Telecom Vanuatu Ltd v Optus Networks Pty Ltd

Telecom Vanuatu Ltd v Optus Networks Pty Ltd - [2008] NSWSC 1209 - NSWSC 2008 case summary — Zoe

[17]

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. Audiotext 4 The "audiotext" traffic the subject of these proceedings consisted of calls made by consumers to telephone information services, being typically a "live" call centre or recorded voice service. These audiotext services were charged for on a per minute basis and were generated by audiotext service providers, referred to at times in the evidence as "ISPs". There were two groups of such service providers relevant to the present proceedings. The first, associated with Hugh Chambers, was Interwest Communications International Limited (Interwest), and its associated entities, Global Internet Billing UK (Limited) (GIB) and Interbill International Limited (Interbill) (collectively the Interwest Group). The second, associated with Michael Charlesworth, was MDC (Europe) Limited (MDC), Mediatel Services Pty Limited (Mediatel) and Sound Advertising Limited (Sound Advertising) (collectively the MDC Group).

[24]

Pursuant to this Licence and subject to the rights and obligations to the Company provided in Condition 2.1, the Company is authorized to: … (g) enter into agreements with other telecommunication organisations or any other organisations; and (h) undertake all commercial, industrial and financial operations, including the acquisition of property, relating to the activities the subject of this Licence. 14 Clause 4.8 of the Franchise Agreement provided that TVL "shall provide Public International Telecommunication Services to a Public Telecommunication Service customer to and from destinations which the Company is by international agreement permitted to provide connection". In order to carry and receive international telecommunications traffic, TVL required a country code that international carriers could recognise as indicating that a call was directed to the Republic of Vanuatu and program their switches accordingly. International Telecommunications Union 15 The Republic of Vanuatu was allocated the country code (+678) by the International Telecommunications Union (ITU), a specialised agency of the United Nations dealing with all matters relating to telecommunication and radio-communication. Although the ITU is an intergovernmental organisation with signatories to its Constitution known as "member states", private telecommunications entities can participate in the activities of the ITU as "sector members". Australia and Vanuatu are member states of the ITU. The plaintiff and the defendant are sector members each being a "Recognized Operating Agency". There are three sectors of the ITU, one of which is ITU-T (formerly known as CCITT), the sector responsible for telecommunications standardisation. 16 The ITU provides a regulatory framework for the carriage of international telecommunications traffic. There is an hierarchy of instruments governing the ITU. At the top is the ITU Constitution. The second level is the ITU Convention. Both the Constitution and the Convention are treaties which are ratified by member states and are binding on them. Next is the Administrative Regulations one set of which is relevantly the International Telecommunication Regulations (ITR). These regulations also have treaty status and are binding on member states. At the lowest level are the Recommendations developed by the three sectors. Article 1.6 of the ITR provides:

[31]

24 Carriers involved in transit arrangements account to each other for the traffic flowing under a transit arrangement either by way of direct accounting or as referred to by McDougall J in the Gilsan proceedings [2004] NSWSC 1077 at [6], cascade accounting. With cascade accounting, A, the originating carrier, issues a single declaration to C, the transit carrier, and then C issues its own traffic declarations to B, the terminating carrier. In direct accounting the originating carrier pays both the transit carrier, C, and the terminating carrier, B, directly. Irrespective of whether traffic is direct or transit, and in the case of transit, irrespective of whether it is cascade accounted or direct accounted, the settlements and payments process is the same as for bilateral traffic. 25 The telecommunications industry created the SDR as a standardised currency. Its value is determined by reference to a number of other currencies, thereby decreasing the effect of fluctuations in individual currencies. The TAR on a direct connection between the originating and terminating carriers was normally split 50:50 for settlement purposes. For example if the TAR was $1.00 per minute then the originating carrier and the terminating carrier would each receive $0.50 per minute. The price paid by a subscriber to their telephone service provider was known as the "collection rate" and was set by the carrier providing the service to the customer. The TAR agreed between the originating and terminating countries was normally lower than the collection rate and the margin between the two rates varied from country to country. The "settlement rate" is the amount of the TAR paid to the terminating carrier. 26 When traffic was routed via a transit carrier, the originating carrier and the terminating carrier shared the TAR with the transit carrier. The originating carrier, terminating carrier and transit carrier would ordinarily enter into a tripartite agreement prior to the commencement of the transmission of traffic. For example, for traffic from the United States to Vanuatu, in relation to which there is no direct link, the originating carrier (for example AT&T) and the terminating carrier (for example TVL) would enter into an agreement with a transit carrier (for example Telstra or Optus) which set out how the TAR was to be divided. Usually the transit carrier's fee (known as the transit fee) was deducted from the TAR and the remainder was split evenly between the originating carrier and the terminating carrier. For example if the TAR was $1.00 per minute and the transit fee was $0.30 then the difference of $0.70 was split 50:50 and the originating and terminating carrier received a payment rate of $0.35 each.

[53]

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. TVL's Claims 36 TVL relies upon three agreements to claim that Optus is liable to pay it in respect of rogue traffic between the USA and Vanuatu and Greece and Vanuatu. The first is the tripartite agreement between AT&T Corporation (AT&T), TVL and Optus (the AT&T Agreement) in respect of traffic between the USA and Vanuatu. The second is the tripartite agreement between Sprint Corporation (Sprint), TVL and Optus (the Sprint Agreement) in respect of traffic between the USA and Vanuatu. The third is the tripartite agreement between Hellenic Telecommunications Organisation SA (Hellenic), TVL and Optus (the Hellenic Agreement) in respect of traffic between Greece and Vanuatu. The AT&T Agreement 37 On 6 March 1996 Mr Keith Wilson, of TVL, wrote to Ms Galloway of AT&T as follows: AT&T TRAFFIC TO VANUATU You will be aware that Telecom Vanuatu Ltd (TVL) and Optus Communications are both Associated companies of Cable & Wireless Plc. In late 1995 TVL opened direct high quality digital circuits with Optus which are used for Australian terminal and transit traffic. Your telephone traffic to Vanuatu is currently routed via Telstra, and we would propose AT&T change this routeing so it transits via Optus. Whilst we are aware of Telstra's high published transit rate, we do not of course know what informal rate they charge you. However I am sure Optus would be prepared to offer you a low transit rate in order that your total outpayment is not increased. The Optus route is currently open for testing whenever you require, and I look forward to receiving your confirmation of this routing change as soon as possible. 38 On 18 March 1996, Mr Isaacs, of Optus, prepared an internal note for Messrs Lawrence and Cooke, of Optus, recording a conversation that he had with Mr Wilson of TVL regarding the proposed agreement with AT&T. The note included the following: I have just spoken with Keith Wilson at TVL and ATT have agreed to transit via Optus. ATT will contact TVL later this week with a date for implementation. 39 On 3 April 1996 Mr Cooke of Optus wrote to Ms Galloway of AT&T with a copy to Mr Collins, also of AT&T, in the following terms: We refer to Vanuatu's message of 6 March 1996 proposing that AT&T change the routing for USA traffic to Vanuatu to via Optus. Optus would be very pleased to carry this traffic to Vanuatu. We understand that the below accounting rates/divisions would apply for this traffic: AT&T 1.485 SDR Optus 0.35 SDR Vanuatu 1.485 SDR TAR 3.32 SDR Cascade accounting requested by Vanuatu In addition Optus' special transit fee rate applies for traffic of 0.10 SDR - our rate for hard to get to destinations for ATT - total outpayment 1.585 SDR per minute. Our discounted rate to AT&T remains at 0. 08 SDR for all other streams. We look forward to your early confirmation. 40 On 20 May 1996 Anita Hui of AT&T wrote to Mr Cooke of Optus and Mr Wilson of TVL in the following terms: Subject: Telephone Service U.S. - Vanuatu via Australia (Optus) AT&T would like to utilize Optus's transit facilities for its terminal traffic to Vanuatu. The following rate/divisions of revenue could apply:

[65]

Keith, please sign your concurrence on the attached Transit Traffic Agreement and fax back to myself… 45 The attachment to Mr Chin's letter was as follows: AT&T AND TELECOM VANUATU TRANSIT AGREEMENT For the provisioning of transit traffic between AT&T and Telecom Vanuatu via Optus, it is agreed that the following rate/divisions of revenue will apply: RATE/MINUTE U.S. OPTUS VANUATU 4.00USD 1.79USD 0.42USD 1.79USD 46 Mr Wilson signed the Transit Agreement on behalf of TVL on 28 June 1996 and Ms Hui signed it on behalf of AT&T on 1 July 1996. 47 Mr Disanayake's advice of 7 June 1996, referred to in Mr Chin's 28 June 1996 letter, was in the following terms: Further to our telephone conversation this afternoon I have done an analysis of the transit traffic received from AT&T to Vanuatu during the period 27.5.96 to 2.6.96. It appears that all calls have arrived via your cable route, hence failing due to double satellite hop would not have occurred. However I have observed that a high percentage of calls (29.6) have been failed due to digit length being in excess of the maximum number length as advised by Vanuatu Telecom. These numbers are not Working numbers in Vanuatu and hence we fail them in our ISCs. If these calls are excluded from the calculation the ASR improves to 50%. I have also observed 77 repeat attempts to four B numbers two of which are fax numbers and two wrong numbers which have been routed to RVAs in Vanuatu. If these are also excluded the ASR improves to 57.6%. The ASR seen by us for Australia originated traffic is around 71%. I further understand that six digit numbers are offered via the other carrier as an Audio Text Service where by arrangement between the parties concerned these calls are routed to devices in Australia which provide the service. I hope this clarifies the low ASR experienced by you during the test period. I would like to assure you that the performance of traffic via Optus to Vanuatu will meet the Industry standards. 48 On 28 June 1996 Philip Richards, the Managing Director of TVL, wrote to Mr Chin (AT&T) in the following terms: TELEPHONE TRAFFIC USA - VANUATU

[197]

Consideration 95 By reason of a judgment that was entered on 14 December 2006 in favour of TVL and the acceptance by Optus of an offer of compromise, the issues in the Cross Claim are concluded. On 17 February 2006 an order was made that the taking of any account of profits to which the plaintiff may be entitled is to be determined separately from and after the determination of all other issues in the proceeding. There were a number of remaining separate issues for determination identified by the parties. However one issue that is determinative of the proceedings is whether the parties reached agreement on a rate per minute for the rogue traffic. A finding in respect of this issue requires analysis of the evidence of Mr Bragg and Mr Hall. TVL accepted that if there is a finding that such an agreement was reached the other issues identified by the parties do not require determination because Optus has paid TVL for the rogue traffic at the rate in the alleged agreement. Having regard to my finding in respect of the agreement, it is not necessary to determine the question of exclusivity and the issue of whether the tripartite agreements related to short-stopped traffic, I will deal with those two issues. Exclusivity 96 There is an issue as to whether TVL had the exclusive right to issue telephone number ranges with the international dialling prefix 678 to third parties irrespective of whether or not the traffic passed to, from or through the Republic of Vanuatu. There is no issue that TVL was the exclusive provider of both national and international telecommunication services in Vanuatu pursuant to the Franchise Agreement. Similarly there is no issue that the ITU acknowledges TVL as the administrator/regulator for telecommunications for the Republic of Vanuatu. There is no doubt that TVL had the exclusive right to allocate numbers in the 678 number range allocated to Vanuatu by the ITU. The issue between the parties is whether it was able to issue such numbers for traffic that did not travel to, from or through the Republic of Vanuatu. TVL relied upon clause 3.1(h) of the Franchise Agreement to submit that it was able to issue number ranges for such traffic. 97 Clause 3.1(h) authorised TVL to "undertake, all commercial, industrial and financial operations, including the acquisition of property relating to the activities the subject of" the Licence. It was submitted that the exploitation of the number ranges in circumstances where the calls did not in fact reach the telecommunications network of TVL constituted a "commercial or financial operation relating to the activities" of the Licence. It was submitted that the practical proof of this is that the funds received by TVL in relation to audiotext traffic were used to develop a GSM network for Vanuatu. 98 TVL submitted that if there were to be a division between control over Vanuatu number ranges which did or did not result in calls reaching TVL's telecommunications network, the entire system of telephone numbering enshrined in the ITU arrangements would be undermined. Reliance was placed upon a communication between Mr Collins of Telstra and Mr Bragg of Optus on 7 January 1999 in which Mr Collins wrote:

[198]

Presumably Interbill is aware of the need to contract with the country code owner for the provision of the number ranges in addition to contracting with ourselves for switching etc. 99 TVL submitted that if it were otherwise the agreements between TVL and APT and between TVL and Gilsan, would have been unnecessary and Optus could simply have proceeded under its agreement with those two companies without ever needing to include TVL in the arrangements. 100 Optus submitted, and indeed its witnesses Mr Bragg and Ms Howe asserted, that it only required the permission of the TVL subscriber, or a person who had contracted with TVL, in order to run traffic for that subscriber. TVL submitted that by these assertions there was an acknowledgement that Optus required TVL's consent in order to issue numbers and/or open numbers on the Vanuatu number ranges at Optus' switch. 101 Optus submitted that because the audiotext traffic was not available to the public in or of Vanuatu, and did not pass to, from or through the Republic of Vanuatu, there was no basis on which TVL could reasonably have thought that it was authorised to enter into contracts concerning such traffic. Optus does not take issue with the fact that the number ranges were under the exclusive control of TVL to issue to parties in respect of the telecommunications service that TVL was licensed to administer. It was submitted however that the utilisation of number ranges for a purpose other than the provision of a telecommunications system was not authorised by the Franchise Agreement. 102 TVL had the sole rights to "provide, operate and develop" the Public Telecommunication System of Vanuatu. That included the entitlement to operate both the Public National Telecommunication Services and the Public International Telecommunication Services. Those services, as defined in the TAV Act, included any "telecommunication service established" internationally and nationally which were "available publicly". Although "public" is not defined in the Franchise Agreement it is clear that the term "public" meant the public of Vanuatu. The telecommunication service - either international or national - had to be: (1) available to members of the public of Vanuatu; and (2) sent or received by any member of the public of Vanuatu to or from some other person either within Vanuatu or outside Vanuatu. 103 Clearly, the short-stopped audiotext traffic was not available to the members of the public of Vanuatu and could not be sent or received by any member of the public of Vanuatu. The telephone numbers issued to Vanuatu by ITU and opened by or made available by TVL for audiotext traffic that was short-stopped were not used for the purpose of operating the telecommunication system because they were not used for a telecommunications service available to members of the public of Vanuatu. 104 The plaintiff's reliance on clause 3.1(h) as a basis for authorising the plaintiff to utilise the numbers for audiotext short-stopped traffic is in my view misconceived. The allocation or opening of these numbers was not a commercial operation relating to the activities the subject of the license. The commercial operations envisaged under clause 3.1(h) were operations supportive of or ancillary to the operation of the public telecommunication system, either nationally or internationally. It would hardly have been intended by the parties to the Franchise Agreement that the plaintiff could allocate the numbers specifically provided to TVL for the provision of a telecommunications service to the public in a way that excluded the public from having access to such a service. The commercial operations envisaged in clause 3.1(h) were in my view limited to the support of or ancillary to the provision of the telecommunications service to the public. This was not such a service and the provision of the number ranges for a purpose otherwise was not authorised by the Franchise Agreement.

[199]

Tripartite Agreements 105 TVL claimed that the Tripartite Agreements applied to traffic to the Vanuatu number ranges which were short stopped by Optus. There is no issue that the audiotext traffic did not arrive at or travel on or through TVL's telecommunications network. 106 TVL submitted that the AT&T Agreement applied to all traffic to Vanuatu number ranges regardless of whether a call reached the telecommunications network of TVL. The AT&T Agreement provides for a TAR of USD$4.00 per minute for "transit traffic between AT&T and Telecom Vanuatu via Optus". TVL submitted that the words "transit" and "via" do not add anything to the process of construing the contract, because in circumstances where there was no direct link between the USA and Vanuatu, transit carriers were required. It was submitted that if calls are directed to Vanuatu number ranges "via Optus" the AT&T Agreement applies to them. 107 There is no doubt that everyone knew that the audiotext traffic was being short stopped. TVL submitted that in those circumstances the contract could not be construed as excluding short stopped traffic. It must be remembered however that it was TVL that approached AT&T on 6 March 1996 to suggest that it change its operations so as to utilise Optus rather than Telstra. That approach referred to AT&T's "telephone traffic". There was no mention of audiotext traffic. Once AT&T agreed to take its business away from Telstra and give it to Optus, the negotiations in relation to the TAR commenced. The first letter from Mr Cooke on 3 April 1996 makes no mention of audiotext. The letter from Ms Hui of 20 May 1996 is clearly a reference to telephone traffic, not audiotext, terminating in Vanuatu. That much is clear from the expression "its terminal traffic to Vanuatu". 108 There is certainly no express provision in the AT&T Agreement that the TAR would apply to short stopped traffic. TVL submitted that if Optus had wished to exclude short stopped traffic from the AT&T Agreement it would have been a simple matter of including an express provision that it did not apply to such traffic. 109 Optus submitted that the letter of 28 June 1996 is irrelevant because it makes no reference to short-stopping of calls bound for Vanuatu. TVL submitted that the fact that Optus and AT&T were testing calls on six digit numbers, as referred to in AT&T's letter of 28 June 1996, is enough to confirm that AT&T knew that telephone calls from AT&T to Optus on Vanuatu number ranges would be short-stopped by Optus. Optus submitted that the Transit Agreement makes it clear that the subject matter of traffic between AT&T and TVL via Optus was traffic actually reaching TVL's network. It also highlighted the fact that the AT&T Agreement did not refer to +678 number ranges. It was submitted that the AT&T Agreement concerns traffic entering TVL's communications network rather than traffic that is short-stopped. Reliance was placed on Mr Gray's evidence in relation to standard TAR agreements as follows (tr 106):

[207]

Q. Just so that I am clear on what you have said in your affidavit and answered there, in that instance then do you refer to the audiotext service provider as the terminating carrier or not? A. In this instance, your Honour, I do because it passes through what I term the transit carriers to the final carrier. Carrier is a terminology. I would not say that it is provided as a recognised operating agency as we understand Telstra, et cetera, but it is still passing through carriers' switches or exchanges to its final destination. 112 TVL made an alternative claim that it was an implied term of the AT&T Agreement that Optus was obliged to pay TVL the termination charges for all traffic terminating on the Vanuatu number ranges for which Optus was the transit carrier and where cascading accounting applied. TVL submitted that this term is implied on the basis of custom and usage in the telecommunications industry and also to give business efficacy to the agreement. Optus submitted that Mr Gray's evidence that number ranges did not form part of the standard TAR agreement and were entirely separate militates against any finding that Optus is liable by reason of the existence of custom and usage in the telecommunications industry. It was submitted that any custom of paying terminating charges for calls that utilised the number ranges but did not terminate on TVL's network was directly contradictory to Mr Gray's evidence. It was submitted that TVL has not established such a custom as a question of fact: Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226. 113 As for giving business efficacy to the AT&T Agreement, Optus submitted that the AT&T Agreement is entirely effective without such an implied term. It was submitted that it is not so obvious as it goes without saying and it is not congruent with the express terms of the contract: BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 292. 114 TVL claimed in the CLS that it was a term of the AT&T Agreement that unless TVL agreed otherwise, Optus was obliged to carry calls to 678 number ranges. Optus submitted that even if such a term existed, TVL did in fact agree otherwise by its insistence that all audiotext traffic be short-stopped. Optus further submitted that: there is nothing in the contractual language to indicate that such a term exists; that such a term would be contrary to ordinary industry usage because the use of number ranges is not treated as part of the TAR Agreement; and that AT&T itself did not evince any intention of the kind alleged in the term and resisted any agreement which included short-stopping. 115 Optus relied upon Mr Gray's evidence in cross-examination as follows (tr 104-105):

[212]

Q. And the business wouldn't have been viable at very much more than about 15 cents a minute being paid to the Pacific Island's network operator; correct? A. Subject to the agreement they gave for the use of the numbers, yes. 116 It was submitted that if the consequence of such an implied term was that TVL became entitled to USD$1.79 per minute, then audiotext traffic would not be feasible. Optus submitted that even if the term arose and even assuming it was breached, TVL suffered no damage. Any audiotext call on the 678 number ranges would simply have failed. No billable minutes would ever have accrued because of audiotext traffic on the 678 number ranges and there would have been no revenue collected by AT&T, no transit share paid to Optus and consequently, no terminating share payable to TVL. In those circumstances Optus submitted there was no damage for which it was liable to compensate TVL. 117 In TVL's Reply it alleged that the AT&T Agreement applied to all traffic terminating on Vanuatu number ranges, including short-stopped traffic. This agreement is alleged to be "inferred from the acts and conduct of AT&T, Optus and TVL during the period 1996 to 2003". The particulars provided in respect of this claim include the APT Agreement; the Gilsan Agreement; the Memorandum of Understanding between Optus and Gilsan dated 3 December 1998; the Memorandum of Understanding between Optus and APT dated 4 April 1996 and the fact that AT&T paid to Optus and/or Optus accepted, retained and/or paid to TVL transit charges and termination charges in relation to traffic which was short-stopped by Optus and/or not delivered by Optus to the telecommunications network of TVL, including traffic generated by Gilsan and APT. 118 Optus submitted that Mr Gray's evidence establishes that such an arrangement would be unworkable because it would apply the TAR in the AT&T Agreement to audiotext, entitling TVL to a terminating share of USD $1.79 per minute. Optus also emphasised that AT&T refused to condone short-stopping and that TVL's licence agreement did not permit it to enter into such an agreement. It is also submitted that the conduct of the parties was to negotiate separately for the use of TVL's numbers at USD $0.10 per minute and that this was contrary to the agreement alleged by TVL. In all the circumstances Optus submitted that no such agreement arose or should be inferred. 119 I am of the view that the AT&T Agreement was an agreement entered into in respect of traffic that actually terminated in Vanuatu. The submission made by Optus in relation to the viability of the arrangements for short-stopped traffic, particularly having regard to the agreements referred to below entered into by TVL in respect of short-stopped traffic for USD$0.10 per minute, provides support for the proposition that a fee of $1.79 per minute was not intended to apply to audiotext traffic. Mr Gray's evidence establishes that the service provider would take the majority of the settlement rate of the TAR. This is totally inconsistent with the submission made by TVL that $1.79 per minute would go to it in respect of the audiotext traffic. I am satisfied that the agreements that were entered into in respect of the transit traffic between AT&T and Telecom Vanuatu via Optus did not include short-stopped audiotext traffic, that did not terminate with TVL.

[324]

As soon as TVL became aware that those numbers were being utilised for an unauthorised purpose, further enquiries were made by TVL, including, with Mr John Bragg, Manager International Business Development, Cable & Wireless Optus Limited, North Sydney. Mr Bragg claims that he holds a copy of a lawyer's letter which he alleges permits that lawyer's client to use the numbers. TVL has provided us with copies of all of the correspondence emanating between itself and Ridgway Blake and we have not seen any letter which would substantiate the usage of those numbers, as Mr Bragg has claimed. 153 TVL submitted that the so called "lawyer's letter" was obviously the email from Mr Ridgway dated 26 November 1998, extracted above. It was submitted that this email "says nothing about authorising anyone to use the 66 Number Range". It is true that there is no express statement that TVL had authorised Mr Ridgway to use the number ranges. However on the assumption that Mr Bragg did claim that he held a copy of a lawyer's letter permitting the lawyer's client to use the numbers as referred to in the extract above, such a claim is quite understandable having regard to the content of Mr Ridgway's email. The emphasis that the numbers were "DEFINITELY available", together with the advice that the first year's fee had been waived and refunded because of the error, would certainly convey to the reasonable reader that the new numbers that had been allocated were able to be used. This is not an example of Mr Bragg manufacturing paperwork as claimed in TVL's submissions. Mr Ridgway was not asked to provide Mr Bragg with the email so that he could utilise it in dealing with an enquiry from lawyers during the Vanuatu proceedings. If he had done that, perhaps the submission that he manufactured paperwork might have some foundation. There is no evidence in support of this submission and it is rejected. 154 I do accept that Mr Bragg was adept in utilising business opportunities and loopholes to increase the profits for his employer, wherever it was possible to do so. Indeed his candour about his rather underhand conduct was quite disarming. He gave the following evidence in relation to his continuation of the use of the Vanuatu numbers notwithstanding that TVL had requested Optus to stop audiotext traffic on those numbers (tr 355):

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Q. What you have tried to do here is to work backwards from the series of e-mails that I have shown you to explain, to suggest that Mr Bonnano would be ringing you in a way that asserted that numbers had been allocated by Vanuatu? A. Ever use the phone in the middle of night to make sure of things like that? 161 Notwithstanding the unsatisfactory nature of the answer to this last question, the submission made by TVL that Mr Bragg appeared to accept that he did make up the conversation and that to his mind there was nothing wrong with doing so, must be rejected. What Mr Bragg clearly meant when he answered the question "so, what's wrong with that?" was a response that asked the cross-examiner to provide particulars of the basis upon which he was suggesting that he had made that conversation up. 162 It is clear from Mr Bragg's evidence that he took the view that he would obtain audiotext traffic whenever possible because it was so lucrative for Optus. It does appear that he was less than candid with his superiors and colleagues about what he was doing. It also appears that he refused to comply with requests made of him by TVL to shut the numbers down on which the rogue traffic was travelling. These are all matters that TVL relies upon to suggest that I would not believe Mr Bragg's evidence that Mr Hall agreed to USD$0.10 cents per minute in respect of all rogue traffic. I will of course take into account all of the matters relied upon by TVL in this regard. However it is necessary to analyse all the relevant evidence in determining whether Mr Hall did agree with Mr Bragg that TVL would accept USD$0.10 per minute in respect of the rogue traffic. 163 Mr Hall's email of 27 November 2000 to Ms Bicknell and Mr Bragg corroborates in part Mr Bragg's evidence that he advised Mr Hall that Optus was prepared to pay USD$0.10 per minute for the rogue traffic. It also corroborates Mr Bragg's evidence that Mr Hall said that he would get back to Mr Bragg in respect of that offer. That email suggested that Optus would receive about US$0.40 transit fee plus US$1.80 termination fee. His email urged Mr Bragg to reconsider and to come back to him. Mr Hall was cross-examined about his email of 27 November 2000 to Ms Bicknell and Mr Bragg as follows (tr 257-259):

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Q. So the proposed document from Optus had arrived shortly before you left TVL; is that right? A. Well, you say shortly, but it was there quite a while, yes, a while before I left TVL. 172 In re-examination Mr Hall identified the "outrageous" document that he claimed had stalled the negotiations. That deed is dated October 2004 and it would appear that the earliest version of it was submitted to TVL on 8 April 2004. Optus submitted that there is no explanation as to why Mr Hall did not provide details of the amounts claimed for the rogue traffic between 2 September 2002 and April 2004. It submitted that the reason there was no such explanation is because Mr Hall did agree with Mr Bragg in late November or early December 2000 to accept 10 cents per minute for all the so called "rogue traffic". 173 Mr Hall's evidence in his affidavit that he "never agreed" to accept US$0.10 per minute for the audiotext traffic operated by MDC was clearly quite wrong. Mr Hall's rather begrudging concession in cross-examination that he agreed with Mr Bragg that Optus would pay TVL at the rate of $0.10 per minute in respect of the MDC traffic was rather devastating for the balance of his evidence. He claimed in cross-examination that this agreement of $0.10 per minute for the MDC traffic was "not necessarily all of it" because the "stuff" as he called it, that TVL knew about was regarded by it as "small beer". This evidence suggested that Mr Hall was willing to concede that he had agreed that MDC traffic that he knew about would be paid at $0.10 per minute but that he had not agreed an amount in respect of traffic that he did not know about. That is a far cry from his affidavit evidence in which he claimed that he "never considered" that the amount of $0.10 per minute was adequate compensation. I have no doubt that Mr Hall was at the very least mistaken when he claimed in his evidence that he had not agreed with Mr Bragg to accept $0.10 per minute for MDC traffic. The fatal blow to Mr Hall's evidence in relation to the MDC traffic makes his evidence in relation to the other traffic very unreliable. 174 I accept that some of Mr Bragg's conduct seems to have been lacking in commercial morality, however that of itself does not prove that he did not have this conversation, as alleged, with Mr Hall. There was never any communication from Mr Hall or TVL to Mr Bragg or Optus during the period 2000 to 2002 that the agreement in relation to the 10 cents per minute for the MDC traffic was only in relation to the traffic that TVL knew about, and that TVL wished to reserve its position to negotiate for a higher or different rate for other traffic. Nor was there any suggestion that the payment that TVL accepted in December 2000, clearly calculated on the basis of 10 cents per minute, was not to be taken as acceptance of a rate of 10 cents per minute for the rogue traffic.

[427]

Mr Hoath's right to use the domain name, the IP addresses and the AS number was recorded in an electronic form on the database of the internet registrar. … However, Mr Hoath was never the owner nor did he have a right to possession of the chattel or chattels being, I infer, a hard disk, or a server, or some other piece of computer equipment, on which the information as to his right to use the domain name, IP addresses and AS number was stored. In my view, the defendants did not act in a way which was repugnant to any right which Mr Hoath had to the ownership or possession of a chattel. That is to say, although Spin and Com-Cen's interference with the internet registrar's records has deprived Mr Hoath of what I assume is his intangible property, namely the right to use the domain name, the IP addresses and AS number, they have not interfered with his ownership or right to possession of goods. Accordingly, the fiction by which a person may recover damages in conversion for the loss of a chose in action where the defendant has wrongly dealt in a chattel which contains, or, possibly, evidences, the chose, is of no avail to him. It would only be if the law of conversion were extended to dealings in intangible property that Mr Hoath could sustain these causes of action. 181 In their dissenting opinions in OBG Lord Nicholls and Baroness Hale expressed the view that there was no logical reason why the law should afford a remedy for misappropriation of tangible property but not intangible property. As Lord Nicholls said (at 602): "This distinction makes no sense. It lacks rhyme or reason". 182 In Thyroff v Nationwide Mutual Insurance Company 832 N.Y.S.2d 873 (2007), the New York Court of Appeals said (at 879) that "the tort of conversion must keep pace with the contemporary realities of widespread computer use". In Shmueli v Corcoran Group 9 Misc. 3d 589 (2005) the Supreme Court of New York County observed in dealing with a case of conversion of electronically stored data (at 592):

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