FEDERAL COURT OF AUSTRALIA Telstra Corporation Limited (ACN 051 775 556) v Optus Networks Pty Limited (ACN 008 570 330) [2007] FCAFC 182 PRACTICE AND PROCEDURE – application for leave to appeal from single judge – procedural fairness – where case management taken into account – whether issues of liability should be heard and determined separately from and prior to issues of pecuniary relief. Federal Court Rules (Cth) O 29 Trade Practices Act 1974 (Cth) House v The King (1936) 55 CLR 499 cited TELSTRA CORPORATION LIMITED v OPTUS NETWORKS PTY LIMITED NSD1926 OF 2007 EMMETT, STONE & JACOBSON JJ 5 NOVEMBER 2007 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD1926 OF 2007 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: TELSTRA CORPORATION LIMITED (ACN 051 775 556) Applicant AND: OPTUS NETWORKS PTY LIMITED (ACN 008 570 330) Respondent JUDGES: EMMETT, STONE & JACOBSON JJ DATE OF ORDER: 5 NOVEMBER 2007 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application for leave be refused. 2. The applicant for leave pay the respondent's costs of the application. 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 NSD1926 OF 2007 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: TELSTRA CORPORATION LIMITED (ACN 051 775 556) Applicant AND: OPTUS NETWORKS PTY LIMITED (ACN 008 570 330) Respondent JUDGES: EMMETT, STONE & JACOBSON JJ DATE: 5 NOVEMBER 2007 PLACE: SYDNEY REASONS FOR JUDGMENT EMMETT J: 1 The Court has before it an application for leave to appeal from orders made by a judge of the Court under Order 29 of the Federal Court Rules (the Rules). In order to put the orders in context, it is necessary to say something about the history of the dispute between the parties. 2 In August 1992, Telstra Corporation Limited (Telstra) and Optus Mobile Pty Limited, a predecessor Optus Networks Pty Limited (Optus), entered into an Access Agreement concerning terms as to the interconnection of their telecommunications networks. In December 1997, Optus commenced a proceeding against Telstra in this Court alleging misleading and deceptive conduct and misuse of confidential information said to belong to Optus. In February 1998, the claims concerning misleading and deceptive conduct were settled and, in January 1998, the confidentiality claims were stayed by consent. The confidentiality claims were referred to an expert committee pursuant to the dispute resolution procedures contained in the Access Agreement. 3 Between August 1998 and early 2002, the parties engaged in various interlocutory steps before the expert committee, including various amendments to the statement of claim relied on by Optus. In one of the amendments proposed in late 2001, Optus sought to claim an account of profits. An issue then arose as to the power of the expert committee to grant the relief claimed by Optus, including ordering an account of profits. Accordingly, Optus filed a notice of motion in the Federal Court seeking, in effect, to lift the stay to enable the Court to grant Optus leave to amend its claim to seek an account of profits. That motion was resolved consensually in 2001, on the basis that the expert committee would determine the question of liability first, and then, if necessary, the question of what relief could be ordered, including whether an account of profits could be ordered, would be considered. 4 Between early 2002 and late 2005, the proceedings before the expert committee were effectively dormant. However, in mid 2005 Optus sought to reinvigorate the proceeding before the expert committee. In November 2005 Telstra terminated the proceeding and the matter was listed before the docket judge in December 2005, for the purpose of the stay being lifted. Telstra consented to the stay being lifted on the basis that the issues in dispute in the proceeding would be limited to those issues that were the subject of the reference to the expert committee, but reserved its rights to seek a permanent stay of the proceeding. 5 Optus then sought leave to amend its statement of claim further. On 15 December 2006 the docket judge granted leave for Optus to file a third consolidated amended statement of claim. That is the current state of the pleading. 6 The allegations now made by Optus are limited to the preparation and use by Telstra of market share reports that were produced by using traffic information contained within Telstra's market share reporting system. Optus alleges that the preparation and use of the market share reports: (a) is in breach of confidentiality obligations imposed by the Access Agreement; (b) is in breach of an equitable duty of confidence owed by Telstra to Optus; and (c) amounts to unconscionable conduct under the Trade Practices Act 1974 (Cth) (the Act). 7 In August 2007, Optus applied to the docket judge for a formal order providing that issues of liability be determined separately from and in advance of issues of relief. That was opposed by Telstra. However, on 14 September 2007, the docket judge made an order, pursuant to Order 29 of the Rules, that issues of liability be heard and determined separately from and prior to issues of the quantum of any pecuniary relief. I shall return to the language of that order shortly. The docket judge gave brief oral reasons for seeking the order, having first considered detailed written submissions made by each of the parties. His Honour indicated that it was his present disposition to split the case. His Honour then went on to say that one consideration that seemed to him not to have been considered by either of the parties was that of case management. His Honour regarded that as a rather important matter and a matter about which he had the apprehension that, unless the case proceeds, with liability being determined separately and anterior to the question of relief, there was a real risk that he would lose control of the case. His Honour said that that was an apprehension that he had and that it was a factor that was weighing on the exercise of his discretion. His Honour pointed out that the case management aspect arose because of the way the matter has been conducted to date. 8 His Honour referred to the fact that the parties had previously proceeded along the lines that liability would be determined anterior to and separately from the matters of relief. His Honour said that Telstra's opposition to a split of liability from quantum was based principally upon its argument that it was likely that there would be commonality of witnesses relevant to both liability and relief and that the credit of those witnesses may be in issue. His Honour accepted that, in the normal situation, that is a relevant and important consideration to take into account in the exercise of the discretion. 9 However, his Honour observed that the submission had been put on a very general basis and had been qualified heavily by the word "likely". His Honour accepted the possibility of common witnesses was a consideration that has to be taken on board, he had taken that matter on board and was not dissuaded at this stage that it should stand in the way of an order. His Honour concluded by saying that, in terms of coming to a conclusion one way or the other, case management was a factor and that his Honour's present disposition was that he would be able to manage the case better if the issue of liability were split from that of relief. Having indicated the orders that his Honour would propose to make, his Honour said that he would give both parties the opportunity to make submissions in relation to those orders. That opportunity was not taken up by either party. 10 The proposed grounds of appeal, apart from the general assertion that his Honour erred, are as follows: · his Honour failed to apply the correct test for determining whether a separate question should be ordered; · his Honour erred in placing an onus on Telstra to establish that there would be a commonality of witnesses whose credit would be in issue; · his Honour conducted the hearing of the matter in such a way as to deny Telstra procedural fairness, in that it had no opportunity to make submissions in relation to "case management"; · his Honour erred in impermissibly elevating principles of case management over the interests of justice; and · his Honour erred in concluding that, if he did not make the orders that he made he would lose control of the case. 11 For leave to be granted to appeal from the orders made by the docket judge, the Court must be satisfied that there is at least sufficient doubt as to whether an error of law or an error of principle was made. The Court must also be satisfied that a substantial injustice will be caused if leave to appeal is not granted, supposing the decision to be wrong. As to the second point, the only matter hinted at on behalf of Telstra is that there has been a very substantial delay since the matters in issue in the proceeding first occurred. They say that memories fail and that witnesses and documents may be lost by reason of that delay. However, there was no attempt to take the Court to any specific evidence that is at risk of being lost. For myself, I am not persuaded at the moment that there would be any substantial injustice at all by the orders made by the docket judge. 12 Before dealing with the question of whether there is any significant doubt as to the correctness of the docket judge's decision, I should observe that there appears to be a hiatus in the orders made by the docket judge, although this was not a ground of appeal. The orders made by the docket judge had been proposed by Optus and the form of the orders was not challenged by Telstra, either before or after the orders were made. 13 The orders appealed from separate liability from issues of the quantum of any pecuniary relief. In its second further amended application, Optus seeks declarations, as well as orders restraining Telstra from using alleged confidential information and an order requiring Telstra to deliver up documents relating to confidential information. The application then seeks an order that Telstra account to Optus or, in the alternative, relief under ss 82 or 87 of the Act, or, in the alternative, equitable compensation. Clearly, there is relief claimed that is not pecuniary relief. However, as I have said, no complaint was made about the form of the order and his Honour expressly invited the parties to make submissions as to the form of the order. It is still open to the parties to do that and I will not say anything further about the form of the order, other than that attention should be directed to it to clarify precisely what issues are to be deferred and what issues are to be considered in the first instance. 14 I do not consider that the docket judge placed any onus on Telstra to establish that there would be commonality of witnesses whose credit would be in issue. His Honour simply said that the matter had been put forward and if Telstra required the Court to take that into account, it should be specific about that matter. His Honour emphasised the fact that Telstra's submission, at its highest, was only that it was likely that there might be some overlap. That is a matter that his Honour expressly contemplated as being capable of being revisited. His Honour made it clear that he was making the order in a provisional sense which is, of course, the way in which such orders should be addressed and approached. 15 Case management is a fluid exercise and not something that should be decided once and for all at any particular stage in the conduct of the proceedings. I do not consider that his Honour made any error in that regard. To suggest that Telstra was denied procedural fairness by not being able to make submissions in relation to case management is a somewhat odd proposition. 16 The overriding consideration of whether an order should be made under Order 29 is case management. To suggest that it was a surprise to either of the parties that his Honour took into account questions of case management in deciding to make an order is untenable. His Honour did not elevate principles of case management over the interest of justice. Nothing specific has been put to the Full Court, and certainly nothing was put to his Honour, as to why it would be unjust for the order to have been made. 17 His Honour's observation that he was concerned that he would lose control of the case appears to be quite justified, when one looks at the history of this proceeding. His Honour was concerned that, unless something was done to get the matter on quickly, then the case would never get a hearing. His Honour might be right or wrong about that. However, it was a matter of judgment and his Honour did not err in principle in concluding that, unless he made some effort to bring commonsense to bear, then the proceeding may get out of hand. 18 That is not to suggest that blame should be laid at the feet of either of the parties at this stage. The matter is obviously one of some complexity. His Honour has made a judgment and I do not see that there was any appellable error in the orders that his Honour made, save for the question of making precisely clear what issues are to be deferred and what issues are not. In my view no case for the grant of leave has been made out and I would dismiss the application for leave to appeal. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 3 December 2007 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1926 OF 2007 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: TELSTRA CORPORATION LIMITED (ACN 051 775 556) Applicant AND: OPTUS NETWORKS PTY LIMITED (ACN 008 570 330) Respondent JUDGES: EMMETT, STONE AND JACOBSON JJ DATE: 5 NOVEMBER 2007 PLACE: SYDNEY REASONS FOR JUDGMENT 19 In relation to a discretionary decision of the nature made by the primary judge it is necessary for Telstra to satisfy the criteria laid down in House v The King (1936) 55 CLR 499. As Emmett J has made abundantly clear in his reasons these criteria have not been met. I agree with his Honour's reasons for decision, with his comments about the orders made below and with the orders that he proposes in this matter. I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Stone. Associate: Dated: 3 December 2007 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1926 OF 2007 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: TELSTRA CORPORATION LIMITED (ACN 051 775 556) APPLICANT AND: OPTUS NETWORKS PTY LIMITED (ACN 008 570 330) RESPONDENT JUDGES: EMMETT, STONE AND JACOBSON JJ DATE: 5 NOVEMBER 2007 PLACE: SYDNEY REASONS FOR JUDGMENT 20 I agree that leave should be refused for the reasons given by the learned presiding judge and by Stone J. I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. Associate: Dated: 3 December 2007 Counsel for the Applicant: CRC Newlinds SC with IR Pike Solicitor for the Applicant: Mallesons Stephen Jaques Counsel for the Respondent: SG Finch SC with C Dimitriadis Solicitor for the Respondent: Baker & McKenzie Date of Hearing: 5 November 2007 Date of Judgment: 5 November 2007