"The Court may, at any time during or after the hearing of a proceeding in the Court, make such order forbidding or restricting the publication of particular evidence, or the name of a party or witness, as appears to the Court to be necessary in order to prevent prejudice to the administration of justice or the security of the Commonwealth."
Australis submits that in applying s50 the Court must undertake a balancing task when considering the extent of disclosure of documents on discovery between trade rivals. It is said that the needs of a party to the litigation must be fairly balanced against the legitimate concern of a trade rival to retain the secrecy of commercially sensitive information. The need for some such balance is not really in dispute. Its applicability depends upon the claim that Mr Hadid is a trade rival of Australis, or for that matter any other of the respondents, a question which is considered below.
ECT and XYZ adopt the submissions of Australis but also raise their own submissions. As a threshold matter, it is said on their behalf that it is clear from the terms of the section that s50 has no application to the present motion. It is then submitted that because s50 refers to "the hearing of a proceeding" (ECT's and XYZ's emphasis) and, as this matter has not yet come to trial but is only at an interlocutory stage, s50 can not apply. It must be noted that the submission does not challenge the power of the court to deny access, for it is accepted that if s50 has no application the Court has power under s23 of the Federal Court Act to make such an order. The source of power could only have significance if different criteria apply depending upon which section has application, a matter discussed later in the judgment.
Section 23 provides:
"The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate."
The narrow interpretation sought to be given to the word "hearing" in s50 is, in my view, not warranted. The word "hearing" is equally apt to refer to a "directions hearing" or an "interlocutory hearing" (emphasis added), as it is to a hearing on the merits: cf Melbourne & Metropolitan Board of Works v Bevelon Investments Pty Limited [1977] VR 473 at 477. Indeed, the Federal Court Rules refer, for example, in O 10 r 1 to "Directions Hearing". Order 4 r 9 of the same rules refers to a "hearing" in the context of a claim for interlocutory relief. Had the word "hearing" been used in s50, together with the words "on the merits" or some such expression, the submission might have had more force. The word "hearing" in s50, in my view, is not limited to the trial of a proceeding. It will include the hearing of any motion or application before a judge or registrar from the first directions hearing to the final determination of the application to the Court. The power to suppress the name or names of parties and witnesses conferred by s50 would be somewhat hollow if restricted to the period during and after the trial and not capable of exercise at the earliest possible time. An example where the power has been exercised before the hearing of the merits is E v Australian Red Cross Society (1991) 27 FCR 310.
Perhaps s23 of the Act could, if the submission were correct, operate as a source of power authorising the making of such orders before a trial on the merits took place, but it would be somewhat cumbersome to apply different sections, and at least arguably different tests, to the same issue merely because the issue arose at a different stage of the hearing of the case. There would also be the argument that s50 covered the field to the exclusion of s23 as a source of power for orders, forbidding or restricting the publication of particular evidence or the name of a party or witness.
ECT and XYZ also make the more substantial submission that the use of the words "publication of particular evidence, or the name of a party or witness", only authorise the making of orders restricting the public from gaining access to material and do not authorise the making of orders restricting the access of a party to material. The submission places emphasis on the word "publication" which it is claimed refers to disclosure to members of the public rather than to a party.
The word "publish", as its etymology suggest, has, among the range of meanings normally attributed to it, the idea of making publicly or generally known. In the area of defamation it involves merely communication to a person or persons other than the person defamed. In this latter sense the emphasis on publication to the general public is weaker than suggested by the ordinary meaning of the word. Nevertheless it demonstrates, I suppose, that the prohibition of publication to which s50 refers could be limited to a particular person or group of persons rather than to the public at large. On the other hand, care must be taken not to emasculate the power conferred by the section by giving too narrow a construction to it, so long as the construction is one which is fairly open.
But the argument that s50 has no application to the restriction of the access of a party to material produced on discovery or on subpoena is given force by the use in the section of the word "evidence". Documents do not become evidence merely by being discovered or produced to the Court on subpoena. Gray J, in Independent Cement & Lime Pty Ltd v Australian Cement Ltd (unreported, 27 October 1988), found that s50 had no application to a discovered document on the ground that such a document was not "evidence". His Honour commented (at 3):
"It should be noted that the section in its terms, so far as relevant to this application, deals with the restriction on the publication of particular evidence. A document which is the subject of the process of discovery of documents before trial is not evidence."
I share His Honour's view.
It might be argued that the word "evidence" could be given an ambulatory meaning so as to extend to material which might at a later time be admitted into evidence. But such a construction would, to say the least, be a strained one. In Australian Broadcasting Commission v Parish (1980) 29 ALR 228 there are some passages which might suggest that s50 could authorise the making of confidentiality orders preventing access by a party to material which had been discovered but not tendered in evidence. Parish, in fact, concerned the making of a s50 order to preserve confidentiality in a document which had been tendered in the course of the hearing. The evidence concerning the document was given in camera and the issue of confidentiality was argued subsequently. A source of possible confusion in the case is that the trial judge apparently suggested that the issue of confidentiality should be determined as if it were a contested application for inspection of a discovered document (see at 240). However, on any view of the matter, the case was one where the source of power of an order lay in s50 and the only issue between the parties consisted of the proper principles to be applied where s50 was relevant.
It is my view that s50 has no application to the present case. It is unnecessary to consider whether the section has any application to restrict specifically the publication of evidence or names to a party, as against the public at large. However, it would be hard to imagine a court making an order restricting publication of the name of a witness or the content of evidence specifically to a party when otherwise that evidence could be published to the world at large.
The question then arises whether s23 supplies the authority for an order preventing access to materials discovered or produced on subpoena where those materials are not yet "evidence". In SRD v Australian Securities Commission (1994) 123 ALR 730 at 733, I said:
"There has been little discussion of the construction of s50 or, for that matter, its relationship to s23 of the Act which empowers the court, in which it has jurisdiction, inter alia, to make such orders as may be appropriate. On one view
of the matter, by expressly dealing in s50 with orders restraining the publication of evidence or the name of a party or witness, the legislature may be taken to have excluded from the ambit of s23 those matters, imposing, where such orders are to be made, the test of prejudice to the administration of justice or the security of the Commonwealth contained in s50."
But once it is found that the matter falls outside s50, then there is no reason to restrict the broad generality of s23. In my view, that section provides the source of power for the order presently sought.
The significance of finding that s50 has no application is said to be that the test to be applied is less onerous for the party seeking to prevent access being granted. Section 50 requires there to be shown, in the case where there is no suggestion that the security of the Commonwealth is threatened, "prejudice to the administration of justice", whereas under s23 it is only necessary that the order be "appropriate".
It may here be remarked that the cases where s50 has been discussed, such as Parish, have given a very broad construction to the words "prejudice to the interests of justice", although it is clear, as Bowen CJ observed, that s50 was not concerned with "trivialities". It is without question that, in exercising a discretion to make an order under s50, the Court would take into account the public interest in doing justice between the parties (per Bowen CJ at 236). Further, the "prejudice" of which s50 speaks is overall prejudice and the "administration of justice" refers to the administration of justice generally. Thus where s50 applies, the interest of the parties, the effect disclosure of confidential material may have, and the advantages or disadvantages which an order under the section may bring with it, are weighed against the public interest in open justice to determine whether on balance an order should be made. The task is not greatly different from that involved in determining appropriateness where the power is enlivened by s23. All of the matters which s50 makes relevant will, of necessity, be required to be considered in defining appropriateness.
To the extent that the tests under ss50 and 23 differ, s23 might impose a lower threshold test than s50. Certainly the public interest in open justice will usually be more affected by suppression of the names of parties or evidence adduced in a trial where there is a reasonable expectation that trials will proceed in open court and the names of the parties will be in the public domain. Most of the reported cases which have applied s50 have been applications to prevent the "public" publication of names; cf E v Australian Red Cross Society; and more recently VX96A v Insurance and Superannuation Commissioner (unreported, Merkel J, 30 September 1996).
Whether the present matter be considered under s23 or s50, certain common considerations are relevant.
Discovery and inspection are today a fundamental part of a court's process designed to provide the parties with access to all relevant documents prior to the trial to enable them to prepare for the trial and of course also appraise their case and that of their opponent so as to promote the settlement of the proceedings: see Simpson, Bailey and Evans, Discovery and Interrogatories 2d ed, 1990 at 2. Thus, Menzies J in Mulley v Manifold (1959) 103 CLR 341 at 345 said:
"... discovery is a procedure directed towards obtaining a proper examination and determination of these issues - not towards assisting a party upon a fishing expedition. Only a document which relates in some way to a matter in issue is discoverable, but it is sufficient if it would, or would lead to a train of enquiry which would, either advance a party's own case or damage that of his adversary."
The inspection of documents discovered is an inseverable part of the process of discovery. Frequently, perhaps indeed almost always, the party to the litigation will be the person best placed to form an assessment of the real significance of documents produced, whether that assessment is made for the purposes of preparing an ultimate trial or for the purpose of prospective settlement negotiations. Thus there is a clear prima facie right in a party to litigation personally to inspect discovered documents. It is a far from a satisfactory answer to the abrogation of this prima facie right, that the legal adviser to the party may be permitted to inspect the document, for that adviser is, if the client is restricted from inspecting the material, placed in the difficult and indeed sometimes impossible position where he or she can not obtain instructions.
This prima facie right of a party to litigation to inspect documents discovered by another party is related to the obvious right of a party to litigation to be apprised of the case which is put against him. It is part of the principles of procedural fairness which are applied daily in our courts.
Where confidentiality in documents is made out the prima facie right to inspect discovered material and the prejudice to the party against whom an order denying access is sought, have to be weighed against the degree of confidentiality made out and the prejudice to the person seeking confidentiality, if that confidentiality should be breached.
It is submitted for the applicant that if s50 applies "serious prejudice" must be shown and that the respondents have failed to do that. It is clear from the judgment of Bowen CJ in Parish, to which reference has already been made, that the ground for an order under s50 could not be "trivial". What is at issue is prejudice to the administration of justice. As Bowen CJ said (at 235):
"... the very proceedings before the court should not be permitted to destroy or seriously depreciate the value of such confidential information."
Likewise under s23, even if the degree of prejudice may be less than that required under s50, that prejudice must be such as to make it appropriate to deprive a party to the litigation to the prima facie right, to which reference has been made, and which is an important ingredient in giving to that party procedural fairness.
On behalf of Australis it is submitted that it is sufficient to attract an exercise of discretion that there be shown a risk of prejudice, a risk that the confidential information will be, in the language of the learned Chief Judge, "destroyed" or "the value seriously depreciated". Whether mere risk is sufficient to found an application under s50 need not be here decided. However, it must be remarked that since prejudice can not eventuate unless the confidentiality is breached by disclosure, and since the information which is confidential could not be destroyed or its value seriously depreciated unless access were granted, it is hard to see how it could be otherwise than that mere risk would suffice. What is relevant, both under s23 and s50, is the extent of that risk. In turn, the extent of that risk will depend in the present case upon whether Mr Hadid is or is a potential competitor of the respondents and the degree of sensitivity of the information sought to be protected.
Some assistance to the approach to be taken is to be found in the decision of the Court of Appeal of the Supreme Court of Victoria in Mobil Oil Australia v Guina Developments Pty Ltd (1995) 33 IPR 82 at 87. Hayne JA in that case said at 87:
"While it may readily be accepted that a party is ordinarily entitled to discovery and inspection of all discoverable documents in the possession or control of the opposite party ... it is important to bear steadily in mind that discovery is but a tool to be used in the pursuit of justice and that the right to discovery and inspection is not without its limits. ...
Where it is said that the documents are confidential, it may be accepted that the fact that the documents are confidential will not ordinarily be a sufficient reason to deny inspection by the opposite party. In most cases, the fact that the documents may not be used except for the purposes of the litigation concerned will be sufficient protection to the party producing them. But where ... the party obtaining discovery is a trade rival ... other considerations arise.
Once the documents are inspected by the principals of the trade rival the information which is revealed is known to the trade rival and cannot be forgotten. Confidentiality is destroyed once and for all ... To say that the trade rival is bound not to use the documents except for the purposes of the action concerned is ... to impose upon that trade rival an obligation that is impossible of
performance by him and impossible of enforcement by the party whose secrets have been revealed."
The concern that once information comes into the hands of a trade rival the confidentiality in it will be destroyed may, perhaps, be overstated: (cf Mackay Sugar Co-operative Association Limited v CSR Limited (unreported, Spender J, 23 February 1996) at 13).
Two questions presently arise for decision in determining the appropriateness of an order denying access to Mr Hadid. The first is whether the documents in respect of which access is sought are such as to contain commercially sensitive or confidential information. The second is whether Mr Hadid is, or is likely to be as submitted by the respondents, a competitor so that access by him to the information constitutes a real risk to the respondents.
THE LENFEST DOCUMENTS
Lenfest sought to prevent access to what are known as the "Envelope C" documents. Contained within Envelope C were documents provided to Lenfest, subject to a contractual obligation to keep the information confidential. It is the contractual obligation to keep this material confidential which prompts Lenfest to apply to the Court in response to Mr Hadid's motion. While the existence of a contractual obligation to keep material confidential will be a relevant consideration, at least in some cases, it can hardly stand in the way of the making by the court of an order if the needs of justice so require.
Although in his affidavit in support of Mr Hadid's access to the documents Mr Sherman asserted that Mr Lonergan had used the information in Envelope C in preparation of his expert report, counsel for Lenfest in cross-examination of Mr Sherman elicited the admission that this was merely an assumption on the part of Mr Sherman. Mr Lonergan did not give evidence in the motion, but an affidavit sworn by a solicitor acting for Lenfest deposed that the documents had not been provided to Mr Lonergan or his staff. But the fact that Mr Lonergan had made no use at all of the information in the documents is no reason to deny to Mr Hadid access to material, if that material has potential relevance to an issue in the proceedings. Even if the documents were not considered by Mr Lonergan, they might assist Mr Sherman in any comment or reply he may wish to make in reply to Mr Lonergan's report. In making that reply, Mr Hadid's comments on the material, in the light of his knowledge of the industry, would obviously be of assistance.
Envelope C contained, inter alia, details supplied by Home Box Office Corporation concerning the terms of supply of particular programs to Australis. A memorandum to Mr Lenfest shows comparative rates proposed by three program suppliers. The information was current as at April 1994. Subject to the age of the material, it is clear that the material in the envelope could have commercial sensitivity. It is difficult to determine the effect of age on the material. Mr Sherman agreed both that he had had access to the actual supply agreements into which Australis had entered and that Australis had not entered into any programming agreement with Home Box Office. Counsel for Lenfest in his cross-examination sought to demonstrate that the material was not relevant, or at least was of little relevance to Mr Sherman's expert testimony. Mr Sherman disagreed that the material could have no relevance. He said that the information which had already been made available to him related to criticism by Mr Lonergan concerning programming expenses and in essence provided information as to costing of potential programs. The fact that no supply contract was entered into with Home Box Office did not according to to Mr Sherman require the conclusion that the material was irrelevant.
THE XYZ AND ECT DOCUMENTS
The documents which XYZ and ECT claimed to be confidential were those referred to in the affidavit of 11 June 1996 of their solicitor, Derek Raymond Hilliard. Mr Hilliard says that the documents contain commercially sensitive and confidential information which only the directors of ECT have seen in its entirety, excluding legal representatives in these proceedings. Mr Hilliard also says that were Mr Hadid to have access to them, he would be placed in the "unique situation of having access to most of the relevant information relating to both satellite and franchise businesses as well as programming". Mr Hilliard then says:
"In 1997 the pay television industry will be deregulated and Mr Hadid will be in a position to compete with ECT, and others, if he is able to obtain a satellite licence or licences and able to find a transponder. After deregulation the restriction on the number of satellite channels will be lifted and there will be a real market. Mr Hadid will be able to compete with XYZ, and programme producers such as XYZ on an unequal basis because he will know XYZ's programming costs, programming sources and programming margins."
The ECT documents fall into three categories according to Mr Hilliard: documents relevant to the franchise agreement with Australis; financial information relating to ECT; and the ECT draft business plan. The XYZ documents consist of programming agreements; financial information regarding XYZ; and costing analyses and projections.
The submission was that the combined effect of this material was to provide a "blueprint" for the creation of an operating channel.