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Pivotel Satellite Pty Limited v Optus Mobile Pty Limited (Includes Corrigendum dated 3 June 2011) [2010] FCA 121 (23 February 2010)

Last Updated: 1 July 2011

FEDERAL COURT OF AUSTRALIA


Pivotel Satellite Pty Limited v Optus Mobile Pty Limited [2010] FCA 121


Citation:
Pivotel Satellite Pty Limited v Optus Mobile Pty Limited [2010] FCA 121


Parties:
PIVOTEL SATELLITE PTY LIMITED ACN 099 917 398 v OPTUS MOBILE PTY LIMITED ACN 054 365 696 and OPTUS NETWORKS PTY LIMITED ACN 008 570 330


File number(s):
NSD 1468 of 2009


Judge:
JAGOT J


Date of judgment:
23 February 2010


Corrigendum:
3 June 2011


Catchwords:
PRACTICE AND PROCEDURE – application to vary interlocutory injunction – whether there has been a material change in circumstances since order made – whether there is new material or evidence available which was not available at the time of the original order – whether there are exceptional circumstances which warrant reconsideration of the matter – whether as a matter of discretion, the matter should be reconsidered.


Legislation:


Cases cited:
Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR 44
P Dawson Nominees Pty Ltd v Australian Securities and Investments Commission (No 2) (2009) 255 ALR 466; [2009] FCA 413
Pivotel Satellite Pty Limited v Optus Mobile Pty Limited [2009] FCA 1601


Place:
Sydney


Division:
GENERAL DIVISION


Category:
Catchwords


Number of paragraphs:
50


Counsel for the Applicant:
Mr F Kunc SC and Mr C Bora


Solicitor for the Applicant:
Marque Lawyers


Counsel for the Respondents:
Mr C.A Moore and Mr J.A.C Potts


Solicitor for the Respondents:
Minter Ellison

FEDERAL COURT OF AUSTRALIA


Pivotel Satellite Pty Limited v Optus Mobile Pty Limited [2010] FCA 121


CORRIGENDUM


  1. The file number on the coversheet, which presently reads “NSD 1468 of 2010”, should read “NSD 1468 of 2009”.
I certify that the preceding one (1) numbered paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Jagot.

Associate:


Dated: 3 June 2011


IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1468 of 2009

BETWEEN:
PIVOTEL SATELLITE PTY LIMITED ACN 099 917 398
Applicant
AND:
OPTUS MOBILE PTY LIMITED ACN 054 365 696
First Respondent

OPTUS NETWORKS PTY LIMITED ACN 008 570 330
Second Respondent

JUDGE:
JAGOT J
DATE OF ORDER:
22 FEBRUARY 2010
WHERE MADE:
SYDNEY

THE COURT ORDERS THAT:


  1. The matter be listed for further directions on 23 February 2010 at 3.00pm.

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 Federal Law Search on the Court’s website.


IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1468 of 2009

BETWEEN:
PIVOTEL SATELLITE PTY LIMITED ACN 099 917 398
Applicant
AND:
OPTUS MOBILE PTY LIMITED ACN 054 365 696
First Respondent

OPTUS NETWORKS PTY LIMITED ACN 008 570 330
Second Respondent

JUDGE:
JAGOT J
DATE OF ORDER:
22 FEBRUARY 2010
WHERE MADE:
SYDNEY

REASONS FOR JUDGMENT

  1. On 23 December 2009 I made interlocutory orders in favour of the applicant, Pivotel Satellite Pty Limited (Pivotel), requiring the respondents, Optus Mobile Pty Limited and Optus Networks Pty Limited (Optus), to restore the connection between Optus’s network and Pivotel’s network to the state of connection as it existed immediately before 20 December 2009 and to stop taking steps to block that connection other than blocking as it was in force immediately before 21 December 2009. I made these orders in response to Pivotel’s urgent application made on the same day, 23 December 2009, seeking interlocutory relief. Pivotel’s application was prompted by Optus’s actions on 21 December 2009 to prevent any Optus customer from making calls via Optus’s network to any Pivotel telephone number.
  2. The issue which now must be resolved is whether, as Optus contends by way of a notice of motion filed on 2 February 2010, the interlocutory orders made on 23 December 2009 should be varied on one or both of the following grounds:
  3. In order to understand these contentions it is necessary to identify the events of, and leading up to, 23 December 2009.

BACKGROUND

  1. On 21 December 2009 Optus blocked its customers from making calls from an Optus telephone to any Pivotel telephone. In response, on 23 December 2009, Pivotel made an urgent application to the Court seeking interlocutory orders that Optus restore connectivity between the Optus network and the Pivotel network and not block connectivity pending the final resolution of Pivotel’s claims that Optus’s actions of 21 December 2009 were unlawful.
  2. Pivotel claimed that Optus’s actions on 21 December 2009 constituted anti-competitive conduct proscribed by the so-called “competition rule” in the Trade Practices Act 1974 (Cth) (ss 151AJ and 151AK). Relevantly, Pivotel alleged that Optus has a substantial degree of power in two telecommunications markets, the ordinary mobile telephone market and the satellite telephone market. Further, Optus had taken advantage of its substantial market power in both markets by preventing its customers from calling any Pivotel telephone number. The effect of Optus’s conduct on 21 December 2009, Pivotel contended, was substantially to lessen competition in both markets. Pivotel’s primary argument was that a consumer of satellite telephone services would be discouraged from using Pivotel to provide this service as no Optus customer would be able to call that consumer. Pivotel’s secondary argument was that a consumer of ordinary mobile telephone services would be discouraged from using Optus to provide this service as that consumer would not be able to call any Pivotel number.
  3. In my reasons for judgment, also given urgently on 23 December 2009, I accepted that Pivotel had established a serious question to be tried in respect of Optus’s alleged breach of the competition rule (Pivotel Satellite Pty Limited v Optus Mobile Pty Limited [2009] FCA 1601 at [22]).
  4. I accepted also that the balance of convenience weighed in favour of Pivotel. In so doing, I referred in my reasons to: - (i) Pivotel’s evidence that 8000 of the 15000 numbers allocated to Pivotel were associated with Pivotel’s satellite customers (at [27]), (ii) Pivotel’s evidence of serious safety issues arising from Optus’s actions, including that emergency services using Optus’s network would not be able to call any Pivotel customer, including any customer of Pivotel’s satellite services (at [25]), (iii) Pivotel’s evidence that Optus had been carrying the Pivotel traffic since 2005, apparently without complaint or concern until August 2009 (at [28] and [29]), (iv) Pivotel’s evidence that the owner of a mobile telephone in Australia expects to be able to make and receive calls to or from any carrier, which I referred to as a serious public interest issue in respect of the interconnectivity of the mobile telephone market in Australia (at [28] and [29]), and (v) the lack of any notice by Optus to Pivotel that it intended to block all calls from its customers to the entire Pivotel network, including (it must be inferred) the 8000 customers of Pivotel’s satellite services (at [28] and [29]).
  5. I accepted that Pivotel’s proffered undertaking as to damages was of genuine worth (at 31]).
  6. In consequence, I was satisfied on 23 December 2009 that Pivotel ought to have the benefit of an interlocutory order to restore and preserve the status quo (being the position as it existed on 20 December 2009 before Optus blocked its customers from calling any Pivotel number).
  7. A further issue requiring resolution on 23 December 2009, however, was the form of the order that should be made to achieve the objective of restoring and preserving the status quo pending the final resolution of the dispute between the parties. In this regard there was evidence before me that: - (i) as at 20 December 2009 Optus had blocked some 1476 Pivotel numbers that it believed to be associated with a “two stage dialling” process (that is, a call from an Optus handset to a Pivotel handset which, in Optus’s view, did not terminate on the Pivotel handset but was automatically diverted to another destination, be it an international call or a music streaming service or the like), (ii) Pivotel, however, knew only of the blocking of some 94 Pivotel numbers at that time, and (iii) the process of Optus identifying any Pivotel number as one associated with the “two stage dialling” process was laborious. In my reasons for judgment at [27] I also noted my acceptance of Pivotel’s evidence and submissions that while I did not know the proportion of Pivotel numbers allocated to the “Mediatel interests” I did know that 8000 of Pivotel’s 15000 numbers had been allocated to Pivotel satellite telephones.
  8. The “Mediatel interests” is a reference to Mediatel Pty Limited and related corporations (as indicated in my reasons for judgment at [7]). These entities are also referred to as Media Ocean. It was common ground between the parties (and, indeed, the essence of Pivotel’s application for interlocutory relief) that Optus’s actions on 21 December 2009 were prompted by Optus’s commercial concerns about its customers being able to call a Pivotel number and thereby be diverted to the two stage dialling process associated with the operations of the Mediatel interests. Optus and the Mediatel interests are involved in separate proceedings in the Court commenced in March 2009 (see my reasons for judgment at [7]-[12] and [30]).
  9. At [33] of my reasons for judgment I accepted Pivotel’s submission that it was:
...unsatisfactory to attempt to carve out from the order any capacity for Optus to continue blocking numbers that Optus believes are Mediatel or similar numbers involving a two stage dialling process. I also accept that, in circumstances where it is proffering an undertaking as to damages, Pivotel should not be required as a price of interlocutory relief to provide to Optus a list of all Mediatel numbers, even assuming that it could do so having regard to the restrictions imposed on the disclosure of such information by s 276 of the Telecommunications Act.

  1. In so concluding I rejected Optus’s submission that I should frame the interlocutory orders so as to permit Optus to continue blocking its customers from making calls to any numbers that it identified as involving the two stage dialling process associated with the operations of the Mediatel interests. This is significant for three reasons. First, Optus’s application is to vary the interlocutory orders by excluding from the scope of the injunctive relief a capacity on its part to continue to identify and block numbers associated with the operations of the Mediatel interests. Second, Optus’s contention is that new evidence has become available which undermines the essential thrust of Pivotel’s case for interlocutory relief and exposes the inconsistency of that case with the facts relating to the Mediatel interests. Third, one of Pivotel’s primary arguments against the variation is that Optus ran and lost the same argument about the Mediatel interests on 23 December 2009.
  2. As Pivotel submitted in resisting Optus’s application to vary the orders, Pivotel’s submissions on 23 December 2009 are one thing and the evidence another. It is also true that Optus contested Pivotel’s application for interlocutory relief so that the principles of full disclosure of all material facts (including facts adverse to the moving party’s case) that apply to an ex parte application were not engaged on 23 December 2009. But evidence is understood and interpreted in the context of the case as put, particularly in the circumstance of a lengthy application for urgent relief necessitating the making of a decision and the giving of reasons for that decision immediately following the hearing.
  3. Pivotel’s application was made and determined on an urgent basis having regard to the safety concerns Pivotel raised about Optus blocking calls from all Optus customers (including emergency service providers) to all Pivotel customers (including people in rural areas dependent on satellite telephones) and the time of the year (immediately before the Christmas holiday period). The hearing was adjourned from the morning of 23 December 2009 to the afternoon to enable Optus’s legal representatives to obtain urgent instructions about its position in response to the application. Undoubtedly influenced by the practical constraints, no applications were made to cross-examine witnesses. The hearing proceeded on the basis of the reading of affidavits and oral submissions by counsel. In these circumstances the significance of the way in which Pivotel put its case to the outcome, particularly to the form of the interlocutory orders made, must be recognised. For these reasons I turn now to the way in which Pivotel put its case on 23 December 2009.
  4. Most of the evidence in support of Pivotel’s application on 23 December 2009 was given by Robert Sakker, the executive director and company secretary of Pivotel Group Pty Limited of which Pivotel Satellite Pty Limited is a wholly owned subsidiary. Mr Sakker was the source of the evidence that of the 15000 numbers allocated to Pivotel, 8000 had been allocated to satellite mobile services. Mr Sakker also gave evidence that Pivotel was Australia’s largest supplier of satellite telephony services. He identified that Optus customers made between 2.2 and 2.4 million minutes worth of calls to Pivotel numbers between September and November 2009. He also identified that Pivotel provides these satellite telephone services to a large number of people in rural Australia, as well as to various emergency services. He said that Pivotel customers expect to be able to make and receive calls from the customers of any carrier including Optus.
  5. In submissions, Pivotel characterised Optus’s action on 21 December 2009 of blocking its customers from making any call to Pivotel’s customers as a commercial dispute that had “gone wildly out of hand”. To Pivotel’s knowledge, before 21 December 2009, Optus had blocked access to 94 Pivotel numbers that Optus considered associated with the two stage dialling operations of the Mediatel interests. This is a reference to the 94 numbers that Optus had managed to identify out of Pivotel’s total of 15000 numbers. Pivotel said (and I accepted) that the matter was “extremely serious” because:
...the vast majority of my client’s [Pivotel’s] business has got nothing to do with the MediaOcean services. We provide entirely legitimate satellite telephone services. We are the largest provider of satellite telephone services in the country. To people in the country - in the country being Australia, that in country Australia, rural Australia, that is often the only way those people have any communications.

  1. In submissions, Pivotel also referred to the numbers which Pivotel had allocated to the Mediatel interests as:
...a very small number of the total number of Pivotel numbers of whom, at least on the evidence, some 8000 are legitimate satellite telephone users.

  1. Pivotel submitted, and I accepted, that Optus’s real commercial concern related only to the numbers allocated to the Mediatel interests. According to Pivotel’s submissions “most of” Pivotel’s numbers had “nothing to do with” the numbers allocated to the Mediatel interests. Hence, for Optus to block all calls to the Pivotel network and to the 8000 users of Pivotel’s satellite services (legitimate users even on Optus’s case) was, said Pivotel, a “wild and unconscionable overreaction”. Further, Pivotel submitted that Optus had been carrying the calls to the Pivotel network since 2005 in circumstances where:
...most of that traffic...has nothing to do with the MediaOcean traffic.

  1. Optus attempted to rebut that aspect of Pivotel’s case relying on an estimate of one of its employees, Kevin Cheng Ean Chuah, that 99.999% of calls from Optus customers to the Pivotel network were for the purpose of accessing the two stage dialling process, music streaming or the like. This estimate appeared in an internal Optus review document dated 18 December 2009. It appeared to be based on nothing more than a comparison between the number of minutes of calls Optus customers made to the Pivotel network in one month (1.7 million minutes) to the number of calls Pivotel customers made to the Optus network in one month (131 minutes). In submissions Pivotel described this estimate of 99.999% of the traffic from Optus customers to the Pivotel network as involving the two stage dialling process as one which:
...completely ignores the reality that we have more than 10,000 numbers and we have 8,000 satellite subscribers who presumably wish to receive, or should be in a position to receive calls from Optus customers.

  1. Although Pivotel subsequently clarified that its case relied on the proportion of the numbers allocated to people who were, on any view, legitimate users of satellite services (the 8000 out of the total of 15000 who had no connection with the numbers allocated to the Mediatel interests), it returned to the 99.999% traffic estimate describing it as “completely illogical” and irrelevant to the question of the effect on the market.
  2. Pivotel thus described the situation as one in which:
... even on our friend’s own case, the only numbers that they don’t want to pay for or do business about are the so-called MediaOcean numbers. And what’s happened here is that they’ve taken a sledgehammer to deal with a problem that is, you know, a walnut in terms of the numbers - the comparative numbers of MediaOcean numbers versus the rest of the numbers owned by Pivotel. So yes, it will require them to carry business but, in effect, your Honour, it will require them to carry a business the vast majority of which they have been willing to carry since 2005, and on the evidence, have no objection to.

All they have objection to is the MediaOcean numbers, to the extent they’ve been able to identify them.

  1. This is the context in which I was satisfied that it was (as I said at [33] of my reasons) “unsatisfactory to attempt to carve out from the order any capacity for Optus to continue blocking numbers that Optus believes are Mediatel or similar numbers involving a two stage dialling process”.

THE ADDITIONAL EVIDENCE

  1. In support of this application, Optus adduced evidence of a detailed analysis by Mr Chuah establishing that 99.94% of the total minutes of calls made from Optus customers to the Pivotel network are being made to the two stage dialling process, music streaming or the like. It must follow from this evidence, which I accept, that the 8000 out of 15000 Pivotel satellite customers apparently account for not more than 0.06% of the total minutes of calls made from Optus customers to the Pivotel network.
  2. Moreover, confronted by Mr Chuah’s new detailed analysis in support of these estimates Mr Sakker now acknowledges that “about 90% or more of the minutes generated from all carriers” to Pivotel’s network are being made to the two stage dialling process, music streaming or the like. Further, according to Mr Sakker in cross-examination, around 4000 of Pivotel’s total of 15000 numbers have been allocated to the Mediatel interests.

CONSEQUENCES OF ADDITIONAL EVIDENCE

Principles

  1. The question whether the interlocutory orders should now be varied in light of the true factual position has to be determined by reference to the relevant principles. Those principles were not in dispute.
...one or more of the following factors has occurred or is satisfied:

(a) there is new material or new evidence which was not available, or reasonably available, to them at the time the orders were made ...;
(b) there has been a material change in the circumstances since those orders were made;
(c) there are exceptional circumstances which warrant re-consideration of the matter...; and
(d) as a matter of discretion, the justice of the matter requires that the applicants be allowed to revisit the matter....

Pivotel’s submissions

  1. Pivotel submitted that none of the factors which Goldberg J identified in P Dawson Nominees were met in the present case. Specifically: - (i) there was evidence available on 23 December 2009 (being a graph forming part of the same internal Optus document prepared by Mr Chuah) showing that Optus had identified some 3629 Pivotel numbers as numbers associated with the two stage dialling process, (ii) a major part of Optus’s case on 23 December 2009 was that as soon as it blocked one number associated with two stage dialling another would emerge, thereby prompting Optus to block all calls to the Pivotel network, (iii) in other words, it was apparent on 23 December 2009 that many of Pivotel’s numbers were associated with two stage dialling, (iv) the essential facts have not changed – there are 8000 Pivotel satellite customers who expect to be able to be contacted by any person with a telephone and Optus blocked its customers from calling all of those people, (v) Pivotel’s case always focused on the number of subscribers and not the volume of minutes of traffic, and (vi) Mr Sakker was present in Court on 23 December 2009 and could have been cross-examined by Optus but was not.
  2. Pivotel submitted that I applied the correct principle in my orders of 23 December 2009 by framing them so as to preserve the status quo. Before it blocked all calls on 21 December 2009 Optus had blocked access to some 1476 Pivotel numbers. The interlocutory orders permitted that blocking to remain but precluded any further blocking by Optus including blocking of numbers Optus identified as associated with two stage dialling after 23 December 2009. Pivotel contended that Optus had put and lost the case for excluding that continued blocking activity. Mr Chuah’s evidence was not new. Evidence of his estimate that 99.9% of the traffic being related to two stage dialling was available on 23 December 2009. All that had happened was that, after 23 December 2009, Mr Chuah had undertaken the laborious process of verifying the percentages. Pivotel submitted that Optus could not complain it had no opportunity to undertake that process of verification before 23 December 2009 when Optus’s actions in blocking access to the entire Pivotel network without any notice to Pivotel and just before Christmas was the cause of the urgent application. For these reasons, Pivotel submitted, Optus’s application should be seen as nothing more than an attempt to bolster evidence that was rejected on 23 December 2009.
  3. Pivotel also relied on additional evidence of its own. Mr Sakker gave evidence that: - (i) all calls to the Pivotel network terminate on a Pivotel handset. Diversion of calls to two stage dialling or music streaming is no different from other forms of call diversion such as to voicemail, (ii) all calls to a Pivotel number are subject to the payment of the mobile terminated access rate, (iii) Optus pays Vodafone (the carrier that switches the calls from Optus to Pivotel) the same rate for two stage dialling calls and music streaming calls as other calls, (iv) Pivotel does not know how the numbers it allocated to the Mediatel interests are being used and all such numbers may be used for receiving ordinary calls at any time because the diversion is able to be lifted at any time by the customer, (v) Pivotel has substantial and ongoing fixed costs, (vi) the calls to two stage dialling, music streaming and the like which Optus does not wish to carry generate about two thirds of Pivotel’s revenue from voice traffic, and (vii) Pivotel’s ability to provide its satellite services will be impacted upon by the significant loss of revenue it would suffer if Optus blocked the numbers associated with two stage dialling, music streaming and the like.
  4. Pivotel stressed that the dispute between it and Optus was purely commercial in character. Recent correspondence between the solicitors discloses that Optus is willing to carry calls to two stage dialling and music streaming services provided it does not have to pay the full rate of 9 cents a minute to Vodafone to do so. Varying the orders to permit Optus to continue to block two stage dialling and music streaming numbers remains impractical unless Pivotel provides Optus with a list of all numbers allocated to the Mediatel interests. According to Pivotel, and as previously submitted to and accepted by the Court, Optus should not be able to obtain that information as a reward for what Pivotel described as Optus’s “high-handed” action in blocking the entire Pivotel network on 21 December 2009. Pivotel also observed that Optus could not obtain that information in the ordinary course. Moreover, it is clear, said Pivotel, that Pivotel will suffer substantial loss of revenue by reason of Optus being permitted to block access to the two stage dialling and music streaming numbers. Optus, in contrast, would suffer no loss. Optus’s complaint is not one of loss. Optus, submitted Pivotel, simply wishes to be able to charge its customers more for international calls than it can charge for a call to a mobile number in Australia. Further, the legitimacy of the traffic to the two stage dialling and music streaming numbers is an issue in the proceeding. Optus seeks to defend the proceeding on the basis that Pivotel’s conduct contravenes the Telecommunications Act 1997 (Cth). Pivotel contends the conduct is lawful. According to Pivotel, faced with this dispute and the disparity between Pivotel’s demonstrated actual loss and the evidence that Optus will suffer no loss, the discretionary factors in support of the interlocutory orders as they stand is in Pivotel’s favour.

CONCLUSIONS ON ADDITIONAL EVIDENCE

  1. It is important to identify the nature of the Optus’s present application. Optus does not seek a discharge of the interlocutory orders. Optus accepts for the purposes of this application that it should not be entitled to block calls from its customers to any person who wishes to receive a call in Australia on a Pivotel handset. Optus, however, wants to be able to continue to identify and block numbers it has verified are being used for two stage dialling and music streaming and the like. The only way Optus can verify the use of a number is to call and check each number as it emerges. This is a laborious process and runs the risk of error. Accordingly, the same practical problem that confronted the parties (and me) on 23 December 2009 remains. In the factual context as then presented I was satisfied that it was impractical and inappropriate to exclude from the interlocutory orders any capacity on Optus’s part to block numbers it had verified to its satisfaction were used for two stage dialling and music streaming and the like. I also accepted Pivotel’s submission that Pivotel should not have to identify the numbers allocated to the Mediatel interests as the price of obtaining interlocutory relief.
  2. The factual context, at least as presented, has changed, however. As explained below, I consider the factual context now presented to be fundamentally different from that put on 23 December 2009.
  3. I accept that, if this were a case in which Optus had been given an opportunity to present its evidence of what it said to be the true position and that evidence had simply failed to come up to proof, there could be no basis for reconsidering the form of the interlocutory orders made on 23 December 2009. To do so would be inconsistent with the interests of justice, particularly the interest in the finality of judicial decisions, even interlocutory decisions. But that is not what happened here.
  4. The application was brought, heard and determined on 23 December 2009. It is true that Optus, by blocking access to the whole Pivotel network on 21 December 2009, was the cause of the urgency with which the application was brought and determined. That, however, does not change the fact that the legal representatives of both parties were operating subject to severe time constraints and the difficulties in obtaining instructions which those constraints inevitably present.
  5. More importantly, the thrust of Pivotel’s case on the balance of convenience was that Optus’s blocking of all calls to the entire Pivotel network was a manifestly disproportionate response to a commercial dispute involving a relatively small part of the business between Optus customers and Pivotel customers. In such a context, consistent with the conclusion in [33] of my reasons for judgment, any attempt to excise that relatively small part of the business from the interlocutory order would be unjustified and impractical.
  6. The evidence now available is irreconcilable with the essential thrust of the case which Pivotel put on 23 December 2009:
  7. I am satisfied that the conditions for the variation of my interlocutory orders are met.
  8. First, there is new material available that was not reasonably available on 23 December 2009. The new material is that nearly all of the traffic from Optus customers to the Pivotel network involves calls to the very services to which Optus objects (two stage dialling and music streaming), being services which have nothing to do with a person in rural Australia dependent on a satellite telephone being able to receive calls from an Optus customer.
  9. In contrast to the real concerns I had on 23 December 2009 about the public interest in maintaining the connectivity of all telecommunications networks in Australia, I see no public interest element in ensuring people can access two stage dialling or music streaming services. The public interest element appears to be limited to Mr Sakker’s evidence of some form of cross-subsidy from revenues generated by those services to the provision of Pivotel’s satellite services. I find that evidence vague and unsatisfactory.
  10. Similarly, the possibility of a number dedicated to two stage dialling and music streaming and the like being used for the purpose of receiving an ordinary telephone call in Australia, on the evidence, is highly speculative. While technically possible, the fact is that Pivotel allocated some 4000 numbers to the Mediatel interests (itself new evidence not available on 23 December 2009). The Mediatel interests have a commercial arrangement with Pivotel that does not contemplate use of the 4000 numbers for ordinary calls. There is no arrangement in place covering the making of any ordinary call.
  11. I also do not consider the dispute between the parties about the legitimacy of Pivotel’s conduct to be material. Subject to the Telecommunications Act and the Trade Practices Act and any other legislation regulating its relationship with its customers, Optus can make any commercial decision it sees fit. If Optus does not want to carry certain types of traffic, and has no legal obligation to do so, then that is a matter for Optus. The fact that Pivotel’s conduct in providing numbers for two stage dialling and music streaming services may be lawful does not mean that Optus must carry that traffic. No submission has been made that Optus has any obligation to do so other than (relevantly) by reason of the competition provisions of the Trade Practices Act. For the purposes of this application Optus does not challenge my conclusion that there is a serious question to be tried in respect of alleged contravention of the competition rule by reason of the blocking of all calls to the Pivotel network on 21 December 2009.
  12. Second, there has been a material change in circumstances since the making of the orders on 23 December 2009. The material change in circumstances, as Optus submitted, is that it has now had the opportunity (through a laborious process of checking) to prepare evidence that undermines the essential thrust of Pivotel’s case that the vast majority of Pivotel’s business has nothing to do with the numbers allocated to the Mediatel interests. I do not find persuasive Pivotel’s submission that the evidence available on 23 December 2009 disclosed that some 3629 of Pivotel’s 15000 numbers were allocated to the Mediatel interests. That figure is derived from calculations based on a graph in the report to Optus which Mr Chuah prepared. The graph is ambiguous. More to the point, and as already noted, the essential thrust of Pivotel’s case was that the numbers allocated to the Mediatel interests were but one small part of its business.
  13. Third, there are exceptional circumstances that warrant reconsideration of the orders I made on 23 December 2009. The exceptional circumstances are that I accepted the thrust of Pivotel’s case on 23 December 2009 that Optus had taken a sledgehammer (blocking access to the entire Pivotel network) to crack a nut (the small proportion of Pivotel’s business associated with the Mediatel interests). As it turns out the true position is virtually the reverse. While Pivotel has allocated 8000 out of its 15000 numbers to satellite customers they represent a tiny fraction of the calls to the Pivotel network. Nearly all calls from Optus customers to the Pivotel network are to the services to which Optus takes commercial objection. Moreover, more than 90% of all calls from all carriers to the Pivotel network are to those services.
  14. Fourth, as a matter of discretion, the justice of the matter requires that Optus be allowed to revisit the matter of the form of the order, specifically the exclusion of its capacity to continue to block calls to numbers associated with two stage dialling, music streaming and the like. In short, I refused to exclude from the interlocutory orders any capacity for Optus to block calls to numbers associated with these services having regard to an apparent factual context which I am now satisfied was materially inaccurate. Further, my apprehension of the true factual context was not a product of Optus’s evidence merely failing to come up to proof. It was a product of the way in which Pivotel put it case on 23 December 2009.
  15. The additional evidence on which Pivotel relied does not persuade me to the contrary. I accept that the evidence now available shows that the Mediatel numbers form a substantial (indeed, the overwhelming) part of Pivotel’s business. I accept that Pivotel will suffer loss if Optus blocks its customers from calling those numbers. I accept also that Optus’s concerns about the impact on it can probably be characterised as a loss of opportunity which has a character different from the type of direct loss Pivotel will suffer. But loss is not the only relevant factor. Pivotel has made a commercial decision to structure its business in a particular way. Subject only to the constraints of the law, Optus has the same rights to structure its business in any way it sees fit. In the circumstances as presented on 23 December 2009 an interlocutory order having a mandatory effect (that is, requiring Optus to continue to carry certain traffic) was appropriate. In the circumstances as now disclosed, and as identified above, I cannot reach the same conclusion today
  16. For these reasons, and on the basis of the facts as I presently understand them, I am satisfied that Optus should be able to continue to block calls to Pivotel numbers used for two stage dialling and music steaming services and the like, pending final resolution of this dispute. The issue remains the practical one of how this may be achieved.
  17. In circumstances where: - (i) Pivotel has allocated some 4000 numbers to the Mediatel interests and can identify those numbers, and (ii) there is no connection between the 4000 or so numbers used for two stage dialling, music streaming and the like and the numbers allocated to the 8000 satellite subscribers other than the alleged financial cross-subsidy and the technical capacity for the diversion from the Mediatel numbers to be lifted at any time, my present view is that the price of interlocutory relief in Pivotel’s favour should include identification of the 4000 or so numbers allocated to the Mediatel interests so that Optus is able to comply with the interlocutory orders yet continue to block calls to the numbers used for two stage dialling, music streaming and the like without risk of breach of the orders. However, and as indicated below, I accept the joint submission of the parties that if satisfied the interlocutory orders should be varied (which I am) the working out of the terms of the orders should be the subject of further submissions.
  18. I am reinforced in my conclusion that the orders should be varied by the other contention which Optus made. Pivotel’s pleading defines the numbers allocated to the Mediatel interests as part of Pivotel’s satellite numbers. Definition is one thing. Use is another. On the evidence before me it appears that the numbers allocated to the Mediatel interests are not used as part of a satellite telephone service as that term would be understood by any person without telecommunications expertise. Calls to a Mediatel number, apparently, are not received by any person in Australia. Indeed, on Mr Sakker’s evidence, Pivotel itself holds some of the handsets associated with the numbers allocated to the Mediatel interests. Pivotel can do so because a call to those numbers is automatically diverted to a two stage dialling process (for international calls), music streaming or some other like service such as “sms and win” competitions. In other words, it appears to be the case that no holder of a Pivotel handset in Australia with a number allocated to the Mediatel interests is using the handset to receive a telephone call from any other person including any Optus customer.
  19. In these circumstances, apart from the evidence about cross-subsidy from one part of the Pivotel business to another and the technical capacity for the diversions to be lifted at any time, there is no rational basis in the cause of action pleaded for breach of the competition rule pleaded against Optus, to require Optus to continue to carry traffic on its network to numbers used for a two stage dialling process (for international calls), music streaming or some other like service. The interlocutory orders are too wide and thus work an injustice against Optus. They must be varied to remove the injustice.
  20. As noted, both parties submitted that if I determined that the interlocutory orders should be varied I should hear further submissions about the form the variation should take. I agree. I propose to give the parties an opportunity to consider these reasons before hearing from them further about the form of the orders as required.
I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.

Associate:


Dated: 23 February 2010


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