Telstra Corporation Limited v Commonwealth of Australia & Ors

[2007] HCATrans 661

[2007] HCATrans 661

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 TUESDAY, 13 NOVEMBER 2007, AT 10.16 AM

Copyright in the High Court of Australia

MR A.C. ARCHIBALD, QC:   May it please the Court, I appear with my learned friends, MR N. PERRAM, SC and MR J.K. KIRK, for the plaintiff, Telstra.  (instructed by Mallesons Stephen Jaques)

MR D.M.J. BENNETT, QC, (Solicitor‑General of the Commonwealth of Australia):   If the Court pleases, I appear with my learned friend, MR C.J. HORAN, for the first defendant.  (instructed by Australian Government Solicitor)

MR N.J. YOUNG, QC:   May it please the Court, I appear with MR M.H. O’BRYAN for the second defendant, the ACCC.  (instructed by Australian Government Solicitor)

MR N.J. O’BRYAN, SC:   If the Court pleases, I appear with my learned friend, MR M.J. HOYNE, for the third, fifth, seventh, eighth, eleventh, twelfth and thirteenth defendants.  (instructed by Herbert Geer & Rundle)

MR S.J. GAGELER, SC:   If the Court pleases, I appear with MR S.J. FREE for the fourth and sixth defendants.  (instructed by Clayton Utz)

MS M. SLOSS, SC:   If the Court pleases, I appear with my learned friends, MR  D.B. CLOUGH and MS K.L. WALKER for the ninth and tenth defendants.  (instructed by Nicholls Legal)

GLEESON CJ:   MrArchibald, I think the Registry mentioned to the parties that I have some shares in your client.

MR ARCHIBALD:   Yes, your Honour.

GLEESON CJ:   Yes, Mr Archibald.

MR ARCHIBALD:   We propose, if it suits the Court’s convenience, to commence by identifying relevant legislative provisions, then to consider features of some of the more important facts and then, mindful though we will naturally be that the expression we are concerned with is a composite expression, we will then seek to move through aspects of the issues:  first, is there an acquisition of property; secondly, is the law one with respect to the acquisition of property; and, thirdly, whether just terms are afforded by the legislative provisions.

Might we commence therefore by going to the legislation.  I think the Court has been provided with two volumes of legislative provisions which are paginated.  There are also two supplementary volumes.  The first two volumes to which I refer contain respectively in volume 1 the salient provisions of the Trade Practices Act and the second the salient provisions of the Telecommunications Act.  We are concerned with Part XIC of the Trade Practices Act which provides industry‑specific measures and regimes for the telecommunications industry. 

Part IIIA of the Trade Practices Act contains the general provisions of the Act for access to infrastructure facilities, but since 30 April 1997 there has been abstracted from that general provision the provisions for the telecommunications industry which are to be found in Part XIC.  The abstraction occurs by reason of the provisions of section 152CK which, if members of the Court are using the volumes provided, is at page 210 in the first volume.  By reason of subsection (1) of that section, notifications of disputes under Part IIIA are precluded if:

(a)      the dispute relates to one or more aspects of access to a declared service (within the meaning of –

Part XIC.  That identifies the pivotal provision of Part XIC, namely the concept of a declared service.  That concept is dealt with in section 152AL at page 147.  By subsection (3) of that section:

The Commission may, by written instrument, declare that a specified eligible service is a declared service if –

certain stipulated conditions are satisfied.  We need not be detained by the conditions which must be satisfied.  The concern is with the character of the declared service.  What may be declared is an eligible service, and subsection (1) identifies an eligible service.  The section provides that an eligible service may be one of two kinds of service where that service is supplied in the way identified.  The first category of service in paragraph (a) is “a listed carriage service” and the second category “a service that facilitates the supply of a listed carriage service”.

In order to understand the concept of “listed carriage service” one tracks through definitions in the Telecommunications Act, as is indicated in subsection (1).  So if one goes to the Telecommunications Act section 16 at page 304 one sees the provisions defining what are listed carriage services.  They are, in substance, carriage services between points, one point at least of which is in Australia.  So the concept of listed carriage service is the simple notion of a carriage service, one point of which is in Australia.  “Carriage service” itself is defined in section 7 at page 291:

carriage service means a service for carrying communications by means of guided and/or unguided electromagnetic energy. 

An illustration of what is a guided electromagnetic energy is the guidance which is afforded by a copper pair, the local loop with which this case is concerned.  Unguided energy is, in substance, energy passing through the air as with a mobile telephone service.

Nothing in particular turns upon the particularly specific elements of the notion of carriage service for the purposes of the present case.  If I might return to section 152AL at page 147 in volume 1 of the legislative provisions, eligible services are those types of service set out in (a) and (b):

where the service is supplied, or is capable of being supplied, by a carrier or a carriage service provider (whether to itself or to other persons).

The first category is that of carrier.  The second category is that of carriage service provider.  “Carrier” is defined in Part XIC of the Trade Practices Act in section 152AC at page 143 but only by stipulation that that expression “has the same meaning as in the Telecommunications Act”.  The second category of person identified in section 152AL is carriage service provider and that expression is defined in the same way also at page 143 by reference back to the Telecommunications Act.  If one goes to the Telecommunications Act, the path leads one to section 7 at page 292 “carrier means the holder of a carrier licence”. 

The next definition shows that a carrier licence is “a licence granted under section 56” and section 56 shows the way in which a carrier licence might be granted.  The detail of that does not matter for present purposes.  One should notice in relation to a carrier section 42 of the Telecommunications Act which is at page 329.  The section imposes a prohibition upon use by an owner of a network unit unless the owner holds a carrier licence.  I think these provisions are really the last of the intricacies which it is unfortunately necessary to go to.  So if a person owns a network unit, it may not use that unit to supply a carriage service to the public unless the owner holds a carrier licence. 

“Network unit” is defined at section 26 of the Act at page 315 as being constituted by what are called line links connecting distinct places in Australia.  A “line link” is specified in section 30 at page 318 as being constituted by a line.  A “line” is defined at page 297 of the volume, section 7 of the Act, as meaning “a wire, cable, optical fibre” and some other things “used, or for use, as a continuous artificial guide for or in connection with carrying communications by means of guided electromagnetic energy” tying back to carriage service.

Here we have arrived at the wire which, in the circumstances before the Court, consists of copper or aluminium pairs, being what is colloquially called the local loop, and that is what we are concerned with.  Then to understand the second category – we have now seen the carrier category – “carriage service provider”, the definition in section 7 of the Telecommunications Act at page 291 takes one to section 87 at page 369 and that provides in subsection (1) that:

if a person supplies, or proposes to supply, a listed carriage service –

section 16 –

to the public using:

(a)a network unit owned by one or more carriers; or

(b)a network unit in relation to which a nominated carrier declaration is in force;

the person is a carriage service provider.

We do not need to address the detail of what is a “nominated carrier declaration”, it is provided for in section 81, but the essence of the definition of “carriage service provider” therefore is that the person in question will supply listed carriage services by use of a network unit.  Here we are concerned mainly with the Telstra PSTN, the public switched telephone network, a component of which is the local loop.  So we are concerned with a person supplying listed carriage services for the public by being able to harness the carriage functions formed by that network unit.

If we return to section 152AL in the Trade Practices Act, the Commission may declare as declared services listed carriage services or services that facilitate the supply of listed carriage services where those services are supplied either by carriers or by carriage service providers.  This case is concerned with two particular services, the unconditioned local loop service, ULLS, and the line‑sharing service, the LSS, both of which we say, although it is not critical to our argument, fall within section 152AL(1)(b).  That is to say, they are services that do not themselves involve carriage of communications but they facilitate the supply of carriage of communications.  Both those services were declared by the Commission, the details of which we will provide to the Court shortly.

Under Part XIC in a way that is very different to Part IIIA, the consequence of declaration is itself attended with consequences as to access.  Under Part IIIA other steps need to be taken but under Part XIC section 152AR, a central provision in the matter before the Court, imposes access obligations.  That section is found at page 157 of the volume.  Subsection (3) shows that upon request by a service provider, an access provider must:

(a)supply an active declared service to the service provider –

So we have some permutations of expressions hitherto seen.  One understands the content of those expressions from subsection (2).  So that:

if a carrier or a carriage service provider supplies declared services . . . 

(a)the carrier or provider is an access provider; and

(b)the declared services are active declared services.

So the supply of a declared service, whether to the entity concerned or to a third party, renders that declared service an active declared service and if the service is of that character, if it is active, a mere unilateral request by a party seeking access to it imposes, we say, immediately and without more an obligation on the access provider – that is the carrier or the service provider who has the service capability – imposes on that party an immediate obligation to supply it to the requesting party.

GLEESON CJ:   On what terms?

MR ARCHIBALD:   To supply without more under subsection (3), but auxiliary features of that obligation to be fleshed out in one of three ways under section 152AY.  I might for shortness because all of these sections are numerically 152 use letters of the alphabet.  So under AY the three ways in which the various access obligations may find their full content and embodiment are delineated and I will come to that shortly.

GLEESON CJ:   But the obligation does not exist independently of the terms and conditions of supply, does it?

MR ARCHIBALD:   In our submission, it does.  Of course, in the ordinary way there will be full content afforded at some point of time, but simply taking a price notion for the moment, price term, subsection AR(3)(a) imposes an immediate obligation to supply with all that that entails, non constat that at that point of time, price has not been agreed, price is not the subject of any operative undertaking, or price has not been determined by the Commission pursuant to an access dispute.

GLEESON CJ:   But there is no legal obligation to make a gift, is there?

MR ARCHIBALD:   No, but it will be an obligation – there is an immediate obligation which is required to be performed.  There will at a point of time be established a price which will constitute the consideration for the supply of the service, but there is no exoneration from the obligation to supply if at the moment of time at which the request is made price has not been established.  There may be cases in which price already has been established, but there will be cases where it has not, but whatever the circumstances in relation to price the obligation under subsection (3) is immediately engaged.

CRENNAN J:   Is there any penalty if the access provider says, “Well, I am not going to supply until price is determined, price and conditions are determined”?

MR ARCHIBALD:   Yes, there is, one sees that in 152BB, which is at page 176.  The Federal Court may enforce the obligation where the obligation has been imposed but not observed and can do it in a variety of ways, including in subsection (1)(c), orders directing compliance, (1)(d) compensation and so on.  So that the provisions of BB immediately engage with the obligation under AR, and neither the ability to enforce under BB nor the imposition of the obligation under AR is in any way conditioned upon the fulfilment or completion of the steps contemplated by AY.

The ways in which AY may be filled out are of course capable of working backwards in point of time so that they may catch up with any steps which the access provider has been obliged to take in the meantime under subsection (3).  The obligations under subsection (3), particularly the obligation under paragraph (a), are no doubt the central obligations.  Paragraph (a) is the supply; paragraph (b) is ensuring that satisfactory quality is provided, equivalent to that which the “provider provides to itself” and (c) is a maintenance and repair‑type obligation.

There are other distinct access obligations imposed under section 152AR.  Subsection (1)(c) is the obligation imposed under subsection (5), again triggered by a request, an obligation to permit interconnections of facilities; under subsection (6), again triggered by request, to provide billing information to the access seeker; and under subsection (8) to supply other services in a particular case where special equipment is required.

GUMMOW J:   Would you look at section 152BB again, Mr Archibald.  That is on page 176.

MR ARCHIBALD:   Yes.

GUMMOW J:   Is it involved in your submissions that there is an acquisition and the terms are not just because, in a constitutional sense, the acquisition is enforced by section 152BB in advance of the determination of the compensation?

MR ARCHIBALD:   No.  It would be a feature of the circumstances in which we find ourselves that that factual ‑ ‑ ‑

GUMMOW J:   I am just wondering if it is any more than a temporal complaint.

MR ARCHIBALD:   Yes.  That would be the feature.  But our fundamental complaints as to just terms are that there is no assurance under the routes established by Division 8 for ultimate determination of compensation afforded in respect of any acquisition that has occurred that will be just.  One of the features that we draw attention to, but certainly not the only feature, is that there is no assurance that the backdating capabilities of the Commission’s determination power will go back to day one.  They may go back, but there is no assurance that they will go back to the beginning.

Another feature of the temporal difficulty that arises is that, while there is a capability to award interest, which might compensate for the passage of time, there is no right to have that interest awarded, and there is no assurance that the rate of interest would, in any event, satisfactorily reflect the disadvantage that flowed.

So there are some temporal aspects to our complaints, but the fundamental complaint is not grounded upon enforcement in advance of the establishment of that compensation, if any, which would emerge under Division 8.  So one has the various obligations under AR.  I draw the Court’s attention to an auxiliary obligation imposed under AYA which is at page 175.  That section provides that:

If:

(a)a carrier or carriage service provider is required to comply with a standard access obligation that arose because of a request made by an access seeker; and –

put shortly, information is imparted in connection with the supply required in consequence of that request –

the carrier or carriage service provider must not, without the written consent of the access seeker, use that information for –

any other purpose.  I will need to return to that section later.  Then if I go to section 152AY, which is at page 174, subsection (2) requires the carrier or carriage service provider to comply with the standard access obligations by reference to three candidate measures, the first being terms agreed between the parties, the second being an operative access undertaking.  So (a) is agreement on terms and conditions, (b)(i) is an operative access undertaking and the third measure or route is determination of an access dispute by the Commission and that arises under (b)(ii) and (iii). 

For present purposes the particularly important feature of this provision is found in subsection (1) because subsection (1) takes as its predicate that there is, separately from section 152AY, an obligation upon a carrier or carriage service provider to comply with standard access obligations.

GLEESON CJ:   What do you mean by “separately”?

MR ARCHIBALD:   Our contention is that section 152AR itself imposes the obligation to comply.  In the case of the services with which this litigation is concerned, that obligation effects instanter an acquisition of property.

It is not the case in our contention that the moment of the imposition of the obligation and the moment of occurrence of the acquisition is deferred until steps within section 152AY have been engaged and fulfilled.  So that our proposition is the obligation is imposed by section 152AR alone without more.  The defendants’ arguments in substance are that is not the case; no obligation is imposed until, in addition to the making of a request under AR(3), the steps identified in AY have themselves been worked through to completion. 

Therefore, absent agreement and an undertaking, only when there is a determination by the Commission months or years after the request is price fixed and only when price is fixed and other terms are fixed does one have an obligation to provide the declared service to the access seeker and only then, according to the defendants, will an acquisition occur if it occurs at all.  In those circumstances section 152EB is engaged and is engaged satisfactorily to provide just terms.  That is the significance of these points about distinctness and immediacy of the imposition of the obligation under 152AR.

Part of our argument is that the very proposition advanced by the defendants is refuted in limine by the terms upon which section 152AY can be engaged.  Subsection (1) stipulates that it only applies if that obligation already exists.  It assumes that the obligation has been imposed and on that predicate deals with aspects that may need to be attended to.  So in its own terms it really is the denial of the sustainability of the defendants’ argument and the confirmation of the argument for which we contend. 

Just as we have observed that there is an enforcement mechanism which attaches to the obligations imposed under AR, so too for each of these measures and steps under AY there is a discrete and specific enforcement mechanism.  So we have four enforcement mechanisms overall:  one to enforce the obligations under AR and three other sets of enforcement provisions to deal with the three routes by which the auxiliary features of the burden imposed upon the carrier or carriage service provider are to be worked out.  So if terms and conditions are agreed, terms may be registered under Division 9 which one finds at page 244 in the volume, and under EE at page 245 the registered terms may be enforced and may only be enforced in the way specified by the legislation.

The second measure identified by AY is the operative undertaking measure.  Undertakings are dealt with in Division 5 starting at page 185 and operative undertakings may be enforced under 152CD.  So the undertaking route is attended with its own enforcement provision found at page 203, the Federal Court may enforce the undertaking.  Likewise with the third route, the determination by the Commission of access disputes, those provisions are found in Division 8 which commences at page 211 and the enforcement provision in respect of determinations under that division is at section 152DU found at page 240.

So there is a pattern of enforcement of each route by which obligations may be imposed under the part, each engaging with its own specific subject matter and for the AR obligations the enforcement provision being BB.  So I have mentioned the three routes and the enforcement measures.  I should perhaps take the Court to a few other features of the undertaking provisions and the access dispute provisions.

Undertakings may be proffered under section 152BS to the Commission.  That section is at page 185.  The undertaking will involve an undertaking by the carrier or provider:

to comply with the terms and conditions specified in the undertaking in relation to the applicable standard access obligations.

Without troubling with the detail, the Commission may accept or reject the profit undertaking, 152BU(2), and if accepted by the Commission the undertaking becomes operative, 152BV(2), and it is the operative undertaking that is engaged in 152AY.

In relation to access disputes in Division 8, one goes first, to understand the division, to 152CM at page 213.  This section provides for notification of disputes.  Subsection (1)(c) provides for notification of disputes:

about the terms and conditions on which the carrier or provider is to comply with those obligations –

Subsection (2)(c) provides for notification of disputes “about one or more aspects of access” and so notices can be given of disputes.  Notices can be given even if the parties have agreed terms, as has occurred here.  Although most of the providers entered into agreements with Telstra, all of them, or perhaps all but one, gave notices of dispute and the Commission has dealt with or is dealing with the disputes.  In some cases final determinations have been made.  In some cases interim determinations have been made.  So the determination overrides agreed terms.

GLEESON CJ:   I am not sure I have understood the way these access undertakings work in practice.  Is that a sort of standing ‑ ‑ ‑

MR ARCHIBALD:   Yes, it works as a standing offer, indeed a standing obligation, in the event that the undertaking responds to a particular declared service and a provider seeks to have the service supplied.  There is an obligation on the part of the carrier to provide the service on the terms of the undertaking.  Division 5 contemplates that some undertakings may be comprehensive and some may be partial.  So depending upon the character of the undertaking that is operative, if it is comprehensive, then all of the terms will be established and those terms will apply to the supply of the service. 

If it is partial, then the terms which are covered by the undertaking will apply but there will be a gap as to other terms and the parties will either seek to agree those other terms under paragraph (a) of section 152AY or those terms would be a subject of an access dispute which is determined.  So at the end of the day the undertaking may have established in advance all of the terms upon which supply is to take place or it may have established only some of the terms upon which supply is to take place.

There is another complication that I think need not trouble the Court.  There can be two types of undertaking.  One is an ordinary and one is a special.  Some different features attend the special undertaking, but there is no immediate significance to that category of undertaking for the purposes of this case.  Within Division 8 where notice of dispute has been given, the Commission is obliged, as one might expect, to make a determination.  That is provided for in CP at page 215.

KIRBY J:   Could you help me with a factual matter.  I realise that many of the facilities that are now described in the legislation did not exist in the old days, but some of the facilities which are the means by which the carriage service is provided – those that came to your client indirectly from the old days from the bounty of the Postmaster General.

MR ARCHIBALD:   If your Honour addresses the chain of title, taking the network which is central to this case, the PSTN – that is the fixed line network – the stated case shows that the initial elements of that network were commenced to be set out I think in the 19th century.  The network was developed over the years, certainly was in the ownership of the Postmaster General.  Then it moved through various steps.  One finds this perhaps efficiently set out in the stated case.  At paragraph 13 in volume 2 ‑ ‑ ‑

KIRBY J:   I am sure it is there somewhere, but I would not want to pretend that I have a complete command of all of this yet.

MR ARCHIBALD:   At page 382, paragraph 13 through to paragraph 19 cover the steps and the measures.  Your Honour said “the bounty of the Postmaster General”, but the assets came to Telstra at a very significant cost, which it paid.  The provisions of paragraph 15 show the transfer from the Minister for Post and Telecommunications to the Australian Telecommunications Corporation in 1976.  A debt of $4 billion was imposed on Telecom in respect of that transfer.  The next corporate entity was the Australian and Overseas Telecommunications Corporation Limited, now Telstra; and in 1992 the property of Telecom, including the PSTN, came to Telstra and the debt – paragraph 17 – had been repaid at a certain point of time.  Other features associated with those matters are set out in those paragraphs.

KIRBY J:   I suppose that theoretically it would have been possible to preserve a public entity as the mutual carrier for all those who wish to use it but instead of that a choice was made to make you the carrier and the provider of the services out of the bounty of the people of Australia.

MR ARCHIBALD:   Again, at a cost, but to make Telstra a carrier and to expose Telstra to the competitive activities of new carriers and new service providers, many of which are represented before this Court today.  So it is a heavily regulated environment, the regulation directed to the objective of achieving competitiveness that would serve the interest of the end user.  Within Division 8 in relation to determinations by the Commission, apart from the obligation ‑ ‑ ‑

KIRBY J:   Is the bottom line in this litigation that you are not content with the arrangements that have been made by the Parliament and the Government for the provision to you of a fair fee for the provision of what one might call the basic carriage services to those others who are in competition with you that are using them?

MR ARCHIBALD:   No.  There are of course other controversies but the controversies in this case are not concerned with the basic carriage service, not concerned, for example, with the local call service.  They are concerned with two specific and very particular services which are radically different in kind from all the other services.  What those two services do in contrast to what the other services do is to work an acquisition of Telstra’s property constituted by the local loops.  The grievance that is advanced in this case is that there is an acquisition of property and just terms for that acquisition are not afforded by any of the provisions of Part XIC.  It is confined to those two services, which are important in their own right, but they are not the basic carriage service. 

They are concerned with the acquisition by service providers of the property constituted by the local loop component of the fixed network.  I will explain shortly, if I may, the components of that network.  We are concerned with the local loops which are sometimes colloquially called “the last mile” for they are the copper wires that lie between the local exchange and the end user premises and it is the terms upon which those loops are required by access seekers under Part XIC that we complain about.

KIRBY J:   It is nice to know what Justice McHugh used to call “the theory of the case” before we plunge down into this most congenial exploration of the statute.

MR ARCHIBALD:   Yes, indeed.  The fundamental theory is acquisition without the assurance of just terms in respect of the services or the lines which are the subject of the two services in issue.  Might I draw attention to one feature in section 152CP.  Part of the work of the section is to oblige the Commission to make a determination in writing, but subsection (3) tells more about the defendant’s proposition that no obligation is imposed by section 152AR alone but is imposed when a determination is finally made by the Commission.

Section 152CP(3) again is a refutation of the sustainability of that proposition because the subsection precludes the Commission from including as a component of the determination a requirement that access be provided if the requirement of access is already imposed by Division 3 which contains section 152AR.  So we will return to it but this provision shows again that the predicate of the provisions of Division 8 about determination of access disputes is that access will have been already imposed as an obligation by Division 3 and that circumstance ousts the capability and power of the Commission to make a determination upon that topic.

Reference to two other provisions in Division 8 will suffice for the moment, we think.  The first reference is to 152CR at page 221.  I will not take the Court to the detail of it at the moment but subsection (1) of that section stipulates matters to which the Commission must have regard or matters which it must take into account in making a final determination.  There are seven of them and it is our contention that those criteria afford no assurance of just terms, some of them are antithetical to just terms for a carrier.  Subsection (2) in any event provides that apart from the criteria to which the Commission must have regard:

The Commission may take into account any other matters that it thinks are relevant.

Those matters need not be confined to matters which conduce to just terms for any acquisition of property.  Subsection (3), apart from the final determinations the Commission may make “an interim determination” and in making an interim determination it is not obliged to take into account the criteria in subsection (1).  It is entitled to have regard to any “matters that it thinks are relevant”.  Again, with interim determinations, therefore no assurance of just terms and there are other features of the determination making power of the Commission which provide further indicators of absence of an assurance of just terms.

The final section to draw the Court’s attention to for the moment is section 152EB which is at page 243.  The section provides that:

(1)      If:

(a)     a determination –

and that is the defined expression meaning a determination by the Commission under Division 8 of an access dispute.  The definition is at 152CL, page 211 –

would result in an acquisition of property; and

(b)the determination would not be valid . . . because a particular person has not been sufficiently compensated;

the Commonwealth must pay that person:

(c)     a reasonable amount of compensation –

et cetera.  Our proposition is that that provision does not deal with the case that arises here, namely an acquisition of property resulting from the imposition of obligations under section 152AR.  So that it fastens only on determinations resulting in acquisitions, not upon requests under 152AR resulting in acquisitions and therefore it is not a relevant safety net provision in respect of the services at issue in this case.

HEYDON J:   The court has jurisdiction under section 152EB.  It says “a court of competent jurisdiction”.  Which court is that?

MR ARCHIBALD:   It would be the Federal Court.

HEYDON J:   Is there any specific section that says that?

MR ARCHIBALD:   I think not.  I will have it checked.

GUMMOW J:   It would be an action against the Commonwealth.

MR ARCHIBALD:   Yes, it would.

GUMMOW J:   So it would be any court which has federal jurisdiction under section 75(iii) of the Constitution, would it not?

MR ARCHIBALD:   Yes, that is so.

GUMMOW J:   It might be the Federal Court, it might be a State court.

MR ARCHIBALD:   Yes, that is so.  Could I now seek to deal with features of the pertinent facts.  I have said that the local loops are part of Telstra’s public switched telephone network.  That network really consists of three features, as the stated case shows.  The first is what is called the customer access network which substantially consists of the local loops, of which mention has already been made.  The local loops are copper pairs, twisted pieces of thin copper wire with a plastic coating that run from, depending which end one starts from, end‑user premises usually in a conduit under the ground, individual copper pairs meeting up first perhaps at a pillar where they are gathered together.  They will then proceed in cable form with a sheath onwards and, simplifying it, will arrive at the local exchange.

The local exchange is the second feature or element of the PSTN, the network.  Within the exchange there are various pieces of equipment, some of which I will need to draw the Court’s attention to, the essential function of which is to receive calls coming from the end‑user premises or going to the end‑user premises and distributing them to their appropriate destination. 

The third feature of the public switched telephone network is what is called the inter-exchange network.  The function of that part of the PSTN is to take the call from the local exchange to the appropriate exchange nearest the destination of the call.  So it will direct the traffic from one exchange to another and when the call reaches the next exchange it will then be distributed along the local loop to the terminating party.  We are concerned with the first element of the network, the customer access network or the local loop. 

A carrier such as Telstra – it is not unique to Telstra – who has a network, will provide listed carriage services in Australia in one of two ways.  The first way is by retail activity.  Telstra has its own end‑user customers and it will carry their communications traffic over its network in a direct relationship with those customers.  A carrier will also have wholesale customers apart from retail customers.  Wholesale customers are the carriage service providers who are identified in the sections I have drawn the Court’s attention to.  Those carriage service providers may not have their own networks but they supply listed carriage services to the public by being a wholesale customer of the carrier who has the network.  So in respect of that type of activity, the communications traffic is again carried by Telstra or the other carrier, but on behalf of a wholesale customer who has purchased that service and who resells it to the end user.  So it has a retail relationship with the customer. 

But in both instances, all the carriage activity is conducted by Telstra.  On the one hand it carries for itself, pursuant to its retail relationship with the end user.  In the second case, it carries that traffic on behalf of its wholesale customer.  It will bill the wholesale customer.  The wholesale customer will in turn bill the end user, so that the carrier uses its own network to itself carry the traffic in each case, but in the one instance for its own customer by retail kind, in the other case on behalf of the wholesale customer.

One can understand that by taking the simple case of a local call from end user A, who is a Telstra retail customer, to end user B.  The call will be made.  Telstra will carry the call along the loop to the local exchange, through the inter-exchange network, the exchange approximate to party B, the destination end user, and then along the loop to the end user. 

Where both of those end users are customers of the service provider, exactly the same carriage activity occurs but Telstra performs that activity by reason of its contractual arrangement and obligations with the wholesale customer, not with the end user.  The wholesale customers performs no carriage service itself.  It does not carry the signal.  The signal is carried by Telstra on behalf of the wholesale customer.

KIRBY J:   Would it have been technologically possible – I assume it would – for there to be supplementary carriage services?  Is that done in any country or does every country adhere, despite privatisation, to a single network?

MR ARCHIBALD:   No, there are numbers of networks in this country.  We are speaking about the particular Telstra network but Optus, Mr Gageler’s client, has its own network and everything that I am speaking of so far about Telstra applies equally to Mr Gageler’s client.  The nature of the Optus network may be such that it does not have the same configuration but take its mobile network.  Again, there are services which are declared which require Optus to make available services in respect of its network to other service providers.  So the position is not unique to Telstra by any means.

KIRBY J:   But for these loops it would have been technologically possible for other providers to add their own networks?

MR ARCHIBALD:   Yes, there is no ‑ ‑ ‑

KIRBY J:   It is just that the legislation does not permit it?

MR ARCHIBALD:   No, the legislation would permit it were a licensed carrier today desirous of laying out a switch network using copper wires either in a particular locality or nationally, it would be at perfect liberty to do that today.  There is no embargo upon it and there is no Telstra specific feature of the point we are addressing.

KIRBY J:   The assumed purpose of the scheme of the legislation in this respect is to prevent needless duplication in the laying down of the copper wire mechanism of carriage?

MR ARCHIBALD:   No, it is a little different from that, in our submission.  We are speaking of Part XIC relevantly.  The object of Part XIC is set out in section 152AB at page 140.   Subsection (1) states the object as the promotion of “the long-term interests of end‑users of carriage services or of services provided by means of carriage services”.  So the elements of the part are directed to that end.

KIRBY J:   That is a bit of a motherhood statement though.

MR ARCHIBALD:   Yes, but subsection (2) says that:

in determining whether a particular thing promotes the long-term interests of end-users of either of the following services (the listed services)  . . . regard must be had to the extent to which the thing is likely to result in the achievement of the following objectives –

Then one sees a number of elements.  One is the promotion of competition in markets.  Another is the achievement of any-to-any connectivity, which is a somewhat jargon way of saying make sure everybody can contact everybody else who has a telephone or telecommunication service.  Paragraph (e) does engage with what your Honour Justice Kirby has drawn attention to:

the objective of encouraging the economically efficient use of, and the economically efficient investment in:

(i)the infrastructure –

and that might or might not tell against duplication.  The objective in (c), promoting competition, might tell in favour of duplication of a network.

So, in concept, one cannot say that necessarily duplication would be negatived by pursuit of these objectives.  It might indeed be promoted.  So there is a variety of things that need to be addressed.

CRENNAN J:   Subsection (6) would be relevant.

MR ARCHIBALD:   Yes, your Honour – (6) being particularly relevant to and tied to the promotion of the competition aspect of the overall objective of promoting the interests of end users.

KIRBY J:   Do we have the ministerial statement or explanatory memorandum elaborating these objects, or not?

MR ARCHIBALD:   We have the explanatory memorandum.

KIRBY J:   You can perhaps give me a reference later on.

MR ARCHIBALD:   Yes.  The place to find the explanatory memorandum is in the supplementary legislative provisions volumes – volume 2 at page 437.

KIRBY J:   Thank you.

MR ARCHIBALD:   We will try to locate relevant paragraphs within that memorandum.  The reason that wholesale services of the local call kind are provided in the way that I was illustrating is substantially because local call services are declared services.  I just wanted to draw the Court’s attention to one aspect of the declaration of local call services.  The declaration by the Commission is found in volume 3 of the stated case book under tab 9 point 25 at page 1144.  At 1145 the service description in respect of the local call service exemplifies the feature that I have described – namely that it is a service constituted by the service of carriage being provided to the service provider so that the service provider, the wholesale customer does not itself carry the calls.  One sees that at line 19 on page 1145:

The local carriage service is a service for the carriage of telephone calls from customer equipment at an end‑user’s premises to separately located customer equipment of an end‑user in the same standard zone.

So the service that the wholesale customer gets is having calls carried for it by the access provider.  Really, all that the service provider does is pay the bill to the carrier – Telstra or Optus – and send a bill to its retail customer, the end user.  It does not carry itself over the network which is the subject of the local call service.

I next need to draw attention to one feature which is a slight factual complication but it does not in any way erode the character of the carriage service that I have described.  As I have said, other participants in the industry will have their own networks, not all of them, but some of them, and those networks may have the capability to carry calls of one kind or another, just take the simple local call example still.  Optus has a network which can carry local calls.  Telstra has its PSTN which can carry local calls.  Optus will have customers who are connected to its network, end users connected to its network, who want to send a call to a customer connected to the Telstra network.

KIRBY J:   But presumably the Optus network is much smaller and less universal because it is not the recipient of the bounty of the people of Australia and the Postmaster-General and the Minister, as you are?

MR ARCHIBALD:   Whatever the reason, and I do not know that I could take time to be pursuing that, but whatever the reason ‑ ‑ ‑

KIRBY J:   It was a little loaded, I accept, but ‑ ‑ ‑

MR ARCHIBALD:   While the stated case does not show it, I think the fact it would be accepted that the Optus network is not as extensive as the Telstra network.

GLEESON CJ:   Optus has those beautiful above ground cables.

MR ARCHIBALD:   I think it is in the eye of the beholder, but they carry their own communications.

GLEESON CJ:   Does Telstra have access to Optus’ facilities?

MR ARCHIBALD:   In respect of declared services, yes.  Telstra is in no different position, no better position, no worse position, than any other service provider, so that if Optus conducts a declared service, Telstra can be a wholesale customer of Optus in respect of that service, and that is demonstrated in the example that I need to come to now.  Because you have these two networks, each of which can carry traffic for that network owner’s own customer, there is a need for them to have a satisfactory interface, to “interconnect” as the industry expression is.

There are declared services called originating access and terminating access which provide for the one network to carry the communication – I will call it to the edge of that network owner’s network – and then to be handed over to be carried the rest of the way by the owner of the other network and through that means one has interconnection, one has in the language of the section dealing with the objectives of the part, to any connectivity.

So that for part of the passage of the call carrier X will carry the call over its own network but it will then hand over the call to the other network owner Y who will carry the call to the destination.  In carrying that call to the destination, Y provides to X a wholesale service for terminating that call but it is Y who carries the call for X, it is not X who carries the call over Y’s network.

One sees that in declarations of the relevant services, which is I think the most efficient way of drawing the Court’s attention to this feature.  If one goes to tab 9.20 in volume 3 at page 1109 one has the declaration of two services, “Domestic PSTN Originating Service” and “Domestic PSTN Terminating Service”.  Focusing on the terminating service, picking up the example that I was drawing the Court’s attention to, that service is described at page 1115.  It is described as:

An access service for the carriage of telephone (i.e. PSTN and PSTN equivalent such as voice from ISDN) calls (i.e. voice, data over the voice band) from a POI –

which is a point of interconnection –

to end-customer –

So again the service which is provided upon the handover is for the second carrier to carry the call to the destination as a wholesale service provided to the first network owner.  One sees those features of handover at 1116 at line 14:

The service is provided on a call that is handed over for termination to a customer directly connected to the AP’s network –

At line 25 interconnection handover arrangements are dealt with, each being responsible for their own activities on either side of the point of interconnection.  The “point of interconnection” is then defined at line 29, the point of handover.  So in all of the cases that have been considered where a wholesale service is provided it is the carrier providing the wholesale service who performs the carriage.  The party to whom the wholesale service is provided performs none of the carriage over the network in question and nothing happens to the local loop.  The local loop remains connected in every respect to the Telstra network and Telstra carries the call over its local loop. 

There are many declared wholesale carriage services.  A number of them are set out at paragraph 111 of the stated case in volume 2 at page 419 and, as paragraph 112 of the stated case shows, in all of those incidences:

When Telstra supplies the [wholesale] services –

thus described, it –

employs the relevant  components of its facilities . . . [itself] to carry a communication . . . In such circumstances, the service provider does not itself effect the carriage of the communication over the facilities employed to carry the communication Telstra maintains use of those facilities.  Telstra may also continue to provide its own carriage services –

So if there is a local call service, if Primus takes a local call service, a wholesale service, from Telstra, Telstra can of course still provide long‑distance services over that loop to that end user.

All of that really has as its major significance the fundamental contrast that exists between those services and the services the subject of this proceeding.  The services in this proceeding involve that the local loop is disconnected from Telstra’s network, disconnected from the Telstra PSTN and is connected to the access seeker’s network and equipment.

KIRBY J:   It is not physically disconnected.

MR ARCHIBALD:   Yes, it is, precisely so.  It is physically disconnected.  There are diagrams that show that very clearly.

CRENNAN J:   What about if the customer churns from Optus to Telstra?  Is it immediately reconnected?

MR ARCHIBALD:   If the access seeker who has taken the ULLS service ceases to have a requirement for it, it will discontinue the service and that line, the line the subject of the particular customer’s churn, would cease to be the subject of the ULLS.  Of course, the churn may occur to another provider and that provider might then request that ULLS be provided to it in respect of that line.

CRENNAN J:   I was just trying to understand how easy or not it was for Telstra to reconnect the loop once there is a churn specifically to Telstra.

MR ARCHIBALD:   If the customer again becomes a Telstra customer, the local loop can be and will be reconnected to the Telstra PSTN.  The way in which that can be done is again illustrated by the diagram which I will come to as soon as I may.  But there is physical disconnection.  The loop ceases to be an operative part of the Telstra network and becomes a connected operative part of the access seeker’s network.

KIRBY J:   Of the nature of telecommunications all of this must be instantaneous, so how is there physical disconnection?  I mean, the copper wires remain in situ; there is no mechanical shifting of gear so that it makes a new connection.

MR ARCHIBALD:   Almost all of the last mile remains intact but a particular step is taken at a particular piece of equipment within the local exchange.  That is what the diagram shows and I will be there very shortly, I hope.

KIRBY J:   I cannot wait to see it.

MR ARCHIBALD:   The only point I wanted to make before going to it is, having made the connection, the point about disconnection from one and connection to another is that in fundamental contrast to all the other services, what then happens is that the access seeker carries the service over the local loop.

GUMMOW J:   Where do we see this in the stated case?  That is why we have it after all is said and done.

MR ARCHIBALD:   Paragraph 64(d), your Honour Justice Gummow, at page 399:

Telstra cannot use that Local Loop –

this is after the disconnection.

GUMMOW J:   Paragraph 64(a) is the answer to Justice Kirby’s question.

MR ARCHIBALD:   Yes, I think all the answers are in this paragraph and in the diagram on the previous page.  So working through the various subparagraphs of 64, the stated case tells one that the particular loop is physically connected to a cable which leads to the service provider’s equipment and network.  That is in the second part of (a):

as a consequence of which the service provider can use that Local Loop to effect the carriage of communications in respect of Local Loop Carriage Services provided –

So the service provider uses and therefore carries.  The converse of that is in (d).  Because of the disconnection, Telstra cannot use and cannot carry.

CRENNAN J:   What if a household wanted to have a Telstra phone and an Optus phone?  Could you have a jumper to Telstra and one to Optus?  Is that technically possible?

MR ARCHIBALD:   When your Honour says an “Optus phone”, a phone connected to the Optus network?  This is not in the stated case, but if ‑ ‑ ‑

CRENNAN J:   A bill from Optus in relation to their telephone services.  So, colloquially speaking, the phone in the study is the Optus phone and the other phone is the Telstra phone.

MR ARCHIBALD:   I could have two phone services connected to my premises.  One could be the Optus network and one could be the Telstra network, in which case without more – one has a retail relationship with each of them.  But I might have two Telstra copper pairs coming into my premises, one of which I would keep a retail relationship with Telstra intact.  The other I might take Optus for local call services and therefore I would have a retail relationship with Optus.  Optus would procure the local call service from Telstra under the declared service that I took the Court to.  Telstra would carry both services but, as to the second, would bill Optus on a wholesale basis and Optus would bill your Honour on a retail basis.

CRENNAN J:   It is not impossible to have two pairs into a house?

MR ARCHIBALD:   No, it is not impossible.

KIRBY J:   Telstra cannot use and cannot carry.  What happens when a customer seeking to make contact with a Telstra retail user in the loop?   They telephone that number, they get an engaged signal, do they?

MR ARCHIBALD:   No.  They telephone that number, the number goes along the local loop from the premises, carried, because it is now a ULLS service, by provider X who has the ULLS service.  There will then be carried through its network and at some point – call it halfway – there will be a point of interconnection between that provider’s network and the Telstra network and Telstra will provide the terminating access carriage service, which I have taken the Court to, the subject of those declarations.  So the second half of the call will be carried by Telstra.

KIRBY J:   I am sorry, I do not think I made the question clear.  I was concentrating on your customers, your retail customers, and whether or not the use by Optus of your service excludes you pro tanto from the use of that service for the purpose of servicing your retail customers.

MR ARCHIBALD:   Yes, it does, as paragraph 64(d) shows in relation to the line that is the subject of the ULLS service.  So end user A indicates to Optus that that user wants all of its telephone services and data services provided by Optus.  Optus may make a request under section 152AR(3) that, in respect of that line, the ULLS service be provided to it.  If that happens, the loop is disconnected from the Telstra network and connected to equipment which leads into the Optus network.  But when that user wants to call a Telstra customer, the call will flow through the Optus network until the point at which it needs to be handed over to the Telstra network to terminate the call, to complete the call.  At that point the call will be carried by Telstra to the terminating party and Telstra, as to that leg of the call, will charge a fee on a wholesale basis to Optus.  But as to the line that is the subject of the ULLS service, Telstra is entirely excluded from it, cannot use it, cannot access it.  It is disconnected from its network.

GUMMOW J:   Now, 64 has to be read with 93, does it not, in the stated case?  Perhaps we need to understand the difference between ULLS and LSS.

MR ARCHIBALD:   Yes, I was going to try and deal with them separately.

GUMMOW J:   All right.

MR ARCHIBALD:   LSS does provide a particular technical feature.

KIEFEL J:   Why is Telstra obliged to maintain and repair the loop if it is completely disconnected from its network?

MR ARCHIBALD:   Because section 152AR(3)(c), I think is the most appropriate one, imposes on Telstra as one of the standard access obligations the obligation to maintain the line even though it is connected to the service provider’s network.

KIEFEL J:   You say it is by way of its contrary obligation in relation to the price paid for the services?

MR ARCHIBALD:   Well, no doubt there are – price terms will be set by reference to a number of factors.  One can conceive that a price set in relation to the ULLS may take account of the repair obligation.  But asking the question “why does Telstra repair it?” - not because it is a retained right as owner but because it is an imposed obligation under section 152AR.

KIEFEL J:   But in practical terms is it in its interest to maintain the loops?

MR ARCHIBALD:   Well, there may be cases in which it is and there may be cases in which it is not.  One could not predicate inevitably in advance.

KIEFEL J:   But there is always the prospect that it may revert to it?

MR ARCHIBALD:   Yes.  I mean, there may be incentives but the fact is it is imposed as a matter of obligation, it is not elective.

GUMMOW J:   Section 152AR, which particular subsection, Mr Archibald?  It is page 157 of the book.

MR ARCHIBALD:   Probably (c) I think.

HAYNE J:   Subsection 3(c)?

MR ARCHIBALD:   Yes, I am sorry, 3(c).  It may even be 3(b), keep the quality up, but fault detection and rectification are certainly elements that would resonate with repair and maintenance concepts.  Now, could I go to the diagram, diagram 1, at page 398?

GLEESON CJ:   Just before you pass from that, I presume that the cost of maintenance, to which you have just been referring, is one of the costs referred to in section 152CR(1)(d)?

MR ARCHIBALD:   Maybe, but not necessarily.  If providing access includes the measures needed to ensure that continuing access is feasible, likely yes, but it is, of course, direct costs, only direct costs.  Now, figure 1 at page 398 shows in graphical terms what happens.

If one takes the case first where there is no ULLS service and there is simply a situation which Telstra provides retail and wholesale carriage services, to the left of the figure will be the end user premises.  The local loop comes in and enters the exchange.  It reaches the main distribution frame – MDF is main distribution frame – which has two parallel blocks.  The local loop connects with the line side block and between the line side block and the equipment side block is another short piece of copper wire.  Here it is the inverted dotted line between the two blocks.  That is called a jumper and that carries the call from the line side block to the equipment side block, continues the copper line, and then, in the case in which there is no ULLS, a call coming in from the end user will then move from the equipment side of the main distribution frame into the other equipment in the Telstra exchange. 

CAM is customer access module.  That will distribute the call, see where it should go, and from the CAM it will be sent out through the inter‑exchange network toward its destination.  If there is a ULLS request, what happens is that inverted V jumper piece of wire is removed and what is installed in its place, as the figure shows, is a new jumper. That is the curved line going to the bottom of the figure.  That new jumper connects the incoming piece of copper wire from the end user to the access seeker’s network.  So it connects to the equipment side of the main distribution frame and from there by further wires or cables goes into the access seeker’s equipment and into the access seeker’s network. 

CRENNAN J:   If you have got the access seeker’s request, but the household wanted to maintain retail Telstra services in addition to having, say, Optus, would happen then?  That was my question before.

MR ARCHIBALD:   There would have to be, if the customer wanted that, a separate second copper line ‑ ‑ ‑

CRENNAN J:   Two separate jumpers.

MR ARCHIBALD:    ‑ ‑ ‑ going all the way back down to the end user premises, but the one we are speaking of would be dedicated to the ULLS access seeker and exclusively within its control and exclusively used by it operationally itself to carry services over that line to Telstra’s exclusion.

KIEFEL J:   So the exclusive part is the new jumper?

MR ARCHIBALD:   Yes, that effectively by a short length of wire severs the connection with the rest of the PSTN network from the line side block onwards, breaks the connection that previously existed, to integrate it with the whole of the Telstra network and uniquely dedicates it thereafter for the duration of the ULLS service to the access seeker’s network.  So the access seeker pushes the electromagnetic energy down that copper line and itself carries all communications over that line henceforth.  That is what reflects the acquisition component of our complaint, for Telstra loses entirely the capacity itself to use the line and loses that, as is called in one of the American cases, that most treasured feature of the bundle of property rights, the ability to exclude others.

MR BENNETT:   I would have thought it could for constitutional purposes, your Honour.  We say there is simply no taking of possession.  It is just sending some electrons through it.  The wire remains in Telstra’s possession.  Someone else has another wire connected to it and is sending something into it.

That provider no more has possession of the wire than an electricity provider has possession of the wires in a customer’s house through which the electricity goes or the appliances through which it goes.  It is just directing something.  It is using it as a facility in the same way as a charterer of the kind we talk about has the ability to say to the captain of the ship, “Take my potatoes to Auckland”.  The wire Telstra is maintaining is connected up to someone else’s equipment and it sends impulses through it.  That is not possession.

GUMMOW J:   Why did we get hooked into this notion of possession?   Property can be incorporeal.  Once Georgiadis was decided, which choses of action are in, the whole of this US doctrine about physical taking becomes nonsensical

MR BENNETT:   I think, your Honour, one still has to have some item of property which is taken.  One has to have an acquisition.

GUMMOW J:   Yes, I know.

MR BENNETT:   We use a different abstract noun.

GUMMOW J:   But I do not think you necessarily solve that through the law of conversion.

MR BENNETT:   One does not necessarily solve it that way, but in both cases one must have something that has been taken.  What I am endeavouring to demonstrate is that the Australasian United Case really is totally analogous to the result that the United States court has reached in relation to this very type of property.  That is all I am seeking to demonstrate at the moment.

Your Honours see the facts at the bottom of the first column of page 2.  Qwest was the equivalent of Telstra.  It is described as:

a “Bell operating company,” and an “incumbent local exchange carrier” (“ILEC”).

Then it refers to the Telecom Act under which the “telephone exchange service” is defined.  Qwest has to provide:

“exchange access” service to long distance carriers . . . 

To provide telephone exchange service Qwest uses a network of cables and switches that connect the residences and businesses of its customers to each other and, through the networks of other carriers, to the customers of other carriers.  In general, each Qwest customer is connected to Qwest’s network by a twisted pair of copper wires, commonly referred to as a “loop,” that runs from the customer’s premises to a U S WEST switching office (often known as a “central office”).

We call them local exchanges but that seems to be the same.  Then if your Honours go to page 3 in the first column they refer to the history of legislation in the United States which again bears a very close resemblance to ours.  I will translate the terms as I go to make it easier:

[Telstra] historically provided local telecommunications services without being subject to competition, often pursuant to state‑granted franchises.  Prior to 1996 virtually all ILECs were Bell operating companies.  The federal government as well as state governments pervasively regulated ILECs with respect to their services . . . The Telecommunications Act of 1996 . . . opened the market for local telecommunications services to competition . . . was designed “to promote competition and reduce regulation in order to secure lower prices –

et cetera.  It overrides State law.  It refers at the top of the next column to a quid pro quo that the Bell company has access to long distance markets.

KIRBY J:   The difficulty of this is you are reading into it for the purpose of putting it up to be tested against a takings provision.  Now, the Commonwealth would love our provision to be a takings, but it is not.  It is an acquisition of property which is a much more ‑ ‑ ‑

MR BENNETT:   Your Honour, what I would seek to demonstrate is, on the basis ‑ ‑ ‑

KIRBY J:   ‑ ‑ ‑ substantial protection for the people.

MR BENNETT:   On the basis of Australasian United, one has to have – it is not a taking of property to require the provision of services. It might be simple conscription, but that is not a problem under our Constitution except in relation to doctors.

HAYNE J:   Well, if that is the proposition you are advancing, what are we getting out of this exercise in literacy and comprehension which you would have us undertake about the Qwest Case, Mr Solicitor?

MR BENNETT:   I will only be a few more minutes on that, your Honour, but what I am seeking to get is that the way the court analysed the facts which are, for practical purposes, identical to this, was to come to the conclusion in the end that there was no physical taking under the takings clause, but the reasoning used to reach that conclusion is very similar to the reasoning used in our shipping case about our provision.

This Court is assisted usually by a comparison with what has occurred in other federations and, in my respectful submission, the case is of value in that area.  As I say, I do not propose to spend a lot of time on it, I really do not.  Indeed, I will not go beyond the remaining two minutes I have today on it.  They describe the opening of the market by provisions very similar to ours.  Then on page 4 in the second column, the requirement to the “Local Competition Order” which required Qwest to make available its local loop.  Then on page 5 they describe in the first column in the only full paragraph what they call the “lift and lay” connection which corresponds to our jumper lead connection. 

That is of importance because they later say that one of the factors that indicates most clearly that they are buying a service rather than property is that it is Qwest who does the “lift and lay” procedure in the same way as here it is Telstra technicians which disconnect the old jumper lead and connect the new jumper lead or the new two jumper leads.

The result is, in the end, that the application fails.  They refer, incidentally, to other American cases which have gone off on a different basis.  There were questions about hanging wires from other peoples’ poles and cases about putting cable inside apartment buildings to run the equivalent of Foxtel to tenants in those buildings, notwithstanding the objection of landlords, and those matters are held to be acquisitions of property because they involve permanently doing something physical, involving the placing of your property in someone else’s property, but I need not take those matters any further.  I see, your Honours, it is a quarter past 4.

GLEESON CJ:   We will adjourn until 10.15 am tomorrow morning.

AT 4.16 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 14 NOVEMBER 2007