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Federal Court of Australia - Full Court Decisions |
Last Updated: 13 May 2002
Reading Entertainment Australia Pty Ltd v Birch Carroll & Coyle Ltd [2002] FCAFC 109
PRACTICE & PROCEDURE - application to extend time for making application for leave to appeal - application for leave to appeal and appeal from an interlocutory decision of primary Judge to Full Court - discovery - whether primary Judge erred in holding applicants not entitled to certain categories of documents - where complex commercial issues arising in relation to causes of action for exclusive dealing against certain parties and knowing concern in relation thereto against remaining parties - whether primary Judge erred in holding that similar fact documents sought in relation to geographical areas beyond the area of the market the subject of the alleged misuse of power could not be relevant to the purpose of the respondents' conduct in the market pleaded - whether categories of documents sought oppressive - role of appellate court in interlocutory applications.
Trade Practices Act 1974 (Cth) s 45, 46, 47, 52
Bailey v Beagle Management Pty Ltd [2001] FCA 60; (2001) 105 FCR 136 followed
Commonwealth of Australia v Northern Land Council (1991) 30 FCR 1 cited
Compagnie Financière et Commerciale du Pacifique v The Peruvian Guano Co (1882) 11 QBD 55 cited
F Hoffman-La Roche AG v Chiron Corporation & Anor [2000] FCA 346; (2000) 47 IPR 516 cited
Jess v Scott (1986) 12 FCR 187 followed
Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341 followed
Trade Practices Commission v CC (New South Wales) Pty Limited (1995) 58 FCR 426 followed
Butterworths, Practice & Procedure of the Federal Court
Halsbury's Laws of England 4th ed, Vol 13
READING ENTERTAINMENT AUSTRALIA PTY LIMITED V BIRCH CARROLL & COYLE LIMITED, VILLAGE ROADSHOW EXHIBITION PTY LIMITED, PACIFIC CINEMAS (GARDEN CITY) PTY LIMITED, AMP LIFE LIMITED, AMP HENDERSON GLOBAL INVESTORS LIMITED, VILLAGE ROADSHOW LIMITED AND PACIFIC CINEMAS (LOGANHOLME) PTY LIMITED
NO. NG 326 OF 1997
BEAUMONT, CARR & TAMBERLIN JJ
10 MAY 2002
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
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1. The time for the filing and service of the applicant's notice of motion for leave to appeal filed on 21 December 2001 be extended to that date.
2. The applicant have leave to appeal from the decision of the primary Judge given on 11 December 2001.
3. The appeal be allowed.
4. Paragraph 1 of the orders made by the primary Judge on 11 December 2001 be set aside.
5. The applicant's motion for discovery of categories of documents (3), (11), (9) and (21 - 26) be remitted to the primary Judge for further hearing and determination, as the justice of the case may require, in accordance with these reasons for judgment.
6. The respondents pay the appellant's costs at first instance to date and of the appeal, but any further costs in the motion abide the order of the primary Judge.
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 |
|
JUDGE: |
BEAUMONT, CARR & TAMBERLIN JJ |
DATE: |
10 MAY 2002 |
PLACE: |
SYDNEY |
BEAUMONT J:
INTRODUCTION
1 This is, in the first instance, an application to extend time for making an application for leave to appeal from an interlocutory order of the docket Judge refusing to make certain specific discovery orders sought by the applicant, Reading Entertainment Australia Pty Limited ("Reading"). The extension application has been argued at the same time as argument on the application for leave. We also heard argument as on the appeal itself.
2 In order to understand the issues that arise for our determination, it will first be necessary to explain some of the background to the litigation, in particular, the issues that arise on the case pleaded by Reading as applicant in the principal proceedings. For this purpose, it will be sufficient to refer to the primary Judge's explanation of these matters, essentially as follows.
THE CASE PLEADED BY READING
3 Reading applied in the proceedings for relief by way of declarations, injunctions and damages, pursuant to causes of action for, inter alia, contravention of s 45, 46, 47 and 52 of the Trade Practices Act 1974 (Cth) ("the Act"). The first, second, third, sixth and seventh respondents, referred to in the fourth amended statement of claim ("S/C") respectively as "BCC", "Exhibition", "Pacific Garden City", "Village" and "Pacific Loganholme" (hereafter together referred to as "the Cinema respondents") were represented by the same counsel in the proceedings, and the fourth and fifth respondents, referred to in the S/C respectively as "AMP" and "Henderson", were separately represented by the same counsel. BCC is said to be a subsidiary within the Greater Union theatre group of companies. Exhibition and Village are part of the Village Roadshow group of companies, (hereafter together referred to as "Village"). Pacific Garden City and Pacific Loganholme are part of the Pacific group of companies (hereafter together referred to as "Pacific"). AMP and Henderson are hereafter together referred to as "AMP".
The context pleaded
4 Reading alleged relevantly:
* A substantial market existed for the supply of cinema services to members of the public in South Brisbane and its environs in the State of Queensland ("South Brisbane"), which area is geographically defined by the Brisbane River in the north, the Pacific Ocean coastline in the east, Beaudesert Road in the west and the Logan River in the south, such services comprising the provision to members of the public of cinema screens whereby they are able to view cinema film releases on payment of a fee.
* BCC and/or Village and/or Pacific have held a substantial degree of power in the South Brisbane market in relation to the provision to members of the public of cinema screens for entertainment, to the extent of not less than 70% of such market. The circumstances giving rise to such market power are as follows:
(a) the Australian cinema industry has been at all material times, and still is, highly concentrated into a virtual duopoly involving the Hoyts group on the one hand and the Village and Greater Union groups on the other, which between them derive 70% of box office receipts from 50% of screens throughout Australia;
(b) Greater Union owns about 33% of Village Roadshow Corporation Limited, which in turn owns about 48% of the ordinary shares of Village;
(c) BCC is a wholly owned subsidiary of Amalgamated Holdings Limited which, through Greater Union, controls 11% of the market Australia-wide for the supply of cinema screens, and 18% of cinema box office receipts;
(d) Exhibition is a wholly owned subsidiary of Village Cinemas Australia Pty Limited, which in turn is a wholly owned subsidiary of Village, which controls 10% of cinema screens Australia-wide and 11% of cinema box office receipts Australia-wide;
(e) Village and Greater Union enjoy a longstanding commercial association for some regional areas in Australia, and in particular some CBD locations, pursuant to which association they develop and/or operate cinemas jointly. In such locations they do not operate cinemas in competition with each other. From 1986 such association has included Village, Amalgamated Holdings Limited and Warner Brothers, each owning a one-third share in a joint venture which developed "multiplex" cinemas throughout Australia. Village and Greater Union have an association with the Hoyts group of cinemas in major venues nationally;
(f) BCC and Village Cinemas Australia Pty Limited own Roadshow Distributors Pty Limited, which owns Roadshow Film Distributors Pty Limited, the latter in turn controlling not less than 52% of the supply of first run cinema film releases Australia-wide;
(g) Pacific Loganholme is part of a group of companies controlled by Mr Terry Jackman, he having been at all material times a director of Pacific Loganholme, the sole director of Classicist Pty Limited, Lord Excellency Pty Limited and Pacific Garden City, and a director of Pacific Cinemas (Brown Plains) Pty Limited (which latter company is owned by Terry Jackman and Classicist); in addition he is said to be a director of Village. Pacific Loganholme and/or its related companies and/or Jackman and Village have had a longstanding commercial association through ventures such as "Movie World" on the Gold Coast;
(h) Warner Brothers Group, which is a major supplier of so-called "first run" films throughout Australia, owns a substantial percentage of the issued capital of Village;
(i) outside of central business district markets, the Hoyts group, and the Village and Greater Union groups, maintain a territorial separation of their operations nationally including in Queensland, and this has had the consequence that the Hoyts Group has not competed and could be relied upon by other exhibitors not to compete, in the South Brisbane market; (S/C par 9(i))
(j) BCC and Village and their related companies have had strategic alliances with their suppliers and other providers of entertainment services, and they have been vertically and horizontally integrated with businesses and companies associated or involved with the operation or promotion of cinema services; and
(k) there have been at all material times limited sites in the South Brisbane market which are capable of being expanded or redeveloped for the supply of cinema services, and BCC Village and Pacific Loganholme control the sites of that description at Capalaba, Carindale, Browns Plains and Loganholme.
* There have been high barriers of entry to or expansion within the market for the supply of cinema services in South Brisbane, by reason of the following matters:
(a) as at 1997 the only remaining viable site for the construction of a cinema complex in South Brisbane was at the AMP Centre (referred to below);
(b) the supply of cinema services has required a new entrant to incur significant capital expenditure of a sunk nature;
(c) access to the supply of first run films is an essential ingredient in competing in the cinema services market;
(d) a first release cinema film is expensive to acquire, and is only available from a limited number of sources, the most significant of which is Roadshow Film Distributors Pty Limited, which is in turn owned by Roadshow Distributors Pty Limited, and which has been at all material times the distributor in Australia for Warner Brothers and Disney; and
(e) the cost of owning and operating cinemas is very high and is a fixed cost.
5 Several causes of action alleged to arise under Part IV of the Act were pleaded, relevantly as follows.
The allegation of contravention of s 45(a)(ii) of the Act
6 Reading pleads the formation of an anti-competitive arrangement allegedly in contravention of s 45, said to have been made from about September 1996 to November 1997 between BCC, Village and Pacific, allegedly to the effect that they would bid together, and not in competition, for the right to enter into an agreement with AMP for the operation of a cinema complex in the AMP shopping centre located at Upper Mount Gravatt in South Brisbane known as The Garden City Shopping Centre ("the Centre"), and would so conduct themselves on the basis that they and/or their related bodies would not acquire and operate further cinema screens in South Brisbane, and would not increase the number of cinema screens in South Brisbane, in particular within a 15 kilometre radius of the Centre, for a period of ten years.
7 Reading claims that the arrangement had the purpose or likely effect of preventing the entry of Reading into the South Brisbane market for cinema services, and of preventing, restricting or limiting BCC and/or Village and/or Exhibition and/or Pacific Garden City and/or Pacific Loganholme in their supply of cinema services within South Brisbane for a period of ten years, and further asserts that such likely effect would extend to not reducing prices in order to compete with the lower prices that Reading would have charged; and to not renovating or expanding the other cinemas operated in the South Brisbane market in order to compete with the facilities which Reading had proposed to AMP.
8 Reading further asserts that had BCC Exhibition and Pacific Garden City not entered into the Lease from AMP on the basis of such anti-competitive arrangement, AMP would not have entered into the same, and AMP would have, instead, honoured the agreement to lease which it had earlier made in favour of Reading of the cinema site adjacent to the Centre.
The allegation of contravention of s 46 of the Act
9 Reading pleads that, in the case of BCC Village and Pacific Loganholme, commencing in or about September 1996 and continuing to 1997, and in the case of Exhibition and Pacific Garden City commencing respectively from February and September 1997, in furtherance of their substantial degree of market power for the supply of cinema services in South Brisbane, such respondents informed AMP that, if AMP granted the lease to them in respect of the Centre in lieu of Reading, they and/or their respective related bodies corporate would not acquire and operate further cinema screens in South Brisbane for a period of ten years; and would not increase the number of cinema screens in South Brisbane, and in particular within a 15 kilometre radius of the Centre, for a period of ten years. Furthermore, the Cinema respondents are said by Reading to possess significant financial resources, such that they could expend substantial funds to acquire further existing cinema screens in South Brisbane; and, moreover, such respondents and AMP knew that, as at 1997, the only remaining site in South Brisbane for the construction of a new cinema complex, was at the Centre.
10 It is further alleged by Reading in the S/C that AMP knew the following material facts and circumstances:
(i) any acquisition and operation of further cinema screens owned by the Cinema respondents in South Brisbane could significantly impact adversely on the proposed cinema screen at the Centre by reducing the number of customers of the cinemas, and consequently the number of visitors to the Centre;
(ii) any reduction in the number of customers of the cinemas and visitors to the Centre would adversely affect their commercial return from the Centre, because the proposed lease terms provided for part of the rent payable in respect of the cinema complex to be calculated on the basis of gross sales of the cinemas, and because of the higher level of rent chargeable by a shopping centre owner where visitation is high; and
(iii) the Cinema respondents possessed the means to put into effect the acquisition or operation of further cinema screens in South Brisbane.
11 Reading says that, as a consequence, AMP leased the part of the Centre which was required for such cinema complex to BCC, Exhibition and Pacific Garden City, to the exclusion of Reading, and thereby became knowingly concerned in the infringements by the other Respondents of s 46 of the Act.
12 Reading pleads that BCC, Pacific Loganholme, Exhibition and Pacific Garden City took advantage of their power in the market for the supply of cinema services in South Brisbane for the purpose of preventing the entry of Reading into that market, and deterring or preventing Reading from engaging in competitive conduct in that market, in contravention of s 46 of the Act in the following respects:
(i) in order to prevent or limit competition or potential competition from Reading, Village, BCC, the Hoyts Group and Greater Union strenuously opposed the entry of Reading into the Australian cinema industry from 1994, notwithstanding that none of such parties had ever objected to or appealed against the grant of development approval of applications made by any of them to develop either a cinema complex or a retail development. The following particulars were given in that regard:
(A) in 1995 BCC initially showed no interest in a proposed cinema development at the Pacific Fair shopping centre owned by AMP at Broadbeach in Queensland. However, after Reading expressed an interest in the development, BCC entered into an agreement, arrangement or understanding with AMP to develop cinemas at Pacific Fair on the basis that BCC's Mermaid Beach cinema complex located nearby the Pacific Fair shopping centre would close down, or in the alternative would not show "first run" movies;
(B) in 1996 Village appealed to the Administrative Appeals Tribunal against the grant, in January 1996, of a planning permit to Reading for the development of a 25 screen complex at Burwood East in Victoria;
(C) in 1996 and 1997 BCC opposed, in the Queensland Planning and Environment Court, Reading's proposal to develop a "state-of-the-art" cinema complex at Jindalee in Brisbane;
(D) in late 1996 Roadshow Film Distributors Pty Limited refused to supply in Townsville certain "first-run" films to related companies of Reading; and
(E) in 1996 Greater Union opposed in the Land and Environment Court Reading's proposal to develop a cinema complex at Liverpool in New South Wales;
(ii) in about April 1995, BCC made an offer to AMP to develop cinemas in the Centre, which offer was considered unacceptable by AMP;
(iii) thereafter, BCC did not pursue its offer to develop cinemas at the Centre until about September 1996, by which time AMP had either granted a lease to Reading, or alternatively was negotiating for the grant of a lease to Reading, and at which time BCC Village and/or Pacific Loganholme commenced negotiations with AMP for the operation of a cinema complex at the Centre;
(iv) the Cinema respondents became aware that Reading was negotiating, or alternatively had negotiated, a lease with AMP in respect of the construction and operation of cinema screens at the Centre;
(v) the Cinema respondents determined that they would not permit a competitor to obtain a foothold in South Brisbane for the supply of cinema services;
(vi) the Cinema respondents determined that they would not allow Reading to weaken their control of the market for the supply of cinema services in South Brisbane;
(vii) the Cinema respondents determined that, given the importance of the Centre, they could not permit a competitor to obtain a lease of it, and they resolved to acquire the lease from AMP notwithstanding that it was outside their usual investment parameters;
13 Reading then pleads that the Cinema respondents knew that as at 1997, the only remaining viable site for the construction of a cinema complex in South Brisbane was at the Centre.
The allegation of contravention of s 47(8)(b)(ii) of the Act
14 Reading alleges that AMP contravened s 47(8)(b)(ii) of the Act, for the reason that AMP granted the leases complained of to BCC, Exhibition and Pacific Garden City on the condition that such lessees did not, or did only to a limited extent, supply cinema services within South Brisbane, and that such condition had the purpose or likely effect of substantially lessening competition for the supply of cinema services in South Brisbane. Reliance is placed by Reading upon a document provided by AMP entitled "Expression of Interest Outline" dated 19 December 1996.
READING'S MOTION FOR SPECIFIC DISCOVERY ORDERS
15 In the course of managing the litigation, which was obviously complex, the docket Judge has, periodically, had to address a number of issues that have arisen in the course of managing the discovery process. In the course of this managerial function (a process specifically contemplated by Practice Note 14 (see below)), the parties have reached agreement on several aspects of discovery by the respondents. However, since no agreement could be reached on the discoverability by the respondents of a number of particular items, Reading moved the Court for orders for their specific discovery. However, Reading no longer presses for discovery of all of the documents mentioned in its notice of motion before the docket Judge. The documents which are still in contention are as follows:
1. Documents (identified by category numbers) sought to be produced by BCC, Exhibition, Pacific Garden City, Village and Pacific Loganholme (i.e. the several Cinema respondents)
"11. Documents [recording] or referring to the territorial division of cinemas in Australia by the Hoyts Group of companies on the one hand and/or by [BCC], [Exhibition] and/or the Greater Union Group of companies on the other, or to any discussion or communication, of any of the [BCC], [Exhibition] and/or the Greater Union Group of Companies with the Hoyts Group of Companies or any representative of the Hoyts Group of companies relating thereto, being documents created by or in possession of the employees officers or directors at or above the level of general manager of the operations of any company within the relevant Respondent's Group."
2. Documents sought from BCC, Exhibition and Village
"21. Documents recording or relating to the response by the Greater Union Group of companies and/or [Exhibition] to [Reading's] proposal for a cinema complex at East Burwood in Victoria, including but not limited to any records of discussion or communication with the Victorian Government pertaining to the formulation and/or promulgation of a planning policy that became known as the `Centres Policy' (pursuant to which the development of `stand-alone' cinema developments were to be discouraged and/or prohibited) being documents created by or in possession of the employees, officers or directors within the relevant Respondent's group whose duties included such response.
22. Documents recording or relating to the response by the Greater Union Group of companies and/or the [Exhibition] to [Reading's] proposal for a cinema development at Geelong in Victoria, including but not limited to any records of communications with the owner of the relevant shopping centre concerning the Applicant or concerning the likelihood of the supply of films to such a cinema being documents created by or in possession of the employees, officers or directors at or above the level of general manager of the operations of any company within the relevant Respondent's Group.
23. Documents recording or relating to the response by the Greater Union Group of companies and/or [Exhibition] to [Reading's] proposal for a cinema complex at Liverpool in New South Wales, including but not limited to any records of discussion or communication with the New South Wales Government in relation to the formulation and promulgation of a planning policy equivalent to the Victorian Centres Policy being documents created by or in possession of the employees, officers or directors at or above the level of general manager of the operations of any company within the relevant Respondent's Group.
24. Documents recording or relating to the response by [BCC] and/or [Exhibition] to [Reading's] proposal in 1996 for a cinema complex in Jindalee in Brisbane being documents created by or in possession of the employees, officers or directors at or above the level of general manager of the operations of any company within the relevant Respondent's Group.
25. Documents relating to the supply of films to [Reading], but not limited to the supply of films for [Reading's] Townsville cinema development in Queensland being documents created by or in possession of the employees, officers or directors at or above the level of general manager of the operations of any company within the relevant Respondent's Group.
26. Documents recording or referring to proposals by [Reading] or [BCC] to [AMP] for the development of a cinema complex at Pacific Fair Shopping Centre in Queensland being documents created by or in possession of the employees, officers or directors at or above the level of general manager of the operations of any company within the relevant Respondent's Group."
3. Documents (categories 3 and 9) sought from AMP and Henderson
"3. Documents recording or referring to any discussion or communication with the Hoyts Group of companies or any representative thereof relating to the location of cinemas in the South Brisbane market in the Period.
...
9. Documents recording or referring to proposals by the Applicant or [BCC] to [AMP] for the development of a cinema complex at Pacific Fair Shopping Centre in Queensland in the Period."
The "Period" is defined as the period from 1994 to 1997 inclusive.
READING'S CASE ON THE MOTION
16 In support of its motion, Reading relied upon a substantial body of unchallenged affidavit evidence, in particular, the following:
(A) With respect to Category 11 (Cinema respondents) (i.e. the allegation of territorial division of cinemas between Hoyts and Village (GU))
17 In the affidavit of Mr Beresford John Rochester, consultant in the cinema industry, and formerly a senior executive of Reading, sworn 9 July 2001, par 5:
"5. In the period October 1995 to 1997 (and indeed so far as I can recall for many years prior to 1995) there was a clear territorial delineation between the cinemas operated by the Hoyts Group and those operated by the GU/Village Group. For example, in Brisbane, again for as long as I can recall, Hoyts only operated cinemas in the CBD whilst GU/BCC operated cinemas throughout the remainder of Brisbane and Queensland. I was aware from time to time during the period I worked in the cinema industry of proposals mooted by either Hoyts to develop a cinema complex in an area which hitherto only had GU/Village Group cinemas or by the GU/Village Group to develop a cinema complex in an area which hitherto only had Hoyts Group cinemas. However, so far as I can recall, the proposals never, or at least hardly ever, came to fruition. I accordingly understood that Hoyts would not develop a cinema in Brisbane outside the CBD and would accordingly have been very surprised had Hoyts actually done so."
18 In the affidavit of Neil Pentecost, Reading's Chief Operating Officer since 1999, formerly (since 1995) a senior executive of Hoyts, sworn 11 July 2001, pars 3, 4, 5, 6 and 7.
"3. From my observations of the Australian cinema industry during 1995 and 1996 Hoyts on the one hand and Greater Union Village (`GU/Village') on the other would operate in separate geographic territories in non-CBD markets.4. Examples of the territorial separation of which I am aware as a result of my experience in the industry are:
(a) In Victoria as at 1996 Hoyts had no cinemas outside metropolitan Melbourne and within metropolitan Melbourne outside the CBD, Hoyts and GU/Village were in separate areas;
(b) During 1996 Hoyts consolidated to control the geographic area west of Parramatta including a `swap' or exchange arrangement in 1996 whereby the Hoyts Roxy Theatre within the city of Parramatta was swapped with GU/Village for its Blacktown operation to become a Hoyts Cinema thus consolidating GU/Village in Parramatta and Hoyts in the outer western corridor, namely Blacktown, Mt. Druitt and Penrith;
(c) In NSW there were no Hoyts cinemas beyond the Sydney, Newcastle and Wollongong metropolitan areas;
(d) In Perth the territory south of the Swan River was the Hoyts territory and north of the river was the GU/Village territory; and
(e) In mid-1996 Hoyts was in the process of building its cinema at the Lend Lease development at Erina Fair and Village had a small two screen operation in Gosford. I had the role of managing the Hoyts takeover of the GU/Village in Gosford operation as part of its consolidation of the southern Central Coast market whereby GU/Village exited that territory. Hoyts ran Gosford until it was closed down sometime after the Erina Fair cinema opened.
5. After I assumed responsibility for Queensland my functions included implementing the Hoyts policy that it would continue its operations within the Brisbane CBD and Surfer's Paradise on the Gold Coast only and that other territories within Queensland would be left to the Greater Union subsidiary Birch Carroll & Coyle (`BCC'). As at 1996, apart from those locations, Hoyts had no other cinemas in Queensland. To the best of my knowledge Hoyts did not seek to bid against the BCC/Village/Pacific consortium for Mt Gravatt.
6. In mid-1996 on a date I cannot now specifically recall, there was a major strategic planning meeting at a Darling Harbour Hotel for all Hoyts senior management. I recall that Paul Johnson, Stuart McInnes, Martin Bagley and Chris Rawlings were at this meeting. At this meeting, strategies were discussed as to the way in which Hoyts could `lock up' all key sites within Hoyts territories as well as implementing a strategy that would hinder the proposed entry by Reading into the market. I recall Paul Johnson referring to the territorial separation between Hoyts and GU/Village with words to the effect of:
`We want to control these territories and secure these locations.'
When Johnson was questioned about a site which was outside a Hoyts' territory, Johnson said words to the effect of:
`We'll leave that one to Village.'
7. While a senior manager at Hoyts I was privy to the business plans of Hoyts. I knew that I could make my own commercial decisions on the basis that GU/Village would not be a competitor against Hoyts in its acknowledged territories. To the best of my knowledge, I do not recall an instance when GU/Village and Hoyts competed for a site."
19 In the affidavit of Robert Ward, a player in the cinema industry for forty years, sworn 11 July 2001, pars 10 - 14:
"10. In my experience and to my observation since the 1950's, there has been an established territorial separation between the cinemas of the Hoyts Group on the one hand and those of the GU/Village group on the other.11. For example, in Melbourne, so far as I can recall, Hoyts has developed and operated cinema outlets in the western suburbs while GU/Village has operated cinemas in other parts of Melbourne (with the one exception being the Village Sunshine cinema located in the western suburbs of Melbourne).
12. In Perth, GU/Village own or operate all major cinemas in the north of Perth while Hoyts own or operate the major cinemas in the south of Perth.
13. In Queensland, I cannot recall the Hoyts Group operating a cinema in the suburbs of Brisbane (with the one very recent exception of the Hoyts twin `arthouse' cinema at South Bank, just over the river from the Brisbane CBD), whilst BCC has for many years operated cinemas throughout the suburbs of Brisbane, including a number of locations in South Brisbane. Hoyts (again so far as I can recall) has generally not operated cinemas in regional centres (with the exception of Rockingham [sic] in Queensland, the Central Coast, Canberra and Wollongong) whilst the GU/Village group has cinemas in regional centres throughout Australia.
14. This separation of territories is also reflected in the close relationship between the two major groups and the large shopping centre developers. Westfield in my experience of the industry has a very close association with Village/GU and Lend Lease with Hoyts. I am not aware of there being any Lend Lease centre in Australia in 1995-7 that included a Village/GU cinema complex. Westfield centres contain cinema complexes for Village/GU and Hoyts in geographic areas consistent with the territorial separation referred to above. To my knowledge in 1995-7 neither Westfield nor Lend Lease centres contained cinema complexes for any other cinema operator."
20 In the Affidavit of James J Cotter, Chief Executive Officer of Reading Entertainment Inc ("Reading USA"), the parent company of Reading, sworn 17 July 2001, pars 16, 17 and 20:
"16. My concerns as to the likelihood of Reading facing opposition to its planned Australian activities were heightened when in about December 1995 I had a conversation with Danny Felman, then Vice-President, Distribution, for Warner Brothers in the US who I knew had regular dealings in the US with Peter Ivany of Hoyts, to the effect of:He said:- `Peter Ivany has been ranting and raving to me about you saying `Doesn't he know we have a lock up on our areas in Australia.' '
I said:- `Well if he has the lock up why is he ranting and raving.'
APPROACHES TO READING BY VILLAGE
17. Shortly after we announced our intentions regarding the East Burwood property, Graham Burke (`Burke') and Rock Kirby (`Kirby') of Village Roadshow Limited called on me at the Park Hyatt Hotel in the Rocks in Sydney. Burke introduced Kirby as the founder and chairman of Village, and a major shareholder and said words to the effect of:
`Rock Kirby looks at the cinema industry as his heritage in Australia.'
Burke said words to the effect of:
`We have a three-way partnership for exhibitors between Village, Greater Union and Warner Bros with each holding a 33% share. Reading could join the partnership taking 25%.'
I replied with words to the effect of:
`Make it 50/50 between Reading and Village/Greater Union without Warner Bros and I may consider it.'
Burke replied with words to the effect of:
`No. We could not do that. They are our mates.'
In making that reply I did not in fact have an intention of forming a partnership with them but I understood their approach to be to remove Reading as a competitive force in the Australian market.
...
20. My next meeting with representatives of Village was in about February 1997 when Burke and Kirby called upon me in my offices at the Decurion in Los Angeles. Ellen Cotter was also present at that meeting for Reading. At the time I understood that we were concluding our arrangements to secure the Mt Gravatt site. Burke said words to the effect of:
`The situation we see as evolving is that Australia is screened. But while there are fewer screens per capita in Australia than the United States, Australians go to the cinema less often. The sites suitable for cinemas are limited and are already essentially spoken for by the existing players.'
He then gave me a document annexed hereto and marked `JC 1' entitled `AUSTRALIAN EXPANSION- New Builds and Major expansion Only' listing future developments for each of Village/GU, Hoyts and Reading in each capital city metropolitan area. I was extremely surprised because this document showed Mt Gravatt as a Village/GU site for 16 screens whereas I understood we had secured Mt Gravatt for our 12 screen development. I said to Ellen Cotter words to the effect of:
`You could mark this as exhibit A!'
Burke then said words to the effect of:
`Maybe we could let you have certain sites.'
Kirby then said words to the effect of:
`Graham, ask Jim what he wants. Let Jim tell us what he wants.'
I understood this to mean that Kirby was seeking a way to remove the competitive effect of Reading and was prepared to allow me to state the terms on which I would be willing to do this.
We concluded the meeting with Reading making no indication that it wished to become involved in sharing aspects of the Australian market."
21 "JC 1" is as follows:
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VRL/GUO |
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HOYTS ??? |
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READINGS ??? |
1) |
SYDNEY |
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Expand to Megas |
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Macquarie Castle Hill Parramatta Liverpool |
20 20 20 20 |
Eastlands Chatswood |
16 10+8 |
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New Builds |
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Bondi Hornsby Burwood Bass Hill |
12/20 16 12 16/20 |
Showgrounds Hoyts = tenant Blacktown Penrith Wetherall Park Merrylands Homebush Bay Others? |
20? 16 ? 16 10 20 |
Auburn 8 Penrith
Liverpool
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2) |
MELBOURNE |
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Expand to Megas |
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Doncaster Southland Jam Factory |
30 20 16 |
Chadstone Forest Hill Highpoint |
18 16 16 |
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New Builds |
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Fountain Gate Sunshine Coburg Waverley Rivoli Frankston * Cronbourne |
10+10 20 20 10 10/16 12? To 20 |
Ringwood Broadmeadows Taylors Lakes Chirnside Park Box Hill Others? |
16 12 8 8 8 |
Frankston é Mornington ! Airport West/ [illegible] Wodonga X |
3) |
BRISBANE |
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Carindale Loganholme Indooripilly |
16 16 16/20 |
Unknown |
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New Builds |
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Chermside Mt Gravatt |
20 16 |
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X Dead! Townsville - ü |
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ADELAIDE |
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Marion Arndale |
30 12/16 |
Elizabeth Norwood |
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Tafe College = Arndale |
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PERTH |
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Joondalup |
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Booragoon Murdoch |
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Mandurah ü |
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CANBERRA |
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Tuggeranong |
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Queanbeyan ? |
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OTHER |
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Most provincial Cities expansion or new include Ballarat Bendigo Hobart Darwin BCC Cairns Rockhampton Sunshine Coast Mackay |
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Newcastle North |
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Italics denotes handwriting.
22 In the affidavit of Christopher Small, one of Reading's senior executives, sworn 23 July 2001, pars 10 and 11:
"10. From my observations of the Australian Cinema market over the last 13 years I am able to say that in the period 1995 to 1997:-* In New South Wales, South Australia and Western Australia Greater Union and Hoyts had the largest share of cinema screens and therefore box office revenue;
* In Victoria Hoyts and Village had the largest share of cinema screens and therefore box office revenue;
* Queensland was principally a Greater Union and Village state (through BCC), with the Hoyts operations being confined to its Gold Coast cinema and its two Brisbane CBD cinemas.
11. Within those States, from my experience and in my observation, each of the two major groups (Hoyts and Greater Union/Village/BCC) kept to distinct and separate geographical areas outside the CBD's. This territorial separation was in my experience of conversations with other Hoyts executives and people involved in the cinema industry commonly referred to as the `keep off the grass' arrangement. An example of this was Perth. Greater Union and Village owned or operated all major cinemas in the north of Perth and Hoyts owned or operated all major cinemas in the south."
(B) As to category 21 (Cinema respondents) (i.e. the allegations of response to East Burwood, Development of the Centres Policy)
23 In the affidavit of Mr Rochester, sworn 9 July 2001, pars 10 - 12:
"10. In Victoria in 1996 the State Government introduced a planning policy known as `the Centres Policy' in order to reinforce the established pattern of activity centres in which shops, offices, public and community services and entertainment facilities were grouped. The policy largely limited new cinema projects to existing activity centres such as shopping centres, which constituted a significant limitation on the available sites for development of cinemas by Reading (or other new entrants), as Reading discovered in relation to a planned cinema development at Burwood East in Victoria.11. In December 1995, Reading had lodged an application for a planning permit to establish a cinema complex on an old brick and pipes works site in Burwood East. So far as I can recall, the proposal included a very large cinema with about 25 screens, cafes, bars, restaurants and associated car parking. The estimated cost for the project was about $35 million. The initial response from the Victorian Government was positive.
Annexed marked `BJR30' is a letter from the then Premier of Victoria, Mr Jeff Kennett to Mr John Altson the Real Estate Director of Reading Australia Pty Limited dated 14 December 1995, which I note states that the East Burwood proposal `sounds like a very exciting and ground breaking complex'.
12. In about January 1996 the local council resolved to grant the planning permit to Reading. A number of appeals were lodged against the proposal, two of which were from Hoyts and Village, with others being lodged by `shopping centre interests'. Following a government review of cinema-based entertainment facilities, the State Government directed the council not to issue a planning permit."
24 In the affidavit of Mr Cotter, sworn 17 July 2001, pars 12 - 15:
"12. After assessing Australia in 1994 to 1995, Reading very quickly moved to commit a substantial investment. We first purchased the East Burwood land for some $9 million and proposed a 25 screen development at about $20 million. We purchased the Auburn land for around A$9 million proposing a 25 screen cinema development with substantial associated retail development, a total potential investment of the order of A$50 million. We also early on purchased land in Moonee Ponds (Vic), New Market (Qld), Frankston (Vic), Belmont (NSW) and Auburn (NSW) as well as made several offers on other Greenfield sites which were opposed by the other cinema operators and there [sic] allied retail developers.13. We also sought out some joint arrangements with landowners with existing opportunities, for example in Liverpool.
14. For all of these sites we encountered very significant opposition, the worst set backs being East Burwood, Liverpool and Mt Gravatt which we were unsuccessful in developing.
15. In its 1996 Annual Report, Reading USA announced that it intended to build a 25 screen cinema on the Burwood East site. The Premier of Victoria wrote to Reading supporting the proposal and Reading had received the necessary development permits from the City of Whitehorse. However after representations to the Government from the major exhibitors and developers, the planning rules were changed and Reading's permit was later withdrawn by the Planning Minister of Victoria. If this cinema was built as Reading planned, it would have been the biggest and most advanced cinema in Australia at the time being the first new generation `megaplex' cinema in Australia. The 1996 Annual Report further stated that Reading was also aggressively pursuing other locations in and about Sydney and Melbourne and elsewhere in Australia. Reading believed that, in light of the quality of these facilities, it would clearly be able to obtain first-run film product and to compete effectively."
25 In the Affidavit of Mr Ward sworn 11 July 2001, par 25:
"25. To my personal knowledge, based on my direct personal involvement in each of the matters referred to below, the following Reading development proposals have faced objections by one of the two major exhibition groups and/or major shopping centre owners or property developers:(a) Auburn (NSW) - the Hoyts group commenced proceedings under the Land and Environment Court Act 1979 challenging a development application which had been granted by Auburn Council in respect of a proposal involving the development by Reading of a cinema complex at Auburn in the western suburbs of Sydney;
(b) East Burwood (VIC) - The Reading proposal for the first new generation `megaplex' in Australia of 25 screens, a $35m development, was originally supported by the Premier and approved by the local council against the opposition of a number of parties including Hoyts and Village who were then parties to an appeal to the AAT. Before the appeal was heard, the Minister called the proposal in and it was rejected by the panel appointed by the Minister on 26th August 1996. The Victorian Government on 27th August 1996 changed the planning laws to establish a policy known as the Centre's Policy requiring cinemas to be built inside `activity centres'. Under this policy the Reading East Burwood development has not been able to proceed.
(c) Moonee Ponds (VIC) - in June 1997 Reading was granted a council planning permit in respect of its proposal to establish a cinema and retail complex at Moonee Ponds Market in Melbourne, but in July 1997 the Hoyts group lodged an appeal and protracted litigation in respect of the proposal followed, as a result of which the proposal has still not proceeded;
(d) Penrith (NSW) - the Hoyts group and Lend Lease opposed Reading's development application in respect of the `Penrith Panthers' site at council level. Hoyts and Lend Lease later developed a cinema complex in Penrith.
(e) Liverpool (NSW) - Reading entered into a development proposal with a proprietor of land at Liverpool in NSW for a `green fields' development. GU opposed the development which was rejected by the Land and Environment Court applying a draft [S]tate Government planning policy similar to the Centres Policy. Having successfully opposed Reading's permit applications, Greater Union built 12 screens locally at Westfield, Liverpool."
(C) As to category 22 (Cinema respondents) (i.e. allegation of response to Geelong)
26 In the affidavit of Mr Ward, sworn 11 July 2001, par 45:
"45. For the reasons which follow, the 12 screen megaplex Reading development proposed at Mt Gravatt would in my view have resulted in major upgrades at the Carindale, Capalaba and Browns Plains cinema complexes in the South Brisbane area. This is based on Reading's experience in other markets such as Geelong. When Reading opened its eight screen cinema complex in Geelong in March 2000, featuring stadium seating, digital sound, two adjoining restaurants and ample parking, Village very quickly upgraded its five or six screen complex by refurnishing the existing screens and adding five new screens."
(D) As to category 23 (Cinema respondents) (i.e. allegation of response to Liverpool and changes to NSW planning policy)
27 In the affidavit of Mr Ward sworn 11 July 2001, par 25(e).
"(e) Liverpool (NSW) - Reading entered into a development proposal with a proprietor of land at Liverpool in NSW for a `green fields' development. GU opposed the development which was rejected by the Land and Environment Court applying a draft [S]tate Government planning policy similar to the Centres Policy. Having successfully opposed Reading's permit applications, Greater Union built 12 screens locally at Westfield, Liverpool."
(E) As to category 24 (Cinema respondents) (i.e. allegation of response to Jindalee)
28 In the affidavit of Jonathon Altson, sworn 6 August 2001, pars 21 - 23:
"21. In late 1996, Reading entered into an agreement to purchase land at Jindalee (a suburb of Brisbane) (`the Jindalee site') from Ray Group Ltd, a company controlled by Brian Ray (`Ray'). Reading planned to develop a state-of-the-art cinema complex on the Jindalee site. Discussions took place between the City of Brisbane Council to ensure the suitability of the Jindalee site for cinema use who confirmed its suitability.21. During conversations with Ray in or about February 1997 in his Gold Coast office, Ray advised me that he was under a lot of pressure from Jackman, Graham Burke and James Packer to cease negotiations with Reading and proceed with other parties. I recall Ray stated words to the effect of:
`I have had a conversation with my neighbour, Terry Jackman, and he is putting a lot of pressure on me to stop talking to Reading. Graham Burke and James Packer also want me to cease negotiations with Reading. I think I will have to drop this deal'.
Ellen Cotter and Brian Moran were also present during this conversation. This conversation was later confirmed in correspondence to Reading dated 12 February 1997. Annexed and marked `JA1' is a copy of a letter from the Ray Group Ltd to Reading dated 12 February 1997.
23. Planning applications were lodged on Reading's behalf with the City of Brisbane and were ultimately successfully challenged in the Land and Environment Court, Queensland. Annexed and marked `JA2' is a copy of the reasons for judgment by Quirk DCJ."
(F) As to category 25 (Cinema respondents) (i.e. allegation as to response to Townsville)
29 In the affidavit of Mr Ward sworn 11 July 2001, pars 27 - 31:
"27. Another difficulty faced by Reading was in obtaining `first run' movies. The `first run' of a movie in a particular market refers to the first period of its release, which is usually about four to six weeks, and is then followed by the `second run'. First run supply is in my experience very important to the profitability of a cinema because patrons generally much prefer to see movies in their first run. In my opinion, the inability to secure first run supply means that a cinema loses its ability to effectively compete with other cinemas that are screening first run releases - thus affecting the commercial viability of the site.28, At the end of 1996 Reading opened its new generation multiplex cinema site in Townsville, Queensland. The cinemas at the site utilised the latest technology for cinema screens - high backed stadium seating, surround sound, premier seats and premier class (which featured luxury seating facilities with greater leg room and space between the seats). Reading's Townsville site was the first cinema in Australia to introduce what is referred to in the industry as the `new generation' high backed stadium seating and the other features referred to above.
29. Once the Townsville multiplex was developed, Reading experienced difficulty in obtaining `first run supply' of films despite being more than 12 kilometres from the nearest BCC cinema in the CBD.
30. I recall in September or October 1996 having a conversation to the following effect with Ian Sands, the Sales Manager of Roadshow Film Distributors Pty Limited, which, as stated above, was a major distributor of movies and owned by Village Roadshow Limited and Greater Union:
Robert Ward: `Why won't you supply us with film?'
Ian Sands: `Your site is at the other end of town, it won't work, BCC have already refused to build cinemas at that location.'
31. Reading Australia Pty Limited and Reading Properties Pty Limited (related companies to Reading) and two other applicants instituted proceedings in the Federal Court against Roadshow Film Distributors in order to obtain first run supply. The matter ultimately settled prior to hearing and the Townsville multiplex now receives first run supply."
(G) As to category 26 (Cinema respondents) (i.e. allegation of response to Pacific Fair)
30 In the affidavit of Mr Altson sworn 6 August 2001, pars 4 - 8:
"4. As there was no interest in the Pacific Fair site, AMP had begun negotiations with Steven and John Anderson of Ballarat, who traded under the name `Andersons'. Andersons were a small independent cinema chain from Victoria. During discussions with Steve Anderson, I was led to believe that AMP required a substantial surety from the Andersons.5. I understood that the Andersons were unable to provide such surety, and as a result the Andersons introduced Reading to the proposal over the Pacific Fair site.
6. In or about 1995 on a date I cannot now specifically recall, I had a conversation with Neil Fagg (`Fagg') of AMP regarding the Pacific Fair site who said to me words to the effect of:
`We [AMP] don't like the situation but we don't like dealing with Anderson. We have been rejected by the majors. If Reading are interested, we also have other sites around Australia that we can form a relationship.'
As a result of this comment, Reading entered into negotiations with AMP to develop a multiplex cinema complex at the Pacific Fair site.
7. Over the following two to three months, I had many conversations with Fagg. On a date I now cannot specifically recall I had a conversation with Fagg who said to me words to the effect of:
`AMP are delighted to have a new entrant in the Cinema Industry. The majors have a duopoly and the introduction of a third operator will split up their territories. In the past landlords generally only have one bidder for a site which puts the landlord in a hopeless position. The introduction of a third operator puts the landlord in a better position.'
8. On a date which I now cannot specifically recall but during 1996, I recall Fagg contacted me by telephone to advise that AMP had made the decision to give the Pacific Fair site to Birch Carroll & Coyle. Fagg spoke to me and said words to the effect of:
`BCC are willing to close the Mermaid Beach site if they develop at Pacific Fair. Whilst I feel bad about it, it suits AMP.'
I replied: `I'm very disappointed about this'.
He said: `There will be other opportunities - for example, the Mt Gravatt site'.
I replied: `What guarantee does Reading have that you will only deal exclusively with Reading for the Mt Gravatt site?'
He said: `The majors have already rejected the site and AMP are prepared to deal exclusively with Reading for that location'."
31 In the affidavit of Mr Ward sworn 11 July 2001, pars 32 - 37:
"32. Reading and its partner Steven Anderson of Anderson Cinemas, an independent cinema operator from Victoria, also experienced difficulties in relation to a proposal for a cinema development at Pacific Fair Shopping Centre, Broadbeach, Queensland. In 1995 I was approached by Anderson who said to me words to the following effect:`I have been negotiating with Neil Fagg (`Fagg') of AMP regarding the operation of the new cinema complex at Pacific Fair. AMP is of the belief that my shoulders are not broad enough when it comes to the signing of a guarantee.'
33. Anderson then outlined a joint venture proposal for the Pacific Fair complex. Reading subsequently agreed to enter the venture and partnership with Anderson.
34. I then had meetings with Fagg to discuss Reading's interest in the Pacific Fair complex. During one of these meetings I recall Fagg saying words to the effect of:
`Birch Caroll and Coyle have been offered this site [Pacific Fair], but they are showing no interest'.
35. In about August 1995 I recall Fagg saying to me words to the effect of:
`AMP is concerned about the likely customer base for a cinema in Pacific Fair near the BCC Mermaid Beach cinema. In order to protect our shopping centre from becoming a white elephant we have decided to do a deal with BCC because they have agreed to close their five screens at Mermaid Beach and guarantee that they will limit further expansion on the Gold Coast. Why don't you have a look at the new complex we are planning at Mt Gravatt?'
36. BCC then proceeded to develop a cinema complex at the Pacific Fair site. The Mermaid Beach cinema complex did not close, however it does not show first run release and offers discounted admissions.
37. BCC now controls 34 screens on the Gold Coast at Pacific Fair, Australia Fair, Robina and Coolangatta (along with its five screens at Mermaid Beach). The only multiplex cinema on the Gold Coast not owned in whole or part by BCC is the Reading complex at Harbourtown, approximately 15 kilometres from Pacific Fair."
32 In the affidavit of Mr Altson sworn 8 October 1997, pars 7 - 11:
"7. In or about mid 1995 I contacted Mr Neil Fagg (`Fagg') of AMP in relation to the Pacific Fair development. I have also known Fagg professionally in the industry for some 10 years.8. I was informed by Fagg that as Birch Carroll and Coyle (`BCC') were not interested in the Pacific Fair development, there may be an opening for Reading if it was interested. He made it clear however that no firm commitment was being made to Reading at that time. On or about 3 October 1995 a lease proposal was forwarded from AMP to Reading, a copy of which is exhibited and marked `JA4'.
9. I recall Reading commissioned a basic demographic survey and received some additional demographic information from AMP.
10. In or about October-November 1995 Fagg informed me that BCC were now negotiating with AMP. I recall at the time Fagg said to me words to the following effect:
`BCC has obviously been spurred on by Reading's interest in the market'.
This was in circumstances where Fagg had previously informed me that AMP had no other cinema group interested in the Pacific Fair project. Reading viewed this project as particularly attractive.
11. Exhibited and marked `JA5' is letter dated 4 November 1995 from Mr James Cotter, Reading Chairman (`Cotter') to Mr John Rochester of Reading (`Rochester'). The letter highlights Reading's concern during this period in not being used as a `stalking horse' to spur on other competitors such as BCC, particularly in light of the fact it was a `new player' on the Australian market. My briefings from Reading executives were consistent with the sentiments expressed in the letter and it was my understanding that Reading would formally withdraw from negotiations in circumstances where its time, money and energy were merely a vehicle to spur on the major competitors. This was a concern that I had expressed to Fagg on numerous occasions."
PRACTICE NOTE 14
33 Before going to the primary Judge's reasons for refusing Reading's motion, reference should be made to Practice Note 14, mentioned above. It provides as follows.
"1. Practitioners should expect that, with a view to eliminating or reducing the burden of discovery, the Court:(a) will not order general discovery as a matter of course, even where a consent direction to that effect is submitted;
(b) will mould any order for discovery to suit the facts of a particular case; and
(c) will expect the questions set out below to be answered:
(i) is discovery necessary at all, and if so for what purposes?
(ii) can these purposes be achieved:
* by a less expensive means than discovery?
* by discovery only in relation to particular issues?
* by discovery (at least in the first instance - see (iii)) only of defined categories of documents?
(iii) particularly in cases where there are many documents, should discovery be given in stages, eg initially on a limited basis, with liberty to apply later for particular discovery or discovery on a broader basis?
(iv) should discovery be given in a list of documents by general description rather than by identification of individual documents?
2. In determining whether to order discovery, the Court will have regard to the issues in the case and the order in which they are likely to be resolved, the resources and circumstances of the parties, the likely cost of discovery and its likely benefit. (Emphasis added)
3. To prevent orders for discovery requiring production of more documents than are necessary for the fair conduct of the case, orders for discovery will ordinarily be limited to the documents required to be disclosed by Order 15 rule 2(3)."
ORDER 15 RULE 2(3) AND RULE 3
34 Order 15 rule 2(3) provides:
"2(3) Without limiting rule 3 or 7, the documents required to be disclosed are any of the following documents of which the party giving discovery is, after a reasonable search, aware at the time discovery is given:(a) documents on which the party relies; and
(b) documents that adversely affect the party's own case; and
(c) documents that adversely affect another party's case; and
(d) documents that support another party's case;
(e) documents that the party is required by a relevant practice direction to disclose."
35 Order 15 rule 3(1) provides:
"3(1) The Court may, before or after any party has been required under rule 1 to give discovery order that discovery under rule 2 by any party shall not be required or shall be limited to such documents or classes of documents, or to such of the matters in question in the proceeding, as may be specified in the order."
36 (It is not necessary, for our purposes, to refer to rule 7.)
THE REASONING OF THE PRIMARY JUDGE
(A) The discovery sought against the Cinema respondents (i.e. categories 11, 21-26)
37 The primary Judge noted (at [29]) that Reading contended that the purposes of the Cinema respondents said to fall within s 46 of the Act were claimed to have been continuing purposes, formed at least by about 1994 when Reading announced its entry into the Australian market, continuing until the events of 1996/7 in relation to the cinema site at the Centre located at Mt Gravatt in South Brisbane. The relevant proscribed purposes were said to be those of excluding and preventing Reading from entry into the Australian market generally, Reading further argued that "... the events at Mt Gravatt were simply part of their overall purpose in opposing the entry of Reading into, and its competitive conduct within Australia".
38 His Honour went on to note (at [29]) Reading's reliance upon the affidavit evidence of its witnesses (cited above) in relation to such alleged conduct of Village and Greater Union elsewhere in Australia, being evidence of circumstances where neither Village nor Greater Union, nor additionally the Hoyts Group (which are not respondents), had ever objected to or appealed against local government approval of applications respectively made by each other to develop either a cinema complex or a retail development.
39 The primary Judge referred (at [30]) to Reading's contentions that such previous instances of conduct of the Cinema respondents in Australia relating to cinema or potential cinema locations outside of South Brisbane, that is to say, conduct in the nature of territorial divisions (category 11) and otherwise, of opposition to Reading's market entry into Australia, was likely to be reflected in documents in the Cinema respondents' control, which were therefore in principle discoverable. Reading further submitted that whilst the present proceedings related to the exercise of market power on the part of the Cinema respondents in the South Brisbane market, an equally significant element of s 46 (as well as of s 45 and 47), was the purpose of undertaking generally in Australia anti-competitive conduct of that kind.
40 His Honour noted (at [30]) that Reading also called in aid the provisions of s 46(7) of the Act, as follows:
"(7) Without in any way limiting the manner in which the purpose of a person may be established for the purposes of any other provision of this Act, a corporation may be taken to have taken advantage of its power for a purpose referred to in sub-section (1) notwithstanding that, after all the evidence has been considered, the existence of that purpose is ascertainable only by inference from the conduct of the corporation or of any other person or from other relevant circumstances." (Emphasis added)
41 His Honour said (at [44] - [45]):
"[T]he categories in dispute framed by Reading are directed to documents brought into existence by the Cinema [r]espondents which Reading considers will serve to demonstrate purposive conduct on their part undertaken in Australia generally, and in certain parts of Australia specifically, which conduct serves to demonstrate the existence of the elements of a s 46 purpose of the Cinema [r]espondents undertaken in the South Brisbane market.The conceptual obstacle to Reading's approach outlined above is that s 46 is relevantly directed to a purpose of damaging a competitor in either the market in which the offender has a substantial degree of power, or in some other market, whereas the issue presented to the Court in the s 46 cause of action is whether the Cinema [r]espondents have abused their power in the South Brisbane market for the purpose of preventing Reading's entry into or engagement in that market. As was emphasised in F Hoffman-La Roche [AG v Chiron Corporation & Anor [2000] FCA 346; (2000) 47 IPR 516] .... `The framework within which discovery may be ordered is fixed by the pleadings... They determine the issues....'. The relevant issue here addressed is alleged conduct within the South Brisbane market in contravention of s 46. Even if, as Reading contends, that evidence of purpose per se in relation to one place is evidence of that purpose relevantly in relation to another place, which in a s 46 context is I think insufficient in principle, it does not follow that discovery may be sought relevantly in relation to the former purpose. The circumstance therefore that the Cinema [r]espondents may have a substantial degree of market power in a relevant market or markets outside of South Brisbane, and have abused such power in such external market or markets, is not an element in Reading's s 46 cause of action as presently framed."
42 (In the passage cited by his Honour from Hoffmann, a patent suit, Burchett J had observed [2000] FCA 346; (2000) 47 IPR 516 at 517:
"The starting point is that the court has wide and flexible powers in respect of the making of orders for discovery.... The framework within which discovery may be ordered is fixed by the pleadings.... They determine the issues, and from the issues may be identified the categories of documents the court should consider when deciding what orders to make in respect of discovery.")
43 The primary Judge went on (at [45]) to say that s 46(7) did not assist Reading, because s 46(7) did not apply to a purpose "in any sense disconnected from the market in which a corporation has a substantial degree of power".
44 However, in rejecting Reading's claim for discovery of categories 21 - 26, his Honour added (at [46]):
"[I]t does not follow from the ruling which I have just made in relation to specific localities within Australia that there would not be discoverable documents referrable to Reading's intention to develop and operate cinema complexes generally and unspecifically in the Commonwealth of Australia, since such documents would inherently relate, or at least tend to relate, inter alia to the subject area of South Brisbane. Put another way, to the extent to which documents of such generality of description, by virtue of the terms thereof, touch and concern South Brisbane as part of Australia as a whole, the same would be discoverable in principle by the Cinema [r]espondents, upon the basis that the greater necessarily and inherently embraces the less. In the event of any questions of relevance, in the sense which I have described, arising, it may become necessary for me to make rulings in relation thereto. Beyond making that general observation in principle, it is inappropriate for me to be more definitive at this point in time, other than for Reading to bear in mind, in its pursuit of discovery upon the issue of purpose, the following further dicta of the majority of the High Court in [Melway Publishing Pty Ltd v Robert Hicks Pty Ltd [2001] HCA 13; (2001) 75 ALJR 600] at 607 [31]:`... there are cases in which it is dangerous to proceed too quickly from the finding about purpose to a conclusion about taking advantage.'" (Emphasis added)
45 Later, his Honour observed (at [53]):
"As to categories 21 to 26, the same should be disallowed for the reasons indicated in [47 - 48] .... I would add that I am unable to understand how communications by any of the [r]espondents with State Governments concerning town planning controls and approvals could be conceivably more than an exercise in fishing." ([48] is quoted immediately below)
46 The primary Judge said (at [48]):
"[T]he S/C makes reference to the Hoyts Group, in relation to its conduct in Australia of opposing Reading's entry into the Australian market, in the context of the s 46 cause of action .... However category 11 is directed to the `territorial division of cinemas in Australia by the Hoyts Group of companies on the one hand and/or by [BCC], [Exhibition] and/or the Greater Union Group of companies on the other...'. Putting aside the apparent absence of confinement of category 11 to a specified period of time, but in the light of any opinions expressed ... above concerning circumstances beyond South Brisbane, I consider that category 11 relates to matters beyond the s 46 issues arising in the proceedings, and should be disallowed, upon the basis at least of `fishing'. I would therefore disallow category 11."
47 His Honour then expressed this conclusion (at [54]) (with respect to, inter alia, categories 11 and 26 - 30):
"In the result, I have disallowed discovery in relation to the categories presently in issue in the proceedings involving the Cinema [r]espondents. Reading shall have liberty to apply in relation to such discovery categories to such extent as would not be inconsistent with the reasons for the rulings I have made, and which Reading may seek to pursue. If Reading is to take advantage of the liberty to apply, it is important for Reading to pay close attention to the discovery principles introduced on 3 December 1999 by the new Rules and Practice Note [14]...."
(B) The discovery sought against AMP (categories 3 and 9)
(1) Category 3 (i.e. allegation of communication with Hoyts as to the location of South Brisbane's market)
48 His Honour noted (at [57]) AMP's written submissions in these terms:
"6. The statement of claim does not plead any allegation that there exists or existed any form of agreement, arrangement or understanding between Hoyts, GU and Village regarding territorial separation. As we understand it, the applicant goes no further than alleging (in its particulars) that territorial separation exists as a matter of fact, and from this state of affairs it draws the conclusion that Hoyts would not enter the South Brisbane market in competition with GU/Village.7. The fact or otherwise that territorial separation exists is capable of being proved by looking at where cinemas are physically located. Assuming it to be the state of affairs, it is then a simple question for the Court to determine whether one can draw an inference as the applicant has done, that Hoyts would not compete in the South Brisbane market.
8. Absent the allegation of an agreement, arrangement or understanding, there is no basis for embarking upon an inquiry as to Hoyts' actions or motivations in relation to the South Brisbane market. No evidence relevant to this has been put forward by the applicant. The applicant's evidence in relation to the allegation of territorial separation does no more than assert that it exists. The applicant does point to paragraph 16 of the affidavit of James Cotter, presumably as evidence of Hoyts' involvement in some unpleaded arrangement with the respondents. This paragraph contains an entirely hearsay recital of a conversation between two third persons.
9. It is simply apparent from the correspondence between the parties that the applicant believes there to exist an arrangement between Hoyts on the one hand and GU and Village on the other in relation to territorial separation. The applicant has not been prepared to plead this allegation and has no evidence to support it. This discovery request is designed to find out whether there is any such evidence. It falls squarely within the definition of fishing...."
49 (It will be recalled that par 16 of Mr Cotter's affidavit is mentioned above.)
50 His Honour proceeded to disallow category 3, holding (at [58]) that the documents propounded in this category, "do not relate to an issue in the proceeding, essentially for the reasons advanced by AMP, and in particular, do not relate to what is pleaded by Reading as to AMP becoming knowingly concerned in the infringements by the Cinema [r]espondents of s 46 of the Act...".
(2) Category 9 (i.e. Pacific Fair allegation)
51 The primary Judge noted (at [59]) that AMP had submitted, in relation to the claim for discovery of certain other categories of documents, which are now not before us, that -
"...[they] are directed solely to the general issue of definition of the barriers to entry into the South Brisbane market for the purposes of the alleged infringement of s 46 by the Cinema [r]espondents, in relation to which AMP is said to have been knowingly concerned, and that it has not pleaded that AMP had substantial market power in relation to the Australian cinema industry, or that it took advantage of that power, or that it had a proscribed purpose. AMP's alleged `knowing concern' is particularised as constituted by the following conduct on its part:`(a) Issuance by AMP of the expression of interest outline referred to in the particulars given in respect of paragraph 11(b)(i)(C) above;
(b) The AMP Board Approval;
(c) The entering into of the Lease by AMP and Perpetual pursuant to the said Board Approval.'
I have difficulty in comprehending how such conduct on the part of AMP, without more, can fulfil the description of its alleged knowing concern in that conduct of the Cinema [r]espondents said to constitute infringement of s 46, but in any event, the documents the subject of categories 4, 5 and 7 have no apparent bearing upon any such alleged conduct on the part of AMP."
52 With respect to category 9, his Honour said (at [60]):
"As to category 9, AMP repeats the substance of its responses to categories 4, 5 and 7, which I consider to be sound in relation to this category as well. I would refuse an order for discovery in relation to the same. I should add that in relation to categories 4, 5, 7 and 9 generally, AMP has invited Reading to subpoena the documents the subject thereof if it still wishes to access the same, and thus become obliged to bear AMP's costs of its search for and production of the same. In the circumstances I consider such stance on ... AMP's part to be a reasonable one to adopt, which has the consequence that if that course was to be undertaken, Reading would not be susceptible to an allegation of abuse of process, as to which see again Finn J in [South Sydney District Rugby League Football Club Ltd v News Ltd [2000] FCA 519] at [23] of his judgment."
53 (Earlier in his reasons, the primary Judge had said (at [23]):
"From 3 December 1999, Rule 2 of Division 1 of Order 15 of the Federal Court Rules became effective. In South Sydney District Rugby League Football Club v News Ltd [2000] FCA 519, Finn J observed in relation thereto at [10] that `In 1999 amendments were made to the Rules manifesting a quite new and restrictive policy in relation to the discovery to be allowed in this Court. I refer in particular to the limitation imposed in O 15 r 2(3)', and his Honour further observed at [12] that discovery must be confined to existing matters in question, and not matters which could possibly be put in question in the future."
ORDERS MADE AT FIRST INSTANCE
54 Accordingly, his Honour ordered, first, that the interlocutory applications be dismissed; secondly, that there be liberty to apply, on notice; and thirdly, that costs be reserved.
CONCLUSIONS ON THE SEVERAL MATTERS BEFORE THE FULL COURT
(A) The application for extension of time
55 His Honour's orders were made on 11 December 2001. Relevantly, O 52 r 10(2)(b) provides that a notice of motion for leave to appeal from an interlocutory judgment shall be filed within seven days from the pronouncement of the judgment, or within such further time as the Court or a Judge may allow. The present notice of motion was filed on 21 December 2001 - i.e. three days after the expiry of the time specified in the Rules.
56 An explanation of the reasons for the lapse of time is offered in an affidavit sworn by Reading's solicitors. These reasons include delays encountered because Reading's instructing executives live in the United States of America, the Christmas season, and ignorance of the time limit.
57 In my opinion, the extension should be granted, taking into account the shortness of the period involved, i.e. three days; the apparent complexity of the matter; and the absence of evidence from the respondents of any actual prejudice they might have suffered in this connection (cf. Jess v Scott (1986) 12 FCR 187 at 190 - 196).
(B) Application for leave to appeal
58 The relevant principles in this area are now settled (see, e.g. Bailey v Beagle Management Pty Ltd [2001] FCA 60; (2001) 105 FCR 136 at 140 - 141), as follows.
59 The first relevant consideration for present purposes is whether the judgment is attended by sufficient doubt to warrant its reconsideration by the Full Court. Having now had the benefit of a full argument, I have conclude, for the reasons which I will give later in this judgment in allowing the appeal in part, that the judgment is so attended.
60 The second material consideration is whether substantial injustice would result if leave were refused, supposing the decision to be wrong.
61 I think that this condition is satisfied here, essentially for the reasons advanced by Reading, namely -
(i) Although the present context is adjectival, the process of reasoning of the primary Judge is based upon substantive concepts which may be applied finally in the disposition of the principal proceedings.
(ii) The effect of his Honour's rulings here cannot be resolved by Reading's specifying categories with more particularity or amending its pleading; and
(iii) The issues in the appeal bear directly upon the way Reading will be able to conduct its case in presenting evidence at the trial.
62 In my view, leave ought to be granted.
The general principles and modern practice governing discovery
63 In order to understand the particular issues that arise on the appeal, it will be necessary to have regard to the evolution of the principles and practice governing the nature and extent of the parties' traditional duty in the discovery process, that is, to disclose documents of adjectival "relevance" - as "relating to any matter in question" in the proceeding.
64 In their traditional form, rules of court required, under a general discovery order, that the party disclose any document in its possession, custody or control "relating to any matter in question" in the proceeding; that is to say, any document which may - not which must - either directly, or indirectly, enable the party requiring the discovery either to advance its own case, or to damage the case of its adversary, or which may fairly lead to a train of inquiry which may have either of those two consequences (see, e.g. Compagnie Financière et Commerciale du Pacifique v The Peruvian Guano Co (1882) 11 QBD 55 at 62 - 63).
65 The nature and extent of disclosure, in terms of the adjectival "relevance" of documents for the purposes of a general order for discovery in its traditional form is explained in Halsbury's Laws of England 4th ed, Vol 13 at [38] to the following effect:
* So long as they are likely to throw light on the case, documents "relate to a matter in question", whether or not admissible in evidence.
* A document may be "relevant" for discovery purposes by reason of its character (i.e. it is a document of a particular type); or by reason of its contents.
* Discovery will not be ordered in respect of an allegation not made in the pleadings or particulars, nor will discovery be allowed to enable a party to "fish" for witnesses, or for a new case, i.e. to enable the party to frame a new case.
* Each case must be considered according to the issues raised; but where there are numerous documents of slight relevance and it would be oppressive to produce them all, some limitations may be imposed.
66 The foregoing is also an accurate description of Australian practice and procedure (see, generally, Commonwealth of Australia v Northern Land Council (1991) 30 FCR 1 at 23 - 24).
67 Under a traditional general discovery order, the following methods are available to obtain further disclosure where a party seeks to show that "relevant" documents have been omitted from the list: (1) It may require verification of the list; (2) It may apply for a further and better list, whether verified or not, either in general terms, or limited to certain classes of documents. (The power to order a further and better list is parallel with, and may be combined with, the court's power, on application, to order the disclosure of particulars of specific documents.); (3) It may apply for an affidavit as to specific documents or classes of documents; (4) In certain special circumstances, it may apply for leave to interrogate as to particular documents (Halsbury, op. cit. at [48]).
68 In the present context, important distinctions have been drawn between, on the one hand, ordering a further affidavit in general terms, and, on the other, ordering an affidavit in respect of particular documents; and a claim for further discovery based upon contentious material, compared with one where the evidence relied upon is not disputed. Thus, in Mulley v Manifold [1959] HCA 23; (1959) 103 CLR 341, on an application for further discovery under O 32 r 13, Menzies J said (at 343 - 344):
"So far as O. 32, r. 13 is concerned, it cannot be shown by a contentious affidavit that the discovery made is insufficient. Before 1912, it was thought that the insufficiency had to appear from the pleadings, the affidavit of documents itself or the documents therein referred to. However, in British Association of Glass Bottle Manufacturers Ltd. v. Nettlefold [(1912) 1 KB 369], it was established that the insufficiency might appear not only from the documents but also from any other source that constituted an admission of the existence of a discoverable document. Furthermore, it is not necessary to infer the existence of a particular document; it is sufficient if it appears that a party has excluded documents under a misconception of the case. Beyond this the affidavit of discovery is conclusive.It was in order to relax this rule to some extent that O. 32, r. 18 was introduced; this rule does permit an application for further discovery based upon the filing of an affidavit that there have been particular undiscovered documents in the possession of the other party which relate to a matter in question in the proceeding.
Pursuant to this rule, the Court, however, can do no more than order an affidavit in respect of particular documents and there is no doubt that the mere existence of such documents does not provide the basis for ordering a further affidavit in general terms although, if a document discovered pursuant to such a particular order were to indicate the existence of other material documents, that would warrant an order under O. 32, r. 13: British Association of Glass Bottle Manufacturers Ltd. v. Nettlefold.
Where, as here, an application is made under both rules, the affidavit filed bears only upon the application under O. 32, r. 18, and it seems to me that where no more appears than that particular documents have not been discovered, the proper course is to make an order under O. 32, r. 18. The affidavit filed here, however, affords no substantial assistance upon what is the only important question, i.e., whether certain documents, of which some do exist, and some may or may not exist, do, or if they were to exist, would, relate to any matter in question in the actions. This is clearly something that must be determined from the pleadings, not from an argumentative affidavit."
69 In 1999, in recognition of the perceived need for this Court, in the discharge of the docket Judge's overall managerial responsibility to supervise closely the discovery process lest unnecessary expense be incurred, our Rules of Court were amended by the introduction of, inter alia, the provisions of r 2(3), and Practice Note 14 was published. They must, of course, be read together.
70 The present position is conveniently summarised by the editors of Butterworths, Practice & Procedure of the Federal Court at [40.760], by reference to the cases there cited, to the following effect:
* The Practice Note contemplates the possibility that O 15 r 2 would continue to authorise orders for general discovery as traditionally understood, i.e. the discovery of any document which may fairly lead to a train of inquiry which may directly, or indirectly, enable one party to advance its own case, or damage that or its opponent.
* However, as the Practice Note indicates, ordinarily, the Court will not now make such an order; rather, discovery will, ordinarily, be limited to documents in the five categories specified in rule 2(3). Moreover, the Court may further restrict the scope of discovery by applying the power conferred by O 15 r 3.
* Yet, where, extraordinarily, the Court judges that it is, in the particular circumstances, appropriate to order general discovery, in the absence of any special (ad hoc) restriction, the traditional (broad) obligation to discover any document relating to any matter in question in the proceeding will continue to apply.
* The "fishing" objection is, in truth, based upon a notion of "oppression", which may justify the imposition of a limit to the discovery obligation to particular issues. Yet, as Lindgren J observed in Trade Practices Commission v CC (New South Wales) Pty Limited (1995) 58 FCR 426 (at 437):
"A particular advantage of discovery is that the party required to give it must search for documents by reference to a judgment which that party is required to make and is in a position to make. This process is apt to bring to light documents the existence of which will often be beyond the other party's knowledge."
* Documents which relate only to credit do not relate to a matter in question within the meaning of the traditional formulation. (This may be seen as an example of the general principle, still valid, that the Court must always be satisfied that any order for discovery (including, as here, a specific order) must be "reasonably" necessary for the fair disposing of the case (see the CC case above, at 436 - 437 and the cases there cited).)
71 It will be convenient to consider the several categories of documents in turn. (As will appear, although not yet mentioned in these reasons, separate questions also arose before the primary Judge, first, with respect to the period in respect of which documents were sought; and, secondly, with respect to the relevant level of seniority of management in terms of the generation, or holding, of documents.)
CONSIDERATION OF THE SPECIFIC DISCOVERY CLAIMS
Category 11
72 It will be recalled that the documents sought here are those which record or refer to the territorial division of cinemas in Australia by Hoyts and/or BCC, Exhibition and/or GU. It will further be remembered that his Honour rejected Reading's claim for their discovery, essentially for the reasons (at [45], [48]) that the relevant s 46 issue on the pleadings, was confined to the South Brisbane market and any abuse by the Cinema respondents of market power held elsewhere was, subject to a qualification stated at [46] (see below), "not an element in Reading's s 46 cause of action as presently framed"; and that, accordingly, this category (11) amounted to an impermissible attempt to "fish". The qualification stated by his Honour at [46] was that a document referrable to Reading's intention to develop and operate cinema complexes "generally, and unspecifically in the Commonwealth", could tend to relate to South Brisbane, as part of Australia as a whole, a matter upon which questions of relevance may need to be ruled upon (presumably pursuant to the liberty to apply reserved).
73 In my opinion, his Honour was clearly correct in holding that discovery must focus upon the issues raised by the pleadings; and in further holding that the relevant issue here concerned the South Brisbane market. But the question then arose as to how, in principle, discovery on the issues pleaded should be managed. In my view, in electing to press for documents of the category 11 class, Reading was not pressing a claim for general discovery in this field, nor for discovery in terms of r 2(3); rather, as a matter of substance if not of form, Reading was invoking either O 15 r 8 or the Court's inherent jurisdiction to supervise discovery in the course of managing the case with a view to achieving a fair process.
74 Order 15 r 8 relevantly provides:
"Where, at any stage of the proceeding, it appears to the Court from evidence or from the nature or circumstances of the case ... that there are grounds for a belief that some ... class of document relating to any matter in question in the proceeding may be or may have been in the possession ... of a party, the Court may order that party ... [to discover ... that class of document]."
75 On behalf of Reading, it is said that, for this purpose, there was evidence to ground the requisite belief; that is to say, the affidavit evidence (significantly, I think, unchallenged in these interlocutory proceedings) of Messrs Rochester, Pentecost, Ward, Cotter and Small, cited above; and, Reading says, that evidence includes evidence, albeit not in final form, from which an inference might be drawn of an understanding between Hoyts on the one hand and GU/Village on the other, that Hoyts would not develop a cinema in Brisbane outside the CBD (Mr Rochester, Mr Ward, Mr Small); and that Hoyts would not bid against the BCC/Village/Pacific consortium for the Mt Gravatt site (Mr Pentecost, Mr Cotter). It is then submitted for Reading that one way it could make out its case in establishing the relevant "purpose" in the context of Part IV (that is to say, the purposes or intentions of the respondents' officers in opposing Reading's entry into the Australian market) would be by proving that the respondents concerned had a continuing purpose of opposing Reading, from the time of announcing its entry into the Australian industry (in 1994), up to the time of the events at Mt Gravatt. Yet, the argument runs, his Honour disallowed access to documents which do not, on their face, contain an admission of a purpose of sufficient generality so as to include South Brisbane, notwithstanding that documents relating to six separate occasions upon which the respondents (variously) opposed Reading's entry into different markets in Australia provided a fair basis to demonstrate, inferentially, the existence of a general purpose to prevent Reading's entry into the Commonwealth. Accordingly, the submission runs, these documents must go to demonstrate the anti-competitive purpose of the respondents' conduct in the South Brisbane market.
76 On the other hand, on behalf of the Cinema respondents, it is submitted that his Honour correctly characterised Reading's claim to access category 11 documents as "fishing". These respondents say that the documents are sought on the basis that they are "relevant" to the existence of power in the South Brisbane market; and that what is alleged is a territorial separation between Hoyts on the one hand and GU/Village on the other. But, they argue, the fact, or otherwise, of territorial separation can be determined readily (without any need for discovery) by reference to the sites where cinemas are actually located; and there is no allegation in the S/C of any agreement etc. between Hoyts and GU/Village.
77 I have difficulty accepting the respondents' analysis.
78 For one thing, as has been noted, in Reading's pleading, the particulars given of its allegation that BCC and/or Village and/or Pacific have held a substantial degree of power in the South Brisbane market include the following (par 9(i)):
"(i) Outside of CBD markets, the Hoyts group and the Village and Greater Union groups maintained a territorial separation of their operations nationally including in Queensland and this meant that the Hoyts Group did not compete and could be relied upon by other exhibitors not to compete in the South Brisbane market." (Emphasis added)
79 Significantly, for present purposes, the respondents have not moved to strike out this part of the pleading as an immaterial, or otherwise, embarrassing allegation. Nor have they sought to demur to the allegation as bad in law, or to otherwise raise a preliminary point of law in this connection. That being so, as things now stand, we must proceed upon the basis that the claim in par 9(i) is a material allegation which raises an issue arising on the pleading. It would follow, I think, that under a general order for discovery, documents would (subject to one qualification) be discoverable if they "related to [this] question" in the traditional sense; and the description of the class being category 11 would be an apt description for discovery purposes. It would also follow, in my opinion, that in principle this does not appear to be a case of "fishing" with a view to framing an amended case, or a fresh one; rather it seems that Reading is seeking, by documentary material, to reinforce the affidavit evidence previously mentioned. This is a quite legitimate exercise in the discovery exercise, subject to the qualification to be mentioned.
80 The qualification is that previously mentioned, namely, that an order for specific discovery under O 15 r 8 (or in the exercise of the managerial jurisdiction) may be refused on the ground that it is unduly oppressive, having regard to the value of the discovery to the person seeking it, and to the burden imposed on the party giving it (see, Halsbury, op. cit.; and Butterworths, Practice at 40.800.1 and the cases there cited).
81 It follows, in my view, that category 11 documents should be discovered, unless this qualification is applicable in the particular circumstances. On the approach taken by his Honour, the potential operation of the qualification did not arise for consideration here. With respect, the primary Judge should have embarked upon this second stage in the process of considering the claims for specific discovery. At the same time, it is not, I think, appropriate that, as an appellate body, we attempt ourselves to weigh in the balance the competing considerations, beyond noting that the applicants appear to have, in their affidavit evidence already referred to, a good deal of evidence in this area, to which (at this early stage at least) no challenge has been made; thus raising the question whether documentary corroboration of such matters is necessary in the fair disposition of the proceedings, because, for instance, the category 11 documents will go only to credit issues. Put differently, as has been noted, each case must be considered according to the issues raised; but where there are numerous documents of slight relevance and it would be oppressive to produce them all, some limitations may be imposed. Discretionary, or judgmental, exercises of this kind ordinarily lie within the particular province of a docket Judge, who will have the advantage of full argument on this aspect, and the benefit of knowing how contentious in the final analysis, the affidavit evidence will be. The respondents did submit that his Honour implicitly exercised his discretion in their favour in this area. However, in my view, a reading of his Honour's reasons as a whole indicate that the Judge, on the approach he took on the issues as he saw them, did not need to, and did not in fact, address any question of a discretionary kind.
82 To this extent, in my view, the appeal should be allowed, the order dismissing the motion for discovery set aside; in lieu thereof, the motion should be remitted to the primary (docket) Judge for further hearing, and determination, in accordance with these reasons.
Categories 21 to 26
83 It will be remembered that, in these categories, Reading focuses on specified cinema developments in Victoria, New South Wales, and at sites in Queensland not located in South Brisbane (i.e. Jindalee, Townsville, Mermaid Beach).
84 It will further be recalled that here also, the primary Judge disallowed these categories on "fishing" grounds, but indicated that it may be necessary to revisit the issue, reserving liberty to apply.
85 On Reading's behalf, it is submitted that its request for documents evidencing a territorial division of the Australian market by various of the respondents was not based upon a contention for which Reading had no other evidence. Reading relies on the affidavit evidence of Mr Cotter sworn 7 July 2001 (pars 16 - 20) (cited above), deposing to conversations with officers of a respondent from which territorial agreements might be inferred.
86 Reading further submits that, although it held independent evidence of communications by respondents with State Governments concerning town planning controls, the documents sought may themselves reveal that the respondents' purposes could be seen as anti-competitive. Reading relies upon the affidavit evidence that some respondents vigorously opposed applications by Reading for development approval to permit it to build cinemas in Victoria and New South Wales, in particular the affidavits of Messrs Rochester and Ward already referred to. Reading contends that, from this affidavit evidence, an inference should be drawn that the conduct of the Village Roadshow group was engaged in pursuant to a general plan to prevent Reading's entry into the Australian industry.
87 I am not persuaded that his Honour erred in his approach in, in effect, deferring this aspect of the claim for discovery and offering, pursuant to the liberty to apply reserved to revisit the issue should it emerge that "documents of such generality of description, by virtue of the terms thereof, touch and concern South Brisbane as part of Australia as a whole ..." (par 46, cited above).
88 In so concluding, I bear in mind the general principle that any order for discovery should be made only to the extent that is reasonably necessary to achieve a fair trial. In this context, I also take into account the following further "balancing" considerations: (1) The formal objections lodged by Reading, together with any correspondence with public bodies, are already available to Reading, and may sufficiently illuminate the field the subject of its present inquiry. (2) As has been seen from the affidavits cited above, Reading already has in its possession and power a substantial body of evidence on the subject of the relevant purposes of the Cinema respondents. A point must arise in the future when the docket Judge will exercise his pre-trial managerial functions, ascertain how much, if any, of this evidence is contentious and, with that knowledge, revisit this issue of discovery at that stage if need be. In that sense, the present claim is at least premature, and perhaps, in whole or in part, academic.
89 Accordingly, I would dismiss this part of the appeal.
Categories 3 and 9
90 It will be convenient to deal first with category 3, being AMP's documents "recording or referring to any discussion or communication with ... Hoyts ...relating to the location of cinemas in the South Brisbane market".
91 As in the case of category 11 documents, his Honour, for essentially the same reasons, held that the present claim was impermissible "fishing". Again, in my view, par 9(i) of Reading's pleading is broad enough to encompass category 3 documents as within a pleaded issue. In my view, the position is the same, in principle, as for category 11.
92 It will be recalled that the description of category 9 documents focussed attention upon Pacific Fair. The position here is, I think, the same in principle as in the case of categories 21 - 26.
Questions as to the period of time of creation of documents and as to the levels of respondents' management holding documents
93 As mentioned, these questions were raised at first instance and dealt with by his Honour. However, although they were also agitated before the Full Court, on the approach I have taken, in principle, I need not address them.
ORDERS
94 Since writing the foregoing, I have had the advantage of reading the draft reasons of the other members of the Court. In the circumstances, I will concur in the orders proposed by Tamberlin J.
I certify that the preceding ninety-four (94) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour Justice Beaumont. |
Associate:
Dated: 10 May 2002
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
NG 326 OF 1997 |
BETWEEN: |
READING ENTERTAINMENT AUSTRALIA PTY LIMITED Appellant |
AND: |
BIRCH CARROLL & COYLE LIMITED First Respondent VILLAGE ROADSHOW EXHIBITION PTY LIMITED Second Respondent PACIFIC CINEMAS (GARDEN CITY) PTY LIMITED Third Respondent AMP LIFE LIMITED Fourth Respondent AMP HENDERSON GLOBAL INVESTORS LIMITED Fifth Respondent VILLAGE ROADSHOW LIMITED Sixth Respondent PACIFIC CINEMAS (LOGANHOLME) PTY LIMITED Seventh Respondent |
JUDGES: |
BEAUMONT, CARR & TAMBERLIN JJ |
DATE: |
10 MAY 2002 |
PLACE: |
SYDNEY |
CARR J:
INTRODUCTION
95 The factual and procedural circumstances of this appeal have been set out in the reasons for judgment of Beaumont J which I have had the advantage of reading in draft form. I record my gratitude to his Honour for sparing me from having to recite those matters.
96 I agree, with respect, with all of Beaumont J's reasoning in relation to Categories 11 of the Cinema Respondents' documents and Category 3 of the AMP's documents. But I disagree, again respectfully, for reasons stated briefly below, with his Honour's conclusions in relation to Categories 21 to 26 of the Cinema Respondents' documents and Category 9 of the AMP's documents.
CATEGORY 11 OF THE CINEMA RESPONDENTS' DOCUMENTS
97 In relation to the matter of discovery of the category 11 documents, my initial view was that we should not remit this issue to the primary judge for further hearing and determination. Initially, for reasons which I set out in a draft judgment, I thought that we should exercise the discretion which the primary judge did not exercise, so that this major piece of commercial litigation could resume its course as soon as possible.
98 However, since preparing my first draft, I have had a further opportunity to consider Beaumont J's reasons and the reasoning of Tamberlin J (agreeing with Beaumont J) that matters of oppression and hardship should be determined by the primary judge. The same applies to the other categories of documents referred to below.
99 I would join in orders to that effect.
CATEGORY 3 OF THE AMP'S DOCUMENTS
100 I agree with Beaumont and Tamberlin JJ that the position is the same in principle as with Category 11.
CATEGORIES 21 TO 26 OF THE CINEMA RESPONDENTS' DOCUMENTS
101 In my view, the numerous specific instances of alleged anti-competitive behaviour referred to in the appellant's evidence reflect conduct spread throughout Australia. That, in my opinion, is sufficient in itself to constitute evidence (for discovery purposes) of an Australia-wide plan which would include the South Brisbane market. In short, I think that the appellant has made out a sufficient case to warrant discovery of these particular categories of documents.
102 I do not think that it is in the interests of justice to confine the appellant to exercising the conditional liberty to apply referred to in the primary judge's reasons.
103 The condition that there must emerge documents of such generality of description that thereby they touch and concern South Brisbane as part of Australia as a whole is, in my view, unduly onerous, given the view which I have expressed above about evidence of Australia-wide conduct. Furthermore, in terms of case management, I think that this approach would unfairly fragment the preparation of the appellant's case.
CATEGORY 9 OF THE AMP'S DOCUMENTS
104 For similar reasons to those expressed above I would allow discovery of this category. Additionally, I note that (on a prima facie basis on the evidence adduced to date) what happened at the South Brisbane site was virtually a re-run of what had happened at the Pacific Fair Shopping Centre. I think that sufficient has been disclosed in the appellant's evidence to indicate a reasonable likelihood that there will appear in AMP's records relating to Pacific Fair Shopping Centre, documents which may assist the appellant in establishing that AMP was knowingly concerned in the alleged contraventions by the other respondents of s 46 of the Act in relation to the site at South Brisbane.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of Justice Carr. |
Associate:
Dated: 10 May 2002
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
NG 326 OF 1997 |
BETWEEN: |
READING ENTERTAINMENT AUSTRALIA PTY LIMITED APPELLANT |
AND: |
BIRCH CARROLL & COYLE LIMITED FIRST RESPONDENT VILLAGE ROADSHOW EXHIBITION PTY LIMITED SECOND RESPONDENT PACIFIC CINEMAS (GARDEN CITY) PTY LIMITED THIRD RESPONDENT AMP LIFE LIMITED FOURTH RESPONDENT AMP HENDERSON GLOBAL INVESTORS LIMITED FIFTH RESPONDENT VILLAGE ROADSHOW LIMITED SIXTH RESPONDENT PACIFIC CINEMAS (LOGANHOLME) PTY LIMITED SEVENTH RESPONDENT |
JUDGE: |
BEAUMONT, CARR & TAMBERLIN JJ |
DATE: |
10 MAY 2002 |
PLACE: |
SYDNEY |
TAMBERLIN J:
105 I have had the advantage of reading the reasons for judgment of Beaumont J and those of Carr J in this matter.
106 As Beaumont J points out the pleadings as particularised (specifically par 9(h)(i)) refer to the Hoyts Group and the Village and Greater Union Groups maintaining a territorial separation of operations nationally including Queensland outside of Central Business District Markets. In addition, the pleadings allege that the Hoyts Group did not compete and could be relied on not to compete in the South Brisbane market. This indicates a consensual arrangement not to compete.
107 In order to decide whether these allegations have any substance, in my opinion, it is relevant to take into account instances of similar alleged arrangements between other exhibitors and Hoyts wherever they occur in Australia. If such discrete arrangements outside the South Brisbane market anywhere in Australia, could be established by documentary evidence, they would have probative value as to the correctness of the contention that:
(i) They are likely to adopt a similar policy in relation to the South Brisbane market in the absence of special or different circumstances; and that(ii) Hoyts would not be likely to compete in the South Brisbane market as a consequence of a consistent course of conduct in other markets.
108 In order to establish the likelihood of the conduct having been carried out in relation to the South Brisbane market, it is not appropriate to restrict the material, which should be made available to the applicants, to arrangements which directly concern that market in express terms. Nor is it appropriate to restrict the documents to those which evidence a course of generalised Australia-wide conduct which is, in terms of language, capable of including the South Brisbane market. It is sufficient if the conduct alleged or similar restrictive co-operative conduct has occurred in one or more other areas elsewhere in Australia albeit they are discrete instances. Depending on the extent to which the conduct corresponds to that alleged in the South Brisbane market, material which evidences such conduct could be relevant to the issues in this case. By "discrete" in this context, I mean conduct or documentary material which does not in terms expressly or by necessary implication refer to, or relate to, the South Brisbane market. For example, if there are documents or material which evidence collaboration or arrangement in a specific local market, in say Perth, and the documents do not refer to any national arrangement which could include Brisbane, nevertheless such material may be relevant to the case pleaded and particularised in so far as it throws light on the purpose and intent of the parties.
109 In excluding from discovery material which did not encompass or refer to the South Brisbane market, I consider that the primary Judge erred by applying a restriction that was unduly narrow. The type of material which his Honour excluded could reasonably be considered to be relevant to the issue raised in the pleadings and particulars.
CATEGORY 11
110 In relation to category 11, I agree with Beaumont J for the reasons his Honour has given, that the appeal should be allowed and the category 11 documents discovered. I also agree with the qualification referred to by Beaumont J that the discretionary question as to what specific documents or range of documents should in fact be discovered, having regard to considerations of oppressiveness and competing hardship, should be determined by the primary Judge. In so doing, no doubt his Honour would have regard to the principles of effective case management and the need for practical restraint on the ambit of discovery weighing in the balance of the respective interests of the parties. Because of the conclusion as to non-relevance reached by the primary Judge, these questions do not appear to have been considered and it is therefore appropriate that his Honour should have the opportunity of taking them into account in the light of these reasons.
CATEGORIES 21-26
111 I have reached a similar conclusion with respect to these categories, namely that the appeal should be allowed and the question remitted to the primary Judge as in the case of category 11.
112 Unlike Beaumont J, I do not consider that the liberty to apply reserved by the primary Judge meets the difficulty. The basis on which liberty to apply was reserved by the primary Judge is in these somewhat restrictive terms at [54]:
"Reading shall have liberty to apply in relation to such discovery categories to such extent as would not be inconsistent with the reasons for the rulings I have made, and which Reading may seek to pursue." (Emphasis added)
113 The difficulty with the terms of this liberty to apply is that the liberty reserved is subject his Honour's reasons for the rulings which he had made and which on appeal we have found to be unduly restrictive having regard to the pleading and particulars. Accordingly, it is appropriate that the discretionary question as to what particular documents or groups ought be discovered should be remitted to his Honour without the limitation imposed.
CATEGORY 3
114 I agree with Beaumont J that the position is the same in principle as for category 11.
CATEGORY 9
115 I consider that the position is also the same as in the case of category 11.
GENERAL
116 I agree with and strongly endorse the principles set out by Beaumont J in relation to the need for the exercise of restraint in discovery, having regard to modern practice as set out in his Honour's reasons at [63]-[71] and, as to the need for close and careful case management in relation to containing the extent of discovery to that which is necessary and proportionate to achieve the ends of justice.
117 Accordingly, I would make the following orders:
1. The time for the filing and service of the applicant's notice of motion for leave to appeal filed on 21 December 2001 be extended to that date.
2. The applicant have leave to appeal from the decision of the primary Judge given on 11 December 2001.
3. The appeal be allowed.
4. Paragraph 1 of the orders made by the primary Judge on 11 December 2001 be set aside.
4. The applicant's motion for discovery of categories of documents (3), (9), (11), and (21-26) be remitted to the primary Judge for further hearing and determination, as the justice of the case may require, in accordance with these reasons for judgment.
6. The respondents pay the appellant's costs at first instance to date and of the appeal, but any further costs in the motion abide the order of the primary Judge.
I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. |
Associate:
Dated: 10 May 2002
Counsel for the Applicant: |
Dr C Birch, Mr K Odgers |
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Solicitor for the Applicant: |
Maurice Blackburn Cashman |
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Counsel for the First, Second, Third, Sixth and Seventh Respondents: |
Mr J Lockhart |
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Solicitor for the First, Third and Seventh Respondents: |
Lane & Lane |
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Solicitor for the Second and Sixth Respondents: |
Freehills |
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Counsel for the Fourth and Fifth Respondents: |
Mr F Kunc |
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Solicitor for the Fourth and Fifth Respondents: |
Gadens |
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Date of Hearing: |
27 February 2002 |
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Date of Judgment: |
10 May 2002 |
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URL: http://www.austlii.edu.au/au/cases/cth/FCAFC/2002/109.html