Seven Cable Television Pty Ltd v Telstra Corp Ltd [2000] FCA 21 (20 January 2000)

Last Updated: 24 January 2000

FEDERAL COURT OF AUSTRALIA

Seven Cable Television Pty Ltd v Telstra Corp Ltd [2000] FCA 21

SEVEN CABLE TELEVISION PTY LIMITED v

TELSTRA CORPORATION LIMITED & ORS

N1095 OF 1999

TAMBERLIN J

SYDNEY

20 JANUARY 2000

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N1095 OF 1999

BETWEEN:

SEVEN CABLE TELEVISION PTY LIMITED ACN 082 901 442 APPLICANT

AND:

TELSTRA CORPORATION LIMITED ACN 051 775 556 FIRST RESPONDENT TELSTRA MULTIMEDIA PTY LIMITED ACN 069 279 072 SECOND RESPONDENT TELSTRA MEDIA PTY LIMITED ACN 069 279 027 THIRD RESPONDENT THE NEWS CORPORATION LIMITED ACN 007 910 330 FOURTH RESPONDENT NEWS LIMITED ACN 007 871 178 FIFTH RESPONDENT SKY CABLE PTY LIMITED ACN 069 799 640 SIXTH RESPONDENT FOXTEL MANAGEMENT PTY LIMITED ACN 068 671 938 SEVENTH RESPONDENT FOXTEL MANAGEMENT PTY LIMITED ACN 068 6781 938 FIRST CROSS CLAIMANT TO THE FIRST CROSS CLAIM SKY CABLE PTY LIMITED ACN 069 799 640 SECOND CROSS CLAIMANT TO THE FIRST CROSS CLAIM

JUDGE:	TAMBERLIN J
DATE:	20 JANUARY 2000
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 Before me are applications to strike out subpoenas issued by the applicant Seven Cable Television Pty Limited ("Seven") in relation to its application for access to broadcasting services provided by Telstra Corporation Limited ("Telstra"). The questions require urgent resolution as the matter is listed for hearing on 31 January next. I will therefore express my conclusions with brief reasons. In the course of submissions, Counsel for Seven, after some discussion, decided not to press certain matters and compromise positions were reached in relation to certain other matters so that it is not necessary to canvass every paragraph of each of the subpoenas. Most of the subpoenas are in substantially the same form and resolution of the principal issues considered below should serve to resolve the remainder. The present applications arise after some informal discovery has taken place. I now refer to the specific subpoenas.

Mallesons Stephen Jaques ("Mallesons") - Subpoenas addressed to Mallesons, 31 December 1999

2 In relation to paragraph 1, Mallesons says that Seven is only entitled to documents which relate to the central issues which bear on two questions: (i) whether Foxtel has any protected contractual right within the meaning of s 152AR of the Trade Practices Act 1974 (Cth) ("TPA") and (ii), if so, whether the grant of the request by Seven would deprive Foxtel of any such protected contractual right. Mallesons also says that they have discovered all documents relating to these two issues, except for two documents, which are not relevant. It says that the paragraph is too wide because it travels beyond the central issues.

3 I have concluded that this paragraph should not be set aside. An important part of Seven's case is that as at the relevant date, namely 13 September 1996, the parties were still in negotiation. Accordingly, Seven submits that there was then no binding legal contract in existence at that date which could give rise to a protected contractual right. The resolution of this question will depend on whether other significant clauses in the agreements were also finalised and agreed upon (apart from those which relate to access and deprivation). It is not clear from the evidence whether Mallesons' discovery to date includes documents which concern these other rights which were the subject of negotiations. As the two documents have not been produced, it is not clear whether these are held back because they do not relate to access or deprivation or whether the reason is that they touch and concern other rights and obligations provided for in the agreements and discussions between the parties. The request contained in this paragraph should therefore be complied with.

4 Paragraph 2 refers to backup documents and is not pressed. Therefore, I do not need to rule on this question.

5 Paragraph 3 covers documents in the nature of communications and instructions between Telstra and Mallesons concerning the negotiation or execution of important documents said to evidence the existence of a contractual right. It is said that at least some of these documents are clearly privileged. This is not self evident on the present state of the evidence. The documents covered by this paragraph should be produced and a claim for privilege made in a proper and formal manner so that the privilege question can be determined with precision. In addition, it is said that some of the documents requested in the paragraph could not be relevant. Counsel for Seven, however, points out that communications relating to the drafting, negotiation or execution of the agreements and documents in question (whether before or after the relevant date) may throw light on the question as to whether there was any binding agreement giving rise to a protected contractual right as at that date.

6 I accept that this is an arguable submission. In order to determine whether a binding agreement has been reached, it is important to consider the negotiations between the parties and their conduct against the background of all the communications talking place between them, taking into account, in some instances, internal communications and communications with third parties: see ABC v XIVth Commonwealth Games Limited [1988] 18 NSWLR 540, at 546-551, per Gleeson CJ. Accordingly, the documents referred to in paragraph 3 should be produced and, where appropriate, a formal claim for privilege should be made on the basis set out together with appropriate evidence.

7 Paragraph 4 calls for production of solicitors' time sheets and related documents. It is cast in very wide terms. Mallesons submit that on the evidence this material is likely to be of minimal, if any, significance and that it would be unduly onerous to require production. Seven says that it requires access to see whether there are any indications or references in the documents to support an argument that the parties were still in negotiations after 13 September 1996 with respect to what is claimed to be a protected contractual right. While there is some force in this contention, in my opinion, the request is cast too widely. I therefore set aside this paragraph. However, it seems to me that Seven is entitled to inspect some at least of these documents in the form of a significant random sample to see whether the form and contents of the time sheets and related documents accord with the claims asserted by Mallesons to the effect that they contain no relevant material.

8 Paragraph 5 is concerned with documents in the nature of accounts and memoranda of fees. It is not pressed and there is therefore no necessity to consider it.

9 Paragraph 6 seeks production of the files of a solicitor at Mallesons which relate to the efforts of Telstra in relation to relevant recent amendments of the TPA relating to the concept of a "protected contractual right". The ground for this requirement is that such communications and records may throw light on the question whether Telstra had a protected contractual right as at the relevant date. Seven submits that there may be references in the files which bear on this question. In my view, this request is far too general and speculative to satisfy the requirements for a valid subpoena and should be struck out. Nothing of substance has been put before me in submissions or by way of evidence to support a suggestion that there are any communications in existence which are likely to come within this category. This consideration, together with the evidence as to the onerous consequences of compliance with the request in this form lead me to the conclusion that this paragraph should be set aside.

Subpoenas to SG Hambros (Australia) Limited ("Hambros"), 31 December 1999.

10 The requirements of these subpoenas are cast in wide terms. In substance, they seek all documents between March 1994 and September 1997 which compare or analyse agreements between the Telsta Group and the Foxtel Group or refer to rights in relation to the Telstra Broadband Cable Network which contained advice by Hambros in relation to the Subscription Pay Television business.

11 Telstra seeks to set these subpoenas aside on the basis that they are too wide. Alternatively, it seeks a limitation of the subpoenas in its Amended Notice of Motion so as not to require production of documents which do not consist or analyse the so-called "Umbrella Agreement", the letter of 23 October 1995 from Telstra Multimedia Pty Limited to Foxtel Management Pty Limited, or the Broadband Co-operation Agreement or any rights arising therefrom. In addition, and in the alternative, it seeks a limitation on paragraph (a)(2) of the Hambros subpoenas so that they do not require production of documents which do not relate to any exclusive use of the Telstra Broadband Cable Network by any company in the Foxtel Group. There has been an exchange of correspondence between the parties in relation to these subpoenas. In my view, the subpoenas should be limited in the manner set out in paragraphs (a) and (b) in the letter of 11 January 2000 from Mallesons to Freeehill Hollingdale & Page. However, I do not consider that they should be limited in the manner suggested in the paragraph (c) of that letter. Seven, in my view, is entitled to see any documents which bear not only on the negotiations and communications concerning the exclusive rights asserted, but also those which bear on any other rights which form part of the alleged contract giving rise to the protected right, because negotiation as to these other rights may bear on the question whether there has been a binding and concluded agreement reached. I therefore decline to set aside this paragraph, but order production of the document as limited in the above way.

Subpoenas to Allen Allen & Hemsley - 5 January 2000

12 In substance, the requirements of these subpoenas are similar to the Mallesons' subpoenas. The only paragraphs in issue are pars (3) and (5).

13 In relation to paragraph (3), I have reached the same conclusions as that in relation to the Mallesons' subpoena expressed earlier. Again, it is not self-evident that the documents are privileged. The documents should therefore be produced and any privilege claim should then be properly made.

14 In relation to paragraph 3(c), I am satisfied that such documents may be relevant in throwing light on the existence or otherwise of a contract at the relevant date.

15 In relation to paragraph (5), and taking into account the onerous nature of the task involved, I consider that Seven should have the opportunity of inspecting only a sample of the documents in question. I do not set aside this paragraph but I consider that production of a random sample of the documents sought should be provided to verify their asserted form and content. I leave it to the parties to agree on a suitable range of sample dates in this respect. If this cannot be agreed on the matter can come back on 24 hours notice for further consideration. Depending on their format and content, such documents could be relevant to the question where there was a concluded contract as at the relevant date.

16 I do not presently propose to make formal orders, but I direct the applicant, Seven, to bring in Draft Short Minutes to give effect to the above reasons. The costs of the applications to set aside the subpoenas will be reserved.

17 I should add that the Court appreciates the co-operation and practical approach taken by the parties in getting this matter ready for an early hearing as indicated by the discussion in limiting the scope of the present dispute as to the production of documents.

I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

Associate:

Dated: 20 January 2000

Counsel for the Applicant:	S G Finch SC
Solicitor for the Applicant:	Freehill Hollingdale & Page
Counsel for the First to Third Respondents:	M A Pembroke SC
Solicitor for the First to Third Respondents:	Mallesons Stephen Jaques
Counsel for the Fourth to Seventh Respondents:	M Dicker
Solicitor for the Fourth to Seventh Respondents:	Allen Allen & Hemsley
Solicitor for the Second Respondent to the Second Cross Claim:	P Cornelius of Cornelius Partners
Date of Hearing:	18 January 2000
Date of Judgment:	20 January 2000