Telstra Corporation Limited v Minister for Communications, Information Technology and the Arts - [2007] FCA 1567 - FCA 2007 case summary — Zoe

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Telstra Corporation Limited v Minister for Communications, Information Technology and the Arts

[2007] FCA 1567

Federal Court of Australia|2007-10-11|Before: Graham J

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Source facts

Court

Federal Court of Australia

Decision date

2007-10-11

Before

Graham J

Source

Original judgment source is linked above.

Judgment (92 paragraphs)

[1]

Table of Contents Telstra's Grievance................................................................................................................. [1] The Application.................................................................................................................... [48] The Funding Proposal........................................................................................................... [49] The Guidelines...................................................................................................................... [50] The Relevant Legal Framework............................................................................................ [51] Nature of the Application...................................................................................................... [66] Telstra's Claims.................................................................................................................... [78] Standing............................................................................................................................... [83] Judicial Review..................................................................................................................... [89] The FMA Regulations and the Policies of the Commonwealth.............................................. [108] Conclusions........................................................................................................................ [112]

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[13]

8 Telstra's grievance focuses upon the: ● 'additional $358 million in funding' ● 'additional funding allocation' ● 'further $358 million to enable the OPEL network to go further' ● 'further $358 million Government investment' 9 Telstra asks: ● Where did the additional funding come from? ● Why wasn't it told about the possibility of funding exceeding $600 million? 10 As will appear shortly, the Government's decision to make an additional $358 million available to the Infrastructure Programme would appear to have been responsive to an 'additional proposal' by OPEL Networks Pty Limited, although other evidence suggests that the initiative was that of the Government. 11 In an affidavit sworn 2 August 2007 a Business Development Manager in the Telstra Country Wide business division, Mr Paul Smith, said: '121. If I had been aware that the Commonwealth had made an additional $358 million in funding available, I would have worked with the Fundamental Planning and the Finance divisions within Telstra to establish various scenarios as to how that $958 million could be allocated by Telstra. I would have sought to develop a proposal to use the additional funding to provide greater ADSL coverage to more under-served areas and premises. In respect of each scenario, this would have involved (among other things): · identifying those under-served remote and rural areas within Australia not already covered by Telstra's Proposal; · assessing the costs (including ongoing operational costs) of providing those areas and premises with broadband services as per Telstra's Proposal; · identifying the risks associated with providing such services; · considering the various financial hurdles for Telstra (such as Telstra's likely return on invested capital); · considering Telstra's capital budget at the relevant time and whether it would be commercially viable for Telstra to make a capital contribution and, if so, how much; · identifying other projects Telstra was involved in at the time and the potential for Telstra to leverage off other infrastructure programs or projects proposed or currently being undertaken by Telstra (including in rural and remote areas); and · considering the feasibility of each of the scenarios, that is, considering such matters as the availability of resources to enable Telstra to complete the proposed works. … 124. After taking all the above factors into account, I would have put forward to senior management each scenario for their consideration, together with my own recommendation as to the most appropriate option for Telstra. Senior management would ultimately have been responsible for deciding the details of any revised bid lodged by Telstra for the $958 million in funding.'

[14]

12 As a Business Development Manager in the Telstra Country Wide business division, Mr Smith was responsible for 'Strategy Development in the Telstra Retail and Consumer divisions'. He was primarily responsible for preparing Telstra's proposal for funding under the Infrastructure Programme. 13 As Mr Smith explained in paragraph 124 of his affidavit his role was confined to putting forward matters for consideration by senior management. His role was to make recommendations. He had no responsibility for decision making in respect of applications for funding that Telstra may have seen fit to lodge. 14 Mr Smith's evidence was that the Telstra Country Wide business division, in which he worked, covered all areas in Australia outside Sydney and Melbourne. As a Business Development Manager in that division he reported to a Gary Goldsworthy who was the Director of Business Development and Support, who in turn reported to a Geoff Booth who was the Group Managing Director in the division. 15 Mr Smith gave evidence that the head of the project team within Telstra in relation to the Infrastructure Programme was a Mr Don Pinel. 16 It is clear that at an executive level the decision as to whether or not Telstra would submit an application for a funding grant and the form such an application might take rested with Telstra's Chief Executive Officer, Mr Sol Trujillo. 17 At an Industry Briefing attended by officers of Telstra and officers of the Department on 27 September 2006 Mr Smith asked a series of questions of the Departmental officers which he had previously prepared and reduced to writing. The Telstra representatives at the briefing were Don Pinel, Paul Granville, David Quilty and Mr Smith. 18 By an email dated 26 October 2006 to Mr Smith, a Mr Sleeman from the Department provided Telstra with a clarification of the Infrastructure Programme guidelines in response to Mr Smith's questions. This included: '1. Does the $600m include GST? The budget is $600m excluding GST. Also, DCITA is not obligated to outlay all the funding, for example, if the selected projects do not require this amount of capital contribution or if all the underserved premises are not adequately covered.' 19 On 3 November 2006 the Department issued a 'Clarification 1' to the Broadband Connect Infrastructure guidelines. That clarification included the following: '5. Funding available and Tax/GST related issues In response to queries from potential applicants, we provide the following advice on the GST in relation to funding: · The amount of funding available under the Broadband Connect Infrastructure Program is up to approximately $600 million (GST exclusive), or approximately $660 million (GST inclusive). · The funding paid to successful applicants will be GST inclusive · Applicants should ensure that they specify their funding requirements inclusive of GST. …'

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20 On 24 November 2006 the Department published a 'Clarification 2' in respect of the Broadband Connect Infrastructure guidelines. 21 Previously, by a Media Release dated 31 October 2006, the Minister had announced that the deadline for submitting proposals under the Infrastructure Programme had been extended to 18 December 2006, the date on which Telstra lodged its initial application for funding. 22 It would appear that on 15 June 2007 (three days before the Prime Minister's announcement of OPEL Networks Pty Ltd as the successful applicant) Senator Stephen Conroy, the Shadow Minister for Communications and Information Technology in the Commonwealth Parliament wrote a letter to the Commonwealth Auditor-General expressing his concerns about the manner in which the tender process for the Infrastructure Programme was being administered by the Department. Thereafter, on 25 June 2007 , Senator Conroy wrote a further letter to the Auditor-General in which he said, amongst other things: 'Increase in funding allocation At the time of the launch of the Broadband Connect Infrastructure Program, the Commonwealth government stated that "up to $600 million" would be available to tenderers under the program … However, when the results of the tender process had been announced, the Government had increased the total funding awarded to the winning tenderer $958 million (sic). This increase in funding during the tender process raises a number of probity issues: · No bidders other than the winning bidder were given any opportunity to demonstrate the solutions they could provide with a larger funding pool; · It is questionable whether all bidders received equal treatment in terms of being able to explain their bids, vary their bids within the guidelines and take into account possible Government objectives not referred to in the Broadband Connect Infrastructure Program guidelines (eg build a competitive network) … In light of these … concerns about … the probity … of the Broadband Connect Infrastructure Program tender process, I ask that you investigate this significant public expenditure as a matter of urgency.'

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… The Australian National Audit Office (ANAO) has scheduled, as part of its forward audit program, an audit of BCIP in 2008-09 to examine the effectiveness of the implementation and delivery of the program. However, in light of your correspondence, we have undertaken a preliminary review into the selection of the program's preferred applicant to provide broadband access to currently under-serviced areas and premises. …It is important to emphasise, though, that we have not undertaken a full audit at this time …. … DCITA issued two clarifications to the Guidelines dated 3 November and 24 November 2006. Neither clarification mentioned the potential availability of additional funds beyond $600 million. Departmental records and advice indicate that one potential applicant sought information from DCITA on whether there could be more funding made available to BCIP. Minutes of a briefing with this potential applicant in November 2006 noted that DCITA: could not comment on whether more than $600 million could be made available, however, the Government may commit further funds if it believes additional funding is justified and will bring significant benefits. DCITA advised, in the context of our review, that this comment was a general statement and not specific to BCIP. DCITA further advised the ANAO that it did not communicate this information to any other potential applicants at any time as: · it was not relevant to the assessment criteria; · DCITA could not provide clarification as to whether more funding could be made available for BCIP; and · the issue arose near the end of the application process and no other potential applicants had raised the issue. The applicant concerned lodged a number of funding options for consideration, two of which would have involved significantly greater funding than the $600 million available. All of the applicant's funding options were considered in the benchmarking phase of the assessment process. However, the application did not proceed to the final assessment phase for reasons unrelated to the amount of funding sought by the applicant. In our view, it would have been prudent for DCITA to inform all potential applicants of its advice-on whether additional funding could be made available under the program. … The possibility that the Government may commit additional funds to the program if it believed that additional funding was justified and would bring significant benefits, may have influenced some potential applicants and applications. … As a result of the final comparative assessment, DCITA identified OPEL Network as the preferred applicant and recommended that the department enter into negotiations with OPEL Network to enhance its proposal's value for money to the Government. OPEL Network's application sought $600 million of Australian Government funding. DCITA documentation indicates that, with Ministerial agreement, its negotiations with OPEL Network focused on enhancing its proposal within the $600 million funding available, as well as exploring options to extend service coverage to a greater number of under-served premises should additional funding be made available. This approach was supported by DCITA's process advisors. These negotiations and related advice from DCITA led to a decision by the Government to accept an additional OPEL proposal and make an additional $358 million available to BCIP. … DCITA recognised that a decision to make additional funding available to the preferred applicant without giving other applicants the opportunity to revise their applications could draw criticism. However, DCITA informed its Minister, amongst other things, that: · all applications were assessed strictly in accordance with the Guidelines; · OPEL Network's proposal was ranked significantly ahead of the other proposals at the final comparative assessment stage; and · OPEL Network's additional proposal was negotiated after its selection as the preferred applicant. While there are obvious benefits in the market being fully informed of the technology solutions being sought and the level of funding available under the program it was, in our view, open to Government, on the basis of departmental advice, to agree to negotiations being pursued with the preferred applicant and to commit to increase the program's funding, (subject to having appropriate parliamentary appropriation).

[21]

None of the matters relied upon by the Department and set out in the Chief General Manager's, Infrastructure and Security's letter of 18 June 2007 were challenged by Telstra in the letter from its Group General Counsel, Legal Services to the Minister of 19 July 2007 referred to below. Whilst Mr Smith raised certain questions at the de-briefing session on 2 August 2007, no challenge was apparently made by Telstra to the Department's finding that Telstra's application was unsatisfactory when assessed against three of the eight essential deliverables specified in the Infrastructure Programme guidelines. 27 It would appear that on 20 October 2006 the Chief Executive Officer of Telstra, Mr Sol Trujillo, considered Telstra's then proposed bid for funding under the Infrastructure Programme. A memorandum prepared by Mr Smith for a meeting of Telstra's Policy Council on 1 November 2006 recorded that Mr Trujillo agreed for Telstra's Infrastructure Programme team to continue to develop a detailed and fully costed proposal for consideration by Mr Trujillo and agreed in principle that ADSL extension was the preferred approach that Telstra should pursue. 28 In Mr Smith's memorandum for the Policy Council he said, amongst other things: '2. Background: The Broadband Connect Infrastructure program is the second stage of Broadband Connect. … . This next stage, with a value of $600m has been established to encourage infrastructure build to provide broadband services to premises which are currently not served by terrestrial broadband services. … 3. Recommendation(s): Our approach will be: an ADSL build out comprising: s New exchange enablement s Remove or enable pair gain systems in band 3 and 4 s Additional transmission capacity and diversity) Telstra will only offer wholesale ADSL products that will be available at the time of submission. The bid for funding will have three layers and will be non-compliant for a range of reasons including the requirement for the subsidy in certain circumstance to exceed the capital costs and due to the coverage constraints of ADSL. The bid will be made up of: 1. $600m subsidy to maximise ADSL build-out in the under-served areas, or 2. Approximately $360M for ADSL deployment in the most commercially attractive markets as well as a range of remote and indigenous areas, or 3. Approximately $200M for ADSL deployment in the most commercially attractive markets only The offers are only available "as is" they cannot be unbundled by either market or geography 4. Rationale: ADSL deployment under this program will provide the most effective and efficient means of extending broadband to the majority of the underserved premises. … Telstra's competitors are expected to: · Focus on regional, commercially attractive areas · Technologies to be employed include WiMAX, some ADSL in band 2, and satellite · Soul and Optus likely to look for funding for transmission build. … 5. Options: If Telstra does not participate: · We may miss a value enhancing opportunity to product (sic) a financial return using Government capital funding · We will still be committed to spend on replacing obsolete and underperforming plant over coming years · The Government will still distribute a substantial amount of funding probably on very favourable terms. This will lead competing infrastructure (sic) and pressure on product margins · Our Opponents could argue that we have "abandoned regional Australia" · A better option than not participating may be to have the Government reject our offer …'

[43]

41 Before proceeding to deal with the specific questions asked by Telstra's Group General Counsel, Clayton Utz, Lawyers, replying on behalf of the Commonwealth, as represented by the Department, said, amongst other things: 'Amended Guidelines Concern and assessment of applications in accordance with the Guidelines 1. The Government did not amend the Guidelines by substantially increasing the amount of funding available under the Program. Indeed, the only amendment to the Guidelines once they were published on 21 September 2006 was to extend the closing date for applications to 18 December 2006. … 4. The Government did not make additional funding available pursuant to the application process for the Program. … 6. All applications were assessed strictly in accordance with the Guidelines, including in relation to the eight essential deliverables set out in section 2.1 of the Guidelines. Applications were required to achieve each of these essential deliverables to a satisfactory level to pass the benchmarking step in the assessment process (as set out in section 3 of the Guidelines). … 8. OPEL's application under the Program did not seek funding greater than $600 million. … 11. In accordance with the process provided for in the Guidelines, Telstra's application did not pass the benchmarking assessment and was therefore excluded from further consideration at the end of benchmarking. … 13. Whereas Telstra's application was determined to be unsatisfactory with respect to three of the eight essential deliverables, the OPEL application was assessed in accordance with the process in the Guidelines as meeting each of the eight essential deliverables and being the preferred application. As noted above, the OPEL application did not seek funding in excess of $600m. 14. After the OPEL application was determined by DCITA's assessment team to be the preferred proposal, OPEL was invited by DCITA to enter into discussions. Those discussions focused on enhancing the value for money to the Government in respect of the $600 million funding sought by OPEL. Discussions also explored additional options to extend coverage of the OPEL solution to a greater number of under-served premises should the Government decide to provide additional funding for this purpose. 15. The Government decided (as is its prerogative to do), following the discussions with OPEL, to make additional funding available to OPEL to obtain extended coverage. 16. As you will appreciate, it is ultimately an executive matter for the Government to determine whether, how, and in what amounts, it decides to fund initiatives in the national interest. … 18. … the Guidelines do not state that funding could not be sought beyond $600 million. 19. Only one potential applicant (which was not OPEL) sought information as to whether more than $600 million might be made available, at a briefing session held on 24 November 2006, as provided for in section 6.7.1 of the Guidelines. DCITA stated that it could not comment on whether more than $600 million would be made available under the Program. 20. The potential applicant then asked whether a bid in excess of $600 million would be considered. DCITA stated that it was up to the applicant to decide on the scope of its application but that DCITA was encouraging all applicants to submit modular proposals, in both size and scope. DCITA stated to the potential applicant that it should submit a bid within the budget. DCITA also stated that the Government may commit further funds if it believed additional funding was justified and would bring significant benefits. This was a general statement, not specific to the Program, as is recorded in the letter of the Commonwealth Auditor-General to Senator Conroy dated 5 July 2007 … …'

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The Commonwealth's response to these questions was contained in paragraphs 22, 23 and 24(a)-(k) of Clayton Utz's reply of 26 July 2007. Relevantly, the reply included: '23. We are also instructed that there was no communication between the Government and OPEL in relation to the possibility of any additional funding being made available for additional coverage and benefits until after OPEL had been selected as the preferred applicant on the basis of the assessment of OPEL's proposal as submitted. 24. DCITA has also instructed us to provide the following details in addition to the general outline of events set out in paragraphs 13 to 15 above: (a) OPEL's application was submitted on 18 December 2006, in compliance with the deadline set out in the Guidelines (as clarified on 3 November 2006); (b) OPEL's application did not seek funding greater than $600 million; (c) All of the applications lodged within time were subjected to initial screening assessment as provided for in the Guidelines. On the basis set out in the Guidelines (see section 3.2), a number of applications were excluded at this point (by decision of the assessment panel on or about 23 January 2007); (d) The remaining applications (including OPEL's and Telstra's applications) proceeded to benchmarking; (e) During benchmarking, Telstra's application was assessed against the assessment criteria published in the Guidelines (section 4) as failing to achieve three of the eight essential deliverables set out in section 2.1 of the Guidelines to a satisfactory level. Accordingly, Telstra's application was excluded from further consideration at the completion of benchmarking (by decision of the assessment panel on or about 14 February 2007). Any other application which did not achieve an essential deliverable to a satisfactory level was also excluded at this point; (f) A small number of applications (including OPEL's), which had been assessed as achieving all of the essential deliverables to a satisfactory level, proceeded to comparative assessment; (g) Comparative assessment (as provided for in the Guidelines) was then undertaken. As a result of the comparative assessment, OPEL was selected as the preferred applicant (by decision of the assessment panel on or about 2 March 2007); (h) DCITA then reported the decision of the assessment panel to the Minister and sought the Minister's authorisation to commence discussions with OPEL to seek to improve the value for money that would be achieved by the Government in respect of the funding sought by OPEL in its proposal. This authorisation was provided on or about 3 March 2007; (i) On or about 7 March 2007, OPEL was invited to meet with DCITA in respect of certain aspects of its proposal; (j) Between 9 March 2007 and 2 April 2007, DCITA and OPEL discussed OPEL's proposal as originally submitted with a view to achieving improved value for money for the Government in relation to certain aspects of the proposal; and (k) During those discussions (i.e. not until after OPEL's selection as preferred applicant), DCITA and OPEL also explored options to extend coverage of the OPEL solution to a greater number of under-served premises if additional funding was to be provided. OPEL was requested to provide a separate proposal in relation to the relevant additional benefits and coverage.' 43 Telstra's Group General Counsel's letter contained a question 3 as follows: '3. When did OPEL first submit an application seeking more than $600 million of funding, either under the Program or in addition to funding available under the Program?'

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1.5 Overview of the assessment process Applications may be subject to a two-stage assessment process. Stage one will involve initial screening and benchmark assessment. All applications will be screened to ensure that they are compliant with the requirements set out in these guidelines and associated documentation, and provide sufficient information to be effectively assessed. Applications will then be assessed against benchmark criteria that relate to the essential deliverables (see sections 2.1 and 4.1 below). Applications that do not meet the benchmark standard, and which therefore do not provide sufficient value-for-money to warrant further assessment, will be excluded at this point. During stage two the remaining applications will be comparatively assessed. Section 4.2 below sets out the criteria that will be used for the comparative assessment. … During stage two applicants may be requested to revise and re-submit their applications. This could include: · restructuring and/or separating their applications into component parts in order to enable a more effective assessment of the optimal mix of projects; · reshaping the geographic scope of their applications, by adding or reducing proposed service areas; or · re-scoping their proposed services and/or other benefits. Any such revisions will be requested to enable more effective comparative assessment and to: · identify the mix of projects that would offer best value-for-money across regional Australia; · achieve seamless coverage and consistent service provision across regional Australia; and/or · create an overall package of projects that fits within the available funding. Applicants will only be asked to re-shape proposed projects if the Australian Government considers: · that the mix of projects contained in applications, including the range of options put forward by individual applicants, does not provide the optimal outcome to achieve the Australian Government's objectives; and · the outcome could be improved by re-shaping proposed projects in particular ways. Any re-shaping requests will be subject to rules and processes to ensure fair and equal treatment of all affected applicants. The proposed re-shaping framework is set out in part 3 (Application assessment strategy) below. An applicant is not obliged to revise and re-submit an application if requested to do so by the Australian Government, but the Australian Government may decide to exclude an application from further assessment if the applicant does not wish to revise and re-submit it. … PART 2: PROGRAM DELIVERABLES This part provides details on the outcomes which the Australian Government is seeking to achieve through the Broadband Connect Infrastructure Program. For the purposes of assessing applications for funding, the Australian Government has divided these outcomes into essential deliverables and desirable features. Essential deliverables must be addressed by all proposals, while desirable features are additional benefits that would add value to proposals and which will be taken into account in the comparative assessment process. Section 2.1 below identifies the essential deliverables to be addressed by all proposed projects. Applications will be required to achieve these essential deliverables to a satisfactory level to pass the benchmarking assessment. The essential deliverables will also be a key component of the comparative assessment process in stage two. Section 2.2 below sets out desirable features that could be included in applications. Although these features are not essential, they would add value and are likely to be favourably considered should an application pass the benchmarking assessment and proceed to the comparative assessment process in stage two. Desirable features will be drawn on to help distinguish between proposals that are assessed at a reasonably equivalent level against the essential deliverables. 2.1 Essential deliverables (to be addressed in all proposed projects) 2.1.1 Applicant capabilities … 2.1.2 Cost-effectiveness and commercial contribution … 2.1.3 Wide coverage of under-served premises Applicants must demonstrate that proposed projects will cover significant numbers of under-served premises and that they will provide the required standard of wholesale broadband services to the vast majority of premises (including under-served premises) in the target coverage area. This is because under-served premises are located throughout regional, rural and remote areas, including in regional and rural cities and towns as a result of technology impairments (e.g. RIMs and pair gains).

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Under-served premises are defined as those premises within the Broadband Connect area that do not have sustainable access to a metro-comparable broadband service. There is no minimum level of coverage of under-served premises required, but as an indication, significant coverage would be considered as being greater than 10 per cent of total under-served premises identified in these guidelines in contiguous regional areas (possibly across states/territories or even nationally). Alternatively, a proposed project may be considered to offer significant coverage if it offers coverage broadly across discrete target communities that face particular difficulties in accessing services (e.g. remote Indigenous communities). It is a requirement that proposed projects offer wholesale broadband services to the vast majority of under-served premises in the area covered by the proposed project (the "target coverage areas"). It is expected that proposed projects would cover at least 95 per cent of under-served premises within the target coverage area. In relation to geographic areas this means that proposed projects must offer coverage across the populated parts of contiguous regional areas, given that under-served premises are generally located throughout such populated areas. If necessary, applications must fully justify why the proposal cannot offer access to under-served premises within target coverage areas. In general, such justification would need to include technical and/or economic reasons why it was not reasonably feasible to provide broadband access to such premises using the proposed technology or mix of technologies. There will be no weighting or priority given in the assessment process to providing access for particular under-served premises (or kinds of under-served premises) above others. All under-served premises will be considered of equal importance. 2.1.4 High quality wholesale broadband services … 2.1.5 Sustainable services … 2.1.6 Infrastructure that is scalable to provide higher capacity broadband … 2.1.7 A high quality, robust technology solution Applications are required to demonstrate that the proposed broadband infrastructure would be technically efficient and of high technical quality. In general terms this means that the technology solution should: · conform to all relevant national and international technical standards; · be sufficiently proven and established to provide a strong likelihood that it will perform effectively; … 2.1.8 Timely roll-out of infrastructure and services … 2.2 Other desirable features 2.2.1 Additional contributions to broadband infrastructure more generally As indicated at section 2.1.3 above, it is intended that the Broadband Connect Infrastructure Program will support the provision of metro-comparable broadband access to under-served premises in target coverage areas through the establishment of broadband networks offering wholesale services contiguously across the target coverage areas. Funding applications will be assessed primarily in terms of the number of under-served premises identified to be covered by the proposed project. … PART 3: Application Assessment Strategy DCITA is responsible for administering the funding assessment and selection process for the Broadband Connect Infrastructure Program …. During all stages of the process, DCITA may use independent advisers to provide advice on probity, legal, financial and technical matters. The basic principles underlying the selection process are to ensure that: · the Australian Government's objective to improve access to broadband services in regional Australia (and mobile services where applicable) is achieved to the maximum extent possible; · this objective is achieved in a way that also achieves value-for-money for the Australian Government; and · all applicants are treated in a fair and equitable manner. … 3.2 Assessment process -overview All options put forward by applicants will be individually assessed and treated as separate proposed projects for the purposes of benchmarking in stage one and comparative assessment in stage two. Stage one of the assessment process involves initial screening and benchmark assessment. Once applications have been received, DCITA staff will conduct an initial screening assessment. At this point, the Australian Government may exclude from further consideration applications which: · fail to address one or more of the essential deliverables; or · do not provide enough information for an effective assessment to be undertaken. The remaining applications will then be assessed against the benchmarking criteria to establish which proposed projects are suitable and offer value-for-money. The meaning of value-for-money, in this context, includes: · whether the proposed project would give a significant number of under-served premises access to metro-comparable broadband services in the service areas covered by the application at a reasonable cost to the Australian Government (particularly in regard to the total amounts of funds available); and · whether the proposal satisfactorily addresses the program's essential deliverables. In stage two of the assessment, applications that pass the benchmarking assessment will be comparatively assessed. In the comparative assessment process, the extent to which proposals include additional benefits on a commercial basis may be considered to contribute to the assessment of value-for-money. Such benefits might include additional higher speed broadband services and additional wholesale access, particularly in relation to services that may be considered to have 'bottleneck' characteristics. The primary purpose of comparative assessment is to evaluate and compare any proposed projects that involve substantially overlapping proposed service areas, in order to rank such projects and to identify the project or overall mix of projects that offers the best value-for-money.

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… During stage two, the Australian Government may request remaining applications to be revised and re-submitted, in order to enable more effective comparative assessment and/or to: · identify the project or mix of projects that would offer best value-for-money across regional Australia; and/or · achieve seamless coverage and consistent service provision across regional Australia; and/or · create an overall package of projects that could be funded within the available funding allocation. Such requests would only take place where applicants had not put forward options within applications that enabled the Australian Government to achieve the best possible project or mix of mix (sic) of projects to meet its objectives within the funding allocation. … Once all revised applications have been received, a final comparative assessment will be undertaken to determine which proposed projects, if any, the Australian Government will agree to fund under the program. Following the selection by the Australian Government of any preferred project proposals, DCITA will enter into contract negotiations with the successful applicant(s). 3.3 Stage one: Screening and benchmarking 3.3.1 Screening All applications will be screened. In order to pass the screening stage an application will need to meet the following minimum requirements. … Any applications that do not meet these minimum requirements may be excluded. 3.3.2 Benchmarking Remaining applications will be assessed against the benchmarking criteria set out in section 4.1 below. The purpose of the benchmarking assessment is to assess all applications against the essential deliverables. Both quantitative and qualitative means will be used to assess if a proposed project represents overall value-for-money in terms of meeting the essential deliverables. … … Projects that do not represent value-for-money (see section 3.2 above) against the benchmarking criteria will be excluded from further consideration … 3.4 Stage two: Comparative assessment and potential revision of proposals 3.4.1 Comparative assessment Following the benchmarking process, all remaining applications will be considered to represent overall value-for-money (as described in section 3.2 above). Applications will then be assessed on a comparative basis. The comparative assessment criteria build on the benchmarking criteria (which will remain the key assessment criteria), but also include assessment criteria relating to desirable features, which will be used to distinguish between applications that are otherwise assessed at a similar level. … 3.4.2 Revising applications The Australian Government may ask applicants to revise their proposed projects, and to re-submit their applications. … 3.4.2.1Rules for revising proposals To ensure that the revision process is fair and equitable to all applicants, the Australian Government has prepared the following indicative rules: · where applicants are asked to divide their proposed projects into components, such requests will only be made where it is considered feasible or potentially beneficial to the decision making process for projects to be divided in this way; · where applicants are asked to include additional areas within their proposed projects, this will be done consistently, so that all relevant applicants (where it is considered feasible on a technical basis) will be asked to include those additional areas; · applicants may be asked to reduce the scope of services and/or other benefits offered where it is considered that the proposed project may be too costly to be funded under the allocated funds; · applicants may be asked to improve the quality and/or scope of proposed services and/or other benefits, but not in circumstances where this would involve giving an applicant the opportunity to improve their bid; · the Australian Government will request that all revisions to proposed projects are costed separately (whether it involves increasing or decreasing the requested funding), so that particular parts of revised applications could be selected in the final assessment; and · all original applications that remain in the assessment process following comparative assessment, along with any re-shaped applications will be considered in the final assessment. After the receipt of applications, should it be considered that these rules require adjustment, including ensuring that any revision of applications is conducted on a fair and equitable basis in respect of all applications, the Australian Government may prepare and issue additional rules for relevant applicants. 3.4.3 Final assessment Following receipt of all revised applications, the Australian Government will make a final comparative assessment to establish the optimal project or mix of proposed projects, aimed at obtaining best value in achieving the Australian Government's objectives. As a result of the final comparative assessment, the Australian Government may agree to offer a funding agreement to the preferred applicant(s). Should the Australian Government be unable to finalise a funding agreement (or any other required documentation) with a preferred applicant, the Australian Government may, at its sole discretion, decide to grant funding to another applicant and invite that applicant to finalise a funding agreement and any other required documentation. PART 4: ASSESSMENT CRITERIA … 4.1.2.2Proposals contribute an appropriate and feasible level of commercial investment towards covering under-served premises in the proposed coverage area Basis of assessment 1. It is expected that all proposals, including those targeting the most remote parts of Australia, will contribute part of the required capital investment towards establishing new wholesale broadband infrastructure in targeted service areas. … 4.2 Comparative assessment criteria Applications that pass the benchmarking assessment will be comparatively assessed, based on the following criteria. … 4.2.2 Cost-effectiveness and commercial contribution Basis of assessment 1. Proposals will be compared based on the cost to the Australian Government of providing each under-served premises with access to wholesale broadband services that would allow at least metro-comparable retail broadband provision (see section 4.1.2.1 above). 2. Proposals will be comparatively assessed on any commercial contributions to providing broadband services to under-served premises, based on the approach outlined in section 4.1.2.2 above. 4.2.3 The total number of under-served premises and the percentage of under-served premises within the target coverage area provided with access to wholesale broadband services Basis of assessment 1. Proposals will be compared based on the total number of under-served premises (residential and small business) within the proposed target coverage area that would be provided with access to wholesale broadband services that would allow the provision of metro-comparable retail services. 2. Proposals will also be compared based on the percentage of under-served premises (residential and small business) within the proposed target coverage area that would be provided with access to wholesale broadband services that would allow the provision of metro-comparable retail services. … PART 5: REQUIRED INFORMATION … 5.5.1 Project costs, funding and other contributions This section should set out the proposed funding schedule for construction and establishment of the network, in the period before 30 June 2009, including · a schedule of costs for all network components, and the timing of capital outlays to pay those costs; · a schedule identifying the amount of the contribution sought from the Australian Government and the value of all other contributions to be provided; … PART 6: MATTERS CONCERNING APPLICATIONS 6.1 General The Australian Government reserves the right: · not to fund any projects under the Broadband Connect Infrastructure Program … if it considers that proposed projects do not offer sufficient value-for-money; · to allocate a lesser amount than that requested in an application; · to seek changes to a proposed project in the context of negotiating a funding agreement for funding; and · to vary, amend or terminate this funding process at any time. … The application and assessment process described in these guidelines is not an offer by the Australian Government to contract. No action or inaction in relation these guidelines (sic), whether the issue of the guidelines, the making or assessment of an application, any steps in relation to stage two of the assessment process as described in these guidelines, or otherwise, creates any contract, or a binding undertaking of any kind by the Australian Government, including without limitation, quasi-contractual rights, promissory estoppel or rights with a similar legal basis. 6.2 Confidentiality The Australian Government will own applications. While an applicant will, as between itself and the Australian Government, own intellectual property rights that exist in the information contained in an application, the Australian Government and its advisers may reproduce, adapt, modify and develop such information for the purposes of the application and assessment processes and, to the extent necessary, the applicant licences the Australian Government and its advisers to do so.

[67]

57 In his reasons for judgment in Alphapharm Pty Limited v Eli Lilly Australia Pty Limited [1996] FCA 391 ('Alphapharm'), Lindgren J made certain observations concerning Order 15A rule 6 at [41] as follows: '1. Paragraphs 6 (a) and 6 (c) pose an objective test, the opening words "there is" in each paragraph signifying "there exists"; but the "insufficiency test" of para 6 (b) has both subjective and objective aspects. 2. Although I need not explore the subjective aspect fully, it seems clear that if the evidence went so far as to show that a particular applicant was already able to decide to commence a proceeding by, for example, showing that the applicant had in fact decided to do so, para 6 (b) would not be satisfied even though the information available satisfied the objective aspect of the insufficiency test referred to below. 3. The fact that a particular applicant genuinely feels unable, because of a lack of information, to decide to commence a proceeding does not, without more, satisfy para 6 (b); the objective aspect of the paragraph requires it to be shown as an objective fact that the applicant lacks "sufficient information to enable a decision to be made whether to commence a proceeding". 4. In my view, the objective aspect of para 6 (b) invokes a notion of "reasonable sufficiency", the question raised being whether it is reasonable that the applicant for an order be required to take its decision without having the information to become available from inspection of the document or documents of which discovery is sought. 5. If the insufficiency test is satisfied, a second question will arise, namely, whether the Court's discretion should be exercised in favour of the making of an order. 6. The questions posed by rule 6 and referred to above are to be answered in the context of an adversary system of forensic contest in which a proposed respondent is ordinarily entitled to withhold its evidence, certainly prior to the commencement of proceedings. 7. The questions are also to be answered in the light of the nature of the "cause of action" contemplated and the range of information potentially available in respect of a cause of action of that kind. 8. … in my opinion rule 6 is not necessarily rendered unavailable by the fact that the applicant already has available evidence establishing a prima facie case for the granting of relief. This is made clear by the reference in para (a) to the existence of "reasonable cause to believe that the applicant has ... the right to obtain relief ..." (emphasis supplied). It would impose an artificial constraint on rule 6, not supported by its terms or purpose, to exclude, a priori, all cases in which the insufficiency of the information possessed by the applicant to enable a decision to be made whether to litigate is due to a matter of "defence" which would defeat the prima facie case. 9. Rule 6 does not provide a means by which an applicant will be enabled to have available to it every document which would assist it in deciding whether to litigate. If that were the intention, paras (a) and (c) would stand alone and the additional condition set out in para (b) would not be necessary. 10. Paragraph 6 (b) contemplates that after making all reasonable inquiries, the applicant has come up against a problem, namely, that it is lacking a piece of information or pieces of information reasonably necessary to enable it to decide whether to commence a proceeding.' 58 In St George Bank Ltd v Rabo Australia Ltd (2004) 211 ALR 147 Hely J stated a series of propositions which his Honour considered had emerged from the authorities in relation to the proper application of Order 15A rule 6 at [26] as follows: '(a) the rule is to be beneficially construed, given the fullest scope that its language will reasonably allow, with the proper brake on any excesses lying in the discretion of the court, exercised in the particular circumstances of each case: Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728 at 733; 20 IPR 79 at 85; Minister for Health and Aged Care v Harrington Associates Ltd [1999] FCA 549; BC9902167 at [27]; (b) each of the elements prescribed in subparas (a), (b) and (c) of the rule must be established: Hooper v Kirella Pty Ltd (1999) 96 FCR 1 at 11 [38] ; 167 ALR 385 at 367; 47 IPR 21 at 30. Preliminary discovery cannot itself be used to remedy deficiencies in the satisfaction of the conditions themselves: Airservices Australia v Transfield Pty Ltd (1999) 92 FCR 200 at 202-3 [5]; 164 ALR 330 at 332; (c) the test for determining whether the applicant has "reasonable cause to believe", as required by subpara (a), is an objective one: Hooper at FCR 11-12 [39]; ALR 367; IPR 30; Malouf v Malouf [1999] FCA 710; BC9902833 at [16]; Quanta Software International Pty Ltd v Computer Management Services Pty Ltd (2000) 175 ALR 536 at 541-2 [24]; 49 IPR 25 at 31;Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd [1996] FCA 391; BC9602085 at 23. Further, the words "or may have" cannot be ignored. The applicant does not have to make out a prima facie case: Quanta Software at ALR 541-2 [24]; IPR 31;Paxus Services at ALR 733; IPR 85; (d) belief requires more than mere assertion and more than suspicion or conjecture. Belief is an inclination of the mind towards assenting to, rather than rejecting a proposition. Thus it is not sufficient to point to a mere possibility. The evidence must incline the mind towards the matter or fact in question. If there is no reasonable cause to believe that one of the necessary elements of a potential cause of action exists, that would dispose of the application insofar as it is based on that cause of action: John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679; BC200403021 at [13], [14], [17] and [73]; (e) while uncertainty as to only one element of a cause of action might be compatible with the "reasonable cause to believe" required by subpara (a), uncertainty as to a number of such elements may be sufficient to undermine the reasonableness of the cause to believe: Glowatzky v Insultech Group Pty Ltd (1997) 39 IPR 215; (f) the question posed by subpara (b) of the rule is not whether the applicant has sufficient information to decide if a cause of action is available against the prospective respondent. The question is whether the applicant has sufficient information to make a decision whether to commence proceedings in the court: Quanta Software at ALR 543 [33]-[34]; IPR 32-3, Alphapharm at 24-6. Accordingly, an applicant for preliminary discovery may be entitled to discovery in order to determine what defences are available to the respondent and the possible strength of those defences, or to determine the extent of the respondent's breach and the likely quantum of any damages award: CGU Insurance Ltd v Malaysia International Shipping Corp Berhad (2001) 187 ALR at 285 [21]; Quanta Software at ALR 543 [33]-[34]; IPR 32-3, Alphapharm at 24-6, Airservices Australia at FCR 202-3 [5]; ALR 332 (g) whether an applicant has "sufficient information" for the purposes of subpara (b) also requires an objective assessment to be made: Minister for Health at [44]; Alphapharm at 23-4, Hooper at FCR 12 [40]; ALR 367; IPR 31. The subparagraph contemplates that the applicant is lacking a piece (or pieces) of information reasonably necessary to decide whether to commence proceedings; (h) it is no answer to an application under the rule to say that the proceeding is in the nature of a "fishing expedition": Paxus Services at ALR 733;IPR 85. Indeed O 15A r 6 "expressly contemplates" what once might have been castigated as "fishing": Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136 at 143 [27]; 182 ALR 264 at 270-1; 20 IPR 79 at 85. As Burchett J commented in Paxus Services, the rule is (at ALR 733; IPR 85): … designed to enable an applicant, in a situation where his proof can rise no higher than the level the rule describes, to ascertain whether he has a case against the prospective respondent …' 59 The documents in respect of which preliminary discovery is presently sought were defined in the Second Further Amended Application as follows: '… documents in the possession of the Respondent in the following categories: 1. All documents (including but not limited to, correspondence and notes of any discussions between the Respondent or any officer, servant or agent of the Department of Communications, Information Technology and the Arts (the Department) and OPEL Networks Pty Limited (OPEL)) relating to the possibility of any applicant for funding under the Broadband Connect Infrastructure Program (the Program) being able to submit an application seeking more than $600 million of funding, or being provided with funding in excess of $600 million, either under the Program or in addition to funding available under the Program. 2. All applications made by OPEL for funding under the Program and for any additional funding for its proposed infrastructure projects as described in the media release entitled "Australia Connected: Fast affordable broadband for all Australians" issued by the Respondent on 18 June 2007. 3. All documents relating to advice received from any probity or process adviser to the Respondent or any officer, servant or agent of the Department concerning: (a) the amount of funding to be made available under the Program or in addition to that funding; and (b) the advice to be provided to potential applicants concerning the amount of funding to be made available under the Program or in addition to that funding. 4. All documents relating to any assessment by the Respondent or any officer, servant or agent of the Department of the applications submitted by OPEL and the Applicant for funding under the Program or, in the case of OPEL, any additional funding, including all documents relating to the decision to award $958 million to OPEL which were prepared: (a) by or on behalf of the Respondent; or (b) by or on behalf of any officer, servant or agent of the Department who was wholly or partly responsible for the assessment of the applications. 5. All documents recording or implementing the decision to award funding under the Program to OPEL including the signed funding agreement with OPEL.'

[73]

Nature of the Application 66 An order made in the course of an action or suit which does not conclude the rights of the parties inter se, although it may conclude the fate of the particular application in which it is made, is interlocutory only (per Taylor J in Hall v The Nominal Defendant (1966) 117 CLR 423 ('Hall') at 440; see also per Owen J at 447). 67 It is not of the essence of an interlocutory order that it is one made in the course of a pending action or suit (per Taylor J in Hall at 440; see also per Owen J at 447). 68 An order made on an application in proceedings preliminary to the bringing of an action, which does not preclude a further application to like effect being brought, is interlocutory (per Taylor J in Hall at 440; see also per Owen J at 447). 69 The character of proceedings such as an application under Order 15A rule 6 may be of more significance than the result for an applicant, in determining whether an order is interlocutory or not (per Windeyer J in Hall at 445). 70 An order made in an application under Order 15A rule 6 will be interlocutory, given that it will not preclude a further application (per Beaumont, Lee and Dowsett JJ in Malouf v Malouf (1999) 86 FCR 134 at 143). 71 Discovery against a prospective respondent is invasive. In Hughes' 'Equity Draftsman' (2nd Edition) (1828) Vol 1 at page 483 the learned author said: 'As the object of a court of equity in compelling a discovery is either to enable itself or some other court to decide on matters in dispute between the parties, the discovery sought must be material either to the relief prayed by the bill, or to some other suit actually instituted or capable of being instituted. If therefore the plaintiff in a bill for discovery does not show by his bill a title to sue the defendant in some other court, or that he is actually involved in litigation with the defendant or liable to be so, and does not also show that the discovery which he prays is material to enable him to support or defend a suit, he shows no title to the discovery, and consequently a demurrer will hold.' (footnotes omitted)

[80]

Standing 83 Telstra submits that it may, without the Attorney-General's fiat, seek to vindicate the public interest in the proper allocation of taxpayers' funds on the basis that it has a sufficient material interest in the relevant subject matter. In other words, it contends that it is not just a busybody sticking its oar into business which is of no direct concern to it. 84 In Bateman's Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Limited (1998) 194 CLR 247 ('Bateman's Bay') the first respondent, the Aboriginal Community Benefit Fund Pty Ltd, operated a contributory funeral benefit fund business catering for members of the New South Wales aboriginal community. The second respondent, the Aboriginal Community Benefit Fund No 2 Pty Ltd, operated a contributory life insurance business for members of the same community. The first appellant, the Bateman's Bay Local Aboriginal Land Council, was a body corporate constituted under s 6 of the Aboriginal Land Rights Act 1983 (NSW). Its functions were set out in s 12(1) of that Act. The second appellant, the New South Wales Aboriginal Land Council, was a body corporate constituted under s 22 of the same Act. Its functions were set out in s 23(1) of that Act. There was no power permitting the second appellant to expend monies by providing a subsidy, guarantee or indemnity. By a deed of trust between the first appellant as trustee, the second appellant as guarantor and the State of New South Wales, the New South Wales Aboriginal Land Council's Funeral Contribution Fund was established. The second appellant provided an indemnity to the first appellant in respect of any liability the first appellant might suffer in connection with the New South Wales Aboriginal Land Council's Funeral Contribution Fund. 85 The respondents instituted proceedings in the Supreme Court of New South Wales seeking an order restraining the appellants from carrying on the New South Wales Aboriginal Land Council's Funeral Contribution Fund. At first instance, McLelland CJ in Eq held that the respondents lacked standing to maintain the proceedings. That decision was reversed on appeal to the New South Wales Court of Appeal. The matter was remitted to McLelland CJ in Eq for hearing. His Honour proceeded to make declarations and grant injunctions in the respondents favour. The appellants proceeded to appeal against the decision of the Court of Appeal in respect of standing. Special leave to appeal was granted on the condition that the appellants withdrew their appeal against McLelland CJ in Eq's decision on the merits. The High Court dismissed the appeal in respect of standing, with costs. 86 It held that the public interest in equity may be vindicated at the suit of a party with a sufficient material interest in the subject matter. 87 At [51]-[52], Gaudron, Gummow and Kirby JJ stated their conclusions as follows: '51 … the use of equitable remedies to ensure compliance by the executive and legislative branches of government with the requirements of the Constitution should not be overlooked. No doubt special considerations may apply in that context, but it would be an odd result if the requirements for standing outside the constitutional sphere were more stringent than within it. Prejudice to a sufficient material interest, such as that in the practice of a profession or occupation, will suffice in constitutional cases. 52 Here, the respondents had an interest in the observance by the appellants of the statutory limitations upon their activities with respect to contributory funeral funds which, as a matter of practical reality, was immediate, significant and peculiar to them. The primary judge found that because the parties would be operating in substantially the same limited market it was highly probable that, if not restrained from commencing and concluding their activities, the appellants would cause severe detriment to the business of the respondents. That, in the circumstances of this litigation, gave the respondents a sufficient special interest to seek equitable relief.' (footnotes omitted) 88 McHugh J also concluded that the appeal should be dismissed. In his reasons he said at [83], [86] and [103]: '83 The enforcement of the public law of a community is part of the political process; it is one of the chief responsibilities of the executive government. In most cases, it is for the executive government and not for the civil courts acting at the behest of disinterested private individuals to enforce the law. There are sometimes very good reasons why the public interest of a society is best served by not attempting to enforce a particular law. To enforce a law at a particular time or in particular circumstances may result in the undermining of the authority of the executive government or the courts of justice. In extreme cases, to enforce it may lead to civil unrest and bloodshed. … 86 The decision when and in what circumstances to enforce public law frequently calls for a fine judgment as to what the public interest truly requires. It is a decision that is arguably best made by the Attorney-General who must answer to the people, rather than by unelected judges expanding the doctrine of standing to overcome what they see as a failure of the political process to ensure that the law is enforced. … … 103 As Australian Conservation Foundation and Onus show, a special interest in the subject matter of the proceedings is sufficient to give standing in a case such as the present. The subject matter of this suit is the legality of the Councils' arrangements setting up the State Fund. The respondents had a special interest in that subject. The allegedly unlawful activities of the appellant affected them financially and to an extent that exceeded the injury to any other individual. Moreover, if the arrangement between the appellants was illegal, the continuing financial injury to the respondents, caused by the arrangement, would be remedied by a grant of the injunction they sought.'

[83]

97 Lam concerned a Ministerial decision to cancel a visa held by a person with a substantial criminal history, under s 501(2) of the Migration Act 1958 (Cth). At the time when the cancellation of his visa was under consideration Lam was incarcerated, having been sentenced to imprisonment for eight years for trafficking in heroin. He was notified that contact was being sought with his children's carers to assess the possible effect upon them of a cancellation of his visa. As it transpires, the relevant Minister made no attempt to contact the carers. 98 The High Court dismissed Lam's application for prohibition and certiorari in respect of the relevant Ministerial decision to cancel his visa. Lam alleged that the relevant Minister failed to accord him procedural fairness/natural justice by failing to make the foreshadowed contact with the carer of his children. 99 Not every departure from a stated intention necessarily involves unfairness, even if it defeats an expectation (per Gleeson CJ in Lam at [34]). 100 A failure to observe an expectation reasonably attributable to a party such as Telstra does not reasonably (perhaps better expressed as 'necessarily') found a case of denial of natural justice. The notion of legitimate expectation serves only to focus attention on the content of the requirement of natural justice in the particular case. The ends sought to be attained by the requirement of natural justice may be variously identified. The concern is with the fairness of the procedure adopted rather than the fairness of the outcome. It is with the decision-making process, not the decision. (Per McHugh and Gummow JJ in Lam at [105]). 101 On no view can the doctrine of 'legitimate expectation' give rise to substantive rights rather than to procedural rights (per Callinan J in Lam at [148]; see also per Gleeson CJ at [28]). 102 The content of the requirement for procedural fairness may fluctuate during the course of particular administrative decision-making (per Gaudron and Gummow JJ in AALA at [62]; see also per McHugh and Gummow JJ in Lam at [48]). 103 Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice (per Gleeson CJ in Lam at [37]). 104 If, in making a decision, a decision-maker is obliged to act with procedural fairness, the decision-maker must give a sufficient opportunity to those directly affected by the decision to present material and argument before the decision is made (per Hayne J in Lam at [114]). 105 In MBA Land Holdings Pty Ltd v Gungahlin Development Authority (2000) 206 FLR 120 ('Gungahlin') Higgins J, as his Honour then was, sitting in the Supreme Court of the Australian Capital Territory, found that the respondent had failed to accord tenderers procedural fairness in respect of the grant of a lease of certain land within the Territory. Tenders had been submitted by a number of tenderers but it was not apparent whether the bids that were submitted were inclusive or exclusive of goods and services tax ('GST'). After the closing date for tenders, the respondent asked the tenderers to clarify the GST aspects of their respective bids. The successful tenderer, Landco Pty Ltd, had offered $5,700,000. Following the request for clarification in relation to the GST position, Landco Pty Ltd advised that its price 'exclusive of GST' was $6,080,000. Plainly this bid involved an increase in the tender price of $380,000 independently of any GST. In the circumstances, Higgins J found that acceptance of Landco Pty Ltd's revised tender rendered the 'assessment process lacking in procedural fairness' (at [182]). 106 The present case is not such a case. In this case the only evidence of the submission of a different application for funding of up to $600 million, after the closing date for applications, related to Telstra's own application. It will be recalled that Telstra substituted a different proposal for the provision of infrastructure, following its decision to proceed with 'OF installation to Marble Bar' at its own expense for operational reasons. 107 Apart from other considerations, the Court in Gungahlin found that the obligation to accord procedural fairness to tenderers arose by virtue of an implied agreement with the respondent pursuant to the Conditions of Tender independently of the respondent's public law obligations to like effect. Given paragraph 6.1 of the guidelines, no such finding could be made in this case.

[84]

The FMA Regulations and the Policies of the Commonwealth 108 Telstra submits that 'the policies of the Commonwealth' in respect of the proposed grant must be found within the guidelines. It will be recalled that Part 3 of the guidelines stated that the 'Australian Government's objective' was to improve access to broadband services in regional Australia to the maximum extent possible. It would seem to me that the importance of the guidelines cannot be denied in discerning the relevant policies. However, regard must also be had to the relevant Ministerial Media Releases, notably the joint Media Release of the Minister and the Deputy Prime Minister and Minister for Trade of 21 September 2006 referred to at [1] above. That Media Release revealed that the guidelines had been 'finalised after an Expressions of Interest process earlier this year'. 109 The relevant 'Broadband Connect request for expression of interest' of June 2006 included the following: 'A. OVERVIEW: THE BROADBAND CONNECT OPPORTUNITY Since 1997 the Australian Government has demonstrated an ongoing commitment to improving the quality of communications services in regional areas, particularly where the competitive market has not proved fully effective in bringing the benefits of the digital revolution to regional communities. … … The Australian Government remains committed to continuing to provide targeted funding to support equitable access to high quality, sustainable broadband services across regional and rural Australia. It is becoming increasingly apparent that next generation broadband, characterised by multi-megabit capacity able to support advanced multimedia applications and improved delivery of government services, is becoming essential to Australia's economic and social prosperity. While such services are increasingly available in the major metropolitan areas, there is concern that the purely commercial roll-out of these services may not occur in regional and rural areas in a timely way. …. The Australian Government intends to test the feasibility of using a substantial portion of the Broadband Connect funding to facilitate a small number of major infrastructure projects that would also leverage significant commercial investment in order to drive a major advancement in the capacity and reach of Australia's regional broadband networks. … … there are a significant number of areas (and premises) that do not have access to broadband infrastructure that allows for the provision of services comparable in price and quality to metropolitan services ('metro-comparable') in a sustainable way (that is, without the need for ongoing Australian Government subsidies). These areas are considered to be under-served … … It is currently anticipated that up to $500 million could be available for an alternative Broadband Connect approach whereby financial assistance is provided through a competitive grants process to large scale broadband infrastructure projects primarily aimed at addressing currently under-served premises and areas. … Under this approach Australian Government funding support would not be available for investments that were otherwise commercially viable. Funding support would be targeted at supporting the provision of infrastructure to service under-served areas that otherwise would not get timely access to metro-comparable services through commercial investment alone. … E. GOVERNMENT OBJECTIVES The Australian Government's primary objective for any future competitive grants program would be to achieve sustainable equitable access to broadband in regional areas by supporting the extension of metro-comparable broadband services into currently under-served areas … on a basis that would provide access to such services without the need for ongoing Australian Government subsidies. …'

[86]

Conclusions 112 In my opinion there does not exist reasonable cause to believe, in the sense in which that expression is used in Order 15A rule 6 of the Rules (see [58(c)-(d)] above), that Telstra may have or has the right to obtain relief in this Court from the Minister in respect of her approval of the proposed expenditure of $958 million under the Infrastructure Programme on the basis that she failed to satisfy herself, after making such inquiries as were reasonable, that the proposed expenditure was in accordance with the policies of the Commonwealth. 113 It is apparent from the evidence presently before the Court that the relevant expenditure was in fulfilment of a policy of the Australian Government to fund, by way of grant, infrastructure development that would take metro-comparable broadband to under-served areas in rural and regional Australia where, without such funding, it would not be commercially viable to establish the necessary infrastructure. 114 I am unable to discern any shackle on such policy which would limit the amount of funding that could be made available in fulfilment of the relevant policy. 115 In my opinion there does not exist reasonable cause to believe, in the sense in which that expression is used in Order 15A rule 6 of the Rules (see [58(c)-(d)] above), that Telstra may have or has the right to obtain relief in this Court from the Minister in respect of the denial of procedural fairness of which it complains, in respect of the additional funding of $358 million. 116 It is apparent that Telstra's amended application for funding of up to $600 million under the Infrastructure Programme was non-compliant. Notwithstanding Mr Smith's view that the application as lodged on 18 December 2006 (and amended on 31 January 2007) was compliant, it is apparent that: · the bid, in its draft form as at 26 October 2006 was and was known by Telstra to be non-compliant. · the Department considered Telstra's application as lodged and amended to be non-compliant in respect of three out of the eight essential deliverables and Telstra did not, according to the evidence, object to that judgment. · the officers within Telstra who compiled the draft internal memorandum of 26 June 2007 headed 'Broadband Connect - Legal Options' were of the opinion 'that Telstra lodged a non-compliant bid'. Accordingly, it was inevitable that Telstra's application would be excluded from further consideration at stage one of the assessment process (see in particular paragraphs 1.5 and 3.2 of the guidelines). In the circumstances, Telstra lacked a sufficient special interest to seek relief for a denial of procedural fairness in respect of the provision of additional funding under the Infrastructure Programme. 117 The case which Telstra would seek to advance could not be expected to succeed given the reservation by the Australian Government, under paragraph 6.1 of the guidelines, of the right to seek changes to proposed projects in the context of negotiating an agreement for funding and to vary or amend the funding process at any time. 118 Perhaps more importantly, Telstra's only evidence as to the information available to it to enable a decision to be made whether to commence a proceeding in the Court against the Minister to obtain the foreshadowed relief was that of Mr Smith, supported by the various documents that were tendered (see Order 15A rule 6(b) of the Rules). 119 A company, of course, is an abstraction. It has no mind of its own, and its state of mind must consequently be found in the person or persons who is or are really the directing mind and will of the company, 'the very ego and centre of the personality of the corporation' (see per Hunt J, as his Honour then was, in Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation (1983) 1 NSWLR 1 at 5). 120 It is clear that Mr Smith's standing in the Telstra hierarchy was well down the ladder. No evidence was called as to the information available to Telstra, within the meaning of Order 15A rule 6(b), from Mr Smith's superiors, Messrs Goldsworthy and Booth, from the head of the Project Team within Telstra in relation to the Infrastructure Programme, Mr Don Pinel, or from the senior executive within Telstra whose judgment on any application for funding, to be submitted by Telstra, was critical, namely its Chief Executive Officer, Mr Sol Trujillo. What is more, no evidence was tendered as to the discussions, if any, at board level concerning the information available to Telstra and any consideration by the board of the question as to whether or not to commence a proceeding against the Minister in the Court. 121 In my opinion, there is insufficient evidence to enable the Court to conclude that after making all reasonable enquiries, Telstra does not have sufficient information to enable a decision to be made whether to commence a proceeding in the Court against the Minister to obtain the foreshadowed relief. 122 Mr Smith did not even attempt to give information and belief evidence as to the information available to his several superiors. 123 The requirement for a successful application for discovery by a prospective respondent contained in Order 15A rule 6(b) of the Rules has not been met. 124 In relation to rule 6(b) it may also be observed that the draft internal memorandum entitled 'Broadband Connect - Legal Options' included: '… we are taking the view that so long as we have claims that are arguable and will not be "laughed out of court", we should run them, even if prospects of success are not great. …'

Telstra Corporation Limited v Minister for Communications, Information Technology and the Arts

At a glance

Court

Decision date

Before

Source

Judgment (92 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (19)

Cited By (2)