FEDERAL COURT OF AUSTRALIA

Media Ocean Limited v Optus Mobile Pty Limited (No 1) [2009] FCA 421

MEDIA OCEAN LIMITED and MEDIATEL SERVICES PTY LTD v OPTUS MOBILE PTY LIMITED

NSD 242 of 2009

PERRAM J

17 APRIL 2009

SYDNEY

THE COURT:

1.                  Orders that the respondent be granted access to the documents produced by the applicants.

2.                  Grants leave to the applicants to remove Mediatel Services Pty Limited as the second applicant.

3.                  Reserves any question of costs arising out of that removal.

4.                  Grants leave to the first applicant and to Mediatel Australia Pty Limited to join Mediatel Australia Pty Limited as the second applicant to the proceeding.

5.                  Reserves any question of costs arising out of that joinder.

6.                  To the extent necessary, grants leave to the first applicant to file an amended application.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                                             This proceeding was commenced by the applicants on 25 March 2009 and came before the expedition judge shortly thereafter.  On 2 April 2009 the respondent, Optus Mobile Pty Limited (“Optus”), applied by motion for security for costs.  That motion is returnable before me on Thursday 23 April 2009.  As part of its preparation for that notice of motion, on 8 April 2009 Optus issued a notice to produce to the applicants relating to their financial position.  The notice to produce was returnable before the registrar on Wednesday 15 April 2009.  At that time the applicants made before the registrar a claim for confidentiality in relation to all of the documents produced, which claim was referred to me.  I adjourned the proceeding until today in order to permit the applicants to put on evidence as to the confidential nature of the documents.  When the matter came before me today the applicants read an affidavit of a Mr Charlesworth who was a director of Mediatel Australia Pty Limited.  For its part, the respondent read an affidavit of Mr Lindsay Powers who is Optus’ solicitor for this proceeding.

2                                             Optus challenges the entitlement of the applicants to make a claim resisting production of the documents to anyone other than the external lawyers for Optus.  Ordinarily, the fact that documents are confidential is not sufficient to prevent their inspection.  So much appears from the decision of the Victorian Court of Appeal in Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34 at 38 per Hayne JA (with whom Winneke P and Phillips JA agreed);  see also ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Limited [2007] FCA 467 at [13]–[14] per Jacobson J.  The rationale underlying that principle is that in an ordinary case the obligation resting upon litigants not to use documents or information acquired as a result of the compulsory processes of the Court, other than for the purposes of the litigation, is a sufficient protection for any confidentiality which inheres in the material.

3                                             However, it is accepted that in various categories of case that obligation will not be sufficient.  For present purposes, only one of those categories is relevant and that is the category which is referred to in the decided cases as that of the trade rival.  In a trade rival case it is accepted that the practicalities of human affairs are such that even the obligation imposed by the use of the Court’s compulsory processes is not sufficient to prevent the use of the information.  In a case where it is held that the implied undertaking (as it was previously called; see Hearne v Street (2008) 235 CLR 125) is not sufficient, it is said that a balancing exercise needs to be undertaken.  However, in an ordinary case where the obligation is sufficient, it is not necessary to undertake that balancing exercise.  It was accepted by Mr Mattock, who appeared for the applicants, that apart from the claim based on trade rivalry, the matter otherwise fell within an ordinary case.

4                                             It is therefore necessary to determine whether the applicants and the respondent are trade rivals.  I will first say a few words about the business conducted by the applicants.  Putting it very generally, not having taken any specific evidence on the point at this stage, the applicants provide what is known as a two-stage international dialling service.  This means that a person using a mobile telephone may dial what appears to be a domestic number and thereafter, using the service provided on that domestic number, arrange an international telephone call.  The net result is that the person making the call from the mobile receives the usual domestic telephone charge from their own mobile carrier and then pays some charge which is levied by the applicants.  It is the intention of this business structure that a person using the service ends up paying less by reason of using the applicants’ service than the person would pay if they used Optus’ international service.

5                                             The manner in which the applicants go about their business was the subject of some evidence from Mr Charlesworth whose affidavit was read before me.  Effectively, the service depends upon the ability of the applicants to identify various service providers which charge rates that enable the service to be competitive.  The applicants’ concern is that a considerable degree of ingenuity and effort on its part is expended in identifying and possibly negotiating the rates with these other intermediaries.  It is concerned that if the identity and perhaps the rates charged by the other intermediaries were to become known to its rivals that would undercut its business advantage.

6                                             The applicants say that Optus is a competitor.  In a sense this is obviously true.  Both Optus and the applicants provide international telephony services.  However, to say that they are competitors is perhaps a little simplistic.  This is because there is evidence that Optus does not provide a two-stage dialling service.  Mr Powers, who is the solicitor on the record for Optus, has spoken with Mr Page, who is a senior product manager with Optus, about its business.  Mr Page is of the opinion that Optus does not intend to operate a two-stage dialling service for international telecommunications traffic.  I accept that.  What this means in practice is that Optus is not in competition with the applicants in the two-stage dialling service market.  This does not, however, mean that it is not in competition with the applicants in a more general sense. 

7                                             One of the concerns which the applicants had is that even though Optus says that it has no intention of conducting a two-stage dialling service, it may nevertheless, in the conduct of its ordinary mobile international telephony service, take advantage of the names of the intermediaries used by the applicants or the applicants’ knowledge of the rates which those intermediaries charge so that Optus may provide a cheaper rate to its clients.  I think it may be accepted that that is a conceptual possibility.  However, Mr Page, through Mr Powers, has given evidence that the arrangements which Optus has with its carriers, predicated on its reputation as part of a multinational telecommunications group with significant purchasing power, would not be influenced or impacted by the arrangements which the applicants have with their customers or resellers.  Perhaps a more colloquial way of putting that is to say that Optus is sufficiently large that it does not have to concern itself with the kind of arrangements around which the applicant has structured its business.

8                                             On balance, I think it is likely that Mr Page is correct.  However, it is not necessary to form a concluded view about that, because whatever the answer, I am satisfied that the obligation arising from Hearne v Street is sufficient to give the material protection.  In that regard, it is to be noted that the information, once access is granted, will be provided to the respondent and will be used only by it in the conduct of this litigation.  In particular, that would have the effect that it would be a breach of the obligation if any of the information in the material were to come into the possession of any other parts of Optus, other than those which are currently dealing with this litigation.  It follows that this is a case where the obligation of confidence is sufficiently protected by the implied obligation.  It is therefore not necessary to consider the balancing exercise.

9                                             In Mobil Oil Australia, it was said at 40 that it is ordinarily appropriate for a judge, before whom there is such an application, to inspect the documents.  I have inspected the documents and there is nothing in them which causes me to change my mind.  I would emphasise again, though, that the impact of the implied obligation needs to be borne in mind by the respondent’s advisers.  Accordingly, I grant access to the envelope marked “CONFIDENTIAL”.

10                                          I order the applicants to pay the respondent’s costs of this application.

Associate:

Dated:         28 April 2009