Australian Competition & Consumer Commission v Telstra Corporation Ltd

REASONS FOR JUDGMENT 1 In these consolidated proceedings the respondent ("Telstra") moves by a notice of motion filed 7 January 2000 for an order that it be permitted to use the pleadings and the affidavits (in fact they are in the form of statements) filed on behalf of the applicant ("the Commission") in the proceedings, in another proceeding instituted by Telstra against the Commission in the Administrative Appeals Tribunal, General Administrative Division, Canberra Registry entitled Telstra Corporation Limited v Australian Competition and Consumer Commission (A99/109). That proceeding ("the AAT proceeding") is fixed for hearing to commence in Canberra next Monday 17 January 2000 for five days. The Commission consents to the making of the order sought in relation to the pleadings, but not in relation to the statements. 2 Telstra filed its notice of motion on 7 January and asked that it be made returnable at 2.15pm yesterday, 13 January. It has asked also that judgment be given this morning so that if it succeeds it will have the opportunity to take advantage of that success in time for the commencement of the hearing of the AAT proceeding next Monday. A result of these circumstances is that time has not permitted me to explore all the issues raised. In one respect, in particular, I consider this is less than satisfactory as will appear below. 3 The background to the two proceedings in this Court and the AAT proceeding is found in Part XIB, of the Trade Practices 1974 (Cth) ("the TP Act") which is headed, "The Telecommunications Industry: Anti-Competitive Conduct and Record-keeping Rules." Fortunately, I need say little about that Part. As its heading suggests, it is concerned with anti-competitive conduct in the telecommunications industry. Both the Court proceedings and the AAT proceeding are concerned with what the Commission alleges was anti-competitive conduct by Telstra. 4 Section 151AK of the TP Act provides that a "carrier" or "carriage service provider" must not engage in anti-competitive conduct. This is called the "competition rule." Section 151AL provides that the Commission may issue a notice stating that a specified carrier or carriage service provider has contravened, or is contravening, the competition rule and setting out particulars of the contravention. Such a notice is called "a competition notice." 5 Section 151AN makes a competition notice prima facie evidence of the matters in the notice. Section 151AO provides that a competition notice comes into force when it is issued or, if the notice specifies a later time, at that later time, and, unless sooner revoked, remains in force until the end of the period specified in the notice which must be not longer than 12 months. 6 On 10 August 1998, the Commission issued a competition notice to Telstra. It related to what is commonly known as Telstra's "Commercial Churn Service" ("the Service") which came into operation on or about 4 August 1997. By the Service end-users wishing to change their suppliers of telephony services are transferred by Telstra from one carriage service provider to another. 7 The terms and conditions of the Service are set out in "Transfer Conditions" which Telstra requires the new carriage service provider to accept. The notice of 10 August 1998 refers to four carriage service providers: AAPT Limited ("AAPT"), Macquarie Corporate Telecommunications Pty Ltd ("Macquarie"), Optus Communications Pty Ltd and/or Optus Networks Pty Ltd ("Optus") and Switch Telecommunications Pty Ltd ("Switch"). 8 The competition notice dated 10 August 1998 states that Telstra contravened and was continuing to contravene the competition rule by requiring AAPT, Macquarie, Optus and Switch to enter into an agreement with Telstra containing some of Telstra's Transfer Conditions which, according to the notice, are "unreasonable", and by refusing to process and effect the transfer of end-users from Telstra to AAPT, Macquarie, Optus or Switch, as the case may be, unless that carriage service provider agrees to abide by those ("unreasonable") Terms and Conditions that are applicable. 9 The competition notice contains lengthy particulars of the contravention of the competition rule alleged. It asserts that AAPT, Macquarie, Optus and Switch under protest and/or with reservations, accepted the Transfer Conditions imposed by Telstra. 10 In short, and no doubt somewhat inaccurately, the competition notice alleges that Telstra engaged in anti-competitive conduct in contravention of the competition rule by imposing anti-competitive conditions as conditions of the supply of the Service. AAPT, Macquarie, Optus and Switch complained to the Commission about this. 11 On the same day, 10 August 1998, the Commission issued a media release relating to the competition notice. The media release referred to the fact that Telstra had conducted "an extensive investigation, involving detailed market analysis and industry interviews" and that the Commission had "consulted with industry participants" and formed the view that issuing a competition notice would assist the resolution of customer transfer problems. 12 The competition notice of 10 August 1998 was to come into force on Wednesday, 30 September 1998 and to remain in force until 29 September 1999. In fact, however, by a Revocation of Competition Notice dated 14 October 1998, the Commission revoked the competition notice dated 10 August 1998 and on the same day, on 14 October 1998, it issued a further competition notice. Also on 14 October 1998 it published a media release explaining the background to the revocation and the issue of the fresh notice. 13 The Commission has brought these two proceedings, which were consolidated on 6 May 1999, seeking relief in respect of other competition notices issued by the Commission against Telstra. I have been informed that in all six notices have been issued and that these two proceedings relate to the third, fourth, fifth and sixth notices. The Commission seeks the imposition of pecuniary penalties and declaratory and injunctive relief. The Commission has filed and served some twenty-one lay witness statements and three expert witness statements in these proceedings. 14 On 14 August 1998, that is, shortly after the issue of the first competition notice on 10 August 1998, Telstra sought from the Commission production of documents under the Freedom of Information Act 1982 (Cth) ("the FOI Act"). There apparently followed correspondence and on 8 December 1998 the Commission forwarded to Telstra a revised schedule of documents which set out the Commission's final decisions in relation to documents remaining in dispute. 15 On 23 December 1998, the solicitors for Telstra wrote to the Commission requesting internal review of its decision and on 16 February 1999 the Commission replied following internal review and attaching a fresh schedule of documents. Telstra commenced the FOI proceeding in the AAT on or about 13 April 1999 seeking review of the internal review decision dated 16 February 1999. 16 Essentially, Telstra complained that the Commission refused access to certain documents on the basis that exemptions provided for in the FOI Act applied to them whereas in fact this was not so. The Commission apparently reviewed the position further and on 9 December 1999 Telstra's solicitors wrote to the Commission attaching a schedule of the documents which remained in dispute. There are sixty-eight such documents. They are the subject of the AAT proceeding. 17 The schedule of disputed documents sets out in columns the author of each document, its addressee, the date of the document, a description of the document, the number of pages in the document, its access status and the reason for the Commission's decision. In many cases the reasons are to be found in s 43(1)(c) and s 45 of the FOI Act. 18 Section 43(1)(c) provides that a document is an exempt document if it would disclose information concerning a person in respect of his business or professional affairs or concerning the business, commercial or financial affairs of an organisation or undertaking, being information which satisfies either one of two descriptions. 19 The first description is information, the disclosure of which would or could reasonably be expected to affect unreasonably that person adversely in respect of his lawful business or professional affairs or that organisation or undertaking in respect of its lawful business, commercial or financial affairs. The second category is documents, the disclosure of which could reasonably be expected to prejudice the future supply of information to the Commonwealth or an agency for the purpose of the administration of a law of the Commonwealth or of a Territory or the administration of matters administered by an agency. 20 Subsection 45(1) provides that a document is an exempt document if it would found an action by a person other than the Commonwealth for breach of confidence. 21 I can now illustrate by reference to two documents in the schedule. The Commission refused to grant access to a document internal to the Commission dated 26 February 1998 which is described in the schedule as follows: "Signed, typed file notearising from Commission discussions with Switch concerning a range of commercial churn issues such as reselling and the business operations of the company, one bill, commercial requirements for telecommunications services, long distance market, average customer spending, profit margins, delays, total debt severance and administrative procedures involved with transfers." In refusing access to this file note, the Commission, relied on s 37(1)(b), s 43(1)(c)(i), s 43(1)(c)(ii) and s 45 of the FOI Act. 22 As a second illustration, the Commission refused to grant access to a facsimile letter and fax cover sheet together with various attachments, of which the author is shown as Macquarie and the addressee is shown as the Commission, dated 10 March 1998. In this case, the description in the schedule is as follows: "Facsimile letter and fax cover sheet together with various attachments. The letter provided information in relation to the immediate term implications of the commercial churn process, and in relation to the Telecommunications Industry Ombudsman, a customer survey, fees, market power, effects on competition and other issues. The attachments contain such information as corporate survey results and customer profiles, and discussion of potential commercial impacts on Macquarie." In this case, for its refusal of access the Commission relied on s 43(1)(b), s 43(1)(c)(i), s 43(1)(c)(ii), s 45 and s 43(1)(a) of the FOI Act. 23 I turn now to the reason why Telstra moves for the present order. The order sought will relate to the twenty-one lay witness statements and the three expert witness statements filed in these two consolidated proceedings. They have not been read and they will not be read before these proceedings are heard (they are fixed for hearing in March 2000). Telstra says that the twenty-one statements contain material which is relevant to the content of the documents the subject of the FOI proceeding. 24 Counsel for Telstra took me to four of the twenty-four statements by way of illustration. I do not think it necessary that I refer to them. I am satisfied that there is some material in one or more of these witness statements which is relevant to the content of some of the documents, access to which has been denied by the Commission. Telstra submits that it should be able to use the statements for the purpose of cross-examination in the AAT proceeding next week. I was informed that in the case of a statement of Michael Andrew Kettell filed 18 November 1999 a confidentiality order or undertaking exists and Telstra accepts that if it were to succeed on its motion in relation to that statement, there would have to be an order or undertaking appropriate to preserve the confidentiality touching that document. 25 Telstra is, of course, subject to an implied undertaking to the Court not to use the statements which it seeks to use in the AAT proceeding, without first obtaining the leave of the Court: see Harman v Secretary of State for the Home Department [1983] AC 280. 26 The circumstances in which a release from the implied undertaking should be granted have been referred to by Wilcox J in Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217. His Honour thought that what was necessary was that "quite special circumstances" existed. He considered that factors relevant to the exercise of the Court's discretion included (at 225): · the nature of the document; · the circumstances under which the document came into existence; · the attitude of the author of the document and any prejudice the author may sustain; · whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain; · the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information); · the circumstances in which the document came into the hands of the applicant; and · most importantly of all, the likely contribution of the document to achieving justice in the other proceeding. 27 At the forefront of its submissions, the Commission submits that the witness statements, not having yet been read in open court, remain subject to legal professional privilege. It is this aspect of the case that presents me with the unsatisfactory situation to which I referred earlier. I will shortly refer to certain authorities on this question but time has not permitted me to explore them fully or to form a final view as to whether the privilege does exist or not. This results from the circumstances that the case came on for hearing at 2.15 pm yesterday and finished a little after 4.15 pm and that judgment is required this morning. 28 In Nilsen Industrial Electronics Pty Ltd v National Semiconductor Corporation (1994) 48 FCR 337, decided on 22 February 1994, Olney J held that statements of witnesses filed in legal proceedings and exchanged continued to attract legal professional privilege unless and until they were put into evidence. In Complete Technology Pty Ltd v Toshiba (Australia) Pty Ltd (1994) 53 FCR 125, decided on 7 September 1994, Hill J thought otherwise. His Honour accepted that unless waived, legal professional privilege subsisted in a witness statement or affidavit prepared for the purpose of litigation, but thought that the privilege was waived once the statement or affidavit was served on the other party. 29 The matter did not rest with this difference between two first instance decisions of this Court. A Full Court of the Supreme Court of South Australia was called upon to consider the issue in State Bank of South Australia v Smoothdale (No 2) Ltd (1995) 64 SASR 224. The Full Court gave its judgment on 2 June 1995. The Court applied Nilsen and did not follow Complete Technology. Finally, in Abigroup Ltd v Akins (1997) 42 NSWLR 623, decided on 2 October 1997, Bainton J in the Supreme Court of New South Wales also followed Smoothdale rather than Hill J in Complete Technology. 30 On the hearing yesterday senior counsel for the Commission submitted, in substance, simply that I should follow the preponderance of authority. Counsel for Telstra submitted, in substance, simply that I should follow the more recent decision of a single judge of this Court. 31 In the circumstances in which I am placed of having to decide now and without the opportunity to explore fully the reasoning in the cases mentioned and others mentioned in them, I think I should follow the preponderance of authority. It was not suggested that the circumstances in which the statements were filed in these consolidated proceedings differ from those in which the affidavits or statements were filed in the cases to which I have referred. Nor was it suggested that there are any special circumstances in this case which were not present in those. Nor was it suggested that those cases are distinguishable or that for any reason they are plainly wrong. The submissions that were put were put on the simple basis of authority versus authority. On that limited basis I would follow Nilsen, Smoothdale and Abigroup rather than Complete Technology. 32 What would the position have been if I had thought otherwise? To say that there must be "special circumstances" before a release from the implied undertaking will be granted, provides little guidance for a judge who is called upon to decide a particular case. I accept that it would probably be of some help to the legal advisers of Telstra to be able to use the statements filed in this Court for the purpose of next week's hearing before the AAT. Just how helpful those statements would be it is impossible to say. I have not seen the affidavits that have been filed in the AAT proceeding. There is before me affidavit evidence identifying them and apparently three or four deponents in the AAT proceeding are makers of statements in the present consolidated proceedings. I would be surprised, if in at least some respect and to at least some extent, the cross-examiner of those witnesses in the AAT proceeding next week would not be assisted by being able to confront the witness with what he or she has said in his or her statement filed in this Court. But in what respect and to what extent have not been identified and are apparently not known. Counsel for Telstra fairly and frankly admitted that the most that can be said is that it may well be useful for his client to be able to use the statements in the manner mentioned. Of course, a disability to which Telstra is subject in the present respect is that it has not seen the documents, access to which has been denied by the Commission. I suspect that the advantage to Telstra of being allowed to use in the AAT proceeding the documents it now seeks would not be great. 33 It can be taken that the makers of the statements would not wish to have them made available to Telstra since they are employees or officers of companies that have been complaining to the Commission about the Service. 34 It was put for the Commission that until the statements are read in open court, it is not known that they represent the final testimony of the witness since the witness may make a supplementary statement or give supplementary oral evidence. It was also put that the Commission may elect not to read some of the statements at all. Finally, the Commission submitted that it is possible that a confidentiality order may yet be sought and made in respect of one or more of the statements on the hearing (as noted earlier, to date such an order has been sought and made only in respect of one of the twenty-four statements). 35 I would not be persuaded by these considerations to refuse the order sought by Telstra. 36 A more persuasive consideration supporting that result is the fact that it is far from clear to me that Telstra really needs to be able to use the statements next week, that is, that it will suffer an injustice if it is not permitted to do so. Although the case is, I think, a borderline one, I would not have thought, even apart from the legal professional privilege point, that the order sought by Telstra should be made. 37 I would, however, have reserved leave to Telstra to apply during the course of next week on, say, one hour's notice. This would have been a little odd, and might have been difficult for Telstra to exploit. I would have had in mind, however, the possibility that a particular situation might develop during the hearing before the AAT in which a genuine injustice would be suffered by Telstra if it were not able to use a statement filed in this Court. Against that possibility I would have reserved leave as discussed while not making any order in favour of Telstra on its motion at this stage. 38 However, being of the view that the Commission succeeds on the legal professional privilege point, I refrain from granting that leave. 39 In the result, By consent the Court orders that: 1. The respondent, through its servants, officers and representatives, including its legal representatives, be permitted to use the pleadings filed in these proceedings, in proceedings instituted by the respondent against the applicant in the Administrative Appeals Tribunal, General Administrative Division, Canberra Registry, entitled Telstra Corporation Limited v Australian Competition and Consumer Commission (No A99/109). The Court further orders that: 2. The motion brought by the respondent by notice of motion filed 7 January 2000 be heard in vacation. 3. Otherwise the motion brought by the respondent by notice of motion filed 7 January 2000 be dismissed. 4. The respondent pay the applicant's costs of that motion. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.