Telstra Corporation Ltd v Australian Telecommunications Authority

[1997] FCA 542

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    No. G731 of 1995
  )
GENERAL DIVISION                 )

BETWEEN:TELSTRA CORPORATION LIMITED

Applicant

AND:AUSTRALIAN TELECOMMUNICATIONS AUTHORITY

First Respondent

OPTUS NETWORKS PTY LIMITED

Second Respondent

CORAM:    LOCKHART J
DATE:     3 JUNE 1997
PLACE:    SYDNEY

MINUTE OF ORDER

THE COURT ORDERS THAT:

1. There be no order as to the costs of either Telstra or Optus of the present proceeding.

NOTE:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    No. G731 of 1995
  )
GENERAL DIVISION                 )

BETWEEN:TELSTRA CORPORATION LIMITED

Applicant

AND:AUSTRALIAN TELECOMMUNICATIONS AUTHORITY

First Respondent

OPTUS NETWORKS PTY LIMITED

Second Respondent

3 June 1997

REASONS FOR JUDGMENT

LOCKHART J.

Telstra Corporation Limited (‘Telstra’) commenced this proceeding in the High Court of Australia against the Australian Telecommunications Authority (‘Austel’) after Austel published its Review of Telstra’s Dominance in the International Telecommunications Services Market, Final Report (‘The August 1995 Report’).  That report found that there was a distinct market for international telecommunications services in Australia, and that Telstra was in a position to dominate that market.  The conclusion had considerable practical commercial consequences for Telstra, which then commenced this proceeding to be freed of those consequences by seeking a declaration of non-dominance in the relevant market.

Optus Networks Pty Limited (‘Optus’) was not a party to the proceeding, but sought to be joined as a party in 1995.  When Optus was joined as a party it did so at its own risk as to costs.

In accordance with its determination in the August 1995 Report, Austel undertook a review of the market for significant and material changes that could lead to a conclusion that Telstra either remained, or was no longer, in a position to dominate that market. 

A Discussion Paper released by Austel in July 1996 called for interested parties to comment on changes in the market relevant to Telstra’s dominance.  In December 1996 Austel released the report of its Preliminary View calling for further submissions.

In February 1997 it released its Final View and found that, amongst other things, Telstra had lost significant measurable market share since the August 1995 Report and that since August 1995 Telstra’s market power had diminished.

After the Final View was released Telstra decided to discontinue the proceeding.  On Telstra’s application the Court granted leave to it to discontinue this proceeding as against Optus on 21 March 1997 except on the question of costs.  Leave was also granted to Telstra to discontinue the proceeding as against Austel.  Telstra and Austel agreed on the question of costs as between themselves, namely, that there should be no order as to costs of either party.

Telstra and Optus disagreed on the appropriate orders for costs and brief written submissions have been filed by them pursuant to directions of the Court.  I have read the submissions.  It is not necessary that there be oral argument on the question of costs as between Telstra and Optus.

Telstra submits that by discontinuing the proceeding, far from being an admission of defeat, it has vindicated its view that it is not in a dominant position in the relevant market.  It took the course of discontinuing the proceeding because it has substantially achieved the commercial end which it commenced the proceedings to achieve.  Telstra seeks an order that Optus pay its costs of the proceeding.

Telstra claims that the effect of Austel’s Final View and Telstra’s decision to proceed in accordance with that Final View is that the commercial constraints initially placed upon Telstra by Austel’s August 1995 Report have been removed.  Telstra maintains that there was nothing further to be gained by continuing the case once the Final View of Austel had been released.

Telstra submits that it commenced this proceeding to be freed of the practical consequences that Austel’s initial report placed upon it; Optus was not a party but sought to be joined of its own motion and knew that it did so at its own risk as to costs; and Telstra’s decision to discontinue the proceeding was brought about by having substantially achieved the commercial result it sought to achieve by commencing the proceeding.

In the alternative, Telstra submits that it is entitled to have Optus pay a large share of Telstra’s costs.  In the further alternative, Telstra submits that there should be no orders as to costs of either Telstra or Optus.

Optus submits that there is no reason why the usual rule should not follow that the costs of the respondent be paid where the applicant discontinues the proceeding.  If Telstra were to discontinue as of right under O 22 r 2(1)(a) or (b) Telstra would have to pay Optus’s costs (O 22 r 3).  It was submitted by Optus that the position is not materially different where the discontinuing party needs to seek leave to discontinue.  Reference was made to a number of cases including Trade Practices Commission v APM Investments Pty Limited (No 2) (1983) 74 FLR 276 at 279-80; affirmed on appeal (1984) 2 FCR 113.

Optus submits that its commercial interests were clearly capable of being affected by the orders which Telstra was seeking in the proceeding, and that Optus had a real interest in opposing the declarations sought by Telstra.  It was also necessary for there to be a proper contradictor.  Optus submitted that Austel was bound by the principles established in The Queen v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13, namely, that regulators should not be protagonists in applications for the judicial review of their decisions.

Optus submitted that Telstra commenced the proceeding knowing that Austel proposed to revisit its conclusions at the latest within twelve months of the release of Austel’s findings in August 1996.  It was clear that when the proceeding commenced the issues were such that they could not possibly be determined prior to Austel conducting a further review of Telstra’s position in the market in August 1996.  Optus submitted that at no stage has it taken any step or made any concession which has led to Telstra achieving its commercial objective.  Optus has continued to make submissions to Austel strenuously opposing Austel forming a view that Telstra is not dominant in the relevant international market.

Optus seeks an order that Telstra should pay its (i.e. Optus’) costs of the proceeding.

In the alternative, Optus submits that the appropriate order to do justice between the parties is that each party should bear its own costs.

It is true that Optus was not a party to the proceeding until it sought to become one.  Nevertheless, Optus had a real interest in the proceeding and there is, I think, some force in its view that if it were not for Optus, there would be no real contradictor before the Court.  This conclusion, however, must be tempered somewhat because this is a different case to Hardiman.  Telstra was seeking a declaration as to an objective fact concerning its position in the market and Austel would not have been precluded from putting substantive argument in this case on that issue.  Nevertheless, I think Optus, not only had a real interest in being involved in the matter, but it was a true contradictor. 

However, it is also true that Telstra brought the proceeding for the reasons which have been previously mentioned and that it discontinued because it had achieved for all practical purposes basically what it set out to achieve following the issue by Austel of its Final View.

In my opinion, in the exercise of the Court’s discretion, this is not a case where it is appropriate to order either Telstra or Optus to pay the costs of the other.  I think the fair and just order is that there be no order as to the costs of either Telstra or Optus of the present proceeding; and the Court so orders.

I hereby certify that this and
the preceding six (6)
pages are a true copy of the
reasons for judgment herein of
the Honourable Justice Lockhart.

Associate
Dated:     3 June 1997

Solicitors for Applicant:    Malleson Stephen Jaques

Solicitors for Respondent:   Gilbert and Tobin

Date of Judgment:           3 June 1997