FEDERAL COURT OF AUSTRALIA

Optus Networks Pty Limited v Telstra Corporation Limited [2002] FCA 267

COSTS –  Where the applicant only succeeded on the basis of one of several causes of action pleaded .

Trade Practices Commission v Commodore Business Machines Pty Ltd [1989] FCA 406

referred to.

Commodore Business Machines Pty Ltd v Trade Practices Commission (1990) 92 ALR 563

referred to

Ruddock v Vadarlis [2001] FCA 1865 referred to

Byrnes v Jokona Pty Ltd [2002] FCA 121 referred to

Cretazzo v Lombardi (1975) 13 SASR 4 referred to

OPTUS NETWORKS PTY lIMITED (acn 008 570 330) & optus mobile Pty ltd (acn 054 365 696) v TELSTRA CORPORATION LIMITED (acn 051 775 556)

N 269 of 2001

MOORE J

19 MARCH 2002

SYDNEY

THE COURT ORDERS THAT:

1.      The respondent pay the applicants’ costs of the proceedings to date.

2.      Orders 1 and 2 made on 28 February 2002 be varied by deleting the words "Subject to further order,".

3.      Order 2 above take effect on 26 March 2002.

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

REASONS FOR JUDGMENT

1                     This judgment deals with what further orders should now be made following a judgment given on 14 December 2001 when an order was made declaring that Telstra Corporation Ltd ("Telstra") had breached a term of an agreement with Optus Networks Pty Ltd and Optus Mobile Pty Ltd (collectively "Optus").  It is unnecessary to repeat the matters referred to in my reasons for judgment of that date.

2                     At a hearing on 28 February 2002, submissions were made by the parties about whether injunctive relief should be granted and if so, in what terms.  I ultimately made the following orders that day:

“1.       Subject to further order, Telstra Corporation Ltd (“Telstra”) whether

by itself its servants or agents or otherwise be restrained on or after a date being 35 days after the date of this order from offering to provide the HomeLine Net service on terms which include as a term of subscribing to that service that the subscriber agree not to acquire services from the applicants or either of them by dialling access override codes of the applicants or either of them while subscribing to the service.

2.                  Subject to further order, Telstra whether by itself its servants or agents

or otherwise be restrained on or after a date being 35 days after the date of this order from providing to any existing customers of the HomeLine Net service that service on terms which include as a term of subscribing to that service that the subscriber agree not to acquire services from the applicants or either of them by dialling access override codes of the applicants or either of them while subscribing to the service.

3.         The parties have liberty to apply on 5 days’ notice.”

3                     Left for further consideration was what order should be made concerning costs and whether an order should be made to the following effect:

“Telstra whether by itself its servants or agents or otherwise be restrained from providing or offering to provide any Preselectable service on terms which include as a term of subscribing to that service that the subscriber agree not to acquire services from the applicants or either of them by dialling the access override codes of the applicants or either of them while subscribing to the service.”

4                     I will return to the question of costs shortly.  The above order was sought by Optus on the footing that it will ensure no further breach of the agreement of the same or a similar character as established in these proceedings.  It would, it was submitted, prevent a breach of contract of "a like kind": see Equity; Doctrines and Remedies, Meagher, Gummow and Lehane par [2111].  Reference was also made to Trade Practices Commission v Commodore Business Machines Pty Ltd [1989] FCA 406 in which an injunction had been made restraining proscribed conduct as pleaded "or any similar manner".  An appeal challenging the inclusion of the words "or any similar manner" was, in that respect, unsuccessful: see Commodore Business Machines Pty Ltd v Trade Practices Commission (1990) 92 ALR 563 at 575, though the proceedings concerned injunctive relief under s 80 of the Trade Practices Act 1974 (Cth).

5                     In my opinion, it is inappropriate to make an order in the terms proposed by Optus.  The orders already made, effectively require Telstra to give effect to the negative stipulation embodied in cl.13.3.7, breach of which was established in this matter.  Moreover the proposed order speaks of "[any] Preselectable service" which is not a term appearing in the contentious clause of the agreement.  What it means cannot be ascertained with absolute precision though it may be accepted that the expression "Preselectable Services" is defined (see [62] of the reasons for judgment of 14 December 2001).  Also there was an issue about whether in the facts of this case there had been a "tariffing of Preselectable Services" and the resolution of that issue involved consideration of the relevant term on which the HomeLine Net service was being offered and provided.  The effect and reach of the proposed order is, in my opinion, not clear.  It is preferable that the question (if it ever again arises) of whether there has been a further breach of cl.13.3.7 concerning limits placed on the use of access override codes be determined in the factual context in which the allegation of breach arises.  It is also preferable that it does not arise in the context of an allegation that Telstra has breached an order earlier made by the Court.

6                     I turn now to the question of costs.  Optus sought an order that Telstra now pay its costs for the proceedings to date.  Telstra opposed this order and submitted that the costs order should reflect the extent to which Optus has both succeeded and failed on the issues raised in the proceedings.  I should add that neither party suggested it was premature to address the question of costs at this stage of the proceedings.  On Telstra's approach, an order should be made requiring Optus to pay half of Telstra's costs.  This apportionment was based on the contention that Optus succeeded in establishing only one breach of the agreement (though several breaches were alleged) and failed on the count based on the Trade Practices Act 1974 (Cth).

7                     The Court has a broad discretionary power to order costs which must be exercised judicially.  A recent discussion of how the power might be exercised (though there are innumerable cases where the parties have engaged in the sort of debate evident in this matter and in which the applicable principles have been discussed) is found in the judgment of Black CJ in Ruddock v Vadarlis [2001] FCA 1865, and a recent illustration of a situation where the Court concluded it was appropriate that there be an apportionment of costs is found in Byrnes v Jokona Pty Ltd [2002] FCA 121.  In the present matter it was appropriate for Optus to demonstrate the factual context in which the agreement was operating and establish the legislative and related history in which the agreement was made even if only to establish breach of cl 13.3.7.  It was also appropriate for Optus to explain at the hearing how the agreement, overall, was intended to operate.  It must be accepted that some time was taken up at the hearing in dealing with issues on which Optus ultimately failed.  It must also be accepted that Telstra was put to the expense of developing written submissions on issues on which it succeeded.  However what Optus set out to do was establish that the imposition of a term for providing HomeLine Net which precluded use of the override facility, was unlawful in the sense that involved a breach of contract.  Optus succeeded in establishing this though only on one of several bases it advanced and it did not establish it was unlawful in the sense that it involved conduct in contravention of s 52. Nonetheless, I rather think this is a case where the cautionary observations of Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 16 are apt.  In my opinion, the appropriate order is that Telstra pay Optus its costs.

8                     I should mention one further matter.  Orders 1 and 2 of the orders made on 28 February 2002 were prefaced by the words "Subject to further order,".  This was done to enable Telstra to exercise the liberty to apply if it transpired that it would take more than 35 days to give effect to what appeared to be the course Telstra then intended to follow, namely withdraw the HomeLine Net service.  If the liberty to apply was exercised then consideration could be given to varying the orders by increasing the period during which they would not, in substance, operate.  However those prefatory words may disguise what I intended, namely that the injunctions were final.  Accordingly I propose to make a further order that the orders 1 and 2 be varied on 26 March 2002 by deleting the words "Subject to further order,".

Associate:

Dated:              19 March 2002