Foxtel Management Pty Limited (ACN 068 671 938) v Seven Cable Television Pty Limited (ACN 082 901 442) [2000] FCA 1399 (5 October 2000)

Last Updated: 5 October 2000

FEDERAL COURT OF AUSTRALIA

Foxtel Management Pty Limited (ACN 068 671 938)

v Seven Cable Television Pty Limited (ACN 082 901 442)

[2000] FCA 1399

FOXTEL MANAGEMENT PTY LIMITED (ACN 068 671 938), SKY CABLE PTY LIMITED (ACN 069 799 640), THE NEWS CORPORATION LIMITED (ACN 007 910 330) AND NEWS LIMITED (ACN 007 871 178) v SEVEN CABLE TELEVISION PTY LIMITED (ACN 082 901 442), TELEVISION AND RADIO BROADCASTING SERVICES AUSTRALIA PTY LIMITED (ACN 070 677 717), AUSTRALIAN COMPETITION & CONSUMER COMMISION, TELSTRA CORPORATION LIMITED (ACN 051 775 556), TELSTRA MULTIMEDIA PTY LIMITED (ACN 069 279 072) AND TELSTRA MEDIA PTY LIMITED (ACN 069 279 027)

N 309 OF 2000

BEAUMONT, MOORE AND GYLES JJ

5 OCTOBER 2000

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 309 OF 2000

BETWEEN:	FOXTEL MANAGEMENT PTY LIMITED (ACN 068 671 938) FIRST APPELLANT SKY CABLE PTY LIMITED (ACN 069 799 640) SECOND APPELLANT THE NEWS CORPORATION LIMITED (ACN 007 910 330) THIRD APPELLANT NEWS LIMITED (ACN 007 871 178) FOURTH APPELLANT
AND:	SEVEN CABLE TELEVISION PTY LIMITED (ACN 082 901 442) FIRST RESPONDENT TELEVISION AND RADIO BROADCASTING SERVICES AUSTRALIA PTY LIMITED (ACN 070 677 717) SECOND RESPONDENT AUSTRALIAN COMPETITION & CONSUMER COMMISION THIRD RESPONDENT TELSTRA CORPORATION LIMITED (ACN 051 775 556) FOURTH RESPONDENT TELSTRA MULTIMEDIA PTY LIMITED (ACN 069 279 072) FIFTH RESPONDENT TELSTRA MEDIA PTY LIMITED (ACN 069 279 027) SIXTH RESPONDENT
JUDGES:	BEAUMONT, MOORE AND GYLES JJ
DATE OF ORDER:	5 OCTOBER 2000
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The notice of motion filed by the appellants on 7 September 2000 is dismissed.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 309 OF 2000

BETWEEN:

FOXTEL MANAGEMENT PTY LIMITED (ACN 068 671 938) FIRST APPELLANT SKY CABLE PTY LIMITED (ACN 069 799 640) SECOND APPELLANT THE NEWS CORPORATION LIMITED (ACN 007 910 330) THIRD APPELLANT NEWS LIMITED (ACN 007 871 178) FOURTH APPELLANT

AND:

SEVEN CABLE TELEVISION PTY LIMITED (ACN 082 901 442) FIRST RESPONDENT TELEVISION AND RADIO BROADCASTING SERVICES AUSTRALIA PTY LIMITED (ACN 070 677 717) SECOND RESPONDENT AUSTRALIAN COMPETITION & CONSUMER COMMISION THIRD RESPONDENT TELSTRA CORPORATION LIMITED (ACN 051 775 556) FOURTH RESPONDENT TELSTRA MULTIMEDIA PTY LIMITED (ACN 069 279 072) FIFTH RESPONDENT TELSTRA MEDIA PTY LIMITED (ACN 069 279 027) SIXTH RESPONDENT

JUDGES:	BEAUMONT, MOORE AND GYLES JJ
DATE:	5 OCTOBER 2000
PLACE:	SYDNEY

REASONS FOR JUDGMENT

(ON NOTICE OF MOTION FOR FURTHER CONSIDERATION)

BEAUMONT J:

1 Having regard to the matters mentioned in the supplementary reasons of the other members of the Court, there is nothing of significance or consequence that I can add to my reasons for judgment. In those circumstances, I agree that the notice of motion should be dismissed, but with no order as to costs.

I certify that the preceding one (1) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont.

Acting Associate:

Dated: 5 October 2000

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 309 OF 2000

BETWEEN:

FOXTEL MANAGEMENT PTY LIMITED (ACN 068 671 938) FIRST APPELLANT SKY CABLE PTY LIMITED (ACN 069 799 640) SECOND APPELLANT THE NEWS CORPORATION LIMITED (ACN 007 910 330) THIRD APPELLANT NEWS LIMITED (ACN 007 871 178) FOURTH APPELLANT

AND:

SEVEN CABLE TELEVISION PTY LIMITED (ACN 082 901 442) FIRST RESPONDENT TELEVISION AND RADIO BROADCASTING SERVICES AUSTRALIA PTY LIMITED (ACN 070 677 717) SECOND RESPONDENT AUSTRALIAN COMPETITION & CONSUMER COMMISION THIRD RESPONDENT TELSTRA CORPORATION LIMITED (ACN 051 775 556) FOURTH RESPONDENT TELSTRA MULTIMEDIA PTY LIMITED (ACN 069 279 072) FIFTH RESPONDENT TELSTRA MEDIA PTY LIMITED (ACN 069 279 027) SIXTH RESPONDENT

JUDGES:	BEAUMONT, MOORE AND GYLES JJ
DATE:	5 OCTOBER 2000
PLACE:	SYDNEY

REASONS FOR JUDGMENT

(ON NOTICE OF MOTION FOR FURTHER CONSIDERATION)

MOORE J:

2 On 18 August 2000 this Full Court gave judgment in this appeal and ordered that the appeal be dismissed. The order dismissing the appeal has not yet been entered. By notice of motion filed on 7 September 2000, the appellants applied for an order setting aside the order dismissing the appeal in so far as it apparently dealt with the question of whether Foxtel Management Pty Ltd ("Foxtel") had a protected contractual right in relation to first, the standard of the broadband service provided by Telstra Multimedia Pty Ltd ("Telstra Multimedia") ("the standards right") and secondly, the provision by Telstra Multimedia of the number and type of channels required by Foxtel ("the channel numbers right") .

3 The general background to these appeals is set out in the reasons for judgment of Beaumont J of 18 August 2000. It is only necessary to refer to some aspects of the course the proceedings have taken so as to place in context this notice of motion. The primary judge, Tamberlin J, was initially dealing with an application by Seven Cable Television Pty Ltd ("Seven") for declaratory relief which was essentially negative in character. The orders sought were:

1 A declaration that the Respondents (or any of them) do not have a "protected contractual right" within the meaning of the term as used in section 152AR (4) (d) of the Trade Practices Act 1974.

2 A declaration that the supply of the declared services requested by the Applicant (as set out in the Schedule) by the Second Respondent to the Applicant will not have the effect that the Respondents (or any all or of them) will be deprived of a "protected contractual right" within the meaning of the term as used in section 152AR (4) (d) of the Trade Practices Act 1974.

4 This led to a cross-claim by Foxtel (and Sky Cable Pty Ltd ("Sky Cable")) which, in its amended form, pleaded the existence of the two protected contractual rights presently under consideration. It was alleged the standards right was found initially in clause 5.1 of the July 1995 BCA and later in clause 7.1 of the April 1997 BCA. It was alleged the channel numbers right was initially found in clause 5.4 of the BCA and later in clause 7.4 of the April 1997 BCA. This was pleaded in two numbered paragraphs in the amended cross-claim. In later paragraphs it was pleaded (in par 22A) that the standards right and (in par 22C) the channel numbers right were rights under a contract that was in force at the beginning of 13 September 1996 and (in pars 22B and 22D respectively) were "protected contractual right(s)". Declaratory relief was not sought that Foxtel would be deprived of these rights if Telstra Multimedia supplied requested services to Seven and TARBS though such declaratory relief was sought in relation to other rights said to be protected contractual rights. Part of the relief sought in the cross-claim were declarations that the rights in clauses 7.1 and 7.4 of the April 1997 BCA were protected contractual rights.

5 On 29 October 1999 Tamberlin J made orders that certain questions be decided separately. On 28 January 2000 he made further orders concerning the determination of preliminary questions. Two of those orders were to the effect that the question of whether the rights alleged in pars 22A and 22C (namely the standards right and the channel numbers right) were "protected contractual right(s)" within the meaning of that term as used in s 152AR (4) (d) also be determined separately. A further order was made on 4 February 2000 to the effect that it not be determined (as a preliminary question) whether the supply of the services requested by Seven and TARBS would deprive Foxtel and Sky Cable of the standards right and the channel numbers right.

6 As a result of these orders an issue arose about whether the asserted standards right and the asserted channel numbers right were protected contractual rights for the purposes of s 152AR. In reaching the conclusion he did, that no contract existed at 13 September 1996, Tamberlin J effectively disposed of this issue though the existence of these two rights received limited attention in his reasons. To the extent that his Honour dealt with the question of whether a particular right existed (on the assumption that his primary conclusion was wrong) he focused on the exclusivity right. In this appeal the submissions of the parties also focused substantially on whether the asserted exclusivity right existed both at 13 September 1996 and continued to exist thereafter. In the Telstra appeal (in which judgment was also given on 18 August 2000) the exclusivity right was, in substance, the only right to which the submissions were directed.

7 In my reasons for judgment given on 18 August 2000 concerning what I might describe as the the Foxtel appeal and the Telstra appeal, I focused on the question of whether the exclusivity right existed at 13 September 1996. I concluded it did not. I did not discuss the question of whether the standards right and/or the channel numbers right were protected rights. During the hearing of the appeals questions were asked by the Court concerning whether the existence of the asserted standards right and/or channel numbers right were truly issues between the parties. This arose because of the apparent lack of a positive case asserting that these rights were not only protected rights but that there would be a deprivation of those rights as a result of the access requests by Seven and TARBS. It appears from the way that case was pleaded that the bare question concerning the existence of these rights was raised notwithstanding that, as it appears to me, the ultimate legal issue dividing the parties, whether there would be deprivation of those rights by the access requests being met, is not raised directly. This bare question is, at best, raised obliquely in the application by Seven seeking a declaration which is negative in form. However it can be accepted that the way the separate questions were formulated by Tamberlin J, the bare question concerning the existence of the standards right and the channel numbers right (at 13 September 1996) was before his Honour and was determined by the orders he made. It can also be accepted that submissions were made in the appeals by at least Foxtel and Seven on the question of whether the standards right and the channel numbers right were protected contractual rights. As we are now asked by Foxtel, Seven and TARBS, in this application by Foxtel, to determine the question, I proceed to answer it directly notwithstanding some reservations I have about the appropriateness of doing so given the way the cases were pleaded.

8 In my reasons of 18 August 2000 I indicated in par 154 that the letter of 23 October 1995 may have been intended to create and may have created legally binding obligations. If the letter had this effect then the question of whether the standards right and/or the channel numbers right was a term of an agreement arising from that letter (and remained a term of an agreement at 16 September 1996) is answered by addressing two subsidiary questions. The first is whether the provisions in the July 1995 BCA concerning each of those rights were settled at the time the letter was written (in the way I discussed in my reasons of 18 August 2000 in relation to the exclusivity provisions) and the second is whether any agreement arising from the letter (if the two rights were terms of the agreement) continued to exist until 13 September 1996.

9 In relation to the asserted channel numbers right, the answer to the first subsidiary question is, in my opinion, relatively clear. The provisions on which that right is said to be based were not settled at the time of the 23 October 1995 letter. Clause 5.4 of the July 1995 BCA provided:

Subject to clauses 2.10 and 2.11, Broadbandco must supply FOXTEL with the number and type of Digital Channels and Analogue Channels required by the Initial Business Plan and by FOXTEL's Business Plan from time to time.

10 Clauses 2.10 and 2.11 dealt with (and specified) the number of channels to be provided for both analogue and digital transmission. However these two clauses (2.10 and 2.11) in the July 1995 BCA were plainly only a proposal advanced by Telstra interests which were to be the subject of review by Foxtel. Not only does a notation to that effect appear in the draft document but the two clauses were themselves in square brackets which signified, so we were informed, that they were only proposals. For my part, I do not see how the opening words of clause 5.4, which are plainly words intended to qualify the operation of that clause, can be disregarded (as suggested by Foxtel in its submissions) if the clauses enlivening those opening words had not been settled. Clause 5.4 in the July 1995 BCA was intended to operate in conjunction with clauses 2.10 and 2.11. Clause 5.4, as appearing in the July 1995 BCA, does not appear to me to have been intended to have an operation independent of clauses 2.10 and 2.11.

11 Our attention was not drawn to any evidence which suggested that by 23 October 1995 either there had been agreement on the contents of clauses 2.10 and 2.11 or agreement had been reached that they not be treated as qualifying clause 5.4 (which they no longer did by the time the terms of the April 1997 BCA were settled) as part of the interim arrangements embodied in the letter of that date. For these reasons any right that may otherwise have arisen under clause 5.4 was not settled by 23 October 1995 and did not, by the letter, become a term of those interim arrangements.

12 The position is less clear in relation to clause 5.1 which is said to embody the standards right. That is, it is not obvious, one way or the other, whether the terms (both in form and substance) of clause 5.1, requiring the provision of the broadband service "to a standard which meets the world's best practice for comparable services", were settled by 23 October 1995. Seven advanced a number of arguments , the import of which were that clause 5.1 (and any right it might have reflected) was not settled by that date. Some of the remainder of Seven's submissions concerning clause 5.1, related to whether the asserted right could be a protected right (for the purposes of s 152 AR) given its likely variable content and whether the same right was reflected in the April 1997 BCA (which is not presently relevant as I apprehend the limited scope, for present purposes, of the question posed and answered by Tamberlin J). However in view of how I consider the second subsidiary question should be answered, is unnecessary to address in detail the competing contentions concerning whether any right conferred by clause 5.1 was settled by 23 October 1995 nor the additional question of whether, if settled, it could be a "protected right" for the purposes of s 152 AR.

13 In par 165 of my earlier reasons I said:

"It is consistent with the language used and the apparent intention of the parties that if there remained substantial disagreement about, or at least unresolved issues concerning, the subject matter of a particular provision then that provision was not intended to apply, on a monthly basis, to the provision by Telstra Multimedia of the broadband service. This is reinforced by other parts of the letter including the sentence indicating that the "arrangements" set out in the letter would terminate with the Australis merger and another sentence indicating that if a merger did not go ahead, Telstra Multimedia or FOXTEL Management could require the other to enter into a "long form Broadband Cooperation Agreement" which was "substantially in the terms of the BCA". What the parties appear to have had in mind with this last provision is that the July 1995 BCA, as modified by, and viewed in the context of, subsequent correspondence and negotiations would become the framework for negotiations for an agreement which would operate in the longer term."

14 What I said in the last sentence of this passage accords with the conclusions of Gyles J in pars 170 to 177 with which I generally agree. In particular I agree with what his Honour said in par 172. In that paragraph his Honour effectively answers the second of the subsidiary questions referred to in par 8 of these reasons in relation to both the channel numbers right and the standards right. That is, even if the 23 October 1995 letter created binding obligations in the interim period pending the Australis merger, any obligation deriving from the letter which might have survived the failure of the merger was the "right" to "require" the other party to enter a long form Broadband Cooperation Agreement. Thus, even if the 23 October 1995 letter created contractual rights of the type embodied in clauses 5.1 or 5.4 during the transitional period, it no longer did so as 13 September 1996. It follows, in my opinion, that the orders made in this appeal on 18 August 2000 remain the appropriate orders. Accordingly I would dismiss the notice of motion and make no order as to costs.

I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.

Associate:

Dated: 5 October 2000

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 309 OF 2000

BETWEEN:

FOXTEL MANAGEMENT PTY LIMITED (ACN 068 671 938) FIRST APPELLANT SKY CABLE PTY LIMITED (ACN 069 799 640) SECOND APPELLANT THE NEWS CORPORATION LIMITED (ACN 007 910 330) THIRD APPELLANT NEWS LIMITED (ACN 007 871 178) FOURTH APPELLANT

AND:

SEVEN CABLE TELEVISION PTY LIMITED (ACN 082 901 442) FIRST RESPONDENT TELEVISION AND RADIO BROADCASTING SERVICES AUSTRALIA PTY LIMITED (ACN 070 677 717) SECOND RESPONDENT AUSTRALIAN COMPETITION & CONSUMER COMMISION THIRD RESPONDENT TELSTRA CORPORATION LIMITED (ACN 051 775 556) FOURTH RESPONDENT TELSTRA MULTIMEDIA PTY LIMITED (ACN 069 279 072) FIFTH RESPONDENT TELSTRA MEDIA PTY LIMITED (ACN 069 279 027) SIXTH RESPONDENT

JUDGES:	BEAUMONT, MOORE AND GYLES JJ
DATE:	5 OCTOBER 2000
PLACE:	SYDNEY

REASONS FOR JUDGMENT

(ON NOTICE OF MOTION FOR FURTHER CONSIDERATION)

GYLES J:

15 In the circumstances, it is appropriate that the issue raised by the motion should be revisited. The declarations made by the primary judge, which are undisturbed by the orders of this Court, would preclude later consideration of the issue. This should not occur without the point being squarely addressed. The affected parties are agreed that the issue was live in the appeal.

16 I need not add to my reasons for concluding that the primary judge was correct in finding that no relevant contractual rights existed at the material time. As Moore J agrees with this, there is no reason to disturb the order dismissing the appeal. The motion should be dismissed. I would make no order for the costs of the motion. It was appropriate to be brought, although unsuccessful.

I certify that the preceding two (2) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.

Associate:

Dated: 5 October 2000

Counsel for Foxtel Management Pty Limited and Foxtel Cable Television Pty Limited and Sky Cable Pty Limited:	Mr A J Meagher SC Mr M C Dicker
Solicitor for Foxtel Management Pty Limited and Foxtel Cable Television Pty Limited and Sky Cable Pty Limited:	Allen Allen & Hemsley
Counsel for Seven Cable Television Pty Limited:	Mr R J Ellicott QC Mr C A Moore
Solicitor for Seven Cable Television Pty Limited:	Freehills
Solicitor for Telstra Corporation Limited, Telstra Multimedia Pty Limited and Telstra Media Pty Limited:	Mr A Black, Mallesons Stephen Jaques
Counsel for Television & Radio Broadcasting Australia Pty Limited:	Mr N Cotman SC
Solicitor for Television & Radio Broadcasting Australia Pty Limited:	Peter Cornelius & Partners
Date of Hearing of Motion:	8 September 2000
Date of Judgment:	5 October 2000