Cuscal Ltd v First Data Resources Australia Ltd [2011] NSWSC 1625 | Case summary

Judgment 1On 10 November 2006, the plaintiff, Cuscal Ltd ( '"Cuscal'" ), entered into an EFT Master Services Agreement ( "MSA" ) with the defendant, First Data Resources Australia Ltd ( "First Data" ), that commenced on 1 January 2008 for a term of five years ending on 31 December 2012 ( "the Term" ). 2Under the MSA, First Data supplies a range of data transfer services to Cuscal, which Cuscal then resupplies to Cuscal's customers, who are credit unions and other small financial services providers. Those credit unions and other financial services providers in turn have about 2.5 million to 3 million cardholder members who depend on those resupplied services in order to be able to withdraw cash via automatic teller machines and to perform electronic funds transfer and point of sale transactions. 3In December 2009, Cuscal issued a request for proposal ( "RFP" ), including to First Data, for the supply of certain of the services after the expiry of the MSA on 31 December 2012. First Data chose not to respond to the RFP and notified Cuscal of its decision in a letter dated 10 February 2010. 4After completion of Cuscal's RFP process, Cuscal decided to build its own capability to supply directly to its customers, from 1 July 2012 onwards, the services it currently obtains from First Data. 5A dispute has arisen between the parties as to the proper construction of the MSA. To understand the dispute, it is necessary to have regard to clause 19 of the MSA which provides for the provision by First Data of "Termination Assistance" to Cuscal during the last six months of the Term and until up to 180 days after expiry of the MSA, ie. from 1 July 2012 until 29 June 2013 to transition the provision of services from First Data to Cuscal (or a replacement service provider). Clause 19.4(a) provides for both Cuscal and First Data to prepare a "Termination Assistance Plan" ( "TAP" ) by 1 January 2009, but neither party did so. Cuscal ultimately initiated the process by providing a first draft of the TAP to First Data on 17 September 2010 and sent a notice in April 2011 seeking to convene an Advisory Committee pursuant to clause 19, but the parties have been unable to agree on a TAP. 6The key clauses of the MSA relevant to the dispute in these proceedings are as follows: (1) Clause 4.2(a) relevantly provides: "Cuscal agrees ... to exclusively acquire the Services from First Data for supply by Cuscal to Customers ... for a period of four (4) years and six (6) months from the Commencement Date, provided that the Fees payable to First Data during the final six (6) months of the Term are no less than the Fees paid to First Data in respect of the preceding six (6) months, adjusted for seasonality." (2) Clause 19.2 relevantly provides: "... Cuscal may, at any time during the last 6 months of the Term ... require First Data to provide Termination Assistance to Cuscal in accordance with a plan devised pursuant to subclause 19.4(a) for a period required by Cuscal, such period to commence from the date required by Cuscal and concluding 180 days after the date of termination or expiry of this Agreement..." (3) Clause 19.3 relevantly provides: " 19.3 Termination Assistance Costs (a) Subject to clauses 19.3(b) and (c), if this Agreement ... expires due to the effluxion of time, First Data shall, at Cuscal's request and at Cuscal's cost as specified in the termination assistance plan ( Termination Assistance Costs ), provide the Termination Assistance to Cuscal. (b) For any remaining period of the Term during which First Data provides the Termination Assistance, First Data will continue to receive the Fees current at the date of commencement of Termination Assistance, provided that the Fees payable to First Data are no less than the Fees paid to First Data in respect of the preceding 6 months, adjusted for seasonality. (c) Following the end of the Term, during the period First Data provides Termination Assistance First Data will receive only the Fees for the Services it provides to Cuscal, together with the Termination Assistance Costs agreed between the Parties." (4) Clause 19.4(a) relevantly provides: " 19.4 Termination assistance plan (a) The parties agree to prepare a termination assistance plan within 1 year of the Commencement Date. The plan is to: (i) address, where relevant and in the context of a termination assistance plan, the matters listed in clause 5.2; (ii) include the period during which assistance is to be provided; and (iii) disclose the Termination Assistance Costs or method by which they will be calculated." (5) Clause 19.4(c) relevantly provides: "(c) First Data agrees to provide Termination Assistance in accordance with this clause 19 upon termination or expiry of this Agreement, irrespective of a termination assistance plan being agreed pursuant to this clause." (6) Clause 19.4(b) provides that if the parties are unable to reach agreement as to the content of the TAP, then they agreed to: "(i) Within 90 days after 1 year from the Commencement Date, convene the Advisory Committee and instruct the Advisory Committee to use its best endeavours and to act in good faith to reach agreement on the content of the termination assistance plan. (ii) If the Advisory Committee does not agree to the content of the termination assistance plan within 30 days after the Advisory Committee has convened pursuant to clause 19.4(b)(i), the Advisory Committee will refer the task of developing the plan to an independent expert appointed by the President of the Law Society of New South Wales. The expert shall act as an expert and not as an arbitrator and their decision shall be final and binding on the parties in the absence of manifest error. The costs of the expert will be borne equally by the parties and the parties shall instruct the expert to finalise the plan within 45 days of appointment. The parties shall provide all reasonable information and assistance required by the expert." (7) Clause 1.1 relevantly defines "Termination Assistance" as follows: " Termination Assistance means the services to be provided by First Data to Cuscal to transition the Services to Cuscal or a replacement service provider and includes: (a) the steps set out in the termination assistance plan described in clause 19.4 required to ensure continuity of supply of Services (or their replacement) to Customers or to ensure a smooth transition of the Services from First Data to Cuscal or its replacement service provider; (b) pre-migration assistance including if required by Cuscal, ceasing work on the provision of any Change Proposal; (c) migration assistance including: (i) performing full data backup; (ii) delivering tapes of data backup (with appropriate documentation) to the replacement service provider's staff; (d) post-migration assistance: (i) answering questions regarding the Services on an "as needed" basis; and (ii) delivering to Cuscal any remaining reports, documentation or other property of Cuscal still in First Data's possession including but not limited to disks, data and user manuals." (8) Clause 1.1 relevantly defines "Termination Assistance Costs" as follows: " Termination Assistance Costs means the reasonable costs of First Data to provide Termination Assistance determined in accordance with clause 19." "Termination Assistance Costs" also appears to be defined in Clause 19.3(a) as set out above. (9) Clause 1.1 defines "Services" as follows: " Services means the services and other deliverables described in the Parts of this Agreement together with services and deliverables to be performed or provided under Change Proposals." (10) Clause 1.1 defines "Fees" as follows: " Fees means the fees payable by Cuscal for the Services as detailed in any Parts of this Agreement and as amended from time to time in accordance with the terms of the Agreement." (11) Clause 6.1 provides: " 6.1 Fees Cuscal agrees to pay First Data the Fees for the Services as set out in the other Parts of this Agreement. Except if agreed by the Parties or contemplated under this Agreement as a mechanism for review of Fees, the Fees under this Agreement shall be fixed." (12) Clause 5.2 provides: "5.2 Content of Change Proposal First Data must include in each Change Proposal, in reasonable detail, the following matters: (a) a description of the proposed change including any functional specifications as drafted by First Data or a Functional Specification provided to First Data by Cuscal; (b) a summation of the benefits and risks to each Party which would result from the implementation of the change and recommendations for mitigating risk; (c) a plan for implementing the change including milestones; (d) the responsibilities of the respective Parties and or Customers in relation to implementation of the proposed change; (e) details of any proposed testing associated with implementation of the change, the resources (including Personnel) required from each of First Data and Cuscal to facilitate or conduct the testing and an allocation of the costs of testing; (f) a timeframe for the proposed implementation and the consequences of a failure to comply with that timeframe; (g) a description of any disruption to the existing Services which may be caused during the implementation process; (h) any consequential changes which may be required to documentation, including but not limited to procedures manuals, the Functional Specifications or other terms of this Agreement; (i) any training required as a consequence of implementing the proposed change; (j) any acceptance procedure relevant to the change and the consequences of a failure of the acceptance process; (k) the prerequisite system, Technical Standards and communication configuration required for a successful connection of Cuscal and each Customer to the First Data System for the purpose of providing the Services. In determining the initial configuration and in any changes that may be required over time to the configuration, First Data will work with Cuscal to design the most efficient, cost effective method of connecting Cuscal and each Customer to the First Data System utilising, wherever commercially practicable, existing network infrastructure; (l) to the extent that it is ascertainable by the Parties, cost benefit analysis in relation to Customers; (m) an estimated cost for implementing the Change Proposal and, if a new Service is introduced, any consequential change to the Fees; and (n) having regard to clause 22, information as to the ownership of Intellectual Property in the Change Proposal and if Cuscal wishes to own Intellectual Property which would ordinarily lie with First Data, First Data is to provide an alternative solution the Intellectual Property of which would then vest in Cuscal." 7For ease of reference, I shall refer to the services that First Data agreed to provide under the MSA, other than Termination Assistance, as " normal Services ", and the services which it agreed to provide in accordance with clause 19 and the defined term of "Termination Assistance" in clause 1.1 (see pages 206-207 of Exhibit A2) as " Termination Assistance ". 8It is agreed that the MSA will come to an end by effluxion of time and that neither Cuscal nor First Data were or are in default. 9There is no dispute that the MSA was for a five-year term. There is no dispute that Cuscal was entitled to indicate that it would require Termination Assistance for the last six months of the Term and for a further six-months beyond the expiry of the contract. It is agreed that subclauses 19.3(a), (d) and (e) do not apply. 10The arguments concerning construction proceed on the basis that there is no TAP, as they must because no TAP has been agreed upon and the Advisory Committee has not met and no independent expert has been appointed (see clause 19.4). 11The particular disputes between the parties are: (1) If after 31 December 2012 there remain Cuscal customers who have not yet been transferred to the aegis of Cuscal, is First Data required to continue to provide to Cuscal normal Services in respect of those customers, ie services of the kind required under clause 4 of the MSA, as Cuscal contends, or is First Data required to provide only Termination Assistance as identified in clause 19 and defined in clause 1.1 of the MSA as First Data contends? ( "the normal Services point") (2) In providing the Termination Assistance required by clause 19, is First Data contractually obliged to ensure continuity and smooth transition and obliged to supply Termination Assistance of a nature, quality and extent such as will ensure that normal Services are reasonably capable of being transitioned from First Data to Cuscal no later than the last date on which First Data is obliged to supply normal Services? ( "the standard of Termination Assistance point" ) (3) What price is Cuscal required to pay for Termination Assistance ( "the fees payable for Termination Assistance point" )? This dispute has two sub-issues: (a) Is the cost of normal Services which are supplied after 30 June 2012 to be offset against the costs payable for Termination Assistance? ( "the offset point" ) (b) How are the costs for Termination Assistance to be calculated? (" the calculation of costs point" ) (4) Can the TAP provisions now be enlivened at the instigation of Cuscal? ( "the reliance on clause 19.4 point" ) 12Both parties have urged upon me (with all appropriate politeness) the desirability of a determination of the issues that divide them before the end of this year so that steps can be taken to do whatever is necessary to effect transition. The normal Services point 13Each party contends that the terms of the MSA are unambiguous and favour the construction for which it contends. Mr A J L Bannon SC of counsel (who appears with Mr R C Gration of counsel for Cuscal) and Mr M J Leeming SC of counsel (who appears with Ms K Dawson of counsel for First Data) did not think it necessary for me to embark on a consideration of the effect of the recent decision of the High Court to refuse leave in Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45, in which three members of the Court reminded lower courts of the need to adhere, until further review by the High Court, to what has been said by the High Court in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337, particularly per Mason J at 352, that courts are only to have regard to surrounding circumstances in the interpretation of contracts where the language used is ambiguous or susceptible of more than one meaning. I would add that the High Court (per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) in Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45 at [39] had expressed the same view. 14The plaintiff cited, in support of its construction, Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at [43] where Gleeson CJ, Gummow and Hayne JJ referred, with approval, to the observation of Lord Diplock in Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 at 201 that: "if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense". The plaintiff also referred to Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109 where Gibbs J said: "...if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, even though the construction adopted is not the most obvious or the most grammatically accurate" 15The defendant cited, in support of its construction, Jireh International Pty Ltd t/as Gloria Jean's Coffee v Western Exports Services Inc [2011] NSWCA 137 at [55] where Macfarlan JA said: "A court is not justified in disregarding unambiguous language simply because the contract would have a more commercial and businesslike operation if an interpretation different to that dictated by the language were adopted." See also Total Destination Marketing Pty Ltd v Horizons Snowy Mountains Pty Ltd [2011] NSWSC 1349 at [12]-[13] per Pembroke J for a recent application of this dictum. Reference was also made to AIB Group (UK) Ltd v Martin [2002] 1 WLR 94 at [8] where Lord Millett said: "The fact that the question concerns the application of an interpretation clause is also significant. The purpose of such a clause is twofold. It shortens the drafting and avoids unnecessary repetition; and it enables the form to be used in a variety of different situations. It is not the purpose of such a clause to enlarge the parties' rights and obligations beyond those provided by the operative provisions by imposing, for example, a secondary liability as surety in addition to a primary liability as principal debtor. The application of such a clause is not merely a question of construction. If it is capable of being applied to the operative provisions in more than one way, it should be applied in a way which serves its purpose rather than in a way which extends the parties' obligations beyond those contemplated by the operative provisions. Of course, an interpretation clause may have this effect; but if so it should do so plainly and unambiguously." 16By clause 4.1 of the MSA, First Data is to provide normal Services to Cuscal for the Term, ie for five years ending 31 December 2012. There is exclusivity for the period of four-and-a-half years: see clause 4.2. Neither clause 19 nor the definition of "Termination Assistance" in clause 1.1 expressly provide that normal Services must be provided during the period after the Term. 17Cuscal's argument that normal Services should be supplied for as long as customers have not been transferred to its system (up until 29 June 2013) has three limbs: (1) the terms of clause 19.3(c); (2) the definition of "Termination Assistance" in clause 1.1; and (3) that clause 19.4(a) should still apply even where there is no TAP. That is to say that First Data's obligation is to take steps to ensure continuity of supply of normal Services to customers or to ensure a "smooth transition" of the normal Services from First Data to Cuscal and that this interpretation of clause 19.4(a) supports Cuscal's contention, since if a customer has not been transferred by 31 December 2012 there will be no continuity of supply of normal Services to customers. 18Dealing with first, I do not accept the contention that subclause (a) of the "Termination Assistance" definition in clause 1.1 can be imported as requirements imposed on First Data where no TAP has been prepared. It is the TAP which should, by the steps set out in it, ensure continuity of supply of normal Services or their replacement to customers and a smooth transition. Further, I agree with Mr Leeming's submission that "smooth transition" and "continuity of supply" are rather elastic words and unlikely to have been words of contractual obligation. I also agree that it is relevant that one of the matters which the TAP is supposed to address (see clause 5.2(d)) is the responsibility of each of the parties in relation to the termination (substituting that word for "proposed change" as required by clause 19.4(a)). Without a TAP, however, the opening words of the definition of "Termination Assistance" remain in force, namely that the Termination Assistance to be provided are the services to be provided by First Data to transition normal Services to Cuscal or a replacement provider (and as I have noted, Cuscal has decided not to use a replacement provider but proposes to provide the normal Services itself). 19In my view, the definition of "Termination Assistance" in clause 1.1 (whether read as Cuscal contends or as I have indicated in [18] above) does not require normal Services to be provided by First Data beyond the Term (ie five years). If there is a requirement to provide normal Services after five years, it must come from somewhere else in the MSA. Cuscal does not assert that it is an implied term. 20The only other candidate is clause 19.3(c). It is true that this subclause contemplates that "[f]ollowing the end of the Term", First Data may be providing normal Services (by its use of the capital "S") for which it is to be paid not only for those services but also for Termination Assistance Costs and this does provide some support for Cuscal's contention. However, I think that clause 19.3(c) takes account of the possibility that First Data may be willing to continue supplying normal Services beyond the Term until all customers have been transferred or migrated, but the clause does not require First Data to do so. I think Cuscal's submissions place too much emphasis on what is a provision dealing with costs. Given that the MSA specifically provides for a term of five years and for the supply of normal Services for five years (and not, for example, until such time as all customers have been transferred to Cuscal or a new service provider), I do not accept that clause 19.3(c) should be construed as imposing on First Data the obligation to continue supplying normal Services after the end of the Term of five years. I do not think the result is capricious, unreasonable, inconvenient or unjust or that it flouts business commonsense. On the contrary, the notion that Cuscal, by delaying migration even for example by its own ineptitude, could force First Data to continue supplying normal Services for another six months for an indeterminate number of customers (or even all of Cuscal's customers) seems to me to be uncommercial and unreasonable, and even more so if, as seems to be the case, First Data is free to seek the business of those customers itself after the end of the Term. 21Mr Bannon pointed out that if a customer has not been transferred to Cuscal (or a new different provider of normal Services), the "Termination Assistance" will be rendered nugatory because helping customers to migrate after 31 December 2012 will be in effect dealing with, commercially speaking, "a corpse". I accept that on the reading of clause 19 which I prefer, the only transition assistance after 31 December 2012 which will be of much practical value will be the post-migration assistance described in subclause (d) of the "Termination Assistance" definition in clause 1.1, but it will be up to Cuscal to set out the services it requires from First Data in a timely fashion so that transition will be achieved by 31 December 2012. I do not think that First Data has contracted to continue supplying normal Services to Cuscal's customers for six months beyond the Term because, for example, Cuscal's systems are not ready to handle its customers' needs. The standard of Termination Assistance point 22This leads to the next question, which is what is First Data required to do? It is required to provide assistance to Cuscal that will transition the normal Services from itself as the provider to Cuscal as the provider. It follows from what I have said at [18] that I do not accept that First Data has contracted to "ensure" smooth transition or continuity of supply. 23In my view, it is necessary for Cuscal to specify what customers it wishes to transition and by what date. It is for First Data to set out what information it requires to achieve transition, by what date such information is to be provided to achieve transition by the target date and what steps need to be taken by Cuscal to achieve that end. It would be appropriate for First Data to also indicate the hours of work that it estimates will be involved and the total cost. If Cuscal is not able to provide the information (including, for example, the specific protocol or network identification) that First Data needs to achieve transition, any loss of customers that arises from that fact will not be due to any breach by First Data. On the other hand, if First Data fails to achieve transition by the target date because of a failure on its part (and not attributable to Cuscal or Cuscal's customers), then different considerations will apply. 24Clause 19 makes it clear that Cuscal may require Termination Assistance only in the last six months of the Term and not before. However, I do not think that this means that Cuscal cannot seek from First Data, prior to 1 July 2012, details of what Cuscal must provide to First Data and what, from First Data's point of view, Cuscal will have to have in place on and from 1 July 2012 to enable First Data to effect transition on and after 1 July 2012. That information is ancillary information to permit the Termination Assistance that the MSA envisaged Cuscal can seek and that First Data would provide if requested. The reliance on clause 19.4 point 25By clause 19.4(a) of the MSA, the parties agreed to prepare a TAP "within 1 year of the Commencement Date". The topics which the TAP is required to address are enumerated, including "the period during which assistance is to be provided" and the costs or method by which the costs will be calculated. The TAP is also to "address, where relevant....the matters listed in clause 5.2". I have set out the whole of clause 5.2 in [6] above, but it seems clear that some of its provisions could not be modified to apply to the TAP. 26If there is disagreement about the contents of the TAP, the steps required to be taken are enumerated in clause 19.4. There are time requirements for each of these steps as well. 27I make the following observations about clause 19.4: (1) Both parties are contractually required to prepare the TAP. (2) The period within which preparation is to take place is the first year of the MSA, not the last or second last year of the MSA. (3) Clause 19.4(c) contemplates that a TAP may not be prepared and makes clear that Termination Assistance must be given even without a TAP. (4) There are precise time limits stated for each part of the TAP process. 28I regard the terms of clause 19.4(c) of the MSA as of considerable importance because it is clear that the parties did not see the absence of a TAP as being critical or insurmountable. 29While attempts have been made to simplify the effect of express provisions as to time for performance in contracts by saying that at common law time is of the essence but that in equity it was not, the position is more complex: see J W Carter, E Peden & G J Tolhurst, Contract Law in Australia, 5 th ed (2007) at [29-08]-[29-09] and J E Stannard, Delay in the Performance of Contractual Obligations (2007) at [2.13]-[2.52]. 30There can be no doubt that clause 19.4 is not of a type that makes performance by the end of the first year essential to the entire contract the breach of which would bring the contract to an end. This is first because of its subject matter - it is dealing with the issue of termination, not the provision of normal Services; secondly, because it is a clause that imposes an obligation on both parties; and thirdly, because there is express recognition by the parties that there may be no TAP. The parties can choose not to prepare a TAP or to insist on one. 31The requirement for early mutual determination of the contents of the TAP within a specified period followed by an internal mechanism for resolution within ninety days followed by a referral to an outside body for determination within thirty days, emphasises that steps are to be taken during the early stages of the MSA to establish the content of the termination provisions. The parties must have seen that process as more appropriately determined in the early stages of the contract rather than the later stages. 32Clause 19.4 does not expressly state that the time requirements specified in that clause are of the essence and Mr Leeming conceded that had Cuscal provided a draft TAP for First Data's consideration one week after the one year period had expired (ie 1 January 2009) there would be no dispute that clause 19.4 could be enlivened. Mr Bannon for his part conceded that Cuscal could not provide a TAP one week before the expiry of the 4.5 years of exclusivity: see T37.10-18. It should be noted too that there is a clause (clause 29.10) which does make time of the essence for the provision of normal Services. 33The summons filed on 25 July 2011 made no reference to relief based on clause 19.4 and nor did the amended summons filed in October 2011. 34Mr Bannon referred to Tyco Fire & Security v Norfolk Mechanical [2007] NSWSC 585 per McDougall J who considered the decision of G R Mailman & Associates Pty Ltd v Wormald (Australia) Pty Ltd (1991) 24 NSWLR 80 which in turn referred to United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 in which Lord Diplock said at 930: "...in the absence of any contraindications in the express words of the lease or in the interrelation of the rent review clause itself and other clauses or in the surrounding circumstances the presumption is that the timetable specified in a rent review clause for the completion of the various steps for determining the rent payable in respect of the period following the review date is not of the essence of the contract." McDougall J in Tyco Fire accepted this statement as representing the law in New South Wales (see also Gollin & Co Ltd v Karenlee Nominees Pty Ltd (1983) 153 CLR 455 at 468). 35In Mailman, Samuels JA at 93-95 questioned whether the approach taken in United Scientific was correct for reasons which are extensively set out, and which in my respectful view have much force, but his Honour's conclusion was that the High Court has accepted the approach in United Scientific . 36United Scientific made it clear that in the absence of an express provision that time is of the essence, there may nevertheless be indications that the time requirements are to be strictly complied with. Where a clause provides for what is to occur when something required to be done has not been done within that specific period, Mailman is authority for the proposition that that consequence cannot be undone: see per Gleeson CJ at 90E and Samuels JA at 96G-97B. Clause 19.4, whilst recognising that a TAP might not be prepared, does not provide expressly what is to occur if a TAP is not prepared within the specified period, so I do not think it meets the criteria identified in Mailman . 37Clause 19 is dissimilar to rent review clauses because in comparison to such clauses it places an obligation on both Cuscal and First Data to prepare the TAP and it is distinctly possible that neither party will regard a TAP as necessary or appropriate; whereas in rent review clauses, first the lessor has to serve a notice and then the lessee has time within which to respond. Mr Leeming contended that even where time was not of the essence (either expressly or inferentially), there has to be some period of delay after which the clause could not be relied on, and he submitted that specific performance of the clause would not be granted, so the argument appears to be framed as one based on inordinate delay but still within the contractual context that the parties could not have intended that the right to insist upon a convening of the Advisory Committee and the appointment of an independent expert could be exercised more than two years after the expiry of the specified period. 38The matter might be viewed as one of contractual interpretation, disentitling delay and or abandonment of the rights provided to the parties under clause 19.4. The precise categorisation is not without its difficulties, partly because the clause, being of a type that gives rights and imposes obligations on both parties to be exercised within a specified period, is not one readily amenable to a notice by the first party requiring the other party to do something (particularly if the first party has no interest in preparing a TAP) so that time, if not otherwise of the essence, can be made of the essence, and partly because whilst abandonment of contracts is well recognised in the law (see DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423), abandonment of rights under a particular clause is less well known, and especially in the context of a clause imposing the same obligations on both parties. 39I do not think that it follows that because a contract cannot be terminated for breach of a time requirement that is not essential or even that because the specified time requirement in a secondary term will not be strictly enforced, the time requirement is meaningless or totally ineffective. In a sense, this is encapsulated in the approach of equity, which is to ameliorate the harshness of the strict effect of the common law which says (speaking broadly) that time constraints must be strictly adhered to. 40Since the parties here are agreed that delay could be sufficient to preclude reliance on the clause and that a short period of delay would not prevent the clause from being relied on, the question becomes one of where the line should be drawn. The first draft of the TAP was provided by Cuscal in September 2010, 21 months after the end of the first year, and notice seeking to convene the Advisory Committee was not sent till 14 April 2011. 41A further dimension to the problem is that given the time limits in clause 19.4 are not strict for the preparation of the TAP, they cannot be strict for the other steps specified. The joint request by the parties for a speedy determination now emphasises that time is running out for the transition process to be established and implemented, which I think gives support to the view that the contractual requirement for early resolution of the contents of the TAP in the contract was well considered. There is a distinct possibility that if the processes required by clause 19.4 were to now commence, they would leave the parties very little time before the commencement of the period of Termination Assistance. I would add that the proceedings which the plaintiff has commenced in a sense have reduced the need for the TAP because some of the matters which might have been addressed in the TAP have been addressed in these proceedings. 42The conclusion that I have come to is that the delay in seeking to enliven clause 19.4 has been inordinate, having regard not only to the time which has passed but also to the terms of the MSA itself, including clause 19.4(c), and the regime provided by clause 19.4 and the time left before Termination Assistance is required to commence, and that it is too late to rely on clause 19.4 now. The fees payable for Termination Assistance point The calculation of costs point 43Cuscal has agreed to pay First Data's reasonable costs in providing Termination Assistance. 44As Mr Bannon pointed out, there may ultimately be no dispute about costs, but there appears to be some disagreement looming already. Discussion seemed to elucidate that the concern of Cuscal is not so much as to whether the hourly rates proposed by First Data are reasonable (they are the rates for which work outside the MSA has already been performed by First Data) but as to the amount of time that might be required. The material relied on by First Data, and met by no contrary evidence, is sufficient, in my view, to support a declaration that reasonable costs are costs based upon the hourly charge rates set out in the affidavit of Mr Luke Wilson dated 27 October 2011 at paragraphs 62-63, but no conclusion can be made as to the reasonableness of costs until the amount of time claimed for Termination Assistance and its reasonableness has been determined. The offset point 45As I understood Cuscal's argument, it is that when clause 19.3(b) says that the fees payable to First Data are to be "no less than the Fees paid to First Data in respect of the preceding 6 months, adjusted for seasonality", the reference to "Fees" includes Termination Assistance Costs as well. The plaintiff seeks to support this argument by pointing to the definition of "Fees" (set out at [6] above). 46I do not accept Cuscal's argument for the following reasons. I think that the terms of clause 19.3 makes it abundantly clear that Termination Assistance Costs and Fees are not the same thing: see particularly subclauses 19.3(a) and (c). Secondly, Termination Assistance Costs is specifically defined in clause 1.1, reinforcing their special character. Thirdly, the definition of Termination Assistance as "services to be provided by First Data to Cuscal to transition the Services to Cuscal" draws a clear distinction between normal Services provided under the MSA and transition services, reinforcing the difference between Termination Assistance Costs and Fees, not amalgamating them as the plaintiff's argument seeks to do. Conclusion 47For the reasons indicated, I answer the questions posed in [11] as follows: (1) First Data is not required to provide normal Services after 31 December 2012. (2) First Data is not contractually obliged to ensure continuity and smooth transition, but is required to provide assistance to Cuscal to transition customers to Cuscal. First Data is also required to provide information to Cuscal as to what its requirements are to enable transition within the period for transition requested by Cuscal. (3)(a) Cuscal cannot offset Termination Assistance Costs against fees for normal Services. (3)(b) Termination Assistance Costs are to be calculated on the basis of the hourly rates identified by Mr Wilson in his affidavit of 27 October 2011. (4) Clause 19.4 of the MSA cannot now be enlivened. 48It follows from what I have said that declarations in the form sought by First Data in its further amended cross-summons filed 8 December 2011 should be made, but there may need to be some modification, and I will hear the parties on the precise form of orders, including costs orders, to be made after they have had an opportunity to consider these reasons.

Cuscal Ltd v First Data Resources Australia Ltd

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Cases Cited (11)