Digicel (Samoa) Ltd v Telecommunications Tribunal [2009] WSSC 101 (23 October 2009)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN:

DIGICEL (SAMOA) LIMITED
a company duly incorporated and carrying on business in Apia and elsewhere in Samoa
Applicant

AND:

THE TELECOMMUNICATIONS TRIBUNAL
appointed pursuant to the Telecommunications Act 2005
Respondent

AND:

THE REGULATOR
appointed pursuant to the Telecommunications Act 2005
First Interested Party

AND:

SAMOATEL LIMITED
a company duly incorporated and carrying on business in Apia and elsewhere in Samoa.
Second Interested Party

Counsel: Bruce Gray QC and James Sloane for the Applicant
Deborah Mortimer SC and Mareva Betham Annandale for the Respondent
Semi Leung Wai for the First Interested Party
Eric Braun and Brenda Heather Latu for the Second Interested Party

Hearing: 13, 14, 15, 16 October 2009
Judgment: 23 October 2009

JUDGMENT OF THE COURT

Introduction

1. The applicant "Digicel" seeks judicial review by way of certiorari against the Telecommunications Tribunal "The Tribunal" in its upholding of two appeals concerning two orders, 2008/03 and 2009/01 made by the Telecommunications Regulator "The Regulator". SamoaTel Limited, the Second Interested Party "SamoaTel" had been successful before the Tribunal in its challenge to the making of those orders. Both Digicel and Samoatel have a real and commercial interest in these proceedings whilst the Tribunal and Regulator seek the direction of the court in relation to their respective duties, powers and responsibilities. The orders, separately made, provide for interconnection rates governing interim mobile termination rates assessed through use of equipment or facilities operated by the commercial parties which create mutual obligations for payment by each to the other. The rates processes and assessments are complex. Here some of the material tendered before the Tribunal and on this review remains ‘commercial in confidence’ on the part of the carrier or service provider and, where necessary will be alluded to but not stated.

2. The Telecommunications Act 2005 "The Act" provides a comprehensive code governing the operation of communication services for Samoa. It is Regulatory in nature but where practicable affords commercial venturers the opportunity to negotiate their terms for provision of service or exchange. Here the parties have not reached agreement. They are the two dominant service providers and recognized as such in accordance with the legislation.

3. On 24 February 2005 SamoaTel entered into a commercial agreement with Telecom Samoa Cellular Limited (the predecessor of Digicel) which governed their relationship as the fixed wire and installation carrier and the monopoly mobile services provider. That agreement provided for the respective rates payable by and to the parties for the components to an overall service. The term of those rates was fixed for 10 years and not renewed. In 2005 Parliament, by enactment number 20 repealed and harmonized the existing Post office Act 1972, the Postal and Telecommunications Services Act 1999 and the Telecommunications Internet Act 1997 stating its intention to ‘establish a new legislative framework’. In 2006 Digicel entered into the telecommunication market and purchased the then mobile service provider Samoa Cellular. Samoatel established its own mobile network in 1997.

4. In 2006 the Regulator, absent agreed renewal of the rates payable between the corporations, was required to determine and order the interconnection charges as between the dominant service providers. The officer did so by order 2006/04 a matter which has remained a matter of controversy between the commercial parties. The making of such an order is complex, replete with variables and requires substantive analysis of economic, geographic and social data. No term was fixed for the operation of the order but it is apparent from all of the evidence that the Regulator intended to conduct further research and analysis, in part, with the assistance and contribution of international agencies studies statistics and the like. The commercial parties continued to disagree about the impact and probity of the charges according to their own vantage. In 2007 the Regulator determined new interconnection charges, again absent agreement, stated in order 2007/04. Under Order 2006/04 Digicel was required to pay SamoaTel 8.2 sene per minute of traffic originating with Digicel and terminating with Samoatel and conversely Samoatel 25 sene and 45 sene for off peak and peak hour connections respectively. Order 2007/04 published on 16 May was for a period of two years and altered the rate payable by Digicel to 11.8 some per minute, effective from 31 October 2007. Digicel appealed the decision to this court advocating as one of its bases a merit and economic based review. The challenge succeeded not on economic detriment or unreasonableness but on errors of procedural fairness (Digicel Samoa Ltd v Attorney General [2008] WSSC 15). The court considered the competing economic bases for the Regulator’s decision but allowed the appeal on the grounds that the appellant had not been afforded due notice or process in the making of the order. While the learned Chief Justice cited Kirisome v Attorney [2002] WSSC 3 in support of the requirement of procedural fairness he did not exclude examination of the significant economic evidence and arguments of Digicel’s case as presented. The reasons for the decision were published on 30 March 2008. Following that decision Parliament enacted responsive legislation (Act No 18 of 2008) effective as and from 12 June. The existing s.11 was repealed and replaced by a new requirement limiting appeals to a new Tribunal and providing a new Part 11A governing the conduct of that body. The amendment further provided for the assessment and implementation of Interim Interconnection Charges (The Act ss. 39A, 39B).

5. Following those amendments the Regulator directed the implementation of new rates (2008/03) governing (inter alia) mobile and fixed charges to expire at the end of six months from the date of the order; 28 September 2008. Samoatel appealed this order to the Tribunal. Difficulties in the obtaining of available dates for hearing and the attendant logistics resulted in the delay of the hearing until 12 May 2009. The order 2008/03 was to expire as and from 26 March and following fruitless attempts by the Regulator to have the parties reach agreement the Regulator made a further 6 month order which cancelled and replaced the September order in similar terms effective from 27 March. This order was also appealed by Samoatel and the two appeals were consolidated into the one hearing although each remained a distinct exercise of discretion subject to review. The hearing was conducted over three days in May and commendably a comprehensive decision published 7 days later on 22 May 2009. The Tribunal upheld the appeals and remitted the matters to the Regulator for further assessment and determination. Digicel sought judicial review of both decisions by prerogative Notice of Motion on 29 July and the matters heard by this court on 13 – 16 October. Meanwhile the Regulator had made fresh interim orders (2009/02, 2009/03) on 7 October which are not, as yet, subject to challenge.

Grounds for Review and Identification of Issues

6. The Notice of Motion seeks to quash the Tribunal’s decision and to have it declared unlawful. At the commencement of the hearing the issues were confined by certiorari and despite an attempt in the replying submissions seeking a declaratory order no serious effort made to contend otherwise. The grounds were stated in historic form to be ones of illegality, irrationality and procedural impropriety but, expanded, run to some seven pages.

7. The Regulator and Tribunal seek clarification of their respective roles and responsibilities, and guidance as to the interpretation of aspects of the legislation.

8. The Applicant relies on the validity and cogency of the orders made by the Regulator. It contends that the power of the Tribunal is confined to consideration of mistakes of law and, in factual terms, to a clear failure to take into account a material matter or error in its acceptance and application. If the Regulator’s order, were reasonable and defensible or if on the factual material he or she was reasonable able to reach the conclusion, the orders ought to stand. The errors said to flow from that fundamental misconception of role and powers are said to be:-

(1) The Tribunal had no provenance to consider the economic consequences of the Regulator’s decision and in particular had misapplied the terms of the Act s.32 (a)

(2) The Tribunal had no power to inquire into or make findings concerning the respective commercial advantages or disadvantages of the charges.

(3) The remittals and corresponding suggestions or comments made by the Tribunal amounted to directions which were beyond power.

9. The concurrent contention of error was that the decision of the Tribunal was flawed and unreasonable, dependent as it was on mistakes of fact.

The particulars of those above grounds identified specific errors of fact and the reasoning giving rise to the decision. Two secondary arguments involving the reception or use of one of identified material the "IML Report" and procedural fairness, will be separately considered.

10. SamoaTel, as the commercial opponent claimed that the decisions of the Regulator were fundamentally flawed in their omission of any proper consideration of the economic consequence of their making, ignored current international best practice and crucially repeated or were dependent upon the 2006 rate which was inherently unsafe. It followed that the Tribunal was not only permitted but required to disallow the orders. Their making had not been a proper exercise of discretion. Digicel conceded that the Tribunal ought not to conduct a hearing ‘de novo’ but maintained that it was not afforded wide powers of review.

11. The Regulator sought to restrict the supervisory role of this court and to retain the function of the Tribunal, if it found error, to remit back many of the disputed or impugned matters for re-consideration. The Regulator accepted that identification of certain technical and economic matters and their resolution ‘could not have been made ... in the absence of expert panelists’, and that unlike the previous statutory right of appeal the process:

"..as established under the new s. 11 and Part 11A of the Act involves a more comprehensive and exhaustive process whereby a party may appeal against an order decision or exercise of the Regulator’s discretion ..."

12. The Tribunal urged the court to reject any interpretation of the legislation as permitting a three tiered merits based review and to afford the Tribunal, if it found primary error, power to reconsider the original decision. It sought to confine the role of this court to consideration of matters of procedural fairness, error of principle or manifest error in findings of fact. As an alternative position SamoaTel suggests that portion of the Tribunal’s decision can be severed or read down leaving the primary order, namely the upholding of the appeal intact.

13. All parties agreed on the importance of the Act s.32 (a) in any consideration of the exercise of discretion by the Regulator in determining ‘the prices for interconnection and access services by dominant service providers’. The difference between the commercial opponents was that of import and consequence and whether its jurisdiction permitted the Tribunal to enter into the provence of the Regulator in the circumstances of this case.

14. This court is required to consider the interpretation of the legislation and the respective roles of the three administrative or judicial components. But the primary task for this court is to determine an application for prerogative relief against the decision of the Tribunal which upheld two appeals concerning the decisions of the Regulator. The question of whether the basis for that decision was correct or otherwise could be disturbed by the Tribunal as being unreasonable is but an incident to the initial grounds of appeal. This decision is not intended to determine any ultimate powers of the Tribunal. Issues raised by that question might require development and statements of principle as the ‘case law’ evolves or are raised by particular decisions of the Tribunal. Nevertheless the decision attempts definition of the commencing point of jurisdiction and an outline of its general powers and limitations.

The Act

15. The legislation is Regulatory with attendant powers of enforcement. It involves management of a public asset namely use of Radio Spectrum permitting internal and international communication. It provides access of communication to the community at large and for governance in cases of national security and public emergency. The Act does so by licence reserving to the Head of State, on the advice of Cabinet, the right to prescribe licence fees and conditions and to restrict the power of the Regulator to the proposing of such fees (s.10). The Act s.3 provides a wide range of objectives including social and economic development (a), the promotion of universal access, efficient provision of service and innovative technology (b, c, d) fairness and transparency and management (j, k,l) policy and orderly development (i, m). The regime seeks to protect the interests of subscribers and establish a framework for the control of anti competitive conduct (f and h). It adopts as a model the provision of ‘market based’ service providers (The Act s.3 (c) ) whilst maintaining the right of interference to prevent anti-comparative practices.

16. The commercial parties here draw specific attention to the objects set out in section 3 to:

(b) facilitate the development of the telecommunications sector in order to promote social and economic development.

(c) promote the efficient and reliable provision of telecommunication services, relying as much as possible on market forces, such as competition and private sector investment ...

(g) promote efficient interconnection arrangements between service providers."

17. Central to Digicel’s argument that the Tribunal wrongly entered into consideration of market forces and the claimed economic hardship and disadvantages to Samoatel is that they are not relevant to any issue of the stability of the overall service. Samoatel adopts the same philosophical assumption with a different outcome claiming that the Regulator failed to take into account the disparity caused by the repetition of the 2006 rates and wrongly ignored those same forces thereby obliging the Tribunal to conclude error. Both contentions overlook a basic premise. The Act repeatedly enables the service providers to determine the rates by agreement negotiated in good faith (ss.32 (c), 33, 35, 36, 37 and 39A) whilst providing supervision and resolution (s.32 (c), (d), (h) and 39B). It is when the parties fail to reach agreement based, presumably on market forces, that the Regulator, after providing procedural fairness, is obliged by law to intervene. Here the initial arrangements in 1995 were contractual and thereafter by order only after failed negotiations. Both claim error by a different regulatory decision maker after those failed negotiations. Parliament has not sought to prevent ‘transfer of control of a service provider except under defined limited circumstances (s. 31). The Act Part II provides for the appointment, responsibility functions and powers of the Regulator. The requirements of s.8 are wide varying and mandatory, encompass technical matters concerning radio spectrum (Part v) competition and anti-competitive practices including determinations (Part VI) fair dealing (Part IX) and relevant here interconnection charges both ongoing and interim (Part VII ss. 36, 39A). In 2008 challenge to any ‘order directive decision or exercise of discretion’ was to be appealed only to the Tribunal on the grounds of error of fact or law. The Regulator is required to afford parties procedural fairness and natural justice (ss.8 (3), 9 (9) and s.39A (4)).

18. The legislative scheme is that of a code. It is both regulatory and coercive. It governs the specific power of the executive, establishes an independent office, provides both administrative and quasi judicial enforcement powers and defines the review process. Any critique of a particular decision of the Regulator or interpretation of a particular section must be viewed in the context of a code rather than a ‘stand alone’ enactment or provision.

19. The orders 2008/03 and 2009/01 each provided for 6 categories of charges. The parties before the Regulator and at the Tribunal were concerned only with the interconnection rates and only those orders impugned, a matter relevant to any claimed invalidity of the whole of each order. The making of each order was an exercise of discretion undertaken pursuant to the Act s.39A. Parliament, following the decision in Digicel v The Attorney General and the setting aside of the 2007 rates, introduced by Enactment 18 of 2008, into the scheme power for the implementation of interim charges. S.39A afforded power either through agreement between the parties or following a process involving consultation consideration and notice. (s. 39A 1- 4). The service providers are entitled to make submissions after which the Regulator is pursuant to sub section 6 to ‘issue interim interconnection charges’ for any period of time for a period not exceeding 6 months. This is what occurred in the making of 2008/03. The position is less clear in respect of 2009/01. The order purported to cancel and replace order 2008/03 but did so in identical terms. Given the time constraints on the Regulator and a pending hearing of the challenge to 2008/03 the order could equally be seen as an extensions permitted by s.39A (7). It is not an issue in this case that repeated interim extension might cumulatively offend the legislation a matter which might arise for a later determination.

20. Irrespective of any difference between the 2008 and 2009 orders, each required a distinct exercise of discretion, in fact made by different holders of the statutory office. In each case the Regulator was required to pay regard to sub section 9 which provides:

"(9) Notwithstanding section 36, any interim interconnection order imposed by the Regulator under this section need not be cost based".

21. The sub section does not preclude consideration of a cost based order but recognizes that a more detailed approach required by s.36 may not be apposite in a limited time frame both for consideration by the Regulator and effect of the order. Section 36 requires a ‘cost based’ determination, and permits a phased scheme referred to within the industry as a ‘glide path’ method. The wording of s.39A does not exclude the functions and duties of the Regulator required by the Act s.32. Section 32 governs an exercise of discretion coming within the Act Part VII. It requires any order to:

(a) promote adequate, efficient and cost-oriented interconnection of telecommunications networks and access by service providers to telecommunications facilities of other service providers, in order to permit interoperability of telecommunications services that originate or terminate telecommunications service markets.

(b) Establish an open, non-discriminatory and commercially viable Regulatory framework for interconnection and access with a view to minimizing Regulatory and other barriers to entry into telecommunication markets;

(c) Promote interconnection arrangements, including by facilitating negotiations between parties to reach interconnection agreements;

(d) Ensure that interconnection agreements otherwise meet the objectives of this Act;

(e) Determine which service providers are dominant service providers in a telecommunication market

(f) If considered appropriate by the Regulator, regulate the prices for interconnection and access services by dominant service providers in a telecommunications market for interconnection;

(g) Ensure that dominant service providers in a telecommunications market for interconnection publish a reference interconnection offer in accordance with section 37 of this Act and any regulations, rules and orders applicable to interconnections;

(h) Resolve disputes related to interconnection in a timely and impartial manner; and

(i) Make orders specifying the terms of interconnection that shall be provided by one or more service providers, including direct, indirect and virtual interconnection arrangements.

22. Significantly sub section (a) uses the term ‘cost oriented’ as distinct form that of ‘cost based’ required by s.36, a distinction acknowledged and applied by the Tribunal. The case presented to the Regulator and the Tribunal was cogent. The order 2006/04 had not been the product of detailed analysis. The Regulator had acknowledged it as such in a written communication. The 2007 orders had attempted a more measured ‘cost based’ fixing of charges. The declaration of invalidity and the inevitable delay had impeded the Regulator’s further detailed consideration. Samoatel had advanced a cogent case supporting the proposition that whilst it might suffer competitive disadvantage, it was the rate which harmed the inter operability of one of the central components of the system and hence the service as a whole. The Regulator was required to consider the cost oriented factor in any consideration of interim order 2008/03. The Tribunal was entitled to determine whether the cancellation and replacement of 2006/04 and the making of a similar order but with differing components amounted to a proper exercise of discretion. The Tribunal was entitled to reach a conclusion on the basis of the material placed before the Regulator in the light of concession of the problematic 2006 order and the rates stated in the failed 2007 order. It was entitled for reasons later stated, to conclude that the 2009 was but a repetition of its predecessor.

Office of the Regulator

23. The responsibilities and powers of the Regulator are all embracing. No particular qualification is required for appointment and in law the holder of office is deemed to have the knowledge or information held by a predecessor and remain responsible for previous decisions. There have been three regulators during the period of the charges determined for interconnection 2006/04, 2008/03 and 2009/01. Each order had been determined after failed negotiations, within a compressed time frame and each had required consideration of complex and voluminous information both national and international. That pressure understandably might warrant a mere extension of an existing rate but of itself does not afford an unassailable basis for an exercise of discretion.

24. Any decision of the Regulator must be given weight and respect by a reviewing body. The Act s.2 provides that the "approved tariffs be binding upon a dominant service provider". Publication of an order of the Regulator ‘shall have the same legal force as a rule’ (s. 8 (1) (r). An interim charge remains valid pending the outcome of an appeal (s. 39A (11)). The Regulator may make determinations of Abuse of Dominance or Anti Competitive Practices and provide remedy (Part VI ss. 29, 30).

25. But Parliament permits review of an order made by the Regulator by the Tribunal. That review might include examination by The Tribunal of the reasons given for an exercise of discretion. The Tribunal was entitled as here, to permit the cross examination of the Regulator as to the reasons for that exercise. An examination of a predecessor’s decision which constituted a foundational basis for that subsequent order might be taken into account on review. But where the Regulator is giving effect to policy or consistency regard must be had to the statutory duty imposed on that office.

The reason is not an artificial construct of jurisdiction but an acknowledgement of the wide grant of power and responsibility granted by Parliament. The historic distinction between jurisdictional and non jurisdictional error was ended by the decision in Ansimatic Ltd. V Foreign Compensation Commission [1968] UKHL 6; [1969] 2 AC 147. In the words of Lord Diplock in O’Reilly v Mackman [1983] UKHL 1; [1983] 2 AC 237 at 278 it was replaced by recognition of a single issue namely that

"... if a tribunal whose jurisdiction was limited by statute or subordinate legislation mistook the law applicable to the facts as they found them, it must have asked itself the wrong question ie. One which it was not empowered to inquire and so had no power to determine."

26. There is a tension between the terms of the Act ss. 8 (1) (u) and 11. The terms of the former are that the Regulator shall:

"In exercising the Regulator’s power and performing duties under this Act, a regulation or rule, determine any other question of fact or law, and despite any other law, the Regulator’s determination on a question of fact is binding and conclusive for all purposes, including but not limited to any proceedings in any court, Tribunal or other adjucative body."

27. That prohibition existed before the establishment of a specialist Tribunal with the responsibility for review of a decision of the Regulator.

Section 11, as amended in 2008 relevantly provides:

"(1) An appeal from an order, directive, decision, or exercise of discretion of the Regulator may only be made to the Telecommunications Tribunal by way of a Notice of Appeal and in accordance with the provisions of this Act.

(5) The Notice of Appeal must set out:

...

The grounds upon which the appellant contends that the decision appealed against was based on an error of fact or was wrong in law, or both"

28. Section 11 was enacted by Act 18 of 2008 which repealed the existing right of appeal to the Supreme Court replacing it with a new review process through a Tribunal granted more extensive powers of disposition. Section 8 (1) (u) had appeared in the original legislation. Applying the traditional rules relevant to statutory interpretation the latter enactment requires the reading down of the former.

29. Before intervention the Tribunal must be satisfied that there had been an error of fact or law. Until that satisfaction the Tribunal has no right of review or intervention and the determination or order of the Regulator must prevail. The jurisdiction is only enlivened by a finding of error.

30. Deference to a decision of the Regulator is a natural consideration in any review by a specialist tribunal but it is a factor not a binding principle (see; generally Proportionality Deference, Wednesbury; Taggart [2008] New Zealand Law Review 423 at 454 – 461, International Roth GmbH v Secretary of State for the Home Department [2002] EWCA Civ 158; [2003] QB 728).

The Tribunal

31. The Tribunal is a creature of statute (Re Coldham; ex parte Brideson (No 2) [1990] HCA 36; [1990] 170 CLR 267). Comparisons with other forms of review are useful but not conclusive. Parliament has determined its composition, nature and powers. The Tribunal was established subsequent to the decision of this court in Digicel (supra). The Tribunal is a specialist appellate body requiring a President as one trained in the law and two expert members appointed from a panel. They might be selected because of particular expertise in the particular matter; competition, spectrum management, technical equipment, economics and the like. Their required qualifications suggest that Parliament intended the Tribunal to consider both legal principles and merits or feasibility of decisions made by the Regulator.

32. The Tribunal is governed by Part II A of the Act and is afforded powers and protections provided by the Commissions of Inquiry Act 1964 and coercive power concerning witnesses and documentation (s. 11E). It is required to conduct its proceedings ‘so as to accord the principles of natural justice’. It is empowered to hear persons ‘having an interest in a matter’ (s. 11E (c). The Commission of Inquiry Act s.7).

Section 7 of the Inquiry Act relevantly provides:

"Any person who satisfies the commission that he has an interest in the inquiry apart from any interest in common with the public shall be entitled to appear and be heard at the inquiry as if he had been cited as a party to the inquiry."

33. That procedure was followed here in the citing of Digicel as an interested party entitled to present material and be heard by the Tribunal. It is the arbiter of its own procedure (s. 11E (5)). The Tribunal is afforded wide powers of modification, reversal of orders by and remittal to the Regulator. (s. 11 (9). It is empowered to order a refund of amounts paid in excess of a revised order (s. 11 G (e)).

34. The composition of and powers afforded the Tribunal demonstrate that Parliament has not confined it as a body ‘strictu sensu’. Nor does parliament permit it to conduct hearings ‘de novo’.

35. The Act s. 11 permits challenge based on an error of fact, wrongness in law or both. A simple request for review generally will not suffice. Any appeal is confined by the Notice of Appeal which must set out ‘the relevant section of the Act under which the decision appealed against was made "and provide sufficient detail ... of the grounds." That requirement prevents an aggrieved party from canvassing matters of competition, spectrum management, and consumer interests in the challenge unless specifically identified. In that respect the parties shape the matter which is before the Tribunal.

36. Once the grounds are formulated the Tribunal is first required to consider whether the decision made by the Regulator and its reasoning was, on the material before it, or rejected, flawed in principle. Preference by the Tribunal for a different outcome is not sufficient. In examining the decision the Tribunal, as the final arbiter of its own procedure, might permit the parties to present additional evidence relevant to the decision and its reasoning. Whilst it is required to afford ‘natural justice’ the term does not provide the parties to proceed at will. The confines of the Notice of Appeal and the procedural powers of the Tribunal define relevance of the material.

37. The interests of a person or entity directly affected by the decision are protected by the requirements of the Act s. 11 (3) providing for notice and service. A person not a respondent or party might seek to be heard as an interested party (s. 11E (c)). Joinder or right of audience might be allowed by the Tribunal before or after the initial determination of the question of error on the part of the Regulator.

38. If error is found the Tribunal is empowered by virtue of s. 11G to conduct its own hearing and confirm modify or reverse the original decision. In doing so it may pay regard to

(1) the material originally before the Regulator

(2) the additional material, if any, put to the Tribunal in support or opposition to the claim of error

(3) material provided during its own hearing.

39. Some or all of the above steps may, as here, be taken concurrently (Ulu Vaomalo Ulu Kini v Lealailepule Rimoni Aiafi and The Electoral Commissioner (Supreme Court Samoa 10 August 2006)).

40. Joinder or right of audience might be determined at the outset. The validity or otherwise of the decision impugned might be decided and known before a continued hearing. Some of the material relevant on the question of error would undoubtedly be relevant to disposition. Flexibility is required because of the nature of the Tribunal and for expeditious determination (The Act s. 11 E (3)). Flexibility does not govern identification and statement by the Tribunal of the differing steps taken in a concurrent hearing. They ought be clearly stated by the Tribunal or be apparent from a composite statement of reasons and be capable of appropriate judicial review.

41. The Tribunal, a creature of statute, has the characteristics of both a confined body of review and wide discretionary powers of appropriate disposition. It is a reflection consistent with many jurisdictions of a more flexible and modern process.

42. The nature of a review by a Tribunal of the decision of a commission concerning telecommunications access was considered in Re Seven Network Ltd of No 1) [2004] ACompT 10; [2004] 187 FLR 351 which applied the test of statutory construction required by the High Court in Coal v Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; [2000] 203 CLR 194 where the majority (Glessor CJ Gandson and Hayne JJ stated:

"[11] It was pointed out in Brideson [No 2] that "the nature of [an] appeal must ultimately depend on the terms of the statute conferring the right of appeal]". The statute in question may confer limited or large powers on an appellate body; it may confer powers that are unique to the tribunal concerned or powers that are common to other appellate bodies. There is, thus, no definitive classification of appeals, merely descriptive phrases by which an appeal to one body may sometimes be conveniently distinguished from an appeal to another."

Procedural Fairness and Regard to Non Admitted Material

43. These matters can, for convenience be considered together. Digicel claims that the Tribunal was not entitled to have regard to the Interim Mondiale Ltd study "IML" referred to in its conclusions at (e) since:

(a) it was not put into evidence before the Tribunal (Ground 6 (a) (i) as refined)

(b) it had been rejected by the Court in Digicel v Attorney General (supra) and as such a ‘binding opinion that the cost study of IML was unlawful’ (Grounds 5 (b), 6 (a) (VIII).

44. The grounds are misconceived. The comments made by the learned Chief Justice in Digicel (supra) were but observations in a case involving procedural fairness and do not constitute ‘Res Judicata. The reference to the methodology and summation of the IML report appearing in the reasons or conclusions of the Tribunal are no more than a compendium of the Regulator’s own considerations stated in the document dated 25 August 2008, 5.2 and 6.1 in evidence before the Tribunal. Digicel itself made submissions to the Tribunal concerning the IML report in its summation document dated 4 May 2009 at paragraph 22.

45. The second issue involving the IML report concerns the claim of procedural unfairness in the making of a refund order, a matter to be later considered, pursuant to the Act s.11G (e). It is claimed (Ground 7 (b)) that:

"The respondent failed to provide the applicant with any opportunity to make any submissions in relation to the refund order."

46. The Tribunal was required to provide procedural fairness especially if were to embark on a different or unforeseen path than that identified by the parties. SamoaTel’s Notice of Appeal dated 3 April 2009 challenging the validity of order 2009/01 specifically sought an order pursuant to the Act s.11G, 2 (e) and became joined with the appeal concerning 2008/03 upon the grant of joinder. During the hearing counsel for Samoatel tendered a document calculating varying amounts of the refund applicable depending on the actual findings of the Tribunal (see; STL Court Book Vol 1 Tabs 1.5, 1.9). The accuracy of the calculations was not challenged. Counsel for Samoatel opened on the claim. Digicel had notice and the Tribunal not required to conduct its case. There had been no breach of procedural fairness in the sense of decisions of this court in cases such as Kirisome v Attorney General [2002] WSSC 3, Digicel v Attorney General (supra) and Lokeni – Lepa v Public Service Commissioner [2006] WSSC 14.

The Court

47. The Act s. 11 (L) provides

"No proceedings relating to any telecommunication dispute may be commenced in any court after an appeal has been filed under the Part.

48. That finality is subject to judicial review by way of prerogative writ or application. But the statement by Parliament in the terms of s. 11 (L) proscribe any ‘merits based’ general review. Whilst questions of fact and principle are often admixed the scheme of the legislation does not permit a simple three tiered hierarchy process. Cases which consider the operation of general Tribunals such as an Administrative Appeals Tribunal might be helpful but in many instances a reviewing court is not required to consider the nature of finality here expressed by the legislature. The duty and jurisdiction of this court to review ought not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository’s power (Attorney General NSW v Quin [1989 – 90] 170 CLR 1).

49. The relief sought is the quashing of the order of the Tribunal not, except by implication, the upholding of the decision of the Regulator. S. 11L (2) does –

"... not prevent any action taken by way of judicial review in relation to a proceeding of the Tribunal."

50. A useful commencing point for consideration of the jurisdiction and powers of this court in considering the import of the Act s. 11L is the summary contained in the judgment of McGrath J on behalf of 5 judges of the Supreme Court of New Zealand in Unison Networks Ltd v Commercial Commission [2008] 1 NZLR 42 when he stated at paragraphs 52 – 55.

"[52] It is unnecessary in this case to attempt a comprehensive description of all circumstances in which the exercise of a statutory power will amount to an abuse. Two conventional instances have been raised for consideration. The first is where the power is exercised for a purpose that is not within the contemplation of the enabling statute. The second, to which we will return, is where the decision maker applies the wrong legal test in exercising the power.

[53] A statutory power is subject to limits even if it is conferred in unqualified terms. Parliament must have intended that a broadly framed discretion should always be exercised to promote the policy and objects of the Act. These are ascertained from reading the Act as a whole. The exercise of the power will be invalid if the decision maker "so uses his discretion as to thwart or run counter to the policy and objects of the Act". A power granted for a particular purpose must be used for that purpose but the pursuit of other purposes does not necessarily invalidate the exercise of public power. There will not be invalidity if the statutory purpose is being pursued and the statutory policy is not compromised by the other purpose.

[54] Ascertaining the purpose for which a power is given is an exercise in statutory interpretation which is not always straightforward. This is partly because legislative regimes differ in the specificity with which they grant the power rather than assessing the merits of its exercise in any case. They must be careful to avoid crossing the line between those concepts.

[55] Often, as in this case, a public body, with expertise in the subject matter is given a broadly expressed power that is designed to achieve economic objectives which are themselves expansively expressed. In such instances Parliament generally contemplates that wide policy considerations will be taken into account in the exercise of the expert body’s powers. The courts in those circumstances are unlikely to intervene unless the body exercising the power has acted in bad faith, has materially misapplied the law, or has exercised the power in a way which cannot rationally be regarded as coming within the statutory purpose."

The threshold question he considered was posed by His Honour at 49 – 50 in the following terms:

"[49] The question for this Court is whether the Commission has failed to exercise its power to set thresholds in accordance with the purpose and the requirements of the Act. Unison contends that the Commission’s decisions setting initial and revised thresholds are invalid because, in reaching them, the Commission abused its statutory powers. Unison says, first, that the Commission set the thresholds for an improper purpose and, secondly, and in consequence applied the wrong legal test in exercising the threshold setting power.

[50] As is often the case, the two grounds relied on to show invalidity overlap to a considerable extent. While we will address each, in the end the common ultimate question is whether the Commission exercised its powers in accordance with the requirements of the statute. It must act within the scope of the authority conferred by Parliament and for the purposes for which those powers were conferred."

51. Here a Tribunal has been included by Parliament into the review process and the supervisory jurisdiction of this court has been further refined. It ought not replicate the role of the Tribunal. A claim of Wednesbury unreasonableness leaves the merits or action unaffected unless the decision or action is such as to amount to an abuse of power (Attorney General NSW v Quin (supra)).

The questions here are rather:

(1) has there been procedural unfairness or impropriety

(2) was the Tribunal able to conclude that the Regulator was:

(a) wrong in law in the determination by reference to statute

(b) wrong in reaching a decision based on insufficient evidence or failing to pay regard

to relevant and cogent material.

(3) If yes to (2) was the Tribunal entitled to conduct its own assessment of the merits of the matters put before it.

(4) If yes could that decision be

(a) a consequence of misapplication of the requirements of statute

(b) so unreasonable as to constitute legal error, through exceeding power.

52. The function of certiorari is to quash the legal effect or the legal consequence, not an identified error which did not itself produce that effect or consequence (Ainsworth v Criminal Justice Commission [1992] HCA 10; [1992] 175 CLR 564). Error in any of the conclusions relating to processes followed by the Regulator such as the critique of the 2006 order would not warrant the quashing of the findings of the Tribunal as to whether or not the orders 2008/03 and 2009/01 were properly or validly made or invalid through wrong application of legal principle or a failed exercise of discretion (Telstra v Australian Competition Commission [2008] FCA 1590; [2009] 175 FCR 1).

The Decision

53. The decision of the Tribunal follows a structure of narrative and recounting of uncontroversial facts, consideration of the claimed error of the Regulator, findings of error based on primary documents and the testing of the Regulator’s reasons through cross examination and ultimately a conclusion of error. Error found, the decision deals with the evidence relevant to its own consideration of merits and disposition. The reasons meet the requirement already stated, namely identification of the differing procedural steps necessary for the legislature scheme.

54. It is not for the Tribunal or Samoatel to show the correctness of the decision but for Digicel to show manifest error Minister for Aboriginal Affairs v Peko – Wallsend Ltd [1986] 186 CLR 24. The error must lie within the decision not of a particular component of the reasoning unless such be fundamental to that decision. In some instances portion of a decision may be set aside and a particular order disallowed but the essence is with the determination. (Telstra Corporation v Australian Competition Consumer Commission (No. 2) [2008] FCA 1640).

55. The decision itself shows respect for or deference to the role of the Regulator (see generally – Proportionality, Deference Wednesbury; Taggart [2008] NZ Law Review 423 at 456.461), shown here through the referral or remitting of many of the matters considered to the Regulator. The primary order made shows that the Tribunal correctly dealt with the case as shaped by the parties. It did not set aside the whole of orders 2008/03 and 2009/01 but upheld the appeal against those portions of the orders challenged by Samoatel. It correctly asked itself the questions.

(1) what were the grounds identified on the Notice of Appeal

(2) had any of those grounds been made out

(3) had it permitted an interested person to be heard on those issues as formulated

(4) on what material did it base its own conclusion and what, if any, orders, as distinct from findings and remittals, should it make.

56. Central to the decision of the Tribunal lay two fundamental questions. The first was whether the Regulator was required to pay regard to the element of ‘cost oriented’ contained in the Act s. 32 (a) in its fixing of an interim charge rate under s. 39A which did not require ‘cost based’ analysis. That issue was central because of the claim by Samoatel of economic detriment to the service as a whole. The second was whether it was entitled to conclude that the Regulator had not in each case engaged in a real, as distinct from claimed, exercise of discretion. In dealing with the latter question the Tribunal was entitled to view the reasons of the Regulator as tested by cross examination together with its assessment of the witnesses Johnstone and Ockerby. If those two questions were properly answered in the affirmative the tests of reasonableness, statutory interpretation, expertise and the like are adjuncts or vehicles for the resolution of those questions.

57. The reasons themselves suggest this analysis. Paragraphs 1 – 11 are introductory whilst paragraphs 12 - 16 provide context. Paragraphs 17 – 21 set out the dealings between the parties. It may be that the Tribunal was confirming in paragraph 21 that there had been a denial of procedural fairness in the setting of the 2006 rates, a finding contested by Digicel. But refined the argument was that it would be unsafe to use those rates as a foundation for any later assessment. That was a finding open to the Tribunal. Paragraph 24 is a finding open on the material provided to both the Regulator and the Tribunal. It did not follow, as a matter of law that the Regulator had been obliged to consider or give weight to the matter. That question was dealt with elsewhere in the Tribunal’s reasons.

58. The Tribunal accepted the opinion evidence given by the Johnstone and recounted the history and fate of the order including the resulting changes in the legislation (paragraphs 25 – 33). It found that the Regulator had in May 2008 acknowledged that it was inappropriate to continue with the 2006 rates. The finding at paragraph 35 that ‘effectively order 2008/03 made no material charge to the rates set in order 2006/04’ challenged by Digicel was open on the evidence to the Tribunal. The flat domestic mobile termination rate of 35 sene was a calculation, supported by opinion evidence based on an average of the previous rates of 45 and 35 sene previously assessed for peak and off peak rates respectively. The Regulator had provided the factors which caused her to decide the 2008/03, in her affidavit dated 30 April 2009.

59. A reading of the 25 August 2008 paper shows that the Regulator was aware of the issues raised by Samoatel and of international benchmarking reports. But it shows that she deferred rather than addressed the issue. It was, in part, on this basis that Samoatel claimed error in relation to the 2008/03 order, and sought to confirm that claim through cross examination.

60. The Regulator in his consideration document of 30 March 2009 noted the failure of Digicel to respond to the initial proposed paper of 27 January 2009 or Samoatel’s proposal of 9 February and regarded that failure as not preventing him from determining the interim charges (The Act s.39 (10). He did not state in that consideration that he had taken Samoatel’s position into account.

61. In the Regulator’s response or consideration document of 30 March relating to the 2009/01 order, the Regulator noted Samoatel’s submission as to amelioration but did not take it into account noting instead at 4.4 that he would need to independently verify the claims and establish the level of harm. He did not regard it as a matter relevant to his determination. He did state that he would be guided by the findings of the Tribunal in relation to the appeal concerning order 2008/03.

62. However that evidence was tested through cross examined and its import weakened by concessions made by the opinion witness Ockerby, called by Digicel, in the course of his cross examination. Examination by this court of their respective affidavits and attachments and the transcript of their cross examination show the testing to have been cogent and effective. That evidence summarized in paragraphs 38 – 41, 43 – 44 supports the conclusion stated at 42 that:

"So by adopting the rates in order 2006/04 and incorporating them into order 2008/033 the Regulator simply continued to apply interconnection rates which were not cost based. As it appears from the evidence, the Regulator did not use or rely on any cost information or analysis in setting the rates in order 2008/03."

63. That it recognized the distinction between the terms ‘cost based’ and ‘cost oriented’ is made clear later in the reason at paragraphs 72 – 74.

64. It is not for this court to determine whether or not it would have drawn the same inferences or reached the same conclusion from the whole of the material as did the Tribunal. The question is whether the Tribunal was entitled to reach the conclusion it did. Given the nature and terms of order 2009/01 the Tribunal was entitled to accept its dependency on the previously impugned order 2008/03 and applying the same critique regard it as separately but equally flawed. Given those findings the conclusion reached was that there had been no real or effective exercise of discretion.

65. The Tribunal correctly identified the statutory duty imposed on the Regulator by the Act s. 32 (a) at paragraphs 50 – 55 and under a separate heading considered the effects of the orders on the financial health of Samoatel. It accepted the evidence of Johnstone both as to the nexus between the charges and the harm and the severity of their financial burden or imbalance.

66. It then identified the issues (paragraph 59) and addressed the nature and form of its hearing accepting correctly that it was not a rehearing de novo; and any duty which the Regulator might have to provide reasons (paragraphs 60 – 64). It noted the tension between the provision of the Act s. 11 and 8 (1) (u) and concluded, as did this court, that it was necessary to read down the latter as against the former or primary provision.

67. It applied three bases for the examination of whether the Regulator had complied with the provision of the Act s. 32 (a). The first was that the terms of s. 39 A did not exclude the operation of s. 32 (a) in the determination of interim charges. It found that despite access to or provision of specialist reports both national and international no cost analysis or information was relied upon. Secondly it accepted the evidence of Ockerby that the approach taken by the Regulator was contrary to accepted international practice. It found that the rates themselves, the acceptance by Morgan, a previous regulator, and the evidence of Johnstone showed that order 2008/03 was but an effective continuation of its predecessor 2006/04. Thirdly it accepted that whilst the rates for 2008/03 need not be cost based there was no evidence that they were cost oriented. It follows that order 2009/01 was likewise tainted.

68. The conclusion reached did not depend on a specific finding that the rates in order 2006/04 were not cost based; a matter relied on by Digicel in this review as showing error on the part of the Tribunal. The impugned findings were stated at 72 – 73 as:

"72. Apart from the rates in Order 2006/04 not being cost based, we also heard no evidence to satisfy us that those rates were cost oriented. Given that Mr. Morgan took only one or two days to set those rates, one asks what type of information were those rates based on.

73. Mr. Johnstone also said in his evidence that in May 2008 Mr. Morgan, the Regulator at that time, wrote to him saying the rates in order 2006/04 were inappropriate to remain in effect. And that was after Mr. Morgan had by order 2007/04 imposed cost based rates which were much lower than the non-cost based rates in order 2006/04 which have had a severe impact on the appellant’s competitive and financial position."

69. The counter to the critique as stated by counsel for Samoatel was that it was supported by inference, the statements by Morgan the ex-Regulator and the terms of the attempted 2007/04 order. Refined the submission was that their date of making and provenance made them unsafe foundations for the later orders.

70. The Tribunal next considered the ‘Wednesbury’ test (Associated Provincial Picture Homes Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223) correctly identifying the principle stated in the cases cited Wellington City Council v Woolworths New Zealand Ltd [1996] 2 NZLR 537 and Minister for Aboriginal Affairs v Peko – Wallsend Ltd (supra). It summarized its findings and conclusion at paragraphs 80 – 82 stating:

"80. We have given careful consideration to the decision by Ms Marius to make order 2008/03 without material change to the rates that were imposed by Mr. Morgan in order 2006/04. We have also given the same kind of consideration to the decision by Mr. De Freitas to extend in order 2009/01 for another three months the rates that were imposed in order 2008/03.

81. It is clear from the evidence that Ms Marius was made aware by the appellant of the fact that the rates in order 2006/04 were not cost based. She was also aware that the cost based rates imposed under order 2007/04 were much lower than the rates in order 2006/04. She should also have known that order 2007/04 was declared unlawful because of the process that was followed in making that order but not because of the rates that were set. She was also aware that the benchmark rates provided in the August 2008 Network Strategies Reports were far below the rates in order 2006/04. The appellant was also expressing grave concerns about the severe impact of the high rates in order 2006/04 on its competitive and financial position. Nonetheless Ms Marius issued order 2008/03 adopting the rates in order 2006/04 not on the basis of any cost information or analysis but because they were the existing rates applied by the appellant and the third party at that time.

82. With respect to the Regulator, we have come to the conclusion, after careful consideration, that the decision to issue order 2008/03 adopting the rates in order 2006/04 without any material change was in the circumstances unreasonable in the Wednesbury sense."

71. It correctly stated the relevant principles governing a failure to take into account relevant considerations as formulated by Mason J in Peko v Wallsend (supra) at paragraphs 39 – 40 and referred to the failure of the Regulator to use benchmark or cost based reports or the severe impact of the rates on Samoatel. The impugned reference to the IML Report at paragraph 91 has been separately considered. The finding specific to order 2009/01 that:

"It follows that the Regulator by extending the application of the rates set under order 2008/03 when he issued order 2009/01 was effectively extending the misuse of direction that occurred in setting the rates under order 2008/03".

was open to the Tribunal and defensible at this hearing. The portion of the reasons under the heading "Further Comments" (paragraphs 94 – 100) are not relevant to the determination of this application.

Conclusions Reached by Tribunal

72. The matters stated under the heading ‘Conclusion’ are a mixture of findings, suggestions, orders and remittals. The orders were:

(1) The Appeals against orders were upheld. They were accompanied by a finding that ‘the Tribunal has decided that the rates used in the orders 2008/03 and 2009/01 derive from the rates of order 2006/04 and do not had an identifiable relationship with costs’.

73. The statement was unnecessary and perhaps too simple a summary of a complex decision stated in the body of the reasons. But although criticized by the applicant its wording does not affect the propriety of the decision. The terms of the order reflect the process earlier discussed in these reasons. The Tribunal did not purport to set aside the orders generally since they contained other terms not the subject of appeal. In doing so the Tribunal confined itself to the matters raised in the Notice of Appeal as required by the Act.

(2) The stay order is irrelevant to the disposition of the application.

(3) The Tribunal remitted orders 2008/03 and 2009/01 to the Regulator for reconsideration. In doing so it gave deference to the Regulator in accordance with one of the criteria mentioned in authorities cited during the hearing of this application. The remittal required the Regulator to take into account matters identified by the Tribunal which it considered were required by the Act s. 32 (a). The remittal was in accordance with the Act s. 11G 2 (b).

(4) The Tribunal ordered that Digicel ‘refund to (the) specified service provider (Samoatel) any amount that has been paid ... in excess of a revised order imposed by the Tribunal’, in accordance with the Act s. 11G 2 (e). It did not quantify the amount. The terms of this order were challenged by the applicant as being too uncertain to be enforceable. The remittal of the orders required the Regulator to reassess the rates of charge. The remittal was accompanied by a statement of opinion or expectation that the new rates would be lower, an expectation born out by the making of the fresh orders on 7 October 2009, orders 2009/02 and 2009/03 respectively. During the hearing Samoatel had tendered a document providing for varying amounts of any refund depending on recalculation. The terms of 2009/02 and 2009/03 permitted ready calculation of the amount of refund, and provide certainty for the order made by the Tribunal.

74. The order was accompanied by a suggestion that the ‘terms and arrangements for the refund should be as the parties agree but being simple, staged and completed by 31 December ‘2010’. The suggestion could have been better worded but, if as the applicant contended, they were directory and imprecise, the effect of the direction was clear. Unless the parties agreed otherwise the amount to be repaid became enforceable in accordance with the Act s. 11G (e) and 11 J on or before 31 December 2010. Payments by installments or offsets might be desirable and beneficial to the commercial parties but in law the terms of the order, in law, are certain.

(5) The subsequent costs order foreshadowed in conclusion (l) was not the subject of argument on the hearing of this application.

75. The remaining matters stated in the Conclusions are but advisory. Even if, as the applicant contends they are directory their terms do not bind the Regulator. Reports or recommendations do not ordinarily attract the function of certiorari which is to quash legal effect not recommendations which themselves have no legal effect or carry no legal consequences (Ainsworth v Criminal Justice Commission [1992] 175 CLR at paragraph 36). Their terms and import can be summarized as:

(1) The Tribunal considered that any new rates ought be lower than those fixed in orders 2008/03 and 2009/01, an opinion consistent with the approach taken by the Tribunal and the rates calculated in the failed 2007/04 order. That opinion or expectation was said by the Tribunal to be supported by the 2007 IML study and the August 2008 Network Strategies study. The references were, in the context of the reasons, unexceptionable.

(2) Any re-calculation should take into account the stay order referred to above in (2). That might constitute a direction but if so it does no more than reflect the terms of the Act ss. 11G and 39A (11).

(3) That the commercial parties and Regulator attempt to agree new long term rates in accordance with the Act ss. 3 and 32.

(4) That the Regulator attempts a transition path in accordance with the so called ‘glide path’ model employed by the industry.

None of these advisory, even if they be directory, statements or expectations fettered in law the exercise of discretion remaining with the Regulator nor vitiate the decision or primary orders 1 – 5 identified above.

76. Their wording might have been imprecise and confusing. Both the Regulator and counsel for the Samoatel suggested that in future cases the Tribunal more carefully craft the wording of orders and/or statements advising or directing matters upon remittal in terms which conform, as far as practicable with the language used by the legislation.

Conclusion

77. The application for the prerogative order for certiorari in each case is dismissed. In so far as is necessary the application for Declaratory relief is dismissed.

78. Counsel are given leave to seek consequential orders but if so are required to state the terms of the orders sought together with written submission in support of those orders within 10 days as and from 26 October 2009. Any orders sought and the supporting submissions are to be provided to the other parties at the same time.

HONOURABLE JUSTICE SLICER