FEDERAL COURT OF AUSTRALIA

C7 Pty Ltd v Foxtel Management Pty Ltd

[2002] FCA 1266

PRACTICE AND PROCEDURE – preliminary discovery – disclosure to potential respondents

Federal Court Rules O 15A

SmithKline Beecham plc v Alphapharm Pty Ltd [2001] FCA 271 followed

SmithKline Beecham plc v Alphapharm Pty Ltd [2001] FCA 1898 followed

C7 PTY LIMITED AND SEVEN NETWORK LIMITED v FOXTEL MANAGEMENT PTY LIMITED, SPORTS INVESTMENTS AUSTRALIA PTY LIMITED, NEWS LIMITED, SKY CABLE PTY LIMITED, TELSTRA MEDIA PTY LIMITED, TELSTRA MULTIMEDIA PTY LIMITED, TELSTRA CORPORATION LIMITED, PUBLISHING AND BROADCASTING LIMITED, AUSTRALIAN FOOTBALL LEAGUE AND NATIONAL RUGBY LEAGUE LIMITED

N1077 OF 2002

GYLES J

SYDNEY

2 OCTOBER 2002

THE COURT ORDERS THAT:

1.       The motion of 13 September 2002 be dismissed.

2.       The applicants pay the costs of the respondents, including fees for one counsel only.

3.       Liberty to apply on 2 days’ notice be granted until 29 October next.

4.       All documents which have been produced by any respondent  pursuant to Orders of the Court be returned to the producing respondent on or before 1 November next and to the extent necessary, all prior orders are amended accordingly.

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

EX TEMPORE REASONS FOR JUDGMENT

1                     This is an application in relation to disclosure of documents which have been ordered to be produced pursuant to O 15A r 6 of the Rules of the Court.  I need not trace the history of the orders which have so far been made, nor do I need to do more than refer to order 1 as sought in the notice of motion now before me:

“Each of the confidentiality undertakings given to the Court and the First to Eighth Respondents by Mr Kerry Stokes, Mr Peter Gammell and Mr Steven Wise, and which are in the form of Schedule 1 to the Orders of the Court dated 7 August 2002, be amended by inserting the following sub-paragraph:

“3.       …;

(c)      any of the following persons:

(1)        Mr Ziggy Switkowski;

(2)        Mr Robert Mansfield;

(3)        Senator Richard Alston;

(4)        Mr Rupert Murdoch;

(5)        Mr Lachlan Murdoch;

(6)        Mr Ken Cowley;

(7)        Mr John Hartigan;

(8)        Mr Kerry Packer;

(9)        Mr James Packer; and/or

(10)      Mr Peter Yates.”

2                     It will be appreciated that the purpose of the order is to enable documents which have now been disclosed to both the lawyers and certain of the persons connected with the applicants to be further disclosed to the identified persons who are connected with the respondents at what may be described as a high level.  It is said that the purpose of this is to explore whether litigation is necessary.  I take it that what is suggested is that there may be a compromise or settlement of the underlying dispute if the documents are disclosed.  That immediately raises the question of power to make such an order, which is the point taken by each of the respondents.  The question which is posed is not an easy one and my mind, I confess, wavered to some extent about the correct answer.

3                     I agree with the submissions that have been put based upon the decision of Finkelstein J in the two Smithkline decisions to which reference has been made (SmithKline Beecham plc v Alphapharm Pty Ltd [2001] FCA 271; SmithKline Beecham plc v Alphapharm Pty Ltd [2001] FCA 1898), where his Honour analysed the purpose of the section as providing a remedy for lack of information to enable a decision to be made whether to commence a proceeding in the Court.  In my view that is plainly correct.

4                     It is put on behalf of the applicants on this motion that, on any sensible view, as r 6 is directed to enabling a reasoned decision to be made whether to commence a proceeding, it is taking too narrow a view to limit that to what might be called the strictly legal consequences of the information which has been provided.  Appeal is made to the obvious public interest in avoiding unnecessary litigation. It is said that discussions with the other parties, in which the applicants are free to disclose to key decision-makers on the other side at least what they regard as important documents, would undoubtedly facilitate that process.  I see the underlying merit of the position taken by the applicants in that respect and recognise the public interest in avoiding the litigation of disputes.  However my view is that, whether it is a matter of power or jurisdiction strictly so called or not, the purpose of the rule is to fill what can be called an information gap and not to facilitate wider issues such as compromises which might be struck before litigation.  In any event, it seems to me that that circumstance is a very powerful factor in the exercise of discretion at least.

5                     In the present case Mr Myers QC puts, with some attractiveness, the proposition that there is an air of unreality, perhaps even absurdity, about counsel for the various respondents objecting so strongly to chief executives and senior directors of the various respondents being apprised of material which, after all, springs from those who are involved in a form of joint venture.  However the reality is that each of the respondents does have its own commercial interests which are separate from each other, although they do coalesce in some respects.  To take one obvious example, FoxSports has different interests from Foxtel. 

6                     It was suggested in argument that the present regime would not permit the applicants to discuss a document with a party who has produced that document.  If that is the result of the orders, the regime should be changed.  However my view is that order 3 has the result that Mr Payne contended for, namely, that a party who has produced a document can be spoken to about that document on behalf of the applicants.

7                     I am influenced to some extent by the circumstance that, given the number of respondents and the range of the commercial activities of those respondents, and given the range of commercial activities of the applicants, it would be inevitable that discussions in relation to settlement of potential litigation on this front would involve taking into account the varying commercial interests that the parties have in other relevant matters.  That is the nature of commercial negotiation. I hasten to say there is nothing wrong with that.  However, I do not think that the purpose of O 15A r 6 is to enable documents which are seen to be particularly significant to be used as bargaining chips in a wider commercial negotiation.  I say nothing, of course, as to the regime which should apply if and when a proceeding is commenced.  At a point in any such proceeding it may be that an application could be made to the docket judge for some alleviation from the express or implied undertakings.  But that is another issue.

8                     It seems to me that the remedy provided by O 15A r 6 is properly described as extraordinary.  I think that it is prudent for me to follow the lead of Finkelstein J in this respect and I therefore decline to make any order in this application unless it be to clarify the orders in the way I have outlined and deal with costs and other ancillary matters.

Associate:

Dated:              15 October 2002