Gilsan v Optus

JUDGMENT OF : McDougall J at 1 DECISION : See paras [523] and [524] of judgment

CATCHWORDS : CONTRACT - parol evidence rule - whether regulatory benchmarks admissible as parol evidence - formation of contract - whether plaintiff acted so that defendant reasonably entitled to believe that plaintiff assented to position put by defendant in e-mail - frustration - where third party in breach of obligations to defendant - whether contract between plaintiff and defendant frustrated - whether frustrating event can have retrospective operation - TRADE PRACTICES - ss 51AC, 52 Trade Practices Act 1974 - unconscionable conduct - misleading and deceptive conduct - where defendant entered into agreements with third party - where plaintiff not told of existence or terms of agreements with third party - whether plaintiff misled - whether unconscionable for defendant not to tell plaintiff of precise terms of agreements - whether statutory limit in s 51AC(9) exceeded - determination of contract "price" for purposes of statutory limit - RESTITUTION - unjust enrichment - recovery of money had and received on a failure of consideration - change of position - quantum meruit - whether defendant provided services for plaintiff or plaintiff's clients - whether services intended to be provided gratuitously - whether change of position defence made out - quantification of quantum meruit claim EVIDENCE - where defendant made assertion in e-mail - inferences - inference to be drawn from plaintiff's failure to respond to e-mail - whether plaintiff's failure to respond to e-mail an admission of allegations made in e-mail - content of applicable foreign law - whether assumption to be made that principles to be applied by foreign court in deciding whether an illegal agreement is enforceable same as principles to be applied by this Court - where no proof of any applicable provisions of relevant foreign legislation LEGISLATION CITED : Trade Practices Act 1974 (Cth) Frustrated Contracts Act 1978 (NSW) Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 76 ALJR 436 Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 Steinberg v The Commissioner of Taxation of the Commonwealth of Australia (1975) 134 CLR 640 Broken Hill Proprietary Company Ltd v Waugh (1988) 14 NSWLR 360 Thomas v Hollier (1984) 156 CLR 152 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 Sullivan v Constable (1932) 48 TLR 369 CASES CITED : David Securities Pty Limited v Commonwealth Bank of Australia (1992) 175 CLR 353 State Bank of New South Wales Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350 Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 Ralli Brothers v Cia Navier Sota y Aznar [1920] 2 KB 287 Vita Food Products Inc v Unus Shipping Co Ltd (in liquidation) [1939] AC 277 Westralian Farmers Limited v Commonwealth Agricultural Service Engineers Limited (in liquidation) (1936) 54 CLR 361 Damberg v Damberg (2001) 52 NSWLR 492 Hurst v Vestcorp Ltd (1988) 12 NSWLR 394 British Steel Corporation v Cleveland Bridge & Engineering Co Ltd [1984] 1 All ER 504 AWA Ltd v Exicom Australia Pty Ltd (1990) 19 NSWLR [705] PARTIES : Gilsan (International) Limited (Plaintiff) Optus Networks Pty Limited (Defendant) FILE NUMBER(S) : SC 50056/02 COUNSEL : P M Biscoe QC/F Kunc/M S White (Plaintiff) I M Jackman SC/A S Bell (Defendant) SOLICITORS : Gadens (Plaintiff) Gilbert & Tobin (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50056/02 GILSAN (INTERNATIONAL) LIMITED v OPTUS NETWORKS PTY LIMITED JUDGMENT HIS HONOUR: Factual background 1 When an international telephone call is made, a number of telecommunications carriers are involved. The caller makes the call through his or her "local carrier". The call is routed from the local carrier to the switch of an "originating carrier". Where the originating carrier has a direct link to the "terminating carrier" (the carrier in the country of destination), it routes the call direct to the switch of the terminating carrier. Where there is no direct link, the originating carrier routes the call to the switch of a "transit carrier", who has either a direct link to the terminating carrier or a direct link to another transit carrier that in turn has a direct link to the terminating carrier. 2 The caller pays a charge known as the "collection rate" of a specific amount per minute to his or her local carrier. (I think that, in some cases, the local carrier may also be the originating character, but if this is so, nothing turns on it.) The local carrier and the originating carrier agree to divide the collection rate between them. 3 The originating carrier and the terminating carrier agree on what is known as an "accounting rate" or "total accounting rate" ("TAR") (which is a notional amount) between them. That, like the collection rate, is a specified amount per minute. Where there is a direct connection between the originating carrier and the terminating carrier, they agree what share each of them will take from the TAR. The originating carrier's share is the "origination charge". The terminating carrier's share is the "termination charge". 4 Where there is no direct connection between the originating and terminating carriers, so that a transit carrier is involved (for present purposes, situations involving more than one transit carrier may be disregarded), the three carriers enter into an agreement ("tripartite agreement") for division of the TAR between them. Under that agreement, the transit carrier's share (known as the "transit charge") is agreed. In principle, the balance remaining of the TAR is divided equally between the originating and terminating carriers. (Origination, transit and termination charges are expressed as rates per minute in the applicable currency. When, in these reasons, I refer to such a charge as a monetary amount, that should be read as an amount per minute.) 5 It has been common practice for originating and transit carriers to enter into "confidential agreements" in relation to the transit charge. Notwithstanding the label, knowledge of the existence and at least the general terms of those agreements appears to be widespread in the industry, although no doubt the precise terms may in fact be confidential. The effect of a confidential agreement is that the originating and transit carriers agree that, in consideration for the originating carrier giving the business to the transit carrier (usually, there is more than one available transit carrier, so the market is competitive), the transit carrier will agree to take, as its transit charge, an amount that is less than the transit charge agreed under the tripartite agreement between the originating, transit and terminating carriers. Of necessity, since the terminating carrier is not a party to the confidential agreement, the monetary amount of its share of the TAR is not affected by the confidential agreement. 6 Accounts between originating, transit and terminating carriers are frequently settled under a system known as "cascade accounting". Under that system, the originating carrier measures the number of minutes that it sends through the transit carrier to the terminating carrier in any given month. It quantifies the value of those minutes using the agreed TAR. It deducts from the amount so quantified the amount of its originating charge and, where a confidential agreement is in place, the amount of difference between the transit charged fixed under the tripartite agreement and the transit charge fixed under the confidential agreement. It pays to the transit carrier an amount equal to the balance thereby calculated of the TAR. That is known as an "outpayment" from the originating carrier and as an "inpayment" to the transit carrier. The transit carrier retains its share of the inpayment to it and pays the balance to the terminating carrier. Again, that payment is known as an "outpayment" or "inpayment", depending upon the perspective from which it is considered. 7 TARs are expressed in US dollars ("USD") where the originating carrier is an American telecommunications carrier and in "Special Drawing Rights" ("SDR") where the originating carrier is a European telecommunications carrier. SDRs reflect the value of a basket of five European currencies. Usually, where the TAR is expressed in USD, settlement between originating, transit and terminating carriers will be in USD; and likewise, for TARs expressed in SDR, settlement will be in SDR. 8 The TAR is expressed as a rate per minute and divisions of the TAR are likewise a rate per minute. That should be understood in all future references to a TAR or a division of a TAR. Further, as I have said, the TAR is a notional charge. It is notional in the sense that, although it forms the basis of the accounting between originating and terminating (and, where applicable, transit) carriers, it does not reflect a charge actually imposed by and paid to the originating carrier. The originating carrier makes outpayments on the basis of the TAR; but it recoups itself, and takes its profit, from payments made to it on other bases. Gilsan's business model 9 The plaintiff ("Gilsan") developed a business concept whereby consumers could use computers to call international telephone numbers to enable them to receive "adult entertainment" or other services. Gilsan did not itself provide those services; that was done by "service agents" who had contracts with "service providers" with whom in turn Gilsan had contracts. Gilsan referred to its product as "international internet dial up services". They are often referred to by the acronym "IID". A related product, whereby consumers could call international telephone numbers to receive recorded or live voice messages, is known as "audiotext services" (often referred to as "audiotex"). The two forms of service, although both involve the use of international telephone numbers, are conceptually different; but it appears that the distinction is not always observed in the use of the nomenclature. What Gilsan calls international internet dial up services are sometimes, if not frequently, referred to by others as audiotext services. 10 For Gilsan's international internet dial up services to be profitable, it was necessary that the international call be one to which a high TAR applied. That is because Gilsan entered into agreements with terminating carriers whereby Gilsan received a substantial part of the terminating charge that would otherwise be payable to the terminating carrier. The incentive for the terminating carrier was that, although its charge per minute might be substantially less where Gilsan was involved, the overall number of minutes was vastly increased, and its revenues were substantially enhanced. Further, because the calls were diverted before reaching the country of destination, the terminating carrier incurred little, if any, direct or overhead cost. 11 In brief, a consumer who was browsing the internet (usually, what are known as "adult sites") might see an advertisement for a particular service. Those advertisements were placed by service agents with whom service providers contracted to Gilsan had contractual or other arrangements. Consumers who wished to avail themselves of the services on offer would download the "dialler" that the service agent provided. Activation of that dialler would cause the computer to disconnect from the internet and, through its modem, to call the relevant international telephone number. The dialler also incorporated a Carrier Identification Code ("CIC"), so that the call was switched from the consumer's local carrier to the originating carrier identified by the CIC code. 12 Calls thus made were not physically switched to (in this case) Vanuatu. They were diverted, usually at a switch operated by the transit carrier, and sent to another destination, from which the relevant service could be provided. This was known as "short stopping" or "long lining". In the former case, a call originating in (say) Greece and routed to Optus in Sydney would be intercepted at Optus' Facilities Management Centre ("FMC") at Rosebery and diverted to a telephone number in Australia for the relevant service agent. In the latter case, the call would be intercepted and sent to an overseas telephone number for the relevant service agent. Gilsan's business in practice 13 In the present case, the originating carriers were AT&T Corporation ("AT&T") and Hellenic Telecommunications Organisation SA ("Hellenic"). During the period material to these proceedings, the relevant portion of AT&T's business was taken over and conducted by Concert Global Network Services Limited ("Concert"), a joint venture of AT&T and BT Plc. Nothing turns on this circumstance. Where in these reasons I refer to AT&T, that should be taken as including, at the relevant time, a reference to Concert. 14 Telecom Vanuatu Limited ("TVL") was the terminating carrier. Since neither AT&T nor Hellenic had direct links to TVL, they needed to use a transit carrier. The defendant ("Optus") was an available transit carrier. The TAR agreed between AT&T and TVL was USD 4.00. 15 Gilsan entered into an agreement with TVL ("the TVL agreement"), whereby TVL in effect gave up all but USD 0.10 of its share of the TARs agreed with AT&T and Hellenic. 16 Gilsan then entered into an agreement ("the Optus agreement") with Optus whereby they agreed that, for calls to be routed by Optus to TVL, Optus would take a transit charge of SDR 0.175, would pay USD 0.10 to TVL and would pay the balance to Gilsan. 17 Gilsan thereby would have available the total inpayment to Optus for the relevant telephone calls, less the transit charge that it had agreed with Optus of SDR 0.175 and the terminating charge that it had agreed with TVL of USD 0.10. Gilsan was then able to contract with services providers to arrange for the provision of services to consumers who called the relevant Vanuatu telephone numbers. 18 In substance, Gilsan's business plan worked where there were relatively high TARs because the actual cost of providing the telecommunications services involved (origination, transit and termination) were relatively low. Thus, the key to the success of Gilsan's business was the identification of countries, international calls to which attracted a high TAR. The disputes 19 In these proceedings, Gilsan brings a number of claims against Optus and Optus brings a number of claims against Gilsan. The Gilsan underpayment claims 20 The first group of claims brought by Gilsan are the "underpayment claims". Those underpayment claims relate to calls to Vanuatu telephone numbers originated by AT&T or Hellenic and routed through Optus as transit carrier. The primary issue is whether Optus was required to account to Gilsan on the basis that the inpayment to Optus should include (as Gilsan claims) the transit charge as fixed by the relevant tripartite agreement, or (as Optus claims) that as fixed by the relevant confidential agreement. There are further claims, including one for AT&T traffic after 1 January 2001. From that date, Concert has purported to account to Optus on the basis that its outpayment to Optus was USD 0.27, comprising a transit charge of USD 0.08 agreed under a confidential agreement and a terminating charge of USD 0.19 imposed, Concert says, pursuant to an order of the Federal Communications Commission ("FCC"). 21 Further, Gilsan says, Optus has under declared the number of traffic minutes and has not paid for all minutes actually declared or carried in January and February 2001. 22 Further, Gilsan says, the agreed transit charge payable under the Optus agreement was SDR 0.175, but Optus "paid" itself at the rate of USD 0.25, although the USD value of the agreed SDR figure was, at some times, less. 23 Finally, under this heading, Gilsan brings a claim for failure to account, both in respect of monies withheld and (to the extent that they are not otherwise caught up) in respect of under declarations and under payments. The rogue traffic claim 24 The second principal claim brought by Gilsan against Optus is its "rogue traffic claim". Gilsan says (and Optus denies) that under the TVL agreement Gilsan had the exclusive right to use Vanuatu telephone numbers for the provision of international internet dial up services; that Optus knew of this; and that Optus deliberately interfered with Gilsan's contractual exclusivity by carrying, for other service providers who offered international internet dial up services in competition with the service providers contracted to Gilsan, calls to Vanuatu telephone numbers. The reply claim 25 Gilsan also brings what is called the "reply claim" - given that name because it is pleaded in Gilsan's reply to Optus' defence. The reply claim invokes ss 52 and 51AC of the Trade Practices Act 1974 (Cth), and alternatively the alleged existence and breach of an implied term of good faith. The Optus overpayments claim 26 Optus' claims against Gilsan fall into three categories. The first category comprises what is known as the overpayments claim. Optus claims to have overpaid Gilsan for both AT&T and Hellenic traffic, and seeks to recover the overpayments on a restitutionary basis. The substantial issue is, again, whether Optus was required to account to Gilsan on the basis of the transit charged fixed by the relevant tripartite agreement or on the basis of the transit charge fixed from time to time by the relevant confidential agreement. The quantum meruit claim 27 Optus' second cross-claim is known as its quantum meruit claim. Optus provided a number of services or facilities in relation to Gilsan's business. It claims to recover the cost of those services and facilities on a quantum meruit basis. The essential issue is whether those services and facilities were provided to Gilsan at its request, or to Gilsan's service providers at Gilsan's request. The clawback claim 28 The third claim brought by Optus is its "clawback claim". Optus says that, for some months, it had paid Gilsan on the basis of traffic minutes declared to it by the originating carrier and reflected in the inpayment to it from that originating carrier. However, in subsequent months, the originating carrier "clawed back" from Optus some of the payments that it had made. The originating carrier would do this where, for whatever reason, it was not itself paid for traffic in months that it had earlier declared to Optus and for which it had earlier paid Optus. The originating carrier would effect this clawback by deducting the amount to be clawed back from amounts otherwise due to Optus. Optus says that, in turn, it is entitled to claw those amounts back from Gilsan. The issues 29 The parties agreed on the issues by which the claims that I have briefly summarised were to be decided. Those issues are as follows: Issues arising on Gilsan's Amended Summons

The true construction of the expression "origination charge" in Schedule C of the Optus Agreement dated 3 December 1998, including whether that expression means:

(a) the amount per minute of traffic agreed between the originating, transit and terminating carriers to be retained (notionally or otherwise) by the originating carrier from the Total Accounting Rate;

(b) the amount per minute of traffic in fact (albeit notionally or otherwise) retained by the originating carrier from the Total Accounting Rate;

(c) the amount per minute of traffic to which the originating carrier is ultimately entitled from the Total Accounting Rate as a result of any confidential agreement between the originating and transit carriers?

In relation to traffic originating with AT&T in the USA , on the true construction of the Optus Agreement , during the term of the Optus Agreement what was the "origination charge" referred to in Schedule C of the Optus Agreement?

Whether in or about June 2000 there arose between the parties an assumption that the payment to Gilsan by Optus under Schedule C of the Optus Agreement, in relation to traffic originating in the USA with AT&T, was to be calculated at a rate of US$1.6805 per minute for the traffic generated for the calendar year of 1999 and US$1.5885 per minute for the traffic generated for the calendar year 2000, the effect of which, in the circumstances found, is to estop Gilsan from now denying that its entitlements were other than as assumed?

Alternatively to 3, whether in June 2000 the parties agreed to vary the Optus Agreement such that the payment by Optus to which Gilsan was entitled under Schedule C of the Optus Agreement, in relation to traffic originating in the USA with AT&T, was to be calculated at a rate of US$1.6805 per minute for the traffic generated for the calendar year of 1999 and US$1.5885 per minute for the traffic generated for the calendar year 2000?

Having regard to the answers to issues 1 to 4, 8, 9, 10 and 11 and the amount already paid as between the parties (Agreed Document B) what amount, if any, is payable to Gilsan by Optus in respect of traffic originating in the USA with AT&T?

In relation to traffic originating with Hellenic in Greece, on the true construction of the Optus Agreement , during the term of the Optus Agreement what was the "origination charge" referred to in Schedule C of the Optus Agreement? 7. Having regard to the answer to issues 1, 6, 8, 9 and 11 and the amount already paid as agreed between the parties (Agreed Document C) what amount, if any, is payable to Gilsan by Optus in respect of traffic originating in Greece with Hellenic?

Whether the number of minutes for which Optus is liable to pay Gilsan under the Optus Agreement is the number declared by the originating carrier or the number measured by Optus?

If the latter, whether Optus: (a) in breach of the Optus Agreement, in relation to traffic originating both from the USA and Greece for the months January 1999 to February 2001 , made declarations and calculated payments to Gilsan, based on minutes of traffic declared to it or on some other basis rather than the actual number of minutes measured for such traffic by Optus; (b) caused Gilsan loss and damage by such breach, and is liable to pay Gilsan an amount, calculated by the number of minutes underdeclared multiplied by a rate per minute determined by resolution of issues 1 to 6 above?

Whether, by July 1999, the parties varied the Optus Agreement so that Optus was entitled to deduct the said Optus fee at the rate of US$0.25 rather than SDR 0.175 for traffic originating on any network where Optus was paid for the traffic in US dollars? Failure to pay claim

Whether Optus: (a) in breach of the Optus Agreement, in relation to traffic originating both from the USA and Greece transited by Optus to Vanuatu telephone numbers: (i) for the months January and February 2001 , failed to pay 25% and 62.5% respectively, and (ii) for the months post February 2001 , failed to pay Gilsan for any minutes of traffic; (b) thereby caused Gilsan loss and damage by such breach, calculated by the number of minutes generated for those months multiplied by a rate per minute determined by resolution of issues 1 to 4 and 6 above, or whether Optus was entitled not to pay Gilsan those amounts on the basis that the Optus Agreement was frustrated by reason that the agreed Total Accounting Rate between AT&T and TVL no longer existed for the 2001 calendar year, or alternatively whether Optus' obligation to make payments after 1 January 2001 was on the basis that the "origination share" retained by AT&T from the Total Accounting Rate referred to in Schedule C to the Optus Agreement was US$3.73 from 1 January 2001?

Whether Gilsan is entitled to an account from Optus for all amounts withheld and not paid by Optus: (a) pursuant to the August 2000 Variation to the Optus Agreement and calculated at the rate of 10% of the monthly traffic minutes for which Optus was liable to pay Gilsan under Schedule C for the months May to December 2000; and (b) in the event that Optus's pleaded Febuary 2001 Variation is found to have been agreed by the parties, pursuant to the February 2001 Variation and calculated at the rate of 25% of the monthly traffic for the months of January and February 2001?

In the event that Optus's construction of the Optus Agreement under Issues 1 and 6 above is accepted on the basis of the effect of the confidential transit rate agreements it entered into with AT&T and Hellenic, whether Optus failed to disclose to Gilsan the existence and alleged effect on the Optus Agreement of the confidential transit rate agreements Optus had entered into with AT&T and Hellenic and that, in the circumstances, such failure to disclose constituted: (i) a contravention of section 52 of the Trade Practices Act 1974 (including the issue whether Optus acted otherwise than inadvertently within the meaning of the definition of conduct in s.4(2)(c) of the Act); or (ii) a contravention of section 51AC of the Trade Practices Act 1974 (including the issue of "conduct" as referred to in (i) above, and the issue of the inapplicability of s.51AC where the price of the services exceeds the statutory cap in s.51AC(10)); or (iii) the breach of an implied term in the Optus Agreement that the parties would act reasonably and in good faith towards each other in respect of the agreement (including whether or not such a term was implied); or (iv) a breach of Optus's fiduciary duty owed to Gilsan (including whether any such duty was owed)?

If so, whether: (a) any such contravention or breach caused Gilsan loss and damage; and (b) Gilsan is entitled to any other relief including under s 87 of the Trade Practices Act 1974?

If so, whether the quantum of such loss and damage is to be calculated: (a) as the difference between the payments to which it is found Gilsan is entitled to under the Optus Agreement and the payments Gilsan would have been entitled to under the alternative agreements which it would have entered into; or (b) on some other and, if so, what basis?

If yes to 14(a) above, the amount of those damages?

Whether Gilsan had any contractual right of exclusivity granted by TVL in the periods:

and, if so, the nature and extent of the exclusivity.

If yes in respect of any of the periods referred to in 17 above, whether Optus knew of such a right to contractual exclusivity?

Whether after 24 November 1998 Optus transited to Vanuatu telephone numbers dial-up data traffic generated by entities other than Gilsan in circumstances where Optus knew that such Vanuatu telephone numbers were Vanuatu numbers which had not been authorised for use by TVL at all or for dial-up data traffic?

Whether the conduct referred to in paragraph 19 (whether or not Gilsan had any contractual right of exclusivity) constituted: (i) a breach of an implied term in the Optus Agreement that the parties would act towards each other reasonably and in good faith (including whether or not such a term is to be implied); (ii) a breach of fiduciary duties owed by Optus to Gilsan (including whether or not any such duties were owed, and if so, which); (iii) wrongful or unlawful interference by Optus in Gilsan's contractual relations, trade or business interests; (iv) unconscionable conduct in contravention of section 51AC of the Trade Practices Act 1974 (including the issue of the inapplicability of s.51AC where the price of the services exceeds the statutory cap in s.51AC(10))?

If so, whether Optus thereby deprived Gilsan of the benefit of such traffic, earned profit from such traffic and is liable to pay damages to Gilsan or make an account of profits to Gilsan?

If Optus is liable to pay damages to Gilsan, whether such damages are to be calculated by the number of minutes found to have been transited by Optus in such unauthorized manner multiplied by the rate per minute determined by resolution of Issues 1 to 6 less what Gilsan would have paid relevant service providers above?

If so, (subject to any election by Gilsan for an account of profits), what is the amount of the damages?

Issues arising on Optus' Third Further Amended Cross Claim

Whether, in relation to traffic originating with Hellenic in Greece , on the true construction of the Optus Agreement dated 3 December 1998: (a) the "origination charge" referred to in Schedule C was SDR per minute of traffic: i 0.995 in 1999; ii 0.97 thereafter; (b) Gilsan was entitled to a payment by Optus under Schedule C calculated at a rate of SDR per minute of traffic: i 0.63 in 1999; ii 0.655 thereafter;

Is Optus entitled to restitution in respect of amounts paid to Gilsan based upon a rate that was higher than that required by 24(b)?

Whether or not laches is a defence to a claim for restitution of those overpayments?

If so, whether laches is made out on the facts?

Whether or not Gilsan has established that it changed its position after receiving the Hellenic overpayments?

If it did, to what extent did it change its position?

Whether and to what extent Gilsan's change of position operates as a defence to Optus' claim?

If Optus is entitled to restitution, in what amount should restitution be ordered?

Whether, in relation to traffic originating with AT&T in the United States, on the true construction of the Optus Agreement dated 3 December 1998, the "origination charge" referred to in Schedule C was $3.73 for the period from 1 January 2001?

If yes to 32, is Optus entitled to restitution in respect of payments to Gilsan in 2001 calculated by reference to a lower origination charge (the 2001 overpayments)?

Whether or not laches is a defence to Optus' claim for restitution in respect of the 2001 overpayments?

If so, whether that claim is made out on the facts?

Whether or not Gilsan has established that it changed its position after receiving the 2001 AT&T overpayments?

Whether and to what extent Gilsan's change of position operates as a defence to Optus' claim?

In the further alternative, whether Gilsan is obliged to repay to Optus any part of the payment received by it from Optus for traffic in respect of the months of February and March 2001 pursuant to an undertaking given to Optus by Gilsan on 21 April 2001?

If Optus is entitled to restitution, in what amount should restitution be ordered? D. Optus' Quantum Meruit Claims Call Termination, Co-Location, Spinnaker and Domestic Traffic Services

Whether Optus was requested by or on behalf of Gilsan to supply each of the services?

Whether each of the services provided was intended to be gratuitous (including whether or not in the events which happened Optus was ultimately willing to and did in fact continue to provide such services without requiring or receiving payment)?

Whether Optus was obliged to provide each of the services provided pursuant to the terms of the Optus Agreement?

Who was benefited by each of the services provided sufficiently to justify an order for quantum meruit?

Whether Optus is estopped from making its quantum meruit claims in respect of each of the services?

Whether or not, in respect of the domestic traffic services: (a) laches and change of position are defences to a quantum meruit claim; (b) If so, whether there has been laches and or a change of position? (c) Whether and to what extent Gilsan's change of position operates as a defence to Optus' claim based on a quantum meruit? (d) If there has been a change of position, to what extent has Gilsan's position changed?

For what amount, if any, should the quantum meruit claim be ordered in respect of each service?

For the traffic months December 1999 to May 2000, whether or not it was the common assumption of Optus and Gilsan that Optus would pay Gilsan the 25% component referred to in clause 1.6 of the Optus Agreement up front on the basis that if Optus: (a) did not receive payment from the distant and/or transit carriers; and/or (b) overpaid Gilsan as a result of a distant or transit carrier refusing to make payments or later offsetting payment for the traffic of any particular month, then: (c) Gilsan would be obliged to repay the overpaid amounts to Optus; or (d) Optus would be entitled to offset the overpaid amounts against future monies owed by Optus to Gilsan under the Optus Agreement up to an amount equivalent to the 25% component?

The effect (if any) of the August 2000 and the February 2001 variations.

Whether or not, following the August 2000 and February 2001 Variations to the Optus Agreement, whether [sic] Optus was entitled to withhold payment from Gilsan [sic] 10% of the value of the traffic declared by Optus to Gilsan for the traffic months August 2000 to January 2001 (inclusive), and 25% from February 2001 for amounts not paid to Optus by AT&T?

What amounts, if any, Optus is entitled to offset against any future monies owed by Optus to Gilsan. [NB The determination of this question must await the extent (if any) to which Optus succeeds against AT&T in the London arbitration.]

Whether on the evidence Optus has proved that any AT&T refusals to pay relate to the Gilsan Vanuatu traffic minutes.

Should the agreed negative Vanuatu minutes recorded by AT&T be apportioned and, if so, how, for the purposes of Optus' clawback claim?

What amounts, if any, Gilsan is obliged to repay to Optus by reason of the parties' common assumption, and in what currency should those amounts be paid?

Whether any and, if so, which of the amounts which Optus is held to be liable to pay to Gilsan and which Gilsan is held to be liable to pay to Optus may be equitably set off against each other?

What is the final amount due from and to whom pursuant to such set off?

What interest is payable on any sum or sums found to be due?

In what currency or currencies should any judgment or judgments be expressed? 30 The parties agreed that issues 5, 7, 31, 40, 51, 54, 56, 57 and 58 are not required to be answered by the Court in its reasons, but will be the subject of calculation and, if necessary, further submissions by the parties in the light of the Court's reasons. The quantification of the issues in paragraphs 8 to 11 (inclusive) is subsumed in paragraphs 5 and 7. Issues 3, 4, 26, 27, 34 and 35 were not pressed in final submissions. The TVL agreement 31 The TVL agreement was made on 24 November 1998 between TVL (referred to in the agreement as "PTT") and Gilsan (referred to in the agreement as "SP"). Relevantly, it recited and provided as follows: " WHEREAS (a) SP wishes to offer International Audiotex and International Internet Dial-up services from countries listed in Schedule A utilizing number ranges owned by PTT, and being routed via a host carrier (Host) to terminate in Call Centre's [sic] with whom they have facilities; (b) PTT wishes to provide SP with number ranges in support of the SP business; PTT and SP have agreed [sic] the following arrangements: 1. PTT shall:- 1.1 issue number ranges to SP by mutual consent so that they may generate traffic to those numbers; 1.2 authorize Host to forward number ranges issued to SP to call centre's [sic] nominated by SP; 1.3 advise all carriers of transit traffic to PTT that SP and Host are authorized to discuss transit rates and routing with such carriers for the purpose of handling the traffic that this Agreement relates to; 1.4 authorize Host to remit directly to SP the amount due in accordance with Schedule B of this Agreement to SP; 1.5 keep both SP and Host informed on a regular basis of any request for or actual accounting range changes that distant carriers request or implement; 1.6 grant SP exclusive access to number ranges under their control for the purposes of offering International Internet Dialup service for a period of 12 months from commencement of service. After this period, continued exclusivity will depend upon SP generating a minimum of 100,000 minutes of traffic each month, as measured by Host. Should SP fail to deliver this volume of traffic for 3 consecutive months, PTT shall have the right to offer other suppliers the option to provide this service in addition to SP. In such circumstances, the rate offered to other suppliers will be no more than the rate offered to SP; … 6 This agreement shall remain in force until such time as either party gives notice to terminate. Such termination shall take place 180 days after receipt of formal written notice from either party, subject to the contract having been in force for a minimum of 24 months. In the event that PTT receives instruction from the Government of the Republic of Vanuatu to cease offering facilities for International Audiotex and Internet Dialup services, this agreement will automatically be terminated. ___________________________________________________________ Schedule A Originating Countries All countries with whom PTT has an agreed accounting rate, with the exception for International Audiotex only of traffic from USA, Greece, Italy and Turkey. __________________________________________________________ Schedule B Revenue Share SP will receive the total accounting rate subject to deductions for origination and transit charges and the PTT share of USD$[sic] 0.10 per call minute to the PTT." 32 Although Optus was not a party to the TVL agreement, a copy was sent to Mr John Bragg of Optus in mid January 1999. 33 The TVL agreement was renegotiated following a dispute and litigation between Gilsan and TVL. The renegotiated agreement, which was substantially more detailed than the agreement that it replaced, was dated 26 October 2000. At present, it is necessary to note the provisions of clause 2.2(a) (a condition precedent said by Optus never to have been fulfilled) and clause 2.4(a) (an exclusivity provision conditional on generation of a certain minimum of traffic per month). Those clauses read as follows: " 2.2 GILSAN shall: (a) as a condition precedent of this Agreement use its best endeavours to, as expeditiously as possible, submit an application to the Vanuatu Foreign Investment Board ("VFIB") to either obtain any necessary foreign investment approval certificate or obtain the VFIB's ruling that a foreign investment approval certificate is not required for the purpose of fulfilling the terms and conditions of this Agreement and in either case, GILSAN shall provide TVL with satisfactory proof of the final decision by the VFIB of GILSAN's said application to the VFIB. … 2.4 Exclusivity (a) TVL hereby grants to GILSAN the exclusive right for the period as set out in clause 2.6 hereof and subject always to this clause, to provide, by the use of any of the GILSAN Numbers, IBBS from all originating countries throughout the world. Continued exclusivity will depend on GILSAN generating a minimum of 100,000 minutes of traffic each month as measured by Host. If GILSAN fails to deliver this volume of traffic for three consecutive months GILSAN's said exclusivity shall be forthwith automatically terminated and TVL shall have the right to offer other suppliers the option to provide IBBS. In such circumstances the terms offered to other suppliers will be no better than the terms in this Agreement, subject always to clause 4.1b) [sic] hereof." The Optus agreement 34 The Optus agreement was made on 3 December 1998 between Optus and Gilsan (referred to in the agreement as "SP"). It likewise referred to terminating carriers as "PTT". Relevantly, it recited and provided as follows: " WHEREAS (a) SP wishes to offer International, Audiotex and International Internet Dialup services from countries listed in Schedule A utilizing number ranges owned by Countries listed in Schedule B ("PTT"); (b) OPTUS wishes to provide SP with telecommunications services in support of the SP business; OPTUS and SP have agreed the following arrangements: 1 OPTUS will:- 1.1 negotiate with transit carriers, that carry traffic on behalf of the PTT, the transit rates for SP traffic in order that the maximum revenues can be achieved for the parties to this Agreement; 1.2 enter into arrangements with transit carriers that carry traffic on behalf of the PTT to route the traffic directly to OPTUS for forwarding to SP; 1.3 route international traffic generated on SP's number ranges to SP's nominated call centre in Australia, or to a [sic] SP nominated call centre in another country; 1.4 pay PTT the amount due under Schedule B under normal traffic accounting and payment terms; 1.5 pay SP, for the duration of this Agreement and for twelve months thereafter, 75% of all monies due, as defined in Schedule C hereto, for each calendar month in which traffic was generated, 45 days from that month end; 1.6 pay SP, for the duration of this Agreement and for twelve months thereafter, 15% of all monies due, as defined in Schedule C hereto, for each calendar month in which traffic was generated, within 45 days of receiving payment from the distant and/or transit carriers. Such payment is to be made after deductions have been calculated for payments that have been overpaid as a result of a distant or transit carrier refusing to make payment for the traffic of any particular month; 1.7 for the duration of this Agreement and for twelve months thereafter, provide SP with daily and monthly Traffic Reports and a monthly Financial Report in a format to be agreed. … ____________________________________________________ Schedule A Originating Countries All countries notified to and agreed with OPTUS with whom PTT has an agreed Accounting Rate ___________________________________________________ Schedule B Country Number Ranges Offered 1. Telecom Vanuatu Ltd. ("TVL") 2. Solomon Telekom Ltd ("SOLTEL") OPTUS will deduct from the SP's revenue the rates listed below and pay to PTT on the regular accounting basis upon which they both work. Telecom Vanuatu USD$ [sic] 0.10 per minute Solomon Telekom USD$ [sic] 0.10 per minute

The deductions are to be calculated monthly. ___________________________________________________ Schedule C Payment Formula OPTUS will pay SP their share of the total accounting rate subject to deductions for OTPUS [sic] , origination and transit charges and the PTT share in Schedule B above. The commencing OPTUS fee will be SDR0.175 which will be reviewed from time to time, by agreement with both parties, to compensate for lower accounting rates on various originating countries. Where the only point of transit is with OPTUS they will deduct only the OPTUS fee of SDR0.175 deductible for such traffic." 35 The words that I have underlined were inserted by Mr Bragg (who signed the agreement on behalf of Optus) in handwriting before the agreement was signed. 36 The Optus agreement was varied in August 2000 and again in February 2001. In final submissions, Optus accepted that (as Gilsan contended) the effect of the August 2000 variation was to permit Optus to retain out of the 25% of the amounts referred to in clause 1.6 of the Optus agreement "10% of all monies due as a retention against any amounts which would not ultimately be payable to Gilsan by reason of a distant or transit carrier refusing to make payment for any part of the traffic of any particular month". As a consequence, the parties accepted that 75% of all amounts due for traffic generated in any calendar month was payable 45 days from the end of that month; a further 15% was payable 105 days from the end of that month; and the final 10% was payable 45 days from the date on which Optus received payment for that month from the distant or transit carrier, subject to adjustment for uncollectible amounts. 37 In final submissions, the parties accepted that the effect of the February 2001 variation was as set out in an e-mail of 8 February 2001 from Mr David Pearson on behalf of Gilsan to Mr Franc Pazmino of Optus. That e-mail stated, relevantly, that the February 2001 and subsequent traffic months would be settled as to 75% within 45 days (of the end of the month) and the balance within 45 days of receipt by Optus "in accordance with the terms set out in the [Optus agreement]"; and that for traffic months up until and including January 2001, settlement would be made as to 75% within 45 days (of the end of the month), 15% within 105 days (again of the end of the month), with the remainder being settled within 45 days of receipt (by Optus) "[a]gain in accordance with the terms of the [Optus agreement] subject to this amendment to the timing of payments." The AT&T/Optus/TVL tripartite agreement 38 This agreement was established by correspondence. It fixed the TAR at USD 4.00 and the division of the TAR was agreed as follows: USD AT&T 1.79 Optus 0.42 TVL 1.79 Total 4.00 (Cascade accounting)

The Hellenic/Optus/TVL tripartite agreement 39 This agreement likewise was established by correspondence. It fixed the TAR at SDR 1.80 and the division of the TAR was agreed as follows: SDR TVL 0.725 Optus 0.35 Hellenic 0.725 TAR 1.80 Cascade accounting

The AT&T/Optus confidential agreements 40 AT&T and Optus entered into a number of confidential agreements. The first (as shown by the evidence) was made in March 1998 and purported to apply from 1 January 1998 to 31 December 1998. 41 It provided, relevantly, as follows: "1. PRINCIPLES 1.1 The purpose of this Agreement is to establish special transit arrangements between Optus and AT&T Corp. for Optus's U.S. originated switched transit service provided to AT&T. 1.2 This Agreement and all its contents is [sic] confidential between Optus and AT&T. 1.3 The Agreement is effective from January 1, 1998 through December 31, 1998. 1.4 Any accounting rate division of revenue calculation with the distant administration shall be based on standard regional charges informed by each supplier. All other discount charges referred on item 2 are confidential. 1.5 Optus's official transit fee to be used by AT&T when negotiating divisions of the accounting rate with distant administrations is .35 SDR ($0.42) per minute which applies to all traffic covered by this agreement. This transit fee can be changed from time to time by Optus by providing thirty (30) days prior written notice to AT&T. … 2. CHARGES 2.1 All U.S. originated switched transit minutes via Optus to the world will be charged at the confidential rate of .05 SDR ($0.07) per minute except as noted below in 2.2. 2.2 All U.S. originated switched transit minutes via Optus to the following destinations will be charged at a flat rate of .075 SDR ($0.10) per minute: [The destinations included Vanuatu.]

… 3. SETTLEMENTS 3.1 Transit settlements will be processed in the normal manner. Official transit fees are to be used in reporting all traffic. Cascade or Direct settlement will be used by the Parties depending upon the arrangements agreed with the distant operators. … " 42 The next agreement was entered into in about September 1999 and purported to apply from 1 January 1999 to 31 December 1999. This agreement introduced a distinction between "audiotext" and other traffic. The "official transit fee" referred to in clause 1.5 of the prior confidential agreement remained at SDR 0.35, but the USD equivalent was stated at USD 0.483. The confidential rates set out in clause 2.1 of the prior agreement were changed to SDR 0.04 and USD 0.055. The confidential rates set out in clause 2.2 of the prior agreement did not change. Clause 3.1 provided as follows: "3.1 Switched Transit settlements will be processed in the normal manner with the confidential discounted rate applied. Cascade or Direct settlement will be used by the Parties depending upon the arrangements agreed with the distant operators." 43 The third agreement was made in June or July or August 2000 (it was signed on various dates by various parties) and purported to apply from 1 January 2000 to 31 December 2000. The official transit rate was set at SDR 0.44 or USD 0.61 for all traffic except Vanuatu, for which the official transit rate was set at USD 0.483. The confidential rates varied according to whether the traffic was audiotext traffic (which, in this context, appears to include what Gilsan referred to as international internet dial up traffic) or not. For the former, which is the only relevant amount, the transit fee was agreed at SDR 0.058 or USD 0.08. Clause 3.1 read as follows: "Transit settlements will be processed in the normal manner. Concert will report all minutes to C&W OPTUS at a flat rate of 0.025 SDR/US$0.035 per minute for ROW and 0.058 SDR/US$0.08 per minute for Audiotext destinations for the duration of this agreement. Cascade or Direct settlement will be used by the Parties depending upon the arrangements agreed with the distant operators. All Audiotext minutes should be reported and charged at the Audiotext rate regardless of volume and without any rebate or discounts." 44 It appears that a further agreement was made for the 2001 calendar year. It purported to be effective from 1 January 2001 to 31 December 2001. It fixed the official transit fee at SDR 0.44 or USD 0.61, with certain presently irrelevant exceptions. It provided for confidential charges for "Premium Traffic Destinations" and other destinations; the former would appear to be for audiotext or international internet dial up services and the agreed rates were SDR 0.025 or USD 0.035. Clause 3.1 provided as follows: "3.1 Transit settlements will be processed in the normal manner. Concert will report all minutes to C&W OPTUS at a flat rate of 0.025 SDR/US$0.035 per minute for ROW and 0.058 SDR/US$0.08 per minute for Premium Traffic destinations for the duration of this agreement. Cascade or Direct settlement will be used by the Parties depending upon the arrangements agreed with the distant operators. All Premium Traffic minutes should be reported and charged at the Premium Traffic rate regardless of volume and without any rebate or discounts." The Hellenic/Optus confidential agreement 45 On about 3 April 1997, Hellenic sent a fax to Optus. That fax stated, so far as is relevant, that where Hellenic routed traffic to Vanuatu through Optus it would do so "applying the published transit rate of 0,35 SDR/min and the confidential one of 0,08 SDR/min". The effect of this was to decrease Optus' share of the Hellenic/TVL TAR from SDR 0.35 to SDR 0.08 and, correspondingly, to increase Hellenic's share from SDR 0.725 to SDR 0.995. From Optus' perspective, the inpayment to it was reduced thereby from SDR 1.075 to SDR 0.805. Credit issues 46 Before I turn to consider the issues individually, I shall deal with the credibility of the principal witnesses for each side. The witnesses of fact for Gilsan were its principal, Mr Peter Warwick, and Mr Pearson. The witnesses of fact for Optus were Mr Bragg, Ms Velvet Papachatgis, Ms Samantha Bicknell, Ms Brenda Kirkham and Mr Pazmino. Mr Warwick 47 Mr Warwick is, I have said, the principal of Gilsan. It is clear that Mr Warwick was in substance the guiding mind of Gilsan. There were a number of respects in which his evidence was unsatisfactory. 48 For example, in his first statement, Mr Warwick said, of the terms "accounting rate" and "transit rate" that "these terms and their meanings were not familiar to me" (PX 3, para 40). It became apparent in his cross-examination that, as ultimately he conceded, this aspect of his statement was wrong (T 183.44). It also became clear that, at least by the time he entered into the Optus agreement, he was familiar with the term "transit rate" so that, as he conceded, that aspect of para 40 also was wrong (T 184.11). Although he tried to pass these off as "mistakes" (T 184.15), he then accepted that he was pretending to have an ignorance about accounting rates and transit rates which was simply wrong (T 184.24). In this context, as he acknowledged, he knew that the level of his awareness about accounting rates and transit rates was "a highly relevant matter in these proceedings" (T 184.31). Mr Warwick then resorted to semantic obfuscation, focussing on the word "familiar" and saying "it's not a familiar thing I've worked with. To say I did have knowledge, it's how you work the word "familiar"." (T 184.36). It became abundantly clear in his evidence thereafter that, contrary to that to which he had sworn, he was indeed "familiar", according to the ordinary English meaning of that word, with those terms at the relevant time. 49 In similar vein, Mr Warwick denied knowledge of the existence or terms of confidential agreements made between originating and transit carriers and their effect on inpayments to transit carriers (see, for example, PX 7, paras 2 and 3; see also PX 8, para 2). However, it was clear that he had been given ample material to show that the transit rate that Optus would in fact receive from AT&T was substantially less than the USD0.42 (per minute) fixed by the tripartite agreement. I have no doubt that Mr Warwick, who was an intelligent and astute businessman, would have understood this material, and its effect, at the time he received and read it. 50 Under the tripartite agreement, AT&T and TVL would each receive USD 1.79 of the TAR and Optus would receive USD 0.42. However, Mr Warwick conceded, he knew before signing the Optus agreement that the total inpayment to Optus from AT&T would be USD 1.89. Mr Warwick would not accept that, therefore, he knew that AT&T was retaining USD 2.11; and his refusal to accept the obvious, and evasions and obfuscations in cross-examination, do him no credit (see generally T 196-210). However, he did agree that it was obvious to him that if AT&T were paying Optus USD 1.89 out of the TAR, then whatever was left was being retained by AT&T (T 208.32). 51 In this context, Mr Warwick said repeatedly that his only interest was the amount of the inpayment to Optus, and that he had no interest at all in how that inpayment was arrived at (see, for example, T 210.46). No doubt, Mr Warwick intended by these statements to convey the suggestion that the existence and effect of confidential agreements were of no concern to him, and thereby to bolster the evidence of his claimed ignorance. 52 Mr Warwick received an e-mail from Ms Bicknell, which he passed to Mr Pearson for his attention (exhibit PX 2, vol 17, p91), showing in an attachment the existence of both official and confidential transit rates (the former relating to rates fixed under tripartite agreements, and the latter relating to rates fixed under confidential agreements). Mr Warwick said that he simply passed this document on to Mr Pearson and that he did not himself read it carefully. That evidence was implausible in itself. Mr Warwick's e-mail forwarding the proposal to Mr Pearson noted that it was "[a]ll positive sounding stuff to me": a comment reflecting knowledge and comprehension of the "stuff". Further, the evidence was inconsistent with Mr Warwick's earlier evidence that he always read e-mails and always read them very carefully (T 216.10). When pressed with this discrepancy in his evidence, he said "I said I read it, but not carefully" (T 223.20), and that "I don't believe I used [the] word "carefully" "(T 223.24). The transcript shows that he accepted the words "very carefully" put to him by counsel (T 216.10). Mr Warwick received a revised version of the proposal from Ms Bicknell (exhibit PX 2, vol 17, p 196). His evidence in relation to that document was equally unsatisfactory; having admitted that he read it (T 230.36), he sought almost immediately thereafter to resile from that admission (T 231.37). 53 The last specific matter that I mention in this context is that Mr Warwick, by his own evidence, engaged in deceitful conduct on at least one occasion. He had a practice of recording telephone calls. On 1 May 2001, he was party to a telephone call between Mr Rick Hall of TVL and Ms Eva Ting of Concert. He recorded that conversation, although he did not disclose that he was doing so (the same may be said of other recorded conversations referred to in his evidence). Mr Hall introduced Mr Warwick to Ms Ting and Ms Ting said in substance that, based on legal advice, she wished to speak only with Mr Hall: "I really would like to keep the communication between us, between telephone administrations". Mr Warwick then said "Well, let me drop off" and Mr Hall said, "OK, alright then. I'll just disconnect Peter. OK Peter I'll speak to you later". Notwithstanding what Mr Warwick had said, he remained on the line and recorded the entirety of the call. He said that he did not regard this behaviour as underhand in relation to Ms Ting (T 271.20). Whether or not that answer is truthful, it reflects adversely on his credibility; as, indeed, does the whole episode. 54 More generally, although Mr Warwick impressed me as an intelligent, astute and capable businessman, I observed that he often would lapse into evasion and obfuscation with questioning that he perceived to be difficult, or where an honest answer would be inconsistent with the case that Gilsan wished to present. On other occasions, Mr Warwick denied matters that a truthful attitude would have required him to accept; on other occasions again, he took advantage of a question to force a non-responsive answer on cross-examining counsel; on yet other occasions he retreated from answers earlier given by him where he perceived those earlier answers to be adverse to his company's interests. In this last category, reference may be made to his evidence on his understanding of the term "clawback" from T 293-308, culminating in the proposition that his earlier evidence as to his understanding of "clawback" was wrong - T 308.18. An example of forcing non responsive answers may be seen at T 290.16 and following; the gratuitous references to "them invoicing Beylen" and to "an invoice raised to Beylen" were, I find, a spur of the moment invention designed both to distract counsel and to justify the stand taken by Mr Warwick in relation to the subject matter of the particular cross-examination. See paras [359] to [366] below. It may be noted that, although the invoice was called for, nothing was produced; and I conclude that the invoice never existed and that Mr Warwick had no reason to believe that it did. 55 I conclude that, in general, I cannot rely on Mr Warwick as a witness of truth. In general, therefore, I would not accept his evidence unless it is corroborated by other and acceptable evidence, or is consistent with the probabilities objectively viewed, or is against interest. This leads to a particular problem because, as will be seen, I take a similar view (more adverse in one case, and less adverse in the other) of the evidence of two of the three principal witnesses for Optus. Mr Pearson 56 Mr Pearson was an accountant in private practice. His firm provided accountancy services to Gilsan and the other companies controlled by Mr Warwick. It is clear that Mr Pearson was directly involved in the administration of the businesses of Mr Warwick's companies. Mr Pearson (more accurately, the firm of which he was a member) was remunerated for his services on the basis of a share in the revenues of those companies. 57 There were a number of respects in which Mr Pearson's evidence was unsatisfactory. Thus, he, too, at first disavowed familiarity with the concept of the TAR or its components, until he dealt with Optus; but he conceded in cross-examination that this was wrong (T 336.38). Again, although initially he denied knowledge of the existence of the 2000 confidential agreement between Optus and AT&T, he conceded in cross-examination that this too was wrong (T 348.40, .46). 58 Nonetheless, taking into account these and other matters referred to by Optus in final submissions, I do not think that Mr Pearson sought deliberately to mislead the Court, let alone to give false evidence. In this context, it is significant that, unlike Mr Warwick, Mr Pearson was prepared to admit error. Nonetheless, I do not think that he is a witness on whose uncorroborated evidence I can in general place great weight. Nor do I think that, in general, Mr Pearson's evidence alone is capable of providing substantial corroboration to the evidence of Mr Warwick. The Optus witnesses of fact: general considerations 59 There is a problem that, to a greater or lesser extent, was common to the evidence of each of Optus' witnesses of fact. The problem is that those people, in their dealings with Gilsan, appear to have regarded as of little if any consequence the terms of the agreement between Optus and Gilsan, and, as a result, to have paid little if any regard to those terms in their dealings with Gilsan. Mr Pearson referred to the "imposition culture" of Optus (T 386.27). This, I think, was an apt phrase. Mr Pearson explained that culture, in the immediately following passage, as "I had a string of things imposed on me by Optus, without warning, without notice and a lot of it was just plain wrong. And I was getting quite honestly to the end of my tether and I needed to have a date from them when I wouldn't get a stupid alteration coming through again and that clawback refers to a whole string of adjustments that went before". 60 For example, Ms Papachatgis, who was Mr Bragg's deputy, did not read the Optus agreement until about June 1999 (T 597.42), and said repeatedly that she did not consider its terms to be important (see for example T 610.37). Mr Bragg, correspondingly, did not seem to think it important that she should read the agreement (T 720.34). Mr Pazmino did not think that it was important for him even to look at the agreement (T 498.32) and he did not in fact do so until October 2000 (T 499.8). Ms Papachatgis and Mr Pazmino were directly involved in the administration of the relationships created by the Optus agreement well before they had read its terms. 61 Optus, in particular through Ms Papachatgis and Mr Pazmino and, to a lesser extent, Ms Bicknell, administered its relations with Gilsan on terms that Optus seems to have regarded as commercially appropriate (or beneficial to it) rather than in accordance with the terms of the agreement. Thus:

(1) Optus deducted 1% or more from its measured minutes when accounting to Gilsan for traffic, even though the agreement between them made no provision for this.

(2) Optus sought to claw back payment for minutes for which the originating carrier had refused to pay Optus, even though, as Mr Bragg at least well understood, Optus' usual clawback provision had been deleted from the draft of the agreement at a relatively early stage in negotiations, and well before the agreement was signed.

(3) Optus deducted the fee of SDR 0.175 payable to it under the agreement at the rate of USD 0.25, regardless of whether this was the correct conversion rate. It sought to justify this by saying that it was a practice universally understood in the industry, or that Gilsan had agreed to this being done. At the hearing, it relied only on the latter justification (see issue 10), but it is clear, on the evidence, that at least Mr Bragg and Ms Papachatgis did not think that it was necessary for there to be any variation to the terms of the Optus agreement to enable this to be done. 62 Listening to the evidence of the Optus' witnesses to whom I have referred, I gained very strongly the impression that their evidence was coloured by the view that what was good for Optus was not only beneficial but also correct. Consideration of the relevant passages of the transcript has done nothing to dispel that impression. I refer, by way of example only, to:

(1) Mr Bragg's evidence that the provisions of cl 3.6 of the Optus agreement was in substance to the same effect as the standard Optus "clawback" provision, when manifestly it was not (T 684-686).

(2) His evidence as to the entitlement of Optus to be paid in USD, rather than SDR, notwithstanding the wording of the Optus agreement (T 718-719).

(3) Ms Kirkham's evidence to the same effect of Mr Bragg's referred to in sub para (1) above (and suffering from the same defects) (T 568-569, 572-573).

(3) Ms Papachatgis' evidence that it was not the contract so much as the fact that "we were doing business in a certain way" that was important (T 612.42-613.1) and that "the agreement was a base of like a starting point, which we evolved together to make the business what it was" (T 613.10; it became clear, as Ms Papachatgis' evidence proceeded, that the evolutionary process was forced rather than co-operative). 63 The result, in my judgment, is that the recollection of those witnesses was coloured to a great extent by their belief that what Optus wanted was what Optus was entitled to have; so that, in a sense, that was done which (from Optus' position) ought to have been done. For reasons that I give in greater detail below, I think that this problem affects in particular the evidence of Ms Papachatgis. Mr Bragg 64 Mr Bragg was, at the relevant time, the manager of Optus' International Business Development division. That division was responsible for the identification of what Mr Bragg called "new and innovative non-traditional business opportunities on an international level", including "specialist network facilities and services to the providers of audiotex services" (DX 17, para 3). 65 I have come to the conclusion that Mr Bragg was a witness who had no regard for the truth, except when it suited him to recognise it. From the outset, his cross-examination was marked by implausibility, evasion and inconsistency. These matters, coupled with his refusal on numerous occasions to accept the obvious, and his readiness to take any opportunity to force non responsive speeches on cross-examining counsel, lead me to conclude that Mr Bragg was a witness for whom truth was important only in so far as it coincided with expediency. 66 Without going to the evidence in detail, I refer (by way of example only) to Mr Bragg's evidence on the following matters:

(1) As to whether, in the course of negotiations with Mr Warwick, he checked the TAR between ATL and TVL (as, in an e-mail to Mr Warwick, he had expressed an interest in doing): T 678-680, 701.

(2) His evasive answers to questioning in relation to the letter of 23 February 2000 from George Vasaris and Co (TVL's lawyers in Vanuatu) to Mr Hambrett of Optus (PX 2/12-349) at T 748-750. Mr Bragg was cross-examined further on this document at T 801-805. That passage of his evidence could most kindly be described as concocted and fantastic.

(3) His evidence on an e-mail of 8 January 1999 from him to his superior, Mr Alan Petts (PX 2/6-39) at T 754-755 (including his admission at T 755.26 that he was saying to Mr Petts something that was "[n]ot totally untrue, but it's not totally accurate, either").

(4) His evasive and non-responsive evidence on the topic of "exclusivity" (T 759-761).

(5) His evasive and clearly concocted answers on an e-mail dated 6 March 1999 from him to Mr Hugh Chambers of the GIB group (a competitor of Gilsan) (PX 2/6-176), including the words "[y]ou will probably shoot me" (T 773-776).

(6) His evasive answers on the question of TVL's entitlement to remuneration in respect of the "rogue numbers" (T 776-779, commencing with the proposition at T 776.33 that "TVL wouldn't know what we were doing at any rate", and finishing with the proposition that it was better if TVL did not know what was happening because otherwise they might have complained (T 779.43)). His evasions on the unfortunate, and probably truthful, answer that he gave, that "it was good that they didn't know", demonstrates an acute sensitivity to the very point that he was trying to avoid.

(7) His evidence on an e-mail dated 11 October 2000 from him to Mr McGinnis (a consultant to Gilsan) and Mr Charlesworth of MDC (another competitor of Gilsan) at PX 2/18-192 (T 850-852). That evidence reeks of both evasion and concoction. 67 Although Mr Bragg's evidence and attitude are to some extent affected by problem that I have outlined in paras [59] to [63] above, I do not think that this is of particular significance in his case. That is not because I think that Mr Bragg was uninfluenced by a perception of a need to achieve the best outcome for Optus; quite the contrary. It is because there is a simpler explanation for the difficulties in Mr Bragg's evidence: namely, that he held the truth in low esteem. 68 I do not regard Mr Bragg as a witness on whose evidence I could rely except where it is corroborated by other acceptable evidence; is consistent with the probabilities objectively viewed; or is against interest. To the extent that his evidence is in conflict with that of Mr Warwick, and to the extent that the conflict cannot be resolved by the factors that I have just mentioned, I would prefer the evidence of Mr Warwick to that of Mr Bragg. Ms Papachatgis 69 I do not think that Ms Papachatgis sought to do other than tell the truth as she recalled it. However, I do not regard her as a witness on whose evidence I can place great weight. That is because I have concluded that she had no real recollection of the events that she recounted and that her evidence was very much a reconstruction. Her reconstruction, I conclude, was a practical application of the Optus imposition culture. In other words, I think, Ms Papachatgis' reconstruction of events was influenced greatly by her predilection to see those events through Optus-tinted spectacles. 70 For example, Ms Papachatgis gave evidence of a meeting said to have taken place at the Ritz Hotel, London, in about April 1999. In her first statement (DX 13, para 29), Ms Papachatgis said that, among other things, Optus needed to offer originating carriers "a discounted rate [ie, transit rate] to encourage the origin [sic] to change to Optus". She then said (para 30) that she explained the concept of the confidential transit rate: increasing the originating carrier's share of the TAR by discounting the transit rate. Thus, she claims to have said, the originating carrier kept a bigger share of the TAR through the discounting of the transit rate. 71 Ms Papachatgis claimed that Mr Pearson acknowledged having "heard of carriers having a confidential transit rate", but that Mr Warwick did not understand what she was saying. Accordingly, she said (para 31), she wrote out an example on a piece of paper in front of Messrs Pearson and Warwick. She said that, as she did this, she explained the steps. Initially, the TAR was split equally between originating and terminating carriers after deduction of the transit charge. Thereafter, Optus and the originating carrier entered into a further agreement whereby the transit charge was reduced and the originating charge increased. Optus would then deduct "its agreed audiotext transit factored rate of USD 0.25 or SDR 0.175 depending on the currency used by the originating carrier, and then makes payments to the service provider including any payment to the destination carrier". Ms Papachatgis said that she explained this further, with another example, at Mr Warwick's request. 72 Thus, if Ms Papachatgis' evidence were to be accepted, it would show conclusively that by April 1999 at the latest Gilsan, through Messrs Warwick and Pearson, was fully aware of the practice whereby originating and transit carriers negotiated confidential transit rates to the benefit of the originating carrier at the expense of the transit carrier. Further, it would show that Gilsan was aware that Optus would take the transit charge agreed between it and Gilsan in SDR where Optus was so paid and in USD where Optus was so paid (contrary to the wording of Schedule C to the Optus agreement, which referred only to SDR). 73 Messrs Warwick and Pearson accepted that they had met Ms Papachatgis at the Ritz Hotel in about April 1999. However, they denied that Ms Papachatgis had said the things that she claimed to have said and they denied that she had provided them (orally or in writing) with worked examples. They provided circumstantial details of why, in any event, things would not have happened when and where Ms Papachatgis had said that they did. 74 Ms Papachatgis responded to Messrs Warwick's and Pearson's denials by a statement made immediately before she gave oral evidence. She said that, rather than occurring over dinner (as she had said in her earlier statement), the conversation "may have occurred shortly after the dinner, when Mr Warwick, Mr Pearson and I had stopped to talk in the foyer of the Ritz, or later during my visit to Europe". 75 Further, in her second statement, Ms Papachatgis said "that the conversations set out between myself and either Messrs Warwick and/or Pearson referred to in my First Statement may have been with either one or both of them". This, as I understood it, was intended to refer to all the conversations set out in her first statement which she claimed to have had with either Mr Warwick or Mr Pearson. It also called up para 23 of her first statement, in which she said that she had had a number of conversations with Messrs Warwick and Pearson, and that by virtue of the number that she had with one or the other of them, she did not recall "the strict chronological sequence in which each of the conversations took place". 76 In cross-examination, Ms Papachatgis' memory proved to be worse even than was suggested by her second statement. I do not mean to be critical in saying this. By the time of the hearing, she had left the employ of Optus and was engaged full time in domestic duties. It was apparent that she had not had any real opportunity to consider the relevant files at length, in an attempt to assist her to recall the events of which she gave evidence. It was equally clear, as I have already indicated, that her evidence was principally reconstruction rather than recollection. 77 Thus, whilst as I have said I do not think that Ms Papachatgis intended to mislead the Court, I do not regard her evidence of any great weight. Specifically, I do not regard her evidence as providing acceptable corroboration of (for example) the otherwise uncorroborated evidence of Mr Bragg. Further, and notwithstanding my reservations as to Messrs Warwick and Pearson, I prefer their evidence to that of Ms Papachatgis where it is in conflict. Ms Bicknell 78 In final submissions, no attack was made on the credibility of Ms Bicknell. I therefore need do no more than record that, in my view, Ms Bicknell was a witness on whose evidence I could rely. She gave her evidence clearly and in a forthright manner. When tested, it was apparent that she had a good recall of the events of which she spoke. Her evidence was not marred by inconsistency, obfuscation or evasion. Mr Pazmino and Ms Kirkham 79 Again, in final submissions, no attack was made on the credibility of either of these witnesses. Nor was there any real evidentiary conflict between the evidence given by them and the evidence given by Messrs Warwick and Pearson. 80 It was apparent that Mr Pazmino had little actual recall of events and that he was substantially reliant on contemporaneous documents to revive his recollection. However, so far as his evidence went, it seems to me to be consistent with the documents and with the probabilities objectively viewed, and I accept it. 81 Ms Kirkham struck me as being very much imbued with the Optus imposition culture. However, notwithstanding that this had a somewhat unfortunate impact on her demeanour in the witness box from time to time, I see no reason not to accept her evidence in so far as it remains relevant to the disposition of the issues. First, second and sixth issues: "origination charge" 82 Gilsan submitted that the origination charge referred to in Schedule C to the Optus agreement (in the phrase "origination and transit charges") was the origination charge fixed under the relevant tripartite agreement between the originating carrier, Optus and the terminating carrier. Optus submitted that the origination charge was the amount in fact notionally retained by the originating carrier out of the TAR: ie, the amount of its entitlement taking into account any applicable confidential agreement between it and Optus. 83 Each of Gilsan and Optus relied on extrinsic evidence to support its contention. Gilsan relied upon Recommendation D 155 made by the International Telecommunications Union ("ITU") and on statements made by the FCC in its Report and Order adopted 7 August 1997 and released 18 August 1997 (the parties referred to this as the "Benchmark Order" and I will do likewise). Optus relied on negotiations between the parties leading up to the making of the Optus agreement; on the expert evidence of Mr John Hibbard, who described himself as "a telecommunications industry professional" and who said that he specialised "in consulting in the field of international telecommunications"; on the practice of making confidential agreements between originating and terminating carriers; and on the practice of cascade accounting. 84 Gilsan called in aid the well known statement of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, 352. His Honour said, of the parol evidence rule, that evidence of surrounding circumstances might be admitted to assist in the interpretation of contractual language that was ambiguous or susceptible of more than one meaning, but that it was not admissible to contradict the plain meaning of that language. To that end, knowledge would be presumed of notorious background facts; and evidence of negotiations might be received to establish both objective background facts known to both parties and the subject matter of the negotiations and the intended contract. But it would not be admitted to prove the actual intentions and expectations of the parties. 85 Optus relied on the statement of the majority in Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 76 ALJR 436, 439 [10], where their Honours referred to what Mason and Brennan JJ had said in Codelfa. Their Honours noted that it was appropriate to have regard to the circumstances with reference to which the words in question were used so as to discern the objective which the parties had in view. They cited with approval the statement of Lord Wilberforce in Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989, 995-996, that an understanding of the commercial purposes of a contract requires "knowledge of the genesis of the transaction, the background, the context, [and] the market in which the parties are operating." They then cited with approval the observation of Brennan J in Codelfa at 401 where his Honour pointed out that "[t]he meaning of a written contract may be illuminated by evidence of facts to which the writing refers, for the symbols of language convey meaning according to the circumstances in which they are used." 86 The commercial purpose of the contract, from Gilsan's perspective, was to enable Gilsan to be paid (in effect out of the TAR) an amount sufficient to permit Gilsan to procure for its service providers and their service agents the use of telephone numbers controlled by TVL. That in turn required that the amount paid to Gilsan should be sufficient to satisfy its obligation to TVL under the TVL agreement and its obligations to its service providers under its contracts with them, and to leave something over from which Gilsan could recover its overheads and derive a profit. 87 From Optus' perspective, the commercial purpose was to enable it to utilise its international telecommunications capacity by carrying traffic for Gilsan or its service providers, at a rate that would enable it to meet whatever overheads it incurred in so doing and derive a profit. 88 It is quite clear that the commercial purpose, as each party perceived it, was known to and understood by the other. It is equally clear that Mr Warwick's focus on the inpayment to Optus was consistent with Gilsan's commercial purpose. 89 I have grave doubts that either ITU Recommendation No. D 155, or the various statements in the Benchmark Order upon which Gilsan relied, are admissible to facilitate an appreciation of the commercial purpose of the Optus agreement, or to prove the genesis of the transaction embodied in that agreement, or the background to it. It may be, although I express no concluded view, that those materials might provide some context for the agreement or some evidence of the market in which the agreement was made. However, I see nothing in them to suggest, let alone require, that the phrase "origination charge" (recognising that this is not the phrase actually used in Schedule C to the Optus agreement, but a phrase extracted from the words "origination and transit charges" actually used) should be construed as Gilsan submits. 90 Likewise, I do not think that Mr Hibbard's evidence is admissible to prove the genesis of the Optus agreement or its background. Again, however, it may provide evidence of the context in which that agreement was made or of the market in which the parties were operating. But again, I do not think that his evidence either suggests or requires that the phrase "origination charge" should be construed as Optus submits. 91 The practice of making confidential agreements, and (in general terms) their effect, is in a slightly different category. Mr Hibbard's evidence suggests that confidential agreements were rife in the international telecommunications industry in 1998 and at all material times thereafter. But his evidence does not satisfy me that they should be regarded as a notorious fact, so that knowledge of them should be imputed to all (including Gilsan) who participated in that industry. 92 However, I think, Mr Warwick did have knowledge, at the time he was negotiating the Optus agreement, of the existence of confidential agreements and of their effect (as increasing the amount of the TAR notionally retained by the originating carrier, at the expense of the transit carrier) although not perhaps of their precise terms. Whilst (as I have said) I do not accept Mr Warwick's denial of the existence and general effect of confidential agreements (see paras [49] to [52] above), it does not necessarily follow, from the fact that I have disbelieved his protestations of ignorance, that I can find that he did in fact have such knowledge: see for example the observations of Gibbs J in Steinberg v The Commissioner of Taxation of the Commonwealth of Australia (1975) 134 CLR 640, 694 (and see Barwick CJ in the same case at 684); and compare the analysis of Clarke JA in Broken Hill Proprietary Company Ltd v Waugh (1988) 14 NSWLR 360, 365-366. The evidence that supports my conclusion that Mr Warwick was aware of the existence and, in general terms, effect of confidential agreements does not of itself show that he had that awareness whilst negotiating the terms of the Optus agreement. Nonetheless, it could be inferred from his conduct (and, in particular, at his failure to protest) that the information came as no surprise to him. In these circumstances, and having regard to what I find was a conscious dishonest denial of something known to Mr Warwick to be highly significant to Gilsan's case, namely the existence and general effect of confidential agreements, I regard the existence or terms of confidential agreements as something that should be taken into account on the construction of the payment formula in Schedule C. 93 Further, I think that Mr Warwick's repeated assertion that he was interested only in the amount of the inpayment to Optus is something that can be taken into account. On his evidence, he communicated that view to Mr Bragg in the course of negotiations. Mr Warwick's focus on the inpayment to Optus supports the proposition, for which Optus contends, that the parties thought that originating charge would be, in substance, the amount of the TAR notionally retained after making what is, (from the originating carrier's perspective) the outpayment to Optus. It would be strange if, thinking that, they provided otherwise in their written agreement. 94 The other matter relied upon by Optus as a relevant matter of background or context was the practice of cascade accounting (see para [6] above). An analysis of its significance requires a slight digression to consider the structure of Schedule C. 95 The starting point in the construction of Schedule C is the concept of the TAR. That, as I have explained, is something agreed between the originating and terminating carriers. The obligation of Optus is to pay Gilsan "their share of the total accounting rate subject to" the specified deductions. As a matter of syntax, the possessive pronoun "their" might be though to refer to Gilsan. Mr Jackman SC, who appeared with Dr Bell for Optus, submitted, however, that "their" referred to Optus. Mr Biscoe QC, who appeared with Mr Kunc and Mr White for Gilsan, did not submit to the contrary. 96 On reflection, I think, Mr Jackman's submission should be accepted. The TAR was a creature of agreement between (for example) AT&T and TVL. The division of the TAR, or the entitlements of interested parties to it, was also a creature of agreement: for example, the tripartite agreement between AT&T, Optus and TVL. On no view did Gilsan have any entitlement under those agreements to a "share" in the TAR. At most, Gilsan would acquire a share in the TAR when Optus made payment to it on the terms set out in Schedule C. If it is correct to regard Gilsan's entitlement to be paid as giving it a "share" of the TAR, it was a share that depended, for its ascertainment, on the deduction of Optus' origination and transit charges and the PTT's (ie, terminating carrier's) share. It follows that if the words "their share of" were intended to refer to Gilsan, they would be entirely redundant, because they would encompass only, and no more than, that which is appropriated to Gilsan by the words following them. At the points in time at which Schedule C operates - namely, each occasion when Optus calculates and makes a payment to Gilsan - Gilsan's share in the TAR is prospective, and depends both for its existence and its quantification on the working out of the formula in the schedule. At that time, Gilsan has no share from which the specified deduction could be made; and if those deductions were to be made from Gilsan's share calculated in accordance with the schedule, there would be double deduction. 97 In effect, then, Gilsan having been eliminated as a possible subject to which the word "their" could refer, Optus remains as the lone candidate. That seems to me to give a very clear indication of how the question of construction of Schedule C should be resolved - in particular, of what is the origination charge. Under the tripartite agreement, Optus' "share" of the TAR was the transit charge of USD 0.42. Clearly, that cannot be what the parties meant as Optus' "share of the total accounting rate" that, subject to the specified deductions, was to be paid to Gilsan. The "share" referred to must therefore be the total amount of the inpayment from the originating carrier to Optus. It is only if the words "their share of the total accounting rate" are construed to refer to that inpayment that the formula in Schedule C makes commercial or practical sense. 98 I therefore regard the handwritten words "their share of" inserted into the typed schedule as providing a very strong indication that the origination charge is the amount in fact retained by the originating carrier pursuant to whatever legal entitlements it has, and not the amount fixed under the relevant tripartite agreement. A consideration of the structure and operation of Schedule C supports that view. 99 The deductions that are to be made before paying Gilsan its share of the TAR are for Optus' charges, the originating carrier's charges, and any (other) transit carrier's charges. The reference to "transit charges" would apply only where there was more than one transit carrier (including Optus) involved. 100 In a sense, where cascade accounting applies, the reference to deductions for originating charges and transit charges, other than those payable to Optus, is misconceived because (in a situation where it was Optus, as the last transit carrier, that was to account to Gilsan) those charges would have been retained, or deducted, before any inpayment to Optus was made. Nonetheless, reference to them makes it clear, I think, that the parties intended that Gilsan should have only the residue of the TAR after deduction of all originating and transit charges and, as the following words make clear, after deduction of the terminating carrier's charge. 101 As matter of language, it is difficult to see why the origination charge should be anything other than the amount in fact retained by the originating carrier pursuant to any legal entitlement that it may have had. It may be accepted that where the originating and terminating carriers have agreed on a TAR, and where they and the transit carrier have agreed on a carving-up of that TAR between them, the originating carrier could not without some further agreement retain out of the TAR an amount greater than its origination charge so agreed. But equally, where the originating carrier and the transit carrier thereafter enter into a confidential agreement, the effect of which is to redistribute between them the total of the origination and transit charges fixed under the tripartite agreement, it is difficult to see why the origination charge should be anything other than the amount retained by the originating carrier pursuant to that confidential agreement. 102 The only deduction that is quantified in Schedule C is the Optus charge, or Optus fee: SDR 0.175. Clearly enough, because the Optus agreement was intended to have general applicability, it would not be possible to specify in monetary terms the originating and terminating carriers' charges, or the charges payable to any other transit carriers that might be involved. Thus, leaving aside the particular agreements, the origination and transit charges (if any, in the latter case) would be such amounts as the originating and transit carriers were entitled, under the various contracts to which they were parties, to retain. 103 In a context where the parties knew either that cascade accounting would be used, or that it was likely to be used, it would be unusual (to say the least) if Optus committed itself to pay out to Gilsan anything other than the amount of the inpayment received by Optus from the originating carrier after deduction of Optus' transit charge and the amount payable to the terminating carrier, or if Gilsan expected anything more than such a commitment. No doubt, those matters fall to be ascertained objectively; but if it is appropriate to have regard to the actual expectations of the parties then again, I think, Mr Warwick's focus on the inpayment to Optus supports what I have just said. 104 Thus, I think, both the language of the payment formula and the commercial context in which it was made show that the origination charge is the amount in fact lawfully retained by the originating carrier, not necessarily (or only) the amount fixed under whatever is the relevant tripartite agreement. Where the parties knew, or were aware, that both transit charges and termination charges were subject to renegotiation (as in my opinion they were, and as in fact happened in the present case), it is difficult to see why the provisions of the tripartite agreement should be regarded as sacrosanct or paramount. In truth, I think, the position was, and the parties well understood, that the tripartite agreement was merely a starting point: it fixed the TAR, and fixed the prima facie division of the TAR; but everyone knew that the prima facie entitlement established by the tripartite agreement were likely to change (in respect of each of the shares that were fixed). 105 It follows that the first, second and sixth issues should be resolved in substance on the basis that, as I have just indicated, the origination charge referred to in Schedule C to the Optus agreement is the amount retained (in a notional sense) by the originating carrier (AT&T or Hellenic) pursuant to any lawful entitlement, including under any applicable tripartite agreement and under any applicable confidential agreement. 106 Before leaving these issues, I should note that the parties in submissions put a number of other arguments that, they said, supported their respective positions. Thus, Gilsan submitted (among other things) that the effect of adopting Optus' construction was that the amount of the terminating carrier's share might be decreased; and Optus pointed to the commercial absurdities that (it submitted) would flow if Gilsan's construction were adopted. 107 As to the former matter: Optus did not submit that any confidential agreement, to which the terminating carrier would not be a party, could have the effect of reducing the terminating carrier's entitlement. Mr Hibbard accepted this proposition. Nonetheless, Gilsan produced worked examples to show (it submitted) that this is precisely what would occur. However, those worked examples failed to take account of the circumstance that TVL had bargained away all but USD 0.10 of its share in the TAR. On no view of events (at least, up until the purported implementation in 2001 of what was said to be the effect of the Benchmark Order) did any dealing between Optus and the originating carriers have the effect of reducing TVL's entitlement below the agreed amount of USD 0.10. Further, to the extent that those dealings reduced the inpayment to Optus to an amount that (before or after deduction of the Optus fee of SDR 0.175) was less than the termination charge established under the relevant tripartite agreement, those dealings, or their effect, were made known to Gilsan and Gilsan at least impliedly accepted them. The result was to reduce the inpayment to Gilsan, but to leave unaffected the TVL charge of USD 0.10 per minute of traffic. 108 As to the latter: whilst I accept that the courts should strain against giving an uncommercial, let alone absurd, interpretation to commercial documents, I have not found it necessary to give detailed consideration to the arguments of the parties on this point. That is because, in substance, I think that the words "their share of" that were added to Schedule C at the time of execution of the Optus agreement were intended to, and did, avert the consequences invoked by Optus as following from adoption of Gilsan's interpretation. 109 In general, however, and because I have come to a clear view on the proper construction to be given the words of Schedule C, I do not propose to deal in detail with all the arguments advanced by the parties. They are adequately identified in the detailed written submissions that were filed. Eighth and ninth issues: under-declaration of minutes 110 Clauses 1.5 and 1.6 of the Optus agreement dealt with payment "of all monies due, as defined in Schedule C hereto, for each calendar month in which traffic was generated." Neither of those clauses, nor Schedule C, specified the way in which the minutes of traffic in respect of which payment was to be made, carried by Optus for Gilsan, should be measured. 111 In practice, Optus declared minutes of traffic to Gilsan monthly. Optus made payment (to the extent that it did) by reference to the minutes so declared. However, as the evidence showed, the minutes declared by Optus to Gilsan were, for almost all months and overall, less than the minutes actually measured by Optus. For AT&T traffic, the overall difference from January 1999 to February 2001 was 396,542 minutes or 1.7%. For Hellenic, the figures are 34,683 minutes and 3%. (The figures, although not the percentages, were agreed between the parties: see exhibits PX 31R, for AT&T, and PX 32R for Hellenic.) With disarming frankness, Ms Bicknell said that the only explanation of which she was aware was "that it was the practice of Optus during some months to declare at 99%" (T 909.22) and that she did not think that "there was any reference to the contract in regards to the contract" (T 909.27); these observations, made in relation to AT&T traffic, applied also to Hellenic traffic (T 910.10). There is no suggestion that any representative of Optus even mentioned this practice to any representative of Gilsan, let alone that Gilsan's consent was sought or obtained. Gilsan said in its written submissions that the practice was only ascertained on inspection of discovered documents; and Optus did not controvert this. 112 Optus did not submit that it was entitled to withhold payment otherwise than in accordance with the terms of the Optus agreement as from time to time renegotiated. It did refer in submissions to cl 1.4, and submit that there was no evidence of the "normal traffic accounting and payment terms" referred to in that sub clause. That submission appears to me to be misconceived. Clause 1.4 deals with the obligation of Optus to pay the terminating carrier the amount due to it under Schedule B. It has nothing to do with the obligation of Optus to pay Gilsan under cls 1.5 and 1.6, and Schedule C. 113 Optus did, however, submit that a decision on issue 9 should be deferred pending the outcome of an arbitration between it and AT&T. For that submission, Optus relied upon its entitlement, under cl 1.6 (as from time to time varied), to withhold 25% or, for a time, 10% of the amount otherwise due to Gilsan until after it received payment from (relevantly for present purposes) the originating carriers. 114 It appears that AT&T did not receive payment (presumably, from local carriers or perhaps, in some cases, from its own subscribers) for some of the Vanuatu traffic that it routed through Optus as the transit carrier. AT&T purported to claw back from Optus an amount equal to the amounts not paid to it. This it did by deducting from monies otherwise due to Optus what it said were the underpayments in earlier months. Further, it appears, the practice of underdeclaration was contagious: Optus asserted, and AT&T has admitted, that AT&T underdeclared significantly the number of minutes of switched traffic routed by AT&T through Optus to TVL, and paid Optus accordingly. 115 In arbitration proceedings in the London Court of International Arbitration, Optus has made a number of claims against AT&T including in respect of AT&T's purported clawback and in respect of AT&T's underdeclaration. AT&T intends to cross-claim to recover what it says are overpayments to Optus. There has been no award made in the arbitration. 116 Optus and AT&T have entered into an agreement which purports to narrow the areas of dispute between them. That agreement provides, relevantly, as follows:

(1) In respect of the proposed AT&T overpayment cross-claim, Optus acknowledges that it was overpaid USD 16.1 million "for the 1996-2000 period … in respect of transit fees for audiotext traffic from AT&T via Optus to Vanuatu and/or telephone numbers in the Vanuatu number range", and that this amount is due and owing and is to be taken into account by the arbitrators in their award.

(2) AT&T acknowledges that it owes Optus USD 9.5 million in respect of the underdeclaration claim and that this amount is to be taken into account by the arbitrators in their award.

(3) AT&T agrees that it owes Optus USD 1.139 million in respect of the clawback claim and that this amount is to be taken into account by the arbitrators in their award.

(4) The parties agree that the balance of the clawback claim (the distinction between AT&T on the one hand and Concert on the other can, as always, be ignored for present purposes) is USD 17.76 million and that this remains for decision by the arbitrators. 117 It is apparent, both from the date ranges referred to and from the amounts of the claims, that not all these amounts are referable to Gilsan traffic. 118 I think it clear, reading cls 1.5, 1.6 and Schedule B together, that the obligation of Optus is to pay Gilsan for traffic actually measured by Optus, subject to deduction in accordance with cl 1.6. (The proper construction of cl 1.6, as from time to time varied, will be considered in connection with issues 48-50.) Optus did not submit that (for example) its obligation to pay Gilsan under those provisions was to be quantified by reference not to minutes measured by Optus but (for example) to minutes declared by originating carriers to Optus. Any such submission would be inconsistent with Optus' practice of paying by reference to what it represented to Gilsan as its measured minutes. It would be also inconsistent with the structure of cls 1.5 and 1.6. Under the former subclause, the obligation of Optus is to pay by reference to traffic generated in calendar months. Deductions in respect of nonpayment by originating carriers are dealt with separately under the latter subclause. This, no doubt, reflects the likelihood that it might take some time for originating carriers to declare to Optus and make payment: something reflected by Optus' description of its fee as both a transit fee and a "factoring" fee. Optus regarded the payment arrangements set out by cls 1.5 and 1.6 as involving factoring because, subject to deductions under cl 1.6, it was Optus that assumed the credit risk, and in any event the opportunity cost, in respect of nonpayment or delayed payment by originating carriers. 119 I therefore conclude that issue 8 should be answered by saying that Optus' obligations under cls 1.5 and 1.6 were to make payments to Gilsan pursuant to those clauses (the latter as varied from time to time) in respect of the number of minutes of traffic measured by Optus for each month. Its obligations under cl 1.6 were qualified in respect of "uncollectibles": something that I consider in paras [415] and following below. 120 Issue 9 requires further consideration. That is best done in the context of issues 48 to 54, which require analysis of the application of cls 1.5 and 1.6 (the latter as varied from time to time). 121 The conclusion to which I have come raises also Optus' general defence of equitable set-off. That is the subject of issue 55 and I will deal with it when I come to that issue. Issue 10: the USD/SDR Optus fee claim 122 Under Schedule C to the Optus agreement, Optus' entitlement was fixed at SDR 0.175, subject to review. It is common ground that, at the time the Optus agreement was made, SDR 0.175 was worth approximately USD 0.25. Thereafter, the exchange rate between SDR and USD varied, with SDR consistently devaluing against USD. By the end of 2001, SDR 0.175 was worth approximately USD 0.22. (As with the underdeclaration claim, the precise figures have been agreed between the parties: see exhibit PX 30R.) 123 Optus did not submit that it was entitled, under the Optus agreement, to retain USD 0.25 as its fee regardless of the exchange rate. It says, however, that in about January 1999, or alternatively in about July 1999, it agreed with Gilsan that the Optus fee referred to in Schedule C would be USD 0.25 per minute of traffic where the originating carrier paid Optus in USD and SDR 0.175 where the originating carrier paid Optus in SDR. That agreement is said to be one implied from conduct. The conduct relied upon includes:

(1) A conversation between Messrs Bragg and Warwick in about December 1998;

(2) A number of conversations between Ms Papachatgis and Messrs Pearson and Warwick in the period March to May 1999;

(3) E-mails sent by Ms Papachatgis to Mr Pearson or Mr Warwick in May and July 1999;

(4) Optus' practice of paying itself, and thereby deducting from the amount payable to Gilsan, in USD for traffic originated by AT&T; and

(5) Gilsan's conduct in accepting without protest (Optus said) deductions so made. 124 In final submissions, Optus did not rely upon the first of those matters. That no doubt reflected an acceptance of the position, put by Gilsan, that regardless of statements made in the course of negotiations, both the Optus agreement as it was signed and a number of the preceding drafts were clear and unambiguous, and referred in Schedule C only to an Optus fee quantified at SDR 0.175. 125 The conversations between Ms Papachatgis and Messrs Warwick and Pearson relied upon by Optus include the conversation that is said to have occurred at the Ritz Hotel in about April 1999. For the reasons that I give in paras [69] to [77] above, I do not regard Ms Papachatgis' evidence of that conversation as persuasive. 126 Ms Papachatgis' evidence was that, in the course of the Ritz conversation (and in subsequent conversations), she said, when asked why the Optus fee was deducted at the fixed amount of USD 0.25 rather than the actual USD equivalent from time to time of SDR 0.175, that Optus deducted its fee at the rate of USD 0.25 when originating carriers accounted to it in USD and at the rate of SDR 0.175 when originating carriers accounted to it in SDR. In some conversations, she said, the discussion was more elaborate, and included reference to the inability of Optus' systems to handle a floating exchange rate. 127 Messrs Warwick and Pearson in their statements denied the conversations alleged by Ms Papachatgis. Optus relies upon Mr Warwick's evidence in cross-examination as follows (T 308.25/.46): "Q. You recall, don't you, that in the period of March to May 1999 Ms Papachatgis of Optus told you that Optus's transit fee would be calculated at 25 cents US for US traffic, or for any other originating carrier which accounts in US dollars? A. Did she tell me that in an email?

Q. I'm asking you whether you recall her saying that? A. No.

Q. You don't deny that she may well have said that, do you? A. She may well have done.

Q. Thank you. And she may well have said also, in that period of March to May 1999, that for other origins which account with Optus using SDRs, Optus would use SDR 0.175 as the transit fee? A. She may well have done.

Q. And you accepted that position, didn't you? A. I can't either deny or agree that."

That was not put specifically in relation to the Ritz conversation. 128 Mr Pearson was not cross-examined out of his denial of the Ritz conversation. However, he does agree that in a subsequent conversation with Ms Papachatgis (Mr Warwick being present) Ms Papachatgis said, when Mr Pearson raised the question of the SDR Optus fee, that SDR 0.175 was approximately USD 0.25 and that is what Optus would deduct. 129 Having regard to my conclusion as to the credibility of Ms Papachatgis, I do not think that there was discussion of this topic at the Ritz Hotel in April 1999. However, I think that there were such discussions at some time (or times) between March and May 1999, in which she told Messrs Warwick and Pearson (or, as she would now have it, one or the other of them) that Optus deducted its fee at the rate of USD 0.25 where the originating carrier accounted to Optus in USD. I doubt that the explanation went to the level of detail suggested by Ms Papachatgis; and I maintain that doubt notwithstanding Mr Warwick's acceptance that she may have said some or all of the things alleged. However, both from Mr Warwick's acceptance that Ms Papachatgis may have said that Optus would deduct its fee in USD where it was paid in USD, and from Mr Pearson's recollection of a conversation to the same effect, I conclude that Ms Papachatgis did indeed make such a statement. 130 Three things however are clear. The first is that Ms Papachatgis did not think that she was proposing a variation to the Optus agreement. The second is that Messrs Warwick and Pearson did not think that she was proposing a variation to the Optus agreement. The third is that Gilsan did not accept that Optus was entitled to do that which Ms Papachatgis said it was doing. 131 As to the first of these matters: Ms Papachatgis did not trouble to read the Optus agreement until, at the earliest, June 1999. She said, in the context of her e-mail of 31 May 1999 to which I shall turn shortly, that it was "more than likely" that she would have written in its terms even if she had been aware of the terms of the Optus agreement (T 647.46). When asked whether she cared what the contract said, she said "No" (T 612.44) although she explained this answer by saying: "It's not that I didn't care. I - I believe we were doing business in a certain way … [a]nd that is the way we did business in that way for a certain reason, to satisfy all parties involved" (T 612.47/613.6). When asked whether it mattered to her whether the agreement said anything different she replied: "I guess the agreement was a base of like a starting point, which we evolved together to make the business what it was." (T 613.10). Although these answers were given in the context of Optus' "pay when paid" mentality, I believe that they are equally reflective of her attitude to the SDR/USD issue and, as I have noted, reflective more generally of the Optus imposition culture. It is impossible to conclude that Ms Papachatgis, knowing nothing of the terms of the Optus agreement, had any subjective or actual intention to seek to vary it. 132 As to the second matter: just as it is impossible to attribute to Ms Papachatgis any subjective intention to propose a variation to the Optus agreement, so it is impossible to conclude that those to whom she spoke could have construed what she said as such a proposal. This is so even if one accepts, against what I have said, that the words spoken were precisely as Ms Papachatgis set them out. At the highest, Ms Papachatgis was stating Optus' position and providing a justification for that position. To the extent that it matters, it was not put to Messrs Warwick and Pearson that they understood Ms Papachatgis, in the relevant conversations, to be proposing a variation to the Optus agreement; and they did not otherwise indicate that they so understood her words. 133 As to the third matter: Mr Warwick could neither deny or agree that he "accepted" Optus' position as it may have been put to him by Ms Papachatgis. That reflected his lack of recall of the relevant conversations. On the other evidence to which I shall turn shortly, it is clear that Gilsan did not accept that Optus was entitled to do as it did, in charging a fee of USD 0.25 for traffic originated by AT&T, regardless of the particular exchange rate. 134 In this context, one significant and uncontroverted piece of evidence was given by Mr Pearson in his statement exhibit PX 12, para 43. Mr Pearson says that he had a conversation with Mr Alex Dance of Optus in June 2000 to the following effect: "At the meeting with Mr Dance in the week of 5 June 2000 we had a conversation to the following effect:

[Mr Pearson]: "The estimate for the Optus fee of 0.175 SDR as $US 0.25 is not accurate. We need to do a reconciliation to determine for each month what the Optus fee is for USA traffic." Mr Dance: "The $US 0.25 is a reasonable estimate. Sometimes the actual figure will be above this and sometimes below." [Mr Pearson]: "It seems to me that the estimate is always in Optus' favour. We should maintain a watch on it and I expect at some stage we'll reconcile the difference"." 135 Mr Dance was not called. Mr Pearson's account of that conversation was not contested. I accept it. 136 Another significant piece of evidence in this context comes, again, from Mr Pearson. He said that he had a discussion with Mr Pazmino in August 2000 to the following effect (exhibit PX 12, para 44): "During the week commencing 14 August 2000 I met with Mr Franc Pazmino from Optus and we had a conversation to the following effect:

[Mr Pearson]: "The practice of converting the Optus fee to US$ 0.25 is continuing to err in Optus' favour." Mr Pazmino: "It probably averages out." [Mr Pearson]: "I don't agree, it's consistently in Optus' favour. We need to keep this under review"." 137 Mr Pazmino says that he did not recall that conversation. He did not deny that it occurred. I accept that it did occur. It is consistent with Mr Pearson's attitude at the time that he was continuing to query the way in which Optus treated the USD/SDR exchange rate issue. Mr Pearson was, as other witnesses noted, and as is in any event apparent from the records kept by him, a meticulous man who would not leave anything unattended to until he was satisfied that it had been resolved. It is inherently likely that, not being satisfied with the position taken by Optus on this issue, he would have continued to raise it with representatives of Optus. 138 I turn now to the e-mails upon which Optus relies. The first was sent by Ms Papachatgis to Mr Pearson, with copies to Messrs Bragg and Warwick. The background to this e-mail is that, notwithstanding the terms of cls 1.5 and 1.6 of the Optus agreement, Optus had not made any payment to Gilsan for traffic carried by Optus for Gilsan. That, it appears, was one of the matters that had been discussed at the Ritz meeting. (The question of payment had been raised between Messrs Warwick and Bragg as well as between Mr Pearson and Ms Papachatgis.) 139 In what appears to be the first e-mail in the sequence, from Mr Pearson to Ms Papachatgis dated 14 May 1999 (or in an attachment to that e-mail), Mr Pearson enclosed "a schedule of my expectations of the revenues due to you from Gilsan … ". He said: "The rate sheet I have quotes a rate of 1.25 SDR's per minute for USA traffic. … In our earlier conversation you suggested that we convert everything to US$ quoting the Optus fee of .175 SDR's as 25c US. Using the same rate of conversation I calculate it gives $1.785 per minute. This is assuming that the traffic has been transited through Hong Kong Telecom or Telecom New Zealand if the traffic is direct, which presumably you will at some time be able to let me know from your statistics the rate will be higher. I am happy to use 1.785 as a provisional rate." 140 After at least one reminder, Ms Papachatgis replied on 31 May 1999. Her reply dealt with the timing of payments and other matters. It concluded: "Regarding the rate you quoted of SDR 1.25 per minute from the USA, I am not sure which rate sheet you're quoting from. Could you please clarify. Our transit/factoring fee is US$0.25 per minute for this traffic and our outpayment is US$1.61 or US$1.54 depending on the origin carrier." 141 Mr Pearson forwarded that e-mail and, it would seem, his reply to Mr Warwick. In the reply, Mr Pearson explained what was the rate sheet he had used and that, since most of it was quoted in SDR, he "had therefore converted everything to SDR's as a starting point", forgetting "that the original rate was quoted in USD." He did not expressly address Ms Papachatgis' last paragraph. He did, however, state: "Obviously there are a few gaps between expectation and delivery and I am glad we have the opportunity to resolve these before the traffic reaches the levels of the Caribbean contracts."

(The reference to "the Caribbean contracts" was a reference to earlier dealings, relating to audiotext traffic carried by Optus for Gilsan to terminating carriers in the Caribbean.) 142 The next e-mail upon which Optus relies was sent by Ms Papachatgis to Mr Pearson, copied to Messrs Warwick and Bragg, dated 19 July 1999. The subject of that e-mail was said to be "Clarification". Addressed to "Dear Paul", it responded to a number of queries that had been raised by Mr Pearson, including in his e-mail (referred to in the previous paragraph), responding to Ms Papachatgis' 31 May 1999 e-mail, and in an e-mail of 14 July 1999. In the latter e-mail, Mr Pearson said, among other things: "Without prejudice to the contracts themselves if you are seeking to change the rates or the terms the least you can do is to tell us immediately so that we can take the necessary action. … Can I remind you that we have seen 7,500 minutes per day so far. Pro rata in terms of host fees and re routing fees this will be worth almost US$ 900,000 per year of which I suspect virtually all is profit [sic]. …" 143 In her response, Ms Papachatgis said among other things: "Regarding your point about the host fee to be based on the net agreed minutes. By host fee I assume you mean transit fee. The fees are calculated individually for both incoming traffic and outgoing traffic. For traffic into Optus as previously agreed, the transit fee to Optus is either SDR 0.175 p/m or US$ 0.25 p/m depending on the accounting arrangements of the origin carrier." 144 It is difficult to identify the "point about the host fee to be based on the net agreed minutes" to which Ms Papachatgis was responding. However, it is quite clear that, by 19 July 1999, Ms Papachatgis understood that there had been an agreement, as to the currency in which the Optus fee would be deducted, in the terms set out. It is equally clear that in fact there had been no such agreement on this topic other than Schedule C to the Optus agreement; which was quite inconsistent with Ms Papachatgis' understanding. 145 Mr Warwick replied to Ms Papachatgis' e-mail. He commented only on some of the points she raised. He did not query the statement that I have set out in para [143]. 146 It does not appear that Mr Pearson replied at all to Ms Papachatgis' e-mail. He said that he did not "review" it, but that he assumed that any difference between SDR 0.175 and USD 0.25 would be adjusted at some later time. He did however agree that he had read the e-mail (T 393.5-.18). 147 Optus submitted that Mr Pearson's evidence on this point was not relevant; but that, if it were, it should be rejected. It relied, among other things, upon the alleged absence of any request for a reconciliation. I do not accept the second limb of that submission. As I have found in paras [134] to [136] above, Mr Pearson made oral requests that included, in substance, a request for reconciliation of the Optus fee, both before and after the e-mail of 31 July 1999. 148 In relation to the absence of response (let alone denial) of the relevant assertion in Ms Papachatgis' e-mail of 19 July 1999, Optus relied on what Gibbs CJ had stated in Thomas v Hollier (1984) 156 CLR 152, 157. As his Honour said, the decision in that appeal turned on "what inferences should properly be drawn from the meagre evidence presented by the parties". It was in that context that his Honour considered the failure of the appellant to answer a letter from the respondent's solicitors. He said that the failure to respond could amount to an admission if there were circumstances making it more likely than not that someone receiving such a letter would answer the allegations made in it. In the circumstances of that case, his Honour concluded at 158 that the failure to respond "is therefore an admission - although perhaps in itself not strong evidence" of the correctness of the allegations made in the unanswered letter. It may be noted that his Honour dissented in the actual decision in that case, but I do not regard that as detracting from the guidance to be gained from this portion of his Honour's reasons. 149 Optus pointed to the fact that Mr Pearson both was and was acknowledged to be, as I have already said, meticulous in the performance of his duties. It submitted, with some force, that it was more likely than not that such a person would have responded to anything in an e-mail that he thought to be incorrect. 150 I do not think that the circumstances in totality justify the drawing of the inference for which Optus contends as flowing from the absence of response or denial to the particular passage in Ms Papachatgis' e-mail. There are a number of reasons for this. Firstly, there was no such prior agreement. Secondly, the particular point made by Ms Papachatgis was at best, in the context of Mr Pearson's questions and her responses, peripheral. Thirdly, Mr Warwick had responded to what, clearly enough, he thought were the principal points of concern in Ms Papachatgis' e-mail. Fourthly, as I have noted, Mr Pearson's conduct both before and after the e-mail was sent is inconsistent with an acknowledgment on his part that any such agreement had been reached. 151 I do not think that Ms Papachatgis, in using the words "as previously agreed", was intending to refer to some oral agreement made by her with Messrs Warwick and (or) Pearson. I think she was intending to refer to the agreement actually made between Gilsan and Optus, rather than to some variation of that agreement. She said that it was about "June/ish" that she looked at the agreement (in answer to a question suggesting that this happened "around about the middle of the year") (T 597.43). In truth, I think, the likelihood is that she had not looked at the Optus agreement at the time she wrote her e-mail of 19 July 1999; or, if she had, she did not appreciate that Schedule C was not in a form that entitled Optus to charge its fee in SDR or USD according to the currency in which the originating carrier accounted to it. (At no stage did Ms Papachatgis suggest that she had closely studied, or made herself thoroughly familiar with, the terms of the Optus agreement.) In other words, I think that when Ms Papachatgis in her e-mail of 19 July 1999 referred to the previous agreement, she was referring to her understanding of Schedule C to the Optus agreement, and that her understanding was deficient. I do not think that Ms Papachatgis was being dishonest, in suggesting that there had been an agreement to vary Schedule C when no such agreement had been reached. I think that her understanding of Schedule C was that it entitled Optus to do what, in her e-mail of 19 July 1999, she said that it was entitled to do. 152 Thus, whilst I accept that Mr Pearson's personality is such that one might expect him to have responded to any statement that he thought to be incorrect, I do not regard his failure to respond as being, in context, a sufficient basis for the drawing of the inference for which Optus contends. 153 More generally, on this issue, Optus relied on the analysis of Heydon JA in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 commencing at 176 [71]. Specifically, it relied on the test enunciated by Scrutton LJ in Sullivan v Constable (1932) 48 TLR 369, 370, which was cited with approval by Heydon JA at 181 [85]. His Lordship said that if one party so acted that the other was reasonably entitled to believe that the first party was assenting to the position asserted by the other, then the first party was bound. That, it said, was the effect of Gilsan's conduct. 154 At 176 [71], Heydon JA pointed out that the analysis of offer and acceptance "is neither sufficient to explain all cases nor necessary to explain all cases". He said at 177 [74] that "offer and acceptance analysis is a useful tool in most circumstances and indeed is "normal" and "conventional" …". After a review of the authorities, he concluded at 179 [81]: "In the light of the above cases, it is relevant to ask: in all the circumstances can an agreement be inferred? Has mutual assent been manifested? What would a reasonable person in the position of the Council and a reasonable person in the position of the defendant think as to whether there was a concluded bargain?" 155 Thus, where (on the facts before his Honour) the Council offered a commercial benefit to the defendant subject to certain conditions, and where the defendant, having at first expressly rejected the offer, thereafter took advantage of the benefit offered (by charging the higher prices for waste disposal permitted by Council on a certain condition), the conclusion to be drawn was that the defendant accepted the condition. His Honour said at 179 [82]: "The charging of the higher prices by the defendant could convey one of two possibilities, that it was acting in breach of the condition on which the benefit was being conferred, or that the defendant was accepting that condition. A reasonable bystander, and in particular a reasonable bystander in the position of the Council, would prefer the latter possibility. Once the Council came to learn that the defendant was charging the higher fees … it would reasonably have thought that a contract existed between the parties on the terms of the [relevant] letter." 156 On this analysis, as his Honour pointed out at 181 [86], it was not necessary for the offeree to communicate to the offeror acceptance of the offer. It was sufficient that the offeror know of the acceptance. The offeror might know of acceptance where there was conduct on the part of the offeree consistent with acceptance, and where the offeree did not make it clear to the offeror that the conduct in question was not an acceptance of the offer. 157 Whether one resolves the issue in the present case by reference to the questions posed by Heydon JA at 179 [81] (see para [154] above), or by reference to the test posed by Scrutton LJ in Sullivan (see para [153] above), the result, in my judgment, is the same. There was no contract. That is because the analysis, on either approach (to the extent that there is any difference between them), requires a consideration of the whole of the circumstances, and requires consideration of the position of a reasonable bystander in the position (in this case) of Optus. 158 A reasonable person in the position of Optus would know that:

(1) Under the Optus agreement, Optus had no right to charge either SDR 0.175 or USD 0.25, depending on the currency in which the originating carrier accounted to it;

(2) Accordingly, if Optus were to charge in USD, it could only do so on the basis of the actual exchange rate from time to time applicable unless Gilsan agreed otherwise;

(3) There had been no such agreement to this, contrary to that which was asserted by Ms Papachatgis in her e-mail of 19 July 1991;

(4) Accordingly, it was likely that Messrs Warwick and Pearson had overlooked, or omitted to respond, to the particular point;

(5) Because of Optus' long delay in making any payment, there had been no long standing practice, in the accounting between the parties, of Optus charging on the basis asserted by Ms Papachatgis as its right; and

(6) Both before and after the e-mail was sent, Mr Pearson had queried the asserted right with other employees of Optus and had requested a reconciliation on the basis of the actual exchange rates from time to time applicable. 159 I therefore conclude that issue 10 should be answered in the negative. 160 That answer means that it will be necessary to consider in the context of this particular claim the issues referred to in paras [120] and [121] above. Issues 11 and 12: Gilsan's 2001 failure to pay claim; Gilsan's failure to account claim 161 The real issue in relation to the 2001 failure to pay claim is whether, in respect of traffic originated by AT&T, the Benchmark Order had the effect of reducing Gilsan's entitlement under the Optus agreement to USD 0.02 per minute. That issue is best considered in the context of issues 32 to 40 (Optus' AT&T traffic overpayment claim) in which context the terms and application of the Benchmark Order require close attention. 162 The other claims subsumed under issue 11 and issue 12 (which is in essence a "catchall" claim to gather anything that may fall outside the preceding Gilsan underpayment claims) do not involve any particular point of dispute. They are, however, subject to Optus' contractual defences generally and to the issues referred to in paras [120] and [121] above. Issues 13 to 16: Gilsan's reply claim 163 The reply claim has three elements:

(1) alleged breach of s 52 of the Trade Practices Act 1974 (Cth) - misleading or deceptive conduct;

(2) alleged breach of s 51AC of the Trade Practices Act - unconscionable conduct; and

(3) alleged breach of an implied obligation of good faith. 164 Gilsan relies upon the same underlying facts in support of each element. In substance, Gilsan says that Optus should have informed, but did not inform, it of the existence and effect of the confidential agreements in place from time to time between it and AT&T; and should have informed, but did not inform, it of the fact that, by reason of the existence and terms of those agreements, the amount payable by AT&T to Optus would be less than USD 2.21. (There is a slight variation, in respect of the amount payable, because of the particular terms of the confidential agreements in place in 1999 and 2000, but nothing of present significance turns on this.) 165 Gilsan says that, had it known of the existence and effect of the confidential agreements, it would have sought to renegotiate its agreement with Optus or its agreement with TVL; alternatively, that it would have sought to prevail upon Optus to renegotiate Optus' agreement with AT&T; alternatively, that it might have negotiated with transit carriers other than Optus, who might have been able to get a better transit rate from AT&T. It says that it lost those opportunities because it was not made aware of the existence or effect of the confidential agreements. 166 There is a simple answer to Gilsan's claim, in so far as it relies upon ss 52 or 51AC of the Trade Practices Act. That answer is that, as Mr Warwick acknowledged, the matter that was significant to him was the amount of the inpayment to Optus (of which, on any view of the facts, he was informed), and that he had no interest in the derivation of the amount of that inpayment (see para [51] above). I accept that evidence. The consequence is that the non disclosure to Mr Warwick (and, through him, to Gilsan) of the arrangements whereby the inpayment to Optus was derived were of no significance. The simple fact is that he was told, and organised his affairs on the basis that, the inpayment would be USD 1.89. He lost nothing by being kept ignorant of the precise basis upon which the balance of the TAR, USD 2.21, was to be divided between AT&T and Optus. There was no basis shown whereby Mr Warwick, credibly or otherwise, could have understood that if Optus gave up some part of its "official" share of the TAR (ie, USD 0.42) then the amount given up would be to the benefit of both AT&T and TVL. He was not misled; and it was not unconscionable for Optus not to inform him of the precise terms of the confidential agreements. 167 At some stage before the making of the Optus agreement, Mr Warwick had understood that the outpayment from AT&T to Optus would be one half of the TAR plus the official transit rate (ie, on the figures established by the AT&T/Optus/TVL tripartite agreement, USD 2.21). That understanding was dispelled before the Optus agreement was made. Mr Warwick visited Sydney in November 1998; and during that visit, Mr Bragg told him that the inpayment to Optus from AT&T for Vanuatu traffic would be USD 1.89. As Mr Warwick acknowledged, this information made it apparent to him that AT&T would be retaining out of the TAR an amount of USD 2.11. It was in this context that Mr Warwick focussed upon the inpayment to Optus; understandably enough, because it was this amount (ie, the amount available for division between Optus, Gilsan and TVL) that was the key to the viability of his business. Had Mr Warwick paused to consider the matter, it must have been obvious to him (as, with the benefit of hindsight he conceded - T 210.37) that his original assumption, as to the division of the TAR, was wrong. 168 There is no basis for thinking that Mr Warwick had any interest in knowing how the inpayment to Optus of USD 1.89 was calculated. There is no basis for thinking that he would have taken a different course had he known how that inpayment was calculated. There is no basis for thinking that he was in any way misled or deceived by the failure of Optus to disclose to him how that inpayment was calculated. (I assume, without deciding, that the omission to state something that is not, and could not reasonably be thought to have been, relevant could be regarded as a "failure".) 169 That is sufficient to dispose of the s 52 case. It is also sufficient to dispose of the alternative formulations of that case, relying on s 51AC and on an implied duty of good faith. As to s 51AC: it cannot be unconscionable to fail to disclose something that is not of significance, in a context where that which is of significance has been disclosed accurately. At to the implied duty of good faith: assuming that there is to be implied into the Optus agreement an obligation of good faith, that obligation, at its highest, required Optus to do all things necessary on its part to enable Gilsan to have the benefit of their contract, and not to hinder or prevent the fulfilment of the purpose of that contract. (The content of the obligation of good faith was so expressed in para 316 of Gilsan's written submissions dated 24 September 2004, apparently picked up in para 511 of those submissions where the implied obligation was analysed in the context of the reply claim.) In the light of Mr Warwick's evidence, considered against the background that the evidence establishes, and the probabilities objectively viewed, Optus' non disclosure of the calculation of the inpayment to it was of no moment. It cannot have breached an obligation of the kind alleged by Gilsan. 170 There are further disclosures relied upon by Gilsan. Some of those are said to have been made by Ms Papachatgis in the Ritz Hotel conversation or in other conversations between March and May 1999. For reasons that I have given, I do not accept Ms Papachatgis' evidence of these conversations except to the extent that it was accepted by Mr Pearson or Mr Warwick. It was not. But this does not improve Gilsan's case. 171 However, in mid June 2000, Mr Bragg and Ms Bicknell sent to Mr Warwick e-mails (which Mr Warwick forwarded to Mr Pearson) that disclosed, to anyone who looked at them carefully, the existence and effect of confidential agreements. Ms Bicknell sent a further e-mail to Mr Warwick, conveying the same information, in July 2000. They are the e-mails referred to in para [52] above. If - contrary to my conclusion - there had been a relevant non disclosure, that non disclosure was corrected no later than the end of July 2000. This is confirmed by a spreadsheet prepared by Mr Pearson in April 2001, setting out details of the TAR, the transit rate, the confidential transit rate and the inpayment to Optus. Both Mr Pearson and Mr Warwick accepted that all the information necessary to enable Mr Pearson to prepare that spreadsheet was available from the e-mails to which I have just referred. It is notable that Mr Warwick did not, in June or July 2000 or thereafter at any relevant time, complain that he had been misled, deceived or kept in the dark. 172 Finally, in respect of all three aspects of this claim, Optus submitted that Gilsan had suffered no loss. I accept that submission. Mr Warwick sought to say that, had he been made aware of the relevant information, he would have acted in the way that I have outlined in para [165] above. It is notable that, when (on his case) he became aware of the relevant information (or when, in truth, he was reminded of it) in June/July 2000, he took none of those steps. Further, there is no basis in the evidence to conclude that Mr Warwick would have been able to renegotiate the Optus transit charge of SDR 0.175; on the contrary, Ms Bicknell said, and I accept, that any attempt to renegotiate that charge would have been unsuccessful (see her statement of 4 September 2003, exhibit DX 23, para 26; see also her cross-examination on that at T 870.33 - 872.17). 173 Optus relied on an additional defence in relation to the case in so far as it was based on s 51AC. That section deals with unconscionable conduct in connection with the supply or possible supply, or acquisition or possible acquisition, of goods or services. By sub s (9), a reference to the supply or possible supply of goods or services does not include a reference to the supply or possible supply of goods or services at a price in excess of (presently) $3 million, or such higher amount as may be prescribed. The parties agreed that the amount prescribed by s 51AC(9) was $1 million up until 30 June 2000, and $3 million thereafter. 174 Based on the actual minutes declared by Optus to Gilsan (putting to one side the fact that there was an underdeclaration), and taking a conversion rate of SDR 0.175 = USD 0.22 (effectively, a rate that would yield the lowest value for the total value of the services supplied), the total price of the services supplied by Optus to Gilsan under and during the currency of the Optus agreement was about USD 5.28 million. I think that I can take notice of the fact that USD 5.28 million is well above $3 million (or $1 million) in Australian currency. It followed, Optus submitted, that in any event s 51AC had no application. 175 Untutored by authority, I would have been inclined not to accept this submission. However, Optus relied on the decision of Barrett J in Overlook v Foxtel (2002) ATPR (Digest) ¶ 46-219; [2002] NSWSC 17. That case concerned the supply of services at a rate of $49.95 per month, with additional services priced at $19.95 per month each. Barrett J held that, where there was continuity of supply and acquisition under a single contract over a period of time, the relevant "price" for the purposes of s 51AC was at least the aggregate of the amounts paid in respect of the supply and acquisition up until that time. His Honour said "at least" because he thought that, where there was the possibility of future supply, an assessment of "price" may have involved some assessment of the likely amount payable for that future price. Thus, he said, where the amount actually paid at a particular time exceeded the statutory limit, s 51AC did not apply. 176 A contract for the supply of services may be made for a fixed duration or at will (ie, until one party or the other decides to terminate it). The services that are supplied may be fixed in nature and quantum or they may vary (expand or contract) from time to time. Depending upon the variables that are concluded in the bargain, or assumed, the "price" that is, or will be, payable under the contract may, or may not, be susceptible of calculation at any given point in time. Where the variables are such that the overall price is at any time susceptible of calculation, one can see, at any point during the life of the contract, whether s 51AC could be invoked. Where, however, the price that is payable depends upon assumptions as to those variables (for example, the length of time for which the contract will subsist, or the amount of services that will be supplied while it subsists), the position is not so clear. It seems strange, in the latter circumstances, that the application of s 51AC will depend upon the point in time at which the analysis is undertaken. For my own part, I would be slow to adopt a construction and application of s 51AC(9) that gave the section an ambulatory effect (applicable or not applicable, according to the time at which the question is asked and answered). However, having regard to the conclusions to which I have come on the other questions relevant to this issue, I need express no concluded view. Issues 17 to 23: the rogue traffic claim Factual background 177 Under cl 1.6 of the TVL agreement, Gilsan had "exclusive access to number ranges under [TVL's] control for the purposes of offering International Internet Dialup service for a period of 12 months from commencement of service." Thereafter, exclusivity was dependent on Gilsan generating a monthly minimum of 100,000 minutes of traffic. 178 Clause 6 of the TVL agreement dealt with termination. It included provision for automatic termination if TVL "receives instruction from the Government of the Republic of Vanuatu to cease offering facilities for International Audiotex and Internet Dialup Services". 179 A copy of the TVL agreement was sent to Mr Bragg by facsimile transmission on 19 January 1999. Whilst it is possible that he may have known of the existence and general effect of that agreement prior to 19 January 1999, it is clear that he had knowledge, or the means of knowledge, of the entirety of its terms from that date. 180 On 1 March 1999, the Minister for Infrastructure and Public Utilities of Vanuatu wrote to the Managing Director of TVL. The Minister required "on behalf of the Government" that TVL immediately take the steps required to cease to offer dialup international services using the access code 678, and directed that all current contracts must be cancelled without delay. (The letter was written in French. Both an "unofficial translation" and a certified translation were proved. It will be necessary to consider the differences between them.) 181 On 5 March 1999, TVL wrote to Mr Warwick at Gilsan. TVL referred to the Minister's letter and attached a copy of the original (French) letter and a copy of the unofficial translation. TVL stated that the agreement between it and Gilsan had terminated automatically in accordance with cl 6 of the TVL agreement: "In accordance with the instructions of the Government of the Republic of Vanuatu to cease offering facilities for Internet Services on international access code (+ 678), TVL is compelled to state that the Memorandum of Understanding between TVL and Gilsan (International) Limited dated 24 November 1998 has automatically been terminated as described in paragraph # 6 of above stated Memorandum of Understanding". 182 On the same day, TVL wrote to Mr Bragg at Optus. It provided a copy of the Minister's letter and directed Optus to block Gilsan's numbers: "TVL instructs you that the following Vanuatu number ranges previously open to use by Gilsan (International) Limited be immediately blocked for all traffic: (+ 678) 50000 - 58999 & (+ 678) 67XXX". 183 Gilsan did not accept that its agreement with TVL had terminated, or that TVL was entitled to deny it the use of the relevant numbers. On 26 March 1999, Gilsan commenced proceedings in the Supreme Court of Vanuatu claiming specific performance of the TVL agreement, injunctive relief, and damages. Those proceedings were resolved by compromise on 26 October 2000. On that day, TVL and Gilsan entered into an agreement relating to "International Audiotex and Bulletin Board Service". As part of the settlement, and in consideration of the making of that agreement, TVL agreed to pay Gilsan USD 500,000 and Gilsan gave appropriate releases to TVL. I have set out the relevant clauses of that agreement in para [33] above. By cl 1, "IBBS" (the service for which cl 2.4(a) granted exclusivity) was defined as "a Bulletin Board Service accessed by a caller using a computer and modem along with software provided by GILSAN and or its Service Agents providing visual informational services including interactive programmes". It appears to be another name for, or an equivalent to, Gilsan's international internet dialup service. There was no exclusivity for audiotext services. 184 Issue 17 raises the key questions in relation to the rogue traffic claim. If Gilsan had no contractual right of exclusivity after 5 March 1999, then it is unnecessary to consider the remaining issues, because (as the parties ultimately agreed) there was no interference with any such right up until 28 February 1999, and only minimal (if any) interference in March 1999. (The agreed figures show that no purportedly rogue traffic was carried by Optus before the beginning of March 1999, and that only 10 minutes that might have been such traffic were carried by Optus during that month. Although the figures do not show whether that traffic was carried before or after 5 March 1999, or whether it was in truth rogue traffic, Gilsan did not submit that it had suffered any substantial damage thereby.) It follows that the key issues are the effect of the Minister's letter to TVL of 1 March 1999 and the effect of TVL's letter to Gilsan of 5 March 1999. 185 On 15 March 1999, the managing director of TVL, M. Daniel Fermine, wrote to Mr Warwick. M. Fermine referred to steps that he had taken to persuade the Minister to change his mind and noted that, so far, those steps had not been successful. He noted that one of the reasons why they had not been successful was "the problem … on [sic] the exclusivity granted … ". M. Fermine offered to continue to work with Gilsan on a non exclusive basis: " - my personnel [sic] opinion is that TVL should consider continuing to work with Gilsan on the base [sic] of a new contract, without giving to Gilsan any exclusivity."

M. Fermine then dealt further with the problems of exclusivity. 186 There does not appear to be a reply to that letter. However, on 25 March 1998, TVL requested Optus to unblock Gilsan's Vanuatu number ranges: "Following recent discussions concerning Telecom Vanuatu Limited's agreement re audiotext and internet dial up traffic with Gilsan International [sic] Limited with immediate effect, please unblock the following Vanuatu number ranges, being: (+ 678) 50000 - 58999 & (+ 678) 67XXX". 187 Thereafter, Optus continued to carry Gilsan's traffic utilising those numbers. The effect of the Minister's letter of 1 March 1999 188 As I have noted, TVL provided Optus both with the French original of this letter and with an unofficial translation. It is clear, I think, that TVL intended to rely upon the original as being the operative document, and that the unofficial translation was provided for assistance. 189 The unofficial translation of the letter read in full (but omitting formal parts): "The Government of Vanuatu was recently in receipt of information regarding Dial-Up Internet Access Providers on PSTN [ie, the public switched telephone network] and using the international access code 678, apparently in collaboration with TELECOM VANUATU Ltd. Moreover, other information given by the international press make believe that some Internet Networks could be used for money laundering in the South Pacific and particularly in Vanuatu. All this could have an [sic] very negative impact on the image of the country, mainly on tourism and finance activities which make-up [sic] the first wealth of Vanuatu. Consequently, as Minister in charge of Telecommunications, I ask you, on behalf of the Government, to take immediately all the steps in order that Telecom Vanuatu Ltd ceases to offer Dial-up Internet Services using the access code 678. All the current contracts must be cancelled without delay. I also ask you to provide me with all information, you may have, regarding the fraudulent use of Intenet [sic] services". 190 Gilsan proved a verified translation made by an accredited professional translator. Her translation read as follows (again, omitting formal parts): "The Government of Vanuatu has recently received information according to which internet service access providers via the switched telephone network (RTC) (sometimes regrouped under the term Audio Web), use the 678 international access code, presumably in collaboration with TELECOM VANUATU LTD. Moreover, other information released by the International press implies that some internet networks could be serving as a base to money laundering in the South Pacific, and particularly in Vanuatu. All this could have an excessively negative impact on the image of our country, particularly on the tourism and finance activities that make up the main wealth of Vanuatu. Consequently, as minister in charge of Telecommunications, I request you, on behalf of the Government to immediately take all the necessary steps so that TELECOM VANUATU LTD ceases to offer internet services using the 678 access code. The current contracts must be annulled without delay. I also request you to provide me, if the case arises, with all the information you may have, regarding the usage of Internet services for illicit purposes". 191 To the extent that there are differences between what I will call the unofficial and verified translations, I think that I should act on the verified translation as the more accurate representation of the precise English effect of the French original. However, to the extent that it is necessary to consider the understanding the parties (including that of Mr Bragg and others at Optus), it is appropriate to have regard to the unofficial translation, since it was that version that was provided to Mr Bragg. I have little doubt that he read and acted on the unofficial translation rather than the French original. 192 Both the French original and the verified translation make it clear that the letter was written and signed by the Minister himself. The original bears (as well as the Minister's signature) a stamp relating to the relevant department and containing the English word "Minister" within it. 193 It is equally clear that the Minister wrote both in his capacity as Minister and on behalf of the Government of the Republic of Vanuatu. Thus, the first paragraph refers to information received by "the Government of Vanuatu" and the second paragraph refers to the impact that the matters referred to in the first paragraph could have on the image of Vanuatu and on its major industries. Finally, in the third paragraph, the Minister writes in terms as Minister and on behalf of the Government. Although the Minister uses the language of "request", it is I think clear that the request was in fact an instruction or a requirement. That request, instruction or requirement reflected the language of cl 6 of the TVL agreement. That it was an instruction or requirement, and not a request that TVL could act on or not as it chose, is made clear by the following sentence: "The current contracts must be annulled without delay.". 194 The subject of the Minister's letter, as given by the verified translation, is: "Re: Usage of Audio Web or Audiotex Internet Services via switched telephone network (RTC) in Vanuatu." 195 One point of interest is that the unofficial translation refers in terms in both the first and third paragraphs to "Dial-up Internet Access Providers" (first paragraph) or "Dialup Internet Services" (third paragraph). It is apparent that the unofficial translator, who may be thought to have had some knowledge of the subject matter of the Minister's concern as well as of the services offered by TVL, thought that the services that were the subject of the letter included services of the kind offered by Gilsan. In any event, the evidence in the case makes it clear that both audiotext and international internet dial-up services are, as the official translation puts it, services offered by "internet services access providers via the switched telephone network" (first paragraph) and, in the case of Vanuatu, "internet services using the 678 access code" (third paragraph). 196 That TVL so understood the Minister's letter is confirmed not only by the terms of its letter of 5 March 1999 to Gilsan, the relevant part of which I have already set out, but by a fax of the same date from Mr Paul Woollard of TVL to Mr Warwick. In that fax, Mr Woollard referred to the Minister's visit to TVL and said: " … the Honourable Minister took the opportunity to cover the topic of Internet Services supplied on the international code of Vanuatu, being (+ 678) … As a result, the Honourable Minister then announced that the Government insisted that TVL cease to offer all Internet services using the code (+ 678), and that all relevant existing contracts had to be cancelled as allowed [sic]. A letter was issued to TVL confirming this position. The originals of the attached correspondence have been couriered to Gibraltar today." 197 In my judgment, it is clear that the Minister's letter of 1 March 1999 was an instruction to TVL "to cease operating facilities for International Audiotex and Internet Dialup Services" of the kind referred to in cl 6 of the TVL agreement. 198 Gilsan, however, submitted that the Minister's letter did not terminate the TVL contract. It gave five reasons why, it said, this was so. 199 Gilsan's first submission was that Gilsan's business did not offer "internet services". Gilsan submitted that the customers who used its services did not connect with the service provider (or service agent) via an internet connection, and that the only relevance of the internet was that customers were attracted to the advertising of the service providers or the agents, and downloaded the dialler, whilst they were browsing on the internet. 200 In amplification of this submission, Gilsan pointed to the reference in cl 6 of the TVL agreement to "International Audiotex and Internet Dial-Up Services" and contrasted this with the wording of the Minister's letter which (in the official translation) required TVL to stop offering "internet services". 201 This submission is not supported by Mr Warwick's evidence. It is a significant understatement to say that customers were merely "likely" (the word employed by Gilsan in its written submissions) to find advertising on the internet. Mr Warwick acknowledged that it was part of his business system that customers gained access to the dialler through an adult website on the internet, and thus (by using the internet) were able to avail themselves of Gilsan's service (T 178.15-.34). Further, Mr Warwick said that it was his understanding when Gilsan entered into the TVL agreement "that TVL was purporting to give Gilsan an exclusive right to offer international internet dial-up services" (T 247.5); and he agreed with the proposition that "the caller had to be on an adult website on the internet in order to access the dial-up" (T 247.10). He agreed that bulletin board services "used a computer and a modem to establish contact through telephone lines with another computer and modem" (T 247.36). He accepted the further proposition that Gilsan was incorporated to take advantage of the opportunity to offer bulletin board-type services utilising telephone numbers controlled by the telecommunications companies in Vanuatu and the Solomon Islands (T 248.14); and that "those type of bulletin board services had become known in the industry as internet dial-up and video text" (T 248.20). 202 To digress for a moment: TVL found itself in an uncomfortable situation because, before it entered into its agreement with Gilsan, it had entered into an agreement with a competitor of Gilsan, known as APT, whereby APT was given exclusive rights to use numbers under the control of TVL for audiotext services. APT became aware of Gilsan's operations pursuant to its agreement with TVL, and protested to TVL that Gilsan's operations breached APT's right of exclusivity. Mr Woollard of TVL asked Mr Warwick to assist in providing a definition of the distinction between audiotext (APT's entitlement) and international internet dial-up (or IID) (Gilsan's entitlement). He asked Mr Warwick to help him show "that Internet Dial-Up is not just a sub set of the Audiotext Services total genre", and asked Mr Warwick in particular to show how it was that "traffic from Gilsan that is determined [sic] as Internet Dial-Up for [sic] outside of" what APT saw as the distinguishing features of audiotext services. 203 Mr Warwick thereupon asked Mr Vince Fullwood of (or a consultant to) Gilsan to provide a precise definition of the internet dial-up business. Mr Fullwood provided a draft definition. It noted that the difference was that "audiotext is an exclusively aural product, where the customer receives a recorded or live voice response", but that "IID, on the other hand, is a visual product, where the customer will gain access to a video service". He said that "[b]oth services use (substantially) the same infrastructure and billing mechanisms". He then pointed out some differences in the kind of equipment used, the way that the services were marketed, and the types of customers who used these services. Mr Warwick did not suggest, either at the time or in his evidence, that Mr Fullwood's remarks were inaccurate. 204 All of this material makes it clear that the distinction that Gilsan sought to draw in its submissions has no basis in fact. It makes it equally clear that Gilsan's business may properly be regarded as an "internet service". As a matter of language, one would think that an internet dial-up service is a species of the genus internet service. In my view, the evidence confirms that this was so at the relevant time. I therefore reject Gilsan's first submission. 205 The second submission was that the Minister's letter was a "request", rather than "an instruction", and that it came from a minister and not from the Government of the Republic of Vanuatu. I have dealt with that submission in para [193] above. The Minister's use of polite language does not alter the fact that TVL was required to comply. Further, as I have noted, the letter made it clear that the instruction was given on behalf of the government. 206 The third submission was that the "facilities" referred to in cl 6 of the TVL agreement were facilities of the kind referred to in recital (a). That recital referred to calls being made utilising TVL's numbers "being routed via a host carrier … to terminate in Call Centre's [sic] with whom they have facilities". (It is unclear whether the pronoun "they" refers to Gilsan or to the transit carrier, but this does not matter for present purposes.) Thus, Gilsan submitted, the "facilities" referred to in cl 6 were facilities such as those maintained by Optus at its Facilities Maintenance Centre at Rosebery: facilities for the diversion (short stopping or long lining) of calls to the service agents' call centres or computers. 207 I do not accept this submission. TVL did not provide "facilities" of the kind referred to in recital (a). There is no evidence that TVL even had, or had access to, such facilities. Clearly, the "facilities" referred to in cl 6 were those offered by TVL to Gilsan and its competitors pursuant to contracts such as the TVL agreement. It was never intended by Gilsan and TVL that calls made utilising the numbers allocated by TVL would terminate in Vanuatu, or that the services would be provided from Vanuatu. The only "facilities" provided by TVL were the use of telephone numbers under its control. They are exactly the "facilities" to which the Minister's letter referred. 208 Next, Gilsan submitted, that to engage cl 6, an instruction must refer to both "International Audiotex and Internet Dial-Up services" and that the Minister's letter did not refer to audiotext services. I do not accept this submission. It seeks to draw a sharp distinction between audiotext services and international internet dial-up services. It is clear, from Mr Warwick's concessions in cross-examination, that the word "audiotext" was used to refer to voice and data services, both by him (T 212.19, .23) and, to his knowledge, by others (T 273.13, .20). The Minister's letter was directed at "internet service access providers" who, through "the switched telephone network … use the 678 international access code". That is an entirely apt way to describe the manner in which Gilsan's business, in so far as it utilised telephone numbers controlled by TVL, operated. Further, that description makes it clear that the "internet services using the 678 access code" that TVL was to cease to offer were the services utilised by such internet service access providers. 209 Finally (in relation to this point), Gilsan submitted that it and TVL, and Optus, "continued as though the TVL contract was still on foot". It referred to the fact that later in March 1999, TVL instructed Optus to unblock the numbers allocated to Gilsan, and that Gilsan's traffic resumed. I do not accept this submission. It is clear that, when TVL offered to permit Gilsan to resume the use of the relevant numbers, it did so on the basis that there would be no exclusivity. See M. Fermine's letter to Mr Warwick of 15 March 1999, referred to in para [185] above. The only source of exclusivity was cl 1.6 of the TVL agreement. If that agreement had been brought to an end by the Minister's letter, the resumption of provision of services would not of itself revive the entire agreement. If there had been no other document dealing with exclusivity (or non exclusivity), and if TVL and Gilsan had conducted their business on the basis that the TVL agreement continued to apply, then there might be some basis in fact for this submission. But there is no evidence of the basis upon which TVL and Gilsan conducted their business between 15 March 2000 and 26 September 2000 save for M. Fermine's letter. When one party offers to provide services on a particular basis, and the other party does not in terms assert a different basis but thereafter avails itself of the services provided, the clear inference is that the services are accepted on the basis offered. (See the discussion of the implied contract relied upon by Optus in relation to the SDR/USD fee issue, in paras [153] to [157] above.) A reasonable party in the position of TVL, knowing the relevant facts, would be entitled to think that Gilsan, by accepting the offer of renewed provision of access to Vanuatu telephone numbers, had accepted the non exclusive basis of that offer. 210 I therefore conclude that the Minister's letter of 1 March 1999 was an instruction of the kind referred to in cl 1.6 of the TVL agreement, and the resumption of services (of the kind provided by TVL to Gilsan under that agreement) thereafter does not indicate otherwise, or that the parties thought otherwise. The effect of TVL's letter of 5 March 1999 211 I think that the better view of cl 1.6 of the TVL agreement is that it was the Minister's instruction that had the effect of automatically terminating the TVL agreement. Thus, I think, the agreement came to an end when TVL received the Minister's instruction - presumably on 1 March 1999. 212 No doubt, it was at least desirable that TVL give Gilsan notice that termination had occurred. But the desirability, or requirement to give that notice does not mean that termination occurred by virtue of TVL's letter to Gilsan rather than by virtue of the Minister's letter to TVL. 213 Even if I am wrong in this, termination occurred, at the latest, when Gilsan received TVL's letter of 5 March 1999 - presumably, since the letter was sent by facsimile transmission, on that day. Optus' knowledge and conduct 214 The conclusion to which I have come makes it unnecessary for me to analyse in detail the evidence relied upon by Gilsan in support of its submission that Optus knowingly and wrongfully carried traffic for Gilsan's competitors utilising Vanuatu number ranges in a way that breached, or interfered with, the exclusivity given to Gilsan by cl 1.6 of the TVL agreement. 215 Gilsan characterised this claim in a number of ways. Firstly, it said, the relevant conduct "breached an implied term or terms in the Optus Agreement which may be expressed variously as an obligation of good faith in the performance of the contract, an obligation to act reasonably, an obligation to do all things necessary on Optus' part to enable Gilsan to have the benefit of the Optus Agreement, or an obligation not to hinder or prevent the fulfilment of the purpose of the Optus Agreement" (Gilsan's written submissions dated 24 September, 2004, para 316). 216 Secondly, Gilsan submitted "that Optus' conduct was also a tort of interference with Gilsan's trade or business by unlawful means" (ibid para 320). 217 Thirdly, Gilsan submitted that the relevant conduct was unconscionable within s 51AC of the Trade Practices Act (ibid, para 333). 218 Gilsan had pleaded also a case of breach of fiduciary duty, but did not press this case in final submissions. It follows, I think, that issue 20(ii) should be taken as not pressed. 219 I do not intend to address in detail the various ways in which Gilsan formulated its claim, or the facts on which the claim is based. It is sufficient to say that, to the extent that the claim (however formulated) required that Optus know or understand that Gilsan had a right of exclusivity, it should not be concluded that Optus knew this, or so understood, after 5 March 1999. That is because, on that day, Mr Woollard sent a copy of the Minister's letter and of the unofficial translation to Mr Bragg. Not surprisingly, Mr Bragg understood from this that the TVL contract had been terminated. He was not cross-examined on that evidence: no doubt because it would be impossible for anyone reading the documents to have any other understanding. I accept this particular aspect of Mr Bragg's evidence. (It may be noted that Mr Bragg purported to have held the belief at all material times that there was no such thing as "exclusivity" in the relevant sense. I do not accept that evidence. Mr Bragg knew, at least from 19 January 1999, that Optus had purported to give Gilsan a limited right of exclusivity. But regardless of whether or not Mr Bragg believed this to be effective, and assuming against him that he did believe it to be effective, he must have appreciated, after 5 March 1999, that the exclusive grant was no longer in force.) 220 To the extent that Gilsan's claim relies on Optus having had, at the material time, knowledge of Gilsan's right of exclusivity, Gilsan has not shown that Optus had such knowledge. On the contrary, I think, the better view is that Optus believed, rightly, that Gilsan did not have exclusivity. In this context, I have not overlooked the body of evidence relied upon by Gilsan to show, firstly, that from time to time, TVL protested at Optus' carrying traffic to Vanuatu numbers for service providers other than Optus and Gilsan; and, secondly, that Mr Bragg ignored those protests, and instructions from TVL to stop carrying such traffic, and in so doing misled his superior, Mr Petts. If, contrary to my finding, Mr Bragg had any real reason after 5 March 1999 to believe that Gilsan did have exclusivity, then this material might have been highly significant. But given that Mr Bragg had been made aware that the TVL agreement had been terminated, the relevance of these later events is sharply diminished. It must also be remembered that (as I think Mr Bragg well understood) TVL found itself in an acutely embarrassing position. On the one hand, it had an unequivocal direction from the government through the Minister. On the other hand, and as a result, it was being sued by Gilsan for a very substantial amount of money. There can be little doubt that TVL, for commercial reasons connected to the litigation, was anxious to be seen as taking all steps reasonably open to it to seek to protect the exclusivity claimed by Gilsan, and that its correspondence with Mr Bragg was (as Mr Bragg no doubt understood) undertaken for that purpose. 221 Nor did Mr Bragg's understanding change, according to his evidence, when on 25 March 1999 TVL requested Optus to unblock the numbers that had been allocated to Gilsan. Mr Bragg said that he understood that this was without prejudice to TVL's position that the prior contract had come to an end, and that any exclusivity granted by it was not enforceable. He was not challenged on that evidence. Again, it seems to me to be consistent with the position revealed by the documents, and I accept it. 222 Further, to the extent that Gilsan's claim depends on showing that Optus intended, whether or not as the predominant purpose of its actions, to cause Gilsan damage, the evidence does not show that Optus had that intention. On the contrary, I think, Optus through its relevant personnel (in particular, Mr Bragg) was pursuing its own economic interest in seeking to carry as much traffic as it could for as many service providers as it could. Indeed, it is difficult to understand why Optus would wish to harm the business of Gilsan. One would have thought that Optus had a very clear interest in carrying as many minutes of traffic as possible for Gilsan. Further, in this context, it was not put to any of Optus' witnesses that a purpose, either predominant or subsidiary, of the conduct alleged against Optus was to cause harm to Gilsan. 223 Finally, to the extent that the case relies on s 51AC, the considerations to which I have referred in paras [173] to [176] are equally applicable. The period from 26 October 2000 224 It does not appear that Optus was ever given a copy of the agreement of 26 October 2000. However, on 29 October 2000, Mr Hall of TVL sent an e-mail to Mr Petts, whose title was Director, International of Optus. Mr Hall forwarded an e-mail from Mr Warwick complaining about rogue operators using Vanuatu numbers. He said to Mr Petts, among other things: "You may not be aware but we have just concluded the Gilsan/TVL litigation issue. The result is that Gilsan has worldwide exclusivity on BBS services for Vanuatu numbers. APT retain the right to use certain number ranges for Audio only. A formal contract and code of practice is in place with Gilsan to reflect this arrangement. I have forwarded the only valid number ranges to both John and Samantha. I am aware of other Vanuatu Numbers being used in the past without TVL's consent and am alarmed that this practice seems to be continuing." (emphasis in original)

The reference to "BBS" was, presumably, to a bulletin board service as referred to in cl 2.4 of the agreement. 225 I have set out the provisions of cl 2.2(a) in para [33] above. There is no evidence that the condition precedent for which that clause stipulated was satisfied. There has been no proof of any application to the VFIB, let alone of any decision of the VFIB. Optus submitted that it was unlikely that the application would have been made, given Gilsan's interest in ensuring that the Vanuatu Government did not discover the true nature of its business. I agree. Mr Warwick made it quite clear that he did not want the Vanuatu Government to know the details of the services offered by or through his company, utilising as its business did the services of an entity of the Vanuatu Government: T 159.12/162.1. I do not think that Mr Warwick would have taken the risk that an application to the VFIB might make the Vanuatu Government aware of the nature of the services offered by, or through, his company. 226 Gilsan submitted that the presumption of regularity should apply. Thus, it submitted, because services were in fact provided of the kind referred to in the agreement of 26 October 2000, the Court should infer that the condition precedent in cl 2.2(a) of that agreement had been satisfied. I do not accept this submission. I do not see why the Court should rely on inference, based on a presumption of uncertain application, when the party with the burden of proof has the means of adducing evidence but fails to do so. In particular, I do not think that it is appropriate to draw an inference where that would require the Court to assume the existence of a state of affairs that, for the reasons set out in the preceding paragraph, is less rather than more likely to have been the case. 227 I therefore conclude, on the basis of such evidence as there is, that the right of exclusivity given by cl 2.4 of the agreement of 26 October 2000 did not become unconditional. Alternatively, given that the agreement of 26 October 2000 is on its face subject to a condition precedent, it is probably sufficient to note that Gilsan - the party asserting a right under that agreement which could only be available to it if the condition precedent had been satisfied - has not proved that the agreement has become unconditional. 228 In any event, the right of exclusivity that was given depended on Gilsan generating a minimum of 100,000 minutes of traffic each month as measured by Optus. If Gilsan failed to deliver that volume of traffic for three consecutive months, its exclusivity would terminate automatically. The figures agreed between the parties showed that Gilsan's traffic failed to reach that minimum for the months of June, July and August 2001. It follows that any right of exclusivity that had come into existence terminated automatically on 31 August 2001. 229 From 1 November 2000 to 31 August 2001, Optus carried in total, for competitors of Gilsan using Vanuatu numbers, 226,325 minutes of traffic. There is no evidence that any of that traffic was IBBS traffic rather than audiotext traffic. Indeed, on 29 January 2001, Mr Michael Charlesworth of MDC (a competitor of Gilsan, whose associated companies included entities known as Mediatel and World E Markets) sent an e-mail to Mr Bragg, stating that "We have not used any Vanuatu numbers for data traffic since instructions given approximately six months ago". All the traffic that I have referred to in the previous paragraph was carried for companies in the MDC group. If Mr Charlesworth's e-mail is to be accepted at face value - and I see no reason why it should not be, given that he had no reason to lie to Mr Bragg - it demonstrates that the traffic carried by Optus for Gilsan's competitors to numbers in the Vanuatu number range was not traffic that infringed any right of exclusivity that Gilsan may have had under cl 2.4. In this context, it is necessary to bear in mind that under cl 2.4, the only exclusivity that was given was under para (a) relating to IBBS traffic. Under para (b), the rights given to Gilsan for "IAS" (ie, audiotext) traffic were non exclusive. 230 It follows, for the period from 26 October 2000, and quite apart from the considerations referred to in para [219] above (which are equally applicable to this period), there is no basis in the evidence to conclude that Optus carried traffic that infringed any right of exclusivity that Gilsan may have had. 231 Further, and in addition to the matters referred to in para [219] above, there is no basis in the evidence to conclude that Optus either knew or had reason to believe that the traffic carried by it in this period for Gilsan's competitors infringed any right of exclusivity that Gilsan may have had. Optus had been notified of the existence of the right of exclusivity. It had not been told that the right was conditional, and that the condition had (or had not) been satisfied. However, it would have been reasonable for Optus, through Mr Bragg, to conclude from Mr Charlesworth's e-mail referred to in para [229] above that the traffic carried by Optus for the MDC group was not traffic that infringed such exclusivity as Gilsan may have possessed. In this context, it is necessary to note that Optus could not tell whether particular traffic was for voice or for data services, ie, whether it was audiotext or dial-up/BBS traffic. Damages 232 The only other matter that requires to be considered is the submission of Optus that, in any event, Gilsan has not shown that it suffered loss. I accept that submission. 233 In essence, Gilsan's damages case rested on the assumption that, had its competitors been barred from using Vanuatu numbers, their traffic would have flowed through Gilsan. There are two fallacies in that assumption. Firstly, the evidence does not support the conclusion that those competitors would have dealt with Gilsan, to take advantage of the numbers under its exclusive control, if they had not had direct access (through Optus) to Vanuatu numbers. Such evidence as there is suggests that this is not the case. For example, it is clear that one of the competitors, known as GIB, refused to enter into a contract with Gilsan to take advantage of Vanuatu numbers in respect of which Gilsan had (on its case) exclusive rights. Mr Warwick told Ms Bicknell that GIB would not contract with Gilsan because Gilsan demanded too much money. 234 The second fallacious assumption is that there were no other destinations available for Gilsan's competitors to use. In fact, there were. There were countries such as the Solomon Islands, Kiribati, Niue, Tuvalu and the Cook Islands that had TARs of USD 4.00 or USD 3.00 (and Norfolk Island had a TAR of USD 3.00). Mr Warwick acknowledged that there were also opportunities to offer a service such as his using destinations such as the Atlantic Islands and Diego Garcia (T 260.8/261.9; it may be noted that Mr Warwick's evasion of the obvious point being put to him in this passage is another example of the demeanour that made me regard him as an unsatisfactory witness). 235 Gilsan relied upon what it said was a correlation in the traffic figures showing that, as restrictions were imposed on Gilsan's competitors using Vanuatu numbers, so Gilsan's business increased. However, I think, there is no basis to infer a connection between the two events. The more likely explanation is that, for the period in question, Gilsan's business using the Vanuatu numbers was, in the jargon of the industry, "ramping up" so that the increase was likely to have occurred regardless of what was happening with Gilsan's competitors. 236 Finally, on the question of damages, Gilsan's method of computation appears to be to multiply the number of minutes purportedly lost to it by the gross amount that would have been payable to it out of the TAR in respect of those minutes. That cannot be right, where (as the evidence shows) between 85 and 90% of the amount payable by Optus to Gilsan was in turn payable by Gilsan to its service providers. Conclusion on the rogue traffic claim 237 For these reasons, I conclude that the rogue traffic claim cannot be sustained. The bases upon which I have come to that conclusion make it unnecessary to examine the detail of the evidence that was given, or the parties' submission upon it. Issues 24 to 30: Optus' Hellenic overpayment claims 238 I have set out the effect of the Hellenic/Optus confidential agreement in para [45] above. For the purposes of Schedule C to the Optus agreement, when Hellenic was the originating carrier, the originating charge was therefore SDR 0.995. From the balance of the TAR, Optus was entitled to deduct its transit charge of SDR 0.175. The resultant outpayment to Gilsan, before deduction of TVL's "share" of USD 0.10, was SDR 0.63. 239 In fact, as the parties agreed, Optus paid Gilsan, from January 1999 until December 2000, upon the basis that the inpayment to Optus from Hellenic was SDR 0.875. It follows, on the construction that I have given to Schedule C, and on the facts as I have outlined them, that Optus has overpaid Gilsan by SDR 0.245 for each minute for Hellenic traffic carried by Optus for Gilsan during that period. Prima facie, Optus is entitled to recover that money as money had and received for its use on a failure of consideration: David Securities Pty Limited v Commonwealth Bank of Australia (1992) 175 CLR 353. Gilsan accepted that, if I construed Schedule C in the way that I have, then this was the position. However, it relied on defences of laches (no longer pressed) and change of position. Change of position: the principles 240 In David Securities, the High Court of Australia recognised the defence of change of position as an answer to a claim for recovery of money paid by mistake. The majority (Mason CJ, Deane, Toohey, Gaudron and McHugh JJ) at 385 said of this defence that "its central element is that the defendant has acted to his or her detriment on the faith of the receipt" (their Honours' emphasis). 241 Their Honours sourced the passage just quoted to the late Professor Birks' work, An Introduction to the Law of Restitution (1989) at 410. Professor Birks said that the enriched defendant would succeed "if he can show that he acted to his detriment on the faith of the receipt … The defendant does not have to show what he did with the specific coins or property received or other property substituted for it. He only has to show that on the faith of his substance having increased he spent more than he would have done and so used up the increase." That approach seems to be consistent with the broad approach indicated by the majority at 385-386 (see para [246] below). 242 The operation of the defence, as stated by the majority in David Securities, was explored by the Court of Appeal in State Bank of New South Wales Ltd v Swiss Bank Corporation (1995) 39 NSWLR 350, 355-357. The Court (Priestley, Handley and Sheller JJA) said at 355 "that knowledge derived otherwise than from the payer cannot be relevant in deciding whether a change of position by the payee occurred on the faith of the receipt." 243 The Court then considered the significance of further information. It did so, however, in the circumstances where (as was stated at 356) the fact of receipt, standing alone, could not have justified the appellant as treating itself entitled to pay away the funds received. In those circumstances, the Court pointed to the need for a bank in the position of the appellant to show something more than the fact of receipt, but something emanating from the payer: "A bank which receives a mistaken payment and disburses it can only bring itself within the change of position defence if it shows that at the time of disbursement it knew or thought it knew more than the fact of receipt standing alone. This must be information which, if true, would entitle the payee to deal with the receipt as it did and that information must have come from the payer." 244 On this analysis, the change of position defence may arise in two ways. Firstly, it may arise where the fact of receipt itself entitles the payee, acting on the faith of the receipt, to pay away the money (or perhaps, to act otherwise to its detriment). Secondly, it may arise where the fact of receipt itself is insufficient, but where that fact coupled with further information emanating from the payer entitles the payee, acting on the faith of those matters, to alter its position. 245 The majority in David Securities did not think it appropriate to seek to define the circumstances in which the defence of change of position might be made out. In this, their Honours followed the approach taken by the House of Lords in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548, where their Lordships, whilst recognising the defence, thought that its operation should be defined on a case by case basis (see, for example, Lord Bridge of Harwich at 558). 246 The High Court did however emphasise that the defence of change of position was necessary to ensure that the enrichment of the payee "is prevented only in circumstances where it would be unjust." (175 CLR at 385; their Honours' emphasis). Their Honours referred at 385 to differences of approach in Canada and the United States, where some authorities required the payee to "point to specific expenditure being incurred because of the payment" (their Honours' emphasis), whereas other cases "allow a wider scope to the defence, such that a defendant can only rely upon it even though he or she cannot precisely identify the expenditure caused by the mistaken payments." Their Honours concluded at 386 that nowhere had it been held that the defence was available where the defendant "has simply spent the money received on ordinary living expenses". Change of position: the facts 247 In substance, Gilsan's defence was that, acting on the faith of the payments made to it by Optus, it paid away to its services providers the great bulk of the amounts paid to it. As I have already noted, the evidence showed that Gilsan paid to its service providers some 85 to 90% of its receipts from Optus. 248 There is no doubt that (if they be relevant matters) Optus knew that:

(1) Gilsan required to be paid by Optus to enable it to pay its service providers; and

(2) Gilsan intended to pay its service providers from the proceeds of payments made to it by Optus. 249 Thus, when Mr Pearson was chasing Optus for payments in the first half of 1999, he said repeatedly that the money was required to enable Gilsan to meet its commitments to its service providers; and that if the service providers were paid then their enthusiasm for developing the traffic (and, therefore, the revenues of both Optus and Gilsan) might increase. That having been said, I do not think that Optus was aware of the proportion of its payments to Gilsan that were paid out by Gilsan to service providers. 250 Further, in this context, it appears that, despite the terms of the Optus agreement (in particular, cl 1.4 and Schedules B & C), Optus left it to Gilsan to pay TVL's share of the TAR (ie, the amount of USD 0.10 per minute fixed under the TVL agreement). This provides a further factual foundation for Gilsan's change of position defence. 251 There was nothing in the circumstances in which Optus made any payment to indicate that it was provisional. Clauses 1.5 and 1.6 (the latter as amended from time to time) set out clearly the basis on which Optus was to make payments, and the extent to which Optus might be entitled to recoup itself out of payments withheld. Gilsan was entitled to assume, particularly having regard to the repeated efforts that it had made to extract payments from Optus, that the payments were made by Optus on the basis that Optus thought they were due and owing to Gilsan. One thing that is clear in this case is that Optus is unlikely to have made any payment that it did not believe it was obliged to make. It is clear that Gilsan well understood that this was Optus' attitude. Gilsan was entitled to assume, when Optus made payments to it, that they represented no more than Gilsan's lawful entitlement from time to time under the terms of the Optus agreement. Gilsan was entitled to assume that that money was its, to use as it wished. I am satisfied that Gilsan did make that assumption. 252 Mr Pearson gave evidence of Gilsan's payment procedures. He said (exhibit PX 14, para 20): "When I received settlement statements from Optus I immediately calculated the amounts to be paid to the Service Agents. I then sent to the Service Agents a statement setting out the amount each was due. When payment was received I immediately arranged for the funds to be transferred to them. This normally occurred within a few days of receiving payment from Optus. At this time I also arranged for any invoices to be paid and disbursed TVL's share to it. I then distributed funds to the consultants and paid for management services provided to Gilsan. Other than a small reserve for forthcoming expense payments the following month and retaining money in a suspense account all amounts received from Optus for Vanuatu traffic was [sic] distributed. Exhibited at DJP3, pages 14 to 19, are a sample of monthly management accounts and payment sheets which I prepared each month to record the distribution of funds received by Gilsan."

The reference to exhibit DJP 3 pp 14-19 is self-explanatory. 253 Gilsan relied also on exhibit PX 18, a payment sheet for Beylen (one of Gilsan's service providers) for the month of October 2000. That document identified, among other things, traffic originated by AT&T and routed through Optus as transit carrier. The number of minutes was stated. Mr Pearson said (T 324.23-41) that he calculated and deducted the amount payable to TVL and the amount payable to Beylen. This amount was payable on a sliding scale: 85% of the total for the first 250,000 minutes, 87.5% of the total for the next 500,000 minutes, and 90% of the total for the remaining minutes. Mr Pearson then said that this showed the amount "that I would be paying Beylen" (T 324.46). 254 Optus relied on evidence given by Mr Warwick as to the limited role of Mr Pearson. He said (T 145) that Mr Pearson provided the accounting function to Gilsan. This included tracking call statistics; reconciling reports from telecommunications companies; drawing up profit and loss statements and balance sheets; and reporting on cash flow. Mr Warwick then agreed that Mr Pearson and his staff processed all sales and purchase invoicing and collected receipts from telecommunications companies. He then said (T 145.35): "Q. They handled payments to service agents? A. They handled the administration of payments. Q. Because you negotiated the rates at the same time as payments; is that right? A. They issued the amounts to be paid, they didn't actually pay them. Q. I see. And they handled the distribution of profits from an administrative point of view? A. Absolutely, yes." 255 Optus submitted further that there were no records of payments actually being made to service providers; that there was "no evidence … demonstrating any causal link between the making of those payments and the representation by Optus of the kind required to establish a change of position" (written submissions dated 24 September 2004, para 199). 256 I do not accept Optus' submissions on this point. It is literally correct to say that Mr Pearson did not make any payments. However, Mr Pearson explained that, having carried out the process of checking the various statements and quantifying the entitlements of the service providers, he and his staff prepared bank drafts; Mr Warwick signed those bank drafts; and Mr Pearson thereafter checked Gilsan's bank statements to satisfy himself that (as he found had happened) the amounts of the drafts had been debited to Gilsan's bank account. This demonstrates that for the purposes of the change of position defence, it is relevant to consider Mr Pearson's understanding. It is clear that Mr Warwick relied on Mr Pearson to carry out the accounting functions that I have described, and that, although it was Mr Warwick who had responsibility for signing the drafts, it was Mr Pearson who, in a real sense, ensured that the payments were made. It shows, further, that the payments were in fact made. 257 The question of reliance was likewise dealt with by Mr Pearson in his oral evidence. He said that he had an understanding that the payments from Optus to Gilsan were final. When asked whether he did something because of that understanding he said (T 322.24) "I didn't do something". This he explained as follows (T 322.26-.38): "Q. What was it that you didn't do? A. I didn't do a review of the traffic profiles of the service agents - service providers. Q. Yes. Could you explain to the court what you mean by "traffic profiles of the service providers"? A. Well, if there was a chance of bad debt coming in, I would always want to have enough in the pipeline owing to the service providers, because when once I'd paid that, I knew I wasn't going to get it back from them. So if there was a chance of a late adjustment coming in, then I would have restricted the payments if I couldn't see any opportunity of getting it back." 258 In other words, not only did Gilsan, on the faith of the receipts, pay away the great bulk of the money received; it failed to retain, or ensure that it had available, a sufficient provision (in the form of amounts owing to service providers) that it could use to "claw back" amounts subsequently reclaimed by Optus. It failed to protect itself against (to use Mr Pearson's words) the "chance of a late adjustment coming in" from Optus. 259 Another relevant matter to take into account in this context is that Gilsan was a company set up expressly for the purpose of carrying on the particular business that I have described. It had no assets other than that business and the assets employed in it. It had no revenues other than those derived from that business. It had no expenses other than those incurred by it for the purposes of that business. Thus, the revenue derived by Gilsan from telephone calls made to Vanuatu was the sole source (leaving aside loan funds and intercompany payments) from which it could pay service providers. Conversely, all the amounts owed by it to those service providers were owed in respect of that traffic. (It should be noted that Gilsan relied also on payments made to consultants and the like. I have not overlooked that evidence, but it does not require any change to the analysis just set out, nor does it enhance the analysis in any significant way.) Equally, those revenues were the sole source from which Gilsan could satisfy the entitlement of TVL; and that entitlement was solely referable to the traffic in question. 260 In all the circumstances, I conclude, as I have indicated, that the defence of change of position is made out. I am satisfied, for the reasons that I have given, that Gilsan made specific payments, to service providers and TVL (and consultants) out of the amount paid to it by Optus and on the faith of the payment and receipt of those amounts. Further, to the extent that it may be relevant, I am satisfied that Optus knew, or understood, that this would happen: although it may not have had an understanding of the extent of the payments that would be made. I am satisfied that Gilsan, on the faith of the payments made to it by Optus, failed to withhold from service providers any amounts by way of provision or reserve from which it could claw back any payments reclaimed by Optus. 261 Although I have dealt with the change of position in the context of the Hellenic overpayment claim, it was not suggested that the position should be any different in respect of the AT&T overpayment claims, to the extent that the defence of change of position was relied upon. Indeed, as will have been seen, the evidence relating to the Beylen payment sheet related to traffic originated by AT&T. Issues 32 to 40: the AT&T overpayment claim 262 This claim requires consideration of the terms and effect of the Benchmark Order, and of AT&T's position taken in reliance on that Order. In substance, for some time during 2001, AT&T paid Optus, and Optus paid Gilsan, on the basis of a rate of USD 1.5885 per minute. However, AT&T alleged that the effect of the Benchmark Order was that from 1 January 2001, settlement rates could not exceed USD 0.19 per minute, so that AT&T could not make outpayments attributing to TVL a share of the TAR in excess of USD 0.19. AT&T has purported to claw back from Optus what it claims are the overpayments made by it during 2001. Optus seeks to recover pro rata from Gilsan. 263 As I have noted, one of the disputes in the London arbitration between AT&T and Optus is whether AT&T was entitled to claw back from Optus what it said were, having regard to the terms of the Benchmark Order, overpayments made during 2001 in respect of Vanuatu traffic. The Benchmark Order 264 The Benchmark Order (more accurately called "Report and Order") is a lengthy document. Its effect, and underlying rationale, are set out in paras 1 and 2 of its introduction as follows (without citations): " 1. In this Order, we establish benchmarks that will govern the international settlement rates that U.S. carriers may pay foreign carriers to terminate international traffic originating in the United States. The action we take in this Order, along with our recent Accounting Rate Flexibility Order and our proceedings implementing the World Trade Organization ("WTO") Basic Telecom Agreement, substantially completes our plan to restructure the economics of the market for U.S. international telecommunications services. This restructuring will promote the low cost, technologically innovative interconnectivity serving all the world's consumers that should be the hallmark of a Global Information Infrastructure. 2. The benchmark settlement rates we adopt in this Order are necessary because, under the current international accounting rate system, the settlement rates U.S. carriers pay foreign carriers to terminate U.S.-originated traffic are in most cases substantially above the costs foreign carriers incur to terminate that traffic. The significant margins on international termination fees that now prevail cause U.S. consumers to pay artificially high prices for international services and discourage foreign carriers from introducing effective competition and cost-based pricing for all telecommunications services. Moreover, the above-cost margins in settlement rates can be used to finance strategies that create competitive distortions in the market for U.S. international services." 265 The background to the accounting rate system was described by the FCC in footnote 2 as follows (without citations): "The current international accounting rate system was developed as part of a regulatory tradition in which international telecommunications services were supplied through a bilateral correspondent relationship between national monopoly carriers. An accounting rate is the price a U.S. facilities-based carrier negotiates with a foreign carrier for handling one minute of international telephone service. Each carrier's portion of the accounting rate is referred to as the settlement rate. In almost all cases, the settlement rate is equal to one-half of the negotiated accounting rate. U.S. carriers are required to file a copy of their settlement agreements with the Commission." 266 In para 5, the FCC referred to "the urgent need for reform of the traditional settlements system on the many routes where more flexible cost-oriented alternative arrangements are not yet contemplated." It noted that reducing the settlement rate would fulfil their duty "to ensure reasonable rates for U.S. consumers" and would "promote competition in the United States market". 267 The benchmark settlement rates proposed by the FCC were set out in para 111. Those benchmarks were based on the classification of the countries in which terminating carriers were located as "upper income", "upper-middle income", "lower-middle income" and "lower income". The benchmark settlement rates proposed were USD 0.15, USD 0.19, USD 0.19 and USD 0.23 respectively. Vanuatu was classified as a lower-middle income country, so that the benchmark settlement rate was USD 0.19. 268 Paragraph 165 of the Order dealt with implementation. The FCC required US carriers "to negotiate settlement rates with their foreign correspondents in accordance with the following schedule". For lower-middle income countries, the implementation date was specified in the schedule as "3 years from implementation of this Order". The reference to "implementation" appears, from a footnote, to be a reference to the effective date of the order, stated as 1 January 1998. 269 Section 3 of the Order dealt with enforcement of the benchmarks. Paragraphs 177, 178, 185 to 187 are relevant. They provide as follows (without citations): " 177. We stated in the Notice that we would consider taking enforcement measures to ensure that U.S. carriers make adequate progress in negotiating settlement rates at or below the benchmarks. We proposed, as an initial measure, to identify foreign carriers that are reluctant to engage in meaningful progress toward negotiating settlement rates at or below the relevant benchmark and to convey to the responsible government authorities our concern about continued high settlement rates and the lack of meaningful progress, and to seek their support in lowering settlement rates. 178. We also proposed stronger steps that we would consider in those cases where a foreign carrier fails to respond to a U.S. carrier's efforts to achieve settlement rate progress. We emphasized that in each case our actions would apply to U.S. carriers within our jurisdiction, not to their foreign correspondents. Specifically, we sought comment on the following measures: (i) directing U.S. carriers to negotiate settlement rate agreements that provide for a fixed expiration date until a foreign carrier agrees to a reasonable schedule of reductions aimed at reaching the benchmark level; (ii) directing U.S. carriers to settle at a rate that is no higher than the transition rate goals until a foreign carrier agrees to a reasonable schedule of reductions aimed at reaching the benchmark level; (iii) directing U.S. carriers to settlement at or below the benchmark rate and to continue paying at that rate until we determine that meaningful progress in the form of accounting rate reductions is being made; and (iv) directing U.S. carriers to pay a settlement rate no higher than the benchmark rate. … 185. Because we have found that settlement rates above the relevant benchmarks after the relevant transition period will not produce just and reasonable rates, we will take appropriate enforcement measures as may be necessary to ensure that U.S. carriers satisfy our benchmark requirements. As an initial measure, we will identify foreign carriers that are reluctant to engage in meaningful progress toward negotiating settlement rates at or below the relevant benchmark. We will convey to the responsible government authorities our concern about continued high settlement rates and the lack of meaningful progress, and seek their support in lowering settlement rates. In our contact with the responsible government authorities, we will emphasize the need for cooperation in achieving the goal of cost-based rates, enlist their active support in achieving that goal, cite relevant ITU recommendations such as Recommendation D.140, and suggest further discussions that may be necessary. 186. When a foreign correspondent fails to respond to a U.S. international carrier's efforts to achieve a settlement rate that complies with the requirements of this Order, we will allow the U.S. international carrier to ask us to consider stronger steps. As it is clearly within the interest of a U.S. international carrier to negotiate rates at or below the relevant benchmark, we believe that we can rely primarily on such a carrier-initiated enforcement process. Pursuant to the procedures we adopt in this Order, a U.S. international carrier may file a petition that: (1) demonstrates that it has been unable to negotiate a settlement rate with its foreign correspondent that complies with the rules and policies we adopt in this Order; and (2) requests enforcement measures be taken to ensure that no U.S. carrier pays that foreign correspondent an amount exceeding the lawful settlement rate benchmark. The U.S. international carrier should file its petition with the Office of the Secretary, Federal Communications Commission, 1919 M Street, NW, Room 222, Washington, DC 20554. The petitioning carrier must serve the foreign correspondent with a copy of the petition and a copy of the procedural rules governing replies to the petition. The foreign correspondent or other interested party will have thirty-five days from the date on which we place the petition on public notice to file comments or an opposition to the U.S. international carrier's petition. We will allow ten additional days for replies to any comments or oppositions. 187. We will ensure compliance with our settlement rate benchmarks. We believe that we have the authority to use any of the enforcement measures proposed in the Notice to respond to a carrier's petition. As we discuss in Section II.E of this Order, our authority includes the ability to prescribe a change in settlement rates whenever we determine such rates to be unlawful. We do not at this time adopt any set enforcement mechanism, but will instead consider the individual circumstances surrounding each carrier-initiated petition to determine the appropriate enforcement action to take. We agree with AT&T that whatever enforcement action we take with regard to a complaint about a foreign correspondent's unwillingness to negotiate a settlement rate at or below the relevant benchmark must apply to all U.S. international carriers' dealings with that foreign correspondent in order for enforcement of our benchmarks to be effective." 270 Paragraph 190 made it clear that the benchmark requirements became effective from 1 January 1998, that the transition periods for negotiation of settlement rates in accordance with the benchmark rates then began, but that, on a case by case basis, some departure from the benchmark rates would be considered. 271 Strictly speaking, all that I have set out comes from the "Report". However, paras 327 and 328, which are described as "Ordering Clauses", make it clear that the relevant requirements purport to take effect as orders of the Commission pursuant to the legislation there cited. 272 It will be seen that the relevant effect of the Benchmark Order was twofold. Firstly, it purported to require US carriers to negotiate settlement rates with terminating carriers in accordance with the applicable benchmarks. Secondly, it indicated that the FCC would take appropriate enforcement measures to ensure that the requirement was satisfied. At least in the first instance, those enforcement measures were proposed to be directed at foreign correspondents that failed to respond to attempts by a US carrier to achieve a complying settlement rate. However, as para 187 made clear, no particular enforcement mechanism was adopted. 273 The apparent effect of the Order, as between AT&T and TVL, was that AT&T had a period of three years up until 31 December 2000 to negotiate a satisfactory benchmark rate with TVL, or to seek to invoke para 190 of the Benchmark Order. 274 As late as 6 March 2001, AT&T appears to have proceeded on the basis that the arrangements set up under the tripartite agreement, varied from time to time by the confidential agreements, were still in place. However, at least by 21 March 2001, it was apparent that AT&T had realised that it should have renegotiated its arrangements with TVL. On that day, Mr Pazmino sent an e-mail to Mr Pearson referring to advice from AT&T, "that they will only be declaring the minutes for the Vanuatu traffic at a zero rate from Jan 2001 onwards (pending confirmation from the FCC regarding the reduction in rate for USA originated traffic to Vanuatu)" and that, as a result, "We will also be declaring the minutes for Vanuatu traffic at zero rate from Jan 2001 and will be putting in place the necessary measures to recoup the payments recently made for the Jan 2001 traffic". On the same day, Mr Collins of AT&T sent an e-mail to Mr Warwick setting out AT&T's position, which was, in substance, that AT&T would be acting in accordance with what it understood to be its obligations under the Benchmark Order, and would take whatever action was necessary (including retrospective adjustments) to ensure that it did. 275 AT&T reiterated its position in an e-mail of 26 March 2001 to Mr Bragg, which Mr Bragg forwarded to Mr Warwick. 276 On 28 March 2001, the FCC - apparently at the instigation of AT&T - wrote to the Minister of Public Utilities, Vanuatu. The letter requested the Minister's "urgent assistance in lowering the settlement rate between Vanuatu and the United States so that it approaches a more cost-based level". It then referred to the Benchmark Order as requiring "that US carriers negotiate settlement rates at or below a specified benchmark rate by the end of a specified transition period", and stated that, in the case of Vanuatu, "US carriers are required to reach a settlement rate of US$0.19 with carriers in your country for traffic settled as of January 1, 2001." The letter concluded by asking for the Minister's assistance in encouraging carriers to negotiate in the terms with the Benchmark Order, so as "[t]o avoid the need for enforcement measures against US carriers by the FCC". 277 On the same date, Mr Hall of TVL sent an e-mail to Mr Martin Chin of Optus. Mr Hall proposed discussions, and set out certain proposals. It does not appear that AT&T was prepared to move away from a settlement rate of USD 0.19 (see the letter of 30 March 2001 from Ms Ting of AT&T to Mr Hall). 278 On 1 May 2001, Ms Ting wrote to Mr Hall. She referred to the relevant effect of the Benchmark Order and said: "Until such time we [sic] conclude negotiations for a Benchmark Settlement Rate agreed with TVL, Concert will be paying an interim settlement rate of $0.19 for Concert minutes going to TVL in Vanuatu, effective January 1, 2001."

That there was by 1 May 2001 no negotiated rate between AT&T and TVL is confirmed by a telephone conversation between, among others, Messrs Warwick and Hall and Ms Bicknell (a transcript of this conversation, apparently recorded by Mr Warwick, commences at exhibit PX 2, vol 21, p 100). Optus' submissions 279 Optus put its case in three ways. Firstly, it submitted, the Benchmark Order had the effect that AT&T was not prepared to, and did not, pay Optus more than USD 0.27 per minute for Vanuatu traffic. That amount was made up of the then applicable confidential transit rate of USD 0.08 and the benchmark rate of USD 0.19. Accordingly, Optus submitted, the origination charge must be taken to have become USD 3.73. Optus submitted that, in consequence, it was bound to pay out only USD 0.27 less its fee of SDR 0.175 or the USD equivalent. It followed, in Optus' submission, that it was entitled to recover what it said were the overpayments made to Gilsan. 280 Alternatively, Optus submitted, the TAR agreement between TVL and AT&T was frustrated, or alternatively was terminated by AT&T. Optus submitted that it would have been illegal for AT&T to give effect to the TAR agreement from 1 January 2001, and that this Court should not enforce an agreement illegal in its place of performance: relying on what Scrutton LJ said in Ralli Brothers v Cia Navier Sota y Aznar [1920] 2 KB 287, 304. (It may be noted that Ralli Bros was not followed in Vita Food Products Inc v Unus Shipping Co Ltd (in liquidation) [1939] AC 277.) 281 On either basis, Optus submitted, it was entitled to restitution of the amounts paid by it to Gilsan on the basis of the higher inpayment. 282 The third way in which Optus put its case was based on an undertaking given by Gilsan to Optus on 21 April 2001. That undertaking was given in the context of negotiations between AT&T, Gilsan and TVL seeking to persuade AT&T to defer introduction of the benchmark rate. The undertaking was to the following effect (omitting formal parts): "Gilsan undertakes that it will repay to Optus any part of the payment received for traffic in respect of the months of February and March 2001 which may become repayable in accordance with the Agreement dated 3 December 1998 in the event that any retroactive reduction in the Total Accounting Rate between USA and Vanuatu results in an overpayment. Gilsan hereby undertakes to repay to Optus any such amount within 30 days of the traffic being finally settled by the carrier. It is understood that this Agreement in no way whatsoever supersedes or countermands any part of the Agreement between Optus and Gilsan dated 3 December 1998." Gilsan's submissions 283 Gilsan's first submission was that reliance on the Benchmark Order was misconceived. It noted that the payment formula set out in Schedule C to the Optus agreement was based on the TAR; but that the subject matter of the Benchmark Order was not the TAR but the settlement rate payable to the terminating carrier. There was never a change to the TAR (and that remained the case, to at least February this year). It followed, on Gilsan's case as to the proper construction of Schedule C (which I have not accepted), that under the tripartite agreement Optus remains entitled to an inpayment of USD 2.21 of which it was obliged to pay all but SDR 0.175, or the USD equivalent, to Gilsan. 284 Second, Gilsan submitted that there was no frustration. It submitted that, on a proper analysis of the evidence, AT&T did no more than depart unilaterally from its obligation to settle with Optus; that what happened was no different to AT&T refusing to pay under the cascade accounting arrangements. Gilsan submitted that the events gave rise to a cause of action in Optus against AT&T, not to frustration of the contract between them. 285 Third, Gilsan submitted, there was never an agreement between AT&T and TVL to reduce the settlement rate to the benchmark rate. It relied on the letter of 1 May 2001, referred to in para [278] above. 286 Further, Gilsan submitted, the doctrine of frustration had no application either because the relevant frustrating event was a reduction in the TAR (for which the Optus agreement expressly provided), or because the alleged frustrating event could not operate retrospectively. Thus, Gilsan submitted, those rights that had accrued prior to the occurrence of the frustrating event (which, it submitted, occurred on 1 May 2001 - presumably, a reference to Ms Ting's letter to Mr Hall of that date) remained enforceable. Those rights included, specifically, its rights to payments for the preceding months. 287 In support of the fourth submission, Gilsan relied both on the relevant provisions of the Frustrated Contracts Act 1978 (NSW), and on the common law, relying on the decision in Westralian Farmers Limited v Commonwealth Agricultural Service Engineers Limited (in liquidation) (1936) 54 CLR 361.

288 Next, Gilsan submitted that it had not been shown that AT&T would have been in breach of any American law had it failed to give effect to the Benchmark Order from 1 January 2001. It submitted that the effect of the Benchmark Order required proof of the legal regime according to which it was made, and that the Court should not assume that American and Australian law were the same on this topic. 289 In relation to the undertaking, Gilsan submitted that it was irrelevant because the condition of liability expressed in it, namely "any retroactive reduction in the Total Accounting Rate between US and Vanuatu [resulting] in an overpayment" had not occurred. There was not at the time, and has not been since, a reduction in the relevant TAR. 290 As an alternative and last resort, Gilsan submitted that on any view it was entitled to USD 0.02 per minute for AT&T originated traffic to Vanuatu from 1 January 2001 on. It may be noted that Optus did not dispute this, but relied on its general defences (including its alleged right of set-off). The effect of the Benchmark Order 291 AT&T, Optus and TVL were parties to the tripartite agreement that is summarised in para [38] above. Their respective shares of the TAR were fixed by that agreement. I have concluded that it was open to AT&T and Optus, by confidential (or other) agreements, to rearrange between themselves that portion of the TAR that was not, by the tripartite agreement, allocated to TVL. For the purposes of the Benchmark Order, the amount allocated to TVL (USD 1.79) was the settlement rate. 292 In terms, the Benchmark Order purported to require US carriers to negotiate with what were called their foreign correspondents (ie, relevantly, terminating carriers) settlement rates that were no higher than the applicable benchmark rate. That is apparent from para 165 of the Benchmark Order: see para [268] above. The Order did not, in terms, purport to impose the benchmark (or any other) rates on particular agreements entered into between a particular US carrier and a particular foreign correspondent. 293 It is not immediately apparent that the Benchmark Order has the force of law, in so far as it is directed to US carriers. The sections dealing with enforcement appear to be directed at the foreign correspondents (see for example paras 177, 178, and 185 to 187, set out in para [269] above). In other words, the assumption seemed to be that US carrier would seek to negotiate with their foreign correspondents, but that where those foreign correspondents proved recalcitrant then the FCC would consider what means of cajolery, persuasion or coercment it could defer against the foreign carrier. 294 It is certainly correct to say, as the ordering clauses (see para [271] above) contemplate, that the relevant provisions of the Benchmark Order have effect. But those ordering clauses say nothing as to the effect in law that is thereby assumed. 295 Even if the Benchmark Order has the force of law, its relevant effect is, as I have said, to require US carriers to negotiate settlement rates at or below the applicable benchmark rate. There does not appear to be anything in the Benchmark Order that would indicate the sanction (if any) that might be imposed on a US carrier that simply failed to engage in such negotiations (as, on the evidence, AT&T failed to do: at least up until 2 May 2001). More importantly, however, it is not apparent from the document itself that the effect of non-compliance - ie, in this case, the effect of the failure to negotiate - is to strike down any subsisting agreement between an American carrier and a foreign correspondent under which a settlement rate higher than the applicable benchmark rate is payable. That may very well be the effect of the applicable American law; or it may not. I do not know. I accept, in general terms, the proposition that absent proof to the contrary, the Court may presume the content of applicable foreign law to be the same as the content of applicable local law. See Damberg v Damberg (2001) 52 NSWLR 492, at 505 [119] (Heydon JA, with whom Spigelman CJ and Sheller JA agreed). But as his Honour pointed out, there are a number of exceptional cases, where the Court will not assume that foreign law is the same as local law: 505 [120]. 296 Neither the legislation (including, it would appear, both enactments and subordinate legislation) referred to in the ordering clauses of the Benchmark Order nor its effect have not been proved. I, therefore, do not know what is the policy of the applicable legislation against which (under Australian law) a claim of illegality, and of the consequences of illegality, might be assessed: see for example the analysis of Kirby P in Hurst v Vestcorp Ltd (1988) 12 NSWLR 394, 411-412. It may be that, absent proof to the contrary, I could assume that the principles to be applied by American courts, in deciding whether an illegal agreement was or was not enforceable, are the same as those to be applied by this Court (upon the basis that the underlying principles of public policy are likely to be the same - compare the analysis of Heydon JA in Damberg at 518 [144]-[147]). But even if I were justified in proceeding thus, I could not undertake the analysis on the basis of that which has been proved. 297 Both because of the way in which the relevant paragraphs of the Benchmark Order are expressed, and because there is no basis on which I can form a view as to the consequences of any non-compliance by AT&T with the relevant terms of the Benchmark Order, I conclude that it has not been shown that continued performance by AT&T of the tripartite agreement between it, Optus and TVL, from 1 January 2001, was illegal so as to make that contract unenforceable. 298 The result, in my judgment, is that AT&T had two courses open to it if it did not wish to continue with performance of the tripartite agreement after 31 December 2000. It could have sought to renegotiate that agreement, so as to achieve a settlement rate with TVL in accordance with the applicable benchmark rate. (I interpolate that, on any view of the Benchmark Order, AT&T should have sought to do this in the three years leading up to 1 January 2001.) Or it could have terminated the agreement. If the latter course had been taken on notice, after negotiations had failed, then it is at least unlikely that any question could arise of breach of contract. But on no view was AT&T entitled to originate traffic and route it through Optus to TVL during the subsistence of the agreement, but at the same time refuse to make the applicable cascade outpayment to Optus. 299 It is necessary at this stage to mention that - obviously enough - AT&T is not a party to these proceedings. It has not been heard on this point. The view to which I have come is influenced substantially by the absence of proof of any applicable provisions of relevant American legislation. I do not intend to suggest that, in another forum (including in this the London arbitration proceedings) a different conclusion might not be reached after consideration of any applicable legislation and of argument based upon it. 300 It follows that I do not accept Optus' submission that AT&T's origination charge increased, on or at any time after 1 January 2001, to USD 3.73. Mr Hibbard said, and Optus itself accepted in its submission on the Gilsan underpayment claims, that the originating and transit carriers could not, by any agreement between them, reduce the amount payable to the terminating carrier without its consent. Indeed, one does not need expert evidence to support the application of such a basic principle of contract law. Yet Optus' submission, on this aspect of its overpayment claim, asserts a position that is diametrically opposite. 301 It may be correct to say, as Optus put in its written submissions (written submissions dated 24 September 2004, para 210), "that AT&T was not prepared to … pay Optus more than 27 cents per minute in respect of traffic after the period 1 January 2001 [sic]". It does not follow that this adversely affected TVL's, and therefore Gilsan's, rights. 302 In this context, it is necessary to bear in mind that Optus assumed some unconditional payment obligations to Gilsan. It did not seek, in the Optus agreement, to make its obligations to Gilsan correspond, on a back-to-back basis, with AT&T's (or Hellenic's) obligations to it. As I have already noted, it assumed a certain credit risk. That is of some significance in this context, particularly where, by cl 4, it was necessary to give 180 days' written notice of intention to terminate and, under Schedule C, the payment obligations were expressed by reference to the TAR and the only reference to renegotiation was in relation to the Optus fee and changes in the TAR. It is both unnecessary and undesirable that I should say more than I have about AT&T's dealings in relation to the Benchmark Order. It is sufficient to note that, whether or not AT&T was justified in its conduct, the risk, as between Optus and Gilsan, was among those assumed by Optus. The relationship between the Benchmark Order and the Optus agreement 303 Schedule C to the Optus agreement is based on the TAR. The obligation imposed on Optus is to pay Gilsan Optus' share of the TAR after deduction of the Optus fee, origination and transit charges, and the terminating charge specified in Schedule B. 304 As I have already noted, the Benchmark Order said nothing about the TAR between America and Vanuatu. Indeed, as I have also noted, that TAR remained unchanged at least until 2 February 2004. In principle, therefore, the Benchmark Order did not impact either on that which was chosen by Schedule C as the subject of division or upon the method of its division. Frustration 305 On my analysis, there is no frustrating event. AT&T is (or may be) in breach of its contractual obligations. But that does not impact on the obligation of Optus to pay Gilsan according to the terms of the agreement between them. In principle, Optus' position is no different to that of any middleman who buys and on-sells. On the one hand, the middleman (absent contractual provision to the contrary) takes the risk of non-delivery by the seller to him. On the other hand, he takes the risk (again, absent any contractual protection) of non-payment by the buyer from him. But unless his obligations on the one hand to deliver, and on the other to pay, are made interdependent, he remains individually liable to each of the parties with whom he contracts. 306 I therefore conclude that there is no frustrating event. If I were wrong in this, it would be necessary to consider Gilsan's submission that there could be no retrospective frustration. 307 I do not think that Gilsan's submission is applicable. It may be - I express no concluded view - that a frustrating event cannot have retrospective operation. But Gilsan's submission assumes that the frustrating event was the unequivocal statement by AT&T, apparently after negotiations had failed, that it would pay only at a rate that included a settlement rate of USD 0.19 for TVL. That unequivocal statement was made on 1 May 2001 (see para [278] above), although it had been clear for some time prior to then that AT&T was proposing so to act (see, generally, the narrative in paras [274] to [278] above). 308 However, on the hypothesis presently under consideration, the frustrating event would be the presumed operation, from 1 January 2001, of the Benchmark Order and not the steps taken by AT&T - belated as they were - in response to it. On this alternative, therefore, it is unnecessary to consider the submission of Gilsan - which, had it required consideration, I would have been inclined to accept - that frustration, not having retrospective effect, could not operate to divest it of rights that had vested prior to the operation of the frustrating event. The undertaking 309 I have set out in para [282] above, the terms of Gilsan's undertaking. It will be seen that that undertaking would operate if, by reason of any retroactive reduction in the TAR, there had been an overpayment by Optus to Gilsan. There was no reduction, retroactive or otherwise, in the TAR. If there were an overpayment - and on the view to which I have come there was not - it was not one caused by the triggering event, reduction in the TAR. 310 To overcome this difficulty, Optus submitted that the written undertaking "should be interpreted as meaning that if AT&T insisted on enforcement of the Benchmark Order retrospectively from 1 January 2001, Gilsan would repay to Optus the extent of any overpayment in respect of the February and March 2001 traffic months" (written submissions dated 24 September 2004, para 217). I do not see how the plain words of the written undertaking can be so construed. In truth, the construction for which Optus contends would require a complete rewriting of the undertaking. Particularly in a context where the payment obligations of the parties were constructed by reference to the TAR (as Schedule C to the Optus agreement makes clear), I see no reason to attribute to the parties, in that undertaking, an intention that the reference to "Total Accounting Rate" should mean anything other than the total accounting rate referred to in Schedule C and, undoubtedly, understood by the parties to be the source of their liabilities and entitlements. Change of position 311 The change of position defence is of limited applicability. Payments were made in respect of January and February (the latter incomplete). To the extent that payments were made, the parties did not submit that any different conclusion, to that which might be reached in respect of Optus' Hellenic overpayment claim, should apply to the AT&T overpayment claim. Reserved issue 11: Gilsan's 2001 failure to pay claim 312 As I noted in para [162] above, this issue is best considered in the context of issues 32 to 40, because those issues required consideration of the terms and application of the Benchmark Order. 313 It follows from what I have said above as to the construction and effect of the Benchmark Order that Gilsan's 2001 failure to pay claim succeeds. Issues 41 to 47: Optus' quantum meruit claims 314 From about March 2000, Optus provided services at or from its Rosebery FMC. They included what were known as call termination services, co-location services and spinnaker services. Optus says that they were provided by it for Gilsan at its request (made through Mr Warwick) in circumstances where they were not intended to be, and not understood to be, provided gratuitously, and where their provision was of benefit to Gilsan. Although there was no written contract for their provision, Optus says that, in the circumstances, it is entitled to be paid by Gilsan for the cost of provision of those services. There is a fourth category of service known as domestic traffic services. They require separate consideration to the three services that I have referred to earlier in this paragraph. 315 Optus relied on the decision of Robert Goff J in British Steel Corporation v Cleveland Bridge & Engineering Co Ltd [1984] 1 All ER 504, on Goff & Jones, The Law of Restitution (Sweet & Maxwell, 6th edition, 2002) at chapter 26 and Mason & Carter, Restitution Law in Australia ( Butterworths, 1995), at [1033]-[1034]. It submitted that the relevant principle to be gathered from those sources was that "a quantum meruit is available in circumstances where one party requests goods or services from another, in anticipation of a contract which does not materialise, the circumstances being such that the parties did not reasonably expect the goods or services to be provided gratuitously." (written submissions dated 24 September 2004, para 227). 316 Gilsan did not challenge Optus' formulation of the relevant principles. The dispute was whether (as Gilsan contended) the services were provided by Optus, not for Gilsan but for Gilsan's service agents; or whether (as Optus contended) the services were provided for Gilsan itself. There was no doubt that, on either version, Mr Warwick was heavily involved in the negotiations. The relevant facts 317 Gilsan's business required that calls to numbers in the Vanuatu number range should be, in effect, intercepted - either short stopped or long lined - before they reached Vanuatu. During the course of the negotiations that led up to the making of the Optus agreement, Mr Warwick said in an e-mail to Mr Bragg that Gilsan's "clients" ie, service providers, would generate traffic which would be carried by Optus as transit carrier. Mr Warwick said: "… Optus will terminate this traffic on equipment owned by [Gilsan's] clients in Melbourne". 318 By this time, Mr Bragg had met Mr Peter Knobel of Beylen and knew that Beylen was one of Gilsan's service providers. 319 In January 2000, there was a conversation between Messrs Warwick and Bragg in relation to the provision of facilities at Optus' FMC. To the extent that their accounts of the conversation differed, I prefer Mr Warwick's version. I do so firstly because of my general preference for his evidence over that of Mr Bragg where the two are in conflict (see para [68] above), and secondly, because Mr Bragg accepted in cross-examination that a conversation to the effect alleged by Mr Warwick had occurred (T 854.5-.24). Mr Warwick said that Gilsan's service agents were annoyed at paying for long lining fees "and would like to have their equipment placed at the Optus FMC. What will it take to do this?". Mr Bragg said he would see what could be done, and Mr Warwick added that "Our service agents will want to have their technical guy involved. Is this OK?". Mr Bragg did not think that this would be a problem. 320 On 1 February 2000, Mr Bragg sent an e-mail to Mr Warwick stating among other things that "We need to talk to your technical guy". Mr Bragg also gave the names and contact details of people who could be spoken to "should your technical people like to discuss the configuration with Cisco [whose equipment was to be installed] directly.". 321 On 2 February 2000, Mr Bragg sent an e-mail to Mr Keith Damant of Optus, copied to Mr Warwick. That e-mail stated that "Peter Warwick of Audiotex Services Gibraltar wants to proceed as soon as possible with the platform . …". It appears that Optus used the name "Audiotex Services Gibraltar" to refer to Gilsan; Mr Warwick did control a company of that name, but (although it had been proposed to use that company for the business ultimately operated by Gilsan) in fact, it had nothing whatsoever to do with Vanuatu traffic. 322 Mr Warwick and Mr Damant exchanged e-mails. In one of those, Mr Damant referred to himself as "the Optus Project Manager for your platform", and attached "a preliminary design … for your reference". 323 On 3 February 2000, Mr Warwick sent an e-mail to Mr Bragg informing him that "Our friends in NY are extremely anxious to get this going quickly. Once we have the diagrams from Cisco and they are agreed we would like to work out a specific timetable … ". Mr Bragg forwarded this e-mail to Mr Damant. 324 Mr Damant sent Mr Warwick a further e-mail on 2 February 2000. It referred to "your platform (to be installed at our Rosebery, Sydney, Technical Centre)" which would route calls "into your equipment". Mr Damant asked for "a better understanding of your application", and wanted to know "[i]f you are recommending particular equipment". He asked Mr Warwick to supply a diagram, or alternatively to make changes to one that was attached to the e-mail. 325 The "technical guy" referred to in the conversation between Messrs Warwick and Bragg in early January 2000 (see para [319] above) was Mr Mark Harris. Mr Harris became involved in the project. He and Mr Damant exchanged e-mails dealing with technical issues. 326 Numerous e-mails were exchanged between Messrs Warwick, Bragg and Damant. It is I think clear from those e-mails that Mr Warwick was the one who was pressing for completion of the project, and that Mr Bragg, and probably Mr Damant, understood that this was so. (I say "probably Mr Damant" because he did not give evidence in these proceedings. To the extent that his understanding is relevant, the attempt to ascertain it depends on inferences to be drawn from the e-mail correspondence to which he was a party.) Nonetheless, it does not necessarily follow from this that Gilsan was holding itself out as a principal, or representing that the equipment to be installed was its. I think that the role taken by Gilsan (through Mr Warwick) was, at least in January and February 2000, that of facilitator or intermediary. There were references to "our chap from NY" and "our guys in NY" which clearly, in context, were references to Beylen and Mr Harris. 327 Although Mr Damant appeared to believe that the equipment that was being installed was Gilsan's, he continued to deal, in relation to technical matters, with Mr Harris. On 9 February 2000, Mr Bragg, in an e-mail to Mr Warwick, referred to "Peter Noble's [sic: obviously, Knobel's] techo": ie, Mr Harris. He said that Mr Harris and Optus' "techos can get the gear up and running as quick as you like". It is clear from this e-mail that Mr Bragg knew that Mr Harris was Peter Knobel's (or Beylen's) "techo". The clear inference is that Mr Bragg knew or understood that the equipment that was being installed was Beylen's equipment. 328 Optus proposed that a company known as Telseek would supply some of the necessary equipment. On 10 February 2000, Telseek provided a quotation to Mr Warwick of "Audiotex Services (Gibraltar) Ltd" for the provision of equipment and what he called "a pro-forma invoice for AUD$5,000 to acknowledge your acceptance". That e-mail was copied to Mr Bragg. It does not appear that Mr Warwick protested that the invoice should have been sent to Beylen; or that he protested at his company's being named as principal, and the party liable to pay (or, indeed, at the fact that it was a company other than Gilsan that was so named). 329 On 22 February 2000, Ms Bicknell instructed an in-house lawyer employed by Optus to prepare a contract for FMC services. She gave the customer's name as "Audiotex Services (Gibraltar) Ltd". Presumably, she got this information either from Mr Bragg or Mr Damant. 330 There is no evidence that Mr Warwick replied directly to the Telseek quotation and invoice. However, on 1 March 2000, Mr Warwick sent an e-mail to Mr Bragg asking him to "chase up Telseek for their updated price to 120 ports keeping in the e-mail distribution list", and asking for further details. 331 On 2 March 2000, Mr Damant forwarded pricing information to Mr Harris who forwarded it on to Mr Warwick. It is apparent that Mr Damant at that time thought that Mr Harris was an employee of "Audiotex Services Gibraltar". Mr Warwick took up the issue of price with Mr Bragg, noting that he had "dropped out of the e-mail loop on this", and trusting "that we will see some downward movement in the install and the monthly ongoing costs". He was, and continued to be, the person with whom Optus negotiated pricing for the supply of the relevant services. Again, Mr Warwick did not protest at the pricing information being addressed to his company, or at the fact that it was a company of his other than Gilsan. 332 On 10 March 2000, Mr Damant sent an e-mail to Mr Warwick saying that there were two contracts for Mr Warwick to sign covering "the housing of your equipment at Rosebery Facilities Management Centre". He asked Mr Warwick to advise a mailing address. Mr Warwick replied, "To speed up the process please send them to the UK". He gave Mr Pearson's address in the United Kingdom. 333 Although Ms Bicknell thought that draft contracts were sent to Mr Pearson, there is no evidence that this was done. It is apparent that her evidence was based on what she thought would have happened, following her usual practice, and that she had no actual recollection of this being done. It appears in any event that Ms Bicknell did not do this personally, but left it to Mr Damant. There is no record of any form of contract having been sent to Gilsan (either care of Mr Pearson or otherwise). In the absence of any such evidence, and in the face of Mr Pearson's denial, and in circumstances where Mr Damant (who was the person actually responsible for sending the contracts off) was not called, I am not prepared to find that draft contracts were sent to Gilsan in accordance with the practice to which Ms Bicknell testified. 334 Mr Warwick said that he had a conversation with Ms Bicknell on 30 March 2000, in the course of which he told her that Gilsan would not pay Optus' charges for the equipment and that Optus should look to the service agents (to whom Mr Warwick said he would speak). 335 Ms Bicknell did not in terms deny that statement. She did, however, say in her oral evidence that she had no recollection of Mr Warwick having said the words alleged by him (T 904.7-.11). I find that, if the conversation had occurred as Mr Warwick had suggested, she would have recalled it. 336 Mr Warwick's evidence was given in answer to a statement by Ms Bicknell in which she said that there had been a conversation (which she said occurred on or about 31 March 2000) to a different effect. Ms Bicknell's recollection was that Mr Warwick said words to the effect: "My preference is that Optus retain an extra one cent per minute on all traffic from the out-payment due to us to pay for the infrastructure services instead of paying a separate bill for FMC and CTS services. It will be easier to sell a permanent charge to our content providers." 337 It was this conversation that Mr Warwick denied, giving instead the version to which I have referred. In cross-examination, he accepted that he "probably" said words to the effect of those attributed to him by Ms Bicknell (T 286.21). He agreed that through "April, May and June" 2000, his "preference was to have a per minute fee to cover infrastructure services as [he had] previously told Ms Bicknell and others" (T 286.27). I accept Ms Bicknell's evidence on this point in preference to that of Mr Warwick. I do so both because of my general view of her as a reliable witness (see para [78] above), and because of Mr Warwick's acknowledgment of the probability that he said the words attributed to him. Those words were consistent with his acknowledged preference at the time. 338 On 3 April 2000, Ms Bicknell sent Mr Warwick an e-mail dealing with "Outstanding Issues". They included, as "Task Four", what she called "FMC and C7 Connection pricing". That comprehended four items: " · complaint regarding quoted pricing · contract for FMC and C7 Link · need to organise pricing standards with Product Manager in Optus · cost structure needs to be determined and alternative pricing mechanisms agreed within Optus " 339 It may be noted that the e-mail, on its face, in inconsistent with the proposition that any form of contract had, by 3 April 2000, been sent to Gilsan. It is not, however, inconsistent with Ms Bicknell's account of the conversation of 31 March 2000. Mr Warwick responded the next day saying "I will let you have any necessary responses within the next day or so". It does not appear that Mr Warwick did provide any further response. 340 On 5 April 2000, Mr Damant asked Ms Bicknell "At what rate do we charge this customer for their Spinnaker service". The customer referred to was "Audiotex Services". Ms Bicknell replied suggesting a figure, but saying "I need to sort out a more competitive price with the Product Manager". She did not suggest that the price should not be charged to the nominated customer (which, as I have noted, was an incorrect way within Optus of referring to Gilsan). That she did not query the idea of charging a price to Gilsan for the Spinnaker service is consistent with her account of the conversation of 31 March 2000. 341 The work was completed by early April 2000, and the facilities commenced to operate from that time, although there were expansions, or upgrades, thereafter during May and June 2000, to cope with the increase in traffic levels. It was Mr Warwick who requested those expansions or upgrades. Gilsan's defences 342 Gilsan relies on a number of defences. It submitted that:

(1) The requests were made, as Optus through Mr Bragg knew, on behalf of Beylen, the equipment was Beylen's, and the services were provided to Beylen.

(2) Optus was obliged in any event to provide the services under cl 1.3 of the Optus agreement, so that the cost of provision of the services was covered by the Optus fee of SDR 0.175.

(3) Optus continued to provide the services on a basis where it assumed the risk of non-payment and "was ultimately content for the services to be gratuitous" (written submissions dated 24 September 2004, para 448). In this context, Gilsan pointed to the value of the traffic to Optus, and to what it said was the insignificant cost of the services compared to the revenue and profit margin generated through them.

(4) Optus is prevented, by estoppel by representation or conventional estoppel, from pressing for payment.

(5) There is a defence of change of position. The "Beylen defence" 343 I have accepted that Optus, through Mr Bragg, knew at the outset that the services (at this stage, I leave aside the domestic call services, which fall into a separate category) were being provided for Beylen. It follows, both from this and from the involvement "of Peter Noble's techo", that Mr Bragg knew, or should have appreciated, that the equipment that was being installed was Beylen's equipment. That is consistent with Gilsan's business model, which I have outlined in paras [9] to [12] above. Gilsan did not itself supply "content" to consumers. It contracted with service providers such as Beylen for this to be done. Gilsan's role was, in effect, as an intermediary. Optus undoubtedly knew that this was so. Optus must therefore have appreciated, quite apart from the discussions between Messrs Warwick and Bragg prior to the signing of the Optus agreement, that to the extent that equipment or facilities were needed, they would be needed by the actual content providers (ie, the service providers or the agents with whom, in turn, they contracted). 344 If matters went no further, I would incline towards acceptance of Gilsan's submission. But there is little doubt that the situation changed quite substantially during the first three months of 2000. Thus, the great bulk of the negotiations were conducted with Gilsan through Mr Warwick. (At the same time, Mr Damant dealt with Mr Harris direct on technical issues although apparently, when doing so, Mr Damant was under the mistaken impression that Mr Harris was an employee of Gilsan.) Gilsan's primary role in the negotiations is easy to understand. It was Gilsan that had devised the business model. It was Gilsan that had a contractual relationship with Optus on the one hand and Beylen (and other service providers) on the other. There was no direct relationship between Optus and the service providers. It was very much in Gilsan's interest that the relevant facilities and services be installed and provided as quickly as possible. 345 In a sense, I think, it is taking too narrow a view to focus on the circumstance that the services were provided to Beylen. If Gilsan were doing no more than acting as Beylen's agent, then this circumstance might be determinative. But if Gilsan, in its own right and for its own purposes, were requesting the provision of those services to Beylen, then the mere fact of provision to a third party would not of itself prevent Optus from looking to Gilsan for payment. 346 Thus, I think, the relevant circumstances are not limited to those disclosed by Mr Warwick to Mr Bragg before the Optus agreement was made. They include the detail of the requests and negotiations concerning the provision of the equipment. In my judgment, when one looks at that material overall, the inescapable inference is that Gilsan was acting, or came to act, as principal, notwithstanding that the equipment to be installed was the equipment of Beylen, and that the services to be provided were to be provided to Beylen. 347 Clearly enough, Ms Bicknell and Mr Damant understood that Gilsan was the "customer" and that it was to Gilsan that Optus should look for payment. So, too, did Telseek. Equally clearly, whenever Mr Warwick was made aware of this state of mind, he did nothing to dispel it. Thus, when Mr Damant referred repeatedly to the equipment or services of or for Audiotex Services Gibraltar (ie, Gilsan), Mr Warwick did not demur. When Ms Bicknell asked to whom the draft contract should be sent, Mr Warwick said that it should be sent to Gilsan, c/o of Mr Pearson. It would be extraordinary if Mr Warwick said this, intending to suggest that a draft contract between Optus and Beylen should be sent to Gilsan c/o Mr Warwick. The clear inference, I think, having regard to Mr Pearson's administrative role, is that Mr Warwick must have understood that the draft contract referred to was one between Optus and Gilsan. That was certainly Ms Bicknell's understanding: see para [329] above. 348 Finally, I think, the conversation of 31 March 2000 makes it clear that Gilsan, through Mr Warwick, had become a principal. What Mr Warwick said was that, in substance, he would prefer to pay for the infrastructure services out of revenue rather than by paying separate invoices. It is highly significant that he acknowledged not only that he "probably" said this, but that this was undoubtedly his state of mind at the time. The reason given by him is equally instructive: "[i]t would be easier to sell a permanent charge to our content providers". Clearly enough, Mr Warwick contemplated that Gilsan would pass on the charge in some way to the service providers: something that would be unnecessary to do if those service providers were themselves required to pay for the services provided by Optus. He thought that it would be easier to do this if the charge were a permanent one, reflected in a reduced outpayment from Optus to Gilsan rather than a one-off bill for, presumably, a substantial sum of money. 349 I therefore conclude that the "Beylen defence" fails. The clause 1.3 defence 350 Under cl 1.3 of the Optus agreement, Optus was required to: "Route international traffic generated on [Gilsan's] number ranges to [Gilsan's] nominated call centre in Australia, or to a [Gilsan] nominated call centre in another country". 351 Optus relies on cl 2.2 of the Optus agreement. By that sub clause, Gilsan was obliged to: "Ensure that the call centre(s) have the appropriate equipment and software to handle the traffic." 352 I do not think that cl 2.2 bears on this dispute. Clearly, the call centres referred to in cl 1.3 are the centres at or from which the relevant content, or services, are to be provided. They are call centres to be nominated by Gilsan: ie, the call centres of service providers nominated by Gilsan. They are, I think, quite different to Optus' FMC at Rosebery. 353 As to cl 1.3, there is no evidence that the equipment and services in question were required to enable Optus to "route" the traffic to nominated call centres. The obligation to "route" traffic to those call centres is an obligation to switch it, or direct it, to them. There is no evidence that the equipment or services were required to enable this to be done. 354 It is significant that the Optus agreement had been in place for more than a year before the services were first requested. Presumably, Optus had been complying, to Gilsan's satisfaction, with its obligations under cl 1.3. To my mind, this confirms that the services and facilities were not required to enable Optus to perform its obligations under cl 1.3. Indeed, as Mr Warwick made clear in his January 2000 conversation with Mr Bragg, the services and facilities were required for the operational purposes of the service providers or their agents (see para [319] above). 355 Finally, in this context, I think it highly significant that Gilsan at no time, during the course of the negotiations, suggested that the provision of the equipment and services was the responsibility of Optus under cl 1.3. I cannot believe that, if Mr Warwick had understood this to be the case at the time, he would have refrained from telling Optus so. I should note that Mr Warwick gave evidence that he said to Ms Bicknell that "I don't see why we should have to pay these charges because you get your money from the MOU". This was part of the conversation that Mr Warwick said he had with Ms Bicknell on 30 March 2000. For the reasons that I give in para [337] above, I reject Mr Warwick's version of that conversation and I accept Ms Bicknell's evidence of the conversation that occurred, she said, on 31 March 2000. That conversation is of course consistent with an understanding on Mr Warwick's part that the services in question were not covered by cl 1.3 of the Optus agreement, and that Gilsan would have to pay for them. 356 I conclude that the cl 1.3 defence fails. The remaining defences 357 The remaining defences can be considered together. 358 It is clear that Optus did not intend to provide the relevant services gratuitously. It quoted prices to Mr Warwick and to Mr Harris (who passed them on to Mr Warwick). It intended to prepare contracts between it and Gilsan in respect of the services, and (to Mr Warwick's knowledge) to send those contracts to Gilsan. It issued invoices to Gilsan, which Mr Warwick did not pay. 359 Not only did Mr Warwick understand that Optus required payment, he suggested that all monies owing had been paid. On 6 November 2001, Mr Bragg wrote to Mr Warwick (at, it may be noted, "Audiotex Services (Gibraltar) Ltd - Internet"). He referred to the provision of the Optus Spinnaker service between March 2000 and September 2001, and noted that $174,835.20 remained owing. Mr Warwick replied by an e-mail of 14 November 2001. He said, relevantly: "The only companies which I have an involvement with which in turn have contractual arrangements are Gilsan (International) Limited and Sesqui Limited … . By way of deduction by Optus Gilsan and Sesqui have discharged any liabilities in respect of FM charges, provisions and services. Such deductions have I understand consistently been listed in statements provided by yourselves ." (emphasis supplied)

Sesqui was another of Mr Warwick's companies. It utilised telephone numbers in Anguilla. 360 Mr Warwick's evidence relating to these communications was, at best, unconvincing and in truth, I think, dishonest. 361 When the sentences that I have highlighted were put to Mr Warwick, he said (T 289.25-.29): "A. You've got me there, I really don't know what that means. Q. It's your communication. A. I know it is, but I don't know what it means." 362 The meaning of the sentences is in fact clear. Mr Warwick was asserting that Gilsan had no further liability to Optus because all liabilities had been satisfied through the process of deduction that he identified. 363 The position did not improve in the following evidence (T 289.31-290.14):

"Q. You were saying Gilsan and Sesqui have already discharged any liabilities to pay for these facilities maintenance services by having moneys deducted by Optus from time to time? A. That's what it might imply, but I really don't know at the time what I was thinking when I sent that. Q. You make absolutely no reference in your response to Optus's letter of demand to Beylen being the party that should have been treated as the debtor for these services, do you? A. I recall at the time that we were in dispute with Optus as to what was happening with previous amounts. I was hardly going to volunteer someone else for them. Q. The position that you took in your response was that, first of all, if any party was liable, it was Gilsan or Sesqui, rather than Audiotext Services (Gibraltar)? A. I don't think that's what I mean here. Q. Well, what do you mean by that comment? A. I don't really know. Q. The second point you make is that Gilsan and Sesqui had already had the relevant moneys deducted from them; correct? A. For anything that they'd been due to pay, yes. Q. There's no other response at all you made at any time to that letter of demand, is there? A. Not that I recall." 364 It was then that Mr Warwick introduced, in a non-responsive way, the proposition that Optus had sent an invoice to Beylen (T 290.16-.32): "Q. Thank you. You accept, don't you, that you understood, when you requested the facilities management services in March 2000, that Optus expected to be paid something for them? A. Yes, and it's documented by them invoicing Beylen. Q. You claim, do you, that Optus has invoiced Beylen for those services? A. There has been an invoice raised to Beylen. Q. I see. Was that invoice brought to your attention at the time? A. By Optus? Q. Or by Beylen? A. Beylen let me know they had an invoice. Mark Harris - it was sent to Mark Harris." 365 A call was made for the invoice. As I have noted, although sufficient time was given for the call to be answered, no invoice was ever produced. It may be noted that Mr Warwick's belated recollection of Optus invoicing Beylen sits ill with his assertion at T 289.44, when pressed with the absence of any reference to Beylen, that he "was hardly going to volunteer someone else for them". 366 Having regard both to the clear terms of Mr Warwick's e-mail (and to the clear terms of the demand to which it responded), and to his dishonest and dissembling evidence in relation to those matters, I have no difficulty in concluding that he was well aware in 2001 and before of the following matters:

(1) Optus required to be paid for the provision of the services;

(2) Optus was looking to Gilsan to pay for those services; and

(3) Gilsan was liable to pay Optus for those services. 367 In this context, the striking similarity between the terms of Mr Warwick's e-mail to Mr Bragg, and the conversation between Mr Warwick and Ms Bicknell of 31 March 2000 (see para [336] above), fortifies both my acceptance of Ms Bicknell's evidence as to that conversation and my conclusion that Gilsan, through Mr Warwick, both understood and accepted that it was liable to pay for the services provided by Optus for Gilsan's service providers. 368 The other matter relied upon by Gilsan in this context is the failure of Optus to press for payment at a time when, on any view, it was deriving very substantial revenues, at a handsome profit margin, from Gilsan's business. There is no doubt that Gilsan's business was very valuable to Optus. Firstly, the agreed facts show that between January 1999 and February 2001, Optus carried some 22.8 million minutes of traffic for Gilsan. If one assumes that the fee of SDR 0.175 per minute ranged from USD 0.25 to USD 0.22 per minute over that period, the revenue to Optus would be in excess of USD 5 million. Further, in August 2000, Ms Bicknell's view was that Gilsan "brings into Optus over a million dollars a month margin". 369 In August 2000, Optus' accounts department thought that Gilsan owed Optus about $26,000. A person from that department asked Ms Bicknell in an e-mail: "As none of the invoices have [sic] ever been paid, I would like to understand why we wouldn't just disconnect them." 370 Ms Bicknell replied as follows: "I think that I need to explain what our main revenue business is. My team look [sic] after International Audiotex services (ie premium rate/sex lines etc) and we collect a transit fee for our services. The team attributes over $100million of revenue to the Company. Recently we have been trying to tie our costumers into using Optus for all their Audiotex business. To do this we have encouraged our customer [sic] to install all of their network facilities in Australia in the Optus FMC. This allows Optus to hold the customer at "ransom" so to speak as all their infrastructure is in our control and they therefor [sic] must use us as their transit point. This means that encouraging the installation of customer equipment is a Win-Win situation for both Optus and the Customer. Optus needs to be prepared to offer attractive pricing packages to ensure that the customer also receives benefit in using the Optus Facilities. As I advised previously the customer was not completely satisfied with the pricing provided to them and wanted Optus to charge a per minuet [sic] rate for the infrastructure rather than a flat fee. This meant that International would need to organise the direct payment of costs via Revenue Accounting for the products used. I have spoken to Hugh Smith regarding this and also have tried to make appointments with Revenue Accounting to discuss alternative ways of paying the costs of the customer's services. Revenue Accounting have not placed this issue on priority and I have been trying to arrange a meeting with Wayne Trattles. I have raised the issues again with the customer and we are looking at otherways [sic] to achieve our goals. At this stage it is not the customer's responsibility to settle the account until Optus has sorted out the pricing issues. The cost of the infrastructure is insignificant compared to the revenue potential of the customer & under no circumstances should this customer ever be turned off. This particular customer brings into Optus over a million dollars a month margin and if we turned off their service, we would not only lose Optus revenue but we would lose our largest customer. … As requested previously, I will need to review the prices already charged, so it would be greatly appreciated if you could provide me with reprints of the customers [sic] bills for the below account to date. We should agree on pricing by this week, once that happens who is the best person to organise changes in the billing system?" 371 There is no evidence that Gilsan had become aware, prior to discovery in these proceedings, of the exchange of views between Ms Bicknell and Optus' accounting staff. 372 At about this time, Ms Bicknell was corresponding with Mr Pearson in relation to the outstanding accounts. On 25 August 2000 - ie, 3 days after her e-mail that I have quoted in the preceding paragraph - she sent an e-mail to Mr Pearson, enclosing information in relation to charges quoted and charges imposed, and said: "My proposition is for you to pay the bills as they stand today and for Aug (I will not charge for the CTS and FMC services for this period as the Billing Department has not created these bills yet), and then to move forward with pricing quoted in option 3." 373 The material sent by Ms Bicknell to Mr Pearson included three options for payment. Under "option one" she noted that "Peter [Warwick] wants to pay 01 c US per minuet [sic] of traffic per month for facilities instead a [sic] monthly recurring fee however I do not feel that this is a good option. We would need to adjust the transit fee each time new facilities added [sic] and monitor that we are receiving the correct fee to cover costs each month. There is a very distinct possibility that you will end up paying to [sic] much." 374 Two things are clear from this. The first is that Mr Pearson can have been under no illusions that Optus was waiving payment for the services provided. The second is that it provides yet further confirmation of Ms Bicknell's account of her conversation with Mr Warwick on 31 March 2000. 375 It does not appear that Optus was particularly active in pressing its claim for payment after August 2000. As I have noted in para [359] above, a demand was made on 6 November 2001 for charges said to be owing in respect of the spinnaker services. 376 On 8 February 2002, Gilsan's lawyers, Gadens, wrote a letter of demand to Optus. The substance of those demands is not of present relevance, but the terms of Optus "considered response" are. In that response, Optus referred, among other things, to its claims for monies owing in respect of spinnaker services and facilities management services. It made no reference to a claim for call termination services; and indeed, that claim was not made until Optus filed its cross-claim in these proceedings. 377 It is unlikely that Mr Warwick forgot that Optus required to be paid and that he had proposed a means of payment. But even if Mr Warwick had overlooked this, Optus made it clear, through Ms Bicknell's e-mail to Mr Pearson of 25 August 2000, that Optus did require to be paid for the services. That was reinforced by the invoices that were sent thereafter. 378 Accordingly, even if it be an answer to a claim for a quantum meruit payment for services provided that (without more) the service provider "was ultimately content for the services to be gratuitous", that defence is not made out on the facts. 379 The factual history shows that Optus made no representation, whether by silence, inaction or otherwise, that it did not require to be paid for the services. Equally, there was no common assumption, and hence no conventional estoppel, to that effect. 380 It may be that, as Gilsan submitted, it "conducted its affairs on the basis that no additional charges were payable and paid its service providers and discharged its other obligations accordingly" (written submissions dated 24 September 2004, para 453). I am not sure that the evidence relied upon by Gilsan to support that submission, namely para 20 of Mr Pearson's statement of 7 April 2004 (exhibit PX 14), goes so far. That paragraph is, I think, directed more to the "change of position" defence in relation to the Optus overpayments cross-claim. But in any event, it does not amount to a sufficient basis for finding a conventional estoppel. Assuming that, for this purpose, it was Mr Pearson who "conducted" the affairs of Gilsan, he cannot have conducted them on the basis that Optus did not require to be paid for the services provided. That would have required him to ignore both the terms of Ms Bicknell's e-mail of 25 August 2000, and the invoices and other reminders sent by Optus to Gilsan. I cannot accept that a person as careful as Mr Pearson was shown to be could have been so neglectful. If it were necessary to explain Gilsan's inaction, I suspect that the explanation would be found in an adoption of the philosophy of allowing sleeping dogs to enjoy their repose. 381 The last of the defences grouped under this heading is the "change of position" defence. Even if that can be a defence to a restitutionary claim of the kind presently under consideration, it is not made good on the facts. On any view, Gilsan requested that the services be provided. On any view they were provided. It is those circumstances, coupled with the circumstances that the services were not (to the understanding of both Optus and Gilsan) intended to be provided gratuitously, and that the services were of benefit to Gilsan, that makes it unjust for Gilsan to retain the benefit of them without payment. It is difficult conceptually to see how there can be a relevant change of position engendered by the fact of receipt of the services. To the extent that something more is needed, the change of position defence is I think no more than the estoppel defence under a different name. It fails for the same reasons. 382 I do not think that the remaining defences asserted by Gilsan are made good. Firstly, as to the submission that Optus was prepared to provide the services gratuitously, that is simply not made out on the facts. Not only did Optus make it clear to Gilsan (through Mr Warwick) during the period of negotiations that it required to be paid; Mr Warwick in the conversation with Ms Bicknell on 31 March 2000 put forward a proposal for payment. Further, when demand was made in respect of the amount outstanding for the spinnaker services, Mr Warwick said in his reply that Gilsan had paid for those services through monthly deductions from amounts otherwise due. It is impossible to understand why Optus would have required to be paid for spinnaker services but not for the others; or why Gilsan would have thought that it was liable to pay for spinnaker services but not the others. Domestic traffic services 383 So far, I have dealt with the call termination, co-location and spinnaker services. They require separate consideration because they were, on Gilsan's analysis, services provided not to it but to its service providers. On any view, the domestic traffic services were provided to Gilsan. 384 Some of Gilsan's traffic was switched by the originating carrier through transit carriers other than Optus. Those other transit carriers were (or included) Telstra, Telecom New Zealand and Hong Kong Telecom. For calls "transited" (in the jargon of the industry) by those other carriers to be routed to Gilsan or its service providers, they had to be switched across to the Optus network. Where Telstra was the carrier, the call was switched to the Optus network through the "Optus/Telstra point of interconnect". If normal cascade accounting principles applied, Telstra would make a cascade outpayment to Optus. However, Telstra and Optus had agreed that the traffic would be "zero rated", ie, no amount would be payable by Telstra to Optus. Telstra accounted directly to Gilsan. 385 Optus incurred some cost in providing this service to Gilsan. Clearly, the service was beneficial to Gilsan: because if the calls were not switched across from Telstra to Optus, they would not be routed to Gilsan's service providers, the service would not be provided, the consumer would not pay and Gilsan would not be paid. 386 On 2 December 1998 (after Mr Warwick had sent Mr Bragg the final draft of the Optus agreement, and the day before it was signed), Mr Warwick sent Mr Bragg an e-mail setting out matters to be finalised. One of those related to domestic traffic. Mr Warwick said: "I understand that you have worked a solution with Telstra for them to transit to you the traffic that they receive. From my initial talks Telstra wanted us to pay you for this and at the time we discussed a rate of 1-2 cents a minute with no Optus Fee applicable. Can you please confirm that this is correct." 387 There is no evidence that Mr Bragg responded to this, or that he discussed the question of domestic traffic services with Mr Warwick. 388 There is a dispute whether the reference to "1-2 cents" is a reference to Australian or American currency. Optus points to the fact that, in the industry, the relevant currencies were USD and SDR. However, where both the transit carrier (Telstra) and the de facto terminating carrier (Optus) were Australian companies, and where the service was provided in Australia, I incline to the view that the reference should be taken to be to Australian currency. For reasons that will become apparent, it is not necessary that I express a concluded view. 389 Nothing more seems to have happened until March 2001, when there was an exchange of e-mails between Messrs Pazmino and Pearson relating to "the Telstra termination charges for Gibraltar Audiotex traffic to Vanuatu". Mr Pazmino proposed a fee of USD 0.35 per minute. Mr Pearson said that Mr Pazmino would need to justify his pricing: "I understand that the maximum retail price for interconnect is 2.5 cents Australian and the usual wholesale rate is 1/2 cent Australian. Our agreement does not specify any other charges to be levied other than the .175 SDR per minute fee." 390 Mr Pazmino replied, going into considerable detail but concluding that the figure of USD 0.035 "is an appropriate price to cover all components of our business". 391 Mr Warwick was asked to acknowledge that he knew "that Optus did not intend to provide those services for free" (ie, the domestic traffic services) (T 291.27), to which he replied (T 291.29) that "[i]t had been discussed in correspondence and with John Bragg." He was then asked (T 291.32-.40): "Q. And you knew that that matter had not been resolved as at 3 December 1998 when you reached your agreement with Optus? A. Correct. Q. You sought, at that time, confirmation that Gilsan would pay Optus between 1 and 2 cents per minute and Telstra would not pay a fee to Optus? A. Yes." 392 Mr Warwick was then referred to the e-mail debate between Messrs Pazmino and Pearson to which I have already referred. He said (T 292.33) that he was aware that there was a debate but not of its intensity. He was then asked (T 292.39-293.1):

"Q. But your recollection is that the scope of the debate concerned what was a fair and reasonable price for those services? A. Mr Pazmino says it's fair and reasonable but I don't know what is fair and reasonable. Q. But you agree with me that, as far as you recall, the scope of the debate concerned what was an appropriate fee to be charged for those interconnection services? A. Yes." 393 Optus relies on all but the first (the Beylen defence) of its defences to the claim for call termination, co-location and spinnaker services. The clause 1.3 defence 394 As I have noted, Optus' obligation under cl 1.3 was to route international traffic generated on the relevant numbers to Gilsan's nominated call centres in Australia or elsewhere. That was one of the services for which Optus was entitled to its fee of SDR 0.175. That fee, of course, applied to every minute of traffic so routed, as declared by Optus to Gilsan: ie, to every minute of traffic routed by an originating carrier through Optus as transit carrier to Gilsan. 395 Gilsan did not submit that Optus was entitled to the fee of SDR 0.175 in respect of those minutes of traffic which were switched through to it from Telstra at the point of interconnect. It was Telstra, as transit carrier, that incurred the costs of "transiting" that traffic; just as, where AT&T switched that traffic through Optus as transit carrier, it was Optus that incurred the cost. 396 Gilsan's submission, as I understood it, was that the Optus fee, payable in respect of traffic routed through Optus as transit carrier by the originating carriers, remunerated Optus not only for its services as transit carrier but also for its services in receiving and routing to Gilsan's nominated service providers traffic switched through from other transit carriers: specifically, Telstra. If the Optus fee were chargeable in respect of all minutes of traffic switched by Optus to Gilsan's service providers, regardless of the source from which that traffic was switched across to Optus, one could understand Gilsan's submission. Although Schedule C is less than clear on the point, it would appear that the Optus fee is only payable where the traffic is carried by it as a transit carrier. The last sentence "where the only point of transit is with OPTUS they will deduct only the OPTUS Fee of SDR 0.175 deductible for such traffic" in particular appears to show this. 397 Both the negotiations leading up to the making of the Optus agreement and the practice of the parties thereafter appear to confirm this approach. As I have noted (see para [386] above), Mr Warwick's e-mail to Mr Bragg referred to a "rate of 1-2 cents per minute with no Optus Fee applicable". The traffic that was declared by Optus to Gilsan, and in respect of which Optus made payments to Gilsan that took account, by deduction, of the Optus fee was traffic routed through Optus as transit carrier by originating carriers. Presumably, this reflects the arrangements to which Mr Bragg deposed in his statement of 4 September 2003 (exhibit DX 17) at para 128: " … Optus did not receive payment from Telstra for traffic routed across the P.O.I. and Optus did not pay Gilsan or other audotex service providers for such traffic. Rather, Telstra accounted to Gilsan and other service providers directly." 398 That evidence was neither contradicted nor challenged. Accordingly, and notwithstanding my view as to Mr Bragg's lack of credibility, I think that I should accept it. I have no doubt that, if Gilsan had thought it were incorrect, it would have challenged it. In any event, it is consistent with the known facts and with such relevant documents as have been proved. 399 The Optus fee was payable for the services set out in cl 1 of the Optus agreement. It was not payable for services outside the ambit of cl 1. I do not think that the particular service - switching across traffic from Telstra through the point of interconnect - is a service within cl 1. 400 It follows that the cl 1.3 argument fails in respect of this service also. 401 Although it does not properly bear on the proper construction to be given to cl 1.3, it is I think significant that when Mr Pazmino raised the question of a charge for the domestic traffic services in 2001, Mr Pearson's response was as to the amount to be charged and not as to the entitlement to charge it. Although Mr Pearson referred to SDR 0.175 as the only charge "to be levied", and referred to the need for Mr Pazmino to "prevail on my better nature and talk me into some sort of additional payment", he did not suggest that the services were intended to be remunerated by the 0.175 SDR fee. As Mr Warwick agreed in the passage of his cross-examination referred to in para [397] above, "the scope of the debate concerned what was an appropriate fee to be charged for those interconnection services": the debate was as to the amount of the fee, not as to the entitlement to it. Although, as I have said, this is not something that can bear on the proper construction of cl 1.3, it is something that may properly be taken into account in considering whether, as a matter of fact, the services for which Optus required the fee were, to the understanding of the parties, comprehended within the services that were to be remunerated by the agreed fee of SDR 0.175. If Mr Pearson had thought they were not, he would have said so. If he had any doubt about the matter, he would have referred it to Mr Warwick. He did neither of those things. Further, Mr Warwick, being aware of the debate (T 292.33) did not intervene and assert that Optus had no entitlement in principle. 402 Again, Mr Warwick's acknowledgment that the relevant services were not provided gratuitously, and that the issue of the fee for them had not been resolved when the Optus agreement was concluded (T291.27-.35) provides strong confirmation of the proposition that the services in question did not, as a matter of fact and to the knowledge of the parties, fall among those that were to be compensated by the Optus fee of SDR 0.175 per minute. 403 Mr Warwick said in his statement of 7 April 2004 (exhibit PX 6, paras 14-15) in substance that he assumed that the charges were included in the Optus fee and that no fee was otherwise payable. I do not accept that evidence. Firstly, it is inconsistent with the relevant passage from his e-mail of 2 December 1998 to Mr Bragg. Secondly, it is inconsistent with his evidence in cross-examination to which I have just referred. 404 Again, Mr Warwick said in his statement of 3 July 2003 (exhibit PX 3, para 30) that when the Optus fee was negotiated Mr Bragg said that it would "cover all of our services". I do not accept that Mr Bragg intended to say, or that Mr Warwick understood him to say, that the fee covered any services other than those listed in the draft agreement. It would be quite extraordinary, even for someone as keen to obtain business as Mr Bragg appears to have been, for Mr Bragg to have committed Optus to the one fee regardless of the services that might be required of it in the future. Any wider reading of that purported statement - in particular, a reading extending it to Optus' entitlement to charge for the domestic traffic services - is, again, inconsistent with Mr Warwick's evidence in cross-examination to which I have just referred. Gilsan's other defences 405 The circumstances relating to the domestic traffic services are slightly different to those relating to the other services. It follows that my conclusion on these defences, in the context of those other services, does not necessarily apply in respect of the domestic traffic services. 406 One significant point of distinction is that Optus from time to time asserted an entitlement to be paid for those other services and that Mr Warwick, as I have found, at one time accepted an obligation to pay for them. In the present case, no question of charge was raised, on the evidence, between 2 December 1998 (just before the Optus agreement was signed) and 20 February 2001 (when Mr Pazmino took up with Mr Pearson the question of a charge for the domestic traffic services). In the meantime, Optus had accounted to and paid Gilsan for minutes of traffic transited by it. It had made deductions for various reasons. Even though the proposal was (according to Mr Warwick's e-mail of 2 December 1998 to Mr Bragg - see para [386] above) for a fee based on the number of minutes switched by Telstra through to Optus, no deduction was made. 407 In the meantime, as I have noted when discussing the "change of position" defence to the Optus overpayments claim in paras [247] and following above, Gilsan had been making payments, to service providers, consultants and the like, comprising the great bulk of the payments made by Optus to Gilsan. It made those payments on the faith of the receipts from Optus in the way that I have explained. That is to be understood as encompassing not just the fact of payment but also the statements and other documents pursuant to which, or by reference to which, the payments were made. 408 Do those different circumstances require a different conclusion? In my judgment, the answer is "no". Mr Warwick was aware that the circumstances were being provided. He was aware that there was to be a fee payable for them. He was aware that the Optus fee was not applicable. The better inference from the evidence is that he, and for that matter Mr Pearson, did not regard the services as covered by the Optus fee. I think the likelihood is that, whilst business was booming, Optus did not take care to ensure that it claimed everything to which it was entitled; and that, in the face of that approach, Gilsan adopted the philosophy to which I have referred in para [380] above. But Mr Warwick did not think that Optus intended to provide the domestic call services gratuitously; and he knew that it had not been resolved as at 3 December 1998 when the Optus agreement was concluded (T 291.27-.35). If Mr Warwick permitted Gilsan's affairs to be conducted on a basis that made no provision for the fee, in circumstances where he knew that the service was being provided, that it was not intended to be provided gratuitously, and that it was for the benefit of Gilsan, then in my judgment he did so at his own risk. 409 For these reasons, I conclude that the remaining defences - howsoever characterised - fail. Quantification of the quantum meruit cross-claim 410 Ms Bicknell quantified the value of each of the relevant services. That evidence was not contradicted, and was challenged only as to the fourth item. She said that the value of the services was as follows:

(4) domestic traffic services: $198,560 411 I add that, to the extent that there is a discrepancy between her quantification of the third item and the amount claimed by Optus in its letter of 1 November 2001 (see para [359] above), Gilsan did not rely upon this as a basis for rejecting Ms Bicknell's evidence. 412 The one challenge that Gilsan raised was to the figure of USD 0.35 taken by Ms Bicknell for calculating the value of the domestic traffic services. It referred to the figure of 1-2 cents advanced by Mr Warwick in his e-mail of 2 December 1998 to Mr Bragg. (Gilsan submitted that this figure should be read as a reference to Australian currency; for the reasons that I have given in para [388] above, I incline to think that this is so.) 413 Gilsan referred further to the various figures canvassed in the e-mail correspondence between Messrs Pazmino and Pearson in February 2001. Even if Mr Pearson's statements as to the amounts charged for such services could be taken as having any real probative weight, they are answered by Mr Pazmino's figures. In any event, Ms Bicknell gave reasons that justified her choice of the figure of USD 0.035 per minute. She referred to the amount charged by Optus to APT (a competitor of Gilsan) for the same services in respect of the same kind of business (the fact that the destination was to be the Solomon Islands rather than Vanuatu does not seem to me to be a point of distinction). I accept Ms Bicknell's evidence and I accept the rate of USD 0.035 per minute as justified by that evidence. Issues 48 to 54: the Optus clawback claim 414 Under the system of cascade accounting, originating carriers declared minutes of traffic to Optus as transit carrier and made payments to Optus in accordance with whatever contractual arrangements were in place between them. Under the Optus agreement, Optus declared minutes of traffic to Gilsan and made payments to Gilsan in accordance with cls 1.5 and 1.6 (the latter as varied from time to time). From time to time, the originating carriers have purported to "claw back" from Optus payments earlier made by them to Optus. That happens when, for one reason or another, the originating carrier is unable to recover payment for the traffic. Optus says that it in turn is entitled to claw back those amounts from Gilsan. The relevant provisions of the Optus agreement 415 This claim turns on the proper construction of cls 1.5 and 1.6 of the Optus agreement. For convenience, I set them out: "1.5 pay SP, for the duration of this Agreement and for twelve months thereafter, 75% of all monies due, as defined in Schedule C hereto, for each calendar month in which traffic was generated, 45 days from that month end; 1.6 pay SP, for the duration of this Agreement and for twelve months thereafter, 15% of all monies due, as defined in Schedule C hereto, for each calendar month in which traffic was generated, within 45 days of receiving payment from the distant and/or transit carriers. Such payment is to be made after deductions have been calculated for payments that have been overpaid as a result of a distant or transit carrier refusing to make payment for the traffic of any particular month; ". 416 Clause 1.6 was varied in August 2000 and again in February 2001. The parties are agreed on the effect of that variation. I have dealt with those variations in paras [36] and [37] above. For convenience I repeat, slightly modified, what I there said. 417 The effect of the August 2000 variation was to permit Optus to retain out of the 25% of the amounts referred to in clause 1.6 of the Optus agreement "10% of all monies due as a retention against any amounts which would not ultimately be payable to Gilsan by reason of a distant or transit carrier refusing to make payment for any part of the traffic of any particular month". As a consequence, the parties accepted, 75% of all amounts due for traffic generated in any calendar month was payable 45 days from the end of that month; a further 15% was payable 105 days from the end of that month; and the final 10% was payable 45 days from the date on which Optus received payment for that month from the distant or transit carrier, subject to adjustment for uncollectible amounts. 418 The effect of the February 2001 variation was as set out in an e-mail of 8 February 2001 from Mr David Pearson on behalf of Gilsan to Mr Franc Pazmino of Optus. That e-mail stated, relevantly, that the February 2001 and subsequent traffic months would be settled as to 75% within 45 days (of the end of the month) and the balance within 45 days of receipt by Optus "in accordance with the terms set out in the [Optus agreement]"; and that for traffic months up until and including January 2001, settlement would be made as to 75% within 45 days (of the end of the month), 15% within 105 days (again of the end of the month), with the remainder being settled within 45 days of receipt (by Optus) "[a]gain in accordance with the terms of the [Optus agreement] subject to this amendment to the timing of payments." Optus' submissions 419 Optus' case as pleaded depended substantially on a conventional estoppel, said to be based on a common assumption (see issue 48). As I have noted, issue 48 is not pressed: Optus accepts that, if it requires answer, it should be answered in the negative. 420 In final submissions, Optus' case was that the effect of the August 2000 and February 2001 variations was in substance as I have just stated. Accordingly, it said, the answer to issue 50 must be "yes". 421 Thereafter, Optus' submissions dealt with issues 52 and 53. Gilsan's submissions 422 Gilsan submitted that, under cl 1.5 of the Optus agreement, Optus was obliged to pay 75% of the amount due for a particular traffic month within 45 days of the end of that month, regardless of whether Optus had itself received payment from the originating carrier. The balance was to be paid 45 days after Optus had been paid by the distant carrier for that month with adjustments made to reflect the extent to which the distant carrier refused to pay for the traffic of that month. Gilsan submitted that, in both cases, the payment when made was final. 423 Gilsan next submitted that Optus had no general entitlement to claw back; and that its only ability to make deductions, from monies otherwise payable to Gilsan on account of non-payment by originating carriers, was the limited right given by cl 1.6. 424 Gilsan next submitted that the effect of the August 2000 variation was to divide the 25% into components of 15% and 10%, with payment of the former being deferred for a period of time (not subject to payment by the originating carrier), and only the latter being available as a provision for what might be called "bad debts". 425 Gilsan next submitted that the effect of the February 2001 variation was to restore the original position (ie, under cls 1.5 and 1.6 of the Optus agreement as drafted and signed) for traffic months from and including February 2001, and in substance to confirm the August 2000 variation as applicable to traffic months up until and including January 2001 where settlement had not been made. The effect, Gilsan submitted, was that for the months up to January 2001, the amount from which "clawbacks" could be made was the 10% and, for months thereafter, the 25%. 426 Gilsan submitted finally that at no time did Optus have a right "to recover clawbacks at large from all future monies that may be due to Gilsan under the Optus agreement" (written submissions dated 24 September 2000, para 434). Analysis: the construction and effect of cls 1.5 and 1.6 427 The effect of cl 1.5 is clear, and was not really disputed. Optus' obligation was to pay Gilsan 75% of the amount due to it for any calendar month in which traffic was generated ("traffic month") within 45 days from the end of that month. That payment was to be made whether or not Optus had received payment from the originating carrier (or, where there was another transit carrier, that transit carrier). No doubt, that is why Optus referred to its fee as, or including, a "factoring fee". There is no express contractual right to deduct, from amounts otherwise payable by Optus under cl 1.5, amounts withheld by the originating carrier either for that traffic month or otherwise. 428 Nor, except under cl 1.6 (as from time to time varied) does Optus have any general express contractual right to claw back, withhold or deduct from payments otherwise due to Gilsan, amounts withheld by originating or other transit carriers on account of bad debts. Other agreements between Optus and companies such as Gilsan included some general clawback provision. At least some employees of Optus appeared to think that, contrary to the fact, the Optus agreement likewise contained such a general clawback right. 429 Under cl 1.6 in its original form, Optus was required to pay the balance of the amount due to Gilsan for a particular traffic month within 45 days of receiving payment from the originating or transit carrier. However, Gilsan had a right to deduct, from the amount otherwise payable under cl 1.6, the amount of "payments that have been overpaid as a result of a distant or transit carrier refusing to make payment for the traffic of any particular month." 430 Gilsan submits that the deductions authorised by cl 1.6 are only for non-payment (by the originating or transit carrier) for the particular month to which the particular 25% relates. I do not think that this is correct. There are two textual indications in cl 1.6 that lead me to this view. 431 First, what is authorised is "deductions … for payments that have been overpaid". That suggests that more than one deduction may be made, and that the deductions may relate to more than one overpayment. The overpayments referred to must be overpayments by Optus to Gilsan. In respect of any one traffic month there would have been (or should have been, if cl 1.5 had been performed according to its terms) at the time cl 1.6 operated only one payment made by Optus to Gilsan for the month. That is the payment of the 75% due for that month within 45 days of its end. If deductions may be made from the 25% tranche for more than one overpaid payment, they must relate to more than one traffic month. Thus, the use of the plural forms, "deductions" and "payments", suggests strongly that account may be taken of overpayments in respect of traffic months other than the particular traffic month to which the 25% tranche relates. 432 Second, the reason for the overpayments must be that the originating or transit carriers have refused "to make payment for the traffic of any particular month." The phrase "any particular month" is somewhat confusing. If the word "any" were replaced by the word "the", it would give a strong indication that, despite the confusing use of the plural "deductions" and "payments" earlier in the sentence, the right to deduct for overpayments was limited to non-payment for the particular month. Equally, if the word "particular" were deleted, there would be a strong indication that the right was general, and not limited to overpayments for the traffic month to which the 25% tranche related. In context, I think, the phrase "any particular month" should be read as referring to any traffic month in respect of which the originating or transit carrier has refused to make payment. That gives proper effect to the adjective "any". Nor does it deprive the following adjective "particular" of significance. The use of the adjective "particular" signifies that the non-payment by the originating or transit carrier that gives rise to the entitlement to make a deduction must have been attributable to a particular month (or months) rather than to some aggregate or non-specific period of time. 433 I therefore conclude that cl 1.6 as originally drafted entitled Optus to make deductions, from the 25% tranche not payable by it until payment to it by the originating or transit carriers, in respect of prior overpayments by Optus to Gilsan. That is so whether an overpayment was for the traffic month in question or for another traffic month. The only qualification is that the overpayments must have resulted from the refusal of the originating or transit carrier to make payment for a particular month or months (including, but not limited to, the traffic month in question). 434 The effect of the August variation was to reduce, from 25% to 10%, the amount in respect of which deductions for non-payment could be made. But with that change in the percentage, the construction that I have just stated applies equally. 435 The effect of the February 2001 variation was to reinstate, for that and future months, the agreement as originally signed. It follows that the construction that I have stated for cl 1.6 in its original form applies to cl 1.6 on and from February 2001. The remaining issues 436 The remaining issues in respect of the clawback claim are whether AT&T has refused to pay Optus in respect of any part of the Gilsan Vanuatu traffic and whether any of AT&T's agreed non-payments be apportioned, and if so how, to Gilsan's Vanuatu traffic. Those two issues should be considered together. 437 There is no doubt that, over the period of time that the Optus agreement was in force, AT&T refused to pay Optus for a large number of minutes of traffic to Vanuatu. Those minutes are set out in exhibit PX 30R, document A, column J. They amount in total to many millions. 438 The real question is whether any of those minutes, called "uncollectibles", can be apportioned to Gilsan's traffic, as opposed to traffic to Vanuatu for other service providers. 439 Ms Bicknell propounded two methods of apportionment. One, which she called the "apportionment method", attributed the uncollectibles to each service provider in the proportion that each service provider's audiotext traffic on the AT&T Vanuatu route bore to the total. The other, referred to as the "dialled numbers method", attributed uncollectibles to the particular telephone numbers for which the consumer refused to make payment. 440 Ms Bicknell said that Optus did not have all the information that it needed to apportion uncollectibles using the dialled number method. She did, however, undertake an analysis on the basis of the information that was available to Optus. That exercise showed that, for eight months out of twelve in 2000, the dialled number method would yield a higher proportion of uncollectibles attributable to Gilsan than the apportionment method. 441 At first blush, the apportionment method would seem to be a reasonable approach. However, Mr Warwick sought to express the view that dial-up internet services (of the kind promoted by his company) had lower levels of uncollectibles than did voice services. Mr Warwick was unable to substantiate, let alone quantify, this purported opinion. Mr Hibbard, whose expertise I accept, said that in his experience the opposite was likely to be the case. He gave persuasive reasons why this was so. 442 In the circumstances, I think that the apportionment method does provide an appropriate basis for the attribution to Gilsan of a proportion of the total minutes of Vanuatu traffic for which AT&T refused to make payment to Optus. To the extent that it is inaccurate, I am satisfied, on the evidence, that the inaccuracies are likely to understate, rather than overstate, the proportion properly attributable to Gilsan. 443 The parties did not address in detail the way in which cl 1.6 (as it applied from time to time) should operate, or on the precise rights of deduction that Optus would have. Consistent with the approach that I take to the construction of cl 1.6, it would seem that Optus' rights of deduction apply only in respect of the unpaid amount from time to time of the particular percentage of monies owing to Gilsan from which deductions can be made. Thus, for cl 1.6 in its original form and as applicable from February 2001 onwards, Optus would have a right of deduction, in respect of non-payment by originating or transit carriers, against such of the 25% tranches as are unpaid. For the months when the August variation is current, the right of deduction would be limited to such of the 10% tranches as are unpaid. 444 It would seem, further, that the right of deduction should be limited to deductions in respect of amounts unpaid by originating or transit carriers at the time the 25% or 10% tranche for a particular month becomes due and payable. In other words, as I see matters at present, it would not be open to Optus to say that there is a pool of money representing the totality of the unpaid 25% or 10%tranches, from which pool of money it is entitled to deduct (so far as the pool extends) all non-payments - in the jargon of the industry, "uncollectibles" - regardless of the month to which any particular amount of those uncollectibles might relate. Further, to the extent that at any particular time the apportioned amount in respect of uncollectibles exceeds the total of the tranches (of 25% or 10%, as the case may be) then unpaid, Optus should suffer the deficiency. 445 However, having expressed these tentative views on the operation of cl 1.6, I think the appropriate course is to permit the parties to consider the matter and address further submissions on the operation of cl 1.6 should they wish. Reserved issues 9 to 12 446 Issue 9 relates to the underdeclaration of minutes. I concluded in substance that Optus was not justified in paying, on a monthly basis, less than the appropriate percentage of the minutes measured by it (see para [119] above). That therefore raised for consideration issue 9, which in substance asked whether Optus' practice of paying by reference to less than the number of minutes measured by it was a breach of contract. 447 Issue 10 dealt with the USD/SDR Optus fee conversion claim. I concluded, in substance, that Schedule C to the Optus agreement had not been varied, so that Optus' entitlement was to the fee calculated in SDR or the USD equivalent applicable at the time the calculation of the entitlement was made (see para [159] above). 448 Issue 11 related in substance to the effect of the Benchmark Order. I considered it in the context of issues 32 to 40. I concluded in substance that the Benchmark Order had no impact on Optus' payment obligations to Gilsan, or on the quantification of the amounts payable by Optus to Gilsan in accordance with Schedule C to the Optus agreement (see para [313] above). 449 Those conclusions rendered it necessary to consider the impact of cls 1.5 and 1.6 of the Optus agreement on the obligations that I have found to exist. Optus submitted that its only obligation was to pay 75% of the amount due in respect of each traffic month 45 days after the end of that month in accordance with cl 1.5, and the balance at the times and upon the occurrence of the events specified in cl 1.6 as it stood from time to time. It therefore submitted that, until a final accounting was taken between it and Gilsan (and, I think, between it and AT&T by reference to the award to be made in the London arbitration), it was not possible to assess the impact of my findings on the parties' rights and liabilities. 450 I do not agree. In each case, on my findings, and to the extent that at least one of those findings applies in respect of a particular traffic month, Optus underpaid Gilsan. It did so (on the assumption just identified):

(1) In respect of the 75% tranche that was due 45 days after the end of the traffic month;

(2) During the currency of the August 2000 variation, in respect of the further 15% tranche that was due 105 days after the end of the traffic month; and

(3) In respect of the final 25% tranche (before and after the August 2000 variation was effective), or 10% tranche (whilst the August 2000 variation was effective), if and to the extent that the amount paid was diminished by any of the matters that I have identified. 451 Payments under cl 1.5 are not provisional. They are final. Nor, during the currency of the August 2000 variation, were payments of the 15% second tranche provisional; they, too, were final. Gilsan was entitled as of right to those payments. Optus was not entitled to diminish them by reference to any of the matters in question. 452 Equally, once payment had been made to Optus by the originating carrier, it was obliged to pay the final tranche (of 25% or 10%, as the case may be) to Gilsan subject only to the deductions authorised by cl 1.6. Again, those payments when made were not provisional; they, too, were final. 453 In principle, therefore, to the extent that Optus has reduced any of the payments by reference to any of the matters in question, it is in breach of contract and Gilsan is entitled to recover, upon a number of alternative bases that do not presently require examination, in respect of the underpayments. Issue 55: set-off 454 Optus submitted that it was entitled to set off in equity any amounts found to be owing by it to Gilsan against any amounts found to be owing to it by Gilsan. It submitted that the relevant test involves examining the closeness of connection of all the competing claims, including the nature of each claim, and asking whether or not it would be unjust or inequitable in all the circumstances for the plaintiff to be permitted to proceed with its claim without making due allowance for the cross-demand: relying on AWA Ltd v Exicom Australia Pty Ltd (1990) 19 NSWLR 705 (written submissions dated 24 September 2004, para 291). 455 Gilsan accepted that the test propounded by Optus was the correct test (written submission in reply, para 88). 456 Optus submitted that the connection between the various claims and counter-claims was plain. Thus, it submitted, the infrastructure and domestic traffic services were necessary to enable Gilsan to have the benefit of the traffic in respect of which it claims to have been underpaid. 457 Further, Optus submitted, the parties had dealt with each other by setting off payments due from one against payments due from the other. This, it submitted, reinforced the point that equitable set-off was available to it. 458 Gilsan submitted that "the final determination of the set-off issue should be the subject of submissions once the Court's decision in relation to the various respective claims and counter-claims is known." This followed, it said, "because there are a number of possible permutations of outcomes and Gilsan does not accept that every possibility should result in set-off" (written submissions in reply, para 89). As to the way in which the parties dealt with each other, Gilsan submitted that it was not determinative because "[c]onvenience and Optus' imposition culture no doubt respectively had a part to play when any set-off occurred" (ibid para 90). 459 I have found that Optus is liable to Gilsan on the following claims:

(1) the underdeclaration of minutes (issues 8 and 9);

(3) Gilsan's failure to pay claim (issue 11). 460 I have found that Gilsan is liable to Optus on the following claims:

(1) the Optus quantum meruit claims (in respect of each of the four services) (issue 41 to 47); and

(2) in principle, the Optus clawback claim (issues 50 to 53). 461 I noted, as to each of the Gilsan claims referred to in para [459], that the general defence of set-off was maintained, and deferred consideration of that issue until I came to the question of set-off. 462 My tentative view is that application of the test accepted by the parties, particularly in light of the authorities referred to by Optus in para 292 of its written submissions of 24 September 2004, would lead to the conclusion that these entitlements should be set off. However, on reflection, I think that the appropriate course is to do as Gilsan submits and allow the parties an opportunity to consider my reasons and to make further submissions on this issue also should they wish to do so. Conclusions 463 I return to the agreed issues that were set out in para [29] above. I answer them as follows: 464 1. The true construction of the expression "origination charge" in Schedule C of the Optus Agreement dated 3 December 1998, including whether that expression means:

(a) the amount per minute of traffic agreed between the originating, transit and terminating carriers to be retained (notionally or otherwise) by the originating carrier from the Total Accounting Rate;

(b) the amount per minute of traffic in fact (albeit notionally or otherwise) retained by the originating carrier from the Total Accounting Rate;

(c) the amount per minute of traffic to which the originating carrier is ultimately entitled from the Total Accounting Rate as a result of any confidential agreement between the originating and transit carriers?

Answer : The "origination charge" is the amount per minute of traffic to which the originating carrier is ultimately (notionally or otherwise) entitled from the TAR taking into account any confidential agreement between it and (on the facts of this case) Optus. 465 2. In relation to traffic originating with AT&T in the USA, on the true construction of the Optus Agreement, during the term of the Optus Agreement what was the "origination charge" referred to in Schedule C of the Optus Agreement?

Answer : AT&T's origination charge up until and including 31 December 2000 was the amount per minute of traffic in fact notionally retained by it from the TAR taking into account the terms of its confidential agreements with Optus that were from time to time in force. From and including 1 January 2001, AT&T's origination charge was that amount not exceeding USD2.21 per minute of traffic that it in fact notionally retained out of the TAR. 466 3. Whether in or about June 2000 there arose between the parties an assumption that the payment to Gilsan by Optus under Schedule C of the Optus Agreement, in relation to traffic originating in the USA with AT&T, was to be calculated at a rate of US$1.6805 per minute for the traffic generated for the calendar year of 1999 and US$1.5885 per minute for the traffic generated for the calendar year 2000, the effect of which, in the circumstances found, is to estop Gilsan from now denying that its entitlements were other than as assumed?

Answer : This issue was not pressed and accordingly should be answered "no". 467 4. Alternatively to 3, whether in June 2000 the parties agreed to vary the Optus Agreement such that the payment by Optus to which Gilsan was entitled under Schedule C of the Optus Agreement, in relation to traffic originating in the USA with AT&T, was to be calculated at a rate of US$1.6805 per minute for the traffic generated for the calendar year of 1999 and US$1.5885 per minute for the traffic generated for the calendar year 2000?

Answer : This issue was not pressed and accordingly should be answered "no". 468 5. Having regard to the answers to issues 1 to 4, 8, 9, 10 and 11 and the amount already paid as between the parties (Agreed Document B) what amount, if any, is payable to Gilsan by Optus in respect of traffic originating in the USA with AT&T?

Answer : By agreement between the parties, consideration of this issue has been deferred until after publication of these reasons. 469 6. In relation to traffic originating with Hellenic in Greece, on the true construction of the Optus Agreement, during the term of the Optus Agreement what was the "origination charge" referred to in Schedule C of the Optus Agreement?

Answer : Hellenic's origination charge was the amount per minute of traffic in fact notionally retained by it from the TAR taking into account the terms of its confidential agreements with Optus that were from time to time in force.

470 7. Having regard to the answer to issues 1, 6, 8, 9 and 11 and the amount already paid as agreed between the parties (Agreed Document C) what amount, if any, is payable to Gilsan by Optus in respect of traffic originating in Greece with Hellenic?

Answer : By agreement between the parties, consideration of this issue has been deferred until after publication of these reasons. 471 8. Whether the number of minutes for which Optus is liable to pay Gilsan under the Optus Agreement is the number declared by the originating carrier or the number measured by Optus?

Answer : The number of minutes measured by Optus. 472 9. If the latter, whether Optus: (a) in breach of the Optus Agreement, in relation to traffic originating both from the USA and Greece for the months January 1999 to February 2001 , made declarations and calculated payments to Gilsan, based on minutes of traffic declared to it or on some other basis rather than the actual number of minutes measured for such traffic by Optus; (b) caused Gilsan loss and damage by such breach, and is liable to pay Gilsan an amount, calculated by the number of minutes underdeclared multiplied by a rate per minute determined by resolution of issues 1 to 6 above?

Answer : (a) To the extent that Optus failed to pay Gilsan, within 45 days of the end of each month, 75% of the value of the traffic for that month as measured by Optus, then Optus is in breach of its obligations under cl 1.5 of the Optus agreement. Further, to the extent that Optus, for any traffic month from August 2000 to February 2001 (both inclusive) failed to pay Gilsan, within 105 days of the end of that month, a further 15% of the value of that traffic as measured by Optus, then Optus is in beach of cl 1.6 of the Optus agreement as varied by the August 2000 variation. The question of any further breach (or potential breach) by Optus of its obligations under cl 1.6 should be reserved for further consideration.

(b) In principle, "yes". 473 10. Whether, by July 1999, the parties varied the Optus Agreement so that Optus was entitled to deduct the said Optus fee at the rate of US$0.25 rather than SDR 0.175 for traffic originating on any network where Optus was paid for the traffic in US dollars?

474 11. Whether Optus: (a) in breach of the Optus Agreement, in relation to traffic originating both from the USA and Greece transited by Optus to Vanuatu telephone numbers: (i) for the months January and February 2001 , failed to pay 25% and 62.5% respectively, and (ii) for the months post February 2001 , failed to pay Gilsan for any minutes of traffic; (b) thereby caused Gilsan loss and damage by such breach, calculated by the number of minutes generated for those months multiplied by a rate per minute determined by resolution of issues 1 to 4 and 6 above, or whether Optus was entitled not to pay Gilsan those amounts on the basis that the Optus Agreement was frustrated by reason that the agreed Total Accounting Rate between AT&T and TVL no longer existed for the 2001 calendar year, or alternatively whether Optus' obligation to make payments after 1 January 2001 was on the basis that the "origination share" retained by AT&T from the Total Accounting Rate referred to in Schedule C to the Optus Agreement was US$3.73 from 1 January 2001?

Answer : No. 475 12. Whether Gilsan is entitled to an account from Optus for all amounts withheld and not paid by Optus: (a) pursuant to the August 2000 Variation to the Optus Agreement and calculated at the rate of 10% of the monthly traffic minutes for which Optus was liable to pay Gilsan under Schedule C for the months May to December 2000; and (b) in the event that Optus's pleaded Febuary 2001 Variation is found to have been agreed by the parties, pursuant to the February 2001 Variation and calculated at the rate of 25% of the monthly traffic for the months of January and February 2001?

Answer : Yes. 476 13. In the event that Optus's construction of the Optus Agreement under Issues 1 and 6 above is accepted on the basis of the effect of the confidential transit rate agreements it entered into with AT&T and Hellenic, whether Optus failed to disclose to Gilsan the existence and alleged effect on the Optus Agreement of the confidential transit rate agreements Optus had entered into with AT&T and Hellenic and that, in the circumstances, such failure to disclose constituted: (i) a contravention of section 52 of the Trade Practices Act 1974 (including the issue whether Optus acted otherwise than inadvertently within the meaning of the definition of conduct in s.4(2)(c) of the Act); or (ii) a contravention of section 51AC of the Trade Practices Act 1974 (including the issue of "conduct" as referred to in (i) above, and the issue of the inapplicability of s.51AC where the price of the services exceeds the statutory cap in s.51AC(10)); or (iii) the breach of an implied term in the Optus Agreement that the parties would act reasonably and in good faith towards each other in respect of the agreement (including whether or not such a term was implied); or (iv) a breach of Optus's fiduciary duty owed to Gilsan (including whether any such duty was owed)?

Answer : No. 477 14. If so, whether (a) any such contravention or breach caused Gilsan loss and damage; and (b) Gilsan is entitled to any other relief including under s 87 of the Trade Practices Act 1974?

Answer : Does not arise. 478 15. If so, whether the quantum of such loss and damage is to be calculated: (a) as the difference between the payments to which it is found Gilsan is entitled to under the Optus Agreement and the payments Gilsan would have been entitled to under the alternative agreements which it would have entered into; or (b) on some other and, if so, what basis?

Answer : Does not arise. 479 16. If yes to 14(a) above, the amount of those damages?

Answer : Does not arise. 480 17. Whether Gilsan had any contractual right of exclusivity granted by TVL in the periods:

and, if so, the nature and extent of the exclusivity.

Answer : Yes, but only for the period from 3 December 1998 to 5 March 1999. 481 18. If yes in respect of any of the periods referred to in 17 above, whether Optus knew of such a right to contractual exclusivity?

Answer : Yes, at least from 19 January 1999. 482 19. Whether after 24 November 1998 Optus transited to Vanuatu telephone numbers dial-up data traffic generated by entities other than Gilsan in circumstances where Optus knew that such Vanuatu telephone numbers were Vanuatu numbers which had not been authorised for use by TVL at all or for dial-up data traffic?

Answer : No (on the basis that even if there were any such traffic carried prior to 5 March 1999, it was "de minimis"). 483 20. Whether the conduct referred to in paragraph 19 (whether or not Gilsan had any contractual right of exclusivity) constituted: (i) a breach of an implied term in the Optus Agreement that the parties would act towards each other reasonably and in good faith (including whether or not such a term is to be implied); (ii) a breach of fiduciary duties owed by Optus to Gilsan (including whether or not any such duties were owed, and if so, which); (iii) wrongful or unlawful interference by Optus in Gilsan's contractual relations, trade or business interests; (iv) unconscionable conduct in contravention of section 51AC of the Trade Practices Act 1974 (including the issue of the inapplicability of s.51AC where the price of the services exceeds the statutory cap in s.51AC(10))?

Answer : Does not arise. (I note that, in any event, Gilsan did not press sub-issue (ii).) 484 21. If so, whether Optus thereby deprived Gilsan of the benefit of such traffic, earned profit from such traffic and is liable to pay damages to Gilsan or make an account of profits to Gilsan?

Answer : Does not arise. 485 22. If Optus is liable to pay damages to Gilsan, whether such damages are to be calculated by the number of minutes found to have been transited by Optus in such unauthorized manner multiplied by the rate per minute determined by resolution of Issues 1 to 6 less what Gilsan would have paid relevant service providers above?

Answer : Does not arise; but if this issue did arise for consideration, it should be answered "no". 486 23. If so, (subject to any election by Gilsan for an account of profits), what is the amount of the damages?

Answer : Does not arise. 487 24. Whether, in relation to traffic originating with Hellenic in Greece, on the true construction of the Optus Agreement dated 3 December 1998: (a) the "origination charge" referred to in Schedule C was SDR per minute of traffic: i 0.995 in 1999; ii 0.97 thereafter; (b) Gilsan was entitled to a payment by Optus under Schedule C calculated at a rate of SDR per minute of traffic: i 0.63 in 1999; ii 0.655 thereafter;

Answer : Yes. 488 25. Is Optus entitled to restitution in respect of amounts paid to Gilsan based upon a rate that was higher than that required by 24(b)?

Answer : No, because of the answers given to issues 28 to 30 below. 489 26. Whether or not laches is a defence to a claim for restitution of those overpayments?

Answer : This issue was not pressed and accordingly should be answered "no". 490 27. If so, whether laches is made out on the facts?

Answer : This issue was not pressed and accordingly should be answered "no". 491 28. Whether or not Gilsan has established that it changed its position after receiving the Hellenic overpayments?

Answer : Yes. 492 29. If it did, to what extent did it change its position?

Answer : By paying TVL its charge agreed under the TVL agreement of USD 0.10 per minute of traffic; and by paying to its service providers amounts ranging from 85 to 90% of the total amount payable by Optus to Gilsan under the Optus agreement. In each case, those payments were made on the faith of the receipts by Gilsan from Optus of the amounts from time to time paid. 493 30. Whether and to what extent Gilsan's change of position operates as a defence to Optus' claim?

Answer : Yes: as a defence in full. 494 31. If Optus is entitled to restitution, in what amount should restitution be ordered?

Answer : By agreement between the parties, consideration of this issue has been deferred until after publication of these reasons. 495 32. Whether, in relation to traffic originating with AT&T in the United States, on the true construction of the Optus Agreement dated 3 December 1998, the "origination charge" referred to in Schedule C was $3.73 for the period from 1 January 2001?

Answer : No. 496 33. If yes to 32, is Optus entitled to restitution in respect of payments to Gilsan in 2001 calculated by reference to a lower origination charge (the 2001 overpayments)?

Answer : Does not arise. 497 34. Whether or not laches is a defence to Optus' claim for restitution in respect of the 2001 overpayments?

Answer : This issue was not pressed and accordingly should be answered "no".

498 35. If so, whether that claim is made out on the facts?

Answer : This issue was not pressed and accordingly should be answered "no". 499 36. Whether or not Gilsan has established that it changed its position after receiving the 2001 AT&T overpayments?

Answer : Does not arise. 500 37. If it did so, to what extent did it do so?

Answer : Does not arise. 501 38. Whether and to what extent Gilsan's change of position operates as a defence to Optus' claim?

Answer : Does not arise. 502 39. In the further alternative, whether Gilsan is obliged to repay to Optus any part of the payment received by it from Optus for traffic in respect of the months of February and March 2001 pursuant to an undertaking given to Optus by Gilsan on 21 April 2001?

Answer : No. 503 40. If Optus is entitled to restitution, in what amount should restitution be ordered?

Answer : By agreement between the parties, consideration of this issue has been deferred until after publication of these reasons. 504 41. Whether Optus was requested by or on behalf of Gilsan to supply each of the services?

Answer : Yes. 505 42. Whether each of the services provided was intended to be gratuitous (including whether or not in the events which happened Optus was ultimately willing to and did in fact continue to provide such services without requiring or receiving payment)?

Answer : No. 506 43. Whether Optus was obliged to provide each of the services provided pursuant to the terms of the Optus Agreement?

Answer : No. 507 44. Who was benefited by each of the services provided sufficiently to justify an order for quantum meruit?

Answer : Gilsan, among others. 508 45. Whether Optus is estopped from making its quantum meruit claims in respect of each of the services?

Answer : No. 509 46. Whether or not, in respect of the domestic traffic services: (a) laches and change of position are defences to a quantum meruit claim; (b) If so, whether there has been laches and or a change of position? (c) Whether and to what extent Gilsan's change of position operates as a defence to Optus' claim based on a quantum meruit? (d) If there has been a change of position, to what extent has Gilsan's position changed?

Answer : To the extent that laches and change of position may be defences to a quantum meruit claim, they are not made out on the facts in relation to Optus' quantum meruit claims. 510 47. For what amount, if any, should the quantum meruit claim be ordered in respect of each service?

Answer : (1) call termination services: $252,303 (2) co-location services: $ 99,170 (3) spinnaker services: $315,711 (4) domestic traffic services: $198,560

All these amounts are expressed in Australian dollars. 511 48. For the traffic months December 1999 to May 2000, whether or not it was the common assumption of Optus and Gilsan that Optus would pay Gilsan the 25% component referred to in clause 1.6 of the Optus Agreement up front on the basis that if Optus: (a) did not receive payment from the distant and/or transit carriers; and/or (b) overpaid Gilsan as a result of a distant or transit carrier refusing to make payments or later offsetting payment for the traffic of any particular month, then: (c) Gilsan would be obliged to repay the overpaid amounts to Optus; or (d) Optus would be entitled to offset the overpaid amounts against future monies owed by Optus to Gilsan under the Optus Agreement up to an amount equivalent to the 25% component?

Answer : Optus accepted that this issue should be answered "no".

512 49. The effect (if any) of the August 2000 and the February 2001 variations. 513 Answer: As to the August 2000 variation: the effect was to permit Optus to retain out of the 25% of the amounts referred to in clause 1.6 of the Optus agreement 10% of all monies due as a retention against any amounts which would not ultimately be payable to Gilsan by reason of a distant or transit carrier refusing to make payment for any part of the traffic of any particular month. As a consequence, the parties accepted that 75% of all amounts due for traffic generated in any calendar month was payable 45 days from the end of that month; a further 15% was payable 105 days from the end of that month; and the final 10% was payable 45 days from the date on which Optus received payment for that month from the distant or transit carrier, subject to adjustment for uncollectible amounts.

As to the February 2001 variation, the effect was as set out in an e-mail of 8 February 2001 from Mr David Pearson on behalf of Gilsan to Mr Franc Pazmino of Optus. That e-mail stated, relevantly, that the February 2001 and subsequent traffic months would be settled as to 75% within 45 days (of the end of the month) and the balance within 45 days of receipt by Optus "in accordance with the terms set out in the [Optus agreement]"; and that for traffic months up until and including January 2001, settlement would be made as to 75% within 45 days (of the end of the month), 15% within 105 days (again of the end of the month), with the remainder being settled within 45 days of receipt (by Optus) "[a]gain in accordance with the terms of the [Optus agreement] subject to this amendment to the timing of payments." 514 50. Whether or not, following the August 2000 and February 2001 Variations to the Optus Agreement, whether Optus was entitled to withhold payment from Gilsan 10% of the value of the traffic declared by Optus to Gilsan for the traffic months August 2000 to January 2001 (inclusive), and 25% from February 2001 for amounts not paid to Optus by AT&T?

Answer : Optus was entitled to withhold 10% or 25% (as the case may be) of the value of traffic declared by Optus to Gilsan for the months in question until it was paid by AT&T. Within 45 days of payment by AT&T, Optus was obliged to pay to Gilsan the value of the traffic so declared less deductions for non-payments by AT&T to Optus in respect of "uncollectibles" for that or prior traffic months. 515 51. What amounts, if any, Optus is entitled to offset against any future monies owed by Optus to Gilsan. [NB The determination of this question must await the extent (if any) to which Optus succeeds against AT&T in the London arbitration.]

Answer : By agreement between the parties, consideration of this issue has been deferred until the outcome of the London arbitration between Optus and AT&T is known. 516 52. Whether on the evidence Optus has proved that any AT&T refusals to pay relate to the Gilsan Vanuatu traffic minutes.

Answer : Yes. 517 53. Should the agreed negative Vanuatu minutes recorded by AT&T be apportioned and, if so, how, for the purposes of Optus' clawback claim?

Answer : Yes; by the "apportionment method" identified by Ms Bicknell. 518 54. What amounts, if any, Gilsan is obliged to repay to Optus by reason of the parties' common assumption, and in what currency should those amounts be paid?

Answer : By agreement between the parties, consideration of this issue has been deferred until after publication of these reasons. 519 55. Whether any and, if so, which of the amounts which Optus is held to be liable to pay to Gilsan and which Gilsan is held to be liable to pay to Optus may be equitably set off against each other?

Answer : Further consideration of this issue should be deferred until after publication of these reasons. 520 56. What is the final amount due from and to whom pursuant to such set off?

Answer : By agreement between the parties, consideration of this issue has been deferred until after publication of these reasons. 521 57. What interest is payable on any sum or sums found to be due?

Answer : By agreement between the parties, consideration of this issue has been deferred until after publication of these reasons. 522 58. In what currency or currencies should any judgment or judgments be expressed?

Answer : By agreement between the parties, consideration of this issue has been deferred until after publication of these reasons. Orders 523 I propose to order, pursuant to Pt 31, r 2, that issues numbered 5, 7, 31, 40, 51, 54, 56, 57 and 58, set out in para [29] above be determined separately from and after the determination of all other issues in these proceedings. 524 The only order I make at this stage is to stand the proceedings over, to a date to be arranged with my associate but no later than 21 days from the date of publication of these reasons, to enable the parties to consider my reasons and the orders that may be necessary to give effect to them. Those orders may include (by way of example only) orders or directions necessary to enable the remaining issues in the proceedings to be determined. The parties may, on that occasion, make further submissions on any matters left unresolved by these reasons, on the orders necessary to give effect to these reasons, and (if desired) on costs. ******

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