Hadid, Albert v Lenfest Communications Inc & Ors [1995] FCA 1159

The background to the motions is that the present proceedings were commenced in January 1995 claiming that there had been conduct which was misleading and deceptive on the part of the corporate respondents in breach of s52 of the Trade Practices Act 1974 (Cth). The alleged misleading conduct concerns representations said to have been made to Mr Hadid, the applicant, concerning the ultimate sale of New World Telecommunications Pty Limited, which company was, at the time it was under Mr Hadid's control, a successful applicant for a satellite subscription television broadcasting licence. There have been a number of interlocutory proceedings concerning discovery. It is unnecessary to detail these. Suffice it to say that around the end of May of this year Lenfest gave discovery of certain documents concerning what the parties referred to as "Project Midsummer". In essence these documents describe a proposal for the licence being sold to the fifth respondent and the capitalisation of that company and an agreement being reached between Australis and the Lenfest Group for Lenfest to sell its interests in New World Telecommunications to Australis under certain terms and conditions. It seems that these documents, at least, were in the possession of the applicant shortly after a list of them had been produced at the end of May. Others of the respondents have not discovered these documents and there has been a continuing festering sore among the parties as to whether better discovery should have been given. On at least two occasions junior counsel for the applicant foreshadowed the need for further amendment to the applicant's statement of claim to deal with the Project Midsummer matter. Ultimately on 18 August there was filed a further amended statement of claim pursuant to leave which I granted on 7 August 1995 which substantially broadens the causes of action upon which the applicant seeks to rely. The causes of action now pleaded are summarised in cl23. It is involving not merely the claims under the Trade Practices Act or the Fair Trading Act 1987 (NSW), so far as they relate to the corporate or individual respondents or knowing participation of the individual respondents in conduct said to be in breach of the Trade Practices Act, but there is now alleged for the first time damages for conspiracy to defraud; damages in deceit; claims for equitable compensation for breach of fiduciary duty; claims under the Corporations Law ss852 and 1005; and in addition exemplary damages are sought for what is said to be conscious wrongdoing in consummate disregard of the rights of the applicants. The matters pleaded are of a very serious nature indeed and senior counsel for the applicant did not resile from that. It is the case for the respondents that the filing of the new statement of claim has changed fundamentally the character of the proceedings so that it is no longer appropriate for evidence to be given on affidavit at first instance, subject, of course, to the usual cross-examination. Rather, it is said that the evidence should be led orally, although it is conceded that an outline of that evidence would be provided to the applicant to avoid any suggestions of ambush. The respondents point out that a number of the counts charged raise matters which could be of a criminal nature and it is submitted that the witnesses should not be ordered to give sworn written evidence of matters which might ultimately be found to be in breach of, for example, s78BB of the Crimes Act 1900 (NSW). Both sides seek to rely upon statements made from judges from time to time in particular circumstances, either in support of or in opposition to the giving of oral evidence in such cases. The respondents point as well to O33 r1 of the Federal Court Rules, which provides a prima facie basis for oral testimony although, of course, it is the more normal practice of the Court that evidence be taken on affidavit in most matters and it will only be in cases where affidavit evidence is seen to be inappropriate in a particular case that the Court would these days permit a trial to proceed by evidence given viva voce.

Counsel for the various respondents rely upon the fact that discovery was given some months ago and it was only very recently that the amended statement of claim was reformulated raising these serious issues for the first time. Counsel for Mr Hadid submits that the delay in making the amendment should not be counted against his client because it came about as the result of concealment by the respondents of matters not previously known to his client. He points to the fact that the original statement of claim alleged a false representation, that representation being false because Mr Price on behalf of Australis had already expressed to representatives of Lenfest Communications interest in purchasing all or substantially all of the shares in New World. The falsity of the representations has been denied by the third, fourth, fifth and sixth respondents and largely denied by the first and second. Yet it was submitted that these denials flew in the face of the Project Midsummer material which had been produced on discovery at the end of May. I think it is quite inappropriate for me to decide at this interlocutory stage whether the representations were in fact false let alone whether there had been concealment on the part of the respondents. Certainly some of the material to which senior counsel pointed could lead to conclusions in favour of the submissions made. On the other hand, there may well be explanations which could be afforded, which have not at this stage surfaced. Senior counsel for the applicant was unable to explain the delay that occurred between the giving of discovery and the amendment of the pleading other than to say that time may have been necessary to appreciate the significance of some of the matters discovered. The parties were actively involved in fighting each other on many fronts and it may well be that the significance of some of the matters did not occur to the advisers for at least some of the time, although I have to say that the Project Midsummer materials have been the subject of much discussion before me over the last few months. There are a number of matters which I would take into account in exercising the discretion I have as to the manner in which the case should proceed for trial. There would be undoubtedly unfairness to the applicant whose evidence has now been fully filed in chief on affidavit if I acceded to the application. If the proceedings now are advanced by oral evidence being adduced, the respondents will have the opportunity to cross-examine fully on written material which the applicant has filed, whereas the applicant will not have that same advantage.

I also take into account the fact that it is commonly accepted that matters of credit are best tested by evidence in chief being given orally, as well as cross-examination taking place and that the case as now pleaded by the applicant will raise matters of conversations said to have occurred between Mr Hadid and the various principals and officers of the respondent companies. This will ultimately require determination of the credit of those who participated in the alleged conversations. However, cross-examination on credit may still take place even if evidence on affidavit is filed. Accordingly I make the following orders: 1. The respondent's evidence should be given orally, however: (a) expert evidence is to proceed by affidavit; (b) uncontroversial evidence to proceed by affidavit; (c) the evidence of witnesses that is not controversial may be put on affidavit. 2. In relation to the evidence of Messrs Burt, Price, Lenfest, Heller and Plant; I vary Order 1. to provide that their evidence may be taken orally. 3. The respondents are to supply by 11 September 1995 to the applicants an outline in detail of evidence expected to be given by their witnesses, so that the applicant will not be taken by surprise. Statements and affidavits that those witnesses may swear should be filed together. 4. Any evidence Mr Hadid or Mr Blanks would have supplied in reply is to be treated in a similar manner, and filed by 3 October 1995. 5. Evidence in chief of Mr Hadid and Mr Blanks is also to be taken orally except for background evidence. 6. The matter be stood over to 6 October 1995. 7. Costs of today be costs in the cause. 8. No motion is to be set down for hearing unless accompanied by a document signed by counsel or a partner with carriage of the matter stating that: (a) the subject matter of the motion has been discussed between the parties to the motion; and (b) no resolution of the issue was possible after reasonable time for resolution has passed; and (c) the client of counsel/the partner with carriage of the matter has been advised of the expected costs of the motion. I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Hill. Associate: Date: 12 March 1996 Counsel and Solicitors D Bennett and N Cotman for Applicant: instructed by Corrs Chambers Westgarth Counsel and Solicitors for D Jordan instructed by First and Second Respondents: Clayton Utz Counsel and Solicitors for L Foster instructed by Third and Fourth Respondents: Phillips Fox Counsel and Solicitors for M Slattery instructed by First and Second Respondent: Atanaskovic Hartnell Date of Hearing: 30 August 1996 Date Judgment Delivered: 30 August 1006