Gilsan v Optus

Supreme Court of NSW|2004-12-15|Before: McDougall J, Dougall J

CITATION : Gilsan v Optus [No 2] [2005] NSWSC 38

CATCHWORDS : CONTRACT - retrospectivity - whether parties could conclude an agreement which adversely affected accrued rights of third party - implied terms - holding over - whether contractual terms expiring at conclusion of one year continued to operate until conclusion of new agreement in the following year - PRACTICE AND PROCEDURE - reopening - whether reasoning in previous decision, but where judgment not yet entered, ought to be reopened - weight of submissions considered both individually and collectively - EVIDENCE - content of applicable foreign law - whether decision of foreign court concerning validity of foreign law is evidence as to the application of that foreign law - JUDGMENTS AND ORDERS - interest rate on judgments - rate - judgment in foreign currency - whether foreign interest rate applicable

Gilsan (International) Limited (Plaintiff) PARTIES : Optus Networks Pty Limited (Defendant)

P M Biscoe QC/F Kunc (Plaintiff) COUNSEL : I M Jackman SC (Defendant)

Gadens (Plaintiff) SOLICITORS : Gilbert & Tobin (Defendant)

GILSAN (INTERNATIONAL) LIMITED V OPTUS NETWORKS PTY LIMITED [NO 2]

Para The further issues for decision 2 The operation of cl 1.6 3 First issue: retrospectivity 5 Second issue: the Optus-AT&T rebate 31 Third issue: reopening 33 First point: evidence of the legal effect of the Benchmark Order 37 Second point: the London arbitration 47 Third point: Mr Hibbard's evidence 49 Fourth point: change of position defence 51 Conclusion on the application to reopen 56 Fourth issue: Sprint traffic claim 60 Fifth issue: interest rates on any USD judgment 64 Sixth issue: ascertainment of any amount owing 68 Conclusions and order 72

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

50056/02 GILSAN (INTERNATIONAL) LIMITED v OPTUS NETWORKS PTY LIMITED [No 2] JUDGMENT 1 HIS HONOUR: The disputes between the parties were crystallised in an agreed statement of issues. In September 2004, I heard evidence and argument on a number of those issues that, the parties agreed, required determination before their respective claims could be defined and (if appropriate) quantified in money. I delivered reasons for judgment on 26 November 2004 dealing with the issues that had been argued. The parties have now agreed that, arising out of those earlier reasons, a number of further issues require determination. Further, one of the parties, Optus, submits that I should reconsider the reasons that I gave on one issue. The further issues for decision 2 The further issues may be stated as follows:

(1) Whether the confidential agreements between Optus and AT&T, which were expressed to operate from 1 January in the calendar year in which they were made, could affect adversely accrued rights as between Gilsan and Optus when in fact each of those agreements was actually made well after the commencement of the calendar year?

(2) Whether AT&T's origination charge in 1998 and 1999 included the rebate of USD0.32 (in 1998) or USD0.3515 (in 1999) payable by Optus to AT&T? (This relates to the answer given by me at para [464] of my earlier reasons to the first of the issues that were the subject of those reasons.)

(3) Whether my reasoning in respect of the FCC's Benchmark Order should be reopened?

(4) Whether Gilsan is entitled to make a claim for alleged unpaid Sprint traffic (Sprint was another originating carrier) which was not pleaded, nor was it raised in the agreed issues?

(5) Whether interest should be at rates prevailing in the United States of America in respect of any judgment in Gilsan's favour expressed in USD; and, if so, what are the relevant rates?

(6) Whether the amount of any judgment (or any part of it) can be ascertained prior to the delivery of an award in the London arbitration? The operation of cl 1.6 3 Before I turn to these further issues, I will deal with one matter that has proved not to be contentious. 4 In paras [443] and [444] of my earlier reasons, I expressed some tentative views as to the operation of cl 1.6 of the Optus agreement as it stood (by reason of the August 2000 and February 2001 variations) from time to time. However, because the parties had not addressed the operation of cl 1.6 in detail, I said that I would permit them to consider my reasons and address further submissions on this point if required (para [445]). The parties in oral submissions accepted my analysis of the operation of cl 1.6. First issue: retrospectivity 5 Each of the relevant confidential agreements was made later than 1 January in a particular year, but was expressed to take effect from 1 January in that year and to be effective for a period of 12 months. 6 In principle, it should be open to parties to a contract to agree upon the date (including in the past) from which their legal relations commence to have effect, and in principle it should be open to the courts to enforce that agreement. Indeed, Gilsan did not submit otherwise. However, Gilsan submitted that an agreement made with retrospective effect between Optus and AT&T could not affect rights that Gilsan had against Optus that had accrued before the agreement was made. 7 In support of its submission, Gilsan relied, by way of analogy, on equity's approach to rectification of a contract. Rectification has retrospective effect: Issa v Berisha [1981] 1 NSWLR 261, 265. But because rectification has retrospective effect, it might not be decreed where to do so would affect accrued rights of third parties: Coolibah Pastoral Co v The Commonwealth (1967) 11 FLR 173, 190. (As Blackburn J pointed out in Coolibah Pastoral at 190, this is consistent with equity's refusal to allow rescission where the rights of third parties have intervened.) I do not think that this analogy is of great assistance. In the present case, there is no doubt that a contract made between Optus and AT&T was capable of affecting rights as between Gilsan and Optus. So much was recognised in the Optus agreement. The position of third parties who take for value and without notice cannot be equated to the position of Gilsan. Gilsan's rights (or, more accurately, its vulnerability to changes in the relevant contractual arrangements between Optus and AT&T) are to be ascertained from the terms of its contract with Optus, not by considerations relevant to the grant or withholding of discretionary relief in a different factual context. 8 Whether the retrospective operation of a confidential agreement affects Gilsan's rights against Optus is, clearly enough, a question of construction of the relevant contract between Gilsan and Optus - the Optus agreement. By cl 1.5, Optus was obliged to pay Gilsan "75 percent of all monies due, as defined in Schedule C hereto, for each calendar month in which traffic was generated, 45 days from that month [sic] end". The payment formula in Schedule C required Optus to pay Gilsan "their share of the total accounting rate subject to deductions for Otpus [sic], origination and transit charges … ". (I have construed the "share" identified by the possessive pronoun "their" to be Optus' "share" of the TAR: see paras [95] to [97] of my earlier reasons.) 9 The remaining 25% of the amounts due was dealt with by cl 1.6, which was varied on two occasions. At some times, that 25% was payable 45 days after settlement between Optus and the transit carrier. At other times, 15% was payable 105 days from the end of the traffic month and the final 10% was payable 45 days after the date of settlement between Optus and the transit carrier. In each case, the portion payable by reference to settlement between Optus and the transit carrier was subject to adjustment for non payment by the transit carrier. 10 As a matter of construction of cl 1.5, Gilsan acquired an accrued right to payment for a particular month's traffic 45 days from the end of that month. The accrued right was, as the clause makes clear, to 75% of the amount calculated in accordance with the Schedule C formula. That formula looks to, among other things, Optus' share of the TAR. That must be its share at the time the 75% became payable. 11 Where, for a particular year, a confidential agreement had not been made between Optus and AT&T purporting to have retrospective effect, the calculation of Gilsan's entitlement under cl 1.5 could not take into account the subsequent (in point of time) confidential agreement between Optus and AT&T as to AT&T's origination charge. There is no provision in cl 1.5 for reduction or adjustment of the instalment that is payable 45 days after the end of a particular traffic month. It follows that the entitlement that accrues at that time is to be calculated having regard (among other things) to whatever contractual arrangements were in fact in place between Optus and AT&T on the accrual date. As a matter of construction of cl 1.5, I see no basis on which an accrued right so quantified can be adjusted, or retrospectively diminished, by the retrospective operation of a confidential agreement subsequently made between Optus and AT&T. Nor does cl 1.5 offer as a possibility deferral of both entitlement and quantification until (if at all) such an agreement is made. 12 In principle, the same construction would apply to one of Gilsan's rights under cl 1.6 whilst what I have called the August 2000 variation was in force (see paras [36] and [37] of my earlier reasons). To the extent that, during the currency of the August 2000 variation, Gilsan may have acquired an accrued right to payment of 15% of the Schedule C amount (105 days from the end of the relevant traffic month), that entitlement was to be calculated having regard (among other things) to whatever contractual arrangements were then in place between Optus and AT&T, and would not be affected by any subsequent retrospective confidential agreement made between them. 13 Optus submitted that this construction should not be accepted. It pointed to what it said was the factual matrix in which the Optus agreement was negotiated. That matrix was said to include knowledge on the part of Gilsan that payments to it from Optus could be reduced retrospectively and without notice. 14 Mr Warwick denied that, when he was negotiating the Optus and TVL agreements, he knew that amounts outpaid by originating and transit carriers could be reduced without notice (T 254.5.16). However, he agreed, he then (in late 1998) appreciated that there had "been some practice" of reductions in outpayments without notice (T 254.18-28). He agreed that Gilsan sought to protect itself in relation to its service agents by stipulating that rates were "subject to retroactive review and change without notice" (T 254.30-.34; see also T 256.16-.25). 15 One of the agreements made between Optus and a service provider, Echo Worldwide Inc ("Echo"), set out the "indicative rates based on … arrangements that are currently in place" payable by Gilsan to Echo and stipulated that those rates were "subject to retroactive review and change without notice". 16 I do not accept Mr Warwick's denial of the proposition that, in late 1998, he knew that outpayments by originating and transit carriers could be changed without notice. On the contrary, I find, he knew that this had happened and was likely to happen; and he knew that, at least purportedly, it happened with retrospective effect. Plainly, Gilsan's agreement with Echo was intended to protect Gilsan against the consequences of that very practice. In the context of these proceedings, the amount payable by Gilsan to a service agent such as Echo was based on the amount payable to Gilsan by Optus. There was no need to make provision, in the agreement between Gilsan and Echo, for retrospective adjustment unless there were a real risk that such adjustments might be made by Optus against Gilsan. 17 I therefore accept Optus' submission as to the factual matrix in which the Optus agreement was negotiated. However, I do not accept that this factual matrix requires that the relevant provisions of the Optus agreement be given a construction or operation different to that set out in paras [10] and [11] above. There are two reasons for this. The first is that the intention of the parties is to be ascertained, objectively, by reference to the reasonable person's understanding of the language employed by them, not from their subjective beliefs or understandings: Toll (FGCT) Pty Ltd v Alphapharm (2004) 79 ALJR 129, 136 [40]. Where the language of the parties is ambiguous, or capable of operating in more than one way, then it may be permissible to construe it by reference to the factual matrix; and it may be permissible to regard that factual matrix as including the subjective understanding or belief of one party, or indeed both parties. But where the language is not ambiguous (as in my view the language of cl 1.5 is not), then it must be given the meaning and operation that, in accordance with the understanding of a reasonable person, it should have, regardless of the antecedent subjective beliefs or understandings of the parties. 18 The second reason is that the parties did make some provision for non-payment by transit carriers. That is to be found in cl 1.6 (as from time to time varied). In this, cl 1.6 stands in stark contrast to cl 1.5. Where the parties, having regard to a particular circumstance, have chosen to make particular provision for it, it is not for the Court to supplement the provision that they have chosen to make. 19 I therefore conclude that, to the extent that Gilsan acquired accrued rights to payment under cls 1.5 or 1.6 (as from time to time varied) before the making in fact of a confidential agreement between Optus and AT&T, that accrued right is not affected or diminished by the purportedly retrospective operation of a confidential agreement subsequently made. That is so even where the accrued right was not satisfied until some subsequent time: the focus is on the accrual of the right, not on its satisfaction. 20 Consistent with what I have said in para [10] above, any refusual by AT&T to pay, based on the purportedly retrospective operation of a confidential agreement, could be taken into account (if at all) only under cl 1.6. However, in this case, it could not be taken into account to reduce any accrued entitlement under cl 1.6 (including, during the currency of the August 2000 variation, any accrued entitlement to 15% of the Schedule C amount). 21 There is some difficulty in this conclusion. As I have noted, the confidential agreements were expressed to be of 12 months' duration, from 1 January in the year in which each was made until 31 December in the same year. Thus, there might be thought to be some hiatus from 1 January in the following year up until the time when the confidential agreement for that year was in fact made. Gilsan embraced this difficulty with some enthusiasm, submitting that, during the hiatus period, it was entitled to be paid not by reference to the origination charge retained by AT & T under the previous year's confidential agreement, but by reference to the origination charge fixed by the tripartite agreement (between AT&T, Optus and TVL). 22 Mr Jackman SC, for Optus, submitted as a fallback, or subsidiary, position that the previous year's confidential agreement should be taken as holding over into the following year up until the time when in fact the confidential agreement for that following year was made. 23 Holding over is, of course, a concept more often found in the relationship of landlord and tenant. Ordinarily, holding over may occur in two circumstances. The first is where the lease expressly provides for it. The second is where there is no express provision, but holding over may be implied from the continuation of the tenant in possession of the leased premises and the payment and receipt of rent. In the former case, the incidents of the holding over will be gathered from the terms of the lease. In the latter case, the incidents are a matter of implication from the relevant circumstances (including, for example, the period of time to which payments of rent are referable as well as the terms of the prior lease). 24 In the present case, none of the confidential agreements makes express provision for anything in the nature of holding over. Nor could a term as to holding over be implied. On the face of things, such an implied term would be inconsistent with the express stipulation that the duration of the agreement was 12 months. It would also be inconsistent with the apparent intention of the parties - Optus and AT&T - as shown by their conduct in negotiating a further confidential agreement for the following year expressed to commence the very day after the prior confidential agreement ceased to have effect according to its terms. 25 Further, there is nothing in the conduct of Optus and AT&T to show that they thought, or conducted themselves on the basis, that there was some holding over. Indeed, one of the curiosities in this case is that, notwithstanding the existence of the 1998 confidential agreement, AT&T made payments to Optus during 1999 (at least until the date when the 1999 confidential agreement was in fact made) not on the basis of the 1998 confidential agreement but on the basis of the tripartite agreement. There is no relevant conduct from which it could be inferred that, during any part of 1999, Optus and AT&T conducted their business relationship upon the basis that it continued to be regulated, pursuant to something akin to holding over, by the terms of the 1998 confidential agreement. 26 The parties did not address submissions to the factual situation during 2000 (and, so far as it is relevant, 2001). To the extent that AT&T did make payments to Optus during 2000 on the basis of the 1999 confidential agreement, there is no basis for concluding that this reflected a conscious decision rather than oversight or inertia. The same may be said for 2001. I do not think that the evidence for either of those years is sufficient to support an implication of holding over. 27 In this context too, Optus relied on the factual matrix. I have found that Gilsan, through Mr Warwick, was aware at all material times of the practice whereby confidential agreements, affecting the originating carrier's entitlements, were made between originating and transit carriers (see paras [49] to [52] of my earlier reasons). There is no particular reason to think that Gilsan, either through Mr Warwick or otherwise, was aware that the terms of those confidential agreements changed every year; and indeed, the terms of the confidential agreement between Optus and Hellenic did not change every year. 28 I do not think that Gilsan's knowledge (to the extent proved or at all) is relevant to the question of whether or not there was a holding over (or something equivalent to a holding over) between Optus and AT&T under a confidential agreement made between them. 29 I therefore conclude that for the period in 1999 and 2000 (and, if it is relevant, 2001) from 1 January up until the time when the confidential agreement for each year was actually made, Optus' share of the TAR is to be ascertained not by reference to the confidential agreement that was made for the previous year, nor by reference to the confidential agreement that was made during the course of the year, but by reference to the tripartite agreement. 30 Because I have concluded this issue in favour of Gilsan, it is unnecessary to consider Gilsan's alternative approach, which focussed on paras [465] and [469] (and others) of my earlier reasons, and on the amount in fact notionally retained by AT&T from the TAR. (In defence of the somewhat peculiar proposition that there may be a retention that is both notional and in fact made, I note that I was seeking, perhaps inelegantly, to signify the calculation of the outpayment made by AT&T based on its notional entitlement to a dollar sum out of the TAR.)

Second issue: the Optus-AT&T rebate 31 The original agreed issues raised both the proper construction of Schedule C and its application to AT&T and Hellenic (issues 1, 2 and 3). Further, in the case of Hellenic, those agreed issues sought to quantify the origination charge payable to or retainable by it from time to time (issue 24). Apparently by oversight, no equivalent issue was posed in relation to AT&T. 32 The parties agreed that it would be convenient for me to express my findings, in relating to the AT&T origination charge, not just as I had done (by answering the relevant issues that were posed) but also by quantifying it, as had been done with Hellenic. To this end, I suggested in the course of the further hearing that a further issue be framed. The parties have not yet framed that further issue but, when they do, I will answer it (if necessary) after hearing such further submissions as the parties may wish to put in relation to that issue having regard to both my earlier reasons and these reasons. Third issue: reopening 33 It is clear that I may reopen my earlier reasons on the FCC Benchmark Order, in circumstances where no judgment has been entered pursuant to those reasons. See De L v Director General, New South Wales Department of Community Services [No 2] (1997) 190 CLR 207; Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13. 34 In Wentworth v Rogers [2002] NSWSC 921, Barrett J said at [9] that the "exceptional step" of reopening reasons should be undertaken where the decision has miscarried and where the miscarriage may be rectified, and the situation retrieved, by attention to the matter by the judge rather than on appeal. I respectfully agree. 35 There were four bases advanced by Optus in support of its submission that I should reopen my reasons on this point. They were:

(1) The statement that there was no evidence of the applicable American law dealing with the impact of the Benchmark Order on American carriers (see paras [293] to [299], in particular [295] and [299], of my earlier reasons).

(2) The statement in para [263] of my earlier reasons that one of the matters in dispute in the London arbitration between AT&T and Optus was whether AT&T is entitled to claw back from Optus overpayments made during 2001 in respect of Vanuatu traffic.

(3) The reliance said to have been placed on the evidence of Mr Hibbard (see para [300] of my earlier reasons).

(4) What was said in para [311] of my earlier reasons as to the change of position defence, in relation to the overpayment claim arising out of the alleged operation of the Benchmark Order. 36 The logical course is to examine each of these points and consider whether, individually or collectively, they justify reopening my previous reasons. In a sense, the consideration of them involves some reopening of what I have said; but there is no other convenient way to deal with the application. First point: evidence of the legal effect of the Benchmark Order 37 Optus submitted that there was such evidence, namely the decision of the United States Court of Appeals, District of Columbia Circuit, in Cable and Wireless Optus PLC v Federal Communications Commission (1999) 166 F. 3d 1224. That decision was tendered pursuant to s 175 of the Evidence Act 1995. Section 175 deals in sub s (1) with proof of the unwritten or common law of a foreign country, and in sub s (2) with proof of the interpretation of a statute of a foreign country. No point was taken that the decision tendered was not one that "is or would be used in the courts of the country to inform the courts about" the unwritten or common law, or interpretation of the statute, as the case may be. It is not clear that sub s(1) is relevant; nor is it clear that sub s (2) is relevant. However, I think, the safer course is to proceed on the basis that the question, or the underlying issue, is one of the effect of the (unproved) statute or regulation pursuant to which the Benchmark Order was made, and of the effect of any non-compliance by AT&T; and that these may be regulated by the unwritten or statute law of America. 38 On that basis, the decision is some evidence of the content of some aspects of American law. However, it remains the case that (as I have already observed, and as I said in para [299] of my earlier reasons) the source of the legislative authority of the FCC to make orders such as the Benchmark Order, and the relevant provisions of that legislative authority (including those provisions, if any, dealing with the enforcement of such orders) have not been proved. Nor has there been proved the effect of non-compliance on the part of an American carrier of the kind prima facie shown in the circumstances of this case. 39 Certainly, there are matters in the decision that deal with the operation of the Benchmark Order. The Court, speaking through Tatel J, said the following (in each case, the emphasis is supplied):

(1) The Benchmark Order was a document " prohibiting U.S. companies from paying more than certain benchmark rates for … "termination" services, and was a valid exercise of the FCC's regulatory authority under the Communications Act" (at 1226, col 2).

(2) The order was one " mandating the maximum settlement rates that U.S. carriers may pay to their foreign counterparts" (at 1228, col 1).

(3) "Under the FCC's Order, the settlement rates negotiated by U.S. carriers may not exceed $0.15 per minute for foreign carriers in upper income nations … , $0.19 per minute for foreign carriers in middle income nations ... , and $0.23 per minute for foreign carriers in lower income nations … ." (1228 cols 1 - 2)

(4) Because the Benchmark Order referred to " enforcement measures … to ensure that no U.S. carrier pays [its] foreign correspondent an amount exceeding the lawful settlement rate benchmark" (a citation from the Benchmark Order at 19, 894 para 186), and in circumstances where the Order did not threaten foreign carriers with enforcement but authorised the FCC to negotiate with the responsible foreign authorities, "we find reasonable the Commission's view that the Order regulates domestic carriers , not foreign carriers." (at 1230 col 1). 40 The relevant issue before the Court of Appeals was whether the Benchmark Order was outside the statutory authority given to the FCC, because it purported to assert regulatory authority over foreign services and carriers. The Court answered that issue adversely to the petitioner, and in favour of the FCC. It is in that context that the remarks relied upon need to be understood. It was not necessary that the Court should entertain a detailed analysis of the operation and effect of the Benchmark Order; nor did it do so. 41 The high point of the decision, from Optus' perspective, is the proposition that the Benchmark Order "mandates" the maximum settlement rates that American carriers could pay their foreign counterparts. However, the decision does not deal with the point made in para [295] of my earlier reasons. It does not show what, under American law (unwritten or statutory) would be the effect, on an American carrier, of non-compliance with the Benchmark Order. It does not show whether (for example) the effect of relevant American law would be to strike down, or invalidate, the agreement as to settlement rates between AT&T and TVL comprised in the tripartite agreement, or of its own force to reduce the settlement rate to the prescribed maximum. (I interpose that the terms of the Benchmark Order would not have had any impact on that agreement prior to 1 January 2001.) 42 Thus, if the particular issue posed to and decided by the Court of Appeals were an issue in the proceedings before me, I would have no hesitation in accepting the decision as proving the relevant content of American law. But the issue is a different one. The decision does not, except in the most general and incomplete way, deal with the relevant issue before me. That issue is whether the tripartite agreement remained enforceable, as between AT&T and TVL, after 31 December 2000, in so far as it fixed, and stipulated entitlements to portions of, the TAR. I do not regard the decision as supplementing the deficiency adverted to in, in particular, paras [295] and [299] of my earlier reasons. 43 The decision does not address in any detail the enforcement provisions of the Benchmark Order. I set out the relevant provisions of the Benchmark Order in paras [264] to [270] of my earlier reasons, and summarised its effect (so far as was relevant for the purposes of these proceedings) in paras [272] and [273]. As between AT&T and TVL, the Benchmark Order gave a three year period, referred to as a transition period, for negotiation. Clearly enough, the intention was that American carriers should negotiate with their foreign counterparts during the applicable transition period so as to agree to settlement rates in accordance with the terms of the Benchmark Order. The Order proposed a series of steps that would be taken where a foreign carrier would not agree to rates that accorded with its requirements. The enforcement steps that were described in paras 185 to 187 of the Benchmark Order were all directed at cases of intransigence on the part of foreign carriers. 44 In the present case, there is no evidence that AT&T made any attempt to negotiate with TVL, either during the transition period or at all. When AT&T did act, it did so unilaterally. There is nothing in the correspondence to show that TVL accepted what AT&T had done. 45 There is nothing in the Benchmark Order to indicate what would be the position, or liability, of an American carrier, that acted (or failed to act) in the way that AT&T did. None of the enforcement measures specified in the Benchmark Order appears to respond to such a situation. The Benchmark Order does refer to "enforcement measures proposed in the Notice" (para 187). However, they are enforcement measures "to respond to a carrier's petition" (ibid): that is to say, enforcement measures to respond to a petition filed by an American carrier in accordance with para 186. That is a petition whereby the carrier demonstrates that it has been unable to negotiate a complying settlement rate with its foreign correspondent, and requests that enforcement measures be taken. On the evidence, AT&T was in no position to file such a petition. 46 I remain of the view, having considered both the decision of the Court of Appeals and Optus' submissions in respect of it, that the decision does not demonstrate the effect, under any relevant statutory or unwritten law of the United States of America, of what on the face of things is AT&T's non-compliance with the terms of the Benchmark Order. I therefore conclude that, although it would have been desirable for my earlier reasons to refer to and analyse the decision, further consideration of the decision does not require me to withdraw or revise the relevant part of my earlier reasons.

Second point: the London arbitration 47 I accept that the relevant clawback claim brought by AT&T in the London arbitration is directed to uncollectibles, not to the effect of the Benchmark Order (or to monies said by AT&T to have been overpaid having regard to its interpretation of the effect of the Benchmark Order). It follows that what I said in para [263] of my earlier reasons was wrong. However, that has no decisive significance; and the further reference to the London arbitration in para [299] of my earlier reasons does not give it any. 48 This is not a sufficient basis to withdraw the relevant section of my earlier reasons. Indeed, in oral submissions, Mr Jackman said of this that "it does not appear to be a central matter, rather it is somewhat more peripheral" (T 25.2). Third point: Mr Hibbard's evidence 49 I referred to Mr Hibbard's evidence, in this context, in para [300] of my earlier reasons. I did so simply to note that it accorded with the view that I had already reached, and that it was "diametrically opposite" to Optus' submission on this point (Mr Hibbard was called by Optus). This was not dispositive; and Mr Jackman in oral submissions accepted that it "may not have been central to [my] reasoning" (T 25.12). 50 There is nothing in the reference to Mr Hibbard's evidence that requires this section of my earlier reasons to be withdrawn and the relevant issue reopened. Fourth point: change of position defence 51 In para [311] of my earlier reasons, I stated, in substance, that the parties accepted that the same conclusion reached in respect of Optus' Hellenic overpayment claim (as to Gilsan's change of position defence) should apply to Optus' AT&T overpayment claim. That was wrong. Optus had submitted that the change of position defence could not apply to the AT&T overpayment claim arising out of the Benchmark Order, because that was always known by Gilsan to be vulnerable. Indeed, I had referred to some of the relevant evidence at para [274] of my earlier reasons. 52 The change of position defence is only relevant if I conclude that Optus is entitled to recover from Gilsan amounts claimed by AT&T to have been overpaid to Optus as a result of the operation of the Benchmark Order. On the view to which I came, the error in para [311] of my earlier reasons caused no injustice. Because I remain of the view that this aspect of Optus' claim fails, the error leads nowhere. 53 If, however, my conclusion on this aspect of Optus' claim were reversed, and it were held that Gilsan was liable to Optus in respect of amounts said by AT&T to have been paid as a result of the operation of the Benchmark Order, it would be necessary to consider the validity of the change of position defence. On the evidence, I would then conclude that the change of position defence was not made good. 54 On 23 January 2001, Mr Pazmino of Optus sent an e-mail to Mr Pearson on behalf of Gilsan. Mr Pazmino said in substance that AT&T had purported to reduce the TAR for traffic to Vanuatu to USD0.40 with retrospective effect from 1 January 2001, as a result of which Optus' payments to Gilsan would be substantially reduced. Mr Pearson replied on 30 January 2001, stating that "rumours of this type of thing" were prevalent. There was no payment due by Optus to Gilsan in respect of traffic for January 2001 until, at the earliest, 15 March 2001. (In fact, there is no evidence that the payment due under cl 1.5 on that date was then paid; and the better inference, having regard to the payment history for earlier months, might be that it was not paid until some time later.) The e-mail from Mr Pazmino to Mr Pearson was incorrect, in that it referred to a TAR of USD0.40. As I noted in my earlier reasons, the TAR remained unchanged, at USD4.00, at all relevant times; and so far as the evidence shows, it was never changed from that figure. The reference to a TAR of USD0.40 should have been a reference to an outpayment from AT&T to Optus of USD0.40. However, this technical inaccuracy does not appear to have concerned Mr Pearson. In any event, the real import of the message, and the matter on which, no doubt, he focussed, was the notification that Optus' outpayment to Gilsan would be significantly reduced. 55 Further, the matters referred to in para [274] of my earlier reasons show that Optus again put Gilsan on notice on 21 March 2001 that AT&T would not be making payment in respect of Vanuatu traffic from January 2001 onwards "pending confirmation from the FCC regarding the reduction in rate for USA originated traffic to Vanuatu". As I have just noted, it does not appear that any payment for 2001 had been made by Optus to Gilsan prior to 21 March 2001. If (and the evidence does not show this) Gilsan did pay its service agents after 21 March 2001 out of monies thereafter received by it from Optus, it must have appreciated (or a reasonable person in its position would have appreciated) that it did so at its own risk. On the evidence, I do not think that Gilsan could be said to have paid its service agents (to the extent that, in the circumstances under consideration, it did) "on the faith of" any payments that it received from Optus. Conclusion on the application to reopen 56 The first three points relied upon by Optus do not, considered individually, justify withdrawing this part of my earlier reasons and reopening the issue. Nor does the fourth point, having regard to the conclusion to which I came (and to which I adhere). However, in the case of the fourth point, the interests of justice would require that it should be dealt with if my conclusion on this issue were reversed. That is why, in the preceding paragraphs, I have sought to deal with it. 57 In some cases, it may be that individual errors will not of themselves justify withdrawing reasons, but that the errors considered in totality will. That would happen, ordinarily, where the effect of the errors was cumulative. In the present case, the errors are discrete. More importantly, only the first of the errors could be said to be central to my reasoning; and on analysis, as I have sought to show, the error is one of expression rather than substance. The second and third points are, to use Mr Jackman's expression, "peripheral" to my conclusions. Those three matters even considered together could not be said (if my conclusion on the first point is correct) to be productive of any present injustice. 58 By contrast, the fourth point is capable of being productive of injustice; but only if my conclusion on this issue is shown to be incorrect. I have dealt with the facts, and the conclusion that I would draw from them if it were necessary to do so. Since the relevant issue would be revived if my conclusion on the operation of the Benchmark Order were overruled, the error that I made in my earlier reasons, and that I have sought to address in these reasons, is not productive of any injustice. 59 I therefore conclude that the application to withdraw the relevant part of my reasons and to reopen the issue fails. Fourth issue: Sprint traffic claim 60 The Sprint claim related to traffic originated by Sprint for Gilsan. The amount at stake was said to be about $35,000. The Sprint claim had not been pleaded or particularised. There was some evidence in the tender bundle to support it. 61 Mr Biscoe QC, who appeared with Mr Kunc of Counsel for Gilsan, submitted that SCR Pt 40 r 1 empowered the Court to deal with the Sprint claim. That rule provides that the Court may at any stage of any proceedings, on the application of any party, give such judgment or make such order as the nature of the case requires, even if the originating process did not make a claim for such a judgment or order. 62 I am not sure that Pt 40 r 1 extends so far. But even if it did, I would not exercise the discretion that, by hypothesis, is enlivened. Optus was not put on notice, until correspondence was exchanged between the parties' legal advisers, that the claim would be made. It has had only a limited opportunity to consider it. Although the amount at stake is not large, that does not of itself justify the Court's requiring a party to answer a case that was notified to it only after the conclusion of evidence and submissions. As Mr Jackman submitted, there were relevant issues that should have been, but have not been, investigated: including, for example, the existence and terms of any confidential agreements between Sprint and Optus, and the level of uncollectibles relating to Sprint traffic. 63 Gilsan did not make an application for leave to amend. Optus said that, if such an application were made, it would be opposed. It is therefore inappropriate for me to say anything about the prospects of such an application, if made. All I will say is that, even if (contrary to my tentative view) the Court's discretion under Pt 40 r 1 were enlivened, I would not exercise that particular discretion in favour of Gilsan where to do so might, for the reasons that I have indicated, cause injustice to Optus. Fifth issue: interest rates on any USD judgment 64 Optus submitted that, if judgment were given in USD (either in its favour or in Gilsan's favour) then interest on that judgment should run at the rates from time to time prevailing in the United States of America. 65 The authorities to which Optus referred support that submission. See, in this Court, Maschinen Fabrik Augsburg-Nurenburg AG v Altikar Pty Ltd [1984] 3 NSWLR 152 and Swiss Bank Corporation v State of New South Wales (1993) 33 NSWLR 63. 66 In Neuchatel Swiss General Insurance Co Ltd v Vlasons Shipping Inc [2001] VSCA 25, Ormiston JA (with whom Callaway and Batt JJA agreed) said at [60] to [63] that, for borrowings in USD, the appropriate interest rate was the American bank prime borrowing rate from time to time. Optus relied on an affidavit of its solicitor, Mr Steven Glass, sworn 14 December 2004. That affidavit proved the American bank prime loan interest rates over the relevant period. 67 Gilsan sought an opportunity to consider the matter. I am prepared to allow it this opportunity, although, as I have said, I think that authority favours the approach taken by Optus. It should be possible for the parties to agree on both the question of principle and the applicable rates. Sixth issue: ascertainment of any amount owing 68 In para [515] of my earlier reasons, I noted the agreement of the parties that the quantification of the amounts owed by one to the other, and of any offsetting, should await the outcome of the London arbitration. 69 Optus says that I should adhere to this position. However, Gilsan says that there are amounts that can now be quantified and for which it is entitled to judgment. It refers to:

(1) Amounts owing by Optus to Gilsan in respect of underdeclaration of minutes of traffic and the USD/SDR conversion rate issue (relating to Optus' fee under the Optus agreement of SDR 0.175). Gilsan submitted that Optus was liable to pay those amounts in accordance with clss 1.5 and 1.6, and that they would have been paid but for Optus' breaches of contract.

(2) What it said were non-contentious claims, namely the AT&T underpayment claim and the Hellenic underpayment claim. 70 I dealt with the issue of set-off in paras [454] to [462] of my earlier reasons. I noted in para [462] that in principle I thought that the entitlements that I had found to exist should be set off, but that Gilsan should have the opportunity that it had requested to consider my reasons and put further submissions. 71 In those circumstances, I do not think that it is appropriate now to give any judgment in favour of Gilsan without considering the question of set-off. I see no present basis to depart from the agreement of the parties referred to in para [515] of my earlier reasons. Conclusions and order 72 I summarise my answers to the further issues as follows:

(1) First issue : Whether the confidential agreements between Optus and AT&T, which were expressed to operate from 1 January in the calendar year in which they were made, could affect adversely accrued rights as between Gilsan and Optus when in fact each of those agreements was actually made halfway through the calendar year? Answer : As between AT&T and Optus, the confidential agreements operate from 1 January each year. However, that retrospective operation does not flow on into the Optus agreement. It follows that, for the purposes of Schedule C to the Optus agreement, AT&T's charge is fixed by reference to a confidential agreement only from the date that agreement is actually made, and then only for the remaining term of that confidential agreement. There is no basis for concluding that AT&T's charge fixed under a confidential agreement for a particular term of 12 months "holds over" into the following year until the date when a fresh confidential agreement is made.

(2) Second issue : Whether AT&T's origination charge in 1998 and 1999 included the rebate of USD0.32 (in 1998) or USD0.3515 (in 1999) payable by Optus to AT&T? Answer : This is best dealt with, as indicated in the course of argument, by formulating an issue that sets out the specific amounts (determined in accordance with these reasons and my earlier reasons), which may then be answered appropriately.

(3) Third issue : Whether my reasoning in respect of the FCC's Benchmark Order should be reopened? Answer: No. However, if my conclusion on the operation and effect of the Benchmark Order is overturned, it will be necessary for Gilsan's change of position defence to be considered. The error relating to that defence in my earlier reasons should then be corrected, for the reasons given in para [53] above.

(4) Fourth issue : Whether Gilsan is entitled to make a claim for alleged unpaid Sprint traffic (Sprint was another originating carrier) which was not pleaded, nor was it raised in the agreed issues?

(5) Fifth issue : Whether interest should be at rates prevailing in the United States of America in respect of any judgment in Gilsan's favour expressed in USD; and, if so, what are the relevant rates? Answer : In principle, the interest rate should be that applicable to the currency in which the judgment is denominated. However, I will allow Gilsan an opportunity both to put submissions on this principle and (should it be necessary) to consider, and I trust agree on, the applicable rates.

(6) Sixth issue : Whether the amount of any judgment (or any part of it) can be ascertained prior to the delivery of an award in the London arbitration? Answer : No. The agreed position, noted in para [515] of my earlier reasons, should be maintained. 73 I direct the parties to bring in short minutes of order to give effect to the answers to the issues dealt with in my earlier reasons as amplified in these reasons. They should include an answer to give effect to what I have said in sub para (2) of the preceding paragraph. This is to be done within 14 days of the date of publication of these reasons.

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Judgment (35 paragraphs)

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Cases Cited (7)