old bucket, in our submission.  If one takes the fishing licence situation, your Honour Justice Gummow’s analysis in Bienke, for example, in our submission, involves the proposition that one cannot through a licence mechanism by a – what would amount to a circuitous device – seek to take the boat that the fisherman otherwise uses.  One can through a licence regime delineate the rules of fishing, but one cannot through the licence regime take the boat.  In the sandpit example you can ‑ ‑ ‑

KIRBY J:   But you can have rules that lead to the forfeiture of a boat which is incongruous to provide compensation then.

MR ARCHIBALD:   There are means by which one can address problems of various kinds, but once the licence condition is directed to the boat it is impermissibly seeking to acquire property.  It is directed to the property as such and that is an impermissible step.  Here an answer might be Telstra can say, “We don’t like having to provide wholesale carriage services to other industry participants we choose”.  I do it only by hypothesis for the purpose of analysis, “we choose to vacate the filed and not to use our copper loops at all”.

But to do that is to fail to recognise that the ULLS service would allow the access seeker to say, “We insist that you provide the loop to us” and that is directed to the property subject matter and reflects the impermissible step which in our submission is involved in the second stage or the second phase of the access regime which is ordained by Part XIC.  It is sometimes therefore said, “Well, you can avoid”.  No doubt one can avoid the impact and burden of these provisions by ceasing to engage in the activity at all.

First, as I have said here, one cannot do that because of the criterion upon which the provision operates, but secondly, and I well recognise the limitations of the United States jurisprudence on the takings provisions but in Loretto and Gulf, both of which are decisions on our list, this type of point is addressed and the court ‑ ‑ ‑

GUMMOW J:   What is the citation?

MR ARCHIBALD:   Loretto 458 US 419 is a decision of the Supreme Court. The passage we wish to refer to is at footnote 17. In Gulf, which is a decision of the United States Court of Appeals, Eleventh Circuit, 187 F 3d 1324, the passage is at page 1331 commencing halfway down the left‑hand column and continuing to the right‑hand column, the particularly pertinent passage being at point 10 in the left‑hand column:

the bundle of rights that a utility has in its property includes the right to permit its use for wire communications, and exercise of that right may not be conditioned on being forced to submit to a -

and here we get to the takings language –

permanent, physical occupation of it of its property without payment of compensation –

but mutatis mutandis, in our submission, the same point applies to our acquisitions law.  So that history does not matter.  The proposition we have addressed would apply as much to the new bucket or the new wire as the old bucket or the old wire, but if history were to be important, or perhaps not so much history but time and sequence, as Georgiadis might convey, then we do say because the PSTN with its copper loops was in existence prior to the 1991 legislation and came to Telstra through the processes described in the stated case if there is some immunity for the old wire then that immunity would be attracted here.

In other words, the wire was never subject to an ab initio impairment which might be the case with a new industry participant entering today.  So there may be some distinction, in the event that our other arguments were not embraced by the Court, there may be some distinction ultimately because of that difference.

My friend, Mr Gageler, said this afternoon that Telstra was not a person until after 1997.  Section 26 of the Australian and Overseas Telecommunications Act 1991, which is at page 15 in volume 1 of the supplementary materials, gave character to the then AOTC for the purposes of the laws of the Commonwealth.  AOTC was by that section taken:

(a)not to have been incorporated or established for a public purpose or for a purpose of the Commonwealth; and

(b)not to be a public authority . . . 

(c)not to be entitled to any immunity or privilege of the Commonwealth –

except as so expressly provided.  That provision itself might well mean that for purposes of the guarantee, Telstra was a person from the outset.  But, in any event, my learned friend’s argument, it does involve failing to make a distinction between Telstra and its then shareholder.  Of course, under modern corporations analysis there are a number of stakeholders in a corporation not confined to the shareholder and, in our submission, it would be wrong to treat Telstra as the Commonwealth for purposes of the constitutional guarantee during that period before what my friend called T.one. 

In relation to just terms and the operation of 152AR alone or in conjunction with 152AY, Mr Young drew attention to the provisions of subsection 152AR(9) at page 160 in the first volume.  In our submission, that provision is essentially prospective, which is to say that one does not wait to see what the terms and conditions are and then address the question whether the access seeker passes or fails the test, rather, one projects into the future and asks the question, would the access seeker fail or would the access seeker be likely to comply?

GUMMOW J:   Can we go back to this notion of “person”, Mr Archibald?

MR ARCHIBALD:   Yes, your Honour.

GUMMOW J:   The mere fact of incorporation cannot be enough, can it?  The Commonwealth Bank, as we know, is the Commonwealth, used to be for section 75 purposes.  Why does not that sort of reasoning apply here, 51(xxxi)?  The mere imposition or creation of corporate character by law of the Parliament on a body such as this, why does it render it a citizen, in effect, for this purpose?

MR ARCHIBALD:   I think as presently advised all that I can draw attention to is section 26.

GUMMOW J:   That cannot overreach the Constitution. Was there any notion of ministerial control at any time? I notice there is 20 billion in dividends being paid.

MR ARCHIBALD:   Yes.  I have to say this is something that we have not addressed.  I do not know if a short note might assist the Court later rather than endeavouring to find further elements, which I think there are.  That may be the most satisfactory way to deal with it.  Of course, what we are concerned with is ‑ ‑ ‑

GUMMOW J:   There just seems to be a large question with the transmutation of what used to be Commonwealth utilities into partly privatised and fully privatised corporate form.

MR ARCHIBALD:   Well, that is so, and it might also be influenced by the supplementary material which is going to be provided to the Court, and we might perhaps combine a note that would deal with that.  But what is complained of, of course, is not an acquisition of property occurring during the pre-T.one period.  We are looking at acquisition of property now.  I think the argument really only goes to the way in which one might view ‑ ‑ ‑

GUMMOW J:   I am not sure about that either.  T.one was only a tranche, was it not?

MR ARCHIBALD:   Yes, yes.  I am not sure what the proportion was, but a tranche, and certainly not 50 per cent.  But how ultimately the circumstance would bear upon the way in which Telstra was to be viewed during the period up to that point could only bear upon notions as to the way in which the constitutional guarantee was then incapable of engaging in respect of it.  We are looking at a period well after that period.  If it bore upon questions of the nature of acquisitions, voluntariness and so on, then the circumstance that Telstra was of that character, if that is the correct characterisation, may bear upon it.

GUMMOW J:   Well, it says in paragraph 19 of the stated case that:

since 1 January 1997, Telstra has paid to the Commonwealth dividends of approximately $20 billion.

MR ARCHIBALD:   Yes.

HAYNE J:   Just on that question of voluntariness, is there anything you would say in answer to the proposition advanced by Mr Gageler in paragraph 14 of his written submissions that the acquisitions with which 51(xxxi) is concerned are those that are compulsory, not voluntary?

MR ARCHIBALD:   To the extent to which our friend sought to draw upon the notions touched on in the cases that he referred to, we would accept that features of voluntariness must attend any characterisation of an acquisition.  There is, however, in our submission, no discrete or separate absence of compulsion exception.  It is a factual element that bears upon whether there is something amounting to an acquisition.  In the cases to which attention was drawn, in our submission, there was not a property subject matter which was touched on by the provisions in question that would be capable of giving rise to an acquisition of property.

HAYNE J:   What was said by Mr Justice Dixon in BMA may perhaps be understood as responding to two separate matters. Firstly, the argument advanced by the Attorney‑General for the Commonwealth as recorded at page 224 of volume 79 CLR 201 where Dr Evatt said that:

So that the acquisition, if it be regarded as acquisition, is a voluntary acquisition, and no question of just terms can arise –

that argument was in play and it may be that what his Honour said at 270 is also to be understood as responding to some statements made in McClintock v The Commonwealth 75 CLR 1, which his Honour refers to earlier on 270 and which seems to be the source of the proposition, the view has been expressed that 51(xxxi) covers voluntary acquisitions. His Honour goes on to deal with that and discountenanced that proposition. Do you say that 51(xxxi) is concerned with compulsory acquisitions?

MR ARCHIBALD:   The acquisition would not be worked by the statute unless it had features of compulsion, otherwise it takes place outside the statutory regime.  So at least in some respects elements of compulsion must be present.

HAYNE J:   The proposition which I understood then to be advanced, dependent on that first one, was Telstra is a volunteer in this industry as a licence holder, this comes with the licence, it comes with the territory.

MR ARCHIBALD:   That bears upon the issues I have been recently addressing as to whether such consent as there maybe might be seen to extend or be capable of extending to acquisition of property as distinct from the provision of services which are otherwise within the permissible ambit of regulatory access provisions.  Once one steps beyond that, one is (a) beyond services which do not touch property and equally beyond any sphere in which there might be said to be any voluntary participation.

In relation to 152AR(9) I have dealt with the futurity point.  In relation to 152CP(3) and 152CPA, my learned friend, Mr Young, in our submission, wrongly proceeding upon the footing that it was our contention that there was no room for an access dispute to occur unless there had been a 152AR request.  That is plainly not the case because if one has regard to section 152CM at page 213 one sees that access disputes can be the subject of valid notices where there is no declared service supplied and where standard access obligations do not then apply, but it is proposed that a declared service be supplied and where a standard access obligation will apply, that is to say, no request having been made in the absence of the supply of the declared service, or a declared service being supplied but no request having been made, the statute allows notices of dispute to be given and for those disputes to be arbitrated before the point at which requests are in fact made. 

Plainly, in our submission, therefore, the provisions to which my friend refers, 152CPA, is directed to that kind of case and CP(3) is directed to the position where there have been requests and therefore, as the section stipulates, there is already imposed by Division 3, which deals with the standard access obligations, an access requirement.

So there is clear work for that section to do to break up the instances in which the access dispute will, on the one hand, be conducted in an

environment where there is an existing application of the standard access obligations and, on the other hand, where there is not, and my learned friend’s argument did not address and did not cater for that.

In relation to the argument as to whether just terms were afforded by the regime established under Division 8, my learned friend relied upon the Grace Brothers balancing of interests considerations.  We say that those notions are not the current law.  Your Honour the Chief Justice said in Smith v ANL in paragraph 8 that the current law does not involve any such balance of exercise.  So those considerations may be put to one side.  My learned friend’s argument was addressed exclusively to the criteria in section 152CR(1).  He endeavoured to present no answer at all to our argument based upon sections 152CR(2) and (3), 152CQ(6) and 152AQB(9) and those propositions remain unanswered. 

We agree that there is no merits review in respect of the Commission’s determinations.  I think what I had been casting around for yesterday was our footnote 13 at page 8 of our primary submissions.  We there identified that there had once been a merits review provision, but it was eliminated by amendment to the Act in 2002, the merits review provisions having been found in sections that were identified as 152DO to DS.  So now there remains only judicial review of the kind mentioned by our learned friends earlier today. 

In relation to section 152EB, we agree that the concept is boilerplate but the activating event delineated in this section is a bespoke provision directed to the circumstances of Part XIC and therefore to be approached upon that footing.  In our submission, none of the ways in which the Commonwealth or the Commission or other parties have endeavoured to explain the construction which should be accorded to the section is open on the words of the section.  It is asking too much even in a Cooper Brookes context of the words to do, and the very circumstance that I think now three alternative answers have been given, demonstrates that the certainty requirement in respect of the Cooper Brookes principle could not here apply. 

In relation to section 591, we rely upon our written submissions. Insofar as there was an argument developed today as to a dual causation circumstance in the legislation, the circumstance, we say, does not in fact exist for the reasons given in our contentions. The dual causation feature might be addressed in the way suggested in Commissioner of Taxation v Sara Lee Household & Body Care 201 CLR 520, copies of which we will provide to the Court in a moment. If the Court pleases.

GLEESON CJ:   Thank you, Mr Archibald.  We will reserve our decision in this matter and we will adjourn until 10 o’clock tomorrow.

AT 4.19 PM THE MATTER WAS ADJOURNED