FEDERAL COURT OF AUSTRALIA Nine Films and Television Pty Limited v Ninox Television Limited [2005] FCA 854 PRACTICE AND PROCEDURE – pleadings – application for declaration of groundless threats of copyright infringement by Ninox and other relief – cross-claim for infringement of copyright – application for leave to file an amended cross-claim – judicial discretion – imminence of hearing dates – new claims raised in amended cross-claim Copyright Act 1968 (Cth) s 202 Trade Practices Act 1976 (Cth) ss 51AA, 51AB, 51AC, 52 Queensland v J L Holdings Pty Limited (1997) 189 CLR 146 NINE FILMS AND TELEVISION PTY LIMITED (ACN 066 040 024) AND NINE NETWORK AUSTRALIA PTY LIMITED (ACN 008 685 407) v NINOX TELEVISION LIMITED (FORMERLY KNOWN AS NINOX FILMS LIMITED), TELEVISION NEW ZEALAND LIMITED AND JOHN CHARLES McEWEN NSD 1820 OF 2004 TAMBERLIN J SYDNEY 23 JUNE 2005 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1820 OF 2004 BETWEEN: NINE FILMS AND TELEVISION PTY LIMITED ACN 066 040 024 FIRST APPLICANT/FIRST CROSS-RESPONDENT NINE NETWORK AUSTRALIA PTY LIMITED ACN 008 685 407 SECOND APPLICANT/SECOND CROSS-RESPONDENT AND: NINOX TELEVISION LIMITED (FORMERLY KNOWN AS NINOX FILMS LIMITED) FIRST RESPONDENT/CROSS- CLAIMANT TELEVISION NEW ZEALAND LIMITED SECOND RESPONDENT JOHN CHARLES McEWEN THIRD RESPONDENT JUDGE: TAMBERLIN J DATE OF ORDER: 21 JUNE 2005 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The Motion is dismissed. 2. The First Respondent/Cross-Claimant is to pay the costs of the Applicants of the Motion. 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 NSD 1820 OF 2004 BETWEEN: NINE FILMS AND TELEVISION PTY LIMITED ACN 066 040 024 FIRST APPLICANT/FIRST CROSS-RESPONDENT NINE NETWORK AUSTRALIA PTY LIMITED ACN 008 685 407 SECOND APPLICANT AND: NINOX TELEVISION LIMITED (FORMERLY KNOWN AS NINOX FILMS LIMITED) FIRST RESPONDENT TELEVISION NEW ZEALAND LIMITED SECOND RESPONDENT JOHN CHARLES McEWEN THIRD RESPONDENT JUDGE: TAMBERLIN J DATE: 23 JUNE 2005 PLACE: SYDNEY REASONS FOR JUDGMENT 1 By Notice of Motion filed in Court on 17 June 2005, the first respondent/cross-claimant, Ninox Television Limited ("Ninox"), seeks leave to amend the Cross-Claim filed on 28 January 2005. This matter came on before me for hearing on Tuesday 22 June 2005, at which time I made orders dismissing the application with costs. I now set out my reasons. 2 The proceeding in respect of which the Motion is brought is fixed for hearing for five days commencing next Monday, 27 June 2005. 3 The Application and Statement of Claim of the first and second applicants, Nine Films and Television Pty Limited and Nine Network Australia Pty Limited (hereafter collectively referred to as "Nine"), were both filed on 7 December 2004. The applicants seek orders pursuant to s 202 of the Copyright Act 1968 (Cth) ("the Act") against Ninox for groundless threats to bring proceedings for copyright infringement. A declaration of non-infringement of copyright by Nine is also sought. In addition, associated relief is sought arising from the same facts in respect of a claim under s 52 of the Trade Practices Act 1976 (Cth) ("the TPA"). 4 The claim by Nine is that Ninox made a number of threats, commencing in December 2003, to bring proceedings for copyright infringement against Nine in respect of Nine's production, broadcast and licensing of a television program entitled "The Block". Ninox is a New Zealand corporation and has asserted to be the owner of the copyright subsisting in the format of a television program entitled "Dream Home". 5 On 27 January 2005, Ninox filed a Defence and Cross-Claim in the proceedings seeking orders for copyright infringement and related relief against Nine in respect of "The Block" and brought an ancillary, but limited, unconscionable conduct claim under the TPA. The proceedings were fast tracked on the basis that there was an urgent need to resolve the issues and having regard to the principle that allegations of groundless threats should be determined in a timely manner in order that Nine be able to proceed with its commercial proposals. 6 The present five day hearing period was allocated on 22 March 2005 after the original five day hearing period of 11 to 15 April 2005 was vacated on the application of Ninox. At the hearing of Ninox's application for an adjournment on 18 March 2005, Ninox said that although it had consented to the April hearing period, it was not ready to proceed with the hearing. Ninox was ordered to pay the costs of Nine thrown away as a consequence of the vacation of the April hearing period and Nine was granted leave to pursue recovery of its costs, which were no doubt considerable, forthwith. 7 The present Motion is opposed by Nine on a number of bases. 8 First, Nine refers to the imminence of the hearing date, which is less than four working days away. The proposed Amended Cross-Claim was served effectively only two weeks prior to the hearing. The case therefore has no resemblance to the circumstances in Queensland v J L Holdings Pty Limited (1997) 189 CLR 146 where the application for leave to amend was made before a date was fixed for hearing of the matter. The date, when fixed, was six months in the future. 9 Secondly, Nine submits that the proposed Amended Cross-Claim advances an unconscionable conduct claim both in equity and under the TPA. Thus, the proposed Amended Cross-Claim raises new issues from the Cross-Claim as previously advanced. Nine says that it should not be forced at this very late stage into the intolerable position of having to attempt to deal with a substantial new claim based on matters said to arise from the exercise of an option a mere week before the hearing. Nine points to the fact that interlocutory procedures such as discovery requests, subpoenas, evidentiary enquiries, evidence preparation and service of affidavit evidence have been carried out on the basis of the existing Cross-Claim and that Nine would suffer considerable prejudice if the amendments to the Cross-Claim were allowed. In my view, it is apparent from the surrounding circumstances that there is likely to be considerable prejudice to the Nine if it is forced to deal with the amendments made to the Cross-Claim. 10 Thirdly, the solicitor for Ninox accepts that as a consequence of allowing the amendments to the Cross-Claim, an adjournment of the hearing date may be required. In the circumstances, in my view, this is quite unacceptable. Nine submits that a practical solution is that Ninox may be permitted to bring its proposed new unconscionable conduct claim against Nine at a later hearing. Nine has given an open indication that it will not rely on Anshun estoppel if Ninox adopts this course. 11 Fourthly, Nine points out that extensive discovery has been undertaken in reliance on, and in accordance with, the Court timetable and procedures and by reference to the existing pleadings. It says that it did not seek discovery of documents that go to a number of matters now sought to be raised by the belated Amended Cross-Claim. There has been no opportunity to make inquiries of relevant employees of the applicants in respect of the additional matters that are raised by the amendments to the Cross-Claim. 12 There is no substantial or satisfactory explanation given by Ninox for the delay in seeking the present amendments. In my view, Ninox has had ample time to get its case together and properly frame its Cross-Claim. So far as the copyright and related issues raised in the Cross-Claim are concerned, it is important to keep in mind that this case was commenced over seven months ago as a consequence of threats of infringement of copyright made by Ninox over a substantial period. It is desirable that threats of legal action should be resolved promptly to enable the threatened party to arrange its commercial affairs. In these circumstances, it is not unreasonable to expect that Ninox would have carefully formulated the basis on which the threats were made prior to the last minute amendments that are now sought to be made, particularly as it has been represented over many months by experienced Senior and Junior Counsel. 13 Fifthly, Nine says that from at least May 2005 it has pressed Ninox to file and serve any proposed Amended Cross-Claim so that it could have a reasonable opportunity to finalise and serve its evidence in answer to the Cross-Claim. These requests remained unanswered. Nine has finalised and served its evidence in answer to the Cross-Claim having regard to the elements of the "Dream Home" format that Ninox identified in its Letter of Particulars dated 15 March 2005. The proposed Amended Cross-Claim was not received until after Nine served such evidence. 14 Nine also submits that the new unconscionable conduct case is speculative and relevantly doomed to fail. At the present stage, however, it is not appropriate for me to determine this question. 15 I am informed by Senior Counsel for Nine that his client cannot be in a position to deal with the unconscionable conduct claim as now framed in any satisfactory manner prior to the hearing. I accept that this is the case. 16 In relation to what may broadly be described as the copyright related claims, a number of new and different issues have been raised in the proposed Amended Cross-Claim in relation to this and a number of matters have been abandoned. Since the case has been prepared on the basis of the pleading which remained unamended until the present application, I do not consider it appropriate at this very late stage to permit the amendments to the copyright related claim. 17 Counsel for Ninox contends that the copyright related amendments are simply intended to put the claims that Ninox has advanced in a more felicitous form and to clarify its existing claims. To the extent that this is so, Ninox cannot complain of prejudice if the hearing proceeds on the pleadings as they stand without the "felicitous" amendments and "clarifications". 18 Substantial inadequacies have been pointed to by counsel for Nine in the proposed Amended Cross-Claim and I am persuaded that, to a large extent, the amendments to the Cross-Claim are unsatisfactory. By way of illustration, there is reference in para. 26 of the Amended Cross-Claim to a broad allegation that by reason of matters pleaded in paras. 5 to 25, the cross-respondents have engaged in conduct that is unconscionable in all the circumstances, in contravention of ss 51AA, 51AB and/or 51AC of the TPA. The Particulars refer to Nine Network Australia Pty Ltd, the second cross-respondent, as having "significant market power" and to the conduct of each of the cross-respondents as being unreasonable and not in good faith. In para. 20(b), Ninox makes a further broad allegation to the effect that the cross-claimant had a "legitimate expectation" that a further series of the television program "Dream Home" would be produced and broadcast by Nine within a reasonable period after the exercise of the option, without formulating any factual ground for such an allegation. In para. 23(f), Ninox alleges that the first cross-respondent or the second cross- respondent knew that its conduct in licensing the format for the television program "The Block" outside Australia would prevent the cross-claimant from licensing third parties to produce the television program "Dream Home" in territories outside Australia. No ground is formulated for this nor is there any identification as to how or in what way the second cross-respondent is alleged to have known that its conduct would have this effect. 19 Having regard to the above considerations, I am satisfied, as a matter of discretion, that in the interests of justice to all parties and sound case management, the application should be dismissed and Ninox should pay the costs of Nine in relation to this application. 20 I note the fact that Nine has made an open offer to the effect that so far as the amendments regarding the allegations of unconscionable conduct now sought to be raised in the Amended Cross-Claim are concerned, Nine would not raise any Anshun estoppel point to the ventilation of these issues separately at a subsequent time, after Nine has had an opportunity to consider and properly prepare its case to meet these allegations. Counsel for Ninox points out that it is unsatisfactory to have the proceedings split in this manner, however, this necessity or alternative course arises as a direct result of the failure by Ninox to take steps to amend its Statement of Claim until the very last moment. I note also that Ninox was unable, perhaps understandably so at this stage, to assure the Court that there would be no necessity to call any further evidence in relation to the matters sought to be raised in the Amended Cross-Claim. Even if such an assurance were able to be given by Ninox, there would still be an obvious prejudice to the applicants in being deprived of a proper opportunity to investigate, consult witnesses and adduce evidence to meet the new varied claims. 21 Therefore, the order of the Court is that the application to amend is dismissed with costs and I note the undertaking of Nine in relation to the Anshun estoppel point. 22 In reaching my conclusion on this matter, I have had regard to the inevitable waste of time and expense, both to the Court and to the parties, and the inconvenience to other litigants, if this five day matter was to be adjourned again in order to enable the applicant to properly meet the new allegations as to unconscionability. These, in my view, are significant disadvantages and cannot be remedied by yet another order as to costs. I certify that the preceding twenty two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. Associate: Dated: 23 June 2005 Counsel for the Applicant: S G Finch SC and D T Kell Solicitor for the Applicant: Gilbert and Tobin Counsel for the First and Third Respondents: J M Ireland QC and D R Sibtain Solicitor for the First and Third Respondents: McCullough Robertson No appearance by the Second Respondent Date of Hearing: 21 June 05 Date of Judgment: 23 June 05