FEDERAL COURT OF AUSTRALIA Seven Network Limited v News Limited [2005] FCA 914 SEVEN NETWORK LIMITED (ACN 052 816 789) & ANOR v NEWS LIMITED (ACN 007 871 178) & ORS NSD 1223 OF 2002 GRAHAM J 1 JULY 2005 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD1223 OF 2002 BETWEEN: SEVEN NETWORK LTD ACN 052 816 789 & ANOR APPLICANTS AND: NEWS LTD ACN 007 871 178 & ORS RESPONDENTS JUDGE: GRAHAM J DATE OF ORDER: 1 JULY 2005 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application for an order that Mr. Stuart Salier be compelled to attend for cross-examination upon his affidavits of discovery be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD1223 OF 2002 BETWEEN: SEVEN NETWORK LTD ACN 052 816 789 & ANOR APPLICANTS AND: NEWS LTD ACN 007 871 178 & ORS RESPONDENTS JUDGE: GRAHAM J DATE: 1 JULY 2005 PLACE: SYDNEY REASONS FOR JUDGMENT 1 Proceedings number NSD1223 of 2002 arise out of bids for television broadcast rights in respect of two codes of football, one administered by the Australian Football League, the other by the National Rugby League. There are numerous parties to the proceedings, and needless to say the litigation is complex. 2 On 11 February 2005 the main proceedings were fixed for hearing before Sackville J commencing on 18 July 2005. On 9 June 2005 I heard a Notice of Motion filed 2 May 2005 by the applicants in which they sought relief in respect of the production of documents by the sixteenth and twenty second respondents, namely Optus Vision Pty Limited and Singtel Optus Pty Limited (the "Optus Respondents"). As it transpires, events overtook the substantive relief sought in the Motion and a number of documents were the subject of the abandonment of claims for privilege previously made. The Motion ended up becoming an application for costs and I dealt with that in my reasons for judgment of 10 June 2005. 3 Unbeknown to me at the time when that Motion was before me, a letter had been sent by Freehills to Atanaskovic Hartnell on 3 June 2005 raising concerns about some other aspects of the Optus Respondents' discovery. It would appear that the Optus respondents have discovered documents in these proceedings on four separate occasions, commencing with a verified list being filed on 18 June 2004 and extending through to a fourth verified list on 19 April 2005. The first verified list was verified by Mr Stuart Sallier, a corporate counsel employed by Optus Administration Pty Limited in-house. He also verified the other lists when they came forward. 4 Order 15 Rule 2 of the Federal Court Rules makes provision for discovery by a party required to give discovery. In essence Rule 2(3) requires documents to be disclosed of which the party giving discovery is, after a reasonable search, aware at the time that discovery is given, and I emphasise the words "at the time discovery is given". 5 There is a further requirement in Order 15 Rule 7A for further discovery. That rule provides: "Where a party has been required, or ordered to give discovery, that party shall be under a continuing obligation to discover any document not previously discovered and which would otherwise be necessary to comply with the requirement or order." 6 When the first list was provided the documents for which no privilege was claimed, namely those in Part 1 of Schedule 1, were detailed. However, the documents for which privilege was claimed were simply referred to collectively in Part 2 of Schedule 1 without being detailed. Subsequently an order was made by Sackville J on 2 August 2004 requiring the documents in Part 2 of Schedule 1 to be detailed, and this occurred. When later discovery was given, a similar practice was followed where the discovery did not strictly comply with the requirements of the Rules. In relation to Privileged Documents they were simply grouped together in Part 2 of Schedule 1 without being specified, but on each occasion later specificity was provided. 7 The most recent discovery given on 19 April 2005 also followed the same pattern and it was not until 27 May 2005 that the Privileged Documents were specified. The letter under which that specificity was provided stated that the solicitors for the Optus Respondents were enclosing "a list of the documents referred to in Part 2 Schedule 1 of our client's Second Further Verified List, as well as various other wholly privileged documents that have not been included in any of our client's Lists of Privileged Documents previously". (The emphasis is mine.) 8 Mr Hughes QC appearing for Seven puts a construction quite reasonably on the letter of 27 May 2005 that it appears to in fact be discovering fresh documents not covered by any of the earlier lists. Mr Bannon SC appearing for the Optus Respondents points out that the letter has not been expressed in felicitous terms and that what it is meaning to say is that some documents previously recorded in Part 1 Schedule 1 have been transferred into a Part 2 listing of privileged documents. He takes me in particular to documents which have been referred to in bundles of documents which have together become exhibit MA4 on the motion presently before me. 9 In volume 5 at page 1379, a document is there identified as document number 158 in relation to which the words "Privileged - Part Relevance - Part" appear. This document 158 is referred to in an open list of documents in Schedule 1 Part 1. Similarly, Mr Bannon refers to document 162 on page 1380, which has against it a notation "Relevance - Part". It seems clear that in the most recent list of Privileged Documents forwarded under cover of the letter of 27 May 2005, each of the documents to which I have just referred has been transposed from a Schedule 1 Part 1 list and added to a Schedule 1 Part 2 list. 10 Mr Bannon submits that it is not a case of the discovery of additional documents at all, it is simply the inclusion now of documents, previously discovered, in a list of Privileged Documents. The letter of 3 June 2005 from Freehills to Atanaskovic Hartnell which raised queries in respect of documents for which privilege had been claimed, but which was not drawn to my attention on 9 June, contains a sentence reading: "We do not propose to address the documents in the enclosed schedule at the hearing on 9 June 2005 before Graham J. We are hopeful to resolve any challenges in relation to privilege claims over the documents in the enclosed schedule by correspondence with you." 11 As it transpires, this endeavour does not appear to have succeeded. On 17 June 2005 a fresh Notice of Motion was filed by Seven seeking orders in respect of the Optus respondent's discovery. In particular, paragraph 1 sought an order that: "(1) On or before 7 July 2005 the Sixteenth and Twenty-Second Respondents review the privilege claims made in relation to their discovered documents, other than claims in respect of ..." and then certain documents were identified. 12 When the Motion first came before me on 20 June 2005 I expressed or made the observation that it seemed to be an irregular way of seeking to deal with a challenge to the discovery which had been provided and the claims of privilege which had been made. I drew attention to Order 15 Rule 11 of the Rules which permits a party to apply for an order for production and that rule, of course, provides that where such an application is made the court may "subject to any question of privilege which may arise" order the party to produce the document for inspection and so on. 13 After considering my observation that perhaps it would be necessary to seek inspection of either a sample of documents or all of the documents for which privilege had been claimed, an amended Notice of Motion was filed which did not seek relief under Order 15 Rule 11 but rather sought an order for, in effect, the Optus respondents to start again and provide discovery in accordance with Order 15 of the Rules. 14 Mr Bannon has drawn my attention to a number of decisions which include an observation to the following effect, namely, that the affidavit of discovery is generally conclusive. I refer to the judgment of Justice Giles in Fruehauf Finance Corporation Pty Limited v Zurich Australian Insurance Limited (1990) 20 NSWLR 359 at 361; the judgment of Mansfield J in Brookfield v Yevad Products Pty Limited [2002] FCA 1376 at [21]; and the judgment of Lindgren J in Spyer v Cuddles 'N' Mum (Franchise) Pty Limited (No 3) [2002] FCA 1563 at [37]. 15 In relation to the amended Notice of Motion which is presently before the court, an affidavit has been read of Mr Graeme Edward James Johnson of 17 June 2005. The six volumes of documents referred to in that affidavit have together become exhibit MA4, and Mr Bannon has tendered part of the bundle of documents produced by the Optus Respondents commencing at page 188 of that bundle, which has become exhibit MR3. 16 There have also been tendered an exchange of letters of 29 and 30 June 2005 which have become exhibit MA5. In the course of the hearing of the motion, Mr Hughes QC has indicated that his clients wish to cross-examine Mr Salier, the deponent of the affidavits verifying the several lists of documents that have been discovered. He has tendered on the Motion notices for Mr Salier to attend for cross-examination of 22 June 2005 and of 30 June 2005. He has also tendered on the application within the application a facsimile sent by the solicitors for the Optus respondents to Freehills at 10.16 pm last night, namely 30 June 2005. That document relevantly provides: "We attach a copy of our clients' responses to a number of the documents referred to in the Schedule attached to your letter dated 3 June 2005. We are finalising the responses to the balance of the documents referred to in the Schedule. We will provide the balance of our responses in tranches and expect to complete the responses by early next week. We note that by not pressing a claim for privilege in relation to a document, our clients should not be taken to have waived privilege in respect of documents for the dominant purpose of obtaining or providing legal advice, either in relation to the particular communications referred to in the documents or over the general subject matter of the document. Nor do our clients concede that the claim for privilege was inappropriately made." 17 It seems clear from a review of some of the documents listed in the twenty one page accompanying schedule which deal with 120 documents in relation to which inquiry has been made, that there has been some further abandonment of claims to privilege by the Optus respondents. In respect of document for instance, No. 88, it is indicated in words to this effect: "Consistent with our clients' approach to OPV.001.021.0702 which is another draft of this Agreement, our clients do not press their claim for privilege in this document." 18 Then later, in respect of document No. 90: "Consistent with our clients' approach to OPV.001.021.0702 which is another draft of this Agreement, our clients do not press their claim for privilege in this document." 19 Mr Hughes also took me to document No. 82 on this list. Whilst the affidavits verifying the lists of documents that have been discovered have been tendered in evidence, they have become part of the evidence on the Motion as a result of a tender of documents by the Applicants. None of the affidavits of discovery have been read and the normal procedure in the circumstances for notices to attend for cross-examination do not apply. 20 No attempt has been made to subpoena Mr Salier or to ask the court to deal with any evidence that he might give under s 38 of the Evidence Act 1995 (Cth) in relation to unfavourable witnesses. Mr Bannon submits that it would be inappropriate to accede to Mr Hughes' application for an order to be made under s 23 of the Federal Court of Australia Act 1976 (Cth)requiring Mr Salier to attend so that he could be cross-examined by Mr Hughes about the affidavits of discovery which have been sworn. Mr Bannon's submission is to the effect that the proper way to challenge the discovery which has been provided is for the Applicants to seek orders for the production of documents in relation to which claims of privilege have been made. Plainly, if the affidavits verifying the lists of discovered documents were not read in such circumstances there would be no proper basis on which the production of the documents could be refused. 21 In such circumstances it would no doubt be open to Seven to cross-examine Mr Salier in relation to his claims that the documents were privileged. Seven has elected not to proceed in the traditional way, and in my opinion, cannot expect to secure the attendance of Mr Salier to give evidence on the Motion presently before the court which is seeking, in effect, that fresh discovery be given by the Optus Respondents. 22 In the circumstances I decline Mr Hughes' application to make an order under s 23 of the Federal Court of Australia Act 1976 (Cth) compelling the attendance of Mr Salier. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. Associate: Dated: 8 July 2005 Counsel for the Applicants: Mr T E F Hughes QC with Mr T D F Hughes Solicitor for the Applicants: Freehills Counsel for the Sixteenth and Twenty-Second Respondents: Mr A J L Bannon SC with Mr J C Hewitt Solicitor for the Sixteenth and Twenty-Second Respondents: Atanaskovic Hartnell Date of Hearing: 1 July 2005 Date of Judgment: 1 July 2005