Telecom Vanuatu Ltd v Optus Networks Pty Ltd

Telecom Vanuatu Ltd v Optus Networks Pty Ltd [2008] NSWSC 1209 Todorovic v Moussa (2001) 53 NSWLR 463 Kwan v Kang [2003] NSWCA 336 Texas Co (Australasia) Ltd v Federal Commissioner of Taxation [1940] 63 CLR 382 Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13 CASES CITED : University of Wollongong v Metwally [No 2] (1985) 59 ALJR 481 Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 Leichhardt Municipal Council v Green [2004] NSWCA 341 Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 Commonwealth of Australia v Gretton [2008] NSWCA 117 Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322

PARTIES : Telecom Vanuatu Ltd (Plaintiff) Optus Networks Pty Ltd (Defendant)

COUNSEL : F Kunc SC/C N Bova (Plaintiff) I M Jackman SC/J A C Potts (Defendant)

SOLICITORS : Marque Lawyers (Plaintiff) Clayton Utz (Defendant)

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

50107 OF 2005 TELECOM VANUATU LIMITED v OPTUS NETWORKS PTY LIMITED [NO 2] JUDGMENT 1 On 27 November 2008 I delivered reasons for judgment in this matter after a 10 day trial which took place over six days in February 2008 and a further four days in August 2008: Telecom Vanuatu Ltd v Optus Networks Pty Ltd [2008] NSWSC 1209 (the Judgment). The concluding paragraph of the Judgment was in the following terms:

186 The plaintiff's claims will be dismissed. The parties are to bring in short minutes of order reflecting this outcome together with an agreed costs order. The matter is listed at 9.15 on 12 December 2008 for that purpose. If the parties are unable to agree on a costs order I will hear argument at that time. 2 On 8 December 2008 the plaintiff's solicitors wrote to my Associate in terms which included the following:

TVL wishes to put to her Honour its view that final orders cannot be made until the issues we raised below are resolved.

In concluding that TVL's claims will be dismissed, her Honour proceeded on the basis that TVL accepted and/or conceded that the finding of an agreement between Mr Hall on behalf of TVL and Mr Bragg on behalf of the defendant put an end to TVL's claim because TVL had been paid for the rogue traffic (see paragraphs 95, 133 and 175 of the judgment).

With respect to her Honour, it appears that her Honour was mistaken in this regard. Question 9 of the parties' agreed questions for determination specifically addressed this question and submissions were made by TVL at p.215 of its written submissions (paragraph 918) and at T532.1-T532.7 and T628-T629. Further, paragraph 14 of TVL's Amended Commercial List Reply addressed this issue.

Although TVL accepted that it had been paid by the defendant on 3,958,190 minutes, TVL argued that it should have been paid by the defendant on 5,046,775 minutes.

It also appears that her Honour may have overlooked TVL's submission that any agreement between Mr Hall and Mr Bragg only related to the rogue traffic that was disclosed to Mr Hall at the time of the agreement through Ms Howe's spreadsheet of 20 November 2000 (Ex. A. 10-277 to 10-279). On TVL's case there are 1,515,530 additional minutes of rogue traffic that were not disclosed to Mr Hall through Ms Howe's spreadsheet.

If her Honour found that Mr Hall and Mr Bragg agreed to the figure of US$0.10 per minute for all rogue traffic (including the rogue traffic that was not disclosed to Mr Hall at the time of the agreement), TVL submits that judgment should be entered for it in the amount of US$108,858.50 (i.e. 1,088,585 minutes at US$0.10 per minute).

However if her Honour only found that Mr Hall and Mr Bragg agreed to the figure of US$0.10 per minute for the rogue traffic disclosed in Ms Howe's spreadsheet of 20 November 2000 (Ex. A. 10-277 to 10-279) then the question arises as to whether and at what rate TVL should be paid on the additional 1,515,530 minutes of rogue traffic. TVL submits that in order to answer the question of what rate should be paid on these minutes, her Honour would be required to determine TVL's Reply Agreements (paragraphs 859FF, page 196 of its written submissions). 3 On 9 December 2008 the solicitors for the defendant wrote to the solicitors for the plaintiff with a copy to my Associate. The defendant's solicitors extracted portions of the transcript, with which I will deal a little later, and contended that there was no basis for the plaintiff to seek to re-argue its case before final orders were made. Reliance was placed on paragraph [175] of the Judgment which was in the following terms:

On balance I am satisfied that the conversation alleged by Mr Bragg and Mr Hall did occur and that Mr Hall, on behalf of TVL agreed to the figure of US$0.10 per minute in respect of all rogue traffic. As Mr Kunc conceded that finding puts an end to TVL's case and its claims will be dismissed. 4 On 12 December 2008 I listed the matter as a special fixture on 5 February 2009 for the plaintiff to make any application it considered appropriate and to hear applications relating to costs. On 5 February 2009 Mr F Kunc SC leading Mr CN Bova, of counsel, appeared for the plaintiff and Mr IM Jackman SC leading Mr JAC Potts, of counsel, appeared for the defendant.

Application to Re-Open 5 The plaintiff had made a claim during the trial that if the Court found that agreement at US$0.10 per minute for rogue traffic had been reached, it only applied to rogue traffic disclosed to Mr Hall at the time the agreement was reached. In this application it was submitted that this claim was overlooked. 6 The plaintiff submitted that the expression "all rogue traffic" in paragraph [175] of the Judgment did not make clear whether it was the rogue traffic that had been disclosed to Mr Hall at the time the agreement was struck or all rogue traffic irrespective of disclosure at the time of the agreement. Paragraph [174] of the Judgment includes the following: 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. 7 The plaintiff's submission that the US$0.10 agreement related only to the rogue traffic disclosed to Mr Hall was not overlooked. This part of paragraph [174] makes reference to it, albeit inferentially. As indicated during submissions on this application, the expression "all rogue traffic" means all rogue traffic, irrespective of disclosure to Mr Hall at the time. In those circumstances, the claims by the plaintiff on this application are: (a) Mr Kunc did not make the concession referred to in paragraph [175] of the Judgment; (b) even if what Mr Kunc said justified a conclusion that he had made the concession referred to in paragraph [175], he made a mistake and should be granted leave to withdraw the concession and to re-open the plaintiff's case; and (c) if leave is granted, the issue of whether all the rogue traffic has been paid for at the agreed rate of US$0.10 should be determined prior to the entry of final orders. (a) Was a concession made? 8 Mr Kunc submitted that he did not make the concession referred to in paragraph [175] of the Judgment. The issue of whether the plaintiff had been paid for all the rogue traffic at US$0.10 was certainly the subject of pleadings and the Agreed Questions for Determination (the Agreed Questions) produced during the trial. 9 Paragraph 15(p) of the defendant's Fourth Further Amended Commercial List Response contended: (p) …further or alternatively, on or about 29 November 2000, TVL agreed with Optus that TVL would receive a rate of US$0.10 per minute of international audiotext traffic generated by Interwest and MDC to the Vanuatu Number Ranges; Particulars (i) Email dated 27 November 2000 from Richard Hall to Samantha Bicknell and John Bragg (cc Thierry Milard). (ii) The agreement was partly express and oral, and partly to be implied. Insofar as it was oral, it was constituted by a telephone conversation between John Bragg and Richard Hall on or about 29 November 2000, the substance of which was to the effect alleged. Insofar as it was to be implied, it was to be implied by the course of dealing between the parties. Optus subsequently paid a termination charge to TVL…calculated at a rate of US$0.10 per minute of international audiotext traffic. Until the commencement of these proceedings, TVL never took any steps to question or dispute the rate applied or the payment received. 10 The plaintiff's Amended Commercial List Reply (the Reply) filed on 1 August 2008 contended:

14. In answer to paragraph 15(p) of the Fourth Further Amended Commercial List Response, TVL says if (which is denied) TVL agreed with Optus that TVL would receive a rate of US$0.10 per minute of international audiotext traffic generated by Interwest and MDC to the Vanuatu Number Ranges, TVL has not been paid at that rate for all international audiotext traffic generated by Interwest and MDC to the Vanuatu number ranges, in that it has not been paid in accordance with: (i) the minutes of traffic as measured by Optus; or (ii) in the alternative, the minutes of traffic as declared by the originating carriers to Optus; or (iii) further in the alternative, the minutes of traffic as declared by Optus to Interwest and MDC.

8. …on or about 28 November 2000, did TVL agree with Optus that TVL would receive a charge of US$0.10 per minute of international audiotext traffic generated by Interwest and MDC to the Vanuatu number ranges? (Para 15(p) CLR).

9. If the answer to the preceding question is "yes", has Optus paid all monies owing to TVL under the agreement referred to in the preceding paragraph? (Para 15(b) CLS and Para 14 Reply).

12 The plaintiff's written submissions included the following:

Question 9: if the answer to question 8 is "yes", whether Optus has paid all monies owing to TVL under the agreement between TVL and Optus of 28 November 2000?

918. Even if the Court finds that there was an agreement between Mr Bragg and Mr Hall, TVL has not been paid for all the traffic generated by GIB and MDC. A separate schedule will be handed up in relation to this. 13 During oral submissions in the trial on 12 August 2008 Mr Kunc addressed this paragraph of the written submissions as follows (tr 532): KUNC: There is one small point arising out of question 9 on page 215 which is whether, if there was an agreement between Mr Hall and Mr Bragg, have we actually received all of those monies. We say we haven't and a separate schedule is being prepared in relation to that. Simply that there were minutes that we have not been paid for.

HER HONOUR: I understand that. 14 In addressing whether there was an agreement between Mr Bragg and Mr Hall in relation to the payment of US$0.10 per minute for rogue traffic the following exchange took place during final submissions in the trial (tr 621-622):

KUNC: …he [Mr Bragg] really couldn't remember much until I started to put back to him versions of his affidavits which he started to accept or embellish upon. But I have to accept at the end of the day he would not yield from the proposition that the agreement had been in relation to both MDC and GIB.

KUNC: If Mr Hall did make that agreement then that is the end subject to this question of some extra limits that I will come to, your Honour, otherwise it is certainly the end of what my friend referred to yesterday as the big dollars.

HER HONOUR: He actually said it was the end of the case.

KUNC: Yes. I am not that pessimistic. What your Honour would indeed have to find, this is important lest we all fall into a trap of thinking this is quite an easy way out, we are not suggesting your Honour would view it in that way.

KUNC: Nor is it in a different sense at our end, your Honour. Your Honour would have to find that agreement was in relation to all of the unauthorised traffic. One point we do make is that at its highest it would only be in relation to the traffic that was disclosed in Ms Howe's e-mail and if there was other traffic that was not disclosed to Mr Hall in Ms Howe's e-mail of I think the 20th, then the agreement would not extend to that.

15 During those final submissions the plaintiff relied upon a schedule entitled "TVL Damages Schedule" (the Schedule) the front page of which was in the following terms:

Using the GIB - AT & T traffic table pages 3-4 below as an example, TVL submits that the following should be applied in relation to the calculation of unpaid minutes for telecommunications traffic upon which the damages calculation will ultimately be based. The evidence shows that the amounts measured by Optus and/or AT&T (where available) on their switches were ultimately paid by AT&T to Optus (note column B is always in excess of columns C & D). If that proposition is not accepted by the Court, TVL submits that (as is evidenced in column E) and using GIB as an example, GIB received payment from Optus on 3,988,851 minutes and not the lesser amount propounded by Optus (see column G). Optus submits that the amounts in column G should be adopted by the Court. Ms Howe gives evidence that she has undertaken a calculation that compares the total amount declared by Optus to all service providers to create a percentage proportion of traffic for each service provider. Using GIB's percentage proportion she has deducted clawbacks from the amounts Optus declared to GIB. There is no evidence before the Court (either Mr Matsudaira, Mr Luciano and Ms Howe) that any deduction of clawback amounts can be made in that way as between carriers. Although TVL and AT&T signed an Uncollectibles Agreement, no method for determining the amount of uncollectibles attributed to GIB has been proffered by Optus in its evidence. Indeed, the Uncollectibles Agreement is between AT&T and TVL and can therefore have no application to the present case. The effect of accepting Ms Howe's figures is that TVL would have to refund monies to Optus. Optus had a claim for clawbacks in relation to the GIB and MDC traffic in its cross-claim which has been settled. The effect of this settlement is that Optus is estopped from relying on clawbacks now. The same submission can be put in relation to GIB traffic originating with Sprint and Hellenic and MDC traffic as set out below.

16 Page 2 of the Schedule was as follows: GIB and MDC - minutes (all originations)

Note that TVL was paid by Optus at 10c on 3,958,190 minutes (A) (B) (C) (D) (E) (F) (G) Declared and paid to GIB and MDC by Optus Optus measured minutes as set out on 20 November 2000 email

Declared by AT&T, Sprint and Hellenic in their traffic declarations for all traffic Measured by Optus on its switch for GIB and MDC traffic And Ms Howe's minutes Traffic Month (Exhibit B) (Exhibit B - see AUR) *Optus' declared minutes as set out on 20 November 2000 email (Exhibit 1) (Exhibit B - See GIB declarations from Optus) (Exhibit A 10-276-279) 40,374,965 5,046,775 4,730,736 4,330,150 3,943,932

17 Mr Kunc made the following submissions in the trial in respect of that page of the Schedule (tr 627-628):

That then brings me to damages. The calculation of damages in this area is notoriously difficult. Our primary invitation would be that your Honour not embark in any judgment, if your Honour found there was liability, on a final attempt to determine what the amount is. In the Gilsan case I can tell your Honour there were two or three subsequent judgments and the parties basically did their best to work it out and when we got to a point we couldn't absolutely agree on it was ultimately ruled upon by his Honour. But in broad terms can I indicate to your Honour what we say your Honour has to do.

If your Honour adopts the approach I have suggested of leaving the number crunching and the final detail to the parties, the finding your Honour ought to make was whether declared minutes or measured minutes are what we should look at. There are then some degrees of complication which are introduced. We have set out in the covering submission what we say happened, but there are effectively four different ways of looking at how many minutes were transmitted. Can I invite your Honour's attention to page 2 of the document. This is GIB and MDC for all originations. There are schedules which deal with particular traffic attached, but this is, as it were, the overview. In column G is Miss Howe's calculation. Going back to the left-hand column, column B is the total number of minutes declared by AT&T, Sprint and Hellenic in their traffic declarations for all traffic, audiotext, not audiotext, everything else. Then C is the measured minutes by Optus on its switch for the GIB and MDC traffic. Now, the point of comparison between 5 million and the 40 million is that Optus was paid certainly at least for the 5 million minutes because it was paid for the declared traffic of 40 million minutes so the 5 million must certainly be within the 40 million, so they certainly got their money.

Then E is the declaration made by GIB and MDC to Optus. In relation to the rogue traffic that's the number of minutes that Optus declared to GIB and MDC, and that's how many minutes they paid them on. We make a simple point at this stage, which is Miss Howe's calculation of minutes is less than what was in fact the number of minutes paid by Optus to the rogues. We ask rhetorically why should we get less than what was actually declared to the rogues. What Miss Howe has done is to engage in an exercise of proportioning whose minutes were whose out of the total number of minutes that came down the line and she has apparently in that process allowed for claw-backs and uncollectibles, which we say was the subject of a settlement between us in relation to earlier parts of the claim. So our friends were originally in their cross-claim seeking to get that back. That was settled out. So we are at least puzzled as to why we should be left in the position that we get fewer minutes than in fact were declared by Optus to the rogue traffic people. Column F is in fact Optus's measured and declared minutes as set out in Miss Howe's email to Mr Hall that led to the discussions between them.

We make the point at the top of this schedule on page 2, "Note that TVL was paid by Optus ... minutes." That's how the figure of 395,819 arose, so we know how many minutes we have been paid on. To be quite clear, in doing it in this way we are seeking to bring to account all minutes, including minutes that don't appear to have been in what Miss Howe disclosed to Mr Hall for the purposes of their discussion. The way we calculate it and what we want to say about it is set out on the note on the front. We remain in your Honour's hands as to how ultimately when you get to that point you would want to resolve this because it is replete for further argument.

18 Mr Jackman's oral submissions at trial in respect of the plaintiff's Damages Schedule included the following (tr 628): With your Honour's leave can I respond to what my friend has just said because it is a point left from his address in chief. Page 2 of this document has that note that TVL was paid by Optus at 10¢ on about 3.9 million minutes. As I indicated before, there is no pleading, nothing said in opening and none of the questions posed for your Honour's consideration would raise as an issue whether TVL were fully paid if there is an agreement for all the traffic at 10¢, so it is simply an irrelevance. My friend seems to be trying to eat his cake now on some further claim which might be worth maybe $100,000 or so, I haven't done the arithmetic, but it is a claim that has never been articulated and never litigated. 19 Significantly Mr Kunc responded as follows (tr 628-630): …even if your Honour takes the view that your Honour may in relation to Mr Hall and says there was a deal done in relation to 10¢ a minute, our proposition is it is in relation to 10¢ a minute for the traffic that was disclosed to Mr Hall in Miss Howe's e-mail. Your Honour will recall Mr Hall was saying I didn't necessarily accept it was all there, I didn't accept that everything had been disclosed.

Now, our case is that on the evidence before you, and it is in those CD-ROMs and that is why this gets very difficult in these cases, there is traffic that should have been paid over and above that which was disclosed by Miss Howe, and there are two options in relation to that extra traffic. One is your Honour says it is the subject of the agreement between Mr Hall and Mr Bragg. If your Honour finds that then we may have some correspondence with our friends about paying us the 10¢. Yes, there is no reply claim to our friends' claim that says if it is 10¢ there is something missing, but our basic claim has been for $1.79 for all traffic.

The tentative position that your Honour can take is that if the agreement that your Honour finds, if your Honour goes this way between Mr Hall and Mr Bragg relates to only the traffic disclosed, we say that wasn't disclosed, is still at 1.79, your Honour has that option and the minutes are still there and in play. [emphasis added] 20 In the present application Mr Jackman submitted that in this response Mr Kunc conceded that there was no claim for any payment said to be owing to TVL by Optus at US$0.10 per minute evidenced firstly by his statement that TVL would "have some correspondence" about Optus paying TVL 10 cents a minute for such traffic and secondly by his statement, "yes, there is no reply claim to our friend's claim that says if it is 10¢ there is something missing".

21 In the present application the defendant conceded that this concession was arguably wrong in light of the inclusion of paragraph 14 in the Reply, however it was submitted that it reflected the reality of the way that the case had been conducted by the plaintiff, namely, that it had never attempted to run a case based on what had been pleaded in paragraph 14 of the Reply and expressed in question 9 in the Agreed Questions. Alternatively it was submitted that the Court would conclude that Mr Kunc ultimately elected not to press that claim, and conceded that if the Court found that the 10 cent agreement applied to all rogue traffic then that was the end of the matter. 22 The exchange that occurred at page 621 of the trial transcript extracted above is a little curious. In the first part of that extract Mr Kunc submitted that if there were to be a finding of an agreement at US$0.10 per minute that would be "the end subject to some extra minutes". This submission was consistent with the submission at page 532 of the trial transcript in which Mr Kunc was referring to the circumstance of a positive answer to question 8 (whether there was an agreement between Mr Hall and Mr Bragg at US$0.10 per minute for the rogue traffic) and a claim for "minutes that we have not been paid for" that would be dealt with in a schedule then under preparation. In the latter part of the extract at page 621 of the trail transcript Mr Kunc submitted that he was not "that pessimistic" that the finding of an agreement at US$0.10 was the "end of the case" and submitted that a finding would have to be made that the "agreement was in relation to all of the unauthorised traffic". Mr Kunc then referred to such an agreement not extending to the minutes that had not been disclosed to Mr Hall at the time the agreement was made. 23 On a reasonable reading of this extract and notwithstanding the earlier reference to the "extra minutes", Mr Kunc may be taken to have conceded that if the US$0.10 agreement extended to all rogue traffic, disclosed and undisclosed, the matter was "at an end". At this point of the submissions, the plaintiff's position was that the application of any US$0.10 per minute agreement was limited to the disclosed minutes and that there would need to be further argument in respect of the volume of undisclosed minutes and the rate that should be applied to those undisclosed minutes. However the matter became crystal clear at page 629 of the trial transcript when Mr Kunc submitted:

Yes, there is no reply claim to our friends' claim that says if it is 10¢ there is something missing, but our basic claim has been for $1.79 for all traffic.

24 The irresistible conclusion is that the concession referred to in paragraph [175] of the Judgment was made. (b) Should leave be granted to withdraw the concession? 25 A number of errors were made in final submissions at the trial. Although Mr Jackman submitted that there was no pleading referring to a claim for unpaid minutes if there were to be a finding at US$0.10 per minute for the rogue traffic, paragraph 14 of the Reply did make such a claim. Questions 8 and 9 of the Agreed Questions also referred to such a claim. Mr Kunc agreed with Mr Jackman's submission at the trial that there was "no reply claim". However Mr Kunc made the following submission in this application in respect of that concession (tr 3):

What then occurred, for which I have to accept responsibility as my error, suffering perhaps from battle fatigue at the end of the day, was I then said at the end yes there is no reply claimed to our friends claim and it says that if it is ten cents there is something missing. I was wrong. Just as my learned friend was wrong I was wrong. But on any view that does not amount in our respectful submission to a concession in the light of everything that has gone before that that claim which was before your Honour and had been the subject of submissions both written and oral was being abandoned. 26 Although the earlier part of this submission is an exemplar of candour that justifies the implicit trust between Bench and Bar, the latter part of the submission fails to recognize that when senior counsel advises the Court that there is no claim, notwithstanding previous submissions apparently to the contrary, the Court is entitled to accept this statement as accurate at the time it is made. As I have already found, the concession referred to in paragraph [175] of the Judgment was made. Mr Kunc submitted that where, as here, final orders have not been entered and there was "mutual error" (tr 9) which led to the finding that a concession had been made when none was intended, the plaintiff should be granted leave to re-open its case. 27 Mr Jackman submitted such a course is not available because it would require a substantive change to the reasoning in the Judgment. In support of this submission reliance was placed upon the Court of Appeal's decision in Todorovic v Moussa (2001) 53 NSWLR 463. There is really no controversy in relation to the extent to which a judge is permitted to alter a judgment prior to entry of orders. In Kwan v Kang [2003] NSWCA 336 the Court of Appeal referred to Texas Co (Australasia) Ltd v Federal Commissioner of Taxation [1940] 63 CLR 382 in which Starke J said at 457:

A superior court of justice, it may be remarked, has full power to rehear or review a case until judgment is drawn up, passed, and entered. 28 In Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13 Sheller JA, with reference to the abovementioned passage of Starke J's judgment in Texas Co (Australasia) Ltd v Federal Commissioner of Taxation, said at 28:

A superior court has power to review, correct or alter its judgment at any time until its order is perfected. 29 Mr Jackman submitted that the plaintiff should be bound by the way in which its counsel conducted the trial and leave should not be granted to withdraw the concession. In University of Wollongong v Metwally [No 2] (1985) 59 ALJR 481 the High Court said at 483:

It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so. 30 In Wentworth v Woollahra Municipal Council (1982) 149 CLR 672 the High Court said at 684 (without footnotes):

…as we had occasion to point out recently in State Rail Authority of New South Wales v. Codelfa Construction Pty. Ltd. (42), the circumstances in which this Court will reopen a judgment which it has pronounced are extremely rare. The public interest in maintaining the finality of litigation necessarily means that the power to reopen to enable a rehearing must be exercised with great caution. Generally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard. 31 The final paragraph of the Judgment recorded the conclusion that the "plaintiff's claims will be dismissed" and set a date for the bringing in of orders reflecting "this outcome". The order in this case has not been "perfected" or "entered". As a matter of principle the Court has power to rehear or review the case. The reality of the plaintiff's application is to advise the Court of the mistaken or erroneous concession and seek to correct the mistake or, put another way, withdraw the concession. It is not an application to change substantive reasoning. 32 The "fault" was not that of the plaintiff but of its counsel agreeing with the erroneous proposition put by the defendant's counsel. Cognisant of the caution suggested by the High Court I am however of the view it would be inconsistent with the dictates of justice for the orders to be entered perfecting a judgment that was based on a concession that was infected by error and, I accept, was not intended. I am satisfied that I should exercise my discretion in the plaintiff's favour. I will allow the plaintiff to withdraw the concession and to re-open its case. (c) Consideration of the plaintiff's claim for payment of additional minutes. 33 Mr Kunc indicated that the plaintiff did not intend to call any additional evidence in respect of its claim for payment for alleged outstanding minutes of rogue traffic pursuant to the US$0.10 agreement. Mr Jackman submitted that it is futile to consider the plaintiff's claim in this regard by reason of the following evidence given by Mr Milard (tr 209):

Q. You are aware, aren't you, that Optus did make payments to TVL for the so-called rogue traffic at the rate of numeral 10 cents per minute? A. There has been payments which have been made to TVL, yes. Q. And you knew that they were made at the rate of 10 cents per minute? A. To my - to what I remember, we did not receive any details of such payments. Q. But there had been a payment of some $81,000 in March 2000, hadn't there? A. There have been - yes, in March 2000 before I arrived there has been a payment which we rejected, yes, that's right. Q. And then you later accepted that when a settlement with Gilsan was imminent, correct? A. After we accepted another payment, this is right. Q. And then there was another payment of $313,000 made by Optus to TVL, correct? A. That's correct. Q. And there were some payments made directly by some of the audio text service providers that you regarded as generating rogue traffic? A. Yes. Q. And you knew, didn't you, that those payments were made at the rate of 10 cents a minute? A. There was no details with that but we suspected that they may have been based on that rate, yes. 34 There was no further evidence in relation to the amount of the payments that were made directly to the plaintiff by some of the audiotext service providers referred to in Mr Milard's evidence, nor was there any evidence identifying the source of the funds. Mr Jackman makes the obvious point that whatever those amounts were, they have not been brought to account in the plaintiff's Schedule. Indeed Mr Jackman submitted that in the absence of any further evidence, a process that has been eschewed by the plaintiff, it would be futile to give any consideration to the plaintiff's claim for payment of allegedly outstanding minutes. 35 The plaintiff claims that it should have been paid for 5,046,775 rogue minutes but was only paid for 3,958,190 rogue minutes. Applying the agreed rate of US$0.10 per minute it applies that the plaintiff claims that the defendant still owes it an amount of US$108,858.50. 36 The defendant also submitted that the plaintiff could not simply have judgment entered in its favour for any unpaid traffic because the Court would have to find: (a) that the plaintiff had proved that it was not paid for all rogue traffic at 10 cents per minute; and (b) if it were proven, the Court would need to determine on what basis the number of minutes of rogue traffic for which it had not been paid should be computed. It was submitted that prior to any entry of judgment in favour of the plaintiff in respect of any minutes that had not been paid at the agreed amount, consideration would have to be given to these further matters. It will be necessary for the plaintiff to prove: (a) the particular traffic was rogue traffic; and (b) it had not been paid for by Optus or the service providers. 37 The defendant concluded its case at trial on the mistaken understanding that there was no claim by the plaintiff for additional minutes payable at the rate of US$0.10 per minute. Mr Kunc's submissions in relation to the Schedule extracted earlier do not contain detail identifying the minutes as rogue traffic for which the plaintiff is seeking additional payment at USD0.10 per minute. Nor do those submissions do not identify or take account of any direct payments from the service providers. Having regard to the difficulties that have occurred in this case, I think the most prudent course is for the plaintiff to file submissions referring to the evidence upon which it relies to establish the claim for payment for additional minutes pursuant to the agreement at US$0.10 per minute and for the defendant to respond to that submission. Costs and interest 38 I should say at the outset of the consideration of the issue of costs and interest that the plaintiff accepts that the maximum it could achieve, should it be successful in obtaining an order for payment of any outstanding minutes at US$0.10 per minute, is US$108,000, plus interest. 39 The defendant makes a claim for indemnity costs based on a number of Calderbank letters. The law relating to Calderbank letters is not in controversy: Leichhardt Municipal Council v Green [2004] NSWCA 341; Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 at [20]-[21]; and Commonwealth of Australia v Gretton [2008] NSWCA 117 at [44]-[47]. The first letter upon which the defendant relies was dated 15 September 2006 and contained an offer to pay US$900,000 plus costs for all of the claims that were originally brought in the proceedings. The offer in the letter of 15 September 2006 was better than the result the plaintiff may ultimately achieve. 40 The plaintiff's solicitors rejected that offer in terms that included the following:

Your client's offer of compromise therefore allows only US$277,000 in relation to the 'rogue' claim. Our client particularised 5,309,277 minutes of rogue traffic for which it claims payment from Optus. It is our client's view that the rogue aspect of its claim is worth significantly more than US$277,000. It is for this reason that it rejects your client's offer of compromise. 41 The defendant submitted that the basis of the rejection of the offer was the plaintiff's belief that US$277,000 was not adequate compensation for the rogue traffic claim. It was submitted that this was plainly a mistaken belief and the rejection was ill founded. Finally it was submitted that the rejection of the offer 18 months before trial, was unreasonable. 42 The defendant made a second offer of compromise on 21 February 2007 for US$852,816 plus costs. By that time judgment had been entered for the plaintiff on 14 December 2006 for the sum of US$257,545.99 and such amount had been paid. The second offer included US$457,000 in respect of the rogue traffic claim. The defendant made the same submissions in respect of this offer claiming that the rejection of it was unreasonable. 43 The third offer by way of Calderbank letter dated 19 February 2008 was for US$700,000 inclusive of interest and costs which related to the remaining rogue traffic claim. This offer was faxed to the solicitors for the plaintiff on 19 February 2008. The facsimile transaction records the "RESULT" as "OK". It is apparent that the plaintiff's solicitors claimed that they did not receive the fax and on 10 March 2008 the defendant's solicitors attached a copy of the letter to an email which included the following:

Attached is a copy of our fax to you both dated 19 February 2008 and the transmission report indicating that it was received at your end.

Please let me know if you would like me to seek instructions as to whether Optus is prepared to refresh the offer set out in the attached letter. 44 Nothing further was heard from the plaintiff's solicitors in respect of this email. 45 The defendant made a fourth offer of compromise by way of Calderbank letter dated 30 May 2008 for US$1.45 million inclusive of interest and costs in respect of the rogue traffic claim. As the defendant submitted this was on any view a most generous offer and it was rejected by the plaintiff without any counter-offer. 46 This was complex litigation and the first offer was made at a time when there were a number of issues in respect of which the plaintiff was successful in having judgment entered in its favour. I do not regard the plaintiff's rejection of the first offer as unreasonable. The second offer was made after judgment had been entered in favour of the plaintiff with other issues in the litigation requiring determination and clarification. One of the matters that was not specifically pleaded was the detail of the alleged oral agreement between Mr Bragg and Mr Hall, the matter that was ultimately to defeat the plaintiff's claim. That was not pleaded as an oral agreement until 22 January 2008. I am of the view that the plaintiff's rejection of the second offer was not unreasonable in the complex circumstances of this case. 47 However the position is quite different in relation to the third offer. The plaintiff submitted that it was not unreasonable to reject this offer because it was inclusive of interest and costs. In support of this submission reliance was placed on the following passage of McColl JA's judgment in Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 322:

115 I agree with Allsop J Smallacombe does not lay down a "definitive rule" that an "all-in" Calderbank offer can never be considered on the question of indemnity costs. The Court cannot fetter the s 98 discretion by legal rules: Oshlack (at [35]). Smallacombe does, however, afford guidance as to the exercise of the s 98(1) discretion. It informs the question of the reasonableness of an offeree's refusal to accept an "all-in" offer. In my view it has a sound practical basis. While I accept each case should be considered on its facts, Smallacombe provides sound reasons to discourage offerors from drafting Calderbank letters on an "all-in" basis.

116 Further, Smallacombe reflects the policy considerations which, no doubt, led to the adoption of UCPR 20.26(2). Requiring Calderbank offers to be exclusive of costs prevents a court from becoming embroiled in collateral issues, such as the offeree's ability to assess the quantum of the costs component of an offer or the reasonableness of the opinion as to this issue an offeree formed at the time of rejection/non-acceptance. In this respect Caldberbank offers which are exclusive of costs assist the Court in facilitating the just, quick and cheap resolution of the real issues in the proceedings: s 56(1) Civil Procedure Act. 48 It must be remembered that these two parties are commercially savvy corporations carrying on business with sophisticated mechanisms for understanding and assessing commercial risks and opportunities. I am not satisfied that the inclusion of costs and interests in the offer of compromise was a proper basis for the plaintiff to reject this offer. 49 The evidence in relation to the timing of the offer establishes that it was sent to the plaintiff's solicitors on 19 February 2008 at 12.30 pm. In those circumstances the defendant should have its costs on an indemnity basis from the day after the expiry of the offer being 26 February 2008. 50 There is no opposition to the application for interest on costs in the form proposed by the defendant other than to include some additional words with which the defendant agrees.

Orders 51 I grant leave to the plaintiff to withdraw the concession referred to in paragraph [175] of the Judgment and to re-open its case. The plaintiff is to file and serve its outline of submissions in respect of its claim for payment of any additional minutes by no later than 27 February 2009. The defendant is to file and serve submissions in reply by no later than 13 March 2009. If appropriate, the matter will be determined on the papers and judgment will be delivered in due course, subject to any order to list the matter for further argument. 52 The plaintiff is to pay the defendant's costs of the proceedings on an indemnity basis from 26 February 2008. 53 The plaintiff is to pay to the defendant interest on costs and disbursements, at the rate set out in schedule 5 of the Uniform Civil Procedure Rules 2005, on the Allowed Percentage of each amount of costs and disbursements actually paid by the defendant, from the date of payment by the defendant of each such amount of costs and disbursements until the first to occur of: (a) such time as the plaintiff has paid the costs due to the defendant under any order made in these proceedings; or (b) any further order relating to interest on cost in these proceedings. In this order "X" equals the total amount of costs and disbursements which the defendant has paid or is liable to pay to its legal advisers in connection with these proceedings. "Y" equals the total amount of costs and disbursements allowed on assessment to the defendant in connection with these proceedings. The Allowed Percentage equals ((Y/X) x 100)%. Reserve further consideration of whether interest on costs should run. **********

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