Supreme Court of SA|2000-10-27|Before: Wicks J

These proceedings commenced on 8 July 1998 on the application of the plaintiff for an injunction which was granted on the same day. As at that date a number of accounts in relation to the Transferred Lines were unpaid and overdue. These were as follows:

In my opinion, the plaintiff had no claim for damages for breach of contract in respect of the services relating to these accounts being the services in respect of the Transferred Lines. Even if the defendant disconnected the services concerned, I hold that it was entitled to do so at the time, being before the commencement of this action and before the issue and service of the injunction. Thus, at the commencement of this action the defendant was not in breach of any contract with the plaintiff in relation to the Transferred Lines.

Any breach on the part of the defendant occurring after 8 July 1998 would go towards a fresh cause of action and would require a new set of legal proceedings: Eshelby v Federated European Bank Limited [1932] 1 KB 423. I am mindful of the provisions of r 46.08 which permits a party to plead a matter which has arisen since the commencement of the proceedings. In s 5 of the Supreme Court Act 1935, a "matter" is defined to include every proceeding in the Court not in a cause. A "cause" includes any action, suit or other originating proceedings between a plaintiff and a defendant: Baldry v Jackson (1976) 2 NSWLR 415 and Servcorp (Aust) Pty Ltd v Abgarus Pty Ltd (1995-1996) 38 NSWLR 281. The definitions of "matter" and "cause", while found in the Supreme Court Act, are nevertheless applicable to the Supreme Court Rules: Acts Interpretation Act 1915, s 14.

In Baldry v Jackson (supra), the New South Wales Court of Appeal had to consider a rule which for all practical purposes was identical to Rule 46.08. Samuels JA observed at p 419:

"The rule looks to events which have occurred after the commencement of the proceedings and thus, where the proceedings have been commenced by statement of claim, after the statement of claim has been filed. It primarily contemplates a party pleading matter which has arisen after the statement of claim has been filed, but before the time comes to file the pleading in which the matter is to be included. No doubt all this can be done by amendment after the relevant pleading has been filed. But an amendment, duly made, takes effect, not from the date when the amendment is made, but from the date of the original document which it amends ... There is nothing in the rules to displace this principle ...

It seems to me, therefore, impossible to permit an amendment to this statement of claim which would have the effect of introducing into it a cause of action based upon facts which had not arisen when the statement of claim was filed. The situation becomes even more curious when one considers that these new facts would be wholly in substitution for the facts already pleaded which do not, of course, disclose any cause of action. I cannot see how a plaintiff can commence proceedings by statement of claim dated 5th November, 1975 (and that date would remain after amendment) which pleads facts which did not occur until the 1st December, 1975: there is nothing in r 16 to authorize such a course."

The meaning of cause of action or cause was discussed by Lord Esher MR in Read v Brown (1889) 22 QBD 128 at 131 where his Lordship said:

"[A cause of action has been defined to be] every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved."

In my view s 46.08 has no application to the case presently before the Court.

It seems that where damages are to be assessed in respect of a continuing cause of action, recurring breaches of recurring obligations or intermittent breaches of a continuing obligation, damages can be assessed up to the date of assessment including damages for breaches occurring after the proceedings were begun: Supreme Court Rules r 77.04. See also, Mann v The Capital Territory Health Commission [1982] HCA 10; (1981-1982) 148 CLR 97. However, any claim for damages in the present case would not come within r 77.04. Each breach occurring after 8 July 1998 should be regarded as giving rise to a fresh cause of action in damages and would require a fresh set of proceedings. If there were a breach on the part of the defendant of any contract between the defendant and the plaintiff, one could not predict when any such breach would be likely to occur. There is no guarantee that any such breach would be recurring or intermittent.

The facsimile dated 2 April 1998 also contains reference to a number of 0500 numbers. No mention of these has been made by either party at trial. I do not propose to deal with them further.

The plaintiff had a number of other accounts with the defendant. These included accounts numbered 262 7611 763, 376 8909 400 and 577 9890 500. None of these were in respect of Transferred Lines and should be ignored in respect of this claim.

Counsel for the plaintiff submitted that the defendant could not rely on cl 10.3 of the General Terms and Conditions to permit it to disconnect services without notice because, he said, the defendant had adopted "an invariable practice" of allowing time beyond the due date, of serving a reminder notice allowing further time and of serving a disconnection notice and allowing still further time. There is no evidence before me of anything done by the defendant which would amount to "an invariable practice" of the kind described. While there may well have been instances where the defendant offered some latitude before disconnecting the line or lines concerned, "an invariable practice" would require much more. Either witnesses would have to depose to such practice or it would have to be conceded by someone holding a senior management position in the defendant, duly authorised to make such a concession on behalf of that company. In my opinion, the defendant was entitled to disconnect a Transferred Line without notice to the plaintiff at any time when a bill was outstanding, in respect of that line, the payment of which was overdue.

On 8 July 1998, Mr Maine complained that certain of the plaintiff's telephone lines had become disconnected. Mr Maine was in Adelaide at the time. He contacted Mr E J Spencer, the manager of the defendant's National Collection Centre located in Melbourne. According to Mr Maine, on that day in a telephone conversation with Mr Spencer, Mr Maine complained at the disconnection of the plaintiff's telephone lines. He said that if any more of the plaintiff's telephone lines were disconnected, he would obtain a court order to have the defendant stopped. According to Mr Maine, Mr Spencer replied that he did not give a damn and that he was withdrawing all services to the plaintiff. He said that the defendant had made a business decision not to give any telephone lines to any company that Mr Maine had anything to do with. According to Mr Maine, Mr Spencer further said that the defendant was not prepared to provide any future services to the plaintiff because NDA had an outstanding bill.

In his evidence, Mr Spencer said that he had spoken to Mr Maine on the telephone on a number of occasions. He recalled an occasion which occurred on 8 July 1998 at about 5.30 pm when Mr Maine rang to say that he had obtained an injunction from this Court ordering the defendant not to disconnect telecommunication services in the name of the plaintiff and to restore services in the name of the plaintiff which had apparently been disconnected. The only itemisation of the lines affected is contained in the facsimile from NDA to the defendant dated 2 April 1998 and referred to earlier in these reasons.

The injunction granted on 8 July 1998 referred to telecommunication services generally and not merely Transferred Lines, although these would clearly have been included within the expression "telecommunication services" and were within the scope of the injunction. At the time of the issue of that injunction, the defendant was lawfully entitled to cancel the telecommunication services provided to the plaintiff and was not in breach of contract on that account. The injunction had the effect of holding matters in abeyance until the dispute between the parties could be resolved by this Court.

As part of the relief claimed, the plaintiff seeks a permanent injunction restraining the defendant from discontinuing the Transferred Lines until equivalent services can be provided by another carrier. The plaintiff has since abandoned its claim for a permanent injunction.

In my opinion, the plaintiff's claim relating to the Transferred Lines fails and the plaintiff is not entitled to any relief in respect of it.

The next claim made by the plaintiff against the defendant is based on an estoppel. In Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Limited [1982] 1 QB 84, the following statement in relation to estoppel by convention appears in the judgment of Brandon LJ at p 130:

"The kind of estoppel which is relevant in this case is not the usual kind of estoppel in pais based on a representation made by A to B and acted on by B to his detriment. It is rather the kind of estoppel which is described in Spencer Bower and Turner, Estoppel by Representation, 3rd ed (1977), at pp 157-160, as estoppel by convention. The authors of that work say of this kind of estoppel, at p 157:

' This form of estoppel is founded, not on a representation of fact made by a representor and believed by a representee, but on an agreed statement of facts the truth of which has been assumed, by the convention of the parties, as the basis of a transaction into which they are about to enter. When the parties have acted in their transaction upon the agreed assumption that a given state of facts is to be accepted between them as true, then as regards that transaction each will be estopped as against the other from questioning the truth of the statement of facts so assumed.'"

This requires an assumption adopted by the parties as the conventional basis of their relationship.

In Franklin v Manufacturers Mutual Insurance Limited [1935] NSWStRp 62; (1935) 36 SR (NSW) 76, Jordan CJ referred to estoppel by representation. He said at p 82:

"In order that this type of estoppel may arise, it is necessary that (1) by word or conduct (2) reasonably likely to be understood as a representation of fact, (3) a representation of fact, as contrasted with a mere expression of intention, should be made to another person either innocently or fraudulently, (4) in such circumstances that a reasonable man would regard himself as invited to act upon it in a particular way, (5) and that the representation should have been material in inducing the person to whom it was made to act on it in that way (6) so that his position would be altered to his detriment if the facts were otherwise than as represented."

There is also equitable or promissory estoppel, a definition of which is set out in the following passage from the judgment of Brennan J in Waltons Stores (Interstate) Limited v Maher [1988] HCA 7; (1987-88) 164 CLR 387 at p 428-9. The passage is as follows:

"In my opinion to establish an equitable estoppel, it is necessary for the plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt the assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise."

I have mentioned these three kinds of estoppel because I am not sure which of the three the plaintiff relies upon. Elements of all three are mentioned in the plaintiff's pleadings.

The three kinds of estoppel to which I have just referred are subject to the rule that an assumption or representation must be clear before it can found an estoppel: Legione v Hateley [1983] HCA 11; (1982-83) 152 CLR 406 at pp 435-436 per Mason and Deane JJ. This does not mean that an assumption or representation, if it is to found an estoppel, must be express. The assumption or representation may properly be seen as implied by the words used or to be adduced from either a failure to speak where there was a duty to speak or from conduct: Legione v Hateley (supra at p 438).

The question of a claim based on estoppel was raised in par 8 to par 15 of the statement of claim. In that document, the plaintiff alleged that it had requested that the OnRamp at Werribee be transferred into its name. The plaintiff contended that such request was made orally in the telephone conversation in early May 1998 and again in the telephone conversation on 29 May 1998 between Mr Maine and Mr Quirk to which I have referred earlier in these reasons.

The statement of claim further alleged that an application for the transfer of the OnRamp at Werribee was subsequently made in writing on or about 29 May 1998. The plaintiff contended that the application in writing referred to was a standard form of application for an OnRamp duo. The application form in question was completed by Mr Maine on behalf of the plaintiff and returned to Mr Quirk by facsimile on the same day. It was alleged that the defendant failed to transfer the OnRamp concerned into the name of the plaintiff and that the defendant failed to communicate to the plaintiff any refusal of the application or the imposition of any condition to the grant of the application referred to above.

In alleging a failure to transfer the Werribee OnRamp to the plaintiff, it is implied that the defendant had a duty to make such a transfer. In fact, that was not the case; there was no such duty to transfer the OnRamp. In alleging a failure to communicate to the plaintiff any refusal of the application, it is implied that the defendant had a duty to so communicate; in fact, it had no such duty.

It was alleged that such failure to communicate constituted an implied representation to the effect that there was no impediment to the grant of the application and to the effect that the OnRamp connection would be transferred into the name of the plaintiff in due course. In fact, such failure could not amount to an implied representation of any kind. The plaintiff contended that in reliance on and induced by the representation, the plaintiff on or about 4 June 1998 assumed responsibility to a number of distributors for providing internet access previously provided by NDA. There is nothing in the evidence arising from the two telephone conversations with Mr Quirk and the surrounding circumstances and, in particular, the negotiations relating to the recovery of the NDA telecommunications account which would amount to an inducement made by the defendant to the plaintiff in relation to the Werribee OnRamp. The plaintiff contended that if the defendant were permitted to disconnect the OnRamp connection the plaintiff would suffer loss and damage. If the plaintiff suffered loss or damage as a result of any inducement of the kind referred to above, it is not loss or damage for which the defendant could properly be held responsible. The OnRamp connection was a crucial component of the plaintiff's business as the provider of internet and related services.

As I have said, in order to found an estoppel, the representation or assumption relied upon must be clear and unequivocal. An estoppel cannot be founded on an ambiguity. To the extent that a representation or assumption can arise from the telephone conversation between Mr Maine and Mr Quirk in early May 1998, I consider that it was ambiguous and should not have founded an estoppel.

The account of NDA with the defendant had been outstanding for some months. In February 1998, there had been negotiations between Mr Maine and representatives of the defendant in order to identify and correct any errors in NDA's outstanding account. At or about 21 April 1998, the defendant had rendered an account to NDA claiming $17 869 as overdue. At that time there were negotiations between Mr Maine and Ms Terrie Ryan for the payment of NDA's outstanding account with the defendant. On 30 April the defendant had threatened to disconnect the services contained in that account. In early May 1998, at about the time of the first telephone conversation between Mr Maine and Mr Quirk, the defendant was preparing to disconnect the services the subject of NDA's account with it. At about that time, there was the episode involving Hale & Wakeling where the defendant was pressing for the payment of its account by threatening disconnection of services and Hale & Wakeling were seeking an extension of time for payment on behalf of NDA. There was a short extension of time. The amount of $5 000 referred to earlier was offered as a gesture of goodwill. It was never paid. There was a telephone conversation between Mr Maine and Ms Galtieri of the defendant. Ms Galtieri requested that all amounts in dispute be listed by 15 May 1998. She drew attention to the fact that the services affected (which included the Werribee OnRamp) would be discontinued unless action was taken within the time limited.

If there were any matters genuinely in dispute, no progress was made in resolving them. Over the period from February to May 1998, there was no written communication of any kind emanating from Mr Maine or NDA setting out items in the defendant's accounts which were claimed to be in dispute and setting out grounds of dispute. In the circumstances, I have a serious doubt as to Mr Maine's bona fides in relation to NDA's account.

On 20 May 1998, Mrs Christina Quirk proceeded to disconnect all services in the name of NDA. The disconnection applied to the services included in the invoice rendered to NDA on 21 April 1998 and took several hours to complete. It included the Werribee OnRamp service.

Having regard to the above sequence of events, Mr Maine should have been in no doubt that from late April 1998 onwards NDA's services were about to be disconnected for non-payment of the bill dated 21 April 1998 and referred to earlier in these reasons. The bill in question at p 56 onwards related to the Werribee OnRamp service. Over the period concerned, Mr Maine knew that the services referred to had not been provided and that the lines in question (including the lines for the Werribee OnRamp service) would not be transferred to the plaintiff.

For there to be an estoppel of any kind, the plaintiff must have been induced to alter its position by a representation or promise or by an agreed state of affairs the truth of which has been assumed by convention of the parties as the basis of a transaction they were about to enter. Mr Maine was fully informed all along of the steps taken by the defendant to disconnect the service in relation to the Werribee OnRamp along with other services in the name of NDA. The defendant had made its position clear to Mr Maine and through him, to NDA and the plaintiff in relation to the Werribee OnRamp that the service, along with other services in the name of NDA, would not be transferred because of the outstanding debt of NDA. In those circumstances, and having regard to all that was happening at the time involving NDA and the plaintiff and the defendant, it cannot possibly be said that the plaintiff was entitled to the benefit of any estoppel of the kind alleged. In any case where a plaintiff knows the true situation, there cannot be an inducement or an assumed state of affairs of a kind necessary to found an estoppel. The plaintiff concerned is fully informed as to the true situation and, in that case, there is no room for an estoppel to operate.

In relation to the meeting between Mr Maine and Mr Quirk on 29 May 1998, Mr Maine was told that in order to transfer the OnRamp to the plaintiff, an application form would be required to be completed and signed on behalf of the plaintiff. Where an application is involved it is generally the case that the party to whom the application is made has a discretion to accept or refuse the application. In the present case, that would certainly be the position because of the nature and length of the form. Where an application is concerned, one is not entitled to assume that it will necessarily be granted.

In my opinion the claim based on an estoppel fails.

Under s 234 of the Telecommunications Act 1997, the Australian Communications Authority is authorised to make standards to be complied with by carriage service providers in relation to the making of arrangements with customers about the period taken to comply with requests to connect customers for specified kinds of carriage services and the periods that carriage service providers may offer to customers when making those arrangements. For present purposes, the defendant is a carriage service provider.

If a carriage service provider contravenes a standard in force under s 234 of the above Act, in relation to a particular customer, it is liable to pay damages to the customer for the contravention. The amount of damages payable for a particular contravention is equal to the relevant amount specified in the scale in force under s 236: s 235 of the Telecommunications Act, 1997.

Under s 236 of the Telecommunications Act 1997, the Australian Telecommunications Authority is authorised by written instrument to specify a scale of damages for contravention of standards under s 234. By the same section it is provided that the scale must specify categories of contraventions and also specify a dollar amount as the amount of damages payable for contraventions covered by each of those categories: Telecommunications Act 1997, s 236.

I have considered the Telecommunications (Customer Service Guarantee) Standard 1997 in its application to this case. Under par 3 of the Standard, it is provided that it applies to a carriage service provider who supplies to a customer a specified service or who is requested by a customer to connect that customer to the service. In the Standard, "specified service" means the standard telephone service or an enhanced call handling feature. A "standard telephone service" is defined in the Standard as a standard telephone service within the meaning of the Telecommunications Act supplied by means of a public switched telephone service line and a telephone hand set that does not have switching functions. An "enhanced call handling feature" refers to a standard telephone service with a number of features added such as "call waiting" and "call forwarding".

Under par 6 of the Standard, in making arrangements to connect customers to a specified service, the carriage service provider must make reasonable efforts to obtain the agreement of the customer to the terms of those arrangements, particularly in regard to the connection period. It should be noted that par 6 refers to a "specified service" which, as I have already mentioned, is defined to mean a standard telephone service or an enhanced call handling feature.

A carriage service provider must comply with an arrangement with a customer for a connection to be provided on an agreed date or within an agreed period: Telecommunications (Customer Service Guarantee) Standard 1997, par 7(4).

In the present case the plaintiff ordered some 20 faxstream lines from the defendant for installation in connection with its business. The order was placed on 6 April 1998. Insufficient cabling was found to exist so that the order had to be placed on "hold". This was done on 9 April 1998. The order was subsequently expanded so that a cable of 50 pairs of wires could be pulled through the channel under the roadway instead of 30 pairs. With the cable containing an increase in the number of wires, it was found necessary to dig up 2½ kilometres of roadway. It appears that a decision was made to increase the cable from 50 pairs to 300 pairs. The job was ultimately completed on 17 July 1998.

In the statement of claim, the plaintiff alleges a contravention of a performance standard under s 234 of the Telecommunications Act in consequence of a failure to connect the 20 faxstream lines promptly. It is alleged that the defendant undertook to connect the lines by 14 April 1998 but failed to do so until 17 July 1998. The plaintiff alleges that by reason of the contravention, the defendant became liable pursuant to the Act to pay damages to the plaintiff in the sum of $20 per line for every working day the defendant failed to connect that line. In this case, an aggregate of $27 200 is claimed.

As I have said earlier in these reasons, the Australian Communications Authority is authorised to specify a scale of damages for contraventions of performance standards under s 234 of the Act. A copy of the written instrument referred to or a certificate as to its terms has not been admitted in evidence in this case. Such a document is essential and without it the plaintiff's claim based on the service guarantee must fail.

A further question arises as to the application of the relevant standard in the circumstances of this case. Mr Maine gave evidence that a faxstream service was a standard telephone service within the meaning of the Telecommunications Act supplied by means of a public switched telephone service line and a handset which does not have switching functions. On the other hand, Mr Spencer expressed a contrary view. A standard telephone service is defined in s 17 of the Telecommunications Act in a manner in which expert technical evidence would be required to be given to make any sense of it. In my view a witness should have been called to give such evidence. I do not suggest that an expert witness would be required to give evidence in respect of terms used in the Telecommunications Act or the Standard where those terms themselves are subject to a statutory definition. But once one has passed the statutory definitions, assistance may be required as to the meaning of technical, scientific or electronic engineering terms.

In this matter, the defendant was faced with a situation where it could not simply connect the necessary number of lines. Two and a half kilometres of roadway or footpath had to be dug up. That having become necessary, there was no point in going to all the trouble and expense of digging up the roadway without laying as many additional lines as reasonable in order to serve future needs. On this matter I consider that the onus lies on the defendant to establish that the time in fact occupied in providing the additional cabling was reasonable in the circumstances. Evidence on this topic would have to come from an engineer familiar with the work of laying cable to ascertain the time reasonably required in obtaining the necessary cable, in submitting plans to and obtaining approval of the relevant local governing authority and in carrying out the work. Also there may well be time necessary to finish other work in hand. In addition, an explanation of why it was necessary to lay 300 pairs rather than a smaller number would have been relevant. Presumably, to deal with the larger number of pairs would not involve a significantly greater delay. It appears that there were some five pairs of wires available at the outset. Could not these have been offered to the plaintiff? If so damages in relation to them could have been avoided altogether.

Despite these considerations, the service guarantee claim fails for the reasons which I have given.

Claim under s 46 of the Trades Practices Act 1974

In its statement of claim, the plaintiff alleged that the defendant had at all material times a substantial degree of power in the telecommunications market in Australia. The plaintiff further contended that the defendant had refused to transfer the Werribee OnRamp connection into the plaintiff's name and continues to refuse to do so - notwithstanding the communication by the plaintiff to the Court in July 1998 of the plaintiff's intention to have Optus Communications Pty Ltd take over from the defendant the provision of all the plaintiff's telecommunications services.

It was further alleged that the defendant's refusal to transfer the Werribee OnRamp connection in the circumstances to which I have referred, had the effect, by reason of the particulars pleaded in par 14(a) of the statement of claim, of preventing Optus or any other carrier from providing an OnRamp connection at Werribee for the plaintiff and by reason thereof constituted a contravention of s 46 of the Trade Practices Act 1974 (Cwlth). The particulars referred to in par 14(a) of the statement of claim were to the effect that the plaintiff would not be able to obtain an equivalent connection from another carrier because the defendant was a monopoly supplier of services such as an OnRamp connection in as much as no other carrier could at the relevant time directly provide such services to a customer although Optus Communications Pty Ltd could accept a transfer from the defendant of the right to provide an OnRamp service in respect of which the defendant has established the current account for that service with a customer.

In the statement of claim, the plaintiff contended that the defendant intended to disconnect the Werribee OnRamp and refuse to provide services to the plaintiff. The plaintiff further contended that the defendant had refused and continued to refuse the plaintiff's application to have the Werribee OnRamp connection transferred into the plaintiff's name notwithstanding the plaintiff's declared intention to have the provisions of the service taken over by Optus Communications Pty Ltd. It was further alleged that the refusal had the effect and was for the purpose of preventing Optus Communications Pty Ltd from competing with the defendant for the provision of services in the OnRamp market in contravention of s 46 of the Trade Practices Act.

So far as is material, s 46 of the Trade Practices Act 1974 is as follows:

"46.(1) A corporation that has a substantial degree of power in a market shall not take advantage of that power for the purpose of:

(a) eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market;

(b) preventing the entry of a person into that or any other market; or

(a) a reference to power is a reference to market power;

(b) a reference to a market is a reference to a market for goods or services; and

(c) a reference to power in relation to, or to conduct in, a market is a reference to power, or to conduct, in that market either as a supplier or as an acquirer of goods or services in that market.

It is admitted on the pleadings that the defendant had at all material times a substantial degree of power in the telecommunications market in Australia. However, the expression "market" is used on several occasions in s 46 of the Trade Practices Act and for the purposes of that section it is necessary to know what the relevant market is. For the purposes of the Trade Practices Act, a market must be defined in both product terms and geographic terms. Section 46 of the Trade Practices Act should be read with s 4E which provides as follows:

"For the purposes of this Act, 'market' means a market in Australia and, when used in relation to any goods or services, includes a market for those goods or services and other goods or services that are substitutable for, or otherwise competitive with, the first-mentioned goods or services."

In Re Queensland Co-operative Milling Association Ltd; Defiance Holdings Ltd (1976) 25 FLR 169 the following statement appears on p 190:

"We take the concept of a market to be basically a very simple idea. A market is the area of close competition between firms or, putting it a little differently, the field of rivalry between them. (If there is no close competition there is of course a monopolistic market.) Within the bounds of a market there is substitution - substitution between one product and another, and between one source of supply and another, in response to changing prices. So a market is the field of actual and potential transactions between buyers and sellers amongst whom there can be strong substitution, at least in the long run, if given a sufficient price incentive. Let us suppose that the price of one supplier goes up. Then on the demand side buyers may switch their patronage from this firm's product to another, or from this geographic source of supply to another. As well, on the supply side, sellers can adjust their production plans, substituting one product for another in their output mix, or substituting one geographic source of supply for another. Whether such substitution is feasible or likely depends ultimately on customer attitudes, technology, distance, and cost and price incentives. It is the possibilities of such substitution which set the limits upon a firm's ability to 'give less and charge more'. Accordingly, in determining the outer boundaries of the market we ask a quite simple but fundamental question: If the firm were to 'give less and charge more' would there be, to put the matter colloquially, much of a reaction? And if so, from whom? In the language of economics the question is this: From which products and which activities could we expect a relatively high demand or supply response to price change, i.e. a relatively high cross-elasticity of demand or cross-elasticity of supply?"

This statement received the approval of the High Court in Queensland Wine Industries Pty Ltd v Broken Hill Proprietary Co Ltd [1989] HCA 6; (1989) 167 CLR 177.

In the present case, no evidence of any kind has been adduced to enable the applicable market to be defined and without such a definition I cannot take the claim under s 46 any further.

I note that par 4.4 of the particulars in respect of par 15C of the amended statement of claim refers to the provision of services in the "OnRamp market". A "market" must be identified in economic terms. For there to be a market, certain criteria must be identified. Such identification has not occurred in this case. There is simply no evidence that such a thing as an OnRamp market exists. Such a market is referred to in par 4.1 of the particulars of the statement of claim and also in 4.4 of those particulars.

At the heart of s 46 of the Trade Practices Act is the proposition that a corporation to which that section applies must not take advantage of its market power for one or more of the proscribed purposes listed in subs (1). In Queensland Wire Industries Proprietary Limited v The Broken Hill Propriety Co Limited (cited above) at 191 per Mason CJ and Wilson J the following question was identified as the one to be determined:

"The question is simply whether a firm with a substantial degree of market power has used that power for a purpose proscribed in the section, thereby undermining competition ..."

This may involve a consideration of subjective as well as objective elements to determine the nature of the "purpose" in question. Purpose will usually be inferred from the nature of the arrangement, the circumstances in which it was made and its likely effect: Dowling v Dalgety Australia Limited [1992] FCA 35; (1992) 34 FCR 109.

The Werribee OnRamp was never transferred to the plaintiff but at all material times remained in the name of NDA until it was disconnected on 20 May 1998 because of the fact that NDA had not paid its accounts, including an account relating to the Werribee OnRamp. Reference is made to communications between the defendant's staff and Mr Maine referred to earlier in these reasons whereby it was made abundantly clear on a number of occasions that the lines in question were not cut off to prevent competition. They were cut off for credit management reasons.

There is no evidence whatsoever that the defendant acted because of one of the proscribed purposes set out in s 46 of the Trade Practices Act. I am satisfied that the defendant acted because of the very large outstanding debt owing to the defendant by NDA and that accounts of the plaintiffs were themselves overdue for payment. Clearly, the defendant was anxious to avoid in the plaintiff a duplication of what had occurred in NDA.

In my opinion the claim of the plaintiff under s 46 of the Trade Practices Act fails.

Reference is made in par 15C of the statement of claim to the competition rule within the meaning of s 151AK of the Trade Practices Act. This section is within part XIB which deals with anti-competitive conduct in the telecommunications industry. The statement of claim seeks no relief under Part XIB in respect of the competition rule. Also, in the course of argument, counsel for the plaintiff intimated that a claim in respect of the competition rule would not be pursued.

The claim under s 46 of the Trade Practices Act is a "special federal matter" within the meaning of the Jurisdiction of Courts (Cross Vesting) Act 1987 (Cwlth). Under s 6 of that Act, if a matter for determination in a proceeding that is pending in the Supreme Court of a State is a special federal matter and the court does not make an order under subs (3) in respect of the matter, the court must transfer the proceedings to the Federal Court. Subsection (3) provides that the Supreme Court may order that the proceedings be determined by that Court if it is satisfied that there are special reasons for doing so in the particular circumstances of the proceedings other than reasons relevant to the convenience of the parties.

On 26 October 1998 after hearing the parties and also after hearing counsel on behalf of both the State and Federal Attorneys-General, Debelle J ordered:

"That the proceeding be determined by this Honourable Court notwithstanding that it involves a special federal matter."

"That the trial of the issues of estoppel alleged by the plaintiff be limited to the question of liability, the question of damages to be reserved to a later trial."

On 2 November 1998 I made the following order:

(b) the claim arising under s 46 and s 82 of the Trade Practices Act; and

be limited in each case to the question of liability, the question of damages (if any) or compensation in each case, to be reserved for a later trial."

On 10 January 2000, I made the following further order:

"That the words "the claim arising under the counterclaim" be omitted from my order made on 2 November 1998 (page 70 of the transcript).

That a further paragraph be added to the above order:

'That the claim arising under the counterclaim and the claim in relation to the service guarantee be heard together with items (a) and (b) of my order of 2 November 1998."

In the circumstances, it will not be necessary to proceed to a second stage in relation to any of the claims made.

The defendant has filed a counterclaim in respect of charges made by the defendant for telecommunications services provided by it to the plaintiff.

Three volumes were tendered and admitted by the consent of the parties containing the defendant's standard terms and conditions of contract. As I have said earlier in these reasons, it was further agreed between the parties that these were the terms and conditions of contract which regulate the supply of services by the defendant to the plaintiff for the purpose of this case.

Clause 4 of Item 2 of the standard terms and conditions of contract deals with the issue of payment of charges by a customer to the defendant. Clause 4.2 is as follows:

"Telstra's records are sufficient evidence of the amount payable by the customer unless they are shown to be incorrect."

The effect of this provision is to make Telstra's records proof of the amount payable by the customer unless the records are shown to be incorrect. Effectively, this reverses the onus of proof.

Copies of invoices prepared by the defendant and addressed to the plaintiff have been tendered and admitted in evidence. I would have expected the counterclaim to be concerned with invoices rendered for services provided from the inception of the services or, in the case of the Transferred Lines, from the date of the transfer up to 30 October 1998, the date of the filing of the counterclaim. Instead, the counterclaim refers to the accrual of charges from 2 July 1998 which is not an accrual date selected by the defendant for charging purposes. Some accounts go back to a date earlier than 2 July 1998 and some have a commencement date for services to be provided after that date. It seems to me that the best I can do, having regard to the material before me, is to make a calculation of charges on and from the second available invoice date after 2 July 1998. I do not know why 2 July 1998 was selected for the purposes of calculations in the counterclaim. No explanation for its use has been given.

I calculate the amount due in respect of accounts numbered 216 7065 000, 381 1542 600, 376 8909 400, 262 7611 763 and 377 4387 400 listed in Schedule A of the counterclaim as the sum of $9 930.06. This amount is made up as follows:

I have not seen anything which would assist me with regard to the account numbered 660 1499 300 in Schedule A of the counterclaim and accordingly I have been unable to fix a figure in relation to that account.

The counterclaim also includes a claim for charges in respect of services provided through the OnRamp situated at Werribee. Charges in respect of that service are included in account number 479 1064 300 rendered to NDA. The OnRamp in question was never transferred to the plaintiff and the account for services provided by it remained at all times with NDA. I know nothing about account number 228 0814 000 appearing in the counterclaim in Schedule B.

In the counterclaim, the defendant claims such further amounts as may accrue between the date of filing the counterclaim and the date of trial of the action. As I have explained earlier in these reasons, an action cannot include a cause of action accruing after the date of the summons. The same principle applies in relation to a counterclaim. The pleading of additional amounts accruing due from time to time is the pleading of fresh causes of action and cannot be included in the counterclaim as originally filed; nor can it be made the subject of amendment to the counterclaim: Baldry v Jackson and other cases cited earlier. I refer to what I have said earlier in these reasons on this topic.

I have considered the fact that there may have been a number of occasions where the defendant disconnected particular lines in contravention of the injunction to which I have referred earlier. I am inclined to think that these disconnections were due to inadvertence and not to any deliberate act on the part of the defendant and its management and staff. In my opinion the disconnection of lines the subject of any of the accounts by the defendant, while it may have constituted a fundamental breach of the contract in question, there is no evidence that the plaintiff responded to such behaviour by bringing the contract to an end. As I see it, the plaintiff elected to continue the contract and the plaintiff continued to have the use of the services.

In my opinion, obedience to the injunction is a matter separate from matters of breach of contract. If the injunction is disobeyed, proceedings by way of civil contempt can be considered. I say no more on that matter. It raises issues which are separate and apart from the issues now under consideration.

For these reasons I would propose to enter judgment in the following terms:

(1) That the plaintiff's action against the defendant be dismissed.

(2) That there be judgment for the defendant against the plaintiff on the counterclaim in the sum of $11550.06 inclusive of a lump sum of $1620 for interest.

I will hear counsel for the parties as to costs.

Interpretation Act 1915

Courts (Cross-Vesting) Act 1987

Interpretation Act 1915

Courts (Cross-Vesting) Act 1987

21ST CENTURY PROMOTIONS AUS P/L v TELSTRA CORP LTD No. SCGRG-98-902 [2000] SASC 353 (27 October 2000)

Supreme Court Rules: Acts Interpretation Act 1915 s 14;
Carter & Harland, Contract Law in Australia, 3rd ed par 205, referred to.
Brown v Brown [1905] NSWStRp 17; (1905) 5 SR (NSW) 146;
Brogden v Metropolitan Railway Co (1876-77) 2 App Cas 666, applied.
Eshelby v Federated European Bank Limited [1932] 1 KB 423;
Baldry v Jackson (1976) 2 NSWLR 415;
Servcorp (Aust) Pty Ltd v Abarus Pty Ltd (1995-96) 38 NSWLR 281;
Read v Brown (1889) 22 QBD 128;
Mann v The Capital Territory Health Commission [1982] HCA 10; (1981-1982) 148 CLR 97, considered.
Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Limited [1982] 1 QB 84;
Franklin v Manufacturers Mutual Insurance Limited [1935] NSWStRp 62; (1935) 36 SR (NSW) 76;
Waltons Stores (Interstate) Limited v Maher [1988] HCA 7; (1987-88) 164 CLR 387;
Legione v Hateley [1983] HCA 11; (1982-83) 152 CLR 406, considered.
Telecommunications Act 1997 s 234 and s 236, referred to.
Trade Practices Act 1974 (Cth) s 46;
Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) s 6, referred to.
Queensland Wire Industries Proprietary Limited v The Broken Hill Propriety Co Limited [1989] HCA 6; (1988-89) 167 CLR 177;
Dowling v Dalgety Austrlaia Limited [1992] FCA 35; (1992) 34 FCR 109;
Re Queensland Co-operative Milling Association Ltd; Defiance Holdings Ltd (1976) 25 FLR 169, considered.

21ST CENTURY PROMOTIONS AUS P/L v TELSTRA CORP LTD No. SCGRG-98-902 [2000] SASC 353

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21ST CENTURY PROMOTIONS AUS P/L v TELSTRA CORP LTD No. SCGRG-98-902 [2000] SASC 353 (27 October 2000)