Brightstar Logistics Pty Ltd v Australian Securities and Investments Commission

REASONS FOR JUDGMENT INTRODUCTION.......................................................................................................... [1] THE STATUTORY FRAMEWORK............................................................................ [2] PROCEDURAL BACKGROUND................................................................................ [6] FACTUAL BACKGROUND......................................................................................... [8] THE GROUNDS OF APPEAL...................................................................................... [13] THE TRIBUNAL'S DECISION AND REASONS...................................................... [28] CONSTRUCTION OF THE RELEVANT PROVISIONS: GROUNDS 1, 2 AND 3 [53] THE CHALLENGED FINDINGS: GROUNDS 4, 5 and 5A................................... [69] The Reverse Engineering Argument......................................................................... [70] Ground 4...................................................................................................................... [82] Ground 5...................................................................................................................... [86] Ground 5A................................................................................................................... [91] The Particular Challenged Findings........................................................................... [98] Finding a, Finding b and Finding e..................................................................... [99] Finding c................................................................................................................. [108] Finding d................................................................................................................ [116] Findings f, Finding g and Finding i..................................................................... [119] Finding h................................................................................................................ [125] Finding j and Finding k........................................................................................ [128] Finding l................................................................................................................. [133] Finding m............................................................................................................... [136] Finding n................................................................................................................ [139] Finding o................................................................................................................ [141] Conclusion as to Grounds 4, 5 and 5A....................................................................... [144] "ACTUAL PRODUCT PRICING": GROUND 6........................................................ [145] EVIDENCE AS TO THE BURDENS: GROUNDS 7 AND 8..................................... [147] FAILURE TO CONSIDER SUBMISSIONS: GROUND 9........................................ [149] CONCLUSION............................................................................................................... [155] THE SCHEDULE (QUESTIONS OF LAW AND GROUNDS OF APPEAL)...........

INTRODUCTION 1 Part 2M.3 of Chapter 2M of the Corporations Act 2001 (Cth) (the Corporations Act) imposes obligations on certain companies to lodge reports with the respondent, Australian Securities and Investments Commission (the Commission). Under Part 2M.6 of the Corporations Act, the Commission may make an order relieving a company from the requirements of Part 2M.3. The appellant, Brightstar Logistics Pty Ltd (Brightstar), applied to the Commission for an order under Part 2M.6. The Commission declined to make an order. Brightstar sought review of the Commission's decision by the Administrative Appeals Tribunal (the Tribunal), which affirmed the Commission's decision. Brightstar now appeals to the Federal Court from the Tribunal's decision.

THE STATUTORY FRAMEWORK 2 Chapter 2M of the Corporations Act deals with Financial Reports and Audit. Under Chapter 2M, all companies must keep financial records and some must prepare financial reports. Part 2M.3 of Chapter 2M deals with Financial Reporting. Division 1 of Part 2M.3, which consists of ss 292 to 301, deals with Annual Financial Reports and Directors' Reports. Division 2, which consists of ss 302 to 306, deals with Half-year Financial Report and Directors' Report. Division 3, which consists of ss 307 to 313, deals with Audit and Auditor's Report. Division 5, which consists of ss 319 to 322, deals with Lodging Reports with the Commission. 3 Under s 292(1)(c), all large proprietary companies must prepare a financial report and a directors' report for each financial year. Section 301(1) provides that a company must have its financial report for a financial year audited in accordance with Division 3 and must obtain an auditor's report. Section 302 provides that a disclosing entity must prepare a financial report and a directors' report for each half year and have the financial report audited in accordance with Division 3 and obtain an auditor's report. 4 Section 319(1) provides that a company that has to prepare or obtain a report for a financial year under Division 1 must lodge the report with the Commission within three months after the end of the financial year. Under s 320(1), a disclosing entity that has to prepare or obtain a report for a half year must lodge the report with the Commission within 75 days after the end of the half year. 5 However, under s 340(1), the Commission may make an order in writing relieving a company from all or specified requirements of Part 2M.3. Section 342(1) relevantly provides that, before making an order under s 340, the Commission must be satisfied that complying with the relevant requirements of Part 2M.3 would impose unreasonable burdens.

PROCEDURAL BACKGROUND 6 Brightstar is a large proprietary company for the purposes of s 292. Brightstar is also a disclosing entity for the purposes of s 302. It is therefore required to lodge reports with the Commission in accordance with ss 319(1) and 320(1). On 15 January 2008, Brightstar applied to the Commission for an order under s 340 relieving it from, relevantly, the requirements of s 319(1) and s 320(1). On 11 July 2008, a delegate of the Commission refused to grant the relief sought by Brightstar. 7 Brightstar then commenced a proceeding in the Tribunal seeking review of the delegate's decision. After hearing evidence from Brightstar and submissions from Brightstar and the Commission, the Tribunal decided to affirm the decision under review. The Tribunal published reasons for its decision on 15 May 2009 (the Tribunal's Reasons). On 12 June 2009, Brightstar filed a notice of appeal to the Federal Court under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (the Tribunal Act). Under s 44 of the Tribunal Act, an appeal lies as of right to the Federal Court of Australia from a decision of the Tribunal but only on a question of law.

FACTUAL BACKGROUND 8 Brightstar is a wholly owned subsidiary of Brightstar Corporation, an entity incorporated in the United States of America. Brightstar Corporation is one of the largest global distributors of mobile telecommunications devices. Brightstar Corporation also specialises in providing a range of advisory and other functions to telecommunication service providers. Telstra Corporation Limited (Telstra) is the largest Australian telecommunications service provider and dominates the Australian broadband internet industry. Brightstar is a party to two agreements with Telstra. Payments made by Telstra to Brightstar under the two agreements account for virtually the whole of Brightstar's revenue. 9 The first agreement between Brightstar and Telstra (the Umbrella Agreement) is concerned with strategic sourcing, which involves Brightstar sourcing products on behalf of Telstra. The products consist of mobile telephone and broadband products, which range from broadband modems to mobile telephone handsets and related accessories. Brightstar is Telstra's exclusive agent for the acquisition of such products and Brightstar provides information about products, suppliers and pricing to Telstra. Brightstar identifies suitable products together with software specifications that products will be required to meet. 10 The second agreement between Brightstar and Telstra (the Supply Chain Optimisation Agreement) has two components, namely, third party logistics and optimisation services. Third party logistics is a warehousing and operations business. Telstra out sources its "pick, pack and ship function" to Brightstar. The optimisation services consist of provision by Brightstar to Telstra of "supply chain solutions", essentially in the form of information technology for processes and supply chain management. An aspect of Brightstar's activities under the Supply Chain Optimisation Agreement involves advising Telstra about the performance and usage of mobile phones and broadband products. 11 Brightstar places orders with suppliers as required by Telstra and is invoiced by the suppliers. Products are delivered to a Telstra owned warehouse operated by Brightstar. Once suppliers deliver products to the warehouse, Brightstar invoices Telstra for the products. Telstra is then regarded as having title to, and bears the risk for, the products in the warehouse. Nevertheless, Brightstar retains custody and provides Telstra with the logistical services involved in the storage, and ultimate retail delivery of products. 12 Brightstar is concerned that, if it is required to comply with the requirements of ss 319 and 320, by lodging reports with the Commission, thereby making the reports publicly available, Brightstar would be significantly disadvantaged because suppliers would have access to information that is presently confidential. Brightstar fears that suppliers would be able to approach Telstra direct, using that information. Brightstar is concerned that that could lead to the loss of its contractual relationship with Telstra, which would be very damaging to its financial prospects.

THE GROUNDS OF APPEAL 13 In general terms, Brightstar contends that the Tribunal ought to have been satisfied that complying with the relevant requirements to lodge reports would provide no relevant benefit but would impose unreasonable burdens on Brightstar by exposing it to the burden of substantial detriment or at least the risk of substantial detriment. In its notice of appeal filed on 12 June 2009, Brightstar purported to raise nine questions of law. The grounds of appeal were that the Tribunal erred in the way in which it resolved each of the postulated questions of law. At the end of oral argument, Brightstar sought leave to amend its notice of appeal by including an additional question of law and an additional ground, namely, that the Tribunal erred in the way that it resolved that additional question of law. The proposed additional ground is that the Tribunal erred in that the Tribunal's Reasons do not satisfy ss 43(2) and 43(2B) of the Tribunal Act. 14 In accordance with directions given following the completion of oral argument, Brightstar filed supplementary submissions in support of the additional ground, assuming leave to amend is granted. The Commission filed supplementary written submissions setting out the basis upon which leave to amend was opposed, together with the submissions that it would make in the event that leave is given. Brightstar then filed supplementary submissions in reply on the question of leave and on the substantive ground. The parties asked the Court to determine the question of leave and the additional ground, if leave is granted, on the basis of those further written submissions without any further oral argument. 15 In support of its application for leave to amend, Brightstar says that the amendment would raise a pure question of law arising out of uncontested facts, being the content of the Tribunal's Reasons. It argues that it would be expedient, and in the interests of justice, that the amendment be allowed and the point be determined. 16 The Commission opposes the grant of leave to amend. The Commission contends that no adequate explanation has been given as to why the proposed additional ground was not included in the notice of appeal as originally filed and why it did not emerge as an issue until the end of oral argument. The Commission says, further, that the grant of leave to amend would have the propensity to lead to further costs and delay. 17 In addition, the Commission points to the conduct of the proceeding before the Tribunal as constituting a basis for refusing leave to amend to raise a question as to the adequacy of the Tribunal's reasons. The Commission asserts that, at every stage of the proceeding before the Tribunal, Brightstar sought protection from disclosure of any aspect of the case, including the evidence, by the imposition of confidentiality regimes. Brightstar's position was that, should any of the information or evidence before the Tribunal leak into the public domain, Brightstar could suffer substantial and irremediable commercial damage such that relief under s 340 would be of no utility. The Commission contends that the Tribunal was extremely sensitive to the concerns expressed by Brightstar in that regard and that that sensitivity explains in large part the form that the Tribunal's Reasons ultimately took. 18 After the Tribunal's Reasons were published, there were further hearings before the Tribunal concerning the question of a confidentiality regime. In the course of those post decision hearings, no suggestion was made by Brightstar that the Tribunal's Reasons were inadequate or that the Tribunal should provide further or more detailed reasons of the sort that Brightstar now contends that it was incumbent upon the Tribunal to provide. Indeed, the position that Brightstar took before the Tribunal was that the Tribunal's reasons were too detailed and should be the subject of redaction to ensure that confidentiality was maintained. The Commission says that Brightstar should not be allowed to rely on the outcome that it sought as constituting a ground of appeal. 19 On the other hand, the Commission does not suggest that it would suffer any prejudice as a consequence of the proposed amendment, save for the incurring of further costs and delay. The question of costs can be dealt with by an appropriate order, depending upon the outcome of the appeal. Any delay consequence upon the application for leave to amend has now occurred. 20 I consider that the complaint as to the adequacy of the Tribunal's Reasons was implicit in the grounds of appeal as they appeared in the original notice of appeal. In essence, Brightstar contended that evidence had been implicitly rejected without reasons and that facts had been found by the Tribunal without evidence being identified. The proposed amendment does no more than make explicit what was already implicit. 21 Further, formulating the ground as inadequacy of reasons accords more or less with the way in which the appeal has been argued. For example, in the course of oral argument, senior counsel for Brightstar observed that, while the Tribunal may have given an adequate statement of the commercial background to the dispute, the Tribunal's Reasons consisted largely of assertions unreferenced to any evidence. Senior counsel accepted that a more accurate way of putting the matter might be that the Tribunal reached conclusions that were not based upon findings of fact. He said that just about everything in the Tribunal's Reasons was largely assertion, without reference to any factual material, even though the general introductory section of the Tribunal's Reasons contains a more or less adequate statement of the commercial background. Later, senior counsel observed that the Tribunal did not refer to the evidence, or the facts as such, in that part of the Tribunal's Reasons that contains its conclusions. 22 Indeed, the proposed additional ground was largely anticipated in the Commission's original written submissions. For example, the Commission's submissions asserted that, although it was not a ground of appeal, Brightstar's submissions appeared to suggest that there was some failure on the part of the Tribunal to provide reasons. The Commission's answer to that assertion was that the Tribunal's Reasons provided a comprehensive explanation of its reasoning process. 23 The proposed amended ground is not without substance. In all of the circumstances, I consider that the interests of justice require that leave to amend be granted. 24 The questions of law and grounds of appeal, as stated in the amended notice of appeal, are set out in the schedule to these reasons. The grounds of appeal fall into two broad groups. The first group consists of grounds 1, 2 and 3. The second group consists of grounds 4, 5, 5A, 6, 7, 8 and 9. 25 The grounds in the first group arise out of the requirement that, before an order under s 340 can be made, the decision-maker must be satisfied that compliance would impose unreasonable burdens. The questions are concerned with: · assessing the risk of detriment; and · assessing the magnitude of the detriment and the comparison between the two. Brightstar contends that the Tribunal misconstrued ss 340 and 342 in resolving those questions. 26 The second group of grounds concerns the Tribunal's decision making process. In particular, Brightstar complains about fifteen so called findings made by the Tribunal (the Challenged Findings). Brightstar contends that the Tribunal: · made the Challenged Findings without any basis in the material before the Tribunal; · failed to afford Brightstar's witnesses the opportunity of dealing with the Challenged Findings; and · failed to explain how the Challenged Findings were based on the material before the Tribunal. The Challenged Findings are shown in bold type in the section of these reasons below that summarises the Tribunal's Reasons. Each Challenged Finding is identified by reference to the numbering adopted by Brightstar in question of law number 4 in the amended notice of appeal. 27 The Commission contends that the second group of grounds constitute no more than an invitation to the Court to substitute its own factual findings and conclusions for those of the Tribunal. That is impermissible in an appeal under s 44 of the Tribunal Act.

THE TRIBUNAL'S DECISION AND REASONS 28 As part of its own management practices, Brightstar prepares monthly financial statements, which are audited annually for the purposes of consolidation in the accounts of Brightstar Corporation. While the form of those financial statements and the content of the auditor's reports may not necessarily constitute compliance with Division 2M.2 and Division 2M.3, the Tribunal characterised that as a matter of form rather than of substance. 29 The Tribunal observed that, where a corporation's financial statements are duly audited and its financial affairs involve relatively few creditors, the benefits of compliance with the relevant requirements of lodging reports with the Commission may be difficult to assess and might be justifiably characterised as minimal. However, the Tribunal considered that the absence of a significant expected benefit arising from compliance with the relevant lodgement requirements of the Corporations Act does not require a conclusion that compliance would necessarily involve an unreasonable burden. Rather, the Tribunal considered that the primary emphasis must be on assessment of the nature and extent of the apprehended burden and whether it should be assessed as sufficiently unreasonable to justify an order relieving a company from compliance. 30 The Tribunal summarised Brightstar's contentions as follows: · There is no real or significant benefit to be derived from compliance with the lodgement requirements of Division 2M.3. · Lodgement of the relevant reports would allow Telstra or Brightstar's competitors or suppliers to estimate Brightstar's profitability meaningfully, particularly in relation to its handset sourcing arrangements with Telstra. · Such disclosure and the analysis that it would facilitate could be used to the detriment of Brightstar. · That detriment could extend to the loss of the contractual arrangements between Brightstar and Telstra and could lead to major adverse effects on Brightstar's employees, creditors and investors. The Tribunal considered that that summary of Brightstar's contentions highlighted the emphasis placed by Brightstar on the comparison between expected benefit and apprehended burden. However, the Tribunal considered that, while the statutory criteria permits such a comparison, the exercise of the power to relieve under s 340(1) is not dictated by the result of the comparison. The Tribunal considered that it was relevant, independently of any consideration of the benefit of compliance, to consider the nature of the apprehended burden and the mechanism by which the cause of that burden is apprehended. 31 The Tribunal accepted that lodgement of the relevant reports would result in a motivated inquisitor concluding that Brightstar was deriving both substantial revenue and profit from the totality of its arrangements with Telstra. The Tribunal also accepted that such an inquisitor would be able to make a reasonably accurate differentiation between the financial performance of Brightstar's logistics services for Telstra, on the one hand, and the remainder of its Telstra business, on the other. However, the Tribunal did not accept that such an inquisitor: · would be able to differentiate further between Brightstar's advisory functions and its product sourcing activities on Telstra's behalf (Finding 4.a); · would either assume that Brightstar's advisory functions were remunerated merely on [a particular basis as alleged by Brightstar] or that Brightstar was not incurring any significant costs in relation to its product sourcing business (Finding 4.b); · would, even if it analysed Brightstar's financial statements and calculated the profit proportion mathematically equivalent to its own market share of Telstra's product range, would characterise that share as a discount it was either giving away to Brightstar or that it could relevantly apply to Brightstar's disadvantage (Finding 4.c). The Tribunal gave four reasons for those conclusions. 32 The first reason is that it was most unlikely that anyone familiar with the complexity and competition in the market place for the relevant products would realistically expect that Brightstar would be able to extract significant revenue from its dealings with Telstra merely by onselling handsets after imposing a mark-up. Rather, the relevantly informed inquisitor would know that there was no such mark-up under Brightstar's back to back product invoicing arrangements with Telstra. 33 The second reason is that the motivated inquisitor would understand that Brightstar's remuneration arrangements with Telstra would most likely not be confined to mere fee for service charges. The Tribunal found that commission incentive arrangements are commonplace and that the likelihood of an incentive fee arrangement was even greater where the monetary value of the real commercial benefit cannot fairly and reasonably be measured by reference to the costs incurred in providing the service. 34 The third reason is that the motivated inquisitor would understand that one of the principal functions of Brightstar's advisory services to Telstra was to assist Telstra in its product planning and acquisition. The informed inquisitor would apprehend that, whatever their precise nature, the detailed remuneration arrangements between Brightstar and Telstra would be complex and that complexity would likely preclude any useful inferred differentiation for the purpose of analysing the significance of Brightstar's trading statement profitability, between the impact of Brightstar's activities related to initial product acquisition and the effect of its ongoing advisory functions (Finding 4.d). Rather, the motivated inquisitor will expect that Brightstar has some kind of incentive arrangement with Telstra. 35 The fourth reason is that the motivated inquisitor would be embarking on a very uncertain exercise in assuming that its own product market share relevantly corresponded with any proportion of Brightstar's inferred profit (Finding 4.e). The Tribunal considered that the task that Brightstar hypothesised in its contentions, and sought to illustrate in its evidence, stopped at what the Tribunal characterised as a merely banal conjecture that an individual supplier's market share meaningfully corresponds to a proportion of Brightstar's trading result. The Tribunal observed that Brightstar did not pursue any analysis that would illustrate how individual suppliers might realistically use the hypothesised information in their actual product pricing. Rather, Brightstar's contention was left at the proposition that, having calculated their percentage contribution to Brightstar's profit, a motivated supplier could then simply offer Telstra a corresponding discount. The Tribunal characterised that proposition as deceptively and unrealistically simplistic. 36 The Tribunal did not accept that the revenue and costs information that would be provided by Brightstar's accounts would result in suppliers being likely to conclude that Brightstar's revenue was quantifiably and reliably related to the supplier's market share of Telstra's product acquisition. Nor did the Tribunal accept that suppliers would in any sense characterise Brightstar's revenue as money that the suppliers were merely "giving away" to Brightstar. Rather, the Tribunal considered that suppliers would have no reasonable basis for any such conclusion, since suppliers neither know, nor could they determine from Brightstar's financial statements, any meaningful details of the remuneration arrangements with Telstra. 37 The Tribunal considered that all suppliers would know that they had agreed on pricing that was acceptable to them with full knowledge of a commercial environment in which Telstra has long and loudly declared both its intention, and its success, in achieving savings as a result of its arrangements with Brightstar. However, that commercial background does not demonstrate, the Tribunal considered, that Telstra's savings reflect a corresponding cost or loss that has been inflicted on the product suppliers (Finding 4.f). The Tribunal considered that that background was not a context that justified an apprehension that suppliers would be influenced to offer corresponding, or greater, discounts to Telstra, merely for the purpose of eliminating Brightstar's future involvement with Telstra (Finding 4.g). 38 The Tribunal said that Brightstar's apprehensions about the consequences of lodgement of reports principally concerned the conduct of product suppliers and, to a considerably lesser extent, other competitors. The Tribunal said that Brightstar apprehended that lodgement of the relevant report would, or at least might, provide either suppliers or competitors with sufficiently improved information and awareness to be able to quantify competitive propositions that Telstra would find attractive. Telstra could then either acquire products outside the ambit of the Umbrella Agreement or, ultimately, not renew the Umbrella Agreement and replace it with other arrangements, including provisions for competitive tender. 39 The Tribunal accepted, at a level of generality, the contentions advanced by Brightstar as to its apprehensions. Brightstar contended to the Tribunal that its apprehensions should be assessed, not just on the balance of the probability of their occurrence, but whether or not they are merely possible, rather than probable, occurrences. The Tribunal considered that an inescapable consequence of Brightstar's reluctant acknowledgement that lodging the relevant reports was unlikely to affect Telstra, is that it was similarly unlikely to afford any meaningful opportunity to suppliers (Finding 4.h). Brightstar submitted to the Tribunal that even a small likelihood of detriment could be a determinative consideration if the actual nature and extent of the detriment was sufficiently significant. In particular, Brightstar contended that, in assessing the benefits and burdens of compliance with the lodgement requirements, the Tribunal should not lightly, or indeed at all, put aside the considered apprehensions of Brightstar's experienced executives and directors, given their intimate knowledge of the complex, competitive commercial environment in which Brightstar operates and the very large monetary values involved in that environment. 40 However, the Tribunal was not satisfied that lodgement of the relevant reports would materially, or even meaningfully, increase either the commercial incentives for disruption of Brightstar's commercial arrangements with Telstra or the information that might materially influence the ability of others to act effectively on those incentives (Finding 4.i). The Tribunal gave six reasons for that conclusion. 41 First, Telstra embarked on its comprehensive and complex contractual relationship with Brightstar because of the advantages Brightstar promised in relation to Telstra's proper acquisition and management costs. Telstra is well satisfied with Brightstar's performance and has taken no steps to deal with other suppliers or competitors outside the terms of the Umbrella Agreement. Telstra is probably highly unlikely to be inclined to replace its arrangement with Brightstar if that means going back to a situation where it would have to deal directly with product suppliers (Finding 4.j). 42 The second reason is that the extent of Telstra's satisfaction poses very considerable difficulties for individual product suppliers and other competitors in providing Telstra with a sufficient incentive to depart from such an apparently satisfactory relationship. It is only if suppliers could either assume a substantial part of Brightstar's existing advisory functions or dissuade Telstra from the current extent of its satisfaction, that the future operation of the Umbrella Agreement would be jeopardised. The Tribunal considered that neither of those possibilities could be assessed as at all likely. The Tribunal found that that assessment would not be materially affected by lodgement of relevant reports with the Commission (Finding 4.k). The Tribunal found that, while the possibility of effective and increased competition for Brightstar could not be entirely discounted, it is not at all likelythat the prospect would be meaningfully increased by the lodgement of relevant reports. 43 The third reason is that even if a motivated inquisitor could use the revenue and expenses disclosed in the relevant reports to determine a supposed range for the profitability of Brightstar's product sourcing business, that determination would not provide any meaningful information about the way in which the revenue was generated or about the complexity of the services and performance criteria that apply under the Umbrella Agreement. The Tribunal was not persuaded that whatever prospects a supplier or potential competitor might have would be materially influenced by lodgement of the relevant reports since it would be extremely difficult for a new potential supplier or other competitor to provide Telstra with any real incentive to depart from the substance of the arrangements between Brightstar and Telstra (Finding 4.l). 44 The fourth reason is that Brightstar's intermediary role between Telstra and suppliers is well known. That role involves highly skilled consultation and negotiation designed to promote the relevant advantage of both Telstra and the product suppliers. Suppliers have themselves benefited from the growth of Telstra's own purchasing volumes. The Tribunal found that, against that background, there was very little justification to apprehend that lodgement of the relevant reports would be at all likely to affect Brightstar adversely. 45 The fifth reason described by the Tribunal derives from the fact that Brightstar's remuneration from Telstra is influenced by the pricing of product manufacturers and those of any other product supplier. However, the details of those sensitivities do not operate in a way that provides either any real incentive for Telstra, or opportunities for others, to precipitate termination or abandonment of the Umbrella Agreement. Accordingly, lodgement of the relevant reports by Brightstar seems highly unlikely to provide any material causal influence on either product price competition or competition about the details of Brightstar's remuneration arrangements with Telstra. 46 The Final reason is the Tribunal's assessment that it was highly improbable that lodgement of the relevant reports would pose any real risk to the continuation of the Umbrella Agreement. The Tribunal considered that, even if that termination was contemplated, it was another matter to conclude that Brightstar's potential detriment should be assessed on the basis that its product sourcing revenue would entirely end. The Tribunal considered that that conclusion was highly unlikely, given the history of Brightstar's proven satisfactory performance in its dealings with Telstra. The Tribunal found that Brightstar's financial success under the Umbrella Agreement was not materially attributable to the mere fact of its contractual status as an exclusive product supplier to Telstra, but was directly related to the quality of its services, the extent of its skill and its own commercial advantages. The Tribunal concluded that, even in the very unlikely event of the termination of the Umbrella Agreement, Brightstar would itself be an interested and very likely successful new contractor with Telstra (Finding 4.m). 47 The Tribunal then summarised the nature and extent of the financial detriment apprehended by Brightstar. The Tribunal concluded that lodgement of the relevant reports was most unlikely to contribute towards either termination of the Umbrella Agreement or to competitive behaviour that would lead directly to reduction of the sourcing revenue Brightstar derives from the operation of the Umbrella Agreement with Telstra. The Tribunal considered that the most that could realistically be said was that financial statement disclosure might increase the level of scrutiny of the nature and effect of the contractual arrangements between Telstra and Brightstar. The Tribunal considered that the nature of the market in which Brightstar operates must already contain very significant incentives to scrutiny and assessment of Brightstar's performance and that that scrutiny would almost inevitably be conducted against a background of very well educated estimates of Brightstar's level of revenue and profitability. 48 While the Tribunal considered that there was a measure of justification for Brightstar's general apprehension of increased commercial scrutiny, it was not satisfied that lodgement of the relevant reports would in fact materially increase either the real incentives for critical evaluation of Brightstar's dealings or materially influence commercial and competitive behaviour in response to them (Finding 4.n). The Tribunal found that Brightstar had thrived in the existing commercial environment in which it operates and that it would not likely be materially burdened and certainly not unreasonably burdened, by the disclosure that will flow from lodgement of the relevant reports. 49 The Tribunal concluded that there was no unreasonable burden for Brightstar in lodging the relevant reports with the Commission. The Tribunal was prepared to accept that there was much interest in, and considerable public importance reputedly attached to, the efficiency and effectiveness of the telecommunications industry and that Telstra is a major Australian corporation with enormous revenues and significance to the Australian economy. Accordingly, at least at that level of generality, audited financial statements in relation to Brightstar in lieu of existing public information was desirable and therefore preferable. Against that preference, the Tribunal considered Brightstar's apprehension that lodging the relevant reports might jeopardise its existing commercial arrangements. 50 While the Tribunal considered that that apprehension has a basis in reason, it was not directly related, in any sufficiently persuasive way, to the burden of compliance itself. The Tribunal characterised Brightstar's apprehension as being much more related to the fact that it operates in an area where revenues are enormous and competitive incentives and imperatives correspond in their magnitude. The Tribunal considered that there was little reason to apprehend that Brightstar would not continue to maintain the confidence of both the suppliers with which it deals and Telstra, the only customer who provides its revenue. The Tribunal found no significant persuasive reason to accept that its capacity to do so would be unreasonably influenced by the consequences of lodging the relevant reports. 51 The Tribunal found that, while the disclosure that would follow from lodging the relevant reports would reveal the true value of Brightstar's revenue, profit and costs, it would not provide any information that could be used in any real, or meaningfully unreasonable, way, adverse to Brightstar's interests. The Tribunal gave two reasons. First, the information is unlikely to differ materially from the existing reasonable expectations that Telstra and Brightstar's suppliers and competitors are capable of drawing from the existing information and knowledge available to them (Finding 4.o). The second reason was the nature of Brightstar's activities and the details of its relationship with Telstra, particularly the terms of its remuneration entitlements under the Umbrella Agreement. 52 The Tribunal considered that the complexity of the integers that affect the pricing of the products with which Brightstar's activities are concerned, and the details of its entitlements under the Umbrella Agreement, were not such as to satisfy the Tribunal that lodging the relevant reports would be at all likely to burden Brightstar, other than by some potential, and marginal, increased scrutiny of the quality of its service performance under the Umbrella Agreement. The Tribunal did not consider that that increased scrutiny constituted an unreasonable burden upon Brightstar.

CONSTRUCTION OF THE RELEVANT PROVISIONS: GROUNDS 1, 2 AND 3 53 There is nothing in s 342 that gives explicit guidance to a decision maker, except in relation to relief from compliance with the audit requirements. Section 342(2) provides that the decision maker must have regard to certain matters in deciding whether the audit requirements would impose an unreasonable burden on a proprietary company. Section 301 and Division 3 of Part 2M.3, which deal with audit and auditor's report, are the only provisions that would satisfy the description of audit requirements. Sections 302(c), 319 and 320 could not fairly be characterised as audit requirements and, accordingly, the prescription of s 342(2) does not apply directly to a decision as to whether compliance with those requirements would impose unreasonable burdens. 54 The matters to which the decision maker must have regard in deciding whether the audit requirements would impose an unreasonable burden are as follows: · the expected costs of complying with the audit requirements; · the expected benefits of having the company comply with the audit requirements; · any practical difficulties that the company faces in complying effectively with the audit requirements; · any unusual aspects of the operation of the company during the financial year concerned; and · any other matters that the decision maker considers relevant. Under s 342(3), in assessing the expected benefits of having the company comply with the audit requirements, the decision maker must take account of: · the number of creditors and potential creditors; · the position of creditors and potential creditors; and · the nature and extent of the liabilities of the company or companies. 55 The fact that s 342(2) specifies matters to which regard must be had in relation to relief from complying with the audit requirements, may have two consequences. First, the considerations for a decision maker where the audit requirements are not in question are at large, although the matters identified in s 342(2) may be matters to which regard could be had. Secondly, the absence of prescription of matters to be considered in relation to requirements other than the audit requirements may throw some light on what would be regarded as an unreasonable burden in complying with requirements other than audit requirements. 56 In making a decision under s 342(1), a decision maker must have regard to the object intended to be achieved by the requirement in respect of which exemption is sought. That object must be of some benefit to the community. Thus, there is a benefit to be gleaned for members of the community who are to have dealings with limited liability companies. One object of lodging reports with the Commission is to ensure that those reports are available to members of the community who wish to ascertain information concerning the company in question. There may be various reasons why members of the community may wish to obtain information about a company. For example, a creditor or prospective creditor will have an interest in knowing the financial position of a company. A shareholder or prospective shareholder of a company will also have an interest. Other interests might include those who wish to enter into contractual arrangements and are concerned to know whether the company could perform contractual obligations, although that interest is very similar to that of a creditor or potential creditor. 57 The matters to which regard must be had in deciding whether compliance with the audit requirements should be waived, would be relevant for a creditor or shareholder or prospective creditor or shareholder of a company. That is to say, the number and position of creditors and potential creditors and the nature and extent of the liabilities of the company, are considerations that one would expect to be taken into account in deciding whether a company should be exempted from compliance with requirements, other than the audit requirements, such as the requirement to lodge reports. In a sense, compliance with the audit requirements would be of no benefit to creditors or potential creditors if the reports required to be lodged with the Commission were not lodged. It would be of no benefit to a creditor or potential creditor to know that a report as to the financial position of the company has been prepared, together with an audit report in respect of the company's financial position, if those reports are not available to the creditor. 58 The upshot must be that the decision maker must engage in a balancing exercise. The balance is between the benefit to the community in having available to it the reports required by Division 2M.3, on the one hand, and the burden imposed on a company by lodging the relevant reports with the Commission, thereby making them publicly available, on the other hand. It may be that the benefit to the community of lodging reports would be very slight, whereas the burden imposed on a particular company by reason of publication of reports, would be very great. For example, if a company was not engaged in trade and had no creditors, the benefit of lodgement would be slight. On the other hand, circumstances could arise where publication of the relevant reports could be potentially damaging to the company. 59 However, there is a further consideration beyond balancing the benefit of lodgement against the burden of possible detriment to the company. That consideration is the extent and likelihood of possible detriment. Under s 342(1), the decision maker must be satisfied that complying with the relevant requirements would impose unreasonable burdens. That entails a consideration of a causal connection between compliance and the detriment that might constitute an unreasonable burden. The likelihood of detriment must be a consideration in determining the extent of the burden that would be imposed by compliance. For example, a certain detriment, being a detriment that was not especially serious, may be a greater burden than a highly unlikely detriment, being a detriment that was particularly grave from the company's point of view if it actually eventuates. Thus, a fanciful or entirely remote prospect of detriment may not be an unreasonable burden even if the detriment, if it eventuated, were very grave. 60 Brightstar contends that the Tribunal failed to apply the correct test, in so far as the Tribunal concluded that the decision to exempt Brightstar from compliance with the relevant requirements could only be made if the feared burden was likely. Brightstar contends that it is not essential for an applicant for an exemption to demonstrate what will happen; nor is it essential for an applicant to demonstrate what is likely to happen. Rather, Brightstar contends, it is sufficient for an applicant to identify the potential for something to occur that will, if it does occur, be to the financial disadvantage of the applicant, particularly where severe financially adverse consequences would follow if the relevant thing did occur. 61 Brightstar adduced evidence designed to demonstrate that no relevantly interested party would derive any substantial benefit from having access to the audited financial statements. That evidence, and the submissions built upon it, emphasise the comparison between expected benefits and the apprehended burden on the Brightstar Group that would flow from compliance. That emphasis on the provisions of s 232(2) is misplaced in so far as those provisions are concerned with factors that bear upon the audit requirements of Part 2M, being ss 301 and 306, rather than the lodgement requirement. 62 While the statutory criteria found in s 342(2) could play a relevant part in the consideration of whether an unreasonable burden would be imposed by compliance with the lodgement requirements, comparison between benefits of disclosure and the burden of compliance is not the exclusive or primary consideration for the purposes of deciding the ultimate question of whether compliance would impose unreasonable burdens. The primary emphasis must be on the words actually used in the Corporations Act. The ultimate issue posed by s 342(1), in the present case, is whether compliance would impose unreasonable burdens on Brightstar. 63 The Tribunal correctly adopted the approach that the primary emphasis must be on assessment of the nature and extent of the apprehended burden and whether that burden should be assessed as sufficiently unreasonable to justify exemption from compliance. The Tribunal concluded that compliance with the lodgement requirements would significantly improve the quality of the financial information available to Brightstar's creditors. However, the Tribunal accepted that the vast majority of those creditors have apparently been content to rely on Brightstar's commercial reputation. The Tribunal considered that compliance, at least in the context of Brightstar's continued successful trading activities, does not appear to be either likely or necessary to provide any clear or direct significant benefit to Brightstar's creditors. 64 On the other hand, the Tribunal considered that the inability to identify any clear and specific benefit to particular creditors, or even to creditors generally, was not surprising. The relevant reports provide only historical information and do not relate directly to either particular transactions or current trading and financial performance. They merely provide information that may permit a considerable measure of satisfaction about a company's capacity to trade, as revealed by its past performance. They also indicate a company's ability to discharge its ongoing commercial obligations, having regard to its balance sheet and its likely maintainable revenue and profitability. While the Tribunal accepted that it may be difficult to identify, with any kind of precision, the particular benefits that compliance with the lodgement requirements would give, it considered that the benefits of compliance, and the assessment of unreasonable burdens, should not be limited to the desirability of compliance only by companies in difficult financial situations or whose creditors cannot otherwise obtain reliable financial information. 65 The language of s 342(1) makes it clear that, before the decision maker can exercise the power to make an order under s 340, the decision maker must be satisfied that compliance would impose unreasonable burdens. It is not sufficient that an applicant for relief believes or feels that compliance would impose unreasonable burdens. The subjective belief or apprehension of an applicant company, and the basis for that subjective state of mind, might be relevant, assuming the beliefs are soundly based. Indeed, if the applicant company did not have fear or apprehension, it is difficult to see how the decision maker could be satisfied that compliance would impose unreasonable burdens. 66 However, it is for the decision maker to be satisfied that the unreasonable burden identified by an applicant company would result from compliance. The likelihood of the feared detriment eventuating is a factor to be considered in assessing the unreasonableness of the burden. The decision maker must, therefore, investigate and examine the relationship between compliance and the identified burden. Unless a relationship with cause and effect is established, at least on the balance of probabilities, the decision maker could not be satisfied and the jurisdictional threshold requirement would be satisfied. Even if the prospect of burden is merely possible, it is still necessary to make an assessment of the reality and extent of the detriment apprehended. The express words of s 342(1) require that an actual link be established between compliance with the lodgement requirements and the suffering of adverse consequences that are said to constitute the unreasonable burdens. 67 Brightstar contends that it is not essential for an applicant company to demonstrate what will happen or what is likely to happen. Rather, Brightstar says, it is sufficient if an applicant company identifies the potential for something to occur that will, if it does occur, be of financial disadvantage to the applicant company. That contention must be rejected. The mere potential for something to occur is not an unreasonable burden. There must be some reasonable prospect or likelihood of the feared or apprehended detriment occurring. 68 None of the first group of grounds is made out. The Tribunal made no error of law in the construction that it gave to ss 340 and 342 and did not apply an incorrect test in the application of the relevant provisions.

THE CHALLENGED FINDINGS: GROUNDS 4, 5 and 5A 69 A theme that pervades the second group of questions, and particularly Brightstar's complaint about the Challenged Findings, concerns the question of what was described as the reverse engineering argument. It is desirable to say something about that argument before addressing the specific grounds of appeal.

The Reverse Engineering Argument 70 The reverse engineering argument involves a hypothetical exercise that Brightstar says its suppliers could carry out if they had access to the reports that Brightstar would be required to lodge. Brightstar asserted that its suppliers would be in a position to make profit share calculations from information gleaned from the reports and that, armed with such knowledge, suppliers would, or at least could, act so as to squeeze Brightstar's existing profit levels in negotiations between the suppliers and Brightstar for the purchase of products. Alternatively, the suppliers would, or at least could, attempt to negotiate for the sale of products, direct with Telstra, thus substantially interfering with Brightstar's existing contractual arrangements with Telstra. If that did occur, such that more than one supplier reacted in that way, the existing contractual arrangements between Brightstar and Telstra would, or could, be diminished or terminate, with a range of serious financial consequences for Brightstar and for Australian consumers of relevant products. 71 Four witnesses were called on behalf of Brightstar as follows: · Mr Nanayakkara, managing director and formerly director of procurement. · Mr Soon, head of human resources and formerly finance director. · Mr Bean, senior financial controller. · Mr Osorio, chief financial officer Asia Pacific, formerly head of strategy and business development. Those witnesses gave evidence, either in chief or in cross examination, as to the reverse engineering argument. The argument was that, if the relevant reports were lodged with the Commission, a relevant inquisitor, such as a supplier of mobile handsets, would be able to make a series of calculations that would reveal confidential information about Brightstar's costs and would enable such an inquisitor to calculate the level of profit that Brightstar was generating from its dealings with suppliers. 72 For example, Mr Nanayakkara said that, if Brightstar's profits and loss statement were disclosed to suppliers, a supplier could calculate its share of Brightstar's profit derived from strategic sourcing in the following way: · Brightstar's audited accounts include the following line items: $ Operations Revenue A Cost of sales B Gross Profit A-B = C Other income D Selling, general and administrative expenses E Other expenses F Results from operating activities C+D-E-F = G Finance income H Finance expenses I Net finance income H-I=J Profit before income tax G+J=K Income tax expense L Profit for the period K-L=M

· By looking at the Cost of sales figure, a supplier could make an assumption as to the extent to which that cost was associated with Brightstar providing the third party logistics service or with providing strategic sourcing. · By using industry information, a supplier could make an estimate by use of the Cost of sales to calculate an estimate of the third party logistics revenue or the strategic sourcing revenue; using that estimate, the component of total revenue from the other could be deduced. · A supplier might infer, from its dealings with Brightstar, that the majority of the staff in Brightstar's head office are dedicated to provide Brightstar's supply chain optimisation services. The supplier might then infer that the costs associated with providing supply chain optimisation services is reflected in the figure for Selling, general and administrative expenses; by using industry information, the supplier could estimate the optimisation services revenue and, in the same manner as described above, the estimate of revenue for supply chain optimisation services can be deduced from the total revenue. · The remaining component of total revenue is therefore the net profit derived from strategic sourcing activities; Brightstar regularly provides suppliers with information on its market share, both in units and dollars and the performance of its product compared with other suppliers. · Therefore, a supplier could apply its percentage of the market share to Brightstar's net profit from strategic sourcing to calculate that supplier's share. · Information to make such a calculation is currently not readily available to suppliers; while Telstra makes public announcements from time to time about the cost savings that Brightstar delivers, such announcements are not specific about the source. Brightstar provided a hypothetical calculation along the above lines that it says might be made by a particular supplier that it named. 73 Brightstar contended that an informed inquisitor might also infer that Telstra and Brightstar had agreed on a particular arrangement in relation to Brightstar's supply chain optimisation services and that, on the basis of that inference, the inquisitor would also conclude that those services were unlikely to account for revenue of the magnitude likely to be revealed in Brightstar's financial statements. Consequently, Brightstar contended, any motivated inquisitor of its financial statements would be likely to conclude that its arrangements with Telstra relating to the physical sourcing and acquisition of mobile handsets and broadband products, whatever their precise detail under the terms of the Umbrella Agreement might be, were responsible for a very substantial part of Brightstar's revenue and profit. 74 At another level of analysis, Brightstar contended that some aspects of its reported expenses would permit a relevantly informed inquisitor to make a considerably more informed estimate about the level of revenue and profit that it derived from the Umbrella Agreement. At that level of analysis, Brightstar pointed to aspects of the way in which its financial statements deal with expenses attributable to its logistics services, on the one hand, and its more general activities, on the other. Such differentiation would be readily apparent from the financial statements. Brightstar said that it would permit the informed inquisitor of the balance sheet to make educated surmises about the inherent probability, and then the actual revenue, of the logistics component of Brightstar's business with Telstra. Such an educated surmise would then give the inquisitor information from which to estimate the costs associated with the remainder of Brightstar's business. Brightstar said that that could be done partly by merely subtracting the estimated logistics expenses from the total disclosed expenses. It could also be partly done by estimating the costs of Brightstar's other advisory business. Brightstar contended that such an estimate could be made with some knowledge of the number of Brightstar employees that were involved in its advisory functions. That knowledge being available, at least by reasonable assessment, to the suppliers with whom it negotiates and whose representatives regularly attend its premises. 75 The Tribunal observed that Brightstar contended that that kind of reverse analysis of the various components of its financial statements and business activities would permit a motivated inquisitor to make a much more particular estimate of its produce sourcing revenue and profitability than would otherwise be realistically possible without access to the financial statements. The Tribunal also referred to Brightstar's argument that, since such suppliers are already informed of their own market shares of Telstra's acquisitions, they could use that information to speculate about the proportion of Brightstar's profits that was attributable to their own products. Brightstar suggested that an inference could be drawn that the contemplated disclosure would reveal Brightstar's inherent or retained profit margin and undermine its future ability to negotiate effectively with suppliers. Another inference that Brightstar said could be drawn was that suppliers could use that inferred arithmetical assessment of Brightstar's profit proportion to offer Telstra a corresponding, or greater, discount on product prices, with a view to eliminating Brightstar. 76 The evidence led by Brightstar in relation to the specific matters that are the subject of the Challenged Findings involved speculation or conjecture by one or more of its witnesses as to the apprehended consequences that would flow from lodgement of relevant reports. The evidence was to the effect that the particular witnesses held a fear or apprehension, which the Tribunal ultimately did not come to accept. The fact that the Tribunal did not accept that fear or apprehension was justified, is not contrary to, or even inconsistent with, the evidence of the witnesses. Rather, it is a consequence of the Tribunal's determination that, for one reason or another, the evidence was not of sufficient cogency to discharge the persuasive onus imposed by the relevant provision of the Corporations Act. 77 It was critical for the reverse engineering argument that Brightstar demonstrate how the motivated inquisitor could deconstruct the relevant reports in such a way as to extract costs, expenses and income attributable to the third party logistics and supply chain optimisation/advisory services provided to Telstra, being two out of the three parts of the commercial relationship. The argument was that the motivated inquisitor would be left with a figure for profit generated from Brightstar's sourcing activities. Brightstar asserted that the inquisitor would be able to use that information in a way that was detrimental to Brightstar. 78 The Tribunal's Reasons, and the Challenged Findings, represent the Tribunal's conclusion that it was not satisfied that the deconstruction postulated by Brightstar could occur. In particular, Brightstar failed to persuade the Tribunal that the motivated inquisitor would be able to dissect cost and expenses or income attributable to the advisory services, as opposed to the sourcing activities. The deconstruction process involves a series of assumptions, each of which is necessary for the deconstruction to produce the result contended for. The assumptions are as follows: · That the figure for Selling, general and administrative expenses as a line item in the balance sheet was referable wholly, or largely, to costs incurred in particular activities undertaken by Brightstar for Telstra. · That such activities would be remunerated on a basis similar to that charged by consulting companies operating in different industries. · That a particular proportion of expenses comprised in the Selling, general and administrative line items were referrable to the sourcing business. Mr Soon gave evidence that he did not interpret the balance sheet items and, in particular, the Selling, general and administrative expenses, in the way in which it is said that the motivated inquisitor might interpret it. 79 There was no evidence form any supplier or market expert that suppliers would act in the way that Brightstar's witnesses said they apprehended that suppliers might act. The Tribunal was entitled to be unpersuaded by the fear or apprehension on the part of Brightstar's witnesses, given that it involves an assumption that Brightstar's profit is earned uniformly across the whole of its product range. Mr Nanayakkara accepted the Tribunal's suggestion that the calculation could not be done with any degree of accuracy. It was open to the Tribunal to come to the view that it is unlikely that sophisticated commercial entities would chart significant commercial strategies, such as the conduct of negotiations for the sale of handsets involving millions of dollars, on the basis of impressionistic assessment of their contribution to Brightstar's profits. 80 The Tribunal found that financial statements in the relevant reports would disclose Brightstar's total revenue and expenses. It also found that, because of the nature and terms of the invoicing practice agreed between Brightstar and Telstra, financial statements prepared in accordance with the relevant accounting standards would not include the total product cost invoiced to Brightstar or the prices that it invoiced to Telstra. The Tribunal found that that characteristic of the financial statements would be readily apparent to any informed inquisitor of Brightstar's financial statements. However, the Tribunal found that, because of Brightstar's exclusive relationship with Telstra, and Telstra's known level of annual product purchases, Brightstar's disclosed total revenue and its expenses would be too small to be explicable on any other basis. 81 The Tribunal considered that the basic emphasis of Brightstar's contention was its apprehension about the level of analysis that that characteristic of its financial statements would permit. At one level of possible analysis, the relevantly informed inquisitor would conclude that Brightstar's reported profitability was substantially more than could likely be explained by its known logistics and advisory functions in Telstra's interests. The logistics services, consisting of warehousing and despatch, are, the Tribunal found, of a kind commonly available from many operators. The Tribunal considered that the informed inquisitor might reasonably infer that such services would not attract from Telstra a fee sufficient to yield either revenue or profitability significantly different from other operators of comparable services.

Ground 4 82 It is an error of law to make a finding of fact for which there is no evidence or other factual material that has rational probative force. The Tribunal must base its decision upon logically probative material rather than mere speculation or suspicion (Minister for Immigration & Ethnic Affairs v Pochi (1980) 31 ALR 666 at 688-690). Brightstar contends that the Challenged Findings were made without evidence or other factual material to support them. 83 The Commission's primary response is that none of the Challenged Findings is a finding of fact at all. Rather, they are statements of the Tribunal's reasoning process and conclusions. No evidence was called from any person connected with any of the suppliers; nor was evidence called as to the operation of the Australian market for the sale of relevant products. The Commission characterised the evidence adduced on behalf of Brightstar as rising no higher than supposition, conjecture and prediction by officers of Brightstar as to what, in their own view, was the likely or probable consequences of lodgement of the relevant reports. For that reason, the Commission did not suggest to any of Brightstar's witnesses that they did not genuinely believe that the consequences that they predicted would in fact ensue. Further, the Commission did not ask the Tribunal to find that any of the witnesses did not, subjectively, hold the views expressed in the evidence of that witness. 84 However, the Tribunal was not bound to come to the same conclusion about the possible or probable or likely consequences that would flow from lodgement of the relevant reports, even if it accepted the evidence of the Brightstar witnesses as to their subjective beliefs, or opinions, or fears. Brightstar bore at least a persuasive onus to satisfy the Tribunal that the adverse consequences that its witnesses predicted would in fact result. The fact that the Tribunal did not reach the same conclusion as the witnesses did not involve a rejection of the evidence of those witnesses or a finding contrary to the evidence of those witnesses. Ultimately, the Tribunal simply did not accept that the fears or apprehensions of the Brightstar witnesses were sufficiently persuasive to cause it to reach the same conclusions as the witnesses had reached, particularly in relation to the reverse engineering argument. 85 In those circumstances, it is incorrect to say that some or all of the Challenged Findings were made contrary to the evidence or material before the Tribunal. In most, if not all, of the instances described, the only evidence led by Brightstar on the particular matter involved speculation or conjecture by one or more of its witnesses as to the apprehended consequences that would flow from lodgement of the relevant reports. At its highest, the material before the Tribunal was no more than evidence that a particular witness held a particular view or apprehension.

Ground 5 86 Brightstar claims that, even if there was evidence to support each of the Challenged Findings, the Tribunal denied Brightstar procedural fairness by failing to provide any adequate opportunity for its witnesses to address the proposed Findings. The Commission accepts that the Tribunal was bound to abide by the rules of procedural fairness but says that there was no denial of procedural fairness. 87 The content of the rules of procedural fairness in any particular case will depend upon the particular circumstances of the proceeding before the Tribunal. In particular, the content of the rule will be governed by the requirement of s 33 of the Tribunal Act that proceedings be conducted with as little formality and as much expedition as possible. The Tribunal is required by s 39 of the Tribunal Act to ensure that a party be given a reasonable opportunity to present its case. Where both parties are represented, the Tribunal will normally allow the parties to identify the issues and present their respective cases as they see appropriate (see Sullivan v Department of Transport (1978) 20 ALR 323 at 342). 88 Brightstar was represented by solicitors as well as senior and junior counsel. The proceeding was the subject of substantial case management by the Tribunal prior to the hearing. Statements in chief by Brightstar's witnesses were delivered to the Commission. Subsequently, statements in reply by Brightstar's witnesses were delivered after the Commission's Statement of Facts and Contentions was filed. The Commission's Statements of Facts and Contentions had challenged the validity of the reverse engineering argument. That precipitated statements in reply from several of Brightstar's witnesses. In the course of the hearing, the Tribunal raised, with both Brightstar's counsel and its witnesses, aspects of the case that the Tribunal considered required further clarification or explanation. 89 However, there was no challenge to the honesty of Brightstar's witnesses. Rather, the challenge was to the conclusions that should be drawn from their evidence, which was, of necessity, speculation. The Tribunal was not bound to put to Brightstar's witnesses the reasoning that might lead it to reach a different conclusion as to the matters about which the Brightstar witnesses speculated in their evidence. There was no denial of procedural fairness on the part of the Tribunal in reaching a conclusion as to what might happen, or what might be likely to happen, in the event of disclosure of the relevant reports, that was different from the speculation on the part of Brightstar's witnesses as to what they feared or apprehended would happen or might be likely to happen. 90 Brightstar could have been under no misapprehension about the Commission's challenge to the reverse engineering argument. The Tribunal indicated aspects of the contention that it found troubling. Brightstar had every opportunity to put its case in the manner which it considered appropriate and to adduce the evidence that it considered would support that case. Indeed, it was able to recall one witness to respond specifically to questions and reservations made by the Tribunal. The contention that Brightstar was denied procedural fairness in relation to the Challenged Findings must be rejected.

Ground 5A 91 The Tribunal was bound to provide adequate reasons for its decision. Such an obligation arises from s 43(2) and s 43(2B) of the Tribunal Act. Under s 43(2), the Tribunal must give reasons either orally or in writing for its decision. Where the Tribunal does not give reasons in writing for its decision, a party to the proceeding may request the Tribunal to give a statement in writing of the reasons of the Tribunal for its decision, and the Tribunal must give that party such a statement. Under s 43(2B), where the Tribunal gives the reasons for its decision in writing, those reasons must include its findings on material questions of fact and a reference to the evidence or other material on which those findings were based. A party should not be left in doubt as to why a decision has gone against it (see Ansett Transport Industries (Operations) Pty Ltd v Wraith (1983) 48 ALR 500 at 507). 92 However, the adequacy or otherwise of reasons is to be judged in the light of the factual and legal issues raised in the proceeding, the evidence that is put to the Tribunal and the relationship between the evidence, the issues and the Tribunal's decision. What is required to satisfy that obligation will depend upon the factual and legal issues raised by the proceeding. The Tribunal is not required to refer to every issue that is raised or that could be raised in the proceeding and is not obliged to explain its response to every piece of evidence or every submission made to it. 93 So long as its reasons expose the reasoning process of the Tribunal and contain a statement of the findings of material facts and a reference to the evidence or other material on which those findings are based, the obligation imposed on the Tribunal will be satisfied. An assessment of the adequacy of the reasons must be made after consideration of the issues that had to be dealt with by the Tribunal. In the present case, the question for determination was whether the Tribunal was satisfied as to a certain matter, namely, whether compliance with the lodgement requirement would impose unreasonable burdens. 94 The argument of Brightstar in relation to the reverse engineering argument, of necessity, involved conjecture and speculation. The ultimate question in the proceeding was one of judgment about whether the consequences feared by Brightstar were a real likelihood or no more than a bare possibility. Resolution of the question involved weighing different considerations and drawing appropriate inferences. That process inevitably descends into one of subjective assessment, where not every stage is or can be explained as a discrete step. 95 The question before the Tribunal involved two stages. The first stage required the Tribunal to make a judgment about the information that would be likely to be gleaned from the lodgement and publication of the relevant reports. The second stage required an assessment of whether the availability of that information, whatever the Tribunal concluded it was, would impose unreasonable burdens on Brightstar. Only the first stage bears any resemblance to the fact finding normally associated with civil litigation, where, for example, there may be a requirement to resolve a dispute between two witnesses as to whether a particular occurrence had taken place in the past. 96 Compliance with s 43 of the Tribunal Act requires no more than that the Tribunal identify the findings of fact, if any, that were critical to the first stage. In the first stage, it would be necessary for the Tribunal to make findings of fact concerning the business of Brightstar and the state of the market in which it participates. Such facts may be necessary to enable the Tribunal to understand and comprehend the information that would be available as a consequence of publication of the relevant financial statements. The Tribunal would need to make findings about the state of knowledge of participants in the relevant market of the business of Brightstar against which the relevant financial statements could be considered. The Tribunal did so. 97 Brightstar's case, of necessity, involved speculation about what unidentified and unspecified persons might do if they had access to the relevant financial statements. Resolving that question of speculation did not require the Tribunal to form a view about the credibility of evidence given by witnesses called by Brightstar. So long as the Tribunal identified any material finding of fact and referred to the evidence on which the finding was based, its obligation under s 43 was satisfied. The Tribunal did so. Brightstar could be left in no doubt as to why the decision went against it. There was no failure by the Tribunal to give reasons that satisfied its obligation under ss 43(2) and 43(2B) of the Tribunal Act.

The Particular Challenged Findings 98 The general observations made above are sufficient to dispose of Grounds 4, 5 and 5A. However, considerable attention was devoted by Brightstar to the particular Challenged Findings on one or other of Grounds 4, 5 and 5A. It is desirable, therefore, to say something about each of the Challenged Findings.

Finding a, Finding b and Finding e 99 Finding a, Finding b and Finding e are concerned specifically with the reverse engineering argument. In its reasons, the Tribunal referred to Brightstar's supply chain optimisation services as advisory functions and to its strategic sourcing activities as product sourcing activities. The Tribunal found that a motivated inquisitor would not be able to differentiate between Brightstar's advisory functions and its product sourcing activities and that a motivated inquisitor would not assume that Brightstar's advisory functions were remunerated merely on the particular basis alleged by Brightstar or that Brightstar was not incurring any particular costs in respect of its product sourcing business. The Tribunal also found that a motivated inquisitor would not assume its own product market share corresponded with any proportion of Brightstar's disclosed profit. 100 Brightstar contended that the relevant Challenged Finding ignored the evidence given by the four witnesses called on behalf of Brightstar that suppliers were in contact with personnel from Brightstar working in the two different business activities. Brightstar claimed that most of its witnesses asserted that a supplier could estimate the revenue from optimisation services by using its knowledge of entities providing comparable consulting services and that there was no evidence from suppliers or anyone else on the basis of which the Tribunal could refuse to accept that a motivated inquisitor would assume that Brightstar's optimisation services were remunerated on the particular basis alleged by Brightstar. Brightstar points out that there was no evidence from any supplier that the supplier would not assume that its market share corresponded with a proportion of Brightstar's profit and says that there was no basis for the Tribunal concluding that the evidence of Brightstar's witnesses was merely conjecture and that the application of a supplier's market share was a very uncertain exercise. 101 I do not consider that these Challenged Findings are findings of fact by the Tribunal. Rather, they are statements of the Tribunal's reasoning process and conclusions. Accordingly, the contention that the Findings were made contrary to available evidence or unsupported by evidence must fail. 102 The Tribunal effectively accepted that the disclosure of the relevant financial statements would ultimately involve publication of Brightstar's audited revenue and expenses. The Tribunal accepted that Brightstar might reasonably be supposed to derive substantial revenue and profit from its contractual arrangements with Telstra. The Tribunal found, however, that disclosure of Brightstar's financial statements would provide audited information and not just a good basis for educated surmise. Disclosure would provide a specific total revenue and would also provide definite quantification of Brightstar's total costs and some allocation of those costs to different parts of its arrangements with Telstra. The Tribunal therefore accepted that publication of the relevant financial statements would result in a motivated inquisitor concluding that Brightstar was deriving both substantial revenue and profit from the totality of its arrangements with Telstra and that such an inquisitor would be able to make a reasonably accurate differentiation between the financial performance of Brightstar's logistic business, on the one hand, and the remainder of Telstra's business, on the other. 103 The Tribunal accepted that publication of the financial statements would authoritatively quantify the extent of Brightstar's profitability. The Tribunal observed that Telstra was fully aware of the revenue that the Umbrella Agreement and the Supply Chain Optimisation Agreement generate for Brightstar. Telstra was also aware of the actual payments it makes, not only for the warehousing services Brightstar provides and its advisory functions, but also the cost of products invoiced by Brightstar. However, Telstra would not know Brightstar's actual total costs. Nevertheless, the Tribunal found that Telstra had ample awareness not only of the broad level of Brightstar's total revenue, but also detailed knowledge of the precise contractual arrangements under which that revenue is derived. 104 The Tribunal found that Telstra is both well informed about the nature, scope and revenue of Brightstar's contractual activities and is well able to assess the worth of those activities to itself. The Tribunal considered that Telstra was likely to be able to assess the magnitude of Brightstar's costs and assess meaningfully both the fact, and the general order of magnitude, of Brightstar's profitability. The Tribunal accepted in effect that Telstra is well satisfied with Brightstar's performance and that there were no substantial reason to contemplate that its attitude to Brightstar, and to the continuation of the existing contractual arrangements, would be likely to be influenced to a material extent, by the disclosure that would flow from the publication of Brightstar's financial statements. 105 In all of those circumstances, the suggestion that Finding a, Finding b and Finding c are unsupported by evidence, or are contrary to the evidence, should be rejected. Similarly, in the light of those considerations, the suggestion that the Tribunal did not give adequate reasons for Finding a, Finding b and Finding e should be rejected. 106 Finding a and Finding b, which are followed by Finding c, are contained in a paragraph of the Tribunal's Reasons under the heading "The Materiality of the Compliance Disclosure". Having made Finding a and Finding b, the Tribunal then sets out four reasons that led to the Tribunal's conclusion, for the reasons set out in the intervening paragraphs, that the revenue and costs information provided in Brightstar's balance sheet would not result in suppliers being likely to conclude that Brightstar's revenue was quantifiably and reliably related to the supplier's market share of Telstra's product acquisitions and that suppliers would not in any sense characterise Brightstar's revenue as money that the supplier were merely "giving away" to Brightstar. That part of the Tribunal's Reasons would leave the reader in no doubt as to why the Tribunal rejected the reverse engineering hypothesis advanced by Brightstar. 107 The Tribunal's Reasons do not refer specifically to what was said and by whom in oral evidence. Nor do the Tribunal's reasons extract passages from the transcription of the oral evidence given by the witnesses. The only witnesses who gave evidence were called by Brightstar. While the reasons do not attribute particular propositions to particular witnesses, a comparison of the Tribunal's Reasons with the evidence given by Brightstar's witnesses would enable Brightstar to understand that the Tribunal, having had regard to the evidence of Brightstar's witnesses, rejected the reverse engineering argument.

Finding c 108 The Tribunal did not accept that a motivated inquisitor, even if it analysed Brightstar's financial statements and calculated the profit proportion mathematically equivalent to its own market share of Telstra's product range, would characterise that share as a discount that it was either "giving away" to Brightstar or that it could relevantly apply to Brightstar's disadvantage. Brightstar asserts that that conclusion is contrary to the evidence or is unsupported by the evidence. 109 Brightstar points to a statement by Mr Bean that, having obtained an estimate of Brightstar's "gain share", a supplier could then apply its market share of Telstra's business to the sourcing revenue shown in Brightstar's accounts, in order to calculate the sourcing revenue derived from that supplier. Mr Bean said that that amount would represent the amount that the supplier was "giving away" to Brightstar in its sales to Telstra, through Brightstar being paid a gain share. Mr Bean said that, by that simple methodology, a supplier could identify that the sourcing business was extremely profitable to Brightstar and it would be targeted by suppliers. He said that, if a supplier had that information, the supplier could use it in negotiations with Brightstar and, worse, approach Telstra with a financial incentive to cut out Brightstar altogether. Brightstar also referred to similar evidence by Mr Nanayakkara and Mr Osorio. 110 Brightstar concludes, therefore, that it was contrary to the evidence for the Tribunal to make Finding c. However, so called Finding c is not a finding of fact but rather a statement of the Tribunal's conclusion that it was not persuaded, by the evidence, even if the profit share calculation could be done, that the motivated inquisitor could use the information to cause disadvantage to Brightstar in the way apprehended. 111 Mr Bean had given evidence that, having, by the reverse engineering process, calculated Brightstar's overall profit attributed to the sourcing business, a supplier could, because it had been told by Brightstar or Telstra what proportion its own business constituted of Telstra's overall sales, by mathematical calculation, determine what proportion of Brightstar's sourcing profit was being earned on sales by it. It was then suggested that that information would be used detrimental to Brightstar. 112 However, the profit share calculation described by Mr Bean, which is repeated in the evidence of other witnesses, requires the Tribunal to be satisfied that a supplier would act in an entirely illogical or irrational fashion. The "profit share calculation" cannot be carried out in the way described; nor would it produce any accurate estimate of the level of gain share revenue being generated by Brightstar from its business with particular suppliers. No explanation was given as to why a supplier would assume that profit was generated uniformly in the way the profit calculation analysis required. 113 Mr Osorio gave evidence that the ability to calculate a supplier's contribution to Brightstar's overall sourcing profits was an absolutely critical aspect of the unreasonable burden argument. Mr Nanayakkara's evidence, that the best that could perhaps be done would be to calculate a very rough estimate of that matter, together with the inherently illogical reasoning process, provided a sound basis for the Tribunal to be sceptical about, and then ultimately reject, the argument. 114 The Tribunal was entitled to conclude that information gleaned from the relevant reports, if lodged, could not be used to Brightstar's detriment in any meaningful way, since there was no detailed explanation as to how that intelligence might actually be brought to bear on any negotiations with Brightstar or with Telstra, particularly given the extreme complexity of such negotiations and the multitude of facts that impact on those negotiations. Mr Nanayakkara accepted that knowing Brightstar's profitability was unlikely to be particularly significant in large scale negotiations where, for example, volume might be much more important. 115 The observations made above in relation to the reasoning that led to Finding a, Finding b and Finding e are equally applicable to the reasoning that led to Finding c.

Finding d 116 One of the reasons given by the Tribunal for its conclusions that constitute Finding a, Finding b and Finding c include the proposition that the complexity of the detailed remuneration arrangements between Brightstar and Telstra would preclude any useful inferred differentiation, for the purpose of analysing the significance of Brightstar's trading profitability, between the impact of Brightstar's activities related to initial product acquisition and the effect of its ongoing advisory functions. 117 Brightstar complains that there is no evidence from any supplier or informed inquisitor or relevant opinion evidence that a supplier would: · Understand that the remuneration arrangements relating to the product sourcing performance between Brightstar and Telstra would be complex and variable. · Expect that there would be incentive arrangements and some part of that would relate to performance indicators other than unit price. · Expect that such performance indicators could easily relate to savings in inventory costs, product wastage, service costs or to generate revenue, profit or savings incentives. Brightstar complains further that it was the Tribunal that first raised such other so called variables. 118 However, the evidence adduced by Brightstar as to the manner in which the calculation might be made showed that it was an extremely complicated process and that it was impossible to decipher without access to the sourcing contract and its schedules and underlying sales data from Brightstar. Mr Osorio accepted the proposition put by the Tribunal that most suppliers would understand that the manner in which Brightstar's remuneration was calculated was likely to be very sophisticated. The evidence of Mr Soon demonstrated how difficult it would be for an insider, let alone an outside inquisitor, to glean any useful information from the financial statements in the way contemplated by the reverse engineering argument.

Findings f, Finding g and Finding i 119 The Tribunal considered that suppliers would know intimately both the details of the prices at which they supply Telstra and the reasons why that pricing was acceptable to them. Suppliers would also know that they had agreed on those prices with full knowledge of a commercial environment in which Telstra has long and loudly declared both its intention and its success in achieving "savings" as a result of its arrangements with Brightstar. The Tribunal considered that, while that commercial background rather strongly suggested that Telstra was a substantial beneficiary of Brightstar's endeavours, it did not demonstrate that Telstra's "savings" reflect a corresponding "cost" or "loss" that has been inflicted on product suppliers. The Tribunal did not consider that it was a context in which suppliers would be at all likely to regard the effect of their pricing negotiations as involving "giving away" money to Brightstar: still less is it a context that justifies an apprehension that suppliers would be influenced to offer corresponding, or greater, discounts to Telstra, merely for the purpose of eliminating Brightstar's future involvement with Telstra. The Tribunal was not satisfied that disclosure of Brightstar's financial statements would materially, or even meaningfully, increase either the commercial incentives for disruption of its commercial arrangements with Telstra or the information that might materially influence the ability of others to act effectively on those incentives. 120 Brightstar relied on evidence given by Mr Nanayakkara, Mr Bean and Mr Osorio to support a conclusion that Brightstar's sourcing revenue was derived from negotiating a lower price from suppliers, which meant that suppliers would be selling handsets at a lower price than they had before Brightstar became an agent for Telstra. Brightstar asserted that the savings on the price of handsets to Telstra equated to a loss or cost to the supplier, since the suppliers would be selling at lower prices, as a result of Brightstar's negotiations. Brightstar complained that the Tribunal diverged completely from the evidence when it found that a reduction in the unit product cost to Telstra; that is to say, Telstra savings did not reflect a corresponding "cost" or "loss" that was inflicted on the product suppliers. 121 Brightstar says that, flowing from that error, is the consequent error of a finding that there was no basis for any apprehension that suppliers to Telstra would be disposed to offer discounts to Telstra, which was contrary to the evidence of Messrs Nanayakkara, Bean and Osorio. Similarly, Brightstar says, to conclude that financial statement disclosure would not materially, or meaningfully, increase either the commercial incentives for disruption of arrangements or materially influence others to act on those incentives, was contrary to the evidence of the change in Telstra's purchasing price of handsets pre and post Brightstar. Brightstar says that the example of the reverse engineering argument demonstrates that a particular supplier could calculate that Brightstar may have received a specific sum derived from savings on purchases from that supplier in a particular period. That, Brightstar says, represents a material incentive for the supplier to deal directly with Telstra and make attractive offers to cut out Brightstar from the sourcing negotiations. 122 The Tribunal found that there was already considerable information available to interested inquirers about Brightstar's level of profit, including the profit likely to be generated from the sourcing business, something that Brightstar's witnesses did not really dispute. Brightstar's witnesses said that product suppliers would assume that the product sourcing business was conducted at relatively low cost. Those two pieces of information would arm a third party inquirer with the very same information, in general terms, as that which Brightstar says can come only from its financial statements. Notwithstanding that that information is, and has been, readily available to suppliers, the evidence was that no supplier had tried to act in any of the ways that Brightstar predicted they would, either in negotiations over the sale of product or by approaching Telstra direct. The Commission says that that casts a doubt on the reality of Brightstar's apprehensions. 123 Finding g is a corollary of Finding h, which is supported by Mr Bean's evidence that, notwithstanding the substantial motive for doing so, no one has, to date, attempted to use the publicly available information to exert pressure on Brightstar or to carve out a direct link to Telstra. Brightstar's witnesses accepted that Telstra was unlikely to be at all interested in dealing direct with suppliers. If Telstra is unlikely to be motivated to entertain direct approaches from suppliers, it is equally unlikely that suppliers would discern any meaningful opportunity to undertake such approaches. 124 Finding i is also a corollary of Finding h. Telstra had publicly stated that Brightstar had received payments under the sourcing arrangement in the 2007 financial year in excess of $40 million. The Tribunal's conclusion as to the likely impact of disclosure of the financial statements was justified by the evidence that there was already substantial commercial motive to launch an attack on Brightstar and its exclusive arrangements with Telstra, yet none of the suppliers had done so or attempted to do so since the inception of the Umbrella Agreement.

Finding h 125 The Tribunal observed that it was an inescapable consequence of Brightstar's reluctant acknowledgment that disclosure was unlikely to affect Telstra, that it was similarly unlikely to afford any meaningful opportunity to suppliers. Brightstar complains that there was no evidence equating the impact of disclosure on Telstra with the impact of disclosure on suppliers. It says that its evidence stated all the information that Brightstar provides to Telstra but the witnesses did not make any conclusion or express any opinion that financial statement disclosure to suppliers would have the same effect. Rather, Brightstar says, it asserted consistently throughout the hearing that the threat came from suppliers obtaining access to the financial statements, not Telstra. 126 Mr Osorio said that suppliers already have substantial bargaining power and none of Brightstar's witnesses gave any explanation as to how that bargaining power would be increased by access to the financial statements other than by mere assertion that the information would be "used" in some undefined way. 127 There was substantial evidence given to the effect that Telstra is extremely satisfied with the benefits that it has derived in its dealings with Brightstar. The Tribunal was entitled to find that that degree of satisfaction constitutes a substantial bulwark against any attempt by suppliers to seek to appropriate any part of Brightstar's business by approaching Telstra direct. The Tribunal was entitled to find that the lodgement of the relevant reports would not increase: · either the motive to do so, since the motive was already present; or · the ability to achieve any actual success in such attempts.

Finding j and Finding k 128 The Tribunal found that Brightstar's witnesses believed that Telstra was well satisfied with Brightstar's performance and had taken no steps to deal with either suppliers or competitors outside the terms of the Umbrella Agreement. The Tribunal also found that Telstra was probably highly unlikely to be inclined to replace its arrangements with Brightstar, at least if it meant going back to a situation where it would have to deal directly with suppliers. The Tribunal said that it is only if suppliers individually, or perhaps collectively, could either assume a substantial part of Brightstar's existing advisory functions, or dissuade Telstra from the current extent of its satisfaction, that the future operation of the Umbrella Agreement would be jeopardised. 129 The Tribunal considered that neither of those possibilities could be assessed as being at all likely, given the history of Telstra's satisfaction and the basic effect of the remuneration provisions in the Umbrella Agreement. That assessment would not be materially affected by the disclosure of Brightstar's financial statements. 130 Brightstar asserted that there was no evidence that its optimisation services would need to be assumed by suppliers in order to jeopardise the continuation of the Umbrella Agreement. The terms of Brightstar's optimisation services, it said, are in one individual, stand alone, agreement with Telstra and the terms of its strategic sourcing services are in a separate, individual, stand alone agreement. Brightstar asserted that there was no evidence that termination of the Umbrella Agreement would result in termination of the Supply Chain Optimisation Agreement, such that Telstra would be left without any such services and a supplier would need to be prepared to assume the optimisation services. 131 After referring to evidence given by Mr Nanayakkara and Mr Osorio, Brightstar said that there was no evidence from Telstra that it would not be attracted by any proposition by suppliers that could increase its profit, especially when it would be in the millions, even if it meant replacing its arrangements with Brightstar. Brightstar asserts that there is no reason to suppose that Telstra would not act in its own economic interests and that the Tribunal was merely speculating in its attempt to judge the level of risk that there might be that Telstra might be persuaded to terminate the Umbrella Agreement. 132 Brightstar's witnesses described the way in which Telstra procured its handset supplies prior to the making of the Umbrella Agreement. Those witnesses also gave evidence as to the substantial savings that Telstra had enjoyed since changing its procurement strategy, by handing that task to Brightstar under the Umbrella Agreement. The sheer scope of those apparent benefits, and the evidence as to the higher level of satisfaction that Telstra had regularly expressed in relation to its arrangements with Brightstar, could justify the Tribunal's conclusion. Mr Osorio explained how complementary the services provided under the two agreements with Telstra were. He agreed that the arrangements between Telstra and Brightstar, under which the two arrangements worked in tandem, was not replicated anywhere else in the Australian market. The conclusion that, unless a supplier or suppliers could offer to replace the whole of those complementary services, there was no risk of Telstra being persuaded to alter its existing arrangements with Brightstar, was open to the Tribunal in the light of that evidence.

Finding l 133 The Tribunal found that financial disclosure from the relevant reports would not provide any meaningful information about the way in which the revenue was generated or about the complexity of the services and performance criteria that apply under the Umbrella Agreement. The Tribunal considered that, without some understanding of those matters, it would be extremely difficult for a supplier, or other competitor, to provide Telstra with any real incentive to depart from the substance of its arrangements with Brightstar. Subsequently, the Tribunal observed that Brightstar's remuneration entitlements under the Umbrella Agreement are not only product price sensitive but also subject to a measure of subjective influence by Telstra. One consequence of those sensitivities is that Brightstar's remuneration is influenced by the pricing of product manufacturers and, for that matter, those of any other product supplier. However, the Tribunal said, the details of those sensitivities do not operate in a way that provides either any real incentive for Telstra, or opportunity for others, to precipitate termination or abandonment of the Umbrella Agreement. 134 Brightstar says that the finding that prospects of a supplier providing an incentive to Telstra to depart from its arrangements with Brightstar would not be increased by financial statement disclosure was contrary to the evidence or was not supported by any evidence. Brightstar asserts that there was no evidence from any witness that, in order to provide an incentive to Telstra, suppliers would need an understanding of the complexity of the way in which revenue was generated under the Umbrella Agreement and the complexity of the services and performance criteria that apply under the Umbrella Agreement. It asserts that there was no evidence that the sensitivities of Brightstar's remuneration entitlements under the Umbrella Agreement operate in a way that precludes providing an incentive to terminate the agreement. Rather, Brightstar says, the evidence was that financial statement disclosure would provide an opportunity for suppliers to do a reverse engineering calculation to work out how much share of the profit from strategic sourcing Brightstar derived from them. It is that knowledge, Brightstar says, that arms suppliers with an incentive to take to Telstra. It says that the other variables introduced by the Tribunal are unsupported by any evidence and that the Tribunal was speculating, in so far as it did not refer to any supporting evidence. 135 Mr Osorio gave evidence that, in his view, suppliers already have substantial bargaining power in their negotiations. Brightstar's evidence did not seek to explain why, in the present environment, and given those circumstances, there had been no attempt by any supplier to deal direct with Telstra but there would or might be, if the financial statements became publicly available. There was evidence to the effect that a handset supplier would already be likely to appreciate that Brightstar was generating very substantial profits from its sourcing business. An inference could be drawn from that evidence that there already existed substantial commercial motive to cause suppliers to act in the way Brightstar apprehends would follow from disclosure, in the relevant reports, of Brightstar's financial statements.

Finding m 136 The Tribunal was not satisfied that disclosure of Brightstar's financial statements in the relevant reports would materially, or even meaningfully, increase either the commercial incentives for disruption of Brightstar's commercial arrangements with Telstra, or the information that might materially influence the ability of others to act effectively on those incentives (Finding i). The Tribunal then gave six reasons for that conclusion and went on to say that, consequently, even if it was realistic, or even prudent, to contemplate that lodging the relevant reports might ultimately lead to termination of the existing Umbrella Agreement, it did not follow that Brightstar would either be precluded from further dealing with Telstra, or would be unlikely to have any further participation in Telstra's future product sourcing. The Tribunal considered that the reasons why that conclusion did not follow relate partly to Brightstar's proven abilities and partly to the enormous size of Telstra's business. They also relate to the past history of Brightstar's demonstrably satisfactory performance for Telstra and the absence of any reason to suppose that Brightstar would, in any sense, be at a commercial disadvantage in any future competition for Telstra's business. 137 Brightstar contends that the conclusion, that Brightstar would itself very likely be successful in a new contract with Telstra, was based on a number of assumptions for which Brightstar says there was no evidence. The assumptions are as follows: · Telstra would engage a new contractor; · Telstra's enormous size would mean that Telstra would seek a new contractor to satisfy its purchasing requirements; · if Telstra did seek a new contractor, Brightstar would be a candidate; · Brightstar would, or would seek to, have future dealings or participation in Telstra's product sourcing; · there would be any competition for Telstra's business in the future in which Brightstar could compete. Brightstar says that, even if Telstra did seek a new contractor, there was no evidence of the entities that would apply for that contract and there was no evidence that Brightstar would be the successful candidate. Furthermore, Brightstar says, the ultimate finding disregarded the evidence that Brightstar was concerned that suppliers would deal directly with Telstra and thus cut out the middleman. It also ignores, Brightstar says, the model upon which Brightstar operates its strategic sourcing business and there was no evidence that Brightstar would provide its strategic sourcing services under any other model. In particular, the strategic sourcing agreement contained exclusivity terms. Mr Nanayakkara gave evidence that he did not accept that, if Brightstar did not have the benefit of exclusivity provisions, other organisations would be competitors for Telstra's business. Mr Nanayakkara did not accept that, if Brightstar did not have its arrangements with Telstra, Telstra's business would be the natural target for such organisations. 138 Evidence was given by Brightstar's witnesses to the effect that, if the Umbrella Agreement were terminated, there would be substantial damage to Brightstar's business. All of that evidence proceeded on the assumption that, if the Umbrella Agreement were terminated, Brightstar would cease doing any business with Telstra. However, Mr Osorio agreed with the proposition that there was no reason why Brightstar would not succeed in securing at least some of the Telstra business, even if the Umbrella Agreement were terminated. Given the evidence that, globally, Brightstar is a substantial player in the market and could, through economies of scale, source product well below the cost at which Telstra was likely to be able to do so on its own, the Tribunal's conclusion that some ongoing arrangements between Telstra and Brightstar in respect of product supply was likely, was open on the material before it.

Finding n 139 The Tribunal was not satisfied, even though there is a measure of justification for Brightstar's general apprehension of increased commercial scrutiny, that lodging the relevant financial statements would in fact materially increase either the real incentives for critical evaluation of Brightstar's dealings or materially influence commercial and competitive behaviour in response to them. That was the Tribunal's conclusion under the heading "The Nature and Extent of the Financial Detriment Brightstar Apprehends". Finding n is based on the preceding paragraphs, in which the Tribunal reasoned as follows: · The incentive for close scrutiny of Brightstar's financial statements arises because the success of its business model depends partly on its own resources and partly on the confidence that Telstra and suppliers have on Brightstar's dealing with each of them. · The market in which Brightstar operates is the highly competitive and innovative telecommunications industry involving major suppliers, which must already contain very significant incentives for scrutiny and assessment of Brightstar's performance. 140 Brightstar says that there was no evidence that there already existed a close level of scrutiny of Brightstar by suppliers and there was no evidence from suppliers that access to Brightstar's financial statements would not provide a material incentive to scrutinise and assess Brightstar's performance. However, the conclusion as to the likely impact of disclosure of the financial statements was open to the Tribunal on the basis of the evidence that there was already substantial commercial motive to launch an attack on Brightstar and its exclusive arrangements with Telstra, yet none of the suppliers had, since the inception of the Umbrella Agreement, attempted to do so.

Finding o 141 The Tribunal's ultimate conclusion was that the complexity of the integers that affect the pricing of the products with which Brightstar's activities are concerned, and the details of its entitlements under the Umbrella Agreement, do not permit satisfaction that disclosure of Brightstar's financial statements in the relevant reports would be at all likely to burden Brightstar, other than by some potential, and marginal, increased scrutiny of the quality of its service performance under the Umbrella Agreement. The Tribunal did not consider that potential to constitute an unreasonable burden. Part of the reasoning of the Tribunal in reaching that conclusion was that the information that would be made available was unlikely to differ materially from the existing reasonable expectations that Telstra and Brightstar's suppliers and competitors are capable of drawing from the existing information and knowledge available to them. 142 Brightstar referred to two pieces of information in the public domain that related to the alleged specific figures of Brightstar's business. The first was an extract from the transcript of a Telstra announcement and an extract of a slide show presentation made in November 2008. The second was a press article dated March 2009. Brightstar asserts that there was no evidence that any of that information would be perceived by suppliers or competitors as being the equivalent to information that would be disclosed in Brightstar's audited financial statements. Brightstar relied on Mr Nanayakkara's interpretation of that evidence. Messrs Bean and Osorio also gave evidence about that material. 143 However, there was evidence of a substantial amount of information about Brightstar's arrangements with Telstra and the profits that those arrangements had produced. It was open to the Tribunal to conclude that that information, and the inferences that can reasonably be drawn from it, is not substantially different from that that might be gleaned from the financial statements in the relevant reports, namely, that Brightstar is generating very substantial profits, from that part of its business.

Conclusion as to Grounds 4, 5 and 5A 144 I am not persuaded that any of the grounds relating to the Challenged Findings is made out. It may be that the reasons of the Tribunal are not as specific as they could be in dealing with the detailed evidence adduced by Brightstar. That may have been the result of Brightstar's desire that confidential information adduced in the course of the hearing not be published, even if compliance with the lodgement requirements is not excused. That, of itself, would not be sufficient to excuse the Tribunal from giving full reasons. Nevertheless, I am not persuaded there is any deficiency in the reasons given by the Tribunal. Further, I am not persuaded that the Tribunal failed to afford Brightstar procedural fairness in relation to the disposition by the Tribunal of the issues raised before it. I am not persuaded that the Tribunal made findings of fact that were not supported by the material before the Tribunal.

"ACTUAL PRODUCT PRICING": GROUND 6 145 Brightstar contends that the Tribunal erred in requiring it to demonstrate how a supplier might use information obtained from the relevant reports in "actual product pricing". It says that the Tribunal misconstrued the entire reverse engineering argument if it expected that Brightstar needed to demonstrate that suppliers might use the information in their actual product pricing. Brightstar pointed to evidence of the reverse engineering calculation that its witnesses gave by way of their own individual opinions, which, Brightstar says, said nothing of a supplier's "actual product pricing". Brightstar's witnesses expressed the opinion that information from the reports that Brightstar would be required to lodge would, or might, be used by suppliers to disadvantage Brightstar and that whether suppliers do that by "actual product pricing" was irrelevant, because the entire basis of Brightstar's case is what is expected to happen in the future. Brightstar says that the Tribunal, therefore, identified the wrong issue, asked itself the wrong question and relied on an irrelevant consideration by requiring Brightstar to demonstrate such an analysis as part of its reverse engineering calculation. 146 The failure of Brightstar to illustrate how individual suppliers might realistically use the hypothesised information in their actual product pricing was not a substantial basis for the Tribunal's decision. The reverse engineering argument, to which that question related, was rejected at all levels by the Tribunal. The Tribunal had to be satisfied that compliance with the lodgement requirements would impose an unreasonable burden upon Brightstar. An integral part of Brightstar's case was that, if information contained in the financial statements were disclosed, suppliers could use that information in their dealings either with Brightstar or Telstra. The evidence did not progress beyond generalised assertion. Brightstar's evidence did not attempt to demonstrate, with any level of detail, how, in the context of extremely complicated price negotiations a particular piece of information would be used to the disadvantage of Brightstar. Ground 6 is not made out.

EVIDENCE AS TO THE BURDENS: GROUNDS 7 AND 8 147 Brightstar's complaint is really that the Tribunal was not persuaded by Brightstar's witnesses to the level of satisfaction that would have prompted a decision in favour of Brightstar. Brightstar is effectively inviting the Court to reconsider the evidence before the Tribunal and to reach a different conclusion from the one reached by the Tribunal. 148 The Tribunal was not obliged to come to the same conclusion as that expressed by Brightstar's witnesses. That it did not do so did not involve any rejection of the evidence, but a rejection of the reasoning that led the witnesses to have the fear or apprehension to which they deposed. There was no failure on the part of the Tribunal to provide reasons for its rejection of the reverse engineering argument. The Tribunal's reasons explain adequately and comprehensively the process by which it rejected the reverse engineering argument.

FAILURE TO CONSIDER SUBMISSIONS: GROUND 9 149 Brightstar also contends that the Tribunal failed to consider the following submissions made by it in writing and in the course of oral argument: · It is not possible to judge the level of risk that Telstra might be persuaded to terminate a major contract with Brightstar, in circumstances where there is no reason to suppose that Telstra would not act in what it perceived to be its own economic interests, which would be considered in the context of the terms offered by suppliers; · The availability of the reports that Brightstar would be required to lodge would have the real potential to be a "tipping point", bringing about a change in a supplier's conduct; · There was no real challenge to the proposition that the availability of the reports that Brightstar would be required to lodge could be used by suppliers to cause serious economic detriment to Brightstar: the suggestion that the method would not be accurate is irrelevant unless it could be shown that the degree of inaccuracy made the information incapable of use in the manner suggested by Brightstar. 150 The Tribunal's Reasons must be read and understood as having dealt with the substance of those three submissions. Thus, one stage of the reverse engineering argument involved the proposition that Telstra would, or might, be persuaded to terminate the contractual arrangements it has with Brightstar if a supplier, armed with the information gleaned from deconstructed financial statements contained in relevant reports, offered to Telstra discounts that would be sufficiently generous to cause Telstra to change the way in which it procured products under the Umbrella Agreement. The Commission says that, because of the lack of evidence that such conduct on behalf of Telstra was at all likely, Brightstar was compelled to argue that the Tribunal could, or should, find that an unreasonable burden would be imposed, even if that likelihood or risk could only be considered to be slight. 151 The jurisdictional threshold requirement of s 342(1) could not be discharged if the likelihood of any adverse consequence arising from compliance with the reporting requirements could not be judged objectively or could be described as only slight. The Tribunal found that it was necessary to undertake an assessment of the reality and extent of the detriment that Brightstar apprehended. The Tribunal made that assessment and rejected Brightstar's argument and the reasons for that conclusion were then set out in detail. In the light of that treatment of that question, the contention that the first submission was not dealt with must be rejected. 152 Similarly, although the Tribunal did not use the words "tipping point", a phrase apparently introduced by Brightstar in its closing submissions, there is no reason to doubt that the Tribunal was aware of the substance of the relevant submission or that the Tribunal failed to give it due consideration. The Tribunal discussed in detail the potential impact that compliance with the reporting requirements might have on Telstra vis-ŕ-vis its dealings with Brightstar and suppliers. The Tribunal expressed its conclusion on the ultimate issue. One of the relevant matters involved in that conclusion was consideration by the Tribunal of the reverse engineering argument, as developed in final submissions, which included the "tipping point" submission. 153 The Tribunal's conclusion on the ultimate issue was that the success of Brightstar's operations depend substantially on its ability to maintain the confidence of both the suppliers, with which it deals, and Telstra, the only customer that provides its revenue. The Tribunal found that Brightstar has done so successfully to date and that there is little reason to apprehend that it will not continue to do so in the future. The Tribunal found that there was no significant persuasive reason to accept that Brightstar's capacity to do so would be unreasonably influenced by the consequences of complying with the financial statement disclosure requirements. That conclusion constitutes a rejection of the "tipping point" submission. 154 There was a clear challenge by the Commission to the relevant aspect of the reverse engineering argument. The Tribunal clearly considered Brightstar's submission and rejected it. The Tribunal was not satisfied by the evidence that suppliers would be able to utilise the hypothetical information in the relevant reports in any meaningful or detrimental way. Brightstar's argument on this point was at the heart the reverse engineering argument and there was no failure by the Tribunal to consider that argument. The Tribunal dealt with the argument adequately.

CONCLUSION 155 None of the ten grounds relied on by Brightstar has been made out. The appeal should be dismissed with costs.

THE SCHEDULE (QUESTIONS OF LAW AND GROUNDS OF APPEAL) The questions of law said to be raised in the appeal are as following: 1. Whether the Tribunal applied the correct test in holding that the discretion to exempt Brightstar from compliance with the requirements of ss 292, 301, 319 and 320 of the Corporations Act (the Requirements) for the Years under s 340 of the Corporations Act could only be exercised if the burden of compliance was so unreasonable as to justify grant of relief. 2. Whether the Tribunal applied the correct test in failing to hold that the discretion to exempt Brightstar from compliance with the Requirements for the Years under s 340 of the Corporations Act could be exercised if the burden of compliance materially exceeded the benefit of compliance. 3. Whether the Tribunal applied the correct test in requiring that the discretion to exempt Brightstar from compliance with the Requirements for the Years under s 340 of the Corporations Act could only be exercised if any material burden was "likely". 4. Whether the Tribunal erred in law by making the below findings contrary to the evidence and/or in the absence of evidence: (a) A motivated inquisitor would not be able to differentiate between Brightstar's advisory functions and its product sourcing activities on Telstra's behalf; (b) A motivated inquisitor would not assume that Brightstar's advisory function were remunerated merely on the particular basis alleged by Brightstar or that Brightstar was not incurring any significant costs in respect of its product sourcing business; (c) A motivated inquisitor, even if it analysed Brightstar's financial statements and calculated the profit proportion attributable to it by reference to its market share of Telstra's product range, would not regard that share as a discount it was "giving away" and/or would not apply such information to Brightstar's disadvantage; (d) The complexity of the detailed remuneration arrangements between the applicant and Telstra for "product sourcing" would preclude any useful differentiation between activities for the purposes of analysing Brightstar's financial statements; (e) A motivated inquisitor would not assume its own product market share corresponded with any proportion of Brightstar's disclosed profit; (f) The fact that Telstra's reported savings provided no relevant information to the motivated inquisitor meant that financial statement disclosure would also provide no relevant information; (g) There was no basis for any apprehension that suppliers to Telstra would be disposed to offer discounts to Telstra as a consequence of financial statement disclosure; (h) Financial statement disclosure would provide no meaningful opportunity to suppliers in negotiations with Telstra; (i) Financial statement disclosure would provide no material contribution to commercial incentives for disruption of Brightstar's arrangements with Telstra or materially influence the ability of others to act effectively in respect of such incentives; (j) It was highly unlikely that Telstra could ever be induced to "replace" its arrangements with Brightstar as a consequence of financial disclosure; (k) Brightstar's future with Telstra could only be jeopardised if suppliers assumed Brightstar's advisory functions or otherwise were able to make Telstra dissatisfied with Brightstar but neither was likely to follow from financial statement disclosure; (l) The prospects of a supplier providing an incentive to Telstra to depart from its arrangements with Brightstar would not be increased by financial statement disclosure; (m) If the Umbrella Agreement were terminated it would be replaced by a new agreement with Brightstar; (n) Financial disclosure compliance would not materially increase real incentives for critical evaluation of Brightstar's dealings or materially impact upon commercial or competitive behaviour in response; and (o) That disclosure of Brightstar's audited financial statements is unlikely to materially differ from the existing information and knowledge available to suppliers. 5. Whether the Tribunal erred in law in denying Brightstar's procedural fairness by failing to provide any or any adequate opportunity for Brightstar's witnesses to address such proposed findings. 5A Whether the Tribunal erred in law in failing to give reasons that discharged its obligation under ss 43(2) and (2B) of the Tribunal Act. 6. Whether the Tribunal erred in law in requiring Brightstar's to demonstrate how a supplier might use information obtained as a result of financial disclosure in "actual product pricing". 7. Whether the Tribunal failed to accept and act upon the unchallenged and uncontradicted evidence of the burdens that would or might result from disclosure. 8. Whether, contrary to the evidence and/or in the absence of evidence, the Tribunal erred in law in finding that Brightstar was not likely to be materially burdened by financial disclosure. 9. Whether the Tribunal failed to consider Brightstar's following submissions which if accepted are capable of affecting the outcome of the case: a. It is not possible to judge the level of risk that there might be that Telstra might per persuaded to terminate a major contract with Brightstar, especially as there is no reason to suppose that Telstra would not act in what it perceived to be its own economic interests and those interests would be considered in the context of the terms offered by suppliers. b. That the availability of lodged financial accounts would have the real potential to be a "tipping point", bringing about a change I the supplier's conduct; and c. There has been no real challenge to the proposition that the availability of audited financial statements could be used by suppliers to cause serious economic detriment to Brightstar, and the suggestion that the method would not be "accurate" is irrelevant unless it can be shown that the degree of inaccuracy makes the information incapable of use in the manner suggested. Brightstar's grounds of appeal are as follows: 1. The Tribunal erred in law in holding that the discretion to exempt Brightstar from compliance with the Requirements for the Years under s 340 of the Corporations Act could only be exercised if the burden of compliance was so unreasonable as to justify grant of relief. 2. The Tribunal erred in law in failing to hold that the discretion to exempt Brightstar from compliance with the Requirements for the Years under s 340 of the Corporations Act could be exercised if the burden of compliance materially exceeded the benefit of compliance. 3. The Tribunal erred in law in requiring that the discretion to exempt Brightstar from compliance with the Requirements for the Years under s 340 of the Corporations Act could only be exercised if any material burden was "likely". 4. The Tribunal erred in law in making the findings set out in par 4(a) to (o) of the Questions of Law above which formed the basis for its conclusions, contrary to evidence and/or in the absence of evidence. 5. The Tribunal erred in law in denying Brightstar procedural fairness by failing to provide any or any adequate opportunity for Brightstar's witnesses to address such proposed findings. 5A. The Tribunal erred in law in failing to give reasons that discharged its obligation under ss 43(2) and (2B) of the Tribunal Act. 6. The Tribunal erred in law in requiring Brightstar to demonstrate how a supplier might use information obtained as a result of financial disclosure in "actual product pricing". 7. The Tribunal erred in law failing to accept and act upon the unchallenged and uncontradicted evidence of the burdens that would or might result from disclosure. 8. The Tribunal erred in law in finding that Brightstar was not likely to be materially burdened by financial disclosure, contrary to the evidence and/or in the absence of evidence. 9. The Tribunal erred in law by failing to consider Brightstar's submissions set out in par 9(a) to (c) of the Questions of Law above which if accepted are capable of affecting the outcome of the case. I certify that the preceding one hundred and fifty-five (155) numbered paragraphs and schedule are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.