Media Ocean Limited v Optus Mobile Pty Limited (No 5) [2009] FCA 659 (11 June 2009)

Last Updated: 3 July 2009

FEDERAL COURT OF AUSTRALIA

Media Ocean Limited v Optus Mobile Pty Limited (No 5) [2009] FCA 659

MEDIA OCEAN LIMITED and MEDIATEL AUSTRALIA PTY LIMITED v OPTUS MOBILE PTY LIMITED
NSD 242 of 2009

PERRAM J
11 JUNE 2009
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 242 of 2009

BETWEEN:

MEDIA OCEAN LIMITED First Applicant MEDIATEL AUSTRALIA PTY LIMITED Second Applicant

AND:	OPTUS MOBILE PTY LIMITED Respondent

JUDGE:	PERRAM J
DATE OF ORDER:	11 JUNE 2009
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The applicants’ solicitor provide to his Honour’s Associate a minute of order consonant with these reasons.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 242 of 2009

BETWEEN:

MEDIA OCEAN LIMITED First Applicant MEDIATEL AUSTRALIA PTY LIMITED Second Applicant

AND:	OPTUS MOBILE PTY LIMITED Respondent

JUDGE:	PERRAM J
DATE:	11 JUNE 2009
PLACE:	SYDNEY

REASONS FOR JUDGMENT

Security for costs

1. On 12 May 2009 I ordered the applicants to provide security for the respondent’s (“Optus”) costs of the proceeding and for the provision of a bank guarantee in a specified form. The terms of that order were that unless the bank guarantee was provided in the specified form that the proceeding would be stayed on and after 27 May 2009. The relevant order was as follows:

On or before 20 May 2009 the applicants provide security for the costs of the respondent in the sum of $300,000 as follows:
(a) By delivering to the solicitors for the respondent an irrevocable written guarantee issued by an Australian bank undertaking to make a payment to the respondent of an amount not exceeding $300,000 (“Bank Guarantee”) subject only to the following conditions:

(i) the amount to be paid will be the amount of any costs payable by the applicants (or either of them) to the respondent in these proceedings;

(ii) the amount of costs so payable will be the amount certified in writing to the bank by the solicitor for the respondent as being:

(A) the costs determined by the Court after taxation or binding assessment by the Registrar (accompanied by a sealed certificate signed by the Registrar) and stating that either no motion for review or reconsideration of the registrar’s decision has been filed within the time allowed under the Federal Court Rules or that such a motion has been heard and determined, and that the amount payable is as set out in the accompanying certificate, or, as set out less any payment actually received; or

(B) as agreed between the applicants and the respondent; and

(C) that the amount has remained unpaid after 30 days from the date of written demand for payment delivered to Marque Lawyers Pty Limited.

(b) By depositing the sum of $50,000 into the trust account of Marque Lawyers Pty Limited to be held by that firm until delivery of the Bank Guarantee, or paid to the applicants in accordance with any further order of the Court.

2. There have been a number of interlocutory steps since the making of that order and a good deal of energy has been expended by both parties. The trial of the matter was to be heard by me on 29 June, 2 and 3 July 2009 but last week those hearing dates were vacated. They were vacated because it became apparent that the case was not sufficiently ready for hearing. At the time of the vacation application an attempt was made to get around that result by severing certain issues from the trial and thereby bringing it within the ambit of that which could be heard in three days. I declined to entertain that severance application instanter, and I declined to adjourn the vacation application until such time as the application was brought. I did, however, permit the applicants to file and make returnable this morning an application to sever the matter. That application was made. In Optus’ submissions in writing in reply to that application it pointed out that the order which was made by me on 12 May 2009, requiring the provision of a bank guarantee had, in fact, not been complied with, with the necessary consequence that the proceedings were now stayed.
3. There is no dispute that a form of bank guarantee has been obtained from the National Australia Bank which at least purports to deal with the topic of the provision of security for Optus. That bank guarantee has a number of terms including cl 2(a)(iii)(A) which conditions payment upon receipt by the bank of, inter alia:

a statutory declaration from an officer of the Beneficiary with knowledge of the proceedings no. 242 of 2009 (Proceedings) specifying that a demand for costs agreed between the Beneficiary and Mediatel Australia Pty Limited ACN 105 996 736 and Media Ocean Limited (a company registered in the British Virgin Islands) has been served on the firm of the Solicitor on the record for Mediatel Australia Pty Limited ACN 105 996 736 and Media Ocean Limited in the Proceedings and has gone unsatisfied for 30 days after the service of that demand; ...

4. Clause 2(a)(iii)(B)(II)(2) also conditions payment upon receipt by the bank:

a statutory declaration from an officer of the Beneficiary with knowledge of the Proceedings specifying that ... the costs specified in the taxation certificate have not been paid within 30 days of the taxation certificate having been served on the firm of the Solicitor on the record for Mediatel Australia Pty Limited ACN 105 996 736 and Media Ocean Limited (a company registered in the British Virgin Islands) in the Proceedings; ...

5. It will be seen that those clauses call for service of a claim for costs upon the firm of solicitors who are on the record for Mediatel Australia Pty Limited (“Mediatel”) and Media Ocean Limited (“Media Ocean”). The latter is a company registered in the British Virgin Islands. The issue which has arisen between the parties is the theoretical possibility that the terms of this instrument could be frustrated if either company ceases to have a solicitor on the record.
6. Further largely unproductive correspondence ensued between the parties resulting ultimately in agreement that an undertaking be proffered by each company and by the directors of those companies to the effect that each company would maintain a solicitor on the record. The actual agreement contained a requirement that there be at least one resident director of each company. The presumed intention underlying that stipulation was, no doubt, to ensure that the undertaking was meaningful.
7. Undertakings were duly proffered by each company and by the directors of Mediatel Australia. An undertaking was proffered by Media Ocean and by its sole director, Mr Michael David Charlesworth. I am satisfied, however, that Mr Charlesworth is not resident in Australia and lives in England.
8. The situation then is that the undertakings have been proffered but not in accordance with the agreement which was reached. Optus submits that it should not be required to endure this arrangement because effectively the undertaking which is proffered by Mr Charlesworth is unenforceable. There remains, therefore, the theoretical possibility that Media Ocean will cease to have a solicitor on the record and that the enforcement mechanisms contemplated in the bank guarantee will not be able to come into effect.
9. Before me this morning the applicants tendered a certificate of title of property owned by Mr Charlesworth, being lot 2 in strata plan 3812 which is in Tamarama, a well-known and reasonably wealthy suburb in Sydney. There was also tendered an instrument of discharge of mortgage which appeared to show, certainly as of 3 July 2002, that a mortgage had been discharged. This, prima facie, might be thought to provide some succour for the notion that there were assets of Mr Charlesworth within the jurisdiction and, hence, that there would be something which this Court could sequestrate in the event that Mr Charlesworth was minded not to honour his undertaking to ensure that Media Ocean maintained a solicitor on the record.
10. Optus objected to that use of the certificate of title on the basis that the certificate itself was dated 28 July 2000 and there could not be, in that circumstance, any certainty that the property remained unencumbered. I was told from the bar table that the property was unencumbered save to the extent that it had become encumbered as a result of Mr Charlesworth obtaining the bank guarantee. I was also told from the bar table by Mr Kunç that a property search demonstrating that proposition was coming to Court and would be tendered in due course. It has not been tendered in due course. However, I propose to proceed upon the basis that Mr Charlesworth has valuable assets within the jurisdiction. If it transpires that is incorrect and the property search to which Mr Kunç has made reference demonstrates that the Tamarama property is not owned by Mr Charlesworth or has been encumbered by him other than as a result of the provision of the bank guarantee then Optus will be entitled to move for a variation of the orders I propose to make.
11. Quite apart from that, however, it seems to me appropriate to make the orders which the applicants seek because, although I accept there is a risk that Mr Charlesworth will not honour his undertaking, I must say that risk strikes me as more theoretical than real. That is not to detract from the force of the proposition, but in a context which includes there being evidence before me, at least prima facie, of property within the jurisdiction, it seems to me that the risk with which one is concerned is necessarily a reasonably small one. In those circumstances I propose to accept the undertaking which appears at page 66 of exhibit LMP2, together with the undertakings which have been proffered in support of it, which appear from pages 69 through to 74 of exhibit LMP2.
12. The consequence of that is that I accede to Mr Kunç’s motion. I will lift the stay now so that the remaining applications may be dealt with, but I will forestall making precise orders. The parties will need to bring in appropriate short minutes of order.

Separate questions

13. The applicants then apply pursuant to O 29 r 2 of the Federal Court Rules for the determination of certain separate questions. The separate questions which it seeks to have determined are respectively the questions of the entitlement of each of the applicants to the relief claimed pursuant to s 80 of the Trade Practices Act 1974 (Cth) set out in the first four paragraphs of the second further amended application. Those prayers for relief are in the following terms:
    1. An order pursuant to section 80 of the Trade Practices Act 1974 (Cth) that the respondent be restrained from representing that:

(a) It is entitled to charge Plan Customers at least $0.29 per minute plus a $0.27 flagfall for calls made to the Media Ocean Numbers that used the Media Ocean Services;

(b) A call to a Media Ocean Number that uses the Media Ocean Services is not a call which is eligible for the “included call” component of Optus’ pricing plans for Plan Customers;

(c) A call to a Media Ocean Number that uses the Media Ocean Services is not included in the cap spend for Plan Customers on an Optus Cap Plan;

(d) A call to a Media Ocean Number that uses the Media Ocean Services is not included in the unlimited voice call spend for a Plan Customer on an Optus “yes” Timeless Plan;

(e) A call to a Media Ocean Number that uses the Media Ocean Services is a call made to an international destination and is an international call or service for the purposes of the Optus Post Paid Agreement; and

(f) A call to a Media Ocean Number that uses the Media Ocean Services is a call made to an international destination and subject to Optus’ international rates for the purposes of the Optus Post Paid Agreement.

[Paragraph 1A omitted.]

2. An order pursuant to section 80 of the Trade Practices Act 1974 (Cth) that the respondent be restrained from charging its customers for calls to Media Ocean Numbers that use the Media Ocean Services as though those calls were made to an international destination and were international calls or services for the purposes of the Optus Agreement.
3. An order pursuant to section 80 of the Trade Practices Act 1974 (Cth) that the respondent charge its customers for calls to Media Ocean Numbers that use the Media Ocean Services on the basis that those calls are standard calls to a local Australian digital mobile telephone service.
4. An order pursuant to section 80 or section 87 of the Trade Practices Act 1974 (Cth) that the respondent undertake corrective advertising in a form to be approved by the Court.
14. In order to understand the significance of those prayers it is necessary to say a little of the second further amended statement of claim. It makes a number of allegations against Optus of misleading and deceptive conduct. Putting the matter at its most simplistic, it is alleged that Optus sent SMS messages to some of its customers and posted on its website statements which had the effect of suggesting to those customers that telephone calls that rerouted or diverted to international numbers would be charged at a rate of 29 cents per minute plus a 27 cents flagfall. The service provided by the applicants is a service whereby a call is made by a customer to what appears to be a local number and then using various arrangements that call is then rerouted to a desired international number. The apparent intent of that arrangement is to allow persons to make what appear to their respective mobile phone carriers to be a local call and to thereafter be charged somewhat lower international rates by the applicants.
15. The effect of Optus’ statements is to impose its full international call charge on customers calling the applicants’ numbers. The applicants contend that the making of those statements was misleading and deceptive because the terms of Optus’ contractual arrangements with its customers did not permit such a charge to be levied on a local call. That statement of the nature of the allegations is incomplete and imperfect but it captures, in part, the case.
16. The pleading also contains at paragraph 23A an allegation that other conduct of Optus was unconscionable. I have previously dealt with, in another judgment, the nature of those allegations. It suffices to say for present purposes that they are related in part to the differential treatment which Optus may have taken with respect to its customers.
17. I have spent some time identifying the nature of the pleading because the issues which the applicants now seek to have determined separately do not include the unconscionability case. The applicants, therefore, submit that it would be appropriate to decide separately the question of whether the SMS messages and the internet postings are misleading and deceptive. This is appropriate, so they submit, because the question which arises on the hearing of such a separate trial would be the simple one of whether the representations contained in the SMS messages, and on the internet postings, were correct. That analysis would require only a consideration of the terms and conditions of the relevant contracts between Optus and its customers. This, so Mr Kunç submitted, would be an inquiry of relatively narrow compass.
18. That would, of course, leave the unconscionability claim which is contained in paragraph 23A of the second further amended statement of claim to be determined at a later time, presumably, at the same time as the hearing of the case on quantum. That would obviously be an undesirable state of affairs. To assuage concerns in that regard the applicants proffered an undertaking that should they fail on their s 52 case then they would abandon the unconscionability claim. The perceived benefit of that was that it could provide certainty of outcome, at least in the case where the applicants were held to fail. Of course, it provides no certainty of outcome in the case where the applicants succeed and it will leave, if that occurs, the possibility that the unconscionability case will need to be decided at the same time as, or possibly even separately from, the case on quantum. The applicants sought to circumvent that outcome by suggesting that if the Court were otherwise minded to pose the separate questions then it might be appropriate to take that course but require, as a condition of it, that the applicants give a further undertaking to abandon their unconscionability case. It is for the applicants to decide how they run their case. I do not propose to fashion relief on the possibility that undertakings might be given.
19. For that reason it seems to me that it would be inappropriate to pose the separate questions which are sought. The same conclusion can be reached another way. This case has already proceeded through a far greater number of interlocutory disputes than is ordinarily seen for reasons which presently elude me. However, if the matter were to be determined on a separate basis there would be, it seems to me, the possibility that there would be witnesses who would be heard in the liability phase who might be recalled in the quantum phase. I accept that this may not necessarily be so for Optus may call no witnesses. But I cannot say at this present state of the proceeding that that will be so. Nor can I be satisfied necessarily that the same may not happen on the applicants’ side.
20. This is not to suggest that it is probable that these problems will arise, only that I am unable to exclude them as being rationally possible. In the area of the determination of separate questions, experience teaches that they are affairs which have a tendency to turn out badly for all concerned. They are generally inspired by perceived gains in efficiency but usually those efficiencies turn out to be illusive. That statement of sentiment is not an isolated expression of a personal view. It is one which finds a manifestation in a number of decisions of a number of courts. The High Court’s decision in Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1 at 55 [168] per Kirby and Callinan JJ is one example of that concern and other examples can likewise be garnered. I accept that the relevant test under O 29 r 2 is one which turns upon the Court being satisfied that it is just and convenient to make the orders. See the authorities which are usefully collected in Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718; (1999) 217 ALR 495 at 497-499 [6]- [9] per Branson J. Taking into account the various matters to which I have referred I think, however, that it would be dangerous to separate the questions in this matter and I decline to do so.

Further and better particulars

21. The applicants also apply to have the respondent provide further and better particulars of its defence. Those particulars were initially sought on 27 May 2009 in a letter from Marque Lawyers to Minter Ellison. There were five particulars which were sought. In relation to the first two, the parties are now in agreement that those particulars should be provided but are in disagreement as to whether that should be within a shorter or a longer period of time. As the trial has now been vacated it seems to me appropriate that those particulars be provided within 21 days.
22. Paragraphs 3, 4 and 5 of the request for particulars seek to have the respondent particularise the facts, matters and circumstances relied upon for the contentions contained within particulars 3, 4 and 5 to paragraph 26 of the defence. Those particulars are as follows:

(iii) the Media Ocean Services are for the provision of an International Service within the meant of the Numbering Plan;
(iv) alternatively, the Media Ocean Services are for the provision of internet protocol telephony and are Location Independent Communications Services within the meaning of the Numbering Plan;
(v) the Media Ocean Numbers are for the provision of a Digital Mobile Service within the meaning of the Numbering Plan;

23. They particularise an allegation of illegality which can be seen from paragraph 26(a) of the defence:

provision by the Applicants of the Media Ocean Services using the Media Ocean Numbers is and at all material times has been in contravention of the Telecommunications Act 1997 (Cth) (“the Act”) and the Telecommunications Numbering Plan 1997 (“Numbering Plan”);

24. The respondent submits that all one needs to do in order to understand this claim is to examine either the Media Ocean services or the Media Ocean numbers and compare them with the numbering plan and the surrounding legislation to ascertain whether the services do or do not have that quality. During the course of argument, some discussion took place in relation to the fifth particular. Mr Kunç asked rhetorically what it was about the Media Ocean numbers referred to in subparagraph (v) that meant they were “for the provision of a Digital Mobile Service”. Mr Potts responded that it was the prefix.
25. I have some sympathy with the proposition that the process of analysis which will be required to make good the allegations in these particulars will be a relatively straightforward one. However, the applicants, so it seems to me, are not seeking much more than the kind of simple explanation which Mr Potts offered from the bar table. Understood in that way, I see no difficulties in requiring the particulars sought in paragraphs 3, 4 and 5 of that request, but in reaching that conclusion, I should make it plain that I do not regard those requests as requiring other than a straightforward explanation of how the case is going to be put – for example, that the Media Ocean services referred to in subparagraph (iii) are “for the provision of” an international service.
26. Accordingly, the respondent on that basis is to provide the particulars sought in paragraphs 3, 4, and 5 of the letter dated 27 May 2009 and is to do so within 21 days.

Interrogatories

27. The applicants also sought the issue of two interrogatories to the respondent. Those interrogatories were as follows:
    1. Were there any other text messages sent to Plan Customers other than Text Message 1 and Text Message 2 relating to charges for calls that re-route or divert to international numbers during the Relevant Period?
    2. If the answer to 1 is “yes”:

(a) On what date(s) was (were) the text messages sent?

(b) What was the wording of each text message(s)?

(c) What were the mobile telephone numbers of each Plan Customer who was sent a text message(s)?

(d) In relation to each Plan Customer who was sent a text message(s), by reference to their mobile telephone number what plan were they on?

28. The meaning and import of those interrogatories requires, regrettably, some understanding of paragraph 10 of the second further amended statement of claim. Paragraph 10 is as follows:

10. On dates not presently known to the Applicants but at least on:

(a) 24 December 2008 Optus sent SMS text messages to Plan Customers in the following terms:

“IMPORTANT: All calls that re-route or divert to international numbers are charged at 29c per min + 27c flagfall. See optus.com.au/international for details”; and

(b) 16 March 2009 Optus sent SMS text messages to Plan Customers in the following terms:

“IMPORTANT: All calls that re-route or divert to international numbers are charged from 29c per min + 27c flagfall. See optus.com.au/international for details”.

(Emphasis added.)

29. It will be noted from the emphasised text that the applicants allege or appear to allege not only that text messages were sent on 24 December 2008 and 16 March 2009 but that there may also, possibly, have been the sending of other text messages.
30. That paragraph of the second further amended statement of claim is subject to a pleading which is contained in paragraph 10 of the defence. That paragraph is as follows:

10. In relation to paragraph 10 of the Statement of Claim, the Respondent:
(a) admits that on 24 December 2008 it sent SMS text messages to certain Plan Customers in the terms set out in paragraph 10(a);
Particulars
The customers to whom the SMS text messages were sent were:
(i) customers with Post-Paid Agreements and SME Agreements; and
(ii) customers that the Respondent was able to identify from its records who had used Media Ocean Numbers (being only those Media Ocean Numbers known to the Respondent as at that date) in the period 1 October 2008 to 23 December 2008.
(b) admits that on 16 March 2009 it sent SMS text messages to certain Plan Customers in the terms set out in paragraph 10(b);
Particulars
The customers to whom the SMS text messages were sent were:
(i) customers with Post-Paid Agreements and SME Agreements; and
(ii) customers that the Respondent was able to identify from its records who had used Media Ocean Numbers (being only those Media Ocean Numbers known to the Respondent as at that date) in the period 26 December 2008 to 31 January 2009.
(c) otherwise denies paragraph 10.

31. It will be seen that subparagraph (c) of paragraph 10 contains an omnibus denial of everything which has not been otherwise admitted.
32. The burden of that, Mr Kunç submitted, was that Optus had denied that it had sent messages on dates other than 24 December 2008 and 16 March 2009. It being denied, so he submitted, he was entitled to interrogate Optus as to the basis of that denial. This topic has been the subject of debate previously between the parties. I had previously disallowed a topic of discovery relating to these other text messages. At the time I reached that conclusion I did not give reasons, however, Mr Potts informed the Court from the bar table, and I accept, that the submission made on that occasion was that the other text messages were outside the scope of the pleading. It seems to me that despite that there is such an allegation. I accept that heretofore that does not appear to have been at the forefront of the applicant’s case. However, a strict reading of the pleadings does appear to result in the conclusion that the opening words of paragraph 10 are denied. That being so, there is formally an issue between the parties as to that issue and it seems to me that it is at least a topic in which one could conceivably grant a species of discovery such as an interrogatory.
33. There are some points which can be said against that. First, it is apparent, I think, that this contention is a relatively new interpretation of paragraph 10. Secondly, it is, I think, open to accept that the words “[o]n dates not presently known to the Applicants but at least on” may not necessarily carry with them a direct allegation that there were additional dates above and beyond 24 December 2008 and 16 March 2009. However, despite the force of that, I think that in the circumstances it is appropriate that the interrogatory, subject to some minor corrections, should be issued.
34. I reach that conclusion because I think the better view of the construction question is that it is formally an issue and secondly, perhaps unlike any related discovery categories, it seems to me that the potential prejudice arising from the issue of the interrogatory is on a lesser scale. For that reason, I will grant leave to administer the interrogatory. The interrogatory will not be in the form which is annexed to the amended notice of motion. It, instead, will need to be in a form which takes account of the fact that plan customers referred to in it should be limited in the terms which appear from paragraph 7 of the second further amended statement of claim. The administration of the interrogatories should take place within a period of three days and with 21 days for the response.

Costs

35. Both parties seek costs. The applicants brought an application to sever certain parts of the proceeding. I have held that that should not occur. That was a substantive application and I can see no reason why the applicants should not bear the costs of that unsuccessful application. As part of that application they were met with an objection that the proceedings were presently stayed. The applicants accepted that the proceedings were, in fact, presently stayed and sought to overcome that unfortunate state of affairs by applying retrospectively to vary the original security order.
36. I ultimately held that the security order should be varied. Optus’ position was that it should not be so varied because they could not be certain that the undertaking being proffered by Mr Charlesworth, a United Kingdom resident, would be useful or valuable. During the course of the hearing of the applicant’s application to vary the security orders, evidence was tendered which had a tendency to demonstrate that Mr Charlesworth had assets in the jurisdiction and hence that the undertaking was meaningful because this Court could, if it were breached, make orders against his assets. In those circumstances, I varied the security regime.
37. It is not self-evident that that asset position was known to the respondent until today and I do not think, therefore, that its position can be described, in any way, as unreasonable. On the other hand, I do not think that the position of the applicants was unreasonable either. Having read the correspondence relating to the bank guarantee, it seems that both parties are the victim of the intransigence of the bankers who are providing the guarantee. I do not see either party as really being responsible for that matter and in those circumstances I do not think it is appropriate to make an order as to costs in either direction on the variation application.
38. In relation to the question of particulars and the interrogatories, it seems to me that the applicants were substantively successful and the appropriate order is therefore that the respondent meet the applicants’ costs associated with the issues of interrogatories and particulars.
39. I will stand the matter over for directions at 9.30 am on Thursday 18 June 2009.
    

I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.

Associate:

Dated: 1 July 2009

Counsel for the Applicants:	Mr F Kunç SC with Mr CN Bova
Solicitor for the Applicants:	Marque Lawyers
Counsel for the Respondent:	Mr RG McHugh SC with Mr JAC Potts
Solicitor for the Respondent:	Minter Ellison

Date of Hearing:	11 June 2009
Date of Judgment:	11 June 2009