TX Australia Pty Limited v Broadcast Australia Pty Limited [2012] NSWSC 4

Supreme Court New South Wales

Medium Neutral Citation: TX Australia Pty Limited v Broadcast Australia Pty Limited [2012] NSWSC 4 Hearing dates: 23, 24 November 2011 Decision date: 16 January 2012 Jurisdiction: Equity Division - Commercial List Before: Brereton J Decision: Summons dismissed with costs Catchwords: CONTRACTS - Broadcasting and related industry contracts - plaintiff owner and operator of broadcast infrastructure - defendant has access to and use of plaintiff's infrastructure pursuant to contract - defendant exercises option to renew contract - contract provides for expert determination of licence fee if parties fail to reach agreement - expert charged with determining a reasonable fee having regard to rates charged to third parties at facility in question - term sheet determines that expert determination final and binding except if attended by manifest error or error of law - terms of contract direct task to be performed by expert and whether determination binding. CONTRACTS - Plaintiff alleges error of law on basis expert misconceived function by adopting objective "market value" assessment to ascertain fee as opposed to a subjective "fair value" approach - function of expert determined by contractual provisions - contract provides for hybrid process requiring consideration of subjective and objective factors, with rates charged to third parties a mandatory consideration - contract requires appraisal akin to 'fair market value' - expert does not have regard to exclusively objective considerations and considers position of particular parties - expert did not misconceive function. CONTRACTS - Plaintiff alleges error of law on basis expert failed to consider relevant factor - relevant consideration said to be 'special value' of contract to defendant - requirement for ascertainment of 'reasonable fee' refers to defendant as a willing but not anxious and involuntary purchaser - requirement for 'reasonable fee' antithetical to valuation proceeding on basis plaintiff a monopolist - expert did consider special value of contract to defendant. CONTRACTS - Plaintiff alleges error of law on basis expert failed to give weight to current fees under original contract - expert had regard to such fees but concluded of limited relevance - not an error of law to weigh relevant factors in a particular way as opposed to not consider them - circumstances prevailing ten years previously when agreement first made materially different to present - fees agreed ten years previously not useful guide to what constitutes a 'reasonable fee'. CONTRACTS - Plaintiff alleges error of law and manifest error on basis expert used incorrect comparator in assessing 'reasonable fee' - expert said to have incorrectly compared digital audio broadcasting with digital television broadcasting - audio broadcasting said to be inapposite comparator due to fact radio different medium to television with different cost factors - digital audio broadcasting fees considered by expert pertain to agreement between same parties and are relatively recent - errors in methodology employed by expert valuer not errors of law - matter of professional judgment as to weight to accord cost recovery and profit margin - expert evidence adduced in attempt to illustrate manifest error - fact such evidence needs to be adduced conveys error not manifest - expert did not make error of law or manifest error. CONTRACTS - Plaintiff alleges expert failed to give detailed reasons - question whether reasons are 'reasons' within the meaning of the contract - failure to provide 'detailed reasons' entails there will not be a binding determination - due to requirement of 'detailed statement of reasons', provision of wider than usual scope to challenge binding nature of determination and fact issues are complex standard of reasons required by contract akin to that expected of judges and commercial arbitrators - expert sufficiently identifies methodology and provides sufficiently detailed and comprehensive reasons - reasons are 'detailed reasons' within meaning of contract. CONTRACTS - Plaintiff alleges error of law on basis determination manifestly unreasonable - determination said to be unreasonable in Wednesbury sense because of relative magnitude of reduction in licence fee - contract requires new fee to be determined with predominate regard to market based considerations and cost considerations not prevailing when original fee determined - determination not so unreasonably low - determination rewards plaintiff above avoidable cost - arguable that perpetuating current fee would be unreasonable - determination not manifestly unreasonable. Legislation Cited: (CTH) Broadcasting Services Act 1992, Sch 4, Pt 5, s 42 (CTH) Broadcasting Services Amendment (Digital Television and Datacasting) Act 2000 (CTH) Television Broadcasting (Digital Conversion) Act 1998 (NSW) Court Suppression and Non-publication Orders Act 2010 (UK) Arbitration Act 1979 Cases Cited: AGL Victoria Pty Limited v SPI Networks (Gas) Pty Limited [2006] VSCA 173 Avon Downs Pty Limited v Federal Commissioner of Taxation (1949) 78 CLR 353 Boland v Yates Property Corporation Pty Limited (1999) 74 ALJR 209 Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp Ltd [1981] AC 909 Campbell v Edwards [1976] 1 All ER 786 Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission (2000) 203 CLR 194 Colin Marg Pty Ltd v Mackay Medical Investment Ltd [2007] 1 Qd R 303 Craig v South Australia (1995) 184 CLR 163 Dean v Prince [1954] 1 Ch 409 Email Ltd v Robert Bray (Langwarrin) Pty Ltd [1984] VR 16 Ex parte Hebburn Limited; Re Kearsley Shire Council (1947) 47 SR (NSW) 416 Holt v Cox (1997) 23 ACSR 590 Lear v Blizzard [1983] 3 All ER 662 Legal & General Life of Aust Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 MMAL Rentals Pty Ltd v Bruning (2004) 63 NSWLR 167 Marks v GIO Australia Holdings (1998) 196 CLR 494 Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111 Oil Basins Limited v BHP Billiton Limited (2007) 18 VR 346 Ponsford v HMS Aerosols Ltd [1979] AC 63 Ricciardello & Anor v Caltex Oil (Australia) Pty Ltd & Anor [1991] ANZ ConvR 445 Shoalhaven City Council v Firedam [2011] HCA 38; 85 ALJR 1220 Spencer v Commonwealth (1905) 5 CLR 418 Strang Patrick Stevedoring Pty Ltd v James Patrick & Co Pty Ltd (1993) 32 NSWLR 583 Thomas Bates & Son Ltd v Wyndham's (Lingerie) Ltd [1981] 1 All ER 1077 Westport Insurance Corporation v Gordian Runoff Limited [2011] HCA 37; 85 ALJR 1188 Category: Principal judgment Parties: TX Australia Pty Limited (plaintiff) Broadcast Australia Pty Limited (defendant) Representation: Counsel: AJ Payne SC with M J O'Meara (plaintiff) JT Gleeson SC with JA Potts (defendant) Solicitors: Gilbert & Tobin (plaintiff) Minter Ellison (defendant) File Number(s): 2011/194227