Telecom Vanuatu Ltd v Optus Networks Pty Ltd

Telecom Vanuatu Ltd v Optus Networks Pty Ltd - [2009] NSWSC 401 - NSWSC 2009 case summary — Zoe

[23]

4 The plaintiff submitted that the amount of damages payable by the defendant should be assessed by reference to the defendant's measured minutes in column (C), pursuant to the agreement as found between Messrs Hall and Bragg. The 5,046,775 minutes in the Schedule extracted above are minutes actually recorded by the defendant on its switch as transiting to the rogue numbers for the relevant period, March 1999 to November 2000. 5 The plaintiff claims it has been paid relevantly US$395,816 by the defendant made up of two payments, US$81,997 and US$313,819. The plaintiff claimed that pursuant to the 10 cents agreement, it was appropriate to divide the paid amount, US$395,816, by US$0.10 to reach the total of 3,958,160 minutes. The plaintiff claims an entitlement to payment for 1,088,615 minutes reached by subtracting the alleged paid minutes, 3,958,160, from the measured minutes, 5,046,775 in column (C) of the Schedule. The difference between minutes measured by the defendant and minutes claimed or declared by GIB and MDC during the relevant period results in the figure of 772,576 minutes, reached by subtracting 3,958,160 from the figure in column (E), 4,730,736. 6 The plaintiff's original claims were for damages of US$108,861.50 plus interest at court rates if the assessment is based on measured minutes; alternatively damages of US$77,257.60, plus interest at court rates, if the assessment is made on declared minutes. In its submissions in reply on this application the plaintiff accepted that if judgment is to be entered in US dollars, and interest is to be awarded, the US interest rates contained in Mr Collins' affidavit of 7 August 2008 should apply. Damages or debt 7 The defendant submitted that the plaintiff's claim is plainly for an unpaid debt, money due and owing pursuant to the 10 cents agreement and submitted that there was never a claim for damages for breach of contract. In respect of the distinction between a claim for damages and a claim for a debt, the defendant relied upon the following passage of Barrett J's judgment in Castlepines (IBM) v Residential Housing Corporation [2003] NSWSC 398 at [8]:

[24]

The distinction between damages and debt is, of course, fundamental. As is pointed out by Professors Carter and Harland (in JW Carter and DJ Harland, "Contract Law in Australia", 4th edition, 2002, at page 875), the action to recover a debt due for payment has a longer history than the action to recover damages for breach of contract and, despite the concurrent administration of law and equity, it remains the case that an action to recover a contract debt due is not a claim for breach of contract. A person who points to a contract as the source of an unsatisfied right to be paid asserts a claim different in nature from that of a person who, relying upon a breach of contract, seeks compensatory relief in the form of monetary damages. 8 The defendant submitted that the distinction is important in the present case for two reasons. First, the elements of each cause of action are different and second, the entitlement to interest may be affected by whether one sues to recover a sum payable under a contract, for a debt, or for damages for breach of contract, where the breach is the non-payment of money due under that contract. It was submitted that the claim made by the plaintiff in its Amended Reply is a claim for a debt arising under the 10 cents agreement for unpaid traffic. 9 The defendant submitted that there is no claim for damages for breach of any obligation under the 10 cents agreement, nor is there any pleading that there was a breach of that agreement or that any loss was suffered as a result of a breach of contract. Accordingly, the defendant submitted that when the plaintiff asserted in its submissions that "damages" should be awarded to it for underpayment under the 10 cents agreement, what it is really propounding is a claim which was never made in the proceedings. The defendant emphasised that the only claim that has been made and the only claim that the plaintiff is entitled to pursue is one to recover a debt owed by the defendant for non-payment of US$0.10 per minute pursuant to the terms of the 10 cents agreement. 10 I agree with the defendant's submission that what the plaintiff is seeking is the payment of a debt. Implied term 11 It was the defendant that propounded an agreement at 10 cents per minute which it particularised, in part, as follows (par 15(p) of relevant Commercial List Response): (i) Email dated 27 November 2000 from Richard Hall to Samantha Bicknell and John Bragg. (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 [that the plaintiff would receive a rate of US0.10 per minute of international audiotext traffic generated by Interwest and MDC to the Vanuatu Number Ranges]. Insofar as it was to be implied, it was to be implied by the course of dealing between the parties. 12 The defendant submitted that when Mr Hall and Mr Bragg reached the 10 cents agreement, as outlined in the first judgment (par [127] - [175]), it was based on industry practice and that the rate should be calculated on the minutes declared by the originating carrier. It claimed that this was an implied term of the 10 cents agreement. In this regard the defendant relied on the finding in the first judgment that pursuant to the usual practice in the industry, governed by the International Telecommunications Regulations (ITR), "Settlements are generally made on the declaration by the originating carrier of minutes sent, rather than measurement by a transit or terminating carrier of minutes received" [19]. The defendant pointed to the plaintiff's concession that the defendant did not pay GIB or MDC on the basis of measured minutes and submitted that the reason for that is plain in that the normal industry practice dictated that everyone in the industry operated using declared minutes as the usual measure, that is declared by the originating carrier. 13 The defendant also relied on Ms Howe's evidence in relation to a document prepared by the defendant entitled "Basis of Preparation of Defendant's Summary of Declared Minutes" (Ex 1). That evidence was as follows (tr 167-168):

[32]

If the answer to the preceding question [ie was there a 10 cent agreement] is yes, has Optus paid all monies owing to TVL under the agreement referred to in the preceding paragraph. 18 The plaintiff's main claim was for payment of the minutes measured by the defendant. Mr Hall's email of 27 November 2000 referred to reverting to a default position if agreement could not be reached at the level that he was then claiming, US$0.20. It is true that in a conversation on 20 November 2000 Mr Bragg said that Mr Hall's offer did not reflect "industry practice": [128]. However, the e-mail of 27 November 2000 makes the point that the traffic was run without the plaintiff's knowledge, and was not declared. The fact that there is mention of traffic that had not been declared does not in my view mean that there should be an implication that the parties intended that the minutes should be measured on the declarations made by the originating carrier. Mr Bragg had suggested a "compromise". This was not the usual industry practice of negotiating deals in the environment of the applicable ITR. This was a deal struck in relation to unauthorised traffic quite outside the industry practice of agreements for authorised traffic. 19 Mr Bragg clearly placed the circumstances outside the usual industry practice when he emphasised to Mr Hall that his "default position" was "nothing" because the plaintiff never received the traffic: [131]. I am not satisfied that the 10 cents agreement struck between Mr Hall and Mr Bragg has such an implied term. It is certainly not necessary for business efficacy. It is certainly not a matter that goes without saying and it seems to me that this particular agreement was struck in circumstances relating to unauthorised traffic quite outside the usual industry practice: BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337. 20 I am not satisfied that such a term is to be implied into the 10 cents agreement. Proof that defendant is indebted 21 The defendant submitted that the plaintiff has not made any serious attempt to prove that the defendant remains indebted to it under the 10 cents agreement. It was also submitted that the plaintiff's case proceeds on inference alone and it has made no attempt to prove by direct evidence that the defendant is indebted to it for any particular sum. In this regard the defendant relied upon the following evidence given by Mr Milard (tr 209):

[42]

27 The plaintiff submitted that Mr Milard's evidence goes no further than an acceptance that there were some payments made directly by some audiotext providers that he regarded as generating rogue traffic. In other words there were some payments from audiotext providers who Mr Milard considered had generated rogue traffic. The plaintiff placed emphasis on the question after the concession in which Mr Milard said that there were no details in respect of the 10 cents agreement but that "we suspected" that the payments "may have been based on that rate". The plaintiff submitted that this is hardly sufficient to link it to the 10 cents agreement and relied upon the finding in the first judgment that Mr Hall did not advise Mr Milard that he had reached the 10 cents agreement with Mr Bragg: [171]. The plaintiff submitted that the cross-examiner failed to question Mr Milard as to whether the payments he suspected may have been based on the rate of 10 cents per minute were made for the rogue traffic and that by failing to ask this further question the defendant cannot make the submission that Mr Milard accepted that the plaintiff had received payments directly in respect of rogue traffic. 28 The plaintiff does not take issue with the principles to be applied in respect of evidentiary matters and the proof thereof, including the reliance by the defendant on the passage of Campbell JA's judgment in Zaccardi v Caunt. The plaintiff submitted that there was no necessity for re-examination having regard to the failure by the cross-examiner to link the concession to the rogue minutes. 29 The plaintiff submitted that it has always been the defendant's case that all payments had been made to the plaintiff and that such claim necessarily involves an assertion that there were 3,958,160 minutes the subject of the 10 cents agreement (reached by dividing US$395,816 by $US0.10). It was further submitted there is no reason in law or logic why, against that background, the plaintiff cannot seek to show that there were additional minutes subject to the agreement. It rejects the criticism made by the defendant that it is seeking to establish its entitlement by inference rather than direct evidence. 30 The pivotal questions and answers in the cross-examination of Mr Milard on which the defendant relies to establish that there were additional payments made to the plaintiff for rogue traffic that have not been brought to account were as follows: 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.

[43]

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. 31 The affirmative answer to the first question might be understood as a concession that some of the audiotext service providers that paid the plaintiff directly were service providers who were generating rogue traffic, as opposed to a concession that those audiotext service providers were paying the plaintiff directly for rogue traffic. The plaintiff's complaint is that the second question and answer does not remove that ambiguity and it was necessary for the cross-examiner to establish that the rate of 10 cents was applied not merely to the traffic that was paid for directly by the service providers who Mr Milard regarded as generating rogue traffic, but that the rate of 10 cents was paid for rogue traffic. 32 I agree with the plaintiff's submissions. The concession is not clear and in any event all that Mr Milard had were suspicions that some payments, whether or not they were for rogue traffic, may have been based on that rate. I am not satisfied that this was a concession that further payments had been received directly for rogue traffic. Reliance on the Schedule 33 The defendant took issue with the plaintiff's claim that there had been no suggestion at the trial that the summary in the Schedule was incorrect. The Schedule was provided to the defendant in Court on the final day of the main hearing, 14 August 2008. The defendant submitted that it does not, and did not, accept the submissions made on page 1 of the Schedule, extracted above, and it submitted that the Schedule was neither accurate nor a complete summary of the evidence. The defendant also submitted that the Schedule is deficient in a number of respects. 34 On the first day of the hearing, 11 February 2008, the plaintiff relied upon a document entitled "Plaintiff's summary of minutes on Rogue Numbers" (the Summary). The defendant submitted that the defendant's measured minutes recorded in the Summary for the months of June, August and September 2000 are different to the figures that are in the Schedule. The Summary relied upon by the plaintiff in its opening was described by Mr Kunc SC as follows (tr 5):

[47]

In relation to MDC, that was a stream that we say we were completely unaware of until November 2000, hence it doesn't turn on and off when the alleged discovery occurred because we never discovered it we say until November 2000. 35 The Summary records the GIB traffic for the months of June, August and September 2000 as zero. The Schedule records the number of minutes for June, August and September 2000 as 610, 91,024, and 104,422 respectively, totalling 196,056 minutes. The defendant's complaint is that whilst the Summary made no claim in respect of those months for rogue traffic measured by the defendant for GIB traffic, the Schedule makes a claim of 196,056 minutes. The defendant complained that the plaintiff had not explained the reason for that difference. 36 In submissions in reply the plaintiff submitted that the figures in the Schedule were an accurate reflection of the relevant measured minutes based on the material discovered by the defendant and contained in Exhibit B. The plaintiff pointed out that these figures were identical to those set out in the confidential exhibit to Ms Howe's (formerly Ms Bicknell) affidavit and that any difference between the Schedule and the Summary is irrelevant. The figures identified in the confidential exhibit are not broken down into months and accordingly it is not possible to see that the figures are identical as claimed. There is a difference between the Summary and the Schedule. The explanation for that difference is that the Schedule more accurately reflects the actual evidence in Exhibit B that was relied upon at trial. The defendant has not submitted that the figures are not a reflection of Exhibit B and accordingly the criticism of the Schedule in this regard is of little moment. 37 The next criticism made by the defendant is that the plaintiff was directed to file submissions referring to the evidence on which it relied to make good its claim for 10 cents per minute for the allegedly unpaid minutes. The defendant submitted that the plaintiff's reliance on the Schedule as generically referring to Exhibit B is, as I understand the submission, less than helpful. This criticism is that the CD ROM, Exhibit B, contains 297 individual files, many of which are spreadsheets containing multiple sheets of data. That may be so. The defendant knew that the plaintiff was relying upon the Schedule as a reasonable reflection of the data that was contained in Exhibit B. It is true that the plaintiff has not identified the particular aspects of the data in Exhibit B from which it reached the figures that are in the Schedule, however it is apparent that the defendant has not sought particulars of the process nor conferred with the plaintiff in this regard. This particular criticism goes nowhere. 38 The next complaint made by the defendant in relation to the Schedule is that column (D) on page 3 incorrectly includes re-file and non-US originated GIB traffic originating with and measured by AT&T on its switch. The plaintiff agrees that column (D) on page 3 of the Schedule includes 5,181 minutes, equivalent to $51.81 of the plaintiff's claim out of 3,578,114 minutes. However the plaintiff submitted that its inclusion is not incorrect because those minutes nevertheless ran to rogue numbers via AT&T and the defendant. 39 The next complaint made by the defendant was that on page 9 of the Schedule the plaintiff incorrectly included APT generated traffic for November 1999 to March 2000 for re-file and non-US originated traffic generated and measured by AT&T on its switch. The plaintiff accepts that the inclusion of 2,308 minutes, equivalent to $23.08 of the plaintiff's claim is in error. However it claims that there are 36,881 minutes of re-file and non-US originated traffic, equivalent to $368.81 of the plaintiff's claim, which it claims are not incorrectly included because they ran to rogue numbers via AT&T and the defendant. 40 The next complaint made by the defendant relates to the second paragraph extracted above and repeated here for convenience.

[50]

46 The defendant submitted that the appropriate interest rate to be applied to the debt is the 6% per annum after the time for payment has fallen due. It has to be remembered that such interest rate was referred to in the first judgment as rarely if ever being applied. The defendant submitted that the existence of that right under the ITR means that pursuant to s 100(3)(b) of the Civil Procedure Act 2005 the Court cannot award interest under that section. That section provides that the section does not authorise the giving of interest on a debt in respect of any period for which interest is payable as of right, whether by virtue of an agreement or otherwise. 47 The plaintiff submitted that the Court should not apply the 6% interest rate. It was submitted that such an interest rate was for "normal" settlement arrangements rather than this one off agreement to settle a dispute about unauthorised rogue traffic. I agree with that submission. 48 In the alternative, the defendant submitted that if judgment is given in United States dollars then interest on that judgment should run at the rates from time to time prevailing in the United States of America as set out in Mr Collins affidavit of 7 August 2008: Maschinenfabrik Augsburg-Nurenburg AG v Altikar Pty Ltd [1984] 3 NSWLR 152; Swiss Bank Corporation v State of New South Wales (1993) 33 NSWLR 63. The plaintiff accepts this contention and seeks interest at the prevailing US rates as set out in Mr Collins' affidavit of 7 August 2008. 49 I am satisfied that the fairest calculation of interest is from 1 October 2002, one month after the request made by Mr Milard on 2 September 2002. Conclusion 50 The plaintiff is entitled to entry of judgment for US$108,861.50. The plaintiff is also entitled to interest on that amount from 1 October 2002 calculated at the rates set out in Mr Collins' affidavit of 7 August 2008. The parties are to make that calculation and I grant leave to the parties to file Short Minutes of Order for the entry of judgment in the Registry. The parties may also include in those Short Minutes an agreed order as to costs. However if the parties wish to argue costs they may file and serve submissions pursuant to an agreed timetable and/or make contact with my Associate to fix a date for oral submissions. **********

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Judgment (51 paragraphs)

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Cases Cited (10)