FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Universal Music Australia Pty Ltd;  Australian Competition & Consumer Commission v Sony Music Entertainment (Australia) Ltd [2000] FCA 1086

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v

UNIVERSAL MUSIC AUSTRALIA PTY LIMITED (formerly known as

PolyGram Pty Limited) (ACN 000 158 592) AND OTHERS

N 925 OF 1999

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v

SONY MUSIC ENTERTAINMENT (AUSTRALIA) LIMITED

(ACN 000 033 581) AND OTHERS

N 926 OF 1999

HILL J

1 AUGUST 2000

SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

1                     Before the Court is an application by motion from Universal Music Australia Pty Limited in proceedings N 925 of 1999 for orders that confidential undertakings presently given in respect of certain annexures to the affidavit of Joseph Karam, sworn on 4 February 2000 be released and the affidavit of Winnie Ching, sworn on 1 June 2000, be not subject to confidentiality orders as is sought by the applicant, the Australian Competition and Consumer Commission (“the ACCC”).

2                     Although no motion has been filed the application is supported by Sony Music and others, the respondents in matter N 926 of 1999.  The application is founded upon s 50 of the Federal Court of Australia Act 1976 (“the Act”) with or without, if necessary, s 23 of the Act which empowers the Court in relation to matters over which it has jurisdiction to make orders including interlocutory orders as the Court thinks appropriate.

3                     Section 50 itself provides:

“The Court may, at any time during or after the hearing of a proceeding in the Court, make such order forbidding or restricting the publication of particular evidence or the name of a party or witness as appears to the Court to be necessary in order to prevent prejudice to the administration of justice or the security of the Commonwealth.”

4                     It is necessary to say something about the material which is sought by the ACCC to be kept confidential and by the record companies and other parties to be released from current confidentiality orders.  The documents referred to as annexures T and KC11 to 25 and exhibits A and B to the affidavit of Joseph Karam are largely affidavit material which detail purchases and sales of various CDs by various companies and the bringing of some CDs into Australia.  Amongst other things the affidavit of Mr Karam in the relevant annexures refers to transactions which involved, so it is said, name changes and specially created invoices to protect the names of Indonesian suppliers.

5                     There is little doubt that the material in that affidavit contains market sensitive information concerning the trade dealings of Tempo.  It also concerns direct dealings into Australia from Indonesia, Singapore and perhaps other countries.  So far as the material in that affidavit ultimately reveals confidential business information of Tempo itself, it clearly should be protected.  The onus lies upon the ACCC to demonstrate, if it can, that there will be a prejudice to justice if the information is made available to all and sundry.

6                     The relevant principles are dealt with in my decision of SRD v Australian Securities Commission (1994) 52 FCR 187.  The case has been followed on more than one occasion.  See for example VX96A v Insurance & Superannuation Commissioner (unreported, FCA 30 September 1996).  There was some suggestion by counsel on behalf of MIPI, which is an industry body aimed at privacy, the members of which include record companies, that s 50 of the Act does not authorise or order that information of the present kind be kept in confidentiality because, it is said, the Court has not yet undertaken the hearing of a proceeding within the words of that section.

7                     I considered that issue in Hadid v Lenfest Communications Incorporated (1996) 70 FCR 403 and decided against the submission.  As I have said then, and I have not changed my mind, the word “hearing” in s 50 is equally apt to refer to a directions hearing or an interlocutory hearing as it is to a hearing on the merits.  In my view, the word “hearing” in s 50 is not limited to the trial of a matter.  It includes the hearing of an application for directions and other kinds of interlocutory interventions.

8                     The affidavit of Winnie Ching is said to be in a different position to the annexures to the affidavit of Mr Karam.  In her affidavit, Ms Ching says in effect that she was taken on a visit to the premises of named wholesale suppliers of recorded music, compact discs and cassettes accompanied by Mr Karam.  Her evidence in effect is of conversations she had with a storekeeper in Indonesia.  When Mr Karam asked a shopkeeper whether the shopkeeper could sell Mr Karam CDs, the person asked replied that he could provide a limited amount but that they were not available for export.

9                     The affidavit contains details of sales of particular qualities of goods and in more than one shop.  The author of the affidavit states, in clause 27, that:

“If the shops were aware that their conversation with her could be used in an affidavit, the persons with whom the conversation was held would not have revealed the information in the affidavit for fear of repercussions from the record company named defendants in the proceedings.”

10                  This is the basis of the application that the material remain confidential.  A firm foundation, as a starting point, is the principle of open administration of justice in a free democracy.  It is important that justice not only be done but be seen to be done.  There has presently been no suggestion that, if the material fell into the wrong hands, there was a real likelihood of disadvantage to the persons who supplied the information to Mr Karam.

11                  One reason for this may well be that s 50 requires there to be shown, in any case where there is no suggestion that the security of the Commonwealth is threatened, prejudice to the administration of justice whereas, under s 23, it is only necessary that the order be appropriate.  Section 50 is not concerned with trivialities. 

12                  In considering how the exercise of discretion conferred on the Court, pursuant to s 50, should be exercised, the Court will take into account the public interest in doing justice between the parties and the prejudice of which s 50 speaks is overall prejudice.  The administration of justice refers to the administration of justice generally.  I have no need to consider at the moment whether s 23 of the Act could operate as an alternative source of power.  The relationship between s 50 and s 23 is considered somewhat briefly in my judgment in Hadid at 409.  That case refers as well to a number of other cases that have been decided in connection with s 50.

13                  Turning to the affidavit of Ms Ching, it seems that she visited some shops and had conversations with shopkeepers without alerting them to the fact that she was from the ACCC and that she proposed to use the contents of their conversations in an affidavit.  She says, in what is prima facie inadmissible form, that some of these unidentified persons spoke of Australian record companies speaking to their Indonesian counterparts to ask them to help stop exports.

14                  She believed, on the basis of what she says she was told, that suppliers were punished by the Indonesian subsidiaries of the major record companies including Sony, Warner and Universal when those record companies were made aware that the supplier was exporting CDs and cassettes to Australia.   The punishment could, she said, take the form of limiting supplies of CDs and a general loss of goodwill with a material effect on the supplier's business.

15                  She continues in her affidavit to say that she believes that if the shops had been aware that their conversations with her could be used in an affidavit they would not have disclosed the information for fear of repercussions.  The inference I am asked to draw is that there is a possibility of repercussions should, in essence, the name of the traders to whom she spoke be revealed.  Some reinforcement, perhaps, for that view may be found in exhibit 11 to Mr Karam's affidavit, an exhibit which consists of parts of an affidavit he has sworn as to what has happened in Indonesia.

16                  One of the documents that Mr Karam exhibits to his affidavit, for example, suggests that some threats had been made, that the major or minor distributors would stop selling to persons who had the intention of exporting CDs.  That is no doubt the kind of threat which both the persons to whom Ms Ching spoke and the persons referred to in Mr Karam's affidavit and the annexures to it are concerned with.

17                  Having said this, however, the basic principle still remains that as far as possible it is in the interests of justice that evidence be disclosed or, to put the matter in a way that Davies J did in another case, it is in the interests of justice that the parties, and ultimately the Court, do not proceed in very difficult litigation in a half-light without adequate instructions.   This, however, does not mean in my view that it is appropriate or in the interests of justice that the material in both affidavits be disclosed to everyone in the world.  Indeed it is, rather, conceded by Mr Cobden that the material in the Karam affidavit contains commercially confidential information that could be useful to trade competitors of Mr Karam. 

18                  That merely reinforces the point that it might very well be the case that Mr Karam could suffer harm if that material was available to persons who are his business competitors.  Some of the material in Ms Ching's affidavit may be of similar form though it is fair to say that the evidence in that affidavit is rather conversational evidence than evidence which operates to expose secrets as such.

19                  The unusual aspect of this case, so far as it concerns Ms Ching, is that it is not the persons who may be harmed who are asking the Court to protect the information.  Oddly enough, it is the Commission who is seeking to do that and the respondents to the proceedings who complain that they cannot adequately deal with the material if it is known only to the legal advisers and the legal advisers are incapable of obtaining instructions.

20                  In my view it would not be in the interests of the administration of justice that either document be released to the whole world.  As I say, this has already been, in part at least, conceded by Mr Cobden.  It was for that reason that I put to him that he should indicate, after obtaining instructions from his clients, the names of persons from whom it would be necessary to obtain instructions so that his clients are in a position to deal with the evidence which is put against them.  To be fair to Mr Cobden, he has not had much time to respond to that suggestion.  He has not greeted it with a great deal of enthusiasm.  I do not think I should really conclude that he has foreclosed the possibility.  The same is no doubt true of other parties who support Mr Cobden’s motion.

21                  It seems to me at the moment that what I should do is to adjourn the motion to a date to be fixed in the not too distant future so that those who wish to pursue an investigation into the material that has so far remained confidential and wish to nominate persons who may need to be consulted and who are prepared to give confidentiality undertakings can do so.  In such circumstances I would then lift the confidentiality orders but only to that limited extent.  I made some tentative suggestions to senior counsel for MIPI which at the time met with some positive response before this judgment was delivered.  It may be that he would prefer to await the adjourned hearing of the motion in case he wished to adopt a different approach to the one that has been put.  If not then orders can be made as suggested.

Associate:

Dated:              1 August 2000