FEDERAL COURT OF AUSTRALIA

Telstra Corporation Ltd v Australian Competition & Consumer Commission (No 2) [2008] FCA 1640

ADMINISTRATIVE LAW – severance of invalid from valid terms of a final determination made under s 152CP of Trade Practices Act 1974 (Cth) – application for judicial review succeeds in respect of one aspect of final determination – whether entire determination or only part of it should be set aside and remitted

Held: severance possible and appropriate

Acts Interpretation Act 1901 (Cth) ss 23, 33(1), 33(3A), 46

Administrative Decisions (Judicial Review) Act 1977 (Cth) s 16(1)(a), (b)

Trade Practices Act 1974 (Cth) ss 152CP, 152DNA

Biyiksiz v Minister for Immigration and Multicultural Affairs [1998] FCA 352 referred to

Craig v The State of South Australia (1995) 184 CLR 163 distinguished

Evans v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 135 FCR 306 referred to

Harrington v Lowe (1996) 190 CLR 311 referred to

Minister for Home Affairs v Tervonen (2008) 166 FCR 91 referred to

Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 distinguished

Plaintiff S157/2002 v The Commonwealth of Australia(2003) 211 CLR 476 distinguished

Re Australian Industrial Relations Commission; Ex parte Smith [2004] FCAFC 271 referred to

Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 referred to

Telstra Corporation Ltd v Australian Competition and Consumer Commission (No 3) (2007) 99 ALD 268 distinguished

TELSTRA CORPORATION LIMITED v AUSTRALIAN COMPETITION AND CONSUMER COMMISSION and REQUEST BROADBAND PTY LTD

NSD 1744 of 2007

TELSTRA CORPORATION LIMITED v AUSTRALIAN COMPETITION AND CONSUMER COMMISSION and PRIMUS TELECOMMUNICATIONS PTY LTD

NSD 1743 of 2007

TELSTRA CORPORATION LIMITED v AUSTRALIAN COMPETITION AND CONSUMER COMMISSION and CHIME COMMUNICATIONS PTY LTD

NSD 1560 of 2007

LINDGREN J

7 november 2008

SYDNEY

THE COURT ORDERS THAT:

1.         Clause 5A(i) of Schedule 2 of the final determination made by the first respondent and dated 1 August 2007 be set aside.

2.         The issue of the charges payable by the second respondent to the applicant (if any) for the disconnection of a LSS outside of a managed network migration in the period between 15 November 2006 and 22 August 2007 be remitted to the first respondent for determination in accordance with law.

3.         The applicant pay 82.5 percent of the second respondent’s costs.

4.         For the purposes of order 3, the second respondent’s costs include only one third of the costs of the second respondent’s work on the preparation of the Common Court Books.

5.         The proceeding be otherwise dismissed.

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

THE COURT ORDERS THAT:

1.         Clause 5A(i) of Schedule 2 of the final determination made by the first respondent and dated 1 August 2007 be set aside.

2.         The issue of the charges payable by the second respondent to the applicant (if any) for the disconnection of a LSS outside of a managed network migration in the period between 15 November 2006 and 22 August 2007 be remitted to the first respondent for determination in accordance with law.

3.         The applicant pay 82.5 percent of the second respondent’s costs.

4.         For the purposes of order 3, the second respondent’s costs include only one third of the costs of the second respondent’s work on the preparation of the Common Court Books.

5.         The proceeding be otherwise dismissed.

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

THE COURT ORDERS THAT:

1.         The proceeding be dismissed.

2.         The applicant pay 92.5 percent of the second respondent’s costs.

3.         For the purposes of order 2, the second respondent’s costs include only one third of the costs of the second respondent on the preparation of the Common Court Books.

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

REASONS FOR JUDGMENT (No 2)

INTRODUCTION

1                     On 19 September 2008 I published reasons for judgment in relation to the substantive issues raised in these three proceedings:  see Telstra Corporation Limited v Australian Competition & Consumer Commission [2008] FCA 1436.

2                     I directed the parties to attempt to agree on the orders to be made, including orders as to costs, and failing agreement to provide the forms of orders for which they would respectively contend and written submissions in support.  Having failed to agree, they provided the forms of orders and written submissions mentioned, on which I have now heard oral elaboration.

3                     These reasons relate to the orders now to be made consistently with the earlier reasons.  I will use the abbreviated forms of reference that I used in those reasons.

SEVERANCE

4                     The first issue raised concerns the effect of the success that Telstra had in the Request and Primus proceedings (not the Chime proceeding) in relation to the backdating issue:  see Section F (Disconnection Charges, Backdating and the “No Charge Period”) at [508]–[571] of the earlier reasons.  (For convenience the parties have used the expression “Ground F” and I will do likewise.)  The relevant grounds were 10(a), (b) and (c) in the Request proceeding and 4(a), (b) and (c) in the Primus proceeding.  Telstra submits that there cannot or should not be a severance in relation to cl 5A(i) of Schedule 2 of the final determinations in each of the Request proceeding and the Primus proceeding, and that the effect of its success in relation to that clause is that each final determination as a whole must or should be set aside.  Request and Primus submit that there must or should be a severance, that is to say, that only cl 5A(i) should be set aside and that the issue of disconnection charges outside a MNM in the period 15 November 2006 to 22 August 2007 should be remitted to ACCC for determination in accordance with law. (For the remainder of these reasons I will refer only to the Final Determination, being the final determination in the Request proceeding, but my reasons apply equally to the final determination in the Primus proceeding).

5                     Section 46 of the Acts Interpretation Act 1901 (Cth) (AI Act) provides:

(1)               If a provision confers on an authority the power to make an instrument that is neither a legislative instrument within the meaning of the Legislative Instruments Act 2003 nor a rule of court, then, unless the contrary intention appears:

…

(c)               any instrument so made is to be read and construed subject to the enabling legislation, and so as not to exceed the power of the authority.

(2)               If any instrument so made would, but for subsection (1), be construed as being in excess of the authority's power, it is to be taken to be a valid instrument to the extent to which it is not in excess of that power.

(3)               …

It was common ground that these provisions applied to a “written determination on access” made by ACCC under s 152CP of the Act.

6                     Section 16(1) of the ADJR Act provides that on an application for an order of review in respect of a decision to which that Act applies, the Court may, in its discretion, make all or any of certain orders, including:

(a)        an order quashing or setting aside the decision, or a part of the decision, …;

(b)        an order referring the matter to which the decision relates to the person who        made the decision for further consideration, subject to such directions as            the court thinks fit; …

[my emphasis]

The proceeding was in one aspect an application under the ADJR Act for judicial review of a decision to which the ADJR Act applied (see [103] of the earlier reasons).  The Final Determination was a “decision” in respect of which s 16(1) gives the Court the powers set out above.

7                     The question is whether, as a matter of discretion, the Court should now exercise the the power to set aside a part of the Final Determination, namely, the part in cl 5A(i).

8                     Telstra accepts that the position at common law is that  severance is possible unless the Final Determination would, with the invalid part excised, have a different effect or operation in substance.  However, Telstra submits  that severance is not possible in the present case because:

(a)                Ground F of its nature renders the entirety of the affected final determinations invalid; and

(b)                appropriate orders could not be made to give effect to a decision by the Court that the final determinations are severable, because under Pt XIC of the Act it is not open to the ACCC to re-exercise the power under s 152CP while a (severed) final determination is in place.

9                     I will deal with these two arguments in turn.

Telstra’s first argument: Ground F of its nature renders the entirety of the affected final determinations invalid

10                  In my opinion, Telstra’s first argument should not be accepted.

11                  Telstra submits that it should be assumed that it succeeded in relation to cl 5A(i) on all three of grounds 10(a), (b) and (c) (in the Request proceeding) and 4(a), (b) and (c) (in the Primus proceeding).  I proceed accordingly (see [513]-[518] and [570] of the earlier reasons).

12                  In oral submissions, senior counsel for Telstra directed this first argument mainly to Telstra’s ground 10(c) which was that ACCC fell into jurisdictional error.  Telstra submits that at common law the inevitable result of its success in relation to cl 5A(i) is that the entire Final Determination is a nullity.  Telstra cites in support Craig v The State of South Australia (1995) 184 CLR 163; Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597; and Plaintiff S157/2002 v The Commonwealth of Australia (2003) 211 CLR 476. 

13                  Telstra submits that its success on the other two grounds (failure to take into account a relevant consideration and procedural ulta vires) yields the same result.

14                  Telstra also submits that the result is the same under the ADJR Act as at common law.

15                  In my opinion, the authorities cited by Telstra do not preclude the possibility of severance.  None of them raised an issue of severance.

16                  Contrary to Telstra’s submission, the authorities show that where there has been an invalid exercise of an administrative power, including on the ground of jurisdictional error, the Court will consider whether it is appropriate to find a severable valid exercise of power: cf Biyiksiz v Minister for Immigration and Multicultural Affairs [1998] FCA 352 at 12; Re Australian Industrial Relations Commission; Ex parte Smith [2004] FCAFC 271 at [85]-[88]; Minister for Home Affairs v Tervonen (2008) 166 FCR 91 at [97]-[107].

17                  It is true that the whole of the Final Determination is “a written determination on access by the access seeker to the declared service”: see s 152CP(1) of the Act.  It is also true that subject to s 152DNA’s provision in relation to backdating, the obligations imposed by s 152CR(1) and s 152AQA(6) apply generally to the making of the whole of the Final Determination.  However, this does not demonstrate a legislative intention to exclude the possibility of severance.  Indeed, s 152DNA suggests that the legislature regarded the operation of a Final Determination in relation to a period prior to the date 21 days after the determination is made (see s 152DN(1)) as different or potentially different from the provisions of a Final Determination to operate after that date.

18                  The structure of the Final Determination invites severance of cl 5A(i).  Clause 7 of the Final Determination categorises the terms and conditions of access as follows:

(a)                LSS annual charges, as per Schedule 1;

(b)               LSS single connection and disconnection charges, as per Schedule 2;

(c)                Terms and conditions to apply to a Managed Migration Network (MNM) involving the LSS, as per Schedule 3.

(I note that cl 7 in the Primus final determination does not contain identical wording to cl 7 of the Final Determination.  However, importantly, like the Final Determination, it categorises the terms and conditions of access.)

19                  Schedule 2 is divided into three parts headed:

LSS ‘single’ connection charges

LSS ‘single’ disconnection charges

Definitions

20                  Under the second of these headings are cll 5, 5A, 6 and 7, which were set out at [419] of the earlier reasons.  The general provision as to the amount of charge payable for the disconnection of a LSS outside of a MNM is found in cl 5. 

21                  It is cl 5A that deals with the circumstances in which a disconnection charge is not payable at all.  The two categories of circumstances in which a disconnection charge is not payable are set out respectively in paras (i) and (ii) of cl 5A.  Not only are they structurally separated, but the course of reasoning that gave rise to them differs as between the two.  In the FD Statement of Reasons, after dealing with disconnection charges, the churn process and “Option 2”, and expressing the conclusion that the resulting arrangements should apply from the time the Final Determination took effect (22 August 2007) until 31 December 2007, ACCC stated in relation to the period before 22 August 2007:

Until 15 November 2006, charges will be payable on all LSS disconnections, as the Commission considers that it was likely to have been reasonable for a LSS churn process not to be implemented before this time.  For the period between 15 November 2006 until the time the final determination takes effect, no disconnection charges will be payable.  This maintains the position taken at the interim determination stage in the absence of a Telstra LSS churn process, and Telstra’s advice that in practice those arrangements did not support Telstra applying charges for any LSS disconnections.

22                  In sum, both the structure of the Final Determination and the FD Statement of Reasons demonstrates that ACCC was treating the question of charges to be made for disconnections effected prior to 22 August 2007 as a discrete self-contained matter.

23                  At common law, a provision is severable if it is a straightforward matter to isolate it from the remaining provisions and the remaining provisions are not affected in their meaning and operation by severing the invalid part: cf Harrington v Lowe (1996) 190 CLR 311 at 327-8; Evans v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 135 FCR 306 at [61] – [62].  The common law test is satisfied in the present case.

24                  Section 46 of the AI Act (set out at [5] above) requires severance, because the structure and effect of the Final Determination clearly expose “the extent” to which the Final Determination is and the extent to which it is not in excess of power: cf Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 347-348 per Dawson J; Evans v Minister for Immigration (2003) 135 FCR 306 at [63] – [65].

25                  It is not to the point that I upheld Telstra’s challenge in so far as it attacked cl 5A(i) on the ground that ACCC had not complied with provisions (ss 152CR(1) and 152AQA(6)) that applied generally to the making of the Final Determination.  To hold that those provisions applied to the issue dealt with in cl 5A(i) just as they applied to other aspects of the Final Determination explains why cl 5A(i) was to be set aside but does not address the issue of severability.

26                  Telstra relies on the decision of Bennett J in Telstra Corporation Ltd v Australian Competition and Consumer Commission (No 3) (2007) 99 ALD 268 (Telstra v ACCC (No 3)).  That case concerned a Pt A competition notice issued by ACCC under s 151AKA of the Act.  Section 151AKA(10) provided, relevantly, that ACCC must not issue such a notice unless it had first given the addressee carrier or carriage service provider a written notice inviting it to make a submission to ACCC on the proposal to issue the Pt A competition notice.

27                  In her earlier reasons (Telstra Corporation Ltd v Australian Competition and Consumer Commission (No 2) (2008) 240 ALR 135) her Honour had held that a notice of invitation in purported compliance with s 151AKA(10)(a) that ACCC had in fact given to Telstra differed from the later Pt A competition notice in its subject-matter and the kind of anti-competitive conduct it described, as a result of which Telstra had been denied procedural fairness and natural justice under the Act and at common law.

28                  In Telstra v ACCC (No 3), ACCC sought leave to argue that there should be a severance of the respective parts of the Pt A competition notice pursuant to s 46 of the AI Act so as to preserve the validity of those parts which had been notified in the notice of invitation.  Her Honour held (at [83]–[91]) that there could not be a severance.  She held that s 46 had no application to a decision made under an Act as distinct from an instrument (at [55]) and also distinguished between questions of severance involving an “excess of power” and a lack of power to make an entire instrument (at [57]).

29                  It suffices to say that s 151AKA(10) was a prohibition on the issuing of a Pt A competition notice unless ACCC had first taken the steps mandated by s 151AKA(10)(a).

30                  The statutory provisions in the present case are different.  Section 152CR(1) required ACCC to take specified matters into account in making a decision, namely, a final determination, and s 152AQA required ACCC to have regard to any determination of principles relating to the price of access to a declared service if it was required to arbitrate (make a decision upon) an access dispute under Div 8 in relation to that service. 

31                  These positive requirements are not implied prohibitions against the making of any decision on the access dispute.  In the absence of a special provision like that found in s 152DNA(7), the requirements apply generally to the making of a final determination as a whole.  As noted earlier, I do not accept that the legislature intended that an entire final determination should always fall to the ground just because ACCC failed to comply with its statutory obligations in respect to any discrete part of it: cf Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [91].

32                  Excision of cl 5A(i) does not cause the remainder of the Final Determination to operate in an unintended manner.  The remainder of the Final Determination is perfectly capable of operating as intended in respect of all periods except that from 15 November 2006 to 22 August 2007.

 Telstra’s second argument: appropriate orders could not be made to give effect to a decision by the Court that the final determinations are severable, because under Pt XIC of the Act it is not open to the ACCC to re-exercise the power under s 152CP while a (severed) final determination is in place.

33                  At the outset, Telstra draws attention to orders which would typically be made on a successful application for judicial review where there was no issue of severance.  In such a case, the order would ordinarily be that the whole of a final determination be set aside and the access dispute be remitted to ACCC for determination according to law.  In such a case, ACCC’s duty under s 152CP(1) would remain unexercised and the access dispute that had been notified under s 152CM would remain pending and unresolved.  ACCC would therefore remain under the duty imposed by s 152CP(1) to make a written determination on access.

34                  Telstra argues that if there is to be a severance in the present case, orders would be made under s 16(1)(a) of the ADJR Act setting aside cl 5A(i) and under s 16(1)(b) referring the access dispute to ACCC for further consideration according to law.

35                  Telstra submits, however, that the statutory framework demonstrates that such orders would be inappropriate.

36                  Telstra submits that if part of a final determination is left standing and valid, the access dispute that had been notified to ACCC pursuant to s 152CM would not remain pending, because that particular access dispute would have been determined under s 152CP by the final determination that was the subject of the application for review. According to Telstra, the severed surviving part of the final determination can be valid only if it is itself a final determination within s 152CP(1).

37                  According to Telstra’s submissions, ACCC would have to make a second determination under s 152CP(1) and (2), yet, according to Telstra, this would be inconsistent with the statutory scheme.  Telstra supports its submission as follows:

3.19 The language of s 152CP(1) contemplates that an access dispute is determined by the making of only one final determination.  The only other grounds on which an arbitration may be terminated are set out in s 152CS(1).  Pursuant to s 152CP(1), the ACCC’s duty is “to make a written determination on access by the access seeker to the declared service [emphasis added] and pursuant to s 152CP(2) “the determination” [emphasis added] may deal with any matter relating to access by the access seeker to the declared service.  The power to make a final determination depends upon the existence of a pending notification made under s 152CM which initiates the arbitration.  If that notification is withdrawn, the ACCC has no power to make a final determination or an interim determination.  (Act s 152CN(3)) Where a final determination has already been made, there can also be no remaining power to make a further final determination in relation to matters not the subject of the first final determination, since the notification is no longer pending.  The arbitration which it initiated was terminated on the making of the first final determination, which remains valid.

3.20 The legislative intention is that the power under s 152CP be exercised by making only one final determination, not two, nor a series of final determinations dealing with various matters.  If that were possible, the ACCC could make a final determination of matters which were the basis for notification of the dispute and later make a second final determination dealing with matters which were not the basis for notification of the dispute.  This could also occur in the reverse order.  Section 152CP does not contain any time limitation as to the making of a final determination.  The process of making subsequent final determinations would be unlimited as to time.  The arbitration would not be terminated by the first final determination and the access dispute could be never-ending with no certainty as to when it would ultimately be terminated. 

3.21 However the legislative intention evident in s 152CP(1) is that a single final determination is made and that this single final determination “terminates” the arbitration. 

3.22 The correctness of this construction is reinforced by other provisions in Pt XIC of the Act, dealing with interim determinations, and variation of interim determinations and final determinations. 

3.23 Section 152CPA(1) provides that a determination may be expressed as an interim determination.  Unless sooner revoked, (Act s 152CPA(5)) an interim determination remains in force for the period specified in it, which must be a period of not longer than 12 months. (Act s 152CPA(5))It may be extended for only one further period of 12 months. (Act s 152CPA(5A))The Act contemplates that there may be a series of determinations, but these are to be expressed as “interim determinations” and that the regime of interim determinations operates for no more than a total of 24 months.

3.24 Section 152CPA(2) expressly provides that an interim determination does not terminate an arbitration or relieve the ACCC of its duty to make “a final determination” [emphasis added].  Sections 152CPA(2) and 152CP(1) indicate that the determination of a dispute is not to occur on a rolling basis with regard to various matters but rather is to be made in one decision which is a final determination made under s 152CP. 

3.25 Any determination governing the dispute during the period prior to the determination of the dispute is made in accordance with different procedural requirements than those applying to the making of the final determination which terminates the dispute.  In particular, an interim determination may in certain circumstances be made or varied without the ACCC’s observing the principles of procedural fairness, (Act s 152CPA(3),(12)) and the ACCC has a discretion but not a duty to take into account the matters set out in s 152CR(1). (Act s 152CR(3),(4))

3.26 Provision is made in Part XIC for variation of interim determinations and of final determinations.  Pursuant to s 152CM(5)(b), an access dispute may be notified about whether a previous determination ought to be varied.  This could be an interim determination or a final determination.  Pursuant to s 152CPA(10)-(12) the ACCC may vary an interim determination.  Pursuant to s 152DT(1) the ACCC may vary a final determination on the application of any party to it, but cannot vary it if any other party objects.  The note to s 152DT(1) states that if the parties cannot agree on a variation, a new access dispute can be notified under s 152CM.  Further, the ACCC’s power to make a variation under s 152DT is subject to the duty imposed by s 152CQ and 152CR as if it were the making of a final determination following notification of an access dispute. (Act s 152DT(2))

3.27 These provisions powerfully indicate that Part XIC contemplates that where an access dispute is terminated by a final determination, there is only one final determination.  If multiple final determinations could be made in relation to a particular notification of an access dispute, there would be no work for s 152DT to do in a case where, for example, the parties recognise after the event that a particular matter ought to be brought to the attention of the ACCC as a matter which ought to have been, but was not, covered by the final determination.  Once a final determination has been made in relation to a particular notification, any subsequent final determination in relation to that notification and arbitration must be made in accordance with the terms of s 152DT or be a separate final determination made after a new arbitration has been initiated by a notification made under s 152CM.

38                  In response, ACCC draws attention to subss (1) and (3A) of s 33 of the AI Act, which provide:

(1)  Where an Act confers a power or imposes a duty, then, unless the contrary intention appears, the power may be exercised and the duty shall be performed from time to time as occasion requires.

(3A)  Where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws) with respect to particular matters (however the matters are described), the power shall be construed as including a power to make, grant or issue such an instrument with respect to some only of those matters or with respect to a particular class or particular classes of those matters and to make different provision with respect to different matters or different classes of matters.

ACCC submits that Pt XIC must be construed in conjunction with these provisions.  According to ACCC’s submission, these provisions empower ACCC to make a final determination in parts, at different times, and in respect of different aspects of an access dispute.

39                  ACCC submits, however, that if the Court should reject this submission, s 16(1)(a) and (b) (see [6] above) would permit the Court to set aside cl 5A(i) and to remit the entire access dispute to ACCC with a direction that it not further consider any other part of the access dispute dealt with in the other provisions of the Final Determination.

40                  Request and Primus make the following submissions in response to Telstra’s submission based on the framework of Pt XIC:

·                    Section 23 of the AI Act provides that, unless the contrary intention is expressed, words in the singular include the plural, and it follows that s 152CP of the Act allows ACCC to make more than one written determination on an access dispute that it is arbitrating;

·                    There is no reason in principle why there can not be more than one determination by ACCC, and there would have to be more than one if issues in dispute had been notified under s 152CM as separate access disputes;

·                    The Act itself recognises that a final determination may be found in separate written documents provided at different times (see s 152CLA(2), s 152 DT, s 152DC(1)(f));

·                    Cases in the criminal context in which a power to make an ‘order’ has been held not to permit severance of a conviction and fine on the one hand and forfeiture on the other, are distinguishable and far removed from the present context.

41                  Notwithstanding the interesting submission made on behalf of Telstra, I do not think that its argument prevails.

42                  Section 23 of the AI Act has the effect that in any Act, unless the contrary intention appears, words in the singular number include the plural.  I refer, too, to s 33(1) and (3A) of the AI Act set out at [38] above.

43                  In the light of these provisions, I do not see why, under s 152CP(1), it would not have been open to ACCC to make a written determination on all aspects of the present access disputes other than the question addressed in cl 5A(i), and then subsequently to make a written determination dealing with that aspect.  I do not think it matters whether this be regarded as two written determinations or a single written determination expressed in two instruments.

44                  While the power of deferral given by s 152CLA(2) applies only where ACCC receives an access undertaking and therefore would not have been available in the present case, the aspect of that provision that allows deferral of consideration of part of an access dispute demonstrates that it is not inherently inconsistent with Pt XIC that an access dispute be considered in parts and separate determinations made.

45                  Similarly, the possibility of a series of access disputes being notified in respect of the various issues rather than a single access dispute in respect of those issues, points in the same direction.

46                  What is essential is that the Court be satisfied that there be severable issues and resolutions of them.  In the present case there was a discrete issue as to disconnection charges in respect of disconnections effected in the period 15 November 2006 to 22 August 2007, and that discrete issue was addressed entirely within cl 5A(i).

47                  I see no inconsistency with Pt XIC in my setting aside cl 5A(i) and remitting the subject matter of it for consideration and determination by ACCC.

48                  The result will be that the determination of 1 August 2007 will remain on foot resolving all other aspects of the access dispute, and that there will be a further determination to be made under s 152CP on the issue remitted.

COSTS

49                  ACCC does not seek any order for costs in its favour and no other party seeks an order for costs against ACCC.  Accordingly it is appropriate that as between ACCC and the other parties, there be no order as to costs.

50                  Ground F (Disconnection Charges, Backdating and the “No Charge Period”) was not applicable in the Chime proceeding (NSD 1560 of 2007): it was relied on only in the Request proceeding (NSD 1744 of 2007) and the Primus proceeding (NSD 1743 of 2007).  It is common ground that the Chime proceeding should be dismissed.  However, in that proceeding also there are issues concerning costs.

51                  First, the application by Request, Primus and Chime (the second respondents) to reopen to adduce further evidence, which related to Ground A (Telstra’s Cost Model) and Ground E (Disconnection Charges, Churn Process and “Option 2”) was brought in all three proceedings, and I treat the motion as having, in substance, failed.  If the costs of that motion were to follow the event, the second respondents would be ordered to pay Telstra’s costs of the motion.

52                  Second, the position concerning preparation of the Court Books was complex.  In the first place, four of the Court Books were Common Court Books, that is to say, they were common to all three proceedings.  The cost of preparing them should be apportioned, one-third to each of the three proceedings.

53                  Third, Telstra submits that the bulk of its costs in preparing the Court Books for all three proceedings would have been required in the Request and Primus proceedings even if Telstra had limited its case to the ground on which it succeeded.  I do not see, however, why this should affect the order to be made in the Chime proceeding.

54                  Fourth, originally there was an eleventh ground on which Telstra relied: see the earlier reasons at [7] and [26].  This was that the LSS Declaration was a legislative rather than an administrative act, and was invalid for failure to comply with certain provisions of the LI Act.  Following the hearing, however, the Trade Practices Amendment (Access Declarations) Act 2008 (Cth) was enacted, as a result of which the ground was not pressed.  Telstra submits that I should conclude that that ground would have succeeded and would have meant failure of all three proceedings, including the Chime proceeding.  I do not so conclude.  Although the ground was on foot throughout the hearing and submissions were made in relation to it, I had not formed a view in relation to it by the time when it ceased to be pressed.

55                  There were several interlocutory hearings concerning the effect of the Trade Practices Amendment (Access Declarations) Act 2008 (Cth) and as to the positions to be taken by the parties, in particular by Telstra, in relation to its effect.   The LI Act ground was referred to as Telstra’s “nuclear point”.  The intention was to convey the idea that if successful this legal argument would have been fatal to the entire Final Determination.  Although no evidence was directed to the issue, its importance was reflected in the fact that it attracted lengthy written submissions.  The second respondents are not entitled to recover costs associated with their resistance to Telstra’s attack on this ground.

56                  Telstra submits that it is artificial to distinguish between the Chime proceeding and the other two proceedings, and that it should be left to the three companies to make internal arrangements for the apportionment of liability as between them.  However, counsel for Request, Primus and Chime points out that the three companies are independent of each other and that it cannot be assumed that agreement would be reached.  On this basis, I think that I must make a separate order appropriate to each proceeding.

57                  Doing the best I can, I think that in the Chime proceeding, Telstra should be ordered to pay something in the range of 90 to 95% of Chime’s costs.  I will make it the mid point of that range - 92.5%.  The 7.5% allowance takes into account the work undertaken by Chime’s legal representatives in relation to the ground not pressed and also Chime’s failure on the motion to reopen and adduce further evidence.  Moreover, in referring to “Chime’s costs” on which the 92.5% is to be calculated do not include two-thirds of the costs of Request, Primus and Chime on preparing the Common Court Books, because those two-thirds are to be treated as costs of Request and Primus.

58                  I turn now to the Request and Primus proceedings.  It will be clear, from what I have said above, that in relation to preparation of the Common Court Books, one-third is to be attributed to the Request proceeding and one-third to the Primus proceeding.

59                  The major issue raised in relation to costs in respect of the Request and Primus proceedings concerns Telstra’s success on Ground F.  Prima facie, Telstra should have its costs on that ground.

60                  The parties have made submissions directed showing the importance or unimportance of Ground F.  In view of the severability of cl 5A(i) and the limited period (15 November 2006 to 22 August 2007) to which it was relevant and the undisputed fact that Telstra did not in fact make disconnection charges in respect of disconnections occurring during that period, or that if it did so, it did so to a very minor extent, I think that as a commercial matter, Telstra’s success on Ground F does not loom large in the scheme of things.

61                  Two particular submissions should be noted before I state my conclusion.

62                  Telstra submits that a sizeable amount of the transcript reveals a cross-examination of Telstra’s witnesses that serves no useful purpose, and that the second respondents should not get their costs of that cross-examination.  I do not accept the submission.  I noted at [387] of the earlier reasons one concession made by a Telstra witness. More importantly, however, in the course of a very hard fought litigious contest of the present kind, one should not be too ready to penalise a party for an extensive cross-examination even if it does not contribute to the result.

63                  The second respondents submit that Telstra should be ordered to pay indemnity costs in respect of the period since the making of my orders of 7 October 2008 because Telstra did not negotiate in good faith towards reaching agreement on the orders to be made.  The submission was not elaborated upon in oral submissions.  I am not satisfied that the submission is supported.

64                  Doing the best I can, I think that Telstra should be ordered to pay something in the range of 80 to 85% of Request’s costs and 82.5% of Primus’s costs.  In each case, I will make it the mid point of that range – 82.5%.  Again, when I refer to “Request’s costs” and “Primus’s costs”, I include in each case only one-third of the costs of preparation of the Common Court Books.

CONCLUSION

65                  For the above reasons, there will be orders as set out in the orders pages attached.

Associate:

Dated:         7 November 2008

Telstra Corporation Ltd v ACCC and Request Broadband Pty Ltd (NSD 1744 of 2007)

Telstra Corporation Ltd v ACCC and Primus Telecommunications Pty Ltd

(NSD 1743 of 2007)

Telstra Corporation Ltd v ACCC and Chime Communications Pty Ltd

(NSD 1560 of 2007)