MINUTES OF ORDER

THE COURT ORDERS THAT:

1.         Leave be granted to the applicant to file and serve an amended application substantially in the form attached to the notice of motion dated 31 July 1997 and marked “A” thereto.

2.         Leave be granted to the applicant to file and serve a further amended statement of claim in the form attached to the said notice of motion and marked “B” thereto.

3.         The notice of motion filed by the ninth, tenth and fifteenth respondents dated 6 June 1997 be dismissed.

4.         The notice of motion filed by the first, second, third, fourth, sixth, seventh, eleventh, thirteenth and fourteenth respondents be dismissed.

5.         The costs of all three motions be the applicant’s costs in the proceeding.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

Before the Court are three notices of motion.  The first notice of motion was filed by the Australian Competition and Consumer Commission (“the ACCC”) which seeks leave to file an amended application and a further amended statement of claim.  The second notice of motion is that of the first, second, third, fourth, sixth, seventh, eleventh, thirteenth and fourteenth respondents, who seek to have the applicant’s motion for amendment refused and certain other orders.  The third notice of motion was filed by the ninth, tenth and fifteenth respondents who seek to have the whole (or certain parts) of the amended statement of claim (which is the statement of claim presently operative) struck out or to have particulars of certain allegations in the statement of claim furnished.  I heard all three motions together by consent.

The statement of claim in its present form contains 88 paragraphs and is 35 pages in length.  I do not propose to set it out or summarize it.  It is sufficient for present purposes to say that the relief sought by ACCC includes the following:

1.         Declarations that certain of the respondents have contravened s 47 of the Trade Practices Act 1974 (“the Act”) by acquiring and offering to acquire television programmes pursuant to programme supply agreements between the fifth respondent and others and between the ninth respondent and others.

2.         Declarations that other respondents have been directly or indirectly knowingly concerned in or party to the alleged contraventions of s 47.

3.         Declarations that certain of the respondents, by making or arriving at an agreement described in the pleading as the Overall Agreement, have contravened s 45(2)(a) of the Act and that by giving effect to the Overall Agreement have contravened s 45(2)(b) of the Act.

4.         Injunctions and pecuniary penalties.

The first, second, third, fourth, sixth, seventh, eleventh, thirteenth and fourteenth respondents are represented by the same solicitors and counsel.  The ninth, tenth, and fifteenth respondents (to whom I shall refer for convenience as the “Seven Network”) are represented by the same solicitors and counsel.  The fifth, eighth and twelfth respondents are represented by the same solicitor (I shall refer to them, for convenience, as the “Nine Network”).

The Nine Network played no active role in the motions before the Court.

The proposed amendments to the statement of claim centre on paragraph 25 of that document and the particulars given with respect to it.  Other amendments are proposed to later paragraphs which are mainly consequential.  I shall consider the proposed amendments to paragraph 25 (also paragraphs 26 and 26A) of the statement of claim as they were the focus of most of the debate.  The determination of the argument concerning those three paragraphs substantially determines the matter.

Although paragraphs 25 and 26A in the proposed amended statement of claim are rather lengthy, it is helpful if I set them out in full.  They are as follows (the amendments are underlined):

“25.     In or about the latter half of 1995, Nine Network and Seven or alternatively Nine Network and Seven and Golden West made a contract or arrangement or arrived at an understanding (‘the Overall Agreement’) containing the following provisions or one or more of them:-

(a)       that Seven would enter into an exclusive television programme supply agreement with Territory Television for ten years with an option to renew for five years or alternatively for a long term and at about the same time, Nine Network would enter into an exclusive television programme supply agreement for fifteen years or alternatively for a similar long term with Golden West and each of Seven and Nine Network would perform the said agreements;

(b)       that for the duration of the exclusive television programme supply agreement with Territory Television, Seven would not by itself or by a subsidiary become a commercial television broadcaster in either the Darwin licence area, or the regional Western Australia licence areas:

(c)        that Seven would inform potential new commercial television broadcasters in the Darwin licence area or otherwise let it be known that it had an exclusive television programme supply agreement with Territory Television;

(d)       that for the duration of the exclusive television programme supply agreement with Golden West, Nine Network would not by itself or by a subsidiary become a commercial television broadcaster in the regional Western Australia licence areas;

(e)        that Nine Network would inform potential new commercial television broadcasters in the regional Western Australia licence areas or otherwise let it be known that it had an exclusive television programme supply agreement with Golden West;

(f)        Seven would not, or would not except to a limited extent, supply television programming to new entrants in the regional Western Australia licence areas; and

(g)       Nine Network would not, or would not except to a limited extent, supply television programming to new entrants in the Darwin licence area.

PARTICULARS

(A)       The said contract or arrangement was made, or the said understanding was arrived at, at or as a result of meetings and other communications between representatives of Seven and Nine Network or alternatively Golden West, Seven and Nine Networkin the latter half of 1995.  The communications included telephone discussions on a number of separate occasions in about September and October 1995 between Gammell on behalf of Seven or alternatively on behalf of Golden West and Seven and Falloon on behalf of Nine Network concerning a proposed exclusive television programme supply agreement in relation to the regional Western Australia licence areas and between Rice on behalf of Seven and Falloon on behalf of Nine Network concerning a proposed exclusive television programme supply agreement in relation to the Darwin licence area.  The Applicant is unable to supply further particulars as to those discussions except that at least one of the conversations between Rice and Falloon took place on about 19 October 1995.  The Applicant will also rely on the announcement by Falloon on about 6 October 1996 that Nine Network was very, very interested in the second commercial licence(s) for the regional Western Australia licence areas and the circumstance that, subsequently, Nine Network did not take any action for the acquisition of the second commercial licence(s) for the regional Western Australia licence areas.  The Applicant will also rely on the inferences which can be drawn as to the existence of the said contract, arrangement or understanding from the matters alleged in paragraphs 27A to 30, 31, 32, 33, 34 and 36, and, in particular, the proximity in time of the execution of the exclusive television programme supply agreements.

(B)       Further and alternatively the said contract, arrangement or understanding was initiated at the meetings and during the other communications in the latter half of 1995 referred to above and was made or arrived at when each of Seven and Nine Network or alternatively Golden West and Seven and Nine Network proceeded to act in the manner discussed during such meetings and other communications with a view to inducing an expectation in the other party or parties that each would continue to so act and was able to observe that the other party or parties was also acting in a like manner.  The Applicant will also rely on the inferences which can be drawn as to the existence of the said contract, arrangement or understanding from the matters alleged in paragraphs 27A to 30, 31, 32, 33, 34 and 36.

26.       The purposes or substantial purposes of the provisions mentioned in paragraph 25 hereof or the purposes or substantial purposes of the parties in entering into the overall agreement were to:

            (a)        enable Territory Television to be in a position to be allocated the second commercial television licence under the Broadcasting Services Act 1992 for the Darwin licence area;

            (b)        hinder or prevent other potential entrants from acquiring the second commercial television licence for the Darwin licence area;

            (c)        prevent, restrict or limit the supply of television programs by the parties to new entrants in the Darwin licence area;

            (d)        enable Golden West to be in a position to be allocated the second commercial television licence(s) under the Broadcasting Services Act 1992 for the regional Western Australia licence area(s(;

            (e)        hinder or prevent other potential entrants from acquiring the second commercial television licence(s) for the regional Western Australia licence area(s);

            (f)        prevent, restrict or limit the supply of television programs by the parties to new entrants in the regional Western Australia licence area(s).

26A.    The provisions mentioned in paragraph 25 hereof have had, presently have and are likely to have, the effect of substantially lessening competition in the following respects:

            (a)        potential new entrants to the regional Western Australia licence areas would not be likely, or would be less likely, to pursue their expressions of interest for the allocation of the second commercial television licence;

            (b)        potential new entrants to the regional Western Australia licence areas would be unlikely, or would be less likely, to have available to them television programs of sufficient quality to be able to operate a viable second commercial television service;

            (c)        by reason of the position and influence of Mr Stokes, Mr Rayner and Mr Gammell, in relation to Golden West and Seven it is unlikely that potential new entrants to the regional Western Australia licence areas would have access to Seven programs of sufficient quality to be able to operate a viable second commercial television service;

            (d)        new entrants to the regional Western Australia licence areas would be unlikely to be able to attract a sufficiently wide demographic viewing audience to support a viable second commercial television service;

            (e)        new entrants to the regional Western Australia licence areas would be unlikely to be able to attract a sufficiently wide demographic viewing audience to attract advertisers sufficient to be able to operate a viable second commercial television service;

            (f)        new entrants to the regional Western Australia licence areas would be unlikely to be able to attract a sufficiently wide demographic viewing audience to generate sufficient revenue from advertising to enable them to produce their own programming;

            (g)        new entrants to the regional Western Australia licence areas would be unlikely to be able to attract a sufficiently wide demographic viewing audience to generate sufficient revenue from advertising to enable them to purchase broadcast rights to programming from independent production houses other than on a limited basis;

            (h)        new entrants to the regional Western Australia licence areas would be unlikely to be able to attract a sufficiently wide demographic viewing audience to generate sufficient revenue from advertising to enable them to purchase broadcast rights to programming from international programme distributors where any of the three national free to air networks (7, 9 and 10) or GWN also sought equivalent broadcast rights to that programming;

            (i)         new entrants to the regional Western Australia licence areas would be unlikely to be able to attract a sufficiently wide demographic viewing audience to generate sufficient revenue from advertising to enable them to purchase broadcast rights to national sports such as test cricket and Australian Football League matches where any of the three national free to air networks (7, 9 and 10) or GWN also sought broadcast rights to that sport;

            (j)        potential new entrants to the Darwin licence area would not be likely, or would be less likely, to pursue their expressions of interest for the allocation of the second commercial television licence;

            (k)        potential new entrants to the Darwin licence area would be unlikely, or would be less likely, to have available to them television programs of sufficient quality to be able to operate a viable second commercial television service;

            (l)         by reason of the position of Territory Television as a wholly owned subsidiary of Nine Network it is unlikely that potential new entrants to the Darwin licence area would have access to Nine programs of sufficient quality to be able to operate a viable second commercial television service;

            (m)       new entrants to the Darwin licence area would be unlikely to be able to attract a sufficiently wide demographic viewing audience to support a viable second commercial television service;

            (n)        new entrants to the Darwin licence area would be unlikely to be able to attract a sufficiently wide demographic viewing audience to attract advertisers;

            (o)        new entrants to the Darwin licence area would be unlikely to be able to attract a sufficiently wide demographic viewing audience to generate sufficient revenue from advertising to enable them to produce their own programming;

            (p)        new entrants to the Darwin licence area would be unlikely to be able to attract a sufficiently wide demographic viewing audience to generate sufficient revenue from advertising to enable them to purchase broadcast rights to programming from independent production houses other than on a limited basis;

            (q)        new entrants to the Darwin licence area would be unlikely to be able to attract a sufficiently wide demographic viewing audience to generate sufficient revenue from advertising to enable them to purchase broadcast rights to programming from international programme distributors where any of the three national free to air networks (7, 9 and 10) also sought equivalent broadcast rights to that programming;

            (r)        new entrants to the Darwin licence area would be unlikely to be able to attract a sufficiently wide demographic viewing audience to generate sufficient revenue from advertising to enable them to purchase broadcast rights to national sports such as test cricket and Australian Football League matches where any of the three national free to air networks (7, 9 and 10) also sought broadcast rights to that sport.”

The central argument of counsel for the respondents was that these paragraphs, like others in the statement of claim, assert conclusions and do not allege material facts.  That is the nub of the argument.

The relevant principles concerning the functions of a statement of claim are well established and referred to in many cases.  See for example Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41-522 per Burchett J at 42,679-42,680 and the cases there cited by his Honour.  I agree with Burchett J that the primary function of a statement of claim:

“is to tell the defending party what the claim is that he has to meet.  That is a matter of elementary and natural justice; the claim cannot be answered until it is known.”

It is important that I say something about motions to strike out statements of claim in the conduct of modern litigation.  Today, courts are playing an increasingly active role in case management.  Motions to strike out pleadings are matters of practice and procedure.  In its role of case management, courts devise various procedures to overcome deficiencies in pleadings other than by simply ordering that the offending paragraphs be struck out.  Sometimes it is appropriate to strike them out, sometimes not.  On some occasions it is better for the court to direct the applicant, whose statement of claim is under challenge, to furnish particulars or to file and serve affidavits to show that there really are facts which can be proved and which, if proved, would support the general statements made in the statement of claim.  This was the course which I took in Trade Practices Commission v Australian Iron and Steel Pty Ltd (1990) 22 FCR 305, a practice which other judges adopt from time to time.  This is not, of course, intended to be a substitute for a defective pleading in every case because, as is well known, pleadings must assert basic or constitutive facts, not the evidence by which they are to be proved.  But case management is a sensible and flexible thing.  It must not be unduly circumscribed.

A case such as the present, where allegations are made of contraventions of Part IV of the Act (in particular ss 45 and 47), raises special issues of market definition, anti-competitive behaviour, public benefit, public detriment and competition generally.  Evidence of experts is generally given, including economists. Documents tendered often include reports of government bodies, official statistics and similar documents.  Factual material in Part IV cases is usually of a more sophisticated nature than a typical commercial dispute between parties, and the line between fact, opinion and conclusion is sometimes blurred.  These circumstances are relevant when considering whether the alleged offending paragraphs of the statement of claim state conclusions rather than facts.

In my opinion the pleading in its present form, in particular, paragraphs 25 and 26A do state conclusions; but they also state basic or constitutive facts.  In some instances the two are inextricably mixed.

The best way, as a matter of case management, to handle the present motions is to allow the amendments to be made that are sought by the ACCC. 

This is not a case where the respondents have sought to strike out the statement of claim or parts thereof so that they may plead to it.  In fact, defences have been filed by all the respondents except the fifth, eighth and twelfth, who, according to the solicitor who appeared for them, are involved in discussions with the ACCC about the case generally.

The defences that have already been filed may have to be amended, which can be done.  Interlocutory processes of discovery and the filing and serving of affidavits or statements or outlines of evidence will then take place.  I see no real difficulty to the defendants in pleading to the proposed amended statement of claim. Once the ACCC’s evidence has been filed the respondents will be able to gauge the appropriate evidence which they should bring in response.

One of the alternative orders sought by the ninth, tenth and fifteenth respondents is for further and better particulars in terms of paragraph 3 of their notice of motion.  I do not think it appropriate to order that further and better particulars be provided.  When the ACCC’s evidence has been filed in the form of affidavits, statements or outlines of evidence, doubtless that will provide certain of the particulars that have been sought.  After all, the applicant’s case cannot rise above the evidence that is adduced at the trial; and, so far as pleading to the further amended statement of claim is concerned, I doubt if the absence of particulars at this stage will present difficulties, as they appear to have presented no real difficulties when the existing defences were put on.

The orders of the Court are as follows:

1.         Leave be granted to the applicant to file and serve an amended application substantially in the form attached to the notice of motion dated 31 July 1997 and marked “A” thereto.

2.         Leave be granted to the applicant to file and serve a further amended statement of claim in the form attached to the said notice of motion and marked “B” thereto.

3.         The notice of motion filed by the ninth, tenth and fifteenth respondents dated 6 June 1997 be dismissed.

4.         The notice of motion filed by the first, second, third, fourth, sixth, seventh, eleventh, thirteenth and fourteenth respondents be dismissed.

5.         The costs of all three motions be the applicant’s costs in the proceeding.

Associate:

Dated:              19 August 1997