RULING ON EVIDENCE (No 1)

THE ISSUE

1                     A dispute has arisen concerning the admissibility of portions of the statement of Mr Gammell of 24 March 2004 (‘the Statement’).  I heard argument yesterday (21 September 2005) and indicated to the parties that I would give a ruling this morning as there are other parts of the Statement that give rise to similar issues.

2                     Paragraphs 16 and 17 of the Statement are as follows:

‘16.     In the period since 1995, and in particular in the period from 1998 to 2002, I have advocated a strategy to position the Seven Network as an integrated media company.  An important element in this strategy was my recommendation that the Seven Network become involved in the production of pay TV channels, initially through the production of the C7 Sport channels.  My intention was that the Seven Network should create and aggregate entertainment and information to deliver it via a range of technology platforms according to consumer demand.  I considered that this would bring synergies as well as revenue growth opportunities for the Seven Network.

17.              The strategy which I advocated was based on my assessment that:

17.1              The Seven Network had a number of advantages on which it could capitalise in the changing technological landscape.  These included:             

(a)          broadcast television is one of the most, if not the most, powerful vehicles to build brands.  This is due to its ability to aggregate large numbers of potential viewers;

(b)          the Seven Network either possessed, or was in a good position to obtain, key content rights, particularly sports rights and Australian drama, and had the expertise and facilities to create and own high quality content;

(c)           this provided Seven Network with a competitive advantage over other potential entrants, particularly in respect of the emerging distribution channels; and

(d)          the Seven Network had a strong existing brand, as well as established media personalities, with associated audience loyalty, which could be leveraged and exploited on new platforms.

17.2              The introduction of new platforms and technologies provided opportunities for growth and for developing greater and deeper links with the viewer.

17.3              If the Seven Network positioned itself as an integrated media company in a manner which utilised its rights to content, skills, production facilities and brand in a complementary manner across a number of different media and distribution channels, the Seven Network would benefit from increased revenue opportunities, including offering integrated advertising packages, without substantially increasing its costs.

17.4              It was imperative that the Seven Network have flexibility and adaptability and be able to move onto new platforms, or technologies, as consumer preferences evolved.  In this regard, I considered that the Seven Network should build upon existing viewer habits, on an incremental basis, as they became accustomed to new technology.  While it is difficult to try to shape viewer habits in a predetermined manner, it was important to be in a position to be able to respond to changing viewer preferences and, hence, have a presence in the evolving technologies and new platforms.

17.5              One of the keys to the Seven Network’s development in the new media landscape was ownership of rights to compelling content, that is, content which is compelling to viewers and potential viewers.

17.6              The most compelling content in Australia, particularly on subscription television, is premium live sport, in particular the AFL and NRL’.

3                     The present dispute relates to the bolded portion of paragraph 17 (‘the disputed material’).  The competing arguments have been put by Mr Sheahan SC on behalf of the applicants (‘Seven Network’), on the one side, and by Mr Castle for the third, fifth and sixth respondents (‘Telstra’) and Mr Meagher SC for the seventh, eighth and twenty-first respondents (‘PBL’), on the other. 

4                     Telstra and PBL accept that the disputed material should be admitted into evidence, but they contend that it should admitted on a limited basis only.  They acknowledge that evidence that Mr Gammell adopted a particular strategy to position Seven Network as an ‘integrated media company’ and that he did so on the basis of his assessment of certain matters affecting Seven Network’s position as a pay television provider, may be relevant in the proceedings.  In particular, Telstra and PBL acknowledge that Seven Network, in order to obtain certain relief that it seeks, may have to show that but for the conduct of various respondents in contravention of the Trade Practices Act 1974 (Cth) (‘TP Act’), it would have successfully pursued an ‘integrated media’ strategy.

5                     However, Telstra and PBL submit that the disputed material should be admitted only insofar as it goes to Mr Gammell’s belief or intention at the relevant times.  They say that a direction should be made pursuant to s 136 of the Evidence Act 1995 (Cth) (‘Evidence Act’), which provides as follows:

‘The court may limit the use to be made of evidence if there is a danger that a particular use of the evidence might:

(a)      be unfairly prejudicial to a party; or

(b)      be misleading or confusing’.

The direction they seek is that the disputed material be admitted for the purpose of proving that Mr Gammell held the beliefs to which he refers, but that it should not be admitted to prove the truth of those beliefs or the truth of the facts on which he may have relied to form those beliefs.

6                     Seven Network contends that Mr Gammell’s evidence should be admitted without qualification.  That is, Seven Network says that Mr Gammell’s account of the opinions he formed while advocating the ‘integrated media’ strategy, particularly during the period 1998 to 2002, should be admitted as probative of the existence of the facts about which he formed the opinions. 

submissions

7                     Mr Sheahan initially put Seven Network’s contention on three bases.

8                     First, Mr Sheahan relied on s 79 of the Evidence Act, which allows opinion evidence to be given by a person with specialised knowledge based on that person’s training, study or experience.  Ultimately, Mr Sheahan did not pursue this contention.

9                     Secondly, Mr Sheahan relied on s 78 of the Evidence Act, which provides as follows:

‘The opinion rule does not apply to evidence of an opinion expressed by a person if:

(a) the opinion is based on what the person saw, heard or otherwise perceived about a matter or event; and
(b) evidence of the opinion is necessary to obtain an adequate account or understanding of the person's perception of the matter or event’.

10                  In the course of argument, I expressed the view that it is difficult to see how s 78 of the Evidence Act could apply to the disputed material.  This is so because any opinions that Mr Gammell formed about the advantages enjoyed by Seven Network in relation to pay television do not seem to have been based on what he saw, heard or perceived about particular matters or events.  Rather, his opinions seemed to have involved the evaluation of a range of information bearing on Seven Network’s position within the pay television industry.  I therefore expressed some doubts as to whether s 78 of the Evidence Act was intended to apply to evidence in the nature of the disputed material.  While Mr Sheahan did not formally abandon this contention, he did not press it.

11                  Thirdly, Mr Sheahan relied on s 77 of the Evidence Act which provides that:

‘The opinion rule does not apply to evidence of an opinion that is admitted because it is relevant for a purpose other than proof of the existence of a fact about the existence of which the opinion was expressed’.

Mr Sheahan pointed out that it is common ground that Mr Gammell’s evidence of the opinions he had formed can be admitted for a purpose other than proof of the existence of facts about which the opinions had been formed.  It followed that the opinion rule does not apply, and that the evidence can be admitted for all purposes pursuant to s 77.  Thus the evidence can be admitted as probative of the existence of the facts about which Mr Gammell had formed opinions.

12                  As I understand their position, neither Telstra nor PBL dispute Seven Network’s submission based on s 77 of the Evidence Act.  They accept that the disputed material constitutes evidence of ‘an opinion’ held by Mr Gammell and that, subject to the operation of s 136 of the Evidence Act, s 77 has the effect that evidence of Mr Gammell’s opinions can be admitted without qualification.  They do not take any point as to whether Mr Gammell has ‘expressed’ the relevant opinions.

13                  Telstra and PBL contend, however, that a direction should be made pursuant to s 136 of the Evidence Act because otherwise there would be a danger that Mr Gammell’s evidence might be unfairly prejudicial to them.  They argue that Seven Network, in effect, is attempting to have opinion evidence admitted without having to comply with the requirements that govern the admissibility of expert evidence: cf Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705, at [64], [85] per Heydon JA; Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157, at [14], per Branson J.  They say that they would be prejudiced because the statement contains no reasoning process to support the opinions of Mr Gammell which he says he formed in the course of advocating an ‘integrated media’ strategy.  They further say that the statement does not identify such enquiries as Mr Gammell may have made or any information upon which he relied to form his opinions.  Nor is it clear whether his assessment was based on any particular experience or expertise he might have had.  They acknowledge that Mr Gammell can be cross-examined, but they point out that cross-examination would have to be undertaken without any of this material being exposed in advance.  They would therefore be at a severe forensic disadvantage. 

14                  Mr Castle further argues that if the evidence is allowed in for all purposes, it will effectively reverse the onus of proof.  This is so, so he contends, because Seven Network would be able to rely on Mr Gammell’s reconstruction of his thought processes as the basis for establishing facts that otherwise would have to be proved by primary evidence.  In effect, so he contends, the respondents will be forced to adduce evidence to rebut Mr Gammell’s unsubstantiated assertions.

15                  Mr Sheahan submits that there is no unfair prejudice in admitting the evidence without qualification.  He accepts that there might be such prejudice if the respondents could not cross-examine Mr Gammell: cf Commonwealth of Australia v McLean (1996) 41 NSWLR 389, at 401-402, per Handley and Beazley JJA; Roach v Page (No 11) [2003] NSWSC 907, at [19], per Sperling J.  But, he says, it is open to the respondents to cross-examine Mr Gammell.  Moreover, they can do so having the advantage of inspecting the very large quantity of documents discovered by Seven Network.  He submits that care must be taken not to render s 77 of the Evidence Act nugatory by making directions under s 136 too readily.

reasoning

16                  The Court has power under s 136 of the Evidence Act to limit the use of evidence if there is a danger that a particular use of evidence might be unfairly prejudicial to a party.  The Court does not have to be satisfied that a particular use of evidence will be unfairly prejudicial.  The section speaks of a danger involved that such a use of evidence might be unfairly prejudicial: Guide Dog Owners’ & Friends’ Association Inc v Guide Dog Association of New South Wales and ACT (1998) 154 ALR 527, at 532, per Sackville J.  The fact that the Court’s power is enlivened does not mean that a direction must be made under s 136.  The section confers a discretion on the Court which must be exercised judicially, having regard to the circumstances of the particular case.

17                  The expression ‘unfair prejudice’ is used not only in s 136 of the Evidence Act but in other similar provisions: see ss 135, 137.  The expression is not defined and, as Sperling J observed in Roach v Page (No 11), at [74], Parliament has placed no express restriction on the criteria for determining unfairness.  Different views have, however, been expressed as to the meaning of the expression. 

18                  The Australian Law Reform Commission, whose report led to the passage of the Evidence Act, appears to have intended the expression to mean:

‘the danger that the fact-finder may use the evidence to make a decision on an improper, perhaps emotional, basis ie on a basis logically unconnected with the issues in the case’.

Law Reform Commission, Evidence (Report No 26 1985), par 644. 

19                  In Papakosmas v The Queen (1999) 196 CLR 297, McHugh J noted (at [93]), that some decisions had suggested that the term ‘unfair prejudice’ could have a broader meaning than that suggested by the ALRC and that the expression could cover procedural disadvantages which a party might suffer as the result of evidence being admitted under the provisions of the Evidence Act (citing Gordon (Bankrupt), Official Trustee in Bankruptcy v Pike (No 1) (FCA, unreported, 1 September 1995); Commonwealth v McLean (1996) 41 NSWLR 389).  His Honour expressed no concluded view on the correctness of these decisions, but was inclined to think that insufficient attention had been given to the changes brought about by the Evidence Act.

20                  The weight of authority, however, supports the view that a procedural disadvantage may mean that a particular use of evidence might be ‘unfairly prejudicial to a party’, depending upon the circumstances of the particular case.  For example, a number of decisions have held that there may be unfair prejudice in admitting hearsay evidence under s 60 of the Evidence Act (which is framed in similar terms to s 77), where the truth of the representation cannot be tested by the party against whom it is tendered: see Roach v Page (No. 11) at [19] and the detailed discussion there of the authorities; Ringrow Pty Ltd v BP Australia Ltd [2003] FCA 933, at [27], per Hely J; Quick v Stoland Pty Ltd (1998) 87 FCR 371, at 377-378 per Branson J; at 382, per Finkelstein J.

21                  In my opinion, considerable care should be exercised before s 136 of the Evidence Act is invoked to limit the use of evidence on the ground that its use might be unfairly prejudicial to a party in a procedural sense.  I agree with Mr Sheahan that the policy apparently underlining provisions such as ss 60 and 77 of the Evidence Act should not be undercut by the making of orders under s 136 as a matter of course.  This is particularly so where a judge, rather than a jury, is the trier of fact, since the danger of unfairness to a party might be expected to be mitigated by the judge attributing less weight to material that cannot adequately be tested in cross-examination.  Even so, the circumstances may be such that the power conferred by s 136 will not only be enlivened but it will be appropriate for the Court to make a direction limiting the use of otherwise admissible evidence.

22                  In the present case, Seven Network seeks to use Mr Gammell’s evidence to prove the truth of a number of highly contentious propositions relating to its position in the pay television market.  It appears that these propositions are, or may be, of considerable importance to the very large damages claim that Seven Network makes against the respondents.  The evidence takes the form of an account by Mr Gammell of his reasoning process for advocating a particular strategy that was apparently formed in the years after 1995. 

23                  The opinions Mr Gammell expresses are couched in general language.  He does not divulge the basis for those opinions.  Nor does he identify the documents upon which he relied or the enquiries that he made before forming his opinions.  There is nothing to indicate the extent to which he used his own expertise or experience to make his assessment.  Indeed, it is not clear when he formed the opinions referred in the Statement.  They might have been formed, so it appears, at any time after 1995.

24                  It is true, as Mr Sheahan emphasised, that the respondents will be able to cross-examine Mr Gammell.  This is therefore not a case where Mr Gammell’s opinions cannot be subject to any scrutiny.  But it is a very large and complex case in which tens of thousands of documents have been discovered.  Special procedures have been devised to deal with the vast volume of documentation.  To mount an effective challenge in cross-examination to Mr Gammell’s opinions may well prove to be an extremely difficult task, given the form in which his opinions are expressed.  It would presumably be necessary for the cross-examiner to ascertain the bases for Mr Gammell’s opinions and then test whether they were well-founded.  The obvious risk is that the bases for the opinions will only be exposed in the course of the cross-examination, potentially placing the cross-examiner at a serious forensic disadvantage.  It may be very difficult, for example, to obtain instructions about documents or transactions referred to by Mr Gammell in the witness box.  For these reasons, in my view, there is a danger that the use of Mr Gammell’s evidence in the manner proposed by Seven Network might be unfairly prejudicial to the respondents.

25                  I should make it clear that I am not suggesting that unless a party seeking to rely upon evidence of opinion complies with the requirements for adducing expert evidence, there will necessarily be unfair prejudice for the purposes of s 136 of the Evidence Act.  Everything must depend upon the particular circumstances.  In this very complex case, evidence has been given of unsupported opinions relating to important factual matters.  Seven Network wishes to use this material in order to support its very large damages claim.  For the reasons I have given, that proposed use creates a significant danger of unfair prejudice to the respondents.

26                  I think that I should exercise the discretion conferred by s 136 of the Evidence Act to make an order limiting the use to which Mr Gammell’s evidence of his opinions may be put.  I take into account not only the unfair prejudice to the respondents, but the fact that the matters on which Mr Gammell formed opinions are quintessentially within the knowledge of Seven Network.  It is possible that these matters are the subject of documentary evidence not yet tendered or that they are dealt with in statements or reports of witnesses who will called later in the proceedings.  If this is not so, Seven Network will have an opportunity to seek leave to adduce further evidence.

27                  In short, I think it would be unfair having regard to the nature and procedural background of this case to allow Seven Network to use the evidence of Mr Gammell’s opinions in the manner it proposes.  Accordingly I shall make the direction under s 136 of the Evidence Act sought by Telstra and PBL.

Associate:

Dated:              22 September 2005